HC Nagpur (2026.01.29) in M/s. Altaf Ahamad Vs. The Assistant Provident Fund Commissioner & Anr. [2026:BHC-NAG:1660, Writ Petition No.1335 Of 2011] held that;
Expenditure shown as wages in balance sheet has been acted upon without verifying the actual part thereof appropriated towards payment of wages by Employer. The quantification of amount without identifying beneficiaries or any attempt to recover it is therefore unsustainable
Although I am in agreement with the learned Advocate for the respondents that the petitioner will be employer for the employees engaged through the contractor under the EPF Act, 1952, in the absence of identification of the employees, it will not be permissible for the respondent No.1 to recover provident fund dues for such unidentified employees for the petitioner.
In fairness, the learned advocate for the respondents states that he is instructed to inform that the records in the office of respondents also do not throw any light on the identification of the employees for whose benefit the order impugned is passed.
In view of the aforesaid, the petitioner deserves to be allowed and is accordingly allowed by quashing and setting aside the order dated 04.08.2009 passed by Assistant Provident Fund, Commissioner, Nagpur (respondent No.1) and order dated 18.02.2011 in Appeal (ATA) No.595(9) of 2009 passed by the Employments Provident Fund Tribunal, New Delhi (respondent No.2).
Excerpts of the Order;
1) The present petition takes exception to order dated 04.08.2009 passed by the Assistant Provident Fund Commissioner, Nagpur, under Section 7-A(1) of the Employees Provident Funds Act, 1952 (for short, “the EPF Act”) and order dated 18.02.2011 passed by the learned Employees Provident Fund Tribunal, New Delhi, dismissing Appeal (ATA) No.595(9) of 2009, arising out of the said order passed under Section 7-A of the EPF Act.
2) The petitioner is engaged in the business of construction. Respondent No.1 had issued summons under Section 7-A(2) of the EPF Act to the petitioner on 14.05.2009, calling upon the petitioner to remain present in his office with relevant documents and records in order to make assessment of provident fund dues of the petitioner for the period from the year 2003-2004 to 2008-2009.
3) On the basis of documents filed by the petitioner, particularly, statements of accounts and certificates issued by the Chartered Accountant of the petitioner, an order of assessment of provident fund dues to the tune of Rs.12,26,930/- came to be passed by the Provident Fund Commissioner. The said order was challenged by the petitioner by filing appeal before the learned EPF Tribunal, which came to be dismissed vide order dated 18.02.2011. These orders are subject matter of challenge in the present petition.
4) Respondent No.1/Commissioner, upon going thorough the documents produced before him found several entries in the accounts of the petitioner under the head of contract expenses. On the instructions of respondent no.1, the petitioner submitted a certificate from the Chartered Accountant working out labour component of the expenses incurred under the head, ‘contract expenses’. Respondent No.1/Commissioner intended to assess the provident fund dues on the labour component by treating the petitioner to be principal employer of the workers of the contractor engaged by the petitioner.
5) However, in view of the contention that most of the employees were highly qualified individuals whose salary was more than the cut-off limit prescribed under the Act, the authority further called upon the petitioner to furnish a break-up of wages paid to the employees whose salary was above the cut-off limit and employees who were receiving salary below the said limit. The petitioner accordingly, furnished a certificate giving this break-up as well. Based on the certificate issued by the petitioner, the respondent No.1 passed an order of assessment of provident fund dues against the petitioner for period commencing from the year 2003-2004 upto the year 2008-2009.
6) The foundation of the order is that the petitioner is the principal employer of all employees who were engaged through a contractor.
7) Mr. S. S. Ghate, learned Advocate for the petitioner, contends that the authorities have erred in passing the impugned orders without actual verification and identification of the employees allegedly engaged through the contractors. He contends that provident fund is an amount which is collected for onward payment to the beneficiaries, i.e., the employees and therefore, unless the employees are identified, an order for payment of provident fund dues cannot be passed. The learned Advocate contends that there are 21 employees in the establishment of the petitioner with respect to whom provident fund was being deposited regularly. He contends that the establishment had obtained coverage under the Act on its own and accordingly coverage code number is also allotted to the petitioner. The learned Advocate therefore contends that the impugned orders are unsustainable and are liable to be quashed.
8) He has placed reliance on judgment of this Court in the case of Sandeep Dwellers Pvt. Ltd., Nagpur Vs. Union of India, reported in 2006 III CLR 748, of which relevant paragraph is reproduced as follows :-
10. ...However steps taken by authority in relation to identification of workers are not apparent and all requirements in this respect are to be fulfilled before effecting recovery. Expenditure shown as wages in balance sheet has been acted upon without verifying the actual part thereof appropriated towards payment of wages by Employer. The quantification of amount without identifying beneficiaries or any attempt to recover it is therefore unsustainable....
9) Per contra, Mr. Chetan Sawalkar, learned Advocate for the respondent No.1, supports the orders. He contends that the order of assessment is passed by respondent No.1 by placing reliance on the documents provided by the petitioner. He therefore contends that no fault can be found with the impugned order of assessment of provident fund dues. He further states that the petitioner does not dispute the fact that he has not made payment of provident fund dues for the employees engaged by the contractor and also does not contend that the contractor(s) engaged by him had deposited the provident fund dues for the employees engaged by them. The learned advocate contends that the petitioner who is the principal employer is liable to provident fund dues of employees hired through a contractor.
10) As regards identification, the learned advocate contends that the petitioner cannot take advantage of his own wrong to contend that provident fund dues cannot be recovered only because now the employees cannot be identified.
11) Having heard the rival submissions as aforesaid, in my considered opinion, the controversy is squarely covered by the aforesaid decision. Although I am in agreement with the learned Advocate for the respondents that the petitioner will be employer for the employees engaged through the contractor under the EPF Act, 1952, in the absence of identification of the employees, it will not be permissible for the respondent No.1 to recover provident fund dues for such unidentified employees for the petitioner.
12) It will be pertinent to state that the order passed under Section 7-A of the Act also does not refer to any particular employees. It is passed merely on the basis of account entries. It will be pertinent to state that this Court has heard the learned Advocate for the petitioner on 08.01.2026, the matter was not argued at length, however, learned Advocate for the petitioner had stated that the principal contention in the petition pertains to identification of employees.
13) In view of the aforesaid, opportunity was granted to the respondents to place material on record with respect to identification of the beneficiaries/employees. The hearing of petition was accordingly adjourned to 13.01.2026, 21.02.2026 and 22.01.2026. On 22.01.2026, this Court had heard arguments on behalf of the petitioners and the matter was adjourned for
further hearing to 29.01.2026 i.e. today.
14) In fairness, the learned advocate for the respondents states that he is instructed to inform that the records in the office of respondents also do not throw any light on the identification of the employees for whose benefit the order impugned is passed.
15) In view of the aforesaid, the petitioner deserves to be allowed and is accordingly allowed by quashing and setting aside the order dated 04.08.2009 passed by Assistant Provident Fund, Commissioner, Nagpur (respondent No.1) and order dated 18.02.2011 in Appeal (ATA) No.595(9) of 2009 passed by the Employments Provident Fund Tribunal, New Delhi (respondent No.2).
16) Learned Advocate for the petitioner states that amount of Rs.3,00,000/- was deposited by the petitioner with respondent No.1 on 12.10.2009 and further amount of Rs.3,00,000/- is deposited with this Court on 29.04.2013. The said amount be refunded to the petitioner with accrued interest, if any.
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