Deciding body (English)
Type of body
Type of Court (material scope)
Type of jurisdiction
Outcome of the decision
The question that is raised is whether the Petitioner is entitled to a waiver of 10% of the pre-deposit amount that has been directed to be paid by the Central Government Industrial Tribunal based on commercial activities in all sectors that are facing a backlash on account of the COVID-19 pandemic and the preventive shut down of commercial activities. The Court held that the authorities have clearly arrived at a conclusion that there are extenuating circumstances for businesses during the COVID-19 pandemic. Further, the beneficiaries have also not been identified, at this stage. Under these circumstances, without going into the merits of the matter and the various judgments which have been cited by both sides, it is directed that the appeals should be entertained by the concerned authorities.
Facts of the case
The Petitioner’s company had entered into an agreement with one M/s. Microcenter for providing certain employees for working in Bahrain. In respect of the said agreement, an enquiry under Section 7A of the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 was initiated by the Respondents in December 2015 and an interim report was submitted in 2016. Thereafter, a further report was submitted by the Area Enforcement Officer on February 27, 2020. When the said report was received by the Assistant Provident Fund Commissioner (APFC), the same was communicated to the Petitioner on February 27, 2020, and a hearing was set for February 28, 2020. The Petitioner’s establishment wrote an email on February 28, 2020, to the authority seeking an adjournment in the matter. However, the matter was not adjourned. The authority went ahead and computed the liability under Section 7A of the Act as being Rs. 3,58,24,797/-, along with a penalty of Rs. 8500/-, in one matter and Rs. 1,64,69,901/- in the other matter. The Petitioner filed an appeal against said orders and amounts determined under section 7A of the Act, before the CGIT. The CGIT (Central government Industrial Tribunal), vide order dated January 18, 2021, stayed the effect of the orders passed under section 7A of the Act by the APFC, and instead of seeking 75% of pre-deposit under section 7-O of the Act for admission of the appeal, granted a reduction in the pre-deposit, and reduced it to 10% of the assessed amount in light of the financial hardships due to COVID-19 and the subsequent preventive shut down of commercial activities. This order of the CGIT was challenged in the present case.
Measures, actions, remedies claimed
Individual / collective enforcement
Nature of the parties
Type of procedure
Conclusions of the deciding body
On perusal of the orders of the CGIT and APFC the Court held that the CGIT has clearly arrived at a conclusion that there have been extenuating circumstances for businesses during the COVID-19 pandemic. Further, the beneficiaries have also not been identified, at this stage. Under these circumstances, without going into the merits of the matter and the various judgments which have been cited by both the sides, the Court has directed that the Petitioner’s appeals be entertained subject to the deposit of Rs.5,00,000/- before the Registrar of the CGIT in each of the two appeals.
Reasoning of the deciding body
The Court stated that the only question before this Court was whether the CGIT’s order directing 10% pre-deposit can be complained of and that examining the validity of the order under s. 7A falls under the purview of the CGIT and not this Court. It was noted that the CGIT’s finding that the beneficiaries have not been identified is clearly in line with the decisions of the Supreme Court and various High Courts, which have been relied upon by the Petitioner in the present case. If the beneficiaries are not identified, especially in the present case where the beneficiaries, i.e., the employees, were engaged for a contract in Bahrain and may be in Bahrain, the question as to whether the authority’s finding in respect of the liability of the Petitioner would itself be under doubt and would have to be gone into by the CGIT. Further, insofar as financial hardship is concerned, clearly there was a finding by the CGIT that the pandemic is an exceptional circumstance and that commercial activities have taken a big hit during the pandemic. Therefore, both findings clearly show that the requisite conditions for grant of a waiver of the pre-deposit have been satisfied in the present case. Further, the fact that the Petitioner was not provided with reasonable time to furnish a reply in respect of the February 28, 2020 proceedings was untenable. Additionally, citing the Escorts limited case the Court held that apart from financial hardship, the standards of prima facie case and balance of convenience may be considered for granting of a waiver of pre-deposit.
Fundamental Right(s) involved
Fundamental Right(s) instruments (constitutional provisions, international conventions and treaties)
Rights and freedoms specifically identified as (possibly) conflicting with the right to health
- Health v. economic freedoms
- Health v. freedom to conduct a business
General principle applied
Balancing techniques and principles (proportionality, reasonableness, others)
The circumstances permitting the granting of a waiver from depositing the pre-deposit, are not mere financial hardships, but are also a prima facie case, or the balance of convenience in favor of the Petitioner. It is argued that if the balance of convenience is in favor of granting complete waiver of pre-deposit, the same ought to be granted.
W.P.(C) 1882/2021 and W.P. (C) 2990/2021 is to the order of the CGIT permitting waiver of the pre-deposit from 75% to 10%.
(i) O.G. Bajaj Construction v. Assistant Provident Fund Commissioner, Nagpur of the Bombay High Court (2010 LLR 767).
(ii) G4S Facility Services India Pvt. Ltd. v. Regional Provident Fund Commissioner-1 (WP(C) 1390/2018, decided on 8th May 2018).
(iii) Girdhar Silk Mills (P) Ltd. v. Presiding Officer, EPF Appellate Tribunal (2003 ILLJ 255) (iv) JBM Auto System Pvt. Ltd. v. Regional PF Commissioner II(C &R) EPFO (WP(C) 25400/2019, decided on September 9, 2019, Madras High Court) the manner in which the amount liable to be paid, under Section 7A of the Act, has been calculated also shows that there was no identification of the beneficiaries concerned in this case.
Reliance is placed upon various judgments, which have been placed on record, and are as under:
(i) Builders Association of India v. Union of India & Ors., [CC No.8035/2016, decided on May 2, 2016].
(ii) Food Corporation of India v. Provident Fund Commissioner and Ors., (1990) SCC 68.
(iii) Himachal Pradesh State Forest Corporation v. Regional Provident Fund Commissioner, (2008) 5 SCC 756.
(iv) Assistant Provident Fund v. M/s Nand Lal & Company, [LPA No.391/2013, decided on March 28, 2016 (Patna High Court)].
(v) Regional Provident Fund Commissioner v. Ahluwalia Contracts (India) Ltd., [W.P.(C) No.887/2013, decided on August 27, 2019]
On the strength of these judgments, it is argued by Mr. Arora, that if the beneficiaries are not identified at all, demand cannot be raised by the authority and hence, the initial order under Section 7A itself is completely untenable.