Bombay High Court
Abbott Healthcare Pvt Ltd vs The Regional Provident Fun ... on 10 November, 2025
Author: Milind N. Jadhav
Bench: Milind N. Jadhav
2025:BHC-AS:47620
WP.7497.2025.doc
Ajay
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 7497 OF 2025
Abbot Healthcare Pvt. Ltd. .. Petitioner
Versus
The Regional Provident Fund Commissioner (I) .. Respondent
....................
Mr. Manoj Gujar a/w Mr. Pradeep Kumar i/b C.R. Naidu & Co.,
Advocate for Petitioner.
Ms. Payoja Gandhi a/w Ms. Devangi Manjrekar, Advocate for
Respondent.
....................
CORAM : MILIND N. JADHAV, J.
DATE : NOVEMBER 10, 2025.
P.C.:
1. Heard Mr. Gujar, learned Advocate for Petitioner and Ms.
Gandhi, learned Advocate for Respondent.
2. Present Petition is filed challenging impugned Orders dated
07.05.2025, 20.05.2025 and 05.06.2025 passed by Regional Provident
Fund Commissioner - I, Thane in Diary No. 35 Of 2021. Impugned
Orders are appended at Exhibit 'A' page 26, Exhibit 'A-1' page 45 and
Exhibit 'V' page 170 respectively in Petition.
3. Briefly stated, Petitioner is Private Limited Company
incorporated under Company Act, 1956 and registered with Registrar
of Companies. Respondent is Regional Provident Fund Commissioner -
I, Thane administering provisions of Employees Provident Fund and
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Miscellaneous Provisions Act, 1952 (for short "EPF Act,1952"). In
2010, four employees of Petitioner - Company filed complaint with
Enforcement Officer (for short "EO") attached to Respondent's Office
and on 17.12.2020, EO visited Petitioner's offices and met two of
Petitioner's officers who gave him inspection of various documents as
per request. On 14.01.2021, Petitioner dispatched Form 3A in respect
of aggrieved employees for the periods of March 2016 - April 2019.
3.1. On 08.02.2021, EO once again visited Petitioner's offices and
requested for salary / wage register for all employees for period of
April 2016 to March 2019 as well as Ledgers pertaining to salary,
wages, bonus, staff welfare expenses, advertising, publicity and sales
promotion, freight and forwarding charges and Miscellaneous expenses
for the period April 2016 to January 2021 which was dispatched by
Petitioner on 05.03.2021. On 11.03.2021, Respondent forwarded
report of EO and requested for explanation with supporting
documents.
3.2. On 01.04.2021, Respondent initiated proceedings under
Section 7A of EPF Act, 1952 bearing Diary No. 35 of 2021 and issued
summons to Petitioner. On 08.04.2021, Petitioner submitted
aforementioned explanation with relevant documents. During
pendency of proceedings, Petitioner filed Miscellaneous Applications
being (i) Misc. Application No. 1 of 2022 praying for speaking order to
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be passed, (ii) Misc. Application No. 2 of 2022 praying for finding that
Petitioner produced all relevant records and documents, (iii) Misc.
Application No.3 of 2022 seeking order stating that no contributions
are due and payable with respect to workmen and office staff. On
28.12.2022, EO filed Deposition Statement however since the matter
did not proceed further, on 20.02.2023, Petitioner filed Misc.
Application No.6 of 2023 seeking permission to cross examine EO
which was followed by another Miscellaneous Application filed on
25.04.2023 being Misc. Application No. 7 of 2023 seeking same relief.
3.3. On 02.05.2024, Respondent heard aforesaid Miscellaneous
Applications and passed Order dated 04.10.2024 allowing
Miscellaneous Application Nos. 1 to 5. On 16.05.2025, Petitioner
received email from Respondent stating that hearing was fixed later in
the afternoon on same date hence Respondent requested for an
adjournment which was granted and hearing was fixed on 20.05.2025.
On 20.05.2025, during hearing, Petitioner informed Respondent that
order on Miscellaneous Application Nos.6 and 7 was pending when
Respondent stated that Order was passed on 07.05.2025 dismissing
both Miscellaneous Applications. Petitioner requested for a copy of
Order dated 07.05.2025 as they were unaware of the same and
Respondent directed his Office to provide the same to Petitioner on
20.05.2025 however when Petitioner sought adjournment to peruse
and challenge the same, his request was denied and Respondent
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disposed of the proceedings on that day itself. On 05.06.2025,
Respondent passed final Order and held that Petitioner was to pay
Rs.6,04,67,266/- is Provident Fund dues. Being aggrieved by twin
Orders dated 07.05.2025 and 05.06.2025, Petitioner filed present
Petition.
4. Mr. Gujar, learned Advocate for Petitioner would submit
Respondent has not only abused the due process of law but also shown
blatant disregard for the principles of natural justice by not affording
Petitioner a chance to cross examine EO. He would submit that
impugned Orders are bad in law, passed without application of mind,
non est and deserve to be set aside. He would submit that, Petitioner is
entitled to cross examine EO basis his report, Deposition Statement
and other documents that he relied upon in order to bring about a fair
and just determination of the matter. He would submit that
Respondent acted with undue haste and in violation of settled
principles of law by passing final Order dated 05.06.2025 which
manifested injustice and procedural irregularities.
4.1. He would submit that Respondent solely relied upon EO's
Deposition Statement and Inspection Report to determine amount of
Rs.6,04,67,266/-. He would submit that when dues are determined
basis report or deposition of any Officer then, Petitioner can test
veracity and methodology of such report in cross examination. He
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would submit that denial of right to cross examine any witness or
person would lead to serious defects in determination of present case.
He would submit that depriving of any party their right of cross
examination is an absolute violation of the principles of natural justice
and denial of substantive right to to cross examine witness in quasi
judicial enquiries.
4.2. He would submit that, EO wrongly quantified Provident
Fund dues by using arbitrary and illegal quantification metric which
led to his calculation running contrary to definition of "Basic Wages"
under EPF Act, 1952. He would submit that EO derived wages of
employees by adding various allowances including Special Allowance,
Other allowances, Medical Allowances and Education allowances to
basic wages and dearness allowances hence such computation is wrong
and deserves to be reversed. He would submit that Petitioner paid
Special Allowances to certain employees to defray expenses which
arise due to nature of their duties. He would submit that Medical and
Education expenses were mere reimbursement of expenses and
allowances that are contingent, variable or linked to reimbursement do
not fall under the definition of "Basic Wages" as enumerated under EPF
Act, 1952. He would submit that findings in EO's reports were contrary
to Employees Provident Fund Organization Circular dated 16.05.1964
which clearly states that "Special Allowances" do not fall into the
definition of "Basic Wages" to determine.
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4.3. He would submit that during hearing on 20.05.2025,
Petitioner sought adjournment to merely peruse Order dated
07.05.2025 and appeal the same however Respondent did not consider
this submission and disposed of the matter without even affording
opportunity to Petitioner to prepare final arguments or orally argue
their case hence final Order dated 05.06.2025 was passed with
necessary haste in violation to established procedure of law. He would
submit that Respondent did not consider prejudice caused to Petitioner
by denying right of cross examination, presentation of final arguments
and appeal of Order dated 07.05.2025 and blindly passed final Order
dated 07.05.2025 without proper hearing to adjudicate the case. He
would submit that even quasi - judicial officers are bound by principles
of natural justice and by Civil Procedure Code, 1908 hence reasonable
opportunity ought to have been given to Petitioner to examine witness
produced by Respondent and failure to allow cross examination of
Respondent's witness would vitiate entire proceedings. He would urge
me to allow present Petition, quash Orders dated 07.05.2025,
20.05.2025 and 05.06.2025, direct Respondent to allow Petitioner to
cross examine EO and pass appropriate order after hearing Petitioner.
4.4. In support of his above submissions he has referred to and
relied upon the following decisions of the Supreme Court and this
Court to contend that the impugned jdugement decserved to be upheld
in view of the ratio in the following cases:-
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(i) Food Corporation of India V/s. Provident Fund
Commission of India1 and
(ii) Sarah Exim Private Limited V/s. The Assistant Provident
Fund Commissioner2
5. Ms. Payoja Gandhi, learned Advocate appearing for
Respondent would submit that impugned Orders are correct, in
accordance with principles of natural justice, tenable in law and
deserve to be upheld. She would submit that Respondent duly followed
principles of natural justice while adjudicating impugned proceeding
and impugned orders were passed after duly considering all documents
submitted by Petitioner as well as oral evidence given by both parties.
She would submit that Respondent afforded numerous opportunities to
Petitioner to file documents and present oral arguments and that
proceedings have extended over four years hence Respondent disposed
of proceedings expeditiously by delivering well reasoned speaking
orders after due consideration of all material on record. She would
submit that impugned proceeding was pending for over a period of 4
years due to repeated and numerous adjournments sought by
Petitioner and hence Respondent passed the impugned Orders dated
07.05.2025 and 05.06.205 expeditiously and the same cannot be
equated with haste as claimed by Petitioner.
1 (1990) 1 SCC 68
2 Writ Petition (St.)No. 97150 of 2020 decided on 13.01.2021
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5.1. She would submit that Respondent exercised due precaution
and concluded the proceedings only after all documents, submissions
and applications were filed by Petitioner and the same were duly
considered while passing the impugned orders. Hence proceedings in
Diary No. 35/2021 was disposed of only after careful consideration of
all material on record and expeditiously with regard to interest of
workmen and employees so that they do no suffer for a prolonged
period of time. She would submit that during hearing on 20.05.2025,
Respondent did not grant adjournment to Petitioner on the ground
that no new or substantive evidence was to be introduced to decide the
matter, hence to prevent further delay in determination of dues and
since impugned proceedings were pending for last four years, it would
the defeat purpose of the EPF Act, Respondent disposed of the
proceedings and passed final order dated 05.06.2025.
5.2. She would submit that Petitioner cannot seek cross
examination of the EO as he was not examined as witness in the
proceedings by the department and that prior to passing Order dated
07.05.2025, EO had already left his position and hence he is exempted
from cross examination. She would submit that Deposition Statement
submitted by EO is a matter of legal right and procedure in
proceedings under Section 7A of EPF Act, 1952. She would submit that
EO only filed his Deposition Statement and was not examined by
Respondent, hence he cannot be cross-examined by Petitioner and his
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Deposition Statement cannot be equated to an Affidavit-in-lieu of
Examination-in-chief. She would submit that EO's duties were merely
to peruse the documents submitted to him by the establishment and
submit report computing total amount payable by the establishment,
hence his role is limited to a functionary to analyse record and thus EO
cannot be subjected to cross examination under Section 142 and 143
of the Bharatiya Sakshya Adhiniyam, 2023. She would submit that
when EO is neither a jurisdictional inspector nor authorized
representative of the department after his transfer, he cannot be called
for cross examination even if he / she was a witness in the
proceedings. She would submit that EO cannot represent the
department in a case post his transfer or superannuation.
5.3. She would submit that Petitioner illegally bifurcated
employees' salaries into various allowances such as Special Allowance,
Medical Allowances, Education allowances and other allowances in
order to reduce liability towards Employees' Provident Fund. She
would submit Petitioner only made contribution towards Employees'
Provident Fund from basic wages and for some employees deductions
were on amount less than statutory wage limit of Rs.15,000/- despite
their gross wages being more than the statutory limit. She would
submit that Respondent assessed outstanding provident fund payable
to Petitioner by restricting salaries up to statutory limit of Rs.15,000/-
per month by taking basic wages, dearness allowances, special
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allowance, other allowance, medical allowance and education
allowances into consideration for calculation as components of basic
salary, hence Respondent issued Show Cause Notice and summons to
Petitioner in order to determine contribution payable on total salary
including allowances. She would submit that salary and allowances
paid to unionized employees are fixed on the principle of "industry -
cum region" however such principle is irrelevant to determine
Provident Fund dues.
5.4. She would submit that Petitioner ought to have deducted
Provident Fund on the basis all allowances paid to employees and not
only on the basis of basic wages. She would submit that, basis
Petitioner's reply, Respondent directed fresh calculation of Provident
Fund dues payable where certain allowances such as field allowance,
travel allowance, conveyance and sales incentive and miscellaneous
allowances which were not paid to all employees and hence fresh
calculation of dues payable amounted to Rs.6,04,67,266/- for the
period March 2017 to February 2019.
5.5. She would submit that despite Respondent's requests,
Petitioner failed to provide copies of salary and wage sheets to
Respondent which hampered exact quantification of dues, hence Show
Cause Notice dated 11.03.2021 was issued to Petitioner. She would
submit that Petitioner failed to substantially explain why contribution
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was paid only on the basis of basic salary excluding the various
allowances and since Petitioner did not provide any satisfactory
response thereto, Respondent was constrained to issue Show Cause
Notice dated 01.04.2021 to Petitioner and initiate proceedings under
Section 7A EPF Act, 1952.
5.6. She would submit that circulars dated 15.05.1964,
28.08.2019 and 14.02.2020 circulars are mere administrative
guidelines to facilitate working of Employees Provident Fund
Corporation and cannot dilute provisions of EPF Act 1952 and
established principles of law. She would submit that it is trite law that
any and all allowances which are paid to employees form a part of
basic wages to determine provident fund contribution. She would urge
me to dismiss present Petition and uphold impugned Orders dated
07.05.2025, 20.05.2025 and 06.06.2025.
5.7. In support of her above submissions she has referred to and
relied upon the following decisions of the Supreme Court and this
Court to contend that the impugned Orders deserved to be dismissed
in view of the ratio in the following cases:-
(i) Associated Cement Co. Ltd. V/s. Keshavanand 3
(ii) Management of Reynolds Pens India Private
Limited V/s The Regional Provident Fund
Commissioner - II and Ors.4
3 AIR 1998 SC 596
4 Writ Petition No. 15823 of 2010 decided on 06.06.2011
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(iii) West Bengal V/s. Vivekananda Vidya Mandir and
Others.5
6. I have heard Mr. Gujar learned Advocate for Petitioner and
Ms. Gandhi, learned Advocate for Respondent and with their able
assistance perused the record of the case. Submissions made by
learned Advocates at the bar have received due consideration of the
Court.
7. At the outset, controversy raised in present Petition is
whether cross examination of EO of Employees Provident Fund
Organization ought to be conducted in quasi - judicial proceedings
under EPF Act,1952? Admittedly, Petitioner registered itself with
Employees Provident Fund Organization and regularly contributes
portion of employees salary towards Provident Fund. It is seen that on
the basis of complaints filed by four employees of Petitioner,
Employees Provident Fund Organization, Thane South (for short
"Department") deputed EO to investigate complaints, collect
documentary evidence, prepare report and submit the same to
Department in order to determine if Petitioner failed in its statutory
duty to contribute appropriate amount of Provident Fund.
8. It is seen that EO collected relevant documentary evidence from
Petitioner with Petitioner's co-operation and submitted his report
5 Civil Appeal Nos. 6221 of 2011, 3954-34966 of 2013 decided on 28.02.2019
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concluding that Petitioner was in default of Provident Fund dues
amounting to Rs.6,064,67,266/- and Petitioner was asked to explain
the same. It is seen that Petitioner forwarded its explanation to
Respondent after one month however in the interregnum, Respondent
issued summons to Petitioner and initiated proceedings under Section
7A of EPF Act, 1952 against Petitioner bearing Diary Number 35 of
2021. It is seen that during course of proceedings Petitioner filed
various Miscellaneous Applications seeking direction to Respondent to
decided the matter expeditiously and pending those Applications, EO
filed his Deposition Statement in support of his report. It is seen that
Petitioner filed reply to Deposition Statement reiterating its position
that it has not bifurcated basic wages into allowances with a view to
reduce contributions to Provident Fund and Petitioner filed another
Miscellaneous Application seeking cross examination of EO on the
basis of his Deposition Statement. It is seen that the same was
dismissed on 07.05.2025, however copy of aforementioned order was
not served upon Petitioner therefore leaving them in the dark and had
EO served copy of aforementioned order upon Petitioner they may
have taken appropriate steps in law to challenge the same.
9. It is seen that, during hearing on 20.05.2025, Respondent
forthwith provided Petitioner a copy of Order dated 07.05.2025 to
which Petitioner sought adjournment to peruse and challenge the
same. However in complete disregard of principles of natural justice
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Respondent denied Petitioner's request and disposed of proceedings in
Diary No.35 of 2021 without affording opportunity to Petitioner to
present final arguments in support of its case hence Respondent's
actions are, prima facie in the above admitted facts, arbitrary in nature
and violative of principles of natural justice by not affording Petitioner
opportunity to cross examine EO and neither affording them an
opportunity to present final arguments. While it is true that material
and documents filed by Petitioner and EO were available on record to
decide proceedings, Respondent ought to have given one final
opportunity to Petitioner to cross examine EO basis report and
Deposition Statement and in that regard, there is nothing in the EPF
Act, 1952 which exempts EO from cross examination on the ground
that he is merely a department functionary.
10. It is seen that duties of EO are to investigate possible
defaults of employers, request and examine documents and submit
report as to whether employer was in default along with amount and
that there is no provision in EPF Act, 1952 that exempts EO from cross
examination in respect of his report as well as Deposition Statement. If
Respondent wished to dispose of impugned proceedings expeditiously
then he ought to have afforded one opportunity to Petitioner to
advance final arguments which would undoubtedly assist Respondent
in adjudicating the proceedings. It is seen that during hearing on
20.05.2025, Respondent absolutely denied Petitioner opportunity to
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peruse and consider Order dated 07.05.2025 despite receipt of the
same on that day itself, advance final arguments and also passed final
Order dated 05.06.2025 despite Petitioner expressing intention to
challenge the Order dated 07.05.2025. Hence actions of Respondent
are highly arbitrary, illegal and not in line with established practice
and deserve to be nipped in the bud.
11. In this regard, I would like to quote paragraph no.9 of a
decision of the Supreme Court in the case of Food Corporation of India
V/s Provident Fund Commissioner and Others (Supra) decided on
26.10.1989 and relied upon by Mr. Gujar wherein it was held that
Commissioner ought to oblige the party who summons evidence from
other party. The paragraph reads as under:-
9. It will be seen from the above provisions that the
Commissioner is authorised to enforce attendance in
person and also to examine any person on oath. He has
the power requiring the discovery and production of
documents. This power was given to the Commissioner to
decide not abstract questions of law, but only to
determine actual concrete differences in payment of
contribution and other dues by identifying the workmen.
The Commissioner should exercise all his powers to collect
all evidence and collate all material before coming to
proper conclusion. That is the legal duty of the
Commissioner. It would be failure to exercise the
jurisdiction particularly when a party to the proceedings
requests for summoning evidence from a particular
person."
12. The words of the Supreme Court need reiteration in the
present matter and in the facts of the present case viz; that
Commissioner i.e. Respondent in the present case possesses power to
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receive and examine witnesses and issue commissions to record
examination of witnesses. It is seen that as per Section 7A of EPF Act,
1952 Respondent is bestowed with powers of Court under Civil
Procedure Code, 1908 and as per aforementioned judgment, non
exercise of such powers would lead to failure to exercise jurisdiction
and therefore it would be a failure to perform his legal duty under EPF
Act, 1952. Hence in the present case, Respondent ought to have
allowed Miscellaneous Application No. 6 and directed EO to file his
Affidavit of Chief Examination or treat his Deposition Statement as
Affidavit of Chief Examination and allow Petitioner to cross examine
him on the same. It is seen that Respondent passed final Order dated
05.06.2025 without directing either party to file their evidence hence
he ignored the vital stage of trial despite being possessed of powers to
receive evidence and appointing commissioner to record examination
of witnesses. It is seen that in Order dated 07.05.2025, Respondent
recorded a finding that EO left his role and hence cannot be examined
however it is seen that Respondent is also possessed with power to
enforce attendance of any person on oath hence although EO in
present matter has left his position, Respondent has power to enforce
his attendance and examine him on oath. Therefore I cannot accept the
submission of Ms. Gandhi with regards to EO being exempt from cross
examination as he has left his position and even if that is the case then
Employees Provident Fund Organization ought to have appointed
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another suitable officer in his place to prepare a fresh report and then
depose in proceedings in Diary No.35 of 2021. Hence Respondent
failed to exercise jurisdiction and failed to perform his legal duty.
13. Next, it is seen that, as per findings in Order dated
07.05.2025, EO left his role before he was examined as witness nor did
he admit to any facts to his personal knowledge and in this regard he
cannot be examined as witness as it would be practically difficult to
ensure his attendance. I cannot accept this finding nor submission of
Ms. Gandhi to this effect as if EO who investigated Petitioner's alleged
default left his role before filing his Affidavit of Chief Examination or
before being examined as a witness, then it is the Employee Provident
Fund Organization's duty to appoint another suitable officer to espouse
its case before Respondent against Petitioner and authorize such officer
to depose to facts and evidence in impugned proceedings in Diary
No.35 of 2021 before Respondent after preparing a fresh report.
14. It is seen from findings in Order dated 20.05.2025,
Respondent has stated that 63 hearings took place in impugned
proceedings in Diary No.35 of 2021 spanning over 4 years hence in the
interest of workers, he decided to conclude impugned proceedings and
pass final Order dated 05.06.2025. In this regard I would like to quote
paragraph No.4 from an Order passed by this Court (Coram: M.S.
Karnik, J.) in the case of Sarah Exim Private Limited V/s. The Assistant
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Provident Fund Commissioner (supra) wherein even if proceedings
were unduly delayed, Petitioner must be given opportunity to cross
examine the EO. The paragraph is reproduced as under:-
"4. In my opinion, it cannot be said that the proceedings are
so unduly delayed that even an opportunity of cross-
examination cannot be given to the Petitioner. The report dated
17.03.2020 was served on the Petitioner only on 28.10.2020. In
these circumstances, in the interest of justice with a view to
give one opportunity to the Respondent to cross-examine the
Enforcement Officers/Department Representative, the Petition
deserves to be allowed. The impugned order is set aside"
15. Hence it is seen that notwithstanding delay or extension
proceedings, right of cross examination is of absolute importance and
Respondent cannot turn a blind eye to it. In the present case, although
proceedings may have extended over a period of 4 years, that cannot
defeat a party's right to cross examine witnesses, advance final
arguments and prevent proper perusal of Orders passed. It is seen that
Respondent in present case rushed through impugned proceedings
with undue haste and passed final Order dated 05.06.2025 which is
arbitrary, perverse and cannot be sustained.
16. In the aforementioned circumstances, nothing can be held
against Petitioner in present case on the basis of the above facts. Thus
impugned Orders dated 07.05.2025, 20.05.2025 and 05.06.2025 suffer
from serious infirmity, bordering on complete arbitrariness, illegality,
and are therefore not sustainable in law and are therefore quashed and
deserve to be set aside.
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17. If the EO who has filed the Deposition Statement is not
available, the EPFO, Thane (South) shall be at liberty to file fresh EO
Report by appointing a new EO and following all principles of natural
justice and only after hearing the Petitioner shall pass appropriate
order assigning liability, if any, upon the Petitioner. If the new EO files
any Deposition Statement, Petitioner shall be allowed to cross-examine
him. All material relied upon by the EO in his Deposition Statement /
Report to determine liability of Petitioner shall be given to Petitioner
before giving hearing to Petitioner. Respondent shall decide Diary
No.35 of 2021 in accordance with law with due regard to principles of
natural justice. Let the aforesaid exercise be completed within a period
of six months from today.
18. In view of my above observations and findings, impugned
orders dated 07.05.2025, 20.05.2025 and 05.06.2025 are quashed
and set aside. Resultantly, present Petition succeeds.
19. Writ Petition stands allowed in terms of prayer clauses (a)
and (b).
20. Writ Petition is allowed and disposed in the above terms.
[ MILIND N. JADHAV, J. ]
Ajay
AJAY AJAY TRAMBAK
TRAMBAK UGALMUGALE
UGALMUGALE Date: 2025.11.10
18:16:54 +0530
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