Newton Engineering And Chemical Ltd vs Regional Provident Fund Commissioner
2025 Latest Caselaw 6243 Guj

Gujarat High Court

Newton Engineering And Chemical Ltd vs Regional Provident Fund Commissioner on 2 September, 2025

                                                                                                          NEUTRAL CITATION




                            C/SCA/22172/2022                              JUDGMENT DATED: 02/09/2025

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                                     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                      R/SPECIAL CIVIL APPLICATION NO. 22172 of 2022


                       FOR APPROVAL AND SIGNATURE:


                       HONOURABLE MRS. JUSTICE M. K. THAKKER

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                                    Approved for Reporting               Yes          No
                                                                                      NO
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                                         NEWTON ENGINEERING AND CHEMICAL LTD.
                                                         Versus
                                         REGIONAL PROVIDENT FUND COMMISSIONER
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                       Appearance:
                       MR. RISHIN R PATEL(7222) for the Petitioner(s) No. 1
                       MR AV NAIR(5602) for the Respondent(s) No. 1
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                          CORAM:HONOURABLE MRS. JUSTICE M. K. THAKKER

                                                     Date : 02/09/2025

                                                    ORAL JUDGMENT

1. Rule, returnable forthwith. Learned advocate Mr.Nair waives service of notice of Rule on behalf of the respondent.

2. This petition, under Articles 226 and 227 of the Constitution of India, is directed against the order dated 16.09.2022 passed by the learned Presiding Officer, Central Government Industrial Tribunal-cum- Labour Court (hereinafter referred to as "the CGIT"),

NEUTRAL CITATION

C/SCA/22172/2022 JUDGMENT DATED: 02/09/2025

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whereby the present petitioner-company has been directed to deposit 50% of the amount assessed by the authority under Section 7-O of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as "the EPF Act").

3. It is the case of the present petitioner that an inquiry under Section 7A of the EPF Act was initiated for the period from December 2011 to July 2012 by issuance of summons dated 11.10.2012. The said inquiry remained pending on various dates between 2012 and 2020, and ultimately culminated in an order dated 31.01.2021 under Section 7A of the EPF Act, whereby additional provident fund dues of ₹21,07,087/- were determined for the aforesaid period. Challenging the said order, the petitioner preferred an appeal under Section 7I of the EPF Act, which came to be registered as Appeal (CGIT) No.5 of 2021, accompanied by an application under Section 7(O) of the EPF Act seeking waiver of the precondition of depositing 75% of the assessed amount for maintainability of the appeal before the EPF Appellate Tribunal. The learned CGIT, by order dated 16.09.2021, directed the petitioner to deposit 50% of the assessed amount, which order is the subject matter of challenge in the present petition.

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4. Heard the learned advocate Mr.Rishin Patel for the petitioner and learned advocate Mr.A.V.Nair for the respondent.

5. Learned advocate Mr. Patel for the petitioner submits that, on account of the COVID-19 pandemic, the petitioner company is facing acute financial constraints and has been incurring continuous losses, as substantiated by the statement of profit and loss for the period ending on 31.03.2022. It is further submitted by the learned advocate Mr. Patel that the Bank of Baroda has issued a possession notice attaching the immovable properties of the petitioner company, thereby aggravating its financial difficulties. In these circumstances, the petitioner had moved an application before the learned CGIT-cum- Labour Court seeking waiver of the condition of pre- deposite. Learned advocate Mr. Patel further submits that, pursuant to the interim order passed by this Court, 25% of the assessed amount has already been deposited before the Registry of the learned Tribunal, and if such interim arrangement is affirmed, the ends of justice would be met.

6. Per contra, learned advocate Mr. Nair submits that unless and until the petitioner demonstrates that the order under challenge is ex facie illegal or without

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jurisdiction, or establishes either that no liability is attracted or that there exists a complete incapacity to discharge the statutory dues, the learned Court cannot exercise discretion under Section 7O of the EPF Act to waive or substantially reduce the pre- deposit requirement. By placing reliance upon the decision of the Bombay High Court in O.G. Bajaj Construction v. Assistant Provident Fund Commissioner, Nagpur, learned advocate Mr. Nair contends that the learned CGIT has rightly directed the petitioner to deposit 50% of the assessed amount. It is, therefore, urged by the learned advocate Mr. Nair that the impugned order is just and proper and does not warrant any interference by this Court.

7. Having considered the arguments advanced by the learned advocates for the respective parties and upon perusal of the record, it emerges that while directing the petitioner to deposit 50% of the assessed amount, the learned CGIT has not recorded any cogent reasons to arrive at such conclusion. The specific submission made before the learned CGIT was that due to the adverse impact of the COVID-19 pandemic, the petitioner-establishment had suffered heavy financial losses and was therefore unable to comply with the condition of pre-deposit. Such

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contention stood substantiated through documentary evidence in the form of the statement of profit and loss account as well as the possession notice issued by the Bank of Baroda. The non-speaking order passed by the learned CGIT has not been challenged by the respondent-authority before this Court. Reliance has been placed by learned advocate Mr. Patel for the petitioner upon the decision of the Bombay High Court in the case of O.G. Bajaj Construction (supra), wherein it has been held that unless and until the petitioner satisfies the three conditions mentioned in paragraph 17 of the said judgment, the power under Section 7O of the EPF Act cannot be exercised. At this stage, paragraph 17 of the said judgment is reproduced hereinbelow:

"17. Any party claiming waiver of prior deposit has to show:

(1) That the order under appeal is patently illegal or without jurisdiction.

(2) No liability whatsoever is attracted. (3) Even if liability is attracted, on facts, the appellant has no capacity or resource and liquidity of paying the dues so claimed."

8. This Court is of the view that since the learned CGIT has not recorded any reasons while arriving at the conclusion that 50% of the assessed amount is

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required to be deposited, and further as the said order has not been challenged by the respondent- authority, in the considered opinion of this Court, the deposit of 25% of the amount already made by the petitioner pursuant to the interim order dated 15.11.2022 would meet the ends of justice. Accordingly, the impugned order deserves to be modified to that extent.

9. Resultantly, this petition is partly allowed. The order passed by the learned CGIT, Ahmedabad dated 16.09.2022 directing the petitioner to deposit 50% of the assessed amount is hereby modified to the extent that the petitioner shall deposit only 25% of the assessed amount. The remaining part of the order shall remain unaltered. The Registry is directed to return the original receipt produced by the petitioner with regard to the deposit of 25% of the amount. Rule is made absolute to the aforesaid extent.

(M. K. THAKKER,J) M.M.MIRZA