Madhya Pradesh High Court
M/S Chimo Agencies (P) Ltd. vs Assistant Provident Fund ... on 9 July, 2025
Author: Vivek Rusia
Bench: Vivek Rusia
NEUTRAL CITATION NO. 2025:MPHC-IND: 17214
1 W.P. No. 12335/2013 & 4 others
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI
ON THE 9th OF JULY, 2025
WRIT PETITION No. 12335 of 2013
M/S CHIMO AGENCIES (P) LTD
Versus
ASSISTANT PROVIDENT FUND COMMISSIONER, SRO
Appearance:
Shri Girish Patwardhan - learned Senior Advocate with Ms. Kirti
Patwardhan, learned counsel for the petitioner.
Shri Pankaj Kumar Jain - Advocate for the respondent.
WITH
WRIT PETITION No. 12341 of 2013
M/S CHIMO AGENCIES (P) LTD
Versus
ASSISTANT PROVIDENT FUND COMMISSIONER, SRO
Appearance:
Shri Girish Patwardhan - learned Senior Advocate with Ms. Kirti
Patwardhan, learned counsel for the petitioner.
Shri Pankaj Kumar Jain - Advocate for the respondent.
WRIT PETITION No. 12345 of 2013
M/S CHIMO AGENCIES (P) LTD
Versus
ASSISTANT PROVIDENT FUND COMMISSIONER, SRO
Signature Not Verified
Signed by: VATAN
SHRIVASTAVA
Signing time: 09-07-2025
18:58:18
NEUTRAL CITATION NO. 2025:MPHC-IND:17214
2 W.P. No. 12335/2013 & 4 others
Appearance:
Shri Girish Patwardhan - learned Senior Advocate with Ms. Kirti
Patwardhan, learned counsel for the petitioner.
Shri Pankaj Kumar Jain - Advocate for the respondent.
WRIT PETITION No. 12349 of 2013
M/S CHIMO AGENCIES (P) LTD
Versus
ASSISTANT PROVIDENT FUND COMMISSIONER, SRO
Appearance:
Shri Girish Patwardhan - learned Senior Advocate with Ms. Kirti
Patwardhan, learned counsel for the petitioner.
Shri Pankaj Kumar Jain - Advocate for the respondent.
WRIT PETITION No. 12351 of 2013
M/S CHIMO AGENCIES (P) LTD.
Versus
ASSISTANT PROVIDENT FUND COMMISSIONER,SRO
Appearance:
Shri Girish Patwardhan - learned Senior Advocate with Ms. Kirti
Patwardhan, learned counsel for the petitioner.
Shri Pankaj Kumar Jain - Advocate for the respondent.
RESERVED ON : 30.06.2025
PRONOUNCED ON : 09.07.2025
--------------------------------------------------------------------------------------------------------------
ORDER
Per: Justice Vivek Rusia
These petitions under Article 227 of the Constitution of India are
filed by the petitioner company calling in question the legality and
propriety of the order dated 30.11.2010 and 12.04.2013 passed by the
Employees Provident Fund Appellate Tribunal, New Delhi under the
NEUTRAL CITATION NO. 2025:MPHC-IND: 17214
provisions of the Employees Provident Funds and Miscellaneous
Provisions Act, 1952 (hereinafter referred to as "the EPF Act, 1952").
2. About the similitude in the controversy involved in these writ
petitions they are being heard analogously and decided by a common
order. For the sake of convenience facts of Writ Petition No. 12335/2013
are taken which are as follows:
3. The facts of the case, in short, are as follows:-
3.1 The petitioner is a Private Limited Company incorporated under
the Companies Act, 1956 having its registered office at Ujjain, Madhya
Pradesh and operating a manufacturing unit under the name of "Rekha
Fashions". The petitioner being an establishment covered under the
provisions of the EPF Act was under an obligation to deposit provident
fund contributions with the Employees Provident Fund Organization
(EPFO).
3.2 The petitioner claims that up to March 2000, there was regularity
in the deposition of statutory contributions with the EPF Organisation.
While the employee's share was deposited until March 2002, the
employer contribution was not deposited beyond March 2000 due to the
closure of operations, mounting losses, inability to recover dues from
exporters and a worker's strike from March to May 2002 This all led the
factory becoming non-operational and ultimately later on resulted in the
closure of the unit.
3.3 The petitioner made several representations to the Provident Fund
Department seeking waiver of interest and penalty, but no effective
relief was granted. During a coercive recovery action conducted on
24.02.2002, the enforcement officers of the EPFO in the presence of a
NEUTRAL CITATION NO. 2025:MPHC-IND:17214
large number of agitated workers compelled the Director of the
company to deposit EPF dues, who under duress had to issue a post-
dated cheque of ₹23,77,808/- despite expressing inability to meet the
demand. This cheque was subsequently dishonored due to insufficient
funds giving rise to proceedings under Section 138 of the Negotiable
Instruments Act, 1881 as well as under Section 406 of the Indian Penal
Code.
3.4 Due to the default in contributions, proceedings were initiated
against the petitioner under Section 7A (1) of the EPF Act, 1952 by the
Regional Provident Fund Commissioner (RPFC), Ujjain and an order
dated 30.10.2003 was passed whereby the liability along with interest
was determined.
3.5 The petitioner challenged this order by way of appeal before the
EPFAT, New Delhi on 28.04.2005 under Section 7-I of the EPF Act,
1952 in ATA Nos. 413(8)/2005 to 417(8)/2005. However, the Tribunal
rejected the application for condonation of delay and dismissed the
appeals by a common order dated 25.05.2005 on the ground of delay
holding that no sufficient reason had been given for delay of 470 days.
3.6 The petitioner filed five separate writ petitions before this court
challenging all the orders of dismissal in W.P. Nos. 3851/2005 to
3855/2005 which were decided by a common order dated 16.10.2006
whereby this court directed that in case the petitioner deposited a sum of
₹5,00,000/- on or before 30.11.2006, the EPF Appellate Tribunal shall
revive and consider the appeals and the stay applications on merits and
shall not dismiss the same on the ground of delay.
3.7 In compliance with the said order, the petitioner deposited
NEUTRAL CITATION NO. 2025:MPHC-IND: 17214
₹5,00,000/- through two demand drafts dated 27.11.2006 and
28.11.2006 and moved an application before the EPFAT seeking revival
of the appeals which was allowed, and the appeals were restored. The
EPFAT sitting at its camp court in Indore heard the matter on merits and
passed a final order dated 30.11.2010 dismissing all the appeals (ATA
No. 413(8)/2005 to ATA No. 417(8)/2005). The Tribunal rejected the
appellant's contentions and upheld the departmental determination of
liability.
3.8 The learned Tribunal held that the applicability of the EPF Act,
1952 was not in dispute that operational or financial hardships did not
justify default and that the appellant failed to produce relevant records
during the inquiry. The tribunal held that the appellant had not complied
with the mandatory pre-deposit requirement under Section 7-O of the
EPF Act, 1952 which barred consideration of the appeal on merits and
held that no ground of interference is made and accordingly the appeal
was dismissed.
3.9 Aggrieved by the dismissal the petitioner filed a review petition
before the EPFAT, New Delhi contending that no notice of listing was
received and that the hearing took place ex-parte as counsel for the
company was not present. It was also contended that despite this court
directions and deposit of the amount the appellate tribunal had wrongly
held that non-compliance with the mandatory pre-deposit under Section
7-O of the EPF Act, 1952 barred any further indulgence and thus no
effective hearing on merits was afforded.
3.10 However the tribunal dismissed the review petition by order dated
12.04.2013 holding that the matter had already been heard in the
NEUTRAL CITATION NO. 2025:MPHC-IND:17214
presence of counsel for both parties and no ground was made out for
recalling the final order. Thus the petitioner has now approached this
court seeking quashment of the final appellate order and the subsequent
review rejection order.
Submission of Petitioner's counsel
4. Shri Girish Patwardhan, learned Senior Counsel appearing for the
petitioner submitted that the impugned orders passed under Section 7A
of the EPF Act, 1952 are vitiated as no opportunity of hearing was
granted and the tribunal proceeded ex parte despite the absence of any
express consent for the camp sitting held at Indore. Learned counsel
submitted that the presence of counsel was wrongly recorded and the
petitioner was thereby denied a fair hearing by the tribunal.
5. Learned counsel for the petitioner further submitted that the
mechanical inclusion of lay-off compensation and incentive payments
within the scope of "basic wages" was done in disregard of the statutory
definition under Section 2(b) and further submitted that lay-off
compensation does not constitute "remuneration" earned under a
contract of employment and hence cannot attract provident fund
liability.
6. Learned counsel further submitted that the establishment had
ceased operations due to which no actual wages were paid and that the
amounts paid post-closure were in the nature of ex gratia relief on which
the contributions are not liable to be made. Learned counsel submitted
that the directors were acquitted in the criminal proceedings initiated
under section 406 of IPC in RT 9034/2010 by First Class Magistrate,
Ujjain decided on 31.07.2015.
NEUTRAL CITATION NO. 2025:MPHC-IND: 17214
7. Learned counsel submitted that substantial amounts were already
deposited in the accounts of employees and the further demand raised by
the 7A order was excessive, arbitrary and made without looking at the
financial difficulties of the company. In support of the above
submission, reliance is placed on the judgment of the Hon'ble Apex
court in the case of The Employees State Insurance Corporation vs.
The Central Press reported in (1977) 2 SCC 581and ESI Corp. vs. C.C.
Santhakumar reported in (2007) 1 SCC 584 and prayed for quashment
of the orders.
Submission of Respondent's counsel
8. Learned counsel appearing for the respondent submitted that the
petitions are misconceived and liable to be dismissed as the impugned
order dated 30.11.2010 was passed by the EPFAT after hearing both
sides and recording findings on merits. Learned counsel submitted that
the petitioner's failure to produce records or demonstrate sufficient cause
for waiver of the pre-deposit under Section 7-O of the EPF Act, 1952.
9. Learned counsel submitted that the order was not challenged
within a reasonable time and that the review application was filed nearly
three years later which was also considered and dismissed on
12.04.2013 with costs of ₹5,000/- on finding that the ground of non-
service of notice was factually incorrect as the petitioners counsel was
present at the time of the hearing.
10. Learned counsel submitted that the present writ petitions also
suffer from unexplained delay and are barred by laches. Learned counsel
submitted that the petitioner had failed to challenge the 30.11.2010 order
within a reasonable period and instead resorted to a belated review
NEUTRAL CITATION NO. 2025:MPHC-IND:17214
which was followed by further delay in filing the writ petitions in 2013.
Learned counsel submitted that such conduct disentitles the petitioner to
any discretionary relief under Article 227 of the Constitution and that
writ jurisdiction cannot be invoked after inordinate and unexplained
delay particularly when no interim protection was ever granted and
statutory dues have remained unpaid for over a decade.
11. Learned counsel further submitted that the petitioner had not
raised the present legal objections including those relating to lay-off
wages or financial incapacity before the Tribunal and thus cannot be
permitted to raise new grounds in supervisory jurisdiction before this
court and thus prayed that these petitions be dismissed.
Our appreciation and conclusion
12. Shri Patwardhan, learned Sr. counsel submitted that as a last
indulgence, this matter be remanded back to the Assistant Provident
Fund Commissioner so that the petitioner can produce all the necessary
documents/ records relating to the wages paid to the employees. We are
unable to accept such a request because the petitioner had a sufficient
opportunity to produce the record first before the Recovery Officer, who
visited the unit on 24.02.2002, thereafter, the petitioner had the
opportunity to appear and produce the entire record before the Assistant
Provident Fund Commissioner in a proceeding initiated under Section 7-
A of the EPF Act. The petitioner paid the cheque of Rs. 23,77,808/- for
the outstanding dues from November 2001 to 2003 but the cheque was
dishonoured and the RPFC initiated the proceedings under Section 138
of the Negotiable Instruments Act, 1881. The PF authority also initiated
NEUTRAL CITATION NO. 2025:MPHC-IND: 17214
coercive measures for recovery by lodging an FIR under Section 406 of
the I.P.C. on 09.05.2003 against the Managing Director and Director of
the petitioner's company, therefore, the petitioner since 2001 avoiding to
discharge the liability under the EPF Act.
13. The petitioner's manufacturing unit was finally closed on
30.09.2003 because according to the petitioner, the management was not
in a position to make the payment of the regular salary and wages to its
workers. Somehow from other sources the fund was arranged, and the
salary was paid for the next few months. Until the closure of the
company is declared under the provisions of the Industrial Disputes Act
by the appropriate government, the employer is liable to pay full salary/
wages to the workmen including the provident fund contribution. The
Assistant Provident Fund Commissioner in its order dated 29.06.2004
has observed that sufficient opportunity has already been given to the
employer but he has failed to appear in the enquiry. The personal
hearing was provided on 05.02.2004. Shri M.M Sethi, Director appeared
and stated that due to financial difficulty, the salary and wages for the
period July, August and September 2003 were not paid and sought time
to make payment thereafter, he stopped appearing. Hence, on the basis
of material available on record, the Assistant Provident Fund
Commissioner passed a final order dated 29.06.2004.
14. The petitioner preferred an appeal before the Appellate Tribunal
and there also no documents were filed like wage register, payment, pay
slips etc. to establish that there are no dues of provident fund. This Court
once remanded this matter back to the Appellate Tribunal the petitioner
failed to avail such a golden opportunity to produce all the material but
NEUTRAL CITATION NO. 2025:MPHC-IND:17214
failed. Therefore, now the petitioner after the expiry of twenty years
cannot pray for remand of this matter to the authority back to decide the
proceedings under Section 7-A again. Even before this Court, the
petitioner has not filed any documents to entertain the petition on merit.
Hence, no case for interference is made out.
15. In view of the above, all these writ petitions are hereby dismissed.
Let a photocopy of this order be kept in the record of connected
writ petitions.
(VIVEK RUSIA) (BINOD KUMAR DWIVEDI)
JUDGE JUDGE
Vatan
