Regional Pf Commssioner By And On Behalf Of Employees Pf Organisation vs M/S Creative Export

$~20
* IN THE HIGH COURT OF DELHI AT NEW DELHI
st
% Date of Decision: 01 September, 2026
# CNR No. DLHC010419662014
+ W.P.(C) 1915/2014
REGIONAL PF COMMSSIONER BY AND ON BEHALF OF
EMPLOYEES PF ORGANISATION .....Petitioner
Through: Mr. Rajesh Kumar, SC with
Mr. Yash Narain, Adv.
versus
M/S CREATIVE EXPORT .....Respondent
Through: Mr. Harvinder Singh, Adv.
CORAM:
HON'BLE MR. JUSTICE AMIT MAHAJAN
AMIT MAHAJAN, J. (Oral)
1. The present writ petition has been filed assailing the Impugned
Orders dated 23.08.2011 passed by the learned Presiding Officer,
Employees' Provident Fund Appellate Tribunal, New Delhi in ATA
No. 814(4)/2009, whereby the Appeal preferred by the
Respondent/establishment against the Original Order dated
03.09.2009 passed under Section 7-A of the Employees' Provident
Funds and Miscellaneous Provisions Act, 1952 (“ the EPFMP Act ”)
was allowed and the Assessment of provident fund dues was set aside.
The Petitioner also assails the subsequent order dated 20.08.2013,
whereby the learned Tribunal directed refund of the pre-deposit made
by the Respondent.
Signature Not Verified
Signed By:HARMINDER
KAUR
Signing Date:02.09.2026
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W.P.(C) 1915/2014 Page 1 of 9

2. Succinctly stated, the Respondent was covered under the
provisions of the EPFMP Act and was allotted PF Code No.
DL/11645. Proceedings under Section 7-A were initiated vide
summons dated 20.10.2008 for determination of statutory dues for the
period from May 2005 to April 2007.
3. Upon consideration of the material on record inter alia the
report of the Enforcement Officer, the Assistant Provident Fund
Commissioner, vide Original Order dated 03.09.2009, determined a
sum of Rs.3,52,492/- as provident fund dues for the period from May
2005 to March 2007.
4. Aggrieved by the said determination, the Respondent preferred
a statutory appeal under Section 7-I of the Act before the EPFAT.
5. A pre-deposit of Rs.1,41,000/- was made by the Respondent
pursuant to the order passed by the learned Tribunal as a condition for
interim protection.
6. Upon hearing the parties, the learned Tribunal, vide Impugned
Order dated 23.08.2011, allowed the appeal and set aside the Original
Order passed under Section 7-A. The learned Tribunal, after
considering the definition of “ basic wages ” under Section 2(b) of the
Act, held that the order under Section 7-A did not record any finding
as to whether the dealing, dyeing and fabrication charges were paid to
employees for carrying out the work. It was further held that payment
of charges to an outside agency for doing the job did not, in itself,
amount to basic wages.
7. Thereafter, vide order dated 20.08.2013, the learned Tribunal,
noting that the Appeal had been decided in favour of the respondent,
Signature Not Verified
Signed By:HARMINDER
KAUR
Signing Date:02.09.2026
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W.P.(C) 1915/2014 Page 2 of 9

directed refund of the pre-deposit amount without interest, subject to
no appeal being preferred.
8. Consequently, the present writ petition has been filed.
9. The principal submission of the Petitioner is that the learned
Tribunal failed to appreciate the scope of Section 2(f) of the Act,
which includes within the definition of “ employee ” a person employed
through a contractor in or in connection with the work of the
establishment. It has been contended that the
Respondent/establishment had engaged various parties for carrying
out dealing, dyeing and fabrication work and, consequently, the
persons engaged by such parties were liable to be treated as
employees for the purposes of the EPFMP Act.
10. It has also been urged that the Respondent had failed to produce
records evidencing compliance in respect of such workers and that the
assessment made under Section 7-A was, therefore, justified.
11. Per contra , learned Counsel appearing for the Respondent-
establishment submits that the writ petition is wholly misconceived
and seeks, in substance, a re-appreciation of the factual material
already considered by the statutory appellate authority.
12. It is submitted that the order dated 03.09.2009 passed under
Section 7-A did not determine that any identified employee of the
respondent had been paid the amounts which were treated as the basis
of the assessment. Rather, the order merely noticed payments made to
various outside parties under the heads of dealing, dyeing and
fabrication charges.
13. It is also contended that the Petitioner is only attempting to
Signature Not Verified
Signed By:HARMINDER
KAUR
Signing Date:02.09.2026
17:24:37
W.P.(C) 1915/2014 Page 3 of 9

establish foundational facts which were never placed before the
learned Tribunal. Petitioner had never challenged the Order dated
23.08.2011 for 2 years and only when the Order for refund has been
passed, the order has been assailed.
14. Having considered the submissions and examined the order
passed under Section 7-A, this Court is unable to find any error in the
approach adopted by the learned Tribunal warranting interference in
exercise of jurisdiction under Articles 226 and 227 of the Constitution
of India.
15. The Original Order dated 03.09.2009 itself records that, during
the course of the proceedings under Section 7-A, the Area
Enforcement Officer examined the books of account and balance sheet
of the Respondent. It was noticed therein that the establishment had
engaged various parties for carrying out work under the heads of
“ Dealing Charges ”, “ Dyeing Charges ” and “ Fabrication Charges ”.
The order proceeds to name several such parties, including M/s Sania
Zari Arts, M/s Shiva Enterprises, M/s Warsi Zari Art, M/s Wazri Art,
M/s Paras Jri Arts and M/s Imtyaz Ahmad, amongst others. The order
further records that the establishment had failed to produce relevant
records regarding provident fund compliance in respect of the workers
allegedly engaged through such parties. The Area Enforcement
Officer also noticed that certain other establishments, namely M/s
Waison Services and M/s Operrose Manpower & Security Services,
were themselves complying with their provident fund obligations
under separate PF codes and recorded that compliance in respect of
those establishments was to be secured through their respective codes.
Signature Not Verified
Signed By:HARMINDER
KAUR
Signing Date:02.09.2026
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W.P.(C) 1915/2014 Page 4 of 9

16. However, as rightly noted by the learned Tribunal, the mere fact
that certain amounts/charges were reflected in the books of account
under the heads of dealing, dyeing and fabrication charges, and that
such amounts were paid to various outside parties, does not by itself
establish that the said amounts constituted “ basic wages ” paid or
payable to employees of the Respondent within the meaning of the
EPFMP Act.
17. The definition of “ basic wages ” contained in Section 2(b) of the
Act proceeds upon the existence of emoluments earned by an
employee in accordance with the terms of his employment and paid or
payable to him in cash. Thus, before an amount can be treated as basic
wages for the purposes of computation of provident fund contribution,
the necessary factual foundation has to exist to establish that the
amount represents wages paid or payable to an employee covered by
the Act.
18. In the present case, the Original Order under Section 7-A does
not record any finding identifying the individual workers in respect of
whom the assessment was made. There is no determination as to
which of the persons engaged in the dealing, dyeing or fabrication
work were employees within the meaning of Section 2(f) of the Act.
Equally, there is no finding determining the wages paid or payable to
any such identified employee. Most importantly, there is no finding
establishing that the amounts paid by the Respondent to the various
outside parties represented, in whole or in part, wages paid or payable
to employees so covered.
19. An amount debited in the books of an establishment as a charge
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Signed By:HARMINDER
KAUR
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paid to an outside party for carrying out a particular job or activity
cannot, without further determination, be equated with wages paid to
an employee. The existence of an expenditure incurred by the
establishment and the existence of wages earned by an employee are
distinct factual concepts. The necessary nexus between the two had to
be established before the expenditure could constitute the basis for
determination of provident fund dues.
20. It is in this context that the reasoning of the learned Tribunal
assumes significance. On that basis, the learned Tribunal concluded
that payment of charges to an outside agency for doing the job could
not, without more, be treated as basic wages.
21. This Court finds no perversity in the aforesaid conclusion. On
the contrary, the finding proceeds directly from the contents of the
Original Order under Section 7-A itself. The learned Tribunal did not
hold that persons engaged through contractors or outside agencies can,
in no circumstances, fall within the definition of “employee” under
Section 2(f). Such a proposition is neither necessary nor discernible
from the order under challenge. The learned Tribunal merely found
that, in the assessment before it, the necessary factual determination
had not been made.
22. The Petitioner has proceeded substantially on the premise that
because the Respondent had incurred expenditure for work connected
with its establishment, the entire expenditure could be treated as
wages of employees for the purposes of the Act. Such a proposition
cannot be accepted without the necessary factual determination.
Further, even where an establishment fails to produce records, the
Signature Not Verified
Signed By:HARMINDER
KAUR
Signing Date:02.09.2026
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W.P.(C) 1915/2014 Page 6 of 9

statutory authority must determine the basis upon which the liability is
being fastened and establish the nexus between the material relied
upon and the statutory liability sought to be imposed.
23. It is equally significant that the Petitioner does not demonstrate
what material, if considered by the learned Tribunal, would have
supplied the missing factual determination. The Petitioner essentially
seeks to rely upon the same material which was before the Section 7-
A authority and requests this Court to draw further factual inferences
from it. Such an exercise would amount to substituting a fresh factual
determination for the determination made by the statutory appellate
authority.
24. More importantly, the jurisdiction of this Court under Articles
226 and 227 is supervisory and not that of a regular appellate court.
This Court is not required to undertake a fresh factual exercise to
ascertain whether persons allegedly engaged through different outside
parties ought to be treated as employees, identify such persons,
determine their wages and thereafter reconstruct the provident fund
liability. Such an exercise would effectively amount to making a fresh
assessment, rather than reviewing the legality of the order passed by
the learned Tribunal.
25. The Petitioner has also relied upon authorities concerning the
applicability of the Act to persons engaged through contractors. There
can be no quarrel with the general proposition that an employee
engaged through a contractor may fall within the ambit of Section
2(f). However, the proposition does not answer the defect identified
by the learned Tribunal in the present case. Reliance placed by the
Signature Not Verified
Signed By:HARMINDER
KAUR
Signing Date:02.09.2026
17:24:37
W.P.(C) 1915/2014 Page 7 of 9

Petitioner upon S.K. Nasiruddin Beedi Merchant Ltd. v. CPFC and
Anr. 2001 2 SCC 612 is also misplaced. The judgment was passed in
an entirely different factual context where beedi workers engaged
through independent contractors for manufacturing beedis. However,
in the present case, the issue before the Tribunal was not whether
contract labour can ever be covered by the Act; it was whether, on the
material placed before the Section 7-A authority, the particular
payments under the head of “ Dealing Charges ”, “ Dyeing Charges ”
and “Fabrication Charges” to the third parties forming the basis of
the assessment had been established to be wages paid or payable to
employees covered by the Act.
26. Though it has also been urged by the Petitioner that the
identification of the workers/employers could have been done
subsequent to the assessment, this Court cannot turn a blind eye to the
significant delay in the institution of the present writ petition. The
substantive Order was passed on 23.08.2011, whereas the present
petition came to be instituted only in or about February 2014. The
subsequent Order dated 20.08.2013 directing refund of the pre-deposit
appears to have preceded the filing of the writ petition. Thus, the
petitioner did not approach this Court with reasonable dispatch against
the substantive order setting aside the Section 7-A assessment. The
Petitioner has not placed on record any satisfactory explanation for
this prolonged inaction. This is not a case where the Petitioner was
unaware of the impugned order, was prevented from obtaining a copy
thereof, or was awaiting adjudication of any issue which remained
pending before the Tribunal. The Department was itself a party to the
Signature Not Verified
Signed By:HARMINDER
KAUR
Signing Date:02.09.2026
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W.P.(C) 1915/2014 Page 8 of 9

proceedings and was therefore fully aware of the decision against it.
The failure to challenge the order for nearly two years is consequently
unexplained.
27. Even though this is a classic case of abuse of process of law by
the Regional Provident Fund Commissioner, which merits imposition
of exemplary cost, however, this Court is refraining from imposing
cost on the request made by Mr. Rajesh Kumar, learned Standing
Counsel.
28. In the circumstances, this Court finds no ground to interfere
with the Orders dated 23.08.2011 and 20.08.2013 passed by the
learned Tribunal.
29. The writ petition is accordingly dismissed. The pending
applications, if any, also stand disposed of.
AMIT MAHAJAN, J
SEPTEMBER 1, 2026
“SS”
Signature Not Verified
Signed By:HARMINDER
KAUR
Signing Date:02.09.2026
17:24:37
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