National Textile Corporation Ltd. (Unit Burhanpur Tapti Mill) vs Regional Commissioner Employee Provident Fund Organization

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IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE

BEFORE
HON'BLE SHRI JUSTICE MILIND RAMESH PHADKE
nd
ON THE 2 OF SEPTEMBER, 2026
WRIT PETITION No. 41767 of 2025
NATIONAL TEXTILE CORPORATION LTD. (UNIT BURHANPUR
TAPTI MILL)
Versus
REGIONAL COMMISSIONER EMPLOYEE PROVIDENT FUND
ORGANIZATION AND OTHERS
Appearance:
Shri Manoj Manav - Advocate for the petitioner/Corporation.
Ms. Darshana Baghel - Advocate for the respondents.
Shri Pradhuman Malpani - Panel Lawyer for the respondent/State.
ORDER
The instant petition under Article 226 of the Constitution of India is
directed against an order dated 08.09.2025 for demand under Section 7Q of
the Employees' Provident Funds and Miscellaneous Provisions Act, 1952
(hereinafter referred to as the 'Act of 1952') for an amount of Rs. 61,93,023/-
towards late payment of the dues payable under the Employees' Provident
Fund Scheme, 1952; Family Pension Scheme, 1971; Employees' Pension
Scheme 1995 and; Employees Deposit Linked Insurance Scheme, 1976 for
the period from 01.10.2023 to 13.06.2024.
2. The short facts for adjudication of the present controversy are that
the present petitioner is a company duly incorporated under the provisions of
the Companies Act, 1956 and is a Government of India Undertaking in
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which Central Government is having 99.76% share. The operations of the

petitioner/Corporation got affected during the nationwide lockdown on
account of outbreak of Covid 19 Pandemic from 25.03.2020 as a result the
production activities became unoperational creating significant financial loss
to the Corporation. Due to imposition of lockdown, the work of the
Corporation was put under suspension from 25.03.2020 as per the guidelines
issued by the Ministry of Home Affairs which was extended from time to
time by the Government based on the pandemic conditions due to which the
petitioner/Corporation was unable to generate funds and during the said
period 50% wages as financial support was paid to the workers.
3. On 25.06.2025, summons were issued by the respondent to the
petitioner directing it to deposit an amount of Rs. 61,93,023/- towards
interest under Section 7Q and Rs. 1,28,42,589/- towards damages under
Section 14B of the Act of 1952 for alleged delayed remittance of employees
provident fund contributions for the period from June, 2020 till March,
2024. In compliance of the aforesaid summons, petitioner appeared before
the authority on 07.07.2025 and submitted a written application requesting
for waiver of interest and damages imposed on delayed provident fund
contribution. In the said application, it was specifically averred that due to
nationwide lock down imposed on account of Covid 19 Pandemic, the mill of
the Corporation remained completely non-operational due to which the
statutory obligations of depositing the remittances of employees' provident
fund contribution could not be meted out. By way of reply, it was also
brought to the notice of the authorities that the petitioner has continued to
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provide 50% salary to its workers by selling its assets for the period of

operational shut down but without considering the said reply and ignoring the
factual circumstances, the impugned order dated 08.09.2025 was passed in a
mechanical manner without conducting any enquiry and without affording
any opportunity of hearing to the petitioner. Consequently, a sum of Rs.
61,93,023/- was directed to be paid by the petitioner towards interest under
Section 7Q and a sum of Rs. 1,28,42,589/- was directed to paid towards
damages under Section 14B of the Act of 1952 which, since being in total
derogation of principles of natural justices, deserves to be quashed.
4. Learned counsel for the petitioner has argued that in pursuance of
the summons / notice dated 25.06.2025, the petitioner's representative has
appeared before respondent No.1 on 07.07.2025 and has submitted an
application for waiver of the amount by appraising respondent No.1 that
petitioner is a Central Government undertaking and as its mill remained
unoperational during Covid 19 Pandemic period and also as on humanitarian
grounds it had paid 50% of the salary to the workers after selling assets of
the Corporation therefore, the interest as well damages be waived but
without considering the reply, order has been passed. Thus, when there is
total non-consideration of the contents of the reply filed by the petitioner, the
order impugned becomes vulnerable and therefore, deserves to be quashed.
5. Learned counsel has also assailed the amount awarded towards the
damages under Section 14B of the Act by reiterating same arguments that
without considering the reply and without giving proper opportunity since
the said order has been passed, it also deserves to be quashed.
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6. Learned counsel further submitted that since the petitioner /

Corporation has been declared as sick industrial company under the
provisions of Sick Industrial Companies (Special Provisions) Act, 1985
(SICA), under the second proviso to Section 14B of the Act of 1952, the
Central Board is empowered to reduce or waive the damages levied under
this section in relation to an establishment for a sick industrial company and
in respect thereof a scheme for rehabilitation has been sanctioned by the
Board for Industrial and Financial Reconstruction (BIFR) but without
considering this fact, the said order under Section 14B of the Act of 1952 has
been passed which is, per se, illegal.
7. In support of his arguments, learned counsel for the petitioner has
placed reliance on the order in the matter of National Textile Corporation
Ltd. (Unit Burhanpur Tapti Mill) Through Authorized Signatory vs. Regional
Director & Ors. passed in Writ Petition No. 806/2025 on 17.06.2025.
8. On the other hand, learned counsel for the respondent/EPFO has
submitted that so far as challenge to the order dated 08.09.2025 passed under
Section 14B of the Act of 1952 is concerned, firstly there is no challenge to
the aforesaid order in the petition and secondly, the said order is an
appealable order under Section 7-I of the Act of 1952. Thus, when firstly
there is no challenge to the said order and secondly, it is an appealable order,
the legality/illegality of the order cannot be gone into in the present writ
petition.
9. With regard to contention of non consideration of the reply filed
by the petitioner / Corporation regarding waiver of interest as argued by the
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learned counsel for petitioner, it is submitted by the counsel for

respondent/EPFO that the liability under Section 7Q is a mandate of statute
and the employer is liable to pay simple interest at the rate of 12% per annum
or at such higher rate of interest as may be specified under the scheme, on
any amount due from him under this Act from the date on which the amount
has become due and not paid till the date of its actual payment and as the
petitioner / Corporation has defaulted in paying the provident fund
contribution dues within the statutory limits, the order for payment of
interest was passed which cannot be faulted with.
10. In support of her arguments, learned counsel has placed reliance
in the matter of Cable Corporation of India & Anr. vs. Union of India & Anr.
reported in 2007 I LLJ 300 and Yuvraj Agrawal vs. RPFC reported in 2007
(115) FLR 777 (Cal).
11. On the basis of aforesaid arguments, learned counsel has
submitted that the present petition has no force therefore, it deserves to be
dismissed.
12. Heard learned counsel for the parties. Perused the record.
13. The relief which has been prayed by the petitioner in para 7 of
the petition is quoted as below :
"1. It is, therefore, prayed that Hon'ble High Court may be pleased to issue
appropriate writ, order or direction and the impugned notice dated 08.09.2025
(P/1) issued by respondent no. 2 may kindly be quashed in the interest of
justice.
2. That, the present Writ Petition may kindly be allowed with cost.
3. That, any other relief may kindly be granted which this Hon'ble Court may
deemed fit."
14. In the said relief, there is no challenge to the order dated
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08.09.2025 passed under Section 14B of the Act of 1952. Even otherwise

the said order is an appealable order under Section 7-I of the Act of 1952.
Thus, firstly when there is no challenge to the said order and secondly, it is
an appealable order, the order passed under Section 14B of the Act of 1952
could not be adjudicated in the present writ petition.
15. So far as challenge to payment of interest under Section 7Q is
concerned, the section itself provides that the employer shall be liable to pay
simple interest at the rate of 12% per annum or at such higher rate as may be
specified under the scheme if the amount legally due under the Act is not
paid in time prescribed, which goes to imply that the liability under Section
7Q is a mandate of the statute and the amount due is to be deposited on the
date on which the said amount becomes so due and if the said amount is not
paid before the due date, it would incur liability under Section 7Q of the Act,
automatically.
16. From the order impugned (Annexure P/1) dated 08.09.2025, it is
reflected that the period for making the payment of dues payable under the
Employees' Provident Fund Scheme, 1952, Family Pension Scheme, 1971,
Employees' Pension Scheme, 1995 and Employees Deposit Linked Insurance
Scheme, 1976 have been paid after the due dates for the period from
01.10.2023 to 13.06.2024. The demand further reflects that a notice cum
summon dated 25.06.2025 was issued to the establishment giving details of
the delayed payment made by the establishment but instead of making the
payment, a reply appears to have been filed showing its inability to deposit
the said amount due to suspension of operation of the mill in wake of
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outbreak of Covid 19 Pandemic. Thus, from the said demand order, it is very

much evident that before the due date, the amount due to the petitioner /
Corporation was not paid therefore, mandatorily the petitioner was required
to pay the interest on delayed payment.
17. It is also note worthy that there is no provision of any waiver
under the provisions of Section 7Q as is provided under Section 14B of the
Act of 1952. Thus, when the Act itself does not provide for any respite to
the petitioner, the order impugned cannot be faulted with.
18. Accordingly, the present petition so far as it challenges the order
dated 08.09.2025 (Annexure P/1) for demand under Section 7Q, being
devoid of merits is hereby dismissed.
19. Regarding challenge to the order dated 08.09.2025 passed under
Section 14B of the Act of 1952 is concerned, the petitioner is at liberty to
prefer statutory appeal as provided under Section 7-I of the Act of 1952.
With the aforesaid, the petition stands disposed of.
(MILIND RAMESH PHADKE)
JUDGE
vidya
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