A licensee is not personally liable for a predecessor’s pre-lease provident fund arrears.

Respondent No. 3, Jai Jute & Industries Ltd., was liable for provident fund and allied dues relating to Nuddea Jute Mill, assessed at approximately Rs. 60.26 crore and arising from periods before the petitioner took over operation of the mill

The petitioner operated the mill first under a leave-and-licence arrangement from 2020 and then under a registered lease dated 1 April 2023; neither arrangement transferred ownership of the mill or its assets

The lease provided that pre-existing liabilities remained the lessor’s responsibility, while the petitioner was responsible for specified fees and liabilities during the lease period

The Provident Fund authorities treated the petitioner as an agent and employer of respondent No. 3 and issued the challenged order and notices seeking recovery from it and its director

The petitioner sought to quash those measures

Whether the Provident Fund authorities could treat the petitioner, as licensee/lessee and alleged agent of the defaulting company, as an employer liable for the latter’s pre-existing provident fund dues

Whether the authorities could proceed against the petitioner and its directors without first pursuing recovery against the defaulting establishment and its assets

Section 2(e) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 defines “employer,” and the authorities relied on that provision to treat the petitioner as an employer on the basis that it was an agent of respondent No. 3

Section 8B provides for recovery of arrears through specified modes, including attachment and sale of property and arrest of the employer; its proviso requires attachment and sale to be effected first against the establishment’s property and permits recourse to the employer’s property where that is insufficient

The court also considered the lease terms allocating pre-lease liabilities to the lessor and liabilities arising during the lease to the lessee

The petitioner cited Sections 182, 188, 218 and 230 of the Indian Contract Act and two authorities, but the judgment does not set out a distinct rule derived from those sources

The court found that the dues related to periods before the petitioner took over the mill and that the authorities’ own materials acknowledged there had been no transfer of the mill’s property to the petitioner

The lease terms likewise placed earlier liabilities on the lessor, while the petitioner had complied with its obligations for the lease period

In these circumstances, the petitioner’s operation of the mill and its alleged status as agent did not justify making it liable for respondent No. 3’s historical dues.

Applying Section 8B, the court held that recovery should first be pursued against the defaulting company and the establishment’s assets; the authorities had not established a basis to proceed against the petitioner’s directors instead

It quashed and set aside the order dated 19 March 2026, the show-cause notice dated 20 March 2026 and the communication dated 23 March 2026, and allowed the writ petition

The authorities remained at liberty to proceed against respondent No. 3, including against assets of Nuddea Jute Mills belonging to it