EPF recovery requires determination of dues under Section 7A after considering the employer’s reply.

The petitioner, a unit of Steel Authority of India Ltd. covered by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“1952 Act”), challenged a demand notice for surcharge, a prohibitory order issued to recover the amount, and the Labour Court’s dismissal of its appeal.

The demand was initially for Rs. 4,32,36,671 and was reduced by corrigendum to Rs. 3,40,15,641.

The petitioner had submitted a detailed reply disputing the demand, but the first respondent issued the prohibitory order; the second respondent bank subsequently recovered the reduced amount.

The Labour Court dismissed the appeal on the basis that the recovery action was taken under Section 8-F of the 1952 Act.

1. Whether the demand notice and prohibitory order could stand when the authority had not determined the amount due under Section 7A of the 1952 Act or considered the petitioner’s reply.

2. Whether the Labour Court was correct to dismiss the petitioner’s appeal against the recovery action taken under Section 8-F of the 1952 Act.

Section 7A of the 1952 Act empowers the specified provident fund authorities to determine amounts due from an employer and permits an inquiry for that purpose; the Court held that the amount due must be determined before recovery is pursued.

The Court also held that the Labour Court had rightly dismissed the appeal because the challenged recovery action was taken under Section 8-F of the Act.

The petitioner had submitted a detailed reply to the demand, but the Court found that the authority had neither considered that reply nor determined the dues before issuing the prohibitory order.

The demand notice and prohibitory order therefore could not stand, and were set aside on that ground.

The Court separately upheld the Labour Court’s dismissal of the appeal, accepting that the recovery action had been taken under Section 8-F.

The Court quashed the prohibitory order dated 19 January 2018 and the demand notice dated 12 July 2017.

It directed the first respondent to consider the petitioner’s reply, determine any amount due in accordance with law, and proceed accordingly.

The amount already recovered by the bank remains subject to further orders of the competent authority.

The Labour Court’s dismissal of the appeal was left undisturbed.