Interest under Section 7Q of the EPF Act is mandatory and cannot be waived.

The petitioner, a Government of India undertaking operating the Burhanpur Tapti Mill, challenged a demand dated 8 September 2025 for ₹61,93,023 towards interest under Section 7Q of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”) for delayed remittance of provident-fund-related dues for the period 1 October 2023 to 13 June 2024.

The petitioner asserted that its mill had remained non-operational during and after the COVID-19 lockdown, causing severe financial losses, although it continued paying 50% wages to workers by selling corporate assets.

Earlier, summons dated 25 June 2025 had also proposed ₹1,28,42,589 as damages under Section 14B for alleged delays from June 2020 to March 2024.

The petitioner appeared on 7 July 2025 and sought waiver of interest and damages on the grounds of the pandemic, financial hardship, and its status as a Central Government undertaking.

It also contended that, having been declared a sick industrial company under SICA and having a rehabilitation scheme sanctioned by BIFR, it was entitled to consideration of waiver or reduction of damages under the second proviso to Section 14B.

The respondents contended that the Section 14B order had not been challenged and was independently appealable under Section 7-I, while liability under Section 7Q was automatic and mandatory.

Whether the demand for interest under Section 7Q of the EPF Act could be waived or interfered with on the grounds that the petitioner’s mill was non-operational during the COVID-19 period and was facing financial hardship?

Whether the High Court could adjudicate the petitioner’s challenge to the order imposing damages under Section 14B when that order was not specifically challenged in the writ petition and was appealable under Section 7-I of the EPF Act?

Section 7Q of the EPF Act makes an employer liable to pay simple interest at 12% per annum, or such higher rate as may be specified under the applicable scheme, on any amount due under the Act from the date it became payable until the date of actual payment; the liability follows mandatorily upon delayed payment and the provision contains no statutory waiver mechanism.

Section 14B concerns damages for default and contains a statutory mechanism permitting reduction or waiver in appropriate cases, including in relation to sick industrial companies, subject to the applicable conditions.

An order under Section 14B is appealable under Section 7-I of the EPF Act.

The authorities cited by the respondents—Cable Corporation of India & Anr. v. Union of India & Anr., 2007 I LLJ 300, and Yuvraj Agrawal v. RPFC, 2007 (115) FLR 777 (Cal)—were recorded, but the decision principally proceeded on the statutory scheme of Sections 7Q, 14B and 7-I.

The Court examined the impugned demand and found that the relevant provident-fund contributions had been paid after their prescribed due dates for the period 1 October 2023 to 13 June 2024.

Since the contributions were legally due and were not remitted within time, Section 7Q automatically attracted liability for interest.

The petitioner’s inability to pay, closure of the mill, pandemic-related financial difficulties, and continued payment of partial wages could not override the mandatory statutory obligation, particularly because Section 7Q contains no provision for waiver or relaxation.

As to damages under Section 14B, the Court declined to examine the merits because the relief clause sought quashing of the Section 7Q demand alone and did not specifically challenge the Section 14B order.

In any event, the Section 14B order was appealable under Section 7-I, making the statutory appellate remedy the appropriate course.

The Court did not adjudicate the merits of the Section 14B damages order because it was not specifically challenged and was appealable under Section 7-I.

The petitioner was granted liberty to pursue the statutory appeal against that order.