Kiran Raj

The Andhra Pradesh High Court, comprising Chief Justice Dhiraj Singh Thakur and Justice Ravi Cheemalapati, partially set aside orders passed under Section 7(B) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, pertaining to the assessment of provident fund contributions in respect of unidentified workers. The Bench directed that “till the time beneficiaries/workers are not identified, it is not understood as to how the amount so realized could reach to such workers/beneficiaries.” The court remanded the matter back to the Employees Provident Fund Organization (EPFO), Guntur, for redetermination of contributions after proper identification of workers.

The Bench held that orders of the Employees Provident Funds Appellate Tribunal, as well as the subsequent confirmation by the single judge, were to be set aside in relation to the calculation of provident fund dues for workers whose identities were not established during the inquiry. The court, however, confirmed the assessment orders in respect of workers who were specifically identified in the inquiry records.

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The intra-court appeal arose from proceedings initiated by M/s. Sri Chakra Cements Ltd., a factory engaged in cement manufacturing, employing more than 100 workers. The appellant challenged the decision of the Employees Provident Funds Appellate Tribunal, which upheld an order passed by the Regional Provident Fund Commissioner, Guntur, determining provident fund contributions due from the appellant for Rs. 8,09,558.12.

The appellant contended that although the company had been declared a sick industry under the Sick Industrial Companies (Special Provisions) Act, 1985, it had consistently paid provident fund contributions as demanded. However, respondent no.2 initiated an inquiry under Section 7(A) of the EPF Act following a complaint from the employees' union, alleging that the employer had failed to enroll approximately 75 workers.

The appellant further argued that the initial order passed under Section 7(A) was challenged in Writ Petition No.18280 of 2003 and was set aside, with the matter remanded for fresh consideration. A subsequent inquiry was held, and respondent no.2 reaffirmed the contribution amount in an order dated 11.06.2004, determining the amount at Rs. 8,09,558.15 for the period from April 1999 to March 2003.

The company challenged this order in Writ Petition No.10165 of 2004, which was disposed of by the court, relegating the appellant to pursue an appeal before the Appellate Tribunal. The Tribunal dismissed the appeal, leading to the present intra-court writ appeal.

During arguments, counsel for the appellant, Mr. K. Venugopal Reddy, submitted that the contribution demand included sums attributed to unidentified workers, which was contrary to established judicial precedent. He relied upon the Supreme Court’s decision in The Provident Fund Inspector, Guntur v. T.S. Hariharan (AIR 1971 SC 1519) and the Andhra Pradesh High Court’s decision in Karachi Bakery v. Regional Provident Fund Commissioner (1990 LawSuit(AP) 61), which, he argued, require identification of workers before fixing provident fund liabilities.

On behalf of the respondent EPFO, Mr. T. Balaji, Standing Counsel, argued that the definition of “employee” under Section 2(f) of the EPF Act includes persons employed through contractors in connection with the work of the establishment. He maintained that the EPFO had properly determined the contributions due and that the learned single judge rightly upheld the tribunal’s decision.

Justice Cheemalapati recorded that “the employees engaged by security agencies, for loading and unloading, office maintenance/factory maintenance and Pay Loader work in respect of whom the provident fund benefit was not extended according to the Provident Fund authorities, cannot be equated to that of the persons employed for a short period on account of some passing necessity or some temporary emergency beyond the control of the company.” The Bench observed that these categories of workers fall within the scope of Section 2(f) of the EPF Act.

However, while reviewing the inquiry findings, the court noted that Annexures-A and B, which formed part of the inquiry record, listed sums based on ledger entries without identifying individual workers. Justice Cheemalapati stated that “the workers/beneficiaries in respect of whom the amount due towards Provident Fund was calculated in Annexures-A and B are not identified. The amount arrived at therein is basing on the ledger accounts.”

The Bench further noted that the Employees Provident Funds Appellate Tribunal in ATA No.445(1)/2000 had previously held that “till the time beneficiaries/workers are not identified, it is not understood as to how the amount so realized could reach to such workers/beneficiaries,” and that determination on the basis of ledger entries alone would not be proper.

The court observed that “in the instant case, the amounts specified in Annexures-A & B were determined without identifying the workers who had worked with the establishment” and that “the learned single Judge did not consider this aspect in proper perspective.”

The Bench confirmed the assessment of dues relating to workers listed in Annexures-C, D, and E, where individual workers were specifically identified. It observed that for these workers, “the due payable was arrived at by specifically mentioning the names of the employees.”

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The High Court allowed the writ appeal in part, setting aside the orders passed by the learned single judge and the Appellate Tribunal to the extent they pertain to contributions assessed in respect of unidentified workers. The court directed that “the Employees Provident Fund Organization, Guntur is at liberty to identify the workers that had worked during the relevant period and then pass 7B orders in respect of those employees.”

The court stated that “orders passed by the appellate authority and so also the assessment orders passed under section 7(B) of the PF Act by the primary authority in relation to determination of the due in respect of unidentified beneficiaries/workers, is set aside.” However, the portion of the order relating to identified workers remains undisturbed.

There was no order as to costs, and all pending miscellaneous applications were closed.

Advocates Representing the Parties

For the Appellant: K. Venugopal Reddy, Advocate

For the Respondents: T. Balaji, Standing Counsel for EPFO

Case Title: M/s. Sri Chakra Cements Ltd. v. The Employees Provident Funds and Others

Neutral Citation: APHC010001682025

Case Number: Writ Appeal No. 11 of 2025

Bench: Chief Justice Dhiraj Singh Thakur, Justice Ravi Cheemalapathi

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