In a significant judgment, the Kerala High Court, presided over by Justice N. Nagresh, annulled the orders of the Central Government Industrial Tribunal-cum-Labour Court (CGIT) against the Sree Narayana Guru Memorial Educational & Cultural Trust. The decision, delivered in two writ petitions, found that the impugned orders suffered from substantial factual inaccuracies and procedural irregularities, rendering them legally untenable. Justice Nagresh emphasized that the lack of a fair hearing and adherence to procedural norms invalidated the assessment of dues under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and directed the authorities to reconsider the matter within four months.

The petitioner, a trust managing multiple educational institutions, including an engineering college, challenged the assessment of ₹19,89,672 and ₹24,49,123 for different periods under Sections 7A and 7C of the Act. The assessments were based on a report by the Enforcement Officer dated May 28, 2015, which alleged non-compliance with EPF enrollment obligations. However, the petitioner asserted that the Enforcement Officer’s report was not shared with them, thereby violating the principles of natural justice. “The very foundation of the dues determination was kept out of the petitioner’s reach, which gravely prejudiced their ability to present a defense,” the petitioner’s counsel contended.

The petitioner further argued that the assessments were inflated due to errors, including duplicate employee entries, wrongful inclusion of employees earning above the statutory salary threshold, and those already covered under the EPF scheme. The petitioner cited specific examples, asserting that “at least nine duplicate names and several employees already enrolled were improperly factored into the calculations.” Additionally, the petitioner highlighted that remittances of ₹3,43,692 made during the disputed periods were not considered, further compounding the inaccuracies in the orders.

In response, the respondents, represented by the Employees’ Provident Fund Organization (EPFO), justified their actions by claiming that the petitioner had failed to provide the required records during the inquiry, necessitating reliance on available materials. They alleged that the petitioner’s institutions had enrolled only 27 out of 340 eligible employees under the EPF scheme, which indicated non-compliance. The respondents maintained that “the assessments were conducted based on evidence available at the time, and procedural norms were adhered to throughout.”

The Court however, found significant merit in the petitioner’s contentions. The judgment noted that the Enforcement Officer’s report, which formed the basis of the assessment, had not been disclosed to the petitioner. The court observed that “non-disclosure of a critical document that serves as the foundation of the inquiry is a violation of the principles of natural justice.” Furthermore, the court identified numerous factual errors in the orders, including the inclusion of duplicate employee names and those earning salaries above the EPF coverage threshold.

The Court also took note of allegations of post-facto alterations in the records and found them to be credible. The court observed, “The evidence of subsequent insertions in the order sheets raises legitimate doubts about the integrity of the proceedings.” The judgment emphasized that procedural fairness had not been observed, as the petitioner was denied an adequate opportunity to present its case.

The court set aside the impugned orders, directing the respondents to reexamine the matter and issue fresh orders within four months, after affording the petitioner a fair hearing. “The glaring procedural lapses and factual inaccuracies demand a thorough reassessment to ensure that justice is not only done but is seen to be done,” the judgment concluded.

Case Title: Sree Narayana Guru Memorial Educational & Cultural Trust v. The Assistant Provident Fund Commissioner

Case No: W.P.(C) Nos.21299 & 21338 of 2023

Bench: Justice N. NAGARESH