The Delhi High Court in the recent judgement of Central Board of Trustees (EPFO) v. M/s Era Infra Engineering Limited and Anr, WP (C) 4083/ 2015 has reaffirmed that the Provident Fund Commissioner while discharging his powers under Section 7A of the Employees' Provident Fund and Miscellaneous Act 1952 (“EPF & MP Act 1952”), is required to comply with the principles of natural justice by gathering as much information as possible including by issuing notice/ summons to the contractors and it is incumbent upon them to identify the beneficiaries to the extent possible.


Era Infra Engineering Limited i.e. the Respondent No. 1 herein (“Establishment”) is an establishment covered by the EPF & MP Act 1952. During the course of inspection of the establishment by the regional offices of Provident Fund Department, it came to light that some of the workers employed through contractors were not receiving the benefits as required under the provisions of EPF & MP Act 1952.

Subsequently, a notice under Section 7A of the EPF & MP Act 1952 was issued to the Establishment with a direction to appear before the Adjudicating Authority i.e. Regional Provident Fund Commissioner (“Adjudicating Authority” or “RPFC”) along with documents required for ascertaining attendance, payments etc. The Establishment filed its reply to the aforesaid notice and also to the inspection report, denying the allegations levelled by the Provident Fund Department. The deposition report as filed by the inquiry officer stated that liabilities of the amount paid as labour component to other contractors covered independently also arises as the Establishment which was deemed to be principal employer that failed to seek compliance from the sub-contractors in respect of all eligible contractual employees.

After providing an opportunity to the Establishment to give its reply, the Adjudicating Authority without even issuing the notices to the contractors to ascertain the true factual matrix, held that the Establishment is liable to pay the Provident Fund and allied dues in respect of the employees who were employed in or in connection with the work of the Establishment and got their wages directly or indirectly to the tune of INR 108,67,37,263.

The said order of the Adjudicating Authority was challenged by the Establishment before the Employees' Provident Fund Appellate Tribunal (“Appellate Tribunal”) and after perusing the record, allowed the appeal preferred by the Establishment and set aside the order of the Adjudicating Authority. The Employees' Provident Fund Organisation preferred the present writ petition before the Delhi High Court challenging the said order of the Appellate Tribunal. During the course of the proceedings, the Establishment went under Corporate Insolvency Resolution Process (“CIRP”) and the Resolution Professional handling the CIRP of the Establishment was impleaded as Respondent No. 2 in the aforesaid writ.


The main issues decided by the Court were:

  1. Whether the Establishment would be liable for payments due to Contractors and Sub-contractors?
  2. Whether the Contractors and Sub-contractors need to be impleaded and heard by the Adjudicating Authority while exercising its powers under Section 7A of the EPF & MP Act 1952?

Judgement and Analysis:

For the first issue, it was argued by the Establishment that, given the nature of contract of the respondent with the contractor / sub-contractors, the respondent had no control over the work of the contracting workers, and they are not employees of the establishment for the purpose of the EPF & MP Act 1952. This contention was rejected by the Adjudicating Authority, as well as the Tribunal. The judgement has duly relied on M/s. Sandeep dwellers Private Limited. V. Union of India1,Builders Association of India v. Union of India2, Officer-in-Charge, Sub-Regional Provident Fund Office & Anr. v. Godavari Garments Limited3, SK Nasiruddin Beedi Merchant Ltd. v. Central Provident Fund Commissioner and Another,4P.M. Patel & Sons v. Union of India and Others5and distinguished Karachi Bakery v. Regional PF Commissioner.6 The Court while relying on Regional Provident Fund Commissioner v. The Hooghly Mills Company Limited and Others,7 reaffirmed that EPF & MP Act 1952 is a social welfare legislation and in case of any doubt, the statute should be read as a whole considering its design and purpose and the remedy it seeks to achieve and should be resolved in favour of the class of persons for whose benefit it is enacted. In the present case, it was held that the contractor for purposes of Section 2(f) is purely a labour contractor and not an independent contractor who contracts to deliver a finished product to the establishment and who, for purposes of manufacture of such a finished product, engages labour for his own purposes. The Court finally held that the workers of the contractors/sub-contractors have worked for the respondent organisation, though indirectly, but in connection with the work of the establishment and therefore, can be said to be covered under the provisions of the EPF & MP Act 1952.

For the second issue, the court distinguished the judgement of the Supreme Court in Regional Director, ESIC v. Kerala State Drugs and Pharmaceuticals Ltd. & Ors.8 ESIC v. Harrison Malayalam Private Limited9, and the decision of this Court in Saraswati Construction Company v. Central Board of Trustees10and Mirco Devices Inc v. Infocom Digital Systems (P) Limited11and reaffirmed the landmark judgement of Supreme Court in Food Corporation of India v. Provident Fund Commissioner12 holding that it cannot be denied that it is the duty of the Commissioner to collect the relevant evidence by impleading parties. The Court further held that under Section 7A of the EPF & MP Act 1952, the Commissioner is authorised to enforce attendance in person and also to examine any person on oath. He has the power requiring discovery and production of documents. The said power was given to the Commissioner to decide not abstract questions of law, but only to determine actual concrete differences in payment of contribution and other dues by identifying the workmen. The Commissioner should exercise all his powers to collect all evidence and collate all material before coming to proper conclusion. The Court further held that it is rather imperative that to determine the contribution as payable under the EPF & MP Act 1952. The identity of the employee has to be established.

The contention of the Petitioner in regards the Paragraphs 30(3) and 36B of the EPF Scheme, vide which the Establishment had a duty to maintain records in order to identify the beneficiary employees themselves and reliance on cases of Regional Provident Fund Commissioner v. Shibu Metal Workers13, State v. Giridharilal Bajaj14, Panther Security Service Private Limited v. EPFO and Another15, was also distinguished vis-à-vis the powers of the commissioner under Section 7A of the EPF & MP Act 1952 with the Court relying on Bharat Heave Electricals Limited v. Employees State Insurance Corporation16,Central Board of Trustees v. Standing Conference of Public Enterprises17, and holding that the third party (contractors/ sub-contractors) needs to be impleaded by the Adjudicating Authority to produce all the documents before determining the dues. The Court duly noted that the Commissioner, in discharge of his powers under aforesaid Section 7A, is required to comply with the principles of natural justice by issuing notice to the contractors and also identifying the beneficiaries.

In view of the above facts and circumstance, the Court duly set aside both the orders of the Adjudicating Authority and the Appellate Tribunal and remanded the matter back to the Adjudicating Authority to be decided afresh by impleading / summoning the contractors / sub-contractors for producing necessary records/documents.

As is evident from the above, the Delhi High Court has duly distinguished the judgements and has clarified that for any liability to be fastened on a company under the EPF & MP Act 1952, it is incumbent upon the Commissioner to make sure that all the avenues of the gathering information are covered including issuing summons to third parties who may have the relevant record. Further, the powers as granted under Section 7A of the EPF & MP Act 1952 duly cover such actions of the Commissioner which should be utilized to ascertain the dues. In absence of such exercise of powers, any liability which may be fastened can be set aside on this premise itself. Further, the Court has also clarified that the workers working for a company (even indirectly) in connection with the work of the company can be said to be covered under the provisions of the EPF & MP Act 1952.


1 2007 (1) LLJ 518

2 WP(C) 3588/2002

3 (2019) 8 SCC 149

4 2001 (2) SCC 612

5 1987 AIR 447

6 W.A. NO. 218/1986.

7 2012 (2) SCC 489

8 1995 Supp. (3) SCC 148

9 AIR 1993 SC 2655

10 WP (C) 5625/2007

11 Co. Pet. 147/1996

12 1990 (1) SCC 68

13 1964-65 (27) FJR 491

14 1962 II LLJ 46

15 2021 (1) SCC 193

16 2008 (3) SCC 247

17 2019 LLR 346

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