New Delhi: Subhiksha Trading Services Ltd has obtained a court stay stopping the Employees’ Provident Fund Organisation (EPFO) from assessing the provident fund contribution of the company for the months between September and December, a period when the troubled retailer shuttered its stores and did not pay staff salaries.
In distress: Subhiksha’s R. Subramanian paid part of Rs1.7 crore dues sought by the EPFO from his own provident fund. Harikrishna Katragadda / Mint
Subhiksha is arguing that it is left with less than 50 employees on its rolls and that its provident fund should be assessed on the current staff strength and not on the basis of the staff strength in September when it had around 5,000 employees on its rolls.
“We have said that we have not paid the salaries. Therefore, the provident fund doesn’t become payable till we pay the salaries” of those thousands of staff, said Prakash Goklaney, the lawyer representing Subhiksha, adding that the company obtained the stay before the court went on its summer holidays in late May.
“Many of them (the staff) have abandoned..., many of them are not reporting, some of them are on leave without pay. We ourselves don’t know how many (employees) are with us. So there is no question of paying provident funds,” Goklaney said.
This is the second such dispute between Subhiksha and the EPFO since January when the Chennai-based discount retailer announced that it had run out of cash and closed its stores, numbering around 1,600.
Once among the country’s most aggressive band of modern retailers, Subhiksha spread too fast before its inability to raise cash either from the stock markets or through debt in a challenging economic situation, finally brought about its downfall earlier this year. Currently, a consortium of a dozen-odd banks are working on a corporate debt restructuring exercise in a bid to revive the mothballed firm. Subhiksha has said it would need around Rs300 crore to get started again.
In March, the Chennai office of EPFO warned Subhiksha to deposit provident funds for thousands of employees that was pending for months, or face action. The EPFO had asked Subhiksha to pay around Rs1.7 crore for at least 4,000 employees on its payroll. Lawyer Goklaney said Subhiksha’s founder and managing director R. Subramanian paid part of this amount by dipping into his own provident fund.
A provident fund is a sort of a pension and is funded equally by the employee and the company.
K. Srinivasan, regional commissioner of EPFO in Chennai, said Subhiksha paid almost 70% of its previous dues, but that it still needs to pay around Rs70 lakh against provident fund payments till September.
Subramanian declined to respond to queries from Mint citing the court litigation.
Srinivasan said EPFO wanted to ascertain the provident fund dues of Subhiksha for the months between September and December.
“We wanted to assess it… I don’t know what is the amount due,” Srinivasan said. “For the earlier period, he (Subramanian) had paid some advances and based on the advances we assessed it. But for the subsequent (September-December) period there is no clarity, whether I should be assessing it on the actual (salaries) paid or on the basis of dues to the employees. For the subsequent period, the dues itself are not quantified.”
Meanwhile, Subhiksha says it has been depositing the provident fund for those currently working with it.