Orissa HC orders criminal case to continue against company director who failed to deposit ₹15lk PF collected from staff
The Orissa High Court has held that payment of employees' provident fund (EFP) dues following police investigation does not absolve a company's director from prior default, according to a report by The Economic Times.
The company in question is now insolvent but had deducted ₹15.14 lakh from employees' salaries towards provident fund between March 2012 to March 2013 and May 2013 to July 2013, which it failed to deposit with the Employee Provident Fund Organisation (EFPO), it added.
The case: What happened with PF deposit?
As per the report, an EPFO inspector filed an FIR against the director on 3 July 2014 and during investigation, the defaulted amount was deposited into employee accounts. This cleared statutory EPF dues. However, the HC noted that subsequent payment of dues does not negate criminal liability of the original default.
Addressing the bench, the director claimed the dues were cleared between July 2014 and February 2015. He added that his company is now insolvent and the matter is pending before the National Company Law Tribunal (NCLT) in Cuttack. He added that the resolution plan was approved in February 2022 and another company took over operations.
On its part, the EPFO argued that dues need to be paid within prescribed period and delay can attract penalties.
The court agreed with the body and held that the offence is “grave” and endangers the right to pension and right to life of workers, and there are no grounds for the investigations and criminal proceeding to be halted.
The court further added that EPFO dues cannot be waived by the NCLT as they lack jurisdiction over the matter, the report added. The bench cited Section 17B of the Insolvency and Bankruptcy Code (IBC), 2016, which pertains to dealing with corporate debtors.
What did the Orissa HC say?
The court held that EPF dues must be deposited within 15 days of subsequent month and at any date thereafter is subject to penalty. “Therefore, even if the deposit has been made after the due date, the offence is already committed,” it stated.
The order further noted the seriousness of this offence and dismissed the director's plea to quash criminal proceedings against the petitioner. The original case is pending before the Judicial Magistrate First Class (JMFC), Cuttack.
The HC further noted that allowing “a grave offender to go free, harms public interest and weakens public trust on the law and the protection of law”.
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