Failure To Deposit EPF Dues On Time Is A Penal Offence, Later Payment Irrelevant: Orissa High Court

The Orissa High Court has held that subsequent payment of employees' provident fund dues does not extinguish criminal liability for prior default, and such payment cannot be a ground to quash criminal proceedings.

A Single-Judge Bench of Dr Justice Sanjeeb K Panigrahi, by order dated 13 March, refused to quash criminal proceedings against the former director of Cosboard Industries Pvt. Ltd. He held:

“The offence committed by the petitioner is grave endangering the Right to pension and Right to life of the workers engaged in the establishment, there is no ground to quash the criminal proceedings against the petitioner”

The case arose from an FIR lodged by an Inspector appointed under Section 13 of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 against Anil Kumar Gilra, then promoter/director of Cosboard Industries.

The complainant alleged that Gilra deducted provident fund contributions from employees' wages but failed to deposit them with the statutory authority. The default amounted to Rs. 15,14,533 for the periods March 2012 to March 2013 and May 2013 to July 2013.

Based on these allegations, the authorities registered an FIR for offences under Sections 406 and 409 of the Indian Penal Code on the ground of criminal breach of trust. Aggrieved, Gilra approached the High Court seeking quashing of the criminal proceedings.

Before the Court, Gilra contended that the company subsequently underwent insolvency proceedings pursuant to an order of the NCLT, Cuttack, and that a resolution plan was approved in February 2022 under which a successful resolution applicant took over the company. He further submitted that he had already cleared the entire provident fund dues through payments made between July 2014 and February 2015.

Opposing the plea, the complainant argued that EPF dues must be deposited within 15 days of the succeeding month and that any delay constitutes a penal offence. Further that subsequent payment does not absolve the offence once committed.

Rejecting the plea, the Court held that EPF dues must be deposited within the prescribed statutory period and that any delay attracts penal consequences. It further clarified that EPF dues and related liabilities cannot be waived by the NCLT. It stated:

“The dues of CBT EPF cannot be waived off by the NCLT for lacking jurisdiction decide EPF matter, post enactment of Insolvency and Bankruptcy Code, 2016, section 17 B remains unaltered because of EPF & MP Act is not among the Acts amended to align with Insolvency and Bankruptcy code.”

Emphasising the seriousness of the offence, the Court held that the alleged act impacts employees' right to pension and livelihood and declined to interfere with the pending proceedings. It held:

“And therefore, praying before this Hon'ble Court not to quash the FIR and encourage a grave offender of the law to go scot-free, harming public interest, weakening public trust on rule of law and protection of law.”

Accordingly, the High Court dismissed the petition.

For Petitioner: Advocate Soumya Jyoti Biswal

For Opposite Parties: Advocates Gayatri Patra, ASC and Bibekananda Nayak