Need Urgent Help Understanding Section 7C of the EPF Act – Any Judgments to Share?

Dear Seniors, can you please guide me on Section 7C of the EPF Act? If anybody has a judgment on Section 7C, it's urgent, so please reply soon.

Regards,
Arihant

Section 7-C empowers the P.F. Authority to reopen a case within five years of passing an order under Section 7-A or 7-B (after reviewing the order passed under Section 7-A) if he finds later (after passing orders under Section 7-A or 7-B) that some amount has escaped his notice (which also falls due) while passing orders under Section 7-A or 7-B, irrespective of whether such escape from his notice is due to the non-production of records before him by the employer or not.

While proceeding to redetermine the amount due after reopening the case, he should give a hearing to the employer. Trust I have made myself understood.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

Understanding Sections 7A, 7B, and 7C of the EPF Act

This follows Section 7A and Section 7B. Section 7A empowers the PF authorities to call for records to determine the PF dues of an employer. Accordingly, an order will be passed, and the employer will be asked to pay the amount so determined.

As per Section 7B, the employer can call for a review of the amount assessed by the authorities. Accordingly, a fresh demand notice will be sent to the employer.

Section 7C gives the authorities the right to reassess the amount determined as per Section 7A or Section 7B if the PF authorities have reasons to believe that there are some more amounts that escaped from the original assessment or review assessment. Therefore, Section 7C is a right conferred on the PF organization to reassess the amounts determined under the 7A enquiry or 7B review.

Section 7C being a right under the Act itself, no judgment is required to establish the rights of PF authorities.

Regards,
Madhu.T.K

Dear Experts, thank you for the prompt reply. Recently, I have heard about a 7C case in the Delhi High Court in which some objections have been raised regarding an officer who has issued an order under Section 7A/7B, being assessed under Section 7C. I would also like to know if the employer has not received any related documents/material from the PF authority upon which Section 7C is initiated, does the employer have the right to access the documents on which Section 7C is initiated?

Regards,
Arihant

Understanding Section 7-C of the EPF Act

Section 7-C itself makes it mandatory that the P.F. Authority, while reopening and reassessing P.F. dues that were already determined under Section 7-A or 7-B on the basis of any fresh evidence, is required to hear the employer before passing any order under Section 7-C. This is in accordance with the principles of natural justice, which means the employer is entitled to have an inspection of all such material relied upon by P.F. under Section 7-C and make his submissions thereon. Failing this, the order is not sustainable. Section 7-C leaves no doubt about this right of the employer.

Regards,
B. Saikumar
H.R. & Labour Law Advisor
Mumbai

Arrest Warrant Under Section 7A(2)

Can the APFC issue an arrest warrant under Section 7A(2) if the owner fails to attend the hearing for some of the last dates in Section 7C? Are Section 7A and 7C independent of each other?

Regards,
Arihant

Understanding Sections 7A and 7C of the EPF Act

Both sections are independent but interrelated. Under Section 7A(2), the APFC has the right to call the owner for giving evidence, and in such an inquiry, he will enjoy the powers of a Civil Court. He can summon (a 7A notice itself is a summons) the owner, and if the owner fails to attend, he can determine the amount payable or escaped (in the case of 7C) and direct the owner to pay the amount. In case the owner does not turn up and pay the amount, he can proceed with revenue recovery proceedings, and simultaneously, he can issue a warrant as well.

Practically, sections of the Indian Penal Code for cheating and misappropriation are attracted only when he has collected PF from the employees but has not deposited the same or has failed to deposit the employees' share of contributions.

Regards,
Madhu.T.K

Thank you for the reply. I have a query regarding Section 7C. This pertains to the APFC who had not issued an order under Section 7A but initiated Section 7C against the Establishment. The case was under Section 7C, and the APFC initiated an arrest warrant under Section 7A(2). I am puzzled as there is no indication of an escaped amount, and there are no remaining dues to be paid by the Establishment. From my understanding, both sections are independent and not interrelated. Additionally, in Section 7C, the Officer did not specify whether the case falls under Section 7C(A) or Section 7C(B).

The arrest warrant is issued to facilitate a hearing with the required documents. Can an arrest warrant be issued by the APFC on these grounds?

Regards,