What Are the PF and ESI Obligations When Reviving a Sick Firm After Six Years?

Dear Experts, One of the sick units has been taken over by a new company. In the old company, all the employees were relieved during the time of sickness with F & F. Simultaneously, the Managing Director (Occupier) of the old firm intimated in a letter to PF/ESI authorities that the firm is 'SICK' with evidence. After that, no correspondence was made from either end.

After six and a half years, the new firm started recruiting employees and intimated the PF/ESI authorities without changing the firm name for "Reviving the same code number." Accordingly, the new firm has been depositing the contributions with the continuation of PF & ESI last employees' serial numbers onwards.

Now, what are the impacts and obligations after that? Please guide me.

Regards, PBS KUMAR

In my view, what the new management has done is perfectly correct. The previous management did not surrender its PF and ESI numbers to the respective authority and simply informed the authorities that the company went into sickness and no employee was engaged, therefore, no contribution was made. The previous management also acted correctly.

Now, the new management, continuing with the old entity, must carry on with the PF and ESI numbers that were allotted to the company previously and were not surrendered. The new management is very correct in reviving the same code numbers.

Obligations of the New Management

In regards to PF:
- Pay minimum charges of Rs. 7/- (Rs. 5/- towards PF administration and Rs. 2/- towards EDLI administration) every month for the non-contributed period.
- Convince the authority that the payment made is correct with supporting documents such as balance sheets and P&L statements.
- Submit Form 5A.

In regards to ESI:
- Convince the authority that the non-contribution period is correct with supporting documents such as balance sheets and P&L statements.
- Submit Form 01C by updating employer details on the ESI portal.

Regards,

I appreciate the reply by Keshav. In addition to what Keshav has mentioned, I would also like to advise PBS to verify the physical records and ensure that inspections by the PF Enforcement Officer and the ESI Social Security Officer have been conducted up to date with no negative comments about omitted wages, etc. Also, ensure that all payments up to the date of closure are made promptly. If remittances have been made after the due dates, there is a possibility of incurring interest and damages, which may need to be addressed at a later date. It is important to avoid unnecessary liabilities from the previous employer transferring to us.

I also have doubts whether just a communication stating that the company has been declared sick would convince ESI/EPF authorities. Shouldn't it be declared as sick by the Board of Industrial and Financial Reconstruction? The declaration of being "sick" is typically expected after all possibilities of revival have been exhausted, and there is no chance of reopening.

Regards,
Madhu.T.K