Navigating EDLI Exemptions: Who's Liable for Overpayments and How to Handle Form 5IF?

Exemption under the EDLI scheme

In the event an establishment is availing exemption under the EDLI scheme, then:

- Are such establishments supposed to file Form No. 5IF (along with Form 19) or not?
- What is the purpose of the certificate to be issued by the exempted establishment (page 3 of Form 5IF)?
- In case Form 5IF is attested by the establishment (PF & Pension: un-exempted, EDLI: exempted) along with Form 19, and EPFO disburses the EDLI claim, then who is responsible for the overpayment and what are the repercussions?

EPFO is supposed to exercise due diligence before settling the EDLI claim, or will they simply treat this as wrong attestation of claims and initiate recovery proceedings against the establishment? Even if the responsibility lies with the establishment and overpayment has occurred due to wrong attestation of the claim by the establishment, is EPFO supposed to explore all possibilities of recovering overpayment from the nominee of the deceased employee before initiating recovery proceedings against the establishment?

Is there any source to access case laws with regards to overpayment by EPFO? May I request seniors to guide us?

With best regards,
Deepak Marathe

PF & Pension: Unexempted, EDLI: Exempted

This line itself explains that Form 5IF cannot be accepted by EPFO. It is a very rare case when EDLI exemption is granted to any establishment; such establishments are administered by higher-level officials. Attestation of Form 5IF in the case of an EDLI-exempted establishment by the employer is an offense, and the department can take action against the establishment signatory.

No money can be paid towards such a form as the file records have no corpus under the insurance against this establishment. Therefore, the recovery matter does not come into the picture.

Background of the Case

Thank you for your time and swift response. I understand the content of your reply. The query posed above is based on fact. Here is a brief background of this unusual case:

Compliance is done centrally by a company having multiple PF codes. Barring one, the rest of the establishment codes are un-exempted for PF, Pension, and EDLI schemes. One establishment code is un-exempted for PF and Pension but exempt for the EDLI scheme. A common SOP is drawn for all establishment codes, stating that a withdrawal form (Form 19) along with Form 5IF is to be submitted in the case of a deceased employee. Accordingly, Form 19 along with Form 5IF was filed in respect of a deceased employee of an establishment code which is un-exempted for PF and Pension but exempt for the EDLI scheme. This is a classic case of following SOP without any discretion on the part of the person who attested the forms.

To the best of my understanding, noting of EDLI exemption for all classes of employees is supposed to be available on Form No. 9, besides the corpus under insurance is to be verified. Upon realizing the mistake, the company approached EPFO on their own and appraised the overpayment. Besides, the company also informed the insurance company to hold the settlement of the claim to the nominee of the deceased employee to avoid double payment. Neither the dealing clerk, supervisor, AC, nor their internal audit could identify the mistake until they were informed.

Company's Stand

The company has taken a stand that:
- At the outset, the attestation of Form 5IF by the signatory is erroneous. Likewise, there was no due diligence on the part of the concerned staff of EPFO.
- The claim amount is received by the nominee of the deceased employee and not by the company.
- The company cannot approach the nominee of the deceased employee, as the transaction is between EPFO and the nominee.
- Since EPFO has disbursed the payment and it has wide powers, they are supposed to explore all possibilities of recovery of the excess payment.
- The company will instruct the insurance company to settle the claim to the nominee of the deceased employee upon confirmation by EPFO that the nominee has refunded the overpayment.
- In the event the nominee does not pay EPFO, then a demand may be raised on the company.
- The company has no inclination to shy away from their responsibility.

Ground Level Observations

What is happening on the ground level is that:
- It is a common experience for everyone dealing with EPFO that the dealing clerk and supervisor reject claims on flimsy grounds in the name of due diligence and display the least respect for attestation done by the establishment.
- On the other hand, when overpayment occurs, they shy away from their responsibility and take the stand that the claim was settled because the employer attested Form 5IF.
- Sending letters, demands, show cause notices, and if required, freezing the bank account of the employer, is an easier way to recover overpayment than pursuing the nominee of the deceased employee.

Request for Guidance

In view of the above, may I request guidance regarding:
1. EPFO and the company have to work together for years to come. Hence, instead of arguing about who is at fault, the best way is to work jointly to recover the overpayment.
2. The position taken by the company is fair and right in the eyes of the law.
3. Is there any other way to overcome this situation?
4. Are there any case laws regarding overpayments?

With best regards,
Deepak Marathe