A person purchasing establishment covered under EPF Act in auction sale will be liable to recover any amount paid under the Act from transferor

Shri Nandkishore Laxminarayan Agarwal - Petitioner


The Union of India & Others – Respondent

Facts of the Case:
Petitioner purchased an establishment in auction sale by the respondent. Subsequently, Provident Fund Authorities issued an attachment order for pending contribution to petitioners originally payable by the transferor. Petitioner deposited the amount under protest and thereafter filed a writ petition before High Court against the same. It was observed that section 17B of the Employees Provident Fund Act, 1952 (EPF Act) provides that, where an employer, in relation to an establishment, transfers that establishment in whole or in part, by sale, gift, lease or licence or in any other manner whatsoever, the employer and the person to whom the establishment is so transferred shall jointly and severally be liable to pay the contribution and other sums due from the employer under the provisions of the Act.

Also that ‘industrial establishment’ as per the Industrial Disputes Act, 1948, means any premises or precincts thereof where manufacturing process is being carried on or was carried on during preceding 12 months by 10 or more workers with aid of power or by 20 or more workers without aid of power.  Counsel for petitioner here argued that the factory was closed long back and no manufacturing activity was carried on. Also, because the assets were obsolete it could no longer be considered to be an establishment.

High Court dismissed the writ petition as the outstanding amount was already paid. But, it ruled that the under the Act employer has to contribute towards PF alongwith employees but here the case is not so. Thus, the petitioner will be entitled to reimbursement from previous employer.


Source: Labour Law Reporter, Pg. No. 1289, Bombay High Court, December 2009.


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