The Bombay HC ruled in favor of Bajaj Finance, setting aside EPFO’s unilateral recovery order and reinforcing that statutory authorities must follow judicial directives.
In a significant ruling dated May 10, 2025, the Bombay High Court provided much-needed clarity in the dispute between Bajaj Finance Ltd. and the Employees’ Provident Fund Organisation (EPFO). The case hinged on the correct interpretation of a stay order issued by the Central Government Industrial Tribunal (CGIT), and whether EPFO could proceed with coercive recovery based on its unilateral understanding.
The Dispute:
Bajaj Finance approached the Bombay High Court challenging an order dated April 26, 2025, passed by the Regional Provident Fund Commissioner-I (RPFC-I) under Section 8F of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. This order was issued for the attachment of Bajaj’s bank accounts, purportedly in compliance with CGIT’s directions.
At the heart of the dispute lay the CGIT’s order dated April 21, 2025, which had stayed coercive recovery actions against Bajaj Finance, conditional upon the company depositing 25% of the assessed amount under Section 7A of the EPF Act.
Background of the Case:
The EPFO had determined a total liability of ₹1,10,75,77,897/- for the period from April 2014 to March 2019. This amount comprised:
- ₹58,19,94,462/- as dues under Section 7A of the EPF Act (pertaining to contributions).
- ₹52,55,83,434/- as interest under Section 7Q.
Bajaj Finance appealed this composite demand before the CGIT. Recognizing the merits of the appeal, the CGIT granted a conditional stay—requiring Bajaj Finance to deposit 25% of the 7A dues only, i.e., roughly ₹14.55 crores.
The Controversy:
Despite the specific language of the CGIT’s stay order, the EPFO interpreted the condition as requiring Bajaj Finance to deposit 25% of the entire amount (i.e., 7A + 7Q). On this basis, EPFO initiated coercive recovery action under Section 8F of the EPF Act and issued an order to the bankers of Bajaj Finance to remit funds.
Bajaj Finance challenged this interpretation, asserting that the CGIT had explicitly directed deposit of 25% of the 7A amount only, not the combined amount with interest under Section 7Q.
Observations of the High Court:
The Bombay High Court agreed with Bajaj Finance’s contention, emphasizing that:
- The CGIT’s order unambiguously directed the deposit of only 25% of the 7A assessed dues.
- EPFO’s interpretation to include the 7Q interest component was unwarranted and not supported by the language of the Tribunal’s order.
- The EPFO should have approached the CGIT for clarification if there was any doubt about the order’s scope.
- Taking unilateral coercive steps based on its own interpretation was “inappropriate” and unjustified.
The Court’s Decision:
Order Set Aside:
The High Court quashed the RPFC-I’s order dated April 26, 2025, and all actions taken pursuant to it, including bank account attachments.
Liberty to EPFO:
The Court gave liberty to EPFO to approach the CGIT to seek clarification on the stay order if it believes the interpretation is erroneous.
Legal Principle Established:
A statutory authority like EPFO must respect judicial directions and cannot act independently based on differing interpretations. The lawful course of action is to seek clarification from the issuing tribunal, not to proceed with unilateral enforcement.
Legal Implications
This ruling reinforces a critical legal principle: quasi-judicial and statutory authorities must adhere strictly to judicial orders and cannot overreach by reading into orders what is not expressly stated. It underscores the importance of due process and the need for restraint, especially when judicial protection against coercive recovery is in place.
As it stands, Bajaj Finance enjoys protection from any coercive recovery by EPFO, provided it complies with the CGIT’s direction to deposit 25% of the Section 7A dues. The EPFO, if unsatisfied, may either seek a clarification from the CGIT or challenge the High Court’s ruling before the Supreme Court. Until then, no recovery action can labour laws lawfully proceed against Bajaj Finance.
