Case Study: Principal Employer Not Liable for PF Dues of Contractual Loaders

Principal Employer Not Responsible for PF Dues Without Proper Identification of Contractual Labour

Case

Hindustan Petroleum Corporation Ltd. v. Asstt. Provident Fund Commissioner

Court and Date

Chhattisgarh High Court
WPL No. 1027/2011
Date of Judgment: 4th February 2025
Judge: Hon’ble Mr. Rakesh Mohan Pandey, J.

Relevant Law

• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  • Section 2(f) – Definition of “Employee”
  • Section 7A – Determination of dues from an employer

Background

Hindustan Petroleum Corporation Ltd. (HPCL) outsourced loading/unloading of LPG cylinders to contractors. These contractors used casual labourers, who were not on HPCL’s rolls. The Petroleum Workers’ Union filed a representation to EPFO, claiming these workers were entitled to PF coverage. Based on this, the APFC initiated a Section 7A enquiry and directed HPCL to submit employee records, declaring it the principal employer.

Legal Issue

Whether HPCL can be held liable under the EPF Act for contractual labourers engaged by independent contractors, when no identification of such labourers was carried out.

Key Legal Findings

• No employer-employee relationship was established.
• The contractors couldn’t provide details of the workers.
• The employees were never called for identification.
• Mere presence at HPCL premises did not imply direct employment or control.
• Section 7A inquiry must be evidence-based, requiring identification and documentation.

Judgment

The Court quashed both the APFC’s order (04/09/2001) and the EPF Appellate Tribunal’s confirmation (26/05/2010), stating:

• The enquiry lacked procedural fairness.
• No identification or proof of employment relationship was established.
• EPFO acted without documentary or oral evidence as mandated under Section 7A.

Conclusion

HPCL cannot be held liable for PF dues of labourers engaged casually by contractors, especially in the absence of proper identification and control. The Court allowed authorities to initiate fresh inquiry only in accordance with law.

Key Learning

📌 Principal employers are not liable for PF contributions of contract labour unless:

• Workers are permanently or regularly employed,
• Proper identification is done, and
• A clear employer-employee relationship is established with documentary and oral evidence.

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