Case Study: Calcutta High Court Allows Reassessment of EPF Interest Due to Bona Fide Error

Case

Inland Waterways Authority of India v. Employees’ Provident Fund Organization, Kolkata & Ors.
WPA 30900/2024
Date of Judgment: 14 January 2025
Hon’ble Judge: Mr. Justice Aniruddha Roy
Court: Calcutta High Court

Relevant Law

• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  • Section 14B: Power to recover damages for delayed payment.
  • Section 7Q: Liability to pay interest on delayed remittance of contributions.
  • Section 7-I: Appeal provisions under the Act.

Background

The Inland Waterways Authority of India (IWAI) filed a writ petition challenging an order passed by the Employees’ Provident Fund Authority (EPFO).

• The EPF Authority had levied damages under Section 14B and interest under Section 7Q of the EPF Act, citing delayed remittance of provident fund dues.
• While the appeal against the Section 14B order was already pending, IWAI approached the Court to challenge the Section 7Q order, arguing that the delay was not intentional.
• IWAI submitted that due to a bona fide mistake in the Electronic Challan-cum-Return (ECR), the salary disbursal date was wrongly entered, which made it appear as if the deposits were delayed.

Legal Issue

Whether, in a case of bona fide clerical error in the ECR entry, the EPF Authority can be directed to revisit the assessment of interest under Section 7Q, even though such an order is not appealable under the Act.

Key Legal Findings

• Order under Section 7Q not appealable:
  The Court reiterated that an order passed under Section 7Q of the EPF Act is not subject to appeal under Section 7-I.
• Scope for reconsideration in case of bona fide error:
  Despite non-appealability, the Court observed that when there is a genuine and unintentional error, such as a mistake in entering the salary disbursal date, justice demands that the employer be allowed to produce supporting documents.
• Interest under Section 7Q:
  Interest is automatically levied only when EPF contributions are remitted belatedly. If the alleged delay stems from an entry error rather than actual late payment, reassessment may be justified.
• Procedural directions:
  • The petitioner was directed to submit all relevant documents within two weeks.
  • The EPF Authority was ordered to conduct a fresh hearing and pass a reasoned order within six weeks.
  • The impugned order was to be kept in abeyance during this process.
  • If the reassessment favored the petitioner, any recovered amount was to be refunded within three weeks.
  • If not, the order would regain full legal effect.

Judgment

The Calcutta High Court disposed of the writ petition with specific procedural directions:

• The Court allowed IWAI to submit supporting documents proving the bona fide error in salary disbursal dates.
• The EPF Authority was directed to revisit the issue and issue a reasoned decision within six weeks.
• The impugned order under Section 7Q would remain in abeyance until the reassessment was completed.
• The pending appeal under Section 14B was to continue separately as per law.

Conclusion

The judgment demonstrates the Court’s balanced approach—upholding statutory limits while ensuring fair opportunity and procedural justice.
Although orders under Section 7Q are not appealable, the Court emphasized that in cases of genuine clerical mistakes, employers must be allowed to clarify their position and correct errors that could unfairly inflate their liability.

Key Learning

• Section 7Q orders are not appealable, but courts may allow review in cases of bona fide mistakes.
• Interest liability arises only from actual delay, not from technical errors in reporting or ECR entries.
• Employers should maintain accurate ECR data and supporting records to avoid wrongful penal interest.
• Courts can grant interim relief by keeping impugned orders in abeyance during reassessment.
• Section 14B (damages) and Section 7Q (interest) proceedings are distinct, and both must be handled separately under law.

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