Вы находитесь на странице: 1из 189

NATIONAL ACADEMY FOR TRAINING AND RESEARCH IN

SOCIAL SECURITY
READING MATERIAL

HANDBOOK FOR EOs/AAOs

The role of Enforcement Officer under the Compliance 2001 is more


important. Similarly the role of Assistant Accounts Officer under the
modernisation program is also equally important. The present training
programme focuses on the role of Enforcement Officer/Assistant Accounts
Officer for the better implementation of the provisions of Act and Schemes.

The topics included are key functional areas in Compliance and Recovery
and gives a fairly detailed description of the duties and responsibilities of officers
at the middle and senior level. The topics on “Compliance 2001”, “CCTS”,
Provisions relating to Levy of Damages and Exemption are of utmost
importance.

This booklet is not a substitute for the Act and Scheme or the Manuals but is
intended only as a reference guide to retrieve useful information in times of need
so that, field officers can discharge their functions and duties more effectively
and systematically. This handbook is a sincere attempt on the part of Zonal
Training Institute, EPFO, Chennai to compile all relevant issues and the latest
Instructions are appended at the end of the book. However, this handbook is not
a substitute to the statute or manuals.

2. The valuable guidance and suggestions received from many serving and
retired officers and officials of EPFO and their expertise in the field offices
made this book a valuable reference book. It is hoped that the users will be
benefited by this hand book for their efficient performance of the training.
2

HANDBOOK FOR EOs/AAOs

CONTENTS – PART II

S.No. Topic Page No.


1. Inspectors – Role, function and powers 1-9
2. Compliance 2001- Salient features 11-18
3. Role of APFCs Compliance 18-24
4. C.C.T.S – Object & Scope - Preparatory Action. 25-27
5. C.C.T.S – Salient Features – Compliance Default Codes 28-30
6. C.C.T.S – Input & output – Monitoring Report. 31-33
7. Assessment of dues under Section 7A – Section 7B and 7C 34-42
8. EPF Appellate Tribunal 43-50
9. Penal Provisions 51-65
10. Levy of Penal Damages 65-75
11. Application of Section 7Q 76-77
12. EPFO – Recovery Machinery 78-94
13. Penal Provisions to exempted establishments – Application. 94-96
14. Drill for conduct of Inspection of Un-exempted 97-98
Establishment
15. Drill for conduct of Inspection of Exempted Establishment 98-99
16. Terms and conditions of exemption under EPF Scheme 99-103
17. Holding of Securities in Demat Form 103-109
18. EPF System of Accounts 109-113
19. Revised Banking Arrangements 113-117
20. Pattern of Investment of funds 117-121
21. Settlement of PF Claims 122-128
22. EPS 1995 – Benefits – Dos and Don’ts in processing the 128-142
claims – Scrutiny of Form 10C and 10D
23. Pension Disbursement – Reconciliation – Disbursing 142-149
Agencies – Life Certificate
24. Settlement of EDLI Claims – Case Study 150-155
25. Procedure of crediting Interest 155-158
26. Nomination – Importance – Handling of death claims in the 158-162
absence of Nomination
27. Issue of PF Annual Statement of Accounts 162-168
28. Transfer of PF Dues on grant/cancellation of exemption 168-170
29. Transfer value of Pension Fund from Exempted to 171-173
Unexempted or Unexempted to Exempted Fund on
Grant/Cancellation of Exemption under EPS1995
APPENDIX I
IMPORTANT CIRCULARS
3

1
INSPECTOR

Powers and functions of Enforcement Officer under Section 13 of the


Act – Action by EO with regard to Annexure ‘A’ & Annexure ’B’

Appointment of Inspectors:
There are two kinds of Inspectors, one appointed by notification under Section 13 of
the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 merely to exercise
certain powers mentioned in that section. The others are officers of the Employees’ Provident
Fund Organisation or outside thereof who could be appointed as Inspectors for exercise of
powers referred to above. The former is appointed under Employees’ Provident Funds (Staff
and Conditions of Service) Regulations, 1962 and fall under the distinct cadre of Enforcement
Officers. The Central Provident Fund Commissioner, Regional Provident Fund
Commissioners, Assistant Provident Fund Commissioners and Enforcement Officers are
notified as Inspectors under Section 13 of the Act. A notification regarding appointment of
Provident Fund Officer and Enforcement Officer to be “Inspector” under Section 13(1) of the
Act is issued.

Duties and responsibilities:


The chief duties and responsibilities of an Inspector are:
1. (a) to bring under the purview of the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952 every establishment which attracts the application of the Act
by reason of requisite employment strength and its nature of activity;
(b) to recommend the coverage of establishment under section 1(4) of the Employees’
Provident Funds and Miscellaneous Provisions Act, 1952 on the joint request of
the employer and the majority of the employees of the establishment provided the
establishment is not liable to implement the Act;
(c) to bring under the ambit of the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952, establishment participating in Common Provident Fund in
which one or more than one establishment is already covered under the Act;
2. To secure full compliance by the employer of that establishment with the provisions
of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and
Schemes framed thereunder;
3. To attend to the problems of employers arising in the process of compliance and to the
grievances of employees including rendering service through the Service Centre, if
any set up, and where he cannot solve the problem or redress the grievances, to report
the case to the Regional Provident Fund Commissioner for further action;
4. To conduct surveys when asked to, assess coverage potential to new categories of
establishment;
4

5. To supply various prescribed forms to the employers on their request and educate them
about their proper completion and punctual submission to the Regional/Sub-Regional
Office;
6. to report to the Regional Provident Fund Commissioner, evasion, abuse, violation,
defect or abnormality noted in the implementation of the Employees’ Provident Funds
and Miscellaneous Provisions Act, 1952 and Schemes framed thereunder;
7. To serve the warrant on the defaulting employer in recovery cases and attach and sell
the property of the defaulting employer and to assist the Recovery Officer.
8. To attend to prosecution cases;
9. To conduct the prosecution cases as Assistant Public Prosecutors. All the Enforcement
Officers are notified as Assistant Public Prosecutors.
10. To ensure that the establishment exempted under Section 17(1) / 17(1C) / 2(A) of the
Act / the establishment, where its individual/class of employees exempted under
paragraph 27 / 27A of Employees’ Provident Fund Scheme, 1952 or paragraph 28 of
Employees’ Deposit Linked Insurance Scheme, 1976 as the case may be, is complying
with the relevant provisions of the Act/Scheme and also the conditions governing the
grant of exemption stipulated by the appropriate Government or Central Provident
Fund Commissioner or Regional Provident Fund Commissioner, as the case may be.
11. To serve summons/warrants on the accused in respect of prosecution cases launched,
to enable quick results in larger interests of the Organisation; and
12. To obtain the requisite documents or particulars or verification of facts, etc., that are
required by Regional Office/ Sub-Regional Office for rendering effective service by
keeping liaison between the establishment and the office. He shall arrange to obtain
and forward the final settlement claims and pension claims of retiring employees two
months in advance of their retirement. The Regional Provident Fund Commissioner in-
charge of the Region shall fix a target for each Enforcement Officer in the matter of
applicability of the Act to the establishments and enrolment of members, for each year
and the progress will be monitored on monthly basis through the respective Regional
Provident Fund Commissioners. the Enforcement Officers should ensure compliance of
the target fixed;
13. To verify and certify the past accumulations dues transferable by the establishment
on account of application of the Scheme either due to coverage or on cancellation of
exemption.
14. To carry out such other functions as may be assigned to him/her by the competent
authority.

Powers of Inspectors (Enforcement Officers):


The Inspector has been given the following statutory powers (vide Section 13 of the
Employees’ Provident Funds and Miscellaneous Provisions Act, 1952), to enable him to
discharge his duties effectively:
(a) To require any employer or any contractor from whom any amount is recoverable
under section 8A of the Act to furnish such information, as he may consider necessary;
(b) At any reasonable time and with such assistance as he may require to enter and search
any establishment or any premises connected with it and require any one found in-
charge of it to produce for his examination any accounts books, registers and other
5

documents which have bearing on the employment of persons and payment of wages in
the establishment;
(c) to examine with respect to any matter relevant to the aforesaid purpose the employer or
any contractor from whom any amount is recoverable under Section 8A or his agent or
servant or any other person found in-charge of the establishment or any premises
connected therewith or whom the Inspector has reasonable cause to believe to be the
employee of the establishment;
(d) to make copies of or take extracts from any book, register or other documents,
maintained in relation to the establishment and, where he has reason to believe that any
offence under this Act has been committed by the employer, seize with such assistance
as he may think fit, such book, register or other document or portion thereof as he may
consider relevant to that offence;
(e) to exercise such other powers as the Schemes may provide.

Search and Seizure – Scope and Powers of Inspector:


Section 13 of the Act empowers an Inspector for search and seizure to secure
compliance from the establishment.
It is essential for every public servant to be well aware of his powers. This
knowledge of powers helps him in discharging his duties more efficiently. Similarly, he
can thereby avert the danger of exceeding limits of powers. Acting beyond the limits of
powers can cause lot of problems including litigations. Similarly, if the public servant
is not aware of his powers, he will not be able to achieve the results which he otherwise
could have achieved by exercise of his powers. One of the powers of the Provident
Fund Inspector defined under Section 13(1) of Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952 is that of search and seizure. This power was not
available to the Inspectors in the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952 (hereinafter referred to as “the Act”) as it originally stood.
However, the same was conferred on them by an amendment made by Act 28 of 1963).
The Inspector can at any reasonable time carry out search, if necessary. He can
also seize the documents connected with an offence under the Act, which he has reason
to believe to have been committed. For carrying out the search and seizure, the
assistance as deemed fit by the Inspector can be obtained. If it is felt that the law and
order problem is likely to be created, the assistance of local police can also be taken.
The power of search of the premises is to be exercised sparingly and with discretion
and as a last resort. Moreover, before carrying out the search it is desirable that the
Regional Provident Fund Commissioner should be informed about the circumstances
and his permission obtained to carry out the Search. If the employer refuses to produce
the records before the Inspector, he should be persuaded to produce the same and even
then if he fails to produce, the power of search and seizure as the case may be, may be
exercised.
Section 13(2B) says that the provisions of Code of Criminal Procedure, 1973,
shall, so far as may be, apply to any search or seizure under that Section as they apply
to any search or seizure made under the authority of warrant issued under Section 94.
From the reading of this Section, it appears that it is not necessary to obtain warrant
before carrying out the search. But the procedure for search is laid down in Code of
Criminal Procedure, 1973 has to be scrupulously followed. The relevant provisions of
Code of Criminal Procedure, 1973 in this regard are those under Section 38 and Section
100. Section 100 of Code of Criminal Procedure, 1973 reads as follows:
6

“Persons in charge of closed place to allow Search:


(1) Whenever any place liable to search or inspection under this Chapter is closed,
any person residing in, or being in charge of, such place, shall, on demand of the
officer or other person executing the warrant, and on production of the warrant, allow
him free ingress thereto, and afford all reasonable facilities for a search therein.
(2) If ingress into such place cannot be so obtained, the officer or other person
executing the warrant may proceed in the manner provided by sub-section(2) of
Section 47.
(3) Where any person in or about such place is reasonably suspected of concealing
about his person any article for which search should be made, such person may be
searched and if such person is a woman, the search shall be made by another woman
with strict regard to decency.
(4) Before making a search under this Chapter, the officer or other person about to
make it shall call upon two or more independent and respectable inhabitants of the
locality in which the place to be searched is situate or of any other locality if no such
inhabitant of the said locality is available or is willing to be a witness to the search, to
attend and witness the search and may issue an order in writing to them or any of them
so to do.
(5) The search shall be made in their presence, and a list of all things seized in the
course of such search and of the places in which they are respectively found shall be
prepared by such officer or other person and signed by such witnesses; but no person
witnessing a search under this Section shall be required to attend the court as a
witness of the search unless specially summoned by it.
(6) The occupant of the place searched, or some person in his behalf, shall, in
every instance be permitted to attend during the search, and a copy of the list prepared
under this Section, signed by the said witnesses, shall be delivered to such occupant or
person.
(7) When any person is searched under sub-section (3), a list of all things taken
possession of shall be prepared and a copy thereof shall be delivered to such person.
(8) Any person who, without reasonable cause, refuses or neglects to attend and
witness a search under this Section, when called upon to do so by an order in writing
delivered or tendered to him, shall be deemed to have committed an offence under
Section 187 of the Indian Penal Code (45 of 1860).”

While carrying out the search it is absolutely essential that at least two
independent witnesses are present. Sub-section (4) of Section 100 says that the officer
carrying out the search shall call upon 2 or more responsible inhabitants of the locality
in which place the establishment is situated or any other locality, if no such inhabitant
is available or willing to give witness for search. The emphasis is on the neutrality and
respectability of the witnesses. Such witnesses should be unprejudiced and independent
and able to inspire the confidence of the Court if such a case is put up for trial. Trial, of
course, applies mostly to cases investigated by police and Income Tax authorities, etc.
It is desirable that these independent witnesses should be requisitioned from other
Government department like ESIC, Office of Labour Commissioner, Factory
Inspectorate, etc., wherever available. Such witnesses will be mostly unprejudiced,
respectable and independent.
7

Before carrying out the search the Inspector should disclose his identity and that
of the witnesses to the employer or occupant of the premises, as the case may be. He
should then call upon the occupier to immediately produce the relevant documents or
records. If he fails to do so the search of the premises can be carried out in order to
trace the documents or records in question. It is essential that the occupant of the
premises should remain present can be allowed to watch the search. After the search is
over, a “panchanama” should be drawn on the spot incorporating therein the time of
the commencement of the search, the time when it was over, the particulars of the
documents, records found or seized, description of the place from where it was found
or seized, and other details of the search. The seized documents, records or things
should be suitably marked for identification. Generally, the signatures of the witnesses
with date are obtained on the documents, records or things seized. The panchanama
should be signed by the witnesses and the officer carrying out the search on the spot. A
copy thereof should be delivered to the occupant of the premises and his signature
obtained on the copy retained by the Inspector. Even if no documents are found, ‘nil’
panchanama should be drawn. If during the course of the search some other
objectionable material like foreign currency, significant amount of unaccountable cash,
unlicensed arms, etc., is found the appropriate authority should be informed
immediately. If the employer or the occupier of the premises where search is to be
carried out does not allow the Inspector and search party to enter the premises, resort
can be taken to the provisions of Section 47(2) of Code of Criminal Procedure, 1973.
Under this provision, if, even after disclosure of identity, authority, purpose and the
demand of admittance duly made, the ingress cannot be obtained, it shell be lawful to
break open any out or inner door or window of any house or place where search is to be
taken. But, if such a place is in the actual occupancy of a female, who as per custom, is
purdanshin, the officer carrying out the search shall, before entering such apartment,
afford her every reasonable opportunity to withdraw and may then break open the
apartment and enter it. Provision has also been made in Section 47(3) of Code of
Criminal Procedure, 1973 to take care of the situation where the officer who has legally
entered to carry out the search is detained or locked inside. In such an event he has the
power to break open the door, window, etc., in order to liberate himself and the search
party.
It is obvious that the situation described above, viz., seeking ingress by making
open the doors or lock or seeking to come out when locked inside will very rarely arise.
The Inspector should be tactful to avoid such situations. If such a situation is likely to
arise the assistance of local police must be taken before proceeding for search.
As regards the seizure it is clear that this power is available only in respect of
the books, register or other documents or portion thereof as are relevant in respect of
any offence under the Act which the Inspector has reason to believe to have been
committed by the establishment. It is necessary to prepare a seizure memo, on the spot,
in respect of the seized documents. The seizure has also to be done before two
independent and respectable witnesses. The seizure memo should contain the details of
date, place and time of seizure, the signature, name of the persons from whom seized,
the description of articles seized, the signature and name of the person from whom
seized, the names of witnesses and their signatures, designation and full address and
signature of the officer carrying out the seizure. The seized documents should also be
marked for identification and signed by the witnesses with date. A copy of seizure
memo should be delivered to the person from whom the documents were seized and his
acknowledgement should be obtained for having received the copy.
It is observed that a feeling of helplessness is often expressed by the
Enforcement Officers regarding reluctance or non-cooperation of the employers in the
8

matter of production of record. If the situation so warrants, the officers can take resort
to their power of search and seizure in the manner stated above. This will have desired
effect and the employers will also have the fear of authority of Inspectors.
To sum up:
 Use the power of search and seizure sparingly and with discretion.
 Use it only when persuasion fails.
 Apprise your Regional Provident Fund Commissioner about the circumstances and
preferably obtain his permission to carry out search.
 Take the assistance of local police before proceeding for search, if law and order
problem is visualised.
 Take two independent respectable and unprejudiced witnesses preferably two
Government servants from departments like ESI Corporation, Office of Labour
Commissioner, Factory Inspectorate, etc., as panchas.

Section 94 of Code of Criminal Procedure, 1973 (Old Section 98), inter alia,
provides-
“that if a District Magistrate, Sub-Divisional Magistrate or Magistrate of the First Class
(JMFC) has reason to believe that any place is used for depositing or selling stolen
property or for depositing, selling or producing any objectionable article described in
this Section, he may by warrant authorise any police officer above the rank of a
constable to:
(a) enter such place with such assistance as may be required;
(b) search the same in the manner specified in the warrant;
(c) to take possession of any property or article found there, which he reasonable
suspects to be one for which search was carried out.

Section 99 of Code of Criminal Procedure, 1973 states that provisions of Section 38,
70, 72, 74, 77, 78 and 79 shall so far as may apply to all search warrants issued under
Section 93, 94, 95 and 97.
Contents of Panchnama
1. Name and designation of the officer carrying out search
2. Name, designation and full address of witnesses.
3. Date and time of commencement of search.
4. Date and time of completion of search.
5. Description of what the panchas saw, viz., how the search was actually carried out,
names of members of search party, what documents/records were seized from which
place, that the articles seized where marked for identification, the employer or the
occupier of the premises was present and watched the proceedings of search. If no
seizure made then the description of documents found for examination and places
from where found, etc.
6. Panchnama to be drawn on the spot.
9

7. Panchnama to be signed by the Inspector carrying out search and by the witnesses
on the spot.
8. Copy thereof to be delivered to the employer or occupier of the premises and his
signature obtained in token of having received the same.

Seizure Memo
(Under Section 13(2)(d)/13(2A) of Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952.)
1. Date of seizure :
2. Time of seizure :
3. By whom seized :
4. From whom seized :
5. Place from where seized :

Particulars of articles seized

Signature of the person from whom seized:

Signature of witness with full name, designation and address:


(1)
(2)
Signature of the Inspector (Enforcement Officer):

Action by EO with regard to Annexure ‘A’ and Annexure ‘B’:

Preparation of Annexure ‘A’ is the prime responsibility of Compliance Section.


This should be prepared carefully and where the visit of the Enforcement Officer to the
establishment is absolutely necessary and the defaulting establishments should
necessarily be included in the Annexure ‘A’. In addition, the requirement of accounts
branch, if any, should also be included. The Annexure ‘A’ should be prepared
preferably on weekly basis and provide the number of establishments atleast 7
establishments per day. This will take care of the actual and effective inspection that
can be conducted by the Enforcement Officer. The establishments listed in the
Annexure ‘A’ should be supported by an authority letter for each establishment under
the signature of the Assistant Provident Fund Commissioner of the circle. No
Enforcement Officer is expected to visit the establishment
without the authority letter. There is no regular inspection of establishments by the
Enforcement Officer. The determination of dues under Section 7A also depends upon
the receipt of Form 12-A from the establishments. Wherever the default in submission
of Form 12A is detected through CCTS Reports, the Enforcement Officer should be
directed to procure the same.

Role of EO in filing prosecution:


10

In order to facilitate the accord of sanction to prosecute any defaulter, the


Enforcement Officer should furnish the Regional Provident Fund Commissioner a
detailed report, touching on the following points:
(i) Name of the establishment.
(ii) Nature of the legal composition of the management, viz., Sole Proprietorship
concern, Partnership firm, Limited Company, etc.
(iii) Name and designation of the employer (where the person committing
offence is a company, name of the person who was in-charge and
responsible to the company at the time when the offence was committed as
well as of the company), if the fact indicates that the offence has been
committed with the consent or convenience or is attributable to any neglect
on the part of any Director or Manager, Secretary of the company name of
such Director, Manager, Secretary and other Officer also be indicated.
(iv) Address of the person(s) against whom prosecution is to be launched.
(v) Facts constituting the offence (Section of the Act/Paragraph of the Scheme).
(vi) Evidence (witness as well as records) for supporting the case.

Once the prosecution is sanctioned the complaints should be filed in the Court
within seven days along with the sanction of the Regional Provident Fund
Commissioner. A proper record of hearings, adjournments and consultations, if any,
with the Public Prosecutor or Private Lawyer should be maintained for each case, or a
group of cases to be disposed of jointly. Mere making of notes of hearing, adjournment
in the respective file is not enough. He should intimate the progress of the case(s) to
Regional Provident Fund Commissioner after each hearing.

The employer’s action in violation of the provisions of the Act / Schemes


should be carefully brought out before the Court. Where the employees’ contribution
after having been deducted has not been paid, the fact that such Act constitutes
Criminal Breach of Trust should be stressed before the Court to drive home the
seriousness of the offence. Section 14AA provides for enhanced punishment for certain
offences after previous conviction for similar offence. While filing the complaint, the
fact of previous conviction, if any, for similar offence should be brought to the notice
of the Court. He should also press for enhanced punishment under Section 14AA of the
Act. He should request the Court for awarding a portion of the fine as compensation to
the prosecution expenses as contemplated under Section 357 of the Code of Criminal
Procedure, 1973.

Section 357 of Code of Criminal Procedure, 1908:

(1) When a Court imposes a sentence of fine or a sentence (including a sentence of


death) of which fine forms a part, the Court may, when passing judgement, order
the whole or any part of the fine recovered to be applied--
(a) in defraying the expenses properly incurred in the prosecution;
11

(b) in the payment to any person of compensation for any loss or injury caused by
the offence, when compensation is, in the opinion of the Court, recoverable
by such person in a Civil Court;
(c) when any person is convicted of any offence for having caused the death of
another person or of having abetted the commission of such an offence, in
paying compensation to the persons who are, under Fatal Accidents Act, 1855
(13 of 1856) entitled to recover damages from the person sentenced for the
loss resulting to them from such death;
(d) when any person is convicted of any offence which includes theft, criminal
misappropriation, criminal breach of trust, or cheating, or of having
dishonestly received or retained, or of having voluntarily assisted in disposing
of, stolen property knowing or having reason to believe the same to be stolen,
in compensating any bona fide purchaser of such property for the loss of the
same if such property is restored to the possession of the person entitled
thereto.
(2) If the fine is imposed in a case which is subject to appeal, no such payment shall
be made before the period allowed for presenting the appeal has elapsed, or, if an
appeal be presented, before the decision of the appeal.
(3) When a Court imposes a sentence, of which fine does not form a part, the Court
may, when passing judgement, order the accused person to pay, by way of
compensation, such amount as may be specified in the order to the person who has
suffered any loss or injury by reason of the act for which accused person has been
so sentenced.
(4) An order under this section may also be made by an Appellate Court or by the
High Court or Court of Session when exercising its powers of revision.
(5) At the time of awarding compensation in any subsequent civil suit relating to the
same matter, the Court shall take into account any sum paid or recovered as
compensation under this section.
As soon as the final orders are passed by the Court, he should immediately
make a report to the Regional Provident Fund Commissioner giving a gist of the order.
He should take steps to obtain a copy of the order at the earliest. (To leave the task of
obtaining a copy to the Public Prosecutor or Private Lawyer, if one has been engaged,
may result in getting the appeal, if any, time barred).
Under no circumstances, he should with hold the sanction and delay the filing
of complaints except on written direction from the sanctioning authority, withdrawing
the sanction accorded. The Enforcement Officer should not Act on oral directions in
such cases.
The Courts should be prayed not to grant requests for adjournments so that the
employees of the establishment are not put to hardships due to delay in the realisation
of dues.
Wherever a portion of fine is awarded to the Organisation as compensation,
prompt action should be taken to collect the same from the Court and to deposit in EPF
Account No.02.
Wherever the employer did not comply with the orders of the Court in the
remittance of dues within the stipulated period, the Court should be approached for
invoking the provisions of Section 14C (2) of the Act for awarding enhanced
punishment.
12

Any difficulty or abnormal delay in the trial or disposal of prosecution should


be reported to the Regional Provident Fund Commissioner, for such action as may be
deemed necessary.
The progress of prosecution cases should be watched through the special
Register prescribed for this purpose.
The Enforcement Officer should fully acquaint himself with the provisions of
the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and Schemes
and the procedures.
Role of Enforcement Officer in Recovery Machinery:
Section 8 to 8G of the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952, deals with recovery of Provident Fund and other dues. The
Enforcement Officer should fully acquaint himself with the provisions of the Act and
procedure contained in the Chapter on Recovery Machinery.
He should assist the Recovery Officer in the recovery matter. For this purpose,
he should obtain the latest bank account details of the establishments, details of
debtors, business etc. and he should submit the same to the Assessing Officer/Recovery
Officer. He should also obtain the latest Form 5A.

2
COMPLIANCE 2001 – INTRODUCTION – SALIENT
FEATURES

INTRODUCTION TO COMPLIANCE:
In terms of securing compliance with Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952, the Compliance Wing of the Organisation need to
ensure -
(1) Timely coverage of all coverable establishments.
(2) Timely allotment of Code Number for a covered establishment.
(3) Timely enrolment of all eligible employees to Provident Fund.
(4) Timely deduction and remittance of dues to the funds.
(5) Timely detection of default for recovery and penal action.
(6) Timely levy of damages.
(7) Timely grant of exemption.
(8) Timely inspection of establishments.
(9) Timely action on legal matters.
13

(10) Infusing and sustaining hope, faith and conviction in the minds of
subscriber-members.

Default Management - Recovery of dues:

To fulfil the mission of the Organisation and the objectives of the Act and
Schemes, the default management and the recovery of dues are the key factors. To
achieve this, the steps to be taken by the Enforcement are –
(a) Determine the dues under Section 7A of the Act.
(b) Realise Current Demand through the modes of recovery under Section 8F of the
Act.
(c) Issue Recovery Certificates to the Recovery Officer to realise the dues by
attaching the movable/immovable properties and arresting the employer and his
detention in prison.
(d) In the case of default of employees’ share of Provident Fund contributions, first
information reports are to be filed with the Police authorities in terms of Section
406/409 of Indian Penal Code.
(e) Ensure the frequent visits by Enforcement Officer to the defaulting
establishments.
(f) Defaulters should be brought to the notice of the employees’ Union and the
employers’ Organisation.
(g) Furnish the list of defaulters to the Banks so as to insist clearance certificate on
Provident Fund and other dues before considering sanction of loans/advances to
the establishments.
(h) Furnish the list of defaulters to the Income Tax authorities so as to enable them
to examine the question of allowing relief, etc.
(i) In genuine and deserving cases instalment facility be allowed to defaulting
employers to clear the dues.
(j) Recovery of interest under Section 7Q of the Act.
(k) Levy of damages on all belated payments in terms of Section 14B read with
relevant provisions of the Scheme(s).
(l) Approach the Executive Magistrate to bind the accused employers for good
conduct under Section 110 of Code of Criminal Procedure, 1973.
(m) Prosecution of defaulters, invoking Section 14 of the Act.
(n) Wherever the punishment awarded by lower Courts are meagre and inadequate,
appeals to be made to secure enhanced punishments.
(o) Display the list of ten highest defaulters with the names of the establishments and
the amount in default through a Notice Board, prominently placed at the entrance
of the Regional/Sub-Regional Offices/Inspectorates.
Set-up:
The Head Office at Delhi is responsible for securing ‘COMPLIANCE’ under
the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 including -
14

(a) conduct of survey for the purpose of inclusion of more industries and class of
establishments under the purview of the Act;
(b) to propose amendments to the provisions of the Act for effective enforcement.
(c) to assist the Committee on exempted establishment.
(d) to process the applications seeking exemption from the operation of the
Scheme(s).
(e) to monitor, review and assist the regions in the matter of recovery machinery,
default management, legal cases and Appellate Tribunal and to issue suitable
guidelines and procedural aspects in regard to the implementation of the Act.
(f) to look into the grievances/complaints on Enforcement through squad of
inspectors.

The Headquarters Office shall obtain the requisite data on various enforcement
matters for inclusion in the organisation’s Annual Report for its presentation to the
Central Board of Trustees, Employees’ Provident Funds and placing it before the
Parliament.
In the regions headed by Regional Provident Fund Commissioner, Grade I, he is
assisted by Regional Provident Fund Commissioners, Grade II, with definite
assignments namely, Enforcement, Recovery, Legal, Exemption, etc. The District
Offices are located wherever the concentration of establishments are there and manned
by Enforcement Officers for effective field functioning. The District Offices in certain
selected areas is also designated as Service Centres to guide and assist the employers in
complying with the provisions of the Act and Schemes and, in addition, render service
to the subscribers in getting their benefits under the Schemes framed under the Act,
expeditiously.
The Assistant Provident Fund Commissioner and Enforcement Officers are also
vested with the powers of enforcement to assist the Regional Provident Fund
Commissioner in their respective sphere so as to ensure proper enforcement of
Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

Every Regional Office / Sub-Regional Office should set up an exclusive section


for each of the following functions:
15

(1)Compliance Section - i) Intelligence Section (Applicability of the Act)


ii) to handle unexempted establishments, including
securing Compliance from Establishments, monitoring
of Enforcement Officers and inspection of
establishments, default management, enforcing penal
provisions, etc.

(2)Exemption Section -to process the exemption applications and monitor the
performance of exempted funds.

(3)Damages Section -to initiate action to levy and realise Penal Damages and
interest under Section 7Q, wherever due.

(4)Recovery Section -to initiate action to recover the arrear dues including
arrear interest due under Section 7Q.

(5)Legal Section -to handle Court cases, Appellate Tribunal and Writ
Petitions.

(6)‘Inspector’ -to perform the functions under Section 13 of the Act by


the Enforcement Officers.

Note: Considering the need, the above nature of work may be


handled separately in each Section or combined in one
or more Sections, set up to handle all the above matters.
However, the procedure prescribed in respect of each
nature of work should be strictly followed.
16

Flow Chart of Compliance Machinery: Authorities empowered to enforce


the Employees’ Provident Funds & Miscellaneous Provisions Act,
1952.

CENTRAL P.F.COMMISSIONER
(Chief Executive)

Addl. CENTRAL P.F.COMMISSIONER


(Compliance)

REGIONAL P.F.COMMISSIONER
(Region)

Regional P.F.Commissioner Regional P.F.Commissioner Regional P.F.Commissioner Regional P.F.Commissioner


(Sub-Regional Office) (Compliance & Recovery) (Exemption) (Legal)

Assistant P.F.Commissioner
(Compliance & Recovery) Inspectorates

Survey & Application of Act


Enforcement Officers
Monitoring

Enforcement / Inspection
Service Centers
Default Management – 7Q

Penal Action

Recovery Proceedings

Legal / Tribunal / Consumer Forum


COMPLIANCE 2001 – AN INTRODUCTION
“Compliance 2001” programme was introduced in the year 2000-2001. The main
objective of the programme is:-

 what is claimed as establishments brought under the purview of the Act are
in effect brought under Compliance fold:

 what is claimed as members become contributing members and in their


accounts contribution realised and interest thereon gets credited and
individual annual statement of account issued in fulfilment of the statutory
obligation

Strategy:

To achieve the above objective, the compliance (enforcement) wings of the field
offices has been reoriented and restructured. All enforcement functions have been
consolidated at the level of a Circle Officer (Assistant PF Commissioner) with appropriate
complement of Enforcement Officers and support staff in each circle. Targets have been
fixed for each Circle Officer in areas of detection of default, disposal of 7A cases, recovery
and in enforcing compliance against the non-complying establishments. The purpose was
to coordinate, focus and channelise the entire machinery and concentrate on delinquent
employers so that members who are or claimed to be their employees are given the
benefits under the Schemes as per their rights.

Work distribution system in the compliance function area was restructured,


streamlined and the concept of area inspectors abolished. The primary objective being to
focus on all non-complying establishments with proper accountability. Computer software
was developed to cull out the progress achieved in converting an establishment from non-
complying to a complying level and at the same time ensuring credit of money into the
subscriber account.

The above issues are discussed at length in the following chapters

COMPLIANCE 2001 – SET UP OF COMPLIANCE WING- PLAN OF


ACTION AND IMPLEMENTATION
To fulfill the ‘Mission’ of EPFO and to achieve its objectives, an effective and
sound compliance machinery is essential.

The compliance wing of an office covers the area of application of the Act to
eligible establishments, entertaining voluntary coverage, securing compliance, grant of
exemption, default management, enforcing penal provisions of the Act, levy of damages,
monitoring performance of Enforcement Officers, Recovery, Tribunal and Legal matters
and furnishing of authentic and accurate MIS data for ABP return.

The Compliance Section is required to attend the following items of work so as to


enforce the provisions of the EPF & MP Act and the schemes framed there under:
18

1. Formation of circle and intelligence circle. Attaching officers to each circle.


The circle is headed by the Assistant Commissioner, who will be assisted by the
Enforcement Officers for the field performance. The Assistant P.F.
Commissioner will have a cross functional responsibility with reference to
accounts as well as enforcement matters.

2. The list of establishments falling in each circle should be maintained.

3. Maintenance of centralized register for covered establishment, on close of each


month to arrive at the actual number of live establishments dealt in the office.
The Code Number Register in the section should also be maintained up to date.
The establishments which are brought under the purview of the Act are required
to be closely monitored atleast for a period of 6 months to watch their
compliance through CCTS reports. This is with a view to arrest the tendency on
the part of newly covered establishments in committing default. The file relating
to applicability kept in the Compliance Section should bear a fly leaf on the front
inner cover to highlight the review made on the file by the Supervisors
periodically.

4. Maintenance of ‘History sheet in respect of each establishment. A ‘History


Sheet’ is an effective tool and serves for monitoring. It should necessarily be
maintained for each establishment in a Register Form so as to record the basic
details of the establishments with reference to coverage data, Form 5A, Bank
accounts, default position, penal/legal action initiated etc. Alternatively, the
History Sheet may be maintained along with the Coverage File.

5. Supply of guidelines to establishments seeking voluntary compliance.

6. Scrutiny of proposal/voluntary compliance applications received from


establishments.

7. Issue of letter allotting the Code No. of establishments within three days, by fax
and speed post.

8. Allotment of EPFO business number to each establishment.

9. To ensure disposal of application for allotment of code number, a register should


be maintained in the prescribed manner.

10. The allotment of code number to an establishment with full details should be fed
to the computer so as to update the establishment master.

11. On assigning code number, simultaneously the accounts group should also be
earmarked so as to achieve the purpose and ensure compliance.

12. While accepting the Demand Draft alongwith the application for allotment of
code number, it is also necessary to collect the Form 9(Revised), 5,10, 12A upto
the current month and also nomination forms of the members.

13. The receipt of these documents should be entered into computer before its
transmission to accounts branch.
19

14. The coverage file should be reviewed and any wanting


information/documents/clarification in regard to membership or the wages etc.
should be obtained through correspondence and wherever required the
establishment may be asked to appear for the enquiry under Section 7A and the
dispute settled.

15. The services of the Enforcement Officer should not be utilized for filing
deposition, presenting the case during enquiry Under Section 7A, except in case
of absolute necessity and with the prior permission of the Regional
Commissioner concerned.

16. Assisting the establishment in determining the dues to be deposited in different


accounts through Demand Draft. Filing of separate challans for each month.

17. A register to watch the conduct of 7A enquiries till the assessment of dues
should be maintained. In addition separate register for current demand and
arrear demand should be maintained so as to extract the details of the amount
assessed, amount realised in each month.

18. Preparation of Annexure ‘A’ is the prime responsibility of Compliance Section.


This should be prepared carefully and where the visit of the Enforcement Officer
to the establishment is absolutely necessary and the defaulting establishments
should necessarily be included in the Annexure ‘A’. In addition, the requirement
of accounts branch, if any, should also be included. The Annexure ‘A’ should
be prepared preferably on weekly basis and provide for the visit of atleast 7
establishments per day. This will take care of the actual and effective inspection
that can be conducted by the Enforcement Officer. The establishments listed in
the Annexure ‘A’ should be supported by an authority letter for each
establishment under the signature of the Assistant Provident Fund Commissioner
of the circle. No Enforcement Officer is expected to visit the establishment
without the authority letter. There is no regular inspection of establishments by
the Enforcement Officer. The determination of dues under Section 7A also
depends upon the receipt of Form 12-A from the establishments. Wherever the
default in submission of Form 12A is detected through CCTS Reports, the
Enforcement Officer should be directed to procure the same.

19. Registers such as Recovery Register, Register of Prosecution, Register of


Tribunal cases, Register of 406/409, Register of Writ Petitions, Register of BIFR
cases, Register of Attachment/Release of Properties, Claim Petition Register,
Register on 8F cases, Register on 110CrPC cases are to be kept and updated.

20. Generation of reports on compliance from the computer through CCTS


Software.

21. Forwarding of letter and damages statements (including 7Q) to the


establishment.

22. Issue of summons, assessment order etc.

23. The CCTS report should be thoroughly scrutinized with the assistance of
Enforcement Officer before its release.
20

24. To ensure prompt action in collecting the Form 12A through Enforcement
Officer, after 15 days of issue of 7A orders letter to banker should be sent under
Sec.8F wherever due.

25. To ensure filing of complaints under Sec.406/409 of IPC.

26. Invoking the provisions of the Section 8B, issue of authority letters etc.

27. Transfer of current demand to arrear demand on first April of each year.

28. To assist the Assistant P.F. Commissioner in conducting minimum number


(i.e.50) of 7A enquiries and also to assist the maintenance of DCB register at his
level.

29. Pursue Court cases and furnishing parawise comments promptly.

30. To obtain the list of inoperative establishment and to follow it up through the
Enforcement Officer for securing compliance.

31. The floppy on IEMS progress should be sent to Head Office every month
.
32. Identifying the closed establishment in the Computer under category 88.

33. Furnishing of statistical data on various enforcement activities, submission of


returns and reports.

34. The Enforcement Officer is expected to visit the office on weekly basis and meet
the Assistant Provident Fund Commissioner concerned and to submit the
Annexure ‘B’ and discuss the issues for follow up action. On receipt of the
Annexure ‘B’ from Assistant Provident Fund Commissioner with his remarks
and directions, follow up action should be taken by the compliance section
immediately.

35. Tackling of defaulters: It should be the prime concern of the Compliance


Section. All the defaulting establishment should be got inspected for the
purpose of conduct of 7A enquiries. With reference to Forms 12A, (after due
scrutiny and acceptance) on the day of enquiry the assessment order is to be
finalised, irrespective of the fact that whether the employer appears or not. The
Drill prescribed for the conduct of 7A enquiry, maintenance of DCB Register
and watching of acknowledgement on 7A order etc. should be closely monitored
by the Compliance Section. After 15 days from the date of issue of 7A order the
file should be reviewed with reference to 7A register for follow up action.
Action should be initiated under Section 8F and to direct the Enforcement
Officer to lodge a complaint under Section 406/409 for defaulting employees’
share of provident fund contributions. Depending upon the gravity of the case
all penal action should be initiated on due date and to determine whether the
dues are realizable or unrealizable.

36. Realisation of dues through Section 8F should be closely watched. Court cases
and prosecution cases should be pursued closely. All legal cases should be
21

reviewed every month. The data for ABP Return should be extracted only from
the concerned registers kept in the Compliance Section. These registers should
be closed on monthly basis under the signature of Assistant Provident Fund
Commissioner. The cases that are pending with the EPF Tribunal and Consumer
Forum etc. are to be examined for follow up action.

37. All Court cases should be attended by the Enforcement Officer and the Report
obtained for updating the History Sheet. At the end of each month a report from
the Enforcement Officer is required to be obtained to determine the follow up
action taken on the defaulters and realisation of current and arrear demand etc.
Wherever the penal damages and interest under Section 7Q are to be realized the
Enforcement Officer should be deputed and action initiated.

38. Unless the compliance is secured by the Compliance Wing it may not be
possible for the accounts branch to give compliance by issuing the Statement of
Accounts etc on due dates. Thus the successful functioning of an office is solely
depending upon the effective role of officials in the Compliance Wing.

3
ROLE OF APFCs COMPLIANCE

 Issue of Annexure ‘A’ (copy enclosed) alongwith the authority letter, (duly
signed by the Asst. Commissioner) to the EOs with reference to CCTS report,
IEMS report, defaulters list, major defaulters, Defaulters current and arrear
demand, non-submission of Form 12A, non-submission of Form 3A and 6A,
Pending Court case etc. This should be sent for a week/15 days.

 The EO on his visit to the office on weekly day should handover the Annexure B
alongwith the acknowledgement on the authority letter issued to the
establishment to the Assistant Commissioner. It is desirable to collect the tour
diary also from the EO, on weekly basis.

 To submit the Annexure ‘B’ (copy enclosed) to the Assistant Commissioner on


the day of EOs visit so as to provide necessary guidance to EOs for further
follow up action.

 To review the performance of EO, a review report is to be obtained in the format


suggested (enclosed)

 The response from employers on CCTS report should be carefully examined and
necessary action to be taken.

 To display the top ten major defaulters of the office, duly updated every month.
Similarly the model employers list (numbering ten) should also be displayed and
this should be communicated to the accounts group for extending speedy service
and issue of PPO and other benefits on the day of superannuation of the PF
members.
22

 The penal damages section should maintain the register for issue of notice with
reference to CCTS report, conduct of enquiry, issue of levy order, watching of
compliance through schedule of receipts and to take follow up action with
reference to current and arrear demand through EOs maintaining the summary
register to show the number of enquiries conducted, amount levied, amount
realized etc. While levying damages the amount due towards 7Q reflected
through CCTS report should also be conveyed to the employers.

 The amount of interest under Section 7Q with effect from 1.7.1997 should also
be watched for its realization.

 A separate review should be under taken in respect of past cases, i.e. with effect
from 1.7.97.

 To furnish the MIS/ABP(revised) return to the MIS section accurately.

 The dues towards pension contribution from the exempted establishment should
not be clubbed with the amount due from the exempted establishment to the
Board of Trustees.

 A proper monitoring should be kept on the exempted establishments on


PF/Pension/EDLI duly maintaining a register.

 The monthly and annual report should be watched properly and follow up action
to be taken.

 The clarification etc. sought for by the establishment should be dealt on priority.

 Action under Section 7A, 14B and other penal provisions should be initiated
promptly in respect of exempted establishments.

 The intelligence wing of the enforcement should be geared up; the references
received should be given due importance and priority.

 All applications under Section 1(4) should be scrutinised and forwarded to Head
Office.

 To enable Regional Commissioner to have a supervisory check on 7A orders and


other enforcement areas necessary assistance should be extended duly
submitting the files for verification/scrutiny.

 All the exempted establishments should be inspected only at the level of


Assistant Commissioner, no Enforcement Officer should be deputed for this
work directly or to assist the Assistant Commissioner.

 As there is a ban on issue of relaxation under Para 79 of EPF Scheme, an


establishment seeking exemption should comply as an unexempted
establishment till the establishment is notified, granting exemption. However,
specific cases of intricate nature should be dealt as per the guidelines issued by
the Head Office.
23

 To maintain the establishment files properly and to ensure updation of Form 5A


in respect of each establishment.

 To provide necessary assistance to the EOs in performing recovery action


promptly.

 To maintain the DCB register for inspection charges preferably through


computer.

 The work ‘Compliance’ means and includes –

“Compliance on the part of the employer in terms of payment of dues and


submission of returns” and
“Compliance on the part of EPFO in compilation of annual accounts and
issuance of annual PF statement through Form 23”

 Since the progress on IEMS is monitored through Computer and special efforts
should be made to secure compliance.

 The collection of Form 12A to the extent of 90% of the establishment is the
responsibility of the Assistant Commissioner. The Enforcement Section should
assist him in complying this direction of the Head Office and to meet the
requirement, the service of the Enforcement Officer should be availed with
positive result.

 The prompt submission of monthly and annual returns by the establishment is


the responsibility of the Enforcement Officer and the Enforcement Section.

 Any omission in this regard cannot be categorised as ‘employers fault’, but the
‘fault of Enforcement Section’.

CATEGORIZATION OF ESTABLISHMENTS
All the establishments covered and members serviced have been categorized on the
following basis.

 Operative Establishments – Establishments having at least one member with


balances in his account.

 Inoperative Establishments – Establishments which have no connected records


for members in the members master database in the computer system or
establishments which do not have even a single member with any balance in his
account.

 Active Members – Members having some balance in their account and in whose
case contributions have been received at least once in the last three years.
24

 Inactive Members – Members having some balance in their accounts but in whose
case no contributions have been received at least once in the last three years.

 Non Existing Members – Members in whose respect no records are available in


the member master file viz. those members in whose case no contribution has ever
been received.

The software classified the establishments and members into following three
categories.

Category -1(Inoperative/Non Complying Establishments)


The expression refers to all the un-exempted Establishments covered on or prior to
31.03.2002 but has NO membership as on 31.03.2003. This may be either due to the non-
compliance by the establishments from the date of coverage or due to the default in
updation of accounts by the field office concerned from the year of coverage.

Category – 2(Operative Establishments with stagnated compliance)


The expression covers all the un-exempted Establishments with membership but
with stagnated compliance for the last three accounting years i.e., from 2000-2001
onwards and hence, annual accounts are NOT updated beyond 1999-2000.

Category – 3(Operative Establishments with continued compliance)


The expression includes
 All the un-exempted establishments with membership where annual accounts are
updated at least up to 2000-2001.
 All the un-exempted establishments covered during the period from 1.4.2002
to 31.3.2003 for which the annual updation is expected during the financial year
2003-2004.
Category – 9(Closed/defunct/In-actionable) Establishments
The term refers to all the establishments which are certified to be
defunct/closed/in-actionable after due verification. These establishments are identified by
the specified codes (101 to 109) fed in to the establishment master.

ENFORCEMENT OFFICERS PERFORMANCE REVIEW

BEFORE APFC AND RPFC (weekly)


E.O.’S NAME | REVIEW PERIOD | CIRCLE | ACCOUNTS GROUP
| | |
------------------------------------------------------------------------------------------------------------------------------
CONTRIBUTION & | ARREAR DEMAND CURRENT DEMAND
OTHER DUES |
|
Due |
|
Collected |
|
Balance |
(Also review of |
top 10 defaulters) |
------------------------------------------------------------------------------------------------------------------------------
25

------------------------------------------------------------------------------------------------------------------------------
PENAL DAMAGES & 7Q | ARREAR DEMAND CURRENT DEMAND
| P.D. 7Q P.D. 7Q
|
Due |
|
Collected |
|
Balance |
------------------------------------------------------------------------------------------------------------------------------
NO. OF DEFAULTERS | NON SUBMISSION NON REMITTANCE
WITH REFERENCE TO | OF F/12-A OF DUES
CCTS REPORTS |
(including current |
month) |
Due |
|
Collected |
|
Balance |
------------------------------------------------------------------------------------------------------------------------------
8F ORDERS | NO. OF ESTABLISHMENTS
|
Due |
|
Issued |
|
Balance to be issued |
|
Balance to be realized |
|
------------------------------------------------------------------------------------------------------------------------------
ACTION U/S 8B |
Due |
|
Action taken |
------------------------------------------------------------------------------------------------------------------------------
CASES PENDING – COURT/ | (furnish details)
TRIBULAN / CONSUMER |
FORUM |
|
|
|
Progress |
|
------------------------------------------------------------------------------------------------------------------------------
NON SUBMISSION OF |
FORM 3A & 6A BY THE |
ESTABLISHMENTS |
|
Due |
|
Received |
|
Balance with action taken |
------------------------------------------------------------------------------------------------------------------------------
26

------------------------------------------------------------------------------------------------------------------------------
IEMS |
|
Due for compliance |
|
Secured |
|
Closed Report |
|
Balance |
|
------------------------------------------------------------------------------------------------------------------------------
VISIT TO ESTABLISHMENTS |
Due as per ANNEXURE A - |
|
Visited w.r.t. ANNEXURE B - |
------------------------------------------------------------------------------------------------------------------------------

(ENFORCEMENT OFFICER)

REVIEWED

APFC RPFC
23

Name of the E.O. ANNEXURE-A

Duty Assigned for the week From ___________ To __________ COMPLIANCE CIRCLE______________

S.No. Code Name and address of the Nature of the work to completed Details of Action taken by the E.O. with Remarks
No. Establishment by the E.O. Supporting Reports of I.R./Cov. Proposal etc.
1 2 3 4 5 6

NOTE: This format will be completed in triplicate 2 copies will be handed over to the EO who will complete the assigned work and return one copy duly
completing column 5 & 6 supported by Inspection Report, Prosecution Proposal, Coverage memo, etc. and any other documents required Estt. wise
details in Annexure ‘A’ (one sheet should be used for one code no.) should be submitted along with the report.
24

ANNEXURE - B
NAME OF THE E.O.: COMPLIANCE CIRCLE-1/CIRCLE-2

DUTY ASSIGNED FOR THE WEEK FROM ______________ TO ___________

CODE NO.: NAME AND ADDRESS OF THE ESTABLISHMENT:

NATURE OF THE WORK TO BE DETAILS OF ACTION TAKEN BY THE E.O WITH REMARKS.
COMPLETED BY THE E.O. SUPPORTING REPORTS OF I.R.

NOTE: This format will be completed by the E.O. Separate sheet should be used in respect of each establishment duly supported by
inspection report, investigation proforma, prosecution proposal, etc.
25

4
COMPUTERISED COMPLIANCE TRACKING SYSTEM- CCTS

OBJECT AND SCOPE:


Doubts were being expressed on the number of establishments under the
purview of the EPF & MP Act 1952 and the membership therein reported by the
Organisation. The reporting method being followed by the Organisation had largely
been manual and prone to errors. There was no scientific tool to arrive at the correct
statistics. It was against this background that a “System Assisted Membership Audit
Software” was conceived and developed at the Head Quarters Office in 1999-2000
to arrive at the correct statistics in relation to the establishments covered by
Employees’ Provident Fund Organisation and membership therein. An elaborate
exercise was mounted to obtain the relevant databases from the field offices and the
same were processed through the said software.

The results thrown by the audit exercise compelled a thorough analysis of the
reasons for the poor compliance status from the un-exempted establishments. The
analysis broadly indicated that:

• There has been a steady deterioration over a period of years in the basic
function of maintenance of DCB Register, which was key for early default
detection and remedial action; this must have been the most significant factor
which resulted in the current state of poor compliance.

• The Accounts Groups to whom the ownership of DCBR is given, were made
responsible for the timely detection and communication of the defaults to the
compliance wing on monthly basis; the duty which was honoured in
exception rather than as a rule. Ideally, the compliance wing should not have
been made dependent on the Accounts Groups for detection and
communication of defaults.

• The fact that the computerization in the EPFO effectively disregarded this
vital function, must have contributed to the situation, thus leaving enough
scope for fraudulent practices.

Consequently, a DCBR Software package for computerised maintenance of


DCB Register was developed in-house and was distributed to all the field offices in
May 2000. The scope and functionality of the software was enhanced and CCTS
Software Version 1.0 was distributed in October, 2000. To ensure its effective
implementation, eight workshops were conducted on Zonal basis (two each at
Calcutta and NATRSS, New Delhi and one each at ZTI, Chennai, Ahmedabad,
Ujjain and Regional Office, Hyderabad) where the functionaries of the field offices
from compliance and EDP wings were given sufficient exposure.

During the last one year of implementation of CCTS, constructive feed back
has been received from various field offices.
26

The functionality of CCTS Version 2.0 broadly encompasses the following


aspects.
 System assisted DCBR maintenance duly supported by dealing assistant wise
monthly DCBR and establishment wise yearly DCBR. This function
includes the basic audit function on monthly returns and remittances.

 System assisted remittance monitoring where by the actual remittances


received are judged against the expected remittances and the exceptions are
reported.

 System assisted Compliance tracking duly supported by necessary


monitoring reports to the compliance circles and Accounts Groups and also
monthly communications to the defaulting employers.

 Establishing a scientific information cum monitoring tool both for the field
offices as well for the Head Quarters Office (the functionality of erstwhile
IEMS software has been merged into the CCTS Version 2.0)

 System Assisted Compliance Audit function in terms of Head Quarters letter


No.E.III/18(9)2001/Compliance/2001 Dated 16.8.2001 and E.III/18(9)2001/
Compliance 2001 dated 31.8.2001.

 System Assisted preventive vigilance function in a limited sense (by


generating exception statements/communications).

CCTS – PREPARATORY ACTION

1. ADDRESS FIELDS OF MODULE 105, CAPS/CAMPS, 95 WITH PIN &


DISTRICT FIELD IS UPDATED IN RESPECT OF EACH
ESTABLISHMENT.

2. CORRECT CIRCLE NO. IS GIVEN – MODULE 115

3. INOPERATIVE ESTABLISHMENTS ARE ENTERED AS 88(CIRCLE NO.)

4. RATE OF CONTRIBUTION IS CORRECTLY FILLED IN.

5. EXEMPTION STATUS IS CORRECT OF EACH ESTABLISHMENT


UNDER “ESTABLISHMENT CATEGORY”.

6. D.O.C. IS CORRECTLY ENTERED IN MODULE 105.


7. NAME/DESIGNATION/TELEPHONE NO. OF ASSESSING OFFICER
ENTERED IN MODULE 12O.

8. IN-ACTIONABLE ESTABLISHMENT STATUS UPDATED IN MODULE


110 WITH REFERENCE TO CORRECT CODE.
27

S.NO. CAT-I ESTABLISHMENTS WHERE NO ACTION LIES CODE

1. ESTABLISHMENTS CERTIFIED AS CLOSED AFTER 101


DUE VERIFICATION

2. ESTABLISHMENTS ALREADY DE-COVERED IN THE 102


PAST.

3. ESTABLISHMENTS GONE OUT OF THE PURVIEW OF 103


THE ACT SUBSEQUENT TO THE COVERAGE

4. DUMMY ESTABLISHMENTS CREATED FOR PRACTICAL 104


SITUATIONS INCLUDING RECORDS WHICH ARE
CREATED BY MISTAKE /DATA ENTRY ERRORS.

5. ESTABLISHMENTS EXCLUDED UNDER SECTION 16 105

6. ESTABLISHMENTS WITH ALL THE ACCOUNTS 106


ALREADY SETTLED AND NO LONGER IN EXISTENCE

7. ESTABLISHMENTS PERTAINING TO OTHER FIELD 107


OFFICES OF THE REGION.

8. SECTION 2A ESTABLISHMENTS (BRANCH ESTA- 108


BLISHMENTS) IN RESPECT OF WHICH COMPLIANCE
IS REPORTED TO DIFFERENT FIELD OFFICE

9. ESTABLISHMENTS WHERE APPLICATION OF THE ACT 109


HAS BEEN JUDICIALLY STAYED

10. CORRECTNESS OF DATA ENTRY IN CRAS - 100%

11. SUPPLY WORK LOAD TO DEALING ASSISTANT IN ACCOUNTS &


COMPLIANCE CIRCLE THROUGH MODULE 810

12. ACCOUNTABILITY FOR DATA ENTRY ERRORS – D.E.O./L.D.C.

ACTIVITY SEQUENCE – II (REGULAR/RECURRING TASKS)

ACTIVITY SEQUENCE – III (PERFORMANCE MANAGEMENT (RO &


HQ) -REPORTS)
ACTIVITY SEQUENCE – IV COMPLIANCE AUDIT OPERATIONS

ACTIVITY SEQUENCE – V FUNCTIONAL RESPONSIBILITIES IN EDP

ACTIVITY SEQUENCE – VI MODULE OPERATIONS IN EDP CENTRES


28

5
CCTS – SALIENT FEATURES

1) DEALING ASSISTANT-WISE MONTHLY DCBR.

2) ESTABLISHEMNT-WISE YEARLY DCBR.

3) AUDIT FUNCTIONS ON MONTHLY RETURNS AND REMITTANCES

4) MONITORING OF ACTUAL REMITTANCES WITH REFERENCE TO


EXPECTED REMITTANCES – EXCEPTIONS ARE REPORTED.

5) COMPLIANCE TRACKING THROUGH REPORTS TO COMPLIANCE


CIRCLES AND ACCOUNTS GROUPS/SECTION (APRIL TO CURRENT
MONTH)

6) COMMUNICATION (SOFT NOTICE) TO DEFAULTING EMPLOYERS

7) BUILT IN IEMS. (MODULE 850)

8) SCIENTIFIC INFORMATION CUM MONITORING REPORTS TO


REGIONAL OFFICE/HEADQUARTERS SUMMARY.

9) PREVENTIVE VIGILANCE FUNCTION, IN A LIMITED SENSE


THROUGH EXCEPTION STAFF/COMMUNICATION

10) GENERATION OF NOTICES ON DUES UNDER SECTION 7Q & 14B

10A) GENERATION OF NOTICES ON 7A/14B

11) TRACKING OF COMPLIANCE OF 100 MAJOR ESTABLISHMENTS OF


EACH OFFICE.

12) MONITORING PAYMENTS AGAINST DUES UNDER SECTION


7A/7Q/14B

13) PERFORMANCE MEASUREMENT AND RATING OF EACH


COMPLIANCE CIRCLE
14) DA WISE STATISTICAL REPORTS AS ON 1.4.2001 FOR ACCURATE
REPORTING AND MONITORING.

15) MONITORING OF CATEGORY 3 ESTABLISHMENTS.

16) PERFORMANCE MEASUREMENT REPORTS FOR BOTH THE LOCAL


OFFICERS AND HEADQUARTERS – ANNUAL ACCOUNTS, CLAIM
DISPOSAL AND COMPLIANCE
29

17) SEGREGATION OF CLOSED/DEFAULT ESTABLISHMENT (88).

18) FORM 5/10 DATA COLLECTED THROUGH MODULE 110.

19) TRANSFER OF PAYMENT DATA TO CAMPS, 1995 – WITHDRAWALS


STATEMENT

20) ESTABLISHMENT STATUS ON EACH ESTABLISHMENT – ANYTIME


FOR 7A/14B

21) TO LOCATE CODE NO. OF ESTABLISHMENT WITH REFERENCE TO


NAME OF ESTABLISHMENT.

22) IEMS INTEGRATED WITH CCTS.

COMPLIANCE & DEFAULT CODES

CODE DEFAULT

00 FULL COMPLIANCE

01 DEFAULT IN RETURNS SUBMISSION AND


ALSO IN PAYMENT

02 DEFAULT IN RETURN SUBMISSION AND


PAYMENT IS AFTER DUE DATE

03 DEFAULT IN RETURN SUBMISSION ONLY

04 DEFAULT IN PAYMENT ONLY

05 PART PAYMENT OF DUES WITHIN DUE DATE

06 PART PAYMENT OF DUES AFTER DUE DATE

07 FULL PAYMENT OF DUES BUT AFTER DUE


DATE

NR NOT RELEVANT (SIGNIFIES THE RECEIPT OF

DUES PERTAINING TO THE PREVIOUS/

SUBSEQUENT PERIOD DURING THE MONTH)

NF NOT FOUND IN THE ESTMSTR. POSSIBLE

DATA ENTRY ERROR IN FORM 12A/CHALAN/


ESTMSTR
30

WHEN TO GENERATE MONTHLY CCTS REPORT?

 CCTS Report generated in the month of August i.e. dues and remittances relating
to the month of June.

 The Input Documents for CCTS:

 1) Remittance details through CRAS.


2) Monthly dues through Form-12-A/Form-6 (PS)/Form-4 (IF)/Annexure from
PF Exempted Establishments.

Input-1: Details of Remittances:-

 The due date for remittances of EPF dues ----------- 15th of the following month.
i.e. for the month of June it is payable on15th July (within the grace period of
20th July).

 The remittances made in a base branch, for example on 20th is expected to reach
the respective link branch by 22nd / 23rd July.

 The scroll duplicate challan and Bank Statements are expected to be sent by
State Bank of India to the Regional Provident Fund Commissioner before
30th/31st.

 The duplicate challans received in cash is processed and sent to EDP for data
entry for the purpose of CRAS.

 After reconciling the CRAS with the Bank Statement the CRAS data is ready for
use as input for CCTS.

 Thus by second/third of August the input for CCTS is already stored.

Input-2: Details of dues:-

 The due date for receipt of monthly dues details from employer is 25th of the
following month i.e. for the month of June, 25th July-which are normally
expected to reach by 31st July/1st of August.

 These documents received in Tappal Section are sent to EDP for data entry and
thus the input data is completed by 4th of August.

 The CCTS report for the wage month of June, generated on 5th of August is
expected to reflect the true picture to some extent.

 If the CCTS report is generated prior to this date it may show the prompt
employers as defaulters and the consequence result.

 Before generating the CCTS, the job pending in EDP towards input data should
be verified and not to follow the date as a matter of routine.
31

6
CCTS – INPUT AND OUTPUT – MONITORING REPORTS

IEMS SOFTWARE:

The latest version of the IEMS Software is being released by the Information
Services Division to provide for monitoring category-III establishments, I.S.
Division vide their letter No. CC-17 (2)2000/SWD/5229 dated 26.6.2001 have
separately issued detailed instructions regarding certain category of inoperative
establishments which are no longer in existence and which can be practically
removed from the work load shown for each office.

In this connection, each office/regions were requested to send the floppies


furnishing the particulars relating to the category code of the inoperative
establishments in category-I, which the offices sought to remove from their
workload in IEMS programme. Even each floppy is to be accompanied by a hard
copy of the contents of the floppy and a signed declaration in writing by the officer-
in-charge with the following words:-

“I have personally verified all available records pertaining to those


inoperative establishments which are either no longer in existence or are not
coverable under the Act as per the categories mentioned in the Head Office
letter No.CC-17(2)2000/SWD/5229 dated 26.6.2001 and only those
establishments are included in the floppy which is being sent to Head
Office.”

A copy of the print out of the floppy, which is being sent to Central Office
should be kept as office copy with the officer-in-charge along with a hard copy of
this declaration. Based on the certificate issued by each of the officers in charge of
the offices in the regions, RPFCs of the regions may also submit a certificate in
writing to the following effect:-

“All efforts have been made to incorporate only those inoperative


establishments which are no longer in existence or are not coverable
under the Act statutorily while recommending for its removal from the
database to the Head Office as per the categories of establishments
mentioned in Head Office letter No.CC-17(2)2000/SWD/5229 dated
26.6.2001. Officers-in-charge of the SROs/SAOs of this region have duly
certified this fact in respect of the data furnished pertaining to their
offices.”

RPFCs Incharge of the regions are requested to ensure that a copy of the
certificate submitted to each of the Officer-in-charge of SROs/SAOs is kept with
them for their records, for future reference.
32

CCTS PROGRAMME:

The procedure to be followed in implementing the CCTS programme


effectively is laid down below:-

1) Every month, the CCTS programme shall be operated between 7th and 10th
and the printouts taken. The following printouts are to be taken (i) Letters to
defaulting employers, (ii) Letters to employers who have not submitted Form
12A, (iii) Letters to employers where there is significant drop in membership
or in remittance.

All the above categories of letters are to be sent to the respective employers
every month. For this purpose each office of the organisation may make
arrangements with the post office for arranging the dispatch of bulk mail of
notices/letters generated under CCTS. Department of Post run a scheme
called ‘Business Post’, which may be used in this regard. In small SROs or
those SROs where compliance from the establishments are reasonably upto
date and as a consequence, the notices generated are comparatively less, they
can use their normal dispatch section to dispatch the notices to the
employers.

In order to facilitate easy dispatch of the notices, the CCTS programme will
generate the address of the employer at the end of the notices. Dispatch
Section need to fold the notices in such a way that the address portion alone
is visible outside and dispatch it under book post after the stapling together
the remaining portion. By this method there should not be any necessity for
putting the notices in envelopes and writing the addresses manually.

2) Assistant Provident Fund Commissioner-in-charge of the circles should


monitor this activity of dispatch of notices pertaining to their circles every
month.
3) Wherever the notices generated are very large in number especially in metro
areas and other major industrial centres, the offices can make an arrangement
for dispatching the notices through bulk mail, since the post offices undertake
to do this job in many towns and cities by charging a specific fee for each
activity. While making arrangements with the post offices, they may be
informed that these notices need not be put into envelopes and there is need
for writing of addresses since the address portion will be printed at the
bottom of the notices and the notices need to be folded in such a way that the
address portion is easily visible outside and staple together the letter and send
it by book post. The number of such notices handed over to the post office
for bulk mail may be entered in a register for cross checking later when the
post office claims the bills for bulk dispatch.

When an employer who has received such a notice for non remittance of dues
reports that he has already made the remittance and furnishes the date of remittance
of photocopy of challans such letters will be sent to the Cash Section where one of
the clerical staff can be instructed to verify the cash book to check up whether the
remittances mentioned by the employer are in fact received by the Organisation and
credited by the Employees’ Provident Fund Organisation’s accounts. In case any
33

discrepancy is found the cash section should enter the details of remittances
furnished by the employer such as the amount remitted account number wise, date of
remittance, bank name & branch in which the amount is remitted etc. in a register
called “CCTS follow up Register” and follow it up with the bank to locate the
payment.

The CCTS Program will also generate a separate list of those cases where
action under Section 7A is to be initiated compliance circle wise. It would be the
responsibility of the Assistant Provident Fund Commissioner-in-charge of the circle
to interact with the EDP Section and obtain such a list by 10th of every month.

The code number and name of the establishment and the period for which 7A
has been suggested by the CCTS programme should be incorporated in the Pendency
Register of Inquiries under Section 7A/14B.

The Assistant Provident Fund Commissioner-in-charge of the compliance


section should within a week issue 7A summons to the employer.

In the summons issued to such defaulters, the period for which inquiry is
launched may be mentioned as “From ______________ onwards”. Such inquiries
should be completed as expeditiously as possible and in any case within a period of
three months when the assessment orders are issued due up to the previous month or
the month prior to that should be assessed without waiting to issue another notice for
the subsequent months.

If nobody comes up on the appointed date, the assessing officer should


decide the case immediately and after the issue of orders under Section 7A, the entry
pertaining to the establishment should be rounded off indicating the date of issue of
speaking order.

The Regional Provident Fund Commissioner-in-charge of the Compliance &


Recovery in Regional Offices and the Officer-in-charge of SRO/SAO will be
responsible for the successful implementation of the CCTS Software. Regional
Provident Fund Commissioner-in-charge of the Compliance and Recovery in the
region may, if necessary visit the SRO/SAO periodically and review the
implementation of the CCTS programme. Alternately, the implementation of the
CCTS programme should also be reviewed during the O & M meetings conducted
by the Regional Provident Fund Commissioner-in-charge of the regions.

The performance appraisal of Regional Provident Fund Commissioners-in-


charge of Compliance and Recovery as well as that of the Assistant Provident Fund
Commissioners-in-charge of the circles will depend on their performance in the
matter of implementation of CCTS, disposal of 7A and 14B inquiries as the case
may be.
34

7
ASSESSMENT OF DUES UNDER SECTION 7A, 7B & 7C

INQUIRY UNDER SECTION 7A:

In order to determine the money dues from any employer and to decide the
dispute arising out of the applicability of the Act an inquiry under Section 7A can be
conducted and the employer must be given a reasonable opportunity to represent his
side. The Central Provident Fund Commissioner, any Addl. Central PF
Commissioner, any Deputy Provident Fund Commissioner, any Regional PF
Commissioner, or any Assistant PF Commissioner may by order conduct the inquiry
for the above said purposes.

On conclusion of the inquiry under Section 7A a well reasoned Speaking


Order should be issued with clarity and precision in as much as issues involved are
identified and specified and the arguments put forth by the employers are analysed
and decided. An order so passed should have the basic ingredients of the Speaking
Order and it should not allow scope for adverse view by any of the judicial forums.

For systematic and uniform approach and in order to remove ambiguity the
following procedures need to be followed during the inquiry under Section 7A.

7A Inquiries:

 Where the returns in Form 12A have been received it is not necessary to
conduct inquiry under Section 7A for quantification of dues. Action under
Section 8B and 8F can be taken against such establishments.

 Immediately on detecting a default a politely worded letter to each defaulter


should be issued requesting and reminding the employer to remit the dues.

 If no response is received or no remittance is received from the employer, a


second reminder should be issued to the employer. Both these letters shall be
signed and issued by the Assistant P.F.Commissioner in-charge of
Enforcement pertaining to that establishment.

 If no remittance is recorded by the end of the second month a show cause


notice should be issued to the defaulter initiating 7A inquiry. The details of
initiation and disposal of case shall be maintained the Pendency Register.

 All pending cases of 7A may be assigned to Assistant Provident Fund


Commissioners who shall enter all cases in the separate register.

 7A authorities should exercise their authority while determining the dues to


quantify the correct amount. The amount assessed must be realistic and
usually based on necessary documents. For achieving the above object, the
assessing authorities have been provided ample powers under Section 7A for
35

enforcing the attendance of person and examining him on oath, requiring


discovery and production of documents, receiving evidence in affidavit and
thereafter commissions for the examination of witnesses. All these powers
are provided in the corresponding provisions of the Code of Civil Procedure.
These powers must be exercised in a proper way according to the demand of
situation for compelling the attendance of concerned person and for
procurement of documents.

 The summary of the hearing must be recorded for every date of hearing with
details of documents filed/statement recorded. The compliance position of
direction of previous hearing if any must also be recorded on order sheets.

 While conducting the inquiries it has to be borne in mind that the quasi-
judicial authority under Section 7A acts on behalf of the department based on
the records available and is expected to pass a judicious order as per the
provisions of Law.

 The case of the Department shall be represented by the Enforcement Officer


before the Assessing Officers. The Assessing Officer shall pass the order on
the basis of the documents filed by the representatives of the Establishment
and Department. The assessing officer shall also supply copies of the
proceedings to the establishment through its representative in the enquiry.

 The assessing officers are quasi judicial authority-Hence the principles of


natural justice must be followed strictly in each and every case. The essence
of natural justice is to afford reasonable opportunity to the Employer to
present/defend his case and also to afford an opportunity to him to peruse the
documents, if any, procured from other sources by the Organisation.

 The assessing officer must keep himself in touch with the relevant law
including some Labour law Journal. The reading of judgements of Hon’ble
High Courts and Supreme Court will develop the skill of examining and
analysing the issues.

 Documents collected from sources other than from the employer are to be
made available for the perusal of the employer or his counsel at the time of
inquiry.

 The report of the enforcement officer may also be allowed to be perused by


the employer or his representative at the time of inquiry in order to satisfy the
principles of natural justice.

 The Assessing Officer should go through the books of accounts for


correctness of the details furnished and also detect any amount due from the
employer that has escaped notice including instances of non enrolment of
members or delayed enrolment of members.

 It shall be ensured that the person responsible for the affairs of the
establishments/owners of the establishment or a representative duly
authorised by the establishment/employer only represents the establishment.
36

 The contentions made in writing and oral submission must be considered and
properly dealt with in the order. Any judgement relied upon must be quoted
with proper citation.

 While issuing orders under Section7A care should be taken to ensure that it is
a speaking order. The preliminary part of the order should contain the
background of the case, details of initiation of the proceedings,
adjournments, if any, with the reasons etc. Details of responsible persons
who attended inquiry shall invariably be noted in the order.

 On completion of the inquiry the details of assessments will be duly recorded


under the signature of Assessing Officer in the Demand and Collection
Register Column No. 1 to 9 shall be recorded on Left Hand Side of Register
while 10 to 14 shall be recorded on Right Hand Side of Register.

 It will be the responsibility of the Assessing Officer to exercise powers under


Section 8F and recover the entire assessed dues as expeditiously as possible
after the assessment is over and in any case before the end of the financial
year. Assessing officers will also maintain all above register with up to date
entries therein.

 The mode of payment and date of realisation shall be recorded under the
dated signature of the assessing officer in the register.

 At the end of the financial year, recovery certificates shall be prepared, for
any Current Demand pending realisation, recording the reasons for non-
realisation, and forwarded to the Recovery Officer before 5th of April.
However, in exceptional cases for realisation of the Current Demand, a
special recovery certificate, mentioning the reasons for issuing an out of turn
recovery certificate to the recovery officer after obtaining concurrence from
RPFC-II in case the Assessing Officer is Assistant Provident Fund
Commissioner and RPFC-I where the Assessing Officer is Regional
Provident Fund Commissioner - Gr.II may be issued.

ROLE OF APFC UNDER DEFAULT MANAGEMENT

Responsibility of Assessing Officers and default management:


The Central Office has formulated various strategies on default management
and prescribed various control registers in managing the default of current as well as
arrear demand which are to be scrupulously adopted.

The demands raised as a result of orders under Section 7A during the


financial year will be categorized as current demand. This definition will apply to
both exempted/unexempted establishments.
Current Demand:
The responsibility to realize the current demand is that of the officer passing
order under Section 7A/14B, i.e., the officer having jurisdiction over the case in this
regard.
37

The target for recovery of current demand is 100% of realizable demand


raised during the financial year, i.e., from 1st April to 31st March.

Assessing Officers are to open separate control registers for keeping control
over cases initiated under Section 7A/14B and a register for controlling the work
relating to realisation of current demand.

Regional Provident Fund Commissioners shall review the control registers on


a monthly basis and suitably instruct, guide an control the pendency position with
each Assessing Officer as well as work relating to recovery of current demand.

The two control registers, viz., -


1. Blue Book – for controlling pendency and disposal of actions under Section 7A;
and
2. Red Book—for controlling the creation and recovery of current demands,

should be maintained upto date on a day to day basis and the same should be subject
to surprise check by supervisory officers at the level of Regional Provident Fund
Commissioner-I and Regional Provident Fund Commissioner-II.

Performance of Assessing Officers in the speed of disposal of 7A actions as


well as the realisation of current demands raised is to be kept under constant review
by supervisory officer at the level of region/central office in order to evaluate the
overall performance and record in Annual Confidential Reports, as well as consider
the suitability of such officers for enforcement work.

The Assessing Officers should establish effective linkages with the accounts
wing in relation to cases under their jurisdiction for timely identification of default
cases for initiation of action under Section 7A and to receive/verify feed back on
realisation of the demand raised.

On last date of the financial year, all the Assessing Officers should take stock
of the cases where current demand (realizable and unrealizable) has remained
outstanding and initiate recovery action on the last day of the financial year.

It may be understood that normally no recovery certificates are to be issued


by the Assessing Officers during the currency of the financial year and the
certificates are to be issued on the last day of the financial year itself. Only in
exceptional cases after recording reasons in writing in the appropriate file, the
Assessing Officer may issue a recovery certificate even in relation to current demand
if that will expedite the recovery of the current demand. It may be clearly
understood that this would not shift the responsibility for realisation of current
demand to the Recovery Officer. The Assessing Officer will continue to be
responsible for such demand and will continue to reflect it in their position of
outstanding demand upto the close of the financial year. This concession is made
only so as to make the additional resources and powers of Recovery Officer
available to the assessing officer. It goes without saying that in all such cases, the
assessing officer will give close personal support to the Recovery Officer in terms of
information/intelligence relating to the defaulter as well as with supporting
manpower for effecting the recovery.
38

In all such exceptional cases, certificate is to be issued only after obtaining


clearance of the Regional Provident Fund Commissioner-I. As far as the Recovery
Officer is concerned, he is required to act in relation to current demand only if the
assessing officer is providing close support both in terms of intelligence as well as
manpower for effecting the recovery. Particulars about such current demands where
certificate has been received will be kept by the Recovery Officer in a separate
register which will be closed at the end of the financial year when the unrealized
demand stands transferred to arrear demand.

Arrear Demand:

All demand that has remained unrealized, both realizable and not
immediately realizable, during the financial year, be categorized as “arrear demand”
on commencement of the next financial year. It includes arrears of contributions,
interest under Section 7Q and damages under section 14B, for both exempted and
unexempted establishments.

All demands which fall within the definition of arrear demand, whether
reported or not, should be accounted for by the respective assessing officer and a
certificate in relation to these issued to the Recovery Officer so that 100% of the
arrear demand stands covered by Recovery Certificates and the Recovery Officer
stands fully vested with jurisdiction over the entire arrear demand in each region.

All Recovery Officers should update their control registers for the
management of arrear recovery demand. The Regional Commissioner(I) should
personally satisfy himself that the registers are upto date and ensure that all the
arrear demand in the region stands covered by certificates.

Recovery of arrear demand also remain the overall responsibility of assessing


officer in relation to cases under their jurisdiction. Of course, the ultimate
responsibility for default management, current as well as arrear demand, in the
region rests with the Regional Provident Fund Commissioner-I. Hence, it is
expected that all assessing officers under the close supervision and control of
Regional Provident Fund Commissioner-I will be giving the necessary support in
terms of intelligence and information to the Recovery Officer in relation to arrear
demand related to them so that the Recovery Officer can function effectively and
help liquidate the arrear demand. Thus the ultimate analysis will only improve the
default management of the assessing officers in relation to their respective
jurisdiction.

The whole purpose of broad banding the apparatus for recovery work is to
establish and effective and aggressive default management regime. It is in this
context that the policy should be constantly reviewed so that exercise of quasi
judicial powers and accountability are effectively integrated and performance of the
Enforcement Wing is kept under constant scrutiny and review.

The Blue/Red Book should be closed every month and summary extracted
for reporting in monthly CAP return duly reconciled with the information contained
in the “Register of defaulting establishments” maintained by the Enforcement
Section.
39

Regional Provident Fund Commissioner and Assistant Provident Fund


Commissioner as Assessing and Recovery Officers:

As the Regional Provident Fund Commissioner and Assistant Provident Fund


Commissioner have been notified as Recovery Officers, they should take action
under Section 8F and also under Section 8B and 8G for the recovery of arrear dues
assessed by them for the current demand and also for the arrear demand.

Need for timely action:

As the EDP Section will generate the list of defaulters every month, immediately
after generation of Schedule of Receipts by using the software, Computerised
Receipt Accounting System (CRAS), there will not be any difficulty in identifying
the defaulters. Where the CRAS is not put into operation, it should be put into
operation immediately. In addition, the Enforcement Officer is required to inspect
the defaulting establishments every month and to send a special report. The action
against the defaulter should be initiated in the month following the month in which
contributions, administrative charges, etc., due for payment by the establishment and
the show cause notice under Section 7A of the Act should be issued at the latest by
the end of that month.

If the action is initiated every month it will be easier to recover the amount. If
the establishment is allowed to accumulate the arrears and take action after several
months, it will be difficult to recover the amount from the defaulter, as a defaulter
who is not in position to pay the dues for a month, will not definitely be in a position
to pay the dues for several months. If the timely action is not taken against the
defaulter every month, as stated above, it should be viewed seriously and the
responsibility for such delay should be fixed and the disciplinary action should be
initiated against them.

In order to have continuous and effective monitoring of default, the following


procedure is prescribed:
(1) The assessment and recovery of dues in respect of the top 10 defaulters of the
Region shall be the responsibility of the RPFC in charge of the Region and shall
be under his original jurisdiction. If all actions have been taken in respect of any
such establishment and the amount becomes NIL, the next 10 defaulters shall fall
within his original jurisdiction.
(2) A separate file will be maintained in respect of each defaulting establishment
having an arrear of rupees one lakh and above. These files will have folder with
points for quick review and monitoring. These will be maintained by Regional
Provident Fund Commissioner (Gr.I), Regional Provident Fund Commissioner
(Enforcement and Recovery), Assistant Provident Fund Commissioner
(Enforcement and Recovery) etc., based on quantum of default.
(3) The establishment of having default of rupees ten lakh and above will be
reviewed and monitored by Regional Provident Fund Commissioner in charge of
the Region every month.
(4) Review of establishment having default of rupees five to ten lakh will be done by
Regional Provident Fund Commissioner (Enforcement and Recovery) or Officer-
in-charge, Sub- Regional Office and Assistant Provident Fund Commissioner
40

(Enforcement & Recovery), respectively. This will be in addition to overall


responsibility of review of the entire work of recovery.
(5) Review can be on points as to whether:
(a) Regular inspections of defaulting establishments have been made by the
inspecting officers.
(b) All actions as required under Section 8B to 8F of the Act have been taken.
(c) Prosecution cases under Section 14 of the Act have been filed and followed
up vigorously.
(d) Action under Section 406/409 IPC has been taken.
(6) The Regional Provident Fund Commissioner (Enforcement & Recovery) should
review the performance of each Assistant Provident Fund Commissioner
(Enforcement & Recovery) every month.
(7) Recovery has to ensure that all effective steps have been taken for recovery of
arrears in respect of each Recovery Certificates. If any administrative
restrictions and directions had been issued from Central Office, restraining
recovery process, such directions may be treated as withdrawn.
(8) An accurate and authentic defaulters list with position as on first April, every
year should be prepared and updated every month.
(9) The ten biggest defaulters for particular year with position as on first April of
each year (both under exemption and unexempted sector) be identified. Strong
action for recovery be taken. Names of these 10 biggest defaulters be
prominently displayed in Regional and Sub-Regional Offices at the prominent
entry place. The progress report of recovery in respect of these ten
establishments of the Region need to be submitted every month to Central Office
separately along with status and efforts made for recovery.

Name & Address of Code Total amount Default since


the establishment Number in default

(10) Besides above, penal action as provided under Section 14 of the Employees’
Provident Funds & Miscellaneous Provisions Act, 1952 be taken against the
defaulting employers.
(11)Action under Section 406/409 of the Indian Penal Code for non payment of
employees’ share of contributions deducted from the wages of the employees
should also be taken vigorously excepting in case of Public Sector Undertakings
of Central and State Governments.
(12)It must be ensured that action as above is taken in case of all defaulting
establishments. Regional Provident Fund Commissioner (Enforcement &
Recovery) will send weekly report to Regional Commissioner (Recovery), Head
Office on the format prescribed.

REVIEW OF ORDERS PASSED UNDER SECTION 7A

Scope for review:

(i) Section 7B provides for review of an order passed under Section 7A


subject to the conditions specified therein the review under this section
41

is envisaged not only on an application which may be filed by the


aggrieved party but also suo-moto on similar grounds.
(ii) Where an order under Section 7A is passed against an employer ex
parte, he may, within three months from the date of communication of
such order, apply to the officer for setting aside such order and if he
satisfies the officer that the show cause notice was not duly served or
that he was prevented by any sufficient cause from appearing when the
inquiry was held, the officer shall make an order setting aside his earlier
order and shall appoint a date for proceeding with the inquiry.
(iii) However no such order shall be set aside merely on the ground that
there has been an irregularity in the service of the show cause notice if
the officer is satisfied that the employer had notice of the date of hearing
and had sufficient time to appear before the officer.
(iv) Where an appeal has been preferred under this Act against an order
passed exparte and such appeal has been disposed of otherwise than on
the ground that the appellant has withdrawn the appeal, no application
shall lie under this sub-paragraph for setting aside the exparte order.
(v) No order passed under this paragraph shall be set aside on any
application under paragraph (ii) above unless notice thereof has been
served on the opposite party.

Review of exparte order:

Under Section (4) of Section 7A of the Act, ex-parte order can be reviewed
subject to the following conditions:

1. The employer should have applied within three months from the date of
communication of such order to the officer for setting aside exparte order.
2. The employer should satisfy the officer that his absence was due to non-
service of the show cause notice or he was prevented by sufficient cause
from appearing when the enquiry was held.
3. Upon satisfaction in the manner stated at (2) ibid the officer may after
serving notice on the opposite party make an order setting aside his earlier
order and appoint a day for proceeding with the enquiry.
4. No exparte order shall be set aside merely on the ground that there has been
irregularity in the service of the show cause notice, if the officer is satisfied
that the employer had notice of the date of hearing and had sufficient time to
appear.

Conditions for Review:

Any person aggrieved by an order made under sub-section (1) of section 7A


but from which no appeal has been preferred under Act can obtain a review of such
order in the following manner under Section 7B, subject to the following conditions:

1. The application for review is to be made in Form 9 prescribed in paragraph


79A of the Employees’ Provident Funds Scheme, 1952.
2. The period of limitation for filing an application for review is 45 days from
the date of making of the order under Section 7A.
42

3. No appeal should have been preferred/filed by aggrieved person under this


Act.
4. The review can be sought on the grounds of –
a) Discovery of new and important matter of evidence which after the
exercise of due diligence was not within his knowledge or could not
be produced by him at the time when the order was made; or
b) On account of some mistake or error apparent on the face of the
records; or
c) For any other sufficient reason.

Procedure for review:

Upon filing application for review where it appears to the officer receiving an
application for review that there is no sufficient ground for review, he shall reject the
application forthwith.

Where the officer is of the opinion that the application for review should be
granted, he shall grant the same provided that –

a) No such application shall be granted without previous notice to all the parties
to enable them to appear and be heard in support of the order in respect of
which review is applied for; and
b) No such application shall be granted on the ground of discovery of a new
matter of evidence which the applicant alleges was not within his knowledge
or could not be produced by him when the order was made without proof of
such allegation.

Appeal against review order:

No appeal shall lie against the order of the officer rejecting the application
for review, but an appeal under this Act shall lie against the order passed under
review as if the order passed under review were the original order passed by him
under Section 7A.

Section 7C - DETERMINATION OF ESCAPED AMOUNT:

Section 7C of the Employees’ Provident Funds & Miscellaneous Provisions


Act, 1952 deals with the determination of escaped amount. Normally the Section 7C
is invoked on account of any complaint received from Trade Union or other
Aggrieved party or where department is itself has detected short assessment of dues
or any amount has been escaped while determining the dues either under Section 7A
or Section 7B. While conducting an enquiry under Section 7C an opportunity should
be given to the employer to represent his case. The action under this Section could
be invoked only with 5 years from the date of communication of the Order passed
under Section 7A or 7B of the Act.
43

8
EPF APPELLATE TRIBUNAL
With the amendment to the Act by the Amendment Act 33 of 1988, Section
19A has been deleted and provisions for set up of an Appellate Tribunal has been
incorporated under the Act. Sections 7D to 7O of the Act, which lays down the mode
of set up of an Appellate Tribunal, the powers of the Appellate Tribunal, etc., with
effect from 1.7.1997.

Constitution of Tribunal:
The Act has been amended by the Amendment Act 33 of 1988, empowering
Central Government to constitute one or more EPF Appellate Tribunal to enable any
person aggrieved by -
(1) Notification issued by the Central Government
(2) Orders passed by the Central Government applying the provisions
of the Act -
(a) to any establishment employing less than 20 persons (proviso to
sub-Section 3 of Section 1 of the Act)
(b) to apply the provisions of the Act to any establishment seeking
voluntary coverage under Act (Section 1(4) of the Act).
(c) to any establishment having common provident fund with
another establishment to which the Act becomes applicable
(Section 3 of the Act)
(3) order passed by any authority, i.e., Regional Provident Fund
Commissioner or Assistant Provident Fund Commissioner, as the
case may be -
(a) on the applicability of the Act to any establishment;
(b) on determination of dues from any employer under the
provisions of the Act and Schemes framed there under
(Sections 7A, 7B and 7C of the Act);
(c) on levy of damages under Section 14B of the Act;
to appeal against any such notification or order.
The Central government has constituted the EPF Appellate Tribunal with
effect from 1.7.1997 to exercise the powers and discharge of the functions conferred
on it by the Act in respect of establishments situated within the territories of India,
vide notification No.V-20025/1/96/SS-II dated 30.06.1997. The Tribunal shall sit in
Delhi. The act and procedures before the Tribunal shall not be called in question in
any manner on the ground of any defect in the constitution of the Tribunal.

Presiding officer:
The power to appoint the Presiding Officer of the Tribunal vests with the
Central Government. The persons to be appointed as Presiding Officer of the
44

Tribunal should be, or has been or is qualified to be a Judge of a High Court or a


District Judge. The Central Government has appointed the Presiding Officer of the
Tribunal with effect from 1st July, 1997, vide notification No.V-20025/1/96-SS-II
dated 30th June, 1997. The order of the Central Government appointing any person
as the Presiding Officer shall not be called in question in any manner.
The Presiding Officer shall hold office for a period of five years from the
date on which he enters upon his office or until he attains the age of sixty two years,
whichever is earlier.

Procedure of Tribunal:
The Tribunal shall have the power to regulate its own procedure in all
matters connected with its exercise of powers and discharge it functions, including
the place of its sittings. The Tribunal is vested with all powers, which are vested
with the authority under Section 7A of the Act for the purpose of discharging its
functions. The proceedings before the Tribunal shall be deemed to be a judicial
proceedings within the meaning of Section 193 and 228 or for the purpose of Section
196 of the Indian Penal Code. The Tribunal shall be deemed to be a Civil Court for
all the purposes under Section 195 and Chapter XXV of the Code of Criminal
Procedure, 1973. It is deemed to be a Civil Court for the above purpose only. But it
is not a Civil Court.

Transfer of 19A cases:


All applications under Section 19A, which are pending with the central government
before its repeal shall stand transferred to the Tribunal, as if, such applications were
appeal preferred to the Tribunal.

Deposit of amount due on filing appeal:


The Tribunal shall not entertain any appeal unless the employer has
deposited with it, seventy-five per cent of the amount due from him, as determined
by the Regional Provident Fund Commissioner or Assistant Provident Fund
Commissioner as the case may be, under Section 7A. The Tribunal may, however,
waive or reduce the amount by recording the reason in writing for such waiver or
reduction.

Assistance by Legal Practitioner:


The appellant may either appear in person or may take the assistance of a
legal practitioner of his choice to present his case before the Tribunal.
The Central government or a State Government or Central Provident Fund
Commissioner or Regional Provident Fund Commissioner or Assistant Provident
Fund Commissioner or any other authority under the Act may authorise one or more
legal practitioners or any of its officers to Act as Presenting Officer and present the
case before the Tribunal.

EPF Appellate Tribunal (Procedure) Rules, 1997:


Under sub-Section (1) of Section 21 of the Act the Central Government is
vested with the powers to make rules to carry out the provisions of the Act. The
Central Government has made EPF Appellate Tribunal (Procedure) Rules 1997,
45

covering the procedure for filing appeals, scrutiny of appeals, time-limit for filing
appeals, etc. These rules came into effect from 21st June 1997.
As the Act provides for appeal to the Tribunal by the aggrieved person,
against the notification issued by the Central Government or the order passed by the
Central Government or order passed by the authority under Sections 7A, 7B, 7C and
14B there will be no occasion for the Central Government or EPF authorities to
appeal to the Tribunal. They will only be respondents in the appeals. Only the
employer will be the appellant and he will be filing the appeal.

Orders of the Tribunal:


The Tribunal, after giving the parties to the appeal an opportunity of
hearing, may pass such order as it thinks fit. It may confirm, modify or cancel the
order appealed against, or may refer the case back to the authority, which passed the
Orders, with such directions, as it may think fit, for a fresh adjudication or order, as
the case may be after taking additional evidence, if necessary. It may at any time
within five years from the date of its order amend its orders passed earlier to rectify
any mistakes apparent from the record, if such mistake, is brought to its notice by the
parties to the appeal. An amendment which has the effect of enhancing the amount
due from, or otherwise increasing the liability of, the employer shall not be made
under sub-Section (2) of Section 7L, unless the Tribunal has given notice to him of
its intention to do so and has allowed him a reasonable opportunity of being heard.
It shall send a copy of the order passed to the parties to the appeal. Any
final order passed by the Tribunal in disposing off an appeal shall not be questioned
in any Court of law. The parties to the appeal may, however, approach the High
Court by way of writ petition, if a substantial question of law is involved. On facts,
there is no further legal remedy for any appeal once a decision is given by the
Tribunal.

Procedure for filing appeals:


An aggrieved person against the orders passed by the Central Government
under proviso to sub-Section (3) or sub-Section (4) of Section 1 or Section 3 or
Section 7A or 7B (except an order rejecting an application for review referred in
sub-Section (5) thereof) or Section 7C or Section 14B may prefer an appeal to the
Tribunal. The appeal to the Tribunal should be presented in Form I, appended to EPF
Appellate Tribunal (Procedure) Rules, 1997, by the Appellant in person or by an
agent or by a duly authorised legal practitioner to the Registrar or any other officer
authorised in writing by the Registrar to receive the same or be sent by registered
post with acknowledgement due addressed to the Registrar of the Tribunal.
The appeal should be presented in triplicate in a paper book form along with
one unused file size envelope bearing full address of the respondent.
Where the number of respondents is more than one, as many extra copies of
the appeal in paper-book form as there are respondents together with unused file size
envelopes bearing the full address of each respondent should be furnished by the
appellant. Where the number of respondents is more than five, the Registrar may
however permit the appellant to file the extra copies of the appeal at the time of issue
of notice to the respondents.
46

The appellant should attach to and present with his appeal a receipt slip in
Form II appended to the EPF Appellate Tribunal (Procedure) Rules, 1997 which
should be signed by the Registrar or the Officer receiving the appeal on behalf of the
Registrar in acknowledgement of the receipt of the appeal.
On receipt of appeal petition in Form I appended to the EPF Appellate
Tribunal (Procedure) Rules, 1997 the Registrar or any other person authorised by
him should endorse on every appeal the date on which it is presented or deemed to
have been presented and should sign the endorsement.
If the appeal, on scrutiny, found to be in order, it should be duly registered
and given a serial number.
If it is found to be defective, the defect noticed is formal in nature, the
Registrar may allow the party to rectify the same in his presence. If the said defect is
not formal, in nature, the Registrar may allow the appellant such time to rectify the
defect, as he may deem fit.
If the appellant fails to rectify the defect within the time limit, the Registrar
may by order and for reasons to be recorded in writing, decline to register the appeal
and inform the appellant accordingly.
The appeal should ordinarily be filed by the appellant with the Registrar of
the Tribunal within whose jurisdiction:-
(i) the appellant is residing for the time being, or
(ii) the cause of action has arisen, or
(iii) the respondent or any of the respondents against whom relief sought,
ordinarily resides;
Every appeal filed with the Registrar should be accompanied by a crossed
demand draft on a nationalised bank or Indian postal order, for rupees two hundred,
drawn in favour of “The Registrar of Tribunal” and payable at the station where the
Tribunal is situated (at present at New Delhi only).
The appeal should be preferred within 60 days from the date of issue of the
notification or order against which the appeal is preferred. However, if the Tribunal
is satisfied that the appellant was prevented by a sufficient cause from preferring the
appeal within the time limit, it may extend the time limit by a further period of 60
days.
The Tribunal shall not entertain the appeal unless the appellant has
deposited to the Tribunal, 75% of the amount due from him as determined under
Section 7A, 7B, 7C. The Tribunal may, however, for reasons to be recorded in
writing, waive or reduce the amount to be deposited.
The appeal filed should set forth concisely under distinct heads the grounds
for such appeal. Such grounds should be numbered consecutively. An appeal,
including any miscellaneous application should be typed in double space on one side
on thick paper of good quality.
47

Documents to be submitted along with an appeal:


The following documents should be submitted along with the appeal
petition:
(1)An attested copy of the order against which the appeal is filed;
(2)Copies of the documents relied upon by the appellant and referred to
in the appeal;
(3)An index of documents.
These documents may be attested by a legal practitioner or by a Gazetted
officer.
Each documents should be marked serially as Annexures A1, A2, A3 and so
on.
If, the appeal is filed by an agent of the appellant a document authorising
him to act as agent, should be appended to the appeal.
If an appeal is filed by a legal practitioner it should be accompanied with a
duly executed “vakalat nama”. An appeal should be based upon a single cause of
action. If it seeks one or more reliefs that they should be consequential to one
another.
Notices or processes to be issued by the Tribunal may be served by any of
the following modes or as directed by the Tribunal:
(1)service by party itself.
(2)by hand delivery (dasti) through process server;
(3)by registered post with acknowledgement due.
If it is served by the party himself by hand delivery (dasti), the appellant
should file with the Registry of Tribunal, the acknowledgement, together with an
affidavit of service.
The Tribunal may, however, taking into account the number of respondents
and their places of residence or work and other circumstances, direct that notice of
the appeal shall be served upon the respondents in any other manner including any
manner of substituted serve, as it appears to the Tribunal just and convenient.
The Tribunal may, in its discretion, having regard to the nature and urgency
of the case, direct the service of the notice on the Standing Counsels appointed as
such by the Central Government or any State Government or any other authority
under the Act.
The notice issued by the Tribunal should, unless otherwise ordered, be
accompanied by a copy of the appeal along with a copy of the paper-book.
The appellant should pay fee for the service or execution of process, not
exceeding the actual charges incurred in effecting the service, as may be determined
by the Tribunal.
The fees for the service or execution of process, not exceeding the actual
charges incurred in effecting the service, as may be determined by the Tribunal
should be remitted within one week of the date of the order determining the fee or
within such extended time as the Registrar may permit.
48

If the Tribunal is satisfied that it is not reasonably practicable to serve


notice of appeal upon all the respondents, it may, for reasons to be recorded in
writing, direct that the appeal should be heard notwithstanding that some of the
respondents have not been served with notice of the application. No appeal shall,
however, be heard unless:
(1) Notice of the appeal has been served on the Central Government or
the State Government or the Central Board or if such Government or
Board is a respondent;
(2) Notice of the appeal has been served on the authority which passed
the order against which the appeal has been filed; and
(3) The Tribunal is satisfied that the interests of the respondents on
whom notice of the appeal has not been served are adequately and
sufficiently represented by the respondents on whom notice of the appeal
has been served.
In the case of death of a party during the pendency of the proceedings
before the Tribunal, the legal representatives of the deceased party may apply within
thirty days of the date of such death for being brought on records as necessary
parties. If no application is received, within 30 days, the proceedings against the
deceased party shall abate. However on good and sufficient reasons the Tribunal on
application from the legal representative, may set aside the order of abatement and
substitute the legal representatives.

Powers and Functions of Tribunal:


The Tribunal shall notify to the parties the date and the place of hearing of
the appeal in such manner as the Presiding Officer may by general or special order
direct.
The Tribunals shall draw up a calendar for the hearing of cases and, as far
as possible, hear and decide cases according to the calendar, within six months from
the date of its registration.
The Tribunal shall have the power to decline an adjournment and also to
limit the time for oral arguments.
If the appellant does not appear on the date fixed for hearing the appeal, or
any other date of its adjournment, the Tribunal, in its discretion, either dismiss the
appeal for default or hear and decide it on merit.
If however, the appellant files an appeal within thirty days from the date of
dismissal and satisfies the Tribunal that there was sufficient cause for his non-
appearance on the date of hearing, the Tribunal shall make an order setting aside the
order dismissing the appeal and restore the same.
Where, however, the case is disposed on merit, the decision shall not be
reopened except by way of review.
If the respondent, i.e., Central Government or Central Provident Fund
Commissioner or Regional Provident Fund Commissioner or Assistant Provident
Fund Commissioner does not appear on the date fixed for hearing the appeal, the
Tribunal in its discretion may adjourn the hearing or hear and decide the appeal ex-
parte.
49

If the appeal is decided ex-parte, the respondent may apply to the Tribunal
for an order to set aside. If the Tribunal is satisfied that the respondent was prevented
by any sufficient cause from appearing on the date of hearing, the Tribunal may
make an order setting aside the ex-parte order, and shall appoint a day for
proceedings with the appeal.
Where the ex-parte order, the appeal is of such nature that it cannot be set
aside as against one respondent only, it may be set aside as against all or any of the
other respondents also.
The tribunal may, if sufficient cause is shown, at any stage of proceedings,
grant time to the parties or any of them, and adjourn the hearing of the appeal.
The order of the Tribunal shall be in writing and it shall be signed by the
Presiding Officer. The order shall be pronounced in the Open Court.
The final Order passed by the Tribunal should be communicated to the
Appellant and to the respondent concerned either by hand delivery or by registered
post free of cost. If they require the copy of any documents or proceedings, they
shall be supplied on payment of fees as may be fixed by the Presiding Officer.
Powers and Functions of the Registrar of Tribunal are enumerated in Rules
24 and 25 of the EPF Appellate Tribunal (Procedure) Rules, 1997.

Role of Regional/Sub-Regional Office:


On receipt of copy of the appeal petition from the Tribunal, the
Regional/Sub-Regional Office should make necessary entries in the Register of
Tribunal Cases.
Thereafter counter should be prepared covering all the contentions raised in
the appeal.
The Regional Office or Sub-Regional Office or office of the Central
Provident Fund Commissioner or Central Government, as the case may be, should
file in triplicate the reply to the appeal and the documents relied upon in paper book
form with the Registry within one month of the service of notice of the appeal on
them.
In their reply, they should specifically, admit or deny or explain the facts
stated by the appellant in his appeal and may also state such additional facts as may
found necessary for the just decision of the case. It should be signed on all pages and
verified as a Counter Affidavit by the Assistant Provident Fund Commissioner or
Regional Provident Fund Commissioner or Central Provident Fund Commissioner or
Central Government, as the case may be, or any other person duly authorised by
them in writing in the same manner as provided for in Order VI, Rule 15 of the Code
of Civil Procedure, 1908 (5 of 1908).
The documents referred to in the reply should also be filed along with the
reply and the same should be marked as R1, R2, and so on.
They should also serve a copy of the reply along with the documents on the
appellant or his legal practitioner, and file the proof of such service in the Registry of
the Tribunal.
50

The Regional Provident Fund Commissioner may represent himself or he


may depute an officer not below the rank of Assistant PF Commissioner to represent
the case before the Tribunal. If a complicated question of law is involved, the
Regional Provident Fund Commissioner may entrust the case to the Standing
Counsel to represent the case before the Tribunal.

The case file should be handed over to the Officer, who will present the
case before the Tribunal, after obtaining due acknowledgement, well before the date
of hearing, not less than a week before the date of hearing, to enable him to study
and present the case, before the Tribunal. In case, the case is entrusted to the
Standing Counsel, the file should be handed over to him on obtaining the due
acknowledgement.

The officer, who appears before the Tribunal should record a brief note on
the day to day proceedings of the hearing on the Note side the file. In case of
adjournment the date of next hearing should be recorded in the file, the Register of
Tribunal Cases and Diary of Hearing.

On the final orders of the Tribunal, Legal Section should study the orders and--
Where the Orders are in favour of the Organisation the decision of the
Tribunal along with a copy of the Order should be communicated to the
Enforcement Section. On its receipt, the Enforcement Section should lodge a claim
to the Tribunal for the amount deposited by the employer, if any, and
simultaneously should initiate action to recover the balance amount due from the
employer.
Where the Orders are against the Organisation, Regional Office should
examine, in consultation of the Standing Counsel, whether it is a fit case for filing a
Writ Petition in the High Court. Where the Tribunal order is against the notification
or orders issued by the Central Government, the matter should be referred to the
Central Government, through Central Provident Fund Commissioner.

Where the case is remitted back, a copy of the order of the Tribunal should
be sent to the Enforcement Section. On its receipt Enforcement Section should take
necessary action to issue notices to the employer, rehear and finalise it, as directed
by the Tribunal.

The Legal Section in Central Office/Regional Office shall obtain the orders
of the Tribunal deciding the future cases.
51

9
PENAL PROVISIONS
Introduction

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 is


one of the social security legislations and therefore invariably provides for the
consequences which would follow, if any, of its provisions are violated. Such
provisions are called penal provisions. The Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952 also contains penal provisions which were
amended in the year 1973 and 1988 so as to make it more stringent and thereby to
ensure its proper implementation.

With a view to ensure expedite action of invoking the penal provisions, the
power to prosecute (which was initially vested with Central and respective State
Governments) was delegated, effective from 1.11.1973, to Central Provident Fund
Commissioner and Regional Provident Fund Commissioners.

The penal action should be initiated promptly by the Compliance Sections, in


the following contingencies:
 Non-payment of dues (part or full) assessed under Section 7A of the
Act;
 non-submission of statutory return as reported through the defaulters
list / CCTS Report and defaulters list of annual returns in Form 3A
and 6A or Form 7 & 8 and the Enforcement Officers report;
 non-transfer of past accumulation dues;
 contravention or non-compliance on any provisions of the
Act/Schemes, both by exempted and Unexempted establishments;
 for giving false statement and false representation with a view to
avoid any payment.

The Penal provisions should be invoked through, -


a) Filing prosecution,
b) filing complaint with the police for criminal breach of trust, and
c) filing application under Section 110 of The Code of Criminal
Procedure, 1973.

OFFENCES UNDER THE EPF & MP ACT AND THE SCHEMES THEREUNDER:

SECTION 14 PENAL PROVISIONS: Provisions of Section 14 have been made


stringent with the new amendments, which have come into force with effect from
1.8.1988. The gist of the various penal provisions and the amendments introduced
and the enhanced punishments prescribed are given below:

(1) Section 14(1) : Punishment for making a false statement or representation or


for causing to be made any such false statement or representation with a view
to avoid any payment under the act and the three Schemes is imprisonment
upto one year or with fine of Rs.5000/- or with both.
52

(2) Section 14(1A) : a) Punishment for non-payment of provident fund


contributions: b) for non-payment of inspection charges in the case of
exempted establishments under Section 17(3): c) for non-payment of
administrative charges under Employees’ Provident Fund Scheme in Account
No.2 is imprisonment upto 3 years but it shall not be less than one year and
fine of Rs.10,000/- in the case of default in payment of employees contribution
which has been deducted by the employer from the employees wages and in
other cases, it shall not be less than six months, and a fine of Rs.5,000/-. The
Court is empowered to impose a sentence of imprisonment for a lesser term
for adequate and special reasons to be recorded in the judgement. It may be
noted that the Courts power to impose a fine in lieu of imprisonment has been
taken away by this new amendment.

Under this section the Courts are bound to give minimum fine of Rs.10,000/-
irrespective of the amount in default in case there is any default in payment of
employees contribution deducted from their wages and offences are proved.
In case the Court wants to give a lesser punishment, the court has to record
specifically the special reasons or other adequate reasons for which it
considers it necessary to impose a lesser sentence and such lesser sentence can
be given only in respect of imprisonment and not in the quantum of fine.

(3) Section 14(1B): a) Punishment for non-payment of Employees Deposit


Linked Insurance contributions b) for non-payment of Employees Deposit
Linked Insurance administrative charges c) for non payment of Employees
Deposit Linked Insurance Inspection charges is imprisonment upto one year
but the court shall award a minimum imprisonment of six months and a fine
upto Rs.5000/- for the offences under this section. However, here also the
Court has got discretionary powers to award a lesser sentence of imprisonment
for adequate and special reasons to be recorded in the judgment.

(4) Section 14(2) : This is an enabling provision which enables the Government
of India while framing the Schemes to incorporate suitable provisions for
punishments for any offences. The ambit of this section is quite wide in as
much as it provides for punishment to any person who defaults in complying
with any of the provisions contained in the three schemes. Thus, not only the
default in payment of contribution but also the non submission of returns or
any other requirements under the Schemes can be brought under the purview
of this section read with the relevant sub clause of Para 76 of the EPF Scheme.

Punishment provided under this Section is imprisonment upto one year or with
fine which may extend upto Rs.4000/- or with both.

(5) Section 14(2A) : In the case of exempted establishments if they are not
complying with any of the provisions of the Act or any of the conditions
subject to which exemption was granted under Section 17 they can be
prosecuted under this Section. Punishment provided is imprisonment upto six
months but shall not be less than one month and shall also be liable to pay a
fine upto Rs.5000/-. There is no discretion for the Court under this section to
award lesser sentence if the accused is guilty.
53

(6) Section 14AA : Under this Section those who have been convicted previously
for any offence under the Act and the three schemes are liable for enhanced
punishment. Punishment is imprisonment upto five years but which shall not
be less than two years and shall also be liable to a fine of Rs.25000/-. Unlike
in Section 14(1A) or in Section 14(1B) there is no discretion for the Court
under this section to impose a lesser sentence of imprisonment and the Courts
are bound to give a minimum sentence of imprisonment for two years and a
fine of Rs.25,000/-

OFFENCES UNDER EMPLOYEES’ PROVIDENT FUNDS SCHEME:

Paragraph 76 of the Scheme enumerates the following offences:


a) Deduction from wages/salary of a member the whole or any part of the
employer’s contribution;
b) Failure to submit any return of contribution/statement or submission of a false
return/statement/document;
c) Obstruction of an Inspector or an Officer in discharge of his duties;
d) Non-compliance with any other requirement of the EPF Scheme.

OFFENCES UNDER EMPLOYEES’ FAMILY PENSION SCHEME:

i) Non-remittance of Family Pension contribution to Account No.10 at the State


Bank of India;
ii) Non-submission of various returns prescribed under paragraphs 13,15 and 16
etc.

OFFENCES UNDER EMPLOYEES’ DEPOSIT LINKED INSURANCE


SCHEME:

i) Non-remittance of Employees’ Deposit Linked Insurance contribution as


per Para 8 of the Scheme.
ii) Non-submission of various returns prescribed under Para 10 of the
Scheme.

The penal provisions are given in a tabular statement on Page 62 & 63 for easy
reference.

NON-PAYMENT OF EMPLOYEES’ SHARE OF CONTRIBUTION-


ACTION (OFFENCE) UNDER 406, 409 IPC

Criminal Breach of Trust


The Explanation-1 below Section 405 of Indian Penal Code provides that -
“A person being an employer of an establishment whether exempted under
Section 17 of the Employees’ Provident Funds and Miscellaneous Provisions Act,
1952, or not, who deducts the employees contribution from the wages payable to the
employees for credit to a Provident Fund or Family Pension Fund shall be deemed
to have been entrusted with the amount of contribution so deducted by him and if he
makes default in the payment of such contributions so deducted to the said fund in
54

violation of the said law, shall be deemed to have been dishonestly used the amount
of said contributions in violations of directions of law as aforesaid”
Thus where an employer after deducting the employees’ share from their wages fails
to remit the contributions so deducted within a specified time, he shall be deemed to have
committed an offence of criminal breach of trust as explained in Section 405 of the Indian
Penal Code, which is punishable under Section 406 and 409 of the Indian Penal Code.
The Enforcement Officers need not wait for the sanction of the Regional Provident
Fund Commissioner for prosecution of the accused for the above offence. Before initiatiing
action, it should be ascertained that the wages for the relevant period of default of
employees’ share, has been paid to the members. They may lodge a complaint (FIR) direct
with the police authorities within whose jurisdiction the offence of criminal breach of trust is
alleged to have been committed by the accused employer after collecting all basic
documentary evidence such as Form 12A salary registers, etc., so as to build up a strong
case against the accused. Case filed under this provision cannot be withdrawn by the
Employees’ Provident Fund Organisation. A special feature on cognizable offence under
section 47 of Cr. PC is that a police can arrest a person concerned in such offence without a
warrant from the Magistrate.

SECURITY FOR GOOD BEHAVIOUR FROM HABITUAL OFFENDER –


Section 110 CrPC, 1973:
For punishing the erring employer and to get compliance from him an
enforcement officer can take the recourse of the provisions of Section 110
CrPC,1973, which provides as under:
“When an Executive Magistrate receives the information that there is within
his local jurisdiction a person who habitually commits, or attempts to
commit, or abets the commission – of any offence under the Employees’
Provident Funds and Family Pension Act, 1952” (Section 110 (f)(i)(c) of
CrPC)
Such Magistrate may in the manner provided require such person to show
cause why he should not ordered to execute a bond, which secures for his good
behaviour for such period, not exceeding 3 years as a Magistrate thinks fit.
Accordingly a good behaviour bond can be obtained from the erring employers.

Section 138 – Negotiable Instrument Act:

Normally, the employers of the covered establishments are advised to make


remittance into State Bank of India through cheque alongwith the prescribed single
challan. Out of such cheques some are dishonoured due to insufficient fund
available at the bank. When a cheque is dishonoured and the intimation is received
from the bank, immediate necessary action need to be taken to realize the amount.
Assistant Commissioner, in charge of enforcement section should issue a show cause
notice to the employer informing him the ill fate of the cheque and require the
employer to pay the amount due by DD. The said notice has to be issued to the
employer within 15 days of the receipt of the dishonour intimation from the bank. In
case of non-adhering to the direction given in the notice a prosecution complaint
need to be filed before the first class magistrate court within one month after the
notice period. It should be noted the issue of the notice within 15 days is mandatory.
The forms prescribed under the Negotiable Instruments Act are required to be
followed.
55

RETURN OF OWNERSHIP IN FORM 5A (REVISED) – IMPORTANCE:

The Return of Ownership of the factory/establishment in Form 5A to be filed


by the employer under paragraph 36-A of the EPF Scheme is a starting point in the
implementation by a covered unit. Its importance as a basic document need not be
emphasized. The Provident Fund Inspectors are well advised to collect this return
(in duplicate) from the Occupier/Managing Director/Proprietor/Managing
Partner/Secretary or other responsible Officer of the factory/establishment at the
time of investigation for coverage and forward one copy (in original) of the same to
the Regional Office alongwith the Inquiry Report and the other copy may be retained
by them on their file for future reference. Under Compliance Programme, the
intelligence section which handles issue of code number should ensure receipt of
Form 5A alongwith other prescribed returns. Care should be taken to get the correct
entries entered in the form so that only those persons responsible for the affairs of
the factory/establishment are brought on record. The Provident Fund Inspectors
should also keep a close watch over subsequent changes in the managerial set up so
that as and when changes take place, they have to get fresh declaration of ownership
in duplicate for record. While launching/recommending prosecution of the employer
only such persons who are responsible for the commission of the offence shall be
impleaded in the recommendation such as Secretary/Managing Director/Director in
the case of a company, Partners/Managing Partners in the case of a Partnership firm,
Manager in the case of factory, Sole proprietor in the case of a Proprietory concern
and the Head of the Department in the case of Departmentally run establishment.

EOs are advised to make it a point to call on the person or persons shown in
Form 5A at the time of every visit and to bring the observations in Part II of
Inspection Report.

PRELIMINARIES FOR INITIATING PROSECUTION:

i. On detection of a default in remittance or submission of returns for a period


exceeding two months, a report in the prescribed form has to be sent to the Regional
P.F. Commissioner concerned for obtaining sanction of prosecution under Section
14AC of the Act after issuing a show cause notice to the accused employer for
default.
ii. On receipt of sanction of prosecution and after the amount is determined under
Section 7A of the Act, a written complaint should be filed by the Provident Fund
Inspector in the competent Court of Law within 7 days of such receipt of sanction
alongwith such documents as copies of Form 5A submitted by the employer, of
notification issued under Section 14AC of the Act delegating the powers of sanction
to the Regional commissioner, of sanction order and a copy of the show causes
notice issued on the accused employer.

iii. A list of documents/witnesses which/who are to be cited/summoned in the course


of the prosecution should also be filed alongwith the complaint.

iv. The complaint to be filed by the Inspector under Section 200 of Cr.P.C. need not
however bear the Court Fee Stamp as he is exempted from Court Fee Stamps as a
Public Servant.
56

NOTE:-
a) Under Section 25 of the Cr.P.C.1973, all the Inspectors appointed under
Sec.13(1) of the Act, have been appointed as Assistant Public Prosecutors
for purpose of conducting EPF cases in the Courts of Magistrates.
b) A set proforma prescribed for preparing the complaint may be used by
the Complainant Inspector with suitable changes wherever required for
preparing and complaint;
c) Sanction, once given, should under no circumstances be returned or
withdrawn even when the accused employer makes good the default by
subsequent remittance and returns.
d) In cases of habitual defaulters, special prayer should be made before the
Court for awarding the maximum punishment including imprisonment
prescribed under the Act.
e) Alongwith every complaint under Section 14AA, a certified copy of the
previous judgement should be attached.

JOINDER OF CHARGES :
The Inspectors are well advised to file separate complaints before the Court
in respect of not more than 3 offences of the same kind committed within a span of
12 months as required under 218 and 219 of Cr.P.C. Each of the following is a
separate offence for the purpose of Section 218 of Cr.P.C. Misjoinder of charges
would run the risk of dismissal of the complaint.
i. Non-remittance of PF or Pension or E.D.L.I. contribution for each month is a
separate offence.
ii. Non-remittance of inspection charges or Administrative charges for each
month is a separate offence
iii. Non-submission of monthly returns/annual returns/contribution
card/nomination /declaration /initial return in Form 9 (EPF) or in Form 3(PS)
etc., is a separate offence.

It may be noted that separate complaints should be filed in respect of


1) Provident Fund – Inspection charges and Adm. Charges (14-1A)
2) Deposit Linked Insurance Fund (14-1B)
3) Under Sec.14AA in case of repeated offences of all the above cases.

If any of the above complaints are filed jointly, Provident Fund Inspector
runs the risk of Misjoinder of charges.

PERSONS LIABLE TO BE IMPLEADED IN THE COMPLAINT


The following persons are liable for offences under the Act and the various
schemes framed there under. As such they may be impleaded in the complaint filed
before the Court.

i. Where the accused is a company,


a) The Company itself,
b) Every director/Managing Director/Manager/Secretary or other
responsible officer of the Company;
ii. Where the accused is a partnership firm;
a) The firm itself,
b) Every Partner including the Managing Partner.
57

c) Manager or other occupier of the Factory/establishment


iii. Where the accused is a Proprietory Concern.
a) The Proprietor himself;

iv. Where the accused is a departmentally run Government or Semi Government


under taking;
a) The Heads of Departments;

It may however be noted that while prosecuting official Receiver/Liquidator


of a Company/Firm being wound up/closed, prior sanction of the Court by which
such Liquidator/Receiver was appointed may be obtained. Where an offence is
committed by a Company and it is proved that the offence has been committed with
the consent or connivance or is attributable to any neglect on the part of any
Director, Manager, Secretary or other officer of the Company, such Director or
Manager or Secretary or other officers shall be deemed to be guilty of the offence
and are liable to be proceeded against and convicted. Law therefore presumes that
all such persons are guilty of the offence committed by the Company. Burden is
however upon such persons to prove that the offence was committed without their
knowledge or that they exercised due diligence to prevent the commission of the
offence. Company, for the purpose of Section 14 of the Act, includes partnership
firm (see citation : State Vs. Bhadami – 1959 Cr. L.J. Page 68)

LIMITATION OF TIME FOR PROSECUTION OF THE ACCUSED


EMPLOYER:
(Please see Section 468 (B)
There was a conflict of judicial opinion in the matter whether the offences
prescribed under this Act are continuing offences or are barred by limitation
prescribed under Section 468 of the Code of Criminal Procedure 1973. The Madras
High Court has laid down in M/s. Premier studs and chaplets Co., and others – Vs.
State (56 FJR 611) that the duty to pay the contribution or to submit the return still
remains and continues till the contributions are made or the returns submitted.
Therefore a failure to pay the contribution or to submit the return is a continuing
breach of duty which continues till it is performed and the non performance of such
a duty from day-to-day is a continuing wrong. Therefore, the offences under this
Act will come under the ambit of Section 472 of Code of Criminal Procedure which
defines a continuing offence. The Section 472 states as follows:- In the case of a
continuing offence, a fresh period of limitation shall begin to run at every moment of
the time during which the offence continues. The matter has however been set at
rest by the Supreme Court ins their judgement dated 17.9.1984 in Criminal Appeal
No.372 of 1984 in Provident Fund Inspector, Chandigarh, Vs. M/s. Delhi Faridabad
Textile Mills case wherein it has been held that refusal to pay Provident Fund and to
submit returns is a continuous offence and every day the breach continues a fresh
cause of action arises.
The field officers however, should launch prosecution proceedings against
erring employers promptly.

THE PROVIDENT FUND INSPECTOR AS A PUBLIC SERVANT:


The Provident Fund Inspector appointed under Sec.13 of Act is a public
servant within the meaning of Sec.21 of the Indian Penal Code.
58

RIGHTS OF PUBLIC SERVANT:


As a public servant he enjoys certain rights and privileges and incurs certain
liabilities under the law. His rights and privileges may be enumerated as follows:-
i) Obstructing a public servant in the discharge of his duties is an offence under
Section 186 of the I.P.C. Similar provisions exist in Para 76(6) of EPF Scheme;
ii) Assaulting a public servant while discharging his duties are offences under
the following heads;
a) Voluntarily causing grievous hurt Sec.333 IPC
b) Voluntarily causing hurt Sec. 332 IPC
c) Assault under Sec. 353 IPC
d) Giving false information to a public servant in order to cause him to
take action against any other person is an offence – Sec. 182 IPC
e) Personal appearance at the time of filing the complaint under Sec.200
Cr.P.C. may be exempted at the discretion of the Magistrate;
f) The complaint filed by the Inspector is exempted from Court fee rules

The following are the liability of a Public Servant:


i) Taking gratification other than legal remuneration in respect of his official
act is an offence under Sec.161 IPC;
ii) Obtaining valuable things without any consideration from person concerned
in a proceeding is an offence under Section 165 IPC.

PROCEDURAL LAW :
1. There are two type of cases, summons and warrants case (Sec.4(c)) Cr.P.C.
Warrant case means a case relating to an offence punishable with imprisonment
exceeding two years. Summons case is a case relating to an offence punishable
with imprisonment of two years or less. Offence under Sec.406 of IPC is
punishable with imprisonment of three years. It is therefore triable as a warrant
case.

2. There are two types of offences: Cognizable (Section 2(c) Cr.P.C.) and non-
cognizable (Section 4(c) Cr.P.C.) Cognizable offence is an offence for which a
police officer can arrest an offender without a warrant. Non-cognizable offence
is one in which a police officer cannot so arrest. Offences under EPF Act and
Scheme are non-cognizable offences except an offence relating to default in
payment of contributions by the employer (Sec.14 AB) and offence under
Sec.405 of IPC is a cognizable offence.

3. Offences under EPF Act and Scheme framed there under are not
compoundable (Schedule II Cr.P.C.) Offence under Sec.406 of IPC is
compoundable only when it relates to Rs.250/- or less (Schedule II Cr.P.C.)

NATURE OF CASES UNDER THE ACT AND THE SCHEME:


The offences under the Act and the Scheme for which the accused employers
are charged with belong to the class of cases which are called ‘summons cases’. The
Court on receipt of complaint under Section 200 Cr.P.C. will issue a process for
appearance of the accused before the Court for answering the charge through the
police officers. The summons issued through the Police officers for service on the
accused are at times returned to the Court without service for various reasons. The
Court, in that event, may ask the complainant to get the summons served on the
59

accused. When an Inspector is asked to serve summons on the accused, he has to


adopt the following course of action for service summons.
i) It should be served on the person summoned by personal service by
delivering the duplicate of the summon after getting the receipt signed on
the back of the other copy.
ii) Where the person summoned cannot be found, the summons may be
served by leaving a duplicate copy with one of the adult members of his
family residing with him and the persons who receives the summon may
acknowledge its receipt by signing on the back of the other copy.
iii) Where both the above modes of service fail, the Inspector shall affix
one of the duplicate of the summons to some conspicuous part of the
house in which the person summoned ordinarily resides.
iv) Where the person summoned is a Corporation, service of summons
may be effected by serving it on the Secretary/Local manager or other
principal officer of the Corporation or by letter sent by registered post
addressed to the Chief Officer of the Corporation

When all the modes of service fail even after exercising due diligence, a
prayer may be made to the Court for issue of warrant (bailable on non-bailable) for
arrest of the accused under Section 70 Cr.P.C. The warrant of arrest is sent through
Police Officer. Some times, even warrant of arrest would fail to get the appearance
of the accused. In such cases the complainant should make a strong prayer before
the Court for issue of proclamation against the accused and attachment of the
properties belonging to him under Section 82 and 83 Cr.P.C.

No. of offences in one trial:


Section 218 Cr.P.C. states that for every offence there should be a separate
trial. Sec.219 Cr.P.C. is an exception to this general rule. Under Sec.219 three
offences of the same kind committed within 12 months can be tried together. Non-
payment of contributions for each month is an offence. Therefore, there can be one
trial for non-payment of contributions, Administration Charges and for not sending
returns for any one month can be tried together under each Scheme separately.

Conduct of trial
1. Offence under EPF & MP Act and Scheme are triable as summons case or
warrant case depending upon the period of imprisonment prescribed.
2. Summons cases are triable in accordance with Chapter XX of the Cr.P.C.
The procedure is as under:-
a) When an accused appears before a Court and the case is taken up for hearing a
plea of the accused whether he pleads guilty or not to the charge to be taken
(Sec.251)
b) If the accused pleads guilty to the charge and the Court accepts it, he is
convicted and sentenced (Sec.252)
c) If the accused pleads not guilty, evidence is to be led by the prosecution.
d) Order of evidence is as follows:

i) The complainant is to be first examined in brief. He will then be


cross examined by the accused. Thereafter he is to be re examined by the
prosecution to remove all doubts arising out of the cross examination (Sec.138
IPC)
60

ii) Other witnesses will then be called by the prosecution and similarly
examined.
iii) After the evidence of prosecution the Court is to examine the accused
under Sec.313 Cr.P.C. The accused can put in written statement on his behalf
at this stage.
iv) The accused is then to examine any witnesses on his behalf if he so
desires.
v) If the accused leads evidence then he has to argue first. The
prosecution will then reply. If no evidence is led by the accused, the
prosecution has to argue its case first and the accused replied.
vi) The court is then to deliver judgement. If the Court convict the
accused, the Court can impose a sentence of imprisonment against him as
prescribed in the Act.

CONVICTION/ACQUITTAL/APPEAL/REVISION:
There is a basic difference between discharge and acquittal under the Cr.P.C.
Chapter XX of the Cr.P.C. which deals with trial of summons cases provides for
conviction/or acquittal of an accused. The accused on appearance before the Court
may either plead guilty of the charges or seek trial. In case where the accused does
not plead guilty the Court will proceed to hear the prosecution (Inspector) and take
all evidence on his behalf and subsequently will hear the accused. The Court, upon
taking the evidence finds the accused guilty, it shall pass a sentence according to
law. If it finds the accused not guilty, it can record an order of acquittal. Non-
appearance or death of the complainant or withdrawal of the case can also result in
acquittal of the accused under Sections 256 and 257 Cr.P.C. Court can also discharge
an accused under Section 258 Cr.P.C. where it has not jurisdiction to try a case even
after taking evidence such as when the case is barred by limitation. In cases of
acquittal, the complainant can file an appeal before the High Court under Section
378 Cr.P.C. after obtaining special leave to appeal within 6 months of the order of
acquittal. Similarly, the complainant can file a revision petition either before the
High Court or before a Sessions Court under Section 397 Cr.P.C. in cases of
discharge ordered under Sec.258 Cr.P.C.

The Enforcement Officers are therefore advised to be thorough with the


procedures contained in Sections 251 to 258 under Chapter XX of the Cr.P.C.

Certified copy of every order of the Court shall be collected so that at the
time of filing prosecution under Sec.14AA, there is no difficulty in leading the
evidence of earlier conviction.

PAYMENT OF COMPENSATION UNDER SECTION 357 Cr.P.C.:


The Court on convicting the accused under Sec.255, may order, at its
discretion under Section 357, any part of the fine (to be imposed on the accused) to
be applied among other things.
i) in defraying the expenses properly incurred in the prosecution;
ii) in payment of compensation for any loss or injury to the complainant.

The Inspector is, therefore, advised to make specific prayers for awarding
expenses in the complaints (being incurred by them) which shall include traveling
expenses from their Headquarters to the Court on each day of appearance incidental
61

expenses such as typing, cost of papers and all other expenses incidental thereto.
Prayers shall also be made for awarding compensation from out of fine being
imposed on the accused which shall be equivalent to the amount due and outstanding
from the accused towards Provident Fund and other dues for the period for which
such complaints are filed in the Court. Normally, Court will be reluctant to pass
order for such compensation unless it is strongly prayed for. The Provident Fund
Inspectors should, therefore make it a point to specifically include prayers for
compensation in all complaints filed against the accused.

Absence of complainant:
If on the day of any hearing of the complaint, the complainant remains
absent, the Court may dismiss the complaint and acquit the accused. However, the
Court may dispense with the attendance of complainant and proceed with the trial of
the case (Sec.247 Cr.P.C.)

It is hoped that the above guidelines would enable the Inspector to


successfully conduct all cases under Sec.14 of the EPF and MP Act, 1952 as well as
under Section 406/409 of I.P.C. They are advised to go through the guidelines
carefully and equip themselves with all the important features of the Cr.P.C. They
may however contact the Regional Office for any further guidance in the matter.

Recovery of Statutory dues form Central Public Sector


Undertakings(CPSU)/State Government Public Sector Undertakings(SPSU):
The Head Office has reviewed the defaulting position of CPSUs and the steps
to be taken to recover the dues expeditiously. It has been decided that all the legal
action against CPSUs to be initiated to recover the dues. However, it is instructed
that complaints u/s 406/409 of IPC should not to be filed. Similarly while exercising
the powers of recover u/s 8B recourse should not be taken to the powers of arresting
the senior officers of the CPSUs. Excepting the above all other coercive provisions
in the Act & Scheme may be invoked for recovering the dues from the CPSUs.

Many of the Public Sector Undertakings depend on grants etc. from the
Government for their survival and payment of statutory dues including PF dues.
Hence, the matter may have to be taken up with the concerned authorities at the
appropriate level, to make them realize the importance of PF dues and the
consequences of not remitting such dues i.e. levy of damages and interest alongwith
penal actions such as arrests and prosecutions. Apart from this, you should also
build pressure on PSUs to recover the dues. Coercive actions like attachment of
bank accounts, sundry debtors and immovable property if taken regularly and in all
cases will definitely yield positive and substantial results.

To give effect to this strategy the following actions are required to be taken :-

1. Initiation and completion of assessment of all the outstanding dues in respect


of all the defaulters on a war footing to ensure its completion by 31.3.2003 so
that a clear picture emerges about the total default in this sector. In all cases
of the Central and State PSUs, dues must be determined and other levies
imposed so that the quantified position of arrears is correctly reflected in our
workload. We are in a regime of disinvestments, various packages are under
contemplation and if we do not project the actual liability position correctly
62

the same will not be factored in any financial arrangement set up for such
PSUs. It should be made very clear to all the Assessing Officers that they
should complete the assessment in all cases of Central and State PSUs on
priority basis.

2. No action plan or strategy can be contemplated and / or executed unless there


exists a robust database which gives clear picture and is capable of constant
updation. You should therefore initiate immediate steps for preparation of a
comprehensive and scientific database which should be ably to clearly reflect
the total amount to be recovered with clear distinction in the employees’ and
employer’s Share and other charges payable categorization of the
establishment with regard to unit being registered with BIFR or other such
relevant points like stay by court etc. alongwith the details of the possible
sources from where the dues can be recovered e.g. Bank accounts, details of
sundry debtors and properties etc. in respect of each establishment and keep
an account of all the actions taken so far with regard of each establishment in
default for recovery.

3. Constant monitoring and updation of this database with regard to any further
addition in default on account of damages and interest leviable and further
default committed, if any, and scheme being sanctioned if the unit is
registered with BIFR.

4. Constant interaction with BIFR or the Official Liquidator, as the case may
be, by officers fully equipped with the provisions of statute and case laws to
strengthen their case.

5. Constant and persistent efforts to get the stay, if any, granted by any court,
vacated.

6. Simultaneous action to take up the matter with the respective


Governments/Ministries under whose control the PSU functions.

7. Initiation of recovery action specially attachments of bank accounts, sundry


debtors and immovable properties etc.
PENAL PROVISIONS
Act – Sec. Offender Offence Imprisonment Fine
(1) (2) (3) (4) (5)
Avoiding payment or of
enabling any other person to
avoid payment under the Act/ Up to or Rs.5000/-
14(1) Whoever Schemes, knowingly makes or One year.
causes to be made any false Or with both.
statement of representation.

Contravention or Default in
payment of Contribution Up to 3 years
payable under Sec.6,
14(1A) An Employer
Nonpayment of Inspection (a) But not less Rs.10000/-
Charges payable in A/C.No.2 & than one year for
Non Payment of Administrative non remittance of
63

Charges payable in A/C.No.2 Employees’ Share


of contribution
deducted;

(b) But not less


than 6 months (in Rs.5000/-
any other case)
Up to one year but
shall not be less
than 6 months
(Proviso common
to Sec.14(1A) and
Contravention or Default in
14(1B) provides
payment of EDLI Contribution
that the Court may And also fine
payable in A/C.No.21, EDLI
14(1B) An Employer or any adequate & extended to
Adm. Charges payable in
Special reasons to Rs.5000/-
A/C.No.22 and Inspection
be recorded in the
Charges payable in A/C.No.22
judgement, impose
a sentence of
imprisonment for a
lesser term).

Up to or with fine
One year which
Contravention or Default in
may
14(2) Any Person Complying with any of the
Extend to
provisions of the three Schemes.
Rs.4000/-
Or with both.
Contravention or Default in
complying with any provisions
of the Act or any condition And also fine
Up to 6 months
subject to which exemption was extend to
14(2A) Whoever (but not less
granted under Sec.17 (if no Rs.5000/-
than one month)
other penalty is else-where
provided under the Act)

Having been convicted by a Extend to 5 And fine of


court of an offence punishable years but shall Rs.25000/-
14(AA) Whoever under the Act / Schemes, not be less that
commits the same offence under 2 years
the Act / Schemes.
Convicted of an offence in
default in the payment of
EPF/EPS/EDLI Contributions And also fine
Imprisonment
or non transfer of previous P.F extended to one
as provided
Accumulations either on hundred rupees
under Sec.14 of
account of coverage or an for every-day,
the Act, as
14C An Employer account of cancellation of after expiry on
relevant to the
exemption and ordered to pay which the Court
offence
the contributions or transfer the Order has not
committed.
accumulations within stipulated been complied
period and failure to pay or with.
transfer the amount as directed
by the Court.
64

WITHDRAWAL OF PROSECUTION - PROCEDURE

It should be ensured that once the prosecution is sanctioned by the competent


authority, complaint is filed in the appropriate court by the Enforcement Officer
within a period of seven days of its sanction. Prosecutions once sanctioned should
not be held back merely because the establishment has paid the amount in arrears,
before the prosecution complaint is actually filed in the Law Court. While it is not
our intention to prosecute every defaulting employer indiscriminately, it is
absolutely necessary for us to ensure that no defaulting employer commits a default
and yet is allowed to get away with impunity.

The prosecution once filed in the law court should not be withdrawn under
any circumstances whatsoever except with the prior and specific permission of the
Central Provident Fund Commissioner. Section 257 of the Code of Criminal
Procedure deals with drawal of prosecution complaints. It reads as follows :

“If a complainant at any time, before a final order is passed in any case
under this chapter satisfies the magistrate that there are sufficient grounds for
permitting him to withdraw his compliant against the accused or if there be more
than one accused, against all or any of them, the magistrate may permit him to
withdraw the same, and shall there upon acquit the accused against whom the
complaint is so withdrawn.”

Although the power of withdrawal of prosecution vest with the complainant


still it lis felt that as a measure of having uniformity in acting upon the provision of
Section 257 of the Code of Criminal Procedure certain guidelines should be followed
by the complainant before actual withdrawal is given effect to. Whenever any
request from a defaulting employer for withdrawal of prosecution is received by the
Regional P.F. Commissioner, he should before referring the same to the Central P.F.
Commissioner for orders in the matter, ensure fulfilment of the following conditions;

a. the accused is a first offender and has not been convicted for a similar
offence earlier, nor any other prosecution under the EPF & MP Act, 1952
is pending against him

b. the accused has set right all the contraventions against which the
compliant was filed.

c. his current performance, in the matter of payment of all dues including


interest due under Section 7Q of the Act, if any, is up to date. This is
essential as it would be futile to withdraw one compliant and file another,
close on the heels of withdrawal.

d. the accused person has paid to the fund the damages upto date levied
under Section 14 B of the EPF & MP Act, 1952 and also, reimbursed the
legal and other expenses incurred by the office in connection with the
prosecution.
65

e. the accused gives an undertaking to Regional P.F. Commissioner, to


make full and prompt complaints under the various provisions of the EPF
& MP Act, 1952.

As the employer seeking withdrawal of prosecution cases is required to pay


the damages before his request is considered, it is necessary for the Regional P.F.
Commissioners to levy, without delay, the quantum of damages payable by the
employer after observing all the necessary formalities and the employer should be
called upon to pay the damages before his request is forwarded to the Central P.F.
Commissioner for consideration. Moreover, the above instructions should be given
effect to invariably in all cases and where any defaulting employer has not complied
with any one or more of these requirements, his request for withdrawal of the
prosecutions may straight away be rejected without any reference to the Central P.F.
Commissioner to avoid protracted correspondence and wastage of time.

Requests of employers who are habitual defaulters should not be entertained


and they should be proceeded against in accordance with the law. The above
instructions should be given effect to, uniformly in all cases.

Furthermore, if a habitual or heavy defaulter is given lenient punishment by


the court, immediate appeal should be filed. In case of any doubt, the case should be
referred to Central P.F. Commissioner for instruction.

The Regional P.F.Commissioner in charge of the region is required to


recommend the withdrawal of prosecution in respect of cases arising from the Sub-
Regional Offices under his jurisdiction duly furnishing the completer particulars of
the case.

10
LEVY OF PENAL DAMAGES – AN INTRODUCTION
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
has been amended by Act 37 of 1953 providing for recovery of damages on the
belated payment of dues under the Act/Schemes. The power to recover damages
vested with the appropriate government till 25.4.1957. The power to levy damages
was delegated to the State Government from 26.4.1957. As there was considerable
delay in levy of damages, the Act has been amended by amendment Act 40 of 1973
vesting the power to levy damages to the Central Provident Fund Commissioner or
such other officer as may be authorised by the Central Government. The Central
Government has authorised the Regional Provident Fund Commissioners to levy
damages vide notification S.O. 548(E) dated 17th October 1973 as amended by
S.O.No.2793 dated 18.6.1983 with effect from 1.11.1973. The Regional Provident
Fund Commissioners in the region as well as in the Sub-Regional Offices are
empowered to levy and recover damages. With effect from 4.5.2002 the APFCs have
also been empowered to levy and recover damages. The organisation was taking a
stand that the damages as imposed under section 14B includes the penalty and the
loss of interest sustained by the organisation by the belated payment of dues. The
Apex Court has also held the same view in the case of Organo Chemical Industries
66

v/s Union of India and others. By the amendment Act 33 of 1988, for the words
“from the employers such damages not exceeding the amount of arrears as it may
think fit to impose”, the words “from the employer by way of penalty such damages,
not exceeding the amount of arrears as may be specified in the Scheme” were
substituted to make it clear that the damages is by way of penalty only.
Simultaneously section 7Q was inserted in the Act making employer liable to pay
interest on belated payment of any dues under the Act.

All the covered establishments are required to pay the dues within 15 days
from the close of the month. Five days grace period is also allowed. The dues shall
include, any amount of contribution or amount to be transferred to the Fund on
account of coverage under Section, 15(2) or amount to be transferred to the Fund
under Section 17(5), after the cancellation of exemption or payment of any charges
payable under any other provisions of the Act/Schemes or any of the conditions
specified under Section 17 of the Act. If the amount is not deposited within this
stipulated time, penal damages not exceeding the amount of arrears can be imposed
under Section 14-B of the Act on the establishment. But before levying and
recovering damages, the employer shall be given reasonable opportunities of being
heard.

The function of Regional Office/SRO/SAO with regard to Section 14-B are:

(a) A centralised ‘Damages Cell’ is to be constituted.


(b) Defaults are to be detected through CCTS Software.
(c) Issue of notices to the employers.
(d) Obtain postal acknowledgement for the notices.
(e) Hearing of representations of defaulters.
(f) Issue of speaking orders.
(g) Collection of the damages levied through revenue recovery action.

Functions of Accounts Branch:


(a) For effective operation of the Section 14-B the Accounts Branch shall
watch for the receipt of monthly returns and challans. After auditing
Form 12A etc. and completing the entries in DCB register note down the
delays made in remittances. The remittances made up to 20th of the
following month are not to be taken as defaults.

(b) A statement of delayed remittances should be prepared in Appendix A/B


after verifying the particulars of remittances with Schedule of Receipts.
The damages statement in Annexure-A and one copy of Annexure ‘B’
should be sent by 15th of the following month to the ‘Damages Cell’ duly
approved by AAO/AO/AC. An entry for having sent the Damages
statement is to be made in the DCB register for future reference.

At present CCTS Software provides the list of defaulters, amount in default,


amount of damages and dues under 7Q of the Act, and the same is forwarded to the
defaulting employer. The employer can remit the amount of damages and the simple
interest on the basis of CCTS reports. The personal hearing need to be provided to
the employer and necessary procedure is required to be followed.
67

Functions of Damages Cell:


(a) On receipt of damages statement prepare a show cause notice in format
Appendix-C. The notice should be accompanied by a statement of dues
and payments.
(b) Issue notice to the employer. Before issue of notice make necessary
entries in the “Register for watching levy and recovery of damages” (vide
special proforma No.20).
(c) Watch for any replies, representations from the employers and add the
same to the file and submit the same to the Asst. P.F. Commissioner
/Regional PF Commissioner one day before the date of hearing.
(d) Once an order is passed by Asst. P.F. Commissioner / RPFC, the
damages cell should prepare the proceedings in prescribed format, get it
approved by Asst. P.F. Commissioner /RPFC. After this the fair copy
should be neatly typed and sent to the employer by registered post.
Printed or cyclostyled forms of speaking orders should not be used for
this purpose.
(e) The amount of damages as ordered by Asst. P.F. Commissioner /RPFC is
to be entered in the Register for watching the levy and recovery of
damages.
(f) If the remittances are not received within 15 days of the issue of the order
the damages cell shall initiate action for recovery.
(g) When instalment facility is granted, the damages cell should receive and
keep the Bank guarantee and watch for remittances on due dates of the
instalments.

The process of levy and realisation of damages is a quasi-judicial function.


As a result of the adjudication by the Regional Commissioner, civil consequences
are vested on the employer and it is therefore necessary that while conducting such
adjudication, the quasi judicial authority have to act in conformity with the
principles of natural justice. The employer should be given reasonable opportunity
of being heard and his submission should be taken into consideration before deciding
the case finally. The orders passed by the Asst. P.F. Commissioner /Regional P.F.
Commissioner should be a speaking order which should specifically state the reasons
for the imposition of the damages.

Damages imposed under Section 14-B is a penalty. It serves as a deterrent, so


that an employer may not commit further defaults.

To sustain the loss caused to the Organisation, simultaneous action need to


be taken to charge the interest under Section 7Q of the Act in all belated remittances.

Levy and realisation of damages should be made in time. As soon as the


default is detected immediate action should be taken, to initiate the proceeding under
Section 14-B. Even though the law of limitation does not apply, damages should be
levied without much delay.

. As soon as the default is detected, the Accounts Section should prepare the
statement of delayed remittances and pass it on to the Damages Cell. The Damages
68

Cell may take action on the Penal Damages Statement generated through CCTS
Software and the amount realised should be accounted for properly.

As already mentioned earlier, the process of levy of damages is a quasi-


judicial function. The employer should be given an opportunity of being heard. On
receipt of the statement of the delayed remittances, the Damages Cell will issue a
show-cause notice to the employer. The soft notice through CCTS serves this
purpose. The Asst. Commissioner /Regional Commissioner should fix certain dates
every month for conducting personal hearings under Section 14-B. The show-cause
notice indicating the date of personal hearing should be issued by Registered Post
and the acknowledgement obtained and kept on record. This will ensure that the
employer has been duly informed of the date of hearing and he can not take the plea
that he was not aware of the dates. All the replies and representations received from
the employer should be kept on record and the file put up to the Asst. Commissioner
/ Regional Commissioner with a brief note on the date before the date of hearing.
On the date of hearing, Asst. Commissioner / Regional PF Commissioner should
record the proceedings in his own hand and pass an appropriate speaking order
applying his mind to the facts and circumstances of the case. In case the employer
fails to attend the personal hearing on the specified date, damages may be levied
taking into account the written representation, if any, received from the employer.
The speaking order should specifically meet all points raised by the employer in his
written and oral evidence, so that the orders once passed are self-speaking and
complete in all respects. The order should be neatly typed and sent to the employer
by registered post. A copy of speaking order should be sent to the accounts branch
also. The section will enter the details in the DCB Register and the remittance
watched. In case, the damages are not paid within 15 days action should be initiated
to invoke the provisions of Section-8F of the Act.

According to Section 14-B of the Act read with the provisions of the relevant
scheme the Regional Provident Fund Commissioner may recovered from the
employer by way of penalty such damages, not exceeding the amount of arrears, as
specified in the Scheme. The rates of damages given in the Schemes are reproduced
hereunder.
E.P.F. Scheme ……..Para 32-A
E.P.S.-1995 ……..Para 5
E.D.L.I. Scheme ……..Para 8-A.

Period of default Rates of damages (percentage


of arrears per annum)
(a) Less than two months Seventeen
(b)Two months and above but less than Twenty Two
four months
(c) Four months and above but less than six months Twenty Seven
(d) Six months and above Thirty Seven

The Central Board of Trustees may reduce or waive the damages levied
under Section 14-B of the Act in relation to an establishment which is a sick
industrial company and in respect of which a Scheme for rehabilitation has been
sanctioned by the Board for Industrial and Financial Reconstruction established
under Section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985
69

subject to such terms and conditions specified in the relevant Scheme. In other
cases, depending upon merits reduction of Damages upto 50% may be allowed.

The order passed under Section 14B can not be revised or rescinded.
However, any clerical or arithmetical mistake can be rectified either suo motto or on
a representation from the employer provided that no such rectification should be
made without giving the employer a further opportunity of hearing where such
rectification will have the effect of enhancing the liability of the employer. An ex-
parte order may be re-opened if it is subsequently brought to the notice of the
Regional Commissioner by the employer that he did not receive the notice or that he
was prevented by sufficient cause from sending representation in writing/appearing
before the authority on the first date. In such cases, the Regional Commissioner may
issue revised speaking order indicating the reasons for the review etc. cancelling the
earlier order.

Damages should not be waived by the Regional Commissioner as he is not


empowered to waive the same. The employer may, however, be allowed to pay the
damages in instalments if he satisfies the requisite conditions of instalment facility.

Levy of Penal Damages in respect of Establishments covered retrospectively:


In respect of the establishments covered belatedly the following
guidelines have been issued by the Head Office vide Lr. No.
C.II/Misc./Inst./04/15921 dated 15.6.2004 with regard to levy of damages.

1. Levy of damages on : No damages shall be levied if the


workers’ share for pre- workers’ share for the pre-discovery
discovery period period has been waived.
2. Establishment which paid : No damages shall be levied, however
PF dues within the time to compensate the interest loss to the
prescribed in the coverage EPFO, only simple interest @ 12%
notice. p.a. shall be levied.
3. Establishments which paid : No damages shall be levied till the
PF dues beyond the date date of payment fixed in the coverage
fixed in the coverage notice. notice. Only simple interest @ 12%
upto the date mentioned in the
coverage letter and damages at
appropriate rates for the period of
delay beyond the date fixed in the
coverage letter be levied.
4. Establishments which were : Only difference of interest amount
having their own private PF between 12% simple interest p.a. and
system before coverage and the actual interest earned by the
who deposited the PF in private PF shall be levied if the latter
banks or finance is less than 12% p.a. Beyond the date
establishments. fixed in the coverage notice, damages
shall be levied at the appropriate
rates.
70

However, the past cases already decided may not be reopened. To avoid
confusion and inconvenience in the matter of remittance of PF dues where the
establishments are covered belatedly, the coverage notices shall henceforth
contained instructions that ‘payments of PF contributions and allied dues shall be
made within 15 days from the date of receipt of the coverage notice’.

PENAL DAMAGES MAY NOT BE LEVIED IN THE FOLLOWING CASES:


1. Damages may not be levied on an employer who sends a Bank Draft or
cheque on or before 20th of the month even though the actual realisation of
money into the account of the Fund takes place after the due date, including
days of grace.
2. Where arrears arise due to mistake in totalling contributions etc. damages
may not be levied for the reason that it can not be said to be a case of
default.
3. Damages are not to be levied where an employer did not make deduction
from the wages of an employee on account of an accidental mistake or a
clerical error or where an employee giving a false declaration regarding his
previous membership provided the employer was permitted in writing to
make deduction from the subsequent month’s wages.
4. Only damages accrued upto the date of liquidation of a company can be
realised from the liquidator. No damages can be levied subsequent to the
date of liquidation.
5. Part payment made by the establishment is to be treated as default and
damages are leviable on the balance amount due.
6. If the delay is solely due to and attributable to railway/General/Bank strike,
no penal damages should be levied. This will, however, be subject to
verification.

Need for timely Action:


The observation made by a High Court on the belated action in levying the
damages is reproduced for guidance:
“the officers entrusted with the task of administering social welfare
legislations should be aware of this and they should be conscious that they
are administering a law which has been enacted for the welfare of the
employees. The Government who have enacted the law owes a duty to set
up proper machinery to administer it. If it needed 17 years to issue notice
which only required turning the pages of a register with a view to seeing
the date of payment, it is difficult to understand what sort of
administration of this social welfare legislation is being done by the
authorities concerned. This case is a glaring example of the way of the
social welfare legislations are being dealt with and administered. The
whole of the legislative purposes may be frustrated by administrative
inefficiency, inaction or negligence. If any loss is caused to the employees
by their inaction, negligence or remissness responsibility may be fixed and
the amount recovered from the persons so responsible. Action taken after
long 17 years for levy of damages of Rs.53,000 for a default committed for
a period of 10 years can neither be exemplary nor act as a deterrent for
other employers.Where no period of limitation is prescribed by the law for
71

exercise of any power it must be exercised within a reasonable time. Any


unreasonable delay in exercise of power may affect its validity. What is
reasonable time will depend upon the facts of each case.”
Though Apex Court set aside the impugned judgement of the High Court and
salvaged the situation to certain extent, that it has not given any blanket permission
to Regional Provident Fund Commissioner to levy the damages taking their own
time. The Apex Court observed -
“There can be no dispute that when a power is conferred by the statute
without mentioning the period within which it could be invoked, the same
has to be done within a reasonable period, as all powers must be
exercised reasonably and exercise of the same within a reasonable period
would be facet of reasonableness”.
Keeping in view of the above observations, Regional Commissioners should
take action to levy damages promptly. Further, interest under section 7Q is
chargeable for belated remittances of damages. A period of 15 days should be
allowed to an employer for remittance of damages from the letter of issue of the levy
order.

Launching of prosecution for non-payment of Damages levied:

The question as to whether an employer could be prosecuted for non-


payment of damages was examined long back and it was decided by the Legal
Advisor to the Government of India, Ministry of Labour than once the date or period
within which the employer is required to pay the damages levied is incorporated
specifically in the speaking order, legal action can be taken against the employer by
resorting to the prosecution under Section 14(2A) of the Act. It was also decided that
the protection of Article 20(2) of the Constitution of India will not apply as it would
not amount to double jeopardy.
The employer has to deposit the damages at the rate as specified under three
Schemes immediately on issue of a proceedings issued by the Regional Provident
Fund Commissioner in terms of proviso to Section 14B of the Act. Thus, the penal
damages levied becomes an amount payable by the employer under the provisions of
the Act and as such the non-payment of damages could be construed as an offence
falling under Section 14(2A) of the Act. In view of this, speaking order should
specifically mention the date by which the damages levied shall be remitted, and in
the event of the employer failed to do so within the stipulated time, the employer is
liable for prosecution, besides, recovery of interest under Section 7Q of the Act.
Database Creation:
With a view to ensure that Penal Damages under Section 14 B and interest
under Section 7Q are realised in respect of all belated deposits, the Headquarters
office has given directions to all the field offices to create a data base in the
prescribed formats (Data base I & II) to the extent of 100% of all establishments.
For this purpose, the remittance particular with the date of deposit are to be collected
in respect of each establishment with reference to DCB Register and Enforcement
files, from the date of Coverage of the establishment. Simultaneously, wherever the
Penal Damages and interest are not realised action shou7ld be initiated to recover the
dues on priority basis.
72

The Regional P.F. Commissioners in charge of the Regions have been given
the task of completing the task of creation of database I & II as their key functional
areas.

RECKONING THE PERIOD OF DELAY:


 To be reckoned from 16th of the month following to the month for which the
dues relates to the date of remittance.

 Where arrear wages are paid – To be deposited within 15 days of


disbursement.

 Transfer of past accumulation dues – Within 10 days from the issue of


related letter.

 Retrospective application of the Act – From the normal due date, from the
date of coverage and not from the date of issue of Code Number.

GRANT OF INSTALMENT FACILITIES FOR PAYMENT OF PF DUES IN


SUITABLE NUMBER OF INSTALMENTS, DELEGATION OF ENHANCED
POWERS TO THE RPFCS

The CBT, EPF at its 163rd meeting held on 19-08-2003 has approved
delegation of enhanced powers of the RPFCs in the matter of granting instalment
facility for liquidation of outstanding statutory dues as detailed below:-

S.NO. GRADE OF THE OFFICER ARREAR


LIMIT
1. Officer in chare of SROs headed by RPFC-II Rs.5 lakhs
2. RPFC-I in charge of the regions Rs.10 lakhs

However these officers shall be required to ensure that the dues are realized
during the current financial year itself. Cases where the amount exceeds Rs.10 lakhs
in arrears and where the amount is not realisable within the current financial year, fit
cases shall be referred by the Regional P.F. Commissioner-I of the region to the
Central Office with his/her specific recommendations.

Sanction of the instalment facility shall be subject to the norms and


conditions already communicated early.
73

The number of instalments shall be regulated depending on the merit of each


case and not mechanically. Similarly, while recommending cases for instalment
facility to Central Office, care shall be taken to ensure that all the conditions
communicated on the subject are adhered to strictly.
[vide Headquarters letter No.E.II/Inst./03/DL/50863 dated 15.10.2003]

*******
GUIDELINES FOR GRANT OF INSTALMENT FACILITY TO LIQUIDATE
THE ARREARS

1. Maximum instalments shall be 36 (monthly instalments). However, the


number of instalments admissible in each case will be decided on individual merits.

2. Except in the case of sick units, the defaulters shall be required to liquidate
the employees’ share, before applying for instalments.

3. The scheme shall operate from the subsequent month of grant of the facility.

4. A revolving bank guarantee equal to one instalment shall be furnished


alongwith the proposal.

5. The proposal shall be submitted to the regional/sub-regional/sub-accounts


office controlling compliance of the establishment. Depending on the delegated
powers the case shall be processed by the appropriate office.

6. Where the case is to be decided by the Head Office, the proposal complete in
all respects shall be forwarded by the Regional Provident Fund Commissioner-I
alongwith his observations and specific recommendations.

7. RPFC-I shall recommend the instalment only where it exceeds the delegated
powers or where the period required stretches beyond the calendar year.

8. Only if the RPFC is satisfied about the viability of the scheme, he shall send
his recommendation.

9. The number of instalments recommended shall be reasonable and relatable to


the quantum of default.

10. The establishment shall be required to remit the instalment amount before
15th of the subsequent month.

11. The establishment shall ensure remittance of the current dues alongwith the
instalment dues before 15th of the month.

12. There shall be an undertaking regarding payment of damages and interest


dues as and when levied.
74

13. The instalment scheme shall be deemed to have been cancelled in case of any
default in payment either of instalment amount or current dues.

14. Consequent on the cancellation of the instalment facility all coercive steps
shall be initiated against the establishment/employer for realizing the outstanding dues
without further notice.

15. Even where the default amount is within the powers of the RPFCs a review
shall be made by the RPFC-I of the region periodically.
[vide Headquarters letter No.C.II/Misc/Inst./03/DL/65517 dated 02.12.2003]

16. The field offices shall forward proposals for grant of instalments to liquidate
only the assessed dues so that in case of default the recovery proceedings can be
initiated immediately.
(H.O. Lr. No. Comp.05/Recovery/Cir/Co-ord/Adm. Inst./21840 dated 2.6.2005)

ASSESSMENT OF DUES UNDER SECTION 7A AND 14B OF


THE ACT

When the Compliance 2001 program was introduced during 2001 detailed
instructions were issued to all the field formations to scrupulously follow certain
norms for accountability and transparency in quantification of dues under the Act.
They were also required to maintain the basic books of accounts and furnish the
information to the Recovery Officer as per the existing instructions. The Circle
Officer was made the centre point of compliance in all matters regarding to arrear
management including recovery up to the end of the financial year. Specific work
norms were fixed for the Assessing Officers as well. However, it is a matter of
record that many regions do not adhere to these instructions strictly with the result
the arrears mount up which are not brought to the books of accounts.

Directions were also issued making it imperative on the part of the


supervisory officers like RPFC-II and RPFC-I to scrutinize the assessment orders, at
least eight orders of each Assessing Officer every month. Out of the eight orders,
four were to be selected by the supervisory officer whereas four were to be
submitted by the Assessing Officer as per his choice. This should be communicated
to the Head Office for every month before 10th of the subsequent month. Except
from a very few regions, such information is not received in the Head Office, which
has been viewed seriously by the Central Provident Fund Commissioner.

[vide H.O. Letter No.RRC/28(3)2003/7A-14B/68533 dated 9.12.2003]


75

NOTIFICATION OF EMPLOYEES’ PROVIDENT


FUND ORGANISATION UNDER SECTION 138 OF
INCOME TAX ACT, 1961 FOR DISCLOSURE OF
INFORMATION OF ASSESSEES

Section 138 of Income Tax Act, 1961 provides for disclosure


of information of assessees. Section 138(1) provides that the
Central Board of Direct Taxes or any other income-tax
authority specified by it by a general special order in this
behalf may furnish or cause to be furnished to such officer,
authority or body performing functions under any other law as
the Central Government may, if in its opinion it is necessary to
do in the public interest, specify by notification in Official
Gazette.

Government of India vide notification No.9/2003 dated


7.1.2003 has specified Central Provident Fund Commissioner
or any other officer, not below the rank of Regional P.F.
Commissioner for the purpose of Section 138 of Income Tax
Act, 1961 duly authorized by him.

Authority: [CPFC’s Letter No.Co-ord/24(5)2000/201


dated 12.6.2003 read with Ministry of Labour letter
No.35025/2/2001-SS.II dated 27.1.2003.
76

11
APPLICATION OF SECTION 7Q

Provisions in the Act:

Section 7Q creates liability on the employer to pay simple interest at twelve


percent per annum or at such higher rate, as may be specified in the Scheme on any
amount due from him under the Act from the date on which the amount has become
due till the date of its actual payment. The higher rate of interest specified in the
Scheme shall not exceed the lending rate of interest charged by any scheduled bank.
As no provision has so far been made in the Scheme for higher rate of interest, the
defaulting employer is liable to pay simple interest at twelve percent per annum.

Implications of Section 7Q of the Act:

Section 7Q was inserted by the Amendment Act 33 of 1988 and it is given


effect only since 1.7.1997. While amending the Act (by the Amendment Act 33 of
1988) for creation of Employees’ Provident Fund Organisation’s own recovery
machinery on the lines of recovery machinery of the Income Tax department by
adopting and applying the provisions of Second and Third Schedules to Income-tax
Act, 1961 and Income-tax (Certificate Proceeding) Rules, 1962, some other
provisions of the Income-tax Act, 1961 relating to recovery were also borrowed and
incorporated with such modification as necessary to suit the requirements of the
Employees’ Provident Fund Organisation. Section 7Q of the Act is adopted from
Section 220 of the Income-tax Act, 1961. There is a reference to Section 220 of the
Act in the Rule 5 of the Second Schedule to Income-tax Act, 1961. This section
provides for payment of simple interest at the rate of one-and-a-half percent for
every month or part of a month, comprised in the period commencing from the
immediately following the end of period mentioned in sub-section (1) of 220 of the
Income-tax Act, 1961 i.e. thirty days from the date of service of demand notice.
Particularly when there is specific provisions in the Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952 for payment of interest on belated payment of
due under the Act., i.e., Section 7Q of the Act, section 220 of Income-tax Act, 1961
cannot be invoked and the interest cannot be charged under this section in addition to
charging of interest under Section 7Q of the Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952. The interest also cannot be charged at rates
mentioned therein, ignoring the provisions of section 7Q of the Act. Interest can be
charged only at the rate specified in section 7Q of the Employees’ Provident Funds
and Miscellaneous Provisions Act, 1952 or the rate as may be specified in the
Scheme.

Section 14B of the Act was also amended on the lines of section 221 of the
Income-tax Act, 1961.

For the words “may recover from the employer such damages not exceeding
the amount of arrears, as it may think fit to impose” in section 14B of the Act, the
following words were substituted.
77

“may recover from the employer by way of penalty such damages not
exceeding the amount of arrears, as may be specified in the Scheme”.

By adding the words “by way of penalty” in Section 14B, it is made clear
that the damages imposed is by way of penalty and it does not cover the loss of
interest to the fund. Further Income-tax Act, 1961 also provided for penalty in
addition to simple interest to be charged on the dues. In view of the above, employer
is liable to pay simple interest at the rate of twelve percent per annum on the belated
payment of contributions, administrative charges, inspection charges, previous
accumulations due for transfer on coverage of establishment or cancellation of
exemption from the date they become due for payment till the actual date of
payment/transfer, in addition to the damages payable under section 14B of the Act.
The exempted establishment also should pay the simple interest at twelve percent on
the belated payment of contribution to the Board of Trustees of the exempted fund in
addition to the damages payable under section 14B of the Act. The interest should
be paid to exempted fund.

Section 7Q of the Act creates liability on the employer to pay simple interest
on any amount due from him under the Act and the damages levied under Section
14B of the Act is the amount due under the Act. Further rule 5 of the Second
Schedule to Income-tax Act, 1961 provides for the payment of interest on belated
payment of penalty also. In view of the above, simple interest at the rate of twelve
per cent per annum should be recovered from the employer from the date it becomes
due ( i.e. fifteen days from the date of receipt of levy order, as ordered in the levy
order itself) till the date of actual payment.

Action to be taken by the Regional Office/Sub-Regional Office :

As the section 7Q of the Act came into force with effect from 1.7.1997 the
employer is liable to pay simple interest at twelve per cent per annum on the belated
payment of contribution, administrative charges, inspection charges, damages and
past accumulations due from 1.7.1997. Demand should be raised for such amounts
straightening after calculating the same. There is no necessity to hear the employer
the before raising the demand, as it is not a penalty.

Entry in the Interest Suspense Account Register:

The interest realised under Section 7Q should be entered under a separate


column in the interest suspense account register as credit to Interest Suspense
Account. Action should be taken to provide a separate column in the Challan to
show amount of interest under section 7Q of the Act. Till then the amount should be
indicated against “Misc. Remittances” with remarks “Interest under Section 7Q”.
78

12
EPFO - RECOVERY MACHINERY

RECOVERY – AN INTRODUCTION – ACTION UNDER SECTION 8B -8F –


PROCEDURE – ITCP RULES

By the Amendment Act 33 of 1988, Section 8B to 8G have been inserted, to


create the Employees’ Provident Funds own recovery machinery on the lines of the
recovery machinery of the Income-tax Department by adopting and applying the
Second and Third Schedules of Income-tax Act, 1961 and Income-tax (Certificate
Proceeding) Rules, 1962. Though the Act was amended in the year 1988, these
provisions were given effect from 1.7.90. Government in the first instance notified
one Assistant Provident Fund Commissioner by name for each Region except
Maharashtra Region where two Assistant Provident Fund Commissioners were
provided, to exercise the powers of the Recovery Officer under the provisions of the
Act. The process of recovery delayed due to large number of cases pending and also
of concentration of work with one Assistant Provident Fund Commissioner.
Subsequently, Government notified all the Regional Provident fund Commissioners
and Assistant Provident Fund Commissioners as recovery officers in their respective
regions so as to decentralize and speed up the recovery work and also to make each
assessing officer responsible for the recovery of arrear dues assessed by them.

As the each Regional Provident Fund Commissioner/Assistant Provident


Fund Commissioner is the assessing officer and also the recovery officers, it will be
easier for each one of them to concentrate on recovery of arrears due from the
defaulting establishments falling in their jurisdiction and to bring down the arrears.

The main functions of the Recovery Officer are as under:

(1) To initiate recovery proceedings against the defaulters.


(2) To ensure compliance with the requirements for recovery proceedings.
(3) Enforce the recovery of arrears by attachment and sale of movable and
immovable property of the defaulter;
(4) Enforce the recovery by attachment of business of the defaulter;
(5) To appoint Receiver for running the business attached, of the defaulter;
(6) Enforce the recovery by arrest and detention of the defaulter;
(7) Investigate the claim preferred to or any objection made to attachment
and sale of property and pass orders;
(8) To ensure safe custody of the property attached;
(9) To confirm the sale of the property;
(10) To ensure the delivery of the property to the purchaser;
(11) To ensure the amount realized are deposited on the same day of its
realization in the EPF Accounts with the State Bank of India.
79

The duties and responsibilities of an Enforcement Officer in recovery


proceedings are as under:

(1) To cause service of summons/warrants/demand notices upon the


defaulting employers to avoid delay.
(2) To collect the information about the movable/immovable property of
the defaulting employer and the establishment.
(3) Attachment of the movable/immovable properties.
(4) To pursue the recovery of dues by sale or auction of the property
attached.
(5) To attend the periodical meetings with the Recovery Officer and the
Regional Provident Fund Commissioner to review the recovery
position.
(6) To maintain the various Registers required for the purpose of
monitoring the recovery.
(7) To maintain liaison with the Courts for speedy and expeditious
recovery.
(8) To carry out such other functions as may be assigned to him by the
Recovery Officer.

RECOVERY CERTIFICATE:
Recovery Certificate means an authority given by the authorised officer to
the Recovery Officer to recover the amount from the defaulter invoking the
provisions of Section 8B to 8G. As such the authorised officer has to issue Recovery
Certificate to the Recovery Officer furnishing the amount of due and the details of
the defaulter. It is also the duty of the authorised officer to inform the recovery
officer the assets and properties of the defaulter. Whenever the defaulter pays the
amount or installment is granted or the amount due is waived the fact should be
informed to the Recovery Officer then and there. The assessing officer on the close
of every financial year before 5th of April the total defaulting amount to be intimated
to the Recovery Officer through Recovery Certificate. On receipt of the Recovery
Certificate by the Recovery Officer in his office enter in a register called Demand
Collection Register the details of the Recovery Certificate. By which the Recovery
Officer can ascertain his work load and the quantum of amount to be recovered from
the defaulter for that financial year.

The Recovery Officer has to issue notice of demand in Form No.1 to all the
defaulters giving 15 days time to remit the amount. On expiry of the 15 days, the
Recovery Officer has to proceed for the recovery of the amount due wherever not
remitted within that 15 days by invoking the powers of

(i) attachment and sale of the movable or immovable property of the


establishment or, as the case may be, the employer; (first the property of
the establishment may be attached if it is not sufficient or if it is not
available then the personal property of the employer shall be attached).
(ii) Arrest of the employer and detention in prison.
(iii) Appointing the receiver for the management of the movable or immovable
properties of the establishment or, as the case may be, the employer.
80

ATTACHMENT:
The attachment means after serving the copy of the warrant to the defaulter,
the Enforcement Officer, if he desires to attach the property he should choose
movable property and its approximate value to be attached, then he has to make a
punchanama (Mahajar) furnishing the entire events right from the stepping into the
establishment to till the proceedings is over. In the mahajar he should mention the
time and date of his arrival and leaving and the persons present over there, details of
the properties attached and the value of the properties attached and where the
attached property is kept and also he should obtain signature of the witnesses and
signature of the employer or his representatives. Finally, the Enforcement Officer
should sign the mahajar and the copy of the same should be handed over to the
employer and one copy should to pasted in the notice board of the Recovery Officer.

The attachment by the seizure should be made after the sunrise and before
the sunset and not otherwise.

ATTACHMENT OF MOVABLE PROPERTIES:

Issue of notice:
If the defaulter fails to pay the dues within the date specified in the
assessment under Section 7A or levy order under Section 14B, action should first be
initiated under Section 8F of the Act to recover the dues. If the dues could not be
recovered, either fully or partially, by taking action under Section 8F or if it is not
feasible to initiate action under Section 8F, action should be initiated under Section
8B of the Act to recover the dues. The concerned Assessing Officer, i.e. Regional
P.F. Commissioner or Asst. P.F. Commissioner himself should draw up statement of
dues (i.e. the Recovery Certificate) specifying the period, amount, etc., in his
capacity as Recovery Officer and issue the demand notice in the Form EPFCP-I
requiring the defaulting employer or the establishment, as the case may be, to pay
the arrears specified in the Recovery Certificate within 15 days receipt of notice, by
registered post with acknowledgement due. Alternatively, the area Enforcement
Officer may be directed to serve the demand notice and obtain the acknowledgement
of receipt of notice from the defaulter. The notice should be issued only in the
prescribed form. The non issue of notice as required above will render entire
proceeding taken by the Recovery Officer, illegal and void. The issue of Recovery
Certificate should be noted in the Register of Recovery Cases.

As further action will have to be taken based on the date of receipt of notice
by the defaulter, the receipt of acknowledgement card should be watched and the
date of receipt of notice by the defaulter should be entered in the Register of
Recovery Cases. The Acknowledgement Card should be preserved properly in the
relevant recovery file of the establishment. The Acknowledgement Card may be
printed by the office, if necessary, after getting approval of the Postal Department,
with Red Border on all the four sides of the Card for easy identification.

After the service of notice, the defaulter or his representative in interest shall
not be competent to mortgage, charge, lease or otherwise deal with any property
belonging to him and if created, without specific permission of the Recovery Officer,
it shall be void. Nor shall any Civil Court issue any process against such property in
execution of a decree for the payment of money.
81

Issue of warrant:
When the movable property is to be attached, the Recovery Officer should
direct the area Enforcement Officer to serve a copy of the warrant in Form EPFCP-2
on the defaulter and take further action as directed therein. Enforcement Officer
should return the warrant on or before the date specified therein with an endorsement
certifying the date on which and manner in which, it has been executed. This
requirement of service of the copy of the warrant of attachment on the defaulter, is
to afford an opportunity to the defaulter to pay the amount. For due compliance of
this requirement service should be personal service and not by affixation. The whole
aim should be to recover the money and not otherwise.

If the defaulter, after the service of warrant, fails to pay the amount of arrear
dues forthwith, the Enforcement Officer should proceed to attach the movable
property of the defaulter and intimate the details of the property attached to the
Recovery Officer. If he could not execute the warrant, he should give reasons for its
non-execution.

While attaching the property, it should be ensured that the property exempt
from attachment under Section 60 of code of Civil Procedure 1908 is not attachable.
The Recovery Officer’s decision as to what property is so entitled to exemption shall
be conclusive.

Where the movable property other than the agricultural produce, is in the
possession of defaulter, Enforcement Officer should attach the property by actual
seizure. He should keep the property in his own custody and he should take
adequate care and steps to keep the property safely, till the Recovery Officer directs
him to sell the property.

When the property seized is subject to speedy and natural decay or when the
expense of keeping it in the custody is likely to exceed its value, he may sell it at
once.

Warrant of Sale:
On receipt of report of Enforcement Officer regarding the attachment of
property, Recovery Officer should issue the warrant of sale in Form EPFCP.12, in
triplicate and direct the Enforcement Officer to act as per the instructions therein.
The date of issue of warrant of sale should be entered in the Register of Recovery
cases and the report of the Enforcement Officer should be watched. After serving
the copy of the warrant of sale on the defaulting employer, Enforcement Officer
should send a report indicating the date on which and manner in which it was served
and also the valued of the each movable property seized to enable the Recovery
Officer to fix the reserve price and order for sale of movable property.

Proclamation of sale:
On receipt of the report of the Enforcement Officer, the date of receipt of
report of the Enforcement Officer should be entered in the Register of Recovery
cases. Thereafter, the proclamation of sale of the property in the form EPFCP-13
should be issued by the Recovery Officer in the languages to district of the intended
sale. He should also fix the reserve price for each article and indicate in the
proclamation of sale. The reserve price should be determined after an objective
82

consideration of all the relevant facts. It should not be any figure having no relation
whatsoever to the minimum price which the property intended to be sold is expected
to fetch at the auction sale. The copy of the proclamation of sale should be affixed
in a conspicuous part of the office of the Recovery Officer and Enforcement Officer.
He should normally direct the area Enforcement Officer to conduct the sale by
public auction in one or more lot as the Enforcement Officer considers necessary. If
the Recovery Officer considers that it is more advantageous to appoint a person
other than the area Enforcement Officer to sell the property, he may appoint any
other Enforcement Officer of the Regional Office/Sub-Regional Office, whom he
considers more suitable for the job. He may also appoint any other fit person other
than the Enforcement Officer from the approved, auctioneers to sell the property and
fix the remuneration to be allowed to him for rendering such services. The
remuneration payable to such person should be treated as cost of the sale and should
be recovered from the defaulter along with other costs. While appointing an
auctioneer, adequate care should be taken in selecting the auctioneer.

The Recovery Officer may summon any relevant person and examine him in
respect of any matters relevant to proclamation and required him to produce any
document or power relating thereto for the purpose of ascertaining the matters to be
specified in the proclamation of sale. The Enforcement Officer should arrange for
the proclamation of sale by beating of drum or other customary mode:

(1) in the case of property attached by actual seizure

(a) in the village in which the property seized or if the property was seized
in a town or city, then in the locality in which it was seized.
(b) At such other place as the Recovery Officer may direct.

(2) in case of property attached otherwise than by actual seizure, in such places,
as Recovery Officer may direct.

Sale after fifteen days:

No sale of property should take place until the expiry of atleast fifteen days
calculated from the date on which the copy of the proclamation of sale affixed in
the office of the Recovery Officer, i.e., Regional Office or Sub/Regional Office,
as the case may be.

Where the property is subject to speedy and natural decay or when the
expense of keeping it in custody is likely to exceed its value, sale may take place
before fifteen days. If the defaulter gives his consent, in writing, for selling the
property before fifteen days, sale may take place before fifteen days.

Prohibition of sale on holidays:


No sale should take place on a Sunday or other general holidays recognized
by the State Government on any days which has been notified by the State
Government to be a local holiday for the area in which the sale is to take place.
83

Prohibition against bidding or purchase by officer of the Employees’


Provident Fund Organisation:
No officer/staff of the Employees’ Provident Fund Organisation or any
person having duty to perform in connection with any sale, should either directly
or indirectly, bid for, acquire or attempt top acquire any interest in the property
sold.

Investigation by Recovery Officer:


If any claim is preferred to or any objection is made to the sale of any
property in execution of certificate on the ground that such property is not liable
for such sale, the Recovery Officer should proceed to investigate the claim or
objection.

ATTACHEMENT OF IMMOVABLE PROPERTY:


After the issue of notice in Form EPFCP.1, if the defaulter fails to pay the
amount of arrears due, within the date specified therein, the Enforcement officer
should send a report immediately to the Recovery Officer, furnishing the details
of immovable property that may be attached. On receipt of report of the
Enforcement Officer, the Recovery Officer should issue the order of attachment,
after the expiry of notice period of 15 days in Form EPFCP-16 and he should
direct the area Enforcement Officer to serve a copy of the order of attachment on
the defaulter. The attachment of immovable property may be resorted only when
sufficient movable property of the defaulter are not available for attachment or
when the amount of arrears due is huge and it is not advisable to attach movable
property. However, the Recovery Officer is under no obligation to recover the
arrears first by proceeding against movable or by arrest before attaching the
immovable property of the defaulter. If he so desires, he may attach the
immovable property without resorting to attachment of movable property.

The Enforcement Officer should return the order of attachment on or before


the date specified therein with an endorsement certifying the date on which and
the manner in which, it has been executed. The order of attachment should also
be proclaimed at some place on or adjacent to the property attached by beat of
drum or other customary mode and a copy of the order should be affixed on a
conspicuous part of the property attached. This is necessary to make the public
aware of the order of attachment. Further a copy of the order of attachment
should be affixed on the notice board of the Recovery Office (i.e., Regional
Office/Sub-Regional Office). The Enforcement Officer should also send the
details of the property attached.

Attachment relate back from the date of service of notice:


The attachment of immovable property shall relate back to or take effect
from the date on which notice to pay the arrears issued in Form EPFCP.1, served
upon the defaulter.

Investigation by Recovery Officer:


If any claim is preferred to or any objection is made to the attachment or sale
of any immovable property, on that ground that such property is not liable for
attachment or sale, the Recovery Officer should, proceed to investigate the claim
84

or objection. No such investigation should , however, be made, where he


considers that the claim or objection was designedly by or unnecessarily delayed.
The claimant or objector must adduce evidence to show that at the date of service
of notice issued in Form EPFCP.1 to pay the amount of arrears due, on the
defaulter, he had some interest in or was possessed of the immovable property in
question. On investigation, if the Recovery Officer has found that attached
property, at the date of service e of notice in Form EPFCP.1, was not in
possession of the defaulter or if some person in trust for him or in the occupancy
or a tenant or other person paying rent to him or that though the property was in
possession of the defaulter, it was in his possession not in his own account or as
his own property but on account of or in trust for some other person or partly on
his own account and partly on account of some other person, the Recovery
Officer should make an order releasing the property, wholly or to such an extent
he think fit for attachment or sale.
If he has found that the property at the above said date was in the possession
of the defaulter, as his own property or was in the possession of some other
person in trust for him or in the occupancy of a tenant or other person paying rent
to him, he should disallow the claim. The party against whom the order is made
may institute a Civil suit, to establish his rights to the property. The orders of
Recovery Officer shall be conclusive, subject to result of such suit.

The investigation by the Recovery Officer is not an empty formality. The


process is quasi-judicial involving a reasoned decision after hearing both sides.
It is beyond the competence of the Recovery Officer to decide the question of
title. His power is limited to decide as to who was in possession of the property.

Proclamation of sale:
The proclamation of sale should be issued in the Form EPFCP.13. It should
be in the language of the district of the intended sale. Recovery Officer should
normally direct the area Enforcement Officer to sell the property attached or
portion thereof to cover the amount of arrears due and other expenses relating to
recovery. If Recovery Officer considers that it will be more advantageous to
appoint a person other than area Enforcement Officer to sell the property he may
appoint any other Enforcement Officer of the Regional Office/Sub-Regional
Office, whom he consider as more suitable for the job. He may also appoint any
other fit person (other than the Enforcement Officer) from the approved
auctioneers list to sell the property and to fix the remuneration to be allowed to
him for rendering such services. The remuneration payable to such person
should be treated as cost of sale and should be recovered from the defaulter along
with other costs. While appointing an auctioneer, adequate care should be taken
in selecting the auction agency.

The Recovery Officer may summon any relevant person and examine him in
respect of any matters relevant to proclamation of sale and require him to
produce any document or power relating thereto for the purpose of ascertaining
the matters to be specified in the proclamation of sale. The notice for settling the
sale proclamation should be issued in Form EPFCP-17.
85

Contents of Proclamation:
The proclamation of sale of immovable property should be drawn up after
notice to the defaulter in Form EPFCP.17 and it should state the time and place
of sale and also should specify, as fairly and accurately as possible

(a) the property to be sold;


(b) the revenue, if any, assessed upon the property or any part thereof;
(c) the amount for the recovery of which the sale is ordered;
(d) the reserve price, if any, below which the property may not be sold;
(e) Any other thing which the Recovery Officer considers material for the
purchases to know, in order to judge the nature and value of the property.

The reserve price should be determined after an objective consideration of all


relevant facts. It should not be any figure having no relation whatsoever to the
minimum price which the property intended to be sold is expected to fetch at the
auction sale.

If the sale proclamation simply mentions the name of the factory or


establishment, but gives no details as to the nature of the building, machinery,
etc., the sale on the basis of such deficient proclamation will be false and it is
likely to be quashed by the Court on the ground that it would result in substantial
injury to all concerned. The full details of the property should therefore be given
in the sale proclamation. It should also be ensured that there is no material mis-
description in the sale proclamation. Sale proclamation should not mention two
different dates. The date mentioned should not be meaning-less, vague,
ambiguous or unintelligible to a man of ordinary prudence.

Mode of making proclamation:


The proclamation for the sale of immovable property should be made at some
place on or near such property by beat of drum or other customary mode and a
copy of the proclamation should be affixed on a conspicuous part of the property
and also on a conspicuous part of the office of the Recovery Officer, i.e.,
Regional Office/Sub-Regional Office, and also of the office of the Enforcement
Officer. If the Recovery Officer considers that such proclamation should also be
published in the local newspaper, he may do so. The cost of such publication
should bed treated as cost of sale. Where the substantial amount is involved, it is
desirable to go for publication in the local newspaper,. Where the property is
divided into lots for the purpose of being sold separately, it is not necessary to
make a separate proclamation of each lot, unless proper notice of sale cannot, in
the opinion of Recovery Officer, otherwise be given.

Time of sale:

No sale of immovable property should, without consent, in writing of the


defaulter, take place until after the expiration of atleast thirty days calculated
from the date on which a copy of proclamation of sale has been affixed on the
property or in the office of the Recovery Officer, whichever is later. However, if
the defaulter gives his consent in writing for the sale before the expiry of the
above period, sale may take place.
86

Sale to be by auction:
The sale of immovable property should be by public auction to the highest
bidder, subject to confirmation of sale by the Recovery Officer. Sale by public
auction is mandatory and the sale held in any other manner is not valid.

However, no sale shall be made, if the amount of bid by the highest bidder is
less than the reserve price, if any, fixed.

Adjournment or stoppage of sale:


The Recovery Officer may adjourn or stop the sale as per Para 28(i) of the
EPF Recovery Manual.

Bid of co-sharer to have preference:


Where the property sold is a share of undivided immovable property and two
or more persons, of whom one is a co-sharer, respectively bid the same sum for
such property or for any lot, the bid shall be deemed to be bid of the co-sharer.

Postponement of sale to enable the defaulter to raise amount due under the
recovery certificate:
The whole aim of the recovery action is to recover the amount of arrears and
not otherwise. In view of this, if the defaulter proves to the satisfaction of the
Recovery Officer that there is reason to believe that the amount of the recovery
certificate may be raised by the mortgage or lease or private sale of such property
or some part thereof or of any other immovable property of the defaulter and he
applies for the postponement of sale of the property ordered for sale, the
Recovery Officer may postpone the sale on such terms, and for such period, as
he thinks proper, to enable the defaulter to raise the amount. In such case, the
Recovery Officer should grant a certificate, in Form EPFCP.21, to the defaulter,
authorizing him within a period to be mentioned therein, to make the proposed
mortgage, lease or sale, subject to the condition that all money payable under
such mortgage, lease or sale should be paid to Recovery Officer only and not to
the defaulter.

Investigation by the Recovery Officer:


If any claim is preferred to or any objection is made to the sale of any
immovable property, on the ground that such property is not liable for sale, the
Recovery Officer should proceed to investigate the claim or objection.

Authority to bid:
All persons bidding at the sale should be required to declare as to whether
they are bidding on their own behalf or on behalf of their principals. In the latter
case, they should be asked to deposit their authority letter of their principals. If
they fail to deposit the authority letter, their bids should be rejected.

Prohibition against bidding or purchase by officer of the Employees’


Provident Fund Organisation:
No officer or staff of the Employees’ Provident Fund Organisation or any
person having duty to perform in connection with any sale should either directly
or indirectly bid for, acquire or attempt to acquire any interest in the property
sold. Where, however, the sale has been postponed for want of a bid of an
87

amount not less than reserve price fixed by the Recovery Officer, an “authorised
officer”, as defined in section 2(aa) of the Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952, if so authorised by the Chairman of the
Central Board of Trustees, may bid for the property on behalf of the Central
Board of Trustees at any subsequent sale.

APPOINTMENT OF RECEIVER:

The Recovery Officer may attach the business of the defaulter and appoint a
person as receiver to manage the business. This mode of attachment will have to
be opted only in rarest of rare situations, where the adoption of other modes of
recovery is not found feasible, as it is not the function of the Employees’
Provident Fund Organisation to manage the business and apart from that it has
no expertise in this field. It should be ensured that by choosing this mode of
recovery, the organisation will not land in trouble.

It should be ensured before taking recourse to this action that—


i) there is no recession in the particular industry;
ii) there is demand for the product of the establishment;
iii) there is no labour problem;
iv) there is good management team capable of running the establishment
efficiently;
v) the accumulated liability of the establishment is not beyond the
manageable limit; and
vi) there is ample scope for enough profits to recover the arrears in a
reasonable period.

Attachment of business should be made by issuing order in Form EPFCP-22.


A copy of the order of attachment should be served on the defaulter and another
copy should be affixed on a conspicuous part of the premises in which the
business is carried on and another copy on the notice board of the Recovery
Officer (Regional Office/Sub-Regional Office).

While appointing a person as receiver, adequate care should be taken. The


person chosen for the job should be of a man of very high integrity. He should
be well experienced and knowledgeable in the particular field. He should be
capable of managing the labour force and his managerial team. He should have
good rapport with the financial institutions, which provide funds to the
establishment.

The order of appointment of receiver should be made in the Form EPFCP.24


which may be so varied as circumstance of each case may require.

Appointment of receiver for immovable property:

When immovable property is attached, the recovery officer, instead of


directing the sale of property, may appoint a person as receiver to manage such
property.
88

Powers of the receiver:


The receiver shall, subject to the control of recovery officer, have such
powers, as to brining in and defending suits and for the realization management,
protection and preservation of the property and the collection of rents and profits
thereof, the application and disposal of such rents and profits and the execution
of the documents, as owner himself has or such of those powers as the Recovery
Officer thinks fit.

Remuneration of the receiver:


The Recovery Officer may fix the amount to be paid as remuneration for the
receiver, with the approval of the Central Provident Fund Commissioner.

Duties of the receiver:

Every receiver so appointed should –


a) furnish such security (if any) as the Recovery Officer thinks fit, duly to
account for what he shall receive in respect of the property;
b) submit his accounts at such periods and in such form as the Recovery
Officer directs
c) pay the amount due from his as the Recovery Officer directs; and
d) be responsible for any loss occasioned to the property by his willful default
or gross negligence.

The Receiver should—


(1) maintain---

(i) true and regular accounts of receivership;


(ii) cash book in which all receipts and payments should be
entered;
(iii) ledger accounts; and
(iv) a counterfoil receipt book with leaves numbered for issuing
receipt for payments made to the receiver.

(2) open a account in the name of receiver ship in the bank as directed by the
Recovery Officer.

(3) deposit all receipts immediately after the receipt thereof, less the amount
required for meeting day to day expenses.

(4) make payments by cheques as far as possible.

(5) submit his accounts once in every three months to the Recovery Officer
within fifteen days of each period of three months (the first of such accounts
commencing from the date of his appointment and ending with the expiry of
three months should be submitted within fifteen days of expiry of said period)

Enforcement of receiver duties:


If a receiver fails to submit his accounts at such periods and in such form as
the Recovery Officer directs, the Recover Officer may direct his property to be
attached until such time as such accounts are submitted to him.
89

The Recovery Officer may at any time make an enquiry as to the amount, if
any, due from the receiver, as shown by his accounts or otherwise, or an enquiry
as to any loss to the property occasioned by his willful default or gross
negligence and may order the amount found due, if not already paid by the
receiver, or the amount of the loss so occasioned, to be paid by the receiver
within the period to be fixed by the Recovery Officer.

If the receiver fails to pay any amount which he has been ordered to pay
within the period specified, the Recovery Officer may direct such amount to be
recovered from the security (if any) furnished by the receiver or by attachment
and sale of his property or, if his property has already been attached by the sale
and sale of his property or, if his property has already been attached by the sale
of such property, and may direct the sale proceeds to be applied in making good
any amount found due from the receiver or any such loss occasioned by him and
the balance (if any) of the sale proceeds should be paid to the receiver.

If a receiver fails to submit his accounts at such periods and in such form as
directed by the Recovery Officer without reasonable cause or improperly retains
any cash in his hands, the Recovery Officer may disallow the whole or any
portion of the remuneration due to him for the period of the accounts with
reference to which the default is committed and may also charge interest at a rate
not exceeding twelve percent per annum on the moneys improperly retained by
him for the period of such retention without prejudice to any other proceedings
which might be taken against the receiver.

Adjustment of profits, rents, etc., towards the discharge of arrears:


The profits or rents and profits of the business or other property should after
defraying the expenses of the management be adjusted towards the discharge of
arrears of dues and the balances, if any, should be paid to the defaulter.

Withdrawal of management:
The attachment of management may be withdrawn at any time at the
discretion of the Recovery Officer or if the arrears are discharged by receipt of
such profits and rents or otherwise paid.

Arrest and Detention of the Defaulter:


The arrest and detention of the defaulter should be resorted in an extreme
situation. The order for arrest and detention of the defaulter in civil prison
should not be issued unless the Recovery Officer, for reasons recorded in
writing, is satisfied –

(1) that the defaulter, with the object or effect of obstructing the execution of
Recovery Certificate, has after drawing up of the Recovery Certificate by the
Recovery Officer, dishonestly transferred, concealed or removed any part of his
property or

(2) that the defaulter has or has had since the drawing up of the Recovery
Certificate by the Recovery Officer, the means to pay the arrears or some
90

substantial part thereof and refuses or neglects or has refused or neglected to pay
the same.

The warrant of arrest may, however, be issued even otherwise, if the


Recovery Officer is satisfied by affidavit or otherwise that the with object or
effect of delaying the execution of the Recovery Certificate the defaulter is likely
to abscond or leave the local limits of the jurisdiction of the Recovery Officer.

The Recovery Officer should not order for the arrest and detention of woman
or any person who in his opinion is a minor or of unsound mind.

The gathering of information relating to concealment, removal or transfer of


property, with the help of workers or their Union or otherwise is essential before
resorting to arrest and detention of defaulter. Thereafter, a notice in Form
EPFCP-25 should be issued by Recovery Officer and served upon the defaulter
by Registered Post with Acknowledgement Due or through the Enforcement
Officer, calling upon him to appear before the Recovery Officer on the date
specified in the notice and to show cause why he should not be committed to the
civil prison.

When the defaulter appears before the Recovery Officer in obedience to the
show cause notice issued to him, the Recovery Officer should give the defaulter
an opportunity to show cause why he should not be committed to civil prison.

If the defaulter has not appeared before the Recovery Officer on the day
specified in the above notice served on him, he may issue the warrant for the
arrest of defaulter in Form EPFCP-26 and direct the area Enforcement Officer to
act as directed therein.

If the defaulter for the time being found in the jurisdiction of other Recovery
Officer, i.e., in other region (The jurisdiction of Regional Provident Fund
Commissioners and Assistant Provident Fund Commissioners in Regional
Office/ Sub-Regional Office is for the whole of the region, as they are notified as
Recovery Officer for the area covering the whole region), the warrant of arrest
issued by the Recovery Officer of one region may also be executed by the
Recovery Officer of such other region.

For the purpose of making the arrest of defaulter, as ordered by the Recovery
Officer, the Enforcement Officer should not enter the dwelling house after the
sun-set and before sun-rise. He should not break open the outer door of the
dwelling house. If, however, such a dwelling house or a portion thereon is on
occupancy of the defaulter and he or other occupants of the house refuses or in
any way prevents access thereto, he may break upon the outer door of the
dwelling house. If he has gained entry to any dwelling house in a normal way,
he may break open the door of any room or apartment, if he has reason to believe
that the defaulter is likely to be found there.

No room which is in the actual occupancy of woman, who according to the


customs of the country does not appear in public, should be entered into unless
91

the Enforcement Officer has given notice to her that she is at liberty to withdraw
and has given her reasonable time and facility for withdrawing.

When the defaulter is brought by the Enforcement Officer and appear before
the Recovery Officer, he should give the defaulter an opportunity of showing
cause, why should not he be committed to civil prison. Though the rule 75 of
Second Schedule to Income-tax Act, 1961 provides for detention of defaulter in
the custody of any officer, as the Recovery Officer may think fit, pending
conclusion of the enquiry the other alternative to release him on his furnishing
security to the satisfaction of the Recovery Officer for his appearance, when
required, is better than the earlier one, the Recovery Officer may adopt this
procedure.

Once a defaulter has appeared before the Recovery Officer in response to the
notice issued to him in Form EPFCP-25 he is not to be arrested unless the
inquiry contemplated by rule 74 of the Second Schedule to Income-tax Act, 1961
is over or the conditions mentioned in Rule 73(1) or 73(3) are fulfilled.

Upon on the conclusion of enquiry, the Recovery Officer may make an order
for the detention of the defaulter in the Civil Prison, in Form EPFCP-27 and
should in that event cause him to be arrested, if he is not already under arrest.
He may give an opportunity to the defaulter to pay the arrears before making
order of detention and leave him in the custody of officer arresting him or any
other officer for a specified period not exceeding fifteen days or release him on
his furnishing security to the satisfaction of the Recovery Officer for his
appearance at the expiration of the specified period, if the arrears are not paid.

When the Recovery Officer does not make an order of detention, he should,
if the defaulter is under arrest, direct his release.

An order of arrest and detention of the defaulter cannot be made without


following the procedure which is implicit in Rules 73 to 81 of Second Schedule
to Income-tax Act, 1961. Immediately after arrest of an employer the same shall
be communicated to the relatives, the best friend or any person closely associated
with the employer.

Detention and Release from Prison:


Every person detained in the civil prison in execution of a certificate may be
so detained:-
(a) where the certificate is for a demand of an amount exceeding two hundred and
fifty rupees—for a period of six months; and
(b) in any other case—for a period of six weeks:

Provided that he should be released from such detention—


i) on the amount mentioned in the warrant for his detention being paid to the
officer-in-charge of the civil prison, or
ii) on the request of the Recovery Officer on any ground other than the
grounds mentioned in rules 78 and 79 of Second Schedule to Income-tax
Act, 1961.
92

Where the Recovery Officer is satisfied that the defaulter who has been
arrested has disclosed his whole of property and has placed it at his (Recovery
Officer) disposal and that he has not committed any act of bad faith, he may
order release of the defaulter.

If he has ground for believing the disclosure made by the defaulter earlier to
have been untrue, he may order for his re-arrest. The period of detention in the
civil prison should not in aggregate exceed the period mentioned above.

The Recovery Officer may release the defaulter on the following grounds:
(i) defaulter suffering from serious illness
(ii) he is not in a fit state of health to be detained in the civil prison.
(iii) existence of any infectious or contagious disease or serious illness.

A defaulter released on the above grounds may be rearrested if the above


grounds cease to exist, but the period of detention in the civil prison should not,
in aggregate, exceed the period mentioned above.

The Order of release should be issued in Form EPFCP-28.

A defaulter released from detention under this rule should not, merely by
reason of his release, be discharged from his liability for the arrears; but he
should not be liable to be re-arrested under the certificate in execution of which
he was detained in the civil prison.

APPEAL
Though there is provisions for appeal in Rule 86 of the Second Schedule to
Income Tax Act, 1961, for filing appeal against any original order of the
Recovery Officer, not being an order, which is conclusive, no authority has so far
been specified for hearing such appeal. As such, the appeal provision will be
inoperative till the Central Government notify the Appellate Authority to make
them operative.

Time Limit and Form of Appeal:

After the Government notifies the Appellate Authority, the appeal must be
presented to the specified Appellate Authority, within 30 days from the date of
order appealed against or within such period as may be specified by the
Government in respect of orders passed by the Recovery Officer before the
appointment of Appellate Authority.

Pending decision of any appeal, the execution of Recovery Certificate may


be stayed, if the Appellate Authority, so desires, but not otherwise.

The appeal should be made in Form EPFCP.30 which should be verified in


the manner indicated therein and should be accompanied by a copy of the order
appealed against. The above prescribed form of appeal, the grounds of appeal
and the form of verification appended thereto should be signed by the defaulting
employer or one of the persons referred to in Form 5A under EPFS, 1952 or any
person affected by the orders of the Recovery Officer.
93

Procedure in appeal:

The specified Appellate Authority should fix a day and place for the hearing
of the appeal and should give a notice of the same to the appellant and the
Recovery Officer against whose order the appeal is preferred.

The appellant either in person or by an authorized representative and the


Recovery Officer either in person or by an representative should have the right to
be heard at the time of appeal.

The appellate authority, if sufficient cause is shown, at any stage of the


appeal, grant time to the parties or any of them and may for reasons to be
recorded in writing, adjourn from time to time, the hearing of the appeal.

The appellate authority, before disposing of any appeal, make such further
enquiry as it thinks fit or may direct the Recovery Officer to make further inquiry
and report the result of the same to the Appellate Authority.

The Appellate authority at the time of hearing appeal allows the appellant to
go into any ground of appeal not specified in the grounds of appeal, if the
appellate authority is satisfied that the omission of that ground from the form of
appeal was not willful or unreasonable.

The order of the appellate authority should be in writing and should state the
points for determination of the decision therein and the reason for the decision.
The appellate authority should communicate the order to the appellant, defaulter
(if he is not the appellant) and Recovery Officer. The appeal should be disposed
as expeditiously as possible and endeavor should be make to dispose of the
appeal within six months from the date on which it is presented.

Assistance by Police:

Whenever assistance of Police is required by the Recovery


Officer/Enforcement Officer, in connection with the attachment and sale of
property, arrest of defaulter, etc., he may apply to the officer in charge of nearest
Police Station for providing such assistance by inviting reference to Section 8G
of the EPF & MP Act, 1952 read with Rule 19 of the Second Schedule to Income
Tax Act, 1961.

Scale of Fees for process, charges for other proceedings and poundage fees
etc.
The fees for (i) service and execution; (ii) copying; (iii) inspection; (iv)
poundage etc., should be charged as prescribed in Rule 56 to 59 of Income Tax
(certificate proceeding) Rules, 1962.

Register to be maintained:
The Registers specified should be maintained and verified every month by
the Recovery Officer.
Note:
94

As per the provisions of Section 8G of the Act, the provisions of the Second
and Third Schedule to the Income Tax Act, 1961 and The Income Tax
(certificate proceeding) Rules, 1962, as in force from time to time shall apply
with necessary modifications as if the said provisions and the rules referred to
the arrears of the amount mentioned in Section 8 of the Act instead of the
Income Tax Act.

Further any reference in the said provisions of the rules to the “assessee” shall
be construed as a reference to the “employer” under the Act.

“Officer” referred hereunder shall mean “Recovery Officer” as defined under


Section 2(kb) of the Act.

“Defaulter” means the establishment who has failed to pay the dues, damages,
interest payable under the Act and the three schemes framed there under.

13
PENAL PROVISIONS TO EXEMPTED ESTABLISHMENTS -
APPLICATION

The provisions of Section 6, 7A, 8 and 14B apply to the employer of the exempted
establishment. Further the exemption is granted to an establishment/class of
employees/employee, subject to certain conditions specified in the notification granting
the exemption. An employer who contravenes or makes default in complying with the
provisions of the Act or conditions governing grant of exemption or any other provisions
of the Act, attracts the penal provisions of the Act and thus punishable under section 14 of
the Act.

APPLICATION OF PENAL PROVISIONS – BOARD OF TRUSTEES

The employer of the exempted establishment should establish a Board of Trustees


for the administration of the Provident Fund, as per paragraph 79C of the Employees’
Provident Funds Scheme, 1952 and perform the duties as specified in sub-section (d) of
Section 17(1A) of the Act.

Any contravention or default by the Board of Trustees is deemed to have committed


an offence under sub-section 2(A) of Section 14 of the Act shall be punishable with the
penalties provided in that sub-section.
The penal provisions are also applicable to the establishments exempted from
Employees’ Pension Scheme,1995 and/or Employees’ Deposit Linked Insurance
Scheme,1976.
95

SCRUTINY AND FOLLOWUP ACTION ON RETURNS DUE FROM


ESTABLISHMENTS EXEMPTED FROM EPF SCHEME 1952

CHECK POINTS FOR SCRUTINY OF ANNEXURE “A”:

a. Whether Annexure “A” has been received within 25th of the close of each
month, if not action taken.
b. Whether inspection charges have correctly been calculated and deposited by
the employer within fifteen days of each month. If not, whether any action
taken to levy damages has been taken.

c. If the employer is habitual defaulter in the payment of inspection charges or


in the submission of Annexure “A”.

d. Whether there is any abnormal decline in the number of employees and


number of subscribers as shown in Annexure “A” as compared with previous
Returns.

e. Whether the information showing the contractor’s workers has also been
shown or not.

f. In case of deficiencies in the Rules, whether the same have been amended by
the Company, if not Action Taken.

g. Whether the Provident Fund Rules of the Company have been scrutinised
and approved by the Income Tax Authorities and the Regional Provident
Fund Commissioner, if not action taken.

h. Whether it is a case of relaxation, if so, the date of issue of relaxation order


and the action taken to grant final exemption.

i. Whether information showing the number of employees, number of


subscribers, amount of contribution, refund of advances, grant of
loan/advances, payment towards Life Insurance premia, date of transfer of
contributions to the Board of Trustees, investment transfer of accumulations,
election etc., has been verified by the area Enforcement Officer, if so,
whether any action on the deficiencies pointed out by the Enforcement
Officer has been taken.

j. Whether Board of Trustees has been properly constituted and there is equal
representation to the employer and the workers side, as per Paragraph 79C of
the Scheme.

k. Whether the Board of Trustees is common to more than six units, if so, action
taken to bifurcate them so that each group of six units or less is required to
have a separate Board of Trustees.

l. Whether the rate of interest and rate of contribution is at par or more


favourable to the employee than those provided under the statutory Scheme,
if not, action taken.
96

m. Whether the forfeiture amount is being utilised for the welfare of the
members according to rules as per pattern duly approved by the Regional
Provident Fund Commissioner.

n. If the pre-coverage Provident Fund accumulations had been invested in


shares/debentures floated by private corporate bodies/companies, whether all
such shares/debentures have been promptly registered according to Law and
dividends in accordance with Central Government instructions from time to
time.

o. Whether in the matter of advances, the Scheme of the exempted


establishment is less/more favourable than the Employees’ Provident Funds
Scheme, 1952.

p. Whether the employer has automatically made application to his employees


any amendment to the statutory scheme which is more beneficial to the
employees than the existing rules of the establishments.

q. Whether the amount of Provident Fund contributions has been transferred by


the employer to the Board of Trustees within the prescribed period, if not,
action taken.

r. Whether the amount due for investment in different categories is correctly


assessed and the amount actually invested tallies, if not whether there is
abnormal deviation.

s. Whether the Provident Fund accumulations have been invested in securities


as per pattern of investment approved by the Government within the
prescribed period.

t. Whether the amount lying uninvested at the end of each month is within the
permissible limit and justified.

u. Whether a copy of the Balance Sheet together with audit report for each year
has been received in the Regional Office, if so, whether there is any adverse
comments of the Auditors with require further action.

v. Whether Board of Trustees is meeting atleast once in every three months, if


so, whether copies of minute of the meeting are being received in the
Regional Office.

w. Whether the position showing the inspection of each exempted establishment


and the deficiencies have been noted in the register maintained in the Office.

x. Whether the pension contribution is transferred to the Regional Provident


Fund Commissioner by deposit in Account NO.10 before the due date. The
quantum of contribution and the date of remittance should be verified.

y. Whether the condition governing exemption as stipulated in Para 27AA of


the EPF Scheme are followed properly.
97

14
DRILL FOR CONDUCT OF INSPECTION OF UNEXEMPTED
ESTABLISHMENTS
 The Enforcement Officers are expected to attend office and report to their
Assistant Provident Fund Commissioner (in case of Inspectorates at the
Inspectorate) except where directed otherwise by the Assistant Provident Fund
Commissioner, In-charge, of the Circle or Regional Provident Fund
Commissioner (Enf.) or Regional Provident Fund Commissioner – Gr. I.
 The Enforcement Officers will be deployed by the Assistant
P.F.Commissioner to whom they are assigned to attend to any work assigned
to them.

 They will attend court cases as directed by the Assistant P.F.Commissioner In-
charge of Enforcement to whom they are attached.

 The Enforcement Officers shall be deployed during this year which is to be


observed as Compliance 2001 Programme year to inspect inoperative
establishments only and to secure compliance from them in the first instance.

 After completion of the inspection of inoperative establishments, inspection of


other defaulting establishment may be conducted with the specific written
direction from Assistant Provident Fund Commissioner, in-charge of the
circle. No routine inspection is allowed for the present.

 No Enforcement Officer should be allowed to visit any establishment without


clear and specific written direction of Assistant Provident Fund
Commissioner, in-charge of the circle.

 Publicity may be made to the effect that no Enforcement Officer should be


allowed access to any establishment without specific written
authority/direction from Assistant Provident Fund Commissioner or Regional
Provident Fund Commissioner.

 Reports indicating remarks such on “record were not produced”


“establishment asked to produce records in office” “ responsible official not
found” “ establishment found closed” etc. indicate poor efforts and lack of
initiative on the part of Enforcement Officers and should be avoided.

 Enforcement Officers must inspect the record/take the statements of


employees present in the establishment, in exercise of the powers vested in
him under Section 13(2)(a) to (d) of the Act. Enforcement Officers are
expected to take the extracts of the relevant books, registers and documents
maintained in the establishment. For taking these copies, extracts etc.
presence of responsible person is not required. Any person who is keeping
these records can be treated as an employee or representative and in his
presence extracts or copies of the record can be made. The presence of
employer is not necessary for this purpose.
98

 The Inspector should examine the person present in the establishment and
must record his statements on relevant matters. It is the responsibility of the
Enforcement Officer to lay his hands on the required documents and examine
the person whom he believes to be in-charge of these documents. In case it is
felt that an offence has been committed relevant books, registers or other
documents or portion thereof as may be considered relevant in respect of these
offences may be seized. Enforcement Officer must record his observation
with dated signature in the Inspection Book of the establishment and bring a
photocopy/carbon copy thereof for submission to Assistant Provident Fund
Commissioner in-charge of the circle alongwith his report.
 Enforcement Officers may ensure collection of details regarding the change of
ownership, details of responsible persons, Bank-accounts- Sundry creditors-
debtors/properties etc. to be utilised for realisation of the dues if the dues are
not remitted within the period specified in the speaking order.

 The filing of prosecution must be selective. Prosecution need not be filed in


routine cases as launching prosecution which goes on for years has not been
an effective means either to secure compliance or to deter the establishments
from committing defaults. The purpose of prosecution must be to ensure
punishment which may be exemplary in nature. Accordingly prosecution for
routine may be avoided until and unless all other methods of brining the
defaulter to mainstream of compliance have failed.

15
DRILL FOR CONDUCT OF INSPECTION OF EXEMPTED
ESTABLISHMENTS
BOARD OF TRUSTEES – SPECIAL INSPECTION ON INVESTMENT:

Inspections will hereafter be carried out only by an APFC level Officer in


whose jurisdiction the establishment is located. In respect of Regional Office,
Mumbai, Calcutta, Chennai and Bangalore inspection have to be carried out by an
APFC level Officer exclusively assigned by RPFC-I. The monthly returns received
from the exempted establishments should be scrutinized only at the level of APFC or
above. The functioning of the Trust can be monitored from these monthly returns
itself and only in those cases where the establishment do not respond or do not give a
satisfactory reply on the deficiencies communicated by the APFC there should be a
need for an inspection. The particulars furnished by the establishment in the
monthly return should be either entered in a register manually or the information
may be fed in respect of each establishment in the Computer. Normally, those
exempted establishments which are found to function well in the matter of
enrolment, proper investment of investible surplus after meeting the obligatory
outgoings, declaration of same or better rate of interest than the statutory interest
rate, prompt sanctioning of withdrawals, settlement/transfer of PF accumulations etc.
99

during the last two financial years as disclosed in the monthly Annexure-A as well as
the report of the squad during the exempted months need not be inspected during this
financial year.

In case the monthly returns are not received from an establishment a letter
should be sent by the APFC reminding the establishment in polite language to
submit the return. If the first letter does not elicit any reply or submission of returns
within fifteen days a more tersely worded letter has to be sent to the establishment.
If the second letter also do not generate any response an EO should be sent to the
establishment with a specific written direction to ascertain the reasons for non-
submission of the returns. The EO is not expected to do any inspection. Depending
upon the report of the EO, the APFC, In-charge of Enforcement should inspect the
establishment. This procedure is intended to detect default promptly and to take
necessary legal action immediately so that the arrears do not mount.

16
TERMS & CONDITIONS OF EXEMPTION (UNDER PARA 27AA)

All exemptions already granted or to be granted hereafter under section 17 of the Act or
under paragraph 27A of the Scheme shall be subject to the revised Terms and conditions
as given in the Appendix below.

APPENDIX – A
1. The employer shall establish a Board of Trustees under his Chairmanship for the
management of the Provident Fund according to such directions as may be given
by the Central Government or the Central Provident Fund Commissioner, as the
case may be, from time to time. The Provident Fund shall vest in the Board of
Trustees who will be responsible for and accountable to the Employees’
Provident Fund Organisation, inter alia, for proper accounts of the receipts into
and payment from the Provident Fund and the balance in their custody. For this
purpose, the “employer” shall mean –

i. In relation to an establishment, which is a factory, the owner or occupier of


the factory; and
ii. In relation to any other establishment, the person who, or the authority, that
has the ultimate control over the affairs of the establishment.

2. The Board of Trustees shall meet at least once in every three months and shall
function in accordance with the guidelines that may be issued from time to time
by the Central Government/Central Provident Fund Commissioner (CPFC) or an
officer authorised by him.

3. All employees, as defined in section 2(f) of the Act, who have been eligible to
become members of the Provident Fund, had the establishment not been granted
exemption, shall be enrolled as members.
100

4. Where an employee who is already a member of Employees’ Provident Fund or


a provident fund of any other exempted establishment is employed in his
establishment, the employer shall immediately enrol him as a member of the
fund. The employer should also arrange to have the accumulations in the
provident fund account of such employee with his previous employer transferred
and credited into his account.

5. The employer shall transfer to the Board of Trustees the contributions payable to
the Provident Fund by himself and employees at the rate prescribed under the
Act from time to time by the 15th of each month following the month for which
the contributions are payable. The employer shall be liable to pay simple
interest in terms of the provisions of Section 7Q of the Act for any delay in
payment of any dues towards the Board of Trustees.

6. The employer shall bear all the expenses of the Administration of the Provident
Fund and also make good any other loss that may be caused to the Provident
Fund due to theft, burglary, defalcation, misappropriation or any other reason.
7. Any deficiency in the interest declared by the Board of Trustees is to be made
good by the employer to bring it upto the statutory limit.

8. The employer shall display on the notice board of the establishment, a copy of
the rules of the funds as approved by the appropriate authority and as when
amended thereto along with the translation in the language of the majority of the
employees.

9. The rate of contributions payable, the conditions and quantum of advances and
other advances laid down under the Provident Fund rules of the establishment
and the interest credited to the account of each member, calculated on the
monthly running balance of the member and declared by the Board of Trustees
shall not be lower than those declared by the Central Government under the
various provisions prescribed in the Act and Scheme framed there under.

10. An amendment to the Scheme, which is more beneficial to the employees than
the existing rules of the establishment, shall be made applicable to them
automatically pending formal amendment of the Rules of the Trust.

11. No amendment in the rules shall be made by the employer without the prior
approval of the Regional Provident Fund Commissioner (referred to as RPFC
hereafter). The RPFC shall before giving his approval give a reasonable
opportunity to the employees to explain their point of view.

12. All claims for withdrawals, advances and transfers should be settled
expeditiously, within the maximum time frame prescribed by the Employees’
Provident Fund Organisation.

13. The Board of Trustees shall maintain detailed accounts to show the contributions
credited withdrawal and interest in respect of each employee. The maintenance
of such records should preferably be done electronically. The establishments
should periodically transmit the details of members’ accounts electronically as
and when directed by the CPFC/RPFC.
101

14. The Board of Trustees shall issue an annual statement of accounts or passbooks
to every employee within six months of the close of financial/accounting year
free of cost once in the year. Additional print outs can be made available as and
when the members want, subject to nominal charges. In case of pass book, the
same shall remain in custody of employee to be updated periodically by the
trustees when presented to them.

15. The employer shall make necessary provisions to enable all the members to be
able to see their account balance from the computer terminals as and when
required by them.

16. The Board of trustees and the employer shall file such returns monthly/annually
as may be prescribed by the Employees’ Provident Fund Organisation within the
specified time limit, failing which it will be deemed as a default and the Board
of Trustees and employer will jointly and separately be liable for suitable penal
action by the Employees’ Provident Fund Organisation.

17. The Board of trustees shall invest the monies of the provident fund as per the
directions of the Government from time to time. Failure to make investments as
per directions of the Government shall make the Board of Trustees separately
and jointly liable to surcharge as may be imposed by the CPFC or his
representative.

18. (a) The securities shall be obtained in the name of the Trust. The securities so
obtained should be in Dematerialised (DEMAT) form and in case the
required facility is not available in the areas where the trust operates, the
board of trustees shall inform the RPFC concerned about the same.

(b) The Board of trustees shall maintain a script wise register and ensure timely
realisation of interest.

(c) The DEMAT Account should be opened through depository participants


approved by Reserve Bank of India and Central Government in accordance
with the instructions issued by the Central Government in this regard.

(d) The cost of maintaining DEMAT account should be treated as incidental


cost of investment by the Trust. Also all types of cost of investments like
brokerage for purchase of securities etc. shall be treated as incidental cost
of investment by the Trust.

19. All such investments made, like purchase of securities and bonds, should be
lodged in the safe custody of depository participants, approved by Reserve Bank
of India and Central Government, who shall be the custodian of the same. On
closure of establishment or liquidation or cancellation of exemption from EPF
Scheme, 1952, such custodian shall transfer the investment obtained in the name
of the Trust and standing in its credit to the RPFC concerned directly on receipt
of request from the RPFC concerned to that effect.

20. The exempted establishment shall intimate to the RPFC concerned the details of
depository participants (approved by Reserve Bank of India and Central
102

Government), with whom and in whose safe custody, the investments made in
the name of trust, viz., investments made in securities, bonds, etc. have been
lodged. However, the Board of Trustees may raise such sum or sums of money
as may be required for meeting obligatory expenses such as settlement of claims,
grant of advances as per rules and transfer of member’s P.F. accumulations in
the event of his/her leaving service of the employer and any other receipts by
sale of the securities or other investments standing in the name of the Fund
subject to the prior approval of the RPFC.

21. Any commission, incentive, bonus, or other pecuniary rewards given by any
financial or other institutions for the investments made by the Trust should be
credited to its account.
22. The employer and the members of the Board of Trustees, at the time of grant of
exemption, shall furnish a written undertaking to the RPFC in such format as
may be prescribed from time to time, inter alia, agreeing to abide by the
conditions which are specified and this shall be legally binding on the employer
and the Board of Trustees, including their successors and assignees, or such
conditions as may be specified later for continuation of exemption.

23. The employer and the Board of Trustees shall also give an undertaking to
transfer the funds promptly within the time limit prescribed by the concerned
RPFC in the event of cancellation of exemption. This shall be legally binding on
them and will make them liable for prosecution in the event of any delay in the
transfer of funds.

24. (a) The account of the Provident Fund maintained by the Board of Trustees
shall be subject to Audit by a qualified independent chartered accountant
annually. Where considered necessary, the CPFC or the RPFC in-charge of the
Region shall have the right to have the accounts reaudited by any other qualified
auditor and the expenses so incurred shall be borne by the employer.

(b) A copy of the Auditor’s report along with the audited balance sheet
should be submitted to the RPFC concerned by the Auditors directly within six
months after the closing of the financial year from 1st April to 31st March. The
format of the balance sheet and the information to be furnished in the report shall
be as prescribed by the Employees’ Provident Fund Organisation and made
available with the RPFC Office in electronic format as well as a signed hard
copy.

(c) The same auditors should not be appointed for two consecutive years and
not more than two years in a block of six years.

25. A company reporting loss for three consecutive financial years or erosion in
their capital base shall have their exemption withdrawn from the first day of the
next/succeeding financial year.

26. The employer in relation to the exempted establishment shall provide for such
facilities for inspection and pay such inspection charges as the Central
Government may from time to time direct under Clause (a) of sub-section (3) of
Section 17 of the Act within 15 days from the close of every month.
103

27. In the event of any violation of the conditions for grant of exemption, by the
employer or the Board of Trustees, the exemption granted may be cancelled after
issuing a show cause notice in this regard to the concerned persons.

28. In the event of any loss to the trust as a result of any fraud, defalcation, wrong
investment decisions etc. the employer shall be liable to make good the loss.

29. In case of any change of legal status of the establishment, which has been
granted exemption, as a result of merger, demerger, acquisition, sale,
amalgamation, formation of a subsidiary, whether wholly owned or not, etc., the
exemption granted shall stand revoked and the establishment should promptly
report the matter to the RPFC concerned for grant of fresh exemption.

30. In case, there are more than one unit/establishment participating in the common
Provident Fund Trust which has been granted exemption, all the trustees shall be
jointly and separately liable/responsible for any default committed by any of the
trustees/employer of any of the participating units and the RPFC shall take
suitable legal action against all the trustees of the common Provident Fund Trust.

31. The Central Government may lay down any further conditions for continuation
of exemption of the establishments”.

17
HOLDING OF SECURITIES IN DEMAT FORM
OPENING OF DE-MAT ACCOUNT BY EXEMPTED PF TRUSTS:

De-mat – Dematerialisation is a process by which the investors gets physical


certificate converted into electronic balance maintained in his account with the
depository participant.

Depository is an Organisation where securities are held in electronic form


through the medium depository participants.

DP(Depository participants) is a representative of the depository in the


system maintained clients securities accounts.

Advantages of De-mat.

1. No requirement of filling up the transfer deed and lodging for transfer.


2. Immediate transfer on registration of securities as against 3-4 months.
3. Shorter settlement cycle ensure prompt liquidity (transaction plus 5 days).
4. Eliminates bad deliveries.
5. Eliminates cost of wastage of time.
6. Reduction in brokerage.
104

7. Special concession on stamp duty.


8. Minimum handling of paper.
9. Avoiding cost of courier.
10. Avoidance loss in transaction/mutilation resulting in expenditure.
11. Receives interest direct to depository account as direct credit.
12. Avoid loss towards interest on interest.
13. Safety in holding.
14. Depository is like a bank.
15. Depository can legally transfer ownership to an institution account.
16. DP will intimate the status of holdings.
17. One can dematerialized debt instructions, mutual fund units, Government
securities in his De-mat account. It can be held in a single De-mat account.
18. DP(Depository participant) will assist for selling dematerialized securities
and also purchase dematerialized securities.

Transactions in Government Securities:

The Reserve Bank of India has advised that RBI regulated entities will have
to hold and deal in debt instructions in the De-mat form. As a result, in due course,
entities like PF holding securities in the physical form may be faced with problem of
liquidity on account of counter parties un willing to transact in the physical mode.
The Reserve Bank of India, therefore, suggested to issue suitable instructions to PF
trusts exempted under EPF & MP Act, 1952 to start the process of dematerializing
the existing holding in their own interest.

To mitigate the difficulties in making the investments in physical form of


securities as pointed out by Reserve Bank of India, Board of Trustees of
establishments exempt under relevant provisions of EPF & MP Act, 1952 be allowed
to keep the securities in DEMAT accounts with Scheduled Bank under the credit
control of the Reserve Bank of India. Further it may be noted that RBI does not
control all the brokers/private firms who are entitled to operate as depository
participants of NSDL/CSDL. NSDL and CSDL do not open the DEMAT accounts
directly, rather they operate through depository participants such as Scheduled
Commercial Banks, private companies and brokers. For safe custody of funds
exempted provident fund trusts should not be allowed to open DEMAT accounts
with brokers/other private fund trusts should not be allowed to open DEMAT
accounts with brokers/other private companies acting as depository participants.
Accordingly such exempted trusts may open DEMAT account only with Scheduled
Commercial Bank.

To encourage securities in DEMAT form, now Reserve Bank of India has


stopped to issue Government Stock certificates in physical form. The State Bank of
India, the portfolio manager for the EPFO has also desired that whenever securities
are to be transferred either to exempted trust or EPFO requisition to transfer
securities in DEMAT form should be forwarded alongwith particulars of CSGL
account and all scheduled bank with whom CSGL account has been opened.

Consequent to cancellation of exemption, particulars of CSGL Account and


of scheduled bank wherein the Employees’ Provident Fund Organisation has opened
CSGL account would be furnished alongwith the cancellation order itself.
105

Henceforth, the securities are to be transferred only in Demat form to the CSGL
Account of the Employees’ Provident Fund Organisation.

While transferring the securities the details in respect of securities


transferred, date of transfer, date up to which interests have been credited to the
Trust Accounts and next due date of interest on securities so transferred, may be
intimated to the respective Regional Provident Fund Commissioner immediately.

It is therefore reiterated that the securities held by exempted Provident Fund


Trust are to be immediately converted to Demat form. Wherever necessary, CSGL
accounts for the purpose may be opened with scheduled banks under the control of
Reserve Bank of India.

DEMATERIALIZED MODE:

The Reserve Bank of India has started encouraging holding of Government


Securities in the dematerialized mode in the following ways:

 All entities having a Subsidiary General Ledger (SGL) account with


RBI are allowed to open Constituent Subsidiary General Ledger
(CSGL) accounts on behalf of their clients.

 Although being non-banks, depositories (NSDL/CDSL) and


organizations such as SHCIL have been provided an additional SGL
account to open CSGL accounts on behalf of their clients.

 The cost of postage incurred by the depositories on remitting interest


and redemption proceeds is being reimbursed by RBI so as to encourage
dematerialized holding and retail participation in Gilts.

 Guidelines have been issued to the banks prescribing the safeguards to


be adopted for maintenance of CSGL accounts.

 To import transparency in Government Securities traded by clients


(though CSGL accounts), a special feature has been incorporated in the
Negotiated Dealing System (NDS) for reporting and settlement of such
trades. Provisions has also been made in the NDS for giving quotes on
behalf of clients i.e CSGL account holder.

In the light of some fraudulent transactions, in the guise of Government


Securities transactions in physical format by a few co-operative banks with
the help of some broker entities, the Reserve Bank of has now proposed the
following measures to accelerate the trading in dematerialized form:

 All entities regulated by RBI (including financial institutions (FIs),


primary dealers (PBs), cooperative banks, RRBs, local area banks
(LABs), non banking financial companies (NBFCs) should
necessarily hold their investments in Government securities portfolio
in either SGL (with RBI) or CSGL (with a schedule commercial
bank/ State Cooperative Bank/PD/FI/sponsor bank (in case of RRBs)
106

and SHCIL or in a dematerialized account with depositories


(NSDL/CDSL).
 Only one CSGL or dematerialized account can be opened by any such
entity.
 In case the CSGL accounts are opened with a scheduled commercial
bank or state cooperative bank, the account holder has to open a
designated funds account (for all CSGL related transaction) with the
bank.
 In case a CSGL account is opened with any of the non-banking
institutions indicated above, the particulars of the designated funds
account (with a bank) should be intimated to that institution.
 The entities maintaining the CSGL / designated funds accounts will
be required to ensure availability to clear funds in the designated
funds accounts for purchases and of sufficient securities in the CSGL
account for sales before putting through the transactions.
 No further transactions by a regulated entity should be undertaken in
physical form with any broker with immediate effect.

SUBSIDIARY GENERAL LEDGER (SGL) ACCOUNT:

The Reserve Bank of India has extended the facility of holding Government
securities in Subsidiary Ledger Form to all exempted Provident Funds. The Public
Debt Offices of Reserve Bank of India has permitted the exempted trust to hold a
minimum balance of Rs.10,000/- to open an SGL Account. This facility was
allowed in the year 1987.

2. In order to ensure efficient payment and settlement system in respect of


transactions in Government Securities, Reserve Bank of India, in consultation with
Government of India has introduced the Delivery Versus Payment (DVP) System
with effect from 17th July 1995. Under this system, it is obligatory for the SGL
Account holders to effect simultaneous fund transfer through their current account
with Reserve Bank of India along with the transfer of securities held in the SGL
accounts. As such those SGL account holders not having current account with the
Reserve Bank of India are not eligible to maintain their SGL accounts with the
Reserve Bank of India. Provident Fund Trusts and approved brokers, etc., are not
eligible to open current account with the Reserve Bank of India. Accordingly
Provident Fund Trusts, etc. have been advised to transfer their existing SGL holdings
to SGL Account No.II of a Commercial Bank of their choice or convert their
holdings into stock certificates. Commercial Banks have allowed to open additional
SGL Account with Reserve Bank of India for transaction in Government Securities
on behalf of their clients. Stock Certificates are transferable by just completing the
transfer deed and by tendering the same at the Public Debt Office of the Reserve
Bank of India for registration. In other words, the holdings in the form of stock
certificate do no inhibit the holders from selling, transferring or gifting the same to
others. The Stock Certificate holders also enjoy the benefit of receiving half-yearly
interest warrants in respect of their holdings to their respective registered addresses
without lodging of the original securities with Reserve Bank of India for claiming
interest. The level of service available in respect of stock certificates will be the
same as in the case of holdings in SGL Account.
107

3. The exempted establishments may maintain an SGL Account with a


Commercial bank and obtain periodical certificate of holding with shall be verified
by the Assistant Provident Fund Commissioner / Enforcement Officer.
Alternatively, the securities may be kept in the form of Stock Certificates.

CONSTITUENT SGL ACCOUNT:

Subsidiary General Ledger (SGL) account is an account maintained by banks


and other select financial institutions with the Reserve Bank of India (RBI). The
Public Debt Office (PDO) maintains SGL Accounts of banks, which have a record of
their holds of Government of India and State Government Securities. The Public
Accounts Department (PAD) of the RBI maintains SGL accounts of banks, which
have a record of their holdings of Treasury Bills.

2. Banks are allowed to maintain two SGL accounts from Government


Securities (G-Secs) with PDO and two accounts for Treasury Bills (T-Bills) with the
PAD. The first account in each case is for the bank’s holdings of G-Secs and T-Bills
on its own account. The second account in each case is for G-Secs and T-Bills,
which the bank holds on behalf of its constituents and is termed the Constituent SGL
account. The bank in turn maintains sub-accounts, which have a record of the
holdings of G-Secs and T-Bills by each of its constituents.

TRANSFER OF SECURITIES BETWEEN CONSTITUENT ACCOUNTS:

The transfer of securities through the SGL accounts is done by means of a


SGL Transfer Form. The seller of a security instruct this bank to execute a SGL
Transfer Form in favour of the buyer of the security’s bank, which gives details of
the transactions. This SGL Transfer Form is lodged by the buyer’s bank with the
RBI. On receipt of the SGL Transfer Form the RBI debit the seller’s bank’s SGL
account and credit’s the buyer’s bank’s SGL account with the face value of the
security transacted. Simultaneously the RBI debits the buyer’s bank’s current
account and credit’s the seller’s bank’s account with the proceeds of the transaction.
This settlement system is known as Delivery-versus-Payment (DVP) and it
eliminates settlement risk.

2. All transactions will be carried on receipt of the client instructions. The


Settlement paper work, and RBI liaison is done by the concerned banks.

3. The settlement will not take place in the following cases:

 SGL Transfer Form improperly executed.

 Seller has insufficient balance in SGL Account Buyer has insufficient


balance in Current Account.

 Since the bank’s current account with the RBI gets debited in case of
purchase by the bank or by the bank’s constituent, the constituent must have
clear funds in its Current / Savings account with the bank to enable the
transaction to be put though.
108

4. The constituent will receive a Debit / Credit advice for both the SGL as well
as the Current / Savings account if a transaction is put through on its behalf.

COUPON / REDEMPTION PROCEEDS:

The RBI credits the Coupon and Redemption proceeds for G-Sec/T-Bill to
the bank’s Current Account with the RBI. The constituent will receive a credit
advice for the amount credited to its Current / Savings account immediately on
receipt of the funds from RBI.

2. The present long prevalent scrip-based system has traditionally involved


paper work involving stock certificates in paper form and transfer deeds. The
process beginning from purchase of securities, getting the securities duly endorsed in
the buyer’s name and depositing in safe custody is complex and time consuming.

3. RBI’s Subsidiary General Ledger (SGL) account system essentially aims at


eliminating the cumbersome paper work involved in the scrip-based system and also
assures risk-free and ‘paperless’ trading.

4. Advantages of holding securities in a Constituent SGL account rather than as


Physical stock certificates:

 When any trust buys securities via the constituent SGL account, the
Securities are transferred to the name of the trust immediately on
confirmation of a valid delivery-versus-payment transaction. If scripts are
purchased in physical form the trust will have to wait for over one moth for
scripts to be transferred in their name, while the trust has already paid the
seller the full consideration. Thus the trust will have to take settlement risk
on the seller of the security, who may be a broker or NBFC . The SGL
account system has been designed by RBI to eliminate risk of default, which
the investor may face while transacting in government securities.

 When the trust’s bid is successful at a RBI auction, RBI may directly credit
the securities allotted into the SGL account. Any refund amount will be
directly be credited into the trust’s bank account. Thus the trust will be
spared the bother of collecting refund and securities from the Reserve Bank.

 There is no requirement of filling transfer deeds and lodging the transfer


documents with the RBI, thus saving paper work and time for the trust. To
operate an SGL account the trust would have to instruct the bank regarding
the execution of a transaction. All the settlement paper work is done between
the concerned banks. The client will receive a memo after every transaction.

 The bank also allows non-Mumbai trusts to maintain their bank accounts in
their city but purchase securities in Mumbai. This enable a non-Mumbai
trust to take advantage of the deeper security market in Mumbai.
Additionally, as Treasury bills are only transacted in Mumbai the non-
Mumbai trust will also be able to invest in the same.
109

 Since all transactions are by book entry, consolidation, transfer or splitting of


a security between various trusts can be effected easily and quickly.

 There is no scope of any risk of loss, theft or fraud with regard to stock
certificate. If securities are maintained in a Constituent SGL account it is not
necessary to have a safe custody account for Government Securities and
Treasury Bills, thereby saving the safe custody charges.

 The Bank provides the statement of holdings on a monthly basis. This will
aid in audit and valuation of the trust’s holding.

 The bank will collect interest on SGL holdings on behalf of the constituent
and will credit the constituent’s bank account at no extra cost. As the recent
budget has removed tax reduction at source on government securities, the full
amount of interest as paid by RBI will be credited to the client’s account. As
per the investment guidelines, any interest earned has to be reinvested in
similar category of securities. The Bank can also offer quotes for sale of
securities to its client for their investments.

NATIONAL SECURITIES DEPOSITORY LTD

The NSDL (National Securities Depository Ltd) provides opening of Demat


Account in NSDL system. The Employees’ Provident Fund Organisation has also
opened demat account in the NSDL system and has dematerialized and significant
part of its non-SLR holdings. All the PF Trusts should be advised to hold their
Securities in demat form.

For more details on DP and Demat, Please consult the Website


http/ www.nsdl.co.in

18
EPF SYSTEM OF ACCOUNTS

INTRODUCTION:

The Employees’ Provident Fund Organisation of India is one of the oldest


institution in the world today and over the years it has played a major role in
providing protection to Indian workers upon reaching old age, and in the event of
invalidity and death. The protection thus provided is essential to permit workers to
aspire to a decent standard of living upon retirement or invalidity and to assist family
members in the event of death of the breadwinner. Over the years the Employees’
Provident Fund Organisation has made major efforts to expand the scope and level
of coverage provided, this is clearly illustrated by the fact that at its inception it
applied to factories and establishments falling within six specified industries, while
at present it covers 180 types of industries and classes of establishments. Moreover,
in order to ensure a comprehensive level of protection, in addition to provisions for a
110

lump sum benefit and withdrawals, it now also offers a pension benefit. To meet the
growing number of subscribers and pensioners and the resultant volume of
transactions a sound and transparent accounting system is to be followed.

A Retrospect:

The Employees’ Provident Funds & Miscellaneous Provisions Act and the
schemes viz. Employees’ Provident Fund Scheme, 1952, Employees’ Pension
Scheme, 1995 and Employees’ Deposit Linked Insurance Scheme, 1976 framed
there under provides various benefits in the nature of Social Security to the working
class and their families. The EPF Organisation, in its 50 years of existence, is
marching ahead in extending and enlarging the various Social Security benefits. To
begin with, a compulsory contributory Provident Fund Scheme was introduced to the
employees in the year 1952 to which both the employees and the employers would
contribute. A Provident Fund has been set up for this purpose and administered by
the CBT-EPF. Thus, the system of accounts and the maintenance of accounts was
initially applicable to the administration of the EPF Scheme, 1952. The rate of
contribution payable by the employees and employers was also steadily increased
from 6.25% to the present level of 12%. The accounts of the EPF subscribers were
maintained and the advances/withdrawals were allowed apart from issuing the
Annual Provident Fund Statement of accounts to the subscribers through their
employers.

The employers were depositing the EPF dues alongwith the administrative
charges into the State Bank of India. The benefits were released through a separate
account known as the EPF refund account and thus three different accounts were
maintained till the year 1971. On introduction of Employees Family Pension
Scheme, 1971, a contribution account exclusively for crediting the contribution
towards family Pension Fund at the rate of 1.16% of the pay diverted from
Employees and Employers share of Provident Fund account was opened. On
introduction of EDLI Scheme, 1976, the Employers (alone) were asked to deposit
the EDLI contribution alongwith the administrative charges. In the year 1995, the
Employees Family Pension Scheme has been converted into a Pension Scheme by
introducing the Employees Pension Scheme, 1995. Thus the EPF Organisation is
vested with the administering the Employees Provident Fund, Pension Fund and
Insurance Fund alongwith the Administration funds. The rate of administration
charges has also been increased from 3.% of total contribution to 1.10% of pay. To
begin with the EPF money collected by the State Bank of India were transferred to
the investment account and the money required to meet the obligatory out goings
was made by making a requisition for transfer from the investment account with the
approval of Headquarters Office, New Delhi.

The EPF Organisation is administering the schemes through its Field Offices
located in the Regional Offices/Sub-Regional Offices. The main operational area
was practically categorised as Enforcement (Compliance) Wing and the Accounts
Wing. The Enforcement (Compliance) wing is responsible for application of the Act
and in securing compliance from the establishment and also to invoke the Penal
provisions against the defaulters. In the Accounts Wing the individual Ledger
accounts of the EPF members are being maintained and the services to the members
were extended through this individual ledger account. Initially, the employers were
111

asked to furnish the wages and contribution of the individual members every month
and postings were made in the ledger card manually and at the end of the financial
year the closing balance was conveyed to the members through the establishment.

On an experimental basis, the maintenance of ledger accounts of the


members were divided into 4 categories and the financial year was staggered for
each category so as to ensure the issue of statement of accounts to the members
without falling into arrears. Due to certain inherent defect in the system, this
procedure was reversed and the financial year (April to March) was made uniform
for all the establishments. With a view to simplify the system of EPF accounts, the
employers were asked to furnish only the abstract of total wages and total
contribution details of the establishment for each month alongwith receipted
challans. As a result the posting of contribution into individual members on monthly
basis was discontinued. Instead, the annual contribution for each financial year was
posted into the ledger account. The accounts statements were thus prepared and
issued to the members. To facilitate, this the Annual return in Form 3A and 6A were
also introduced showing the month-wise contribution of individual members through
Form 3A alongwith its summary in Form 6A.

Due to the application of computers, the contribution of the members were


captured from the Annual Returns in Form 3A/6A and prepared the computerised
annual statement of Accounts every year. In order to ensure audit check on the
recovery of contribution etc., instead of capturing the contributions the system of
capturing the wages by computer was introduced thereby the computer calculated
the quantum of PF Contribution and Pension contribution on the given wages in
respect of each individual member.

The maintenance of ledger card had undergone series of changes.


Initially to facilitate monthly posting of contribution, a single ledger card was kept
for 4 financial years. The size of the card was then reduced and provided for 6
financial years. After the introduction of computers a ledger card was designed to
cover 8 financial years. With a view to avoid fraudulent payment etc. the ledger
cards were supplied in a bound volume containing 20/50/100 folios. But, the bound
volume of the subscribers ledger posed some serious practical difficulty in disposal
of claims. At present one individual loose ledger card in respect of each member is
prescribed which will be kept from his date of entry to date of exit and this will serve
as a master for recording only the details of withdrawals, transfers etc. Except for
this, the subscribers ledger card will not bear any annual contributions on year to
year basis. While releasing the final settlement of the Provident fund account this
ledger card will be completed by extracting the closing balance for the preceding
year and the ledger card for the current year is completed on manual basis. As an
improvement to this system and to suit the settlement of accounts through computer,
the members master ledger card are being used only to record final payments and
withdrawals. No separate individual subscribers ledger account is maintained under
the Employees Pension Fund, as the benefits are not related to the amount of
contribution paid to the fund. Similarly the position in respect of EDLI fund also.
112

The payment of interest to the EPF balance was allowed upto 1.4.93 at the
declared rate on the amount stood as Opening Balance as on 1st April. The method
of crediting the interest to the subscribers account had been changed whereby the
interest was credited on monthly balance method.

A series of changes have also been witnessed in the operation of bank


accounts. Now all the bank accounts are treated as receipt and payment account.
Most of the activities in the Banking operations/cash branch in the EPFO has been
transferred to the computer. As a result, the preparation of Daily cash book,
subsidiary Cash books for each accounts groups and the main cash book on both
receipts as well as payments are through computer. By doing so, the receipt details
collected through the computerised cash book facilitates quantifying penal damages
and interest under section 7Q on all belated deposits. Similarly the monthly abstract
statement in Form 12-A is also being fed to the computer so as to determine the dues
payable by the employer. This facilitates generation of DCB register through
computer which replaced the manual preparation of DCB Registers. Similarly the
withdrawals are also captured by computer as and when payment is made which will
be directly reflected in the Annual statement of accounts. Thus the system of
compilation of annual statement of accounts was simplified, avoiding manual
feeding of certain vital data relating to payments.

The Portfolio management of the investment of EPFO monies which was


handled by the Reserve Bank of India has now been entrusted to the State Bank of
India. The EPF Organisation entered into an agreement with the State Bank of India
and the service charges payable to the State Bank of India will be adjusted within the
interest payable by the State Bank of India to EPF Organisation on account of
belated transfer of funds. The investment of EPF money is subject to adherence to
the pattern of investment prescribed by the Central Government from time to time.

The organisation is preparing its balance sheet alongwith the audit report and
presenting to the Government and Parliament as per the mandate given in the EPF
scheme, 1952. To facilitate this all the field offices in the region are also required to
compile the monthly classified summary of receipt and payment and forward to the
Headquarters for consolidation. A regional balance sheet is also prepared and
consolidated in the Head quarters every year.

The organisation is also maintaining certain Proforma accounts on Interest


Suspense account, Unclaimed Deposit Account, DRF and SRF.

The procedure for transfer of PF balance to the Unclaimed Deposit Account


has been duly closing ledger account and maintaining the UCD register was
dispensed with and instead only the Form 24 of each establishment reflects the
contribution of the members divided into 3 parts viz. contributing member, non-
contributing member (for a period of 3 years) and members whose accounts are
settled in the current year.. The accounts of the non contributing members are
continued with upto date interest which facilitate settlement without any delay.

With a view to ensure expeditious payment of benefits, the payments are also
being made through ECS. The monthly pension to the members and Family Pension
are being released through the banks designated for this purpose in each region
113

which includes Nationalised Banks and Scheduled banks such as HDFC, UTI and
ICICI. Necessary agreement have been entered into with the disbursing agencies i.e.
Banks and Post Offices and the accounting procedure has been evolved for
reconciliation of payment.

The administration/inspection charges realised by the regions are utilised to


meet its administration expenditure subject to the budget allocation and Delegation
of Administrative and Financial powers.

Proposed Action Plan: Under the Reinventing EPF India, the EPF
Organisation is preparing in for Business Process Reengineering (BPR) for total
computerisation of the entire operation of the accounting in EPFO. It is also under
consideration whether to switch over to double entry accounting in handling various
accounting aspects of EPF System of Accounts.

The Manual of Accounting Procedure, Part II-A, Chapter-I provides for the
details on the system of accounts prescribed under the EPF.

19
SALIENT FEATURES OF THE NEW BANKING
ARRANGEMENTS ENTERED WITH SBI
DEFINITIONS

In this agreement, the following Terms shall be interpreted as indicated:


a. “Commissioner” means the Central Provident Fund Commissioner or
other representative authorised by the Central P.F. Commissioner.
b. “The Trustees” means the Central Board of Trustees acting through
the Central Provident Fund Commissioner and Financial Advisor &
Chief Accounts Officer.
c. “The Agreement” means the agreement entered into between the
Trustees and the SBI as recorded in the Agreement form signed by
the Trustees through their representatives and the SBI, including all
attachments and annexes thereto and all documents incorporated by
reference therein.
d. “Link Branch” of SBI means the branch designated by SBI where the
accounts of the Regional/Sub Regional Offices and Sub Account
Offices of the Trustees are held for collection of Provident Fund Dues
etc., within the territorial jurisdiction of the concerned office of the
Trustees.
e. “Local Base Branches” of SBI shall mean all branches of SBI situated
within the municipal limits of the Link Branch.
f. “Outstation Base Branches” of SBI shall mean all other branches of
SBI situated outside Municipal limits of Link Branch but within the
territorial jurisdiction of concerned office of the Trustees.
114

g. “The Services” mean all of the services which the SBI is required to
perform for the Trustees under the Agreement.

STANDARDS:

The Service under this Agreement shall confirm to the specifications


mentioned in the Agreement.

Use of Agreement Documents and Information

i. The SBI shall not, without the Trustees’ prior written consent, disclose the
Agreement, or any provision thereof, or any specification, or information
furnished by or on behalf of the Trustees in connection therewith, to any
person other than a person employed by the SBI in
performance of the Agreement except as may be and to the extent required
under any law, statute or by any statutory regulation or other authority
exercising power under any law/rules/regulations. Disclosure to any such
employed person shall be made in confidence and shall extend only as far as
may be necessary for purposes of such performance.

ii. The SBI shall not, without the Trustees’ prior written consent, make use of
any document or information except for purposes of performing the
Agreement.

SCOPE OF THE AGREEMENT

5.1 The trustees shall maintain and operate the Savings Bank Accounts as a two-
tier arrangement i.e. one at the level of Regional, Sub Regional and Sub Accounts
Office and other at the Headquarters.

5.2 In the Headquarters of the Regional, Sub Regional and Sub Accounts offices
there shall be a branch designated as the Link branch. The said Link Branch shall
maintain the accounts and also receive the dues directly from the employers within
the territorial jurisdiction of each of the concerned office of the Trustees. There
shall be a number of branches of the SBI and its Associate Banks within the
territorial jurisdiction of each of the concerned office of the Trustees for the purpose
of collecting the dues as specified in the Act and Schemes framed there under
(hereinafter referred to as Base Branches). The base branches shall, after collecting
the dues paid by the employers, transmit the same to the Link Branch in which
accounts of the Trustees are being maintained, on the date of receipt itself. The
receiving branch what so ever will have no responsibility and liability in regard to
correctness of the deposits made by the employers’ vis-à-vis their liability under the
respective Act.

5.3.1 The Link Branch, apart from accepting Monies and other dues on
behalf of the Trustees in the manner applicable to all base branches, will maintain
the following Savings Bank accounts of the Head Office, Regional Office, Sub
Regional, Sub Accounts Office, as the case may be.
115

Acc. No. Name of the Account


1 Employees’ Provident Fund Contribution account
2 Employees’ Provident Fund Regional Administration account
10 Employees’ Pension Fund Contribution account
21 Employees’ Deposit Linked Insurance Fund Contribution account
22 Employees’ Deposit Linked Insurance Fund Regional administration
account.
5.3.2. Description of accounts maintained by the Head Office of
Trustees.

Acc. No. Name of the Account


4 Employees’ Provident Fund Central Administration account
4A Employees’ Provident Fund Head Office (Local Administration)
account
5 Employees’ Provident Fund Investment account
8 Employees’ Provident Fund Staff Provident Fund Account
9 Employees’ Provident Fund Pension cum gratuity account
11 Employees’ Pension Fund Investment account
24 Employees’ Deposit Linked Insurance Fund Central Administration
account
25 Employees’ Deposit Linked Insurance Fund Investment Account

5.4 The remittances received from various base branches as well as the
remittances deposited directly in the link branch shall be credited to the respective
accounts as per schedule detailed in clause 5.5. The credit/debit advice pertaining to
the above mentioned accounts shall be sent to the Head Office/Regional Office/Sub
Regional Office/Sub Accounts Office concerned on daily basis. The link branch
shall furnish the reconciled Bank Statements & supporting challans and other
documents to the concerned office of the Trustees in the manner and periodicity as
set out in the Annexure I of this agreement.

5.5 Monies received by various branches shall be credited within the


manner and period specified below:
I. The deposits received by way of cash by the Link branches across the
counter shall be credited to the account of CBT EPF on the same day.
II. The deposits received by way of Demand Draft and Cheques by the
Link branches shall be credited to the accounts of CBT EPF within one
day from the date of realisation(date of realisation will be counted when
the clearing return discipline time is over).
III. The deposits received by way of Demand Draft and Cheques by the
local base branches shall be credited to the accounts of CBT EPF in
Link Branch within four days from the date of realisation by the base
branches.
IV. The deposits received by way of Demand Draft and Cheques by the
outstation base branches shall be credited to the accounts of CBT EPF
in Link branch within seven days from the date of realisation by the
base branches.
116

5.6 The cheques received by the link branch as well as the base branches shall
be presented for clearing on the date of receipt or on the next working day itself.

5.7 All branches receiving PF Dues by Cheques/Demand Draft shall accept


only local Cheques/Demand Drafts.

5.8 Any delay in crediting the amounts indicated in Para 5.5., over and above
the period prescribed shall attract payment of interest, which shall be equivalent to 2%
above the Savings Bank Interest rate as applicable from time to time on the Savings Bank
Deposits of SBI.

5.9 On the services so rendered as narrated above, SBI shall be entitled to the
remuneration/fee as detailed in the paragraphs given herein after.

5.10 The Service charges @ Rs.2.50 per Rs.1000/- on the total monies received
on behalf of the Trustees by the base branches and remitted to the link branch (excluding
the direct deposit with link branch) is payable to the link branch of the State Bank of India
by the respective Regional Office/Sub Regional Office every month.

5.11 The remittance charges @ Rs.1.50 per Rs.1,000/- on the monies received on
behalf of Trustees by the link branch directly is payable to the link branch of the State
Bank of India by the respective Regional Office/Sub Regional Office every month.

5.12 Out of pocket expenses incurred on postages, telegrams, courier, cost of


MICR cheques etc. shall be reimbursed to SBI by the Trustees on actual basis. If there are
any other expenses incurred by SBI, the same will be considered for reimbursement on
mutual agreement.

5.13 Levy of charges shall by only on remittances from base branches to link
branches and on provident fund dues collected by the link branches. Other inter
departmental remittances shall be excluded from the levy of charges.

5.14 Charges shall be debited to CBT EPF account No.2 in respect of


Regional/Sub Regional/ Sub Accounts offices and to Account No.4/4A in respect of Head
Office of the Trustees only after adjusting the interest on delayed credits to the account of
CBT EPF on month to month basis. The details of bank charges so debited shall be sent to
respective offices of Trustees every month;
Provided that any dispute on calculation and debiting of service charges net
of interest on delayed credits shall be settled within one month and that the Officer-in-
charge of the respective field offices of the Trustees and concerned Manager of link branch
of SBI shall act as the nodal officer for the purpose.
Provided further that any dispute relating to charges if any debited by SBI
net of interest on belated credits, should be resolved by the nodal officers within three
months from the date of such debits failing which Trustees shall be entitled to penal
interest of 4% above prevailing savings bank interest rate of SBI.
117

5.15 The monies received at base branches (other than the situation when
the link branch acts as base branch) should be transferred through electronic mode
wherever possible and where such arrangement has been set up in consultation with
Trustees’ officers. However, in other cases old system of transfer of funds through
DD may continue till such facilities are available at these branches.

5.16 the monies and other remittances received in the Link branch, net of
payments authorised by designated officers of the Trustees shall be transferred to the
respective investment accounts by the SBI immediately on receipt of instructions
from the respective field offices of the Trustees.

5.17 The link branches shall provide the Regional, sub Regional Offices,
Sub Accounts Offices the particulars of balance available in the accounts maintained
by them on daily basis and that the link branches shall provide the facility of remote
long in (wherever available) to the respective field offices so as to facilitate efficient
transfer of funds. The transfer from the link branch to the respective investment
accounts and vice versa shall be through electronic mode only (wherever available).

5.18 Settlement with regard to payment of service charges & claim of


interest for delayed credit, clearance of missing credits, un reconciled amount, or
amount in transit pertaining to past period shall be in accordance with the
mechanism agreed in February 1998.

NODAL OFFICER:

SBI has informed that a Nodal Officer of AGM rank in each of their 14
circles all over the country shall be notified for coordinating all issues concerning
EPFO. The name, designation etc. of the Nodal Officers shall be intimated as and
when received by Headquarters. All offices are requested to take up the outstanding
issues with the Nodal Officers and get them resolved.

[H.O.Letter No.BKG7(1)2001/NBA/Part/2003/68639 dated 11.12.2003]

20
PROCEDURE FOR INVESTMENT OF PROVIDENT FUND MONIES
The employer of an establishment exempted from the operation of
Employees' Provident Fund Scheme, 1952 either in respect of the establishment as a
whole for which, exemption granted under Section 17(1)(a) or 17(1)(b) of the Act or
in respect of an employee/Class of employees for whom exemption granted under
Paragraph 27 or 27-A of Employees' Provident Fund Scheme, 1952, respectively,
shall transfer the monthly Provident Fund contributions (both shares, after diverting
118

the Pension contributions from the employer's share of Provident Fund) including
the refund of withdrawals to the respective Board of Trustees within fifteen days of
the close of the month (with five days grace period), through a cheque drawn in
favour of the Trust.

The Area Enforcement Officer should ensure the actual crediting of the
monthly dues remitted by the employer duly verifying the Pass Book of the
Exempted Fund and the Bank Statement showing the realization of Cheque before
due dates. All belated remittances, as explained in the Chapter on Penal Damages,
will attract levy of damages by the Regional Provident Fund Commissioner
concerned.

In addition to the contributions and refund of withdrawals remitted by the


employer, the Board of Trustees may realize the interest due on various
securities/deposits, etc., kept on its investment holdings and also on redemption
proceeds (i.e., repayment on account of matured securities). Similarly, the transfer
of Provident Fund accumulations received from the statutory or other exempted
establishments will also constitute the current accretions for a month.

Out of monthly current accretions, the Board of Trustees should discharge, in


the first instance, the payment of dues towards outgoing members of their final
settlement, transfer of account, payment of refundable and non-refundable
withdrawals. These are known as obligatory outgoings.

After meeting the obligatory outgoings, the money available (investible fund)
should be invested as per the pattern of investment notified by the Ministry of
Labour, Government of India, under Section 17(3)(a) of the Act.

The pattern of investment prescribed by the Central Government from time


to time, is enclosed below:

The pattern of investment prescribed by the Central Government is


applicable both for the funds generated through unexempted establishments and also
of exempted funds. As regards unexempted establishments the pattern is notified
under the provisions of Paragraph 52 of the Employees' Provident Fund Scheme,
1952 and the pattern for exempted Provident Fund is notified separately under
Sec.17(3)(a) of the Act.
119

PATTERN OF INVESTMENT
NOTIFICATION : GOVT. OF INDIA, MINISTRY OF LABOUR, New Delhi,
NO. G-27031/3/99/-SS.II dated 9th July, 2003

Percentage of amount to
Sl.No.. Category
be invested
(i) Central Government securities as defined in Section 2
of the Public Debt Act, 1944(18 OF 1944); and/or units
of such Mutual Funds which have been set up as
Twenty five per cent
dedicated Funds for investment in Government
securities and which have been approved by the
Securities and Exchange Board of India.
(ii) (a) Government securities as defined in Section 2 of
the Public Debt Act, 1944 (18 of the 1944)
created and issued by any State Government ;
and/or units of such Mutual Funds which have
been set up as dedicated Funds for investment in
Government securities and which have been Fifteen per cent
approved by the Securities and Exchange Board
of India.
and/or
(b) Any other negotiable securities the principal
whereof and interest whereon is fully and
unconditionally guaranteed by the Central
Government or any State Government except
those covered under (iii)(a) below.
(a) Bonds/Securities of "Public Financial Institutions
(iii) as specified under Section 4(1) of the Companies
Act; "Public Sector Companies" as defined in
Thirty per cent
Section 2(36-A) of the Income Tax Act, 1961
including Public Sector;
and/or
(b) Short duration (less than a year) Term Deposit
Receipt (TDR) issued by Public Sector Banks
To be invested in any of the above three categories as
Thirty per cent
(iv) decided by the Trustees
The Trusts, subject to their assessment of the risk-return prospects, may invest upto
(v) 1/3rd of (iv) above, in private sector bonds/securities which have an investment grade
rating from at least two credit rating agencies.

2. Any money received on the maturity of earlier investments reduced by


obligatory outgoing shall be invested in accordance with the investment pattern
prescribed in this Notification.
3. In case of any instruments mentioned above being rated and their rating
falling below investment grade and the same rating has been confirmed by two credit
rating agencies then the option of exit can be exercised.

4. The investment pattern as envisaged in the above paragraphs may be


achieved by the end of a financial year, and shall come into force with immediate
effect.
120

PATTERN OF INVESTMENT UNDER SEC.17(3)(A) OF THE


ACT

NOTIFICATION : GOVT. OF INDIA, MINISTRY OF LABOUR, New Delhi,


NO. G-27031/3/99/-SS.II dated 9th July, 2003

% of amount to
S.No. Category
be invested
(i) Central Government securities as defined in Section 2 of the
Public Debt Act, 1944 (18 of 1944); and / or units of such
Mutual Funds which have been set up as dedicated Funds for 25 %
investment in Government Securities and which have been
approved by the Securities and Exchange Board of India
(ii) (a) Government securities as defined in Section 2 of the Public
Debt Act, 1944 (18 of the 1944) created and issued by
any State Government ;and/or units of such Mutual funds
which have been set up as dedicated Funds for
investment in Government Securities and which have
been approved by the Securities and Exchange Board of 15 %
India; and/or

(b) Any other negotiable securities the principal whereof and


interest whereon is fully and unconditionally guaranteed
by the Central Government or any State Government
except those covered under (iii)(a) below.
(a) Bonds/Securities of "Public Financial Institutions as
(iii) specified under Section 4(I) of the Companies Act; "Public
Sector Companies" as defined in Section 2(36-A) of the
Income Tax Act, 1961 including Public Sector Banks; and 30 %
or

(b) Short duration (less than a year) Term Deposit Receipts


(TDR) issued by public sector bank.

To be invested in any of the above three categories as decided


by their Trustees 30 %
(iv)
The Trustees, subject to their assessment of the risk-return prospects, may invest
(v) upto 1/3rd of (iv) above, in private sector bonds/securities which have an investment
grade rating from at least two credit rating agencies.

2. Any money received on the maturity of earlier investments reduced by


obligatory outgoing shall be invested in accordance with the investment pattern
prescribed in this Notification.
3. In case of any instruments mentioned above being rated and their rating
falling below the investment grade and the same rating has been confirmed by two
credit rating agencies then the option of exist can be exercised.
4. The Investment pattern as envisaged in the above paragraphs may be
achieved by the end of a financial year and shall come into force with immediate
effect.
121

Item (iv) of the pattern provides investment of 20% of the investible funds in
any of the three categories, viz., Central Government securities, State Government
Securities and Public Financial Institution/Public Sector Companies/IDFC/Public
Sector Banks/IDFC/Certificate of Deposits issued by the Public Sector Banks. The
option for investment of 20% in any of the said categories is left to the concerned
Board of Trustees.

With effect from 1.4.1998, the Board of Trustees may invest the extent of ten
per cent out of the amount allocated for item (iv) (which is to be invested at the
discretion of the Board of Trustees in any three categories specified above) in private
sector bonds/securities which have an investment grade rating from at least two
credit rating agencies. While doing so, the Board of Trustees should assess the risk-
return prospective of the bonds/securities of the private sector companies.

The bonds/securities issued by the private sector companies should be


examined after assessing their risk return prospects(Default risk) with reference to
their investment grade rating, as under :

ASSESSMENT OF RISK-RETURN PROSPECTS

Credit rating refers to the rating (or assessment and gradation) of creditorship
securities or debt instruments, particularly with regard to the probability of timely
discharge of payment of interest and repayment of principal obligations

Credit ratings are usually expressed in alphabetical or alphanumeric symbols


enabling the investor to choose between debt instruments on the basis of their
underlying credit quality. For example, standard and poor, corporate and municipal
debt rating definitions are as follows:
High Investment Grades : "AAA" (Triple A)
"AA" (Double A)
Investment Grades : "A"
"BBB" (Triple B)
Speculative Grades : "BB" (Double B)
"CCC"(Triple C)
"CC" (Double C)
Default Grade : "D"

The ratings from "AA" to "CCC" may be modified by the addition of a plus
or minus sign to show relative standing within the major rating categories.
Credit rating aims to-
I. provide superior information to the investors at a low cost;
II. provide superior information to the investors at a low cost;
III. provide a sound basis for proper risk-return structure ;
IV. subject borrowers to a healthy discipline ; and
V. assist in the framing of public policy guidelines on institutional investment.
Thus, the credit rating financial services represent an exercise in faith
building for the development of a healthy financial system.
122

21
SETTLEMENT OF PF CLAIMS
CLAIM FORMS

S.No. FORM No. PURPOSE SCHEME


PROVISIONS
1. Form 19 Application for claiming the PF accumulations dues Para 69 of
on leaving service/retirement. EPFS,52
2. Form 20 Application for claiming the PF accumulations of Para 70 of
the deceased PF member by Nominee / Legal Heir / EPFS,52
Minor / Lunatic .

ATTESTATION OF CLAIMS BY THE EMPLOYER: (Para 72(5))

1.In case of claim which is to be settled immediately under Para 69(1) (a) to (dd) &
Para 70 , the employer has to get the claim application from the member /
nominee duly filled in, attest it and forward the application within 5 days of its
receipt to the Commissioner.

2. In case the member has to prefer the claim after the waiting period of 2
months, the employer has to get the claim application from the member when
he/she leaves the service, attest it and handover to the member for submission to
the Regional P.F.Commissioner after the completion of waiting period of 2
months.

3.The employer has to attest the claim forms of the members forwarded to him by
the Commissioner for attestation and return the same to the Commissioner within
5 days of its receipt.

4. The Employer has to ensure submission of Form -10 & Form 3A for the broken
currency period (for the previous financial year(s) also, if not submitted already)
along with Claim forms in Form – 19 / Form – 20.

5. The defaulting establishment should ensure the payment of dues and


submission of returns upto the date of leaving service/death of the member and
forward the challans and returns alongwith the claim without fail.

Immediate settlement

On Retirement from Service after attaining the age


Under Para 69 (1) (a): of 55 years:
123

1.Provided that a member, who has not attained the age of 55 years at the time of
termination of his service, shall also be entitled to withdraw the full amount standing
to his credit in the Fund if he attains the age of 55 years before the payment is
authorised.

2.The Employer may forward the claims of such members 3 months in advance
before the date of retirement on attaining age of 55 years in order to enable the
Commissioner to make arrangement for payment of PF accumulation to the
members on the date of Retirement.

On Retirement on account of total and


Under Para 69 (1) (b): permanent incapacity due to bodily or
mental infirmity
1.The Employer has to designate the Doctor for the purpose of issue of Medical
certificate, where such designated Doctor is not there, the Medical certificate from
the Registered Medical Practitioner will also be accepted.

2. If the establishment is covered under ESIC, a Certificate from ESIC is accepted.

3. The Certificate issued by the Medical Board which exists by mutual agreement
between the employer & employees of the establishment.

4. In doubtful cases the claim will be settled after 2 months waiting period.

Migration from India for permanent


Under Para 69(1)(c): settlement abroad, or for taking employment
abroad.

1.The Attested copies of the Passport, Air ticket & Immigration Visa must be
forwarded alongwith the claim form.
2.In case of a member taking up employment at abroad, the offer of appointment
letter received by the member is to be forwarded.
3.The payment to such member who already left the country will be credited to his
bank account maintained at any Scheduled / Exchange bank in India.

Termination of service in the case of Mass or


Under Para 69(1)(d)
Individual retrenchment.
1. The employer should state whether or not the Retrenchment compensation has
been paid to the member/members.

Termination of Service on V.R.S. framed by the


Under Para 69(1) (dd) Employer and the Employees under a mutual
agreement
1.A copy of VRS Scheme has to be forwarded by the employer and it will be
accepted if the operative period of the Scheme is not expired.
124

SETTLEMENT ONLY AFTER THE WAITING PERIOD OF TWO MONTHS

Transfer of a non retrenched employee from a closed


Under Para 69(1)(e)(i)
establishment To uncovered establishment.

Transfer of an employee from a covered establishment


Under Para 69(1)(e)(ii) to an uncovered establishment under the same
employer.

Member discharged and is given retrenchment


Under Para 69(1)(e)(iii)
compensation under the Industrial Disputes Act, 1947

Under Para 69(2) Other cases viz. Resignation, Left Service, etc.

Note: For female members leaving service for the purpose of getting married;
waiting period is not applicable.

SETTLEMENT UNDER PARA 70:


(Settlement of deceased members P.F account – Application to be made:- Form
No.20).

Para 70 (i): If a nomination exists, payment will be made to the nominee in


accordance with Form 2 (R). (Nomination and Declaration Form).

Para 70(ii): If no nomination subsists, payment will be made to the members of his
family (as defined under Para-2(g) of EPF Scheme 1952) other than those indicated
below in equal share.

(a) Major sons, (b) Sons of a deceased son who have attained majority, (c)
Married daughters whose husbands are alive. (d) Married daughters of a deceased
son whose husbands are alive.

Para 70(iii): In any cases where 70(i), 70(ii) do not apply, the whole amount will be
paid to the person legally entitled to it.

For the purpose of this paragraph, a member’s posthumous child, if born


alive, shall be treated in the same way as a surviving child, born before the
member’s death.

If posthumous child is to be born to the deceased member, the amount will be


retained and the balance will be distributed. If subsequently no child is born or the
child is still born, the amount retained will be distributed among the eligible family
members.

PARA 70(A): If a person entitled to receive a share in the Provident Fund


accumulations of a deceased is charged with committing the murder of the member
or with abetting the crime, the share payable to such person shall be retained till the
case is finalised. If, subsequently he/she is exonerated the share will be paid to
125

him/her. If such a person is found guilty and convicted, the share will be paid
equally to other person(s) entitled to receive the accumulations.

Para 72 (1 & 2): In case there is no nominee and also there is no person entitled to
receive the amount, if the amount to the credit of the Fund does not exceed
Rs.10,000/- the Commissioner may pay such amount to the claimant after enquiry
and after satisfying the title of the claimant.

Para 72 (3): Where the payment is to be made to a minor, it is payable to:

a) The Guardian appointed under Guardian and Wards Act 1890.


b) Failing (a) above, the Guardian appointed by the member as per
Para 61 (4A),
c). Failing (a), (b)above, to the natural guardian of the minor.
d). Failing (a), (b), (c) above, to the person, considered to be the proper person
by the Commissioner when the amount not exceeding
Rs.20,000/- or the person considered to be the proper person, by the
Chairman, C.B.T. where the amount exceeds Rs.20,000/-.

Para 72(3A): Where the payment is to be made to a lunatic person, it is


payable to:

a) The Manager appointed for the minor’s estate under Indian Lunacy Act,
1912.

b) Failing (a) above, The natural guardian of the lunatic.

c) Failing (a),(b) above, To the person considered by the Commissioner as


proper person, amount being not exceeding Rs.20,000/- or to person
considered by Chairman C.B.T. as proper person amount being exceeding
Rs.20,000/-.

CHECKLIST FOR CLAIMS IN FORM 19

(Form to be used by a major member of the EPF Scheme)


1) Whether all the columns in the Form 19 are correctly and completely filled in
(as per the details furnished to this office), in ink, without any overwriting.
2) Whether the reason and date of leaving service have been correctly filled in,
with reference to Form 10 already given, in the appropriate columns in the
Form 19.
3) Whether the member has furnished his full postal address, with the postal pin
code number, for communication and for payment of amount, if preferred by
postal money order.(Money Order is issued only where the amount payable is
below Rs.2000/-)
4) If the payment is preferred by account payee cheque, through Bank, please
check to:
 Whether the member has got a Savings Bank account in any of the branches
of a Nationalised/Scheduled/Co-operative Bank/Post Office.
126

 Whether the account so opened is only an individual account and not a joint
account.
 Whether the name, branch and address of the Bank have been clearly
furnished in the Form 19. Any correction should be attested by the
Employer.(Attach the first page of Savings Bank passbook showing the name
and account number of the member)
 Whether the member has completed the advanced stamped receipt (furnished
in the Form 19 itself) and appended his signature on one rupee revenue stamp
affixed in the relevant portion.
5) If the reason for leaving service is “Left”, “Resigned”, etc., ensure that 2
months period has been completed from the date of leaving service to the
date of preference of the claim. However this will not be applicable if the
member has completed 55 years of age or being a female member resigned
for her marriage.
6) In case the member is an illiterate, whether thumb impression of the member
is affixed at the relevant portion.
7) Whether Form 5 and Form 10 particulars are reproduced in the claim Form.
8) a) Whether Form 3A, if any, for the broken period of currency is enclosed.
b) Whether Form 3A for the previous currency period is sent, if not,received
already
c) Whether Form 3A is completed and signed and reasons for ‘Nil’
contribution is given.
d) Whether the period of non-contributory service is indicated where the
wages are not drawn for a full month.
9) Whether the remittances are made upto date and returns submitted. If for any
reasons, any remittance is outstanding in respect of the claimant, the amount
due on his/her account needs to be indicated.
10) Whether the specimen signatures of the authorised officials of the
establishment are already submitted to the Regional Provident Fund
Commissioner. If not, it shall be done and be updated whenever there is
change in the officials.
11) Whether the claim has been attested by the authorised officials of the
establishment, duly affixing his official seal and date.

CHECKLIST FOR CLAIM IN FORM-20

(Form to be used by a nominee/ a legal heir in case of death of a member)

Note : The Points given below are in addition to common points such as attestation,
Form 3A, mode of Payment, completion of form etc., as given in the checklist for
claims in Form 19.

1) In case of death of the member, whether death certificate in original is


enclosed.
2) Whether complete details of the deceased member/the claimant are furnished
in the appropriate columns of the Form 20.
3) Whether the claim has been preferred by the nomine(s) as per the nomination
Form 2 as Executed by the deceased member.
4) In case the member has not executed any valid nomination during his life
time, ensure that the claim is preferred by eligible member(s) of the family or
127

eligible legal heir of the member, as the case may be. (In such case, a list of
members of the family duly certified by the employer or the Revenue official
or an affidavit by the family members sworn before a Notary Public should
be enclosed).
5) In case, the parents of the deceased member are included in the list of family
members, whether or not the parents were dependent on the member is to be
specified.
6) In case of the claims preferred by any person other than natural guardian on
behalf of the minor member/nominees/legal heirs, ensure that the required
Guardianship certificate etc. are enclosed.
7) Whether the age and marital status of the family members/Legal heirs are
furnished as on the date of death of the member and NOT on the date of the
claim.
8) Separate application should be preferred by each eligible claimant. In the
case of minor, guardian is to prefer the claim.

CHECKLIST FOR CLAIMS IN FORM-13(Revised)

1. To check whether all columns in the claims are properly filled.


2. Whether the particulars are written clearly without any overwriting or
cutting. Correction, if any, is attested
3. Whether the previous employment particulars such as name, address and
code number and the account number of the member are correctly furnished
4. In case the PF transfer is due from the PF Trust of an exempted
establishment, the application is to be sent direct by the employer to the PF Trust
of the exempted establishment with a copy to the RPFC concerned for details of
the Pension Scheme membership.
5. This form should be submitted by the member to the present employer for
onward transmission to the RPFC by whom the transfer is to be effected.

CHECKLIST FOR CLAIMS IN FORM-31

1. To check whether all columns in the claims are properly filled.


2. Whether the particulars are written clearly without any overwriting or
cutting. Correction, if any, is attested.
3. For the non-refundable withdrawal under Para 68B it should be ensured that
declaration in the prescribed form is furnished. In all cases the employer
should ensure the genuineness of the case before forwarding the application.
It should be noted that if the advance granted is misused, the amount of
advance will be recovered together with penal interest.
4. For the withdrawal for repayment of loans under 68 BB, it should be ensured
that the member earlier obtained a loan from a State Government,
Cooperative Society, Housing Board, a Municipal Corporation, or a body
similar to Delhi Development Authority solely for the housing purpose.
5. For closure/lock-out it should be ensured that no compensation is paid to the
member and the advance is eligible for the reasons other than strike only.
6. For Illness of member/family member whether the certificate has been
furnished by the employer as regards to the leave granted and the non-
availability of ESI benefits
128

7. Whether the medical certificate in proper form obtained from the factory
doctor/designated medical officer / the Registered Medical
Practitioner/Hospital is enclosed. Before forwarding it to the RPFC, the
genuineness of the certificate should be ensured.
8. It should be noted that one month hospitalisation is compulsory in case of the
illness of family members.
9. In case of treatment of heart ailment/mental derangement a certificate by a
specialist doctor is necessary
10. For marriage purpose certificate regarding advance required to meet the
expenses in connection with the marriage needs to be furnished in the
claim form.
11. In the case of education a certificate from the educational institution
regarding the course of study and the anticipated expenditure needs to be
submitted
12. Before forwarding the applications for the reasons noted under item No10 the
genuineness of the case shall be ensured by the employer.
13. In case of advance for the natural calamity (flood/earthquake/riot) whether
the certificate from an appropriate authority to the effect that the movable or
immovable property has been damaged as a result of the natural calamity and
it should be ensured that the State Government has declared that the calamity
has affected the general public in the area. It is also to be ensured that the
application for advance is made within a period of 4 months from the date of
declaration by the State Government.
14. In the case, affected by cut in electricity it should be certified that the fall in
wages amounting to 25% or more than 25% of the wages in respect of the
member is due to power cut. A certificate from the State Government is also
necessary to the effect that the cut in the supply of electricity was enforced in
that area where the factory is situated.
15. Purchase of equipment for physically handicapped member: whether the
certificate from a competent medical practitioner furnishing the details like
name of the person, nature of the handicap, nature of the equipment
required and its approximate cost is submitted.
16. Payment of withdrawal within one year before the retirement. The employer
should ensure that the member has attained the age of 54 years or within one
year before his actual retirement on superannuation, which is later and then
the application is submitted. He should also ensure that the said particulars
tally with the age particulars furnished in Form – 9 or Form – 2.

22
EPS-1995 – BENEFITS – DOS & DONT’S IN PROCESSING THE
CLAIMS – SCRUTINY OF FORM 10C AND 10D
DETAILS OF BENEFITS TO MEMBERS OF EMPLOYEES’ PENSION
SCHEME 1995 & THEIR FAMILY MEMBERS

Pension is defined as the Pension payable under the Employees’ Pension Scheme,
1995 and includes the Family Pension admissible and payable under the ceased
Employees’ Family Pension Scheme, 1971.
129

Pension depends upon 4 factors:


1. Pensionable Salary
2. Pensionable Service
3. Age (Date of Birth).
4. Pension Factor

Pension is classified broadly into 2 categories:-


a) Pension to the members;
b) Pension to the family.

TYPES OF BENEFITS:

BENEFITS TO MEMBERS BENEFITS TO FAMILY MEMBERS

WITHDRAWAL BENEFIT
WIDOW PENSION
SCHEME CERTIFICATE
CHILDREN PENSION
PENSION
ORPHAN PENSION
1.SUPERANNUATION PENSION

2.RETIRMENT PENSION
DISABLED CHILDREN PENSION
3.SHORT SERVICE PENSION
NOMINEE PENSION
4.DISABLED PENSION

RETURN OF CAPITAL TO NOMINEE


COMMUTATION OF PENSION

DEPENDENT PARENT PENSION


OPTION FOR RETURN OF CAPITAL

AGE (DATE OF BIRTH)

AGE IS AN IMPORTANT FACTOR WHICH PLAYS A VITAL ROLE IN


DECIDING THE FOLLOWING
1. ENROLMENT AND RETENTION OF MEMBERSHIP.
2. ELIGIBILITY FOR PENSION
3. NATURE OF PENSION
4. THE QUANTUM OF PENSION PAYABLE TO A MEMBER
5. PERIOD OF PAYMENT OF PENSION IN THE CASE OF
CHILDREN / ORPHAN.
130

The age should be determined with reference to the date of birth.


Wherever the date of birth is not given, it shall be determined in the
following manner:
1. where the year of birth is given but not the exact date, 1st July
shall be treated as the date of birth.
2. where the year and month are given, the 16th of the month shall be
treated as the date of birth; and
3. where only the age is indicated the member shall be assumed to
have completed that age on that date of the medical certificate
accompanying Form 2, and where no medical certificate is
attached to From 2, on the date of filing Form 2.

On attaining the age of 58 years the member can normally draw the pension.
On attaining the age of 58 years the member is not required to pay the pension
contribution.

Further the age as on 16.11.1995 is also relevant to determine the monthly


members pension, to the members of EFPS, 1971.

The completed age of the member alone should be taken into account for all
purposes and as such the question of rounding off of age does not arise.

A member is entitled to draw reduced pension after attaining the age of 50


years.
A member is entitled to disabled pension before attaining the age of 50
years.

The payment of pension for past service is determined as on 16.11.1995 and


for that purpose the Existing members are divided into three groups.

1. those who have not attained the age of 48 years as on 16.11.1995


2. those who have attained the age of 48 years but less than 53 years as on
16.11.1995 and
3. those who have attained the age of 53 years or more as on 16.11.1995.

In the case of children, on attaining 18 years of age they become major. Till
then, the guardian is to be appointed to receive the benefit.

The children are entitled to pension upto the age of 25 years.

SALARY

The term “SALARY” means the pay / wages on which contributions is due.

“Pay” for the purpose of contributions means “Basic wages dearness allowance,
retaining allowance and cash value of food concession, admissible, if any” [para
2(xiii)]
131

a) Salary for Calculation of MMP for Past Service:

The Salary drawn as on 16.11.1995 or date of exit whichever is earlier was divided
into two groups .
i) Salary upto Rs.2500/- per month.
ii) Salary more than Rs.2500/- per month.

b)Salary for Calculation of MMP for Pensionable Service:


Average monthly pay drawn during the contributory period of service of 12 months
preceding the date of exit from the membership of the Employees’ Pension Scheme,
1995.

c)Salary for Calculation of Widow Pension (Table C)


Salary at the date of death of the member,.

d)Salary for Calculation of Withdrawal Benefit (Table A & Table B):


Salary at the date of exit.

e)Salary for Calculation of Return of Contributions (Table D)


Salary at the date of exit.

Statutory ceiling of Salary (Pay/Wages)

Statutory ceiling of pay on which contributions are to be made is as follows;

Wage Ceiling From To


1000/- 31.12.1962 28.02.1983
(01.03.1971)
1600/- 01.03.1983 31.08.1985
2500/- 01.09.1985 31.10.1990
3500/- 01.11.1990 30.09.1994
5000/- 01.10.1994 31.05.2001
6500/- 01.06.2001 onwards

IMPORTANT FACTORS TO DECIDE THE ELIGIBILITY AND QUANTUM


OF PENSION

a).Upto 15.11.1995
1. SERVICE

b).On or after 16.11.1995

a) as on 15.11.1995
2. SALARY
132

b). On or after 16.11.1995


(Pensionable Salary)

3. AGE Date of Birth of the member


Age as on 16.11.1995
Age as on date of exit after
16.11.1995
Date of birth of the
family members

SERVICE

The term service is classified into the following four categories

1. Past Service

2. Actual Service

3. Eligible Service

4. Pensionable Service

The total period of each service referred to above is calculated for the following
purposes

1. To decide the eligibility of the member for Pensionery Benefits under the
Employees’ Pension Scheme, 1995.

2. To decide the Quantum of Pensionery Benefits payable to the member


under the Employees’ Pension Scheme, 1995.

3. Minimum quantum prescribed for- factor pension

 Pension with 24 years of past service


 Pension with service less than24 years

DEFINITION:[PARA 2]
PAST SERVICE:

‘Past Service’ means the period of service rendered by an existing member


from the date of joining Employees’ Family Pension Fund till the date of exit (i.e.
death or leaving service) or attainment of age of 60 years or 15th November 1995
whichever is earlier. [para 2 (xii)]

BREAK IN SERVICE:
The period of Break in Service is the period of Past Service for which no
contributions to EFPS, 1971 were payable due to non eligibility for wages. (first
proviso to para 6 of EFPS, 1971).
133

ACTUAL SERVICE:

‘Actual Service’ means the aggregate of periods of service rendered from


th
16 November 1995 or from the date of joining any establishment, whichever is
later, to the date of exit from the employment of the establishment covered under the
Act or the date of attaining the age of 58 years, whichever is earlier. [para 2(ii)]

PENSIONABLE SERVICE:

‘Pensionable Service’ means the service rendered by the member for which
contributions have been received or are receivable.[para 2(xv)]

CONTRIBUTORY SERVICE:
‘Contributory Service’ means the period of Actual service rendered by a
member for which the contributions to the fund have been received or are
receivable. [para 2(iv)]

NON CONTRIBUTORY SERVICE:

‘Non Contributory Service’ is the period of Actual service rendered by a


member for which no contribution to the ‘Employees Pension Fund’ has been
received or are receivable; due to non eligibility for wages. [para 2(x)]

BENEFITS OF PENSION SCHEME – IN NUTSHELL

• A member is eligible for Pension after 10 years of service.


• The Pension is payable on attaining the age of 58 years, whether he is in
service or superannuated.
• Early Pension at reduced rate can be availed on leaving the employment,
after attaining the age of 50 years.
• Where an employee is totally disabled and leaving service on account of
disablement, Disablement Pension is allowed. No age and service stipulation
to claim the pension.
• Every year, the pension quantum may increase.
• Wherever the Pension claims are received three months before the date of
superannuation, the Regional Provident Fund Commissioner will deliver the
Pension Payment Order on the day of superannuation.
• Apart from Pension Benefit, a member can commute upto one-third of his
pension and in lieu of this, he will receive a lumpsum amount equivalent to
100 times of the commuted value of pension.
• A Pensioner may nominate a person to receive a lumpsum amount after his
death, as Return of Capital.
• Family Pension is payable in case of death of a member:
 after leaving the employment.
 while in employment.
 after drawing the pension
• Family Pension is payable even where the death occurs before 10 years of
service. Thus, the minimum eligible service of 10 years is not applicable.
134

• On death of a pensioner. the Pension is automatically payable to the spouse


(widow / widower).
• When a member dies as Bachelor or Spinster or where there is no spouse or
children below 25 years, the Family Pension is payable to Nominee till
his/her death.
• When there is no valid nomination, the Family Pension is payable to
dependent father followed by dependent mother.
• In addition to Family Pension to Widow / Widower, Children below 25 years
are also eligible for Pension simultaneously. It is payable to the married
daughters also, below the age of 25 years.
• On death or re-marriage of widow / widower, Children will be given
enhanced pension treating such children as Orphan.
• On behalf of the minor children the pension is payable to guardian.
• Any child in a family with total and permanent disablement will receive
Children Pension till death.
• The monthly pension is payable through Indian Overseas Bank, State Bank
of India, Indian Bank, HDFC Bank and Post Offices in Tamil Nadu and
Pondicherry States on the first day of every month through the Savings Bank
account of the pensioner.
• The pension can be drawn anywhere in India.
• The employees with less than 10 years of service on the day of
superannuation may avail the benefit of withdrawal from Pension Fund.
• Where an employee has not served for 10 years on the date of leaving
service, he may obtain a Scheme Certificate so as to continue his
membership during un-employment period and the same can be used to count
the previous service as and when he joins another establishment covered
under the Act.
• The employees who have not contributed to the Employees’ Family Pension
Scheme, 1971 can also join the Employees’ Pension Scheme before attaining
the age of 58 years, at their option, after paying the contribution and interest
upto-to-date.
• The contribution to Pension Fund can be made beyond the ceiling limit of
Rs.6,500/- on the joint request of the employee and the employer so as to get
more benefit.
• The Pension quantum is determined separately for the period of service from
1.3.1971 to 15.11.1995 as fixed amount. This is known as “Past Service”
benefit.
• The Pension for the service rendered after 15.11.1995 is calculated through
formula namely,

Pensionable Salary x Pensionable Service


70
• An employee on his superannuation is entitled for Pension (through the
above formula) upto 60% of the pensionable salary. (Pensionable Salary
would mean, the salary drawn by the employee for a period of 12 months
prior to the date of superannuation).
135

POINTS TO BE NOTED WHILE AUDITING


Work sheet for Pension

• Date of Birth: As per Form 9 or Form 3 (PS) .


EPF members – Form 2 received before 16.11.95.
EPS members – Form 2 received on or after 16.11.95
Date of Birth given in Form 10D if it is less than one year to the age in
Form 9.

• Date of Cessation of Membership: Date of leaving service. Date of


Superannuation. Death in service – Death away from service.

• Date of Entitlement of Pension: date of Superannuation. Date furnished


Column 8A of Form 10D, Date of application may be treated as date of
option or date first receipt of the claim in EPF Office.

• Rounded off Past service after regularisation if any.

• Wages on the date of exit in respect of Death cases otherwise only minimum
pension of 450 alone.

• Wages as on 15.11.95 Maximum Rs.3,500/- upto 30.9.94 and Rs.5,000/-


thereafter.

• Formula Pension upto 16.11.2000 Minimum Rs.335/- para 12(5) (a)


Upto 16.11.2005 Minimum Rs.335/-
Minimum Rs.438/- para 12(4)(a)
After 16.11.2005 Minimum Rs.335/-
Minimum Rs.438/-
Minimum Rs.635/- para 12(3)(a)
• Every month Maximum Pension MMP Rs.820/- Jan. 2002.
WMP Rs.205/- for Rs.6500/
To be calculated and given to Auditors for checking.
• Percentage of Commutation opted.
• Form ROC option 1: One or more persons were nominated in Col. No.11. In
such case 1st nominee have to be taken into account.
• ROC option 2: Wife should not be nominated in Col.No.11.
• Bank account No.: Xerox copy of Ist page of pass book of account opened in
designated bank.
• CMP Cases: Date of Birth of children and Bank account of eligible children.
• Parental pension Death while in service or 10 years membership arrears from
6.3.99.

OTHER POINTS TO BE NOTED

1. Where about of the member not known. Date of filing FIR note the date of
disappearance.
2. After the death of the member pensioner adopted child – Children Monthly
Pension not eligible.
136

3. Post retiral spouse and children is also eligible for pension.


4. Child or children legally adopted by the member eligible for pension.
5. Permanent total disable children eligible for Pension for life time in addition
to regular eligible children.
6. Left service before 1.4.93 more than 10 years. EPF and FPF settled after
1.4.93. Eligible for pension.
7. Multiple memberships – An employee served in more than one
establishment.
8. Bachelor died at the time of death he is orphan – No valid nomination - No
Pension is payable to Brother/sister.
9. NEPAL (i) SONALI SBI
(ii) RAKSHAL through SRO, Gorakhpur (UP)
(iii) BADANI
10. Payment of Pension through NRI account.
11. Two or more wives – Seniority Date of marriage – Children according to
Date of Birth.

POINTS TO BE NOTED FOR WITHDRAWAL BENEFIT

 For Past Service – upto Date of Cessation 15.11.95;


 Actual Service from 16.11.95 or Date of Joining;
 If fluctuation in wages in Form 3A or Form 7(PS) breaks should not be
assessed notionally in the absence of break statement;
 If no contribution is received for entire month, it has to be treated as break;
 For Table D, Actual Service minus NCP days- rounded off;
 For Table B, Date of Exit minus Date of Joining or 16.11.95 without
deducting NCP days;
 Breaks in Past service have to be regularised; However if continuous break is
more than one year upto 1.4.88 it cannot be regularised under any pretext.
This should be strictly followed to avoid any erroneous/over payment.
 In respect of defaulting establishments, the withdrawal can be allowed if the
factor in Table D is not altered (Proportion of wages at exit) even after
excluding the defaulted period from the total year of service. The Scheme
Certificate can be issued wherever the due benefit is not payable, with due
remarks on the period of default given in the Scheme Certificate. (The
question of extending the withdrawal with reference to the actual period of
service for which contribution received is receiving the attention of the
Headquarters Office).
 NCP days not to be regularised;
 If there is abnormal fluctuation in wages, 12 months average can be taken
into account, with prior permission of APFC.
 If there are NCP days during last month wages, the salary drawn during last
12 months divided by actual number of days worked during the last span of
12 months shall be multiplied by 30 to work out the average monthly pay;
 Actual Service upto the date of exit or on attaining 58 years of age whichever
is earlier;
 For Past and Actual service, full pay last drawn have to be rounded off to
next Rs.10/-;
 Seasonally employed actual service during the year shall be treated as full
year – Not attended, when employment is offered taken as NCP;
137

 EPF and EPS can be settled separately. No question of simultaneous


payment: A member can draw his PF account and continue in the Pension
membership;

POINTS TO BE NOTED FOR ISSUE OF SCHEME CERTIFICATE

 As and when Scheme Certificate is received along with Form 5, it should be


recorded in Form 9/Form 3 (PS) and transmitted to Pension Section / EDP
for recording the data in the system.
 Actual salary and service are not to be rounded off. Rounding off should
take place on Superannuation/Pension payable;
 The breaks in Past service have to be regularised as per proviso to 9(2) OF
EPS, 1995; However if continuous break is more than a year upto 1.4.88, it
cannot be regularised under any pretext. This should be strictly followed to
avoid any erroneous/over payment;
 Bank account details and Advanced Stamped Receipt not necessary;
 If total service is more than 10 years after deducting breaks, service falls
short of 10 years, withdrawal benefit should not be settled. Only Scheme
Certificate or Pension is payable if otherwise entitled;
 Family details if not furnished in Form 2 this need not be insisted – for issue
of Scheme Certificate.
 Date of Birth as per Form 9 or Form 3 (PS) only taken into account – Form 2
received before 16.11.95 for FPF member – Form 2 received after 16.11.95
in respect of new members under EPS 1995 – If the date of birth given in
Form 10C tallies age in Form 9. (less than one year on both ways) the actual
Date of Birth given by the member may be admitted;
 In respect of defaulting establishments, if the yearly returns, such as Form 3A
or Form 7 (PS) not submitted, the fact on the period of default should be
recorded on the Scheme Certificate, before issue;
 Pension to be payable in future will not take place in Scheme Certificate;
 Wherever Scheme Certificate is already issued, the member has preferred the
claim in Form 10D duly surrendering the Scheme Certificate, the claim is to
be verified with reference to Scheme Certificate and after ensuring its issue
and also verifying the authority attested the claim, the Form 10D and its
enclosures should be verified for its correctness. Thereafter Form 10D along
with IDS & Scheme Certificate should be sent to Pension Section;
 Once Scheme Certificate is issued, and transfer of provision Account of the
member is received, a fresh Scheme Certificate to be issued cancelling the
original received from the member;
 Scheme Certificate holder dies, his family is entitled for Family Pension,
subject to eligibility.
 When pension is applied for, Original Scheme Certificate to be surrendered.

CHECK LIST FOR CLAIMS IN FORM –10C


(Form to be used by a member of Employees Pension Scheme 1995 for claiming
Withdrawal Benefit/Scheme Certificate)

1) To check whether all columns in the claims are properly filled.


138

2) Whether the particulars are written clearly without any overwriting or


cutting. Correction, if any, is attested.
3) Whether the member has appended his signature on One Rupee Revenue
Stamp affixed in the relevant portion. (To be given where withdrawal benefit
is admissible and opted for payment by cheque).
4) Whether the details of wages and period of non-contributory service were
already informed through Form 3A.
5) If the member is not eligible for pension and has rendered 10 or more years
of eligible service, he/she is not entitled for option but Scheme Certificate
only will be issued.
6) Wherever the member is having less than 10 years’ eligible service, he/she
may be advised to opt for Scheme Certificate instead of Withdrawal Benefit.
7) Option to be specifically stated either for Scheme Certificate or Withdrawal
Benefit.
8) In case of opting for “Scheme Certificate”, it is not necessary to furnish the
Savings Bank Account and enclosing of attested photos.
9) These points are in addition to common points furnished under “Checklist for
claim in Form-19”.

CHECKLIST FOR CLAIMS IN FORM-10D

(Form to be used for claiming Superannuation Pension, Retirement Pension, Short-


service Pension, Disablement Pension, Widow Pension, Children Pension and
Orphan Pension).

1) To check whether the application in Form-10D has been preferred in


duplicate in case pension is to be drawn in other SRO/SAO or other Region.
2) Whether all columns are properly filled in without any overwriting.
3) Whether the application in form-10D has been attested by the employer or
his authorised official with his official seal and date.
4) Whether the date of birth of the member has been furnished as per records
already submitted to the RPFC.
5) In case of death of the member (For Widow, Children or Orphan Pension)
ensure that the death certificate is submitted in original and family members’
certificate is furnished.
6) The descriptive roll/finger impressions/Specimen signatures of the claimant
are obtained in the prescribed forms (in duplicate) and attested by the
employer.
7) Whether 3 copies of Passport Size photograph of the member with spouse
(taken together/or claimant) are submitted and the employer has attested with
seal on the back side of the Passport size photos duly furnishing the name
and Account number of the member below the age of 25 years irrespective of
their marital status.
8) Whether the birth certificate of the children of the member, is submitted in
original, with one Xerox copy duly attested by the employer.
9) Whether the Personal marks of Identification, if any, on the hand /face or
body of the claimant is furnished.
10) The monthly Pension can be disbursed to the Pensioner through the
designated Banks such as State Bank of India and other Nationalised Banks
or HDFC (or ICICI) or Post Offices. Please check whether the member has
139

opened a Savings Bank Account in any Bank branch and he has furnished
Savings Bank Account Number and complete postal address of the Bank in
the relevant column of the Form-10D.
11) Whether the claimant has exercised any option for Return of Capital, in the
relevant column of Form-10D. If so, please specify the Para such as 13(1),
13(2) or 13(3). In case of opting for Para 13(2), the nomination should be
made in favour of person other than the spouse. Similarly it should be
ensured that the member furnished his option for Commutation under Para
12A.
12) While furnishing family details, the relationship with the member may be
furnished correctly in Form-10D.
13) Whether the particulars of wages etc. at Page 7 of the claim form is duly
checked and correctly filled up by the employer.
14) Separate Savings Bank Account for the minor children may also be opened in
the same branch at which the Savings Bank Account opened to the
widow/widower.

EXAMPLE : PENSION CALCULATION

1. From the following particulars calculate the Short Service Pension payable to
Mr. ‘X’.

1) Date of Birth …………………………………02.07.1943


2) Past Service………………………………….. 5 Years
3) Pensionable Salary……………………………Rs.5,000/-
4) Wages as on 15.11.95………………………... Rs.3,500/-
5) Date of Exit…………………………………... 11.10.2000
6) Date of Application…………………………... 09.01.2001

SOLUTION

SHORT SERVICE PENSION = Para 12 (1) (c)

The member has rendered eligible service of 10 years or more but less than
20 years.

(a) Pension as per formula – Para 12 (2)

Pensionable Service
Date of Exit == 11.10.2000
16.11.1995
-------------
25.10. 4
-------------
140

(i.e.) rounded off to 5 years.

5000 X 5
---------------- == 142.85
70

But minimum pension payable as per Para 12 (4) (a) Rs.438/-

(b) Past Service Benefit under FPFS ‘71

Past Service 5 years


Salary Rs.3,500/- (i.e.) more than Rs.2,500/-

Pension as per Table = Rs.85 02.07.43


Factor as per Table ‘B’ 58
---------------
01.07.2001
Less than 6 years 16.11.1995
---------------
Factor 1.689 15. 7. 5
---------------
85 X 1.689 = 143.56
Rounded off to = 144/-

(c ) Total pension payable (a ) + (b) = 438 + 144 = 582/-


But minimum pension payable as per Para 12 (4) (b) is Rs.600/-

Proportionate Service Reduction : 600 X 10 = 250/-


-----
24
as per 12 (4) (b) minimum payable is Rs.325/-
Age reduction @ the age of 57 years
Rs.325 X 97 % = 315.25
Rounded off to Rs.315/- p.m. w.e.f. 9.1.2001
141

CALCULATION OF PENSION
(Para: 12 – EPS 1995)
---------------------------------------------------------------------------------------------------
Past Service Pension Aggregate Pension
Formula Pension
Minimum Formula Pension Aggregate Minimum Pension

Service below 24 Years ----- ?


---------------------------------------------------------------------------------------------------
Pension for Past Service

Pension as per Formula for


Pensionable Service
(Sub. to Minimum (with Aggregate Pension
reference to age group,
as on 15-11-1995)

53 & above - Rs.335


48 - 53 - Rs.438
Below 48 - Rs.635

---------------------------------------------------------------------------------------------------
If it is below Rs.500/600/800

Raise to Minimum applicable.

If service is below 24 years

Reduce proportionately, subject to minimum of Rs.265/325/450

EMPLOYEES’ PENSION SCHEME, 1995 – PARA 12

COMPUTING MONTHLY MEMBER PENSION

A. ON ATTAINING 58 YEARS (UPTO NOVEMBER 2005)

i. On attaining the age of Superannuation (i.e. 58 years), irrespective of No. of


years of eligible service wherever the aggregate of Past Service benefit and
Formula Pension works out to Rs.600/- or above, the amount thus calculated
is payable as Monthly Member Pension.
ii. Wherever the aggregate of Past Service benefit and Formula Pension works
out to an amount below Rs.600/-, raise the Pension to the minimum of
142

Rs.600/- and while doing so, wherever the Eligible Service is below 24 years,
reduce the Pension quantum proportionately. (For this purpose, the Past
Service and Pensionable Service will be construed as Eligible Service).

B. EARLY PENSION (UPTO NOVEMBER 2005)

i. Wherever the Pension is payable between 50-57 years of age (Early


Pensioners – before 58 years) irrespective of their age as at 16.11.1995, a
minimum aggregate Pension of Rs.600/- only will be given. The aggregate
minimum Pension would mean, the sum of total of Past Service benefit and
Formula Pension.

Thus in Early Pension cases –


(a) Calculate Past Service benefit – and
(b) Calculate Formula Pension (Subject to minimum of Rs.438/- upto Nov
2005).
ii. If aggregate of (a) and (b) above is equal or more than Rs.600/- that will be
further reduced by 3% for each year of age that falls short of 58 years.
iii. If aggregate of (a) and (b) works out to an amount below Rs.600/-, raise the
Pension to Rs.600/-. Then reduce proportionately, where the eligible service
(for this purpose, the Past Service + Pensionable Service) is below 24 years.
However, this will be subject to minimum Pension of Rs.325/-. Thereafter
reduce 3% with reference to age that falls short of 58 years.

23
PENSION DISBURSEMENT – RECONCILIATION –
DISBURSING AGENCIES – LIFE CERTIFICATE

PENSION RECONCILIATION

The Link branch of the designated Bank is the nodal point to ensure proper
and prompt disbursement of pensions under the Employees’ Pension Scheme, 1995
co-ordinating the activities of Regional Office / Sub-Regional Office and the paying
branches, in the matter of receipt and disposal of Pension Payment Orders, monthly
disbursement, maintenance of SB account and reconciliation with the payment
received from Employees’ Provident Fund Organisation and the amount reimbursed
to the paying branches etc.

Whenever the PPO is forwarded by the RO / SRO of the EPF Organisation to


the Link Branch, the Link Branch designated Officer should verify the signatures of
the Authorised Officer affixed on the PPO with the specimen signatures available
with Link Branch from time to time, and then ensure to send the PPO to the Paying
Branch concerned under their jurisdiction within 3 days for disbursement of pension
after proper identification and in the manner prescribed.

The Paying Branch should verify the PPO and keep in a separate file for its
preservation and maintenance being the basic document for release of pension.
143

A monthly statement of Pension Payment will be prepared by the RO/SRO of


EPFO in triplicate, paying Branch wise, and will be forwarded to the Link Branch by
20th of every month together with a summary sheet of all the Paying Branches in
duplicate, and a cheque for the amount of deposit for disbursement of Pension on
month to month basis. The amount required for the payment of pension during the
next month will be remitted by RO / SROs after adjusting the balance amount, with
due examination, if any, at the close of the month.

As explained above, the Regional Office / Sub-Regional Office of the


Employees’ Provident Fund Organisation will release cheque on 20th of each month
towards the pension due for disbursement in the ensuing month. This advance
payment by Regional Office/ Sub-Regional Office will cover all the pensions due for
the current month i.e. pensions which are current till previous month and also all
cases for which pension payment orders released in the current month. Wherever
arrear pension is due, the same will be included. In addition, the dues to the
pensioners towards Return of Capital and commuted value of Pension, relief, etc., as
and when payable, will also be included.

The Monthly Statement of Pension Payments received from RO/SRO should


be checked by the Link Branch. Any discrepancy noticed should be taken up with
RO/SRO for due rectifications. The said statements (in triplicate) will be sent to the
concerned paying branch on 23rd each month. The Paying Branch on receipt of the
said statements and after verifying the Pension Payment orders included therein,
shall disburse the Pension duly crediting the amount on the last day of the month or
on any specified date in the following month but not later than 7th of the following
month to the Saving Bank accounts of the Pensioners. In the case of new pensioners,
the paying branch shall intimate the pensioner through the form prescribed for this
purpose. As and when the pensioner appears and after satisfying the identity of
pensioner, the Saving Bank Account of the pensioner will be allowed to be operated.

On 8th of every month, the paying branch shall return the duplicate and
triplicate copy of the said statement of the link branch. The link branch shall
forward the duplicate copy containing the date of payment and other details on
cessation of pension, if any, to the RO/SRO concerned on 12th of each month. A
summary on total quantum of pension disbursed by each branch and the consolidated
amount of pension disbursed by the bank during the current month will be sent
alongwith the said statement duly indicating the balance available in the SB Account
maintained at the Link Branch.

DISBURSEMENT OF PENSION – AGENCIES – BANK [ PARA 33]

The Commissioner shall with the approval of the Central Board, enter into
arrangement for disbursement of pension and other benefits under this Scheme with
disbursing agencies like Post Office or Nationalised Banks or Treasuries or
Scheduled Commercial Banks including Regional Rural Banks or Co-operative
Banks.

The Commission payable to the disbursing agencies and other charges incidental
thereto shall be met as provided in paragraph 27 of this Scheme.
144

Employees PF Organisation has finalised in Principle, an arrangement in


consultation with IBA and Department of Banking, with the State Bank of India,
HDFC Bank, ICICI Bank and other Nationalised Banks. Accordingly, the Regional
Provident Fund Commissioners-in-charge of the Region are authorised to enter into
an agreement with one or more banks having wider network of branches located
throughout the Region.

Such Nationalised Banks with whom agreement was entered into are called
Designated Banks. Such Designated Banks have to identify a Bank to act as their
agents (Link Branch). Such Link Branch of each designated Bank has to identify the
Paying Branches of the Bank under its control with Branch code number. The
Region-wise name of the disbursement agencies are furnished in the next page.
145

S.No. NAME OF THE NAME OF THE DESIGNATED POST OFFICES


REGION BANK
1. ANDHRA PRADESH 1. ANDHRA BANK POST OFFICES
2. STATE BANK OF INDIA
3. SYNDICATE BANK
4. INDIAN BANK
5. HDFC BANK
6. ICICI BANK
7. UTI
2. BIHAR 1. PUNJAB NATIONAL BANK POST OFFICES
(including 2. STATE BANK OF INDIA
JHARKAND) 3. BANK OF INDIA
4. HDFC BANK
5. ICICI BANK
6. UTI
3. DELHI 1. PUNJAB NATIONAL BANK POST OFFICES
2. STATE BANK OF INDIA
3. INDIAN BANK
4. HDFC BANK
5. ICICI BANK
6. UTI
4. GUJARAT 1. DENA BANK POST OFFICES
2. STATE BANK OF INDIA
3. INDIAN BANK
4. HDFC BANK
5. ICICI BANK
6. UTI
5. HARYANA 1. PUNJAB NATIONAL BANK POST OFFICES
2. STATE BANK OF INDIA
3. HDFC BANK
4. ICICI BANK
5. UTI
6. HIMACHAL 1. PUNJAB NATIONAL BANK POST OFFICES
PRADESH 2. STATE BANK OF INDIA
3. HDFC BANK
4. ICICI BANK
5. UTI
7. KERALA 1. CANARA BANK POST OFFICES
2. STATE BANK OF INDIA
3. SYNDICATE BANK
4. INDIAN BANK
5. HDFC BANK
6. ICICI BANK
7. UTI
8. KARNATAKA 1. CANARA BANK POST OFFICES
2. SYNDICATE BANK
3. STATE BANK OF INDIA
4. STATE BANK OF MYSORE
5. HDFC BANK
6. ICICI BANK
7. UTI
146

9. MAHARASHTRA 1. BANK OF INDIA POST OFFICES


(Including GOA) 2. PUNJAB NATIONAL BANK
3. STATE BANK OF INDIA
4. HDFC BANK
5. ICICI BANK
6. UTI
10. MADHYA PRADESH 1. PUNJAB NATIONAL BANK POST OFFICES
(Including 2. STATE BANK OF INDIA
CHATTISGARH) 3. HDFC BANK
4. ICICI BANK
5. UTI
11. NORTH EAST 1. PUNJAB NATIONAL BANK POST OFFICES
REGION 2. STATE BANK OF INDIA
3. HDFC BANK
4. ICICI BANK
5. UTI
12. ORISSA 1. BANK OF INDIA POST OFFICES
2. STATE BANK OF INDIA
3. UCO BANK
4. HDFC BANK
5. ICICI BANK
6. UTI
13. PUNJAB 1. PUNJAB NATIONAL BANK POST OFFICES
2. STATE BANK OF INDIA
3. HDFC BANK
4. ICICI BANK
5. UTI
14. RAJASTHAN 1. S.B OF BIKANER & JAIPUR POST OFFICES
2. PUNJAB NATIONAL BANK
3. HDFC BANK
4. ICICI BANK
5. UTI
15. TAMIL NADU 1. INDIAN BANK POST OFFICES
(Including 2. STATE BANK OF INDIA
PONDICHERRY) 3. INDIAN OVERSEAS BANK
4. HDFC BANK
5. ICICI BANK
6. UTI
16. UTTAR PRADESH 1. PUNJAB NATIONAL BANK POST OFFICES
(Including UTARANCHAL) 2. STATE BANK OF INDIA
3. HDFC BANK
4. ICCI BANK
5. UTI
17. WEST BENGAL 1. PUNJAB NATIONAL BANK POST OFFICES
2. UNITED BANK OF INDIA
3. STATE BANK OF INDIA (for
North Bengal only)
4. HDFC BANK
5. ICICI BANK
6. UTI
147

DISBURSEMENT OF PENSION THROUGH THE POST OFFICES


[PARA 33]

Disbursement of Family pension under the erstwhile Employees’ Family


Pension Scheme, 1971 is, however being made through Post Offices throughout the
country.
An agreement for the disbursement of Pension under the EPS 95 through
Post Offices also has been finalised between the Department of Posts and the EPFO
at the Headquarters level and will be made applicable for whole of the country. The
copy of this agreement has been circulated by Headquarters vide its reference dated
14th May, 2001 / 19th June, 2001

As already stated the procedure of disbursement of pension through Post


Offices will be similar to that of the existing arrangements as prevalent in the banks.
However, the operational procedure in brief is detailed as hereunder :-

• No separate agreement is required to be entered into at Regional /


Sub-Regional level.
• “Head Post Offices” will be the “Link Offices” between the Regional
Offices / Sub-Regional Offices of the EPFO and all “Sub-Post
Offices” falling under the jurisdiction of respective “Head Post
Offices”, are designated as paying offices.
• Unlike, the banking arrangement where there is only one Link Office
attached to a RO/SRO, there may be more number of Head Post
Offices which will function as Link Offices. In other words, a
Regional Office / Sub-Regional Office, may have to deal with more
than one Head Post Office.
• Depending upon the choice of the pensioner, Head Post Office itself
may act as Paying Office in addition to its functioning as Link Office.

DUTIES AND FUNCTIONS OF ROs/SROs (EPFO)

The RO/SRO shall open a “Pension Payment Savings Account” with the
Head Post Office(s) falling within their respective jurisdiction for depositing the
money required for pension disbursement. The specimen signature of the
authorised officer of the EPFO shall be provided to the respective Head Post
Office.

EXISTING PENSIONER OF EMPLOYEES’ FAMILY PENSION SCHEME, 1971

The existing pensioners under the erstwhile Employees’ Family Pension


Scheme 1971 presently drawing Family Pension from the Post Offices shall continue
to draw pension from their respective Post Office. The disbursement of Family
Pension, shall, however, be switched over under the new agreement.

CEPS software Programme has been appropriately modified to suit


disbursement of Pension through Post Office also.
148

The modified version of the Programme has already been released separately
vide Head Office Circular Letter No.Pension-1/7(2)2000/CEPS, dated 27/4/2001.

As the arrangement for disbursement of pension under EFPS, 1971 is slightly


different (one pension at a time only), it may be ensured that separate Monthly
statements Paying Office (Bank or Post Office) and Link Office wise be generated,
so as to have easy identification for smooth reconciliation. The facility of generation
of separate statements has been provided in the modified version of CEPS.

In order to have timely and continuous Reconciliation of Pension Payments,


at monthly intervals, it is suggested to have a Monthly meeting with Postal
Authorities (Head Post Offices), as is being done with Banks at present, to have a
smooth working arrangement and stabilization of the procedure prescribed.

The new arrangement will come into effect from 1st July 2001. It is
requested that necessary arrangement may be made to disburse pension through the
Post Office in addition to the existing arrangement of disbursement through the
banks.

“ Pensioner may, at their discretion opt to draw pension either from the
designated Post Office or from a designated Bank”.

SERVICE CHARGES IN RESPECT OF NATIONALISED BANKS AND


POST OFFICES:

As per the agreement, the Employees’ Provident Fund Organisation will pay
service charges to the Bank and Post Offices on the turnover of the Pension
amount disbursed. The rate of service charges currently in force is 1.25% for
disbursement of monthly pension & 0.25% on non-recurring lump sum payments
such as commutation, arrears etc The service charges should be claimed by the
link branch from the concerned Regional Office / Sub-Regional Office on or
before 15th of every month, furnishing a statement of pension actually disbursed
by the paying branches (Annexure – 5) in the preceding month. The demand
should be sent to Regional Provident Fund Commissioner in the prescribed form
(Annexure – 15). The Regional / Sub-Regional Office will remit the service
charges through a separate cheque and forward to the concerned link branch
within 7 days of the receipt of the demand.

Under no circumstances, the service charges due from Employees’ Provident


Fund Organisation should be adjusted in the balance lying in the pension (Savings
bank) account maintained at the link branch. Similarly, the cheque received towards
service charges should not be reflected in this account.

The above position is reiterated vide H.O. Letter No.Pension-


1/7/(3)2002/CEPS/21757 dated 17.02.2004.
149

LIFE CERTIFICATES / NON-REMARRIAGE CERTIFICATE

CERTIFICATES TO BE FURNISHED BY THE PENSIONERS

1) LIFE CERTIFICATE:

The pensioners are required to furnish a life certificate in November each


year in the prescribed form indicated below.

2) NON-REMARRIAGE CERTIFICATE:

In the case of widow / widower recipient family pension, the certificate of


non-remarriage in the prescribed form indicated below is required to be furnished by
the recipient, at yearly intervals i.e in November.

The certificates mentioned above are required to be submitted by the


concerned pensioner to the Paying Branch and the Paying Branch will retain it with
the Pension Payment Order concerned and send a list of the certificates so received
to the concerned Regional Office / Sub-Regional Office of the Employees’ Provident
Fund Organisation.

The details of the receipt of the above certificate must be updated in CEPS
programme against each pensioner every year.

Appropriate check point has also been provided in the CEPS programme for
stopping the pension to the pensioner whose Life Certificate / Non-Remarriage
Certificate has not been received.

(CPFC’s Circular No.Pension-I/7(2)2000/CEPS/LC/Pt/23124 dated


19.07.2001)

REVISED PROCEDURE FOR COLLECTION OF LIFE/NON-


REMARRIAGE CERTIFICATE FROM BANKS UNDER EPS,
1995:
All the paying branches will notify in the month of October on their notice
board the requirement of timely submission of the life and Non-marriage certificate
for the benefit of pensioner, as non-submission of the certificate will result in
discontinuance of release of pension by EPFO from January next. The Paying
Branch shall collect the prescribed life certificate/non-marriage certificates from the
pensioner in the month of November, once in a year. On obtaining such certificates
the Designated Officer of the paying Branch shall verify each certificate and on
being satisfied he will prepare a consolidated statement in respect of all pensioners
and furnish it to the Link Branch, who will authenticate/certify the statement and
forward it to the concerned office of the EPFO before 15th December. For certificate
received after November intimation shall be given to RO/SRO/SAO concerned as
and when it is received.
[Ref: HO Lr. No. Pension-I/7(2)2000/CEPS/LC/Pt./22594 dated
17.9.2004.]
150

24
EMPLOYEES DEPOSIT LINKED INSURANCE SCHEME, 1976 –
PROVISIONS IN BRIEF – CASE STUDY

Introduction:

The Central Government with the motive of providing additional social


security in the form of life insurance to the family of the deceased member of the
Provident Fund, introduced the Employees Deposit Linked Insurance Scheme with
effect from 1.8.1976 as provided for under Section 6(C) of the EPF & MP Act, 1952.
The benefit under the Scheme is so devised that it acts as an incentive to the
members to save more in their Provident Fund Account. As the name of the Scheme
says, the benefit is linked to the amount of accumulation in the Provident Fund
Account of the member.

Applicability:
The Scheme applies to all the establishments to which the EPF & MP Act
applies.

Membership:
All the members of the EPF Scheme (both exempted & unexempted) are
covered as members of the EDLI Scheme also.

Contribution:
Under this Scheme, the members do not contribute any amount. However,
the employer pays an amount equal to 0.5% of the total wages paid to the members
as contribution.

Administrative Charges:
As regards Administrative charges, the employer is required to pay an
amount equal to 0.01% of the wages subject to a minimum of Rs.2/- per month.

Exemption: (Section 17(2A) of the Act and Para 28 of the EDLI Scheme, 1976):
The provisions are available as per Section 17 (2A) of the Act and Para 28(1)
and 28(4) of the EDLI Scheme, 1976, for grant of exemption to an establishment or
to an employee or to a class of employees as the case maybe, from the operation of
all or any of the provisions of the Scheme if without payment of any separate
contribution/premium the employees are entitled to the life assurance benefit of the
Scheme in the establishment which are more beneficial than the benefits provided
under the statutory scheme.

Inspection Charges:
An employer of an establishment exempted from the provisions of the EDLI
Scheme is required to pay inspection charges at the rate of 0.005% subject to a
minimum of Re.1/- per month.
Assurance Benefit:

The benefit provided under the EDLI Scheme is called Assurance Benefit.
On the death of the member while in service, the nominee or any other person
151

entitled to receive the Provident Fund benefits will, in addition to the Provident
Fund, receive the Assurance Benefit under EDLI Scheme.

Scale of Assurance Benefit:

From 24.6.2000 onwards the amount of Assurance Benefit payable is an


amount equal to the average balance in the account of deceased member in the Fund
during the preceding 12 months or during the period of his membership whichever is
less, except where the average balance exceeds Rs.35,000/- the amount payable shall
be Rs.35,000/- plus 25% of the amount in excess of Rs.35,000/- , subject to ceiling
of Rs.60,000/-. The form prescribed for claiming the Assurance Benefit under EDLI
Scheme, 1976, is Form 5(IF).

CHECK LIST FOR FORM – 5(IF)

1) Whether the Xerox copy of death certificate is attested by the authorised


signatory.
2) Whether the beneficiary who prefers a claim under form 5(IF) is the same
person who is entitled to receive the Provident Fund accumulations of the
deceased member.
3) Whether the date and reason for leaving service given in the application tally
with theForm-10 already submitted.
4) Whether the Death while in service certificate is furnished by the Employer.
5) Whether the contributions (both shares) for 12 months preceding the date of
death furnished in page 3 of the form 5(IF) tally with the figures for the
respective period shown in the Form 3A already submitted/to be submitted.
6) Whether claims have been preferred under EPFS ’52, EPS 95 and EDLIS ’76
have been submitted simultaneously.
7) Whether all the general check points for preferring a claim are observed such
as filling the form without any omission and overwriting, furnishing the
correct address and mode of payment, the bank details etc

MODEL PROBLEM ON DETERMINING THE ASSURANCE BENEFIT


PAYABLE

Date of joining: 18.10.1991


Date of death : 9.8.2001

1. OB as on 1.4.2000 is Ee : Rs.45,320/-
Er : Rs.45,320/-
2. The contributions payable are as follows: (Both Shares)
i. from March 2000 to May 2000 : Rs.627/- pm
ii. from June 2000 to Sep2000 : Rs.674/- pm
iii. for Oct 2000 : Rs.705/-pm
iv. for Nov 2000 : Rs.736/-pm
v. from Dec 2000 to Feb 01&May 01 : Rs.783/-pm
vi. from June 2001 to July 2001 : Rs.1019/- pm
152

vii. for August 2001 : Rs.305/-

• No wages for the months March and April 2001


• Default on the months June, July and August 2001
• Withdrawal in the month June 2001 – Rs.25,000/-
• Interest : 2000-2001 - Rs.10,599/-
• Interest : 2001-2002 - Rs.3,081/-

CALCULATION OF AVERAGE BALANCE FOR EDLI PAYMENTS


MODEL WORKING SHEET
SRI/SMT/KUM.________________________ P.F. A/C.No.____________

EDLI.A/C.No.___________
Member died on: - 9.8.2001

The Provident Fund Contribution on 12 months’ wages [from 1.8.2000 to 31.7.2001]


are to be considered for calculation of average balance under Para 22 of EDLI
Scheme 1976.

I).Closing Balance as on 31.3.2000 | Rs.90,640/-


Opening Balance as on 1.04.2000 |

II).Contributions received on wages for | Rs.3,229/-


March to July 2000 |
----------------------
Total Rs. 93,869/-
----------------------
Month (in which Opening Refund of Both Share Interest Withdrawal Progressive
Contribution on Balance Withdrawal Of Average
the wages for Aug Contributions Balance
2000 to July 2001
were payable
(1) (2) (3) (4) (5) (6) (7)
9/2000 93,869 - 674 - - 94,543
10/2000 94,543 - 674 - - 95,217
11/2000 95,217 - 705 - - 95,922
12/2000 95,922 - 736 - - 96,658
1/2001 96,658 - 783 - - 97,441
2/2001 97,441 - 783 - - 98,224
3/2001 98,224 - 783 10,599* - 1,09,606
4/2001 1,09,606 - --@ - - 1,09,606
5/2001 1,09,606 - --@ - - 1,09,606
6/2001 1,09,606 - 783 - 25,000 85,389
7/2001 85,389 - 1019@@ - - 86,408
153

8/2001 86,408 - 1019@@ 3,081** - 90,508


Total - 11,69,128/-

 *Interest for the period 2000-2001 @ 12 % from 4/2000 to 6/2000 & 11 % form
7/2000 to 3/2001
 ** Interest for the broken period (4 months) for 2001-2002 calculated on IBB
 @ Member has not earned any wages
 @@ Establishment has not remitted the amount of dues. Anyhow, the contributions
due even though not paid, has been taken into account.

Total Progressive Balance in 12 months : Rs.11,69,128/-

Average Balance : 11,69,128 / 12 = Rs.97,427/-

Assurance Benefit Payable :-Rs.35,000/- + 25 % of the amount in excess of


Rs.35000/- (Subject to a Maximum of
Rs.60,000/-)
= Rs.35,000/- + 25 % of Rs.62,427/-
= Rs.35,000/- + Rs.15,607/-
= Rs.50,607/-.

Therefore the Assurance Benefit payable is Rs.50,607/-

NOTE:
1. If the Average Balance exceeds Rs.1,35,000/-, then the Assurance Benefit
payable to the members family will be restricted to Rs.60,000/-
2. Opening Balance as on 1.4.2000 includes contributions in respect of wages
of the member upto 29.2.2000 ( i.e wages for Feb 2000, paid in March
2000)
3. Contributions for 12 months upto the end of the month preceding the date
of death are taken (i.e from August 2000 to July 2001 wage month)
4. The interest should be restricted to the month preceding the month in
which the death occurred ( in this case upto 31.7.2001)

EDLI CLAIM SETTLEMENT


CHECKLIST – DRILL
1. Date of Death:
154

 Verify the date of death.

2. Membership for EDLI: (Average Balance)


 a) Verify the membership – whether below 12 months or above 12
months.
 b) If more than 12 months – 12 months Wages prior to the
month in which death occurred to be taken.
If Less than 12 months – Actual period of membership to be
taken.
3. Opening Balance:
 Note the financial years falling in the above period.
 Note the opening balance as on 1st April, for the first financial year, with
reference to Form 24. (Add both shares and note it).

4. Contribution:
 Note both share of contributions from March of the first financial year
and determine the opening balance at the commencement of first month.
 (First month with reference to 2).

5. Wage Period within the 12 months:


 Note the details of no wages for any month/months. This will be
reflected as ‘Nil’ in the statement.

6. Default Period:
 Note default period.
 Even there is default, that should be taken into account for calculation
purpose with contribution, as given in Form 3-A.

7. Withdrawals:
 Note withdrawals within the given ‘period’ and post in the month in
which it has been authorised.

APPROVAL OF GROUP LIFE INSURANCE POLICIES ISSUED BY


PRIVATE SECTOR LIFE INSURANCE COMPANIES IN LIEU OF THE
EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME 1976:

After the privatisation of the Insurance Sector, many Private Sector Life
Insurance Companies have approached the Employees’ Provident Fund Organisation
for approval of the Term Group Plan offered by them for issuance in lieu of
Employees’ Deposit Linked Insurance Scheme, 1976.

The Central Board of Trustees, in its various meetings had approved the
proposal for allowing the following insurance companies in private sector coming
under the regulatory control of IRDA to offer the Group Insurance Scheme
conferring similar or better benefits than the Employees’ Deposit Linked Insurance
Scheme, 1976.
155

LIST OF PRIVATE INSURANCE COMPANIES APPROVED BY HEAD OFFICE


IN LIEU OF EMPLOYEES” DEPOSIT LINKED INSURANCE

1. M/s. MAX Newyork Life Insurance Co. Limited


2. M/s. Tata AIG Life Insurance Co. Limited
3. M/s. Birla Sun Life Insurance Co. Limited
4. M/s. SBI Life Group Insurance Scheme
5. M/s. AMP Sanmar Assurance Co. Limited
6. M/s. Om Kotak Mahindra Life Insurance Co. Limited
7. M/s. Allianz Bajaj Life Insurance Co. Limited
8. M/s. Metlife Indias” Group Insurance Co. Limited
9. M/s. AVIVA Life Insurance Co. India Private Limited
10. M/s. ING Vysya Life Insurance Co. Private Limited.
11. M/s. ICICI Prudential’s Group Insurance Scheme.

25
PROCEDURE FOR CREDITING OF INTEREST
Interest on the amount standing to the credit of EPF Member’s account as on
1.4.93 onwards is to be paid on monthly running balance. The Government of India
has notified the said decision and amended Para 60 of the Employees’ Provident
Fund Scheme accordingly.

Thus the claims to be settled from 1.4.93 will have to be paid interest on
monthly running balance. A detailed procedure for calculation of this interest is as
follows:

i. On receipt of a claim application the ledger card of the particular member


should be completed up to 31.3.2003 and opening balance as on 1.4.2003 be
arrived at.
ii. The current contribution i.e. the contribution during the year 1993-94 which
is available in the claim application or in Form No.3A should be posted in
the ledger card, as usual.
iii. For calculating interest an interest calculation sheet should be prepared.

a) Account No. and Name should be filled up from the ledger card.
b) Opening balance i.e. Column No.2 for the moth of April, 1993 should
be filled up with the opening balance of 1.4.1993 as arrived at in
Ledger Card.
c) Withdrawals if any in the Ledger Card are to be posted in Column No.4
against the months in which the withdrawals have taken place.
156

d) Current contribution as shown in the claim application or Form No.3A


should be posted in Column No.l3 against the respective months.
e) The amount of refund of withdrawals if any may be added to the
contribution and shown in the month of deposit.
f) Column No.2 of interest calculation sheet should be filled up to the
month prior to the month of settlement. However if the claim is
authorised on or after the 25th day of a particular month, interest for the
current month is also to be allowed.
g) The column of the remaining months should be left blank.
h) Column No.2 and Column No.4 should be added and interest bearing
balance marked ‘A” in the interest calculation sheet should be arrived at
after subtracting total of Column No.4 from the total of Column No.2.
i) Interest to be credited to the member’s account should be arrived at by
the formula I.B.B. x R.O.I
100 x 12
Interest as calculated in the interest calculation sheet should be posted in the
ledger card and claim be settled for net amount on the ledger itself. The interest
calculation sheet should invariably be attached to the working sheet of claim.

To illustrate clearly the procedure for calculation of interest on monthly


running balance an example is enclosed in Annexure ‘A’.

Interest payable to the out-going members during 1993-94 should be


calculated as detailed above.
In case of transfer of provident fund accumulations from exempted
establishment to un-exempted establishment, the details of monthly contributions
and withdrawals, if any should also be sent.

Procedure for crediting interest in certain cases:

Interest is to be credited at the rate declared under Para 60 of the EPF


Scheme for the respective year.

Interest on the amount standing to the credit of EPF member’s account as on


1.4.1993 onwards is to be paid on monthly running balance. Prior to 1.4.1993
interest was arrived on the Opening Balance, as on the first day of the financial year.

In the case of settlement of claims, from 1.4.93, under para 69 or 70, interest
is to be paid on monthly running balance, upto the end of month preceding the date
on which the final payment is authorised irrespective of the date of receipt of the
claim from the claimant.

The interest upto and for the current month shall be payable on the claims
which are authorised on or after the 25th day of a particular month but the actual
payment is to be made after the end of the current month.

If an establishment is covered for the first time under the Act/Scheme during
the course of the current period the interest shall be allowed on all the sums credited
to the member’s account on and from the first day of the month succeeding the
month of credit to the end of the current year.
157

In cases of transfer of amount from one account to the other are:

i. If it is from an Unexempted establishment to another Unexempted


establishment, no interest to be allowed for the current year. Only
the details of Opening Balance for the current year, details of
monthly contributions and withdrawals, if any, should be
communicated to the transferee RO/SROs.
ii. In case of transfer from an exempted establishment or from an
uncovered establishment, the amount transferred by cheque shall be
credited to the account of the individual member in the month in
which the cheque is received. Wherever the transfer amount is
received in cheque, the date of receipt of cheque is to be taken
irrespective of its date of realisation and credit to the EPF Account
No.1. Interest shall be credited on the total amount of transfer
credited to the member’s account, on and from the first day of the
month succeeding the month of credit to the end of the current year.

Where past accumulations are received in instalment, they should be posted


in the ledger account of the members, as Opening Balance ( as on 1st April) only in
the year in which the entire dues are received (i.e year in which Cash/Securities,
credited to the account of Central Board of Trustees, EPF) and interest on the total
dues should then be credited i.e. from the date of coverage/cancellation of exemption
to the 31st March of the year preceding to the year in which the PA is credited and
included as Opening Balance for the current year.

Where arrears of contribution pertaining to the past years are received in the
current year, it should be posted in the accounts of the members for the current year
(as Opening Balance) and interest on the contributions pertaining to the past years
should be credited at the rate declared for the related year on compound rate basis.
The total interest due till the preceding year is to be credited as Opening Balance for
the current year. (There is no need to recast the accounts of the previous years and
once the account is closed for an accounting year any credit due for the past period is
to be effected only in the current year.)

Where the penal interest is recovered from the member for misuse of
withdrawal made by him under para 68 B of the Scheme, it should be credited to the
Interest Suspense Account only and not to the member’s account.

Where the amount of contribution received are not required to be credited to


the individual account of the member (Owing to wrong coverage, voluntary or
erroneous deposit, etc) such amount is refundable along with interest. The interest
on such refund should be credited on each month total amount of contributions at
simple interest from the first day of the month following that on which the amount
was received to the month preceding that of refund, at the declared rate.

Where an exemption is granted (or Relaxation Order is issued) to an


establishment/Class of employees/employee, no interest is to be allowed after the
date of grant of exemption to the individual members’ account. However, where the
cash is to be transferred, the interest at the declared rate is to be allowed on the
158

actual amount of cash transfer from the date of grant of exemption to the month
preceding the month in which cash portion is transferred through cheque. (as per
Para -60 of the Scheme).

While transferring the PA dues to establishment partly in cash and partly in


securities and wherever the withheld portion of cash transfers (i.e. 2 %) is to be
released, the interest at statutory rate on compound rate basis be allowed from the
date of grant of exemption to the month preceding to the month in which the
withheld amount is released.

Whenever part payment is allowed to a member or the beneficiaries the


balance amount due to the member/ other eligible claimants, from whom the claim is
yet to be received should be retained in the account and interest allowed, (U.P.-60)
till the payment is fully and finally authorised to eligible persons or when their share
is released.

26
NOMINATION – IMPORTANCE - HANDLING OF DEATH
CLAIMS IN THE ABSENCE OF NOMINATION
Nomination:

Each member shall make in his declaration in Form 2, a nomination


conferring the right to receive the amount that may stand to his credit in the fund in
the event o his death before the amount standing to his credit has become payable, or
death before the amount standing to his credit has become payable, or where the
amount has become payable, before payment has made.

A member may in his nomination distribute the amount that may stand to his
credit in the Fund amongst his nominees at his own discretion.

If a member has a family at the time of making a nomination, the nomination


shall be in favour of one or more persons belonging to his family. Any nomination
made by such member in favour of a person not belonging to his family shall be
invalid.

[Provided that a fresh nomination shall be made by the member on his


marriage and any nomination made before such marriage shall be deemed to be
invalid]

If at the time of making a nomination the member has no family, the


nomination may be in favour of any person or persons but if the member
subsequently acquires a family, such nomination shall forthwith be deemed to be
invalid and the member shall make a fresh nomination in favour of one or more
persons belonging to his family.
159

[Where the nomination is wholly or partly in favour of a minor, the member


may, for the purposes of this Scheme appoint a major person of his family, as
defined in clause (g) of paragraph 2, to be the guardian of the minor nominee in the
event of the member predeceasing the nominee and the guardian so appointed:

Provided that where there is no major person in the family, the member may,
at his discretion, appoint any other person to be a guardian of the minor nominee.]

A nomination made under sub-paragraph (1) may at any time be modified by


a member after giving a written notice of his intention of doing so in Form 2
annexed hereto. If the nominee predeceases the member, the interest of the nominee
shall revert to the member who may make a fresh nomination in respect of such
interest.

A nomination or its modification shall take effect to the extent that it is valid
on the date on which it is received by the Commissioner.

Nomination Form:

Every employee on becoming a member of Employees’ Provident Funds


Scheme, 1952 and Employees’ Pension Scheme, 1995 should furnish the particulars
concerning himself, his nominee for Provident Fund and his family/nominee for
Employees’ Pension Fund in Form 2 (Revised). As the nomination made by the
minor is not valid, minor member should furnish the above particulars in Form 2
(Revised) only on becoming a major. Prior to 1.9.1991, the member was furnishing
particulars of nominee for Provident Fund in Form 2 and his family for Family
Pension Fund in Form 2 (FPF) separately. With effect from 1.9.1991, both these
forms have been combined and a single form has been introduced furnishing the
above particulars. Consequent on introduction of Employees’ Pension Scheme,
1995, this form has been further modified to keep the requirement of both the
Schemes. It has also been decided to get the Form 2 (Revised) from all the existing
members of Employees’ Provident Fund and Pension Fund members under
exempted Provident Fund to create a date base in the Computer. The nomination
earlier made by the members to the extent it is valid holds good till the receipt of
Form 2 (Revised). On its receipt, the earlier nomination made by the member should
be treated as cancelled and the Form 2 (Revised), after due verification with
reference to Form 9 (Revised), Form 3 (PS) and observing the prescribed cheque,
should then be sent to EDP for storing the data in the Employees’ Member’s Master
file. Similarly, the Form 2 (Revised) received along with the Form 5 / Form 4 (PS)
should be sent to EDP for its inclusion in the Member’s Master and thereafter it
should be sent to the concerned accounts group or centrally maintained in a cell
setup for this purpose. The required information can be retrieved from this master,
as and when necessary.

In view of the great importance and value of nomination forms, it is


necessary that the Regional / Sub-Regional Office handle and maintain them very
carefully and arrange to keep them bound securely between thick cardboard pads and
inside locked steel cupboards. The cupboards should remain close to the place
where the Assistant Accounts Officer or Section Supervisors are seated and the keys
of each cupboard should remain one (original) with the AAOs and other (duplicate)
160

with the S.S. Under no circumstances, should the bundles of Form 2 be allowed to
be kept unattended to either on the tables or side racks of the dealing assistant. The
AAOs should ensure proper maintenance of the stock register of Form 2 and
periodical check up of the register to ensure that all the wanted Form 2 have not only
been received from the establishment but also are safely lodged and properly
maintained.

On change of charge, the handing over and taking over certificate in respect
of these forms should signed by both the officials.

Nominee ( Legal Provisions)

The member may nominate one or more persons from among the family
members as defined Para 2(g) of the EPFS, 1952. The family for the purpose of
EPFS is as follows:

(i) in the case of a male member, wife, children (including legally adopted
children) whether married or unmarried, major or minor, dependant parents
deceased son’s widow and children, whether married or unmarried, major or minor;

(ii) in the case of a female member, her husband, children (including legally
adopted children) whether married or unmarried, major or minor, her dependant
parents, her husband’s dependant parents, deceased son’s widow and children,
whether married or unmarried, major or minor;
(iii) if the male member proves that his wife has ceased, under the
personal law governing him or the customary law of the community to which the
spouse belongs, to be entitled to maintenance shall no longer be deemed to be part
of the member’s family for the purpose of this Scheme, unless the member
subsequently intimates by express notice in writing to the Commissioner that she
shall continue to be so regarded;

(iv) if a female member by notice in writing to the Commissioner


expresses her desire to exclude her husband from the family, the husband and his
dependant parents shall no longer be deemed to be a part of the member’s family for
the purpose of this Scheme, unless the member subsequently cancels in writing any
such notice.

(v) if the child of a member or, the child of a deceased son of the member
as the case may be, has been adopted by another person and if, under the personal
law of the adopted, adoption is legally recognised, such a child shall be considered
as excluded from the family of the member. The child is no longer deemed to be a
‘family member’ of the member. In view of this, the nomination in favour of such
child given on adoption to another person is not valid, if other ‘family’ members are
alive. However, such child shall deemed to be the ‘family’ member of the adopted
persons. If the adopted persons are member of the Provident Fund, they may
nominate such child, as a member of the ‘family’.

If, at the time of making nomination the member has no family or deemed to
have no family in the circumstances stated in Para (iii) & (iv) above, he may
nominate a person of his choice even an institution. If he subsequently acquires a
161

‘family’, such nomination shall forthwith deemed to be invalid. He should make a


fresh nomination in favour of one or more persons of his family.

On his marriage, any nomination made by him before his marriage even if, it
is in favour of his dependent parents shall be deemed to be invalid. He should make
fresh nomination. However, where a member has made a nomination in favour of
the dependent parents after his marriage, such nomination is valid. The unmarried
daughter on her marriage, the minor son on becoming a major, continues to be a
family members and as such the validity of nomination in their favour is not affected
and there is no need to change the nomination, if the member, so desires. Where a
nomination is wholly or partly in favour of a minor, the member may appoint major
person of his family, as guardian of the minor. If, however, there is no person of his
family, he may appoint a person of his choice as guardian for the minor. The
member may modify his nomination at any time by submitting a fresh Form 2
(Revised), but if he has got a family, he has to nominate a person belonging to his
family. A nomination or its modification shall take effect from the date on which it
is received in the Regional/ Sub-Regional Office. In view of this, acceptance or
otherwise of Form 2 does not have any bearing on the validity of the nomination.
However, the prescribed check should be made.

Where a Hindu member nominates two wives or his second wife when his
first wife is alive, such nomination in favour of his second wife is not valid under the
Hindu Marriage Act.

The nomination made by the male member in favour of his wife continues to
be valid even if she remarried after the death of her husband (member).

The nomination made by the employee under the EPFS,1952 shall hold good
for the payment of Assurance Benefit payable to the nominee and nominees under
EDLI , 1976.

NOMINATION FOR PENSION

NOMINATION AND NOMINEE PENSION

A member is required to execute nomination in Form 2 (Revised) in favour of


a person to receive pension in the event of his death under following contingencies.
1). A member who is not married or who does not have a living spouse and
or children below the age of 25 years
2). A member who is married but does not have a living spouse and living
children.
3). If the member has no living spouse and all children attained the age of 25
years.

The nominee appointed by the member will be paid pension.

If the member has a Family, the person nominated should fall within the scope
of definition of “Family”.
162

Nomination in favour of spouse has no relevance as he/she is an automatic


beneficiary for family pension.

A member who is not married or who does not have a living spouse and or
children below the age of 25 years shall nominate a person of his choice. The
nomination should be in favour of one person only. In the event of member acquiring
a family subsequently, the nomination made in favour of a person not falling within
the family shall become void.

Normally, children who attained the age of 25 years are not eligible for
children pension.
However, if the member has no living spouse and all children attained the age
of 25 years, he should nominate any one of his children, irrespective of their age and
marital status to receive the monthly pension.
The eligibility of pension to nominee would arise only when a member who
does not have any living spouse and or eligible child dies while in service or after the
date of exit (before 58 years). Further in the case of death after leaving service,
before 58 years of age, the member should have rendered 10 years eligible service and
should not have availed reduced monthly pension. In case requisite service of 10
years is not there, the nominee shall entitled to ROC only under para 13 (1) of the
EPS, 1995.
Wherever the member, without having eligible members of family, draw
MMP and dies subsequently, his/her nominee is not entitled for pension. Thus, after
commencement of MMP, the nominee is ineligible for pension.

The nomination made by the employee under the EPFS,1952 shall hold good
for the payment of Assurance Benefit payable to the nominee and nominees under
EDLI , 1976.

27
ISSUE OF PF ANNUAL STATEMENT OF ACCOUNTS
The foremost responsibility of the Employees’ Provident Fund Organisation
in the field of Service to Subscribers, apart from timely payment of Provident Fund
amount and other benefits to the members and their beneficiaries, is the prompt and
accurate issue of Annual Provident Fund Statement of Accounts to the members.
Para 73 of the Employees’ Provident Fund Scheme, 1952, stipulates that the
Accounts Section in Regional Office/Sub-Regional Offices should issue an Annual
Provident Fund Statement of Accounts soon after the close of each financial year.
The promptness in compiling the Annual Statement of Accounts of the Provident
Fund member will accelerate the pace of settlement of Provident Fund Accounts and
grant of withdrawal/advance.

2. The compilation of Annual Statement of member’s Account is the


responsibility of the Accounts Branch. The benefits payable to an EPF member is
directly linked with the contribution with interest standing to his credit in his EPF
account. Hence, a running account is maintained in respect of each EPF member,
whereas no such running account is maintained in EPS, 1995/EDLI, 1976 where
163

benefits are not related to the contributions paid in respect of a member. Hence the
Annual Statement of Accounts is required to be issued to a PF member and should
reflect the correct balance of a member in his PF account and not in respect of his
pension or EDLI account. This position should be explained to the member through
a note on the reverse of Form 23.

3. The member’s Annual Statement of account will reflect the following:

a) Opening Balance of the Provident Fund amount standing to the credit


of the member at the beginning of the financial year i.e., as on 1st
April
b) Contributions (both member and employer shares i.e. employer’s
share being the excess of 8.1/3% of pay in respect of pension
members) made during the financial year (i.e. from wages paid for
March to February);
c) Refund of withdrawal received, if any, during the financial year;
d) Interest credited to the account annually on the last day of financial
year i.e.31st March calculated on the monthly balance method;
e) Withdrawal made during the financial year (including part settlement,
if any);
f) Closing balance of the Provident Fund amount as on 31st March of
each year.

For example, the annual accounts issued for the year 2004-05 will reflect the
following:

a. O.B. as on 1.4.2004
ADD: 2) Contribution received for the wages from March,2004 to Feb.2005
ADD: 3) Refund of withdrawals received during 1.4.2004 to 31.3.2005
ADD: 4) Interest at declared rate
LESS: 5) Withdrawal from 1.4.2004 to 31.3.2005
6) C.B. as on 31.3.2005

The software viz. CAMPS 95(Revised) facilitates the job of compiling the
Annual Accounts through computer.

4. DUE DATE FOR ISSUE OF ANNUAL STATEMENT OF ACCOUNTS:

The Annual statement of Accounts is required to be issued for each financial


year before 30th September of the following year. The data shown in the Annual
Statement of Account will reflect the receipt transactions in a financial year i.e. 1st
April to 31st March. To suit this, the wage period is taken from March to February.
The withdrawals availed by the member from 1st April to 31st March will be included
in the Annual Accounts.

Due date for submission of Form 3A/6A by the Establishment: 30th April of
each year. It is desirable to collect the same through floppy along with hard copy in
respect of the establishment having the membership of 200.
164

5. DOCUMENTS THAT ARE REQUIRED FOR COMPILING THE


ANNUAL ACCOUNTS.

1. Form 9 (Revised), duly updated with reference to Form 5 for the period from
March to February.
2. Reconciled and approved Form 24 of the preceding financial year.
3. Form 12A for the period from March to February.
4. Form 3A and 6A of the current Financial year.
5. DCB Register kept in Accounts alongwith the EDP generated report through
CCTS.
6. Withdrawal register alongwith the details of payment from EDP.
7. Transfer in and out registers (both Inter and Intra Office transfers)
8. Payment made from SRF, DRF & UCD.
9. Default position of the establishment in the submission of returns and
remittances of dues and details of Excess/short remittances made.

6. CHECKS TO BE EXERCISED BEFORE COMPILING THE ACCOUNTS


THROUGH COMPUTER.

(i) Whether the Form 9 (Revised) is up-to-date, giving the enrolment of


members up to the month of February.
(ii) Whether the establishment has paid the dues in EPF Account No.1, both
employees and employers share for the current financial year i.e. the dues
upto the wage month of February paid in March.
(iii) Whether the Form 3A/6A is received in respect of all the members
enrolled up to February.
(iv) Whether the Form 6A reflects the contributions in respect of ceased
members, for whom Form 3A were already sent. In the case of settled
accounts, the contributions extracted from the Form 3A received
alongwith the claim should be taken into account.
(v) Whether the DCB Register is reconciled – duly verified with the schedule
of receipts and also tallied with the statement of dues, remittances
generates through CCTS report and supplied by the EDP Section.
(vi) Whether the matured Insurance Policy are properly credited to the
members account – whether the premium released is properly included in
the current financial year.
(vii) Whether the penal damages has been levied and interest on 7Q has been
determined.
(viii) Whether the Form 24 for the preceding year is approved and Form 23 is
despatched, and intimated to EDP through Despatch Register.

CERTIFICATE FOR GENERATION OF FORM 24/23 BY EDP SECTION

Code No…………………… Year………………………… A/cs Group:


……………………..
165

EDP Section is requested to generate the Checklist followed by Form-24/23


with reference to the documents listed in the forwarding letter annexed.

It is certified that the following checks have been made with reference to
Form-3A & 6A.

1. The Name and Account No. given in Form 3A are correct.


2. The dues as per Form-12A & 3A are tallied with the dues as per Form-6A
3. Receipt of remittances to cover the dues as per Form No.6A as verified with
reference to Form 3A are confirmed.
4. Form 3A is authenticated by the authorised officer of the employer;
5. The wages are posted in respect of all the months;
6. The rate of contributions is properly reflected; if there is any change in the
rate in any month, the correct rate should be indicated against the relevant
month(s).
7. The non-contributory period of service is furnished under Col.7, where no
wage is posted against a month, the entire month should be taken as non-
contributory period;
8. Wherever the member is contributing to Provident Fund at a higher rate, the
rate of contribution is furnished.
9. Wherever the member is contributing to Provident Fund over and above
Rs.5,000/-such information is furnished;
10. Wherever the member opts for pension fund contribution over and above
Rs.50,000/- for enhanced pension such information is furnished;
11. The Form 3A in respect of settled cases also enclosed duly verifying the
correctness of the recovery and remittance of contribution.
12. A top list to Form-3A showing the monthwise employment strength and
statutory rate of contribution with reference to Form-12A (Revised) is
furnished/not furnished.
13. The DCB Register of the Establishment has been reconciled and the
excess/short remittances in Account No.1,2,10,21 & 22 has been arrived at.

CLERK:
VERIFIED AND FOUND CORRECT
DATE:
SECTION SUPERVISOR/ASST. ACCOUNTS OFFICER

To
EDP Section.
FOR THE OFFICE OF EDP SECTION

-- Date of receipt of Form 3A/6A:


______________________________________________

-- Date entry made on _______________________ by


_____________________________

-- Checklist sent to Accounts section on


_________________________________________
166

7. PERIOD FOR WHICH THE ACCOUNT IS TO BE COMPILED.

(A) In case of regular establishment i.e. where the employer has sent
all the returns and remitted the dues upto date.
Please verify –

(i) whether the DCB Register is properly reconciled and item numbers
are verified from the Schedule of receipts and tallied with the EDP
Statement of DCB extracted from CCTS Report.
(ii) Whether Form 3A has been received in respect of all the members
including members who have already left the service/where accounts
settled.
(iii) Whether Form 6A reflects the Contribution in respect of all the
members who have contributed during the financial year. The last
account No. shown in Form 6A should tally with the one given in
Form 9(R), upto February.
(iv) Whether the Form 3A has been prepared on remittance basis.
(v) Where any member has contributed in excess of the statutory rate or
the statutory limit or a member’s Pension contribution is beyond the
wage ceiling. These factors should be verified and noted.
(vi) Whether the non-contributory period of service is properly filled in
Form 3A and wherever there is no wages, the non-contributory period
should be taken as 30 days ( if it occur between the two spells of
wage period).
(vii) Forward the Annual returns alongwith the prescribed documents to
the EDP for generation of Check list. Wherever the Annual Returns
are received in floppy, the hard copy should be received and the
prescribed checks should be exercised before the floppy is sent to the
EDP Centre.

(B) Compiling of accounts in respect of defaulting establishments:-


(Where all the Monthly and Annual Returns are received but the
employer is in default in payment of dues for part of the year or
default in payment of employers share only).
In certain cases, employer is in default in payment of the dues whereas the
Form 3A is prepared for the whole year with reference to the due amount. In such
case, it is incorrect to compile the accounts for the whole year. When there is no
remittances even for one month, the accounts should not be compiled for the whole
year but only upto the month of payment of dues. The default period should not be
treated as short remittances for the purpose of compiling the accounts. Under no
circumstances, the Annual Statement of accounts should be prepared for the whole
financial year in respect of a defaulting establishment. The default denotes only in
respect of remittances in respect of EPF Account No.1. The default in other
accounts will not affect the issue of Annual statement of accounts. However, efforts
should be made to realize the dues, invoking recovery and Penal measures.
167

(C) Where the establishment is closed and no compliance:

If annual accounts has already been prepared up to the preceding financial


year, the accounts should be compiled giving interest on the opening balance and
also taking into account the withdrawals, if any.

(D) Triplicate challans received, but not reflected in Schedule of


Receipt/Credit not given by the SBI to EPF Accounts:

The remittances are to be accounted only where it is confirmed through


schedule of Receipts and the related Credit item No. to be verified. The compiling
of Annual Accounts on the basis of Triplicate challans alone is highly irregular and
this is totally prohibited. Efforts to be made to confirm the realisation in EPF
accounts before approving the Annual Account.

(E) Where an employer has erroneously remitted the PF dues in


other accounts

After due verification and examination, Cash section should be advised to


transfer the funds from one account to another, before approving the Annual
Account. The employer need not be asked to make good the shortfall by deposit.

(F) Where there is no compliance for the whole year or where the
Monthly/Annual Returns are not forthcoming from the date of
coverage.

Examine the position with Compliance Wing and Enforcement Officer


concerned. If no account is to compiled, open a folio of Form 24 and record the full
facts of the establishment and reason for non compilation duly indicating penal
action taken and the EOs report to be attached. This Form 24 to be approved at the
level of APFC. Thereafter the Establishment may be shown as disposal or clearance
of Annual accounts for the year. Necessary note to be sent to EDP / Co-ord. Section
for the purpose of compiling data on issue of Annual Accounts.

8. “COMPLIANCE”- Definition:

If an establishment is said to have complied, it is construed that the employer


has submitted the prescribed returns and remitted the dues in full and the office in
turn compiled the Annual statement and the statement issued to all the subscribers;
then only the establishment is said to have been complied.

9. “BROAD SHEET” –
The compilation of Annual Accounts is completed only when the ‘Broad
sheet’ is prepared and reconciled and the closing balance is certified by the AAO.
Annual Accounts once compiled can not be revised and any additions/deletions
should be incorporated in the current years account only. There is no question of
provisional issue of Annual Statement of Accounts. PA dues or any arrear dues for
the past period should be included in the current year account with due interest. The
clerks in Accounts Section is required to maintain the prescribed Register for the
168

receipt and disposal of Form 3A & 6A and the progress in compilation of Account of
each establishment.

Transfer of UCD Accounts to the Form 24:

The members PF accounts transferred to UCD account in accordance with


the provisions of Para 72(6) of the EPF Scheme, 1952, prior to generation of Form
24 through computer are required to be reflected in the Form 24 of the current year,
providing upto date interest. This should be done with the approval of APFC and
duly linking the relevant ledger accounts and Form 9/UCD Register etc.

THE MANUAL OF ACCOUNTING PROCEDURE HAS GIVEN THE


PROCEDURE ELABORATELY ON PROMPT AND PROPER
COMPILATION OF ACCOUNTS. THIS SHOULD BE STUDIED.
(Refer: Part II-A – Chapter 12).

28
TRANSFER OF PROVIDENT FUND ACCUMULATION
ON GRANT/CANCELLATION OF EXEMPTION

Hitherto, on grant of exemption under Section 17 of the Act, or Para 27/27A of the
Employees’ Provident Funds Scheme 1952, the past accumulations have been transferred
partly in cash and partly in securities.

2. The Central Board of Trustees at its 163rd meeting held on 19.08.2003 has decided
that consequent to grant of exemption or in any other eventually necessitating transfer of
past accumulations to an establishment or trust, 100% of past accumulations be
transferred in cash in all cases. All pending cases are also required to be regulated
accordingly, However, where the requisition for transfers are pending in Headquarters
Office, the decision to transfer 100% past accumulations in cash may be made after
getting specific instructions from Headquarters Office in each individual case.

3. The amount transferred in cash should be invested as per the prescribed pattern of
investment immediately and submit the proof thereof to the Regional Provident Fund
Commissioner.

(Authority : Headquarters Office Lr.No.Invest.I/1(10)2000/42517, dated 4.9.2003)

PROCEDURE FOR TRANSFER OF PREVIOUS ACCUMULATIONS

A. Procedure for transfer of Special Deposit Account on cancellation of


exemption or on coverage of the establishment.
1. The deposit Bank which holds the Special Deposit Accounts, should be
approached by preferring an application for transfer of Special Deposit Account in
favour of Central Board of Trustees, Employees’ Provident Funds and also to
transfer the balance to the State Bank of India, Securities Services Branch, Mumbai
169

Main Branch, Mumbai, where the Special Deposit Account of Central Board of
Trustees is being maintained.

2. Memorandum in Form Annexure VIII addressed to the State Bank of India,


Securities Services Branch, Mumbai. (This form is available with Bankers).

3. A copy of the Regional Provident Fund Commissioner’s order/coverage


Notice instructing the establishment to transfer the funds.

4. Statement showing the details of deposits made, interest due, collected, etc.,
as on the date of coverage(Applicability of the Act to the establishment or as on the
date of cancellation of exemption as the case may be) should be submitted in
quadruplicate together with the SDS Pass Book with upto date entries.

5. The interest upto 31st December of the previous year should have been
realized and credited to the account.

6. Copy of the resolution passed by the Trustees for transfer of Special Deposit
Account.

7. Acceptance of Special Deposit Account towards previous accumulation dues


should be only through transfer of balances from the books of deposit bank to the
State Bank of India, Securities Services Branch, Mumbai and not by closure of the
account and remitting the proceeds in cash or by cheque, etc, to the Account of
Central Board of Trustees, Employees’ Provident Funds.

8. After the transfer is effected, SDS Pass Book with due endorsement thereon
should be collected from the transferor branch of the Bank and submitted to the
Regional Provident Fund Commissioner along with photocopy of the Pass Book.

B. Procedure for Transfer of other Securities (Paragraph 28 of Employees’


Provident Fund Scheme, 1952).

(1) Previous accumulation dues should be transferred only in cash. Wherever


the instruments are kept in Government/Guaranteed securities, Post office Term
Deposit, Special Deposit Account, Certificates, etc., they may be accepted only if the
instrument is transferable to the Central Board of Trustees, Employees’ Provident
Funds, otherwise cash should be paid.

(2) The securities should be endorsed/transferred through transfer deed in favour


of Central Board of Trustees, Employees’ Provident Funds irrespective of the fact,
whether they are Stock Certificate, Government Promissory Notes, etc.

(3) The endorsement should be made only by the authorised Trustees of the
Fund.
(4) Endorsement should be certified by the public Debt Office of Reserve Bank
of India/authority issued the securities, by affixing the seal on the instrument itself.
170

(5) Endorsed securities should be forwarded to the Regional Provident Fund


Commissioner for onward transmission to the State Bank of India, Securities
Services Branch, Mumbai.

(6) Actual purchase price of the securities should be intimated to this office duly
certified by the area Enforcement Officer of the Employees’ Provident Fund
Organisation.

(7) Original or authenticated copy of the memorandum and articles of


association, copy of Certificate of Incorporation and the appointment and the
authority in favour of the authorised Trustees of the Fund to deal with securities
should be forwarded.

(8) Securities which have already been notified for repayment and securities
which are in the ‘short period’ i.e. which are due for repayment within a period of
one month cannot be accepted on account of the past accumulations.

(9) A certificate from the Income-Tax Commissioner approving the transfer of


the accumulated assets of the Old Private Provident Fund to the new one, i.e.
Employees’ Provident Funds, should be obtained and forwarded as and when
received. The transfer need not be delayed only on account of this.

(10) Securities purchased after the date of application of the Act should not be
transferred, i.e all accumulation after the date of application of the Act should be
transferred only in cash, by deposit in EPF Account No.1 in State Bank of India.

(11) The details of interest due on securities but not collected beyond the notified
period should be furnished.

(12) Income Tax deduction certificate, if any, should be surrendered.

(13) Wherever any security is not transferable by endorsement in favour of


Central Board of Trustees, Employees’ Provident Funds such securities should not
be forwarded. In lieu of this, the transfer should be made in cash only.

(14) Wherein a previous accumulation bearing no guarantee as regards principal


and interest, it can be transferred only if the deposit account is transferable in the
name of Central Board of Trustees, Employees’ Provident Funds, by the bank on the
instrument as well as in the books of the bank, subject to acceptance of Central
Govt., failing which the amount kept in such deposits should be transferred in cash.

(15) In the case of NSC and NPSC, appreciated value will be taken into account
in determining the amount for transfer, in case the difference between face value and
appreciated value has been credited to the members.

(16) Securities etc., to be transferred within thirty days and cash in hand/Savings
Bank Account of the Trust should be transferred within ten days.
171

29
TRANSFER VALUE OF PENSION FUND FROM EXEMPTED TO UNEXEMPTED
OR UNEXEMPTED TO EXEMPTED FUND ON GRANT/CANCELLATION OF
EXEMPTION UNDER EMPLOYEES’ PENSION SCHEME 1995

TRANSFER VALUE:

In case exemption is granted to any establishment or in the case of a member


being transferred from pension fund of one exempted establishment to another
pension fund of exempted establishment or statutory pension fund or vice-versa, a
transfer value payment will be made which will consist of the following :-

a) Withdrawal benefit relating to past service period upto 15.11.1995 as per


Table-A multiplied by Table-B factor for the period between 16.11.1995 to
the date of exemption/transfer, and
b) Transfer value for Pensionable service as per Table E for the service
rendered from 16.11.1995 or from the date of joining the establishment to the
date of exemption/transfer as the case may be.
c) In the event of cancellation of exemption granted under Para 39, transfer of
fund; will be made as per the conditions mentioned in the exemption
notification.
(New Para No.39B of EPS’95)
( effective from 23.5.2003)

“TABLE-E
(see paragraph 39-B)
(Transfer of contribution from Employees Pension Scheme, 1995 to exempted or
other pension fund or vice-versa)

Number of full year’s contribution paid Proportion of pay payable on


last contribution month

1 0.978
2 1.979
3 3.003
4 4.051
5 5.124
6 6.221
7 7.345
8 8.494
9 9.671”

[F.No.S-65012/1/2000-SS-II]
D.S.POONIA,Jt.Secy.
172

FORM 1A
(Please see para 39-B)

Application for transfer of past accumulation from 16.11.1995 to the date of


effective date of exemption/transfer in respect of members of Employees
Pension Scheme, 1995 working in ------ (Name of the Establishment)

1. Name of the Establishment and full address


2. Code No.
3. Name of the R.O/SRO/SAO of E.P.F.O
4. Date of Initial coverage under the Scheme
5. Effective date of grant of Exemption under Para 30 of EPS 95
6. No. and date of Exemption notification
7. Total Nos. of Employees as on date
8. No. of EFPS 1971 members as on 15.11.1995
9. No. of Employees/Members covered under the EPS 95 as on effective
date of Exemption.
10. No. of EPS members left the estt. between 16.11.1995 and effective
date. (individual details to be furnished separately with A/c PF No., date
of joining, date of exit, Pensionable service, salary at exit on which
contribution paid to Employees Pension Fund)
11. Name of the Trust as registered with RBI
12. Registration no. of the Trust with Public Deptt. Office of RBI
13. Date of Registration of the Trust with Public Dept Office of the RBI
14. Name and address of the Trustees
15. 3A/7PS in respect of above employees have submitted for the period
upto ________ and 3A/7PS for the remaining period is enclosed
herewith
16. Individual details of membership & contribution details are attached in
the prescribed annexure 1B
17. Amount claimed as per Annexure: Rs.

Certified that above particulars are correct and the amount claimed are as per
Table E of EPS 1995 against the existing Pension Fund Members of the
_______________ Employees Pension Fund Trust.

---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------

Name & signature of authorized official of


Establishment with stamp and date
173

Form 1A contd.

For office use

Certified that the claim for refund by________________ have been verified
as per Form 3A/7PS and ledger and found to be correct. The claim has been
processed as per Table E of EPS 1995 as under:

Amount as per annexure to Form 1A as on ___________ = ______________


Add Simple Interest declared under Para 60 EPF Scheme for the relevant
period upto last date of the month prior to transfer as on date of refund/release =
__________________

Total = _____________________________

2. Accordingly Rupees (in words)/Rs. (in figure) is to be transferred from


Employees Pension Fund to the/Trustees.

3. Certified that full particulars of the claim has been verified with the records
available with this office and Rs.__________________ is recommended for refund
to the Trust namely _________________.

Date, Name and Signature RC(F & A) _____________________________________

Name & Signature of RC in charge of the Region ____________________________

4. A sum of Rupees __________________ (in figures and in words) is


sanctioned for refund of past accumulation for the period ________________ to the
Trust namely _________________.

-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------

Date, Name and Signature of the FA & CAO

Note: Past accumulation under EFPS 1971 for the period up to 15.11.1995 is to be
claimed by submitting separate claim for the existing members.
174

Statement showing service & contribution details of employees of M/s._________________________ (For Establishment)

Name of Date of Father’s/ Provident/ Date of Break in Date of Wages Wages as In case of Details of 3A/7PS 3A/7PS Amount
the birth Husband’s Pension joining reckonable joining as on on date of cancellation (NCP) non submitted enclosed payable as
member (Enclose Name Fund EPFS service upto EPS 1995 15.11.95 exemption/ of exemption contributory up to for the per Table E
Form 2) Account 1971 16.11.95 cancellation wage period from which period
No. particulars 16.11.95 to the period for
from date of which it
16.11.95 to exemption/ was not
date of cancellation sent to
cancellation (years/months/ EPFO
(furnish in days)
Form 7PS)

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Total amount claimed in Rupees: ____________________________

List of enclosures: ________________________________________


175

APPENDIX I
IMPORTANT CIRCULARS
USE OF ASHOKA EMBLEM AS THE OFFICE STAMP OF RECOVERY
OFFICERS

Ministry of Home Affairs has objected the use of Ashoka Emblem as the office
stamp by the autonomous bodies. Headquarters has also taken a serious view of the use of
Ashoka Emblem without any authority and sanction and also directed that the practice of
using Ashoka Emblem as the office seal by some of the Recovery Officers of the
Employees Provident Fund Organisation has to be stopped with immediate effect. The
officers of the EPFO including the Recovery officers shall use only the approved symbol
of the EPFO in their office stamp as well as for letterheads. Any deviation will be viewed
seriously.

[Hqrs letter No.RRC/28(13)2003/7A-14B/Pt./87609 dated 17.02.2004]

RECOVERY CERTIFICATES – ISSUE AND EXECUTION

Recovery Certificates are issued in respect of all cases of demand raised during the
financial year which remain uncollected as on 31st March of the year, during the first week
of April itself.

Recovery Certificates relate to contributions, damages u/s 14B or interest levied u/s
7Q of the Act. In the Recovery Certificates item-wise details is required to be given as to
the nature of the dues, period of default etc. While issuing the Recovery Certificates care
may be taken to ensure that interest u/s 7Q is calculated up-to the date of issue of the
Recovery Certificate and shown separately by the authorised officer and added to the total
dues. Thereafter, admissible interest u/s.7Q shall be collected by the Recovery Officer
executing the certificate until the date of realization of the dues. This shall be specifically
reported and accounted against each Recovery Certificate.

The Recovery Officer shall show specifically the nature of dues in the challans
while making remittance on execution of the certificate. The Assessing Officer shall
ensure that there is no confusion in accounting, that the interest and damages are
accounted properly and not accounted against the PF dues.

While executing the Recovery Certificates instances of seizure/recovery of liquid


cash and negotiable instruments also occur. Wherever such instances arise, an official
receipt in CTR Form No.5 shall be issued under the signature of the Recovery Officer.
As soon as the cash is brought to the office, the same shall be entrusted with the office
cashier for immediate deposit of the same in the banks if not already done by the Recovery
Officer. Copies of the challans shall be received by the Recovery Officer and the triplicate
copy shall be sent to the authorised officer with a report. The quadruplicate copy shall be
kept on files of the Recovery Officer and necessary entries shall be made in his books of
accounts.

[H.O.Letter No.RRC/28(13)03/91371 DATED5.3.2004]


176

ASSESSMENT OF DUES UNDER SECTION 7A AND 14B OF THE ACT:

When the Compliance 01 program was introduced during 2001 detailed


instructions were issued to all the field formations to scrupulously follow certain norms for
accountability and transparency in quantification of dues under the Act. They were also
required to maintain the basic books of accounts and furnish the information to the
Recovery Officer as per the existing instructions. The Circle Officer was made the centre
point of compliance in all matters regarding to arrear management including recovery up
to the end of the financial year. Specific work norms were fixed for the Assessing Officers
as well. However, it is a matter of record that many regions do not adhere to these
instructions strictly with the result the arrears mount up which are not brought to the books
of accounts.

Directions were also issued making it imperative on the part of the supervisory
officers like RPFC-II and RPFC-I to scrutinize the assessment orders, at least eight orders
of each Assessing Officer every month. Out of the eight orders, four were to be selected
by the supervisory officer whereas four were to be submitted by the Assessing Officer as
per his choice. This should be communicated to the Head Office for every month before
10th of the subsequent month. Except from a very few regions, such information is not
received in the Head Office, which has been viewed seriously by the Central Provident
Fund Commissioner.

[vide H.O. Letter No.RRC/28(3)2003/7A-14B/68533 dated 9.12.2003]

RELAXATION UNDER PARA 79:


It has been observed by Internal Audit Party that a large number of establishments
have been enjoying relaxation under para 79 of the EPF Scheme, 1952 for the past several
years without issue of notification for grant of exemption by the Appropriate Government.
It may be mentioned that relaxation under Para 79 is only a temporary arrangement to
avoid delay and facilitate the establishments to implement their PF Scheme pending
notification by Appropriate Government granting theme exemption from the operation of
the provisions of the employees Provident Fund Scheme, 1952. The compliance position
of the establishment concerned is to be kept under observation during this period, on the
basis of which Regional Provident Fund Commissioner may take a decision regarding
suitability of the case for recommendation to Head Office for issue of Notification by
Appropriate Government.

All such cases which are pending as relaxed under Para 79 for more than two years
may be reviewed and their proposal may be submitted to Head Office along with all
supporting documents.

In case the establishment does not satisfy all the condition required for exemption,
the matter for withdrawal of relaxation be considered after following the due procedure as
laid down in this regard without any delay.

[Head Office letter no.E.III/18(8)2001/68427 dated 11.12.2003]


177

DISCONTINUATION OF SPECIMEN SIGNATURE FOR TRANSFER OF


SECURITIES:

In continuation of the Head Office letter No.Invst.I/6(4)96/Authorisation dated


23.9.2002 on forwarding of specimen signatures of all the Regional PF Commissioners,
who authorise the requisition for transfer of past accumulations by way of securities to
establishments exempted from the purview of Employees’ PF Act, 1952 and Schemes
framed there under for verification by Central Office before the State Bank of India and
regarding transfer of provident fund accumulations in shape of cash/securities to exempted
establishment 100% in cash vide Head Office letter No.Invst.I/1(10)2000 dated 4.9.2003,
specimen signature for transfer of securities are not required and the same is
discontinued.

[H.O.Letter No.Invst.II/6/MR/RO/98/03/MH/77945 dated 12.01.2004]

REGARDING COST OF RECOVERY INCLUDING COST OF LITIGATION:

Employees Provident Fund Organisation has been incurring heavy expenditure


towards stationary, postage, transport and communication litigation, advertisement etc. for
recovery of dues from the defaulting establishments. Auction sale of movable and
immovable properties, arrest and detention of defaulters are also expensive exercises for
the Employees Provident Fund Organisation. Substantial amounts are being spent from
the administrative account by the field offices regularly. Very often these amounts are
either not recouped at all or recouped only partially. Approach to realization of cost also
differs from office to office. It is to be ensured that our recovery exercise should not be at
the cost of the revenue health of the organization. Moreover the defaulters need to bear a
cost for their non-compliance as well. The rule 5 of the II schedule to the IT Act also
emphasizes this.

The expenses towards recovery exercises are to be recovered from the defaulters
and all the field offices shall have a uniform approach to the same as detailed below:

S.NO. Nature of services Cost/Fees


1. Summons and notices Rs.50/- or actual cost whichever is
including letters sent by post higher.
2. Attachment of properties Actual cost incurred subject to a
minimum of Rs.500/-.
3. Cost of litigation Actual cost subject to a minimum of
Rs.500/- per case.
4. Auction, sale, release etc. of Actual cost incurred for valuation,
movable properties transportation, auctioneer and also for
process subject to a minimum of
Rs.1000/-.
5. Auction, sale, release etc. of Cost incurred for prohibitory order,
movable properties valuation, auctioneer, processing
including cost oftransportation
incurred for the third parties subject to
a minimum of Rs.1000/-.
178

6. Warrant of arrest, detention Actual cost including transportation


and release charges subject to a minimum of
Rs.1000/- per case.
7. Cost of advertisement for Actual cost + 10% processing charges.
sale proclamation, sale etc.
8. Attachment of bank account Rs.500/- per attachment.
9. Appointment of receiver Actual cost involved including
receivers’ remunerations subject to a
minimum of Rs.1000/-.

[Hqrs letter No.RRC/28(13)03/87579 dated 17.02.2004]

ENTITLEMENTOF ASSURANCE BENEFIT UNDER EDLI SCHEME 1976 –


CLARIFICATION IN RESPECT OF CASES PERTAINING TO MISSING
EPF MEMBERS

The spirit behind the scheme is to provide some additional social security to
the family of the member in the form of insurance if he dies in service while being a
member of the Fund. In case of a missing member it cannot be established that
member died while in service.

In view of the above, payment of Assurance Benefit under EDLI Scheme


1976 in respect of missing EPF members is not contemplated.

Accordingly, Para 10.07.02 (ii) in Manual of Accounting Procedure Part II A


may be treated as deleted.

[vide H.O.Letter No.WSU/5(3)2002/EDLI/79087 dated 20.01.2003]

RETURN OF CAPITAL OPTION IN THE CASE OF DISABLEMENT PENSION

On application of explanation 3 to Para 13(1) of Employees’ Pension Scheme


1995, the following case has been received from one of the PF Member, the details of
which are as under:-

The Original pension in the case is Rs.250/- and Return of Capital amount is
accordingly Rs.25,000/. However the member aged 18 years and on his death the
reduction @Rs.1000/- for every year by which the age falls short of 50 years (32 years)
amounts to Rs.32000/-. Therefore the total amount of Return of Capital benefit is
Rs.25000/-. Whereas the total amount to be deducted comes to Rs.32000/-.

Wherever on the application of the above provision results in minus payment, the
option for ROC in such cases may not be entertained.

[CPFC Circular No.Pen/Misc/2002/68101 dated 10.12.2003]


179

PAYMENT OF WITHDRAWAL BENEFITS IN CASE OF DEFAULTING


ESTABLISHMENT – CLARIFICATION ON PARA 16A OF EMPLOYEES’
PENSION SCHEME 1995:

Para 16A of Employees’ Pension Scheme 1995 provides guarantee of pensionary


benefits in the event of default by the employer in remittance of contribution. According
to the said provisions, none of the pensionary benefits under the Scheme shall be denied to
any member or beneficiary for want of compliance of the requirement by the employer
under Para 3(1) of Employees’ Pension Scheme 1995.

Consideration of withdrawal benefits as pensionary benefits has been clarified by


Ministry of Labour, Government of India vide their letter No.S-16015/5/2001-SS II dated
02/12/2003 as follows:-

“the issue (Payment of withdrawal benefits in case of defaulting


establishments) has been examined as per the provisions of the scheme and it is
clarified that withdrawal benefits as envisaged in para 14 of EPS 1995 is not to be
considered as one of the pensionary benefits as mentioned in para 16A of the
scheme.”

(H.O. Letter No. Pen-2/7/Clarif/97/A/73834 dated 31.12.2003.)

In continuation to the above circular, it is further clarified that in respect of an


establishment defaulting in remitting contribution to the Employees Pension Fund 1995 for
any period, withdrawal benefit will not be paid to the member in respect of the default
period. In other words, period of default shall not be counted for the purpose of
calculating quantum of benefit under para 14 of Employees’ Pension Scheme 1995.

The member is entitled to withdrawal benefits only in respect of the period for
which the contributions are received.

(H.O. Letter No. Pen-2/7/Clarif/97/A/ dated 29.01.2004.)

CLARIFICATION ON CHANGE OF DATE OF BIRTH OF EMPLOYEES


PENSION FUND MEMBERS:

In order to avoid delay in pension payment, it has been decided by Headquarters


that all Regional Provident Fund Commissioner-in-Charge of the Regions are permitted to
consider the genuine cases of change of date of birth where the variation is up to a period
of two years plus or minus between the age/date of birth recorded in our records and date
of birth/age claimed by the member through his employer.

It is reiterated that while considering all such cases the guidelines issued by this
office vide circular No.Pension.3/8/Orissa/96-97 dated 8.1.02 should strictly be followed.

[Hqrs letter No.Pen/3/8/OR/2003 Pt./87172 dated 16.02.2004]


180

PRIORITY PAYMENT OF PF DUES – ORDERS OF DEBT


RECOVERY TRIBUNAL, MUMBAI:
The Debt Recovery Tribunal, Mumbai has held that the EPF Organization has got
priority in securing payment and also initiating recovery action for realizing its dues. The
Recovery Officer of the EPFO is entitled to sell even the mortgaged properties of the
secured creditors and can not be restrained from conducting the auction. The Debt
Recovery Tribunal has agreed that EPF dues has got priority as contemplated under
Section 11(2) of the EPF & MP Act, 1952.

Ref: (i) HO Circular No. Compliance 04/Recovery/2004-05/Cir/23834 dated 23.7.2004.


(ii)Misc. Appln. No.24 of 2004 in judgement dated 29.6.2004 of Mumbai D.R.T.-I.

WITHDRAWAL OF INSTRUCTION FOR REFUND OF


CONTRIBUTION TO THE MEMBER EXITING WITH SERVICE
LESS THAN SIX MONTHS UNDER – EPS-1995:
As per the provisions of Para-9 of EPS-1995 while arriving at eligible service,
period of service less than six months shall be ignored and period of service of 6 months
and above shall be rounded off to one year. Therefore, no benefit is payable to members
exiting with less than 6 months service. No refund of contribution shall be paid to
members exiting with less than 6 months service and claiming benefit.

[Hqrs letter No. Pen/12/33/EPS Amend/96/Pt.V/54310 dated 04.11.2004]

CLARIFICATION ON PROVISO TO PARA 11(3) OF THE EPS, 1995

The employees whose salary as on 16.3.96 was above statutory limit or exceeded
the wage limit after 16.3.96, but remittances made by the employer to A/c No.10 is upto
wage ceiling and not on such higher wages drawn by the employee, such workers can not
be allowed now to contribute at higher wages. If any workers wages was over and above
the salary ceiling and whose options were (exercised) forwarded to RPFC but contribution
were not on such higher wages drawn by them, retrospective remittance cannot be
allowed. The establishment was not expected to forward the option on piecemeal at their
discretion, if any worker has exercised option to contribute on such higher salary with
retrospective the same cannot be allowed. In some cases it is revealed that though the
workmen salary was over and above the wage ceiling prescribed under EPS, 1995 but
contribution were restricted to the wage ceiling up to 31.5.2001 and some have exercised
option to contribute on such higher salary w.e.f. 1.6.2001 to avoid back period
contributions. Such practice should not be allowed.

[Hqrs letter No. Pen.4 (38)/96/WB/59867 dated 01.12.2004]


181

RECOVERY OF PF DUES BY AUCTION/SALE OF ATTACHED


MOVABLE/IMMOVABLE PROPERTY OF DEFAULTERS

The instructions issued vide Letter No.RRC/Misc/Circular/2001/4410 dated


th th
16 /18 April, 2002 are withdrawn forthwith. Henceforth the Recovery Officer shall
exercise the recovery powers vested in them under Section 8B to 8G of the EPF & MP Act
read with IInd Schedule and IIIrd Schedule of Income Tax Act, 1961 and Part III of
Income-tax (Certificate Proceedings) Rules, 1962 without any approval from their
administrative authority. In order to streamline and expedite the recovery of arrears &
arrest the growth of default, the recovery powers in respect of the cases involving more
than 10 lakhs shall be exercised by RPFC II in his original jurisdiction. In respect of the
arrears below 10 lakhs, APFCs shall continue to discharge the functions of Recovery
Officer. In respect of SROs/SAOs, with the Officer-in-charge of the level of APFC it shall
be the responsibility of the Officer-in-charge to exercise jurisdiction in respect of the cases
involving more than 10 lakhs and that of APFC(Compliance) for the cases below 10 lakhs.
[Authority: Hqrs. Letter No.RRC/Misc/Circular/2001/6942 dated 28.4.2005/3.5.2005]

REALISATION OF PROVIDENT FUND DUES FROM DEFAULTING


ESTABLISHMENTS

All the assessing officers are requested to follow the following drill to tackle the
defaulters and arrest the growth of arrears:

(i) Enquiry under section 7A should be initiated on month to month basis against all
persistent and chronic defaulters. Officer-in-charge shall ensure the assessment of dues on
monthly basis against all such defaulters;

(ii) In case of default in payment of employees’ share deducted from the wages of the
workers, the assessing officers shall ensure that the police complaint u/s 405 explanation
(1) are filed on monthly basis without fail. It shall be the responsibility of the RC(C&R)
and Officer-in-charge of the SROs/SAOs to ensure the logical end as per law to all such
complaints filed with the police authorities.

(iii)In case of failure on the part of the establishment to remit the dues as per the time
given in the Order under section 7A, the Prosecution cases u/s 14 of the Act shall be
launched against the estts. and its’ responsible persons. It shall be the responsibility of
Officer-in-charge in case of SROs/SAOs and of RC(C&R) & RC(I) in case of ROs to
ensure that the Prosecution Cases are filed against the persistent and chronic defaulters. It
is to clarify that the establishments which are in default of more than 10 lakhs shall come
within the definition of persistent and chronic defaulters. The estts. which fail to remit the
dues for three months in the financial year shall also be treated as the persistent and
chronic defaulters. These instructions are in modification of the instructions issued vide
Circular No. PQ Cell/1(1)87/Vol-I dated 12.5.1993 wherein the Regional Commissioners
are restrained from prosecuting the sick estt. registered with BIFR without prior approval
of Central Office. Henceforth, no approval of Head Office is required.
182

(iv) The Recovery Officers and the Assessing Officers shall invoke all the actions
provided in Section 8B to 8G of the Act for the realization of dues. Any failure on the part
of the concerned officer to invoke timely recovery action such as attachment and auction
of movable and immovable property, arrest and detention in the civil prison of the
defaulting employer and appointment of receivers shall be viewed seriously. It is to
emphasise that all movable and immovable properties attached uptil now should be put up
for auction for the realization of dues. There should not be any un-reasonable delay in
putting the property to auction after attachment of the same. RC (I) of the region and
Officer-in-charge shall review the cases of establishments in more than 10 lakhs on
fortnightly basis and record their observations in the concerned file of the estts.

(v) In case of delay in remittances of dues, assessing officers shall, besides timely levy &
recovery of damages u/s 14B of the Act shall ensure collection of interest u/s 7Q of the
Act as well for delayed payment including delay in remittances of damages after the expiry
of time granted in the 14B Order.

[Hqrs letter No. RRC/Comp-05/18(6)05/73703 dated 06.01.2005]

DELEGATION OF POWERS FOR THE SETTLEMENT OF CLAIMS OUT OF


UNCLAIMED DEPOSIT ACCOUNTS :

1. AAO in charge of Accounts Group may authorize claims up to Rs.10000/- out of UCD
accounts provided the same is counterchecked by another AAO.

2. APFC may authorize claims up to Rs.50000/- out of UCD account provided the same is
counterchecked by another APFC.

3. Claims of Rs.50000/- and above out of UCD accounts may be authorized by OIC or RC
(F&A) only.

It is however, reiterated that all the existing procedures provided in the Manual of
Accounting Procedure and instructions issued by HQ be scrupulously followed while
processing such claims out of UCD Accounts.
[vide H.O.Letter No.WSU/5(1)2003/Clar/71618 dated 28.12.2004]

LEAVE ENCASHMENT SALARY:

The Leave encashment salary comes under the ambit of basic wages for payment of P.F.
contributions vide circular No.Co-ord/3(4)2002 clarification/7731-2844 dated 6th May,
2004 and Circular No.C-I/(20)(1)2003/Misc/DL/72311 dated 3.3.2003. For uniform
application, it has been decided that Leave Encashment paid on or after 1.10.1994 i.e.
the date of the judgement of the Hon’Ble High Court of Bombay shall be liable for
Provident Fund deductions.

(Authority : Head Office Circular No.Co-ord/3(4)2002/clarifications/2002 dated


16.5.2005)

It is advised to enforce the recovery of PF contribution on leave encashment paid on or


after 01st May 2005 and keep the actions of recovery upto 30.04.2005 in abeyance.
[Authority: H.O.Letter No.Co-ord/3(4)2002/clarifications/50673 dated 09.09.2005]
183

DISPENSING WITH SUBMISSION OF NON-REMARRIAGE CERTIFICATE


EVERY YEAR BY WIDOW PENSIONERS:

The widow pensioner under EPS, 1995 shall not be required to submit Non-
remarriage certificate every year, instead an undertaking to the effect that, in the event of
her remarriage she would report this fact to the Pension disbursement agency/EPFO
immediately, shall be taken at the time of commencement of pension. The modified
Proforma of Non-re-marriage certificate is annexed. However, widower pensioner will
continue to submit non-remarriage certificate as usual in the month of November every
year. All widow Pensioners may also be asked to provide the certificate in modified
Proforma this year, so that they will not be required to furnish Non-remarriage certificate
from next year.

Name of the Pensioner____________________ PPO No.________________

Bank_________________ Branch_________________ S.B. A/c. No._____________

(b) LIFE CERTIFICATE

Certified that I have seen the pensioner whose details are given above and that he/she is
alive on this date.

Signature/Thumb impression of pensioner


Guardian of Minor Children Pensioner

Place:
Date:
Signature of the Manager with Bank Seal

II. CERTIFICATE OF NON RE-MARRIAGE

(a) (Applicable to widow family pensioner and to be furnished only once)

I hereby declare that I have not re-married and I undertake to report such an
event promptly to the Pension Disbursing Agency/EPFO.

(b) (Applicable to widower family pensioner to be submitted in the month of


November every year)

I hereby declare that I have not got re-married till date.

Date:
Signature/Thumb impression of pensioner

Place:
184

I certify to the best of my knowledge and belief that the above declaration is correct.

Signature of a responsible officer or a well-known person

Place: Name_____________
Date : Designation____________________

(For the use of Disbursing Branch)

Forwarded to Regional P.F. Commissioner through Link Branch. One copy of the
above certificate is retained.

Place: Signature of Manager


Date : Office Seal

(For the use of Regional P.F. Commissioner’s Office)

Entered in the Computer (Bank Reconciliation statement) for updation.


(To be preserved in the PPO file)

D.E.O. (EDP Section) A.A.O.(Pension Section)

RATE OF INTEREST FOR THE BROKEN CURRENCY PERIOD

In exercise of the powers conferred by Sub-section (1) of Section 7 of the


Employees’ Provident Funds and Miscellaneous Provisions Act, 1951 (19 of 1952), the
Central Government hereby makes the following Scheme further to amend the
Employees’ Provident Funds Scheme, 1952, namely:-

(1) (i) This Scheme may be called the Employees’ Provident Funds
(Amendment) Scheme, 2007.
(ii) It shall come into force on the date of its publication in the Official
Gazette.

(2) In the Employees’ Provident Funds Scheme, 1952, in paragraph 60, after
the second proviso to clause (b) of sub-paragraph (2), the following proviso shall be
added, namely:-

“Provided also that the rate of interest to be allowed on claims for refund for the
broken currency period shall be the last declared rate on Employees’ Provident Fund
and if the rate declared for any current year happens to be less than the previous year’s
declared rate, then it would accrue as bonus to the outgoing members and it shall be
incorporated into calculation for deriving the current year’s rate of interest at the end of
the year and the claims settled under this proviso shall be final.”

(Authority: H.O. Lr. No. Co-ord./13(Notification)07/1268 dated 10.4.2007)


185

CHANGE OF NOMENCLATURE OF “UNCLAIMED DEPOSITS ACCOUNT”


AS “INOPERATIVE ACCOUNT”

The Government of India, Ministry of Labour and Employment has issued


notification dated 22.3.2007 vide which the following amendment has been made in
Para 72(6) of the EPF Scheme, 1952.

(i) In paragraph 72 in Sub-paragraph (6), for the words “Unclaimed Deposits


Accounts”, the words “Inoperative Account” shall be substituted.
(ii) In paragraph 72 in Sub-paragraph (6), in the proviso, for the words
“Unclaimed Deposits Account”, the words “Inoperative Account” shall be
substituted.

The above amendment in the nomenclature of “UCD Account” as “Inoperative


Account” is to be incorporated henceforth in all correspondence and also in the
Balance Sheet for the financial year 2006-07.

(Authority: H.O. Lr. No. Bkg/Inoperative Account/2007/Analysis/1369 dt.20.4.2007)