Hyderabad: The Telangana High Court has held officials of the Regional Provident Fund Commissioner’s office at Patancheruvu under the Employees’ Provident Fund Organisation liable to pay interest to Virtusa Consulting Services Pvt. Ltd. for retaining ₹4.05 crore after the original provident fund assessment was set aside.
Justice Nagesh Bheemapaka ruled that while the EPFO was entitled to challenge the appellate order, it could not retain the company’s funds indefinitely without implementing the tribunal’s decision or promptly approaching the court. The court observed that a party cannot be made to suffer due to administrative inaction.
The dispute arose from an assessment under Section 7A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, wherein the EPFO alleged that the company had excluded components such as conveyance allowance, food coupons and special allowance while calculating provident fund contributions, and had not followed the applicable wage ceiling for international workers. Based on this, dues of ₹4,05,00,748 for the period between November 2008 and June 2015 were determined and recovered in March 2020.
The company challenged the order before the Central Government Industrial Tribunal-cum-Labour Court, which on May 3, 2024 set aside the EPFO’s assessment and remanded the matter for fresh adjudication. The EPFO neither refunded the amount nor challenged the order for over 18 months, leading the company to approach the High Court.
During the hearing, the EPFO submitted that the amount represented employees’ social security contributions and that the appellate order had been challenged in 2025, with an interim stay granted. It argued that refunding the amount could affect proceedings relating to statutory interest and damages.
Rejecting the contention, the court noted the absence of any explanation for the delay between May 3, 2024 and November 19, 2025 in challenging the tribunal’s order. It held that retaining the funds without a protective judicial order was arbitrary and contrary to principles of fairness, restitution and equity.
The court directed the EPFO to pay interest at nine per cent per annum on ₹4.05 crore for the period between May 3, 2024 and November 19, 2025, within eight weeks. It further ordered that the interest liability be recovered from the officers responsible for the delay.
The court also directed that the interest accrued on the deposited amount during the same period be donated to the Prime Minister’s National Relief Fund. It did not express any opinion on the merits of the underlying provident fund dispute.
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