Can a Company be compelled to pay Provident Fund contribution in excess of its statutory liability at all times?

In Marathwada Gramin Bank Karamchari Sangathana and another V/s Management of Marathwada Gramin Bank and Others, 2011, the Bank, having received exemption under the Provident Fund Act, along with a permission from the Regional Provident Fund Commissioner to start paying Provident Fund contribution to its employees in accordance with its own scheme, started paying contributions in excess of its statutory liability.

Subsequently, the said exemption/relaxation was withdrawn and cancelled and the Bank was directed to pay contributions in accordance with the statutory scheme, however, the Bank continued to pay contributions as per its own, earlier scheme. Thereafter, the Bank, owing to huge accumulated losses had to, via a Notice of Change, express its intention to discontinue payment of contribution in excess of its statutory liability and continue to contribute as per statutory scheme. The Regional Provident Fund Commissioner issued a letter to the Bank informing that they cannot withdraw the present benefits and the dispute was referred to Industrial Tribunal by the Central Government. Subsequently, the question that was posed before the Supreme Court, was whether an employer, which had been paying Provident Fund contributions in excess of its statutory liability for a certain length of time, could be compelled to pay such excess amount at all times;

The Hon’ble Supreme Court held that the Bank was under an obligation to pay contributions as per the statutory liability. However, the Respondent Bank cannot be compelled to pay the amount in excess of its statutory liability for all times to come just because the Respondent Bank formed its own trust and started paying provident fund in excess of its statutory liability for some time. The employees therefore were certainly entitled to provident fund according to statutory liability of the Respondent Bank, which the Respondent Bank, in accordance with the provisions of the statutory Scheme, never discontinued

Leave a Reply