Case Study: No Criminal Liability for Not Submitting Employee Bank Details under EPF Scheme

Case:

M/s. Bectors Food Specialities vs. Regional Provident Fund Commissioner & Anr.
Cr. MMO No. 498/2018

Court and Date:

Himachal Pradesh High Court
Decided on: 23 June 2025
Hon’ble Judge: Mr. Justice Rakesh Kainthla

Relevant Law:

Employees’ Provident Fund Scheme, 1952

• Para 76(d): Provides punishment for failure to comply with any requirement of the Scheme.
• Para 78: Empowers the Central Government to issue directions for proper implementation of the Scheme or to remove difficulties.

Background:

The Provident Fund Inspector filed a criminal complaint against M/s. Bectors Food Specialities Limited and its officers, alleging non-compliance with directions issued under Para 78(1) and 78(3) of the Employees’ Provident Fund (EPF) Scheme.

The directions required employers to submit bank account details of all employees to update KYC (Know Your Customer) records for Provident Fund accounts. The company allegedly failed to comply with these instructions, leading to a complaint before the Judicial Magistrate, First Class, Court No. II, Una (H.P.) for offences under Para 76(d) of the EPF Scheme.

The company challenged the complaint before the Himachal Pradesh High Court, seeking to quash the proceedings on the ground that there was no legal requirement in the Scheme mandating submission of bank details and that the directions issued by the government could not be treated as part of the Scheme itself.

Legal Issue:

Whether an employer can be held criminally liable under Para 76(d) of the EPF Scheme, 1952, for failure to submit employees’ bank account details to update their KYC information, as directed by the Central Government under Para 78.

Key Legal Findings:

1. No statutory provision for mandatory KYC submission:
   The Court noted that no requirement in the EPF Scheme mandates the employer to submit employees’ bank details. Therefore, failure to do so does not constitute non-compliance with the Scheme’s provisions.
2. Distinction between Scheme provisions and government directions:
   While Para 78 empowers the Central Government to issue directions for implementation, such directions do not automatically form part of the Scheme. Hence, non-compliance with those directions cannot attract penal consequences under Para 76(d).
3. Prohibition against expanding statutory interpretation:
   The Court held that it is impermissible to read additional words like “directions issued under the Scheme” into Para 76(d). The punishment clause applies only to violations of the Scheme’s express requirements, not subsequent directions.
4. Reliance on judicial principles:
   Justice Kainthla referred to Lord Atkin’s dissent in Liversidge v. Sir John Anderson (1942 A.C. 206) and the Supreme Court ruling in P.D. Jambekar v. State of Gujarat (1973) to emphasize that courts cannot give strained interpretations or add meanings not present in statutory language.

Judgment:

The Himachal Pradesh High Court allowed the petition and quashed the criminal complaint pending before the Trial Court.

The Court observed:

• The allegations in the complaint, even if accepted as true, did not constitute an offence under Para 76(d) of the EPF Scheme.
• The KYC directive was merely an administrative instruction, not a statutory obligation.
• Continuing criminal proceedings against the employer would amount to abuse of the process of law.

Accordingly, the complaint bearing Registration No. 09/2015 was set aside, and the company was relieved from prosecution.

Conclusion:

This judgment reaffirms the principle that criminal liability cannot arise from administrative directions unless they form part of a statutory scheme. Employers are bound only by the express provisions of the Employees’ Provident Fund Scheme, not by subsequent instructions or circulars issued by the authorities.

The ruling also underscores the importance of judicial restraint — courts cannot read into laws obligations that the legislature has not explicitly provided.

Key Learning:

• Failure to comply with government directions (like KYC data submission) does not attract penal liability unless those directions are formally incorporated into the EPF Scheme.
• Para 76(d) applies strictly to contraventions of the Scheme’s provisions, not administrative orders.
• Courts will quash criminal proceedings where the complaint does not disclose an offence under the statutory framework.
• Employers should still ensure compliance with current EPFO circulars to avoid administrative action, though criminal liability arises only for violations expressly stated in the Scheme.
• The case strengthens the rule of legality in labor and compliance law — penal consequences must stem from clear legislative authority, not executive discretion.

Download the PDF copy of this Case:

Join the community that’s changing the way businesses handle compliance in India.