Interest on provident fund contributions is payable only from the date of remittance, not retrospectively.

JUDGMENT The short issue that arises for consideration in this writ petition is whether interest under Section 7Q of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (in short ‘the Act’) is payable on contributions made on account of pay revision effected from a retrospective date. In the facts of the present case, the pay revision was effected in the case of the employees of the petitioner Federation on 11.10.2018 through G.O. (Ms)No.81/2018/ID with effect from 01.07.2010. It is the case of the petitioner that the pay revision benefits were disbursed to the employees not in lumpsum, but by making separate payments from time to time. It is submitted that by now all the pay revision benefits have been disbursed to the employees. The petitioner has also remitted contribution towards the Employees Provident Fund on the basis of the revised pay sanctioned to its employees. However, it is now faced with a demand for interest under of the Act on the ground that such interest was payable on the revised amount of salary from the date from which such revised salary was payable though the sanctioning of the pay revision was only on 11.10.2018. The petitioner has also been mulcted with damages under Section 14B of the Act. However, the question of damages is now pending consideration before the Central Government Industrial Tribunal at the instance of the petitioner.

2. The learned counsel appearing for the petitioner submits that the question as to whether interest is payable as now demanded by the Provident Fund Department on account of pay revision was considered by a Division Bench of this Court in W.A.No.1902 of 2017 (M/s. Kerala Minerals & Metals Ltd. v. Regional Provident Commissioner), where the Division Bench has taken the view that the interest under Section 7Q of the Act shall not be payable for the entire period and it shall be payable only for the period when there was a delay in making the provident fund contribution after the pay revision was sanctioned. It is submitted that the Provident Fund Department filed a Special Leave Petition against the judgment of this Court in W.A.No.1902/2017 and by order dated 10.12.2024, the Special Leave Petition was dismissed. It is submitted that in such circumstances, the impugned Ext.P11 order and the consequential recovery notices Exts.P13 and P14 are liable to be set aside.

3. The learned Standing Counsel appearing for the Provident Fund Organization submits that interest is payable to the Provident Fund Organization on the amount remaining to paid for the period after the period for which the remittance relates. It is submitted that if for example, in the year 2025, a remittance is made in respect of an amount payable for the year 2020, even if such remittance was on account of pay revision sanctioned in the year 2025, the Provident Fund Scheme contemplates payment of interest from the year 2020. It is submitted that the amounts collected as interest under Section 7Q of the Act will be remitted to the account of the employees and does not accrue to the benefit of the Provident Fund Organization. The learned counsel referrred to paragrah 60 of the Employees Provident Fund Scheme, 1952 in support of his contention. It is submitted that, at any rate, any delay in the remittance after the pay revision order will attract interest under of the Act.

4. Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the Provident Fund Organization and having perused the judgment of this Court in W.A.No.1902 of 2017 and the order of the Supreme Court in SLP (C) No.29721-29725/2024 dated 10.12.2024, I am of the view that the matter requires reconsideration at the hands of the competent authority. The contention of the learned counsel appearing for the Provident Fund Organization that interest will have to be paid by the Provident Fund Organization to the employee / subsc