Tag Archives: Defaulters

Attachment of Immovable Property by ESIC & EPFO !

The procedure followed for the recovery of arrears from the defaulters is common for both the ESIC and the EPFO. The provisions of the Second Schedule to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962 as were in force as on 01.04.1989 are followed by both the organisations. The procedure followed by the Recovery Officers and the rights of the defaulters and the general public are brought out in the Power Point Presentation given below.

Click on the slide below to reach the Presentation



Leave a comment

Filed under For Trainees, Powerpoints, Recovery

Action Against Defaulters: Quo vadis, the ESIC?

Excerpts from a news item from the Times of India dated 07.12.2012:

“It has been observed that open-ended assessment, inquiries and investigations serve no real purpose. Moreover, such inquiries often do not result in the identification of beneficiaries and only tend to harass the employers and establishments. It is accordingly directed that no inquiry or probe shall ordinarily go beyond seven years that is, it shall cover the period of default not exceeding preceding seven financial years. It is to be ensured that compliance actions are initiated in time and there is normally no reason for extending the scope of investigation and assessment inquiry beyond previous seven financial years,” Central PF commissioner R C Mishra said in a circular issued on November 30, the day he superannuated.

“This circular is anti-worker. The law of limitation does not apply on us and does not stand the test of law as there are several Supreme Court rulings on the issue,” said A D Nagpal, Hind Mazdoor Sabha secretary and a trustee on the EPFO board.

“Nagpal said that fearing action, employees often do not complain against their employer till they leave service and the new provision will make it impossible for them to claim what is due to them.”

“It is not proper to have a time limit for what is an employee’s right,” added CITU president A K Padmanabhan, who is also on the EPFO board. He said the EPF statement usually does not reach employees on time and very few actually check the balance and deposits carefully.

Even before the circular was issued, there were protests within EPFO over the move. Sources said some of the members of a committee of officers on judicial proceedings had opted out from giving their recommendations as they recognized that the move was not employee-friendly. Yet, Mishra went ahead and issued the directive.


“In a country which has precious little by way of a social safety net, the provident fund is one of the few such fallback options, even if only for those in the organized labour force. Any change in the rules governing this scheme must therefore be tested on the touchstone of whether it enhances the safety net or weakens it. Imposing a time limitation on when defaults can be investigated clearly weakens it. Most of those whose savings lie in the EPF do not regularly track whether money is being deposited in it by their employers and, if so, whether it is as much as it should be. They may well discover a default well after it happens. Clearly, they cannot be left with no scope for redress due to a time limitation clause.”

What happened in the ESIC? The ESIC had, silently, restricted the duration to five years (and not seven as in the EPFO) and got the Act amended too. The cut-off date for determining the five years period is not with reference to the financial years but with reference to the 21st of every month. The cut-off date was just left to float, so fast.

Continue reading

Leave a comment

Filed under Amendments 2010

Defaulters: what the ESIC could do but did not.

Action had been taken once very effectively and enthusiastically by the ESIC Officers’ Federation in the year 1997 through a Member of the Standing Committee Mr. Gautam hailing from Mumbai, to streamline the work of follow-up with the defaulters by making it easier for the employers to pay the contribution. All the Regions were asked to give their opinion on it. And, all the Regions supported that proposal.

A recap of that proposal is appropriate.

  1. Every employer covered under the ESI Act would pay the contribution through a Cheque or Demand Draft in the Branch Office (then, Local Office) and get formal acknowledgment of the same.
  2. No payment would be received in cash by the Branch Office. The Branch Manager will arrange to deposit all the instruments  in the ESI Corporation’s Bank Account the next day by preparing a Broad Sheet for the same.
  3. By twenty second of every month, he would easily know which employer did not pay the Contribution for the previous month and issue notices to all those Partial Defaulters besides calling them over phone and remind them.
  4. In the case of Persistent Defaulters, he would issue Show Cause Notices after the six monthly Period of Contribution is over and send the notice as well as acknowledgment to the Regional Office for taking action for prosecution.
  5. He would, during the course of the month, obtain the Bank Reconciliation Statement and ensure that all the cheques and Demand Drafts presented by him were accounted for and no cheque was dishonoured.
  6. In the event of dishonour of any cheques, the Branch Manager would take further action of issuing notices in time as per law and send the papers to the Regional Office for further action.

This process was suggested by the ESIC Officers’ Federation after a lot of deliberation with various Regional Units.

Continue reading


Filed under For Trainees