CAG raps EPFO for slow recovery, legal lethargy

Written by Raj Kumar Ray | New Delhi | Updated: Dec 19 2012, 09:28am hrs
The Comptroller & Auditor General (CAG), in an interim report, has slammed Employees Provident Fund Organisation for slow recovery of dues following court orders and delays in filing criminal cases against companies that dont deposit workers PF dues in time.

The performance audit by CAG comes following a rise in arrears and interest dues, which has lowered the funds ability to pay higher interest to its 4.5 crore subscribers. Due to paucity of funds in 2011-12, EPFO paid 8.25% interest as against 9.5% in the previous year.

CAG is conducting a performance audit on EPFO. Discussions are on. In the interim report, CAG has pointed out some discrepancies, an EPFO official told FE.

While CAGs office declined to divulge any details, EPFO officials admitted to lapses for various reasons including shortage of manpower in some offices.

In its interim report, CAG has pointed out that field officers dont take prompt action in collecting fines awarded by courts.

The CAG has also pointed out that there is considerable delay in filing criminal cases in instances where contributions deducted from wages of employees are not remitted to the statutory account by the employer. The CAG audit found that delays in initiating appropriate legal proceedings by EPFO impacts the timely collection of dues.

Highlighting the concerns raised by CAG, EPFO has issued a circular asking all regional offices to be careful in monitoring court cases, their disposal and prompt collection of fines wherever awarded.

To avoid delays, EPFO has also asked its officers looking into compliance issues to file police complaints on a monthly basis wherever such offenses occur and are detected.

During 2010-11, EPFOs total arrears amounted to R2,383.49 crore of which dues amounting to R1,851.31 crore, or 77.67%, may not be immediately realisable and R532.18 crore are realisable through recovery proceedings.

The arrears falling under the not immediately realisable category could not be recovered over the years due to various reasons including disputes in courts and tribunals, liquidation of firms, recovery action barred by the Acts of central and state governments and sanction of installments. A major chunk of arrears cannot be recovered as many companies were referred for rehabilitation.

Stay orders by courts have blocked R1,022.42 crore of arrears while liquidation of companies resulted in PF dues of R244.26 crore.

As on March 31, 2011, of the 148 cases in the Supreme Court, only 23 were decided. The pendency in high courts stood at 8,933 while the number was even greater for district courts at 16,262.

The interest payment due to EPFO for late remittances by companies, as mandated under Section 7Q of EPFO Act, amounted to R303.23 crore in 2010-11.

In contrast to the huge arrears, EPFO recovered R219.79 crore by attachment and sale of properties of defaulting establishments.