LexM/S EDELWEISS ASSET RECONSTRUCTION LIMITED versus REGIONAL PF COMMISSIONER II AND RECOVERY OFFICER, RO BENGALURU (KORAMANGALA) & ANR.
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[2025] 8 S.C.R. 2183 : 2025 INSC 1045 M/s Edelweiss Asset Reconstruction Limited v. Regional PF Commissioner II and Recovery Officer, RO Bengaluru (Koramangala) & Anr. (Civil Appeal No. 11105 of 2025) 26 August 2025 [Vikram Nath,* Sanjay Karol and Sandeep Mehta, JJ.] Issue for Consideration Present appeal assails the correctness of the judgment of the High Court dismissing the writ petition filed by the appellant-EARC and further directing that the amount deposited, vide order dated 02.02.2023, be transmitted to the account of the respondent no.1 herein; priority of first charge amongst the EPFO and the secured creditors in view of s.11(2) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Headnotes† Employees Provident Fund and Miscellaneous Provisions Act, 1952 – s.11(2) – Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – s.35 – Default by the Establishment, covered under the ambit of EPF Act, 1952 in payment of provident fund dues – Axis Bank claimed first charge by referring to s.35, SARFESI Act – Employees’ Provident Fund Organisation (EPFO) re-asserted its priority u/s.11(2) of the PF Act – Appellant-EARC contended that the EPFO has first charge over the property auctioned, whether by the appellant or by the Axis Bank – Whereas, the Axis Bank argued that in view of s.35 of the SARFAESI, the dues of the Bank being secured would have a priority over the sales taxes and other dues payable to the Government or local authority and thus, the EPFO would be entitled to recover anything from the Axis Bank only after its dues are fully satisfied – High Court dismissed the writ petition filed by the appellant: Held: Appellant did not implead Axis Bank as a party-respondent before the High Court – Admittedly, Axis Bank by sale of one of the property of the Establishment has realised an amount of Rs.12 crores approximately whereas, appellant by sale of the other two * Author 2184 [2025] 8 S.C.R. Supreme Court Reports properties has realised only Rs.7 crores approximately – Further, it is also admitted that the appellant had already paid Rs.75 lakhs and had in fact given an undertaking that it will pay Rs.78,42,579/- in full and final discharge of its liability – According to the appellant, the balance payment of Rs.1,30,52,221/- approximately may be recovered from the Axis Bank – It would be appropriate that the High Court first deals with the issues raised by Axis Bank that it has first charge and priority over and above the EPFO to satisfy its dues from the secured property in view of s.35 of the SARFAESI Act – High Court will examine the priority of first charge amongst the EPFO and the secured creditors i.e. the Axis Bank and other two Banks, namely, State Bank of India and the State Bank of Travancore (now taken over by SBI) in view of s.11(2) of the PF Act – Impugned order set aside – Writ Petition restored, to be decided afresh after impleading the Axis Bank as a respondent and after affording due opportunity of exchanging pleadings and hearing to all the parties to the said proceedings. [Paras 8, 10-12] Case Law Cited Maharashtra State Co-operative Bank v. Assistant PF, Commissioner (2009) 10 SCC 123 – referred to. List of Acts Employees Provident Fund and Miscellaneous Provisions Act, 1952; Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. List of Keywords Provident Fund; Employees’ Provident Fund Organisation (EPFO); Non-performing assest (NPA); Charge; Priority; Default in payment of provident fund dues; Priority of first charge; Priority of first charge amongst the EPFO and the secured creditors; First charge and priority over and above EPFO; Dues from secured property; First charge over the property auctioned; Axis Bank; Recovery proceedings; Auction; Auction sale; Remittance of the outstanding dues of the EPFO. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11105 of 2025 From the Judgment and Order dated 01.02.2024 of the High Court of Karnataka at Bengaluru in WP No. 2543 of 2023 [2025] 8 S.C.R. 2185 M/s Edelweiss Asset Reconstruction Limited v. Regional PF Commissioner II and Recovery Officer, RO Bengaluru (Koramangala) & Anr. Appearances for Parties Advs. for the Appellant: Krishnan Venugopal, Sr. Adv., Kaushik Mishra, Shivendra Singh, Ms. Prakriti Rastogi, Shailesh K. Rajora, Ms. Deepanshi Ishar, Avinash
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