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Report No. 137

4.1.2. Withholding payments for reasons not warranted by law and in violation of spirit of section 10-need for remedial amendment.-

The Legislature has extended unqualified immunity to the provident fund accumulations from being attached in respect of any debt incurred by an employee and has gone to the length of providing that the said amount shall not be capable of being assigned or charged. The Legislature has also provided that on the death of an employee, in case there is a nominee, the amount will vest' unto the nominee free from any debt or liability incurred by the employee before his death, subject only to deductions authorised by the Scheme or the rules of the concerned provident fund.

Notwithstanding this immunity embodied in section 10 of the Act, it has been noticed that the amount of provident fund is often being withheld by the employers pending vacation of residential accommodation allotted to the employee by the employer. This course is not authorised by law and is against the very spirit of the Act and the Scheme framed thereunder. For, withholding on such a ground virtually amounts to attachment of the amount in questione or bringing illegal pressure.

4.1.3. Even though there is no provision in the Act or the Scheme framed thereunder for withholding provident fund claims on such a ground, the Bombay High Court in Kareparambil Theyyan Lakshmanan v. Air India, 1986 (1) CLR 138. refused to grant relief in its writ jurisdiction to the petitioners, whose amount of provident fund was withheld by the employer (Air India Corporation) on the ground that they had not vacated the residential accommodation allotted to them. The High Court held that in case the Court permits such employees to seek relief under Article 226 of the Constitution, then it would merely promote dishonestly.

It is perhaps not realised that more often than nought it is not a case of dishonest conduct but a case of helplessness to secure accommodation in these times of acute housing shortage and steep rise in prices of properties and in rents. Taking shelter under the judgment of the Bombay High Court, the employers withhold the payment of the amount of provident fund till the official residential accommodation is vacated by the employees.

To quote by way of an illustration, the Maharashtra State Road Transport Corporation, relying on the judgment of the Bombay High Court, has taken a policy decision not to release the retirement dues to its employees till the complete charge of all belongings of the Corporation it handed over by the employees.

While the conduct of the employees in refusing or failing to vacate the official residential accommodation or to hand over the charge of the other belongings of the employer when called upon to do so, cannot be approved it cannot be gainsaid that the release and payment of the amount of provident fund cannot be allowed to be withheld on this ground. Apart from the fact that there is no authority in law for doing so, it would be violative of the spirit of section 10 of the Act and in negation of the legislative intent manifest in the provision.

Besides, in a sense it would be counter-productive in as much as it would operate as a hurdle in the way of the concerned employee acquiring an alternative accommodation with the aid of the said resources. So also the insistence on 'No Demand Certificate' has no justification since no deduction can be made from the P.F. accumulations unless provided by the Scheme or the rules of the Fund. Moreover, the official authorised to grant such a certificate is under no obligation or compulsion to issue it urgently or even within a reasonable time frame.

The Commission, is therefore, of the view that it needs to be provided by way of an Explanation to section 10 that no part of the provident fund shall be withheld by the employers pending vacation of the official residential accommodation by the employee or pending the production of "No Demand Certificate)".

Need for creating Office of Ombudsman and for Evolving Legislative - Administrative measures Inter alia to relieve hardships caused by Inordinate Delays in settling Provident Fund claims of Beneficiaries Back

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