On April 15, 2026, Patna High Court Chief Justice Sangam Kumar Sahu and Justice Harish Kumar, using the principle of ‘unjust enrichment’, ruled that the Employees’ Provident Fund Organization (EPFO) cannot retain the appeal amount deposited by an assessee (taxpayer) for almost 11 years, especially when the PF assessment itself has been cancelled. Yes. The Patna High Court also said that by retaining the assessee’s deposits of Rs 10 lakh, the EPFO has deprived him of the use of his money, over which he has a legal right. The court said that if EPFO had returned this money to the appellant after the assessment order was cancelled, he could have invested it somewhere and earned interest. Thus, by keeping the money with itself, EPFO not only took undue advantage and earned interest on it, but also deprived the Appellant of the opportunity to earn interest. For this reason, Patna High Court ordered EPFO to pay interest on this money.
What is the matter after all?
The case originated from a PF assessment order issued under the ‘Employees’ Provident Fund and Miscellaneous Provisions Act, 1952′, in which an organization was directed to deposit more than Rs 20 lakh as provident fund (PF) dues. The organization decided to challenge this order in the EPF Appellate Tribunal, but was directed to deposit the amount. Initially he could not deposit this amount, but later on the orders of Patna High Court, he deposited 50 percent of the total amount i.e. Rs 10,12,692 through four separate challans within the time fixed by the court.
Since the writ petition order of the Patna High Court had been complied with, the EPF Appellate Tribunal, New Delhi, on June 2, 2011, quashed the PF assessment order and remanded the matter back to EPFO, with directions to re-determine the liability. However, after being sent back to EPFO, the matter remained pending in the Provident Fund Department for almost 11 years and according to reports, the Provident Fund officials ignored the organization’s requests.
While the appeal was still pending, the Area Enforcement Officer of Nalanda submitted its reports on December 14, 2011 and May 8, 2012, estimating the organization’s liability at Rs 49,453 from September 4, 1999 to April 3, 2004. The organization paid the outstanding amount of Rs 49,453 through a separate demand draft. The PF officer had told him that the issue of such adjustment and refund of his amount of Rs 10.12 lakh already deposited with EPFO would be looked into separately by the department.
Assessee wrote letters
After depositing Rs 49,453 through demand draft number 710306 dated January 25, 2023, he submitted two letters to the Regional Provident Fund Commissioner-II. In these letters he stated that he had paid the stipulated amount of Rs 49,453, hence Rs 10,12,692 (including interest) deposited with the Provident Fund Department should be returned to him. However, despite the cancellation of assessment, the amount of ₹10,12,692 deposited by the assessee following the previous order of the Patna High Court was retained by EPF officials for more than a decade.
According to the Assessee, when the Regional Provident Fund Commissioner-II, Bihar, Patna himself admitted that after depositing the fixed amount of Rs 49,453, the refund request would be considered separately, then this work should have been done immediately along with interest. But this did not happen. Instead, on February 22 and 23, 2023, EPFO placed a new condition that before processing the request for refund of the additional amount of Rs 10,12,692 deposited by the assessee, the amount of penalty damages (penalty) and interest, if any, will be calculated and adjusted.
The Assessee says that the Provident Fund Department had no solid reason or justification for not returning the additional amount of Rs 10,12,692 along with interest, which was deposited with them since October 2009. Ultimately this amount was returned to him in 2023. Based on this, he presented his case in the Patna High Court and argued that the appeal process dragged on for almost 11 years and even though his total liability was fixed at only Rs 49,453 in the last assessment in 2022, the excess amount was not immediately refunded. Therefore, according to him, he was charged interest on EPFO for the delay.
Patna High Court order
EPFO’s counsel argued that there is no legal provision for paying interest on such deposited amount and this amount was deposited following the instructions of the court. Patna High Court rejected this argument of EPFO and said that it is an undisputed fact that Rs 10.12 lakh were deposited in 2009 and were returned only in October 2023, and during this time EPFO officials kept that money with themselves and used it.
Patna High Court said that the principle laid down in the case of ‘Cooperative Block Udyog Mandal Limited’ and other decisions given are fully applicable in this case. This case is related to the principle of ‘unjust enrichment’, according to which no person can be allowed to gain unfair advantage at the expense of another. Unfair advantage is considered when retaining any advantage is against justice or fairness.
Patna High Court said that when the assessment order was canceled in 2011, the EPFO officials had no justification to retain the deposited amount. The Patna High Court also rejected the argument that the delay was due to quasi-judicial proceedings. The Court said that as per Tribunal rules, appeals should be disposed of within six months as far as possible, whereas in this case the case dragged on for almost 11 years without any fault (on the part of the assessee). According to Live-Law report, finding no infirmity in the single judge’s order, the court refused to interfere and upheld the direction to pay interest at the rate of 6% per annum.
