Whether Employees dues can be withheld merely because its agency/ principal employer failed to furnish PF, ESI ?

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SHUBHAM BUDHIRAJA[1]

Company-A and Company-B entered into a service agreement as per which Company- B to provide the housekeeping, staff, and guard services at all offices of Company-A in India. The agreement further requires Company-B to furnish compliance proof of payment of ESI, PF of the employees deputed. The Dispute arises on payment of dues and matters reach arbitration. The Arbitral tribunal allowed the claim of Company-B for non-payment of salary dues of the employee deputed.  The Company-A challenged the award on the ground that the arbitrator has committed patent illegality by ignoring specific terms of the agreement which mandate Company-B to furnish compliance report on payment of ESI, PF. The Hon’ble High Court refused the plea and held that the breach committed by Company-B is not material one. The withheld of payment by Company-A is not because of the non-furnishing of compliance report by the Company-B. The Company-A could have made the payment by deducting the statutory dues amount. The Company-A no-where in its termination notice cited this ground as a reason for non-payment.  The Employees dues cannot be made to suffer merely because Company-B has not submitted the compliance report on payment of ESI, PF. Hence, the arbitrator view is plausible one


 


[1] Advocate, Delhi High Court, shubhambudhiraja02@gmail.com , Member, Delhi High Court Bar Association, Associate Member-ICSI, Secretary, NGO Shaurya Ek Samman, Delhi

[2] O.M.P. (COMM.) 413/2020, Delhi High Court, 06.05.2022

 

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