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Supreme Court of India
M/S. Edelweiss Asset Reconstruction … vs Regional Pf Commissioner Ii And … on 26 August, 2025
Author: Vikram Nath
Bench: Sanjay Karol, Vikram Nath
2025 INSC 1045
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO………………………OF 2025
(ARISING OUT OF SLP(CIVIL) NO.11069 OF 2024)
M/S EDELWEISS ASSET
RECONSTRUCTION LIMITED ...APPELLANTS
VERSUS
REGIONAL PF COMMISSIONER II
AND RECOVERY OFFICER, RO
BENGALURU (KORAMANGALA) &
ANR. ...RESPONDENTS
JUDGMENT
VIKRAM NATH, J.
1. Leave granted.
2. The present appeal assails the correctness of the
judgment and order dated 01.02.2024 passed by the
Karnataka High Court in Writ Petition No.2543 of 2023
(L-PF), whereby the High Court dismissed the writ
petition filed by the present appellant and further
directed that the amount deposited, vide order dated
Signature Not Verified
Digitally signed by
NAVEEN D
Date: 2025.08.26
19:24:46 IST
Reason:
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 1 of 12
02.02.2023, be transmitted to the account of the
respondent no.1 herein, i.e., the sole respondent before
the High Court. Brief facts giving rise to the present
appeal are narrated hereunder:
2.1. M/s Acropetal Technologies Pvt. Ltd. (hereinafter
referred to as the ‘Establishment’) was covered
under the ambit of Employees Provident Fund and
Miscellaneous Provisions Act, 1952 1 . The
Establishment defaulted in payment of provident
fund dues since July, 2013 and accordingly an
enquiry was initiated under Section 7(A) of the PF
Act. After due enquiry and affording opportunity of
hearing to the Establishment, the Regional
Provident Fund Commissioner-II, Bangalore, vide
order dated 08.06.2015, determined a liability of
Rs.1,28,90,486/- against the Establishment and
accordingly directed it to deposit the same within 15
days. The order further indicated that any default or
failure may entail prosecution under Section
14/14(A) of the PF Act in addition to recovery
proceedings under Section 8(B) to 8(G) of the PF Act.
1
For short, “PF Act”
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 2 of 12
It was also clarified that the above quoted amount
did not include the interest and the damages under
Sections 7(Q) and 14(B) of the PF Act.
2.2. The Establishment, vide communication dated
29.06.2015, informed that all its bank loan
accounts with the Bank had been declared NPA
(Non-Performing Asset) and that the Banks had
initiated recovery process by auctioning their
property. It was also mentioned in the said
communication that Axis Bank Ltd. had initiated
recovery process for auction of their property at 255-
B in Bommasandra Industrial Area, Attibele Hobli,
Anekal Taluk, Bangalore (hereinafter referred to as
the ‘Attibele property’). The communication further
mentioned that the auction date fixed by the Bank
was 29.07.2015 and also that they would have
sufficient balance after settling the bank loan and
accordingly would address the statutory dues from
the sale amount.
2.3. It further requested the Employees’ Provident Fund
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 3 of 12
Organisation2 to communicate to the Axis Bank Ltd.
for making payment directly to them towards the
dues. Upon receipt of the aforesaid communication,
the EPFO, vide letter dated 08.07.2015, addressed
to the Axis Bank Ltd. referring to Section 11(2) of the
PF Act and the judgment of this Court in the case of
Maharashtra State Co-operative Bank vs.
Assistant PF, Commissioner asked the Bank to
remit a total amount of Rs.2,96,76,656/- as
outstanding dues on 08.07.2015 by way of Demand
Draft in favour of Regional Provident Fund,
Commissioner payable at Bangalore out of the sale
proceeds of the auction scheduled on 29.07.2015.
2.4. The Axis Bank in response, vide letter dated
20.07.2015, claimed first charge by referring to
Section 35 of the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security
Interest Act, 20023. Immediately, on 23.07.2015, the
EPFO re-asserted its priority under Section 11(2) of
the PF Act and further issued an order of
2
In short, “EPFO”
3
In short “SARFAESI Act”
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 4 of 12
attachment of the immovable property i.e. the
‘Attibele property’.
2.5. The EPFO issued a reminder dated 06.08.2015 to
the Axis Bank which in response issued a
communication informing that the auction could not
take place as the same was stayed by an order of
status quo passed by the High Court of Karnataka.
The EPFO demanded a copy of the stay order, vide
its communication dated 14.08.2015. Again, vide
communication dated 02.09.2015, the EPFO
requested for copy of the stay order.
2.6. The writ petition apparently was disposed of some
time in October/November 2015 whereafter, again
communications started flowing between EPFO and
Axis Bank regarding the outcome of the auction sale
and remittance of the outstanding dues of the EPFO.
It appears that Axis Bank sold the property in
auction held in March, 2016 and it appropriated the
sale proceeds against its outstanding dues and
informed the EPFO that the Bank had no amount in
the account of the Establishment as it still had
outstanding dues against the Establishment.
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 5 of 12
3. The EPFO, in the meantime, was informed by the
Establishment that another property was being auctioned
by State Bank of India through its assignee, the
appellant-EARC. This property was situated at
Kammanahalli (hereinafter referred to as the
“Kammanahalli property”). The Establishment further
informed the EPFO that another property at N.S. Palya
(hereinafter referred to as the ‘Palya property’) was being
auctioned by State Bank of Travancore (now taken over
by SBI). Accordingly, the EPFO communicated with EARC
and State Bank of India to remit the outstanding dues,
vide communication dated 23.04.2021. The EPFO
demanded an amount of Rs.2,08,94,800/- from EARC as
per priority under Section 11(2) of the PF Act. EARC filed
a writ petition before the Karnataka High Court, in which
an interim order was granted staying the operation of
order dated 15.06.2016 passed under Section 14(B) of the
PF Act raising demand for an amount of Rs.1,30,52,221/-.
In view of the same, the EPFO demanded EARC to remit
the balance amount of Rs.78,42,579/- and also issued an
order of attachment dated 24.11.2022 against EARC. In
response, EARC, vide letter dated 27.01.2023, expressed
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 6 of 12
its willingness to remit Rs.78,43,629/-, which included
Rs.1050/- as recovery charges also subject to
confirmation that the said amount would be towards full
and final settlement and EPFO would not raise any
further demands from EARC with respect to provident
fund dues of the Establishment. EARC challenged the
order of attachment dated 24.11.2022 and also the
recovery certificate of January 2023 before the High Court.
The High Court, vide order dated 02.02.2023, directed the
EARC to deposit Rs.75 lakhs as an interim measure and
subject to such deposit stayed further recovery. By the
impugned order, the said writ petition has been dismissed
with the further direction that the amount of Rs.75 lakhs
deposited by EARC be transmitted to the account of EPFO.
4. Aggrieved by the same, EARC has preferred the present
appeal. The appellant in the appeal has admitted that the
dues of EPFO have a first charge. However, the objection
taken by the appellant is to the effect that the Axis Bank
has sold one property for 12 crores approximately
whereas, appellant has sold two properties for total
consideration of Rs.7 crores. Further, submission is that
the balance amount of EPFO may be recovered from the
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 7 of 12
Axis Bank as EARC has already paid an amount of Rs.75
lakhs which is proportionate to the sale consideration
received by it and the balance amount due to the EPFO
which apparently has been stayed by the High Court of
Karnataka for the amount quantified under Section 14(B)
of the PF Act amounting to Rs.1.3 crores approximately
would fall in proportionate share of the Axis Bank. The
recovery for the balance amount if ultimately EPFO
succeeds before the High Court for its demand under
Section 14(B) of the PF Act should be made from Axis
Bank and not from the appellant.
5. The stand of the EPFO is that the High Court has rightly
dismissed the petition of the appellant and, therefore, it
is entitled to recover the balance amount of Rs.3,43,629/-
and the amount of Rs.1.3 crores approximately quantified
under Section 14(B) of the PF Act, as and when, the EPFO
succeeds before the High Court. It is further submitted
that the appellant had not impleaded Axis Bank before
the High Court and, therefore, the contention of the
appellant that balance recovery may be made from Axis
Bank with respect to the amount quantified under
Section 14(B) of the PF Act cannot be sustained. It has
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 8 of 12
therefore prayed that the appeal may be dismissed.
6. The stand of the Axis Bank is based upon Section 35 of
the SARFAESI. According to the Axis Bank in view of the
provisions contained in Section 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, therefore, no recovery can be made
from Axis Bank till such time its entire dues are
liquidated and satisfied.
7. We have heard Shri Krishnan Venugopal, learned Senior
Counsel appearing for the appellant, Shri Gopal Jain,
learned Senior Counsel appearing for the Axis Bank and
Shri Dushyant Parashar, learned counsel appearing for
the EPFO and have also perused the material on record.
8. It is true that the appellant did not implead Axis Bank as
a party-respondent before the High Court. However,
before this Court, Axis Bank was impleaded and is now
represented and duly heard.
9. According to the appellant, the EPFO had first charge over
the property auctioned, whether by the appellant or by
the Axis Bank. Whereas the contention of the Axis Bank
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 9 of 12
is that it has the first charge and priority over the sales
tax and other dues payable to the Government and local
authority. Therefore, EPFO would be entitled to recover
anything from the Axis Bank only after its dues are fully
satisfied.
10. It is an admitted position that Axis Bank by sale of
Attibele property has realised an amount of Rs. 12 crores
approximately whereas, appellant by sale of the other two
properties namely Kammanahalli property and Palya
property has realised only Rs.7 crores approximately.
Further, it is an admitted position 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. This is precisely
the case canvassed before us by the appellant.
11. In our considered opinion, 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 Section 35 of the SARFAESI Act. The High Court
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 10 of 12
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 Section
11(2) of the PF Act.
12. In view of the above, we set aside the impugned order and
restore the Writ Petition No.2543 of 2023 (L-PF) 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. The High Court will take into
consideration, the relevant fact relating to the charge
having been created by the EPFO over the properties to
be auctioned by the Axis Bank prior to the auction.
Material in this regard has been placed before us. Since
we are not entering into the merits of that issue relating
to first charge and priority, we are not dealing with the
same in detail. All the parties to the writ petition as it
would stand now after remand would be at liberty to raise
all contentions before the High Court.
13. The appeal stands accordingly allowed. The impugned
order is set aside, and the writ petition is restored to its
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 11 of 12
original number before the High Court. Further, the High
Court to proceed and decide the writ petition in
accordance with law in the light of the observations made
above after impleading the Axis Bank as a party-
respondent.
……………………………J.
[VIKRAM NATH]
……………………………J.
[SANJAY KAROL]
……………………………J.
[SANDEEP MEHTA]
NEW DELHI;
AUGUST 26, 2025
C.A. NO…./2025@SLP(C) NO.11069/2024 Page 12 of 12
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