Subhiksha defaults on PF dues, property may be attached

Contractors’ books will also be scrutinised.

The Employees’ Provident Fund Office (EPFO) in Chennai said it intends to attach the properties of the promoters of struggling retail chain Subhiksha to meet provident fund dues for around 4,500 employees in and around the city.

A senior EPFO official said the company had not deposited provident funds from June, 2008, and the default to date stood at Rs 5 crore.

Subhiksha has been facing a financial crisis and is currently in talks with banks and financial institutions to restructure loans worth Rs 700 crore.

The EPFO official also noted that Subhiksha Promoter and Managing Director R Subramanian claimed that the company had 10,000 employees in a recent media interview, suggesting that another 5,500 are employed on contract. Accordingly, the department is also scrutinising contractors’ records.

"If the department finds that the contractors have also defaulted on provident fund payment, Subhiksha will be held responsible since the company is the principal employer," the official said. Inquiries which began on January 3 were held under Section 7A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Section 7A of the Act deals with “determination of moneys due from employees”.

The final hearing was scheduled for February 11 but was adjourned to February 19, 2009.

Meanwhile, Subramanian in an email reply told Business Standard that the company had no comment on this issue because it “is a quasi-legal proceeding before a statutory authority”.

He confirmed that EPFO had issued a notice to all directors, including representatives of the financial investors.

He added, however, that the company did not owe the EPFO Rs 5 crore but declined to provide the actual figure.

The EPFO official added that the company would be given 15 days from the final hearing to remit the amount, failing which the regional office can invoke penal provisions under the Act.

The first step would be to attach the company’s bank accounts but the official said doing so would be of “no use since the company does not have any balance in its bank accounts”.

Subramanian said, "We have no such deadline in mind — we are attending the hearing and believe that the issues will be resolved in a manner the suits the best interest of the employees and the company and within the boundaries of law."

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