Non-payment of loan from EPF deficiency in service: NCDRC

The National Consumer Dispute Redressal Commission (NCDRC) has held that management and operation of the employees provident fund (EPF) is "service" under the law and non-payment of loan from it amounted to denial of service.

The apex consumer body passed the order on a plea of Mineral Area Development Authority (MADA) employee challenging the order of Jharkhand state commission which had set aside the district forum's direction to pay damages and cost of Rs 10,000.

"The objection of the respondent (MADA) that the dispute does not fall within the domain of consumer fora has no legs to stand since the law on the subject has been settled by the apex court," a bench, comprising members B N P Singh and S K Naik, said while rejecting the plea of the authority that operation of the contributory EPF scheme was not service under Consumer Protection Act.

In this case, complainant Shashi Shekhar had applied for a loan of Rs one lakh for his son's higher education, but the amount was reduced to Rs 50,000 by the employer even though there was a balance amount of over Rs two lakh in his fund.
    
While setting aside the order of the State Commission, the apex forum directed the MADA to pay balance amount of the loan from the Provident Fund (PF), in addition to Rs 10,000 as damages and cost.
    
Pursuant to the terms and conditions of contributory EPF scheme run by the MADA, an employee was entitled to get loan after completing  services in excess of 20 years on three occasions and the denial of the same amounted to deficiency in service, the NCDRC said.
    
Earlier, the district forum had ordered for payment of balance amount of loan, besides imposing a compensation and cost on MADA.
    
The state commission, however, had set aside district forum's order, saying the employee was not a consumer under the Contributory Provident Fund Scheme and the operation of the funds was not service under the Act.