Provident fund transferee liability in liquidation auction does not cover pre-transfer dues where the buyer starts a fresh unit.

Section 17-B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 fastens joint and several liability on a transferee only within the limits of the assets transferred, and the provision did not extend to a purchaser who acquired an industrial unit in a liquidation auction by operation of law. Because the purchaser started a fresh unit, employed new staff, obtained a new provident fund code, and did not take over the earlier establishment as a going concern, it could not be treated as having stepped into the shoes of the prior employer for past provident fund dues or damages. The recovery orders for pre-transfer liabilities were therefore quashed, while the authorities were left free to proceed against the liquidator or original establishment in accordance with law.

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Issues: Whether a transferee who purchased an industrial unit in auction from a liquidator can be fastened with liability for provident fund dues and damages pertaining to the period prior to transfer under Section 17-B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

Analysis: Section 17-B fastens joint and several liability on the employer and the transferee where the establishment is transferred by sale, gift, lease, licence or otherwise, but the liability of the transferee is limited to the value of the assets obtained. The transfer in the present case was not a voluntary transfer by the employer but an auction sale in liquidation, effected by operation of law. The purchaser started a new unit, employed fresh staff, obtained a new provident fund code, and did not take over the earlier establishment as such. The liability for prior dues had been expressly placed on the liquidator under the sale terms. In these circumstances, the transferee could not be treated as having stepped into the shoes of the earlier employer for purposes of past provident fund dues or related penal liability.

Conclusion: The transferee was not liable for provident fund dues and damages attributable to the period before transfer, and the impugned recovery orders could not be sustained against it.

Final Conclusion: The writ petition succeeded, and the recovery was quashed against the purchaser, leaving the authorities free to proceed against the liquidator or the original establishment in accordance with law.

Ratio Decidendi: Section 17-B does not extend liability for pre-transfer provident fund dues and damages to a purchaser where the transfer occurs involuntarily by operation of law and the purchaser does not continue the earlier establishment as a going concern.

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