Provident fund liability on transfer of establishment extends to damages and interest, with transferee exposure subject to statutory limits.

On transfer of an establishment, liability for provident fund dues under the Act continues to attach to the establishment, so damages under Section 14B may be recovered from the transferee-employer jointly and severally with the transferor, subject to the statutory cap linked to the value of assets received. The transfer arrangement does not defeat statutory recovery, and Section 14B damages are treated as part of the sums recoverable for default in provident fund payments. Interest under Section 7Q is also recoverable on the amount due because the provision makes simple interest mandatory from the date the amount became due until actual payment, without requiring separate equitable discretion.

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Issues: (i) Whether damages under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 could be recovered from the transferee-employer after transfer of the establishment, and whether such liability extended jointly and severally to the transferor and transferee; (ii) Whether interest under Section 7Q of the Act was recoverable on the amount found due.

Issue (i): Whether damages under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 could be recovered from the transferee-employer after transfer of the establishment, and whether such liability extended jointly and severally to the transferor and transferee.

Analysis: The liability under the Act attaches to the establishment and not merely to the individual owner or management. Section 17B expressly provides that on transfer of an establishment, the transferor and transferee are jointly and severally liable for contributions and other sums due in respect of the period up to the date of transfer, and the proviso only limits the transferee's liability to the value of the assets obtained. Damages under Section 14B are a statutory penalty intended to deter default and are part of the sums recoverable for defaults in payment of provident fund dues. The transfer arrangement between the parties cannot defeat the statutory liability, and the nature of proceedings under Section 14B does not convert the liability into one that is exclusively personal to the erstwhile management.

Conclusion: The transferee was liable for damages under Section 14B, and the liability was recoverable jointly and severally with the transferor, subject to the statutory cap in Section 17B.

Issue (ii): Whether interest under Section 7Q of the Act was recoverable on the amount found due.

Analysis: Section 7Q makes the employer liable to pay simple interest on any amount due from the date it became due till actual payment. Once the principal liability and damages were lawfully determined, the levy of interest followed the statutory mandate and was not dependent on a separate equitable discretion. The amount determined by the Commissioner therefore carried the statutory consequence of interest for delayed payment.

Conclusion: Interest under Section 7Q was recoverable.

Final Conclusion: The statutory scheme governing provident fund dues was held to fasten liability on the establishment and its transferee, and the impugned order sustaining damages and interest was affirmed.

Ratio Decidendi: On transfer of an establishment, liability for provident fund dues and statutory damages under the Act remains enforceable against both transferor and transferee jointly and severally, because the Act treats the liability as one of the establishment and not merely of the individual employer.

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