In a significant ruling, the Bombay High Court’s Nagpur Bench set aside a recovery order issued against the Municipal Council, Pusad, holding that the action was taken without proper notice or opportunity of hearing.
Background of the Case
The dispute arose after provident fund authorities initiated proceedings against the Municipal Council for alleged non-payment of employee dues between 2011 and 2016. Earlier, an order under the Employees Provident Fund law had fixed liability of over ₹8.52 crore on the council.
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The council had challenged that determination and filed an appeal before the tribunal. However, the appeal was dismissed in default in October 2025. Soon after, recovery proceedings were initiated, and over ₹3.65 crore was withdrawn from the council’s bank accounts.
Justice Prafulla S. Khubalkar noted that the recovery order dated December 8, 2025, was passed without issuing any fresh or reasonable notice to the Municipal Council.
“The order… is passed without giving any prior reasonable notice and opportunity of hearing,” the Court observed.
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The bench emphasized that relying on an old notice issued eight years earlier could not justify such drastic action. It further pointed out that freezing multiple bank accounts and recovering large sums without due process violated principles of natural justice.
The Court also questioned why authorities issued a second recovery order when an earlier one from 2017 was already under challenge.
Allowing the writ petition, the High Court quashed and set aside the impugned recovery order dated December 8, 2025.
At the same time, the Court clarified that the underlying dispute regarding provident fund liability would be decided independently by the tribunal in pending proceedings.
The Municipal Council was granted liberty to pursue restoration of its appeal before the tribunal.
Case Title: Municipal Council, Pusad vs Assistant Provident Fund Commissioner & Ors.
Case Number: Writ Petition No. 7975 of 2025
Judge: Justice Prafulla S. Khubalkar
Decision Date: March 5, 2026
