Section 17B of EPFMA : Section 17B: Liability In Case Of Transfer Of Establishment

Explanation using Example

Imagine a scenario where Mr. A owns a textile manufacturing unit, which is covered under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. Mr. A decides to retire and sells his business to Mr. B. According to Section 17B of the Act, both Mr. A (the transferor) and Mr. B (the transferee) are responsible for clearing any pending Provident Fund contributions and other related sums that were due up to the date of the business transfer.

In this case, if Mr. A had unpaid Provident Fund contributions for his employees before selling the business, Mr. B would also be liable for those dues. However, Mr. B's liability is capped to the value of the assets he acquired from Mr. A, ensuring that Mr. B does not have to pay more than what he gained from the transaction.