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Section 7 of The Provident Funds Act, 1925

Protection for acts done in good faith.

No suit or other legal proceeding shall lie against any person in respect of anything which is in good faith done or intended to be done under this Act.

Summary

This section protects individuals from lawsuits and other legal actions for things they do under the Act.
The legal protection applies only if the action was done in good faith, which means with honest and sincere intentions.
It also covers actions that were intended to be done in good faith under the Act, even if the final outcome was not what was expected.

Practical examples

1Anil, a provident fund officer, paid out a deceased subscriber's balance of 4,500 rupees to a nominee named Vinay on June 1, 2025, in accordance with the rules. Later, a family member named Suresh sued Anil for making the payment. Since Anil acted in good faith under the Act, the court dismissed the lawsuit against him.

2Kavita, an administrative officer, withheld a provident fund payment of 25,000 rupees on October 12, 2025, because she received conflicting claims and was waiting for a court order. One of the claimants sued Kavita for the delay. The court protected Kavita because her decision to withhold payment was made in good faith under the law.

FAQ

1. What does acting in good faith mean under this section?

It means carrying out duties with honest intentions, without malice, and in compliance with the provisions of the Provident Funds Act.

2. Can an officer be sued if they make an honest mistake while carrying out their duties under the Act?

No, as long as the act was done or intended to be done in good faith under the Act, no suit or legal proceeding can be filed against them.

3. Who is protected under Section 7 of the Act?

Any person who performs an action or intends to perform an action in good faith under the provisions of the Act is protected from legal proceedings.

Test yourself

1.What is required for a person to be protected from lawsuits under Section 7?

2.Under Section 7, what legal actions can be brought against a person for acts done in good faith under the Act?

3.Does the protection under Section 7 apply to things that were intended to be done in good faith but not completed?

4.Who does Section 7 protect?

5.Under which Act is the protection of good faith actions provided in Section 7?

6APreviousSection 6A Withholding or recovery of Government contributions in case of Central Government officers taking up, without prior permission, commercial employment within two years of their retirement.8NextSection 8 Power to apply the Act to other Provident Funds.

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