Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 – Employees’ Provident Fund Scheme, 1952 – Benefits under the Pawan Hans Employees provident Fund Trust Regulations or under the EPF Act, 1952 and EPF Scheme, 1952 of contractual employees of the Appellant-Company – Entitlement to – AppellantCompany framed and notified the Pawan Hans Employees Provident Fund Trust Regulations for giving provident fund benefits to all its regular employees – The members of the Respondent-Trade Union made several representations to extend the benefit of the PF Trust Regulations since they were directly engaged by the Company on contractual basis – The Company failed to respond to the representations made by the Respondent-Trade Union – Writ Petition by the Respondent- Trade Union – The High Court directed that the benefits under the EPF Act be extended to the members of the Respondent-Trade Union and other similarly situated employees – The Appellant-Company having framed its own PF Trust Regulations, claimed exemption from the applicability of the EPF Act and EPF Scheme – On appeal, held: The Supreme Court in Regional Provident Fund Commissioner v. Sanatan Dharam Girls Secondary School laid down a twin test for an establishment to seek exemption from the provisions of the EPF Act, 1952 – The first, the establishment must be either ‘belonging to’ or ‘under the control of ’ the Central or the State Government – Second, the employees of such an establishment should be entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule framed by the Central Government or the State government governing such benefits – In the instant case, the first test is satisfied as the Appellant- Company can be termed as a Government Company u/s. 2(45) of the Companies Act, 2013 – With respect to the second test, the PF Trust Regulations of the Company were not framed by the Central or State Government, nor were they applicable to all the employees of the Company, so as to satisfy the second test – The Company did not satisfy the second test, consequently the exemption u/s. 16 of the EPF Act not applicable to the Appellant Company – Insofar as the entitlement of the members of the Respondent-Trade Union to the benefit under the PF Trust Regulations or under the EPF Act is concerned, the members were receiving wages/salary directly from the Company without the involvement of any contractor since their date of engagement and their work being of a perennial and continuous nature cannot be termed to be ‘Contractual’ in nature – Therefore, the members of the Respondent Union are entitled to the benefit of the provident fund under the PF Trust Regulations or the EPF Act – Since, the PF Trust Regulations are already in force and are applicable to all employees of the company, the Respondent-Trade Union granted the benefit of provident fund under the PF Trust Regulations so that there is uniformity in the service conditions of all the employees.
Disposing of the appeal, the Court
HELD: 1. As per Section 1(3) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, the EPF Act is applicable to every establishment in which 20 or more persons are employed, which is either a factory engaged in any industry specified in Schedule I, or an establishment which the Central Government may by notification in the Official Gazette specify in that behalf. Section 1(3) of the EPF Act. Section 1(3) is subject to Section 16 of the EPF Act. Sub-section (1) of Section 16 enlists those establishments which are excluded from the applicability of the EPF Act. As per clause (b) of sub-section (1), an establishment belonging to or under the control of the Central or State Government, and whose employees are entitled to the benefit of contributory provident fund in accordance with any scheme or rules framed by the Central or State Government governing such benefits, is excluded from the purview of the EPF Act. [Para 6.2][741-B, C, G-H]
2. As per Section 2(45) of the Companies Act, 2013, a “Government Company” means any company in which not less than 51 % of the paid-up share capital is held by the Central Government. Since 51% of the shares of the Appellant-Company are owned by the Central Government, the first test is satisfied as the Appellant-Company can be termed as a Government Company under Section 2(45) of the Companies Act, 2013. [Para 6.2][743-D-E]
3. With respect to the second test, it is relevant to note that the Company had its own Scheme viz. the Pawan Hans Employees Provident Fund Trust Regulations in force. The Company, however, restricted the application of the PF Trust Regulations to only the ‘regular’ employees. The PF Trust Regulations of the Company were not framed by the Central or State Government, nor were they applicable to all the employees of the Company, so as to satisfy the second test. The Regional Provident Fund Commissioner, Bandra issued letter dated 24.05.2017 addressed to the Company wherein it was stated that the benefit of contributory provident fund was not being provided to contractual/casual employees of the Company; and was directed to implement the provisions of the EPF Act. In view of this Court, the Company does not satisfy the second test, since the members of the Respondent-Union and other similarly situated contractual workers were not getting the benefits of contributory provident fund under the PF Trust Regulations framed by the Company, or under any Scheme or any rule framed by the Central Government or the State Government. Consequentially, the exemption under Section 16 of EPF Act would not be applicable to the AppellantCompany. In view of the above discussion, this Court holds that the Company has failed to make out a case of exclusion from the applicability of the provisions of the EPF Act. [Para 6.2][743-EG; 744-D-E]
4. The next issue which arises for consideration is whether the members of the Respondent-Trade Union are entitled to the benefit of Provident Fund under the PF Trust Regulations or under the EPF Act. Clause 1.3 of the Regulations would show that the PF Trust Regulations were made applicable to “all employees” of the Appellant-Company. Clause 2.5 of the Regulations, defines an “employee”, to include any employee who is employed for wages/salary in any kind of work, monthly or otherwise, or in connection with the work of the Company, and who gets his wages/salary directly or indirectly from the Company. Clause 2.5 excludes only a person employed by or through a contractor in connection with the work of the Company, and any person employed as an apprentice or trainee. In the present case, the Respondent-Union submitted that even though the appointment letters refer to the employees as ‘contractual’ employees, they were not engaged through any contractor. They were being paid directly by the Company, which is evidenced from the pay-slips issued to them. It was submitted that about 250 contractual employees receive wages directly from the Company, and are eligible to be included under the PF Trust Regulations framed by the Company. [Para 6.3][744-F-H; 745-A-B]
5. The members of the Respondent-Union have been in continuous employment with the Company for long periods of time. They have been receiving wages/salary directly from the Company without the involvement of any contractor since the date of their engagement. The work being of a perennial and continuous nature, the employment cannot be termed to be ‘contractual’ in nature. In view of this Court, Clause 2.5 of the PF Trust Regulations would undoubtedly cover all contractual employees who have been engaged by the Company, and draw their wages/salary directly or indirectly from the Company. [Para 6.4][745-C-D]
6. As per Section 2(f) of the EPF Act, the definition of an ‘employee’ is an inclusive definition, and is widely worded to include “any person” engaged either directly or indirectly in connection with the work of an establishment, and is paid wages. In view of the above discussion, this Court finds that the members of the Respondent-Union and all other similarly situated contractual employees, are entitled to the benefit of provident fund under the PF Trust Regulations or the EPF Act. Since the PF Trust Regulations are in force and are applicable to all employees of the Company, it would be preferable to direct that the members of the Respondent-Union and other similarly situated contractual employees are granted the benefit of provident fund under the PF Trust Regulations so that there is uniformity in the service conditions of all the employees of the Company. [Para 6.5][745-F-G]
8. The following directions are passed to effectuate the reliefs granted:
(i) The interests of justice would be best subserved if the benefit of Provident Fund is provided to the members of the Respondent-Union, and other similarly situated contractual employees, from January 2017 when the Writ Petition was filed before the High Court.
(ii) Respondent No.3 - the Regional Provident Fund Commissioner, Regional Office is directed to determine and compute the amount to be deposited by the Company on the one hand, and the members of the Respondent-Union and other similar situated employees on the other hand. The computation would be required to be made for the past period i.e. January 2017 to December 2019;
(iii) The Company shall be liable to pay Simple Interest @ 12% p.a. on the amount payable by it towards contribution of provident fund for the past period, i.e., January 2017 to December 2019, as per Section 7Q of the EPF Act,1952;
(iv) The statement of computation made by Respondent No.3 will be placed before this Court within a period of 12 weeks from the date of this Judgment, and thereafter the matter will be listed for issuance of necessary directions, so that the amount can be remitted from the deposit made before this Court, directly to the PF Trust;
(v) The employees will be obligated to deposit their matching contribution for the past period i.e. January 2017 to December 2019, within a period of 12 weeks along with interest @ 6% p.a., after the contribution of the Company has been remitted to the PF Trust;
(vi) With respect to the period from January 2020 onwards, the Company and the members of the Respondent-Union as also other similary situated employees, will make their respective contributions as per the PF Trust Regulations;
(vii) The benefit shall not be extended to those employees who have superannuated, expired, resigned, or ceased to be in the employment of the Company on the date of this Judgment;
(viii) This Court considers it appropriate to award Costs of Rs. 5,00,000 (Rupees Five Lacs) to the Respondent-Union towards litigation expenses incurred in the High Court and in this Court.
(ix) After the aforesaid amounts are disbursed, the balance amount lying deposited in this Court shall be refunded to the Appellant-Company. [Para 8][747-E-H; 748-A-F] Regional Provident Fund Commissioner v. Sanatan Dharam Girls Secondary School (2007) 1 SCC 268 : [2006] 7 Suppl. SCR 849; Shamrao Vithal Coop. Bank Ltd. v. Kasargode Panduranga Maliya, (1972) 4 SCC
600 : [1972] 2 SCR 162 – relied on.
Sub-Regional Provident Fund Office v. Godavari Garments Ltd., (2019) 8 SCC 149 : (2019) 2 SCC (L&S) 483; M/s P.M. Patel & Sons and Ors. v. Union of India and Ors (1986) 1 SCC 32 : [1985] 3 Suppl. SCR 55 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.