2018 (9) TMI 2045 - HC - Indian Laws

Entitlement to the benefit of Provident Fund as per the Act and the statutory scheme - members of the Petitioner and other similarly situated employees, employed on contract basis - HELD THAT - A conjoint reading of Sections 16 and 17 of the PF Act discloses that the provisions of the Act do not apply to an establishment which is belonging to or under the control of the Central or State Government and whose employees are entitled to the benefit of a contributory Provident Fund or old age pension in accordance with the scheme. An establishment can be exempted by the appropriate Government if the employees of the said establishment are in enjoyment of a Provident Fund Scheme which is not less favourable than the one under the PF Act. In the instant case, it is required to be noted that the shareholding to the extent of 51% is that of the Central Government and to the extent of 49% is that of the ONGC. The affairs of the Respondent No.1 are regulated and controlled by its Memorandum and Articles of Association. The affairs of the Respondent No.1 are managed by the Board of Directors and that the Board of Directors functions independently and not at the behest or directions or control of the Central Government - It is questionable whether the Respondent No.1 would classify as an airline owned or controlled by the Central Government. In the matter of application of the PF Act which is undoubtedly a social welfare legislation, a liberal interpretation is required to be adopted so as not to deprive the benefit of the said social welfare legislation to the employees like the members of the Petitioner Union. Since Section 16(1)(b) excludes an employee who has the benefit of a Provident Fund Scheme whose terms and conditions are not less favourable than the one available under the PF Act. The contract employees of the Respondent No.1 cannot be denied the benefits of the Provident Fund on both counts i.e. on the ground that they are ineligible as they are the employees of the airline controlled by the Central Government and to the benefits of the Scheme under the Trust Regulations on the ground that they are contract employees - such an interpretation would result in gross injustice to the members of the Petitioner Union and other similarly situated as them who are working in the Respondent No.1 and who as indicated have put in more than 20 years of service with the Respondent No.1. It is directed that the benefits under the PF Act be extended to the members of the Petitioner Union who are working on contract basis with the Respondent No.1 and other similarly situated be extended latest by 31st December 2018 - petition allowed.

Summary

Issues Involved:
1. Applicability of the Provident Fund (PF) Act to contract employees of the Respondent No.1.
2. Interpretation of the Notification dated 22-3-2001 regarding the applicability of the PF Act.
3. Entitlement of contract employees to benefits under the Pawan Hans Employees Provident Fund Trust Regulations.
4. Exemption under Section 16 and Section 17 of the PF Act.
5. Consideration of relevant correspondence and governmental directives regarding the PF Act.

Issue-wise Detailed Analysis:

1. Applicability of the Provident Fund (PF) Act to contract employees of the Respondent No.1:
The Petitioner filed a Writ Petition under Article 226 of the Constitution of India, seeking a declaration that contract employees are entitled to the benefit of Provident Fund as per the PF Act and the statutory scheme. The Respondent No.1, a Central Public Sector undertaking, had framed the Pawan Hans Employees Provident Fund Trust Regulations applicable only to permanent employees, excluding contract employees. The Petitioner argued that this exclusion was in violation of the PF Act, which has a broad definition of an employee, including those employed on a contract basis.

2. Interpretation of the Notification dated 22-3-2001 regarding the applicability of the PF Act:
The Notification dated 22-3-2001 specified that the PF Act would apply to establishments employing 20 or more persons, including aircraft or airlines not owned or controlled by the Central Government. The Petitioner contended that Respondent No.1 does not fall under the category of being controlled by the Central Government, as its operations are managed by the Board of Directors independently. The Respondent No.1 argued that it is controlled by the Central Government due to the majority shareholding by the Government of India.

3. Entitlement of contract employees to benefits under the Pawan Hans Employees Provident Fund Trust Regulations:
The Petitioner argued that contract employees, who have been working for over 20 years, should be included under the Trust Regulations, which define an employee as any person receiving wages directly or indirectly from the Corporation. The exclusion of contract employees from the Provident Fund benefits was deemed unjust and contrary to the liberal interpretation required for social welfare legislation like the PF Act.

4. Exemption under Section 16 and Section 17 of the PF Act:
Section 16 of the PF Act exempts establishments controlled by the Central or State Government, whose employees are entitled to a contributory Provident Fund or old age pension. Section 17 allows for exemptions if the establishment's scheme is not less favorable than the PF Act. The Court found that Respondent No.1's scheme did not cover contract employees, and thus, they could not be denied benefits under both the PF Act and the Trust Regulations.

5. Consideration of relevant correspondence and governmental directives regarding the PF Act:
The Court considered letters from the Ministry of Labour and the Regional Provident Fund Commissioner, which emphasized the need to extend Provident Fund benefits to contract employees. A letter dated 24-5-2017 from the Regional Provident Fund Commissioner highlighted that Respondent No.1 should provide social security benefits to contract employees, aligning with the Employees Enrolment Campaign 2017.

Conclusion:
The Court concluded that the members of the Petitioner Union, who are contract employees, are entitled to Provident Fund benefits under the PF Act. The Respondent No.1 was directed to extend these benefits to contract employees by 31st December 2018. The Petition was allowed, and Rule was made absolute in terms of prayer clause (a).

Judgment:
The Petition is allowed, and the benefits under the PF Act are to be extended to the contract employees of Respondent No.1 by 31st December 2018.