2024 (5) TMI 517 - HC - Indian Laws

Constitutional validity of para 83 of the EPF Scheme and para 43A of the Pension Scheme - international workers - grievance of the petitioners is that, under para 83 of the EPF Scheme, international workers are covered under the Act and Scheme, irrespective of their salary drawn by them. The employees other than the international workers, who draw exceeding Rs. 15,000/- per month is outside the purview of the Scheme. HELD THAT - Section 5 of the EPF MP Act states that the Central Government may, by notification in the Official Gazette, frame a Scheme to be called the Employees Provident Fund Scheme for the establishment of provident funds under this Act for the employees or for any class of employees and specify establishments or class of establishments to which the said Scheme shall apply and they shall be established, as soon as, may be after the framing of the scheme, a Fund in accordance with the provisions of this Act and the Scheme. On reading of Section 7 of the said Act, it is thus clear that the modification of the Scheme is a statutory power which the Central Government initially exercises and then the notification is placed before each of the houses of the parliament for its ratification - In the instant case, the Government of India has the power under Section 7(1) of the EPF MP Act to modify the Scheme from time to time and the competence of the Central Government to introduce or modify the Scheme is apparent from Section 7 of the EPF MP Act. The aims and objects of introducing para 83 of the EPF Scheme as could be seen is, to protect the Indian employees going abroad to work from being subjected to the social security and the retirement clause of their post-country which are prejudicial to their interest and to motivate these countries for entering into such agreements with India and to make it happen is to provide for reciprocal treatment to the nationals of these countries while they work in India - Keeping in view the aims and objects of the main EPF MP Act, when a ceiling amount of Rs. 15,000/- per month has been placed as a threshold for an employee to be a member to the scheme, para 83 of the EPF Scheme ought not to have an unlimited threshold for international workers while denying the same benefit to Indian workers. There being no commonality of interest of the aims and objectives of EPF MP Act, 1952 and para 83 of EPF Scheme, para 43A of EP Scheme to be struck down as incompatible, arbitrary, unconstitutional and ultra vires. Thus, there is discrimination between the Indian employees working in a non-SSA country (who are not international workers as per definition) and foreign employees from a non-SSA working in India who are classified as international workers. There is no rational basis for this classification nor there is reciprocity that compels to classify foreign employees from non-SSA countries as international workers - The introduction of para 80 and 81 under the Scheme in respect of working journalists and the cine employees cannot be equated with bringing international workers under the EPF Scheme. In the case of working journalists, considering the fact that they undergo a lot of risk on duty, the said amendment was made. The introduction of para 83 of Employees Provident Fund Scheme and para 43A of Employees Pension Scheme are hereby struck down as unconstitutional and arbitrary and consequently, all the orders passed thereof are unenforceable. Writ Petitions are allowed.

Summary

Issues Involved:
1. Constitutionality of para 83 of the Employees Provident Fund Scheme, 1952 and para 43A of the Employees Pension Scheme, 1995.
2. Arbitrariness and discrimination under Article 14 of the Constitution of India.
3. Compliance with the object of the Employees Provident Fund and Miscellaneous Provisions Act, 1952.

Summary:

Issue 1: Constitutionality of para 83 of the EPF Scheme and para 43A of the Pension Scheme:
The petitioners, comprising employers and employees, challenged the vires of para 83 in the EPF Scheme and para 43A in the Pension Scheme, introduced by notification dated 01.10.2008, as unconstitutional and arbitrary. They argued that these provisions, which cover "international workers" irrespective of their salary, violate Article 14 of the Constitution of India and are opposed to the object of the EPF & MP Act, 1952. The Union of India contended that these provisions were introduced to honor bilateral Social Security Agreements (SSAs) with various countries and ensure that no person is deprived of social security benefits.

Issue 2: Arbitrariness and discrimination under Article 14 of the Constitution of India:
The petitioners argued that the provisions are discriminatory as they impose a heavy burden on employers by requiring contributions on the entire global salary of international workers, unlike the Rs. 15,000/- ceiling for other employees. They claimed that this classification lacks reasonable basis and is arbitrary. The respondents argued that international workers form a separate class and the classification is based on intelligible differentia with a rational relation to the object sought to be achieved. The court noted that Article 14 guarantees equality before the law and prohibits unreasonable discrimination. It found that the classification made under para 83 is discriminatory and lacks a rational basis, as it treats international workers of Indian and foreign origin differently without any justification.

Issue 3: Compliance with the object of the EPF & MP Act, 1952:
The court examined the object and reasons for introducing the EPF & MP Act, 1952, which aims to provide social security to industrial workers with lower salaries. It found that para 83 of the EPF Scheme and para 43A of the Pension Scheme go beyond the scope of the parent Act by imposing contributions on high-salary international workers, which is contrary to the Act's objective of covering weaker sections of workers. The court held that the provisions are incompatible, arbitrary, and ultra vires.

Order:
(i) Writ Petitions are allowed.
(ii) The introduction of para 83 of the Employees' Provident Fund Scheme and para 43A of the Employees' Pension Scheme are hereby struck down as unconstitutional and arbitrary and consequently, all the orders passed thereof are unenforceable.