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TMI Blog1962 (3) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 employees or for any class of employees and specify the establishments or class of establishments to which the said Scheme shall apply and there 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. (2) A Scheme framed under sub-section (1) may provide that any of its provisions shall take effect either prospectively or retrospectively on such date as may be specified in this behalf in the Scheme. 2. Section 6(1) which provides for the employer making contribution to the Fund runs as follows :- 6(1) The contribution which shall be paid by the employer to the Fund shall be six and a quarter per cent of the basic wages dearness allowance and retaining allowance (if any) for the time being payable to each of the employees, and the employees contribution shall be equal to the contribution payable by the employer in respect of him and may, if any employee so desires and if the Scheme makes provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that no such deduction may be made from any wage other than that which is paid in respect of the period or part of the period in respect of which the contribution is payable : Provided further that the employer shall be entitled to recover the employee's share from a wage other than that which is paid in respect of the period for which the contribution has been paid or is payable where the employee has in writing given a false declaration at the time of joining service with the said employer that he was not already a member of the Fund : Provided further that where no such deduction has been made on account of an accidental mistake or a clerical error, such deduction may, with the consent in writing of the Inspector, be made from the subsequent wages. (2) Deduction made from the wages of a member paid on daily, weekly or fortnightly basis should be totalled up to indicate the monthly deductions. (3) Any sum deducted by an employer from the wage of an employee under this Scheme shall be deemed to have been entrusted to him for the purpose of paying the contribution in respect of which it was deducted. 5. The combined effect of s. 6 and Paras 30 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 2(f)(iii) as it then stood and added a new Para 73A as follows :- 73A. Where an employee is employed by, or through, a contractor in, or in connection with, the work of an establishment, the principal employer shall be responsible for complying with the provisions of the Act and this Scheme in relation to such employee. 8. This amendment had the effect of abolishing the distinction made by the amendment of 1958 between workmen employed by contractors who were directly connected with the manufacturing process in the factory or establishment, and those who were not so connected, all of whom became entitled to the benefits of the Scheme. 9. The authorities constituted under the Act issued notices to the first Petitioner drawing its attention to the changes introduced by the notifications and asking it to comply with their provisions, to which the management replied pointing out the practical difficulties in the way of implementing them as regards workmen brought in by contractors. A long correspondence followed culminating in a threat by the respondents to take penal proceedings under s. 14 of the Act. Thereupon the petitioners have filed the present petition, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners is that the obligation of the employer to contribute every month to the provident fund an amount equal to six and a quarter per cent of the wages and dearness allowance of the employee is incapable of performance as the principal employer is not in a position to know what wages had been agreed between the contractor and his employees and that further as the factory or establishment maintains no muster rolls as regards workmen employed through contractors, it is not possible for the principal employer to know whether a workmen is a casual labourer, or whether he is entitled to the benefits of the Scheme under Para 26, by reason of his having put in continuous work for the requisite period. 12. The difficulties suggested by the petitioners are not without substance but they are not, in our view, of sufficient weight to overthrow the Scheme. It is true that they could have been eliminated if the Scheme had enacted a provision imposing on the contractors an obligation to give a statement in writing to the principal employer containing the necessary particulars about the workmen and their wages. But even apart from such a provision there should be no difficulty in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und on account of the employee from his wages and not otherwise . Moreover the Scheme does not impose any obligation on the contractor to pay to the principal employer the amounts paid by him on account of the employee. The intention of the Legislature as expressed in s. 6(1) of the Act is to make the employer liable only for a moiety of the provident fund and while the Scheme of 1952 is well designed to carry out this intention, in its application to workmen directly employed, by reason of the combined operation of Paras 30 and 32, it breaks down, in its extension to contract labour by reason of the inapplicability of Para 32. It operates unfairly and harshly on persons who employ contract labour and it further results in discrimination between those who employ contract labour and those who employ direct labour. The Scheme therefore cannot be said to be reasonable and must be struck down as not falling within the protection afforded by Art. 19(6). 15. In the result we hold that the notifications dated January 15, 1958, and December 2, 1960, are unconstitutional and void. The petitioners are entitled to their costs. 16. Petition allowed. - - TaxTMI - TMITax - ..... 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