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TMI Blog2020 (1) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - If both tests are satisfied, an establishment can claim exemption/exclusion under Section 16(1)(b) of the EPF Act. Applying the first test to the instant case, the Central Government has a 51% ownership in the AppellantCompany, while the balance 49% is owned by the ONGC, a Central Government PSU - 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 contractua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 - appeal disposed off. - CIVIL APPEAL NO. 353 OF 2020 (ARISING OUT OF SLP (C) NO. 381 OF 2019) - - - Dated:- 17-1-2020 - UDAY UMESH LALIT AND INDU MALHOTRA, JJ. For the Petitioner : Ms. Laxmi Kumari, Adv., Mr. Puneet Taneja, AOR, Mr. Sumit T., Adv., Mr. S. Sharma, Adv. For the Respondent : Mr. Anantha Narayana M.G., AOR, Mr. Amit Kumar Agrawal, Adv., Mr. Siddharth, AOR ORDER INDU MALHOTRA, J. Leave granted. 1. The issue which arises for consideration is whether the contractual employees of the Appellant-Company are entitled to provident fund benefits under the Pawan Hans Employees Provident Fund Trust Regulations or under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 ( EPF Act ) and the Employees Provident Fund Scheme, 1952 ( EPF Scheme ) framed thereunder. 2. The background facts in which the present Civil Appeal has been filed are as under : 2.1 The Company was incorporated on 15.10.1985 under the Companies Act, 1956, and is registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ministry of Labour, Government of India, issued a communication to the Central Provident Fund Commissioner, New Delhi, pertaining to the grant of exemption to departmental undertakings under the control of the Central/State Government statutory bodies. The Central Provident Fund Commissioner was directed to instruct the Regional Provident Fund Commissioners to carefully review the cases of departmental undertakings and statutory bodies falling under the categories specified in Section 16(1)(b) and 16(1)(c) of the EPF Act, and take further action as indicated in the said letter. Clause (iv) of the said letter dated 08.01.1989 is of relevance, and is extracted hereunder for ready reference: (iv) There may be establishments which employ large member of casual/contingent staff, who are not entitled to the benefit of provident fund or pension. The casual/contingent staff of such establishment will continue to be covered under the Act, but their regular employees who are entitled to the benefit of provident fund or pension should be excluded from the purview of the Act . [emphasis supplied] 2.7 The Central Government, in exercise of the powers under S.1(3)(b) of the EPF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit their contribution with the Respondent No. 3Regional Provident Fund Commissioner, Employees Provident Fund Organisation, from the date they are eligible till remittance, and thereafter, till they are in the employment of the AppellantCompany. (b) Alternatively, the Appellant Company forthwith be directed to suitably amend the PF Trust Regulations to permit the enrolment of contract workers as members of the PF Trust instituted by the Appellant Company and to make all eligible contract employees members of the PF Trust from their respective dates of entitlement and continue to contribute amounts to the PF Trust in respect of contract employees. 2.11 During the pendency of the Writ Petition, the Regional Provident Fund Commissioner, Bandra issued a letter dated 24.05.2017 to the Company wherein it was stated that even though the EPF Act would not apply to establishments owned/controlled by the Central Government as per S.16(1)(b) and (c), however social security benefits such as provident fund must be provided to all employees/workers who are engaged on contractual/casual/daily wages basis since there is no distinction between a person employed on permanent, tempora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. The Appellant Company is thus an establishment owned and controlled by the Central Government. Even after the EPF Act became applicable to the airlines industry, the Appellant Company being an establishment owned and controlled by the Central Government, was excluded from the purview of the EPF Act. d) The High Court committed a grave error in giving retrospective application to the provisions of the EPF Act, i.e., from the date of the members joining the RespondentTrade Union, given that several contractual employees had superannuated, passed away, resigned, or ceased to be in the employment of the Company. The extension of benefits under the EPF Act to contractual employees irrespective of their status of employment with the Company was wholly illegal, arbitrary, and liable to be set aside. e) The members of the Respondent Union and other similarly situated employees have already been paid in full their monthly financial benefits/emoluments. The direction of the High Court to the Company to contribute to the provident fund of the contractual employees would amount to burdening the Company with twice the liability. 4.2 Mr. P.S. Narasimha, learned Senior Counsel appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Official Gazette specify in that behalf. Section 1(3) of the EPF Act reads as: Section.1(3) : Subject to the provisions contained in section 16, it applies - (a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which twenty or more persons are employed, and (b) to any other establishment employing twenty or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify in this behalf: Provided that the Central Government may, after giving not less than two months notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than twenty as may be specified in the notification. [emphasis supplied] Section 1(3) is subject to Section 16 of the EPF Act. Subsection (1) of Section 16 enlists those establishments which are excluded from the applicability of the EPF Act. As per clause (b) of subsection (1), an establishment belonging to or under the control of the Central or State Government, and whose employees are entitled to the benefit of cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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. If both tests are satisfied, an establishment can claim exemption/exclusion under Section 16(1)(b) of the EPF Act. Applying the first test to the instant case, the Central Government has a 51% ownership in the AppellantCompany, while the balance 49% is owned by the ONGC, a Central Government PSU. As per Section 2(45) of the Companies Act, 2013, a Government Company means any company in which not less than 51 % of the paidup 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. 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho 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 payslips 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. 6.4 We find that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest income for past several years in respect of such contributions. In order to have clear perspective in the matter and to see if there could be any solution to the problem as posed above, we call upon the petitioner to depute a person who is well versed in the matter and who has been managing the Provident Fund Scheme of Pawan Hans Limited to have a dialogue with the respondent No.3 before 15.11.2019 (a representative of the respondent(s) is also at liberty to remain present during such discussion) so that a workable solution could then be presented by such person and the representative of respondent No.3 before us on the next occasion. List the matter on 29.11.2019 at 10.30 a.m. 6.7 The learned ASG submitted that no workable solution could be worked out at the meeting held between the representative of the AppellantCompany, Respondent No.3, and the representative of the RespondentUnion. The learned ASG however offered that the Appellant Company was willing to extend the benefit under the PF Trust Regulations to the members of the Respondent Union and other similarly situated employees, from the date of the impugned Judgment. 6.8 Respondent No.3 the Regional Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 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) We consider it appropriate to award Costs of ₹ 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. The present civil appeal along with all pending applications, if any, stand disposed of. Ordered accordingly. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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