The South Malabar Gramin Bank vs The Regional Provident Fund ... on 27 February, 2019

[Cites 12, Cited by 1]

Kerala High Court

The South Malabar Gramin Bank vs The Regional Provident Fund ... on 27 February, 2019

This is an appeal filed by the Writ Petitioner in W.P.(C) No.10991of 2011 challenging the judgment dated 27.02.2013 of the learned Single Judge dismissing the Writ Petition. The Writ Petition was filed by the appellant aggrieved by an order passed by the Regional Provident Fund Commissioner under Section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the EPF Act' for short). As per the said order evidenced in these proceedings by exhibit P8, deposit collectors of the appellant bank were held to be persons to whom the EPF Act would apply. Accordingly, contributions have been directed to be paid in respect of such employees. Though the appellant had challenged exhibit P8 order before the Employees' Provident Fund Appellate Tribunal, New Delhi, as per exhibit P10 order, the appeal has been dismissed by the Appellate Tribunal. It was challenging the said order that the Writ Petition was filed by the appellant.

2. The contention of the appellant was that deposit collectors are not "employees" under the EPF Act. Therefore, it -:3:- WA.No. 549 of 2013 was contended that no contributions under the EPF Act was either due or payable in respect of such employees.

3. The learned Single Judge considered the contentions of the appellant, found that the deposit collectors of the bank were also employees under the EPF Act and that contributions were due in respect of the commission paid to them. Accordingly, the Writ Petition has been dismissed. It is aggrieved by the said judgment that this appeal is filed.

4. We have heard the counsel appearing for the appellant as well as the respondents in detail. We have also considered the respective contentions advanced before us, anxiously. The question that arises for consideration is whether contributions under the EPF Act is due or payable in respect of the commission that is paid to deposit collectors. It cannot be disputed that, the deposit collectors form a separate class of persons who are engaged by the bank for the purpose of collecting deposits from the customers. The question as to whether such deposit collectors were workmen under the provisions of the Industrial Disputes Act, 1947 had come up for consideration before the Apex Court in Indian Banks Association vs. Workmen of Syndicate Bank [(2001) 3 SCC 36]. Considering the said -:4:- WA.No. 549 of 2013 question, the Apex Court has held that deposit collectors would also come within the definition of workmen in the Industrial Disputes Act. The definition of Wages in Section 2(rr) of Industrial Disputes Act includes commission payable on promotion of sales or business also and therefore, it has been held that deposit collectors were also workmen within the meaning of Section 2(s) of the Industrial Disputes Act. Paragraphs 24 and 25 of the said judgment reads as under:-

24. We have considered the rival submissions. In our view, Mr. Sharma was right when he submitted that on the basis of evidence before it the Tribunal has given findings of fact that the Deposit Collectors were workmen within the meaning of Section 2 (s) of the Industrial Disputes Act. On the evidence on record it could not be said that this finding was unsustainable. Having been shown the relevant evidence we are also of the opinion that the Tribunal correctly arrived at a conclusion that these Deposit Collectors were workmen.

25. Further, as seen from Section 2(rr) of the industrial Disputes Act, the commission received by Deposit Collectors is nothing else but wage, which is dependent on the productivity. This commission is paid for promoting the business of the various banks.

5. It therefore follows that deposit collectors are workmen under the provisions of the Industrial Disputes Act. However, the question that requires to be determined in this case is whether the commission paid to them would qualify under the EPF Act as remuneration in respect of which -:5:- WA.No. 549 of 2013 contribution was payable. The learned counsel for the appellant has placed reliance on a Constitutional Bench decision of the Apex Court in M/s Bridge and Roofs Co. Ltd v. Union of India [AIR 1963 SC 1474] particularly paragraph 8 where the Bench has held after analysing the definition of basic wages under Section 2(b) of the EPF Act that, whatever is payable in all concerns and earned by all permanent employees is liable to be included for the purpose of contribution under Section 6 but whatever is not payable by all concerns or may or may not be earned by all employees of a concern is excluded for the purpose of contribution. Dearness allowance for example is payable in all concerns either as an addition to basic wages or as a part of consolidated wages where a concern does not have separate dearness allowance and basic wages. Similarly, retaining allowance is payable to all permanent employees in all seasonal factories like sugar factories and is therefore included in section 6 but house rent allowance is not paid in many concerns and sometimes in the same concern it is paid to some employees but not to others. For the theory is that house rent is included in the payment of basic wages plus dearness allowance or consolidated wages. Therefore, house rent allowance may not be payable to -:6:- WA.No. 549 of 2013 all employees of a concerns and which is certainly not paid by all concerns is taken out of the definition of basic wages. Similar is the case with overtime wages. The Bench has gone on to say that, commission or any other similar allowances are excluded from the definition of basic wages, for commission and other allowances are not necessarily to be found in all concerns. Nor are they necessarily earned by all employees of the same concern, though where they exist, they are earned in accordance with the terms of the contract of employment. The above observations are relied upon to contend that the commission paid to deposit collectors would not qualify as basic wages attracting contributions under the EPF Act. According to the learned counsel for the appellant therefore, the learned Single Judge has seriously erred in finding that the commission paid to deposit collectors would attract contribution under the EPF Act. Therefore, it is contended that the judgment of the learned Single Judge requires to be interfered with in appeal.

6. We have carefully gone through the judgment in Bridges Company case (supra). The Court has gone on to consider the aspect in paragraph 12 of the said judgment to observe as follows:

-:7:-

WA.No. 549 of 2013

It was pointed out that "the payment of production bonus depends upon production and is in addition to wages. In effect, it is an incentive to higher production and is in the nature of an incentive wage". The straight piece rate plan where payment is made according to each piece produced is the simplest of incentive wage plans. In a straight piece rate plan, payment is made according to each piece produced and there is no minimum and the worker is free to produce as much or as little as he likes, his payment depending upon the number of pieces produced. But in such a case payment for all that is produced would be basic wage as defined in s. 2bof the Act, even though the worker is working under an incentive wage plan.

7. It is clear from the above observation that, where the workers' remuneration is purely based on piece rate, the payment made would constitute basic wages. But production bonus is a bonus that is paid in addition to the basic wages dependent upon the performance of a worker in generating extra production and for the extra production that is generated, an extra payment is made which is the production bonus. Such production bonus or incentive wage was held to be outside the definition of basic wages. In the said case, therefore the Apex Court has not considered whether the commission paid to deposit collectors like those represented by the second respondent Union were workers for the purpose of coverage by -:8:- WA.No. 549 of 2013 the EPF Act. Apart from the above, the decision has taken note of the fact that where the entire payment that is made to a worker is on the basis of piece rate alone, the payment made would constitute his basic wages. In the present case, it is not in dispute that, the deposit collectors are paid only their commission. The commission would depend upon the terms of the agreement entered into between the bank and deposit collectors. The relevant clause extracted by the learned Single Judge in the judgment appealed against provides that an agent would be paid commission at the rate or rates determined by the Board of Directors of the bank from time to time. Therefore, it cannot be disputed that the commission so paid to the deposit collectors constitute their wages. In view of the above, we find no infirmity in the finding entered by the learned Single Judge to the said effect.

8. The other question that comes up is whether the deposit collectors would come within the definition of Section 2(f) of the EPF Act. Section 2(f) defines an employee as follows:-

4. Section 2(f) of the Act defines 'employee' as follows:-

"employee" means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment,and who gets, his wages directly or indirectly from the employer, and includes any person, -

-:9:- WA.No. 549 of 2013

(i) employed by or through a contractor in or in connection with the work of the establishment;

(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961) or under the standing orders of the establishment.

9. It is clear from a perusal of the above provision that employee is a person who is employed for wages in any kind of work "in or in connection with the work of an establishment" and who gets his wages directly or indirectly from the employer. Therefore, the deposit collectors answer the above condition in the provision extracted above. In addition, section 2(b) of the Act defines basic wages as follows:-

"basic wages" means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include -

   (i)     the cash value of any food concession;
   (ii)    any dearness allowance (that is to say, all

cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;

(iii) any presents made by the employer.

10. Basic wages means all emoluments earned by an -:10:- WA.No. 549 of 2013 employee while on duty or on leave or on holidays with wages in either case "in accordance with the terms of the contract of employment" and paid or payable in cash to him. This definition therefore brings within its scope the commission paid to the deposit collectors which would include the only emoluments paid in accordance with the terms of the contract of their employment. It is clear from the above that, deposit collectors are persons who come within the definition of employee under the EPF Act and that the commission paid to them comes within the expression "basic wages" in section 2(b) of the Act. The learned Single Judge has therefore correctly held that the impugned orders are justified.

11. The other contention raised by the learned counsel for the petitioner has been that the definition in one Act should not be used to attribute meanings to the definition in another enactment. Authorities have been cited before us in support of the said contention. We do not find any need to consider the said aspect since we have already found that the definition in the EPF Act itself would include the commission paid to deposit collectors also. Therefore, it is not necessary to import the meanings attributable to definitions in any other enactment here. -:11:- WA.No. 549 of 2013

For the foregoing reasons, we do not find any infirmity in the judgment of the learned Single Judge, warranting an interference with the same. The appeal fails and is accordingly dismissed.

Sd/-

K.SURENDRA MOHAN JUDGE Sd/-

A.M.BABU JUDGE kkj // true copy // Sd/-

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