Kerala High Court
The Mahatma Gnadhi University vs The Assistant Provident Fund on 24 January, 2012
Author: P.N.Ravindran
Bench: P.N.Ravindran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN
TUESDAY, THE 24TH DAY OF JANUARY 2012/4TH MAGHA 1933
WPC.No. 16648 of 2005 (F)
---------------------------------------
PETITIONER(S):
------------------------
THE MAHATMA GNADHI UNIVERSITY, REPRESENTED
BY ITS REGISTRAR, KOTTAYAM 686 560.
BY ADVS.SRI. T.A. SHAJI, SC, M.G.UNIVERSITY
RESPONDENT(S):
---------------------------
THE ASSISTANT PROVIDENT FUND
COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANISATION,
SUB REGIONAL OFFICE, C.M.S.COLLEGE ROAD, P.B.NO.36,
KOTTAYAM 686 001.
*ADDL.R2 & R3 IMPLEADED:
R2. AJANTHA.K.G.,
LECTURER IN BIOCHEMISTRY,
SCHOOL OF MEDICAL EDUCATION,
M.G.UNIVERSITY, GANDHINAGAR, KOTTAYAM.
R3. ANDREWS ABRAHAM,
LECTURER IN BIOCHEMISTRY,
SCHOOL OF MEDICAL EDUCATION,
M.G.UNIVERSITY, GANDHINAGAR, KOTTAYAM.
(*ADDL.R2 & R3 ARE IMPLEADED AS PER ORDER DTD. 17/01/2012
IN I.A.NO.15760/2010)
R1 BY SRI.N.N. SUGUNAPALAN, SENIOR ADVOCATE,SC, P.F.
ADDL.R2 & 3 BY ADV.SRI.C.S.SUNIL
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
26/07/2011, THE COURT ON 24/01/2012 DELIVERED THE FOLLOWING:
Kss
WPC.NO.16648/2005 F
APPENDIX
PETITIONER'S EXHIBITS:
P1: COPY OF THE ORDER NO.KR/KTM/GANDHI UNIVERSITY/ENF.1(2)/04 OF
THE RESPONDENT DTD. 27/01/2004.
P2: COPY OF THE REPLY OF THE UNIVERSITY DTD. 29/04/2004.
P3: COPY OF THE ORDER NO.KR/KTM/GANDHI UNIVERSITY/ENF.1(2)/04/764
OF THE RESPONDENT DTD. 12/08/2004.
P4: COPY OF THE REPLY OF THE UNIVERSITY DTD. 25/09/2004.
P5: COPY OF THE ORDER NO.KR/KTM/20187/ENF.1(2)/2004/764 OF THE
RESPONDENT DTD. 27/12/2004.
P6: COPY OF THE REPLY OF THE UNIVERSITY DTD. 10/02/2005.
P7: COPY OF THE COMMUNICATION NO.KR/KTM/EO/TAV/INSPECTION/05
OF THE RESPONDENT DTD. 16/02/2005.
P8: COPY OF THE ORDER NO.KR/KTM/20187/ENF.1(3)/05/13441 OF THE
RESPONDENT DTD. 08/04/2005.
P9: COPY OF THE SHOW CAUSE NOTICE NO.KR/KTM/20191/ENF.1(4)/2005/618
OF RESPONDENT DTD. 05/05/2005.
P10: COPY OF THE SHOW CAUSE NOTICE NO.KR/KTM/20191/ENF.1(4)/05/670
OF RESPONDENT DTD. 09/05/2005.
RESPONDENT'S EXHIBITS: N I L
/TRUE COPY/
P.A.TO JUDGE
Kss
P.N.RAVINDRAN, J.
---------------------------
W.P.(C) No. 16648 OF 2005
--------------------------
Dated this the 24th day of January, 2012
J U D G M E N T
The Mahatma Gandhi University has filed this writ petition seeking a declaration that employees of the self financing institutions run by it are not covered by the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the Act' for short). The brief facts of the case are as follows:
2. The Mahatma Gandhi University (hereinafter referred to as 'the University' for short) was established by the Mahatma Gandhi University Act, 1985, which came into force with effect from 2nd October, 1983. It has established and is running self financing institutions. By Ext.P1 notice dated 27.1.2004 the Assistant Provident Fund Commissioner, Employees Provident Fund Organisation, Kottayam called upon the Registrar of the University to furnish the information sought therein for the purpose of examining the applicability of the Act to the self financing institutions run by the University. The Registrar of the WPC No.16648/2005 2 University was also directed to be present in person or through a representative and to produce the documents referred to in the notice before the Enforcement Officer, Employees Provident Fund Organisation, Sub Regional Office, Kottayam.
3. Upon receipt of Ext.P1 notice, the Registrar of the University sent Ext.P2 letter dated 29.4.2004 in reply stating that the employees working in the self financing institutions run by the University are governed by the provisions in the Kerala Service Rules pertaining to employees appointed for a limited period and therefore they will not come under the purview of the Employees Provident Fund Scheme which is contributory. The Assistant Provident Fund Commissioner thereupon issued Ext.P3 show cause notice dated 12.8.2004 to the Registrar of the University calling upon the University to explain why the Act should not be enforced with effect from the date on which 20 employees were employed by the University/Institutions, within 10 days from the date of receipt of the notice. The Registrar of the University thereupon sent Ext.P4 letter 25.9.2004 stating that the University which was established under the Mahatma WPC No.16648/2005 3 Gandhi University Act, 1983 is not an establishment falling within the scope of the Act. It was also contended that in the case of any establishment not being a factory, the Central Government should issue a notification under section 1(3)(b) of the Act, making the Act applicable to that establishment. The Assistant Provident Fund Commissioner thereupon sent Ext.P5 notice dated 27.12.2004 stating that the School of Medical Education at Gandhinagar and its centres at Cheruvandur, Puthupally, Angamaly and Ernakulam are covered by the Act for the reason that the Act has been made applicable to educational institutions by notification No.S.O.986 dated 19.2.1982 issued by the Government of India under section 1(3)(b) of the Act.
The Registrar of the University was called upon to remit the arrears of contribution in respect of that establishment for the period commencing from June 1993 and ending with November 2004, within 15 days of receipt of the communication. By that notice, a code number was also allotted to the School of Medical Education.
4. The Registrar of the University thereupon sent Ext.P6 WPC No.16648/2005 4 letter dated 10.2.2005 wherein relying on section 16 of the Act it was contended that the Act does not apply to educational institutions. It was alternatively contended that even assuming that the University and its institutions are covered by the notification issued under section 1(3)(b) of the Act, it stands exempted in view of section 16(1)(b) and 16(1)(c) of the Act. The Assistant Provident Fund Commissioner thereupon sent Ext.P7 letter dated 16.2.2005 to the Registrar of the University calling upon him to produce documents in respect of the School of Technology & Applied Sciences, the School of Medical Education, the University College of Teacher Education and the University College of Engineering for examination. The Assistant Provident Fund Commissioner thereafter sent Ext.P8 letter dated 8.4.2005 to the Registrar of the University, wherein referring to Ext.P6 letter dated 10.2.2005 and the earlier letters sent by the Registrar and after extracting the substance of the Government of India notification dated 6.3.1982, it was stated that exemption under section 16(1)(b) and 16(1)(c) of the Act is available only to those institutions whose employees are entitled WPC No.16648/2005 5 to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule framed by the appropriate Government. It was stated that as per the information available with him, employees of the self financing institutions run by the University namely the School of Technology & Applied Sciences, the School of Medical Education, the University College of Teacher Education and the University College of Engineering are not governed by the State Government statutes and are not given the benefits applicable to employees of the University and therefore steps may be taken to implement the provisions of the Act in respect of the self financing institutions run by the University. When steps were not taken as directed in Ext.P8 and earlier notices to implement the Act in respect of the self financing institutions run by the University, the Assistant Provident Fund Commissioner issued Ext.P9 show cause notice calling upon the Principal, University College of Engineering, Thodupuzha to show cause why besides recovery proceedings penal action should not be taken against him for failure to remit the contribution towards the Employees WPC No.16648/2005 6 Provident Fund Scheme, 1952, the Employees Deposit Linked Insurance Scheme, 1976 and the Employees Pension Scheme, 1995. Shortly thereafter Ext.P10 notice dated 9.5.2005 was issued to the Principal, University College of Engineering, Thodupuzha calling upon him to show cause why for failure to submit the annual returns penal action should not be initiated against him. It was in such circumstances that the instant writ petition was filed on 2.6.2005 seeking the following reliefs:-
"(a) Call for the records relating to Exts.P1, P3, P5, P7, P8, P9 and P10 and quash the originals of the same by the issue of a writ of certiorari or other appropriate writ or order.
(b) Declare that the employees of the self-financing schools of the Mahatma Gandhi University do not fall within the mandatory provisions of the E.P.F. Act (Act 19 of 1952)"
5. The main contention raised by the petitioner is that the Act is not applicable to the University and its institutions in view of the provisions contained in section 16(1)(b) and 16(1)(c) of the Act. It is stated that employees of the self financing institutions run by the University are "having Provident Fund"
that the petitioner is ready to parade them before the respondent, that the petitioner has extended the benefits under WPC No.16648/2005 7 the General Provident Fund Rules (Kerala) to all its employees, but the respondent is insisting that the Act and the Schemes framed thereunder should be implemented in the University and that such insistence has no legal sanction.
6. The respondent has sworn to a counter affidavit dated 2.8.2006, the relevant portions of which read as follows:-
"2. The Mahatma Gandhi University, Kottayam, are having so many Self-Financing Courses/Institutions, some of them are mentioned below:
1. University College of Teacher Education, M.G.University, Kottayam.
2. School of Technology and Applied Science, M.G.University, Kottayam.
3. University College of Engineering, Thodupuzha.
4. School of Communication and Information Science, St.Joseph's Training College Campus, Mannanam.
5. School of Life Sciences, Chuttippara, Pathanamthitta.
6. School of Distance Education, M.G.University, Kottayam.
7. School of Medical Education, Gandhi Nagar, Kottayam.
As per notification No.S.O.986 dated 19th February 1982, any University, any College whether or not affiliated to a University, any School whether or not recognised or aided by the Central Government or a State Government any Scientific or Research Institutions in which activity of imparting knowledge or training is systematically carried on, is coverable under the Employees Provident Funds and Miscellaneous Provisions WPC No.16648/2005 8 Act, 1952, if the establishments are employing 20 or more persons. Inspite of notices sent for complying with the provisions, the University did not implement the provisions of the Act and the Schemes to the following four establishments which were covered under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 by issuing coverage Notices as detailed below:
Sl. Name Date of Code No.
No. coverage allotted
School of pedagogical Science,
University College of Teacher Education (B.Ed) at 1 12 cenres. 01/06/92 KR/20185 School of Medical Education Main campus at Gandhinagar & Centres at 2 Cheruvandoor, Puthupally etc. 01/06/93 KR/20187 School of Technology and Applied Science with 3 centres at Edappally, Pullarikunnu, Pathanamthitta 01/06/93 KR/20186 4 University College of Engineering, Thodupuzha 01/06/97 KR/20191 The question regarding coverage of the above establishments have been clarified vide letter No.KR/KTM/20187/Enf.1(3)/05/13441 dated 8.4.2005, Ext.P-8 of the petitioner.
The University can contest the coverage before the Regional Provident Fund Commissioner, Kottayam, under Section 7A of the EPF & MP Act, 1952, which has not been done. Even after the order under Section 7A of the Act, if dissatisfied, the petitioner can file review under Section 7B of the Act and thereafter appeal under section XI before the Employees' Provident Fund Appellate Tribunal. (emphasis supplied) Instead of that before exhausting the remedies provided under the EPF & MP Act, 1952, the petitioner has filed the writ petition before the Hon'ble High Court.
3. In reply to paragraph 2 and 3 it is submitted WPC No.16648/2005 9 that the petitioner has admitted that various self financing institutions are conducted ever-so-many courses and a large number of staff are employed by the petitioner.
4. By Ext.P1 the respondent has brought to the notice that establishment having employed 20 persons under the University is liable to comply with the provisions of the EPF & MP Act, 1952 and the Schemes and called for documents to ascertain the liability. In Ext.P2 the petitioner has stated that the University will not come under the purview of the EPF & MP Act, 1952.
5. In reply to paragraph 4 and 5 it is submitted that in Ext.P3, the respondent has pointed out that the petitioner establishment is not extending the service benefits including the Provident Fund to the employees working on temporary or contract basis in various schools and colleges under self financing scheme for whom no provident fund benefits are available. Instead of furnishing the details of any provident fund ;benefits extended to such employees, by Ext.P4, the petitioner has only stated that the University is not coming under the purview of the Act.
6. Ext.P5 is the Coverage Notice covering the establishment M/s.School of Medical Education at Gandhi Nagar and Centres at Cheruvandoor, Puthuppally, Angamaly, Ernakulam etc. functioning under the University with effect from 1.6.1993.
7. In reply to paragraphs 6, 7, 8 & 9, it is submitted that the respondent vide Ext.P8 has already indicated that the replies furnished by the University have already been considered and even after that the establishments covered are coverable and directed the University to give necessary instructions for compliance by the self-financing institutions functioning under the University.
8. The petitioner has not exhausted all the remedies available under the Act, such as dispute of coverage Section 7A enquiry, review under Section 7B or appeal under section XI before the EPF Appellate Tribunal. Therefore, it is humbly prayed that this Hon'ble WPC No.16648/2005 10 Court may be pleased to vacate the stay order passed in the above writ petition and the same may be dismissed with costs to the respondent."
The substance of the contention raised in the counter affidavit is that employees of the self financing institutions which are covered under the Act are not given any benefit including provident fund and that if the petitioner disputes the applicability of the Act to its institutions it can raise that issue when proceedings are initiated under section 7A of the Act and if the decision taken under section 7A of the Act is adverse to the petitioner, it can be challenged in appeal before the Employees Provident Fund Appellate Tribunal, New Delhi.
7. I heard Sri.T.A.Shaji, learned counsel appearing for the petitioner and Smt.T.N.Girija, learned standing counsel appearing for the Employees Provident Fund Organisation. The main contention raised by the petitioner is that the Act does not apply to the self financing institutions run by the University and even assuming that it applies, in view of the provisions contained in section 16(1)(b) and 16(1)(c) of the Act, the Act will have no application and therefore the impugned notices are liable to be set aside. The stand taken by the respondent is that WPC No.16648/2005 11 by virtue of the notification issued by the Government of India way back on 6.3.1982 under section 1(3)(b) of the Act, the Act applies to universities and colleges and any institution in which the activity of imparting knowledge or training is systematically carried on. It is contended that the Act applies to self financing institutions in view of the notification and the exemption contemplated in section 16(1)(b) and 16(1)(c) of the Act will be available only if it is shown that employees of the self financing institutions are 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 employees of the self financing institutions are entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule governing such benefit framed under the Mahatma Gandhi University Act.
8. I have considered the submissions made at the Bar by the learned counsel on either side. The main issue that arises in this writ petition is whether the Act applies to the self financing institutions run by the University in view of the notification dated WPC No.16648/2005 12 6.3.1982 issued by the Central Government under section 1(3)
(b) of the Act and if the notification applies, whether under section 16(1)(b) and 16(1)(c) of the Act the institutions are exempted from the Act. The notification dated 6.3.1982 issued by the Government of India under section 1(3)(b) of the Act is extracted below.
"S.O.986-In exercise of the powers conferred by clause
(b) of sub-section (3) section 1 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the Central Government hereby specifies the following classes of establishments in each of which twenty or more persons are employed, as establishments to which the said Act shall apply, namely:-
(i) any University,
(ii) any College, whether or not affiliated to a University
(iii) any school, whether or not recognised or aided by the Central or State Government
(iv) any scientific institution
(v) any institution in which research in respect of any matter is carried on
(vi) any other institution in which the activity of imparting knowledge or training is systematically carried on."
9. The impugned notices are issued in relation to the School of Technology & Applied Sciences, the School of Medical Education, the University College of Teacher Education and other institutions. Section 1(3)(b) of the Act stipulates that subject to WPC No.16648/2005 13 the provisions contained in section 16, the Act applies to any establishment employing twenty or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette specify. In view of the notification dated 6.3.1982 the Act will apply to any University, any College whether or not affiliated to a University, any School whether or not recognised or aided by the Central or Sate Government or any Scientific Institution or any institution in which research in respect of any matter is carried on or any other institution in which the activity of imparting knowledge or training is systematically carried on. By no stretch of imagination can it be said that in the self financing institutions run by the University the activity of imparting knowledge is not systematically carried on. Therefore on the terms of the notification, the Act applies to all self financing institutions run by the University. Then the only question is whether they are exempted by virtue of the stipulations contained in section 16(1)
(b) and 16(1)(c) of the Act. Section 16 of the Act reads as follows:
"16. Act not to apply to certain establishments.-(1) WPC No.16648/2005 14 This Act shall not apply-
(a) to any establishment registered under the Co-
operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State relating to co-operative societies, employing less than fifty persons and working without the aid of power; or
(b) to any other establishment belonging to or under the control of the Central Government or a State Government and whose employees are entitled to the benefits 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; or
(c) to any other establishment set up under any Central, Provincial or State Act and whose employees are entitled to the benefits of contributory provident fund or old age pension in accordance with any scheme or rule framed under the Act governing such benefit."
10. In order to claim an exemption under section 16(1)(b) of the Act it must be shown that the employees of the establishment are entitled to the benefits of contributory provident fund or old age pension in accordance with any scheme or rule framed by the State Government or the Central Government governing such benefits. In order to claim the exemption under section 16(1)(c) of the Act it must be shown that the employees of the establishment are entitled to the benefits of contributory provident fund or old age pension in accordance with any scheme or rule framed under the Act under WPC No.16648/2005 15 which the establishment was set up, governing such benefits. Therefore in order to claim exemption under section 16(1)(a) or 16(1)(b) of the Act, the University will have to prove by cogent material that the employees working in the self financing institutions run by it are entitled to the benefits of contributory provident fund or old age pension in accordance with any scheme or rule framed by the State Government or the Central Government governing such benefits. Alternatively it will have to show that in accordance with any scheme or rule framed under the Mahatma Gandhi University Act under which the University was established, all its employees including employees of the self financing institutions run by it are entitled to the benefits of contributory provident fund or old age pension.
11. Ext.P1 was the first of the notices issued by the Assistant Provident Fund Commissioner calling upon the Registrar of the University to furnish the information sought therein for the purpose of examining the applicability of the Act to the self financing institutions run by the University. The stand taken by the University in the first instance was that self WPC No.16648/2005 16 financing institutions are not covered under the Act since the service conditions of employees are governed by the Kerala Service Rules. When Ext.P3 notice was issued, the stand taken by the University was that the Act does not apply to it for the reason that it was established under an Act of the State Legislature. It was also contended that even in the case of any other establishment not being a factory, the Act will apply only if a notification as envisaged under section 1(3)(b) of the Act is issued. After Ext.P5 notice is issued, for the first time a contention was raised that the Act does not apply in view of section 16(1)(b) and 16(1)(c) of the Act. However the University did not produce before the respondent documents to prove that under any scheme or rule framed under the Mahatma Gandhi University Act, employees of the self financing institutions run by it are entitled to the benefits of contributory provident fund or old age pension or that they are entitled to such benefits under any scheme or rule framed by the State Government or the Central Government. If as contended by the University, employees of the self financing institutions run by it WPC No.16648/2005 17 are given benefits of contributory provident fund or old age pension under any scheme or rule framed by the State Government or the Central Government or under the Mahatma Gandhi University Act, the University ought to have produced materials to substantiate that fact before the Assistant Provident Fund Commissioner instead of rushing to this Court challenging the impugned notices. It appears, the University was not willing to subject itself to the authorities under the Act. Under section 7A of the Act where a dispute arises regarding the applicability of the Act to an establishment the authorities under the Act are empowered to settle the dispute and for that purpose they are also empowered to conduct such enquiry as is necessary. The petitioner should have therefore requested the Assistant Provident Fund Commissioner who issued the impugned notices to conduct an enquiry under section 7A of the Act for the purpose of deciding whether the Act applies to the self financing institutions run by it. If the decision taken after such an enquiry is adverse to the petitioner, the Act provides for a review under section 7B of the Act if grounds exist for a review WPC No.16648/2005 18 and an appeal to the Employees Provident Fund Appellate Tribunal. Such being the situation, I am of the opinion that the relief prayed for in the writ petition cannot be granted.
The writ petition fails and is accordingly dismissed with the observation that dismissal of this writ petition will not stand in the way of the petitioner from raising all its contentions before the competent authority under the Act as and when proceedings are initiated under section 7A of the Act. Having regard to the fact that the dispute has been pending for the past nearly seven years, I also direct the competent authority under the Act to settle the issue regarding the applicability of the Act by holding an enquiry under section 7A of the Act and finalising it within six moths from the date of receipt of a certified copy of this judgment.
P.N.RAVINDRAN, (JUDGE) vps WPC No.16648/2005 19 WPC No.16648/2005 20