Jharkhand High Court
Damodar Valley Corporation vs Union Of India & Ors on 5 February, 2015
Equivalent citations: 2015 LAB. I. C. 3524, 2015 (3) AJR 447
Author: Shree Chandrashekhar
Bench: Shree Chandrashekhar
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IN THE HIGH COURT OF JHARKHAND AT RANCHI
W. P. (C) No. 647 of 2011
Damodar Valley Corporation, A Corporation under the Act of
Parliament known as DVC Act, 1948 through its Personnel
Manager(A), DVC Chandrapura Thermal Power Station,
Chandrapura, PO&PS Chandrapura, District Bokaro represented
through Sri Ram B. Choubey, Jt. Director of Personnel &
Ex.Officio Dy. Secretary, DVC, CTPS R/o Qr. N. D 55, DVC CTPS,
Chandrapur, DisttBokaro ... ... Petitioner
Versus
1. The Union of India
2. The Regional Provident Fund Commissioner, Regional
Provident Fund Organisation, R.O. Bhagirathi Complex, through
the Regional/Divisional Provident Fund Commissioner1 having
its office at Bhagirati Complex near Circuit House, Karamtoli,
Ranchi
3. The Branch Manager, Bank of India, CTPS, Chandrapura,
Bokaro
4. The Branch Manager, State Bank of India, CTPS,
Chandrapura, Bokaro ... ... Respondents
CORAM: HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR
For the Petitioner : Mr. Srijit Choudhary, Advocate
For the Respondent no. 1 : Mr. Mr. T.N.Mishra, CGC.
For the Respondent No. 2 : Mr. Yogendra Prasad, Advocate
06/05.02.2015Seeking quashing of order dated 06.01.2011 directing the petitionerDamodar Valley Corporation to pay Provident Fund and other allied due with interest for the period between April, 2006 to February, 2010, the present writ petition has been filed. A further prayer for quashing communication contained in letter dated 24.01.2011 issued for attachment of the petitioner's bank account has also been made in the writ petition.
2. Brief facts of the case are that, the petitionerDamodar Valley Corporation is constituted under the DVC Act, 1948. The petitioner is a MultiPurpose River Valley Project and, it performs different sovereign functions. The petitioner takes several steps for soil conservation and generates electric energy through 2 various Thermal Power Stations in the State of Jharkhand and WestBengal. The Damodar Valley Corporation is wholly owned and controlled jointly by the Central Government, Government of West Bengal and Government of Jharkhand. A notice dated 06.05.2010 was issued to the petitioner by the Regional Provident Fund CommissionerII, Ranchi for remittance of certain amounts. In the enquiry under Section 7(A) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPF and MP Act, 1952), the management of Chandrapura Thermal Power Station of DVC appeared on 25.05.2010 and presented its case and gave details regarding remittance of Employees Provident Fund and other funds of the workers of DVC and CTPS. It was pleaded on behalf of the management that the special allowance so given as per Tripartite Agreement does not form part of the basic pay. In view of the Tripartite Agreement dated 17.04.2007, the terms of the Agreement is binding on the parties. The special allowances paid to the workmen as a result of the Tripartite Agreement do not form part of the basic wage and thus, cannot be included for contribution of employer contribution under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. However, the Regional Provident Fund Commissioner vide impugned order dated 06.01.2011 directed the petitioner to deposit contribution on account of the Provident Fund for the period April, 2006 to February, 2010 which is wholly illegal, arbitrary and vague and it has been issued without application of mind.
3. A counteraffidavit has been filed on behalf of respondent no. 2 stating that Chandrapura Thermal Power Station is not exempted establishment under EPF and MP Act, 1952 and thus, 3 no distinction can be made between its regular employees and workmen employed through contractor in connection with the work of the establishment. The employees employed through the contractor are also required to be enrolled to the membership of Employees Provident Fund in the same manner as the regular employees of M/s Chandrapura Thermal Power Station of DVC are enrolled. It is stated that a complain was received from one Nabin Kumar Sharma and Brij Bihari Sharma on 06.06.2008 regarding EPF deduction and remittance of workers engaged through contractor in CTPS. The enforcement officer made verification of the records of the establishment and recommended enquiry. An enquiry under Section 7 A was initiated and summon was issued on 03.05.2010. An objection as to the maintainability of the writ petition has been raised on the ground that the petitioner has remedy of appeal under Section 7 I / 7 O of the EPF and MP Act, 1952 before the Employees Provident Fund Appellate Tribunal.
4. A rejoinder has been filed by the petitioner stating that the special allowances, revised adhoc payment and annual increment are not the component of basic wage in terms of the Section 2(b) of the EPF and MP Act, 1952. A copy of Tripartite Agreement dated 17.04.2007 has also been brought on record.
5. Heard the learned counsel for the parties.
6. Mr. Srijit Choudhary, the learned counsel appearing for the petitioner refers to the Tripartite Agreement dated 17.04.2007 and submits that a settlement has been signed between the representatives of the management and the workers and it is evidenced by the Labour Commissioner, Jharkhand and thus, the parties are bound by the terms of the Settlement dated 4 17.04.2007. Referring to Clause1 in the said settlement, the learned counsel for the petitioner submits that the basic wage of the workmen has been fixed at Rs. 2500 and therefore, other payments and allowances are not part of the basic wage and thus, the petitioner is not liable for employer's contribution with respect to special allowances, revised adhoc payment and annual increment. The learned counsel appearing for the petitioner relies on decision in "M/s Burmah Shell Oil Storage and Distributing Company of India Ltd., New Delhi vs. the Regional Provident Fund Commissioner, Delhi and Others" reported in 1980 Lab.I.C. 1129, in "The Regional Commissioner, Employees Provident Fund, Tamil Nadu and Pondicherry vs. The Management of Southern Alley Foundries (P) Ltd., Madhawaram" reported in 1981 Lab.I.C. 472 and in "Associated Cement Companies Ltd. Dwarka vs. R.M.Gandhi, Regional, Provident Fund Commissioner, Gujarat" reported in [1995] 3 LLG 368 and reiterates that the adhoc payment and special allowances cannot be treated as part of basic wage and thus, cannot be included for computation of employer's contribution payable under the Act.
7. As against the above, the learned counsel appearing for the respondents submits that the special allowances, revised adhoc payment and the annual increment are ordinarily paid to all the employees in the same category and thus, form part of "basic wage" as defined under Section 2(b) of the EPF and MP Act, 1952. It is further submitted that merely because in the Settlement dated 17.04.2007 amongst different heads one head is basic wage, it would not exclude other emoluments paid to the workmen which are earned by an employee while on duty or on leave or on holiday.
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8. I have carefully considered the submissions of the learned counsel appearing for the parties and perused the documents on record.
9. Before adverting to the rival contentions raised on behalf of the parties, provisions under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 may usefully be notice. Section 2(b) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 defines "basic wages" as follows :
2. Definitions - In this Act, unless the context otherwise requires
(a) * * *
(b) '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), houserent 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. In "Bridge and Roofs Co. Ltd. v. Union of India", reported in AIR 1963 SC 1474, the following basic principles have been laid down ;
"(a) Where the wage is universally, necessarily and ordinarily paid to all across the board such emoluments are basic wages.6
(b) Where the payment is available to be specially paid to those who avail of the opportunity is not basic wages. By way of example it was held that overtime allowance, though it is generally in force in all concerns is not earned by all employees of a concern. It is also earned in accordance with the terms of the contract of employment but because it may not be earned by all employees of a concern, it is excluded from basic wages.
(c) Conversely, any payment by way of a special incentive or work is not basic wages".
11. Making a distinction between overtime bonus and the bonus paid to the workmen for their contribution to the establishment's profit, in "Associated Cement Companies, Ltd. Dwarka vs. Their workmen" reported in AIR 1959 SC 967, the Hon'ble Supreme Court has observed as under:
65. "............ Besides, if the payment of bonus proceeds on the broad consideration that it is due to the workmen for their contribution to the profits it would be unreasonable to make a distinction between workmen and workmen on the ground that some have contributed more to the profit than others; and that is exactly what would follow if overtime workers are allowed to claim a larger amount of bonus than their other colleagues. That is why we think that the tribunal was not justified in directing that the calculations of bonus should be made on the basis that overtime payments constituted a part of the basic wages of the employees".7
12. In "Prantiya Vidhyut Mandal Mazdoor Federation v. Rajasthan SEB", reported in (1992) 2 SCC 723, whether the arrears paid to the employees in terms of revised payscale under an award would constitute "basic wage" or not, the Hon'ble Supreme Court has observed thus :
8. "When an award gives revised pay scales the employees become entitled to the revised emoluments and where the said revision is with retrospective effect, the arrears paid to the employees, as a consequence, are the emoluments earned by them while on duty".
13. From the aforesaid decisions of the Hon'ble Supreme court it emerges that before an emolument paid to workmen is included in basic wage, the test of universality has to be satisfied and that is the reason, why overtime additional allowances paid on account of overtime, leave encashment etc. which are based on different contingencies and uncertainties, are not included in "basic wage". From the impugned order, it appears that special allowances is paid to welder, rigger and other specialised labour for their specialized service. The petitioner has contended that the special allowances is paid as a result of Tripartite Agreement and therefore, it is not a part of basic wage. I am of the opinion that special allowances is paid to all employees falling under the category of specialised labour for their specialised service. It is thus, paid to a category of workmen across the board. The payment is not restricted on account of duration of time. It is paid as emolument to a category of workmen and therefore, it must form part of basic wage. The Provident Fund Commissioner has drawn support from the decision in "RPFCII 8 vs, Vivekanand Vidya Mandir" reported in 2005 (2) LLN 214 and held that it must be included in contribution by the employer under the Act. I do not find any infirmity in the conclusion arrived by the respondent no. 2.
14. From the discussion in the impugned order, it is apparent that the revised adhoc payment is made every month. The learned counsel appearing for the respondents submits that in view of decision rendered by the Hon'ble Supreme Court in an earlier proceeding, to grant parity with other employees, revised adhoc payment is made to a class of workmen. However, the learned counsel appearing for the petitioner submits that in view of the Tripartite Agreement dated 17.04.2007, the revised adhoc payment cannot form part of "basic wage". I find that the alleged Tripartite Agreement dated 17.04.2007 is not a tripartite agreement. It is the proceeding of agreement between the Management and the Union. Merely because the proceeding took place in presence of Labour Commissioner, Jharkhand, it would not become a tripartite agreement. The revised adhoc payment is made to a category of workmen across the board and the payment is made every month. Such payment is obviously made to a class of workmen for their contribution to the establishment's profit. In "Associated Cement Companies Ltd.", the expression "lump sum of Rs. 450" and "an adhoc" payment were used in the agreement. In the facts of the case, the Court came to a conclusion that the payment was not linked with the performance of duty during the period in question. Other cases relied on by the counsel for the petitioner are also distinguishable on facts. Similarly, annual increment is paid @ Rs 50 and it is added in the revised adhoc payment of the 9 wages. In its defence that annual increment would not form part of the "basic wage", the only plea taken by the petitioner is that, it is not paid every month and therefore, it would not form part of the "basic wage" paid to the workmen. I find that this annual increment is paid every year to each workmen. It is not paid in the form of additional bonus for extra work/overtime rather, it is in the form of contribution of each workmen to the profit earned by the management of CTPC and thus, in my opinion it forms part of "basic wage" as defined under Section 2(b) of the Act and it is not excluded under Section 26 of the Employees Provident Fund and Miscellaneous Provision Act, 1952. In the result, I find no infirmity in the impugned order and accordingly, the writ petition is dismissed.
15. I.A. No. 419 of 2015 and I.A. No. 420 of 2015 are also dismissed.
(Shree Chandrashekhar, J.) Tanuj/ A.F.R.