Madras High Court
M/S.The Ponnur Handloom vs Employees' Provident Fund Appellate ... on 6 February, 2012
Author: K.Chandru
Bench: K.Chandru
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 06.02.2012 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.Nos.1069 to 1077 of 2012 and M.P.No.1 to 1 (9) of 2012 M/s.The Ponnur Handloom Weavers Co-operative Production and Sales Society Ltd., Ponnur, rep by its Special Officer, Ponnur. .. Petitioner in W.P.No.1069 of 2012 M/s.Ponnur Sri Murugan Handloom Weavers Cooperative Production and Sales Society Ltd., Ponnur, rep by its Special Officer, Ponnur. .. Petitioner in W.P.No.1070 of 2012 M/s.Korukkathur Arignar Anna Silk Handloom Weavers Cooperative Production and Sales Society Ltd., rep by its Special Officer, Korukkathur .. Petitioner in W.P.No.1071 of 2012 M/s.Ammapalayam Sri Chammundeswari Handloom Weavers Cooperative Production and Sales Society Ltd., rep by its Special Officer, Ammapalayam. .. Petitioner in W.P.No.1072 of 2012 M/s.Ammayapet Kumaran Handloom Weavers Cooperative Production and Sales Society Ltd., Ammayapet, rep by its Special Officer, Ammayapet. .. Petitioner in W.P.No.1073 of 2012 M/s.Vadamanapakkam Sakthivel Murugan Handloom Weavers Cooperative Production and Sales Society Ltd. Rep by its Special Officer, Vadamanapakkam .. Petitioner in W.P.No.1074 of 2012 M/s.Athimalaipattu Arignar Anna Cotton- cum-Silk Handloom Weavers Cooperative Production and Sales Society Ltd., rep by its Special Officer Athimalaipattu. .. Petitioner in W.P.No.1075 of 2012 M/s.Hasanamapet Annai Indira Gandhi Women Handloom Weavers Cooperative Production and Sales Society Ltd., rep by its Special Officer, Hasanampet. .. Petitioner in W.P.No.1076 of 2012 M/s.HAsanamapet Sri Ramanatheswarar Cotton -cum-Silk Handloom Weavers Cooperative Production and Sales Society Ltd., rep by its Special Officer, Hasanamapet. .. Petitioner in W.P.No.1077 of 2012 Vs. 1.Employees' Provident Fund Appellate Tribunal, Scope Minar, Core-II, 4th Floor, Laxmi Nagar District Centre, Laxmi Nagar New Delhi-110 092 2.The Assistant Provident Fund Commissioner (The APFC) EPFO, Sub Regional Office, 31, Filter Bed Road, Vellore-632 001. 3.Employees' Provident Fund Organization, No.31, Filter Bed Road, Vellore-632 001. .. Respondents in all writ petitions W.P.Nos.1069 to 1077 of 2012 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records pertaining to the impugned order dated 23.7.2010 of the first respondent Employees Provident Fund Appellate Tribunal passed in ATA No.165(13)03, ATA No.147(13)03, ATA No.163(13)03, ATA No.143(13)03, ATA No.139(13)03, ATA No.160(13)03, ATA No.179(13)03, ATA No.148(13)03 and ATA No.153(13)03 respectively and quash the said order. For Petitioners : Mr.A.R.Gokulnath in all W.Ps. For Respondents : Mr.K.Gunasekar in all W.Ps. - - - - COMMON ORDER
These writ petitions were filed by various Handloom Weavers Cooperative Production and Sales Societies. In these writ petitions the petitioners have come forward to challenge an order passed by the Employees Provident Fund Appellate Tribunal, New Delhi in various appeals filed by them.
2.The petitioners' societies aggrieved by the orders passed by the Provident Fund Authorities under Section 7-A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (for short EPF Act), had preferred appeals under Section 7-I of the EPF Act. In their appeal memorandum, they contended that the societies are run by its members and they are no employees under the societies. Therefore, the question of covering the alleged workers of the societies will not arise. They also contended that the societies are exempted in terms of Section 16(1)(a) of the EPF Act. Apart from these legal issues, they have also raised other issues, i.e., the societies are extending various benefits to its members. Hence there is no necessity to cover them separately. Along with appeal memos, they have also enclosed several circulars relating to cooperative societies issued by the State Government and gave their written arguments.
3.The Tribunal had entertained those appeals and assigned various appeal numbers and also issued notices to the PF Department. Apart from factual contentions, they had also referred to certain decisions of this court having bearing on the question. The Tribunal by its order dated 23.7.2010 had dismissed the appeals and held that the provisions of the EPF Act will apply to cooperative societies. The members of the societies can also be employees for the purpose of the Cooperative Societies Act. With reference to the exemption claimed under Section 16(a)(1), it was stated that the societies have not proved that they are having less than 50 employees, i.e., they should employee less than 50 persons and work without the aid of power, then alone the cooperative societies will be exempted from the provisions of the Act. With reference to the question whether the members of the societies can also be the employees, the Tribunal held that even the piece rated workers are covered by the definition of the term "employee". Therefore, there is no case made out. It is in that view of the matter, the appeals were rejected. Challenging the same, the writ petitions came to be filed.
4.When these writ petitions came up for hearing, this court had directed notice to be served on the Standing Counsel of the EPF Department Mr.K.Gunasekaran. Accordingly notice was served and a common counter affidavit, dated 27.01.2012 has also been filed by the department.
5.With reference to the question as to whether the members of the cooperative societies can also be employees under the societies, reliance was placed upon a division bench judgment of this Court in Madathupatti Weavers Cooperative Production and Sales Society Ltd., represented by its President Vs. Regional Provident Fund Commissioner, Madurai and others reported in 2003 (3) L.L.N. 674. It was argued by the department that the said judgment was rendered on technical ground and the issue was not covered under Section 2(f) of the EPF Act. Even a person who was engaged in connection with the work of the establishment including home worker is also covered. Since the societies are registered as separate legal entities under the Tamil Nadu Cooperative Societies Act, they are the autonomous body and that the weaver members cannot be said to be employer.
6.However, Mr.A.R.Gokulnath, learned counsel appearing for petitioners submitted that the Tribunal did not even take note of the judgment of the division bench of this Court which is having direct bearing on the point and also did not refer to various enclosures produced while rejecting the case of the petitioners.
7.The learned counsel first relied upon a judgment of the division bench in Madathupatti Weavers Cooperative Production and Sales Society Ltd.'s case (cited supra). In that case, the contentions raised by the societies and the answers given by the division bench were set out in paragraphs 18 to 21 which are as follows:
"18.On merits, it is submitted that the appellant weavers co-operative society formed on the basis of one for all and all for one as a co-operative movement for the purpose of producing and selling the finished cloth. The members of the co-operative society cannot be construed as "employees" and the society also in turn cannot be construed as an "employer" and there is no such relationship between them. In the affidavit, it is stated that the society do not have looms of their own. The members, who are weaving through their own looms in their respective houses, are provided with yarn and they take yarn to their houses and they weave in their looms and bring it to the society as finished cloth. According to them, amount is paid for the cloth. According to them, amount is paid for the cloth produced by them and there is no employer and employee or master and servant relationship between the members and the society. The society employed eight persons as their staff to maintain their records and other connected work. All the members of the society are shareholders and they formed the Board of Management. They elect the President and Vice-President among themselves. They share the profits, if any, among themselves. Besides, it is stated that all shareholders, who are members do not get yarn regularly and weave the cloth, nor is there any time frame work. The society also does not exercise any supervising control over them.
19.The specific averments made in the affidavit are not denied in the counter-affidavit. Paragraph 4 dealing with this point states to the effect that the society has admitted that they supplied the raw materials to the weavers, who returned the finished goods back to the society. Thus, according to the counter, weaver workers were engaged in the business of the appellant society. They did weaving for the society and the society supplied yarn and paid the wages after receiving the finished cloth and sold them. There is no finding with reference to the nature of transaction except stating that the workers are doing business of the society.
20.Co-operation means work together. But, in law, it has a specific meaning of "working together". The co-operative movement has a history of social development and weavers societies have a role in the freedom movement of our country for self reliance in the production and distribution of the textile needs of our country. The law relating to co-operative and credit is regulated. Article 43 of the Constitution of India as one of the Directives mandates the State of endeavour to promote cottage industries oh an individual or co-operative basis in rural areas. The respondents have not applied the basic issues involved prior to or during the determination. There appears to be an undue haste, lack of openness in consideration with fair opportunity and to cover the society under the Act.
21.The Tamil Nadu Co-operative Societies Act, 1983 for short "Societies Act" is a consolidated law for making provisions for organisation, management and supervision of co-operative societies in Tamil Nadu. The object is to provide for orderly development of co-operative movement in accordance with co-operative principle such as open membership, democratic management, ........ distribution of surplus ... self help and mutual aid ... so as to bring about improvement in better method of production ... a weaver society has been defined under Section 1(3) of the societies Act as follows:
"Registered society which has its principle object the production of handloom cloth or fabrics or cloth through, or with the help of its members and marketing the same and includes any registered society which has as its principal object the provision of facilities for the operation of a weavers society."
A member means a person joining in the application and a person admitted to membership. Thus a member of co-operative weaver society joints with the object of production and with its help to market the same. There is a marked and clear distinction between a member and a staff or worker of the society. Section 16 empowers the Registrar to classify the societies with reference to the objects, membership, etc. Section 21 of the Societies Act deals with the qualification of membership of society provided he/she does not suffer the disqualification under Section 23 of the Societies Act. One of the disqualification factors is paid officer or servant of society. Chapter VIII deals with paid officers and servants of the society including appointment, removal set. Rule 14 of the Tamil Nadu Co- operative Societies Rules, 1988 deals with conditions of service of paid officers and servants of societies. Therefore, if the members are paid employees, they would have been (covered under the relevant provisions of the Societies Act and procedure for employment service conditions should have been followed. In a weavers society of this nature, there is very little scope of members becoming as workers, unless otherwise proved. Members carrying on weaving may also be doing the connected business of the society, but that will not be sufficient to say that they are the employees of the society." (Emphasis added)
8.Even on the question of supervision and control exercised by the societies, in paragraphs 25,28 and 31, it was stated as follows:
"25...... But, in the present case, there is no question of rejecting of the cloths or supervision over the weavers and there is no question of compelling them to do the work. Further, the society is a non-profitable organisation to help the poor weavers to have their own cotton loom in their own houses and share their profits through a co-operative venture. We, therefore, agree with the view taken by the learned Judge in relation to the relationship of the members with the society.
28........In that case, the members work in the premises of the society for the wages paid by the society and in the light of expression "wages" under Section 2(22) of the Act to mean all remuneration paid by the society being distinct legal entity from its members and of the members work for wages for the society, they are employees. There is no such finding with materials in our case.
31.......On the contrary, it is pointed out that the members of the society have their own looms in their residence and they do their work along with their family members and there is no supervision and time frame work, etc. There is absolutely no question of master and servant-relationship between the members and the society."
9.This judgment was taken on appeal by the department. The Supreme Court had dismissed the civil appeal vide its decision in Regional Provident Fund Commissioner and others Vs. Madathupatti Weavers Cooperative Production and Sales Society Ltd. reported in 2008 (3) LLN 507.
10.The counsel further referred to a subsequent judgment of a division bench of this court in The Management, Dindigul Ladies Polythene Workers' Industrial Cooperative Society Ltd. Vs. The Controlling Authority under the Minimum Wages Act (Deputy Commissioner of Labour), Dindigul and another reported in 2010 (2) CWC 878, wherein Madathupatti Weavers Cooperative Production and Sales Society Ltd.'s case was doubted by this Court and in paragraph 7, it was observed as follows:
"7.The learned single Judge also referred to The Workmen of Salem Co-operative Motor Society for Ex-Servicemen Limited v. The Government of Tamilnadu, rep. by labour Secretary and another, 1974 (2) LLJ 385, wherein another Division Bench has held "notwithstanding the fact that a person is a member of a society, when employed in the society, the relationship of master and servant will come into existence and held that member of a society can well be its employee". Pointing out that there is two conflict views in the two decisions Madathupatti Weavers Cooperative Production and Sales Society Limited v. Regional Provident Fund Commissioner, Madurai and two others, 2003 (3) LLN 674 and The Workmen of Salem cooperative Motor Society for Ex-Servicemen Limited v. The Government of Tamil Nadu, rep by Labour Secretary and another, 1974 (2) LLJ 385, the learned single Judge referred the matter to be placed before the appropriate Bench and accordingly, the matter was listed before us on the orders of the Hon'ble Chief Justice."
11.The findings of the division bench are set out in paragraph 9 which reads as follows:
"9.As rightly contended by the learned counsel for the Petitioner-Society, in the instant case 32 persons are members who elect the Directors, Vice-President and President and they manage and administer the affairs of the Society and they enjoy the dividends and share the profits and also take policy decisions with regard to the affairs of the Society, applying the ratio of the decision in Madathupatti Weavers Cooperative Production and Sales Society Limited v. Regional Provident Fund Commissioner, Madurai and two others, 2003 (3) LLN 674, they are not workmen as per the provisions of Tamilnadu Co-operative Societies Act. Even though, Petitioner-Society has been registered under the Factories Act and 32 persons are covered under the Employees' State Insurance Act, since 32 persons are administering the affairs of the Society, they cannot be categorised as "Jobbers" for fixation of minimum wages and applicability of Minimum Wages Act."
12.The first respondent Tribunal being the appellate authority is bound to consider all relevant factors including the precedents cited. Therefore, as the appellate authority in this case, the Tribunal failed to discharge its duty. It ought to have given a specific finding whether the members of the petitioners' societies are employees for the purpose of Section 2(f) of the EPF Act, after taking note of various circumstances pleaded by the petitioners' societies. The findings that exemption under Section 16(1)(a) will not apply may be the correct observation, but at the same time for the purpose of coverage whether the members of the societies were also workers under the EPF Act, a specific finding should be given after taking note of the two binding precedents given by this court in Madathupatti Weavers Cooperative Production and Sales Society Limited's case and Dindigul Ladies Polythene Workers' Industrial Cooperative Society Ltd. (cited supra).
13.It must be noted that the Tribunal constituted under the statutory provisions is also bound by the judgments rendered by the High Court. The Supreme Court has even held that even the Central Administrative Tribunal constituted under Article 323-A is also bound by the judgments of the High Courts. The supreme Court in Shreedharan Kallat Vs. Union of India reported in (1995) 4 SCC 207 had criticized the Tribunal which went behind the judgment of the High Court instead of following the same. It is necessary to refer to the following passages found in paragraphs 1,4 and 5, which reads as follows:
1.This appeal directed against the order of the Central Administrative Tribunal does not raise any intricate question of law but it exposes a very disturbing feature as the Tribunal not only commented upon the judgments rendered by the Kerala High Court in favour of the appellant which had been affirmed by this Court, but went on to hold that they had no binding effect as they appeared to be inconsistent with the Rules. This was against judicial comity and propriety. We do not approve of it.
4.......The first four issues having been settled by the judgment of the High Court, the Tribunal committed act of grave impropriety in attempting to reopen it. Such practice of the Tribunal cannot be commended. It has interfered at the instance of the respondents who were not adversely affected. The judgment was binding on Railways. It could not once again take up those very pleas which were rejected by the High Court. Such unwarranted stand by public authorities results in protracted litigation involving wastage of money and time.
5.Assuming that the respondents could challenge fixation of seniority of the appellant as the order which furnished foundation for the determination of seniority, was passed without impleading the respondents, the scope of such petition could be limited. In service matters where validity or interpretation of rule is concerned any order passed by the courts which achieves finality is binding on the department. If the court is satisfied that any employee has been prejudiced or his right under Article 14 has been violated it may interfere in his favour. But the department is precluded from challenging the interpretation given by the court. Since the earlier order has been upheld by this Court the order could be set aside by this Court. The Tribunal could not have passed an order which resulted in disturbing the finality about interpretation of rule specially when the SLP had been dismissed by this Court.
14.In view of the above, this court is obliged to set aside all the orders passed by the Tribunal. Accordingly, all the orders of the Tribunal are set aside. The matters are remanded back to the first respondent Tribunal to decide the matter afresh after giving notice to the parties in accordance with law and in the light of the observations made by this Court. Accordingly, all the writ petitions will stand allowed. No costs. Consequently connected miscellaneous petitions stand closed.
vvk To
1.Employees' Provident Fund Appellate Tribunal, Scope Minar, Core-II, 4th Floor, Laxmi Nagar District Centre, Laxmi Nagar New Delhi-110 092
2.The Assistant Provident Fund Commissioner (The APFC) EPFO, Sub Regional Office, 31, Filter Bed Road, Vellore-632 001.
3.Employees' Provident Fund Organization, No.31, Filter Bed Road, Vellore 632 001