Madras High Court
M/S.Kanyakumar vs The Regional Provident Fund ... on 21 July, 2025
W.P (MD) No.9627 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 30.04.2025 Pronounced on : 21.07.2025
CORAM
THE HONOURABLE MR.JUSTICE MUMMINENI SUDHEER KUMAR
W.P (MD) No.9627 of 2018
M/s.Kanyakumar ... petitioner
Vs.
The Regional Provident Fund Commissioner,
Employees Provident Fund Organization,
Regional Office, Lady Doak College Road,
Chokkikulam, Madurai – 625 002, Tamil Nadu. ... Respondent
Prayer: Writ Petition is filed under Article 226 of the Constitution of India, to
issue a Writ of Certiorari, calling for the records pertaining to the impugned
order passed by the respondent vide File No.TN/NGL/ENF/CIRCLE
32/4144/2018 dated 01.03.2018 and quash the same.
For petitioner : Mr.D.Shanmugaraja Sethupathi
For Respondent : Mr.J.S.Murali
ORDER
This writ petition has been filed aggrieved by the proceedings bearing No.TN/NGL/ENF/CIRCLE 32/4144/2018 dated 01.03.2018, issued by Page 1 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 the respondent under Paragraph No.26(B) of the Employees' Provident Fund Scheme, 1952, requiring the petitioner bank to enroll the jewel appraisers of the petitioner Bank under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the Act, 1952'), by treating them as employees under Section 2(f) of the Act, 1952, and to pay Provident Fund contributions from the date of joining of the respective jewel appraisers.
2. Heard Mr.D.Shanmugaraja Sethupathi, learned counsel for the petitioner and Mr.J.S.Murali, learned counsel for the respondent.
3. According to the learned counsel for the petitioner, the jewel appraisers appointed by the petitioner Bank are not employees within the meaning of Section 2(f) of the Act 1952, as they were appointed only for the purpose of assessing the purity and quality of the gold jewellery offered to the petitioner Bank for availing the gold loan facility, and that the jewel appraisers are being paid commission charges from out of the service charges collected by the petitioner Bank from the respective loanees. Learned counsel for the petitioner further contended that the jewel appraisers are being paid commission charges as and when their services were utilized, and no fixed monthly or daily Page 2 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 wages are being paid to them. He also further contended that the jewel appraisers appointed by the petitioner Bank are not borne on the cadre and are not governed by the Service Rules that are applicable to the employees of the petitioner Bank. He further submitted that the jewel appraisers does not satisfy the basic attributes of an employee and, therefore, the impugned order passed by the respondent requiring the petitioner to enroll the jewel appraisers of the petitioner Bank as members of the Employees' Provident Fund Scheme is liable to be set aside.
4. Learned counsel for the petitioner has placed reliance on various decisions of the Hon'ble Apex Court as well as this court in the cases of “Indian Overseas Bank -vs- Workmen” reported in (2006) 3 SCC 729, “M/s.Puri Urban Cooperative Bank -vs- Madhusudan Sahu and another” reported in (1992) 3 SCC 323 and “M/s.Jayakumar -vs- The Secretary to Government” reported in 2014 (3) LLN 739 (Mad), as well as the order dated 25.01.2022 passed by the Madurai Bench of this court in W.P (MD) Nos.11571 to 11573 and 9572 to 9574 of 2018.
5. On the other hand, Mr.J.S.Murali, learned counsel appearing for the respondent contended that the jewel appraisers are being paid by the Page 3 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 petitioner Bank the service charges collected by the Bank and therefore, they do come within the meaning of an 'Employee', as defined under Section 2(f) of the Act, 1952, and therefore, the impugned order passed by the respondent is perfectly in order. He also placed reliance on the decision of a Co-ordinate Bench of this court in W.P (MD) No.20952 of 2012 dated 22.07.2021.
6. This court has carefully considered the submissions made on either side and also perused the entire material on record.
7. Sections 2(b) and Section 2(f) of the Act, 1952, reads as under:-
“(b) “basic wages” means all emoluments which are earned by an employee while on duty or 3[ 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” “(f) “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 6[an establishment], and who gets his wages directly or indirectly from the employer”
8. Section 2(b) defines basic wages as “all the 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. Page 4 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018
9. In order to come within the meaning of an employee as defined under 2(f) of the Act, 1952, “a person who is employed should be the one who is being paid wages, directly or indirectly by the employer, which includes any person employed through a contractor or in connection with the work of the establishment”. Thus, it is evident that, in case, if an employee or a person is paid wages by the employer, then such person would definitely come within the meaning of an employee under Section 2(f) of the Act, 1952.
10. From the above, it is evident that in order to come within the meaning of 2(f), the fundamental requirement is that the emoluments must be earned by an employee in accordance with the terms of the contract of employment.
11. If the commission that is being paid to the jewel appraiser is to be brought within the meaning of basic wages under Section 2(b) of the Act, 1952, the pre-condition required to be satisfied is existence of “terms of the contract of employment”. In the absence of any specified terms of employment between the petitioner bank and the jewel appraiser, any amount paid to the jewel appraiser would not fall within the meaning of 'basic wages' as defined under Section 2(b) Page 5 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 of the Act, 1952. Further, by the very word 'wage' or 'basic wage', it implies payment on a regular or periodical basis, whether monthly, daily or otherwise in a perennial manner. Whereas, the jewel appraiser are admittedly being paid only such an amount in the name of commission, which would be a certain percentage of service charges collected by the petitioner bank, as and when the loan was advanced by the petitioner bank and the same depends entirely on the quantum of loan that is sanctioned by the petitioner bank. It is only in case if there are any gold loans that are advanced by the petitioner bank in a particular month and the services of the jewel appraiser are availed, the jewel appraiser will be paid commission. If there are no gold loans advanced by the petitioner bank, the jewel appraiser may not get even a single rupee in a given month. So also, in the petitioner bank, there are several jewel appraisers attached to different branches in various locations. It is also not necessary that the very same jewel appraiser alone should alone be required to assess the quality and purity of the gold offered as security for gold loan, but it is at the discretion of the concerned branch to entrust such work to the jewel appraiser of its choice. Thus, there is no certainty of payment of service charges to every jewel appraiser.
12. Thus, the commission that is being paid to the jewel appraiser is Page 6 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 neither on a regular basis nor there is any fixed amount that would be paid to the jewel appraiser on a regular basis. Therefore, the commission that is being paid to the jewel appraiser cannot be treated as 'wage' or 'basic wage' within the meaning of Section 2(b) of the Act, 1952. Under the scheme, if an employee is enrolled, whether that employee is being paid wages or not, the employer would be under obligation to remit monthly contributions to the respondent. In case of a jewel appraiser, if no amounts are paid in a particular month or for a few months, or even a whole year, the question of paying contribution does not arise. But the Provident Fund Scheme does not allow the employer to remain without paying the contributions on the ground of non-payment of any commission to a particular jewel appraiser.
13. Let me examine another angle of the case. While advancing loans, whether home loan, personal loan or mortgage loan etc., the banks would avail the services of advocates, so also services of a property valuer. For the services rendered by them, the bank would be paying a particular amount. If the jewel appraiser is to be treated as an employee, the advocate and the property valuer would also have to be treated as employees. An advocate who is consulted for his legal opinion by the petitioner bank cannot be treated as an employee of the petitioner bank. If such a situation is allowed to take place, Page 7 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 there is nothing more absurd than the same.
14. In this connection, it is also necessary to refer to the decisions relied upon by the learned counsel for the petitioner. In the cases of “Puri Urban Co-operative Bank -vs- Madhusudan Sahu” reported in (1992) 3 SCC 323 and “Indian Overseas Bank -vs- Workmen” reported in (2006) 3 SCC 729, the Hon'ble Apex Court considered the claim of a jewel appraiser employed by a bank, viz-a-viz, the provisions of Industrial Disputes Act, 1947, and came to the conclusion that the jewel appraiser does not fall within the meaning of a 'workman' under Section 2(s) of the Act, 1947.
15. In the case of “Puri Urban Co-operative Bank -vs- Madhusudan Sahu” reported in (1992) 3 SCC 323, the Honourable Apex Court held as under:-
“Now engaging Sahu was to require him to weigh the ornaments brought in the Bank for pledging and to appraise their quality, purity and value. He could be directed to do this but not the manner in which he shall do it. That was left to him exclusively, as it depended on his skill, technique and experience. Besides under the terms of engagement he was required to, and he did, execute a bond indemnifying and holding himself responsible to the Bank for all his acts and commissions as an appraiser, and be accountable for the loss sustained by the Bank on Page 8 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 account of undervaluation of the gold pledged with it. These terms inhered in the Bank the power to warn him and to remind him that he was not expected to be negligent in his duty. Still there was a fair element of freedom though coupled with responsibility, for Sahu in the manner in which he could do his work.
7. Therefore, we are of the view that though Sahu claims to be a workman as commonly understood, he was not ‘employed’ as such, so as to establish a master and servant relationship, which could warrant a reunion in the event of disruption, by the intervention of the Labour Court. The allegation of the Bank before the Labour Court, as well as here, that Sahu is a reputed goldsmith and had remained gainfully employed so as to disentitle him to any back wages, which appealed to the Labour Court, has remained uncontroverted before us. It also remains uncontroverted before us that the Bank has, on its approved list, other such like appraisers and it is not obligatory for the Bank to allot work to Sahu or any other, at all. Additionally, in no event can he ask for work, or periodic remuneration or idling wages.
These particulars, not by themselves, but in the totality of circumstance indicate lack of master and servant relationship.”
16. So also, in the case of “Indian Overseas Bank -vs- Workmen” reported in (2006) 3 SCC 729, the Hon'ble Apex Court, having compared the attributes of a regular employee and the jewel appraisers, held as under:-
15. A few other facts need to be noted. In the present case as well as in Puri Coop. Bank case [(1992) 3 SCC 323 : 1992 SCC (L&S) 675 : (1992) 20 ATC 753 : (1992) 2 LLJ 6] the jewel appraisers were required to weigh the ornaments brought to the Bank for pledge and to appraise the quality, purity and Page 9 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 value. The jewel appraisers could be asked to do this exercise but not the manner in which it was to be done. In both the cases the respective Banks had their lists of appraisers. It was not obligatory for the Bank to allot work to any particular jewel appraiser.
16. Strong reliance was placed by learned counsel for the respondent in Dharangadhara Chemical Works Ltd. v. State of Saurashtra [1957 SCR 152 : AIR 1957 SC 264] , Silver Jubilee case [(1974) 3 SCC 498 : 1974 SCC (L&S) 31] , Shining Tailors v. Industrial Tribunal II, U.P. [(1983) 4 SCC 464 : 1983 SCC (L&S) 533] and Chintaman Rao v.
State of M.P. [1958 SCR 1340 : AIR 1958 SC 388]
17. The inferences culled out from the reading of those judgments can be summed up as follows:
(a) Where the contractors were substantially responsible for the main and sole business, they would be treated as workers.
(b) One exception is that where in such cases flexibility of the contract was at variance with the normal worker's contract, the contractors would not be treated as workers.
(c) Where the contractor is in the nature of supplier of goods and services, they are to be treated as supplier contractors and not workmen.
18. At this juncture the distinction between jewel appraisers and the regular employees of the Bank can be noted.
Regular employees Jewel appraisers
1. Subject to qualification and 1. No qualification/age.
age prescribed.
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W.P (MD) No.9627 of 2018
2. Recruitment through employ- 2. Direct engagement by ment exchange/Banking Service the local Manager. Recruitment Board.
3. Fixed working hours. 3. No fixed working hours.
4. Monthly wages. 4. No guaranteed payment, only commission paid.
5. Subject to disciplinary 5. No disciplinary control. control.
6. Control/supervision is exerci- 6. No sed not only with regard to the control/supervision over allocation of work, but also the the nature of work to be way in which the work is to be performed.
carried out.
7. Wages are paid by the Bank. 7. Charges are paid by the borrowers.
8. Retirement age. 8. No retirement age.
9. Subject to transfer. 9. No transfer.
10. While in employment cannot 10. No bar to carry on carry on any other occupation. any avocation or occupation.
Therefore, the jewel appraisers are not employees of the Bank.”
17. So also, this court in the case of “V.Palanivel -vs- Manager, Canara Bank” reported in (2014) 3 LLN 736 (Mad), while dealing with the provisions of the Industrial Disputes Act, 1947, held as under:-
“11.In view of the fact that the petitioner as a jewel appraiser of the Respondent/Bank was not an employee of the Bank and also this Court taking note of the fact the Honourable Supreme Court in the decision 2006 (3) SCC 729 between Indian Overseas Page 11 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 Bank and Workmen has clearly held that "jewel appraisers are not employees of the Bank", this Court holds that the Petitioner is not entitled to seek the relief of setting aside the impugned order dated 10.06.2012 passed by the Respondent/Bank. As such the Writ Petition filed by the Writ Petitioner sans merits.”
18. So also, a Co-ordinate Bench this Court in W.P (MD) Nos.11571 to 11573 and 9572 to 9574 of 2018, by order dated 25.01.2022, having taken note of the decision of the Hon'ble Apex Court referred to above, came to the conclusion that the commission agents employed by a co-operative society to gather deposits are 'not employees' for the purpose of Co-operative Societies Act, 1952.
19. Then coming to the decision relied upon by Mr.J.S.Murali, learned counsel appearing for the respondent in W.P (MD) No.20952 of 2012, dated 22.07.2021, a Co-ordinate Bench came to the conclusion that the jewel appraisers do fall within the definition of 'employee' under Section 2(f) of the EPF Act, though they may not be workmen under the provisions of Section 2(s) and 2(rr) of the Industrial Disputes Act 1947. However, the learned Single Judge in the said decision, has not taken note of the definition of 'basic wages' as defined under Section 2(b) of the Act, 1952. Further, the learned Single Judge, Page 12 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 having referred to the decision of the Hon'ble Apex Court in the Indian Overseas Bank's case, has not considered the said binding precedent in detail and therefore, the said decision of the learned Single Judge is to be treated as per incuriam and therefore, this court is not inclined to follow the same.
20. In the light of the above, the impugned order bearing File No.TN/NGL/ENF/CIRCLE 32/4144/2018 dated 01.03.2018, passed by the respondent cannot be sustained and the same is accordingly quashed and the writ petition is allowed. No costs. Connected miscellaneous petitions, if any, shall stand closed.
21.07.2025 skr Index : Yes / No Speaking order / Non-speaking order Neutral Citation : Yes / No To The Regional Provident Fund Commissioner, Employees Provident Fund Organization, Regional Office, Lady Doak College Road, Chokkikulam, Madurai – 625 002, Tamil Nadu.
Page 13 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm ) W.P (MD) No.9627 of 2018 MUMMINENI SUDHEER KUMAR, J.
skr Pre-Delivery Order made in W.P (MD) No.9627 of 2018 21.07.2025 Page 14 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/07/2025 03:11:52 pm )