Gauhati High Court
M/S Raju Constructions And Ors vs State Of Assam And Ors on 20 May, 2014
Author: Hrishikesh Roy
Bench: Hrishikesh Roy
THE GAUHATI HIGH COURT
(The High Court of Assam: Nagaland: Mizoram and Arunachal Pradesh)
Writ Petition (C) No. 4107/2011
1. M/S K.M. SARMAH ELECTRICALS
REP. BY ITS PROPRIETOR, SHRI KULA MOHAN SARMAH, S/O- LT. ADYA NATH SARMAH,
SECTOR- II, NOONMATI, GUWAHATI- 20.
2. DILIP KUMAR DUTTA
S/O- LT. HARENDRA NATH DUTTA, NOONMATI, GHY- 20
3. BIPUL BORA
S/O- LT. MOHIDHAR BORA, SECTOR - II, NOONMATI, GHY- 20.
4. M/S. H.N. ELECTRICALS
REP. BY ITS PARTNER, MD. NASIR ALI, VILL.- AGDOLA, P.O.- BAIHATA CHARIALI,
DIST.- KAMRUP, ASSAM.
5. SELIM ALI
S/O- NOOR MOHAMMAD ALI, NOONMATI, GHY- 20
6. M/S LAKSHMI ELECTRICALS
REP. BY ITS PROPRIETOR, SHRI GHANASHYAM DAS, S/O- SHRI GOPAL CHANDRA DAS,
NOONMATI, GHY- 20.
7. M/S. KHANINDRA KUMAR TALUKDAR
REP. BY ITS PROPRIETOR, SHRI KHANINDRA KUMAR TALUKDAR, S/O- SHRI HARENDRA
NATH TALUKDAR, NOONMATI, GHY- 20.
8. M/S. P.K. ELECTRICALS
REP. BY ITS PROPRIETOR, SHRI PULENDRA KUMAR TALUKDAR, S/O- SHRI HARENDRA
KUMAR TALUKDAR, R/O- NARENGI HOUSING COLONEY, P.O.- NOONMATI, GHY- 20.
9. PRADIP KUMAR TALUKDAR
S/O- SHRI GOBINDA RAM TALUKDAR, R/O- BYE LANE NO. 4, GANESH MANDIR PATH,
NEW GUWAHATI, GHY- 20.
10. M/S TRIMURTY CONSTRUCTION
REP. BY ITS PROPRIETOR, SHRI DHIREN DEKA, S/O- LT. UPEN DEKA, R/O- SALBARI,
NOONMATI, GHY- 20.
11. M/S RAJ ELECTRICAL
REP. BY ITS PROPRIETOR, SHRI BHUPENDRA SINGH, S/O- SHRI MUNDA KISHORE
SINGH, R/O- BISHNU RABHA NAGAR, NOONMATI, GHY- 20.
12. M/S RIMA DEB AGENCY
REP. BY ITS PROPRIETOR, MISS RIMA DEB, D/O- LT. PRABHAT CHANDRA DEB, R/O-
NOONMATI, NEAR RANA STAR CLUB, P.O.- NOONMATI, GHY - 20.
13. M/S DHANIRAM DAS
REP. BY ITS PROPRIETOR SHRI DHANIRAM DAS, S/O- LT. HARIHAR DAS, R/O- BISHNU
RABHA NAGAR, NOONMATI, GHY- 20.
14. M/S R.D. ELECTRICALS
REP. BY ITS PROPRIETOR, SHRI DULAL BARMAN, S/O- SHRI RAMESH BARMAN, R/O-
HILL VIEW COLONY, NEW GUWAHATI, P.O.- NOONMATI, GHY- 20. ...... Petitioners
-Versus-
1. INDIAN OIL CORPORATION LIMITED
REP. BY ITS CHAIRMAN, SCOPE COMPLEX- 2, 7, INSTITUTIONAL AREA, LODHI ROAD,
NEW DELHI- 110003.
2. THE GENERAL MANAGER
GUWAHATI REFINERY, INDIAN OIL CORPORATION LTD., NOONMATI, GHY- 20.
3. THE CHIEF HUMAN RESOURCE MANAGER
GUWAHATI REFINERY, INDIAN OIL CORPORATION LTD., NOONMATI, GHY- 20.
4. TUSHAR TARUN
LAW OFFICER, GUWAHTI REFINERY, INDIAN OIL CORPORATION LTD., NOONMATI,
GHY- 20.
5. REGIONAL PROVIDENT FUND COMMISSIONER
N.E. REGION, G.S. ROAD, BHANGAGARH, GHY- 5. ...... Respondents
Page 1 of 11
Writ Petition (C) No. 726/2008
1. SHRI DILIP KUMAR DUTTA
S/O LT. HARENDRA NATH DUTTA, NOONMATI, GHY-20.
2. M/S S P SINGH ELECTRICALS,
REP. BY ITS PROPRIETOR, SHRI SENAPATI SINGH (DAS), S/O LT. RAGHU PRASAD
SINGH (DAS), NOONMATI, BISHNU RABHA NAGAR, GHY-20.
3. SHRI BIPUL BORA,
S/O LT. MOHIDHAR BORA, SECTOR- II, NOONMATI, GHY-20.
4. M/S H. N ELECTRICALS,
REP. BY ITS PARTNER, MD NASIR ALI, VILL- AGDOLA, P.O. BAIHATA CHARIALI, DIST.
KAMRUP, ASSAM.
5. M/S MON CONSTRUCTION,
REP. BY ITS PROPRIETOR, SHRI GAUTAM DAS, S/O LT. MANIK DAS, R.G. BARUA ROAD,
GHY-5.
6. M/S K M SARMAH ELECTRICALS,
REP. BY ITS PROPRIETOR, SHRI KULA MOHAN SARMAH, S/O LT. ADYA NATH SARMAH,
SECTOR-II, NOONMATI, GHY-20.
7. MD SELIM ALI,
S/O NOOR MOHAMMAD ALI, NOONMATI, GHY-20.
8. M/S G S ENTERPRISE,
REP. BY ITS PARTNER, SHRI GAGAN KALITA, S/O LT. SATYANANDA KALITA, SALBARI,
NOONMATI, GHY-20.
9. M/S LAKSHMI ELECTRICALS,
REP. BY ITS PROPRIETOR, SHRI GHANASHYAM DAS, S/O SHRI GOPAL CHANDRA DAS,
NOONMATI, GHY-20.
10. SHRI JAYANTA TALUKDAR,
S/O SHRI GOBINDA TALUKDAR, UPPER HENDERABARI, BARBARI, SAMMANYA PATH,
GHY-36.
11. M/S KHANINDRA KUMAR TALUKDAR,
REP. BY ITS PROPRIETOR, SHRI KHANINDRA KUMAR TALUKDAR, S/O SHRI HARENDRA
NATH TALUKDAR, NOONMATI, GHY-20. ----- Petitioners
Versus-
1. INDIAN OIL CORPORATION LIMITED
REP. BY ITS CHAIRMAN, SCOPE COMPLEX- 2, 7, INSTITUTIONAL AREA, LODHI ROAD,
NEW DELHI- 110003.
2. THE EXECUTIVE DIRECTOR,
GUWAHATI REFINERY, INDIAN OIL CORPORATION LTD., NOONMATI, GHY-20.
3. SENIOR ENGINEERING SERVICES MANAGER,
GUWAHATI REFINERY, INDIAN OIL CORPORATION LTD, NOONMATI, GHY-20.
4. REGIONAL PROVIDENT FUND COMMISSIONER,
N.E. REGION, G.S. ROAD, BHANGAGARH, GHY-5. ...... Respondents
Writ Petition (C) No. 1150/2005
1. M/S RAJU CONSTRUCTION,
SON OF LATE THANESWAR BHUYAN, NOONMATI, GUWAHATI-20.
2. SRI BC DAS, SON OF DEBEN CH. DAS, SALBARI NOONMATI-20, GUWAHATI.
3. SRI KHONINDRA NATH DAS, SON OF LATE SUNANDA DAS, ANANDANAGAR NOONMATI-
20.
4. SRI BAKUL SAIKIA, SON OF LATE SUKHUNA DHAR SAIKIA, SALBARI NOONMATI,
GUWAHTI-20.
5. SRI PARENEWSAR HIRA, SON OF LATE BALI RAM HIRA, MADHABPUR NOONMATI,
GUWAHATI-20.
6. SRI PANKAJ KUMAR BHUYAN, SON OF SRI KESHAB BHUYAN, B.R. NAGAR, NOONMATI-
20.
7. MD. SHEKH SAFIJUL ISLAM, SON OF MAJIBAR RAHMAN, JOYANTA NAGAR NOONMATI-
20.
8. MD. MAJIB ALI, SON OF LATE MOHBUR ALI SALBARI NONMATI-20.
9. JYOTISH DEKA, SON OF RAVI DEKA, SALBHARI NOONMATI-20.
10. MD. AFNUR ALI, SON OF LATE BHABUN ALI, B.R. NAGAR, NOONMATI-20.
Page 2 of 11
11. DHIREN DEKA (SANKAR BUILDER), SON OF SARBESWAR DEKA, ANANDA NAGAR,
NOONMATI-20.
12. MR. H.P. KOIRALA, SON OF LATE SURAJA PRASAD KOIRALA, KALI MANDIR, NOONMATI-
20.
13. SRI MINES DHAR DAS, SON OF LATE BHABI RAM DAS, SALBARI NOONMATI, GUWAHTI-
20.
14. SRI UDAY KUMAR DAS, SON OF LATE BALI RAM HIRA, BHABANIPUR, NOONMATI-20.
15. SRI DEBEN BARMAN, SON OF NARESWAR BARMAN, 2 NOS. MATHGHURIA, NOONMATI-
20.
16. SRI PRIYA NATH RAJBANGSHI, SON OF SANATAN RAJBANGSHI, RAM NAGAR,
NOONMATI-20. ----- Petitioners
-Versus-
1. INDIAN OIL CORPORATION LIMITED
REP. BY ITS CHAIRMAN, SCOPE COMPLEX- 2, 7, INSTITUTIONAL AREA, LODHI ROAD,
NEW DELHI- 110003.
2. THE GENERAL MANAGER
GUWAHATI REFINERY, INDIAN OIL CORPORATION LTD., NOONMATI, GHY- 20.
3. THE SENIOR ENGINEERING SERVICES MANAGER,
GUWAHATI REFINERY, INDIAN OIL CORPORATION LTD., NOONMATI, GHY- 20.
4. REGIONAL PROVIDENT FUND COMMISSIONER
N.E. REGION, G.S. ROAD, BHANGAGARH, GHY- 5. ----- Respondents
Writ Petition (C) No. 5767/2010
1. M/S P K ELECTRICALS
REPRESENTED BY ITS PROPRIETOR SRI PULENDRA KR. TALUKDAR SON OF SRI
HARENDRA KR. TALUKDAR RESIDENT OF NARENGI HOUSING COLONY, P.S.
NOONMATI, GUWAHATI-20, DIST. KAMRUP, ASSAM.SRI BC DAS, SON OF DEBEN
CH. DAS, SALBARI NOONMATI-20, GUWAHATI.
2. SRI PRADIP KUMAR TALUKDAR
SON OF SRI GOBINDA RAM TALUKDAR, RESIDENT OF NEW GUWAHATI, GANESH
MANDIR PATH, BYE LANE NO. 4, P.S.NOONMATI, GUWAHATI-20, DIST. KAMRUP,
ASSAM.
3. M/S TRIMURTY CONSTRUCTION,
REP. BY ITS PROPRIETOR SRI DHIREN DEKA, SON OF LATE UPEN DEKA RESIDENT
OF SALBARI, P.S. NOONMATI, GUWAHATI-20, DIST. KAMRUP, ASSAM.
4. M/S RAJ ELECTRICAL,
REPRESENTED BY ITS PROPRIETOR SRI BHUPENDRA SINGH, SON OF SRI MUNDA
KISHORE SINGH, R/O BISHNU RAVA NAGAR, P.S. NOONMATI, GUWAHATI-20, DIST.
KAMRUP, ASSAM.
5. M/S RIMA DEB AGENCY,
REPRESENTED BY ITS PROPRIETOR MISS RIMA DEB, D/O LATE PRABHAT CH. DEB,
RESIDENT OF NOONMATI, NEAR RANA STAR CLUB, P.S. NOONMATI, GUWAHATI-
20, DIST. KAMRUP, ASSAM.
6. M/S DHANIRAM DAS
REP. BY ITS PROPRIETOR SRI DHANIRAM DAS SON OF LATE HARIHAR DAS
RESIDENT OF NOONMATI, BISHNU RAVA NAGAR, P.S. NOONMATI, GUWAHATI-20,
DIST.KAMRUP, ASSAM.
7. M/S R.D. ELECTRICALS,
REP. BY ITS PROPRIETOR SRI DULAL BARMAN, S/O SRI RAMESH BARMAN,
RESIDENT OF HILL VIEW COLONY, NEW GUWAHATI, P.S.NOONMATI, GUWAHATI-
20, DIST. KAMRUP, ASSAM. -----Petitioners
-Versus-
1. INDIAN OIL CORPORATION LIMITED
REP. BY ITS CHAIRMAN, SCOPE COMPLEX- 2, 7, INSTITUTIONAL AREA, LODHI
ROAD, NEW DELHI- 110003.
2. THE EXECUTIVE DIRECTOR,
GUWAHATI REFINERY, INDIAN OIL CORPORATION LIMITED, NOONMATI,
GUWAHATI-20.
Page 3 of 11
3. SENIOR ENGINEERING SERVICES MANAGER,
GUWAHATI REFINERY, INDIAN OIL CORPORATION LIMITED,NOONMATI,
GUWAHATI-20.
4. REGIONAL PROVIDENT FUND
COMMISSIONER, N.E. REGION, G.S. ROAD, BHANGAGARH,
GUWAHATI-5. -----Respondents
Writ Petition (C) No. 6464/2010
1. LABA KANTA NATH
S/O LT. MANESWAR DEKA R/O NOONMATI, GUWAHATI, DIST. KAMRUP.
2. SRI DILIP CHOUDHURY
S/O SRI SARAT CHOUDHURY R/O NOONMATI, GUWAHATI, DIST. KAMRUP.
3. MD. SAIFFUDDIN AHMED,
S/O LT. MEHBOOB ALI VILL. SALBARI, NOONMATI, GUWAHATI, DIST. KAMRUP.
4. SRI KHANINDRA NATH DAS, S/O LT. SUNANDA DAS R/O ANANDA NAGAR,
NOONMATI, GUWAHATI-20, DIST. KAMRUP.
5. SRI PANKAJ KR. BHUYAN,
S/O SRI KESHAB BHUYAN, R/O SHIVA NAGAR, SECTOR-II, NOONMATI, GUWAHATI-
20, DIST. KAMRUP.
6. SRI HARI CHANDRA DEKA,
S/O LT. S.R. DEKA, R/O NOONMATI, GUWAHATI-20, DIST. KAMRUP, ASSAM.
7. SRI DEBEN BARMAN,
S/O SRI NARENSWAR BARMAN, R/O NO.2 MATHGHARIA, NOONMATI, GUWAHATIA-
20, DIST. KAMRUIP.
8. SRI MAHENDRA BHUYAN,
S/O T. BHUYAN R/O NOONMATI, B.R. NAGAR, GUWAHATI-20.
9. SRI KHARGESWAR BEZBARUAH,
S/O LT. THANU RAM BEZBARUAH, R/O NOONMATI, GUWAHATI-20, DIST. KAMRUP.
- ---Petitioners
-Versus-
1 INDIAN OIL CORPORATION LIMITED
REP. BY ITS CHAIRMAN, SCOPE COMPLEX- 2, 7, INSTITUTIONAL AREA, LODHI
ROAD, NEW DELHI- 110003.
2 THE EXECUTIVE DIRECTOR,
GUWAHATI REFINERY, INDIAN OIL CORPORATION LTD. GUWAHATI-20.
3 SENIOR ENGINEERING SERVICES MANAGER,
GUWAHATI REFINERY, INDIAN OIL CORPORATION LIMITED,NOONMATI,
GUWAHATI-20.
4 REGIONAL PROVIDENT FUND
COMMISSIONER, N.E. REGION, G.S. ROAD, BHANGAGARH,
GUWAHATI-5. -----Respondents.
Writ Petition (C) No. 3523/2012
1. M/S SANGEETA AGENCY
A.T. ROAD, BORBILL NO.1, P.O. & P.S. DIGBOI, DIST- TINSUKIA, ASSAM,
REPRESENTED BY ITS PROPRIETOR SRI ARUP KR. SHARMA
2. ARUP KR. SHARMA
S/O SRI INDRESWAR SHARMA, R/O NEAR LITTLE STAR SCHOOL, BORBILL NO.1,
P.O. & P.S. DIGBOI, DIST- TINSUKIA, ASSAM. -----Petitioners.
-Versus-
1. INDIAN OIL CORPORATION LTD. & ORS.
ASSAM OIL DIVISION, A GOVT. COMPANY WITHIN THE MEANING OF THE
COMPANIES ACT, 1956, HAVING ITS REFINERIES ACROSS INDIA, INCLUDING A
REFINERY IN DIGBOI, ASSAM, REPRESENTED BY ITS EXECUTIVE DIRECTOR
2. THE CHIEF MANAGER (CONTRACTS)
INDIAN OIL CORPORATION LTD. (ASSAM OIL DIVISION), DIGBOI, DIST- TINSUKIA,
ASSAM.
Page 4 of 11
3. THE SENIOR E.R. MANAGER
INDIAN OIL CORPORATION LTD. (ASSAM OIL DIVISION), DIGBOI, PIN 786171,
DIST- TINSUIKIA
4. THE SENIOR MANAGER (CONTRACTS)
INDIAN OIL CORPORATION LTD. (ASSAM OIL DIVISION), DIGBOI, DIST- TINSUKIA,
ASSAM
5. THE REGIONAL PROVIDENT FUND COMMISSIONER
PROVIDENT FUND, BHAVISHYA NIDHI BHAWAN, G.S. ROAD, GUWAHATI.
6. THE ASSTT. PROVIDENT FUND COMMISSIONER
EMPLOYEES PROVIDENT FUND ORGANISATION, SUB REGIONAL OFFICE, G.N.B.
ROAD, PRAKASH BAZAR, TINSUKIA, PIN-786125. -----Respondents.
Writ Petition (C) No. 3249/2013
1. M/S DURGA CONSTRUCTION
REP. BY SRI JOGEN CH. DAS, S/O- LT. RAJESH DAS, R/O- HOUSE NO. 2, JAYANTA
NAGAR, NOONMATI, GHY- 20, DIST.- KAMRUP, ASSAM.
2. M/S TANKCLEAN
REP. BY MD. SHAMIM UDDIN KHAN, S/O- KAMAL KHAN, R/O- SALBARI, NOONMATI,
GHY- 20, DIST.- KAMRUP, ASSAM. -----Petitioners
-Versus-
1. INDIAN OIL CORPORATION LIMITED
REP. BY ITS CHAIRMAN, SCOPE COMPLEX- 2, 7 INSTITUTIONAL AREA, LODHI
ROAD, NEW DELHI- 110003.
2. THE EXECUTIVE DIRECTOR
GUWAHATI REFINERY, INDIAN OIL CORPORATION LTD., GHY- 20.
3. SENIOR SERVICE MANAGER.
GUWAHATI REFINERY, INDIAN OIL CORPORATION LTD., GHY- 20.
4. REGIONAL PROVIDENT FUND COMMISSIONER
N.E. REGION, G.S. ROAD, BHANGAGARH, GHY- 5. ----Respondents
BEFORE
THE HON'BLE MR. JUSTICE HRISHIKESH ROY
For the Petitioners : Mr. BD Das, Sr. Counsel,
Mr. PJ Saikia,
Mr. M. Choudhury, Advocates.
For the Respondents : Mr. SN Sarma, Sr. Counsel,(ONGC)
Mr. N. Deka, SC, IOC.
Mr. PK Roy, SC, EPF Organization.
Date of Judgment & Order : 20.05.2014.
JUDGMENT (ORAL)
Heard Mr. BD Das, the learned Sr. counsel representing the petitioners in the WP(C) Nos.4107/2011, 726/2008 & 5767/2010 respectively. Advocates Mr. PJ Saikia and Mr. M. Choudhury are appearing for the other petitioners in this group. The Indian Oil Corporation Ltd. (IOC) is represented by the Sr. Counsel Mr. SN Sarma in the WP(C) No.3523/2012. In the other cases, the IOC is represented by Mr. N. Deka, the learned Counsel. The Employees Provident Page 5 of 11 Funds Organization (EPF) and their authorities are represented by their Standing Counsel, Mr. PK Roy. As agreed to by the parties the cases are heard analogously and this judgment will cover all the cases.
2. These cases pertain to minor contract works under the IOC and the primary grievance of the petitioners is the tender requirement of furnishing the Provident Fund Code (hereinafter referred to as "the PF Code") in order to be eligible for submitting tenders under the IOC. The petitioners contend that they are small time contractors employing less than 20 employees in their respective establishments and therefore the Employees Provident Funds and the Miscellaneous Provisions Act, 1952 (hereinafter referred to as "the EPF Act") do not apply to their establishments. Accordingly, the IOC's requirement for furnishing the PF Code as eligibility pre-condition to submit tenders for contracts under the IOC is contended to be arbitrary and unreasonable.
3.1 Mr. BD Das, the learned Sr. Counsel projects that works of electrification, boundary wall construction etc. are executed by the small scale contractors through few non-permanent employees (less than 20) and therefore the contractor's establishment are not covered under the EPF Act. Thus the insistence on providing the PF Code by the IOC is contended to be discriminatory.
3.2 Projecting that works are usually executed through casually engaged and non-permanent floating workers, the counsel argues that requiring these contractors who execute minor works to obtain the PF Code is punitive and should not be made mandatory by the IOC.
3.3 The difficulties in complying with the provision of the EPF Act are narrated and Mr. Das submits that the contractors do not have the expertise/infrastructure to comply with the procedural requirements under the EPF Act and therefore the principal employer i.e. the IOC should be made responsible for recovery of the PF dues for the employees under the contractor. The counsel also expressed concern on whether the PF money will actually reach the targeted employees since more than Rs.51 crore is lying unclaimed in the coffer of the PF authorities.
4. In the WP(C) No.3523/2012, Mr. SN Sarma, the learned Sr. Counsel appears for the IOC. The counsel firstly submits that this particular case has become infructuous as the work order in question was already awarded to the eligible tenderer on 27.07.2012 and therefore the challenge to the tender clause Page 6 of 11 (in the NIT dated 01.05.2012) requiring furnishing of PF Code as a qualification criteria, has now become academic and since no relief can be granted, the proceeding should be closed. On this aspect, advocate Mr. PJ Saikia in response submits that since the petitioner has only 2 (less than the required 20) employees on his pay roll, his establishment i.e. M/s Sangeeta Agency can't legally be covered under the EPF Act. But because they are interested in the contract works under the IOC, the legality of the challenge to the offending tender condition should be considered on merit and the case should not be thrown out at the threshold only because the work order was already issued in pursuant to the impugned NIT.
5. Defending the requirement of providing the PF Code, Mr. SN Sarma and Mr. N Deka jointly submit that as the principal employer, the IOC can certainly specify the eligibility norms in the tender notice and the challenge of a tenderer to such tender clause should not be entertained by the writ court. They refer to the counter affidavit filed in the WP(C) No.726/2008 to project that several contractors with less than 20 employees under their establishment have furnished their EPF Code and accordingly the IOC's counsel argue that the petitioner can also apply for the PF Code under Sub Section (4) of Section 1 of the EPF Act and in that event, they will not suffer disability in participating in the tender process under the IOC.
6.1 Representing the authorities under the EPF Act, Mr. PK Roy, learned counsel submits that the EPF Act is a beneficial piece of legislation and the primary concern of his client is the financial benefits to be reached to the employees of the covered establishments. On the issue of voluntary coverage under the EPF Act under Sub Section (4) of Section 1, the counsel submits that none of the petitioners have so far applied under this provision and if they do apply under Sub Section(4), the same will certainly be considered. 6.2 Referring to the counter affidavit filed by the Assistant Provident Fund Commissioner in the WP(C) No.6464/2010, advocate Mr. PK Roy submits that compliance with the provisions of the EPF Act can be ensured by bringing all the employees under the contractors within single umbrella code under the principal employer, as was done for the Bongaigaon Refinery and Petrochemicals Limited (BRPL) (now amalgamated with the IOC) and if this system is followed in the IOC, the contractors need not provide individual PF Codes and yet the Page 7 of 11 employees under the contractor can be assured of the benefits under the EPF Act, through the umbrella code of the principal employer.
7. Before examining the provisions of the EPF Act, it might be appropriate to deal with the legality of the offending clause in the NITs, which requires a tenderer to provide the PF Code in order to be eligible to submit tenders under the IOC. In Michigan Rubber (India) Limited Vs. State of Karnataka reported in (2012) 8 SCC 216 , the Supreme Court held that in formulating conditions in the tender, greater latitude is required to be conceded to the tendering authority and unless the pre-condition for qualification are considered to be unreasonable and contrary to public interest, interference by the court may not be justified. In fact, the Apex Court declared that a person cannot claim a fundamental right to carry on business with the Government and the question that needs to be posed by court while exercising power of judicial review in such situation is whether the process adopted is mala fide or is intended to favour someone. When the answers to these questions are in the negative, then there should be no interference under Article 226 of the Constitution of India.
8. Keeping the above ratio in Michigan Rubber (Supra) in mind, if we examine the contract clause specifying furnishing of the PF Code by the intending tenderer, it can be easily inferred that such stipulation is neither arbitrary nor it is contrary to public interest. In fact many contractors with less than 20 employees under their establishment have procured the PF Code and therefore it cannot also be said that these conditions are intended to keep out any class of contractors. Furthermore, the EPF Act itself provide a mechanism for voluntary coverage under Section 1(4) and the petitioners if interested to work for IOC, can certainly exercise this option. Therefore, I do not see any valid ground to consider the requirement of providing PF Code by the intending tenderers to be arbitrary or unreasonable and this issue is accordingly answered in favour of the tendering authority.
9. The Provident Fund facilities are intended to secure the betterment of the employees and one of the objects of the legislative exercise is to encourage the habit of regular saving by the employees in commercial and other establishments. Thus the EPF Act was intended to provide for compulsory contribution of provident funds by the worker and the employer and the fund that is generated in turn is disbursed to the employee when his employment Page 8 of 11 tenure ends. The Clause (b) of Sub Section (3) of Section 1 specifies that the Act will apply to the establishments employing 20 or more persons with liberty to the Central Government to extend the Act to any establishment employing less than the prescribed number.
10. But coverage of the EPF Act can also be sought under Sub Section (4) of Section 1 which permits any establishment (otherwise not covered by the Act), where the employer and the employee may mutually agree for application of the EPF Act to their establishment. Through this mechanism, the statutory benefits can also extend to those establishments who may not satisfy the conditions under the Sub Section (3) of Section 1. The definition of employee in Section 2(f) takes into its fold the contractor's employees also. Through the recovery mechanism under Section 8A, the principal employer may recover from the contractor the employer's contribution as well as the employees' contribution under the EPF Act by deduction from the contractual amount payable to the contractors.
11. The Employees Provident Fund Scheme, 1952 (hereinafter referred to as the EPF Scheme) is framed under Section 5 of the EPF Act for administration of the beneficial legislation. Under Clause 29 of the Scheme, the rate of contribution by the employer is specified and under Clause 30, it is made obligatory for the employer at first instance, to pay the contribution payable by himself and also on behalf of the member employed by him directly or through a contractor. The duties of the contractor is specified under Clause 36B and the contractor is required to submit to the principal employer a monthly statement showing the recoveries of contributions for the employees under him.
12. The petitioners are concerned that even for temporary works or for engagement of floating employees on work to work basis, they may be fastened with perennial obligation of PF contribution for this class of non-permanent employees. Addressing this concern, it may be appropriate now to consider whether there is any legal basis for such apprehension. The Clause 2(f) of the EPF Scheme defines excluded employee and under Clause 30A of the Scheme, an employer can submit nil return when no recoveries are made from the employees for a given period. This concept of excluded employee under the EPF Scheme obviously deals with situation where the employees are not under the permanent rolls of the employer and are floating employees engaged on work to Page 9 of 11 work basis. Obviously, when the contractor does not have work and does not employ any one, a nil return can be submitted and therefore the coverage of the EPF Act by the contractors opting for voluntary coverage will not result in any undue financial outflow and only minor administrative adjustments may have to be made by such contractors. Therefore the apprehension expressed of undue hardship by the petitioners is found to be without any basis.
13. The learned counsel for the contractors have reacted favourably to voluntary coverage under Sub Section (4) of Section 1 of the EPF Act although the Act may not automatically apply to them. In an earlier proceeding where the requirement of providing the PF Code by the contractors under the IOC was challenged in the WP(C) No.3562/2000 (M/s. Digboi IOC AOD Contractors' Association Vs. Indian Oil Corporation Ltd.), this court in its judgment of 10.08.2000 observed that the interest of the employees should be protected and on that basis the court ordered the contractors to approach the Employees Provident Organization, who were directed to issue the necessary PF Code to the applicant contractors.
14. As can be gathered from the chart enclosed to the counter affidavit of the IOC, many establishments with less than 20 employees were provided the PF Code and therefore since the petitioners herein are interested for contract works under the IOC, they may acquire the required qualification by applying for voluntary coverage under Sub Section (4) of Section 1 of the EPF Act. If the interested establishment of the contractor with less than 20 employees apply for voluntary coverage under Section 1(4) of the EPF Act, the EPF Code should be issued to them as was earlier ordered by this court in M/s. Digboi IOC AOD Contractors' Association (Supra).
15. On the concern towards unclaimed Provident Fund to the tune of Rs.51 crores (approx) lying with the EPF authorities of North East Region and the apprehension of similar accumulation when the petitioners are covered by the EPF Act, in my perception, if the contractors voluntarily apply and secure the EPF Code, the benefits are more likely to reach the intended beneficiaries i.e. employees under the contractor and difficulties arising out of unclaimed Provident Fund is unlikely to occur when the dues are routed to the employees through their immediate employer i.e. the contractor. Therefore, the concern of the contractors on this aspect is answered against the petitioners.
Page 10 of 1116. The projection of the IOC in the WP(C) No.6464/2010 for providing a single umbrella Code as was done in the BRPL organization, this court finds that the EPF Act doesn't provide for any umbrella code for the principal employer intended to cover the contractors working under the principal employer. Therefore, the submission of the Provident Fund authorities for fastening the principal employer with an umbrella code dispensing with individual EPF Code for the contractors do not appeal to this court as this projection is found contrary to the statutory prescription.
17. In the above backdrop and having regard to the interest expressed by the petitioners to voluntarily apply for PF Code under Sub Section(4) of Section 1 of the EPF Act, the interested contractors are given the liberty to take recourse to Sub Section(4) of Section 1. Since the eligibility of the contractors is dependent on furnishing of the PF Code to the IOC, the Provident Fund authorities should consider the contractors applications expeditiously and ensure allotment of the PF Code within 4 weeks to all valid applications.
18. When the PF Code is received and the contractors intimate the same to the IOC and the PF authorities, the accumulated Provident Fund money should be disbursed to the eligible employees in accordance with the EPF Act. If any contractual dues is kept withheld or is deducted from the contractor, the grievance should be examined by the principal employer and if any amount is found refundable to the contractor, it should be disbursed with mutual co- operation of the PF authorities, the IOC and the contractor concerned.
19. With the above direction, the cases are disposed of without any order on costs.
JUDGE Benoy Page 11 of 11