Karnataka High Court
R. Muralidharan vs Director, National Law School Of India ... on 8 February, 1995
Equivalent citations: ILR1995KAR843, 1995(3)KARLJ135
ORDER
1. The short question that arises for consideration in this writ petition is as to whether the respondents are bound to pay the Employers' Contributions to the Provident Fund on the cessation of the contract of employment which the petitioner had entered with the respondent.
2. By Annexure A dated March 3, 1988, the petitioner was offered the appointment of Assistant Professor of Law in the National Law School for a maximum period of three years with effect from June 1, 1988, on certain terms and conditions mentioned therein. The petitioner accepted the offer and he continued to work as Assistant Professor of Law for three years in accordance with the provisions contained in Annexure A. On completion of the term, it was renewed for a period of another three years. While he was continuing so, by exercising the provision under the contract of employment, the petitioner gave a notice of termination Annexure R-6 and the services of the petitioner came to be terminated with effect from November 30, 1991 on the basis of the provisions contained in the contract of employment. Annexure R-7 is the order relieving the petitioner from duties. The offer of appointment mentions that the employees are entitled to the contributory Provident Fund and Gratuity Fund of the respondent-School. The petitioner had also joined the Provident Fund Scheme and on relieving from duty, the petitioner was paid the amount which he had contributed towards the provident fund. On the petitioner's request to release the Employer's Provident Fund as well, the respondents took the view that the petitioner is not eligible for the University contributions towards his provident fund account under Regulation 23(1) of the Employees' Service Regulations dealing with Contributory Provident Fund. That rule provides that, if the employee resigns from the service within 5 years of commencement of his service, the Director of the respondent-School is entitled to deduct the Employer's contribution to the Provident Fund from the amount payable to the employee. The petitioner is challenging the decision of the respondents on the ground that, by virtue of the provisions contained in Regulation 23 itself, the denial of Employer's contribution was not justified as the petitioner ceased to be an employee of the respondent-School by virtue of the provisions of the contract of employment. It is further contended by the petitioner that it is the Provident Fund Act, 1952 that is applicable to the petitioner and has also prayed for declaring that the forfeiture provisions contained in Regulation 23 of the Service Regulations is unconstitutional in view of the recent amendments to the Employer's Contributory Provident Fund (Misc. Provisions) Act, 1952 and hence un-enforceable. He has further prayed for a direction to the respondents to release the Employer's contribution with interest thereon and other retirement benefits forthwith to the petitioner.
3. The respondents have filed a statement of objections, in which, the main contention taken is that the Provident Fund Act of 1925 applies to the respondent-Institution which is extended to the respondent-School by a Notification of the Karnataka Government dated October 20, 1990 evidenced by Annexure R-1. It is contended that, by virtue of the provisions contained in Section 6 of the Act, they are entitled to deduct the Employer's contribution where he has resigned such employment within 5 years of the commencement thereof. It is further contended that, by virtue of the provisions contained in Regulation 23 of the Regulations framed under Section 13 of the National Law School of India University Act, the petitioner is not entitled to the Employer's contribution as he has resigned from service within 5 years of commencement of his service. It is further contended that the forfeiture clause contained in Regulation 23 is constitutionally, valid and that there are no grounds to allow the claim made by the petitioner.
4. The only question that arises for consideration in this case is as to whether, in the circumstances of the case, the petitioner is entitled to be paid the Employer's contribution to the Provident Fund ?
5. The facts in this case are not in dispute. By Annexure A, offer of appointment dated March 3, 1988, the petitioner was appointed as Assistant Professor of Law in the respondent-School for a period of three years with effect from June 1, 1988. Thereafter, in 1991, the contract was renewed for a further period of three years. While the petitioner was working under the renewed contract, the petitioner gave a notice of resignation - Annexure R-6 dated August 31, 1991, giving three months' notice under the contract of employment and requested that he may be relieved with effect from December 1, 1991. By Annexure R-7 dated November 23, 1991, the respondent-School accepted the termination notice given by the petitioner and he was relieved of his duties as Assistant Professor with effect from the afternoon of December 30, 1991. It can thus be seen that the petitioner has not worked for 5 years in the respondent-School, as he has admittedly worked from June 1, 1988 to November 11, 1991. The question is, whether he will forfeit his right to the Employer's contribution to the Provident Fund by virtue of the provisions contained in Regulation 23 of the National Law School of India University Employees' Service Regulations which is produced as Annexure R-2. Regulation 23 provides that :
"Every wholetime employee on confirmation, shall subscribe monthly to the University Provident Fund. The rate of subscription may not be less than 8 1/3% of his emolument".
It is further provided :
"That the University shall contribute to this fund 8% of pay from the date of subscription".
Regulation 23 further makes a provision to the following effect and the relevant portion for the purpose of this case is being reproduced herein below :
"The Director may direct the deduction therefrom and payment to University of, -
(i) all amounts representing such contribution and interest, if the subscriber within five years of commencement of his service as such, resigns from the service or ceases to be an employee of the University otherwise than by reason of death, superannuation, or a declaration by a competent medical authority that he is unfit for further service, or the abolition of the post or the reduction of establishment or under a contract".
6. From the above said provision, it is seen that the Director is entitled to deduct the Employer's contribution if the subscriber resigns from service within 5 years or ceased to be an employee of the University, but an exception is made that, if the cessation of service is by reason of death, superannuation etc., or under a contract, the forfeiture clause shall not apply. The stand taken by the respondents is that the petitioner resigned within 5 years from the commencement of his service; Whereas, the petitioner who argued the case in person, contended that his case is not the one of resignation but a case where he ceased to be an employee under the contract. No doubt, if the petitioner had resigned from the service, he will not be entitled to the Employer's Contribution Fund if it is within 5 years but if the cessation of his service is by virtue of the provisions contained in the contract, then the forfeiture clause will not apply to the case of the petitioner. It is difficult to accept the case of the respondents that this is a case of resignation, though, no doubt, in the notice given in pursuance to the contract, the petitioner has stated it as resignation. By that itself, it cannot be concluded that it is a case of resignation. Admittedly, the petitioner worked for the full three years in pursuance to the original contract. Thereafter, it was renewed for a period of another three years. The contract of employment evidenced by Annexure provides that the National Law School has a Contributory, Provident Fund and Gratuity Scheme and the Employees are entitled to its benefits. The agreement entered into by the petitioner and the University under clause (9) gives option to teachers like the petitioner who are appointed on contract to terminate their engagement by giving Executive Council three months' notice in writing or by payment of amount equal to three months salary in lieu of notice. The clause provides as follows :
"The teacher may, at any time, terminate his/her engagement by giving the Executive Council three months' notice in writing or by payment of an amount equal to three months' salary in lieu of notice".
It is in exercise of this power that the petitioner got his contract of service terminated by giving three months' notice. In these circumstances, it cannot be said that this is a case of resignation from the service. On the other hand, I am clearly of the opinion that the petitioner ceased to be an employee of the University in exercise of the option given to him under the Contract. In other words, cessation of the employment of the petitioner was under the terms of the contract and not by way of resignation. It is pertinent to note that Regulation 23 itself provides for two contingencies (i) by resignation and (ii) ceasing to be an employee of the University. If it is a case of cessation of employment and if it is under a contract, the forfeiture clause provided for in Regulation 23 shall not apply. I have already held that the case of the petitioner is not one of resignation and by use of the word 'resignation' inadvertably in his letter will not preclude the petitioner from contending that his case was not one of resignation. On the other hand, it is clear that the petitioner ceased to be an employee of the University by exercising his option under clause (9) of the agreement, by which, he was entitled to terminate the contract by giving three months' notice. It is in exercise of that power that the petitioner ceased to be an employee of the Respondent-School and accordingly, his case will come under the exceptional category mentioned in Regulation 23. In that view of the matter, the forfeiture clause in Regulation 23 cannot apply to the petitioner and he will be entitled to the Employer's contribution as well.
7. There is one more difficulty in accepting the case of the respondents that it is a case of resignation. Admittedly, the petitioner completed the first contract by serving the University for three years. If the contract was not renewed and the petitioner ceased to be an employee after the terms of the contract, certainly, he would have been entitled to the Employer's Provident Fund Contribution. I do not understand the logic behind the contention, that, by exteding the contract and ceasing to be an employee by virtue of exercising the option given under the agreement will disentitle the petitioner from claiming the Employer's Provident Fund Contribution by the application of the forfeiture clause. In the circumstances of the case, it is not a case of resignation from service but it is a case where the petitioner ceased to be an employee of the University under the contract which is saved by virtue of the provisions contained in the last portion of Regulation 23.
8. It is contended by the learned counsel for the Respondent-School that the employees of the Respondents are governed by the Provident Fund Act of 1925. Section 6(b) of that Act provides that, where the subscriber has been dismissed from his employment for any of the reasons specified in the Rules or when he has resigned from such employment within five years of the commencement thereof, the whole or any part of the amount of any such contributions, and interest can be deducted. I do not think that the above provision can have any application to the facts of the case. In this case, the employment of the petitioner is governed by a Contract. The contract specifically provides as seen from Annexure A, that, the petitioner is entitled to the Contributory Provident Fund and Gratuity Scheme of the Respondent-School and that, he is entitled to its benefits. The service condition of the employees of the Respondent-School are governed by the Regulations, namely, the National Law School of India University Employees' Service Regulations. That alone will govern the parties. I have already discussed the scope of Regulation 23 which is the one applicable insofar Provident Fund is concerned. That Regulation contemplates that, deduction of Employer's contribution can be made in the circumstances mentioned in that Regulation and excludes cases of cessation of employment by virtue of contract. As the appointment of the petitioner is governed by the contract entered into between him and the respondents, the parties are governed by that contract and the provisions contained in the Regulations. On going through Section 6 of the Provident Fund Act, 1925. I am of the opinion that it deals with the case of resignation within 5 years and not cessation of employment under a contract which is governed by the Regulations which the respondent-School has framed. In that view of the matter, Section 6 of the Provident Fund Act, 1925 cannot have any application. The parties are governed by the Regulations of the University, under which, the petitioner is entitled to the Employer's contribution as well.
9. In the view I have taken in the matter, it is net necessary for me to consider the constitutional validity of Regulation 23 and the question as to whether the Provident Fund Act, 1952 is applicable to the parties in question. On the basis of the contract and the terms of the Regulations, the petitioner is entitled to the Employer's contribution and the decision contrary to it taken by the respondents cannot be upheld.
In the result, I allow this writ petition and declare that the petitioner is entitled to the Employer's contribution in the Provident Fund Account and direct the respondents to pay to the petitioner the Employer's contribution due to him forthwith. The petitioner shall also be entitled to interest on the aforesaid amount from the date on which it became due till payment at the rate that is applicable to Provident Fund amounts.
10. Parties are directed to bear their costs.