Andhra HC (Pre-Telangana)
Presidency High School, Hyderabad vs Union Of India And Others on 25 April, 2001
Equivalent citations: 2001(4)ALD1, [2001(90)FLR697]
Author: S.B. Sinha
Bench: Satya Brata Sinha
ORDER S.B. Sinha, C.J.
1. The petitioner in this writ petition questions Section 7(A) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, (for brevity, hereinafter referred to as "Provident Fund Act") as also to declare the proceedings dated 21-2-2000 issued by the third respondent as illegal and violative of Articles 14, 19, 21 and 300-A of the Constitution of India.
2. The petitioner herein is an educational Institution. According to the petitioner, it has been established in terms of Section 2(18) of the A.P. Education Act having been recognised in terms of Section 21 thereof and that the provisions of the Provident Fund Act are not applicable to the petitioner Institution. Before adverting to the question involved in this application, the factual matrix may be noticed.
3. The Assistant Provident Fund Commissioner by an order dated 14-2-1992 directed to pay the arrears of provident fund amounts for the period from 1-7-1990 to 30-9-1991. Another order dated 4-4-1993 was passed demanding the dues for the period from 1-10-1991 to 31-l-1993. Yetagain similar order dated 4-11-1993, 2-8-1994, 10-10-1994 were passed for the periods from 1-2-1993 to 30-9-1993, 1-10-1993 to 31-3-1994; 1-4-1994 to 31-3-1994 respectively. Being aggrieved and dissatisfied with the said orders, the petitioners herein filed a writ petition before this Court which was marked as Writ Petition No.13111 of 1993. A learned Judge of this Court by an orderdated 13-12-1994 directed the petitioner to approach the competent authority under Section 7-A of the Provident Fund Act.
4. Therefore, the impugned order dated 15-5-1996 was passed. It appears from the said order that not only the petitioner failed to appear before the said authority, it also did not produce the relevant records. Only a written representation had been filed. The 2nd respondent herein referred to a Division Bench decision of this Court in WA No.318 of 1995 dated 14-6-1995 passed in M/s. Rosy High School, Hyderabad v. Union of India and inter alia held that the matter stands concluded thereby.
5. Mr. Surendra Rao, learned Counsel for the petitioner would submit that the petitioner Institution must be held to be exempted from the operation of the Provident Fund Act having regard to the provisions of the Section 16(1)(c) thereof. It was submitted that the petitioner Institution is covered by the Provident, Fund Scheme in terms of G.O. Ms. No.524, dated 20-12-1988.
6. Our attention has been drawn to Rules 17 and 18(4)(e) of the Andhra Pradesh Educational Institutions (Establishment, Recognition, Administration and Control of Schools under Private Managements) Rules, 1993 which read thus:
17. Criteria and Procedure for fixing salary structure for the Staff :--(1) The staff appointed in un-aided private schools and those appointed in the unaided posts of the higher classes of the upgraded school shall be paid salaries as prescribed by the governing body attached to the school as constituted under Rule 15.
(2) In order to meet the expenditure, it is open for the private management of un-aided schools to collect fees at the rates prescribed by the Government Body, as per criteria indicated in Rule 18.
(3) The Governing Body shall fix the salary structure of the staff taking into account the revenue position of the institution and other requirements mentioned under sub-rule (4) of Rule 18 for which amounts are to be earmarked. Approximately 50% of the total revenue collection as fee from students shall be earmarked for payment of regular salaries to the staff and 15% of the revenue shall be earmarked for providing various benefits like Teacher's Provident Fund, Group Insurance etc., 18(4)(e) 15% of the fees collected shall be earmarked as management's contribution towards staff benefits like gratuity, teachers' provident fund, Group Insurance Scheme etc.
7. According to the learned Counsel for the petitioner, there exists a scheme for payment of provident fund in the case of the petitioner Institution and therefore, the Provident Fund Act would not be applicable in this case. Strong reliance has been placed on Indramani v. W.R. Natu, and in Indian Bank, Alamuru v. M. Krishna Murthy, AIR 1983 AP 347. In any event, provisions of Section 7-A of the Provident Fund Act have not conferred judicial powers to the competent authority under the Act.
8. Sri R.N. Reddy, learned Standing Counsel for the Employees Provident Fund on the other hand would submit that the educational institutions are brought within the purview of the Provident Fund Act by issuing paper notification dated 19-2-1982. It was submitted that the Institution is not admitted to grant-in-aid rules.
9. The learned Counsel would contend that the said Act is regulatory in nature and thus, the establishment of the Institution cannot be said to have been under the Act. Our attention has been drawn to the decision in Dav College v. RPF Commissioner, (1988) 2 LLJ 218, and to the order of the appellate Tribunal dated 6-8-1998. The appellate Tribunal held:
Thus, to my mind the condition prescribed for excluding an establishment from the applicability of the act under Section 16(1)(b) and (c) are fulfilled in the present case. Section 16(1)(b) was substituted with effect from 1-8-1988 whereas the judgment of the Hon'ble Supreme Court is dated 7-1-1988. Thus, in view of the present Section 16(1)(b) the judgment of the Hon'ble Supreme Court cannot hold the field. To my mind, the Hon'ble Andhra Pradesh High Court while considering Section 16(1)(c) put in a narrow construction on the words "set up under any Central Provincial or State Act." I think their Lordships confined this provision only to the institutions which were established by the Act itself. But even if it is said that the establishment of the appellants is not covered under Section 16(1)(c) of the Act as held by the Hon'ble Andhra Pradesh High Court, they are still covered under the provisions of Section 16(1)(b) of the Act and the operation of the Act is excluded because of Section 1(3) of the Act itself. The appeal is fit to be allowed and the impugned order to be set aside.
10. The contention raised by Mr. Surender Rao, learned Counsel for the petitioner that the Act is ultra vires and unconstitutional in our opinion, is clearly covered by a decision reported in Younus Mohammad v. R.P.F. Commissioner, 1987 Lab.IC 1089 = 1994 (3) LLJ (Supp.) 68. The authorities under Section 7-A is a statutory authority who exercises only quasi-judicial power and not the judicial power. There are several Tribunals which are manned by the authorities of the other Departments. Only because the authority under the said Act happened to be an employee of the Department, the same by itself would not render a statutory provision unconstitutional unless it is hit by Article 14 of the Constitution. Not only a fair procedure has been laid down therein in Section 7-A of the Provident Fund Act, appeal is also provided under Section 19 thereof as against such orders. The power of judicial review of the High Court can also be invoked. We therefore do not find any merit in the aforementioned contention of Mr. Surender Rao.
11. As regards the applicability of the Act, suffice it to point out that A.P. Education Act, 1982 was enacted to consolidate and amend the laws relating to the educational system in the State of Andhra Pradesh for reforming, organizing and developing the said educational system and to provide for matters connected therewith or incidental, thereto. Thus, the main purpose of the Act is to create Institutions but by reforming, organising and developing the educational system.
12. Section 2(18) of the Education Act defines 'educational institution' as -
'educational institution' means a recognised school, (colleges including Medical Colleges), special institution or other institution (including an orphanage or boarding home or hostel attached to it) by whatever name called, the management of which carries on (either exclusively or among other activities) the activity of imparting education therein, and includes every premises attached thereto; but does not include a tutorial institution.
13. Section 2(35) defines 'private institution' to which category the petitioner belongs thus:
"private institution" means an institution imparting education or training, established and administered or maintained by any body of persons, and recognised as educational institution by the Government, and includes a college, a special institution and a minority educational institution, but does not include an educational institution-
(a) established and administered or maintained by the Central Government or the State Government or any local authority;
(b) established and administered by any University established by law; or
(c) giving, providing or imparting only religious instructions, but not any other instruction.
14. Section 20-A although bans establishment of such institutions, but in terms of the proviso appended thereto, any private institution established by private individual and recognised by competent authority prior to such commencement does not come within the purview thereof. Therefore, it is evident that running of an educational institution is regulated, but the institution itself is not constituted under the Act. Section 21 governs the grant or withdrawal of recognition of institution imparting education. Section 26 merely puts an embargo as regards the closure of the institution without sufficient notice. Sections 27 and 29 speak of steps required to be taken for closing down the educational institution. It is true that in terms of Rules 17(3) and 18(4)(e) certain provisions have been made for payment of contribution to the provident funds.
15. Section 16(c) of the said Act reads:
(16) Act not to apply to certain establishments :--This Act shall not apply-
(c) to any other establishment set up under any Central, Provincial or State Act and whose employees are entitled to the benefits of contributory provident fund or old age pension in accordance with any scheme or rule framed under that Act governing such benefits.
16. It is not in dispute that a Notification has been issued by the appropriate Government bringing the educational Institutions within the purview of the said Act. It is also not in dispute that the petitioner Institute employs 20 or more persons.
17. Thus, the two pre-conditions are required to be fulfilled before the said exemption can be claimed. Firstly, the establishment must be set under any Central Provincial or State Act and secondly, those employees are entitled to the benefits of contributory provident fund.
18. In Indramani v. W.R. Natu, , the Apex Court was concerned with the question as to whether the bye-law framed under the Act would be a substantive legislation. While considering the issue, it was held:
Learned Counsel is undoubtedly right in his submission that a power conferred by a bye-law is not one conferred 'by the Act', for in the context the expression 'conferred expressly or by necessary implication by the Act itself. It is also common ground that a bye-law framed under Section 11 or 12 could not fall within the phraseology 'as may be prescribed' for the expression 'prescribed' has been defined to mean 'by rules under the Act', i.e., those framed under Section 28 and a bye-law is certainly not within that description. The question therefore is whether a power conferred by a bye-law could be held to be a power 'conferred under the Act'. The meaning of the words 'under the Act' is well known. "By" an Act would mean by a provision directly enacted in the statute in question and which is gatherable from its express language or by necessary implication therefrom. The words 'under the Act' would, in that context signify what is not directly to be found in the statute itself but is conferred or imposed by virtue of powers enabling this to be done, in other words, bye-laws made by a Subordinate law-making authority which is empowered to do so by the parent Act. The distinction is thus between what is directly done by the enactment and what is done indirectly by rule making authorities which are vested with powers in that behalf by the Act.
19. In India Bank, Alamuru, v. M. Krishna Murthy (supra), the Court was concerned with the question as to whether a Bank is a Corporation in terms of A.P. (Andhra Area) Agriculturists Relief Act and it was observed:
On these contentions, the major question of law that falls for our consideration in this case is, whether Section 4(e) of the Madras Act would be applicable to the debt due from the defendants to the plaintiff-bank. The question of the extent of applicability of Section 4 (e) of the Madras Act should be answered on the basis of the meaning it bears in the Act. But its meaning is to be gathered not merely from the words in which it is couched, but also for the context in which the section occurs and from the overall purpose of the Madras Act. The above Section 4(e) is a non-obstante provision and therefore to the extent that provision applies to the facts in this case, it could clearly override Section 13 of the Madras Act on which the defendants rely upon for defeating the claims of the plaintiff-bank. But in considering the rival contentions of the parties, we must be aware that Section 4(e) of the above Madras Act enacts an exception to the general purpose of the above Madras Act and even runs directly counter to the central objective which the Madras Act seeks to achieve which is to relieve the agriculturists of their age-old burdens of rural indebtedness. It should not be forgotten that the burden of a debt owing to a bank failing under Section 4(e) of the Madras Act can be no less burdensome to the agriculturist than any other debt he owes to any other creditor. Before applying such a section to any debt due by an agriculturist to a bank, we must therefore carefully scrutinise the language used by the Legislature in Section 4(e) of the Madras Act and examine its provisions with a view to find out to what extent that language permits the Courts granting of exemption new claimed by the plaintiff-bank in this case from the operation of the Madras Act. An analysis of the language used by the Legislature in Section 4(e) of the Madras Act to the extent that it is applicable to our case shows that the claim of the plaintiff bank (Indian Bank now the Union Bank) for exemption from the operation of Section 13 of the Madras Act can be upheld only if three conditions are fulfilled by the plaintiff bank. Those conditions are: (a) the plaintiff bank should be a Corporation; (b) the debt should be due to the plaintiff banks'; and (c) the plaintiff bank should have been formed 'in pursuance of an Act of British Parliament or in pursuance of any special Indian Law or Royal Charter or Letters Patent.
20. We are therefore of the opinion that the said Institution cannot be said to have been formed under the provisions of the Education Act. We may notice that the Apex Court in Dav College v. RPF Commissioner (supra) clearly held:
We direct that the petitioners shall comply with the Act and the scheme framed thereunder regularly with effect from February 1, 1988. Whatever arrears they have to pay under the Act and the schemes in respect of the period between March 1, 1982 and February 1, 1988 shall be paid by each of the petitioners within such time as may be granted by the Regional Provident Fund Commissioner. If the petitioners pay all the arrears payable from March 1, 1982 to up to February, 1, 1988 in accordance with the directions of the Regional Provident Fund Commissioner, he shall not levy any damages for the delay in payment of the arrears. Having regard to the special facts of these cases the subscribes (the employees) shall not be entitled to any interest on the arrears.
21. For the reasons aforementioned, we do not find any merit the writ petition is dismissed. No costs.