Madhya Pradesh High Court
Central Board Of Trustee Employees ... vs M/S Force Motors Limited on 28 June, 2017
Bench: P.K. Jaiswal, Virender Singh
1 W.P. No.6207/2016
HIGH COURT OF MADHYA PRADESH
BENCH AT INDORE
Hon'ble Shri P.K. Jaiswal and
Hon'ble Shri Virender Singh, JJ.
Writ Petition No.6207/2016
Central Board of Trustees,
Employee's Provident Fund Organization, Indore
Vs.
M/s Force Motors Limited, Pithampur, District-Dhar
-x-x-x-x-x-x-x-x-x-x-
Shri P.K. Jain, learned counsel for the petitioner.
Shri Girish Patwardhan with Ms. Kirti Patwardhan, learned counsel for the
respondent.
-x-x-x-x-x-x-x-x-x-x-
ORDER
(Passed on 28/06/2017) Per : Virender Singh, J. :-
1. The petitioner, who is Assistant Provident Fund Commissioner (for short APFC) on behalf of Central Board of Trustees, Employees Provident Fund Organization has challenged the order dated 26.07.2016 passed by the 2 W.P. No.6207/2016 Employees Provident Fund Appellate Tribunal, New Delhi (for short EPFAT) in ATA No. 1212(8) of 2015, whereby learned EPFAT has allowed the appeal filed by the respondent and set aside the order passed by the Regional Provident Fund Commissioner directing the Respondent to deposit contribution of provident fund of 1223 employees working in the respondent establishment taking them as regular employees of the respondent establishment.
2. Relevant facts giving rise to the present petition; in brief are that to secure compliance of the provisions of the EPF Act, an inspection was carried out in the Respondent establishment on 06.01.2012 and 22.01.2012. It was found that total 2926 employees were working in the Respondent establishment; out of which, as shown by the Respondent, 1753 employees were employed directly, 150 employees were employed through contractor and 1223 were appointed as trainee technicians. It was further found that in fact these 1223 employees were also regular employees of the Respondent establishment but to avoid responsibility towards the contribution of provident fund, these employees were shown as apprentices or trainees. Therefore, RPFC (Regional Provident Fund Commissioner) directed the Respondent to extend PF membership and to deposit contribution of PF of these employees and in fact thereafter recovered it also. The order was challenged by the Respondent before the EPFAT by filing an appeal. The appeal was allowed vide order dated 26.07.2016 on various grounds discussed in para 16 to 25 of the order of the EPFAT, which will be discussed later, and the order of the RPFC was set aside. This order of the EPFAT is under challenge in the present petition.
3. The seminal question that emerges for consideration in the present controversy is whether 1223 persons working in the respondent establishment 3 W.P. No.6207/2016 are "employees" within the preview of Section 2 (f) of the Employees Provident Fund and Miscellaneous Provision Act, 1952 (in short "EPF Act").
4. According to the Petitioner they are "employees" as :-
(i) the respondent paid attendance bonus, retention bonus and efficiency payment to these 1223 employees, which are generally given to the regular employees for the purpose to discourage the employees to take leave so that production may not be affected adversely due to absence of the employees, experience employees may not leave the service and establishment may take advantage of their experience and efficiency payment is given to encourage them to increase or enhance their efficiency etc.
(ii) as per the Apprentice Act, 1961 (52 of 1961) ratio of the regular employees and apprentices should be 7:1, whereas in the case of respondent, it was approximately 10:7, which proves that these 1223 employees are not trainees/apprentices but were regular employees.
(iii) out of total 3126 employees working in the Respondent establishment 1753+150=1903 were employed directly and through contractor and rest 1223 were shown as appointed as trainee technicians i.e. almost 70% of employees were shown as apprentice, which makes it clear that the production of the respondent was dependent on the person's described as Trainee technicians/apprentices, therefore, they are eligible to be considered as "employees" under EPF Act.4 W.P. No.6207/2016
(iv) the respondent has paid bonus to 2950 employees for the year ending 31/03/2011. Definition of employee given under Section 2(13) of the Payment of Bonus Act, 1965 excludes apprentices. Considering the total number of persons employed directly or through contractor by the respondent shown as 1753 + 150 and thus remaining employees who were benefited by bonus were definitely regular employees of the Respondent.
(v) while applying in form No.4 prescribed under M.P. Factories Rules, 1962 for renewal of its license, the Respondent had applied for the category which was applicable to the factories employing employees between 2001 to 5000 while as claimed by the respondent in the present dispute the number of employees are 1753 (directly employed) + 150 (employed through contractor) = 1903 i.e. less than 2000. If that is the case then the Respondent should have applied for the category classified for the factories employing employees between 1501-2000. This further confirms that while applying for renewal of its license under the Rules, 1962, the Company itself took 1223 employees as its regular employees.
(vi) as per the definition of "apprentice" defined in M.P. Industrial Employment (Standing Orders) Rules an 'apprentice' means a learner; provided that no employee shall be classified as an apprentice if he has had training for an aggregated period for one year; provided further that a longer period of apprenticeship shall be required if prescribed by a law or an award, or by agreement with the representative of employees. In the present 5 W.P. No.6207/2016 case, the respondent establishment has not submitted any fact or document to show that they come under this provision, therefore, they are definitely regular employees.
5. All these grounds, according to the petitioner, confirms that 1223 employees shown as apprentices were actually regular employees of the Respondent establishment.
6. According to the Respondent, they (1223 employees) are apprentices/trainees and not "employees" of their establishment as :-
(i) the definition of "employees" given in Section 2 (f) of the EPF Act excludes apprentice engaged under the Apprentice Act, 1961 (52 of 1961) or under the Standing Orders applicable to an Establishment from the term "employees".
(ii) to ascertain the status of trainees/apprentices of the establishment situated in the State of Madhya Pradesh, the provisions of Industrial Employment Standing Orders Act, 1946 are not applicable instead the provisions of the SSO (Standing Standard Orders) issued by the State Government under Section 21 of the M.P. Industrial Employment (Standing Orders) Act, 1961 are applicable and as per these SSO, 1223 employees are in fact apprentices and not the "employees" of the Respondent establishment as defied under Section 2 (f) of the EPF Act.
(iii) as per the definition given in Section 2 (v) of the SSO issued under Section 21 of the M.P. Industrial Employment (Standing Orders) Act, 1961 an 'apprentice' means a learner. It provides that no employee shall be classified as an apprentice, if 6 W.P. No.6207/2016 he has had training for an aggregate period of one year but that period may be longer than one year, if prescribed by a law or an award or by an agreement with the representative of the employees.
(iv) In the present case, 1223 employees were engaged for training for a period of two years under an agreement with the representative of the employees (Annexure-R/1), therefore, they cannot be treated as "employees" of the respondent- establishment.
(v) the 1223 persons are not appointed under Apprentice Act, 1961, therefore, mentioning of the ratio of employees and apprentices as provided in Apprentice Act, 1961 is wholly uncalled for and without any logic as the SSO under which these apprentices/learners were appointed does not prescribe any ratio and therefore, the contention of the petitioner in this regard is ill-logical or irrational.
(vi) the Respondent has not paid bonus as per the provisions of Bonus Act, 1965 to any of the trainees but it has paid attendance bonus to these trainees every month as per its existing internal scheme to motivate them to maintain regular attendance, therefore, on this ground they cannot be treated as "employees" of the Respondent establishment.
(vii) the definition of 'workmen' given in the Factories Act, 1948 does not make distinction between direct employee, contractor's employee and even apprentice or trainee and it is only related to the maximum number of persons working in the establishment, 7 W.P. No.6207/2016 therefore, information given in form No.4 submitted for renewal of license under Factories Act, 1948 has no relevancy with the issue of determination of status of any person working in any establishment whether as apprentice or regular employee.
7. Vide impugned order, the EPFAT held that the persons mentioned by the APFC in its order dated 16/09/2015 (under challenged before EPFAT) are not "employees" of the Respondent establishment on various grounds including that the provisions of the Industrial Employment (Standing Orders) Act, no where prescribes that in case; any attendance bonus given to a person then such person shall be considered as 'employee' of the Respondent establishment or any person who is getting more than Rs.6,500/- per month (stipend Rs.6,000/- + attendance bonus Rs.1,500/-) then at that relevant point of time of employment that person shall be excluded from the provisions of the Act.
8. We have considered the rival contentions of the parties and have gone through the record as well as the relevant provisions of law related to the subject.
9. Section 2 (f) of the EPF Act defines employees which reads as under :-
2. Definition : In this Act, unless the context otherwise required.
(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 an establishment and who gets his wages directly or indirectly from the employer, and includes any person,-
(i) employed by or through a contractor in or in connection with the work of the establishment;
(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961) or under the standing orders of the establishment;
8 W.P. No.6207/201610. 'Apprentice' is defined under Section 2(v) of the SSO issued under M.P. Industrial Employment (Standing Orders), Act, 1961 reads thus :-
"an 'apprentice' means a learner; provided that no employee shall be classified as an apprentice if he has had training for an aggregated period for one year; provided further that a longer period of apprenticeship shall be required if prescribed by a law or an award, or by agreement with the representative of employees."
11. Thus, it is vividly clear that "employee" does not include an 'apprentice' engaged under the Apprentice Act, 1961 or the Standing Orders of the establishment. Nothing is on record to show that the questioned 1223 employees were engaged by the respondent establishment falls under the definition of apprentice mentioned above. We do not find any provision of any relevant Act or law which shows that the payment of any type of bonus like; retention bonus, attendance bonus, efficiency payment paid under the scheme of the establishment can only be paid to the regular employees or it shows that the persons under considerations were "employees" of the respondent establishment. Grounds taken by the petitioner; to show that 1223 persons were employees of the respondent establishment finds no basis in any law or the provisions have any relevancy or authority on the subject.
12. Learned EPFAT has considered all the grounds raised by the petitioner before this Court and find that they have no substance. The relevant paras of the impugned order reads as under :-
16. "Section 2(f) of the Act clearly enumerates that a person engaged under the standing orders of the establishment does not fall within the definition of employee. Interestingly both parties to the appeal asserting for implication of Standard Standing Orders to the appellant establishment as provided in the 9 W.P. No.6207/2016 Industrial Employment (Standing Orders) Act. Provisions of The Industrial Employment (Standing Orders) Act nowhere prescribed that in case any attendance bonus given to a person than such person shall be considered as employee of the appellant establishment. Further if any person is getting more than Rs.6500/- per month (Stipend of Rs.6000/- + Attendance Bonus of Rs.1500/-) then at that relevant time of employment, that person shall be excluded from the provisions of the Act. The observation of respondent in the impugned order considering trainee technicians as employees of appellant establishment on account of attendance bonus is on the basis of surmises and conjectures, without any provisions of the law. Simply appellant establishment not produced any attendance bonus scheme, does not empowered the respondent to saddle such liability to the appellant establishment.
17. So now this is to be seen by this Tribunal whether alleged trainee technicians were actually performing regular job in the appellant establishment or not? Admittedly during course of inquiry, respondent never tried to summon those trainee technicians to confirm from them whether production of appellant establishment is actually dependent upon them. No oral as well as documentary evidence produce on behalf of respondent which could revels that production of appellant establishment fully dependent upon the services of alleged trainee technicians, so trainee technicians cannot be covered under the definition of employee.
18. Further it is not proved on case file that after completion of training of trainee technicians, all trainee technician shall be entitled for regular employment in the appellant establishment. There is no such agreement in between those trainee technicians and appellant establishment that after completion of training, appellant establishment shall be compulsorily bound to give those trainee technicians regular job.
19. The object of enforcement or compelling compliance is not to gather money from establishments or units to meet any preconceived target. The object behind that act is to collect the fund, which is meant for welfare of the workmen, who are required to be taken care of, once they superannuate.10 W.P. No.6207/2016
20. Respondent passed impugned order in the year 2015 on the basis of inspection report which was prepared in the year 2012 by which it was alleged that appellant has not paid PF contribution of 1223 trainees. Alleged assessment is for the period from Jan.2010 to Dec.2011. Respondent himself is unknown whether all 1223 alleged trainees actually worked with appellant from Jan.2010 to Dec.2011.
21. Respondent is also unknown about the total working period of alleged trainees with appellant establishment. It is also not a case of respondent that appellant ever deducted any employee's share from the stipend/wages of trainees.
22. It is settled law that Commissioner while conducting an enquiry under Section 7A of the Act or under Para 26-B of EPF Scheme has the same powers as are in the Court under the CPC for trying a suit. Respondent was duly empowered to enforce the attendance in person of the alleged trainee technicians. Respondent has the power requiring the discovery and production of documents. This power is given to the Commissioner to decide not abstract question of Law, but only to determine actual concrete differences in payment of contributions and other dues by identifying the workmen. Respondent should exercise all his powers to collect all evidence and to collate all material before coming to proper conclusion. That is the legal duty of the Commissioner. Further a fiction is created under Section 7A of the Act or under Para 26-B of EPF Scheme that an enquiry there under is deemed to be a judicial proceedings. Merely respondent granted opportunity of hearing is not sufficient to uphold the finding of respondent.
23. Respondent itself is unknown about those trainee technicians, their parents for whom alleged assessment taken place. It is settled law that in absence of identified beneficiaries, who are entitled to such benefit, a liability cannot be saddled upon an establishment in the name of compliance of or enforcement of law. No collection can be made by the PF authorities for faceless, nameless or non-identifiable workmen on mere head-count for balance sheet.
24. During course of arguments, no provision of the Act cited by counsel for respondent which could reveals that 'PF Commissioner' is empowered to direct 11 W.P. No.6207/2016 the employer to comply with the provisions of the Bonus Act and the Apprentices Act. Accordingly this Tribunal reached at a considered opinion that respondent is not empowered to direct the appellant establishment to comply the provisions of the Bonus Act and the Apprentices Act. Non-compliance of the provisions of Bonus Act and the Apprentices Act are the issues, completely out of the purview of PF authorities.
25. In case in hand respondent authority has not carried out its legal obligation within the ambit of the Act. The doctrine of audi alteram patram has three basic essentials. Firstly, a person against him an order is required to be passed must be granted an opportunity of being heard. Secondly, the concerned authority should provide a fair and transparent procedure and lastly, the authority concerned must apply its mind and dispose the matter by a reasoned or speaking order. The procedure adopted by the Commissioner did not match with what justice demanded."
13. Learned counsel appearing for the petitioner failed to satisfy us that any of these findings are not according to law, illegal or perverse. The petitioner also failed to convince us that the Tribunal exceeded its jurisdiction or exercised the jurisdiction not vested in it or exceeded the limits of its authority or there is an error apparent on the face of the record, therefore, we do not find any force in the contentions of the learned counsel for the petitioner.
14. The petitioner has raised one other issue that whether 1223 persons are "employees" or not is a matter of fact and in view of the judgment of Madras High Court passed in Nacchammal Cotton Mills Ltd. Vs. The RPFC, Madurai in W.P. (4518) of 2010 finding of facts recorded by the Authority under the Act after evaluating the record maintained by the establishment cannot be reappreciated or interfered with by the superior authority i.e. in the present case EPFAT. But in our view this is not a matter of fact but is a matter 12 W.P. No.6207/2016 of interpretation and therefore, neither the contention is acceptable nor the authority cited by the petitioner is applicable in the present case. To challenge the claim of the petitioner, the respondent has also questioned the competency of the petitioner to file the present petition and consequently the maintainability of the present petition and also pointed out the manner and the way in which EPFC has passed the order and has made allegations of bias on the EPFC but we are not deciding culpability of any of the party. Besides, these are not core questions and the controversy has already been examined and decided on the basis of the core question, therefore, we are not unnecessarily lengthening our order by considering all these issues which have not much impact on the decisions of this Court on the subject matter of the petition.
15. In view of the aforesaid discussion and on the basis of foregoing reasons, we hold that the order passed by the learned Tribunal (EPFAT) is just and proper and does not call for any interference by this Court; therefore, the present petition being bereft of merits is dismissed and disposed off accordingly.
(P.K. Jaiswal) (Virender Singh)
Judge Judge
Aiyer*