Madras High Court
… vs The Assistant Provident Fund ... on 29 September, 2022
Author: J.Sathya Narayana Prasad
Bench: J.Sathya Narayana Prasad
W.P.No.20930 of 2010
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 09.07.2022
PRONOUNCED ON : 29.09.2022
CORAM:
THE HONOURABLE MR.JUSTICE J.SATHYA NARAYANA PRASAD
W.P.No.20930 of 2010
and W.M.P.No.1 of 2010
The Management of Sree Mangalambigai
Cotton Mills Private Limited,
Represented by its Director,
V.Venkatachalapathy
Seelanickenpatty Post,
Salem – 636 201.
Salem District.
… Petitioner
Vs.
1.The Assistant Provident Fund Commissioner,
Employees Provident Fund Organization,
S.J.Shopping Plaza,
Anna Salai, Swarmapuri,
Salem – 636 004.
Salem District.
2.The Appellate Tribunal,
Employees Provident Fund,
New Delhi.
… Respondents
Page No.1 of 21
https://www.mhc.tn.gov.in/judis
W.P.No.20930 of 2010
Prayer:
Writ Petition filed under Article 226 of the Constitution of
India, praying to issue a Writ of Certiorari, calling for records of the
2nd respondent in ATA No.37 (13) 2003 dated 08.07.2010 confirming
the order of the 1st respondent in No.TN/SL/ENF/SAL-
111/17469/7A/2002 dated 17/25.10.2002 and quash the same.
For Petitioner : Ms.Nalini Chidambaram
Senior counsel
for Mr.M.Kamalanathan
For Respondents : Mr.M.Palanimuthu for R1
ORDER
This Writ Petition has been filed challenging the order of the 2nd respondent in ATA No.37 (13) 2003 dated 08.07.2010 confirming the order of the 1st respondent in No.TN/SL/ENF/SAL- 111/17469/7A/2002 dated 17/25.10.2002 and quash the same.
2.The case of the petitioner is that the petitioner Mill namely Sri Mangalambigai Cotton Mills (P) Limited along with Page No.2 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 M/s.S.V.Spinning Mills and M/s. Annamalai Cotton Mills were jointly managed as Group concern upto March, 1997, there was a partition in their managements. As per the partition, Sree Mangalambigai Cotton Mills Private Limited and M/s.S.V.Spinning Mills Private Limited were allowed the present Management of M/s.Mangalambigai Cotton Mills Private Limited.
3.The petitioner mill is engaged in manufacturing cotton and during the partition, many goods, materials, machineries, spares and other item inclusive of books of accounts, and registers and records like standing orders were misplaced during the transit from one mill to another. The respondent initiated proceedings during the year 2000 against the petitioner as an establishment covered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and the claim of the petitioner therein with effect from 01.03.1984. Thereafter, it was alleged that the petitioner establishment had also failed to remit the Provident Fund, Family Pension, Employees Deposit Link Insurance, Contribution and Administrative charges for Page No.3 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 the period from 01.11.1990 to 31.01.2000 and the respondent issued notice to the petitioner mill for appearance on 31.07.2000 for an enquiry under Section 7A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The petitioner establishment contended that while they were managed as group concern, they got their common Standing Orders certified by the Joint Commissioner of Labour, Coimbatore on 11.07.1983 which was made applicable to all their group concerns though the said Standing Orders were certified in the name of the Annamalai Cotton Mills Private Limited. As per the above Standing Order so certified provides that right to the establishment to engage Apprentices for a period not exceeding 36 months. The alleged workers were all Apprentices and as such there is no need to subscribe them for Provident Fund. The petitioner mill and their group concern recruited freshers as apprentice trainees and they got training in their mills for 3 months and after learning work to some extent they joined in some other mills as trained workers for higher wages on regular basis.
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4.The petitioner further submitted that the amount of stipend paid to the apprentices cannot be treated as wages and as such the establishment is not liable to pay any amount by way of Provident Fund Contribution as stipend amount paid to the apprentices engaged in the mill. Moreover, the apprentices are not workers within the meaning of the Section 2(F) of the Employees Provident Fund and Miscellaneous Provisions Act. The petitioner/ Management had enrolled with the respondent, all the employees eligible from the date of their respective joining in the petitioner Mill. The 1st respondent conducted enquiry dated 17/25.10.2002 and passed an order in No.TN/SL/ENF/SAL-rejecting the contention of the petitioner mill and held that the petitioner establishment is in arrears of Rs.17,99,677/- with interest at the rate of 12% p.a for the period from 04.1997 to 01.2000. The 1st respondent without looking into the Standing Order and without considering the material facts and evidence has passed the impugned order assuming that the establishment has no certified Standing Order, the Industrial Employees (Standing Order) Act, 1946 would apply to all factories Page No.5 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 in the State of Tamil Nadu still a Certified Standing Order is obtained, the model Standing Orders given in Schedule-1 of the Tamil Nadu Industrial Employment (Standing Order) Rules, 1947 will be applicable. The said Standing Order is entitled to engage the service of apprentices. Therefore, the model Standing Order is statutorily applicable and therefore apprentices engaged are excluded from the coverage under the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
5.Due to acute shortage of man power, the petitioner mill was constrained to engage more number of freshers and train them in various departments and even the trainees irrespective of the contracted period after learning the work used to quit the training. Therefore, the petitioner management had no other option except to have excess trainees and this serious problem of the petitioner mill was not taken into account either by the E.P.F. Authorities or by the E.P.F. Appellate Tribunal genuinely represented by the petitioner mill. Hence, the apprentices are not workers/ employees within the Page No.6 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 meaning of Section 2(f) of the Employees Provident Fund and Miscellaneous Provisions Act. The petitioner preferred a Statutory Appeal before the Appellate Tribunal and the Appellate Tribunal by its order dated 08.07.2010 in ATA No.37 (13) 2003 rejected the contention of the petitioner mill that there is no material placed that the employees were apprentices and therefore, they should be treated as regular employees and found that there is no irregularity in the demand made by the 1st respondent. Aggrieved by the order passed by the E.P.F. Appellate Tribunal, the petitioner mill has come forward with the present Writ Petition.
6.The learned counsel appearing for the petitioner mill submitted that the petitioner is considerably having more numbers of freshers with regular employees who are settled in Salem because of their personal and family environment. Without considering the above said facts, the respondents have rejected the contention of the petitioner. The 1st respondent did not even call for any record from the Inspector of Labour Office, Salem and arrived at a hasty Page No.7 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 conclusion which was confirmed by the 2nd respondent.
7.A counter affidavit was filed on behalf of the 1st respondent and the learned counsel appearing on behalf of the 1 st respondent submitted that the model Standing Orders classify the workmen into 7 categories such as (1)Permanent, (2) Probationer, (3)Temporary, (4)Badli, (5)Casual, (6) Seasonal and (7)Apprentices. The petitioner mill had tried to take advantage of the classification made in the Model Standing Orders treating all persons as “apprentices” with the only view to deny the membership to Provident Fund to them. By this action, the petitioner mill is avoiding the benefits under the Social Security Scheme to the workers. The issue was elaborately discussed during the inquiry and the petitioner establishment could not produce any documentary evidence except the Standing Order of the Group Companies. The petitioner establishment stated that as there was a major partition in their mill and they were given M/s.Sree Mangalambigai Cotton Mills P. Ltd., to the petitioner mill herein as their share during March 1997, they could not trace out the Page No.8 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 records from 11.1990 to 03.1997. The matter was decided and the proceedings was issued in respect of those employees for the period from April, 1997 to January, 2000 amounting to Rs.17,99,677.00 vide order dated 25.10.2002. Aggrieved by the above proceedings, the employer had filed an appeal before the EPF Appellate Tribunal. Aggrieved by the order dated 08.07.2010 by the Tribunal dismissing the appeal, the employer had filed this Writ Petition before this Court. He further submitted that the petitioner themselves has accepted that the Standing Order was obtained for the Group of Companies and even after partition, the petitioner establishment failed to obtain a certified standing order and only on the respondent department's intervention, they initiated action to obtain standing orders.
8.The Employees Provident Fund Organization is a Social Security Organization which caters to the needs of millions of poor subscribers. The main area of service of this Organization is timely settlement of Provident and Pension Fund benefits, Insurance Page No.9 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 coverage etc., to the subscribers and their families. It is the bounden duty of the employer to pay the PF arrears especially the employees' share already deducted from the wages. The non-payment of statutory dues though it is recovered from the wages of the employees is a grave offence for which the employer cannot show any valid reasons. This is an offence under Sections 406/ 409 of Indian Penal Code punishable under Section 409 of I.P.C Unless penal/ legal actions as contemplated under the Act are initiated the petitioner mill will not pay the amount. The coercive action is necessary to realize the defaulted amount in the interest of the poor working class. It is submitted that there is no excess of authority from the respondent and all actions are within the ambit of law and as provided under the Employees Provident Fund and Miscellaneous ProvisionsAct.
9.The Provident Fund and other dues payable under the Employees' Provident Fund & Miscellaneous Provisions Act, 1952 are part of the legitimate statutory entitlement of the workers. The Page No.10 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 respondent is duty bound to protect the interests of the workers. The Employees Provident Fund and Miscellaneous Provisions Act comes into force in its own vigour. The respondents are therefore, legal in initiating necessary action to determine the dues and recover the same subsequently.
10.The learned counsel appearing for the petitioner relied upon the judgment of the Hon'ble Apex Court in the case of Regional Provident Fund Commissioner, Mangalore Vs Central Arecanut & COCA Marketing and Processing Co.op. Ltd., Mangalore reported in (2006) 2 SCC 381 and the same is not applicable to the case on hand. There is no Model Standing Order for the petitioner Management for the partition in the year 1997 and the model Standing Orders are pertaining to the Group of Companies not separate for the petitioner mill.
11.Heard the learned counsel appearing on either side and perused the materials available on record.
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12.In this case, it is an admitted fact that there is no certified Standing Orders for the petitioner's mill for the period from 11.1992 to 03.1997 and during the enquiry, the petitioner establishment could not produce any documentary evidence and even the petitioner mill in their evidence has stated that during the partition many companies, mills, machineries and other items inclusive of books of accounts and register and records like Standing Orders were misplaced during the transit from one mill to another mill. The petitioner mill have also further stated in the affidavit that their common Standing Orders was certified by the Commissioner of Labour, Coimbatore on 11.07.1983. But after the partition in the management between Sri Mangalambigai Cotton Mills (P) Limited, M/s.S.V.Spinning Mills and M/s.Annamalai Cotton Mills were managed as group concern. There is no separate or individual Standing Order for the petitioner mill. The petitioner's mill is relying on the Standing Orders that too prior to the partition of the management. As on date of enquiry by the 1 st respondent Page No.12 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 under Section 7A of the EPF and MP Act, 1952 no Model Standing Orders or certified Standing Orders for the petitioner Management was produced. But the petitioner mill relying is of the year 1983 that is before the partition of the management in the year 1997. The petitioner mill is covered under the provisions of EPF and MP Act with effect from 01.03.1984.
13.This Court is not inclined to accept the contentions of the petitioner mill that the employees take training for three to four months and after which they will leave the mill and join another mill at Coimbatore due to their family environment. In the absence of the certified Standing Orders or Model Standing Orders, the employees working in the mill will be considered only as employees under Section 2 (f) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
14.It is pertinent to extract Section 2 (b) & 2(f) of the Employees Provident Fund and Miscellaneous Provisions Act , 1952 Page No.13 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 hereinbelow:
“(b) “basic wages” means all 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 and which are paid or payable in cash to him, but does not include-
(i) the cash values of any food concession;
(ii)any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer;
(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 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;]
15.The petitioner mill has admitted that there is no separate Page No.14 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 Standing Order for the management and only certified Standing Orders of the Group Companies before the partition which was certified by the Joint Commissioner Labour, Coimbatore on 11.07.1983 alone is available . The other contention of the petitioner mill is that the petitioner mill was constantly engaging more apprentices/ trainees than the number of freshers and trained them in various department. After learning the work, they quit the training and therefore, the petitioner Management has no other option except to have excess trainees is not tenable, for the reason that the petitioner mill is engaged in manufacturing cotton and all over the year there will be production.
16.The other contention is that Salem is not a textile industrial city like Coimbatore and therefore, the apprentice work in place like Salem and after training they go to Coimbatore to have better prospects and that is the reason, the petitioner mill is considerably having more number of trainees than the regular employees is not sustainable. Moreover, the regular employees who settle in Salem Page No.15 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 because of the personal and family environment prefers Coimbatore is a better place for workers in spinning mills is not acceptable to this Court.
17.In this case, it is crystal clear and evident that the persons who are engaged are not apprentice under Section 2(f) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and they are only employees. In order to evade the payment of Provident Fund, the petitioner Management is showing that all the employees are apprentices and that the Employees Provident Fund and Miscellaneous Provisions Act, 1952 is not applicable to them.
18.The learned counsel appearing for the petitioner relied upon the judgment of the Hon'ble Apex Court in the case of Regional Provident Fund Commissioner, Mangalore Vs Central Arecanut & COCA Marketing and Processing Co.op. Ltd., Mangalore reported in (2006) 2 SCC 381 and the same is not Page No.16 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 applicable to the case on hand. There is no Model Standing Order for the petitioner Management for the partition in the year 1997 and the model Standing Orders are pertaining to the Group of Companies not separate for the petitioner mill.
19.The findings of the first respondent/original authority in the enquiry conducted under Section 7A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 that no material is placed to show whether any provision was made to impart training to these persons, and such trainees are appointed regularly only and they are engaged in the work of the establishment was also confirmed by the second respondent tribunal.
20.The second respondent tribunal has rightly relied on the judgment, M/s. N.E.P.C. Textile Ltd. Vs. Assistant PF Commissioner reported in 2007 LLR page 535, wherein, this Court has held that person though engaged as apprentice but required to do Page No.17 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 the work of regular employee have been rightly held as the employee of the mill. The relevant portion of the order passed by the second respondent tribunal is as follows:
“7. As per the schedule to the Apprentice Act, the strength of the trainees should be in the ratio of 1:7 but in this case the appellant employed more person as trainee than regular employee and this fact shows that they are not the actually trainee but employee of the appellant.”
21.In view of the above facts and circumstances of the case, this Court do not find any infirmity or perversity in the order passed by the second respondent Tribunal in ATA No.37 (13) 2003 dated 08.07.2010 confirming the order of the 1st respondent in No.TN/SL/ENF/SAL-111/17469/7A/2002 dated 17/25.10.2002 and the same is hereby confirmed.
22.In the result, this writ petition stands dismissed. No costs. Consequently, connected miscellaneous petition is closed. Page No.18 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 29.09.2022 gba Index: Yes Speaking Order (or) Non-Speaking Order To Page No.19 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010
1.The Assistant Provident Fund Commissioner, Employees Provident Fund Organization, S.J.Shopping Plaza, Anna Salai, Swarmapuri, Salem – 636 004.
Salem District.
2.The Appellate Tribunal, Employees Provident Fund, New Delhi.
Page No.20 of 21 https://www.mhc.tn.gov.in/judis W.P.No.20930 of 2010 J.SATHYA NARAYANA PRASAD, J.
gba W.P.No.20930 of 2010 29.09.2022 Page No.21 of 21 https://www.mhc.tn.gov.in/judis