Team Industrial Relations, Regional Office, Mumbai. Team IR, Mumbai

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1 1 Supreme Court & High Court Judgments on service matters for the period from October, 2016 to December, 2016 exclusively on Employees Provident Funds and Miscellaneous Provisions Act, It has been a continuous endeavor of Team Industrial Relations, Regional Office, Mumbai to provide professional inputs to the HR fraternity and in this direction compilation of recent Judgments of Supreme Court & High Court on service matters is being uploaded every month on the intranet. This will facilitate not only the In-charges HR/ER in ONGC, but also those who have interest & inclinations to understand and appreciate various verdicts given by the courts on service matters. We trust that this will also facilitate better handling of existing and future cases by the concerned work centers. Team Industrial Relations, Regional Office, Mumbai.

2 2 IMPORTANT SUPREME & HIGH JUDGMENTS ON SERVICE MATTERS for the period from October, 2016 to December, 2016 exclusively on Employees Provident Funds and Miscellaneous Provisions Act, Case Citation Issues Involved Judgment

3 LLR 1019 BOMBAY HIGH Hon'ble Mr. S.C. Gupte, J. C.A.J. W.P. No. 4173/20 15 with C.A. No. 541/2016, D/ Central Board of Trustees Nutan Pushpak Premises Co- op- Society Ltd. Whether society being duly registered can be covered by item 34 of Apppendix-1 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952? Whether electricity used for providing light and other emenities at the workplace of the society can make the society working with the aid of power? Society being duly registered is not covered by Item 34 of Appendix-1 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 since it does not render any particular service to its members. Society registered under the Cooperative Societies Act is excluded from the operation of Section 16(1) of the EPF & MP Act if it is employing less than fifty workers, working without aid of power. Electricity used for providing light and such other ementies at the work place of the Society cannot make the Society working with the aid of power' since use of electric bulbs or fans does not amount to working with the aid of power. Working with the aid of power implies that there must be some work or process carried on in the establishment with use of power.

4 LLR 1021 CALCUTTA HIGH Hon'ble Mr. I.P. Mukerji, J. W.P. No. 609/1999 and W.P. No. 2276/1999, Dt/ Rupa & Company & Anr. The Regional Provident Fund Commissioner, West Bengal & Ors. Whether principal employer is liable to pay EPF contribution in respect of employees of contractors? Principal employer is not liable to pay EPF contributions in respect of employees of contractors if (i) such employees were not performing duty either within the premises of the principal employer or under the control and supervision of the principal employer, (ii) employees of the contractors were not identifiable by the principal employer or contractor or EPF Authority and (iii) employees of the contractors were performing work of other employers through their respective contractors.

5 2016 LLR 1032 KERALA HIGH Hon'ble Mr. K. Vinod Chandran, J. W.P. (C) Nos /2005-P and 14985/2011-W Dt/ Employees' Provident Fund Organisation, rep. by Assistant P.F. Commissioner, Kochi Kerala State Civil Supplies Corporation Ltd., Kochi & Ors. Whether EPF Authority can burden the employer for payment of EPF contribution in respect of employees engaged by the contractor for completing the work and not for supply of man power? 5 When contract is not for supply of man-power but for completing the related work, the EPF Authority cannot burden the employer for payment of EPF contributions in respect of employees engaged by the contractor for completing the work that too not in the premises of the main employer since the main employer will not be having any control and supervision over such employees of the contractor. If the contract is for completing the related work by supply of material including machines and raw materials and man-power, the principal employer is liable to pay EPF contributions, if the conctractors do not deposit the same, subject to recover the same from the contrctor(s) by any legal mode. If the principal employer has deducted the EPF contributions from the wages of the employees of the contractor, it has to deposite the same in the respective account of the concerned employee and for any in depositing the same, he is liable to pay interest and damages. An employer, in the absence of relationship of employer-employee with the workmen engaged through contractor, is not liable to pay EPF contributions in respect of such employees.

6 2016 LLR 1039 ORISSA HIGH Hon'ble Mr. S.N. Prasad, J. W.P. (C) No /2011, Dt/ Regional Provident Fund Commissioner Orissa State Road Transport Corporation and Another Whether EPF Appellate Tribunal has been conferred with any power over statutory provisions as per Employees Provident Funds and Miscellaneous Provisions Act, 1952? Whether the Act and Scheme can reduce or waive the damages in absence of Corporation being sick industrial unit? 6 As per provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, the EPF Appellate Tribunal has never been conferred with any power to sit over the statutory provision on whatsoever ground may be. Provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, Act do not confer any power upon the EPF Appellate Tribunal to reduce or waive the damages. Such a power, to reduce or waive the damages, is conferred upon the Central Board and that too in relation to a sick industrial unit for which a scheme for rehabilitation has been sanctioned by Board for BIFR established under Sick Industrial Companies (Special Provisions) Act. Since the corporation is not a sick industrial unit, there is no question of application of provisions of the Act and Scheme to reduce or waive the damages. It is the basic principle of law long settled that if the manner of doing a particular act is prescribed under any statute, the act must be done in that manner or not at all, If the EPF Appellate Tribunal exceeds its jurisdiction in passing an order, the same is liable to be set aside.

7 LLR 1043 ORISSA HIGH Hon'ble Mr. S.N. Prasad, J. W.P. (C) No. 7595/2010, Dt/ M/s. ISAR Engineers (Pvt.) Ltd. The Presiding Whether order under section 7A of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 can be passed by EPF Authority without giving reasonable opportunity to the employer? Unless the employer is given reasonable opportunity, no order under section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, shall be passed by the EPF Authority as per mandate of the Act. An order passed by the EPF Authority is liable to be set aside if copies of the material documents have not been supplied to the employer since such a practice on the part of the Authority amounts to violation of principles of natural justice. Officer, Employees' Provident Fund Appellate Tribunal and Others

8 LLR 1075 HYDERABAD HIGH Hon'ble Mr. Dilip B. Bhosale, CJ. Hon'ble Mr. P. Naveen Rao, J. W.P. No /1998, Dt/ Whether educational institution is exempted from the perview of the Act without satisfying the conditions mentioned in Section 16(L)(b) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952? Unless the conditions mentioned in Section 16(l)(b) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 are satisfied, no educational institution is exempted from the purview of the Act. Employees Provident Fund Appellate Tribunal acquires jurisdiction to consider an appeal only if an appeal is filed under Section 7-I of the Act against the order made in exercise of power under any of the provisions in Section Regional Provident Fund Commissioner, Hyderabad E.P.F. Appellate Tribunal, New Delhi and Anr. 1(3) &(4), 3, 7A, 7B, 7C and 14B of the Act. Since the request of the Association was rejected by the EPF Authority in exercise of administrative power, it is not an order made in exercise of quasi judicial powers under the Act, an appeal, against such an order is not maintainable being without jurisdiction.

9 LLR 1096 BOMBAY HIGH Hon'ble Mr. Ravindra V. Ghuge, J. W.P. No /2015, Dt/ Whether an order passed by EPF Authority under section 7Q of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 is appealable? Order passed by the EPF Authority under section 7Q of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 is not appealable. When damages are imposed under section 14B of the Act and interest is imposed separately under section 7Q of the Act, if the appeal against the order passed under M/s. Evergreen Engineering Company Pvt. Ltd. Employees Provident Fund Organisation section 14B is allowed in totality, the interest amount already deposited against order passed under section 7Q of the Act will have to be returned to the employer since the same was, in fact, outcome of the order passed under section 14B of the Act.

10 2016 LLR 1104 PUNJAB & HARYANA HIGH Hon'ble Mr. Justice Inderjit Singh C.R.M. No.M of 2016 (O&M), D/ Sanjay Sharma Employees Provident Funds Inspector, Jalandhar 10 Whether only authorised signatory will be liable to prosecution/penalty for the default in payment of provident fund contribution? Employees' Provident Funds Scheme no where provide that only the authorised signatory will be liable to prosecution/penalty for the default in the payment of provident fund contributions since the Directors/Partners/Managers or any other person/persons who have ultimate control over affairs of the establishment will be liable, as such the petition as filed in the High Court by the petitioner challenging the complaint for his prosecution is liable to be dismissed.

11 LLR 1118 CALCUTTA HIGH Hon'ble Mr. I.P. Mukerji, J. A.S.T. No. 275/2015, D/ Rupendra Nath Kumar Assistant Commissioner Whether right to arrest of a defaulter of the provident fund dues to be exercised by the concerned authority under the Employees Provident Fund Act on account of negligence to pay the dues? Right to arrest of a defaulter of the provident fund dues to be exercised by the concerned authority under the Employees' Provided Fund Act only when he was neglecting to pay the dues. Before arresting a defaulter of provident fund, the provident fund authority must give an opportunity for hearing and unless the conduct of the employer is found to be obstructive or fraudulent, as such the order of arrest of the employer without hearing is liable to be set aside. Employees Provident Fund and Others

12 Case Citation Issues Involved Judgment 2016 LLR 1135 DELHI HIGH Hon'ble Mr. Sanjeev Khanna, J. Hon'ble Ms. Sunita Gupta, J. CM Nos. 1650, 1651/2016, LPA No. 35/2016, D/ Central Board of Trustees EPF St. Michaels School, Durgapur Whether pre-deposit stipulated under Section 7 o of the Act would be restricted to the amount due and demanded under section 7A of the Act? 12 Pre-deposit stipulated under Section 7-O of the Act would be restricted to the amount due and demanded under Section 7A of the Act. An appellant challenging the order passed under Sections 14B and 7Q of the Act can move an application for stay of demand under these sections. Pre-deposit under section 7-O of the Act or its waiver and an application for stay of recovery of demand under sections 14B and 7Q of the Act are two separate and independent aspects and issues.

13 Case Citation Issues Involved Judgment 2016 LLR 1146 CALCUTTA HIGH Hon'ble Mr. I.P. Mukerji, J. W.P. 102/2016, Dt/ Mehras Books Pvt. Ltd. Employees Provident Fund Organisation & Ors. Whether Writ Court can reduce the quantum of damages imposed by EPF Authority under section 14B of the Employees Provident Funds and Miscellaneous Provisions Act, 1952? 13 Writ Court can reduce the quantum of damages imposed by the EPF Authority under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, by using its discretionary power. Writ Court is not empowered to reduce the quantum of damages, imposed under Section 7Q of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

14 2016 LLR 1153 BOMBAY HIGH Hon'ble Mr. S.C. Gupte, J. C.A. No. 239/2014, Dt/ Regional Provident Fund Commissioner, Thane Official Liquidator, High Court, Mumbai of Zodana Electronic Ltd. Whether in absence of adjudication of damages under section 14B of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 provable debt to be recovered from the liquidator of the company is possible? 14 In the absence of adjudication of damages under section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, there would be no provable debt to be recovered from the Liquidator of the Company. Adjudication of damages under section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, is exclusively in the jurisdiction of the authorities under the Act and not with the Official Liquidator. In winding up of an insolvent company, interest, under section 7Q of the Act, is payable only in the event of there being a surplus after payment in full of all claims. Interest rate cannot exceed 4 percent per annum while effecting recovery from a solvent company.

15 2016 LLR 1170 PUNJAB AND HARYANA HIGH Hon'ble Mr. P.B. Bajanthri, J. C.W.P. Nos /2010, 10624/2010 and 11122/2010, Dt/ Whether an ex-parte order passed by the EPF Authority can be set aside? An ex-parte order passed by the EPF Authority may be set aside subject to reasonable conditions. Non production of relevant records by the employer before the EPF Authority may result into passing of an ex-parte award. M/s. Akash Founders and Engineers Presiding Officer, Employees Provident Fund and Another

16 2016 LLR 1175 ORISSA HIGH Hon'ble Mr. S.N. Prasad, J. W.P.(C) No /2003, Dt/ M/s. Magnum Fibers Pvt. Ltd. Regional Provident Fund Commissioner & Others Whether issuance of notification specifying an establishment/class of establishments by Central Government under first proviso of Section 6 (amendaed) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 is necessary? 16 Issuance of Notification by Central Government under 1st proviso of Section 6 (Amended) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, specifying an establishment/ class of establishments to be included therein, is not necessary, It is statutory duty of the employer to pay continutions of both the shares i.e., employer's and employees' well in prescribed time at the prescribed rates. Writ petition cannot be said to be not maintainable on the ground of availability of alternative remedy. Appeal against demand notice is not maintainable since no such provision under section 7-I of the Act is available.

17 2016 LLR 1185 KARNATAKA HIGH Hon'ble Mr. Raghvendra S. Chauhan, J. W.P. No /2015 (L-PF), D/ M/s. Deccan Education Society Union of India and Others Whether sub-section (5) of section 7B of Employees Provident Funds and Miscellaneous Provisions Act 1952 states about the division? 17 Sub-section (5) of section 7B of Employees' Provident Funds and Miscellaneous Provisions Act states that it can be divided into two parts. While the first part debars filing of an appeal against an order of the Officer rejecting an application for review, and the second part permits an appeal against an order passed under review, and creates a legal fiction that the said order shall be deemed to have been passed under section 7A of Employees' Provident Funds and Miscellaneous Provisions Act. Section 7-I of the Employees' Provident Funds & Miscellaneous Provisions Act lays down that although a person aggrieved by the order under section 7B may file an appeal, but a person is not permitted to file an appeal against an order rejecting an appeal for review as referred to in sub-section (5) of section 7B of the Act.

18 2016 LLR 1191 CALCUTTA HIGH Hon'ble Mr. Indrajit Chatterjee, J. C.R.R. Nos /2010 with C.R.R. Nos /2010, Dt/ Whether prosecution proceedings on account of delayed remittance of EPF dues are quashable on fulfilment of deficiency payment? Prosecution proceedings on account of delayed remittance of EPF dues are quashable if deficiency of payment has already been fulfilled. Non-payment of EPF dues within prescribed limitation would attract criminal proceedings against the defaulter employer. Kartick Chandra Das & Anr. The State of West Bengal & Anr.

19 Case Citation Issues Involved Judgment 2016 LLR 1236 KERALA HIGH Hon'ble Mr. K. Harilal, J. WP(C) No. 7097/2011(J), Dt/ St. Vincent English Medium Higher Secondary School Assistant Provident Fund Commissioner, Kottayam and Ors. 19 Whether wilfull defaulter or negligence on the part of the employer is an important factor to be considered to levy the damages on account of delayed remittance of EPF dues by the employer? While levying damages on account of delayed remittance of EPF dues by the employer, the fact of wilfull default or negligence on the part of the employer is an important factor to effect the decision of the authority. In view of provisions of Section 14B of the Act, the determination of damages is not an inflexible application of a rigid formula. While levying damages, the authority concerned has to apply its mind to the facts and circumstances, which caused delay. Levying damages would not warrant if it is proved on record that the delay in remittance of EPF contributions was neither wilfull nor due to any negligence on the part of the employer.

20 2016 LLR 1248 MADRAS HIGH Hon'ble Mr. A. Selvam, J. Hon'ble Mr. G. Chockalingam, J. W.A. (MD) No. 478/2008, Dt/ Whether casual labour engaged in construction work/activities for wages is entitled and required to become member of scheme under Employees Provident Funds and Miscellaneous Provisions Act,1952? 20 Casual labour engaged in construction work/activities for wages shall be entitled and required to become member of Scheme under Employees' Provident Funds and Miscellaneous Provisions Act, Employers engaged in construction activities being establishments are coverable under the provisions of Employees' Provident Funds and Miscellaneous Provisions Act, Builders Association of India, Madurai Centre Union of India and Others

21 2016 LLR 1249 ORISSA HIGH Hon'ble Mr. S.N. Prasad, J. O.J.C. No /1199, Dt/ Regional Engineering College, Rourkela Presiding Officer, EPF Appellate Tribunal and Others 21 Whether any worker working in an establishment and being paid directly or indirectly by the establishment can be employee under section 2(f)of the Employees Provident Funds and Miscellaneous Provisions Act, 1952? Whether employer is liable to pay EPF contribution in respect of casual or temporary employees working for the establishment? Any worker working in an establishment, for the establishment, being paid directly or indirectly by the establishment, will be an employee under section 2(f) of the Act. If the workmen were engaged through advertisement released by the principal employer, disciplinary actions were initiated by the principal employer, annual increments were given by the principal employer, orders for paying allowances were issued by the principal employer, there would be direct control over such workmen establishing relationship of employer-employee making the principal employer liable to pay EPF contributions. Whether an employee is in regular capacity or NMR or DLR (casual or temporary), if working for the establishment, he will be an employee of the establishment, making the employer liable to pay EPF contributions in respect of such employees. In judicial review under Article 226 of the Constitution of India, the writ court is to see whether the decision-making process is proper or not and not to decide the correctness of the finding or claim of the claimant, in the nature of appeal. Mess workers whose salary is paid by the contractor if working under the direct supervision and control of the principal employer, they would be employees of the principal employer.

22 2016 LLR 1253 PUNJAB AND HARYANA HIGH Hon'ble Mr. P.B. Bajanthri, J. C.W.P. Nos and 7289/2012 (O&M), Dt/ Food Corporation of India Presiding Officer, Employees' Provident Fund Appellate Tribunal, New Delhi and Others Whether delay in initiating proceedings on the part of EPF Authority for recovery of EPF dues along with interest and damages from the defaulting employer is a hurdle in invoking the provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952? 22 Delay in initiating proceedings on the part of EPF Authority for recovery of EPF dues alongwith interest and damages from defaulting employer is no hurdle in invoking the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 as per law settled by the Apex Court. Principal employer is liable to pay EPF dues etc., in accordance with law in respect of employees engaged through contractors in case the contractor(s) fail to remit the same. When the enquiry proceedings reveal that the EPF Authority has provided ample opportunities to the employer to submit his defence by way of documentary and oral evidence, the employer is not entitled to seek interference of the writ court in the finding of the EPF Authority on the ground that proper opportunity has not been provided.

23 2016 LLR 1266 HYDERABAD HIGH Hon'ble Mr. Dilip B. Bhosale, A.C.J Hon'ble Mr. P. Naveen Rao, J. W.P. No /1998, D/ Regional Provident Fund Commissioner, Hyderabad E.P.F. Appellate Tribunal, New Delhi and Another Whether educational institutions are covered under the perview of Employees Provident Funds and Miscellaneous Provisions Act, 1952? Whether private education institution can seek exemption from the coverage of the Act by obtaining permission from EPF Authority? 23 Educational institutions are covered under the purview of Employees' Provident Funds and Miscellaneous Provisions Act, 1952 w.e.f vide notification dated by the Central Government. EPF Appellate Tribunal being a creature of the Act, has to act within the four corners of the Act. EPF Appellate Tribunal has jurisdiction to consider an appeal only if the appeal is filed under section 7-I of the Act against order passed under sections 1(3) and (4), 3, 7A, 7B, 7C and 14B. EPF Appellate Tribunal does not have jurisdiction to consider an appeal if the same is not against order passed under sections 1(3) and (4), 3, 7A, 7B,7C and 14B of the Act by the EPF Authority. Any private education institution may seek exemption from coverage of the Act by obtaining permission from the EPF Authority on fulfillment of twin conditions mentioned in section 16(l)(b) of the Act. To claim exemption under section 16(l)(b) of the Act, the burden lies on the applicant to satisfy the competent authority/epf authority.

24 Case Citation Issues Involved Judgment 2016 LLR 1273 JHARKHAND HIGH Hon'ble Mr. Aparesh Kumar Singh, J. W.P. (C) No. 5221/2014, Dt/ M/s. B.K. Engineering Works Union of India 24 Whether employer is duty bound to produce the relevant records? Whether levying of damages and interest up on the employer is justified in addition to amount contribution consisting shares of employer and employee? Employer is duty bound to produce the relevant recordes when by the EPF Authority or authorized official of the department. Non-production of records despite repeated opportunity would justify the inference drawn by the EPF Authority against the employer. Once an official has represented the employer before the EPF Authority without any reservation or objection by the employer, his acts and deeds before the EPF Authority would be finding upon the employer. In addition to amount of contibutions consisting of shares of employer and employees, levying of damages and interest upon the employer is justified when the employer has not shown any bona fide reason for delay deposit or non-deposit of the EPF dues within prescribed limitation. Orders passed under Sections 7A and 7B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 are appealable under the Act. Challenging to the order passed by the EPF Authority under section 7A and 7B of the Act, in writ petition, is not sustainable till the alternative remedy of appeal is n

25 Case Citation Issues Involved Judgment LLR 1278 ORISSA HIGH Hon'ble Mr. S.N. Prasad, J. W.P. (C) No /2004, D/ Odyssy Pickles Ltd. Regional P.F. Commissioner and Others Whether writ petition is maintainable for challenging the order of EPF Authority? Whether controversy between the parties relating to facts requires to be determined by hearing the contentions of both the parties supported with the cogent evidence? Writ petition is not maintainable for challenging the order of the EPF Authority till the alternative remedy of appeal is not exhausted. Writ Court is only required to see whether the decision making process is proper or not and not to decide correctness of the demand in the nature of an appeal. Controversy between the parties relating to facts requires to be determined by hearing the contentions of both the parties supported with cogent evidence. EPF Appellate Authority is having enough power at par with the EPF Authority to consider the correctness of the demand and rival contentions on the basis of facts.