If any establishment or employer claims to be not covered under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, burden to prove in such cases is on the establishment – Delhi HC

J K College Of Nursing & Paramedicals Vs UOI & ORS (Delhi High Court)- It was held that if any establishment or employer claims to be not covered under the said Act, then it is for the employer to place sufficient cogent and convincing material before the designated authority in an enquiry under Section 7A of the Act, so as to satisfy the Authority with regard to non-applicability of the Act and further held that on failure to place any such material, the onus cannot be shifted on the EPF authorities to prove the applicability of the Act. It was yet further held that the EPF authorities under no circumstances can be in possession of necessary records evidencing the extent of strength of employees in any particular establishment.

IN THE HIGH COURT OF DELHI AT NEW DELHI

SUBJECT : EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952

J K COLLEGE OF NURSING & PARAMEDICALS 

Vs  UOI & ORS           

Date of decision: 24th May, 2011

W.P.(C) 8195/2010 & CM No.21123/2010 (for stay)

CORAM :-

HONOURABLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

3. The Appellate Tribunal, relying upon Saraswati Construction Company v. Central Board of Trustees 171 (2010) DLT 3, held that if any establishment or employer claims to be not covered under the said Act, then it is for the employer to place sufficient cogent and convincing material before the designated authority in an enquiry under Section 7A of the Act, so as to satisfy the Authority with regard to non-applicability of the Act and further held that on failure to place any such material, the onus cannot be shifted on the EPF authorities to prove the applicability of the Act. It was yet further held that the EPF authorities under no circumstances can be in possession of necessary records evidencing the extent of strength of employees in any particular establishment.

4. The Tribunal further held that the petitioner in the present case had failed to place any such material and had not produced any documents to show its staff strength and on the contrary the order of the EPF Authority in appeal before the Tribunal revealed that the staff strength was determined on the basis of attendance register and salary register. The Tribunal held that there was no material to disbelieve the documents and no inconsistency was noticed in the order of the EPF Authority.

5. The contention of the counsel for the petitioner is that the judgement of this Court in Saraswati Construction Company (supra) is per incuriam, having not noticed the provisions of Section 101 of the Indian Evidence Act, 1872. It is contended that burden necessarily has to be on the person asserting the fact and in the present case it was the EPF Authority that was asserting that the petitioner was employing more than 20 persons and the Tribunal has wrongly held that the burden was on the petitioner.

6. It is further contended that there is no finding whatsoever of 37 employees in any of the orders of the EPF Authority also. It is yet further contended that there is no such plea in the counter affidavit filed before the Tribunal also.

7. Per contra, the counsels for the respondents appearing on advance notice have invited attention to Section 106 of the Evidence Act providing that where any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. With respect to the argument of there being no finding of 37 employees, it is contended that as per the attendance register of the petitioner there were 37 employees. On inquiry, as to where it has been so found, the counsel for the respondent has invited attention to the counter affidavit filed in the present writ petition. However it is not deemed expedient to refer to the said counter affidavit since, neither was the same allowed to be filed and further since the counsel for the petitioner claims that he has not received copy thereof. The counsel for the respondent has also contended that the petitioner in its letter dated 21st October, 2010 to the respondent no.3 had admitted the liability and had enclosed a Demand Draft for `1,50,000/- towards part payment and had sought installments for payment of the balance.

8. The counsel for the petitioner rejoins by contending that the said amount was paid per force and cannot prevent the petitioner from agitating its rights.

9. I am unable to agree with the contention of the counsel for the petitioner that the judgement in Saraswati Construction Company is per incuriam and I have no reason whatsoever to disagree from the view taken therein. The strength of employees can be within the exclusive knowledge of the establishment only and it is the duty of the establishment to satisfy the EPF authorities of the strength of its employees. The emphasis placed on Section 101 of the Evidence Act is misplaced. The said rule is a rule of evidence in the Court and in my opinion would not apply to the proceedings before the EPF authorities. Though the counsel for the petitioner invites attention to Section 7(J) of the Act but the same is not found to be of any assistance in this regard; rather the same enables the Tribunal, as distinct from the EPF Authority, to regulate its own procedures and vests only certain powers of the Civil Court in the Tribunal to enable the Tribunal to prosecute the witnesses falsely deposing before it. In any case, the reliance by the counsel for the respondents on Section 106 of the Evidence Act is also apposite. The Division Bench of the Calcutta High Court also in State of West Bengal Vs. Board of Revenue, West Bengal 1975 LIC 1162 relied upon Section 106 of the Evidence Act to hold the burden in such cases to be on the establishment. I also find that LPA No.400/2010 preferred against the judgment in Sarswati Construction Co. was dismissed on 2nd June, 2010.

10. I also find the view in Saraswati Construction Co. (supra) to be in consonance with the judgments of the other High Courts. Reference may be made to:-

(a) Chudasma Engineering Works Vs. RPFC, Bangalore 1985 (67) FJR 363 (Karnataka).

(b) Employees’ State Insurance Corporation Vs. Rasu Tools Ltd. (2000) I LLJ 372 (Andhra Pradesh)

(c) Regional Director, ESI Corporation, Bangalore Vs. Malekopmath Metal Forms Private Ltd. 2001 (6) Kar. LJ 139.

(d) Regional Director, ESI Corporation Vs. G. Sivaprasad (2010) I LLJ 279 (Kerala).

(e) Gopi Chand Vs. Employees’ State Insurance Corporation 172 (2010) DLT 565.

(f)  Syndicate Printers Vs. Regional Director, ESI Corporation MANU/TN/0515/2011.

11. Reference may also be made to the Division Bench judgement of the Patna High Court in Bankim Chandra Chakravarty Vs. Regional Provident Fund Commissioner AIR 1958 Patna 314 laying down that once the authorities under the Act have held the number of employees in the establishment to be more than required to bring the establishment within the purview of the Act, it is up to the person challenging the said finding to establish that infact the number is less. A Single Judge of this Court in Laksmi Restaurant Vs. The Regional Provident Funds Commissioner, Delhi 10 (1974) DLT 369 also held that if anybody feels aggrieved by some order and files a petition in the High Court, he must bring sufficient material before the Court to displace the finding and the same has nothing to do with the question of onus of proof before the Provident Funds Commissioner. It was further held that in matters like this, the question of onus of proof is immaterial; the Provident Funds Commissioner is an authority created by the statute who has to administer the statutory provisions according to law and for this purpose he is entitled to collect material by resort to powers under various provisions of law including by examination of the books of accounts and others records of establishments.

12. In the present case, the EPF Authority in the order dated 19th February, 1999 has recorded as to how the petitioner employer dodged the proceedings and failed to appear and produce documents repeatedly. Similarly in the order dated 9th November, 2000 of the EPF Authority also, it is recorded that records maintained by the petitioner establishment are in complete variance with the statement originally made by the same establishment; that though the petitioner claimed most of the employees to be excluded from the purview of the Act but could not submit any proof thereof; that the names and salary reflected in the salary register were totally at variance with the survey account taken from the ledger for the relevant period and the salary records maintained for teaching and non-teaching staff were found to conceal the names of all the employees. The EPF Authority in the said order further recorded that the petitioner did not even reveal the particulars and address of the various persons whose names figured on its records. The EPF Authority accordingly held the petitioner to be guilty of concealment of facts regarding employees and salary, of fabrication of records and of evasion of statutory obligations.