Hon’ble Supreme Court in the case of Union of India and others v Ogale glass Works 1971 AIR 2577 held that the award of industrial tribunal cannot stand in the way of enforcing the statutory provision cast on the Regional Provident Fund Commissioner under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. In view of that, any agreement entered into between the employer and employees’ union against deduction of PF on the adhoc allowance in question is not binding on this organization.
Supreme Court of India
Union Of India & Anr.
Vs.
Ogale Glass Works
Date Of Judgment – 01/09/1971
Bench: C.A. Vaidyialingam, G.K. Mitter, P. Jaganmohan Reddy
Citation: 1971 AIR 2577, 1972 SCR (1) 525, 1971 SCC (2) 678
ACT: Employees’ Provident Fund Act, 1952-Scope of s. 19A of the Act-Whether decision under s. 19A of the Act by the Central Government is final in the facts and circumstances of the case.
HEADNOTE: The respondent company was manufacturing various articles including. Lantern and Safety Stoves etc. In November 1952, Employees Provident Fund Act, was passed and the company was making regular contributions to the Provident Fund for all employees.
After sometime, another establishment which was carrying on similar business, filed a writ petition in Bombay High Court contesting the claim of the Regional Provident Fund Commissioner, that the Act applied to all sections of the glass works. The Bombay High Court held that the Act and the scheme applied only to such sections of the company as were covered by Sch. 1 of the Act and not to all sections. Against this decision, an appeal was preferred before this
Court and the Court reversed the decision of the High Court and held that the Act and the scheme applied to all employees working under the said glass works. Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., Bhandra, [1962] Supp. 3 S.C.R. 815.
The respondent, although was making contributions in respect of all its employees, discontinued to do so after the decision of the High Court in the above matter, except for those employees who were working in the Lantern and Stove Sections. Thereafter, the employees raised a dispute, and the dispute was referred to the Industrial Tribunal, Maharashtra and the Industrial Tribunal gave its award against the management but exempted the respondent company from contributing for certain years. After the decision of this Court in Shree Krishna Metal Co.’s case, the Regional Provident Fund Commissioner, called upon the respondent to make contributions but the respondent pleaded that there has been already a decision by the Central Government under s. 19A of the Act holding that the Act and the scheme applied only to the Lantern and Stove Sections and therefore the respondent asked for refund of the contributions made for employees of other sections and maintained that the Department was not entitled to call upon the company to make
contributions for the years in question. The Department threatened to take coercive steps and in consequence, respondent filed a writ petition in the Nagpur Bench of the Bombay High Court challenging the demand made by the Regional Provident Fund Commissioner and sought relief.
The High Court held that in view of the Central Governments decision under s. 19A of the Act, the appellants have no right to reopen the question of liability of the respondent. On appeal, the following questions arose for consideration : (i) Whether there has been a decision of the Central Government under s. 19A of the Act. (ii) the effect of the Award passed by the Industrial Tribunal exempting the company from contributing for certain years; (iii) whether the company is liable to pay the administrative charges for the exempted periods. Allowing the appeal, -1340 Sup. CI/71 526
HELD : (1) From the evidence it is clear that there has been no ,final decision by the Central Government under s. 19A of the Act. it was only a limited decision not to apply the Act and the scheme in view ,of the judgment of the Bombay High Court and till the final decision of the appeal by this Court. After the matter is finally disposed of by this Court, the appellants are perfectly justified in demanding contributions for all employees from the respondent in terms of the demand notice. [545 E]
(2) Although the Award passed by the Industrial Tribunal exempted the management from contributing for a certain number of years, it is not relevant for the purpose of applying the Act arid the scheme. Moreover, the appellants were not parties to the award. Since the Act and the scheme applies to all sections of the respondent, the respondent is liable to make contributions at the rate specified in the Act. The rate specified by the Industrial Tribunal is not in accordance with the Act. Therefore, the award of the Industrial Tribunal does not stand in the way of the appellant’s demand for the period in question. [545 G-546 C]
(3) Once the employer is held liable for payment of its share of Provident Fund contribution for the period in question, it will also be liable to pay the administrative charges. [546 B]
JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2591 of 1966.
Appeal from the judgment award order dated September 17, 1965 the Bombay High Court in Special Civil Application No. 380 of 1964.
R. H. Dhebar, Ram Panjwani, S. P. Nayar and P. R. Ram Asish,for the appellants.
V. M. Tarkunde and K. R. Chaudhuri, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. This appeal on certificate, by the Union of India and the Regional Provident Fund Commissioner., Maharashtra State, is directed against the judgment and order dated September 17, 1965 of the Bombay High Court allowinG Special Civil Application No. 380 of 1964 filed by the respondent company under Art. 226 of the Constitution and quashing the notice of demand dated May 22, 1963 issued by the Regional Provident Fund Commissioner. The circumstances under which the writ petition was filed by the respondent may be stated : The respondent a limited company having its Head Office at Ogalawadi in Satara District was manufacturing at the relevant time Glassware, Stoves, Lanterns and Enamel wares. It had several sections in its factory, namely, (1) Glass Manufacturing Section, (2) Lantern and Safety Stoves Section, (3) Enamel Section, (4) General Section and (5) Canteen Section. In or about 1946 the Company had introduced a Provident Fund Scheme for its workers under which it paid 12 pies in a rupee as the employer’s contribution towards the said fund. In 1951 the Provident Fund Scheme was amended and the Company agreed to make contributions to the. fund only if it made profits.
On November 1, 1952, The Employees’ Provident Fund Act, 1952, Act No. XIX of 1952 (hereinafter to be referred to as the Act), came into force and it made applicable to certain scheduled industries. There is no controversy that the Act was made applicable to the respondent on October 6, 1952 and the Company had been paying its contribution to the Employees Provident Fund from November 1, 1952. For the purpose of the Fund, a scheme had been framed under the Act. According to the Regional Provident Fund Commissioner, the Act and the Scheme framed thereunder applied to the entire body of employees working under the respondent. Though the Company then raised objections on the ground that only the employees in the Lantern and Stoves Section were covered by the Scheme and that it was bound to make contributions only in respect of those employees, nevertheless, the Company continued to make its share of contribution to the Provident Fund even in respect of other employees working in other sections.
In the mean while, another establishment in the area, the Nagpur Glass Works, which was carrying on a business similar to that of the respondent company filed a writ petition before the Nagpur Bench of the Bombay High Court under Art. 226 of the Constitution, being Miscellaneous Petition No. 122 of 1956 contesting the claim of the Regional Provident Fund Commissioner that the Act applied to all sections of the Glass Works. In the said writ petition the contention was that the Act and the Scheme will apply only to the Lantern and Stove Section. Though this claim was contested by the Department, a Division Bench of the, Bombay High Court, by its decision dated March 7, 1957 reported in The Nagpur Glass Works Ltd., v. Regional Provident Fund Commis- sioner(1) upheld the contentions of the Nagpur Glass Works that the Act and the Scheme applied only to such sections or departments of the Company as were covered by Schedule The respondent before us continued to make its contribution in respect of All the employees. There was some correspondence between the Company and the Department, to which we will refer later. The Department had challenged the decision of the Bombay High Court before this Court. The decision of the Bombay High Court was reversed by this Court on March 14, 1962 in the decision reported in The Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., Bhandara(2). This Court after referring to the relevant Provisions of the Act including s. 2A which had been introduced by an amendment in 1960 held that the Act applied to composite factories and that the Glass (1) 1. L. R. [1958] Boni. 444.
(2) [1962] Supp. 3 S. C. R. 815, 5 28 Works therein was commercially engaged in a Scheduled industry among others and hence the Act was applicable to it. On this basis, this Court held that all the employees working under the said Glass Works were covered by the Act and the Scheme.
To resume the narrative, after the decision of the Bombay High Court, the respondent began to discontinue making contributions in respect of the employees, other than those working in the Lantern and Stoves Section. The employees raised a dispute regarding the discontinuance of the Provident Fund Scheme and in consequence the State Government referred the dispute to the Industrial Tribunal, Maharashtra, being Reference No. I.D. 29 of 1960. The Industrial Tribunal, by its award dated June 24, 1960, after considering the financial position of the Company, held that for the years, 1951, 1957, 1958 and 1959, the Company should make contributions to the Provident fund at the rate of 8- 1/3 per cent of the basic wages to the workers uncovered by the Scheme under the Act and that the Company need not make any contributions for the years 1950 and 1952 to 1956, as during those years they have suffered loses. It gave a further direction that from March 1, 1960 the Company is to make contribution at 6-1/4` per cent of the wages and Dearness Allowance. The Reference also related to the claim for Dearness Allowance and the Tribunal had adjudicated on that aspect also.
After the decision of this Court, referred to above, rendered on March 14, 1962, the Regional Provident Fund Commissioner, by his letter dated March 22, 1963 called upon the respondent to make its share of the Provident Fund contributions at the statutory rate for the period November 1, 1952 to December 31, 1960 together with administrative charges for the said period. The Company made representations protesting against the demand made, by the Regional Provident Fund Commissioner. In particular, they pleaded that there has been already a decision by the Central Government under S. 19A of the Act holding that the Act and the Scheme apply only to the Lantern and Stoves Section and on the basis of that decision the contributions made by them, under protest, with regard to the employees working in the other sections had been refunded and therefore the department was not entitled to call upon the Company to make contributions for the years in question. They further contested the claim of the department on the ground that the question regarding the liability of the Company to make contributions to the provident fund was the subject of adjudication under the Award of the Industrial Tribunal dated June 24, 1960 and this Award precluded the department from ‘Claiming contributions for the identical period. The Company raised a further objection that even on the basis of the decision of this Court, the Act does not apply to its other sections.
These objections raised by the Company were negatived by the department which threatened to take coercive steps to collect the contributions if the demand, under the order dated May 22, 1963 was not complied with. The respondent, in consequence filed the writ petition in the Nagpur Bench of the Bombay High Court challenging the demand made by the Regional Provident Fund Commissioner by his order dated May 22, 1963 and sought relief for restraining the officers concerned from enforcing the demand and for quashing the said order.
The appellant contested the writ petition on various grounds, but it is only necessary to note that their main plea was that there has been no decision of the Central Government under S. 19A of the Act to the effect that the Act and the Scheme apply only to the Lantern and Stove Section of the respondent. On the other hand, their plea was that the Act and the Scheme had been made applicable to the entire establishment of the respondent comprising all its sections and covering the entire body of workmen employed in the said establishment. The respondent has been making contributions as per the scheme framed under the Act. But i n view of the decision of the Bombay High Court, which they had to respect and obey, they had provisionally decided that the contributions will be collected from the respondent only in respect of those sections, which have been held by the High Court to be governed by the Act. This decision was a purely provisional and tentative one pending the adjudication by this Court regarding the correctness of the decision of the Bombay High Court, which was being challenged by the appellants. It was in view of the Bombay High Court’s judgment that the amounts by way of contributions collected from the respondent in respect of the workmen who were held not to be governed by the Act, were either refunded or adjusted towards his future contributions in respect of those workmen to whom the Act applied. In this connection the appellants relied on the correspondence that passed between them and the respondent as well as the correspondence that the appellant had with the employees’ Union. But after the decision of this Court holding that the Act applies even to a composite establishment, the appellants necessarily had to take up the matter from the stage at which it was left because of the Bombay High Court’s decision and in consequence made demands on the respondent to comply with the provisions of the Act and the Scheme. The appellants further pleaded that the award of the Industrial Tribunal had no relevancy in considering the statutory liability of the respondent under the Act. Further, it was pointed out by them that the principles on which the adjudication was given were not at all in conformity with the Act. Finally, the appellants pleaded that they, having a duty to enforce the provisions of the Act, which was a benevolent measure in the interest of the workmen, issued the demand 5 30 dated May 22, 1963 which is in conformity with the decision of this Court.
The High Court, by its judgment and order under appeal, has held that the letter dated August 19, 1959 sent by the Central Provident Fund Commissioner, New Delhi, to the Regional Provident Fund Commissioner read with the letter dated September 21, 1959 sent by the latter to the respondent clearly shows that there has been a decision under s. 19A of the Act that only the Lantern and Stoves as well as Enamel Sections of the respondent Company would be covered by the provisions of the Act and that the order of the Central Government having become final, the appellants have no right to have the question of liability of the respondent in respect of the other sections reopened. In this view, the High Court did not consider it necessary to go into the question whether the decision of the Central Government as contained in the two letters referred to above, was inconsistent with the provisions of the Act, nor did it think it necessary to consider the effect of the award in I.D. No. 29 of 1960. The High Court rejected the claim of the appellants that the decision not to enforce the Act in respect of the other sections was only a tentative one pending adjudication by this Court regarding the correctness of the Bombay High Court’s judgment. Though it was contended by the respondent that even on the basis of the decision of this Court, the Act and the Scheme will not apply to all sections of its establishment, the High Court rejected that contention on the ground that the manufacture of glass wares, the enamel wares and the lantern and stoves was the industrial activity of the respondent and that to such a case the decision of this Court will apply and that the respondent Company will be governed by the provisions of the Act and the Scheme. Ultimately, the High Court quashed the demand made under the order dated May 22, 1963 and gave directions to the appellants not to enforce the said demand. On behalf of the appellants Mr. R. H. Dhebar, learned coun- sel, very strenuously urged that the High Court has committed a very serious error in construing the letters dated August 19, 1959 and September 21, 1959 as indicating that there has been a decision by the Central Government under s. 19A, accepting the contentions of the respondent. The counsel pointed out that the entire correspondence clearly shows that in view of the decision of the Bombay Hi- gh Court, the respondent’s claim for adjustment of the amount paid by them was provisionally accepted pending the appellants’ appeal in this Court challenging the decision of the Bombay High Court. The counsel further urged that the award of the Industrial Tribunal has no relevancy or bearing in considering the statutory liability of the respondent under the Act. The appellants were not parties to the award and they have got a statutory duty to enforce the provisions of the Act in the interest of the employees. On facts, the counsel urged, there can be no controversy regarding the application of the Act to all the activities of the respondent. Therefore, he pointed out that the demand made by the Regional Provident Fund Commissioner on May 22, 1963 was justified and the demand in any event are for the periods not covered by the industrial adjudication.
Mr. V. M. Tarkunde, learned counsel for the respondent, has supported the judgment of the High Court in full as also the reasons given by the High Court for holding, that there has been a decision by the Central Government under S. 19A. In this connection he referred to certain passages contained in the communications that passed between the appellants and the respondent. The counsel further urged that when the Central Government took a decision under S. 19A, as is evidenced by the letters dated August 19, 1959 and September 21, 1959, that decision was not in any manner inconsistent with the provisions of the Act. The said decision by the Central Government was not a provisional one to abide the adjudication by this Court regarding the Bombay High Court’s judgment. On the other hand, the said decision was a totally independent one taken under s. 19A by the Central Government in respect of the respondent’s establishment in view of the contentions raised by it before the appropriate authorities. The counsel further urged that the liability of the respondent for the period now covered by the demand dated May 22, 1963 was the subject of adjudication by the Industrial Tribunal on a dispute raised by the employees. The award has considered all aspects. and has exempted the respondent from making any contribution for certain years. That decision is binding on the workmen and the award is still in force. The claim made by the appellants is really an attempt made by the employees indirectly to circumvent the decision in I.D. No. 29 of 1960. Finally, the counsel urged that even on the principles laid down by this Court regarding the applicability of the Act, the respondent’s objections regarding their liability in respect of certain sections are valid.
We can straightaway dispose of the last point urged by Mr. Tarkunde that the Act does not apply to all sections of the respondent’s establishment. We have already referred to the decision of the High Court rejecting the contentions of the respondent in this regard and holding that the manufacture of glass material, enamel and lantern and stoves, was the industrial activity of the respondent and that the decision of this Court squarely applies which, in consequence, makes the Act and the Scheme applicable to all sections of the respondent. That is a decision recorded by the High Court on facts and we see no error in this conclusion reached by the High Court.’ Mr. Tarkunde, however, contended that this Court in the case of The Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., Bhandara(1) has held that the Act and the Scheme apply to all the sections of the glass works on the basis of s. 2A, which was inserted in the Act, with effect from December 31, 1960 by the Employees Provident Fund (Amendment) Act, 1960 (Act 46 of 1960). Section 2A is as follows “2A Establishment to include all departments and branches:
For the removal of doubts, it is hereby declared that where an establishment consists of different departments or has branches, whether situate in the same place or in different, places, all such departments or branches shall be treated as parts of the same.”
As the said section takes effect only from December 31, 1960, the counsel argued, that the decision of this Court does not apply to the respondent for the years in respect of which the demand is made. We are not inclined to accept this contention of the learned counsel. This Court has elaborately considered the various provisions of the Act, and having due regard to the activities of the Company with which they were dealing held that the Act applies to a composite factory. No doubt this Court has also referred to s. 2A, which has been added by the Amendment Act 46 of 1960 only for the purpose of emphasising that the said provision makes it clear that an establishment may consist of different departments or may have different branches, whether situated in the same place or in different places and yet all such departments or branches shall be treated as parts of the same establishment. Reference to this Section has been made only for the purpose of giving an additional reason for negativing the contention that the establishment under s.. 1(3) (a) does not contemplate a composite factory. Therefore, it follows that the Act and the Scheme fully apply to a composite establishment like that of the respondent, as held by this Court, in the decision referred to above.
Two questions now fall, to be considered in this appeal, namely, (i) whether there has been a decision of the Central Government under S. 19A of the Act as contended by the respondent, and (ii) the effect of the award in I.T. No. 29 of 1960. In ,order to appreciate the contentions of the learned counsel on both sides, it is necessary to refer to the material provisions of the Act and also to the correspondence that passed between the appellants and the respondent.
The Act, as its preamble shows is to provide for the institution ,of provident fund for the employees in factories and other establishments. Sub-section 3 of S. 1 provides for the applicability (1) [1962] Supp. 3 S.C.R. 815.
of the Act to the establishments referred to therein. There is no controversy that the Act has been made applicable to the respondent Company on October 6, 1952 and the Company has been paying its share of contribution to the employees provident fund from November 1, 1952.
Section 2 defines the various expressions. In particular four expressions require to be noticed, namely, “contribution” “scheme” ,’member’ ‘and “fund”. Under s. 2(c) “contribution” means a contribution payable in respect of a member under a Scheme. Under s. 2(1) “Scheme” means a Scheme framed under the Act. Under s. 2(j) “member” means a member of the fund and under s. 2(h) “Fund” means the provident fund established under a Scheme. We have already pointed out that s. 2A. has also been referred to by this Court in The Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., Bhandara(1) for holding that the Act applies to a composite establishment.
Section 5 deals with the framing of a Scheme by the Central Government called “Employees Provident Fund Scheme”. Under sub-s. 2 of s. 5, a scheme framed under sub-section (1) can provide that any of the provisions shall take effect either prospectively or retrospectively from such date as may be specified in this behalf in the Scheme. Sections 5A to 5C deal with the constitution of the Central Board, the State Board and treating the Board of Trustees a body corporate, Section 5D(i) empowers the Central Government to appoint a Central Provident Fund Commissioner who is to be the Chief Executive Officer of the Central Board and to work subject to the general control and superintendence of the Central Board. Sub-section (2) of s. 5D similarly empowers the Central Government to appoint Provident Fund Commissioners, Regional Provident Fund Commissioners and other officers to assist the Central Provident Fund Commissioner in the discharge of his duties. Section 5E provides for the Central Board, with the prior approval of the Central Government and a State Board with the prior approval of the State Government to delegate to its Chairman or any of its officers such of its powers and functions under the Act as are necessary for the efficient administration of the Scheme.
Section 6 deals with the contributions to be paid by the employer to the fund. It is to be at 6-1/4% of the basic wages and Dearness Allowance and Returning Allowance, if any, for the time being payable to the employees. It also provides for the employees contribution to be equal to the contribution payable by the employer. At this stage it may be mentioned that during the period for which the demand has been made contribution is to be (1) [1962] Supp. 3 S.C.R.815.
made at 6-1/4% of the basic wages including Dearness Allowance, though the expression “Basic Wages” under S. 2B excludes Dearness Allowance. In I.T. No. 29 of 1960 the Tribunal, even for the years for which the contribution has been directed to be made, has fixed it only on the basic wages excluding Dearness Allowance.
Under s. 7A the officers mentioned therein have been em- powered to determine the amount due from any employer under any provision of the Act or of the Scheme. Section 8 deals with the manner of recovery of the amount due from the employer. Section 19 provides for the appropriate government delegating any power, authority or jurisdiction exercisable by it under the Act or the Scheme to the appropriate offices mentioned therein.
Section 19A, under which, according to the respondent, a decision has been taken by the Central Government regarding non-applicability of the Act to some of its sections, disputed by it, runs as follows:
