Case Law Details
Carewell Security Services Private Limited Vs Employees Provident Fund Organization (Madhya Pradesh High Court)
Conclusion: Employer could not camouflage basic wage as part of allowance so as to avoid deduction and contribution under the EPF Act.
Held: Assessee was company incorporated under the provisions of the Companies Act and was engaged in the business of providing security guards to various establishment. A notice was issued by the Regional Provident Fund Commissioner, Indore under the provision of Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred as the Act of 1952) directing the employer to deduct Provident Fund dues from the wages paid to the workman. In the notice, it was also observed that the wages shown by the employer were negligible and were even lesser to the wages prescribed under Minimum Wages Act. The notice was issued to ensure proper payment of Provident Fund dues payable to the workers. Assessee submitted that they were complying with the provisions of the Act of 1952 and they were deducting Provident Fund on the wages paid to the workman and the wages fixed under the Minimum Wages Act could not be made the basis for deducting Provident Fund dues. It was held that the establishment had failed miserably before the Provident Fund Commissioner and before the Tribunal and even before the Court that the allowances in question were being paid to its employees were either variable or were linked to any incentive of production resulting in greater output by an employee and the allowances in question were not paid across the board to all employees in a particular category or were being paid specially to those who avail the opportunity. Resultantly, the employer had camouflaged basic wage as part of allowance so as to avoid deduction and contribution, the Provident Fund Commissioner as well as the Tribunal were justified in the passing the impugned orders. The Act of the 1952 is a beneficial social welfare legislation and had to be treated as such keeping in view the view expressed by the Hon’ble Supreme Court in the case of The Daily Partap v/s The Regional Proident Fund Commissioner, Punjab, Haryana, Himachal Pradesh & Union Territory, Chandigarh reported in (1998) 8 SCC 90. Resultantly, this Court did not find any reason to interfere with the order passed by the Regional Provident Fund Commissioner and the order passed by the Employee Provident Fund Appellate Tribunal. A Division Bench of the MP High Court, placing reliance on the ruling of the Supreme Court in Vivekananda Education Society’d case had held that an employer could not camouflage basic wage as part of allowance so as to avoid deduction and contribution under the EPF Act.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
Regard being had to the similitude in the controversy involved in the present cases, these writ petitions were analogously heard and by a common order, they are being disposed of by this Court. Facts of the Writ Petition No.14287/2010 are narrated hereunder.
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