M/S Express Publications (Madurai) Private Limited Vs Union of India (Karnataka High Court)
Karnataka High Court held that any person who is paid wages by the employer would become an employee under the EPF Act whether the said payment is done directly or through a contractor and accordingly EPF would be applicable.
Facts-
The Petitioner filed a petition under Section 26-B of the Employee Provident Fund Scheme, 1952 to determine the issue with regard to existence of employer-employee relationship between the petitioner and the respondent.
Conclusion-
Held that in terms of Subsection (f) of Section 2 of EPF Act (i.e. definition of employee), even a person who is engaged through a contractor being covered under the EPF act, in my considered opinion that if an employer were to employ a person directly on a contractual basis, the EPF Act would apply to such a relationship also more so when there in no exemption issued under sub-section (ff) or (fff) of Section 2.
An employee means any person who is employed for wages to do any kind of work. Thus, it is only the payment and receipt of wages which is important. So long as this dual test is satisfied, any person who is paid wages by the employer would become an employee under the EPF Act whether the said payment is done directly or through a contractor.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
1. The petitioner is before this Court seeking for the following reliefs:
i. Issue a Writ of Certiorari quashing the order dated 29.10.2020 passed by the 2nd respondent bearing No.RO/BG/BNG(Malleshwaram)/Comp/2D/3485/2 020-21/80 (produced as Annexure-J) and;
ii. Pass such other and further orders as deemed fit in the facts and circumstances of the case in the interest of justice and equity.
2. The petitioner is a company which is engaged in the publication of newspapers. 3rd respondent, who is a Photographer, had approached the petitioner offering his services only on a contract basis to do some work on photography which was accepted by the petitioner, and in order to formalise the arrangement, a contract was entered into between the petitioner and the 3rd respondent.
3. 3rd respondent submitted a representation to the Hon’ble Prime Minister of India stating that he was a contract employee of the petitioner but was not enrolled under the Provident fund and as such sought for the Prime Minister’s intervention in release of the provident fund amount.
4. It appears that in pursuance thereof, the matter was referred to 2nd respondent and 2nd respondent issued a summons to the petitioner for enquiry under Section 7-A of the Employees Provident Fun and Miscellaneous Provisions Act [for short referred to as ‘EPF Act’].
5. The petitioner entered appearance and filed a petition under Section 26-B of the Employee Provident Fund Scheme 1952 [hereinafter referred to as ‘Scheme’] to determine the issue with regard to the existence of employer-employee relationship between the petitioner and the respondent. Applications and objections having been filed, written arguments having been filed, after hearing the parties, the 2nd respondent vide its order dated 29.10.2020 held that 3rd respondent is an employee of the petitioner and directed his enrolment to be made by the petitioner under the Scheme. It is aggrieved by the same that the petitioner is before this Court seeking for the aforesaid relief.
6. Ashok Haranahalli, learned Senior counsel appearing for the petitioner submitted that:
6.1. There is no employer-employee relationship between the petitioner and 3rd respondent. To make applicable the EPF Act and or the Scheme, it is required that there is a master-servant relationship established by the employee, and in the absence of the same, 2nd respondent could not have returned a finding on the issue raised by the petitioner under para 26-B of the Scheme holding that 3rd respondent was an employee of the petitioner.
6.2. One of the predominant tests for a person to be classified and/or treated as an employee, there has to be control and supervision by the employer. Insofar as a regular employee is concerned, the petitioner would excise control and supervision, as also disciplinary proceedings could be taken, but insofar as a contractual employee is concerned, the petitioner would not have control or supervision, let alone the right to initiate disciplinary proceedings.
6.3. There are various differences between regular employee and contractual person and refers to the table appended to para 5 of the petition, which is reproduced hereunder for easy reference:
