whether the contractual employees of the AppellantCompany are entitled to provident fund benefits under the Pawan Hans Employees Provident Fund Trust Regulations or under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF
Act”) and the Employees’ Provident Fund Scheme, 1952 (“EPF Scheme”) framed thereunder. ? - yes
We pass the following directions to effectuate the reliefs
granted:
(i) The interests of justice would be best subserved if the
benefit of Provident Fund is provided to the members
of the RespondentUnion, and other similarly situated
contractual employees, from January 2017 when the
Writ Petition was filed before the High Court.
(ii) Respondent No.3 the Regional Provident Fund
Commissioner, Regional Office, Bhavishya Nidhi
Bhawan, 341 Bandra (E), Mumbai is directed to
determine and compute the amount to be deposited by
the Company on the one hand, and the members of
the RespondentUnion and other similar situated
employees on the other hand. The computation would
be required to be made for the past period i.e. January
2017 to December 2019;
(iii) The Company shall be liable to pay Simple Interest @
12% p.a. on the amount payable by it towards
contribution of provident fund for the past period, i.e.,
24
January 2017 to December 2019, as per Section 7Q of
the EPF Act,1952 ;
(iv) The statement of computation made by Respondent
No.3 will be placed before this Court within a period of
12 weeks from the date of this Judgment, and
thereafter the matter will be listed for issuance of
necessary directions, so that the amount can be
remitted from the deposit made before this Court,
directly to the PF Trust;
(v) The employees will be obligated to deposit their
matching contribution for the past period i.e. January
2017 to December 2019, within a period of 12 weeks
along with interest @ 6% p.a., after the contribution of
the Company has been remitted to the PF Trust;
(vi) With respect to the period from January 2020
onwards, the Company and the members of the
RespondentUnion as also other similary situated
employees, will make their respective contributions as
per the PF Trust Regulations;
(vii) The benefit shall not be extended to those employees
who have superannuated, expired, resigned, or ceased
25
to be in the employment of the Company on the date of
this Judgment ;
(viii) We consider it appropriate to award Costs of
Rs.5,00,000 (Rupees Five Lacs) to the RespondentUnion towards litigation expenses incurred in the High
Court and in this Court.
(ix) After the aforesaid amounts are disbursed, the balance
amount lying deposited in this Court shall be refunded
to the AppellantCompany.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 353 of 2020
(Arising out of SLP (C) No. 381 of 2019)
M/S. PAWAN HANS LIMITED & ORS. …APPELLANTS
Versus
AVIATION KARMACHARI SANGHATANA
& ORS. …RESPONDENTS
J U D G M E N T
INDU MALHOTRA, J.
Leave granted.
1. The issue which arises for consideration is whether the
contractual employees of the AppellantCompany are entitled to
provident fund benefits under the Pawan Hans Employees
Provident Fund Trust Regulations or under the Employees’
Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF
Act”) and the Employees’ Provident Fund Scheme, 1952 (“EPF
Scheme”) framed thereunder.
1
2. The background facts in which the present Civil Appeal has
been filed are as under :
2.1 The Company was incorporated on 15.10.1985 under the
Companies Act, 1956, and is registered as a Government of
India company with the Registrar of Companies, Delhi. The
Government of India holds 51% shareholding in the
AppellantCompany and the remaining 49% is held by Oil
and Natural Gas Company Ltd. (ONGC).
The Company was incorporated with the primary
objective of providing helicopter support services to the oil
sector for its offshore exploration operations, services in
remote and hilly areas, and charter services for promotion
of tourism. It is classified as a nonscheduled operator
under Rule 134 of the Aircraft Rules, 1937.
2.2 On 01.04.1986, the AppellantCompany framed and
notified the Pawan Hans Employees Provident Fund Trust
Regulations (hereinafter referred to as “the PF Trust
Regulations”) for giving provident fund benefits to all the
employees of the AppellantCompany.
Regulations 1.3 and 2.5 of the PF Trust Regulations are
set out hereunder for ready reference:
2
“1.3 These Regulations shall apply to all the employees of
the Corporation.
2.5. – “Employee” means any person who is employed for
wages/salary in any kind of work, monthly or otherwise, in
or in connection with the work of the Corporation and who
gets his wages/salary directly or indirectly from the
Corporation, and excludes any person employed by or
through a contractor or in connection with the work of the
Corporation but does not include any person employed as an
apprentice or trainee.”
[emphasis supplied]
2.3 On 26.03.1987, the AppellantCompany instituted the
Pawan Hans Employees Provident Fund Trust (“PF Trust”)
wherein the management started depositing its share
towards the provident fund contribution with respect to
employees on the regular cadre of the Company;
correspondingly, the regular employees started depositing
the matching contribution with the PF Trust.
2.4 Out of a total workforce of 840 employees, the Company
had engaged 570 employees on regular basis, while 270
employees were engaged on ‘contractual’ basis.
The Company implemented the PF Trust Regulations
only with respect to the regular employees, even though
the term “employee” had been defined to include “any
3
person” employed “directly or indirectly” under the PF
Trust Regulations.
2.5 The Company having framed its own PF Trust Regulations,
was claiming exemption from the applicability of the EPF
Act and EPF Scheme under Section 16 of the EPF Act.
2.6 On 08.01.1989, the Ministry of Labour, Government of
India, issued a communication to the Central Provident
Fund Commissioner, New Delhi, pertaining to the grant of
exemption to departmental undertakings under the control
of the Central/State Government statutory bodies. The
Central Provident Fund Commissioner was directed to
instruct the Regional Provident Fund Commissioners to
carefully review the cases of departmental undertakings
and statutory bodies falling under the categories specified
in Section 16(1)(b) and 16(1)(c) of the EPF Act, and take
further action as indicated in the said letter.
Clause (iv) of the said letter dated 08.01.1989 is of
relevance, and is extracted hereunder for ready reference:
“(iv) There may be establishments which employ large
member of casual/contingent staff, who are not entitled to
the benefit of provident fund or pension. The
casual/contingent staff of such establishment will
continue to be covered under the Act, but their regular
employees who are entitled to the benefit of provident fund
or pension should be excluded from the purview of the
Act.”
4
[emphasis supplied]
2.7 The Central Government, in exercise of the powers under
S.1(3)(b) of the EPF Act, issued a Notification dated
22.03.2001, making the provisions of the EPF Act
applicable to aircraft or airlines establishments employing
20 or more persons, excluding aircraft or airlines
establishments owned or controlled by the Central or State
Government.
The Gazette Notification No. SO 746 dated 22.03.2001
(“Notification”) is extracted for ready reference:
“ S.O. 746 – In exercise of the powers conferred by
clause (b) of sub section (3) of Section 1 of the
Employees Provident Fund and Miscellaneous
Provisions Act 1952 (19 of 1952), the Central
Government hereby specifies the following
establishment employing 20 or more persons as the
class of establishments to which the said Act shall
apply with effect from 1st April 2001 namely:
(i) An establishment engaged in rendering courier services;
(ii) An establishment of aircraft or airlines other than the
aircraft airlines owned or controlled by the Central or
State Government.
(iii) An establishment engaged in rendering cleaning and
sweeping services.”
[emphasis
supplied]
The said Notification was brought into force w.e.f
01.04.2001.
2.8 Correspondingly, amendments were made to the EPF
Scheme framed under Section 5 of the EPF Act. Clause 3
5
(b)(ci) was inserted vide Notification No. S35016/1/1997
SS II dated 22.07.2002, by which the EPF Scheme was
made applicable to aircraft or airlines establishments other
than the aircraft or airlines establishments owned or
controlled by the Central or State Government.
2.9 The members of the RespondentUnion made several
representations on 18.09.2012, 29.09.2012, 13.03.2013,
19.11.2014 to extend the benefit of the PF Trust
Regulations since they were directly engaged by the
Company on contractual basis, some of whom were
working for almost 20 years.
The Company failed to respond to the representations.
2.10 Being aggrieved by the inaction of the Company, the
RespondentTrade Union, filed CWP No.325 of 2017 on
20.12.2016 against the Company praying for the following
reliefs:
“(a) A declaration that the members of the RespondentTrade Union and other similarly situated employees,
employed on contract basis by the AppellantCompany are
entitled to the benefit of Provident Fund as per the EPF Act
and the EPF Scheme, and that the AppellantCompany be
directed to forthwith enrol all such eligible contract
employees under the EPF Scheme and deposit their
contribution with the Respondent No. 3 Regional Provident
6
Fund Commissioner, Employees’ Provident Fund
Organisation, from the date they are eligible till remittance,
and thereafter, till they are in the employment of the
AppellantCompany.
(b) Alternatively, the AppellantCompany forthwith be
directed to suitably amend the PF Trust Regulations to permit
the enrolment of contract workers as members of the PF
Trust instituted by the AppellantCompany and to make all
eligible contract employees members of the PF Trust from
their respective dates of entitlement and continue to
contribute amounts to the PF Trust in respect of contract
employees.”
2.11 During the pendency of the Writ Petition, the Regional
Provident Fund Commissioner, Bandra issued a letter
dated 24.05.2017 to the Company wherein it was stated
that even though the EPF Act would not apply to
establishments owned/controlled by the Central
Government as per S.16(1)(b) and (c), however social
security benefits such as provident fund must be provided
to all “employees/workers who are engaged on
contractual/casual/daily wages basis” since there is no
distinction between a person employed on permanent,
temporary, contractual, or casual basis under S.2 (f) of the
EPF Act.
2.12 The High Court vide the impugned Judgment & Order
dated 12.09.2018 allowed the Writ Petition in terms of
prayer (a), with the direction that the benefits under the
7
EPF Act be extended to the members of the RespondentTrade Union, and other similarly situated employees. It
was held that a liberal view must be taken in extending
social security benefits to the contractual employees. The
High Court directed the Company to enrol all eligible
contractual employees under the EPF Scheme, and deposit
their contribution with Respondent No.3 – Regional
Provident Fund Commissioner from the date they became
eligible till remittance, and thereafter till they are in
employment of the Company. This was to be carried out
latest by 31.12.2018.
3. Aggrieved by the impugned Judgment, the AppellantCompany filed the present Civil Appeal.
This Court vide Order dated 14.01.2019 issued notice
and granted stay of the impugned Judgment subject to the
Company depositing a sum of Rs.5,00,00,000/ (Rupees Five
Crores) within 3 months in this Court.
Pursuant thereto, the Company deposited the said
amount on 09.04.2019, which has been invested in a Fixed
Deposit.
8
4. We have heard the learned counsel for both the parties, and
have considered the oral and written submissions made on
their behalf.
4.1 Ms. Pinky Anand, learned Additional Solicitor General of
India, appearing for the AppellantCompany inter alia
submitted that:
a) The Company is excluded from the applicability of the
EPF Act since it neither falls under Schedule I of the
EPF Act, nor is it covered by Notification dated
22.03.2001 issued under Section 1(3)(b) of the EPF
Act, since the Notification itself expressly excludes
airline companies “owned or controlled by the Central
Government” from the purview of the EPF Act.
b) The Notification 22.03.2001 was inapplicable to the
AppellantCompany since Section 16(1)(b) of the EPF
Act, excludes an establishment owned or controlled
by the Central Government from the scope of the EPF
Act.
c) The Central Government holds 51% of the
shareholding in the AppellantCompany, and the
Board of Directors of the AppellantCompany have
9
been appointed by the Ministry of Civil Aviation. The
AppellantCompany is governed by the guidelines
issued by the Department of Public Enterprises,
Government of India. The AppellantCompany is thus
an establishment owned and controlled by the Central
Government. Even after the EPF Act became
applicable to the airlines industry, the AppellantCompany being an establishment owned and
controlled by the Central Government, was excluded
from the purview of the EPF Act.
d) The High Court committed a grave error in giving
retrospective application to the provisions of the EPF
Act, i.e., from the date of the members joining the
RespondentTrade Union, given that several
contractual employees had superannuated, passed
away, resigned, or ceased to be in the employment of
the Company. The extension of benefits under the
EPF Act to contractual employees irrespective of their
status of employment with the Company was wholly
illegal, arbitrary, and liable to be set aside.
10
e) The members of the RespondentUnion and other
similarly situated employees have already been paid
in full their monthly financial benefits/emoluments.
The direction of the High Court to the Company to
contribute to the provident fund of the contractual
employees would amount to burdening the Company
with twice the liability.
4.2 Mr. P.S. Narasimha, learned Senior Counsel appearing
on behalf of the RespondentUnion inter alia submitted
that:
a) The term “employee” defined by Clause 2.5 of the PF
Trust Regulations is widely defined to cover all
employees, including those engaged on contractual
basis, who are in the direct or indirect employment of
the Company. The members of the RespondentUnion
are in direct employment of the Company, since they
have not been engaged through any contractor. The
contractual workers are paid directly as evidenced by
the pay slips issued by the Company. The benefits
under the PF Trust Regulations, or the EPF Act, are
required to be provided to even contractual employees
11
from the date of their joining till the date of
remittance.
b) The Company is not controlled by the Central
Government since its affairs are managed and
controlled by a Board of Directors. The Company is
not a company controlled by the Central Government.
The Notification dated 22.03.2001, specified
certain establishments including the airlines industry,
other than airlines owned or controlled by the Central
or State Government, to be covered under the EPF
Act. Consequently, the Company was obligated to
extend the benefits under the EPF Act to all its
employees.
c) The EPF Act is a beneficial piece of legislation, which
has to be liberally construed. The denial of statutory
benefits and entitlements like provident fund to the
members of the RespondentUnion is exfacie illegal,
arbitrary, discriminatory and in violation of the
provisions of the EPF Act and the Constitution of
India.
12
5 The issue which arises for consideration in the present Civil
Appeal is whether the AppellantCompany is under a
statutory obligation to provide the benefit of provident fund
to its contractual employees under the PF Trust Regulations
or the EPF Act?
If so, the date from which the aforesaid benefit is to be
extended to the contractual employees.
6 Discussion and Analysis
6.1 It is first required to be seen whether the AppellantCompany is excluded from the applicability of the provisions
of the EPF Act and the EPF Scheme framed thereunder as
contended by them.
6.2 As per Section 1(3) of the EPF Act, the EPF Act is applicable
to every establishment in which 20 or more persons are
employed, which is either a factory engaged in any industry
specified in Schedule I, or an establishment which the
Central Government may by notification in the Official
Gazette specify in that behalf. Section 1(3) of the EPF Act
reads as:
“Section.1(3) : Subject to the provisions contained in section
16, it applies —
13
(a) to every establishment which is a factory engaged in
any industry specified in Schedule I and in which twenty or
more persons are employed, and
(b) to any other establishment employing twenty or more
persons or class of such establishments which the Central
Government may, by notification in the Official Gazette,
specify in this behalf:
Provided that the Central Government may, after
giving not less than two months’ notice of its intention so to
do, by notification in the Official Gazette, apply the
provisions of this Act to any establishment employing such
number of persons less than twenty as may be specified in
the notification.”
[emphasis supplied]
Section 1(3) is subject to Section 16 of the EPF Act.
Subsection (1) of Section 16 enlists those establishments
which are excluded from the applicability of the EPF Act. As
per clause (b) of subsection (1), an establishment belonging
to or under the control of the Central or State Government,
and whose employees are entitled to the benefit of
contributory provident fund in accordance with any scheme
or rules framed by the Central or State Government
governing such benefits, is excluded from the purview of the
EPF Act.
Subsection (1) of Section 16 reads as:
“Section 16. Act not to apply to certain establishment.
–
(1)This Act shall not apply
14
(a) to any establishment registered under the Cooperative
Societies Act, 1912 (2 of 1912), or under any other law
for the time being in force in any State relating to
cooperative societies employing less than fifty persons
and working without the aid of power; or
(b) to any other establishment belonging to or under the
control of the Central Government or a State
Government and whose employees are entitled to the
benefit of contributory provident fund or old age
pension in accordance with any Scheme or rule framed
by the Central Government or the State Government
governing such benefits; or
(c) To any other establishment set up under any Central,
Provincial or State Act and whose employees are
entitled to the benefits of contributory provident fund or
old age pension in accordance with any scheme or rule
framed under that Act governing such benefits;
(2) If the Central Government is of opinion that having
regard to the financial position of any class of
establishment or other circumstances of the case, it is
necessary or expedient so to do, it may, by notification
in the Official Gazette, and subject to such conditions,
as may be specified in the notification, exempt, whether
prospectively or retrospectively, that class of
establishments from the operation of this Act for such
period as may be specified in the notification.”
[emphasis supplied]
This Court in Regional Provident Fund Commissioner v.
Sanatan Dharam Girls Secondary School 1
laid down a twintest for an establishment to seek exemption from the
provisions of the EPF Act, 1952. The twin conditions are:
1 (2007) 1 SCC 268 : (2007) 1 SCC (L&S) 167
15
First, the establishment must be either “belonging to” or
“under the control of” the Central or the State Government.
The phrase “belonging to” would signify “ownership” of the
Government, whereas the phrase “under the control of”
would imply superintendence, management or authority to
direct, restrict or regulate.2
Second, the employees of such an establishment should
be entitled to the benefit of contributory provident fund or
old age pension in accordance with any scheme or rule
framed by the Central Government or the State Government
governing such benefits.
If both tests are satisfied, an establishment can claim
exemption/exclusion under Section 16(1)(b) of the EPF Act.
Applying the first test to the instant case, the Central
Government has a 51% ownership in the AppellantCompany, while the balance 49% is owned by the ONGC, a
Central Government PSU.
As per Section 2(45) of the Companies Act, 2013, a
“Government Company” means any company in which not
less than 51 % of the paidup share capital is held by the
Central Government. Since 51% of the shares of the
2 Shamrao Vithal Coop. Bank Ltd. v. Kasargode Panduranga Maliya, (1972) 4 SCC 600
16
AppellantCompany are owned by the Central Government,
the first test is satisfied as the AppellantCompany can be
termed as a Government Company under Section 2(45) of
the Companies Act, 2013.
With respect to the second test, it is relevant to note
that the Company had its own Scheme viz. the Pawan Hans
Employees Provident Fund Trust Regulations in force. The
Company however restricted the application of the PF Trust
Regulations to only the ‘regular’ employees. The PF Trust
Regulations of the Company were not framed by the Central
or State Government, nor were they applicable to all the
employees of the Company, so as to satisfy the second test.
The Regional Provident Fund Commissioner, Bandra
issued letter dated 24.05.2017 addressed to the Company
wherein it was stated that the benefit of contributory
provident fund was not being provided to
contractual/casual employees of the Company; and was
directed to implement the provisions of the EPF Act.
The relevant extract from the letter is set out
hereinbelow:
“approximately 370400 employees have been engaged by
M/s Pawan Hans Ltd. on contract basis in various cadres.
17
But no social security benefit is being extended to them.
The EPF & MP Act, 1952 under Section 2(f) lays down that
any person employed for wages in any kind of work in or
in connection with the work of the establishment and
includes a worker engaged by or through a contractor.
There is no distinction between a person employed on
permanent, temporary, contractual or casual basis under
Section 2(f) of the EPF & MP Act, 1952.
You are therefore, requested to implement the
provisions of the EPF & MP Act, 1952 in respect of all the
contractual/causal employees engaged by M/s Pawan
Hans Ltd. who are still not getting benefits of PF and
Pension.”
[emphasis supplied]
In our view, the Company does not satisfy the second
test, since the members of the RespondentUnion and other
similarly situated contractual workers were not getting the
benefits of contributory provident fund under the PF Trust
Regulations framed by the Company, or under any Scheme
or any rule framed by the Central Government or the State
Government. Consequentially, the exemption under Section
16 of EPF Act would not be applicable to the AppellantCompany.
In view of the above discussion, we hold that the
Company has failed to make out a case of exclusion from
the applicability of the provisions of the EPF Act.
6.3 The next issue which arises for consideration is whether the
members of the RespondentTrade Union are entitled to the
18
benefit of Provident Fund under the PF Trust Regulations or
under the EPF Act.
Clause 1.3 of the Regulations would show that the PF
Trust Regulations were made applicable to “all employees”
of the AppellantCompany.
Clause 2.5 of the Regulations, defines an “employee”,
to include any employee who is employed for wages/salary
in any kind of work, monthly or otherwise, or in connection
with the work of the Company, and who gets his
wages/salary directly or indirectly from the Company.
Clause 2.5 excludes only a person employed by or through a
contractor in connection with the work of the Company, and
any person employed as an apprentice or trainee.
In the present case, the RespondentUnion submitted
that even though the appointment letters refer to the
employees as ‘contractual’ employees, they were not
engaged through any contractor. They were being paid
directly by the Company, which is evidenced from the payslips issued to them. It was submitted that about 250
contractual employees receive wages directly from the
19
Company, and are eligible to be included under the PF Trust
Regulations framed by the Company.
6.4 We find that the members of the RespondentUnion have
been in continuous employment with the Company for long
periods of time. They have been receiving wages/salary
directly from the Company without the involvement of any
contractor since the date of their engagement. The work
being of a perennial and continuous nature, the
employment cannot be termed to be ‘contractual’ in nature.
In our considered view, Clause 2.5 of the PF Trust
Regulations would undoubtedly cover all contractual
employees who have been engaged by the Company, and
draw their wages/salary directly or indirectly from the
Company.
6.5 As per Section 2(f) of the EPF Act, the definition of an
‘employee’ is an inclusive definition, and is widely worded to
include “any person” engaged either directly or indirectly in
connection with the work of an establishment, and is paid
wages.3
3 SubRegional Provident Fund Office v. Godavari Garments Ltd., (2019) 8 SCC 149 : (2019) 2
SCC (L&S) 483; M/s P.M. Patel & Sons and Ors. v. Union of India and Ors (1986) 1 SCC 32.
20
In view of the above discussion, we find that the
members of the RespondentUnion and all other similarly
situated contractual employees, are entitled to the benefit of
provident fund under the PF Trust Regulations or the EPF
Act. Since the PF Trust Regulations are in force and are
applicable to all employees of the Company, it would be
preferable to direct that the members of the RespondentUnion and other similarly situated contractual employees
are granted the benefit of provident fund under the PF Trust
Regulations so that there is uniformity in the service
conditions of all the employees of the Company.
6.6 The question which now arises is the date from which the
benefit of provident fund is to be extended to the
contractual employees.
This Court vide Order dated 24.10.2019 had passed the
following Order:
“Provident Fund is normally managed on actuarial basis;
the contributions received from employer and the
employee are invested and the income by way of interest
forms the substantial fund through which any payout is
made. For all these years the Fund in question was
subsisting on contributions made by the other employees
and, if at this stage, the benefit in terms of the judgment
of the High Court is extended with retrospective effect, it
may create imbalance. Those who had never contributed
at any stage would now be members of the fund. The
21
fund never had any advantage of their contributions and
yet the fund would be required to bear the burden in case
any payout is to be made. Even if concerned employees
are directed to make good contributions with respect to
previous years with equivalent matching contribution
from the employer, the fund would still be deprived of the
interest income for past several years in respect of such
contributions.
In order to have clear perspective in the matter
and to see if there could be any solution to the problem
as posed above, we call upon the petitioner to depute a
person who is well versed in the matter and who has
been managing the Provident Fund Scheme of Pawan
Hans Limited to have a dialogue with the respondent
No.3 before 15.11.2019 (a representative of the
respondent(s) is also at liberty to remain present during
such discussion) so that a workable solution could then
be presented by such person and the representative of
respondent No.3 before us on the next occasion.
List the matter on 29.11.2019 at 10.30 a.m.”
6.7 The learned ASG submitted that no workable solution could
be worked out at the meeting held between the
representative of the AppellantCompany, Respondent No.3,
and the representative of the RespondentUnion. The
learned ASG however offered that the AppellantCompany
was willing to extend the benefit under the PF Trust
Regulations to the members of the RespondentUnion and
other similarly situated employees, from the date of the
impugned Judgment.
6.8 Respondent No.3 – the Regional Provident Fund
Commissioner submitted that since the Company had
22
remained out of the purview of the EPF Act, the direction to
deposit contribution from the date of eligibility of the
contractual employees till the date of remittance was not
workable, and could not be sustained.
7 After hearing the parties at length, and in light of the
peculiar facts and circumstances of this case, we affirm the
Judgment & Order dated 12.09.2018 passed by the Bombay
High Court in W.P.No.325/2017 holding that members of
the RespondentUnion are covered by the EPF Act. However,
we modify the direction of the High Court to grant the
benefits under the EPF Act, and direct that the members of
the RespondentUnion and other similarly situated
contractual employees be enrolled under the Pawan Hans
Employees Provident Fund Trust Regulations so that there
is uniformity in the conditions of service of all employees of
the AppellantCompany.
Furthermore, the direction of the High Court to pay the
contribution from the date of their eligibility till the date of
remittance is also modified in terms of the directions given
in this Judgment.
23
8 We pass the following directions to effectuate the reliefs
granted:
(i) The interests of justice would be best subserved if the
benefit of Provident Fund is provided to the members
of the RespondentUnion, and other similarly situated
contractual employees, from January 2017 when the
Writ Petition was filed before the High Court.
(ii) Respondent No.3 the Regional Provident Fund
Commissioner, Regional Office, Bhavishya Nidhi
Bhawan, 341 Bandra (E), Mumbai is directed to
determine and compute the amount to be deposited by
the Company on the one hand, and the members of
the RespondentUnion and other similar situated
employees on the other hand. The computation would
be required to be made for the past period i.e. January
2017 to December 2019;
(iii) The Company shall be liable to pay Simple Interest @
12% p.a. on the amount payable by it towards
contribution of provident fund for the past period, i.e.,
24
January 2017 to December 2019, as per Section 7Q of
the EPF Act,1952 ;
(iv) The statement of computation made by Respondent
No.3 will be placed before this Court within a period of
12 weeks from the date of this Judgment, and
thereafter the matter will be listed for issuance of
necessary directions, so that the amount can be
remitted from the deposit made before this Court,
directly to the PF Trust;
(v) The employees will be obligated to deposit their
matching contribution for the past period i.e. January
2017 to December 2019, within a period of 12 weeks
along with interest @ 6% p.a., after the contribution of
the Company has been remitted to the PF Trust;
(vi) With respect to the period from January 2020
onwards, the Company and the members of the
RespondentUnion as also other similary situated
employees, will make their respective contributions as
per the PF Trust Regulations;
(vii) The benefit shall not be extended to those employees
who have superannuated, expired, resigned, or ceased
25
to be in the employment of the Company on the date of
this Judgment ;
(viii) We consider it appropriate to award Costs of
Rs.5,00,000 (Rupees Five Lacs) to the RespondentUnion towards litigation expenses incurred in the High
Court and in this Court.
(ix) After the aforesaid amounts are disbursed, the balance
amount lying deposited in this Court shall be refunded
to the AppellantCompany.
The present civil appeal along with all pending
applications, if any, stand disposed of.
Ordered accordingly.
...…...............………………J.
(UDAY UMESH LALIT)
.......................................J.
(INDU MALHOTRA)
New Delhi;
January 17, 2020.
26
Act”) and the Employees’ Provident Fund Scheme, 1952 (“EPF Scheme”) framed thereunder. ? - yes
We pass the following directions to effectuate the reliefs
granted:
(i) The interests of justice would be best subserved if the
benefit of Provident Fund is provided to the members
of the RespondentUnion, and other similarly situated
contractual employees, from January 2017 when the
Writ Petition was filed before the High Court.
(ii) Respondent No.3 the Regional Provident Fund
Commissioner, Regional Office, Bhavishya Nidhi
Bhawan, 341 Bandra (E), Mumbai is directed to
determine and compute the amount to be deposited by
the Company on the one hand, and the members of
the RespondentUnion and other similar situated
employees on the other hand. The computation would
be required to be made for the past period i.e. January
2017 to December 2019;
(iii) The Company shall be liable to pay Simple Interest @
12% p.a. on the amount payable by it towards
contribution of provident fund for the past period, i.e.,
24
January 2017 to December 2019, as per Section 7Q of
the EPF Act,1952 ;
(iv) The statement of computation made by Respondent
No.3 will be placed before this Court within a period of
12 weeks from the date of this Judgment, and
thereafter the matter will be listed for issuance of
necessary directions, so that the amount can be
remitted from the deposit made before this Court,
directly to the PF Trust;
(v) The employees will be obligated to deposit their
matching contribution for the past period i.e. January
2017 to December 2019, within a period of 12 weeks
along with interest @ 6% p.a., after the contribution of
the Company has been remitted to the PF Trust;
(vi) With respect to the period from January 2020
onwards, the Company and the members of the
RespondentUnion as also other similary situated
employees, will make their respective contributions as
per the PF Trust Regulations;
(vii) The benefit shall not be extended to those employees
who have superannuated, expired, resigned, or ceased
25
to be in the employment of the Company on the date of
this Judgment ;
(viii) We consider it appropriate to award Costs of
Rs.5,00,000 (Rupees Five Lacs) to the RespondentUnion towards litigation expenses incurred in the High
Court and in this Court.
(ix) After the aforesaid amounts are disbursed, the balance
amount lying deposited in this Court shall be refunded
to the AppellantCompany.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 353 of 2020
(Arising out of SLP (C) No. 381 of 2019)
M/S. PAWAN HANS LIMITED & ORS. …APPELLANTS
Versus
AVIATION KARMACHARI SANGHATANA
& ORS. …RESPONDENTS
J U D G M E N T
INDU MALHOTRA, J.
Leave granted.
1. The issue which arises for consideration is whether the
contractual employees of the AppellantCompany are entitled to
provident fund benefits under the Pawan Hans Employees
Provident Fund Trust Regulations or under the Employees’
Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF
Act”) and the Employees’ Provident Fund Scheme, 1952 (“EPF
Scheme”) framed thereunder.
1
2. The background facts in which the present Civil Appeal has
been filed are as under :
2.1 The Company was incorporated on 15.10.1985 under the
Companies Act, 1956, and is registered as a Government of
India company with the Registrar of Companies, Delhi. The
Government of India holds 51% shareholding in the
AppellantCompany and the remaining 49% is held by Oil
and Natural Gas Company Ltd. (ONGC).
The Company was incorporated with the primary
objective of providing helicopter support services to the oil
sector for its offshore exploration operations, services in
remote and hilly areas, and charter services for promotion
of tourism. It is classified as a nonscheduled operator
under Rule 134 of the Aircraft Rules, 1937.
2.2 On 01.04.1986, the AppellantCompany framed and
notified the Pawan Hans Employees Provident Fund Trust
Regulations (hereinafter referred to as “the PF Trust
Regulations”) for giving provident fund benefits to all the
employees of the AppellantCompany.
Regulations 1.3 and 2.5 of the PF Trust Regulations are
set out hereunder for ready reference:
2
“1.3 These Regulations shall apply to all the employees of
the Corporation.
2.5. – “Employee” means any person who is employed for
wages/salary in any kind of work, monthly or otherwise, in
or in connection with the work of the Corporation and who
gets his wages/salary directly or indirectly from the
Corporation, and excludes any person employed by or
through a contractor or in connection with the work of the
Corporation but does not include any person employed as an
apprentice or trainee.”
[emphasis supplied]
2.3 On 26.03.1987, the AppellantCompany instituted the
Pawan Hans Employees Provident Fund Trust (“PF Trust”)
wherein the management started depositing its share
towards the provident fund contribution with respect to
employees on the regular cadre of the Company;
correspondingly, the regular employees started depositing
the matching contribution with the PF Trust.
2.4 Out of a total workforce of 840 employees, the Company
had engaged 570 employees on regular basis, while 270
employees were engaged on ‘contractual’ basis.
The Company implemented the PF Trust Regulations
only with respect to the regular employees, even though
the term “employee” had been defined to include “any
3
person” employed “directly or indirectly” under the PF
Trust Regulations.
2.5 The Company having framed its own PF Trust Regulations,
was claiming exemption from the applicability of the EPF
Act and EPF Scheme under Section 16 of the EPF Act.
2.6 On 08.01.1989, the Ministry of Labour, Government of
India, issued a communication to the Central Provident
Fund Commissioner, New Delhi, pertaining to the grant of
exemption to departmental undertakings under the control
of the Central/State Government statutory bodies. The
Central Provident Fund Commissioner was directed to
instruct the Regional Provident Fund Commissioners to
carefully review the cases of departmental undertakings
and statutory bodies falling under the categories specified
in Section 16(1)(b) and 16(1)(c) of the EPF Act, and take
further action as indicated in the said letter.
Clause (iv) of the said letter dated 08.01.1989 is of
relevance, and is extracted hereunder for ready reference:
“(iv) There may be establishments which employ large
member of casual/contingent staff, who are not entitled to
the benefit of provident fund or pension. The
casual/contingent staff of such establishment will
continue to be covered under the Act, but their regular
employees who are entitled to the benefit of provident fund
or pension should be excluded from the purview of the
Act.”
4
[emphasis supplied]
2.7 The Central Government, in exercise of the powers under
S.1(3)(b) of the EPF Act, issued a Notification dated
22.03.2001, making the provisions of the EPF Act
applicable to aircraft or airlines establishments employing
20 or more persons, excluding aircraft or airlines
establishments owned or controlled by the Central or State
Government.
The Gazette Notification No. SO 746 dated 22.03.2001
(“Notification”) is extracted for ready reference:
“ S.O. 746 – In exercise of the powers conferred by
clause (b) of sub section (3) of Section 1 of the
Employees Provident Fund and Miscellaneous
Provisions Act 1952 (19 of 1952), the Central
Government hereby specifies the following
establishment employing 20 or more persons as the
class of establishments to which the said Act shall
apply with effect from 1st April 2001 namely:
(i) An establishment engaged in rendering courier services;
(ii) An establishment of aircraft or airlines other than the
aircraft airlines owned or controlled by the Central or
State Government.
(iii) An establishment engaged in rendering cleaning and
sweeping services.”
[emphasis
supplied]
The said Notification was brought into force w.e.f
01.04.2001.
2.8 Correspondingly, amendments were made to the EPF
Scheme framed under Section 5 of the EPF Act. Clause 3
5
(b)(ci) was inserted vide Notification No. S35016/1/1997
SS II dated 22.07.2002, by which the EPF Scheme was
made applicable to aircraft or airlines establishments other
than the aircraft or airlines establishments owned or
controlled by the Central or State Government.
2.9 The members of the RespondentUnion made several
representations on 18.09.2012, 29.09.2012, 13.03.2013,
19.11.2014 to extend the benefit of the PF Trust
Regulations since they were directly engaged by the
Company on contractual basis, some of whom were
working for almost 20 years.
The Company failed to respond to the representations.
2.10 Being aggrieved by the inaction of the Company, the
RespondentTrade Union, filed CWP No.325 of 2017 on
20.12.2016 against the Company praying for the following
reliefs:
“(a) A declaration that the members of the RespondentTrade Union and other similarly situated employees,
employed on contract basis by the AppellantCompany are
entitled to the benefit of Provident Fund as per the EPF Act
and the EPF Scheme, and that the AppellantCompany be
directed to forthwith enrol all such eligible contract
employees under the EPF Scheme and deposit their
contribution with the Respondent No. 3 Regional Provident
6
Fund Commissioner, Employees’ Provident Fund
Organisation, from the date they are eligible till remittance,
and thereafter, till they are in the employment of the
AppellantCompany.
(b) Alternatively, the AppellantCompany forthwith be
directed to suitably amend the PF Trust Regulations to permit
the enrolment of contract workers as members of the PF
Trust instituted by the AppellantCompany and to make all
eligible contract employees members of the PF Trust from
their respective dates of entitlement and continue to
contribute amounts to the PF Trust in respect of contract
employees.”
2.11 During the pendency of the Writ Petition, the Regional
Provident Fund Commissioner, Bandra issued a letter
dated 24.05.2017 to the Company wherein it was stated
that even though the EPF Act would not apply to
establishments owned/controlled by the Central
Government as per S.16(1)(b) and (c), however social
security benefits such as provident fund must be provided
to all “employees/workers who are engaged on
contractual/casual/daily wages basis” since there is no
distinction between a person employed on permanent,
temporary, contractual, or casual basis under S.2 (f) of the
EPF Act.
2.12 The High Court vide the impugned Judgment & Order
dated 12.09.2018 allowed the Writ Petition in terms of
prayer (a), with the direction that the benefits under the
7
EPF Act be extended to the members of the RespondentTrade Union, and other similarly situated employees. It
was held that a liberal view must be taken in extending
social security benefits to the contractual employees. The
High Court directed the Company to enrol all eligible
contractual employees under the EPF Scheme, and deposit
their contribution with Respondent No.3 – Regional
Provident Fund Commissioner from the date they became
eligible till remittance, and thereafter till they are in
employment of the Company. This was to be carried out
latest by 31.12.2018.
3. Aggrieved by the impugned Judgment, the AppellantCompany filed the present Civil Appeal.
This Court vide Order dated 14.01.2019 issued notice
and granted stay of the impugned Judgment subject to the
Company depositing a sum of Rs.5,00,00,000/ (Rupees Five
Crores) within 3 months in this Court.
Pursuant thereto, the Company deposited the said
amount on 09.04.2019, which has been invested in a Fixed
Deposit.
8
4. We have heard the learned counsel for both the parties, and
have considered the oral and written submissions made on
their behalf.
4.1 Ms. Pinky Anand, learned Additional Solicitor General of
India, appearing for the AppellantCompany inter alia
submitted that:
a) The Company is excluded from the applicability of the
EPF Act since it neither falls under Schedule I of the
EPF Act, nor is it covered by Notification dated
22.03.2001 issued under Section 1(3)(b) of the EPF
Act, since the Notification itself expressly excludes
airline companies “owned or controlled by the Central
Government” from the purview of the EPF Act.
b) The Notification 22.03.2001 was inapplicable to the
AppellantCompany since Section 16(1)(b) of the EPF
Act, excludes an establishment owned or controlled
by the Central Government from the scope of the EPF
Act.
c) The Central Government holds 51% of the
shareholding in the AppellantCompany, and the
Board of Directors of the AppellantCompany have
9
been appointed by the Ministry of Civil Aviation. The
AppellantCompany is governed by the guidelines
issued by the Department of Public Enterprises,
Government of India. The AppellantCompany is thus
an establishment owned and controlled by the Central
Government. Even after the EPF Act became
applicable to the airlines industry, the AppellantCompany being an establishment owned and
controlled by the Central Government, was excluded
from the purview of the EPF Act.
d) The High Court committed a grave error in giving
retrospective application to the provisions of the EPF
Act, i.e., from the date of the members joining the
RespondentTrade Union, given that several
contractual employees had superannuated, passed
away, resigned, or ceased to be in the employment of
the Company. The extension of benefits under the
EPF Act to contractual employees irrespective of their
status of employment with the Company was wholly
illegal, arbitrary, and liable to be set aside.
10
e) The members of the RespondentUnion and other
similarly situated employees have already been paid
in full their monthly financial benefits/emoluments.
The direction of the High Court to the Company to
contribute to the provident fund of the contractual
employees would amount to burdening the Company
with twice the liability.
4.2 Mr. P.S. Narasimha, learned Senior Counsel appearing
on behalf of the RespondentUnion inter alia submitted
that:
a) The term “employee” defined by Clause 2.5 of the PF
Trust Regulations is widely defined to cover all
employees, including those engaged on contractual
basis, who are in the direct or indirect employment of
the Company. The members of the RespondentUnion
are in direct employment of the Company, since they
have not been engaged through any contractor. The
contractual workers are paid directly as evidenced by
the pay slips issued by the Company. The benefits
under the PF Trust Regulations, or the EPF Act, are
required to be provided to even contractual employees
11
from the date of their joining till the date of
remittance.
b) The Company is not controlled by the Central
Government since its affairs are managed and
controlled by a Board of Directors. The Company is
not a company controlled by the Central Government.
The Notification dated 22.03.2001, specified
certain establishments including the airlines industry,
other than airlines owned or controlled by the Central
or State Government, to be covered under the EPF
Act. Consequently, the Company was obligated to
extend the benefits under the EPF Act to all its
employees.
c) The EPF Act is a beneficial piece of legislation, which
has to be liberally construed. The denial of statutory
benefits and entitlements like provident fund to the
members of the RespondentUnion is exfacie illegal,
arbitrary, discriminatory and in violation of the
provisions of the EPF Act and the Constitution of
India.
12
5 The issue which arises for consideration in the present Civil
Appeal is whether the AppellantCompany is under a
statutory obligation to provide the benefit of provident fund
to its contractual employees under the PF Trust Regulations
or the EPF Act?
If so, the date from which the aforesaid benefit is to be
extended to the contractual employees.
6 Discussion and Analysis
6.1 It is first required to be seen whether the AppellantCompany is excluded from the applicability of the provisions
of the EPF Act and the EPF Scheme framed thereunder as
contended by them.
6.2 As per Section 1(3) of the EPF Act, the EPF Act is applicable
to every establishment in which 20 or more persons are
employed, which is either a factory engaged in any industry
specified in Schedule I, or an establishment which the
Central Government may by notification in the Official
Gazette specify in that behalf. Section 1(3) of the EPF Act
reads as:
“Section.1(3) : Subject to the provisions contained in section
16, it applies —
13
(a) to every establishment which is a factory engaged in
any industry specified in Schedule I and in which twenty or
more persons are employed, and
(b) to any other establishment employing twenty or more
persons or class of such establishments which the Central
Government may, by notification in the Official Gazette,
specify in this behalf:
Provided that the Central Government may, after
giving not less than two months’ notice of its intention so to
do, by notification in the Official Gazette, apply the
provisions of this Act to any establishment employing such
number of persons less than twenty as may be specified in
the notification.”
[emphasis supplied]
Section 1(3) is subject to Section 16 of the EPF Act.
Subsection (1) of Section 16 enlists those establishments
which are excluded from the applicability of the EPF Act. As
per clause (b) of subsection (1), an establishment belonging
to or under the control of the Central or State Government,
and whose employees are entitled to the benefit of
contributory provident fund in accordance with any scheme
or rules framed by the Central or State Government
governing such benefits, is excluded from the purview of the
EPF Act.
Subsection (1) of Section 16 reads as:
“Section 16. Act not to apply to certain establishment.
–
(1)This Act shall not apply
14
(a) to any establishment registered under the Cooperative
Societies Act, 1912 (2 of 1912), or under any other law
for the time being in force in any State relating to
cooperative societies employing less than fifty persons
and working without the aid of power; or
(b) to any other establishment belonging to or under the
control of the Central Government or a State
Government and whose employees are entitled to the
benefit of contributory provident fund or old age
pension in accordance with any Scheme or rule framed
by the Central Government or the State Government
governing such benefits; or
(c) To any other establishment set up under any Central,
Provincial or State Act and whose employees are
entitled to the benefits of contributory provident fund or
old age pension in accordance with any scheme or rule
framed under that Act governing such benefits;
(2) If the Central Government is of opinion that having
regard to the financial position of any class of
establishment or other circumstances of the case, it is
necessary or expedient so to do, it may, by notification
in the Official Gazette, and subject to such conditions,
as may be specified in the notification, exempt, whether
prospectively or retrospectively, that class of
establishments from the operation of this Act for such
period as may be specified in the notification.”
[emphasis supplied]
This Court in Regional Provident Fund Commissioner v.
Sanatan Dharam Girls Secondary School 1
laid down a twintest for an establishment to seek exemption from the
provisions of the EPF Act, 1952. The twin conditions are:
1 (2007) 1 SCC 268 : (2007) 1 SCC (L&S) 167
15
First, the establishment must be either “belonging to” or
“under the control of” the Central or the State Government.
The phrase “belonging to” would signify “ownership” of the
Government, whereas the phrase “under the control of”
would imply superintendence, management or authority to
direct, restrict or regulate.2
Second, the employees of such an establishment should
be entitled to the benefit of contributory provident fund or
old age pension in accordance with any scheme or rule
framed by the Central Government or the State Government
governing such benefits.
If both tests are satisfied, an establishment can claim
exemption/exclusion under Section 16(1)(b) of the EPF Act.
Applying the first test to the instant case, the Central
Government has a 51% ownership in the AppellantCompany, while the balance 49% is owned by the ONGC, a
Central Government PSU.
As per Section 2(45) of the Companies Act, 2013, a
“Government Company” means any company in which not
less than 51 % of the paidup share capital is held by the
Central Government. Since 51% of the shares of the
2 Shamrao Vithal Coop. Bank Ltd. v. Kasargode Panduranga Maliya, (1972) 4 SCC 600
16
AppellantCompany are owned by the Central Government,
the first test is satisfied as the AppellantCompany can be
termed as a Government Company under Section 2(45) of
the Companies Act, 2013.
With respect to the second test, it is relevant to note
that the Company had its own Scheme viz. the Pawan Hans
Employees Provident Fund Trust Regulations in force. The
Company however restricted the application of the PF Trust
Regulations to only the ‘regular’ employees. The PF Trust
Regulations of the Company were not framed by the Central
or State Government, nor were they applicable to all the
employees of the Company, so as to satisfy the second test.
The Regional Provident Fund Commissioner, Bandra
issued letter dated 24.05.2017 addressed to the Company
wherein it was stated that the benefit of contributory
provident fund was not being provided to
contractual/casual employees of the Company; and was
directed to implement the provisions of the EPF Act.
The relevant extract from the letter is set out
hereinbelow:
“approximately 370400 employees have been engaged by
M/s Pawan Hans Ltd. on contract basis in various cadres.
17
But no social security benefit is being extended to them.
The EPF & MP Act, 1952 under Section 2(f) lays down that
any person employed for wages in any kind of work in or
in connection with the work of the establishment and
includes a worker engaged by or through a contractor.
There is no distinction between a person employed on
permanent, temporary, contractual or casual basis under
Section 2(f) of the EPF & MP Act, 1952.
You are therefore, requested to implement the
provisions of the EPF & MP Act, 1952 in respect of all the
contractual/causal employees engaged by M/s Pawan
Hans Ltd. who are still not getting benefits of PF and
Pension.”
[emphasis supplied]
In our view, the Company does not satisfy the second
test, since the members of the RespondentUnion and other
similarly situated contractual workers were not getting the
benefits of contributory provident fund under the PF Trust
Regulations framed by the Company, or under any Scheme
or any rule framed by the Central Government or the State
Government. Consequentially, the exemption under Section
16 of EPF Act would not be applicable to the AppellantCompany.
In view of the above discussion, we hold that the
Company has failed to make out a case of exclusion from
the applicability of the provisions of the EPF Act.
6.3 The next issue which arises for consideration is whether the
members of the RespondentTrade Union are entitled to the
18
benefit of Provident Fund under the PF Trust Regulations or
under the EPF Act.
Clause 1.3 of the Regulations would show that the PF
Trust Regulations were made applicable to “all employees”
of the AppellantCompany.
Clause 2.5 of the Regulations, defines an “employee”,
to include any employee who is employed for wages/salary
in any kind of work, monthly or otherwise, or in connection
with the work of the Company, and who gets his
wages/salary directly or indirectly from the Company.
Clause 2.5 excludes only a person employed by or through a
contractor in connection with the work of the Company, and
any person employed as an apprentice or trainee.
In the present case, the RespondentUnion submitted
that even though the appointment letters refer to the
employees as ‘contractual’ employees, they were not
engaged through any contractor. They were being paid
directly by the Company, which is evidenced from the payslips issued to them. It was submitted that about 250
contractual employees receive wages directly from the
19
Company, and are eligible to be included under the PF Trust
Regulations framed by the Company.
6.4 We find that the members of the RespondentUnion have
been in continuous employment with the Company for long
periods of time. They have been receiving wages/salary
directly from the Company without the involvement of any
contractor since the date of their engagement. The work
being of a perennial and continuous nature, the
employment cannot be termed to be ‘contractual’ in nature.
In our considered view, Clause 2.5 of the PF Trust
Regulations would undoubtedly cover all contractual
employees who have been engaged by the Company, and
draw their wages/salary directly or indirectly from the
Company.
6.5 As per Section 2(f) of the EPF Act, the definition of an
‘employee’ is an inclusive definition, and is widely worded to
include “any person” engaged either directly or indirectly in
connection with the work of an establishment, and is paid
wages.3
3 SubRegional Provident Fund Office v. Godavari Garments Ltd., (2019) 8 SCC 149 : (2019) 2
SCC (L&S) 483; M/s P.M. Patel & Sons and Ors. v. Union of India and Ors (1986) 1 SCC 32.
20
In view of the above discussion, we find that the
members of the RespondentUnion and all other similarly
situated contractual employees, are entitled to the benefit of
provident fund under the PF Trust Regulations or the EPF
Act. Since the PF Trust Regulations are in force and are
applicable to all employees of the Company, it would be
preferable to direct that the members of the RespondentUnion and other similarly situated contractual employees
are granted the benefit of provident fund under the PF Trust
Regulations so that there is uniformity in the service
conditions of all the employees of the Company.
6.6 The question which now arises is the date from which the
benefit of provident fund is to be extended to the
contractual employees.
This Court vide Order dated 24.10.2019 had passed the
following Order:
“Provident Fund is normally managed on actuarial basis;
the contributions received from employer and the
employee are invested and the income by way of interest
forms the substantial fund through which any payout is
made. For all these years the Fund in question was
subsisting on contributions made by the other employees
and, if at this stage, the benefit in terms of the judgment
of the High Court is extended with retrospective effect, it
may create imbalance. Those who had never contributed
at any stage would now be members of the fund. The
21
fund never had any advantage of their contributions and
yet the fund would be required to bear the burden in case
any payout is to be made. Even if concerned employees
are directed to make good contributions with respect to
previous years with equivalent matching contribution
from the employer, the fund would still be deprived of the
interest income for past several years in respect of such
contributions.
In order to have clear perspective in the matter
and to see if there could be any solution to the problem
as posed above, we call upon the petitioner to depute a
person who is well versed in the matter and who has
been managing the Provident Fund Scheme of Pawan
Hans Limited to have a dialogue with the respondent
No.3 before 15.11.2019 (a representative of the
respondent(s) is also at liberty to remain present during
such discussion) so that a workable solution could then
be presented by such person and the representative of
respondent No.3 before us on the next occasion.
List the matter on 29.11.2019 at 10.30 a.m.”
6.7 The learned ASG submitted that no workable solution could
be worked out at the meeting held between the
representative of the AppellantCompany, Respondent No.3,
and the representative of the RespondentUnion. The
learned ASG however offered that the AppellantCompany
was willing to extend the benefit under the PF Trust
Regulations to the members of the RespondentUnion and
other similarly situated employees, from the date of the
impugned Judgment.
6.8 Respondent No.3 – the Regional Provident Fund
Commissioner submitted that since the Company had
22
remained out of the purview of the EPF Act, the direction to
deposit contribution from the date of eligibility of the
contractual employees till the date of remittance was not
workable, and could not be sustained.
7 After hearing the parties at length, and in light of the
peculiar facts and circumstances of this case, we affirm the
Judgment & Order dated 12.09.2018 passed by the Bombay
High Court in W.P.No.325/2017 holding that members of
the RespondentUnion are covered by the EPF Act. However,
we modify the direction of the High Court to grant the
benefits under the EPF Act, and direct that the members of
the RespondentUnion and other similarly situated
contractual employees be enrolled under the Pawan Hans
Employees Provident Fund Trust Regulations so that there
is uniformity in the conditions of service of all employees of
the AppellantCompany.
Furthermore, the direction of the High Court to pay the
contribution from the date of their eligibility till the date of
remittance is also modified in terms of the directions given
in this Judgment.
23
8 We pass the following directions to effectuate the reliefs
granted:
(i) The interests of justice would be best subserved if the
benefit of Provident Fund is provided to the members
of the RespondentUnion, and other similarly situated
contractual employees, from January 2017 when the
Writ Petition was filed before the High Court.
(ii) Respondent No.3 the Regional Provident Fund
Commissioner, Regional Office, Bhavishya Nidhi
Bhawan, 341 Bandra (E), Mumbai is directed to
determine and compute the amount to be deposited by
the Company on the one hand, and the members of
the RespondentUnion and other similar situated
employees on the other hand. The computation would
be required to be made for the past period i.e. January
2017 to December 2019;
(iii) The Company shall be liable to pay Simple Interest @
12% p.a. on the amount payable by it towards
contribution of provident fund for the past period, i.e.,
24
January 2017 to December 2019, as per Section 7Q of
the EPF Act,1952 ;
(iv) The statement of computation made by Respondent
No.3 will be placed before this Court within a period of
12 weeks from the date of this Judgment, and
thereafter the matter will be listed for issuance of
necessary directions, so that the amount can be
remitted from the deposit made before this Court,
directly to the PF Trust;
(v) The employees will be obligated to deposit their
matching contribution for the past period i.e. January
2017 to December 2019, within a period of 12 weeks
along with interest @ 6% p.a., after the contribution of
the Company has been remitted to the PF Trust;
(vi) With respect to the period from January 2020
onwards, the Company and the members of the
RespondentUnion as also other similary situated
employees, will make their respective contributions as
per the PF Trust Regulations;
(vii) The benefit shall not be extended to those employees
who have superannuated, expired, resigned, or ceased
25
to be in the employment of the Company on the date of
this Judgment ;
(viii) We consider it appropriate to award Costs of
Rs.5,00,000 (Rupees Five Lacs) to the RespondentUnion towards litigation expenses incurred in the High
Court and in this Court.
(ix) After the aforesaid amounts are disbursed, the balance
amount lying deposited in this Court shall be refunded
to the AppellantCompany.
The present civil appeal along with all pending
applications, if any, stand disposed of.
Ordered accordingly.
...…...............………………J.
(UDAY UMESH LALIT)
.......................................J.
(INDU MALHOTRA)
New Delhi;
January 17, 2020.
26
