EPF Act -We have no doubt in our mind that the appellant is engaged in the specialised and expert services of providing trained and efficient security guards to its clients on payment basis. The contention that the appellant merely facilitated in providing 7 Chowkidars cannot be countenanced. The provisions of the Act of 2005 make it manifest that the appellant is the employer of such security guards and who are its employees and are paid wages by the appellant. Merely because the client pays money under a contract to the appellant and in turn the appellant pays the wages of such security guards from such contractual amount received by it, it does not make the client the employer of the security guard nor do the security guards constitute employees of the client. The appellant therefore is squarely covered by the Notification dated 17.05.1971.
NONREPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs.44344435 OF 2010
M/S. PANTHER SECURITY SERVICE
PRIVATE LIMITED ...APPELLANT(S)
VERSUS
THE EMPLOYEES’ PROVIDENT FUND
ORGANISATION AND ANOTHER ...RESPONDENT(S)
JUDGMENT
NAVIN SINHA, J.
The appellant is engaged in the business of providing
private security guards to its clients on payment basis. The
appellant is registered under the Private Security Agencies
(Regulation) Act, 2005 (hereinafter referred to as “the Act of
2005”). The appellant is aggrieved by the order of the High
Court, affirming the order dated 28.07.2008 of the Assistant
Provident Fund Commissioner, Kanpur under Section 7A of the
Employees’ Provident Funds and Miscellaneous Provisions Act,
1952 (hereinafter referred to as “the EPF Act”) holding the
appellant liable for compliance with the provisions of the EPF Act
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and to deposit statutory dues within 15 days. The dues of the
appellant as quantified by order dated 15.04.2009 are
Rs.42,01,941/, and statutory interest under Section 7Q at
Rs.30,44,224/.
2. Shri S. Sunil, learned counsel for the appellant submitted
that the appellant was not covered by G.S.R. No.805 dated
17.05.1971 issued under Section 1(3)(B) of the EPF Act, since it
was not engaged in rendering any expert services. It merely
facilitated in providing Chowkidars to its clients at the request of
the latter. The appellant only levelled a service charge for
facilitation. The salary was paid to the Chowkidars by the client
who engaged their services. The appellant had only 5 persons on
its rolls. The EPF Act was therefore not applicable to it. Placing
reliance on Section 2(e) (ii) and (f) of the EPF Act it was submitted
that since the salary was paid by the client and who had the
ultimate control over the security guards deployed with them, the
appellant was not the employer of these security guards and
neither were they employees of the appellant. Reliance was
placed on Krantikari Suraksha Rakshak Sanghatana vs.
Bharat Sanchar Nigam Limited and others, (2008) 10 SCC
2
166 and Saraswath Films vs. Regional Director, Employees’
State Insurance Corporation, Trichur, (2010) 11 SCC 553.
3. Ms. Divya Roy, learned counsel for the respondents
submitted that the appellant renders expert services by way of
providing trained personnel as security guards. It is fully covered
by the Notification dated 17.05.1971. Despite repeated notices
the appellant never furnished its wage and salary registers. The
balance sheets seized for the financial years 200304, 200405,
200506 and 200607, during raid, reveals a very large amount
paid towards salaries and wages running into several lacs which
cannot be the wage bill of five employees. The letter dated
03.04.2001 written by the appellant to the New India Assurance
Company Limited seeking Group Janta Personnel Accident
Insurance Policy of one lac each was in respect of 79 security
personnel. It was lastly submitted that the appellant did not
approach the Tribunal under Section 7I of the EPF Act against
the order passed under Section 7A, where all disputed facts could
have been examined and instead filed a writ petition directly.
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4. The writ petition and review application filed by the
appellant were both dismissed.
5. We have considered the submissions on behalf of the parties
and are of the opinion that the appeal lacks merit, for reasons to
be enumerated hereinafter.
6. By G.S.R. No. 805 dated 17.05.1971 issued under Section
1(3)(b) of the EPF Act and published in the Gazette on
25.09.1971 the provisions of the EPF Act were made applicable to
specified establishment and which reads as follows :
“G.S.R. No. 805 : In exercise of the powers conferred by
clause (b) of subsection (3) of Section 1 of the
Employees’ Provident Funds and Family Pension Fund
Act, 1952 (19 of 1952), the Central Government hereby
specifies that with effect from the 31st May, 1971, the
said Act shall apply to every establishment rendering
expert services such as supplying of personnel, advice
on domestic or departmental enquiries, special services
in rectifying pilferage, thefts and payroll, irregularities to
factories and establishments on certain terms and
conditions as may be agreed upon between the
establishment and the establishment rendering expert
services and employing twenty or more persons.”
7. The appellant was engaged in providing security services to
its clients since the year 2001. A squad under the EPF Act
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visited the appellant’s establishment on 29.12.2005 and seized
certain records opining that the provisions of the EPF Act applied
to the appellant. The Assistant Provident Fund Commissioner on
07.03.2006 on basis of the seized documents opined that the
appellant had 79 employees as on 03.04.2001 allotting Code No.
UP/39076, requiring the appellant to deposit the necessary
contributions. The appellant having objected to the same,
proceedings were initiated under Section 7A of the EPF Act with
due opportunity of defence to the appellant. The appellant failed
to submit the attendance register, wage register etc. The
Assistant Provident Fund Commissioner on basis of balance
sheets seized during raid opined that the appellant had more
than twenty employees on its rolls and stood covered by the term
“expert services” such as providing of personnel under the
Notification dated 17.05.1971. It also noticed that wages were
not paid directly by the clients to the security guards deployed by
the appellant but that the payments were made by the clients to
the appellant, who in turn disbursed wages to the security
guards. The remedy of an appeal before the Tribunal under
Section 7I was bypassed by the appellant instituting the writ
petition directly. The High Court declined interference with the
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conclusion of expert services being rendered by the appellant. A
review petition contending that the appellant stood duly
registered under the Act of 2005 was also rejected.
8. The Act of 2005 defines a private security agency under
Section 2(g) as an organization engaged in the business of
providing security services including training to private security
guards and providing such guards to any industrial or business
undertakings or a company or any other person or property. A
licence is mandatory under Section 4 and those security agencies
existing since earlier were mandated to obtain such licence
within one year of coming into force of the Act. A complete
procedure is provided with regard to making of an application for
grant of a licence under Section 7, renewal under Section 8 of the
Act. The eligibility for appointment as a security guard with such
security agency is provided under Section 10 of the Act. Section
11 provides for the condition of the licence and the licence can be
cancelled under Section 13. A private security agency under
Section 15 is required to maintain a register inter alia with the
names, addresses, photographs and salaries of the private
security guards and supervisors under its control. The Private
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Security Agencies Central Model Rules, 2006, framed under the
Act of 2005, requires verification by the security agency before
employing any person as a security guard or supervisor in the
manner prescribed. Proper security training of the person
employed is the responsibility of the security agency under Rule
5, and Rule 6 prescribes the standard of physical fitness for
security guards. Under Rule 14 the security agency is required
to maintain a Register in Form VIII, PartI of which contains
details of the management, PartII contains the name of guard,
his parentage, address, photograph, badge no. and the salary
with the date of commencement. Part III contains the name of
the customer, address, the number of guards deployed, date of
commencement of duty and date of discontinuance. Part IV
contains the name of the security guard/supervisor, address of
the place of duty, if accompanied by arms, date and time of
commencement of duty and date and time of end of duty.
9. We have no doubt in our mind that the appellant is engaged
in the specialised and expert services of providing trained and
efficient security guards to its clients on payment basis. The
contention that the appellant merely facilitated in providing
7
Chowkidars cannot be countenanced. The provisions of the Act
of 2005 make it manifest that the appellant is the employer of
such security guards and who are its employees and are paid
wages by the appellant. Merely because the client pays money
under a contract to the appellant and in turn the appellant pays
the wages of such security guards from such contractual amount
received by it, it does not make the client the employer of the
security guard nor do the security guards constitute employees of
the client. The appellant therefore is squarely covered by the
Notification dated 17.05.1971.
10. The appellant never made available the statutory registers
under the Act of 2005 to the authorities under the EPF Act. In
fact, we have no hesitation in holding that it actually withheld
relevant papers. This coupled with the letter dated 03.04.2001
written by the appellant, the appellant’s balance sheet seized for
the financial years 200304, 200405, 200506 and 200607
showing payment of wages running into lacs, necessarily and
only leads to the irresistible conclusion that the appellant has
more than 20 employees on its roles. The provisions of the Act
therefore necessarily apply to it.
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11. Krantikari Suraksha Rakshak Sanghatana (supra) has
no relevance to the present controversy as it concerned to the
provision of the Maharashtra Private Security Guards (Regulation
of Employment and Welfare) Act, 1981. The applicability of the
EPF Act did not fall for consideration there. Saraswath Films
(supra) was in the context of the Employees’ State Insurance Act,
1948 interpreting the term “immediate employer”, which again
has no relevance to the present controversy.
12. That the provisions of the EPF Act are applicable to a
private security agency engaged in the expert service of providing
personnel to its client, if it meets the requirement of the EPF Act.
The question is no more res integra evident from the discussions
contained in Group 4 Securitas Guarding Ltd. vs. Employees
Provident Fund Appellate Tribunal & Ors., 184 (2011) DLT
591, G4S Secure Solutions India Pvt. Ltd. vs. The Regional
Provident Fund CommissionerI and Ors., ILR 2018 Karnataka
2527, Orissa State Beverages Corporation Limited vs.
Regional Provident Fund Commissioner & Ors., 2016 LLR
413, Roma Henney Security Services Private Limited vs.
9
Central Board of Trustees, EPF Organisation, 2012 SCC
OnLine Del 3597, Sarvesh Security Services Private Limited
vs. University of Delhi, 2017 SCC OnLine Del 12209.
13. The appeals are therefore dismissed and the interim order
dated 12.05.2009 restraining coercive steps for enforcement of
the demand notice dated 15.04.2009 is vacated.
…………...................J.
[NAVIN SINHA]
…………...................J.
[SURYA KANT]
NEW DELHI
DECEMBER 02, 2020.
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