Case Laws on Employee’s Provident
Funds and Miscellaneous Provisions Act, 1952
1.
Silver
Jubilee Tailoring House v. Chief Inspector of Shops and Establishments [1974
AIR 37, 1974 SCR (1) 747] - Cited in The
Officer In Charge vs M/S Godavari Garments Limited [CIVIL APPEAL NO. 5821 OF
2019]
The reputation
of a tailoring establishment depends not only on the cutter but also upon the
tailors. In a many cases, stitching is a delicate operation when the cloth upon
which it is to be carried on is expensive. The defect in stitching might mar
the appearance not only of the garment but also of its wearer. So when the
tailor returns a garment, the proprietor has got to inspect it to see that it
is perfect. He has to keep his customers pleased and he has also to be
punctual, which means that the stitching must be done according to the
instruction of the employer and within the time specified. The degree of
control and supervision would be different in different types of business. If
an ultimate authority over the worker in the performance of his work resided in
the employer so that he was subject to the latter's direction that would be
sufficient to qualify them as “Employee”.
That some of
the employees take up the work from other tailoring establishments and do that
work also in the shop in which they generally attend for work, as spoken to by
the proprietor in his evidence, would not in any way militate against their
being employees of the proprietor of the shop where they attend for work.
A person can
be a servant of more than one employer. A servant need not be under the
exclusive control of one master. He can be employed under more than one
employer. That the workers are not obliged to work for the whole day in the
shop is not very material. There is of course no reason why a person, who is
only employed part time, should not be a servant and it is doubtful whether
regular part time service can be considered even prima facie to suggest
anything other than a contract of service. According to the definition in
section 2(14) of the Act, even if a person is not wholly employed, if he is
principally employed in connection with the business of the shop, he will be a
"person employed" within the meaning of the sub-section. Therefore,
even if he accepts some work from other tailoring establishments or does not
work whole time in a particular establishment, that would not in any way
derogate from his being employed in the shop where he is principally employed.
2.
The
Palliadi Handloom Weavers Co-op Production and Sale Society v Regional
Provident Fund Commissioner [S.A(MD)No.2120 of 2003]
This Court keeps
in mind that the EPF Act is a beneficial social welfare legislation which was
enacted by the Legislature for the benefit of the workmen. It is meant for the
protection of weaker sections of society, namely, workmen who had to eke out
their livelihood from the meagre wages they receive after toiling hard for the
same. Hence, the provisions under the EPF Act have to be interpreted in a
manner which is beneficial to the workmen. A harmonious construction alone
would help carry out the purpose of the Act.
3.
Shri
Birdhichand Sharma v. First Civil Judge, Nagpur and Others [1961 3 S.C.R. 161]
- Cited in Messrs P.M. Patel & Sons vs Union of India [1987 AIR 447, 1985
SCR Supl. (3) 55]
Manufacturer had
employed workmen in his beedi factory and who were at liberty to work at their
homes, and the Court held that the conditions in which they worked made them
"workers" within the meaning of clause (1) of s. 2 of the Factories
Act. The significant feature of the judgement lies in the observation of the
Court that in the case of the beedi industry the right of rejection of the
beedis if they did not come up to the proper standard was evidence of the
supervision and control exercised by the manufacturer. Noting that the nature
and extent of supervision and control varied in different industries the Court
said:-
"Taking the nature of the work in the
present case it can hardly be said that there must be supervision all time when
biris are being prepared and unless there is such supervision there can be no
direction as to the manner of work. In the present case the operation being a
simple one, the control of the manner in which the work is done is exercised at
the end of the day, when biris are ready, by the method of rejecting those
which do not come up to the proper standard. In such a case it is the right to
supervise and not so much the mode in which it is exercised which is
important."
4.
Regional
Provident Fund Commissioner, Andhra Pradesh v. Shri T.S. Hariharan [1971 Suppl.
S.C.R. 305]
The Act was
brought on the statute book for providing for the institution of a provident
fund for the employees in factories and other establishments. The basic purpose
of providing for provident funds appears to be to make provision for the future
of the industrial worker after his retirement or for his dependants in case of
his early death. To achieve this ultimate object the Act is designed to
cultivate among the workers a spirit of saving something regularly, and also to
encourage stabilisation of a steady labour force in the industrial centres,
5.
M.
Abdul Samad Sahib Sons, Samad vs
Presiding Officer
Therefore, a
reading of the provisions of the E.P.F. Act and the scheme framed thereunder,
makes it clear that it will have to ensure that the coverage of the employees
either employed directly by the principal employer or through any contractor
and that the contributions are duly recovered and paid along with the
employer's contribution to the second respondent. It will have to be born in
mind that it is a welfare legislation meant for the benefit of the employees
concerned and therefore, every attempt should be made to ensure that the
purport of the enactment is not defeated by resorting to any unfair means to
deprive the benefit of Provident Fund to the employees concerned.
6.
Regional
Provident Fund Commissioner and Anr. v. Dharamsi Morarji Chemical Company
Limited – Cited in The Regional Provident Fund vs B. Ganapathy Bhandarkar [2003
(4) KarLJ 10, (2003) IIILLJ 356 Kant]
So far as this
contention is concerned the finding reached by the High Court, as extracted
earlier, clearly shows that there was no evidence to indicate any such
interconnection between the two factories in the matter of supervisory,
financial or managerial control. Nothing could be pointed out to us to
contradict this finding. Therefore, the net result is that the only connecting
link which could be effectively pressed in service by the learned Counsel for
the appellant for culling out interconnection between Ambarnath factory and
Roha factory was that both of them were owned by a common owner, namely, the
respondent-company and the Board of Directors were common. That by itself
cannot be sufficient unless there is clear evidence to show that there was
interconnection between these two units and there was common supervisory,
financial or managerial control. As there is no such evidence in the present
case, on the peculiar facts of this case, it is not possible to agree with the
learned Counsel for the appellant that Roha factory was a part and parcel of
Ambarnath factory or it was an adjunct of the main parent establishment
functioning at Ambarnath since 1921. – Meaning that two units will be treated distinct
and different for the applicability of the act, where there is no
inter-connection between them.
7.
Khoja
Lime Udyog vs R.P.F. Commissioner [1991 (62) FLR 252, (1992) ILLJ 903 Raj, 1990
(1) WLN 361]
That was a case
where the entrepreneur owned a press as also published a newspaper and the
question was whether these two units are one establishment or are distinct and
separate units and their lordships laid down the criteria for testing whether
the units is one or they are separate units. The most important lest pointed
out by their lordships was that of functional 'integrality' that means of the
unity of finance and employment and of labour. In that case, unity of ownership
existed ex-hypothesi but there should have been such functional inter-dependence
that one unit could not exist conveniently and reasonably without the other and
their finances and employment should have been integrated in order to make them
one unit of establishment. I have already referred to the question of
functional Integrality and unity of finance and so far as the question of
ownership is concerned, in our case there is no such unity of ownership as such
and it has been clearly shown that the three proprietors of the three different
concerns are different and independent entities.
8.
Bridge
& Roof Co. (India) Ltd vs Union Of India [1963 AIR 1474, 1963 SCR (3) 978] –
Most Important Judgment
The main
question therefore that falls for decision is as to which of these two rival
contentions is in consonance with s. 2 (b). There is no doubt that ",basic wages" as defined therein
means all emoluments which are earned by an employee while on duty or on leave
with wages in accordance with the terms of the contract of employment and which
are paid or payable in cash.
If there were no exceptions to this
definition, there would have been no difficulty in holding that production
bonus whatever be its nature would be included within these terms. The difficulty, however, arises because the
definition also provides that certain things will not be included in the
term "basic wages", and these are contained in three clauses. The
first clause mentions the cash value of any food concession while the third
clause mentions any presents made by the employer.
The fact that
the exceptions contain even presents made by the employer shows that though the
definition mentions all emoluments which are earned in accordance with the
terms of the contract of employment, care was taken to exclude presents which
would ordinarily not be earned in accordance with the terms of the contract
of employment.
Similarly,
though the definition includes "all emoluments" which are paid or
payable in cash, the exception excludes the cash value of any food concession,
which in any case was not payable in cash. The exceptions therefore do not seem
to follow any logical pattern which would be in consonance with the main
definition.
It excludes
dearness allowance, house-rent allowance, overtime allowance, bonus, commission
or any other similar allowance payable to the employee in respect of his
employment or of work done in such employment. This exception suggests that
even though the main part of the definition includes all emoluments which are
earned in accordance with the terms of the contract of employment, certain
payments which are in fact the price of labour and earned in accordance with
the terms of the contract of employment are excluded from the main part of the
definition of "basic wages".
It is undeniable
that the exceptions contained in explanation (ii) refer to payments which are
earned by an employee in accordance with the terms of his contract of
employment. It was admitted by counsel on both sides before us that it was
difficult to find any one basis for the exceptions contained in the three
clauses. It is clear however from cl. (ii) that from the definition of the word
"basic wages" certain earnings were excluded, though they must be
earned by employees in accordance with the terms of the contract of employment.
Having excluded
"dearness allowance" from the definition of "basic wages" section
6 then provides for inclusion of dearness allowance for purposes of
contribution. But that is clearly the result of the specific provision in section
6 which lays down that contribution shall be 6-1/4 per centum of the basic
wages, dearness allowance and retaining allowance (if any).
We must
therefore try to discover some basis for the exclusion in cl. (ii) as also the
inclusion of dearness allowance and retaining allowance (for any) in section 6.
It seems that the basis of inclusion in section 6 and exclusion
in cl. (ii) is that whatever is payable in all concerns and is earned by all
permanent employees is included for the purpose, of contribution under s. 6,
but whatever is not payable by all concerns or may not be earned by all
employees of a concern is excluded for the purpose of contribution.
·
Dearness allowance, for examples is payable in
all concerns either as an addition to basic wages or as a part of consolidated
wages where a concern does not have separate dearness allowance and basic wage.
·
Similarly, retaining allowance is pay able to
all permanent employees in all seasonal factories like sugar factories and is
therefore included in section 6;
·
But house-rent allowance is not paid in many
concerns and sometimes in the same concern it is paid to some employees but not
to others, for the theory is that house- rent is included in the payment of
basic wages plus dearness allowance or consolidated wages. Therefore,
house-rent allowance which may not be payable to all employees of a concern and
which is certainly not paid by all concern is taken out of the definition of
"basic wages", even though the basis of payment of house rent
allowance where it is paid is the contract of employment.
·
Similarly, overtime allowance though it is
generally in force in all concerns is not earned by all employees of a concern.
It is also earned in accordance with the terms of the contract of employment;
but because it may not be earned by all employees of a concern it is excluded
from basic wages".
·
Similarly, commission or any other similar
allowance is excluded from the definition of "basic wages" for
commission and other allowances are not necessarily to be found in all
concerns; nor are they necessarily earned by all employees of the same concern,
though where they exist they are earned in accordance with the terms of the
contract of employment.
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