Important Point
The employees of exempted P.F. Scheme u/s. 17(1)(a) of Employees P.F. and Miscellaneous Provisions Act, 1952 are not entitled of automatic benefit revised terms and conditions for granting exemption u/s. 17(1)(a) as they apply to fresh cases of exemption.

Headnote:Employees Provident Funds and Miscellaneous Provisions Act, 1952 -Section 17(1)(a)-JC Mills Ltd. was granted exemption under as PF Scheme made by it was found not less favourable than the statutory Scheme-Government of India revised the terms and conditions for grant of exemption u/s. 17(1)(a) and circulated the same by a letter dated 29.8.83 to all the State Governments and Union Territory Administration-One of the revised conditions was that any amendment EPF Scheme which was more beneficial to the employees than the existing rules of the establishment shall become applicable to them automatically-Government increased interest on PF-Employees of JC Mills claimed it-Regional PF Commissioner rejected but High Court allowed-Whether correct? (No).
       Held : What the High Court failed to notice was that the revised terms and conditions were to be made applicable to fresh cases of exemption. The Central Government had not made any statutory amendment nor given statutory directions but had only requested all State Governments and Union Territory Administrations to grant exemption under Section 17(1)(a) subject to the conditions specified in the schedule to the model notification. The revised terms and conditions did not and could not have become applicable automatically, and in order to make them applicable they were required to be incorporated by the appropriate Governments in the notification granting exemption under Section 17(1)(a). As regards the exempted establishments it was rightly pointed out by the Regional Provident Fund Commissioner that unless the appropriate Government issued a notification amending the exempted scheme and published the same in the Official Gazette, condition No. 4 did not apply to them. Admittedly, no such notification amending the exempted scheme framed by the appellant and respondent No. 10 was issued by the State Government. Therefore, the appellant and respondent No. 10 were not legally bound to credit the account of each of the respondent-employees with higher rate of interest for the years 1984-85 to 1988-89, only because for those years the Central Government had declared interest at higher rates. The High Court really misconstrued the correct legal position and unjustifiably criticised the Regional Provident Fund Commissioner by observing that his approach was perverse. The view taken by the Regional Provident Fund Commissioner was quite correct and the High Court was wrong in taking a different view. (Para 9)
       Consequently held : We, therefore, allow this appeal, set aside the order passed by the High Court and restore the order passed by the Regional Provident Fund Commissioner. In view of the facts and circumstances of the case there shall be no order as to costs. (Para 10)

Judgment

Nanavati, J.-Leave granted.

2. Heard learned counsel for the parties.

3. Jiyajeerao Cotton Mills Ltd., respondent No. 10 is an establishment covered by the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the Act). It constituted ‘Jiyajee Cotton Mills Employees Provident Fund Institution’, the appellant herein, and framed its Rules and Regulations in 1952. Respondent No. 10 applied to the Government of India, that being the appropriate Government at the relevant time, for grant of exemption under Section 17(1)(a) of the Act. The Government on being satisfied that the employees were in enjoyment of Provident Fund benefits which were on the whole not less favourable than the benefits provided under the Act and the Scheme granted exemption w.e.f. 1.11.1952, by a Notification dated 4.1.63 published on 12.1.63 Respondents Nos. 1 to 9 who were the employees of the appellant and members of the Provident Fund were discharged from service and paid their provident fund amounts. The Central Government by its letter dated 29.1.83 forwarded to the appropriate Governments, revised conditions for granting exemption under Section 17(1). One of the revised conditions was that any amendment to the Employees Provident Fund Scheme which was more beneficial to the employees than the existing rules of the establishment shall become applicable to them automatically. In view of this revised condition the said respondents claimed the difference between the interest which was given to them at the rate declared by the Board of the Trustees and the rate of interest declared by the Central Government for the years 1984-85 to 1988-89. As the appellant did not accept their demand they filed a claim petition before the Central Provident Funds Commissioner who referred that petition to the Regional Provident Fund Commissioner. As their claim was not dealt with by the Regional Provident Fund Commissioner for some time, they filed Writ Petition M.P. No. 901 of 1989 in the High Court of Madhya Pradesh. The High Court by its order dated 26.7.89 directed the Regional Provident Fund Commissioner to dispose of the said respondent’s claim within six months.

4. The matter was thereafter heard by the Regional Provident Fund Commissioner who held-with respect to the revised conditions of exemption that “It is worthwhile, to mention that the said revised conditions of exemption as notified by the Govt. of India cannot be given effect in respect of particular exempted establishment until and unless the same is notified in the Official Gazette by the appropriate Govt.

5. After referring to Rule 16(f) and Rule 18(i) of the exempted Provident Fund Scheme of the appellant and Respondent No. 10, the Regional Provident Fund Commissioner held that the appellant being an exempted establishment the account of each of the employees was to be credited with interest at the rate decided by the Board of Trustees and as the exempted scheme was not amended by the State Government they were not entitled to the enhanced rate of interest. He also held that even with lesser rate of interest the exempted scheme as a whole was not less favourable than the Statutory Scheme. He, therefore, dismissed the claim petition of the respondents.

6. The employees challenged this order by preferring a writ petition under Article 227 of the Constitution of India to the High Court of Madhya Pradesh. The High Court was of the view that the approach of the Commissioner was perverse and the respondents were unnecessarily made to run from pillar to post for payment of their legal dues. It referred to para 60 of the Statutory Scheme and held that interest was required to be credited to the account of each member at such rate as was determined by the Central Government. It further held that in view of this clear provision made in the Scheme, not paying interest at the higher rate amounted to contravention of the Act and the Scheme. The High Court was also of

Click Here to Read the rest of this document

Judicial Analysis

SupremeToday

1998 Supreme(SC) 681

Important PointThe employees of exempted P.F. Scheme u/s. 17(1)(a) of Employees P.F. and Miscellaneous Provisions Act, 1952 are not entitled of automatic benefit revised terms and conditions for granting exemption u/s. 17(1)(a) as they apply to fresh cases of exemption.

Judicial Analysis

Important Point
The employees of exempted P.F. Scheme u/s. 17(1)(a) of Employees P.F. and Miscellaneous Provisions Act, 1952 are not entitled of automatic benefit revised terms and conditions for granting exemption u/s. 17(1)(a) as they apply to fresh cases of exemption.