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SUPREME COURT OF INDIA
Dipak Misra, A.M. Khanwilkar, Mohan M. Shantanagoudar, JJ.
M/s Yeshwant Gramin Shikshan Sanstha - Appellant
Versus
The Assistant Provident Fund Commissioner & Ors. - Respondents
Civil Appeal No. 721 of 2013
Decided On : 09-03-2017
(b) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 16 r/w section 2A – Appellant running 29 schools/colleges and has employed around 1151 permanent employees – Presumption u/s 2A attracted – Employees working in concerned schools/colleges of appellant covered by the contributory provident fund scheme framed by the State Government – Appellant entitled to exemption from the Act. (Para 18, 19)
(c) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 16 r/w section 2(19), 2(20), 2(21), 3, 4 and 5 – State Government having power of superintendence and authority to direct, restrict or regulate working of the educational institutions – Appellant’s establishment, 100% grant-in aid schools held, under control of the State Government – Appellant’s institution, held, entitled to exemption u/s 16 – Central Act not applicable. (Para 21, 22, 23)
(2007) 1 SCC 268 – Relied upon
(1972) 4 SCC 600 – Referred
(d) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 16 – The act applies to establishments, not employees – When an establishment is exempted from operation of the Act, it cannot be invoked in respect of some of the employees. (Para 24, 26)
(e) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 16 – Appellant running 29 schools/colleges and receiving 100% grant-in aid from the State Government in respect of 28 schools/colleges – The employees employed with the permission and approval of the State Government and governed by State CPF Scheme – Entire process of appointment strictly monitored by State Government – Appellant submitting employees’ pay bills to Education Department and their salaries directly deposited into their bank accounts – Appellant employing around 1151 employees covered by State Contributory Provident Fund Scheme – Appellant had engaged the 16 part-time employees with the permission and approval of the State Government – Not entitled to benefits of State CPF Scheme of the State – Just because 16 part-time employees were not eligible for benefits of State CPF Scheme, the exemption status of appellant’s establishment acquired u/s 16 will not cease or stand withdrawn automatically. (Para 25)
(f) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 1 – Other establishments – Act would apply to all colleges and schools subject to the provisions of Section 16. (Para 17)
(g) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 16 r/w section 2A – Appellant running 29 schools/colleges and has employed around 1151 permanent employees – Presumption u/s 2A attracted – Employees working in concerned schools/colleges of appellant covered by the contributory provident fund scheme framed by the State Government – Appellant entitled to exemption from the Act. (Para 18, 19)
(g) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 16 r/w section 2(19), 2(20), 2(21), 3, 4 and 5 – State Government having power of superintendence and authority to direct, restrict or regulate working of the educational institutions – Appellant’s establishment, 100% grant-in aid schools held, under control of the State Government – Appellant’s institution, held, entitled to exemption u/s 16 – Central Act not applicable. (Para 21, 22, 23)
(2007) 1 SCC 268 – Relied upon
(1972) 4 SCC 600 – Referred
(h) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 16 – The act applies to establishments, not employees – When an establishment is exempted from operation of the Act, it cannot be invoked in respect of some of the employees. (Para 24, 26)
(i) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 16 – Appellant running 29 schools/colleges and receiving 100% grant-in aid from the State Government in respect of 28 schools/colleges – The employees employed with the permission and approval of the State Government and governed by State CPF Scheme – Entire process of appointment strictly monitored by State Government – Appellant submitting employees’ pay bills to Education Department and their salaries directly deposited into their bank accounts – Appellant employing around 1151 employees covered by State Contributory Provident Fund Scheme – Appellant had engaged the 16 part-time employees with the permission and approval of the State Government – Not entitled to benefits of State CPF Scheme of the State – Just because 16 part-time employees were not eligible for benefits of State CPF Scheme, the exemption status of appellant’s establishment acquired u/s 16 will not cease or stand withdrawn automatically. (Para 25)
Facts of the case:
The appellant is a registered society runs 29 (twenty nine) schools and junior colleges in the Wardha District, Nagpur. Out of which, 28 (twenty eight) schools and colleges purportedly received 100% grant-in aid from the State Government.
Between 1996 and 1997 16 part-time librarians were appointed to some of the appellant's colleges, with the permission/approval of the State Government.
On 5th May, 1998, the appellant forwarded a bill of one of the part-time librarians to the Education Officer, with a request to deduct the provident fund. This request was declined with a direction not to deduct provident fund contributions of such part-time employees.
On 6th October, 2005, the officers of Respondent No.1 visited one of the schools of the appellant and sought details of the employees and payments made on their behalf vis-a-vis provident fund contributions.
The appellant mentioned that as per the law, it was not required to deduct provident fund contributions of the concerned part-time employees.
Ultimately, Respondent No.1 heard the matter and passed an order holding that the appellant was liable to pay a sum of Rs. 16,89,796/- as outstanding provident fund contributions.
The appellant filed a review application which was dismissed without granting a hearing.
The appellant filed an appeal before the Appellate Tribunal which was rejected
The appellant also filed Writ Petition challenging the order dated 8th April, 2011 passed by the Appellate Tribunal. The High Court stayed the order and directed the appellant to deposit Rs. 4 lacs in court, which it duly complied with.
Ultimately the High Court dismiss the said writ petition.
Result: Appeal allowed.
JUDGMENT
A.M. Khanwilkar, J.
The present civil appeal arises from the judgment and final order passed by the High Court of Judicature at Bombay, Nagpur Bench dated 17th January, 2012 in Writ Petition No. 4013 of 2011. The High Court has dismissed the aforesaid writ petition filed by the appellant, which had assailed the order of the Employees Provident Fund Appellate Tribunal (for short `Tribunal') dated 8th April, 2011 whereby it was held that the appellant is deemed to have defaulted in depositing the provident fund contributions of 16 (sixteen) of its part-time employees.
2. Before dealing with the legal submissions and issues, it would be apposite to set out the factual matrix leading to the filing of the present appeal:
a) The appellant is a registered society under the Societies Registration Act, 1860 and Bombay Public Trusts Act, 1950 and runs 29 (twenty nine) schools and junior colleges in the Wardha District, Nagpur. Out of which, 28 (twenty eight) schools and colleges purportedly received 100% grant-in aid from the State Government.
b) Between 1996 and 1997, due to administrative exigency 16 part-time librarians were appointed to some of the appellant's colleges, with the permission/approval of the State Government. These librarians worked for lesser hours as opposed to the working hours put in by regular, full-time employees. The appellant contends that the entire process of appointment and approval was monitored and supervised by the State Government. Further, the appellant did not possess any direct control over the payment of or deductions to the salaries of its employees. It is done by the State Authorities.
c) On 5th May, 1998, the appellant forwarded a bill of one of the part-time librarians to the Education Officer, with a request to deduct the provident fund. This request was declined vide a letter dated 19th November, 1998, with a direction not to deduct provident fund contributions of such part-time employees. Subsequently, on 5th March, 2004, the Director of Education issued a letter clarifying that the contributory provident fund scheme was not applicable to such part-time employees. In view of the aforesaid communications, the appellant had reason to believe that it was not supposed to deduct and/or deposit provident fund contributions of its 16 part-time employees.
d) On 6th October, 2005, the officers of Respondent No.1 visited one of the schools of the appellant and sought details of the employees and payments made on their behalf vis-a-vis provident fund contributions.
e) The appellant submitted its response to the aforesaid query vide its letter dated 18th October, 2005, wherein the appellant mentioned that as per the law, it was not required to deduct provident fund contributions of the concerned part-time employees.
f) The appellant, however, received a summons from Respondent No.1 dated 23rd May, 2006, to appear in connection with failure to remit provident fund dues of its employees. Further correspondence in that regard ensued between the parties and adjournments were taken in the matter.
g) Ultimately, Respondent No.1 heard the matter and passed an order dated 1st August, 2007, holding that the appellant was liable to pay a sum of Rs. 16,89,796/- as outstanding provident fund contributions.
h) The appellant then filed a review application dated 14th September, 2007 against the aforesaid order, on the ground that Respondent No.1 had failed to appreciate certain material submissions and objections raised at the time of hearing. Respondent No.1 dismissed the said review with a one-page order, without granting a hearing.
i) During the abovementioned proceedings, 3 (three) out of 16 part-time librarians of the appellant were regularized w.e.f 29th September, 2007. Another librarian was regularized w.e.f. 29th September, 2009. This was done with the approval of the State Authorities.
j) Aggrieved by the aforesaid order passed by Respondent No.1, the appellant filed an appeal before the Appellate Tribunal, which
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