2011 Supreme(AP) 954
2012 (2) ALT 433
IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD
L. NARASIMHA REDDY, J.
E. Satyanarayana Reddy
Versus
Regional Provident Fund Commissioner (Exemption), Hyderabad and others
Writ Petition No. 9274 of 2011 and Batch
Decided on: 5-11-2011.
M/s. D.V. Chalapathi Rao and Jitender Rao Veeramalla, Counsel for the Petitioners.
Mr. R.N. Reddy, Standing Counsel for Provident Fund Commissioner-Respondent.
Mr. K. Madhava Reddy, Standing Counsel for APSRTC for Respondent.
Headnote:A) EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT, 1952, Section 7-A:-The order of the PF Commissioner calling for contribution towards the payments made to the drivers of the buses engaged by the contractors giving a notice to the APSRTC, but not to the owners of the drivers is violative of the principle of natural justice. (Para 10)
The petitioners in this batch of writ petitions are owners of Buses, which are hired by the Andhra Pradesh State Road Transport Corporation (for short 'the Corporation'), to be operated on its routes. Agreements are entered into by the Corporation with the owners of the buses, stipulating various conditions. The owner of a hired bus is under obligation to put a bus in good condition together with the Driver(s) at the stipulated times. The Corporation would allot the Conductor to issue tickets by collecting fares. The owners of the buses are paid hire charges once in a month.
2. In the year 2008, the Corporation directed its Depot Managers to deduct the provident fund contributions for the drivers on the hired buses, from the hire charges. Challenging such directions, some of the owners filed W.P.No.11619 of 2008 and batch. The directions issued by the Corporation were set aside by this Court through judgment dated 12-08-2009 on the ground that they were issued in violation of the principles of natural justice. It was left open to the Corporation to take necessary steps by issuing show cause notices.
3. The Regional Provident Fund Commissioner, Hyderabad received complaints from the drivers of the hired buses to the effect that P.F contributions, with reference to their services were not being remitted. Acting on that, the Regional Provident Fund Commissioner (for short 'the Commissioner') initiated proceedings under Section 7-A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (for short 'the Act'). Treating the Corporation as the principal employer, the Commissioner required the Corporation to explain as to why the contributions be not recovered. The Corporation entered appearance and pleaded that the• drivers are not its employees and that the owners of the buses are liable to pay the contribution, if at all. The Commissioner passed an order dated 05-03-2006, holding that the Corporation, in its capacity as the principal employer of the drivers of the hired buses, is liable to extend all the benefits under the Act and Schemes from the date of joining of the employees, for the purpose of working, in connection with the Corporation. Direction was issued to make the contributions under the relevant schemes, within the stipulated time.
4. Based upon the orders of the Commissioner, the Corporation issued circulars dated 17-05-2010 requiring its Regional Managers to issue notices to the owners of the hired buses. The circular was challenged in W.P.No.11791 of 2010 and batch. The writ petitions were disposed of leaving it open to the petitioners therein to submit explanations to the notices. Accordingly explanations were submitted. The concerned Regional Mangers issued proceedings dated 25-09-2010, directing deduction of the PF contribution in respect of the drivers from the hire charges payable to the owners. He has also quantified the contribution, kilometre-wise.
5. The petitioners challenge the orders passed by the Regional Managers directing deduction/recovery of PF contribution. They contend that the obligation to pay the PF contribution arises, only if they have engaged more than 20 persons, and that the liability can be fastened upon them by the Commissioner, only after issuing specific notice under the relevant provisions of law. It is urged that any determination or adjudication that has taken place between the Corporation, on the one hand, and the Commissioner, on the other hand, does not bind them. They also contend that there was no basis for the Corporation to demand or levy the PF contribution for each kilometre and that such a course is totally impermissible in law.
6. Counter-affidavits are filed by the Corporation, on the one hand, and the Commissioner, on the other hand. The Corporation states that the hire charge's that are determined by it have the component of the salary payable to a driver, and the salary of the driver in turn, is arrived at by taking into account the minimum wages for th