The term "Co-operative Society" in Clause (a) of sub-paragraph (1) of Paragraph 68-B of the Employees' Provident Fund Scheme, 1952 should not be restricted to mean only a co-operative housing society.

Headnote:
EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - SECTION 68-B - EMPLOYEES' PROVIDENT FUND SCHEME, 1952 - PARAGRAPH 68-B - WITHDRAWAL FROM PROVIDENT FUND FOR PURCHASE OF DWELLING HOUSE - INTERPRETATION OF CLAUSE 3(A)(III) AND PROVISOS - CO-OPERATIVE SOCIETY AS AGENCY - ENCUMBRANCES ON DWELLING HOUSE/FLAT.
Fact of the Case:

Employees of a Co-operative Bank sought to withdraw funds from their provident fund for the purchase of residential flats. The Regional Provident Fund Commissioner denied their request, citing that the flats were encumbered and thus not eligible for withdrawal under Clause 3(a)(iii) of Paragraph 68-B of the Employees' Provident Fund Scheme, 1952.
Finding of the Court:

The court interpreted Clause 3(a)(iii) and its provisos in favor of the employees. It held that the flats were not encumbered within the meaning of the clause because they were mortgaged to the Co-operative Bank, which was an agency referred to in Clause (a) of sub-paragraph (1) of Paragraph 68-B. The court also held that the term "Co-operative Society" in the clause should not be restricted to mean only a co-operative housing society.
Issues: Whether the flats proposed to be purchased by the employees were encumbered within the meaning of Clause 3(a)(iii) of Paragraph 68-B of the Employees' Provident Fund Scheme, 1952.
Ratio Decidendi: The court held that the flats were not encumbered because they were mortgaged to the Co-operative Bank, which was an agency referred to in Clause (a) of sub-paragraph (1) of Paragraph 68-B. The court also held that the term "Co-operative Society" in the clause should not be restricted to mean only a co-operative housing society.
Final Decision: The court allowed the employees to withdraw funds from their provident fund for the purchase of residential flats.

JUDGMENT - AGARWAL ASHOK, J.:—The right of the employees to withdraw from their provident fund for the purchase of their dwelling houses is questioned by the first respondent, the Regional Provident Fund Commissioner, and hence the petitioners have filed the present petitions.

2. The petitioners are employees of the Abhyudaya Co-operative Bank Ltd., the third respondent herein. They are members of the Employees' Provident Fund and the scheme framed under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “the Act”). Each of the petitioners desires to purchase a residential flat. They have entered into agreements with different builders for purchasing their flats. They have obtained loans from their employers, the third respondent. They have deposited xerox copies of the agreements entered with the builders with their employers. The amount advanced by the employers having fallen short of the requisite purchase price, they desire to withdraw from their provident fund. It is contended on behalf of the first respondent that the petitioners are not entitled to withdraw from the provident fund because the flats which they are proposing to purchase are encumbered. Reliance is placed on Clause 3(a)(iii) of Para 68-B of the Employees' Provident Fund Scheme, 1952. The said provision has, therefore, fallen for my interpretation.

3. In exercise of the powers conferred by section 5 of the Act, the Central Government has framed the Employees' Provident Fund Scheme, 1952. Chapter VIII of the Scheme deals with nominations, payments and withdrawal from the funds. The relevant para which falls for my consideration is paragraph 68-B which deals with a provision for withdrawal from the fund for the purchase of a dwelling house, flat or for the construction of a dwelling house including the acquisition of a suitable site for the purpose. Sub-para (1) of paragraph 68-B in so far as it is relevant for the present enquiry is concerned, is as under :—

“The Commissioner, may............sanction from the amount standing to the credit of the member in the Fund, a withdrawal—

(a) for purchasing a dwelling house/flat or for constructing dwelling house including the acquisition of a suitable site for the purpose from the Central Government, the State Government, a Co-operative Society, an institution, a trust, a local body or a Housing Finance Corporation (hereinafter referred to as the agency/agencies); or

(b) for purchasing a dwelling site for purpose of construction of a dwelling house or a ready-built dwelling house/flat from any individual; or

(bb) for purchasing dwelling house/flat on ownership basis from a promoter governed by the provisions of any Flats or Apartments Ownership Act...................:

Provided that the member has entered into an agreement with the promoter..............and the said agreement is registered under the Indian Registration Act, 1908;

(c) for the construction of a dwelling house on a site owned by the member or the spouse of the member or jointly by the member and the spouse, for the purchase of a house/flat in the joint name of the member and the spouse under Clauses (a) and (b) above.

Explanation : In this paragraph, the expression, “Co-operative Society” means a society registered or deemed to be registered under the Co-operative Societies Act,............”

4. Sub-paragraph (2) of paragraph 68 deals with the extent of the amount which a member can withdraw. According to sub-paragraph (2) the amount of withdrawal will not exceed the member's basic wages and dearness allowance for thirty six months or the member's own share of contributions together with employer's share of contribution with interest thereon or the actual cost towards the acquisition of the dwelling site together with the cost of construction thereon, or the purchase of the dwelling house/flat or the construction of the dwelling house, whichever is the least. Since there is no controversy in the instant case, in regard

Click Here to Read the rest of this document