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2016 Supreme(Cal) 516
IN THE HIGH COURT AT CALCUTTA
Samapti Chatterjee, J.
M/s. R.K. Trading Co. (India) & others. – Petitioner
Versus
Union of India & others. – Respondents
In W.P 3075, 3076, 5576 (W) of 2016 & In W.P 30687 (W) of 2015
Decided On : 08-11-2016
For the Petitioners:Mr. Tapas Dutta, Learned Advocate
For the U.O.I :Mr. Kaushik Chanda, Learned Advocate, Mr. Tarun Jyoti Tiwari, Learned Advocate
For the P.F. Authority :Mr. Jasobanto Rakshit, Learned Advocate
Contractors engaged in maintenance/E.P.R completion and finishing services with less than 20 workers are required to obtain EPF code to participate in tender process under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
Headnote:
EPF REGISTRATION - TENDER PROCESS - ELIGIBILITY CRITERIA - EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - SECTION 1(3)(B), 2(E)(II), 2(F)(I), 6, 8A - Whether contractors engaged in maintenance/E.P.R completion and finishing services such as glazing, plastering, flooring, wall tailing, installation, electrical fittings, etc. with less than 20 workers are required to obtain EPF code to participate in tender process?
Fact of the Case:
Petitioners, engaged in maintenance/E.P.R completion and finishing services, challenged the impugned letter directing them to participate in the tender process with a mandatory requirement of uploading a copy of the Provident Fund Code number. The petitioners contended that they were not covered under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) as they had less than 20 workers and were not principal workers.
Finding of the Court:
The Court held that the petitioners were required to obtain an EPF code to participate in the tender process. It relied on Section 1(3)(B) of the EPF Act, which includes engineers and engineering contractors within its ambit, and Section 8A, which mandates the recovery of provident fund contributions from contractors.
Issues: 1. Whether the petitioners were required to obtain an EPF code to participate in the tender process? 2. Whether the impugned letter directing the petitioners to participate in the tender process with a mandatory requirement of uploading a copy of the Provident Fund Code number was illegal or against the interest of the public?
Ratio Decidendi: 1. The Court held that the petitioners were required to obtain an EPF code to participate in the tender process. It relied on Section 1(3)(B) of the EPF Act, which includes engineers and engineering contractors within its ambit, and Section 8A, which mandates the recovery of provident fund contributions from contractors. 2. The Court held that the impugned letter directing the petitioners to participate in the tender process with a mandatory requirement of uploading a copy of the Provident Fund Code number was not illegal or against the interest of the public. It reasoned that the condition was imposed for the benefit and betterment of the employees working under the contractors, and that the Court would not interfere with a government contract unless it was patently illegal or wholly against the interest of the public at large.
Final Decision: The Court dismissed the writ petitions filed by the petitioners.
Samapti Chatterjee, J.
1. Assailing the impugned letter dated 6th November, 2015 issued by the Respondent no. 6, director (Contract) for Engineer-in-Chief, Military Engineer Services thereby directing the petitioners to participate in the tender process during the evolution of ‘T’ bid (Cover-1) of e-tendering, and that uploading of copy of Provident Fund Code number in addition to the other documents required shall be mandatory. It was also mentioned in the said impugned order that it should be clearly mentioned that contractor not in possession of this EPF Code number shall be disqualified in bid evolution and his financial bid shall not be opened.
2. The petitioners’ case in nutshell is as follows:
The petitioners are engaged in carrying on business of maintenance/E.P.R completion and finishing services such as glazing, plastering, flooring, wall tailing, installation, electrical fittings, etc. and the number of workers in the petitioners’ establishment are below 20.
3. It is also the case of the petitioners that the petitioners also engaged Subcontractor for labour for execution of the said job. They provide service to the Headquarters, Commercial Works Engineer Military Engineer Services in Kolkata and other branches. It is also submitted that the impugned letter dated 6th November, 2015 has been issued in compliance of the letter issued by the Secretary, (Ministry of labour and employment), Government of India, dated 15th July, 2015 to the effect that all construction workers are to get their benefit of social security, the contractors and sub-contractors shall have provident fund code number in order to participate in the bid and it should also be ensured that all workers deployed by contractors or sub-contractors are enrolled with the number of the provident fund and should be given to the universal account number.
4. It is also case of the petitioner that they are not covered under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the said Act) as the number of workers engaged in their establishment are below twenty and they are not the principal workers.
5. Mr. Dutta, learned advocate appearing for the petitioners vehementlyurged that when Employees Provident Fund Act 1952 was introduced then the employees engaged by/through a contractor was not included in Para 2 (f) (iii) of the scheme. Thereafter pursuant to a notification dated 15th October, 1958 Para 2 (f) (iii) of the scheme was substituted and employees engaged under any contractor was included within the Employees Provident Fund Act 1952. Therefore, Mr. Dutta emphasized that by Notification No. G.S.R. 1467 dated 2nd December, 1960 whereby it was added that, where an employee is employed by/through a contractor for work of an establishment the principal employer shall be responsible for complying with the provision of Act 1952 and the scheme framed there under in relation to such employees.
6. Mr. Dutta further vehemently urged that by this amendment the principal employer is held responsible for making contribution of provident fund for engaging employees by/through a contractor. But that notification was struck down by the Hon’ble Supreme Court in 7 Judges Bench decision reported in 1962 AIR 1402 (M/s. Orissa Cement Ltd vs Union of India) thereby holding that the notification dated 15th January, 1958 and 2nd December, 1960 are unconstitutional and void as those do not impose any obligation on the contractor to the principal employer the amount paid by him on account of the employees.
After that the Act 1952 was further amended on 30th November, 1963.
7. Mr. Dutta further contended that as per Section 2 (f) (i) of the Act 1952 the word “Employee” includes any person by/through a contractor in connection with the work of the establishment.
8. Mr. Dutta further contended that Hon’ble Supreme Court in series of cases held that under the Provident Fund Act it is the principal employer who is statutorily liable for pay
