An employer who engages a contractor is liable for the provident fund dues of the contractor's employees, even if the contractor also works for other employers.

I.P. Mukerji, J.

The law is this. Under Section 2 (f) (i) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952,(the Act) read with Sections 1(3) (a) and (b), 2 (e) and 6 thereof, an employer, who gets his work done through contract labour, is liable to pay the provident fund dues of the employees of his contractor. There is no dispute that the writ petitioners (the writ petitioner) got their work done by entering into contracts with various contractors, which in the particular trade in which the writ petitioner is engaged, are known as "job workers". On 3rd April, 1998 and 6th April, 1998 summons were issued to them by the Provident Fund Authority under Section 7A of the said Act, to show cause why they should not pay the Provident Fund dues of their contractors.

2. The writ petitioner argued, through Mr. Sarkar, learned senior Advocate that their contractors were independent and were not subject to their supervision or control.

3. Amongst other points they argued that the work entrusted to the job workers was not done exclusively for them by those persons or organisations. They worked for many employers. Therefore, how could the writ petitioner be responsible for the Provident Fund dues of the employees of a contractor who had multiple employers? In fact this point never arose in the decisions cited before me and appears to be very novel. Secondly, it was submitted that even if it is assumed that an employer is liable for the provident fund dues of the contractor, in that event, the employer cannot be liable for the entire provident fund liability. The work a contractor was doing for a particular employer in proportion to the entire work he was doing on job work for all his employers had to be determined. A particular employer can be liable in wages in respect of that proportion of the work done by the employees of the contractor. Furthermore, the exact number of employees of the contractor had to be ascertained.

4. The impugned order dated 10th February, 1999 was a preliminary determination as to whether the writ petitioner was liable. The Assistant Provident Fund Commissioner came to the finding that the writ petitioner was liable for the Provident Fund dues of the employees engaged through the contractors. This order is challenged on the above grounds. Now I come to the facts in some detail.

5. The case of the writ petitioner is this. They are traders. They are marketing hosiery goods. Their trade activity is carried out in this way. They buy yarn from spinning mills. This yarn is sent to the knitters directly by the spinning mills. These knitters weave the fabric. The woven cloth is sent to processors for bleaching, dyeing etc. Thereafter it is sent to the cutters for cutting the cloth. Thereafter, it goes to another set of artisans called "makers" who stitch, do the finishing work and pack the goods. The writ petitioner say that each stage of the work is done by independent contractors. They have no administrative control over them. It is a contract of service. These contractors have their employees whom they control. Now, the writ petitioner’s version is that each of these independent contractors also works for other employers. In other words, none of the contractors do work for the writ petitioner, exclusively (see paragraph 4 of the petition).

6. Therefore, the writ petitioner does not have any idea about the number of persons and the identity of these persons employed by each independent contractor. Secondly, the writ petitioner does not know what proportion of the total work of the contractor constitutes the job work assigned to them by the writ petitioner.

7. Mr. Sarkar submits that the writ petitioner employer is not liable for the provident fund dues of independent contractors. Mr. Sarkar contends in the alternative that assuming that the job workers were work contractors under the supervision of the writ petitioner, unless a contractor does work exclusively for an employer, the employer does