1. Ext.P1 Government Order dated 24.9.1998 directing the Kerala Co-operative Milk Marketing Federation to comply with C1.26A of the Employees Provident Fund Scheme and directing the respondents from discontinuing or reducing the rate of employees contribution under the E.P.F. Act from 12% on the amount of salary in excess of Rs.5,000/- per month was under challenge at the instance of some of the employees and the Ernakulam Regional Co-operative Producers Union Officers Association.

2. Heard the learned Counsel for the petitioner and the learned Government Pleader. The Kerala Co-operative Milk Marketing Federation was contributing an equal amount of contribution as employers share to the Employees Provident Fund Scheme. The Audit Department raised objection noting that the share of contribution made by the employer was in excess of the limits under C1.26A(2) of the Employees' Provident Fund Scheme. The above matter was brought to the notice of the Government. Accordingly, the Government issued Ext.Pl letter to the Kerala Co-operative Milk Marketing Federation to discontinue the remittance of the employers share of contribution in excess of the statutory limits and comply with C1.26A(2) of the Employees Provident Fund Scheme. The above order (Ext.Pl) is under challenge at the instance of some of the employees as well as the representative of the trade Union.

3. One of the arguments advanced by the learned Counsel for the petitioner was that the Government was not competent to issue such an order like Ext.P1 and as such it was illegal. A reading of Ext.P1 would reveal that the Audit Department made certain objections relating to the contributions made by the employer in excess of the statutory limits to the E.P.F. Scheme and that was brought to the notice of the Government and accordingly, the Government issued Ext.P1 directing to comply with the statutory provisions. Ext.P1 order reads:

"I am directed to invite attention to the letter cited in which you had given replies to several audit queries. Vide Note No.4 in Part-A of your reply, it is stated that the Employer's share of contribution to EPF have been made by the management to the officer category in excess of the limit fixed. The audit objection in this regard is seen confirmed by you.

As per C1.29 of the EPF Scheme, 1992, the employer is bound to contribute 8-1/3% (subsequently increased to 10% and now 12% with effect from 22-9-1997) of the Basic Pay + DA of an Employee as Employer's contribution to the EPF Scheme. However, as per C1.26(A)(2) of the said Scheme, it is stated that if the monthly salary (Basic Pay + Dearness Allowance of an employee exceeds Rs.1600/P.M. (subsequently increased to Rs.3000/- and now to 5000/-) the contribution payable by the employer, shall be limited to the amounts payable on the monthly pay of Rs.1,600/- now this limit is Rs.5,000/- P.M.

The practice stated to have been followed in the KCMMF and the 3 unions for the last several years is totally against C1.26(A) of the EPF Scheme.

Therefore, I request you to stop this practice forthwith. It should be made sure that in future the Employers contribution towards EPF be remitted strictly in accordance with the relevant provision in the EPF Scheme, 1992."

Orders regarding recovery of the excess amount paid will be issue subsequently".

C1.29 of the Employees Provident Fund Scheme deals with the of contribution. Sub-cls.(1) and (2) read as follows:

"(1) The contributions payable by the employer under the Scheme shall be at the rate of (ten percent) of the (basic wages, dearness allowance (including the cash value of any food concession) and retaining allowance (if any) payable to each employee to whom the Scheme applies:

(Provided that the above rate of contribution shall be (twelve per cent) in respect of any establishment or class of establishments which the Central Government may specify in the Official Gazette from time to time under the first proviso to sub-s.(1) of S.6 of the Act.)

(2) The