IMPORTANT POINT
The court clarified that trainees paid stipends do not qualify as employees under the Employees Provident Funds Act, necessitating individual case analysis.

JUDGMENT :

Amit Rawal, J.

Six hospitals, namely, M/s. Indo American Hospital, Holy Cross Hospital, Sivagiri Sree Narayana Medical Mission Hospital, M/s. Malabar Hospitals (P) Ltd., Moulana Hospital and Lisie Hospital, except two, that is Holy Cross Hospital and Sivagiri Sree Narayana Medical Mission Hospital, who are indulging into education were confronted with proceedings under the Employees Provident Funds and Miscellaneous Provisions, 1952 (hereinafter called, the 1952 Act) on the allegation that, on the basis of the report of the inspection conducted by the Enforcement Officer, the contribution of the entire number of staff working in the hospital was not being paid, except a few and therefore exigible to the provisions of the 1952 Act and consequential proceedings. The Enforcement Officer as required under the Act is competent to inspect the record by visiting the premises of the establishments to ascertain whether the staff is permanent or a trainee, contractual or bonded etc. for, as per the definition of Section 2(f) 'employee' means an employee employed directly or indirectly in any establishment including the apprentice but not apprentice appointed under the Apprentice Act, 1961 or model Standing Orders.

2. Management of the hospitals purported to have supplied materials and made available the entire documents to the Enforcement Officer by justifying the cause of not submitting the contribution of few members of the staff, who, according to them, were either training staff, bonded worker, contractual or trainees.

3. The Enforcement Officer dissatisfied with the reply submitted a report, resulted into proceedings under Section 7A of the Act. The Assessing Officer conducted a detailed hearing and provided an opportunity of hearing as per the provisions of sub-section (2) of Section 7A of the Act. The representatives of the Hospitals raised multi-fold grounds for non applicability of the provisions of the 1952 Act, which are summarised hereunder:

1) Few of the hospitals are also imparting the education and the students who have passed the final year examinations are mandatorily required to undergo one year training and would not be falling in the definition of permanent employee.

2) The terms and conditions of the appointment letters also reveal that they were paid stipend which is not equivalent to the wages given to the other regular set of employees and appointment is confined to three months; on satisfaction of the work, they would be confirmed and absorbed in the establishment. It is only for those set of employees, the employer would be obliged to make the contribution under the provisions of the 1952 Act.

4. The Assessing Officer after having accepted the request for re-inspection of certain establishments, came to the finding that the workers working under the establishment were infact regular ones and not temporary apprentices appointed under the standing orders, raised the demand.

5. The aforementioned orders were impugned before the Commissioner but of no avail. The matter was taken to this Court under Article 226 of the Constitution of India.

6. Learned Single Judge on analysis of the rival contentions and the case law on record, particularly the judgment of the Supreme Court in Regional Provident Fund Commissioner, Mangalore v. Central Arecanut & Coca Marketing and Processing Coop. Ltd., Mangalore reported in (2006) 2 SCC 381) allowed the writ petition. It is in that background the Employees' Provident Fund Organization is before us in this intra court appeals.

7. Respective counsels representing the EPF in different matters have in unison raised the following submissions:

i) The entire gamut and genesis of the judgment of the learned Single Bench is based on a premise that all the hospitals are indulging into education and therefore the final year students who are mandatorily required to give undertaking, would not fall within the definition of Section 2(ii)(f) of the Payment of Wages Act ; whereas each and every c