Back
1994 Supreme(MP) 709
U.L. Bhat, M. Tamaskar
Khemchand Motilal Tobacco
vs
Union Of India (Uoi) And Anr.
Decided On : 31 August, 1994
The amendment to paragraph 26(2) of the Employees' Provident Funds Scheme, 1952, which entitles and requires eligible employees of a concerned factory or establishment to become members of the Fund from the date of joining the establishment or factory, is valid and does not violate the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, or the Constitution of India.
Headnote:
EMPLOYEES' PROVIDENT FUNDS SCHEME - AMENDMENT - VALIDITY - EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - SECTION 5, 6D, 7(2) - EMPLOYEES' PROVIDENT FUNDS SCHEME, 1952 - PARAGRAPH 26(2) - CONSTITUTION OF INDIA - ARTICLE 14, 19(1)(G).
Fact of the Case:
Writ petitions challenging the validity of the amended paragraph 26(2) of the Employees' Provident Funds Scheme, 1952, which entitles and requires eligible employees of a concerned factory or establishment to become members of the Fund from the date of joining the establishment or factory.
Finding of the Court:
1. The amendment to paragraph 26(2) of the Scheme is valid and does not violate Section 7(2) of the Act. 2. The compulsory contribution does not amount to denial of minimum wages. 3. The amendment is not impracticable or unworkable. 4. The amendment is not ultra vires the Act or Article 14 or Article 19(1)(g) of the Constitution.
Issues: 1. Whether the amendment to paragraph 26(2) of the Scheme is valid in light of Section 7(2) of the Act? 2. Whether the compulsory contribution amounts to denial of minimum wages? 3. Whether the amendment is impracticable or unworkable? 4. Whether the amendment is ultra vires the Act or Article 14 or Article 19(1)(g) of the Constitution?
Ratio Decidendi: 1. The duty of the Central Government is to lay the notification before each House of Parliament while it is in session. It should be so laid for a total period of 30 days comprised in one session or two sessions or more sessions. There is no provision that notification shall take effect only after both the Houses of Parliament have taken decision in that regard. Section 7(2) only enables the Parliament to make any modification in the notification or decide that the notification should not be issued. 2. The contribution made by the employer and the employee is for the benefit of the employee. It reaches the hands of the employee or his legal representatives. Therefore, the contention that the employees' contribution erodes the minimum wages guaranteed under the law is without substance. 3. The definition of 'employee' in the Act is wide enough to include persons employed through contractors in or in connection with the work of the factory or establishment. The impugned provision does not place unbearable burden or onerous obligation on the employer so as to affect their constitutional rights. 4. The purpose of the Scheme of the Act is to provide for the institution of Provident Funds for the employees and conferment of certain other benefits on them. There is nothing inequitable or unfair in the requirement that 'employee', as defined, should be required to become member of the fund with effect from the date of joining the factory or establishment.
Final Decision: The writ petitions challenging the validity of the amended paragraph 26(2) of the Employees' Provident Funds Scheme, 1952, are dismissed with costs.
U.L. Bhat, C.J.
1. A common question arises for consideration in this batch of writ petitions, namely whether the amended paragraph 26(2) of the Employees' Provident Funds Scheme, 1952 (for short, 'the Scheme'), framed under Section 5 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short, 'the Act'), is valid. Hence these writ petitions are being disposed of by a common order
2. M P No. 432/91 is filed by manufacturer of Soya Products. M. P. No. 1230/91 is filed by Association of Lime Manufacturers and a Lime Manufacturer. M. P. No. 743/91 and M. P. No. 3030/91 are filed by Paper Manufacturers. M. P. No. 2680/91 is filed by Cement Manufacturers. M. P. No. 3664/91 is filed by an Engineering and Construction Contractor. The remaining petitions are filed by Bidi manufacturers.
3. The Act, as originally conceived, was to provide institution of Provident Funds for employees of factories and other establishments. Scope of the Act was subsequently extended to provide for family pension scheme and Employees' Deposit Linked Insurance Scheme. Section 5 of the Act enables Central Government to frame Scheme for the establishment of Provident Funds for employees or for any class of employees and specify the establishments or class of establishments to which the Scheme shall apply. On the framing of the Scheme, a fund shall be established in accordance with the provisions of the Act and the Scheme. The Fund shall vest in and be administered by the Central Board constituted under Section 5A. The Scheme may provide for any of the other matters specified in Schedule-II. 'Industry', as defined in Section 2 of the Act, includes any establishment specified in Schedule-I and includes any other industry added in the Schedule by Notification under Section 41. Cement industry, engineering and construction industries, edible oil industry etc. were included originally in Schedule-I. Bidi industry was included in the Schedule by Notification dated 15-5-1977. Paper products industry was included by Notification dated 11-7-1966. The broad features of the Act, as far as this case is concerned, are that employees of the scheduled industries are to be enrolled as members of the Scheme and they, as well as their employers are to make contribution to the Fund. The Act provides for machinery and procedure for recovery of amount under the Scheme from employers and contractors. The Central Government is to appoint Commissioners, Additional Commissioners, Deputy Commissioners, Regional Commissioners and Assistant Commissioners etc.
4. The Scheme, broadly speaking, provides for contributions, payment of contributions, recovery of members' share of contribution, filing declarations and returns, maintenance of contribution costs, allotment of account numbers, mode of payment of contribution, inspection of cards, administration of Fund, accounts and audit, nominations, payment and withdrawal from Fund etc.
5. Paragraph 26 deals with class of employees entitled to join Provident Fund Scheme. Paragraph 26(2) as it originally stood, read as follows :
"26(2) - After this paragraph comes into force in a factory or other establishment, every employee employed in or in connection with the work of that factory or establishment, other than an excluded employee, who has not become a member already, shall also be entitled and required to become a member from the beginning of the month following that in which he completes six months' continuous sendee or has actually worked for not less than 60 days within the period of three months or less in that factory or other establishment or in any factory or establishment to which the Act applies under the same employer, or partly in one and partly in the other or has been declared permanent in any such factory or other establishment whichever is earliest."
By Notification dated 16-1-1981, the above paragraph was amended substituting "three months" for "six months". In other words, under paragraph 26(2) of the
