The main legal point established in the judgment is the interpretation of the definition of 'employee' under Section 2(f) of the EPF Act and the relevance of various grounds in determining employee status.

Virender Singh, J.

The petitioner, who is Assistant Provident Fund Commissioner (for short APFC) on behalf of Central Board of Trustees, Employees Provident Fund Organization has challenged the order dated 26.07.2016 passed by the Employees Provident Fund Appellate Tribunal, New Delhi (for short EPFAT) in ATA No. 1212(8) of 2015, whereby learned EPFAT has allowed the appeal filed by the respondent and set aside the order passed by the Regional Provident Fund Commissioner directing the Respondent to deposit contribution of provident fund of 1223 employees working in the respondent establishment taking them as regular employees of the respondent establishment.

2. Relevant facts giving rise to the present petition; in brief are that to secure compliance of the provisions of the EPF Act, an inspection was carried out in the Respondent establishment on 06.01.2012 and 22.01.2012. It was found that total 2926 employees were working in the Respondent establishment; out of which, as shown by the Respondent, 1753 employees were employed directly, 150 employees were employed through contractor and 1223 were appointed as trainee technicians. It was further found that in fact these 1223 employees were also regular employees of the Respondent establishment but to avoid responsibility towards the contribution of provident fund, these employees were shown as apprentices or trainees. Therefore, RPFC (Regional Provident Fund Commissioner) directed the Respondent to extend PF membership and to deposit contribution of PF of these employees and in fact thereafter recovered it also. The order was challenged by the Respondent before the EPFAT by filing an appeal. The appeal was allowed vide order dated 26.07.2016 on various grounds discussed in para 16 to 25 of the order of the EPFAT, which will be discussed later, and the order of the RPFC was set aside. This order of the EPFAT is under challenge in the present petition.

3. The seminal question that emerges for consideration in the present controversy is whether 1223 persons working in the respondent establishment are "employees" within the preview of Section 2(f) of the Employees Provident Fund and Miscellaneous Provision Act, 1952 (in short "EPF Act").

4. According to the Petitioner they are "employees" as :-

(i) the respondent paid attendance bonus, retention bonus and efficiency payment to these 1223 employees, which are generally given to the regular employees for the purpose to discourage the employees to take leave so that production may not be affected adversely due to absence of the employees, experience employees may not leave the service and establishment may take advantage of their experience and efficiency payment is given to encourage them to increase or enhance their efficiency etc.

(ii) as per the Apprentice Act, 1961 (52 of 1961) ratio of the regular employees and apprentices should be 7:1, whereas in the case of respondent, it was approximately 10:7, which proves that these 1223 employees are not trainees/apprentices but were regular employees.

(iii) out of total 3126 employees working in the Respondent establishment 1753+150 = 1903 were employed directly and through contractor and rest 1223 were shown as appointed as trainee technicians i.e. almost 70% of employees were shown as apprentice, which makes it clear that the production of the respondent was dependent on the person's described as Trainee technicians/apprentices, therefore, they are eligible to be considered as "employees" under EPF Act.

(iv) the respondent has paid bonus to 2950 employees for the year ending 31/03/2011. Definition of employee given under Section 2(13) of the Payment of Bonus Act, 1965 excludes apprentices. Considering the total number of persons employed directly or through contractor by the respondent shown as 1753 + 150 and thus remaining employees who were benefited by bonus were definitely regular employees of the Respondent.

(v) while applying in form No.4 prescribed under M.P. Factories Rules, 1962