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2025 Supreme(Online)(Ker) 26451
IN THE HIGH COURT OF KERALA AT ERNAKULAM
MOHAMMED NIAS C.P., J
M/s AVG MOTORS LTD. – Appellant
Versus
THE REGIONAL PROVIDENT COMMISSIONER – Respondent
WP(C) NO. 19209 OF 2021
For the Appellants/Petitioners: SHRI.BENNY P.
For the Respondents: SHRI.JOY THATTIL ITTOOP
The court ruled that trainees classified as employees under the EPF Act require proper evidence for classification, necessitating reconsideration of related orders.
Headnote:(A) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 - Section 2(f) - Industrial Employment (Standing Orders) Act, 1946 - Section 12A - Liability to pay contributions for trainees - The petitioner contended that trainees engaged for training do not qualify as employees under the EPF Act, as they were not paid wages but stipends to assist with expenses. The authorities found that the trainees were performing roles akin to regular employees, leading to the issuance of orders for contribution payments. (Paras 2, 4, 12, 13, 14)
(B) Employer-Employee Relationship - The court examined the definition of 'employee' under the EPF Act, noting that apprentices are excluded and emphasized the need for proper evidence to establish the status of trainees. The orders were set aside for reconsideration of the evidence regarding the trainees' employment status. (Paras 12, 14)
Facts of the case:
The petitioner, an authorized dealer, was ordered to remit contributions for trainees who were engaged without proper classification under the EPF Act.
Findings of Court:
The impugned orders were set aside for reconsideration of the trainees' employment status and the applicability of the EPF Act.
Issues: The main issue was whether the trainees qualified as employees under the EPF Act and the implications of the Industrial Employment (Standing Orders) Act.
Ratio Decidendi: The court ruled that the definitions under the EPF Act and the absence of certified standing orders necessitated a reconsideration of the trainee status.
Result: The writ petition is disposed of as above.
| Table of Content |
|---|
| 1. petitioner claims trainees are not employees under epf act. (Para 1 , 2) |
| 2. authorities issued orders based on trainees' roles. (Para 3 , 4) |
| 3. counterarguments emphasize employer-employee relationship. (Para 5 , 6 , 7) |
| 4. legal definitions and amendments discussed regarding employee status. (Para 8 , 9 , 10) |
| 5. court finds need for reconsideration of trainee classification. (Para 12 , 13 , 14) |
JUDGMENT
The petitioner is a company engaged in the sales and service of vehicles and is an authorised dealer for Maruti Suzuki Ltd. It is submitted that the company is duly covered under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “EPF Act") with EPF Code No. KR/15951, and has been regularly remitting contributions for all eligible employees without default. The present dispute arises concerning the liability to pay contributions in respect of certain individuals described by the petitioner as “trainees” who were engaged from January 2009 to January 2010.
2. Proceedings under Section 7A of the EPF Act were initiated by the 1st respondent, culminating in Ext.P2 order dated 04.07.2011, whereby the petitioner was directed to remit contributions in respect of 161 such trainees for the said period. The petitioner submits that this order was passed without proper application of mind and in complete disregard of the legal submissions, statutory provisions, and the documents produced, and pending certification of the standing orders. Aggrieved by the said order, the petitioner filed a statutory appeal before the 2nd respondent Tribunal. However, the Tribunal, too, by Ext. P3 order dated 15.03.2021, dismissed the appeal.
3. The petitioner argues that the trainees do not qualify as employees under Section 2 (f) of the EPF Act, as they were engaged purely for training and not for wages. Any stipend paid was merely ex gratia to assist with basic expenses, rather than a wage as defined under the EPF Act, thus negating any employer-employee relationship. Despite the certification of the petitioner’s standing orders in 2013, the petitioner claims that the Model Standing Orders applied until that time, reiterating that the stipend does not constitute wages and no contributions are due. Under Section 7A of the EPF Act, the 1st respondent issued an order, Ext. P2 on 04.07.2011 requiring contributions for 161 trainees, which the petitioner contends is illegal. An appeal to the 2nd respondent Tribunal was dismissed through Ext.P3 on 15.03.2021, without regard to the exclusion of apprentices under (f)(ii) of the EPF Act. The petitioner also relies on the Industrial Employment (Standing Orders) Act, 1946 , to contend that until standing orders are certified, Model Standing Orders apply, and asserts that the trainees were not performing regular employee duties, had no binding obligations, and lacked contracts of employment or disciplinary control. Consequently, the petitioner maintains there is no assumption of an employer-employee relationship.
4. They also relied on the judgment of the Hon’ble Supreme Court in Regional Provident Fund Commissioner v. Central Arecanut and Cocoa Marketing and Processing Co-operative Ltd. [(2006) 3 SCC 381], that held that the apprentices engaged under the standing orders of an establishment are excluded from the definition of "employee" under Section 2 (f) of the EPF Act. On these grounds, Exts.P2 and P3 orders are challenged.
5. In the counter affidavit submitted by the 1st respondent opposing the writ petition, it is stated that an inspection by the Enforcement Officers of the Employees’ Provident Fund Organisation (EPFO) found that the petitioner had engaged 160 individuals as "trainees" from January 2009 to January 2010 but did not enroll them under the EPF Act. However, these individuals were enrolled under the Employees' State Insurance (ESI) Act, 1948, indicating an employer-employee relationship, leading to proceedings initiated un
