AI Structured Summary
Not yet generated for this judgment
Judgment
M.R. Shah, J.—As common question of law and facts arise in all these petitions, they are being disposed of by this common judgment and order.
Special Civil Application No. 15691 of 2004 has been preferred by the Petitioner-Gujarat State Road Transport Corporation for an appropriate writ, direction and order quashing and setting aside the impugned communications made by Respondent No. 1-Regional Provident Fund Commissioner (C & R) dated 15.10.2004 and dated 9.11.2004 and thereby to allow the Petitioner-Corporation to make payment contribution towards Provident Fund contribution at the rate of 10% instead of 12% and further allow the corporation to get the adjustment of the excess amount of Provident Fund Contribution made to the tune of Rs. 54.17 crores in the Provident Fund Trust Account since 1997.
2.1. Special Civil Application No. 15171 of 2004 can be said to be cross petition to the Special Civil Application No. 15691 of 2004 filed by the Petitioner Gujarat State S.T. Karmachari Mahamandal for quashing and setting aside the Circular No. 16074 dated 12.10.2004 (Annexure A) and consequential decision of deducting Provident Fund at the rate of 10% from the salary of the employees and workmen for the month of October 2004, declaring it to be violative of the provisions of the Employees Provident Funds Act, 1952 (herein after referred to as "the Act").
2.3. Special Civil Application No. 5285 of 2006 has been preferred by the Petitioner-P.F. Trustee, S.T. Karmachari P.F. Trust-Joint Secretary of the Gujarat State S.T. Karmachari Maha Mandal for an appropriate writ, direction and order directing Respondent Nos. 1 and 2 i.e. Managing Director, Gujarat State Road Transport Corporation and the Chief Accounts Officer to immediately comply with the provisions of the Act in so far as it relates to deposit of arrears of amount of contribution/subscription with equal contribution of the Corporation in the Provident Fund Account and Family Pension Account with the Provident Fund Trust.
Shri Dagli, learned advocate for the Petitioner of Special Civil Application No. 15691 of 2004 has submitted that u/s 6 of the Act, 1952, the Petitioner is liable to deposit their contribution to the Provident Fund at the rate of 10% however considering the proviso of Section 6 and considering the Notification dated 9.4.1997, the Corporation voluntarily passed resolution for deduction of their contribution towards P.F at the rate of 12%. It is submitted that the objection was raised by the audit party, that the Petitioner had been making enhanced contribution at the rate of 12% from 1997 though it had been suffering cash losses and accumulating loss exceeding its entire net worth even prior to 1997-98 which could have been avoided in view of its weak financial position and has been defaulting in payment of PF dues from August 2003. It is submitted that as per the objection raised by the Auditor Officer, the notification issued by the Central Government enhancing the provident fund contribution to 12% shall not be applicable, to the Petitioner corporation as there is accumulated loss equal to or exceeding its entire net worth and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year. Therefore, it is submitted that considering the fact that corporation had been suffering the cash loss and had accumulated loss exceeding its entire net worth even prior to 1997-98, and considering the fact that even the corporation was in default in depositing their contribution towards P.F from August 2003, Petitioner approached Respondent No. 1 by submitting that their case falls within the ambit of Clause (III) of Schedule II in view of direction issued by the Ministry of Labour, Government of India, bearing F No. S-35019/1/97-SS-II dated 9.4.1997 and therefore it was requested to permit the corporation to deposit/pay their contribution towards PF at the rate of 10% as proviso to Section 6 of the Act and the notification enhancing the contribution to be deposited at the rate of 10% would not be applicable to the Petitioner and therefore, it was requested to permit them to deposit their contribution P.F towards 10%. However, by communication dated 15.10.2004 Respondent No. 1-Regional Provident Fund Commissioner (C & R) directed the Petitioner Corporation to continue to pay the P.F contribution at the rate of 10% instead of 12% by observing that GSRTC has been contributing the P.F at the rate of 12% since 1997 till date and therefore, once the establishment start paying contribution at the enhanced rate, it does not have the option to revert back to the old rate of contribution. Being aggrieved and dissatisfied with the aforesaid communication dated 15.10.2004, the Petitioner Corporation has preferred the present Special Civil Application No. 15691 pf 2004. It is to be noted that having prima facie considered the notification dated 9.4.1997 the learned Single Judge while admitting the present petition has granted the interim relief in terms of para 8(C) allowing the Petitioner Corporation to continue to make P.F. Contribution at the rate of 10% instead of 12% prospectively. It is to be noted that at the time of admission of the petition and considering the facts, the learned advocate for the Petitioner-Corporation fairly conceded that though the financial condition of the Petitioner-corporation is in a pathetic state since long i.e. even prior to issuance of notification dated 9.4.1997, he has instruction not to press for the interim relief retrospectively and press the same only prospectively because even if under mistake the corporation has paid the contribution at the rate of 12%, as a public body, interim relief cannot be pressed with retrospective effect. However, it was submitted that looking to the financial position of the corporation the Petitioner shall be exempted from making contribution at an enhanced rate.
3.1. As stated above, Petitioner of Special Civil Application No. 15171 of 2004 i.e. Union has prayed for an appropriate writ, direction and order directing the corporation to pay their contribution at the enhanced rate of 12%.
Shri Dgali, learned advocate for the Petitioner-Corporation has vehemently submitted that the impugned communication dated 15.10.2004 in not considering the case of the Petitioner corporation on merits and not permitting the Petitioner corporation to pay/deposit their P.F contribution at the rate of 10% on the ground that their case falls within the ambit of Clause (III) of Schedule II of direction issued by the Ministry of Labour, Government of India, bearing F No. S-35019/1/97-SS-II dated 9.4.1997 is absolutely illegal and most arbitrary. It is submitted that the application of the Petitioner Corporation permitting them to pay the P.F contribution at the rate of 10% and directing the corporation\\to continue to pay P.F contribution at the enhanced rate of 12% on the ground that the once the Petitioner start paying contribution at the enhanced rate, it does not have the option to revert back to the old rate of contribution, is absolutely illegal and contrary to the aforesaid notification dated 9.4.1997. It is submitted that Respondent No. 1 was required to at least consider their case on merits and the submission on behalf of the Petitioner that as the corporation had been suffering cash loss and has accumulated losses exceeding its entire net worth and considering the weak financial position and considering the fact that even the corporation has been defaulting in payment of PF dues from August 2003 even at the rate of 10%, Respondent No. 1 was required to consider same on merits and required to consider whether the case of the corporation falls within the ambit of Clause (III) of Schedule II of aforesaid Notification or not and whether in such situation the corporation would still be required to pay their P.F contribution at the enhanced rate or not. It is submitted that entire material was placed before Respondent No. 1 to establish and show cash losses and accumulated losses, which is not considered by Respondent No. 1 at all and has directed the Petitioner to pay P.F contribution at the enhanced rate solely on the ground that as the corporation has started paying contribution at the enhanced rate, it does not have the option to revert back to the old rate of contribution. Therefore, it is requested to allow the present Special Civil Application and direct Respondent No. 1 to reconsider their appilcations dated 12.5.2004 and 17.6.2004 so as to enable/allow the Petitioner to deposit/pay their P.F Contribution at the rate of 10%.
Petition is opposed by Shri M.S. Rao, learned advocate for Respondent No. 1. He has relied upon the affidavit filed on behalf of Respondent No. 1 and has also relied upon the Section 6 and 17(1)(b) of the Act, 1952. It is submitted that in fact there is an exemption in favour of Petitioner corporation as provided u/s 17(1) of the Act and as such Petitioner-corporation has committed a breach of condition of the exemption and, therefore, as such exemption is liable to be cancelled/withdrawn for which the notice has been issued by the Commissioner. It is submitted that even otherwise as per Sub-section (3) of Section 17 where, in respect of any person or class of persons employed in any establishment, an exemption is granted under Sub-section (2A) or Sub-section (2B) from the operation of all or any of the provisions of any Insurance Scheme, the employer in relation to such establishment shall not, at any time after the exemption without the leave of the Central Government, reduce the total quantum of benefits in the nature of Life Insurance to which any such person or class of persons was entitled immediately before the date of exemption. It is submitted that in the present case though the application of the Petitioner - corporation to enable/allow them to pay P.F contribution at the reduce rate came to be rejected, the corporation passed a resolution and took the decision to pay contribution at the reduced rate of 10%, which is not permissible.
5.1. It is further submitted by Shri Rao, learned advocate for the Respondent No. 1 that as per proviso to Section 6, Central Government may by notification enhanced the rate of P.F Contribution to 12% and such establishment is required to pay. It is submitted that consequently in exercise of powers under proviso to Section 6 of Notification dated 9.4.1997 has been issued to enhance the rate of P.F contribution to 12% instead of 10% and therefore, Petitioner is bound to pay the same. It is submitted that therefore, once the Petitioner corporation started paying contribution at the enhanced rate of 12%, as rightly observed by Respondent No. 1, it does not have the option to revert back to the old rate of contribution. Therefore, it is requested to dismiss the present Special Civil Application.
Shri Jani, learned advocate for the Respondent Union has adopted the submissions made by Shri Rao, learned advocate for Respondent No. 1. He has further submitted that if this Court is inclined to remand the matter to Respondent No. 1 for its reconsideration, in that case, it may be clarified that application of the Petitioner shall be considered in accordance with law and on merits and prospectively i.e. Petitioner cannot be permitted to pay/deposit their P.F contribution at the reduced rate of 10% retrospectively i.e. from 1997 to 2004 as it will create chaos so many problems, as in the meantime so many employees might have retired and it is likely to create more complication. It is submitted that even otherwise when the Petitioner voluntarily accepted to pay/deposit their contribution towards P.F at the rate of 12%, they cannot be permitted to revert back to the old rate of contribution and to pay their contribution at the rate of 12% retrospectively. Shri Dagli, learned advocate for the Petitioner-Corporation has fairly submitted that they have no objections while remanding the matter to Respondent No. 1 it clarification is made as suggested by Shri Jani, learned advocate for the union.
Now, so far as Special Civil Application No. 5285 of 2006 is concerned, Shri Raval, learned advocate for the Corporation has requested to grant at least three months time to clear entire arrears of their P.F contribution. It is submitted that out of the total outstanding dues, substantial amount has been deposited/paid and only sum of approximately Rs. 50 crores is now outstanding. Therefore, it is requested to grant some reasonable time to clear the outstanding due by the corporation looking to their financial position.
Having heard the learned advocates for the respective parties, the short question which is to be considered by this Court is whether the case the Petitioner-Corporation falls within the ambit of Clause (III) of Schedule II of direction issued by the Ministry of Labour, Government of India, bearing F No. S-35019/1/97-SS-II dated 9.4.1997 and whether despite the fact the corporation is suffering cash loss and accumulated losses exceeding its entire net worth and despite its weak financial position and despite the fact that the corporation has been in default in payment of P.F dues from August 2003 even at the rate of 10%, the corporation is liable to pay/deposit their P.F contribution at the enhanced rate of 12%? It appears that the Petitioner corporation has approached Respondent No. 1 with full particulars and materials showing that the Petitioner has been suffering cash loss and accumulated losses and therefore, their case was falls within the ambit of Clause (III) of Schedule II of direction issued by the Ministry of Labour, Government of India, bearing F No. S-35019/1/97-SS-II dated 9.4.1997 and therefore, notification dated 9.4.1997 would not be applicable to them and therefore, they are not required/liable to pay/deposit their P.F contribution at the enhanced rate of 12%. Without considering the material on record and without considering the contention that their case falls within ambit of Clause (III) of Schedule II of direction issued by the Ministry of Labour, Government of India, bearing F No. S-35019/1/97-SS-II dated 9.4.199, Respondent No. 1 directed the Petitioner corporation to pay their P.F contribution at the enhanced rate of 12% solely on the ground that once the Petitioner started paying contribution at the enhanced rate, it does not have the option to revert back to the old rate of contribution. As such Respondent No. 1 was required to consider whether the case of the Petitioner corporation falls within the ambit of Clause (III) of Schedule II of Notification or not and whether the corporation is liable to pay/deposit their P.F contribution at the enhanced rate of 12% or not. Therefore, if Respondent No. 1 would have considered the application of the Petitioner on merits,it would have been established that the Petitioner-corporation had been suffering cash losses and accumulated losses and that case falls within Clause (III) of Schedule II of Notification, in that case, it might be that Petitioner-corporation would not be liable to pay/deposit their PF contribution at the enhanced rate of 12% as they could be exempted from making P.F contribution at the enhanced rate. The aforesaid aspect has not been considered by Respondent No. 1 at all and therefore, impugned communication dated 15.10.2004 cannot be sustained and same deserves to be quashed and set aside and the matter is to be remitted to Respondent No. 1 for reconsidering the applications submitted by the Petitioner corporation dated 12.5.2004 and 17.6.2004 afresh in light of the observations made herein above and Respondent No. 1 is to be directed to consider on the material available on record whether the case of the Petitioner corporation falls within Clause (III) of Schedule II of Notification or not. However, even if Respondent No. 1 comes to the conclusion that the case of the Petitioner corporation falls within Clause (III) of Schedule II of Notification and they are exempted from payment of P.F contribution at the enhanced rate of 12% as stated herein above and as fairly conceded, same shall not be prospectively i.e. from the date of their application i.e. 12.5.2004 and same shall be made applicable retrospectively as Petitioner had voluntarily paid their P.F contribution at the rate of 12% from the period of 1997 and for the first time the Petitioner-corporation submitted the application before Respondent No. 1 allowing them to pay their P.F contribution at the rate of 10%. If such an order is not passed and retrospective effect is given there is likelihood of number of complications, recovery of amount etc. as so many persons might have expired and/or retired in between.
Now, so far as the contention on behalf Shri Rao, learned advocate for the Respondent relying upon Sub-section (3) of Section 17 of the Act, 1952 is concerned, it is to be noted that as such the Petitioner-corporation did approach Respondent No. 1 to allow them to pay/deposit the P.F contribution at the rate of 10%. Even otherwise, the case of the on behalf of the Petitioner is that their case falls within Clause (III) of Schedule II of Notification and therefore, they are not liable to pay P.F contribution at the enhanced rate of 12%. Therefore, it would not be a case of reduction of P.F amount but it would be case of Petitioner-Corporation that whether their case falls within Clause (III) of Schedule II of Notification dated 9.4.1997 or not.
In view of the above, Special Civil Application No. 15171 of 2004 succeeds in part and the impugned communication dated 15.10.2004 and 9.11.2004 issued by Respondent No. 1 rejecting the application of the Petitioner corporation to allow them to pay P.F contribution at the rate of 10% instead of 12% and directing the Petitioner-corporation to pay/deposit P.F contribution at the rate of 12% is hereby quashed and set aside and the matter is remitted to Respondent No. 1 for deciding the application submitted by the Petitioner-corporation dated 12.5.2004 and 17.6.2004 afresh in accordance with law and on merits and in light of the observation made herein above and Respondent No. 1 is directed to consider on the basis of material available on record that whether the case of Petitioner-corporation falls within Clause (III) of Schedule II of Notification dated 9.4.1997. However, it is clarified that even if ultimately it is found that the case of the Petitioner corporation falls within Clause (III) of Schedule II of Notification dated 9.4.1997 and considering cash loss and accumulated losses, they are not liable to pay enhanced rate at the rate of 12%, in that case, the same shall be made applicable prospectively from the date of application submitted by the corporation i.e. 12.5.2004 and same shall not have any effect with respect to the amount already paid/deposited by the corporation at the rate of 12% for the period of 1997 onwards till 12.5.2004. Meaning thereby the said decision shall be made applicable prospectively from May 2004 (in case the application of the Petitioner corporation is accepted). The aforesaid exercise shall be completed within a period of three months from the date of receipt of the copy of the present order. It goes without saying that if any of the party is dissatisfied/aggrieved with the judgment and order passed by Respondent No. 1 it can be challenged by either of the parties which can be considered in accordance with law and on merits. However, it is made clear that this Court has not expressed any opinion on merits in favour of either parties and the matter is remanded to Respondent No. 1 to reconsider its earlier decision afresh in accordance with law and on merits and in light of the observation made herein above. Rule is made absolute so far as Special Civil Application No. 15171 of 2004 is concerned. Ad-interim relief granted earlier in Special Civil Application No. 15171 of 2005 is directed to be continued till the decision is taken by Respondent No. 1 on remand. In view of the order in Special Civil Application No. 15171 of 2004, no order in Special Civil Application No. 15691 of 2004.
Now, so far as Special Civil Application No. 5285 of 2006 is concerned, Shri Raval, learned advocate for the Corporation has requested to grant at least three months time to deposit the entire outstanding amount dues towards their P.F contribution at the rate of 12% till May 2004 and at the rate of 10% on and after May 2004 and therefore, the Respondent No. 1 is hereby directed to deposit the same within a period of three months as requested by Shri Raval, learned advocate for the Respondent-Corporation. However, it is made clear that the amount of deposit of P.F contribution by the Respondent corporation at the rate of 10% from May 2004 shall be without prejudice to the rights and contentions of the respective parties and subject to the decision that may be taken by Respondent No. 1 as stated herein above by this Court in Special Civil Application No. 15171 of 2004 subject to challenging the same by any of the parties would be aggrieved by the decision that may be taken by Respondent No. 1 on remand. If the aforesaid outstanding amount of P.F is not deposited by the Respondent corporation within stipulated time stated herein above in that case, the matter shall be viewed very seriously and whatever the consequences for non compliance of the provisions of Act, 1952 inclusive of penal action shall follow and it will be open for Respondent No. 1, Provident Fund Commissioner to initiate the appropriate proceedings for non compliance of provision of Act, 1952. Rule is made absolute to the aforesaid extent so far as Special Civil Application No. 5285 of 2006 is concerned. No cost.