Niranjan Lal vs State Of Uttarakhand And Others

Sudhanshu Dhulia, J

The only dispute in this matter is as to what amount of deduction has to be made from the workman and what amount of contribution has to be made from the employer towards EPF contribution.

Learned counsel for the workman/petitioner would argue that deduction is not being made in accordance with law, inasmuch as under the law the deduction shall be made on the basic wages, dearness allowance and retaining allowance, if any.

There is no dispute about as to how much amount is to be deducted. It is given in statute itself. Section 6 of the Employees' Provident Funds & Misc. Provisions Act, 1952 reads as under:-

"6. Contribution and matters which may be provided for in Schemes. - The Contribution shall be paid by the employer to the Fund shall be ten per cent of the basic wages, dearness allowance and retaining allowance (if any), for the time being payable to each of the employees (whether employed by him directly or by or through a contractor), and the employee's contribution shall be equal to the contribution payable by the employer in respect of him and may, if the employee so desires, be an amount exceeding ten per cent of his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section]:

[Provided that in its applicant to any establishment or class of establishments which the Central Government, after making such enquiry as it deems fit, may, by notification in the Official Gazette specify, this section shall be subject to the modification that for the words ten per cent, at both the places where they occur, the words twelve per cent shall be substituted:]

Provider further that where the amount of any contribution payable under this Act involves a fraction of a rupee, the Scheme may provide for the rounding off of such fraction to the nearest rupee, half of a rupee or quarter of a rupee.

Explanation [1]. - For the purposes of this section dearness allowance shall be deemed to include also the cash value of any food concession allowed to the employee.

Explanation [2]. - For the purposes of this section "retaining allowance" means an allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working, for retaining his services."

From a bare perusal of the aforesaid provision, it is clear that 12 per cent contribution of the basic wages, which would include dearness allowance and retaining allowance, if any, has to be made by the employer and from the side of worker 10 per cent of the basic wages, which would include dearness allowance and retaining allowance, if any, would be deducted.

"Basic wages" is defined under Section 2 (b) of the Employees' Provident Funds & Misc. Provisions Act, 1952, which reads as under:-

"2. Definitions. - In this Act, unless the context otherwise requires, -

(a).....

(aa)......

(b) "basic wages" means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include -

(i) the cash value of any food concession;

(ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living),

house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;

(iii) any presents made by the employer;"

By citing the aforesaid provision of "basic wages" under the Act, the learned counsel for the Provident Fund Sri M.S. Rawat would argue that "basic wages" have been clearly defined under Section 2 (b) of the Act, which would mean wages which are earned by an employee while on duty or on leave or on holidays, which are payable to him in cash and it does not include dearness allowance. In other words, dearness allowance has been specifically excluded from the definition of "basic wages" under the Act.

This is definitely so, however, this would not help the Provident Fund, inasmuch as the contribution has to be given as what is given under Section 6 of the Act, which includes basic wages, dearness allowance and retaining allowance. Therefore, as to how and how much contribution has to be given is clearly prescribed in the Act. There should be no cause or any confusion in this matter.

In view thereof, the writ petition stands disposed of with the direction that the contribution and deduction be made in accordance with law as to what has been provided under Section 6 of the Act.

Let the amount towards EPF contribution be deposited by the employer with the Employees' Provident Fund Organisation within a period of six weeks from the date of production of a certified copy of this order.