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Judgment
S. Nagamuthu, J.—The Petitioner is an Association known as ""PIPMATE Teaching Staff Association"". Its members are the teaching staff
working in various institutions run by the Pondicherry Institute of Post-Matric Technical Education. (for Short PIPMATE) There are 66 lecturers
working in those institutions, who are the members of the Petitioner Association. According to the learned Counsel appearing for the Petitioner,
this Association is a Registered Association.
According to the Petitioner, PIPMATE implemented General Provident Fund Scheme to its staff in the year 1992 in accordance with the
provisions contained in General Provident Fund (Central Services) Rules. The said scheme is being implemented till date. While so,; the third
Respondent is directed the first Respondent (PIPMATE) to pay contribution in respect of the Employees of PIPMATE to the Provident Fund
Organisation as per the Employees Provident Fund Organisation and Miscellaneous Act 1952. As a matter of fact, in a subsequent Governing
Body Meeting of the Pondicherry Institute of Post Matric Technical Education held on 03.07.2002, it was decided by the PIPMATE as under:
The Chairperson, referring to the recent instructions of the Finance Department has stated that PIPMATE being an autonomous institution, cannot
continue GPF Scheme to its employees and should be switched over to CPF scheme immediately. The Governing body therefore resolved:
i. that the existing employees of the PIPMATE appointed upto 31.12.2000 may be continued to be governed under GPF scheme and the
employees appointed from 01.10.2001 and thereafter be brought under CPF Scheme.
ii. to consult the Pondicherry Engineering College, Pondicherry where both GPF and CPF scheme are being implemented so that the same
procedure can be adopted in PIPMATE also.
iii. To address the Regional Commissioner, Provident Fund, Chennai for details of CPF such as % of contribution by the employees and the
contribution by the employer.
Despite the same, according to the Petitioner-association, the Institutions of PIPMATE are likely to be brought under the Employees Provident
Fund Scheme as per the provisions of the Employees Provident Fund and Miscellaneous Act 1952. In those circumstances, the Petitioner, as an
association has come up with this writ petition seeking a mandamus to the Respondents not to convert the General Provident Fund Scheme to
Employees Provident Fund Scheme under the Act with further direction to continue the scheme of General Provident Fund on par with other
autonomous institutions.
Among other things, the main contention of the Petitioner is that as per Section 16(1)(b) of the E.P.F Act, the first Respondent PIPMATE has
been kept out of the purview of the said Act. In other words, the Act itself is not applicable to the first Respondent Institution. Therefore, the
demand of the third Respondent to the first Respondent to pay contribution under the Employees Provident Fund and Miscellaneous Provisions
Act 1952 is wholly without jurisdiction.
In the counter filed by the first respondent, it is stated that the first respondent implemented the General Provident Fund Scheme to its staff in the
year 1992 in accordance with the provisions contained in the General Provident Fund (Central Services) Rules 1960. It is further stated that 21st
Governing Body Meeting held on 03.07.2002, the Governing Body considered the service conditions of its employees and adopted the Service
Rules applicable to the employees of the Government of Puducherry subject to necessary variations for its employees except the Pension & GPF
Rules. In the same meeting, the Governing Body has resolved that the employees of the PIPMATE appointed upto 31.12.2000 have to be
continued to cover under the General Provident Fund Scheme and the employees appointed on and from 01.01.2001 have to be covered under
the Contributory Provident Fund Scheme. The counter further proceeds to say that in the year 2000, PIPMATE has sent a letter to the Regional
provident Fund Commissioner, Chennai requesting to grant exemption to its employees from applicability of the Employees Provident Fund and
Miscellaneous Provisions Act 1952. It is further proceeds to state as follows:
I respectfully state that in the year 2000, the PIPMATE has sent a letter to the Regional Provident Fund Commissioner, Chennai requesting to
grant exemption to it from applicability of the Employees'' Provident Funds and Miscellaneous provisions Act 1952. At that time, they have
informed that the employees of the PIPMATE were given coverage under the EPF Act w.e.f. 01.10.1991 and asked the PIPMATE to submit the
required returns and remit the employees'' and employer''s share of contribution. The Enforcement officer at Pondicherry has collected the required
particulars and clarifications from the PIPMATE. Based on the same, the Enforcement Officer has opined that in view of Sec. 16(1)(b) of the EPF
Act, the EPF Act would apply to the PIPMATE and made his recommendations to the Regional Provident Fund Commissioner therefor. From
September,2002, the EPF Commissioner has issued notice to the PIPMATE and conducted enquiry. In the said enquiry, it is informed that the
EPF Scheme is superior than the GPF Scheme and the EPF Act would apply to the PIPMATE and if the PIPMATE fails to comply with the
same, legal action will be initiated against it. As per the orders passed by the EPF Commissioner U/S. 7-A of the EPF Act, the PIPMATE has to
pay a sum of Rs.34,45,145/- towards contribution for the period from 01.10.1991 to 31.12.2002. Hence, there was a compulsion for
discontinuing the GPF Scheme from March 2004. At that stage, the petitioner Association filed the above W.P and subsequently, an order of
Interim Injunction, restraining the PIPMATE from converting the GPF Scheme into EPF Scheme was granted. Hence, the PIPMATE has not
taken any further action in that regard.
In paragraph 9 of the counter, it is again stated that the PIPMATE has implemented the GPF Scheme only on the persistent demand made by
the employees with an idea of providing a Pension Scheme on Government of India pattern at a later stage. However, as per the D.O.letter
No.25(1)(EV/2000 dated 16.03.2000 of the Joint Secretary, Government of India, Ministry of Finance, New Delhi (communicated in the Office
Memorandum dated 16.05.2000 by the Finance Department, Government of Pondicherry), the proposals regarding introduction of Pension
Scheme on Government of India pattern for the employees of autonomous bodies are not considered for certain reasons. In paragraph 10 of the
counter it is further stated as follows:
I respectfully state that the Government of India has viewed that there may not be any possibility for disbursement of Pension to the Pensioners
with the Pension Fund set up for the Pensioners by the autonomous bodies without seeking Government support in the form of grant-in-aid.
Therefore, it is advised that the autonomous bodies may continue the Contributory Pension Fund or it they so desire, work out an annuity scheme
through the Life Insurance Corporation of India based on voluntary contributions by the employees and without any contributions from the
Government or the employees may join the Pension Scheme introduced by the Ministry of Labour for the Provident Fund subscribers. In these
circumstances, the decision of the PIPMATE to convert the GPF Scheme to the EPF Scheme for its employees, is just, proper, legal and tenable.
Hence, there is No. merit in the above W.P and the same is liable to be dismissed.
In the counter filed by the third Respondent inter alia it is stated that the Act is very much applicable to the first Respondent and it does not fall
within Section 16(1)(b) of the Act. Instead, u/s 16(2) of the Act, the Central Government issued S.O. No. 2070 dated 30.9.1998 granting
exemption to certain establishments like the first Respondent upto 31.03.1999. Therefore, on and after 01.04.1999, the first Respondent is very
much within the ambit of the Act. There has been No. further exemption given either u/s 16(1)(b) or u/s 17 of the Act and therefore, the first
Respondent is liable to implement the EPF Scheme.
I have heard the learned Counsel on either side and also perused the records carefully.
The foremost dispute in this case is in respect of the applicability of the Act. If once it is held that the provisions of the Act are not applicable to
the first Respondent, then the question of exemption either u/s 16(2) or u/s 17 may not arise for consideration. If there has been any such
exemption either u/s 16(2) or u/s 17 of the Act, then the said establishment, which would be otherwise falling within the purview of the Act will get
exempted and so, such exempted establishment need not implement EPF Scheme. Therefore, in this case, it has to be decided as to whether the
Act itself is applicable to the Petitioner establishment or not.
The contention of the learned Counsel for the Petitioner is that the Act is not applicable as per the provision contained in Section 16(1)(b) of
the Act. For better understanding, let me now reproduce the entire Section 16, which reads as follows:
Act not to apply to certain establishments: (1) This Act shall not apply:
a) to any establishment registered under the Co-operative Societies Act 1912 (2 of 1912) or under any other law for the tie being in force in any
State relating to co-operative societies, employing less than fifty persons and working without the aid of power; or
b) to any other establishment belonging to or under the control of the Central Government or a State Government and whose employees are
entitled to the benefit of contributory Provident Fund or old age pension in accordance with any scheme or rule framed by the Central Government
or the State Government governing such benefitss; or
c) to any other establishment set up under any Central, Provincial or State Act and whose employees are entitled to the benefits of contributory
provident fund or old age pension in accordance with any Scheme or rule framed under that Act governing such benefits.
2) If the Central Government is of opinion that having regtrd to the financial position of any class of (establishments) or other circumstances of the
case, it is necessary or expedient so to do, it may, by notification in the official Gazette, and subject to such conditions as may be specified in the
notification exempt (whether prospectively or retrospectively) that class of establishments) from the operation of this Act for such period as may be
specified in the notification.
It is needless to point out that Section 16(2) speaks of exemption. Under this provision, any institution which is brought within the purview of
the Act and which does not fall within any of the categories enumerated in Section 16(1) can be exempted. But the contention of the Petitioner is
that the first Respondent falls within the ambit of Section 16(1) of the Act and so the Act itself is not applicable. A close reading of Section 16(1)
(b) would make it clear that if the employees of any establishment belonging to or under the control of Central Government or State Government,
are entitled to the benefit of contributory Provident fund in accordance with any scheme or rule framed by the Central Government or State
Government governing its benefits, then the said establishment will not fall within the ambit of the Act. In this case, as it is pointed out by the
learned Counsel for the Petitioner, and as it has been admitted in paragraph 5 of the counter, the first Respondent has already implemented the
General Provident Fund Scheme to their staff from the year 1992 in accordance with the provisions of the Central Provident Fund (Central
Services) Rules 1960. Thus, the first Respondent-establishment, since has been implementing the contributory Provident Fund Scheme as per the
Scheme framed by the Central Government, the Act is not applicable.
But the learned Counsel appearing for the third Respondent would submit that the first Respondent is under the control of the Government of
Pondicherry. But the Government of Pondicherry has not framed any scheme or rule for contributory Provident Fund. The Contributory Provident
Fund which has been implemented by the first Respondent is in accordance with the scheme floated by the Central Government. Therefore,
according to the learned Counsel, since there has been No. scheme or rule framed by the Government of Pondicherry, the first Respondent would
very much fall within the ambit of the Act and not within the ambit of Section 16(1)(b) of the Act. I find it very difficult to persuade myself to
accept the said contention. As I have already stated, a close reading of Section 16(1)(b) of the Act would make it manifestly clear that it is not
necessary for an establishment governed by the State Government to follow the contributory Provident Fund Scheme floated by the State
Government. The establishment has got its own option either to follow the Scheme floated by the Central Government or the Scheme floated by
the State Government. In this case, there has been No. such scheme or rule floated by the State of Pondicherry. That is the reason why in the
meeting of the Governing Body, the first Respondent decided to implement the General Provident Fund Scheme in accordance with the provisions
contained in the General Provident Fund (Central Services)Rule 1960. At the risk of repetition, I want to reproduce the stand taken by the first
Respondent as found in paragraph 5 of the counter.
I respectfully state that the PIPMATE has implemented the General Provident Fund Scheme to its staff in the year 1992 in accordance with the
provisions contained under the General Provident Fund(Central Services) Rules 1960. It is allowing interest thereon at the rates prescribed by the
Government of Puducherry from time to time.
Thus, the first Respondent has already been implementing the contributory Provident Fund Scheme as per the General Provident Fund(Central
Services) Rules 1960 and so, it falls within the ambit of Section 16(1)(b) of the Act. Thus the act is not at all applicable to the first Respondent.
The learned Counsel for the third Respondent would take me through S.O.2070 dated 30.09.1998, which reads as follows:
S.O.2070 dated September 30, 1998:-In exercise of the powers conferred by Sub-section (2) of Section 16 of the Employees'' Provident Fund
and Miscellaneous Provisions Act, 1952 (19 of 1952) and in continuation of the notification of the Government of India in the Ministry of Labour
S.O. No. 3231, dated the 21st November, 1995, the Central Government being of opinion that having regard to the circumstances of certain
establishments registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any State
relating to registration of societies which are being run mainly on grants-in-aid received from the Central Government or the State Governments, it
is necessary and expedient so to do, hereby exempts the said class of establishments from the operation of the first mentioned Act for a further
period upto the 31st March, 1999 with effect from the 22nd September, 1997 subject to the condition that such grants-in-aid do not include any
amount for the purpose of meeting the liability of the employer towards the employer''s contribution to the provident fund.
It is the contention of the learned Counsel that since in this case, the exemption granted by the Central Government expired on 31.03.1999, on
or after 1.04.1999, the first Respondent has come within the ambit of the Act and therefore, it is liable to implement the Employees Provident Fund
Scheme. The said argument of the learned Counsel is only to be rejected for the simple reason that as I have already stated, the question of getting
exemption from the purview of the Act either u/s 16(2) or u/s 17 of the Act will arise if only the Act itself is applicable to a particular institution. For
example, if an establishment has not implemented any contributory Provident Fund Scheme either as per the Central Government Scheme or as
per the State Government Scheme, then the said establishment would not fall within the ambit of Section 16(1)(b) of the Act and therefore, the Act
would be applicable in respect of the said establishment. The exemption granted in S.O.2070 dated 30.09.1998 is applicable only to such
establishments. These establishments, after expiry of the exemption period, would have automatically fallen within the purview of the Act.
Thereafter, unless, any fresh exemption is given either u/s 16(2) or u/s 17 of the Act, the said establishment shall be liable to implement EPF
Scheme. But, in this case, as I have already held, the Act itself is not applicable to the first Respondent in view of the implementation of the General
Provident Fund Scheme as per the Rule framed by the Central Government, and so, question of exemption either u/s 16(2) or u/s 17 of the Act,
does not arise at all.
In the counter filed by the Respondents 1 and 2, it is further stated that in the subsequent Governing Body Meeting, it has been decided to
implement the General Provident Fund Scheme in respect of the employees appointed upto 31.12.2000 and in respect of the employees who are
appointed after 01.01.2001, Central provident Fund Scheme under the Employees Provident Fund and Miscellaneous Act will be implemented.
The question is whether the first Respondent has got the power to subject itself to the provisions of the Employees Provident Fund and
Miscellaneous Act. In this regard, I may refer to Section 1(4) of the Act, which reads as follows:
1(4) Notwithstanding anything contained in Sub-section (3) of this section or Sub-section (1) of Section 16, where it appears to the Central
Provident Fund Commissioner, whether on an application made to him in this behalf or otherwise, that the employer and the majority of employees
in relation to any establishment have agreed that the provisions of this Act should be made applicable to the establishment, he may, by notification
in the Official Gazette, apply the provisions of this Act to that establishment on and from the date of such agreement or from any subsequent date
specified in such agreement.
A close reading of the above provision would make it clear that it is only under this provision an establishment which does not fall within the
ambit of the Act in view of Section 16(1) of the Act, can be brought under the purview of the Act and not otherwise. In this case, it is not as
though the employer and the majority of the employees have agreed that the provisions of the Act should be made applicable to the establishments.
There is No. application to the Central Provident Fund Commissioner and there has been No. Notification also in this regard u/s 1(4) of the Act.
Therefore, I have No. hesitation to hold that as of now, the first Respondent does not fall within the ambit of the Act. In other words, the Act is not
applicable to the first Respondent. Therefore, the Petitioner is entitled for the relief prayed for in the writ petition.
In the result, the Writ Petition is allowed, declaring that the Provisions of the Employees Provident Fund and Miscellaneous Act 1982 are not
applicable to the first Respondent as indicated above and therefore, the Scheme floated under the said Act cannot be made applicable to the first
Respondent and its employees. No. costs.