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Judgment
N.A. Britto, J.—Challenge in this Writ Petition is to the Order dated 5-5-2005 of the Employees Provident Fund Appellate Tribunal, New Delhi, upholding the Order dated 13-3-2000 of the Regional Provident Fund Commissioner directing the Petitioner to pay the provident fund dues of all the employees of the contractor running their restaurants in all its hotels. Some facts are required to be stated to dispose of this Writ Petition.
The Petitioner is a Government Corporation w.e.f. 4-3-1987 and is covered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952(Act, for short) as a Travel Agency and has been allotted Code Number Goa/10152. The Corporation pays the contributions under the Act in respect of its own employees but has been resisting the payment of contribution in respect of the employees employed by its contractors contending that the said contractors are lessees of the premises let out to them.
The Petitioner owns several hotels in Goa and the restaurant and catering services are run on contract basis but the Petitioner being the principal employer was summoned u/s 7A of the Act to assess the dues payable by the contractor and on behalf of the Petitioner it was stated that the building premises owned by the Petitioner were having places for shops, restaurants and commercial establishments which were leased out on leave and license basis and therefore the persons to whom the said spaces were leased out i.e. the caterers were not contractors and the Petitioner was not their principal employer.
The Regional Provident Fund Commissioner found that the restaurants in the hotels run by the Petitioner had their own furniture and fittings which were supplied by the Petitioner to the contractors on payment basis and the regular course of the said establishments was catering to the needs of the tourists in Goa by providing accommodation in their hotels and also by providing travel facilities and that the running of the said restaurants was part of the establishment of the business of the Petitioner. The Regional Provident Fund Commissioner took note of the terms and conditions on which the running of the restaurant and catering services were allotted, and, came to the conclusion that the Petitioner is the principal employer of the employees of the restaurant contractors as the business of restaurants was part of the regular course of business and the same was run under control and supervision of the Petitioner. The Regional Provident Fund Commissioner also held that the Judgment in the case of K. V. Ratnam, Partner Brindavan Lodge v. Government of India and others(1988 (56) FLR 473) was not applicable to the facts of the case.
The Petitioner having filed an appeal before the Appellate Tribunal, the Appellate Tribunal by its Order dated 5-5-2005 noted that in the hotels/tourist complexes owned by the Petitioner, guests were residing and provision of a restaurant was made to provide food and beverages mainly to the guests and therefore the workers working in the restaurant would have certainly been working in connection with the work of the Petitioner and therefore such workers would fall within the definition of Section 2(f) (i) of the Act having been engaged through a contractor and that it was the responsibility of the Petitioner, being the principal employer, to pay the dues under para 36 of the EPF Scheme and also in terms of Clause (x) of agreement dated 1-6-1998.
Section 2(e) defines the word "employer" and Section 2(f) defines the word "employee". The word "employee" has been defined to mean any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment and who gets his wages directly or indirectly from the employer, and includes any person
(i) employed by or through a contractor in or in connection with the work of the establishment;
(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 or under the standing orders of the establishment.
Learned Counsel on behalf of the Petitioner submits that they let out the premises by inviting tenders to different persons, and though the Petitioner pays the contributions in respect of the employees employed by the Petitioner, the Petitioner is not bound to pay the contributions in respect of the employees employed by the licencees. Learned Counsel further submits that the employees engaged by the licencees are not part of the establishment of the Petitioner and if at all Clause (x) was incorporated in the said agreement dated 1-6-1988 it was to ensure that the licencees complied with the requirements of Labour Laws including the provisions of the Act. Learned Counsel further submits that the Petitioners only charge the employees for space and furniture. Learned Counsel has relied on the decisions in the cases of Nandinee Travels Pvt. Ltd. v. The Regional Provident Fund Commissioner, Goa (2003 II CLR 58), K. V. Ratnam v. Government of India and others(1988 (56) 473) and Regional Provident Fund Commissioner v. EPF Appellate Tribunal and others(2007 II CLR 121).
In the decision of this Court in Nandinee Travels Pvt. Ltd. v. The Regional Provident Fund Commissioner (supra) reference was made to the case of The Associated Cement Companies Limited, Chaibassa Cement Works, Jhinkpani Vs. Their Workmen, and to Management of Pratap Press, New Delhi Vs. Secretary, Delhi Press Workers'' Union and Its Workmen, .
In the first case, it was stated by the Apex Court that:
It is perhaps impossible to lay down any one test as an absolute and invariable test for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units, etc.. If in their true relation they constitute one integrated whole, we say that the establishment is one, if on the contrary they do not constitute one integrated whole, each unit is then a separate unit. How the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute. Thus, in one case the unity of ownership, management and control may be the important test, in another case functional integrality or general unity may be the important test; and in still another case the important test may be the unity of employment
In the second case, the Apex Court observed that:
In all such cases, therefore, the Court has to consider with care how far there is functional integrality meaning thereby such functional interdependence that one unit cannot conveniently and reasonably function without the other and on the further question whether in matters of finance and an employment, the employer has actually kept the two units distinct or integrated
Admittedly, the Petitioner pays contributions of its own employees but has been resisting the payment of contributions of the employees engaged by the contractors who are allotted the running of the restaurants. The Petitioner has been given a Code Number and the employees of the contractor have been given Sub Code Number. As the very heading of the notice inviting tenders shows, the tenders are invited for the running of the restaurant and catering services of the Petitioner. Clause (x) of the said agreement between the Petitioner and the caterers i.e. contractors stipulates that the caterer will comply with all the Labour Laws including the Employees Provident Fund... etc. and other laws pertaining to the caterer''s business and to discharge all liabilities and to refund to the Corporation in the event the Corporation is made to pay the same. The contractor or caterer employs his employees in the said restaurant which are part of the establishment of the Petitioner and therefore it is obvious that such employees are employed in connection with the work of the establishment of the Petitioner and therefore would stand covered in terms of the definition given in Section 2(f)(i) of the Act. The caterers do not run any separate establishment.
The cases cited stood on their own facts and therefore are inapplicable to the facts of the case at hand. In the case of K. V. Ratnam v. Government of India and others(supra) there was a lodge on the first floor and a restaurant on the ground floor originally established by the Petitioner. The restaurant was then leased out to a different person and the Petitioner had no control over the establishment of the restaurant and it was held that both the establishments were different and independent. This case could not be compared to the facts of the case at hand where the Petitioner exercises substantial control over the contractor-caterer in terms of the agreement. The case of Regional Provident Fund Commissioner v. EPF Appellate Tribunal and others(supra) shows that there were two units i.e. Golden Masala Company and M/s. Molu Ram Suraj Mal, the former providing work of grinding of spices to the latter. Both the establishments were covered on the ground of inter-dependency but it was held that there were several other grinding mills in the market and if M/s. Molu Ram Suraj Mal would not grind for M/s. Golden Masala Company it could get spices grinded from any other grinding mill. Similarly, even if M/s. Golden Masala Company does not send its material for grinding to M/s. Molu Ram Suraj Mal, this firm could procure business from other masala sellers or it can grind something else. Outsourcing is one of the mode of doing business.
Considering the facts of the case at hand where catering services are provided by the Petitioner through contractors to their guests and others and in the light of the agreements entered into between such persons the Petitioner was bound to pay the contributions under the Act in the event the same were not paid by the said contractors/caterers in terms of the said agreement. The conclusion arrived at by the authorities below could not be faulted. There is no merit in this petition and therefore the same is hereby dismissed with no order as to costs.