M/S BHANDARKARS ARTS & SCIENCE COLLEGE TRUST vs. THE REGIONAL PROVIDENT FUND COMMISSIONER

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 1ST DAY OF MARCH, 2012 BEFORE: THE HON’BLE MR. JUSTICE ARAVIND KUMAR W.P.NO. 13503/2011 (L-PF) BETWEEN: M/s.Bhandarkars Arts & Science College Trust Kundapura Udupi District - 576 201 Represented by its Principal Dr.Chandrashekar Doma Sb late Doma Irappa Aged about 58 years. .. PETITIONER (BY SRI.P.M.NAYAK, ADVOCATE FOR SRI.N.RAVINDRANATH KAMATH, M/s.SHEVGOOR AND KAMATH LAW ASSOCIATES, ADVOCATES) AND: The Regional Provident Fund Commissioner P.B.No.572, Highlands Silva Road. Mangalore - 575 002. . .RESPONDENT (BY SMT.SUMANGALA A.SWAMY. ADVOCATE)

2 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH ANNEXURE-A DATED 24.01.2011 IN AAT.NO.67(6)/2006 PASSED BY THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL. NEW DELHI AND THEREBY ALLOW THE APPEAL AS PRAYED FOR. THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Petitioner which is a covered establishment under the Employees Provident Fund (Miscellaneous Provisions) Act, 1952 (hereinafter referred to as ‘Act ‘for the sake of brevity) is seeking for quashing of order dated 24.01.2011 passed in ATA.No.67(6)/2006 AnnexureA by Employees’ Provident Fund Appellant Tribunal, New Delhi. 2. Heard Sri.Ravindranath Kamath and Sri.P.M.Nayak, learned counsel appearing for petitioner and Smt.Sumangala Swamy, learned counsel appearing for respondent. Perused the impugned order.

3 3. PetitIoner Is a trust registered under the Indian Trusts Act and running educational Institutions. Summons was Issued by respondent on 18.01.2005, to the petitioner notifying that contributions and administrative charges for the period July 1982 to May 2003 has not been remitted and as such petitioner was called upon to produce the records specified therein. Pursuant to the same, petitioner submitted a reply on 28.03.2005, Annexure-D enclosing therewith statement of month wise salazy paid to each of Its employee since 1982 and requesting to waive provident fund contributions both of employer and employee In respect of staff who have left the services of petitioner-Institution and staff who have been absorbed In grant-in-aid or have secured Government jobs. It was further stated In the reply that petitioner-Institution Is prepared to pay Its share of EPF contribution In respect of unaided staff if exemption cannot be granted.

4 4. An enquiry was held under Section 7A by Assistant Provident Fund Commissioner, Mangalore and in the enquiry proceedings, representative of petitioner-institution appeared and furnished some of the records which had been called under the summons issued to the petitioner. After considering the contentions raised by petitioner. respondent authority passed an order on 30.12.2005/ 02.0 1.2006 Annexure-G holding that all employees were not given the triple benefit scheme extended by Government of Karnataka and salary paid to temporary/stopgap employees though reimbursed by Government of Karnataka it (Government of Karnataka) cannot be termed as employer and held petitioner establishment is liable to remit the provident fund contributions and accordingly determined the amount payable in respect of temporary/stopgap employees for the period July 1982 to May 2003. This order was challenged before this court in W.P.704/2006 which came to be disposed of by order dated 23.01.2006 reserving liberty to the petitioner to approach Appellate Tribunal. Thereafter,

5 petitioner preferred an appeal before Employees Provident Fund, Appellate Tribunal in ATA.67(6)/2006 which was dismissed on merits after considering the contentions raised by petitioner/appellant by order dated 24.01.2011 Annexure A. It is this order which is impugned in the present writ petition. 5. Learned Counsel appearing for petitioner would contend that petitioner is an Institution aided by Government of Karnataka and is governed by grant-in-aid code and all the posts in the petitioner - Institution and salaries paid to them are approved and they are paid by Government of Karnataka. It is contended that due to exigencies if part time lecturers/teaching staff are appointed as a stop gap provision it was on obtaining prior sanction from the Director, Grant in-Aid code, and even salary paid to them was being reimbursed by Government of Karnataka and petitioner has no control over the payment of salary to these staff and they are being paid salaries as fixed by the Government. He would

6 contend that as per the agreement entered into between petitioner and Government of Karnataka on 24.10.1977 Annexure-B part time teaching staff are entitled for package extended by the Government of Karnataka and if any deduction is done in respect of those employees it would be in violation of the agreement and the very grant provided to the petitioner would be cancelled by Government of Karnataka and as such it is contended that order of the respondent authority as affirmed by Appellate Tribunal is erroneous and liable to be quashed. 6. Per contra, learned counsel appearing for respondent would support the order passed by authority as well as Appellate Tribunal and seeks for dismissal of writ petition. 7. Having heard the learned advocates appearing for parties and on perusal of impugned orders it is noticed that the Enforcement Officer had inspected the petitioner - establishment on 9.12.2004 and found that petitioner -

7 establishment had employed temporary employees from 1.7.1982 onwards who were not covered under the triple benefit scheme of the Government of Karnataka. On account of this a report was submitted by the Enforcement Officer. Enquiry u/s.7A has been conducted by respondent. It Is not In dispute that employees engaged by petitioner establishment from September 1?82 onwards are not covered under the triple benefit scheme of the Government of Karnataka. The Act namely Employees Provident Funds Act applies to any establishment which employs twenty (20) or more persons or class of such establishments which the Central Government may by notification In the official gazette specIfy and subject to Section 16. By virtue of Government Notification bearing No. No.S.O.986 Dated 19.02.82 It would cover petitioner/establishment also and as per saId notification It extends to: 1. Any University; 2. Any college whether or not affiliated to a UniversIty; 4r

8 3. Any School, whether or not recognized or aided by the Central or a State Government: 4. Any Scientific institution: 5. Any institution in which research in respect of any matter is carried on 6. Any other institution in which the activity of imparting knowledge or training is systematically carried on. 8. The thrust of the argument of the learned Counsel appearing for petitioner is that since the salaries of the temporary staff/stop gap employees are re-paid by Government of Karnataka petitioner is not required to cover these employees under the Act. As per Section 2(e) of the Act, a employer would include who has authority and control over the affairs of the establishment. In the instant case, petitioner establishment is run by a Trust headed by managing Trustee and as such, the managing Trustee of petitioner establishment would squarely fall within the definition of a employer. In the agreement dated 24.10.1997 Annexure-B it would go to show that under clause 8, the

9 petitioner management Is having power to appoint employees in accordance with lawful procedures and pay from Its own funds to any person other than a employee as defined in the agreement for a short time subject to and pending approval of the Director. It Is also agreed that Director would reimburse to the petitioner management payment so made to the extent of appointment and the salary and allowances as are approved by him. This clause would not take away the right of the management to appoint employees. Merely because State has agreed to under the contract to reimburse the petitioner Institution of any salary paid by ft, the relationship of employer’ and employee’ as defined under Employees’ Provident Fund and Miscellaneous Provisions Act between the petitioner and such of those employees which It had/has appointed would not cease. Infact under clause 5 of said agreement the prIncipal of the Institution Is authorised to authorise the bank to deduct towards life insurance premium, provident fund, professional tax, income tax from out of salary paid to the employees. This goes to show that

10 there is effective control of the petitioner over its employees in so far as petitioner institution is concerned. Though it is contended by petitioner that employees of petitioner establishment are being paid salary and salary paid to stopgap employees or temporary staff is repaid by Government of Karnataka that by itself would not severe the relationship of employer and emp1oyee between the petitioner and all such class of employees. Respondent authority has relied upon the Judgment in the case of Satish Plastics Vs RPFC reported in 1981 2(LLJ) 277 Gujarat (Division Bench) so as to arrive at a conclusion that in the circumstances enumerated thereunder master and servant relationship exists. It is not the case of petitioner that these stopgap employees are temporary staff and are covered by contributory fund of State Government. Infact there exists a triple benefit scheme evolved by Government of Karnataka which has been extended only to permanent employees and not temporary or stopgap employees. In that view of the matter, I am of the considered view that respondent was

U. justified in bringing these employees namely temporary and stopgap employees within the purview of the Act and directing the petitioner establishment to remit their dues and payable to such employees. Employee Provident Funds and Miscellaneous Provision Act being a social beneficial legislation widest possible interpretation Is to be extended while considering the effect of withholding such legislation from not being extended to the employees. 9. It is no doubt true that it Is the ldentlfisble employees in respect of whom assessment can be made. Thus, a duty is cast on employer to furnish to the authorities list of employees engaged by ft by Identifying them and admittedly the petitioner in the instant case was engaging stopgap employees as lecturers after obtaining permission from the Director, Grant-in-aid code and thus it cannot be said or construed that these stop gap or temporary employees are unidentifiable. In that view of the matter also, order passed by Assistant Provident Fund Commissioner at 4c

12 Annexure-G as affirmed by Appellate Authority under AnnexureA cannot be termed either to be contrary to records or contrary to statutory provisions. In the result, writ petition stands dismissed as devoid of merits. No order as to costs. Sd/ TUDGE SBN