The Calcutta Gujarati Education ... vs The Regional Provident Fund ...
2021 Latest Caselaw 4379 Cal

                       In the High Court at Calcutta
                        Civil Revisional Jurisdiction
                               Appellate Side

The Hon'ble Justice Sabyasachi Bhattacharyya

                           C.O. No.208 of 2006

         The Calcutta Gujarati Education Society and another
                                 Vs.
        The Regional Provident fund Commissioner and others


For the petitioners                 :     Mr. Soumya Majumder,
                                          Ms. Noelle Banerjee,
                                          Mr. Dipak Dey

For the opposite parties            :     Mr. Rajib Roy,
                                          Mr. Sudip Kumr Dutta

For the State                       :     Mr. Susanta Pal,
                                          Ms. Ananya Neogi

Hearing concluded on                :     10.08.2021

Judgment on                         :     24.08.2021


Sabyasachi Bhattacharyya, J:-



1.

The present application under Article 227 of the Constitution of India

has been preferred against an order dated October 20, 2005 passed by

the Employees' Provident Fund Appellate Tribunal in A.T.A No.

383(15)/2001.

2. The revisionist-petitioners had approached the Appellate Tribunal

against an order, bearing Order No. 25 dated April 30, 2001 passed by

the Regional Provident Fund Commissioner, West Bengal, determining

the Provident Fund (PF) dues on the Government's Dearness Allowance

(DA) component for the period from August 1982 to January 1989

under Section 7-A of the Employees' Provident Fund and

Miscellaneous Provisions Act, 1952 (for the sake of brevity, "the EPF

Act"). It was found by the Commissioner that Provident Fund

contribution was payable on the DA by the petitioner no.1.

3. Learned counsel for the petitioners argues that Dearness Allowance is

granted by the State Government and the petitioner no.1 has no role,

as an employer, to pay such component of the PF. It is argued that, all

along, the State had been disbursing such amounts in respect of the

DA component of PF through its own Disbursing Officer (DO).

However, all on a sudden, the Assistant Inspector of School (SE),

Calcutta and DDO of the petitioner no.1-School vide Memo No.666/P

dated 7,1997, intimated the District Inspector of Schools (SE),

Calcutta, seeking necessary instruction for taking further action in

respect of the alleged dues on the score of deductions of PF

contribution for the relevant months, in so far as the DA component

was concerned.

4. Vide another Memo dated March 11, 1997, the Enforcement Officer,

PF, West Bengal had indicated that the petitioner no.1-society was not

deducting any PF contributions on DA received from the Government

of West Bengal since August, 1982.

5. On March 20, 1997, the petitioner no.1-society intimated the Regional

Provident Fund Commissioner (RPFC) that the DA sanctioned by the

Government of West Bengal from time to time were neither received,

nor managed and/or disbursed to teachers by the petitioner no.1 but

the same was placed at the disposal and control of the Disbursement

Officer (DO) appointed by the Government of West Bengal, which was

the only person authorised to deal with it and he directly, without

involvement of the society in any manner whatsoever, disbursed to the

concerned teachers. The petitioner no.1 also communicated to the

DDO on March 29, 1997 that the PF contributions deducted by the

latter be deposited by the DDO directly under an appropriate challan

into the EPF Code Account No. WB/19535 to the credit of the

respective employees or to hand over such deduction to the petitioner

no.1 for enabling the petitioner no.1 to forward it for deposit into the

said EPF Code Account.

6. On behalf of the Regional Provident Fund Commissioner (RPFC),

intimation was given on March 11, 1999 to petitioner no.1 asking the

said petitioner to appear/be represented on April 7, 1999 at 11:00 am

at the designated place to represent its case against determination of

the amount due from the petitioner no.1 under the provisions of the

EPF Act. Such notice was issued in accordance with Section 7-A of

the Act.

7. Ultimately, vide Order dated April 30, 2001, the proceeding under

Section 7-A was disposed of, directing the petitioner no.1 to deposit

the dues of Rs.19,46,878/-, with interest (as on April 25, 20010) to the

tune of Rs.10,45,970/-, totalling Rs. 29,92,848/-, within 15 days from

the date of receipt of the order, failing which, the dues would be

recovered as per rules.

8. Learned counsel appearing for the petitioners specifically contends, by

relying on several annexures and documents of the contemporaneous

period to indicate that, previously, the DDO had been disbursing the

amount directly to the concerned teachers.

9. It is further argued that the petitioner no.1-empoloyer never had any

control on such disbursal. As such, the belated claim of arrears for a

much prior period was not tenable in the eye of law inasmuch as the

DA component of PF was concerned.

10. In any event, it is contended, the employer, that is, the petitioner no.1,

is not liable to pay the employees' share of the DA component of the

PF.

11. Learned counsel places reliance on a judgment dated July 24, 2019

passed by the Supreme Court in Civil Appeal No.7115 of 2009 [Calcutta

Gujarati Education Society and another Vs. Regional Provident Fund

Commissioner and others] in support of the proposition that although

the Appellate Tribunal which passed the impugned order was situated

in New Delhi, the Calcutta High Court had jurisdiction to entertain the

present revisional application. In view of the fact that the original

order was passed by the Assistant PF Commissioner situated at

Calcutta, West Bengal, this court had territorial jurisdiction to

entertain and decide a challenge thereto.

12. Leaned counsel for the petitioner next relies on a Division Bench

judgment of this court, reported at (1998) 2 CLJ 61 (Gyan Bharati Vs.

Regional Provident Fund Commissioner and others), in support of the

proposition that the liability of the employer to pay the DA component

arises only on receiving the same from the State Government. The

premise of the said judgment was that such liability arises only when

the amount is released by the Government and paid to the School

Authorities.

13. However, in the present case, since no such payment had been made

to the petitioner no.1-employer, no such liability arose on the part of

the petitioner no.1.

14. In the said case, it was admitted by the employer that it was liable to

pay Provident Fund (PF) and have been paying such amount including

the part of the DA under the employers' share.

15. In the present case, however, the employer did not pay such amount

at any point of time and the entire control over disbursement and

actual disbursement was with the DDO.

16. Learned counsel next cites a Single Bench Judgment reported at

(1996) 2 CHN 134 (Gyanbharati Vidyapith Vs. RPF. Commissioner,

Andaman & Nicobar Islands) for the proposition that the DA

component of PF is paid by the government and only upon such

payment, the obligation is shifted to the employer. It was further

observed in the said report that, in the fitness of things, belated

payment may naturally occur as the pay bills, after preparation by the

school office, are sent to the Government which, after due scrutiny, are

sanctioned.

17. Placing reliance on the definition of "basic wages" in terms of Section

2(b) of the EPF Act, it is highlighted that such wages do not include

any Dearness Allowance.

18. It is, thus, contended that it is not the employer's liability to pay the

DA component of the PF as well. Learned counsel submits that

although Section 6 of the EPF Act stipulates that the contribution of

the employer to the fund shall be 10 per cent of the basic wages, DA

and Retaining Allowances (if any) for the time payable to each of the

employees, the same has to be read in conjunction with the definition

of "basic wages" in the Act itself. As such, it is argued that the liability

to pay such component, at lease in respect of the employees' share, is

on the State Government.

19. Learned counsel appearing for the opposite party no.1 (RPFC)

contends that the provisions of Section 6 of the EPF Act make it

abundantly clear that the employers' share of the DA component of PF

is included within the employers' contribution. As such, the liability is

on the employer to pay such dues.

20. Although basic wages have been defined to exclude DA in Section

2(b)(ii) of the EPF Act, the employers' contribution as stipulated in

Section 6 clearly includes, over and above the basic wages, DA and

Retaining Allowance.

21. That apart, Section 29 of the EPF Act further reiterates that the

contributions payable by the employer under the Scheme shall be at

the rate of 10 per cent of the basic wages as well as the Dearness

Allowance (including the cash value of any food concessions) payable

to each employee to whom the Scheme applies. The contribution

payable by the employee shall be equal to the contribution of the

employer and/or more.

22. Section 30 of the EPF Act clearly provides that the employer shall, at

the first instance, pay both the contributions payable by himself and

also, on behalf of the member employed by him, directly or by or

through a contractor, the contribution payable by such member.

23. It has been further clarified in Section 30(3) of the EPF Act that it shall

be the responsibility of the principal employer to pay both the

contribution payable by himself respect of the employees directly

employed by him and also in respect of the employees employed by or

through a contractor, as well as administrative charges.

24. That apart, Section 31 of the EPF Act provides that, notwithstanding

any contract to the contrary, the employer shall not be entitled to

deduct the employer's contribution from the wage of a member or

otherwise to recover it from him.

25. It is further submitted that, in all the cited judgments, Section 6 of the

EPF Act have been considered and it has been the clear finding of the

Division Bench as well as the learned Single Judge of this Court that

the liability of payment of the employer's contribution of the DA

component of PF is of the employer.

26. Upon a consideration of the relevant provisions and the submissions of

the parties, as well as the cited reports, there is no doubt that this

Court has jurisdiction to take up the present challenge under Article

227 of the Constitution of India, in view of the judgment of the

Supreme Court in Calcutta Gujarati Education Society (supra).

27. The question of contribution of DA component of the PF is answered

clearly in Section 6 of the EPF Act which, in no uncertain terms,

indicates that the contribution of PF of the employer shall, over and

above 10 per cent of the basic wages, also include the DA component

and Retaining Allowance (if any).

28. The definition of "basic wages" in Section 2(b), specifically excludes

Dearness Allowances in sub-clause (ii) of the said provision. Hence,

taken harmoniously, Section 6 attributes the liability on the employer

to pay the employer's share of the entire amount payable to the

employee, including 10 per cent of the basic wages as well as the DA.

29. In fact, Section 30 of the said Act clearly provides that it is the

employer's liability, in the first instance, to pay both the contributions

payable by himself and also on behalf of the employee.

30. Section 29, in unequivocal terms, reiterates the concept of Section 6

that the Provident Fund is to be calculated not only on the basic wages

but on the DA as well.

31. Although Section 31 mentions that the employer shall not be entitled

to deduct only the employer's contribution from the wage of a member

or otherwise to recover it from him, it does not absolve the first

instance on the employer to pay both contributions, of the employer as

well as employee, under Section 30 of the EPF Act.

32. In the present case, petitioner no.1 failed to discharge its duties in

clearing the DA component of PF for the relevant period, that is,

August, 1982 to January, 1999. Hence, the RPFC was perfectly

justified in directing the petitioner no.1 to pay such amount.

33. The perusal of Gyan Bharati (supra) and Gyanbharati Vidyapith (supra)

clearly shows that both the Division Bench and the learned Single

Judge laid down the proposition that the statutory liability for

payment of PF contribution, including the DA component over and

above the basic pay, is of the employer.

34. Section 6 was clearly interpreted in its literal terms by both the

Benches to come to the conclusion that it was the employers', and not

the State's, liability to pay the employer's contribution of the DA

component of the PF. That apart, in Section 2(b)(ii), Dearness

Allowance has been defined as all cash payments, by whatever name

called, paid to an employee on account of rise in the cost of living.

Such DA is obviously paid by the State Government to the employee

directly. However, insofar as the DA component of the PF is

concerned, the employer has the liability to pay the employer's share of

such component, over and above the basic wages.

35. The provisions of the EPF Act, read as a whole, leave no option for any

other construction.

36. In fact, the definition of "wages" in the Payment of Wages Act, 1936

also referred in the in the passing by learned counsel, means any

remuneration (whether by way of salary, allowance or otherwise)

expressed in terms of money or capable of being so expressed which

would, if the terms of employment, express or implied, were fulfilled,

be payable to a person employed in respect of his employment or of

work done in such employment.

37. In any event, such definition has no direct relevance to the present

case, which only deals with the DA component of the PF, which is

governed entirely by the EPF Act.

38. Although the petitioner has relied on Memo No.519-Edn. (SE)/3-A -

3/72 dated August 23, 1973, which stipulates that the Deputy

Director of Public Instruction (Sec. Edn.), West Bengal is authorised to

release necessary funds on quarterly basis in favour of the authorities

concerned, such Circular cannot be read in exclusion of Section 6 of

the EPF Act, which clarifies that the liability of payment of the DA

component is entirely on the employer, at least inasmuch as the

employer's share is concerned. As discussed, the primary liability to

clear off, in favour of the employee, even the employee's contribution is

on the employer subject to adjustment/deduction from salary.

39. Even in Bridge & Roof Co. (India) Ltd. Vs. Union of India, reported at

AIR 1963 SC 1474, there is no indication that Provident Fund

contributions in respect of the DA is not payable by the employer but

by the Government. The definition of Section 2(b) cannot circumscribe

the specific stipulations in Section 6, which exclusively deals with the

respective contributions of the employer and employee regarding the

PF, which includes the DA component along with basic wages.

40. In the Regional Provident Fund Commissioner (II) West Bengal Vs.

Vivekananda Vidyamandir and others, rendered by the Supreme Court

on February 28, 2019, inter alia, in Civil Appeal No.6221 of 2011, the

concept of PF contribution was considered to include the DA

component, over and above the basic wages.

41. Hence, although DA is not a part of the basic wages, insofar as the DA

component of PF is concerned, Section 6, read with Sections 29 and

30, of the EPF Act clearly indicate that not only is it the employer's

liability to pay his share of the DA component of PF along with the

other components, the first liability of payment of the contributions of

both the employer and employee lies on the employer.

42. Thus, in the instant case, the contentions raised by the petitioners

have no legs to stand upon. Hence, C.O. No.208 of 2006 is disposed of

without interfering with the impugned order dated October 20, 2005

passed by the Appellate Tribunal. The petitioner no.1 shall pay the

liabilities as ascertained by the Appellate Tribunal, confirming the

order of the RPFC, positively within two months from the date of this

order. Upon such payment being made, the Disbursing Authority

shall take appropriate steps to distribute such arrear component of the

PF in favour of the respective employees, or their heirs and legal

representatives in the event the employees are no longer in the world

of the living.

43. In default of such payment, the RPFC will be at liberty to recover such

amount in accordance with law from petitioner no.1. However, the

petitioners will be at liberty to approach the appropriate authorities of

the State Government for recovery of the employees' share of the DA

component for the period between April, 1982 and January, 1999, and

alternatively, to deduct the employees' share of the DA component of

PF for the said period, in the event the same has not been disbursed in

favour of the employees, from the total amount directed to be paid by

the impugned orders.

44. There will be no order as to costs.

45. Urgent certified copies of this order shall be supplied to the parties

applying for the same, upon due compliance of all requisite formalities.

( Sabyasachi Bhattacharyya, J. )