Banasthali Vidyapith And Anr. vs Union Of India & Ors
2014 Latest Caselaw 3435 Del

           THE HIGH COURT OF DELHI AT NEW DELHI
%                                Judgment delivered on: 31.07.2014
+       W.P.(C) 3390/1998

BANASTHALI VIDYAPITH AND ANR.                              ..... Petitioners

                                    versus
UNION OF INDIA & ORS                                       ..... Respondents

Advocates who appeared in this case:
For the Petitioners  : Ms Indu Malhotra, Sr. Advocate with
                       Mr Vanshdeep Dalmia, Ms Nishtha Kumar
                       and Mr Gautam Demba, Advocates.
For the Respondents  : Mr Shivanath Mhanta, Advocate for R2 & R3.


CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
                                JUDGMENT

VIBHU BAKHRU, J (ORAL)

1. The present writ petition has been filed by the petitioner university seeking quashing of orders dated 04.05.1998 and 12.06.1998 (hereinafter referred to as the 'impugned orders') passed by the Assistant Regional Provident Fund Commissioner (respondent no.3). By the impugned orders, respondent no.3 has rejected the petitioner university's contention that by virtue of Section 16(1)(c) of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the 'Act'), the provisions of the Act are not applicable to the petitioner. The petitioner university has further prayed for an order directing the Central Provident Fund Commissioner/respondent no.2 to decide the representation of the petitioner university under Section 16(1)(c) of the Act by a speaking order.

2. Briefly stated, the relevant facts are as under:

2.1 The petitioner university was established in 1935 with the object of improving the status of women through education. Subsequently, the petitioner university was registered under the Societies Registration Act, 1860. In the year 1953, the petitioner university gained autonomy as an approved Institute of the Rajasthan University and on 24.10.1983, the petitioner university was declared as a "Deemed University" by the University Grants Commission (UGC).

2.2 On 01.07.1951, the petitioner university introduced a contributory Provident Fund Scheme for the welfare of its employees. On 13.03.1967, the petitioner university constituted a trust, namely, Banasthali Vidyapith Staff Provident Fund Trust for the benefits of its employees.

2.3 In the year 1982, the Government of India issued a notification by virtue of which provisions of the Act were made applicable to all educational institutions w.e.f. 01.08.1982. The Government of Rajasthan issued a notification dated 14.02.1983 whereby all educational institutions aided by the State Government were exempted from the operation of the Act. At the material time, the petitioner university also claimed the benefit of the said notification as the petitioner university was affiliated to the Rajasthan University.

2.4 Respondent no.3 issued a notice dated 04.12.1991 to the petitioner university whereby the provisions of the Act were made applicable to the petitioner and the petitioner was directed to deposit the amount towards provident fund for the period August 1982 to October 1991. In response to

the said notice, the officials of the petitioner university appeared before the respondent. The claim of the petitioner university that it is exempt from the provisions of the Act was not accepted and respondent no.3 passed an order dated 17.02.1992 holding that the provisions of the Act were applicable to the petitioner university.

2.5 Subsequently, the Government of India issued a notification dated 19.03.1993 exempting all educational institutions from the provisions of the Act for a period of three years. Thereafter, by an order dated 15.03.1995, respondent no.3 initiated proceedings against the petitioner under Section 7A of the Act. The petitioner filed a writ petition (CWP No.1476/1996) before the Rajasthan High Court challenging the order dated 15.03.1995. By an order dated 14.07.1997, the learned Single Judge directed the petitioner university to file an application before respondent no.3 under Section 17 of the Act. This order dated 14.07.1997 was assailed by the petitioner university in an appeal before a Division Bench, which was disposed of by an order dated 10.11.1997 with a direction to the petitioner university to approach respondent no.3 by way of a representation to explain its schemes and to seek the exemption from the operation of the Act.

2.6 Pursuant to the order of the Division Bench, the petitioner university made a representation to respondent no.3 on 17.12.1997. And, by the impugned orders dated 04.05.1998 and 12.06.1998, respondent no.3 held that the provisions of the Act were applicable to the petitioner. Aggrieved by the impugned orders, the petitioner university has filed the present writ petition.

3. It is asserted by the learned counsel for the petitioner university that the provisions of the Scheme which are currently being followed by the petitioner university are more beneficial to its employees and provide a greater extent of security than the scheme which is mandatory under the Act. In this view, the sequitur of the decision of respondent no. 3 would be that the employees of the petitioner university would be placed in a position which would be less advantageous to them in comparison to their current position. In other words, the decision of respondent no. 3 directing compliance with the provisions of the Act would, in fact, be detrimental to its employees and as such contrary to the object for which the Act was enacted. It is further asserted that the petitioner university is recognised under the University Grants Act, 1956 and has to comply with its provisions. Therefore, by virtue of Section 16(1)(c) of the Act, the petitioner university would fall outside the scope of the Act as being established under a Central Act.

4. The orders impugned in the present petition have rejected the contention of the petitioner that it is an organization which is exempt under Section 16(1)(c) of the Act. Therefore, before proceeding further, it would be relevant to consider the provision of Section 16(1)(c) of the Act which is reproduced as under:-

"16. Act not to apply to certain establishments.-- (1) This Act shall not apply--

xxxx xxxx xxxx xxxx xxxx

(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;"

5. A plain reading of Section 16(1)(c) of the Act indicates that for an organization to be excluded under the said provision, it is necessary that the organization be one which is set up under a Central, Provincial or a State Act. In the present case, although the petitioner is recognized as a deemed university under the University Grants Act, 1956, it would not be a University that is established by any Central, Provincial or a State Act. There is a clear distinction between statutes that establish an organisation and statutes that may govern certain aspects of their functioning. Undoubtedly, the petitioner would have to comply with certain provisions of the University Grants Act, 1956 but that does not mean that the petitioner has been established under the said Act. In this view, the decision of respondent no.3 that the petitioner cannot be excluded from the purview of the Act cannot be faulted.

6. Having stated the above, it is also necessary to refer to Section 17 of the Act by virtue of which an appropriate Government can exempt certain establishments from the provisions of the Act. Section 17 of the Act is reproduced below:-

"17. Power to exempt.--(1) The appropriate Government may, by notification in the Official Gazette, and subject to such conditions as may be specified in the notification, exempt, whether prospectively or retrospectively, from the operation] of all or any of the provisions of any Scheme--

a) any establishment to which this Act applies if, in the opinion of the appropriate Government, the rules of its

provident fund with respect to the rates of contribution are not less favourable than those specified in section 6 and the employees are also in enjoyment of other provident fund benefits which on the whole are not less favourable to the employees than the benefits provided under this Act or any Scheme in relation to the employees in any other establishment of a similar character; or

b) any establishment if the employees of such establishment are in enjoyment of benefits in the nature of provident fund, pension or gratuity and the appropriate Government is of opinion that such benefits, separately or jointly, are on the whole not less favourable to such employees than the benefits provided under this Act or any Scheme in relation to employees in any other establishment of a similar character:

Provided that no such exemption shall be made except after consultation with the Central Board which on such consultation shall forward its views on exemption to the appropriate Government within such time limit as may be specified in the Scheme."

7. As is apparent from the plain language of Section 17 of the Act, the appropriate Government has the power to exempt any establishment from the provisions of the Act, where in its opinion, the Provident Fund scheme being implemented by the establishment with respect to the rates of contribution and other terms are not less favourable than those as specified under the Act and the schemes made thereunder.

8. Given the assertion of the petitioner university that its schemes are more beneficial to the employees than the ones framed under the Act, it would be just and proper if the appropriate Government considers an application under Section 17 of the Act to exempt the petitioner university

from the operation of the Act.

9. The learned counsel for the petitioner states that an appropriate application, giving the details of the Provident Fund Scheme which is currently being implemented by the petitioner as well as the comparative statement of the benefits as available under the scheme followed by the petitioner and the 1952 scheme would be made within a period of eight weeks from today. The petitioner shall also enclose all documents that are necessary for the Government to take an informed decision. In the event, the Central Provident Fund Commissioner deems it necessary it may call for any clarification or further material from the petitioner and forward the application to the appropriate authority/government for action under Section 17 of the Act. The learned counsel for respondent no.3 is also agreeable to this course of action.

10. The present petition is, thus, disposed of with the aforesaid directions. In the meantime, no coercive action shall be taken by the respondents against the petitioner university till the disposal of the application proposed to be filed by the petitioner, if the same is filed within the period of eight weeks.

VIBHU BAKHRU, J

JULY 31, 2014 pkv/RK