Kerala High Court
M/S. Malabar Dazzle India Pvt. Ltd vs Employees Provident Fund Appellate ... on 15 October, 2024
Author: D. K. Singh
Bench: D. K. Singh
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
1
2024:KER:76265
C.R.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE D. K. SINGH
TUESDAY, THE 15TH DAY OF OCTOBER 2024 / 23RD ASWINA, 1946
WP(C) NO. 7245 OF 2014
PETITIONER:
THE EMPLOYEES PROVIDENT FUND ORGANIZATION,
REPRESENTED BY ASSISTANT PROVIDENT FUND COMMISSIONER, SUB
REGIONAL OFFICE, P.B.NO.1895, KALOOR, KOCHI-682 017.
BY ADV. NANDAKUMAR (SR.)
By ADV.N.N.SUGUNAPALAN (SR.)
RESPONDENTS:
1 M/S.MALABAR COCHIN ARCADE (P) LTD.,NO.40/515 A, M.G.ROAD,
KOCHI-682 011, REPRESENTED BY ITS MANAGING DIRECTOR.
2 THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL
SCOPE MINAR, 4TH FLOOR, CORE-2, LAXMI NAGAR, NEW DELHI-110
092, REPRESENTED BY ITS REGISTRAR.
BY ADVS.
BENNY P. THOMAS (SR.)
M.GOPIKRISHNAN NAMBIAR
K.JOHN MATHAI
JOSON MANAVALAN
KURYAN THOMAS
NITA N.S. - SC EPF
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03.07.2024,
ALONG WITH WP(C).29166/2014, 30357/2021, THE COURT ON 15.10.2024 DELIVERED
THE FOLLOWING:
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
2
2024:KER:76265
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE D. K. SINGH
TUESDAY, THE 15TH DAY OF OCTOBER 2024 / 23RD ASWINA, 1946
WP(C) NO. 29166 OF 2014
PETITIONER:
M/S. MALABAR DAZZLE INDIA PVT. LTD.,EDAPPAL, MALAPPURAM-679 576,
REPRESENTED BY ITS DIRECTOR, MR.RATHIN.
BY ADVS.
NANDAKUMAR (SR.)
M.GOPIKRISHNAN NAMBIAR
BENNY P. THOMAS (SR.)
K.JOHN MATHAI
JOSON MANAVALAN
KURYAN THOMAS
RESPONDENTS:
1 EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL,
SCOPE MINAR, CORE II, 4TH FLOOR, LAXMI NAGAR DISTRICT CENTRE,
LAXMI NAGAR, NEW DELHI-110 092.
2 THE ASST. PROVIDENT FUND COMMISSIONER,EMPLOYEES PROVIDENT FUND
ORGANIZATION, SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN,
P.B.NO.1806, ERANHIPALAM, KOZHIKODE-673 006.
3 THE MANAGER,
STATE BANK OF TRAVANCORE, EDAPPAL, MALAPPURAM-679 576.
BY ADVS.
SRI.THOMAS MATHEW NELLIMOOTTIL,SC, P.F.
K.JAYESH MOHANKUMAR
PUSHPARAJAN KODOTH
T.SETHUMADHAVAN (SR.)
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03.07.2024, ALONG WITH
WP(C).7245/2014 AND CONNECTED CASES, THE COURT ON 15.10.2024 DELIVERED THE
FOLLOWING:
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
3
2024:KER:76265
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE D. K. SINGH
TUESDAY, THE 15TH DAY OF OCTOBER 2024 / 23RD ASWINA, 1946
WP(C) NO. 30357 OF 2021
PETITIONER:
M/S MALABAR GOLD PRIVATE LTD., (FORMERLY KNOWN AS MALABAR GOLD,
ORNAMENTS MAKERS PRIVATE LTD.), 17/1491C, 2ND FLOOR, MALABAR GATE,
RAM MOHAN ROAD, PUTHIYATHAR POST, KOZHIKODE-673 004, REPRESENTED
BY BY ITS AUTHORISED SIGNATORY, PRESENTLY FUNCTIONING AT 16/501 M,
MOUNTANA ESTATE, PAINGOTTUPURAM, PERINGALAM P.O, CALICUT 673 571.
BY ADVS.
NANDAKUMAR (SR.)
M.GOPIKRISHNAN NAMBIAR
K.JOHN MATHAI
JOSON MANAVALAN
KURYAN THOMAS
PAULOSE C. ABRAHAM
RAJA KANNAN
SHILPI M.LAL
RESPONDENTS:
1 ASSISTANT PROVIDENT FUND COMMISSIONER,
EMPLOYEES PROVIDENT FUND ORGANIZATION, SUB REGIOANL OFFICE,
ERANHIPALAM P.O, KOZHIKODE 673004.
2 CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL,
X78V+ C45, PRIYA SQUARE, ERNAKULAM-682016.
BY ADVS.
NITA N.S. - SC EPF
ABRAHAM P.MEACHINKARA
SUNIL J., CGC
SHRI.VISHNU PRADEEP, CGC
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03.07.2024, ALONG
WITH WP(C).7245/2014 AND CONNECTED CASES, THE COURT ON 15.10.2024 DELIVERED THE
FOLLOWING:
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
4
2024:KER:76265
[WPC Nos.30357/2021, 29166/2014 and 7245 of 2014]
JUDGMENT
In these Writ Petitions, almost common questions of law
and facts are involved. Therefore, the Writ Petitions were heard
together and are being disposed of by a common judgment.
However, the facts of each Writ Petition are taken note of
hereunder.
2. This Writ Petition has been filed by the petitioner
company having its registered office at Kozhikode and a
showroom at Malappuram. The company is engaged in the sale
of jewellery and allied products. The establishment of the
petitioner is covered under the Employees Provident Fund
Scheme.
3. The petitioner had commenced business in the year
2007. It is the case of the company that at that time the
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And 30357 of 2021
2024:KER:76265
petitioner establishment enrolled all eligible employees except
trainees under the Employees Provident Fund Scheme and
started remitting contributions for the enrolled employees. The
petitioner's standing orders were certified by the competent
officer on Ist July 2011 under the provisions of the Industrial
Employment (Standing Orders) Act, 1946.
4. The Enforcement Officer conducted an inspection and
based on the report of the Enforcement Officer, the second
respondent initiated proceedings under Section 7A of the
Employees Provident Fund Act alleging non-payment of
contribution in respect of the trainees engaged by the petitioner
during the period July 2007 to September 2011. A show cause
notice was issued to the petitioner to which the petitioner had
filed a reply. The second respondent, the Assistant Provident
Fund Commissioner, however, proceeded to assess the dues in
respect of 46 trainees for the period from July 2007 to
September 2011 and an order was passed for an amount of Rs.
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And 30357 of 2021
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11,12,070/- in respect of non-payment of contribution by the
petitioner in Ext.P3 dated 15th June 2012.
5. The petitioner has challenged the said order by filing
a statutory appeal before the first respondent. However, the
first respondent had dismissed the appeal filed by the petitioner
against the order dated 15th June 2012 passed by the second
respondent vide order dated 8th April 2014 in Ext.P5. An order
under Section 8F of the Employees Provident Fund and
Miscellaneous Provisions Act, 1952 has been issued by the
second respondent to the third respondent on condition that on
payment being made by the petitioner in compliance with the
order, the petitioner would stand discharged from the liability
in accordance with the provisions of clause (viii) of sub section-
3 of section 8F of the Act. These orders are under challenge in
this Writ Petition.
6. The petitioner got incorporated as a private limited
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And 30357 of 2021
2024:KER:76265
company on 19 June 2001. The petitioner company is engaged
th
in the manufacture of gold ornaments, jewel ornaments and
allied products and it is also supplying gold and jewel
ornaments to other units of its group of companies. It is covered
under the provisions of the Employees Provident Fund &
Miscellaneous Provisions Act, 1952.
7. The petitioner claims to have enrolled all the eligible
employees except trainees under the provident fund scheme
from the date of commencement of its business. The
petitioner's standing orders under the provisions of the
Industrial Employment (Standing Orders) Act, 1946 were
certified and the standing orders came into force with effect
from Ist January 2005.
8. The Enforcement Officer inspected the premises of
the petitioner and based on the report of the Enforcement
Officer, the first respondent issued a notice proposing to
conduct an enquiry under Section 7A of the Act of 1952 in
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And 30357 of 2021
2024:KER:76265
respect of non-payment of contribution by the petitioner for the
trainees engaged by the petitioner. The petitioner submitted its
reply and made submissions. However, the first respondent
passed the order on Ist October 2015 holding that the petitioner
is liable to make contribution in respect of the trainees under
the provisions of the Act, 1952 and assessed an amount of
Rs.23,62,920/- as outstanding dues for the period from 09/2014
to 03/2015 vide Ext.P2 order. Aggrieved by the said order
passed by the first respondent, the petitioner preferred an
appeal before the Employees Provident Fund Appellate
Tribunal, New Delhi. The said appeal was admitted on 19 th
August 2019 and an interim stay was granted against Ext.P2
order passed by the first respondent on a condition to remit 40%
of the assessed amount as pre-deposit. The petitioner had
complied with the said direction and remitted an amount of
Rs.9,45,168/- on 30th August 2019. The second respondent,
however, dismissed the appeal vide impugned order dated 3rd
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
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May 2021 in Ext.P9. The orders passed by the first and second
respondents in Ext.P2 and P9 are under challenge before this
Court.
9. This Writ Petition has been filed by the Employees
Provident Fund Organisation impugning the order dated 2 nd
April 2013 passed in appeal, ATA No.340(7) of 2010 by the
Employees Provident Fund Appellate Tribunal in Ext.P4. The
first respondent company registered as a Private Limited
Company under the provisions of the Indian Companies Act,
1956 and is covered under the provisions of the Employees
Provident Fund and Miscellaneous Provisions Act, 1952. The
first respondent company is engaged in the business of
jewellery and allied products and the said activity is covered by
the scheduled head 'Trading and Commercial'.
10. The Enforcement Officer appointed under Section 13
of the Act of 1952 visited the establishment in order to ascertain
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And 30357 of 2021
2024:KER:76265
compliance under the Act of 1952 and reported that the
establishment had not enrolled all the eligible and entitled
employees under the EPF Scheme as mandated under the Act.
As per the report of the Enforcement Officer, in addition to the
regular employees, the establishment had also engaged several
paid trainees from the date of coverage and these paid trainees
were not enrolled under the EPF Scheme in violation of the
statutory provisions. It was further reported by the
Enforcement Officer that there were 66 employees at the time
of coverage of the establishment and the employer had remitted
contribution only in respect of seven employees and the
employer claims that the remaining 59 employees were trainees
who were not eligible for enrolment under the provisions of the
Act of 1952. The number of such trainees was more than the
number of employees which varies from month to month. The
number of trainees thereafter increased to 88. Even the Drivers,
Attenders, Electricians, Receptionists, Accountants etc. were
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And 30357 of 2021
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put in the categories of trainees and the benefits under the Act
were not extended to them and they were paid wages in the
name of stipend.
11. An enquiry under Section 7A of the Act of 1952 was
initiated by the competent authority in order to determine the
dues defaulted by the petitioner in respect of the non-enrolled
employees. A notice dated 7th January 2010 was issued to the
petitioner fixing the enquiry on 4th February 2010 wherein the
production of necessary records and appearance in person or
through an authorised representative was granted. On the date
of appearance, the counsel who appeared on behalf of the
respondent company failed to produce the copies of balance
sheet, profit and loss account, general ledger and cash book for
the year 2007-2008 and 2008-2009 and promised to produce the
same along with the documents under Shops and
Establishments Act, Factories Act etc. In view thereof, the
hearing was adjourned to 12th April 2010. In the reply, the
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And 30357 of 2021
2024:KER:76265
respondent raised two grounds:
(A) The non-enrolled persons engaged in the establishment were
covered by the Certified Standing Orders and as such they did
not fall under the definition of "Employees" as provided in the
Act of 1952.
(B) Sale Executives, Trainees, and Apprentices were given training
in the field of analysing the purity of ornaments, repairs of
ornaments, billing, cash handling, placing orders for
purchasing ornaments, receiving orders for ornaments, ways
and methods to be adopted for promoting business and to win
over the customers, maintaining general customer relations,
rectifying minor repairs of electronic devices for weighing
ornaments, packing of ornaments etc.
12. On conclusion of the proceedings under Section 7A of
the Act, an order Annexture-A6 was passed assessing an amount
of Rs.11,46,787/- as the amount of dues payable by the
establishment for the period from May 2007 to June 2009 in
respect of non-enrolled employees subject to the provisions for
determination of the escaped amount, if any found later, under
Section 7C of the EPF Act. The establishment was directed to
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
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remit the amount within 15 days of receipt of the said
proceedings.
13. The establishment filed Ext.P1 Appeal No.ATA 340(7)
of 2010 before the EPF Appellate Tribunal, New Delhi
challenging Annexure A-6 order. The appeal was disposed of
vide the impugned order dated 2nd April 2013 holding that the
standing orders certified by the Certifying Officer were valid
and the respondent establishment could appoint the
apprentices in accordance with the standing orders as certified
by the Certifying Officer and as the apprentices were appointed
under the certified standing orders of the respondent
establishment and they were not discharging the regular nature
of jobs, the apprentices could not be treated as the employees
within the meaning of Section 2(f) of the EPF Act. The said order
is under challenge in the present Writ Petition.
14. Heard Sr.Adv.Sri.P.Nandakumar assisted by Adv.Ms.
Pooja Menon for the petitioners in Writ Petition No.29166/2014
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
2024:KER:76265
and 30357/2021 and Mr.Abraham P.Meachinkara, learned
counsel for the respondents in the aforesaid Writ Petition.
Same counsels have appeared in Writ Petition (c) No.7245/2014
for the opposite parties i.e. for the respondents in the Writ
Petition.
15. Sri P.Nandakumar, learned counsel for the
petitioner, has submitted that Section 2 of the Act of 1952
defines the employees to include an apprentice, but makes an
exclusion in the case of an apprentice engaged under the
Apprentices Act or under the standing orders. Therefore, an
apprentice engaged under the Apprentices Act or under the
standing orders which excluded from the definition of an
'Employee' as per Section 2 of the Act. It is further submitted
that once the standing order is certified, it will remain in force
till the same is cancelled.
16. The question which falls for consideration before
this court in these writ petitions is whether the trainees
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
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appointed by the petitioners are to be enrolled under the EPF
Scheme as per the provisions of the Employees' Provident
Funds and Miscellaneous Provisions Act, 1952 ('The EPF Act' for
short).
17. Sri. P Nandakumar, the learned Senior counsel
assisted by Ms. Pooja Menon, has submitted that, once the
standing order is certified, it will remain in force till it is
cancelled. The definition of the 'industrial establishment' as
defined in Section 2(e) of the Industrial Employment (Standing
Orders) Act, 1946 ('the IESO Act' for short) was amended in the
year 2013, and therefore, the view taken by the EPF authorities
that the IESO Act would not be applicable to the petitioner, as
it does not fall within the definition of the industrial
establishment as defined in Section 2(e) of the IESO Act is
patently unsustainable.
18. It is further submitted that the issue regarding the
coverage of trainees under the EPF Act is no longer res integra
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And 30357 of 2021
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in view of the several judgments of this Court and the Supreme
Court, particularly, the judgment dated 28.02.2019 passed by
the Division Bench in EPF organization v. Malabar Business
Centre (P) Ltd.,[ W.A No. 746/2014], Gehna Gold Palace (P) Ltd v.
Employees Provident Fund Appellate Tribunal, [W.P (C) No.
16126 /2014], and the Supreme Court judgments in Regional
Provident Fund Commissioner, Mangalore v. Central Arecanut
and Cocoa Marketing and Processing Co.Ltd., Mangalore [(2006)
2 SCC 381].
19. The next submission advanced by the learned Senior
counsel for the petitioner is that the nature of the work
undertaken by the petitioner necessitates the employment of
a higher number of trainees than the regular employees. The
view taken by the EPF authorities that since the petitioners
have set up a training institute called 'Malabar Institute of
Management' for imparting preliminary training, and
therefore, there was no need to give training at the
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And 30357 of 2021
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establishment without an understanding of the nature of the
work and business of the petitioner. It is submitted that the
petitioners are engaged in the business of the sale of jewellery
and allied products. Some degree of training is required for a
person to be taken on the rolls of the establishment. Unlike
other products, jewellery cannot be dealt with or sold by
laymen or persons who have no knowledge of the product.
Training is, therefore, imparted in making, handling,
purchasing, billing, cash handling, product knowledge and
dealing with customers. Persons/Trainees are trained in
appraising the product, assessing its value, making charges
and also its repair and maintenance. Therefore, it is submitted
that before a person is taken on the rolls of the petitioner, it is
essential that the management has trust and confidence in the
employee, who is dealing with expensive and delicate products
like gold jewellery.
20. At the initial stage of establishment, it was
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imperative that the people engaged were adequately trained in
various facets of the business. In view of this, only a few regular
employees and trainees/professionals were hired in the units.
21. The learned Senior counsel has further submitted
that, once the standing order is certified, neither EPF
authorities nor the EPF Appellate Tribunal had jurisdiction to
hold that the IESO Act and the Standing Order certified
thereunder would not be applicable to the petitioners'
establishment.
22. In view thereof, it is submitted that the view taken
by the authorities in passing the impugned orders is
unsustainable and therefore consequently, the impugned
orders are liable to be set aside.
23. On the other hand, the learned counsel for the EPF
organization has submitted that the petitioners/employers
had failed to enroll employees with the EPF Scheme under the
provisions of the EPF Act 1952. As the employers/petitioners
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did not comply with the direction to enroll 211 employees to
the fund, an enquiry under Section 7A was conducted to
determine the dues payable by the establishment for the said
211 employees. An enquiry under Section 7A has been
conducted as per provisions of the EPF Act 1952 and the
Schemes framed thereunder.
24. The learned counsel for the respondent organization
has submitted in the assessment order, there is a clear finding
that the establishment is providing training for engaging the
employees. It is submitted on the facts of the W.P (C) No. 30357
of 2021 that the petitioner's establishment had engaged 267
employees as regular employees and 211 employees as trainees
as on 03/2015. It is well settled that an establishment cannot
put any number of persons under the category of trainees
merely on the strength of the Standing Orders, especially,
when the employees are engaged in the production line and
given the same kind of work that has been given to the regular
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And 30357 of 2021
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employees. All the 211 trainees were contributing towards ESI
from their remuneration from their date of appointment.
Stipend/remuneration of trainees having equal designation
was found not to have uniformity though they were working
equal days in a month. More or less, same kind of work has
been given to the so-called trainees as well as the employees
designated as regular employees. From the month of 09/2014
onwards, the number of employees engaged as regular trainees
does not show much variation.
25. It is further submitted that on the facts on record, it
would disclose that as far as the work is concerned, there was
no difference between the employees labelled as trainees and
regular employees, except for the remuneration of the former
was in nomenclature as stipend.
26. The learned counsel, therefore, submitted that the
aforesaid aspect would give strong credence to the case that
the so-called trainees are regular employees as per the
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And 30357 of 2021
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definition under Section 2(f) of the EPF Act, 1952 and therefore,
an order under Section 7A dated 01.10.2015 was issued for
assessing the liability of Rs.23,62,920/-.
27. The learned counsel has relied on the following
judgments in support of his contention that the EPF authorities
are empowered to pierce the veil and read between the lines
whether an employee is a trainee or a regular employee, and
whether he has been designated as a trainee only to avoid the
contribution to the EPF Scheme. He has placed reliance on the
following judgments:-
1) Rajasthan Prem Krishan Goods Transport Co.
Ltd v. Regional Provident Fund Commissioner,
New Delhi [(1996) 9 SCC 454]
2)Sivagiri Sree Narayana Medical Mission
Hospital v. RPFC [2018 (4) KLT 352]
3)Mcleod Russel India Limited v. Regional
Provident Fund Commissioner, Jalpaiguri [(2014)
15 SCC 263]
28. The questions which fall for consideration in these writ
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
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petitions are: -
1) Whether the IESO Act, 1946, would be applicable in
respect of the petitioners in W. P (C) Nos. 29166 of 2014,
30357 of 2021 and respondent in Writ Petition (C) No.
7245 of 2014 (Malabar Dazzle India Pvt Ltd and Malabar
Gold Pvt Ltd)?
2) Would the trainees be covered under the provisions
of the Employment Provident Fund Act?
29. Section 2(e) of the Industrial Employment Standing
Order Act, 1946, defines "Industrial Establishment" as follows:
"Section 2(e) "industrial establishment" means--
(i) an industrial establishment as defined in clause (ii) of
section 2 of the Payment of Wages Act, 1936 (4 of 1936), or
(ii) a factory as defined in clause (m) of section 2 of the
Factories Act, 1948 (63 of 1948), or
(iii) a railway as defined in clause (4) of section 2 of the
Indian Railways Act, 1890 (9 of 1890), or
(iv ) the establishment of a person who, for the purpose of
fulfilling a contract with the owner of any industrial
establishment, employs workmen;"
30. The petitioner's activity would include dealing in gold
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Jewellery, manufacturing, repairing, adapting, and selling it to
its customers in the market. Such activities would fall within the
definition of an Industrial Establishment as defined under
Section 2(ii)(f) of the Payment of Wages Act, 1936.
31. The identical issue was considered by this court in its
judgment dated 10.03.2014 in Malabar Business Centre (P) Ltd v.
Employees Provident Fund Appellate Tribunal & Ors (Writ
Petition (Civil) No. 9419 of 2011), and this Court held as under: -
" 4. A contention is raised by the Provident Fund
Organization with respect to the employers/assessee
herein being termed "Industrial Establishment" as per
the Standing Orders Act or Payment of Wages Act.
Section 2(e) of the Standing Orders Act defines
"Industrial Establishment" inter alia as an Industrial
Establishment as defined in clause (ii) of Section 2 of
the Payment of Wages Act. Sub clause (f) of clause (ii)
of Section 2 of the Payment of Wages Act, includes
"workshop or other Establishment in which articles
are produced, adapted or manufactured, with a view to
their use, transport or sale". Hence the Private Limited
Companies herein, who manufacture jewellery and
have a workshop for such manufacture wherein
ornaments are manufactured for the purpose of sale,
definitely would be an Industrial or other
Establishments as defined under the Payment of Wages
Act and hence, would fall within the ambit of the
Standing Orders Act."
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32. Thus, from the definition of Industrial Establishment
as defined under Section 2(e) of the IESO Act and 2(ii)(f) of the
Payment of Wages Act, the petitioner manufactures jewellery
and has a workshop for such manufacture for the purpose of
sale would be an Industrial or other establishment and would
be covered within the purview of Payment of Wages Act, and
therefore, would fall within the ambit of the Standing Orders.
33. Once the Industrial Standing Orders have been
certified by the competent Officer under the provisions of the
IESO Act, the EPF authority would not have the jurisdiction to
hold that the IESO Act would not be applicable to the
petitioner's establishment.
34. This Court in Muthoot Pappachan Consultancy &
Management Services v. Labour Commissioner, 2007 SCC OnLine
Ker 576: (2008) 1 KLT 388, dealt with the power of the Labour
Commissioner to cancel the certified Standing Order issued
under the IESO Act, 1946, holding that the Act does not
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contemplate any powers on the Labour Commissioner to suo
motu review or cancel the certification made by the
jurisdictional certifying officer.
35. The IESO Act is compulsory and applicable with
respect to establishments employing 50 or more workmen.
However, the Act does not prohibit an establishment from
getting its Standing Orders certified under the Act, if both the
employer and the workmen desire so. There is nothing in the
provisions of the IESO Act prohibiting an establishment from
getting its standing orders certified and once the standing
order is certified, there is no power vested in the jurisdictional
certifying officer or any other authority to cancel the
certification already made.
36. Thus, the EPF authority's view that the provisions of
the IESO Act would not be applicable to the petitioner does not
appear to be correct.
37. The next question is regarding the applicability of EPF
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Act to the trainees/apprentices. The Supreme Court in
Regional Provident Fund Commissioner (supra) dealt with the
question of the applicability of the provisions of the EPF Act in
respect of the apprentices.
38. In the aforesaid case, the Supreme Court, after
considering the definition of employee under the provisions of
Section 2(f) of the EPF Act, 1952 and Section 12A of the IESO Act
as well as the provisions of the Apprenticeship Act, held that
even when the Standing orders were not certified at the
relevant time, the standing orders would be deemed to be
applicable. Section 2(f) of the EPF Act defines an employee to
include an apprentice, but at the same time, makes an
exclusion in the case of an apprentice engaged under the
Apprenticeship Act or under the Standing Order. Under the
model standing orders, an apprentice is described as a learner,
who is paid allowances during the period of training. It was,
therefore, held that the trainees could not be held to be
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employees in terms of Section 2(f) of the Act, and they were
excluded from the definition of an employee as per Section 2(f)
of the EPF Act. Paragraphs 9-14 of the said judgment are
extracted hereunder:-
"9. From a bare reading of Section 12 A it is manifestly
clear that until the Standing Orders are finally certified
and come into operation, the prescribed model standing
orders shall be deemed to be adopted in the
establishment concerned. The model standing orders
prescribed under Rule 3(1) of the Industrial
Employment (Standing Orders) Central Rules, 1946 (in
short "the Central Rules") are contained in Schedule 1
to the said Rules. Standing Order 2 thereof classified
workmen as follows:
"2. (a)(1) permanent,
(2) probationers,
(3) badlis,
(4) temporary.
(5) casual,
(6) apprentices."
10. "Apprentice" is defined in clause (g) of Standing
Order 2 as follows:
"2. (g) an 'apprentice' is a learner who is paid an
allowance during the period of his training.'
11. The Apprentices Act defines an "apprentice"
as follows:
"2. (aa) 'Apprentice' means a person who is undergoing
apprenticeship d training in pursuance of a contract of
apprenticeship;"
12. In the present case, admittedly the Standing Orders
were not at the relevant point of time certified.
Therefore, in terms of Section 12-A of the Standing
WPC Nos.7245 & 29166 of 2014
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Orders Act, the model standing orders are deemed to be
applicable. Section 2(f) of the Act defines an employee
to include an apprentice, but at the same time makes an
exclusion in the case of an apprentice engaged under e
the Apprentices Act or under the Standing Orders.
Under the model standing orders an apprentice is
described as a learner who is paid allowance during the
period of training.
13. In the case at hand, trainees were paid stipend
during the period of training. They had no right to
employment, nor any obligation to accept any
employment, if offered by the employer. Therefore, the
trainees were f "apprentices" engaged under the
"Standing Orders" of the establishment.
14. Above being the position, it cannot be said that the
45 trainees concerned were employees in terms of
Section 2(1) of the Act. In other words, an apprentice
engaged under the Apprentices Act or under the
Standing Orders is excluded from the definition of an
"employee" as per Section 2(f) of the Act."
39. The Division Bench of this court in its judgment dated
28.02.2019 in EPF organization (supra), considering the
provisions of Section 2(f) of the EPF Act as well as the
provisions of the IESO Act, held that trainees appointed under
the certified standing orders would not be covered within the
definition of Section 2(f) of the EPF Act. Section 2(f) of the EPF
Act shows an exception thereunder from the applicability of
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And 30357 of 2021
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the provisions of the EPF Act, in respect of the apprentices
appointed under the Standing orders of the establishment.
Para-8 of the said judgment would read as under:-
"8. ....Be that as it may, the facts remains that there are
certified Standing Orders applicable to the
establishment, which authorise or permits such
trainees to be appointed... A perusal of Section 2(f) of
EPF Act shows that an exception is made thereunder in
the case of persons who are engaged as apprentices and
persons engaged under the Standing Orders of the
establishment. In the present case, admittedly the
trainees are engaged under the Standing Orders of the
establishment. Therefore, they are not persons, who
come within the scope of the definition contained in
Section 2(f) of the EPF Act."
40. It may not be out of place to mention here that the
nature of work undertaken by the petitioners necessitates the
employment of a higher number of trainees viz-a viz regular
employees. However, upon verification, if it is found that the
trainees are performing the same work, function and
responsibility as the regular employees, the jurisdictional
authority may consider that such trainees should be treated
as employees under the definition of Section 2(f) of the EPF
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
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Act and the provisions of the Act would be applicable. Thus,
Writ Petition Nos. 29166 of 2014 and 30357 of 2021 are
allowed.
41. However, in respect of Writ Petition (C) No.7245 of
2014, it is held that the drivers, attenders, electricians,
receptionists and accountants could not have been put in the
categories of trainees and therefore, these persons would be
covered by the provisions of EPF Act and the benefits under
the Act were required to be extended to these persons as they
were not trainees but paid regular wages in the name of
stipend. Therefore, the matter is remitted to the files of the
Assistant Provident Fund Commissioner, Employees
Provident Fund Organization, Sub Regional Officer,
Bhavishyanidhi Bhavan, Kaloor Kochi to determine the
liability for not making the contribution in respect of the
employees including, the drivers, attenders, electricians,
receptionist, accountants and make a fresh determination.
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
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The W.P (C)No. 7245 of 2014 is thus partly allowed, and
the impugned order passed by the appellate authority is set
aside to that extent. However, in respect of the trainees, the
impugned order passed by the appellate authority is upheld.
Sd/- D.K.SINGH
Judge
css/SJ
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
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APPENDIX OF WP(C) 30357/2021
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF THE CERTIFIED STANDING ORDER
APPLICABLE TO THE PETITIONER.
Exhibit P2 TRUE COPY OF THE ORDER OF THE 1ST RESPONDENT
DATED 01.10.2015.
Exhibit P3 TRUE COPY OF THE APPEAL FILED BY THE PETITIONER
DATED 30.10.2015 BEING APPEAL NO. 210/2019
(WITHOUT ANNEXURES).
Exhibit P4 TRUE COPY OF THE INTERIM ORDER DATED 19.08.2019
OF THE 2ND RESPONDENT IN APPEAL NO. 210/2019
Exhibit P5 TRUE COPY OF THE COVERING LETTER DATED 30.08.2019
TO THE 1ST RESPONDENT FROM THE PETITIONER.
Exhibit P5(a) TRUE COPY OF THE DEMAND DRAFT TO THE 1ST
RESPONDENT DATED 29.08.2019
Exhibit P6 TRUE COPY OF THE COUNTER AFFIDAVIT FILED BY THE
1ST RESPONDENT DATED 27.09.2018 BEFORE THE 2ND
RESPONDENT IN APPEAL NO. 210/2019
Exhibit P7 TRUE COPY OF THE JUDGMENT DATED 10.03.2014 IN
W.P.(C) 9419/2011 OF THE HON'BLE HIGH COURT OF
KERALA.
Exhibit P8 TRUE COPY OF THE JUDGMENT DATED 20.09.2019 IN
W.P.C NO. 16126/2014 OF THE HON'BLE HIGH COURT OF
KERALA.
Exhibit P9 TRUE COPY OF THE ORDER DATED 03.05.2021 IN APPEAL
NO. 210/2019 PASSED BY THE 2ND RESPONDENT
TRIBUNAL.
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
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APPENDIX OF WP(C) 7245/2014
PETITIONER EXHIBITS
P1 : COPY OF THE MEMORANDUM OF APPEAL IN ATA
340(7)/2010.
P2 : COPY OF THE COVERAGE NOTICE DTD.7.8.2007
ISSUED TO THE 1ST RESPONDENT.
P3 : COPY OF THE COUNTER AFFIDAVIT FILED IN ATA
NO.340(7)/2010.
P4 : COPY OF THE ORDER DTD.2.4.2013 IN ATA
NO.340(7)/2010.
P5 : COPY OF THE ORDER DTD.2.4.2013 IN ATA
NO.201(7)/2010.
P6 : COPY OF THE ORDER DTD.19.1.2011 IN ATA
NO.11(7)/2008.
P7 : COPY OF THE JUDGMENT IN INDRAPRASTHA MEDICAL
CORPORATION LTD. VS. NCT OF DELHI.
P8 : COPY OF THE JUDGMENT DTD.8.8.2008 IN WPC
NO.5306/2005.
P9 : COPY OF THE JUDGMENT DTD.8.1.09 IN WPC
NO.24276/2001.
WPC Nos.7245 & 29166 of 2014
And 30357 of 2021
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APPENDIX OF WP(C) 29166/2014
PETITIONER EXHIBITS
EXHIBIT P1 TRUE COPY OF THE STANDING ORDER NO SOC
NO 3/2008 DATED 01-07-2011
EXHIBIT P2 TRUE COPY OF THE STATEMENT DATED 27-
12-2011 SUBMITTED BY THE PETIITONER BEFORE THE2ND
RESPONDENT
EXHIBIT P3 TRUE OPY OF THE ORDER DATED 15-06-2012
PASSED BY THE 2ND RESPONDENT
EXHIBIT P4 TRUE COPY OF THE APPEAL MEMORANDUM
(WITHOUT ANNEXURE) FILED BY THE PETITIONER BEFORE
THE IST RESPONDENT DATED 02-07-2012
EXHIBIT P5 TRUE COPY OF THE ORDEER DATED 08-04-
2014 PASSED BY THE IST RESPONDENT IN A.T.A NO
581(7) 2012
EXHIBIT P6 TRUE COPY OF THE COMMUNICATION DATED
29.10.2014 ISSUED BY THE SECOND RESPONDENT.
EXHIBIT P7 TRUE COPY OF THE JUDGMENT IN WPC NO
9419 OF 2011 DATED 10-03-2014
EXHIBIT P8 TRUE COPY OF THE ORDER IN WPC NO 16373
OF 2014 DATED 30-06-2014.
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And 30357 of 2021
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