Madras High Court
M/S.The Ponnur Handloom Weavers' ... vs Employees' Provident Fund ... on 9 August, 2021
W.A.Nos.854 to 862/2012
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 09.08.2021
CORAM
THE HONOURABLE MR.JUSTICE T.RAJA
and
THE HONOURABLE MR.JUSTICE V.SIVAGNANAM
W.A.Nos.854 to 862/2012 and M.P.No.1/2012 in
W.A.No.854/2012 and M.P.No.2/2012 in
W.A.Nos.855 to 862/2012
W.A.No.854/2012 :
M/s.The Ponnur Handloom Weavers' Co-operative
Production and Sales Society Limited, Ponnur
rep. by its Special Officer, Ponnur. ... Appellant
-vs-
1. Employees' Provident Fund Appellate Tribunal,
Scope Minar,
Core-II, 4th Floor,
Laxmi Nagar District Centre,
Laxmi Nagar, New Delhi-110 092.
2. The Assistant Provident Fund Commissioner
(The APFC),
EPFO, Sub-Regional Office,
31, Filter Bed Road,
Vellore-632 001.
3. Employees' Provident Fund Organization,
No.31, Filter Bed Road,
Vellore-632 001. ... Respondents
https://www.mhc.tn.gov.in/judis/
W.A.Nos.854 to 862/2012
Prayer: Writ Appeal filed under Clause 15 of the Letters Patent
against the Common Order dated 06.02.2021 passed in W.P.Nos.1069
to 1077/2012 insofar as it relates to W.P.No.1069/2012 remanding
back the appeal bearing ATA No.165(13)03 to the 1st respondent
Employees' Provident Fund Appellate Tribunal for deciding it afresh.
For Appellants : Mr.A.R.Gokulnath
in all W.As.
For respondents : M/s.V.J.Latha
2 and 3 in
W.A.Nos.854 to 860 and
862/2012
COMMON JUDGMENT
(Judgment of the Court was pronounced by T.RAJA.J)
These Writ Appeals have been filed against the Common Order
dated 06.02.2021 passed in W.P.Nos.1069 to 1077/2012 insofar as
they relate to W.P.Nos.1069 to 1077/2012 remanding back the
appeals bearing ATA No.165(13)03, ATA No.147 (13) 03, ATA No.163
(13)03, ATA No.143(13)03, ATA No.139(13)03, ATA No.160(13)03,
ATA.No.179(13)03, ATA No.148(13)03 and ATA No.153(13)03
respectively to the 1st respondent Employees' Provident Fund Appellate
Tribunal for deciding them afresh.
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W.A.Nos.854 to 862/2012
2. The appellant Ponnur Handloom Weavers Co-operative
Production and Sales Society Limited, Ponnur, represented by its
Special Officer, Ponnur has preferred these Writ Appeals taking inter
alia among other grounds that when the weaver-members of the
appellant Society are not employees as defined in Section 2(f) of the
Employees Provident Funds and Miscellaneous Provisions Act, 1953
(hereinafter referred to as, 'the Act'), for the simple reason that there
is no relationship of employee and employer, hence, the contribution
cannot be collected, besides, this issue has already been decided in
favour of the appellant Society by a Division Bench of this Court in the
case of Q793, Madathupatti Weavers Co-operative Production
and Sales Society Limited reported in 2003 (3) LLN 674-Q793
and also by yet another judgment of a Division Bench in the case of
The Management, Dindgul Ladies Polythene Workers' Industrial
Co-operative Society Limited reported in 2010 (2) CWC 878.
3. Learned Counsel for the appellant would contend that the
judgment of the Division Bench in Madathupatti Weavers Co-
operative Production and Sales Society Limited holding that the
weaver-members of the appellant society are not employees has been
upheld by the Hon'ble Apex Court since a Special Leave Petition filed
by the Regional Provident Fund Commissioner and others came to be
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W.A.Nos.854 to 862/2012
dismissed. It was further contended that when the weaver-members
of the appellant society have established their own looms at home,
they would get the raw materials like silk, zari from the society, after
taking them home, they weave those materials into sarees, dhoties
etc. and handover the finished products to the Society. In some cases,
they also sell away either the raw materials or the finished products.
In such cases, they have to give the actual costs to the Societies and
they retain the profits. If they do not do so, the Societies have to
initiate arbitration proceedings that clearly shows that there was no
contract of service between the society and the weaver-members.
Therefore, when there is no relationship of employee and employer
between the society and the weaver-members, it cannot be said that
the weaver-members are ''employees'' as contemplated under the
Section 7(f) of the Employees Provident Fund and Miscellaneous
Provisions Act, 1953. As a matter of fact, many of the weaver-
members remain just as members, they are not receiving from the
society raw materials or supply goods and they do not do even hand
loom work. Such persons are employed under the Power Loom
Owners.
4. Learned Counsel for the appellant further contended that
when the members of the society are not entitled to get the benefits
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W.A.Nos.854 to 862/2012
extended by the Government of Tamil Nadu and the Central
Government which have been implemented are as follows, they are
not employees of the societies;
i. The Co-operative Handloom Weaver's Savings and Security
Scheme;
ii. Thrift Fund Scheme and Group Insurance Scheme;
iii. Central Assistance under the Thrift Fund Scheme;
iv. The Tamil Nadu Co-operative Handloom Weavers Family
Pension Scheme;
v. The Tamil Nadu Co-operative Handloom Weavers Old Age
Pension Scheme;
vi. Health Package Scheme for Handloom Weavers under
Central Plan Scheme;
vii. House Construction with Handloom Scheme;
viii. Dr.M.G.R. Handloom Weavers Welfare Trust Scholarship;
ix. Welfare Fund for Legal Heirs of Weavers; and
x. Insurance amount to legal heirs of weaver members
(which is now Rs.65,000/-).
In view of the fact that the employees' namely, staffs of the
societies are not entitled to benefit under the said schemes, the
Government of Tamil Nadu vide letter dated 12.12.1986 has stated
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W.A.Nos.854 to 862/2012
that the Payment of the Bonus Act is not applicable to the Weaver-
members of the Societies. Besides, the Industrial Tribunal, Tamil
Nadu has already held that the weaver-members are not workmen and
there is no worker-employer relationship between them and the
Society.
5. Continuing his argument, learned Counsel for the appellant
further contended that the weaver-members do not attend the society
as its employees do, that there are no fixed hours for work for them as
in the case of the paid employees, that the appellant society is not
maintaining any attendance/wage registers for the weaver-members
as it does in the case of its employees, that the weaver-members do
not get any monthly wages from the appellant society as in the case of
its employees as the charges for the finished products are not
constant, that there is no control or supervision over the working of
the weaver members and that the appellant cannot initiate any
disciplinary action against the weaver-members as in the case of its
paid employees. There is no continuity in their work inasmuch as they
work according to their convenience. Thus, it could be seen that there
is no contract of service between the appellant society and its weaver
members whereas there is such a contract of service between the
appellant and its paid employees.
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6. When a similar issue came up before this Court in the
Management, Dindgul Ladies Polythene Workers' Industrial Co-
operative Society Limited reported in 2010 (2) CWC 878, the
learned Single Judge of this Court stating that the Co-operative
Societies stand on a special footing which are distinguishable from
other establishments or Corporation categorically held that the
members of the appellant society are not workmen as per the
provisions of the Tamil Nadu Co-operative Societies Act and since the
appellant society has been registered under the Co-operative Societies
Act, they cannot be categorized as ''jobbers'' for the fixation of
maximum wages and applicability of the Minimum Wages Act.
7. Learned Counsel for the appellant also contended that the
issue raised in this appeal is no longer res integra and as such
requested us to apply the ratio laid down by two of the judgments of
the Division Bench cited supra in the case of Q793, Madathupatti
Weavers Co-operative Production and Sales Society Limited
reported in 2003 (3) LLN 674-Q793 and also in yet another
judgment of the Division Bench in the case of the Management,
Dindgul Ladies Polythene Workers' Industrial Co-operative
Society Limited reported in 2010 (2) CWC 878. Explaining further,
the learned Counsel for the appellant submitted that after carefully
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considering the provision under Section 7-A of the Act, the learned
Division Bench has held that for taking a decision under Section 7A of
the Act, the following requirements are conditions precedent:
i. It should be an industry coming under S.1(3)(a) of the Act,
i.e. it should be an establishment which is a factory engaged in any
industry specified in Sch.I; and
ii. They should employ 20 or more persons;
iii. There should be a notification of the Central Government
to apply the provisions of the Act; or
iv. The majority of the employees should have applied for the
applicability of the Act; and
v. There must be fullfledged enquiry by the Regional
Provident Fund Commissioner preceded by an inspection, report and
notice of requirement and sufficient opportunity to furnish records;
Except the 2nd condition, none of the other conditions have been
applied. On this basis, the Division Bench in Madathupatti Weavers
case has held that without conducting any fullfledged enquiry under
Section 7-A, the Commissioner cannot exercise his jurisdiction,
bringing the Madathupatti Weavers Co-operative Production and Sales
Society Limited under the Act. In the instant case, there is no any
notification issued by the Central Government complying with the
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W.A.Nos.854 to 862/2012
provisions of the Act. Secondly, majority of the members of the
appellant society have not even applied for the applicability of the Act
and above all, the relationship of employee and employer has not
been found for the reason that the appellant society is not maintaining
any attendance or wage register for the weaver-members as it does in
the case of its employees, that the weaver-members do not get any
monthly wages from the society as in the case of its employees, that
the charges for the essential products are not constant, that there is
no control or supervision over the work of the weaver-members, that
the appellant society cannot take any disciplinary action against its
weaver members as in the case of its employees and that there is no
continuity of work as they work according to their convenience. In
addition thereto, the Government of Tamil Nadu Government also in
the letter dated 12.12.1986 has stated that the payment of the Bonus
Act is not applicable to the weaver-members of the societies. Besides
the Industrial Tribunal, Tamil Nadu has already held that the weaver-
members are not workmen and there is no workmen-employer
relationship between them and the Society. Therefore, the judgment
of the Division Bench in the case of Q793, Madathupatti Weavers
Co-operative Production and Sales Society Limited reported in
2003 (3) LLN 674-Q793 answers to the doubt raised by the
appellant, hence, nothing survives for further adjudication, he pleaded.
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W.A.Nos.854 to 862/2012
8. Again referring to the yet another decision of the Division
Bench of this Court in the case of the Management, Dindgul Ladies
Polythene Workers' Industrial Co-operative Society Limited
reported in 2010 (2) CWC 878, learned Counsel for the appellant
submitted that the law laid down by this Court in the Madathupatti
Weavers case has been followed in this case for a simple reason that
there was no any relationship of employer and employee between the
appellant society and the weaver-members. Moreover, there was no
any notification issued by the Central Government to apply the
provisions of the Act. On the contrary, the Tamil Nadu Government
vide letter dated 12.12.1986 has said that the payment of Bonus Act is
not applicable to the weaver- members of the societies. Therefore,
when the learned Single Judge has agreed with the ratio laid down by
the Division Bench of this Court in the aforesaid cases, the matter
ought not to have been remanded, hence, the order of remand is liable
to be set aside by allowing the Writ Appeals holding that in view of no
relationship of employer and employee between the appellant society
and the weaver-members and the applicability of the Bonus Act is
unacceptable.
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W.A.Nos.854 to 862/2012
9. Learned Counsel for the respondents 2 and 3 in
W.A.Nos.854 to 860 and 862/2012 again contended that when the
Employees Provident Funds and Miscellaneous Provisions Act, 1953 has
been brought in for the benefit of the weavers, the appellant society
ought not to have resisted the same. Referring to the two judgments
of the Apex Court in the case of S.K.Nasiruddin Beedi Merchant
Limited vs. Central Provident Fund Commissioner and another
reported in (2001) 2 Supreme Court Cases 612, it is argued that
when the Apex Court has held that even in respect of home workers
engaged through contractor, Employees Provident Funds and
Miscellaneous Provisions Act, 1953 is applicable, following the said
Nasiruddin Beedi Mercant Limited Case, these appeals shall be
dismissed. Arguing further, it is submitted that the order of remand
passed by the learned Single Judge is only to redetermine the issue as
to whether the members of the appellant Society are working at home
or not and getting any benefit from the appellant society so as to bring
them under the relationship of employee and employer. Hence, the
order of remand need not be interfered with.
10. Again referring to yet another judgment in the case of the
Officer-in-Charge, Sub-Regional Provident Fund Office and
another vs. M/s.Godavari Garments Limited in Civil Appeal
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W.A.Nos.854 to 862/2012
No.5821/2019, it has been argued that when M/s.Godavari
Garments Limited, the respondent therein, engaged women workers
by providing with cut fabric, thread, buttons etc. to be made into
garments at their own homes, the Apex Court considering the fact that
sewing machines used by the women workers were owned by them
and not provided by the respondent company, came to the conclusion
that it is a fit case for applying the Employees Provident Funds and
Miscellaneous Provisions Act, 1953, by bringing the case under Section
2(f) of the Act, while holding that the ''employee'' means 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 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 (52 of
1961) or under the standing orders of the establishment.'' Therefore,
no fault can be found with the impugned order, it is pleaded.
Therefore, the impugned order remanding the matter to decide the
case afresh should be affirmed by this Court.
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W.A.Nos.854 to 862/2012
11. But we are unable to find any merit on the said
submissions made by the learned Counsel for the respondents 2 and 3
in W.A.Nos.854 to 860 and 862/2012. The reason being that the
Appellant Society is a society registered under the provisions of the
Tamil Nadu Co-operative Societies Act. The members are the
handloom weavers residing at the place where the said society is
situated and its sub-urbans. They are shareholders of the appellant
Society. As on the date of filing the writ petitions, it was claimed that
there were 125 members and among them, only 40 were active
participants in the society. The Appellant Society has one employee on
its rolls and is working without the aid of power less than 20 members.
When the principal object of the appellant society is to improve the
hand loom industry and the economic condition of the weavers residing
in the area of operation, the appellant society was formerly managed
by the Board of Management and the members of the Board were
elected from among the members of the Society. The Board of
Management was the appointing authority as far as the weaver
members/share holders of the appellant society are concerned and
they are not employees of the society. While so, they produce the
cloth at their own residence and they do not attend the society as its
employees do because there are no fixed hours of work for them and
the appellant society is not maintaining any Attendance Register or
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Wage Register for the weaver-members besides the weaver-members
do not get any monthly wages from the appellant society. In addition
thereto, the charges for the finished products are not even constant.
As the members of the appellant society are not working within the
premises of the appellant concerned and some of them collect the raw-
materials from the appellant society and some of them collect from
outside, weave the sarees, dhoties and shirts etc. It goes without
saying that the weaving of cloths, namely, sarees, dhoties and shirts
are made without there being any control or supervision over the
weaver-members, therefore, it also goes to show that the appellant
society cannot take any disciplinary action against its weaver-
members. Moreover, there is no any contract of service between the
appellant society and its weaver-members.
12. Considering the similar facts and circumstances when
Madathupatti Weavers case came before this Court at the instance of
the similar problem faced from the respondent Provident Fund
Authority, the Division Bench in its reported judgment in Q793,
Madathupatti Weavers Co-operative Production and Sales
Society Limited reported in 2003 (3) LLN 674-Q793 dealing with
Section 7(A) of the Act has held thus :
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''Held : For taking a decision under S.7A of the Act,
the following requirements are conditions precedent:
i. It should be an industry coming under
S.1(3)(a) of the Act, i.e. it should be an establishment
which is a factory engaged in any industry specified in
Sch.I; and
ii. They should employ 20 or more persons;
iii. There should be a notification of the Central
Government to apply the provisions of the Act; or
iv. The majority of the employees should have
applied for the applicability of the Act; and
v. There must be fullfledged enquiry by the
Regional Provident Fund Commissioner preceded by an
inspection, report and notice of requirement and sufficient
opportunity to furnish records.''
In the present case also, firstly, the Appellant Society does not
have more than one employee, secondly, there is no notification issued
by the Central Government to apply the provisions of the Act, thirdly,
the majority of the employees had not even applied for the
applicability of the Act. Therefore, it should also be an industry under
Section 7-A of the Act and it should also be an establishment coming
under S.1(3)(a) of the Act, i.e. a factory engaged in any industry
specified in Sch.I. Moreover, there is no any fullfledged enquiry
conducted by any Provident Fund Commissioner and adversely there is
no any report submitted by the respondents either before the learned
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Single Judge or before us. Therefore, we have no hesitation to apply
the ratio laid down by the Division Bench in the case of Q793,
Madathupatti Weavers Co-operative Production and Sales
Society Limited reported in 2003 (3) LLN 674-Q793 and the said
decision has been confirmed by the Apex Court when appeal was filed
by the Regional Provident Fund Commissioner and others
reported in 2008 (3) LLN 507 (SC). Moreover, another Division
Bench of this Court also following the ratio laid down in Q793,
Madathupatti Weavers Co-operative Production and Sales
Society Limited reported in 2003 (3) LLN 674-Q793 has also held
that the Management, Dindigul Ladies Polythene Workers' Industrial
Co-operative Society Limited, Industrial Estate Dindigul are not
workmen as per the provisions of the Tamil Nadu Co-operative
Societies Act and even though they have been registered under the
Factories Act and 32 persons are covered under the Employees' State
Insurance Act, since 32 persons are administering the affairs of the
society, they cannot be categorized as ''Jobbers'' for fixation of
Minimum Wages and applicability of Minimum Wages Act.
13. Now coming to the two decisions referred to by the learned
Counsel for the respondents 2 and 3 in W.A.Nos.854 to 860 and
862/2012 which are frankly speaking distinguishable in nature, it may
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be mentioned herein that in the case of S.K.Nasiruddin Beedi
Merchant Limited vs. Central Provident Fund Commissioner and
another reported in (2001) 2 Supreme Court Cases 612, the
petitioners therein were engaged in the manufacture of sale of beedies
and it was found that there was a direct relationship between the
manufacturer and workers, therefore, when there was a relationship of
employer and employee, the ratio laid down therein cannot be
applicable to the present case as the Division Bench in Q793,
Madathupatti Weavers Co-operative Production and Sales
Society Limited reported in 2003 (3) LLN 674-Q793 has held that
if the members of the Society are not supervised or managed by the
society, there cannot be any relationship of employer and employee.
14. We have also seen in the present case that among the
members of the appellant society some of them are collecting the raw
materials from the premises of the appellant society and taking them
to home and after weaving the sarees, dhoties and shirts, they would
return the finished products whereas some of the members do not
collect the raw materials from the appellant society. Therefore, when
the relationship of employer-employee relationship between the
appellant society and the weaver members of the society have not
been made out, the above ratio cannot be of any use to the
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respondents.
15. In the case in Officer-in-Charge, Sub-Regional Provident
Fund Office and another vs. M/s.Godavari Garments Limited in Civil
Appeal No.5821/2019 also, the company has engaged women workers
who were provided with cut fabric, thread, buttons etc. to be made
into garments at their own homes and the sewing machines were
owned on their own costs and not provided by the respondent
company and although an objection was raised stating that even the
sewing machines used by the women workers were owned by them
and not provided by the respondent, repelling the same, it has been
held that they are all brought under Section 2(f) of the Act which says
that ''employee'' means 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 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 (52 of 1961) or under the standing orders of the
establishment. The distinction put in the case in Officer-in-Charge,
Sub-Regional Provident Fund Office and another vs. M/s.Godavari
Garments Limited in Civil Appeal No.5821/2019 shows that the women
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workers were employed by the respondent company by providing all
the raw materials such as fabric, thread, button etc. from the
respondent-employer. With these materials, the women workers were
required to stitch the garments as per the specifications given by the
respondent company and all the women workers were paid wages
directly by the respondent company on a per piece basis for every
garment stitched. But in the case on hand, as we have narrated
above, some of the members of the appellant society used to get raw
materials and take them home for making finished products and some
of the members of the appellant society do not even receive any raw-
materials and they collect from outside and return the finished
products for sale. Therefore, the relationship of employer and
employee does not arise in this case. Hence, we hold that the case of
the respondents to bring the appellant society under the Employees
Provident Funds and Miscellaneous Provisions Act, 1953 is far from
acceptance and untenable in law.
16. In view of all the above, we are inclined to set aside the
Common Order of the learned Single Judge dated 06.02.2021 passed
in W.P.Nos.1069 to 1077/2012 insofar as it relates to the remanding of
the matters back to the 1st respondent herein, namely, Employees
Provident Fund Appellate Tribunal, New Delhi-110 092, alone is
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concerned and in all other aspects, the Common Order shall stand
good. No costs. Consequently, connected Miscellaneous Petitions
are also closed.
(T.R.J.,) (V.S.G.J.,)
09.08.2021
Index : Yes
Internet Yes
tsi
To
1. Employees' Provident Fund Appellate Tribunal,
Scope Minar,
Core-II, 4th Floor,
Laxmi Nagar District Centre,
Laxmi Nagar, New Delhi-110 092.
2. The Assistant Provident Fund Commissioner
(The APFC),
EPFO, Sub-Regional Office,
31, Filter Bed Road,
Vellore-632 001.
3. Employees' Provident Fund Organization,
No.31, Filter Bed Road,
Vellore-632 001.
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T.RAJA, J.
and
V.SIVAGNANAM, J.
tsi
W.A.Nos.854 to 862/2012
09.08.2021
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