Madras High Court
Tamil Nadu Grama Bank vs The Regional Provident Funds ... on 25 September, 2024
W.P.No.21205 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on 05.09.2024
Pronounced on 25.09.2024
CORAM
THE HONOURABLE MS.JUSTICE R.N.MANJULA
W.P.No.21205 of 2022 and
W.M.P.No.20196 of 2022
Tamil Nadu Grama Bank
(Successor in title to Pallavan Grama Bank)
6 Yercaud Road,
Hasthampatty,
Salem 536 007
Rep by its General Manager (Admin).
... Petitioner
Vs.
1.The Regional Provident Funds Commissioner - II,
Employees' Provident Fund Organisation,
Regional Office,
Steel Plant Road,
Thalavaipatti
Salem 636 302.
2.The General Secretary,
Tamil Nadu Grama Bank
Workers Union,
Regn.No.457/VDR, 3/12, M.K.Nagar,
Seelanaickenpatti, Salem 636 201.
(R2 impleaded as per order dated 22.02.2024
in W.M.P.No.23953 of 2022) ... Respondents
Page No.1 of 18
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W.P.No.21205 of 2022
Prayer: Writ Petition filed under Article 226 of the Constitution of India,
to issue a Writ of Certiorari, to call for the records of the respondent in
Proceedings No.CB/RO/SLM/COMP-I/21969/S-3/2021 and quash its
order dated 06.06.2022.
For Petitioner : Mr.Anand Gopalan for
M/s.T.S.Gopalan & Co
For Respondents : Ms.R.Meenakshi, Standing Counsel
for R1
Ms.D.Geetha for R2
ORDER
The petitioner has filed this writ petition challenging the impugned
order of the first respondent dated 06.06.2022 by proceedings
No.CB/RO/CLM/COMP-1/21969/S-3/2021, through which, the first
respondent has assessed a sum of Rs.10,29,26,330/- to be payable
towards EPF contribution in respect of the employees covered under the
Act.
2. Heard Mr.Anand Gopalan, learned counsel for the petitioner,
Ms.R.Meenakshi, learned Standing Counsel for R1 and Ms.D.Geetha,
learned counsel for R2 and perused the materials available on record.
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3. Mr.Anand Gopalan submitted that the petitioner institution itself
is excluded from the applicability of the Employees' Provident Funds and
Miscellaneous Provisions Act (hereinafter referred to as "the Act") and
hence, the very assessment in respect of the petitioner's institution itself
is illegal. Section 16(1)(c) of the Act, would state that the 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, would not be covered under the Act. So, it is
submitted by the learned counsel for the petitioner that the employees of
the petitioner's institution are only covered under the Regional Rural
Banks Act, 1976 and in terms of Section 30 of that Act. The petitioner
framed their own regulation in respect of the provident fund and hence,
they will not come under the purview of the said Act.
4. However, the counter argument of Ms.R.Meenakshi, learned
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Standing Counsel for the first respondent is that the above issue has
already been dealt by the Hon'ble Supreme Court and the position has
been settled in Pawan Hans Ltd. Vs. Aviation Karmachari Sanghatana
reported in (2020) 13 SCC 506, by holding that even when if the
institution has got its own scheme by their own regulations or rules, they
will be applicable only in respect of the employees under the Scheme, but
do not fall under the scheme of the Act and hence, the petitioner cannot
seek shelter under Section 16(1)(c) of the Act.
5. Mr.Anand Gopalan submitted that only if the institution is
covered under the Act, the question of exemption would arise and the
petitioner would be obligated to apply for exemption and get an order in
that regard. He further submitted that the Central Government in exercise
of powers conferred by Section 5 and 7(1) of the Act, amended the
Employees Fund Scheme, 1952 by substituting in the notification dated
18.12.1965 the expression "banks other than the nationalised banks
established under any Central or State Act" in the place of "the banks
doing business in one State or Union Territory and having no
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departments or branches outside that State or Union Territory", which
was published in the Gazatte dated 09.03.2000.
6. The following judgments have been cited on behalf of the
petitioner:
(i) The decision of this Court in the case of Bharat Overseas Bank
Ltd., Chennai, Vs. Government of India and Others, reported in 2008
SCC Online Mad 1299;
(ii) The decision of the Hon'ble Supreme Court in the case of
Yeshwant Gramin Shikshan Sanstha Vs. Assistant Provident Fund
Commissioner and others, reported in (2017) 5 SCC 579;
(iii) The decision of the Hon'ble Supreme Court in the case of
Pawan Hans Ltd. and Others Vs. Aviation Karmachari Sanghatana
and Others, reported in (2020) 13 SCC 506;
(iv) The decision of the Hon'ble Supreme Court in the case of
Maharashtra Chess Association Vs. Union of India, reported in (2020)
13 SCC 285.
7. The further contention of the learned counsel for the petitioner
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is that by virtue of the judgment of the Division Bench of this Court held
in Bharat Overseas Bank Ltd., Chennai, Vs. Government of India and
Others, the notification including the petitioner bank under the scheme
has been quashed and hence, the employees' provident fund is not
applicable to the petitioner's Bank.
8. Ms.D.Geetha, learned counsel for the second respondent
submitted that the petitioner Bank came under the coverage of EPF
Scheme voluntarily in view of the regulation 71 of the erstwhile Pallavan
Gram Bank (officers and employees). Hence, the petitioner cannot claim
that he is exempted from the applicability of the Act. So far as the
exemption under Section 16(c) of the Act is concerned, it is available
only when conditions stated therein are fulfilled. They are (i) the
establishment should be set up under any Central, Provincial or State Act
(ii) And its 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. But the said criteria has
not been fulfilled in the petitioner's case. There are 625 persons who are
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not given with the benefit of the scheme of the bank, but they come
under the definition of 'employee' under the Act. So they have to be
covered under the benefit of the Act. In the judgment of the Division
Bench held in W.P.No.15728 of 2000 dated 24.03.2008, the notification
dated 15.02.2000 has been quashed and hence that has got no relevance
to the case in hand. Hence the above case has got no application to the
facts of the case. It is further submitted that the impugned order of
assessment has been made under Section 7A of the Act and if the
petitioner is aggrieved, his remedy would lie by way of preferring an
appeal before the Tribunal and not by way of preferring this Writ
Petition.
Discussion:
9. Before adverting into the merits of the legal issue raised in this
Writ Petition, the primary objection as to the maintainability of the Writ
Petition has to be answered. No doubt, the impugned order has been
passed for determining the employees provident fund arrears payable by
the petitioner under Section 7A of the Act. Hence, it is correct for the
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second respondent to state that the rightful course open to the petitioner
is by preferring an appeal and not by way of filing Writ Petition. But the
petitioner contended that he has raised the legal point which would go to
the root of the matter and hence, he has preferred to file this Writ
Petition.
10. The argument of the petitioner is that the Tamil Nadu Grama
Bank will not come under the purview of the Act and there is a lack of
competence and jurisdiction on the part of the first respondent authority
to pass the impugned order. No doubt the jurisdiction of this Court under
Article 226 of the Constitution of India is equitable and discretionary and
the above power has to be invoked by the High Courts to uphold the rule
and law. In this regard, it is appropriate to cite the judgment of the
Constitution Bench of the Hon'ble Supreme Court held in the case of
A.V.Venkateswaran Vs. Ramchand Sobhraj Wadhwani. In the said case,
it is held that it is not possible and desirable to lay down inflexible rules
which should be applied to the rigidity in every case comes before the
High Court.
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11. As the petitioner in the instant case has raised a legal plea
stating that the first respondent authority has abused his power and
determined the employees provident fund dues on an institution which is
excluded under the coverage. As the petitioner has touched upon the root
of the validity of the inclusion of the petitioner's institution under the
Act, settling the above point in accordance with law would have the
direct impact upon the impugned order. Hence, I feel it is appropriate to
deal with the contentions raised by the petitioner by invoking the
discretionary jurisdiction vested with this Court.
12. In fact it is claimed by the petitioner that the notification which
was issued to include the Bank under the Employees Provident Fund
Scheme itself has been quashed by virtue of a judgment of the Division
Bench of this Court held in the case of Bharat Overseas Bank Ltd.,
Chennai, Vs. Government of India and Others. Even though the learned
counsel for the petitioner raised the above contention before the first
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respondent authority, the above point was not argued. Even in the Writ
Petition, it has been stated that regulation 71 of the Service Regulations
provided that an Officer or employee who has satisfied with the
eligibility criteria, shall be a member of the Employees' Provident Fund
and the contribution to the provident fund by the officer or employee and
the bank shall be in accordance with the provisions of the said Act.
13. It is further clarified that the above provision would mean the
voluntary coverage of the institution under the Act. Having said that in
the Writ Petition, now the petitioner wishes to place reliance on the
judgment of the Division Bench of this Court in order to take a different
plea that the notification which covers the petitioner's Bank itself was
quashed. In fact, the notification in GSR No.170 dated 20.01.1966 would
include all the banks doing business in one State or Union Territory and
having no departments or branches outside the State or Union Territory.
14. But the controversial notification brought before the Division
Bench of this Court in Bharat Overseas Bank Ltd., Chennai, Vs.
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Government of India and Others, is the notification dated 09.03.2000.
The above notification brought the amendment by amending the words
"the banks doing business in one State or Union Territory and having no
departments or branches outside the State or Union Territory", in the
earlier notification by substituting the expressions "banks other than the
nationalised bank established under the Tamil Nadu Central or State
Act". The said notification was challenged by various Banks which had
branches in more than one State and also by the Union.
15. Originally when the notification of the year 1966 was issued, it
had the effect of covering all the Banks doing business in one State or the
Union Territory, but did not have departments or branches outside the
State or Union Territory. But in view of the amendment dated
09.03.2000, the Act is made applicable only for those banks other than
the nationalised banks established under the Central or State Act.
16. It was contended that the above notification is discriminatory
in nature without any reasonable basis and hence, it is unconstitutional.
By accepting the contention of the petitioner bank therein, the Division
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Bench has struck down the notification. In view of the above order, the
amendment got struck down and the position ante amendment got
restored. It means that all the Banks whether nationalised or not but
doing business in one State or Union Territory and no departments or
branches outside the State or Union Territory continue to be covered
under the Act.
17. Admittedly the petitioner Bank Tamil Nadu Grama Bank, is by
the name of it can have his business inside the State of Tamil Nadu and it
does not have any branches outside the State. So the petitioner Bank is
well within the coverage of the Act. Hence, the argument that the
petitioner Bank has been excluded in view of the judgment of the
Division Bench held in the case of Bharat Overseas Bank Ltd.,
Chennai, Vs. Government of India and Others,, is not acceptable. At the
risk of repetition, it is reiterated that the service regulations of the
petitioner Bank itself states about the voluntary coverage. Hence, both
by virtue of Government notification and the petitioner's own service
regulations will make it very much covered under the ambit of the said
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Act.
18. The further argument of the petitioner is that the petitioner
Bank has got its own pension scheme and the hence, the employees of
the Bank are entitled to the benefit of the above scheme and it is
exempted from the application of the Act.
19. Ms.R.Meenakshi, learned Standing Counsel for the first
respondent made an earnest effort to make out difference between the
concepts of 'exclusion' and 'exemption'. The word 'exclusion' would
denote something completely falling out of the very coverage.
'Exemption' is permission given to go out of coverage by special
notification, as prescribed under Section 17 of the Act. If any
establishment is said to have got a special scheme or fund to cover its
employees, it can seek exemption under Section 17 by following the due
procedure prescribed therein. Some of the situations which would clarify
exemption can be seen under Section 16 of the Act. The word "exempted
employee" or "exempted establishment" is defined under Section 2 (ff)
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and 2(fff) of the Act. For a better clarification, the above definition is
extracted below:
“Section 2(ff) - “exempted employee” means an
employee to whom a Scheme [or the Insurance Scheme,
as the case may be,] would, but for the exemption
granted under Section 17, have applied.
Section 2(fff) - “exempted [establishment]” means [an
establishment] in respect of which an exemption has been
granted under section 17 from the operation of all or any
of the provisions of any Scheme [or the Insurance
Scheme, as the case may be], whether such exemption
has been granted to the [establishment] as such or to any
person or class of persons employed therein]”
20. In some of the situations, it would also exempt the
applicability of the Act under Section 16 of the Act. It is seen as below:
"16. Act not to apply to certain establishments --
This Act shall not apply--
(a) to any establishment registered under the Co-
operative Societies Act, 1912, (2 of 1912), or under any
other law for the time being in force in any State relating
to Co-operative Societies, employing less than fifty
persons and working without the aid of power; or
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(b) to any other establishment belonging to or
under the control of the Central Government or a State
Government and whose employees are entitled to the
benefit of contributory Provident Fund or old age
pension in accordance with any Scheme or rule framed
by the Central Government or the State Government
governing such benefits; or
(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."
21. The petitioner harps upon Section 16 (c) of the Act and
claimed that the petitioner Bank has got its own contributory provident
fund and old age pension scheme and hence, the Act is not applicable to
the same. The petitioner has not got any exemption in view of the above
reason. Even though the petitioner Bank has got its own pension scheme,
the employees for whose benefit, the impugned proceedings were passed,
did not come under the scheme of the bank. Even in the impugned order,
it is stated that the petitioner's employees were not covered under the
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Bank's pension scheme as well. The position has been well clarified by
the Hon'ble Supreme Court in the case of Pawan Hans Ltd. Vs. Aviation
Karmachari Sanghatana and Others. In the said case, the Hon'ble
Supreme Court has held that even when the institution has got its own
scheme by their own regulations or rules, they will be applicable only in
respect of the employees under the Scheme.
22. Since the word employed under Section 16(c) states about
those employees who are entitled to the benefit of contributory provident
fund and old age pension scheme, for the rest of the employees who did
not come under the scheme, the Employees' Provident Fund and
Miscellaneous Funds Act only can be applicable.
23. In view of the above discussion, the following inescapable
inferences can be made:
(i) The petitioner bank is very much covered under the ambit of the
Act.
(ii) If the petitioner Bank has got a special scheme, it is applicable
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only for the persons who have already been covered under the same.
(iii) The first respondent appropriate authority has rightly applied
the above inferences by rightly understanding the legal submissions
made by the parties and held that 625 employees of the petitioner Bank
who are not covered under the scheme of the bank, cannot be treated as
exempted category under the Act and hence, the bank is liable to pay the
EPF contribution dues determined in respect of those employees. Hence
the impugned order does not require any interference.
24. In the result, this Writ Petition is dismissed. No costs.
Consequently, connected miscellaneous petition is closed.
Index : Yes /No 25.09.2024
Speaking / Non-speaking
Neutral Citation : Yes / No
gsk
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R.N.MANJULA, J.
gsk
To
1.The Regional Provident Funds Commissioner - II,
Employees' Provident Fund Organisation,
Regional Office,
Steel Plant Road,
Thalavaipatti
Salem 636 302.
2.The General Secretary,
Tamil Nadu Grama Bank
Workers Union,
Regn.No.457/VDR, 3/12, M.K.Nagar,
Seelanaickenpatti, Salem 636 201.
W.P.No.21205 of 2022 and
25.09.2024
https://www.mhc.tn.gov.in/judis
