Madras High Court
M/S.R.R.Infraa Construction vs The Regional Provident Fund ... on 18 February, 2025
W.P.(MD) No.31083 of 2024
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 18.02.2025
CORAM
THE HON'BLE MR.JUSTICE MUMMINENI SUDHEER KUMAR
W.P.(MD) No.31083 of 2024
and
W.M.P.(MD) Nos.26084, 26086 and 26088 of 2024
M/s.R.R.Infraa Construction,
Rep., by its Partner,
R.Murugaperumal,
Old No.4-C, New No.2,
Visalatchipuram,
Madurai-625 014. ... Petitioner
Vs.
1.The Regional Provident Fund Commissioner-I,
Regional Office,
Employees Provident Fund Organization,
1, Lady Doak College Road, Bhavishya Nidhi Bhavan,
Chokkikulam, Madurai-625 002.
2.The Enforcement Officer,
Employees Provident Fund Office,
Regional Office,
1, Lady Doak College Road,
Bhavishya Nidhi Bhavan,
Chokkikulam, Madurai-625 002. ... Respondents
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W.P.(MD) No.31083 of 2024
Prayer: Petition filed under Article 226 of the Constitution of India praying to
issue a Writ of Certiorarified Mandamus, to call for the records of the
impugned order passed by the 1st respondent in No.
TN/RO/MD/MDU/1544567/M-4/7A Inquiry/2024 dated 15.10.2024 and
quash the same as illegal and consequently forbear the 1st respondent from
proceeding further with the inquiry without impleading the sub-contractors as
parties for the year 2014-2020 and summon them for the purpose of the
enquiry in No.TN/RO/MD/MDU/1544567/ENF/M-4/7A-INQUIRY/2024
under Section 7A of the Employees Provident Funds and Miscellaneous
Provisions Act, 1952 and pass order for fresh inspection Part-II.
For Petitioner : Mr.M.Kannan
For R1 : Mr.John Xavier
ORDER
Respondent No.1 initiated proceedings against the petitioner by
issuing a notice under Section 7A of the Employees Provident Funds and
Miscellaneous Provisions Act, 1952 (hereinafter referred to as “the Act
1952”) and accordingly, the petitioner participated in the proceedings and
because of certain disputes that arose during the course of enquiry, the
petitioner approached this Court on an early occasion by filing W.P.(MD) No.
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13950 of 2022 and the proceedings under Section 7A of the Act 1952 remain
stayed during the pendency of the said writ petition. The said writ petition
was finally disposed of by order dated 26.04.2023 and thereafter, the
proceedings under Section 7A of the Act 1952 again commenced. While so,
the petitioner herein submitted an application seeking to implead some of the
sub-contractors to whom the petitioner has entrusted a part of the work on
sub-contract basis and who had executed the work on the ground that the
Provident Fund contribution payable in respect of the said employees worked
under the said sub-contractors is sought to be imposed on the petitioner and
therefore, seeking to implead those sub-contractors to bring the relevant
material before Respondent No.1 for proper adjudication of the matter. It is
the said application that was rejected by Respondent No.1 by passing the
impugned order dated 15.10.2024 on the ground that the petitioner herein,
being the Principal employer, who has the responsibility to identify all such
employees, is already a party to the proceedings and no useful purpose would
be served by including the sub-contractors as parties to the case. It is
aggrieved by the said order, the petitioner approached this Court by filing the
present writ petition.
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2. A Co-ordinate Bench of this Court, while entertaining the writ
petition, by order dated 10.01.2025, passed the following order:
“4.Considering the submissions made on either
side, this Court is not inclined to defer the enquiry,
however, the petitioner shall participate in the enquiry
and provide all the informations with regard to the details
of the sub-contractors, so as to enable the respondent to
send notice to the sub-contractors and after receiving
notice, they can also very well participate in the enquiry.
Till then, the respondent is directed not to pass any final
orders. After hearing the sub-contractors and completion
of the enquiry, if the respondent comes to a conclusion
that the petitioner is no way responsible for EPF
contribution for the workers worked under the sub-
contractors, appropriate orders can be passed.”
3. In spite of the above said order, no further proceedings had taken
place and the respondents preferred to file counter affidavit by contesting the
relief sought for in the writ petition. Accordingly, with the consent of the
parties, the main writ petition is taken up for consideration and accordingly,
the same is being disposed of by this order.
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4. Heard Mr.M.Kannan, learned counsel for the petitioner and
Mr.John Xavier, learned counsel for the first respondent.
5. The scope of enquiry under Section 7A of the Act 1952 is wide
enough and Respondent No.1 is conferred with powers of a civil Court under
the Code of Civil Procedure, 1908 for trying a suit in the matters of enforcing
the attendance of any person or examining any person on oath, requiring the
discovery and production of documents, receiving evidence on affidavit and
issuing commissions for the examination of witnesses and any such enquiry
shall be deemed to be a judicial proceeding within the meaning of Sections
193 and 228 and for the purpose of Section 196 of the Indian Penal Code. It
is in the light of the wide scope of Section 7A of the Act 1952, the petitioner
filed an application to implead the sub-contractors on the ground that the
petitioner is totally unaware of the employees that were engaged by the sub-
contractors and the petitioner is having no particulars of all such employees
and also to ascertain whether the sub-contractos would be covered by the
provisions of the Act 1952 or not etc.
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6. Respondent No.1 ought to have allowed the said application
either by impleading the sub-contractors as party to the proceedings or
summoning them by issuing appropriate notices and gathered the relevant
evidence for proper adjudication of the matter and passed final orders. But
Respondent No.1, instead of exercising the said power either way, rejected
the application filed by the petitioner on the ground that no useful purpose
would be served, when the petitioner is already there as a party.
7. In the considered view of this Court, the said stand of
Respondent No.1 is totally unsustainable. The petitioner is entitled for fullest
opportunity to defend his case either by producing evidence or by calling for
evidence from third parties or by impleading the third parties, who according
to him are necessary for proper adjudication in the matter. Had the said sub-
contractors are under the control of the petitioner, the petitioner himself
should have submitted all the material. But in the instant case, the works that
were entrusted to the sub-constractors were already executed long back and
therefore, the sub-contractors cannot be said to be under the control of the
petitioner herein. Therefore, even if the petitioner makes an attempt, the sub-
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contractors may not turn up and produce the relevant material. If any such
notice is issued by Respondent No.1, the said sub-contractors are under
statutory obligation to respond and in case if they fail to respond, Respondent
No.1 has power under Section 7A of the Act 1952 to summon them in
accordance with law.
8. The very same issue was dealt with by the Hon'ble Apex Court in
the case of Food Corporation of India vs. Provident Fund Commissioner
and others reported in (1990) 1 SCC 68, which was rightly relied upon by the
learned counsel for the petitioner, wherein the Hon'ble Apex Court held as
under:
“7. The question, in our opinion, is not whether one
has failed to produce evidence. The question is whether the
Commissioner who is the statutory authority has exercised
powers vested in him to collect the relevant evidence before
determining the amount payable under the said Act.
8. It is of importance to remember that the
Commissioner while conducting an inquiry under Section 7-A
has the same powers as are vested in a court under the Code of
Civil Procedure for trying a suit. The section reads as follows:
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“7-A Determination of moneys due from
employer—(1) The Central Provident Fund
Commissioner, any Deputy Provident Fund
Commissioner or any Regional Provident Fund
Commissioner may, by order determine the amount
due from any employer under any provision of this
Act (the scheme or the Family Pension Scheme or the
Insurance Scheme as the case may be) and for this
purpose may conduct such inquiry as he may deem
necessary.
(2) The officer conducting the inquiry
under sub-section (1) shall, for the purposes of such
inquiry, have the same powers as are vested in a
court under the Code of Civil Procedure, 1908, for
trying a suit in respect of the following matters,
namely:
(a) enforcing the attendance of any person
or examining him on oath;
(b) requiring the discovery and production
of documents;
(c) receiving evidence on affidavit;
(d) issuing commissions for the
examination of witnesses and any such inquiry shall
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be deemed to be a judicial proceeding within the
meaning of Sections 193 and 228, and for the
purpose of Section 196 of the Penal Code, 1860.”
9. It will be seen from the above provisions that the
Commissioner is authorised to enforce attendance in person
and also to examine any person on oath. He has the power
requiring the discovery and production of documents. This
power was given to the Commissioner to decide not abstract
questions of law, but only to determine actual concrete
differences in payment of contribution and other dues by
identifying the workmen. The Commissioner should exercise all
his powers to collect all evidence and collate all material
before coming to proper conclusion. That is the legal duty of
the Commissioner. It would be failure to exercise the
jurisdiction particularly when a party to the proceedings
requests for summoning evidence from a particular person.”
9. Similarly, in Bharat Heavy Electricals Ltd. vs. Employees' State
Insurance Corporation reported in (2008) 3 SCC 247, the Hon'ble Supreme
Court has been pleased to deal with identical issue and held as under:
“Conclusion
29. Determination of the exact liability on the
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part of the contractors is necessary keeping in view the
fact that they or some of them may not be under the
control of the principal employer having regard to the fact
that the contract has come to an end. It will bear
repetition to state that the principal employers have a
statutory right to recover the dues from the
contractors/immediate employers.
30. It appears that the determining authority
did not give an opportunity of hearing to the petitioner in
regard to the names and other particulars of the
contractors. The impugned judgment, therefore, cannot be
sustained. It is set aside accordingly. The appeal is
allowed and the matter is remitted to ESI
Corporation/determination authority for considering the
matter afresh. The authority shall either implead the
contractors as parties and/or summon them for producing
necessary records for the said purpose. In the facts and
circumstances of the case, there shall be no order as to
costs.”
10. The contention of the learned counsel appearing for Respondent
No.1 is that the primary responsibility is on the petitioner herein to collect the
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provident fund contributions from the contractors and to remit to the
Organisation in terms of Paragraph No.30 of Employees' Provident Funds
Scheme, 1952. The said Paragraph No.30 reads as under:
“30. Payment of contributions .- (1) The
employer shall, in the first instance, pay both the
contribution payable by himself (in this Scheme referred
to as the employer's contribution) and also, on behalf of
the member employed by him directly or by or through a
contractor, the contribution payable by such member (in
this Scheme referred to as the member's contribution).
(2) In respect of employees employed by or
through a contractor, the contractor shall recover the
contribution payable by such employee (in this Scheme
referred to as the member's contribution) and shall pay to
the principal employer the amount of member's
contribution so deducted together with an equal amount
of contribution (in this Scheme referred to as the
employer's contribution) and also administrative charges.
(3) It shall be the responsibility of the principal
employer to pay both the contribution payable by himself
in respect of the employees directly employed by him and
also in respect of the employees employed by or through a
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contractor and also administrative charges.
Explanation: For the purposes of this
paragraph the expression "administrative charges" means
such percentage of the pay (basic wages, dearness
allowance, retaining allowance, if any, and cash value of
food concessions admissible thereon) for the time being
payable to the employees other than an excluded
employee, and in respect of which Provident Fund
Contribution are payable as the Central Government may,
in consultation with the Central Board and having regard
to the resources of the Fund for meeting its normal
administrative expenses, fix.”
11. This Court has carefully considered Paragraph No.30 of the said
Scheme, but this Court is unable to agree with the contention raised by the
learned counsel appearing for Respondent No.1 for the reason that the said
provision deals with the contractors who supply employees to the Principal
employer, but not in cases where the work itself was entrusted to the sub-
contractors for the purpose of execution. Therefore, the contention of the
learned counsel for Respondent No.1 does not require any further
consideration.
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12. In the light of the above, the impugned order to the extent of
rejecting the request of the petitioner for impleading the sub-contractors
listed in the said application is quashed and Respondent No.1 is directed to
either implead list of sub-contractors furnished by the petitioner as parties to
Section 7A proceedings or summon them by issuing appropriate notice for
furnishing information as may be required by Respondent No.1 and the
petitioner.
13. The petitioner is also directed to furnish complete address and
other particulars of all the sub-contractors whom he intends to implead or
summon within a period of three weeks from today (18.02.2025). As the
impugned proceedings under Section 7A of the Act 1952 were commenced as
early as in the year 2021 and the same are pending for consideration, the
petitioner is also directed to cooperate for early conclusion of the said
proceedings.
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14. Accordingly, this Writ Petition stands allowed as indicated
above. There shall be no order as to costs. Consequently, connected
miscellaneous petitions are closed.
18.02.2025
NCC : Yes/No
Index : Yes/No
Internet : Yes
ABR
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To
1.The Regional Provident Fund Commissioner-I,
Regional Office,
Employees Provident Fund Organization,
1, Lady Doak College Road, Bhavishya Nidhi Bhavan,
Chokkikulam, Madurai-625 002.
2.The Enforcement Officer,
Employees Provident Fund Office,
Regional Office,
1, Lady Doak College Road,
Bhavishya Nidhi Bhavan,
Chokkikulam, Madurai-625 002.
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MUMMINENI SUDHEER KUMAR, J.
ABR
18.02.2025
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