Madras High Court
The Commissioner vs M/S. Nepc Airlines on 18 July, 2025
Author: C.V.Karthikeyan
Bench: C.V.Karthikeyan
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 13.06.2025
Pronounced on : 18 .07.2025
CORAM
THE HONOURABLE MR. JUSTICE C.V.KARTHIKEYAN
S.A.No. 582 of 2009
1. The Commissioner
Provident Fund Organisation
Chennai – 600 014.
2. The Commissioner
Employees Provident Fund Office
Chennai – 600 014.
3. The Assistant Provident Fund Commissioner (Enforcement)
Chennai.
4. The Regional Provident Fund Commissioner
Coimbatore – 18.
5. The Assistant Provident Fund Commissioner
Coimbatore-18.
... Appellants/Appellants/Defendants
Vs.
1. M/s. NEPC Airlines
A Division of NEPC India Lt.,
Rep. by its Director
2. M/s. NEPC Textiles Ltd
Rep. by its Director
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2
3. M/s. NEPC Tea Garden
A Division of Agro Foods
Rep. by its Director ... Respondents/Respondents/Plaintiff
PRAYER: This Second Appeal is filed under Section 100 of Civil
Procedure Code, against the Judgment and Decree dated 08.09.2006 made
in A.S.No. 87 of 2006 on the file of the Principal Subordinate Judge,
Coimbatore, thereby confirming the Judgment and Decree of the II
Additional District Munsif at Coimbatore, in O.S.No. 2585 of 2004 on
22.02.2006.
***
For Appellants : Mrs. R.Meenakshi
For RR 1 to 3 : Mr. Sai Krishnan
JUDGMENT
The defendants in O.S.No. 2585 of 2004 on the file of the II
Additional District Munsif Court at Coimbatore are the appellants herein.
2. O.S.No. 2585 of 2004 had been filed by the respondents seeking
a Judgment and Decree restraining the defendants therein from recovering
the due of Rs.90/- lakhs as employer and employee contribution from the
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second and third plaintiffs by grant of permanent injunction and for costs
of the suit. By Judgment dated 22.02.2006, the learned II Additional
District Munsif at Coimbatore had decreed the suit.
3. The appellants herein / defendants in the suit then filed A.S.No.
87 of 2006 before the Sub Court at Coimbatore. By Judgment dated
08.09.2006, the Appeal Suit was dismissed with costs, necessitating the
filing of the Second Appeal.
4. The Second Appeal had been admitted on 25.06.2009 on the
following substantial question of law:-
"Whether the Civil Court has jurisdiction to decide the issue."
O.S.No. 2585 of 20024:
5. The plaintiffs NEPC Airlines, NEPC Textiles Ltd., and NEPC
Tea Garden had filed the suit against the Commissioner, Provident Fund
Organisation and other officials of the Provident Fund Office, seeking
permanent injunction restraining the defendants from recovering an
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alleged due of Rs.90/- lakhs as employer and employee contribution from
the second and third plaintiffs.
6. In the plaint, it had been contended that the first plaintiff, a
limited company was carrying on business in Airlines. The second
plaintiff also a limited company was carrying on business dealing with
textiles. The third plaintiff was maintaining Tea Garden and dealing with
tea products. It had been stated that the Provident Fund Contribution had
been effected with respect to the employees of the defendants. The share
of the employers had also been made in the interest and welfare of the
employees. It had been further stated that the Airline Division of the first
plaintiff suspended its operation.
7. Thereafter, the plaintiff came to know about a notification of the
Central Government under the Employees Provident Funds and
Miscellaneous Provisions Act 1952 which was issued under Section
131(3)(b) dated 22.03.2001 that Provident Fund is applicable to
establishments of Aircrafts or Airlines other than Aircrafts and Airlines
controlled by Central and State Government with effect from 01.04.2001.
It had therefore been contended that Aircrafts and Airlines were not
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covered under the Provident Fund Act prior to the said notification
namely, 01.04.2001.
8. The first plaintiff had addressed a letter on 19.12.2001 calling
upon the first defendant to refund the amount of employers share lying
with the defendants. It had been stated that the third defendant had sent a
reply rejecting the demand of the first defendant. A further letter was sent
by the first plaintiff for refund of the share in the Provident Fund. It had
been further stated that the defendants are not entitled to retain the amount
lying in deposit. It had been further stated that the defendants are
Government Officers representing the Central Government and
functioning under the Ministry of Labour, Government of India. It was
contended that they are bound by the notification issued by the Central
Government. It had been stated that the defendants are taking
arrangements to recover alleged dues from the second and third plaintiffs.
It had been further contended that the dues had been crystallised to Rs.90/-
lakhs. It is under those circumstances that the suit had been filed seeking
a permanent injunction restraining the defendants from recovering the
dues of Rs.90/- lakhs from the second and third plaintiffs.
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9. A written statement had been filed on behalf of the defendants
wherein it had been stated that the first plaintiff was covered under
Section 2(A) of the Employees Provident Funds and Miscellaneous
Provisions Act, 1952 with effect from 01.04.1997 at the request of NEPC
Micon Ltd., dated 16.04.1997. It had been denied that the defendants had
been unlawfully holding to the contributions made by the plaintiffs. It had
been stated that the contributions had been made in accordance with the
rules and regulations. It had been further stated that all the employees for
whom the contributions have been made would get due credit in their
accounts. It had been further stated that the plaintiffs were yet to pay a
sum of Rs.2.46 lakhs on the dues upto 6/01. It had been stated that the
application of the notification dated 22.03.2001 would not arise with
respect to adjustment of remittance made by the plaintiffs. It had thus
been stated that the suit should be dismissed.
10. On the basis of the pleadings, the following issues were framed
by the trial Court:-
“(i) Whether the plaintiff is entitled to the relief of
permanent injunction as sought?; and
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(ii) To what other reliefs are the parties entitled?”
11. Thereafter, additional issues were also framed as follows:-
“(i) Whether the Civil Court has jurisdiction to
examine the issues raised in the plaint?; and
(ii) Whether the first plaintiff was entitled to
refund of the contribution deposited with the
defendants.”
12. During the course of trial, on the side of the plaintiffs, one
Padmanaban was examined as PW1 and Exs.A-1 to A-19 were marked.
On the side of the defendants, one Devadas was examined as DW-1 and
Exs. B-1 to B-8 were marked.
13. The learned trial Judge during the course of his discussion had
examined Section 18 of the Provident Funds Act which stated that no suit
would lie against an Inspector with respect to any act done in good faith.
The learned trial Judge had also examined Section 9 CPC with respect to
jurisdiction of the Civil Court and on the basis of the aforementioned
provisions held that the Court was vested with jurisdiction.
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14. With respect to the other issues raised, the learned trial Judge
examined the notification issued by the Central Government which was
brought into effect from 01.04.2001 and stipulated that Aircraft or Airlines
owned or controlled by the Central and State Government would not be
covered under the Provident Fund.
15. The learned Additional District Munsif was of the opinion that
this would indirectly mean that prior to 01.04.2001 every Aircraft and
every Airline would not be subject to Employees' Provident Funds.
Holding as above, the suit was decreed as prayed for.
A.S.No. 87 of 2006 [Sub Court, Coimbatore]:
16. The defendants then filed the above Appeal Suit which came up
for consideration before the Sub Court at Coimbatore. By Judgment dated
08.09.2006, the learned Sub Judge once again re-examined the entire issue
and framed as points for consideration whether the Civil Court has
jurisdiction to examine the issues raised in the plaint and whether the
Appeal should be allowed or not.
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17. The First Appellate Court relied on the very same reasonings as
given by the trial Court and it could actually be stated that the Judgment is
more or less replica of the observations made by the trial Court. The
learned First Appellate Judge was also of the opinion that the Civil Court
has jurisdiction to examine the issues raised and thereafter had also come
to the conclusion that the plaintiff was entitled to the relief sought and had
therefore dismissed the Appeal Suit and confirmed the Judgment and
Decree of the trial Court.
S.A.No. 582 of 2009:
18. The defendants had then filed the present Second Appeal. The
Second Appeal had been admitted on the following substantial question of
law:-
"Whether the Civil Court has jurisdiction do decide the issue."
19. The only issue raised by the learned counsel for the appellant is
about the jurisdiction of the Court to examine the issues raised by the
plaintiff.
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20. The suit had been filed by the three respondents, who could be
called as group companies seeking a permanent injunction restraining the
appellants herein / Officials of the Employees Provident Fund from
recovering any due much less dues of Rs.90/- lakhs from the second and
third respondents.
21. It is the case of the respondents that the Central Government
had issued a notification dated 22.03.2001 wherein they had stated that
Aircrafts or Airlines owned or controlled by the Central and State
Government would not be covered under the Provident Fund Act with
effect from 01.04.2001. The respondents have interpreted this notification
to mean that prior to 01.04.2001, the respondents were not covered under
the Employees Provident Fund. There could be no worse misleading
interpretation given to the said notification. The notification only clarified
that on and from 01.04.2001, the Aircraft and Airlines belonging to the
Central and State Government would not covered under the Employees
Provident Fund Scheme. This would never mean that prior to that
particular date, no organisation running Aircrafts and Airlines would be
covered under the Employees Provident Fund. The notification only
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carved out an exception on and from 01.04.2001. All companies running
Aircrafts and Airlines would continue to be covered under the Employees
Provident Funds even after 01.04.2001. The Aircrafts and Airlines
belonging to the State and Central Government alone would not be
covered under the Employees Provident Fund scheme. This is the only
logical interpretation which could be given for the notification. Both the
Courts below had misdirected themselves on the interpretation of the
notification.
22. For better appreciation, the notification is also extracted
below:-
“The Employees' Provident Funds and
Miscellaneous Provisions Act, 1952 – notification under
Section 1(3)(b) New Delhi, dated the 22nd March 2001.
s.o.746 – In exercise of the powers conferred by
clause (b) of sub-section 1 of the Employee's Provident
Funds and Miscellaneous Provisions Act, 1952 (19 of
1952) the Central Government hereby specifies the
following establishments employing 20 or more persons
as the class of establishments to which the said Act shall
apply with effect from 1st April 2001, namely:-
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(i) an establishment engaged in rendering courier
services;
(ii) an establishment of aircraft or airlines other
than the aircraft of airlines owner or controlled by the
Central or State Government.
(iii) an establishment engaged in rendering
cleaning and sweeping services.”
23. The Judgments relied on by both the trial Court are not at all
applicable to the facts of this case.
24. Additionally, Section 7(A) of the Employees Provident Funds
and Miscellaneous Provisions Act, 1952 provides that the Central
Provident Fund Commissioner or Additional Central Provident Fund
Commissioner or Deputy Provident Fund Commissioner or Regional
Provident Fund Commissioner or Assistant Provident Fund Commissioner
may whenever there is a dispute regarding the applicability of the Act to
an establishment decide such dispute and determine the amount due from
any employer under the provisions of this Act. Section 7(A)(1)(a) and (b)
are as follows:-
“7A. Determination of moneys due from
employers.—[(1) The Central Provident Fund
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Commissioner, any Additional Central Provident
Fund Commissioner, any Deputy Provident Fund
Commissioner, any Regional Provident Fund
Commissioner, or any Assistant Provident Fund
Commissioner may, by order,—
(a) in a case where a dispute arises regarding the
applicability of this Act to an establishment,
decide such dispute; and
(b) determine the amount due from any employer
under any provision of this Act, the Scheme or the
3 [Pension] Scheme or the Insurance Scheme, as
the case may be,
and for any of the aforesaid purposes may conduct
such inquiry as he may deem necessary]; ”
25. Section 7(B) provides for Review of orders passed under
Section 7-A. Section 7(C) provides for determination of escaped amount.
It had been provided in Section 7(D) that the Industrial Tribunal
constituted by the Central Government under 7(A)(i) of the Industrial
Disputes Act 1947 would be the Tribunal for the purpose of the Act. The
procedure to be followed by the Tribunal had been given under Section
7(J) of the Act. It is thus clear that the issues raised in the plaint can only
be examined by the Industrial Tribunal constituted by the Central
Government under Section 7(A)(1) of the Industrial Disputes Act 1947.
When a special Tribunal had been established to exercise the said issues
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and disputes, the jurisdiction of the Civil Court stands barred.
26. The relief sought in the plaint is for permanent injunction
restraining the defendants from making any recovery of the dues from the
second and third plaintiffs. A Civil Court can never enter into a discussion
on those issues.
27. In Union of India Vs. Narayan [1989 LAB.I.C. 854], this
Court had held as follows with respect to Section 7(A) of the Employees
Provident Funds and Miscellaneous Provisions Act, 1952 with specific
reference to the jurisdiction of a Civil Court to examine applicability of
the provisions of the Act to an employer:-
“Thus all the trappings of a judicial proceeding
are grafted into the process of determination to be made
under S.7A(1) of the Act. Even thereafter, if the
employer feels aggrieved by the order it is open to him to
challenge the same under Art.226 or 227 or both of the
Constitution. The bar contained in sub-sec.(4) of S.7A of
the Act has to be appreciated in the background of the
object of the Act. The Act is a beneficial legislation and
it is intended to serve interest of the employees. Even
after the determination is made after holding a due
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enquiry under S.7A of the Act to the effect that the
provisions of the Act are attracted and the employer is
liable to deposit the amount as per the provisions of the
Act, and such a determination in spite of the provisions
contained in sub-Sec.(4) of S.7A of the Act, is held to be
open to challenge by seeking relief in a civil Court either
in the form of an injunction or declaration, it will be
nothing but defeating the very Act itself inasmuch as the
enforcement authority will not be able to enforce the Act,
until the proceeding before a Civil Court attains finality;
which, having regard to several stages including an
appeal and further appeal have to be covered, before it
attains finality, is possible only after a decade or two
and by that time many of the employees would be either
out of employment or have left the world for ever.
Keeping this aspect in view and also the fact that an
aggrieved employer has a remedy against the order
passed under S.7A of the Act under Arts.226 and 227 of
the Constitution, the Parliament in its wisdom has
excluded the jurisdiction of a Civil Court and has issued
statutory injunction that the order made under S.7A of
the Act shall not be questioned in any Court of law. A
party cannot be allowed to over-come or avoid such a
statutory injunction by seeking a prayer in a Civil Court
in such a manner so as to make it appear that apparently
the order passed u nder S.7A of the Act is not
challenged; though in effect and in substance the relief,
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if granted would result in nullifying the order passed
under S.7A of the Act. Therefore having regard to the
fact that, in the instant case, if the decree as prayed for
is granted, it results in setting aside or nullifying the
order passed under S.7A of the Act, Civil Court has no
jurisdiction to grant such a relief.”
28. The reasoning given above is directly applicable to the facts of
this case. Both the trial Court and the First Appellate Court had
misdirected themselves in assuming jurisdiction when they had no
jurisdiction to examine the issues raised and more specifically when the
Industrial Tribunal constituted under the provisions of the Industrial
Disputes Act alone had been notified as the competent Tribunal to
examine the applicability of the provisions of the act.
29. The substantial question of law is answered that the Civil Court
has no jurisdiction to decide the issues raised in the suit.
30. In view of the above discussion, the Judgment and Decree
passed by both the Courts below are set aside. The suit in O.S.No. 2585
of 2004 on the file of the II Additional District Munsif, Coimbatore stands
dismissed. The Second Appeal stands allowed with costs right through.
Vsg 18.07.2025
Index :Yes/No
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Internet:Yes/No
To
1. Principal Sub-Court, Coimbatore.
2. II Additional District Munsif Court at Coimbatore.
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C.V.KARTHIKEYAN, J.
vsg
Pre-Delivery Judgment made in
18.07.2025
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