Madras High Court
City Union Bank Limited vs The Union Of India on 4 September, 2025
Author: R.Vijayakumar
Bench: R.Vijayakumar
W.P(MD).Nos.11870 & 11889 of 2017
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
ORDER RESERVED ON :25.08.2025
ORDER PRONOUNCED ON : 04.09.2025
CORAM:
THE HONOURABLE MR.JUSTICE R.VIJAYAKUMAR
W.P.(MD).Nos.11870 & 11889 of 2017
and
WMP(MD).Nos.9137 & 9155 of 2017
WP(MD).No.11870 of 2017
City Union Bank Limited
Administrative Office
24B, Gandhi Nagar
Kumbakonam 612 001
Rep.by Assistant General Manager (HRMD) ....Petitioner
Vs
1.The Union of India
Rep.by the Joint Secretary
Ministry of Labour and Employment
New Delhi
2.The Regional Provident Fund Commissioner
Employees Provident Fund Organisation
Sub Regional Office
Bhavishyanidhi Bhavan
588, Sree Complex, 'D' Block
18, Madurai Road
Tiruchirappalli 620 008
3.The Enforcement Officer
Employees Provident Fund Organisation
82-G, Kamaraj Road
1/15
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W.P(MD).Nos.11870 & 11889 of 2017
Kumbakonam ….Respondents
WP(MD).No.11889 of 2017:
The Karur Vysya Bank Limited
Central Office
Erode Road
Karur 639 002
Rep.by General Manager (HRD) ....Petitioner
Vs
1.The Union of India
Rep.by the Joint Secretary
Ministry of Labour and Employment
New Delhi
2.The Addl.Central Provident Fund Commissioner
(Compliance & CAIU)
Employees Provident Fund Organisation
(Ministry of Labour, Government of India)
Head Office
Bhavishyanidhi Bhawan
14, Bhikaijicama Place
New Delhi 110 066
3.The Regional Provident Fund Commissioner
Employees Provident Fund Organisation
Sub Regional Office
Bhavishyanidhi Bhavan
588, Sree Complex, 'D' Block
18, Madurai Road
Tiruchirappalli 620 008 ....Respondents
Prayer in WP(MD).No.11870 of 2017: This Petition filed under Article 226
of the Constitution of India, to issue a Writ of Certiorari, calling for the
records of the first respondent in Notification in SO 444(E) published in the
Gazette of India dated 10.02.2016 and quash the notification dated
2/15
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W.P(MD).Nos.11870 & 11889 of 2017
10.02.2016.
Prayer in WP(MD).No.11889 of 2017: This Petition filed under Article 226
of the Constitution of India, to issue a Writ of Certiorari, calling for the
records of the first respondent in Notification in SO 444(E) published in the
Gazette of India dated 10.02.2016 and quash the Notification dated
10.02.2016.
(In both the writ petitions)
For Petitioners : Mr.P.Raghunathan
For M/s.T.S.Gopalan & Co.,
For Respondents : Mr.K.Govindarajan
Deputy Solicitor General of India
Assisted by
Mr.C.Nandagopal for R1
: Mr.N.Dilip Kumar
Standing Counsel for R2 & R3
COMMON ORDER
These two writ petitions have been filed by two scheduled banks
challenging the notification issued by the first respondent on 10.02.2016
under Section 1(3)(b) read with Section 16 of the Employees Provident Fund
and Miscellaneous Provisions Act, 1952 .
(A)Factual Matrix:
2.As per Section 1(3)(a) of Employees Provident Fund and
Miscellaneous Provisions Act, 1952, every establishment which is a factory
engaged in any industry specified in Schedule-I and in which 20 or more
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W.P(MD).Nos.11870 & 11889 of 2017
persons are employed are covered under E.P.F Act. Admittedly, the Banking
Companies are not specified in Schedule-I. However, Section 1(3)(b) of the
Act, empowers Central Government to issue a notification in the official
gazette to extend the coverage of the Act to any other establishment
employing 20 or more persons or class of such establishment.
3.No notification was issued by the Central Government exercising
their power under Section 1(3)(b) of the Act till 31.01.1966 extending the Act
to Banking Companies. For the first time, the Act was extended to the
Banking Companies which were doing business in one State or Union
Territory and not having any department or branches outside the State or
Union Territory. The present petitioners herein who were operating within the
State of Tamil Nadu ( at that point of time) got covered under E.P.F. Act.
Later, when they opened their branches in other States, they got excluded
from the purview of the Act. This position continued till 25.02.2000.
4.The Government of India issued a notification on 25.02.2000
bringing all the Non-Nationalised Banks within the purview of E.P.FAct
irrespective of the fact that whether they are operating within one State or
having business in other State or Union Territory. This notification was put to
challenge in WP.No.15728 of 2000 batch case before Madras High Court.
The main contention of the Non-nationalized Banks was that, there cannot be
any discrimination between the Nationalized Banks operating multiple States
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W.P(MD).Nos.11870 & 11889 of 2017
and Non-nationalized Bank having their branches in other State or Union
Territory. It was contended that the notification of Government of India
discriminated between the similarly placed banks. This plea was accepted by
the Hon'ble Division Bench and the notification came to be set aside on
24.03.2008. Challenge made by the Union of India before the Hon'ble
Supreme Court in SLP(Civil).No.12726 of 2009 was unsuccessful and the
same was dismissed on 27.08.2010.
5.When the Non-nationalized Banks were out aside the purview of
E.P.F Act, they have framed their own scheme for payment of provident fund
to their respective employees. The present impugned notification has been
issued by the Government of India on 10.02.2016 in exercise of its power
under Section 1(3)(b) of EPF Act read with Section 16 of EPF Act. As per the
said notification, the EPF Act shall apply to all Banks employing 20 or more
member of persons as a class establishment in respect of those employees
who were not 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 or by the respective banks established
under the Banking Regulations Act, 1949.
6.This notification is being put to challenge in these two writ petitions
on the following grounds.
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W.P(MD).Nos.11870 & 11889 of 2017
(B).Submissions of the counsels appearing on either side are as
follows.
a)According to the learned counsel for the writ petitioners, in view of
Section 16(1)(b) of the EPF Act, it would not apply to any one of the
Nationalised Banks. He had further submitted that in view of Section 16(1)(c)
of the Act, it would not be applicable to the State Bank of India in view of the
fact that it has been created by a Central enactment. In such circumstances,
the impugned notification is again discriminatory in nature.
b)According to the learned counsel, since Section 16(1)(b) and 16(1)
(c) of the Employees' Provident Funds and Miscellaneous Provisions Act,
1952 exempts Nationalised Banks and the State Bank of India from the
purview of EPF Act, the present notification which purports to extend the Act
to Non-nationalized Banks alone, again would result in discrimination.
c)The learned counsel for the petitioners has relied upon a Division
Bench judgment of our High Court in W.P.No.15728 of 2000 batch case dated
24.03.2008 wherein the Hon'ble Division Bench were pleased to point out
that the Union of India cannot discriminate between the Nationalised Banks
and Non-nationalised Banks with regard to the coverage of E.P.F Act and has
proceeded to set aside the notification. Such judgment was upheld by the
Hon'ble Supreme Court. In such view of the matter, the present notification is
also discriminatory in nature, in view of the fact that again there is a
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discrimination between the Nationalised Banks and Non-nationalized Banks.
According to him, the present notification should also be set aside on the
ground of discrimination as laid down by the Hon'ble Division Bench while
quashing the notification dated 25.02.2000.
7.Per contra, the learned Deputy Solicitor General of India appearing
for the first respondent has submitted that the present notification does not
discriminate between the Nationalised Banks and Non-nationalized Banks. If
an employee is not covered by any one of the schemes, whether he is
employed in a Nationalised Bank or in a Non-nationalized Bank, he would
get automatically covered under EPF Act as per the impugned notification.
The notification dated 25.02.2000 was struck down by the Hon'ble Division
Bench only in view of the fact that it was made applicable only to the
Non-nationalised Banks operating in various States or Union Territories.
However, the said defects has been rectified and the present notification
applies to all the Banks irrespective of the fact whether it is a Nationalised
Bank or a Non-nationalized Bank.
8.The learned counsel for the respondents 2 and 3 relying upon his
counter submitted that for getting excluded from the purview of the Act as
contemplated under Section 16(1)(b) and 16(1)(c) of the Act, twin conditions
have to be satisfied. It is not enough that a particular establishment is under
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the control of the State or created under a statute, the employees should be
covered under a Contributory Provident Fund Scheme or Old Age Pension
Scheme in accordance with any other scheme also. He relied upon a judgment
of the Hon'ble Supreme Court reported in (2020) 13 SCC 506 (Pawan Hans
Limited and others Vs. Aviation Karmachari Sanghatana and others) in
support of his contention.
9.The learned counsel for the respondents 2 and 3 had further
contended that the present impugned notification would cover only those
employees who were not covered under any of the existing scheme floated by
Non-nationalized Banks. Even if a workman is employed in a Nationalised
Bank or in the State Bank of India, he would be brought within the purview
of E.P.F Act, in case if he is not covered by any one of the schemes. Hence,
he pointed out that the present notification is not discriminatory, but on the
other hand it applies to all the Banks.
10.The learned counsel had relied upon a judgment of this Court in
W.P(MD).No.24362 of 2017 (State Bank of India and another Vs.Assistant
PF Commissioner, EPFO, Salem) dated 18.11.2022 wherein a show cause
notice that was issued by EPF Organisation was challenged by the State Bank
of India and the writ Court was pleased to dismiss the writ petition on the
ground that it is a mere show cause notice. According to him, it makes it clear
that the EPF Organisation has chosen to issue show cause notice to the State
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Bank of India also, pursuant to the impugned notification. In such
circumstances, the contention of the learned counsel for the petitioners that
the present notification also suffers from discrimination as that of the
notification dated 25.02.2000 is not factually correct. Hence, he prayed for
dismissal of the writ petitions.
11.Heard both sides and perused the material records.
(C).Analysis:
12.The only ground on which the notification issued by the first
respondent is under challenge is on the ground that it discriminates between
Nationalised Banks and Non-nationalized Banks. The impugned notification
is extracted as follows:
“S.O.444(E).In exercise of the powers conferred by clause (b)
of Sub Section (3) of Section 1 read with section 16 of the
Employees' Provident Funds and Miscellaneous Provisions Act,
1952 (19 of 1952), the Central Government hereby specifies that the
said Act shall apply to all banks employing twenty or more number
of persons as a class of establishment in respect of those employees
who are not 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 or by the
respective banks established under the Banking Regulations Act,
1949 (10 of 1949).”
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W.P(MD).Nos.11870 & 11889 of 2017
13.A perusal of the history of the legislation reveals that the Banks
were not covered under EPF Act up to January 1966. From 31.01.1966, the
Banks that were operating within a single State or Union Territory were
covered by way of notification. However, the Banks having operation in
multiple States or Union Territory were not covered. Therefore, those types of
Banks were having their own private Provident fund or Old Age Pension
Scheme for their respective employees. By way of notification dated
25.02.2000, all the Non-nationalized banks were brought within the purview
of the Act irrespective of the fact that whether they are having a private
scheme or not. This notification was put to challenge by the Non-nationalized
Banks and it was set aside by the Division Bench of Madras High Court and
upheld by the Hon'ble Supreme Court. Thereafter, the Non-nationalized
Banks having operation in multiple States or Union Territory continued with
their private Provident Fund Scheme in view of non-applicability of E.P.F
Act.
14.A perusal of the present impugned notification clearly reveals the
following aspects:
a)It is applicable to both Nationalised and Non-
nationalized Banks.
b) It is not applicable to the employees of the Nationalised
or Non-nationalized Banks, if they are already covered by any
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other private scheme.
c)Those employees who were not covered by any private
schemes of a Nationalised or a Non-nationalized Bank, would be
covered under EPF Act under the impugned notification.
d)In case, if the petitioners' Bank covered all their
employees under their respective private Provident Fund Scheme
or Old Age Pension Scheme, the notification will not have any
impact upon them. On the other hand, if they have excluded
some temporary or casual employees from the purview of their
private schemes, those employees alone would now get covered
under EPF Act under the impugned notification. It is further clear
that those employees of Non-nationalised Banks who are already
covered under private scheme would not be directed to get
enrolled under EPF Act.
15.The learned counsel for the petitioner has contended that Section
16(1)(b) and 16(1)(c) exclude the Nationalised Banks and the State Bank of
India from the purview of the Act. In such circumstances, by way of
impugned notification, those Banks cannot be brought within the purview of
EPF Act. Therefore, when Nationalised Banks and the State Bank of India are
not brought within the purview of EPF Act, bringing the Non-nationalized
Bank under the purview of EPF Act would certainly amount to
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discrimination. This argument is noted only to be rejected.
16.For an establishment to get excluded from the purview of the Act
under Section 16 of E.P.F Act, it is not enough that such an establishment
belongs to or under the control of the State or was set up under the State or
Central enactment alone, the employees of such establishment should also be
entitled to the benefit of contributory Provident Fund or Old Age Pension
under any of the Scheme or Rule.
17.The Hon'ble Supreme Court in a judgment reported in (2020) 13
SCC 506 (Pawan Hans Limited and others Vs. Aviation Karmachari
Sanghatana and others) in Paragraph No.10.3 has held as follows:
“10.3.This Court in Provident Fund Commissioner
v.Sanatan Dharam Girls Secondary School laid down a twin-test
for an establishment to seek exemption from the provisions of the
EPF Act, 1952. The twin conditions are:
10.3.1. First, the establishment must be either “belonging to”
or “under the control of” the Central or the State Government. The
phrase “belonging to” would signify “ownership” of the
Government, whereas the phrase “under the control of” would imply
superintendence, management or authority to direct, restrict or
regulate.
10.3.2.Second, the employees of such an establishment should
be entitled to the benefit of contributory provident fund or old age
pension in accordance with any scheme or rule framed by the
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Central Government or the State Government governing such
benefits.
10.3.3.If both tests are satisfied, an establishment can claim
exemption/exclusion under Section 16(1)(b) of the EPF Act.”
18.In view of the judgment of the Hon'ble Supreme Court cited supra,
it is clear that unless if both the conditions are satisfied, an establishment
cannot claim exclusion from the purview of the Act. Therefore even a
Nationalised Bank or the State Bank of India, cannot claim exclusion from
the purview of the Act, if some of their employees (casual/temporary) are not
covered under any EPF Scheme or Old Age Pension in accordance with any
scheme or rule framed under that Act governing such benefits.
19.The learned counsel relying upon a judgment of the Hon'ble
Supreme Court reported in (2017) 5 SCC 579 (Yeshwant Gramin Shikshan
Sanstha Vs. Assistant Provident Fund Commissioner and others) and
contended that once it is found that a particular establishment is excluded
from the purview of the Act, merely because some of the employees are not
covered under the private scheme, that would not justify the Central
Government to issue a notification to cover those employees.
20.A perusal of the judgment reported in (2017) 5 SCC 579 reveals that
it was a 100% State funded educational institution where all employees were
covered under CPF Scheme except 16 part time employees. Admittedly, the
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present petitioners do not claim any exclusion from the purview of the Act as
contemplated under any one of the provisions of Section 16 of the E.P.F.Act.
Therefore, the said judgment is not applicable to the facts of the present case.
21.It was further contended on the side of the petitioners that the
contract employees are already governed by EPF Act through their
contractors. In such circumstances, there would not be any necessity for the
Bank managements to challenge these notifications, since the present
impugned notification intends to cover only those employees, who are not
covered under any one of the schemes.
22.In view of the above said deliberations, there are no merits in these
writ petitions and the same stand dismissed. No costs. Consequently,
connected miscellaneous petitions are closed.
04.09.2025.
Internet : Yes/No
Index : Yes/No
NCC : Yes/No
msa
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W.P(MD).Nos.11870 & 11889 of 2017
R.VIJAYAKUMAR, J.
msa
Pre-delivery order made in
W.P.(MD).Nos.11870 & 11889 of
2017 and WMP(MD).Nos.9137
& 9155 of 2017
04.09.2025
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