Madras High Court
The Assistant Provident Fund ... vs The Presiding Officer on 26 September, 2025
Author: B.Pugalendhi
Bench: B.Pugalendhi
WP(MD)Nos.528 and 1272 of 2016
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 26.09.2025
CORAM:
THE HONOURABLE MR.JUSTICE B.PUGALENDHI
WP(MD)Nos.528 and 1272 of 2016
and
WMP(MD)No.436 and 1045 of 2016
The Assistant Provident Fund Commissioner,
Employees Provident Fund Organisation
P.B.No.588, Sree Complex, D Block,
No.18, Madurai Road, Tiruchirappalli.
...Petitioner
Vs
1.The Presiding Officer,
Employees' Provident Fund Appellate Tribunal,
Scope Minor, Core II, 4th Floor,
Lakshmi Nagar District Centre,
Lakshmi Nagar, New Delhi.
2.M/s.S.Periyasamy Moopanar and Sons,
Textiles & Readymade Showromm,
No.106, Nageswaram North Street,
Kumbakonam – 612 001,
Through its partner. ...Respondents
PRAYER: Writ Petitions filed under Article 226 of the Constitution of
India for issuance of a writ of certiorarified mandamus to call for the
records relating to the orders passed by the 1st respondent in ATA Nos.
739(13) 2012 and 740 (13) 2012, dated 20.08.2014 and quash the same
1/16
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as illegal and consequently direct the 2nd respondent to pay the
contribution of Rs.2,40,570/- and Rs.2,83,905/- as per the proceedings in
D4/TN/SRO-TRY/43590/Compliance D/2012 and D4/TN/SRO-
TRY/76626/Compliance D/2012 dated 04.07.2012 respectively within a
time frame as fixed by this court.
For Petitioner : Mr.N.Dilip Kumar
For Respondent : Mr.C.Karthikeyan
No.2
For Respondent : No representation
No.1
ORDER
The present writ petitions have been filed by the EPF organisation
as against the orders passed by the 1st respondent EPF appellate tribunal.
2.The 2nd respondent establishment has involved in retail sale of
textiles and ready-made dresses and it is covered under the Employees
Provident Fund and Miscellaneous Provident Funds Act [herein after
shall be referred to as 'the EPF Act'].
3.The enforcement officer of the PF authority has conducted an
inspection in a shop of the 2nd respondent establishment on 18.07.2011
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and filed his report on 29.07.2011 that the 2nd respondent has failed to
enroll 11 employees under the EPF scheme and also failed to enroll 51
other employees shown as apprentices. Based on this report dated
29.07.2011 an enquiry was conducted for determination of the dues
under Section 7A of the EPF Act. Pending enquiry the 2nd respondent
informed that they have enrolled 11 casual workers and remitted the dues
and with regard to other 51 employees they claim that they were engaged
only as apprentices as per the standing orders certified under the
Industrial Establishment (Standing Orders) Act, 1946 and therefore, they
would not come under the purview of the EPF Act.
4.The enforcement officer of the PF authority has also conducted
inspection in the other shop of the 2nd respondent establishment on
18.07.2011 and report was filed by the enforcement officer of the PF
authority on 29.07.2011 that the 2nd respondent establishment has failed
to enroll 32 employees under the EPF scheme and also failed to enroll 34
other employees engaged as apprentices. Based on this report dated
29.07.2011 an enquiry was conducted for determination of the dues
under Section 7A of the EPF Act. Pending enquiry the 2nd respondent
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informed that they have enrolled 32 casual workers and remitted the dues
and with regard to the other 34 employees, they claimed that they were
engaged only as apprentices as per the standing orders certified under the
Industrial Establishment (Standing Orders) Act, 1946 and therefore, they
would not come under the purview of the EPF Act.
5.The EPF authority found that that the casual workers were paid a
sum of Rs.3,627/- (Basic pay + Dearness Allowances) per month.
The apprentices were also paid a sum of Rs.3,627/- as stipend. The EPF
authority found that these employees have been shown as apprentices in
order to avoid the EPF contribution. Considering the manner in which
the payment has been made for both casual workers and for the
apprentices, the authority has passed orders in D4/TN/SRO-
TRY/43590/Compliance D/2012 and D4/TN/SRO-TRY/76626/
Compliance D/ 2012 under Section 7A of the EPF Act dated 11.07.2012
for each shop directing the 2nd respondent to pay the contribution for the
apprentices also for the period from April 2011 to March 2012.
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WP(MD)Nos.528 and 1272 of 2016
6.As against these orders, the 2nd respondent establishment
preferred appeals before the 1st respondent appellate tribunal in ATA No.
739(13) 2012 and ATA No. 740 (13)2012 and the same were allowed by
Tribunal on the ground that the authority has failed to consider the
certified standing orders issued by the competent authority, which
enables the 2nd respondent establishment to engage apprentices.
Challenging the orders of the appellate tribunal, these writ petitions are
filed by the EPF authority.
7.Mr.N.Dilip Kumar, learned counsel for the EPF organisation
submits that the 2nd respondent is a retail textile unit, there is no necessity
for them to engage this number of apprentices, there is no agreement for
apprenticeship, there is no place for training, the period of apprenticeship
is not specified and they have paid salary to the apprentices equivalent to
other employees.
8.The learned counsel has relied on the judgments of this court in
M.R.F.Ltd vs. The Presiding Officer,EPF Appellate Tribunal, New
Delhi and others (WP NO.26590 of 2003 dated 18.10.2011) and submits
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merely because some workers had been labelled as apprentices that by
itself will not take away the jurisdiction of the authority from piercing the
veil and see the true nature of the such appointments. Further, the learned
counsel has also relied on the judgment of this court in N.E.P.C. Textiles
Ltd vs. The Assistant Provident Fund Commissioner (WA.No.581 of
2002 dated 22.01.2007) and submits that the EPF authority under
Section 7A of the EPF Act can factually find whether the establishment is
liable to pay contribution to the employees provident fund and whether
those persons engaged as apprentices are really apprentices or
employees.
9.The learned counsel further submits that under Section 7A of the
EPF Act, the authority has got power to go behind the term of
appointment and to find out where they are really engaged as apprentices
and the authority can also decide as to whether they are really workmen
or apprentices. From the documents of the establishments, it could be
culled out easily that there is no difference between the permanent causal
workers and the apprentices.
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10. On the other hand, Mr.C.Karthikeyan, the learned counsel for
the 2nd respondent establishment submits that the Joint Commissioner of
Labour, Tiruchirappalli the authority under the Industrial Establishments
(Standing Orders) Act has certified that the respondent establishment is
entitled to engage the apprentices. He has relied on the Government
order in GO.Ms.No.2272 Labour and Employment dated 11.11.1986 and
submits that even if any establishment employs less than 20 workmen,
the Industrial Establishments (Standing Orders) Act is applicable to
them. Pursuant to the notices, they have enrolled 43 casual employees
along with their contribution. However, the authority has passed the
above orders under Section 7A including the apprentices as employees of
the establishment and they are liable to pay the contribution under
Section 7A. In the event the authority is having any doubt with regard to
the engagement of their services they ought to have verified those who
have been registered as apprentices. However, without doing so they
have simply brought the apprentices also under the liability for
contribution. According to him, the 2nd respondent establishment has
produced all the records including the stipend register with payment
details paid to the apprentices and the employees.
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11.The learned counsel further submits that the Joint
Commissioner of Labour has issued certification of standing orders to the
2nd respondent establishment enabling them to engage apprentices.
Although the authority claims that there is no necessity for any training
in a retail establishment, they are providing training to the apprentices on
the behaviour and the technicalities to handle the customers. He further
submits that with regard to the ground that the stipend paid to the
apprentices was equal to the payment provided to the casual employees,
the permanent employees were provided other allowances, like HRA,
incentives, leave with wages, bonus, gratuity etc., apart from salary, but
the apprentices were paid with stipend only. Further, there is no ceiling
under the Apprentices Act for the payment of stipend. Therefore,
according to the learned counsel there is no reason to interfere with the
orders of the 1st respondent / EPF appellate tribunal.
12.This court has considered the submissions and perused the
materials on record.
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13.The 2nd respondent establishment is involved in retail sale of
textiles and ready-made dresses and it is covered under the EPF Act and
hence liable to remit benefits to its employees under the Act.
The allegation against the 2nd respondent establishment is that it has
failed to enrol its apprentices / trainees with the petitioner organisation
and also failed to pay EPF contribution under the Act.
14.The issue to be addressed in these writ petitions is whether the
persons said to be apprentices of the 2nd respondent are to be treated as
apprentices or employees under the EPF Act.
15.It would be relevant to refer to Section 2(f) of the EPF Act,
which defines an employee as follows:
“2(f) 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—
(i) employed by or through a contractor in or in
connection with the work of the establishment;
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(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;”
16.The above provision makes it clear that an apprentice engaged
under the Apprentices Act 1961 or appointed as per the standing orders
of the establishment cannot be considered to be employees under the EPF
Act. The 2nd respondent establishment has placed its certified standing
orders dated 04.06.2004 and 18.08.2008 before this court which
specifically provides for engaging of apprentices.
17.The petitioner EPF organisation claims that the 2nd respondent
is not an “industrial establishment” under the Industrial Establishments
(Standing Orders) Act 1946 and hence they cannot rely on the standing
orders. At this juncture it would be pertinent to point out Section 2 (e) of
the Industrial Establishments (Standing Orders) Act 1946, which
provides the definition of “Industrial Establishment” and only such
industrial establishments defined under this section can get their standing
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orders certified under this Act. Section 2(e) of the Industrial
Establishments (Standing Orders) Act 1946 is extracted hereunder:
“2(e) “industrial establishment” means
(i) an industrial establishment as defined in
clause (ii) of Section 2 of the Payment of Wages Act,
1936.
or ... .... ...”
18.From the above it is clear that as per Clause (i) of the above
provision, industrial establishments as defined in the Payment of Wages
Act 1936 are also covered under the Industrial Establishments (Standing
Orders) Act 1946. Section 2 (ii) (h) of the Payment of Wages Act 1936
provides for the definition of an industrial establishment and it allows the
appropriate government to extend the application of the Act to any
establishment by notification in the official gazette. By virtue of the said
power conferred under the above provision, the State Government by a
notification made in G.O.Ms.No.78, Labour and Employment
Department, dated 26.6.1996 has extended the provisions of the Payment
of Wages Act to all the shops and commercial establishments employing
twenty or more persons. Therefore, by virtue of this notification, the
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WP(MD)Nos.528 and 1272 of 2016
provisions of the Industrial Employment (Standing Orders) Act, 1946 are
applicable to the 2nd respondent establishment and the 2nd respondent
establishment is an industrial establishment under the Act and as such the
standing orders obtained by them is valid.
19.The Hon’ble Supreme Court in The Regional Provident Fund
Commissioner,Mangalore vs. M/s Central Aercanutand Coca
Marketing and Processing Co-op Ltd reported in 2006 (2) SCC 381 has
held that apprentices appointed under the Apprentices Act 1961 or under
standing orders cannot be considered to be employees under the EPF Act.
The relevant portions are extracted hereunder:
“12.In the present case, admittedly the Standing
Orders were not at the relevant point of time certified.
Therefore, in terms of Section 12-A of the Standing
Orders Act, the Model Standing Orders are deemed to be
applicable. Section 2(f) of the Act defines an employee to
include an apprentice, but at the same time makes an
exclusion in the case of an apprentice engaged under the
Apprentices Act or under the Standing Orders. Under the
Model Standing Orders an apprentice is described as a
learner who is paid allowance during the period of
training.
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13.In the case at hand, trainees were paid stipend
during the period of training. They had no right to
employment, nor any obligation to accept any
employment, if offered by the employer. Therefore, the
trainees were 'apprentices' engaged under the 'Standing
Orders' of the establishment.
14.Above being the position, it cannot be said that
the concerned 45 trainees were employee in terms of
Section 2(f) of the Act. In other words, an apprentice
engaged under the Apprentices Act or under the
Standing Orders is excluded from the definition of an
'employee' as per Section 2(f) of the Act.”
20.A perusal of the certified standing orders of the 2nd respondent
reveals that it specifically provides for engaging “apprentices” who
would be paid with a stipend amount. Accordingly as per the standing
orders the 2nd respondent has engaged apprentices in their establishments.
Thus the apprentices appointed by the 2nd respondent under the certified
standing orders cannot be considered as employees under the EPF Act
and therefore, the 2nd respondent establishment is not required to enroll
the apprentices under the EPF Act.
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21.The bone of contention of the petitioner organisation is that
there is no necessity for the 2nd respondent retail textile unit to engage
more number of apprentices and that there is no agreement for
apprenticeship, there is no place for training, the period of training is not
specified and they were also paid on par with the regular employees. The
Joint Commissioner of Labour, Tiruchirappalli, the authority to certify
the Standing Orders has considered the case of the 2nd respondent and has
permitted them to engage apprentice, however there is no ceiling fixed
as to the number of apprentices. Similarly the ceiling for the stipend is
also not prescribed. The 2nd respondent claims that though stipend is
provided to the apprentices equivalent to the regular employees, the
regular employees are provided with other allowances such as HRA,
incentives, leave with wages, bonus, gratuity, etc., apart from the salary.
However, the apprentices are paid with only the stipend. Considering the
rival submissions, the EPF appellate tribunal has come to a conclusion
that the authority during the enquiry has not ascertained by examining
any of the apprentices that whether they have been engaged as regular
employees. In view of the certified standing orders and the available
materials, this court is not inclined to interfere with the orders of the
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appellate tribunal and accordingly these writ petitions are dismissed. No
costs. Consequently connected miscellaneous petitions are closed.
26.09.2025
Index : Yes / No
DSK
To
The Presiding Officer,
Employees' Provident Fund Appellate Tribunal,
Scope Minor, Core II, 4th Floor,
Lakshmi Nagar District Centre,
Lakshmi Nagar, New Delhi.
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WP(MD)Nos.528 and 1272 of 2016
B.PUGALENDHI.J.,
DSK
WP(MD)Nos.528 and 1272 of 2016
26.09.2025
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