Orissa High Court
Orissa State Co-Operative Bank Ltd vs Union Of India on 28 February, 2025
ORISSA HIGH COURT : CUTTACK
W.P.(C) No.6323 of 2010
In the matter of an Application under Articles 226 & 227 of
the Constitution of India, 1950
***
Orissa State Co-operative Bank Ltd.
Pandit Jawaharlal Nehru Marg
Bhubaneswar-1, Orissa
Represented through Managing Director
Tusarkanti Panda
Aged about 54 years
Son of Sri Krushna Chandra Panda. ... Petitioner
-VERSUS-
1. Union of India,
Represented through Secretary to Govt.,
Ministry of Labour, Central Secretariat
New Delhi.
2. Regional Provident Fund
Commissioner-II, (Compliance)
Bhabisyanidhi Bhawan, Janpath
Unit-IX, Bhubaneswar
District: Khordha.
3. Jaisima Das
Aged about 58 years
Son of Natabar Das
Village: Punga, District: Jagatsinghpur.
4. Khirod Kumar Das
Aged about 59 years
Son of Late Kailash Chandra Das
Village: LV 79, Breet Colony
Bhubaneswar, District: Khordha.
5. Chittaranjan Lenka
Aged about 56 years
Son of late Chandra Sekhar Lenka
At: Badagada Uppar Sahi
PO: Baragada, Breet Colony
Bhubaneswar
District: Khordha.
6. Barada Prasad Mohanty
Aged about 66 years
Son of Late Sai Mohanty
At: 5-Budheswar Colony
PS: Budheswari, Bhubaneswar
District: Khordha.
7. Bhuban Mohan Sinha
Aged about 59 years
Son of Subodha Chandra Singh
Of 1930, Chitamaieswar Colony
Bhubaneswar
District: Khordha.
8. Kunjabihari Khatai
Aged about 62 years
Son of Late Bharambar Khatei
Of Dewank Patna, PO: Banamalipur
District: Khordha.
9. Sudhir Kumar Gadanayak
Aged about 67 years
Son of Late Sarat Chandra Gadanayak
Village: N-4, 323, IRC Village, Nayapali
Bhubaneswar, District: Khordha.
10. Damadar Jena
Aged about 50 years
Son of Jhula Jena
Village: Budhipada
PO: Sisio, District: Khordha.
11. Roja Panda
Aged about 55 years
Wife of Chittaranjan Panda
of 95/3, Road No.11
Jagannath Nagar, Rasulgarh
Bhubaneswar.
12. Sarbeswar Mohapatra
Aged about 62 years
Son of Late Lochana Mohapatra
of 5-2574 Niladree Vihar
Chandrasekharpur, Bhubaneswar
District: Khordha.
13. Choudway Benaya Kumar Das
Aged about 57 years
Son of Late Choudhway Duryodhan Das
Plot no.GA 41, Niladree Vihar
Chandrasekharpur, Bhubaneswar
District: Khordha.
14. Rama Chandra Panda
Aged about 60 years
Son of Late Braja Kishore Panda
Plot No.656/23/92 Nayapali
Bhubaneswar, District: Khordha.
15. Bhimasen Mati
Aged about 50 years
Son of Late Banamali Mati
Village: 138/751 near Smuti Das Godown
PO: Breet Colony, Bhubaneswar
District: Khordha.
16. Ajambar Sahoo
Aged about 55 years
Son of late Narayan Sahoo
At/PO: Malapatna
District: Kendrapara.
17. Umesh Chandra Mohanty
Aged about 61 years
Son of Late Padma Charan Mohanty
EW 24/8/12, Chandrasekharpur
District: Khordha.
18. Tuna Mishra
Aged about 51 years
Son of Rama Chandra Mishra
Village: Khanditar, PS: Kuakiha
District: Khordha.
19. Salil Kumar Ray
Aged about 61 years
Son of Brajendra Ray
At/PO: Mohanpur, PS: Aul
District-Kendrapara.
20. Renubala Choudhury
L & T Raintree Boubrard Tower
(Byatranarayanapara)
Near GKUK College,
Bangalore - 560 092. ... Opposite Parties.
Counsel appeared for the parties:
For the Petitioner : Mr. Budhadev Routray,
Senior Advocate assisted by
Mr. Jagadish Biswal, Advocate
and M/s. D.K. Mohapatra,
D. Routray, S. Jena, P.K. Sahoo,
K. Mohanty and R.P. Dalai,
Advocates
For the Opposite Party : Mr. Ajay Kumar Ray,
No.1 Senior Panel Counsel
For the Opposite Party : Mr. Bimbisar Dash,
No.2 Senior Panel Counsel
And
In the matter of an Application under Articles 226 & 227 of
the Constitution of India, 1950
Orissa State Co-operative Bank Ltd.
Pandit Jawaharlal Nehru Marg
Bhubaneswar-1, Orissa
Represented through its Managing Director
Sri Tusarkanti Panda, Aged about 54 years
Son of Sri Krishna Chandra Panda.... Petitioner
-VERSUS-
1. Union of India,
Represented through Ministry of Labour,
Ministry of Labour, Central Secretariat
New Delhi.
2. Regional Provident Fund
Commissioner-II, (Compliance)
Bhabisyanidhi Bhawan, Janpath
Unit-IX, Bhubaneswar
District: Khordha.
3. Orissa State Cooperative Bank
Retired Employees Association
At: OSCB Building, Unit-4
Pandit Jawaharlal Nehru Marg
Bhubaneswar-751001
District: Khurda
Represented through its General Secretary
Tarachand Mahanta
Aged about 66 years
Son of Late Natabar Mahanta
At: Plot No.468/2627, Sri Vihar
3B Lane, P.O.: Patia
Bhubaneswar, PIN: 751031
District: Khordha. ... Opposite Parties.
Counsel appeared for the parties:
For the Petitioner : Mr. Asok Mohanty,
Senior Advocate
assisted by
M/s. Lopamudra Pradhan and
Soumya Subhadourshni Mohanty,
Advocates
For the Opposite Party : Mr. Millan Kumar,
No.1 Central Government Counsel
For the Opposite Party : Mr. Bimbisar Dash,
No.2 Senior Panel Counsel
P R E S E N T:
HONOURABLE
MR. JUSTICE MURAHARI SRI RAMAN
Date of Hearing : 19.02.2025 :: Date of Order : 28.02.2025
O RDER
Challenging order dated 18.11.2003 under Annexure-3
passed by the Regional Provident Fund Commissioner,
Bhubaneswar, Odisha-Opposite Party No.2, wherein
holding that the "Sanchayan Daily Deposit Agents" are
classified as "temporary employee" engaged by the
Odisha State Co-operative Bank Ltd., it was directed
that the Petitioner-employer is required to extend
benefits as envisaged in the Scheme under the
provisions of the Employees' Provident Funds and
Miscellaneous Provisions Act, 1952 from the due dates
of their eligibility under Section 7A, the Petitioner has
approached this Court by way of filing this writ petition
invoking provisions under Articles 226 and 227 of the
Constitution of India with the following prayer(s):
"It is therefore prayed that this Hon‟ble Court may
graciously be pleased to:-
i) Admit the writ application;
ii) Call for the records;
iii) Issue Rule Nisi calling upon the opposite parties to
show cause as to why the impugned order
dtd.18.11.2003 under Annexure-3 and the order
dtd.21.01.2010 of the appellate Tribunal under
Annexure-4 shall not be quashed;
iv) And if the opposite parties fail to show cause or
show insufficient cause, issue a writ in the nature of
certiorari or any other appropriate writ/writs,
order/orders, direction/directions in quashing
impugned order dtd.18.11.2003 under Annexure-3
and the order dtd.21.01.2010 of the Appellate
Tribunal under Annexure-4.
v) And issue a writ in the nature of Mandamus or any
other appropriate writ/writs, order/orders,
direction/directions in declaring that 35 number of
S.D.D. agents are not the employees of the Bank and
are not entitled to get any benefit under the Scheme
framed pursuant to E.P.F. and M.P. Act, 1952;
vi) And/or pass such other order/orders,
direction/directions as this Hon‟ble Court may think
fit and proper for the ends of justice;
And for this act of kindness, the petitioner as in duty
bound shall ever pray."
1.1. The petitioner also laid challenge to order dated
21.01.2010 passed in ATA No.2(10) of 2004 by the
Employees' Provident Fund Appellate Tribunal (Camp at
Bhubaneswar) whereby dismissing the appeal, the view
of the Regional Provident Fund Commissioner,
Bhubaneswar, Odisha vide Annexure-3 has been upheld
treating the "commission" to be "remuneration" falling
within the scope of Section 2(b) of the Employees'
Provident Funds and Miscellaneous Provisions Act,
1952.
W.P.(C) No.23057 of 2010:
1.2. In W.P.(C) No.23057 of 2010, the Petitioner has made
following prayer(s):
"It is, therefore, prayed that this Hon‟ble Court may
graciously be pleased to:-
i) Admit the writ application;
ii) Call for the records;
iii) Issue Rule Nisi calling upon the opposite parties to
show cause as to why the interim order dated
16.09.2010 and 11.10.2010 issued by the Provident
Fund Commissioner under Annexures-9 and 13
respectively shall not be quashed.
iv) And if the opposite parties fail to show cause or
show insufficient cause issue a writ in the nature of
certiorari quashing the interim order dated
16.09.2010 and 11.10.2010 issued by the Provident
Fund Commissioner under Annexures-9 and 13
respectively.
v) Issue a writ in the nature of mandamus or any other
appropriate writ/writs, order/orders,
direction/directions directing the opposite parties to
accept the exemption proposal submitted as per the
direction of this Hon‟ble Court in order dated
25.01.2005 passed in OJC No.15660 of 1997 and
further direct the opposite parties to grant exemption
to the petitioner bank.
vi) And/or pass such other order/orders,
direction/directions as this Hon‟ble Court may think
fit and proper for the ends of justice.
And for this act, the petitioner shall as in duty bound ever
pray."
Facts:
2. Facts, as adumbrated by the writ petitioner in W.P.(C)
No.6323 of 2010 reveal that the Petitioner-Odisha State
Cooperative Bank Limited (for short, "Bank") engaged
thirty-five numbers of Sanchayan Deposits Agents
(abbreviated, "SDD") on 20.07.1996 for collection of
deposits under Sanchayan Daily Deposit Account with
certain terms and conditions on commission basis inter
alia that Agents would get 3% commission on the total
deposit collected by him in each month. However, after
closure of said Scheme, the engagements of thirty-five
agents were automatically ceased.
2.1. Therefore, the said Agents approached the Regional
Provident Fund Commissioner by filing petitions to bring
them to the fold of Provident Fund Scheme. After receipt
of the notice, the Petitioner-Bank vide letter
No.OSCB/10020/2003-04/, dated 15.11.2003 filed
objection stating therein that the said thirty-five agents
were not the employees of the Bank.
2.2. Thereafter, the Regional Provident Fund Commissioner-II
(Compliance, Odisha, Bhubaneswar vide order
No.OR/BBS/Circle/16/OR/822/3, dated 18.11.2003
under Annexure-3 passed the following order:
"It is admitted that the "Commission" paid to SDD agents
are paid in lieu of service rendered to the Bank by such
agents. Further such payment is made with certain
written understanding as per the terms and conditions.
Thus this payment in lieu of service rendered to the Bank
can be nothing but "emoluments" may it be termed as
wages, salary, pay, Commission etc. Hence, by definition
of 2(b) of the Act, 1952 these SDD agents are wage
earners and since they are engaged in connection with
the promotion of the Banks core business i.e. "borrowing"
they are employees of the bank. Further as per definition
of Staff service rules of the Orissa State Co-operative
Bank Ltd at item No.4 "Temporary employee means an
employee who has been appointed for a limited period for
work which is of an essentially temporary nature or who
is employed temporarily as an additional employee in
connection with the temporary increase in work and is not
made permanent". By virtue of this definition the SDD
Agents can be classified as temporary employee but they
are proved as employees engaged by the Bank for its
business purpose.
Thus it can be concluded that SDD Agents are
conclusively engaged for promotion of the Bank‟s
business i.e. promotion/increase in deposits. It can be
further concluded that SDD Agents are engaged in
connection with the Banking business only and not for
their own separate individual enterprise.
Hence, I Rabindra Samal, Regional Provident Fund
Commissioner-II (Compliance), Orissa, Bhubaneswar in
exercise of the powers conferred upon me Under Para-26-
B of the Scheme‟ 52 decide by due application of mind,
having gone through the fact and circumstances of the
case that the SDD Agents engaged by M/s. Orissa
State Co-Op. Bank Ltd are the employees of the
Bank as defined under Section 2(f) of the Act' 52
and commission paid in lieu of the service rendered
by the SDD Agents are nothing but emoluments
which is nothing but wages as defined under
Section 2(b) of the Act'52. I, therefore, direct the
employer of M/s. Orissa State Co-Op. Bank Ltd.,
Bhubaneswar to extend benefits as provided under
the three schemes of the Act' 1952 to these 35 SDD
Agents from due dates of their eligibility
immediately and furnish statutory returns within
15 days of assessment of dues by A.P.F.C.(CC-I)
under Section 7A of the Act'1952."
2.3. Being aggrieved by the said Order dated 18.11.2003
passed by the Regional Provident Fund Commissioner-II,
Bhubaneswar, the Petitioner-employer approached the
Employees' Provident Fund Appellate Tribunal (Camp
Court) at Bhubaneswar by filing an appeal bearing ATA
No.2(10) of 2004 for setting aside the order dated
18.11.2003, which stood disposed of vide Order dated
21.01.2010 (Annexure-4) with the following observation:
"In the case of Burmah Sheel Oil Storage and Distributing
Co. Ltd. Vrs. Regional Provident Fund Commission, Delhi
reported in 1981, Vol.II LLJ Page 86, the Hon‟Court held
that "basic wages are those which are paid to all the
employees of a concern and are generally paid to
employees of all concerned." Similar view was held by
this lordship in case of Manipal Academy of Higher
Education Vrs. P.F. Commissioner reported in the 2008 (5)
SCC page 428. In this case the order passed by the
authority and the appeal memo filed by the appellant
revealed that the commission agents were working for the
bank and the appellant was supervising and controlling
their work and they are also paid the equal amount of
commission to the agents. In other words, the agents are
getting their remuneration for their services rendered to
the bank so they can be treated as employee of the bank
and the commission paid to them is treated as wages. The
circular dated 27.08.2009 shows that commission agents
are the employees of the Bank. Since the appellant has
engaged more than 20 employees, it is rightly coming
under the ambit of E.P.F. & MP Act, 1952. Hence ordered,
the appeal stands dismissed. Copy of order be sent to
both the parties. File be consigned to record room. "
2.4. Still dissatisfied, with prayer to set aside the dated
18.11.2003 under Annexure-3 passed by the Regional
Provident Fund Commissioner-II, Bhubaneswar and
order dated 21.01.2010 under Annexure-4 passed by the
Appellate Tribunal, the Petitioner-Bank (Employer)
approached this Court by way of this writ petition
invoking extraordinary jurisdiction under Articles 226
and 227 of the Constitution of India.
Hearing:
3. Pleadings, being completed and exchanged between the
learned counsel for respective parties, on their consent,
this matter is taken up for final hearing at the stage of
admission.
3.1. Accordingly, heard Mr. Budhadev Routray, learned
Senior Advocate appearing along with Mr. Jagadish
Biswal, learned counsel appearing for the Petitioner and
Mr. Ajay Kumar Ray, learned Senior Panel Counsel
appearing for Opposite Party No.1 and Mr. Bimbisar
Dash, learned Senior Panel Counsel appearing for
Opposite Party No.2 in W.P.(C) No.6323 of 2010 and Mr.
Asok Mohanty, learned Senior Advocate appearing along
with Ms. Lopamudra Pradhan, learned Advocate and Ms.
Soumya Subhadourshni Mohanty, learned Advocate
appearing for the Petitioner and Mr. Millan Kumar,
learned Central Government Counsel appearing for
Opposite Party No.1 and Mr. Bimbisar Dash, learned
Senior Panel Counsel appearing for Opposite Party No.2
in W.P.(C) No.23057 of 2010.
3.2. On conclusion of hearing, the matter stood reserved for
preparation and pronouncement of Order.
Rival contentions and submissions:
4. Reiterating the facts as narrated in the writ petition, Sri
Budhadev Routray, learned Senior Advocate appearing
for the Petitioner-Bank submitted that the order passed
by the Regional Provident Fund Commissioner is illegal
and contrary to the law. Referring to definitions of terms
"basic wages" in clause (b) and "employee" in clause (f) of
Section 2 of the Employees' Provident Funds and
Miscellaneous Provisions Act, 1952 (for short, "the EPF
and MP Act"), he submitted that the SDD Agents can at
no stretch of imagination fall within the meaning of
"employee" and they receive "commission" which does
not fall within the meaning of "basic wages". Section 2(f)
says that any person who is employed for wages in any
kind of work and Section 2(b) deals with "basic wages"
which unequivocally lays down that it does not include
"commission".
4.1. He further submitted that the decisions relied on by the
learned Tribunal vide order dated 21.01.2010 are not
applicable to this case. Agents are engaged only for
collection of money not to function as employee of the
Bank.
4.2. Learned Senior Counsel appearing for the Petitioner
drew attention of this Court to Annexure-1, i.e.,
appointment order dated 20.07.1996 issued to thirty-five
SDD Agents, and submitted that the said Agents are
appointed with certain terms and conditions, wherein
paragraph-7 reads as follows:
"7. You are not an employee of the bank in any
sense. The relationship between you and the bank is
only that of an Agent and principal. The service
rules and service conditions relating to the
employees of the bank, have no application in your
case and you shall not be entitled to any salary,
provident fund or any other benefits, ordinarily,
allowed to the staff of the bank under its service
conditions and rules. "
4.3. He further relied paragraph-14 of the said terms and
conditions, which quoted hereunder:-
"14. As our Agent, for collecting deposit under
'Sanchayan Daily Deposits', you shall be paid
commission @ 3% on the total deposits
collected by you in every month. No commission
will be paid on deposits under Sanchyan Daily
Deposit Scheme received by the Branch directly from
a depositor. No commission shall be paid on lump
sum collections received in anticipation to refund of
such "Sanchayan Daily Deposit Accounts" and in
that connexion, decision of the bank will be final and
binding on you. Further, the rate of commission is
liable to reduction, alternative or revision at the
discretion of the Bank and without any previous
initiation or notice to you."
4.4. Therefore, he submitted that the Agents are not the
"employees" of the Bank and the observation of the
Provident Fund Commissioner-II, Bhubaneswar vide
order dated 18.11.2003 and the Appellate Tribunal vide
order dated 21.01.2010 to grant 35 SDD agents all the
benefits as provided under the Scheme framed under
1952 Act is illegal and liable to be quashed.
4.5. Amplifying further Sri Budhadev Routray urged that in
identical case, the same Regional Provident Fund
Commissioner did consider similar dispute with regard
to the status of the SDD Agents by referring to the
judgments of the Hon'ble Supreme Court vide order
dated 05.04.2007, which is enclosed to the rejoinder
affidavit as Annexure-7. Reliance has been placed on the
following observation contained in the said order:
"***
6.1) From the above discussion and in light of the order
of the Hon‟ble Supreme Court in the case of Bridge
and Roof Company (India) Ltd. Vrs. Union of India1 it
is very clear that commission has been excluded
from the term basic wages. In the instant case the
complaint Agents of the Bank are being paid
commission and nothing else by the Bank which is
proportionately based on the collection made by
individual Agent. Hence from the statement filed by
the employer and accepted by the Agents. It is very
clear that the commission is not fixed and the Agents
do not get any fixed commission whether they collect
any deposits or not. From the discussion as above it
is concluded that the Agents are engaged by the
Bank for collection purpose only and in lieu of the
1 Reported at (1963) 3 SCR 978, wherein it has been held as follows:
"This brings us to the consideration of the question of bonus, which is also an
exception in cl. (ii). Now the word „bonus‟ has been used in this clause without
any qualification. Therefore, it would not be improper to infer that when the word
„bonus‟ was used without any qualification in the clause, the legislature had in
mind every kind of bonus that may be payable to an employee. It is not disputed
on behalf of the respondents that bonuses other than profit bonus were in force
and well known before the Act came to be passed in 1952.
***
It may be, as we have pointed out earlier, that if there were no exceptions to the
main part of the definition in s.2(b), whatever was payable in cash as price for
labour and arose out of contract would be included in the term „basic wages‟, and
that reward for labour which did not arise out of contract might not be included in
the definition. But the main part of the definition is subject to exceptions in cl. (ii),
and those exceptions clearly show that they include even the price for labour. It is
therefore not possible to accept the contention on behalf of the respondents that
whatever is price for labour and arises out of contract is included in the definition
of „basic wages‟ and therefore production bonus which is a kind of incentive wage
would be included."
amount collected the Bank pays commission to the
Agent out of the profit payable to the depositors. The
Agents even though working in connection with the
work of the bank, they are not getting any wages
against the work done which is one of the basic
requirement for qualifying to be an employee under
the provisions of Employees Provident Funds &
Miscellaneous Provisions Act, 1952. As such, it is
held that as the employees are getting no
wages from the bank and they cannot be
treated as employee for the purpose of
Employees Provident Funds & Miscellaneous
Provisions Act, 1952 and as such, they do not
qualify to become the member of the fund."
5. Mr. Asok Mohanty, learned Senior Advocate appearing
for the Petitioner in W.P.(C) No.23057 of 2010
supporting the arguments made by Mr. Budhadev
Routray, learned Senior Advocate appearing for the
Petitioner (in W.P.(C) No.6323 of 2010) made a reference
to paragraph 38 of the writ petition, which reads as
under:
"38. That the petitioner humbly begs to submit that while
the petitioner bank has brought to the notice of the
Commissioner not only about the pendency of the
writ application, but also the proposal submitted by
the petitioner bank in conformity with the provisions
provided under Section 17C of the Act the Regional
provident Fund Commissioner should not have
issued letter dated 16.09.2010 and consequential
letter dated 11.10.2010 both letter/order under
Annexur-9 and 13. The action of the authorities
in issuing such letters are not only illegal,
arbitrary but also contrary to the provisions of
the act in as much as it is in contravention of
the interim order passed by this Hon'ble Court
in the aforesaid writ application bearing
W.P.(C) No.6323 of 2010. Hence both the order
dated 16.09.2010 and 11.10.2010 are liable to be
quashed."
6. Mr. Bimbisar Dash, learned Senior Panel Counsel
appearing for Opposite Party No.2 agreed with the
submissions of the learned Senior Advocate appearing
for the Petitioner(s) submitted that the order under
Annexure-7 enclosed to rejoinder affidavit has not been
challenged.
Conclusion:
7. For better appreciation, Section 2(b) and Section 2(f)
defining the terms "basic wages" and "employee"
respectively under the EPF and MP Act, 1952 are
extracted hereunder:
"(b) "basic wages" means all emoluments which are
earned by an employee while on duty or on leave
or on holidays with wages in either case in
accordance with the terms of the contract of
employment and which are paid or payable in cash
to him, but does not include--
(i) The cash value of any food concession;
(ii) any dearness allowance (that is to say, all cash
payments by whatever name called paid to an
employee on account of a rise in the cost of
living), house-rent allowance, overtime
allowance, bonus, commission or any other
similar allowance payable to the employee in
respect of his employment or of work done in
such employment;
(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."
8. Considered the averments and documents forming part
of writ petition and diligently taken note of arguments
advanced by Sri Budhadev Routray, learned Senior
Counsel appearing in W.P.(C) No.6323 of 2010 and Sri
Asok Mohanty, learned Senior Counsel appearing in
W.P.(C) No.23057 of 2010 and counter arguments
advanced by Sri Bimbisar Dash, learned Senior Panel
Counsel in both the writ petitions.
8.1. Definition of the term "employee" as envisaged in Section
2(f) of the EPF & MP Act suggests that for being an
"employee" one has to get wages directly or indirectly. In
the present case as the record reveals there is no dispute
that the Bank has been extending "commission", which
term is conspicuously excluded from the purview of the
term "basic wages" defined under Section 2(b). Careful
reading of said clause (b) of Section 2 unambiguously
leads to depict that such commission is required to be
shown as "payable to the employee".
8.2. As it appears from the impugned order, the Appellate
Tribunal hypothetically construing "commission" to be
"wages" did not discuss with respect to "employee" as
envisaged in Section 2(f). Furthermore, the Regional
Provident Fund Commissioner in his order merely based
on document like "cancellation of agent-ship" proceeded
to hold that there was employer-employee relationship,
which appears to be erroneous approach and contrary to
order dated 05.04.2007 passed by the Regional
Provident Fund Commissioner-II (Annexure-7, relating to
M/s. Urban Co-operative Bank Ltd., Rourkela), which is
conceded by Sri Bimbisar Dash, Senior Panel Counsel as
not challenged before any higher fora. Both the
authorities failed to address the factual position vis-à-vis
statutory provision in proper perspective.
8.3. It is felt expedient to have reference to Indian Banks
Association, Bombay (represented by Deputy General
Manager, Syndicate Bank, Zonal Office, Hyderabad) Vrs.
Workmen of Syndicate Bank, 1997 SCC OnLine AP 226,
wherein it has been observed that:
"14. There is no dispute that the payment to the deposit
collectors is by way of a commission on the
collections made by them. There is also no dispute
that the commission is the remuneration to them. The
substantive provision of Section 10(1)(b)2 [of the
Banking Regulation Act, 1949] prohibits employment
2 Section 10 of the Banking Regulation Act, 1949 stands as follows:
"[10. Prohibition of employment of managing agents and restrictions on certain
forms of employment.--
(1) No banking company--
(a) shall employ or be managed by a managing agent; or
(b) shall employ or continue the employment of any person--
(i) who is, or at any time has been, adjudicated insolvent, or
has suspended payment or has compounded with his
creditors, or who is, or has been, convicted by a criminal
court of an offence involving moral turpitude; or
(ii) whose remuneration or part of whose remuneration takes
the form of commission or of a share in the profits of the
company:
Provided that nothing contained in this sub-clause shall
apply to the payment by a banking company of--
(a) any bonus in pursuance of a settlement or award
arrived at or made under any law relating to
industrial disputes or in accordance with any
scheme framed by such banking company or in
accordance with the usual practice prevailing in
banking business;
(b) any commission to any broker (including guarantee
broker), cashier-contractor, clearing and forwarding
agent, auctioneer or any other person, employed by
the banking company under a contract otherwise
than as a regular member of the staff of the
company; or
(iii) whose remuneration is, in the opinion of the Reserve Bank,
excessive; or
(c) shall be managed by any person--
(i) who is a director of any other company not being--
(a) a subsidiary of the banking company, or
(b) a company registered under section 25 of the
Companies Act, 1956 (1 of 1956):
Provided that the prohibition in this sub-clause
shall not apply in respect of any such director for a
temporary period not exceeding three months or
such further period not exceeding nine months as
the Reserve Bank may allow; or
(ii) who is engaged in any other business or vocation; or
(iii) whose term of office as a person managing the company is
for a period exceeding five years at any one time:
Provided that the term of office of any such person may be
renewed or extended by further periods not exceeding five
years on each occasion subject to the condition that such
renewal or extension shall not be sanctioned earlier than
two years from the date on which it is to come into force:
Provided also that where the term of office of such person
is for an indefinite period, such term, unless it otherwise
comes to an end earlier, shall come to an end immediately
on the expiry of five years from the date of his appointment
or on the expiry of three months from the date of
or continuance of employment of any person whose
remuneration or part of it takes the form of a
commission. The proviso permits the payment of
commission, as remuneration provided the payment
is made not to be a regular member of the staff but to
a person who is employed under a contract
otherwise than as a regular member of the staff. A
reading of the substantive provisions as well as the
exception unmistakably shows the intention of the
Parliament that the person to whom a commission is
payable as remuneration cannot be a regular staff of
the bank but that he may be employed on contract.
Employment on the basis of contract is, under the
scheme of the section, treated on a different footing
than a person who is a regular staff of the bank. A
deposit collector, like the respondent, would be
one who is squarely covered by the exception,
commencement of section 8 of the Banking Laws
(Miscellaneous Provisions) Act, 1963 (55 of 1963),
whichever is later:
Provided further that nothing in this clause shall apply to a
director, other than the managing director, of a banking
company by reason only of his being such director.
Explanation.--
For the purpose of sub-clause (iii) of clause (b), the
expression "remuneration", in relation to person employed
or continued in employment, shall include salary, fees and
perquisites but shall not include any allowances or other
amounts paid to him for the purpose of reimbursing him in
respect of the expenses actually incurred by him in the
performance of his duties.
(2) In forming its opinion under sub-clause (iii) of clause (b) sub-section (1), the
Reserve Bank may have regard among other matters to the following:--
(i) the financial condition and history of the banking company, its size
and area of operation, its resources, the volume of its business,
and the trend of its earning capacity;
(ii) the number of its branches or offices;
(iii) the qualifications, age and experience of the person concerned;
(iv) the remuneration paid to other persons employed by the banking
company or to any person occupying a similar position in any other
banking company similarly situated; and
(v) the interests of its depositors.
***
(6) Any decision or order of the Reserve Bank made under this section shall
be final for all purposes."
i.e., the proviso, since his remuneration totally
consists of commission for which reason he
could not be a regular staff. If he would have
been a regular staff from the date of his
engagement as a deposit collector, he could not
have been paid remuneration by way of
commission. Such engagement of him, and of the
deposit collectors who were admittedly engaged
after the 1949 Act, would have been against the
provision of law and would have been null and void.
***
16. A distinction has to be drawn between employment
as regular staff of the bank and as workmen only
without being regular staff. The concept of a person
being a workman but not being a regular staff is
conceivable. In different decisions of the Supreme
Court, to which we shall presently refer, piece-rated
workers and job workers have been found to be
workmen, though they may not be regular staff.
What is prohibited under Section 10(1)(b) of the
Banking Regulation Act, 1949, is to treat persons,
who are in receipt of commission as remuneration,
as regular workers. Sri Narasimham rightly concedes
the respondents not to be regular staff and also does
not for such claim. We accordingly hold as such.
17. Even so, the question yet remains whether the
deposit collectors are workmen of the banks and, if
so, to what relief they are entitled. That workmen are
also in employment in apparent from the definition of
workmen in S. 2(s) of the Industrial Disputes Act. It
is the submission of Sri K. Srinivasa Murthy that the
instances of employment of the deposit collectors
show them as holding "contract for service" instead
of "contract of service" with the banks for which
reason they cannot be said to be in employment of
the bank but that they are independent contractors
who have voluntarily taken up the job of
popularising the scheme of voluntary deposits and to
earn a commission therefor. It is the submission of
Sri Narasimham on the other hand that the various
facets of the control exercised by the bank shows the
respondents to be workmen and that the
determination as to whether they are workmen,
being a finding of fact reached by the Tribunal, is not
available to be varied in a writ of certiorari.
Contending as such, our attention has been invited
to the decision in Dharangadhara Chemical Works,
Ltd. Vrs. State of Saurashtra, AIR 1957 SC 264,
wherein it has ruled that the question whether the
relationship between the parties is one as between
employer and employee or between master and
servant is a pure question of fact which the Tribunal
has a jurisdiction to determine, and that the
determination is not liable to be questioned in
proceedings under Article 226 of the Constitution of
India unless, at the least, it is shown to be fully
unsupported by evidence. It is on the other hand
argued by Sri K. Srinivasa Murthy placing reliance
on the decision in Lloyds Bank Vrs. Parma Lal
Gupta, 1961 -- I L.L.J. 18 and Burmah Shell Oil
Storage and Distribution Company of India, Ltd. Vrs.
Burmah Shell Management Staff Association and
vice versa, 1970 --II L.L.J. 590, both decisions of
the Supreme Court, that the determination of
the question is a mixed question of fact and
law, i.e., it is a question of whether a proper
inference has been drawn applying accepted
principles. In Lloyds Bank case (vide supra), the
Court observed that if the inference drawn by the
Tribunal in regard to the status of the three workmen
involved the application of certain legal decisions,
that necessarily becomes a mixed question of law
and fact and the respondent would not be justified in
raising a preliminary objection that the appellant
would not be allowed to urge against the correctness
of the finding of the Tribunal on such mixed question
of fact and law. The Court, however, administered
the caution saying;
„We would however like to add that even if the
question raised is one of fact and law, we would not
readily interfere with the conclusion of the Tribunal
unless we are satisfied that such conclusion is
manifestly or obviously erroneous.‟
In the latter case, even though the principle for
decision of the question was not specifically
mentioned, the Court held-- the conclusion of the
Tribunal of the Transport Engineer to be a workman
to be a misdirection to itself. The Court held, from the
admitted facts, the Transport Engineers as one could
not have been held to be a workman.
18. Even though in Dharangadhara case (vide supra),
the question was held one to be one of pure fact and
in Lloyds Bank case (vide supra), as one of fact and
law, yet there is necessarily no conflict between the
two pronouncements and, closely analysed, both the
decisions reflect the same view. In Dharangadhara
case (vide supra), itself, their Lordships observed
that the finding of fact could be disturbed by a writ
of certiorari if the finding was fully unsupported by
evidence. This in itself was a statement of the
parameters of the exercise of the writ jurisdiction
under certiorari in respect of all findings reached by
Tribunals vested with the power of determining any
fact. Broadly stated, the situations which invite
interference by the High Court while exercising
certiorari jurisdiction are that the finding is based on
no evidence or that it is essentially based on
extraneous considerations of facts which are not
germane to the issue and thirdly, where the finding
reached is such which cannot be reached by any
reasonable process of inference. So far as the third
one is concerned it would include in itself the
question of perverse consideration, that is, where the
conclusion is one which is manifestly Contrary to
accepted legal principles and has been reached
either in ignorance or in avoidance of the same. In
Lloyds Bank case (vide supra), their Lordships were
reiterating the same thing while saying that it is a
mixed question of law and fact, but that the Court
would not interfere with the conclusion of the
Tribunal unless it is manifestly erroneous. Even after
Dharangadhara case (vide supra), several decisions
of the Apex Court bearing on the question as to
whether a person is to be treated as a workman or
not has been handed down and in all those cases
the Court has gone into the question of examining the
various aspects of the work discharged by the
workman and has laid down the tests as to when
and when not the person concerned should be
treated as workman. In deciding the question, the
Court was obviously going into appreciation of facts.
But the limit is to be drawn where such aspects have
been taken into consideration and applying the tests,
the conclusion has been reached by the Tribunal.
When such is the case, the Court would not interfere
merely because the conclusion is one which is
different from the one which could have been
reached by the Court. As has been observed in
Lloyds Bank case (vide supra), the conclusion must
be manifestly and obviously erroneous."
8.4. Therefore, this Court is of the considered view that the
matter deserves to be reconsidered by the Regional
Provident Fund Commissioner in the light of the
discussions made supra.
9. In the wake of the above, order dated 18.11.2003 passed
by the Regional Provident Fund Commissioner-II
(Compliance), Odisha (Annexure-3) and order dated
21.01.2010 passed by the Employees' Provident Fund
Appellate Tribunal in ATA No.2(10) of 2004 in W.P.(C)
No.6323 of 2010 and order dated 16.09.2010 passed by
the Regional Provident Fund Commissioner (C&R),
Odisha (Annexure-9) and order dated 11.10.2010 passed
by the Regional Provident Fund Commissioner-II(C&R),
Odisha (Annexure-13) in W.P.(C) No.23057 of 2010 are
set aside and the matter is remitted to the Regional
Provident Fund Commissioner-II (Compliance), Odisha,
Bhubaneswar for fresh consideration keeping in view the
discussions and observations made supra.
10. With the above observation, both the writ petitions
[W.P.(C) No.6323 of 2010 and W.P.(C) No.23057 of 2010]
stand disposed of, but in the circumstances there shall
Signature Not be no order as to costs.
Verified
Digitally Signed
Signed by: ASWINI KUMAR
SETHY
Designation: Personal Assistant
(Secretary-in-Charge)
Reason: Authentication (MURAHARI SRI RAMAN)
Location: ORISSA HIGH COURT,
CUTTACK
Date: 28-Feb-2025 14:08:11 JUDGE
High Court of Orissa, Cuttack
The 28th February, 2025//Laxmikant/Suchitra
