Punjab-Haryana High Court
G 4 S Security Services India Pvt. Ltd vs Regional Provident Fund Commissioner on 21 November, 2024
Neutral Citation No:=2024:PHHC:154025
CWP-17716-2011 (O&M) -1-
IN THE HIGH COURT OF PUNJAB & HARYANA
AT CHANDIGARH
293 CWP-17716-2011 (O&M)
Date of decision: 21.11.2024
G 4 S SECURITY SERVICES (INDIA) PVT. LTD. ....PETITIONER
Vs.
REGIONAL PROVIDENT FUND COMMISSIONER ...RESPONDENT
CORAM: HON'BLE MR. JUSTICE JAGMOHAN BANSAL
Present: Mr. Amitabh Chaturvedi, Advocate,
Mr. Pankaj Gupta, Advocate and
Mr. Paras Jain, Advocate
for the petitioner.
Mr. Sanjay Tangri, Advocate
for the respondent.
****
JAGMOHAN BANSAL, J (ORAL)
1. The petitioner through instant petition under Articles 226/227 of the
Constitution of India is seeking setting aside of order dated 04.07.2011
(Annexure P-1) passed by Employees' Provident Fund Appellate Tribunal, New
Delhi to the extent petitioner's liability of Provident Fund Contribution qua
conveyance and washing allowance has been confirmed.
2. The petitioner is a Private Limited Company which is engaged in
providing security services to multiple customers. It has engaged number of
workers who are deployed as 'Security Guards' at different premises. The
Provident Fund Authorities in 1996 formed an opinion that petitioner is wrongly
and illegally bifurcating wages payable to its workers in four components i.e.
Basic, House Rent Allowance, Conveyance Allowance and Washing Allowance.
The petitioner is paying minimum wages payable under Minimum Wages Act,
1948 (for short '1948 Act'), however, the said wages are bifurcated into four
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components. The petitioner is complying with provisions of 1948 Act, however,
violating provisions of Employees' Provident Funds and Miscellaneous
Provisions Act, 1952 (for short '1952 Act') by not including HRA, Conveyance
Allowance and Washing Allowance (collectively as 'Allowances" hereinafter) in
the basic wage while calculating Employer/Employee Contribution. On the basis
of said opinion, the respondent-authority for the period of March' 1996 to 1998
passed order dated 31.05.1999 holding that Provident Fund Contribution is
required to be made on minimum wages without splitting emoluments into
different heads i.e. Basic Wages, HRA, Conveyance and Washing Allowances.
3. The petitioner preferred an appeal before Appellate Authority which
vide order dated 01.05.2000 upheld order dated 31.05.1999 passed by Assessing
Authority. He preferred Writ Petition before Delhi High Court which came to be
allowed vide order dated 20.09.2011. Delhi High Court set-aside orders passed
by Assessing and Appellate Authority. The respondent preferred Intra Court
Appeal which came to be dismissed vide order dated 10.10.2023.
4. The respondent like demand for the period from March' 1996 to
1998 initiated proceedings under Section 7A of 1952 Act for the period from
November' 1998 to May' 1999. The Assessing Authority vide order dated
23.05.2002 dropped proceedings holding that petitioner is not liable to pay
Provident Fund Contribution on allowances i.e. HRA, Conveyance Allowance
and Washing Allowance. The said order was never assailed by respondent, thus,
has attained finality.
5. The respondent for the period from December' 2001 to July' 2005
again initiated proceedings under Section 7A of 1952 Act and vide order dated
13.04.2006 held that petitioner is liable to include HRA and other allowances in
the basic wage for the purpose of Provident Fund Contribution. The Authority
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formed an opinion that act of petitioner was a subterfuge to avoid statutory
liability. The petitioner preferred an appeal before Appellate Tribunal which
came to be allowed vide order dated 15.06.2009. The Appellate Authority held
that allowances cannot be included in Basic Pay for the purpose of calculation of
Provident Fund Contribution. The respondent preferred Civil Writ Petition
before this Court which came to be dismissed vide order dated 01.02.2011. The
respondent preferred Intra Court Appeal which came to be dismissed by a
Division Bench vide order dated 20.07.2011. There was some typing mistake in
the order dated 20.07.2011 which was corrected vide order dated 08.09.2011.
The orders passed by this Court as well as Delhi High Court could not retain the
respondent and it rushed to Supreme Court against the order passed by Division
Bench of this Court. Supreme Court vide order dated 17.08.2023 upheld orders
passed by Division Bench of this Court and dismissed appeal of the respondent.
6. The respondent for the period in question from August' 2005 to
October' 2007 again initiated proceedings under Section 7A of 1952 Act which
culminated in order dated 30.07.2008. The respondent again ordered to include
allowances in the Basic Wage for the purpose of Provident Fund Contribution.
The petitioner preferred an appeal before Appellate Authority which came to be
partially allowed. The Tribunal ordered not to include HRA in the Basic Wage,
however, ordered to include other allowances in the Basic Wage for the purpose
of Provident Fund Contribution.
7. Mr. Amitabh Chaturvedi, Advocate submits that as per principles of
uniformity, consistency and res-judicata, the impugned order is not sustainable.
The matter has already been settled by different Courts including Hon'ble
Supreme Court, thus, impugned order is not sustainable.
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8. Per contra, Mr. Sanjay Tangri, Advocate submits that it is factually
correct that different Courts, in the case of petitioner, have held that minimum
wages can be bifurcated into different heads i.e. Basic, HRA, Conveyance
Allowance and Washing Allowance, however, it has not been considered and
adjudicated whether an allowance which is uniformly paid to all the employees
should be included in Basic Pay or not. Hon'ble Supreme Court in 'Regional
Provident Fund Commissioner (II) West Bengal Vs. Vivekananda
Vidyamandir and others reported in (2020) 17 SCC 643 has clearly held that if
an allowance is paid to all the employees, it should form part of Basic Pay for
the purpose of Provident Fund Contribution.
9. I have heard the arguments of both sides and with the able
assistance of learned counsel perused the record.
10. The respondent vide order dated 13.04.2006 ordered to include
Allowances in Basic Pay for the purpose of Provident Fund Contribution. The
Authority was well aware of the fact that petitioner has bifurcated wages of
workman into four heads i.e. Basic, HRA, Conveyance and Washing
Allowances. This is evident from following paragraphs of the aforesaid order:-
"12. In their submission particularly on split-up of wages they have
commented:-
That the department earlier also initiated &A proceedings on
the similar issue vide show cause notice dated 19.07.1999
which was decided in favour of Group 4 vide order
No.EB/HR/9693/993 dated 23.05.2002 whereby it has been
ordered by the APFC, Gurgaon that the employer is not liable
to pay PF contribution on HRA, fixed conveyance and
washing allowance under minimum wages.
xxx xxx xxx
That the employer and the employee have admittedly
contracted to split the total emoluments in to
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component parts and it has been agreed that HRA
conveyance allowance and washing allowance shall be
treated as separate from basic wages payable to the
employees and these allowances are specifically
excluded from the Basic Wages by the definition clause
contained in EPF&MP Act and the eAPFc has no
power to treat these allowances as part of basic wages.
xxx xxx xxx
13. After having considered the facts of the case, the
Enforcement Officer's report dated 26.09.2005 and the written
and oral submissions made by M/s Group 4 Securitas Pvt.
Limited, I am of the considered opinion that the EPF&MP Act
being special welfare legislation, requires liberal interpretation.
In construing the provision of the Act, it is borne in mind that it
is a beneficent piece of social legislation aimed, promoting and
security the well-being of employees and that splitting of
minimum wages in Basic Wage, HRA and other allowances was
clearly a subterfuge in order to avoid statutory liability of P.F.
on the same analogy as decided by the Hon'ble EPF Appellate
Tribunal in the ATA in the matter of JMA Industries Vs.
Assistant P.F. Commissioner, Faridabad (ATA No.599)(16)2000
dated 17th February, 2005.)
xxx xxx xxx
18. Therefore, in the light of the judgment made by the
Hon'ble EPF Appellate Tribunal in the matter of M/s JMA
Industries Vs. Assistant P.F Commissioner, Faridabad and the
judgment of Hon'ble High Court of Karnatka in the matter of
RPFC, Karnatka Vs. M/s Group 4 Securitas Guarding Pvt.
Limited, there is no scope to differ from the views of the
Enforcement Officer as mentioned supra and I hold that
splitting of minimum wages into basic, HR and other allowance
was clearly a subterfuge in order to avoid statutory liability of
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Provident Fund. I further order that the Provident Fund is to be
paid on the entire minimum wages disclosed by the
establishment and the splitting of minimum wages should not be
allowed."
11. The Appellate Tribunal vide order dated 15.06.2009 held that
allowances which are part of pay structure, are not part of Basic Wage as per the
definition of Basic Wages under Section 2(b) of 1952 Act and appellant is not
liable to make contribution on the same. The Tribunal as well as Authorities
were well aware of colour and contour of bifurcation of wages made by
respondent which is evident from below reproduced para no. 2 of the said order:
"2. The facts of the case are that the appellant company a
covered establishment, was remitting the salary to its
employees, as per the contract of employment. The salary
package is state to include the basis wages + HRA and other
allowances consisting of conveyance and washing allowance,
as specified in the contract of employment. Shri Khushi Ram
President of the All India Trade Union Congress, Gurgaon
made a complaint that the appellant is bifurcating the
minimum wages with a view to avoid PF liability on minimum
wages. The respondent initiated an enquiry under Section 7A
of the Act. The appellant contested the enquiry by contending
that this issue had already been decided by the Tribunal and
hence cannot be raised again for adjudication."
12. The Tribunal specifically set-aside decision of respondent to include
Allowances in the Basic Wage for the purpose of PF Contribution. The operative
portion of order dated 15.06.2009 is reproduced as below:-
"6. On the basis of the above discussions, the wages
payable by the appellant to its employees is in accordance with
minimum wages and the pay structure of the appellant is as
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per law and the PF contribution shall be payable on the basic
wages paid to the employees. In nutshell, the appellant is
liable to pay its share of PF contribution on the basic wages
payable + other allowances permissible under the Act and not
on entire minimum wages which the employer is paying to its
employees. The HRA and other allowances, which is part of
Appellant's wage structure, are not a part of Basic Wage as
per the definition of the basic wages defined under Section
2(b) of the Act and the Appellant is not liable to pay PF
contribution on the same. In view of the above, the appeal is
allowed and the impugned order dated 13.04.2006 passed by
the Respondent is quashed being illegal. Appeal file be
consigned to the record room. Copy of the order be sent to
both the parties."
13. A Co-ordinate Bench of this Court vide order dated 01.02.2011
dismissed petition of the respondent. In the order dated 10.02.2011, it was
specifically held that Allowances cannot be included in the Basic Wages for the
purpose of PF Contribution. The relevant extracts of order dated 01.02.2011 are
reproduced as below:-
"The petitioner's grievance is that the respondents
were splitting the wage structure of the employees as a
subterfuge so as to dilute its liability and that this was
contrary to the wage structure which is to be taken into
consideration for the contributions to be made to the Fund
under the Act. The precise grievance is that rates of minimum
wages which ought to have been taken into consideration are
not being done so by the respondents and by splitting up the
wage structure there is an evasion of its liability.
The Tribunal considered the matter and held that the
respondents were right in taking into consideration the basic
wage of the employee for determining the contribution to the
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Fund. The plea of the petitioner was negated which has
prompted him to file the instant writ petition.
It has been contended by the learned counsel for the
petitioner that it is the minimum wage, the definition of which
is provided under the Minimum Wages Act which is to be
taken into consideration for determining the contribution and
that the Tribunal was wrong in interpreting the provisions of
law and determining the liability of the respondents on the
basis of the basic wage which was being given by the
respondents to its employees for the purposes of determining
the contribution to the fund. It is his case that the respondents
have deliberately, by not including the allowances in the
basic wage have sought to deflate the share of the employees
contribution. Reliance has been placed on cases titled as
DCM Limited versus Regional Provident Fund
Commissioner 1998 (1) LLJ,979 High Court Rajasthan and
Airfreight Ltd. versus State of Karnatka and others AIR
1999 SC 2459.
On the other hand, learned counsel for the respondents
has stated that the definition of basic wage as given in the Act
clearly provide for an exclusion clause and they have gone
strictly by definition of basic wage to determine the liability
of the contribution to the fund. It has further been contended
that definition of wages under the Minimum Wages Act is
distinct from that of the basic wage under the Employees
Provident Fund & Misc. Provisions Act and the provisions of
one Act cannot be read into the other when the Legislative
intent is clear since the Provident Fund Act was enacted
subsequent to the enactment of the Minimum Wages Act and
if the Legislature so intended , it would have certainly read
the definition of wage as provided under the Minimum Wages
Act into the provisions of the Employees Provident Fund Act
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but instead it chose to provide a separate definition as it was
conscious of the needs of the Legislation.
xxx xxx xxx
Having regard to the aforesaid, there is little hesitation
to hold that the contention of the learned counsel for the
petitioner is mis-placed and that the respondents have rightly
excluded certain allowances such as House Rent Allowance,
washing allowance and conveyance allowance while
determining their liability towards the fund."
xxx xxx xxx
14. The respondent herein preferred Intra Court Appeal which was
dismissed vide order dated 20.07.2011.
15. The matter travelled to Supreme Court which vide order dated
17.08.2023 has dismissed Civil Appeal No. 9284 of 2013 filed by Authorities.
The order dated 17.08.2023 passed by Supreme Court is reproduced as below:-
"2. Before the learned Single Judge, the appellant had
impugned the order dated 15th June, 2009, passed by the
Appellate Tribunal under the provisions of the Employees
Provident Fund and Miscellaneous Provisions Act, 1952,
while determining the issue raised by the respondents
regarding the liability of the Management under the
provisions of Section 7A of the EPF Act. The stand of
the appellant is that for the purposes of determining
its contribution towards provident fund, the respondent no.1
was wrongly splitting the wage structure of the employees
and treating the reduced wage as the basic wage to the
detriment of the employees, thereby evading its liability to
contribute the correct amount towards provident fund. The
aforesaid stand taken by the appellant has been turned down
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by the Appellate Tribunal as also by the learned Single Judge
and the Division Bench of the High Court.
3. Mr. Vikramjeet Banerjee, learned Additional Solicitor
General submits that for the purposes of determining the
basic wage under the EPF Act, reference must be made to the
definition of the expression 'minimum rate of wages'
under Section 4 of the Minimum Wages Act, 1948. This aspect
has been considered in paragraph 6 of the impugned
judgment and turned down holding that there was no
compulsion to hold the definition of 'basic wage' to be
equated with the definition of 'minimum wage' under
the Minimum Wages Act, 1948.
4. In our opinion, once the EPF Act contains a specific
provision defining the words 'basic wage' (under Section 2b),
then there was no occasion for the appellant to expect the
Court to have travelled to the Minimum Wages Act, 1948, to
give it a different connotation or an expansive one, as sought
to be urged. Clearly, that was not the intention of the
legislature.
5. It is also pertinent to note that a similar issue had
come up for consideration in the order dated 23rd May, 2002,
passed by the APFC under Section 7A of the EPF Act, that
was duly accepted by the appellant department as the said
order was not taken in appeal.
6. In view of the aforesaid observations, the present
appeal is dismissed as meritless. There shall be no orders as
to costs."
16. The respondent on the basis of judgment of Supreme Court in
Vivekanand Vidya Mandir (Supra) is claiming that entire issue should be re-
examined. As per respondent, the question of payment of conveyance and
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washing allowances to all the employees was not considered, thus, matter should
be examined from the said angle.
The judgment in Vivekanand Vidya Mandir (Supra) was delivered
on 28.02.2019 whereas Supreme Court in the case of petitioner itself has
dismissed appeal of the Authorities on 17.08.2023. The Supreme Court has also
considered that similar issue for the previous period has already been settled.
17. In view of finality of demand raised for last more than 10 years by
way of multiple orders and judgment of Supreme Court in the case of petitioner
itself, this Court in view of principles of uniformity, consistency and res-
judicata cannot form any opinion other than opinion formed by Co-ordinate
Bench, Division Bench of this Court as well as Supreme Court.
18. In this backdrop, the instant petition deserves to be allowed and
accordingly allowed. Impugned order dated 04.07.2011 (Annexure P-1) is
hereby set-aside.
19. Pending miscellaneous application(s), if any, shall also stand
disposed of.
21.11.2024 [JAGMOHAN BANSAL]
manoj JUDGE
Whether speaking/reasoned Yes/No
Whether reportable Yes/No
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