High Court
Facts
-1- W.P.No.6567.2016IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADWRIT PETITION NO. 6567 OF 2016WITHCIVIL APPLICATION NO. 9364 OF 2018 IN WP/6567/2016YUVAK VIKAS SHIKSHAN PRASARAK MANDAL THROUGH ITSSECRETARY GANGADHAR DIGAMBARRAO MUNDHEVERSUSTHE UNION OF INDIA AND OTHERS***Advocate for the Petitioner : Mr. A. P. BhandariAdvocate for Respondent No. 5 : Mr. A. S. Londhe Advocate for Applicants in C.A. No. 9364/2018 : Mr. B. R. Kedar***CORAM:MANJUSHA DESHPANDE, J. PRONOUNCED ON:11 FEBRUARY, 2025 ***ORDER : 1.The petitioner is a Trust registered under the provisionsof Bombay Public Trust Act, 1950 and it is also registered under theSocieties Registration Act, 1860. The petitioner Trust was establishedin the year 1973 and has established various schools and colleges.Some of the schools and colleges are receiving grant-in-aid whilesome are running on non-grant basis. According to the petitionerTrust, the staff profile, salary and other aspects of each schools and
Legal Reasoning
-5- W.P.No.6567.201630 years. The intention of the legislature behind prescribing limitationis that there should be some end to the legal proceedings. 7.After making an application addressed to the AssistantProvident Fund Commissioner, Provident Fund Office, Aurangabaddated 20.11.2013, the petitioner has again filed one more applicationon 03.02.2015 as well as 17.03.2015. In all these applications, aprayer is made by the petitioner for cancellation of registration ofTrust under the EPF and MP Act and also to cancel the inquiry of theTrust as the EPF and MP Act is not applicable to the Trust. Alongwiththe applications, the petitioner has also cited various judgments onthe issue. 8.In the application dated 17.03.2015, a specific stand istaken that in view of Section 16 of the EPF and MP Act, the grant-in-aid schools and collages, cannot be made subject matter of theproceedings under the Act. In view of the fact that the GPF accountare opened and maintained under the relevant provisions of the Stateenactments under which grant-in-aid schools and collages are run.The petitioner Trust places reliance on the decision of this Court ingroup of writ petitions which were decided by this Court by commonjudgment dated 17.02.2017 in Writ Petition No. 391 of 1998 -6- W.P.No.6567.2016alongwith the connected writ petitions. Reliance is placed onparagraph No. 21 of the said judgment, which reads thus :“21. As a result, all such employees (except those whohave opted for pension) working in aided or unaidedschools are mandated to subscribe to the contributoryprovident fund under the Contributory Provident FundRules (Bombay). Consequentially, keeping in view that theState Government has administrative control even if aschool or college is not operated on grant-in-aid basis, Rule20(1) would make it mandatory for every employee, whohas not opted for pension, to subscribe to the C.P.F.notwithstanding whether he is working full time or parttime in an aided or unaided school.” 9.Relying on various judgments of the Hon’ble SupremeCourt as well as Hon’ble High Court, it was asserted by the petitionerthat the petitioner Trust would come under the exemption underSection 16 of the EPF and MP Act. The petitioner has also filedwritten notes of arguments alongwith the applications dated20.11.2013 and 17.03.2015.10.The applications of the petitioner Trust were keptpending for a very long time. The petitioner therefore, filed WritPetition No. 2180 of 2016 before this Court praying for directions todecide the application dated 20.11.2013. During the pendency of theWrit Petition No. 2180 of 2016, the respondents have decided theapplication by order dated 24.05.2016. The order dated 24.05.2016 is -7- W.P.No.6567.2016assailed in the present writ petition.11.The order dated 24.05.2016 is challenged by thepetitioner on the ground that the order itself clearly reflects non-application of mind by respondent No. 3 i.e. Assistant Provident FundCommissioner. Learned Advocate Mr. Bhandari has taken me throughthe order impugned wherein respondent No. 3 has observed thatSection 16(1) of the EPF and MP Act shall not apply to anyestablishment registered under the Co-operatives Societies Act, 1912or any other laws for time being in force in any State relating to Co-operative Societies employing less than 50 persons and workingwithout the aid of power. It is further observed that the establishmentof the petitioner has never been registered under the Co-operativeSocieties Act, 1912. Hence, the educational institutions has beenrightly covered under Section 1(3)(b) read with Section 2-A of theAct as specified at (VI) in the notification of Government of India,Ministry of Labour dated 19.02.1982 w.e.f. 01.06.1984 including itsbranches such as schools and colleges. 12.Therefore, in view of the observations made regardingthe applicability of Section 16(1) of the EPF and MP Act, theapplication of the petitioner has been disposed of for further -8- W.P.No.6567.2016determination of dues of all the branches of the establishment. It wasfurther directed that the AEO should visit the establishment andutilise the powers vested under Section 13 of the Act and submit hisreport on or before N.D.H.13.The petitioner is challenging the order dated 24.05.2016passed by the Assistant Provident Fund Commissioner, on the groundthat it was never case of the petitioner that it is covered under Section16(1)(a) of the Act. In the application filed by the petitioner, it hasbeen consistent stand of the petitioner that the petitioner Trust runsgrant-in-aid schools and colleges and the employees are governed byrelevant provisions of law and GPF accounts are opened under therelevant provisions. The petitioner has reproduced the observationsmade in the various reported judgments in the application whereinthe issues regarding functional integrity of the establishments havebeen explained. It was specifically mentioned that the various ratioswhich were reproduced in the application were applicable to the caseof petitioner wherein it was held that the different units run atdifferent places and started at different dates cannot come under oneunit and considering that the GPF scheme is already made applicableto the school receiving grant-in-aid, the petitioner would be coveredunder the exemption under Section 16 of the EPF and MP Act. -9- W.P.No.6567.201614.Without application of mind and without taking intoconsideration the purport of the application, Respondent No. 3 haspassed an order thereby holding that Section 16(1)(a) is notapplicable to the establishment since it is not registered under the Co-operative Societies Act. It is the contention of the learned Advocatefor petitioner that it was never a claim of the petitioner that they areregistered under the Co-operative Societies Act. The petitioner hadcategorically stated that the employees of the school and college arealready registered under the GPF and Pension Scheme of the StateGovernment. Therefore, the EPF and MP Act was not applicable andthe exemption has been claimed by the petitioner. Section 16 of theEPF and MP Act is reproduced hereunder.16. Act not to apply to certain establishments.-[(1) This Act shall not apply—(a) to any establishment registered under the Co-operativeSocieties Act, 1912 (2 of 1912), or under any other law forthe time being in force in any State relating to co-operativesocieties, employing less than fifty persons and workingwithout the aid of power; or(b) to any other establishment belonging to or under thecontrol of the Central Government or a State Governmentand whose employees are entitled to the benefit ofcontributory provident fund or old age pension inaccordance with any scheme or rule framed by the CentralGovernment or the State Government governing suchbenefits; or -10- W.P.No.6567.2016(c) to any other establishment set up under any Central,Provincial or State Act and whose employees are entitled tothe benefits of contributory provident fund or old agepension in accordance with any scheme or rule framedunder that Act governing such benefits; [(2) If the Central Government is of opinion that havingregard to the financial position of any class of9[establishments] or other circumstances of the case, it isnecessary or expedient so to do, it may, by notification inthe Official Gazette, and subject to such conditions as maybe specified in the notification, exempt 10 [whetherprospectively or retrospectively] that class of9[establishments] from the operation of this Act for suchperiod as may be specified in the notification.]15.Hence, there are two objections raised by the petitionerto the order impugned - (1) regarding belated invocation of powersby the respondent No. 3 which is at much belated stage; (2) on theground of total non-application of mind by Respondent No. 3 whilepassing the impugned order.16.The writ petition is opposed by the Respondents No. 2 to4 who are the Authorities under the EPF and MP Act. In the replyaffidavit filed by respondents No. 2 to 4, it is contended that in case offailure to deposit the legitimate dues of the workers, the EPFO underSection 7A of the Act initiates assessment and recovery action for thepurpose of compelling the employer to deposit the legitimate dues ofthe workers. Through a quasi-judicial process, the dues of the workers -11- W.P.No.6567.2016under Section 7-A of the Act are assessed and the employer is askedto deposit the amount. In case of the petitioner, it is submitted thatthe petitioner society is brought under the purview of the EPF and MPAct w.e.f. 01.06.1984. Respondent No. 3 has received the complaintfrom the employee of the establishment of the petitioner regardingnon-enrollment of EFF number. Therefore, the summons was issuedunder Section 7-A of the Act on 02.05.2013 calling upon thepetitioner to produce relevant records in order to verify the status ofmembership and assess the dues for the period 6/1984 to 4/2013.17.The petitioner had submitted an application challengingthe applicability of the Act. However, the Enforcement Officer hassubmitted a report on 10.02.2015 stating that the permission to runthe various schools and colleges is granted to the ‘society’. Thus, it isestablished that the school and colleges cannot come into existenceunless and until there is Society governing it. Therefore, the Societywas allotted the code number for the implementation of the Act.Thus, the allotment is to the Society and not the Trust. It is submittedthat Section 16(1)(b) of the Act grants exemption to theestablishment set up under the Central or State Act whose employeesare entitled for the benefits of the Contributory Provident Fund or oldage pension in accordance with any scheme or rule framed under that -12- W.P.No.6567.2016governing Act.18.Since the school and colleges run by the petitioner are ofnon grant-in-aid basis, therefore the Act is made applicable to theTrust. It is stated that the order has been passed by respondent No. 3after affording the opportunity of hearing to the petitioner. TheEnforcement Officer in his report dated 10.02.2015 had answered allthe points raised by the petitioner. The said report was handed overto the petitioner. It is further stated that in order to prolong theproceedings, the petitioner is indulging in litigation. Hence, therespondents No. 2 to 4 prayed that the writ petition be dismissed andthe interim relief granted should be vacated.19.Respondent No. 5 who is the complainant has also filedan affidavit. It is contended by learned Advocate Mr. Lodha appearingfor respondent No. 5 that though the Society is making deductionsfrom the salary under the garb of PF, when he made an applicationfor withdrawal of an amount from his Account No. 82627 which wasprovided by the Trust, the respondent No. 3 intimated him orallyregarding non-availability of any PF account. Thereafter, he hadapplied under the Right to Information Act to the Office of respondentNo. 3 vide application dated 18.11.2010. From the information -13- W.P.No.6567.2016received under the Right to Information Act, it was disclosed that theD.Ed. College of the petitioner was allotted PF Account No. 82627. Athis instance, inquiry was initiated against the petitioner Society andthe petitioner was directed to deposit the arrears of of payment of Rs.8,99,861/- as per the powers conferred under Section 7-A of the EPFand MP Act upon the respondent No. 3. It is his contention thatduring the inquiry, the Enforcement Officer had filed his report on10.02.2015 recommending that the Society has to be allotted oneuniform PF Account Number since all the units are run by the one andthe same Society. It would be covered under uniform PF AccountNumber. It is the contention of the respondent No. 5 that in view ofthe inquiry which is conducted by the Enforcement Officer, there is nosubstance in the application made by the petitioner. Hence, the writpetition should be dismissed by imposing heavy costs on thepetitioner.20.One Civil Application bearing No. 9364 of 2018, is filedby the employees of the petitioner Trust who have filed theintervention application during the pendency of the present writpetition. It is their contention that they were working as Peon in theestablishment of petitioner and they have not received the amount ofprovident fund till date. Though they have made several requests to -14- W.P.No.6567.2016respondent No. 1 for release of their PF amount in their favour,respondent No. 1 has not responded to them. Therefore, they havefiled an application seeking directions from the Officer ofRespondents No. 3 and 4 requesting to disburse the amount of theirprovident fund. When they have made such request, they wereinformed that this Hon’ble Court has granted stay to the proceedingsin Writ Petition No. 6567 of 2016. Therefore, the inquiry underSection 7-A of the EPF and MP Act which was in progress has beenkept in abeyance till the disposal of the writ petition due to which therequest of the applicant for disbursal of the amount of his providentfund is not being processed. On this background, the applicants haveapproached this Court with an intervention application.21.I have heard the respective parties. Though the petitionerhas raised various issues on the merits of the matter, however, upongoing through the order impugned which is a very cryptic order, I donot find it necessary to go into the various issues raised by thepetitioner. The order impugned does not reflect that the respondentNo. 3 has given any finding on the issues raised by the petitioner inhis application / objection which was addressed to the respondent No.3 under Section 7-A of the EPF and MP Act. After going through theorder what transpires is that the order is an unreasoned order and it -15- W.P.No.6567.2016reflects total non-application of mind by the respondent No. 3. It wasa specific contention of the petitioner that they are running variousschools and colleges amongst which some of the schools and collegesare grant-in-aid who are governed by the GPF scheme. Therefore,they are exempted under Section 16(1)(b) of the EPF and MP Act.However, while passing the order, respondent No. 3, very casuallyand without any application of his mind and in a mechanical manner,has passed an order referring to Section 16(1)(a) of the EPF and MPAct whereby an establishment registered under the Co-operativeSocieties Act, 1912 is exempted from the provisions of the EPF andMP Act.22.It was never the case of the petitioner that theirestablishment is registered under the Co-operative Societies Act, 1912or any other laws for the time being in force, in any state relating tocooperation in Co-operative Societies Act. In all the three applicationsfiled by the petitioner, the consistent stand of the petitioner is that thepetitioner is a Society registered under the Bombay Public Trust Act,1950 and Societies Registration Act, 1860 and it was never contentionor claim of the petitioner that they are claiming exemption underSection 16(1)(a) of the EPF and MP Act. Yet the application of thepetitioner is rejected on the ground not raised or claimed by the -16- W.P.No.6567.2016petitioner, this reflects the casual and cavalier approach of therespondent No. 3. The respondent No. 3 has committed an error inapplying Section 16(1)(a) instead of Section 16(1)(b) as claimed bythe petitioner to reject the application of the petitioner.23.Although the petitioner has raised various issues in hisapplication dated 20.11.2013, and in subsequent applications as wellas in written submissions, they have also cited various case laws insupport of issues raised by them, cryptic order is passed byrespondent No. 3 without giving any reason or taking into account thevarious grounds raised by the petitioner, such order is not capable ofbeing sustained in the eye of law since it cannot be termed as areasoned order by any stretch. The respondent No. 3 has neitherrecorded any findings nor passed a reasoned order, in view of thesame, the order needs to be interfered with. Hence, the order passedby the Assistant Provident Fund Commissioner dated 24.05.2016 isquashed and set aside.24.The matter is remanded back to the Respondent No. 3 i.e.Assistant Provident Fund Commissioner, to decide the application ofthe petitioner afresh after taking into consideration all the issuesraised by the petitioner in the application and the applicable case lawscited in the application by passing a reasoned order, after granting
Arguments
-2- W.P.No.6567.2016college is independently maintained. The majority of the schools andcolleges run by the petitioner has a strength of less than twenty (20)employees. 2.It is the contention of the learned Advocate for thepetitioner Mr. Bhandari that the petitioner Trust was never subjectedto the application of provisions of the Employees Provident Fund andMiscellaneous Provisions Act, 1952 (hereinafter referred to as “EPFand MP Act” for short), A notification was issued in the year 1982under the provisions of the EPF and MP Act thereby bringing theschools and colleges within the purview of application of the EPF andMP Act. It is his contention that there is no functional integritybetween schools and colleges of the Trust, each establishment isindependent by itself. 3.In one of such establishment of the petitioner i.e. D.Ed.College, an inquiry under Section 7-A of the EPF and MP Act wasinitiated and without assigning any reason and referring to thealleged report prepared by the respondent No. 4, the petitioner Trustwas allotted Registration Number MH/AB/84324. On the basis of thesaid report dated 06.06.2012 given by the Enforcement Officer, theTrust is registered on 12.06.2012. It is his contention that before the -3- W.P.No.6567.2016said registration, neither any copy is made available to the petitionernor any opportunity of hearing is granted. All of a sudden, a summonswas served on the petitioner on 02.05.2013 communicating that aninquiry under Section 7-A of the EPF and MP Act was initiated againstthe petitioner and summons for such inquiry has been issued callingupon the petitioner to remain present. 4.Though the D.Ed. College of the petitioner was madeliable to pay certain amount and that was a matter of challengebefore this Court in independent proceeding. During suchproceedings, the petitioner Trust got knowledge about the fact thatthe entire Trust is registered by the Authorities. Therefore, thepetitioner has filed an application on 20.11.2013 raising a disputeunder Section 7-A of the EPF and MP Act and bringing to the notice ofthe Authorities various objections to the registration of the Trust.5.In the said application, the petitioner has requested forcancellation of very applicability of the EPF and MP Act to thepetitioner Trust. According to the petitioner, before granting theregistration number or granting account number, the satisfactionshould have been recorded about the applicability of the EPF and MPAct. It was contended in the application that the Trust cannot be -4- W.P.No.6567.2016termed as an establishment under the EPF and MP Act. It is submittedin the application that the inquiry under Section 7-A of the EPF andMP Act was initiated against the D.Ed. Collage for a period from24.09.2007 to 2011 and a report came to be prepared in the month ofJune 2012 by the Enforcement Officer. Without referring to the saidreport and not assigning any reason, the Trust has allottedregistration number. Before granting such registration number, thecopy of the said report was not furnished to the Trust and the Trustwas never subjected to any proceedings under the EPF and MP Act.6.A notice dated 02.05.2013 was issued to the Trustinitiating the inquiry under Section 7-A- of the EPF and MP Act andtreating the whole Trust as one establishment, calling upon them tofurnish the details of various schools and collages, which are run bythe Trust. A belated demand is made in respect of record of schools ofthe Trust from the year 1984 onwards. The inquiry initiated in theyear 2013 demanding the documents from the year 1984 is beyondlimitation and is not maintainable after such a long gap of time. Theaction under the provision of the EPF and MP Act / Statute arerequired to be taken within a reasonable time. In the present case, theaction is not taken within a reasonable time. Therefore, there is a barof estoppel by conduct. An action or inquiry cannot be initiated after
Decision
-17- W.P.No.6567.2016opportunity of being heard to the interested parties. 25.The exercise of deciding the application of the petitionershall be concluded preferably within a period of four (4) months fromthe date of receipt of this order. 26.Hence, writ petition is partly allowed and disposed of inabove terms. In view of the disposal of the writ petition, the pendingcivil application also stands disposed of. [MANJUSHA DESHPANDE, J.] Omkar Joshi