Bharat Sanchar Nigam Ltd. v. NONE

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 16.06.2011CORAMTHE HONOURABLE MR.JUSTICE K.CHANDRUW.P.Nos.21520, 21782 and 21783 of 2010 andM.P.Nos.1,1,1 and 2 of 2010Bharat Sanchar Nigam Ltd.,Chennai Telephones,Rep. By its Chief General Manager,No.78, Purasawalkam High Road,Chennai – 600 010. ...Petitioner inW.P.No.21520/2010Bharat Sanchar Nigam Ltd.,Tamil Nadu Circle,Rep. By its Chief General Manager,No.80, Anna Salai, Chennai – 600 002....Petitioner inW.P.No.21782/2010Bharat Sanchar Nigam Ltd.,Southern Telecom Region (Maintenance)Rep. By its Chief General Manager,No.11, Link Road, Ganapathy Colony,Guindy, Chennai – 600 032. ...Petitioner inW.P.No.21783/2010Vs.1.Union of India, Rep. By Secretary to Government, Ministry of Labour and Employment, New Delhi.2.Employees' Provident Fund Organisation, Rep. By Regional Provident Fund Commissioner – II Employees' Provident Fund Organisation, 37, Royapettah High Road, Chennai – 600 014.3.The Regional Provident Fund Commissioner – II, Employees' Provident Fund Organisation, 37, Royapettah High Road, Chennai – 600 014....Respondents 1 to 3 in all the WPs4. N.J.P.Shilohu Rao5. P.Kannan6. K.Senthil Kumar7. V.S.Chokkalingam8.S.Jaikumar https://hcservices.ecourts.gov.in/hcservices/

9.K.Sandeep....Respondents 4 to 9 inW.P.No.21520/201010.Surinder Kumar11.S.S.Karthikeyan...Respondents 4 and 5 inW.P.Nos.21782 and 21783/2010 Writ Petitions preferred under Article 226 of theConstitution of India praying for the issue of a writ ofcertiorari, to call for the records in CC-II/TN/RO/CHN/50452,50267 and 50267/Regl/2010 respectively on the file of the thirdrespondent and quash the impugned order dated 01.09.2010 passedby the respondent therein.For Petitioners : Mr.Manoj Sreevatsan (in all Wps)For Respondents : Mr.P.V.Sudakar, CGSC for R1 (in all Wps) Mr.Vibhishanan for R2 and R3 (in all Wps) Ms.V.Srividya for R4,R5,R6 and R9 (in W.P.No.21520/2010) Mr.V.P.Raman for R4 and Ms.C.S.Monica for R5 in (W.P.Nos.21782 & 21783/2010)C O M M O N O R D E RIn these three writ petitions, the question that arisesfor consideration is whether the pre-induction training periodundergone by the petitioners in the Bharat Sanchar Nigam Limited(for short BSNL) is covered for the purpose of deductingsubscription towards Employees Provident Fund in terms of theEmployees Provident Fund and Miscellaneous Provisions Act, 1952(for short EPF Act)?2.When the third respondent had conducted an Adalat inrespect of provident fund matters during January, 2010, some ofthe contesting respondents who are working either as JuniorTelecom Officers or Junior Accounts Officers, made a grievancethat their training period was not counted for the purpose ofcoverage under the Act and therefore, they were aggrieved by thenon coverage. The said matter was taken for giving ruling by thethird respondent in terms of Paragraph 26B of the Employees'Provident Fund Scheme, 1952. Under the said paragraph, if anyquestion arises whether an employee is entitled or required tobecome or continue as a member or as regards the date from whichhe is so entitled or required to become a member, a decision ofthe Regional Commissioner was made final. But proviso to the said https://hcservices.ecourts.gov.in/hcservices/ paragraph made that no such decision can be rendered unless boththe employer and employee were heard on the said issue. 3.After taking notice on the complaint projected by thecontesting respondents, the Regional Provident Fund Commissionergave notice to the parties. After hearing both sides, he haspassed an order, dated 1.9.2010 and directed the contestingrespondents and other similarly placed employees working inM/s.Chennai Telephones (BSNL) to be made as members of EPF Schemeand other schemes from the date on which the individuals joinedor reported for their pre-induction training and that theircontribution should be regulated accordingly. The contribution inrespect of both employees and employer doe for that period was tobe worked out and remitted immediately. In case, no remittancewas done, the petitioner BSNL was informed that it will attractdamages and consequential interest on delayed payment. 4.When the first writ petition came up on 23.9.2010,notice was directed to be taken by the official respondents andprivate notices were ordered to the contesting privaterespondents. Thereafter, the BSNL filed subsequent two writpetitions. In that cases also, similar orders were made on thesame day. Pending the writ petition, it was recorded that for aperiod of two weeks, no coercive steps will be taken by thedepartment. Aggrieved by the said order, one of the contestingrespondent filed M.P.No.2 of 2010 seeking to vacate the interimdirection. On behalf of the PF Department, a counter affidavit,dated 4.1.2011 was also filed in all the three writ petitions.The fourth respondent in W.P.Nos.21782 and 21783 of 2010 by nameSurinder Kumar had filed a common counter affidavit, dated20.11.2010 together with supporting typed set of documents. 5.In normal circumstances, the petitioner will bedirected to file an appeal in terms of Section 7A to the EPFTribunal if an order is passed under paragraph 26B of the EPFScheme. But, however without going into the said controversy,this Court heard the matters on merits. 6.The contention made by Mr.Mani Sreevatsan, learnedcounsel appearing for the petitioner was that pre-inductiontraining given to persons cannot be said to be coming within theterm Section 2(f). The said person is not employed for any wagesand for doing any kind of work manually or otherwise and that healso cannot be described as an apprentice. He also submitted thatthe JTOs and JAOs were trained in any one of their trainingcenters. They never made to perform any duty on site. Even thework done on site by the trainees are purely for the purpose ofequipping such trainees with necessary skills to enable them toclear the tests that are conducted at the end of the training tomake them fit for appointment as JTOs or JAOs and that the samecannot be called as duty. The stipend paid to them cannot beequated with the wages or salary of regular employees and it isonly for personal maintenance of the trainees. It is not acompensation for any productive work done for their employer. https://hcservices.ecourts.gov.in/hcservices/ They will have no lien over the post for which they had applied.In case they failed in the test at the end of the training, theywill be straight-away discharged. The training programme isclearly covered by the codified guidelines. The authorities didnot take note of the judgment of the Supreme Court in EmployeesState Insurance Corporation Vs. The Tata Engineering andLocomotive Company Ltd. reported in (1975) 2 SCC 835.7.Controverting the said submission, Mr.V.P.Raman,learned counsel appearing for the fourth respondent inW.P.Nos.21782 and 21783 of 2010 submitted that the contestingrespondents were recruited in terms of the recruitment rules.They were provided pre-induction training for a period from16.2.2004 to 23.05.2004. The training was under the control andsupervision of the Tamil Nadu Circle of BSNL. After completion ofthe training, they were directed to be posed in the SouthernTelecom Region. They had also executed a bond and that medicalfitness was also obtained from them. The pre-induction trainingwas conducted in three phases. The EPF contribution was paid forthe second and third phases. The so-called stipend paid to themwas linked with their pay scales. For the purpose of EPF underthe EPF Scheme, when it was extended to the contestingrespondent, joint undertakings between the petitioner BSNL andthe contesting respondents were also executed. In thatundertaking, it was jointly agreed that the contribution will bepaid from the date of joining the pre-induction training period.It is also stated that the contesting respondents are employeeswithin a meaning of Section 2(f) of the EPF Act and they are notapprentices in terms of the Apprentice Act, 1961. Since they wererecruited directly as employees of BSNL and only directed toundergo training for the purpose of later posting, that periodcannot be diverted from the period which came subsequent to theregular posting. 8.It was further stated that FR 9(6)(b)(2) clear statesthat the period of training will be treated as duty for thepurpose of promotion, fixing increment, eligibility fordepartmental examination. It was further stated that the BSNLEmployees' Gratuity Trust Rules provides for qualifying service.The definition of "qualifying service" as found in Rule 1(vii)reads as follows:"Qualifying service" means the un-interruptedservice rendered in the Company after completionof 18 years of age, excluding period of servicerendered as apprentice or as casual but includesthe period of training followed by regularappointment in the case of trainees. The periodwill also include service which was uninterruptedby authorized leave and cessation of work not dueto any fault of the employee concerned."In the context of the same, it was argued that there is no gainsaying that the pre-induction training cannot be considered forthe purpose of subscription of EPF Act. https://hcservices.ecourts.gov.in/hcservices/

9.Since the petitioners have referred to the judgment ofthe Supreme Court in Tata Engineering and Locomotive CompanyLtd. case (cited supra) in support of their contentions as foundin the affidavit, it is necessary to refer to the said judgment.That case arose out of Employees State Insurance Act (for shortESI Act). In the ESI Act, the definition of the term "employee"is found under Section 2(9). The Supreme Court has held thatwhile the legislature has competence to enlarge the definition ofthe term "employee" even to include the apprentice, in the caseof the ESI Act, the legislature did not make any amendment toinclude the term "apprentice" within a meaning of Section 2(9).The Supreme Court also took note of the fact that the term"workman" found under the Industrial Disputes Act, 1947 (forshort ID Act) was cautiously worded and specifically included'apprentices' also to come within the term under Section 2(s),but did not choose to do so in terms of Section 2(9) of the ESIAct. Therefore, the term "employee" under Section 2(9) will notinclude the apprentice. In paragraphs 8,10 and 11, the SupremeCourt had observed as follows:"8.Again we find that where the Legislature intendsto include apprentice in the definition of a workerit has expressly done so. For example, theIndustrial Disputes Act, 1947, which is a piece ofbeneficial labour welfare legislation ofconsiderable amplitude defines “workman” underSection 2(s) of that Act and includes apprentice inexpress terms It is significant that although thelegislature was aware of this definition underSection 2(s) under the Industrial Disputes Act,1947, the very following year while passing theEmployees’ State Insurance Act, 1948, it did notchoose to include apprentice while defining the word“employee” under Section 2(9) of the Employees’State Insurance Act, 1948. Such a deliberateomission on the part of the Legislature can be onlyattributed to the well-known concept ofapprenticeship which the Legislature assumed andtook note of for the purpose of the Act. This is notto say that if the Legislature intended it could nothave enlarged the definition of the word “employee”even to include the “apprentice” but the Legislaturedid not choose to do so.10.We may, therefore, turn to the definition of“employee” under Section 2(9) of the Act. So far asit is material, Section 2(9) reads as follows:“ ‘Employee’ means any person employed forwages in or in connection with the work of afactory or establishment to which this Actapplies and—(i) who is directly employed by the principalemployer on any work of, or incidental or https://hcservices.ecourts.gov.in/hcservices/ preliminary to or connected with the work of,the factory or establishment, whether such workis done by the employee in the factory orestablishment or elsewhere....”It is clear that in order to be an employee a personmust be employed for wages in the work of a factoryor establishment or in connection with the work of afactory or establishment. Wages is defined underSection 2(22) and“means all remuneration paid or payable in cash toan employee, if the terms of the contract ofemployment, express or implied, were fulfilled andincludes any payment to an employee in respect ofany period of authorised leave, lock-out, strikewhich is not illegal or layoff and other additionalremuneration, if any, paid at intervals notexceeding two months, but does not include....”11.From the terms of the agreement it is clear thatapprentices are mere trainees for a particularperiod for a distinct purpose and the employer isnot bound to employ them in their works after theperiod of training is over. During theapprenticeship they cannot be said to be employed inthe work of the company or in connection with thework of the company. That would have been so if theywere employed in a regular way by the company. Onthe other hand the purpose of the engagement underthe particular scheme is only to offer trainingunder certain terms and conditions. Besides, theapprentices are not given wages within the meaningof that term under the Act. If they were regularemployees under the Act, they would have beenentitled to additional remuneration such as dailyallowance and other allowances which are availableto the regular employees. We are, therefore, unableto hold that an apprentice is an employee within themeaning of Section 2(9) of the Act.(Emphasis added)10.The said judgment was pronounced on 08.10.1975.Subsequent to the said judgment, the Parliament had amendedSection 2(9) of the ESI Act by Central Act 29/1989 with effectform 20.10.1989. In that amendment, it was stated that allapprentices, except the apprentices engaged under the ApprenticeAct, 1961, are covered by the provisions of the Act. Therefore,the said judgment can have no relevance for coverages after20.10.1989. Similarly, the definition of the term "employee"under Section 2(f) of the EPF Act was also amended. Under Section2(f)(ii), the term "employee" includes person engaged as anapprentice but not being an apprentice engaged under theApprentices Act, 1961. The amendment was made by the Central Act33/1988 with effect from 1.8.1988. Therefore, after these two https://hcservices.ecourts.gov.in/hcservices/ amendments, the definition of the terms "employee" found in theESI Act and EPF Act are in paramateria with each other. Evenassuming that in the traditional sense, the contestingrespondents during the period of pre-induction training cannot bedescribed as employees by the extended definition, but as per thedefinition of the term "employee", they are also covered. Thatwas why the Supreme Court in Tata Engineering and LocomotiveCompany Ltd. case (cited supra) had stated that the legislaturecan always enlarge the definition of the term "employee" and caninclude "apprentices" also under the definition. 11.The definition being wide enough to cover the pre-induction training. It must also be noted that among the trainingperiod, for the second and third phases, the petitioners BSNLcovered the contesting respondents for the purpose of the Act andthat there is no reason why they should not be covered even forthe first phase of training. As rightly contended byMr.V.P.Raman, the fundamental rule took note of the traininggiven before the regular appointment as "duty". In the jointagreement, the BSNL and the employees have agreed to cover thetraining period for the purpose of EPF. 12.The gratuity rule also provides for taking note of thesaid period as qualifying service for the purpose of grantinggratuity. Therefore, it is too late for the BSNL to contend thatthe pre-induction training cannot be considered for the purposeof EPF Act. This Court vide its judgment in Sree MangayarkarasiMills (P) Ltd. Vs. The Assistant Provident Fund Commissionerreported in 2011 (1) CTC 851 has held that an apprentice, who isnot apprentice under the Apprentices Act, is also covered by theEPF Act. 13.Therefore, there is no case made out to interfere withthe impugned orders. Hence all the three writ petitions willstand dismissed. However, there will be no order as to costs.Consequently, connected miscellaneous petitions stand closed.vvkSd/-Asst. Registrar//True Copy//Sub Asst. RegistrarTo1.The Secretary to Government, Union of India, Ministry of Labour and Employment, New Delhi. https://hcservices.ecourts.gov.in/hcservices/

2.The Regional Provident Fund Commissioner – II Employees' Provident Fund Organisation, Employees' Provident Fund Organisation, 37, Royapettah High Road, Chennai – 600 014.3.The Regional Provident Fund Commissioner – II, Employees' Provident Fund Organisation, 37, Royapettah High Road, Chennai – 600 014.+ 1 cc to Mr. V.P. Raman, Advocate SR No.35047+ 1 cc to M/s. C.S. Monica, Advocate SR No.34888+ 3 ccs to Mr. V. Vibhishanan, Advocate SR No.34658, 34657, 34656+ 3 ccs to Mr. Manoj Srivatsan, Advocate SR No.34554,34554,34553TS(CO)SR/23.6.2011ORDER INW.P.Nos.21520, 21782 and 21783 of 2010