CoramThe Honourable Mr v. The Assistant Provident Fund Commissioner

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 22-1-2007CoramThe Honourable Mr.Justice P.SATHASIVAMandThe Honourable Mr.Justice N.PAUL VASANTHAKUMARW.A.No.581 of 2002N.E.P.C. Textiles Ltd.,rep.by its Director,SF-256, Kannampalayam Post,Trichy Road,Coimbatore - 641 402....Appellant/PetitionerVs.The Assistant Provident Fund Commissioner,Office of the Regional Provident Fund Commissioner,Bhavishya Nidhi Bhawan,Post Box No.3875,Dr.Balasundaram Road,Coimbatore - 641 018....Respondent/RespondentThis Writ Appeal has been filed under Clause 15 of LettersPatent against the order of the learned single Judge in W.P.No.2621of 1997 dated 10.12.2001.presented to this Court under article 226of the Constitution of India to issue a writ of certiorari callingfor the records of the respondent in its order No.D6/TN/CBE/ENF/21376/TPR/III/97 dated 14.02.97 quash the sameFor Appellant:Mr.R.ParthibanFor Respondent:Ms.V.J.LathaJUDGMENTN. PAUL VASANTHAKUMAR, J.This writ appeal is filed against the order made inW.P.No.2621 of 1997 dated 10.12.2001 declining to interfere withthe proceedings of the respondent dated 14.2.1997.2.The brief facts necessary for disposal of this writ appeal areas follows. https://hcservices.ecourts.gov.in/hcservices/ (a)Appellant is a Textile Mill, engaged in the manufactureof cotton yarn. The Mill was originally owned by M/s.BharatTextiles, which was a partnership firm and it was taken over by thepetitioner Mill with effect from 14.2.1994. According to theappellant Mill, at the time of taking over, the Mill had only 3000spindles and after that the appellant added another 3000 spindlesin the same unit and established a new unit known as Unit-II withspindleage of 18,000.(b)At the time of taking over, eight employees were employedin the Bharat Textiles and they were absorbed by the appellant Milland in respect of them, contribution under the Employees ProvidentFund and Miscellaneous Provisions Act were made by the appellantMill. After establishment of Unit-II, production started fromApril, 1995 and the appellant Mill employed number of apprenticesover a period of time and according to the appellant, the saidapprentices were engaged as per the standing orders.(c)The respondent, by proceeding dated 19.7.1996 issued anotice stating that the appellant had failed to extend the benefitsof the Employees Provident Fund to a large number of employeesincluding the casual/contract/ temporary employees and thereforethe petitioner was directed to appear for an enquiry with allrecords. On 1.10.1996, the appellant submitted a representationand stated that all the persons engaged were only apprentices underthe standing orders of the Mill and they were being paid stipendduring the training period as per the scheme and apprentices areexcluded from the purview of the definition of "employees" underthe Employees Provident Fund and Miscellaneous Provisions Act, 1952and therefore the question of paying contribution towards EmployeesProvident Fund in respect of the said apprentices does not arise.(d)An enquiry was conducted on 1.10.1996 and the appellantproduced copy of the documents including the certified standingorders and thereafter by letter dated 11.12.1996 the respondentobserved that 75% of the establishment's total work force compriseof apprentices and therefore they should be considered as'Employees' under the Act with a direction to the appellant toenroll all the apprentices and extent the benefit of the Act forthem. The respondent also stated that ESI contributions werededucted in respect of the apprentices and therefore they are boundto be given EPF benefit also.(e)According to the appellant, from December, 1996, theprovident fund contribution is being paid and from October, 1994 toApril, 1995, the appellant is not liable to pay provident fundcontribution.(f)By the impugned order dated 14.2.1997, the appellant wasdirected to enroll all the apprentices under ESI Scheme and theappellant was directed to pay a sum of Rs.8,30,322.85 within aperiod of 15 days. The said order was challenged by the appellanton the ground that the 'apprentice' is not an 'employee' within the https://hcservices.ecourts.gov.in/hcservices/ meaning of the Act and they are excluded from the definition ofemployee and no contribution is payable in respect of theapprentices. It is also stated that merely because the apprenticesare covered under the ESI Act, the management cannot be compelledto pay contribution to the Provident Fund.3.The respondent has filed counter affidavit wherein it isstated that the appellant is employing several persons under thename and style of 'apprentices' only to avoid the statutoryliability and more than 75% of the labour force is treated asapprentices by the appellant Mill. It is stated that after issuingnotice and receiving explanation, an enquiry was conducted andduring the enquiry, the wage register, attendance register, etc.were gone into by the respondents and a factual finding was arrivedat and thereafter only the impugned order was passed. It is alsostated in the counter affidavit that after issuance of notice, onlythe certified standing order was ratified on 20.9.1996 and theperiod for which the enquiry was conducted, there was no certifiedstanding order. It is further submitted that on scrutiny ofrecords, inspection of the premises and after enquiry, it was foundthat the respondent had engaged more number of apprentices than theregular employees and the apprentices are doing regular work of theestablishment and they were not learners and no period is specifiedfor the apprentices. It is further elaborated that out of the 123employees in the year 1995, 80 were shown as apprentices; and outof the 247 employees in the year 1996, 177 were shown asapprentices. It is also stated that the so called apprentices werepaid wages for the work and the payment were directly linked to thenumber of days they attended work and therefore the apprentices aredirectly contributing to the production of the establishment andare not learners.4.On consideration of the rival contentions, the learnedsingle Judge dismissed the writ petition on 10.12.2001 taking noteof the stand taken by the appellant by letter dated 27.12.1996, inwhich the appellant requested the respondent to grant one yeargrace period from May, 1995 to April, 1996 for paying thecontribution of the Provident Fund. The said letter clearlyestablishes the admission of the liability of the appellant to paycontribution towards Provident Fund.5.The learned counsel for the appellant submitted thatmerely because the impugned order was passed by the respondentsolely on the ground that the appellant remitted ESI contributionto the apprentices and the apprentices having been exempted undersection 2(f) of the Employees Provident Fund and MiscellaneousProvisions Act, 1952, and they having been engaged under thecertified standing orders, the respondent has no jurisdiction todirect the appellant to remit the contribution towards EmployeesProvident Fund in respect of the apprentices. In support of hiscontention, the learned counsel cited the decision of theHonourable Supreme Court reported in (2006) 2 SCC 381 (RegionalProvident Fund Commissioner, Mangalore v. Central Arecanut & Coca https://hcservices.ecourts.gov.in/hcservices/ Marketing and Processing Co-op. Ltd., Mangalore).6.The learned counsel for the respondent on the other handsubmitted that the appellant is evading payment of Provident Fundcontribution to the workmen on the guise of having engagedapprentices for the regular work and a factual finding is given bythe respondent after perusal of the wage register, attendanceregister, etc. to the effect that the term 'apprentice' is usedinstead of 'workmen' only to defeat the provisions of the Act. Thelearned counsel further argued that the fact finding authority hascome to the conclusion that more than 75% of the works in theappellant Mill are being carried out by the so called apprenticesand therefore they cannot be treated as trainees/learners and theyare paid regular wages as per the number of days of theiremployment and the same cannot be treated as stipend.7.We have considered the rival submissions made by thelearned counsel for the appellant as well as the learned counselfor the respondent in the light of the pleadings as well as theorder of the learned single Judge dated 10.12.2001.8.Admittedly the appellant is paying contribution inrespect of the so called apprentices towards Employees ProvidentFund from May, 1996, and requested the respondent on 27.12.1996 togive one year grace period for the payment of contribution towardsProvident Fund from May 1995 to April, 1996. The said standclearly establishes the factual aspect that the appellant has notengaged apprentices and they are treated as regular workmen. If atall the contention of the appellant is to be accepted that theappellant is engaging only apprentices and they shall not betreated as employees, the same should be the stand throughout. Onthe contrary, one year grace period alone was sought for and thesame was rejected. There is no basis to claim one year graceperiod by the appellant as it is factually found by the respondentin the impugned order after perusing the records and after hearingthe representative of the appellant Mill on 12.2.1997.9.A categorical finding is given by the respondent afterperusing the records that a modern textile mill like the appellantestablishment cannot run solely on the strength of the apprenticesalone. Hence the respondent was of the view that the workmen inquestion were the actual employees of the appellant establishmentand should be enrolled to the Provident Fund Scheme right from thedate of their eligibility. The respondent also perused the wageregister and attendance register and found that the persons inquestion were paid the wages for the actual days of theiremployment and not paid any stipend as contended by the appellant.10.The decision cited by the learned counsel for theappellant reported in (2006) 2 SCC 381 (Regional Provident FundCommissioner, Mangalore v. Central Arecanut & Coca Marketing andProcessing Co-op. Ltd., Mangalore) will not help the appellant asfactually the respondent has proved that actually the appellant hasnot engaged apprentices and they are treated as regular employees https://hcservices.ecourts.gov.in/hcservices/ and wages are paid for actual days of their employment and only tocircumvent the statutory liability the appellant Mill has claimedthat the persons are engaged as apprentices and not as regularemployees. If really the appellant has not employed the persons asregular employees and not paid salary and paying only stipend,definitely appellant is entitled to get the benefits under section2(f) of the Employees Provident Fund and Miscellaneous ProvisionsAct, 1952. Relying upon the documentary evidences, a categoricalfactual finding is given by the respondent that the said personsare not engaged as apprentices, but as workmen. Hence the saiddecision cannot he held applicable to the facts of this case.11.The respondent being a statutory authority, exercisedpowers conferred on him under section 7(f) of the EmployeesProvident Fund and Miscellaneous Provisions Act, 1952, andfactually found that the appellant is liable to pay contribution tothe Employees Provident Fund and specifically found that thepersons engaged by the appellant are employees and not apprentices.There is no perversity in the said finding. The said order isupheld by the learned single Judge. There is no error apparent onthe face of the order of the respondent as well as the order of thelearned single Judge inviting interfere in the writ appeal.12.We do not find any merit in the writ appeal and the sameis dismissed. No costs.Vr/Sd/Asst.Registrar/true copy/Sub Asst.RegistrarToThe Assistant Provident Fund Commissioner,Office of the Regional Provident Fund Commissioner,Bhavishya Nidhi Bhawan,Post Box No.3875,Dr.Balasundaram Road,Coimbatore - 641 018.+ ONE CC TO MRS. V.J. Latha, Advocate sr no. 3887AKM(CO)NM(30.01.07)W.A.No.581 2002