M/S.VASANTHAM AGENCIES (P) LTD. v. Union of India

BY ADVS. Mr.C.DINESH, CGC FOR R4 TO R6 SMT.NITA.N.S. FOR R2 & R3 SRI. S. MANU, DSGI FOR R1 THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON

04.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P (C) No.19765/2019 -2- J U D G M E N T The petitioner is a contractor who was awarded the work of ‘mechanized cleaning’ of the Railway Divisional Office, Thiruvananthapuram and the Changanassery Railway Station covered by Exts P.1 & P.2 tender notifications and Exts.P.3 & P.4 agreements. The petitioner has approached this court challenging Ext.P8 communication issued by the Chief Health Inspector, Divisional Office and Colony, Southern Railway, Thiruvananthapuram, informing the petitioner that the amount obtained by the petitioner / paid on behalf of the petitioner under 'PMPRPY Scheme' of the Central Government (Employers’ contribution to Employees Provident Fund) will be deducted from monthly running bills submitted by the petitioner from January 2019 onwards.

The learned counsel for the petitioner would submit that the action of the authorities in proposing to deduct the amount of benefit received by the petitioner under 'PMPRPY Scheme' from the monthly running bills submitted by the petitioner in respect of works covered by Exts.P3 and P4 agreements is absolutely illegal and without any basis. It is submitted with reference to Ext.P5 [details of the 'PMPRPY Scheme'] that the scheme envisages the payment by the Government of India of the amount of contribution payable by the employer to the Employees Provident Fund on account of new employment created by an employer for a period upto three W.P (C) No.19765/2019 -3- years from the commencement of the business/activity. It is submitted that the provisions of the 'PMPRPY Scheme' do not contemplate that the said amount shall be recovered from the petitioner on account of the fact that he is a contractor engaged by the Southern Railway. It is submitted that there is absolutely no provision in the tender documents or the agreements executed by the petitioner with the Southern Railway which would permit the Southern Railway to recover the amounts received/paid on behalf of the petitioner under the 'PMPRPY Scheme' from the running bills of the petitioner. The learned counsel for the petitioner had exhaustively referred to the terms of the tender as well as to the provisions of Exts.P3 and P4 agreements and the provisions of the 'PMPRPY Scheme' (Ext.P5) to support her contention that Ext.P8 is illegal and unsustainable in law. It is submitted that a benefit that is extended to an employer under the 'PMPRPY Scheme' cannot be unilaterally withdrawn by deducting the said amount from the petitioner's running bills. It is submitted that the petitioner is therefore, entitled to an order quashing Ext.P8 and for a direction to the authorities to pay the amounts due to the petitioner without considering any benefits received by the petitioner under the 'PMPRPY Scheme'.

The learned Standing Counsel appearing for the Southern Railway would contend that there is absolutely no illegality in Ext.P9. It is submitted that the 'PMPRPY Scheme' is a scheme providing for payment of amounts W.P (C) No.19765/2019 -4- payable by an employer to the Provident Fund Department (employer's contribution), provided the employer is eligible in terms of the provisions contained in the scheme. It is submitted that the petitioner does not dispute that it is eligible for the benefits of the 'PMPRPY Scheme'. It is submitted with reference to Exts.P1 and P2 tender documents and Exts.P3 and P4 agreements executed by the petitioner that the bid amount which was accepted by the Southern Railway includes the amount payable by the petitioner as contribution to the Provident Fund Scheme (Employer's contribution). It is submitted that after getting the benefits of 'PMPRPY Scheme', the petitioner cannot collect the amount of the employer's contribution from the Railway and, therefore, there is no illegality whatsoever attached to Ext.P8. I heard the learned standing counsel for the Provident Fund Department also.

Having heard the learned counsel for the petitioner, learned Standing counsel for the Southern Railway and learned Standing counsel for the Provident Fund Department, I am of the view that the petitioner has not made out any case for grant of relief. It is not disputed before me that the petitioner is enrolled under the 'PMPRPY Scheme' and has received benefits of the said scheme. Exhibit P1 and P2 tender documents relating to the works awarded to the petitioner contain the following clause as clause No.1 of the special conditions of the contract:- W.P (C) No.19765/2019 -5-

If the contractor is not eligible to remit the contribution towards EPF and ESI as per the act 13.16% for EPF 4.75 for ESI will be deducted in the running bill of every month based on the total minimum wages for labourers and and supervisors. Since EPF 13.16% and 4.75% for ESI in the total minimum wages for labourers and supervisors are included in the cost of work. The bonus amount is included in the contract value.

This is also carried forward into Ext.P3 agreement executed in respect of the work at Thiruvananthapuram Division. However, the said clause is not specifically carried into Ext.P4 agreement pertaining to the work at Changanassery, which is relatable to Ext.P2 tender document. However, nothing turns on this. Though the extracted clause in the tender document is not happily worded, it appears that the intention of the tendering authority was apparent. The only meaning that can be ascribed to the aforesaid clause in Exts.P1 and P2 is that if the contractor is not liable to remit contribution towards the EPF and ESI for any reason whatsoever, 13.16% towards EPF and

4.75% towards ESI will be deducted from every running bill as the amount offered to the contractor includes the amounts payable by the employer towards EPF and ESI contribution. When the petitioner admittedly gets the benefits of the 'PMPRPY’ Scheme [at least for the period during which the petitioner had obtained the benefit of the said scheme], the petitioner cannot be entitled to claim that amount from the railways. In other words the only meaning that can be ascribed to the aforesaid clause in Exts.P1 and P2 would be that if, for any reason, the contractor has no liability to pay any amount towards EPF contribution, whether it be on account of a benefit received by W.P (C) No.19765/2019 -6- the petitioner under Ext.P5 scheme or otherwise the amount of EPF contribution payable by the contractor (from out his own pocket) will be deducted from the running bills. Viewed in that manner, there is absolutely no illegality in Ext.P8 communication.

The writ petition fails, and it is accordingly dismissed. AMG Sd/- GOPINATH P. JUDGE W.P (C) No.19765/2019 -7- APPENDIX OF WP(C) 19765/2019 PETITIONER EXHIBITS EXHIBIT P1 EXHIBIT P2 EXHIBIT P3 EXHIBIT P4 A TRUE COPY OF THE TENDER NOTIFICATION FOR E-TENDER PUBLISHED IN THE WEBSITE OF THE FIFTH RESPONDENT FOR MECHANIZED CLEANING CONTRACT OF THE DIVISIONAL OFFICE, THIRUVANANTHAPURAM. A TRUE COPY OF THE TENDER NOTIFICATION FOR E-TENDER PUBLISHED IN THE WEBSITE BY THE FIFTH RESPONDENT FOR MECHANIZED CLEANING CONTRACT OF THE CHANGANASSERY RAILWAY STATION. A TRUE COPY OF THE AGREEMENT DATED 15.02.2019 EXECUTED BETWEEN THE PETITIONER AND THE SIXTH RESPONDENT FOR THE WORKS CONTRACT COVERED VIDE EXHIBIT P1 TO THE PERIOD COMMENCING FROM 01.12.2018 TO 30.11.2020. A TRUE COPY OF THE AGREEMENT DATED 04.02.2019 EXECUTED BETWEEN THE PETITIONER AND THE SIXTH RESPONDENT FOR THE WORKS COVERED VIDE EXHIBIT P2 FOR THE PERIOD COMMENCING FROM 01.12.2018 TO 30.11.2020.

EXHIBIT P5 A TRUE COPY OF THE GUIDELINES OF PMPRPY SCHEME PUBLISHED BY THE CENTRAL GOVERNMENT WITHOUT DATE. EXHIBIT P6 A TRUE COPY OF THE OFFICE MEMORANDUM DATED 12.04.2018 ISSUED BY THE FIRST RESPONDENT TO THE SECOND RESPONDENT. EXHIBIT P7 A TRUE COPY OF THE LETTER DATED 04.06.2019 ISSUED BY THE FIFTH RESPONDENT TO THE SIXTH RESPONDENT. EXHIBIT P8 A TRUE COPY OF THE LETTER DATED 01.07.2018 ISSUED BY FIFTH RESPONDENT TO THE PETITIONER. RESPONDENT EXHIBITS EXHIBIT R 5A TRUE COPY OF THE ESTIMATE FOR DIVISION OFFICE, THIRUVANANTHAPURAM RAILWAY STATION EXHIBIT R5 B TRUE COPY OF THE ESTIMATE FOR THE DIVISION OFFICE CHANGANACHERY RAILWAY STATION