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Arora Construction vs Managing Director And Anr. on 6 July, 2007

Madhya Pradesh High Court
Arora Construction vs Managing Director And Anr. on 6 July, 2007
Equivalent citations: (2008) IILLJ 281 MP, 2007 (4) MPHT 347
Author: A Mishra
Bench: A Mishra, K Chauhan


ORDER

Arun Mishra, J.

1. This revision has been preferred under Section 19 of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 (for short ‘the Adhiniyam’) as against the award dated 15-3-2007 passed by M.P. Arbitration Tribunal in Reference Case No. 8/2005.

2. Facts in short are that M/s. Arora Constructions entered into an agreement with the respondents M.P. State Seed and Farm Development Corporation for construction of godown, processing cell and administrative block. The respondents deducted a sum of Rs. 1,44,982/- and made payment of remaining amount. The aforesaid amount was withheld in view of Clause 24 of the agreement. It was submitted that amount was withheld arbitrarily, hence prayer was made to refund the amount along with the interest. M.P. Seed and Farm Development Corporation was with the purview of Employees Provident Fund Scheme, 1952 as such the contractor was not liable to comply with the provision of the Employees Provident Fund Act and the Scheme, consequently it was prayed that amount be paid along with the interest @ 12% per annum.

3. The respondent contended that the contractor was not entitled to receive the amount of Rs. 1,44,982/- in view of Clause 24 of the agreement entered into between the parties. On every day more than 20 employees were employed, contract was given for a huge sum of Rs. 26,33,635/-. The period for completion was 8 months. In spite of employing more than 20 labours every day, compliance of provision of Employees Provident Fund Act was not made nor No Objection Certificate (for short ‘NOC’) from Commissioner, Employees Provident Fund was obtained as such the amount of Rs. 1,44,982/- was withheld. The Commissioner, EPF had been informed, still contractor had not filed the NOC from the Commissioner, EPF.

4. The Claims Tribunal has held that the contractor failed to comply with Clause 22 of the agreement, it was necessary for the contractor to get himself registered under the Contract Labour Regulations and Abolition Act, 1970. The Tribunal has further held that contractor had failed to produce the attendance register. Considering Clause 24 of the agreement the action of the respondents has been held to be proper. The contractor had failed to comply with Para 36 (b) of EPF Scheme, 1952. Recovery has been held to be valid considering the provisions of Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘Act of 1952’). It is permissible for the principal employer to withhold the amount. Contractor has been given liberty to obtain NOC from the Commissioner, EPF absolving it from the liability so as to claim the refund. Consequently, application filed under Section 7 of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 has been dismissed.

5. Ms. Shobha Menon, learned Sr. Counsel with Ms. S. Qureshi, appearing for appellant has submitted that the respondents could not have withheld the amount as no order has been passed under the Act of 1952. Determination has to be done by the Central Provident Fund Commissioner or its delegate as per Section 7 of the Act of 1952. It is also submitted that at no point of time petitioner had employed workmen/labours beyond 20 as such provisions of Act of 1952 were wholly inapplicable. Consequently, the order passed by the Tribunal be quashed.

6. We find an order passed by the Tribunal to be proper and in accordance with law. Section 8A of the Act of 1952 provides that amount of “contribution” and any charges for meeting the cost of administering the Fund paid or payable by an employer in respect of an employee employed by or through a contractor may be recovered by such employer from the contractor, either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor. Section 8A of the Act of 1952 reads thus:

8-A. Recovery of moneys by employers and contractors.- (1) The amount of contribution (that is to say the employer’s contribution as well as the employee’s contribution in pursuance of any Scheme and the employer’s contribution in pursuance of the Insurance Scheme) and any charges for meeting the cost of administering the Fund paid or payable by an employer in respect of an employee employed by or through a contractor may be recovered by such employer from the contractor, either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.

Thus, the respondents’ Corporation being a principal employer was empowered under Sub-section (1) of Section 8A of the Act of 1952 to recover from the contractor the amount of contribution payable under the Act of 1952. Clause 24 of the Agreement entered into between the parties is also clear, which provides that it was necessary for the contractor to comply with the Labour Act in force and Corporation shall have the right to deduct, from the money due to the contractor, any sum required or estimated to be required for making good the loss suffered by a worker or workers by reason of non-fulfilment of the conditions of the contract for the benefit of the workers. Thus, the amount which has been withheld is for the benefit of the workers. Prima facie it was necessary to make the contribution under the aforesaid Act.

Coming to the submission raised that the Competent Authority under Section 7(a) of the Act, has not determined the liability. It is clear that the respondent Corporation has asked the contractor to approach the Commissioner, Employees Provident Fund to obtain NOC so as to release the amount but for the reasons best known to the contractor, he has not chosen that course, that liberty has been given to the contractor by the Tribunal in the order. Once NOC is obtained from the Commissioner, EPF this amount has to be released. If it is held that contractor was not liable to make the deposit, amount has to be released by the respondents, otherwise it has to be kept in deposit by the respondents for the benefit of the employees to be dealt with in accordance with law and the provisions of the Act. In our opinion, such an amount can always be withheld in case contractor has failed to comply with the provisions of the Act. In case contractor disputes the liability, has to approach the concerned Authority under the Act of 1952 and to obtain NOC for releasing of the amount. The deduction has been made as per Section 8A of the Act of 1952 and terms of the agreement particularly Clause 24 of the agreement.

7. Coming to the submission that more than 20 employees/workmen were not employed at any point of time on a single day, suffice is to observe that before the Tribunal even the attendance registers were not produced by the contractor to show that on a single day for a period of 8 months more than 20 employees/workmen were not employed, thus it could not be said that amount has been wrongfully withheld by the respondents’ Corporation.

8. Resultantly, we find this revision to be meritless, it deserves to be dismissed. Consequently this revision is hereby dismissed.

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