IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 25080 of 2008(I)
1. K.RAJENDRAN, PROPRIETOR,
... Petitioner
Vs
1. ASSISTANT PROVIDENT FUND COMMISSIONER,
... Respondent
2. THE EMPLOYEES PROVIDENT FUND
For Petitioner :SRI.E.K.NANDAKUMAR
For Respondent :SRI.N.N.SUGUNAPALAN (SR.)
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :05/01/2009
O R D E R
S.SIRI JAGAN, J.
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W.P(C).No.25080 of 2008
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Dated this the 5th day of January, 2009
J U D G M E N T
The petitioner is a contractor engaged by M/s.Kovalam Hotels
Ltd., for certain work relating to horticulture and gardening on contract
basis. The petitioner employs 28 personnel in his establishment and
the petitioner is engaged in the business of rendering services of
supplying expert personnel and therefore, is liable to be covered under
Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
The petitioner submitted Ext.P5 application for coverage under the Act
and allotment of code number. However, by Exts.P7 and P8 orders, the
respondents have rejected the claim of the petitioner on the ground
that the petitioner being an exclusive contractor for M/s.Kovalam
Hotels Ltd., is not entitled to be alloted a separate code number and
the employees of the petitioner are liable to be covered under the code
number alloted to M/s.Kovalam Hotels Ltd. The petitioner is
challenging Exts.P7 and P8 and seeking the following reliefs:
“(i) call for the records leading to Exts.P7 and P8 orders and to
quash the same by the issue of a writ of certiorari;
(ii) issue a writ of mandamus or any other appropriate writ, order or
direction, directing the first respondent to allot a code number
in respect of the petitioner’s establishment in terms of Ext.P5
application submitted by the petitioner;
(iii) pass an ad-interim order directing the first respondent to allot a
code number in respect of the petitioner’s establishment Kairali
Constructions, pending disposal of the Writ Petition;
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2. A counter affidavit has been filed by the respondents, in
which they seek to sustain the impugned orders. According to them,
the petitioner being an exclusive contractor of M/s.Kovalam Hotels
Ltd., which is a covered establishment under the Employees’ Provident
Funds and Miscellaneous Provisions Act having a particular code
number, a separate code number cannot be allotted to the contractor-
employer, as his employees are covered already under the principal
employer. They also rely on Section 8A of the Employees’ Provident
Funds and Miscellaneous Provisions Act as also Paragraph 30 of the
Employees Provident Funds Scheme in support of their contentions.
3. I have heard the counsel on both sides.
4. I am of opinion that every employer liable to be covered
under the Employees’ Provident Funds and Miscellaneous Provisions Act
is entitled to be so covered separately under a separate code number.
Simply because such employer is doing contract work exclusively on
behalf of a principal employer, that does not disentitle the contractor-
employer from having his establishment covered under the Act
separately from the principal employer. The fact that the principal
employer is covered under the Act under a specific code number and
the contributions relating to the employees of the petitioner are also
recovered from the principal employer is no reason to reject the
request of the petitioner for separate coverage and allotment of
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separate code number. Neither Section 8A of the Employees’ Provident
Funds and Miscellaneous Provisions Act nor paragraph 30 of the
Scheme prohibits such separate coverage and allotment of code
number. Section 8A reads thus:
“8A. Recovery of moneys by employers and contractors.-
(1) The amount of contribution (that is to say the employer’s
contributions 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
any employee employed by or through a contractor may be recovered
bu 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.
(2) A contractor from whom the amounts mentioned in sub-
section (1) may be recovered in respect of any employee employed by
or through him, may recover from such employee the employee’s
contribution under any Scheme by deduction from the basic wages,
dearness allowance and retaining allowance (if any) payable to such
employee.
(3) Notwithstanding any contract to the contrary, no
contractor shall be entitled to deduct the employer’s contribution or
the charges referred to in sub-section (1) from the basic wages,
dearness allowance, and retaining allowance (if any) payable to an
employee employed by or through him or otherwise to recover such
contribution or charges from such employee.”
Paragraph 30 of the Employees’ Provident Funds Scheme, 1952,
reads thus:
“30. Payment of contributions.- (1) The employer shall, in
the first instance, pay both the contribution payable by himself (in this
Scheme referred to as the employer’s contribution) and also, on behalf
of the member employed by him directly or by or through a
contractor, the contribution payable by such member (in this Scheme
referred to as the member’s contribution).
(2) In respect of employees employed by or through a
w.p.c.25080/08 4
contractor, the contractor shall recover the contribution payable by
such employee (in the Scheme referred to as the member’s
contribution) and shall pay to the principal employer the amount of
member’s contribution so deducted together with an equal amount of
contribution (in this Scheme referred to as the employer’s
contribution) and also administrative charges.
(3) It shall be the responsibility of the principal employer to
pay both the contribution payable by himself in respect of the
employees directly employed by him and also in respect of the
employees employed by or through a contractor and also
administrative charges.”
These are provisions which enable the Provident Fund Organization to
recover contributions relating to contract employees in the first
instance from the principal employer. That is purely for the purpose
easy recovery of contributions instead of going after the contractor.
The primary liability to recover contributions from the contractor and
to pay the same to the Provident Fund Organization is cast on the
principal employer by the above provisions, with liberty to the
principal employer to recover such contributions paid by the principal
employer from the amounts due from the principal employer to the
contractor. That does not in any way stand in the way of the
contractor-employer claiming coverage under the Act and allotment of
separate code number. There is no provision of law anywhere in the
Act or in the Scheme which empowers the Provident Fund Organization
to refuse to allot separate code number to the contractor-employer for
the coverage of his employees. The fact that the petitioner employer
does contract work exclusively for one principal employer does not
w.p.c.25080/08 5
alter the situation in any manner. Whether the petitioner does contract
work for one principal employer or different principal employers, is not
a criterion to decide whether the contractor is entitled to be covered
under the Act and entitled to separate code number. In so far as the
establishment is one liable to be covered under the Act and the
petitioner is an “employer” as defined under the Employees’ Provident
Funds and Miscellaneous Provisions Act, he is entitled to have his
establishment and his employees covered under the Act separately.
That being so, the petitioner is entitled to be alloted a separate code
number on such coverage. Therefore Exts.P7 and P8 orders are totally
erroneous and they are hereby quashed. Accordingly, the respondents
are directed to cover the petitioner’s establishment and the employees
employed by the petitioner under a separate code number pursuant to
Ext.P5 application. Orders in this regard shall be passed within one
month from the date of receipt of a certified copy of this judgment.
The writ petition is allowed as above.
Sd/-
sdk+ S.SIRI JAGAN, JUDGE
///True copy///
P.A. to Judge
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