JUDGMENT
P. Sathasivam, J.
1. N. Manickam, beedi manufacturing contractor, Achamangalam village, petitioner in W.P.No.3310 of 1998 has approached this Court to issue a writ of mandamus directing the first respondent/Assistant Provident Fund Commissioner, Salem-1, to receive the petition to implead him as a party in the proceedings No.TN/SL/ENF/21270/7-A KNG 1/97. Aggrieved by the proceedings of the very same officer, dated February 19, 1998, Jyoti Home Industries, Krishnagiri, have filed W.P. No.3553 of 1998 to quash the same on various grounds.
2. The case of the contractor in Writ Petition No.3310 of 1998 is briefly stated hereunder:
According to him, he is an independent beedi manufacturing contractor who obtained the raw materials from the third respondent and supply the same to the workers and on completion of the job work, he collected the finished products and gave it to the third; respondent. He is a contractor in so far as third respondent is concerned i.e., Jyoti Home Industries who are beedi manufacturing firm. The third respondent is duly registered under the Beedi and Cigar Workers (Conditions of Employment) Act, 1966, and also has a Central Excise Licence under the Central Excise Act and has manufacturing centres all over Karnataka and one at Krishnagiri in Tamil Nadu. The petitioner has taken out licences for carrying on their own activities of manufacture. Wages and other monetary benefits are paid to the rollers by the contractors. The petitioner herein has no individual provident fund code number to make any contributions towards, provident fund. In so far as Krishnagiri, is concerned, the particulars of the wages paid to the workers who are members to the provident fund are furnished to the third respondent periodically. The provident fund contributions, collected from these members are paid to the third respondent for depositing the same to the provident fund authorities. While so, he came to understand that in or around February, 1997, the second respondent in Krishnagiri visited the premises of the third respondent and collected certain records. Based on his inspection, the first respondent issued a notice on June 11, 1997 purporting to be the summons under Section 7-A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. On the basis of the reply sent, the matter was apparently dropped. In August, 1997, another communication, dated August 8/12, 1997, was received by the third respondent from the first respondent, alleging some violations of the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the Act). Another notice under Section 7-A of the Act was issued on December 19, 1997. On coming to understand that the first respondent is initiating proceedings against the third respondent on vague and untenable grounds, the petitioner along with 24 other contractors submitted a joint memorandum to the first respondent and also a petition to implead themselves as a party to the proceedings. The petitioner and others have been paying provident fund contributions and this fact was to be brought to the attention of the first respondent, particularly in the light of Section 30(2). However, strangely, the cover sent under registered post with acknowledgment due was returned by the first respondent with the endorsement “refused.” Any order made without hearing the petitioner and other contractors, will be no order at all in the eyes of law. The contractors such as the petitioner herein are necessary parties to the proceedings. In such circumstances, aggrieved by the action of the first respondent having no other effective remedy has filed the present writ petition.
3. On behalf of the respondents 1 and 2, Assistant Provident Fund Commissioner, Madras, has filed a counter-affidavit disputing various averments made by the petitioner. It is stated that the writ petition is not maintainable, since the Provident Funds Appellate Tribunal has been constituted with effect from July 1, 1997 and the petitioner has the remedy of filing appeal against the impugned order before the Appellate Tribunal. It is stated that the name of the excluded employees, a large number of home-workers are denied the benefit of social security by denying Provident Fund/ Employees Pension Scheme benefits. The employer has taken undue advantage and not enrolled all the eligible employees as provident fund subscribers and thereby the very purpose of the social security legislation has been defeated. This being the case, it was decided through an enquiry under Section 7-A of the Act that there should be no excluded employees in beedi workers presuming that a beedi worker at the most can roll beedies per month and the inquiry proceedings, dated February 19, 1998, was issued under Section 7-A of the Act assessing the dues payable by the employer in respect of such employees whose wages contributions are not paid for the period from March, 1996 to February, 1997. Aggrieved by the said proceedings, the employer namely, the third respondent herein filed Writ Petition No.3553 of 1998 before this Court. The petitioner is one of the contractors engaged by the establishment namely, Jyoti Home Industries, third respondent herein. The petitioner cannot be claimed as independent beedi manufacturing contractor. The petitioner is a dependent contractor for a principal employer. The third respondent supply raw materials to the contractors and in turn get rolled beedies. The contractor entirely depends on the third respondent for raw materials. Initially the enquiry was fixed on August 28, 1997 and adjourned to January 8, 1998. The same was preponed to January 6, 1998 on which date Sri C.H Narayana, advocate appeared on behalf of the employer. The enquiry was again adjourned to January 16, 1998. Thereafter, the same was adjourned to February 3, 1998. After closing the enquiry on February 3, 1998, the employer has instigated the contractors to make representation mainly for the purpose of delaying the issue. Since the
contractor kept silent for a long period namely at the enquiry dates on June 27, 1997 and on August 28, 1997, there was no other alternative except to refuse and reject the representation of the contractors. The petitioner has nothing to be aggrieved as the orders passed is within the jurisdiction and without violating principles of natural justice ; accordingly prayed for dismissal of the writ petition.
4. The case of the petitioner in Writ Petition No.3553 of 1998 is briefly stated hereunder: According to them, their firm Jyoti Home Industries is a beedi manufacturing firm. It is duly registered under the Beedi and Cigar Workers (Conditions of Employment) Act, 1966, and is also having a Central Excise Licence under the Central Excise Act. It is stated that pursuant to the summon issued under Section 7-A of the Act, they submitted their written objection then and there. In spite of their valid representation through a counsel, the first respondent in the communication, dated February 19, 1998, has purported to determine the dues for the period March 1996 to February, 1997 in the petitioners establishment in respect of “certain non-enrolled employees”, at Rs. 18,54,612-30. The petitioners have been directed to remit the said amount to the respective E.P.F. Account forthwith. The alternative remedy provided under the Act, namely, appeal to the Employees’ Provident Fund Appellate Tribunal, New Delhi is not an effective remedy since no such appeal by the employees shall be entertained by the Tribunal unless he has deposited with it 75 per cent of the amount due from him as determined by an officer under Section 7-A. In spite of their written argument and also of the fact that the contractors themselves filed a petition for impleading them since they are interested in the disposal of the matter, without considering all those aspects, the first respondent has passed the impugned order which cannot be sustained.
5. On behalf of the respondents 1 and 2 the Assistant Provident Fund Commissioner, Madras, has filed a counter-affidavit which is similar to one filed in the other connected Writ Petition No.3310 of 1998. It is also stated that petitioner-employer was given adequate opportunity and inasmuch as the contractors were set up by the employer, their belated representation was returned and impugned order was passed determining the amount payable by the employer in order to extend the social security benefit to downtrodden home workers, who are all along suffering and sacrificing their lives for the so-called principal employer and contractors, the order of the first respondent is just and reasonable and there is no merit in the writ petition.
6. In the light of the above pleadings I have heard the learned counsel for the petitioner-contractor as well as the employer and the respondents provident fund authorities.
7. Sri Sanjay Mohan, learned counsel for the petitioner, would contend that in the light of the scheme of the Act and in view of the fact that the petitioner in W.P. No.3310 of 1998 is a registered contractor under the petitioner in W.P. No.3553 of 1998, and also of the fact that the contractors have been paying provident fund contributions, but have filed necessary: petition for impleading themselves as party to the proceedings, the Assistant Provident Fund Commissioner, Salem ought to have heard them (contractors) before passing the impugned proceedings, dated February 19, 1998 calling upon the employer to remit the amount of Rs. 18,54,612-30 towards the alleged dues for the period from March 1996 to February, 1997 in respect of certain non-enrolled employees. He also contended that apart from the statutory provisions even on the principles of natural justice, contractors must be heard before initiating action against the employer. On the other hand, Sri V. Vibhishanan learned counsel for the respondents, would contend that the contractors have nothing to do with the order impugned and the first respondent is justified in passing the impugned order; accordingly prayed for dismissal of both the writ petitions.
8. I have carefully considered the rival submissions.
9. If I accept the contention of the contractor, petitioner in W.P. No.3310 of 1998, the impugned order in W.P. No.3553 of 1998 is liable to be quashed and the matter has to be reconsidered by the first respondent. In the light of the narration of the facts in the earlier part of my order, it is unnecessary to refer the same once again. There is no dispute that petitioner in W.P. No. 3310 of 1998 is one of the registered contractors under the petitioner in W.P.No.3553 of 1998. It is also not disputed that the contractors have taken out licences for carrying out their own activities of manufacturing Beedi. The contractors engage the beedi rollers depending on number of beedi they propose to supply to the employer and the contractors supply the raw-materials to such rollers. The wages and other monetary benefits are paid to the rollers by the contractors. It is further seen that the contractor (petitioner in W.P. No. 3310 of 1998) has no individual provident fund code number to make any contributions towards provident fund. The particulars of the wages paid to the beedi workers who are members of the provident fund are furnished to the employer periodically for depositing the same to the provident fund authorities. Employees Provident Fund contributions is paid by the employer in the case of contractors who have no provident fund code numbers, based on the particulars provided by the contractors. While so, the first respondent issued a summons to the employer, petitioner in W.P. No.3553 of 1998 under Section 7-A of the Act for which they submitted their written objection. The summons relate to non-deduction of certain contributions from wages paid to the workers. The first respondent after referring certain contractors, called upon the employer for an enquiry on January 8, 1998. A suitable reply was sent by the employer and requested the first respondent to furnish certain copies of materials on which notice has been issued. In the meanwhile, on coming to know that the first respondent has entertained proceedings against the employer, the contractor (petitioner in W.P. No.3310 of 1998) along with 24 others submitted a joint memorandum to the first respondent and also a petition to implead themselves as a party to the proceedings. In the said representation, it is specifically stated that they have been paying provident fund contributions and this fact was to be brought to the attention of the first respondent. It is seen from the proceedings that the enquiry was initially posted to August 28, 1997 and periodically adjourned to January 6, 1998, January 16, 1998 and closed on February 3, 1998. Before passing orders, i.e. on February 19, 1998 the contractors including the petitioner in W.P. No.3310 of 1998 filed an application on February 11, 1998 seeking permission to implead them as party respondents in the said proceedings. Strangely, the first respondent returned the cover sent under registered post with acknowledgment due with endorsement “Refused”. It is very unfortunate that the first respondent a quasi-judicial authority after knowing the sender’s name and address, refused to receive the registered cover. The attitude of the first respondent in refusing to acknowledge the cover addressed to him cannot be appreciated. No doubt, in the counter-affidavit, particularly in Para. 16, the first respondent has explained that reasonable opportunity was given, to the establishment and after concluding the enquiry under Section 7-A of the Act, the employer has instigated the contractors to make representation mainly for the purpose of delaying the issue and prior to receipt of such representations, the enquiry was closed on February 3, 1998 and orders passed. Though it is stated that the enquiry was closed on February 3, 1998, it was brought to my notice that actually the order was passed only on February 19, 1998 and the first respondent refused the representation made by the contractors on February 11, 1998. The explanation offered by the first respondent in Para. 16 of the counter-affidavit cannot be accepted. In fairness, the first respondent ought to have received the cover and verified the contents of the representation, particularly in the light of objection statement by the employer Jyoti Home Industries. In the said objection, the employer, apart from raising various contentions, has stated as follows:
“….. .The beedi rollers both provident fund member employees as well as non-member (excluded) employees are individual Log Book holders employed by the registered contractors. All the beedi rollers are home workers who roll beedi in their dwelling houses and as such no attendance registers are maintained. Number of beedies rolled by such Log Book holders is entered in his or her Log Book by the contractor. Wages are paid weekly by the contractors at the rate fixed by the State Government and the wage sheet is maintained by the contractors. As such no attendance or payment registers/sheets are available or maintained at our branch level…….”
Sri Sanjay Mohan has also brought to my notice that even in the summons issued by the Assistant Provident Fund Commissioner to the employer Jyoti Home Industries to appear in person under Section 7-A of the Act they themselves mentioned the names of two contractors, namely, (i) Sri V. Raja as contractor No. 3; and (ii) Syed Ummer as contractor No. 1. The said notice finds a place at page No. 13 of the typed-set of papers filed in W.P. No.3310 of 1998. It was also brought to my notice, the letter of the employer Jyoti Home Industries, dated January 6, 1998, addressed to the first respondent/Assistant Provident Fund Commissioner, wherein it is stated that:
“……..Further your goodself may be
aware that all the beedi rollers are contract workers working under the registered contractors and their wages are paid by the contractor and provident fund contributions is also deducted by the contractors and this management has no direct supervision or control. In spite of that we are requesting periodically to the contractors to deduct provident fund from the wages of all the eligible employees at the prescribed rates…….”
The employer Jyoti Home Industries have also filed an affidavit before the first respondent in which it is state,d that:
“….. Our Krishnagiri depot is also engaged in the manufacture of Khulla Beedies which are got rolled through independent beedi manufacturing contractors who are also registered under the above said Acts. Our Krishnagiri depot has 26 such independent beedi manufacturing contractors. Sri V. Raja and Sri P.K. Syed Ummer referred to by the provident fund department are two of such contractors.
I swear on oath and submit that all the workers engaged by the registered independent beedi manufacturing contractors who are eligible to become members of the provident fund have been covered under the provident fund scheme by the independent beedi manufacturing contractors who engaged them. The said beedi manufacturing contractors are furnishing to us every month a statement containing particulars like the name of the beedi roller, total wages paid, provident fund contribution collected etc., in respect of home workers who are the provident fund members engaged by them. They are also paying the provident fund contribution to us for depositing the same, with the department under proper challans, as we have been allotted with the code number by the department……”
In the joint representation of the registered beedi manufacturing contractors, it is stated as follows:
“3. That all the beedi rollers who are eligible and required to be made members of the provident fund are being made members from time to time and their provident fund contributions are being deducted regularly and sent to the said Jyoti Home Industries, Krishnagiri for depositing with the provident fund department as the members covered under the Code No.TN/21270, and
4. That apart from the provident fund members covered under Code No.TN/21270, there are a few beedi rollers engaged by us and getting wages of more than Rs. 5000 per month. They are not bound/required to be the members of the provident fund. The provident fund contribution is being collected from their wages, other beedi rollers included in our arrangements have been made members to the provident fund under Code No. TN/21270.
5. The provident fund membership in respect of beedi rollers who are getting more than Rs. 5000 per month is not mandatory. They fall under EXCLUDED EMPLOYEES category as per Para. 2(f) of the Employees’ Provident Fund Scheme, 1952. Accordingly the said beedi rollers have not been made members and no contribution is being deducted in respect of them…….”
10. The said representation signed by all the contractors find place at page 20 of the typed-set of papers.
11. In the light of the information furnished and in view of the stand taken by the employer Jyoti Home Industries I am of the view that it is but proper for the first respondent to hear the claim of the contractor/contractors and pass appropriate orders after affording opportunity to all the parties concerned. In view of my conclusion, it is unnecessary to refer various decisions cited by both counsel. Even though it is brought to my notice that it is open to the petitioner to file an appeal before the Provident Fund Appellate Tribunal against the impugned orders, in view of the fact that the representation of the petitioner in W.P.No.3310 of 1998 has been refused by the first respondent, this Court cannot direct him to file an appeal before the Tribunal. Like-wise, in the light of the particulars furnished in the representation of the contractors regarding payment of provident fund to their workers. I am of the view that this aspect has to be reconsidered by the first respondent. Accordingly there is no need to ask the employer, petitioner in W.P.No.3553 of 1998 to file an appeal before the Tribunal.
12. In the light of what is stated above and in view of my conclusion that the contractor is to be impleaded in the proceedings of the first respondent in TN/SL/ENF/21270/7-A KNG 1/97, the impugned order of the first respondent, dated
February 19, 1998 in W.P. No.3553 of 1998 is quashed. The first respondent namely the Assistant Provident Fund Commissioner, Salem-1 is directed to receive the petition to implead the petitioner N. Manickam, beedi manufacturing contractor as a party in the said
proceedings and pass fresh orders after affording opportunity to the contractor as well as the employer in accordance with law. Writ petitions are allowed. No costs. Both Writ Miscellaneous petitions are closed.
