IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 22-1-2007
Coram
The Honourable Mr.Justice P.SATHASIVAM
and
The Honourable Mr.Justice N.PAUL VASANTHAKUMAR
W.A.No.581 of 2002
N.E.P.C. Textiles Ltd.,
rep.by its Director,
SF-256, Kannampalayam Post,
Trichy Road,
Coimbatore - 641 402. ... Appellant
Vs.
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
This Writ Appeal has been filed under Clause 15 of
Letters Patent against the order of the learned single Judge
in W.P.No.2621 of 1997 dated 10.12.2001.
For Appellant : Mr.R.Parthiban
For Respondent : Ms.V.J.Latha
JUDGMENT
N. PAUL VASANTHAKUMAR, J.
This writ appeal is filed against the order made in
W.P.No.2621 of 1997 dated 10.12.2001 declining to interfere
with the proceedings of the respondent dated 14.2.1997.
2. The brief facts necessary for disposal of this
writ appeal are as follows.
(a) Appellant is a Textile Mill, engaged in the
manufacture of cotton yarn. The Mill was originally owned
by M/s.Bharat Textiles, which was a partnership firm and it
was taken over by the petitioner Mill with effect from
14.2.1994. According to the appellant Mill, at the time of
taking over, the Mill had only 3000 spindles and after that
the appellant added another 3000 spindles in the same unit
and established a new unit known as Unit-II with spindleage
of 18,000.
(b) At the time of taking over, eight employees were
employed in the Bharat Textiles and they were absorbed by
the appellant Mill and in respect of them, contribution
under the Employees Provident Fund and Miscellaneous
Provisions Act were made by the appellant Mill. After
establishment of Unit-II, production started from April,
1995 and the appellant Mill employed number of apprentices
over a period of time and according to the appellant, the
said apprentices were engaged as per the standing orders.
(c) The respondent, by proceeding dated 19.7.1996
issued a notice stating that the appellant had failed to
extend the benefits of the Employees Provident Fund to a
large number of employees including the casual/contract/
temporary employees and therefore the petitioner was
directed to appear for an enquiry with all records. On
1.10.1996, the appellant submitted a representation and
stated that all the persons engaged were only apprentices
under the standing orders of the Mill and they were being
paid stipend during the training period as per the scheme
and apprentices are excluded from the purview of the
definition of “employees” under the Employees Provident Fund
and Miscellaneous Provisions Act, 1952 and therefore the
question of paying contribution towards Employees Provident
Fund in respect of the said apprentices does not arise.
(d) An enquiry was conducted on 1.10.1996 and the
appellant produced copy of the documents including the
certified standing orders and thereafter by letter dated
11.12.1996 the respondent observed that 75% of the
establishment’s total work force comprise of apprentices and
therefore they should be considered as ‘Employees’ under the
Act with a direction to the appellant to enroll all the
apprentices and extent the benefit of the Act for them. The
respondent also stated that ESI contributions were deducted
in respect of the apprentices and therefore they are bound
to be given EPF benefit also.
(e) According to the appellant, from December, 1996,
the provident fund contribution is being paid and from
October, 1994 to April, 1995, the appellant is not liable to
pay provident fund contribution.
(f) By the impugned order dated 14.2.1997, the
appellant was directed to enroll all the apprentices under
ESI Scheme and the appellant was directed to pay a sum of
Rs.8,30,322.85 within a period of 15 days. The said order
was challenged by the appellant on the ground that the
‘apprentice’ is not an ’employee’ within the meaning of the
Act and they are excluded from the definition of employee
and no contribution is payable in respect of the
apprentices. It is also stated that merely because the
apprentices are covered under the ESI Act, the management
cannot be compelled to pay contribution to the Provident
Fund.
3. The respondent has filed counter affidavit wherein
it is stated that the appellant is employing several persons
under the name and style of ‘apprentices’ only to avoid the
statutory liability and more than 75% of the labour force is
treated as apprentices by the appellant Mill. It is stated
that after issuing notice and receiving explanation, an
enquiry was conducted and during the enquiry, the wage
register, attendance register, etc. were gone into by the
respondents and a factual finding was arrived at and
thereafter only the impugned order was passed. It is also
stated in the counter affidavit that after issuance of
notice, only the certified standing order was ratified on
20.9.1996 and the period for which the enquiry was
conducted, there was no certified standing order. It is
further submitted that on scrutiny of records, inspection of
the premises and after enquiry, it was found that the
respondent had engaged more number of apprentices than the
regular employees and the apprentices are doing regular work
of the establishment and they were not learners and no
period is specified for the apprentices. It is further
elaborated that out of the 123 employees in the year 1995,
80 were shown as apprentices; and out of the 247 employees
in the year 1996, 177 were shown as apprentices. It is also
stated that the so called apprentices were paid wages for
the work and the payment were directly linked to the number
of days they attended work and therefore the apprentices are
directly contributing to the production of the establishment
and are not learners.
4. On consideration of the rival contentions, the
learned single Judge dismissed the writ petition on
10.12.2001 taking note of the stand taken by the appellant
by letter dated 27.12.1996, in which the appellant requested
the respondent to grant one year grace period from May, 1995
to April, 1996 for paying the contribution of the Provident
Fund. The said letter clearly establishes the admission of
the liability of the appellant to pay contribution towards
Provident Fund.
5. The learned counsel for the appellant submitted
that merely because the impugned order was passed by the
respondent solely on the ground that the appellant remitted
ESI contribution to the apprentices and the apprentices
having been exempted under section 2(f) of the Employees
Provident Fund and Miscellaneous Provisions Act, 1952, and
they having been engaged under the certified standing
orders, the respondent has no jurisdiction to direct the
appellant to remit the contribution towards Employees
Provident Fund in respect of the apprentices. In support of
his contention, the learned counsel cited the decision of
the Honourable Supreme Court reported in (2006) 2 SCC 381
(Regional Provident Fund Commissioner, Mangalore v. Central
Arecanut & Coca Marketing and Processing Co-op. Ltd.,
Mangalore).
6. The learned counsel for the respondent on the
other hand submitted that the appellant is evading payment
of Provident Fund contribution to the workmen on the guise
of having engaged apprentices for the regular work and a
factual finding is given by the respondent after perusal of
the wage register, attendance register, etc. to the effect
that the term ‘apprentice’ is used instead of ‘workmen’ only
to defeat the provisions of the Act. The learned counsel
further argued that the fact finding authority has come to
the conclusion that more than 75% of the works in the
appellant Mill are being carried out by the so called
apprentices and therefore they cannot be treated as
trainees/learners and they are paid regular wages as per the
number of days of their employment and the same cannot be
treated as stipend.
7. We have considered the rival submissions made by
the learned counsel for the appellant as well as the learned
counsel for the respondent in the light of the pleadings as
well as the order of the learned single Judge dated
10.12.2001.
8. Admittedly the appellant is paying contribution in
respect of the so called apprentices towards Employees
Provident Fund from May, 1996, and requested the respondent
on 27.12.1996 to give one year grace period for the payment
of contribution towards Provident Fund from May 1995 to
April, 1996. The said stand clearly establishes the factual
aspect that the appellant has not engaged apprentices and
they are treated as regular workmen. If at all the
contention of the appellant is to be accepted that the
appellant is engaging only apprentices and they shall not be
treated as employees, the same should be the stand
throughout. On the contrary, one year grace period alone
was sought for and the same was rejected. There is no basis
to claim one year grace period by the appellant as it is
factually found by the respondent in the impugned order
after perusing the records and after hearing the
representative of the appellant Mill on 12.2.1997.
9. A categorical finding is given by the respondent
after perusing the records that a modern textile mill like
the appellant establishment cannot run solely on the
strength of the apprentices alone. Hence the respondent was
of the view that the workmen in question were the actual
employees of the appellant establishment and should be
enrolled to the Provident Fund Scheme right from the date of
their eligibility. The respondent also perused the wage
register and attendance register and found that the persons
in question were paid the wages for the actual days of their
employment and not paid any stipend as contended by the
appellant.
10. The decision cited by the learned counsel for the
appellant reported in (2006) 2 SCC 381 (Regional Provident
Fund Commissioner, Mangalore v. Central Arecanut & Coca
Marketing and Processing Co-op. Ltd., Mangalore) will not
help the appellant as factually the respondent has proved
that actually the appellant has not engaged apprentices and
they are treated as regular employees and wages are paid for
actual days of their employment and only to circumvent the
statutory liability the appellant Mill has claimed that the
persons are engaged as apprentices and not as regular
employees. If really the appellant has not employed the
persons as regular employees and not paid salary and paying
only stipend, definitely appellant is entitled to get the
benefits under section 2(f) of the Employees Provident Fund
and Miscellaneous Provisions Act, 1952. Relying upon the
documentary evidences, a categorical factual finding is
given by the respondent that the said persons are not
engaged as apprentices, but as workmen. Hence the said
decision cannot he held applicable to the facts of this
case.
11. The respondent being a statutory authority,
exercised powers conferred on him under section 7(f) of the
Employees Provident Fund and Miscellaneous Provisions Act,
1952, and factually found that the appellant is liable to
pay contribution to the Employees Provident Fund and
specifically found that the persons engaged by the appellant
are employees and not apprentices. There is no perversity
in the said finding. The said order is upheld by the
learned single Judge. There is no error apparent on the
face of the order of the respondent as well as the order of
the learned single Judge inviting interfere in the writ
appeal.
12. We do not find any merit in the writ appeal and
the same is dismissed. No costs.
vr/
To
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.