IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP.No. 38287 of 2002(G)
1. RAJESH KRISHNAN, SECRETARY,
... Petitioner
Vs
1. THE ASST.PROVIDENT FUND COMMISSIONER,
... Respondent
For Petitioner :SRI.MATHEW JOHN (K)
For Respondent :SRI.N.N. SUGUNAPALAN, SC, P.F.
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :03/04/2009
O R D E R
S. SIRI JAGAN, J.
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O.P.No.38287 OF 2002
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Dated this the 3rd day of April, 2009
JUDGMENT
The petitioner is a Co-operative Society engaged in the
business of running a hospital. They are aggrieved by Ext.P9
order of the respondent – Assistant Provident Fund
Commissioner, Kottayam, by which it was held that the
petitioner’s hospital is liable to be covered under the Employees
Provident Funds and Miscellaneous Provisions Act and the
Scheme framed thereunder. According to the petitioner, being a
Co-operative Society employing less than 50 employees, the
petitioner is eligible for exemption from the provisions of the Act,
by virtue of Section 16(1)(a) of the Employees Provident Funds
and Miscellaneous Provisions Act, by which Co-operative Societies
employing less than 50 employees are exempted from the
purview of the Act. The petitioner’s contention is that Ext.P9
order has been passed considering the trainees engaged by the
petitioner in their establishment also as employees, who do not
come within the definition of ’employee’ under Section 2(f) of the
O.P.No.38287/02 2
Act, without counting whom, the number of employees
employed by the petitioner in their hospital is below 50,
consequent to which the exemption provision applies to the
petitioner. The petitioner would also contend that for this
purpose, Ext.P3 scheme framed by the petitioner as per which
the trainees are engaged must be construed as a standing
order referred to in the definition of `employee’ in Section 2 (f)
of the Act, in which case, the trainees are liable to be excluded
for the purpose of calculating the number of employees
employed in the petitioner’s establishment, direct result of
which is that the petitioner is employing less than 50
employees and therefore is eligible for exemption under
Section 16(1)(a) of the Act. The petitioner relies on the
judgment of the Madras High Court in Sri. Rama Vilas
Service Ltd., V. Regional Provident Fund Commissioner
[2001 LLJ 709], wherein, according to the petitioner, an
identical training scheme has been relied upon for the purpose
of holding that trainees employed as per that training scheme
is excluded from the purview of the definition of ’employee’.
The contention of the petitioner is that since the two schemes
are in parimateria, the trainees engaged by the petitioner
under Ext.P3 scheme are also liable to be excluded for the
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purpose calculating the number of employees of the
petitioner’s establishment, while considering claim for
exemption under Section 16(1)(a) of the Act.
2. This is opposed by the learned counsel for the
Provident Fund Organisation. According to them, Ext.P3 does
not constitute standing orders as referred to in the definition
of `employee’ under the Act and without standing orders
applicable to the employees of the petitioner’s establishment,
which permits engagement of apprentices, the trainees also
would come within the definition of ’employee’. Although they
have not taken such a contention in the proceedings resulting
in Ext.P9, they would now raise a contention that for the
purpose of becoming eligible for exemption under Section 16
(1) (a), it is not sufficient that the petitioner is employing less
than 50 persons, but the other condition referred to therein
that the establishment is working without the aid of power also
should be satisfied.
3. I have considered the rival contentions in detail.
4. Section 16(1)(a) reads thus:-
“16. Act not to apply to certain
establishments.- [(1) This Act shall not apply-
(a) to any establishment registered under
the Co-operative Societies Act, 1912(2 of 1912), or
under any other law for the time being in force in
O.P.No.38287/02 4
any State relating to co-operative Societies,
employing less than fifty persons and working
without the aid of power; or….”
The term `employee’ is defined in Section 2(f) of the Act thus:-
” `employee’ means any person who is employed for
wages in any kind of work, manual or otherwise, in or
in connection with the work of and establishment,
and who gets, his wages directly or indirectly from
the employer, and includes any person,-(i) employed by or through a contractor in or in
connection with the work of the establishment;(ii) engaged as an apprentice, not being an
apprentice engaged under the Apprentices Act, 1961
(52 of 1961), or under the standing orders of the
establishment;’Going by the said definition, for excluding an apprentice from
the purview of ’employee’, that apprentice should have been
engaged under the Apprentices Act 1961 or under the standing
orders of the establishment. The petitioner has no case
that the apprentices in question were engaged under the
Apprentices Act. Therefore, the question which has to be
considered is whether the apprentices, whom the petitioner
claims to have engaged are engaged under the standing orders
of the establishment. No standing orders other than Ext.P3,
which the petitioner claims to be the standing orders have
been produced before me. The petitioner also contends that
even if Ext.P3 cannot be construed as standing orders, the
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bye-laws of the society can be construed as the standing
orders permitting engagement of trainees, in view of Clause 2
(e) of the bye-laws, which is quoted in the original petition,
thus:
“To train nurses, compounders, technicians, opticians,
physiotherapists, etc. and to conduct institutions to
impart the required training”According to the petitioner, since the object clause of the
bye-laws of the Society provides for training of nurses,
compounders, technicians, opticians, physiotherapists etc. that
should be construed as standing orders permitting engagement
of trainees.
5. I am unable to agree. It cannot be disputed by
anybody that the term `standing orders’ has a definite
connotation in industrial law. The Industrial Employment
(Standing Orders) Act gives an indication as to what a standing
order should contain. Section 2(g) of that act defines ‘standing
orders’ to mean rules relating to matters set out in the
schedule. The schedule reads thus:
“Matters to be provided in standing orders
under this Act.1. Classification of workmen eg. whether
permanent, temporary, apprentices, probationers or
badlis.2. Manner of intimating to workmen periods
O.P.No.38287/02 6
and hours of work, holidays, pay days and wage rates.
3. Shift working.
4. Attendance and late coming.
5. Conditions of procedure in applying for
and authority which may grant leave and holidays.6. Requirements to enter premises by
certain gates and liability to search.7. Closing and re-opening of sections of the
industrial establishment and temporary stoppages of
work and the rights and liabilities of the employer
and workmen arising therefrom.8. Termination of employment and the
notice thereof to be given by employer and workmen.9. Suspension or dismissal for misconduct
and acts and omissions which constitutes misconduct.10. Means of redress for workmen against
unfair treatment or wrongful exactions by the
employer or his agents or servants.10A. Additional matters to be provided in
standing orders relating to industrial establishment
in coal mines-(1) Medical aid in case of accident.
(2) Railway travel facilities.
(3) Method of filling vacancies.
(4) Transfers.
(5) Liability of manager of the
establishment or mine.(6) Service certificate.
(7) Exhibitions and supply of standing
orders.11. Any other matter which may be prescribed".Model standing orders have also been prescribed in the Rules
framed under the Act. Standing orders which provides for
such matters are what is referred to in the definition of
O.P.No.38287/02 7
’employee’ in Section 2(f) of the Act. Such standing order
should specifically contain a provision, whereby the
establishment can engage an apprentice in that establishment,
and the apprentice so engaged only would be taken out of the
purview of the definition of ’employee’. The petitioner has
not been able to produce before me or refer to any such
standing orders as contemplated in the definition. The object
clause of the bye-laws referred to in the original petition can
by no stretch of imagination be termed as standing orders. It
only lays down the objects of the society for which the
petitioner’s Society can engage themselves in, as required
under the Kerala Co-operative Societies Act. That does not
constitute standing orders at all.
6. Of course, the petitioner has a contention that
Ext.P3 can be construed as standing orders, which also I
cannot agree. Ext.P3 is only a scheme for training persons in
the Nursing, Laboratory and X-ray departments of the
petitioner’s hospital. It does not provide for the general
conditions of service of the employees which standing orders
should necessarily contain. That deals exclusively with trainees
only. Ext.P3 can be pressed into service only if there are
standing orders for the establishment which provides for
O.P.No.38287/02 8
engaging apprentices. That being so persons engaged as
trainees as per Ext.P3 scheme cannot be excluded from the
purview of ’employee’. Therefore, by no stretch of imagination
can Ext.P3 also be termed as a standing order.
7. The result of the above discussion is that there are
no standing orders in the petitioner’s establishment as referred
to in the definition of employee in Section 2(f) of the Act,
which permits the petitioner to engage apprentices in their
establishment. Without such standing orders, the apprentices,
even if engaged by the petitioner as per Ext.P3 scheme,
cannot be excluded from the purview of the definition of
’employee’ as defined in Section 2(f) of the Act. Of course, the
petitioner would rely on the decision of the Madras High Court
in Sri. Rama Vilas Service Ltd’s case (supra), in which,
according to the petitioner, such a scheme was considered as
standing orders. A reading of the said judgment would,
without any doubt, show that the contention of the petitioner
is wrong. The following sentences in paragraph 5 of the said
judgment would conclusively prove the same:
“5. xxxx xxxx xxxx xxxx
The petitioner-company is having its goods
transport services and also workshop. Apart from the
permanent employees, the petitioner has been engaging
trainees for the purpose of training in accordance with the
O.P.No.38287/02 9
Training Scheme, the Rules and Regulations as well as the
Standing Orders. The trainees are classified as “staff
trainees”, who are trained in the administrative side of the
office, “technical trainees” trained in the workshop,
“workshop trainees” and “security trainees”.
(underlining supplied)
Those sentences would show that in the establishment referred
to in that judgment, there were standing orders as well as a
training scheme. The types of employees permitted to be
engaged by the establishment by the standing orders are also
mentioned in the judgment. This is further highlighted from the
following sentences in the same judgment.
“5……………..The petitioner herein, replied to the same
by their letter dated October 3, 1988, stating that in terms
of the provisions of the Standing Orders applicable to the
petitioner-company they have classified the trainees as
learners, who may be paid or unpaid during the period of such
training and it is not obligatory on the part of the petitioner
to provide an apprentice with work, in the company after
his training period”.
(underlining supplied)
Therefore, in that judgment also, the trainees, who were
trained in accordance with the Scheme framed by the
establishment, were also engaged pursuant to provisions
available in the standing orders of the establishment. Here it
is not so. The petitioner could not refer to any document
which could answer the description of standing orders as
O.P.No.38287/02 10
contemplated in Section 2(f). That being so, these trainees
cannot be exempted from the purview of the definition of
’employee’ in Section 2(f) of the Act.
8. Admittedly, if these trainees are also included in the
number of workmen of the hospital, clearly the number of
workmen would exceed 50. The exemption under section 16(1)
(a) is available only to a Co-operative Society, who employs
less than 50 employees. Since taking into account the so
called trainees also the number of employees exceeds 50, the
petitioner is not entitled to the benefit of exemption under
Section 16(1)(a).
9. Although in view of my above finding it is not
necessary for disposal of this writ petition to consider the
same, I also find merit in the contention of the respondent that
for attracting Section 16(1)(a), the society employing less than
50 employees should also be one working without the aid of
power. It is common knowledge that no hospital can function
without the aid of power. Therefore, since the petitioner’s
hospital is working with the aid of power, clearly for that
reason also, the petitioner falls out side the scope of Section
16(1)(a) of the Act.
10. For the above reasons, the challenge against Ext.P9
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order clearly fails. Accordingly, the original petition is
dismissed.
The learned counsel for the petitioner makes a fervent
plea that if the petitioner is now forced to pay the demand, the
Society would have no other option, but to close down. I do
not find that consideration of sympathy can weigh with this
Court in deciding a question of law. But I make it clear that it
would be open to the petitioner to approach the appropriate
authorities under the Employees Provident Funds and
Miscellaneous Provisions Act, 1952 for appropriate exemptions
and remissions and I hope that the appropriate authority
would consider the same with the sympathy it deserves
considering the fact that the petitioner is a Co-operative
Society and the respondent organisation seeks to protect the
welfare of the employees of the petitioner’s establishment who
would be likely to be rendered jobless, if the demand is
enforced. In any event the petitioner shall be given at least
four months’ time to pay off the amount demanded.
S. SIRI JAGAN, JUDGE
Acd
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