JUDGMENT
Pradipta Ray, J.
1. The Talcher Sarakarakhana Shramik Sangha, a Registered Trade Union, recognised by the management of Talcher Unit of the Fertiliser Corporation of India Limited (hereinafter referred to as ‘Talcher Unit’) has filed this writ application questioning the legality and propriety of the decision of the management of Talcher Unit reducing the rate of compulsory provident fund contribution from 10% to 8.33% (Annexures 10 & 12). The Fertiliser Corporation of India (in short, ‘F.C.I.’) was formed on January 1, 1961 as a Government of India undertaking under the Fertilisers and Chemical Companies Amalgamation Order, 1960, Due to its considerable growth the Government of India undertook to reorganise the Fertiliser Corporation of India and its sister concerns, the National Fertiliser Limited of India. With effect from April, 1, 1973 the said two concerns were divided into five separate Government Companies, namely; (1) Fertiliser Corporation of India Limited, (2) Rastriya Chemicals and Fertilisers Limited, (3)
Hindustan Fertiliser Corporation Limited, (4) The Fertiliser (Planning and Development) India Ltd., and (5) The National Fertilisers Limited. Although five different Companies were formed, the representatives of workmen of all the said Companies were called for negotiation to finalise a common wage settlement to provide a uniform pay scale and service conditions in all the said Companies. In the joint negotiation it was agreed that the wage agreement as and when finalised would be effective from January 1, 1987. After prolonged negotiation the management and Unions of all the said Companies reached an agreement and a draft settlement on the basis of such agreement was prepared. In Clause 20 of the said draft settlement it was expressly stated, “the management agrees to increase the existing rate of P. F. Contributions to 10% as and when approved by the Government”. The petitioner – Union was a signatory to the said draft settlement dated July 1, 1989. The said draft settlement was sent to the Government of India for necessary approval. The Government of India accorded its approval to the said draft settlement with slight modifications in Clauses 10 & 19 relating to house rent recovery and Leave Travel Concession. Clause 20 of the draft settlement relating to rate of provident fund contribution was accepted inasmuch as no change or modification was proposed or suggested by the Central Government, After obtaining the said approval a final settlement was signed by the petitioner-Union and opp. party Nos. 2 and 3 on March 23, 1990. In the final agreement the stipulation relating to provident fund was incorporated in para 10.0. The said paragraph of the final settlement is reproduced below :
"10.O PROVIDENT FUND --The management agrees to increase the existing rate of P, F. Contributions to do 10% as and when approved by the Government." After the said final settlement the Regional Provident Fund Commissioner, Orissa requested the management of Talcher Unit of F.C.I. to enhance the rate of contribution of provident fund to 10% with effect from June 1, 1989 (vide Annexure-4). It may be mentioned here that section 6 of the Employees Provident
Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘the Act’) was amended enhancing the provident fund contribution from 8.33% to 10% with effect from June 1, 1989. Upon receipt of the letter from the Regional Provident Fund Commissioner, the Finance Manager of the Talcher Unit by his letter dated October 3, 1989 sought necessary clarification from the Head Office of the General Manager (Finance) of the F.CI. Ltd. in that regard. By letter dated October 30, 1989 General Manager (Finance) wrote back that the amended provisions of section 6 of the Act enhancing the provident fund contribution from 8.33% to 10% did not apply to the Talcher Unit of the F.C.I. as the accumulated loss of the said unit was equal to or exceeded the value of the entire asset and it had suffered cash loss during the relevant financial year and the previous financial year. The said letter dated October 30, 1989 caused resentment among the employees who lodged their strong protest and intimated that they would resort to peaceful agitation if the rate of provident fund contribution was not raised as per the wage agreement and the amended provisions of the Act. The management of the Talcher F.C.I. defended the said settlement pointing out that all the establishments formed out of Fertiliser Corporation of India and National Fertiliser Company have raised the rate of provident fund contributions from 8.33% to 10%. The Board of Directors in its 337tb meeting held on December 24, 1990 approved the enhancement of the provident fund contribution from 8.33% to 10% with effect from June 1, 1989. The General Manager (Finance) by his letter dated January 4, 1991 communicated the said decision of the Board to opp. party No. 2. In pursuance of the decision of the Baard of Directors the management of Talcher Unit gave effect to the decision to enhance the rate of provident fund contribution from 8.33% to 10% with effect from June. 1989. The petitioner-Union, however, came to learn that the management of the Talcher Unit was trying to revert to the old rate of 8.33% and accordingly sent a letter of protest dated July 26, 1991 requesting the management to desist from such move to reduce the rate of provident fund
contribution. The management by its letter dated August 9, 1991 sent a reply to the Union supporting its stand to reduce the rate of contribution on the ground that the Central Government did not accord its approval to collect @ C.P.F. at enhanced rate of 10%. Ultimately by letter dated September 11, 1991 the management of Talcher Unit of F.C.I, intimated its decision that from September 1991 it would collect C.P.F. from the employees at the old rate of 8.33%. Being aggrieved by the said decision to revert to the old rate of C.P.F. the petitioner Union has filed this writ petition.
2. The management of the F.C.I. has filed a counter supporting the decision of the management to reduce the rate of contribution on the ground that the Talcher Unit is covered by the exclusion No. (iii) as contained in the proviso to the amended provisions of section 6 of the Act and that Central office of the F. C. I. instructed the Talcher Unit to revert to the original rate of 8.33% as the ministry did not agree to approve the decision to enhance rate of C. P. F. contribution.
3. The writ application initially stood dismissed against the Union of India, opp. party No. 4, for non-filing of requisites. Upon an application filed by the petitioner the said order of dismissal was recalled by order dated January 6, 2000 and the writ application was restored against Union of India. Mr. Mohanty, learned Senior Standing counsel (Central Government) thereafter appeared in the case and made his submissions. However, no separate affidavit has been filed by the Union of India.
4. By Notification No. section 35011/9/88-SS-II dated May 17, 1989 the Government of India amended provisions of section 6 of the Act specifying 10% of the basic wages and dearness allowances as the rate of contribution of the employees and employer to the provident fund. The said notification, however, excluded certain classes of establishments from the operation of the said enhancement. Immediately thereafter the Regional Provident Fund Commissioner, Orissa issued a circular dated July 6, 1989 to all the Establishments covered by the Act in Orissa to recover contribution at the enhanced rate of 10%.
Upon receipt of the said circular the Finance Manager of the Talcher Unit wrote to the General Manager (Finance) in the central office for issuing necessary instructions. Initially the General Manager of the Central Office did not agree, but sub-sequently in consideration of the fact that all other. Fertiliser Group Companies raised the rate of contribution from 8.33% to 10%. The Board of Directors of the F. C. I. in its 337th meeting held on December 24, 1990 took a decision to enhance the rate of provident fund contribution to 10%. In pursuance of the said decision of the Board of Directors the General Manager of the Central office by his letter dated January 4, 1991 instructed the Finance Manager of different units to carry out the said decision of the Board. The Talcher establishment started deducting provident fund at the rate of 10% with effect from June 1, 1989, Subsequently, the management of the Talcher Unit withdraw its order enhancing the rate of provident fund contribution on the basis of the letters dated May 25. 1991 and July 3, 1991 issued by the Ministry of Chemicals and Fertiliser declining to agree to any proposal involving higher contribution by the Company to the Contributory Provident Fund at that stage.
5. It has been submitted by the learned Advocate for the opp. parties that in view of the exclusion as contained in proviso No.III in the Notification dated May 17, 1989 the management is not entitled to enhance the rate of provident fund contribution. The said submission is not acceptable. Section 6 of the Act imposes upon the employer an obligation to deduct from the employee and to contribute to the provident fund at the rate specified therein. The said section does not, however, prevent any establishment from enhancing the rate of contribution voluntarily or on the basis of agreement with the employees. In fact, the rate prescribed is the minimum rate of contribution which no employer or employee of an establishment covered by it can avoid.
6. The Director, Ministry of Labour, Government of India rigthly took the same view and clarified that any establishment falling under the excluded category under the Notification
dated May 17, 1989 could voluntarily decide to pay contribution at the enhanced rate of 10%. Thus the notification dated May 17, 1989 does not stand in the way of voluntary payment of provident fund contribution at the enhanced rate. The Department of Fertiliser, Ministry of Agriculture Was not correct in taking stand that the unit was not entitled to contribute at the enhanced rate. It is, however, a different matter whether as the controlling department, the Department of Fertiliser puts its approval on such proposal or not.
7. Even after Notification dated May 17, 1989 the Talcher Unit and the petitioner-union entered into a wage agreement whereby it was agreed to enhance the provident fund contribution to 10%. The draft agreement containing the said clause was sent to the Government of India for its approval. The said draft agreement was approved by the Government of India and no objection was raised to the clause seeking to enhance the provident fund contribution. From the communication of the General Manager of the Central office of the Fertiliser Corporation of India dated March 7, 1990 it appears that the said agreement was approved by the Government of India with the understanding that the increase in wage bills consequent on wage settlement should in no way effect the targets of internal generation of resources and additional resource mobilisation to absorb the substantial portion of the wage increases through several means including those suggested. Thus enhancement of provident fund contribution was not made on the basis of the notification dated May 17, 1989 but on the basis of the bipartite wage agreement signed on March 23, 1990 made effective from January 1 1987. Accordingly, reference to the notification dated May 17, 1989 appears to be immaterial.
8. Mr. Rath, learned Senior counsel for the petitioner has referred to the letter dated May 25, 1991 issued by the Department of Fertiliser, Ministry of Agriculture and D. O. No. CO/PERS/1(90)/1761 dated April 30, 1991 sent by the Chairman-cum-Managing Director, Fertiliser Corporation of India in reply thereto, to point out that the objection of the
Ministry was to the enhancement of rate of C. P. F. of the executives and not in respect of unionised non-executive employees. Paragraph 14 of the letter dated March 25, 1991 refers to contribution of C.P. F. It has been written :–
“Since the net worth of the P. S. Es. like Fertiliser Corporation, Hindustan Fertiliser Corporation-PDIL, is in the negative, their executives are not entitled to enhance rate of employer’s contribution to the F.P.F….”
In paragraph 3 of the D. O. letter dated April 30, 1991 it has been stated :–
“As per paragraph 14 of the Deptt. of Fertiliser’s letter under reference since the net worth of the P.S.Es. like F. C. I., H. F. C. and P.D. I. L. is in the negative, their Executives are not entitled to enhance rate of employer’s contribution to C. P. F. No such bar has however been stipulated in the case of Unionised category of Employees. This would constitute a discriminatory treatment which would be demoralising to the Executives and would be difficult for the organisation to implement……”
The ultimate rejection dated April 3, 1991 relates to the letter dated March 25, 1991 and reply of the Chairman-cum-Managing Director dated April 30, 1999. In such circumstances, it also appears to us that the Fertiliser Department of the Government of India did not in fast object to enhancement of the rate of P. F. contribution in respect of unionised employees covered under the agreement signed on March 23, 1990.
9. The opp parties in their counter have also referred to the letter dated July 3, 1991 written by the Under Secretary, Ministry of Chemicals and Fertilisers, Government of India in support of the impugned decisions. In the impugned decisions it has been specifically mentioned that the management was left with no alternative, but to implement the Central Government’s order. Upon consideration of the materials placed before us we find that the Central Government’s objection related to the Executives only and not to the unionised employees covered under the wage agreement dated March 23, 1991.
10. For the foregoing reasons, we allow this writ application. The impugned orders dated July 12/15, 1991 and September 11, 1991 (Annexures 10 and 12) are set aside.
11. No order as to costs.
L. Mohapatra, J.
12. I agree.
13. Writ application allowed.