1. The common question for consideration in all these original petitions was whether the employer was entitled to discontinue from the remittance of the provident fund contributions in excess of the rate prescribed by law, when the employer was contributing in excess of the statutory limits on the basis of the joint application filed by the employer and employees before the provident fund authorities.
2. Original petitions Nos. 13968 of 2001 and 14011 of 2001 were filed by the North Malabar Gramin Bank Officers' Association and the North Malabar Gramin Bank Employees' Association for quashing Exhibit P2 Circular issued by the North Malabar Gramin Bank directing the discontinuance of the payment of contributions in excees of the prescribed rate by the employer. Original Petition Nos. 17647 of 2001 and 17994 of 2001 were filed by the South Malabar Gramin Bank Staff Association and the South Malabar Gramin Bank Officers Congress and also the Staff Union and others for quashing Exhibit P2 circular for discontinuing the contributions made by the management in excess of the statutory limits. The main relief prayed for in all these original petitions was to direct the management bank to pay contribution at 12 per cent of the entire salary without taking into consideration of the salary ceiling and for directing the respondent management not to withdraw the consent given under Para. 26 (BJ of the Employees' Provident Fund Scheme, 1952 (for short the Scheme).
3. Heard the learned counsel for the petitioners and the learned counsel for the Management.
4. The officers and employees of the South Malabar Gramin Bank and the North Malabar Gramin Bank were contributing to the scheme in excess of the rate of contributions prescribed by law. The employer also was making equal contribution under the scheme which was in excess of the statutory limits on the basis of joint applications filed by the management and the employees before the concerned employees provident fund authorities. It was submitted by the learned counsel for the unions that by Exhibit P2 notification, the management had withdrawn from the above agreement without notice to the employees and officers and had reduced and limited their share of contribution to the statutory limits and as the management had already consented for making contribution in excess of the statutory limits, they were not entitled to withdraw from the above agreement unilaterally and they were bound to continue to contribute the same amount. The learned counsel for the management submitted that due to the change of circumstances including the enhancement of salary of the employees and other benefits and also as per the objection raised by the inspecting authorities, it had become impossible for the bank to make such contribution in excess of the statutory limits and hence the management had issued the circular informing all the employees that the above consent granted earlier shall stand withdrawn. It was further submitted that there was no statutory bar for the management to withdraw from the payment of the contribution in excess of the statutory limits and their liability was only to make the contribution up to the statutory limits. Paragraph 29 of the scheme deals with the payment of the contribution to the scheme. Sub-paragraphs (1) and (2) of Para. 29 read as follows:
29. Contribution.—(1) The contributions payable by the employer under the scheme shall be at the rate of ten per cent of the basic wages, dearness allowance (including the cash value of any food concession) and retaining allowance (if any) payable to each employee to whom the scheme applies:
Provided that the above rate of contribution shall be twelve per cent in respect of any establishment or class of establishments which the Central Government may specify in the Official Gazette from time to time under the first proviso to Sub-sec. (1) of S. 6 of the Act.
(2) The contribution payable by the employee under the scheme shall be equal to the contribution payable by the employer in respect of such employee:
Provided that in respect of any employee to whom the scheme applies, the contribution payable by him may, if he so desires, be an amount exceeding ten per cent or twelve per cent, as the case may be of his basic wages, dearness allowance and retaining allowance (if any) subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under the Act.
Sub-paragraph (1) prescribes the rate of percentage of the salary to be made to the fund by the employer towards contribution. Sub-paragraph (2) says that the contribution payable by the employee shall be equal to the contribution payable by the employer in respect of such employee. But the proviso says that the employee shall be at liberty to make contribution in excess of the rate prescribed under Sub-para. (1) but by such payment made by the employee in excess of the above statutory limits, the employer shall not be obliged to make contribution in excess of the statutory limits fixed under Sub-para. (1). Paragraph 26 of the scheme deals with the classes of employees entitled and required to join the fund. Sub-paragraph (1) says that every employee employed or in connection with the work of a factory or other establishment to which the scheme applies other than any excluded employee, shall be entitled to be required to become a member of the Fund. Sub-paragraph(6) of Para. 26 says that the PR authorities can permit the employee to enrol as a member and to contribute more than Rs. 6,500 of his pay per month, if he is already a member and an application is filed jointly by the employer and employee and the employer makes an undertaking in writing that the employer shall pay the administrative charges payable and shall comply with all statutory provisions in respect of such employee. Sub-paragraph (8) of Para. 26 reads:
(6) Nowithstanding anything contained in this paragraph and officer not below the rank of an Assistant Provident Fund Commissioner may, on the joint request in writing of any employee of a factory or other establishment to which this scheme applies and his employer enroll such employee as a member or allow him to contribute more than rupees six thousand and five hundred of his pay per month. If he is already a member of the fund and thereupon such employee shall be entitled to the benefits and shall be subject to the conditions of the fund, provided that the employer gives an undertaking in writing that he shall pay the administrative charges payable and shall comply with all statutory provisions in respect of such employee.
The above provisions would make It clear that permission has to be granted by the provident fund authorities to the employee for enrolling as a member and for making the contribution on more than Rs. 6,500 of his pay. Such permission has to be granted on the basis of a joint application by the employer and employee and an undertaking from the employer that the employer shall pay the administrative charges and shall comply with all statutory provisions regarding the employee. The above clause did not say that there should be any undertaking that the employer also should pay an equal amount of contribution. But it says that there should be an undertaking from the employer regarding the payment of administrative charges. The above provision allows the provident fund authorities to permit the employee to make contribution and it does not empower the authorities to allow the employer also make such contributions in excess of the limits.
5. Paragraph 26A of the scheme deals with the retention of the membership under the scheme. Paragraph 26A reads:
“26A. Retention of membership.— (1) VA member of the fund shall continue to be member until he withdraws under Para. 69 the amount standing to his credit in the fund or is covered by a notification of exemption under S. 17 of the Act or an order of exemption under Para. 27 or Para. 27A.
Explanation: In the case of claim for refund by a member under sub-para. (2) of Para. 69, the membership of the fund shall be deemed to have been terminated from the date of payment is authorised to him by the authority specified in this behalf by Commissioner irrespective of the date of claim.
(2) Every member employed as an employee other than an excluded employee’ in a factory or other establishment to which this scheme applies shall contribute to the fund and the contribution shall be payable to the fund in respect of him by the employer. Such contribution shall be in accordance with the rate specified in Para. 29:
Provided that subject to the provisions contained in Sub-para. (6) of Para. 26 and in Sub-para. (1) of Para. 27, or Sub-para. (1) of Para. 27A, where the monthly pay of such a member exceeds six thousand and five hundred rupees the contribution payable by him and in respect of him by the employer, shall be limited to the amounts payable on a monthly pay of six thousand and five hundred rupees including dearness allowance, retaining allowance (if any) and cash value of food concession.”
Sub-paragraph (1) of Para. 26A says that a member shall continue to be a member until he withdraws under Para. 69 the amount standing in his credit Sub-para. (2) of Para. 26A stipulates that a member shall contribute to the Fund and the same shall be remitted by the employer and the amount of contribution shall be in accordance with the rate specified under Para. 29. As per Para. 29, an employee would be at liberty to contribute at more than the prescribed rate of percentage, but the employer shall not be obliged to contribute in excess of the prescribed rate. The proviso to Para. 26A(2) says that if the wages of the member exceeds the prescribed limit, i.e, if it exceeds its Rs. 6,500 per mensem, the contribution payable by the employer and employee shall be limited to the amounts payable on a monthly pay of Rs. 6,500. When the wages of the member exceeds the prescribed wage-limits in view of the proviso to Sub-para. (6) of Para. 26, the provident fund authorities can permit the employee to make contributions to the fund in excess of the wage-limits, if there is a Joint application by the employer and employee and an undertaking by the employer that he shall meet the administrative charges. A consideration of all the above provisions would make it clear that the employer was not at all obliged to make contributions in excess of the statutory limits regarding the rate of contribution and also on the amount of contribution in excess of the wage-limits. But when the employee is permitted to make contributions in excess of the prescribed wage-limits, there shall be an undertaking by the employer that he shall pay the administrative charges payable and shall comply with the statutory provisions in respect of such employee under S. 26(6) of the Act. The joint application filed by the employee and the employer shall be only with respect to an undertaking by the employer that the employer shall pay the administrative charges payable. Even if there was an agreement between the respondent-bank and employees regarding the payment of the contribution in excess of the statutory limits towards the share of the employer's contribution, it was not covered by Sub-para. (6) of Para. 26 or any provisions under the scheme. On the other hand, there is a specific direction under Para. 26A(2) that the contribution payable by the employer shall be limited to the amount payable on the monthly pay of Rs. 6,500. It appears that in the joint application, the employer-bank also had agreed to make contribution in excess of the statutory limits. As per the provisions of the scheme, the employees' provident fund authorities can grant permission to the employees alone to make contribution in excess of the wage-limits. So, even if the permission was granted by the employees' provident fund authorities to the employer to make contributions in excess of the wage-limits, it was unauthorised.
6. When the employer had agreed for making contribution in excess of the statutory limits, it did not mean that it was for ever. When the salary was revised or when the ceiling limits had been enhanced or modified, naturally the employer was also entitled to reconsider or revise or withdraw from its earlier decision. Hence, I do not think that there was any prohibition under the scheme for the management to withdraw from their earlier decision making the employer's share of contribution in excess of the statutory limit or limiting the contribution to the statutory limits.
7. Another argument advanced by the learned counsel for the petitioners was that there was a prohibition under S. 12 of the Employees' Provident Funds and Miscellaneous Provisions Act, for short, the EPF Act) from reducing the benefit which the employees were enjoying. Section 12 of the Act reads:
“12. Employer not to reduce wages, etc.
No employer in relation to an establishment to which any scheme or the insurance scheme applies shall, by reason only of his liability for the payment of any contribution to the fund or the insurance fund or any charges under this Act or the scheme or the insurance scheme, reduce whether directly or indirectly, the wages of any employee to whom the scheme or the insurance scheme applies or the total quantum of benefits in the nature of old age pension, gratuity, provident fund or life insurers to which the employee is entitled under the terms of his employment, express or implied”.
Section 12 prohibit the employer from reducing the wages of the employee for avoiding his liability to pay contributions to the E.P.F Scheme. It says that the employer should not reduce whether directly or indirectly, the benefits of the old age pension, gratuity, provident fund, life insurance, etc, to which the employee was entitled under the terms of his employment express or implied. The learned counsel for the petitioners submitted that there was a prohibition under S. 12 of EPF Act that the employer should not reduce the benefits enjoyed by the employee either directly or indirectly and by reducing the employer's share of contribution, the benefits which the employees were enjoying would be reduced. Section 12 imposes a prohibition from reducing the wages with an intent to, by reason only of his liability for the payment of contribution to the Scheme. It further says that the employer cannot reduce it directly or indirectly if by the terms of employment, the employee shall be entitled to such benefits. The petitioner had no case that the terms of employment was such that the employer had agreed to contribute to the employees' provident fund Scheme in excess of the statutory limits. There was no case for the petitioners that the wage was reduced or that the terms of employment included such a concession that the employer shall make contributions to the scheme in excess of the statutory limits. In the absence of any such allegation, I do not think that S. 12 can have any application.
8. The learned counsel for the petitioners placed reliance on the decision of the High Court of Bombay in Consolidated Crop Protection (P). Ltd. v. V. Hema Chandra Rao, [1976 (2) L.L.N 469], and a decision of the Supreme Court in Som Prakash Rekhi v. Union of India, [1981 (1) L.L.N 322]. The facts of the above cases are not similar to the facts of the present case. Those were cases where the employer had their own pensionary scheme and thereafter the employees were brought under the purview of the EPF Scheme of 1952. As per the earlier scheme of the management, the employees were entitled to more benefits and by bringing them within the purview of the EPF Scheme of 1952, there was reduction in certain benefits. It was in those circumstances, the High Court of Bombay and the Supreme Court held that the benefits which the employees were enjoying under the earlier scheme should not be reduced. The facts of the present cases are different and have no similarity and hence the above decisions cannot have any application to the present case.
9. Reliance was placed by the learned counsel for the petitioners on the decision of the Karnataka High Court in Regional Provident Fund Commissioner, Bangalore v. Harihar Poly Fibres, [1991 (2) L.L.N 948]. That also was a case where under an earlier scheme, the establishment (employer) was making contribution at 10 per cent of the salary. But, when the employees were brought under the EPF Scheme of 1952 the management reduced contribution to 8 per cent, the statutory limit. In the above circumstances, the Karnataka High Court placing reliance on the decisions cited supra, held that such a reduction in the benefit already enjoyed by the workmen cannot be made. In the present case, the management was contributing to the EPF Scheme in excess of the statutory limits. But, due to the revision of pay and the enhancement of the ceiling limits, the employer was compelled to change and to stop the making of the contribution in excess of the statutory limits and by reducing and limiting the contribution at the statutory rate and hence S. 12 cannot have any application.
10. Another argument advanced by the learned counsel for the petitioners was that there was violation of S. 9-A of the Industrial Disputes Act and as such the notifications are liable to be quashed. Section 9-A of the Industrial Disputes Act does not impose an absolute bar in effecting any change in the conditions of service.
Section 9-A reads:
“9A. Notice of change:
No employer, who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change—
(a) without giving to the workmen likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected; or
(b) within twenty-one days of giving such notice:
provided that no notice shall be required for effecting any such change—
(a) where the change is effected in pursuance of any settlement or award; or,
(b) where the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Services, Regulations. Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply.”
Learned counsel for the management submitted that there was no change in the conditions of service by limiting the contribution from the part of the employer to the statutory limits and as such there was no violation of S. 9-A of the Industrial Disputes Act (for short, the I.D Act). It was further submitted that even if it be treated as a change in the conditions of service, the circular would be a notice as contemplated by law to all the employees regarding the intention of the employer to reduce the contribution to the statutory limits. Learned counsel for the petitioners placed reliance on the decision of the Supreme Court in the Management of Management Of Indian Oil Corporation Ltd. v. Workmen, [(1976) 1 SCC 63 : A.I.R 1975 S.C 1856]. The facts of the above case are entirely different from the facts of the present case. That was a case where the management of Assam Oil Refineries, Gauhati took an independent and voluntary decision to grant to the employees Assam Compensatory Allowance on the basis of the Central Government Circular which granted such allowance to all Central Government employees. Thereafter, there was another notification by the Central Government by which it was provided that the employees in receipt of Assam Compensatory Allowance would be given the option to choose the house rent allowance or compensatory allowance, but they will not be entitled to draw both. Thereafter the company unilaterally without giving any notice to the workmen withdrew the concession of the compensatory allowance. The workmen moved the Government for making reference to the Tribunal because a dispute arose regarding the competency of the management to withdraw the concession granted by them unilaterally. There, the Supreme Court held that the grant of Assam Compensatory Allowance was an implied condition of service and by withdrawing the above allowance, the employer sought to effect a substantial change which would affect the service conditions of the workmen. I do not think that the above decision can have any application in the present case. Even if there is a change of service conditions, it is for the petitioners to raise an industrial disputes before the appropriate forum and this Court cannot treat it as an industrial dispute and take a decision. Hence, the above argument advanced by the learned counsel for the petitioners also cannot be accepted. The management was competent to take a decision restricting their share of contribution to the EPF scheme to the statutory limits. The concession they had given by making the contribution at the, same rate of the contribution made by the workmen, i.e, in excess of the statutory limits was in violation of the provisions of the scheme and hence has to be modified in accordance with the provisions of the scheme. Hence I do not find any grounds for interference with the notification issued by the South and North Malabar Gramin Banks limiting their rate of contribution to the EPF Scheme at the statutory limits and all these original petitions are liable to be dismissed.
11. In the result, all the original petitions are dismissed.
Petitions dismissed.