K.V Hymavathi v. Special Deputy Tahsildar And Others

1. The short issue that arises for decision in this writ petition filed under Art. 226 of the Constitution of India as to whether an employer who gets voluntarily covered as an establishment under S. 1(4) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the EPF Act) is exempted from paying contribution under the Kerala Motor Transport Workers' Welfare Fund Act, 1985 (Welfare Fund Act for short), by virtue of the proviso to S. 4(1) of that Act.

2. The factual matrix on which this issue is raised is that the petitioner, an individual namely, K.V Hymavathi and M. Balakrishnan and K.V Devaki, who own three different stage carriages, applied for being covered under S. 1(4) of the EPF Act on the basis, of a joint application, dated 23 January, 2002 from the employees and the consent letter issued by the aforesaid persons. With effect from 1 January, 2002 Code No. KR/KNR/18135 is allotted to the said establishment awaiting statutory notification by the Central Provident Fund Commissioner in terms of S. 1(4) of the EPF Act. This fact is evidenced by Exhibit P2. Exhibit P4 evidences that the writ petitioner, K.V Hymavathi owns vehicle No. KL-IOC 1591. She employs three persons. Vehicles, KL-13J 3563 and KL-13A 1081 belong respectively to M. Balakrishnan and K.V Devaki, who employed four persons each. This is evidenced by Exhibit P4 certificate. Thus, three different owners of three different vehicles with three different sets of employees are brought under the cover of the EPF Act, by recourse to S. 1(4) thereof, on the consent of the said employees and employees and by calling the aforesaid activity as a single establishment.

3. Until the aforesaid exercise was undertaken under the EPF Act, the petitioner remitted contributions under the Welfare Fund Act up to December, 2001. Exhibit P4 evidences that from January, 2002, the compliance position of the establishment up to 4/05 is satisfactory under the EPF Act. On the strength of the fact that the establishment is so brought under the cover of the EPF Act, voluntarily, the petitioner impeaches Exhibit P5 revenue recovery proceedings initiated for default of remittances due under the Welfare Fund Act. The plea of the petition is that having been covered under the EPF Act, the petitioner is not liable to make any payment under the Welfare Fund Act.

4. I have heard advocate Sri. P.M Pareed on behalf of the petitioner advocate Sri. Paulson C. Varghese on behalf of the second respondent. Advocate Sri. R Sudheer on behalf of the third respondent and Sri. John Joseph Vettikad on behalf of the State of Kerala.

5. The Welfare Fund Act is an enactment by the State of Kerala which is deemed to have come into force on 27 June, 1985. Section 4(1) of the said Act reads as follows:

“4. Contributions to the Fund— (1) The contribution which shall be paid by the employer to the Fund shall be eight per cent of the wages for the time being payable to each of the employees and employees' contribution shall be equal to the contribution payable by the employer in respect of him;

Provided that nothing in this sub-section shall apply to a motor transport undertaking to which the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (Central Act 19 of 1952), apply.”

6. While the aforesaid enactment came into force, the EPF Act contained the provision whereby the employer and employees could agree to be governed by the provisions of the EPF Act. Section 1(4) of the EPF Act, as it then stood, reads as follows:

“(4) Notwithstanding anything contained in Sub-sec. (3) of this section or Sub-sec. (1) of S. 16, where it appears to the Central Government, whether on an application made to it in this behalf or otherwise, that the employer and the majority of employees in relation to any establishment have agreed that the provisions of this Act should be made applicable to the establishment, it may, by notification in the Official Gazette, apply the provisions of this Act co that establishment.”

The object and reason for introducing Sub-sec. (4) in S. 1, as above, as per Act 37 of 1953, were that, until then, there was no power for applying the Scheme to a factory (establishment) not covered by the Act even when the employer and the employees ask for such application.

7. By the substitution, as per Act 33 of 1988, with effect from 1 August, 1988, the authority to notify the voluntary coverage under S. 1(4) of the EPF Act has been conferred on the Central Provident Fund Commissioner and such coverage is clarified to be on and from the date of such agreement or from any subsequent date specified in such agreement.

8. The petitioner claims exemption from the provisions of the Welfare Fund Act relying on a proviso. So much so, that proviso needs to be considered.

9. The validity of the Welfare Fund Act was upheld by the Division Bench of this Court in Unni Mammu Haji v. State Of Kerala, [1989 (1) KLT 779. Repelling the contentions of the employers, this Court held that the Welfare Fund Act and the Scheme thereunder is not an unreasonable restriction on the employer's right to carry on trade under Art. 19(1)(g) of the Constitution. To hold so, this Court had viewed the effect of S. 4(1) of the Act and the proviso thereto as one resulting in making the Welfare Fund Act applicable to undertakings, which do not employ 20 or more employees. Such a view of the Bench can be easily gathered from the said judgment, though S. 1(4) of the EPF Act was very much in the statute book, as already noticed.

10. The proviso to S. 4(1) of the Welfare Fund Act, on a plain reading, does not admit any scope for an inference of a legislative intention to have the sweep of the said proviso dependent on the volition of the employer and employees. Going by the scheme of the provisions of the Welfare Fund Act and the scheme framed thereunder, it is the undisputed position that the benefit that a member of the fund would get under the scheme is much more than what he would get under the provisions of the EPF Act. Both being legislations which are made for the welfare of the workers, the social welfare goals sought to be achieved by the said beneficial legislations can be comparatively considered for the purpose of noticing the intention of the Legislature. Going by this yardstick, the conclusion can only be that it was never the intention of the State Legislature, by enacting the proviso to S. 4(1) of the Welfare Fund Act, to permit employers and majority of the employees, to voluntarily go under the net of the EPF Act, depriving the employees of the more beneficent provisions available under the Welfare Fund Act. It cannot be held that it was ever the intention of the State Legislature to permit those persons who come under the cover of the EPF Act by the exercise provided under S. 1(4) of the EPF Act to escape from the net of the Welfare Fund Act.

11. The. EPF Act and the Welfare Fund Act fall under Entry, 24 of list III of the Seventh Schedule to the Constitution, which relates to “Welfare of labour including conditions of work; provident funds, employer's liability, workmen's compensation, invalidity and old age pensions and maternity benefits”. The thrust of the said Entry is essentially social welfare. The declared socialist object of the Constitution and the concept of Welfare State glitter in this Entry and when legislative exercises are undertaken with reference to the said subject, such enactments have to be construed as statutes conferring benefit on citizens and are based on public policy. When public policy requires the observance of the provision, it cannot be waived by an individual. “Privatorum conventiojuri publico non derogaf.” Private contracts are not permitted to impair the integrity of a rule necessary for the common welfare. Any dispensation of the rights under a social welfare legislation will be an entrenchment on the public policy or public right in contra distinction to the benefit and protection of the individual in his private capacity. The Legislature, while enacting the Welfare Fund Act, can never be treated to have contentedly trusted the employers and employees to make their own bargains by getting the establishment voluntarily covered under the EPF Act by recourse to S. 1(4) thereof and thereby depriving the employees of the better provisions of the Welfare Fund Act. From the relative figures of contributions paid under the EPF Act and the amount to be contributed under the Welfare Fund Act, the contribution made under the EPF Act would be ridiculously low. The purpose of exclusion under the proviso to S. 4(1) of the Welfare Fund Act is not to deny the legitimate benefits of employees of establishments, which do not fall within the limits of S. 1(3) of the EPF Act and thereby compulsorily covered by that Act. The Welfare Fund Act is made in the interest of the welfare of motor transport workers, whose welfare, in the wisdom of the Legislature, required to be protected, having regard to their conditions. As noticed in Unni Mammu Haji (vide supra), the Welfare Fund Act is a beneficial legislation in favour of an unorganised class of labour, employed in such motor transport undertakings. By the very nature of the undertaking, the employees are not secure in service. There is no security in service, nor is the labour organised in such undertakings. The purpose of social welfare legislation in the context of relationships like that of an employer-employee, is to protect the employee and concede to the reasonable rights of the employer, thereby attempting to strike a balance between the reciprocal rights, having regard to the age old, but indisputable, fact that they have unequal bargaining power between them. So much so, if an establishment that gets voluntarily covered under the EPF Act by recourse to S. 1(4) thereof is to be treated as an establishment entitled to exemption by virtue of the proviso to S. 4(1) of the Welfare Fund Act, it will, in effect, be permitting the employer and the majority of the employees to decide for themselves and thereby contract out of the Welfare Fund Act, a social welfare legislation. This is plain against the concept of the Welfare Fund Act and the objects sought to be achieved thereby. Where a statutory provision is based on public policy and is intended to achieve and sustain a social welfare goal, the same cannot be waived by, even the beneficiary thereof, since such waiver will be an infringement of the public policy embedded. This is so because the underlying intention of the Welfare Fund Act is that the Legislature decided to offer some measure of protection to a very large number of persons who are really required to be protected. The Welfare Fund Act is an enactment based on public policy for achieving a public purpose. The object of such an enactment cannot be achieved, if parties are allowed to contract out of it by method similar to that adopted by the petitioner and her workers. The protection given to the workers is based on public policy. It cannot be waived or defused by recourse to the proviso to S. 4(1) on the basis of a voluntary cover obtained under the EPF Act by recourse to S. 1(4) thereof.

12. The primary and foremost task of a Court in interpreting a statute is to ascertain the intention of the Legislature, actual or imputed. Having ascertained the intention, the Court must then strive to so interpret the statute as to promote and advance the object and purpose of the enactment. For this purpose, where necessary, the Court may even depart from the rule that plain words should be interpreted according to their plain meaning. (See Girdhari Lal & Sons v. Balbirnath, [(1986) 2 SCC 237 : A.I.R 1986 S.C 1499]. A construction to narrow down the language of a statute and to allow persons, to escape from its purview should not be encouraged. The Legislature should always be supposed, not to have intended to contradict itself and therefore, in construing a particular provision, the Court will always endeavour to construe the language of a statute in such a way as to avoid contradictions. A construction most agreeable to justice and reason should be adopted in construing the provisions in a statute. No statute should be construed as to produce wholly unreasonable or inconvenient result. (See Krishnan v. Vijayaraghavan, 1977 KLT 1013). There can be no interpretation or construction of a statute in any manner leading to unintended and undesired results.

13. On the general principle of avoiding injustice and absurdity, any construction will, if possible, be rejected (unless the policy of the Act requires it), it would enable a person by his own act to impair an obligation. He is not entitled to plead in his own interest, a self-created necessity - See Maxwell on the Interpretation of Statutes - 12th Edn. The voluntary cover under the EPF Act is a situation invited by the employer on his own volition. Such exercise is not projected as a reason to be free from the net of the Welfare Fund Act. As already noticed, the benefit that the workers get under the Welfare Fund Act is much in excess of what would be available under the EPF Act. Even if it is to be assumed that the employees had voluntarily joined the employer to be covered under the EPF Act, after knowing its consequences, such exercise only ultimately results in providing room for the employer to seek exemption of a statutory obligation under a social welfare legislation. This is plainly impermissible. It is only a mechanism to defeat a statute with public purpose and public rights, founded on public policy. The mischief has to be suppressed and the remedy has to be advanced.

14. So much so, notwithstanding the fact that the petitioner and her employees would have voluntarily brought the petitioner's establishment under the cover of the EPF Act by recourse to S. 1(4) thereof, the, petitioner continues to be an employer for the purpose of the Welfare Fund Act and hence, liable to make remittances under the Welfare Fund Act. It is so declared. In this view of the matter, the challenge of the petitioner fails.

In the result, the writ petition is dismissed. No costs.