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National Thermal Power Corporation, Ltd. v. Regional Provident Fund Commissioner And Another

Calcutta High Court

Mar 3, 1998

Judgment

Subsequent
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Factual and Procedural Background

The National Thermal Power Corporation Ltd. (the petitioner) filed a writ application challenging an order dated 10 January 1996 that fixed a liability to pay and deposit Rs. 4,31,82,834.60 in respect of certain employees of a contractor. It was noted that those employees were said to have been appointed by the Corporation for work in the township rather than for generation of electricity, but the Court did not decide that point at this stage. The core factual-procedural question identified by the Court was whether the workers were employed directly by the Corporation or by a contractor, and whether the provident fund authorities had obtained the particulars of the workers necessary to make a determination.

An investigating team had produced materials on which the liabilities were fixed. The opinion refers to the extended meaning of "employee" under Clause (f) of Section 2 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and observes that provident fund monies must ultimately be kept to the credit of individual workers (the ultimate beneficiaries). The provident fund authorities alleged that the principal employer had an obligation to disclose particulars and deposit the money but failed to do so.

Procedurally, the Court declined to make a final determination on the merits and directed that the respondents keep an order dated 1 October 1996 in abeyance, give the petitioner an opportunity to produce documents, and require the Corporation to produce contract records. The authorities were directed to summon contractors and enforce their attendance to obtain names and addresses of employees, and then, after hearing all parties, to pass a fresh order — preferably within two months. The writ application was described as disposed of, with directions that it be kept pending for the purposes described.

Legal Issues Presented

Whether the workers in question were employed directly by the National Thermal Power Corporation Ltd. or by a contractor for the work of the establishment.
Whether, and to what extent, the provident fund authorities can require disclosure of particulars and enforce production of documents and attendance (including summoning contractors) under Section 7-A(2) and related provisions to determine liability.

Arguments of the Parties

Provident Fund Authorities' Arguments

The provident fund authorities' counsel alleged that the obligation to disclose particulars and to deposit provident fund monies was on the part of the principal employer, and that the principal employer had failed to discharge that obligation.

Petitioner (National Thermal Power Corporation Ltd.)

The opinion does not contain a detailed account of the petitioner's legal arguments beyond noting that the Corporation was aggrieved by the order fixing liability and that it may raise all points before the authorities. No further specifics of the petitioner's submissions are recorded in the provided opinion.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court reasoned as follows, based solely on the material and statutory provisions recorded in the opinion:

The central factual determination — whether the workers were employed by the Corporation or by a contractor — must be made on the basis of records, contracts and documents; the Court should not pre-empt that determination.
Given the extended definition of "employee" in Clause (f) of Section 2 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, if liability is established the provident fund authorities must hold monies on account of the individual workers who are the ultimate beneficiaries; identification of those beneficiaries is therefore necessary.
Section 7-A(2) confers on officers conducting an enquiry powers equivalent to those of a civil court (e.g., enforcing attendance, examining on oath, requiring discovery and production of documents, receiving evidence on affidavit, issuing commissions). Such enquiries are to be treated as judicial proceedings for the purposes of certain penal provisions. This enables authorities to compel production of materials relevant to determination.
Sub-section 3A of Section 7 permits authorities, if documents are not produced, to determine amounts due on the basis of available evidence or documents; however, this does not absolve officers of the responsibility to make a proper determination.
Contractors are in the best position to provide names and addresses of the employees they engaged; therefore, simply issuing a notice is insufficient — authorities must enforce attendance of contractors under the powers in Section 7-A(2) to collect necessary material.
Because the authorities are statutorily charged with making the effective determination, it would be improper for the Court at this stage to make final determinations or observations that might affect the pending administrative determination.
Accordingly, the Court directed procedural steps (abeyance of the order dated 1 October 1996, opportunity to produce documents, production of contractual records by the Corporation, summoning and enforcing attendance of contractors, and a fresh decision after hearing) to enable the authorities to perform their statutory duties. The Court requested these steps be taken expeditiously, preferably within two months.

Holding and Implications

Holding: Writ application disposed of; order dated 1 October 1996 kept in abeyance.

Direct consequences and practical implications as stated in the opinion:

Respondents are directed to keep the order dated 1 October 1996 in abeyance.
The petitioner is to be given an opportunity to produce documents; the Corporation must produce all records and documents relating to the contract.
If authorities cannot find relevant material, they must take further steps, including summoning each contractor and enforcing their attendance to obtain names, addresses and particulars of employees and workmen.
After giving all parties an opportunity to be heard and following the statutory procedure, the authorities will pass a fresh order either confirming, revoking or altering the earlier order; these steps should be completed expeditiously, preferably within two months.
The writ application is described as disposed of, but the Court directed the matter be kept pending for the administrative determination. The Court explicitly stated it has not adjudicated any points on merit; the petitioner may raise all available points before the authorities.
All parties must cooperate with the provident fund authorities, and all parties may act on a signed xerox copy of the dictated order on the usual undertaking.

Show all summary ...

By the Court:— The National Thermal Power Corporation, Ltd, filed a writ application being aggrieved by an order, dated 10 January, 1996, fixing the liability to pay and to deposit a sum of Rs. 4,31,82,834.60 on account of certain employees of the contractor, who, it is stated, were appointed by the National Thermal Power Corporation, Ltd, not for the purpose of generation of electricity but for the purpose of doing some other works in the township. At this stage we are not concerned with this point as it appears to us that the question that requires to be considered on the basis of records and documents was that whether the Corporation had employed the workers by themselves or through a contractor or in connection with the work of the establishment and that for this purpose it is necessary on the part of the provident fund authorities to get the particulars of the workers or employees employed by the contractor. In the instant case, it appears that on the basis of the report of the investigating team certain materials were obtained and the liabilities were fixed. One thing is clear that in case such liability is there in view of the extended meaning of the definition of the term “employee” as provided in Cl. (f) of S. 2 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, the employees provident fund authorities have to keep money on account of the individual workers or employees who are the ultimate beneficiaries. But from the order itself it does not appear that the workmen and the employees had not been and could not have been identified. Monies so collected had ultimately to be kept in the account of the employees concerned who are the ultimate beneficiaries and they must also know that if the liability is there on the part of the Corporation or anybody else and no provident fund amount is laying to their credit, in that event, the money has to be given back to such employees. It is a social welfare made for the benefit of the employees concerned.

2. It is alleged by the learned counsel appearing on behalf of the provident fund authorities that the obligation was on the part of the principal employer to disclose the particulars and to deposit the money which they failed to do.

3. In view of the provisions of S. 7-A(2) of the Act for the purpose of making an effective determination of an objection and/or liability, the officers conducting enquiry were conferred with the same power as are vested in a Court under the Code of Civil Procedure for trying a suit in respect of enforcing the attendance of any person or examining him on oath, requiring the discovery and production of documents; receiving evidence on affidavit; issuing commissions for the examination of witnesses and by such enquiry should be deemed to be a judicial proceeding within the meaning of Ss. 193 and 228 and for the purpose of S. 196 of the Indian Penal Code. It is also true in view of the provisions of Sub-sec. 3-A of S. 7 that in case the documents are not produced, in that event, the authorities are competent to determine the amount due from the employer on the basis of the evidence during such enquiry or documents available on record. This Sub-sec. (3A) does not absolve responsibility of the officers making determination of money due from the employer to employees. The question whether the workers were employed by the Corporation directly or through the contractor has to be determined on the basis of the contracts and that for the purpose of ascertaining the name and address and the particulars of the workers, it would be necessary for summoning the contractor and/or examining them for the purpose of getting materials for making effective determination. It is the contractors who are in a position to know the name and address of the workers, who are engaged by the contractor for the purpose of the work which was entrusted by the corporation. But in that instant case, simply issuance of a summon or notice to appear would not be sufficient but the authorities concerned are bound to force them to appear in exercise of the power conferred in Sub-sec. (2) of the S. 7-A as the authorities concerned had to collect material for the purpose of discharging their statutory duties and responsibilities imposed under the law. Accordingly, we are or the view that it would not be proper on the part of this Court to make final determination or to make any observation which will ultimately affect the proposed determination which is required to be made by the authorities concern in accordance with law.

4. Accordingly, we direct the respondents to keep the order, dated 1 October, 1996, in abeyance and give the petitioner an opportunity to produce documents and we also direct the Corporation to produce all records and documents which are in their possession in respect of the contract. Thereafter, the authorities concerned if they are unable to find out relevant material required for the purpose of determination as indicated above in that event, they would take steps in the matter and further for the purpose of getting name and address of the employees and the workmen each and every contractor should be summoned and their attendance should be enforced before the authorities concerned and after giving opportunity to all the parties, and after hearing the matter in accordance with law, the authorities concerned will pass a fresh order either confirming the order or revoking and/or altering the order that had already been passed. Steps in terms of this order should be taken as expeditiously as possible preferably within two months.

5. The view we have taken of useful purpose will be served in keeping the writ application pending which stands disposed of. It is made clear that all the parties should co-operate with the provident fund authorities for the purpose of making determination in this matter as required under the law.

6. It is also made clear that we have not adjudicated any of the points on merit which are left open and the petitioner corporation would be entitled to raise all points which are available to them before the said authorities.

7. All parties to act on a signed xerox copy of this dictated order on the usual undertaking.

Application disposed of.