AMICUS AI
Citation Codes
Neutral Citations
1989 INSC 328
Equivalent Citations
citation codes
Case Number
Disposition
Advocates
Judges
Acts
  • Section 7-A of the Employees' Provident Fund Act
  • Code of Civil Procedure, 1908
  • Code of Civil Procedure for trying a suit
  • Article 226 of the Constitution
  • The Contract Labour (Regulation and Abolition) Act, 1970
  • Section 7-A of the said Act
  • Sections 193 and 228, and for the purpose of Section 196 of the Indian Penal Code
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Cites
Cited by
Citation Codes
Neutral Citations
1989 INSC 328
Equivalent Citations
citation codes
Case Number
Disposition
Advocates
Judges
Acts
  • Section 7-A of the Employees' Provident Fund Act
  • Code of Civil Procedure, 1908
  • Code of Civil Procedure for trying a suit
  • Article 226 of the Constitution
  • The Contract Labour (Regulation and Abolition) Act, 1970
  • Section 7-A of the said Act
  • Sections 193 and 228, and for the purpose of Section 196 of the Indian Penal Code
Smart Summary

Factual and Procedural Background

The Food Corporation of India (FCI) operates multiple depots across Rajasthan for handling and transporting food grains. It contracts out the execution of these tasks, and the contractors, in turn, hire workers. The Provident Fund Commissioner demanded that FCI deposit provident-fund contributions for these workers under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Upon FCI’s non-compliance, the Commissioner issued an order under Section 7-A determining that approximately Rs 22.48 lakhs were payable. FCI challenged this determination in a writ petition under Article 226 of the Constitution, which the Rajasthan High Court dismissed. FCI then appealed to the Supreme Court.

Legal Issues Presented

  1. Whether the Provident Fund Commissioner failed to exercise his statutory powers under Section 7-A to collect and verify evidence—particularly by summoning contractors and their records—before determining FCI’s liability for provident-fund contributions.
  2. Whether the denial of an opportunity to FCI to produce identification details of the workers rendered the Section 7-A determination invalid.

Arguments of the Parties

Appellant – Food Corporation of India

  • Contended it was denied a reasonable opportunity to produce evidence identifying the workers for whom contributions were allegedly due.
  • Highlighted that contractors—who possess the relevant employee lists—were neither summoned nor made parties to the Section 7-A proceedings despite repeated requests.

Respondent – Union of Workmen

  • Argued that, under the Contract Labour (Regulation and Abolition) Act, 1970, FCI is the principal employer and is therefore obligated to maintain its own list of workers.
  • Asserted that FCI’s failure to produce such lists justified the Commissioner’s reliance on the lists furnished by the union.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Supreme Court emphasized that a Section 7-A inquiry is a quasi-judicial proceeding in which the Commissioner possesses powers akin to those of a civil court: enforcing attendance, examining witnesses on oath, compelling discovery and production of documents, receiving evidence by affidavit, and issuing commissions. The Court noted that:

  • The Commissioner had based his large monetary determination (approximately Rs 22.48 lakhs) solely on lists supplied by the Workers’ Union.
  • While both the employer and contractors are obliged to maintain worker registers, FCI’s depots are geographically dispersed, making consolidation of records difficult.
  • FCI specifically requested that contractors be summoned to produce the relevant lists, a request the Commissioner ignored.
  • Failure to use the compulsory-process powers available under Section 7-A, particularly when a party seeks their exercise, amounts to a failure to exercise jurisdiction.

Accordingly, the Court held that the Commissioner must actively collect and scrutinize all available evidence before fixing liability; abstract determinations based on unilateral lists are impermissible.

Holding and Implications

Holding: The appeal is allowed; the orders of both the Provident Fund Commissioner and the Rajasthan High Court are set aside. The matter is remitted to the Commissioner for fresh determination in accordance with law and the Court’s observations. Parties are directed to appear before the Commissioner on 12 December 1989, and the matter is to be disposed of within three months thereafter.

Implications: The decision reaffirms that in Section 7-A proceedings the Commissioner must actively employ statutory powers to gather evidence, especially where liability hinges on identifying covered employees. The judgment directly affects only the parties but underscores procedural safeguards applicable to future provident-fund determinations.

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    Food Corporation Of India v. Provident Fund Commissioner And Others

    K. Jagannatha Shetty, J.— Special leave granted.

    2. Having heard counsel on both sides and having perused the material on record, we are of opinion that the matter requires reconsideration by the Provident Fund Commissioner.

    3. The Food Corporation of India has depots located at various places in Rajasthan for handling, storing and transporting foodgrains and other articles. It has appointed contractors for execution of such works and the contractors in turn engaged some workers. In respect of such workers, the Provident Fund Commissioner called upon the Corporation to deposit contribution payable under the Employees' Provident Fund Act and the scheme framed thereunder. When there was non-compliance, the Commissioner made an order under Section 7-A of the said Act determining amount payable by the Corporation. Being aggrieved by that determination, the Corporation moved the High Court for relief under Article 226 of the Constitution. The High Court has dismissed the petition.

    4. Hence the Corporation has appealed to this Court.

    5. The grievance complained of by the Corporation is that it was denied of reasonable opportunity to produce material in proof of identification of the workers in respect of whom the contribution was payable. It is urged that the contractors are in possession of the relevant lists and the Commissioner has not even given notice to contractors nor made them parties to the proceedings in spite of repeated requests made by the Corporation. Counsel for the Union of Workmen, however, contended that under the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 the Corporation being the principal employer has to maintain list of workers; that it has failed to produce such list and, therefore, it cannot throw the burden on the contractors to prove the case.

    6. We have carefully perused the Commissioner's order and also the order of the High Court. The total amount ordered to be payable comes to about Rs 22,48,000 in respect of the employees of depots namely: Udaipur, Jaipur, Ajmer, Badmer and Sawai Madhopur. The Commissioner has also directed the Divisional Officer, Jaipur to deposit the provident fund contribution i.e Rs 18,72,194 to the Fund being maintained by the trustees of the establishment. It is indeed a large amount for the determination of which the Commissioner has only depended upon the lists furnished by the Workers' Union. It is no doubt true that the employer and contractors are both liable to maintain registers in respect of the workers employed. But the Corporation seems to have some problems in collating the lists of all workers engaged in depots scattered at different places. It has requested the Commissioner to summon the contractors to produce the respective lists of workers engaged by them. The Commissioner did not summon the contractors nor the lists maintained by them. He has stated that the Corporation has failed to produce the evidence.

    7. The question, in our opinion, is not whether one has failed to produce evidence. The question is whether the Commissioner who is the statutory authority has exercised powers vested in him to collect the relevant evidence before determining the amount payable under the said Act.

    8. It is of importance to remember that the Commissioner while conducting an inquiry under Section 7-A has the same powers as are vested in a court under the Code of Civil Procedure for trying a suit. The section reads as follows:

    “7-A Determination of moneys due from employer—(1) The Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner or any Regional Provident Fund Commissioner may, by order determine the amount due from any employer under any provision of this Act (the scheme or the Family Pension Scheme or the Insurance Scheme as the case may be) and for this purpose may conduct such inquiry as he may deem necessary.
    (2) The officer conducting the inquiry under sub-section (1) shall, for the purposes of such inquiry, have the same powers as are vested in a court under the Code of Civil Procedure, 1908, for trying a suit in respect of the following matters, namely:

    (a) enforcing the attendance of any person or examining him on oath;

    (b) requiring the discovery and production of documents;

    (c) receiving evidence on affidavit;

    (d) issuing commissions for the examination of witnesses

    and any such inquiry shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228, and for the purpose of Section 196 of the Indian Penal Code.”

    9. It will be seen from the above provisions that the Commissioner is authorised to enforce attendance in person and also to examine any person on oath. He has the power requiring the discovery and production of documents. This power was given to the Commissioner to decide not abstract questions of law, but only to determine actual concrete differences in payment of contribution and other dues by identifying the workmen. The Commissioner should exercise all his powers to collect all evidence and collate all material before coming to proper conclusion. That is the legal duty of the Commissioner. It would be failure to exercise the jurisdiction particularly when a party to the proceedings requests for summoning evidence from a particular person.

    10. We, therefore, allow the appeal and reverse the order of the Commissioner and that of the High Court. The matter stands remitted to the Commissioner to dispose it of afresh and in accordance with law and in the light of the observation made.

    11. The parties shall appear before the Commissioner to receive further orders on December 12, 1989. The Commissioner, shall dispose of the matter within three months thereafter.

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    Food Corporation Of India v. Provident Fund Commissioner And Others
    (Oct 26, 1989)