JUDGMENT
Dated this the 02nd day of February, 2024
The petitioner, the Employees' Provident Fund Organization has approached this Court, challenging Ext.P4 order of the Employees' Provident Funds Appellate Tribunal, in ATA-45(7) 2000, through which an order of the Regional Provident Fund Commissioner, Thiruvananthapuram, under Section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the EPF Act') has been set aside.
2. The brief facts are that; The 1strespondent had, upon a settlement under the provisions of the Industrial Disputes Act, agreed to pay to all existing workmen, a sum of Rs.300/- per pensum as interim relief together with a special allowance of Rs.50 already being paid,
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pending the notification of minimum wages in respect of employees of private hospitals.
3. A question arose as to whether this amount should be factored for the purposes of determining the amount of contribution payable by the 1st respondent in terms of the provisions contained in the EPF Act. In the proceedings under Section 7A of the EPF Act, the Regional Provident Fund Commissioner, by Ext.P1 order dated 21.12.1999, came to the conclusion that the aforesaid amount of Rs.350/- per pensum (interim relief of Rs.300/- plus special allowance of Rs.50/-) should be factored for the purposes of calculating the amount of contribution to be made in terms of the EPF Act. On appeal to the Tribunal, the Tribunal came to the conclusion that the said amount need not be factored for the purposes of determining the Provident Fund contribution, going by the law laid down by the Division Bench of the Madras High Court in E.I.D. Parry (India) Ltd. v. Regional
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Commissioner EPF Tamilnadu and Ors. [(1984) ILLJ300(Mad.)].
4. A Writ Petition filed by the Regional Provident Fund Commissioner as O.P.No.21636 of 2001, was allowed by this Court through Ext.P5 judgment. The order of the Appellate Tribunal was set aside and the order of the Provident Fund Commissioner under Section 7A of the Act was restored. The 1st respondent thereupon filed Writ Appeal No.57 of 2010 and the Division Bench through Ext.P6 judgment, reversed the finding of the Single Judge in Ext.P5 judgment. Though certain observations were made on the merits of the matter, the Division Bench ultimately held that, the Writ Petition filed by the Regional Provident Fund Commissioner was not maintainable and reserved the liberty of the Provident Fund Organization to challenge the order of the Appellate Authority. It is accordingly that, this Writ Petition has been filed by the Provident Fund
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Organization, challenging the appellate order (Ext.P4).
5. The learned Counsel appearing for the petitioner would submit that the law laid down by the Division Bench of the Madras High Court in
E.I.D. Parry (India) Ltd. (Supra) is not applicable in the facts of this case. It is submitted that the facts in
E.I.D. Parry (India) Ltd.(Supra) are completely different. It is submitted that, in the case before the Madras High Court, the Court was dealing with a flat ad-hoc allowance and incentive earnings, which were specifically excluded for the benefits of Provident Fund, Bonus, Gratuity, ESI etc. It is submitted that, an identical question as arising in this case was considered by the Hon'ble Supreme Court in
Regional Provident Fund Commissioner (II) West Bengal & Ors v. Vivekananda Vidyamandir & Ors. [AIR 2019 SC 1240], where it was held that, when no material is placed by the establishment to demonstrate that the special
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allowance is paid to its employees are either variable or linked to any incentive for production resulting greater out put by an employee and also when there is nothing to show that the allowances are not paid across the Board to all employees, in a particular category, the amounts paid will partake the character of wages, for the purposes of determining the amount of contribution payable under the provision of the EPF Act.
6. The learned Counsel appearing for the 1st respondent submits that, a reference to Ext.P7 agreement will show that the amount agreed to be paid as interim relief and special allowance was clearly an ad-hoc payment, pending the minimum wage notification and therefore, the matter stands covered by the judgment of the Division Bench in the Madras High Court in E.I.D. Parry (India) Ltd.
(Supra). Learned Counsel for the 1strespondent also points out that for the very same reason, as seen in Ext.P6 judgment of this Court in Writ Appeal No.57 of
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2010, the present Writ Petition is also not maintainable, as the very same adjudicating authority whose Writ Petition was found to be not maintainable by the Division Bench has filed the present Writ Petition representing the Employees' Provident Fund Organization.
7. Having heard the learned Counsel appearing for the petitioner and the learned Counsel appearing for the 1strespondent, I am of the view that, the petitioner is entitled to succeed. A reference to Ext.P7 agreement, will indicate that the amount of interim relief plus special allowance were paid to the employees across the Board, pending the notification of minimum wages, in respect of employees of private hospitals. Therefore, it can only be held that the amount so paid, was in lieu of wages which would be revised, following the minimum wage notification. Therefore, I am of the view that, in the light of the definition of basic wages, in Section 2(b) of the EPF Act, the amount paid to employees in
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terms of Ext.P7 agreement cannot be stated to be an ad-hoc payment, which does not form part of the wages for the purposes of determining Provident Fund contribution. The issue stands covered against the 1strespondent, on account of the judgment of the Hon'ble Supreme Court in Regional Provident Fund Commissioner (Supra). In that judgment, the Hon'ble Supreme Court has held that, where any kind of allowance is paid to an employee, without the employer being able to demonstrate that those allowances were paid as variable allowances linked to any incentive for production, resulting in greater out put by the employee and where the employer is not able to show that the said incentive is paid only to selected employees and not across the Board, then any incentive should form part of the basic wages, for the purposes of Section 2(b) of the EPF Act.
8. The facts considered by the Division Bench of the Madras High Court in E.I.D. Parry (India) Ltd.
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(Supra) appear to be different and therefore, the law laid down in that case does not apply in the facts of the present case. Therefore, Ext.P4 order of the Appellate Tribunal cannot be sustained.
9. The present Writ Petition is filed by the Provident Fund Organization and not by the Regional Provident Fund Commissioner. He is only representing the Provident Fund Organization. Therefore, the question of maintainability has to be decided in favour of the petitioner. Accordingly, the Writ Petition is allowed. Ext.P4 order is quashed and Ext.P1 order of the Regional Provident Fund Commissioner, Thiruvananthapuram will stand restored. However, in the light of the specific stipulations in Ext.P7, that the amounts paid in addition will not be counted for the purposes of determining Provident Fund contribution, I deem it appropriate to direct that, if the 1strespondent pays the amount of contribution together with interest within a period of two months from the date of
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receipt of a copy of this judgment, the Provident Fund Organization shall limit any damages under Section 14B to the minimum amount.
Sd/-
GOPINATH P.
JUDGE
NB/2-2