Disposed

Sri Kailash Logistics Limited v. Asst.Provident Fund Commissioner

Kerala HC10 Jul 2018WP(C)/890/2013

Case brief

AI extract

What is this about?

The High Court directed the EPF Authority to reconsider the classification of 'Special Allowance' as wages, granting the petitioner a final opportunity to explain the nature of payments before affirming the lower authority's order, while upholding all other findings.

What did the court decide?

Directing the respondent to afford an opportunity of being heard to the petitioner on the issue of 'Special Allowance' and re-consider the matter within two months.

Sri Kailash Logistics Limited Vs… — Pension and Retirement Benefits | Kerala HC (2018)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN TUESDAY, THE 10TH DAY OF JULY 2018 / 19TH ASHADHA, 1940 WP(C).No. 890 of 2013

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PETITIONER(S)

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SRI KAILASH LOGISTICS LIMITED, 52/3054 - 55, PALLIYIL LANE, KOCHI - 682 016, REPRESENTED BY ITS MANAGER - LAW & VIGILANCE SRI.GHILLS P.MATHEW.

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BY ADV.SRI.P.RAMAKRISHNAN

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RESPONDENT(S):

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ASSISTANT PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANISATION, SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, KALOOR, KOCHI - 17.

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BY ADVS. DR.S.GOPAKUMARAN NAIR (SR.) SRI.A.RAJASIMHAN,SC,

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 10-07-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 890 of 2013

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APPENDIX

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PETITIONER(S)' EXHIBITS

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EXHIBIT P1 TRUE COPY OF ORDER DATED 31.10.2011 ISSUED BY THE RESPONDENT.

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EXHIBIT P2 TRUE COPY OF APPLICATION DATED 23.12.2011 SUBMITTED BY THE PETITIONER.

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EXHIBIT P3 TRUE COPY OF ORDER DATED 17.12.2012 ISSUED BY THE RESPONDENT.

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RESPONDENT(S)'EXHIBITS - NIL

/TRUE COPY/

PS TO JUDGE

TS 17.07.2018

DEVAN RAMACHANDRAN, J.

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-------------------------------------------------------W.P.(C) No. 890 of 2013

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-------------------------------------------------------Dated this the 10^th day of July, 2018

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J U D G M E N T

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The petitioner impugns Exhibit-P1 and Exhibit-P3 orders issued by the respondent under Section 7A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the Act' for short). The point in dispute in this writ petition is in a very small compass; as to whether certain amounts paid by the petitioner under the head “Special Allowance” could be construed to be part of wages under Section 2(b) of the Act.

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While the respondent found that the amounts paid by the petitioner under this head is nothing but Dearness Allowance in a camouflage and thus liable to be computed along with the wages, the petitioner says that this is not so and that it is an Allowance that would stand excluded from the definition of basic wages under Section 2(b) of the Act. The petitioner, thus challenges these orders as being illegal and unlawful.

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I have heard Sri.T.C.Krishna, the learned counsel

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W.P.(C) No.890/13 2

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appearing for the petitioner and Sri.A.Rajasimhan, the learned Standing Counsel for the respondent.

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On an examination of Exhibits-P1 and P3 orders, which are the determination order and an order passed in review by the respondent respectively, it becomes ineluctable that the orders cannot be found to be in error because the petitioner did not inform or concede to the said Authority the true character of the amounts paid as “Special Allowance” by them to their employees. Since the petitioner had refused to explain what this head of payment meant, it was naturally only possible for the Authority to have included it also in the ambit of the amounts under Section 6 of the Act. Pertinently, even in the pleadings before this Court, the petitioner does not say what they mean by the term “Special Allowance” and for what purpose it has been paid.

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In fact, in the counter affidavit filed on behalf of the respondent, they say that the amounts paid by the petitioner under the head “Special Allowance” is nothing but Dearness Allowance given a different name. The

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W.P.(C) No.890/13

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specific averment to this effect is available in paragraph 12 of the counter affidavit and the relevant portion of which is extracted as under:

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“12. The contention of the petitioner that the special allowance granted to the employees is an allowance falling within the ambit of other similar allowances excluded in Section 2(b) of the Act and therefore cannot be treated as wages for the purpose of determination of PF contribution is inconsistent with the statutory provisions and hence untenable. In this connection it is submitted that the special allowance is an emolument admittedly earned by all the employees, albeit in different rates, while on duty in terms of the contract of employment and therefore, having the general characteristic of dearness allowance. The establishment is not paying any amount in the form of Dearness Allowance on account of rise in the cost of living, which is an ordinary ingredient of monthly pay or wages in all other establishments both under the Government and in the Private Sector. The special allowance cannot be

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W.P.(C) No.890/13 4

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treated as one of the other similar allowances, which are otherwise exempted vide Section 6 of the Act. It is either part of the basic wages or it is the dearness allowance itself described as Special Allowance or in the grab of special allowance, it is the Dearness Allowance which is being wrongly described.”

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Sri.T.C.Krishna, learned counsel appearing for the petitioner submits that his client was unable to explain the true nature of “Special Allowance” paid by them to their employees because they were not given an opportunity by the respondent to do so. According to him, had the respondent put the petitioner on notice as to the nature of this Allowance, they would have certainly explained the same. I am afraid that I cannot accede to this submission immediately because, as I have already said above, even in this writ petition, the petitioner has chosen not to explain the characteristics of the so called

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“Special Allowance” paid by them.

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Normally, in such circumstances, therefore, I

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W.P.(C) No.890/13 5

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could have only been justified in dismissing this Writ Petition without any further orders. However, Sri.T.C.Krishna, the learned counsel appearing for the petitioner vehemently submits that if given a chance, they would be able to explain to the Authority as to the real nature of this Allowances and according to him, it would go beyond the ambit of Section 2(b) of the Act. The request of Sri.T.C.Krishna is strongly opposed by the learned Standing Counsel for the EPF for the respondent, who submits that when the petitioner has refused to divulge even before this Court the character of the Allowance paid by them, it is not proper or apposite that they be given another opportunity. He, therefore, prays that this writ petition be dismissed confirming ExhibitsP1 and P3 orders.

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On a consideration of the submissions afore and the materials on record, I notice that Exhibit-P1 order was issued by the respondent under Section 7A of the Act and that against that order, a review application was filed by the petitioner, which led to Exhibit-P3 order being

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W.P.(C) No.890/13 6

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issued. It is, no doubt, true that in Exhibit-P3 order, the Authority has dealt with the characteristics of the “Special Allowance” paid by the petitioner and has found that it is nothing but a part of basic wages coming within the definition of Section 2(b) of the Act.

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However, it is also luculent therefrom that neither did the petitioner make an effort to explain the character of the “Special Allowance” nor was any consideration made by the Authority on that regard. Since Sri.T.C.Krishna submits that if give an opportunity, the petitioner will able to convince the Authority that the “Special Allowance” is not a part of the basic wages and since, I notice that no such opportunity had been availed of by the petitioner at the relevant time, I deem it apposite to give them a last chance, solely to ensure that substantial justice is obtained an opportunity to explain their stand before the respondent.

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In such view of the matter, I order this writ petition and direct the respondent to reconsider the issue relating to the “Special Allowance” alone as recorded in

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W.P.(C) No.890/13 7

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Exhibit-P3 order, after affording an opportunity of being

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heard to the petitioner. The respondent will, therefore, issue a notice to the petitioner asking them to appear before him for a hearing on this issue and the petitioner will be entitled to place before the said Authority their explanation with respect to this Allowance. All other findings in Exhibits-P1 and P3 are upheld and since I am only asking the respondent to reconsider one aspect in Exhibit-P3, I clarify that the said order will continue to hold the filed and that if any modification is required to the same, the respondent will be entitled to do so, after hearing the petitioner, as directed afore, with respect to the issue relating to “Special Allowance” alone. This exercise shall be completed by the respondent not later than two months from the date of receipt of a copy of this judgment.

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This writ petition is disposed of accordingly.

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Sd/-

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DEVAN RAMACHANDRAN JUDGE

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DSV/

Sri Kailash Logistics Limited v. Asst.Provident Fund Commissioner

Case brief

What is this about?

What did the court decide?

Sri Kailash Logistics Limited v. Asst.Provident Fund Commissioner

Case brief

What is this about?

What did the court decide?

What the court decided

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