Quashed

Southern Power Distribution Company of a.P.Ltd., v. Employees Provident Fund Organisation

Telangana HC4 Apr 2014WP/10446/2014

Case brief

AI extract

What is this about?

This writ petition challenges an EPF Commissioner's order fixing contribution liability on the petitioner for employees of Lions Club. The Court held the order illegal for not first determining the petitioner's status as a principal employer and quashed the order for reconsideration.

What did the court decide?

The impugned order dated 28.02.2014 is set aside. The Assistant Provident Fund Commissioner is directed to determine the petitioner's status as principal employer before fixing liability.

Southern Power Distribution Company of… — Pension and Retirement Benefits | Telangana HC (2014)

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HON’BLE SRI JUSTICE P.NAVEEN RAO

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WRIT PETITION No. 10446 of 2014

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Dated: 04.04.2014

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Between:

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Southern Power Distribution Company of A.P. Ltd., Operation Circle, Tirupati, Chittoor District, rep.by its Superintending Engineer/Operation and others.

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.. Petitioners

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And

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Employees’ Provident Fund Organization (Government of Andhra, Ministry of Labour), Sub-Regional Office, 1/30, R.S. Road, Cuddapah, rep.by its Assistant Provident Fund Commissioner and others

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.. Respondents

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The Court made the following:

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HON’BLE SRI JUSTICE P.NAVEEN RAO

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WRIT PETITION No.10446 of 2014

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ORDER:

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With the consent of learned counsels for the parties, this writ petition is disposed of at the admission stage.

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2. Petitioner challenging the orders of Assistant Provident Fund Commissioner, Sub-Regional Office, Kadapa, dated 28.02.2014. The order impugned is made under Section 7-A of Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (for short, ‘EPF Act’) determining an amount of Rs.4,10,657/- as payable as contributions towards employees engaged by Lions Club with whom an agreement was entered into by the petitioners. The liability is for period from April, 2004 to February, 2013.

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3. The principal ground of challenge against impugned order is that though specific contention was raised on behalf of the petitioner that the agreement entered into with Lions Club does not attract the provision of EPF Act and petitioners cannot be described as principal employer as defined in Section 2-F of the Act, no finding is recorded but the authority proceeded to fix the liability on petitioner treating the petitioner as principal employer. It is therefore contended that without first deciding the status of petitioner as principal employer, no liability can be fixed on petitioner.

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4. It is further contended that the Lions Club is a voluntary organization and members of the club are attending to collection of electricity bills on behalf of club members. Collection of bills is on piece rate basis. Lions club informed the Assistant Commissioner vide letter dated 18.7.2013 that no salary is paid to volunteers. It is not the concern of the petitioner as to how work is executed and whether persons were employed to carry out such

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work. The petitioner does not exercise control over the affairs of Lions Club in any manner. It is therefore contended that petitioner cannot be called as principal employer.

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5. In support of said contention, learned counsel placed reliance on the decision of this Court in W.P.Nos.28153 of 2008 and 14508 of 2009. In the above writ petitions, the Private Accounting Agencies entered into agreements with the distribution companies. They were entrusted with specific works of professional in nature. The private accounting agencies were sought to be brought on to the provisions of EPF Act and distribution company was sought to be fixed with the liability to pay contributions holding it as principal employer. Dealing with the said contention, this Court held as under:

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“In the above facts and circumstances, it is clear that the PAAs are employing the persons of their own for the purpose of their various professional services, including the execution of the work of the Power Distribution Companies entrusted to them under the agreements. Thus, the PAAs under no circumstances can be treated as ordinary labour contractors and the persons executing the works of the Power Distribution Companies as per the terms and conditions of the agreements cannot be treated as persons engaged by PAAs for and on behalf of the Power Distribution Companies. Apparently, the petitioners/PAAs are independent entities engaging the employees themselves for the purpose of their professional services as well as for getting executed the work entrusted to them by the Power Distribution Companies under the agreements. ”

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6. Learned standing counsel representing the respondent organization also submits that the issue was not discussed in the order and it is not known whether any issue was raised.

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7. As seen from the order impugned, there is no discussion regarding the status of the petitioner company vis-à-vis Lions Club with which petitioner entered into an agreement to carry out a specific task. There was no discussion and finding on holding the petitioner as principal employer. As material on record discloses, work of collection of electricity consumption bills were entrusted to Lions club by petitioner. It is necessary for the

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competent authority to first determine whether the provisions of EPF Act would apply to Lions Club and whether the petitioner company can be described as principal employer taking into consideration the nature and terms of contract and status of Lions club before fixing liability on the petitioner. Thus, unless it is established that nature of contract with Lions club is traced as labour contract, petitioner cannot be fastened with liability to pay contribution on employees engaged by Lions club.

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8 . The order impugned is ex-facie illegal, without jurisdiction and competence. The matter requires reconsideration by the competent authority under Section 7-A of the Act. In view of the serious infirmity noticed, in the facts of this case, petitioner cannot be relegated to avail remedy of appeal.

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9. The order No.AP/69120/CTR/SRO/CDP/2014-2336, dated 28.02.2014 is set aside. It is open to the Assistant Provident Fund Commissioner, Employee’s Provident Fund Organization, Sub-Regional Office, Kadapa (1^st respondent) to proceed further as warranted by law. In the event if the Assistant Provident Fund Commissioner intends to continue proceedings under Section 7-A of the Act, he shall first determine the status of the petitioner as principal employer after affording due opportunity to all parties concerned. It is made clear that no opinion is expressed on merits. The rights and obligations of parties are left open.

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10. Accordingly, the writ petition is disposed of. There shall be no order as to costs. Miscellaneous petitions if any pending in the writ petition shall stand closed.

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__________________________ JUSTICE P.NAVEEN RAO

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Date: 04.04.2014 kkm

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HON’BLE SRI JUSTICE P.NAVEEN RAO

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WRIT PETITION No.10446 of 2014

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Date: 04.04.2014

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Kkm

Southern Power Distribution Company of a.P.Ltd., v. Employees Provident Fund Organisation

Case brief

What is this about?

What did the court decide?

Southern Power Distribution Company of a.P.Ltd., v. Employees Provident Fund Organisation

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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