Quashed

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

Telangana HC4 Apr 2014WP/9088/2014

Case brief

AI extract

What is this about?

The High Court set aside an order fixing EPF contributions on the petitioner without first determining if they were a principal employer. The judge held the order was jurisdictionally flawed as the authority failed to examine the contract nature with Samaritans Club before imposing liability.

What did the court decide?

The impugned order is set aside; no remedy of appeal is relegated to the party; to be decided afresh.

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. 9088 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 another.

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…. Petitioners 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.9088 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. Petitioners challenging the orders of Assistant Provident Fund Commissioner, Sub-Regional Office, Kadapa, dated 24.01.2014. 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.11,77,695/- as payable as contributions towards employees engaged by M/s.Samaritans Club with whom an agreement was entered into by the petitioners. The liability is for period from April, 2004 to June, 2012.

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3. The principal ground of challenge against impugned order is that though specific contention was raised on behalf of the petitioners that the agreement entered into with M/s.Samaritans 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 petitioners treating the petitioners as principal employer. It is therefore contended that without first deciding the status of petitioners as principal employer, no liability can be fixed on petitioners.

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4. It is further contended that M/s.Samaritans 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. M/s.Samaritans club informed the Assistant Commissioner vide letter dated 04.04.2013 that no salary is paid to volunteers. It is not the concern of the

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petitioners as to how work is executed and whether persons were employed to carry out such work. The petitioners does not exercise control over the affairs of M/s.Samaritans Club in any manner. It is therefore contended that petitioners 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

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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 on instructions submits that the issue was not discussed in the order and it is not known whether any such issue was raised. 7. As seen from the order impugned, there is no discussion regarding the status of the petitioners company vis-à-vis M/s.Samaritans Club with which petitioners entered into an agreement to carry out a specific task. There was no discussion and finding on holding the petitioners as principal employer. As material on record discloses, work of collection of electricity consumption bills were entrusted to M/s.Samaritans club by petitioners. It is

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

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9. The order No.AP/43256/CTR/SRO/CDP/2014-2256, dated 24.01.2014 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 petitioners 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.9088 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

Parties & counsel

Coram

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