Allowed

The Regional Provident Fund Commissioner v. The Employees Provident Fund Appellate Tribunal

Telangana HC4 Jan 2023WP/27680/2008

Case brief

AI extract

What is this about?

The High Court allowed the writ petition, quashing the order of the EPF Appellate Tribunal for failing to consider all statutory tests for commonality and retrospective liability, and remanded the matter for fresh consideration.

What did the court decide?

The impugned order dated 22.06.2007 in Appeal ATA No.575 (1) of 2001 was set aside and the matter remanded to the Appellate Tribunal for fresh consideration within three months.

The Regional Provident Fund Commissioner… — Pension and Retirement Benefits | Telangana HC (2023)

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[³¹⁶⁸ ]

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HIGH COURT FOR THE STATE OF TELANGANA^" AT HYDERABAD (Special Original Jurisdiction)

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WEDNESDAY, THE FOURTH DAY OF JANUARY TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE SRI JUSTICE K.LAKSHMAN

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WRIT PETITION NO: 27680 OF 2008

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Between:

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The Regional Provident Fund Commissioner, Barkatpura, Hyderabad.

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...PETITIONER

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AND

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The Employees Provident Fund Appellate Tribunal, Scope l/inor Care-2, 4th. Floor Karkaduman Court, Lakshmi Nagar, New Delhi.

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M/s. Aligarh Lock House, H.No.5-3-1045, Nizamasahi Road, Hyderabad^- 500195, rep. by its Partner, Tilak Raj Hera.

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.,.RESPONDENTS

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Petition under Article 226 of the Constitution of lndia^praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue writ or order or direction especially in the nature of Writ of Certiorari calling for the records relating to the order dt.22-06-2007 and the clarification dt.23-07-2008 passed in Appeal ATA No.575 (1) 2001 and^quash the same as illegal unjust.

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l.A. NO: 1 OF 2 . NO: 36268 OF 2008)

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Petition underSection 151 CPC praying that in the circumstances stated in the affidavit filed in support of the^petition, the High Court may be^pleased to suspend the order dt.23-O7-2008 in so far as the refund of the amount to the 2nd respondent with shall be subject to the result of the W.P.

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Counsel fOr thE PEtitiONEr: SMT. ABBURI PRASANNA^{LAKSHMI, SC FOR EPFO} Counsel for the Respondent No.1: SR!. VEDULA SRINIVAS,^SENIOR COUNCIL^FOR SRI P.PANDU RANGA REDDY The Court made the following: ORDER

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TFM HONOURABLE SRI JUSTICE K.LAKSHMAN

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WRIT PETITION No.27680 OF 2⁰⁰⁸

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ORDER:

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Heard Smt. Abburi Prasanna Lakshmi, learned Standing Counsel appearing for the petitioner and Sri Vedula Srinivas, learned Senior Counsel representing Sri P.Pandu Ranga Reddy, learned^{counsel for} respondent No.2. Perused the record.

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This Writ Petition is filed to call for the records^relatingto order dated 22.06.2007 and the clarification order dated^23.07.2008 passed in Appeal vide ATA No.575 (l) of 2001 and^quash the^same.

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The petitioner herein had initiated proceedings^{under Section} 7(A) of the Employees Provident Fund and Miscellaneous^Provisions Act, 1952 (for shoft, 'the Act') by way of^{issuing summonsdated} 29.06.2000. He had passed an order dated^{19.03.2001. Accordingto} the petitioner, 2nd respondent and IWs Sheel^{Industries, IWs Sheel Lock} House and I\4/s Sheel Security Products^{partnershipfirms are its sister} concerns. Place of business and Management is^{also common.} Therefore, the petitioner held that though the^{aforesaidestablishments} are registered separately, they are one and^{the same. Therefore,the} provisions of the Act and scheme framed thereunder^{are applicableto}

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the establishments. Thereafter, he has arso passed an order under Section 7-A of the Act dated r7.0s.200r determining the amount of Rs.14,56,3061- from 2nd respondent for a period from 0r.07.t9g5 to 28.02.2004 towards dues.

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4' challenging the aforesaid order dated 17.05.200r, 2nd respondent has preferred an appear under sectio, 7(r) of the Act vide ATA No.575 (r)/2001 before r.t respondent. vide order dated 22.06.2007, r" respondent a,owed the said appear. charenging the said order, the petitioner herein fired the present writ petition.

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According to the leamed counser for the petitioner, there is no challenge to the order dated r9.o3.zoor and chalrenge is onry to the order dated 17.os.2o0r. Therefore, now 2nd respondent cannot contend that the petitioner herein has not considered tests to be complied to come to conclusion and give a finding with regard to commonarity of establishments and the business. since there is no chailenge to the said order, dated 19.03.2oor,2nd respondent cannot take said grounds before l't respondent-Tribunar and also before this court. challenge in the aforesaid appear is to the order dated r7.0s.200r. Even then, lrt respondent did not consider the said facts and ailowed the aforesaid appeal filed by the 2nd respondent vide impugned order dated

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.. 1

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22.06.2007.^{With the said submissions,learned counselfdr the} petitioner sought to^{quash the impugned order dated 22'06'2007'}

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Whereas, Sri^{Vedula Srinivas, learned SeniorCounsel} representing^{Sri P. Pandu RangaReddy, learned counselappearing2nd} respondent^{would submit that 2"d respondenthas specificallyraised} several^{grounds before l't respondentin the aforesaid appeal including} the following^grounds:-

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1. UnitY of^ownershiP,

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UnitY of^labour

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1. Place of^business

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Source offinance,

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Management,^{Supervision and Control'}

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1. Service^{conditions of workmen,}

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National^IntegralitY,

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1. UnitY of PurPose^{and general'}

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In the said^{groundsof appeal, 2nd respondent also specifically contended} with regard to^{test to be followedto cometo conclusionwith regard to} commonality of^{business of aforesaidthree firms i'e' IWs Sheel} Industries, I{/s^{Sheel Lock House and lrzl/s Sheel Security Products} which are separate^{legal entities and they are nothing to do with 2nd} resoondent^{firm. Even then, withoutservinga notice and without} ^ -- affording an^{opportunity to the aforesaid three ftrms, the petitioner}

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herein had passed orders dated tg.03.200r under section 7(A) of the Act hording that alr the establishments are o,e and the same and therefore, they have to cover emproyees under the provisions of the Act and scheme framed thereunder.

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Sri Vedula Srinivas, learned Senior Counsel, fuither contend that l't respondent cannot exte'cr the period of enquiry under section 7(A) of the Act beyond the period mentioned in summons dated 29'06'2000. without consider.ing the said facts, he has passed the order dared 17.05.200r determining an amounr of Rs. 14,56,306/_ from 2nd respondent for a period from 01.07.I9g5 to 2g.02.200r. Therefore, the said order dated 17.05.2001 is iregar and urjustified. He has arso praced reriance on the judgment of the Apex court in The District Exhibitors Association, Muzaffarnagar Vs. Union of Indial.

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The above stated facts, rivar contentions and arso perusar of the record would revear that there is no dispute that the petitioner herein had initiated enquiry under Section 7-A of the A"* by way of issuing summons, dated 29.06.2000. The said summons were served onry on the 2nd respondent. Admittedry, said summons were not served on the afcresaid three firms.

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'AtR^tsgr sc l38l

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Hon'ble Apex Court in^{AssociatedCement Companies}

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Limited Vs. Their^{Workmen2laid down certain tests for deciding} commonality and to^{coverestablishmentsunder the provisionsof the} Act and Scheme. The^{same are as follows:-}

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Unity of Ownership,^{Managementand Control,}

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Unity of Employment^{and conditions of Service,}

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Unity of Finance,^and

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Functional IntegralitY

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Though the said^{tests were referredby l" respondent in the} order dated 19.03.2001,^{without serving notices on the aforesaid three} firms, he has passed^{the saidorder. However,2nd respondent did not} challenge the aforesaid^order.

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Consequent to^{the saidorder dated 19'03'2001, the petitioner} herein had passed^{anotherorder dated 17.05.2001, under Section7-A of} the Act determining.the^{aforesaid amount of Rs'14,56,306/-for the} period from 01.07.1985 to^{28.O2.2OO|Summons in the aforesaid} enquiry under Section^{7-A of the Act wereissued on 1l'05'2001' In} paragraph No.6 of the^{order dated 19.03.2001,1" respondent} specifically referred^{that 2nd respondentwas set up as earlyas in 1968-}

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other firms namery M/s sheer Industries in rqso_gr, kf,/s Sheer Lock House in r 9g5-g6 and IWs Sheer Security products in 1993_94. Even then, the petitioner herein determined the aforesaid amount for the period from Cl.O7.l9g5 to 2g.02:2001 retrospectively

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In The District Exhibitors Association, Nruzaffarnagar (supra), Hon'bre Apex court had an occasion to deal with the coverage of estabrishnrent under the provisions of the Act retrospectivery. on examination of the facts and arso referring to the provisions of the Act, the Hon'bre Apex court herd that Emproyer is not riabre to pay the employees' contribution for retrospective perio,J.

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l3' As discussed supra, 2nd respondent has raised severar grou,ds cha,enging rhe proceedings dated 17.05.2001 0f the petitioner passed under Section 7-A of the Act. It is arso not in dispute that 2nd respondent did rror cha'enge the order dated tg.o3.2ool passed under section 7_A of the Act by the petitioner herein. The order dated 17 .05.2001 is onry a consequential order. However, though 2nd respondent raised the aforesaid grounds with regard to determination of contributions retrospectivery and not forowing the tests to determine commonarity of the establistunents as herd in Associated cement companies Limited

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(supra), 1" respondent did^{not consider the same in the impugned"order'} There is no consideration of^{the aforesaid aspects in the impugned order.} 14. Though 1" respondent^{statedin the impugnedorder that 2"d} respondent has not challenged^{the order dated 09.03.2001, allowed the} aforesaid appeal on^{the ground that the petitioner herein did not examine} the test i.e. Financial^{Integrality. l"respondenthas relied upon the} principle laid down by the^{Hon'ble Apex Court in M/s Pratap Press,} New Delhi Vs. Secretary,^{DelhiPress Workers Union, Delhi3' In the} said case, the Hon'ble^{Apex Court held that most important test is} functional integrality^{which means such of finance, employmentand} labour. However,^{ltt respondent did not consider the aforesaid other test} as held by the Apex^{Court in AssociatedCement CompaniesLimited} (supra) and the petitioner herein^{had applied test partly but not aforesaid} four tests as laid down^{by the Hon'ble Apex Court. It is the specific} contention of 2"d respondent^{that during the pendency of the aforesaid} appeal, it had deposited certain^{amounts.Therefore,the same shall be} subject to the orders that may^{be passedin the aforesaidappeal.}

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This court vide order^{dated 19.12.2008, directed 2"d} respondent herein that it shall^{not claim the amountsalreadydeposited}

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and the same sha, be subject to the orders that may u. purs.a in the writ petition

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In view of the same, 2nd resrpondent shall not claim amounts deposited by it during the pendency of the aforesaid appear. The aforesaid deposit is subject to the resurt of the said appear pending before I^{ttrespondent.}

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As discussed supra, at the cost of repetition, the petitioner herein did not consider the determination of the contributions retrospectively' Though a specific ground was raised o, the said aspect, l" respondent did not consider the same in the impugned order. Thus, the impugned order is not on consideration of the grounds raised by 2,,0 respondent and on consideration of the law laid down by the Hon,bre Apex court as discussed above. Therefore, the impugned order is liabre to be set aside. The matter is to be remanded back to Ir,respondent for fresh consideration. The period of coverage is from 01.07.19g5 to 28'02'200r ' First order under secrion 7-A of the Act is dated rg.03.200r and second order is dateci t7 .,s.2oor and the impugned order is dated 22.06.2001.

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18' In view of the above, the writ petition is arowed. The impugned order dated 23.07.200g passed in Appear vide ATA No.575

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(1) of 2OOl is set aside.^{The matter is remandedback to l't respondent}

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for fresh consideration.^{The 1" respondentis directed to disposeof the}

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aforesaid appeal^{in accordancewith law as expeditiously as possible} preferably within a^{periodof three months from the date of receipt of a} copy of this order.

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consequently,^{miscellaneousPetitions,if any, pending, shall also} stand closed.

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THAT RULE NISI HAS BEEN MADE ABSOLUTE AS ABOVE.

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W|INESS THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN, on this WEDNESDAY, THE FOURTH DAY OF JANUARY TWO THOUSAND AND TWENTY THREE

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SD/. T. SRINIYAS DEPUW REGtgtrRAR //TRUE COPY// c/ sEcTtoN brHceR

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1 Jfe^{Er-nployeesPro_videntFundAppellate Tribunal,scope Minor care-24th} Floor Karkaduman Court Lakshmi Nagar New Delhi. 2. One CC to SRI R.N,RE_DDY, SC FOR EMPLOYS PF ORG tOpUCI 3. One CC to SRI P.PANDU RANGA REDDY, Advocate IOPUCI 4. one cc to SMT. ABBURT PRASANNA LAKSHM|, SC^-FOR EPFO [OPUC]

PSK GJP Gt

HIGH GOURT

DATED:0410112023

ORDER

WP.No.27680 of 2008