Research › Search › Judgment

Gauhati High Court · body

2015 DIGILAW 884 (GAU)

Assam Cooperative Union v. Union of India

2015-07-22

HRISHIKESH ROY

body2015
JUDGEMENT : Heard Ms. S. Sarma, the learned counsel appearing for the petitioner in both the cases. The respondent Provident Fund authorities (hereinafter referred to as ‘the P. F. Authorities’) are represented by the learned counsel Ms. M. Dutta. 2. The petitioner is a state level Cooperative Society (hereinafter referred to as ‘the Cooperative Union’) which is duly registered under the Assam Cooperative Societies Act, 1949. The Union was established under the auspices of the Govt. of Assam, inter alia, for imparting Cooperative Education, Training and Publicity and for development of the Cooperative Movement in Assam. The State Government funds the functioning of the Cooperative Union and the salaries of the employees are paid out of the Government’s annual grants. 3. In the WP(C) No.2790/2004, the Cooperative Union challenges the order dated 12.6.2003 (Annexure-5), issued by the Regional Provident Fund Commissioner demanding remittance of dues under the Employees Provident Fund & Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘the P.F. Act’) and the Employees Provident Fund Scheme, 1952 (hereinafter referred to as ‘the P. F. Scheme’). The petitioner also challenges the order dated 17.7.2003 (Annexure-6), whereby penal damage and interest under Section 14B & Section 7Q have been imposed for the alleged default of the Cooperative Union under the P.F. Act. The order passed by the Regional Provident Fund Commissioner on 12.1.2004 (Annexure-8), whereby the petitioner’s representation was rejected, is also under challenge in that WP(C) No.2790/2004. 4. In the second case i.e. WP(C) No.2118/2007, the petitioner Union, inter alia, contends that it should be exempted from the coverage of the P.F. Act under Section 16(1), as at no point of time since its inception, the petitioner had engaged more than 50 employees in their establishment. Accordingly it is contended that the petitioner is not amenable to the jurisdiction of the P.F. Authorities. 5. Ms. S. Sarma, the learned counsel for the petitioner cites Mohmedalli vs. Union of India reported in AIR 1964 SC 980 to argue that the petitioner being a registered Cooperative Society is an exempted establishment under Section 16(1)(a) of the P.F. Act and therefore the petitioner contends that the initiation of the penal action against the petitioner by the P.F. Authorities, is legally impermissible. 6. On the other hand, Ms. 6. On the other hand, Ms. M. Dutta, the learned counsel submits that the petitioner Union is allotted the P.F. Code No.AS/405 under the P.F. Act and they were filing their P.F. returns regularly without claiming exemption under the P.F. Act and the P.F. Scheme. Therefore she refers to Section 1(5) of the P.F. Act to argue that an establishment to which the P.F. Act was made applicable shall continue to be governed by the P.F. Act, notwithstanding the reduction in the number of employees engaged under that establishment. 7. The steps for recovery of penal damage and interest for delayed payment is questioned by the petitioner in the WP(C) No.2790/2004 by projecting that because of delayed receipt of Government grant, the salaries of the employees could not be paid on time and therefore provident fund dues can’t be demanded for the concerned period, when P.F. contribution wasn’t made. In response, Ms. M. Dutta, the learned counsel refers to proviso to paragraph 38 of the P.F. Scheme to contend that when recoveries have not been made, the employer is required to send a Nil returns to the P. F. Authorities and in the instant case, for the relevant period, the petitioner failed to submit any Nil return, as is required by the Act. 8. In Mohmedalli (Supra), the Apex Court observed that the Cooperative Societies stand on a special footing which distinguishes them from other establishments. A classification is made for such establishment to save them from the additional burden of making contribution to the provident fund in respect of their employees, provided it is exempted under Section 16(1)(a) of the P.F. Act. 9. In the present case, the Cooperative Union from the days of its inception was regularly praying their dues under the P.F. Act and the P.F. Scheme until 1978. In the first case, they refer to the delayed receipt of Govt. grant and a chart has been prepared by the Chief Executive Officer of the petitioner Union to project that salaries of the employees could be paid after long delays, because of irregular receipt of Govt. grant. But in the 2nd case i.e. in the WP(C) No.2118/2007, the stand of the petitioner is that their establishment is exempted under the P.F. Act as it is a Cooperative Union working without aid of power, where less than 50 employees are engaged. 10. grant. But in the 2nd case i.e. in the WP(C) No.2118/2007, the stand of the petitioner is that their establishment is exempted under the P.F. Act as it is a Cooperative Union working without aid of power, where less than 50 employees are engaged. 10. The P.F. Act applies to all establishments unless it is exempted by Section 16(1)(a) of the P.F. Act. In so far as the petitioner establishment is concerned, until 2007, they paid their dues under the P.F. Act with the understanding that the P.F. Act applies to their establishment. But when exemptions are envisaged for Cooperative Union employing less than 50 persons, having regard to the ratio of Mohmedalli (Supra), a proper determination ought to be made as to whether the petitioner establishment is exempted under Section 16(1)(a) of the P.F. Act. When an establishment is not to be covered, the law can’t permit the application of the P.F. Act and P.F. Scheme for such exempted entities. Therefore if it is decided that the P.F. Act does not apply to the petitioner establishment, the steps taken under the P.F. Act and the P.F. Scheme against the petitioner will be invalid. But in the event of contrary conclusion, the petitioner establishment is bound to comply with the requirement of the P.F. Act and the P.F. Scheme. It is declared accordingly. 11. Consequently a verification exercise is ordered to examine the status of the petitioner establishment. During the process the authority may examine the implication of allotment of the P.F. code number to the petitioner but full opportunity should be given to the Cooperative Union to establish the strength of their employees to claim exemption under Section 16(1)(a) of the P.F. Act. This exercise is ordered to be carried out by the Regional Provident Fund Commissioner, Guwahati. The impugned steps taken by the P.F. authorities against the petitioner establishment will abide by the resultant decision on the status of the petitioner under the P.F. Act. It is ordered accordingly. 12. With the above order, both cases stand allowed to the extent indicated. No cost.