THE HON’BLE SRI JUSTICE N.V. RAMANA W.P. Nos. 11619, 14575, 15330, 15910, 15956, 16813, 16923, 16943, 16973, 16980, 17006, 17007, 17008, 17009, 17010, 17011, 17012, 17013, 17014, 17015, 17016, 17132, 17133, 17135, 17136, 17137, 17148, 17149, 17163, 17316, 17345, 17528, 18082, 18090, 18115, 18117, 18156, 18333, 18335, 18451, 18459, 18696, 18720, 18830, 18834, 18835, 18838, 18839, 18842, 18907, 18911, 18934, 19040, 19137, 19365, 19582, 19822, 19976, 20094, 20142, 20298, 20314, 20508, 20798, 20822, 20953, 21210, 21355, 21561, 21646, 21712, 21733, 21868, 22014, 22372, 22592, 22598, 22608, 22713, 23050, 23192, 23259, 23305, 23545, 23662, 23694, 24031, 24087, 24186, 24221, 24796, 25169, 25251, 25457, 25766, 25769, 25884, 26050, 26084, 26186, 26309, 26383, 26477, 26637, 26858, 27204, 28183, 28623, 28985 and 12546 of 2008; 55, 404, 905, 1913, 2649, 2877, 3152, 3409, 3903, 4001, 4312, 5492, 6308, 6435, 6632, 7079, 7213, 8179, 8244, 8702, 9125, 9126, 9138, 9350, 10003, 10155, 10222, 10262, 10338, 10424, 10425, 10591, 10661, 10664, 10665, 10796, 10842, 10896, 10967, 11008, 11012, 11345, 11361, 11376, 11384, 11415, 11421, 11427, 11580, 11690, 11767, 11812, 11900, 11947, 11986, 12030, 12203, 12310, 12335, 12376, 12382, 12494, 12690, 12806, 12835, 12874, 12884, 12922, 12924, 13131, 13146, 13176, 13186, 13191, 13346, 13490 and 13686 of 2009 Common order: As the issue involved in all these writ petitions is one and the same, they are heard together and are being disposed of by this common order. The petitioners are owners of passenger buses. They have given their buses on hire to the respondents- A.P.S.R.T.C. under “Agreement of Hire”. While the matters stood thus, respondent No.2 namely, the Chief Personnel Manager issued Notification dated 13.05.2008 requesting their Regional Managers, to recover P.F. and E.D.L.I.F. and administrative and inspection charges based on the wages being paid by the petitioners to the bus drivers from the hire charge bills payable to the petitioners and remit the same to A.P.S.R.T.C. E.P.F. Trust with effect from May, 2008. It is this notification, which the petitioners have impugned in these writ petitions, as illegal and arbitrary, on several grounds to be noted infra. The learned counsel for the petitioners submitted that the petitioners are owners of passenger buses, which they hired them to APSRTC under Agreement of Hire. As per the terms and conditions of the Agreement of Hire, the petitioners employ Drivers on their buses on temporary basis, to work for the APSRTC. The petitioners are solely responsible for the maintenance and upkeep of the passenger buses hired by them to APSRTC, and they are also responsible for meeting the fuel expenses of the passenger buses and salary bills of the Drivers, irrespective of the fact whether APSRTC pays them the hire bills or not. The Drivers employed by the petitioners on their buses, are the employees of the petitioners, and it is only the petitioners and not the APSRTC who have administrative control over them to take disciplinary action/terminate their services. This apart, the risk factor, if any, arising out of the engagement of Drivers on their passenger buses, is the sole responsibility of the petitioners and not of the APSRTC. As per the terms and conditions of the Agreement of Hire, there is no provision, which enables APSRTC to deduct PF and EDLIF contributions of the Drivers engaged by the petitioners on their buses from out of the hire bills payable to them. It is contended that to bring the Drivers engaged by the petitioners on their passenger buses hired to APSRTC under the purview of EPF Act, APSRTC has to pass the “test of ultimate control”, and since APSRTC has no control over the Drivers engaged by the petitioners on their passenger buses hired to APSRTC, he submitted that the provisions of the EPF Act are not applicable to the Drivers engaged by the petitioners on their passenger buses hired to APSRTC, and more so when the number of Drivers working under the control of the petitioners is less than 20. In support of various arguments, reliance is placed on several judgments of the apex Court and various High Courts, namely in Food Corporation of India v. Union of India[1], A.T. Union Pvt. Ltd. v. Regional Provident Fund Commissioner[2], Employees State Insurance Corporation v. P.R. Narahari Rao[3], Karachi Bakery v. R.P.F. Commissioner[4], Jyothi Home Industries v. Regional Provident Fund Commissioner[5], Bhakra Management Board Karmachari Sangh (Regd.) Nangal T/ship v. State of Punjab[6], Parvathi Construction Co. v. Rajasthan Housing Board[7], NTPC v. Regional Provident Fund Commissioner[8], Standard Chartered Bank v. Union of India[9] and Springdales School v. Regional Provident Fund Commissioner[10]. The learned counsel submitted that since the Drivers are engaged through the petitioners and not directly by APSRTC, the action of the Chief Manager Personnel, APSRTC in issuing the impugned notification in SA /255(51)/2008:P.O. III, dated 13.05.2008, requesting the Regional Managers to deduct PF and EDLIF contributions (employee and employer) along with administrative and inspection charges from the hire amounts payable to the petitioners and remit the same to the Secretary, APSRTC EPF Trust, is illegal and arbitrary. It is further contended that impugned notification, which APSRTC claims to have issued based on the orders of Regional Provident Fund Commissioner, passed under Section 7-A of the EPF Act, is without notice to the petitioners, that the petitioners are not parties to the proceedings under Section 7-A of the EPF Act before the Regional Provident Fund Commissioner, who without issuing any notice and providing opportunity to the petitioners and without considering the relevant material, has come to the conclusion that the Drivers engaged by the petitioners on their passenger buses hired to APSRTC are casual employees of APSRTC, which is illegal and arbitrary, and more so when EPF Act is not applicable to casual or temporary employees. At any rate, since the petitioners are not parties to the proceedings before the Regional Provident Fund Commissioner, the orders passed are not binding on the petitioners, and the said orders having been passed against APSRTC, it is only the APSRTC and not the petitioners, who are liable to pay the PF & EDLIF contributions in respect of Hire Bus Drivers, and APSRTC is not entitled to deduct the said contributions from out of the hire bills payable to the petitioners and that too unilaterally and without any notice and contrary to the orders dated 05.03.2006, passed by the Regional Provident Fund Commissioner. The learned Standing Counsel for APSRTC submitted that as per Clause 5(vi) of the Agreement of Hire, it is the responsibility of the owner to implement statutory labour laws in respect of the Drivers and other employees engaged by them, and since the petitioners have not implemented the provisions of EPF Act, ASPRTC has issued the impugned notification, pursuant to the orders passed by the Regional Provident Fund Commissioner under Section 7-A of the EPF Act. It is contended that the Regional Provident Fund Commissioner has passed order of recovery under Section 7-A of EPF Act, pursuant to an enquiry conducted, based on a complaint received by him from the President, APSRTC Hire Bus Drivers Association, stating that the benefits under the EPF Act are not being extended to the Drivers engaged on hire buses. The Regional Provident Fund Commissioner, upon receipt of such a complaint, issued notice to APSRTC and upon hearing them and upon considering the material, passed orders under Section 7-A of the EPF Act holding that Drivers working on hire buses are employees under Section 2(f) of the Act and they are entitled to become members of EPF Fund from the day he/she is deployed that APSRTC is principal employer and Drivers engaged on hire buses are contract employees and direct APSRTC to recover the contributions. He further contended that as per para 30(3) of the EPF Scheme, the Contractor shall recover the employees contribution towards provident fund and remit the same together with equal contribution of employer (contractor) along with administrative expenses to the principal employer every month. Given the fact that the Agreement of Hire entered into by the petitioners with APSRTC is for a period of three years, which is renewable by five more years, it can be said that the services of the Drivers to be engaged by the petitioners on hire buses, are temporary, and having regard to para 26(B) of EPF Scheme, Drivers engaged on hire buses, whether employed on temporary basis or not are entitled to become members of EPF, and as per para 30(2) of the Scheme, the responsibility of remitting the contributions of such employees to APSRTC, is on the bus owners. Since the petitioners were not doing so, APSRTC has issued the impugned notification, based on the orders passed by EPF Commissioner under Section 7-A of the EPF Act, and no exception can be taken thereto. The learned Standing Counsel for Employees Provident Fund submitted that based on a complaint received from the President, APSRTC Hire Bus Drivers United Union that benefits of EPF are not being extended to their members, the Regional Provident Fund Commissioner initiated an enquiry in which APSRTC participated, and after considering the contentions in the light of the arguments advanced, an order under Section 7-A has been passed holding that APSRTC being the principal employer, is liable to remit the contributions and accordingly directed them to comply with the provisions of the EPF Act, which order having not been assailed, attained finality. He further submitted that the provisions of EPF Act are applicable even to temporary employees, and having regard to the provisions of Section 8Aof the EPF Act and para 30(2) of the EPF Scheme, APSRTC is justified in implementing the provisions of EPF Act, and no exception can be taken thereto. Heard the learned counsel for the petitioners, the learned Standing Counsel for APSRTC and the learned Standing Counsel for Employees Provident Fund. The petitioners, who are passenger bus owners, filed these writ petitions questioning the notification dated 13.05.2008, issued by the Chief Personnel Manager of APSRTC, requesting their Regional Managers, to maintain a Register showing the Depot-wise PF Account Numbers allotted to the Hire Bus Drivers and ensure that the PF & EDLIF recoveries in respect of the Hire Bus Drivers are recovered regularly and remitted to the Secretary, APSRTC EPF Trust, Hyderabad. The said notification reads as follows: NOTIFICATION Sub: PROVIDENT FUND – Recovery and remittance of contribution towards PF & EDLIF (both Employee and Employer) in respect of Hire Bus Drivers – Allotment of Identification Numbers (PF Account Numbers to be allotted) – reg. Ref: 1) Lr. No. IR2/5(2)/2007-PO.IV dated 24.04.2008 addressed to all DMs. 2) Circular No. PD-28/2008, dated 08.05.2008. - - - Instructions were issued vide Circular 2nd cited to arrive at the PF & EDLIF Contributions (both Employee and Employer) along with Administrative and Inspection Charges based on the wages paid to the Hire Bus Driver or minimum wages, whichever is more, for the month of April, 2008, recover the same from the first Fortnight Hire Charges Bill of May, 2008 payable to the Hire Bus Owners and remit the same to APSRTC EPF Trust immediately by way of a Demand Draft together with a statement as per Annexure II communicated vide reference 1st cited along with a statement showing the details of each hire Bus Driver (as specified at item Nos. (i) to (xi) of the Circular 2nd cited). It was also specified that from May, 2008 onwards, the PF & EDLIF and Administrative & Inspection charges shall be recovered from the Second Fortnight Bill of the month and remitted to the Secretary, APSRTC, EPF Trust by 15th of the following month by way of Demand Draft and statement in Annexure II communicated through reference 1st cited. For the purpose of crediting the amount of PF & EDLIF contribution to respective Hire Bus Driver by the Secretary, APSRTC EPF Trust, a unique 8 Digit Identification Number shall be allotted at the Region to the Hire Bus Driver as indicated at Annexure-A. 1) The First Digit of the Identification Number denotes the Zone Code. 2) The Second Digit of the Identification Number denotes the Region Code. 3) The Third and Fourth Digits of the Identification Number denotes the Depot Code. 4) The last four Digits of the Identification Number which has to be allotted serially by the Region denotes the individual PF Account Number of the Hire Bus Driver. The Regional Managers are requested to maintain a Register showing the Depot-wise PF Account Numbers allotted to the Hire Bus Drivers and ensure that the PF & EDLIF recoveries in respect of Hire Bus Drivers are regularly recovered and remitted to the Secretary, APSRTC EPF Trust, Hyderabad. Though the impugned notification, is in the nature of an internal communication addressed by the Head Office to its Regional Manager and other down level officers in the hierarchy, the fact remains, it is the specific case of the petitioners that, if the Regional Managers, as requested by the Chief Manager Personnel, in the notification, proceed to act and effect the recoveries of PF & EDLIF contributions in respect of Hire Bus Drivers, from the monies payable by APSRTC to them towards the Hire Bus charges, and remit the same to APSRTC EPF Trust, then they would be adversely affected. It is the further case of the petitioners that before issuing the impugned notification, the Chief Personnel Manager, has not issued any notice whatsoever calling upon them to show cause as to why the PF & EDLIF contributions in respect of Hire Bus Drivers shall not be deducted regularly, from the Hire Bus charges payable to them. The learned Standing Counsel for APSRTC, even though admitted that before issuing the impugned notification, no notice whatsoever was issued to the petitioners, but submitted that since the present notification, is a notification, issued to implement the provisions of Clause 5(ix) of the Agreement of Hire and the orders dated 05.03.2006, passed by the Regional Provident Fund Commissioner, under Section 7-A of the EPF Act, no notice need be given to the petitioners. This stand taken by APSRTC cannot be sustained, because the impugned notification, nowhere refers to the orders dated 05.03.2006, passed by the Regional Provident Fund Commissioner under Section 7-A of the EPF Act nor indicates that it has been issued to implement the said order passed by the Regional Provident Fund Commissioner under Section 7-A of the EPF Act. On the other hand, it is the specific case of the petitioners that they are not aware of the said order dated 05.03.2006 passed by the Regional Provident Fund Commissioner under Section 7-A of the EPF Act, and that they came to know of the said order only through the counter filed by APSRTC and that copy of the same was also not served on them, and that the said order is not binding on them because they are not parties to the proceedings under Section 7-A of the EPF Act, before the Regional Provident Fund Commissioner. The learned Standing Counsel for APSRTC as also the learned Standing Counsel for EPF, admitted that the petitioners are not parties to the proceedings under Section 7-A of the EPF Act, before the Regional Provident Fund Commissioner and that the Regional Provident Fund Commissioner, before passing the order dated 05.03.2006, has not issued any notice whatsoever to the petitioners, and that APSRTC has also not taken any steps to bring the petitioners on record as party-respondents in the proceedings under Section 7-A of the EPF Act before the Regional Provident Fund Commissioner, either by issuing them notice or getting notices issued through the Regional Provident Fund Commissioner. It is the case of the petitioners that the provisions of EPF Act are not applicable to them because they are engaging less than 20 persons, and had they been issued notices and made party-respondents to the proceedings under Section 7-A of the EPF Act, before the Regional Provident Fund Commissioner, they would have brought all these facts to the notice of the Regional Provident Fund Commissioner for effective adjudication of the matter, but without making the petitioners as party-respondents, APSRTC got the matter adjudicated, by the Regional Provident Fund Commissioner, resulting in the order dated 05.03.2006, affecting the rights of the petitioners. At any rate, it is the specific case of the petitioners that the orders dated 05.03.2006, passed by the Regional Provident Fund Commissioner under Section 7-A of the EPF Act, cannot be implemented against them, because the Regional Provident Fund Commissioner, under the said order, has fixed the liability of making the PF & EDLIF contributions in respect of Hire Bus Drivers on APSRTC by treating them as principal employer. The relevant portion of the order dated 05.03.2006, passed by the Regional Provident Commissioner, which fixed the liability of making the contributions on APSRTC, reads as follows: In view of the above statutory provisions, APSRTC shall be responsible to pay the contributions payable in respect of the employees employed by the contractors/hire bus owners. And it cannot shift its responsibility to pay statutory liability under the Act to the Contractors by making such provisions in the contract agreement. Now it is settled law that any contract made which is contrary to law is null and void. From a perusal of the order dated 05.03.2006 passed by the Regional Provident Fund Commissioner under Section 7-A of the EPF Act, would make it manifestly clear that liability to make the PF & EDLIF contributions in respect of the Hire Bus Drivers, is fixed on APSRTC by treating them as principal employer, and further making it clear that APSRTC cannot shift the said liability on the Hire Bus Drivers by making such provisions in the contract agreements. Even though the order dated 05.03.2006, passed by the Regional Provident Fund Commissioner under Section 7-A of the EPF Act, fixed the liability of making the PF & EDLIF contributions in respect of Hire Bus Drivers on APSRTC on APSRTC, the fact remains, APSRTC has not challenged the same in appeal, and now the said order has attained finality. Whatever be the spirit of the order dated 05.03.2006, passed by the Regional Provident Fund Commissioner under Section 7-A of the EPF Act, and its implication on APSRTC, the fact remains, it is the admitted case of APSRTC that no notice whatsoever was issued by the Chief Manager Personnel, APSRTC, to the petitioners before issuing the impugned notification. The law is well settled that when an order affecting the rights of individuals is to be passed by the authorities, principles of natural justice demand, that authorities shall issue show cause notice to the individuals concerned against the action proposed, to enable them to explain why such action shall not be taken. In the instant case, as stated supra, the impugned notification, though is in the nature of internal communication between the officers of APSRTC, the fact remains, it sought to recover money from petitioner from the bills payable to them, towards the PF & EDLIF contributions in respect of hire bus drivers, which would adversely affect the rights of the petitioners. Hence, before issuing the impugned notification, the Chief Manager Personnel, APSRTC, ought to have issued notice to the petitioners, calling upon them to show cause against the action proposed. Since the impugned notification issued by APSRTC suffers from the vice of violation of principles of natural justice, the same cannot be sustained and is liable to be set aside. Even though various submissions were made by the petitioners as well as respondents as regards the applicability of EPF Act and the correctness or otherwise of the impugned notification and the orders dated 05.03.2006, passed by the Regional Provident Fund Commissioner under Section 7-A of the EPF Act, I am not inclined to go into the same because the impugned notification, issued by the Chief Manager Personnel, APSRTC, is being set aside on the ground that in its issuance, the principles of natural justice are violated, and the order dated 05.03.2006, passed by the Regional Provident Fund Commissioner under Section 7-A of the EPF Act, is not challenged before this Court either by the petitioners or APSRTC. For the foregoing reasons, the writ petitions are allowed and the impugned notification dated 13.05.2008, issued by the Chief Manager Personnel, APSRTC, Hyderabad, is set aside. No costs. _________________ N.V. RAMANA, J. Dated:12th August, 2009. 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