IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN FRIDAY, THE 19TH SEPTEMBER 2008 / 28TH BHADRA 1930 OP.No. 25527 of 2000(L) ----------------------- PETITIONER: ------------ M/S. GRAND HOTEL, A REGISTERED PARTNERSHIP FIRM REP. BY ITS MANAGING PARTNER K.J. FRANCIS. BY ADV. SRI.JIMMY GEORGE SRI.M.JOSE ANTONY RESPONDENTS: ------------- 1. PRESIDING OFFICER, EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, 7TH FLOOR, 60 SKYLARK BUILDING, NEHRU PLACE, NEW DELHI-110019. 2. THE REGIONAL PROVIDENT FUND COMMISSIONER, SUB REGIONAL OFFICE, KALOOR, COCHIN-17. BY ADV. SRI.DINESH R.SHENOY, ADDL.CGSC THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 19/09/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PETITIONER'S EXHIBITS: O.P.NO. 25527/2000. ----------------------------------------------------------------- EXT.P1 PHOTOSTAT COPY OF PROCEEDINGS DT. 15-6-1999. EXT.P2 ORDER DT. 14-3-2000. EXT.P3 LETTER DT. 26-6-2000. [TRUE COPY] P.S TO JUDGE. S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= O.P. No. 25527 of 2000 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 19th September, 2008. J U D G M E N T The petitioner is an establishment covered under the Employees Provident Funds and Miscellaneous Provisions Act. The question posed by them in this original petition is as to whether in respect of free food supplied to its employees, contribution is payable on the cash value equivalent to the food supplied to them. 2. The petitioner is a hotel running a restaurant also. All the employees of the hotel are provided food and accommodation free of cost as per the contract of service. They have been paying contributions in respect of the employees without taking into account the cash value of the food supplied to the employees. However, by Ext. P1 order passed under Section 7A of the Act, the 2nd respondent demanded contributions on the wages paid to the employees taking into account the cash value of the food supplied free of cost to the employees of the hotel. That action of the 2nd respondent was challenged by the petitioner before the 1st respondent which ended in Ext. P2 order dismissing the appeal. The petitioner is challenging Exts.P1 and P2 orders. The contention of the petitioner is that there is no food concession given to the employees and therefore there is no question of including cash value of food concession also in the wages, on which contributions are payable by the petitioner. Therefore, according to them, the cash value of food supplied free of cost to the employees cannot be taken into account for the purpose of calculating contributions under the Act. 3. With the help of a counter affidavit filed the 2nd respondent would seek to sustain the impugned orders. 4. I have considered the rival contentions in detail. 5. Contributions are payable as per Section 6 of the Act, which reads thus: O.P. No. 25527/2000. -: 2 :- “6. Contributions and matters which may be provided for in Schemes:- The contribution which shall be paid by the employer to the Fund shall be ten per cent of the basic wages, dearness allowance and retaining allowance (if any) for the time being payable to each of the employees (whether employed by him directly or by or through a contractor), and the employees' contribution shall be equal to the contribution payable by the employer in respect of him and may, if any employee so desires, be an amount exceedings ten per cent of his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section: Provided that in its application to any establishment or class of establishments which the Central Government, after making such inquiry as it deems fit, may, by notification in the Official Gazette specify, this section shall be subject to the modification that for the words “ten per cent” at both the places where they occur, the words “twelve per cent” shall be substituted. Provided further that where the amount of any contribution payable under this Act involves a fraction of a rupees, the Scheme may provide for the rounding off of such fraction to the nearest rupee, half of a rupee or quarter of a rupee. Explanation 1:- For the purposes of this section, dearness allowance shall be deemed to include also the cash value of any food concession allowed to the employee. Explanation 2:- For the purposes of this section, “retaining allowance” means an allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working, for retaining his services.” The term “basic wages” is defined in Section 2(b) of the wages thus: “(b) “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-- (i) the cash value of any food concession; (ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment; O.P. No. 25527/2000. -: 3 :- (iii) any presents made by the employer.” Of course, the cash value of any food concession is excluded from the purview of basic wages. But, in Explanation 1 to Section 6, it is specifically provided that dearness allowance shall be deemed to include the cash value of any food concession allowed to the employee also. Therefore, cash value of food concession is liable to be included in dearness allowance for the purpose of calculating contributions under the Act. The only question that arises would be as to whether the food supplied free of cost to the employees would come within the purview of the Explanation. 6. It is not disputed that food is given free of cost to the employees. That being so, that is a concession given to the employees. Since concession is in respect of food, naturally it would be a food concession. Hence, cash value of that food concession would certainly be liable to be included in the dearness allowance for the purpose of calculating contributions under the Act, as provided in Explanation 1 to Section 6 of the Act. In any event, the Act being a beneficial legislation, the same should be construed liberally so as to enable the employees to get maximum benefit. The above interpretation would certainly be more beneficial to the employees undoubtedly. In the above circumstances, I do not find any merit in the original petition and accordingly the same is dismissed. Sd/- S. Siri Jagan, Judge. Tds/