IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN MONDAY, THE 5TH JANUARY 2009 / 15TH POUSHA 1930 WP(C).No. 25080 of 2008(I) -------------------------- PETITIONER(S): --------------- K.RAJENDRAN, PROPRIETOR, KAIRALI CONSTRUCTIONS, KALLUVETTAMKUZHY, VENGANOOR P.O., THIRUVANANTHAPURAM DISTRICT. BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.ANIL D. NAIR RESPONDENT(S): --------------- 1. ASSISTANT PROVIDENT FUND COMMISSIONER, EMPLOYEE'S PROVIDENT FUND ORGANIZATION, REGIONAL OFFICE, BHAVISHYA NIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM. 2. THE EMPLOYEES PROVIDENT FUND COMMISSIONER (CENTRAL),EMPLOYEES PROVIDENT FUND ORGANIZATION, HEAD OFFICE, BHAVISHYA NIDHI BHAVAN,14 BHIKAIJI CAMA PALACE,NEW DELHI 110 066. ADV. SRI.N.N.SUGUNAPALAN (SR.) FOR R1,2 SMT.T.N.GIRIJA, SC,EPF ORGANISATION FOR R1,2 THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: S.SIRI JAGAN, J. ================== W.P(C).No.25080 of 2008 ================== Dated this the 5th day of January, 2009 J U D G M E N T The petitioner is a contractor engaged by M/s.Kovalam Hotels Ltd., for certain work relating to horticulture and gardening on contract basis. The petitioner employs 28 personnel in his establishment and the petitioner is engaged in the business of rendering services of supplying expert personnel and therefore, is liable to be covered under Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The petitioner submitted Ext.P5 application for coverage under the Act and allotment of code number. However, by Exts.P7 and P8 orders, the respondents have rejected the claim of the petitioner on the ground that the petitioner being an exclusive contractor for M/s.Kovalam Hotels Ltd., is not entitled to be alloted a separate code number and the employees of the petitioner are liable to be covered under the code number alloted to M/s.Kovalam Hotels Ltd. The petitioner is challenging Exts.P7 and P8 and seeking the following reliefs: “(i) call for the records leading to Exts.P7 and P8 orders and to quash the same by the issue of a writ of certiorari; (ii) issue a writ of mandamus or any other appropriate writ, order or direction, directing the first respondent to allot a code number in respect of the petitioner's establishment in terms of Ext.P5 application submitted by the petitioner; (iii) pass an ad-interim order directing the first respondent to allot a code number in respect of the petitioner's establishment Kairali Constructions, pending disposal of the Writ Petition; w.p.c.25080/08 2 2. A counter affidavit has been filed by the respondents, in which they seek to sustain the impugned orders. According to them, the petitioner being an exclusive contractor of M/s.Kovalam Hotels Ltd., which is a covered establishment under the Employees' Provident Funds and Miscellaneous Provisions Act having a particular code number, a separate code number cannot be allotted to the contractor- employer, as his employees are covered already under the principal employer. They also rely on Section 8A of the Employees' Provident Funds and Miscellaneous Provisions Act as also Paragraph 30 of the Employees Provident Funds Scheme in support of their contentions. 3. I have heard the counsel on both sides. 4. I am of opinion that every employer liable to be covered under the Employees' Provident Funds and Miscellaneous Provisions Act is entitled to be so covered separately under a separate code number. Simply because such employer is doing contract work exclusively on behalf of a principal employer, that does not disentitle the contractor- employer from having his establishment covered under the Act separately from the principal employer. The fact that the principal employer is covered under the Act under a specific code number and the contributions relating to the employees of the petitioner are also recovered from the principal employer is no reason to reject the request of the petitioner for separate coverage and allotment of w.p.c.25080/08 3 separate code number. Neither Section 8A of the Employees' Provident Funds and Miscellaneous Provisions Act nor paragraph 30 of the Scheme prohibits such separate coverage and allotment of code number. Section 8A reads thus: “8A. Recovery of moneys by employers and contractors.- (1) The amount of contribution (that is to say the employer's contributions as well as the employee's contribution in pursuance of any Scheme and the employer's contribution in pursuance of the Insurance Scheme) and any charges for meeting the cost of administering the Fund paid or payable by an employer in respect of any employee employed by or through a contractor may be recovered bu such employer from the contractor, either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor. (2) A contractor from whom the amounts mentioned in sub- section (1) may be recovered in respect of any employee employed by or through him, may recover from such employee the employee's contribution under any Scheme by deduction from the basic wages, dearness allowance and retaining allowance (if any) payable to such employee. (3) Notwithstanding any contract to the contrary, no contractor shall be entitled to deduct the employer's contribution or the charges referred to in sub-section (1) from the basic wages, dearness allowance, and retaining allowance (if any) payable to an employee employed by or through him or otherwise to recover such contribution or charges from such employee.” Paragraph 30 of the Employees' Provident Funds Scheme, 1952, reads thus: “30. Payment of contributions.- (1) The employer shall, in the first instance, pay both the contribution payable by himself (in this Scheme referred to as the employer's contribution) and also, on behalf of the member employed by him directly or by or through a contractor, the contribution payable by such member (in this Scheme referred to as the member's contribution). (2) In respect of employees employed by or through a w.p.c.25080/08 4 contractor, the contractor shall recover the contribution payable by such employee (in the Scheme referred to as the member's contribution) and shall pay to the principal employer the amount of member's contribution so deducted together with an equal amount of contribution (in this Scheme referred to as the employer's contribution) and also administrative charges. (3) It shall be the responsibility of the principal employer to pay both the contribution payable by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor and also administrative charges.” These are provisions which enable the Provident Fund Organization to recover contributions relating to contract employees in the first instance from the principal employer. That is purely for the purpose easy recovery of contributions instead of going after the contractor. The primary liability to recover contributions from the contractor and to pay the same to the Provident Fund Organization is cast on the principal employer by the above provisions, with liberty to the principal employer to recover such contributions paid by the principal employer from the amounts due from the principal employer to the contractor. That does not in any way stand in the way of the contractor-employer claiming coverage under the Act and allotment of separate code number. There is no provision of law anywhere in the Act or in the Scheme which empowers the Provident Fund Organization to refuse to allot separate code number to the contractor-employer for the coverage of his employees. The fact that the petitioner employer does contract work exclusively for one principal employer does not w.p.c.25080/08 5 alter the situation in any manner. Whether the petitioner does contract work for one principal employer or different principal employers, is not a criterion to decide whether the contractor is entitled to be covered under the Act and entitled to separate code number. In so far as the establishment is one liable to be covered under the Act and the petitioner is an “employer” as defined under the Employees' Provident Funds and Miscellaneous Provisions Act, he is entitled to have his establishment and his employees covered under the Act separately. That being so, the petitioner is entitled to be alloted a separate code number on such coverage. Therefore Exts.P7 and P8 orders are totally erroneous and they are hereby quashed. Accordingly, the respondents are directed to cover the petitioner's establishment and the employees employed by the petitioner under a separate code number pursuant to Ext.P5 application. Orders in this regard shall be passed within one month from the date of receipt of a certified copy of this judgment. The writ petition is allowed as above. Sd/- sdk+ S.SIRI JAGAN, JUDGE ///True copy/// P.A. to Judge w.p.c.25080/08 6