THE HONOURABLE SRI JUSTICE B.SESHASAYANA REDDY WRIT PETITION NOS.11791, 11793 AND 13943 OF 2010 COMMON ORDER: DATED: 21ST JUNE 2010. W.P.NO.11791 OF 2010 BETWEEN: V.YADAIAH AND OTHERS .. PETITIONERS AND APSRTC REP. BY ITS CHAIRMAN AND MANAGING DIRECTOR, BUS BHAVAN, MUSHEERABAD, HYDERABAD AND OTHERS .. RESPONDENTS W.P.NO.11793 OF 2010 BETWEEN: MOHD. HAMEED ALI AND OTHERS .. PETITIONERS AND APSRTC REP. BY ITS CHAIRMAN AND MANAGING DIRECTOR, BUS BHAVAN, MUSHEERABAD, HYDERABAD AND OTHERS .. RESPONDENTS W.P.NO.13943 OF 2010 V.SUSEELA AND OTHERS .. PETITIONERS AND APSRTC REP. BY ITS CHAIRMAN AND MANAGING DIRECTOR, BUS BHAVAN, MUSHEERABAD, HYDERABAD AND OTHERS .. RESPONDENTS THE HONOURABLE SRI JUSTICE B.SESHASAYANA REDDY WRIT PETITION NOS.11791, 11793 AND 13943 OF 2010 COMMON ORDER: 1. Since the issue involved in all these three writ petitions is one and the same they are heard together and are being disposed of by this common order. 2. The petitioners are owners of passenger buses. They have given their buses on hire to the respondents-APSRTC under an agreement of hire. Some proceedings went on between the APSRTC and Regional Provident Fund Commissioner (Exemption)- with regard to the payment of provident fund contributions in respect of the drivers engaged by the hire bus owners. An order under section 7-A of the EPF & MP Act, 1952 came to be passed by the Regional Provident Fund Commissioner (Exemption). Thereupon, the Chief Personnel Officer of APSRTC issued notification in No.SA1/255(51)/2008 PO.III, dated 13.5.2008 instructing the Regional Managers to recover PF and EDLIF CONTRIBUTIONS (employee and employer) along with administrative and inspection charges based on the wages paid to the hire bus drivers or minimum wages, whichever is more, from 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. The said notification came to be challenged by the petitioners by filing W.P.No.11619 of 2008 and batch. The writ petitions came to be allowed setting aside the notification dated 13.5.2008 principally on the ground that the petitioners were not put on notice before deduction of the amounts from the hire charges payable to them. For better appreciation, I may refer the relevant portion of the order passed in W.P.No.11619 of 2008 and batch, which reads as under: “ Whatever be the spirit of the order dated 5.3.2006 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 thepetitioners as well as respondents as regards the applicability of EPF Act and the correctness or otherwise of the impugned notification and the orders dated 5.3.2006, 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 5.3.2006 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 13.5.2008 issued by the Chief Manager Personnel, APSRTC, Hyderabad is set aside. No costs.” Thereafter the Executive Director (A & P), APSRTC instructed all the Regional Managers to issue notices to the respective hire bus owners immediately and take necessary action after considering the replies received from the hire bus owners to recover both employee and employers contribution towards PF/EDLIF together with administrative and inspection charges thereon and remit the same to APSRTC EPF Trust vide letter dated 26.4.2010. Thereupon, the Accounts Officer (HCZ), APSRTC addressed a letter to all the Depot Managers, Hyderabad City Zone on 3.5.2010 reiterating the instructions issued in the letter-dated 26.4.2010 of the Executive Director (A & P), APSRTC. While reiterating the instructions certain further directions have been issued by the Accounts Officer (HCZ), APSRTC., which reads as under: “ It was also stated that, if they fail to do so, the PF amount along with employer’s contribution as detailed hereunder shall be recovered from the bills payable to the PHB owner. The details of PF deduction shall be as follows: 1) Employee’s contribution towards Provident Fund @ 12% of wages paid or Minimum wages, whichever is more, duly recovering the same from the wages of each driver. 2) Equal amount of employer’s contribution towards P.F. 3) Administrative charges @ 1.10% of wages. 4) Inspection charges @ 0.18 % of wages paid. 5) Employer’s contribution towards EDLIF @ 0.5 %. 6) Administrative charges @ 0.01 % of wages 9sbject to a minimum of Rs.2/- p.m.per driver). 7) Inspection charges @ 0.005% of wages (subject to a minimum of Rs.1/- p.m. per driver). You are therefore requested to: 1) Obtain proof of remittance of PF by the PHB owner with PF code/without PF code before processing the bills for payment. 2) In case they fail to do so, you shall recover the amount duly obtaining the particulars of drivers along with wage payment statement and remit the amounts to Secretary PF(T). 3) The recoveries shall be effected from the date of operation. 4) The proof of remittance/recovery from the bill shall be effected in the claim pertaining to 2nd fortnight of Apr-2010 duly calculating the PF on full calender month. 5) However, the issue of arrears has to dealt in the bill on hand itself.” Hence, the present three writ petitions seeking the following reliefs: a) declaring the action of the respondent No.2 in issuing the letter/circular in No.IR2/5(2)/2007 dated 26.4.2010 directing the Regional Managers to issue notice and recover both employer and employee contributions towards the PF & EDLIF together with administrative and inspection charges from the date of employment of drivers whichever is later by the petitioners from the hire charges bills payable to the petitioners and to remit to the APSRTC EPF Trust and its annexure and consequential directions issued by the Regional Managers to various depot managers to deduct the EPF & EDLIF along with administrative and inspection charges from the hire charges payable to the petitioners as illegal, arbitrary and without jurisdiction. b) To declare the orders passed by the 10th respondent u/s 7-A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 vide No.AP/295/Exemption/RO/HYD/2006 DATED 5.3.2006 as illegal, arbitrary and in violation of Sec.7 –A (3) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and not binding on the petitioners. c) And may pass such other order or orders or any other appropriate writ as this Hon’ble Court may deem fit and proper in the circumstances of the case. 3. When the writ petitions came up for admission Sri.K.Madhava Reddy, learned Standing Counsel for APSRTC takes notices on behalf of respondents 4 to 9 in W.P.No.11791 of 2010 and respondents 1 to 6 in W.P.No.11793 of 2010 and Smt.W.V.S.Rajeswari, learned Standing Counsel for APSRTC takes notice for respondents 1 to 14 in W.P.No.13943 of 2010. Sri.R.N.Reddy, learned Standing Counsel for Regional Provident Fund Commissioner (Exemption) takes notice for 10th respondent in W.P.No.11791 of 2010, 6th respondent in W.P.No.11793 of 2010 and 15th respondent in W.P.No.13943 of 2010. 4. Respondents 1 to 9 filed counter affidavit in W.P.No.11791 of 2010. Learned Standing Counsel appearing for APSRTC in other writ petitions made a request to treat the counter affidavit filed in W.P.No.11791 of 2010 as a counter affidavit in the other two writ petitions also. Sri.D.Venu, Chief Personnel Manager, APSRTC, Hyderabad has sworn to the counter affidavit filed in W.P.No.11791 of 2010. It is stated in the counter affidavit that wage calculation includes P.F. contributions. The other details in the counter affidavit are not required to be referred in view of the order proposed to be passed. 5. Heard learned counsel for the parties in all the three writ petitions. 6. Sri.D.V.Chalapathi Rao, learned counsel appearing for the petitioners in W.P.Nos.11791 and 11793 of 2010 submits that the authorities have made up their mind to deduct the P.F. contributions from the hire charges and the show cause notice is only an eye wash and in which case the writ petitions filed by the petitioners are maintainable. Learned counsel took me to the internal correspondence between the Executive Director (A&P) and the Regional Managers and also the Accounts Officer (HCZ) to the Depot Managers and laid much emphasis on the letter dated 3-5-2010 addressed to the Depot Managers. Learned counsel by referring the said letter contends that the authorities had made up their mind to deduct the EPF contributions etc. from hire charges payable to the petitioners. 7. Learned counsel appearing for the petitioners in W.P.No.13943 of 2010 adopted the arguments of Sri.D.V.Chalapathi Rao. 8. Sri.R.N.Reddy, learned Standing Counsel appearing for Regional Provident Fund Commissioner (Exemption) submitted that it is not open to APSRTC to challenge the order passed under section 7-A of EPF & MP Act, 1952 r/w Para 26B of the EPF Scheme, 1952 at this stage. A further submission has been made that under section 2(f) of EPF & MP Act, 1952 the definition of employee includes employee engaged through a contractor and therefore the APSRTC is liable to pay PF contribution etc. in case of drivers engaged by the hire bus owners. 9. Learned Standing Counsels appearing for the APSRTC submits that what all is instructed in the proceedings dated 26.4.2010 to the Regional Managers is to issue notice to individual hire bus owners and consider their replies and that it does not amount to pre-determination of the liability of the hire bus owners to pay the contributions. 10. Be that as it may, most of the petitioners have received individual notices as on this day where under they are called upon to submit their explanation as to why P.F. contributions cannot be deducted from the hire charges. It is the contention of the petitioners that they have not engaged more than 20 persons to come within the purview of the EPF & MP Act, 1952. After considering the explanations, the APSRTC is at liberty to pass appropriate orders. Till the explanations offered by the petitioners are considered, no amount shall be deducted from the hire charges towards EPF contributions etc. Any instructions issued to the Depot Managers deducting the PF contributions from the hire charges shall remain suspended pending enquiry. Learned counsel appearing for the petitioners submits that some of the petitioners have not yet submitted their individual explanations after receipt of such notices and therefore time may be extended to enable them to submit their explanations. Considering the facts and circumstances of the case, time is extended by thirty days to the petitioners who have not submitted their explanations as on this day. 11. With the above directions, these three writ petitions are disposed of. No order as to costs. 21st June, 2010. ( B.Seshasayana Reddy,J ) tnb cc in three days. THE HONOURABLE SRI JUSTICE B.SESHASAYANA REDDY WRIT PETITION NOS.11791, 11793 AND 13943 OF 2010 COMMON ORDER: DATED: 21ST JUNE 2010.