1 22 wp 787.11.doc K IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 787 OF 2011 Pune Mahila Mandal ..Petitioner. Vs. Assistant Provident Fund Commissioner & Anr. ..Respondents. Mr. Nitin Kulkarni for petitioner. Ms. S.V.Bharucha for respondents. CORAM : K.K.TATED, J. DATED : 19th April, 2011. PC: 1 Heard learned counsel for the parties. 2 Rule. 3 By consent matter is taken on board for final hearing at the stage of admission. 4 By this Petition under Article 226 and 227 of the Constitution of India, Petitioner-original Appellant challenges the order dated 20th October, 2010 passed by the learned Presiding Officer, Employees’ Provident Fund Appellate 2 22 wp 787.11.doc Tribunal, Camp Hearing at Pune in Appeal ATA No. 258 (9) of 2009 arising out of order passed by the Provident Fund Authority under section 7A of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 directing the Petitioner to deposit the dues. 5 A few facts of the matter are as under: The Petitioner is a social organization registered under Registration of Societies Act, XXI of 1860 and also registered as a Trust under Bombay Public Trust Act, 1950. The Petitioner is a social organization. The Petitioner is Non-Government organization providing social services. The aims and objects of the Trust are up-liftment of poor women and children in and around Pune City. To fulfill the said aims and objects the petitioner runs various activities like Vruddhashram, Balwadi, Anganwadi, Ladies Hostel for working women, free legal aid center, Creche, library, etc. at Pune and also runs Family Planning and Welfare Center, which is a Government Scheme. The authority under Provident Fund Act initiated proceeding under section 7A of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. They issued summons to the Petitioner calling upon them why action should not be taken 3 22 wp 787.11.doc against them for non-compliance of the provisions of the said Act. Pursuant to the said summons, petitioner filed their reply dated 15th December, 2009 raising objection about applicability of the provisions of the said Act. 6 After hearing both the sides, the Assistant Provident Fund Commissioner, Regional Office, Pune, passed an order dated 11th January, 2009 under section 7A of the said Act, holding that the Petitioner is engaged in some commercial and social activities to help old aged persons and women and children, providing sewing machines and legal aid to the needy persons. Considering the reply filed by the Petitioner, record produced including the report of Enforcement Officer dated 3rd January, 2008, the Provident Fund Authority held that provisions of said Act were applicable to the Petitioner and they were liable to pay their contribution to the Provident Fund which they failed to pay. They called upon the petitioner to pay the same with effect from 1st May, 1996 provisionally to the tune of Rs.43,77,917/-. 7 Being aggrieved by the said order dated 11th January, 2009, petitioner preferred Appeal ATA No.258 (9) of 2009 before the Employees’ Provident Fund Appellate Tribunal. In the Appeal Memo they specifically raised objection about 4 22 wp 787.11.doc maintainability of the provisions of the said Act. The contentions of the Petitioner in the Appeal Memo are that they are doing social activities. They also raised objection that before passing the impugned order, the Provident Fund Authority should have considered that work undertaken by the Petitioner is not a trade, business or commercial activity and the Petitioners are not making any profit out of it. The Authority should have seen that whether the Trust falls within the definition “understanding” or the word, “societies, clubs or associations doing commercial activity”. 8 The said Appeal decided by the Appellate authority by the impugned order dated 20th October, 2010 holding that order passed by the Provident Fund Authority was according to law. 9 Being aggrieved by the said order of Appellate Authority, Petitioner preferred present writ petition. The learned counsel appearing on behalf of Petitioner submits that both the authorities below failed to consider the applicability of Provident Fund Act to the Petitioner as the Petitioner being a Charitable Institution doing social services to the public at large. He further submit that in view of section 1, sub section 3 (b) and as per Entry no.16 of Appendix 1, the Petitioner is not covered 5 22 wp 787.11.doc under the provisions of Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. He further submit that though they raised specific ground in the Appeal Memo as well as Reply before the Provident Fund Authority, both the Authorities below failed to consider their objection. 10 The learned counsel appearing on behalf of the Petitioner further submits that as the Petitioner is registered under the Bombay Public Trusts Act and providing social services, therefore, the provisions of the said Act are not applicable to them. In support of his contentions, they relied on the judgment in the matter of Shri Jain Swetamber Nakoda Paraswnath Teerth, Mewanagar, Barmer vs. Regional Provident Fund Commissioner and Others reported in 2009 (1) CLR 458 and in the matter of T.B. Association of India vs. Regional Provident Fund Commissioner, New Delhi and another, reported in 1981 (1) Labour Law Notes 437. In the matter of Shri Jain Swetamber Nakoda Paraswnath Teerth (supra), Rajasthan High Court held that the Trust Managing the Temple does not fall under the definition given in section 1 (3) (b) of the said Act. and, therefore, no question of its claiming exemption under the provisions of the Provident Fund Act to the Trust. In similar way in the matter of T.B.Association of India (supra) 6 22 wp 787.11.doc Delhi High court is of the view that the Trust which is doing social activities cannot be covered under the provisions of the said Act. In view of the submission, the learned counsel appearing on behalf of Petitioner submits that both the authorities failed to consider the applicability of provisions of the said Act to the Petitioner and erred in coming to the conclusion that Petitioners are liable to pay contribution. 11 On the other hand, the learned counsel appearing on behalf of respondent vehemently opposed the present Writ Petition. She submits that the authority below at the time of deciding proceeding under section 7B of the said Act, categorically held that the Petitioner is engaged in some commercial and social activities. She submits that one of the employees of the Petitioner made a complaint to the authority and on the basis of said complaint he had started investigation and proceeding. She further submits that from the Trust Deed of the Petitioner, it is crystal clear that they are doing commercial activities also, and, therefore, provisions of the said Act are applicable to them. She further submits that just because the Petitioner is doing some charitable activities, they cannot claim exemption from the operation of the said Act. In support of her contention, she relies on the judgment, in the matter of The 7 22 wp 787.11.doc Venkataramana Dispensary and Ayurvedic College vs. Union of India and another, reported in 1986 (2) LLJ 411. Head note of the said judgment reads as under: “Employees Provident Fund and Miscellaneous Provisions Act, 1952 – Sections 1 (3) (b), 19A – First schedule – Relevancy of the charitable activity of the institution to decide the applicability of the Act – Dispensary meant to impart practical training and for preparing Ayurvedic medicines and distributing such medicines to poor patients – Applicability of the Act to such establishment – Charitable activity of the institution has no relevance to determine the applicability of the Act – Dispensary imparting training to students in Ayurvedic medicines is covered by the Act.” 12 With the help of the both the counsel, I have gone through the papers before the Authority as well as Trust Deed produced by the Petitioner on record. It is to be noted that pursuant to the notice under section 7B of the said Act, Petitioner filed their reply dated 15th December, 2009. In the said reply, they specifically raised objection about the applicability of the provisions of the said Act to them. Though the said issue was raised by the Petitioner in the reply, the Provident Fund Authority failed to consider the same at the time of passing of 8 22 wp 787.11.doc the order dated 11th January, 2009 under section 7A of the said Act. Even the petitioner in their appeal memo before the appellate authority categorically raised the issue about maintainability of the provisions of the said Act to them. Ground no. vii in the said appeal memo reads thus: “vii. The Appellant further submits that Mrs. Madhuri Keskar one of the employee retired from family welfare center which runs under Government aided scheme, made complaint before the Regional Provident Fund Commissioner, Pune with malice intention and asked to cover Pune Mahila Mandal under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. In response to the complaint made by Mrs. Madhuri Keskar, the Respondent initiated enquiry u/s 7-A and summoned the Appellant to appear and participate in the proceeding u/s 7-A by its summons dated 15.11.2006. The Appellant made submission before EPF Commissioner orally as well as documents was also submitted. The Appellant stated that the EPF & MP Act, 1952 is not applicable to the Appellant establishment. To substantiate the same certain documents were also produced and written submission was made on 15.12.2006. The Asst. Provident Fund commissioner directed the Enforcement officer to visit the office of the Appellant to verify the records 9 22 wp 787.11.doc as well as to testify the submission made by the Appellant. The Enforcement officer visited in our establishment on 03.01.2007 and verified certain record as well as directed the Appellant to present certain records. Accordingly the Appellant submitted the records with list before the Respondent. However, the Respondent did not consider the submission of Appellant and again on 03.01.2008 squad of Enforcement Officer visited and done physical verification of existing employees for confirmation the strength of employees and date of coverage. The Enforcement Officer prepared visit note and submitted it in 7A proceeding. While preparing the visit note, the Enforcement Officer did not taken into consideration the aims and objects of the Trust, whether the activities run by the Trust fall u/s 1 (3) (b) of the Act. The Enforcement officer did not mention the names of employees, place, designation, length of service and signature or thumb impression of such employees were not obtained. The Appellant submits that the visit note prepared by the Enforcement Officer is false and not based on facts. However, without considering the submission made by the Appellant and without taking detailed information about the functions of Appellant Trust, the Respondent passed following order - Order Now Therefore, I Shri V.D.Jawale, APFC, 10 22 wp 787.11.doc Regional Office, Pune in exercise of powers conferred on me under section 7A of the EPF & MP Act, 1952 having regard to the facts of the case and considered the submissions made before me by E.O. on 02.01.2009 confirming that the EPF & MP Act, 1952 is applicable to M/s Pune Mahila Mandal w.e.f. 01.05.1996 (provisionally). I further order that the aforesaid amount i.e. 26,31,676/- towards PF/EPS/EDLI & Rs.17,92,483 interest as per the provisions of section 7 Q of EPF Act, 1952, Total Rs.43,77,917/- (Forty three lakhs seventy Seven thousand nine hundred seventeen), which shall be paid by the establishment in respective accounts immediately from the date of receipt of this order and produce the received copies of challans in support thereof failing which the same shall be recovered in the manner prescribed in section 8B and 8G of the Act. This will be without prejudice to any other action that may be under the provision of law for which establishment has rendered itself liable. Since the establishment has not yet remitted the amount, the order relating to the section 7Q is only provisional and final will be issued under section 7Q duly adjusting the above provisional amount on receipt of remittances from the establishment. The records of the establishment prior to 01.05.1996 should be produced for the 11 22 wp 787.11.doc inspection of Enforcement Officer’s squad. Issued under my seal at Pune this day, 11.01.2009.” 13 Though the Petitioner raised specific grounds about the applicability of the provisions of the said Act to them, the Appellate Authority failed to consider the said issue at the time of passing the impugned order dated 20th October, 2010. Considering these facts, I am of the opinion that this is a fit case for remand to the respondent no.1 for fresh hearing wherein the issue regarding the applicability of the said Act shall also be considered and decided. 14 The learned counsel for the Respondents pointed out that the total claim against the petitioner was for more than Rs.43,27,917/- while the petitioners at the time of obtaining interim stay deposited Rs.10,00,000/- only with the Appellant Authority which is inadequate and hence they be directed to deposit the entire remaining amount with Respondent no.1. Considering facts and circumstances of the present case, I am of the opinion that in the interest of justice, Petitioner should be directed to deposit additional Rs.15,00,000/- with respondent no. 1 within six weeks from today as a condition precedent. 12 22 wp 787.11.doc 15 In view of the above mentioned findings writ petition is partly allowed as under: (a) The impugned order dated 20th October, 2010 passed by the learned Presiding Officer in Appeal ATA No. 258 (9) of 2009 and the order dated 11th January, 2009 passed by respondent no.1 is set aside. (b) The Matter is remanded to the respondent no.1 for fresh hearing. (c ) Petitioner is directed to deposit additional sum of Rs.15,00,000/- with respondent no.1 within six weeks from today as condition precedent. (d) The amount of Rs.10,00,000/- already deposited with the Tribunal at the time of obtaining stay shall be transferred by the Appellant Authority to the Respondent no.1 as early as possible. (f) No order as to costs. (K.K.Tated, J.)