Civil Writ Petition No. 1763 of 2011 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No. 1763 of 2011 Date of decision:-30.08.2011 Gurdaspur Co-operative Sugar Mills Limited, Gurdaspur ...Petitioner Versus Presiding Officer, Employees Provident Fund, Appellate Tribunal, New Delhi and another ...Respondents CORAM: HON'BLE MS. JUSTICE RITU BAHRI Present:- Mr. Vivek Salathia, Advocate for the petitioner. Mr. Rajesh Hooda, Advocate for the respondents. RITU BAHRI J.(Oral) Challenge in this petition is to the order dated 22.10.2010 (Annexure P-1) and the assessment order dated 07.09.2007 (Annexure P-2) passed by the Assistant Provident Fund Commissioner . Petitioner is a registered co-operative society and engaged the contractor to further engage casual employees to do the work, which was allotted to them. After conducting the inquiry under Section 7-A of the Employees Provident Funds and Miscellaneous Provision Act, 1952 by the Additional Provident Funds Commissioner. Notice was issued on 18.4.2007. After verifying the records of the establishment, an inquiry report was submitted by the Inquiry Officer Shri Sarabjit Singh, E.O. on 07.8.2007. The establishment is covered under the Employees Provident Funds and Miscellaneous Provision Civil Writ Petition No. 1763 of 2011 -2- Act, 1952. A notice was issued initiating proceedings under Section 7-A of the Act. The Enforcement Officer furnished the report after inspecting the records of the establishment for the period May 2004 to June 2007. The assessment has been made by the impugned order dated 07.9.2007 (Annexure P-2) for depositing the leave encashment amounting to Rs.15,34,257/- and shortfall of provident fund on account of work done by two contractors Gulzar Singh and Gurmet Ram. This order has been upheld by the Appellate Authority by passing order dated 22.10.2010 (Annexure P-1). Counsel for the petitioner has referred to the judgment of the Supreme Court in Manipal Academy of Higher Education versus Provident Fund Commissioner 2008(2) S.C.T. 421 to contend that the term 'basic wage' does not include the payment made towards leave encashment. Since payment made towards the leave encashment is not part of the basic wage, it cannot be taken into consideration for calculating the provident fund, which was due, which the petitioner was liable to pay as per the Act. Counsel for the respondent at the outset does not dispute this proposition of law and accordingly it is held that the amount of Rs.15,34,257/- has assessed to be paid by the petitioner vide order dated 07.9.2007 (Annexure P-2) is set aside. The other amounts, which relates to the payment made by two contractors Gurmet Ram and Gulzar Singh. The payment of assessment with regard to Gulzar Singh is Rs.73,27,572/- and as far as Gurmet Ram is concerned i.e. Rs.2,69,357/-. The precise argument of the petitioner is that this amount is not to be adjusted against the petitioner Mill as the contractor was the principal employer and he was liable to make the payment towards provident fund on account of labour employed by him. Counsel for the petitioner has referred to (Annexure P-4) giving the details of the work done by small contractors, who had Civil Writ Petition No. 1763 of 2011 -3- employed some workmen to carried out the essential requirements for a short period of time to overcome the necessities. The payment made to these contractors will not be covered under the Employees Provident Funds Act so as to make petitioner liable to deposit the provident fund. Counsel for the respondent on these two above grounds has stated that the matter can be re-examined by the Commissioner by giving opportunity to both the parties. This writ petition is being disposed of and the orders dated 22.10.2010 (Annexure P-1) and dated 07.9.2007 (Annexure P-2) are set aside and the matter is remanded back to the Assistant Provident Fund Commissioner to examine the issue afresh after giving opportunities to the petitioner to lead appropriate evidence. This exercise will not cover the issue regarding leave encashment. It is directed that the amount of Rs.15,34,257/- towards leave encashment be refunded within four weeks and the parties are directed to appear before the Assistant Provident Fund Commissioner on 01.11.2011. August 30, 2011 ( RITU BAHRI ) Vijay Asija JUDGE