Case: Automotive and Allied Industries Private Limited Vs. Regional Provident Fund Commissioner

the parties in the two suits filed in the City Civil Court. A mere perusal of the consent terms makes it clear that the company agreed to pay diverse amounts to respondent No. 2 towards his employment. The payment of gratuity amount, the payment of salary, the payment of leaving travel concession, the payment of pension clearly indicates that the company did not dispute the character of service rendered by respondent No. 2 as an employee. In the face of these circumstances, Shri Talsania could not seriously dispute that respondent No. 2 was an employee. The principal contention urged by the learned Council is that respondent No. 2 by entering into consent terms had given up all the claims in respect of the employment and, therefore, he is no entitled to demand the provident fund by approaching Commissioner and compelling the company to enroll respondent no. 2 as member of the fund. In our judgment, the contention urged on behalf of the appellants is of considerable merit and deserves acceptance. Clause 8 of the consent terms, which is set out hereinabove, clearly provides that amounts were received by respondent No. 2 in full and final settlement and satisfaction of all the claims against the company for loss of office or otherwise howsoever. The ambit of clause 8 is extremely wide and takes in its sweep every claim arising out of the employment. The trial judge held that the claim for payment of provident fund arises out of statutory provision and the statutory claims cannot be given up by consent terms. We are afraid, we cannot share the view of the learned single Judge. The payment of provident fund is ensured by the provisions of the Employee provident Fund and Miscellaneous Provisions Act, 1952. An employer is required to contribute towards the provident fund membership of the employee in cases where the establishment is covered by the provisions of the Act. It is not in dispute that the company was covered by the provisions of the Act with effect from January 1, 1965. In the present case respondent No. 2, who was an employee, was also a Director of the company along with his two real brothers. The company never contributed any amount towards the alleged claim of respondent No. 2 as an employee of the company. Respondent No. 2 was in charge of Madras factory and had paid contribution in respect of other employees but not in respect of his employment. It is obvious that respondent No. 2 did not make contribution because respondent No. 2 always treated himself as an employer and that agreement of employment was merely for some incidental purpose. The termination of employment as well as the directorship gave rise to the litigation and respondent No. 2 entered into consent terms. The perusal of consent terms leaves no manner of doubt that respondent No. 2 conceded his right to continue as a Director and secured every benefit arising out of the alleged employment. As a part of the overall settlement it was always open for respondent No. 2 to give up the claim in respect of the provident fund and there is no rule o flaw which prescribes that a beneficiary cannot give up or surrender his claim even though it arises out of statutory provision. In our judgment, the trial Judge was clearly in error in concluding that provident fund being statutory provision, it was not open for the parties to contract out of statute. Shri. Shah learned Council appearing on behalf of the legal representations of respondent No. 2 who died during the pendency of this appeal, submitted that clause 8 of the consent terms merely provides that respondent No. 2 will not make any claim against the company but that will not disentitle respondent No. 2 to make claim against the provident Fund Commissioner. The submission overlooks that the claim is made against the company and is sought to be recovered through the agency and of the Provident Fund commissioner. The amount is not sought from the Provident Fund Commissioner de hors the company. Shri. Shah then submitted that the company had not sought any exemption from payment of the provident fund in respect of respondent No. 2 in accordance with Section 17 of the Act. The submission overlooks that it is not the claim the company that the Central Government had granted exemption to the company in respect of contribution of provident fund due to respondent no. 2. The claim was given up by respondent No. 2 by entering into consent terms. Shri Shah then submitted that respondent No. 2 was not aware that he was an employee at the time of the entering into consent terms and consequently, entitled to the provident fund. The submissions only required to be stated to be rejected. As mentioned hereinabove, there is intrinsic evidence reflected in the consent terms that both the parties were fully conscious that respondent No. 2 was an employee and benefit in respect of that employment was conferred by consent terms. ( 5 ) SHRI Shah finally submitted that it was not within the understanding of both the parties at the time of entering into consent terms that the claim as regards provident fund is given up by respondent No. 2. It is not possible to accede to the submission. The clear wording of Clause 8 of the consent terms leaves no manner of doubt that respondent No. 2 gave up all the claims against the company by the words "or otherwise howsoever". In our judgment, respondent No. 2, after taking advantage of the consent terms, cannot turn around and start making claim in respect of provident fund by approaching Provident Fund Commissioner. It is not open for respondent No. 2 to blow hot and cold and the principle of appropriate and reprobate is clearly attracted. In our judgment, Provident Fund Commissioner was in error in calling upon the company to enroll respondent No. 2 as a member of the fund.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In our judgment, the contention urged on behalf of the appellants is of considerable merit and deserves acceptance. Clause 8 of the consent terms, which is set out hereinabove, clearly provides that amounts were received by respondent No. 2 in full and final settlement and satisfaction of all the claims against the company for loss of office or otherwise howsoever. The ambit of clause 8 is extremely wide and takes in its sweep every claim arising out of the employment. The trial judge held that the claim for payment of provident fund arises out of statutory provision and the statutory claims cannot be given up by consent terms. We are afraid, we cannot share the view of the learned single Judge. The payment of provident fund is ensured by the provisions of the Employee provident Fund and Miscellaneous Provisions Act, 1952. An employer is required to contribute towards the provident fund membership of the employee in cases where the establishment is covered by the provisions of the Act. It is not in dispute that the company was covered by the provisions of the Act with effect from January 1, 1965. In the present case respondent No. 2, who was an employee, was also a Director of the company along with his two real brothers. The company never contributed any amount towards the alleged claim of respondent No. 2 as an employee of the company. Respondent No. 2 was in charge of Madras factory and had paid contribution in respect of other employees but not in respect of his employment. It is obvious that respondent No. 2 did not make contribution because respondent No. 2 always treated himself as an employer and that agreement of employment was merely for some incidental purpose. The termination of employment as well as the directorship gave rise to the litigation and respondent No. 2 entered into consent terms. The perusal of consent terms leaves no manner of doubt that respondent No. 2 conceded his right to continue as a Director and secured every benefit arising out of the alleged employment. As a part of the overall settlement it was always open for respondent No. 2 to give up the claim in respect of the provident fund and there is no rule o flaw which prescribes that a beneficiary cannot give up or surrender his claim even though it arises out of statutory provision. In our judgment, the trial Judge was clearly in error in concluding that provident fund being statutory provision, it was not open for the parties to contract out ofsubmission overlooks that the claim is made against the company and is sought to be recovered through the agency and of the Provident Fund commissioner. The amount is not sought from the Provident Fund Commissioner de hors thesubmission overlooks that it is not the claim the company that the Central Government had granted exemption to the company in respect of contribution of provident fund due to respondent no. 2. The claim was given up by respondent No. 2 by entering into consentsubmissions only required to be stated to be rejected. As mentioned hereinabove, there is intrinsic evidence reflected in the consent terms that both the parties were fully conscious that respondent No. 2 was an employee and benefit in respect of that employment was conferred by consentis not possible to accede to the submission. The clear wording of Clause 8 of the consent terms leaves no manner of doubt that respondent No. 2 gave up all the claims against the company by the words "or otherwise howsoever". In our judgment, respondent No. 2, after taking advantage of the consent terms, cannot turn around and start making claim in respect of provident fund by approaching Provident Fund Commissioner. It is not open for respondent No. 2 to blow hot and cold and the principle of appropriate and reprobate is clearly attracted. In our judgment, Provident Fund Commissioner was in error in calling upon the company to enroll respondent No. 2 as a member of the fund.