MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA versus THE ASSISTANT PROVIDENT FUND COMMISSIONER &  ORS.
[2017] 3 S.C.R. 939, Supreme Court of India, 2017
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
J 
I• 
[2017] 3 S.C.R. 939 
MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA 
A 
v. 
THE ASSISTANT PROVIDENT FUND COMMISSIONER & 
ORS. 
(Civil Appeal No. 721of2013) 
MARCH 09, 2017 
[DIPAK MISRA, A. M. KHANWILKAR AND 
MOHAN M. SHANTANAGOUDAR, JJ.] 
Employees' Provident Funds and Miscellaneous Provi~ions 
B 
Act, 1952 - s.16 -Applicabili(v of-Appellant is a registered sociezv 
C 
and runs schools and colleges - It appointed part-time employees 
with approval of State Government- Whether the provisions of 1952 
Act (Central Act) will apply to the part-time employees in the schools/ 
colleges of appellant whose service conditions are governed by the 
provisions of State Act and State Rules and whether appellant is 
D 
deemed to have defaulted in depositing Provident Fund contribution 
of 16 of its part time employees - Held: The appellant is 100% 
grant-in-aid school and is umler the control of State Government -
The employees working in school/college of appellant are covered 
by the contributory provident fund scheme framed by State 
Government subject to eligibility - Appellant-society, thus, ji1/fills 
E 
the twin conditions specified in s.16(1}(b) - It follows that the same 
is exempted from the application of provisions of Central Act - Once 
an establishment is covered under any one of the excepted category 
u/s.16 of the Central Act, the officials empowered by the Central 
Act will have no authority to proceed against such establishment; 
and more so on the ground that a miniscule
number uf emplcyees 
F 
(16 part-time employees) working in the establishment were not 
eligible for the benefits under the State Contributory Provident Fund 
Scheme governing the rest of the regular employees of the 
establishment - Initiation of action of recovery against the 
establishment of the appellant, which was otherwise exempted from 
G 
application of the provisions of the Central Act is, therefore, whol~v 
without authority of law - Maharashtra Employees of Private 
Schools (Conditions of Service) Rules, 1981 - r.20 - Maharashtra 
Employees of Private Schools (Conditions of Service)Regulation 
Act, 1977. 
H 
939
940 
A 
SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
Allowing the appeal, the Court 
HELD: 1. A plain reading of Section 1 of the Employees 
Provident Funds and Miscellaneous Provisions Act, 1952 (Central 
Act) shows that the Central Act applies to the establishments 
referred to therein. In the instant case, the appellant's 
B establishment may fall within the purview of "other 
establishment" referred to in sub-clause (b) of Section 1(3). It is 
indisputable that the Central Government in exercise of the 
powers conferred by clause (b) of sub-Section (3) of Section 1 of 
the Central Act has published a Notification being No.S.0.-986, 
c dated 19.02.1982 on 06.03.1982, so as to include all the 
educational institutions in the category of "any other 
establishment", namely;University; College (Whether or not 
affiliated to a University); School (Whether or not recognized or 
aided by the Central or a State Government); any scientific 
institution; any institution in which research in respect of any 
D matter is carried on; and any other institution in which the activity 
of imparting knowledge or training is systematically carrieu on. 
A conjoint reading of Section 1 of the Central Act with the said 
notification, makes it clear that the Central Act would apply to all 
the colleges and schools, subject to the provisions of Section 16 
E · of that Act. [Paras 16, 17)(952-D-G] 
2.1 The question then arose: whether the appellant school 
is an establishment covered by any one of the
excepted category 
specified in Section 16 of the Central Act. The appellant has 
invoked clause (a) as well as clause (b) of Section 16 (1) of the 
Central Act. As regards the argument hinging on clause (a), it 
F 
proceeds on the premise that the appellant's school (in which 16 
part-time employees were working), had employed less than fifty 
persons and working without the aid of power. This ar6ument 
cannot come to the aid of the appellant. Inasmuch as, the appellant 
is running 29 schools/colleges and has employed around 1151 
G permanent employees. Section 2A of the Central Act predicates 
that where an establishment consists of different departments or 
has branches, whether situate in the same place or in different 
places, all such departments or branches shall be treated as part 
of the same establishment. In other words, the fact tltat the 
appellant has employed less than 50 permanent employees and 
H
MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST. 
941 
PROVIDENT FUND COMM. 
who are working without the aid of power in the school in which A 
the 16 part-time employees were also working, will not take the 
matter any further. The appellant has neither pleaded the material 
facts n<'r adduced any proof, so as to rebut the presumption 
stipulated in Section 2A of the Central Act - that all the schools 
and colleges run by the appellant were part of the same B 
establishment. The fact that the appellant is a Co-operative 
Society registered under the State Co-operative Societies Act by 
itself will not extricate the appellant from the application of the 
Central Act.[Para 18](952-G-H; 953-A-D] 
2.2 Sub-clause (b) of Section 16(1) is an independent 
excepted category. It is attracted to any other establishment C 
belonging to or under the control of the Central Government or 
a State Government "and~' whose employees are entitled t{l the 
benefits of contributory provident fund or old age pension in 
accordance with any scheme or rule framed by the Central 
Government or the State Government governing such benefits. D 
These twin conditions are required to be satisfied by the 
concerned establishment, seeking exemption from the provisions 
of the Central Act. In the present case, the employees working 
in the concerned schools/colleges of the appellant are covered 
by the contributory provident fund scheme framed by the State 
Government, subject to eligibility. The second
condition required 
E 
for seeking exemption under the Central Act is thus fulfilled. 
The moQt question is: whether the schools in which the 16 part-
time employees were working, can be said to be an establishment 
belonging to or under the control of the Central Government or 
a State Government. [Paras 19, 20](953-E-H; 954-A] 
F 
2.3 The question is whether there are similar provisions in 
the subject State Act and Rules framed thereunder so as to infer 
that th.e State Government exercises substantive control over 
the establishments such as that of the appellant. The State Act, 
the Rules made thereunder and the provisions of the Secondary G 
Schools Code are a complete code in themselves with regard to 
the educational institutions and indicative of the extent of exercise 
of substantive control by the State Government over such 
institutions, whether owned by it. The State Government has the 
power of superintendence and the authority to direct, restrict or 
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942 
SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
A regulate wo.rking of the educational institutions. It necessarily 
follows that the establishment of the appellant, which in this case 
is 100% grant-in aid schools in which 16 part-time employees 
were working, is under the control of the State Government and 
thus would fulfill even the first condition of Section 16(1) (b) of 
B the Central Act. [Paras 21, 22)(956-G-H; 959-A-CJ 
, 2.4 As it is held that the establishment of the aJ>pellant 
fulfills the twin conditions specified in Section 16(l)(b), it must 
follow that the same is exempted from the application of the 
provisions of the Central Act. Section 16 of the Central Act makes 
C it abundantly clear that the provisions of the Central Act will have 
no application to the establishment, if covered by one of the 
excepted category provided therein. The exemption is for the 
establi.shment as a whole and for all purposes, from the application 
of the Central Act. Once the establishment is covered by the 
excepted category specified in Section 16, to get exemption, it is 
D i.ncomprehensible that the provisions of the Central Act can be 
invoked against such establishment on the specious reasoning 
that few (16 in this case) part-time employees working thereat 
were not covered by the CPF Scheme of the State Government, 
as applicable to rest of its employees. (Para 23)(959-C, J!:-H) 
E 
3. Once the establishment qualifies for exemption of 
application of the provisions of
the Central Act, there is no way 
that the authorities under the Central Act can exercise authority 
over it or call upon the establishment to comply with the provisions 
of the Central Act, unless the exemption of the establishment is 
withdrawn or lifted de jure. Section 16 of the Central Act docs 
F not envisage a concept of partial exemption of application of the 
provisions of the Central Act in respect of employees, but the 
exemption operates qua the establishment for all purposes. In 
the instant case, the appellant is running 29 schools/colleges and 
is receiving 100% grant-in aid from the State Government in 
G respect of 28 schools/colleges. The employees working in the 
said schools of the appellant have been employed with the 
permission and approval of the State Government and are 
governed by the State CPF Scheme. The entire process of 
appointment has been strictly monitored by the State 
Government. Additionally, the appellant has been submitting pay 
H
MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v .. ASST. 
943 
PROVIDENT FUND COMM. 
bills of its employees to the Education Department which directly A 
deposits the salaries. of such employees into their bank accounts. 
At the relevant time, the appellant had employed around 1151 
employees who were covered by the Contributory Provident Fund 
Scheme framed by the State Government for the employees of 
the private schools (except the 16 part-time employees who were 
B 
not doing full time load of work). The appellant had engaged t:!tose 
16 part-time employees with the permission and approval of the 
State Government. It can be safely presumed that the State 
Government was fully conscious of the fact that those part-time 
employt:es will not be entitled for the benefits of CPF Scheme of 
the State. In other words, the substantial number of employees 
C 
of the appellant if not all of them, around 1151 employees, were 
covered by the contributory provident fund scheme of the State 
Government applicable to private schools governed by the 
provisions of the State Act and the Rules made thereunder. Just 
because the 16 part-time employees working in the appellant's D 
school were not eligible for the benefits of the.State CPF Scheme, 
the exemption status of the establishment of the appellant acquired 
under Section· 16 of the Central Act, will not cease or stand 
withdrawn automatically. (Paras 24, 25)(960-B-H; 961-A] 
4. Once an establishment is covered under any one of the 
E
excepted category under Section 16 of the Central Act, the officials 
empowered by the C<'11tral Act will have no authority to proceed 
against such establishment; and more so on the ground that a 
miniscule number of employees (16 part-time employees) working 
in the establishment were not eligible for the benefits under the 
State Contributory Provident Fund Scheme governing the rest 
F 
of the regular employees of the establishment. Initiation of action 
of reco"ery by the official(s) of Respondent No.1 against the 
establishment of the appellant, which was otherwise exempted 
from application of the provisions of the Central Act is. wholly 
without authority of law. [Paras 26, 27)(961-B-D] 
Regional Provident Fund Commissioner v. Sanatan 
Dram Girls Secondary School & Ors. (2007) 1 SCC 
268 : [2006) 7 Suppl. SCR 849 - relied on. 
The Shamrao Vithal Co-operative Bank Ltd v. Kasargod 
G 
H
944 
SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
A 
. Pandhuranga Ma!lya (1972) 4 SCC 600 : (1972) 2 SCR 
B 
162 - referred to. 
Case Law Reference 
[2006) 7 Suppl. SCR 849 
[1972) 2 SCR 162 
relied on 
Para 20 
referred to 
Para 27 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 721 of 
2013. 
From the Judgment and Order dated 17.01.2012 of the High Court 
of Judicature at Bombay, Bench at Nagpur in Writ Petition No. 4013 of 
c 2011. 
Satyajit Desai, Ms. Anagha S. Desai, Neelmani Pant, Advs. for 
the Appellant. 
Kuna! A. Cheema, Addi. Govt. Adv., Yogesh K. Ahirrao, Nishant 
D Ramakantrao Katneshwarkar, Vijay Prakash, P. Soma S undaram, Ad vs. 
for the Respondents . 
. The Judgment of the Court was delivered by 
A. M. KHANWILKAR, J. 1. The present civil appeal arises 
from the judgment and final order passed by the High Court of Judicature 
E at Bombay, Nagpur Bench dated I 7'h January, 2012 in Writ Petition No. 
4013 of2011. The High Court has dismissed the aforesaid writ petition 
filed by the appellant, which had assailed the order of the Err:ployees 
Provident Fund Appellate Tribunal (for short 'Tribunal') dated 81h April, 
2011 whereby it was held that the appellant is deemed to have defaulted 
in depositing the provident fund contributions of 16 (sixteen) of its part-
F time employees. 
2. Before dealing with the legal submissions and issues, it would 
be apposite to set out the factual matrix leading to the filing of the present 
appeal: 
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a) The appellant is a
registered society under the Societies 
H 
Registration Act, 1860 and Bombay Public Trusts Act, 1950 and runs 29 
(twenty nine) schools and junior colleges in the Wardha District, Nagpur. 
Out of which, 28 (twenty eight) schools and colleges purportedly received 
100% grant-in aid from the State Government.
M/S. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST. 
945 
PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.] 
b) Between 1996 and 1997, due to administrative exigency I 6 A 
part-time librarians were appointed to some of the appellant's colleges, 
with the permission/approval of the State Government. These librarians 
worked for lesser hours as opposed to the working hours put in by regular. 
full-time employees. The appellant contends that the entire process of 
appointment and approval was monitored and supervised by the State 
B 
Government. Further, the appellant did not possess any direCt control 
over the payment of or deductions to the salaries of its employees. It is 
done by the State Authorities. 
c) On 5'h May, I998, the appellant forwarded a bill of one of the 
part-time librarians to the Education Officer, with a request to deduct 
the provident fund. This request was declined vide a letter dated I 9'
11 
C 
November, 1998, with a direction not to deduct provident fund 
contriblliions of such part-time employees. Subsequently, on 51h March, 
2004, the Director of Education issued a letter clarifying that the 
contributory provident fund scheme was not applicable to such part-
time employees. In view of the aforesaid communications, the appellant D 
had reason to believe that it was not supposed to deduct and/or deposit 
provident fund contributions of its I6 part-time employees. 
d) On 61h October, 2005, the officers of Respondent No. I visited 
one of the schools of the
appellant and sought details of the employees 
and payments made on their behalf vis-a-vis provident fund contributions. 
E 
e) The appellant submitted its response to the aforesaid query 
vide its letter dated I 81h October, 2005, wherein the appellant mentioned 
that as per the law, it was not required to deduct provident fund 
contributions of the concerned part-time employees. 
f)The appellant, however, received a summons from Respondent 
F 
No.l dated 23'd May, 2006, to appear in connection with failure to remit 
provident fund dues of its employees. Further correspondence in that 
regard ensued between the parties and adjournments were taken i11 the 
matter. 
g) Ultimately, Respondent No.I heard the matter and passed an 
G 
order dated l ''August, 2007, holding that the appellant was liable to pay 
a sum ofRs. I6,89,796/- as outstanding provident fund contributions. 
h) The appellant then filed a review application dated 14'h 
September, 2007 against the aforesaid order, on the ground that 
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946 
SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
A Respondent No.I had failed to appreciate certain material submissions 
and objections raised at the time of hearing. Respondent No. I dismissed 
the said review with a one-page order, without granting a heari!lg. 
i) During the abovementioned proceedings, 3 (three) out of 16 
part-time librarians of the appellant were regularized w.e.f 291h 
B September, 2007. Another librarian was regularized w.e.f. 29
111 September, 
2009. This was done with the approval of the State Authorities. 
j) Aggrieved by the aforesaid order passed by Respondent No. I, 
the appellant filed an appeal before the Appellate Tribunal, which rejected 
the appeal vide its order dated 81h April, 20 l I inter alia on the ground that 
c there was no difference between full-time and part-time employees and 
thus the appellant was bound to deduct/pay the provident fund · 
contributions in respect of the part-time employees. 
k) Respondent No. I thereafter issued a demand notice dated I 01h 
May, 2011 to one of the schools of the appellant for payment of the due 
D amount by 251h May, 20 I l. That was followed by a show cause notice 
as to why a warrant of arrest be not issued by Respondent No. I, dated 
23'" June, 20 l I. The appellant replied to the said show cause notice vide 
its letter dated 81h July, 2007, asking for one week time to pay the amount 
as demanded. 
E 
1) In the meanwhile, the appellant also filed Writ Petition No.40 I 3 
of 2011 before the High
Court, challenging the order dated 81h April, 
2011 passed by the Appellate Tribunal. The High Court stayed tl1e order 
and directed the appellant to deposit Rs.4 lacs in court, which it duly 
complied with. 
F 
m) Ultimately, on 17th January, 2012, the High Court was pleased 
to dismiss the said writ petition. 
3. In light of the above factual matrix, the present appeal raises 
the question of interpretation ofRule 20 of the Maharashtra Employees 
of Private Schools (Conditions of Service) Rules, I 98 I, as framed under 
G the Maharashtra Employees of Private Schools (Conditions of Service) 
Regulation Act, 1977 (for short 'the State Rules' and 'the State Act' 
respectively); as also of Section I 6 of the Employees' Provident Funds 
and Miscellaneous Provisions Act, I 952 (for short 'the Central Act'). 
The primary issue is: Whether in the present case, the provisions of the 
Central Act will apply to the part-time employees in the schools/colleges 
H
M/S. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST. 
947 
PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.] 
of the appellant, whose service conditions are governed by the provisions 
A 
of the State Act and State Rules. The relevant provisions are reproduced 
hereinbelow: 
Section 16 of the Central Act reads as: 
"(!) This Act shall not apply-
a) to any establishment registered under the Co-operative 
Societies Act, 1912 (2 of 1912), or under any other law 
for the time being in force in any State relating to co-
operative societies, employing less than fifty persons and 
working without the aid of power; or 
b) to any other establishment belonging to or under the control 
of the Central Government or a State Government and 
whose employees are entitled to the benefit of contributory 
provident fund or old age pension in accordance with any 
scheme or rule framed by the Central Government or the 
State Government governing such benefits; or 
c) to any other establishment set up under any Central, 
Provincial vr State Act and whose employees are entitled 
to the benefits of contributory provident fund or old age 
pension in accordance with any scheme or rule framed 
B 
c 
D 
under that Act governing such benefits; 
E 
[ (2) If the Central Government is of opinion that having regard 
to the financial position of any class of {establishments} 
or other circumstances of the case, it is necessary or 
expedient so to do, it may, by notification in the Official 
Gazette, any subject to such
conditions as may be specified F 
in the notification, exempt {whether prospectively or 
retrospectively,} that class of {establishments} from the 
operation of this Act for such period as may be specified 
in the notification.)" 
Section 20 of the State Rules reads as: 
"20. Provident Fund 
(!) Every employee (not being an employee who has opted 
for pension) of an aided or unaided school working on a 
full time basis or every employee employed on part-time 
G 
H
948 
A 
B 
c 
SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
basis in more than one school run by the same Management 
and doing full-time load of work in these schools, shall 
subscribe to the Contributory Provident Fund under the 
Contributory Provident Fund Rules (Bombay) as in force 
from time to time. 
(2) Every employee of an aided private secondary school 
working on a full time basis who was appointed before the 
l" April 1966 and who had exercised in writing his option 
for a Contributory Provident Fund Scheme shall subscribed 
to that Fund as per rules made by Government and are in 
force in this behalf." 
4. Mr. Satyajit Desai, Ld. Counsel appearing for the appellant, 
first submits that the schools of the appellant are receiving grant-in aid 
from the State Government. The appellant receives 100% grant-in aid 
and has no separate source ofincome. Further, the 16 part-time employees 
in question were appointed with the permission and approval of the State 
D Government. The appellant does not even have direct control over the 
payment of and deduction from its employees' salaries. In fact, even the 
salary of the concerned employees is directly issued by the State Education 
Officer and deposited in their respective bank accounts. 
E 
F 
G 
H 
5. Mr. Desai then submits that in terms of Section 16(1)(h) of the 
Central Act, the said Act has no application to an establishment which 
inter al ia is under the control of the State Government, which, as si.;bmitted 
above, is
clearly the case. The appellant's schools are governed by the 
State Act (and, by extension, State Rules) which over-rides the Central 
Act by virtue of being a special statute. Further, the appellant which had 
employed the part-time employees is an establishment registered under 
the State Co-operative Societies Act. The schools in which the part-
time employees were employed, have engaged less than 50 (fifty) persons 
who were working without the aid of power. Consequently, the Central 
Act has no application to such establishment even in terms of Section 
16(1) (a) of that Act. 
6. With regard to the status of the employees, Mr. Desai submits 
that regardless of whether the appellant's employees are full time or 
part time, to be eligible for provident fund as set out in Rule 20 of the 
State Rules, they must be doing full time load work. In the present case, 
the 1 e part-time employees were assigned work only for around i 8 hours
M/S. YESHWANT GRAMIN SHIK.SHAN SANSTHA v. ASST. 
949 
PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.~ 
a week i.e. from I 0:30AM to 2:00PM, as against the normal work load A 
of30 hours per week for full time or regular employees. In other words, 
they were not doing full time work load and thus not covered by the 
Provident Fund Scheme operated under the State Act. Consequently, 
the part time employees are not eligible to receive the benefit of the 
provident fund scheme framed by the-State. 
B 
7. Mr. Desai then submits that the State Government resolution 
dated 3"1 August, 2006, directed that all part-time librarians who had 
completed 5 (five) years in private schools, such as that of the appellant, 
were to be upgraded and made full time employees. This was further 
reiterated by the letter of the Education Officer dated 301h March, 2007, 
whereby the appellant was directed to implement the aforesaid resolution. 
C 
The fact that now the full-time employees were given provident fund 
benefits by virtue of being regularised, itself shows that the part-time 
employees were not entitled to provident fund benefits. The State 
Government therefore, did not make any deductions from their salaries 
towards provident fund employees' contribution. 
D 
8. Without prejudice to any of the aforesaid arguments, Mr. Desai 
also submits that the appellant was always willing to deduct the provident 
fund contributions from the salary of its part time employees ana had 
even written to the
concerned authority about the same but was 
categorically asked to refrain from doing so by the Education Officer 
E 
(Middle) Zilla Parishad, Wardha vide its letter dated l 91h November, 
1998. 
9. In reply, Mr. Vijay Prakash, learned counsel appearing for 
Respondent No.I, submits that the scheme of contributory provident 
funds (CPF) under the provisions of the State Act and the State Rules is 
F 
not applicable to the part-time employees of the appellant. Rather, it is 
the employees' provident funds (EPF) scheme framed under the Central 
Act which is applicable. Mr. Prakash buttresses his argument by 
submitting first that the Central Act prevails over the State Act by virtue 
of the 1982 notification which clearly brings educational institutions and, 
by extension, the benefit of provident fund to the employees in such 
G 
institutions, under the ambit of the Central Act. Secondly, an establishinent 
can be excluded from the purview of the Central Act only if it belongs 
to/is under the control of the State or Central Government and if its 
employees are entitled to CPF/pension benefits., Even if it is accepted 
that the appellant is controlled by the State Government, the fact remains 
H
950 
SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
A that the 16 part-time employees of the appellant were not entitled to 
CPF/pension benefits by virtue ofRule 20 of the State Rules itself, which 
clearly excludes them from receiving such benefits. Admittedly, the 
employees in question are part-time employees. The Rule relied upon by 
the appellant in its favour actually goes against it. Thus, the appellant's 
B schools cannot be excluded from the purview of the Central Act. 
10. Mr. Vijay Prakash would then submit that the Central Act 
does not distinguish between part-time and full-time employees of an 
establishment. An employee of such an establishment has to fit into the 
definition of an employee as per the Central Act and not any other Act. 
The appellant's argument that it has part-time employees, who are not 
C liable to have their provident fund deducted, will hold no ground as the 
Central Act makes no distinction between such so-called part time 
employees and regular employees. 
· 11. Mr. Vijay Prakash submits. that the appellant's stance, that it 
was willing to extend the provident fund benefits to its employees but 
D was restrained by the State Education Officer, is without merit. The 
State Education Officer is only concerned with CPF scheme and not 
with EPF scheme. Admittedly, CPF is inapplicable to the part-time 
employees of the appellant, and thus there is no question of the State 
Education Officer preventing the appellant from deducting EPF from its 
E
part-time employees' salaries. Infact, the High Court in the Impugned 
Judgment clearly records that the appellant ought to have taken steps to 
resolve the issue with the State Education Officer by resorting to 
appropriate remedies, which it has failed to do. 
12. Mr. Kuna) Cheema, learned counsel appearing on behalf of 
F the State of Maharashtra, submits that Rule 20 of the State Rules is not 
applicable to part-time employees unless they work in more tl:tan one 
school run by the same management and are doing full time load of 
work in those schools. If a school is fully aided and if Rule 20 is applicable 
to such part-time employees, only then will the provident fund be deducted 
by the State Government as per the State Scheme. 
G 
H 
13. Mr. Cheema then submits that as per Government Resolution 
No.CCPS-1005/126/SER-4 dated 31" October, 2005, the Government 
has introduced a new scheme titled 'Defined Contribution ?ension 
Scheme', to replace the existing pension scheme applicable to government 
servants recruited on or after l ''November, 2005. As per the resolution,
MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST. 
951 
PROVIDENT FUND COMM. (A. M. KHANWILKAR, J.] _ 
the Government has inter alia decided that the present pension scheme A 
and the existing General Provident Fund Scheme will not be applicable 
to government servants recruited on or after 1 ''November, 2005 in the 
State Government. 
14. Mr. Cheema finally submits that as regards the 16 parMime 
employees of the appellant, the said employees cannot be employed in a B 
permanent post by virtue ofbeing part-time employees. Thus, the State 
Government cannot deduct/pay the provident fund dues of such 
employees as they are not permanent employees. 
15. After hearing the submissions advanced by the counsel for 
the respective parties, we deem it necessary to examine the purport and c 
-interplay of the provisions of the Central Act and State Act, in order to 
get clarity on the issue of applicability of the relevant Act. First, we may 
advert to the Central Act. Section 1 of the Central Act elucidates the 
application of the said Act to the establishments referred to therein. 
The same reads thus: 
"I.Short title, extent and application-
(1) This Act may be called the Employees· Provident Funds 
and Miscellaneous Provisions Act, 1952. 
(2) It extends to the whole of lndia except the State of Jammu 
and Kashmir. 
(3) Subject to the provisions contained in section 16, it applies-
(a) to every establishment which is a factory engaged in any 
industry specified in Schedule 1 and in
which twenty or more 
• 
-persons are employed, and 
(b) to any other establishment employing twenty or more 
persons or class of such establishments which the Central 
Government may, by notification in the Ofjlcial Gazette. 
speci[y in this behal( 
D 
E 
F 
"Provided that the Central Government may, after giving not G 
less than two months' notice of its intention so to do, by 
notification in the Official Gazette, apply the provisions of 
this Act to any establishment employing such number of 
persons less than [Twenty] as may be specified in the 
notification] 
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952 
A 
B 
c 
SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
(4) Notwithstanding anything contained in sub-section (3) of 
this section or sub-section (1) of section 16, where it 1ppears 
to the Central Provident Fund commissioner, whether on an 
application made to him in this behalf or otherwise, that the 
employer and the majority of employees in relation to any 
establishment have agreed that the provisions of this Act should 
be made applicable to the establishment, he, may, by 
notification in the Official Gazette, apply the provisions of 
this Act to that establishment on and from the date of such 
agreement or from any subsequent date specified in such 
agreement. 
(5) An establishment to which this Act applies shall continue 
to be governed by this Act notwithstanding that the number 
of persons employed therein at any time falls below twenty:" 
(emphasis supplied) 
D 
16. On a plain reading of this provision, it is evident that the Central 
Act applies to the ~stablishments referred to therein. In the present case, 
the appellant's establishment may fall within the purview of "other 
estab!.ishment" referred to in sub-clause (b) of Section 1(3). It is 
indisputable that the Central Government in exercise of the powers 
conferred by clause (b) of sub-Section (3) of Section I of the Central 
E Act has published a Notification being No.S.0.-986, dated 19.02.1982 
on 06.03.1982, so as to include all the educational institutions in the 
category of"any other establishment",
namely; University; College 
(Whether or not affiliated to a University); School (Whether or not 
recognized or aided by the Central or a State Government); any scientific 
F ·institution; any institution in which research in respect of any matter is 
carried on; and any other institution in which the activity of imparting 
knowledge or training is systematically carried on. 
17. A conjoint reading of Section l of the Central Act with the 
aforesaid notification, makes it clear thatthe Central Act would apply to 
G all the colleges and schools, subject to the provisions of Section 16 of 
that Act. 
18. The question then arises is: whether the appellant school is an 
establishment covered by any one of the excepted category specified in 
Section 16 of the Central Act. The appellant has invoked clause (a) as 
H: well as clause (b) of Section 16 (1) of the Central Act. As regards the
M/S. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST. 
953 
PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.] 
argument hinging on clause (a), it proceeds on the premise that the A 
appellant's school (in which 16 part-time employees were working), had 
employed less than fifty persons and working without the aid of power. 
This argument, in our opinion, cannot come to the aid of the appellant. 
Inasmuch as, the appellant is running 29 schools/colleges and has 
employed around! 151 permanent employees. Section 2A of the Central 
B 
Act predicates that where an establishment consists of different 
· departments or has branches, whether situate in the same place or in 
different places, all such departments or branches shall be treated as 
part of the same establishment. In other words, the fact that the appellant 
has employed less than 50 permanent employees and who are working 
without the aid of power in the school in which the 16 part-time employees 
C 
were also working, will not take the matter any further. We find that the 
appellant has neither pleaded the material facts nor adduced any proof, 
so as to rebut the presumption stipulated in Section 2A of the Central 
Act - th;it all the schools and colleges run by the appellant were part of 
the same establishment. The fact that the appellant is a Co-operative D 
Society registered under the State Co-operative Societies Act by itself 
will not extricate the appellant from the application of the Central Act. 
19. The fact that the
appellant is not falling within the ambit of 
clause (a) of Section 16(1), however, can be no impediment for the 
appellant to peruse the argument regarding exemption by relying on clause 
(b) of Section 16( 1) thereof. We say so because, the excepted categories 
E 
specified in Section 16 are mutually exclusive. They are separated by 
the word "or". Sub-clause (b) of Section 16(1) is an independent excepted 
category. It is attracted to any other establishment belonging to or under 
the cont1ol of the Central Government or a State Government "and" 
whose employees are entitled to the benefits of contributory provident 
F 
fund or old age pension in accordance with any scheme or rule framed 
by the Central Government or the State Government governing such 
benefits. These twin conditions are required to be satisfied by the · 
concerned establishment, seeking exemption from the provisions c,fthe 
Central Act. In the present case, the employees working in the concerned 
schools/colleges of the appellant are covered by the contributory provident G 
fund scheme framed by the State Government, subject to eligibility. The 
second condition required for seeking ex.emption under the Central Act 
is thus fulfilled. 
20. The moot question is: whether the schools in which the 16 
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[2017] 3 S.C.R. 
A part-time employees were working, can be said to be an establishment 
belonging to or under the control of the Central Government or a State 
Government. This question is no more res integra. This Court in the 
case of Regional Provident Fund Commissioner Vs. Sanatan Dharam 
Girls Secondary School & Ors1 has considered a similar argument. In 
B paragraphs 29 to 35, the Court analysed the issue in the following words: 
' 
"29. In respect to the contention of the respondent that the 
·establishment belonging to or under the control of the Central 
Government or a State Government, it was submitted that the 
c 
establishments must either be (a) belonging to, or (b) under 
the control of the Central Government or the State 
·Government. In our view, the two words used in the said 
section have different connotations. The words "belonging 
to" signify ownership i.e. the Government-owned insritutions 
D 
would be covered under the said part and the words "under 
the control of" signify control other than ownership since 
ownership has already been covered under the words 
''belonging to". It must also be noted that the two words are 
separated by the word "OR" and therefore these two words 
E 
refer to two mutually exclusive categories of institutions. While 
the institutions "belonging" to the Central or the State 
Government would imply the control of the State but the 
privately-owned institutions can be ''under the control of" 
F
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H 
the Government in various way. 
30. Under the State Act itself, the "control" by the State is in 
the following ways: 
(a) Under Section 3 of the State Act, the State Government 
grants recognition to the "non-government educational 
institutions". 
It was submitted that recognition by the State is of prime 
importance for running and operating an educ::itional 
institution: The said recognition can be withdrawn on the 
failure of the institution to abide by the terms and the 
conditions of the grant of recognition. 
1 (2007J 1 sec 268
MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST. 
955 
PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.] 
(b) Under Section 7 of the State Act, the State Government A 
grants aid to only recognised educational institutions. The 
aid given by the State can be used only for the purpose for 
which the aid has been given. Under Section 8, the institutions 
are thereafter required to keep accounts in the manner 
prescribed by the State. It was submitted that in such manner, 
the State exercises financial control over the institutions. 
(c) Under Section 9, it has been prescribed that the institutions 
shall be governed by a managing committee and Section JO 
B 
of the Act empowers the State to take over management lf the 
institutions "whenever it appears to the State that the 
C 
Mt:1naging Committee has neglected to perform the duties 
assigned to it by or under the Act or the rules made thereunder. 
(d) Chapter Vofthe Act relates to properties of the institutions 
and the manner in which the institutions can managr:, the 
properties of the institution. It was submitted that under D 
Section 13 of the Act, the institutions have to apply and get 
the approval of the competent authority set up under the said 
Act before transferring the management of the institution. 
Under Section 15, restrictions have been placed on the 
transfer of immovable properties of the institutions. 
E 
(e) Section 14 of the Act prohibits closure of any institution 
or its class or the teaching of any subject
therein without 
notice in writing to the competent authority. It was submitted 
that the Government thus has functional control over the 
institution. 
(j) Chapter VI of the State Act deals with recruitment and 
removal, etc. of employees. Their salary, conditions of service, 
providentfund, code of conduct are all prescribed under the 
Act. The Act further prescribes setting up of'a tribunal for 
resolution of the disputes whose decision is final and binding 
or. the parties. -
31. The State Government also exercises administrative control 
over the institution. Section 17 deals with the manner of 
recmitment and Section 18 deals with the procedure by which 
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B 
c 
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the employees may be removed or dismissed or reduced in 
rank. Section 28 permits the State Government to prescribe 
the code of conduct of the employees and Section 29 enjoins 
upon the institutions not to give to its employees a pay lesser 
than the scales of pay and the allowances paid to similar 
categories of the State Government. 
32. Jn our view. the State Act is a complete code in itself with 
regard to the educational institutions and the State Gowrnment 
· exercises substantive control over the institutions even though 
the institutions are not "owned" by it. The word "control" 
has not been defined under the EPF Act, 1952. 
33. However, this Court in Sltamrao Vitltal Coop. Bank Ltd. 
v. Kasargod Pandlturanga Mallya, SCC at P. 604, para 6 has 
cited with approval the meaning of the word "control" as it 
. appears at p. 442 of Words & Phrases, Vol. 9, Permanent 
Edition as under: 
"The word 'control' is synonymous with superintendence, 
management or authority to direct, restrict or regulate. " 
34. In State of Mysore V. Allum Karibasappa, SCC at p. 501, 
para 16 this Court defined the .word "control" as under: 
E 
"The word 'control' suggests check, restraint or in;?uence. 
Control is intended to regulate and hold in check and restraint 
from action. " 
35. We further observe that the State Government has the 
power of superintendence or the authority to direct, restrict 
F 
or regulate the working of the
educational institutions. It 
was, therefore, submitted that the institutions had satisfied 
both Conditions (1) and (2) mentioned above and as 'such 
they would fall within the exception contained under Section 
16(1)(b) of the EPF Act, 1952." 
G 
21. The question is whether there are similar provisions in the 
subject State Act and Rules framed threunder, so as to infer that the 
State Government exercises substantive control over the establishments 
such as that of the appellant. On analyzing the provisions of tlie State 
Act and Rules framed thereunder, similar inference can be drawn as in 
H the case of Sanatan Dharam (Supra). In the present case, the State
MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST. 
· 957 
PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.] 
Act which has received assent of the President oflndia on l 6'h March, 
A 
1978, contains several provisions elucidating the extent to which the 
State Government has control over the private schools: 
a) Section 2( 19), 2(20) and Section 2(21) of the State Act, are 
indicative of the fact that the State Government grants recognition to the 
Primary Schools and Private Schools in the State. 
B 
b) Section 4 ( 4) of the State Act inter alia empowers the 3tate 
government to withdraw the recognition granted to the concerned school 
on its failure to comply with directions issued by the Director of Education, 
who is appointed by the State Government; 
c) Under Section 4 of the State Act, the State Government also 
C 
has the power to make Rules governing the terms and conditions of 
service of employees, including minimum qualification for recruitment 
and the procedure to be followed thereof, duties, pay, allowances, post-
retirement and other benefits, other conditions of service of employees 
of private schools and for reservation of adequate number of posts for D 
backward classes. Additionally, the State Authorities are empower~d to 
continually monitor that the management of the school is fulfilling the 
prescribed terms and conditions of service ofits employees and including 
to issue directions to the Management for that purpose. 
d) Under Section 4A of the State Act,
the Director Education has 
been empowered to issue directions in relation to the inquiries ag:iinst 
the employees regarding alleged misconduct, misbehavior or moral 
turpitude of an employee. 
e) Section 5 postulates the obligations of the management of 
private schools such as to fill in the permanent vacancy in a private 
school in the manner, as may be prescribed by the Competent Authvrity. 
f)Under Section 16 of the State Act, the State Government has 
the power to make rules governing the duties of employees of private 
schools and about their Code of Conduct and disciplinary matters. This 
is a form ofadministrative control. 
g) The Stat~ Rules deal with gamut of matters relating to service 
conditions of the employees and the manner in which it is to be adhered 
to by the management, in respect of which the management is 
accountable to the Competent Authority of the State to report compliance 
and including to adhere to the directions issued by the authority 
E 
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[2017] 3 S.C.R. 
A in that regard. 
B 
c 
D 
E 
.f 
h) The Rules also specifically deal with the facility of Pension 
Provident Fund and other matters to be extended to every employee 
working on a full time basis or on a part-time basis but doing full time 
load of work. 
i) Besides the provisions of the State Act and the Rules framed 
thereunder, the schools recognized and receiving grant-in aid from the 
State Government have to fulfill additional conditions, as are specified in 
the grant-in aid scheme and the Maharashtra Secondary School Code 
applicable to such schools. As the grant in aid can be used by the school 
only for the purpose for which it has been granted and that the school is 
required to maintain and submit proper accounts in the manner prescribed 
by the State, is also indicative of financial control of the State over such 
schools/colleges. 
j) The provisions in the Secondary School Code also empower the 
State Government to take over or transfer the management of the 
institution. 
k) Besides the State Authorities have to oversee that the 
management is making payment of proper salary and allow&nces as 
specified. 
I) The Secondary School Code, which is a compendium of the 
executive instructions and orders, also deals with matters concerning 
recognition, organization and management of schools; staff service 
conditions, records and inspection; records, registers and inspection of 
schools and hostels; and grant in aid
etc. The provisions regarding grant 
in aid deal with matters of salary/non salary grant; building grant; and 
other grants. Stipulations in respect of these matters are indicative of 
financial control exercised by the State over such institutions. Similarly, 
Chapter III deals with staff service conditions, records and inspection 
provides for matters relating to maintenance of adequate staff; conditions 
of service of employees; and rules of discipline and leave. These 
G provisions are also indicative of administrative control exercised by the 
State over the institutions. All this is in addition to the incipient requirement 
of obtaining recognition from the State before starting any school within 
the State or for that matter commencing additional sections and increasing 
the intake capacity of students, as the case may be. 
H
M/S. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST. 
959 
PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.] 
22. Suffice it to observe that the State Act, the Rules made 
A 
thereunder and the provisions of the Secondary Schools Code are a 
complete code in themselves with regard to the educational institutions 
and indicative of the extent of exercise of substantive control by the 
State Government over such institutions, whether owned by it. The State 
Government has tlie power of superintendence and the authority to direct, 
B 
restrict or regulate working of the educational institutions. It necessarily 
follows that the establishment of the appellant, which in this case is 
100% grant-in aid schools in which 16 part-time employees were working, 
is undenhe control of the State Government and thus would fulfill even 
the first condition of Section 16( 1) (b) of the Central Act. 
23. As we have held that the establishment of the appellant fulfills 
the twin conditions specified in Section 16 (I) (b ), it must follow that the 
same is exempted from the application of the provisions of the Central 
· Act. In the present case, however, it has been found by the authority 
concerned and the Tribunal, that the 16 part-time employees working in 
c 
the establishment of the appellant were not covered by the State CPF D 
Scheme applicable to the other permanent employees of the 
establishment. Inasmuch as, Rule 20 does not cover the part-time 
employees working in the school, in case they are
not doing full time 
load of work. True it is that the said finding of fact cannot be over 
turned. Even so, is it possible to uphold the decision of the authority as 
confirmed by the Tribunal and the High Court - that the appellant is 
E 
liable to pay towards the Provident Fund under the Central Act in respect 
ofits part-time employees? Intrinsic in that direction, is that the provisions 
of the Central Act are invoked against the establishment of the appellant. 
That is impermissible. As aforesaid, Section 16 of the Central Act makes 
it abundantly clear that the provisions of the Central Act will have no 
application to the establishment, if covered by one of the excepted 
category provided therein. Notably, the exemption is forthe establishment 
as a whole and for all purposes, from the application of the Central Act. 
Once the establishment is covered by the excepted category specified 
F 
in Section 1.6, to get exemption, it is incomprehensible that the provisions 
of the Central Act can be invoked against such establishment on the 
G 
specious reasoning that few (16 in this case) part-time employees working 
thereat were not covered by the CPF Scheme of the State Government, 
as applicable to rest of its employees. 
24. It is not possible to countenance a situation that although the 
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[2017] 3 S.C.R. 
A establishment enjoys exemption from application of the provisions of the 
Central Act, is still liable to be proceeded in respect of its few ( .16) part-
time employees. That would lead to an incongruous approach, not 
envisaged by the Central Act. 
Taking any other view would :esult in 
rewriting of the provisions of the Central Act to mean that although the 
B establishment is exempted from the application of the provisioIIs of the 
Central Act, yet it would be open to the central authorities to proceed 
against such establishment in certain situations. In our opinion, once the 
establishment qualifies for exemption of application of the provisions of 
the Central Act, there is no way that the authorities under the Central 
Act can exercise authority over it or call upon the establishment to comply 
C with the provisions of the Central Act, unless the exemption of the 
establishment is withdrawn or lifted de Jure. Section 16 of the Central 
Act does not envisage a concept of partial exemption of application of 
the p:ovisions of the Central Act in respect of employees, but the 
exemption operates qua the establishment for all purposes. 
D 
E 
F 
25. In the present case, the appellant is running 29 schools/colleges 
and is receiving 100% grant-in aid from the State Government ir. respect 
of28 schools/colleges. The employees working in the said schools of 
the appellant have been employed with the permission and approval of
the State Government and are governed by the State CPF Scheme. The 
entire· process of appointment has been strictly monitored by the State 
Government. Additionally, the appellant has been submitting pay bills of 
its employees to the Education Department which directly deposits the 
salaries of such employees into their bank accounts. At the relevant 
time, the appellant had employed around 115 l employees who were 
coverP,d by the Contributory Provident Fund Scheme framed by the State 
Government for the employees of the private schools (except the 16 
part-time employees who were not doing full time load of work). The 
appellant had engaged those 16 part-time employees with the permission 
and approval of the State Government. It can be safely presumed that 
the State Government was fully conscious of the fact that those part-
time employees will not be entitled for the benefits of CPF Scheme of 
G the State. In other words, the substantial number of employees of the 
appellant ifnot all of them, around ll 5 l employees, were covered by the 
contributory provident fund scheme of the State Government applicable 
to private schools governed by the provisions of the State Act and the 
Rules made thereunder. Just because the 16 part-time employees 
H
MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST. 
961 . 
PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.] 
working in the appellant's school were not eligible for the benefits of the A 
State CPF Scheme, the exemption status of the establishment of the 
appellant acquired under Section 16 of the Central Act, will not cease or 
stand withdrawn automatically. 
26. Once an establishment is covered under any one of the 
excepted category under Section 16 of the Central Act, the officials 
B 
empowered by the Central Act will have no authority to proceed against 
such establishment; and more so on the ground that a miniscule number 
of employees (16 part-time employees) working in the establishment 
were not eligible for the benefits underJhe State Contributory Prov: dent 
Fund Scheme governing the rest of the regular employees of the· 
establishment. 
C 
27. Having said this, we must hold that initiation of acti0n of 
recovery by the official(s) of Respondent No.l against the establishment 
of the appellant, which was otherwise exempted from application of the 
provisions of the Central Act is wholly without authority of law. The 
appellani had placed reliance on the case of Sanatan Dharam (supra), D 
before the Tribunal. But neither has the Tribunal nor the High Court 
considered the same. The Tribunal, however, chose to rely on the decision 
in the case of The Shamrao Vithal Co-operative Bank Ltd. Vs. 
Kasargod Pandhuranga Mallya 2• This decision has been duly 
considered and
distinguished in the case of Sanatan Dharam (supra), 
E 
as can be discerned from paragraph 33 of the reported decision. 
28. Be that as it may, for the reasons alluded hitherto we ha~e no 
hesitation in allowing this appeal and set aside the decision of the }Iigh 
Court; and also the entire action of the authorities under the Central 
enactment for having initiated recovery against the concerned school 
F 
run by the appellant by invoking the provisions of the Central Act, which 
had no application. 
29. Accordingly, the appeal is allowed in the above terms with no 
order as to costs. 
Devika Gujral 
Appeal al:owed. 
'(1972) 4 sec 600 
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