Case: Bihar State Electricity Board, Patna Vs. Their Workmen

The Employees Provident Fund Act applies only to establishments which are factories. It could be applied to establishments which are not factories if the Central Government by notification in the official Gazette specifies in this behalf. The industry in question" electricity including the generation, transmission and distribution thereof, is on to which the Act applies. But as is well known only a small proportion of employees connected with the generation of electricity is in establishment which are factories. The transmission and distribution is all over the State and the employees concerned with transmission and distribution and the maintenance of those lines of transmission and distribution are spread all over the State and probably far outnumber those working in establishments which are factories. To them the Employees Provident Fund Act does not apply. The Board maintains a Contributory Provident Fund where the contribution is on the basis of basic wage, the Board and the employees contributing equally.The workmen claimed that all workmen of the Board should have the same and similar benefits and that therefore there should be no distinction between the Boards Contributory Provident Fund scheme and the scheme under the Employees Provident Fund Act. Moreover, the contribution under the Act is 8 per cent whereas under the Boards scheme it is 6.25 per cent. The employees also contended that the services of the workmen of the Board are liable to be transferred from one establishment to another both which may not he covered by the same scheme under the Act and therefore it will bring about serious injustice if they are deprived of their benefits under the Act, and such anomalies will be removed by making the benefits under both the schemes similar. The Boards contention was that this would impose additional financial liabilities which the Board would not be able to bear. Therefore, the main question which the Tribunal had to consider was the Boards financial capacity to implement the Provident Fund scheme as demand: ed by the workmen. It seems to have been argued on behalf of the workmen that the State Government is the financier of the Board which charges interest now at the rate of 6.25 per cent as against the previous 4 per cent per annum. It, was also contended that no scheme run by the Board was running at a loss. Exhibit 17, purported to contain trading results of the Board., was shown to the Tribunal and it was argued that in the year ending March 1969 Boards gross profits amounted to Rs. 305.12 lakhs and it had been continuously rising from Rs. 59.39 lakhs in 1961. Exhibit 18 shows the loans which have been received from the Government by the Board and the balance sheet shows a very large amount in the shape of interest payable to the Government. It w as argued on behalf of the Union that this amount should be taken as dividend to be paid to the Government by the Board and should not be taken into consideration while deciding matters regarding benefits to be made available to its employees. The validity of none of these contentions was considered by the Tribunal. It referred to an award made by it in 1964 in reference No. 19 of 1960 in which it had held that if the interests realised by the State were excluded from consideration, there would be surplus in favour of the Board. In that award it had been pointed out that it had not been explained by the management how the depreciation had been calculated. That award also pointed out that one of the main reasons for the deficits shown was heavy interest on the capital investment, that in an electrical establishment capital investments are heavy in the initial stages, that the Board expected that after the load developed fully the scheme would start giving adequate profits. The Tribunal thought that the position at present was not worse than what it was earlier and that therefore the Board should extend the benefits of the Contributory Provident Fund to all workmen other than those who are covered by the Act. It therefore ordered that the contribution should be 6.25 per cent but not on the basic wages but on the total wages.The Tribunal has treated the whole matter in a very perfunctory manner. The main question for consideration by the Tribunal was the financial capacity of the Board. It has made no effort at all to analyse the balance sheet of the Board to show the actual results of its working. It has made no effort to work out the financial implications of its order. It has not made it clear what exactly are the total wages.

Court's reasoning:
5. The facile assumption by the Tribunal that the interest should no. be taken into account in working out the profits is no t borne out by the provisions of the statute. Indeed the Tribunal did not look into the Act at all. Whether in view of the statutory obligations laid on ii under the various sections just now referred to in analysing the capacity of the Board to bear any additional burden in the matter of provident fund or other amenities the same considerations that applied in the case of private commercial concerns could be applied is a rather difficult question. In fact the decision might very often depend on a close analysis of the financial condition of the Board. We do not want at present to express one view or the other. one thing at least is obvious, that the various sums payable under the provisions of s. 67 have to be deducted before the profits could he ascertained. Even with regard to the depreciation reserve the provisions of s. 68 may have to be taken into account. If it is not it would have to be met by loans on which interest will have to be paid and deduction of interest so paid will have to be taken into account in calculating the profits. The contribution to the depreciation reserve is a statutory obligation and is a definite proportion whereas it is open to an ordinary commercial concern to credit any amount to the depreciation reserve. These and other matters cannot be properly decided in the absence of a detailed examination of the finances of the Board. That is why we said that the Tribunal has dealt with the matter in a perfunctory way. It should be directed to dispose of the matter afresh in the light of the observations made in this judgment.