AI Structured Summary
Not yet generated for this judgment
Judgment
Honourable Mr. Justice K. Chandru
The petitioner is Gudalur Taluk Muslim Orphanage Committee, represented by its General Secretary. In this writ petition, they have come
forward to challenge an order passed u/s 7A of the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952 (for short EPF Act) by
the second respondent. By the impugned order, it was ascertained that the petitioner had not paid the Provident Fund dues from 3/06 to 10/08
and the amount was worked out to Rs. 9,73,528/-. It was further stated if the amount was not paid in time, it will also attract damages and levy of
interest and appropriate recovery action will be initiated for recovering the amount.
When the matter came upon 03.04.2009, notice was taken by the learned Standing Counsel appearing for the respondent PF organisation and
an interim stay was granted.
On notice from this Court, a counter affidavit has been filed by the respondents dated 02.12.2009 and the petitioner has filed a reply affidavit
dated 11.07.2011. Subsequently, an application was filed by the petitioner in M.P. No. 1 of 2010 seeking to fix an early date for hearing of the
writ petition. This Court by an order dated 05.04.2010 directed the writ petition to be listed on 10.06.2010. However, the matter was not listed.
It was agreed by the petitioner that M/s. Gudalur Taluk Muslim Orphanage Educational Institution run by the Gudalur Taluk Muslim Orphanage
Committee, Gudalur was brought under the purview of the EPF Act with effect from 01.12.2003 and they have also been allotted a separate code
number. The Committee is running three schools namely GTMO Primary School, GTMO Matriculation School, GTMO Higher Secondary
School. Therefore, Section 1(3)(b) of the Act squarely applies to the entire establishment. Since they had failed to pay the dues in respect of three
institutions, an order u/s 7A of the EPF Act was passed vide proceedings dated 23.05.2006.
Considering the financial difficulties expressed by the petitioner and accepting the recommendation of the Area Enforcement Officer, waiver of
employees'' share for the period from 12/03 to 8/05 was accepted. But however, as the petitioner had defaulted in making contribution, damages
were levied u/s 14-B and interest u/s 7Q. The area Enforcement Officer after inspecting the institution filed a report dated 10.11.2008 and
19.11.2008 and found that 19 to 75 employees were not enrolled from 01.06.2006 to 01.10.2008. A statement in respect of non-enrolled staff
were prepared and handed over to the Administrative Officer of the petitioner. On behalf of the petitioner, one K.A. Mohammed Kutty Hajee,
Correspondent appeared on 05.01.2009 before the second respondent during enquiry u/s 7A. The non-enrolment of the employees were brought
to the notice and it was admitted that several employees were not covered.
The petitioner Association originally started a primary school in the year 1984. Subsequently, the same institution was upgraded as Matriculation
School in the year 1994. Thereafter, higher secondary school was started in the year 2001. Therefore, it satisfied the coverage initially when they
had 20 employees. Subsequently, employees strength was raised to 75 and in that view of the matter after enquiry assessment was made.
The contention of the petitioner was that all the three wings of the schools are different and they cannot be clubbed together. It is a trust run for
the welfare of orphan children and is not funded by government. They agreed that there are 10 teachers and 1 staff working in the primary school,
16 teachers and 2 staff working in the matriculation school and 17 teachers and 1 staff working in the Higher Secondary School. Hence, none of
the three schools were having the minimum strength required for coverage.
It is not clear as to how the petitioner never filed any appeal against the order passed by the respondent in terms of Section 7-I of the EFF Act.
In normal circumstances, they should have been directed to move the appellate Tribunal and no writ petition will lie. In any event, the contention
that three wings of the same school are different entities also cannot be accepted.
In this context, it is necessary to refer to judgment of the supreme Court reported in Noor Niwas Nursery Public School Vs. Regional Provident
Fund Commr. and Others, , wherein the Supreme Court in identical circumstances held that two schools run by the same educational agency was a
single unit in terms of Section 2A of the EPF Act. In paragraphs 3 to 6, the Supreme Court held as follows:-
The Provident Fund Commissioner on this material held that the two institutions constitute one and the same establishment and, therefore, are
covered by the Act. This order of the Provident Fund Commissioner was unsuccessfully challenged before the High Court. Hence this appeal.
Whether two units are one or distinct will have to be considered in the light of the provisions of Section 2-A of the Act which declares 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 parts of the same establishment. In such cases, the court has to consider how far there is functional
integrity between the two units, whether one unit cannot exist conveniently and reasonably without the other, and on the further question, in matters
of finance and employment, the employer has actually kept the two units distinct or integrated. In fact, this Court set out certain tests in Pratap
Press v. Secy., Delhi Press Workers'' Union1. However, we may point out that each case would depend upon its own peculiar facts and has to be
decided accordingly.
In the present case, when two units are located adjacent to one another and there are only two teachers with an aaya, a clerk and a peon, it is
difficult to believe that the society which runs 30 schools would run a separate school consisting of such a small number of staff. If the unit of the
appellant School was not part of the unit of Francis Girls Higher Secondary School, the Head Clerk, Mrs. Wadhavan could not have been in
possession of the particulars of the appellant School and could not have furnished such particulars to the Inspector when he visited the school in
connection with the grant of a code number. Undisputably, the two units are run by the same society and they are located in one and the same
address thereby establishing geographical proximity and nothing worthwhile has been elicited in the cross-examination of the Inspector in regard to
inquiries made by him from Mrs. P. Wadhavan. Mrs. P. Wadhavan was not examined before the Provident Fund Commissioner. All these facts
clearly point out to one factor that the two units constitute one single establishment. After all the appellant School caters to nursery classes, while
the higher classes are provided in Francis Girls Higher Secondary School. Thus, the link between the two cannot be ruled out. In the facts and
circumstances of the case, we hold that the view taken by the Provident Fund Commissioner as affirmed by the High Court in this regard is
correct.
However, the learned counsel for the appellant drew our attention to the letter sent to Francis Girls Higher Secondary School wherein the said
School has been excluded from the purview of the Act in view of the fact that the provident fund in respect of all the employees is subscribed
under another scheme. The learned counsel submitted that if the two units were put together as a single establishment, the Act would be applicable
and otherwise not, inasmuch as it falls short of the number of minimum of employees for the applicability of the Act u/s 1(3)(b) of the Act. We are
not impressed with this argument. The two establishments have more than 20 employees and the exemption granted u/s 17 of the Act is subject to
the condition that such exclusion will not apply to the appellant''s unit because the same would not be covered under another scheme for
subscribing to the provident fund. When the entire establishment is covered by the Act, only part of the establishment is excluded and condition of
exclusion being applicable only to a part, we fail to understand as to how the appellant can rely upon the said letter to claim non-applicability of the
Act on the ground that it falls short of the number of employees.
In the light of the above, the writ petition stands dismissed. No costs. Consequently, connected miscellaneous petition is closed.