2009 (9) TMI 1072 - HC - Indian Laws

Interpretation of 'Month' in Provident Fund Act: Wage Month vs. Calendar Month

The court held that the term 'month' in para 38 of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952 should be interpreted as the wage ... - Issues Involved:1. Interpretation of 'within 15 days of the close of every month' in para 38 of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952.2. Applicability of wage month versus British calendar month for calculating the due date for Provident Fund contributions.3. Legality of the Regional Provident Fund Commissioner's order imposing penalties under Section 14B of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952.Issue-Wise Detailed Analysis:1. Interpretation of 'within 15 days of the close of every month':The petitioners challenged the interpretation of 'within 15 days of the close of every month' in para 38 of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952. The counsel for the petitioners argued that this phrase should be interpreted as 'within 15 days of the close of the wage month' rather than the British calendar month. They contended that the wage month could start and end on any date within a calendar month, as per the Payment of Wages Act, 1936, which allows employers to fix their wage periods.2. Applicability of Wage Month Versus British Calendar Month:The petitioners maintained that their wage month commenced from the 16th of each English calendar month and ended on the 15th of the following month. They argued that contributions should be deposited within 15 days of the close of this wage month. They also pointed out that the Provident Fund authorities had inspected their records regularly from 1978 to 1989 without raising any objections to this practice. The respondents, however, argued that the term 'month' should be understood as the British calendar month, starting from the 1st and ending on the last day of the month. They contended that the forms and provisions of the Provident Fund Scheme indicated that contributions should be made according to the British calendar month.3. Legality of the Regional Provident Fund Commissioner's Order Imposing Penalties:The petitioners received a notice from the Regional Provident Fund Commissioner in 1990, stating that they had defaulted in payment of dues from May 1978 to November 1989. The petitioners argued that this notice was time-barred and that their contributions were made within the prescribed period according to their wage month. They contended that the impugned order imposing penalties was bad in law and ignored the wage month concept. The respondents, on the other hand, argued that the penalties were justified as the contributions were not made within 15 days of the close of the British calendar month.Judgment:The court held that the term 'month' in para 38 of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952, should be interpreted as the wage month and not the British calendar month. The court reasoned that the basic wages are emoluments earned by an employee for work done, and the wage month could be fixed by the employer as per the Payment of Wages Act, 1936. The court found that the petitioners had been making contributions within 15 days of the close of their wage month and that the impugned order imposing penalties was not justified. The court set aside the order imposing penalties but clarified that the respondents could impose penalties for any defaults in making timely payments even after considering the wage month from the 16th of each English calendar month to the 15th of the following month.Conclusion:The petitions were allowed, and the impugned order imposing penalties under Section 14B of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952, was set aside. The court emphasized that the wage month concept should be applied for calculating the due date for Provident Fund contributions.