2019 (7) TMI 2009 - HC - Indian Laws

CIDCO exempt from EPF Act as State Government agent under Section 16(b), demand period invalid

THE OFFICER INCHARGE AND ASSISTANT P.F. COMMISSIONER Versus CITY AND INDUSTRIAL DEVELOPMENT CORPORATION AURANGABAD AND ORS.

The Bombay HC dismissed a Letters Patent Appeal challenging proceedings under Section 7-A of the Employees Provident Fund and Misc. Provisions Act, 1952. ... Lack of jurisdiction and authority - proceedings initiated under Section 7-A of the Employees Provident Fund and Misc. Provision Act, 1952 - period from which the demand is made extends from 1980 to 1995, while the provisions of the said Act came to be made applicable to cleaning and sweeping workers with effect from 01.04.2001 - HELD THAT:- Conjoint reading of the provisions under Sections 40(1) (b), 113 of the MRTP Act and Notification dated 01-06-1973 shows that CIDCO would be acting as special planning authority and as an agent of the State Government. It emerges that CIDCO is new town development authority and special planning authority which has constituted provident fund and is declared to be governed by Provident Funds Act, 1952 for benefits of its members and officers and other employees under notification dated 1st June, 1973 reproduced above does show the same and veracity of the same is not disputed - It is easily discernible that CIDCO would be an authority covered by clause (b) of Section 16 of the EPF and MP Act, 1952 referred to above. Sub-section (3) of Section (1) of the EPF and MP Act, 1952 shows that applicability of the Act would be subject to provisions contained in Section 16 and further that it is not the case of the appellant that their case is covered under sub-section of 4 of Section 1 of the EPF and MP Act, 1952. Having regard to aforesaid, it transpires that CIDCO in present matter as the special planning authority would hardly be said to be governed by the provisions of Employees Provident Fund and Misc. Provisions Act, 1952. In view of the same, it is not found that the Letters Patent Appeal can be entertained on the grounds and the submissions as advanced on behalf of the appellant. Letters Patent Appeal therefore, is dismissed. No order as to costs. In view of dismissal of the LPA and writ petition, the civil applications do not survive and are disposed of. Issues Involved:1. Jurisdiction and authority of proceedings initiated under Section 7-A of the EPF & MP Act, 1952.2. Applicability of EPF & MP Act provisions to CIDCO for the period 1980-1995.3. Legitimacy of the demand and assessment method by EPF authorities.4. Status of CIDCO under the MRTP Act and its implications on EPF applicability.Issue-wise Analysis:1. Jurisdiction and Authority of Proceedings under Section 7-A of the EPF & MP Act, 1952:The appellant contended that the proceedings initiated under Section 7-A of the EPF & MP Act were invalid due to a lack of jurisdiction and authority. The court examined whether the EPF authorities had the competence to levy charges on CIDCO. The appellant argued that the EPF & MP Act is a beneficial legislation aimed at the welfare of employees, and the EPF authorities were within their powers to take action and levy charges on CIDCO.2. Applicability of EPF & MP Act Provisions to CIDCO for the Period 1980-1995:The respondent argued that the demand period from 1980 to 1995 was not applicable since the provisions of the EPF & MP Act were made applicable to cleaning and sweeping workers only from 01.04.2001. The court noted that CIDCO, being a government company, was declared as a new town development authority and special planning authority under the MRTP Act. The notification dated 01-06-1973 declared that the Provident Funds Act, 1925, applied to CIDCO's provident fund, thus exempting it from the EPF & MP Act, 1952.3. Legitimacy of the Demand and Assessment Method by EPF Authorities:The appellant argued that CIDCO did not provide a list of contractors for cleaning and sweeping activities, leading the EPF authorities to estimate 30% as the labor component based on CIDCO's balance sheet. The respondent countered that CIDCO was not responsible for maintaining records of contractors' activities from 15 years prior and that the EPF authorities' method of assessment was incompatible with the law. The court found the EPF authorities' assessment method and the demand to be untenable and not logical.4. Status of CIDCO under the MRTP Act and its Implications on EPF Applicability:The court examined CIDCO's status under the MRTP Act, noting that CIDCO was a special planning authority and a subsidiary company of the State Industrial and Investments Corporation of Maharashtra Limited, controlled by the State Government. Section 134 of the MRTP Act allowed CIDCO to constitute a provident fund governed by the Provident Funds Act, 1925. The court concluded that CIDCO, being under the control of the State Government and having its provident fund governed by the Provident Funds Act, 1925, was exempt from the EPF & MP Act, 1952.Conclusion:The court dismissed the Letters Patent Appeal, finding that CIDCO, as a special planning authority under the MRTP Act, was not governed by the EPF & MP Act, 1952. The amount recovered from CIDCO's bank accounts was ordered to be returned with accrued interest. The court acknowledged the commendable efforts of the appellant's counsel but ultimately ruled in favor of CIDCO based on the legal position discovered during the hearing. The civil applications related to the case were also disposed of.