TaxTMI 
TaxTMI 
2024 (5) TMI 517
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....vocate A/W Sri Rajendra M.S., Advocate Sri S.N. Murthy, Senior Advocate A/W Sri Somashekar, Advocate, By Sri H. Srinivas Rao, Advocate And Smt. Deepthi C.R., Advocate, For the Respondents : (By Sri M.N. Kumar, CGSPC For R-1; Smt. Nandita Haldipur, Advocate For R-2 & R-3) Stone Hill Education Foundation, UE Develoment India Pvt. Ltd., Deccan Cargo & Express Logistics Private Limited, Canadian International School, Mr. Shane Kells, Mr. John Nigel Gleave, Mr. Scott Zeuch, CPG Consultants India Pvt. Ltd., Mr. Raimi Bin A Rahim, Mantri Developers Private Limited, Jonathan Yach, ARM Embedded Technologies Pvt. Ltd., Sobha Developers Ltd., M/s. Toyota Tsusho India Pvt. Ltd., Mr. A. Murali, M/s. Toyotetsu India Auto Parts Pvt. Ltd., Ozone Propex Private Limited, Value And Budget Housing Corporation Pvt. Ltd., Metro Cash & Carry India Private Limited, Guenter Kari Redtenbacher, M/s. Toyota Kirloskar Motor Private Limited, M/s Toyota Kirloskar Auto Parts Pvt. Ltd., M/s. Transystem Logistics International Pvt. Ltd., M/s. Toyota Logistic Kishor India Private Limited, M/s. Toyota Techno Park (I) Pvt. Ltd. M/s. Sunchirin Autoparts India Pvt. Ltd. M/s. Mahindra Reva Electric Vehicles Ltd., M....
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....pective of their salary drawn by them. The employees other than the international workers, who draw exceeding Rs. 15,000/- per month is outside the purview of the Scheme. The international workers do not work till retirement, they work only for a limited period and thus, requiring them to pay PF contribution on their entire global salary would cause irreparable injury. According to the petitioners, international workers required to pay EPF contributions is arbitrary and hit by Article 14 of the Constitution of India. According to the petitioners - the employers and the employees, the provisions introduced in the Scheme are arbitrary and discriminatory. 6. Statement of objections filed by the Union of India - respondent No. 1: It is contended that, the Union of India has effected changes to the Act by making special provisions for different types of workers. The following are the special provisions made by the respondent for different types of workers from time to time: (I) With effect from 31.12.1956 para 80 was inserted in the Scheme to make a special provision in the Scheme in the case of Newspaper Establishment and Newspaper Employees. The said Scheme shall, in it....
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.... security contributions in accordance with the laws of those countries. The contribution so deducted from the salaries of Indians was a loss for every worker as the benefits, according to the laws of the countries of their posting, are generally payable on completion of the minimum qualifying period of contribution or residence, which is normally ten years or more. An Indian worker deputed for a limited period of five years or so is generally less than the minimum qualifying period. Therefore, Indian workers, ever after remittance of social security contribution in the host countries, are not entitled to any social security benefits and with a view to protecting such rights of such migrant workers, the Government of India decided to introduce the statutory provisions in the EPF Scheme and the Pension Scheme in respect of the international workers and as per the amended provisions, an international worker from an SSA country is entitled to withdraw his provident fund accumulation on seizing to be an employee in an establishment covered under the Act. (VI) It is further submitted that the grievance of the petitioner that international workers can withdraw the full amount sta....
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....ram Bhat, learned counsel for the petitioners and Sri M.N. Kumar, learned Central Government Senior Panel Counsel for respondent No. 1 - Union of India; Smt. Nandita Haldipur, learned counsel for respondent No. 2 and 3 (EPF), Smt.Shwetha Anand, learned counsel for respondent No. 2 (in W.P. Nos. 22507/2015 and 19464/2021) have been heard. 9. Arguments advanced by the petitioners' counsel: (I) Introduction of para 83 and para 43A is opposed to the object and intendment of the Act (II) There is manifest arbitrariness while introducing para 83 and para 43A. (III) Para 83 introduced in the Scheme is violative of para 2(f) of the Act "excluded employee" and violative of the Act, for the reasons that: (i) The Act provides for coverage of the weaker sections where there is a ceiling limit; (ii) No salary ceiling limit for international workers which is in contravention to the Act; (iii) Heavy burden is on the employer; (iv) Para 83 and para 43A are unconstitutional and hit by Article 14 of the Constitution of India and also illegal being opposed to the object of the EPF & MP Act, 1952. (v) Implications of amendment pertaining to inse....
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..... 15,000/- per month is an excluded employee, but in the case of an international worker, such limit is not prescribed. The employer is required to pay a contribution on the gross salary of several lakhs of rupees per month, which is in total contravention of the Act; (m) The Scheme framed under Section 5 of the EPF & MP Act, 1952 cannot go beyond the definition of "employee" under the application and object of the Act under the definition of "excluded employee"; (n) Para 83 is contrary to Section 6 of the EPF Act and higher interest over and above the ceiling limit is not entitled and the huge burden is on the employer; (o) Article 14 is applicable to foreign citizens, even non-citizens have to be protected under Articles 14 and 21. The introduction of para 83 is a violation of fundamental rights; (p) Central Government has given a go-bye to the Act, no application of mind by the Government; (q) While bringing Para 83 into force, the Central Government has not looked into the objects of the Act; (r) The Scheme is oppressive and there is manifest arbitrariness while issuing notification by the Central Government and introducing ....
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....ncome-tax I.L.R. 1994 KAR 2185 (II) Sri S.N.Murthy, learned senior counsel along with Sri Somashekar, learned counsel: (a) In re the Special Courts Bill, 1978 (1979) 1 SCC 380 (b) Ajoy Kumar Banerjee and others vs. Union of India (UOI) and others AIR 1984 SC 1130 (c) Harakchand Ratanchand Banthia and others vs. Union of India (UOI) and others AIR 1970 SC 1453 (III) Sri Dhyan Chinnappa, learned senior counsel along with Sri M.V. Sundara Raman, learned counsel and Sri Krishar Somaiah, learned counsel: (a) Lakshman and others vs. State of Madhya Pradesh (1983) 3 SCC 275 (b) Food Corporation of India and others vs. Ashis Kumar Ganguly and others (2009) 7 SCC 734 (c) K.T. Veerappa and others vs. State of Karnataka and others (2006) 9 SCC 406 (d) Ameerunissa Begum and others vs. Mahboob Begum and others AIR 1953 SC 91 (e) Ram Prasad Narayan Sahi and another vs. State of Bihar and others AIR 1953 SC 215 (f) Namit Sharma vs. Union of India (2013) 1 SCC 745 (g) Subramaniyan Swamy vs. Director, CBI (2014) 8 SCC 682 (h) State of Rajas....
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.... therefore, unsustainable. As the classification held to be based on intelligible differentia, which had a rational relation to the object sought to be achieved viz., the amelioration of the condition of service of international workers and therefore, the provisions made in the scheme are neither arbitrary nor discriminatory. 12. In support of his case, Sri M.N. Kumar, learned Central Government Standing Panel Counsel appearing for respondent No. 1 - Union of India has relied upon the following decisions of the Apex Court and various High Courts: (1) State of West Bengal vs. Anwar Ali Sarkar (1952) 1 SCC 1 (2) Kathi Raning Rawat vs. State of Saurashtra (1952) 1 SCC 215 (3) Lachmandas Kewalram Ahuja and another vs. State of Bombay (1952) 1 SCC 726 (4) Shamarao v. Parulekar vs. District Magistrate, Thana, Bombay and others (1952) 2 SCC 1 (5) State of Punjab vs. Ajaib Singh and another (1952) 2 SCC 421 (6) Budhan choudhry vs. State of Bihar (1954) SCC Online SC 19 (7) State of Kerala and another vs. N.M. Thomas and others (1976) 2 SCC 310 (8) The Bihar Eastern Gangetic Fisherman Co-Operativ....
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.... (29) Maharashtra State Cooperative Bank Limited vs. Assistant Provident Fund Commissioner and others (2009) 10 SCC 123 (30) Employees Provident Fund Commissioner vs. Official Liquidator of Esskay Pharmaceuticals Limited (2011) 10 SCC 727 (31) Kallakkurichi Taluk Retired Officials Association, Tamil Nadu and others vs. State of Tamil Nadu (2013) 2 SCC 772 (32) Pepsu Road Transport Corporation Patiala vs. Mangal Singh and others (2011) 11 SCC 702 (33) Mafatlal Group Staff Association and others vs. Regional Commissioner Provident Fund and others (1994) 4 SCC 58 (34) Sachin Vijay Desai vs. Union of India and others W.P. No. 1846/2018 D.D. on 07/08/2019 (35) Sachin Vijay Desai vs. Union of India and others W.P. No. 1846/2018 D.D. on 07/08/2019 13. This Court has carefully considered the contentions urged by the learned counsel for the parties and perused the material on record, having heard the point that arises for consideration is, "Whether introduction of para 83 of EPF Scheme and para 43A of EP Scheme is unconstitutional hit by Article 14 of Constitution of India?" 14. In order ....
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....on the well-known fact that the circumstances which govern one set of persons or objects may not necessarily be the same as those governing another set of persons or objects so that the question of unequal treatment does not arise as between persons governed by different conditions and different sets of circumstances. (h) While Article 14 prohibits class legislation, it does not prohibit reasonable classification for the purposes of legislation. However, in order to pass the test of permissible classification, two conditions must be fulfilled, namely, (i) the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that the differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification should be founded on a different basis, namely, geographical or according to the objects or occupations or the like. (i) What is necessary to be seen is that, there must be a nexus between the basis of the classification and the object sought to be achieved under the Act. 16. These principles were formulated ....
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...., with whom India has entered into a bilateral comprehensive economic agreement containing a clause on social security prior to 1st October, 2008, which specifically exempts natural persons of either country to contribute to the social security fund of the host country; 18. With the introduction of para 83, international workers came to be covered under the EPF Scheme and the salient features of para 83 are: (i) An international worker is required to be covered on his entire salary. (ii) The amount at the credit of the international worker when he leaves India would be payable to him, only upon his attaining the age of 58 years. 19. The special provisions of EPFS and EPS made applicable to international workers with effect from 01.10.2004 are as follows: (i) An Indian employee having worked or going to work in a foreign country with which India has entered into a bilateral agreement being eligible to avail the benefits under the social security programme of that country, by virtue of eligibility gained or going to gain under the said agreement. (ii) An employee other than an Indian employee, holding other than an Indian passport working for....
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....nd in any manner are to be covered as international workers. (xiii) Foreigners employed directly by Indian establishments would be covered under the EPF & MP Act, 1952 as international workers. (xiv) Only those employees covered by SSA will be eligible for withdrawal benefit under the EPF, 1995, who have not rendered the eligible service i.e., ten years even after including the tantalization benefit, if any, as may be provided in the said agreement. (xv) In all other cases of international workers not covered under SSA withdrawal benefit under EPF, 1995 will not be available. (xvi) The cap on the salary upto which the contribution has been made under EDLI Scheme, 1976 is Rs. 6,500/-. According to the Union of India, keeping in view the interest of international workers, in order to honour bilateral agreements with foreign countries, the Scheme has been amended. The intention of the Parliament to amend the Scheme is to ensure that no person can be deprived of social security benefits and also known Indians deputed to work outside should not be deprived of the benefits. 20. Section 5 of the EPF & MP Act states that the Central Government may,....
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.... In the instant case, the Government of India has the power under Section 7(1) of the EPF & MP Act to modify the Scheme from time to time and the competence of the Central Government to introduce or modify the Scheme is apparent from Section 7 of the EPF & MP Act. However, even assuming that there is a power conferred under the provisions of Section 7 of the EPF & MP Act, it has to be exercised to meet the objects of the enactment and thus, the object and reasons of the enactment of EPF & MP Act need to be looked into. 22. Statement of objects and reasons for introducing EPF & MP Act, 1952: When the question of making some provision for the future of the industrial worker, after he retires or his dependants in case of his early death, has been under consideration for some years. The ideal ways would be provision through old age and survivors' pensions as has been done in the industrially advanced countries, but in the prevailing conditions, in India, the institution of a pension scheme cannot be visualized in the near future is another alternative way for the provisions of gratuities after the prescribed period of service. The main defect of a gratuity Scheme, howev....
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....n India. Para 83 of the EPF Scheme is in the nature of subordinate legislation and therefore, the subordinate legislation cannot travel beyond the scope of the mother Act. Keeping in view the aims and objects of the main EPF & MP Act, when a ceiling amount of Rs. 15,000/- per month has been placed as a threshold for an employee to be a member to the scheme, para 83 of the EPF Scheme ought not to have an unlimited threshold for international workers while denying the same benefit to Indian workers. There being no commonality of interest of the aims and objectives of EPF & MP Act, 1952 and para 83 of EPF Scheme, para 43A of EP Scheme to be struck down as incompatible, arbitrary, unconstitutional and ultra vires. 24. An Indian employee working in a foreign country with SSA who is a member of EPF & MP Act, 1952 continues to contribute on meager sum of Rs. 15,000/- whereas, a foreign worker from SSA country, without a certificate of coverage, is made to contribute PF on his entire salary although both are by definition of international workers. The Government of India is unable to substantiate any nexus with the object sought to be achieved, para 83 is clearly discriminatory in treat....
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....on of India with regard to the social security scheme. There is no material to show what is social security scheme available for such international workers whose country of origin has not entered into a bilateral agreement with the Union of India. 26. Thus, it is clear from the above analysis that there is discrimination between the Indian employees working in a non-SSA country (who are not international workers as per definition) and foreign employees from a non-SSA working in India who are classified as international workers. There is no rational basis for this classification nor there is reciprocity that compels to classify foreign employees from non-SSA countries as international workers. The respondents neither have stated whether the Indian employees working in non- SSA countries nor required to contribute their entire pay without statutory limit towards PF of that country. In the absence of parity and also in the absence of reciprocity, there is no justification to demand a contribution on the entire pay of a foreign employee from a non-SSA country. 27. The introduction of para 80 and 81 under the Scheme in respect of working journalists and the cine employees cannot b....