Bristo Foods Pvt. Ltd. v. Regional Provident Fund Commissioner, Employees' Provident Fund Organization

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN TUESDAY, THE 28TH OCTOBER 2008 / 6TH KARTHIKA 1930 OP.No. 25639 of 1998(B) ----------------------PETITIONER(S): --------------BRISTO FOODS PVT. LTD., CRYPTMS HOUSE, PANAMPILLY NAGAR, COCHIN-36, REP. BY ITS MANAGING DIRECTOR, MATHEN PANICKER. BY ADV. SRI.E.K.NANDAKUMAR RESPONDENT(S): --------------THE REGIONAL PROVIDENT FUND COMMISSIONER, EMPLOYEES' PROVIDENT FUND ORGANIZATION, BHAVISHYANIDHI BHAVAN, ERANHIPALAM, KOZHIKODE - 06. ADV. SRI.N.N.SUGUNAPALAN (SR.) THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 28/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.P.25639/98. ## APPENDIX ## PETITIONER'S EXHIBITS: - P1. COPY OF THE NOTICE DTD.28.1.98. - P2. COPY OF THE ORDER DTD.10.3.98. - P3. COPY OF THE LETTER DTD.16.3.98. - P4. COPY OF THE LETTER DTD.4.5.98. - P5. COPY OF THE ORDER DTD.14.5.98. - P6. COPY OF THE LETTER DTD.1.8.98. - P7. COPY OF THE ORDER DTD.29.10.98. ## sdk+ ## ///True copy/// P.A. to Judge S.SIRI JAGAN, J. ================== ## O.P.No.25639 of 1998 ================== Dated this the 28[th] day of October, 2008 **==> picture [105 x 11] intentionally omitted <==** The petitioner is an establishment which started functioning in November, 1995. At that time, the Employees' Provident Funds and Miscellaneous Provisions Act (“the Act”), provided for infancy protection from coverage under the Act. However, the provision relating to infancy protection was deleted from the Act with effect from 22.9.1997. Therefore, the petitioner establishment was brought under coverage of the Act from 22.9.1997 onwards. At that time, the petitioner was employing 30 apprentices. By Ext.P2, the petitioner was directed to bring them under coverage of the Act and Scheme and to pay contributions in respect of them. The petitioner had got their Standing Orders certified only on 1.10.1997. In Ext.P2 the enforcement officer of the Provident Fund Organization took the stand that since the coverage was with effect from 22.9.1997 and the Standing Orders were certified only on 1.10.1997, the apprentices cannot escape from the coverage in so far as at the relevant time they were not apprentices under the certified 2 Standing Orders of the company, which is a requirement for exclusion of apprentices from coverage. Despite Ext.P3 objections of the petitioner, the Regional Provident Fund Commissioner, by Ext.P5 order, confirmed the decision, directing the petitioner to cover the apprentices also. Although the petitioner requested for a 7A enquiry the same was also rejected by Ext.P7 on the ground that the matter decided under paragraph 26B of the Employees' Provident Fund Scheme cannot be re-opened. The petitioner is challenging Exts.P5 and P7 orders in this original petition. As far as Ext.P7 order is concerned, since I am inclined to consider the matter on merits, it is not necessary to consider the question as to whether the Regional Provident Commissioner was bound to initiate 7A enquiry in the matter. 2. The counsel for the petitioner would submit that simply because at the relevant time viz., 22.9.1997, the Standing Orders of the establishment were not yet certified, the provisions relating to exemption in respect of apprentices as per the Standing Orders do not cease to be applicable to the petitioner establishment. According to him, in so far as the petitioner's establishment is one liable to get its Standing Orders 3 compulsorily certified under the Industrial Employment (Standing Orders), till Standing Orders are so certified, the Model Standing orders are deemed to be applicable to the petitioner establishment. The Model Standing orders specifically contain a provision where workmen are classified into various categories including apprentices. Therefore, as per the Model Standing Orders, the petitioner establishment could engage apprentices as per the Standing Orders. Therefore, either the Model Standing Orders or Certified Standing Orders were applicable to the petitioner's establishment at the relevant time, both of which contained a provision for engaging apprentices. Therefore, simply because the petitioner's establishment's Standing Orders were certified only on 1.10.1997 the exemption in relation to the apprentices from coverage did not become inapplicable to the petitioner, is the contention raised. 3. I have heard the learned standing counsel appearing for the Provident Fund Organization also. He would argue in support of the impugned orders. According to him, in so far as there were no certified Standing Orders of the company at the relevant time, the petitioner cannot get exemption in relation to 4 apprentices since there were no provision for engaging apprentices as per the Standing Orders, by which the petitioner could validly engage apprentices who can claim exemption from the coverage under the Act validly. 4. I need not go into the question in detail in so far as a situation identical to the situation which arises in this original petition has been the subject matter of a decision of the Supreme Court in _**R.P.F. COMMISSIONER**_ v _**. C.A. & C.M. & P. CO-OP. LTD.**_ (2006-I-LLJ 995), wherein the Supreme Court held thus: **“** 9. From a bare reading of Section 12-A it is manifestly clear that until the Standing Orders are finally certified and come into operation, the prescribed Model Standing Orders shall be deemed to be adopted in the concerned establishment. The Model Standing Orders prescribed under Rule 3(1) of the Industrial Employment (Standing Orders) (Central) Rules, 1946 (in short the 'Central Rules') are contained in Schedule I to the said Rules. Standing Order No.2 thereof classified workmen as follows: - (1) Permanent (2) Probationers (3) _Badlis_ (4) Temporary (5) Casual (6) Apprentices. 'Apprentice' is defined in Clause (g) of Standing Order No.2 as follows: “An 'apprentice' is a learner who is paid an allowance during the period of his training” The Apprentices Act defines an 'apprentice' as follows: “ _2(aa)_ 'apprentice' means a person who is undergoing apprenticeship training in pursuance of a contract of apprenticeship.” 5 10. In the present case, admittedly the Standing Orders were not at the relevant point of time certified. Therefore, in terms of Section 12-A of the Standing Orders Act, the Model Standing Orders are deemed to be applicable. Section 2(f) of the Act defines an employee to include an apprentice, but at the same time makes an exclusion in the case of an apprentice engaged under the Apprentices Act or under the Standing Orders. Under the Model Standing Orders an apprentice is described as a learner who is paid allowance during the period of training. 11. In the case at hand, trainees were paid stipend during the period of training. They had no right to employment, nor any obligation to accept any employment, if offered by the employer. Therefore, the trainees were 'apprentices' engaged under the 'Standing Orders' of the establishment. 12. Above being the position, it cannot be said that the concerned 45 trainees were employees in terms of Section 2(f) of the Act. In other words, an apprentice engaged under the Apprentices Act or under the Standing Orders is excluded from the definition of an 'employee' as per Section 2(f) of the Act. **”** Since the ratio of the above decision is squarely applicable to the facts of this case, I am satisfied that the respondents could not have validly directed the petitioner to cover apprentices also under the Act and to pay contributions in respect of them. It is declared so and Ext.P5 is accordingly quashed with consequential benefits. The original petition is allowed as above. sdk+ Sd/S.SIRI JAGAN, JUDGE ///True copy/// P.A. to Judge 6