Hotel Pankaj, Thiruvananthapuram v Regional Provident Fund Commissioner, Employees’ Provident Fund Organization, Regional Office Pattom and the Employees’ Provident Fund Appellate Tribunal

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **FRIDAY, THE 29TH DAY OF JUNE 2018 / 8TH ASHADHA, 1940** **WP(C).No. 19631 of 2011** ## **PETITIONER** **HOTEL PANKAJ, M.G.ROAD, THIRUVANANTHAPURAM, REPRESENTED BY ITS, MANAGING PARTNER D.RAMARAJAN NAIR.** **BY ADV.SRI.P.RAMAKRISHNAN** ## **RESPONDENTS:** **1. THE REGIONAL PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND, ORGANIZATION, REGIONAL OFFICE, PATTOM,, THIRUVANANTHAPURAM-695 001.** **2. THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, SCOPE MINAR, CORE II, 4TH FLOOR,, LAKSHMI NAGAR DISTRICT CENTRE, NEW DELHI-110 093.** **BY SRI.N.N. SUGUNAPALAN, SC, P.F. SRI. S. SUJIN, SC** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 29-06-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **sdr/-** **7.7.18** ## **WP(C).No. 19631 of 2011** ## **APPENDIX** ## **-------** ## **PETITIONERS EXHIBITS** ## **------------------** |**EXT.P1**|**TRUE COPY OF LETTER DATED 14/06/2002 ISSUED BY THE**| |---|---| ||**1ST RESPONDENT**| |**EXT.P2**|**TRUE COPY OF ORDER DATED 20.09.2002 OF THE 1ST RESPONDENT**| |**EXT.P3**|**TRUE COPY APPEAL MEMORANDUM DATED 20.11.2002 FIELD BY THE**| ||**PETITIONER BEFORE THE 2ND RESPONDENT**| |**EXT.P4**|**TRUE COPY OF ORDER DATED 29/04/2010 IN ATA NO. 674 (7)**| ||**2002**| |**EXT.P5**|**TRUE COPY OF APPLICATION DATED 28/4/2011 SUBMITTED BY**| ||**THE PETITIONER**| |**EXT.P6**|**TRUE COPY OF ORDER DATED 2/6/2011 OF THE 2ND RESPONDENT**| ## **RESPONDENTS EXHIBITS** **-------------------** **EXT.R1(A) TRUE COPY OF THE WRITTEN STATEMENT OF THE MANAGING PARTNER OF THE PETITIONERS ESTABLISHMENT DATED 20.12.1999 /TRUE COPY/ PA TO JUDGE** ## **sdr/-** **7.7.18** ## **DEVAN RAMACHANDRAN, J.** ---------------------------------------- ## W.P.(C) No.19631 of 2011 ----------------------------------------Dated this the 29[th] day of June, 2018 ## _**JUDGMENT**_ The petitioner claims to be a partnership firm running a hotel in Thiruvananthapuram City. They concede that the establishment is covered under the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the ‘Act’) and that all their employees have been enrolled as members, with the Provident Fund contribution being remitted by them on their behalf regularly. 2. The controversy in this case has its genesis in the proceedings that was initiated by competent Authority of the Provident Fund Department, bringing into fold of the Act 25 persons who were being allegedly employed by the petitioner as trainees. The competent authority concluded that these 25 persons were also employees, coming within the sweep of the Act and that the petitioner is obligated to remit the dues on their behalf also, under the provisions of the Act. 3. When the adjudication bringing these 25 persons within the fold of the Act was made, the petitioner approached the Regional Provident Fund Commissioner, under Section 7A of the Act read with paragraph 26B of the Employees' Provident Funds Scheme, seeking a : **:2::** W.P.(C) No.19631/11 determination as to whether these 25 persons can be included as employees in their service. The specific contentions on behalf of the petitioner before the Commissioner was that these 25 persons were only being paid stipend and that they have no right to obtain employment or any obligation to accept any employment, even if offered to them. According to the petitioner, they were merely trainees engaged under the Standing Orders applicable and therefore, that they could not be brought under the umbra of the Act. In addition to this submission, the petitioner also states that, at best, the trainees can only be considered as apprentices and therefore, only entitled to the benefits under the Apprentices Act, 1961, thus being expressly excluded from the definition of 'employee' as per Section 2(f) of the Act. 4. The employees Provident Fund Commissioner, however, rejected these contentions as regards 22 of the 25 persons involved, but finding that the remaining three are apprentices, thus ordering that the establishment is obligated to file returns with respect to the aforementioned 22 persons, who the said Authority determined to be employees under the provisions of the Act. The petitioner challenges this order as being illegal and unlawful. 5. I have heard Sri.P.Ramakrishnan, learned counsel appearing for petitioner and Sri.S.Sujin learned Standing Counsel appearing on behalf of the Provident Fund Organisation. : **:3::** W.P.(C) No.19631/11 6. Sri.P.Ramakrishnan, learned counsel appearing for the petitioner, in support of the contentions of the petitioner, cites the judgment of the Honourable Supreme Court in _**Provident Fund Commissioner, Mangalore v. Central Arecanut & Coca Marketing and Processing Coop. Ltd. (2006) 2 SCC 381**_ to contend that when trainees are paid only stipend, without being offered any right of employment and without being burdened by an obligation to accept employment even if offered to them, they would be at the best construed to be only apprentices engaged under the Standing Orders of the establishment. Sri.P.Ramakrishnan, further says that since the establishment does not have a Standing Order of its own, the Model Standing Order prescribed by the Government of Kerala, under the Kerala Industrial Employment Standing Order Rules, 1958, would become applicable to the establishment. He thus asserts that going by the observations of the Honourable Supreme Court in the aforecited judgment, Exhibit-P2 order of the Provident Fund Commissioner would become untenable. 7. The learned Standing Counsel for the Provident Fund Commissioner, Sri.Sujin, on the contrary, submits that the afore contentions of the petitioner cannot be accepted because no documents have been produced by them before the Commissioner to show the nature of the engagement of the aforementioned 22 persons and that it : **:4::** W.P.(C) No.19631/11 would therefore, not be possible to conclude that the said persons were being engaged only as trainees under a stipend, without an obligation to accept employment. Sri.Sujin, also continues to say that these 22 employees can neither be concluded to have been appointed under the Model Standing Order, since this was not an issue that was raised by the establishment in their application before the Authority, but that it is only an oral submission made by its counsel at the time when the Section 7A determination was being done by the Employees Provident Fund Commissioner. 8. I have considered the submissions made before me by the learned counsel as above and I am of the view that the issues raised in this Writ Petition will have to be guided and modulated substantially, if not fully, by the judgment of the Honourable Supreme Court in Central Arecanut _& Coca Marketing and Processing Copp. Ltd_ _**.**_ ’s case (supra). The specific declarations of law by the Honourable Supreme Court in this regard is available from paragraphs 6 to 13 of the said judgment, which reads as follows : _“6. Undisputedly, the respondents are trainees. The question as rightly noted by the Division Bench is whether an apprentice can be deemed to be an employee within the meaning of Section 2(f) of the Act in the case at hand. 7. For this purpose it is necessary to take note of the definition of “employee” as given in Section 2(f) of the Act. It reads as under :_ _“2.(f) 'employee' means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer, and includes any person -_ : **:5::** W.P.(C) No.19631/11 _(i) employed by or through a contractor in or in connection with the work of the establishment ;_ _(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment ;”_ _8. Section 12-A of the Standing Orders Act, inter alia, provides as follows :_ _“12-A. Temporary application of model standing orders : - (1) Notwithstanding anything contained in Sections 3 to 12, for the period commencing on the date on which this Act becomes applicable to an industrial establishment and ending with the date on which the standing orders as finally certified under this Act come into operation under Section 7 in that establishment, the prescribed model standing orders shall be deemed to be adopted in that establishment, and the provisions of Section 9, sub-section (2) of Section 13 and Section -13A shall apply to such model standing orders as they apply to the standing orders so certified._ _(2) Nothing contained in sub-section (1) shall apply to an industrial establishment in respect of which the appropriate Government is the Government of the State of Gujarat or the Government of the State of Maharashtra.” 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 establishment concerned. 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 2 thereof classified workmen as follows :_ _“2. (a)(1) permanent, (2) probationers, (3) badlis, (4) temporary, (5) casual,_ _(6) apprentices.”_ _10. “Apprentice” is defined in clause (g) of Standing Order 2 as follows :_ _“2. (g) an ‘apprentice’ is a learner who is paid an allowance during the period of his training.”_ _11. 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;”_ _12. 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._ _13. In the case at hand, trainees were paid stipend_ W.P.(C) No.19631/11 : **:6::** _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.”_ 9. It, therefore, becomes indubitable that the facts involved in this case are analogous to the facts noticed by the Honourable Supreme Court in the aforementioned judgment and therefore, that Exhibit-P2 order becomes susceptible to a re-consideration. I am not saying that the petitioner establishment has been able to establish their contentions before this Court conclusively, but I am of the view that it will be apposite, going by the judgment of the Honourable Supreme Court, to give them one more opportunity to establish that their case is also akin to the one that was considered by the Honourable Supreme Court in the afore cited judgment. 10. For that purpose, I deem it appropriate to set aside Exhibit-P12, not because I have concluded against it on its merits, but so as to pave way for a re-consideration, at the hands of the Employees Provident Fund Commissioner, of all the issues including whether the 22 persons involved in this case are either trainees or apprentices under the provisions of the Model Regulations. 11. Consequently, the Employees Provident Fund Commissioner is directed to re-consider the matter, after affording an opportunity of being heard to the petitioner and to all other stake holders as per law and make a determination under Section 7A of the Act, : **:7::** W.P.(C) No.19631/11 adverting specifically to the ratio of the Honourable Supreme Court in Central Arecanut _& Coca Marketing and Processing Copp. Ltd.’s case_ (supra). This exercise shall be completed by the Commissioner as expeditiously as possible, but not later than three months from the date of receipt of a copy of the judgment. This Writ Petition is thus ordered. **DEVAN RAMACHANDRAN JUDGE** csl