M/S Getwell Medicare Pullappady Cross Road, Ernakulam v Employees Provident Fund Appellate Tribunal, New Delhi and The Assistant Provident Fund Commissioner, Employees Provident Fund Organization, Kochi

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** **MONDAY, THE 19[TH] DAY OF SEPTEMBER 2022 / 28TH BHADRA, 1944** ## **WP(C) NO. 18394 OF 2014** ## **PETITIONER/S:** M/S GETWELL MEDICARE PULLAPPADY CROSS ROAD, ERNAKULAM, KOCHI - 682 018, KERALA STATE, REPRESENTED BY ITS PARTNER, M. DILEEP KUMAR, S/O MUKUNDAKASHAN NAIR, PERUMITTATHU HOUSE, THATTAMPADY P.O., ALUVA, ERNAKULAM BY ADV SRI.N.K.SUBRAMANIAN ## **RESPONDENT/S:** 1 THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL NEW DELHI 110 001. 2 THE ASSISTANT PROVIDENT FUND COMMISSIONER EMPLYEES PROVIDENT FUND ORGANIZATION SUB REGIONAL OFFICE, 36/685 A, 'BHAVISHYANIDHI BHAVAN', P.B.NO.1895, KALOOR, KOCHI - 682 017. BY ADVS. DR.S.GOPAKUMARAN NAIR SR. SRI.A.RAJASIMHAN,SC,EPF ORGANISATION THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.09.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WP(C) NO. 18394 OF 2014** **2** ## **JUDGMENT** The petitioner, an establishment, a partnership firm engaged in the business of distribution of allopathic medicines to various companies, has assailed the orders dated 2.5.2013, Ext.P3 and 16.4.2014, Ext.P6 of the assessing officer and the appellate authority under the Employees Provident Fund and Miscellaneous Provisions Act 1952. The petitioner received a notice dated 18.3.2013, Ext.P1 from the respondent to produce all records with regard to the remittances of the employees on the allegation that it has failed to remit the contribution due for the period April 2009 to October 2012. 2. The petitioner vide Ext.P2 reply submitted that there is no default of the contribution as the medical reimbursement is being paid only to few as per the terms and conditions of the agreement of contract and not to all. In other words, the statement of account and the payment of the salary was placed on record in support of the aforementioned submissions. Rejecting the aforementioned contention of the petitioner, respondent No.2 vide impugned order dated 2.5.2013, Ext.P3 assessed the amount to the tune of Rs.6,33,014/- on account of the fact that the petitioner had bifurcated the wages into **WP(C) NO. 18394 OF 2014** **3** basic + D.A, Medical, D.A + H.R.A. Aggrieved against the aforementioned order, the petitioner preferred an appeal on 17.7.2013, Ext.P4 and remitted a sum of Rs.2 lakhs as a condition precedent for staying the operation of Ext.P3 order, as ordered by an interim order dated 1.8.2013, Ext.P5. 3. Vide impugned order dated 16.4.2014, Ext.P6 the appellate authority dismissed the appeal. Learned counsel appearing on behalf of the petitioner submitted that both the authorities have failed to take into consideration a cumulative effect of definition of basic wages as specified under Section 2(b) and 6 of the 1952 Act and as well as the documentary evidence placed on record to establish that the facility of medical reimbursement was being availed only by handful of the employees; not to all. There was no bifurcation of the wages as evident from the statement as PF were paid by including the basic T.A, H.R.A and D.A. In support of the contentions relied upon the findings rendered by the Supreme Court in the judgment _**'the Regional Provident Fund Commissioner (ii), West Bengal and Ors. v. Vivekananda Vidyamandir and Ors. (AIR 2019 SC 1240)**_ whereby the ratio of decidendi has been culled out that if all the employees of the establishment are getting the particular benefit, then the establishment cannot be permitted to volte face and take a stand **WP(C) NO. 18394 OF 2014** **4** that they are not liable to pay the contribution towards the aforementioned charges but if otherwise that is to the handful, then the remittances under the EPF Act cannot be directed to be paid by the establishment. 4. Counsel for the respondent submitted that it is fit case where the writ petition is required to be dismissed as the concurrent findings of the fact cannot be interfered with while exercising the power of judicial review under Article 226 of the Constitution of India. Writ petition deserves dismissal with exemplary costs. On going through the contents of the judgment referred to above and the documents placed on record, it was found that there was a splitting of the basic wage, D.A and H.R.A and rightly so, the management /establishment has been called upon to pay the remittances of all the 28 employees of not making the contributions towards the medical reimbursement. 5. I have heard the learned counsel for the parties and appraised the paper book. The factum of receipt of the notice, reply, documents in support of the reply are not in dispute. For examining the veracity of the judgment while exercising the power of judicial review under Article 226 of the Constitution of India, this Court cannot be precluded from appreciating the orders, in case there has been a **WP(C) NO. 18394 OF 2014** **5** misleading, misdirection and overlooking of the evidence already on record before the authorities. In other words had been a case of a appreciation of fresh documentary evidence, perhaps there would not have been any force in the argument. On examination of Ext.P2, reply along with the documents, it is evident that the petitioner, management had not been extending the benefit of medical reimbursement to all employees but to handful ie., 5 employees and that has also been shown in the profit and loss account of the February, March, April and May 2010. There is no advertence to the aforementioned documentary evidence either by the assessing officer as well as by the appellate authority. 6. The controversy with regard to the applicability of the expression basic wages as defined under Section 2b r/w Section 6 of the EPF and MP Act, came for ponderence before the Supreme Court in the judgment cited, supra. It would be expedient to extract the provisions of Section 2(b) and 6 of the Act. _**Section 2(b)** "basic wages" means all emoluments which are earned by an employee while on duty or (on leave or on holidays with wages in either case) in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include_ _i) the cash value of any food concession;_ _ii) any dearness allowance(that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime. allowance,_ **WP(C) NO. 18394 OF 2014** **6** _bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment._ _iii) Any presents made by the employer._ _**Section-6.** Contribution and matters which may be provided for in Schemes. The contribution which shall be paid by the employer to the Fund shall be ten per cent of the basic wages, dearness allowance and retaining allowance(if any) for the time being payable to each of the employees(whether employed by him directly or by or through a contractor) and the employee's contribution shall be equal to the contribution payable by the employer in respect of him and may, if any employee so desires, be an amount exceeding ten per cent of his basic wages, dearness allowance and retaining allowance(if any) subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section:_ _9. Provided that in its application to any establishment or class of establishments which the Central Government, after making such inquiry as it deems fit, may, by notification in the Official Gazette specify, this section shall be subject to the modification that for the words "ten percent", at both the places where they occur, the words "12 percent" shall be substituted. Provided further that where the amount of any contribution payable under this Act involves a fraction of a rupee, the Scheme may provide for rounding off of such fraction to the nearest rupee, half of a rupee, or quarter of a rupee._ _Explanation I - For the purpose of this section dearness allowance shall be deemed to include also the cash value of any food concession allowed to the employee._ ## 7. Paras 11, 12, 13 and 14 of the aforementioned judgment reads thus: _11. In Manipal Academy of Higher Education vs. Provident Fund Commissioner, (2008) 5 SCC 428, relying upon Bridge Roof’s case it was observed:_ _“10. The basic principles as laid down in Bridge Roof's case (supra)_ **WP(C) NO. 18394 OF 2014** **7** _on a combined reading of Sections 2(b) and 6 are as follows:_ _(a) Where the wage is universally, necessarily and ordinarily paid to all across the board such emoluments are basic wages._ _(b) Where the payment is available to be specially paid to those who avail of the opportunity is not basic wages. By way of example it was held that overtime allowance, though it is generally in force in all concerns is not earned by all employees of a concern. It is also earned in accordance with the terms of the contract of employment but because it may not be earned by all employees of a concern, it is excluded from basic wages._ _(c) Conversely, any payment by way of a special incentive or work is not basic wages.”_ _12. The term basic wage has not been defined under the Act. Adverting to the dictionary meaning of the same in Kichha Sugar Company Limited through General Manager vs. Tarai Chini Mill Majdoor Union, Uttarakhand, (2014) 4 SCC 37, it was observed as follows:_ _“9. According to http://www.merriam webster.com (Merriam Webster Dictionary) the word 'basic wage' means as follows:_ _1. A wage or salary based on the cost of living and used as a standard for calculating rates of pay_ _2. A rate of pay for a standard work period exclusive of such additional payments as bonuses and overtime._ _10. When an expression is not defined, one can take into account the definition given to such expression in a statute as also the dictionary meaning. In our opinion, those wages which are universally, necessarily and ordinarily paid to all the employees across the board are basic wage. Where the payment is available to those who avail the opportunity more than others, the amount paid for that cannot be included in the basic wage. As for example, the overtime allowance, though it is generally enforced across the board but not earned by all employees equally. Overtime wages or for that matter, leave encashment may be available to each workman but it may vary from one workman to other. The extra bonus depends upon the extra hour of work done by the workman whereas leave encashment shall depend upon the number of days of leave available to workman. Both are variable. In view of what_ **WP(C) NO. 18394 OF 2014** **8** _we have observed above, we are of the opinion that the amount received as leave encashment and overtime wages is not fit to be included for calculating 15% of the Hill Development Allowance.”_ _13. That the Act was a piece of beneficial social welfare legislation and must be interpreted as such was considered in The Daily Partap vs. The Regional Provident Fund Commissioner, Punjab, Haryana, Himachal Pradesh and Union Territory, Chandigarh, (1998) 8 SCC 90._ _14. Applying the aforesaid tests to the facts of the present appeals, no material has been placed by the establishments to demonstrate that the allowances in question being paid to its employees were either variable or were linked to any incentive for production resulting in greater output by an employee and that the allowances in question were not paid across the board to all employees in a particular category or were being paid especially to those who avail the opportunity. In order that the amount goes beyond the basic wages, it has to be shown that the workman concerned had become eligible to get this extra amount beyond the normal work which he was otherwise required to put in. There is no data available on record to show what were the norms of work prescribed for those workmen during the relevant period. It is therefore not possible to ascertain whether extra amounts paid to the workmen were in fact paid for the extra work which had exceeded the normal output prescribed for the workmen. The wage structure and the components of salary have been examined on facts, both by the authority and the appellate authority under the Act, who have arrived at a factual conclusion that the allowances in question were essentially a part of the basic wage camouflaged as part of an allowance so as to avoid deduction and contribution accordingly to the provident fund account of the employees. There is no occasion for us to interfere with the concurrent conclusions of facts. The appeals by the establishments therefore merit no interference. Conversely, for the same reason the appeal preferred by the Regional Provident Fund Commissioner deserves to be allowed._ 7. On analysis of the aforementioned, it was held that the exception carved out in Section 2(b) of the Act suggests that even though the main part of the definition includes all amendments, certain payments which are, in fact the price of the labour and earned, in accordance with the terms of the contract wages. It was held that if such payments are made **WP(C) NO. 18394 OF 2014** **9** to all the concerned, then the establishment cannot wither away from the liability of not making the contribution 8. It has further been held that the wages which are universally, necessarily and ordinarily paid to all the employees across the board would fall within the expression Basic Wages but if the payment is available to those who availed the opportunity more than others, the amount paid for that, cannot be included in the basic wages. 9. In the instant case, it is evident that only 5 of the employees were given the benefit of medical reimbursement thus, the non contribution of the medical reimbursement in respect of remaining other employees, the liability cannot be fastened upon the petitioners, for not providing the contribution towards the provident fund. In para 14 of the judgment, the findings came on the basis of the fact that the provident fund commissioner could not establish on record before the authorities, any evidence linking to incentive for production resulting into greater output of the employees being paid to all. For the reason aforementioned, I am of the view that the findings of the assessing officer as well as the appellate authority burdening petitioner establishment to pay the contribution of **WP(C) NO. 18394 OF 2014** **10** Rs.6,33,014/- is not sustainable in the eyes of law. The impugned orders Exts.P3 and P6 are quashed. The writ petition is allowed. The directions are issued to the respondents to either adjust the amount of Rupees two lakhs deposited while entertaining the appeal as well as of passing of the interim order in future contribution or refund the same within a period of 45 days from the date of receipt of a certified copy of this judgment. Sd/- sab **AMIT RAWAL JUDGE** **WP(C) NO. 18394 OF 2014** **11** ## **APPENDIX OF WP(C) 18394/2014** PETITIONER EXHIBITS EXHIBIT P1 : TRUE COPY OF THE NOTICE DATED 18.03.2013 ISSUED BY R2 EXHIBIT P2 : TRUE COPY OF DATED 02.05.2013 AND SALARY STATEMENT EXHIBIT P3 : TRUE COPY OF ORDER DATED 02.05.2013 ISSUED BY R2 EXHIBIT P4 : TRUE COPY OF APPEAL DATED 17.07.2013 FILED BEFORE R1 EXHIBIT P5 : TRUE COPY OF INTERIM ORDER DATED 01.08.2013 ISSUED BY R1 EXHIBIT P6 : TRUE COPY OF ORDER DATED 16.04.2014 ISSUED BY R1