Sulthan Bathery Service Co-operative Bank v Union of India, The State of Kerala, The Assistant Provident Fund Commissioner, and The Kerala State Co-operatives Employees Pension Board

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR. JUSTICE AMIT RAWAL`** ## **`FRIDAY, THE 1[ST] DAY OF APRIL 2022 / 11TH CHAITHRA, 1944`** ## **`WP(C) NO. 28869 OF 2018`** ## **`PETITIONER:`** ``` SULTHAN BATHERY SERVICE CO-OPERATIVE BANK, REP. BY ITS SECRETARY, SULTHAN BATHERY, WAYANAD DISTRICT. WAYANAD ``` ``` BY ADVS. M.P. ASHOK KUMAR BINDU SREEDHAR R.S. MANJULA ``` ## **`RESPONDENTS:`** ``` 1UNION OF INDIA REP. BY ITS SECRETARY, MINISTRY OF LABOUR, GOVT.OF INDIA, NEW DELHI 110 001 ``` ``` 2THE STATE OF KERALA REP. BY THE SECRETARY TO GOVERNMENT, CO-OPERATIVE DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM-695001. ``` ``` 3THE ASSISTANT PROVIDENT FUND COMMISSIONER SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, ERANJIPALAM P.O., KOZHIKODE – 673006. ``` - `4 THE KERALA STATE CO-OPERATIVE EMPLOYEES PENSION BOARD, REPRESENTED BY ITS SECRETARY, T.C.28/2781, CHETTIKULANGARA, THIRUVANANTHAPURAM-695001.` ``` 2 ``` ## **`WP(C) NO. 28869 OF 2018`** ``` BY ADVS. SRI.T.V.VINU, CGC SRI.M.SASINDRAN, SC, KERALA STATE COOPERATIVE EMPLOYEES PENSION BOARD ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 28.03.2022, THE COURT ON 01.04.2022 DELIVERED THE FOLLOWING: ``` ``` WP(C) NO. 28869 OF 2018 ``` ``` 3 ``` ## **JUDGMENT** Order dated 17.04.2018 Ext.P13 order of the Regional Provident Fund Commissioner (Enforcement) while exercising powers under Section 7A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter called ‘1952 Act) and attachment order dated 10.08.2018 Ex.P14 on behalf of the petitioner Co-operative Bank, without availing the remedy of appeal, have been challenged in this present writ petition on the ground of jurisdictional error and maintainability of proceedings. 2. Petitioner is a primary Co-operative Society registered under the Kerala Co-operative Societies Act, 1969 ('KCS Act', for short). Under Section 80A of the KCS Act had framed Employees Financing Pension Scheme, 1994. It has also established a contributory provident fund as per the provision of Section 61 of the KCS Act. On the roll, it has 52 employees out of which 27 had retired and 17 have been receiving pension from Keala State Co-operative Employees ``` WP(C) NO. 28869 OF 2018 ``` ``` 4 ``` Pension Board – 4[th] respondent. Society was flabbergasted to receive a notice dated 19.11.1998 by the Regional Provident Fund Commissioner under the provisions of the 1952 Act of non-payment of the Contribution with effect from 01.07.1997 Ext.P2. The aforementioned notice was duly replied vide Ext.P3, on the premise that the employees have been already registered with the Employees’ Pension Scheme and therefore, the provisions of the 1952 Act would not be applicable. Dissatisfied with the reply of the petitioner, respondents insisted for remittance of the Employer’s Contribution vide letter dated 24.02.1999 Ext.P4. However, again reply was submitted vide Ext.P5 which resulted into an order dated 25.10.1999 Ext.P6 determining the amount, due, for the period July 1997 to March, 1999 to the tune of Rs.13,49,288.90/-. Petitioner addressed a letter to the Pension Board in respect of the demand by the 3[rd] respondent. 4[th] respondent replied to the society of its involvement as evidenced from the contents of the letter ## **`WP(C) NO. 28869 OF 2018`** ``` 5 ``` dated 05.11.1999 Ext.P8. When the proceedings under Section 8F of the 1952 Act were initiated by issuing the attachment order, petitioner approached this Court vide W.P. (C).No.13339/2006 on various ground including the nonapplicability of the provisions. This Court vide judgment dated 06.04.2017 Ext.P12 directed the respondent No.3 to consider the claim for exemption from the applicability of the provisions of the Act. 3. Learned counsel appearing on behalf of the petitioner submitted that the direction of this Court did not entail into any positive order as again demand of 13,49,582.90/- vide order dated 17.04.2018 Ext.P13 was raised and proceedings under Section 8F for attachment Ext.P14 have been initiated. 4. Petitioner society would not be covered under the provisions of the Act as per the provisions of Section 16(1) of 1952 Act. All the employees have already been registered with the Pension Scheme carved out while exercising the ``` WP(C) NO. 28869 OF 2018 ``` ``` 6 ``` power under Section 80A of the KCS Act. This fact is also evident from the communication of the 4[th] respondent dated 05.11.1999 Ext.P8. Petitioner is engaged in a banking business and no other activity than the one referred to above is being conducted. The expression ‘working with the aid of power’ has to be constructed in the light of the definition given to the word ‘power’ given in the Factories Act as well as Industries Development Regulations Act. No office, even if, not covered under the 1952 Act cannot, in the present era, run without the use and aid of the power. It has employees less than 50, thus the findings of the authority in focusing on the expression use of 'aid of the power' cannot be permitted to sustain. In such background extra ordinary writ jurisdiction without availing the remedy of appeal has been availed of. 5. In support of the aforementioned contention the judgment of Division Bench of this Court in _**Kottayam District Co-operative Hospital Society Ltd.**_ v. _**Regional**_ ``` WP(C) NO. 28869 OF 2018 ``` ``` 7 ``` ## _**Provident Fund Commissioner, Kottayam and Another**_ [2014 KHC 762] has been relied upon to contend that while considering the facts and circumstances it was found by the Division Bench that since Hospital Society had the employees above the threshold limit of 20 or more, the society was covered under the terms of provisions of Section 1(3)(b) of 1952 Act. The EPF Act was made applicable considering the activity of the society, which was running a hospital having various machines like CT Scan Unit, Medical Laboratory, Pathological Laboratory, Specialist Employees, Professional Doctors like pathologist, radiologist, administrative staff, nursing staff much less paramedical staff like pharmacist, radiographers etc. and thus urged this Court for setting aside the impugned order Ext.P13 and attachment order under Section 8F Ext.P14. 6. On the other hand, Sri. Abraham.P.Meachinakara, learned counsel representing the respondent orgainsation countered the argument on the ground that the writ petition ``` WP(C) NO. 28869 OF 2018 ``` ``` 8 ``` is not maintainable as statutory appeal under Section 7(1)(I) of the Act has to be filed within a period of 60 days with another delay condonation of 60 days which had already elapsed and therefore, jurisdiction of this Court under Article 226 of the Constitution cannot be pressed into service. Petitioner Co-operative Bank has not been excluded from the provisions of 1952 Act, despite transferring the employees portion of EPF as pension fund. The Division Bench of Gujarat High Court in _**Mansa Nagrik Sahakari Bank Ltd. Others**_ v. _**Regional Provident Fund Commissioner of Gujarat State**_ reported in [2003 LAB.I.C.3346] has held Clause (a) of Section 16(I) of 1952 Act was not intended to grant exemption to a commercial establishment run by a Cooperative Society with large scale business like banking business as for carrying the aforementioned activity it uses power for running the computers and other gadgets for efficient banking services, to be provided to the customers. The argument that the establishment using computers for day ``` WP(C) NO. 28869 OF 2018 ``` ``` 9 ``` to day transaction of banking activities would not be construed as use of power as defined under the Factories Act, cannot be countenanced in the absence of any specific notification under Section 16(I) of 1952 Act. 7. I have heard the learned counsel for the parties and appraised the paper book. 8. Section 16(1) of the 1952 Act reads thus: ## **16. Act not to apply to certain establishments.** —4 [(1) This Act shall not apply— (a) to any establishment registered under the Cooperative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State relating to co-operative societies, employing less than fifty persons and working without the aid of power; or 5 [(b) to any other establishment belonging to or under the control of the Central Government or a State Government and whose employees are entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule framed by the Central Government or the State Government governing such benefits; or (c) to any other establishment set up under any Central, Provincial or State Act and whose employees are entitled to the benefits of contributory provident ``` WP(C) NO. 28869 OF 2018 ``` ``` 10 ``` fund or old age pension in accordance with any scheme or rule framed under that Act governing such benefits; 9. Looking at the provisions, extracted above, it is evident that any establishment registered under the Cooperative Societies Act or any other law for the time being in force in the state relating to Co-operative Societies employing less than 50 and working without the 'aid of the power' would be exempted from the applicability of 1952 Act. For claiming the exemption two requirements have to be followed that with the 'aid of the power' and employees to be less than 50 in number. Adjudicating authority while exercising the powers under Section 7A of the Act, in the impugned order Ext.P13 noticed that petitioner had employed more than 20 employees but less than 50 employees. Since the employees were less than 50 in number, the question which revolves for applicability or otherwise of the provision would be, whether usage of the computer for banking purpose can be correlated to the use of power as per the definition of the power in the ``` WP(C) NO. 28869 OF 2018 ``` ``` 11 ``` Factories Act or not. Use of power means the power meant for running machinery where the workers, both skilled and semiskilled more than 50 are employed for carrying on the activity for manufacturing and fabrication of the articles. Heavy reliance has been laid to the judgment of High Court of Gujarat in _**Mansa Nagrik Sahakari**_ (supra) where in para 10, while rejecting the contention of the petitioner therein, the Court observed as under: 10. Mr. Shah learned advocate submitted that the petitioner establishment is a Co-operative Bank and it cannot be said to have indulged in any manufacturing activity and therefore, the provisions of section 16(1)(a) of the Act will not be applicable to the petitioner Bank. He also submitted that the provisions of the Act will not be made applicable to the petitioner Bank, because it does not employ 50 or more persons. Mr. Shah submitted that no significance is to be attached to the words, "and working with out the aid power". If the interpretation advanced by Mr. Shah is accepted, then in cases of establishment, which do not carry on any "manufacturing activity" the words, "and working without the aid power" become redundant, because according to Mr. Shah, the quest of working without the ``` WP(C) NO. 28869 OF 2018 ``` ``` 12 ``` aid power arise only in the cases of manufacturing units and not in the case of establishments like the petitioner which are service oriented and rendering service to the society. 11. In the present days, to assume an establishment working without the aid power is if not impossible is definitely very difficult. A Bank works with the aid of power not only for the purpose of light and cooling to the employees and its customers, but also for its computers and other gadgets used in the Bank in providing effective service to its customers. In the 21st Century to contend that an establishment like Cooperative Bank working in cities is working without the aid of power is ridiculous. Therefore, the contention of Mr. Shah is turned down. Therefore, if on this ground alone the petitioner establishment wanted the authorities to hold that the provisions of the Act or not applicable the same has no substance hence rejected. Mr. Shah cited some decisions of Patna High Court, Allahabad High Court, to contend that the words, "and without the aid of power" are to be considered to mean that they will have application only to manufacturing units. This Court is of the opinion that in view of the aforesaid discussion these decisions have no application the facts of the case on hand. Therefore, they are not discussed in detail. 10. On cumulative reading of the aforementioned ``` WP(C) NO. 28869 OF 2018 ``` ``` 13 ``` provisions, I am not in agreement with the aforementioned observation for the simple reason that the entire focus of the judgment is based upon the use of expression 'power'. For claiming the non-applicability of the provisions of the Act, not only the word 'power' is required, but 'without the aid of power' is to be seen and the 'strength of the employees' as well, as the expression used under Section 16(I)(a) is ‘and’ not ‘or’. Concededly, the workers as per the findings of the authority under the Act are less than 50. Running of a banking business cannot be equated with manufacturing or fabrication or job work to be undertaken in the factories usage of lights and fans for working of the computers cannot be also similarly equated with aid of the power as expression 'aid of the power' according to the findings of the authority, has to be construed of a wide amplitude which in my view cannot be read as it has been. Before the computers had come into operation or introduced for undertaking transactions or other purposes, the bank used to do manual ``` WP(C) NO. 28869 OF 2018 ``` ``` 14 ``` works and that too, with the aid of the power by using the lighting and fans and even the table lamp, air conditioners etc. The usage of such facilities cannot be commensurate with the expression 'aid of power' to bring the establishment under the applicability and provisions of 1952 Act. 11. Also, the judgment pertained to a Co-operative Society which was running a hospital,a commercial establishment having different machineries providing different services to the patients under one roof. Activity of the hospital cannot be equated with the banking business, thus the ratio culled out in the aforementioned would not be made applicable for applicability of the provisions of 1952 Act. 12. The order in my view is wholly without jurisdiction and rightly so, jurisdiction of writ Court under Article 226 of the Constitution of India warranting interference for judicial review has been invoked without availing the remedy of appeal. As an upshot of my finding the impugned order Ext.P13 ``` WP(C) NO. 28869 OF 2018 ``` ``` 15 ``` and attachment order Ex.P14 are not sustainable being non est in the eyes of law, illegal, arbitrary and are hereby quashed. The writ petition is allowed in the aforementioned terms. **Sd/-** **AMIT RAWAL JUDGE** nak ``` WP(C) NO. 28869 OF 2018 ``` ``` 16 ``` ## **`APPENDIX OF WP(C) 28869/2018`** ``` PETITIONER EXHIBITS ``` ``` EXHIBIT P1PHOTOCOPY OF THE DETAILS OF THE EMPLOYEES. ``` - `EXHIBIT P2 PHOTOCOPY OF THE NOTICE DATED 19/11/1998.` - `EXHIBIT P3 PHOTOCOPY OF THE REPLY SENT TO THE PETITIONER DATED 29/11/1998 AND TYPED COPY.` - `EXHIBIT P4 PHOTOCOPY OF THE LETTER OF THE 3RD RESPONDENT DATED 24/02/1999.` - `EXHIBIT P5 PHOTOCOPY OF THE REPLY DATED 08/03/1999.` - `EXHIBIT P6 PHOTOCOPY OF THE PROCEEDINGS OF THE 3RD RESPONDENT DATED 25/10/1999.` - `EXHIBIT P7 PHOTOCOPY OF THE LETTER DATED 29/10/1999 SENT TO THE SECRETARY, KERALA STATE COOPERATIVE EMPLOYEES PENSION BOARD.` - `EXHIBIT P8 PHOTOCOPY OF THE LETTER OF THE 4TH RESPONDENT DATED 05/11/1999.` - `EXHIBIT P9 PHOTOCOPY OF THE ATTACHMENT ORDER DATED 22/02/2000.` - `EXHIBIT P10 PHOTOCOPY OF THE NOTICE DEMAND DATED 05/05/2006 ISSUED BY THE 3RD RESPONDENT.` - `EXHIBIT P11 PHOTOCOPY OF THE LETTER DATED 16/05/2006 RECEIVED BY THE PETITIONER FROM THE WAYANAD DISTRICT CO-OPERATIVE BANK, SULTHAN BATHERY BRANCH.` ``` EXHIBIT P12PHOTOCOPY OF THE JUDGMENT IN WP(C) 13339/2006 DATED 06/04/2017. ``` ``` WP(C) NO. 28869 OF 2018 ``` ``` 17 ``` ``` EXHIBIT P13PHOTOCOPY OF THE ORDER DATED 17/04/2018 EXHIBIT P14PHOTOCOPY OF THE ORDER NO.KR/KKD/17238/ENF W2(3)/2018 DATED 10/08/2018. ```