The Manager, Wallardie Estate, Harrisons Malayalam Ltd., Vandiperiya, Idukki v. The Regional Provident Fund Commissioner, Employees' Provident Fund Organisation, Regional Office, Kottayam, and S. Venugopal

WP(C).No.40468/2018 1 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V** **TUESDAY, THE 05TH DAY OF MAY 2020 / 15TH VAISAKHA, 1942** **WP(C).No.40468 OF 2018(G)** ## **PETITIONER/S:** **THE MANAGER, WALLARDIE ESTATE, HARRISONS MALAYALAM LTD., VANDIPERIYAR, IDUKKI, REPRESENTED BY SENIOR MANAGER (LEGAL), SUMITH BABU.** **BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM** ## **RESPONDENT/S:** **1 THE REGIONAL PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANIZATION, REGIONAL OFFICE, KOTTAYAM, ADITHYA SABARI TOWER, POST OFFICE ROAD, THIRUNAKKARA, KOTTAYAM-686001. 2 S VENUGOPAL, THEKKAEMURIYIL, 2ND MILE, AMARAVATHY.P.O., KUMALY-685509. R1 BY SRI.JOY THATTIL ITOOP, SC, EPF ORGANISA R2 BY ADV. SRI.B.ASHOK SHENOY R2 BY ADV. SRI.K.V.GEORGE R2 BY ADV. SRI.P.N.RAJAGOPALAN NAIR R2 BY ADV. SRI.P.S.GIREESH R2 BY ADV. SRI.RIYAL DEVASSY** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05-05-2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C).No.40468/2018 2 ## **“CR”** ## **JUDGMENT** The 2[nd] respondent, Sri. Venugopal was employed as a Field Officer in the Pattumalay Division of Wallardie Estate. For alleged violation of the standing orders of the Wallardie Estate, disciplinary proceedings were initiated against the 2[nd] respondent by the petitioner. A domestic enquiry was conducted and accepting the findings of the enquiry officer, the 2[nd] respondent was dismissed from service. The issue ultimately reached the Industrial Tribunal, Idukki and by award dated 28.8.2019, the Tribunal held that the petitioner failed to bring home the charges against the 2[nd] respondent. The 2[nd] respondent was ordered to be reinstated in service with back wages and all consequent benefits. Being aggrieved by the order passed by the Industrial Tribunal, the petitioner herein approached this Court and filed a Writ Petition under Article 226 of the Constitution of India. This Court by judgment dated 24.07.2015 in W.P.(C) No. 934 of 2010 dismissed the Writ Petition. Though the matter was taken in appeal, the Division Bench by its judgment dated 10.02.2016 in Writ Appeal No. 2691 of 2015 refused to interfere with the judgment. The award has thus become final. 2. Alleging non compliance of the award, the 2[nd] respondent filed a claim petition before the Labour Court, Ernakulam as C.P. No.9 of 2016 WP(C).No.40468/2018 3 claiming a total sum of Rs.12,39,802.02/- which includes interest of Rs.4,84,600/-. The said claim petition was partly allowed by the Labour Court and the 2[nd] respondent was awarded a sum of Rs.7,55,202.02/- by excluding the interest which was claimed. Being aggrieved by the quantum of amount awarded and the denial of interest, the 2[nd] respondent filed W.P.(C) No.33527 of 2017 which is pending before this Court. The petitioner is stated to have remitted a sum of Rs.7,55,202/- as ordered by the Labour Court. 3. While things being so, the 2[nd] respondent approached the 1[st] respondent seeking a direction to the Employer to pay their share of Contribution under the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 on the amount of back wages paid to him as per the award of the Labor Court. The 1[st] respondent heard the petitioner and the 2[nd] respondent and passed Exhibit P5 order finding that the 2[nd] respondent was eligible for membership of the Employees Provident Fund Scheme, 1952 and Employees Pension Scheme, 1995 for the period from 10.7.2004 to 2.11.2009. The above order is under challenge in this Writ Petition. 4. I have heard Sri.Jai Mohan, the learned counsel appearing for the petitioner, Sri. B.Ashok Shenoy, the learned Counsel appearing for the 2[nd] respondent and Sri.Joy Thattil Ittoop, the learned standing counsel WP(C).No.40468/2018 4 appearing for the 1[st] respondent. 5. Sri.Jai Mohan, the learned counsel, very fervently submitted that back wages awarded to the 2[nd] respondent consequent to the decision in an Industrial Dispute cannot be considered as emoluments earned by an employee while on duty. According to the learned counsel, the expression “emoluments”, which are earned by an employee while on duty represents the amounts actually earned by an employee during the period of his employment while he is actually on duty. Reliance is placed on a judgment of the High Court of Gujarat in **Swastik Textile Engineers (Pvt) Ltd Vs Virjibhaji Mavjibhai Rathode and Another[1]** and it was argued that the amount of back wages as awarded by the court will not constitute “basic Wages” as envisaged by the EPF Act and therefore, the employer is not under an obligation to make statutory contribution to the Provident Fund under the EPF Act. 6. Per contra, the learned standing counsel appearing for the 1[st] respondent submitted that the question posed in the instant case is no longer res integra and is squarely covered by the principles laid down by the Hon'ble Supreme Court in **Pranitiya Vidhyut Mandal Mazdoor Federation and Ors. v. Rajasthan State Electricity Board and Ors.[2] ,** > 1 [2008 (1) CLR 953] 2 [1992 (2) SCC 723] WP(C).No.40468/2018 5 **Changdeo Sugar Mills Vs Union of India[3]** and also that of a Division bench of this Court in **K.Y. Varghese v Puthuppady Service CoOperative Bank Ltd and Others** (Judgment dated 6.6.2008 in W.A. No.881 of 2007). 7. Sri. Ashok Shenoy, the learned counsel appearing for the 2[nd] respondent, submitted that though the petitioner complied with the award and paid the wages for the period from 10.7.2004 to 2.11.2009 in the year 2017, they refused to pay the contributions to the EPF for the above period. It is further submitted that Exhibit R2(h) report was submitted by the enforcement officer of the 1[st] respondent wherein it is stated that the back wages to the tune of Rs.7,55,202.02/- was arrived at and paid to the 2[nd] respondent after deducting the employees' share of contribution to the EPF Fund on Basic Pay, Personal Pay and Variable Dearness Allowance. 8. I have considered the submissions advanced. Exhibit R2(a) is the order passed by the Industrial Tribunal, Idukki, wherein after considering the entire gamut of the facts and circumstances, the Tribunal has passed the award holding that the 2[nd] respondent is eligible to be reinstated in service with back wages and other benefits. The said judgment has been confirmed by this Court and has become final. It is by now settled beyond any doubt that the relief of reinstatement with 3 [2002 (2) SCC 519] WP(C).No.40468/2018 6 continuity of service is granted where termination of service is found to be invalid. This is premised on the basis that the employer has taken away in an illegal manner the right to work of the workman, contrary to the relevant law or in breach of contract, and simultaneously deprived the workman of his earnings. If that be the case, when the workman is directed to be reinstated, the employer cannot not shirk from his responsibility to pay the wages which the workman has been deprived of by the illegal or invalid action of the employer. The only conclusion possible is that the 2[nd] respondent was always willing to work but he was kept away on account of an invalid act of the petitioner. There cannot , therefore, be any justification to refrain from awarding him the full back wages which would also include the contribution towards the EPF and other benefits to which he was legitimately entitled. ## 9. In **Pranitiya Vidhyut Mandal Mazdoor Federation** (supra), the issue which arose for consideration was as to whether the arrears of wages payable by employer to workmen pursuant to a wage revision award made applicable from a back date would constitute basic wages for the time being payable within the meaning of Section 2(b) r/w. Section 6 of the EPF Act. It was held as follows in paragraph Nos. 6 to 11 of the report: “6. Sections 2(b) and 6 of the Act which are relevant are reproduced hereunder: WP(C).No.40468/2018 7 “2(b). ‘Basic wages’ means all emoluments which are earned by an employee while on duty or on leave with wages 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) 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, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employments. (iii) any presents made by the employer. 6. Contributions and matters which may be provided for in scheme.— The contribution which shall be paid by the employer to the fund shall be six-and-a-quarter percent 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 employees' contributions shall be equal to the contribution payable by the employer in respect of him and may, if any employee so desires and if the scheme makes provision therefor, be an amount not exceeding eight-andone-third percent of his basic wages (dearness allowance and retaining allowance (if any) ….” 7. Reading the above-quoted two sections together the expression “basic wages” means: (i) all emoluments which are earned by an employee while on duty or on leave; WP(C).No.40468/2018 8 (ii) with wages in accordance with the terms of the contract of employment; (iii) which are paid or payable in cash; and (iv) are payable for the time being to each of the employees. 8. When an award gives revised pay scales the employees become entitled to the revised emoluments and where the said revision is with retrospective effect, the arrears paid to the employees, as a consequence, are the emoluments earned by them while on duty. 9. We do not agree with the Division Bench of the High Court that the wages which are substituted from back-date as a result of an award under the Act are not the basic wages as defined under the Fund Act. If the original emoluments earned by an employee were “basic wages” under the Fund Act, there is no justification to hold that the substituted emoluments as a result of the award are not the “basic wages”. The reference to the arbitration, the acceptance of the award by the parties and the resultant wage-increase with retrospective effect, are the direct consequences of the settlement between the workmen and the Board. We are of the view that revision of wage-structure, as a result of an award under the Act, has to be taken as a part of the contract of employment in the context of the Fund Act. This Court in Harihar Polyfibres v. Regional Director, ESI Corporation [(1984) 4 SCC 324] while dealing with the definition of wages under Employees' State Insurance Act, 1948 held as under: (SCC p. 325, para 2)) “Now, under the definition, first, whatever remuneration is paid or payable to an employee under the terms of the contract of the employment, express or implied is wages; thus if remuneration is paid in terms of the original contract of WP(C).No.40468/2018 9 employment or in terms of a settlement arrived at between the employer and the employees which by necessary implication becomes part of the contract of employment it is wages.” 10. The workmen have inherent right to collective-bargaining under the Act. The demands raised by the workmen through their unions are decided by conciliation, settlement or adjudication under the Act. These are time-consuming proceedings. When ultimately the dispute is settled/decided in workers' favour the accrued-benefit may be made available to them from back date. This is what has happened in the present case. The award given in the year 1985 has been made operative from April 1, 1980. Under the circumstances it would be in conformity with the objects of the Fund Act, which is a social welfare legislation, to hold that the revised pay scales have become part of the contract of employment with effect from April 1, 1980. 11. The expression “basic wages for the time being payable to each of the employees” under Section 6 of the Act means the “basic wages” at the relevant time. When the existing pay scales are revised with effect from back date then the revised wages posterior to that date are the “basic wages for the time being payable”. The High Court in our view fell into error in giving a strained interpretation to the provisions of the Fund Act.” 10. Though the above judgment was rendered in a case pertaining to revision of wages with effect from a back date, principles laid down can be applied in the instant case as well. 11. In **Shree Changdeo Sugar Mills** (supra), the question was WP(C).No.40468/2018 10 whether the amounts paid under a settlement between employer and employee as wages for a period when the employees were deemed to be on duty as in the case of a lockout could be held as basic wages within the meaning of section 2 (b) of the EPF Act. In para 11 of the report, it was held as follows: “11. We are unable to accept the submissions. Undoubtedly contribution towards provident fund can only be on a basic wage. However, it is not at all necessary that the workman must actually be on duty or that the workman should actually have worked in order to attract the provisions of the Employees' Provident Funds Act. For example, there may be a lockout in a company. During the period of lockout the workmen may not have worked yet for the purpose of the Employees' Provident Funds Act they will be deemed to have been on duty and provident fund would be deductible on their wages. In this case by order dated 12-12-1988, the High Court (pursuant to directions of this Court) fixed 31-10-1988 as a date when the services of the employees stood terminated/retrenched. Thus up to 31-10-1988 the employees were in service of the appellant Company. They were, therefore, deemed to be on duty up to 31-10-1988. As set out above many of these employees had raised claims before the Labour Court and there were awards of the Labour Court for payment of arrears of wages and retrenchment compensation. All that the settlement did was that, by agreement, the total claim of the workmen was reduced to a certain extent. Amongst the claims of the workmen was a claim for wages up to 31-10-1988. This was a claim for wages for a period during which they were on “deemed duty”. Clause 5 of the settlement, which has been set out hereinabove, shows that a WP(C).No.40468/2018 11 sum of Rs 35 lakhs has been paid towards wages and another sum of Rs 10 lakhs has been paid towards retaining (seasonal) wages. These are amounts which are paid for wages during a period when the workmen are deemed to be on duty. Therefore it is basic wage within the meaning of Section 2(b) of the Employees' Provident Funds Act. All the cases relied upon by Mr Sharma are of no assistance to him as in those cases the amounts were clearly not basic wages. In this case the abovementioned two sums of Rs 35 lakhs and Rs 10 lakhs are wages.” 12. In view of the above, it has to be held that contribution towards provident fund can only be on basic wage and it is not at all necessary that the workman must necessarily be on duty or that the workman should actually have worked in order to attract the provisions of the EPF Act. The judgment of the Gujarat High Court in **Swastik Textile Engineers Pvt Ltd** (supra), being against the principles laid above, cannot be accepted in the light of the above precedents. Furthermore, a Division Bench of this Court in **K.Y.Varghese** (supra) had held that when the workman was reinstated in service with full benefits including back wages, he should have been deemed to be in service from the date on which he was kept under suspension till 16.3.1981 on which day, he was reinstated in service. Applying the principles above, the workman being covered under the Employees Provident Fund, the employer becomes liable to remit their share of contribution during the period when the workman was kept out of service, irrespective of whether the employer had made any contribution or WP(C).No.40468/2018 12 not. The petitioner had a statutory duty to pay the contribution to the EPF and the contention contrary to the same cannot be sustained. 13. For the aforementioned reasons, I find that the order directing the petitioner to remit EPF and EPS contribution for the period from 10.07.2004 to 2.11.2009 is in order and no interference is warranted. This Writ Petition will stand dismissed. No costs. **Sd/-** ## **RAJA VIJAYARAGHAVAN V** **JUDGE** **ps/25/4/2020** WP(C).No.40468/2018 13 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1** **TRUE COPY OF THE ORDER DATED 10.5.2017 IN C.P.NO.9/2016 PASSED BY THE LABOUR COURT, ERNAKULAM.** **EXHIBIT P2 TRUE COPY OF THE COMPLAINT DATED 18.9.2017 FILED BY THE 2ND RESPONDENT BEFORE THE 1ST RESPONDENT.** **EXHIBIT P3 TRUE COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENT DATED 21.6.2018.** **EXHIBIT P4 TRUE COPY OF THE WRITTEN OBJECTION SUBMITTED BY THE PETITIONER DATED 18.9.2018 BEFORE THE 1ST RESPONDENT (WITHOUT ANNEXURES).** **EXHIBIT P5 TRUE COPY OF THE ORDER DATED 5.10.2018 PASSED BY THE 1ST RESPONDENT.** - **RESPONDENT'S/S EXHIBITS:** **EXHIBIT R2(A) TRUE COPY OF AWARD DATED 28.8.2009 PASSED BY INDUSTRIAL TRIBUNAL,IDUKKI, IN I.D.NO.35 OF 2005. EXHIBIT R2(B) TRUE COPY OF JUDGMENT DATED 24.7.2015 OF THIS HON'BLE COURT IN WP(C)NO.934 OF 2010. EXHIBIT R2(C) TRUE COPY OF LETTER DATED 9.11.2017 SUBMITTED BY PETITIONER BEFORE THE 1ST RESPONDENT** **EXHIBIT P2(D) TRUE COPY OF LETTER DATED 9.11.2017 SUBMITTED BY PETITIONER BEFORE THE 1ST RESPONDENT.** **EXHIBIT P2(E) TRUE COPY OF LETTER DATED 8.1.2018 SUBMITTED BY 2ND RESPONDENT BEFORE THE 1ST RESPONDENT EXHIBIT R2(F) TRUE COPY OF LETTER DATED 18.7.2018 SUBMITTED BY 2ND RESPONDENT BEFORE THE 1ST RESPONDENT. EXHIBIT R2(G) TRUE COPY OF THE LETTER DATED 25.7.2018** WP(C).No.40468/2018 14 **SUBMITTED BY 2ND RESPONDENT BEFORE THE 1ST RESPONDENT.** **EXHIBIT R2(H)** **TRUE COPY OF THE REPORT DATED 21.8.2018 OF THE ENFORCEMENT OFFICER,EMPLOYEES PROVIDENT FUND ORGANISATION TO 1ST RESPONDENT.** //True copy// PS to Judge