The Thodupuzha Taluk Educational Co-Operative Society Ltd. v. Assistant Provident Fund Commissioner, Sub Regional Office, Kottayam; Employees Provident Fund Organization, Kottayam; Appellate Tribunal, Scope Minar, Core II, 4th Floor, Laxmi Nagar, New Delhi

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE A.M.SHAFFIQUE** **FRIDAY, THE 18TH DAY OF JANUARY 2013/28TH POUSHA 1934** **WP(C).No. 27900 of 2011 (J) -------------------------------------** **PETITIONER(S):** **------------------------** **THE THODUPUZHA TALUK EDUCATIONAL CO-OPERATIVE SOCIETY LTD;NO.1-159, THODUPUZHA 685 584 IDUKKI DISTRICT REPRESENTED BY ITS PRESIDENT P.J.GEORGE** **BY ADV. SRI.K.G.ANIL BABU** ## **RESPONDENT(S):** **----------------------------** **1. THE ASSISTANT PROVIDENT FUND COMMISSIONER SUB REGIONAL OFFICE KOTTAYAM EMPLOYEES PROVIDENT FUND ORGANIZATION KOTTAYAM 686 001, KERALA.** **2. THE EMPLOYEES PROVIDENT FUND** - **APPELLATE TRIBUNAL,SCOPE MINAR,CORE II 4TH FLOOR,LAXMI NAGAR, DISTRICT CENTRE LAXMI NAGAR,NEW DELHI 110092 REPRESENTED BY ITS REGISTRAR.** **R1 BY ADV. SRI.JOY THATTIL ITOOP, SC, EPF ORGANISATION** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18-01-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **DCS** ## **WP(C).No. 27900 of 2011 (J)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXT.P1 THE COPY OF THE ORDER OF THE 1ST RESPONDENT DATED 09.7.08** **EXT.P2 THE COPY OF THE REVIEW PETITION DATED 3.9.2008 FILED ON 4.9.08 BEFORE THE 1ST RESPONDENT BY THE PETITIONER EXT.P3 THE COPY OF THE CERTIFICATE DATED 2.9.08 ISSUED BY THE ASSISTANT ENGINEER EXT.P4 THE COPY OF THE ORDER ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER DATED 31.10.2008** **EXT.P5 THE COPY OF THE JUDGMENT IN W.P(C) NO.35653/08 DATED 3.12.2008 OF THIS HON'BLE COURT. EXT.P6 THE COPY OF THE MEMORANDUM OF APPEAL EXT.P7 THE COPY OF THE ORDER IN ATA NO. 6(7) 2009 DATED 23.08.2011 EXT.P8 THE COPY OF THE ORDER OF THE 2ND RESPONDENT IN ATA NO.583(9)/2008 DATED 20.10.2010** ## **RESPONDENT'S EXHIBITS: NIL** ## **/TRUE COPY/** **P.A. TO JUDGE** ## **DCS** ## **A.M. SHAFFIQUE, J** ## **---------------------------------------** ## **W.P. (C) NO. 27900 OF 2011** ## **----------------------------------------** Dated this the 18[th ] day of January, 2013 ## **JUDGMENT** The writ petition is filed challenging Ext. P1, P4 and P7 orders issued by the authorities under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as Act). The petitioner is a society running a cooperative college and claims exemption from payment of contribution as provided under Section 16(1)(a) of the Act which reads as follows:- 16. Act not to apply to certain establishments:- (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;” 2. The petitioner being a society registered under the Cooperative Societies Act having employed only less than 50 persons upto 2007 was entitled for the exemption as specified u/s. 16(1)(a) of the Act. However, after an inspection of the college by the Department, an enquiry was conducted u/s. 7(A) of the Act. The Assistant Provident Fund Commissioner came to a W.P. (C) NO. 27900 OF 2011 **2** finding that since the petitioner is running the college with the aid of power, being a commercial establishment, it is not entitled for the exemption as provided u/s.16(1)(a) of the Act. On this basis the Department had calculated the contribution to the different accounts for the period from June 2004 to May 2007 and called upon the petitioner to remit an amount of Rs. 13,33,695/-. 3. Though a review was filed, the same came to be rejected on the ground of delay. The petitioner challenged the said order by filing W.P.C. 35653/2008 and by judgment dated 03.12.2008, this Court permitted the petitioner to file an appeal within a period of 30 days and the appellate authority was directed to consider the matter in accordance with law. 4. The appellate authority also confirmed the view expressed by the EPF authority. Ext. P7 is the said order. 5. Counter affidavit is filed by the 1[st] respondent inter alia contending that since the petitioner is running a Co-operative College and Co-operative Public School, it comes under the schedule category of Educational Institution (College and School) where the combined employment strength of the society as on 01.06.2004 was 30. Hence, the establishment was W.P. (C) NO. 27900 OF 2011 **3** brought on 01.06.2004 under section 1(3)(b) of the Act as it satisfied the conditions in the said provision. The communication in that regard was issued on 11.09.2007. Though the petitioner had claimed exemption u/s. 16(1)(a) of the Act, the said benefit cannot be extended to the petitioner in view of the fact that it is admittedly using electricity for the purpose of lighting, for running fans in the office, class rooms and that computers are also used which requires electricity. The respondent also relied upon the judgment of the Gujarat High Court in **Mansa Nagrik Sahakari Bank Ltd and others vs. RPFC of Gujarat State [2003 III LLJ 525].** Paragraph 11 of the aforesaid judgment reads as under:- 11. In the present days to assume an establishment working without the aid of 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 computes and other gadgets used in the Bank in providing effective service to its customers. In the 21[st] 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 W.P. (C) NO. 27900 OF 2011 **4** the provisions of the Act are not applicable, the same has no substance, hence rejected. Mr. Shah cited some decisions of Patna High Court and 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 to the facts of the case on hand. Therefore, they are not discussed in detail. 6. The appellate authority had relied upon the judgment of Supreme Court in **Hotel New Nalanda vs. Regional Director, ESIC [2009 (14) SCC 558]** . That was a case under the Employees State Insurance Corporation Act, wherein is it held that use of power in manufacturing process should be direct and proximate. In the said case the Supreme Court was considering the question regarding “aid of power” in a factory. That is not the situation here. Here is a situation where power is used for lighting facility, for fan and computers. Apparently it cannot be the intention of legislature while granting exemption to deny the same if power is used for lighting, fan or computers. 7. Heard the learned counsel appearing for the petitioner. It is not in dispute that in view of Section 1(3)(b) of W.P. (C) NO. 27900 OF 2011 **5** the Act, the petitioner is an establishment wherein 20 or more persons are working. The only question is whether the petitioner being a society registered under the Co-operative Societies Act is entitled to claim exemption as provided u/s. 16(1)(a) of the Act. The exemption is available to such establishment registered under the Co-operative Societies Act or under any other law for the time being in force in any State relating to Co-operative societies employing less than 50 persons and working “without the aid of power”. Question is whether use of electric lights, fans and computers, would amount to an establishment working “with the aid of power”. The very concept of providing an exemption to Co-operative Societies in which less than 50 persons are employed is for the purpose of granting some benefit to such institutions. The authorities have taken a view that using light, fans and also use of computers amounts to the society working with aid of power. The argument of the petitioner is that the society is running an educational establishment and for imparting education no power is being used. The educational purpose is entirely different from other commercial activities that are being carried on by other establishments like industrial units, factories or other agencies which uses electricity for **6** W.P. (C) NO. 27900 OF 2011 running any machines. Lights, fans and computers are all normal equipments which are common equipments for institutions and no office or institution could function without lights or fan and at the present day situation even without computers. That being the situation the contention is that these are all items normally required and in use in all institutions and while interpreting the exemption to certain categories of societies, such interpretation should not amount to denial of exemption. 8. If the exemption clause under Section 16(1)(a) of the Act, is read on the basis of the interpretation given by the authorities I don't think that any Co-operative society in State of Kerala will be in a position to get exemption as provided under the statute. In the case of Mansa Nagrik (supra) though it is found that, a Bank using light, fans and computers is not entitled for exemption, I am not persuaded to take such an approach. 9. The words used in Section 16(1)(a) of the Act as “working without aid of power”, has to be interpreted taking into consideration the scheme of the exemption. Power has to be used in relation to the employment of the persons. In other words the employees should work with the aid of power, or they W.P. (C) NO. 27900 OF 2011 **7** should be part of a process relating manufacturing or running of a mechanical device which indulges in production or generates income to the society. Section 16(1)(a) of the Act has to be given a purposive interpretation. It cannot be interpreted in a manner to deny the benefit of exemption. One cannot visualise a situation of an establishment working without light or sometimes fan. Computers are common day gadgets. Petitioner is running an educational institution and it cannot be said for a moment that the employees are teaching with the aid of power. 10. Therefore while giving a meaningful interpretation to 16(1)(a) of the Act, I am of the view that the impugned orders passed by the appellate authority is illegal. Accordingly Ext. P1, P4 and P7 are liable to be quashed. It is submitted by the learned counsel for the petitioner that after 2007 they are employing more than 50 persons and already covered under the Act and the issue is only regarding the period in which Ext. P1 was issued. The writ petition is allowed and Ext. P1, P4 and P7 orders are quashed. **A.M. SHAFFIQUE JUDGE** **DCS**