2023 LLR 332
KARNATAKA HIGH COURT
Hon'ble Mr. C.M. Poonacha, J.
W.P. No. 6849/2011 (L-PF), Dt/– 21-11-2022
M/s. WeP Peripherals Ltd.
vs.
Regional Provident Fund Commissioner-II
EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 – Section 7A – EPF Authority initiated enquiry – Considered personal pay as part of basic wages – Determined EPF contributions – Directed petitioner to remit the assessed amount – Petitioner challenged order of EPF Authority in appeal which was dismissed – Petitioner filed writ petition against the order of appellate authority – Held, petitioner stand before the EPF Authority is that the assessed amount is without identification of beneficiaries – Personal Pay includes local conveyance, lunch and mobile phone expenses – Assess amount does not indicate the names of beneficiaries – Hence, matter I remanded back to the EPF Authority to decide it in accordance with law – Petitioner is directed to file additional documents, if any, before the EPF Authority for passing a suitable order under section 7A of the Act – Parties are directed to appear before EPF Authority on 08.12.2022 at 3.00 p.m. Paras 6 and 7
For Petitioner: Mr. C.K. Subramanya, Advocate for Mr. B.C. Prabhakar, Advocate.
For Respondent: Mrs. Nandita Haldipur, Advocate.
IMPORTANT POINTS
ORDER
C.M. Poonacha, J.–1. The above Writ Petition is filed seeking the following reliefs:
“(a) call for records leading to the passing of the Order dated 22.12.2010 passed by the EPF Appellate Tribunal, New Delhi in No. ATA No. 530(6) 2008. (Annexure-A)
(b) to quash the Order dated 22.12.2010 passed by the EPF Appellate Tribunal, New Delhi in No. ATA No. 530(6) 2008 (Annexure – N).
(c) grant any other relief(s) as may be deemed fit and proper, in the circumstances of the case; in the interest of justice and equity.”
2. It is the case of the Petitioners that as part of the basic pay being paid by the Petitioner to its employees a portion of the amount was being paid as “Personal Pay” and the said Personal Pay was explained in the appointment letter as “Personal Pay includes your expenses towards local conveyance, lunch and mobile phone expenses”. The Respondent authority initiated an enquiry under section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (‘EPF Act' for short) claiming contribution in respect of the portion of the pay that has been paid by the Petitioner as Personal Pay. The Petitioner furnished its reply dated 28.1.2007 in the said proceedings. The Enforcement Officer has also furnished his response vide letter dated 11.2.2008. Considering the same, the Respondent-Commissioner vide order dated 21.4.2008 has passed the following order:
“The proceedings under section 7A were initiated for assessment of dues. The Enforcement Officer has filed the dues particulars as per the statement furnished by the establishment in respect of the Personal Pay. However, I find that the dues have been calculated on entire Personal Pay. As the statute provides for wage ceiling for Provident Fund contribution, the figure furnished will be on the higher side, if the establishment desires to contribute only upto the ceiling. I, therefore, direct the establishment to work out the dues payable on Personal Pay, if they so desire, restricting it to the wage ceiling of Rs. 6,500/- and remit the same within 15 days of this order.
ORDER
I, K. Narayana, Regional Provident Fund Commissioner-II, Employees' Provident Fund Organization, Bangalore by virtue of the powers conferred on me under section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 hereby hold that the personal pay in the pay structure of M/s. WeP Peripherals Ltd. falls within the definition of Basic Wages and therefore, contribution on Personal Pay shall be paid by the establishment.
I also hereby direct the establishment and its responsible persons to remit the said dues within fifteen days and produce the proof of remittance along with the monthly returns. If they fail, prosecution action as contemplated under section 14/14A of the Act read with para 76 of the Employees' Provident Fund Scheme, 1952 will be initiated against them without further notice and the amount shall be recovered in the manner specified under section 8B to 8G of the EPF and MP Act, 1952.
The amount determined above is exclusive of interest payable under section 7Q and the damages leviable under section 14B of the Employees' Provident Funds and Miscellaneous Provision Act, 1952.
3. Challenging the said order dated 21.4.2008, the Petitioner had filed an appeal before the Employees Provident Fund Appellate Tribunal, New Delhi (‘Appellate Tribunal' for short) in ATA. No. 530/6/2008. The Appellate Tribunal, vide order dated 22.12.2010, dismissed the said appeal. Being aggrieved, the present Writ Petition is filed.
4. It is forthcoming from the order of the Commissioner dated 21.4.2008 that the employees in respect of whom the PF contribution is required to be made has not been identified nor the amount on the basis of which the contribution was required to be made has been determined. In respect of the same, it is relevant to notice the following findings recorded by the Commissioner in paragraph 39, which reads as under:
“The proceedings under section 7A were initiated for assessment of dues. The Enforcement Officer has filed the dues particulars as per the statement furnished by the establishment in respect of the Personal Pay. However, I find that the dues have been calculated on entire Personal Pay. As the statute provides for wage ceiling for Provident Fund contribution, the figure furnished will be on the higher side, if the establishment desires to contribute only upto the ceiling. I, therefore, direct the establishment to work out the dues payable on Personal Pay, if they so desire, restricting it to the wage ceiling of Rs. 6,500/- and remit the same within 15 days of this order.”
5. The Petitioner has filed an Affidavit on 28.10.2022 in the present Writ Petition which, inter alia, states as follows:
“6. The personal pay was one of the salary components paid to the employees from the year 2000 to 31.3.2008. However, from 1.4.2008 the payment of personal pay has been discontinued.
7. I also state that the employees who worked between 2000 and 2008 are not on the rolls of the Petitioner Company now. Therefore, without prejudice to the Petitioner Company, there are no beneficiaries even in the event of holding that personal pay is a part of basic wages as defined under section 2(b) of EPF and MP Act, 1959. .....”
6. In view of the averments made in the Affidavit filed on 28.10.2022 as noticed above and having regard to the observations made in the order dated 21.4.2008, it is just and appropriate that the Writ Petition be allowed and the matter be remanded to the Respondent Commissioner to pass suitable orders under section 7A of the EPF Act by taking into consideration the averments made in the Affidavit filed on 28.10.2008 as well as identifying the employees in respect of whom the PF contribution is required to be deducted as well as the quantum of amount.
7. Although in the final relief claimed in the Writ Petition, the Petitioner has only sought for quashing of the order dated 22.12.2010 passed by the Appellate Tribunal, in the interim relief, the order dated 24.4.2008/19.5.2008 (21.4.2008) (Annexure-F to the Writ Petition) passed by the Respondent authority is sought to be stayed. Further, in the grounds urged, both the order of the Respondent authority as well as the Appellate Tribunal have been sought to be impugned. Hence, in the interest of justice, in order to enable the proceedings initiated by the Respondent Authority against the Petitioner is conducted in accordance with law, it is just and appropriate that the order of the Appellate Tribunal as well as the order of the Respondent authority are set aside so as to enable the remand of the proceedings to the Respondent authority, as noticed above.
8. In view of the aforementioned, I pass the following:
ORDER
(i) The Writ Petition is allowed;
(ii) The order dated 22.12.2010 passed in ATA No. 530(6) 2008 by the Employees Provident Fund Appellate Tribunal, New Delhi as well as the order dated 24.04.2008/19.05.2008 passed in proceedings No. BN/PF/Cir-II/BD-II/KN/25092/08/98/246 by the Respondent-Commissioner are set aside;
(iii) The matter is remanded to the Regional Provident Fund Commissioner-II, Bangalore, to pass suitable orders under section 7A of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, taking into consideration the aspects as mentioned herein;
(iv) It is open to the parties to produce such additional material that may be required for the purpose of completing the proceedings under section 7A of the EPF Act;
(v) The parties shall appear before the Regional Provident Fund Commissioner-II on 8.12.2022 at 3.00 pm., without the requirement of any fresh notice being issued in this regard;
(vi) Upon appearance of the parties, the Commissioner shall proceed with the enquiry as contemplated under section 7A of the EPF Act, taking into consideration the observations made in this order, in accordance with law;
(vii) All contentions of the parties are left open.
No costs.