2023 LLR 351
KARNATAKA HIGH COURT
Hon'ble Mr. Alok Aradhe, J.
Hon'ble Mr. S. Vishwajith Shetty, J.
WA No. 5732/2012 (L-PF), Dt/– 25-1-2023
Central Board of Trustees EPFO
vs.
Svenpa Systems (Stiven Systems) and Ors.
EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 – Section 7A – Applicability of – Basic Wages – Scope of – Establishment engaged contractor for providing faculty members for imparting computer training in Government School – EPF contribution was deducted on consolidated salary of Rs. 1000/- instead of Rs. 2,550/- actually paid EPF Authority conducted enquiry – Determined amount and directed the establishment to remit the same – Establishment challenged order of EPF Authority in writ petition – Writ Court quashed order of EPF Authority remitting the matter back to EPF Authority to conduct a fresh enquiry after affording an opportunity to establishment – Again EPF Authority assessed the EPF dues on consolidated salary – Order of EPF Authority was challenged in appeal – Tribunal held that Rs. 1000/- is basic wages and rest amount is towards House Rent Allowance and Dearness Allowance and other allowances which are not part of basic wages – Order of Tribunal was challenged in writ petition which was dismissed – EPFO challenged order of writ court in writ appeal – Held, basic wages does not include any dearness allowance, house rent allowance, over time allowance or any other similar allowance – Accordingly, EPF contributions is to be deducted only on basic wages of Rs. 1000/- and not on consolidated salary – Hence, appeal fails. Paras 7 to 9
For Petitioner: Mr. Venkataramana K.S., Advocate.
For Respondent No. 1 & 2: Mr. B.C. Prabhakar, Advocate.
For Respondent No. 3 & 4: Mr. B. Rajendra Prasad, HCGP.
IMPORTANT POINTS
JUDGMENT
Alok Aradhe, J.–1. This intra court appeal arises out of order dated 16.07.2012 passed by learned Single Judge by which writ petition preferred by the appellant has been dismissed.
2. Facts giving rise to filing of this appeal briefly stated are that M/s Svenpa Systems is an establishment covered under the provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘the Act' for short). The respondent No. 1, viz. , M/s Svenpa Systems entered into a contract with M/s Aptech, Mumbai for imparting training in computer under Mahiti Sindhu Scheme of Government of Karnataka. Under the contract, respondent No. 1 employed faculty members on consolidated salary of Rs. 2,550/- to impart education in computers in Government school in the State of Karnataka.
3. The M/s Svenpa Systems was deducting the share of provident fund contributions on the consolidated salary of Rs. 1,000/- instead of Rs. 2,550/- which was actually paid to the faculty members. Therefore, a proceeding under section 7 of the Act was initiated against the M/s Svenpa Systems and an enquiry was conducted. M/s Svenpa Systems by an order dated 03.07.2006 passed by Assistant Provident Fund Commissioner was held responsible to pay a sum of Rs. 72,70,262/- for a period of 2001 till 2006.
4. The said order was challenged in a writ petition viz. , W.P. No. 9322/2006 which was disposed of by a learned single Judge of this court by an order dated 17.10.2006. The learned single Judge quashed the order dated 03.07.2006 and remitted the matter to the Assistant Provident Fund Commissioner to conduct a fresh enquiry after affording an opportunity of hearing to M/s Svenpa Systems.
5. The Assistant Provident Fund Commissioner by an order dated 23.01.2007 held M/s Svenpa Systems liable to pay contribution on consolidated salary of Rs. 2,550/- and determined a sum of Rs. 52,35,621/-. Against the aforesaid order, M/s Svenpa Systems preferred an appeal. The appellate tribunal by an order dated 20.08.2009 inter alia held that out of Rs. 2,550/- is consolidated salary. Out of the aforesaid amount, only Rs. 1,000/- is paid as basic wages and remaining amount is paid on account of House Rent Allowance, Dearness Allowance and other allowances. It was further held that aforesaid allowances are not part of basic pay for the purposes of computing provident fund.
6. The order passed by the Employees Provident Fund Appellate Tribunal dated 20.08.2009 was challenged in a writ petition, which has been dismissed by learned Single Judge. In the aforesaid factual background, this appeal has been filed.
7. Learned counsel for the appellant submitted that the order passed by the learned single Judge is cryptic and suffers from the vice of non-application of mind. It is further submitted that learned single Judge erred in upholding the order passed by Employees Provident Fund Appellate Tribunal. On the other hand, learned counsel for the respondent has supported the order passed by learned single Judge.
8. We have considered the submissions made on both sides and have perused the record. Section 2B of the Act defines the expression ‘basic wages', which is extracted below for the facility of reference:
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, 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;
Thus, it is evident that basic wages does not include any dearness allowance, house rent allowance, over time allowance or any other similar allowance.
9. The employer under he Act is under a statutory obligation to deduct specified amount of contribution from the employee's salary and to make matching contribution in terms of section 6 of the Act. In the instant case, Employees Provident Fund Appellate Tribunal on the basis of material available on record has concluded that out of consolidated salary of Rs. 2,550/- only a sum of Rs. 1,000/- was paid as basic wages and remaining amount was paid as house rent allowance, dearness allowance and other allowances. The aforesaid finding has been affirmed by learned single Judge. It is not the case of the appellant that aforesaid finding recorded by the Employees Provident Fund Appellate Tribunal or the learned single Judge is perverse.
10. The matter stands concluded against the appellant by concurrent finding of fact, which do not call for any interference in this intra court appeal.
In the result, the appeal fails and is hereby dismissed.
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