Full Judgment Text
Neutral Citation Number: 2023/DHC/001656
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 12.01.2023
% Judgment delivered on: 03.03.2023
+ LPA 420/2022 & C.M. Nos. 30843-30845/2022 & 1382/2023
PARTHA SARATHI SAHA ..... Appellant
Through: Mr. Abheek Saha, Mr. Siddharth
Mohan & Ms. Aditi Mohan,
Advocates.
versus
ASSISTANT PROVIDENT FUND
COMMISSIONER ..... Respondent
Through: Mr. Satpal Singh, Advocate.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
J U D G M E N T
SATISH CHANDRA SHARMA, C.J.
1. The Employees’ Provident Funds And Miscellaneous Provisions
Act, 1952 (Hereinafter referred as “the EPF Act” or “the Act”) provides for
the institution of certain funds to be maintained through contributions by
employers employing equal to or more than 20 persons in their
establishments. The competent authority under the EPF Act declared the
appellant’s establishment to be an employer under the Act and held it to be
governed by the provisions of the Act. Whether the appellant is governed
L.P.A. NO. 420/2022 Page 1 of 8
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By:BHUPINDER SINGH
ROHELLA
Signing Date:06.03.2023
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Neutral Citation Number: 2023/DHC/001656
by the provisions of the EPF Act, and thus liable to meet certain obligations
meant for employers under the Act, is the sole question that falls for our
consideration.
2. On 01.10.2012, the appellant received a communication whereby his
establishment Shri Krishna Automobiles was brought under the purview of
the EPF Act. Aggrieved thereby, the appellant preferred a review petition
dated 06.11.2012 before the Assistant Provident Fund Commissioner
(Hereinafter referred as “APFC”), Agartala, which came to be dismissed.
Thereafter, on 27.02.2013, the appellant filed an application under Section-
7A of the Act before APFC, Agartala for determining whether his
establishment was covered by the Act or not. The Commissioner conducted
a quasi-judicial enquiry in this regard. Upon culmination thereof, an order
was passed by the Commissioner declaring the establishment to be covered
by the Act. During the course of this proceeding, the appellant submitted
that the establishment was employing 17 employees and 3 security
personnel who were only employed for a temporary period and on need
basis. It was further submitted that the three security personnel were
engaged through a contractor namely New Brave Security Pvt. Ltd. on
outsourcing basis and thus, they cannot be regarded as the employees of his
establishment. The appellant was given opportunity to produce the relevant
records to show the employees engaged by the establishment. The
appellant, before the Commissioner, also took the stand that the wages of
the said security personnel were not being paid from the accounts of the
establishment and thus, they cannot be regarded as the employees of the
establishment. However, the Enforcement Officer furnished the profit and
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By:BHUPINDER SINGH
ROHELLA
Signing Date:06.03.2023
15:41:15
Neutral Citation Number: 2023/DHC/001656
loss account of the establishment along with the balance sheet for the
concerned period of time, which revealed that the wages of the security
personnel were paid from the account of the establishment. On this basis,
the application under Section-7A came to be decided against the appellant
vide order dated 01.07.2013 passed by the APFC, Agartala.
3. The aforesaid order came to be challenged before the Employees
Provident Fund Appellate Tribunal (Hereinafter referred as “the Tribunal”)
which upheld the order passed by the Commissioner and noted that the
appellant employed 20 persons, including the three security personnel.
Challenging the Tribunal’s order, the appellant has approached this Court
by way of a writ petition. Ld. Single Judge traversed through the history of
this case at length and found the impugned orders to be on the right side of
the law. Ld. Single Judge noted that the appellant’s own documents
reflected that the three security personnel were being paid from the account
of establishment and thus, they were employed with the establishment. The
Court further noted that the Tribunal correctly relied upon the definition of
“employee” within the meaning of the Act as it included both direct as well
as indirect employees hired through a contractor. The operative part of the
impugned order reads thus:
“29. On a consideration of the averments made in the petition,
the response of the respondent, written submissions made on
behalf of either side and oral submission addressed on behalf of
either side by their learned counsel, it is apparent that the
impugned order dated 09.05.2017 of the learned Employee
Provident Fund Appellate Tribunal, New Delhi i.e. EPFAT in
ATA No.480(2)/2013 is based on the proceedings before the
APFC, Agartala, Tripura as observed vide order dated
01.07.2013 of the Assistant Provident Fund Commissioner,
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ROHELLA
Signing Date:06.03.2023
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Neutral Citation Number: 2023/DHC/001656
SRO, Agartala which in turn is based on the inquiry conducted
under Section 7A of the „Act‟. The proceedings before the
Enforcement Officer as reflected in the order dated
01.07.2013 of the learned Assistant Provident Fund
Commissioner categorically indicate that the Enforcement
Officer had deposed that in terms of Section 2(f) of the Act
‘employee’ includes both direct employees of the
establishment as well as indirect employees employed through
a contractor in or in connection with the workmen of
establishment and it was apparent that the security personnel
had been engaged from M/s New Brave Security Private
Service and were employed in or in connection with the work
of M/s Shri Krishna Automobiles and that during the
hearings on 12.04.2013, 22.04.2013, 30.04.2013, letter dated
17.04.2012 issued to the Enforcement Officer and prayer
dated 27.02.2013 submitted before the Assistant Provident
Fund Commissioner, the proprietor and the learned
Advocates of M/s Shri Krishna Automobiles had contended
that the security personnel in the instant case are outsourced
from Brave Security Private Service and New Brave Security
Private Service and salaries were not paid to them from the
business of Shri Krishna Automobiles but by the outsourced
agency and that Shri. S.R. De, Enforcement Officer in his
deposition on 22.04.2013 had stated that the security personnel
were being paid by the establishment as per the balance sheet
of the establishment and that in contradiction to the
submissions made by the establishment‟s representatives, an
amount of Rs.64,640/- and Rs.97,239/- had been paid against
security service from the profit & loss accounts as per the
balance sheet ending March 2010-2011 respectively and that
with the date of hearing being 30.04.2013, the petitioner had
strangely submitted that on 29.04.2013, the bills pertaining to
New Brave Security Private Service had been lost making it
obvious that the details of the payment made to the security
personnel were thus available.”
(emphasis supplied)
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By:BHUPINDER SINGH
ROHELLA
Signing Date:06.03.2023
15:41:15
Neutral Citation Number: 2023/DHC/001656
4. Taking exception to the order passed by the Ld. Single Judge, the
appellant contends that the security personnel were employed by the
appellant through an independent contractor i.e. M/s New Brave Security
Private Service. It is further contended that the security personnel were, in
fact, the employees of the contractor and their EPF contribution was also
made by the contractor, their actual employer. It is urged that the appellant
never paid their salaries to them directly and the payments on account of
their salaries were made to the contractor and not to the security personnel.
5. The appeal is contested by the respondent on the principal ground
that the governing law provides for a clear definition of an “employee” and
includes both direct and indirect employees. It is further contended that the
balance sheet and profit and loss account of the relevant period indicates
that the salaries of the security personnel were indeed being disbursed by
the appellant and there is no infirmity in the impugned order.
6. We have heard the parties at length and have perused the record in
detail.
7. The appellant in this case appears to be fighting against an
unambiguous piece of legislation. Section-2 of the Act incorporates the
definition clause and clause (f) defines an “employee” as:
“(f) “employee” means any person who is employed for wages
in any kind of work, manual or otherwise, in or in connection
with the work of an establishment, and who gets his wages
directly or indirectly from the employer, and includes any
person—
(i) employed by or through a contractor in or in connection
with the work of the establishment;…..”
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By:BHUPINDER SINGH
ROHELLA
Signing Date:06.03.2023
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Neutral Citation Number: 2023/DHC/001656
8. The key ingredients for holding any person as an employee in an
establishment are –
a. The person must be employed for wages;
b. The person must be employed in connection with the work of an
establishment;
c. The person must be getting his wages from the employer, directly or
indirectly;
d. Even if the employment is through a contractor, the person would
continue to be an employee if such employment is in connection
with the work of the establishment.
9. The Act also defines the term “employer” as a person who has the
ultimate control over the affairs of the establishment. In this case, the
appellant admittedly had the ultimate control over the establishment in
question and thus, it is not a subject matter of contest in this case. Thus, the
case spins on the definition of the term employee. In this case, the three
security personnel were working and drawing wages from the
establishment. Despite averments that the security personnel were not paid
by the establishment, no material was brought on record at any stage of this
litigation to substantiate this averment. On the contrary, the record brought
by the Enforcement Officer, including the balance sheet and profit/loss
account of the relevant period, nullifies the stand taken by the appellant.
Thus, the personnel were working at the establishment and were being paid
wages from the accounts of the establishment. Mere fact that they were
employed through a contractor would not disturb the employee-employer
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By:BHUPINDER SINGH
ROHELLA
Signing Date:06.03.2023
15:41:15
Neutral Citation Number: 2023/DHC/001656
relationship and this possibility had been foreseen by the legislature. The
submission advanced by the appellant that the security personnel were also
deployed at the private residence of the appellant, would not advance his
case any further. We say so because wages were paid from the accounts of
the establishment and not personally by the appellant. It follows as a
natural corollary that the personnel were employed by the establishment.
The burden to rebut this position fell upon the appellant and he failed to
discharge the same, despite given multiple opportunities to do so.
10. Pertinently, the widely worded definition of “employee” in the Act is
a conscious legislative measure to confront a situation like the one that
arises before us. The EPF Act is a welfare legislation having its roots in the
constitutional idea of social justice and seeks to benefit the unempowered
class of employees in the industry. The definition is carefully crafted to
protect the employees from those employers who camouflage their
relationship with the employees in order to avoid regulatory expenses. It is
for this reason that even indirect employment is covered within the
definition of “employee”, subject to the fulfilment of other conditions
already stated above. To permit an employer to camouflage its relationship
with the employee by contending that the employees were engaged
indirectly through a contractor, as urged in this case, would be an assault
on the fairly unambiguous legislative intent behind the provision.
11. Before parting, we may note that in the course of this hearing, the
appellant had also moved an application for bringing certain additional
documents on record indicating that the appellant has already shut
operations. Without expressing any view on the factual merits of the
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By:BHUPINDER SINGH
ROHELLA
Signing Date:06.03.2023
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Neutral Citation Number: 2023/DHC/001656
application, we proceed to decide the issue at hand for the sake of legal
certainty of rights and liabilities inter-se parties. No separate opinion is
required to be expressed on the merits of the application.
12. In view of the aforesaid discussion, we find no infirmity in the
impugned order and uphold the same. Interim applications, if any, also
stand disposed of.
13. No costs.
(SATISH CHANDRA SHARMA)
CHIEF JUSTICE
(SUBRAMONIUM PRASAD)
JUDGE
MARCH 03, 2023
L.P.A. NO. 420/2022 Page 8 of 8
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:06.03.2023
15:41:15