Full Judgment Text
1
IN THE HIGH COURT OF JUDICATURE
AT BOMBAY
CIVIL APPELLATE JURISDICTION
CIVIL WRIT PETITION NO. 190 OF 2007
1. KRC Employees Union
a registered Trade Union,
having its registered
Office at V.R.Malgi
st
Foundation Trust, 1 floor,
19, Vacharaj Lane, Matunga,
(C.R.), Mumbai 400 019,
through its President
Subhash Venkatesh Malgi
2. Jayaraman Nair
presently working as
Senior Passenger Assistant,
in the Commercial Department
Konkan Railway Corporation Ltd.
Under CCM, Headquarters,
Belapur CBD,
Navi Mumbai- 400 614. ...Petitioners
Versus
1.Konkan Railway Corporation Ltd.
A registered company
having its Corporate Office
at Belapur Bhavan, Plot No.6
Sector 11, CBD Belapur,
Navi Mumbai 400 614.
2. Regional Provident Fund
Commissioner II, Employees
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Provident Fund Organization
Ministry of Labour, Govt. of
th
India, T.No.6 , 5 floor,
Vashi Station Compled,
Navi Mumbai 400 703. ...Respondents
Mr. Saikumar Ramanathan for Petitioners
Ms. Kiran Bagalia for Respondent No.1
Mr. M.S. Karnik for Respondent No.2
CORAM: SMT.RANJANA DESAI &
SMT.ROSHAN DALVI, JJ.
th
DATED: 17 APRIL, 2008
JUDGMENT (Per Smt. Roshan Dalvi, J.)
1. Rule. Returnable forthwith. The Respondents' affidavits
in reply are filed.
2. The Petitioners are the Trade Union consisting of the
employees of Konkan Railway Corporation Limited (KR). They
have filed this Petition against the KR and Regional
Provident Fund Commissioner II (PFC) under the Employees
Provident Fund and Miscellaneous Provisions Act, 1952
(PFA).
3. The Petitioners have prayed for declaration that the KR
employees and the KR are not covered by PFA and
consequently certain amounts transferred to the PFC under
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the PFA are sought to be declared illegal. The Petitioners
have prayed to get a refund of the amounts so transferred
along with interest at 18% p.a thereon. The Petitioners have
also applied for the writ of mandamus calling upon KR to
maintain the provident fund amounts of its employees in the
Provident Fund Trust managed by KR.
4. Pursuant to an agreement dated 19.06.1990 KR came to
be incorporated. The said agreement has been executed by
and between the Government of India represented by the
President of India, i.e., the Central Government (CG) and the
Governments of the States of Maharashtra, Goa, Karnataka
and Kerala represented by their respective Governments as
State Governments. (S.Gs.).
5. The agreement was for constructing a railway line to
connect Mangalore and Bombay on the West Coast of India
and to operate it. Under Clause 4 of the said agreement it
was incorporated to set up an autonomous organization
under the administrative control of the Manager of the
Railways, a company being Konkan Railway Corporation
Limited to be incorporated.
6. Under Clause 6 (iv) of the said agreement such company
would be deemed to be a Railway Company under the
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Provisions of the Indian Railways Act, 1890 (IRA). It would
be a wholly owned Government Company, owned by the
Central and the aforesaid 4 State Governments as per the
shares specified therein.
7. Under Clause 6(ix) of the said agreement the Board of
Directors of KR would consist of 14 Directors. The
Chairman and the Executive Directors would be appointed
by the CG. The S.Gs would be entitled to nominate alternate
Directors who would be non- executive Directors.
8. Under Clause 6 (XII) the agreement was to be valid for
15 years with such extension as required and thereafter the
properties of the KR would vest in and be transferred to the
CG.
9. Under Clause 6(XIX) the CG was to provide qualified and
experienced manpower to manage the affairs of KR.
10. Under Clause 6 (XX) the KR would be converted into a
statutory authority created by an Act of Parliament.
11. Consequently it is seen that under the aforesaid
agreement dated 19.06.1990 the Company was a wholly
owned Government Undertaking. It was managed by the
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CG. Its properties were to vest and were to be transferred to
the CG in due course of time. It was to be a Railway
Company, as defined in Section 2(31) of the IRA. Under that
definition it would be a railway for the public carriage of the
passengers and goods and hence, covered by the said Act.
12. It has been contended by Ms. Kiran Bagalia on behalf of
KR that the CG was to charge fares as determined by it
under the Railway Act. The claims of KR are decided by
Tribunals constituted under the IRA. It is shown as a Zonal
Railway in the Zonal Railway Code. It is a national priority
project for laying the Coastal railway line as per the demands
of the citizens in the area in which it was to operate. It is a
public utility undertaking established in national interest.
Consequently it was deemed to be a Railway Company under
the IRA as per Clause 6(iv) under the aforesaid agreement.
13. It is the case of the Petitioners as well as KR that the
employees of KR are railway servants as per the definition of
under Section 2(34) of IRA. Under that
“Railway Servant”
Section a person employed by the CG or by a Railway
Administration in connection with the service of a railway is
a railway servant. KR has about 3854 employees. They
render services to Railway, which is for public carriage of
passengers or goods.
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14. The Petitioners and the KR entered into a Memorandum
of Understanding (MOU) on 05.02.2004 under which all the
employees who were on the rolls of KR on 01.06.1998 came
to be entitled to the PF as well as the Pension under the
Contributory Provident Fund Scheme of KR from the date of
their joining service. They also became entitled to the
pension under the Pension Rules of I.R from 01.06.1998.
15. It is contended on behalf of KR and the Petitioners that
the provisions of this scheme for payment of PF, pension as
well as Insurance to the employees of KR are more beneficial
to the employees and hence, that scheme must be allowed to
operate.
16. It is further contended on behalf of Petitioners as well as
KR that in view of the fact that KR is a wholly owned
Government undertaking as a part of the I.R and has got a
scheme for payment of contributory provident fund, pension
as well as insurance to its employees, it is exempt from the
provisions of PFA under Section 16(b) of the PFA. Section 16
(b) runs thus:
16. Act not to apply to certain
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establishments-
(a) .......
(b) to any other establishment belonging to
or under the control of the Central
Government or a State Government and
whose employees are entitled to the benefit
of contributory provident fund or old age
pension in accordance with any scheme or
rule framed by the Central Government or
the State Government governing such
benefits.”
17. Section 16(1)(b) shows non- applicability of PFA to an
establishment belonging to or under the control of the
Central Government or State Government and whose
employees are entitled to the benefit of a contributory
provident fund or old age pension in accordance with the
scheme or rule framed by the Central Government or State
Government governing such benefits. The MOU dated
05.02.2004 is stated to be one such scheme framed by the
KR as a wholly owned government undertaking controlled by
the C.G and having 100% equity participation of only C.G
and the aforesaid S.Gs.
18. This aspect is disputed by PFC, Respondent No.2. It is
argued on behalf of the PFC that the PFA applies to KR as an
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establishment specified in Schedule- I of the PFA.
Consequently under Section 1(3)(a) it would be covered
under PFA. Section 1(3) runs thus:
“ (3) Subject to the provisions contained in
Section 16, it applies -
(a) to every establishment which is a factory
engaged in any industry specified in
Schedule I and in which (twenty) or more
persons are employed and
(b) - - - - - -
Provided that the Central Government may,
after giving not less than two months' notice
of its intention so to do, by notification in
the Official Gazette, apply the provisions of
this Act to any establishment employing
such number of persons less than (twenty) as
may be specified in the notification.”
19. It may be at once stated that KR is not a factory engaged
in any industry. Hence, it cannot be included in Schedule- I.
20. An order came to be passed by the Assistant PFC on
11.10.2004 against KR holding that KR was a building and
construction Industry under Schedule- I of PFA, since it had
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built and constructed the Konkan Railway and was operating
it. The construction of the Konkan Railway line was its
primary activity and hence, the Act would be applicable to it.
21. In an appeal from the said order filed by KR before the
Appellate Tribunal under the PFA the said order came to be
set aside by the order dated 09.03.2005. Upon considering
that KR was under Section 2(31) of the IRA, it
“Railway”
held that the ambit of its activities cannot be brought within
the scope of as
“Building and construction Industry”
mentioned in Schedule- I of PFA. Consequently it was held
that KR would not fall within the ambit of Section 1(3)(b) of
the PFA. This has not been challenged by the PFC.
22. It is contended on behalf of the PFC that by a
notification dated 10.11.2005, Exhibit- E to the Petition, KR
came to be included in the provisions of the PFA. It would
be worth citing the relevant portion of the said Gazette
notification dated 10.11.2005 showing the establishments to
which PFA would apply:
“Any establishment engaged in construction,
maintenance, operation and commercial
activity of Railways other than Indian
Railway and other Railway establishment
owned and controlled by Central or State
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Government.”
23. It is contended on behalf of PFC by Mr. Karnik that KR is
engaged in construction, maintenance, operation and
commercial activities of railways and hence pursuant to the
said notification a PFA would be squarely applicable to KR.
He concedes that I.R is excluded from the said notification.
He however, claims that any other railway establishments
which have been owned and controlled by Central and State
Governments are not excluded from the said notification.
24. A reading of the original notification shows that what is
covered by the notification dated 10/11 / 2005 is any
establishment engaged in construction, maintenance,
operation and commercial activities of railways. The
remainder of the notification shows the exclusion. We may
mention that there is no comma before and after the words
hence it is impossible to
“other than Indian Railways”
accept the contention of Mr. Karnik that only I.R is excluded
from the notification. The exclusion is not only for I.R but
for I.R and other Railway Establishment owned and
controlled by the C.G or S.Gs. The KR is an establishment
owned by the C.G. We have no hesitation in concluding that
the KR is excluded from the said notification. Consequently
KR is not covered under Section 1(3) of the PFA including its
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proviso. Further being an establishment under the control
of the C.G and having its own contributory PF and Pension
Scheme it would be exempt under Section 16(b) of the PFA.
25. Despite the aforesaid order of the Appellate Authority
and presumably upon an erroneous construction of the
above Notification dated 10/11 / 2005 the Assistant PFC by
his Note dated 14.02.2006 sought from KR copies of
approved balance sheets for the last 3 years' projects
undertaken by KR and Memorandum and Articles of
Association of KR. Thereafter by his letter dated 16.03.2006
the Regional PFC directed KR to implement the provisions of
PFA and the schemes framed thereunder.
26. Consequent upon its letter dated 16.03.2006 to cover its
employees under the PF Scheme, KR applied for an
exemption under Section 17 of the PFA. The PFC called
upon it to furnish further details and the documents. Those
have not yet been furnished, the application for exemption
has remained at that.
27. Under pain of penalties under the PFA, which has
several stringent provisions enshrined therein, KR accepted
the provisions of the scheme under the PFA. This was done
without the consent of the Petitioner Union or the individual
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employees of KR. KR transferred certain huge amounts
available under its individual contributory scheme to the
PFC. These are the amounts that the Petitioners seek refund
of. It is for this transfer that the Petitioners seek the
aforesaid declaration followed by the Writ of Mandamus
calling upon KR to maintain its separate provident fund
amounts in the Provident Fund Trust managed by KR and
not under the PFA.
28. It is contended by Mr. Karnik on behalf of the PFC that
once the amount was transferred by KR it shows an implicit
acceptance of KR to the applicability of the Act to it.
Consequently KR would be estopped from contending that
the Act does not apply to it. It need hardly be stated there
can be no estoppel against the Statutes. Nevertheless it is
contended on behalf of the PFC that KR may make
application for exemption of itself from the PFA under
Section 17 of the PFA. The Petitioners as well as KR dispute
this aspect upon the premise that there is no question of
applying for exemption of the Act as the Act is not applicable
to KR.
29. We may mention that KR is indeed a wholly owned
undertaking of the C.G and S.Gs. It is controlled by the CG.
It has been incorporated for being run as a part of the IR. We
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are told that it is soon to amalgamate into the Indian
Railways. It has got its own individual separate contributory
P.F as well as old age pension schemes. It is, therefore,
exempt from the provisions of the PFA under Section 16(1)(b)
thereof.
30. Nevertheless all parties have contended that the interest
of the employees should be the prime consideration for
applying the PFA or the Individual Contributory Schemes of
KR. The Petitioners as well as KR contend that their scheme
is far from beneficial to their employees. The PFC contends
otherwise. It is contended that Sections 6, 6a and 6 a of PFA
apply to KR's employees which confer benefits also under the
Employees Pension Scheme (EPS) framed under PFA. The
parties are not at dispute with regard to the intrinsic
features of the scheme. We have been shown a columnar
statement specifying the relative merits and demerits of the 2
schemes. We may broadly consider the 2 schemes to
understand which would be more beneficial to the employees
of KR.
Sr.No. PFA Scheme KR Scheme
1 Applicable from 16.11.2005 Applicable from the
(Cl.1(2) (a) of the BPS) date the employees
started contributing to
the scheme. (Several
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have contributed since 1998).
2 Scheme is not compulsory All Employees are
for employees earning covered by the
above Rs.6500/- ( this Scheme.
excludes 90% of the
employees of KR including
several Class IV workers)
3 Minimum pension Minimum pension
contributable is Rs.697/- . contributable is
Rs.1913/- + DA @ 41%
4 Maximum pension Maximum pension
contributable is Rs.3250/- . contributable is
Rs.19500/- + DA @
4%.
Maximum Deposit Linked Maximum Deposit
Insurance Scheme (DLIS) Linked Insurance
of Rs.60,000/- . Scheme (DLIS) of
Rs.75,000/- for
employees and
Rs.1,50,000 /- for
Officers.
5 Pension amount is static Pension amount is
revisable as per Pay
Commission benefits +
D.A.
6 33.33% of pension is 40% of pension is
commutable commutable.
7 N.A. Commuted pension is
restored at the end of
15 years.
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8 N.A. D.A. Relief is declared
every 6 months.
9 Minimum amount of Minimum amount of
family pension is Rs.450/- family pension is
Rs.1913/- .
10 Maximum amount of Maximum amount of
family pension is Rs.2051/- family pension is
Rs.11700/- + D.A.
11 N.A. E n ha n c e d family
pension is payable if
pensioner dies within
7 years of entering the
Scheme.
12 Payable only at the age of Payable forthwith in
58 years even if employees case of Voluntary
voluntarily retire years Retirement Scheme
before. (VRS).
13 N.A. P r o f e s s i o n a l
M a n a g e m e n t by
LIC/SBI resulting in
increased yield.
31. We have no hesitation in concluding that the KR Scheme
is distinctly more beneficial to the employees also. We are
gratified to note that KR itself is desirous of its employees
availing of its contributory scheme. That is the scheme
applicable to the employees of the I.R. The employees would
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therefore, have no legal impediment even when KR gets
merged into Indian Railways as contemplated in the
agreement dated 19.06.1990.
32. Hence, the Petitioners have made out a case for grant of
each of the reliefs sought. There shall be a declaration that
the employees of KR and the KR are not governed by the
provisions of the PFA. The transfer of the amounts made by
KR to PFC under PFA has been made under misconception
of law. The amount standing to the credit of the KR with the
PFC shall, therefore, be returned/refunded by the PFC to KR
within 8 weeks from today.
33. If the amount is not refunded within 8 weeks the PFC
shall pay interest at the rate of 18% p.a on the amount
detained by him.
34. The KR shall maintain the provident fund amounts of its
employees in the Provident Fund Trust managed by itself as
per the M.O.U executed by KR with its employees Union on
05.02.2004. The contributory provident fund, pension as
well as insurance scheme of KR shall be made applicable
forthwith.
35. Rule made absolute accordingly.
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(SMT. ROSHAN DALVI, J.) (SMT.RANJANA DESAI, J.)
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