CONCEPT OF IDENTIFICATION
Under the Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952
S K Gupta , Advocate ,
Supreme Court of India,
Email:skpfdelhi@gmail.com
Identification of members of fund and their entitlement of PF contribution is must while assessing PF Contribution under Section 7A of the The Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952 which is enumerated under the said clearly. In fact , they said The Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952, being a social welfare legislation , unless the fund is transferred in the name of employee, the purpose of the Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952 will not be achieved. Hence, the meaning of identification of member in true sense indicated that
“name of the employee /KYC and his monthly earned basic wages {Section 2(b)} and Provident Fund Contribution { Section 6 } thereon” so his PF & Pension Fund can be transferred ( Form 3A) in the name of employee as per paragraph of Scheme,1952”.
In respect of identification of member of fund, the following are the relevant judgment(s) of the Supreme Court as well as other High Court(s).
SUPREME COURT’S JUDMENT
(i) The latest judgment of the Hon’ble Supreme Court in the matter of Builder Association of India Vs. Union of India and Ors. SLP No. CC No. 8035 of 2016 by which the Hon’ble Supreme Court categorically pronounced that
“Therefore , it is made clear that during the process of inquiry conducted by the respondent-organization , the steps will also be taken to identify the workmen either of the petitioner or engaged through contractors. Needless to say that the organization will ensure that the contribution taken from the petitioner will actually go to the benefit of the employees concerned”.
Besides above, these are few judgments clearly say that the assessment of PF Contribution should be done on identifiable employees only.
(ii) Food Corporation of India Vs RPFC, 1990 (60) FLR 15 (S C 2 J) by which the Hon'ble Supreme Court has, inter-alia decided that
" The question, in our opinions not whether one has failed to produce evidence. The question is whether the commissioner who is statutory authority has exercised powers vested in him to collect the relevant evidence before determining the amount payable under the said Act"………..…… that the commissioner is authorized to enforce attendance in person on oath. He has the power requiring the discovery and production of documents. This power was given to commissioner to decide not abstract questions of law, but only to determine actual concrete difference in payment of contribution and other dues by identifying the workmen ……………………………………………… It would be failure to exercise the jurisdiction particularly when a party to the proceedings requests for summoning evidence from a particular person”
(ii) Himachal Pradesh State Forest Corporation Vs Regional Provident Fund Commissioner, Appeal (civil) 5717 of 2001, 2008 LLR 980, Wherein the Hon’ble Supreme Court held
“5. We have heard the learned counsel for the parties and gone through the record. We do appreciate that the inaction on the part of the Commissioner to initiate proceedings within a reasonable time, has to be deplored. However, as the Corporation has itself submitted that it was covered under the Act and in view of the limited relief granted by the authorities below and by the High Court, we are disinclined to interfere with the matter at this stage. We accordingly dismiss the appeals but reiterate the recommendation that the amounts due from the Corporation will be determined only with respect to those employees who are identifiable and whose entitlement can be proved on the evidence and that in the event the record is not available with the Corporation (at this belated stage), it would not be obliged to explain its loss, or that any adverse inference be drawn on this score. With this very small modification, we dismiss the appeals”.
(iii) Gasket Radiators pvt. Ltd. vs. Employees State Insurance Corporation & Anr., (1985) 2 SCC 68, has held as under:
“6……. These contributions or for example contributions to provident funds or payments of other benefits to workers are not required to be and cannot be labeled as taxes or fees for the sole and simple reason that they are neither taxes nor fees…..”
High Court’s Judgment:
(i) Sandeep Dwellers Pvt. Ltd. Nagpur Vs. Union of India, 2006 III CLR 748 : In para no. 11 the Hon’ble High Court says that …..
“as beneficiaries are unknown and the department itself had doubts, recovery from any earlier date for which no deduction has been made should not be allowed . The law in the point is already discussed above. The beneficiaries must be known and the amount of deduction can not be permitted to lie idle with department.”
(ii) Shrirampur Education Society Vs Regional Provident Fund Commissioner and other , 2014 LLR 792 , the Hon’ble Bombay High Court held as follows in paragraph no.12:
“12. It is concluded by this Court that “Identification of employee is therefore held to be must before effecting such recovery. It is the part of wages earned by such employees which is being deducted by the P.F. department and ultimately it is to be returned back to him. If his identity is not known, the amount cannot definitely be returned to him and as such there is no point in effecting deduction from employer on account of such unknown worker.”
(iii) Assistant Provident Fund Commissioner Vs. M/s Nand Lal and Company 2017 LLR 83 : EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - Section 7A - Assessment of dues - Held, procedure for assessment under section 7A of Act is for assessing dues payable under Act - Which is for benefit of identified individuals - Assessment under section 7A of Act should not be confused with an assessment of tax - These are provident fund which accrue to an individual and not a tax and not an amount payable to Provident Fund Commissioners - Unless nature of employment and names of employees identified with certainty - Assessment cannot be said to be in accordance with law.
(iv) Raj Kumar Gupta Vs. Asstt. Provident Fund Commissioner, Muzaffarpur and Another, 2013 LLR 1254 , EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - Section 7A - Illegal collection - Refund of - Provident Fund Authorities - Cannot collect or compel contributions to be made by an employer or non-identifiable workmen on mere head count - If there are non-existent workmen or beneficiaries in whose name such collections made by P.F. Authorities - It is per se illegal and in clear breach of legislative intent and object - Petitioners can demand refund of such amount.
(v) Gerson Engineering Works Vs. Asstt. Provident Fund Commissioner , Goa ,2018 LLR 185 : Held in para 7 that
“ ……….in my considered view , the order passed by the respondent does not show what is the basic wages considered in respect of an individual employee for ascertaining the provident fund contribution.
(vi) Mantu Biri Factory (P) Ltd. and Anr. v. The Regional Provident Fund Commissioner and Anr. 1994 vol.(2)CHN, p. 75 the Hon'ble Division Bench of this High Court (Calcutta) observed in paragraph 8 of this Judgment inter alia as follows:
"8. In the instant case it appears that the liability was fixed under Section 7A of the said Act only on the basis of the wages paid to some named contractors without any reference to the number of home workers. Provident fund dues had to be kept in the account of individual home workers. Their name and address and/or their identity is required to be known by the provident fund authorities otherwise the person in whose favour the money is kept would not get it back when he was entitled to get it. Such sum could not be kept with reference to the contractors inasmuch as the contractors are not recipient of the benefit under the Act. We are of the view that in the peculiar fact and circumstances of the case the Regional Provident Fund Commissioner shall issue notice to the contractors in question for disclosing the name and address of the home workers in exercise of the power conferred upon the Regional Provident Fund Commissioner under Section 7A(2)(a)(b) unless such power is directed to be exercised, the identity and the particulars of the home workers could not be known and as in our view, no provident fund money could be kept in account of some unknown employees and workers. It must be remembered that this is not a tax or fee payable by the employer to the Provident Fund Commissioner. It is an act for the welfare of the employee and that the provident fund amount paid top the provident fund authorities are meant for the employees and/or workers and unless their identity is found out the purpose of the legislation will be frustrated. Accordingly, the Regional Provident Fund Commissioner is directed to issue summons to all the contractors for the purpose or appearing before such an authority and to disclose the name and address of each and every home workers and on whose account the provident fund dues were realized. The individual contractors against whom such notice is issued should appear and disclose all relevant materials for the purpose of disclosing and finding out the identity of such persons. Furthermore, the Provident Fund Commissioner shall also deploy some of the Inspectors to verify the particulars submitted by such contractors in respect of home workers to find out the genuineness of such particulars furnished to the provident fund authorities. We make it clear that such course of action is necessary for the purpose of doing justice to each and every home workers who are the recipient of the benefit of the provident fund. The Provident Fund Commissioner shall also so that the list furnished are correct and complete and as the home workers are illiterate and poor the Provident Fund Commissioner shall send Inspector to their respective villages or their houses for making some random check. For this purpose we also direct the appellants to compel the contractors to disclose the name and addresses of the home workers for the past periods and also as and when the moneys are paid by the company on account of home workers as their renumeration the contractors should be directed to submit the list of such home workers with their addresses and the appellant petitioners shall then forward a statement before the Regional Provident Fund Commissioner giving the names and addresses of each and every home workers and the amount of Provident Fund realized from their wages and the contribution of the employer for the purpose of record. Furthermore, the home workers should also be informed that the provident fund authorities are realizing and keeping with them provident fund dues of each and every home workers as the home workers are poor and illiterate and are most supposed to know all these matters it must be brought to their notice so that they may approach to the Provident Fund authorities for the purpose of obtaining loan and/or withdrawal of the money lying with the Provident Fund authorities. Accordingly the order of the Regional Provident Fund Commissioner is modified to the extent that the employees' share of contribution which could not be realized by the appellants for the period under reference should not be imposed as a liability of the employer. But the employer would be liable for the employers contribution for the aforesaid period including administration charges. Regional Provident Fund Commissioner shall issue notice to each and every contractor for the purpose of disclosing the names and addresses of each home workers who were paid wages by such contractors. For the purpose of enrolling the names in the provident fund account so that the account in their names be maintained, the appellant is also directed not to make any payment on account of wages to the contractors until and unless such contractors furnish the names and addresses of each and every home workers and the amount of wages paid to such workers in detail. It is made clear that it is the primary duty of the employer to get the name of Home Workers collected and sent to the Provident Fund Deptt. for necessary action. The appellants being the employer shall immediately forward the statement furnished by the contractors giving in detail the names and addresses of such home workers and the amount of wages paid to such home workers for the purpose of verifying the amount of contribution whether paid correctly or not. If the course of action is not laid down by us is not followed in that event there may be scope for manipulation which will frustrate the very purpose of the Provident Fund Act. All arrears shall be paid within 3 months from today to the Provident Fund Authorities.
(vii) Kaushik K. Chatterjee Engineers and Contractors Vs. APFC , Nagpur, WRIT PETITION NO. 1674 OF 2016 : The Bombay High Court has taken a very serious view for huge assessment without identification of the employees.
HENCE, once the principle of law i.e. identification of beneficiaries is settled by the Hon’ble Supreme Court as well as the other High Court(s) , then it has to be followed by the EPFO and their RPFC/APFC while passing the 7A order for assessment of the PF dues . The Hon’ble Supreme Court in the matter of Dwarikesh Sugar Industries Ltd. Vs. Prem Heavy Engineering Works (P) Ltd. and Another , AIR 1997 SC 2477 pronounced in paragraph 32 :
32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate Courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate Courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops.
Union of India and Ors. Versus Kamlakshi Finance Corporation Ltd. Case No.: Special Leave Petn.(Civil) No. 7717 of 1990, 1992 AIR(SCW) 350 : 1992 CrLR 41 : 1991 Legal Eagle 487, Held that
“The position now, therefore, is that, if any order passed by an Assistant Collector or Collector is adverse to the interests of the Revenue, the immediately higher administrative authority has the power to have the matter satisfactorily resolved by taking up the issue to the Appellate Collector or the Appellate Tribunal as the case may be. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under Section 35-E (1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail."
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