MODERN TRANSPORTATION CONSULTATION SERVICES PVT. LTD. & ANR. versus CENTRAL PROVIDENT FUND COMMISSIONER EMPLOYEES PROVIDENT FUND ORGANISATION & ORS. on 26 March 2019

MODERN TRANSPORTATION CONSULTATION SERVICESPVT. LTD. & ANR.

v.

CENTRAL PROVIDENT FUND COMMISSIONER EMPLOYEESPROVIDENT FUND ORGANISATION & ORS.

(Civil Appeal No. 7698 of 2009)

MARCH 26, 2019

[ABHAY MANOHAR SAPRE ANDDINESH MAHESHWARI, JJ.]

Employees’ Provident Fund and Miscellaneous ProvisionsAct, 1952:

s. 17 (1) – Exemption from Employees’ Provident FundScheme, 1952 – Retired employees of Railways who had withdrawnall superannuation benefits including full amount in their ProvidentFund account – Re-employed on retainer basis with Private LimitedCompany – Whether covered under Provident Fund Scheme or wereto be treated as ‘excluded employees’ in terms of Para 2(f) of theScheme – Held: To be covered under the expression ‘excludedemployee’ by virtue of clause (i) of para 2(f) r/w. clause (a) of para69 (1), the employee must be such who was a member of the fundestablished under the Provident Fund Scheme and had withdrawnfull amount of his accumulations in the said fund on retirement –The employees in question since were not the members of the Fundestablished under the Scheme, they could not have been treated as‘excluded employees’.

Dismissing the appeal, the Court

HELD: 1. The concept underlying the enactment ofEmployees’ Provident Fund and Miscellaneous Provisions Act,1952 had been of providing for compulsory contributory providentfunds for safeguarding the future of industrial workers. Elaborateprovisions have been made in the Act for creation of a Fund, tobe settled in accordance with a Scheme to be framed by the CentralGovernment. However, the Act also provides for continuation ofsuch of the other provident funds, which are offering equal or

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Amore advantageous terms to the employees concerned and areoperating efficiently. [Para 9.1] [75-F-H]

2. There is no definition of an “excluded employee” in theAct of 1952. In fact, this expression comes in operation for thepurpose of exclusion of certain employees from compulsion toBjoin the Fund created under the Scheme of 1952. Therefore, thisexpression is defined only in the Scheme of 1952, in clause (f) ofparagraph 2 thereof. [Para 9.2.1] [79-E-F]

3. Paragraph 26 of the Scheme of 1952 specifies the classesof employees entitled to, and required to, join the Fund as alsoCthe co-related aspects. The expression “Fund”, as occurring inParagraph 26 refers to the Fund created under the Scheme of1952. In the scheme and structure of the Act of 1952, it is butclear that for the specified establishments or class ofestablishments, the Central Government was to frame a Scheme,to be called “the Employees’ Provident Fund Scheme”; and soonDafter framing of such Scheme, a Fund was to be established, whichwas to vest in, and administered by, the Board constituted underSection 5A. The expression “Fund” is defined in the Act of 1952to mean the provident fund established under a Scheme; and theexpression “Scheme” is defined to mean the EmployeesEProvident Fund Scheme framed under Section 5. Indisputably,the Scheme of 1952 is the one framed by the Central Governmentin exercise of the powers conferred by Section 5. [Paras 9.2.2and 11] [80-D; 85-C-E]

4. By virtue of sub-section (1) of Section 17, anFestablishment could be exempted from the operation of all orany of the provisions of any Scheme if: (a) in regard to theestablishment to which the Act applies, the appropriateGovernment is of opinion that the rules of its provident fund,with respect to the rates of contributions, are not less favourablefor the employees than those specified in Section 6 and theGemployees are in enjoyment of other provident fund benefitswhich, on the whole, are not less favourable than the benefitsavailable under the Act or under the Scheme in relation to anyother establishment of similar character; and (b) in regard to anyother establishment, the appropriate Government is of opinion H

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that benefits in the nature of provident fund, pension or gratuity,as available to the employees of such establishment are, on thewhole, not less favourable than the benefits provided under theAct or any Scheme in any other establishment of similar character.[Para 12] [85-F-H; 86-A]

5. When an exemption is granted to an establishment underclause (a) of sub-section (1) of Section 17 of the Act of 1952,several duties are cast upon the employer as specified in sub-section (1-A) thereof, with penal provisions in the event of default.The employees are expected to be covered by the Scheme framedunder Section 5 of the Act of 1952 with the exception being thatin case of availability of equivalent or more favourable benefits inan establishment, the appropriate Government could grantexemption. As per sub-section (2) of Section 17, even the Schememay make a provision for exemption but the basic requirementbeing again that the persons or the class of persons to beexempted are entitled to such benefits which are, on the whole,not less favourable than the benefits provided under the Act andthe Scheme thereunder i.e., the Scheme of 1952. All therequirements of Section 17 make the position undoubtedly clearthat the provisions are intended to ensure optimum benefits forthe employees and even the exemption is granted only on thesatisfaction of appropriate Government about existence ofequivalent or more favourable provident fund Scheme for theemployees concerned. [Para 12.1] [86-B-E]

6. The provisions of the Scheme are generally madeapplicable, subject to the provisions of Sections 16 and 17 of theAct, to all the factories and other establishments to which theAct applies or is applied under sub-sections (3) and (4) of Section1 or under Section 3 of the Act. The provisions of the Scheme of1952 have been extended to various establishments from timeto time under clause (b) of sub-paragraph (3) of Paragraph 1thereof. As per Paragraph 26 of the Scheme of 1952, everyemployee employed in or in connection with the work of thefactory or other establishment to which this Scheme applies, isentitled to, and is obliged to, become a member of the Fund fromthe date the Scheme would come into force for such factory or A

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Aestablishment, except the “excluded employees”. Significantly,even an “excluded employee”, on ceasing to be so i.e., on ceasingto be an “excluded employee”, is entitled to, and is required to,become a member of the Fund from the date of such cessation.[Para 13] [86-F; 87-A-C]

B7. In the framework of the Scheme of 1952, exclusion isprovided under clause (i) of Paragraph 2(f) thereof to an employeewho had been a member of the Fund and had withdrawn full amountof his accumulations in the Fund under clause (a) or (c) ofParagraph 69(1). Clause (a) of the Paragraph 69(1) of the Schemeof 1952 refers to a member who would withdraw the full amountCstanding to his credit in the Fund on retirement from serviceafter attaining the age of 55 years. A comprehensive look atvarious clauses of paragraph 69(1) makes it clear that referencetherein is to a member of the Fund who withdraws full amountstanding to his credit for different eventualities like regular Dretirement; retirement for disablement or incapacity; migrationfrom the country; termination of service; accepting a voluntaryretirement scheme; closure of the factory; transfer from a coveredfactory or establishment to another factory or establishment notcovered under the Act etc. [Para 13.1] [87-C-D, E-F]

E8. In the setup and structure of the Act of 1952, specificdistinction is maintained between the Fund, which is created bythe Central Government under Section 5(1) of the Act and anyother provident fund, which is created by an employer.Significantly, clause (f) of Paragraph 2 of the Scheme of 1952 refersto “the Fund” and not to “any Fund”; and Paragraphs 26 and 69Falso refer to “the Fund” and not to “any Fund”. The determiner“the”, as occurring in Paragraph 2(f) as also Paragraph 69 beforethe expression “Fund” makes it clear that the reference thereinis only to the Fund which is created under the Scheme of 1952and it is not a general reference to any Fund. The requirement ofGjoining the Fund under Paragraph 26 is also of joining that Fundwhich is created under the Scheme of 1952. In other words,obviously and undoubtedly, the Fund referred to in Paragraphs2(f), 26 and 69 of the Scheme of 1952 is that Fund, which is createdunder the Scheme of 1952 and the reference is not to any other H

Fund. Thus, to be covered under the expression “excludedemployee” by virtue of clause (i) of paragraph 2(f) read with clause(a) of paragraph 69(1), the employee must be such who was amember of the Fund established under the Scheme of 1952 andwho had withdrawn full amount of his accumulations in the saidFund on retirement from service after attaining the age of 55years. [Para 14.1] [88-B-E]

9. Therefore, the retired Railway employees, who hadwithdrawn their accumulations in General Provident Fund or anyother Fund of which they were members, could not have beentreated as “excluded employees” for the purpose of the Schemeof 1952 for the reason that such a withdrawal had not been fromthe Fund established under the Scheme of 1952. In fact, therewas no occasion for them to make any withdrawal from the Fundestablished under the Scheme of 1952 because they were neverthe members of the said Fund. In other words, the employees inquestion were not answering to the requirements of clause (i) ofparagraph 2(f) read with clause (a) of paragraph 69(1) of theScheme of 1952 and hence, were not the “excluded employees”.[Para 14.2] [88-F-H; 89-A]

10. The provisions of the Act and the stipulations of theScheme of 1952 are mandatory in character and the applicationthereof could not have been averted by the appellants or the saidemployees except on certain eventualities as mentioned inSection 17 of the Act as also Paragraph 26 of the Scheme of 1952.Such eventualities are indeed non-existent in the present matter.So far the aspect relating to age is concerned, the operation andeffect of the Act and the Scheme of 1952 are not restricted withreference to any age limit of the employee. Such a suggestionrelating to the age of the employees had been entirely baselessand has rightly been disapproved. [Para 15] [89-C-D]

11. So far as the plea of the appellants that they had appliedfor exemption and no decision was taken on their representationis concerned, it is noticed that the appellant had not made anysuch submission that they had any better and beneficial schemefor their employees. In any case, there is no concept of anyholidaying in payment of contribution by the employer by merely A

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Amoving an application for exemption; and when there was no orderof exemption under Section 17 by the competent authority, theappellant-company was under the liability to make payment of itscontribution. [Para 15.1] [89-E-F]

12. The observations by the Single Judge of High CourtBthat clause (i) of Paragraph 2(f) of the Scheme of 1952 has to beapplied in relation to the withdrawal from any Provident Fundand else, an employee may keep on successively deriving benefits,remain rather unwarranted because the principle underlying theenactment and the Scheme of 1952 is to provide financial securityto the employees. The concept of exclusion from the Scheme ofC1952 is limited to the class/es of employees mentioned inParagraph 2(f) only; and the area of operation of this exclusionclause cannot be expanded by way of an assumption about thealleged extra advantage likely to be driven home by an employee.In fact, even the assumption of the Single Judge does not appear Dapt in the framework of the Act and the Scheme of 1952. Whateveran employee gets by virtue of the Act of 1952 is basically theaccumulation in his provident fund account, where he and hisemployer do contribute. The order passed by the Single Judge,being based on entirely irrelevant considerations, has rightly beendisapproved by the Division Bench of High Court. [Para 16]E[89-G-H; 90-A-D]

13. The framework and setup of the Scheme of 1952, theconcept remains plain and clear that if a person is member of theFund created thereunder i.e., under the Scheme of 1952 andwithdraws all his accumulations therein, he may not be obliged toFbe a member of the same Fund under the Scheme of 1952 overagain and could be treated as an “excluded employees”. However,such is not the relaxation granted in relation to an employee whowas earlier a member of any other Fund but later on joins such anestablishment where he would be entitled to membership of theGFund created under the Scheme of 1952. This framework of theprovisions and stipulations appears to be best serving the interestof employees, while providing them with continued financialsecurity. [Para 17] [90-E-G]

MODERN TRANSPORTATION CONSULTATION SERVICES PVT.LTD. v. C.P.F. COMMNR. E.P.F.O.

N.K. Jain and Ors. v. C.K. Shah and Ors.(1991) 2 SCC495 : [1991] 1 SCR 938 – referred to.

Case Law Reference

[1991] 1 SCR 938 referred toPara 10

CIVIL APPELLATE JURISDICTION: Civil Appeal No.7698 of2009.

From the impugned Order dated 07.05.2008 of the High Court atCalcutta in FMA No.537 of 2007.

Abani Kumar Sahu, Ghanshyam, P. K. Manohar, Advs. for theAppellants.

Ms. Vibha Dutta Makhija, Sr. Adv., Amit Sharma, B.K. Satija,Raj Bahadur Yadav, Arun Yadav (for Mrs. Anil Katiyar), Vishnu Sharma,Ms.Anupama Sharma, Ms. Rangoli Seth, Varun Agarwal, ChandraPrakash, Advs. for the Respondents.

The Judgment of the Court was delivered by DINESH MAHESHWARI, J. 1.In this appeal by special leave,the appellants (writ petitioners) have called in question the judgment andorder dated 07.05.2008 in FMA No. 537 of 2007 whereby, the DivisionBench of High Court at Calcutta has reversed the order dated 07.04.2006,as passed by the learned Single Judge in W.P. No. 2982(W) of 2005.

1.1. By the aforesaid order dated 07.04.2006, the learned SingleJudge of High Court allowed the writ petition filed by the appellantswhile upholding their contentions that the employees of Railways, whohad withdrawn full amount of provident fund while retiring and whowere engaged by them on lump sum honorarium basis, should be treatedas “excluded employees” for the purpose of the Employees’ ProvidentFunds and Miscellaneous Provisions Act, 1952 (hereinafter referred toas ‘the Act’/’the Act of 1952') and the Employees’ Provident FundsScheme, 1952 (hereinafter referred to as ‘the Scheme of 1952’).However, in the Letters Patent appeal preferred by the Central ProvidentFund Commissioner and the Regional Provident Fund Commissioner,the Division Bench of High Court totally disagreed with the learnedSingle Judge; and dismissed the writ petition while holding that the saidemployees, who retired after serving an exempted employer, would not A

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Afall within the category of excluded employees on re-employment andwould be covered by the Act and the Scheme of 1952.

2. The basic question arising for determination in this appeal is asto whether the retired employees of Railways, who had withdrawn allthe superannuation benefits, including full amount of accumulations inBtheir provident fund accounts, are to be treated as “excluded employees”in terms of Paragraph 2(f) of the Scheme of 1952? If to be treated as“excluded employees”, the said retired employees of Railways, on beingre-employed by the appellants, may not be required to join the Fundcreated under the said Scheme of 1952 and consequently, the appellantsmay not be obliged to make any contribution in that regard.

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3. The relevant factual aspects leading to the question aforesaidare not of much controversy and could be briefly summarised as follows:

3.1. The appellant No. 1, a Private Limited Company, had beenengaged in manning the Captive Railway System of the respondent No.D4-Damodar Valley Corporation (‘DVC’). The appellant No. 2 is said tobe a Director of the appellant No. 1-company. The appellants wouldsubmit that their only connection with DVC had been a contract to supplythe personnel for manning the cabins and gates on the railway-road; andthey were receiving the remuneration for supplying the aforesaidpersonnel, who were retired employees of the Indian Railways and wereEengaged on a lump sum honorarium basis.

3.2. By his letter dated 18.02.2002, the Assistant Provident FundCommissioner Circle-IV, Calcutta informed the appellant-company thatthe number of employees of its establishment being twenty-eight in themonth of May, 1999, the establishment came within the purview of theFAct of 1952 with effect from 01.05.1999. In reply, the Director of theappellant-company stated in his letter dated 05.03.2002 that all the personsengaged by the company, except two of them, were the retired Railwayemployees above 58 years of age; that all of them were working only onretainer basis; and that they were not covered under the Employees’Provident Fund Scheme. The said Assistant Provident FundGCommissioner, in his letter dated 03.05.2002, refuted the contentions ofthe appellants while referring to Paragraph 26 of the Scheme of 1952and while asserting, inter alia, that on and from 01.11.1990, an employeeis eligible for enrolment as a member of the Scheme of 1952 from thedate of joining an establishment covered under the Act of 1952; that H

there was no age bar for an employee to become a member of theScheme of 1952; and that the employees in question were not excludedemployees in terms of the Scheme of 1952.

3.3. It appears that the appellant-company applied for exemptionunder Section 17 of the Act and Paragraph 27 of the Scheme of 1952 onthe ground that the persons concerned were retired Railway employeesbut then, no decision was taken on such representations. On the otherhand, by yet another letter dated 22.05.2002, the appellant-companyelaborated on its contentions that the employees in question, being retiredemployees of Railways, did not come within the purview of the Act of1952 and were to be treated as “excluded employees” under Paragraph26 of the Scheme of 1952. It was stated that these employees, whilst inthe service of Railways, were not covered under the Scheme of 1952but were covered under the General Provident Fund (‘GPF’) Schemeand had withdrawn all the superannuation benefits including ProvidentFund (‘PF’) and pension and hence, they were not covered under theAct of 1952. It was also claimed that these employees were in receiptof more favourable benefits than those available under the Scheme of1952 and had expressed their unwillingness to become the members ofthe Scheme of 1952. However, the authorities related with the Employees’Provident Fund Organisation (the contesting respondents herein)maintained that the employees of an establishment were eligible forenrolment as members of the Scheme of 1952 irrespective of age; andthe employees of the appellant company were not “excluded employees”,as defined in the Scheme of 1952.

3.4. The appellant-company having failed to remit the requisitecontribution in relation to the employees concerned, the competentauthority under the Act of 1952 commenced proceedings under Section7A thereof, for determination of the money due from the appellants. Byits order dated 31.12.2004, the competent authority, after having heardthe appellants, determined the amount payable by the appellant-companyunder various heads while holding, inter alia, that the provisions of theAct of 1952 were not repugnant to the GPF Scheme; that a person wasentitled to draw double or multiple pension/s; and that the retirement ofthe employees from Railways would not take them within the definitionof “excluded employees”. Aggrieved, the appellants preferred the writpetition before the High Court at Calcutta [W.P. No. 2982(W)of 2005].

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A4. In the impugned order dated 07.04.2006, the learned SingleJudge of High Court, though held that the Act was applicable to theestablishment of appellants but, thereafter, concluded that onsuperannuation, the retired employees of the Railways would fall withinthe definition of “excluded employees”. The learned Single Judgeobserved that an employee, who had withdrawn full amount of hisBaccumulation in the fund, on re-employment with any establishment notexempted under Section 17 of the Act, would not be again treated as anemployee to be covered under the Act. The learned Single Judge furtherobserved that accepting the submissions of the authorities would createa situation where an employee, after being employed in any establishmentCand working for some time, may voluntarily retire from service and joinanother establishment and keep on doing so successively and get thebenefit of various provisions of the Act of 1952. According to the learnedSingle Judge, even though the Act of 1952 is a piece of social benefitlegislation, and its provisions are intended to protect the employees, whoare considered to be the weaker section of society, yet, the enactment isDnot intended to create a largesse in favour of the employees at the costof the employer. In the opinion of learned Single Judge, the retiredemployees of Railways cannot be compelled to become members of theFund and else, the object and purpose of the expression “excludedemployees” in the Scheme of 1952 would be rendered nugatory. TheElearned Single Judge also observed that when an employee earning morethan Rs. 6,500/- was treated as an “excluded employee” because of thescale of pay as per Paragraph 2(f)(ii) of the Scheme of 1952, there wasno reason as to why Paragraph 2(f)(i) would not apply in case of anemployee who had withdrawn the full amount of his accumulations. Thelearned Single Judge further observed that in order to decide as toFwhether the provisions of the Act do not apply in respect of some of theemployees, the provisions contained in Paragraph 2(f) of the Scheme of1952 must be strictly construed; and having taken the benefit of oneScheme, the employees cannot compel the employer to comply with theprovisions of the Act. With these observations, the learned Single JudgeGallowed the writ petition and remanded the matter to the authorities forre-determination of the amount of provident fund payable by the appellants,after treating the retired employees as “excluded employees”, but aftertaking into account those employees who were seeking to be includedunder the Act voluntarily.

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5. Aggrieved by the order so passed by the learned Single Judge,the Central Provident Fund Commissioner and the Regional ProvidentFund Commissioner preferred the Letters Patent appeal that has beenconsidered and allowed by the Division Bench of High Court at Calcuttaby way of the impugned judgment and order dated 07.05.2008.

5.1. The Division Bench took note of the meaning assigned to theexpressions “Fund” and “Scheme” in the Act of 1952 as also the definitionof “excluded employee” in Paragraph 2(f) of the Scheme of 1952 andrejected the contentions of the writ petitioners that the employees inquestion were to be treated as excluded employees while observing asunder:

“We are unable to accept the submission of Mr. Senguptathat the receipt of GPF and the Pension by the retired railwayemployees would be as if full payment has been received underparagraph 69(1). There can be no addition to the term “Fund”as defined under Section 2(h). It is also not possible to acceptthat since the Railway Employees have retired onsuperannuation and are beyond the age of 55 years, theywould be on par with the “excluded employees”. There is nomaximum age limit prescribed in any of the provisions of theAct or the 1952 Scheme for an employee to become a memberof the Fund or the Scheme. It is claimed that the term “Scheme”refers only to the Employees Provident Fund Scheme framedunder Section 5. The term “excluded employee” therefore hasto be co-related to the employee who was a member of the“fund” as defined under Section 2(h) of the Act. Such anemployee would be an “excluded employee” when the fullamount has been withdrawn by him on retirement from serviceafter attaining the age of 55 years i.e., in terms of Paragraph69(1)(a). The provision being crystal clear does not admit ofany other interpretation. Paragraph 69(1)(c) deals with anemployee who withdraws the full amount standing to his creditimmediately after migration from India for permanentsettlement abroad and for taking employment abroad.

In our opinion, there can be no dissections of these provisionsas proposed by Mr. Sengupta. Under paragraph 2(f)(i) aretired employee would be an excluded employee. UnderParagraph 2(f)(ii) an employee who is otherwise entitled to A

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become a Member of the fund becomes an excluded employeeas he is earning beyond the stipulated minimum that is requiredfor an employee to become a Member of the Scheme. Thisprovision clearly demonstrates the underlying principle ofthe Provident Fund Act is to provide social security for thoseemployees who otherwise would not be in a position to saveany money from their wages. Paragraph 2(f)(iv) againprovides that an apprentice shall be an excluded employeetill he becomes a fullfledged employee. There is a qualitativedifference between Paragraph 2(f)(i) on the one hand andParagraph 2(f)(ii) & (iv) on the other. Paragraph 2(f) 1(i)provides exclusion only to the employees who have alreadyreceived retirement benefits. On the other hand, under Clause2(f)(ii) and 2(f)(iv) an employee may be an excluded employeeat one point and may not be at a subsequent point. But benefitof these provisions cannot be extended to any employees whoare not erstwhile members of a fund administered by theCentral Board, under Section 5A of the Act

The ‘Fund’ created by the exempted establishment underSection 17(1)(a) cannot be equated with the Fund which isestablished by the Central Board under Section 5(1). Nor canit be added to the definition of Fund under Section 2(h) ofthe Act. It is for this reason that the appropriate Governmentcan only exempt an establishment from the operation of thescheme under Section 17(1) upon forming an opinion thatthe employees of such an establishment enjoyed benefits whichare not less favourable to the employee than the benefitsavailable under the Act or any Scheme made under the Act.In fact, the exemption can only be granted on consultationwith the Central Board. This provision is made only to givesupervisory control to the Appropriate Government overindividual employers seeking exemption. But this provisioncannot be put on the same pedestal as Section 5(1) of the Act.It is admitted position that employees of the Railways are notmembers of the 1952 Scheme. Therefore, these retiredemployees cannot be treated as excluded employees coveredunder Paragraphs 69(1)(a) and 26 of the 1952 Scheme. Thereis a clear distinction between a fund which is created by the Central Government and is administered by the Central Boardunder Section 5(1)(a) and a fund created by a privateemployer, exempted under Section 17(1) and administered byBoard of Trustees under Section 17(1A) and (b). There canbe no intermingling of the two provisions. “

5.2. In view of the above, the Division Bench concluded on thematter in the following:

“In view of the above, we find that the judgment of thelearned Single Judge is not sustainable in law. We are unableto hold that retired employees of the Railways can be treatedas excluded employees. We are also unable to hold that, notincluding the retired employees in the category of excludedemployees would in any manner contravene the provisions ofthe Act or the Scheme. We are unable to accept that bringingthe Railway employees within the purview of the Act and theScheme would result in unjust enrichment of the retiredemployees. We are of the opinion that an employee who retiresafter serving an exempted employer would not fall within thecategory of excluded employees on re-employment and wouldbe covered by the Act and the 1952 Scheme. We are alsounable to accept that since the employees covered underParagraph 2(f)(i) and (ii) are excluded employees, allemployees who had drawn the full amount from any otherProvident Fund should also be treated as excluded employees.

In view of the above, we allow this appeal and set aside theorder passed by the learned Single Judge.

Consequently, the writ petition being W.P. No. 2982(W) of2005 shall be dismissed.”

6. Assailing the judgment aforesaid, learned counsel for theappellant has strenuously argued that the Division Bench of High Courthas erred in interpreting the term “excluded employee” and in holdingthat the retired employees of the Railways, even when they hadwithdrawn the full amount from their provident fund, cannot be treatedas excluded employees. The learned counsel emphasised on thesubmissions that the retired Railway employees, who were covered underGPF Scheme while in service, who had drawn all the superannuation A

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Abenefits including the PF, and who were also receiving pension underthe CPG rules, would fall within the definition of “excluded employees”as contained in clause (i) of Paragraph 2(f) of the Scheme of 1952.Learned counsel submitted that as per Paragraph 26 thereof, the Schemeof 1952 shall apply to all the employees other than excluded employees;and, as per Paragraph 2(f)(i), an excluded employee is the one who,Bhaving been a member of a provident fund, had withdrawn the full amountof his accumulations in the fund under clause (a) or (c) of sub-paragraph(1) of Paragraph 69. Therefore, according to the learned counsel, theemployees concerned in the present case ought to be treated as “excludedemployees”, for having withdrawn their PF accumulated with the IndianCRailways after having reached the age of superannuation. Further,according to the learned counsel, if these employees are not treated as“excluded employees”, it would amount to their unjust enrichment, whichhas never been the intention of the Act of 1952 or the Scheme thereunder.The learned counsel contended that the Division Bench of High Courthas erred in holding that Paragraph 69 of the said Scheme does notDapply to the case of retired Railway employees and such retiredemployees, though not covered under the Act, came to be so covered ontheir re-employment in an establishment covered under the said Act.According to the learned counsel, the Division Bench has erred ininterpreting the definitions of ‘Fund’ and ‘Scheme’ and in restricting theEdefinition of ‘Fund’ under Section 2(h) of the Act by holding that evenafter retiring from the Railways and receiving the benefits under GPFScheme, the said employees are not “excluded employees” as the saidemployer is not covered under the Scheme of 1952.

7. Per contra, learned counsel for the contesting respondentsFhas referred to the object as also the arrangement of the Act of 1952and has particularly submitted that two different sets of provident fundSchemes are envisioned: on one hand is the Scheme contemplated bySection 5 of the Act, the Scheme of 1952 being that Scheme; and on theother hand, there could be other Scheme/s, as permissible under Section17 of the Act of 1952. According to the learned counsel, coverage of theGemployees referable to the Act of 1952 by one of the Schemes of provident 1The Act was originally enacted on 04.03.1952 as “The Employees’ Provident FundsAct, 1952" (No. 19 of 1952); its nomenclature was changed to “The Employees’Provident Funds and Family Pension Fund Act, 1952" w.e.f. 23.04.1971; and itsnomenclature was again changed to the present one i.e., “The Employees’ ProvidentHFunds and Miscellaneous Provisions Act, 1952" w.e.f. 01.08.1976

fund is the rule and generally, such employees would be covered by theScheme of 1952 with the exception that such coverage may not benecessary when the employees receive the benefits under some otherScheme, which are not less than those available under the Scheme of1952. Learned counsel for the respondent submitted that in the frameworkof the Scheme of 1952, only some specific classes of employees aretreated as “excluded employees”, as defined in Paragraph 2(f) thereof;and, as per clause (i) of Paragraph 2(f), only such an employee wouldbe excluded who was earlier the member of the Fund under the Schemeof 1952 and had withdrawn all the benefits thereunder. According to thelearned counsel, the present appeal is devoid of merits for the reasonthat the Railway employees, who were not covered under the Schemeof 1952, do not fall within the definition of “excluded employees” as perParagraph 2(f) of the Scheme of 1952, even if they had withdrawn theamount standing to their credit in any provident fund created under anyother Scheme.

8. We have bestowed thoughtful consideration to the rivalsubmissions and have examined the record of the case with referenceto the law applicable.

9. For determination of the question involved in this matter,appropriate it would be to briefly take note of the objects and reasonsbehind the Act of 1952 as also the relevant provisions thereof and therelevant stipulations in the Scheme framed thereunder i.e., the Schemeof 1952.

9.1. The background aspects had been that, taking note of theneed to provide for the institution of contributory provident funds for thepurpose of financial security of industrial workers, the Government ofIndia promulgated the Employees’ Provident Fund Ordinance with effectfrom 15.11.1951, which was later on replaced by the Act of 1952[1]. Thus,the concept underlying the enactment had been of providing forcompulsory contributory provident funds for safeguarding the future ofindustrial workers. Elaborate provisions have been made in the Act forcreation of a Fund, to be settled in accordance with a Scheme to beframed by the Central Government. However, the Act also provides forcontinuation of such of the other provident funds, which are offeringequal or more advantageous terms to the employees concerned and areoperating efficiently.

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A9.1.1. In the Act of 1952, the expression “employee” is defined inclause (f) of Section 2 as under:

“(f) “employee” means any person who is employed for wagesin any kind of work, manual or otherwise, in or in connectionwith the work of an establishment, and who gets, his wagesBdirectly or indirectly from the employer, and includes anyperson,-

(i) employed by or through a contractor in or in connectionwith the work of the establishment;

(ii) engaged as an apprentice, not being an apprenticeCengaged under the Apprentices Act, 1961 (52 of 1961), orunder the standing orders of the establishment;”

9.1.2. The concepts of “exempted employee” and “exemptedestablishment” are defined in clauses (ff) and (fff) of Section 2 of theAct of 1952 as under:D

“(ff) “exempted employee” means an employee to whom aScheme or the Insurance Scheme, as the case may be, would,but for the exemption granted under section 17, have applied; (fff) “exempted establishment” means an establishment inrespect of which an exemption has been granted under sectionE17 from the operation of all or any of the provisions of anyScheme or the Insurance Scheme, as the case may be, whethersuch exemption has been granted to the establishment as suchor to any person or class of persons employed therein;”

9.1.3. The expression “Fund” is defined in clause (h) of SectionF2 of the Act of 1952 as under:

“(h)“Fund” means the provident fund established under a Scheme;”

9.1.4. The expression “Scheme” means the one framed underGSection 5 of the Act of 1952 and is defined in clause (l) of Section 2 asunder:

“(l) “Scheme” means the Employees Provident Fund Schemeframed under section 5;”

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9.1.5. Section 5 of the Act of 1952, providing for the Employees’Provident Fund Scheme, reads as under[2]:

“5. Employees’ Provident Funds Scheme. – (1) The CentralGovernment may, by notification in the Official Gazette, framea scheme to be called the Employees’ Provident Fund Schemefor the establishment of provident funds under this Act foremployees or for any class of employees and specify theestablishments or class of establishments to which the saidScheme shall apply and there shall be established, as soon asmay be after the framing of the Scheme, a Fund in accordancewith the provisions of this Act and the Scheme.

(1A) The Fund shall vest in, and be administered by, the CentralBoard constituted under section 5A.

(1B) Subject to the provisions of this Act, a Scheme framedunder sub-section 1 may provide for all or any of the mattersspecified in Schedule II.

(2) A Scheme framed under sub-section 1 may provide thatany of its provisions shall take effect either prospectively orretrospectively on such date as may be specified in this behalfin the Scheme.”

9.1.6. For the purpose of the question at hand, sub-section (1)and sub-section (1-A) of Section 17 of the Act of 1952, relating to thepowers of the appropriate Government to grant exemption and theconsequence thereof, could also be taken note of as under:

“17. Power to exempt - (1) The appropriate Government may,by notification in the Official Gazette, and subject to suchconditions as may be specified in the notification, exempt,whether prospectively or retrospectively, from the operation of all or any of the provisions of any Scheme –

2The original Section 5 has undergone several changes by way of amendments. Therelevant amendments to be noticed for the present purpose are that by Act No. 37 of1953, original Section 5 was re-numbered as sub-section (1), the expressions forestablishment of Fund soon after framing of Scheme were added, and sub-section (2)was also inserted. Moreover, by Act No. 28 of 1963, Sub-section (1A) to Section 5(providing for vesting and administration of Fund in and by the Central Board) wasinserted. The provisions relating to Central and State Boards and co-related aspectswere also inserted as Sections 5A to 5E by the said Act No. 28 of 1963, which need notbe dilated upon, for being not relevant for present purpose A

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(a) any establishment to which this Act applies if, in the opinionof the appropriate Government, the rules of its provident fundwith respect to the rates of contribution are not less favourablethan those specified in section 6 and the employees are alsoin enjoyment of other provident fund benefits which on thewhole are not less favourable to the employees than thebenefits provided under this Act or any Scheme in relation tothe employees in any other establishment of a similar character;or (b) any establishment if the employees of such establishmentare in enjoyment of benefits in the nature of provident fund,pension or gratuity and the appropriate Government is ofopinion that such benefits, separately or jointly, are on thewhole not less favourable to such employees than the benefitsprovided under this Act or any Scheme in relation to employeesin any other establishment of a similar character:

Provided that no such exemption shall be made except afterconsultation with the Central Board which on suchconsultation shall forward its views on exemption to theappropriate Government within such time limit as may bespecified in the Scheme.

(1A) Where an exemption has been granted to an establishmentunder clause (a) of sub-section (1),- (a) the provisions of sections 6, 7A, 8 and 14B shall, so far asmay be, apply to the employer of the exempted establishmentin addition to such other conditions as may be specified inthe notification granting such exemption, and where suchemployer contravenes, or makes default in complying withany of the said provisions or conditions or any other provisionof this Act, he shall be punishable under section 14 as if thesaid establishment had not been exempted under the saidclause (a); (b) the employer shall establish a Board of Trustees for theadministration of the provident fund consisting of suchnumber of members as may be specified in the Scheme;

(c) the terms and conditions of service of members of the Boardof Trustees shall be such as may be specified in the Scheme; (d) the Board of Trustees constituted under clause (b) shall–

(i) maintain detailed accounts to show the contributionscredited, withdrawals made and interest accrued in respectof each employee;

(ii) submit such returns to the Regional Provident FundCommissioner or any other officer as the Central Governmentmay direct from time to time;

(iii) invest the provident fund monies in accordance with thedirections issued by the Central Government from time to time;

(iv) transfer, where necessary, the provident fund account ofany employee; and

(v) perform such other duties as may be specified in theScheme.

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9.2. After having taken note of the relevant provisions of the Actof 1952, essential it is to take into comprehension the relevant provisionsand stipulations of the Scheme of 1952 that has been, as noticed, framedby the Central Government under Section 5 of the Act of 1952.

9.2.1. Noteworthy it is that there is no definition of an “excludedemployee” in the Act of 1952. In fact, this expression comes in operationfor the purpose of exclusion of certain employees from compulsion tojoin the Fund created under the Scheme of 1952. Therefore, this expressionis defined only in the Scheme of 1952, in clause (f) of paragraph 2 thereof,as under:

“(f) “excluded employee” means—

(i) an employee who, having been a member of the Fund,withdrew the full amount of his accumulations in the Fundunder clause (a) or (c) of sub-paragraph (1) of paragraph69; A

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(ii) an employee whose pay at the time he is otherwise entitledto become a member of the Fund, exceeds fifteen thousandrupees per month;[3]

Explanation. —’Pay’ includes basic wages with dearnessallowance, retaining allowance (if any) and cash value ofBfood concessions admissible thereon;

(iii) [omitted][4];

(iv) an apprentice.

Explanation.— An apprentice means a person who, accordingto the certified standing orders applicable to the factory orestablishment, is an apprentice, or who is declared to be anapprentice by the authority specified in this behalf by theappropriate Government;”

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9.2.2. Paragraph 26 of the Scheme of 1952 specifies the classesDof employees entitled to, and required to, join the Fund as also the co-related aspects. Useful it shall be to keep in view the fact that theexpression “Fund”, as occurring in Paragraph 26 refers to the Fundcreated under the Scheme of 1952[5]. This Paragraph 26 reads as under:

“26. Classes of employees entitled and required to join the-fund.E

(1) (a) Every employee employed in or in connection with thework of a factory or other establishment to which this Schemeapplies, other than an excluded employee, shall be entitledand required to become a member of the Fund from the daythis paragraph comes into force in such factory or otherFestablishment.

(b) Every employee employed in or in connection with thework of a factory or other establishment to which this Schemeapplies, other than an excluded employee, shall also beentitled and required to become a member of the fund from G

3 At the relevant point of time, in sub-clause (ii) the figures had been ‘six thousand andfive hundred rupees’ in place of the present figures of ‘fifteen thousand rupees’[4] Sub-clause (iii) and explanation thereto were omitted by GSR 1467 dated 02.12.19605 The contra-distinction of this “Fund” with a “private provident fund” is noticeable insub-paragraph (5), where reference is made to an exempted establishment.

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the day this paragraph comes into force in such factory orother establishment if on the date of such coming into force,such employee is a subscriber to a provident fund maintainedin respect of the factory or other establishment, or in respectof any other factory or establishment (to which the Actapplies) under the same employer:

Provided that where the Scheme applies to a factory or otherestablishment on the expiry or cancellation of an order ofexemption under section 17 of the Act, every employee whobut for the exemption would have become and continued as amember of the Fund, shall become a member of the fundforthwith.

(2) After this paragraph comes into force in a factory or otherestablishment, every employee employed in or in connectionwith the work or that factory or establishment, other than anexcluded employee, who has not become a member alreadyshall also be entitled and required to become a member of thefund from the date of joining the factory or establishment.

(3) An excluded employee employed in or in connection withthe work of a factory or other establishment to which thisScheme applies shall, on ceasing to be such an employee, beentitled and required to become a member of the fund fromthe date he ceased to be such employee.

(4) On re-election of an employee or a class of employeesexempted under paragraph 27 or paragraph 27 A to join thefund or on the expiry or cancellation of an order under thatparagraph, every employee shall forthwith become a memberthereof.

(5) Every employee who is a member of a private providentfund maintained in respect of an exempted factory or otherestablishment and who but for exemption would have becomeand continued as a member of the fund shall, on joining afactory or other establishment to which this Scheme applies,become a member of the fund forthwith.

(6) Notwithstanding anything contained in this paragraph anofficer not below the rank of an Assistant Provident Fund A

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ACommissioner may, on the joint request in writing of anyemployee of a factory or other establishment to which thisScheme applies and his employer, enroll such employee as amember or allow him to contribute more than fifteen thousandrupees of his pay per month if he is already a member of thefund and thereupon such employee shall be entitled to theBbenefits and shall be subject to the conditions of the fund,provided that the employer gives an undertaking in writingthat he shall pay the administrative charges payable and shallcomply with all statutory provisions in respect of suchemployee.”

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9.2.3. For comprehension of all the relevant provisions andstipulations, a reference to sub-paragraph (1) of paragraph 69 of theScheme of 1952 is also pertinent and the same, as applicable at therelevant point of time, may be noticed as under[6]:

“69. Circumstances in which accumulations in the Fund areDpayable to a member.- (1) A member may withdraw the fullamount standing to his credit in the Fund—

(a) on retirement from service after attaining of the age of 55years:

EProvided that a member, who has not attained the age of 55years at the time of termination of his service, shall also beentitled to withdraw the full amount standing to his credit inthe Fund if he attains the age of 55 years before the paymentis authorized; F(b) on retirement on account of permanent and total incapacityfor work due to bodily or mental infirmity duly certified bythe medical officer of the establishment or where anestablishment has no regular medical officer, by a registeredmedical practitioner designated by the establishment;

(c) immediately before migration from India for permanentGsettlement abroad or for taking employment abroad; (d) on termination of service in the case of mass or individualretrenchment; 6 This paragraph 69 and its sub-paragraphs and clauses have also undergone severalamendments from time to time; however, the contents as reproduced herein are more orHless in the same form, as are applicable to the present case.

(dd) on termination of service under a voluntary scheme ofretirement framed by the employer and the employees undera mutual agreement specifying, inter alia, that notwithstandingthe provisions contained in sub-clause (a) of clause (oo) ofsection 2 of the Industrial Disputes Act, 1947, excludingvoluntary retirements from the scope of definition of“retrenchment” such voluntary retirements shall for thepurpose be treated as retrenchments by mutual consent of theparties; (e) in any of the following contingencies, provided the actualpayment shall be made only after completing a continuousperiod of not less than two months immediately preceding thedate on which a member makes the application forwithdrawal:—

(i) where a factory or other establishment is closed but certainemployees who are not retrenched, are transferred by theemployer to other factory or establishment, not covered underthe Act;

(ii) where a member is transferred from a covered factory orother establishment to another factory or other establishmentnot covered under the Act, but is under the same employer;and

(iii) where a member is discharged and is given retrenchmentcompensation under the Industrial Disputes Act, 1947 (14 of1947);”

10. Before proceeding further, we may take note of a decision ofthis Court referred to by the learned counsel for the parties, being that inthe case of N.K. Jain and Ors. v. C.K. Shah and Ors.: (1991) 2 SCC495. The relevant background aspect of the said case had been that theestablishment in question was governed by the provisions of the Act of1952 but was exempted under Section 17; and had its own trust in respectof the provident fund contributions. However, the establishment failed topay such contributions for some period during the year 1974 and therewas a default. The question was as to whether such default would entailprosecution also, or only the exemption was to be cancelled ? The said A

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Acase, being related to a different fact situation and different controversymay not have a direct bearing on the present matter but, the observationsof this Court, illuminative on the setup and framework of the Act andthe Scheme of 1952, could be usefully reproduced as under:

“7. On a perusal of the above extracted provisions of the Actthe following aspects to the extent relevant to the present casecan be spelt out. The management of an establishment has tocontribute to the provident fund and the government underSection 5 can frame a Scheme called Employees’ ProvidentFund Scheme and such a Scheme was framed in the year 1952.The Scheme provides for the establishment of provident fundunder the Act for employees of the establishments specifiedtherein. Section 6 is the material provision and deals withcontributions which may be provided under the Scheme andalso prescribes the rate of contribution to the fund and thatthe employees’ contribution should be equal to the contributionpayable by the employer. Section 14 deals with the penaltiesand Section 14(1-A) lays down that an employer whocontravenes, or makes default in complying with theprovisions of Section 6 shall be punishable with imprisonmentfor a term which may extend to six months but shall not beless than three months in case of default in payment of theemployees’ contribution which has been deducted by theemployer from the employees’ wages. But for adequate reasonsit can be less. Paragraph 76 of the Scheme also provides forpunishment for failure to pay such contributions to the fund.Then we have Section 17 which provides for the exemption.As per the said section the appropriate government may bynotification and subject to such conditions, as may bespecified in the notification, exempt from the operation of allor any of the provisions of any Scheme (in the present case1952 Scheme) if the appropriate government is satisfied thatthe rules of the provident fund which a particularestablishment is following in the matter of contribution to theprovident fund are not less favourable than those specifiedin Section 6 and that the employees are also in enjoyment ofother provident fund benefits. In other words the exemptionfrom the operation of the Scheme is granted provided the B

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particular establishment makes contribution as per its ownrules governing the contribution to the fund, which in otherwords, can be called a provident fund scheme of its own arenot less favourable than those specified in Section 6.Accordingly the exempted establishment has to provide for itsemployees the benefits which are in no way less favourablethan the ones provided under the Act and the Scheme.”

10.1. In the said case, this Court finally held that the failure tomake the contributions by an exempted establishment to the providentfund as per its own rules may also attract the penalties under sub-sections(1-A) and (2-A) of Section 14 of the Act of 1952.

11. In the scheme and structure of the Act of 1952, it is but clearthat for the specified establishments or class of establishments, theCentral Government was to frame a Scheme, to be called “theEmployees’ Provident Fund Scheme”; and soon after framing of suchScheme, a Fund was to be established, which was to vest in, andadministered by, the Board constituted under Section 5A. As noticed,the expression “Fund” is defined in the Act of 1952 to mean the providentfund established under a Scheme; and the expression “Scheme” is definedto mean the Employees Provident Fund Scheme framed under Section5. Indisputably, the Scheme of 1952 is the one framed by the CentralGovernment in exercise of the powers conferred by Section 5 ibid. Weshall examine the provisions of the Scheme of 1952 a little later. At thisjuncture, apposite it would be to take note of another feature of the Actof 1952 emanating from the provisions relating to exemption, as containedin Section 17 thereof.

12. By virtue of sub-section (1) of Section 17, an establishmentcould be exempted from the operation of all or any of the provisions ofany Scheme if: (a) in regard to the establishment to which the Act applies,the appropriate Government is of opinion that the rules of its providentfund, with respect to the rates of contributions, are not less favourablefor the employees than those specified in Section 6 and the employeesare in enjoyment of other provident fund benefits which, on the whole,are not less favourable than the benefits available under the Act or underthe Scheme in relation to any other establishment of similar character;and (b) in regard to any other establishment, the appropriate Governmentis of opinion that benefits in the nature of provident fund, pension or AB

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Agratuity, as available to the employees of such establishment are, on thewhole, not less favourable than the benefits provided under the Act orany Scheme in any other establishment of similar character.

12.1. When an exemption is granted to an establishment underclause (a) of sub-section (1) of Section 17 of the Act of 1952, severalBduties are cast upon the employer as specified in sub-section (1-A)thereof, with penal provisions in the event of default. We need not elaborateon various other provisions contained in Section 17. Suffice would be tonotice for the present purpose that coverage of the employees like theone engaged in the establishment of appellants is the rule; and ordinarily,the employees are expected to be covered by the Scheme framed underCSection 5 of the Act of 1952 with the exception being that in case ofavailability of equivalent or more favourable benefits in an establishment,the appropriate Government could grant exemption. As per sub-section(2) of Section 17, even the Scheme may make a provision for exemptionbut the basic requirement being again that the persons or the class ofDpersons to be exempted are entitled to such benefits which are, on thewhole, not less favourable than the benefits provided under the Act andthe Scheme thereunder i.e., the Scheme of 1952[7]. All the requirementsof Section 17 make the position undoubtedly clear that the provisions areintended to ensure optimum benefits for the employees and even theexemption is granted only on the satisfaction of appropriate GovernmentEabout existence of equivalent or more favourable provident fund Schemefor the employees concerned.

13. The Scheme of 1952 was framed by the Central Governmenton 02.09.1952 i.e., within 6 months of the enactment of the Act of 1952.The provisions of the Scheme are generally made applicable, subject toFthe provisions of Sections 16 and 17 of the Act, to all the factories andother establishments to which the Act applies or is applied under sub- 7 Sub-section (2) of Section 17 reads as under:

(2) Any Scheme may make provision for exemption of any person or class of personsemployed in any establishment to which the Scheme applies from the operation of allor any of the provisions of the Scheme, if such person or class of persons is entitled toGbenefits in the nature of provident fund, gratuity or old age pension and such benefits,separately or jointly, are on the whole not less favourable than the benefits providedunder this Act or the Scheme:

Provided that no such exemption shall be granted in respect of a class of persons unlessthe appropriate Government is of opinion that the majority of persons constitutingsuch class desire to continue to be entitled to such benefits.

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sections (3) and (4) of Section 1 or under Section 3 of the Act. Theprovisions of the Scheme of 1952 have been extended to variousestablishments from time to time under clause (b) of sub-paragraph (3)of Paragraph 1 thereof. As per Paragraph 26 of the Scheme of 1952,every employee employed in or in connection with the work of the factoryor other establishment to which this Scheme applies, is entitled to, and isobliged to, become a member of the Fund from the date the Schemewould come into force for such factory or establishment, except the“excluded employees”. Significantly, even an “excluded employee”, onceasing to be so i.e., on ceasing to be an “excluded employee”, is entitledto, and is required to, become a member of the Fund from the date ofsuch cessation.

13.1. In the framework of the Scheme of 1952, exclusion is providedunder clause (i) of Paragraph 2(f) thereof to an employee who had beena member of the Fund and had withdrawn full amount of his accumulationsin the Fund under clause (a) or (c) of Paragraph 69(1). Now, clause (a)of the said Paragraph 69(1) of the Scheme of 1952 refers to a memberwho would withdraw the full amount standing to his credit in the Fund onretirement from service after attaining the age of 55 years. Clause (c) isnot relevant for the present purpose as the same relates to a memberwho withdraws the amount before migration from India for permanentsettlement or taking employment abroad but then, a comprehensive lookat various clauses of paragraph 69(1) makes it clear that reference thereinis to a member of the Fund who withdraws full amount standing to hiscredit for different eventualities like regular retirement; retirement fordisablement or incapacity; migration from the country; termination ofservice; accepting a voluntary retirement scheme; closure of the factory;transfer from a covered factory or establishment to another factory orestablishment not covered under the Act etc.

14. It is not a matter of much debate in this case that the appellantsotherwise answer to the description of “employer” under the Act of1952 and their establishment is covered thereunder. The basic contentionurged in this matter on behalf of the appellants is that the persons engagedby them had been the members of General Provident Fund while workingas the employees of Railways and had withdrawn the full amount ofaccumulations in GPF and are, therefore, to be treated as “excludedemployees”. This contention has fundamental shortcomings as pointedout infra.

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A14.1. The crucial aspect to be considered in this matter is as towhether the definition of “excluded employees” in Paragraph 2(f) asalso the stipulation in Paragraphs 26 and 69 of the Scheme of 1952 referto any provident fund or only to the Fund under the Scheme of 1952? Asnoticed above, in the setup and structure of the Act of 1952, specificdistinction is maintained between the Fund, which is created by the CentralBGovernment under Section 5(1) of the Act and any other provident fund,which is created by an employer. Significantly, clause (f) of Paragraph 2of the Scheme of 1952 refers to “the Fund” and not to “any Fund”; andParagraphs 26 and 69 also refer to “the Fund” and not to “any Fund”.The determiner “the”, as occurring in Paragraph 2(f) as also ParagraphC69 before the expression “Fund” makes it clear that the reference thereinis only to theFund which is created under the Scheme of 1952 and it isnot a general reference to any Fund. The requirement of joining theFund under Paragraph 26 ibid. is also of joining that Fund which iscreated under the Scheme of 1952. In other words, obviously andundoubtedly, the Fund referred to in Paragraphs 2(f), 26 and 69 of theDScheme of 1952 is that Fund, which is created under the Scheme of1952 and the reference is not to any other Fund. Thus, to be coveredunder the expression “excluded employee” by virtue of clause (i) ofparagraph 2(f) read with clause (a) of paragraph 69(1) ibid., the employeemust be such who was a member of the Fund established under theEScheme of 1952 and who had withdrawn full amount of his accumulationsin the said Fund on retirement from service after attaining the age of 55years.

14.2. On the plain interpretation aforesaid, we have not an iota ofdoubt that the retired Railway employees, who had withdrawn theirFaccumulations in General Provident Fund or any other Fund of whichthey were members, could not have been treated as “excluded employees”for the purpose of the Scheme of 1952 for the reason that such awithdrawal had not been from the Fund established under the Schemeof 1952. In fact, there was no occasion for them to make any withdrawalfrom the Fund established under the Scheme of 1952 because they wereGnever the members of the said Fund. In other words, the employees inquestion were not answering to the requirements of clause (i) ofparagraph 2(f) read with clause (a) of paragraph 69(1) of the Schemeof 1952 and hence, were not the “excluded employees”. The DivisionBench of the High Court has rightly rejected the contention of appellantsHthat every employee, who had withdrawn full amount from any provident fund, should be treated as an “excluded employee”. In our view, theanswer by the Division Bench of the High Court is in accord with lawand deserves to be approved.

15. We may also take note of and deal with a few ancillary aspects.The appellants, in their initial response to the proposition for coverage ofthe employees in question under the Scheme of 1952, attempted to statethat most of the said employees were above 58 years of age and thatthey had expressed unwillingness to join the Fund under the said Scheme.It does not appear from the record if the concerned employeescategorically made any such expression of unwillingness. Even otherwise,as noticed, the provisions of the Act and the stipulations of the Schemeof 1952 are mandatory in character and the application thereof could nothave been averted by the appellants or the said employees except oncertain eventualities as mentioned in Section 17 of the Act as alsoParagraph 26 of the Scheme of 1952. Such eventualities are indeednon-existent in the present matter. So far the aspect relating to age isconcerned, the operation and effect of the Act and the Scheme of 1952are not restricted with reference to any age limit of the employee. Sucha suggestion relating to the age of the employees had been entirelybaseless and has rightly been disapproved.

15.1. Apart from the above, the appellants also alleged that theyhad applied for exemption and no decision was taken on theirrepresentation. In this regard, it is noticed that the appellant had notmade any such submission that they had any better and beneficial schemefor their employees. In any case, there is no concept of any holidayingin payment of contribution by the employer by merely moving anapplication for exemption; and when there was no order of exemptionunder Section 17 by the competent authority, the appellant-company wasunder the liability to make payment of its contribution.

16. Before concluding, we may also point out that the observationsby the learned Single Judge of High Court in this matter, that clause (i)of Paragraph 2(f) of the Scheme of 1952 has to be applied in relation tothe withdrawal from any provident fund and else, an employee maykeep on successively deriving benefits, remain rather unwarrantedbecause the principle underlying the enactment and the Scheme of 1952is to provide financial security to the employees. The concept of exclusionfrom the Scheme of 1952 is limited to the class/es of employees mentionedin Paragraph 2(f) only; and the area of operation of this exclusion clause A

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Acannot be expanded by way of an assumption about the alleged extraadvantage likely to be driven home by an employee. In fact, even theassumption of the learned Single Judge does not appear apt in theframework of the Act and the Scheme of 1952. Whatever an employeegets by virtue of the Act of 1952 is basically the accumulation in hisprovident fund account, where he and his employer do contribute. TheBlearned Single Judge had gone to the extent of observing that when theemployees earning more than the particular amount (Rs. 6,500/- permonth at the relevant time) were excluded under clause (ii) of Paragraph2(f) of the Scheme of 1952, the retired employees who had receivedtheir accumulations could also be excluded under clause (i) of ParagraphC2(f). With respect, we are unable to find any logic in these observationsbecause the stipulation in clause (ii) of Paragraph 2(f) relates to an entirelydifferent class of employees with reference to the quantum of their pay;and exclusion of such class of employees as per clause (ii) cannot leadto any corollary that clause (i) be also expanded beyond its plain language.The order passed by the learned Single Judge, being based on entirelyDirrelevant considerations, has rightly been disapproved by the DivisionBench of High Court.

17. To summarise, in the framework and setup of the Scheme of1952, the concept remains plain and clear that if a person is member ofthe Fund created thereunder i.e., under the Scheme of 1952 and withdrawsEall his accumulations therein, he may not be obliged to be a member ofthe same Fund under the Scheme of 1952 over again and could be treatedas an “excluded employees”. However, such is not the relaxation grantedin relation to an employee who was earlier a member of any other Fundbut later on joins such an establishment where he would be entitled toFmembership of the Fund created under the Scheme of 1952. Thisframework of the provisions and stipulations appears to be best servingthe interest of employees, while providing them with continued financialsecurity. Therefore, we find no reason to take any view different thanthe one taken by the Division Bench of the High Court in this case.

G18.For what has been discussed hereinabove, this appeal failsand is, therefore, dismissed.

Kalpana K. Tripathy

Appeal dismissed.

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