# MODERN TRANSPORTATION CONSULTATION SERVICES PVT. LTD. & ANR v. CENTRAL PROVIDENT FUND COMMISSIONER EMPLOYEES PROVIDENT FUND ORGANISATION & ORS

- **Citation:** [2019] 5 S.C.R. 61
- **Court:** Supreme Court of India
- **Decided:** 2019-03-26
- **Case number:** Civil Appeal No. 7698 of 2009
- **Bench:** Abhay Manohar Sapre, Dinesh Maheshwari
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/modern-transportation-consultation-services-pvt-ltd-anr-v-central-provident-33718
- **Pages:** 30

## Headnote

Employees' Provident Fund and Miscellaneous Provisions
Act, 1952:
s. 17 (1) - Exemption from Employees' Provident Fund
Scheme, 1952 - Retired employees of Railways who had withdrawn
all superannuation benefits including full amount in their Provident
Fund account - Re-employed on retainer basis with Private Limited
Company - Whether covered under Provident Fund Scheme or were
to be treated as 'excluded employees' in terms of Para 2(f) of the
Scheme - Held: To be covered under the expression 'excluded
employee' by virtue of clause (i) of para 2(f) r/w. clause (a) of para
69 (1), the employee must be such who was a member of the fund
established under the Provident Fund Scheme and had withdrawn
full amount of his accumulations in the said fund on retirement -
The employees in question since were not the members of the Fund
established under the Scheme, they could not have been treated as
'excluded employees'.
Dismissing the appeal, the Court
HELD: 1. The concept underlying the enactment of
Employees' Provident Fund and Miscellaneous Provisions Act,
1952 had been of providing for compulsory contributory provident
funds for safeguarding the future of industrial workers. Elaborate
provisions have been made in the Act for creation of a Fund, to
be settled in accordance with a Scheme to be framed by the Central
Government. However, the Act also provides for continuation of
such of the other provident funds, which are offering equal or
 [2019] 5 S.C.R. 61
 61
A
B
C
D
E
F
G
H
62
SUPREME COURT REPORTS
[2019] 5 S.C.R.
more advantageous terms to the employees concerned and are
operating efficiently. [Para 9.1] [75-F-H]
2. There is no definition of an "excluded employee" in the
Act of 1952. In fact, this expression comes in operation for the
purpose of exclusion of certain employees from compulsion to
join the Fund created under the Scheme of 1952. Therefore, this
expression is defined only in the Scheme of 1952, in clause (f) of
paragraph 2 thereof. [Para 9.2.1] [79-E-F]
3. Paragraph 26 of the Scheme of 1952 specifies the classes
of employees entitled to, and required to, join the Fund as also
the co-related aspects. The expression "Fund", as occurring in
Paragraph 26 refers to the Fund created under the Scheme of
1952. In the scheme and structure of the Act of 1952, it is but
clear that for the specified establishments or class of
establishments, the Central Government was to frame a Scheme,
to be called "the Employees' Provident Fund Scheme"; and soon
after framing of such Scheme, a Fund was to be established, which
was to vest in, and administered by, the Board constituted under
Section 5A. The expression "Fund" is defined in the Act of 1952
to mean the provident fund established under a Scheme; and the
expression "Scheme" is defined to mean the Employees
Provident Fund Scheme framed under Section 5. Indisputably,
the Scheme of 1952 is the one framed by the Central Government
in exercise of the powers conferred by Section 5. [Paras 9.2.2
and 11] [80-D; 85-C-E]
4. By virtue of sub-section (1) of Section 17, an
establishment could be exempted from the operation of all or
any of the provisions of any Scheme if: (a) in regard to the
establishment to which the Act applies, the appropriate
Government is of opinion that the rules of its provident fund,
with respect to the rates of contributions, are not less favourable
for the employees than those specified in Section 6 and the
employees are in enjoyment of other provident fund benefits
which, on the whole, are not less favourable than the benefits
available under the Act or under the Scheme in relation to any
other establishment of similar character; and (b) in regard to any
other establishment, the appropriate Government is of opinion
A
B
C
D
E
F
G
H
63
that benefits in the nature of provident fund, pension or gratuity,
as available to the employees of such establishment are, on the
whole, not less favourable than the benefits provided under the
Act or any Scheme in any other establi

## Text

_Characters 0–39,504 of 69,788. This is a partial read: ask again with offset=39504 for what follows._

A
B
C
D
E
F
G
H
61
MODERN TRANSPORTATION CONSULTATION SERVICES
PVT. LTD. & ANR.
v.
CENTRAL PROVIDENT FUND COMMISSIONER EMPLOYEES
PROVIDENT FUND ORGANISATION & ORS.
(Civil Appeal No. 7698 of 2009)
MARCH 26, 2019
[ABHAY MANOHAR SAPRE AND
DINESH MAHESHWARI, JJ.]
Employees' Provident Fund and Miscellaneous Provisions
Act, 1952:
s. 17 (1) - Exemption from Employees' Provident Fund
Scheme, 1952 - Retired employees of Railways who had withdrawn
all superannuation benefits including full amount in their Provident
Fund account - Re-employed on retainer basis with Private Limited
Company - Whether covered under Provident Fund Scheme or were
to be treated as 'excluded employees' in terms of Para 2(f) of the
Scheme - Held: To be covered under the expression 'excluded
employee' by virtue of clause (i) of para 2(f) r/w. clause (a) of para
69 (1), the employee must be such who was a member of the fund
established under the Provident Fund Scheme and had withdrawn
full amount of his accumulations in the said fund on retirement -
The employees in question since were not the members of the Fund
established under the Scheme, they could not have been treated as
'excluded employees'.
Dismissing the appeal, the Court
HELD: 1. The concept underlying the enactment of
Employees' Provident Fund and Miscellaneous Provisions Act,
1952 had been of providing for compulsory contributory provident
funds for safeguarding the future of industrial workers. Elaborate
provisions have been made in the Act for creation of a Fund, to
be settled in accordance with a Scheme to be framed by the Central
Government. However, the Act also provides for continuation of
such of the other provident funds, which are offering equal or
 [2019] 5 S.C.R. 61
 61
A
B
C
D
E
F
G
H
62
SUPREME COURT REPORTS
[2019] 5 S.C.R.
more advantageous terms to the employees concerned and are
operating efficiently. [Para 9.1] [75-F-H]
2. There is no definition of an "excluded employee" in the
Act of 1952. In fact, this expression comes in operation for the
purpose of exclusion of certain employees from compulsion to
join the Fund created under the Scheme of 1952. Therefore, this
expression is defined only in the Scheme of 1952, in clause (f) of
paragraph 2 thereof. [Para 9.2.1] [79-E-F]
3. Paragraph 26 of the Scheme of 1952 specifies the classes
of employees entitled to, and required to, join the Fund as also
the co-related aspects. The expression "Fund", as occurring in
Paragraph 26 refers to the Fund created under the Scheme of
1952. In the scheme and structure of the Act of 1952, it is but
clear that for the specified establishments or class of
establishments, the Central Government was to frame a Scheme,
to be called "the Employees' Provident Fund Scheme"; and soon
after framing of such Scheme, a Fund was to be established, which
was to vest in, and administered by, the Board constituted under
Section 5A. The expression "Fund" is defined in the Act of 1952
to mean the provident fund established under a Scheme; and the
expression "Scheme" is defined to mean the Employees
Provident Fund Scheme framed under Section 5. Indisputably,
the Scheme of 1952 is the one framed by the Central Government
in exercise of the powers conferred by Section 5. [Paras 9.2.2
and 11] [80-D; 85-C-E]
4. By virtue of sub-section (1) of Section 17, an
establishment could be exempted from the operation of all or
any of the provisions of any Scheme if: (a) in regard to the
establishment to which the Act applies, the appropriate
Government is of opinion that the rules of its provident fund,
with respect to the rates of contributions, are not less favourable
for the employees than those specified in Section 6 and the
employees are in enjoyment of other provident fund benefits
which, on the whole, are not less favourable than the benefits
available under the Act or under the Scheme in relation to any
other establishment of similar character; and (b) in regard to any
other establishment, the appropriate Government is of opinion
A
B
C
D
E
F
G
H
63
that benefits in the nature of provident fund, pension or gratuity,
as available to the employees of such establishment are, on the
whole, not less favourable than the benefits provided under the
Act 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 under
clause (a) of sub-section (1) of Section 17 of the Act of 1952,
several duties are cast upon the employer as specified in subsection (1-A) thereof, with penal provisions in the event of default.
The employees are expected to be covered by the Scheme framed
under Section 5 of the Act of 1952 with the exception being that
in case of availability 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 exemption but the basic requirement
being again that the persons or the class of persons to be
exempted are entitled to such benefits which are, on the whole,
not less favourable than the benefits provided under the Act and
the Scheme thereunder i.e., the Scheme of 1952. All the
requirements of Section 17 make the position undoubtedly clear
that the provisions are intended to ensure optimum benefits for
the employees and even the exemption is granted only on the
satisfaction of appropriate Government about existence of
equivalent or more favourable provident fund Scheme for the
employees concerned. [Para 12.1] [86-B-E]
6. The provisions of the Scheme are generally made
applicable, subject to the provisions of Sections 16 and 17 of the
Act, to all the factories and other establishments to which the
Act applies or is applied under sub-sections (3) and (4) of Section
1 or under Section 3 of the Act. The provisions of the Scheme of
1952 have been extended to various establishments 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
factory or other establishment to which this Scheme applies, is
entitled to, and is obliged to, become a member of the Fund from
the date the Scheme would come into force for such factory or
MODERN TRANSPORTATION CONSULTATION SERVICES PVT.
LTD. v. C.P.F. COMMNR. E.P.F.O.
A
B
C
D
E
F
G
H
64
SUPREME COURT REPORTS
[2019] 5 S.C.R.
establishment, except the "excluded employees". Significantly,
even an "excluded employee", on ceasing to be so i.e., on ceasing
to 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]
7. In the framework of the Scheme of 1952, exclusion is
provided under clause (i) of Paragraph 2(f) thereof to an employee
who had been a member of the Fund and had withdrawn full amount
of his accumulations in the Fund under clause (a) or (c) of
Paragraph 69(1). Clause (a) of the Paragraph 69(1) of the Scheme
of 1952 refers to a member who would withdraw the full amount
standing to his credit in the Fund on retirement from service
after attaining the age of 55 years. A comprehensive look at
various clauses of paragraph 69(1) makes it clear that reference
therein is to a member of the Fund who withdraws full amount
standing to his credit for different eventualities like regular
retirement; retirement for disablement or incapacity; migration
from the country; termination of service; accepting a voluntary
retirement scheme; closure of the factory; transfer from a covered
factory or establishment to another factory or establishment not
covered under the Act etc. [Para 13.1] [87-C-D, E-F]
8. In the setup and structure of the Act of 1952, specific
distinction is maintained between the Fund, which is created by
the Central Government under Section 5(1) of the Act and any
other provident fund, which is created by an employer.
Significantly, clause (f) of Paragraph 2 of the Scheme of 1952 refers
to "the Fund" and not to "any Fund"; and Paragraphs 26 and 69
also refer to "the Fund" and not to "any Fund". The determiner
"the", as occurring in Paragraph 2(f) as also Paragraph 69 before
the expression "Fund" makes it clear that the reference therein
is only to the Fund which is created under the Scheme of 1952
and it is not a general reference to any Fund. The requirement of
joining the Fund under Paragraph 26 is also of joining that Fund
which is created under the Scheme of 1952. In other words,
obviously and undoubtedly, the Fund referred to in Paragraphs
2(f), 26 and 69 of the Scheme of 1952 is that Fund, which is created
under the Scheme of 1952 and the reference is not to any other
A
B
C
D
E
F
G
H
65
Fund. Thus, to be covered under the expression "excluded
employee" by virtue of clause (i) of paragraph 2(f) read with clause
(a) of paragraph 69(1), the employee must be such who was a
member of the Fund established under the Scheme of 1952 and
who had withdrawn full amount of his accumulations in the said
Fund on retirement from service after attaining the age of 55
years. [Para 14.1] [88-B-E]
9. Therefore, the retired Railway employees, who had
withdrawn their accumulations in General Provident Fund or any
other Fund of which they were members, could not have been
treated as "excluded employees" for the purpose of the Scheme
of 1952 for the reason that such a withdrawal had not been from
the Fund established under the Scheme of 1952. In fact, there
was no occasion for them to make any withdrawal from the Fund
established under the Scheme of 1952 because they were never
the members of the said Fund. In other words, the employees in
question were not answering to the requirements of clause (i) of
paragraph 2(f) read with clause (a) of paragraph 69(1) of the
Scheme 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 the
Scheme of 1952 are mandatory in character and the application
thereof could not have been averted by the appellants or the said
employees except on certain eventualities as mentioned in
Section 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 and
effect of the Act and the Scheme of 1952 are not restricted with
reference to any age limit of the employee. Such a suggestion
relating to the age of the employees had been entirely baseless
and has rightly been disapproved. [Para 15] [89-C-D]
11. So far as the plea of the appellants that they had applied
for exemption and no decision was taken on their representation
is concerned, it is noticed that the appellant had not made any
such submission that they had any better and beneficial scheme
for their employees. In any case, there is no concept of any
holidaying in payment of contribution by the employer by merely
MODERN TRANSPORTATION CONSULTATION SERVICES PVT.
LTD. v. C.P.F. COMMNR. E.P.F.O.
A
B
C
D
E
F
G
H
66
SUPREME COURT REPORTS
[2019] 5 S.C.R.
moving an application for exemption; and when there was no order
of exemption under Section 17 by the competent authority, the
appellant-company was under the liability to make payment of its
contribution. [Para 15.1] [89-E-F]
12. The observations by the Single Judge of High Court
that clause (i) of Paragraph 2(f) of the Scheme of 1952 has to be
applied in relation to the withdrawal from any Provident Fund
and else, an employee may keep on successively deriving benefits,
remain rather unwarranted because the principle underlying the
enactment and the Scheme of 1952 is to provide financial security
to the employees. The concept of exclusion from the Scheme of
1952 is limited to the class/es of employees mentioned in
Paragraph 2(f) only; and the area of operation of this exclusion
clause cannot be expanded by way of an assumption about the
alleged extra advantage likely to be driven home by an employee.
In fact, even the assumption of the Single Judge does not appear
apt in the framework of the Act and the Scheme of 1952. Whatever
an employee gets by virtue of the Act of 1952 is basically the
accumulation in his provident fund account, where he and his
employer do contribute. The order passed by the Single Judge,
being based on entirely irrelevant considerations, has rightly been
disapproved by the Division Bench of High Court. [Para 16]
[89-G-H; 90-A-D]
13. The framework and setup of the Scheme of 1952, the
concept remains plain and clear that if a person is member of the
Fund created thereunder i.e., under the Scheme of 1952 and
withdraws all his accumulations therein, he may not be obliged to
be a member of the same Fund under the Scheme of 1952 over
again and could be treated as an "excluded employees". However,
such is not the relaxation granted in relation to an employee who
was earlier a member of any other Fund but later on joins such an
establishment where he would be entitled to membership of the
Fund created under the Scheme of 1952. This framework of the
provisions and stipulations appears to be best serving the interest
of employees, while providing them with continued financial
security. [Para 17] [90-E-G]
A
B
C
D
E
F
G
H
67
N.K. Jain and Ors. v. C.K. Shah and Ors. (1991) 2 SCC
495 : [1991] 1 SCR 938 - referred to.
 Case Law Reference
[1991] 1 SCR 938
 referred to
Para 10
CIVIL APPELLATE JURISDICTION: Civil Appeal No.7698 of
2009.
From the impugned Order dated 07.05.2008 of the High Court at
Calcutta in FMA No.537 of 2007.
Abani Kumar Sahu, Ghanshyam, P. K. Manohar, Advs. for the
Appellants.
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, Chandra
Prakash, 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 and
order dated 07.05.2008 in FMA No. 537 of 2007 whereby, the Division
Bench 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 Single
Judge of High Court allowed the writ petition filed by the appellants
while upholding their contentions that the employees of Railways, who
had withdrawn full amount of provident fund while retiring and who
were engaged by them on lump sum honorarium basis, should be treated
as "excluded employees" for the purpose of the Employees' Provident
Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to
as 'the Act'/'the Act of 1952') and the Employees' Provident Funds
Scheme, 1952 (hereinafter referred to as 'the Scheme of 1952').
However, in the Letters Patent appeal preferred by the Central Provident
Fund Commissioner and the Regional Provident Fund Commissioner,
the Division Bench of High Court totally disagreed with the learned
Single Judge; and dismissed the writ petition while holding that the said
employees, who retired after serving an exempted employer, would not
MODERN TRANSPORTATION CONSULTATION SERVICES PVT.
LTD. v. C.P.F. COMMNR. E.P.F.O.
A
B
C
D
E
F
G
H
68
SUPREME COURT REPORTS
[2019] 5 S.C.R.
fall within the category of excluded employees on re-employment and
would be covered by the Act and the Scheme of 1952.
2. The basic question arising for determination in this appeal is as
to whether the retired employees of Railways, who had withdrawn all
the superannuation benefits, including full amount of accumulations in
their 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 being
re-employed by the appellants, may not be required to join the Fund
created under the said Scheme of 1952 and consequently, the appellants
may not be obliged to make any contribution in that regard.
3. The relevant factual aspects leading to the question aforesaid
are not of much controversy and could be briefly summarised as follows:
3.1. The appellant No. 1, a Private Limited Company, had been
engaged in manning the Captive Railway System of the respondent No.
4-Damodar Valley Corporation ('DVC'). The appellant No. 2 is said to
be a Director of the appellant No. 1-company. The appellants would
submit that their only connection with DVC had been a contract to supply
the personnel for manning the cabins and gates on the railway-road; and
they were receiving the remuneration for supplying the aforesaid
personnel, who were retired employees of the Indian Railways and were
engaged on a lump sum honorarium basis.
3.2. By his letter dated 18.02.2002, the Assistant Provident Fund
Commissioner Circle-IV, Calcutta informed the appellant-company that
the number of employees of its establishment being twenty-eight in the
month of May, 1999, the establishment came within the purview of the
Act of 1952 with effect from 01.05.1999. In reply, the Director of the
appellant-company stated in his letter dated 05.03.2002 that all the persons
engaged by the company, except two of them, were the retired Railway
employees above 58 years of age; that all of them were working only on
retainer basis; and that they were not covered under the Employees'
Provident Fund Scheme. The said Assistant Provident Fund
Commissioner, in his letter dated 03.05.2002, refuted the contentions of
the appellants while referring to Paragraph 26 of the Scheme of 1952
and while asserting, inter alia, that on and from 01.11.1990, an employee
is eligible for enrolment as a member of the Scheme of 1952 from the
date of joining an establishment covered under the Act of 1952; that
A
B
C
D
E
F
G
H
69
there was no age bar for an employee to become a member of the
Scheme of 1952; and that the employees in question were not excluded
employees in terms of the Scheme of 1952.
3.3. It appears that the appellant-company applied for exemption
under Section 17 of the Act and Paragraph 27 of the Scheme of 1952 on
the ground that the persons concerned were retired Railway employees
but then, no decision was taken on such representations. On the other
hand, by yet another letter dated 22.05.2002, the appellant-company
elaborated on its contentions that the employees in question, being retired
employees of Railways, did not come within the purview of the Act of
1952 and were to be treated as "excluded employees" under Paragraph
26 of the Scheme of 1952. It was stated that these employees, whilst in
the service of Railways, were not covered under the Scheme of 1952
but were covered under the General Provident Fund ('GPF') Scheme
and had withdrawn all the superannuation benefits including Provident
Fund ('PF') and pension and hence, they were not covered under the
Act of 1952. It was also claimed that these employees were in receipt
of more favourable benefits than those available under the Scheme of
1952 and had expressed their unwillingness to become the members of
the 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 for
enrolment as members of the Scheme of 1952 irrespective of age; and
the 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 requisite
contribution in relation to the employees concerned, the competent
authority under the Act of 1952 commenced proceedings under Section
7A thereof, for determination of the money due from the appellants. By
its order dated 31.12.2004, the competent authority, after having heard
the appellants, determined the amount payable by the appellant-company
under various heads while holding, inter alia, that the provisions of the
Act of 1952 were not repugnant to the GPF Scheme; that a person was
entitled to draw double or multiple pension/s; and that the retirement of
the employees from Railways would not take them within the definition
of "excluded employees". Aggrieved, the appellants preferred the writ
petition before the High Court at Calcutta [W.P. No. 2982(W)
of 2005].
MODERN TRANSPORTATION CONSULTATION SERVICES PVT.
LTD. v. C.P.F. COMMNR. E.P.F.O. [DINESH MAHESHWARI, J.]
A
B
C
D
E
F
G
H
70
SUPREME COURT REPORTS
[2019] 5 S.C.R.
4. In the impugned order dated 07.04.2006, the learned Single
Judge of High Court, though held that the Act was applicable to the
establishment of appellants but, thereafter, concluded that on
superannuation, the retired employees of the Railways would fall within
the definition of "excluded employees". The learned Single Judge
observed that an employee, who had withdrawn full amount of his
accumulation in the fund, on re-employment with any establishment not
exempted under Section 17 of the Act, would not be again treated as an
employee to be covered under the Act. The learned Single Judge further
observed that accepting the submissions of the authorities would create
a situation where an employee, after being employed in any establishment
and working for some time, may voluntarily retire from service and join
another establishment and keep on doing so successively and get the
benefit of various provisions of the Act of 1952. According to the learned
Single Judge, even though the Act of 1952 is a piece of social benefit
legislation, and its provisions are intended to protect the employees, who
are considered to be the weaker section of society, yet, the enactment is
not intended to create a largesse in favour of the employees at the cost
of the employer. In the opinion of learned Single Judge, the retired
employees of Railways cannot be compelled to become members of the
Fund and else, the object and purpose of the expression "excluded
employees" in the Scheme of 1952 would be rendered nugatory. The
learned Single Judge also observed that when an employee earning more
than Rs. 6,500/- was treated as an "excluded employee" because of the
scale of pay as per Paragraph 2(f)(ii) of the Scheme of 1952, there was
no reason as to why Paragraph 2(f)(i) would not apply in case of an
employee who had withdrawn the full amount of his accumulations. The
learned Single Judge further observed that in order to decide as to
whether the provisions of the Act do not apply in respect of some of the
employees, the provisions contained in Paragraph 2(f) of the Scheme of
1952 must be strictly construed; and having taken the benefit of one
Scheme, the employees cannot compel the employer to comply with the
provisions of the Act. With these observations, the learned Single Judge
allowed the writ petition and remanded the matter to the authorities for
re-determination of the amount of provident fund payable by the appellants,
after treating the retired employees as "excluded employees", but after
taking into account those employees who were seeking to be included
under the Act voluntarily.
A
B
C
D
E
F
G
H
71
5. Aggrieved by the order so passed by the learned Single Judge,
the Central Provident Fund Commissioner and the Regional Provident
Fund Commissioner preferred the Letters Patent appeal that has been
considered and allowed by the Division Bench of High Court at Calcutta
by way of the impugned judgment and order dated 07.05.2008.
5.1. The Division Bench took note of the meaning assigned to the
expressions "Fund" and "Scheme" in the Act of 1952 as also the definition
of "excluded employee" in Paragraph 2(f) of the Scheme of 1952 and
rejected the contentions of the writ petitioners that the employees in
question were to be treated as excluded employees while observing as
under:
"We are unable to accept the submission of Mr. Sengupta
that the receipt of GPF and the Pension by the retired railway
employees would be as if full payment has been received under
paragraph 69(1). There can be no addition to the term "Fund"
as defined under Section 2(h). It is also not possible to accept
that since the Railway Employees have retired on
superannuation and are beyond the age of 55 years, they
would be on par with the "excluded employees". There is no
maximum age limit prescribed in any of the provisions of the
Act or the 1952 Scheme for an employee to become a member
of the Fund or the Scheme. It is claimed that the term "Scheme"
refers only to the Employees Provident Fund Scheme framed
under Section 5. The term "excluded employee" therefore has
to be co-related to the employee who was a member of the
"fund" as defined under Section 2(h) of the Act. Such an
employee would be an "excluded employee" when the full
amount has been withdrawn by him on retirement from service
after attaining the age of 55 years i.e., in terms of Paragraph
69(1)(a). The provision being crystal clear does not admit of
any other interpretation. Paragraph 69(1)(c) deals with an
employee who withdraws the full amount standing to his credit
immediately after migration from India for permanent
settlement abroad and for taking employment abroad.
In our opinion, there can be no dissections of these provisions
as proposed by Mr. Sengupta. Under paragraph 2(f)(i) a
retired employee would be an excluded employee. Under
Paragraph 2(f)(ii) an employee who is otherwise entitled to
MODERN TRANSPORTATION CONSULTATION SERVICES PVT.
LTD. v. C.P.F. COMMNR. E.P.F.O. [DINESH MAHESHWARI, J.]
A
B
C
D
E
F
G
H
72
SUPREME COURT REPORTS
[2019] 5 S.C.R.
become a Member of the fund becomes an excluded employee
as he is earning beyond the stipulated minimum that is required
for an employee to become a Member of the Scheme. This
provision clearly demonstrates the underlying principle of
the Provident Fund Act is to provide social security for those
employees who otherwise would not be in a position to save
any money from their wages. Paragraph 2(f)(iv) again
provides that an apprentice shall be an excluded employee
till he becomes a fullfledged employee. There is a qualitative
difference between Paragraph 2(f)(i) on the one hand and
Paragraph 2(f)(ii) & (iv) on the other. Paragraph 2(f) 1(i)
provides exclusion only to the employees who have already
received retirement benefits. On the other hand, under Clause
2(f)(ii) and 2(f)(iv) an employee may be an excluded employee
at one point and may not be at a subsequent point. But benefit
of these provisions cannot be extended to any employees who
are not erstwhile members of a fund administered by the
Central Board, under Section 5A of the Act
The 'Fund' created by the exempted establishment under
Section 17(1)(a) cannot be equated with the Fund which is
established by the Central Board under Section 5(1). Nor can
it be added to the definition of Fund under Section 2(h) of
the Act. It is for this reason that the appropriate Government
can only exempt an establishment from the operation of the
scheme under Section 17(1) upon forming an opinion that
the employees of such an establishment enjoyed benefits which
are not less favourable to the employee than the benefits
available under the Act or any Scheme made under the Act.
In fact, the exemption can only be granted on consultation
with the Central Board. This provision is made only to give
supervisory control to the Appropriate Government over
individual employers seeking exemption. But this provision
cannot be put on the same pedestal as Section 5(1) of the Act.
It is admitted position that employees of the Railways are not
members of the 1952 Scheme. Therefore, these retired
employees cannot be treated as excluded employees covered
under Paragraphs 69(1)(a) and 26 of the 1952 Scheme. There
is a clear distinction between a fund which is created by the
A
B
C
D
E
F
G
H
73
Central Government and is administered by the Central Board
under Section 5(1)(a) and a fund created by a private
employer, exempted under Section 17(1) and administered by
Board of Trustees under Section 17(1A) and (b). There can
be no intermingling of the two provisions. "
5.2. In view of the above, the Division Bench concluded on the
matter in the following:
"In view of the above, we find that the judgment of the
learned Single Judge is not sustainable in law. We are unable
to hold that retired employees of the Railways can be treated
as excluded employees. We are also unable to hold that, not
including the retired employees in the category of excluded
employees would in any manner contravene the provisions of
the Act or the Scheme. We are unable to accept that bringing
the Railway employees within the purview of the Act and the
Scheme would result in unjust enrichment of the retired
employees. We are of the opinion that an employee who retires
after serving an exempted employer would not fall within the
category of excluded employees on re-employment and would
be covered by the Act and the 1952 Scheme. We are also
unable to accept that since the employees covered under
Paragraph 2(f)(i) and (ii) are excluded employees, all
employees who had drawn the full amount from any other
Provident Fund should also be treated as excluded employees.
In view of the above, we allow this appeal and set aside the
order passed by the learned Single Judge.
Consequently, the writ petition being W.P. No. 2982(W) of
2005 shall be dismissed."
6. Assailing the judgment aforesaid, learned counsel for the
appellant has strenuously argued that the Division Bench of High Court
has erred in interpreting the term "excluded employee" and in holding
that the retired employees of the Railways, even when they had
withdrawn the full amount from their provident fund, cannot be treated
as excluded employees. The learned counsel emphasised on the
submissions that the retired Railway employees, who were covered under
GPF Scheme while in service, who had drawn all the superannuation
MODERN TRANSPORTATION CONSULTATION SERVICES PVT.
LTD. v. C.P.F. COMMNR. E.P.F.O. [DINESH MAHESHWARI, J.]
A
B
C
D
E
F
G
H
74
SUPREME COURT REPORTS
[2019] 5 S.C.R.
benefits including the PF, and who were also receiving pension under
the 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 Scheme
of 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,
having been a member of a provident fund, had withdrawn the full amount
of his accumulations in the fund under clause (a) or (c) of sub-paragraph
(1) of Paragraph 69. Therefore, according to the learned counsel, the
employees concerned in the present case ought to be treated as "excluded
employees", for having withdrawn their PF accumulated with the Indian
Railways 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, which
has never been the intention of the Act of 1952 or the Scheme thereunder.
The learned counsel contended that the Division Bench of High Court
has erred in holding that Paragraph 69 of the said Scheme does not
apply to the case of retired Railway employees and such retired
employees, though not covered under the Act, came to be so covered on
their re-employment in an establishment covered under the said Act.
According to the learned counsel, the Division Bench has erred in
interpreting the definitions of 'Fund' and 'Scheme' and in restricting the
definition of 'Fund' under Section 2(h) of the Act by holding that even
after retiring from the Railways and receiving the benefits under GPF
Scheme, the said employees are not "excluded employees" as the said
employer is not covered under the Scheme of 1952.
7. Per contra, learned counsel for the contesting respondents
has referred to the object as also the arrangement of the Act of 1952
and has particularly submitted that two different sets of provident fund
Schemes are envisioned: on one hand is the Scheme contemplated by
Section 5 of the Act, the Scheme of 1952 being that Scheme; and on the
other hand, there could be other Scheme/s, as permissible under Section
17 of the Act of 1952. According to the learned counsel, coverage of the
employees 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 Funds
Act, 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 its
nomenclature was again changed to the present one i.e., "The Employees' Provident
Funds and Miscellaneous Provisions Act, 1952" w.e.f. 01.08.1976
A
B
C
D
E
F
G
H
75
fund is the rule and generally, such employees would be covered by the
Scheme of 1952 with the exception that such coverage may not be
necessary when the employees receive the benefits under some other
Scheme, which are not less than those available under the Scheme of
1952. Learned counsel for the respondent submitted that in the framework
of the Scheme of 1952, only some specific classes of employees are
treated as "excluded employees", as defined in Paragraph 2(f) thereof;
and, as per clause (i) of Paragraph 2(f), only such an employee would
be excluded who was earlier the member of the Fund under the Scheme
of 1952 and had withdrawn all the benefits thereunder. According to the
learned counsel, the present appeal is devoid of merits for the reason
that the Railway employees, who were not covered under the Scheme
of 1952, do not fall within the definition of "excluded employees" as per
Paragraph 2(f) of the Scheme of 1952, even if they had withdrawn the
amount standing to their credit in any provident fund created under any
other Scheme.
8. We have bestowed thoughtful consideration to the rival
submissions and have examined the record of the case with reference
to 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 reasons
behind the Act of 1952 as also the relevant provisions thereof and the
relevant stipulations in the Scheme framed thereunder i.e., the Scheme
of 1952.
9.1. The background aspects had been that, taking note of the
need to provide for the institution of contributory provident funds for the
purpose of financial security of industrial workers, the Government of
India promulgated the Employees' Provident Fund Ordinance with effect
from 15.11.1951, which was later on replaced by the Act of 19521. Thus,
the concept underlying the enactment had been of providing for
compulsory contributory provident funds for safeguarding the future of
industrial workers. Elaborate provisions have been made in the Act for
creation of a Fund, to be settled in accordance with a Scheme to be
framed by the Central Government. However, the Act also provides for
continuation of such of the other provident funds, which are offering
equal or more advantageous terms to the employees concerned and are
operating efficiently.
MODERN TRANSPORTATION CONSULTATION SERVICES PVT.
LTD. v. C.P.F. COMMNR. E.P.F.O. [DINESH MAHESHWARI, J.]
A
B
C
D
E
F
G
H
76
SUPREME COURT REPORTS
[2019] 5 S.C.R.
9.1.1. In the Act of 1952, the expression "employee" is defined in
clause (f) of Section 2 as under:
"(f) "employee" means any person who is employed for wages
in any kind of work, manual or otherwise, in or in connection
with the work of an establishment, and who gets, his wages
directly or indirectly from the employer, and includes any
person,-
(i) employed by or through a contractor in or in connection
with the work of the establishment;
(ii) engaged as an apprentice, not being an apprentice
engaged under the Apprentices Act, 1961 (52 of 1961), or
under the standing orders of the establishment;"
9.1.2.
The concepts of "exempted employee" and "exempted
establishment" are defined in clauses (ff) and (fff) of Section 2 of the
Act of 1952 as under:
"(ff) "exempted employee" means an employee to whom a
Scheme 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 in
respect of which an exemption has been granted under section
17 from the operation of all or any of the provisions of any
Scheme or the Insurance Scheme, as the case may be, whether
such exemption has been granted to the establishment as such
or to any person or class of persons employed therein;"
9.1.3.
The expression "Fund" is defined in clause (h) of Section
2 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 under
Section 5 of the Act of 1952 and is defined in clause (l) of Section 2 as
under:
"(l) "Scheme" means the Employees Provident Fund Scheme
framed under section 5;"
A
B
C
D
E
F
G
H
77
9.1.5. Section 5 of the Act of 1952, providing for the Employees'
Provident Fund Scheme, reads as under2:
"5. Employees' Provident Funds Scheme. - (1) The Central
Government may, by notification in the Official Gazette, frame
a scheme to be called the Employees' Provident Fund Scheme
for the establishment of provident funds under this Act for
employees or for any class of employees and specify the
establishments or class of establishments to which the said
Scheme shall apply and there shall be established, as soon as
may be after the framing of the Scheme, a Fund in accordance
with the provisions of this Act and the Scheme.
(1A) The Fund shall vest in, and be administered by, the Central
Board constituted under section 5A.
(1B) Subject to the provisions of this Act, a Scheme framed
under sub-section 1 may provide for all or any of the matters
specified in Schedule II.
(2) A Scheme framed under sub-section 1 may provide that
any of its provisions shall take effect either prospectively or
retrospectively on such date as may be specified in this behalf
in 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 the
powers of the appropriate Government to grant exemption and the
consequence 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 such
conditions 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. The
relevant amendments to be noticed for the present purpose are that by Act No. 37 of
1953, original Section 5 was re-numbered as sub-section (1), the expressions for
establishment 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) was
inserted. The provisions relating to Central and State Boards and co-related aspects
were also inserted as Sections 5A to 5E by the said Act No. 28 of 1963, which need not
be dilated upon, for being not relevant for present purpose
MODERN TRANSPORTATION CONSULTATION SERVICES PVT.
LTD. v. C.P.F. COMMNR. E.P.F.O.