Case Note & Summary
The petitioner, The Pachora Peoples' Co-op. Bank Ltd., a co-operative bank registered under the Co-operative Societies Act, 1960, and covered by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act), challenged two orders: (1) an order dated 28.9.2010 passed by the Assistant Provident Fund Commissioner (APFC) under Section 7A of the EPF Act assessing provident fund dues of Rs.8,37,745/- in respect of Pigmy Deposit Collectors, and (2) an order dated 20.5.2011 of the Employees Provident Fund Appellate Tribunal, New Delhi, dismissing the petitioner's appeal (A.T.A. No.727(9) of 2010). The petitioner contended that Pigmy Deposit Collectors were not 'employees' under Section 2(f) of the EPF Act as they were commission agents and not earning 'basic wages' under Section 2(b). The APFC, after an inquiry initiated based on an Enforcement Officer's report dated 5.3.2010, concluded that the Pigmy Deposit Collectors were employees and the commission paid to them constituted basic wages, thus attracting provident fund liability. The petitioner had earlier filed W.P.No.8568/2009 challenging the Section 7A inquiry, which was dismissed as withdrawn on 16.12.2009. The High Court, after hearing arguments, held that the Pigmy Deposit Collectors are employees under Section 2(f) as they are employed for wages (commission) and their work is integral to the bank's business. The court further held that the commission paid is 'basic wages' under Section 2(b) as it is remuneration for work done and not excluded by any exception. The court found no procedural irregularity in the Section 7A inquiry and upheld the assessment of Rs.8,37,745/-. Consequently, the writ petition was dismissed, and the orders of the APFC and the Appellate Tribunal were confirmed.
Headnote
A) Employees' Provident Fund - Definition of Employee - Section 2(f) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 - Pigmy Deposit Collectors - The court held that Pigmy Deposit Collectors are employees under Section 2(f) as they are employed for wages (commission) and their work is connected with the establishment's business. The nature of their employment, including supervision and control by the bank, brings them within the definition. (Paras 5-10) B) Employees' Provident Fund - Basic Wages - Section 2(b) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 - Commission as Basic Wages - The court held that the commission paid to Pigmy Deposit Collectors is 'basic wages' under Section 2(b) as it is remuneration paid for work done and is not excluded by any of the exceptions in the definition. The employer is liable to deduct and deposit provident fund contributions on such wages. (Paras 11-15) C) Employees' Provident Fund - Section 7A Inquiry - Validity of Assessment - The court upheld the order of the Assistant Provident Fund Commissioner under Section 7A assessing provident fund dues of Rs.8,37,745/- in respect of Pigmy Deposit Collectors, finding no procedural irregularity and that the inquiry was conducted in accordance with law. (Paras 16-20)
Issue of Consideration
Whether Pigmy Deposit Collectors working for a co-operative bank fall within the definition of 'employee' under Section 2(f) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and whether the commission paid to them constitutes 'basic wages' under Section 2(b) of the said Act.
Final Decision
The writ petition is dismissed. The order dated 28.9.2010 passed by the Assistant Provident Fund Commissioner and the order dated 20.5.2011 passed by the Employees Provident Fund Appellate Tribunal are confirmed.
Law Points
- Pigmy Deposit Collectors are employees under Section 2(f) of the EPF Act
- Commission paid to them is basic wages under Section 2(b)
- Employer is liable to pay provident fund contributions on such wages
