- (1.) The appellant before us is a manufacturer of beedis. He challenged an order made by the respondents under Section 7-A of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the Act'). The appellant had not deducted from the wages of the home workers employed through contractors for manufacture of beedis because of pendency of litigation in order to contribute towards the provident fund on the ground that the Act would not be applicable in cases of such employees. Earlier on the receipt of a notice under the Act from the respondents the appellant challenged the notice in the High Court in C.W.J.C. No. 4089 of 1988 on the ground that the Act has no application in respect of home workers engaged in rolling the beedis engaged through independent contractors. An interim stay had been granted by the Court during the pendency of the proceeding. By an order made on July 27, 1989 the said writ petition was dismissed by holding that the provisions of the Act are applicable in respect of home workers engaged in rolling the beedis of the petitioner's establishment through contractors. This decision was questioned before this Court in Special Leave Petition No. 10538 of 1989. In the meanwhile, the Provident Fund Commissioner determined the amount due from the appellant and called upon it to deposit a sum of Rs. 66,84,930.50 being employers' and employees' contribution towards the provident fund from July, 1977 to August, 1986. By another order made on December 18, 1989 the appellant was called upon to pay a sum of Rs. 28,72,383.85 within stipulated time. These demands were also challenged in two writ petitions, C.W.J.C. No. 1114 of 1990 and C.W.J.C. 1115 of 1990. This Court by an order made on August 22, 1989 disposed of S.L.P.(C) No. 10538 of 1989 observing that the question involved in the matter could be heard and decided in the proceedings pending before the High Court. The two writ petitions, namely, C.W.J.C. No. 1114 of 1990 and C.W.J.C. 1115 of 1990 came to be dismissed on August 19, 1992. A sum of Rs. 46,90,051/- out of a total demand of Rs. 95,57,314.35 was realised by the Provident Fund Commissioner. When the order made by the High Court in C.W.J.C. No. 1114 of 1990 and C.W.J.C. 1115 of 1990 was questioned in Special Leave Petitions (C) Nos. 15312-13 of 1992 filed in this Court, the same were dismissed on May 3, 1993 by stating as follows : "The SLPs are dismissed. It is open for the petitioner to collect the names of the Bidi workers who work for them through their contractors and furnish the names of all the workers to the Provident Fund Commissioner. The Provident Fund Commissioner thereafter will verify these names and calculate the liability of the petitioner on the basis of such verification. If any excess amount is found due from the petitioner, the Provident Fund Commissioner will recover such amount from the petitioner, on the other hand, if any amount is found due to the petitioner, the Provident Fund Commissioner will refund the same. The petitioner to furnish names of the workers, as above within six months from today." Thereafter the appellant furnished the particulars of home workers stated to be engaged by the contractors to the best of information available with the appellant for final determination of its liability under Section 7-A of the Act as noticed by this Court. A claim was made by the appellant for waiver from payment of employees' contribution for the period from October, 1985 to May 3, 1993 on the ground that he had not been able to collect the same. But the said claim was disallowed. The Regional Provident Fund Commissioner issued a certificate for recovery of the outstanding liability of Rs. 46,17,538.20 through the Recovery Officer, Bihar. This action of the respondent was called in question before the High Court. Three contentions were raised before the High Court, vis a vis : (i) In the circumstances arising in this case the appellant, cannot be asked to pay retrospectively employees' contribution to the provident fund without deducting that from their wages as it is not possible to comply with the provisions of Para 32 of the Statutory Scheme. This situation arose on account of uncertainty of their liability until the same was settled by an order made under Section 7-A of the Act on June 2, 1994 by the Regional Provident Fund Commissioner; (ii) There is a bona fide dispute as to the applicability of the Act and payment by the employer towards the employees' contribution to the fund would arise only after making deductions from their wages and that the employer cannot be made liable to pay that contribution from an anterior date to the final determination of their liability under Section 7-A of the Act; and (iii) The demands in question are arbitrary and unreasonable in violation of Article 14 of the Constitution in view of the admitted position that the appellant had bona fide not deducted the employees contribution from the wages of the employees due to various uncertainties arising out of litigation before the Courts.
(2.) The contesting respondents before the High Court submitted that after the law was settled in P. M. Patel and Sons v. Union of India, AIR 1987 SC 447 : (1986 Lab IC 1410), there was hardly any scope for litigation regarding applicability of the Act in respect of home workers employed by the appellant through contractors. When the liability became clear a formal notice as to coverage under the Act had been sent to the appellant in January, 1977 to the effect that the notification issued by the Central Government applied to the appellant with effect from July, 1976 to December, 1977 and the Code Number is BR/7 A-Cell/1365/88/3445 in respect of the establishment of the appellant. Thus it was contended that the formal notice had already been issued as to the coverage and, therefore, it is not open to the appellant to contest their liability arising under the Act by stating that it is the date of determination that will attract the provisions of the Act and not the date of notification extending the application of the Act to the industry in which the appellant is engaged. The learned single Judge of the High Court concluded as follows : "In the instant case, I have found that the petitioner raised dispute as regards the applicability of the Act bona fide and that until collection of particulars of the home-workers engaged by the contractors and furnishing thereof in compliance with the order dated 3-5-1993, passed by the Hon'ble Supreme Court, the petitioner did not have the particulars of the home-workers engaged by the contractors. The petitioner also did not get deduction of those employees' contributions from their wages by the contractors for the period from October, 1985 to 3-5-1993, as the petitioner bona fide took the view that the employers of these home-workers were the contractors and not the petitioner. As such, it cannot be said that the petitioner deliberately or negligently did not make deduction of the employees' contribution from the wages of the home-workers for the period from October, 1985 to 3-5-1993. No doubt, as per the provision of paragraph 30 of the Employees' Provident Funds Scheme, 1952 (hereinafter mentioned as the 'The Scheme'), the employer is required to pay both contributions payable by the employer as well as the employees and the employees' contributions, equal to the contribution of the employer, are to be deducted from their wages. Now, in case the petitioner is required to pay the employees' contribution for the period from October, 1985 to 3-5-1993, in view of the provisions of paragraphs 31 and 32 of the Scheme, the petitioner will not be able to make deduction of the employees' contribution from the wages of the home-workers for the said period." In this background, the learned single Judge is of the view that it is inequitable and unfair to saddle the petitioner with the liiability to pay the employees' contribution for the period from October, 1985 to May 3, 1993 which the appellant could not and did not deduct through its contractors on bona fide ground. In reaching this conclusion, the learned Judge placed reliance upon the decision of Calcutta High Court in Mantu Biri Factory (P) Ltd. v. Regional Provident Fund Commissioner, Civil Appeal 6 of 1993 decided on March 8, 1994. The matter was taken up in appeal before the Division Bench of the High Court in Letters Patent Appeal No. 403 of 1996*. The Division Bench did not agree with any of the contentions raised on behalf of the appellant and held that the appellant is liable to make payments. Thus the High Court allowed the appeal and set aside the order made by the learned single Judge.
(3.) In this appeal the contentions urged before the High Court are reiterated before us and in support of the same strong reliance is placed on the decision of this Court in District Exhibitors Association, Muzaffarnagar v. Union of India, (1991) 2 SCR 477 : 1991 AIR SCW 1212 : AIR 1991 SC 1381 : (1991 Lab IC 1332).;