Deciding Authority : Supreme Court
Date of Judgement : 09/01/2000
Bench : S.R.Babu, S.N.Variava
Facts : The Appellant claimed that they had ceased operation from 1984. In Suit No. 1937 of 1985, filed by Bank of Madura, Court Receiver,High Court Bombay was appointed as Court Receiver for all the assets of the Appellant’s Company on 28th November, 1985. The workers, through their Unions filed various proceedings before the Labour Court, claiming their arrears of wages, retrenchment benefits,terminal benefits etc. A number of Awards came to be passed by the Labour Court. The workers carried their dispute all the way upto this Court. On 21st March, 1988, this Court passed an order wherein, inter alia, directions were issued to the High Court to look into the question whether there was any scope for restructuring the mill and if there was no scope for restructuring the mill, then to close down the same so that the employees could be retrenched with effect from a particular date to be indicated by the High Court in its Order. On 12th December, 1988, the High Court fixed 31st October, 1988 as the date when the services of the employees was to stand terminated/retrenched. The Court Receiver was directed to notify this date as the date of retrenchment of the workers. On 2nd December, 1995 the Appellant Company entered into a Memorandum of Settlement with its workers, wherein it was agreed that the workmen whose services were terminated/retrenched with effect from 31st October, 1988 would be paid their dues on or before 31st March, 1996. It was also agreed that even though the amount payable was Rs.1,23,03,947.07 the Union would accept a sum of Rs.1,10,00,000/- towards settlement of dues.
The 2nd Respondent declined to exempt the Appellant Company from payment of Provident Fund on the wages paid by the Company under the said Settlement. Thus Provident Fund was claimed on the sum of Rs.35 lakhs i.e. the wages. The Company claimed that since this was an ad hoc payment Provident Fund was not deductible on this sum. This was not accepted by the 2nd Respondent. The Appellants therefore preferred a Writ Petition in the High Court of Bombay which came to be dismissed on 12th August, 1997.
Judgement : Undoubtedly contribution towards Provident Fund can only be on a basic wage. However, it is not at all necessary that the workman must actually be on duty or that the workman should actually have worked in order to attract the provisions of the Employees’ Provident Funds Act. For example, there may be a lockout in a Company. During the period of lockout the workmen may not have worked yet for the purpose of the Employees’ Provident Funds Act they will be deemed to have been on duty and Provident Fund would be deductible on their wages.
It is the duty of the employer to contribute. The employers agreement,with the employee, not to deduct does not discharge the employer of his obligation in law to make payment.The term of the settlement which provides that there shall be no deduction only means that the Appellant Company has agreed to take on this liability also. We,therefore,find no infirmity in the order of the learned Single Judge or the Division Bench of the High Court.
Held : Appeal Dismissed.
Tejasv Anand , 4th Year , AMITY LAW SCHOOL,DELHI.
A COMPREHENSIVE WEBSITE FOR ALL LEGAL DEVELOPMENTS