Garhwal Mandal Vikas Nigam Ltd. V. Regional Provident Fund Commissioner, Dehradun AND ANOTHER

WPMS/2742/2013

AI Insights

The case revolves around the Garhwal Mandal Vikas Nigam Ltd. (the Corporation), a state public sector undertaking, which challenged the order of the Regional Provident Fund Commissioner (respondent no.1) that withdrew the Corporation's exemption from certain provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The exemption was initially granted in 1980 but was revoked due to the Corporation's failure to comply with various conditions, including improper maintenance of provident fund records and delayed contributions. The court examined the compliance audit reports and found substantial violations by the Corporation, leading to the dismissal of the petition.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 725871 (HC-UTTARAKHAND)
• Appeal Type: Others
• Pronouncement Date: 02-11-2017
• Assessment Year: misc
• Other Referred Cases: N.K. Jain & others v. C.K. Shah & others, Balbir Kaur & another v. Steel Authority of India Ltd., Maharashtra Coop. Bank Ltd. v. Assistant P.F. Commissioner and others, Arcot Textile Mills Ltd. v. Regl. PF Commissioner, State of Uttar Pradesh through the Provident Fund Inspector, U.P. v. Lala Ram Gopal Gupta and three Others, EPF Commissioner v. Official Liquidator of ESSKAY Pharm. Ltd., TNSID Corpn. Ltd. v. RPF Commr.
• Laws Referred To: Employees Provident Funds & Miscellaneous Provisions Act, 1952, Companies Act, 1956, Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: D S PATNI
• Assessee Lawyers: SANDEEP KOTHARI
• Keywords: Exemption; Provident fund; Social security legislation; Relaxation; Compliance Audit
• Section: 5; 79; 17; 2(f); 2(e); 14B; 7Q; 2(ff); 2(fff); 27AA

Judgement Text

"Reserved Judgment IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition (M/S) No.2742 of 2013 Garhwal Mandal Vikas Nigam Ltd. ……. Petitioner Versus Regional Provident Fund Commissioner & another …… Respondents Mr. Sandeep Kothari, Adv. for the petitioner. Mr. D.S. Patni, Advocate, for the respondents. Reserved on: 21.09.2017 Delivered on: 02.11.2017 Hon’ble Rajiv Sharma , J. This petition has been filed challenging the order dated 30.10.2013 passed by the respondent no.1. 2. Key facts necessary for the adjudication of this petition are that the petitioner Garhwal Mandal Vikas Nigam (hereinafter to be referred as ‘the Corporation’) is an establishment incorporated under the Companies Act, 1956. It is a State public sector undertaking. The 100% paid up share capital of the Corporation is held by the State Government. The Corporation was granted relaxation by the respondent no.1 - Regional Provident Fund Commissioner on 12.5.1980 from applicability of the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The Corporation was issued a show cause notice on 14.10.2013. The Corporation filed its reply to the same on 19.10.2013. Respondent No.1 vide order dated 30.10.2013 has withdrawn the relaxation granted to the Corporation under para 79 of the EPF Scheme, 1952 for maintaining 2 its own P.F. Trust w.e.f. 31.10.2013 and directed the Corporation to report compliance as un-exempted establishment w.e.f. 1.11.2013. The Corporation was further directed to transfer the past accumulation in respect of the members of its P.F. Trust in accordance with para 28 of the Scheme. The Corporation has assailed the order dated 30.10.2013 in this petition. 3. The Parliament has enacted the Employees Provident Funds & Miscellaneous Provisions Act, 1952 (hereinafter to be referred as ‘the Act’). Section 2(e) defines the term ‘employer’. Section 2(f) defines ‘employee’, Section 2(ff) defines ‘exempted employee’ and Section 2(fff) defines ‘exempted [establishment]’. Section 17 empowers the appropriate government to exempt an establishment, whether prospectively or retrospectively, from the operation of all or any of the provisions of any Scheme. 4. The Central Government has framed the Employees’ Provident Funds Scheme, 1952 (to be referred as ‘the Scheme’ for brevity sake) under Section 5 of the Act. It is evident from the language employed in Paragraph 27AA that all exemptions already granted or to be granted u/s 17 of the Act or in Paragraph 27A of the Scheme shall be subject to the terms and conditions as given in the ‘Appendix A’. Under Paragraph 79 of the Scheme, the Commissioner has been given power to relax an establishment pending the disposal of application under the provisions of this Scheme. 5. According to the show cause notice, the Corporation has not submitted the Forms 7(PS) and 8(PS) from 2007-08 to 2011-12 despite repeated reminders which was a serious violation of condition no.16 3 governing grant of exemption/relaxation as contained in Para 27 AA of the Scheme. The Corporation has also not produced the records. There was non-deposit of EDLI contributions on the pretext that the Corporation has also taken policy of L.I.C. for which no exemption was sought from the competent authority. The Corporation has not maintained the records regularly in computerized format. The dues and deposits statements were prepared on receipt basis. The Units of Corporation were situated at various locations and the Provident Fund money, pension dues etc. sent by them were being shown against the month of its receipt irrespective of the month for which it was due. It was in breach of Condition No.5 of Grant of Exemption/Relaxation. The Corporation has not regularly maintained the disposal of claim register which is a serious violation of Condition No.12. The Corporation has kept a huge amount of Rs.3,35,81,900.26 at the end of 31.3.2012 and Rs.51,56,508/- at the end of 31.3.2013 un-invested. The Corporation has not invested the P.F. money within two weeks of its receipt which is a serious violation of Condition No.17. The bank charges were also required to be borne by the Corporation. 6. The show cause notice was issued to the Corporation on the basis of compliance audit of the Establishment for the year 2011-12 and 2012-13 by the Team of Officers of P.F. Office. The respondent no.1 has given a categorical finding that the Corporation was required to transfer to Board of Trustees the contributions payable to the provident fund by itself and employees at the rate prescribed under the Act from time to time by the 15th of each month following the month for which the contribution was payable and out of employer 4 contribution, 8.33% was required to be deposited in Employees’ Pension Fund by 15th of each month following the month for which the contribution is payable. Non- compliance of this would attract the provisions of Section 7Q of the Act and Damages under Section 14B of the Act. 7. The same factual matrix has also been illustrated in the counter affidavit filed by the Regional Provident Fund Commissioner. For example, the P.F. Contribution of June, 2013 was deducted from the salary of an employee in the month of June, 2013 and it was sent by the unit of the petitioner establishment to its headquarters in the month of October, 2013. Instead of showing this contribution as contribution for the month of June, 2013, the petitioner establishment was showing it as dues for the month of October, 2013. Moreover, the provident fund money was necessarily required to be invested within two weeks of its receipt as per the instructions contained in Govt. of India Notification No.S.O. 2126 dated 9th July, 2003. The petitioner establishment had kept a huge amount of Rs.81,61,120.26 un-invested in the month of March, 2012 on the plea that it was kept for final settlement and refundable loan etc. However, as per the reply furnished by the Corporation, no such payment was made during the month of April, 2012. It has also kept Rs.51,56,508.60 in the month of March, 2013 for final settlements and payment of refundable advances but only an amount of Rs.24,74,314/- was paid on account of final settlement and advances. It is clear violation of Condition No.17 of Grant of Exemption in Appendix ‘A’ of para 27AA of the Scheme. The Corporation has also not submitted Forms 7(PS) and 8(PS) from 2007-08 to 2011- 12, which is a serious violation of Condition No.16. This 5 illegality was pointed out to the Corporation by respondent no.1 vide letter dated 29.4.2013 and also in the show cause notice dated 14.10.2013. The Corporation has also not produced the records of the employees engaged on contractual basis which is violative of Condition No.26 prescribed in Para 27AA of the Scheme. This anomaly was pointed out to the Corporation vide notices dated 30.1.2013, 29.4.2013 and 10.7.2013. The Corporation has also committed the irregularity by not depositing the EDLI contributions. This was also pointed out to the Corporation vide letters dated 30.1.2013, 29.4.2013 and 10.7.2013. There was delay in deposit of P.F. Contribution as well as Pension Contribution attracting damages and penal interest. The reply submitted by the Corporation to this effect was not found satisfactory. This fact was also brought to the notice of Corporation during the audit for the year 2008- 09. The Corporation has also not maintained the registers regarding disposal of claims. It is in these circumstances the impugned order dated 30.10.2013 was passed by the respondent no.1. 8. Since the relaxation to the petitioner Corporation was granted by the respondent no.1- Regional Provident Fund Commissioner, he has the authority to withdraw the same as per Para 79 of the Scheme. The Corporation was required to submit an application for exemption u/s 17(2) of the Act for switching over GIS of LIC in lieu of EDLI Scheme. It was submitted by the Corporation on 14.11.2013 after lapse of 23 years. Moreover, as per the amendment carried out in Rule 4 of Part A of the Fourth Schedule to Income Tax Act, 1961 by Clause 56 of the Finance Act, 2006, the 6 recognition to a Provident Fund under the Income Tax Act shall be restricted to only such funds: - a. “which are covered under sub section (3) or sub section (4) of Section 1 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; and b. which have been exempted under Section 17 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 from the operation of any scheme framed therein. Further, clause (ea) of Rule 4 was substituted vide Finance Act, 2007 which reads as under:- “(ea) the fund shall be a fund of an establishment to which the provisions of sub-section (3) of section of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) apply or of an establishment which has been notified by the Central Provident Fund Commissioner under sub section (4) of Section 1 of the said Act and such establishment shall obtain exemption under Section 17 of the said Act from the operation of all or any of the provisions of any Scheme referred to in that section.” 9. Moreover, as per Section 17 of the Act, the appropriate government may exempt an establishment either prospectively or retrospectively from the operation of all or any of the provisions of any scheme whose employees are in enjoyment of provident fund benefits which on the whole are not less favourable to the employees than the benefits provided under the Act or any Scheme in relation to the employees in any other establishment of a similar character. 10. The respondent no.1 has complied with the Conditions stipulated under Appendix ‘A’ of Para 27AA of the Scheme before withdrawing the relaxation granted to the petitioner Corporation. The Corporation, till date, has not been granted any exemption by the appropriate government and only relaxation under Para 79 of the Scheme was granted to the Corporation. The Corporation was granted relaxation till the pendency of its application for exemption. There is no requirement of approval of 7 Central Provident Fund Commissioner before withdrawing the relaxation. 11. In (1991) 2 SCC 495 in the case of ‘N.K. Jain & others v. C.K. Shah & others’, their Lordships of Hon. Apex Court have held that non-payment of contribution of provident fund by establishment exempted under Section 17 as per its own Rules would constitute contravention of Section 6. Their Lordships further held that Section 17 is a self-contained provision dealing with the power to grant exemption. It was further held that Sections 14 and 17 forms part of a welfare legislation and are meant to ensure the employees the continuance of benefits of the provident fund. These should be interpreted in such a way so that the purpose of the legislation is allowed to be achieved. Their Lordships have held as under: - “10. We shall first take up the submissions in respect of Section 14(2A). This Section lays down that whoever contravenes or makes default in complying with any provisions of the Act or of any condition subject to which exemption was granted under Section 17 shall, if no other penalty is elsewhere provided by or under this Act for such contravention or non- compliance, be punishable with imprisonment and also fine mentioned therein. Firstly, it is submitted that the only contravention alleged against the appellants is that no contribution was made to the provident fund and since it is an exempted establishment, Section 6 is not attracted and therefore it must be held that there is no contravention or non-compliance of any of the provisions of the Act. In other words, the submission is that Section 6 of the Act applies only to the non-exempted establishments and covered under the statutory exemption . The learned Additional Sessions Judge, however, as already noted, has held that Section 6 applies to both exempted and non-exempted establishments. This aspect we will consider at a later stage while examining the applicability of Section 14(1A). So far Section 14(2A) is concerned, the later part of it specifically is made applicable to the exempted establishments and if there is contravention of any of the conditions subject to which exemption was granted under Section 17 and if no other penalty is elsewhere provided by or under the Act then such contravention or non-compliance is punishable. The essentials of these provisions are; (i) there should be a contravention or default in complying with the provisions of the Act, or (ii) there should be a contravention or default in complying with any of the conditions subject to which exemption was granted under Section 17, and (iii) there should be no other penalty elsewhere provided by or under the Act for such contravention or non-compliance. Only when these essentials are satisfied, the Section is attracted. The learned Counsel for the appellants submitted that in the present case there is no such contravention or non-compliance of any of the conditions subject to which exemption was granted. His further submission in this context is that the cancellation of an exemption 8 as provided under Section 17(4) is a penalty provided by or under the Act for such contravention and therefore Section 14(2A) is not attracted. To appreciate these contentions it becomes necessary to refer to the conditions subject to which the exemption under Section 17 was granted in the present case. The relevant conditions for our purposes are Conditions Nos. 1, 2(a), 2(b), 10 and 15 and they read as under: SCHEDULE-II (Conditions) 1. Every factory shall have a provident fund scheme in force the rules of which with respect to the rates of contribution shall not be less favourable than those specified in Section 6 of the Act and the employees shall also be in enjoyment of other provident fund benefits which on the whole shall not be less favourable to the employees than the benefits provided under the Act or any Scheme in relation to the employees in any other factory of a similar character and these rules shall be followed in all respects. 2. The employer in relation to each factory (hereinafter referred to as the 'employer') shall within three months of the date of publication of this notification, amend the Constitution of the Provident Fund maintained in respect of the factory in regard to the following matters namely: (a) The Provident Fund shall vest in a Board of Trustees and there shall be a valid instrument in writing which adequately safeguards the interests of the employees and such instruments shall be duly registered under Section 5 of the Indian Trusts Act, 1882; (b) the Board of Trustees shall consist of an equal number of representatives of the employees and the employer and all questions before the Board shall be decided by a majority of votes; xx xx xx 10. The employer shall accept the past provident fund accumulations or an exempted fund and who obtains employment in his factory. Such an employee shall immediately be admitted as a member of the factory's Provident Fund. His accumulations which shall be transferred within 3 months of his joining the factory shall be credited to his account. xx xx xx 15. Exemption granted by this notification is liable to be withdrawn by the Central Provident Fund Commissioner for breach of any of the aforesaid conditions or for any other sufficient cause which may be considered appropriate. As per condition No. 1 the exempted factory should have a provident fund scheme in force the rules of which with respect to the rates of contribution shall not be less favourable than those specified in Section 6. This part of the condition is in conformity with the requirement under Section 17(1). The condition proceeds to lay down that these rules shall be followed in all respects. There is no dispute that as per the rules governing the provident fund scheme of the exempted establishment in question, the contributions have to be made regularly and condition No. 1 lays down that these rules should be followed in all respects. The default in making the contribution amounts to contravention of the rules and consequently the condition No. 1, subject to which the exemption was granted, is clearly violated. That there was a violation of this condition is also made clear by the notice issued by the Regional Provident Fund Commissioner on 15.9.75. The relevant portion of the notice reads thus: 9 And thus it has violated the conditions governing grant of exemption for contravention of which the offenders are liable for the cancellation of the exemption granted under Section 17 of the Employees' Provident Fund Act, 1952. We are therefore satisfied that some of the conditions subject to which the exemption was granted have been violated. So this part of Section 14(2A) is satisfied. Now we shall see whether the cancellation under Section 17(4) is a penalty provided by or under the Act. 11. In the common parlance the word \"penalty' is understood to mean; a legal or official punishment such as a term of imprisonment. In some contexts it is also understood to mean some other form of punishment such as fine or forfeiture for not fulfilling a contract. But in gathering the meaning of this word, the context in which this is used is significant. In the Act, as already noted, Section 14 deals with penalties and enumerates various contraventions or non-compliances which are punishable with imprisonment. Every contravention mentioned in each of the sub-sections is punishable with imprisonment and for offences covered by Sections 14(1A), 14(1B) and 14(2A) minimum imprisonment is also made compulsory. The imposition of fine also is prescribed . The penalties mentioned in this connection would indicate that the Legislature envisaged that a penalty should necessarily mean imprisonment or atleast imposition of fine. We find from the reports that the National Commission of Labour having found that the working of the Employees' Provident Fund and Family Pension Fund Act, 1952 are not effective and that in order to cheque the growth of arrears penalties for defaults in payment of provident fund dues should be made more stringent and the default should be made cognizable. Accordingly it was proposed to amend the Act so as to render penal provisions more stringent and to make defaults cognizable offences and provisions were also made for compulsory imprisonment in case of non-payment of contributions and administrative and inspection charges. The provisions of the Act thereafter are suitably amended. We must bear this object and reasons in mind in examining whether a mere cancellation of the exemption granted under Section 17(4) would amount to a penalty. No doubt under Section 14(2A) one of the requirements is that \"there should be no other penalty elsewhere provided by or under the Act for such contravention or non-compliance,\" but we are not persuaded to hold that the mere cancellation of an exemption amounts to a penalty particularly expected to be stringent as contemplated under Section 14. However, we shall proceed to consider some of the submissions made on this aspect. The learned Counsel referred to certain standard books on words and phrases. In Butterworths' Words and Phrases, legally defined Third Edition page 343 the meaning of the word 'Penalty' is given as that the word 'penalty' is large enough to mean, is intended to mean, and does mean, any punishment whether by imprisonment or otherwise. 12. We may also note that Section 14(2A) was introduced in the year 1953 by Act No. 37 of 1953 whereas Sub-section 4 of Section 17 was introduced in the year 1963 by the amendment Act No. 28 of 1963, nearly ten years later. This only shows that the cancellation is not meant to be treated as one of the penalties and the reasonable inference is, particularly having regard to the object underlying the Act, that the expression 'penalty' in the context in which it is used particularly in Section 14 including Section 14(2A) only connotes imposition of imprisonment or fine. The cancellation as provided under Section 17(4) is only consequential and also rather procedural meant to be applied to the exemption granted under Section 17(1) in case of non-compliance of the conditions subject to which such exemption was granted. A close perusal of Section 17 and its various sub-sections would clearly indicate that it is a self-contained provision dealing with the power to grant exemption and the consequent obligations and the procedural aspects and Section 17(4) is a built-in provision providing for cancellation of such exemption in case of contravention or 10 non-compliance of the conditions. By a cancellation of the exemption only the privilege granted is being withdrawn by an executive order. Suffice it to say that such a cancellation does not penalise the management and consequently does not result in any punishment that is normally awarded in respect of an offence. In State of Uttar Pradesh through the Provident Fund Inspector, U.P. v. Lala Ram Gopal Gupta and three Others, [1973] A L J 355 a Division Bench considered this very question and held that the cancellation of exemption in accordance with Section 17(4)(a) does not involve imposition of a penalty within the meaning of Section 14(2A) of the Act. In our view the Division Bench of the Allahabad High Court rightly held that cancellation under Section 17(4)(a) is not an alternative penalty for failure to comply with the conditions subject to which the exemption was granted and if the Parliament had contemplated that the cancellation of the exemption amounted to penalty within the meaning of Section 14(2A) it was purposeless to provide for any similar penalty under Section 14(2A). It is thus clear that if the contention of the learned Counsel is to be accepted then Section 14(2A) would become otiose and redundant. 15. Shri P. Chidambaram, learned Counsel for the appellants, however, contended that the failure to contribute to the fund under the 1952 Scheme only is punishable as it amounts to \"contravention\" and that in the instant case the complaint is that the management failed to contribute to the fund maintained by the establishment itself and such a failure is not punishable and the word \"contribution\" must be construed strictly as defined under Section 2 and not otherwise as the context does not otherwise require. Similar words occur in Section 2 of the Companies Act and in S.K. Gupta and Anr. v. K.P. Jain and Anr. [1979]2SCR1184 wherein it is held as under: Where in a definition section of a statute a word is defined to mean a certain thing, wherever that word is used in that statute, it shall mean what is stated in the definitions unless the context otherwise requires. But where the definition is an inclusive definition, the word not only bears its ordinary, popular and natural sense whenever that would be applicable but it also bears its extended statutory meaning. At any rate, such expansive definition should be so construed as not cutting down the enacting provisions of an Act unless the phrase is absolutely clear in having opposite effect. In State Bank of India etc. v. Yogendera Kumar Srivastava and Ors. etc., (1988)ILLJ41SC it is observed: Repugnancy of the definition of any term may arise only if such definition does not agree with the subject or context of a particular provision. But, surely, any action not in conformity with the provision of the definition clause will not render the definition of a term repugnant to the subject or context of any provision of the statute containing the term. Relying on the above, passages, the learned Counsel for the appellants further submitted that the context in which the word 'penalty' is used would show that Section 14(2A) does not necessarily require that there should be a punishment of either imprisonment or fine inasmuch as the \"cancellation\" also can be a penalty within the meaning of Section 14(2A). At any rate according to the learned Counsel for the appellants there is an ambiguity and that this being a penal law, the provisions should be construed strictly and necessarily the benefit of doubt, if any, should go to the accused. In view of the discussion already made by us on this aspect, this contention does not merit acceptance. In our view, there is no ambiguity as suggested by the learned Counsel for the appellants. Even assuming so, in view of the object underlying the Act the context does definitely require a reasonable interpretation of Section 14(2A) so as to make it applicable also to a case of failure to contribute to the fund as per the conditions under which the exemption was granted. Like-wise it must also be interpreted to mean that cancellation does not amount to a penalty. 11 Therefore the submission that Section 14(2A) is not attracted does not merit acceptance.” 12. In (2000) 6 SCC 493 in the matter of ‘Balbir Kaur & another v. Steel Authority of India Ltd.’, their Lordships of Hon. Supreme Court have held that the EPF Act, 1995 is a social security legislation. It was further held that the social justice is the norm for administration of justice. 13. In (2009) 10 SCC 123 in the matter of ‘Maharashtra Coop. Bank Ltd. v. Assistant P.F. Commissioner and others’, their Lordships of Hon. Supreme Court have held that the E.P.F. Act has been enacted in furtherance of Articles 38 and 43 of the Constitution of India. Their Lordships have held as under: - “16. We have considered the respective submissions. In pre- independence era, some of the big industrial employers introduced schemes of provident funds for the welfare of their workers. However, the workers of small industrial establishments did not get similar benefits because employers of those establishments did not introduce voluntary schemes of provident funds. The framers of the Constitution were very much alive to the plight of the working class and particularly the unorganised labour employed in factories and other establishments. They were also conscious of the fact that the goals of justice — social, economic and political and equality of status and of opportunity proposed to be incorporated in the Preamble to the Constitution will remain illusory for weaker sections of society unless the State takes affirmative legislative and administrative measures for ameliorating the conditions of those sections including the workers employed in factories, etc. Therefore, specific provisions were incorporated in Part IV of the Constitution with the title “Directive Principles of State Policy” casting an obligation upon the State to apply these principles in making laws. 17. Article 38 which has been renumbered as clause (1) thereof by the Constitution (Forty-fourth Amendment) Act, 1978 declares that the State shall strive to promote the welfare of the people by securing and protecting, as effectively as it may, a social order in which justice, social, economic and political, shall inform all the institutions of national life. Clause (2) of Article 38 mandates the State to strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different avocations. Article 43 casts a duty on the State to make efforts to secure by suitable legislation or economic organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities, and, in particular, social opportunities. The State is also required to make special endeavour to promote cottage industries on an individual or cooperative basis in rural areas. 12 18. Soon after enforcement of the Constitution, the Government of India promulgated the Employees’ Provident Funds Ordinance on 15-11-1951, which was replaced by the Act, which belongs to the family of legislations enacted by Parliament in furtherance of the mandate of Articles 38 and 43 of the Constitution and is intended to give social security to the workers employed in the factories and other establishments. The Act provides for institution of provident funds, pension fund and deposit-linked insurance fund in factories and other establishments. It requires the employers of the factories and specified establishments to deduct certain amount from the wages payable to the employees and also make contribution to various funds, which are administered by the Central and Regional Provident Fund Commissioners.” 14. In (2011) 10 SCC Page 727 in the matter of ‘EPF Commissioner v. Official Liquidator of ESSKAY Pharm. Ltd.’, their Lordships of Hon. Supreme Court have held that the E.P.F. Act is a social welfare legislation. It should be given liberal and purposive interpretation. Their Lordships have held as under: - “22. The EPF Act is a social welfare legislation intended to protect the interest of a weaker section of the society i.e. the workers employed in factories and other establishments, who have made significant contribution in economic growth of the country. The workers and other employees provide services of different kinds and ensure continuous production of goods, which are made available to the society at large. Therefore, a legislation made for their benefit must receive a liberal and purposive interpretation keeping in view the directive principles of State policy contained in Articles 38 and 43 of the Constitution. 15. In (2013) 16 SCC page 1 in the case of ‘Arcot Textile Mills Ltd. v. Regl. PF Commissioner, their Lordships of Hon. Supreme Court have held that the E.P.F. Act is a beneficial social legislation to ensure health and other benefits of the employees. The employer under the Act is an under statutory obligation to make the deposit that is due from him on a timely basis. Their Lordships have held as under: - “27. Presently we shall address to the nature of the lis that can arise under this provision. There cannot be any dispute that the Act in question is a beneficial social legislation to ensure health and other benefits of the employees and the employer under the Act is under statutory obligation to make the deposit that is due from him. In the event of default committed by the employer Section 14-B steps in and calls upon the employer to pay the damages. (See Regl. Provident Fund Commr. v. S.D. College15.) Section 7Q which provides for interest for belated payment is basically a compensation for payment of interest to the affected employees. This provision has been made to secure just and humane conditions of work as 13 has been opined in Regl. Provident Fund Commr. v. Hooghly Mills Co. Ltd.16 The language employed in Section 7-Q provides for levy of interest on delayed payment and the rates have been stipulated. When a composite order is passed or order imposing interest becomes a part of the order or levy in any of the provisions of the Act the authority grants a reasonable opportunity of hearing to the employer/affected party. 28. The issue that falls for consideration in this case is when the employer volunteers may be after long delay to pay the dues, can he claim any right to object pertaining to the interest component. On certain occasions the authority on its own may issue a demand notice under Section 7-Q after a long lapse of time by computing the delay committed by the employer in payment of the dues. We repeat at the cost of repetition that it is a matter of computation but sometimes computation is done when the main order is passed and at times an interest component is demanded separately by the competent authority. To say that there cannot be any error at any point of time will be an absolute proposition. There can be errors in computation. It is difficult to hold that when a demand of this nature is made in a unilateral manner and the affected person is visited with some adverse consequences no prejudice is caused. 29. The learned counsel for the respondent would contend that the natural justice has been impliedly excluded and for the said purpose she would emphasise upon the scheme and the purpose of the Act. There is no cavil for the fact that it is a social welfare legislation to meet the constitutional requirement to protect the employees. That is why the legislature has provided for imposition of damages, levy of interest and penalty. It is contended that it is luminous that the legislature always intended that when hearing takes place for determination of the money due, the component of interest would be computed and in that backdrop the affected person will have opportunity of hearing. But in reality when an independent order is passed under Section 7-Q which can also be done as has been done in the present case the affected person, we are inclined to think, should have the right to file an objection if he intends to do. We are disposed to think so, when a demand of this nature is made, it cannot be said that no prejudice is caused.” 16. In 2004-I-LLJ Page 67 in the matter of ‘TNSID Corpn. Ltd. v. RPF Commr.’, learned Single Judge of Madras High Court has held that a perusal of the relevant provisions of the Act and Scheme would disclose that an establishment seeking exemption u/s 17 of the Act would not put it outside the purview of the Act, much less entitle it to obtain the exemption automatically without fulfilling conditions. It was held as under: - “16. I have considered the submissions of both sides. A perusal of the above mentioned provisions under the Act and the Rules would disclose that the fact that the petitioner-establishment sought for exemption under Section 17 of the Act, will not put them outside the purview of the Act, nor entitle the petitioner-establishment to receive exemption automatically. They have to frame their own scheme and have to satisfy the respondent that the Trust constituted by the petitioner-company is really beneficial to the workers under the petitioner-establishment. Therefore, unless and other wise the conditions are properly fulfilled by the petitioner- establishment, the petitioner cannot claim to be exempted from the provisions of the Act as a matter of right. It is not disputed that while granting relaxation under Section 17 pending disposal of the exemption 14 application, certain conditions were imposed. It is also not disputed that after two inspections several defects were pointed out and after repeated inspection ultimately two of the requirements were allegedly not fulfilled namely, the details relating to the employees employed by or through any contractor were not furnished to the respondent and that the pattern of investment of Provident Fund was also not in terms of the directions by the respondents. 17. In fact, the stand taken by the petitioner-establishment themselves would disclose that they do not dispute the fact that the said two requirements have not been rectified. By a letter dated 14.3.2000, the petitioner has merely asked for one month time to spell out their stand on the issue after consultation with the legal experts and other Government Corporations executing the Civil works through the contractors. A perusal of the above quoted provisions of the Act as well as the Rules discloses that there are options available to the petitioner either to continue in terms of the Act or to constitute their own Scheme subject to the terms of relaxation order. As regards the liability of the principal employer, above quoted provisions are very clear to the effect that the liability is mainly on the principal employer. It is the duty of the principal employer to insist from the contractor to furnish all the details relating to the employees and there is also a corresponding duty cast upon the contractor to furnish all the particulars to the principal employer. Therefore, the petitioner establishment as the principal employer is duty bound to comply with all the requirements and the attitude of the officers of the petitioner- establishment in raising untenable contentions which are not consistent with the provisions of the Act and Rules cannot be appreciated. Considering that the petitioner-establishment is a Government establishment, the respondent has also shown sufficient indulgence and on the request of the petitioner establishment, they have also chosen to keep the withdrawal under abeyance. But in spite of the same, no concrete steps have been taken by the petitioner establishment thereby leaving no other alternative except to withdraw the relaxation order. It is not sufficient for the petitioner to plead that it is not possible for them to obtain particulars of the employees employed by or through the contractor. The provisions of the act mandate all the establishments to comply with the Scheme and conditions on which the relaxation is granted in strict terms. The failure to comply with the pattern of investment of the Provident Fund scheme monies is also a deviation by the petitioner establishment.” 17. Moreover, in the present case also, the Corporation has not adhered to the amendments carried out in the Income Tax Act from time to time about the manner in which the fund is required to be maintained resulting in monthly loss to the Members of the Scheme. 18. Accordingly, there is no merit in this petition and the same is dismissed affirming the impugned order dated 30.10.2013 passed by the respondent no.1. (Rajiv Sharma, J.) Rdang "