Date of Judgement:
9 September 2011
Bench:
Justice Dalveer Bhandari
Justice Deepak Verma
Parties:
Appellant – Marathwada Gramin Bank Karamchari Sanghatana
Respondent - Management of Marathwada Gramin Bank
Subject
The judgement is about a dispute between the employees and the management of Marathwada Gramin Bank. It also enumerates the scope of contribution to Provident Fund Schemes by the employer.
Overview
- Marathwada Gramin Bank est. in 1976, followed the provisions of the Employees Provident Fund Scheme, 1952 (Statutory Scheme). But in 1981, the bank framed its own scheme under which, the bank employees received excess Provident Fund (PF) as compared to what they received under the Employees Provident Fund Scheme, 1952.
- The Regional Provident Fund Commissioner had permitted the bank to do so. However, this permission was later withdrawn in the year 1991 and the bank was directed to implement the provisions of the Statutory Scheme.
- The bank complied and under Section 9A of the Industrial Disputes Act, 1947 issued a ‘notice of change’. Basically, the bank stopped the payment of PF in excess of its statutory liability and continued to pay PF according to Statutory Scheme.
- This matter was referred to the Central Government Industrial Tribunal. The Tribunal relied on Section 12 of the Employees Provident Fund and the Miscellaneous Provisions Act, 1952 and said that employers cannot reduce the wages of employees to whom the scheme applies. It also held that the reduction of contribution of PF by the bank was not justified.
- Aggrieved by this, the bank filed a writ petition before the Bombay High Court on the grounds that the tribunal award, as well as the communication issued by the Regional Provident Fund Commissioner, is contrary to the law. To support this, they relied on the judgement in Vijayan V. Secretary to Government [2006 (3) KLT 291].
- The opposition submitted that Section 17(3)(b) of the 1952 Act was subject to certain conditions. However, the Court did not allow this contention because it was not raised before and can’t be raised now in a writ petition.
- They also contended that the banks are required to obtain leave of Central Govt. which they did not. To support this, they cited the judgement in Madura Coats Employees Union V. Regional Provident Fund Commissioner and Others [(1999) ILLJ 928].
- High Court held that Section 17(3)(b) of the 1952 Act was not applicable because it applies only when the exemption is granted and is in force. As a result, the appellant moved to the Supreme Court under Article 136 of the Constitution of India.
Legal Provisions
- Section 9A of the Industrial Disputes Act, 1947 – A ‘notice of change’ in the prescribed manner to be given to the workmen regarding changes in the conditions of service.
- Section 12 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 – Employer not permitted to reduce wages, directly or indirectly, of any employee to whom the scheme applies.
- Section 17(3)(b) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 – An establishment shall not reduce the benefits in the nature of PF, pension, gratituity, without the leave of the Central Government.
- Article 136 Constitution of India – Special leave to appeal by the Supreme Court.
- Employees Provident Fund Scheme, 1952 – An employment benefit scheme established and regulated under Employees Provident Fund Organization.
Issues
- Can an employer be compelled to pay Provident Fund in excess of its statutory liability?
Judgement
- The Supreme Court after its perusal said that the concerned bank was under obligation to pay Provident Fund to employees according to the provisions of the Statutory Scheme.
- However, they are under no such obligation to pay in excess of its statutory liability just because they had started paying Provident Fund in excess for some time in the past.
- The Apex Court held that appellants are entitled to Provident Fund based on the statutory liability of the bank. However, since the banks never discontinued their contribution to Provident Fund, they have committed no wrong.
- Lastly, the Court also reiterated that the decision of the Division Bench of the Bombay High Court was fair, just, appropriate and in consonance with the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
Conclusion
This case is considered to be a landmark judgement under labour law. It cleared out the standing relationship between an employer and his employee in terms of payment of Provident Fund. It also established that an employer cannot be compelled to pay Provident Fund beyond the Statutory Provisions.
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