TMI Blog2024 (5) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... the EPF MP Act states that the Central Government may, by notification in the Official Gazette, frame a Scheme to be called the Employees Provident Fund Scheme for the establishment of provident funds under this Act for the employees or for any class of employees and specify establishments or class of establishments to which the said Scheme shall apply and they shall be established, as soon as, may be after the framing of the scheme, a Fund in accordance with the provisions of this Act and the Scheme. On reading of Section 7 of the said Act, it is thus clear that the modification of the Scheme is a statutory power which the Central Government initially exercises and then the notification is placed before each of the houses of the parliament for its ratification - In the instant case, the Government of India has the power under Section 7(1) of the EPF MP Act to modify the Scheme from time to time and the competence of the Central Government to introduce or modify the Scheme is apparent from Section 7 of the EPF MP Act. The aims and objects of introducing para 83 of the EPF Scheme as could be seen is, to protect the Indian employees going abroad to work from being subjected to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , For the Respondents : (By Sri M.N. Kumar, CGSPC For R-1; Smt. Nandita Haldipur, Advocate For R-2 R-3) Stone Hill Education Foundation, UE Develoment India Pvt. Ltd., Deccan Cargo Express Logistics Private Limited, Canadian International School, Mr. Shane Kells, Mr. John Nigel Gleave, Mr. Scott Zeuch, CPG Consultants India Pvt. Ltd., Mr. Raimi Bin A Rahim, Mantri Developers Private Limited, Jonathan Yach, ARM Embedded Technologies Pvt. Ltd., Sobha Developers Ltd., M/s. Toyota Tsusho India Pvt. Ltd., Mr. A. Murali, M/s. Toyotetsu India Auto Parts Pvt. Ltd., Ozone Propex Private Limited, Value And Budget Housing Corporation Pvt. Ltd., Metro Cash Carry India Private Limited, Guenter Kari Redtenbacher, M/s. Toyota Kirloskar Motor Private Limited, M/s Toyota Kirloskar Auto Parts Pvt. Ltd., M/s. Transystem Logistics International Pvt. Ltd., M/s. Toyota Logistic Kishor India Private Limited, M/s. Toyota Techno Park (I) Pvt. Ltd. M/s. Sunchirin Autoparts India Pvt. Ltd. M/s. Mahindra Reva Electric Vehicles Ltd., M/s. Recaero India Private Limited, M/s. Gokaldas Images private Limited, NAFL S Trust, Versus The Union Of India, The Regional Provident Fund Commissioner-I, The Central Providen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k till retirement, they work only for a limited period and thus, requiring them to pay PF contribution on their entire global salary would cause irreparable injury. According to the petitioners, international workers required to pay EPF contributions is arbitrary and hit by Article 14 of the Constitution of India. According to the petitioners - the employers and the employees, the provisions introduced in the Scheme are arbitrary and discriminatory. 6. Statement of objections filed by the Union of India - respondent No. 1: It is contended that, the Union of India has effected changes to the Act by making special provisions for different types of workers. The following are the special provisions made by the respondent for different types of workers from time to time: (I) With effect from 31.12.1956 para 80 was inserted in the Scheme to make a special provision in the Scheme in the case of Newspaper Establishment and Newspaper Employees. The said Scheme shall, in its application to Newspaper Establishments and Newspaper Employees, as defined in Section 2 of the Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955. (II) In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letion of the minimum qualifying period of contribution or residence, which is normally ten years or more. An Indian worker deputed for a limited period of five years or so is generally less than the minimum qualifying period. Therefore, Indian workers, ever after remittance of social security contribution in the host countries, are not entitled to any social security benefits and with a view to protecting such rights of such migrant workers, the Government of India decided to introduce the statutory provisions in the EPF Scheme and the Pension Scheme in respect of the international workers and as per the amended provisions, an international worker from an SSA country is entitled to withdraw his provident fund accumulation on seizing to be an employee in an establishment covered under the Act. (VI) It is further submitted that the grievance of the petitioner that international workers can withdraw the full amount standing to their credit in the fund only on attaining the age of 58 years or on retirement on account of permanent and total incapacity for work due to bodily or mental infirmity has been resolved in respect of international workers being deployed in India from SSA countr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22507/2015 and 19464/2021) have been heard. 9. Arguments advanced by the petitioners counsel: (I) Introduction of para 83 and para 43A is opposed to the object and intendment of the Act (II) There is manifest arbitrariness while introducing para 83 and para 43A. (III) Para 83 introduced in the Scheme is violative of para 2(f) of the Act excluded employee and violative of the Act, for the reasons that: (i) The Act provides for coverage of the weaker sections where there is a ceiling limit; (ii) No salary ceiling limit for international workers which is in contravention to the Act; (iii) Heavy burden is on the employer; (iv) Para 83 and para 43A are unconstitutional and hit by Article 14 of the Constitution of India and also illegal being opposed to the object of the EPF MP Act, 1952. (v) Implications of amendment pertaining to insertion of para 83 and the international worker may be an Indian worker or foreign national: (a) An Indian employee working or having worked abroad in a country with which India has entered into SSA or any foreigner working in India in an establishment where the EPF MP Act is applicable; (b) There is no cap on the salary on which the contribution is payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83 is contrary to Section 6 of the EPF Act and higher interest over and above the ceiling limit is not entitled and the huge burden is on the employer; (o) Article 14 is applicable to foreign citizens, even non-citizens have to be protected under Articles 14 and 21. The introduction of para 83 is a violation of fundamental rights; (p) Central Government has given a go-bye to the Act, no application of mind by the Government; (q) While bringing Para 83 into force, the Central Government has not looked into the objects of the Act; (r) The Scheme is oppressive and there is manifest arbitrariness while issuing notification by the Central Government and introducing para 83; (s) There is no intelligible differentia between the Indian employee and an international worker who is not covered under the Social Security Agreement or Bilateral Comprehensive Economic Agreement. There is no nexus between the object sought to be achieved under the EPF MP Act, 1952 and the Schemes framed thereunder the classification made; (t) There is no legislative competence to modify the EPF Scheme, 1952 and the Employees Pension Scheme, 1995 in respect of an international worker who is not covered under the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d others vs. State of Karnataka and others (2006) 9 SCC 406 (d) Ameerunissa Begum and others vs. Mahboob Begum and others AIR 1953 SC 91 (e) Ram Prasad Narayan Sahi and another vs. State of Bihar and others AIR 1953 SC 215 (f) Namit Sharma vs. Union of India (2013) 1 SCC 745 (g) Subramaniyan Swamy vs. Director, CBI (2014) 8 SCC 682 (h) State of Rajasthan vs. Basant Nahata (2005) 12 SCC 77 (i) State of Tamil Nadu vs. P. Krishnamurthy (2006) 4 SCC 517 (j) Global Energy Ltd. vs. Central Electricity Regulatory Commission (2009) 10 SCC 570 (IV) Sri Vasuki, learned senior counsel along with Sri C.K.Subrahmanya, learned counsel for Sri B.C.Prabhakar, learned counsel: (a) Sri Sudarshan v. Biradar vs. State of Karnataka and others W.P. No. 15800/2022 D.D. on 17/04/2023 11. Per contra, learned Central Government Senior Panel Counsel, Sri M.N. Kumar appearing for respondent No. 1 authority would contend that: (i) The Central Government in exercise of its power under Section 5 of EPF MP Act, 1952, by notification in the Official Gazette, framed a Scheme to be called the Employees Provident Fund Scheme for the establishment of provident funds under this Act for the employees of any class and sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. State of Bihar (1954) SCC Online SC 19 (7) State of Kerala and another vs. N.M. Thomas and others (1976) 2 SCC 310 (8) The Bihar Eastern Gangetic Fisherman Co-Operative Society Ltd. vs. Sipahi Singh and others (1977) 4 SCC 145 (9) Pathumma and others vs. State of Kerala and others (1978) 2 SCC 1 (10) Jolly George Varghese and another vs. The Bank of Cochin (1980) 2 SCC 360 (11) M/s. P.M. Patel and sons and others vs. Union of India and others (1986) 1 SCC 32 (12) State of Kerala vs. Smt. A. Lakshmikutty and others (1986) 4 SCC 632 (13) Louis De Raedt vs. Union of India and others (1991) 3 SCC 554 (14) State of Arunachal Pradesh vs. Khudiram Chakma 1994 Supp (1) SCC 615 (15) Chairman Railway Board and others vs. Chandrima das (MRS ) and others (2000) 2 SCC 465 (16) K. Thimmappa and others vs. Chairman, Central Board of Directors, State Bank of India and another (2001) 2 SCC 259 (17) Director General, Central Reserve Police Force and others vs. Janardan Singh and others (2018) 7 SCC 656 (18) Employees Provident Fund Organization vs. Rollwell Forge Ltd. (2011) SCC Online Guj 2846, (19) Battula Veeraswamy vs. The Regional Provident Fund Commissioner, Barkathpura, Hyderabad and oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and scope of the guarantee that is implied in it. Article 14 reads as under: 14. Equality before law. The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. 15. Article 14 in Indian Constitution guarantees the right to equality for every citizen of the country. It encompasses the general principles of equality before the law and prohibits unreasonable discrimination between the two persons. It incorporates the idea of equality expressed in the preamble. The well settled principles of law underlining the guarantee in Article 14 are that: (a) Presumption always lies in favour of the constitutionality of a statute, unless it is shown that the classification made thereunder is neither reasonable nor rational and does not have any nexus with the object sought to be achieved by the Act. (b) That the classification made is on an intelligible differentia which distinguishes those that are grouped from others. (c) Guarantee given under Article 14 is not that, the same rule of law should apply to all persons within the Indian territory or that the same remedies should be made available to them irrespective of differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the guarantee in Article 14 of the Constitution. 17. The petitioners have challenged the constitutional validity of para 83 of the EPF Scheme and para 43A of the Pension Scheme as being unconstitutional is hit by Article 14 of the Constitution of India, and also as illegal being opposed to the very object of the EPF MP Act, 1952. The EPF Scheme was introduced on 01.10.2008 to start with, and later it was amended on 03.09.2010 and the modified version was brought into effect from 11.09.2010. Para 83 introduced with special provisions in respect of international workers. Para 83(2) of the EPF Scheme defines international workers as under: (ja) International Worker means (a) an Indian employee having worked or going to work in a foreign country with which India has entered into a social security agreement and being eligible to avail the benefits under a social security programme of that country, by virtue of the eligibility gained or going to gain, under the said agreement; (b) an employee other than an Indian employee, holding other than an Indian passport, working for an establishment in Indian to which the Act applies: Provided that the worker who is a Nepalese national on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded employee under these provisions. (v) Contribution is payable on total salary payable on account of the employment of the employee for the wages by an establishment covered in India even for responsibility outside India. (vi) There is no cap on the salary on which contributions are payable by the employer as well as the employee. (vii) There is no cap on the salary upto which the employer s share of contribution has to be diverted to EPS 1995 and the same is payable on the total salary of the employee. (viii) Applies to employees sent on posting in another country provided their/compliance under the social security system of the home country. (ix) The period of service rendered by an employee in a foreign country is counted for determining the eligibility for benefits, but the quantum of payment is restricted to the length of service on a pro rata basis. (x) If an Indian employee is employed in any covered establishment in India and sent abroad on posting, he is liable to be a member in India as a domestic Indian employee if otherwise eligible. He is not an international worker. (xi) An Indian employee attains the status of international worker only when he becomes eligible to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide for all or any of the matters specified in Schedule II, subject to the provisions of the Act. A Scheme framed may provide that any of its provisions shall take effect either prospectively or retrospectively on such date as may be specified in this behalf in the Scheme. The Scheme framed under Section 5 of the EPF MP Act has been amended from time to time. This power of amendment of the Scheme is pursuant to the power conferred under Section 7 of the EPF MP Act. Section 7 reads as under: 7. Modification of Scheme.- (1) The Central Government may, by notification in the Official Gazette, add to amend or vary, either prospectively or retrospectively, the Scheme, the Family Pension Scheme or the Insurance Scheme, as the case may be. (2) Every notification issued under sub-section (1) shall be laid, as soon as may be after it is issued, before each House of Parliament, while it is in session, for a total period of thirty days, which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the notification, or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l centers. The EPF MP Act, 1952 is a social welfare legislation meant for the protection of industrial workers to enable them to have an alternative to the pension. The Act is also meant to inculcate savings for their future, especially for the period subsequent to their retirement. It is nowhere mentioned in the objects of the enactment i.e., EPF MP Act, 1952 with regard to covering employees irrespective of the salary drawn by them. In fact, to start with, only those employees who drew a salary of Rs. 3,500/- and less were to be covered. Later on, it was raised to Rs. 6,500/- per month and then to Rs. 15,000/- per month indicating that the EPF MP Act was enacted with a view to see that those in lower salary brackets get retirement benefits and by no stretch of imagination, could it be said that the employees who draw lakhs of rupees per month should be given the benefit under the enactment. In order to ensure strict compliance with the Act, stringent provisions of 7A, 14B, and 7Q have been provided and personnel of the EPF MP Act, 1952 are exclusively employed to ensure the imposition of heavy cost in terms of interest and damages in case of non-compliance. Such personnel cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Constitution of India. 25. The respondents in their statement of objections have claimed that para 83 has been introduced as a measure of reciprocity in order to honour social security agreements between India and other countries. Wherever the Government of India has entered into a social security agreement with another country, as a matter of reciprocity, the international workers of such SSA countries are considered as either excluding employees meaning that such excluded employees need not be members of the fund or if they are not excluding employees, they are free to withdraw accumulation of cessation of employment in India. It is relevant to note that, such benefit has not been extended under para 83 to international workers from non-SSA countries as it is clear from the following: (I) An international worker from a non-SSA country is not allowed to withdraw accumulation until he reaches the age of 58 years. Therefore, para 83 eventually applies to international workers from countries with which the Government of India does not have SSA, and therefore, the claim of reciprocity does not arise and thus the claim of the Government that the obligation of reciprocity has made th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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