Marathwada Gramin Bank Karamchari Sanghatana vs Marathwada Gramin Bank

Sanghatana and Another ...Appellants

Versus

Management of Marathwada Gramin Bank

and Others ...Respondents

WITH

CIVIL APPEAL NO. 7767 OF 2011

(Arising out of SLP(C) NO.1205 of 2009)

Marathwada Regional Rural Bank

Employees Union ...Appellant

Versus

Management of Marathwada Gramin Bank

and Others ...Respondents

J U D G M E N T

Dalveer Bhandari, J.

1. Leave granted in both the matters.

2. We propose to dispose of these appeals by a common

judgment. These appeals emanate from the judgment and

final order dated 14.11.2008 passed by the High Court of

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Judicature at Bombay, Nagpur Bench, Nagpur in Letters

Patent Appeal Nos.347 and 348 of 2008.

3. Marathwada Gramin Bank (for short, respondent

bank) was established in 1976. The provisions of the

Employees Provident Fund Scheme, 1952 became

applicable to the respondent bank from 1.9.1979.

According to the respondent bank, it meticulously complied

with the provisions of the Scheme till 31.8.1981.

Thereafter, the respondent bank formed its own trust and

framed its own Scheme for payment of provident fund to its

employees. According to that Scheme of the bank the

employees were getting provident fund in excess of what

was envisaged under the Employees Provident Fund

Scheme, 1952.

4. The Regional Provident Fund Commissioner vide order

dated 29.8.1981 exempted the respondent bank from

complying with the statutory provisions of the Scheme with

effect from 1.9.1981 and permitted the respondent bank to

pay provident fund to its employees according to its own

Scheme. The respondent bank contributed provident fund

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to its employees as per its own Scheme for the period from

1.9.1981 to 31.8.1993.

5. On 14.10.1991, the said exemption/relaxation granted

to the respondent bank was withdrawn and cancelled and

the respondent bank was directed to implement the

provisions of the statutory Scheme. Despite cancellation of

exemption, the respondent bank continued to make

payment of provident fund in accordance with the earlier

Scheme till 31.8.1993. In the said Scheme, the respondent

bank was contributing provident fund for the employees in

excess of the statutory obligation.

6. According to the respondent bank, owing to huge

accumulated losses, it issued a notice of change under

section 9A of the Industrial Disputes Act, 1947 expressing

its intention to discontinue payment of provident fund in

excess of its statutory liability with effect from 1.11.1998,

but would continue to contribute towards Employees

Provident Fund according to the statutory liability.

7. The Regional Provident Fund Commissioner-II issued a

letter dated 13.5.1999 informing the respondent bank that

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it cannot withdraw the benefit of paying matching

employer's share without any limit to wage ceiling and

directed it to continue extending the same benefit as was

granted prior to 01.11.1998.

8. Thereafter, the Central Government made a reference

of the dispute to the Central Government Industrial

Tribunal, Nagpur (for short, the Tribunal). The said

Tribunal relied on Section 12 of the Employees Provident

Fund and Miscellaneous Provisions Act, 1952 (for short,

1952 Act) and held that the management cannot reduce,

directly or indirectly, the wages of any employee to whom

the Scheme applies or the total quantum of benefits in the

nature of old age pension gratuity (provident fund) or life

insurance to which the employee is entitled under the terms

of his employment, express or implied. Section 12 of the

1952 Act reads as under:-

"No employer in relation to [an

establishment] to which any [Scheme or the

Insurance Scheme] applies shall, by reason

only of his liability for the payment of any

contribution to [the Fund or the Insurance

Fund] or any charges under this Act or the

[Scheme or the Insurance Scheme] reduce,

whether directly or indirectly, the wages of

any employee to whom the [Scheme or the

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Insurance Scheme] applies or the total

quantum of benefits in the nature of old age

pension, gratuity [provident fund or life

insurance] to which the employee is entitled

under the terms of his employment, express

or implied.]"

9. The Tribunal directed that the employees of the

respondent bank shall continue to draw equal amount of

contribution from the bank towards provident fund without

any ceiling on their wages. According to the Tribunal, the

action of the respondent bank to reduce the contribution of

the provident fund or to put a ceiling on the provident fund

is not justified. The Tribunal also directed that the

workmen shall continue to draw the benefit of the prevailing

practice of contribution of Employees Provident Fund

without any ceiling.

10. The respondent bank, aggrieved by the said award

passed by the Tribunal, preferred a writ petition before the

learned Single Judge of the High Court of Judicature of

Bombay at Nagpur Bench, Nagpur.

11. It was submitted by the respondent bank that the

impugned award as well as the communication issued by

the Regional Provident Fund Commissioner-II is contrary to

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law as the same is based on the assumption that Section

12 of the 1952 Act creates bar for imposing the ceiling in

accordance with the Provident Fund Act.

12. The learned counsel for the respondent bank in

support of his contention, before the learned Single Judge of

the High Court, placed reliance on the judgment of the

Constitution Bench of this Court in Committee for

Protection of Rights of ONGC Employees and Others v.

Oil and Natural Gas Commission and Another (1990) 2

SCC 472 and the judgment of the High Court of Kerala in

Vijayan v. Secretary to Government 2006 (3) KLT 291.

13. It was also submitted that the respondent bank is

under an obligation to make contribution towards

Employees Provident Fund in accordance with the statutory

provisions of 1952 Act. It was further urged that the

respondent bank all through has at least made contribution

towards Employees Provident Fund in consonance with the

statutory provisions. On behalf of the respondent bank it

was submitted that the respondent bank has always

complied with the statutory obligation. It was also

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contended by the respondent bank that the appellants

cannot claim as a matter of right the amount in excess of

the statutory provisions of 1952 Act.

14. Before the High Court, for the first time, the appellants

herein submitted that Section 17(3)(b) of the 1952 Act

regarding exemption of any establishment from the

operation of the Scheme was subject to certain conditions.

Section 17(3)(b) of the 1952 Act reads as under:-

17. Power to exempt

(1) xxx xxxxx

xxxx

(2) xxx xxxxx

xxxx

(3) Where in respect of any person or class of

persons employed in an establishment an

exemption is granted under this section from the

operation of all or any of the provisions of any

Scheme (whether such exemption has been

granted to the establishment wherein such

person or class of persons is employed or to the

person or class of persons as such), the employer

in relation to such establishment--

(a) xxx xxxxx

xxxx

(b) shall not, at any time after the exemption,

without the leave of the Central Government,

reduce the total quantum of benefits in the

nature of pension, gratuity or provident fund to

which any such person or class of persons was

entitled at the time of the exemption;"

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15. The learned Single Judge in his judgment observed

that Section 17(3)(b) of the 1952 Act was never pressed into

service by the appellants herein either before it or the

Tribunal and the appellants herein cannot be allowed to

raise the said contention for the first time in the writ

petition. In that judgment, it was also observed that even

otherwise, the said provision applies when the exemption is

granted and is in force and in the instant case admittedly

the exemption was already cancelled. Therefore, Section

17(3)(b) of 1952 Act is not applicable.

16. On analysis of Section 12 of the 1952 Act, the learned

Single Judge of the High Court came to the conclusion that

Section 12 of the 1952 Act will operate as a bar in case the

same is the term of employment expressed or implied. In

the instant case, it is not in dispute that under Regulation

No.56 of the Marathwada Gramin Bank (Staff) Service

Regulations, 1980, the express term of employment

accepted by the employees is that contribution to the

provident fund shall be in accordance with the provisions of

the 1952 Act. Regulation No.56 reads as under:-

8 "56. All officers and employees who have

completed continuous minimum service as

specified in the Employees' Provident Funds

and Miscellaneous Provisions Act, 1952 (19

of 1792) shall be members of the Provident

Fund. The contribution to the provident

fund by the officers and employees and the

Bank shall be in accordance with the

provisions of the aforesaid Act."

17. The learned Single Judge observed that in the instant

case it is the express term of employment that the

contribution of the bank shall be in accordance with the

provisions of the 1952 Act. The learned Single Judge thus

observed that the bar of Section 12 will not operate as

otherwise held by the Tribunal in the impugned award.

18. The learned Single Judge also observed that under

Section 17(3)(b) of the 1952 Act, the said permission would

be required in case an exemption from the operation of the

provisions of the 1952 Act has been obtained. In the

instant case, the exemption was already cancelled on

14.10.1991 and consequently this provision has no

application to the facts of this case. The learned Single

Judge consequently set aside the impugned judgment of the

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Tribunal and allowed the writ petition filed by the

respondent bank.

19. The appellants, aggrieved by the judgment of the

learned Single Judge, preferred Letters Patent Appeals

before the Division Bench of the High Court of Judicature at

Bombay, Nagpur Bench, Nagpur and contended that under

Section 17(3)(b) of the 1952 Act once the exemption is

granted by the Appropriate Government, it shall not,

without the leave of the Central Government reduce the

total quantum of benefits in the nature of pension, gratuity

or provident fund etc.

20. It was also contended by the appellants that in the

instant case, the respondent bank did not obtain leave of

the Central Government before acting on the

communication dated 14.10.1991 by issuing notice of

change.

21. The appellants relied on the case of Madura Coats

Employees Union v. Regional Provident Fund

Commissioner and Others (1999) ILLJ 928 Bombay and

particularly relied on paragraphs 6, 7 and 8 of that

judgment where the Court observed that the benefit cannot

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be taken away by the employer without prior permission of

the Central Government. The Division Bench approved the

view of the learned Single Judge that the case of Madura

Coats (supra) did not apply to the present case because in

the instant case the relaxation/exemption was

withdrawn/cancelled. The Division Bench also observed

that in Madura Coats case there was no contention that

the relaxation/exemption was withdrawn at any time. This

is the main distinguishing feature in both these cases. The

Division Bench did not interfere with the judgment of the

learned Single Judge and dismissed the appeals filed by the

appellants. The appellants are aggrieved by the impugned

judgment of the Division Bench of the High Court and have

approached this Court by preferring these appeals under

Article 136 of the Constitution.

22. The appellants contended before this Court that this

case involved substantial question of law regarding

interpretation of the provisions of Section 12 of 1952 Act. It

was also argued by the appellants that the contribution to

provident fund is a component of wages and when

admittedly the respondent bank has paid its share of the

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provident fund contribution in excess of the amount

prescribed in the 1952 Act for a long period of time and

continued to contribute at such higher rate without any

ceiling even after withdrawal of the exemption for a period of

7 years and had also framed rules whether it is open to the

respondent bank to reduce its contribution towards

provident fund.

23. The appellants submitted that in view of the facts of

this case, Section 12 of the 1952 Act is clearly attracted.

The appellants reiterated before this Court the submissions

advanced before the Division Bench of the High Court.

24. We have heard the learned counsel for the parties at

length and perused the relevant provisions of the Act. It

may be pertinent to mention that the respondent bank

complied with the provisions of the 1952 Act meticulously

after it became applicable from 1.9.1979. The respondent

bank complied with the provisions of the Scheme till

31.8.1981. Thereafter, the respondent bank formed its own

trust and framed its own Scheme for payment of provident

fund. In that Scheme, the respondent bank paid higher

12

amount of provident fund to its employees than what the

respondent bank was obliged to pay according to the statute

or the agreement with the appellants.

25. The Regional Provident Fund Commissioner vide order

dated 29.08.1981 exempted the respondent bank from

complying with the statutory provisions of the Scheme with

effect from 1.9.1981. Admittedly, the respondent bank paid

provident fund to its employees as per its own Scheme for

the period from 1.9.1981 to 31.8.1993.

26. The said exemption/relaxation granted on 29.8.1981

was withdrawn and cancelled on 14.10.1991 and the

respondent bank was directed to implement the provisions

of the statutory Scheme. Despite cancellation of the

exemption, the respondent bank continued to pay excess

provident fund to its employees in accordance with the

earlier Scheme till 31.8.1993. Thereafter, the respondent

bank issued a notice of change under section 9A of the

Industrial Disputes Act, 1947 expressing its intention to

discontinue payment of provident fund in excess of its

statutory liability with effect from 1.11.1998. It may be

13

pertinent to mention that owing to huge accu*mulated

losses of the respondent bank, the bank though continued

to pay according to the provisions of the statutory Scheme,

but discontinued payment of provident fund in excess of its

statutory liability.

27. The respondent bank is under an obligation to pay

provident fund to its employees in accordance with the

provisions of statutory Scheme. The respondent bank

cannot be compelled to pay the amount in excess of its

statutory liability for all times to come just because the

respondent bank formed its own trust and started paying

provident fund in excess of its statutory liability for some

time. The appellants are certainly entitled to provident fund

according to statutory liability of the respondent bank. The

respondent bank never discontinued its contribution

towards provident fund according to the provisions of the

statutory Scheme.

28. The view which has been taken by the learned Single

Judge and affirmed by the Division Bench of the High Court

is just, fair, appropriate and in consonance with the

provisions of the 1952 Act.

14 29. In our considered view, no interference is called for.

These appeals filed by the appellants being devoid of any

merit are accordingly dismissed. In the facts and

circumstances of these appeals, the parties are directed to

bear their own costs.

...............................J.

(Dalveer Bhandari)

..............................J.

(Deepak Verma)

New Delhi;

September 9, 2011

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