ORISSA CEMENT LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The first petitioner is a company carrying on business in the manufacture of cement in the State of Orissa and petitioners Nos. 2 and 3 are two of its Directors. They have filed the present petition under Art. 32, challenging the validity of two notifications dated January 15, 1958 and December 2, 1960 issued by the Central Government under S. 7 (1) of the Employees' Provident Funds Act, 1952 hereinafter referred to as "the Act". It will be convenient to first set out the relevant statutory provisions bearing on the question. The Act was passed for the purpose of providing for the institution of Provident Funds for the employees in factories and other establishments. Section 5 of the Act, which deals with this matter is as follows:

(2.) In exercise of the Powers conferred by S. 5 of the Act, the Central Government published on September 2, 1952, what is called the Employees' Provident Funds Scheme, 1952, para 2 (f) (iii) of the Scheme defines "Excluded Employees" as meaning the employees employed by or through a contractor. Under Para 3 the provident fund standing to the credit of an employee vests in the authorities constituted thereunder. Para 26 provides that every employee employed in a factory or establishment other than an excluded employee shall be required to become a member of the fund if he has completed one year's continuous service, in the factory or establishment, and there is a proviso that if the employee has actually worked in the factory or establishment for not less than 240 days, he shall be deemed to have completed one year's continuous service. Paras 30 to 32 deal with contributions to be made by the employer and they are as follows:

(3.) The combined effect of S. 6 and Paras 30 to 32 of the Scheme is that the contribution to the Provident Fund is to be 12 1/2 per cent of the basic wages, and dearness allowance, that it is to be borne equally by the employer and the employee, and that the employer is to pay the whole of it, half on his account, and the other half on account . of the employee, and he is to recoup himself ' by deducting it from the wages of the employee. Such deduction would be possible only when the employer is the person who has to pay wages to the employee and that is why employees employed by or through a contractor were included in the definition of "excluded persons" to whom under Para 26 the Scheme had no application. These employees would be paid by the contractor and the question of deduction of wages by the principal employer, i-e- the person who is in charge of the factory or establishment, will not arise.