Full Text
HIGH COURT OF DELHI
BAL BHARTI PUBLIC SCHOOL ..... Petitioner
Through: Mr.Abhinav Vashisht, Sr. Advocate alongwith Mr.B.B.Mahajan, Advocate.
Through: Mr.R.C. Chawla, Advocate alongwith Mr.Charanjeet Singh and Mr.D.
Rajeshwaar Rao, Advocates for R-2 to R-4.
JUDGMENT
1. Vide present writ petition, the petitioner has sought the quashing of the order dated 02.08.2000, whereby he was directed to deposit the Provident Fund (PF) at the rate of 12% with effect from 22.09.1997 and of quashing of the notification dated 09.04.1997 or in alternative to declare that the notification dated 09.04.1997 cannot be invoked by the respondents after the amendment of 1988 Act by the Amending Act No.10 of 1998 which came into force with effect from 22.09.1997. 2015:DHC:6726 W.P.(C) 7342/2000 Page 2
2. The case of the petitioner is that it is an unaided private school recognized by the Directorate of Education under the provisions of the Delhi School Education Act, 1973 and the Rules framed thereunder and it was set up in the year 1984. Although the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘the Act’) came into force in the year 1952, the educational institutions, including university, colleges and schools were not covered under the Act. The Central Government in exercise of its power conferred under Section 1(3)(b) of the Act, vide Notification No. 986 dated 19.02.1982 made the Act applicable to the educational institutions. This notification was challenged by some educational institutions and the Supreme Court in the case of DAV College and Another vs. Regional Provident Fund Commissioner and Ors. 1998 II LLJ 218 dismissed the petition and directed the educational institutions to comply with the provisions of the Act regularly with effect from 01.02.1988 and pay the arrears from March, 1982 up to 31.01.1988. Since then, the petitioner has been regularly depositing the PF contribution. It is submitted that initially the rate of contribution (fixed by the Central Government under Section 6 of the Act) was ‘six and a quarter percent’ on the basic wages and the DA for all the establishments. Subsequently, a proviso to Section 6 W.P.(C) 7342/2000 Page 3 was inserted by Amending Act No. 48 of 1962 which conferred the powers upon the Central Government to specify the establishments or class of establishments to which the proviso would apply by issuing a notification in the Official Gazette and which were thereafter required to pay the contribution at a higher rate of eight per cent. The Central Government, thereafter, issued Notification No.S.O.3793, under the first proviso to Section 6 of the Act of 1962 and brought certain categories of establishments under the ambit of proviso which were then to pay their contributions at the enhanced rate. Initially, only four establishments were so notified. However, the Central Government, from time to time, issued more than 20 notifications enlisting the establishments to be covered under said proviso. Thereafter, by Amending Act No.33 of 1988, Section 6, including its proviso was amended. This amendment came into force with effect from 01.08.1988. The basic minimum rate of PF contribution in respect of all establishments was enhanced from ‘six and a quarter percent’ to 8.33% and for establishments covered by first proviso to Section 6 of the Act of 1988 to 10% from 8%. The Government, thereafter, issued fresh notifications specifying the establishments required to pay the contributions at enhanced rate under proviso to Section 6 of the Act of 1988. W.P.(C) 7342/2000 Page 4 It is contended that whenever the 1st proviso to Section 6 of the Act is amended, the Government had issued fresh notifications specifying the establishments required to pay PF contribution at enhanced rate. The fresh notification is required to be issued since on the amendment of the Section, the old notifications stand automatically repealed and on the said premise, the Central Government were issuing fresh notification under first proviso to Section 6 of the Act notifying the establishments covered by proviso to Section 6 of the Act. It is submitted that the schools or the educational institutions were not listed in the notification issued by the Government under first proviso to Section 6 of the Act of 1988 and the educational institutions or the schools continued to pay their contributions at the rate of
8.33 %. The Central Government had been issuing notifications from time to time bringing more establishments under the ambit of first proviso to Section 6, but, had spared the educational institutions and the schools. Although in its Budget speech for the year 1997-98, the Finance Minister of India had proposed to enhance the basic minimum rate of PF contributions in respect of all establishments from 8.33% to 10% and to enhance the rate of contributions in respect of some industries, as may be specified, to 12%, but the Act could not be amended at the relevant time. The Central W.P.(C) 7342/2000 Page 5 Government, however, issued a notification bearing a Reference No. Ministry of Labour/F.No.S-35019/1/97-SS II dated 09.04.1997 bringing all establishments, except those exempted therein, under the ambit of first proviso to Section 6 of the Act of 1988 and it was done without making the enquiries as required. This notification also suffers from the vice of the excessive delegation and/or colourable exercise of the powers conferred upon the Central Government. The notification dated 09.04.1997 is also challenged on the ground that it is a negative notification since vide this notification first proviso to Section 6 of the 1988 Act is made applicable to every establishment, except those specifically excluded in Schedule-II of the notification and that the notifications are required to be in a positive connotation enumerating the establishments to be covered under the first proviso to Section 6 of 1988 Act. It is further contended that at no stage, the Regional Provident Fund Commissioner had called upon the petitioner to deposit the PF contribution at the enhanced rate of 10%. Section 6 as it stood in the Act of 1988 was further amended by Act No.10 of 1998 and was published in the Gazette of India on 22.06.1998 and this Act had come into force with effect from 22.09.1997. Vide this amendment, the rate of contribution which was payable at the rate of 8.33% was enhanced to 10% W.P.(C) 7342/2000 Page 6 and the rate of contribution under the first proviso of Section 6 which was payable at 10% was enhanced to 12%. It is submitted that the petitioner was never directed to deposit PF contribution at the rate of 12% even though the Inspecting Officers from the office of Respondent No.4 had visited their school on several occasions for inspection of records and for compliance under the Act. After a lapse of about two years, for the first time, the petitioner had received a letter dated 06.10.1999, directing the petitioner to deposit PF contribution at the rate of 12% with effect from 22.09.1997. The petitioner also received a notice dated 14.02.2000 directing the petitioner to deposit the PF contribution at the rate of 10% with effect from 01.05.1997 and 12% with effect from 22.09.1997. A reply dated 13.03.2000 was submitted and it was pointed out that petitioner’s school had been paying their provident fund contributions at the rate of 10% with effect from 22.09.1997. It is contended that the notification dated 09.04.1997 stands repealed after the Amending Act No.10 of 1998 which replaces the Section 6 of the Act of 1988 and since no notification has so far been issued by the Central Government under first proviso to Section 6 of the Act of 1998, bringing the establishments or class of establishments within the ambit of first proviso and thus requiring them to pay enhanced rate of PF contribution W.P.(C) 7342/2000 Page 7 to 12%, the petitioners, after the Amendment of Act of 1998 are liable to pay their contribution only at the rate of 10 under Section 6 of the Amended Act of 1998.
3. The main contention of respondents is that since the notification dated 09.04.1997 was issued by the Central Government in exercise of its power conferred under first proviso to Section 6 of the Act of 1988 and as the EPF Act itself is a Social Security Act enacted for the benefit of working class, the notification dated 09.04.1997 since being passed within ambit of aims and objects of the EPF Act of 1988, can neither be said to be a colourable exercise of the power nor it suffers with the vice of excessive delegation of powers. After the notification dated 09.04.1997, the petitioner and all other establishments except those exempted under this notification are liable to pay their contribution at the rate of 10%. It is further submitted that the petitioner is required to pay its contribution at the rate of 12% with effect from 22.09.1997 as the rate of contribution has been increased from 10% to 12% by virtue of Amendment of EPF Act by Amendment Act No.10 of
1998. It is urged that it is the mandatory duty of the establishments to deposit their PF contributions suo moto under the Act which the petitioner has violated. Also that, there is no requirement to issue any notice to any W.P.(C) 7342/2000 Page 8 particular establishment prior to issuing any notification by the Central Government under first proviso to Section 6 of the EPF Act. It is submitted that petition has no merit and is liable to be dismissed.
4. I have heard the arguments of the learned counsels for the parties and have perused the record.
5. The Act, which is called Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, had come into force in the year 1952. The necessity arose since it was found that through with the industrial growth, big employers had introduced certain schemes of provident funds for the welfare of their workers which were private and voluntary, the workers of the small employers, remained deprived of such type of benefits. In order to provide the benefits of provident fund which was already available to employees of big employers, in 1946, a Committee known as the Labour Investigation Committee was formed to investigate the functioning of the private schemes of provident funds adopted voluntarily by big employers for the benefit of their employees. In November, 1950, the Standing Labour Committee discussed the subject of provident fund for industrial workers and thereafter, the Government of India promulgated the EPF Act of 1952. W.P.(C) 7342/2000 Page 9
6. Section 1 of the Act reads as under:-
(i) S.O. No. 360 dated the 17th May, 1989
(ii) S.O. No. 1837 dated the 29th June, 1990
(iii) S.O No. 627(E) dated the 31st August, 1994
(iv) S.O. No. 126(E) dated the 1st March, 1995
(i) Any establishment in which less than twenty persons are employed:
(ii) Any sick industrial company as defined in clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and which has been declared as such by the Board for Industrial and Financial Reconstruction established under Section 4 of the Act, for the period commencing on and from the date of registration of the reference in the Board and ending either on the date by which the net worth of the said company becomes positive in terms of the orders passed under sub-section (2) of Section 17 of that Act or on the last date of implementation of the scheme sanctioned under Section 18 of the Act.
(iii) Any establishment which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth that is, the sum total of paid-up capital and free reserves and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year. Explanation.—For the purposes of clause (iii) “cash loss” means loss as computed without providing for depreciation;
(iv) Any establishment in the—
(C) Brick industry;
(D) Coir industry other than the spinning sector; and
8. One of the grounds of challenge is that it is a negative notification amounts to excessive use of the delegation of power and neither the petitioner was consulted nor the necessary enquiry into the matter, which the Government was required to do before issuing the notification under first proviso to Section 6 of the Act, was made.
9. To substantiate its arguments, the learned counsel for the petitioner has also made a reliance on the Supreme Court’s findings in the case of State of Tamil Nadu and Ors.. vs. K. Shyam Sunder and Others JT 2011 (9) SC 166, wherein the Supreme Court has crystallized the law to the effect that whenever the Legislature wants to delegate its power in respect of the implementation of the law enacted by it, it must provide sufficient guidelines, conditions, on fulfillment of which, the Act would be enforced by the delegatee and where the Act has already come into force, such a power cannot be exercised just to nullify its commencement thereof.
10. The learned counsel for the respondents has urged that the necessary enquiry as required before promulgation of the notification had been done W.P.(C) 7342/2000 Page 15 by the Government and that there was no requirement of giving personal hearing to each and every establishment before issuing such notification.
11. I have given careful consideration to the rival arguments. Learned counsel for the petitioner has failed to point out any requirement of personal hearing of the each and every establishment before issuance of notification, under first proviso to Section 6 of the EPF Act 1988. The findings of the Supreme Court in the case of K. Shyam Sunder (supra) have no bearing on the facts of the present case. In the present case, the Act has itself delegated the power on the Government to issue a notification under first proviso to Section 6 of the EPF Act of 1988. Since the relevant provision itself requires that before issuing such notification, necessary enquiry be made into the matter, it cannot be said that unfettered powers have been delegated. The impugned notification dated 09.04.1997 also in no way supersedes the Act, rather it furthers the aim and object of the EPF legislation. The notification also cannot be termed as ‘a negative notification’ and cannot be discarded on the ground that it ought to have been positive in the sense that it ought to have enclosed the list of establishments which it intends to include within its ambit. It certainly is a positive notification as it brings into its ambit every establishment and class of establishments to which this Act of 1988 applies W.P.(C) 7342/2000 Page 16 by virtue of Section 1(3) of the Act and exempts from the operation only those establishments or class of establishments which are specified in Schedule-II. The effect of the notification was that all the establishments of Category-A were notified to pay the contribution at higher rate and thus became part of Category-B (excepting those covered by Schedule-II of notification which remained part of Category C). Thus, this notification also encloses within it the list of establishments which is the same notified by the Government under Section 1(3) of the Act. The Government had issued this notification in exercise of its delegated powers under first proviso to Section 6 of the Act of 1988, so the notification, issued in exercise of the express powers cannot be termed as a notification issued without any authority or power. The petitioner being covered by the provisions of EPF Act, the notification is binding on it. Even otherwise, during the course of arguments, the learned counsel for the petitioner, under instruction, had accepted the liability to pay the PF contribution at the rate of 10%. In terms of the impugned notification, petitioner is certainly liable to pay its PF contribution at the rate of 10% with effect from 01.05.1997.
12. Another leg of arguments addressed by the learned counsel for the petitioner is that, after the amendment in the EPF Act of 1988 by W.P.(C) 7342/2000 Page 17 Amendment Act No. 10 of 1998, a new Act had come into force with effect from 22.09.1997 and so the notification dated 09.04.1997 ceased to exist and till a notification is issued by Government under first proviso to Section 6 of Amendment Act of 1998, their liability to pay the PF contribution under Section 6 of the Act is at the rate of 10% and not at the rate of 12% under first proviso to Section 6 of the Act of 1998. The question for consideration, therefore, is whether after the amendment under Section 6 of EPF Act 1988 by the Amendment Act No. 10 of 1998, whereby the only amendment has been made in the rates of contribution and rate 8.33% was enhanced to 10% under Section 6 rate of 10% is enhanced to 12% under first proviso to Section 6, the Government is required to issue fresh notification under first proviso to Section 6 of Amendment Act 1998 before it can be said that the establishments notified under Section 1(3) of the Act, including the petitioner, are covered under the first proviso to Section 6 of Amended Act of 1998.
13. Section 6 of EPF Act 1988, reads as under:-
15. The effect of Amendment is that Section 6 as it stood in the Amendment Act of 1988 was repealed by the Amendment of the year 1998 and the provisions of Section 6 were re-enacted. From the reading of Section 6 and its proviso of 1988 Act and the present Amended 1998 Act, it is apparent that the amendment relates only to the rates of contribution under Section 6 and its first proviso. In Section 6, the rates were substituted from 8.33% to 10% and under first proviso from 10% to 12% respectively. Besides that, no other change was introduced in the provision. Now, the question is, what is the effect of such an amendment on the notifications issued previously before the amendment under the repealed Act. This is not W.P.(C) 7342/2000 Page 20 the case where the whole Act had been repealed. Only amendment done was in the rate of contributions.
16. Section 6 and 6A of the General Clauses Act deals with the effect of repeal of an Act. It reads as follows:-
W.P.(C) 7342/2000 Page 22
18. On conjoint reading of both the Sections, it is apparent that any order passed/notification issued under the repealed Act, if not inconsistent with the provisions of re-enacted Act, shall be deemed to have been passed or issued under the provisions so re-enacted unless and until it is superseded. This has been done in order to avoid a vacuum which could be created by repeal of an Act by an Amended Act. Learned counsel for the petitioner has failed to point that notification dated 09.04.1997 issued under the repealed Act of 1988 is in any way inconsistent to Amended Act of 1998. He has also failed to bring to my notice any provision of Amended Act of 1998, which supersedes the notification dated 09.04.1997 or expressly de-notify or repeal notification dated 09.04.1997. Since there is no automatic cessation of a notification issued under the repealed Act on its amendment, it cannot be said that the notification dated 09.04.1997 post its application. My view gets support from the findings of Supreme Court in the case of Neel alias Niranjan Majumdar vs. State of West Bengal (1972) 2 SCC 668. The relevant paragraphs read as under:-