Full Text
HIGH COURT OF DELHI
Date of Decision: 17th September, 2021
ASSOCIATION OF INDUSTRIES AND INSTITUTIONS ..... Petitioner
Through: Mr. Sudhir Kumar Gupta & Mr. Puneet Gupta, Advocates.
Through: Mr. Siddharth & Mr. Amit Kumar, Advocates for EPFO/R-2.
JUDGMENT
1. This hearing has been done through video conferencing. Brief Facts
2. The Petitioner is an association of various entities and persons stated to be owning and running industrial/commercial establishments, factories, institutions, etc. The Petitioner-Association has filed the present petition challenging the circular dated 1st June, 2021 issued by the EPFO, by which the seeding of Aadhaar number along with the Universal Account Number (hereinafter ‘UAN’), generated under the Employees Provident Fund & Miscellaneous Provisions Act, 1952 (hereinafter, ‘EPF Act’), in respect of employees, has been made mandatory.
3. On the last date i.e., 14th September, 2021, Mr. Gupta, ld. Counsel for the Petitioner, sought time to file a list of its members and also file an amended memo of parties, impleading some of its members who are affected by the impugned order of the EPFO dated 1st June, 2021. Parties 2021:DHC:2921 were also directed to place on record the circulars being relied upon by them. Further to the last order dated 14th September, 2021, an amended memo of parties has been filed by the Petitioner, impleading three companies who are members of the Petitioner-Association, namely, M/s T C Global India Private Ltd., M/s Jindal ITF Limited and M/s Lifting Equipment Engineer. The said amended memo of parties is taken on record.
4. In August/September, 2020, the Central Government enacted four labour codes, namely: (a) Code on Wages, 2019; (b) Code on Social Security, 2020;
(c) Code on Industrial Relations, 2020; and
(d) Code on Occupational Safety, Health and Working Condition,
2020.
5. The abovementioned Codes were notified but are stated to have not yet come into effect. The Rules etc. under the said Codes are yet to be framed and notified. The only provision in the Code on Social Security, 2020, which has been notified is Section 142.
6. Pursuant to the notification of Section 142 of the Code on Social Security, 2020 on 30th April, 2021, the impugned circular was issued by the EPFO on 1st June, 2021. As per the said circular, the EPFO has made it mandatory that the Aadhaar number of each employee be seeded and verified with the UAN, with effect from 1st June, 2021.
7. It is pertinent to note that under the EPF Act, whenever deposits are made in respect of any employees, an Electronic Challan-cum-Receipt (hereinafter “ECR”) is generated. The said ECR acts as the proof of deposit of the provident fund (hereinafter, “PF”). It is the case of the Petitioners that if the ECR is not generated, the employer would be liable to pay various penalties and suffer consequences of non-deposit of dues. The impugned circular dated 1st June, 2021 mandated that no PF deposit would be made or accepted without Aadhaar numbers being seeded with the UAN. Thus, in effect, seeding of Aadhaar numbers was made mandatory to obtain an ECR.
8. Pursuant to the impugned notification, the Petitioner-Association made a representation to the Ministry of Labour & Employment, Govt. of India, in view of the various difficulties being faced by employers due to mandatory seeding. It informed the Ministry that though both the employers and employees intend to effectuate the seeding, there are various technical issues being faced due to which, the same is not becoming possible in respect of a large number of people. According to the Petitioner, the EPFO portal rejects the ECR for two reasons: (a) Error- Aadhaar being not verified against UAN; and (b) Error – Aadhaar not seeded against the UAN. Submissions (a) Issues with Aadhaar verification against UAN
9. In the representation made to the Ministry, it was highlighted by the Petitioner-Association that in case of various employees, there is a mismatch between the Aadhaar database and the EPFO database. The mismatch could be in respect of the name/spelling of a person, date of birth, etc. and for getting the same rectified, various documents are demanded by the authorities, which results in delay in deposit of the PF. The Petitioner- Association represented that sometimes the mismatch is a result of Aadhaar data also requiring to be updated. The said updating has also been delayed due to the COVID-19 pandemic and lockdown restrictions. Even online requests for correction of name and date of birth with the EPFO, are not working effectively in the absence of mobile number linked with the UAN or the Aadhaar number seeded with KYC. If the employee is changing the mobile number, he/she is unable to generate the OTP in respect of the change that is to be effected. Further, change of the mobile number is also proving to be quite arduous, as such a request has to be submitted to the EPFO and duly counter-signed by the employer, which usually takes several weeks for updating. This data mismatch has resulted in the ECRs being rejected by the EPFO on the ground of “Error – Aadhaar not verified against the UAN”. In effect, therefore, the employees are unable to avail the benefits of PF, if their Aadhaar data is not verified with the UAN. Thus, the Petitioner’s members pray that a specific functionality be provided for uploading the ECRs in cases where the Aadhaar is not verified against the UAN. (b) Issues with mandatory seeding of Aadhaar with UAN
10. The other difficulties faced by the employers as per the writ petition are as under: (1) Difficulty in availing of Aatmanirbhar Bharat Rozgar Yojana Scheme (“ABRY”), which takes September, 2020 as the base year for the purpose of availing of benefits - Under the said scheme, since the seeding is not taking place of all employees, the employers are unable to upload ECRs at one go and are forced to only upload those ECRs, which are seeded with the Aadhaar number. This has resulted in an anomalous situation wherein even those employees, who are entitled to benefit under the ABRY Scheme, are being forced to make contribution of PF on their own whereas under the said scheme, the Central Government itself is to contribute their share of the PF. (2) Hardship for employees, who do not have Aadhaar card - The employers are being forced to not employ those Workmen/employees, who do not have proper Aadhaar card. (3) Difficulties of migrant workers – Migrant workers who have moved from cities back to their villages or have joined back the employer after the lock down period ended, are unable to arrange for supporting documents for seeding of Aadhaar number with the UAN under the EPFO.
11. Mr. S.K. Gupta, ld. counsel for the Petitioner, submits that enormous prejudice is being caused to the employers due to the mandatory requirement, which has been imposed. According to ld. Counsel for the Petitioner, due to mandatory seeding, enormous prejudice is caused to the employers as under: “(i) Prejudice caused to the Employers
12. He further submits that apart from the consequences of implementation, the employees would also be prejudiced to a considerable extent in the following manner. “(ii) Prejudice cause to the Employees
B. EDLI benefits may be affected, in case of death of the employee.
13. Mr. Gupta, ld. counsel further highlights the fact that the EPF benefits also have insurance linked benefit under the Employees’ Deposit-Linked Insurance Scheme, 1976 (“EDLI”) where insurance of Rs 2.[5] lakhs is also extended to employees. Non-deposit of EPF amount would also result in depriving the employees from the benefits under this scheme.
14. Mr. Gupta, ld. Counsel, highlights the fact that invocation of Section 142, for making seeding mandatory, is itself wholly misplaced as the said provision can be used only for the benefits “under this Code or rules, regulations or schemes made or framed thereunder”. When the Code itself is not notified, the issuance of the impugned circular, under Section 142, is legally unsustainable. He further refers to the fact that under the ESIC scheme/benefit, though Section 142 has been considered, it has not been made mandatory. Reliance is placed upon circular dated 12th May, 2021 and 20th May, 2021.
15. The Petitioner and its members are, therefore, requesting for an extension of 3-4 months before the circular dated 1st June, 2021 is implemented. The prayers in the writ petitions are as under: “[a] Issue a writ in the nature of mandamus or any other appropriate writ, order or direction in the nature of mandamus or any other writ or order or direction or granting interim relief against the impugned order No.BKG.27/07/2020 – G/Pt. File dated 01.06.2021 passed by the ACC (F&A), Employees’ Provident Found Organisation Delhi. [b] Or in the alternative, Issue a writ in the nature of mandamus or any other appropriate writ, order or direction commanding the respondents to extend the implementation of Annexure P[1] directives by 6 months, enabling remittance of contributions by employers in respect of their employees, under the Employees’ Provident Fund and Miscellaneous Provisions Act 1952, for the period from 01.06.2021 onwards, without liability for interest, damages or penalty as also without incurring any disentitlement to any benefits under ABRY Scheme and PMRPY Scheme; [c] Issue a writ in the nature of mandamus or any other a appropriate writ, order or direction commanding the respondents to extend the due dates for remittance of contributions under the Employees' Provident Fund and Miscellaneous Provisions Act 1952 by six months so the provisions of Income Tax 1961 may not give adverse effect as per Section 36(1)(va) read with Section 2(24)(x) of Income Tax Act,1961; [d] Grant such other and further reliefs as are deemed just and necessary in the facts and circumstances of the case including the costs of this proceedings; as also the following:”
16. On the other hand, Mr. Siddharth, ld. counsel appearing on behalf of the EPFO, submits that on 11th September, 2021, a further circular has been circulated, giving some benefits in the following manner: “ (a)Considering the low Aadhaar penetration in the EPFO’s administrative Zone of North East Region comprising of States of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland & Tripura, time for mandatory seeding of Aadhaar in UAN for filing ECR is extended till 31.12.2021. (b)Considering the concentration of establishments in remote localities & in areas affected by insurgency, frequent change in work sites of the workers and other attendant constraints in the Classes of establishments- Beedi making, Building and Construction and Plantation industries (Tea, Coffee, Cardamom, Pepper, Jute, Rubber, Cinchona, Cashewnuts etc.) time for mandatory seeding of Aadhaar in UAN for filing ECR is extended till 31.12.2021.
(c) For areas and industries/class of establishments other than above, delay in filing of ECRs for wage months of August, 2021 & September, 2021 only in respect of EPF members due to non-seeding of Aadhaar in the UANs should not be presumed as employer’s default for levy of penal damages u/s 14B of the EPF & MP Act, 1952.”
17. He submits that beyond the above benefits, no further extension can be granted in general for those employees whose Aadhaar is not seeded with the UAN, inasmuch as adequate time has already passed since the first notification dated 1st October, 2017 when the Government had asked the employers to begin the process of seeding the employee’s accounts with the Aadhaar number. Ld. counsel submits that almost four years have passed, and in the past four years, the accounts of a substantial number of employees have already been validated. The total number of employees whose validation is yet to be done is only 29,26,479.
18. Ld. counsel further submits that the EPF Act is for the benefit of employees and not a single employee has come forward before this Court challenging the seeding. The employer is merely a conduit. Despite four years having been granted, there is non-cooperation by the employers. Thus, adequate time has been granted by the Government for the process of seeding to be completed.
19. In response to the submission regarding Section 142, Mr. Siddharth places reliance upon two judgments i.e., K.S. Puttaswamy (Retired) and Ors. v. Union of India & Ors., (2015) 10 SCC 92 and Binoy Viswam v. Union of India & Ors., (2017) 7 SCC 59. On the strength of the ruling in K.S. Puttaswamy (supra), he submits that the provident fund scheme was added as one of the schemes for which Aadhaar could be used, in terms of the orders of the Supreme Court dated 11th August, 2015 and 15th October,
2015. He further relies upon the judgment in Binoy Viswam (supra) to argue that the restrictions being imposed for seeding with Aadhaar are in the interest of the employees themselves, as this ensures that the benefits under the scheme of the EPF Act are extended purely to the employees and are not in any manner diverted and pilfered by employers or any unverified persons.
20. Mr. Siddharth, ld. counsel for the EPFO further submits by way of a supplementary affidavit that the entire issue is only limited to those employees who were on the rolls of the EPFO prior to 1st October, 2017. He submits that approximately 30 lakh workmen’s Aadhaar has not been seeded with their UANs. However, he highlights the fact that the process of seeding has, in fact, revealed that there are approximately 3.67 crore UANs which are found to be surplus, and could either be duplicate in nature or persons who are completely unverified. Ld. counsel draws the attention of this Court to paragraph 3 of the Employees’ Pension Scheme, 1995. The said provision reads as under:
21. On a query put to Mr. Siddharth, ld. counsel, in respect of the judgment of the Supreme Court in K.S. Puttaswamy (Retd) & Anr. v. Union of India & Ors., (2019) 1 SCC 1 (‘Aadhaar 5J’), ld. counsel takes the Court through paragraphs 371 to 379 to argue that considering that the Central Government contributes a substantial amount in the pension scheme, which amount is derived from the Consolidated Fund of India, the seeding of Aadhaar with the UAN being made mandatory does not fall foul of the said judgment.
(c) Issues with new portal
22. Mr. S.K. Gupta, ld. counsel for the Petitioner, has also placed before the Court the circular dated 1st June, 2021, by which the seeding of Aadhaar with the UANs was made effective from 1st June, 2021. He submits that the portal was activated on that very date i.e., 1st June, 2021 and ECRs were generated only if the seeding was done with the Aadhaar. Representations were made by several members of the Petitioner-Association and other industry members. Subsequent to the said representations, another circular dated 15th June, 2021 was issued by the Ministry of Labour & Employment modifying the deadline for compliance to 1st September, 2021. On 15th June, 2021, the software was amended to permit deposits of provident fund without the seeding of Aadhaar. Ld. counsel therefore submits that a large number of members of the Petitioner-Association have been unable to deposit the provident fund for the period 15th May, 2021 to 30th May, 2021, which was due on 15th June, 2021, in a timely manner i.e., the same was deposited with some delay. He submits that the consequences of the delay are enormous inasmuch as interest and damages would be levied against the members of the Petitioner-Association. It is submitted that since the new software came into effect only on 1st June, 2021 and in light of the circular dated 15th June, 2021, a relaxation of five days ought to be granted to the employers for the belated deposit of provident fund dues in respect of the amounts which were due on 15th June, 2021.
23. Mr. Gupta, ld. counsel further submits that whenever there was a glitch etc. in the past, the grace period has also been given by the department. Reliance is placed upon two communications dated 12th January, 2017 and circular issued on 15th April, 2020, that 30 days’ grace period was given at the outbreak of the Covid-19 pandemic. He assures the Court that all the employers will still make attempts to seed the Aadhaar with the UAN, if time is granted till 31st December, 2021. Analysis & Findings
24. There are several factual and legal issues which have been raised in this petition. Pleadings are yet to be completed. However, in view of the various difficulties which have been highlighted, the interim relief, if any, is to be considered at this stage.
25. The first issue that would be required to be considered is whether Section 142 of the Code on Social Security, 2020 can form the basis of the seeding of the UAN with Aadhaar. There were four Codes which were introduced in and are stated to have been passed by Parliament in August/September, 2020. It is not disputed that the provisions of the four Codes have not come into effect. The only provision which has been notified is Section 142 of the Code on Social Security, 2020. Section 142 reads as under:
26. A perusal of the above provision shows that the provision seeks to make Aadhaar mandatory in order to establish the identity of the member, as also the identity of his/her family members or dependents. The issue raised by the Petitioners, is that this provision would be applicable only in respect of the benefits under the Code on Social Security, 2020 and not otherwise. The Petitioners argue that since the other provisions of the Code on Social Security, 2020 have not been notified, Section 142 cannot be made applicable in this manner.
27. The second issue that arises is whether the mandatory seeding of the UAN with the Aadhaar is permissible considering the various judgments of the Supreme Court culminating in K.S. Puttaswamy (Retd) & Anr. v. Union of India & Ors., (2019) 1 SCC 1 (hereinafter “Aadhaar 5J”).
28. In K.S Puttaswamy & Anr. v. UOI & Ors., (2015) 10 SCC 92 the Supreme Court had observed with respect to linking of Aadhaar for the EPFO as under:
29. However, this order has thereafter culminated in the final judgment of the Court in Aadhaar 5J. The findings of the Supreme Court in Aadhaar 5J are as under:
30. The supplementary affidavit which has been filed by the EPFO today reveals the following data: “6. The following table explains the status of UANs generated up to 30.09.2017.
┌───────────────────────────────────────────────────────────────────────────────────────┐ │ generated up to 30.09.2017. │ │ Sl. Description No. of UANs │ ├───────────────────────────────────────────────────────────────────────────────────────┤ │ 1. UAN allotted prior to 01-10- 4,71,15,897 │ │ 2017 but exited from │ │ membership │ │ 2. UAN allotted prior to 01-10- 52,09,799 │ │ 2017 not exited from │ │ membership but contributions │ │ not received for last year │ │ 3 UANs amalgamated in Aadhaar 3,67,17,295 │ │ seeded UANs │ │ 4. UAN allotted prior to 01-10- 2,73,39,648 │ │ 2017 not exited from │ │ membership & contributions │ │ received in last one year (*) │ │ 5. Total UAN allotted prior to 01- 11,63,82,639 │ │ 10-2017 │ │ W.P.(C) 5952/2021 Page 21 of 25 │ │ 2021:DHC:2921 │ │ 7. The break-up of the abovementioned 2,73,39,648 │ │ UAN allotted prior to 01-10-2017 and contributions │ │ received during last one year are described as follows (*) │ │ 1 UAN with Aadhaar seeding 2,44,13,169 │ │ 2 UAN not seeded with 29,26,479 │ │ Aadhaar │ │ 3 Total 2,73,39,648 │ └───────────────────────────────────────────────────────────────────────────────────────┘
31. The affidavit filed by the EPFO claims that there are 29,26,479 persons whose contributions have been received in the last one year but whose UANs are yet to be seeded with their Aadhaar. Thus, the figure cited by Mr. Gupta of approximately 1.10 crores is disputed by Mr. Siddharth, ld. counsel. Irrespective, this is a substantial number of persons. The Petitioner No.1- claims to be representing various industries whose workers’ Aadhaar numbers are yet to be obtained or verified. This Court cannot ignore the fact that mismatch between the Aadhaar data and the UAN data would require time to be corrected since the names of persons, their date of birth, addresses, phone numbers, etc. would need to be properly verified to ensure that the data matches. The non-deposit of provident fund or the belated deposit of provident fund has enormous consequences for both the employees as well as the employers.
32. On 11th September, 2021, the EPFO has already granted extensions till 31st December, 2021 in respect of States of the North-East. Extension has also been given in respect of certain classes of establishments where there could be unorganized labor such as beedi making, Building and Construction and Plantation industries (Tea, Coffee, Cardamom, Pepper, Jute, Rubber, Cinchona, Cashewnuts etc.) However, for the third category of establishments and industries, the only benefit which is sought to be given is exemption from the levy of penal damages under Section 14B of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. Considering that the legal issues which have been raised above are yet to be examined and adjudicated by this Court, as per the judgement of the Supreme Court, exclusions cannot be permitted, especially from benefits under a social welfare legislation such as the EPF Act and benefits thereunder. Accordingly, subject to adjudication of the legal issues which have been raised in this petition, the following interim directions are issued: a) Insofar as the employees qua whom Aadhaar numbers have already been provided to the EPFO are concerned, the provident fund shall be permitted to be deposited by the employers without awaiting verification from the Unique Identification Authority of India. The process of verification shall however continue; b) Insofar as those persons for whom the Aadhaar number seeding is yet to take place are concerned, the date for completing the seeding and verification shall stand extended till 30th November, 2021. In the meantime, employers shall be permitted to deposit the provident funds in respect of employees for whom seeding has not taken place and no coercive measures shall be taken against them for non-seeding of Aadhaar numbers with UANs. During this period, the EPFO would appoint a Grievance Redressal Officer who can be contacted by the Petitioner’s members or any other employer, to ensure that the deposits are not delayed and are made in a timely manner, in terms of the provisions of the Act and the Scheme. c) Insofar as the difficulties which were faced by the employers during the period from 1st June, 2021 to 15th June, 2021 during which period the software was amended, are concerned, no coercive measures shall be taken against the employers for the time being in respect of such belated payments until final decision in the present writ petition.
33. Details of the Grievance Redressal Officer who can be contacted by the Petitioner’s members or any other employer, to ensure that the deposits are not delayed have been emailed on behalf of the EPFO to the Court Master today. The officer’s details are as follows: Mr. Harsh Kaushik, Deputy Director (Information Services). Email ID: ecr.help@epfindia.gov.in
34. The documents, affidavits, judgements filed by parties through email to the Court Master shall be filed properly with the Registry and brought on record. The following details of the members of the Petitioner-Association shall be provided by the Petitioner: a) Names of the entity/firm/company along with details of their constitution i.e., sole proprietary firm, partnership firm or registered company; b) Details of the registered office address of the entity/firm/company; c) The email address, as also the mobile number of the relevant contact person in the entity/firm/company; d) The provident fund code of the entity/firm/company and the number of employees.
35. An application placing the above details on record shall be filed within a period of two weeks, with an advance copy to the Respondents. Parties are permitted to file any additional affidavits or synopsis for the purposes of addressing the legal issues which have been captured in this order, within a period of four weeks.
36. The EPFO shall place on record the complete data relating to the verification/seeding of Aadhaar at least one week before the next date of hearing.
37. This shall be treated as a part-heard matter.
38. List on 10th November, 2021.
PRATHIBA M. SINGH JUDGE SEPTEMBER 17, 2021 Rahul/dj/T/MS (corrected & released on 22st September, 2021)