Mere Fact That 2 Institutes Controlled By Same Mgmt, Offer Different Courses Or Established At Different Times Not Relevant For Clubbing Under EPF Act: SC
The Supreme Court has held that mere fact that two institutes controlled by the same management, offer different courses or were established at different times is not relevant for their clubbing under the EPF Act (Employees’ Provident Funds and Miscellaneous Provisions Act, 1952).
The Court was dealing with a civil appeal in which the order passed by the Karnataka High Court was challenged by the appellant. The Division Bench had upheld the order of the Single Judge who had upheld the order passed by the Employee Provident Fund Appellate Tribunal and also upheld the application of EPF Act to the appellant’s institution.
The two-Judge Bench comprising Justice Hima Kohli and Justice Rajesh Bindal observed, “The mere fact that two Institutes, managed and controlled by the same management, offer different courses or were established at different times is not relevant for their clubbing under the EPF Act. The fact that one of the institutes receives 100% grant-in-aid from the government while the other is receiving to the extent of 70%, is also not relevant. After coverage of the establishments, the benefits, as determined for the purpose of assessing dues under the EPF Act, have already been assessed by the Commissioner.”
The Bench said that the name of the introducer for opening the account is shown as the ‘Ideal Fine Arts Trust’ and that no other documents for the period from 1988 till the Commissioner's order, were submitted.
“Even the documents pertaining to the subsequent period weaken the appellant's case”, further said the Court.
Advocate V. N. Raghupathy appeared on behalf of the appellant while Advocate Nachiketa Joshi appeared on behalf of the respondent.
Brief Facts -
The Ideal Fine Arts Society ran two institutions, namely, the ‘Ideal Institute of Fine Arts’ and ‘Mathosri Manikbai Kothari College of Visual Arts’. Both, the Ideal Institute as well as the Arts College were being run in the same campus and the Ideal Institute was set up way back in the year 1965, offering Diploma Course in drawing and painting, whereas the Arts College was set up in the year 1985-86, offering Degree and Post-Graduate Degree in drawing and painting. It was claimed that the Ideal Institute employed 8 persons, whereas the Arts College had 18 employees and hence, the issue arose with reference to their coverage and application of the EPF Act. Based on the report of the Enforcement Officer, it was reported that there being total 26 employees working in both the Institutes, which were managed by the same Society and within the same premises, the establishment would be covered under the provisions of the EPF Act.
Thereafter, a notice was issued to the establishment and after affording an opportunity of hearing, an order was passed by the Commissioner under Section 7-A of the EPF Act, assessing the amount of contributions to be made by the appellant under various schemes of the EPF Act. The aforesaid order was challenged by the appellant through statutory appeal before the Tribunal, which was dismissed. Then, the appellant filed a writ petition challenging the order passed by the Tribunal before the High Court, which was dismissed by the Single Judge vide order in 2011. In writ appeal, the order of the Single Judge was upheld by the Division Bench of the High Court. Hence, the appellant approached the Apex Court.
The Supreme Court in view of the above facts noted, “If the employees employed in both the institutes are added, the total number of employees would be 26, which will be sufficient for coverage in terms of Section 1(3)(b) of the EPF Act, which stipulates that an institute employing 20 or more persons is liable to be covered under the provisions of the EPF Act. It is also a fact not in dispute that both the institutes are being run in the same campus.”
The Court added that the appellant had taken the case very casually and there being total 26 employees working in both institutes managed by the same Society and within the same premises, the establishment would be covered under the provisions of the EPF Act.
“The issue raised in the present appeal is not regarding the calculation of dues under the EPF Act, rather it is regarding the coverage of the EPF Act by clubbing of two Institutes. In fact, no arguments were raised regarding calculation”, said the Court.
The Court, therefore, concluded that there is financial integrity between the Society of the appellant as well as the Ideal Institute as substantial funds have been advanced to the Institutes by the Society and that both the Institutes are functioning from the same premises.
Accordingly, the Apex Court dismissed the appeal.
Cause Title- M/s Mathosri Manikbai Kothari College of Visual Arts v. The Assistant Provident Fund Commissioner (Neutral Citation: 2023 INSC 909)
