M/S. PAWAN HANS LIMITED & ORS. versus AVIATION KARMACHARI SANGHATANA & ORS.

Citation: [2020] 1 S.C.R. 728 · Decided: 17-01-2020 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Disposed off

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 1 S.C.R.
M/S. PAWAN HANS LIMITED & ORS.
v.
AVIATION KARMACHARI SANGHATANA & ORS.
(Civil Appeal No. 353 of 2020)
JANUARY 17, 2020
[UDAY UMESH LALIT AND INDU MALHOTRA, JJ.]
Employees’ Provident Funds and Miscellaneous Provisions
Act, 1952 – Employees’ Provident Fund Scheme, 1952 – Benefits
under the Pawan Hans Employees provident Fund Trust Regulations
or under the EPF Act, 1952 and EPF Scheme, 1952 of contractual
employees of the Appellant-Company – Entitlement to – Appellant-
Company framed and notified the Pawan Hans Employees Provident
Fund Trust Regulations for giving provident fund benefits to all its
regular employees – The members of the Respondent-Trade Union
made several representations to extend the benefit of the PF Trust
Regulations since they were directly engaged by the Company on
contractual basis – The Company failed to respond to the
representations made by the Respondent-Trade Union – Writ Petition
by the Respondent- Trade Union – The High Court directed that the
benefits under the EPF Act be extended to the members of the
Respondent-Trade Union and other similarly situated employees –
The Appellant-Company having framed its own PF Trust Regulations,
claimed exemption from the applicability of the EPF Act and EPF
Scheme – On appeal, held: The Supreme Court in Regional Provident
Fund Commissioner v. Sanatan Dharam Girls Secondary School
laid down a twin test for an establishment to seek exemption from
the provisions of the EPF Act, 1952 – The first, the establishment
must be either ‘belonging to’ or ‘under the control of’ the Central
or the State Government – Second, the employees of such an
establishment should be entitled to the benefit of contributory
provident fund or old age pension in accordance with any scheme
or rule framed by the Central Government or the State government
governing such benefits – In the instant case, the first test is satisfied
as the Appellant- Company can be termed as a Government
Company u/s. 2(45) of the Companies Act, 2013 – With respect to
the second test, the PF Trust Regulations of the Company were not
   [2020] 1 S.C.R. 728
728
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framed by the Central or State Government, nor were they applicable
to all the employees of the Company, so as to satisfy the second test
– The Company did not satisfy the second test, consequently the
exemption u/s. 16 of the EPF Act not applicable to the Appellant -
Company – Insofar as the entitlement of the members of the
Respondent-Trade Union to the benefit under the PF Trust
Regulations or under the EPF Act is concerned, the members were
receiving wages/salary directly from the Company without the
involvement of any contractor since their date of engagement and
their work being of a perennial and continuous nature cannot be
termed to be ‘Contractual’ in nature – Therefore, the members of
the Respondent Union are entitled to the benefit of the provident
fund under the PF Trust Regulations or the EPF Act – Since, the PF
Trust Regulations are already in force and are applicable to all
employees of the company, the Respondent-Trade Union granted
the benefit of provident fund under the PF Trust Regulations so
that there is uniformity in the service conditions of all the employees.
Disposing of the appeal, the Court
HELD: 1. As per Section 1(3) of the Employees’ Provident
Funds and Miscellaneous Provisions Act, 1952, the EPF Act is
applicable to every establishment in which 20 or more persons
are employed, which is either a factory engaged in any industry
specified in Schedule I, or an establishment which the Central
Government may by notification in the Official Gazette specify in
that behalf. Section 1(3) of the EPF Act. Section 1(3) is subject to
Section 16 of the EPF Act. Sub-section (1) of Section 16 enlists
those establishments which are excluded from the applicability
of the EPF Act. As per clause (b) of sub-section (1), an
establishment belonging to or under the control of the Central
or State Government, and whose employees are entitled to the
benefit of contributory provident fund in accordance with any
scheme or rules framed by the Central or State Government
governing such benefits, is excluded from the purview of the EPF
Act. [Para 6.2][741-B, C, G-H]
2. As per Section 2(45) of the Companies Act, 2013, a
“Government Company” means any company in which not less
than 51 % of the paid-up share capital is held by the Central
Government. Since 51% of the shares of t

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