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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2011
(Arising out of SLP (C) NO.1067 of 2009)
Marathwada Gramin Bank Karamchari
Sanghatana and Another ...Appellants
Versus
Management of Marathwada Gramin Bank
and Others ...Respondents
WITH
CIVIL APPEAL NO. OF 2011
(Arising out of SLP(C) NO.1205 of 2009)
Marathwada Regional Rural Bank
Employees Union ...Appellant
Versus
Management of Marathwada Gramin Bank
and Others ...Respondents
J U D G M E N T
Dalveer Bhandari, J.
1. Leave granted in both the matters.
2. We propose to dispose of these appeals by a common
judgment. These appeals emanate from the judgment and
final order dated 14.11.2008 passed by the High Court of
1
Judicature at Bombay, Nagpur Bench, Nagpur in Letters
Patent Appeal Nos.347 and 348 of 2008.
3. Marathwada Gramin Bank (for short, respondent
bank) was established in 1976. The provisions of the
Employees Provident Fund Scheme, 1952 became
applicable to the respondent bank from 1.9.1979.
According to the respondent bank, it meticulously complied
with the provisions of the Scheme till 31.8.1981.
Thereafter, the respondent bank formed its own trust and
framed its own Scheme for payment of provident fund to its
employees. According to that Scheme of the bank the
employees were getting provident fund in excess of what
was envisaged under the Employees Provident Fund
Scheme, 1952.
4. The Regional Provident Fund Commissioner vide order
dated 29.8.1981 exempted the respondent bank from
complying with the statutory provisions of the Scheme with
effect from 1.9.1981 and permitted the respondent bank to
pay provident fund to its employees according to its own
Scheme. The respondent bank contributed provident fund
2
to its employees as per its own Scheme for the period from
1.9.1981 to 31.8.1993.
5. On 14.10.1991, the said exemption/relaxation granted
to the respondent bank was withdrawn and cancelled and
the respondent bank was directed to implement the
provisions of the statutory Scheme. Despite cancellation of
exemption, the respondent bank continued to make
payment of provident fund in accordance with the earlier
Scheme till 31.8.1993. In the said Scheme, the respondent
bank was contributing provident fund for the employees in
excess of the statutory obligation.
6. According to the respondent bank, owing to huge
accumulated losses, it issued a notice of change under
section 9A of the Industrial Disputes Act, 1947 expressing
its intention to discontinue payment of provident fund in
excess of its statutory liability with effect from 1.11.1998,
but would continue to contribute towards Employees
Provident Fund according to the statutory liability.
7. The Regional Provident Fund Commissioner-II issued a
letter dated 13.5.1999 informing the respondent bank that
3
it cannot withdraw the benefit of paying matching
employer's share without any limit to wage ceiling and
directed it to continue extending the same benefit as was
granted prior to 01.11.1998.
8. Thereafter, the Central Government made a reference
of the dispute to the Central Government Industrial
Tribunal, Nagpur (for short, the Tribunal). The said
Tribunal relied on Section 12 of the Employees Provident
Fund and Miscellaneous Provisions Act, 1952 (for short,
1952 Act) and held that the management cannot reduce,
directly or indirectly, the wages of any employee to whom
the Scheme applies or the total quantum of benefits in the
nature of old age pension gratuity (provident fund) or life
insurance to which the employee is entitled under the terms
of his employment, express or implied. Section 12 of the
1952 Act reads as under:-
"No employer in relation to [an
establishment] to which any [Scheme or the
Insurance Scheme] applies shall, by reason
only of his liability for the payment of any
contribution to [the Fund or the Insurance
Fund] or any charges under this Act or the
[Scheme or the Insurance Scheme] reduce,
whether directly or indirectly, the wages of
any employee to whom the [Scheme or the
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Insurance Scheme] applies or the total
quantum of benefits in the nature of old age
pension, gratuity [provident fund or life
insurance] to which the employee is entitled
under the terms of his employment, express
or implied.]"
9. The Tribunal directed that the employees of the
respondent bank shall continue to draw equal amount of
contribution from the bank towards provident fund without
any ceiling on their wages. According to the Tribunal, the
action of the respondent bank to reduce the contribution of
the provident fund or to put a ceiling on the provident fund
is not justified. The Tribunal also directed that the
workmen shall continue to draw the benefit of the prevailing
practice of contribution of Employees Provident Fund
without any ceiling.
10. The respondent bank, aggrieved by the said award
passed by the Tribunal, preferred a writ petition before the
learned Single Judge of the High Court of Judicature of
Bombay at Nagpur Bench, Nagpur.
11. It was submitted by the respondent bank that the
impugned award as well as the communication issued by
the Regional Provident Fund Commissioner-II is contrary to
5
law as the same is based on the assumption that Section
12 of the 1952 Act creates bar for imposing the ceiling in
accordance with the Provident Fund Act.
12. The learned counsel for the respondent bank in
support of his contention, before the learned Single Judge of
the High Court, placed reliance on the judgment of the
Constitution Bench of this Court in Committee for
Protection of Rights of ONGC Employees and Others v.
Oil and Natural Gas Commission and Another (1990) 2
SCC 472 and the judgment of the High Court of Kerala in
Vijayan v. Secretary to Government 2006 (3) KLT 291.
13. It was also submitted that the respondent bank is
under an obligation to make contribution towards
Employees Provident Fund in accordance with the statutory
provisions of 1952 Act. It was further urged that the
respondent bank all through has at least made contribution
towards Employees Provident Fund in consonance with the
statutory provisions. On behalf of the respondent bank it
was submitted that the respondent bank has always
complied with the statutory obligation. It was also
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contended by the respondent bank that the appellants
cannot claim as a matter of right the amount in excess of
the statutory provisions of 1952 Act.
14. Before the High Court, for the first time, the appellants
herein submitted that Section 17(3)(b) of the 1952 Act
regarding exemption of any establishment from the
operation of the Scheme was subject to certain conditions.
Section 17(3)(b) of the 1952 Act reads as under:-
17. Power to exempt
(1) xxx xxxxx
xxxx
(2) xxx xxxxx
xxxx
(3) Where in respect of any person or class of
persons employed in an establishment an
exemption is granted under this section from the
operation of all or any of the provisions of any
Scheme (whether such exemption has been
granted to the establishment wherein such
person or class of persons is employed or to the
person or class of persons as such), the employer
in relation to such establishment--
(a) xxx xxxxx
xxxx
(b) shall not, at any time after the exemption,
without the leave of the Central Government,
reduce the total quantum of benefits in the
nature of pension, gratuity or provident fund to
which any such person or class of persons was
entitled at the time of the exemption;"
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15. The learned Single Judge in his judgment observed
that Section 17(3)(b) of the 1952 Act was never pressed into
service by the appellants herein either before it or the
Tribunal and the appellants herein cannot be allowed to
raise the said contention for the first time in the writ
petition. In that judgment, it was also observed that even
otherwise, the said provision applies when the exemption is
granted and is in force and in the instant case admittedly
the exemption was already cancelled. Therefore, Section
17(3)(b) of 1952 Act is not applicable.
16. On analysis of Section 12 of the 1952 Act, the learned
Single Judge of the High Court came to the conclusion that
Section 12 of the 1952 Act will operate as a bar in case the
same is the term of employment expressed or implied. In
the instant case, it is not in dispute that under Regulation
No.56 of the Marathwada Gramin Bank (Staff) Service
Regulations, 1980, the express term of employment
accepted by the employees is that contribution to the
provident fund shall be in accordance with the provisions of
the 1952 Act. Regulation No.56 reads as under:-
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"56. All officers and employees who have
completed continuous minimum service as
specified in the Employees' Provident Funds
and Miscellaneous Provisions Act, 1952 (19
of 1792) shall be members of the Provident
Fund. The contribution to the provident
fund by the officers and employees and the
Bank shall be in accordance with the
provisions of the aforesaid Act."
17. The learned Single Judge observed that in the instant
case it is the express term of employment that the
contribution of the bank shall be in accordance with the
provisions of the 1952 Act. The learned Single Judge thus
observed that the bar of Section 12 will not operate as
otherwise held by the Tribunal in the impugned award.
18. The learned Single Judge also observed that under
Section 17(3)(b) of the 1952 Act, the said permission would
be required in case an exemption from the operation of the
provisions of the 1952 Act has been obtained. In the
instant case, the exemption was already cancelled on
14.10.1991 and consequently this provision has no
application to the facts of this case. The learned Single
Judge consequently set aside the impugned judgment of the
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Tribunal and allowed the writ petition filed by the
respondent bank.
19. The appellants, aggrieved by the judgment of the
learned Single Judge, preferred Letters Patent Appeals
before the Division Bench of the High Court of Judicature at
Bombay, Nagpur Bench, Nagpur and contended that under
Section 17(3)(b) of the 1952 Act once the exemption is
granted by the Appropriate Government, it shall not,
without the leave of the Central Government reduce the
total quantum of benefits in the nature of pension, gratuity
or provident fund etc.
20. It was also contended by the appellants that in the
instant case, the respondent bank did not obtain leave of
the Central Government before acting on the
communication dated 14.10.1991 by issuing notice of
change.
21. The appellants relied on the case of Madura Coats
Employees Union v. Regional Provident Fund
Commissioner and Others (1999) ILLJ 928 Bombay and
particularly relied on paragraphs 6, 7 and 8 of that
judgment where the Court observed that the benefit cannot
10
be taken away by the employer without prior permission of
the Central Government. The Division Bench approved the
view of the learned Single Judge that the case of Madura
Coats (supra) did not apply to the present case because in
the instant case the relaxation/exemption was
withdrawn/cancelled. The Division Bench also observed
that in Madura Coats case there was no contention that
the relaxation/exemption was withdrawn at any time. This
is the main distinguishing feature in both these cases. The
Division Bench did not interfere with the judgment of the
learned Single Judge and dismissed the appeals filed by the
appellants. The appellants are aggrieved by the impugned
judgment of the Division Bench of the High Court and have
approached this Court by preferring these appeals under
Article 136 of the Constitution.
22. The appellants contended before this Court that this
case involved substantial question of law regarding
interpretation of the provisions of Section 12 of 1952 Act. It
was also argued by the appellants that the contribution to
provident fund is a component of wages and when
admittedly the respondent bank has paid its share of the
11
provident fund contribution in excess of the amount
prescribed in the 1952 Act for a long period of time and
continued to contribute at such higher rate without any
ceiling even after withdrawal of the exemption for a period of
7 years and had also framed rules whether it is open to the
respondent bank to reduce its contribution towards
provident fund.
23. The appellants submitted that in view of the facts of
this case, Section 12 of the 1952 Act is clearly attracted.
The appellants reiterated before this Court the submissions
advanced before the Division Bench of the High Court.
24. We have heard the learned counsel for the parties at
length and perused the relevant provisions of the Act. It
may be pertinent to mention that the respondent bank
complied with the provisions of the 1952 Act meticulously
after it became applicable from 1.9.1979. The respondent
bank complied with the provisions of the Scheme till
31.8.1981. Thereafter, the respondent bank formed its own
trust and framed its own Scheme for payment of provident
fund. In that Scheme, the respondent bank paid higher
12
amount of provident fund to its employees than what the
respondent bank was obliged to pay according to the statute
or the agreement with the appellants.
25. The Regional Provident Fund Commissioner vide order
dated 29.08.1981 exempted the respondent bank from
complying with the statutory provisions of the Scheme with
effect from 1.9.1981. Admittedly, the respondent bank paid
provident fund to its employees as per its own Scheme for
the period from 1.9.1981 to 31.8.1993.
26. The said exemption/relaxation granted on 29.8.1981
was withdrawn and cancelled on 14.10.1991 and the
respondent bank was directed to implement the provisions
of the statutory Scheme. Despite cancellation of the
exemption, the respondent bank continued to pay excess
provident fund to its employees in accordance with the
earlier Scheme till 31.8.1993. Thereafter, the respondent
bank issued a notice of change under section 9A of the
Industrial Disputes Act, 1947 expressing its intention to
discontinue payment of provident fund in excess of its
statutory liability with effect from 1.11.1998. It may be
13
pertinent to mention that owing to huge accu*mulated
losses of the respondent bank, the bank though continued
to pay according to the provisions of the statutory Scheme,
but discontinued payment of provident fund in excess of its
statutory liability.
27. The respondent bank is under an obligation to pay
provident fund to its employees in accordance with the
provisions of statutory Scheme. The respondent bank
cannot be compelled to pay the amount in excess of its
statutory liability for all times to come just because the
respondent bank formed its own trust and started paying
provident fund in excess of its statutory liability for some
time. The appellants are certainly entitled to provident fund
according to statutory liability of the respondent bank. The
respondent bank never discontinued its contribution
towards provident fund according to the provisions of the
statutory Scheme.
28. The view which has been taken by the learned Single
Judge and affirmed by the Division Bench of the High Court
is just, fair, appropriate and in consonance with the
provisions of the 1952 Act.
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29. In our considered view, no interference is called for.
These appeals filed by the appellants being devoid of any
merit are accordingly dismissed. In the facts and
circumstances of these appeals, the parties are directed to
bear their own costs.
...............................J.
(Dalveer Bhandari)
..............................J.
(Deepak Verma)
New Delhi;
September 9, 2011 15
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