MARATHWADA GRAMIN BANK KARAMCHARI SANGHATANA AND ANOTHERversusMANAGEMENT OF MARATHWADA GRAMIN BANK AND OTHERS

                    [2011] 11 S.C.R. 269


      MARATHWADA GRAMIN BANK KARAMCHARI                        A
           SANGHATANA AND ANOTHER
                            . v.
 MANAGEMENT OF MARATHWADA GRAMIN BANK AND
                 OTHERS
                                                               8
              (Civil Appeal No. 7766 of 2011)

                   SEPTEMBER 9, 2011
   [DALVEER BHANDARI AND DEEPAK VERMA, JJ.]
                                                              ·c
     Employees Provident Fund and Miscellaneous
 Provisions Act, 1952: s. 12 - Liability of employer to pay
provident fund - Held: Employer is under an obligation to pay
provident fund to its employees in accordance with the
statutory scheme - Employer cannot be compelled to pay the . D
amount in excess of its statutory liability for all times to come
just because it had paid provident fund in excess of its
statutory liability for sometime.

      Respondent-Bank was established in 1976. The E
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 F
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 en'visaged under
the Employees Provident Fund Scheme, 1952.
                                                               G
     The Regional . Provident Fund Commh;sioner
exempted the respondent ·bank from complying with the
statutory provisions of the Scheme with effect' from .
1.9.1981 and permitted the respondent ban·k to pay
                         269                           H
    270    SUPREME COURT REPORTS            [2011) 11 S.C.R.


A provident fund. to its employees according to its own
  Scheme. The respondent bank contributed provident
  fund to its employees as per its own Scheme for the
  period from 1.9.1981 to 31.8.1993.

8      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  to the respondent bank was withdrawn and cancelled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
C payment of provident fund in accordance with the earlier
  Scheme till 31.8.1993.0n account of huge accumulated
  losses, the respondent-Bank decided to discontinue
  contribution of provident fund in excess of its statutory
  liability with effect from 1.11.1998 and issued a notice of
  change under section 9A of the Industrial Disputes Act,
D 1947. The Commissioner issued a letter informing the
  respondent bank that 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.
E
       The reference of dispute was made to the Industrial
  Tribunal. The Tribunal held that the action of the
  respondent bank to reduce the contribution of the
  provident fund or to put a ceiling on the provident fund
F was not justified and also directed that the workmen
  would continue to draw the benefit of the prevailing
  practice of contribution of Employees Provident Fund
  without any ceiling.

       The respondent bank filed a writ petition before the
G High Court. The High Court allowed the writ petition
  holding that it was the express term of employment that
  the contribution of the bank would be in accordance with
  the provisions of the 1952 Act. The instant appeals were
  filed challenging the order of the High Court.
H
MARATHWADA GRAMIN BANK KARAMCHARI SANGHATANA v. MNGT. OF   271
               MARATHWADA GRAMIN BANK

    Dismissing the appeals, the Court                            A
     HELD: .1. Owing to huge accumulated losses of the
respondent bank, the bank though continued to pay
a~cording to the provisions of the statutory Scheme, but
discontinued payment of provident fund in excess of its 8
statutory liability. 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 C
because it had formed its own trust and started paying
provident fund in excess of its statutory liability for some
time. The appellants were 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 D
provisions of the statutory Scheme. The view which was
taken by the High Court was just, fair, appropriate and in
consonance with the provisions of the 1952 Act.
Therefore, no interference is called for. [Paras 27-29] [279-
E-H; 280-A-C]                                                   E
    Committee for Protection of Rights of ONGC Employees
and Others v. Oil and Natural Gas Commission and Another
(1990) 2 SCC 472: 1990 (2) SCR 156; Vijayan v. Secretary
to Government 2006 (3) KLT 291; Madura Coats Employees           F
Union v. Regional Provident Fund Commissioner and Others
(1999) ILLJ 928 Bombay - referred to.
                    Case Law Reference:
    1990 (2) SCR 156         referred to·          Para 12       G
    2006 (3) KLT 291         referred to           Para 12
    (1999) ILLJ 928 Born. referred to              Para 21
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.              H
7766 of 2011.
    272        SUPREME COURT REPORTS           (2011) 11 S.C.R.


A        From the Judgment and Order dated 14.11.2008 of the
    High Court of Judicature of Bombay at Nagpur in LPA No. 347
    of 2008.
                                  WITH
B   C.A. No. 7767 of 2011.

        C.U. Singh, Dhruv Mehta, Shivaji M. Jadhav, Brij Kishor
    Sah, Amit Singh, R.S. Hegde, Chandra Prakash, Prakash
    Chandra Sharma (for P.P. Singh), Manish Pitale, Rahul
    Bhangde (for Chander Shekhar Ashri), Aparna Bhat and
C   Ramesh Kumar P., for appearing parties.

          DALVEER BHANDARI, J. 1. Leave granted in both the
    matters.

         2. We propose to dispose of these appeals by a common
D   judgment. These appeals emanate from the judgment and final
    order dated 14.11.2008 passed by the High Court of
    Judicature at Bombay, Nagpur Bench, Nagpur in Letters Patent
    Appeal Nos.347.and 348 of 2008.

E       -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
F   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 er.visaged under the Employees Provident
G   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
H
 MARATHWADA GRAMIN BANK KARAMCHARI SANGHATANA v. MNGT. OF 273
      MARATHWADA GRAMIN BANK [DALVEER BHANDARI, J.]

provident fund to its employees according to its own Scheme.          A
The respondent bank contributed provident fund to its
employees as per its own Sch em~ for the period from 1.9.1981
to 31.8.1993.

      5. On 14.10.1991, the said exemption/relaxation granted         8
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     C
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     D
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.
                                                                      E
     7. The Regional Provident Fund Commissioner-II issued
a letter dated 13.5.1999 informing the respondent bank that 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.
                                                                      F
     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          G
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            H
    274       SUPREME COURT REPORTS                (2011] 11 S.C.R.


A   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
B         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 Insurance
          Scheme] applies or the total quantum of benefits in the
          nature of old age pension, gratuity (provident fund or life
c         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
D 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
E 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
F   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 law as
G 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. lhe learned counsel for the respondent bank in
H support of his contention, before the learned Single Judge of
MAAATHWADA GRAMIN BANK KARAMCHARI SANGHA'TANA v. MNGT. OF     275
      MARATHWADAGRAMIN BANK [DALVEER BHANDARI. J.]

the High Court, placed reliance on the judgment of the               A
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.                                      B

     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             C
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 contended by the respondent bank that
the appellants cannot claim as a matter of right. the amount in      D
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          E
of the Scheme was subject to certain conditions.

     Section 17(3)(b) of the 1952 Act reads as under:-

     17. Power to exempt
                                                                     F
     (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             G
    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
                                                                     H
 ' 276         SUPREME COURT REJ10RTS               r2011] 11 S.C.R.·


A        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
B        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;"

C      15. The learned Single Judge in his judgment observed
  that Section 17(3)(b) of the 1952 Act was never pressed into
  s~rvice 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 ju)lgment,
  it was also observed that even otherwise, the said provision
D 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.

E        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
F   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:-
G
         "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) stiall be members of
         the Provident Fund. The contribution to the provident fund
H
 MARATHWADA GRAMIN BANK KARAMCHARI SANGHATANA v. MNGT. OF 277
       MARATHWADA GRAMIN BANK [DALVEER BHANDARI, J.]

    by the officers and employees and the Bank shall be in        A
    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     B
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.

      1.8. The learned Single Judge also observed that under
Section 17(3)(b) of the 1952 Act, the said permission would       C
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        D
the impugned judgment of the 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     E
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.
                                                                  F

   ' 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.                           G

    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            H
    278     SUPREME COURT REPORTS                [2011) 11 S.C.R.


A observed that the benefit cannot 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/
B 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.
c 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.
D      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. ft
  was also argued by the appellants that the contribution to
  provident fund is a component of wages and when admittedly
E the respondent bank has paid its share of the 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
F 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
G 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
H the provisions of the 1952 Act meticulously after it became
MARATHWADA GRAMIN BANK KARAMCHARI SANGHATANA v. MNGT. OF 279
      MARATHWADA GRAMIN BANK [DALVEER BHANDARI, J.]

applicable from 1.9.1979. Ttie respondent bank complied with              A
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 amount of provident fund to its
employees than what the respondent bank was obliged to pay                B
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         C
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                         D
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                E
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 pertinent to mention that owing to huge accu*mulated
losses of the respondent bank, the bank though continued to               F
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                    G
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           H
    280        SUPREME COURT REPORTS               (2011] 11 S.C.R.

A   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
8
    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.

           29. In our considered view, no interference is called for.
C 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.

    D.G.                                         Appeal dismissed.