Holding

The Rajasthan Non‑Government Educational Institutions Act, 1989, being a later law with presidential assent, prevails over the EPF Act and the institutions fall within the exemption under Section 16(1)(b), rendering the RPFC’s orders invalid.

Summary

The Regional Provident Fund Commissioner (RPFC) sought to enforce the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) against Sanatan Dharm Girls Secondary School and other non‑governmental educational institutions in Rajasthan. The State had enacted the Rajasthan Non‑Government Educational Institutions Act, 1989 (RNEIA) and a separate provident‑fund scheme, and ordered the transfer of existing PF balances to the RPFC and further contributions to be paid to the RPFC. The institutions challenged these orders, arguing that they were exempt under Section 16(1)(b) of the EPF Act and that, under Article 254(2) of the Constitution, the later State Act eclipsed the central law. The Supreme Court examined the meaning of “belonging to” versus “under the control of” in Section 16(1)(b) and held that the RNEIA gives the State substantive control over the institutions, satisfying the “under the control of” limb. Because the RNEIA was enacted and received presidential assent after the EPF Act became applicable, Article 254(2) makes the State law prevail, rendering the EPF Act inapplicable to these institutions. Consequently, the RPFC’s orders were held ultra vires and the appeals were dismissed.

Issues considered

Whether non‑governmental educational institutions in Rajasthan are covered by the exemption in Section 16(1)(b) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
Whether the Rajasthan Non‑Government Educational Institutions Act, 1989, being a later law with presidential assent, prevails over the EPF Act under Article 254(2) of the Constitution.
Whether the State’s power of recognition, aid, management and other controls constitute ‘control’ within the meaning of Section 16(1)(b).

Legislation cited

Constitution of Indias. Article 254(2)
Employees' Provident Funds and Miscellaneous Provisions Act, 1952s. 16(1)(b)
Rajasthan Non-Government Educational Institutions Act, 1989s. 10, s. 13, s. 14, s. 15, s. 17, s. 18, s. 3, s. 7, s. 8, s. 9

Subjects

Employees' Provident FundSection 16 exemptionState controlArticle 254(2)Rajasthan Non-Government Educational Institutions ActConcurrent legislationWrit petitionSupreme Court interpretation

Judgment

REGIONAL PROVIDENT FUND COMMISSIONER A
v.
SANA TAN DHARAM GIRLS SECONDARY SCHOOL AND ORS

OCTOBER 30, 2006

[DR. AR. LAKSHMANAN AND AND TARUN CHATTERJEE, JJ.] B

• Employees Provident Funds and Miscellaneous Provisions Act, 1952-
Section 16(l)(b)-Exemptionfrom operation ofAct-Establishments belonging
to or under control of Government whose employees are entitled to benefits C
of contributory provident fund under scheme framed by Government-Non-
Governmental Educational Institution covered under Rajasthan Non-
Government Educational Institutions Act, 1989 and availing benefit of
provident fund scheme formulated therein-Held: Under the Act
of 1989 the State Government exercised substantive control over educational
institutions even though they were not "owned" by it, and also had authority D
to direct, restrict or regulate their working-Hence those institutions were
exempted from operation of Act of 1952 -Also, as the State Act of I989 was
enacted subsequent to the '(Jpplicability of Act of 1952, the former eclipsed
the latter by application of Art. 254(2) Constitution of India, 1950.

Words and phrases-Belonging to or control of Government-Meaning E
of in context of Section 16(l)(b) of Employees Provident Funds and
Miscellaneous. Provisions Act, 1952.

Respondent is a Non-Governmental Educational Institution. In the year
1989, an amendment to Section 16{1){b) of Employees Provident Fund and
Miscellaneous. Provisions Act, 1952 exempted certain 'establishments from F
the operation of that Act, which inter alia included establishment belonging
to or under the control of the Central Government or a State Government and
whose employees are entitled to the benefits of contributory provident fond or
old age person in accordance with any scheme or rule framed by the Central
Government or the State Government governing such benefits'. After this, G
the State passed Rajasthan Non-Government Educational Institutions Act,
1989 and formulated a provident scheme under it. Respondents were paying
their provident find dues according to that scheme. However, later on, the State
Government ordered implementation of the Act of 1952 with respect to the
849
H
850 SUPREME COURT REPORTS [2006] SUPP. 7 S.C.R.
I
A respondents, and thereupon not only transferred their existing Provident Fund
amount from the State treasury to the office of appellant, a Regional Provident
Fund Commissioner, but also further directed them to deposit their
contributions with the appellant. High Court allowed the writ petitions of
respondents challenging this order. Hence the present appeals.

B Respondents contended that (i) they were covered under the exception
enumerated in the amended section 16(1)(b) of the Act of 1952 (ii) as per
Article 254(2) of the Constitution of India, 1950, the State Act of 1989 eclipsed
the Central Act of 1952. •

Dismissing the appeals, the Court
c
HELD: 1.1. The two words used in the said Section 16(1)(b) have
different connotations. The words "belonging to" signify ownership i.e. the """'
Government owned institutions would be covered under the said part and the
words "under the control of' signify control other than ownership since
ownership ·has already been covered under the words "belonging to". It must
D
be also noted that the two words are separated by the word "OR" and therefore
these two words refer to two mutually exclusive categories of institutions. ...
While the institutions "belonging" to the Central or the State Government
would imply the control of the State the privately owned institutions can be
"under" the control of" the Government in various ways, 1862-C-EJ
E
Shamrao Vithal Coop. Bank Ltd. v. Kasargode Panduranga Maliya,
[1972) 4 SCC 600 and State of Mysore v. Allum Karibasappa, (1974) 2 SCC
498, relied on

1.2. The State Act is a complete code in itself with regard to the
F educational institutions and the State Government exercises substantive
control over the institutions even though the institutions are not "owned" by r
it. (863-G-HJ

1.3. The State Government has the power of Superintendent or the
authority to direct, restrict or regulate the working of the educational
G institutions. 1864-C-D I
2.1. Benefit of Art. 254(2) is available. Admittedly the State Act has
been enacted and has received the assent of the president subsequent to the
applicability of the EPF Act, 1952 on the educational institutions.
(864-H; 865-AJ
H
REGIONAL PROVIDENT FUND COMMNR. 1·. SANATAN DHARA~I GIRLS SECONDARY SCHOOL ILAKSHMANAN. J.I 85)

M.P. Shikshak Congress v. R.P.F. Commnr., [19991 1 SCC 396, A
distinguished.

State of Bihar v. Bhabapritananda Ojha, AIR (1959) SC 1073 and
Bhagwat Singh v. State of Rajasthan, [1964[ 5 SCR I, referred to
2.2. The respondent-institutions have been paying the provident fund B
dues to the State Government in accordance with the Scheme liramed by the
State Government under the State Act and thus the employees of the
respondent-institutions are entitled to the benefit of the provident fund.
[861-H; 862-AJ

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7016 of2004. C
From the Final Judgment and Order dater! 16.9.2002 of High Court of

- Judicature for Rajasthan at Jodhpur in D.B. Civil Special Appeal No. 467/200 I
in S.B. Civil Writ Petition No. 2320/1998.

WITH D
CIVIL APPEAL Nos. 7738/2004, 774012004, 7739/2004, 715-737/2005, 739/
2005, 742/2005, 741/2005, 746/2004, 745/2005, 738/2004, 747/2004, 748/2005,
740/2005, 750/2005, 749/2005, 752/2005, 751/2005, 743/2005, 744/2005 and 753/
2005.
E
Aruneshwar Gupta, A.A.G., H.L. Aggarwala, S.K. Dubey, S.K. Gambhir,
Ashok Bhan, Sunita Sharma, Kiran Bhardwaj, D.S. Mahra, Anil Katiyar, B.V.
Balaram Das, Naveen Kumar Singh, Mukul Sood, Shashwat Gupta, Shikha
Tandon, B.S. Banthia, Yikas Upadhyay, M.P. Jha, Ram Ekbal Roy, Harshvardhan
Jha, Amit Mishra, Anil K. Sharma, B.K. Sharma, Anil K. Chopra, Sushi! Kumar
Jain, Dr. Manish Singhvi (for P.V. Yogeswaran), Pratibha Jain, H.D. Thanvi, F
Puneet Jain, Sarad Singhania, Manoj Prasad, Ajay Kumar Chaudhary, K.K.
'· Srivastava, Ajatshatru, Ashok K. Mahajan, Satish Chand Gupta, Babita Kr.
Arya, Dharam Bir Raj Yohra, J.P.N. Gupta, Pankaj Kr. Singh, Dr. Vinod K.
Tewari, K.L. Janjani, R.S. Suri, Shivendra Dwivedi, Anjali Bhandari Doshi and
Ruchi Kohli for the appearing parties. G
The Judgment of the Court was delivered by

DR. AR. LAKSHMANAN, J. In the present matter, the appellant is the
Regional Provident Fund Commissioner (RPFC) and the respondents are
Sanathan Dharam Girls Secondary School, a Non-Governmental Educational H
852 SUPREME COURT REPORTS (2006] SUPP. 7 S.C.R.

A Institution and the State of Rajasthan among others.

Brief facts in the matter are as follows:

The Employees Provident Fund and Misc. Provisions Act (in short 'the
EPF Act') came into force in 1952. In 1982, vide Gazette notification by the
B Government, Educational Institutions were added in the Schedule of the Act
under section 1(3). The schedule reads thus:

"(i) any University;

(ii) any college whether or not affiliated to a University
c (iii) any school, whether or not recognized or Aided by the Central or
State Government

(iv) any scientific institution

(v) any institution in which research in respect of any matter is carried
D on.

(vi) any other institution in which the activity of imparting knowledge
or training is systematically carried on." ....
Further in 1988, clause (b) of section 16(1) of the EPF Act, 1952 was
E substituted by new clauses (b) (c) and (d). The amended provisions read as
under:

"16 (l)(b): to any other establishment belonging to or under the
control of the Central Government or a State Government and whose
employees are entitled to the benefits of contributory provident fund
F or old age person in accordance with any scheme or rule framed by
the Central Government or the State Government governing such
benefits;

(c) to any other establishment set up under any Central Provincial or
State Act and whose employees are entitled to the benefits of
G contributory provident fund or old age person in accordance with any
scheme or rule framed under that Act governing such benefits;

(d) to any other establishment newly set up until the expiry of a period
of three years from the date on which such establishment is has been
set up"
H
REGIONAL PROVIDENT FUND COMMNR. 1'. SANATAN DHARAM GIRLS SECONDARY SCHOOL ILAKSHMANAN. J.I 853

The State Government had framed rules known as 'The Rules for payment A
of Grant-in-Aid to non-governmental educational, cultural and physical
educational institutions in Rajasthan, 1963'.

Later in 1989 the Rajasthan Legislative Assembly passed "The Rajasthan
Non-Government Educational Institutions Act, 1989" which came into force
from 01.01.1993. B
On 05.08.1997, the State Government (Finance Department) issued an
order to implement the provisions of the EPF Act, 1952 on Non-Governmental
aided educational institutions employing 20 or more persons.

On 24.01.1998, the State Government (Educational Department) passed C
an order by which it transferred the existing Provident Fund amount from the
State treasury to the office of Regional Provident Fund Commissioner.

Later on 24.08.1998, the State Government (Finance Department) passed
an order about transfer of Provident Fund amount from State treasury to the
Provident Fund Commissioner. D

Various Educational Institutions filed 21 writ petitions in the High Court
of Rajasthan, challenging the orders and circulars of the State Government
issued on 05.08.1997, 24.01.1998 and 24.08.1998. The Regional Provident Fund
Commissioner also filed 2 writ petitions in the High Court.
E
The learned Single Judge dismissed the writ petitions filed by the
Regional Provident Fund Commissioner and allowed the 21 writ petitions filed
by different Educational Institutions by an order dated 16.01.2001 stating that
the state Act would override the provisions of EPF Act, 1952 and also
observed that the educational institutions before him would fall under the F
exception under the amended section 16( I)(b) of the EPF Act.

Against this order of the learned Single Judge, the RPFC went on
appeal before the Division Bench of the Rajasthan High Court. However, the
Division Bench also observed that the EPF Act will not apply to the Educational
Institutions before the Court and dismissed the appeals filed by the RPFC. G

Further on 23.02.2003, the respondent, Educational Institution filed the
S.B. Civil Writ Petition before the High Court challenging the order of the
State Government directing the Non-Governmental aided Educational Institution
employing 20 or more persons to deposit its contribution with the RPFC. The
High Court disposed off the matter in favour of the Educational Institution H
854 SUPREME COURT REPORTS (2006] SUPP. 7 S.C.R.

A in line with the decision in the matter of Ba/bari Vidya Mandir Churu v. State
of Rajasthan & Ors.. (S.B. Civil Writ Petition No. 1085/2000). Against this
decision of the High Court, the RPFC went on appeal to the Division Bench
of the High Court which in turn by an order dated 16.09.2002, dismissed the
appeal.

B Being aggrieved by th is order of the High Court of Rajasthan, the
appellant, RPFC has approached this Court. As we understand, the issue
before this court is:

* Whether the provisions of EPF Act, 1952 are applicable to the
Non- Governmental Educational Institutions or not in view of
c the provisions contained in Section 16 of the EPF Act.

* And whether the respondents Institutions will fall under the
exceptions stated in section 16(1) (b) of the EPF Act.

We heard Mr. H.L. Aggarwala, learned senior counsel appearing for the
D appellant, Mr. Aruneshwar Gupta, learned Additional Advocate General
appearing for the respondent and Mr. S.K. Dubey, learned senior counsel, Mr.
Sushi! Kumar Jain and Manish Singhi, learned counsel appearing for the
;
interveners. We have also perused all the documents filed before us ..

Learned senior counsel appearing for the appellant, the RPFC stated
E that, the Central Act that is the EPF Act came into force in 1952, the same
was made applicable to all Educational Institutions from 06.03.1982 and there
were no State Acts or Rules in place which dealt with the matters relating to
Provident Fund in Educational Institutions. Later in 1989 the Rajasthan
Legislative Assembly passed "The Rajasthan Non-Government Educational
F Institutions Act, 1989 which came into force from 01.01.1993.

Therefore, during the period from 06.03.1982 to 31.12.1992, the Central
(
Act, that is the EPF Act, 1952 will be applicable on all Educational Institutions
employing more than 20 employees. To establish this, the learned counsel
invited our attention to M.P. Shikshak Congress and Ors. v. R.P.F.
G Commissioner, Jaba/pur and Ors., [I 999) I sec 396, case, where this Court
observed that:

"However, after the application of the Employees' Provident Fund and
Miscellaneous Provisions Act, 1952 to education institutions, in 1983
new Rules were framed by the State of Madhya Pradesh under Act
H 20 of 1978. These are referred to as the State Rules of 1983. Under the
REGIONAL PRO\'JDENT FUND COMMNR ''· SANATAN OHARAM GIRLS SECONDARY SCHOOL ILAKSllMANAN. J.j 855

State Rules of 1983, for the first time a scheme was set out for A
Contributory Provident Fund covering the teachers and employees of
aided schools. The State Government, however, was conscious of the
fact that the Employees' Provident Fund and Miscellaneous Provisions
Act, 1952 was applicable in the State of Madhya Pradesh. Therefore,
by Rule 10(6) of the State Rules of 1983, it was provided that the B
scheme as set out in State Rules of 1983 would not apply where the
provisions of the Employees' Provident Funds and Miscellaneous
Provisions Act, 1952 apply. Clearly, therefore, far from there being any
conflict between the State and the Central Legislation, the State
Legislation by Rules framed in 1983 has excluded from the operation
of the State scheme as framed under the 1983 Rules, those employees C
to whom the Central Act applies.

16. In this view of the matter, there can be no doubt that for the period
Jst August, 1982 to Jst August, 1988 the Employees' Provident Funds
and Miscellaneous Provisions Act, 1952 was applicable to such
teachers and employees of the aided schools in the State of Madhya D
Pradesh who are covered by the provisions of the scheme framed
thereunder. The orders of the Regional Provident Fund Commissioner,
therefore, in so far as the orders cover the period 1st August, 1982
to Ist August, 1988 are valid"

Further the learned senior counsel submitted that, the Educational E
Establishment covered or coverable under EPF Act, 1952 during the period
from 06.03.1982 to 31.12.1992 will remain covered or coverable under Central
Act of 1952 itself even after the coming into force of the State Act of 1989
or the State Rules of 1993, as RPFC has already settled the PF Accounts of
their employees on retirement and has settled their pension cases, family F
pension cases, children and parents pension cases and monthly pension
cases and paying monthly pension/family pension regularly for number of
years.

It was submitted by the learned counsel appearing for the appellant
that, the learned single Judge and the Division Bench of the Rajasthan High G
Court have not correctly appreciated and interpreted Section 16(1)(b) of the
EPF Act, 1952 and have wrongly recorded that all Educational Institutions are
under the control of the State Government as they are recognized by the State
Act of 1989. He pointed out that these Educational Institutions were running
and are managed by registered societies and none of them are owned or
managed by the State Government. Merely on the basis of recognition under H
856 SUPREME COURT REPORTS [2006] SUPP. 7 S.C.R.

A the State Act of 1989 it could not have been held that these Educational
Institutions are under the control of the State Government as required under
section 16( l )(b) of the EPF Act, 1952.

Further, the counsel stated that, only the Educational Institutions whose
management has been taken over by the State Government under section I0
B of the State Act, 1989 shall fall within the excepti'on under section l 6( I)(b) of
the State Act of 1989. Section l 0 reads as follows:

"10. Powers of the Stale Government to take over management-(!)
,.·
notwithstanding anything contained in any law for the time being in
force, whenever it appears to the State Government that the managing
c committee of any recognized institution has neglected to perform any
of the duties assigned to it by or under this Act or the rules made
there under or has failed to manage the institution properly and that
it has become necessary in the public interest to takeover the
management of such institution, it may after giving to such managing
D committee a reasonable opportunity of showing cause against the
proposed action, take over such management and appoint an
administrator to exercise control over the assets of the Institution and •j
to run the institution for such period as the State Government may
from time to time fix.

E (2) Where, before the expiry of the period fixed under sub-section (I)
the State Government is of opinion that it is not necessary to continue
the management of the institution by an administrator, such
management shall be resorted to the managing committee".

While concluding· his submissions, the learned senior counsel stated
F that the High Court did not take into consideration that the Central Act is
more beneficial for the employees than the State Act as there is compulsory
pension scheme, called "The Employees Pension Scheme, 1995" under the
Central Act.

Mr. Aruneshwar Gupta, learned Additional Advocate General, appearing
G for the State of Rajasthan, respondent herein submitted that, in the year 1989
the Government of Rajasthan enacted the Rajasthan Non-government
Educational Institutions Act, 1989. The Act came into force on 01.01.1993.
The State Government after the enactment of the said Act has clearly occupied
the field concerning the deposit of PF of the employees of Non-Government
H Institutions and it clearly overrides the provisions of the EPF Act, 1952. He
REGIONAL PROVIDENT FUND COMMNR_ 1·. SANATAN DHARAM GIRLS SECONDARY SCHOOL ILAKSHMANAN. J.I 857

submitted that, it is relevant to mention that the contribution to the PF A
pertains to Entry 24 of List Ill of the Sc he du le 7 of the Constitution of India.
Therefore, as far as post 1993 period is concerned, the RPFC do not have any
subsisting legal right as that Act of 1989 of Rajasthan shall prevail and to this
extent the issuance of orders dated 05.08.1997, 28.01.1998 and 24.08.1998 by
the Government of Rajasthan amounted to incorrect application of law and the
AG appearing for the state of Rajasthan clearly conceded to the same before B
the High Court of Rajasthan. Thus it is clear that the Educational Institutions
are outside the purview of the EPF Act.

Besides, the Central Act itself contemplates non-application of the
Central Act in certain situations especially enumerated under section 16 of the C
Act of 1952. Section 16 (I) (b) clearly mentions that the establishments which
are under the control of state government will not fall within the purview of
the Central Act, 1952. Moreover, there is a scheme framed for contributory PF
under the chapter VIII of the Rules of I993.

In conclusion it was submitted by the learned counsel for the respondent D
State that in the present fact scenario, the provisions of section 16( I )(b) of
the Central Act, 1952 are attracted and therefore, the appellant cannot claim
any right over the contributory provident fund of the employees of the
Educational Institutions covered by the Act of 1989.

Mr. S.K. Dubey and Sushi! Kumar Jain, learned counsel appearing for E
the interveners, submitted as follows:

(I) that their institutions are governed under the provisions of the
Rajasthan Non-Government Educational Institutions Act, 1989.
The said Act was enacted in the year 1989 and was reserved for
and received Presidential assent on 4.6.1992 in terms of Article F
254(2) of the Constitution oflndia. The said Act came into force
with effect from 4.7.1992.
(2) that Entry 24 of List Ill of the VII Schedule read with Article
246(2) of the Constitution of India allows concurrent power to
the Center and the State Governments to legislate with regard to G
Provident Funds. The said entry provides as under:
"Welfare of labour including conditions of work, provident funds,
Employer's liability, workman's compensation, invalidity and old age
pension and maternal benefits."
H
858 SUPREME COURT REPORTS [2006] SUPP. 7 S.C.R.

A (3) that the Union had enacted the Employees Provident Funds and
./
Miscellaneous Provisions Act, 1952 in exercise of the said powers.
The State Government of Rajasthan has, thereafter, enacted the
Rajasthan Non-Government Educational Institutions Act, 1989,
which also includes a power to make a provident fund scheme.
It was also submitted that the State Government has, thereafter,
B framed the scheme under the rules and the respondent-institutions
are governed by the said scheme. Since the State Act has
received Presidential assent, the said Act would prevail over the
Central Act in the State of Rajasthan as per the provisions of
Article 254(2) of the Constitution of India. The said Article
c provides as under:

"254. Inconsistency between the laws made by Parliament and Laws
made by Legislatures of States:-

(1)

0 (2) Where a law made by the legislature of the State with respect
to one of the matters enumerated in the concurrent list contains
any provisions repugnant to the provisions of an earlier law
made by the Parliament or any existing law with respect to that
matter, then, the law so made by the Legislature of such State
shall, if it has been reserved for the consideration of the President
E and has received his assent, prevail in that State.
Provided that nothing in this clause shall prevent Parliament from
enacting at any time any law with respect to the same matter including
a law adding to, amending, varying or repealing the law so made by
the legislature of the State."
F
(4) that the State Act would "eclipse" the Central Act within the
State of Rajasthan and therefore, the Central Act (i.e. the EPF
Act) would not apply to the educational institutions in the State
of Rajasthan which are governed by the State Act. Undoubtedly,
the respondent-institutions are covered under the State Act and
G as such the provisions of the said Act would be applicable on
the respondent-institutions.

In support of his submission, he relied on the judgment of this Court
in State of Bihar v. Bhabapritananda Ojha, AIR (1959) SC 1073. In this case,
H this Court dealt with the provisions of the Bihar Hindu Religious Trusts Act,
REGIONAL PROYIDENT fUt-;D (Q!l.IMNR. 1·. SAN AT.\!\. LJHAR:\1-.\ UJRLS S[Cl.lNDARY ~CHOOL I! <\KSHl-.1.\N,\i'<. JI 859

I 950(Bihar I of 1951 ), which received the president's assent on February 21, A
1951 and came into force on August 15, 1951. The said Act established the
Bihar State Board of Religious Trusts to discharge the functions assigned to
the Board hy the Act. The said Act was challenged on the grounds that it
was ultra vires of the Bihar Legislature and in the alternative, it was contended
that even if it was construed that the Act was intra vires, it did not apply
to the Baidyanath Temple and the properties appertaining thereto by reason B
of the circumstance that the said temple and its properties were administered
under a Scheme made by the Court of the District Judge of Burdwan and
approved by the Calcutta High Court, both of which are situated outside the
territorial limits of Bihar. After considering the matter, this Court held as under:

" .. If, as we have held, it is open to the Bihar Legislature to legislate
c
in respect of religious trusts situate in Bihar, then that Legislature can
make a law which says, as in sub-s. (5) of s. 4 of the Act, that s. 92
of the Code of Civil Procedure shall not apply to any religious trust
in the State of Bihar. If sub-s. (5) of s. 4 of the Act is valid as we hold
it is, then no question really arises of interfering with the jurisdiction D
of the District Judge of Burdwan or of the Calcutta High Court in
respect of the Baidyanath temple, inasmuch as those courts exercised
that jurisdiction under s. 92, Code of Civil Procedure, which no longer
applies to the Baidyanath temple and the properties appertaining
thereto, after the commencement of the Act. It is true that the Act E
does put an end to the jurisdiction under s. 92, Code of Civil Procedure,
of all courts with regard to religious trusts situate in Bihar, but that
it does by taking these trusts out of the purview of s. 92. In other
words, the Act does not take away the jurisdiction of any court
outside Bihar but takes the religious trusts in Bihar out of the operation
of s. 92 so that a court outside Bihar in exercise of its jurisdiction F
under s. 92 will decline to deal with a religious trust situate in Bihar
just as it will decline to entertain a suit under that section regarding
a private trust of religious or charitable nature. Civil Procedure,
including all matters included in the Code of Civil Procedure at the
commencement of the Constitution, is item 13 of the Concurrent List.
It has not been disputed before us that it is open to the Bihar G
Legislature to amend the Code of Civil Procedure while legislating in
respect of religious endowments and religious institutions in Bihar,
and the President's assent having been received to the Act, the law
made by the Bihar Legislature shall prevail in that State, under Art.
254(2) of the Constitution, in respect of all religious trusts situate in H
860 SUPREME COURT REPORTS [2006) SUPP. 7 S.C.R.

A Bihar.

In the case of Bhagwat Singh v. State of Rajasthan, [1964] 5 SCR 1, with
regard to the applicability of the provisions of the Rajasthan Industrial Tribunal
(Constitution & Proceedings) Validating Act, 1959, this Court held as under:

B "14. It is unnecessary however to consider the merits of these
contentions because the Legislature has remedied the defects, if any,
in the constitution of the Tribunal, by enacting the Rajasthan Industrial
Tribunal (Constitution and Proceedings) Validating Act, 1959, which
was reserved for the consideration of the President of India and has
received his assent. By s. 2(1) of that Act, notwithstanding any
c judgment, decision or order of any court and notwithstanding any
defect or want of form or jurisdiction, the Industrial Tribunal for
Rajasthan, constituted under s. 7 of the Industrial Disputes Act, 1947,
by Government notification dated the 2nd June, 1953, as amended by
order dated the 9th March, 1956, shall, as respects the period
commencing on the 10th day of March 1957 and ending with the 15th
D
day of April, 1959, be deemed to have been duly constituted under
s. 7A of the said Act. By sub-s. (2) it is provided that notwithstanding
any judgment, decision or order of any court all references made to
'
and all proceedings taken and orders passed by the Industrial Tribunal
constituted in sub-s. (I) between the period 10th March, 1957 and
E 15th April, 1959, shall be deemed respectively to have been made,
taken and passed as if the said Tribunal were constituted under s. 7A
of the Act. It is clear from the validating provisions that the Tribunal
originally constituted under s. 7 of the Industrial Disputes Act, 1947,
before it was amended by Act 36 of 1956 is to be deemed to have been
duly constituted under s. 7A, and the reference made on December
F
18, 1957 is to be deemed to have been made as ifthe Tribunal were
constituted under s. 7A of the amended Act. The Validating Act is,
because of Item 22, List III of the Seventh Schedule to the Constitution,
within the competence of the State Legislature, and it was reserved
for the consideration of the President and has received his assent. It
G must by virtue of Art. 254(2) prevail in the State of Rajasthan.
(5) that in the present case, the provisions of the said Act and the
Rules made thereunder apply and prevail over the provisions of
the Employees Provident Funds and Miscellaneous Provisions
Act, 1952. It was further submitted that there is a clear conflict
H
REGIONAL PROVIDENT FUND COMMNR. 1·. SAN AT AN OHAR..\1'.1 GIRLS SECONDARY SCHOOL ILAKSHMANAN. J.I 86)

among the provisions in respect of the Provident Fund Scheme A
and the resultant effects thereto between the State and the
Central Act and as the State Act has received Presidential assent,
the provisions of the said Act would apply.
(6) that no arguments have been advanced by the appellants in the
present case with regard to the present submissions before the B
High Court nor were any arguments raised by the appellant
before this Court. It was also submitted that in the absence of
any rebuttal by the respondent, it is clear that the provisions of
the State Act would prevail over the Central Act.

Institutions fall under exception contained under Section 16(/)(b) of the C
EPF Act, 1952.

Section 16(1 )(b) of the EPF Act, 1952 provides as under:

"16(\) This Act shall not apply-

(a) ............... . D
(b) to any other establishment belonging to or under the control of
the Central Government or a State Government and whose employees
are 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; or E

(c)to(e) ................. "

In order to be covered under the exception to the EPF Act, 1952 stated
above, following two conditions have to be satisfied by the establishment
seeking to be exempted from the provisions of the EPF Act, 1952: F
(\) It must be an establishment belonging to or under the control
of the Central Government or a State Government, and
(2) It must be an establishment whose employees are entitled to the
benefit of contributory provident fund or old age pension in G
accordance with any scheme or rule framed by the Central
Government or the State Government governing such benefits.

We heard the parties in detail. The submissions made by the learned
counsel appearing for the respondents merit acceptance. It is not in dispute
that the respondent-institutions have been paying the provident fund dues H
862 SUPREME COURT REPORTS (2006] SUPP. 7 S.C.R.

A to the State Government in accordance with the Scheme framed by the State
Government under the State Act and thus the employees of the respondent-
institutions are entitled to the benefit of the provident fund. By the orders
impugned by the respondent-institutions, the State Government has sought
to transfer the balance standing to its credit to the Regional Provident Fund
Commissioner. Thus it is clear that the respondent-institutions have been
B paying in accordance with the Scheme and there is no grievance with regard
to the same.

In respect to the contention of the respondent that the establishment
belonging to or under the control of the Central Government or a State
C Government, it was submitted that the establishments must either be (a)
belonging to or (b) under the control of the Central Government or the State
Government. In our view, the two words used in the said Section have
different connotations. The words "belonging to" signifies ownership i.e. the
Government owned institutions would be covered under the said part and the
words "under the control of" signify control other than ownership since
D ownership has already been covered under the words "belonging to". It must
be also noted that the two words are separated by the word "OR" and
therefore these two words refer to two mutually exclusive categories of
institutions. While the institutions "belonging" to the Central or the State
Government would imply the control of the State the privately owned
E institutions can be "under the control of' the Government in various ways.

Under the State Act itself, the "Control" by the State is in the following
ways:

(a) Under Section 3 of the State Act, the State ~overnment grants
recognition to the "Non-government educational institutions".
F
It was submitted that recognition by the State is of prime
importance for running and operating an educational institution.
The said recognition can be withdrawn on the failure of the
institution to abide by the terms and the conditions of the grant
of recognition.
G
(b) Under Section 7 of the State Act, the State Government grants
aid to only recognized educational institutions. The aid given by
the State can be used only for the purpose for which the aid has
been given. Under Section 8, the institutions are thereafter

H
REGIONAi.. PROVIDENT FUND Cm..lMNR. r_ SAN ..\ TAN OHARA~! GIRLS SECONDARY SCHOOL jlAKSHM..\NAN. J.\ 863

required to keep accounts in the manner prescribed by the State. A
It was submitted that in such manner, the State exercises
Financial Control over the institutions.

(c) Under Section 9, it has been prescribed that the institutions shall
be governed by a managing committee and Section 10 of the Act
empowers the State to take over management of the institutions B
"whatever it appears to the State that the Managing Committee
has neglected to perform the duties assigned to it by or under
the Act or the Rules made thereunder.
(d) Chapter V of the Act relates to properties of the institutions and
the manner in which the institutions can manage the properties C
of the institution. It was submitted that under Section 13 of the
Act, the institutions have to apply and get the approval of the
competent authority set up under the said Act before transferring
the management of the institution. Under Section 15, restrictions
have been placed on the transfer of immovable properties of the
institutions. D
(e) Section 14 of the Act prohibits closure of any institution or its
class or the teaching of any subject therein without notice in
writing to the competent authority. It was submitted that the
government thus has Functional control over the institution.
E
(t) Chapter VI of the State Act deals with recruitment and removal
etc. of employees. Their salary, conditions of service, provident
fund, code of conduct are all prescribed under the Act. The Act
further prescribes setting up of a Tribunal for resolution of the
disputes whose decision is final and binding on the parties.
F
The State Government also exercises Administrative Control over the
institution. Section 17 deals with the manner of recruitment and Section 18
deals with the procedure in which the employees may be removed or dismissed
or reduced in rank. Section 28 permits the State Government to prescribe the
code of conduct of the employees and Section 29 enjoins upon the institutions
not to give to its employees a pay lesser than the scales of pay and the G
allowances paid to similar categories of the State Government.

In our view, the State Act is a complete code in itself with regard to the
educational institutions and the State Government exercises substantive control
• over the institutions even though the institutions are not "owned' by it. The
H
864 SUPREME COURT REPORTS [2006) SUPP. 7 S.C.R.

A word "control" has not been defined under the EPF Act, 1952.
However, this Court in Shamrao Vithal Coop. Bank ltd v. Kasargode
Panduranga Maliya, [ 1972] 4 SCC 600 at page 604 has cited with approval
the meaning of the word "'control" as it appears at page 442 of Words &
Phrases Vol.9, Permanent Edition as under:
B
"The word "control" is synonymous with superintendence,
management or authority to direct, restrict or regulate.''

In the case of State of Mysore v. Allum Karibasappa, [1974] 2 SCC 498 'f
at page 501, this Court defined the words "word control" as under:
c "The word "control" suggests check, restraint or influence Control
is intended to regulate and hold in check and restrain from action."

We further observe that the State Government has the power of
Superintendent or the authority to direct, restrict or regulate the working of
D the educational institutions. It was, therefore, submitted that the institutions
had satisfied both the conditions (i) and (ii) mentioned above and as such
they would fall within the exception contained under Section 16(\)(B) of the
EPF Act, 1952.

In this context we may refer to the decision cited by the appellant in
E the case of MP. Shikshak Congress v. R.P.F. Commnr., [1999] I SCC 396, in
which it was stated that the provisions of the E.P.F. Act apply in supersession
of the State Act. This contention is not correct; the said case is clearly
distinguishable on facts as has been noted in the judgment itself. The State
Act did not provide for establishment of any Scheme as has been provided •
F under the provisions of the State Act in the State of Rajasthan. In this regard,
this Court noted as under:

"12 ...... The Act did not even provide for any scheme for setting up
a provident fund. The Act incidentally required that the institutional
contribution to any existing provident fund scheme should be paid
G into the institutional fund set up under the said Act... .. "

In addition to the above, the said case is aiso distinguishable with
regard to the contention of repugnancy and Article 254(2) of the Constitution.
In the said case, the Act in relation to the State of Madhya Pradesh came into
force prior to the application of the provisions of the EPF Act, 1952 on
H educational institutions and therefore the benefit of Art. 254(2) was not
REGIONAL PRO\'IDENT FUND COMMNR. 1•. SANATAN DHARAM GIRLS SECONDARY SCHOOL ILAKSH~1ANAN. J.I 865

available to it. In the present case, however, admittedly the State Act has been A
enacted and has received the assent of the President subsequent to the
applicability of the EPF Act, 1952 on the educational institutions. In this
regard, this Court in the said case noted as under:

"13. It was by reason of the notification of 06.03.1982 that the Central
Act was extended to educational institutions. The Employees' B
Provident Funds and Miscellaneous Provisions Act, 1952, therefore,
became applicable to educational institutions in the State of Madhya
Pradesh for the first time on 6-3-1982. This was much later than the
enactment of the State Act 20 of 1978. The parliamentary enactment,
therefore, would prevail over the State Act 20 of 1978, assuming that C
the State Act of 1978 created or effected any scheme for provident
fund. Article 254(2), therefore, has no application in the present case."

Mr. Manish Singhvi, learned counsel appearing for respondent No. I in
Civil Appeal No. 748 of2005 reiterated the submissions made by them in the
counter affidavit filed in the special leave petition No. 2625 of 2003. He D
submitted that the demand issued by the Regional Provident Fund
Commissioner at Udaipur was ultra vires and beyond jurisdiction because
there was already an exemption under law for the purposes of application of
this Act and, therefore, the order dated 23.05.1997 was a nullity. It was further
submitted that the exemption was withdrawn from October, 1993 onwards and,
therefore, the exemption notification granted under this Act was prevalent E
between January, 1983 to September, 1992. He has also given the details in
regard to the details of payment of Provident Fund/Pension scheme in
accordance with the directions issued by the State Government/Central
Government in the counter affidavit filed by them. He also invited our attention
to the notification dated 14.02.1983 issued by the Government of Rajasthan F
in exercise of the power conferred by sub-section 17 of the EPF and Misc.
Provisions Act, 1952 exempting schools added by the State Government from
the operation of the said Act subject to the condition that the scheme of the
Provident Fund applicable to the employees of educational institutions vide
No. F7(13) Education GR 74, dated 12.11.1974 shall be reviewed by the
Committee which shall be constituted by the Education Department with G
representatives of the Finance Department and Labour Department to review
the existing schemes so as to bring inconformity with the central scheme if
needed. It is beneficial to refer to the notifications dated 23.12.1988 and
26.12.1993 in this context. The said two notifications read thus:
H
866 SUPREME COURT REPORTS (2006] SUPP. 7 S.C.R.

A "GOVERNMENT OF RAJASTHAN

Labour Department

No.F. I3(9)Shram/82-Pt.ll, Jaipur Dtd.23.12.1988

B NOTIFICATION

In exercise of Powers conferred by Sub-section (I) of Section 17
of the Employees Provident Funds & Miscellaneous Provisions Act,
1952 (Central Act 19 of 1952) and in supersession of this department
notification No.F.13(9)Shram/82-Pt.ll dated 14.2.83 the State Government
C hereby exempts all schools and educational institutions aided by the
State Government from the operation of all the provisions of the
Provident Fund Scheme only.

This shall have immediate effect.
BY ORDER OF THE
D GOVERNOR
Sd/- K.L.KOCHAR
SPECIAL SECRETARY TO THE GOVERNMENT'
"GOVERNMENT OF RAJASTHAN

E Labour Department

No.F.13(9)Shram/82-Pt.II, Jaipur Dtd.26.10.1993

NOTIFICATION ..
Notification No.F. I3(9)Shram/82-Pt.11 dated 14.02.1983 and even
F notification dated 23.12.1988 issued by this department under Sub-
section ( 1) of Section 17 of the Employees Provident Fund &
Miscellaneous Provisions Act, 1952 (Central Act 19 of 1952) is hereby
nullified with immediate effect.

In this regard, it is hereby clarified that if the relief-granted
G
educational institutions want to seek exemption for their employees,
for whom they get relief, under the provisions of Employees, Provident
Fund Scheme 1952 then such educational institutions can seek
exemption from Regional Provident Fund Commissioner, Rajasthan,
Jaipur as per para 27 of Employees Provident Fund Scheme 1952, after
H obtaining applications from their such employees.
REGIONAL PROVIDENT FUND COMMNR. "· SANATAN DHARAt-.-1 GIRLS SECONDARY SCHOOL )LAKSHMANAN. J.J 867

By the Order of Governor Sd/- Ramveer Singh Bhanwar Labour A
Commissioner and Deputy Secretary to the Government"

Learned counsel appearing for the respondent in C.A. Nos. 715-737 of
2005 also drew our attention to the counter affidavit filed on behalf of the
State of Rajasthan and the educational institutions. It is submitted that the
order of recovery is patently illegal and unjustified because of the fact that B
the respondent institution does not come under the purview of the Act of
1952. He would further submit that after the amendment was made in Section
16 of the Act by the EPF and Miscellaneous Provisions Amendment Act (33
of 1988) all establishments belonging to or under the control of the Central
Government or State Government have been exempted from the provisions of C
the Act. Arguing further, he submitted that the words in Section 2(b) and 2(a)
are so clear and unambiguous that no further interpretation need be made to
amplify the same and that the provisions made in the enactment of 1989 make
it clearer that the respondent institution is a recognized educational institution
managed by the private management and is within the effective management
of the State Government and, therefore, it is entitled to be excluded from the D
applicability of the Central Act, 1952.

Learned counsel appearing for the respondents in all the other appeals
adopted the arguments of Mr. Sushi! Kumar Jain.

For the foregoing reasons, all the civil appeals filed by the Regional E
Provident Fund Commissioner stand dismissed and the judgment and order
passed by the Division Bench of the High Court dated 16.09.2002 and all the
judgments on different dates by different Division Benches stand affirmed.
No costs.

vs. Appeals dismissed.