MIS. YESHWANT GRAMIN SHIKSHAN SANSTHAversusTHE ASSISTANT PROVIDENT FUND COMMISSIONER & ORS.

J

I•


                           [2017] 3 S.C.R. 939


          MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA                          A
                                    v.
      THE ASSISTANT PROVIDENT FUND COMMISSIONER &
                          ORS.
                      (Civil Appeal No. 721of2013)                       B
                        MARCH 09, 2017
             [DIPAK MISRA, A. M. KHANWILKAR AND
               MOHAN M. SHANTANAGOUDAR, JJ.]
           Employees' Provident Funds and Miscellaneous Provi~ions
    Act, 1952 - s.16 -Applicabili(v of-Appellant is a registered sociezv C
    and runs schools and colleges - It appointed part-time employees
    with approval of State Government- Whether the provisions of 1952
    Act (Central Act) will apply to the part-time employees in the schools/
    colleges of appellant whose service conditions are governed by the
    provisions of State Act and State Rules and whether appellant is D
    deemed to have defaulted in depositing Provident Fund contribution
    of 16 of its part time employees - Held: The appellant is 100%
    grant-in-aid school and is umler the control of State Government -
    The employees working in school/college of appellant are covered
    by the contributory provident fund scheme framed by State
    Government subject to eligibility - Appellant-society, thus, ji1/fills E
    the twin conditions specified in s.16(1}(b) - It follows that the same
    is exempted from the application ofprovisions of Central Act - Once
    an establishment is covered under any one of the excepted category
    u/s.16 of the Central Act, the officials empowered by the Central
    Act will have no authority to proceed against such establishment; F
    and more so on the ground that a miniscule number uf emplcyees
     (16 part-time employees) working in the establishment were not
     eligible for the benefits under the State Contributory Provident Fund
     Scheme governing the rest of the regular employees of the
     establishment - Initiation of action of recovery against the
     establishment of the appellant, which was otherwise exempted from G
     application of the provisions of the Central Act is, therefore, whol~v
     without authority of law - Maharashtra Employees of Private
     Schools (Conditions of Service) Rules, 1981 - r.20 - Maharashtra
     Employees of Private Schools (Conditions of Service)Regulation
     Act, 1977.
                                                                          H
                                    939
940          SUPREME COURT REPORTS                      [2017] 3 S.C.R.


A         Allowing the appeal, the Court
           HELD: 1. A plain reading of Section 1 of the Employees
    Provident Funds and Miscellaneous Provisions Act, 1952 (Central
    Act) shows that the Central Act applies to the establishments
    referred to therein. In the instant case, the appellant's
B establishment may fall within the purview of "other
    establishment" referred to in sub-clause (b) of Section 1(3). It is
    indisputable that the Central Government in exercise of the
    powers conferred by clause (b) of sub-Section (3) of Section 1 of
    the Central Act has published a Notification being No.S.0.-986,
    dated 19.02.1982 on 06.03.1982, so as to include all the
c educational institutions in the category of "any other
    establishment", namely;University; College (Whether or not
    affiliated to a University); School (Whether or not recognized or
    aided by the Central or a State Government); any scientific
    institution; any institution in which research in respect of any
D matter is carried on; and any other institution in which the activity
    of imparting knowledge or training is systematically carrieu on.
    A conjoint reading of Section 1 of the Central Act with the said
    notification, makes it clear that the Central Act would apply to all
    the colleges and schools, subject to the provisions of Section 16
E · of that Act. [Paras 16, 17)(952-D-G]
         2.1 The question then arose: whether the appellant school
  is an establishment covered by any one of the excepted category
  specified in Section 16 of the Central Act. The appellant has
  invoked clause (a) as well as clause (b) of Section 16 (1) of the
  Central Act. As regards the argument hinging on clause (a), it
F proceeds on the premise that the appellant's school (in which 16
  part-time employees were working), had employed less than fifty
  persons and working without the aid of power. This ar6ument
  cannot come to the aid of the appellant. Inasmuch as, the appellant
  is running 29 schools/colleges and has employed around 1151
G permanent employees. Section 2A of the Central Act predicates
  that where an establishment consists of different departments or
  has branches, whether situate in the same place or in different
  places, all such departments or branches shall be treated as part
  of the same establishment. In other words, the fact tltat the
  appellant has employed less than 50 permanent employees and
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  MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST.                         941
              PROVIDENT FUND COMM.

who are working without the aid of power in the school in which A
the 16 part-time employees were also working, will not take the
matter any further. The appellant has neither pleaded the material
facts n<'r adduced any proof, so as to rebut the presumption
stipulated in Section 2A of the Central Act - that all the schools
and colleges run by the appellant were part of the same B
establishment. The fact that the appellant is a Co-operative
Society registered under the State Co-operative Societies Act by
itself will not extricate the appellant from the application of the
Central Act.[Para 18](952-G-H; 953-A-D]
      2.2 Sub-clause (b) of Section 16(1) is an independent
excepted category. It is attracted to any other establishment C
belonging to or under the control of the Central Government or
a State Government "and~' whose employees are entitled t{l the
benefits 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. D
These twin conditions are required to be satisfied by the
concerned establishment, seeking exemption from the provisions
of the Central Act. In the present case, the employees working
in the concerned schools/colleges of the appellant are covered
by the contributory provident fund scheme framed by the State
Government, subject to eligibility. The second condition required E
for seeking exemption under the Central Act is thus fulfilled.
The moQt question is: whether the schools in which the 16 part-
time employees were working, can be said to be an establishment
belonging to or under the control of the Central Government or
 a State Government. [Paras 19, 20](953-E-H; 954-A]               F
        2.3 The question is whether there are similar provisions in
 the subject State Act and Rules framed thereunder so as to infer
 that th.e State Government exercises substantive control over
 the establishments such as that of the appellant. The State Act,
 the Rules made thereunder and the provisions of the Secondary            G
 Schools Code are a complete code in themselves with regard to
 the educational institutions and indicative of the extent of exercise
 of substantive control by the State Government over such
  institutions, whether owned by it. The State Government has the
  power of superintendence and the authority to direct, restrict or
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942          SUPREME COURT REPORTS                     [2017] 3 S.C.R.


A regulate wo.rking of the educational institutions. It necessarily
  follows that the establishment of the appellant, which in this case
  is 100% grant-in aid schools in which 16 part-time employees
  were working, is under the control of the State Government and
  thus would fulfill even the first condition of Section 16(1) (b) of
B the Central Act. [Paras 21, 22)(956-G-H; 959-A-CJ
         , 2.4 As it is held that the establishment of the aJ>pellant
  fulfills the twin conditions specified in Section 16(l)(b), it must
  follow that the same is exempted from the application of the
  provisions of the Central Act. Section 16 of the Central Act makes
C it abundantly clear that the provisions of the Central Act will have
  no application to the establishment, if covered by one of the
  excepted category provided therein. The exemption is for the
  establi.shment as a whole and for all purposes, from the application
  of the Central Act. Once the establishment is covered by the
  excepted category specified in Section 16, to get exemption, it is
D i.ncomprehensible that the provisions of the Central Act can be
  invoked against such establishment on the specious reasoning
  that few (16 in this case) part-time employees working thereat
  were not covered by the CPF Scheme of the State Government,
  as applicable to rest of its employees. (Para 23)(959-C, J!:-H)
E        3. Once the establishment qualifies for exemption of
  application of the provisions of the Central Act, there is no way
  that the authorities under the Central Act can exercise authority
  over it or call upon the establishment to comply with the provisions
  of the Central Act, unless the exemption of the establishment is
  withdrawn or lifted de jure. Section 16 of the Central Act docs
F not envisage a concept of partial exemption of application of the
  provisions of the Central Act in respect of employees, but the
  exemption operates qua the establishment for all purposes. In
  the instant case, the appellant is running 29 schools/colleges and
  is receiving 100% grant-in aid from the State Government in
G respect of 28 schools/colleges. The employees working in the
  said schools of the appellant have been employed with the
  permission and approval of the State Government and are
  governed by the State CPF Scheme. The entire process of
  appointment has been strictly monitored by the State
  Government. Additionally, the appellant has been submitting pay
H
  MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v.. ASST.                      943
              PROVIDENT FUND COMM.

bills of its employees to the Education Department which directly      A
deposits the salaries. of such employees into their bank accounts.
At the relevant time, the appellant had employed around 1151
employees who were covered by the Contributory Provident Fund
Scheme framed by the State Government for the employees of
the private schools (except the 16 part-time employees who were        B
not doing full time load of work). The appellant had engaged t:!tose
16 part-time employees with the permission and approval of the
State Government. It can be safely presumed that the State
Government was fully conscious of the fact that those part-time
employt:es will not be entitled for the benefits of CPF Scheme of
the State. In other words, the substantial number of employees         C
of the appellant if not all of them, around 1151 employees, were
covered by the contributory provident fund scheme of the State
Government applicable to private schools governed by the
provisions of the State Act and the Rules made thereunder. Just
 because the 16 part-time employees working in the appellant's         D
 school were not eligible for the benefits of the.State CPF Scheme,
 the exemption status of the establishment of the appellant acquired
 under Section· 16 of the Central Act, will not cease or stand
 withdrawn automatically. (Paras 24, 25)(960-B-H; 961-A]
      4. Once an establishment is covered under any one of the
excepted category under Section 16 of the Central Act, the officials E
empowered by the C<'11tral Act will have no authority to proceed
against such establishment; and more so on the ground that a
miniscule number of employees (16 part-time employees) working
in the establishment were not eligible for the benefits under the
State Contributory Provident Fund Scheme governing the rest F
of the regular employees of the establishment. Initiation of action
of reco"ery by the official(s) of Respondent No.1 against the
establishment of the appellant, which was otherwise exempted
from application of the provisions of the Central Act is. wholly
without authority of law. [Paras 26, 27)(961-B-D]
                                                                        G
       Regional Provident Fund Commissioner v. Sanatan
       Dram Girls Secondary School & Ors. (2007) 1 SCC
       268 : [2006) 7 Suppl. SCR 849 - relied on.
       The Shamrao Vithal Co-operative Bank Ltd v. Kasargod
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944              SUPREME COURT REPORTS                           [2017] 3 S.C.R.


A          . Pandhuranga Ma!lya (1972) 4 SCC 600 : (1972) 2 SCR
             162 - referred to.
                                Case Law Reference
               [2006) 7 Suppl. SCR 849             relied on         Para 20

B              [1972) 2 SCR 162                    referred to       Para 27
              CIVIL APPELLATE JURISDICTION: Civil Appeal No. 721 of
      2013.
            From the Judgment and Order dated 17.01.2012 of the High Court
      of Judicature at Bombay, Bench at Nagpur in Writ Petition No. 4013 of
c     2011.
            Satyajit Desai, Ms. Anagha S. Desai, Neelmani Pant, Advs. for
      the Appellant.
         Kuna! A. Cheema, Addi. Govt. Adv., Yogesh K. Ahirrao, Nishant
D Ramakantrao Katneshwarkar, Vijay Prakash, P. Soma Sundaram, Ad vs.
  for the Respondents .
              . The Judgment of the Court was delivered by
         A. M. KHANWILKAR, J. 1. The present civil appeal arises
  from the judgment and final order passed by the High Court of Judicature
E at Bombay, Nagpur Bench dated I 7'h January, 2012 in Writ Petition No.
  4013 of2011. The High Court has dismissed the aforesaid writ petition
  filed by the appellant, which had assailed the order of the Err:ployees
  Provident Fund Appellate Tribunal (for short 'Tribunal') dated 81hApril,
  2011 whereby it was held that the appellant is deemed to have defaulted
  in depositing the provident fund contributions of 16 (sixteen) of its part-
F time employees.

            2. Before dealing with the legal submissions and issues, it would
      be apposite to set out the factual matrix leading to the filing of the present
      appeal:
G           a) The appellant is a registered society under the Societies
      Registration Act, 1860 and Bombay Public Trusts Act, 1950 and runs 29
      (twenty nine) schools and junior colleges in the Wardha District, Nagpur.
      Out of which, 28 (twenty eight) schools and colleges purportedly received
      100% grant-in aid from the State Government.

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  M/S. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST.                              945
   PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.]

       b) Between 1996 and 1997, due to administrative exigency I 6 A
part-time librarians were appointed to some of the appellant's colleges,
with the permission/approval of the State Government. These librarians
worked for lesser hours as opposed to the working hours put in by regular.
full-time employees. The appellant contends that the entire process of
appointment and approval was monitored and supervised by the State B
Government. Further, the appellant did not possess any direCt control
over the payment of or deductions to the salaries of its employees. It is
done by the State Authorities.
       c) On 5'h May, I998, the appellant forwarded a bill of one of the
part-time librarians to the Education Officer, with a request to deduct
the provident fund. This request was declined vide a letter dated I 9'11 C
November, 1998, with a direction not to deduct provident fund
contriblliions of such part-time employees. Subsequently, on 51h March,
2004, the Director of Education issued a letter clarifying that the
contributory provident fund scheme was not applicable to such part-
time employees. In view of the aforesaid communications, the appellant D
had reason to believe that it was not supposed to deduct and/or deposit
 provident fund contributions of its I6 part-time employees.
       d) On 61hOctober, 2005, the officers of Respondent No. I visited
 one of the schools of the appellant and sought details of the employees
 and payments made on their behalf vis-a-vis provident fund contributions.     E
        e) The appellant submitted its response to the aforesaid query
 vide its letter dated I 81h October, 2005, wherein the appellant mentioned
 that as per the law, it was not required to deduct provident fund
 contributions of the concerned part-time employees.
       f)The appellant, however, received a summons from Respondent            F
 No.l dated 23'd May, 2006, to appear in connection with failure to remit
 provident fund dues of its employees. Further correspondence in that
 regard ensued between the parties and adjournments were taken i11 the
 matter.
       g) Ultimately, Respondent No.I heard the matter and passed an           G
 order dated l ''August, 2007, holding that the appellant was liable to pay
 a sum ofRs. I6,89,796/- as outstanding provident fund contributions.
      h) The appellant then filed a review application dated 14'h
 September, 2007 against the aforesaid order, on the ground that
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946             SUPREME COURT REPORTS                            [2017] 3 S.C.R.


A Respondent No.I had failed to appreciate certain material submissions
  and objections raised at the time of hearing. Respondent No. I dismissed
  the said review with a one-page order, without granting a heari!lg.
         i) During the abovementioned proceedings, 3 (three) out of 16
  part-time librarians of the appellant were regularized w.e.f 29 1h
B September, 2007. Another librarian was regularized w.e.f. 29111 September,
  2009. This was done with the approval of the State Authorities.
            j) Aggrieved by the aforesaid order passed by Respondent No. I,
      the appellant filed an appeal before the Appellate Tribunal, which rejected
      the appeal vide its order dated 81h April, 20 l I inter alia on the ground that
c     there was no difference between full-time and part-time employees and
      thus the appellant was bound to deduct/pay the provident fund ·
      contributions in respect of the part-time employees.
          k) Respondent No. I thereafter issued a demand notice dated I 01h
  May, 2011 to one of the schools of the appellant for payment of the due
D amount by 25 1h May, 20 I l. That was followed by a show cause notice
  as to why a warrant of arrest be not issued by Respondent No. I, dated
  23'" June, 20 l I. The appellant replied to the said show cause notice vide
  its letter dated 81h July, 2007, asking for one week time to pay the amount
  as demanded.
E           1) In the meanwhile, the appellant also filed Writ Petition No.40 I 3
      of 2011 before the High Court, challenging the order dated 81h April,
      2011 passed by the Appellate Tribunal. The High Court stayed tl1e order
      and directed the appellant to deposit Rs.4 lacs in court, which it duly
      complied with.
F            m) Ultimately, on 17th January, 2012, the High Court was pleased
      to dismiss the said writ petition.
         3. In light of the above factual matrix, the present appeal raises
  the question of interpretation ofRule 20 of the Maharashtra Employees
  of Private Schools (Conditions of Service) Rules, I 98 I, as framed under
G the Maharashtra Employees of Private Schools (Conditions of Service)
  Regulation Act, 1977 (for short 'the State Rules' and 'the State Act'
  respectively); as also of Section I 6 of the Employees' Provident Funds
  and Miscellaneous Provisions Act, I 952 (for short 'the Central Act').
  The primary issue is: Whether in the present case, the provisions of the
  Central Act will apply to the part-time employees in the schools/colleges
H
  M/S. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST.                            947
   PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.]

of the appellant, whose service conditions are governed by the provisions   A
of the State Act and State Rules. The relevant provisions are reproduced
hereinbelow:
      Section 16 of the Central Act reads as:
       "(!) This Act shall not apply-
                                                                            B
      a) to any establishment registered under the Co-operative
         Societies Act, 1912 (2 of 1912), or under any other law
         for the time being in force in any State relating to co-
          operative societies, employing less than fifty persons and
          working without the aid of power; or
                                                                            c
       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                     D
       c) to any other establishment set up under any Central,
          Provincial vr State Act and whose employees are entitled
          to the benefits of contributory provident fund or old age
          pension in accordance with any scheme or rule framed
          under that Act governing such benefits;                            E
       [ (2) If the Central Government is of opinion that having regard
           to the financial position of any class of {establishments}
           or other circumstances of the case, it is necessary or
            expedient so to do, it may, by notification in the Official
            Gazette, any subject to such conditions as may be specified F
            in the notification, exempt {whether prospectively or
            retrospectively,} that class of {establishments} from the
            operation of this Act for such period as may be specified
            in the notification.)"
       Section 20 of the State Rules reads as:                               G
        "20. Provident Fund
        (!) Every employee (not being an employee who has opted
           for pension) of an aided or unaided school working on a
           full time basis or every employee employed on part-time
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948            SUPREME COURT REPORTS                          [2017] 3 S.C.R.


A               basis in more than one school run by the same Management
               and doing full-time load of work in these schools, shall
               subscribe to the Contributory Provident Fund under the
                Contributory Provident Fund Rules (Bombay) as in force
               from time to time.
B          (2) Every employee of an aided private secondary school
               working on a full time basis who was appointed before the
               l" April 1966 and who had exercised in writing his option
              for a Contributory Provident Fund Scheme shall subscribed
               to that Fund as per rules made by Government and are in
              force in this behalf."
c
          4. Mr. Satyajit Desai, Ld. Counsel appearing for the appellant,
  first submits that the schools of the appellant are receiving grant-in aid
  from the State Government. The appellant receives 100% grant-in aid
  and has no separate source ofincome. Further, the 16 part-time employees
  in question were appointed with the permission and approval of the State
D Government. The appellant does not even have direct control over the
  payment of and deduction from its employees' salaries. In fact, even the
  salary of the concerned employees is directly issued by the State Education
  Officer and deposited in their respective bank accounts.
         5. Mr. Desai then submits that in terms of Section 16(1)(h) of the
E Central Act, the said Act has no application to an establishment which
  inter alia is under the control of the State Government, which, as si.;bmitted
  above, is clearly the case. The appellant's schools are governed by the
  State Act (and, by extension, State Rules) which over-rides the Central
  Act by virtue of being a special statute. Further, the appellant which had
F employed the part-time employees is an establishment registered under
  the State Co-operative Societies Act. The schools in which the part-
  time employees were employed, have engaged less than 50 (fifty) persons
  who were working without the aid of power. Consequently, the Central
  Act has no application to such establishment even in terms of Section
  16(1) (a) of that Act.
G
         6. With regard to the status of the employees, Mr. Desai submits
  that regardless of whether the appellant's employees are full time or
  part time, to be eligible for provident fund as set out in Rule 20 of the
  State Rules, they must be doing full time load work. In the present case,
  the 1epart-time employees were assigned work only for around i 8 hours
H
  M/S. YESHWANT GRAMIN SHIK.SHAN SANSTHA v. ASST.                               949
   PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.~

a week i.e. from I 0:30AM to 2:00PM, as against the normal work load            A
of30 hours per week for full time or regular employees. In other words,
they were not doing full time work load and thus not covered by the
Provident Fund Scheme operated under the State Act. Consequently,
the part time employees are not eligible to receive the benefit of the
provident fund scheme framed by the-State.
                                                                                B
       7. Mr. Desai then submits that the State Government resolution
dated 3"1 August, 2006, directed that all part-time librarians who had
completed 5 (five) years in private schools, such as that of the appellant,
were to be upgraded and made full time employees. This was further
reiterated by the letter of the Education Officer dated 301h March, 2007,
whereby the appellant was directed to implement the aforesaid resolution.       C
The fact that now the full-time employees were given provident fund
benefits by virtue of being regularised, itself shows that the part-time
employees were not entitled to provident fund benefits. The State
Government therefore, did not make any deductions from their salaries
towards provident fund employees' contribution.                                 D
       8. Without prejudice to any of the aforesaid arguments, Mr. Desai
also submits that the appellant was always willing to deduct the provident
fund contributions from the salary of its part time employees ana had
even written to the concerned authority about the same but was
categorically asked to refrain from doing so by the Education Officer            E
(Middle) Zilla Parishad, Wardha vide its letter dated l 91h November,
1998.
        9. In reply, Mr. Vijay Prakash, learned counsel appearing for
Respondent No.I, submits that the scheme of contributory provident
funds (CPF) under the provisions of the State Act and the State Rules is         F
not applicable to the part-time employees of the appellant. Rather, it is
the employees' provident funds (EPF) scheme framed under the Central
Act which is applicable. Mr. Prakash buttresses his argument by
submitting first that the Central Act prevails over the State Act by virtue
of the 1982 notification which clearly brings educational institutions and,
by extension, the benefit of provident fund to the employees in such             G
institutions, under the ambit of the Central Act. Secondly, an establishinent
can be excluded from the purview of the Central Act only if it belongs
to/is under the control of the State or Central Government and if its
 employees are entitled to CPF/pension benefits., Even if it is accepted
 that the appellant is controlled by the State Government, the fact remains      H
950              SUPREME COURT REPORTS                            [2017] 3 S.C.R.


A that the 16 part-time employees of the appellant were not entitled to
  CPF/pension benefits by virtue ofRule 20 of the State Rules itself, which
  clearly excludes them from receiving such benefits. Admittedly, the
  employees in question are part-time employees. The Rule relied upon by
  the appellant in its favour actually goes against it. Thus, the appellant's
B schools cannot be excluded from the purview of the Central Act.
          10. Mr. Vijay Prakash would then submit that the Central Act
  does not distinguish between part-time and full-time employees of an
  establishment. An employee of such an establishment has to fit into the
  definition of an employee as per the Central Act and not any other Act.
  The appellant's argument that it has part-time employees, who are not
C liable to have their provident fund deducted, will hold no ground as the
  Central Act makes no distinction between such so-called part time
  employees and regular employees.
         ·11. Mr. Vijay Prakash submits. that the appellant's stance, that it
  was willing to extend the provident fund benefits to its employees but
D was restrained by the State Education Officer, is without merit. The
  State Education Officer is only concerned with CPF scheme and not
  with EPF scheme. Admittedly, CPF is inapplicable to the part-time
  employees of the appellant, and thus there is no question of the State
  Education Officer preventing the appellant from deducting EPF from its
E part-time employees' salaries. Infact, the High Court in the Impugned
  Judgment clearly records that the appellant ought to have taken steps to
  resolve the issue with the State Education Officer by resorting to
  appropriate remedies, which it has failed to do.
             12. Mr. Kuna) Cheema, learned counsel appearing on behalf of
F     the State of Maharashtra, submits that Rule 20 of the State Rules is not
      applicable to part-time employees unless they work in more tl:tan one
      school run by the same management and are doing full time load of
      work in those schools. If a school is fully aided and if Rule 20 is applicable
      to such part-time employees, only then will the provident fund be deducted
      by the State Government as per the State Scheme.
G
            13. Mr. Cheema then submits that as per Government Resolution
      No.CCPS-1005/126/SER-4 dated 31" October, 2005, the Government
      has introduced a new scheme titled 'Defined Contribution ?ension
      Scheme', to replace the existing pension scheme applicable to government
      servants recruited on or after l ''November, 2005. As per the resolution,
H
   MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST.                               951
    PROVIDENT FUND COMM. (A. M. KHANWILKAR, J.] _

the Government has inter alia decided that the present pension scheme A
and the existing General Provident Fund Scheme will not be applicable
to government servants recruited on or after 1''November, 2005 in the
State Government.
     14. Mr. Cheema finally submits that as regards the 16 parMime
employees of the appellant, the said employees cannot be employed in a B
permanent post by virtue ofbeing part-time employees. Thus, the State
Government cannot deduct/pay the provident fund dues of such
employees as they are not permanent employees.
        15. After hearing the submissions advanced by the counsel for
 the respective parties, we deem it necessary to examine the purport and        c
-interplay of the provisions of the Central Act and State Act, in order to
 get clarity on the issue of applicability of the relevant Act. First, we may
 advert to the Central Act. Section 1 of the Central Act elucidates the
 application of the said Act to the establishments referred to therein.
 The same reads thus:
                                                                                D
        "I.Short title, extent and application-
        (1) This Act may be called the Employees· Provident Funds
        and Miscellaneous Provisions Act, 1952.
        (2) It extends to the whole of lndia except the State of Jammu
        and Kashmir.                                                            E
        (3) Subject to the provisions contained in section 16, it applies-
         (a) to every establishment which is a factory engaged in any
         industry specified in Schedule 1 and in which twenty or more
       - persons are employed, and
                                                                •
                                                                                 F
        (b) to any other establishment employing twenty or more
        persons or class of such establishments which the Central
        Government may, by notification in the Ofjlcial Gazette.
        speci[y in this behal(
        "Provided that the Central Government may, after giving not G
        less than two months' notice of its intention so to do, by
        notification in the Official Gazette, apply the provisions of
        this Act to any establishment employing such number of
        persons less than [Twenty] as may be specified in the
        notification]
                                                                      H
952            SUPREME COURT REPORTS                            [2017] 3 S.C.R.


A          (4) Notwithstanding anything contained in sub-section (3) of
           this section or sub-section (1) of section 16, where it 1ppears
           to the Central Provident Fund commissioner, whether on an
           application made to him in this behalf or otherwise, that the
           employer and the majority of employees in relation to any
           establishment have agreed that the provisions of this Act should
B          be made applicable to the establishment, he, may, by
           notification in the Official Gazette, apply the provisions of
           this Act to that establishment on and from the date of such
           agreement or from any subsequent date specified in such
           agreement.
c          (5) An establishment to which this Act applies shall continue
           to be governed by this Act notwithstanding that the number
           of persons employed therein at any time falls below twenty:"
                                                             (emphasis supplied)
D          16. On a plain reading of this provision, it is evident that the Central
   Act applies to the ~stablishments referred to therein. In the present case,
   the appellant's establishment may fall within the purview of "other
   estab!.ishment" referred to in sub-clause (b) of Section 1(3). It is
   indisputable that the Central Government in exercise of the powers
   conferred by clause (b) of sub-Section (3) of Section I of the Central
E Act has published a Notification being No.S.0.-986, dated 19.02.1982
   on 06.03.1982, so as to include all the educational institutions in the
   category of"any other establishment", namely; University; College
   (Whether or not affiliated to a University); School (Whether or not
   recognized or aided by the Central or a State Government); any scientific
F ·institution; any institution in which research in respect of any matter is
   carried on; and any other institution in which the activity of imparting
   knowledge or training is systematically carried on.
          17. A conjoint reading of Section l of the Central Act with the
  aforesaid notification, makes it clear thatthe Central Act would apply to
G all the colleges and schools, subject to the provisions of Section 16 of
  that Act.
          18. The question then arises is: whether the appellant school is an
   establishment covered by any one of the excepted category specified in
   Section 16 of the Central Act. The appellant has invoked clause (a) as
H: well as clause (b) of Section 16 (1) of the Central Act. As regards the
   M/S. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST.                               953
    PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.]

  argument hinging on clause (a), it proceeds on the premise that the           A
  appellant's school (in which 16 part-time employees were working), had
  employed less than fifty persons and working without the aid of power.
  This argument, in our opinion, cannot come to the aid of the appellant.
  Inasmuch as, the appellant is running 29 schools/colleges and has
  employed around! 151 permanent employees. Section 2A of the Central           B
  Act predicates that where an establishment consists of different
· departments or has branches, whether situate in the same place or in
  different places, all such departments or branches shall be treated as
  part of the same establishment. In other words, the fact that the appellant
  has employed less than 50 permanent employees and who are working
  without the aid of power in the school in which the 16 part-time employees    C
  were also working, will not take the matter any further. We find that the
  appellant has neither pleaded the material facts nor adduced any proof,
  so as to rebut the presumption stipulated in Section 2A of the Central
  Act - th;it all the schools and colleges run by the appellant were part of
  the same establishment. The fact that the appellant is a Co-operative         D
  Society registered under the State Co-operative Societies Act by itself
  will not extricate the appellant from the application of the Central Act.
         19. The fact that the appellant is not falling within the ambit of
 clause (a) of Section 16(1), however, can be no impediment for the
 appellant to peruse the argument regarding exemption by relying on clause
 (b) of Section 16( 1) thereof. We say so because, the excepted categories E
 specified in Section 16 are mutually exclusive. They are separated by
 the word "or". Sub-clause (b) of Section 16(1) is an independent excepted
 category. It is attracted to any other establishment belonging to or under
 the cont1ol of the Central Government or a State Government "and"
 whose employees are entitled to the benefits of contributory provident F
 fund or old age pension in accordance with any scheme or rule framed
 by the Central Government or the State Government governing such
 benefits. These twin conditions are required to be satisfied by the ·
 concerned establishment, seeking exemption from the provisions c,fthe
 Central Act. In the present case, the employees working in the concerned
 schools/colleges of the appellant are covered by the contributory provident G
 fund scheme framed by the State Government, subject to eligibility. The
 second condition required for seeking ex.emption under the Central Act
  is thus fulfilled.
        20. The moot question is: whether the schools in which the 16
                                                                                H
954                 SUPREME COURT REPORTS                       [2017] 3 S.C.R.


A part-time employees were working, can be said to be an establishment
  belonging to or under the control of the Central Government or a State
  Government. This question is no more res integra. This Court in the
  case of Regional Provident Fund Commissioner Vs. Sanatan Dharam
  Girls Secondary School & Ors 1 has considered a similar argument. In
B paragraphs 29 to 35, the Court analysed the issue in the following words:
     '
                   "29. In respect to the contention of the respondent that the
                ·establishment belonging to or under the control of the Central
                 Government or a State Government, it was submitted that the
 c               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" signify ownership i.e. the Government-owned insritutions
 D               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 also be noted that the two words are
                 separated by the word "OR" and therefore these two words
 E               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 but the
                 privately-owned institutions can be ''under the control of"
                 the Government in various way.
 F
                 30. 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 Government
                 grants recognition to the "non-government educational
                 institutions".
 G
                 It was submitted that recognition by the State is of prime
                 importance for running and operating an educ::itional
                 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.
 H       1
             (2007J 1 sec 268
MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST.                        955
 PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.]

  (b) Under Section 7 of the State Act, the State Government A
  grants aid to only recognised 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 required to keep accounts in the manner
  prescribed by the State. It was submitted that in such manner,
                                                                  B
  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 JO
  of the Act empowers the State to take over management lf the
  institutions "whenever it appears to the State that the             C
  Mt:1naging Committee has neglected to perform the duties
  assigned to it by or under the Act or the rules made thereunder.
  (d) Chapter Vofthe Act relates to properties of the institutions
  and the manner in which the institutions can managr:, the
  properties of the institution. It was submitted that under D
  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.
                                                                      E
   (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.
                                                                      F
   (j) Chapter VI of the State Act deals with recruitment and
   removal, etc. of employees. Their salary, conditions of service,
   providentfund, 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
   or. the parties. -                                                 G

   31. The State Government also exercises administrative control
   over the institution. Section 17 deals with the manner of
   recmitment and Section 18 deals with the procedure by which

                                                                      H
956           SUPREME COURT REPORTS                        (2017] 3 S.C.R.


A          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 allowances paid to similar
           categories of the State Government.
B
            32. Jn our view. the State Act is a complete code in itself with
            regard to the educational institutions and the State Gowrnment
          · exercises substantive control over the institutions even though
            the institutions are not "owned" by it. The word "control"
            has not been defined under the EPF Act, 1952.
c
            33. However, this Court in Sltamrao Vitltal Coop. Bank Ltd.
            v. Kasargod Pandlturanga Mallya, SCC at P. 604, para 6 has
            cited with approval the meaning of the word "control" as it
          . appears at p. 442 of Words & Phrases, Vol. 9, Permanent
            Edition as under:
D
           "The word 'control' is synonymous with superintendence,
           management or authority to direct, restrict or regulate. "
           34. In State of Mysore V. Allum Karibasappa, SCC at p. 501,
           para 16 this Court defined the .word "control" as under:
 E          "The word 'control' suggests check, restraint or in;?uence.
            Control is intended to regulate and hold in check and restraint
           from action. "
           35. We further observe that the State Government has the
           power of superintendence or the authority to direct, restrict
 F         or regulate the working of the educational institutions. It
           was, therefore, submitted that the institutions had satisfied
           both Conditions (1) and (2) mentioned above and as 'such
           they would fall within the exception contained under Section
           16(1)(b) of the EPF Act, 1952."
 G        21. The question is whether there are similar provisions in the
   subject State Act and Rules framed threunder, so as to infer that the
   State Government exercises substantive control over the establishments
   such as that of the appellant. On analyzing the provisions of tlie State
   Act and Rules framed thereunder, similar inference can be drawn as in
 H the case of Sanatan Dharam (Supra). In the present case, the State
  MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST.                                · 957
   PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.]

Act which has received assent of the President oflndia on l 6'h March,           A
1978, contains several provisions elucidating the extent to which the
State Government has control over the private schools:
      a) Section 2( 19), 2(20) and Section 2(21) of the State Act, are
indicative of the fact that the State Government grants recognition to the
Primary Schools and Private Schools in the State.                                B
        b) Section 4 (4) of the State Act inter alia empowers the 3tate
government to withdraw the recognition granted to the concerned school
on its failure to comply with directions issued by the Director of Education,
who is appointed by the State Government;
       c) Under Section 4 of the State Act, the State Government also C
has the power to make Rules governing the terms and conditions of
service of employees, including minimum qualification for recruitment
and the procedure to be followed thereof, duties, pay, allowances, post-
retirement and other benefits, other conditions of service of employees
of private schools and for reservation of adequate number of posts for D
backward classes. Additionally, the State Authorities are empower~d to
continually monitor that the management of the school is fulfilling the
prescribed terms and conditions of service ofits employees and including
to issue directions to the Management for that purpose.
       d) Under Section 4A of the State Act, the Director Education has           E
been empowered to issue directions in relation to the inquiries ag:iinst
the employees regarding alleged misconduct, misbehavior or moral
turpitude of an employee.
       e) Section 5 postulates the obligations of the management of
private schools such as to fill in the permanent vacancy in a private F
school in the manner, as may be prescribed by the Competent Authvrity.
        f)Under Section 16 of the State Act, the State Government has
the power to make rules governing the duties of employees of private
schools and about their Code of Conduct and disciplinary matters. This
is a form ofadministrative control.
                                                                                  G
      g) The Stat~ Rules deal with gamut of matters relating to service
conditions of the employees and the manner in which it is to be adhered
to by the management, in respect of which the management is
accountable to the Competent Authority of the State to report compliance
and including to adhere to the directions issued by the authority
                                                                                  H
958·             SUPREME COURT REPORTS                           [2017] 3 S.C.R.


A in that regard.
             h) The Rules also specifically deal with the facility of Pension
       Provident Fund and other matters to be extended to every employee
       working on a full time basis or on a part-time basis but doing full time
       load of work.
B             i) Besides the provisions of the State Act and the Rules framed
       thereunder, the schools recognized and receiving grant-in aid from the
       State Government have to fulfill additional conditions, as are specified in
       the grant-in aid scheme and the Maharashtra Secondary School Code
       applicable to such schools. As the grant in aid can be used by the school
 c     only for the purpose for which it has been granted and that the school is
       required to maintain and submit proper accounts in the manner prescribed
       by the State, is also indicative of financial control of the State over such
       schools/colleges.
               j) The provisions in the Secondary School Code also empower the
 D     State Government to take over or transfer the management of the
       institution.
              k) Besides the State Authorities have to oversee that the
       management is making payment of proper salary and allow&nces as
       specified.
 E         I) The Secondary School Code, which is a compendium of the
    executive instructions and orders, also deals with matters concerning
    recognition, organization and management of schools; staff service
    conditions, records and inspection; records, registers and inspection of
    schools and hostels; and grant in aid etc. The provisions regarding grant
 .f in aid deal with matters of salary/non salary grant; building grant; and
    other grants. Stipulations in respect of these matters are indicative of
    financial control exercised by the State over such institutions. Similarly,
    Chapter III deals with staff service conditions, records and inspection
    provides for matters relating to maintenance of adequate staff; conditions
    of service of employees; and rules of discipline and leave. These
 G provisions are also indicative of administrative control exercised by the
    State over the institutions. All this is in addition to the incipient requirement
    of obtaining recognition from the State before starting any school within
    the State or for that matter commencing additional sections and increasing
    the intake capacity of students, as the case may be.
 H
    M/S. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST.                            959
     PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.]

        22. Suffice it to observe that the State Act, the Rules made A
 thereunder and the provisions of the Secondary Schools Code are a
 complete code in themselves with regard to the educational institutions
 and indicative of the extent of exercise of substantive control by the
 State Government over such institutions, whether owned by it. The State
 Government has tlie power of superintendence and the authority to direct, B
 restrict or regulate working of the educational institutions. It necessarily
 follows that the establishment of the appellant, which in this case is
 100% grant-in aid schools in which 16 part-time employees were working,
 is undenhe control of the State Government and thus would fulfill even
 the first condition of Section 16( 1) (b) of the Central Act.
          23. As we have held that the establishment of the appellant fulfills c
  the twin conditions specified in Section 16 (I) (b ), it must follow that the
  same is exempted from the application of the provisions of the Central
· Act. In the present case, however, it has been found by the authority
  concerned and the Tribunal, that the 16 part-time employees working in
  the establishment of the appellant were not covered by the State CPF D
  Scheme applicable to the other permanent employees of the
  establishment. Inasmuch as, Rule 20 does not cover the part-time
  employees working in the school, in case they are not doing full time
  load of work. True it is that the said finding of fact cannot be over
  turned. Even so, is it possible to uphold the decision of the authority as
  confirmed by the Tribunal and the High Court - that the appellant is E
  liable to pay towards the Provident Fund under the Central Act in respect
  ofits part-time employees? Intrinsic in that direction, is that the provisions
  of the Central Act are invoked against the establishment of the appellant.
  That is impermissible. As aforesaid, Section 16 of the Central Act makes
  it abundantly clear that the provisions of the Central Act will have no F
  application to the establishment, if covered by one of the excepted
  category provided therein. Notably, the exemption is forthe establishment
  as a whole and for all purposes, from the application of the Central Act.
  Once the establishment is covered by the excepted category specified
  in Section 1.6, to get exemption, it is incomprehensible that the provisions
  of the Central Act can be invoked against such establishment on the G
  specious reasoning that few (16 in this case) part-time employees working
  thereat were not covered by the CPF Scheme of the State Government,
  as applicable to rest of its employees.
        24. It is not possible to countenance a situation that although the
                                                                              H
960           SUPREME COURT REPORTS                           [2017] 3 S.C.R.


A establishment enjoys exemption from application of the provisions of the
  Central Act, is still liable to be proceeded in respect of its few ( .16) part-
  time employees. That would lead to an incongruous approach, not
  envisaged by the Central Act. Taking any other view would :esult in
  rewriting of the provisions of the Central Act to mean that although the
  establishment is exempted from the application of the provisioIIs of the
B
  Central Act, yet it would be open to the central authorities to proceed
  against such establishment in certain situations. In our opinion, once the
  establishment qualifies for exemption of application of the provisions of
  the Central Act, there is no way that the authorities under the Central
  Act can exercise authority over it or call upon the establishment to comply
C with the provisions of the Central Act, unless the exemption of the
   establishment is withdrawn or lifted de Jure. Section 16 of the Central
   Act does not envisage a concept of partial exemption of application of
   the p:ovisions of the Central Act in respect of employees, but the
   exemption operates qua the establishment for all purposes.
 D         25. In the present case, the appellant is running 29 schools/colleges
   and is receiving 100% grant-in aid from the State Government ir. respect
   of28 schools/colleges. The employees working in the said schools of
   the appellant have been employed with the permission and approval of
   the State Government and are governed by the State CPF Scheme. The
   entire· process of appointment has been strictly monitored by the State
 E Government. Additionally, the appellant has been submitting pay bills of
   its employees to the Education Department which directly deposits the
   salaries of such employees into their bank accounts. At the relevant
   time, the appellant had employed around 115 l employees who were
   coverP,d by the Contributory Provident Fund Scheme framed by the State
 F Government for the employees of the private schools (except the 16
   part-time employees who were not doing full time load of work). The
   appellant had engaged those 16 part-time employees with the permission
    and approval of the State Government. It can be safely presumed that
    the State Government was fully conscious of the fact that those part-
   time employees will not be entitled for the benefits of CPF Scheme of
 G the State. In other words, the substantial number of employees of the
    appellant ifnot all of them, around ll 5l employees, were covered by the
    contributory provident fund scheme of the State Government applicable
    to private schools governed by the provisions of the State Act and the
    Rules made thereunder. Just because the 16 part-time employees
 H
   MIS. YESHWANT GRAMIN SHIKSHAN SANSTHA v. ASST.                              961 .
     PROVIDENT FUND COMM. [A. M. KHANWILKAR, J.]

working in the appellant's school were not eligible for the benefits of the A
State CPF Scheme, the exemption status of the establishment of the
appellant acquired under Section 16 of the Central Act, will not cease or
stand withdrawn automatically.
       26. Once an establishment is covered under any one of the
excepted category under Section 16 of the Central Act, the officials B
empowered by the Central Act will have no authority to proceed against
such establishment; and more so on the ground that a miniscule number
of employees (16 part-time employees) working in the establishment
were not eligible for the benefits underJhe State Contributory Prov: dent
Fund Scheme governing the rest of the regular employees of the·
establishment.                                                            C
       27. Having said this, we must hold that initiation of acti0n of
recovery by the official(s) of Respondent No.l against the establishment
of the appellant, which was otherwise exempted from application of the
provisions of the Central Act is wholly without authority of law. The
appellani had placed reliance on the case of Sanatan Dharam (supra), D
before the Tribunal. But neither has the Tribunal nor the High Court
considered the same. The Tribunal, however, chose to rely on the decision
in the case of The Shamrao Vithal Co-operative Bank Ltd. Vs.
Kasargod Pandhuranga Mallya 2 • This decision has been duly
considered and distinguished in the case of Sanatan Dharam (supra), E
as can be discerned from paragraph 33 of the reported decision.
       28. Be that as it may, for the reasons alluded hitherto we ha~e no
hesitation in allowing this appeal and set aside the decision of the }Iigh
Court; and also the entire action of the authorities under the Central
enactment for having initiated recovery against the concerned school           F
run by the appellant by invoking the provisions of the Central Act, which
had no application.
      29. Accordingly, the appeal is allowed in the above terms with no
order as to costs.
                                                                               G
Devika Gujral                                                Appeal al:owed.




'(1972) 4 sec 600