Principal employer can be liable for EPF contribution of contractor when the latter does not have code number. and Principal employer not liable for provident fund dues of contractor with independent code number.

Principal employer can be liable for EPF contribution of contractor when the latter does not have code number. and Principal employer not liable for provident fund dues of contractor with independent code number.

M/s. Calcutta Constructions Company
vs.
Regional Provident Fund Commissioner and Others

A. EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 – Sections 14B, 7A & 17Q – Contract Labour (Regulation and Abolition) Act, 1970 – Sections 2(e), (f) and (c) – Employer, Employee and Contribution – When liability to pay contribution is upon principal employer and when upon contractor – Where Code No. is allotted to a contractor it becomes an establishment under the Act – Would, thus, be liable to pay contributions of its employees – Where the contractor has not been allotted code number, the contributions in respect of contractor's employees shall have to be paid by the principal employer and recover the same later on from the contractor. Paras 15 to 17

B. EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 – Sections 14B, 7A and 7Q – CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970 – Sections 2(e), (f) and (c) – Respondent took action and initiated proceedings under sections 7A and 14B of the Act – Directed the petitioner to deposit the assessed amount – Application filed under section 7Q of the Act was dismissed – Employees were employed by the Contractor and deputed at the premises of the principal employer (PSEB) – Salary to the employees was paid by the petitioner-contractor – Contractor was allotted a separate EPF Code number – Hence, contractor is liable to pay the contributions and not the PSEB, principal employer – Hence, writ petition is dismissed. Paras 15 to 17

For Petitioner : Mr. Harsh Agarwal, Advocate.

For Respondent No. 1 : Mr. Rajesh Hooda, Advocate.

For Respondent No. 2 : Mr. Dinesh Kumar, Advocate.

For Respondent No. 2 and 5 : Mr. K.S. Mamrat for Mr. Rupinder Khosla, Advocate.

\IMPORTANT POINTS

• When code No. is allotted to a contractor under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, it becomes an establishment under section 2(e) of the Contract Labour (Regulation and Abolition) Act, 1970 making it liable to pay EPF contributions of its employees.
• When the contractor has not been allotted code No., the contributions in respect of contractor's employees shall have to be paid at the first instance by the principal employer and
  recover the same later on from the contractor.
• The Contractor having an independent code No. under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, he is liable to pay EPF contributions in respect of employees whose salary is paid by it.
• Principal employer is not liable to pay EPF contributions in respect of employees engaged through independent contractor who has been having an independent code No. under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

JUDGMENT

AMIT RAWAL, J.—1. The challenge in the present writ petition is to the orders dated 3.9.2001 (Annexure P-6) whereby assessment has been made under section 7A against the petitioner, order dated 21.12.2001 (Annexure P-7) whereby the application filed under section 7-O seeking exemption from depositing 75% of the amount has been dismissed, order dated 22.3.2002 (Annexure P-9) whereby the appeal has been dismissed for non-deposit of 75% of the assessed amount, order dated 16.9.2010 (Annexure P-14) whereby the review application of the petitioner has been dismissed.

2. Learned counsel for the petitioner submits that the petitioner is a Contractor and had undertaken various contracts with Punjab State Electricity Board (hereinafter called as ‘the PSEB')-Establishment for maintenance of the machinery of the PSEB establishment.

3. It is a matter of record that the petitioner-company executed a man power supply contracts involving the contract of job. The Provident Fund Commissioner raised a demand under Section 7A to the petitioner and as well as to PSEB for not depositing of the contribution of the employees.

On the basis of the plea submitted by the petitioner as well as PSEB the then Regional Provident Fund Commissioner passed an assessment order of Rs. 55,10,742 and directed the petitioner and as well as Guru Gobind Singh Super Thermal Plant to deposit the assessed amount jointly and severally, failing which the proceedings was subject to an action under Section 7G shall be initiated against the establishment and the principal establishment for recovery of the assessed amount by attaching their accounts. The said order for initiation of proceedings was subject to an action under Section 7Q and 14B of Employees Provident Fund and Misc. Provisions Act, 1952 (hereinafter called as ‘the Act').

4. The said order was assailed by the PSEB by filing an appeal before the authority and the appellate authority on 20.11.2000