Supreme Court

The Officer In-charge, Sub-Regional Provident Fund Office and Ors. Vs. Godavari Garments Limited

MANU/SC/0961/2019

24.07.2019

Labour and Industrial

Definition of "employee" includes workers engaged either directly or indirectly in connection with work of establishment and are paid wages

In facts of present case, the Respondent Company engaged women workers who were provided with cut fabric, thread, buttons, etc. to be made into garments at their own homes. The sewing machines used by the women workers were owned by them, and not provided by the Respondent Company.

The Appellant No. 1 - Officer In-Charge, Sub-Regional Provident Fund Office, issued a Show Cause Notice to the Respondent Company calling upon it to pay the Provident Fund contributions for the women workers. The Balance Sheet of the Respondent Company for the year 1988 - 89, revealed large debits towards salary and wages for direct and indirect workers, but the Respondent Company made a false statement that, it had only 41 employees.

The Provident Fund Officer - Appellant No. 1 vide Order held that, the women workers engaged for stitching garments were covered by the definition of "employee" under Section 2(f) of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act). An amount of Rs. 15,97, 087 was assessed towards Provident Fund dues of the Respondent Company for the period from November, 1979 to February, 1991. The Respondent Company was directed to pay the said amount within 7 days.

The Respondent Company challenged the aforesaid Order. The Bombay High Court, vide Final Judgment allowed the Writ Petition filed by the Respondent Company, and set aside the Order passed by the Appellant No. 1. It was held that, the Respondent Company had no direct or indirect control over the women workers. The conversion of cloth into garment could be done by any person on behalf of the women workers. Hence, the Respondent Company did not exercise any supervisory control over the women workers. Aggrieved by the aforesaid Judgment, the present Civil Appeal has been filed by the Provident Fund Office.

The short issue which arises for consideration is whether the women workers employed by the Respondent Company are covered by the definition of "employee" under Section 2(f) of the EPF Act or not.

The definition of "employee" under Section 2(f) of the EPF Act is an inclusive definition, and is widely worded to include any person engaged either directly or indirectly in connection with the work of an establishment.

In the present case, the women workers employed by the Respondent Company were provided all the raw materials, such as the fabric, thread, buttons, etc. from the Respondent - Employer. With this material, the women workers were required to stitch the garments as per the specifications given by the Respondent Company. The women workers could stitch the garments at their homes, and provide them to the Respondent Company. The Respondent Company had the absolute right to reject the finished product i.e. the garments, in case of any defects.

The mere fact that the women workers stitched the garments at home, would make no difference. It is the admitted position that, the women workers were paid wages directly by the Respondent Company on a per-piece basis for every garment stitched. The issue in the present case is squarely covered by the decision of this Court in Silver Jubilee Tailoring House and Ors. v. Chief Inspector of Shops and Establishments and Ors. The EPF Act is a beneficial social welfare legislation which was enacted by the Legislature for the benefit of the workmen.

In the present case, the women workers were certainly employed for wages in connection with the work of the Respondent Company. The definition of "employee" under Section 2(f) is an inclusive definition, and includes workers who are engaged either directly or indirectly in connection with the work of the establishment, and are paid wages.

In the present case, the women workers were directly engaged by the Management in connection with the work of the Respondent Company, which was set up as a ready-made garments industry in Marathwada. The women workers were paid wages on per-piece basis for the services rendered. Merely because the women workers were permitted to do the work off site, would not take away their status as employees of the Respondent Company. The judgment passed by the Bombay High Court vide the Impugned Order being contrary to settled law, is set aside. Civil Appeal is allowed.

Tags : Employees Status Wages

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