REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL NO.   7766               OF 2011 (Arising out of SLP (C) NO.1067 of 2009)

Marathwada Gramin Bank Karamchari  Sanghatana and Another …Appellants

Versus

Management of Marathwada Gramin Bank and Others                          …Respondents

WITH CIVIL APPEAL NO.       7767           OF 2011

(Arising out of SLP(C) NO.1205 of 2009)

Marathwada Regional Rural Bank Employees Union …Appellant

Versus

Management of Marathwada Gramin Bank and Others      …Respondents

J U D G M E N T  

Dalveer Bhandari, J.

1. Leave granted in both the matters.

2. We propose to dispose of these appeals by a common  

judgment.  These appeals emanate from the judgment and  

final order dated 14.11.2008 passed by the High Court of  

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Judicature  at  Bombay,  Nagpur  Bench,  Nagpur  in  Letters  

Patent Appeal Nos.347 and 348 of 2008.

3. Marathwada  Gramin  Bank  (for  short,  respondent  

bank)  was  established  in  1976.  The  provisions  of  the  

Employees  Provident  Fund  Scheme,  1952  became  

applicable  to  the  respondent  bank  from  1.9.1979.  

According to the respondent bank, it meticulously complied  

with  the  provisions  of  the  Scheme  till  31.8.1981.  

Thereafter, the respondent bank formed its own trust and  

framed its own Scheme for payment of provident fund to its  

employees.  According  to  that  Scheme  of  the  bank  the  

employees  were  getting  provident  fund in  excess  of  what  

was  envisaged  under  the  Employees  Provident  Fund  

Scheme, 1952.  

4. The Regional Provident Fund Commissioner vide order  

dated  29.8.1981  exempted  the  respondent  bank  from  

complying with the statutory provisions of the Scheme with  

effect from 1.9.1981 and permitted the respondent bank to  

pay provident fund to its  employees according to its  own  

Scheme.  The respondent bank contributed  provident fund  

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to its employees as per its own Scheme for the period from  

1.9.1981 to 31.8.1993.

5. On 14.10.1991, the said exemption/relaxation granted  

to the respondent bank was withdrawn and cancelled and  

the  respondent  bank  was  directed  to  implement  the  

provisions of the statutory Scheme.  Despite cancellation of  

exemption,  the  respondent  bank  continued  to  make  

payment of  provident fund in accordance with the earlier  

Scheme till 31.8.1993. In the said Scheme, the respondent  

bank was contributing provident fund for the employees in  

excess of the statutory obligation.  

6. According  to  the  respondent  bank,  owing  to  huge  

accumulated  losses,  it  issued  a  notice  of  change  under  

section 9A of the Industrial Disputes Act, 1947 expressing  

its  intention to discontinue payment of  provident fund in  

excess of its statutory liability with effect from 1.11.1998,  

but  would  continue  to  contribute  towards  Employees  

Provident Fund according to the statutory liability.   

7. The Regional Provident Fund Commissioner-II issued a  

letter dated 13.5.1999 informing the respondent bank that  

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it  cannot  withdraw  the  benefit  of  paying  matching  

employer’s  share  without  any  limit  to  wage  ceiling  and  

directed it to continue extending the same benefit as was  

granted prior to 01.11.1998.

8. Thereafter, the Central Government made a reference  

of  the  dispute  to  the  Central  Government  Industrial  

Tribunal,  Nagpur  (for  short,  the  Tribunal).   The  said  

Tribunal relied on Section 12 of  the Employees Provident  

Fund  and  Miscellaneous  Provisions  Act,  1952  (for  short,  

1952 Act)  and held that  the  management cannot  reduce,  

directly or indirectly, the wages of any employee to whom  

the Scheme applies or the total quantum of benefits in the  

nature of  old age pension gratuity (provident fund) or life  

insurance to which the employee is entitled under the terms  

of  his  employment,  express or  implied.  Section 12 of  the  

1952 Act reads as under:-

“No  employer  in  relation  to [an  establishment] to which any [Scheme or the  Insurance Scheme] applies shall, by reason  only of his liability for the payment of any  contribution to [the Fund or the Insurance  Fund] or any charges under this Act or the  [Scheme or the Insurance Scheme] reduce,  whether directly or indirectly, the wages of  any employee to whom the [Scheme or the  

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Insurance  Scheme]  applies  or  the  total  quantum of benefits in the nature of old age  pension,  gratuity [provident  fund  or  life  insurance] to which the employee is entitled  under the terms of his employment, express  or implied.]”

9. The  Tribunal  directed  that  the  employees  of  the  

respondent bank shall  continue to draw equal amount of  

contribution from the bank towards provident fund without  

any ceiling on their wages.  According to the Tribunal, the  

action of the respondent bank to reduce the contribution of  

the provident fund or to put a ceiling on the provident fund  

is  not  justified.   The  Tribunal  also  directed  that  the  

workmen shall continue to draw the benefit of the prevailing  

practice  of  contribution  of  Employees  Provident  Fund  

without any ceiling.

10. The  respondent  bank,  aggrieved  by  the  said  award  

passed by the Tribunal, preferred a writ petition before the  

learned  Single  Judge  of  the  High  Court  of  Judicature  of  

Bombay at Nagpur Bench, Nagpur.

11. It  was  submitted  by  the  respondent  bank  that  the  

impugned award  as well as the communication issued by  

the Regional Provident Fund Commissioner-II is contrary to  

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law  as the same is based on the assumption that Section  

12 of the 1952 Act creates bar for imposing the ceiling in  

accordance with the Provident Fund Act.

12. The  learned  counsel  for  the  respondent  bank  in  

support of his contention, before the learned Single Judge of  

the  High  Court,  placed  reliance  on  the  judgment  of  the  

Constitution  Bench  of  this  Court  in  Committee  for  

Protection of Rights of ONGC Employees and Others  v.   

Oil and Natural Gas Commission and Another  (1990) 2  

SCC 472 and the judgment of the High Court of Kerala in  

Vijayan   v.   Secretary to Government  2006 (3) KLT 291.

13. It  was  also  submitted  that  the  respondent  bank  is  

under  an  obligation  to  make  contribution  towards  

Employees Provident Fund in accordance with the statutory  

provisions  of  1952  Act.    It  was  further  urged  that  the  

respondent bank all through has at least made contribution  

towards Employees Provident Fund in consonance with the  

statutory provisions.  On behalf of the respondent bank it  

was  submitted  that  the  respondent  bank  has  always  

complied  with  the  statutory  obligation.   It  was  also  

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contended  by  the  respondent  bank  that  the  appellants  

cannot claim as a matter of right the amount in excess of  

the statutory provisions of 1952 Act.

14. Before the High Court, for the first time, the appellants  

herein  submitted  that  Section  17(3)(b)  of  the  1952  Act  

regarding  exemption  of  any  establishment  from  the  

operation of the Scheme was subject to certain conditions.

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

17.  Power to exempt

(1)      xxx xxxxx xxxx

(2)   xxx xxxxx xxxx

(3)   Where in respect of  any person or class of  persons  employed  in  an  establishment  an  exemption is granted under this section from the  operation of  all  or  any of  the provisions of  any  Scheme  (whether  such  exemption  has  been  granted  to  the  establishment  wherein  such  person or class of persons is employed or to the  person or class of persons as such), the employer  in relation to such establishment--

(a)      xxx xxxxx xxxx

(b)  shall  not,  at  any  time  after  the  exemption,  without  the  leave  of  the  Central  Government,  reduce  the  total  quantum  of  benefits  in  the  nature of pension, gratuity or provident fund to  which any such person or class of persons was  entitled at the time of the exemption;”

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15. The  learned  Single  Judge  in  his  judgment  observed  

that Section 17(3)(b) of the 1952 Act was never pressed into  

service   by  the  appellants  herein either   before  it  or  the  

Tribunal  and the  appellants  herein  cannot  be  allowed to  

raise  the  said  contention  for  the  first  time  in  the  writ  

petition.  In that judgment, it was also observed that even  

otherwise, the said provision applies when the exemption is  

granted and is in force and in the instant case admittedly  

the  exemption  was  already  cancelled.  Therefore,  Section  

17(3)(b) of  1952 Act is not applicable.

16. On analysis of Section 12 of the 1952 Act, the learned  

Single Judge of the High Court came to the conclusion that  

Section 12 of the 1952 Act will operate as a bar in case the  

same is the term of employment expressed or implied.  In  

the instant case, it is not in dispute that under Regulation  

No.56  of  the  Marathwada  Gramin  Bank  (Staff)  Service  

Regulations,  1980,  the  express  term  of  employment  

accepted  by  the  employees  is  that  contribution  to  the  

provident fund shall be in accordance with the provisions of  

the 1952 Act.   Regulation No.56 reads as under:-

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“56.  All  officers  and  employees  who  have  completed continuous minimum service  as  specified in the Employees’ Provident Funds  and Miscellaneous Provisions Act, 1952 (19  of 1792) shall be members of the Provident  Fund.   The  contribution  to  the  provident  fund by the officers and employees   and the  Bank  shall  be  in  accordance  with  the  provisions of the aforesaid Act.”

17. The learned Single Judge observed that in the instant  

case  it  is  the  express  term  of  employment  that  the  

contribution of  the bank shall  be in accordance with the  

provisions of the 1952 Act.  The learned Single Judge thus  

observed  that  the  bar  of  Section  12  will  not  operate  as  

otherwise held by the Tribunal in the impugned award.

18. The  learned  Single  Judge  also  observed  that  under  

Section 17(3)(b) of the 1952 Act, the said permission would  

be required in case an exemption from the operation of the  

provisions  of  the  1952  Act  has  been  obtained.   In  the  

instant  case,  the  exemption  was  already  cancelled  on  

14.10.1991  and  consequently  this  provision  has  no  

application to  the  facts  of  this  case.   The learned Single  

Judge consequently set aside the impugned judgment of the  

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Tribunal  and  allowed  the  writ  petition  filed  by  the  

respondent bank.

19. The  appellants,  aggrieved  by  the  judgment  of  the  

learned  Single  Judge,  preferred  Letters  Patent  Appeals  

before the Division Bench of the High Court of Judicature at  

Bombay, Nagpur Bench, Nagpur and contended that under  

Section  17(3)(b)  of  the  1952  Act  once  the  exemption  is  

granted  by  the  Appropriate  Government,  it  shall  not,  

without  the  leave  of  the  Central  Government  reduce  the  

total quantum of benefits in the nature of pension, gratuity  

or provident fund etc.   

20. It  was also  contended by the  appellants  that  in  the  

instant case, the respondent bank did not obtain leave of  

the  Central  Government  before  acting  on  the  

communication  dated  14.10.1991  by  issuing  notice  of  

change.   

21. The appellants  relied on the  case of  Madura Coats  

Employees  Union v. Regional  Provident  Fund  

Commissioner and Others (1999) ILLJ 928 Bombay and  

particularly  relied  on  paragraphs  6,  7  and  8  of  that  

judgment where the Court observed that the benefit cannot  

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be taken away by the employer without prior permission of  

the Central Government.  The Division Bench approved the  

view of the learned Single Judge that the case of Madura  

Coats (supra) did not apply to the present case because in  

the  instant  case  the  relaxation/exemption  was  

withdrawn/cancelled.   The  Division  Bench  also  observed  

that in  Madura Coats case there was no contention that  

the relaxation/exemption was withdrawn at any time.  This  

is the main distinguishing feature in both these cases.  The  

Division Bench did not interfere with the judgment of the  

learned Single Judge and dismissed the appeals filed by the  

appellants.  The appellants are aggrieved by the impugned  

judgment of the Division Bench of the High Court and have  

approached this  Court  by  preferring  these  appeals  under  

Article 136 of the Constitution.

22. The appellants contended before this Court that this  

case  involved  substantial  question  of  law  regarding  

interpretation of the provisions of Section 12 of 1952 Act.  It  

was also argued by the appellants that the contribution to  

provident  fund  is  a  component  of  wages  and  when  

admittedly the respondent bank has paid its share of the  

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provident  fund  contribution  in  excess  of  the  amount  

prescribed in the 1952 Act  for  a long period of  time and  

continued  to  contribute  at  such  higher  rate  without  any  

ceiling even after withdrawal of the exemption for a period of  

7 years and had also framed rules whether it is open to the  

respondent  bank  to  reduce  its  contribution  towards  

provident fund.  

23. The appellants submitted that in view of the facts of  

this case, Section 12 of the 1952 Act is clearly attracted.  

The appellants reiterated before this Court the submissions  

advanced before the Division Bench of the High Court.

24. We have heard the learned counsel for the parties at  

length and perused the relevant provisions of  the Act.   It  

may  be  pertinent  to  mention  that  the  respondent  bank  

complied with the provisions of the 1952 Act meticulously  

after  it  became applicable from 1.9.1979. The respondent  

bank  complied  with  the  provisions  of  the  Scheme  till  

31.8.1981.  Thereafter, the respondent bank formed its own  

trust and framed its own Scheme for payment of provident  

fund.   In that  Scheme,  the  respondent  bank paid higher  

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amount of provident fund to its employees than what the  

respondent bank was obliged to pay according to the statute  

or the agreement with the appellants.  

25. The Regional Provident Fund Commissioner vide order  

dated  29.08.1981  exempted  the  respondent  bank  from  

complying with the statutory provisions of the Scheme with  

effect from 1.9.1981.  Admittedly, the respondent bank paid  

provident fund to its employees as per its own Scheme for  

the period from 1.9.1981 to 31.8.1993.

26. The said exemption/relaxation granted on 29.8.1981  

was  withdrawn  and  cancelled  on  14.10.1991  and  the  

respondent bank was directed to implement the provisions  

of  the  statutory  Scheme.  Despite  cancellation  of  the  

exemption,  the  respondent  bank continued to  pay  excess  

provident  fund  to  its  employees  in  accordance  with  the  

earlier Scheme till  31.8.1993.  Thereafter,  the respondent  

bank  issued  a  notice  of  change  under  section  9A  of  the  

Industrial  Disputes  Act,  1947  expressing  its  intention  to  

discontinue  payment  of  provident  fund  in  excess  of  its  

statutory  liability  with  effect  from 1.11.1998.   It  may  be  

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pertinent  to  mention  that  owing  to  huge  accu*mulated  

losses of the respondent bank, the bank though continued  

to pay according to the provisions of the statutory Scheme,  

but discontinued payment of provident fund in excess of its  

statutory liability.   

27.   The respondent bank is under an obligation to pay  

provident  fund  to  its  employees  in  accordance  with  the  

provisions  of  statutory  Scheme.  The  respondent  bank  

cannot  be  compelled  to  pay  the  amount  in  excess  of  its  

statutory  liability  for  all  times  to  come  just  because  the  

respondent bank formed its own trust and started paying  

provident fund in excess of its statutory liability for some  

time.  The appellants are certainly entitled to provident fund  

according to statutory liability of the respondent bank.  The  

respondent  bank  never  discontinued  its  contribution  

towards provident fund according to the provisions of  the  

statutory Scheme.

28. The view which has been taken by the learned Single  

Judge and affirmed by the Division Bench of the High Court  

is  just,  fair,  appropriate  and  in  consonance  with  the  

provisions of the 1952 Act.

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

These appeals filed by the appellants being devoid of  any  

merit  are  accordingly  dismissed.  In  the  facts  and  

circumstances of these appeals, the parties are directed to  

bear their own costs.

..………………………..J.                                                      (Dalveer Bhandari)

.………………………..J.                                                      (Deepak Verma)

New Delhi; September 9, 2011

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