UNIVERSITY OF PETROLEUM & ENERGY STUDIES

COLLEGE OF LEGAL STUDIES

BA.,LLB(HONS.)/BBA.,LLB(HONS.)

SEMESTER 8

ACADEMIC YEAR: 2013-2014 SESSION: JANUARY-MAY

ASSIGNMENT – CASE ANALYSIS

FOR

Labour Law II

(LLBG…)

Under the Supervision of: Priya Misra(TO BE FILLED BY THE STUDENT)

NAME: ADITI GUPTA

SAP NO: 500012340

ROLL NO 7

M/s Mukund Construction Co. v. Regional P.F. Commissioner”

(2008) ILLJ 7 Guj

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 is an important

social security programme which provides protection to industrial workers and their families

who are exposed to the risks of sickness, employment injury, occupational diseases and in

case of female employees to maternity. A social security legislation, was enacted to

ameliorate various risks and contingencies sustained by the workers while serving in a

factory or establishment.

In the present case, M/s. Mukund Construction Company had made an application under

Section 1(4) to the Commissioner, Provident Funds stating that their industry be included

within the act. After a series of events, the department clearly ordered that the industry would

be included in the Scheme with retrospective effect. As per the scheme, the employer was

asked to make deposits of the amount known as contribution of employer and contribution

made by the employee. Within the reasonable period of time and without any delay, the

petitioner deposited their 50% contribution but the employees did not do it. It appeared that

the employees wanted that further 25% should be paid by the employer. The employer, as a

prudent and good employer deposited that 25% also but still there was delay on the part of

the employees in making their contribution.

The department had issued a notice to the petitioner claiming that there was delay in making

deposits, therefore, an amount of interest and other damages be paid to the department. The

petitioner replied by submitting that they were not liable to pay any interest as there was no

delay on their part and that the Scheme could not be applied with retrospective effect. The

department disagreed with the submission and the defence made/raised by the petitioner and

passed a final order. Being aggrieved by the said order, the petitioner has come before

Gujarat High Court.

The arguments on the behalf of the petitioner was that in absence of any lapse on the part of

the employer, no direction for recovery of the interest and other damages could be issued

against the petitioner. The counsel submitted that retrospective operation of the Scheme and

inclusion of the industry in the Scheme would not give any additional benefit to the

department, because, the department cannot be allowed to take advantage of its own wrong

and the delay caused by it. He also submitted that in accordance with Section 1(4) liability of

the employer would be only from the date of the agreement or the date so provided in the

agreement. He submitted that the order of the department deserves to be quashed.

On the other hand, the counsel on behalf of the Respondent placed strong reliance on Section

1(4), Section 7A and 14B of the Act and submitted that the department is required to provide

certain benefits to the employees of an industry admitted to the Scheme. Under such

circumstances, the department is entitled to recover interest and damages. He also submitted

that the liability to make deposits of the contribution lies on the employer. He also submitted

that in absence of any lapse on the part of the department, the petitioner cannot get any

benefit.

It can be inferred from the act that the employer is liable to contribute some amount and can

also recover the employee’s contribution from the wages of the employees by deducting from

his wages and submitting the same to the department. Undoubtedly, the petitioners have

deposited the sums to the department within reasonable period of time. Here the fault was on

the part of the employees who were taking a lot of time to make their contributions in spite of

the fact that the employers had conceded to that fact of contributing 25 % more which was

supposed to be contributed by the employees. Also the department should not forget the

objective with which the act was established and the benefits that are provided to the

employers as well as the employees under the act.

The E.S.I act provides for the compulsory contributory insurance of the employees that are

covered by the act. The scheme under the act is contributory in nature that both the employer

as well as the employees are required to pay their share of the contribution as specified in the

First Schedule of the Act. If any person fails to pay contribution which he is liable to pay

under the Act shall be punishable with imprisonment for a period of three years.

It was held that the department was absolutely unjustified in issuing a direction to the

petitioner for making payment of interest and damages. The order issued by the department

was quashed and the petition was allowed.

Thus it is witnessed that the benefit that can be derived from the act is to the employees. The

employees are entitled to promote the general welfare of the worker. The act has been

designed to provide cash benefit in the case of sickness, maternity and employment injury,

payment in the form of pension to the dependents of workers who dies out of employment

injury and medical benefit to the workers.

The act also provides for the establishment of ESI Corporation that serves a number of

functions and powers like promoting measures for the improvement of health and welfare of

the insured personnel; promoting measures for the rehabilitation and re-employment of

insured persons who are disabled or injured and incurring expenses in respect of such

measures from its fund up to a limit prescribed by the Central Government.