Regional
Provident Fund Commissioner Vs. Shiv Kumar Joshi [1999] INSC 424 (14 December
1999)
S. Saghir
Ahmad, R.P.Sethi
The
short but an important question of law to be decided in this appeal is as to
whether the provisions of Consumer Protection Act, 1986 (hereinafter referred
to as 'the Act') can be invoked against the Provident Fund Commissioner by a
member of the Employees Provident Fund Scheme? it has to be ascertained as to
whether any such member is a 'consumer* and the duties performed by the Provident
Fund Commissioner under the relevant scheme is a 'service' within the meaning
of the Act. If it is held that such member is the 'Consumer and the facilities
provided are 'services', it has to be further considered as to whether the
delayed payment of the provident fund to a member-employee amounts to
deficiency of service under the Act.
The
facts leading to the filing of the present appeal are that the respondent, who
was a member of the Provident Fund Scheme, applied to the Regional Provident
Fund Commissioner for the payment of his provident fund on 15th July, 1992. It was found that the application
filed was not complete as required by Para 72(5)(d) of the Provident Fund
Scheme applicable in the case. The appellant forwarded the application to the Respondent's
employer for verification in terms of the said Para. The Inspector of the appellant is also stated to have visited the
factory, where the respondent- employee was working, to impress upon the
employer to expedite verification of the application. The appellant's Area
Inspector is stated to have personally gone to the factory on 19^ August, 1992
. and obtained the verification application. The claim of the respondent was
settled on 24^ August, 1992.
However,
the respondent filed a complaint before the District Consumer Disputes Redressal
Forum, Faridabad (hereinafter referred to as "the District I Forum")
on 26th August, 1992 alleging deficiency in service of the appellant and
claimed damages to the tune of Rs.65,000/- along with costs for the alleged
delay in payment of his provident fund. The appellant raised a preliminary
objection regarding the jurisdiction of the District Forum on the ground that
the respondent was not a 'consumer' and the facilities provided by the scheme
were not a 'service'. The District Forum vide its order dated 4.11.1992
directed the appellant to pay interest @ 18% on delayed payment and costs of
Rs.1,000/-. Not satisfied with the order of the District Forum, the appellant
filed an appeal before the State Consumer Disputes Redressal Commission, Haryana
at Chandigarh (hereinafter referred to as
"the State Commission'') under Section 15 of the Act. The appeal was
dismissed by the State Commission on 1.3.1994. The revision filed before the
National Consumer Disputes Redressal Commission, New Delhi (hereinafter referred to as "the National
Commission") was dismissed vide the order impugned in this appeal.
Taking
us through the Employees Provident Fund Scheme, 1952, Shri N.N. Gowswamy,
Senior Advocate appearing for the appellant submitted that the said scheme
could not be held to be a 'service' within the meaning of Section 2(1)(o) and
the respondent No.l as 'consumer* within the meaning of Section 2(1)(d) of the
Act. It was urged that as the Provident Fund Commissioner was the custodian of
the funds passed to him and the contribution to the Scheme was not for
consideration, the Act was not applicable.
Consumer
under the Act has been defined as any person who;
"(i)
buys any goods for a consideration which has Deer) paid or promised or partly
paid and partly promised or under any system of the daferred payment and
includes user of such goods other than the person who buys such goods for
consideration paid or promised or partiy paid or partiy promised, or under any
system of deferred payment when such use is made with the approval of such
person, but does not include a person who obtains such goods for resale or for
any commercial purpose; or (i?) hires or avails of any services for a
consideration which has been paid or promised or partly p^d and partly
promised, or under any system of deferred payment and includes any beneficiary
of such services other than the person who hires or avails of the services for
consideration paid or promised, or partly paid and partly promised, or any system
of deferred payment, when such services are availed of with the approval of the
first mentioned person.
and
"service" means service of any description which Is made available to
potential users and includes the provision of facilities in connection with
banking, financing, insurance, transport processing, supply of electrical or
other energy, board or lodging or both, entertainment, amusement or the
purveying of news or other information, but doss not include the rendering of
any service free of charge or under 9 contract of personal service.
The
definition of consumer is wide and covers in its ambit not only the goods but
also services, bought or hired, for consideration.
Such
consideration be paid or promised or partly paid or partly promised under any
system of deferred payment and includes any beneficiary of such person other
than the person who hires the service for consideration. The Act is aimed to
protect the interests of a consumer as understood In commercial sense of the
term as 'purchaser of goods' and in larger sense 'user of services'. The
important characteristic of goods and service under the Act is that such goods
are supplied at a price to cover the costs which consequently result in profit
or income to the seller of goods or provider of service. The definition
excludes a person who obtains such goods for re-sale or for any commercial
purposes. However, the services hired for consideration even for commercial
purposes have not been excluded. A reference to the definition of 'service'
unambiguously indicates that the definition is not restrictive and includes
within its ambit such services as well which are specified therein. However,
services hired or availed, which are free of charge, or under a contract of
personal service, have specifically been excluded. This Court in Lucknow
Development Authority vs. M.K. Gtipta 1(1994) 1 SCO 243 referred to the
meanings of the word "consumer" in various dictionaries and found
that the Act has opted for no less voider definition than those mentioned in dictionaries.
Referring to the definition of the "consumer" the Court held:
"....It
is in two parts. The first deals with goods and the other with services. Both
parts first declare the meaning of goods and services by use of wide
expressions.
Their
ambit is further enlarged by use of inclusive clause.
For
instance, it is not only purchaser of goods or hire, of services but even those
who use the goods or who are beneficiaries of services with approval of the
person who purchased the goods or who hired services are included in it. The
legislature has taken precaution not only to define 'complaint', 'complainant',
'consumer' but even to mention in detail what would amount to unfair trade
practice by giving an elaborate definition in clause (r) and even to define
'defect' and 'deficiency' by clauses (f) and (g) for which a consumer can
approach the Commission. The Act thus aims to proisct the economic interest of
a consumer as understood in commercial sense as a purchaser of goods and in the
larger sense of user of services. The common characteristics of goods and
services are that they are supplied ai a price to cover the costs and general
profit or income for the seller of goods or provider of service. But the defect
in one and the deficiency in other may havs to be removed and compensated
differently. The former is normally, capable of being replaced and repaired
whereas the other may be required to be compensated by award of the just
equivalent of the value or damages for loss. 'Goods' have been defined by clause
(i) and have been assigned the same meaning as in the Sale of Goods Act, 1930
which reads as under:
"
'goods' means every kind of movable property other than actionable claims and
money; and includes stocks and shares, growing crops, grass and things attached
to or forming part of the land which are agreed to be severed before sale or
under the contract of sale." It was therefore urged that the applicability
of the Act having been confined to movebale goods only a complaint filed for
any defect in relation to immoveable goods such as a house or building or
allotment of site could not have been entertained by the Commission.
The
submission does not appear to be well founded. The respondents were aggrieved
either by delay in delivery of possession of house or use of substandard
material etc. and therefore they daimed deficiency in service rendered by the
appellants. Whether they were justified in their complaint and if such act or
omission could be held to be denial of service in the Act shall be examined presently
but the jurisdiction of the Commission could not be ousted (sic merely) because
even though it was service it related to immoveable property." and while
dealing with the meaning of the word "service" this Court held:
"The
main clause itself is very wide. It applies to any service made available to
potential users. Trie words 'any' and 'potential' are significant. Both are of
wide amplitude. The word 'any' dictionarily means 'one or some or all'. In
Black's Law Dictionary it is explained thus.
"word
'any' has a diversity of meaning and may be employed to indicate 'all' or
'every' as well as 'some' or 'one' and its meaning in a given statute depends
upon the context and the subject matter of the statute". The use of the
word 'an/ in the context it has been used in clause (o) indicates that it has
been used in wider sense extending from one to all. The other word 'potential'
is again very wide. In Oxford Dictionary it is defined as 'capable of coming
into being, possibility'. In Black's Law Dictionary it is defined as
"existing in possibility but not in act.
Naturally
and probably expected to come existence at some future time, though not
existing; for example, the future product of gain or trees already planted, or
the successive future instalments or payments on a contract or engagement
already made." In other words service which is not only extended to actual
users but those who are capable of using it are covered in the definition. The clause
is thus very wide and extends to and or ail actual or potential users." In
Morgan Stanley Mutual Fund v. Kartick Pas [(1994) 4 SCC 225 the definition of
"consumer' was explained as:
"The
consumer as the term implies is one who consumes.
As per
the definition, consumer is the one who purchases goods for private use or
consumption. The meaning of the word 'consumer' is broadly stated in the above
definition so as to include anyone who consumes goods or services at the end of
the chain of production. The comprehensive definition aims at covering every
man who pays money as the price or cost of goods and services. The consumer
deserves to get what he pays for in real quantity and true quality, in every
society, consumer remains the centre of gravity of ail business and industrial
activity. He needs protection from the manufacturer, producer, supplier,
wholesaler and retailer." i This Court again in S.P. Goel vs. Collector of
Stamps Delhi 1(1996) 1 SCC 573 considered, with approval, the meaning and scope
of the words "consumer", "service" and "deficiency in
service".
In State
of Orissa vs. Divisional Manager. LIC &
Another [(1996) 8 SCC 655 this Court held:
"The
only question is: whether the appellant is liable to pay compensation to Haribandhu
Setha under the Act and whether the claim Is maintainable. Section 2(1)(o) of the
Act defines 'services' as under: "services" means service of any
description which is made available to potential users and includes the
provision of facilities in connection with banking, financing, insurance,
transport, processing, supply of electrical or other energy, board or lodging
or both, housing construction, entertainment, amusement or the purveying a news
or other information, but does not include the rendering of any service free of
charge or under a contract of personal service." A reading of the
definition would indicate that the services contemplated thereunder alone are
the services within the meaning of the Act except excluded services mentioned thereunder.
The excluded services are "service free of charge or under a contract of
personal service".
The
concept of contract of personal service was considered in a recent Judgment of
this Court in Indian Medical Assn.vs. V.P. Shantha (1995) 6 SCC 651. This Court
had he'd therein that the expression "personal service" has a
well-known legal connotation and has been construed in the context of the right
to seek enforcement of such a contract under the Specific Relief Act, 1963. For
that purpose, a contract of personal service has been held to cover a civil
servant, the managing agents of a company and a professor in the University.
There can be a contract of personal service if there is relationship of master
and servant between a doctor and the availing of his services and in that event
the services rendered fay the doctor to hi's employer would be excluded from
the purview of the expression under section 2(1)(o) of the Act by virtue of the
exclusionary clause in the said definition. The other excluded service is
service rendered free of charge." The combined reading of the definitions
of "consumer" and "service" under the Act and looking at
the aims and object for which the Act was enacted, it is imperative that the
words "consumer" and "service" as denned under the Act
should be construed to comprehend consumer and services of commercial and trade
oriented nature only. Thus any person who is found to have hired services for
consideration shall be deemed to be a consumer notwithstanding that the
services were in connection with any goods or their user. Such services may be
for any connected commercial activity and may also relate to the services as
indicated in Section 2(1 )(o) of the Act.
The
Employees Provident Fund & Miscellaneous Provisions Act, 1952 (hereinafter
referred to as "the Provident Fund Act") has been enacted to provide
for the institution of provident fund, pension and deposit linked insurance
funds for employees working in factories and other establishments. Section 2(h)
defines "fund" to mean the provident fund established under the
Scheme. "Scheme" means the Employees Provident Fund Scheme framed
under Section 5 thereof which provides:
"5.
Employees' Provident Fund Scheme.(1 ) The Central Government may, by
notification in the Official Gazette, frame a scheme to be called the
Employees' Provident Fund Scheme for the establishment of provident funds under
this Act for employees or for any class of employees and specify the
establishments or class of establishments to which the said Scheme shall apply
and there shall be established, as soon 33 may be after the framing of the
scheme, a Fund in accordance with the provisions of this Act and the Scheme.
(IA)
The Fund shall vest in, and be administered by, the Central Board constituted
under section 5A.
(IB)
Subject to the provisions of this Act, a scheme framed under sub-section (1)
may provide for all or any of the matters specified in Schedule II.
(2) A
scheme framed under sub-section (1) may provide that any of its provisions
shall take effect either prospectively or retrospectively on such date as may
be specified in this behaif in the Scheme." Section 5(d) authorises the
Central Government to appoint a Central Provident Fund Commissioner who is the
Chief Executive Officer of the Central Board constituted under Section 5(a) or
the Provident Fund Act. Section 6 provides that the contributions to the Scheme
shall be made by the employer to the Fund at the rates specified therein from
the wages of the employee along with his own equal contribution" exercise
of the powers conferred by Section 5 of the Provident Fund Act, the Central Government
framed Employees Provident Fund Scheme. 1952. Para 30 of the Scheme provided:
"30.
Payment of contributions(1) The employer shall, in the first instance, pay both
the contribution payable by himself (in this Scheme referred to as the
employer's contribution) and also, on behalf of the member employed by him
directly or by or through a contractor, The contribution payable by such member
(in this Scheme referred to as the member's contribution).
(2) In
respect of employees employed by or through a contractor, the contractor shall
recover the contribution payable by such employee (in this Scheme referred to
as the member's contribution) and shall pay to the principal employer the
amount of member's contribution so deducted together with an equal amount of contribution
(in this scheme referred to as the employer's contribution) and also
administrative charges." (3) It shall be the responsibility of the
principal employer io pay both the contribution payable by himself in respect
of the employees directly employed by him and also in respect of the employees
employed by or through a contractor and also administrative charges.
ExplanationFor
the purposes of this paragraph the expression "administrative
charges" means such percentage of the pay (basic wages, dearness
allowance, retaining allowance, if any. and cash value of food concessions
admissible thereon) for the time being payable to the employees other than an
excluded employee, as the Central Government may in consultation with the
Central Board and having regard to the resources of .the Fund for meeting its
normal administrative expenses fix.
Obviously,
it appears that as the payment of contribution includes the payment of
administrative charges, the Scheme appears to be for consideration.
Mr.A.S.
Nambiar, Senior Advocate, who later appeared for the appellant submitted that
as no part of the administrative charges is payable by the employee, he
(employee) cannot be held to be a 'consumer' within the meaning of Section 2(1)(d)
of the Act. In support of such a submission an affidavit of Shri D.P. Sethi,
Assistant Provident Fund Commissioner has been Tiled ^wherein after
reproduction of para 55 of the scheme it is submitted:
'That
under para 30 of Employees' Provident Fund Scheme 1952, employer is liable to
pay both the contributions as well as administrative charges but under para 38
the employer is authorised to deduct the employee's share of contribution from
his wages, consequently leaving employer's share as well as administrative
charges payable by employer himself.
That
according to above scheme provisions it is the employer who is responsible to
pay administrative charges and not the member. Following the above provisions
of law the Central Board of Trustees is recovering administrative charges only
from employer and not from members." Such a submission which apparently
appears to be attractive, when analysed in depth, is without substance and, if
accepted, is likely to defeat the purpose and object of the Act as also the
scheme framed under it. The word 'consideration' has not been defined either
under the scheme or the Act. Black's Law Dictionary defines 'consideration'
thus: Consideration is not to be confounded with motive, consideration means
something which is of value in the eye of the law, moving from the plaintiff,
either or benefit of the plaintiff or of detriment to the defendant. In volume
17 of Corpus Juris Secundum (pp.420-421 and 425) the import of 'consideration'
has been described thus: Various definitions of consideration are to be found
in the textbooks and judicial opinions. A sufficient one, as stated in Corpus Juris
and which has been quoted and cited with approval is, 'a benefit to the party
promising, or a loss or detriment to the party to whom the promise is
made....". At common law every contract not under seal requires a
consideration to support it, that is, as shown in the definition above, some
benefit to the promisor, or some loss or detriment to the promisee...
There
is a sufficient consideration for a promise if there is any benefit to the promisor
or any detriment to the promisee. It may be laid down as a general rule. in
accordance with the definition given above, that there is a sufficient
consideration for a promise if there is any benefit to the promisor or any loss
or detriment to the promisee. The gist of the term 'consideration' and its
legal significance has been clearly summed up in Section 2(d) of the Contract
Act which defines 'consideration' thus:
When,
at the desire of the promisor, the promisee or any other person has done or
abstained from doing, or does or abstains from doing, or promise to door to
abstain from doing, something such actor abstinence or promise is called a
consideration for the promise. Webster's Third New Intenational Dictionary
(Unabridged) defines 'consideration' as: Something that is legally regarded as
the equivalent or return given or suffered by one for the act or promise of
another.
In
Sonia Bhatia v. State of U.P. & Ors. [1981 (2) SCC 585] it was held:
"From
a conspectus, therefore, of the definitions contained in the dictionaries and
the books regarding a gift or an adequate consideration, the inescapable
conclusion that follows is that 'consideration' means a reasonable equivalent
or other valuable benefit passed on by the promisor to the promisee or by the
transferor to the transferee." A perusal of the scheme unambiguously shows
that it is for consideration which is applicable to all those factories and
establishments covered under the Act and the scheme who are required to become
a member of the Fund under the scheme. Para 26 provides that every employee
employed in connection with any work of the factory or other estabishment to
which the scheme applies other than an excluded employee, shall be entitled and
required to become a member of the Fund from the date the said para comes into
force in such factory or the establishment. The scheme provides for the Board
of Trustees, the appointment, power of Commissioner and other staff of Board of
Trustees, membership of the Fund, contribution, etc. Chapter V deals with
contribution. The employer who is otherwise not a member of the scheme is
obliged to contribute under the scheme at the rates specified therein of the
basic wages, dearness allowance including cash value of any food concession and
repairing allowances, if any., payable to each employee to whom the scheme
applies. The contribution of the employee has to be equal to the contribution
payable by the employer in respect of such employee. The words 'in respect of
are significant as they indicate the liability of the employer to pay his part
of the contribution in consideration of the employee working with him. But for
the employment of the employee there is no obligation upon the employer to pay
his part of the contribution to the scheme. The administrative charges, as
required to be paid under para 30 of the scheme are also paid for consideration
of the employee being the member of the scheme. It is Immaterial as to whether
such charges are deducted actually from the wages of the employee or paid by
his employer in respect of the employee-member of the scheme working for such
employer. The administrative charges are further required to be determined
having regard to the basic wages, the dearness allowance, retaining allowance,
if any, and cash value of food concessions admissible thereon for the time
being payable to the employee. If the contention of the appellant is accepted ttiat
as no part of the administrative charges are deducted from the actual wages of
the employee, he cannot be deemed to be hiring the services of scheme, the
consequences of such an interpretation shall frustrate the object of the Act
and the scheme as in that event no obligation can be cast upon the employer to
pay contributions which are equal to the contribution payable by the employee
along with the administrative charges. The scheme has to be given such an
interpretation which serves the purpose intended to be achieved by it keeping
in view the objects of the Act. The admini»trative charges are in lieu of the
membership of the employee and for the services rendered under the scheme. It
cannot be held that even though the employee is the member of the scheme, yet
the employer would only be deemed to be a 'consumer' for having made payments
of the administrative charges. Admittedly, no service is rendered to the
employer under the scheme which is framed for the benefit of the employee under
Sections 5, 6 and 7 of the Act. Chapter VII provides for administration of the
Fund. Accounts and Audit. A separate account called "Central
Administration Account" for recording of administration expenses of the
Fund is required to be kept under Para 49. Para 52 deals with the investment of
monies belonging to employee's provident fund and provides that such monies be
deposited in the Reserve Bank or the State Bank of India or in such other
scheduled banks as may be approved by the Central Government from time to time
or be invested subject to the directions as the Central Government may from
time to time give in securities mentioned or referred to in Clauses (a) to (d)
of Section 20 of the Indian Trust Act., 1882. Ail expenses incurred in respect
of, and loss, if any. arising from, any investment shall be charged to the
Fund. Para 53 provides that the Fund not including the administration account
shall be except with the previous sanction of the Central Government be
expanded for any purpose other than the payment of the sums standing to the
credit of individual member of the Fund or to their nominees or heirs or legal
representatives in accordance with the provisions of the scheme. All expenses
relating to the administration of the Fund including those incurred on Regional
Committee are to be made from the Fund in terms of para 54 of the scheme.
Similarly all expenses of administration of Fund including the fees and
allowances of the trustees of the Central Board and salaries, leave and joining
time allowance. travelling and compensatory allowances, gratuities and
compassionate allowances, pensions, contributions to provident fund and other
benefit fund instituted for the officers and employees of the Central Board,
the cost of audit of the accounts, legal expenses and cost of all stationery
and forms incurred in respect of the Central Board, cost and ali e>i"-n^es
incurred in connection with the construction of office ana staff quarters shall
be met from the Administration Account of the Fund. The member of the scheme is
entitled oniy to the interest determined as per para 60. Chapter VIII deals
with nominations, payments and withdrawals from the Fund.
We
cannot accept the argument that the Regional Provident Fund Commissioner, being
Central Government, cannot be held to be rendering 'service' within the meaning
and scheme of the Act. The Regional Provident Fund Commissioner, under the Act
and the scheme discharges statutory functions for running the scheme. It has
not, in any way, been delegated with the sovereign powers of the State so as to
hold it as a Central Government, being not the authority rendering the
'service' under the Act. The Commissioner is a separate and distinct entity, it
cannot legally claim that the facilities provided by the 'scheme' were not
"service" or that the benefits under the scheme being provided were
free of charge. The definition of "consumer" under the Act includes
not only the person who hires the 'services' for consideration but also the
beneficiary, for whose benefit such services are hired.
Even
if it is held that administrative charges are paid by the Central Government
and no pad of it is paid by the employee, the services of the Provident Fund
Commissioner in running the scheme shall be deemed to hsve been availed of for
consideration by the Central Government for the benefit of employees who wouid
be treated as beneficiary within the meaning of that word used in the
definition of consumer.
This
Court in M/s.Sprinq Meadown Hospital & Anr. vs. Harjol Ahluwalia through
K.S. Ahluwalia & Anr. [JT 1998 (2) SC 620, to which one of us (Saghir Ahmad.J)
was a party has already held that the "consumer" means a person who
hires or avails of any services and includes any beneficiary of such service
other than the person who hires or avails the services. The Act gives
comprehensive definition of 'consumer' who is the principal beneficiary of the
legislation but at the same time in view of the comprehensive definition of the
term "consumer" even a member of the family of such 'consumer' was
held to be having the status of 'consumer'.
In an
action by any such member of the family of beneficiary of the service it will
not be open for a trader to take a stand that there was no privity of contract.
In this regard this Court specifically held:
"In
the present case. we are concerned with clause (ii) of Section 2(1)(d). In the
said clause a consumer would mean a person who hires or avails of any services
and includes any beneficiary of such services other than the person who hires
or avails of the services. When a young child is taken to a hospital by his
parents and the child is treated by the doctor, the parents would come within
the definition of consumer having hired the services and the young child would
also become a consumer under the inclusive definition being a beneficiary of
such services. The definition clause being wide enough to include not only the
person who hires the services but also the beneficiary of such- services which
beneficiary is other than the person who hires the services, the conclusion is
irresistible that both the parents of the child as well as the child would be
consumer within the meaning of Section 2(1 )(d)(ii) of the Act and as such can
claim compensation under the Act" A perusal of the scheme clearly and
unambiguously indicate that it is a 'service' within the meaning of Section
2(1)(o) and the member a 'consumer' within the meaning of Section 2(1)(d) of
the Act. It is.. therefore, without any substance to urge that the services
under the scheme are rendered free of charge and, therefore, the scheme is not
a 'service' under the Act.
Both
the State as well as National Commission have dealt with this aspect in detail
and rightly came to the conclusion that the Act was applicable in the case of
the scheme on the ground that its member was a ' consumer' under Section
2(1)(d) and the scheme was a 'service' under Section (1)(o). No ground is,
therefore, made out for interference with the impugned order. The appeal is
accordingly dismissed, as no one appeared on behalf of the respondent, without
any order as to costs.
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