Report No. 137
4.13. Exempted organisations.-
There are two types of exempted organisations. One class of exempted organisation is the organisation to which though provisions of Act of 1952 are applicable, the Scheme framed thereunder is not applicable. Such organisations are permitted to frame their own Schemes. Such types of organisations are exempted under section 17 of the Act of 1952.
Though such exempted organisations are free to frame their own schemes and such schemes are normally framed on the lines of the Scheme of 1952 framed under the Act, there is no specific provision in the Act requiring such exempted organisations to get the scheme framed by them approved by the Central Provident Fund Commissioner with an eye on incorporating the safeguards provided by the Act and the Scheme therein.
The only requirement under clause (b) of sub-section (1) of section 17 of the Act of 1952 is that the benefits allowed to the employees of the exempted organisations should not be less favourable than the benefits being allowed to the employees to whom the Scheme of 1952 is applicable. The Law Commission feels that a specific provision should be incorporated in the Act of 1952 making it obligatory for the organisations exempted from the operation of the Scheme of 1952 under section 17 of the Act to obtain specific approval of their schemes from the Regional Provident Fund Commissioner concerned from the aforesaid stand point.
Another category of exempted organisations are those to whom the provisions of the Act of 1952 are not applicable either by virtue of section 1(3) or section 16 of the Act. To quote as an illustration, Entry No. 12 of Appendix 1 to the Act of 1952 provides that the provisions of the Act shall be applicable to all trading and commercial establishments engaged in purchase, sale or storage of any goods including establishments of exporters, importers, advertisers, commission agents and brokers and commodity and stock exchanges but not including bank or Warehouses established under any Central or State Act.
One of such organisations is the Central Warehousing Corporation. Since this Corporation is not governed by the Act of 1952 and the Scheme framed thereunder, it has framed its own regulations Shown as "The Central Warehousing Corporation Employees Provident Fund Regulations, 1962". Though primarily the provisions contained in these Regulations are similar to the provisions contained in the Scheme of 1952, there is a major departure in so far as the question of payment of interest on Provident Fund accumulations is concerned.
Under paragraph 60 of the Scheme of 1952, the interest on provident fund accumulation is payable up to the end of the month preceding the date on which the final payment is authorised irrespective of the date of the receipt of the claim from the claimant concerned. In other words, even if it has taken 10 years in the settlement of the claim, the claimant is entitled to and is paid, the interest for the period for which the case has remained unsettled.
On the other hand, Regulation No. 14 of the Central Warehousing Regulations, 1962 provides that inter t on all sums standing in the books of the Fund to the credit of a subscriber shall cease on the day on which he leaves the service of the Corporation or on the date of his death, whichever is earlier. Under the Regulations governing the employees of the Central Warehousing Corporation, if the amount of the provident fund accumulation has remained unpaid pending the final settlement of the claim, the employer or may Trust will not be liable to pay any interest.
The interest which the employer may earn on the amount belonging to the subscriber will go to the employer himself which will result in unjust enrichment of the employer. If such a provision is allowed to remain, the possibility of employer intentionally delaying the payment to the claimant and thereby earning interest over the money which does not belong to him cannot be ruled out.
The Commission is of the firm opinion that the provisions similar to the one contained in Regulation 14 of the Central Warehousing Corporation Employees' Provident Fund Regulation, 1962 virtually authorising denial of interest from the date of leaving the service of Corporation or death, whichever is earlier, till the end of the month preceding date of final payment should be deleted forthwith and substituted by a provision similar to the one contained in paragraph 60(2)(i) of the Scheme of 1952.
Further, Regulation No. 15(2) of the Central Warehousing Corporation Employees Provident Fund Regulation 1962 provides that subject to the directions of Executive Committee, the whole or any part of the employers' contribution together with interest credited in respect thereof may be deducted from the total amount standing to the credit of a subscriber.
Such deduction can be made if the employee has been dismissed or removed from employment in pursuance of disciplinary proceedings taken against him or if the employee has voluntarily left his employment within 5 years of his entry into service otherwise than on account of ill-health or other unavoidable causes. The corresponding provision contained in the Act and the Scheme has already been deleted recently. Regulation 15(2) must also accordingly be repealed or deleted.
Regulation 15(3) further provides that the employees' share together with interest shall not be payable except with the approval of the Managing Director. Both these provisions are, on the face of it, opposed to the policy under which the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 and the Scheme framed under it came to be enacted. Section 10 of the Act clearly provides that the Provident Fund accumulations shall not be subject to any deductions or attachment, etc. Moreover, neither any guidelines nor any limit has been prescribed for the deduction of the Employees' share by the Executive Committee.
The matter rests entirely in the discretion of the Executive Committee. Such unlimited and unguided discretion cannot be said to be proper and legal. The provisions contained in Regulations 15(2) and 15(3) of the Central Warehousing Corporation Employees' Provident Fund Regulations, 1962 and such similar provisions contained in the Regulations, pertaining to other organisations to which the provisions of the Act of 1952 are not applicable are required to be deleted so as to bring the employees of such organisations at par with the employees of other organisations.