Apex Court Clarifies: EPF Act Applicable to Factories Outside Schedule I

Introduction:

In a recent ruling, the Supreme Court provided crucial clarity on the applicability of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act) to factories not specified in Schedule I. The court concluded that the Central Government has the authority to issue notifications under clause (b) of sub-Section (3) of Section 1 for factories engaged in industries not mentioned in Schedule I.

Decoding the Legal Framework:

The court, consisting of Justice Abhay S Oka and Justice Sanjay Karol, emphasized the distinction between clause (a) and clause (b) of sub-Section (3) of Section 1. While clause (a) pertains to factories in industries specified in Schedule I, clause (b) extends its coverage to all other establishments not covered by clause (a). The court referred to the constitutional bench judgment in Mohmedalli V. Union of India, highlighting the EPF Act’s status as a social welfare legislation.

Purposive Interpretation for Social Justice:

The court stressed the need for a purposive interpretation, considering the EPF Act’s nature as a measure of social justice. Rejecting the argument that factories not covered by industries in Schedule I are exempt from clause (b), the court asserted that such establishments fall within its ambit.

Historical Context and Applicability:

Referring to the 1962 notification by the Central Government, the court addressed the case of an appellant engaged in the manufacturing and selling of umbrellas. The Regional Provident Fund Commissioner claimed the EPF Act’s applicability to the appellant’s commercial establishment. The appellant contested, arguing that a notification under clause (b) cannot cover a factory in an industry not listed in Schedule I. The court, however, dismissed this contention, ruling that the appellant’s business fell under ‘trading and commercial establishments’ as per the 1962 notification.

Conclusion:

The Supreme Court’s ruling clarifies the nuanced application of the EPF Act, ensuring that factories outside Schedule I can be brought under its purview through appropriate notifications. The decision, grounded in a commitment to social justice, highlights the importance of a purposive interpretation in navigating the complexities of employment legislation.

Written — Athi Venkatesh