- 1 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF JULY, 2025 BEFORE THE HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE WRIT PETITION NO. 19191 OF 2012 (L-PF) BETWEEN: MANGALORE ELECTRICITY SUPPLY CO. LTD., REP. BY THE EXECUTIVE ENGINEER (EI) O & M DIVISION, MARUTHI VEETHIKA, UDUPI - 576101. …PETITIONER (BY SRI VASUKI K N, ADVOCATE SRI B C PRABHAKAR, ADVOCATE) AND: THE ASST P F COMMISSIONER/ O.I.C SUB REGIONAL OFFICER, EMPLOYEES PROVIDENT FUND ORGANIZATION, 2ND & 3RD FLOOR, TULUNADU TOWERS, COURT ROAD, UDUPI-576101. …RESPONDENT (BY SMT NANDITA HALDIPUR, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE RECORDS LEADING TO THE PASSING OF THE ORDER DTD.3.8.11 BY THE RESPONDENT VIDE ANNEX-E AND ALSO ISSUE OF WRIT OF CERTIORARI AND ALSO ISSUANCE OF SHOW CAUSE NOTICE DTD.26.4.12 AND ETC. THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: Digitally signed by BELUR RANGADHAMA NANDINI Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 CORAM: HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE ORAL ORDER This petition is filed assailing the order dated 03.08.2011 issued by the respondent rejecting petitioner's application seeking permission to deduct provident fund contribution of the employees. 2. The petitioner has also questioned the notice dated 26.04.2012 alleging violation of paragraph No.32 of the Employees Provident Funds Scheme, 1952 (for short 'Scheme, 1952'). 3. Learned counsel for the petitioner submits that between 02.06.2002 to 01.05.2008, the petitioner company engaged services of 182 temporary gangmen to meet the urgent workload. On 07.06.2010, respondent acting under Section 7A of the Employees Provident Fund and Miscellaneous Act, 1952 (for short 'Act of 1952') determined the provident fund dues in respect of said 182 gangmen amounting to Rs.85,64,155/-. - 3 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 4. The petitioner claims that though the said order is contrary to the law, the petitioner accepted the order and remitted Rs.85,64,155/- to the respondent on 21.07.2010. This payment is not in dispute. 5. Later, on 14.09.2010, petitioner sought permission from the provident fund department to deduct the provident fund contribution from the employees in 36 equal instalments commencing from September, 2011. However, the permission is not granted and application is rejected vide impugned order dated 03.08.2011 at Annexure-E and subsequently on 26.04.2012 vide Annexure-F show cause notice is issued, alleging violation of paragraph No.32 of Scheme, 1952. 6. Learned counsel for the petitioner would submit that the petitioner was a Board established under Section 5 of the Electricity (Supply) Act, 1948. And it is a Corporation under the State Government under Karnataka Electricity Reforms Act, 1999. - 4 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 7. It is submitted that the employees of the petitioner are entitled to pension benefits under the Employees Service Regulations and that being the position, and Section 16(b) of Act of 1952 does not apply to the petitioner Company. 8. Under Regulations 182 of the Service Regulation applicable to the petitioner, there is a provision to pay pension to the employees on temporary roll. In view of the Regulations, there was no obligation on the part of the employer to remit towards provident fund in respect of the said 182 employees. Hence, there could not have been an order to pay the amount under the Act of 1952. However, the petitioner has honoured the order passed by the respondent and remitted Rs.85,64,155/- and subsequently, interest on the said amount is also paid as directed in the order dated 02.01.2012 marked at Annexure-B. - 5 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 9. Learned counsel for the petitioner would submit that the petitioner being the public utility service controlled by the State Government wanted to recover the employees contribution which is required to be paid under the Act of 1952 and sought permission from the respondent to recover the dues. The permission is refused on the premise that such an act is impermissible under paragraph No.32 of the Scheme, 1952. 10. Learned counsel for the petitioner would submit that paragraph No.32 of the Scheme, 1952 is inapplicable in as much as the said claim applies only to the members of the Provident Fund Scheme and the employees under consideration who were earlier temporary employees were regularised with effect from 01.05.2008. Once said employees are regularised as the employees of the petitioner, such employees are not governed by the provisions of Act of 1952 and the Scheme, 1952. There is a separate Regulation governing provident fund of the - 6 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 petitioner's employees and the petitioner's employees are entitled to pension. 11. Since the said employees ceased to be the members of the provident fund under the Act of 1952, paragraph No.32 has no application and in fact, it was not necessary for the petitioner to seek permission to recover employees' contribution. 12. It is further submitted that the employees' contribution is already recovered and none of the employees has raised any objection objecting to the recovery made by the petitioner. Under these circumstances, learned counsel for the petitioner would submit that the impugned order at Annexure-E is unsustainable and so also the show cause notice at Annexure-F is without jurisdiction as the Scheme, 1952 itself is not applicable to the petitioner. 13. Learned counsel appearing for the respondent on the other hand would submit that the Scheme, 1952 - 7 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 does not enable the employer to deduct or to recover the amount paid to the member beyond the time stipulated in the said Scheme. Referring to paragraph No.32, it is submitted that amount if any, which ought to have been deducted if not deducted in that month, cannot be deducted beyond that particular month. Thus, it is that the amount which is now recovered by the petitioner was the amount required to be paid by the employees between the period 2002-08 and the recovery is made in the year 2011. Thus, the Scheme, 1952 is violated, is the submission. 14. It is further submitted that the Union of the employees has lodged a complaint complaining about the deduction made by the petitioner and thus would contend that the petition is not maintainable without Union being party to the proceeding. 15. Learned counsel for the petitioner by way of reply would submit that the Union moved an application to come on record and this Court vide order dated - 8 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 10.11.2014 has rejected the application holding that the Union is not a necessary party to the proceeding. It is submitted that the Union has accepted the said order and no workman who is said to have been affected by recovery has raised a contention would whatsoever. Thus, he would urge that the petitioner is entitled to the relief claimed. 16. This Court has considered the contentions raised at the bar and perused the record. 17. It is not in dispute that the amount which is recovered by the petitioner in the year 2011 was pertaining to the contribution made between the year 2002-2008. When the amount was contributed in the said period, the employees were temporary employees and were covered by the Scheme, 1952. However, in the year 2008, their services were regularised. Afterwards, they are covered under the Regulations of the petitioner. Thus, the employees ceased to be the members of the Scheme, 1952. The recovery was made after they ceased to be the members. In other words, the recovery was made after - 9 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 the Scheme ceased to be applicable to the employees of the petitioner. 18. It is no doubt true that the proviso to Paragraph No.32 provides that recovery cannot be made after the period specified in the said provision. However, what is relevant to notice is that the amount was recovered from the employees after they ceased to be the members of the Scheme. The employees have not raised any objection. It is further submitted that the employees had withdrawn the amount from the Provident Fund account after the provisions of the Act of 1952 and the Scheme, 1952 became inapplicable to them as they were governed by the Regulations which provided for pension. Thus, the amount in the account of the employees was their exclusive amount though at one point of time it was lying in the Provident Fund account. The amount when it was recovered was not under the purview of Scheme, 1952 as the Scheme had ceased to be applicable to such employees. - 10 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 19. That being the position, the recovery initiated is entirely between the employer and employee. The respondent authority has no say over it. 20. Employer claims to have recovered the amount in the year 2011 and admittedly employees were not the members of the Scheme, 1952. Nothing is placed on record to show that the employees raised protest except by producing copy of the letter addressed by the Union. It is also an admitted fact that Union's application to come on record in this proceeding is rejected by this Court which has attained finality. 21. This being the position, this Court is of the view that in the year 2011, the Scheme was not applicable to the petitioner or the employees from whom the amount is recovered. 22. Under these circumstances, the impugned notice demanding action on the premise that the petitioner - 11 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 has violated the provisions of the Act of 1952 is unsustainable. 23. It is also required to be noticed that the petitioner was not required to seek permission to deduct the amount as the Scheme, 1952 was not applicable when the application was filed seeking leave of the authority to recover the amount. The application was not maintainable for the simple reason that the Scheme itself was not applicable to the petitioner. Infact the respondent - authority should have issued an endorsement stating that the Scheme, 1952 is not applicable. This being the position, this Court is of the view that the impugned orders have to be set aside. 24. Hence, the following: ORDER (i) The Writ Petition is allowed. (ii) The impugned order dated 03.08.2011 at Annexure-E and show cause notice dated - 12 - HC-KAR NC: 2025:KHC:24332 WP No. 19191 of 2012 26.04.2012 marked at Annexure-F are quashed. (iii) It is made clear that the employees from whom the amount is recovered are not before this Court. If at all such employees have raised any dispute relating to the recovery made, or if such employees are contemplating a dispute challenging recovery, same shall be considered in accordance with law without being influenced by any of the observations made in this Petition as the employees are not parties to these proceeding. Sd/- (ANANT RAMANATH HEGDE) JUDGE CHS/GVP List No.: 1 Sl No.: 33