Emphasising that the purpose of mandating an employee to be a member of a fund/scheme under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, is to provide social security, the Delhi High Court ruled that the classification between the foreign employee and Indian employee based on capping in the pay drawn for applicability of the scheme of 1952 Act, has some intelligible differentia, to satisfy the test of any State action conforming with Article 14 of the Constitution of India.
The ruling came in respect of the category of employees who are of foreign origin and with whom India does not have a Social Security Agreement (SSA) on a reciprocal basis or with whom India has not entered into a bilateral comprehensive economic agreement.
The Court explained that Constitutional protection as enshrined in Article 14 of the Constitution applies to foreign nationals as well, for the reason that the phrase occurring in Article 14 is not “the citizen”; rather, it is “any person”. Thus, even the foreign nationals enjoy under Article 14 of the Constitution of India the equality before law and equal protection of laws within the territory of India. However, that right of equality is subject to reasonable classification, which is permissible provided such classification has an intelligible differentia.
The Division Bench comprising the Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela observed that mandating the foreign employees to become member of the provident fund scheme, irrespective of the monthly pay they draw and requiring only those Indian employees to become member of the fund/scheme who are drawing pay below Rs.15,000/- a month, has a rationale based on the economic duress which is caused to the Indian employees, if they are mandated to contribute to the fund/scheme irrespective of quantum of salary they draw, which is absent in case of the foreign employees for the reason that they come to India for employment for shorter period of 2 to 5 years.
The Bench emphasised that the modification in the Provident Fund Scheme has been made to implement India’s international treaty obligations, and entering into an international treaty is a sovereign prerogative; Therefore, if such a provision is struck down, that will amount to taking away the legal basis for entering into and applying the SSA.
Accordingly, the Bench upheld the Notifications and the Circular/ Letters issued by the EPFO for the purposes of ensuring compliance of the PF Scheme in respect of ‘International Workers’, and dismissed the petition filed by Spice Jet Limited.
Briefly, by way of the Notification dated October 01, 2008, issued under Section 5 read with Section 7(1) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, the Central Government has included ‘International Workers’ in the scheme, subject to certain modifications. On account of this modification, every ‘International Worker’ of an Indian establishment to which the Scheme applies, other than excluded employees, is entitled to become a member of the Fund with effect from the date of Notification.
The petitioner, which is an airline service provider, challenged this modification as well as the letter issued by the Employees’ Provident Fund Organisation (EPFO) directing the petitioner to deposit the Provident Fund and other dues in respect of ‘International Workers’. The petitioner also challenges the summons issued by EPFO under Section 7A of the 1952 Act, requiring the petitioner to produce all the relevant records for the determination of PF and related dues in respect of ‘International Workers’ employed by it.
Appearances:
Senior Advocate Sudhir Nandrajog, along with Advocates Atul Sharma, Abhilasha Sharma, Dipan Sethi, Rishi Awasthi, Amit Awasthi, and Piyush Vatsa, for the Petitioners
Advocates Manisha Agrawal Narain, Nipun Jain, Ananya Arora, Siddharth, Amit Kumar, Prateek Goyal, Harshit Manwani, Vikram Jetly, and Shreya Jetly, for the Respondents
