whether the definition of “excluded employees” in Paragraph 2(f) as also the stipulation in Paragraphs 26 and 69 of the Scheme of 1952 refer to any provident fund or only to the Fund under the Scheme of 1952? = if a person is member of the Fund created thereunder i.e., under the Scheme of 1952 and withdraws all his accumulations therein, he may not be obliged to be a member of the same Fund under the Scheme of 1952 over again and could be treated as an “excluded employees”. However, such is not the relaxation granted in relation to an employee who was earlier a member of any other Fund but later on joins such an establishment where he would be entitled to membership of the Fund created under the Scheme of 1952. This framework of the provisions and stipulations appears to be best serving the interest of employees, while providing them with continued financial security.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7698 OF 2009
MODERN TRANSPORTATION CONSULTATION
SERVICES PVT. LTD. & ANR. ….. APPELLANT(S)
VS.
CENTRAL PROVIDENT FUND COMMISSIONER
EMPLOYEES PROVIDENT FUND
ORGANISATION & ORS. ….. RESPONDENT(S)
JUDGMENT
Dinesh Maheshwari, J.

  1. In this appeal by special leave, the appellants (writ petitioners) have called
    in question the judgment and order dated 07.05.2008 in FMA No. 537 of 2007
    whereby, the Division Bench of High Court at Calcutta has reversed the order
    dated 07.04.2006, as passed by the learned Single Judge in W.P. No. 2982(W) of
    2005.
    1.1. By the aforesaid order dated 07.04.2006, the learned Single Judge of High
    Court allowed the writ petition filed by the appellants while upholding their
    contentions that the employees of Railways, who had withdrawn full amount of
    1
    provident fund while retiring and who were engaged by them on lump sum
    honorarium basis, should be treated as “excluded employees” for the purpose of
    the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
    (hereinafter referred to as ‘the Act’/’the Act of 1952′) and the Employees’
    Provident Funds Scheme, 1952 (hereinafter referred to as ‘the Scheme of 1952’).
    However, in the Letters Patent appeal preferred by the Central Provident Fund
    Commissioner and the Regional Provident Fund Commissioner, the Division
    Bench of High Court totally disagreed with the learned Single Judge; and
    dismissed the writ petition while holding that the said employees, who retired
    after serving an exempted employer, would not fall within the category of
    excluded employees on re-employment and would be covered by the Act and the
    Scheme of 1952.
  2. The basic question arising for determination in this appeal is as to whether
    the retired employees of Railways, who had withdrawn all the superannuation
    benefits, including full amount of accumulations in their provident fund accounts,
    are to be treated as “excluded employees” in terms of Paragraph 2(f) of the
    Scheme of 1952? If to be treated as “excluded employees”, the said retired
    employees of Railways, on being re-employed by the appellants, may not be
    required to join the Fund created under the said Scheme of 1952 and
    consequently, the appellants may not be obliged to make any contribution in that
    regard.
    2
  3. The relevant factual aspects leading to the question aforesaid are not of
    much controversy and could be briefly summarised as follows:
    3.1. The appellant No. 1, a Private Limited Company, had been engaged in
    manning the Captive Railway System of the respondent No. 4-Damodar Valley
    Corporation (‘DVC’). The appellant No. 2 is said to be a Director of the appellant
    No. 1-company. The appellants would submit that their only connection with DVC
    had been a contract to supply the personnel for manning the cabins and gates on
    the railway-road; and they were receiving the remuneration for supplying the
    aforesaid personnel, who were retired employees of the Indian Railways and
    were engaged on a lump sum honorarium basis.
    3.2. By his letter dated 18.02.2002, the Assistant Provident Fund
    Commissioner Circle-IV, Calcutta informed the appellant-company that the
    number of employees of its establishment being twenty-eight in the month of
    May, 1999, the establishment came within the purview of the Act of 1952 with
    effect from 01.05.1999. In reply, the Director of the appellant-company stated in
    his letter dated 05.03.2002 that all the persons engaged by the company, except
    two of them, were the retired Railway employees above 58 years of age; that all
    of them were working only on retainer basis; and that they were not covered
    under the Employees’ Provident Fund Scheme. The said Assistant Provident
    Fund Commissioner, in his letter dated 03.05.2002, refuted the contentions of the
    appellants while referring to Paragraph 26 of the Scheme of 1952 and while
    3
    asserting, inter alia, that on and from 01.11.1990, an employee is eligible for
    enrolment as a member of the Scheme of 1952 from the date of joining an
    establishment covered under the Act of 1952; that there was no age bar for an
    employee to become a member of the Scheme of 1952; and that the employees
    in question were not excluded employees in terms of the Scheme of 1952.
    3.3. It appears that the appellant-company applied for exemption under Section
    17 of the Act and Paragraph 27 of the Scheme of 1952 on the ground that the
    persons concerned were retired Railway employees but then, no decision was
    taken on such representations. On the other hand, by yet another letter dated
    22.05.2002, the appellant-company elaborated on its contentions that the
    employees in question, being retired employees of Railways, did not come within
    the purview of the Act of 1952 and were to be treated as “excluded employees”
    under Paragraph 26 of the Scheme of 1952. It was stated that these employees,
    whilst in the service of Railways, were not covered under the Scheme of 1952
    but were covered under the General Provident Fund (‘GPF’) Scheme and had
    withdrawn all the superannuation benefits including Provident Fund (‘PF’) and
    pension and hence, they were not covered under the Act of 1952. It was also
    claimed that these employees were in receipt of more favourable benefits than
    those available under the Scheme of 1952 and had expressed their unwillingness
    to become the members of the Scheme of 1952. However, the authorities related
    with the Employees’ Provident Fund Organisation (the contesting respondents
    4
    herein) maintained that the employees of an establishment were eligible for
    enrolment as members of the Scheme of 1952 irrespective of age; and the
    employees of the appellant company were not “excluded employees”, as defined
    in the Scheme of 1952.
    3.4. The appellant-company having failed to remit the requisite contribution in
    relation to the employees concerned, the competent authority under the Act of
    1952 commenced proceedings under Section 7A thereof, for determination of the
    money due from the appellants. By its order dated 31.12.2004, the competent
    authority, after having heard the appellants, determined the amount payable by
    the appellant-company under various heads while holding, inter alia, that the
    provisions of the Act of 1952 were not repugnant to the GPF Scheme; that a
    person was entitled to draw double or multiple pension/s; and that the retirement
    of the employees from Railways would not take them within the definition of
    “excluded employees”. Aggrieved, the appellants preferred the writ petition
    before the High Court at Calcutta [W.P. No. 2982(W) of 2005].
  4. In the impugned order dated 07.04.2006, the learned Single Judge of High
    Court, though held that the Act was applicable to the establishment of appellants
    but, thereafter, concluded that on superannuation, the retired employees of the
    Railways would fall within the definition of “excluded employees”. The learned
    Single Judge observed that an employee, who had withdrawn full amount of his
    accumulation in the fund, on re-employment with any establishment not
    5
    exempted under Section 17 of the Act, would not be again treated as an
    employee to be covered under the Act. The learned Single Judge further
    observed that accepting the submissions of the authorities would create a
    situation where an employee, after being employed in any establishment and
    working for some time, may voluntarily retire from service and join another
    establishment and keep on doing so successively and get the benefit of various
    provisions of the Act of 1952. According to the learned Single Judge, even
    though the Act of 1952 is a piece of social benefit legislation, and its provisions
    are intended to protect the employees, who are considered to be the weaker
    section of society, yet, the enactment is not intended to create a largesse in
    favour of the employees at the cost of the employer. In the opinion of learned
    Single Judge, the retired employees of Railways cannot be compelled to become
    members of the Fund and else, the object and purpose of the expression
    “excluded employees” in the Scheme of 1952 would be rendered nugatory. The
    learned Single Judge also observed that when an employee earning more than
    Rs. 6,500/- was treated as an “excluded employee” because of the scale of pay
    as per Paragraph 2(f)(ii) of the Scheme of 1952, there was no reason as to why
    Paragraph 2(f)(i) would not apply in case of an employee who had withdrawn the
    full amount of his accumulations. The learned Single Judge further observed that
    in order to decide as to whether the provisions of the Act do not apply in respect
    of some of the employees, the provisions contained in Paragraph 2(f) of the
    Scheme of 1952 must be strictly construed; and having taken the benefit of one
    6
    Scheme, the employees cannot compel the employer to comply with the
    provisions of the Act. With these observations, the learned Single Judge allowed
    the writ petition and remanded the matter to the authorities for re-determination
    of the amount of provident fund payable by the appellants, after treating the
    retired employees as “excluded employees”, but after taking into account those
    employees who were seeking to be included under the Act voluntarily.
  5. Aggrieved by the order so passed by the learned Single Judge, the Central
    Provident Fund Commissioner and the Regional Provident Fund Commissioner
    preferred the Letters Patent appeal that has been considered and allowed by the
    Division Bench of High Court at Calcutta by way of the impugned judgment and
    order dated 07.05.2008.
    5.1. The Division Bench took note of the meaning assigned to the expressions
    “Fund” and “Scheme” in the Act of 1952 as also the definition of “excluded
    employee” in Paragraph 2(f) of the Scheme of 1952 and rejected the contentions
    of the writ petitioners that the employees in question were to be treated as
    excluded employees while observing as under:
    “We are unable to accept the submission of Mr. Sengupta that the
    receipt of GPF and the Pension by the retired railway employees would
    be as if full payment has been received under paragraph 69(1). There
    can be no addition to the term “Fund” as defined under Section 2(h). It is
    also not possible to accept that since the Railway Employees have
    retired on superannuation and are beyond the age of 55 years, they
    would be on par with the “excluded employees”. There is no maximum
    age limit prescribed in any of the provisions of the Act or the 1952
    Scheme for an employee to become a member of the Fund or the
    Scheme. It is claimed that the term “Scheme” refers only to the
    7
    Employees Provident Fund Scheme framed under Section 5. The term
    “excluded employee” therefore has to be co-related to the employee who
    was a member of the “fund” as defined under Section 2(h) of the Act.
    Such an employee would be an “excluded employee” when the full
    amount has been withdrawn by him on retirement from service after
    attaining the age of 55 years i.e., in terms of Paragraph 69(1)(a). The
    provision being crystal clear does not admit of any other interpretation.
    Paragraph 69(1)(c) deals with an employee who withdraws the full
    amount standing to his credit immediately after migration from India for
    permanent settlement abroad and for taking employment abroad.
    In our opinion, there can be no dissections of these provisions as
    proposed by Mr. Sengupta. Under paragraph 2(f)(i) a retired employee
    would be an excluded employee. Under Paragraph 2(f)(ii) an employee
    who is otherwise entitled to become a Member of the fund becomes an
    excluded employee as he is earning beyond the stipulated minimum that
    is required for an employee to become a Member of the Scheme. This
    provision clearly demonstrates the underlying principle of the Provident
    Fund Act is to provide social security for those employees who otherwise
    would not be in a position to save any money from their wages.
    Paragraph 2(f)(iv) again provides that an apprentice shall be an excluded
    employee till he becomes a fullfledged employee. There is a qualitative
    difference between Paragraph 2(f)(i) on the one hand and Paragraph 2(f)
    (ii) & (iv) on the other. Paragraph 2(f) 1(i) provides exclusion only to the
    employees who have already received retirement benefits. On the other
    hand, under Clause 2(f)(ii) and 2(f)(iv) an employee may be an excluded
    employee at one point and may not be at a subsequent point. But benefit
    of these provisions cannot be extended to any employees who are not
    erstwhile members of a fund administered by the Central Board, under
    Section 5A of the Act
    The ‘Fund’ created by the exempted establishment under Section
    17(1)(a) cannot be equated with the Fund which is established by the
    Central Board under Section 5(1). Nor can it be added to the definition of
    Fund under Section 2(h) of the Act. It is for this reason that the
    appropriate Government can only exempt an establishment from the
    operation of the scheme under Section 17(1) upon forming an opinion
    that the employees of such an establishment enjoyed benefits which are
    not less favourable to the employee than the benefits available under the
    Act or any Scheme made under the Act. In fact, the exemption can only
    be granted on consultation with the Central Board. This provision is
    made only to give supervisory control to the Appropriate Government
    over individual employers seeking exemption. But this provision cannot
    be put on the same pedestal as Section 5(1) of the Act. It is admitted
    position that employees of the Railways are not members of the 1952
    Scheme. Therefore, these retired employees cannot be treated as
    excluded employees covered under Paragraphs 69(1)(a) and 26 of the
    8
    1952 Scheme. There is a clear distinction between a fund which is
    created by the Central Government and is administered by the Central
    Board under Section 5(1)(a) and a fund created by a private employer,
    exempted under Section 17(1) and administered by Board of Trustees
    under Section 17(1A) and (b). There can be no intermingling of the two
    provisions. ”
    5.2. In view of the above, the Division Bench concluded on the matter in the
    following:
    “In view of the above, we find that the judgment of the learned
    Single Judge is not sustainable in law. We are unable to hold that retired
    employees of the Railways can be treated as excluded employees. We
    are also unable to hold that, not including the retired employees in the
    category of excluded employees would in any manner contravene the
    provisions of the Act or the Scheme. We are unable to accept that
    bringing the Railway employees within the purview of the Act and the
    Scheme would result in unjust enrichment of the retired employees. We
    are of the opinion that an employee who retires after serving an
    exempted employer would not fall within the category of excluded
    employees on re-employment and would be covered by the Act and the
    1952 Scheme. We are also unable to accept that since the employees
    covered under Paragraph 2(f)(i) and (ii) are excluded employees, all
    employees who had drawn the full amount from any other Provident
    Fund should also be treated as excluded employees.
    In view of the above, we allow this appeal and set aside the order
    passed by the learned Single Judge.
    Consequently, the writ petition being W.P. No. 2982(W) of 2005
    shall be dismissed.”
  6. Assailing the judgment aforesaid, learned counsel for the appellant has
    strenuously argued that the Division Bench of High Court has erred in
    interpreting the term “excluded employee” and in holding that the retired
    employees of the Railways, even when they had withdrawn the full amount from
    their provident fund, cannot be treated as excluded employees. The learned
    counsel emphasised on the submissions that the retired Railway employees, who
    9
    were covered under GPF Scheme while in service, who had drawn all the
    superannuation benefits including the PF, and who were also receiving pension
    under the CPG rules, would fall within the definition of “excluded employees” as
    contained in clause (i) of Paragraph 2(f) of the Scheme of 1952. Learned counsel
    submitted that as per Paragraph 26 thereof, the Scheme of 1952 shall apply to all
    the employees other than excluded employees; and, as per Paragraph 2(f)(i), an
    excluded employee is the one who, having been a member of a provident fund,
    had withdrawn the full amount of his accumulations in the fund under clause (a)
    or (c) of sub-paragraph (1) of Paragraph 69. Therefore, according to the learned
    counsel, the employees concerned in the present case ought to be treated as
    “excluded employees”, for having withdrawn their PF accumulated with the Indian
    Railways after having reached the age of superannuation. Further, according to
    the learned counsel, if these employees are not treated as “excluded
    employees”, it would amount to their unjust enrichment, which has never been
    the intention of the Act of 1952 or the Scheme thereunder. The learned counsel
    contended that the Division Bench of High Court has erred in holding that
    Paragraph 69 of the said Scheme does not apply to the case of retired Railway
    employees and such retired employees, though not covered under the Act, came
    to be so covered on their re-employment in an establishment covered under the
    said Act. According to the learned counsel, the Division Bench has erred in
    interpreting the definitions of ‘Fund’ and ‘Scheme’ and in restricting the definition
    of ‘Fund’ under Section 2(h) of the Act by holding that even after retiring from the
    10
    Railways and receiving the benefits under GPF Scheme, the said employees are
    not “excluded employees” as the said employer is not covered under the Scheme
    of 1952.
  7. Per contra, learned counsel for the contesting respondents has referred to
    the object as also the arrangement of the Act of 1952 and has particularly
    submitted that two different sets of provident fund Schemes are envisioned: on
    one hand is the Scheme contemplated by Section 5 of the Act, the Scheme of
    1952 being that Scheme; and on the other hand, there could be other Scheme/s,
    as permissible under Section 17 of the Act of 1952. According to the learned
    counsel, coverage of the employees referable to the Act of 1952 by one of the
    Schemes of provident fund is the rule and generally, such employees would be
    covered by the Scheme of 1952 with the exception that such coverage may not
    be necessary when the employees receive the benefits under some other
    Scheme, which are not less than those available under the Scheme of 1952.
    Learned counsel for the respondent submitted that in the framework of the
    Scheme of 1952, only some specific classes of employees are treated as
    “excluded employees”, as defined in Paragraph 2(f) thereof; and, as per clause
    (i) of Paragraph 2(f), only such an employee would be excluded who was earlier
    the member of the Fund under the Scheme of 1952 and had withdrawn all the
    benefits thereunder. According to the learned counsel, the present appeal is
    devoid of merits for the reason that the Railway employees, who were not
    11
    covered under the Scheme of 1952, do not fall within the definition of “excluded
    employees” as per Paragraph 2(f) of the Scheme of 1952, even if they had
    withdrawn the amount standing to their credit in any provident fund created under
    any other Scheme.
  8. We have bestowed thoughtful consideration to the rival submissions and
    have examined the record of the case with reference to the law applicable.
  9. For determination of the question involved in this matter, appropriate it
    would be to briefly take note of the objects and reasons behind the Act of 1952
    as also the relevant provisions thereof and the relevant stipulations in the
    Scheme framed thereunder i.e., the Scheme of 1952.
    9.1. The background aspects had been that, taking note of the need to provide
    for the institution of contributory provident funds for the purpose of financial
    security of industrial workers, the Government of India promulgated the
    Employees’ Provident Fund Ordinance with effect from 15.11.1951, which was
    later on replaced by the Act of 19521
    . Thus, the concept underlying the
    enactment had been of providing for compulsory contributory provident funds for
    safeguarding the future of industrial workers. Elaborate provisions have been
    made in the Act for creation of a Fund, to be settled in accordance with a
    Scheme to be framed by the Central Government. However, the Act also
    1 The Act was originally enacted on 04.03.1952 as “The Employees’ Provident Funds Act, 1952” (No. 19
    of 1952); its nomenclature was changed to “The Employees’ Provident Funds and Family Pension Fund
    Act, 1952″ w.e.f. 23.04.1971; and its nomenclature was again changed to the present one i.e., “The
    Employees’ Provident Funds and Miscellaneous Provisions Act, 1952″ w.e.f. 01.08.1976.
    12
    provides for continuation of such of the other provident funds, which are offering
    equal or more advantageous terms to the employees concerned and are
    operating efficiently.
    9.1.1. In the Act of 1952, the expression “employee” is defined in clause (f) of
    Section 2 as under:
    “(f) “employee” means any person who is employed for wages in any
    kind of work, manual or otherwise, in or in connection with the work of an
    establishment, and who gets, his wages directly or indirectly from the
    employer, and includes any person,-
    (i) employed by or through a contractor in or in connection with the work
    of the establishment;
    (ii) engaged as an apprentice, not being an apprentice engaged under
    the Apprentices Act, 1961 (52 of 1961), or under the standing orders of
    the establishment;”
    9.1.2. The concepts of “exempted employee” and “exempted establishment” are
    defined in clauses (ff) and (fff) of Section 2 of the Act of 1952 as under:
    “(ff) “exempted employee” means an employee to whom a Scheme or
    the Insurance Scheme, as the case may be, would, but for the exemption
    granted under section 17, have applied;
    (fff) “exempted establishment” means an establishment in respect of
    which an exemption has been granted under section 17 from the
    operation of all or any of the provisions of any Scheme or the Insurance
    Scheme, as the case may be, whether such exemption has been granted
    to the establishment as such or to any person or class of persons
    employed therein;”
    9.1.3. The expression “Fund” is defined in clause (h) of Section 2 of the Act of
    1952 as under:
    “(h) “Fund” means the provident fund established under a Scheme;”
    13
    9.1.4. The expression “Scheme” means the one framed under Section 5 of the
    Act of 1952 and is defined in clause (l) of Section 2 as under:
    “(l) “Scheme” means the Employees Provident Fund Scheme framed
    under section 5;”
    9.1.5. Section 5 of the Act of 1952, providing for the Employees’ Provident Fund
    Scheme, reads as under2
    :
    “5. Employees’ Provident Funds 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 as may be after the framing of the Scheme, a Fund
    in accordance with the provisions of this Act and the Scheme.
    (1A) The Fund shall vest in, and be administered by, the Central
    Board constituted under section 5A.
    (1B) 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 behalf in the Scheme.”
    9.1.6. For the purpose of the question at hand, sub-section (1) and sub-section
    (1-A) of Section 17 of the Act of 1952, relating to the powers of the appropriate
    2 The original Section 5 has undergone several changes by way of amendments. The
    relevant amendments to be noticed for the present purpose are that by Act No. 37 of 1953,
    original Section 5 was re-numbered as sub-section (1), the expressions for establishment of
    Fund soon after framing of Scheme were added, and sub-section (2) was also inserted.
    Moreover, by Act No. 28 of 1963, Sub-section (1A) to Section 5 (providing for vesting and
    administration of Fund in and by the Central Board) was inserted. The provisions relating to
    Central and State Boards and co-related aspects were also inserted as Sections 5A to 5E by
    the said Act No. 28 of 1963, which need not be dilated upon, for being not relevant for
    present purpose.
    14
    Government to grant exemption and the consequence thereof, could also be
    taken note of as under:
    “17. Power to exempt – (1) The appropriate Government may, by
    notification in the Official Gazette, and subject to such conditions as may
    be specified in the notification, exempt, whether prospectively or
    retrospectively, from the operation of all or any of the provisions of any
    Scheme –
    (a) any establishment to which this Act applies if, in the opinion of
    the appropriate Government, the rules of its provident fund with respect
    to the rates of contribution are not less favourable than those specified in
    section 6 and the employees are also in enjoyment of other provident
    fund benefits which on the whole are not less favourable to the
    employees than the benefits provided under this Act or any Scheme in
    relation to the employees in any other establishment of a similar
    character; or
    (b) any establishment if the employees of such establishment are
    in enjoyment of benefits in the nature of provident fund, pension or
    gratuity and the appropriate Government is of opinion that such benefits,
    separately or jointly, are on the whole not less favourable to such
    employees than the benefits provided under this Act or any Scheme in
    relation to employees in any other establishment of a similar character:
    Provided that no such exemption shall be made except after
    consultation with the Central Board which on such consultation shall
    forward its views on exemption to the appropriate Government within
    such time limit as may be specified in the Scheme.
    (1A) Where an exemption has been granted to an establishment
    under clause (a) of sub-section (1),-
    (a) the provisions of sections 6, 7A, 8 and 14B shall, so far as may
    be, apply to the employer of the exempted establishment in addition to
    such other conditions as may be specified in the notification granting
    such exemption, and where such employer contravenes, or makes
    default in complying with any of the said provisions or conditions or any
    other provision of this Act, he shall be punishable under section 14 as if
    the said establishment had not been exempted under the said clause (a);
    (b) the employer shall establish a Board of Trustees for the
    administration of the provident fund consisting of such number of
    members as may be specified in the Scheme;
    (c) the terms and conditions of service of members of the Board of
    Trustees shall be such as may be specified in the Scheme;
    15
    (d) the Board of Trustees constituted under clause (b) shall–
    (i) maintain detailed accounts to show the contributions credited,
    withdrawals made and interest accrued in respect of each employee;
    (ii) submit such returns to the Regional Provident Fund
    Commissioner or any other officer as the Central Government may direct
    from time to time;
    (iii) invest the provident fund monies in accordance with the
    directions issued by the Central Government from time to time;
    (iv) transfer, where necessary, the provident fund account of any
    employee; and
    (v) perform such other duties as may be specified in the Scheme.
    *** *** *** “
    9.2. After having taken note of the relevant provisions of the Act of 1952,
    essential it is to take into comprehension the relevant provisions and stipulations
    of the Scheme of 1952 that has been, as noticed, framed by the Central
    Government under Section 5 of the Act of 1952.
    9.2.1. Noteworthy it is that there is no definition of an “excluded employee” in the
    Act of 1952. In fact, this expression comes in operation for the purpose of
    exclusion of certain employees from compulsion to join the Fund created under
    the Scheme of 1952. Therefore, this expression is defined only in the Scheme of
    1952, in clause (f) of paragraph 2 thereof, as under:
    “(f) “excluded employee” means—
    (i) an employee who, having been a member of the Fund, withdrew the
    full amount of his accumulations in the Fund under clause (a) or (c) of
    sub-paragraph (1) of paragraph 69;
    16
    (ii) an employee whose pay at the time he is otherwise entitled to
    become a member of the Fund, exceeds fifteen thousand rupees per
    month;3
    Explanation. –‘Pay’ includes basic wages with dearness allowance,
    retaining allowance (if any) and cash value of food concessions
    admissible thereon;
    (iii) [omitted]4
    ;
    (iv) an apprentice.
    Explanation.– An apprentice means a person who, according to the
    certified standing orders applicable to the factory or establishment, is an
    apprentice, or who is declared to be an apprentice by the authority
    specified in this behalf by the appropriate Government;”
    9.2.2. Paragraph 26 of the Scheme of 1952 specifies the classes of employees
    entitled to, and required to, join the Fund as also the co-related aspects. Useful it
    shall be to keep in view the fact that the expression “Fund”, as occurring in
    Paragraph 26 refers to the Fund created under the Scheme of 19525
    . This
    Paragraph 26 reads as under:
    “26. Classes of employees entitled and required to join the fund.-
    (1) (a) Every employee employed in or in connection with the work of a
    factory or other establishment to which this Scheme applies, other than
    an excluded employee, shall be entitled and required to become a
    member of the Fund from the day this paragraph comes into force in
    such factory or other establishment.
    (b) Every employee employed in or in connection with the work of a
    factory or other establishment to which this Scheme applies, other than
    an excluded employee, shall also be entitled and required to become a
    member of the fund from the day this paragraph comes into force in such
    factory or other establishment if on the date of such coming into force,
    such employee is a subscriber to a provident fund maintained in respect
    3 At the relevant point of time, in sub-clause (ii) the figures had been ‘six thousand and five hundred
    rupees’ in place of the present figures of ‘fifteen thousand rupees’
    4 Sub-clause (iii) and explanation thereto were omitted by GSR 1467 dated 02.12.1960
    5 The contra-distinction of this “Fund” with a “private provident fund” is noticeable in sub-paragraph (5),
    where reference is made to an exempted establishment.
    17
    of the factory or other establishment, or in respect of any other factory or
    establishment (to which the Act applies) under the same employer:
    Provided that where the Scheme applies to a factory or other
    establishment on the expiry or cancellation of an order of exemption
    under section 17 of the Act, every employee who but for the exemption
    would have become and continued as a member of the Fund, shall
    become a member of the fund forthwith.
    (2) After this paragraph comes into force in a factory or other
    establishment, every employee employed in or in connection with the
    work or that factory or establishment, other than an excluded employee,
    who has not become a member already shall also be entitled and
    required to become a member of the fund from the date of joining the
    factory or establishment.
    (3) An excluded employee employed in or in connection with the work of
    a factory or other establishment to which this Scheme applies shall, on
    ceasing to be such an employee, be entitled and required to become a
    member of the fund from the date he ceased to be such employee.
    (4) On re-election of an employee or a class of employees exempted
    under paragraph 27 or paragraph 27 A to join the fund or on the expiry or
    cancellation of an order under that paragraph, every employee shall
    forthwith become a member thereof.
    (5) Every employee who is a member of a private provident fund
    maintained in respect of an exempted factory or other establishment and
    who but for exemption would have become and continued as a member
    of the fund shall, on joining a factory or other establishment to which this
    Scheme applies, become a member of the fund forthwith.
    (6) Notwithstanding anything contained in this paragraph an officer not
    below the rank of an Assistant Provident Fund Commissioner may, on
    the joint request in writing of any employee of a factory or other
    establishment to which this Scheme applies and his employer, enroll
    such employee as a member or allow him to contribute more than fifteen
    thousand rupees of his pay per month if he is already a member of the
    fund and thereupon such employee shall be entitled to the benefits and
    shall be subject to the conditions of the fund, provided that the employer
    gives an undertaking in writing that he shall pay the administrative
    charges payable and shall comply with all statutory provisions in respect
    of such employee.”
    9.2.3. For comprehension of all the relevant provisions and stipulations, a
    reference to sub-paragraph (1) of paragraph 69 of the Scheme of 1952 is also
    18
    pertinent and the same, as applicable at the relevant point of time, may be
    noticed as under6
    :
    “69. Circumstances in which accumulations in the Fund are payable
    to a member.- (1) A member may withdraw the full amount standing to
    his credit in the Fund—
    (a) on retirement from service after attaining of the age of 55 years:
    Provided that a member, who has not attained the age of 55 years at the
    time of termination of his service, shall also be entitled to withdraw the
    full amount standing to his credit in the Fund if he attains the age of 55
    years before the payment is authorized;
    (b) on retirement on account of permanent and total incapacity for
    work due to bodily or mental infirmity duly certified by the medical officer
    of the establishment or where an establishment has no regular medical
    officer, by a registered medical practitioner designated by the
    establishment;
    (c) immediately before migration from India for permanent settlement
    abroad or for taking employment abroad;
    (d) on termination of service in the case of mass or individual
    retrenchment;
    (dd) on termination of service under a voluntary scheme of retirement
    framed by the employer and the employees under a mutual agreement
    specifying, inter alia, that notwithstanding the provisions contained in
    sub-clause (a) of clause (oo) of section 2 of the Industrial Disputes Act,
    1947, excluding voluntary retirements from the scope of definition of
    “retrenchment” such voluntary retirements shall for the purpose be
    treated as retrenchments by mutual consent of the parties;
    (e) in any of the following contingencies, provided the actual payment
    shall be made only after completing a continuous period of not less than
    two months immediately preceding the date on which a member makes
    the application for withdrawal:—
    (i) where a factory or other establishment is closed but certain
    employees who are not retrenched, are transferred by the employer to
    other factory or establishment, not covered under the Act;
    6 This paragraph 69 and its sub-paragraphs and clauses have also undergone several amendments from
    time to time; however, the contents as reproduced herein are more or less in the same form, as are
    applicable to the present case.
    19
    (ii) where a member is transferred from a covered factory or other
    establishment to another factory or other establishment not covered
    under the Act, but is under the same employer; and
    (iii) where a member is discharged and is given retrenchment
    compensation under the Industrial Disputes Act, 1947 (14 of 1947);”
  10. Before proceeding further, we may take note of a decision of this Court
    referred to by the learned counsel for the parties, being that in the case of N.K.
    Jain and Ors. v. C.K. Shah and Ors.: (1991) 2 SCC 495. The relevant
    background aspect of the said case had been that the establishment in question
    was governed by the provisions of the Act of 1952 but was exempted under
    Section 17; and had its own trust in respect of the provident fund contributions.
    However, the establishment failed to pay such contributions for some period
    during the year 1974 and there was a default. The question was as to whether
    such default would entail prosecution also, or only the exemption was to be
    cancelled ? The said case, being related to a different fact situation and different
    controversy may not have a direct bearing on the present matter but, the
    observations of this Court, illuminative on the setup and framework of the Act
    and the Scheme of 1952, could be usefully reproduced as under:
    “7. On a perusal of the above extracted provisions of the Act the
    following aspects to the extent relevant to the present case can be spelt
    out. The management of an establishment has to contribute to the
    provident fund and the government under Section 5 can frame a
    Scheme called Employees’ Provident Fund Scheme and such a Scheme
    was framed in the year 1952. The Scheme provides for the
    establishment of provident fund under the Act for employees of the
    establishments specified therein. Section 6 is the material provision and
    deals with contributions which may be provided under the Scheme and
    also prescribes the rate of contribution to the fund and that the
    employees’ contribution should be equal to the contribution payable by
    20
    the employer. Section 14 deals with the penalties and Section 14(1-A)
    lays down that an employer who contravenes, or makes default in
    complying with the provisions of Section 6 shall be punishable with
    imprisonment for a term which may extend to six months but shall not be
    less than three months in case of default in payment of the employees’
    contribution which has been deducted by the employer from the
    employees’ wages. But for adequate reasons it can be less. Paragraph
    76 of the Scheme also provides for punishment for failure to pay such
    contributions to the fund. Then we have Section 17 which provides for
    the exemption. As per the said section the appropriate government may
    by notification and subject to such conditions, as may be specified in the
    notification, exempt from the operation of all or any of the provisions of
    any Scheme (in the present case 1952 Scheme) if the appropriate
    government is satisfied that the rules of the provident fund which a
    particular establishment is following in the matter of contribution to the
    provident fund are not less favourable than those specified in Section 6
    and that the employees are also in enjoyment of other provident fund
    benefits. In other words the exemption from the operation of the Scheme
    is granted provided the particular establishment makes contribution as
    per its own rules governing the contribution to the fund, which in other
    words, can be called a provident fund scheme of its own are not less
    favourable than those specified in Section 6. Accordingly the exempted
    establishment has to provide for its employees the benefits which are in
    no way less favourable than the ones provided under the Act and the
    Scheme.”
    10.1. In the said case, this Court finally held that the failure to make the
    contributions by an exempted establishment to the provident fund as per its own
    rules may also attract the penalties under sub-sections (1-A) and (2-A) of Section
    14 of the Act of 1952.
  11. In the scheme and structure of the Act of 1952, it is but clear that for the
    specified establishments or class of establishments, the Central Government was
    to frame a Scheme, to be called “the Employees’ Provident Fund Scheme”; and
    soon after framing of such Scheme, a Fund was to be established, which was to
    vest in, and administered by, the Board constituted under Section 5A. As noticed,
    21
    the expression “Fund” is defined in the Act of 1952 to mean the provident fund
    established under a Scheme; and the expression “Scheme” is defined to mean
    the Employees Provident Fund Scheme framed under Section 5. Indisputably,
    the Scheme of 1952 is the one framed by the Central Government in exercise of
    the powers conferred by Section 5 ibid. We shall examine the provisions of the
    Scheme of 1952 a little later. At this juncture, apposite it would be to take note of
    another feature of the Act of 1952 emanating from the provisions relating to
    exemption, as contained in Section 17 thereof.
  12. By virtue of sub-section (1) of Section 17, an establishment could be
    exempted from the operation of all or any of the provisions of any Scheme if: (a)
    in regard to the establishment to which the Act applies, the appropriate
    Government is of opinion that the rules of its provident fund, with respect to the
    rates of contributions, are not less favourable for the employees than those
    specified in Section 6 and the employees are in enjoyment of other provident
    fund benefits which, on the whole, are not less favourable than the benefits
    available under the Act or under the Scheme in relation to any other
    establishment of similar character; and (b) in regard to any other establishment,
    the appropriate Government is of opinion that benefits in the nature of provident
    fund, pension or gratuity, as available to the employees of such establishment
    are, on the whole, not less favourable than the benefits provided under the Act or
    any Scheme in any other establishment of similar character.
    22
    12.1. When an exemption is granted to an establishment under clause (a) of
    sub-section (1) of Section 17 of the Act of 1952, several duties are cast upon the
    employer as specified in sub-section (1-A) thereof, with penal provisions in the
    event of default. We need not elaborate on various other provisions contained in
    Section 17. Suffice would be to notice for the present purpose that coverage of
    the employees like the one engaged in the establishment of appellants is the
    rule; and ordinarily, the employees are expected to be covered by the Scheme
    framed under Section 5 of the Act of 1952 with the exception being that in case of
    availability of equivalent or more favourable benefits in an establishment, the
    appropriate Government could grant exemption. As per sub-section (2) of Section
    17, even the Scheme may make a provision for exemption but the basic
    requirement being again that the persons or the class of persons to be exempted
    are entitled to such benefits which are, on the whole, not less favourable than the
    benefits provided under the Act and the Scheme thereunder i.e., the Scheme of
    19527
    . All the requirements of Section 17 make the position undoubtedly clear
    that the provisions are intended to ensure optimum benefits for the employees
    and even the exemption is granted only on the satisfaction of appropriate
    7 Sub-section (2) of Section 17 reads as under:
    (2) Any Scheme may make provision for exemption of any person or class of persons employed
    in any establishment to which the Scheme applies from the operation of all or any of the provisions of the
    Scheme, if such person or class of persons is entitled to benefits in the nature of provident fund, gratuity
    or old age pension and such benefits, separately or jointly, are on the whole not less favourable than the
    benefits provided under this Act or the Scheme:
    Provided that no such exemption shall be granted in respect of a class of persons unless the
    appropriate Government is of opinion that the majority of persons constituting such class desire to
    continue to be entitled to such benefits.
    23
    Government about existence of equivalent or more favourable provident fund
    Scheme for the employees concerned.
  13. The Scheme of 1952 was framed by the Central Government on
    02.09.1952 i.e., within 6 months of the enactment of the Act of 1952. The
    provisions of the Scheme are generally made applicable, subject to the
    provisions of Sections 16 and 17 of the Act, to all the factories and other
    establishments to which the Act applies or is applied under sub-sections (3) and
    (4) of Section 1 or under Section 3 of the Act. The provisions of the Scheme of
    1952 have been extended to various establishments from time to time under
    clause (b) of sub-paragraph (3) of Paragraph 1 thereof. As per Paragraph 26 of
    the Scheme of 1952, every employee employed in or in connection with the work
    of the factory or other establishment to which this Scheme applies, is entitled to,
    and is obliged to, become a member of the Fund from the date the Scheme
    would come into force for such factory or establishment, except the “excluded
    employees”. Significantly, even an “excluded employee”, on ceasing to be so i.e.,
    on ceasing to be an “excluded employee”, is entitled to, and is required to,
    become a member of the Fund from the date of such cessation.
    13.1. In the framework of the Scheme of 1952, exclusion is provided under
    clause (i) of Paragraph 2(f) thereof to an employee who had been a member of
    the Fund and had withdrawn full amount of his accumulations in the Fund under
    clause (a) or (c) of Paragraph 69(1). Now, clause (a) of the said Paragraph 69(1)
    24
    of the Scheme of 1952 refers to a member who would withdraw the full amount
    standing to his credit in the Fund on retirement from service after attaining the
    age of 55 years. Clause (c) is not relevant for the present purpose as the same
    relates to a member who withdraws the amount before migration from India for
    permanent settlement or taking employment abroad but then, a comprehensive
    look at various clauses of paragraph 69(1) makes it clear that reference therein is
    to a member of the Fund who withdraws full amount standing to his credit for
    different eventualities like regular retirement; retirement for disablement or
    incapacity; migration from the country; termination of service; accepting a
    voluntary retirement scheme; closure of the factory; transfer from a covered
    factory or establishment to another factory or establishment not covered under
    the Act etc.
  14. It is not a matter of much debate in this case that the appellants otherwise
    answer to the description of “employer” under the Act of 1952 and their
    establishment is covered thereunder. The basic contention urged in this matter
    on behalf of the appellants is that the persons engaged by them had been the
    members of General Provident Fund while working as the employees of Railways
    and had withdrawn the full amount of accumulations in GPF and are, therefore,
    to be treated as “excluded employees”. This contention has fundamental
    shortcomings as pointed out infra.
    25
    14.1. The crucial aspect to be considered in this matter is as to whether the
    definition of “excluded employees” in Paragraph 2(f) as also the stipulation in
    Paragraphs 26 and 69 of the Scheme of 1952 refer to any provident fund or only
    to the Fund under the Scheme of 1952? As noticed above, in the setup and
    structure of the Act of 1952, specific distinction is maintained between the Fund,
    which is created by the Central Government under Section 5(1) of the Act and
    any other provident fund, which is created by an employer. Significantly, clause
    (f) of Paragraph 2 of the Scheme of 1952 refers to “the Fund” and not to “any
    Fund”; and Paragraphs 26 and 69 also refer to “the Fund” and not to “any Fund”.
    The determiner “the”, as occurring in Paragraph 2(f) as also Paragraph 69 before
    the expression “Fund” makes it clear that the reference therein is only to the
    Fund which is created under the Scheme of 1952 and it is not a general
    reference to any Fund. The requirement of joining the Fund under Paragraph 26
    ibid. is also of joining that Fund which is created under the Scheme of 1952. In
    other words, obviously and undoubtedly, the Fund referred to in Paragraphs 2(f),
    26 and 69 of the Scheme of 1952 is that Fund, which is created under the
    Scheme of 1952 and the reference is not to any other Fund. Thus, to be covered
    under the expression “excluded employee” by virtue of clause (i) of paragraph
    2(f) read with clause (a) of paragraph 69(1) ibid., the employee must be such
    who was a member of the Fund established under the Scheme of 1952 and who
    had withdrawn full amount of his accumulations in the said Fund on retirement
    from service after attaining the age of 55 years.
    26
    14.2. On the plain interpretation aforesaid, we have not an iota of doubt that the
    retired Railway employees, who had withdrawn their accumulations in General
    Provident Fund or any other Fund of which they were members, could not have
    been treated as “excluded employees” for the purpose of the Scheme of 1952 for
    the reason that such a withdrawal had not been from the Fund established under
    the Scheme of 1952. In fact, there was no occasion for them to make any
    withdrawal from the Fund established under the Scheme of 1952 because they
    were never the members of the said Fund. In other words, the employees in
    question were not answering to the requirements of clause (i) of paragraph 2(f)
    read with clause (a) of paragraph 69(1) of the Scheme of 1952 and hence, were
    not the “excluded employees”. The Division Bench of the High Court has rightly
    rejected the contention of appellants that every employee, who had withdrawn
    full amount from any provident fund, should be treated as an “excluded
    employee”. In our view, the answer by the Division Bench of the High Court is in
    accord with law and deserves to be approved.
  15. We may also take note of and deal with a few ancillary aspects. The
    appellants, in their initial response to the proposition for coverage of the
    employees in question under the Scheme of 1952, attempted to state that most
    of the said employees were above 58 years of age and that they had expressed
    unwillingness to join the Fund under the said Scheme. It does not appear from
    the record if the concerned employees categorically made any such expression
    27
    of unwillingness. Even otherwise, as noticed, the provisions of the Act and the
    stipulations of the Scheme of 1952 are mandatory in character and the
    application thereof could not have been averted by the appellants or the said
    employees except on certain eventualities as mentioned in Section 17 of the Act
    as also Paragraph 26 of the Scheme of 1952. Such eventualities are indeed nonexistent in the present matter. So far the aspect relating to age is concerned, the
    operation and effect of the Act and the Scheme of 1952 are not restricted with
    reference to any age limit of the employee. Such a suggestion relating to the age
    of the employees had been entirely baseless and has rightly been disapproved.
    15.1. Apart from the above, the appellants also alleged that they had applied for
    exemption and no decision was taken on their representation. In this regard, it is
    noticed that the appellant had not made any such submission that they had any
    better and beneficial scheme for their employees. In any case, there is no
    concept of any holidaying in payment of contribution by the employer by merely
    moving an application for exemption; and when there was no order of exemption
    under Section 17 by the competent authority, the appellant-company was under
    the liability to make payment of its contribution.
  16. Before concluding, we may also point out that the observations by the
    learned Single Judge of High Court in this matter, that clause (i) of Paragraph 2(f)
    of the Scheme of 1952 has to be applied in relation to the withdrawal from any
    provident fund and else, an employee may keep on successively deriving
    28
    benefits, remain rather unwarranted because the principle underlying the
    enactment and the Scheme of 1952 is to provide financial security to the
    employees. The concept of exclusion from the Scheme of 1952 is limited to the
    class/es of employees mentioned in Paragraph 2(f) only; and the area of
    operation of this exclusion clause cannot be expanded by way of an assumption
    about the alleged extra advantage likely to be driven home by an employee. In
    fact, even the assumption of the learned Single Judge does not appear apt in the
    framework of the Act and the Scheme of 1952. Whatever an employee gets by
    virtue of the Act of 1952 is basically the accumulation in his provident fund
    account, where he and his employer do contribute. The learned Single Judge
    had gone to the extent of observing that when the employees earning more than
    the particular amount (Rs. 6,500/- per month at the relevant time) were excluded
    under clause (ii) of Paragraph 2(f) of the Scheme of 1952, the retired employees
    who had received their accumulations could also be excluded under clause (i) of
    Paragraph 2(f). With respect, we are unable to find any logic in these
    observations because the stipulation in clause (ii) of Paragraph 2(f) relates to an
    entirely different class of employees with reference to the quantum of their pay;
    and exclusion of such class of employees as per clause (ii) cannot lead to any
    corollary that clause (i) be also expanded beyond its plain language. The order
    passed by the learned Single Judge, being based on entirely irrelevant
    considerations, has rightly been disapproved by the Division Bench of High
    Court.
    29
  17. To summarise, in the framework and setup of the Scheme of 1952, the
    concept remains plain and clear that if a person is member of the Fund created
    thereunder i.e., under the Scheme of 1952 and withdraws all his accumulations
    therein, he may not be obliged to be a member of the same Fund under the
    Scheme of 1952 over again and could be treated as an “excluded employees”.
    However, such is not the relaxation granted in relation to an employee who was
    earlier a member of any other Fund but later on joins such an establishment
    where he would be entitled to membership of the Fund created under the
    Scheme of 1952. This framework of the provisions and stipulations appears to be
    best serving the interest of employees, while providing them with continued
    financial security. Therefore, we find no reason to take any view different than the
    one taken by the Division Bench of the High Court in this case.
  18. For what has been discussed hereinabove, this appeal fails and is,
    therefore, dismissed.
    ………………………………………..J.
    (ABHAY MANOHAR SAPRE)
    ……………………………………….J.
    (DINESH MAHESHWARI) 1
    New Delhi
    Dated: 26th March, 2019.
    30