Surya Roshni Ltd. vs. Employees Provident Fund and Anr.

Citation: 2011 LLR 867

Decided on: 24.03.2011

Court:  High Court of Madhya Pradesh


The Petitioner-company was remitting the provident fund contribution of eligible employees in accordance with the Employees’ Provident Fund Act, 1952 (‘Act’) and the Scheme and it was deducting provident fund contribution on two components of salary, i.e., Basic + VDA (dearness allowance). However, it was not deducting provident fund contribution on other components, i.e., Transport Allowance + Attendance incentive + Special allowance + Lunch Incentive.

The Assistant Provident Fund Commissioner noticed that the petitioner was paying wages to its workers in guise of allowances to avoid the EPF liability, hence it issued summon under Section 7A of the Act for determination of provident fund dues against the petitioner. The Authority held that that other allowances are part of basic wages for the purpose of provident fund contribution hence, petitioner is liable to deposit provident fund of Rs. 69,09,534.

Against the aforesaid order, the petitioner filed an appeal which was dismissed.


Whether other allowances paid by petitioner is covered under “basic wages” for the purpose of calculating provident fund contribution.


Petitioner: Relying on the judgment of Hon’ble Supreme Court in the case of Manipal Academy of Higher Education v. Provident Fund Commissioner [(2008) 5 SCC 428], petitioner contended that it is not liable to deduct provident fund from the wages of the workers except basic wages + VDA and it has been depositing the provident fund contribution with the department accordingly.

Respondent: As per the test laid down by the Hon’ble Supreme Court in the case of Bridge and Roofs Co. Ltd. v. Union of India and Ors. [AIR 1963 SC 1474], the principle of universality has to be applied in determining the basic wages and on the basis of the aforesaid principle the orders passed by both the Authorities are in accordance with law.


The Court relied on Supreme Court judgment in Manipal Academy case (supra); Jay Engg. Works Ltd. v. Union of India [AIR 1963 SC 1480] and Cycles of India v. M.K. Gurumani[ (2001) 7 SCC 204] to reiterated that:

“On combine reading of Section 2(b) and Section 6 of the  Act, the wages’ which is universally, necessarily and ordinarily paid to all across the board, such emoluments are ‘basic wages’ and where the payment is available to be specially paid to those who avail of the opportunity is not the ‘basic wages'”.

Applying the above principles, High Court held that the canteen allowance could not be included in ‘basic wages’ and there is no liability of the Petitioner to deduct provident fund of the employees against the aforesaid amount. However, the rest of the special allowances paid by the Petitioner to the workers in this case were liable to be included under the ‘basic wages’.

Accordingly, the Court allowed the petition partially to the above extent.

Author: Swati Agrawal

Editor: Vivek Verma

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One Comment

  1. The paramount consideration still remains to put the various allowances paid to the touch stone of the dicta enunciated in the case of Bridge and Roof Company by the Constitution bench of the Hon. Supreme Court. The present judgment by two bench of the Hon. Supreme Court in the case of Swami Vivekananda’s case cannot give differing views and can only reiterate the dicta. Hence nothing new has been expressed by it for the EPFO to proceed against the employers who adhere to the Act and Scheme together with the dicta laid down in the case of Bridge and Roof Company.

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