M/S Panther Security Service … vs E.P.F. Organisation on 2 December, 2020


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Supreme Court of India

M/S Panther Security Service … vs E.P.F. Organisation on 2 December, 2020

Author: Navin Sinha

Bench: Rohinton Fali Nariman, Navin Sinha, K.M. Joseph

                                                            NON­REPORTABLE

                                 IN THE SUPREME COURT OF INDIA
                                  CIVIL APPELLATE JURISDICTION


                            CIVIL APPEAL NOs.4434­4435 OF 2010

          M/S. PANTHER SECURITY SERVICE
          PRIVATE LIMITED                                     ...APPELLANT(S)

                                             VERSUS
          THE EMPLOYEES’ PROVIDENT FUND
          ORGANISATION AND ANOTHER                          ...RESPONDENT(S)



                                           JUDGMENT

NAVIN SINHA, J.

The appellant is engaged in the business of providing

private security guards to its clients on payment basis. The

appellant is registered under the Private Security Agencies

(Regulation) Act, 2005 (hereinafter referred to as “the Act of

2005”). The appellant is aggrieved by the order of the High

Court, affirming the order dated 28.07.2008 of the Assistant

Provident Fund Commissioner, Kanpur under Section 7A of the

Employees’ Provident Funds and Miscellaneous Provisions Act,

1952 (hereinafter referred to as “the EPF Act”) holding the
Signature Not Verified

Digitally signed by
Nidhi Ahuja
Date: 2020.12.02
17:29:05 IST
Reason:

appellant liable for compliance with the provisions of the EPF Act

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and to deposit statutory dues within 15 days. The dues of the

appellant as quantified by order dated 15.04.2009 are

Rs.42,01,941/­, and statutory interest under Section 7Q at

Rs.30,44,224/­.

2. Shri S. Sunil, learned counsel for the appellant submitted

that the appellant was not covered by G.S.R. No.805 dated

17.05.1971 issued under Section 1(3)(B) of the EPF Act, since it

was not engaged in rendering any expert services. It merely

facilitated in providing Chowkidars to its clients at the request of

the latter. The appellant only levelled a service charge for

facilitation. The salary was paid to the Chowkidars by the client

who engaged their services. The appellant had only 5 persons on

its rolls. The EPF Act was therefore not applicable to it. Placing

reliance on Section 2(e) (ii) and (f) of the EPF Act it was submitted

that since the salary was paid by the client and who had the

ultimate control over the security guards deployed with them, the

appellant was not the employer of these security guards and

neither were they employees of the appellant. Reliance was

placed on Krantikari Suraksha Rakshak Sanghatana vs.

Bharat Sanchar Nigam Limited and others, (2008) 10 SCC

2
166 and Saraswath Films vs. Regional Director, Employees’

State Insurance Corporation, Trichur, (2010) 11 SCC 553.

3. Ms. Divya Roy, learned counsel for the respondents

submitted that the appellant renders expert services by way of

providing trained personnel as security guards. It is fully covered

by the Notification dated 17.05.1971. Despite repeated notices

the appellant never furnished its wage and salary registers. The

balance sheets seized for the financial years 2003­04, 2004­05,

2005­06 and 2006­07, during raid, reveals a very large amount

paid towards salaries and wages running into several lacs which

cannot be the wage bill of five employees. The letter dated

03.04.2001 written by the appellant to the New India Assurance

Company Limited seeking Group Janta Personnel Accident

Insurance Policy of one lac each was in respect of 79 security

personnel. It was lastly submitted that the appellant did not

approach the Tribunal under Section 7I of the EPF Act against

the order passed under Section 7A, where all disputed facts could

have been examined and instead filed a writ petition directly.

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4. The writ petition and review application filed by the

appellant were both dismissed.

5. We have considered the submissions on behalf of the parties

and are of the opinion that the appeal lacks merit, for reasons to

be enumerated hereinafter.

6. By G.S.R. No. 805 dated 17.05.1971 issued under Section

1(3)(b) of the EPF Act and published in the Gazette on

25.09.1971 the provisions of the EPF Act were made applicable to

specified establishment and which reads as follows :

“G.S.R. No. 805 : In exercise of the powers conferred by
clause (b) of sub­section (3) of Section 1 of the
Employees’ Provident Funds and Family Pension Fund
Act, 1952 (19 of 1952), the Central Government hereby
specifies that with effect from the 31 st May, 1971, the
said Act shall apply to every establishment rendering
expert services such as supplying of personnel, advice
on domestic or departmental enquiries, special services
in rectifying pilferage, thefts and payroll, irregularities to
factories and establishments on certain terms and
conditions as may be agreed upon between the
establishment and the establishment rendering expert
services and employing twenty or more persons.”

7. The appellant was engaged in providing security services to

its clients since the year 2001. A squad under the EPF Act

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visited the appellant’s establishment on 29.12.2005 and seized

certain records opining that the provisions of the EPF Act applied

to the appellant. The Assistant Provident Fund Commissioner on

07.03.2006 on basis of the seized documents opined that the

appellant had 79 employees as on 03.04.2001 allotting Code No.

UP/39076, requiring the appellant to deposit the necessary

contributions. The appellant having objected to the same,

proceedings were initiated under Section 7A of the EPF Act with

due opportunity of defence to the appellant. The appellant failed

to submit the attendance register, wage register etc. The

Assistant Provident Fund Commissioner on basis of balance

sheets seized during raid opined that the appellant had more

than twenty employees on its rolls and stood covered by the term

“expert services” such as providing of personnel under the

Notification dated 17.05.1971. It also noticed that wages were

not paid directly by the clients to the security guards deployed by

the appellant but that the payments were made by the clients to

the appellant, who in turn disbursed wages to the security

guards. The remedy of an appeal before the Tribunal under

Section 7­I was bypassed by the appellant instituting the writ

petition directly. The High Court declined interference with the

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conclusion of expert services being rendered by the appellant. A

review petition contending that the appellant stood duly

registered under the Act of 2005 was also rejected.

8. The Act of 2005 defines a private security agency under

Section 2(g) as an organization engaged in the business of

providing security services including training to private security

guards and providing such guards to any industrial or business

undertakings or a company or any other person or property. A

licence is mandatory under Section 4 and those security agencies

existing since earlier were mandated to obtain such licence

within one year of coming into force of the Act. A complete

procedure is provided with regard to making of an application for

grant of a licence under Section 7, renewal under Section 8 of the

Act. The eligibility for appointment as a security guard with such

security agency is provided under Section 10 of the Act. Section

11 provides for the condition of the licence and the licence can be

cancelled under Section 13. A private security agency under

Section 15 is required to maintain a register inter alia with the

names, addresses, photographs and salaries of the private

security guards and supervisors under its control. The Private

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Security Agencies Central Model Rules, 2006, framed under the

Act of 2005, requires verification by the security agency before

employing any person as a security guard or supervisor in the

manner prescribed. Proper security training of the person

employed is the responsibility of the security agency under Rule

5, and Rule 6 prescribes the standard of physical fitness for

security guards. Under Rule 14 the security agency is required

to maintain a Register in Form VIII, Part­I of which contains

details of the management, Part­II contains the name of guard,

his parentage, address, photograph, badge no. and the salary

with the date of commencement. Part III contains the name of

the customer, address, the number of guards deployed, date of

commencement of duty and date of discontinuance. Part IV

contains the name of the security guard/supervisor, address of

the place of duty, if accompanied by arms, date and time of

commencement of duty and date and time of end of duty.

9. We have no doubt in our mind that the appellant is engaged

in the specialised and expert services of providing trained and

efficient security guards to its clients on payment basis. The

contention that the appellant merely facilitated in providing

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Chowkidars cannot be countenanced. The provisions of the Act

of 2005 make it manifest that the appellant is the employer of

such security guards and who are its employees and are paid

wages by the appellant. Merely because the client pays money

under a contract to the appellant and in turn the appellant pays

the wages of such security guards from such contractual amount

received by it, it does not make the client the employer of the

security guard nor do the security guards constitute employees of

the client. The appellant therefore is squarely covered by the

Notification dated 17.05.1971.

10. The appellant never made available the statutory registers

under the Act of 2005 to the authorities under the EPF Act. In

fact, we have no hesitation in holding that it actually withheld

relevant papers. This coupled with the letter dated 03.04.2001

written by the appellant, the appellant’s balance sheet seized for

the financial years 2003­04, 2004­05, 2005­06 and 2006­07

showing payment of wages running into lacs, necessarily and

only leads to the irresistible conclusion that the appellant has

more than 20 employees on its roles. The provisions of the Act

therefore necessarily apply to it.

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11. Krantikari Suraksha Rakshak Sanghatana (supra) has

no relevance to the present controversy as it concerned to the

provision of the Maharashtra Private Security Guards (Regulation

of Employment and Welfare) Act, 1981. The applicability of the

EPF Act did not fall for consideration there. Saraswath Films

(supra) was in the context of the Employees’ State Insurance Act,

1948 interpreting the term “immediate employer”, which again

has no relevance to the present controversy.

12. That the provisions of the EPF Act are applicable to a

private security agency engaged in the expert service of providing

personnel to its client, if it meets the requirement of the EPF Act.

The question is no more res integra evident from the discussions

contained in Group 4 Securitas Guarding Ltd. vs. Employees

Provident Fund Appellate Tribunal & Ors., 184 (2011) DLT

591, G4S Secure Solutions India Pvt. Ltd. vs. The Regional

Provident Fund Commissioner­I and Ors., ILR 2018 Karnataka

2527, Orissa State Beverages Corporation Limited vs.

Regional Provident Fund Commissioner & Ors., 2016 LLR

413, Roma Henney Security Services Private Limited vs.

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Central Board of Trustees, EPF Organisation
, 2012 SCC

OnLine Del 3597, Sarvesh Security Services Private Limited

vs. University of Delhi, 2017 SCC OnLine Del 12209.

13. The appeals are therefore dismissed and the interim order

dated 12.05.2009 restraining coercive steps for enforcement of

the demand notice dated 15.04.2009 is vacated.

………………………….J.

[NAVIN SINHA]

………………………….J.

[SURYA KANT]
NEW DELHI
DECEMBER 02, 2020.

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