High Court, As A Constitutional Court Of Record, Possesses The Inherent Power To Correct Its Own Record: Bombay High Court High Court of Uttarakhand Acquits Defendants in High-Profile Murder Case, Cites Lack of Evidence In Cases of Financial Distress, Imposing A Mandatory Deposit Under Negotiable Instruments Act May Jeopardize Appellant’s Right To Appeal: Rajasthan High Court Patna High Court Acquits Accused, Questions “Capacity of Victim to Make Coherent Statement” with 100% Burn Injuries High Court of Himachal Pradesh Dismisses Bail Plea in ₹200 Crore Scholarship Scam: Rajdeep Singh Case Execution of Conveyance Ends Arbitration Clause; Appeal for Arbitration Rejected: Bombay High Court Allahabad High Court Denies Tax Refund for Hybrid Vehicle Purchased Before Electric Vehicle Exemption Policy Entering A Room with Someone Cannot, By Any Stretch Of Imagination, Be Considered Consent For Sexual Intercourse: Bombay High Court No Specific Format Needed for Dying Declaration, Focus on Mental State and Voluntariness: Calcutta High Court Delhi High Court Allows Direct Appeal Under DVAT Act Without Tribunal Reference for Pre-2005 Tax Periods NDPS | Mere Registration of Cases Does Not Override Presumption of Innocence: Himachal Pradesh High Court No Previous Antecedents and No Communal Tension: High Court Grants Bail in Caste-Based Abuse Case Detention of Petitioner Would Amount to Pre-Trial Punishment: Karnataka High Court Grants Bail in Dowry Harassment Case Loss of Confidence Must Be Objectively Proven to Deny Reinstatement: Kerala High Court Reinstates Workman After Flawed Domestic Enquiry Procedural lapses should not deny justice: Andhra High Court Enhances Compensation in Motor Accident Case Canteen Subsidy Constitutes Part of Dearness Allowance Under EPF Act: Gujarat High Court Concurrent Findings Demonstrate Credibility – Jharkhand High Court Affirms Conviction in Cheating Case 125 Cr.P.C | Financial responsibility towards dependents cannot be shirked due to personal obligations: Punjab and Haryana High Court

Canteen Subsidy Constitutes Part of Dearness Allowance Under EPF Act: Gujarat High Court

14 November 2024 12:08 PM

By: Deepak Kumar


Gujarat High Court, comprising Justice A.S. Supehia and Justice Gita Gopi, delivered a significant judgment in I P C L Employee Association (Bhartiya Majdoor Sangh) v. Reliance Industries Ltd., addressing the scope of “cash value of any food concession” under Section 2(b)(i) and Explanation 1 to Section 6 of the Employees’ Provident Funds (EPF) and Miscellaneous Provisions Act, 1952. The court ruled that the canteen subsidy paid to employees qualifies as dearness allowance, impacting the calculation of provident fund contributions.
“Subsidy with Nexus to Cost of Living Can Be Part of Dearness Allowance”
The court observed that "the canteen subsidy has a direct nexus to the cost of living, which is an integral part of dearness allowance paid to employees to offset inflation."
The dispute arose from a 1995 settlement between the IPCL Employee Association and Reliance Industries under the Industrial Disputes Act, 1947. The settlement increased the canteen subsidy from Rs. 300/- to Rs. 475/- per month. The question before the court was whether this cash canteen subsidy should be treated as part of the dearness allowance under the EPF Act, thereby necessitating provident fund contributions.
The Regional Provident Fund Commissioner, Vadodara, ruled in 1998 that the canteen subsidy did form part of the dearness allowance, thus requiring provident fund contributions. Reliance Industries challenged this ruling, leading to a series of appeals. The Single Judge initially set aside the Regional Provident Fund Commissioner’s decision, prompting the IPCL Employee Association to file the present appeal.
Whether the canteen subsidy constitutes “basic wages” under Section 2(b) of the EPF Act.
Whether the cash canteen subsidy can be classified as the "cash value of any food concession" and included as dearness allowance under Explanation 1 to Section 6 of the EPF Act.
The court examined Section 2(b), which defines "basic wages," and Explanation 1 to Section 6, which extends the scope of dearness allowance to include the cash value of any food concession allowed to an employee.
Senior Advocate Mr. Shalin Mehta argued that the canteen subsidy was available to all employees and should be included as dearness allowance. He cited that the subsidy was tied to the cost of living, akin to a dearness allowance as per Explanation 1 to Section 6.
The Association contended that excluding the canteen subsidy would create unequal treatment among employees who availed cash subsidies and those who used subsidized canteen facilities.
Senior Advocate Mr. K.S. Nanavati emphasized that the canteen subsidy was not universally paid but depended on the presence and choice of the employee. Thus, it should not be included under "basic wages" or dearness allowance.
The company also argued that the subsidy was a discretionary benefit and did not satisfy the definition of "cash value of any food concession" as interpreted in Tata Power Company Ltd. v. Regional Provident Fund Commissioner, where no food was supplied directly.
The court relied on the Supreme Court's ruling in Bridge & Roof Co. Ltd. v. Union of India, which outlined that only emoluments universally and necessarily paid to all employees constitute basic wages. The High Court concluded that the canteen subsidy, being contingent on the employee’s choice and presence, did not meet this criterion for basic wages.
However, the court distinguished the present case from Tata Power Company Ltd., noting that in Reliance Industries, subsidized food was provided in 12 canteens. The payment was connected to food costs and hence influenced by inflation, aligning with the definition of dearness allowance under Explanation 1 to Section 6 of the EPF Act.
The High Court held: “The canteen subsidy has a direct nexus to the cost of living. Thus, it falls within the 'cash value of any food concession' and forms part of the dearness allowance under the EPF Act.”
The Gujarat High Court upheld that the cash canteen subsidy of Rs. 475/- paid by Reliance Industries is subject to provident fund contributions as it is part of dearness allowance. This decision underscores that benefits linked to essential cost-of-living adjustments, even if provided as optional subsidies, may fall under the purview of the EPF Act.

Date of Decision: October 21, 2024
 

Similar News