Can beedi rollers get provident fund? Madras High Court answers

‘Beedi rollers offered service’

• The presence of Rajan Traders as an intermediary does not alter the relationship between the beedi workers and the petitioner company since it is clear that the beedi rollers were producing beedis and rendering services to the petitioner company through Rajan Traders.

• The sustenance of the beedi rollers was wholly dependent on the petitioner company. However, the arrangement adopted by the petitioner company was to project the absence of a nexus between the beedi rollers and them.
• The regional provident fund commissioner has given adequate and convincing reasons to establish that the beedi rollers were, in fact, employees of the petitioner company.
• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) is a beneficial piece of legislation intended to safeguard employees’ welfare.

Why court consider beedi rollers employees?

• The previous order passed in 2003 reflects that the entire supply chain, the manner in which the beedis were rolled, and their ultimate sale under the petitioner’s brand name were taken into consideration.
• The present case involves indirect engagement of labour through Rajan Traders, and the enquiry revealed that the petitioner company exercised control over the said traders and the manner in which the beedis were to be rolled.
• It was also placed on record that the petitioning company used to give specifications regarding the rolling of beedis, and then the beedis so rolled were purchased through the said traders, branded as the petitioner’s product and sold in the market.

‘No employer-employee relationship’: Petitioner’s contention

• Appearing for the petitioner company, advocate C Karthikeyan argued that all the previous orders challenging the EPF dues are liable to be set aside.
• He submitted that the EPF authority had been at fault when they concluded that the beedi rollers were employees of the petitioner company.
• Karthikeyan argued that there was no nexus between the beedi rollers and the petitioner company, as these beedi rollers were associated only with Rajan Traders, which purchased beedis from such self-employed workers and supplied them to the petitioner company.
• He pointed out that the petitioner company merely purchased beedis from Rajan Traders and sold them under its brand name.

• It was submitted that the Central Excise Department had inspected the premises of Rajan Traders and found that the beedi rollers had no connection with the said traders.
• In another criminal case against the Rajan Traders, it was found that there was no evidence to show that the beedi workers were on the rolls of the said traders.
• He pleaded that, considering all circumstances, the provisions of the EPF Act would not be attracted in the present case.

Beedi rollers employees

• Representing the EPF authority, advocate T Aswin Raja Simman submitted that the enquiry conducted revealed that the beedi rollers were employees of the petitioner company.
• There was several documentary and oral evidence to establish that the beedi rollers were employed by the petitioner company and that the manner in which the business was carried out, the beedi rollers fall within the definition of “employee” under the EPF Act.
• It was contended that the EPF authority had rightly concluded that the petitioner company was liable to pay EPF contributions.

‘Beedi rollers- employed by traders or petitioner’

• The petitioner company was allegedly procuring unbranded beedis from one trader, Rajan Traders, and after affixing its own brand label, it was selling the beedis.
• In July 2021, a complaint was filed by the district beedi employees union alleging that provident fund benefits were not being extended to nearly 800 beedi workers engaged by the petitioner company, which is covered under the EPF Act.
• Subsequently, the regional provident fund commissioner conducted an enquiry and passed an order in July 2023, where it was held that all the beedi rollers who supplied beedis to Rajan Traders were, in fact, employees of the petitioner company and were liable to be enrolled as PF members.
• Later, the July 2023 order was challenged in the appellate tribunal concerned, which set aside the order of the regional provident fund commissioner.
• The appellate tribunal’s order was challenged by the regional provident fund authority and the beedi workers’ union, which were dismissed by the high court.
• The assistant provident fund commissioner concerned had earlier passed an order in August 2004 challenging a sum of Rs. 2,09 crore towards EPF contribution in respect of 700 beedi rollers, treating them as employees of the petitioner company.
• This order of August 2004 was challenged before this court but was disposed of since an appeal was pending before the appellate tribunal at New Delhi.