Ker HC | Bank liable to pay contribution under Employees’ Provident Funds Act, in respect of commission paid to its deposit collectors

Kerala High Court: The Division Bench of K. Surendra Mohan and A.M. Babu, JJ. dismissed an appeal filed by a bank and concluded that deposit collectors, who act as agents of the bank, are ‘employees’ for the purpose of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act).

The instant appeal was filed assailing dismissal of a petition challenging order of Regional Provident Fund Commissioner whereby deposit collectors of the appellant bank were held to be persons to whom the EPF Act would apply, and accordingly, contributions were directed to be paid in respect of such employees.

The question herein was that whether contributions under the EPF Act is due or payable in respect of the commission that is paid to deposit collectors.

Mr M.R. Anison, learned counsel on behalf of the appellant submitted that deposit collectors are not ‘employees’ under the EPF Act. Therefore, no contributions under the EPF Act were either due or payable in respect of such employees.

The Court relied on Indian Banks Assn. v. Workmen of Syndicate Bank, (2001) 3 SCC 36 where it was held that deposit collectors are covered under the definition of ‘workmen’ in the Industrial Disputes Act, 1947. It was opined that commission paid to deposit collectors depends upon the terms of the agreement entered into between the bank and deposit collectors. An agent is paid commission at the rate or rates determined by the Board of Directors of the bank from time to time. Therefore, commission so paid to the deposit collectors constitutes their wages.

In view of the above, it was held that there was no infirmity in the impugned order.[South Malabar Gramin Bank v. Regional Provident Fund Commr., 2019 SCC OnLine Ker 843, Order dated 27-02-2019]

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