R. Gururajan, J.Petitioner an erstwhile Assistant Secretary of the Federation of Karnataka Chamber of Commerce and Industry (Federation for short) is before this Court challenging the order dated 18.12.2000 passed by the Employees Provident Fund Appellate Tribunal, New Delhi, in appeal No. ATA 176 (6) 2000.

2. The facts in brief are as under:

3. Petitioner was appointed on 24.7.1986 as an Assistant Secretary by the Federation. His services came to be terminated illegally on 23.6.1992 without any enquiry. Aggrieved by this termination the Petitioner approached the Labour Court in ID No. 90 of 1992. During the pendency of the proceedings before the Labour Court the Respondent-1 appointed a three men committee to consider the case of Petitioner and one Ms. Kumuda Kashi. The said Committee considered the matter in detail and submitted its conclusion to the Respondent 1.

4. In the report submitted by the committee it was recommended for reinstatement of the Petitioner and other benefits to be given in terms of Annexure-A. To continue the narration of the legal proceedings before the Labour Court, the Federation filed its statement of objection and contested the matter. Matter was pending for more than seven years. Finally a settlement was arrived at between the Petitioner and the Federation. A joint memorandum of settlement was presented before the Labour Court on 22.9.1999 and the same was accepted by the Labour Court by passing an award. In terms of the said compromise Petitioner was paid a total sum of Rs. 5,00,000/-. But however, the said payment did not include the provident fund legally payable to the Petitioner. Petitioner admittedly is covered by the Act and the scheme framed thereunder. In those circumstances the Petitioner moved the authorities under the Act. The Respondent 2 after hearing the parties passed an order in favour of the Petitioner in terms of Annexure-C. A writ petition was filed by the Federation against the said order. But however, in view of the subsequent appeal filed by the Federation against the same order, the writ Court directed the disposal of the appeal at an early date. The appeal filed by the Federation was allowed by the impugned order. The said order is questioned in this case.

5. The Respondents have entered appearance and filed their objections. They justified the non-payment of provident fund. According to them settlement is full and conclusive settlement. No further amount is payable under any circumstances to the Petitioner. They want the petition to be dismissed by accepting the Appellate order.

6. Heard Sri Mohan Bhat, learned Counsel appearing for the Petitioner. He took me through the pleadings and contends that what is settled is only backwages and other benefits but not certainly PF. He says that PF being a statutory benefit, has to be settled in favour of the Petitioner. Non-settlement of the PF according to the Petitioner is a matter that require consideration by this Court. He says that the Commissioner in a well considered order accepted the case of the Petitioner which has been turned down by the Appellate Authority. He finds fault with the order of Appellate Authority. He strongly relies on the definition of "basic wages" in terms of Section 2b and relies on a judgment of Apex Court in AIR 2000 March 557.

7. Per contra Sri Somashekar, learned Counsel for Respondent contends that the facts of the case would show that the Petitioner himself volunteered and got the matter settled. Based on his request matter was referred to a Chartered Accountant and on the basis of the opinion given by him the matter got settled. The award has been passed in terms of the settlement. According to the Counsel, the Appellate Authority is right in rejecting the request of PF in the case on hand. He relies on the judgment of Apex Court in The District Exhibitors Association, Muzaffarnagar and others Vs. Union of India and others, .

8. After hearing the Counsel on either side it is my duty as to find out as to whether the facts of this case warrant payment of PF in favour of the Petitioner or not.

9. Admitted facts reveal that the Petitioner is a covered employee under the Act. It is no doubt true that a settlement was effected between the parties with regard to a dispute in ID No. 90 of 1992. The said settlement provides for the certain terms in the settlement. The settlement read as under:

TERMS OF SETTLEMENT:

1. The second party A Management has paid today a sum of Rs. 5,00,000/- (Rupees Five Lakhs only) to the first party in full and final settlement of all claims of the first party towards backwages and compensation in lieu of the reinstatement, etc. from 1.7.1992 to till 31.5.1999 gratuity and further compensation in lump sum under voluntary retirement as detailed below:

1. a) Amount of salary payable for the period 1.7.1992 to 31.3.1993 Rs. 37,800/- 017468

b) Amount of salary payable for the period 1.4.1993 to 31.3.1994 50,400/- 017469

c) Amount of salary payable for the period 1.4.1994 to 31.3.1995 50,400/- 017470

d) Amount of salary payable for the period 1.4.1995 to 31.3.1996 50,400/- 017471

e) Amount of salary payable for the period 1.4.1996 to 31.3.1997 50,400/- 017472

f) Amount of salary payable for the period 1.4.1997 to 31.3.1998 50,400/- 017473

g) Amount of salary payable for the period 1.4.1998 to 31.3.1999 50,400/- 017474

h) Amount of salary payable for the period 1.4.1999 to 31.5.1999 8,400/- 017475

2. Amount receivable as gratuity from 1.7.1992 7,000/- 017478

3. Balance to be treated as lumpsum amount paid under the v. covered by Section 10(10C) read with Rule 2BA of the IT Rules 1,41,160/- 017477

4. IT deducted (Ch. No. 017479 in favour of Canara Bank) 3,240/-

Rs. 5,00,000/-

Thus totally 10 cheques bearing No. 017468 to 017478 dated 21.9.1999 drawn on Canara Bank, Majestic branch for the respective amounts drawn in favour of Sri R.V. Shanbhag are handed over before this Honble Court.

2. The first party acknowledges the receipt of amount indicated in Clause 1 above from the second party A in full and final settlement of the claims of the first party including backwages, compensation in lieu of reinstatement, gratuity and lumpsum amount under voluntary retirement etc.

3. In view of this settlement, the jural relationship of employer and employee between the first party and second party A Management ceases to exist from this date. It is made clear that the first party is not entitled to reinstatement, re-employment or fresh employment in second party A hereinafter.

4. It is agreed that the first party shall have no more claim whatsoever against the second party A either monetary or otherwise in view of this settlement.

5. The second party A has agreed to assist the first party in furnishing and certifying necessary statements spread over required to be filed by the first party before the IT authorities for relief u/s 89 of the Act.

6. In view of the above both the parties pray that CONSENT AWARD be passed in terms of this settlement in the interest of justice.

10. The said settlement has been accepted by the Labour Court and has become an ward by the Labour Court. A reading of the said terms would show that the Federation has paid a sum of Rs. 5/- lakhs in full settlement of the claims of the Petitioner towards backwages and compensation in lieu of reinstatement etc., gratuity and further compensation under voluntary retirement scheme. The settlement further refers to an amount of salary payable for different periods. The settlement further reads in Clause 2 that what is received by the Petitioner in full and final settlement of the claim pertaining to backwages, compensation in lieu of reinstatement, gratuity etc. There is absolutely no reference with regard to settlement of PF. There is not even a whisper about the settlement of PF. In these circumstances I am of the view that the present settlement cannot be said to be a settlement in full in favour of the Petitioner in so for as PF. If that is the case nothing prevented the parties in saying so in the settlement. Moreover the parties could have not have settled PF which is always settled under the Act by the Commissioner. PF is a statutory payment and it cannot be settled de hors of the Act. A settlement contrary to an Act would be a settlement contracting out of a statute which is impermissible in law. In these circumstances Petitioners Counsel is right in saying that the settlement did not pertain to a settlement of PF dues. When a complaint with regard to the same was made before the Commissioner the Commissioner has considered the settlement in the light of various provisions of the Act and has come to a conclusion that the Federation is liable to pay the PF in the absence of any settlement whatsoever. It cannot be said that the order of the Commissioner suffer from any violation of the statute orders. However, the Appellate Authority in the impugned order holds that the original authority has misconstrued the statutory provision. According to the Appellate Authority the basis of deposit of the PF itself is the actual payment made to the employee. No actual payment was made to the employee as wages. Therefore, no PF contribution is payable. This finding in my view runs counter to the settlement in this case between the parties. It is also against the definition of "basic wages" under the Act. The settlement admittedly refers to salary for different periods. The payment is made as though the Petitioner was in employment. When an employer makes certain payments as salary by way of settlement towards backwages and compensation the concept of employment for the said period impliedly gets into it. When there is no employment for this period neither the payment of salary nor backwages would arise in such situations. This is not a settlement of a lumpsum or an adhoc payment that is effected by the employer. This is a specific case of settlement of salary for the period. Income tax is deducted in this regard. Parties also refer to backwages in the settlement in addition to using of the word "salary". In the light of these materials available on record, I am of the view that this payment is nothing but wages u/s 2(b) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952.

Section 2(b) reads as under:

"(b) basic wages" means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-

(i) the cash value of any food concession

(ii) any dearness allowance that is to say all cash payments by whatever name called paid to an employee on account of a raise in the cost of living, house rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;

(iii) any presents given by the employee.

A careful reading of this definition would show that the said definition includes not only wages paid but payable also. In the case on hand what is paid is nothing but a payable payment though belatedly paid. It certainly fits into the four corners of "basic wages" under the Act. Therefore the Petitioner is right in claiming his contribution under the Act. In this regard he has usefully refers to a judgment of Apex Court in Shree Changdeo Sugar Mills and Another Vs. Union of India and Another, . The Apex Court in Shree Changdeo Sugar Mills and Another Vs. Union of India and Another, has virtually negatived the theory found in the appellate order. The Apex Court in para 11 in the judgment rules that it is not necessary for the workman to be actually on duty or workman should actually have worked in order to attract the provisions of the Act. It is useful to quote from para 11 for reference:

We are unable to accept the submission. Undoubtedly contribution towards Provident Fund can only be on a basic wage. However, it is not at all necessary that the workman must actually be on duty or that the workman should actually have worked in order to attract the provisions of the EPF Act. For example, there may be lockout in a company. During the period of lockout the workman may not have worked yet for the purpose of the EPF Act they will be deemed to have been on duty and PF would be deducted on their wages....

In the light of the clear pronouncement in para 11 in the judgment of the Supreme Court, order of the Appellate Authority has no legs to stand in this case.

11. Counsel for the Respondent-employer relies on a judgment in The District Exhibitors Association, Muzaffarnagar and others Vs. Union of India and others, . That was a case in which the Court was considering with regard to a notification issued under the Act and also with regard to employees share in terms of the scheme. The Court was considering with regard to para 32 of the Act in the matter of deduction. The facts of the present case stands on entirely different footing. On the otherhand the latest judgment of the Supreme Court is applicable to the present case.

12. However, I must also notice one other factor in the case on hand. The original authority has ordered grant of both employer and employees contribution in terms of paras 30 to 32 of the Act. A careful reading of the 2 paras would show that no doubt it is the duty of the employer to deduct the contribution at the first instance. But however, the scheme provides for recovery of the same in terms of Regulation 30. Instead of asking the employer to pay and recover it later, I deem it proper to confine the direction only in so far as employers contribution is concerned to end the litigation. Moreover it is not a case where strictly the para 30 would step in the given sets of facts. It is only a case of settlement of wages. In these circumstances the employer contribution if paid would meet the ends of justice. Counsel for the Petitioner also could not convince me as to how he would be entitled under the Act with regard to both the employees and employers share when there being any such deduction whatsoever.

13. In the circumstances this petition is accepted. Order of Appellate Authority is set aside. Order of original authority is confirmed only in so far as contribution of employers is concerned. Federation is directed to settle the same within 8 weeks from the date of receipt of a copy of this order. In the event of failure to settle in terms of the order the Petitioner is entitled for interest also in terms of the provisions of the Act. Parties to bear their respective costs.