PIGMY AGENT or PIGMY COLLECTOR or DEPOSIT COLLECTOR DOES NOT FALL WITHIN DEFINATION OF “EMPLOYEE” AS DEFINED UNDER SECTION 2(f) of P. F. & M.P. ACT,1952 & COMMISSION PAID TO HIM, DOES NOT ATTRACT DEDUCTION OF PF CONTRIBUTION. By: S K Gupta, Advocate, Supreme Court of India, 25-B , Pocket-I, Mayur Vihar-III, Delhi-110096, M-+91-9891170907,+91-9968097740, +91-11-22624124, Email:skpfdelhi@gmail Across the country, to indoctrinate the culture of saving among the small investor(s), many co-operative bank(s), to collect the saving from small investor, engages so-called ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ on commission basis. The nature of job of ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ is to collect fund on day to day basis, from door to door and deposits the same ‘collected-fund’ to the concerned co-operative bank in their individual bank account. In lieu of ‘collected-fund’ , the concerned ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ gets only ‘commission’ from the bank which may fluctuate from 3% to 5% on ‘collected-fund’ , depending upon individual co-operative bank’s terms and conditions. 2. The Enforcement Officer, Employees’ Provident Fund Organization ( in short ‘EO’), an inspecting authority under Section 13 of the Employees’ Provident Fund & Misc. Provisions Act,1952 ( in short the ‘Act,1952’), has been inspecting the co-operative bank(s) as per one of the circular no. C.I./18(Misc.)08/TN/SZ/38529 dated 27.08.2009, issued by Central Provident Fund Commissioner, Employees’ Provident Fund Organization, Delhi ( in short ‘CPFC’) for covering these ‘Deposit Collectors’ under the provisions of the Act,1952 and the Employees’ Provident Fund Scheme,1952 ( in short the ‘Scheme,1952’) framed there under. Prior to the aforesaid circular, the Regional Provident Fund Commissioner or Assistant Provident Fund Commissioner ( in short the ‘RPFC/APFC’) have also been covering these ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ under the provisions of the Act,1952 by passing an order under Section 7A of the Act,1952 that the ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ comes within the definition of ‘employee’ as defined under section 2(f) of the Act,1952 based on the judgment titled Indian Bank Association Vs. Workmen of Syndicate Bank, AIR 2001 SC 946 and whatever commission earned by these ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ attract PF Contribution as per section 6 of the Act,1952. 3. Keeping in view the dispute of ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ , only question arose among the legal consultant for analysis and consideration thereof that : (i) “Whether ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ falls within definition of ‘Employee’ as defined under Section 2(f) of the Act,1952 or not ? (ii) “Whether commission paid to him , comes within definition of ‘Basic wages’ as defined under Section 2(b) of the Act,1952 or not ? 4. The Regional Provident Fund Commissioner, Assistant Provident Fund Commissioner , being quasi-judicial authority, has decided under Section 7A of the Act,1952 that the ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ comes within the definition of ‘employee’ as defined under section 2(f) of the Act, 1952 based on only Indian Bank Association(supra). In fact , Indian Bank Association(supra) matter was decided under Industrial Dispute Act,1947 , not under Act,1952. The dispute of ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ was examined by Shri A K Pathak, Presiding Officer, Employees’ Provident Fund Appellate Tribunal, Delhi (in short ‘Tribunal’) in matter of Akola Janta Commercial Co-operative Bank Ltd. Vs. Assistant Provident Fund Commissioner, Nagpur, ATA 607(9)2001 and Bhartiya Sindhu Sahakari Pat Sanstha Ltd. Vs. APFC, Nagpur, ATA 267(9)2005. The Hon’ble Tribunal in these appeals, categorically decided after distinguishing the judgment of Indian Bank Association (supra), the word “commission” as well as the word “Basic Wage” vide final order dated 29.08.2005 that “It is clear from the provisions quoted hereinabove that definition of “wages” as contained under section 2(f) of the Act are not paramateria with the definition of wages as contained under Section2 (rr) of the ID Act. Under the ID Act under sub-clause IV of Section 2(rr), the commission payable would form part of wages. There is no such clause in Section 2(b) of the Act. Therefore, it cannot be said that even if a person is a workman within ambit and scope of ID Act, can also be termed as an employee within the definition of Section 2(f) of the Act. More so when the commission paid to the person does not form part of basic wages as contained under Section 2(b) of the Act. Not only this, the Hon’ble Tribunal in the ATA 601(6)2000 that pigmy agents would not be employee within the meaning of Section 2(f) of the Act for the reason that no raw material was given to these collecting agents nor they produced finished products. They simple collected the amount on behalf of the bank and were given commission out of the total collected by them. Security deposit appears to have been taken to secure the amount collected by each collecting agents. In the case collecting agent did not deposit the deposit the amount in the bank collected by him the very next day then the same could have been recovered from the security deposit and that appears to be the purpose of taking security deposit and also the guarantee. There appears to be no supervisory control of the appellant on the collecting agents, nor master and servant relation exists between them.” 5. The Hon’ble Tribunal finally has decided in 2005, after distinguishing the judgment of Indian Bank Association (supra) that ‘Pigmy Agent’ does not fall within definition of ‘employee’ as defined under section 2(f) of the Act, 1952 and whatever, commission, paid to him, does not attract PF contribution as per Section 6 of the Act, 1952. 6. The issue/dispute of ‘Pigmy Agent’ was also examined by the Hon’ble Karnataka High Court in the matter of Sri Gokarnanatha Co-operative Bank Limited Vs. APFC, Mangalore , WP No. 35152 of 2010(L-PF). The Hon’ble Karnataka High Court categorically pronounced that the commission is paid to the pigmy collectors, did not constitute ‘Basic Wages’ within the definition of the said term under Section 2(b) of the Act,1952. The Hon’ble Karnataka High Court pronounced in paragraph 02 of the aforesaid judgment that “ In identical circumstance, when identical question arose, as to whether commission paid to pigmy collectors is not ‘basic wage’ as defined in Sec. 2(b) of the Act? Was answered in affirmative by order dated 14.06.11 in W.P.17999/2010 , in the case of Murugharajendra Co-operative Bank Ltd . Vs. Assistant Provident Fund Commissioner. Following the said decision and for the very same reasons, this writ petition is accordingly allowed”. The Assistant Provident Fund Commissioner, Mangalore , being aggrieved with judgment of single judge , preferred a writ appeal before the Hon’ble Karnataka High Court. The Division Bench , in the matter of APFC, Mangalore Vs. Sri Gokarnanatha Co-opertaive Bank Limited Vs. , WA No. 17717 of 2011(L-PF). ,inter-alia, decided that since the “Pigmy Collector” is paid commission. Commission is not treated “basic wage” as defined under Section 2(b) of the Act,1952. 7. In persuasion of the aforesaid WA No. 17717 of 2011(L-PF) , the PF authority has preferred SLP, bearing no. CC 11912 of 2013, before the Hon’ble Supreme Court which was dismissed on 10.07.2012. Therefore, now the law is settled that ‘Pigmy Agent’ or ‘Pigmy Collector’ or ‘Deposit Collector’ does not come within definition of ‘Employee’ as defined under Section 2(f) of the Act,1952 and commission paid to him, does not attract deduction of provident fund contribution as per Section 6 of the Act,1952. S K Gupta, Advocate, Supreme Court of India NB: I humble request all the Learned Legal Consultants , PF Consultant to represent the matter before the RPFC/APFC by submitting detailed representation during 7A inquiry so that the interest of the Employer(s) Bank (s)can be protected during 7A inquiry and subsequent legal proceedings thereof. If any bank wants to file an appeal against the 7A order , please contact me. Address for communication: S K Gupta, Advocate 25-B, Pocket-I,Near Red Fox Hotel , Mayur Vihar–III,Delhi-110096.Mobile No. 09891170907, 09968097740, 011-22624124, Email: skpfdelhi@gmail.
Posted on: Sat, 02 Nov 2013 03:41:25 +0000
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