“Cash Canteen Subsidy” Satisfies Expression “Cash Value Of Any Food Concession”; Forms Part Of Dearness Allowance: Gujarat HC

The Gujarat High Court held that, “cash canteen subsidy” satisfies the expression “the cash value of any food concession” and hence, forms part of the dearness allowance by virtue of deeming fiction.

The Court held thus in an appeal filed against the judgment of the Single Judge allowing the writ petition of the Reliance Industries Ltd. (RIL) assailing the Appellate Tribunal’s order.

A Division Bench of Justice A.S. Supehia and Justice Gita Gopi observed, “… on an overall threadbare analysis of the facts and law as well the judicial precedents, we hold that the ‘cash canteen subsidy’ will satisfy the expression ‘the cash value of any food concession’ and will fall under Explanation 1 to Section 6 of the EPF Act, 1952 and will be part of the dearness allowance by virtue of deeming fiction, hence amenable to deductions towards provident fund. The learned Single Judge has erred in quashing and setting aside the orders passed by the statutory authorities.”

Senior Advocate Shalin Mehta appeared on behalf of the appellant while Senior Advocate K.S. Nanavati appeared on behalf of the respondent.

Brief Facts -

A dispute between the appellant (IPCL Employees Association) and the respondent (RIL) arose regarding “the Canteen Subsidy”, being paid at the rate of Rs. 475/- per month to the members of the appellant-Association. A settlement under Sections 12(3) and 18(3) of the Industrial Disputes Act, 1947 (IDA) arose between the parties which contained clause increasing the canteen subsidy from Rs. 300/- to Rs. 475/-. The said settlement did not contain any explanation as to whether the canteen subsidy will form part of basic wages or dearness allowance.

Ultimately, the dispute landed before the EPF (Employees Provident Fund) authorities and after hearing both the parties, the Regional Provident Fund Commissioner (RPFC) passed an order by concluding that the “Cash Canteen Subsidy”, is in the form of “dearness allowance” and would attract the contribution under the EPF Act and hence, RIL is liable to contribute such amount. Thereafter, RIL moved an application seeking review of the said order but the same was rejected. Then it filed an appeal before the Appellate Tribunal and it was also dismissed. However, the Single Judge set aside all the orders and being aggrieved, the Association approached the High Court.

The High Court in view of the facts and circumstances of the case, noted, “In the present case, it is established that the respondent - Industries are supplying the food in 12 canteens at subsidized rates through Contractors. The rates of food items of both the categories are fixed. The cash canteen subsidy has been made available to all employees in view of statutory settlement. It has been revised from Rs.300/- to Rs.475/- and further revised to Rs.525/- per month w.e.f 01.01.2002. Simultaneously, the Industries has revised the rate of food items in both the categories. Thus, revising of the rates of food items has direct nexus to the cost of living, which is an integral part of dearness allowance which is paid to the employees to offset the adverse impact of inflation.”

The Court added that the price of food items has direct nexus to inflation and hence, they are amendable to revision and as a consequential effect, the canteen subsidy is also revised. It said that the term cash value of food concession, though cannot be qualified as dearness allowance stricto sensu, but the legislature has supplied a deeming fiction to include the same in the dearness allowance looking to the basic nature of both the components.

“The characteristics of ‘the cash value of any food concession’ and ‘dearness allowance’ are analogous and are interlaced with each other. The legislature in its wisdom has aptly excluded both from the ambit of Section 2(b), but they are included for the purpose of deduction of contribution towards provident fund in Section 6 of the EPF Act, 1952. Explanation 1 to Section 6 of the EPF Act, 1952 uses the language “dearness allowance shall be deemed to include also the “cash value of any food concession ‘allowed’ to the employee”, it observed.

Furthermore, the Court elucidated that the cash value of food concession has the colour of ‘allowance’, and is included in dearness allowance due to deeming fiction and all three benefits, the dearness allowance, supply of food at concessional rates and canteen subsidy are admissible to the employees in the course of employment.

“Canteen subsidy is nothing but synonym to food concession or, discount offered on food. … The cash canteen subsidy has direct nexus to the rates of items of food which are being sold at subsidized rates to the employees who have not opted for cash canteen subsidy. Thus, it can be said that the subsidized rates of food items in canteens are fixed keeping in mind the cash canteen subsidy or it can be vice versa also. Such cash value of the subsidized food in canteens, in fact is a concession in the form of cash subsidy, and hence, it will satisfy the expression “cash value of any food concession” which will indubitably form a part of dearness allowance”, it also held.

The Court remarked that an employee may not take the food at concessional rates everyday, but the same cannot absolve the Establishment from deductions to provident fund entirely.

“It is well settled legal proposition of law that a beneficent provision of legislation must be liberally construed so as to ful fill the statutory purpose and not to frustrate it, and in case there are two views possible, the Court of law will always adopt the view which would be beneficial to the employees/workers. The Courts will be slow in adopting the view which would frustrate the purpose of the beneficial legislation”, it concluded.

Accordingly, the High Court allowed the appeal and quashed the impugned judgment.

Cause Title- IPCL Employee Association (Bhartiya Majdoor Sangh) v. Reliance Industries Ltd. (Neutral Citation: 2024:GUJHC:58705-DB)

Appearance:

Appellant: Senior Advocate Shalin Mehta and Advocate Aditi S. Raol.

Respondent: Senior Advocate K.S. Nanavati, Advocates E. Shailaja, Kunal Nanavati, Mayur Dhotare, and Shyam P. Naik.

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