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Panther Security Service Private Limited Vs. The Employees' Provident Fund Organisation and Ors. - (Supreme Court) (02 Dec 2020)

Provisions of EPF Act are applicable to a private security agency engaged in expert service of providing personnel to its client


Labour and Industrial

The Appellant is engaged in the business of providing private security guards to its clients on payment basis. The Appellant is registered under the Private Security Agencies (Regulation) Act, 2005 ("the Act of 2005"). The Appellant is aggrieved by the order of the High Court, affirming the order of the Assistant Provident Fund Commissioner under Section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 ("the EPF Act") holding the Appellant liable for compliance with the provisions of the EPF Act and to deposit statutory dues within 15 days.

The Appellant submitted that, the Appellant was not covered by G.S.R. No. 805 dated 17th May, 1971 issued under Section 1(3)(B) of the EPF Act, since it was not engaged in rendering any expert services. It merely facilitated in providing Chowkidars to its clients at the request of the latter. The Appellant only levelled a service charge for facilitation. The salary was paid to the Chowkidars by the client who engaged their services. The Appellant had only 5 persons on its rolls. The EPF Act was therefore not applicable to it.

The Act of 2005 defines a private security agency under Section 2(g) as an organization engaged in the business of providing security services including training to private security guards and providing such guards to any industrial or business undertakings or a company or any other person or property. A licence is mandatory under Section 4 and those security agencies existing since earlier were mandated to obtain such licence within one year of coming into force of the Act. A private security agency under Section 15 is required to maintain a register with the names, addresses, photographs and salaries of the private security guards and supervisors under its control. The Private Security Agencies Central Model Rules, 2006, framed under the Act of 2005, requires verification by the security agency before employing any person as a security guard or supervisor in the manner prescribed.

The Appellant is engaged in the specialised and expert services of providing trained and efficient security guards to its clients on payment basis. The contention that the Appellant merely facilitated in providing Chowkidars cannot be countenanced. The provisions of the Act of 2005 make it manifest that the Appellant is the employer of such security guards and who are its employees and are paid wages by the Appellant. Merely because the client pays money under a contract to the Appellant and in turn the Appellant pays the wages of such security guards from such contractual amount received by it, it does not make the client the employer of the security guard nor do the security guards constitute employees of the client. The Appellant therefore is squarely covered by the Notification dated 17th May, 1971.

The Appellant never made available the statutory registers under the Act of 2005 to the authorities under the EPF Act. In fact, it actually withheld relevant papers. This coupled with the letter dated 3rd April, 2001 written by the Appellant, the Appellant's balance sheet seized for the relevant showing payment of wages running into lacs, necessarily and only leads to the irresistible conclusion that the Appellant has more than 20 employees on its roles. The provisions of the Act therefore necessarily apply to it. The provisions of the EPF Act are applicable to a private security agency engaged in the expert service of providing personnel to its client, if it meets the requirement of the EPF Act. Appeals dismissed.


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