Societies attached to Medical College Hospitals are not covered by EPF Act

Kerala High Court: While dealing with two appeals preferred by the Provident Fund Department challenging a decision of Kerala High Court wherein the Single Bench had set aside the orders passed by the Provident Fund Commissioner and the Appellate Tribunal, the Division Bench comprising of P.R. Ramachandra Menon, Anil K. Narendran,  JJ. found no tenable ground to interfere with the decision and held that the Societies attached to Medical College Hospitals in Kerala do not come within the purview of an “establishment” covered under the Employees  Provident Fund and Miscellaneous Provisions Act, 1952.

In 1983, the Government had constituted Hospital Advisory Committees, which were subsequently registered as Societies, with the object of ensuring steady development of hospitals. Several persons were being engaged by the Societies to cater to the needs of the Hospitals, particularly Security Personnel, Cleaning staff, Laboratory staff, Pharmacists, Clerks, Drivers and Medical Officers. In 1988, relying on a Government notification that extended the Application of the EPF Act to every establishment rendering “expert services” such as supplying of personnel, the Provident Fund Commissioner ordered that the Societies were an “establishment” coming within the purview of the EPF Act, which was later upheld by the Appellate Tribunal. On appeal, a Single Bench of Kerala High Court held that the Societies were never extending any “expert service” as envisaged under the Notification and thus they do not come within the purview of coverage.

The Court noted that since any able-bodied man can work as a security personnel and no particular qualification or training is called for, supply of security personnel cannot be regarded as an “expert service”. Also, the Societies themselves were engaging various employees and there was no supply of such personnel to the Medical Colleges/Hospital for being appointed/engaged by the latter. The Court also noted that all the employee recruited in the Hospital are Government employees whose selection comes exclusively within the purview of the Public Service Commission and, such selection can under no circumstance be entrusted with a Society. So, employment of persons by the Societies, on their own, is not liable to be termed as an ‘expert service’ rendered to Government Medical College/Hospitals.  Thereby, the Court concluded that the Societies would not be coming within the purview of the EPF Act. [Regional Provident Fund Commissioner v. Trivandrum Medical College Hospital Development Society, 2016 SCC OnLine Ker 23847, decided on November 9, 2016]

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