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EPFO declared power sector Trust illegal, issued notices after notices
ANOMALY UPPCL allegedly never approached EPFO for mandatory permission to create private PF Trust
ANOMALY UPPCL allegedly never approached EPFO for mandatory permission to create private PF Trust
The very foundation of the Uttar Pradesh power sector power employees Trust that invested around Rs 2,600 crore (26 billion) provident fund (PF) in the Dewan Housing Finance Ltd (DHFL) in alleged breach of rules is apparently based on an illegality, those in the know of things said.
The Employment Provident Fund Organisation (EPFO), a statutory body under the Union ministry of labour and employment, has declared this Trust illegal and has been issuing notices after notices to the UP Power Corporation Ltd (UPPCL) for last two years or so, asking it to justify the existence and operation of the Trust, said a senior EPFO official, who did not wish to be named.
It is revealed that the UPPCL never approached the EPFO for the mandatory permission to create the private PF Trust and seek exemptions from depositing its employees’ PF in the EPFO. This is the reason why the UPPCL does not find a mention in the EPFO’s list containing the names of ‘exempted establishments’.
“The UPPCL employees’ PF Trust is totally illegal,” disclosed the senior EPFO official in Lucknow.
“We have already initiated legal action against the Madhyanchal Vidyut Vitaran Niagam Ltd (MVVNL) that comes under our jurisdiction for not handing over the employees’ contributory provident fund to us and depositing the same in a so-called Trust,” he added.
The UPPCL Trust is common to all the energy corporations, including the MVVNL and they deposit their employees’ CPF in this trust only, rather than invest in the EPFO. The MVVNL, according to the official, had moved the high court more than a year ago, quoting some rules that, according to the company, permitted it to set up the Trust without seeking the mandatory exemptions from the EPFO.
The high court, however, directed MVVNL to appear before the competent EPFO authority to explain their case.
“They did appear before but failed to show the so-called rules that permit them to sit on their employees’ CPF without EPFO’s nod,” the official said, adding, “MVVNL has gone to the EPF Appellate Tribunal but is not able to establish its case so far.”
The government/ EPFO grants exemptions when it satisfies itself that a PF scheme proposed by an establishment is, in no way, less ruminative than the PF benefits provided under the government’s PF rules.
The UPPCL, known as UP State Electricity Board (UPSEB) before the latter was unbundled into three independent corporations, the UPPCL being one of them, as distribution entity, in January 2000, is covered under the EPF & MP Act, 1952 the provisions of which has fixed employees provident fund contribution at 12% plus DA with equal share of the employer (UPPCL).
“Exemptions from these provisions can be granted by the appropriate government only under Section 17 of the same Act upon submission of an alternative PF scheme, the provisions of which are no less favourable than those specified under section 6 and the overall PF benefits that, on the whole, are no less attractive than the benefits under the EPF and MP Act, 1952,” said sources.
“But exemptions were apparently never sought,” they said.
The provisions of the General Provident Fund (UP) Rules, 1985, had been made applicable to the employees of then UPSEB and to the UPPCL, UPPTCL and the UPRVUNL, three distribution, transmission and generation corporations, respectively, constituted under UP Electricity Reforms Act, 1999.
“In view of the provisions of Rule 2 (f) of the GPF (UP) Rules, 1985 that defines an ‘undertaking’ to mean a statutory body incorporated by or under UP Act and also in view of adoption of the said GPF Rules, 1985 by the erstwhile UPSEB for its employees, it is the provisions of the GPF (UP) Rules, 1985 that are applicable to the UPPCL and other energy corporations employees,” the sources said.
The UPPCL framed the rules known as UP Power Corporation Ltd Contributory Provident Fund Trust Rules in 2004, two years prior to the setting up of the Trust in 2006.
“The said rules were never placed before the EPFO for mandatory exemptions and are totally ultra vires of the EPF and MP Act, 1952 have no legal sanctity,” sources said.
The UPPCL CPF Trust Rules, 2004, they said, violated the Act also in the sense that they provided PF benefits that were less favourable than ones provided under the EPF provisions.
Dozen other UP govt firms
have sought exemption
There are around a dozen UP government’ corporations that operate and maintain employees’ contributory fund Trusts like the one that the UPPCL established in 2006.
However, unlike the UPPCL all other corporations that have such a Trust have sought mandatory exemptions from the EPFO for managing and investing staff’s PF on their own and hence are listed in the category of ‘exempted establishments’ on the EPFO’s website.
Among these exempted corporations/establishments are UP Samak Kalyan Nigam, UP Scheduled Caste Finance Corporation, UP State Sugar Mill Corporation, UP Forest Corporation, UP State Agro-India, UP State industrial Development Corporation, UP State Bridge Corporation, UP Stock Exchange Association Ltd, UP Electronic Corporation, and UP Matsya Vikas Corporation.
The UPPCL, however, is nowhere on the list of exempted establishments. Currently, in the whole country there are 1552 government and private establishments categories as ‘exempted’ by the EPFO.
