EPF Act applicable to private security agency - Supreme Court

The Supreme Court (“SC”) in the case of ‘Panther Security Service Private Limited vs. Employees' Provident Fund Organisation (Civil Appeal Nos. 4434­4435 of 2010)’ stated that the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act (“Act”) are applicable to private security agencies providing personnel to clients on December 02, 2020.

A bench of Justices Navin Sinha and Surya Kant stated that the Panther Security Service Private Limited (“Appellant Company”) was engaged in specialized and expert services of providing trained and efficient security guards to its clients on payment basis. The SC rejected the Appellant Company's contention that it merely facilitated in providing chowkidars and held that the provisions of Private Security Agencies (Regulation) Act, 2005 stated that the firm was the employer of such security guards and their wages were paid by the Appellant Company.

The Appellant Company was engaged in providing security services to its clients since the year 2001. A squad under the Act visited the Appellant Company’s establishment in 2005 and seized certain records opining that the provisions of the Act applied to them. The Assistant Provident Fund Commissioner on March 07, 2006 on the basis of the seized documents opined that the Appellant Company had seventy-nine (79) employees as on April 03, 2001, requiring them to deposit the necessary contributions. The Appellant Company having objected to the same, proceedings were initiated under Section 7A of the Act.

The Appellant Company instituted a writ petition to seek remedy. The Allahabad High Court declined interference with the conclusion of expert services being rendered by the Appellant Company. A review petition contending that the Appellant Company stood duly registered under the Act was also rejected.

The SC stated that, “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 bench said.

This update is by Rohitaashv Sinha, Advocate & Associate Partner at Agarwal Jetley & Co., Advocates & Solicitors. Contact: Email: rohitaashv.sinha@agarwaljetley.com or Mob: (+91) - 9999565393