In a landmark judgment, the Delhi High Court on 25 February 2010 vacated its interim order of 29 March 2000, and ruled that NGOs with strength of more than 20 would have to provide employees the benefits of provident fund. The judgment came following a plea appeal filed by an NGO, Professional Assistance for Development Action (PRADAN), which had approached the High Court against a judgment of the Employees` Provident Fund Appellate Tribunal (EPFAT) of 16 March 1999. The EPFAT has dismissed PRADAN`s appeal against the order of Regional Provident Fund Commissioner (RPFC) that some of its activities were systematic. The NGO has contended that the provisions under Sections 1.3(a) and 1.3(b) of the Employees` Provident Funds & Miscellaneous Provisions Act 1952 were not applicable to it because it was not engaged in a `systematic activity` and the training it imparted to the underprivileged was sporadic and without any prescribed syllabi, methodology or schedule. (As per the Employees` Provident Funds & Miscellaneous Provisions Act 1952, PF rules are applicable to all NGOs who are involved in systematic activities and those involved in unsystematic activities might be considered outside its purview.) Earlier, the Regional Provident Fund Commissioner (RPFC) had initiated an enquiry under Section 7(A) of the same Act after which a conclusion was reached that the NGO in question was involved in systematic activity because the NGO was “engaged in the activity of imparting knowledge or training.” To reach this conclusion, the RPFC relied upon a notification under Section 1.3(b) of the Act, according to which the Act was applicable to “any other institution in which the activity of imparting knowledge of training is systematically carried on.” Though in its order dated 10 May 1998, the RPFC has agreed that some of the activities of the NGO were not systematic but because the Act was welfare legislation, it could be applied to the NGO. The NGO made an appeal to EPFAT against this order, but EPFAT again ruled against the stand taken by the NGO and observed that since the name of the NGO itself suggested that the NGO was providing professional assistance for development action and that assistance being a service, it should be brought under the ambit of section 1.3(b) of the Act. Also it is worth mentioning that PRADAN has its own Provident Fund Trust for the benefit of its employees and that PRADAN was fearful that it might be victimised by not following the route that has been prescribed by the government in relation to PF.

Dissatisfied, the NGO then approached the Delhi High Court. The court thereupon questioned the motives of the petitioner in opposing the applicability of the Act, despite PRADAN having established its own Provident Fund Trust. Counsel to the NGO, Advocate Saurabh Prakash, clarified to the court that the petitioner was afraid that it would be victimised for not applying the Act till date. Though the court was sympathetic to this reasoning, any decision on penalty was not brought under the ambit of the current order. The court then decreed that since the appellant was not able to provide any proof that its activities were not systematic and decided that since the Act was a “welfare legislation aimed at promoting and securing the well being of the employees,” it could be applied to the NGO.

The writ petition no. WP(C) No. 2954/1999 was being heard by Justice Rajiv Sahai Endlaw. The Judge, during the course of hearing, referred to the following judgments of the Supreme Court: Prakash Foods Limited vs State of Andhra Pradesh (2008) 4 SCC 584, M/s. Siddeshwari Cotton Mills (P) Ltd. vs. UOI AIR 1989 SC 1019 State of Bombay vs Hospital Mazdoor Sangh AIR 1960 SC 610, Andhra University vs Regional Provident Fund Commissioner of Andhra Pradesh (1985) 4 SCC 509. The High Court being a court of record (Article 215 of the Indian constitution), its judgments carry legal authority over all such disputes arising within the judicial territory of the High Court.
According to its website: “PRADAN professionals, divided into 30 teams, work with over 180,000 families in 3,429 villages across eight of the poorest states in the country. A majority of the families that PRADAN works with belong to the Schedule Tribes and Schedule Castes.”