NMC contractor challenges mandatory EPFO registration

Nagpur: A civil contractor engaged in carrying out petty works for Nagpur Municipal Corporation (NMC) has moved Nagpur bench of Bombay high court against the Employees’ Provident Fund Organisation (EPFO) for making it mandatory for registration of his firm with it and restraining the freeze of his payments by the civic body.
Apart from EPFO, the petitioner Gausuddin, owner of Creative Construction, has also made NMC as a respondent. Justice Manish Pitale issued notices to the respondents asking them to file their reply within four weeks.

Under the Employees’ Provident Fund Act 1952, an EPF account is mandatory for all employees earning up to Rs15,000 per month in firms including civil contractors engaged by a municipal corporation employing more than 20 workers. So the EPFO has made it mandatory for the contractors to ensure remittance of the provident fund, pension and insurance amounts on behalf of their regular contract workers and those employed through contractors.

The NMC too asked all contractors to register their firms with the EPFO online. Though 10% contractors did so and obtained licences from the EPFO, Gausuddin refused to register citing he had never engaged more than 19 employees on any single day.

Following non-compliance of the directives, the EFPO had sent notice to Creative Construction firm. “Whenever we engage more than 19 employees we will apply online registration of our establishment under EPF and MP Act number 1952,” the petitioner stated in a letter to the provident fund commissioner.

Gausuddin, founder president of NMC’s Contractor Welfare Association, also raised the issue with NMC’s chief engineer. The petitioner also pointed out the NMC follows the guidelines given by the state public works department for contractors’ registration as well as floating tenders. As per present state PWD guidelines, is compulsory for registration of contractors in class I and II, while for the contractors registered between class III and IX, an affidavit is being taken every year fixing responsibility on the contractors themselves, if any EPF and MP Act 1952 related matter occurs.

To protect construction labourers, labour cess to the tune of one per cent of contract amount is being already deducted from the contractors’ bills and deposited with the state government.

Gausuddin told TOI as per guidelines only 10% of registered contractors of NMC are eligible under the EPFO Act 1952. These 10% contractors being the competitors of other 90% contractors insisting NMC to made a condition of EPFO registration in tenders. If this condition is implemented, many contractors will have to bow down before the EPFO or will have to quit the contractorship from NMC, he said.

He also ridiculed the NMC’s attitude towards this mandate as it always follow the guidelines of PWD. He cited the example of NMC, which always claiming to follow PWD guidelines, is still not implemented new CSR of the latter.

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