J&K Provident Fund Act | PF Coverage Without Gazette Notification Is 'Non Est' In Law: High Court

Justice Sanjay Dhar held that in such circumstances, it remains open for the petitioner-society to opt out of voluntary registration and reasoned,

“.. mere making of an application by an employer and the majority of the employees for voluntary coverage is not enough. On the basis of the said application, a decision has to be taken by the Government which has to be promulgated in the Official Gazette. It is only when the process is completed that the Act and the Scheme under it, can be said to have become applicable to the establishment concerned”

The petitioner, Jammu Cooperative House Building Society, a registered cooperative society since 1975, had approached the High Court challenging an order whereby its request for de-coverage under the 1961 Act was rejected. Though the society never had more than four employees well below the statutory threshold of five it had voluntarily contributed to the Provident Fund and was allotted a PF Code. However, the society later sought exemption, citing its cooperative nature and low employee strength.

An earlier writ petition had resulted in a High Court direction to the authorities to reconsider the society's claim in accordance with Section 18 of the Act. The reconsideration culminated in the impugned order of once again rejecting the society's request for de-coverage.

Justice Dhar meticulously examined the scheme of the 1961 Act. He noted that Section 18 specifically excludes cooperative societies with fewer than five employees and without the aid of power from its ambit. While the respondents relied on an inspection note from 1992 claiming eight employees were then on roll, the Court observed that there was no corroborative administrative action or any order compelling contribution for the additional employees. The authorities had accepted returns from the society showing only 2–4 employees for over two decades, he pointed.

Importantly, the Court analyzed the legal architecture governing voluntary coverage. Referring to Subsection (4) of Section 1, the Court underscored that even where voluntary registration is sought, the Act becomes applicable only when the Government issues and publishes a notification in the Official Gazette. In this case, there was no such notification, an omission fatal to the respondents' claim of valid registration.

The Court declared,

“.. applicability of the provisions of the Act to an establishment, which is otherwise not covered under the said Act, would become final only after a notification to this effect is published in the Official Gazette. The notification contemplated by Subsection (4) of Section 1 of the Act of 1961 is not merely a mere ministerial act, but it is an event which makes the Act applicable to an establishment where voluntary coverage is sought”

Drawing strength from Tech Movers Systems (India) Pvt. Ltd. v. Regional Provident Fund Commissioner, 1995 (2) LLN 938 of Bombay High Court the court reiterated that without Gazette notification under Section 1(4), proceedings under the Provident Fund Act are “illegal and without jurisdiction.” It also emphasized that either the employer or employees can withdraw consent before such notification.

In alignment with these observations Justice Dhar quashed the impugned order dated and directed the respondents to issue an order for the society's de-coverage under the 1961 Act.

Case Title: Jammu Cooperative House Building Society Vs UT Of J&K

Citation: 2025 LiveLaw (JKL) 164

Click Here To Read/Download Judgment