Beedi Rollers Engaged Through Intermediary Would Be Considered Employees, Eligible For Provident Fund: Madras High Court

The Madras High Court recently held that “beedi rollers” who have been employed through an intermediary agency would still be considered as employees under the Employees' Provident Funds and Miscellaneous Provisions Act. Justice K Surender thus refused to interfere with an order passed by the Regional Provident Fund Commissioner, holding that the beedi rollers were liable to be enrolled as PF members. The court noted that the EPF Act was beneficial legislation, and though the company had adopted dubious methods to engage services of beedi rollers, it could not be said that they were not employees of the company. “The Regional Provident Fund Commissioner has given adequate and convincing reasons to establish that the beedi rollers were, in fact, employees of the petitioner company. The EPF Act is a beneficial piece of legislation intended to safeguard employees' welfare. Though dubious method was adopted by the petitioner company in engaging the services of the beedi rollers, on a close scrutiny and the reasoning given in the order dated 01.07.2003, it cannot be held that the beedi rollers are not employees of the petitioner company or that they are not entitled to provident fund benefits,” the court said. The court was hearing two petitions filed by M/s. Seyadu Beedi Company. The first one was seeking to quash the order passed by the Regional Provident Fund Commissioner under Para 26B of the EPF Scheme, read with Section 7A of the EPF Act. The second petition was filed seeking to stop the Regional Provident Fund Commissioner to stop the recovery proceedings. The Beedi company was procuring unbranded beedis from M/s Rajan Traders and selling it after affixing their brand label. In 2001, the District Beedi Employees Union filed a complaint alleging that provident fund benefits were not being extended to 800 beedi workers engaged by the company through Rajan Traders. Upon receipt of the complaint, the Regional Provident Fund Commissioner conducted an enquiry and passed the order. The company argued that the EPF authority had erroneously concluded that the beedi rollers were employees of the company. It was argued that there was no nexus between the company and the beedi rollers and the latter were associated only with M/s Rajan traders which purchased beedis from self-employed workers and supplied them to the company. It was submitted that the company merely purchased beedis from M/s Rajan Traders and sold them in its brand name. On the other hand, the EPF argued that there was ample documentary and oral evidence to establish that the beedi rollers were employed by the company and that from the manner in which the business was carried out, the beedi rollers would fall within the definition of employee under the Act. Thus, it was argued that the authority had rightly concluded that the company was liable to pay the EPF contributions. After perusing the materials, the court noted that Rajan traders was only a benami unit of the company and that the arrangement was devised to procure beedis from workers so as to circumvent the provisions of the EPF Act. The court concluded that in such arrangement, the beedi rollers would come within the definition of “employee” under the EPF Act. The court thus sustained the order of the authority and dismissed the pleas filed by the company. Counsel for Petitioner: M/s. C. Karthikeyan Counsel for Respondent: Mr. I. Robert Chandra Kumar Case Title: M/s. Seyadu Beedi Company v. The Regional Provident Fund Commissioner Citation: 2026 LiveLaw (Mad) 73 Case No: W.P.(MD) Nos.1900 and 3279 of 2026Click Here To Read/Download The Judgment

Beedi Rollers Engaged Through Intermediary Would Be Considered Employees, Eligible For Provident Fund: Madras High Court

Upasana Sajeev

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