Beedi Rollers Engaged Through Intermediary Held Employees Eligible for PF

Case Details: Seyadu Beedi Company vs. Regional Provident Fund Commissioner - [2026] 183 taxmann.com 731 (HC-Madras)

Judiciary and Counsel Details

K. Surender, J.
I. Robert Chandra Kumar, Standing Counsel for the Respondent.

Facts of the Case

In the instant case, the petitioner was a beedi manufacturing company. It procured unbranded beedis from M/s. Rajan Traders affixed its brand and sold them. The petitioner was covered under the Employees’ Provident Funds and Miscellaneous Provisions (EPF) Act.

A complaint by the District Beedi Employees Union alleged that provident fund benefits were not extended to about 800 beedi rollers engaged through M/s. Rajan Traders.

Pursuant to the complaint, the Regional Provident Fund Commissioner conducted an enquiry under Para 26B of the EPF Scheme, read with Section 7A of the Act and held that beedi rollers supplying beedis to M/s. Rajan Traders were employees of the petitioner and had to be enrolled as PF members.

The petitioner challenged the said order before the Appellate Tribunal, which set aside the Regional Provident Fund Commissioner’s order. The Regional Provident Fund Authority and the Beedi Workers Union filed writ petitions challenging the Appellate Tribunal’s order; the High Court dismissed those writ petitions, thereby confirming the Appellate Tribunal’s order.

In writ appeals, the Division Bench held that the Appellate Tribunal lacked jurisdiction to entertain an appeal against an order passed under Para 26B read with Section 7A of the Act. Thereafter, the petitioner filed the instant writ petition.

It was noted that, since the beedi rollers were producing beedis and rendering services to the petitioner company through M/s. Rajan Traders, the presence of M/s. Rajan Traders, as an intermediary, did not alter the relationship between the beedi workers and the petitioner company.

Further, it was noted that sustenance of the beedi rollers was wholly dependent on the petitioner company, and the arrangement adopted by the petitioner company was to project the absence of nexus between the beedi rollers and the Petitioner Company.

High Court Held

The High Court observed that the Regional Provident Fund Commissioner had given adequate and convincing reasons to establish that beedi rollers were, in fact, employees of the petitioner company.

The High Court held that though the petitioner company adopted a dubious method in engaging the services of beedi rollers, on a scrutiny and reasoning given in the order dated 01.07.2003, it could not be held that beedi rollers were not employees of the petitioner company or that they were not entitled to provident fund benefits.

Accordingly, the order dated 01.07.2003 passed under Para 26B of the EPF Scheme, read with Section 7A of the Act, and the consequential order dated 17.08.2004 was liable to be sustained.