The Supreme Court said that once an establishment is covered under any one of the excepted category under Section 16 of the Employees’ Provident Funds and Miscellaneous Provisions Act, the authorities under the Central Act cannot exercise authority over it or call upon the establishment to comply with the provisions of the Central Act.

The tribunal and the high court, in the instant case, had held that the Central Act will apply on the ground that 16 part-time employees working in Yeshwant Gramin Shikshan Sanstha were not eligible for benefits under the State Contributory Provident Fund Scheme governing the rest of the regular employees of the establishment.

On appeal, a three-judge bench headed by Chief Justice of India JS Khehar observed that the establishment which receives 100% grant-in-aid as a school, in which 16 part-time employees were working, is under the control of the state government and thus would fulfill the first condition of Section 16(1) (b) of the Central Act.