Regional Provident Fund Commissioner,
Andhra Pradesh Vs. Shri T. S. Hariharan [1971] INSC 102 (1 April 1971)
DUA, I.D.
DUA, I.D.
SHELAT, J.M.
BHARGAVA, VISHISHTHA
CITATION: 1971 AIR 1519 1971 SCR 305 1971 SCC
(2) 68
CITATOR INFO:
D 1987 SC 447 (12)
ACT:
Employee's Provident Fund Act, 1957, s.
1(3)(a) & (b)Employment of more than 20 persons-Casual labour whether to be
included for determining number of employees-Minimum period of employment
whether can be laid down.
HEADNOTE:
The respondent ran a hotel. Due to failure of
water supply he had to employ some persons to bring water from the tank for a
short period. .The Provident Fund Commissioner sought to enforce the provisions
of the Employees' Provident Funds Act, 1957, and the Provident Fund Scheme, 1952,
against him.
The respondent thereupon filed a writ
petition in the High Court. It was held by the High Court that employment of
more than twenty persons for a short period did not bring an establishment
within the proviso of s. 1(3) (a) & (b) of the Act. II It was also held,
that only those employees should be taken into consideration who were in
employment for the full period of one year. While, thus laying down the legal
position the High Court left it to the authorities Under the Act to apply the law
to. the facts of each case and dismissed the respondents petition. The
Provident Fund Commissioner appealed to this Court for further clarification.
HELD: Considering the language of s. 1(3)(b)
in the light of the provisions of s: 16 and s. 1(5) as *OIL as the general
scheme and object of the Act it would appear, that employment of a few persons
on account of some: emergency or for a every short period necessitated by some
abnormal contingency which is not, a regular feature of the business' of the
establishment and which does not reflect its business prosperity or its
financial capacity or stability from which it can reasonably be concluded that
the establishment can in the normal way bear the burden of the contribution
towards the provident fund under the Act, would not be covered by the
definition. The word 'employment' must therefore. be construed as employment in
the regular course of business of the establishment, such employment obviously
would not include employment of a few persons for a short period on account of
some passing necessity or some temporary emergency beyond the control of the
company. The High Court was right in holding so. But it went wrong, in holding
that the section contemplated the required number of persons to Work in the
establishment continuously for one year. It was difficult to impute to the
Legislature an intention to exclude from the application of, the Act an
establishment which regularly employs for its general business the required
number, of persons for a major part of the year say for. 360 days every year '
the employment of the required number does not extent merely because to full
one year Therefore the question must be determined in each case on its own
peculiar facts. [313C-G]
CIVIL APPELLATE JURISDICTION: civil Appeal
No. 1128 of 1967.
20-1 S.C. India/71 306 Appeal from the
judgment and order dated September 1, 1964 of the Andhra Pradesh High Court in
Writ Petition No.907 of 1963.
L. M. Singhvi and S.P. Nayar, for the
appellant The respondent did not appear.
The Judgment of the Court was delivered by
Dua, J.-The appellant in this appeal by certificate granted by the Andhra
Pradesh High' Court of February 25, 1965 under Art. 133 (1) (b) of the
Constitution is the Regional Provident Fund Commissioner, Andhra Pradesh. A
large number, of writ petitions. by various parties were filed in the High
Court praying for writs in the nature of mandamus directing the appellant
to-forbear from enforcing or taking other proceeding under the provisions of
the Employees' Provident Funds Act, 1957 (hereinafter called the Act) and,
provident Fund Scheme,' 1952. With 'the exception of perhaps one writ petition,
all the rest, including W. P. 907 of 1963 presented by T. S. Hariharn,
Proprietor, New Cochin Cafe, Ongole, respondent in; this Court were dismissed.
Certificates under Article. 133 (i) (b) of
the Constitution were secured by the appellant in almost all the cases but.
the present is the only appeal which now
survives, all the rest having been dismissed for non-prosecution.
The writ, petition of the respondent was
dismissed which means that the final order made by the High, Court was in
favour of the appellant. The only grievance raised by the appellant's learned
counsel in this court was that the HighCourt bad in the course of its judgment
expressed the view that Clause (a),and (b)of sub-section (3) of Section I of
the Act do not cover casual labour and since this expression of opinion which
he considers to be legally erroneous would be binding on the appellant in
administering the Act, it was necessary to have the correct legal position
enunciated by this Court. According to the appellant's learned counsel the
following passages in the judgment of the High Court clearly bring out the
arguments both for and against the legal position canvassed by him:-"We
have next reconsider whether clauses (a) and (b) of Section 1(3) are wide
enough to cover casual labour the work of an establishment even for a day or a
fraction thereof. This argument is sought to be reinforced; by the unreported
judgment of a Division Bench of the Madras High It is maintained by the learned
Government Pleader that` requirement as to the numerical strength is satisfied
is twenty persons are engaged in connection with 307 308 The other passage
occurs a little lower down in that judgment "Section 19-A also seems to
strengthen our view. A doubt as to the number of persons employed in an
establishment could arise only if the employment of twenty persons in the
establishment were a normal feature. A legitimate doubt cannot, be said to
arise if the condition as to the number is satisfied if twenty persons work in
the establishment even for a day or two. It is not necessary for us to labour
this point any further as we feel that the provisions of the Act are
inapplicable to establishments which do not employ twenty or more persons to
work therein for a period of one year. It follows that 'casual labour'falls
outside the scope of section 1(3). The fact that the casual labour is engaged
by. or, through a contractor does not make any different for the decision of
the question, the only criterion being whether they were casual laborers or
not.
On this discussion, it follows that the
establishments whose employees do not, come upto twenty,, excluding casual
laborers do not fall within the purview 'of Section 1(3) and so the, provisions
of the Scheme cannot be applied to them. The respondents will.
therefore, examine this question in the light
of these decide whether the Scheme should be applied these establishments
excluding casual labour." The appellant's learned counsel had at one stage
of his arguments stated that his client was anxious merely to steer clear of
the observations made by the High Court that "the provisions of the Act
are inapplicable to establishments which do not employ 20 or more persons to
work therein for a period of one year." But while citing certain decided
cases he did appear to canvas for the wide proposition that employment of a
person for however short a period would be employment for the purpose of determining
the number of persons employed as contemplated by Section 1 (3) (a) and (b) of
the Act. He relied on the Bench decision of the Madras High Court reported
Messrs East.-,India Industries (Madras) v. Regional P. F: Commissioner(1) (this
decision was also cited in the High Court as an unreported judgment) and
pressed us to uphold the reasoning adopted therein.
The question requiring our determination is a
very short one. As there is no representation on behalf of the respondent in
this Court and, therefore, we do not have the benefit of the respondent's point
of 'view we propose to confine ourselves strictly to the (1) [1964] 1 L. L. J.
441 309 limited question of the scope of clauses (a) and (b) of subsection (3)
of Section I and this judgment is not intended to be considered as expressing
any opinion on other controversial aspects. Before considering the relevant
provisions of the Act it may be pointed out that according to the respondent's
writ petition presented in the High Court in August, 1963, the New Cochin Cafe
(treated as a hotel) was started in Ongole town on November 20, 1956 and the
respondent usually employed only 18 or 19 persons. In 1961 there was total
failure of rains in the Ongole region and that town was particularly hard hit.
The respondent had, to employ two or three persons on contract basis. for
supplying water to the hotel. Those persons were engaged from June to
September, 1961. The appellant has not questioned the correctness of these
assertions for the purpose of this appeal. Let us now examine the relevant
provisions of the Act.
The Act was brought on 'the statute book for
providing for the institution of provident fund for the employees in factories
and other 'establishments. The basic purpose of providing for provident funds
appears to be to make provision for the future of the industrial worker after
his retirement or for his dependants in case of his early death.
To achieve this ultimate object the Act is
designed to cultivate among the workers a spirit of saving something regularly,
and also to encourage stabilisation of a steady labour force in the industrial
centers. This Act has since its initial enactment been amended several times to
extend its scope for the benefit of industrial workers. We are, however,
concerned with the Act as it stood in 1962 when notice was sent by the
appellant to the respondent stating that the provisions of the Act had been
made applicable to his establishment. Sections 1 (3) (a) and (b), 4 and 5 may
now be reproduced "Section 1 (3) Subject to the provisions contained in
section 16, it applies.
(a) to every establishment which is a factory
engaged in any industry specified in Schedule 1 and in which twenty or mom
persons are employed, and (b) to any other establishment employing twenty or
more persons or class of such establishments which the Central Government may,
by notification in the Official Gazette, specify in this behalf Provided that
the Central Government may, after giving not less than two months' notice of
its intention so to do, by notification in the Official Gazette, apply the
provisions of this Act to any 310 establishment employing such number of
persons less than fifty as may be specified in the notification.
Sub-Section 4 "Notwithstanding anything
contained in subsection (3) of this section or subsection(1) of section 16,
where it appears to the Central Government , whether on an application; made to
it in this behalf or otherwise, that the employer and the majority of employees
in relation to any establishment have agreed that the provisions of this Act
should be made applicable to the establishment it may by notification in the
Official Gazette, apply the provisions of this Act to that establishment."
Sub-Section 5 "An establishment to which this Act applies shall continue to
be governed by this Act notwithstanding that the number of persons employed
therein at any time falls below twenty Provided that where, for a continuous
period of not less than one year the number of persons employed therein has
been less than, fifteen the employer in relation to such establishment may
cease to give effect to the provisions ofthis Act and any scheme framed there
under, with effect from the beginning of the month following the expiry of the
said period of one year, but he shall, within one month, of the date, of such
cessation, intimate, by. registered post, the. fact thereof to such authority,
as may be specified by appropriate Government in this behalf." The
original Act was applicable to establishments which were factories engaged in
the six industries specified in Schedule 1 but as a result of persistent
demands for extension of provident fund benefits to all industrial workers, the
Act was amended' in 1956 by Act 94 of 1950 so as to enable its extension ,to
other establishments as well. .,Earlier, it may be pointed out, it was amended
in 1953. It is unnecessary to give the details of the various amendments.
We now turn to the relevant definition
clauses contained in Section 2. These definitions are subject to the context
providing otherwise. In Clause (f) "employee is, defined to mean any
person who is employed for wages in any kind of work manual or otherwise in or
in connection with the work.
of an establishment and who gets his wages
directly or indirectly from the employer and includes any person employed by,
or through a contractor in or in connection with the work of the establishment.
Clause 311 (h) defines "Fund" to mean the provident fund established
under a Scheme.' "Member" is defined in Clause (j) to mean a member
of the Fund and "Scheme" is defined in Clause (1) to mean a scheme
framed under the Act. Section 5 provides for the framing of a scheme called the
Employees' Provident Fund Scheme by the Central Government. Section 6 makes
provision for contribution by the employer and the employee to the Fund.
Section 14 provides penalties for evasion of payments under the Act or the
Scheme. Section 16 Which excludes from the applicability of the Act
establishments belonging to Government or local authority and also infant
factories, reads "16. Act not to apply to establishments belonging to
Government or local authority and also to infant industries This Act shall not
apply-(a) to any establishment registered under the Cooperative Societies Act,,
1912, or under any other law for the time being in force in any State relating
to cooperative societies employing less than fifty persons and Working without
the aid of powers; or (b) to any other establishment employing fifty or more
persons or twenty or more, but less than fifty persons until the expiry of
three years in the case of the former and five years in the case of the latter,
from the date on which the establishment is, or has been, set up.
Explanation.--For the removal of, doubts, it
is hereby declared that an establishment shall not be deemed to be newly set up
merely by reason of a change in its location.
(2)If the Central Government is of opinion
that having regard to, the financial position of any class of establishment or
other circumstances of the case, it is necessary or expedient so to do, it may,
by notification in the Official Gazette, and subject to such conditions as may
be specified in the notification, exempt that class of establishments from the
operation of this Act for such period as may be specified in the
notification." Section 17 invests in the appropriate Government power to
exempt certain establishments from the operation of all or any of the
provisions of any scheme. Section 19-A vests in the Central Government power to
remove difficulties by making necessary provision or giving directions not in consistent
with the provisions of 312 the Act. The order of the Central Government made
under Section 19-A for removing doubts and difficulties is clothed with
finality.
The narrow question which directly arises for
our consideration is whether Clause (b) of sub-section (3) of Section 1 when it
speaks of the establishment employing 20 or more persons means that the person
so employed may be employed by the establishment for any purpose whatsoever and
for however short a duration or that the employment must be for some minimum
period in the establishment. The language used in the clause does not give any
clear indication., We have, therefore, to construe this word in the light of
the legislative, scheme, the object and purpose of enacting this clause and the
ultimate effect of adopting one or the other construction. The relevant
sections of the statute have already been reproduced.
Section 16 which has already been get out in extension
seems to us to throw considerable light on the point raised., it may be
recalled that this section excludes from the applicability of the Act
establishments belonging to the Government and to local authorities and infant
establishments. It is, therefore, obvious that this Act is intended to apply
only where ;in establishment has attained sufficient financial stability and is
prosperous enough to be able to afford regular contribution provided by the
Act.
Contribution by the employer is an essential
part of the statutory scheme for effectuating the object of inducing the
workmen to save something regularly. The establishment, therefore, must possess
stable financial capacity to bear the burden of regular contribution to the
Fund under the Act. In this connection it may be recalled that by virtue of
Section 1 (5) an establishment to which the Act is applied continues to be
governed by the Act notwithstanding that the number of persons employed by it
'at any time falls below the required number. This liability to be governed by
the Act ceases only if the terms of the Proviso to Section 1(5) are complied
with. The financial capacity of the establishment to bear the burden must,
therefore, have, some semblance of a reasonably long term stability. In other
words, the employment of requisite number of persons must be dictated by the
normal regular requirement of the establishment reflecting its financial
capacity and stability. It, therefore, follows from this that the number of persons
to be considered to have been employed by an establishment for the purpose of
this Act has to be determined by taking into account the general requirements
of the establishment for its regular work which should also have a commercial
noxus with its general financial capacity and stability. This seems to us to be
the correct approach under the statutory scheme.
313 To accede to the appellant's argument
would lead to some Startling consequences. By way of illustration, if for the
purpose of extinguishing accidental fire an establishment is compelled to
employ a few persons for about a couple of hours, even then, however weak and
unstable its general financial capacity, the establishment would be covered by
the Act and would have to contribute towards the 'provident fund for the
benefit of its regular ,employees, of course, excluding those whose services
were utilised for a short while for extinguishing the fire. In this
illustration we are assuming that the employees would have no objection to
being governed by the Act. This, in our opinion, could never have been the
intention of the legislature.
Similarly, we find it difficult to impute to
the legislature an intention to exclude from the application of the Act an
establishment which regularly employs for its general business the required
number of persons for a major part of the year, say, for 360 days every year,
merely because the employment of the required number does not extend to full
one year. Both the extreme views, the one canvassed on behalf of the appellant
and the other postulated in the observation of the High Court that the required
number of persons must continuously work in the establishment for one year, do
not conform to the scheme and object of the Act and are, therefore,
unacceptable.
Considering the language of Section 1 (3) (b)
in the light of the foregoing discussion it appears to us that employment of a
few persons on account of some emergency or for a very short period
necessitated by some abnormal contingency which is not a regular feature of the
business of the establishment and which does not reflect its business
prosperity or its financial capacity and stability from which it can reasonably
be concluded that the establishment can in the normal way bear the burden of
contribution to-wards the provident fund under the Act would not be covered by
this definition. The word "employment" must, therefore, be construed
as employment in the regular course of business of the ,establishment; such
employment obviously would not include employment of a few persons for a short
period on account of some passing necessity or some temporary emergency beyond
the control of the company. This must necessarily require determination of the
question in each case on its own peculiar facts. The approach pointed out by us
must be kept in view when determining the question of employment in a given
case.
The appellant's learned counsel argued that
in the present case ,the respondent has to employ a few persons every year
regularly from June to September for supplying water to the hotel because ,of
failure of rains. This, according to him, would be a regular employment and the
High Court was wrong in holding to the contrary. There is no finding of the
High Court to this effect and 314 indeed no attempt was made before also to
substantiate this bald assertion We are, therefore, unable to accept this
contention on, the present., record. The general approach of the High Court to
the problem raised in this case seems. to us to be, broadly speaking, correct;
so is its final conclusion. ,The only observation of the-High 'Court which
required consideration is that the sub-section in question contemplates the
required number of per-. sons to work in the establishment continuously for one
year. On this point we have clarified the legal position. As the High Court has
dismissed the writ petition after clarifying the points of law raised leaving
it to the appropriate authority to finally decide the controversy on a
consideration of all the facts and circumstances we do not propose to say
anything more in this appeal which has, been heard ex parte. , With the
aforesaid clarification of the legal. position we. dismiss this appeal. As
there is no representation. on behalf of the respondent there will be no order
as to costs.
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