Full Judgment Text
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PETITIONER:
R. RAMAKRISHNA RAO
Vs.
RESPONDENT:
STATE OF KERALA
DATE OF JUDGMENT:
23/01/1968
BENCH:
HIDAYATULLAH, M.
BENCH:
HIDAYATULLAH, M.
HEGDE, K.S.
CITATION:
1968 AIR 1367 1968 SCR (2) 819
CITATOR INFO :
R 1970 SC 655 (8)
F 1971 SC 82 (2)
ACT:
Employees Provident Funds Act (19 of 1952), s. 1(3)(b) and
s. 16 (1)(b)-Proprietor of hotel starting new hotel-
Number of employees reaching twenty-Whether employer
can claim exemption from application of Act for 5 years.
HEADNOTE:
The appellant started running a hotel in 1948. In 1949 be
started a second hotel and in 1959 a third in the same
place. On the addition of the 3rd hot.,-I the number of
employees reached the figure 20.
On the question whether, even if the three hotels were
taken together as one establishment, the proprietor
could not claim under S. 16(1)(b) of the Employees
Provident Funds Act, 1952, exemption from the application of
the provisions of the Act for a period of five years from
1959.
HELD : The period should be counted only from 1948,
when the establishment was first set up.
Under s. 1(3) (b) the Act applies to establishments
employing 20 or more persons. The word ’employing’ only
describes the establishments to which the Act applies and
does not show that there should be continuity of
employment of 20 persons for 5 years. Under s. 16(1)(b), in
the case of a new establishment, the period of 5 years is
counted forward from the date the establishment is set
up but in the case of in existing establishment from the
date the establishment has been set up. The intention in
either case is to give a breathing time to new
establishments. [822 C, D, E-F]
JUDGMENT:
CRIMINAL APPELLATE JURISDICTION : Criminal Appeals Nos.
94 of 1965.
Appeals by special leave from the judgment and order
dated January 11, 1965 of the Kerala High Court in
criminal Revision Petition No. 90, 107 and 108 of 1964.
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B. R. L. Iyengar and A. G. Ratnaparkhi, for the
appellant (in all the appeals)
R. H. Dhebar, for the respondent (in all the appeals).
The Judgment of the Court was delivered by
Hidayatullah, J. The appellant is the proprietor of two
establishments called Ananda Bhavan Boarding & Lodging and
Hotel Brinda Palghat. He was convicted by the Special 1st
Class Magistrate, Kozhikode on three counts under paragraphs
76(c) and (e) of the Employees Provident Fund Scheme 1952
read with s. 14 of the Employees Provident Funds Act, 1952
for having failed to submit the returns, statements and
other documents required by the Scheme in respect of three
quarters July to
820
September, 1961, October to December, 1961 and January to
March, 1962. He was fined Rs. 25 on each count. His appli-
cation for revision in the High Court of Kerala was
dismissed. He has now filed these appeals by special leave
of this Court.
Ananda Bhavan Boarding & Lodging was started by him on
December 6, 1949 and Hotel Brinda on January 15, 1959. He
had a third establishment which went under the name of Anand
Bhavan started on September 15, 1948 but it was sold by him
in April, 1962. Complaints were filed against him by the
Provident Fund Inspector, Trichur on December 16, 1962,
alleging that he had contravened paragraphs 36(2)(a) and (b)
and 38 of the Scheme. Under these provisions he was
required to submit within 15 days of the close of the month
a return of the employees qualified to become members of
the; Fund for the first time during the preceeding month
together with a declaration of such qualifying employees and
to pay to each member his wages in respect of any period or
part of the period for which contributions were payable
after deducting the employees’ contribution from his wages
which together with his own contribution as well as an
administrativecharge were to be paid to a Fund established
under the Scheme. He was also required to forward to the
Commis-sioner within 15 days of the close of the month a
consolidated statement. The appellant contended that two
employees were working in the Ananda Bhavan Lodging and I I
members in the Hotel Brinda. He claimed exemption for five
years under the Act. His further defence was that the three
establishments formed different units and that 20 persons
were not employed in any one of these places and that even
if the three establishments could be deemed to be a single
establishment the number of employees reached the figure
(which the Act puts down as the minimum) after Hotel Brinda
was opened in January 1959 and he was entitled to an
exemption under the Act for a further period of five years
from January 15, 1959. Lastly, he pleaded that if there was
a doubt on all these points the matter could only be decided
after the doubt was cleared by an order of the Central
Government under S. 19A of the Act. His pleas were not
accepted by the High Court and the Magistrate and he has
raised some of the contentions before us.
Before we consider the arguments which have been urged be-
fore us we may refer to some of the provisions of the Act.
The Employees Provident Fund Act became law on March 4, 1952
and the scheme was published on September 2, 1952. A part
of the Scheme became operative from October 31, 1953; other
portions came into operation on subsequent dates. It was
not contended before us that the relevant parts of the
Scheme were not in force. The Act applies to the whole of
India and subject
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to the provisions contained in s. 1 6 of the Act it applies
(a) to a factory engaged in any industry specified in
Schedule I in which 20 or more persons are employed and (b)
to "any other establishment employing 20 or more persons or
class of such establishments which the Government may by
notification in the Official Gazette specify in this
behalf". These establishments come within cl. (b) and are
governed by the appropriate notification issued by the
Central Government. No contention has been raised before us
that the Act and the Scheme were not applicable to the kind
of establishments here. Since the objection is that s. 16
excludes the establishments for a period we may read that
section here:
"16. Act not to apply to certain establishments.-
(1) This Act shall not apply-
(a) to any establishment registered under the Co-
operative 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 power; 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 doubt, 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)
Paragraph 26 (I) (a) of the Scheme shows the classes of
employees entitled and required to join the Fund. It reads
as follows:-
"26 (I) (a) Every employee employed in or in connection with
the work of a factory or other establishment to which this
Scheme applies, other than an excluded employee shall be
entitled and required to become a member of the Fund from
the beginning of the month following that in which this
paragraph comes into force in such factory or other
establishment, if on the date of such coming into force he
has completed one year’s continuous service or has actually
worked for not less than 240 days during a period of twelve
months or less in that factory or other establishment or in
any other factory or other establishment to which the Act
applies under the same employer, or partly in one and partly
in the other."
822
Now the question in this case is that Hotel Brinda commenced
only on January 15, 1959 and the number of employees then
exceeded 20 for the first time. Under the provisions of s.
1 6 an exemption from the Act and the Scheme is claimed for
five years and it is submitted no offence was committed
because the establishments even if taken together could not
be subjected to the provisions till a period of five years
had expired from January 15, 1959.
In support of this argument Mr. B. R. L. lyengar emphasises
that the use of the participle ’employing’ in s. 1 (3) (b)
shows some continuity of employment of 20 persons and not
the first point of time when that number is reached. He
contends that it is always intended that a period of 3 or 5
years, as the case may be, must elapse before the provisions
of the Act and the Schemes are made applicable. This is an
ingenious way of Putting the matter but is not admissible.
The language of s. 16 (I) (b) is very precise. The last
thirteen words of the clause from the date on which the
establishment is or has been set up’, show both cases where
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the establishment is new and where the establishment is old.
The word ’is’ shows that a new establishment is meant and
the words ’has been’ show that the establishment existed
before the number is reached. If it was -intended to apply
the clause to new establishments the words ’is set up’ would
have been sufficient. The construction Sought to be placed
would render the words ’has been’ otiose. Further the
scheme of Paragraph 26 quoted earlier relates to a period of
service and this qualifying period may be in the past as
well as in the future. The intention behind s. 16 read with
paragraph 26 quite clearly shows that the period is intended
to give a breathing time to new establishments. That reason
does not hold when the establishment is already old and well
founded. The use of the participle is therefore immaterial.
Whether a present perfect tense or a participle be used the
meaning is the same. Clause (b) of s. 1(3) which uses the
participle and clause (a) of the same section which employs
the present perfect tense both merely describe the
establishments and convey no different meanings. The
conclusion of the High Court was thus right. The appeals
fail and will be dismissed.
V. P. S. Appeals
823