1990 Supreme(Kar) 360
Karnataka High Court
Regional Provident Fund Commissioner - Appellant
Versus
B.Hukmini K.Shetty - Respondent
Decided On : 07-31-90
W.A. : 100 of 1988
B.MANOHAR, P.V.SHETTY, SHAILENDRA KUMAR
Headnote:
Employees Provident Fund - Continuation of Establishment - Section 16(1)(b) of the Employees Provident Fund and Miscellaneous Provisions Act 1952 - Summary of Acts and Sections: The court discussed the application of Section 16(1)(b) of the Act and its interpretation in determining whether the establishment was a new one or a continuation of the old. The court highlighted the importance of examining the facts of each case to prevent evasion of liability and circumvention of the Act's provisions. The judgment referenced legal principles from various rulings to distinguish between a new and old establishment and emphasized the significance of genuine discontinuity in determining infancy protection eligibility.
Fact of the Case:
The premises known as 'hotel Shivaprasad' was leased to Smt. B. Rukmini K. Shetty after the eviction of the previous lessee. The Regional Provident Fund Commissioner held an enquiry to determine the entitlement to infancy protection under Section 16(1)(b) of the Act. The validity of the order was challenged in a writ petition.
Finding of the Court:
The court found that the establishment run by Smt. Rukmini K. Shetty was a new one, not a continuation of the old establishment. It emphasized the importance of genuine discontinuity and the absence of circumvention of the Act's provisions in granting infancy protection.
Issues: The key issue was whether the establishment was a new one or a continuation of the old, determining the eligibility for infancy protection under Section 16(1)(b) of the Act.
Ratio Decidendi: The court's decision was based on the determination that the establishment was genuinely new, not a continuation of the old, and therefore entitled to infancy protection under the Act.
Final Decision: The court dismissed the writ appeal, affirming the rejection of the claim for infancy protection and emphasizing the importance of genuine discontinuity in determining eligibility under Section 16(1)(b) of the Act.
( 1 ) THE facts leading to the Writ Appeal are shortly as follows ; premises known as 'hotel Shivaprasad', situated at Kundapur Town, belongs to a partnership firm consisting of the following partners : (1) V. K. Shetty; (2) B. Arunkumar Shetty ; (3) Arithkala S. Shetty ; (4) Vasanthamala R. Shetty ; and (5) Amrithkala S. Shetty. One P. M. Krishna Murthy Bhat was a lessee of this premises who was running a restaurant. O. S. No. 28/1978 was filed before the learned Civil Judge, Udipi, for his eviction. That ended in a decree in favour of the landlord. In execution of that decree in E. C. No. 14/1983 ultimately, possession was delivered to the landlord on 22-4-1983.
( 2 ) THEREAFTER the premises wasleased in favour of Smt. B. Rukmini K. Shetty (respondent herein) under lease deed dated 30-7-1983. She started a restaurant under the same name and style of Hotel Shivaprasad afresh. She obtained loan from the Bank for starting this restaurant with new furniture and utensils. She also obtained a fresh licence from the municipality which is required under the karnataka Municipalities Act for running restaurant. She recruited new employees. It may also 02 added that no one of the employees of the previous establishment was continued.
( 3 ) THE Regional Provident Fundcommissioner, held an enquiry under Section 7-A of the Employees Provident Fund and Miscellaneous Provisions Act 1952 (for short the Act), to determine whether the restaurant run by the respondent (Smt. B. Rukmini) would be entitled to infancy protection under Section 16 (1) (b) of the Act. He came to the conclusion that this was only continuation of the old establishment which had been covered by the Provisions of the Act with effect from 1-4-1985. Merely, because, there is a reduction of the number of employees which had fallen below 50, it cannot go out of the purview of the Act in view of section 1 (5) of the Act. Therefore, he concluded that the establishment run by respondent continued to be covered under the scheme. This order was passed on 6-7-1985. The validity of the order was challenged by the respondent before our learned brother Justice Doddakalegowda in W. P. No. 5511/1986.
( 4 ) IT was contended on behalf of the first Appellant- Commissioner that, merely because there had been periodical lease of the same premises in favour of different persons, that does not mean that at every time a fresh lease commences and the lessee could claim infancy protection. Further, this is a case in which delivery of possession has taken place in favour of Smt. Rukmini K. Shetty even earlier. Lastly, the goodwill had also come to be purchased. Therefore, relying on a decision in Sayaji Mills Ltd. v regional Provident Fund Commissioner, (AIR 1985 SC323), it was urged that the claim for infancy protection must be rejected. The learned Single Judge, on a consideration of the entire matter, was of the view that the ruling in AIR 1985 SC 323 has no bearing. He was also of the view merely because the respondent has taken over possession even prior to the execution of the lease deed on 30-7-1983, it would b'3 of no consequence where a fresh commencement of business has taken place by a new lessee by purchasing new utensils etc. . Accordingly he quashed the order dated 6-7-1985 and made rule absolute. Thus the Writ appeal.
( 5 ) MR. Shylendrakumar, learned counsel for the appellants, would urge that in this case the old lease came to an end on 22-4-1983 and hardly within three months the wife of one of the partners becomes s Lessee; in her favour possession is delivered even before execution of the degree; the said business is continued under the same name and style of Hotel shivaprasad. Therefore this establishment is the continuation of old establishment and in this case Section 15 of the act would squarely apply. The reliance placed by the appellants on AIR 1985 SC 323 was fully justified.
( 6 ) MR. P. V. Shetty, appearing for the respondent, would counter these submissio