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IN THE HIGH COURT OF BOMBAY
(D. V. Patel and J. L. Nain JJ.)
M/s. SHAPOORJI NUSSERWANJI & CO. - Petitioner.
V.
THE CHAIRMAN, BOARD OF TRUSTEES OF THE EMPLOYEE - PROVIDENT FUND SCHEME, 1952 - Respondent.
Advocated appeared
For petitioner- V. N. Gadgil.
EMPLOYEES PROVIDENT FUNDS ACT, 1952 - SECTION 7A - SCHEME - LIABILITY OF EMPLOYER - COMMENCEMENT - DISCOVERY - ORDER UNDER SECTION 7A - HEARING.
Fact of the Case:
The petitioner, a partnership firm engaged in motor transport business, challenged an order passed by the Regional Provident Fund Commissioner under section 7A of the Employees Provident Funds Act, 1952, directing it to pay certain sums into his office. The petitioner contended that it became liable only after a code number was assigned to it, that it could not be called upon to pay any amount for a period prior to the date of the order, and that it was not heard before the making of the order.
Finding of the Court:
The court held that the petitioner's liability arose as soon as the conditions for the application of the Act and the Scheme were satisfied, and that the Scheme automatically applied from that date. The court further held that the order under section 7A was not retrospective, but was merely enforcing the Scheme from the date it should have been implemented by the employer. The court also held that the petitioner was given sufficient opportunity to be heard, but it chose not to cooperate with the Commissioner.
Issues: 1. Whether the petitioner's liability under the Act and the Scheme arose only after a code number was assigned to it? 2. Whether the petitioner could be called upon to pay any amount for a period prior to the date of the order under section 7A? 3. Whether the petitioner was heard before the making of the order under section 7A?
Ratio Decidendi: 1. The court held that the petitioner's liability arose as soon as the conditions for the application of the Act and the Scheme were satisfied, and that the Scheme automatically applied from that date. The court relied on the provisions of the Act and the Scheme, which impose duties on the employer to do certain preliminary things within a fortnight of the Scheme applying and to start enforcing it qua such employees as are required to become members of the Fund immediately. 2. The court held that the order under section 7A was not retrospective, but was merely enforcing the Scheme from the date it should have been implemented by the employer. The court reasoned that the Act and the Scheme became applicable to the petitioner from the date of the order or decision which resolved the doubt, and that the direction for the implementation of the Scheme from a prior date was not retrospective. 3. The court held that the petitioner was given sufficient opportunity to be heard, but it chose not to cooperate with the Commissioner.
Final Decision: The court dismissed the petition and upheld the order of the Regional Provident Fund Commissioner.
PATEL J.-By this petition the petitioner seeks to have the order made by the Regional Provident Fund Commissioner quashed. The said order is made under section 7 A of the Employees Provident Funds Act, 1952 (herein. after referred to as the Act of 1952) and calls upon the petitioner-firm to pay the sums of Re. 54,2i5 and Rs 1,261 into his office.
2. The petitioner-firm is a partnership doing motor transport business.
The Central Government framed a scheme under the said Act called the Employees Provident :Funds Scheme, 1952 (hereinafter referred to as the Scheme). It issued a notification under section I (3) (b) of the Act of 1952 and applied the said Scheme to Road Motor Transport Establishments from April 30, 1959. Respondent No.2 intimated to the petitioner by the letter dated May 24, 1966, that the petitioners establishment fulfilled the conditions for the application of the Scheme with effect from July 31, 1961; that Code No. MB /6949 was allotted to it and that it should implement the provisions of the Act and the Scheme from August I, 1961. It also gave other necessary directions. Upto the end of 1966 the petitioner did not do anything to implement it. On July 12, 1967, respondent No.2 wrote another letter to the petitioner intimating that the period from August 1961 to April 1966 would be treated as prediscovery period and gave certain directions in respect of the waiver of the employees share of the fund amount. By the letter dated November 23, 1967, respondent No.2 proposed December 4, 1967, for inquiry, to determine the amount payable by the petitioner from August 1961 to December 1966 and called upon it to attend the same with records in his office. The petitioner replied by its letter dated November 30, 1£67, that it would not be able to attend his office and asked for postponement. The inquiry was then postponed to December 23, 1967 and due intimation was given to the petitioner. The petitioner again made an excuse and did not attend. Respondent No.2 then made the order and demanded the said sums from the petitioner (Annexure H).
3. Mr. Gadgil, for the petitioner, has made three contentions before us: (I) That the petitioner becomes liable only after a code number is assigned to it, (2) that by an order under section 7 A of the Act the petitioner cannot be called upon to pay any amount for a period prior to the date of the order, and (3) that it was not heard before the making of the order.
4. We will first consider the Act and the Scheme. Section I (3) of the Act of 1952 applies in the first instance to factories engaged in industries specified in Schedule I and in which twenty or more persons are employed and clause (b) of the sub-section gives power to the Central Government to apply it to other establishments. Section 2 is a definition section. Section 5 enables the Central Government to frame a Provident j1und Scheme for establishment of provident funds and then to establish a Fund in accordance with the Act and the Scheme, and, to vest it in Central Board of Trustees, the constitution of which is provided by section 5A. Section 5B of the Act relates to the appointment of a State Board of Trustees and its powers and section 6C makes these Boards bodies corporate. Section 5D relates to appointment of officers under the Act and section 5E deals with delegation of powers by the Central Government and the Board to the officers. Section 6 prescribes the quantum of contribution payable by the employer and the employee. Section 7 A provides for determination of the amount due from any employer, empowers the Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner or any Regional Provident Fund Commissioner to hold an enquiry, gives him limited powers of a Court, and by sub-section (4) makes his order final. Section 8 enables the amount due and penalty to be recovered as land revenue. Section 10 provides that the amount standing to the credit of any member cannot be assigned or charged an
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