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1996 Supreme(Pat) 507
HIGH COURT OF PATNA
Nagendra Rai, J.
M/s Girilal & Company, Gun Factory, through one of its Partner Sudhir Prasad Sharma - Petitioner
vs.
Union of India & Ors. – Respondents
C.W.J.C. No. 5351 of 1995
Decided On : 16.8.1996
For the Petitioner: Mr. Dinesh Kumar Gupta.
For the Respondents: M/s Y.V. Giri, M.N. Parbat.
The term "electrical, mechanical or general engineering products" in Schedule I of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 should be interpreted broadly to include all products that are generally known as such, regardless of whether they are produced by electrical, mechanical, or general engineering processes.
Headnote:
EMPLOYEES PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - SECTION 1(3)(A), 1(3)(B), 1(5), 2(G), 2(I), 4, 7A - SCHEDULE I - APPLICABILITY OF THE ACT TO GUN MANUFACTURING INDUSTRY - INTERPRETATION OF THE TERM "ELECTRICAL, MECHANICAL OR GENERAL ENGINEERING PRODUCTS" - DETERMINATION OF LIABILITY UNDER SECTION 7A.
Fact of the Case:
The petitioner, a partnership firm engaged in manufacturing single and double barrel shot guns under a valid license, challenged the applicability of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (the Act) to its establishment. The petitioner argued that gun manufacturing is not covered by the definition of "industry" under the Act and that the number of employees engaged by the petitioner was less than 20, the minimum number required for the Act to apply.
Finding of the Court:
The court held that the Act is applicable to the petitioner's establishment. The court interpreted the term "electrical, mechanical or general engineering products" in Schedule I of the Act to include gun manufacturing, as it is a mechanical engineering product. The court also held that the petitioner's establishment continued to be governed by the Act even though the number of employees had reduced to less than 20, as per Section 1(5) of the Act.
Issues: 1. Whether the Act is applicable to the petitioner's establishment, which is engaged in manufacturing single and double barrel shot guns? 2. Whether the Act ceases to apply if the number of employees engaged by the petitioner falls below 20?
Ratio Decidendi: 1. The court interpreted the term "electrical, mechanical or general engineering products" in Schedule I of the Act to include gun manufacturing, as it is a mechanical engineering product. The court relied on the Supreme Court's decision in The Regional Provident Fund Commissioner, Punjab vs. Shibu Metal Works, which held that the entry "electrical, mechanical or general engineering products" should be interpreted broadly to include all products that are generally known as such, regardless of whether they are produced by electrical, mechanical, or general engineering processes. 2. The court held that the Act continues to apply to the petitioner's establishment even though the number of employees had reduced to less than 20, as per Section 1(5) of the Act, which provides that once the Act applies to an establishment, it will continue to be governed by the Act notwithstanding that the number of persons employed therein at any time falls below twenty.
Final Decision: The court dismissed the petitioner's application, holding that the Act is applicable to the petitioner's establishment and that the petitioner is liable to pay the amount due under the Act and the scheme framed thereunder.
Nagendra Rai, J.
The only question involves in this writ application is as to whether the establishment of the petitioner is covered by the provision of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, (hereinafter referred to as the Act).
2. The petitioner has challenged the order dated 7.6.95 passed by the Assistant Provident Fund Commissioner, Bhagalpur (respondent no. 2) contained in Annexure-7 by which he has held that the petitioner's industry is covered by the provisions of the Act and thereafter has determined the amount payable by the petitioner under the provisions of the Act and the scheme framed thereunder in exercise of power under Section 7A of the Act.
3. The facts, which are not in dispute, are that the petitioner is a partnership firm and was established in the year, 1948 and is engaged in manufacturing single and double barrel shot guns under a valid licence granted under the Arms Act. It has been registered as a Small Scale Industry Unit by the State of Bihar. In the year, 1966 one Sri M.K. Bhatnagar an employee of the provident fund office visited the gun factory of the petitioner and other factories situated in the town of Munger and found twenty eight persons working in the factory of the petitioner and, accordingly, he submitted a report on 29.11.1966 vide Annexure-A to the counter affidavit and thereafter the provision of the Act was made applicable to the petitioner's industry w.e.f. 13.11.1966 and he was allotted BR/1474 as Code number and the petitioner continuously paid the money under the Act and the Scheme upto 1990. There was default in payment of the money due from the petitioner's employer and a prosecution case was launched against partners of the firm under Section 14A of the Act and by judgment dated 3.4.90 they were acquitted on the ground that the prosecution has failed to prove its case against them. While acquitting them the trial Court held that the Act is not applicable to the gun factory of the petitioner. A copy of the said judgment has been annexed as Annexure-3 to the application. Thereafter, the petitioner stopped the payment of money due under the Act and the Scheme. On 28.12.93 a notice was issued to the petitioner' by the respondent authority to appear under Section 7 A of the Act to determine the amount due under the Act and the Scheme framed thereunder. The petitioner filed a show cause on 20.1.94 alleging inter alia that the Act is not applicable to the establishment in question as it is not an industry which is covered by Schedule-I of the Act and the number of persons employed in it is less then twenty. Thereafter, after hearing the parties the impugned order has been passed holding that the Act is applicable and the petitioner has been directed by the said order to pay the amount due under the Act and scheme framed thereunder.
4. Learned counsel for the petitioner contended that the Act is not applicable in the case of the petitioners' establishment as it is not a factory engaged in any industry specified in Schedule-I of the Act. Secondly, it is submitted that even if it is assumed that the petitioner's establishment is covered by Schedule I of the Act cannot be made applicable as members of the employees engaged by the petitioner is less than 20 which is the minimum number to attract the provisions of the Act. Thirdly, it is submitted that no sufficient opportunity was given to the petitioner by the authority while passing the impugned order.
5. Learned counsel for the respondents on the other hand combated all the submissions and submitted that the Act is applicable with regard to the establishment of the petitioner. As back as in the year, 1966 on inspection it was found that more than 28 persons were employed and thereafter the petitioner went on paying the money as employer under the Act till 1990 and at this stage it cannot be allowed to say that the Act is not applicable to its' establishment because number of employees has reduced to less
