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2008 Supreme(Cal) 1018
IN THE HIGH COURT OF CALCUTTA
MR. JUSTICE SHAILENDRA PRASAD TALUKDAR
Satyanarayan Brick Field and Others
Versus
Union of India and Others
W.P. No. 18562 (W)/2007 with W.P. No. 18563 (W)/2007
Decided on : November 21, 2008
For Petitioners: Soumya Majumdar, Arjun Ray Mukheerjee
For Respondents: Shiv Chandra Prasad Ms. Apama Banerjee
The activities of a brick manufacturing establishment, which is seasonal and dependent on weather, and hires laborers from independent contractors during the peak season, do not constitute a 'factory' or an 'establishment' covered under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and Schedule I thereof.
Headnote:
EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - INDUSTRY - SCHEDULE I - BRICK MANUFACTURERS - APPLICABILITY: The activities of a brick manufacturing establishment, which is seasonal and dependent on weather, and hires laborers from independent contractors during the peak season, do not constitute a 'factory' or an 'establishment' covered under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and Schedule I thereof.
Fact of the Case:
A brick manufacturing establishment, which was seasonal and dependent on weather, and hired laborers from independent contractors during the peak season, was issued a notice by the Employees' Provident Fund Organization (EPFO) demanding provident fund dues for the period from February 1989 to November 2000. The establishment challenged the notice, arguing that its activities did not constitute a 'factory' or an 'establishment' covered under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act), and Schedule I thereof.
Finding of the Court:
The court held that the establishment's activities did not constitute a 'factory' or an 'establishment' covered under the EPF Act and Schedule I thereof, and that the EPFO's demand for provident fund dues was not justified.
Issues: Whether the activities of the brick manufacturing establishment constituted a 'factory' or an 'establishment' covered under the EPF Act and Schedule I thereof.
Ratio Decidendi: The court relied on the definition of 'industry' under Section 2(i) of the EPF Act, which includes any industry specified in Schedule I and any other industry added to the Schedule by notification under Section 4. The court noted that the brick manufacturing industry was added to Schedule I by notification under Section 4 with effect from October 31, 1980. However, the court held that the establishment's activities did not constitute a 'factory' or an 'establishment' covered under Schedule I, as they were seasonal, dependent on weather, and involved the hiring of laborers from independent contractors during the peak season.
Final Decision: The court dismissed the EPFO's demand for provident fund dues and held that the establishment was not covered under the EPF Act and Schedule I thereof.
Per SHAILENDRA PRASAD TALUKDAR,J.
Identical facts and points of law being involved in the two cases, those have been heard 5 analogously and are governed by this common judgment.
The petitioner No.1 in W.P. No. 18562(W)/2007 is a registered partnership firm and engaged in a business of manufacturing 11 brick. The petitioner Nos. 2 to 4 are the partners of the said firm. Such establishment is a small-scale industry and it has the quarry permit. It pays royalty to the Government of West Bengal regularly for quarry of soil. The said establishment does not have any shed and the same is situated in an open field. The nature of industry is seasonal and the activities are purely dependent on weather. A large part of the year particularly the rainy season is spent without any activity. During the peak season, labourers are hired from independent contractors. Workers are mainly cultivators who work for additional income when they are otherwise free. This establishment was established in 1988. A code number was subsequently allotted to the said establishment by the Provident Fund Organization being C.A/33187 dated December 8, 1995. A memo bearing reference No. R-ENF/SPL/WB/CA/33187/331 dated December 8, 1995 was issued by the respondent No. 3 in favour of petitioner No.2. There was no mention in it as to whether it was covered as a 'factory' or as an 'establishment' under Section 1 (3)(a) or under Section 1 (3)(b) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the 'EPF and MP Act'). The said memo dated December 8, 1995 purported to cover the establishment as a o manufacturer of brick and it was given retrospective effect w.ef January 30, 1989. Such establishment since then had been paying provident fund contributions under the misconception that the said Act is applicable to it. From time to time the Enforcement Officers used to visit the establishment and upon verification of relevant records used to report compliance of the statutory provisions by the establishment.
2. In the year 1999, proceeding under Section 7-A of the EPF & MP Act, 1952 was initiated for the period from 12/92 to 1/99 for failure in payment of provident fund dues. Authorized representative of the establishment duly appeared before the respondent No.4 but since 2002, the respondent authorities maintained a stoic silence in respect of the same. All on a sudden, petitioner No.2 received a purported notice issued by respondent No.5 in respect of the said proceedings. By such notice dated February 12,2007, intimation was given that the enquiry was last held on September 14, 2002 and in order to finalize the enquiry, petitioner No.2 was summoned to appear in person or through an authorized representative on March 22, 2007. The matter 5 was heard by respondent No.4 on diverse dates. It was submitted that subject matter of the proceeding was the alleged provident fund dues by the said establishment for the period from February, 1989 to November, 2000 and since the said proceeding was reinitiated after a lapse of more than 18 years, relevant documents have been lost and/or misplaced. The petitioner No.2 sought for time in order to enable him to collect such document but the prayer was turned down. By an order dated May 22, 2007 issued by respondent No.4, petitioners were directed to pay a sum of Rs. 4,76,621/- along with interest in terms of Section 7-Q of the EPF and MP Act for the provident fund dues for the period 20 February, 1989 to November, 2000.
3. The enquiring authority relied upon a report dated March 19, 2007 of an Enforcement Officer and on April 10, 2007, the departmental representative filed a report of the Assistant Provident Fund Commissioner. Copies of such reports were never served upon the petitioners and this resulted in violation of the principles of natural justice.
4. Petitioner No.2 is a member of the West Bengal Brick Field Owners Association and he was informed by the association that the ac
