1957 Supreme(Cal) 44

HIGH COURT OF CALCUTTA
Bose
BHARAT BOARD MILLS LTD. - Appellant
Versus
REGIONAL PROVIDENT FUND COMMISSIONER - Respondent
Civil Revn. Case 1047  Of  1956
Decided On : FEBRUARY 28, 1957

Section 19-A of the Employees' Provident Funds Act is unconstitutional as it vests an uncontrolled and arbitrary power in the Government to make a subjective determination of various matters specified in clauses (i) and (iv) of the section without giving the owner of the factory any opportunity of a hearing or without giving such owner opportunity to make representation against or to prefer an appeal against any adverse order made by the Government.

Headnote:

EMPLOYEES' PROVIDENT FUNDS ACT - Section 19-A - Unconstitutional - Uncontrolled and arbitrary power to Government - No opportunity of hearing or appeal - Unreasonable restriction on fundamental right under Article 19 (1) (g) of the Constitution - Section 16 (2) - Not violative of Article 14 of the Constitution - Classification on reasonable basis - Section 16 (2) - Not violative of Article 19 (1) (g) of the Constitution - No restriction or abridgement of right - Temporary relief to particular class of factories - Section 19-A being unconstitutional - Court can determine whether petitioner's factory is an infant factory within the meaning of Section 16 (1) (b) of the Act - Date of establishment of a factory - Date when factory starts manufacturing process - Change of ownership does not shift date of establishment - Requisition under Bengal Public Demands Recovery Act - Delegation of power under Section 19 of the Act - Alternative remedy under Bengal Public Demands Recovery Act - Not a bar to application under Article 226 of the Constitution - Special facts of the case - Notice under Order 27-A of the Code of Civil Procedure - Not necessary in proceedings under Article 226 of the Constitution - Substantial question of law as to interpretation of the Constitution not involved.

Fact of the Case:

The petitioner, a company registered under the Indian Companies' Act, purchased machineries and a one-storied brick built house with lands from India Paper and Board Mills company and commenced business from 31st July, 1950. The petitioner was treated as a new concern by awards made by the Industrial Tribunal in respect of certain disputes between India Paper and Board Mills company and the petitioner company, and their employees. The petitioner received letters from the Regional Provident Fund Commissioner, West Bengal, pointing out that the petitioner's factory came within the purview of the Employees' Provident Funds Act and the Scheme framed thereunder, and requesting the petitioner to comply with the provisions of the scheme. The petitioner made representations to the respondent No. 1, requesting him to keep the question of contribution in abeyance as the petitioner company had remained closed for about four months from the 1st April, 1952. The petitioner also made a representation to the Deputy Minister, Labour Department, Government of India, praying for personal representation with all papers and documents, to prove the bona fides of the prayer made by the petitioner. A certificate case was also started under the Bengal Public Demands Recovery Act for realisation of a sum of Rs. 5505/- from the petitioner company. The petitioner filed objections thereto under Section 9 of the Bengal Public Demands Recovery Act. The petitioner obtained the present Rule on the 18th April 1956.

Finding of the Court:

1. Section 19-A of the Employees' Provident Funds Act is unconstitutional as it vests an uncontrolled and arbitrary power in the Government to make a subjective determination of various matters specified in clauses (i) and (iv) of the section without giving the owner of the factory any opportunity of a hearing or without giving such owner opportunity to make representation against or to prefer an appeal against any adverse order made by the Government. 2. Section 16 (2) of the Act is not violative of Article 14 of the Constitution as the classification is on a reasonable or rational basis. 3. Section 16 (2) is not violative of Article 19 (1) (g) of the Constitution as it does not restrict or abridge in any way the right conferred by Article 19 (1) (g) of the Constitution. 4. The date of establishment of a factory is the date when the factory starts its manufacturing process. The fact that a new company or concern subsequently takes over or acquires the factory does not shift the date of the establishment of the factory to the date of its taking over or acquisition: nor does, the fact that the factory had ceased to produce goods for a certain time and resumed production after certain brief intervals result in extinction of the old factory and establishment of a new factory. 5. The requisition pursuant to which the certificate proceedings were started against the petitioner under the Bengal Public Demands Recovery Act 1913 read with Section 8 of the Employees' Provident Funds Act 1952 was not an invalid requisition and therefore the certificate proceedings were not without jurisdiction. 6. The adoption of alternative remedy as prescribed in the Public Demands Recovery Act does not preclude the petitioner from invoking the jurisdiction of this Court under Article 228 of the Constitution. 7. Notice under Order 27-A of the Code of Civil Procedure is not necessary in proceedings under Article 226 of the Constitution as substantial question of law as to interpretation of the Constitution is not involved.

Issues: 1. Whether Section 19-A of the Employees' Provident Funds Act is unconstitutional? 2. Whether Section 16 (2) of the Act is violative of Article 14 of the Constitution? 3. Whether Section 16 (2) is violative of Article 19 (1) (g) of the Constitution? 4. Whether the petitioner's factory is an infant factory within the meaning of Section 16 (1) (b) of the Act? 5. Whether the requisition pursuant to which the certificate proceedings were started against the petitioner under the Bengal Public Demands Recovery Act 1913 read with Section 8 of the Employees' Provident Funds Act 1952 was an invalid requisition? 6. Whether the adoption of alternative remedy as prescribed in the Public Demands Recovery Act precludes the petitioner from invoking the jurisdiction of this Court under Article 228 of the Constitution? 7. Whether notice under Order 27-A of the Code of Civil Procedure is necessary in proceedings under Article 226 of the Constitution?

Ratio Decidendi: 1. Section 19-A of the Employees' Provident Funds Act is unconstitutional as it vests an uncontrolled and arbitrary power in the Government to make a subjective determination of various matters specified in clauses (i) and (iv) of the section without giving the owner of the factory any opportunity of a hearing or without giving such owner opportunity to make representation against or to prefer an appeal against any adverse order made by the Government. 2. Section 16 (2) of the Act is not violative of Article 14 of the Constitution as the classification is on a reasonable or rational basis. 3. Section 16 (2) is not violative of Article 19 (1) (g) of the Constitution as it does not restrict or abridge in any way the right conferred by Article 19 (1) (g) of the Constitution. 4. The date of establishment of a factory is the date when the factory starts its manufacturing process. The fact that a new company or concern subsequently takes over or acquires the factory does not shift the date of the establishment of the factory to the date of its taking over or acquisition: nor does, the fact that the factory had ceased to produce goods for a certain time and resumed production after certain brief intervals result in extinction of the old factory and establishment of a new factory. 5. The requisition pursuant to which the certificate proceedings were started against the petitioner under the Bengal Public Demands Recovery Act 1913 read with Section 8 of the Employees' Provident Funds Act 1952 was not an invalid requisition and therefore the certificate proceedings were not without jurisdiction. 6. The adoption of alternative remedy as prescribed in the Public Demands Recovery Act does not preclude the petitioner from invoking the jurisdiction of this Court under Article 228 of the Constitution. 7. Notice under Order 27-A of the Code of Civil Procedure is not necessary in proceedings under Article 226 of the Constitution as substantial question of law as to interpretation of the Constitution is not involved.

Final Decision: The petition is dismissed with no order as to costs.