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High Court Of Calcutta
D.K. Sen, J.
Pratap Sukhoni : Appellant
Versus
Regional Provident Fund Commissioner : Respondent
Decided On : Oct 31,1979
EMPLOYEES' PROVIDENT FUNDS ACT, 1952 - S. 1(3)(a), 1(5) - ESTABLISHMENT - DISSOLUTION - NEW ESTABLISHMENT - COVERAGE UNDER THE ACT - CONTINUATION OF LIABILITY.
Fact of the Case:
A partnership firm covered under the Employees' Provident Funds Act, 1952, was dissolved, and its assets were divided among the partners. Subsequently, one of the partners started a new business with a part of the machinery and some employees of the earlier business. The question arose whether the new business was also covered by the Act.
Finding of the Court:
The court held that the new business was not covered by the Act as it was a separate establishment from the earlier one. The dissolution of the partnership and the subsequent allotment of the assets thereof had not been disputed by the Provident Fund Authorities. The petitioner's allegation that the present establishment employs less than the prescribed number of employees which would bring it within the mischief of the Act has not been admitted.
Issues: Whether the new business was covered by the Employees' Provident Funds Act, 1952.
Ratio Decidendi: The court held that there is no provision in the Employees' Provident Funds Act, 1952, which lays down that an establishment covered under the said Act and the scheme there under can never be disrupted or dissolved or that the assets of such an establishment if utilised in another establishment would make the latter a part or a continuation of the former.
Final Decision: The court issued a writ of mandamus directing the respondents not to give any or any further effect to the impugned notices and a writ of prohibition commanding the respondents to refrain from taking any further steps pursuant to the impugned notices.
1. PRATAP Chand Sukhoni, the petitioner No. 1, carries on business at Kalimpong, in partnership under the name and style of Jetmull bhojraj, the petitioner No. 2. It is not in dispute that the said business was originally carried on by a different partnership which was reconstituted from time to time. The said partnership was finally dissolved by a deed dated the 18th April, 1970, with effect from the 14th April, 1970, and the assets thereof were divided and partitioned between the partners thereof. Pursuant thereto, the petitioner No. 1 was allotted the business Jetmull Bhojraj at kalimpong, and the petitioner No. 1 became the sole proprietor thereof, Subsequent thereto the petitioner again entered into a partnership in respect of the said business by a deed of partnership dated the 18th May, 1970, and the business is being continued by the new partnership.
2. IT is also not in dispute that prior to its dissolution, the earlier partnership came under the Employees' Provident Funds and Family pension Fund Act, 1952, and the scheme framed there under. By a letter dated the 13/6/1970, the petitioner No. 1 informed the Regional provident Fund Commissioner, West Bengal, about the dissolution of the earlier partnership and by letter dated the 1/7/1970, gave a notice of discontinuance of membership from the provident fund.
On a subsequent query the Provident fund Inspector was informed that on dissolution and partition of the earlier firm, Jetmull bhojraj, Darjeeling, a new business under the said name had been started at Kalimpong, teesta Bridge and Siliguri and altogether ten persons were employed in the said business. As the Employees' Provident Funds Act, 1952, was not applicable to the new business it had discontinued the provident fund account maintained in the names of the employees of the earlier partnership who had been retained in employment in th e new business.
3. ON the 8th May, 1972, the Regional provident Fund Commissioner, West Bengal and Andamans again issued a summons under s. 7a of the Act to the petitioner No. 1 alleging, inter alia, that he had failed to remit provident fund money in respect of the said business, Jetmull Bhojraj from July, 1970, till February, 1972, and had failed to furnish prescribed returns required to be submitted under the Act. The petitioner No. 1 was directed to appear before the Provident Fund Commissioner on the 10th May, 1972, to adduce evidence and to produce all records for an enquiry and determination of the provident fund instalments due.
4. ON the 30th October, 1972, the Regional provident Fund Commissioner issued another communication to the petitioner No. 1 stating inter alia, that has been ascertained on investigation that the petitioners had taken over possession of the Kalimpong Unit of the business, jetmull Bhojraj, pursuant to the dissolution of the earlier partnership and had started a business under the same name and style with the same goodwill and the same set of employees. As the earlier partnership was already covered by the Employees' Provident Funds Act, 1952, it was obligatory on the petitioners to comply with the provisions of the Employees' Provident funds Scheme, 1952, from the date of starting the new business. It was contended that a mere change of ownership did not affect the coverage of the establishment.
By further communications dated the 6th December, 1972, the 28th February, 1973, the 28th March, 1973, and the 2nd May, 1973, the Provident Fund Authorities reiterated their contentions and called upon the petitioners to comply with the directions given on the 30th october, 1972.
5. THE petitioners by their letters, respectively, dated the 22nd March and the 3rd April, 1973, contended in reply that after the dissolution of the earlier partnership the new firm was commenced having its total number of employees below twenty and as such the Employees' provident Funds Act, 1952, had on application to their case. There being genuine dissolution of the ear
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