1997 Supreme(Raj) 1521
RAJASTHAN HIGH COURT
J.C.Verma, J.
U.P. Hotels Limited and anr. - Appellant
Versus
State of Rajasthan and Ors. - Respondent
S.B.C. W.P. No. 37 of 1984.
Decided On : 18-12-1997
Advocates:
For the Petitioner:Manoj Sharma, Advocate.
For the Respondent:Narendra Jain, Advocate.
The infancy benefit under Section 16 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 is not applicable to branches of existing establishments.
Headnote:
EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - SECTION 1(3)(B), 2A, 16 - ESTABLISHMENT - BRANCHES OF HOTELS OWNED BY SAME COMPANY - INFANCY BENEFIT - NOT APPLICABLE - UNITY OF PURPOSE AND CONTROL.
Fact of the Case:
The petitioner, U.P. Hotels Limited, owned and operated several hotels, including Hotel Clarks Amer in Jaipur. The petitioner claimed that Hotel Clarks Amer was entitled to the infancy benefit under Section 16 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (the Act), which exempted new establishments from the Act's provisions for a period of three years. The Regional Provident Fund Commissioner (RPFC) and the Central Government rejected the petitioner's claim, holding that Hotel Clarks Amer was not a new establishment but a branch of the petitioner's existing hotel business.
Finding of the Court:
The court found that the petitioner's various hotels, including Hotel Clarks Amer, were all part of the same establishment, as defined in Section 2A of the Act. The court noted that the hotels were owned by the same company, had common management and supervision, and shared financial resources. The court also found that Hotel Clarks Amer was not a new establishment, as it had been set up by the petitioner, an already well-established enterprise.
Issues: Whether Hotel Clarks Amer was a new establishment entitled to the infancy benefit under Section 16 of the Act.
Ratio Decidendi: The court held that Hotel Clarks Amer was not a new establishment entitled to the infancy benefit under Section 16 of the Act. The court reasoned that the purpose of the infancy benefit was to give new establishments a breathing time to get established, and that this purpose did not apply to Hotel Clarks Amer, which was a branch of an already well-established enterprise. The court also found that the petitioner's various hotels, including Hotel Clarks Amer, were all part of the same establishment, as defined in Section 2A of the Act.
Final Decision: The court dismissed the petitioner's writ petition, holding that Hotel Clarks Amer was not entitled to the infancy benefit under Section 16 of the Act.
JUDGMENT
1. - M/s. U.P.Hotels Limited, Varanasi and Hotel Clarks Amer, Jaipur have filed the present writ petition for issuance of a direction in the nature of certiorari for quashing the orders dated June 16, 1980 (Annexure-VII), October 5, 1983 (Annexure-XI) passed by Respondent No. 2 and order dated May 4, 1981 (Annexure-VIII) passed by Respondent No. 3. M/s.U.P.Hotels Limited (hereinafter called as 'the petitioner') is a company registered under the Companies Act. Its head quarter is situated at New Delhi. It has got hotels at Varanasi, Agra and had also established Hotel Clarks Amer at Jaipur. It is stated that the Petitioner No. 1 is a company with multifarious activities i.e. to lend money, to establish or to promote establishments, in which the company may be interested to enter into any arrangements with the Government or authority and other activities.
2. It is admitted that the hotel and restaurants fall under the provision of Employees' Provident Funds Act. The Petitioner No. 2, Hotel Clarks Amer (hereinafter called as 'Jaipur Hotel') is one of such projects sponsored by the Petitioner No. 1 and falls within the meaning of Section 1(3)(b) of the provisions of the Employees' Provident Funds Act, 1952 (hereinafter called as 'the Act'). Section 1(3)(b) of the Act provides that if there are more than twenty persons working in any establishment, that establishment is to be governed by the provisions of the Act. However, Section 16 says that the Act shall not apply to any of the establishments employing fifty or more persons or twenty or more till the expiry of three years in the case of former and 5 years in the case of latter (this was the provision at the relevant time when the Petitioner No. 2 was established).
3. It is stated that the Company had established Hotel Clarks at Agra which started functioning in the year 1962 and Agra Hotel was granted three years infancy benefit under Section 16(1)(b) of the Act. The Company had taken second project at Jaipur which was established in the year 1973 and it was similarly entitled to three years infancy benefit under Section 16(1)(b) of the Act. However, on June 12, 1974 the Regional Provident Fund Commissioner (hereinafter called as the 'Commissioner') issued a notice to the petitioner Hotel to furnish information and the Commissioner started the proceedings under Section 7A of the Act. The notice is attached as Annexure-3 to the writ petition. The Company was directed to comply with the provisions of the Act vide Annexure-4 which was challenged before the Central Government under Section 19A of the Act and the Central Government had remanded the case back to the Commissioner, Jaipur for completing the proceedings under Section 7A after giving the party a reasonable opportunity to show cause vide its order attached as Annexure-VI.
4. The Regional Provident Fund Commissioner passed the order under Section 7A of the Act holding that the Jaipur Hotel is owned by M/s.U.P.Hotel and Restaurants Limited, Varanasi and was covered under the Act. On the notice having been issued for covering Jaipur Hotel for the period from 1973 to 1976 the parties had appeared. The petitioners had taken up stand before the Regional Provident Fund Commissioner that in view of Section 16 of the Act, the Jaipur Hotel was not covered because it was entitled to infancy benefit of three years on the ground that Jaipur Hotel had been newly constructed and had started working in 1973 even though it was admitted case that it was one of the several units of the company having its registered office at Varanasi. Because of the (reason that it is a separately registered unit under the Rajasthan Shops and Commercial Establishments Act, 1958 and also separately registered with Tourism Department of Government of India for its import requirements etc. and has got a separate license for foreign liquor and for the reason that staff at Jaipur is under the General Manager of the Hotel at Jaipur and, therefore, on the gro
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