The exemption under Section 16 of the Employees' Provident Funds Act is available only to new establishments, and not to establishments that have been in existence for more than five years.

ORDER :- The petitioner company was incorporated on 10th May 1960. It appears to consist of only two members, the Managing Director and his wife, who are the sole proprietors of the concern. Prior to the formation of the company, the Managing Director was the individual owner of the bus concern. The Regional Provident Fund Commissioner issued a notice dated 17-9-1962, demanding certain payments under the Provident Fund Scheme framed under the Employees' Provident Funds Act. The petitioner company contended that it came into existence only on 10th May 1960 and was entitled under S. 16 of the Employees' Provident Funds Act to exemption from the provisions of the law for a period of five years. This contention of the petitioner company was not accepted. Since penal action for failure to comply with the requirements of the notice was threatened, the petitioner has approached this court for the issue of a writ of mandamus to forbear the respondent, the Regional Provident Fund Commissioner, from enforcing the Act and the scheme against the petitioner.

2. In the counter affidavit filed on behalf of the department, it is stated that road transport concerns were brought within the ambit of the Act by a notification effective from 1-8-1961. It is contended by the department that the establishment in question had been in existence from 1932 onwards and that its incorporation as a company cannot entitle it to say that it is a new establishment to which the benefits of S. 16 are available. The establishment having been in existence for more than five years already, the respondent acted within his jurisdiction in demanding that the petitioner company should comply with the requirements of the scheme. It is accordingly claimed that the petition is devoid of substance and should be dismissed. The question lies within a very narrow compass. It is whether in these circumstances the petitioner is entitled to the protection of S. 16 of the Employees' Provident Funds Act. Section 10 reads :

"This Act shall not apply : (a) to any establishment registered under the Co-operative Societies Act 1912, or under any other law for the time being in force in any State relating to Cooperative Societies, employing less than 50 persons and working without the aid of power; (b) to any other establishment employing 50 or more persons or 20 or more but less than 50 persons, until the expiry of three years in the case of the former and five years in the case of the latter, from the date on which the establishment is or has been set up."

We are not concerned with sub-clause (a). Though Mr. Sundaravardan, learned counsel for the petitioner, raised some question with regard to the number of persons employed, it was not in dispute that the petitioner company did employ more than 20 but less than 50 persons after the date of the incorporation. The question then is whether the expression "the date on which the establishment is or has been set up" means the date on which the company was incorporated.

3. The word "establishment" has not been defined in the Act, though that word has been used in several provisions of the Act, as also in other terms which have been defined in the definition section. An 'establishment' therefore must be given its ordinary meaning and it means an organisation which employs persons between whom and the establishment the relationship of employee and employer comes to exist. That broad definition will suffice for the purpose of this case, Mr. Sundaravaradan contends that an incorporation brings a new entity into existence and that therefore the old entity has altogether ceased to exist, and that in support of this argument he has cited Salomon v. Salomon and Co., 1897 AC 22, a decision of the House of Lords. It is unnecessary to refer to any portions of the judgment, for there is no disputing the position that the company is juristic entity different from the persons who are members thereof. But that has no bearing whatsoever upon the quest