Lease of establishment if can be treated as a new establishment.

the short question that arises is whether the petitioner establishment is entitled to the protection of section 16 of the employees’ provident fund act. generally stated, this act makes the employers liable to pay certain amounts towards the provident fund of the employees. section 16 of the act, however, makes the act inapplicable to any 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”.

It is seen from this provision that in the case of an establishment liability to pay any contribution towards the employees’ provident fund is postponed for a period of time from the date when it was set up and the question that i have to decide is whether the petitioner establishment is entitled to this ‘infancy protection‘, as it is called.

The petitioner company was incorporated under the indian company’s act in april, 1959. the object of the company was the taking on lease of the building and equipment known as the ‘rajkumari theatre ‘from the owner thereof. previously, this building had been leased by the owner to one om prakash gupta. that lease expired and thereafter by instituting proceedings in the high court, the owner obtained possession from the lessee. the petitioner company was formed for the purpose of starting cine exhibition in this theatre. a lease was duly executed and thereafter the petitioner company spent considerable sums of money for improving this theatre with new furniture, and started cinema shows under the name and style of ‘sahni cinemas ‘. this business has been carried on with effect from 16th June, 1960.

The regional provident fund commissioner called upon the petitioner to make contribution to the employees’ ‘provident fund. the petitioner contended that since the company newly started business only with effect from 16th june, 1960, the act did not apply. the regional provident fund commissioner, however, took the view that the establishment, namely, the theatre in question, had been in existence for a number of years and that the mere fact that the petitioner company had taken a lease thereof did not mean that a new establishment had come into existence and insisted upon the payment of contribution. It is in these circumstances that the petitioner has come to this Court challenging the validity of the demand

On behalf of the respondent, the Union of India and the Regional Provident Fund Commissioner, it is stated that the Rajkumari Theatres as an establishment had been in existence for more than five years prior to the coming into force of the Employees’ Provident Fund Act. It is claimed that under section 1, sub-section (3) of the Act, Government have issued a notification extending the provisions of the Act to cinemas, including preview theatres and other establishments associated with film production, film distribution, and film processing laboratories. The Rajkumari Theatres, it is stated, is an establishment employing more than 20 persons, and it has come into existence for the purpose of exhibiting films. The contention that because the petitioner firm came into existence in 1959, it ought to be regarded as a new concern entitled to the protection under section 16 is resisted. The theatre, so it is contended, has already been established, and it has merely been re-started under a new lease arrangement by the petitioner, and in that view, it is urged that section 16 does not apply.

Mr. N. C. Raghavachari, learned Counsel, for the petitioner, claims that the protection is intended to be given to the employer, and where a new employer comes into existence for the first time, the establishment in respect of which the protection is granted is the one denoted by the employer. It is claimed that the mere building along with the equipment, cannot constitute an establishment, and that it must necessarily include the