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PUNJAB & HARYANA HIGH COURT
Bishan Narain, J.
Robindra Textile Mills
Versus
Secretary, Ministry Of Labour, Govt.Of India, New Delhi
Civil Writ No. 447 of 1956,
Decided On : MAY 22, 1957
EMPLOYEES PROVIDENT FUNDS ACT, 1952 - SECTION 1 (3), 2 (G), 16 (1) (B) - EXEMPTION FROM APPLICATION OF ACT - FACTORY ESTABLISHED BEFORE COMMENCEMENT OF ACT - CHANGE OF OWNERSHIP - EFFECT ON DATE OF ESTABLISHMENT.
Fact of the Case:
Robindra Textile Mills, Amritsar, purchased a factory that had been closed for seven months and restarted operations. The factory had been in operation since 1946 under a different name. The issue was whether the factory was entitled to an exemption from the Employees Provident Funds Act, 1952, which exempted factories established before the commencement of the Act.
Finding of the Court:
The court held that the factory was not entitled to the exemption because it had been established before the commencement of the Act, even though it had been closed for a period of time. The court found that the change of ownership did not affect the date of establishment of the factory.
Issues: Whether the factory was entitled to an exemption from the Employees Provident Funds Act, 1952, which exempted factories established before the commencement of the Act.
Ratio Decidendi: The court interpreted Section 16 (1) (b) of the Act, which exempted factories established before the commencement of the Act, to mean that the date of establishment was the date when the manufacturing process was first started, not the date when the factory was purchased by the new owners. The court also found that the temporary closure of the factory did not affect its status as an established factory.
Final Decision: The petition was dismissed, and the factory was held to be subject to the provisions of the Employees Provident Funds Act, 1952.
Bishan Narain, J.
1. Robindra Textile Mills of Amritsar have filed this petition under Article 228 of the Constitution through Robindra Nath Mehra, one of the partners, for an order restraining the Regional Provident Fund Commissioner, Punjab and the Government of India from enforcing the provisions of the Employees Provident Funds Act, 1952, against the petitioning mills, during the period from 1st November, 1952 to 1st February, 1955.
2. The facts which are not in dispute in this case may be briefly stated. The factory at its present site was started in 1946 under the name of Sindh Textile Mills, Amritsar. The factory worked from 1946 till 15th June. 1951 when it was closed. Robindra Nath Mehra and others purchased the factory on 31st January, 1952 and formed a partnership firm to carry on the business of manufacturing textiles under the name and style of Robindra Textile Mills. The factory started functioning from 1st February, 1952 with admittedly more than 50 employees. The Employees Provident Funds Act, 1952, came into force on 4th March, 1952 and the Employees Provident Funds Scheme was framed by the Central Government under Section 5 of the Act. The scheme came into force on 2nd September. 1952. The Regional Provident Fund Commissioner required the petitioning mills to deposit contributions under the Act by letter dated 19th December, 1953. The firm in reply claimed that the industry was exempted from contributing to provident fund for three years with effect from 1st February, 1952 by virtue of Section 16 (1) (b) of the Act. This position was not accepted by the Commissioner and he called upon the petitioning mills to comply with the provisions of the Act. The petitioner thereupon filed a writ petition (Civil Writ No. 159 of 1954) which was, however, dismissed on 14th December, 1955 on the ground that he had not availed of the remedy provided in Section 19-A of the Act. Thereafter the petitioner applied to the Central Government under that provision of law but that application was dismissed on 2lst August, 1956 Hence this petition.
3. It is common ground between the parties that Robindra Textile Mills come within the definition of "factory" as defined in the Act inasmuch as they are engaged in an industry specified in schedule I of the Act and employ 50 or more persons. It is not seriously in dispute that the workers employed in the Sindh Textile Mills were 50 or more. In any case it is not the petitioners case that it was not so. It is also admitted that the factory is now functioning in the same premises as previously, although the petitioner has alleged that some of the old machinery has been reconditioned and new power-looms have been added to it.
4. The dispute centres round the fact whether the factory is exempted from the application of the Act under Section 16 (1) (b), i.e., whether It can be said to have been established in 1946 when it first went into production or when the present partnership firm started operating it after it had remained closed for about seven months from 15th June, 1951 to 25th January, 1952, If it can be said that the factory was established on 26th January, 1952 then obviously it is entitled to take the advantage of the exemption provided in Section 16 (1) (b) of the Act, otherwise not.
5. Section 1 (3) of the Act reads :
"1 (3), Subject to the provisions contained in Section 16, it applies in the first instance to all fac-fories engaged in any industry specified in Schedule I in which fifty or more persons are employed, but the Central Government may, after giving not less than two months notice of its intention so to do, by notification in the Official Gazette apply the provisions of this Act to all factories employing such number of persons less than fifty as may be specified in the notification and engaged in any such industry."
Section 16 (1) (b) of the Act reads :
"16 (1) (b). This Act shall not apply to any other factory, established whether before or after the commencem
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