M/s. Hindustan Durree Factory Ambala City vs The Regional Provident Fund Commissioner, Chandigarh

Bal Raj Tuli, J.—The Appellant is a firm carrying on the business of manufacture of durries. On May 24, 1967, Shri B.D. Sharma Provident Fund Inspector, inspected the factory of the appellant-firm and found that there were 21 persons employed by the firm in the process of manufacturing durries. He accordingly asked the firm to submit the coverage proforma. In that proforma, the names of the partners were mentioned as Ram Murti, Gopal Krishan, Shyam Sunder and Suraj Marain Kapoor, Suraj Narain Kapoor signed the proforma on behalf of the firm and in this proforma the maximum number of persons employed in the office as in March, 1967, was stated as 21. On receipt of this proforma, the Regional Provident Fund Commissioner sent letter dated May 31, 1967, covering the appellant-firm under the Employees Provident Funds Act, 1952 (hereinafter referred to as the Act) and the Scheme framed thereunder. In reply to that letter, the appellant-firm informed the Regional Provident Fund Commissioner that 20 or more persons had never been employed by it and mostly the strength was that of independent contractors who did not fall within the meaning of the word "employees". It was pointed out that the definition of "persons employed", according to the Act, WAS that a person must be employed on wages and because the strength of the persons so employed fell short of the strength required by the Act, the Act was not applicable and that independent contractors do not fall within the meaning of the word "employees". On February 17, 1969, the Regional Provident Fund Commissioner wrote a letter to the appellant-firm standing that it had been brought under the ambit of the Act and the Scheme with effect from March 1967, vide office letter dated May 31, 1967, and it was required to start the Provident Fund scheme from April, 1967. The appellant firm had, however, failed to comply with the provisions of the Act and it was required to comply with those provisions within seven days of the receipt of the letter failing which action would be taken under sections 8 and 14 of the Act In reply to that letter, the appellant firm, through Suraj Narain Kapoor partner, again submitted that the strength of the employees'' of the concern had never been 20 or more and there were 16 to 17 persons employed in the concern and that too on contract. Thereafter on November 9, 1970 the Regional Provident Fund Commissioner sent a notice to the appellant-firm to appear before him either in person or through an authorised representative on November 21, 1970, to give evidence and to produce all the records including those mentioned in the said notice. It was further stated that in case the appellant-firm failed to attent the said enquiry, he would proceed to hold the enquiry in the matters on merits and an order would be passed determining the amount due from the firm under the provisions, of the Employees Provident Fund Scheme, 1952, on receipt of this notice, the appellant firm filed an appeal u/s 19-A of the Act to the Central Government on November 13, 1970, wherein the only point taken was that the firm never employed 20 or more workers ever since its inception and that the Regional Provident Fund Commissioner had no jurisdiction to cover the factory with retrospective effect. In relation to that appeal, which was considered as a representation by the Central Government, the appellant-firm was informed by letter dated February 10, 1971, signed by Shri Daljit Singh, Under Secretary, Ministry of Labour, Employment and Rehabilitation (Department of Labour and Employment), Government of India, that the Provident Fund Authorities had reported the following facts :--

The establishment was set up on 1st July, 1960.

The establishment is engaged in the manufacture of durries.

21 persons were employed in March, 1957, in the establishment. This figure has been shown in the coverage proforma which has been signed on the 24th May, 1967, by Shri Suraj Narain Kapoor on behalf of the management.

In an application dated the 29th June, 1965, to the Chief Inspector of Factories, Chandigarh, for registration of the factory, it was, stated that you ordinarily employed above 80 persons.

It was further stated that :--

In the light of the facts reported by the Provident Fund Authorities there seems to be prima facie case for coverage of your factory under the Employees'' Provident Funds Act, 1932, from March, 1967. Before the Central Government issues a direction u/s 19-A of the said Act, your further view in the matter may kindly be furnished to this Ministry within a month of the receipt of this communication.

The appellant firm sent a reply to that letter on May 12, 1971. Thereafter, a personal hearing was afforded to the representative of the appellant-firm. The record produced by the respondent shows that the following order was passed by the competent officer of the Central Government on February 15, 1972, in the presence of Shri Gopal Krishan, a partner of the firm, and Shri D.S. Rekhi, Labour law Adviser of the appellant-firm. This order reads as under :--

This is an appeal u/s 19A of the E.P.F. and Family Pension Funds Act, 1952, by M/s. Hindustan Durrie Factory, Ambala City, challenging the coverage of their factory by the Regional Provident Fund Commissioner, Chandigarh, on the ground that they were not employing 20 or more than 20 persons at any time on, before or after March 1967 from, which date the said factory is sought to be covered by the R.F.F.C. In support of the appeal, I have heard Shri D.S. Rekhi, Labour Law Adviser of the factory, as also Shri B.L. Chopra, Head Clerk of the R.P.F.C''s office. Shri Gopal Krishan, a partner of the Hindustan Durrie Factory was also present. After giving my considered thought I have come to the following findings.

The facts giving rise to this appeal are that the factory of the appellant was inspected by Shri B.D. Sharma, Provident Fund Inspector, on 24th May, 1967, and he reported that 21 persons were employed by the petitioner in the proceeds manufacturing durries and as such the said factory was (sic) w.e.f. 1st March, 1967. Thereupon, a coverage notice was (sic) the appellant on 31st May, 1967, against which a (sic) by the said factory on 4th August, 1967, but after (sic) said (sic) also, the appellant was directed to (sic) the directions the coverage notice dated 31st May, 1967, issued by the office of the R.P.F.C. vide its notice dated 21st August, 1967. The (sic) lingered on until this appeal was filed by M/s. Hindustan Durries Factory.

Shri B.L. Chopra, Head Clerk of the R.P.F.Cs office, has drawn my attention to the coverage preforma signed by Shri Suraj Narain Kapoor, a partner of the said factory, and from a perusal thereof I find that it is stated against item No. 6 thereof that 21 persons were employed as on 1st March, 1967. In fact it is on the basis of this coverage proforma, coupled with his personal observations by the P.F. Inspector, Shri D.D. Sharma that it was decided to cover the said factory and it might be how late for the factory to represent that it did not employ 21 persons on that date. Shri Rekhi has sought to derive benefit from the attendance register, cash book and the ledger but from the perusal thereof I find that none of them bears initials or signatures of any Inspector, either Shop Inspector or the Labour Inspector or the Factory Inspector or the P.F. Inspector, prior (sic). It may also be mentioned here that from the perusal of the report, paragraph 3, that Wage Inspector had in his registerability report dated 27th July, 1965 indicated that (sic) workers were on roll of M/s. Hindustan Durries Factory. In this (sic) para of the report I find that persecution had also been launched against Hindustan Durrie Factory by the Inspector of Factories because muster rolls were not maintained on 19th June, 1967, in respect of the 21 workers who were found working at the time of inspection. All these facts go to suggest that no reliance can be placed on account books and attendance register produced by M/s. Hindustan Durries Factory before the R.P.F.C. In view of these circumstances, it cannot be said that the coverage of the Hindustan Durrie Factory with effect from 1st March, 1967, is not in order and, therefore, 1 do not find any merit in this representation, which is accordingly rejected.

The R.P.F.C. and M/s. Hindustan Durries Factory, Ambala City, are to be advised accordingly.

Announced in the presence of Sarvshri D.S. Rekhi and Gopal Krishan, partner of the factory.

Although this order was passed in the presence of the representatives of the appellant-firm and announced to them, the Central Government sent a formal communication of this order to the appellant-firm by letter dated March 1, 1972, which reads as under :--

Subject :--Applicability of the Employees'' Provident Funds and Family Pension Fund Act, 1952.

Dear Sir,

With reference to your representation dated the 12th May, 1971, on the above subject. I am directed to say that the Central Government after having heard your representatives and having examined the matter further, feels satisfied that 21 persons were employed in March, 1967, in your establishment. Accordingly, the Central Government hereby directs u/s 19-A of the Employees Provident Fund and Family Pension Act, 1952, that your establishment has been rightly covered under said Act from March, 1967.

By order and in the name of the President. Yours faithfully, Sd./- Daljit Singh, Under Secretary.

On April 11, 1972, the Regional Provident Fund Commissioner wrote a letter to the appellant-firm advising it to deposit the amount of Provident Funds dues and administration charges for the period from April, 1967, to date and submit return in forms No. 12, 9, 18, 5 and 2 for the said period within 7 days of the receipt of the notice failing which his office would be constrained to take further legal action in the matter as provided under the rules. The appellant-firm filed C.W. 3005 of 1972, challenging the above orders of the Central Government as well as the Regional Provident Fund Commissioner covering it under the Act and the Scheme with a prayer that the said orders may be quashed. The writ petition was dismissed by the learned Single Judge by order dated December 6, 1972, and the present appeal under clause 10 of the Letters Patent is directed against that order.

The appellant took various points in the writ petition which were not taken in its representation to the Regional Provident Fund Commissioner or the Central Government but the learned Single Judge dealt with the same. The first point raised by the Learned Counsel for the appellant is that the Act applies only to industries mentioned in Schedule I to the Act. The appellant-firm is sought to be made liable because, according to the respondent, it is engaged in the manufacture of textiles which is an industry mentioned in the said Schedule. The entry in the Schedule reads as under :--

Any industry engaged in the manufacture of textiles (made wholly or in part of cotton or wool or jute or silk whether natural or artificial).

Explanation (d) in the Schedule states that--

the expression ''textile'' includes the products of carding, spining, weaving, finishing and dyeing yarn and fabrics, printing, knitting and embroidering.

The question raised by the Learned Counsel for the appellant is that durries are not textiles within the meaning of the term as used in the Schedule read with the Explanation It is not disputed that durries are spun with cotton and woollen yarn. It was stated by the appellant-firm in its reply dated May 12, 1971, sent to the Government of India that outside contractors took yarn from the factory and spun durries for the firm at their own homes and returned it duly prepared at the factory against payment of their contract. Durries are, therefore, product of spinning and weaving yarn and are covered by the entry in the Schedule and the argument of the Learned Counsel for the appellant that "textiles", not having been defined in the Act, have to be given their common meaning, that is, the sense in which the common man understands the expression, cannot be accepted. The Learned Counsel is not correct when he says that ''textiles'' has not been defined in the Act or the Schedule. It has been sufficiently defined and described by the words appearing within brackets against the expression "textiles" and Explanation (d) in the Schedule. It is with reference to this expression "textiles" that we have to devide whether durries are textiles or not. The only material that is used in the manufacture of durries is yarn, cotton and/or woollen and the process is by weaving or spinning yarn into durries. Durries, therefore, squarely fall within the term "textiles" in the schedule to the Act and the appellant-firm being an industry engaged in the manufacture of durries is liable to be covered under the Act if other conditions are satisfied. This submission of the Learned Counsel for the appellant is repelled.

It is then submitted that the appellant-firm never employed 20 or more employees in its establishment and could not be covered under the Act by the Regional Provident Fund Commissioner or the Central Government and the orders passed by them are erroneous. The Central Government u/s 19-A of the Act passed its final order after affording full opportunity to the appellant-firm to substantiate its plea that it did not employ 20 or more employees. Unfortunately that plea was not accepted by the Central Government on the basis of the coverage proforma wherein the appellant-firm through Suraj Narain Kapoor had stated that there were 21 employees working in its establishment and the application made to the Chief Inspector of Factories for registration of the factory to which reference has been made in the order of the Central Government, set out above It cannot, therefore, be said that there was no evidence before the Central Government to hold that the appellant-firm had employed more than 20 persons in March, 1967, and thereafter. It was held by their Lordships of the Supreme Court in The State of Mysore and Another Vs. D. Achiah Chetty, etc., that--

a finding of fact recorded by the Tribunal cannot, however, be challenged in proceedings for a writ of certiorari on the ground that the relevant and material evidence adduced before the Tribunal was insufficient or inadequate to sustain the impugned finding. The adequacy or sufficiency of evidence led on a point and the inference of fact to be drawn from the said finding being within the exclusive jurisdiction of the Tribunal the points cannot be agitated before a writ Court.

It is, therefore, not necessary for us to determine whether the persona working for the appellant-firm were employees or contractors. The finding of fact recorded by the Central Government is based on evidence and has to be accepted in these proceedings. The plea of the appellant cannot, therefore, be accepted.

It is next argued by the Learned Counsel for the appellant that the order communicated to the appellant-firm is contained in the letter dated March 1, 1972, set out above, which does not give reasons in support of the order and is thus not a speaking order. The Learned Counsel for the respondent produced the file from which I have reproduced above the order dated February 15, 1972, passed by the competent officer of the Central Government in the presence of Shri Gopal Krishan a partner of the appellant-firm, and Shri D.S. Rekhi, its Labour Law Adviser. The order was also announced to them. The appellant-firm, therefore, knew that a detailed order giving reasons had been passed u/s 19-A of the Act by the Central Government and it could apply for obtaining its certified copy which it never did. In these circumstances, it is not open to the appellant-firm to raise the objection that the order passed by the Central Government is not a speaking order. The original order passed by the Central Government gives reasons and is a speaking order it is only the communication thereof which does not state reasons in support of the order. The order passed by the Central Government on February 15, 1972, and communicated to the appellant on March 1, 1972, cannot be quashed on that ground.

By letter dated August 21, 1971, the Regional Provident Fund Commissioner required the appellant-firm to deposit the sum of Rs. 4300.35 on account of provident fund contributions and administration charges for the period from April 1, 1967, to May, 1971, and it does not appear that this amount was determined after hearing any representative of the appellant-firm. It is stated in this letter that the firm had failed to attend the enquiry on November 21, 1970, but the order was passed on August 21, 1971. There was enough time for the Regional Provident Fund Commissioner to inform the appellant that according to the information collected by him a sum of Rs. 4300.35 appeared to be due from it and giving it an opportunity to show whether the amount arrived at by him was correct or not. No such procedure was followed. Before this order was passed, the Regional Provident Fund Commissioner had taken possession of the various account books of the appellant-firm and so an ex parte determination of the amount due stems to have been made. This opinion of mine finds support from the use of the word "provisional" after the words "in relation to the period from April 1967 to May 1971" in the said order, It is, therefore considered proper to direct the Regional Provident Fund Commissioner to determine the amount due from the appellant-firm after affording it an opportunity of hearing. The Learned Counsel for the respondent did not urge anything against this course being adopted and, in fact, endorsed the same so that the dispute may be decided after due determination.

For the reasons given above, this appeal is accepted only to the extent that the order determining the amount due from the appellant-firm as Rs. 4300.35 for the period from April 1967 to May 1971 is set aside and the Regional Provident Fund Commissioner is directed to redetermine this amount after affording an opportunity of hearing to the appellant-firm, which has been directed to appear, before the Regional Provident Fund Commissioner on January 3, 1975 The appeal in all other respects is dismissed and the parties are left to bear their own costs.

A.S. Bains, J.

I agree.