3 S.C.R.

SUPREME COURT REPORTS

THE REGIONAL PROVIDENT FUND

COMMISSIONER, BOMBAY

' 815

SHREE KRISHNA METAL MANUFACTORING

CO., BHANDARA

(P. B. GAJENDRAGADKAR and K. N. WANCHOo, JJ.)

Construction-Rules of Grammer-Oontext-Oomposite factory-Different industries~Whether "factory'' -Determinative industry, which is-Employees' Provident Funds Act, 1952 (19 ~' 1952), ss. 1(3)(a), (2)(g), Schedule I.

The respondent company in the first appeal carried on the business of manufac.turing brass, copper and 'kasa' circular sheets for manufacrnring utensils therefrom, milling paddy, a fiour mill and a saw mill in the same compound, it had a rolling mill for the first item of its business and bad other mills for the other for each of which it employed different set of workmen, but there were common clerks and other employees for the entire business. When the Employees Provi dent Funds Act came in to force the company was required to comply with its terms. It challenged the applicability of the Act to it successfully by way of a writ petition before the High Court of Bombay at Nagpur.

The respondent in the second appeal were mills which manufactured Hydrogenated vegetable oil. They also manu factured tin containers for marketing and storing and its product in a separate establishment in which were employed

0 nly 31 workmen as against 211 employed for the manufac ture of oil. The mills were also asked to comply with the Act, but contested the applicability of the Act to their industry which was manufacture of oil and not tin containers. They also successfully challenged the order of the appellant against them by a writ petition before the High Court of Bombay, Nagpur Bench.

In both the appeals it was contended that each of the respondents was a 'factory' within the meaning ofs.1(3)(a) of the Act and that the High Court was in error in construing it otherwise.

Held, that the fact that 1he Act was beneficicnt piece of legislation aimed at pomoting the welfare of the emp~• must be borne in miad in construing it and that there was no warrant in the language or context to read into or imply into s.1(3)(a) the sense of exclusive engagement in the 3chedule

Ma1ch 14.

rht u,11iDflol Procid< nl Fund Commissio11tf,

~01116'!1'

Shire K, iJJmo MtloJ

MormftUluring Cr.,

lllundora

industry and that composite factories wrre well within the 1neaning of 'factory' \vhich \Vas comprehensively dtfined by s.2(g) and later made clearer hy the amrndment by which "establishn1ents" \\ere included \\ithin the meaning of

1factory '.

llcltl, f'11rthrr, that in s.1(3)(a) the qualilication •in which fifty or rnorc persons arc ernploycd' though lt inunediatcly followed the words •industry' specified Schedule I, properly applied to 'factory' which proceeded the latter words and that the applicability of the ordinary rules of grammer to a section is to be detennind by the context and by reference to other relative provisions of the Act.

Hr, ld, further, that the expression 'engaged in any industry sptcificd in Sch.I' n1eans priinarily or tnainly engaged in any industry a.s contrasted , vith incidentally and in that

ense minor or sub:)i<liary activities for the purpose of feeding the main industry would 11ot detenuinc the character of the industry \vith reference to the Schedule. \Vhcn t\\o constructions arc possible each of \vhich leads to some anomolies that which is on the \Yholc consistent \vith comtnon sense and the current understanding of the expression used should be preferred.

Held, also that the respondent in the fint appeal was commercially engaged in a Scheduled industry among others and the Act was applicable to it; further held that the respondent in the second appeal was mainly engaged in an industry not included in the Schedule but was engaged incidentally and only for the feeding that industry in manufacturing containers and hence did not co1nc \vithin the Act.

CIVIL APPELLATE J UUIBDICTIO!'l : Civil Appeals Nos. 361 and 387 of 1959.

Appeals from the judgment and ordor dated March 19•i7, of the Bombay High Court at :N'agpur

in Misc. Petn. Nos. 282 and 335 of 1955.

B. Sen and P. D .• 'ltenan. for tho appellants.

I. N. Shroff, for the respondent (in C. A.

No. 361/59).

A. V. V i8wanatlu1 Sa11tri and V. J. 111 erchuut, for respondent (in C. A. No: 387 of 195\l).

3 s.c.tt.

SUPREME COURT REPORTS 811

1962. March 14. The Judgment of the Court was delivered by

GAJENDRAGADKAR, J.-These two appeals have been heard together because they raise a common question of construction of section 1(3)(a) of the Employee's Provident Funds Act, 1952 (No.19 ofl952) (hereinafter called the Act). The Regional Provident Fund Commissioner, Bombay, is the appellant in both the appeals, whereas Shree Krishna Metal Manufacturing Co., and Oudh Sugar Mills Ltd. are the respondents respectively. Shree Krishna Metal Mfg. Co. is a partnership firm which is registered under the Indian Partnership Act.

Its business consists of (I) manufacturing brass, copper and 'kasa' circular sheets and the preparation of utensils therefrom;

(2) milling paddy, (3) a flour mill and (4) a saw mill. The aforesaid four works are situated in the same compound. For the manufacture of metal circular sheets, the company has a rolling ma.chine.

In order to carry on other works, a separate rice mill, flour mill and saw mill have been installed by the Co.

The Company's case is that it employs different workers in each section of its .activities and these workmen are engaged either on a permanent or on a temporary basis. Some workers, such as clerks and watchmen are common to the four sections of the Co.'s works. After the Act came into force, the Co. was required to comply with its provisions. The Co. protested and urged that it was not a factory under s. 1(3)(a) of the Act and so, it could not be called upon to comply with its provisions.

The Regional Provident Fund Commr., however, took a contrary view. He held that the Co. fell within the meaning of the word ''factory" as defined under s.1(3)(a) and so, be threatened to use coercive processes to compel the Co. to comply with its requisitions issued under the relevant provisions 'of the act.

The &gisnal Provident FUnd

Bombay ...

Shree Kr; sh'na Melot

ManuJacluriat Co,,

Bhandor•

Gajendragadk.or J •

7-,., Rttinal rrovitltnJ J•'und

CcmmisJiorier,

Bomba.~

Shrte Kn"sMa fllttal

Jfanufocbdiflg Co.,

J; handara

At that stage, thc> Co. moved the High Court of Bombay at Nagpur by a writ petition under Art. 2'1li of the Constitution and it prayed that an appropriate writ should bu isAued re8training tho Commissioner from enforcing the relevant provisions of the Act against it.. This writ petition has been allowed and an appropriatt! writ has been issue.d as prayed for by the Co.

It. is against this order that the Regional Commissioner has comll to this Court with 'a cc>rtificate granted by tho High Court. For convenience, the Regional Provident Fund Commissioner would hereafter be referred a.~ the appellant and the i:-hreo Krishna l\Ictal Manufacturing Co. would be called the Company.

The Oudh Sugar lllilb Ltd. which is respondent in C.A. No. 387 of i\Jii\l, is a public limited company registered under the Indian Companies Act. It carries on the business of manufacturing hydrogenated vegetable oil named "Vanasada"

and its by-products, such as soap, oil.cakes, etc.

This business is carried on at Akola. under the name and style of 'Berar Oil Industries'. The Mills commenced manufacturing its products on the 11th October, 19~8. It also manufactures and .Markets vegetable oil after completing all the processes at Akola. The oil is then tinned in tin containers of certain sizes.

The said tin containers a.re fabricated by the mills in its own precincts of the oil factory. These tin containers a.re used only for the purpose of packing vegetable oil and for no other. They are not sold in the market nor aro tho customers of oil chargerl separate prico

for the tins. The \\ ork of fabricating these tiaH

began on the 13th October, HHS. In this section of the Works only 31 workmen are engaged, while in the Mills 1roper 211 workers \\ere working on tLc ma11ufac1u1; e of vii a.1.d ita l .1 f, J c LUds c, J, tJ, c Jst of November, 1952. ·

3 S.C.R. st:J:PREME COURT REPORTS 8Hl

The Central Government framed a scheme under 5 of the Act and this scheme came into force partly on 2.9.1952 and partly on 6.10.1952. Under this scheme, an employer is required to contribute 6-1/4% of the total wage bill every year as his contribution towards the Fund and 3% as the administrative charges on the total contribution of the employer and his employees.

On the 8th of August, 1955, the Regional Commissioner called upon the Mills to deposit its contribution and incidental charges as required by the scheme.

The amount thus required to be deposited was of the order of Rs. 34,000/-.

This deposit is required on the basis that the whole of the factory run by the Mills is a factory under s. 1(3)(a). The Mills declined to make the deposit on the ground that it was not a factory to which the Act applied. The Regional Commr. then threatened to take proceedings against the Mills for the recovery of the said amount under section 8 of the Act.

At that stage, the Mill moved the High Court of Bombay at Nagpur by a writ petition and its writ petition has been allowed by the High Court. In the result, a direction has been issued restraining the Regional Commissioner from enforcing the provisions of the Act against the Mills. It is against this order that the Regional Commr. has come to this Court with a certificate granted by the High Court.

For the sake of convenience, the Regional Commissioner will hereafter be called the appellant, whereas the Oudh Sugar Mills Ltd. will be described as the Mills.

The appellant contends that the High Court was in error in coming to the conclusions that the company and the Mills did.not constitute a factory as defined by s. 1(3}(a) of the Act.

Section ,1 (3) at the relevant period read thus:

"Subject to the provisions contained in section 16, it (i.e., the Act) applies in the first

196S

The RezionaZ Provident Fund

CommitJinner,

Bomba7

•• Shree Krishna Meta/,

11 anufactraint Co.,

Bh1ntlara ' -- Gojendragodkor J.

rll t'•iarcal

eni'Fzu:rl iJJions1, nnhay

v. irhna Mttal Oc1uri111 Co. , •ndara

1aga,!ar J.

instance to all factories engaged in any industry specified in Schedule I in which fifty or more pcrRons are employed, but tho Central Government may, after giving not less than two months' notice of its intention tto to do, by notification in the Ollicial Gazett-0, apply the provisions of thiH Act to all factories employing such number of persons less than fifty as may be specified in tho notification and engaged in any such industry."

As a result of the amendment made in 19ii6, section 1(3) has become 1(3)(a) and so, it is referred to as such.

Before construing thiR clause, it may be relevant to remember that tho Aot was passed to provide for the institution of provident funds for employees in factories and other establishments.

The object of the Act, broadly staged, is to bring into exist-enco a scheme to bo called "Tht' Emploj ees' Provident, Funds Scheme" for the establishment of provident funds under the Act for employees to whom its provisions apply.

This object is specified by s. 5 of the Act.

Section 6 provides for the contributions to be made by the employers and s. 9 recognises the Fund constituted under the Act for the purpose of income-tax. Section 10 affords protection against attachment in rnspect of the amount standing to the credit of any member in the Fund and s.11 prescribes for priority of payment of contributious over other debts.

In other words, the provisions of tho Act constitut.. a welfare measure intended for the benefit of the workmen to whom the Act applies, and thiR beneficent purpose cf thu Act has to be borne in mind in construing the relevant clause with which we are concerned in the present appeals.,

The first question which calls for our dcoiRion is whether s. l(:i)(a) excludes oomposite factories

f I '

from its scope. It has been urged before us on behalf of the respondents that composite factories are not intended to be covered by s. 1 (3 )(a). It is only factories which are exclusively engaged in any

industry specified in Schedule I to which the Act applies, provided, of course, they satisfy the other test that there are 50 or more persons employed in them. This argument is based on the fact that when the Act was originally passed in March, 1913~, the Legislature had provided for only six industries in Schedule I.

The intention of the Legislature was to extend the benefits of the Act to the workmen industry-wise step by step. The Legislature wa.s conscious that the relevant provi sions 'of the Act imposed a burden on the employer and so, it took the precaution of confining the operation of tbe Act only to six important industries specified in Schedule I. Section l (3) (a) no doubt confers power on the Central Government to extend the provisions of the Act to other factories

by issuing a notifications, as contemplated by it ; and so, whenever the Central Government comes to the conclusion that the benefits of the Act shC>uld be extended to workmen engaged in additional categories of factories, it could exercise its power in that behalf and by issuing a notification, bring within the scope of the Act such factories.

But this has to be done factory-wise in the sense that it has to be done by reference to the factories engaged in industdes included in Schedule I and that shows that. it is only factories exclusively engaged in the said industries that are included within the purview of s. J (3) (a).

In our opinion, this argument is not welt. founded.

The expression "all factories engaged in any industry specified in Schedule I" does not lend itseJf to the construction that it is confined to factories exclusively engaged in any industry specified in Schedule l.

What exactly is meant by the

The Reg Provident

Commiss,

Bomb v.

Shree Krishn

M anuftJClut

Bhan

196•

Tlk Regional Prot•ldtnt Fund

Com111i1sio11er,

Bom6c1

•• Slv11 Kris/ono .\/tlal

M.nu/octu1i11g Co.,

Bhaiara

822 SUPI\.EME COURT REPORTS [1962] SUPP.

clause, we will have occasion to deal with later on.

For the present, it would be enough to sa.y tha.t when the Legislature has described factories as factories engaged in a.ny industry, it did not intend that the said factories should be exclusively engaged in the indusiry specified in Sohedule I. The construction for which the repondents contend requires that we should add tho word "eil:dusively'' in tho clauJe and that clearly would not bo permissible.

The definition of th" word "factory" prescribed ny s. ~(g) of the Act shows that a "factory" means any premises. including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on, whether with the aid of power or without the aid of power.

Thus, t.he word "factory" used ins. 1(3)(a) has a comprehensive meaning and it includes

premiss in which any manufacturing process is being c.rried on a.s described in the definition. This definition of the wore! "factory" shows that the factory engaged in any industry specified in Schedule I •::mnot necnssarily mean a factory exclusively engaged in the pnrticular industry specified in the said Schedule.

Besides, s.l(:l)(a), as it has been amended in 19;36, now referA to cvnry establishment which is a factory engaged in any industry specified in Schedule I a.ncl the introduction of the word "establishment" clearly shows that it may consis\ of different factories clealing with different. industries and yet considered as one establishment, it may fall under section l(:l)(a), provided the other requirements of the said section a.re satisfied. Section 2A which has been added in the Act by the Amending Act 46 of 1961) makes it clear that an establishment mav consist of rlitTnrrmt departmcnt8 or 111ay h:we different branches, whether sit.uate in the same place or in cliffcrnnt placc8, and yet all such departments or hrancjies H!1all he treated as parts

3 S.C.lt.

SUPREME COURT REPORTS 823

of the same establishment. Therefore, the concept of establishment being of such a comprehensive character, the insertion of the word "establishment" in s.l(3)(a) by the Amending Act of 1956 helps to negative the argument that the factory therein contemplated cannot be a composite factory.

Besides, the explanation to Schedule I which has been added by Act 37 of l953 clearly shows that one of the industries originally included in Schedule Tin 1952 definitely suggests the idea of a composite factory and wou Id, thus, assist the inter

pretation of the word "factory" as including a composite factory under s.l(3)(a). The industry in question is electrical, mechanical or general engineering products and the explanation of this industry shows that it includes 25 different items, and so any factory carrying on the work of producing one or more of these items would. not be exclu sively engaged in producing one or the othf'f of those items and would be in the nature of a composite factory and yet it would definitely fall under s.1(3)(a). ThereforP, in our opinion, the argument that a composite factory carrying on different industrial opera1 ions is outside the purview of s.1 (3)( a) cannot be accepted. •

The next question which falls to be considered is whether the requirement that the workmen employed should be 50 or more, governs tho w:ird "Industry" or the word "factor" is under s. l (3)(a).

T]).e respondents' contention is that tbis rmmcrica] test must be satisfied by t.he industry and not by the factory.

In other worcfa, even if a composite factory is included in s.1(3)(a), before the provisions of the Act can be applied to it. it must be shown that 50 or more persons are employed in that unit of the factory which iR ng•tged in the industry specified in :Schcdlllo I. If this is the true and correct position, neither the Mills nor the Company would fall within the mischief of thP Act. The

J9iM

Thi Regional Provident Fund

Oommis; ioner,

Bomba., v

Slir1e_K1isJ.na Met11.

M aun.fac'ttring c,.1

Bhantf14ra

Gajeridragadkar J,

l!ldZ

Tii1 R, giufUJI ProtJid, nt Pim I

Commissionrr,

Bomb•_p

v. S"'• Kriolno .If t14/ JI actruing Co.,

Bh111dar12.

Otridr•fad.l:ar J.

argumont in 811(lport of thiH construction jg that the pronoun "which" must under the ordinary rules of grammar qualify the noun immediately preceding it an<l that take~ it to the word "[ndustrv" rather than to the word "factories". ·

We are not indincd to accept this construction. The ordinary rule of grammar on which this construction is based r.annot be treated as an invariable rule which must alwnys nnd in every case be accepted without regard to thn context. If the contoxt definitely suggests that the relevant rule of grammar is ina.pplica.ble, then the requirement of the context must prevail over the rule of i!rammar.

As the provision stands, the word •factories' is qualified by two clauAes.

The firAt n.<ljoctival clause is 'engaged in any industry specified in Schedule I' and the second clause is "in which 50 or more persons a.re employed".

In other words, in order that the factories should fall within th•• Hcopu of the provision, they must satisfy two tests : they must be engaged in any inrlustry sµecifit•rl in Schcclule I and they must have employed ;)0 nr more persons. The first ; Lrljectival clauij<: is in thn natme of a parenthetic11.l ehiusc am! so the clause b"ginning with t.Jw worrls "in which" must neceHsarily qualify the word "factories'' and not tho word "industry''. Therefore, in our opinion, the requir<>ment ns to the prescribed number qualifies the word "factories" and does not qualify the word "industry" ; that means the question to ask is : does the factory employ 50 or more persons ? The quest.ion is not : does the industry employ .~O or more persons ?

This conclusion is Rtrengthoned by the. provision contained in the latter part of s. \(:{)(, i).

This latter clause empowers the CPntral Government .to brin" within the purview of the A<'t other factories

in the manner specified by it, .While referring to the factories which may thns be brought: within the purview of the Act, t.h? clause provides that these

I J

factories must be such as employ such number of persons less than fifty as may be specified in the notification and they must be engaged in any such industry. In other words, this latter clause makes it clear that it is the factories which have to satiafy two tests-(i} that the number of their employees should not be less than 50 and (ii) that they must be engaged in any such industry as is specified in Schedule I,

This position has been placed beyond all doubt by the amended clause as It now stands as a proviso to s. 1(3)(a) and (b) after the amendment of

1956. This proviso reads that 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 proisions of the Act to any establishment employing such number of persons less than fifty as may be specified in the notification. This proviso makes it absolutely clear that the requirement as to the number of the employees applies to the establishment and not to the industry. We may incidentally add that the requirement of fifty has now been reduced to twenty by the Amending Act 46 of 1960 .

. There is yet another provision in the Act which supports the same conclusion.

Section l 9A provides, inter alia, that if any difficulty arises in giving effect to the provisions of the Act, and in particular, if any doubt arises as to whether 50 or more persons are employed in a factory, the Central Government may. by order, make such provision or give such direction, not inconsistent with the provisions of the Act, as appears to it to be necessary or expedient for the removal of the doubt or difficulty; and the order of the Central Government, in such cases, Ahall be final.

This clause has been subsequently amended, but for our present purpose those amendments do not matter. The point about the provision is that the Central Qovernnient h"s

The Regional Provident li'und Commissioner,

B1mbay

Shree Krishna Met al Manufacturing Co.,

Bhandara

Gajendtagadkar J.

Tlie Rezionol ProvU/mt Fund

<.Assio11e1,

B1mbay

Shr11 Krish11~ Metal

jfGIUl.fatbtrinf! Co.,

Blumdara

been given powur to resolvo a doubt as to whether fifty or more persons are employed in a factory or in an establishment and that shows that the requirement as to tho number of employHes governs the factory or the establishment but not the industry.

That takfs us to the question as to the meaning of the expression "engaged in any industry specified in Schedule I", and this question no don bt,

presents some difficulty. We have already reject<'d the argument that the composite factory is not included in s. 1(3Xa).

That means that the clause "engaged in any industry" does not mean "exclusi vely engaged in any industry". If that is so, what exactly is the meaning and significance of thig clause ? Two views are possible. It may be said that

even if a factory is only partiall.v engaged in any industry specified in Schedule I, it would satisfy the test however small or insignificant may be the <>Xtent of its operation in the said industry. On this construction, it would follow that if a factory is engaged in several industrial operation one of ,,:hirh

relates to an industry specified in Schedule I, the factory would fall under s. 1(3)(a) even though its relevant a<:tivity in the specified industry may be of

a minor, incidental or subsidiary character. The other construction would be that tho oxprossion

"engaged in any industry" means "primarily or mainly engagod in any inclustry". On this construe

tion, if a factory is engaged in several industrial activities one of which relateH to tho industry ptl'i

fied in Schedule I, it would he rieccs8ary to enquire whether the said specified activity is subsidiary or minor; if it is subsidiary, incidental or minor, tho factory cannot be said to be engaged in that industry.

Cases may occur where a factory is primarily or

mainly engaged in other industrial activities ancl it is only for feeding one or more of such activit ics that the factory may undertake an activity in respect of the $pecified industry. But surh an undertaking is mornly for the purpose of feeding its

major activity; it is subsidiary, incidental and minor. In that case, the factory cannot be said to be engaged in the industry specified in Schedule I.

Both constructions are possible and each one of them presents some 'lnomalies.

On the first construction, it would follow that even if half a dozen employees arc engaged by the factory in regard to.its activity in the industry specified in Schedule I, the provisions of the Act would apply to all the workmen engaged in the whole of the factory because the factory would be deemed to have satisfied the test that it is engaged in the industry specified in Schedule I and that, no doubt, looks anomalous. On the other hand, if the second construction is accepted, though more then 50 persons may be employed in the incidental and subsidiary activity relating to an industry specified in Schedule I, the provisions of the Act will not apply to such workmen because the factory, as a whole, does not satisfy the test that it is engaged in the said industry and that also is anomalous.

It is true that in dealing with the construction of a clause which is capable of two reasonably possible constructions, it is not easy to make a choice, particularly when bot.h constructions seem to lead to some anomalies. On the whole, however, we are inclined to take the view that the clause "engaged in any industry specified in Schedule I'' should be interpreted to mean "mainly engaged in any indn>tr, y specified in Schedule I". If a fantory is engaged in two industrial activities one of which is itH primary, principal or dominant activity and the other is a purely subsidiary, incidental, minor or feeding activity, then it is the primary or the dominant activity which should determine the character of the factory under s. I (3) (a).

This view does not purport to add any word to the section; it merely interprets the relevant expression ••engaged in any industry specified in Schedule I",

'l'he Regional Provid111t Fund

Commissioner, Bombay v.

Shree Krishna Metal

Manufacturing Co .•

BhandMa

G 'ljendragat!kar J,

r ht Rtf]ionol Prtbidtnt Fund

Commissioner,

Bomby

Shrtt Krishna .\I eta/

Afan11faclurint Co.,

' llhandar•

fJajtnriragadkf1r J.

828 SUPRE~IE COGl~T REPORTS [1962] SUPP. I

\Vhen it is said that a person is engaged in any business, it usually means he is engaged mainly or . principally in that business; and the same wo:ilrl be tho position when the relevant clause refers to an establishment engaged in the specified industry.

That is the common-sense view which is consistent with tho current and accepted denotation of tho words "engaged in".

One of the tests which can sometimes be applied is whothcr the product of the incidt•ntal activity is intended for the market or exclusively for use by the factory in its other department only.

If the answ"'r to this question is that the said product is sent out in the market for sale, then the activity in question cannot he treated as incidental.

In such a case, it may be said that thu factory is engaged in both thn activities and as such, it is

engaged in the industry specified in Schedule I.

But tho test of sending the product in the market cannot ho treated as decisive or even very significant ht>cnuse tho definition of tho word "manufacture'' given ins. 2(i)(a) shows that a commndity may be produced by the fa,.tory as much for sale, transport, delivery or disposal aH for its own use.

Therefore, the fact that a commodity is pro<luce<I only for th" use of the factory in is other department may not necessarily show that tho activity which IeadR to the production of the said commodity is not the main activity of the factory. . .

If a factory iR engaged simultaneously in different industrial artivities and one of these is in relat.ion to an industry specified in Schedule I. then it can be said that the factory is engnl!'ed in the industry specified in Schedule f.

Th" fact that. the factory is engaged in other inrhrntrial activities will not ncr, cssnrily tulw it out of the purview of s. I (3)(a).

The broad test which may safely he appliecl in dealing with this question is: is the

'actory engaged in the industry specified in -dchedule I from a business point of viewY; and the answer to this question would generally give a satisfactory solution to the problem posed by s. 1(3)(a). Whether or not. a factory is engaged in any industry specified in Schedule I would, thus, be a question of fact to be determined in the facts and circumstances of each qase.

That appearn to be the view taken by B11lakrishna Ayyar J. in the Madras Pencil Factory, by its Proprietors v .. Perurnal Clietty & Sons, by its partner V. Anantliakrislina .Clietty ' v. Tlie Regional Provident Fund Gornrnissioner, ( 1) and with that view we are in general agreement.

What remains now is to consider whether the High Court was right in holding that the company and the Mills are outside the purview of s.1(3)ta). As we have already seen, company carries on four different kinds of industrial activities, one of which is the manufacturing of brass copper and 'kasa' circular sheets and the prepara tion of utensils thuefrom. For the manufacture of metal circular sheets, the Co. has a rolling machine. It is common ground that this work would fall within Schedule I of the Act and so, if it can be held that th.e Co. is a factory engaged in the industry represented by this work, the first test is satisfied. As we have already observed this Co.

carries on four diJferent kinds of activities and it is impossible to hold that the activity in relation to the industry which falls in Schedule I is either minor, subsidiary or incidental to -the other activities.

This activity is as much the work of the Co. as the other activities are and so, the Co. must be hold to be a factory under s.1(3)(a) so far as the first test is concerned. In regard to the test of the number of employees elilgaged in the factory it appears to be the Co.'s case that at the relevant time, the number of its total employees in all the

(I) A.I.R. 1959 Mad. 235.

T/11: Regional Providtnt l<Und

Commissioner, 8omba1J

•• Sh,.ee Krishna Metal

Monufadurinrr Co.,

Bhondara

Gajendraga4kar J.

The Ileyionl f'ro•-'idtnf Fund

Bumboy ..

Slirte /(rislma ft[tlal

.'t-101.ufacluring Co.,

lJham/ar•

G'ojendroyaJkar J.

s3o SUPREME COuRT REPORTS [l!l62] sijpp_

four activities did not consistently exceed 50; but that it is a point on which the High Court has expressed no opinion, and rightl.v, because it is a disputed question of fact which cannot be tried in writ proceedings. The appellant's case is that the total number of cmploy<!CS engaged by the Co. excoeded 50 at the relevant time and it is on that footing "that the present writ petition has been tried in the High Court. Therefore, without deciding this dispute question of fact, it may ho assumed that for the purpose of the present writ proceedings, the test of the numerical strength can be said to hine been satisfied. The result is, the view taken by the High Court that the company is outside s. l (3)(a) is erroneous in Jaw and must be reversed; and that means that appeal No. 361 of 1959 filed by the regional Commissioner is allowed and the writ petition filed by the Co. is dismiBBed with costs throughout.

In the rosult, the respondent will have to comply with the requisition issuad by the appellant against it under the relevant provisions of the Act. In regard to the date from which the respondent should make its statutory contribution to the Provident Fund tho a!'lpellant may have to .give a direction after consulting tho workmen, because from the date so specified by the appellant both the respondent and its workmen will have to make their respective contribution.

The position with regard to the Mills is, however, different. The main industrial activity of the Mills is the manufacture of hydrogenated vegetable oil named 'V a.nasada' and its by-products, such as soap, oil-cakes etc. It is true that in the mills tin containers are fabricated and this, no doubt,

is an activity covered by Schedule I. But it is obvious that this branch of the activity of the mills forms a very minor portion of its activity. The number of employees engaged in this branch is 31, whereas the total number of employees is 2ll.

r 831

Besides; the containers are produced only for the ; use of the Mills.

They are not intended to be sold in the market at all. Price for the containers is not also charged from the customers. Indeed, containers are required even for the purpose of storage of the vegetable oil. It is thus clear that the fabrication of tin containers has been under taken by the Mills only as a feeder activity ; it is integrally connected with its main business of pro ducing and marketing vegetable oil and as such, it is 't minor. part of the said activity. Having regard to the relevant facts admitted or proved in the present case, we are satisfied that the High Court. was right in coming to the conclusion that the Mills was not a factory within the meaning of section 1(3)(a). The result is, the appeal .'lo. 387 of 1959 fails and is dismissed with costs.

C.A. 361 of 1959 allowed.

C.A: 387 of 1959 dismissed.

BOKARO AND RAMGUR LTD. v.

THE STATE 01<' BIHAR AND ANOTHER

(B. P. SINHA, c. J., P. B. GAJENDRAGADKAR, K. N.

WANOHoo, N. RAJAGOPALA AYYANGAR, and

T. L. VENKATARAMA AIYAR, JJ.)

P.undamental right - Right to hold property_ Ad. d' t' t t"tl d' u zca b in a8 O ,' .de .Pe~ zy -Question of infringement, if could ariBe e, ore sue,, a udzcatiun - Constitu, tion of India Arts.19(1) (f) 31(1) - Bihar Lanrl Reforms Act 1950 (Bihar 1 of 1950)' •. 4(h). . '

h The property regarding which the contention is raised t at the fundamental rights of the petitioners under Arts. 19(1) (f) and 3] (I) of tl1e Constitution "'" "-lleged to

Tire Regiortal Provident Fund

Comm; ssionr,

Bombay v.

Shee Krishna Mtal

M anufocturing Co.,

llnondora

Gajendragadkat J.

Morch 14,

SHREE KRISHNA METAL MANUFACTURING CO., BHANDARA

P. B. GAJENDRAGADKAR

K. N. WANCHOo, JJ.

Provident Funds Act, 1952

ss. 1(3)(a)

Schedule I

Schedule I

section 1(3)(a)

Provident Funds Act, 1952

Indian Partnership Act

s. 1(3)(a)

Art. 2

Companies Act

s. 1(3)(a)

section 8

s. 1(3}(a)

section 16

Schedule I

section 1(3)

s. 5

Section 6

s. 9

Section 10

s. 1

Schedule I

Schedule I

Schedule I

Schedule I

Schedule I

Schedule I

Schedule I

Section 2A

Schedule I which has been added by Act

Schedule I

Schedule I

s. 1(3)(a)

Schedule I

s. 1(3Xa)

Schedule I

Schedule I

s. 1(3)(a)

Schedule I

Schedule I

Schedule I

Schedule I

Schedule I

Schedule I

Schedule I

Schedule I

Schedule I

Schedule I

s. 1(3)(a)

Schedule I

Schedule I

Schedule I

Schedule I

section 1(3)(a)

Bihar Lanrl Reforms Act 1950

Arts. 19(1)


3 S.C.R.

SUPREME COURT REPORTS

r 831

Besides; the containers are produced only for the ; use of the Mills.

They are not intended to be sold in the market at all. Price for the containers is not also charged from the customers. Indeed, containers are required even for the purpose of storage of the vegetable oil. It is thus clear that the fabrication of tin containers has been under taken by the Mills only as a feeder activity ; it is integrally connected with its main business of pro ducing and marketing vegetable oil and as such, it is 't minor. part of the said activity. Having regard to the relevant facts admitted or proved in the present case, we are satisfied that the High Court. was right in coming to the conclusion that the Mills was not a factory within the meaning of section 1(3)(a). The result is, the appeal .'lo. 387 of 1959 fails and is dismissed with costs.

C.A. 361 of 1959 allowed.

C.A: 387 of 1959 dismissed.

BOKARO AND RAMGUR LTD. v.

THE STATE 01<' BIHAR AND ANOTHER

(B. P. SINHA, c. J., P. B. GAJENDRAGADKAR, K. N.

WANOHoo, N. RAJAGOPALA AYYANGAR, and

T. L. VENKATARAMA AIYAR, JJ.)

P.undamental right - Right to hold property_ Ad. d' t' t t"tl d' u zca b in a8 O ,' .de .Pe~ zy -Question of infringement, if could ariBe e, ore sue,, a udzcatiun - Constitu, tion of India Arts.19(1) (f) 31(1) - Bihar Lanrl Reforms Act 1950 (Bihar 1 of 1950)' •. 4(h). . '

h The property regarding which the contention is raised t at the fundamental rights of the petitioners under Arts. 19(1) (f) and 3] (I) of tl1e Constitution "'" "-lleged to

Tire Regiortal Provident Fund

Comm; ssionr,

Bombay v.

Shee Krishna Mtal

M anufocturing Co.,

llnondora

Gajendragadkat J.

Morch 14,

19Gt

Bsl.:aro a11d Ram:Jur

Lid

The State of Bihar

832 SUPREME COURT REPORTs [1962] SUPP.

have heen infrin!(ed is a plot of land within the Municipal I imits of I-lazaribagh with certain buildins and structures thereon,, vhic!t originally belonged to the Raja of Ramgarh.

On January 16, I l41l, the Raja leased this property to I': for a

ter1n of 99 years and son1eti1ne thereafter settled his reversion ary interest of the property for the benefit of a Trust.

The estate of Ramgarh was notified under s. 3( 1) of the Bihar Land Reforms /\ct for being taken over by the Govcrn1ncnt of Bihar and in consequence, the estate statutorily vested in th~ State of Bihar.

A notice was issued to N to shov.· cause \Vhy the lease executed in his favou1; should not be set aside under s.4(h) of the act as the lease was executed well within the period sperified under s. 4(h). N submitted objections standing that these properties \Vere not covered by s. 4(h).

During the pendcncy of the enquiry, I': surrendered his leasehold to the trust. The Trust !cased the property to one B \vho assigned his leasehold interest in the property to the petitioner company. l, he present petition sought to quas the said proceedings under s. 4(h) pending before the Collector wherein an enquiry was having held as to the manner in which the property in question was being enjoyed by the Raja of Rarngarh prior to the transfer by lease for 99 years.

The question is whether any fundamental rights of the petitio ncr have been infringed by the enquiry being held.

Held, that hcfore a party could complain of an i11fringcment of his fundamental rights to hold property he must estahlish that he has title to that property and if that title itself is in dispute and is the subject of adjudication n proceedings legally constituted, .he canot obviously put for, vard any claim based on ur.h utle until as a resull of that enquiry his title established. It is only thereafter that the question whether his rights in or to that property have been

improperly or illegally infrinl(ed could arise.

CrVJL APPELLATE Ju111su1C'l'IO!-i: Writ Petition N0. 19 of 1961.

Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights.

A. V. Viiiwanatlta Sustri and D. N. Mukhe1jGe, for the petitioners.

Bajrang Sakai and S. P. Varma, for the respondents.

II 3 s.c.R.

SUPREME COURT REPORTS 833

1962.

March 14. The Judgment of the Court was delivered by

AYYANG.IB, J.-We consider that this petition under Art. 32 of the Constitution is entirely devoid of merits and deserves to be dismissed as misconceived as it does not involve any question of the infringement of any fundamental right.

The petition is substantially for the issue of a writ of prohibition directing the Collector ofHazaribagh not to proceed with an enquiry pending before him under s. 4(h) of the Bihar Land Reforms Aot and a writ of certiorari to quash the said proceedings. The property regarding which a contention is raised that the fundamantal rights of . the petitioner under Arts.19(l)(f) and 31(1) of the constitution are alleged to have been infringed, is a plot of land within the municipal limits of Hazari- . bagh in Bihar together with certain buildings and structures thereon. The property originally belonged to the Ramgarh Raj. There is a dispute as to the manner in which this property was being <mjoyed by the then proprietors and so we shall at this stage refrain from saying anything about it. On

January 16, 194& the Raja of Ramgarh granted a lease of this property in favour of his younger brother Basant Narain-for a term of 99 years. On April 7, 1949 the Raja settled his reversionary interest in the property for the benefit of a Trust under a registered deed of settlement. The estate of Ramgarh was notified under s. 3(1) of the Bihar La.nd Reforms Act (Bihar 1 of 1950) for being taken over by the Government of Bihar and in consequence the estate statutorily vested in the State on and from November 3, 1951. Section 4(h) of the Bihar Land Reforms Act enacts:

"The collector shall have power to make inquiries in respect of any transfer including the settlement or lease of any land comprised such estate or the transfer of any kind of

Bokoro and Ramgur

Ltd. v.

The Stalt of Bihor

AJJO"gar J,

Boka10 and R"'11lur

ltd.

Tht State of Bii.ar

Ayya11gar J,

834 SUPHEME COURT REPORTS [1962) SUPP.

interest in any building used primarily as office or kutdwry for tbc collection of rent of such estate or tenure or part thereof, made at any time after t, ho first day of January 1!!46 and if he is satisfied that such transfer was made with thP. object of defeating any provisions of this Act or causi1ig 1088 t.o the tate or obtaining higher compensation thereunder the Collector may, after giving reasonable notice to the parties concerned to appear and be heard and with the previous sanction of the State Government, annul such transfer, \ dispossess the person claiming under it and take possession of such property on such terms as may appear to the Collector tu be fair and equitable." It will ho noticed that the lease in favour of the

H.aja's younger brother was dated January 16, 1948 and therefore was well within the period specified in the provision. It was the contention of the State that the buildings on the property which were tho subject of the lease <lated January 16, 1948 were being used by the Haj primarily as an office or kutcheri for the collect' on of rent-a fact which however was disputed .,,_(: ia a sul'ject of contest in tho proceedings now sought to e quashed.

On Kovember 27, 1955 a notice was issued to Basant Narain to show cause why the lease cxecutt,>d in his favour on January 16, 11!48 should not be set aside under the power conforred upon the CollPctor by

~. 4(h). Basant Narain submitted his objections and stated that the leased properti!'s were not covered by s. 4(b).

Before however this enquiry was completed, llasant !\arain surrendered his leasehold interest to the assignee of the reversion, viz., the Trust, by a rcgibterc<l deed" dated January I, l!J57.

Subsequently on June , I, 1959 the Trust which thus became entitled to the entire interest. in the property in its turn leased the property to one

Bnsidhar and about a m1 nth later, on July 3, 1959

3 S.d.R. s:i5

Bansidhar assigned his leasehold interest i11 the property to the petitioner-company and that is how the petitioner came upon the scene.

On November 13, 1959 the Collector pessed an order cancelling the lease. The petitioner who laid claim to a title to the property under the assignment in its favour dated. July 3, 1959, applied to the Collector to set aside his order both on the merits and also on the ground that the order of November 13, 1959 had been passed to its prejudice without giving it an opportunity to make its objections even though by that date it had obtained title to the property and therefore a locus standi to be heard. We are not now concerned with the correctness or otherwise of the contention raised by the petitioner, because the State of Bihar set asidA the order of the Collector and directed a re-enquiry and in this re-enquiry the petitioner filed a petition before the Collector on August 9, 1960 setting out its case.

It was during the progress of this last enquiry that the petitioner moved this Con.rt by the present petition for the reliefs which we have already set out. Pausing here it is necessary to add that the constitutional validity of s. 4(h) is not challenged and the case therefore turns on whether the property satisfies the conditions on which the section is attracted. The relief sought in this petition is based on two allegations: (I) that the land on which the buildings stand is raiyati land and therefore could not be taken possession of by the State under the Bihar Land Reforms Act and (2) that the buildings standing thereon were previously used for the'residential purpose of the Raja and his family and not as a kutoheri. The enquiry has been proceeding before the Collector in regard to these two points and it may be mentioned that when the petitioner applied to this Court for a stay of proceedings before the Collector .. this Court passed an order permitting the enquiry to continue, though it stayed the passing of

196Z

Bokaro and Ramgw

Ltd. v. r/H t late of Bihar

I9G2

Bo/; oro • nd Ramyw

Lid. ..

The Stal t rif Bilwr

Ay.1angar J,

. . . . . . .

836 SUPREME COURT REPORTI'S [1962) SUPP.

any order by the State Governm•mt. It will thus be seen that if the contention of the State is correct

a11 regards th" tenure of the property am! as regards the purpo; e for which thp buildings were used, the 1 title of the State to the.property wonld be made out and the petitioner could have no legitimate grievance. If, on the other hand, the petitioner cstab. lishcs in the enquiry the case that it has put forward in the petition it is bound to succeed. Thus the question whether petition has a.ny right to the property which it claims depends wholly on questions of fact which are plainly within the jurisdiction of the authorities constituted under the Bihar Land Reforms Act. Before a party can complain of an infringement of his fundiimental right to hold property he must establish that he bas title to that property and if his title itself is in dispute and is the subject of adjudication in proceedings legally constituted, he cannot obviously put forward any claim bi.sect on hi8 title until as a result of that enquiry he is able tu establish his t.itlc. It is only thereafter that the que8tion whether his rightH in or to that property have been improperly or ilkgally infringed could arise.

In the circumstances we consider that the petitioner can complain of no infringement of its fundamental right, a8 to justify a. pdition undor Art. 32.

The petition is dismissed with costs.

Petition dismissed.

\ ·-·

section 1(3)(a)

BOKARO AND RAMGUR LTD

THE STATE 01<' BIHAR AND ANOTHER

B. P. SINHA

P. B. GAJENDRAGADKAR

N. RAJAGOPALA AYYANGAR

Bihar Lanrl Reforms Act 1950

Arts. 19(1)

s. 3( 1)

s. 4(h)

s. 4(h)

s. 4(h)

Art. 32

Constitution of India

Art. 32

s. 4(h)

Arts.19(l)(f) and 31(1)

s. 3(1)

Section 4(h)

s. 4(b)

s. 4(h)

Art. 32


3 S.C.R.

SUPREME COURT REPORTS

M/S. ORISSA CEMEN'f LTD.

UNION OF INDIA

(B. P. SINHA, C.J., K. SUBBA RAO, N. RAJAGOPALA

AYYANGAR, J. R. MuDHOLKAR and T. L.

VENKA.TARAMA AIYAR, JJ.)

Provident Fund-Contract labour-Contribution to provident fund-If and when principal employer liahle-Providenl Fund Act, 1952 (XIX of .1952), ss. 5, 6, 7-Employees' Provident Fund Scheme, paras. 30, 31, 32, 73A-Notification No.

S.R.O. 331 dated January 15, 1958-Notification No. G.S.R. 1461 dated December 2, J.?60. '

The Central Government under s.5 of the Provident Funds Act, 1952, published a Scheme under the Act for the establishments of the Provident Fund. Paragraph 2(f)(iii) of the Scheme defined "Excluded Employees" meaning employees employed by or through a contractor.

Section 6 of the Act and paras. 30 to 32 of the scheme provided for the employer making contribntion to the fund and the combined effect of s.6.and paras. 30 to 32 of the Scheme is that the contribution to the Provident Fund is to be 12-1/2% of the basic wages and dearness allowance, that is to be borne equally by the employer and the employee and that the employer is to pay the whole of it, half on his account, and the other half on account of the employee and he is to recoupe himself bv deducting it from the wages of the employee.

Paragraph 26 of the Scheme provided that every employee in a factory or establishment other than excluded employee shall be regarded

to become a member of the fund if he has completed one years cOntinuous servict".

The Government by Notification No. S.R.O. 351 dated January 15, 1958, amended Para. 2(f)(iii) of the Sd1eme,

whereby all employees employed by coµtractor who were directly connected with any manllfacturing process carried out in a factory or establishment became entitled to the benefit by' the Act.

Another Notification No. G. R. E. 1457 dated December 2, 1960 repealed the said para. 2(f)(iii) added

a new para. 73A.

This amendment had the effect of abolishing the distinction between the workmen employed by the contractors who "vere directly connected with the manufacturing process in the factory or establishment, and those who were not so connected, all of whom becaine entitled to !h~

MarchH.

JYoz

Orissa Ctmtnt Lid.

•• Ut1ion of India

benefit of the Schcrnc. 'I'he authorities issued notice on the petitioner to comply with the changes introduced hy the amcn<ln1en ts .

The (>(titioncr filed petition under Art.32 of the Constitution challenging the valirlity of the two notifications as unreasonable restrictions and not falling within Art. 19(6) and that they .slwld be struck down as infringing Art. 19( 1) (g) of the Constttutton.

Held, that the './otification dated Januai:y l'i, 1958 and December 21, 1960 ore unconstitutional and void.

Section 6( 1) of the Act is to make the employer liahlc only for a moiety of the provident fund and while the scheme of 1952 is \vell designed to carrv out this intentions in ito;; application to \\'Orkrnen directly eployc<l, by' reasons of the combined operation of paras. 30 and 32, it broaks down in its extension to contract labour by reason of the inapplicability of para. 32.

It opc.r; ltr.s unfairly and harash.Jy on persons who employ contract labour and it further results in discrimination bct\\ecn those \vho employ contract labour anti. those who employ direct labour. The scheme. therefore cannot be said to he reasonable and inust he stn1ck down as not fallin~ v.:ithin the protection afforded hy :\rt.· 19(6).

OnIGIXAL Ju111snrcnoN : Petition No. 17 of l!l6l.

Petition under Art. :l2 of the ConRtitution of Indin. for enforcement of Fund11.ment:1l Rights.

A. V. Vistcanatha Saslri, K. C .. Jain nnd 13. P.

Jfahe.hwari, for tho petitioners.

Bishan N11rain, Snkumar Ghosc and P. D. Menon, for the rospondcnt..

1962.

March 14.

The Judgment of the Court was delivered by

VE:-; KATAllAMA AIL\H, J.-The first petitioner is a company cn.rrying on business. in the manfc ture of cement in the Stale of Ortssa and pet1t10ners os. 2 and 3 11.re t.wo of its Direotors. They have filed the prcsont petition under Art. :l2, challenging the validity of two 11otiflc11tins. date<l Janua.ry Hi, 1958, and D0cembor 2, 19o0, issue 4

by the Central Government under s. 7(1) of the em ployees' Provident Funds Act. 1952 hereinafter referred to as "the Act". It will be convenient to first set out the relevant statutory provisions bearing on the question. The Act was passed for the purpose of providing for the institution of Provident Funds for the employees in factories and other establishments. Section 5 of the Act, which deals with this matter is a.s follows :-

"5. Employees' Provident Fund Schemes.-(!) The Central Government may, by notification in the Official Gazette, frame a Scheme to be called the employees' Provi dent Fund Scheme for the establishnent of provident funds under this act for employees or for any class of employees and specify the establishments or class of establishments to which the said Scheme shall apply and there shall be established, as soon as may be a, fter the framing of the Scheme, a Fund in accordance with the provisions of this Act and the Scheme.

(2) A Scheme framed under sub-section (I) may provide that any of its provisions shall take effect either prospectively or retros., pectively on such date as may be specified in this behalf in the Scheme.

Section 6( 1) which provides for the employer making contribution to the Furd runs as follows :-

"6(1) The contribution which shall be p_aid by the employer to the Fund shall be six and a quarter per cent. of the basic wages dearness allowance and retaining allowance (if any) for the time being payable to each oft.he employees, and the employees contribution shall be equal to the contribution payable by the emplof'er in respect of him

Orissa Cement Ltd

Union of India

Aryar J,

Oria1a Ctmtnl Lt~. ..

Unfon of lridia

and may, if any employee so desires and if the i:lchemo makes provision therefor, be an amount not exceeding eight and onet.hird per cent. of his basic wages, dearness allowance and retaining allowance (if any):

Provided that where the amount of any contribution payable under this Act. involves a fraction of a rupee, the Scheme may provide for the rounding off of 8ueh fraction to the nearest rupee, half of a rupee or quarter of a rupee.

Under s.7 the ('_, entral Government may, by notiffoation iP the Official Gazette, add to, amend or vary any Scheme framed under this Act. Section

14 prescribe~ penalties for any contravention of the provisions of the Act or default in eompliance with them.

In exercise of the powers conforrod bys. 5 of the Act, the Central Government publiRhed on September 2, 195~, what is called the Employees' Provident Funds Scheme, lflfi~. Para 2(f)(iii) of the Schomo defines "Excluded Employees'' as men.ning the employees employed by or through a contractor. l.Jnder Pam :l the provident fund standing to the credit of an employee vests in the authorities constituted therennder.

Para 26 provides that every omployee cmployod in a factory or establishment other than an exc:luded employee shall he required to become a member of the fund if he has completed one ycr's continuous service, in the factory or establishment, and there is a proviso that if the employee has actually worked in the factory or establishment for not less than 240 days, he shall dceme<l to ha, e cumplnted one years continuous service.

Paras 30 to :l2 deal with contributions to he made hy the <'m ployul' and they 11rc a.~ follows:-

"30. Thn employfir shall, in the first instanco ipay both thn oontribution pay:tblP, by

himself (in this Scheme referred to as the employer's contribution) and also, on behalf of the member . employed by him, the contribution payable by the member (in this Scheme referred to as the member's contribution)."

"31. Notwithstanding any contract to the contrary the employer shall not be entitled to deduct the employer's contribution from the wage of a member or otherwise to recover it from him.'1

"32. (I) The amount of a member's contribution paid by the employer shall notwithstanding the provisions in this Scheme or any law for the time being in force or any contract to the contrary be recoverable by means of deduction from the wages of the member and not otherwise :

Provided that no such deduction may be made from any wage other than that which is paid in respect of the period or part of the period in respect of which tho contribution is

p:tyahle :

Provided further that the employer shall be entitled to recover the employee's share from a wage other than that which is paid in respect of the period for which the contribution has been paid or is p:tyable where the employee has in writing given a false declaration at the time of joining service with the said employer that be was not already a member of the Fund :

Provided further that where no such deduction has been made on account of an accidental mistake or a clerical error, such deductinri may, with the consent in writing of the Inspector, he made froll) the subsequent wages, ·

Orissa Cement Ltd. v.

Union of India

AiYar J,

J96t

Otissa Cement Ltd. v.

Union of India --

(:!) Deduction ma.de from tho wages of a member paid on daily, weekly or fortnightly basis should he totalled up to indicate the monthly deductions.

(3) Any sum deducted by an employer from the wage of an employee under this Sc!icme shall he deemed to have been entrusted to him for the purpose of payinir tho contribution in respect of which it was deducted."

The combined effect of s. (i and Paras 30 to 32 of tho Schnme is that the contribution to the Provident J<'und is to be 12-1/:! per cent. of the basic wages, and dearness allowanc<>, that it. is to be borne equally by the employer and the employee, and that the employer is to pay the whole of it, half on hiR account, and the other half on account of the employee, a.ncl he is to recoup himself by deducting it from the wages of the employee. Such deduction would he poosible only when the employer is the person who h1is to pay wages to t.he employee and that is why employees cmplo.\'ed hy or through a contractor were inclmlcd in thB definition of "excluded persons" to whom under Para ~(i the 8cheme had no application. These cmploy"c8 would bo paid hy the contmctor and the <JUestion of deduction of wages by tho pri1wipal employer, i.e, the person who is in charge of the factory m cst.ahlishment, will not arise.

It is said that with a view to avoicl their contribution under the Act, t.ho employers rrsorted increasingly to the , device of employing workm<'n through contractors, and the GovPrnment accordingly deemed it expedient t.o amend the pre'" isions o(thll Schomc so as t.o secnro the benefits thereof to

employees who were employed through contrnct.ors. 'fo carry out this purpose, a notification w:~~

issued on January 15, 1958 No. S.R.O. 331 subRtituting for Para 2(f)(iii) of the Scheme as it stood in 1952 the following :- '

"(iii) an employee employed by a contractor in any operation not directly connected with any manufacturing process carried on in the factory or other establishment, or

Exp/, a, nation-ln respect of an employee employed by a contractor who is not an excluded employee under this paragraph, the principal employer shall be responsible for complying with the provisions of the Act and the Scheme;"

The result of this amendment was that all employees employed by contractors who were directly connected with any manufacturing process carried on in the factory or the establishment became entitled to the benefits under the Act. On May ll, 1959, Para26 was suitably amended so as to conform to the notification dated January 15, 1958. Even this notification was felt to be inadequate for achieving the objects of the legislation and the, refore in exercise of the powers conferred by s. 7( 1) of the Act Government issued a: fresh notification No.

G.S.R. 1467 on December 2, 1960, whereby it repealed Para 2 (f) (iii) as it then stood and added a new Para 73A as follows :-

. "73A. Where an employee is employed by, or through, a contractor in, or in connection with, the work of an establishment, the principal employer shall be responsible for complying with the provisions of the Act and this Scheme in relation to such employee."

This amendment had the effect of abolishing the distinction made b! the arrHmd..,,, nt of l958 bet\j'eeq

01issa Cement Ltd. v.

Union of India

AiYaf J,

I96t

Orissa Ctmttd LJd.

•• Union of India

A1yar .T.

844 SUPREME COUH.T ltEPORTS (1062J SOPP.

workmen employod by contractors who wero direc tly connected with the manufacturing process in tho factory or establishment, and those who were not so connected, all of whom became entitled to the benefits of the Scheme. • The authorities constituted under the Act issued notices to the first Petitioner drawing its attention. to the changes introduced by th<i notifi. cations and asking it. to comply with their provi sions, to which the management replied pointing out the practic:d difficulties in the way of implementing them as reg:irds workmen brought in by contractors.

A long correspondence followed <mlminating in a thre:it by the respondents to take penal proceedings under s. 14 of the Act.

Thereupon. the petitioners have filed the present potition, raising the queHtion

of the constitutionality of tho two not.ificntions dated .January );), l!l58 anrl December 2, l!IGO. They contend that they throw a heavy burden on their btrnine8s :i.nd cannot, in consequence, b<0 upheld as reasonable restriction within Art. I 0{6) and m1rnt be •truck dnwn as infringing Art. 19( I )(g) of the Con8titntion. Tho respondent.< on t.he other hand maintain that t.hey arn heneficient l<'gislation ena.ctcd in the interests of tho public ancl :ire within the protection of Art. J!) ( (i ).

Now there can he no question that the impn)!n ed notifications are conceived in the interests of the

public. The Scheme framed under the Act in I U!i2 conferred benefits of provident fund on workmen directly employed in factories or establishmtnlR hut large sections of them working there under similiir conditions but. crnploycrl hy contractors w0 rc

<'X eluded from its pur\'iew. This was obviously a disc:rimin:ition for which there w:is no ju:; tific;1tion and it was this that was Rought to he rem ovcd hy the notifications in qnest ion. It is not contcndcd

by the petitioners th:i.t the object. behind these notifications is not such as would fall witbiu

Art. 19(6). What is urged is that the means and modus adopted for :10hieving it are unreasonable and that therefore tho Scheme must be held to violate Art. 19(l)(g). It is argued that when the Government decided to confer the benefits of provident fund on workmen who were employed through contractors, instead of framing provisions appropriate to their character as employees of contractors, it simply extended to them the provisions which had been framed in 1952 with reference to workmen directly employed without regard to the difference in the situations in which the two classes of workmen were placed. This, it is contended, has led to results as unjust as unforeseen, and the Scheme must therefore be held not to be within" the saving of Art. 19(6).

In order to decide how far this objection is well founded we must examine the distinction between contract labour and direct la.bom to the extent that it bears on the provisions of the Scheme. When the principal employer engages contract labour there is no privity of contract between him and the work men who actually do the work. It is the contractor who engages them, and pays wages to them. The principal employer has as such no direct relationship with them. Now the argument of the petitioners is that the ob!iga, tion of the employer to contribute every month to the provident fund an amount equal to six and a quarter per cent. of the wages and dearness allowance of the employee is incapable of performance as the principal employer is not in a position to know what wages had been agreed between the contractor and his employees and that further as the factory or establishment maintains no muster rolls as regards workmen employed through contractors, it is not possible for the principal employer to know whether a workmen is .a casual labourer, or whether he is entitled to the benfits of the Scheme under Para 26, by reason of his

Oriss• Cement Ltd.

Union oJ India

AiyarJ.

Orusa Ctm<M Lid.

v. l/nion of India

AfyarJ.

846 SuPREME COURT REPORTS (1962] SUPP.

having put in continuous work for the requisite period.

Tho difficulties suggested by the petitioners are not without substance but they are not, in our view, of sufficient weight to overthrow the Scheme. It is true that they could have been eliminated if the

Scheme had enacted a provision imposing on the contractors an obligation to give a statement in writing to the prinoipal employer containing the neoeBBary particulars about the workmen and their wages.

But even apart from such a provision there should ho no difficulty in the principal employer requiring the contractor at the time of the agreement to give those particulars, so as to protect himself. Nor is ther'e any point in the contention that the workmen may be casual labourers and the prinoipal employer would not be in a position to asoertain whether a particular workmen is entitled to the benefits of the Scheme under Para 26 because under that para the workman can claim the benefits of the Scheme only if ho works continuously for a period of not less then 240 days in that very factory or establishment, and that is a matt-0r which is capable of being asoertained by the principal employer.

A more serious objection to the extension of the Scheme of 1952 to workmen umployed through contractors is that the right given to the prinoi pal employer under Para 32 is incapable of exercise as against thom. Under Para 30 the whole of the provident fund, being 12-1 /2 per cent. of the wages and dearness allowance ha~ to be paid in tho first instance by the employer and under Para 32 he is to deduot half of it, being the omployee's share of the oontribution from his wages.

As already pointed out, this contemplates that the hand whioh has to pay the provident fund under Para 30 ia also the hand that has to pay wages to the workmen under Para 32. But that is not the position in the oas!\ of oontraot labour.

It is tho oontraotor wh~ p&yd

3S.C.R.

' 847

SUPREME COURT HEPORTS

the wages of workmen employed through him, but the obligation to pay the provident fund is cast on the principal employer. Now the complaint of the petitioners is that tbe Scheme works ''with a.n evil oye and an unequal hand" with reference to an employer who engages contract labour, in that while an obligation to pay the entire provident fund, including the share of his employee, is laid on him, he is not given the correlative right of recouping himself to the extent of that share, by deducting it out of his wages. -· The answer of the respondents to this is that the principal employer might by an arrangement with the contractor deduct from out of the amounts payable to him the sums contributed by him to the provident fund on account of the employees and that further he might . sue to recover those sums from the contractor in a suit based on s. 69 of the Contract Act. But then, it is to be observed, that Para 32 provides that the employer has to deduct the amount paid towards thii provident fund on account of the employee from his wages "and not otherwise". Moreover the Scheme does not impose any obligation on the contractor to pay to the principal employer the amounts paid by him on account of the employee. The intention of the Legislature as expressed ins. 6(1) of the Act is to make the employer lii>ble only for a moiety of the provident fund and while the Scheme of 1952 is well designed to carry out this intention, in its application to workmen directly employed, by reason of the combined operation of Paras 30 and 32, it breaks

down, in its extension to contract labour by reason of the inapplicability of Para 32. It operates unfairly and harshly on persons who employ contract labour and it further results in discrimination between those who employ contract labour and those who employ direct labour.- The Scheme therefore cannot

Orissa Cement Ltd.

Union of India

A{Var J.

Orisso CtmmJ Lttl.

Uni0tt of lrutia

AfyarJ.

19&t

Mo1d114

t ' r 848 SUl'l\E.ME COlJRT l{EPORTS [Hlli2J SUPP.

be said to be reasonable and must be struck down as not falling within the protection afforded by Art. HJ (6).

In the result we hold that the notifiuat.iuns dated January I 5, 1958, and Dcocmbf)J' 2, 1960, are unconstitutional and void.

The petitioners are entitled to their costs.

PetitWri allowed .

MOHAN SINGH v.

STATE OF PUNJAB

( B. P. Sr XHA, C. J., P. B. GAJE!WRAGADKAR, K. N.

WANCHoo, N. RAJAGOl'ALA AYYANOAR and

1'. L. V}; l\KATARAMA An:AR, JJ.)

Cri1nit1al Liability-Members of u11/auful assembly- M aintainahility of conviclion-Cou11nou obejct and common i?ltention-Di•tinction-A/teration of w1.viction-lndian l!enal Code 1860 (Act 46 of 1860). ss. 302, 149, 34.

The two appellants, who were tried with three others, were convicted under s. 302 read withs. 149 ands. 147 of the h1dian Penal Code. Two of these five persons tried together were acquitted.

In the charge these five accused persons and none others wc:rc mentioned as forn1ing the unlawful assembly and the evidence led in the case was confined to them alone.

The facts proved in the case unmistakably showed that the two appellants and the other convicted person, who inflicted the fatal blow, were actuated by the common intention of fatally assulling the deceased. It was contended in this Court that the conviction of the appellants under s. 302 read with s. 149 of the Indian Penal Code was not sustainable in law in view of the acquittal of two of the five accused persons who were alleged to have formed the unlawful assembly.

Held, that the contention must prevail and the conviction altered to one under ' 302 read with s. 34 of the Indian Penal Code.

Section 149 of Indian Penal Code prescribes vicarious or constructive criminal liability for members ofan unlawful

S. ORISSA CEMEN'f LTD

UNION OF INDIA

B. P. SINHA, C.J.

K. SUBBA RAO

AYYANGAR, J.

R. MuDHOLKAR

ss. 5, 6, 7

Provident Funds Act, 1952

Section 6

Art. 19(6)

Art. 19( 1)

Section 6( 1)

s. 7(1)

Provident Funds Act

Section 5

Section 6( 1)

Section

14

s. 7( 1)

s. 14

Art. 19( I )(g)

Art. 19(6)

Art. 19(l)(g)

Art. 19(6)

s. 69

ss. 302, 149, 34

s. 302

Penal Code

s. 302

s. 149

Indian Penal Code

s. 34

Indian Penal Code

Section 149

Indian Penal Code