Prakash D. Shah, Anand N. Desai, ... vs Union Of India (Uoi) Through The ...
2003 Latest Caselaw 1053 Bom

JUDGMENT

R.M.S. Khandeparkar, J.

1. Heard the learned Advocate for the parties.

2. The petitioners challenge the order dated 6-2-2001, passed by the Assistant Provident Fund Commissioner, Mumbai under the Section 7A of the Employees Provident Fund & Miscellaneous Provisions Act, 1952, hereinafter called as "the said Act". The challenge is on two grounds, namely, that the partner working in the firm cannot be construed as the employee of the firm, and secondly, that the authority erred in misconstruing the amended provision regarding the infancy period in as much as though the firm of the petitioners having been established prior to amendment to the Section 16(1)(d) of the said Act, whereby the infancy period was of three years, the petitioners could not have been denied the exemption from the provisions of the said Act for a period of three years from the date of its inception merely because during the subsistence of the said period of three years the Section 16(1)(d) of the said Act was amended, deleting the availability of the infancy period. Reliance is placed, in support of the first ground of challenge in the matter of the Regional Director, Employees State Insurance Corporation, Trichur v. Ramanuja Match Industries, , and in relation to the second ground of challenge, in the decision of the Division Bench of this Court in the matter of Magic Wash Industries (P) Ltd. and Ors. v. Asstt. Provident Fund Commissioner and Ors., reported in 1999 II CLR 426.

3. The Apex Court in Regional Director, Employees State Insurance Corporation, Trichur v. Ramanuja Match Industries, (supra) clearly held that.--

"A partner who belongs to the class of employer cannot rank as employee because he also works for wages for the partnership, Undoubtedly the term employee is the co-relative of employer. In common parlance the status of a partner qua the firm is different from employees working under the firm, it may be that a partner is being paid some remuneration for any special attention which he devotes but that would not involve any change of status and bring him within the definition of employee."

It was clearly ruled that the contention, that on the basis of the status being beneficial a partner should also be counted as an employee, was unsustainable. The law on the point being well-settled, it is apparent that the authority below erred in ignoring the said well-settled law while dealing with the matter in issue.

4. The Division Bench in Magic Wash Industries (P) Ltd. and Ors. v. Asstt. Provident Fund Commissioner and Ors. (supra) has clearly held that the infancy period is essentially for the benefit of the establishments and the establishments are entitled to continue to enjoy such infancy benefit for the period for which it was granted to them from the date of commencement of such establishment, and the amendment brought about to the statutory provision reducing the period of infancy during the subsistence of the said period of infancy in case of a given undertaking or establishment cannot alter such period to the detriment of the establishment. It was clearly ruled that the amended provision does not curtail the infancy period of the already existing establishment which enjoyed the five years infancy period under the unamended provision. In the said case, the infancy period of five years was reduced to three years by amendment to the Section 16(1)(d) of the said Act during the subsistence of the said period of five years, applicable to the petitioners therein, namely, Magic Wash Industries (P) Limited. In the case in hand, the period of infancy of three years was available to the petitioners in terms of the provision of the Section V of the said Act, as was in force at the time when the firm of the petitioners was established. Before completion of the said period of three years, there was amendment to the Section 16(1)(d) of the said Act whereby the provision regarding the infancy was deleted with effect from 22-9-1997. The amended provision nowhere provides that it would have a retrospective effect so as to deny the benefit of the infancy period to the firms which were already entitled to enjoy the same in terms of the statutory provision in force at the time of establishment of such firms. Considering the same, and applying the law laid down by the Division Bench in the case of Magic Wash Industries (P) Limited, the petitioners are justified in contending that the petitioners could not have been denied the benefit of the infancy period of three years. The authority below clearly erred in observing that the decision in Magic Wash Industries (P) Limited's case was applicable exclusively to the facts of the said case and does not lay down any proposition of law as such.

5. In the circumstances, therefore, the impugned order cannot be sustained and is liable to be set aside and the matter needs to be remanded to the authority to pass appropriate order, bearing in mind the observations hereinabove, and after hearing the petitioners.

6. In the result, the petition succeeds. The impugned order is hereby quashed and set aside and the matter is remanded to the authority to decide the same afresh, after hearing the petitioners and bearing in mind the observations made hereinabove. The rule is made absolute accordingly with no order as to costs.

7. All concerned to act on the ordinary copy of this order duly authenticated by the Associate/P.S. of this Court as a true copy.