M/S Aniket College Of Social Work vs Asstt.Provident Fund ...
2017 Latest Caselaw 5856 Bom

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                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
                  

                           NAGPUR BENCH, NAGPUR.


 LETTERS PATENT APPEAL NO.54 OF 2004
            IN
 WRIT PETITION NO.2493 OF 2003


 M/s. Aniket College of Social Work
 (Aniket Shikshan Sanstha, Dighori),
 Desaiganj, Wadsa, District Gadchiroli,
 through its Secretary.                                     ....       APPELLANT


                     VERSUS


 1) Assistant Provident Fund Commissioner,
     Sub-Regional Office, 132-A, Ridge Road,
     Raje Raghuji Nagar, Nagpur.

 2) Secretary, Social Welfare Department,
     Mantralaya, Mumbai.                                    ....       RESPONDENTS


 ______________________________________________________________

               Shri S.S. Ghate, Advocate for the appellant, 
           Shri R.S. Sundaram, Advocate for respondent No.1,
    Shri A.S.Fulzele, Acting Government Pleader for respondent No.2.
  ______________________________________________________________


                               CORAM :     B.P. DHARMADHIKARI AND
                                           ROHIT B. DEO, JJ.

DATE OF RESERVING THE JUDGMENT : 08-06-2017 DATE OF PRONOUNCING THE JUDGMENT : 11-08-2017

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JUDGMENT : (PER : ROHIT B. DEO, J.)

1. This letters patent appeal assails the judgment and order

of the learned Single Judge dated 08-12-2003 in Writ Petition

2493/2003 dismissing the writ petition and affirming the order and

determination dated 04-01-2000 under Section 7-A of the Employees'

Provident Funds and Miscellaneous Provisions Act, 1952 (for short "the

Act") made by respondent 1.

2. FACTUAL MATRIX :-

2.1 The petitioner is a society registered under the Societies

Registration Act, 1860 and the Maharashtra Public Trusts Act, 1950.

The petitioner is an educational institution, which conducts courses of

Bachelor of Social Work and Master of Social Work from a rented

premises at Desaiganj Wadsa in Gadchiroli District.

2.1 Pursuant to an inspection and enquiry conducted by the

Enforcement Officer appointed under Section 13(1) of the Act, the

authority under the Act prima facie found the petitioner in default in

remittance of provident fund, family pension fund and insurance fund

contribution and administrative charges payable in accordance with

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the provisions of the Act, the Employees' Provident Funds Scheme,

1951, the Employees' Family Pension Scheme, 1971 and the

Employees' Deposit Linked Insurance Scheme, 1976. The petitioner

having disputed the applicability of the Act, proceedings under Section

7-A of the Act were initiated, which culminated into order dated

04-01-2000.

2.3 The petitioner/employer sought a review of the said

determination, as is envisaged under Section 7-B of the Act. By an

order dated 28-11-2002, the application seeking review was summarily

rejected by a reasoned order. It is not in dispute that the petitioner

was not heard at the stage of rejection of the review application.

2.4 The petitioner/employer raised three contentions before the

learned Single Judge. The first contention was that since the petitioner

society indisputably employees less than 50 persons who work without

the aid of power, the establishment is exempted under Section 16(1)

(a) of the Act. The second contention was that the establishment is

also exempted in view of the provisions of Section 16(1)(b) of the Act

and the third contention was that the application for review could not

have been rejected without due notice and hearing.

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 2.5       Dealing with the first contention that employing less than 50

persons who work without the aid of power qualifies the petitioner

society for exemption, the learned Single Judge held that even if

electricity or power is used by an educational institution for lighting,

cooling or heating, as the case may be, the work of teaching is with the

aid of power. The learned Single Judge further held that on a true and

faithful interpretation of the exemption provision, only establishments

to which there is no power supply are exempted. The second

contention was rejected by the learned Single Judge in view of the

admitted position that at the relevant time the institution was not

under the control of either the Central Government or State

Government and the employees were not entitled to the benefits of any

contributory fund or old age pension in accordance with any scheme or

rule framed by the Central Government or the State Government,

governing such benefits. The third contention that the order of

rejection of review was in violation of the principles of natural justice,

was rejected by the learned Single Judge holding that the requirement

of notice would not apply where the application for review is

summarily rejected under Section 7-B (3) of the Act.

 2.6       During   the   pendency   of   appeal,   the   appellant   has   impleaded



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respondent-Secretary, Social Welfare Department, Mantralaya,

Mumbai and has brought on record that with effect from 07-10-2006

the State Government has extended grant-in-aid to the appellant

institution. The effort of the appellant is to demonstrate that at least

from 07-10-2006 the appellant society is exempted from the provision

of the Act in view of Section 16(1)(b) of the Act.

2.7. The contention that the establishment of the petitioner society

is exempted in view of the provisions of Section 16(1)(a) raises an

interesting and important question of interpretation of the expression

"working without the aid of power" used in the said exemption

provision. The learned Single Judge was of the view that on a true and

faithful construction of exemption provision that the work shall have to

be construed as work with the aid of power even if power is used only

for the purpose of lighting, cooling or heating. The learned Single

Judge has taken a view that exemption is available only to those

establishments, which do not have power supply.

3. The Act provides for Provident Funds, Family Pension

Funds and Deposit Linked Insurance Funds for employees in factories

and other establishments and is a beneficial social welfare legislation,

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the object of which is to ensure health and other benefits to the

employees as is held by the Hon'ble Supreme Court in Provident Fund

Commissioner vs. S.D. College reported in (1997) 1 SCC 241.

Section 16 of the Act which falls for consideration in this appeal reads

thus :

"16. Act not to apply to certain establishments - (1) This Act shall not apply -

(a) to any establishment registered under the Co- operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State relating to co- operative societies, employing less than fifty persons and working without the aid of power; or

(b) to any other establishment belonging to or under the control of the Central Government or a State Government and whose employees are entitled to the benefit of contributory Provident Fund or old age pension in accordance with any Scheme or rule framed by the Central Government or the State Government governing such benefits; or

(c) to any other establishment set up under any Central, Provincial or State Act and whose employees are entitled to the benefits of contributory provident fund or old age pension in accordance with any Scheme or rule framed under that Act governing such benefits.

(2) If the Central Government is of opinion that having regard to the financial position of any class of (establishments) or other circumstances of the case, it is necessary or expedient so to do, it may, by notification in the Official Gazette, and subject to such conditions as may be specified in the notification, exempt (whether prospectively or retrospectively,) that class of (establishments) from the operation of this Act for such period as may be specified in the notification."

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4. Shri Ghate, learned Counsel for the appellant would urge

that the learned Single Judge felt in serious error in holding that

the exemption shall be available only to those establishments

who have not availed power supply. He would urge that the use

of electricity to provide light or other amenities at the work

place would not mean or imply that the work was with the aid of

power. He would further urge that working with the aid of

power necessarily implies that the work in the establishment is

with the use of power and the use of power must have direct

and proximate nexus to the work. Shri Ghate, learned Counsel

has invited our attention to the following judgments, to which

we shall advert at a later stage in the judgment.

(a) Gateway Auto Services, Bombay vs. Regional Director, Employees' State Insurance Corporation and another reported in 1980 Mh.L.J. 339.

(b) M/s. Kalpana Kala Kendra, Kanpur vs. Employees' State Insurance Corporation, Kanpur reported in 1985 LAB I C 763.

(c) Employees' State Insurance vs. Bhag Singh reported in 1988 LIC 1170.

        (d)      Esic, Bombay vs. Vyankatesh Cop. Processors Society
                 Ltd.   &   another   reported   in   1993   (2)   LLJ   394




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                 Bombay.
        (e)      U.I.I. & others vs. Digamber Jain Secondary School
                 reported in 2003 I CLR 233.
        (f)      Regional Provident Fund Commissioner vs. Sanatan

Dharam Girls Secondary School and others reported in 2006 III CLR 1046.

(g) Bharat Heavy Electricals Ltd. vs. Employees' State Insurance Corporation reported in (2008) 3 SCC

5. Per contra, Dr. R.S. Sundaram, learned Counsel for

respondent 1 would urge that the act is a piece of beneficial

social welfare legislation and must receive a liberal and

purposive construction, which would advance the object thereof.

Dr. R.S. Sundaram, learned Counsel would urge that a beneficial

social welfare legislation must not be construed narrowly or

technically and if two interpretations are possible, an

interpretation, which would effectuate the legislative intent must

be adopted. He would urge that the view of the learned Single

Judge is in consonance with the rule of liberal interpretation of

beneficial social welfare legislation. He would also urge that

Section 16, which provides for exemption of certain

establishments/classes of establishment from the provisions of

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the beneficial social welfare legislation, must be strictly

construed.

6. The Act is indeed a piece of social welfare

legislation and as is contended by the learned Counsel appearing

for respondent 1, must receive a liberal construction, which

would effectuate the intention of the legislature. The Hon'ble

Supreme Court in B.D. Shetty v. Ceat Ltd., (2002)1 SCC 193

held in paragraph 12 thus :

""12. ... One must not lose sight of the fact that the Act is a beneficial piece of legislation and the provision of subsistence allowance made is intended to serve a definite purpose of sustaining the workman and his family members during the bad time when he is under suspension, pending inquiry. This provision is enacted with a view to ensure social welfare and security. Hence, such a beneficial piece of legislation has to be understood and construed in its proper and correct perspective so as to advance the legislative intention underlying its enactment rather than abolish it. Assuming two views are possible, the one, which is in tune with the legislative intention and furthers the same, should be preferred to the one which would frustrate it. ..."

7. It is equally well settled that any provision, which provides

for exemption from beneficial social welfare legislation must be

construed strictly. The Hon'ble Supreme Court in Nathi Devi v. Radha

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Devi Gupta (2005) 2 SCC 271, observes thus :

"19. The Delhi Rent Control Act primarily is a legislation meant for protection of tenants from their eviction from the tenanted premises. Section 14 occurring in Chapter III of the Act provides for control of eviction of tenants. It puts an embargo as regards recovery of possession of any premises at the instance of the landlord unless the Controller satisfies himself as regards existence of any of the grounds specifically referred to in the proviso appended thereto. Clause (e) appended to the proviso enables a landlord to file a suit for eviction on the ground that the premises let out for residential purposes are required bona fide by him for occupation as a residence for himself or for any member of his family dependent on him, if he is the owner thereof or for any person for whose benefit the premises are held and that the landlord or such person has no other reasonably suitable residential accommodation. An embargo has been placed on a transferee landlord to recover possession from the tenant by sub-section (6) of Section 14 of the Act which is in the following terms:

"14. (6) Where a landlord has acquired any premises by transfer, no application for the recovery of possession of such premises shall lie under sub-section (1) on the ground specified in clause (e) of the proviso thereto, unless a period of five years has elapsed from the date of the acquisition."

21. Sections 14-A to 14-D carve out an exception to Section 14(1)(e) of the Act. The said provisions envisage recovery of immediate possession of the tenanted premises by

(i) the members of armed forces, (ii) the Central Government and Delhi Administration employees who have retired or who would be retiring, and (iii) where the landlord is a widow. All the aforementioned provisions refer to the immediate necessity of the landlord.

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22. The provisions contained in Sections 14-A to 14-D being in the nature of exception to the main provision, they must be construed strictly.

23. Where the statute provides for an exemption from the rigours of a beneficial statute for tenants, the landlord with a view to obtain immediate possession thereof must plead and prove the requirements envisaged therein. In other words the conditions precedent contained therein must be complied with."

8. In Lalappa Lingappa and others vs. Laxmi Vishnu

Textile Mills Ltd. reported in AIR 1981 SC 852 while propounding

that while interpreting a social welfare legislation, the Court should

adopt a beneficent rule of construction, the Hon'ble Supreme Court

was pleased to caution that when language is plain and unambiguous,

the same must be given effect to whatever may be the consequences.

The relevant observations of the Hon'ble Apex Court read thus :

"13. In constructing a social welfare legislation, the court should adopt a beneficent rule of construction; if a Section is capable of two constructions, that construction should be preferred which fulfills the policy of the Act, and is more beneficial to the persons in whose interest the Act has been passed. When, however, the language is plain and unambiguous, as here, we must give effect to it whatever may be the consequences, for, in that case, the words of the statute speak the intention of the legislature. When the language is explicit, its consequences are for the legislature and not for the courts to consider. The argument of inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the

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statute is obscure and there are two methods of construction. In their anxiety to advance beneficent purpose of legislation, the courts must not yield to the temptation of seeking ambiguity when there is none."

9. Shri Ghate, learned Counsel relies on paragraph 22 of the

judgment in Gateway Auto Services, Bombay vs. Regional Director,

Employees' State Insurance Corporation and another, 1980 Mh.L.J.

330. However, the learned Single Judge has only referred to the

submissions of the employer and to a judgment of the Madras High

Court, which was pressed in service to contend that the manufacturing

process could not be said to be with the aid of power. The learned

Single Judge observes that the facts in Madras High Court were

altogether different and the principles laid down would be inapplicable

to the facts before the learned Single Judge. The learned Single Judge

in paragraph 22 observes thus :

"22. Mr. Damania then strongly relied upon the judgment reported in V. Mohammed Haneef & Co. v. Employees' State Insurance Corporation Madras to show that no manufacturing process is carried on at the appellant's premises. In this judgment the question that fell for consideration before the Madras High Court was as to whether could it be said that the manufacturing process is being carried on with the aid of power merely because the water is utilized in the process lifted by power from a well before it is taken through channels or pipes to the tannery

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premises. The question before the Madras High Curt was as to whether the manufacturing process is tannery premises is being carried on with the aid of power. The requirement of the definition is not that power must be used in any part of the premises where the process is carried on. The essential postulates that power must be used in aid of the manufacturing process. The pumping of water has little to do with the manufacturing process. The pumping of water by power is not incidental to the tannery process carried on with the tannery premises. The main activity must be connected or must be identical part of the activities which is carried on with the aid of power. I have gone through the entire judgment and I find that the facts of our case are altogether different from the facts of that case. I, therefore, do not see that the principles laid down in this judgment are applicable to the present case. Admittedly in the case before me the power is used in order to drive compressors which supply compressed air for operating service hosts oil spray guns, in lubrication service and for supply of petrol. The activities of such services are directly with the aid of power and they are not with manual labour."

10. Shri Ghate, learned Counsel also relies on a judgment of

the learned Single Judge of Allahabad High Court in M/s. Kalpana

Kala Kendra, Kanpur vs. Employees' State Insurance Corporation,

Kanpur, 1985 LAB.I.C. 763. The learned Single Judge of the

Allahabad High Court was considering whether the employment is a

factory as defined in Section 2(12) of the Employees State Insurance

Act, 1948. The learned Single Judge of the Allahabad High Court has

held that unless the use of electric power is a integral part of the

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manufacturing process, it cannot be said that the manufacture is with

the aid of power. Shri Ghate, learned Counsel has also relied on a

Division Bench Judgment of the Punjab and Haryana High Court in

Employees' State Insurance v. Bhag Singh, 1988 LIC 1170 and in

particular to paragraph 14 thereof. However, we notice that all that

paragraph 14 records is the agreement of the Division Bench with the

view expressed by this Court in Gateway Auto Service and the Calcutta

High Court in M/s. Baranagar Services Station, 1988 LAB IC 302.

Reliance is also placed on judgment of Esic, Bombay vs. Vyankatesh

Cop. Processors Society Ltd. & another reported in 1993 (2) LLJ 394

Bombay in support of the submission that the use of electric power

must be an integral power of the working for the establishment to

attract the applicability of the expression "with the aid of power".

Perusal of the said judgment of the Division Bench of this Court reveals

that the question which fell for consideration is whether the use of

electric power for processing the effluent preparatory to its eventual

disbursal can be termed as manufacturing process as contemplated by

the expression "manufacturing process" in Section 2(12) of the

Employees State Insurance Act, 1948. The establishment-society was

using electricity for treatment of effluent after using water for dyeing

and bleaching purpose. The electricity was not used for bleaching and

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dyeing purpose. The Division Bench held that the use of power was

not for any manufacturing process. The finding of the Division Bench

is based on the view that if electricity is used for any activity which is

not a part of the manufacturing process, it cannot be said that the

manufacturing process is being carried on with the aid of power.

11. The judgment of Union of India and others vs. Digamber

Jain Secondary School, 2003 I CLR 233, has no applicability to the

factual matrix of the present appeal. The Hon'ble Supreme Court was

considering a factual scenario where the Rajasthan Non-Government

Educational Institutions (Recognition-Grant-in-Aid and Service

Conditions) Rules, 1993 provided for contributory provident fund

benefits and in the context of the statutory provisions of the State Act,

the Hon'ble Supreme Court held that the Employees' Provident Funds

and Miscellaneous Provisions Act, 1952 would not apply to the

establishments belonging to or under the control of the State

Government. Reliance is further placed on the judgment of Regional

Provident Fund Commissioner vs. Sanatan Dharam Girls Secondary

School and others, 2006 III 1046, to urge that educational

institutions under the superintendence and control of the State

Government would be exempted from the provisions of the Act. The

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said judgment is of no relevance muchless applicability to the facts of

the case. The Hon'ble Supreme Court after taking note of Rajasthan

Non-Government Educational Institutions, Act, 1989 held that

educational institutions in the State of Rajasthan were under the

substantive control of the State Government and would fall within the

exception under Section 16(1)(b) of the Act. Shri Ghate, learned

Advocate lastly placed reliance on the judgment of Bharat Heavy

Electricals Ltd. vs. Employees' State Insurance Corporation, (2008)

3 SCC 247, in support of the submission that the authority under the

Act is duty bound to adhere to the principles of natural justice in

exercise of adjudicatory power.

12. The learned Single Judge has held that on a true and plain

construction of Section 16(1)(a) of the Act, only those establishments

would be exempted to which there is no power supply. The learned

Single Judge is of the view that even if the power supply is to facilitate

the use of lighting, cooling or heating, the working of the

establishment would be with the aid of power. We have noticed a

judgment of another learned Single Judge in Central Board of

Trustees, EPF vs. Nutan Pushpak Premises Co-op. Society Ltd.,

2016(150) FLR 163, which takes a diametrically opposite view which

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is apparent from a perusal of paragraph 7, which reads thus :

"7. Secondly, the Respondent society is excluded from the operation of the Act under sub-section (1) of Section 16 of the Act. The provision excludes establishments registered under any law for the time being in force in any State relating to co-operative societies, employing less than fifty workers and working without the aid of power. The Respondent society is admittedly a co-operative housing society registered under the Maharashtra Co-operative Societies Act, 1960. Far from there being any material to show that it employs more than fifty workers, the material on record in the form of salary registers maintained all these years actually show that at no point of time fifty or more workers were employed with the Respondent society. There is also no case that the establishment was working with the aid of power. Merely because electricity is used in the premises of the society for providing light and other amenities at the work place, it cannot be said that the establishment works with the aid of power. Working with the aid of power implies that there must be some work or process carried on in the establishment with the use of power. Such use must be direct and proximate as regards the activity carried on by the establishment. An indirect application such as use of electric bulbs for providing light or electric fans for providing comfortable working environment, does not amount to working with the aid of power. The Respondent society, accordingly, answers fully the description of an establishment covered under clause (a) of sub-section (1) of Section 16, all three characteristics necessary for such coverage being present in its case."

13. With deepest respect to the view of the learned Single

Judge who has authored the judgment impugned, we find it difficult to

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agree with the extremely broad proposition that exemption would be

available only to those establishments which have not availed of power

supply. We can visualized plethora of diverse situations in which

establishment may be availing the facility of power supply to satisfy the

basic needs of the workmen or to offer the very minimal comfort and

dignified working ambiance. Illustratively, a society of artisans

engaged in creating handcrafts may well have availed power supply to

operate a motor pump installed at a Well only to ensure the availability

of drinking water to the workmen. The fact that such an establishment

is availing power supply would not, however, mean or imply that the

artisans are working with the aid of power. The use of power of

electricity must necessarily have a direct or proximate nexus with the

work. Power or electricity need not be necessarily used at every stage

or part or process of the work to hold the working as working with the

aid of power. However, some activity or process integral to the

working must be aided with power for an establishment be termed as

working with the aid of power. With respect to the learned Single

Judge, who has delivered the judgment impugned, we are inclined to

agree with and approve the view of the learned Single Judge in Writ

Petition 2493/2003.

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14. The learned Counsel for the respondents 1 is right in

contending that since the act is a piece of beneficial and social welfare

legislation, the provisions thereof must be interpreted liberally and that

a narrow, technical or pedantic interpretation which may frustrate the

legislative object and intent must be avoided. The learned Counsel

would further urge that the expression "with the aid of power" must

receive a purposive interpretation to ensure that the legislative object

and intent as advanced rather than diluted or nullified. He would

urge, a fortiori, that a provision which carves out an exception to the

applicability of the Act must be strictly construed and the endeavour

ought to ensure that any beneficiary whom the protective umbrella of

the beneficent provision of the Act is intended to cover, must not be

excluded from the benefits of the Act.

15. We are alive to the legal position that a provision

providing for an exemption from the provisions of a beneficial statute

must be strictly construed. This juristic principle is as deeply

entrenched in our jurisprudence as the principle of liberal construction

or interpretation of beneficial or social welfare statute. However,

neither the principle of liberal construction of a beneficial or social

welfare legislation nor the principle of interpretation that a provision

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providing exemption from the applicability or rigor of a beneficial or

social welfare legislation, permits or justifies doing violence to the

language of the statute. The principle of liberal construction of

beneficial social welfare legislation or the principle of strict

construction of an exemption provision would come into play only if

there is more than one possible interpretation. If the words are neither

ambiguous or obscure, the anxiety or urge to advance the object of the

legislation must not result in an artificial expansion of the category of

beneficiaries. In the factual matrix of the appeal, we are not persuaded

to hold that every establishment which avails of power supply would

necessarily be an establishment working with the aid of power. We are

not for a moment suggesting that in every fact situation the work of

imparting education would not be a work with the aid of power.

Imparting of education with the aid of electronic gadgets like

computers, projectors or the like may possible imply that the working

is with the aid of power. However, if the use of power is only to

operate tube-lights or fans as is the factual scenario in the present

appeal, such use of power shall certainly not imply that the imparting

of education is with the aid of power.

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16. The appellant has brought on record that with effect from

07-10-2006 the State Government has extended grant-in-aid to the

appellant institution and the alternate submission is that the appellant

society is exempted from the provisions of the Act in view of Section

16(1)(b) thereof at least from 07-10-2006. In light of the view which

we have taken, we need not delve on the aforesaid submission which is

founded on events occurring during the pendency of the appeal. We

have recorded a finding that the appellant society was exempted from

the provisions of the Act during the period in dispute. We have

recorded the said finding on the basis of the factual position that the

appellant society was employing less than 50 persons who were not

working with the aid of power. If the respondent 1 is of the view that

due to any subsequent change in the factual position like increase in

the strength of employees, the appellant society ceases to be exempted,

the respondent authority is at liberty to take an appropriate decision on

the applicability of the Act to the appellant institution, in accordance

with law. In such a situation, it is also open for the appellant society to

demonstrate that in view of the grant-in-aid by the State Government

or any other development or event, the appellant society shall

continued to be exempted.

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17. The learned Single Judge has rejected the contention that

the failure of the authority to issue notice to the appellant society

before holding the review application under Section 7-B of the Act is

not maintainable. In the view of the learned Single Judge, requirement

of notice would not apply where the office of the reviewing authority

summarily rejects the application under Section 7-B(3) of the Act. In

the light of the view which we have taken, we do not express any

opinion on the view taken by the learned Single Judge on the

requirement of issuance of notice before summary rejection of an

application seeking review and the contention that failure to issue

notice would vitiate the order or rejection is expressly kept open.

18. We set aside the order dated 04-01-2000 of the

respondent 1 and the judgment and order of the learned Single Judge

on 08-12-2003 in Writ Petition 2493/2003.

The letters patent appeal is accordingly allowed with no

order as to costs.

                                 JUDGE                                    JUDGE


adgokar