Professional Assistance For ... vs Presiding Officer, Employees ...
2010 Latest Caselaw 1103 Del

                     *IN THE HIGH COURT OF DELHI AT NEW DELHI
+                               WP(C) No.2954/1999

%                                          Date of decision: 25th February, 2010

PROFESSIONAL ASSISTANCE FOR
DEVELOPMENT ACTION                                .... Petitioner
                  Through: Mr. Saurabh Prakash, Advocate.

                                          Versus

PRESIDING OFFICER, EMPLOYEES PROVIDENT
FUND APPELLATE TRIBUNAL & ANR                  ..... Respondents
                   Through: Mr. R.C. Chawla, Advocate.

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.       Whether reporters of Local papers may
         be allowed to see the judgment?                    Yes

2.       To be referred to the reporter or not?             Yes

3.       Whether the judgment should be reported            Yes
         in the Digest?

RAJIV SAHAI ENDLAW, J.

1. This writ petition seeks quashing of the order dated 16 th March, 1999

of the respondent No.1, Employees' Provident Fund Appellate Tribunal

dismissing the appeal preferred by the petitioner against the order of the

respondent No.2 Regional Provident Fund Commissioner, holding the

Employees' Provident Funds & Miscellaneous Provisions Act, 1952

applicable to the petitioner.

2. The petitioner is a society registered under the Societies Registration

Act, 1860 and is a Non-Governmental Organization (NGO). The respondent

No.2/RPFC sought to make the provisions of the Act applicable to the

petitioner and upon the petitioner disputing the same, an inquiry under

Section 7A of the Act was initiated by the respondent No.2/RPFC. The

petitioner does not dispute that it is an establishment and/or that it has more

than 20 employees. The only contention of the petitioner was/is that it is

neither an establishment within the meaning of Section 1(3)(a) nor has the

Central Government issued any notification under Section 1(3)(b) of the Act

specifying the petitioner and hence the provisions of the Act are not

applicable to the petitioner. The respondent No.2/RPFC on the contrary,

initially relied upon a notification under Section 1(3)(b) bringing

"establishments rendering expert services such as supplying of personnel,

advise on domestic or departmental inquiries, special services in rectifying

pilferage, theft and payroll irregularities to factories and establishments" and

subsequently on a notification which made the provisions of the Act

applicable to-

         "(i)        any University;

          (ii)       any college, whether or not affiliated to a University;

(iii) any school, whether or not recognized or aided by the Central or a State Government;

         (iv)        any scientific institution;

         (v)         any institution in which research in respect of any matter is
                     carried on;

         (vi)        any other institution in which the activity of imparting

knowledge of training is systematically carried on."

and contended that the petitioner was engaged in the activity of

imparting knowledge or training.

3. The stand of the petitioner in the proceedings before the respondents

and before this Court also is, that it has been formed for the purpose of

providing assistance to the poor with a view to bring about their economic

upliftment; that because of the very nature of the work involved, it is

necessary for the petitioner to approach each situation in the context of its

peculiar facts and circumstances and therefore, the nature of assistance that

is provided by the petitioner to such people takes a variety of forms

including organizing them into small informal groups for mutual help,

linking such groups to banks for obtaining credit, licenses, concessions etc.;

linking them to various markets, helping them to solve problems and

channelizing to them funds donated by charitable and development

institutions. The petitioner in its letter dated 9th September, 1997 to the

respondent No.2/RPFC had also stated that it is engaged in providing

technical and management assistance to poor people in villages, to registered

or unregistered groups of such poor people and to other societies or trusts

engaged in similar works. The petitioner in its communication dated 8 th

January, 1998 during the 7A proceedings before the respondent No.2/RPFC

also stated that training is not a systematic activity of its organization and

any skills imparted to poor people are contextual to specific problems that

such people face in their occupational activities. It was further represented

that there are no set schedules, syllabi or training methodologies followed

and each staff member in his or her day to day work in villages would impart

skills as and when necessary in a manner appropriate. It was thus contended

that the activity of the petitioner was sporadic in nature and situation specific

and it was the exact opposite of being systematic.

4. The respondent No.2/RPFC vide its order dated 10th May, 1998 held

that from the Memorandum of Association of the petitioner, the following

are the objectives of the petitioners:-

a. In conformity with its name, the Society is established to

provide professional, technical and management assistance to

various agencies engaged in rural developments and related

action programmes.

b. To offer know-how, advice and technical guidance in the field

of agriculture, animal husbandry, water resources, forestry, new

and renewable energy sources, rural industries, formal and non-

formal education, community health, habitat and environment,

and any other fields considered useful for the purpose of

promoting integrated human development.

c. To develop and promote appropriate prototypes, designs and

technologies related to development, to test and popularize their

application in the field, and to act as a clearing house of

information on such matters, with or without the help of other

agencies/institutions.

d. To assist developmental agencies to find appropriate

professionals for their projects, and to assist persons interested

in making a professional contribution to development to find

suitable development agencies, where they may work on a short

or long term basis.

e. To do planning and formulation of development projects

independently or in association with other agencies, for

implementation by itself or though other agencies engaged in

development programmes.

f. To assist development agencies at the grass roots to effectively

utilize physical assets acquired for the purpose of rural

development and to evolve systems to ensure equity and justice

in their utilization.

g. To monitor the progress of development projects, conduct

evaluation, maintain information systems and report on its own

development projects, or projects of other agencies at their

request.

h. To do all such other lawful acts, deeds or things either alone or

in conjunction with other organizations as are incidental or

ancillary or conducive to the attainment of any of the above

objectives.

It was further held that some activities of the petitioner may be

systematic and some may not be systematic but as a whole the establishment

objectives were to improve the skills of the people and the petitioner was

imparting knowledge. It was held that the avowed object of the Act is to

provide adequate social security to the employees and it is a welfare

legislation and should be construed so as to give necessary effect to that

object. The respondent No.2/RPFC thus held the petitioner to be imparting

knowledge and thus covered by the notification (supra).

5. Aggrieved from the order of the respondent No.2/RPFC, the petitioner

preferred an appeal to the respondent No.1 Appellate Tribunal. The said

appeal has been dismissed holding (i) that since the petitioner did not dispute

that it is employing 20 or more persons in its establishment the Act is in any

case applicable to the petitioner; (ii) that the petitioner is also providing

expert services and rendering the activity of imparting knowledge and thus is

covered by the notifications aforesaid under Section 1(3)(b)of the Act; (iii)

that the name itself of the petitioner suggested that the petitioner is providing

assistance for development action and assistance is nothing but a service.

6. This Court, prima facie finding fault with the reasoning of the

respondent No.1 / Appellate Tribunal that if any establishment engages more

than 20 employees it would be covered by the Act, issued notice of this

petition and also stayed recovery from the petitioner pursuant to the order

aforesaid under Section 7A of the Act. The said interim order was made

absolute on 29th March, 2000 till the disposal of the petition.

7. The counsel for the petitioner at the outset contended that the Tribunal

has erred in holding that merely because the establishment of the petitioner

was employing more than 20 employees, it would be covered by the Act. It

is contended that the petitioner is admittedly not a factory engaged in any

industry specified in Schedule-I so as to be covered under Section 1(3)(a). It

is further contended that if the interpretation of the respondent No.1 is to be

upheld, all establishments employing more than 20 persons would be

covered by the Act and the words in Section 1(3)(b), "which the Central

Government may, by notification in the official gazette, specify in this

behalf", shall be rendered otiose. However need is not felt to deal with the

said contention inasmuch as the counsel for the respondents has not sought

to justify the orders impugned in this petition on this ground and has only

sought to justify the same on the basis of the establishment of the petitioner

falling within the purview of the notifications aforesaid i.e. qua

establishments rendering expert services and imparting knowledge or

training.

8. The counsel for the petitioner has vehemently urged that the

Appellate Tribunal has, in holding the petitioner covered by the notification

qua institutions in which the activity of imparting knowledge or training is

systematically carried on has missed out the words "systematically carried

on" and not even reproduced the same in the order. It is contended that even

if the petitioner is to be held as carrying on activity of imparting knowledge

or training, such imparting is not systematic. It is urged that since there is no

curriculum and no classes are held, the imparting of knowledge cannot be

said to be systematic and in fact no finding of any such systematic imparting

of knowledge or training has been returned by the RPFC or by the Appellate

Tribunal also. It is contended that the orders impugned cannot be sustained

on this ground alone. It is also contended that even though the respondent

No.2/RPFC had not insisted upon the petitioner being covered by the

notification qua establishments rendering expert services but the Appellate

Tribunal wrongly held the petitioner to be covered by the same also. It is

further contended that Clause vi of the notification aforesaid, qua any other

institution in which the activity of imparting knowledge or training is

systematically carried on, has to be read ejusdem generis to clauses (i) to

(v) the notification i.e. the institution should be akin to the University,

College, School, Scientific Institution, Research Institution. Reliance is

placed on Prakash Foods Limited Vs. State of Andhra Pradesh (2008) 4

SCC 584 and M/s. Siddeshwari Cotton Mills (P) Ltd. Vs. UOI AIR 1989 SC

1019 on the principle of ejusdem generis.

9. I had enquired from the counsel for the petitioner as to why the

petitioner, which claims to be a NGO and to be working on a no profit and

no loss basis, is resisting applicability of the Act inasmuch as the petitioner

further claims to have set up its own Provident Fund Trust. The counsel for

the petitioner explains that the respondents may levy penalty on the

petitioner and/or may prosecute the petitioner for non compliance of the

provisions of the Act and that the PF deductions done by the petitioner till

now may not be as per the Act. It is vaguely sought to be suggested that if

the respondents were willing to make the statement that they will not

penalize the petitioner and not prosecute the petitioner the petitioner is

willing to be covered by the Act. Alternatively, it was suggested that this

Court may save the petitioner from penalties and prosecution for past

defaults. Even though, I am of the opinion that in view of the matter having

remained subjudice including before this Court, the question of the petitioner

being liable for penalty or prosecution may not arise but that is not to be the

subject matter of the present decision.

10. At the outset, I may state that the question whether the establishment

of the petitioner is covered by a particular notification or not is a mixed

question of law and fact. The scope of the writ petition against the

concurrent findings of the RPFC and the Appellate Authority is limited. This

Court can only examine whether any material evidence has not been

considered or whether any evidence which ought not to have been read has

been considered. Re-appreciation of evidence is outside the domain of

scrutiny in the writ jurisdiction.

11. The petitioner has neither raised any ground on which the writ ought

to be entertained nor urged any such argument. The petitioner would want

this Court to independently adjudicate whether it is covered by the

notification or not. The same cannot be permitted.

12. I am also of the view that the best measure of the activities of the

petitioner is its objectives as set out in its memorandum of association and as

recorded above. A perusal thereof unequivocally leads to the conclusion that

the petitioner is engaged in imparting knowledge and/or training. Upon the

same being put to the counsel for the petitioner he contends that that what

has to be seen is the activity in fact being carried on by the petitioner and not

what is recorded in its memorandum. It is urged that the language of

memorandum is always drafted very widely to prevent any restriction

subsequently on activities to be carried on. Even if the said contentions were

to be accepted, what stares one in the face in the present case is that the

petitioner utterly failed to lead any evidence whatsoever in this regard before

the respondent No.2/RPFC. In conducting an inquiry under Section 7A of

the Act the officer conducting the inquiry has the same powers as are vested

in a court under the CPC in relation to enforcing the attendance of any

person and/or examining him on oath or requiring the production of

documents or receiving evidence on affidavit or issuing commissions for the

examination of witnesses. However, the petitioner neither gave any evidence

or any particulars of its actual practice or transactions if different from that

said out in the memorandum. No opportunity to lead any evidence was

sought. Before this Court also the petitioner has not stated or filed anything

which would show that the petitioner is not providing professional, technical

and management assistance or not offering know-how, advice or technical

guidance or assistance as it is to, in terms of its memorandum. The onus in

this regard was squarely on the petitioner and which it has failed to

discharge. In such situation, the authorities below had no option but to

proceed to determine the applicability of the Act as per the objects of the

petitioner set out in its own memorandum and as per which it is definitely

engaged in imparting of knowledge and/or training.

13. The word systematic is defined in the Shorter Oxford Dictionary 6 th

Edition inter alia as arranged or conducted according to a system plan or

organized method or as acting according to a system regular and methodical

and/or as habitual, deliberate and premeditate. Similarly, the Supreme Court

in the State of Bombay Vs. Hospital Mazdoor Sangh AIR 1960 SC 610,

though not in the context of the Provident Fund Act held "as a working

principle it may be stated that an activity systematically or habitually

undertaken for the production or distribution of goods or for the rendering of

material services to the community at large or a part of such community with

the help of employees is an undertaking. Such an activity generally involves

the co-operation of the employer and the employees and its object is the

satisfaction of material human needs. It must be organised or arranged in a

manner in which trade or business is generally organised or arranged. It must

not be casual nor must it be for oneself nor for pleasure. Thus the manner in

which the activity in question is organised or arranged, the condition of the

co-operation between employer and the employee necessary for its success

and its object to render material service to the community can be regarded as

some of the features which are distinctive of activities......."

14. I had during the hearing enquired from the counsel for the petitioner

whether the accounts of the petitioner were audited or not. The answer was

in the affirmative. I had also enquired whether a social audit of the activities

of the petitioner was carried on or not. The counsel though having no

instructions in this regard fairly stated that in the ordinary course, for the

petitioner to receive funding/donations for its activities, such fund/donor

organizations must be insisting upon a social audit. If that be so then it is

difficult to believe that the activities of the petitioner are being not

systematically carried out. Systematic carrying on of activity cannot be

confused merely with a curriculum or a course or a relationship of student

and teacher. The language of the notification permits wide amplitude. The

notification is for bringing establishments within the ambit of the Act which

itself is social welfare legislation. The Supreme Court in Andhra University

Vs Regional Provident Fund Commissioner of Andhra Pradesh (1985) 4

SCC 509 has held that it has to be borne in mind that the Act is a beneficial

piece of social welfare legislation aimed at promoting and securing the well

being of the employees and the court will not adopt a narrow interpretation

which will have the effect of defeating the very object and purpose of the

Act. The notifications under the Act thus also have to be liberally construed

so as to bring employees of maximum number of establishments within the

ambit of the Act. The notifications under Section 1(3) (b) are not required to

be establishment specific. There can be one notification with respect to a

class of establishments. The notification in the present case is of the latter

category. Such notifications necessarily have to be generic and a distinction

here or a difference there cannot be used to contend that an establishment

which generally would be covered by the notification, owing to such

difference or distinction is exempt therefrom. In fact from the contention of

the petitioner itself that some of its activities in imparting knowledge or

training may be systematic and others not, the petitioner would be covered

by the notification.

15. I also do not find favour with the contention of the counsel for the

petitioner that clause vi (supra) of the notification has to be read ejusdem

generis to clauses i to v. It cannot be said that clause vi can include only

such institutions as of the categories of university, colleges, schools,

scientific or research institutions. If that had been the intention, the

legislature could have very well said "any other institution carrying on

similar activity". The legislature and/or the delegatee has fixed the criteria

of imparting knowledge or training in a systematic manner. As per the

objects of the petitioner as set out in its memorandum, the petitioner is

carrying out such systematic activity.

16. I find it hard to believe that in today's time and age and specially

when the petitioner depends on funding including from sources outside

India, the activities of the petitioner of imparting knowledge or training

could be casual or sporadic. It is hard to believe that there would not be a

module defining the steps to be taken qua each project/situation. The very

fact that the petitioner has shied away from producing any material relating

to its activity is indicative enough of the adverse inference to be drawn

therefrom. The counsel for the petitioner himself has contended that the

petitioner has more than 20 employees to carry on its objectives and it is

unbelievable that such employees would not be guided by a specific course

or mandate or that the manner of rendering assistance or training would not

be formulated so to be economical and time efficient rather than being left to

be decided as per the discretion of each employee.

17. I, therefore, do not find any merit in this petition. The rule issued on

29th March, 2000 is discharged and the interim order is vacated and the

petition is dismissed.

No order as to costs.

RAJIV SAHAI ENDLAW (JUDGE) 25th February, 2010/pp