Surya Charitable Welfare Society vs Central Board Of Trustees, ...
2010 Latest Caselaw 3155 Del

*           HIGH COURT OF DELHI : NEW DELHI

+    W.P.(C) No. 2261/2010 & CM NO.4554/2010

%                                Pronounced on:      8th July, 2010

SURYA CHARITABLE WELFARE SOCIETY             ...Petitioner
                 Through:  Mr. S.P. Arora Adv. with Mr. Rajiv
                           Arora, Adv.


                       Versus

CENTRAL BOARD OF TRUSTEES, THROUGH CENTRAL PROVIDENT
FUND COMMISSIONER AND ANR.                    ....Respondents
                Through:   Mr. R.C. Chawla, Adv. with
                           Mr. Ankit Kohli, Adv.
Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                 No
2. To be referred to Reporter or not?                              Yes
3. Whether the judgment should be reported                         Yes
   in the Digest?

MANMOHAN SINGH, J.

1. The present writ petition has been filed by the petitioner

M/s. Surya Charitable & Welfare Society (Regd.) seeking direction

for quashing of order dated 11.12.2009 passed by the Employees

Provident Fund Appellate Tribunal in Appeal No.630(4)2008 on the

ground that the impugned order is non-speaking as many vital

averments of the petitioner have not been dealt with and no

findings have been given by the appellate authority and further

directions are sought that the orders dated 15.1.2008/26.2.2008

passed under Section 7-A of the Employees Provident Funds and

Miscellaneous Provisions Act, 1952 and orders dated

1.7.2008/30.7.2008 passed under Section 7-B of the Employees

Provident Funds and Miscellaneous Provisions Act, 1952 are

against the law and principles of natural justice.

2. The brief facts are that the petitioner is a Charitable and

Welfare Society duly registered under the Societies Registration

Act XXI of 1860 and is an association of social workers who have

come together for the welfare of the down trodden and poor school

children by implementing the Mid Day Meal Scheme in the primary

school under the scheme of Ministry of HRD since 2005.

3. The petitioner entered into an agreement with the

Municipal Corporation of Delhi to serve hot cooked mid-day meal

to the school children numbering around 1 lac. This agreement

was effective for five years starting from 1.1.2005. Later on its

terms and conditions were revised and the agreement renewed on

1.7.2009 was valid upto 30.4.2011.

4. In response to letter dated 4.5.2007 issued by the

respondent it was alleged by the petitioner that it is neither an

industry nor a factory or an establishment to attract the provisions

of the Act as mentioned in the letter dated 4.5.2007. A similar

letter was sent on 6.12.2007 to the respondent. The office of the

Regional Provident Fund Commissioner applied the Employees‟

Provident Funds Act, 1952 to the petitioner vide letter dated

26.2.2008 with effect from 22.2.2007 under the schedule head

Mess/Canteen. In the said letter the Assistant Provident Fund

Commissioner, Delhi, forwarded an order dated 15.1.2008 which

had been passed under an inquiry held under Section 7A of the

Act. The said inquiry was held ex-parte and no opportunity of

hearing was given to the petitioner and therefore, as per petitioner

the said order was clearly in violation of principles of natural

justice.

5. The petitioner thereafter in March 2008 filed the review

under Section 7B of the Act pointing out the errors made by the

respondent on the face of the record and requested the

respondent to pass fresh orders under Section 7A of the Act. The

office of the respondent did not allow the review petition filed by

the petitioner and an order was passed on 1.7.2008/30.7.2008

dismissing the review petition filed by the petitioner by holding

that the petitioner was a canteen and not a mess within the

meaning of Employees Provident Fund Act.

6. An appeal was filed by the petitioner under Section 7-I of

the Act which was finally heard on 23.11.2009 and the order was

reserved. Vide the impugned order dated 11.12.2009 the appeal

of the petitioner was dismissed by the Assistant Provident Fund

Commissioner who held that the petitioner was a canteen within

the meaning of the Act.

7. The main discussion and finding given by the presiding

officer is mentioned in paras 6 and 7 of the order which read as

under:

"6. The order of the authority revealed that appellant employed 56 employees to prepared the food. This fact is not at all challenged by the appellant. The only question to be determined whether the appellant was running a canteen or not. The word "Canteen‟ is not defined in the Act, but generally canteen means where food was supplied for a price. It is the case of the appellant that as per agreement he was preparing food for about 1 lakh students and selling the same. This job of the appellant satisfy the conditions of Canteen as appellant was supplying food for a price.

7. It is also not disputed that the appellant employed 56 persons and running same automatic cooking centre. Since the appellant

was selling food for whatever price may be. The establishment will come under the Head of the Canteen and as such appellant is liable to pay the contribution."

8. Challenging the said order, the present writ petition has

been filed by the petitioner praying for setting aside/quashing the

impugned order dated 11.12.2009 passed by the Appellate

Tribunal and in consequence thereto further direction is also

sought for setting aside the orders dated 15.1.2008/26.2.2008 and

1.7.2008/30.7.2008 passed by the respondent No.2 under Sections

7A and 7B respectively.

9. None of the parties had disputed the fact that under

Section 7A of the Act it has been determined by various Courts

that the power conferred under Section 7A should be exercised

carefully and not arbitrarily and in case the order passed under

Section 7 of the Act is not a speaking one then the said order is

invalid as the said order must determine the jurisdiction and

relevant facts necessarily involved in the matter and the same

cannot be passed without proper inquiry and without affording an

opportunity to the employer.

10. I have considered the submission of learned counsel for

the parties. Let me first discuss the scheme of the provision. "The

Employees Provident Funds Act, 1952 Section (3) (a) makes it

applicable (subject to what may be termed the infancy protection

outlined in Section 16 of the Act) "to every establishment which is

a factory engaged in any industry specified Schedule-I and in

which 20 or more persons are employed." Schedule-I contains a

list of industries. Section 4 of the Act empowers the Central

Government to add any other industry to Schedule-I. Sub-section

(3) (b) of the Act makes the Act applicable "to any other

establishment employing 20 or more persons, or class of such

establishments, which the Central Government may, by

notification in the Official Gazette, specify in this behalf".

11. The term „establishment‟ is not defined in the Act and

must to my mind, take its meaning from the context in which it

appears, that is to say, the purpose underlying the Act. The Act

itself was made for the purpose of providing for the institution of

provident fund for employees in factories and other

establishments. The main purpose would thus appear to be that it

is enacted in the interests of employees in establishments. The

question is whether as contended by the petitioner, the Act cannot

be made applicable to the Charitable and Welfare Society in the

present case.

12. The main grounds in the writ petition are that:

i) The petitioner establishment is not a canteen, as

it does not conform to the requirements of a

canteen as contemplated under the Act and/or in

general meaning of the term, therefore, the

petitioner is not liable for coverage under the Act

as it is not amenable to the provisions of the Act.

ii) The legislatures while incorporating „Canteens‟

as Schedule Head in the Act vide notification

dated 31/08/1963 could not have

contemplated/visualized that such a scheme as

mid-day meal would qualify to be treated as

canteen and the provisions of the Act would be

applied.

iii) There has been no written counter-submission

from the Provident Fund Department against the

7B review application of the petitioner as there is

no outlet nor there is any general public or

otherwise to whom the canteen catering/service

is rendered.

13. Apart from the above mentioned grounds in the petition,

the petitioner in its appeal filed before the Appellate Tribunal

under Section 7-I of the Act had also stated specifically that a team

of enforcement officers visited the petitioner establishment for the

purpose of applying the provisions of the Act to the petitioner

establishment and the petitioner had filed an exhaustive reply to

the visit dated 2.5.2007 and further made a detailed submission

on 6.12.2007 which was attached to the appeal as Annexure A-7.

14. The contention of the petitioner before me is that office

of the respondent without considering the aforesaid consideration

applied the provisions of the Act to the society with effect from

22.2.2007. The petitioner‟s contention before the Appellate

Tribunal was that the respondent held the ex-parte inquiry under

Section 7A against the petitioner establishment without the

service of summons or notice under Section 7A.

15. Besides the abovementioned as well as other legal

points, it was denied by the petitioner establishment that it was a

mess or a canteen conforming to the description given in the Act.

Therefore, the said Act is not applicable to the case of the

petitioner. In ground E of the review petition, the petitioner had

taken the following ground:

"Because the coverage letter dated 26/02/2008 issued by the office of the Regional Provident Funds Commissioner Delhi shows that the Act is made applicable to the society of the Applicant under the head of classes of establishments as Canteen/Messes. There‟s a complete non- application of mind as there are two separate and independent schedule heads under the classes of the establishment applicable to non- factory establishments and only one head can be applied and not the two heads simultaneously. However, the society of the Applicant is neither a Canteen nor a Mess to be amenable to the provisions of the Act. It is not a Canteen because there is no outlet nor there is any general public or otherwise to whom the canteen catering/service is rendered. The Applicant establishment is also not a mess as per the ingredients/qualifications of a Mess. The notification says in pursuance of powers conferred u/s 1(3)(b) of the Act, the Central Government published a Notification dated March 15, 1963 in Government Gazette and specified that every Mess, not being a military mess, employing 20 or more persons as a class of establishments to which the said Act shall apply with effect from 31st March 1973. The explanation provides that mess means a place where food is served on payment made or promised to be made. In terms of the aforesaid notification the Applicant establishment is also not a mess."

16. The other ground taken in the appeal was that the order

dated 30.7.2008, wherein it was held that the petitioner

establishment was coverable under the Schedule head „Canteens‟

and the provisions of the Act were applicable for the reasons that

„the establishment supplies food at the location of the clientele

rather than the clientele coming to the location of the

establishment‟, was perverse, illegal, bad in law and suffered from

non-application of mind as the only controversy in the present

dispute was whether the activities of the petitioner establishment

fall under the schedule head of notified establishments or not.

17. After considering the order of the Appellate Tribunal

dated 11.12.2009 it appears that no reason and grounds have

been given for making the final observation in paras 6 and 7 of the

impugned order. It is settled law that the findings of any quasi-

judicial authority must be based upon reasons and grounds.

Similarly, the finding arrived at must be supported by cogent

logical examination of facts and the provisions of law after taking

note of the contentions raised by the parties and dealing with

them. I find that the findings recorded in paras 6 and 7 of the

impugned order are unsupported by reasons and that a conclusion

has been reached without dealing with the grounds stated in the

appeal under Section 7-I of the Act. It appears that while coming

to the conclusion by the tribunal, the grounds and contentions

raised by the petitioner have not been dealt with. The Appellate

Tribunal ought to have appreciated the fact that the order passed

under Section 7A was ex-parte order, no opportunity was given to

the petitioner of being heard. Secondly, various serious issues

were raised by the petitioner which ought have been decided by

the Appellate Tribunal in its order. Some of the points have not

been mentioned in the impugned order. Thus, the impugned

order is not sustainable. The matter is required to be determined

afresh by the Tribunal after discussing the issues raised by the

petitioner.

18. In these circumstances, this Court has no option but to

set aside the order passed by the Appellate Tribunal dated

11.12.2009 and remand back the matter to the Appellate Tribunal

to consider the entire dispute and questions raised by the

petitioner.

19. Parties are directed to appear before the Appellate

Tribunal on 11th August, 2010. The Appellate Tribunal shall

proceed to hear the matter at an early date preferably within four

months as the agreement between the petitioner and MCD is

expiring on 30.4.2011. In terms of the aforesaid directions, the

petition stands disposed of. No orders as to cost.

MANMOHAN SINGH, J.

JULY 08, 2010 jk