Appeal No 1128 of 1967
20 1 SC India71 306 Appeal from the judgment and order dated September 1 1964 of the Andhra Pradesh High Court in Writ Petition No907 of 1963
L M Singhvi and SP Nayar for the appellant The respondent did not appear
The Judgment of the Court was delivered by Dua J
The appellant in this appeal by certificate granted by the Andhra Pradesh High  Court oft February 25 1965 under article 133 1 b of the Constitution is the Regional Provident Fund Commissioner Andhra Pradesh
A large number of writ petitions
by various parties were filed in the High Court praying for writs in the nature of mandamus directing the
appellant to forbear from enforcing or taking other proceeding under the provisions of the Employees  Provident Funds Act 1957 hereinafter called the Act and provident Fund Scheme  1952
With the exception of perhaps one writ petition all the rest including W P 907 of 1963 presented by T section Hariharn Proprietor New Cochin Cafe Ongole respondent in this Court were dismissed
Certificates under Article
133 i b of the Constitution were secured by the appellant in almost all the cases but
the present is the only appeal which now survives all the rest having been dismissed for non prosecution
The writ petition of the respondent was dismissed which means that the final order made by the High Court was in favour of the appellant
The only grievance raised by the appellant s learned counsel in this court was that the High Court bad in the course of its judgment expressed the view that Clause aand bof sub section 3 of Section I of the Act do not cover casual labour and since this expression of opinion which he considers to be legally erroneous would be binding on the appellant in administering the Act it was necessary to have the correct legal position enunciated by this Court
According to the appellant s learned counsel the following passages in the judgment of the High Court clearly bring out the arguments both for and against the legal position canvassed by him We have next reconsider whether clauses a and b of Section 13 are wide enough to cover casual labourthe work of an establishment even for a day or a fraction thereof
This argument is sought to be reinforced by the unreported judgment of a Division Bench of the Madras High It is maintained by the learned Government Pleader that requirement as to the numerical strength is satisfied is twenty persons are engaged in connection with 307 308 The other passage occurs a little lower down in that judgment Section 19 A also seems to strengthen our view
A doubt as to the number of persons employed in an establishment could arise only if the employment of twenty persons in the establishment were a normal feature
A legitimate doubt cannot be said to arise if the condition as to the number is satisfied if twenty persons work in the establishment even for a day or two
It is not necessary for us to labour this point any further as we feel that the provisions of the Act are inapplicable to establishments which do not employ twenty or more personsto work therein for a period of one year
It follows that casual labour  falls outside the scope of section 13
The fact that the casual labour is engaged by
or through a contractor does not make any different for the decision of the question the only criterion being whether they were casual laborers or not
On this discussion it follows that the establishments whose employees do not come upto twenty excluding casual laborers do not fall within the purview of Section 13 and so the provisions of the Scheme cannot be applied to them
The respondents will
therefore examine this question in the light of these decide whether the Scheme should be applied these establishments excluding casual labour
 The appellant s learned counsel had at one stage of his arguments stated that his client was anxious merely to steer clear of the observations made by the High Court that the provisions of the Act are inapplicable to establishments which do not employ 20 or more persons to work therein for a period of one year But while citing certain decided cases he did appear to canvas for the wide proposition that employment of a person for however short a period would be employment for the purpose of determining the number of personsemployed as contemplated by Section 1 3 a and b of the Act
He relied on the Bench decision of the Madras High Court reported Messrs East India Industries Madras vs Regional P F Commissioner1 this decision was also cited in the High Court as an unreported judgment and pressed us to uphold the reasoning adopted therein
The question requiring our determination is a very short one
As there is no representation on behalf of the respondent in this Court and therefore we do not have the benefit of the respondent s point of view we propose to confine ourselves strictly to the 1 309 limited question of the scope of clauses a and b of sub section 3 of Section I and this judgment is not intended to be considered as expressing any opinion on other controversial aspects
Before considering the relevant provisions of the Act it may be pointed out that according to the respondent s writ petition presented in the High Court in August 1963 the New Cochin Cafe treated as a hotel was started in Ongole town on November 20 1956 and the respondent usually employed only 18 or 19 persons
In 1961 there was total failure of rainsin the Ongole region and that town was particularly hard hit
The respondent had to employ two or three persons on contract basis
for supplying water to the hotel
Those persons were engaged from June to September 1961
The appellant has not questioned the correctness of these assertions for the purpose of this appeal
Let us now examine the relevant provisions of the Act
The Act was brought on the statute book for providing for the institution of provident fund for the employees in factories and other establishments
The basic purpose of providing for provident funds appears to be to make provision for the future of the industrial worker after his retirement or for his dependants in case of his early death
To achieve this ultimate object the Act is designed to cultivate among the workers a spirit of saving something regularly and also to encourage stabilisation of a steady labour force in the industrial centres
This Act has since its initial enactment been amended several times to extend its scope for the benefit of industrial workers
We are however concerned with the Act as it stood in 1962 when notice was sent by the appellant to the respondent stating that the provisions of the Act had been made applicable to his establishment
Sections 1 3 a and b 4 and 5 may now be reproduced Section 1 3 Subject to the provisions contained in section 16 it applies
a to every establishment which is a factory engaged in any industry specified in Schedule 1 and in which twenty or mom persons are employed and b to any other establishment employing twenty or more persons or class of such establishments which the Central Government may by notification in the Official Gazette specify in this behalf Provided 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 provisions of this Act to any 310 establishment employing such number of persons less than fifty as may be specified in the notification
Sub Section 4 Notwithstanding anything contained in sub section 3 of this section or subsection1 of section 16 where it appears to the Central Government  whether on an application made to it in this behalf or otherwise that the employer and the majority of employees in relation to any establishment have agreed that the provisions of this Act should be made applicable to the establishment it may by notification in the Official Gazette apply the provisions of this Act to that establishment Sub Section 5 An establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below twenty Provided that where for a continuous period of not less than one year the number of persons employed therein has been less than fifteen the employer in relation to such establishment may cease to give effect to the provisions of this Act and any scheme framed thereunder with effect from the beginning of the month following the expiry of the said period of one year but he shall within one month of the date of such cessation intimate by
registered post the
fact thereof to such authority as may be specified by appropriate Government in this behalf
 The original Act was applicable to establishments which were factories engaged in the six industries specified in Schedule 1 but as a result of persistent demands for extension of provident fund benefits to all industrial workers the Act was amended  in 1956 by Act 94 of 1950 so as to enable its extension to other establishments as well
Earlier it may be pointed out it was amended in 1953
It is unnecessary to give the details of the various amendments
We now turn to the relevant definition clauses contained in Section 2
These definitions are subject to the context providing otherwise
In Clause f employee is defined to mean any person who is employed for wages in any kind of work manual or otherwise in or in connection with the work
of an establishment and who gets his wages directly or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment
Clause 311 h defines Fund to mean the provident fund established under a Scheme  Member is defined in Clause j to mean a member of the Fund and Scheme is defined in Clause 1 to mean a scheme framed under the Act
Section 5 provides for the framing of a scheme called the Employees  Provident Fund Scheme by the Central Government
Section 6 makes provi sion for contribution by the employer and the employee to the Fund
Section 14 provides penalties for evasion of payments under the Act or the Scheme
Section 16 Which excludes from the applicability of the Act establishments belonging to Government or local authority and also infant factories reads 16
Act not to apply to establishments belonging to Government or local authority and also to infant industries This Act shall not apply a to any establishment registered under the  or under any other law for the time being in force in any State relating to cooperative societies employing less than fifty persons and Working without the aid of powers or b to any other establishment employing fifty or more persons or twenty or more but less than fifty persons until the expiry of three years in the case of the former and five years in the case of the latter from the date on which the establishment is or has been set up
Explanation
For the removal of doubts it is hereby declared that an establishment shall not be deemed to be newly set up merely by reason of a change in its location
2If the Central Government is of opinion that having regard to the financial position of any class of establishment 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 that class of estab lishments from the operation of this Act for such period as may be specified in the notification
 Section 17 invests in the appropriate Government power to exempt certain establishments from the operation of all or any of the provisions of any scheme
Section 19 A vests in the Central Government power to remove difficulties by making necessary provision or giving directions not inconsistent with the provisions of 312 the Act
The order of the Central Government made under Section 19 A for removing doubts and difficulties is clothed with finality
The narrow question which directly arises for our conside ration is whether Clause b of sub section 3 of Section 1 when it speaks of the establishment employing 20 or more persons means that the person so employed may be employed by the establishment for any purpose whatsoever and for however short a duration or that the employment must be for some minimum period in the establishment
The language used in the clause does not give any clear indication
 We have therefore to construe this word in the light of the legislative scheme the object and purpose of enacting this clause and the ultimate effect of adopting one or the other construction
The relevant sections of the statute have already been reproduced
Section 16 which has already been get out in extenso seems to us to throw considerable light on the point raised
 it may be recalled that this section excludes from the applicability of the Act establishments belonging to the Government and to local authorities and infant establishments
It is therefore obvious that this Act is intended to apply only where in establishment has attained sufficient financial stability and is prosperous enough to be able to afford regular contribution provided by the Act
Contribution by the employer is an essential part of the statutory scheme for effectuating the object of inducing the workmen to save something regularly
The establishment therefore must possess stable financial capacity to bear the burden of regular contribution to the Fund under the Act
In this connection it may be recalled that by virtue of Section 1 5 an establishment to which the Act is applied continues to be governed by the Act notwithstanding that the number of persons employed by it at any time falls below the required number
This liability to be governed by the Act ceases only if the terms of the Proviso to Section 15 are complied with
The financial capacity of the establishment to bear the burden must therefore have some semblance of a reasonably long term stability
In other words the employment of requisite number of persons must be dictated by the normal regular requirement of the establishment reflecting its financial capacity and stability
It therefore follows from this that the number of persons to be considered to have been employed by an establishment for the purpose of this Act has to be determined by taking into account the general requirements of the establishment for its regular work which should also have a commercial noxus with its general financial capacity and stability
This seems to us to be the correct approach under the statutory scheme 313 To accede to the appellant s argument would lead to some Startling consequences
By way of illustration if for the purpose of extinguishing accidental fire an establishment is compelled to employ a few persons for about a couple of hours even then however weak and unstable its general financial capacity the establishment would be covered by the Act and would have to contribute towards the provident fund for the benefit of its regular employees of course excluding those whose services were utilised for a short while for extinguishing the fire
In this illustration we are assuming that the employees would have no objection to being governed by the Act
This in our opinion could never have been the intention of the legislature
Similarly we find it difficult to impute to the legislature an intention to exclude from the application of the Act an establishment which regularly employs for its general business the required number of persons for a major part of the year say for 360 days every year merely because the employment of the required number does not extend to full one year
Both the extreme views the one canvassed on behalf of the appellant and the other postulated in the observation of the High Court that the required number of persons must continuously work in the establishment for one year do not conform to the scheme and object of the Act and are therefore unacceptable
Considering the language of Section 1 3 b in the light of the foregoing discussion it appears to us that employment of a few persons on account of some emergency or for a very short period necessitated by some abnormal contingency which is not a regular feature of the business of the establishment and which does not reflect its business prosperity or its financial capacity and stability from which it can reasonably be concluded that the establishment can in the normal way bear the burden of contribution to wards the provident fund under the Act would not be covered by this definition
The word employment must therefore be construed as employment in the regular course of business of the establishment such employment obviously would not include employment of a few persons for a short period on account of some passing necessity or some temporary emergency beyond the control of the company
This must necessarily require determination of the question in each case on its own peculiar facts
The approach pointed out by us must be kept in view when determining the question of employment in a given case
The appellant s learned counsel argued that in the present case the respondent has to employ a few persons every year regularly from June to September for supplying water to the hotel because of failure of rains
This according to him would be a regular employment and the High Court was wrong in holding to the contrary
There is no finding of the High Court to this effect and 314 indeed no attempt was made before also to substantiate this bald assertion We are therefore unable to accept this contention on the present record
The general approach of the High Court to the problem raised in this case seemsto us to be broadly speaking correct so is its final conclusion
The only observation of the High Court which required consideration is that the sub section in question contemplates the required number of per 
sons to work in the establishment continuously for one year
On this point we have clarified the legal position
As the High Court has dismissed the writ petition after clarifying the points of law raised leaving it to the appropriate authority to finally decide the controversy on a consideration of all the facts and circumstances we do not propose to say anything more in this appeal which has been heard ex parte
 With the aforesaid clarification of the legal
position we
dismiss this appeal
As there is no representation
on behalf of the respondent there will be no order as to costs


Summary:
The respondent ran a hotel
Due to failure of water supply he had to employ some persons to bring water from the tank for a short period
Provident Fund Commissioner sought to enforce the provisions of the Employees  Provident Funds Act 1957 and the Provident Fund Scheme 1952 against him
The respondent thereupon filed a writ petition in the High Court
It was held by the High Court that employment of more than twenty persons for a short period did not bring an establishment within the proviso of section 13 a  b of the Act
II It was also held that only those employees should be taken into consideration who were in employment for the full period of one year
While thus laying down the legal position the High Court left it to the authorities Under the Act to apply the law to
the facts of each case and dismissed the respondents petition
The Provident Fund Commissioner appealed to this Court for further clarifica tion
HELDConsidering the language of section 13b in the light of the provisionsof s 16 and section 15 as OIL as the general scheme and object of the Act itwould appear that employment of a few persons on account of some emergency or for a every short period necessitated by some abnormal contingency which is not a regular feature of the business  of the establishment and which does not reflect its business prosperity or its financial capacity or stability from which it can reasonably be concluded that the establishment can in the normal way bear the burden of the contribution towards the provident fund under the Act would not be covered by the definition
The word employment  must therefore
be construed as employment in the regular course of business of the establishment such employment obviously would not include employment of a few persons for a short period on account of some passing necessity or some temporary emer gency beyond the control of the company
The High Court was right in holding so
But it went wrong in holding that the section contemplated the required number of persons to Work in the establishment continuously for one year
It was difficult to impute to the Legislature an intention to exclude from the application of them Act an establishment which regularly employs for its general business the required number of persons for a major part of the year say for
360 days every year  the employment of the required number does not extent merely because to full one year Therefore the question must be determined in each case on its own peculiar facts
313C G