N Criminal Appeal No647 48 of 1979
From the Judgment and Order dated the 931979 of the Additional Sessions Judge Ahmedabad in Crl
Revision Application Nos
356  357 of 1978
P Chidambram AT Patra SR Aggarwal Ms Monika Mohil and Ms
Bina Gupta for the Appellants
SK Dholakia and Anip Sachthey for the Respondents
The Judgment of the Court was delivered by KJAYACHANDRA REDDY J
The question of general importance that arises in these three appeals is whether criminal proceedings can be instituted under Section 14 of the Act  for short against an establishment exempted under Section 17 of the for the contravention of the provisions of Section 6 of the  The appellants who are common in each of these three appeals were connected with the management of MS Shri Subhlaxmi Mills Ltd hereinafter referred to as the said Company an establishment governed by the 
By a Notification dated 17th October 1957 the Central Government in exercise of the powers under Section 17 of the granted exemption to the said Company subject to the conditions specified in Schedule 2 annexed to the said Notification
As a result of the said exemption the provisions of the employees  Provident Fund Scheme 1952 framed under Section 5 of the did not apply to the said Company which created a Trust and the management made contributions of provident fund to the said trust and admittedly the exemption continued to be in operation at all material times
In or about SeptemberOctober 1975 the Inspector of Provident Fund filed criminal complaints in the Court of the Judicial Magistrate Cambay against the appellant on the allegation that they being incharge of the 945 management failed to pay the contributions to the provident fund trust and thereby committed offences punishable under Sections 141A 142 142A 14A1 14A2 and Paragraph 76 of the Employees  Provident Fund Scheme 1952
The appellants also received notice dated 15th September 1975 from the Inspector threatening to cancel the exemption granted under Section 17 of the 
However some time in September 1975 the said Company s Mill had to be closed down and liquidation proceedings were initiated
The criminal complaints persuant to an order of the High Court were transferred to the Court of the Second Metropolitan Magistrate Ahmedabad
The respondent No 1 the complainant was examined who in his evidence admitted that the Government of India had exempted the said Company under Section 17 of the and the same had not been subsequently canceled and was in existence at all material times
The appellants filed an application praying that the proceedings against them should be dropped and they should be acquitted on the ground that Section 6 of the was not applicable to the establishment exempted under Section 17 of the and therefore no proceedings under Section 14 can be initiated against them
The learned Metropolitan Magistrate by his order dated 28th November 1978 rejected the aforesaid application
Being aggrieved they filed three criminal revision applications in the Court of the Additional Sessions Judge Ahmedabad who by a common order dismissed the same taking the view that Section 6 of the covers and attracts all the establishments including the exempted establishment
Against that order in those three revision applications the present appeals have been filed
Shri P Chidambram learned counsel for the appellants submitted that none of the Sections of the mentioned in the complaints can be applied as against the appellants since the establishment in question is exempted under Section 17 of the and consequently is not governed by the 1952 Scheme nor by Section 6 of the 
According to the learned counsel the does not provide for prosecution in respect of any of the offences enumerated under Section 14 in case of breach by an exempted establishment in not paying the provident fund contributions to the trust and therefore no prosecution can be launched and that if at all the management of the establishment had not deposited the provident fund contributions with the trust the Government was empowered only to cancel the exemption which also amounts to a penalty
The learned counsel appearing on both sides addressed elaborate arguments and referred to various provisions of the and 946 Employees  Provident Fund Scheme 1952 and also took us through several citations and also some passages in various text books
Before we proceed to consider the same we must note some undisputed facts
The establishment in question was governed by the provisions of the and it was exempted under Section 17 of the and it had its own trust in respect of the provident fund contributions but failed to pay the provident fund contributions to the trust for some period during 1974 and thus there was a default
The controversy therefore is whether such failure attracts the prosecution or only warrants the cancellation of the exemption granted
This Act No 19 of 1952 was enacted to provide for institution of provident fund for employees in factories and other establishments and is made applicable to every establishment which comes within the meaning of factory 
The underwent major amendments by No 16 of 1971 and also by some amendments thereafter
We are mainly concerned with the provisions of the that were in force at the relevant time ie in 1974
Section 2 contains various definitions and commences with the words In this  unless the context otherwise requires and thereafter the definitions are enumerated
Contribution is defined in Section 2c which means a contribution payable in respect of a member under the Scheme
The words Contribution employer employee factory fund and scheme are defined in Sections 2c 2e 2f 2g 2h and 21 respectively
They reads as under 2
In this  unless the context otherwise requires 2c
contribution means a contribution payable in respect of a member under a Scheme or the contribution payable in respect of an employee to whom the Insurance Scheme applies 2e employer means i in relation to an establishment which is a factory the owner or occupier of the factory including the agent of such owner or occupier the legal representative of a deceased owner or occupier and where a person has been named as a manager of the factory under clause f of sub section  1 of Section 8 of the  the named andperson so 947 ii in relation to any other establishment the person who or the authority which has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager managing director or managing agent such manager managing director or managing agent 2f employee means 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 2 g factory means any premises including the precints thereof in any part of which a manufacturing process is being carried on or is ordinarily so carried on whether with the aid of power or without the aid of power 2 h fund means the provident fund established under a Scheme  21 scheme means the Employees  Provident Fund Scheme framed under Section 5 Section 5 provides for framing a scheme which is in the following terms 51 The Central Government may by notification in the Official Gazette frame a Scheme to be called the Employees  Provident Fund Scheme for the establishment of provident funds under this for employees or for any class of employees and specify the establishments or class of establishments to which the said scheme shall apply and there shall be established as soon as may be after the framing of the Scheme a Fund in accordance with the provisions of this and the Scheme
xx xx xx We may mention here that the Employees  Provident Fund Scheme 1952 was duly framed as provided under Section 5 and the relevant provisions of the Scheme shall be referred to at the appro 948 priate stages
Section 6 is an important provision which deals with the contribution and allied matters and reads thus 6
The contribution which shall be paid by the employer to the Fund shall be six and a quarter per cent of the basic wages dearness allowance and retaining allowance if any for the time being payable to each of the employees whether employed by him directly or by or through a contractor and the employees  contribution shall be equal to the contribution payable by the employer in respect of him and may if any employee so desires and if the Scheme makes provision therefor be an amount not exceeding eight and one third per cent of his basic wages dearness allowance and retaining allowance if any Provided that in its application to any establishment or class of establishments which the Central Government after making such enquiry as it deems fit may by notification in the Official Gazette specify this section shall be subject to the modification that for the words six and a quarter per cent the words eight per cent shall be substituted Provided further that where the amount of any contribution payable under this involves a fraction of a rupee the Scheme may provide for the rounding off of such fraction to the nearest rupee half of a rupee or quarter of a rupee
Explanation 1 For the purposes of this section dearness allowance shall be deemed to include also the cash value of any food concession allowed to the employee
Explanation 2 For the purposes of this section retaining allowance means an allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working for retaining his services
The next important Section is Section 14 which deals with penalties
For the purposes of the present case it would be enough if we extract the relevant provisions of Section 14 as mentioned in the complaints
949 Penalties 14IA An employer who contravenes or makes default in complying with the provisions of section 6 or clause a of sub section 3 of section 17 in so far as it relates to the payment of inspection charges or paragraph 38 of the Scheme in so far as it relates to the payment of administrative charges shall be punishable with imprisonment for a term which may extend to six months but a which shall not be less than three months in case of default in payment of the employees  contribution which has been deducted by the employer from the employees  wages b which shall not be less than one month in any other case and shall also be liable to fine which may extend to two thousand rupee Provided that the court may for any adequate and special reasons to be recorded in the judgment impose a sentence of imprisonment for a lesser term or of fine only in lieu of imprisonment  142 Subject to the provisions of this  the Scheme the Family Pension Scheme or the Insurance Scheme may provide that any person who contravenes or makes default in complyingwith any of the provisions thereof shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees or with both
 142A Whoever contravenes or makes default in complying with any provisions of this or of any condition subject to which exemption was granted under Section 17 shall if no other penalty is elsewhere provided by or under this for such contravention or non compliance be punishable with imprisonment which may extend to three months or with fine which may extend to one thousand rupees or with both 14Al If the person committing an offence under this  the Scheme the Family Pension Scheme or the Insurance 950 Scheme is a company every person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly Provided that nothing contained in this sub section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence
14A2 Notwithstanding anything contained in sub section 1 where an offence under this  the Scheme or the Family Pension Scheme or the Insurance Scheme has been committed by a company and it is proved that the offence has been committed with the consent or connivance of or is attributable to any neglect on the part of any director or manager secretary or other officer of the company such director manager secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly
Explanation For the purposes of this Section a company means any body corporate and includes a firm and other association of individuals and b director in relation to a firm means a partner in the firm The next important Section to be noted is Section 171  a which empowers the Government to grant exemption which is in the following terms 171 The appropriate Government may by notification in the Official Gazette and subject to such conditions as may be specified in the notification exempt from the operation of all or any of the provisions of any Scheme a any establishment to which this applies if in the opinion of the appropriate Government
the rules of its 951 provident fund with respect to the rates of contribution are not less favourable than those specified in Section 6 and the employees are also in enjoyment of other provident fund benefits which on the whole are not less favourable to the employees than the benefits provided under this or any Scheme In relation to the employees in any other establishment of a similar character or xx xx xx Section 174 provides for cancellation of such an exemption if any employer fails to comply with the conditions
The relevant provision 1714 a reads thus  174 Any exemption granted under this section may be cancelled by the authority which granted it by order in writing if an employer fails to comply a in the case of an exemption granted under sub section 1 with any of the conditions imposed under that sub section or with any of the provisions of sub section xx xx xx xx xx xx Section 175 deals with transfer of provident fund so far contributed after such cancellation and it reads as under 175 Where any exemption granted under sub section 1 sub section IA sub section 2 sub section 2A or sub section 2B is cancelled the amount of accumulations to the credit of every employee to whom such exemption applies in the provident fund the family pension fund or the insurance fund of the establishment in which he is employed shall be transferred within such time and in such manner as may be specified in the Scheme or the Family Pension Scheme or the insurance Scheme to the Credit of his account in the Fund or the Family Pension Fund or the Insurance Fund as the case may be
 The only other provision to be noted before we proceed further is paragraph 76 of the 1952 Scheme the contravention of which is also mentioned in the complaints
It reads thus 952 76
Punishment for failure to pay contributions etc
If any person a deducts or attempts to deduct from the wages or other remuneration of a member the whole or any part of the employer s contribution or b fails or refuses to submit any return statement or other document required by this Scheme or submit a false return statement or other document or makes a false declaration or c obstructs any Inspector or other official appointed under the or this Scheme in the discharge of his duties or fails to produce any record for inspection by such Inspector or other official or d is guilty of contravention of or non compliance with any other requirement of this Scheme he shall be punishable with imprisonment which may extend to six months or with fine which may extend to one thousand rupees or with both
On a perusal of the above extracted provisions of the the following aspects to the extent relevant to the present case can be spelt out
The Management of an establishment has to contribute to the provident fund and the Government under Section 5 can frame a scheme called Employees  Provident Fund Scheme and such a scheme was framed in the year 1952
The scheme provides for the establishment of provident fund under the for employees of the establishments specified therein
Section 6 is the material provision and deals with contributions which may be provided under the Scheme and also prescribes the rate of contribution to the fund and that the employees  contribution should be equal to the contribution payable by the employer
Section 14 deals with the penalties and section 141A lays down that an employer who contravenes or makes default in complying with the provisions of Section 6 shall be punishable with imprisonment for a term which may extend to six months but shall not be less than three months in case of default in payment of the employees  contribution which has been deducted by the employer from the employees wages
But for adequate reasons it can be less
Paragraph 76 of the Scheme also provides for punishment for failure to pay such contributions to 953 the fund
Then we have Section 17 which provides for the exemption
As per the said Section the appropriate Government may be notification and subject to such conditions as may be specified in the notification exempt from the operation of all or any of the provisions of any Scheme in the present case 1952 scheme if the appropriate Government is satisfied that the rules of the provident fund which a particular establishment is following in the matter of contribution to the provident fund are not less favourable than those specified in Section 6 and that the employees are also in enjoyment of other provident fund benefits
In other words the exemption from the operation of the scheme is granted provided the particular establishment makes contribution as per its own rules governing the contribution to the fund which in other words can be called a provident fund scheme of its own are not less favourable than those specified in Section 6
Accordingly the exempted establishment has to provide for its employees the benefits which are in no way less favourable than the ones provided under the and the Scheme
Now the question is whether failure to make the contribution by the exempted establishment to the provident fund as per its one rules could attract the penal provisions of Section 14 The learned Additional Sessions Judge however as hereinbefore mentioned held that Section 6 covers and attracts all be establishments including the exempted establishment
Even otherwise according to him Section 142A which applies to an exempted establishment is clearly attracted inasmuch as the conditions subject to which exemption was granted under Section 17 have been violated in the instant case
The learned Additional Sessions Judge also gave a finding that Section 14IA also is attracted as in his view even an exempted establishment is not absolved from the liability of employer s contribution as also the employees  contribution to the provident fund and therefore by necessary implication the employer and the employees of an exempted establishment have to make full contribution to the provident fund as required under Section 6 of the  and if its contribution remains unpaid it amounts to contravention of the provisions of Section 6 of the the thus attracts Section 141A
We may point out at this stage that Section 142 and paragraph 76 of the Scheme are not attracted in the present case
So far as Section 142 is concerned it can be seen that the provision deals with the family pension scheme or the insurance scheme etc
We are not concerned in the present case with any such scheme
We are only concerned with the provident fund as defined under Section 2h of the 954 
Similarly paragraph 76 of the 1952 Scheme also is not attracted because the establishment herein is admittedly exempted from the operation of the scheme
We may also mention here that similarly Sections 14A1 14A2 and 14AA which are also mentioned in the complaints also are not attracted
Shri SK Dolakia learned counsel appearing for the respondents could not dispute the same
Then we are left with Sections 14IA and 142A
While it was the submission of Mr Chidambram learned counsel for the appellants that even these two provisions are also not attracted Shri Dholakia on the other hand submitted that both the provisions are attracted and at any rate Section 142A is clearly attracted and therefore no interference is called for in these appeals
We shall first take up the submissions in respect of Section 14 2A
This Section lays down that whoever contravenes or makes default in complying with any provisions of the or of any condition subject to which exemption was granted under Section 17 shall if no other penalty is elsewhere provided by or under this for such contravention or non compliance be punishable with imprisonment and also fine mentioned therein
Firstly it is submitted that the only contravention alleged against the appellants is that no contribution was made to the provident fund and since it is an exempted establishment Section 6 is not attracted and therefore it must be held that there is no contravention or non compliance of any of the provisions of the 
In other words the submission is that Section 6 of the applies only to the non exempted establishments and covered under the statutory exemption
The learned Additional Sessions Judge however as already noted has held that Section 6 applies to both exempted and non exempted establishments
This aspect we will consider at a later stage while examining the applicability of Section 14 IA
So far Section 142A is concerned the later part of it specifically is made applicable to the exempted establishments and if there is contravention of any of the conditions subject to which exemption was granted under Section 17 and if no other penalty is elsewhere provided by or under the then such contravention or non compliance is punishable
The essentials of these provisions are i there should be a contravention or default in complying with the provisions of the  or  ii there should be a contravention or default in complying with any of the conditions subject to which exemption was granted under Section 17 and iii there should be no other penalty elsewhere provided by or under the for such contravention or non compliance
Only when these essentials are satisfied the Section is attracted
The learned counsel for the appellants submitted that in the present case there is no such contra 955 vention or non compliance of any of the conditions subject to which exemption was granted
His further submission in this context is that the cancellation of an exemption as provided under Section 174 is a penalty provided by or under the for such contravention and therefore Section 142A is not attracted
To appreciate these contentions it becomes necessary to refer to the conditions subject to which the exemption under Section 17 was granted in the present case
The relevant conditions for our purposes are Conditions Nos 1 2ab 10 and 15 and they read as under SCHEDULE II Conditions 1
Every factory shall have a provident fund scheme in force the rules of which with respect to the rates of contribution shall not be less favourable than those specified in Section 6 of the and the employees shall also be in enjoyment of other provident fund benefits which on the whole shall not be less favourable to the employees than the benefits provided under the or any Scheme in relation to the employees in any other factory of a similar character and these rules shall be followed in all respects
The employer in relation to each factory hereinafter referred to as the employer  shall within three months of the date of publication of this notification amend the constitution of the Provident Fund maintained in respect of the factory in regard to the following matters namely a The Provident Fund shall vest in a Board of Trustees and there shall be a valid instrument in writing which adequately safeguards the interests of the employees and such instruments shall be duly registered under Section 5 of the  b the Board of Trustees shall consist of an equal number of representatives of the employees and the employer and all questions before the Board shall be decided by a majority of votes xx xx xx 10
The employer shall accept the past provident fund accumulations or an exempted fund and who obtains employment in his factory
Such an employee shall immediately 956 be admitted as a member of the factory s Provident Fund
His accumulations which shall be transferred within 3 months of his joining the factory shall be credited to his account
xx xx xx 15
Exemption granted by this notification is liable to be withdrawn by the Central Provident Fund Commissioner for breach of any of the aforesaid conditions or for any other sufficient cause which may be considered appropriate
As per condition No I the exempted factory should have a provident fund scheme in force the rules of which with respect to the rates of contribution shall not be less favourable than those specified in Section 6
This part of the condition is in conformity with the requirement under Section 171
The condition proceeds to lay down that these rules shall be followed in all respects
There is no dispute that as per the rules governing the provident fund scheme of the exempted establishment in question the contributions have to be made regularly and condition No I lays down that these rules should be followed in all respects
The default in making the contribution amounts to contravention of the rules and consequently the condition No 1 subject to which the exemption was granted is clearly violated
That there was a violation of this condition is also made clear by the notice issued by the Regional Provident Fund Commissioner on 15975
The relevant portion of the notice reads thus And thus it has violated the conditions governing grant of exemption for contravention of which the offenders are liable for the cancellation of the exemption granted under Section 17 of the Employees  Provident Fund Act 1952
 We are therefore satisfied that some of the conditions subject to which the exemption was granted have been violated
So this part of Section 142A is satisfied
Now we shall see whether the cancellation under Section 174 is a penalty provided by or under the Act
In the common parlance the word penalty  is understood to mean a legal or official punishment such as a term of imprisonment
In some contexts it is also understood to mean some other form of punishment such as fine or forfeiture for not fulfilling a contract
But 957 in gathering the meaning of this word the context in which this is used is significant
In the Act as already noted Section 14 deals with penalties and enumerates various contraventions or non compliances which are punishable with imprisonment
Every contravention mentioned in each of the sub sections is punishable with imprisonment and for offences covered by Sections 141A 141B and 142A minimum imprisonment is also made compulsory
The imposition of fine also is prescribed
The penalties mentioned in this connection would indicate that the Legislature envisaged that a penalty should necessarily mean imprisonment or atleast imposition of fine
We find from the reports that the National Commission of Labour having found that tile working of the Employees  Provident Fund and Family Pension Fund Act 1952 are not effective and that in order to cheque the growth of arrears penalties for defaults in payment of provident fund dues should be made more stringent and the default should be made cognizable
Accordingly it was proposed to amend the Act so as to render penal provisions more stringent and to make defaults cognizable offences and provisions were also made for compulsory imprisonment in case of non payment of contributions and administrative and inspection charges
The provisions of the Act thereafter are suitably amended
We must bear this object and reasons in mind in examining whether a mere cancellation of the exemption granted under Section 174 would amount to a penalty
No doubt under Section 142A one of the requirements is that there should be no other penalty elsewhere provided by or under the Act for such contravention or non compliance but we are not persuaded to hold that the mere cancellation of an exemption amounts to a penalty particularly expected to be stringent as contemplated under Section 14
However we shall proceed to consider some of the submissions made on this aspect
The learned counsel referred to certain standard books on words and phrases
In Butterworths  Words and Phrases legally defined Third Edition page 343 the meaning of the word Penalty  is given as that the word penalty  is large enough to mean is intended to mean and does mean any punishment whether by imprisonment or otherwise
BlackburnJ in R vs Smith   at 138 observed as under I consider that the word penalty falls to be read in a wide popular sense 
and I select two definitions adequately conveying that sense
The late Mr Roberton Christie The Encyclopedia Vol
I 1 p 204 saidPenalty in the broad sense may be defined as any suffering in person or property by way of forfeiture deprivation or disability imposed as a punishment by law or judicial 958 authority in respect of  an act prohibited by statute
 The Oxford Dictionary echoes the same wide conception by referring to a loss disability or disadvantage of some kind  fixed by law for some offence
The meaning of the word penalty  as given in the Collins English Dictionary is as under Penalty 1
a legal or official punishment such as a term of imprisonment
some other form of punishment such as a fine or forfeit for not fulfilling a contract
3 loss suffering or other unfortunate result of one s own action error etc
Sport games etc
a handicap awarded against a player or team for illegal play such as a free shot at goal by the opposing team loss of points etc
 In addition the learned counsel also relied on some decisions of foreign courts where the meaning of the word penalty  was considered
In People ex rel Risso vs Randall  268 Misc1057 it was held that A penalty may refer to both criminal and civil liability being denied as penal retribution punishment for crime of offense the suffering in person rights or property which is annexed by law or judicial decision to commission of a crime or public offense
 In City of Fort Wayne vs Bishop  547  it was observed as under The term penalty embraces all consequences visited by law on heads of those who violate police regulations and extends to all penalties whether exigible by state in interest of community or by private persons in their own interest even when statute is remedial as well as penal In City of Cincinnativ
Wright 67NE2d 35836177 Ohio App261it was noted that The word penalty is not confined to punishment or crime it has a broader meaning in law of contracts it is used as contradistinguished from liquidated damages
It is also used to indicate the sum to be forfeited on breach of a 959 bond
And in common parlance it expresses any disadvantage resulting from an act
The learned counsel relying on the above meanings given to the word penalty  submitted that a cancellation in other words a forfeiture of the right given amounts to punishment
It is also his submission that this is a penalty provided by or under the Act inasmuch as such a cancellation is contemplated under Section 174 and that the word under cannot but be understood to mean that it covers the cancellation of the exemption also provided under Section 174
In this context he relied on the meaning of the word under as given in Butterworths  Words and Phrases legally defined
Third edition page 345 which reads thus In one sense every act of a body which is the creature of statute may be said to be done under or by virtue of the statute creating it The author has extracted the observations made by O  Bryan J in R D vs Clyne ex p Harrap  194 1 VLR 200 at 20 1 as under In another sense the acts of such a body may be said to be done under or by virtue of some provision granting a general jurisdiction to act in relation to a variety of matters
But the expression is also quite commonly used in relation to a particular act when the general jurisdiction to act is assumed to designate the more particular power to do that particular act
It is rash to attempt to substitute a different expression for the more simple and usual one used but in this connection under is perhaps more aptly translated by the expression pursuant to than by the phrase by virtue of
 It is necessary to have regard to the context to determine in which sense the word is used emphasis supplied It therefore cannot be gainsaid that the context in which these words are used is significant
At this juncture we may also note that the scheme or rules framed by a company in respect of the provident fund of the employees are meant to be duly complied with
The exemption under Section 17 is incorporated in the Act for getting better benefits for the employees and the same is granted with a view to avoiding duplication that is to say for framing a scheme by the appropriate Government on the lines as framed by the establishment itself and 960 such an exemption is meant to ensure to the employees the continuance of the benefits and the purpose of the exemption is only to ensure such a scheme better than the one under Section 6 of the Act
It must also be noted that notwithstanding the exemption granted under Section 17 of the Act the appropriate Government does not lose its hold over the scheme framed by the establishment and there are built in safeguards in Section 17 itself to protect the interests of the employees and Section 1714 is one such safeguards
In Mohmedalli and Others vs Union of India and another 1963 Suppl
I SCR 993 it is held that It would appear from the terms of the relevant portion of section 17 that the exemption to be granted by the appropriate Government is not in the nature of completely absolving the establishments from all liability to provide the facilities contemplated by the Act
The exemptions are to be granted by the appropriate Government only if in its opinion the exempted establishment has provisions made for provident fund in terms at least equal if not more favourable to its employees
In other words the exemption is with a view to avoiding duplication and permitting the employees concerned the benefit of the preexisting scheme which presumably has been working satisfactorily so that the exemption is not meant to deprive the employees concerned of the benefit of a provident fund but to ensure to them the continuance of the benefit which at least is not in terms less favourable to them
As the whole scheme of provident fund is intended for the benefit of employees section 17 only saves pre existing schemes of provident fund pertaining to particular establishments
 emphasis supplied Having examined the scope of Section 14 2A in this background we find it difficult to agree with the learned counsel that the cancellation of the exemption granted under Section 174 amounts to a penalty under Act within the meaning of Section 1412A
We may also note that Section 142A was introduced in the year 1953 by Act No 37 of 1953 whereas sub section 4 of Section 17 was introduced in the year 1963 by the amendment Act No 28 of 1963 nearly ten years later
This only shows that the cancellation is not meant to be treated as one of the penalties and the reasonable inference is particularly having regard to the object underlying the Act that the expression penalty  in the context in which it is used particu 961 larly in Section 14 including Section 142A only connotes imposition of imprisonment or fine
The cancellation as provided under Section 174 is only consequential and also rather procedural meant to be applied to the exemption granted under Section 17 1 in case of noncompliance of the conditions subject to which such exemption was granted
A close perusal of Section 17 and its various sub sections would clearly indicate that it is a self contained provision dealing with the power to grant exemption and the consequent obligations and the procedural aspects and Section 174 is a built in provision providing for cancellation of such exemption in case of contravention or noncompliance of the conditions
By a cancellation of the exemption only the privilege granted is being withdrawn by an executive order
Suffice it to say that such a cancellation does not penalise the management and consequently does not result in any punishment that is normally awarded in respect of an offence
In State of Uttar Pradesh through the Provident Fund Inspector UP vs Lala Ram Gopal Gupta and three Others a Division Bench considered this very question and held that the cancellation of exemption in accordance with Section 174a does not involve imposition of a penalty within the meaning of Section 1412A of the Act
In our view the Division Bench of the Allahabad High Court rightly held that cancellation under Section 174a is not an alternative penalty for failure to comply with the conditions subject to which the exemption was granted and if the Parliament had contemplated that the cancellation of the exemption amounted to penalty within the meaning of Section 142A it was purposeless to provide for any similar penalty under Section 142A
It is thus clear that if the contention of the learned counsel is to be accepted then Section 142A would become otoise and redundant
The learned counsel submitted that these being penal provisions should be interpreted strictly and if so interpreted the cancellation of exemption under Section 174 cannot but be a penalty under the Act
The learned author Justice GP Singh in his book Principles of Statutory Interpretation Fourth Edition 1988 has stated the general principles regarding the construction of penal statutes as follows Clear language is now needed to create a crime  
If there is a reasonable interpretation which will avoid the penalty in any particular case we must adopt that construction and if there are two reasonable constructions we must give the more lenient one
 962 In Tolaram vs State of Bombay  Mahajan CJ observed as under If two possible and reasonable constructions can be put upon a penal provision the court must lean towards that construction which exempts the subject from penalty rather than the one which imposes penalty
It is not competent to the court to stretch the meaning of an expression used by the legislature in order to carry out the intention of the legislature
 The learned author Justice GP Singh after extracting the principles laid down by the Supreme Court as well as by the English courts summed up the principles in the following manner The content of the rule and its limits in the sense now understood may be summed up in the following propositions 1 If the prohibitory words in their known signification cover only some class of persons or some well defined activity their import cannot be extended to cover other persons or other activity on considerations of policy or object of the statute
2 If the prohibitory words are reasonably capable of having a wider as also a narrower meaning and if there is no clear indication in the statute or in its policy or object that the words were used in the wider sense they would be given the narrower meaning
3 When the prohibitory words are equally open to two constructions one of which covers the subject and the other does not the benefit of construction will be given to the subject
4 If the prohibitory words in their known signification bear a wider meaning which also fits in with the object or policy of the statute the words will receive that wider meaning and their import will not be restricted even if in some other context they can bear a narrower meaning
5 If the literal reading of the prohibitory words produces 963 an unintelligible or non sensual result
but the statute read as a whole gives out its meaning clearly effect will be given to that meaning by curing a mere defect in phraseology
Relying on the aforesaid principles governing the construction of the penal statute Shri P Chidambram learned counsel for the appellants submitted that the provisions of Section 142A and Section 174 should reasonably be construed and if so construed Section 142A becomes inapplicable to the facts of the case on hand
It is true that all the penal statutes should be construed strictly and the court must see that the thing charged as an offence is within the plain meaning of the words used but it must also be borne in mind that the context in which the words are used is important
The legislative purpose must be noted and the statute must be read as a whole
In our view taking into consideration the object underlying the Act and on reading Sections 14 and 17 in full it becomes clear that cancellation of the exemption granted does not amount to a penalty within the meaning of Section 142A
As already noted these provisions which form part of the Act which is a welfare legislation are meant to ensure the employees the continuance of the benefits of the provident fund
They should be interpreted in such a way so that the purpose of the legislation is allowed to be achieved vide Ms International Ore and Fertilizers India Pvt Ltd vs Employees State Insurance Corporation AIR 1988 SC 79
In Seaford Court Estates Ltd vs Asher  19491 2 All E R 155 Lord Denning LJ observed The English language is not an instrument of mathematical precision
Our literature would be much poorer if it were
This is where the draftsmen of Acts of Parliament have often been unfairly criticised
A judge believing himself to be fettered by the supposed rule that he must look to the language and nothing else laments that the draftsmen have not provided for this or that or have been guilty of some or other ambiguity
It would certainly save the judges trouble if the Acts of Parliament were drafted with divine prescience and perfect clarity
In the absence of it when a defect appears a Judge cannot simply fold his hands and blame the draftsman
He must set to work on the constructive task of finding the intention of Parliament and he must do this not only from the language of the statute but also from a consideration of the social conditions which gave rise to it and of the mischief which it was passed to remedy and then he must supplement the written word so as to give force 964 and life  to the intention of legislature
A Judge should ask himself the question how if the makers of the Act had themselves come across this ruck in the texture of it they would have straightened it out He must then do so as they would have done
A judge must not alter the material of which the Act is woven but he can and should iron out the creases
emphasis supplied Therefore in a case of this nature a purposive approach is necessary However in our view the interpretation of the word penalty  used in Section 142A does not present any difficulty and cancellation is not a punishment amounting to penalty within the meaning of this Section
Shri P Chidambram however submitted that unless the context otherwise requires such a purposive or liberal approach need not be resorted to
He invited our attention to the opening words unless the context otherwise requires occurring in Section 2 which contains definitions
We may at this juncture point out that these words strictly apply to definitions and while considering the scope of Section 142A we have proceeded adhering to the language of the Section
However we shall consider the effect of these opening words in Section 2A at a later stage while considering the submissions of Shri Dholakia regarding the applicability of Section 141A
Shri P Chidambaram learned counsel for the appellants however contended that the failure to contribute to the fund under the 1952 Scheme only is punishable as it amounts to contravention and that in the instant case the complaint is that the management failed to contribute to the fund maintained by the establishment itself and such a failure is not punishable and the word contribution must be construed strictly as defined under Section 2 and not otherwise as the context does not otherwise require
Similar words occur in Section 2 of the Companies Act and in section K Gupta and Another vs K P Jain and Another  wherein it is held as under Where in a definition section of a statute a word is defined to mean a certain thing wherever that word is used in that statute it shall mean what is stated in the definitions unless the context otherwise requires
But where the definition is an inclusive definition the word not only bears its ordinary popular and natural sense whenever that would be applicable but it also bears its extended statutory meaning
965 At any rate such expansive definition should be so construed as not cutting down the enacting provisions of an Act unless the phrase is absolutely clear in having opposite effect
 In State Bank of India etc
vs Yogendera Kumar Srivastava and Others etc
  it is observed Repugnancy of the definition of any term may arise only if such definition does not agree with the subject or context of a particular provision
But surely any action not in conformity  with the provision of the definition clause will not render the definition of a term repugnant to the subject or context of any provision of the statute containing the term
Relying on the above passages the learned counsel for the appellants further submitted that the context in which the word penalty  is used would show that Section 142A does not necessarily require that there should be a punishment of either imprisonment or fine inasmuch as the cancellation also can be a penalty within the meaning of Section 142A
At any rate according to the learned counsel for the appellants there is an ambiguity and that this being a penal law the provisions should be construed strictly and necessarily the benefit of doubt if any should go to the accused
In view of the discussion already made by us on this aspect this contention does not merit acceptance
In our view there is no ambiguity as suggested by the learned counsel for the appellants
Even assuming so in view of the object underlying the Act the context does definitely require a reasonable interpretation of Section 142A so as to make it applicable also to a case of failure to contribute to the fund as per the conditions under which the exemption was granted
Like wise it must also be interpreted to mean that cancellation does not amount to a penalty
Therefore the submission that Section 142A is not attracted does not merit acceptance
Shri Dholakia learned counsel for the respondents as already noted submitted that in addition to Section 142A Section 14A is also attracted and the appellants are punishable under that provision for the contravention and non compliance of Section 6 of the Act
In his submission the words fund and scheme should be given a wider meaning and cannot be restricted merely because of their definitions as contained in Section 2
According to the learned counsel the opening words of Section 2 namely Unless the context otherwise 966 requires give a scope for a wider interpretation and they cannot be narrowly understood to mean only fund and scheme as mentioned therein
As this point has been argued in support of the applicability of Section 141A we shall consider the same from that perspective
Section 2 begins with the words In this Act unless the context otherwise requires
Section 2c defines contribution to mean a contribution payable in respect of a member under a Scheme Section 2h defines fund to mean the provident fund established under a Scheme and Section 21 defines Scheme to mean the Employees  Provident Fund Scheme framed under Section 5
Section 5 empowers the Central Government by a notification to frame a scheme and such a scheme was framed in 1952 called the Employees  Provident Fund Scheme of 1952
Section 6 as already noted lays down that the contribution which shall be paid by the employer to the Fund shall be of the percentage mentioned therein
We shall now examine Section 141A
This provision was introduced in the year 1973 and specifies a penalty laying down that if an employer who contravenes or makes default in complying with the provisions of Section 6 or clause a of sub section 3 of Section 18 shall be punishable with imprisonment mentioned therein
For the purpose of this case we have to see whether there is a contravention or non compliance with the provisions of Section 6
According to Shri Dholakia the scheme should be interpreted liberally as to mean a scheme framed and followed by the employer himself and fund in that context should be taken to mean a provident fund established under such a scheme by the employer and the contribution should consequently mean a contribution payable by him under such a private scheme and consequently if there is a default in payment of the contribution to such a scheme it amounts to contravention of Section 6 punishable under Section 141A
Learned counsel for the respondents very much relied on the opening words of Section 2 namely In this Act unless the context otherwise requires and urged that these words can otherwise than as mentioned in the definitions also be interpreted keeping in view the object of the Act
He further urged that the duties under the scheme framed under Section 5 ie 1952 scheme and the private scheme followed by an employer because of an exemption granted are one and the same and that if viewed from this angle the expressions contribution fund and scheme can be understood to be wide enough to carry the same meanings in respect of the private scheme also and consequently failure to contribute to the fund under a private scheme framed and operated by the employer attracts Section 14IA
After a careful consideration we are inclined to agree with the 967 learned counsel fOr the respondents
In this context we may note a passage in Knightsbridge Estates Trust Ltd vs Byrne and Others which reads thus It is perhaps worth pointing out that the words unless the context otherwise requires which we find in the consolidating Act of 1929 are not to be found in the amending Act of 1928
I attribute little weight to this fact for in my opinion some such words are to be implied in all statutes where the expressions which are interpreted by a definition clause are used in a number of sections with meanings sometimes of a wide and sometimes of an obviously limited character
On the other hand I think due weight ought to be attributed to the words otherwise requires in the Companies Act 1929 and it is incumbent on those who contend that the definition does not apply to sect
74 to show with reasonable clearness that the context does in fact require a more limited interpretation of the word debenture then Sect
380 has assigned to it In National Buildings Construction Corporation vs Pritam Singh Gill and Others   this Court observed as under as is usual with most of the definition sections with the clause unless there is anything repugnant in the subject or context
 This clearly indicates that it is always a matter for argument whether or not this statutory definition is to apply to the word workman as used in the particular clause of the Act which is under consideration for this word may both be restricted or expanded by its subject matter
The context and the subject matter in connection with which the word workman is used are accordingly important factors having a bearing on the question
The propriety or necessity of thus construing the word workman is obvious because all parts of the Act have to be in harmony with the statutory intent emphasis supplied In Commissioner of Expenditure Tax Gujarat Ahmedabad vs Darshan Surendra Parekh  it was observed as under Undoubtedly the definitions in section 2 of words and expressions used in the Act apply unless the context otherwise 968 requires and if the context in section 4 requires that the expression dependent should not be given the meaning which is assigned thereto by the definition in cl
g of section 2 the Court would be justified in discarding that definition
It is a settled rule of interpretation that in arriving at the true meaning which is assigned thereto by the definition in cl
g to be viewed isolated from its context it must be viewed in its whole context the title the preamble and all the other enacting parts of the statute
It follows there from that all statutory definitions must be read subject to the qualifications expressed in the definition clauses which create them such as unless the context otherwise requires or unless a contrary intention appears or if not inconsistent with the context or subject matter
emphasis supplied In Bennett Coleman  Co P Ltd vs Punya Priya Das Gupta 1970I SCR 181 this Court observed thus But assuming that there is such a conflict as contended we do not have to resolve that conflict for the purposes of the problem before us
The definition of section 2 of the present Act commences with the words In this Act unless the context otherwise requires and provides that the definitions of the various expressions will be those that are given there
Similar qualifying expressions are also to be found in the  the  the CP  Berar Industrial Disputes Settlement Act 1947 and certain other statutes dealing with industrial questions
It is therefore clear that the definitions of a newspaper employee and a working journalist have to be construed in the light of and subject to the context requiring otherwise
 The above passages throw a flood of light on the scope of interpretation of these opening words of Section 2 and it is clear that they must be examined in the light of the context the title the preamble and all the other enacting parts of the statute
Due weight ought to be given to the words unless the context otherwise requires
The subject matter and the context in which a particular word is used are of great importance and it is axiomatic that the object underlying the Act must 969 always be kept in view in construing the context in which a particular word is used
In the Statement of Object and Reasons of Act No 40 of 1973 by which Section 14IA was introduced it is clearly mentioned that National Commission of Labour has recommended that in order to check the growth of arrears penalties for defaults in payment of provident fund dues should be more stringent and the default should be made cognizable
The concept which prompted the Legislature to enact this welfare law should also be borne in mind in interpretation of the provisions
Chagla CJ in Prakash Cotton Mill
P Ltd vs State of Bombay 19572 LLJ 490 observed as under no Labour legislation no special legislation no economic legislation can be considered by a court without applying the principles of social justice in interpreting the provisions of these laws
Social justice is an objective which is embodied and enshrined in our Constitution   it would indeed be startling for anyone to suggest that the court should shut its eyes to social justice and consider and interpret a law as if our country had not pledged itself to bringing about social justice In Organo Chemical Industries and Another vs Union of India and Others  19791 4 SCC 573 it was observed that A policy oriented interpretation
when a welfare legislation falls for determination especially in the context of a developing country is sanctioned by principle and precedent and is implicit in Article 37 of the Constitution since the judicial branch is in a sense part of the State
So it is reasonable to assign to damages  a larger fulfilling meaning
In Kanwar Singh vs Delhi Administration  it was observed as under It is the duty of the court in construing a statute to give effect to the intention of the legislature
If therefore giving a literal meaning to a word used by the draftsman particularly in a penal statute would defeat the object of the legislature which is to suppress a mischief the court can depart from the dictionary meaning or even the popular meaning of the word and instead give it a meaning which will advance the remedy and suppress the mischief
 970 In State of Gujarat vs Chaturbhuj Maganlal and Another  it was observed as under It is well recognised that where the language of a statutory provision is susceptible of two interpretations the one which promotes the object of the provision comports best with its purpose and preserves its smooth working should be chosen in preference to the other which introduces inconvenience and uncertainty in the working of the system
This rule will apply in full force where the provision confers ample discretion on the Government for a specific purpose to enable it to bring about an effective result In Vanguard Fire  Gen Ins Co vs Fraser  Ross AIR 1960 SC 1971 it was held that the Court has not only to look at the words but also at the context the collocation and the object of such words and interpret the meaning intended to be conveyed by the use of the words under the circumstances We feel it may not be necessary to multiply the authorities on this aspect
In this background if we examine the opening words of Section 2 namely In this Act unless the context otherwise requires then we necessarily feel that there is much in the context to show that the restricted meaning in the definitions should not be applied
So much is about the opening words to Section 2 and it therefore follows that the words contribution  Scheme  fund  occurring in the said section should in the context be otherwise interpreted as to apply to a private scheme also and if there is a default in contribution by the exempted establishment the same amounts to contravention of Section 6 punishable under Section 141A
Before we conclude we shall however refer to one general submission of Sri Chidambaram
He submitted that the fact that Section 171A was introduced in 1988 prescribing a penalty in respect of contraventions or non compliances committed by an exempted establishment would go to show that Sections 141a and 142A were not intended to be made applicable to an exempted establishment and that cancellation of the exemption under Section 174 was the only prescribed penalty
He also invited our attention to the Statement of Objects and Reasons of Amendment Act No 33 of 1988
We see no force in this submission
The mere fact that Section 171A was intro 971 duced in the year 1988 does not necessarily lead to an inference that Sections 14IA and 142A were not intended to be made applicable to an exempted establishment
As stated in the foregoing paragraphs the object underlying every amendment was mainly intended to render the penal provisions more stringent in order to check the growth of arrears and to punish the defaulters
Likewise in the Amendment Act No 33 of 1988 also it was intended to make the existing penal provisions more stringent
This Amendment Act was passed on the recommendations of a high level committee set up to review the working of the employees provident fund organisation and to suggest improvements
One of the recommendations was to make the existing penal provisions more stringent and also make the existing legal and penal provisions as applicable to unexempted establishments being made applicable to exempted establishments so as to check the defaults on their part
The learned counsel for the appellants very much relied on this part of Objects and Reasons and submitted that it is only by the introduction of Section 171A that the exempted establishments also are brought within the purview of the penal provisions which hitherto were applicable to unexempted establishments and therefore Sections 141a and 142A were hitherto inapplicable to exempted establishments
We are unable to agree that this part of the Statement of Objects and Reasons would necessarily lead to such an inference
As already discussed many aspects are common to both the types of provident fund
So far as unexempted establishments are concerned there are several other penal provisions like Sections 141 142 and 14AA and also in particular Paragraph 76 of the 1952 Scheme
There are other legal provisions also which apply to unexempted establishments
Therefore under the Amendment Act No 33 of 1988 the Legislature wanted to make as far as possible these existing legal and penal provisions which are applicable to unexempted establishments applicable also to exempted establishments
That does not mean that there were no penal provisions earlier applicable to exempted establishments
Section 171A is in the following terms  171 A Where an exemption has been granted to an establishment under clause a of sub section 1 a the provisions of Sections 6 7 A 8 and 14 B shall so far as may be apply to the employer of the exempted establishment in addition to such other conditions as may be specified in the notification granting such exemption and where such employer contravenes or makes default in complying with any of the said provisions or conditions or 972 any other provision of this Act he shall be punishable under Section 14 as if the said establishment had not been exempted under the said clause a b the employer shall establish a Board of Trustees for the administration of the provident fund consisting of such number of members as may be specified in the Scheme c the terms and conditions of service of members of the Board of Trustees shall be such as may be specified in the Scheme d the Board of Trustees constituted under clause bshall i maintain detailed accounts to show the contributions credited withdrawals made and interest accrued in respect of each employee ii submit such returns to the Regional Provident Fund Commissioner or any other officer as the Central Government may direct from time to time iii invest the provident fund moneys in accordance with the directions issued by the Central Government from time to time iv transfer where necessary the provident fund account of any employee and v perform such other duties as may be specified in the Scheme
A perusal of this Section would only go to show that some more provisions legal and penal are also made applicable to the exempted establishments with a view to make the penal provisions more stringent with a view to check the growth of arrears
Therefore we are unable to agree with the learned counsel that Sections 14IA and 142A are inapplicable to exempted establishments
From the above discussion it emerges that atleast Sections 14IA and 142A are attracted to the facts in the present case and therefore it cannot be said that there is no prima facie case and conse 973 quently the accused cannot claim any acquittal even before the conclusion of the trial under Chapter XX Cr PC dealing with trial of summons cases
Other Sections like 142 14Al and 14A2 and paragraph 76 of the Employees Provident Fund Scheme 1952 will not apply to the facts of the present case
Therefore the trial court may proceed with the trial for the offences punishable under Sections 14IA and 142A against the appellants and dispose of the matter in accordance with law
Subject to the above directions these appeals are disposed of


Summary:
Landlord and Tenant Accommodation Agreed monthly rent New construction Enhancement of rent House Allotment Officer s findings Power of the civil courts to interfere U P Templeton Control of Rent and Eviction Act 1947 UP 3 of 1947 SS
2af 3A 54 6
In 1938 the respondent took on rent from the appellant the accommodation in dispute on a monthly rent of Rs 21 4as
On January 28 1950 the appellant made an application to the House Allotment Officer under section 3A of the UP Temporary Control of Rent and Eviction Act 1947 for an increase in rent on the allegation that according to the instruction of the respondent lie had made a new construction in January 1949
The 734 Officer considered that the accommodation was not a newly constructed one as the respondent had been a tenant from 1938 but he increased the rent to Rs 40 per mensem on the basis of the building that was added by the new construction
The appellant thereupon instituted a suit under section 54 Of the Act for the enhancement of  reasonable annual rent 
The respondent s defence inter alia was that the new construction was undertaken in order to put up another storey on the top of the old building that so far as the accommodation in his possession was concerned there was no new construction of accommodation after June 30 1946 and that therefore the suit was not maintainable
The trial court found that as a result of the new construction the accommodation had increased and was of the opinion that the portion of the building which had been newly replaced must be treated as a new accommodation and hence the court could determine its rent under section 54
In revision the High Court held that though the construction on the upper storey was a new construction so far as the accommodation in the occupation of the respondent was concerned the construction could not be called a new one and therefore section 3A of the Act was not applicable
Accordingly the revision petition was allowed and the suit was dismissed
On appeal by special leave to the Supreme Court it was contended for the appellant that the House Allotment Officer having decided in his favour the question of the date of construction which section 3A of the Act authorised him to decide the High Court could not in revision go into the correctness of the decision  and in any case it was within the jurisdiction of the trial court to decide the question of the date of construction and in doing so it could decide rightly or wrongly and as the matter was one of fact the High Court had no power to interfere under section 115 Of the Code of Civil Procedure
Held1 that a wrong decision made by the House Allot ment Officer under section 3A of the Act or an order made by him in excess of his powers under that section could be rectified by a suit under section 54 of the Act and 2that the maintainability of the suit brought under section 3A of the Act depended on the determination of the jurisdictional fact ie date of construction of the accommodation whether it was after June 30 1946 and if the court wrongly decided that fact and thereby assumed jurisdiction not vested in it the High Court had the power to interfere under section 115 of the Code of Civil Procedure and once it had the power it could determine whether the question of the date of construction was rightly or wrongly decided
Joy Chand Lal Babu vs Kamalaksha Chaudhury 1949 LR 76 IA 131 relied on
Queen vs Commissioner for Special Purposes of the Income Tax  Venkatagiri Ayyangar vs Hindu Religious Endowment Board Madras 1949 LR 76 IA 67 and Keshardeo Chamria vs Radha Kissen Chamria 1953 SCR 136 considered
735 Rai Brij Raj Krishna vs section K Shaw and Bros 1951 SCR 145 distinguished The relevant provisions of the Act are set out in the judg ment