IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN MONDAY, THE 22ND SEPTEMBER 2008 / 31ST BHADRA 1930 OP.No. 4937 of 1999(K) ------------------------------ PETITIONER(S): ----------------------- 1. M/S. BISMILLA COIR MART, P.B. NO. 8 CIVIL ROAD, ALAPPUZHA - 1, A PARTNERSHIP FIRM REPRESENTED BY ITS PARTNER SHAFI, S/O. ISMAIL, AGED 48. 2. SURAYYA, PARTNER M/S. BISMILLA COIR MART, P.B. NO. 8, CIVIL ROAD, ALAPPUZHA - 1. BY ADV. SRI.S.SREEKUMAR RESPONDENTS(S): --------------------------- 1. UNION OF INDIA, REPRESENTED BY THE SECRETARY, MINISTRY OF LABOUR, NEW DELHI. 2. EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL 7TH FLOOR, 60, SKYLARK BUILDING, NEHRU PLACE, NEW DELHI - 110 019. 3. REGIONAL PROVIDENT FUND COMMISSIONER, SUB REGIONAL OFFICE, KALOOR, COCHIN - 682 017. ADV. SRI.K.THANKAPPAN, ADDL.CGSC SRI.N.N.SUGUNAPALAN (SR.) FOR 0 SRI.V.V.JOSHI, ADDL.CGSC SMT.S.AMBIKA DEVI, ADDL.CGSC FOR R1 TO R3 SRI.M.R.JAYAPRASAD, CGC FOR R1 TO 3 THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 22/09/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP.No. 4937 of 1999(K) APPENDIX PETITIONERS' EXHIBITS: EXT.P1 - TRUE COPY OF THE REGISTER OF WAGES DATED 1.4.1993 TO 30.11.1993 (8 NOS) EXT.P2 - TRUE COPY OF NOTICE ISSUED BY THE 3RD RESPPONDENT DATED 16.3.1994. EXT.P3 - TRUE COPY OF THE NOTIFICATION NO. GSR.952 DATED 3.7.1965. EXT.P4 - TRUE COPY OF THE EXPLANATION TO EXT.P2 DATED 1.8.1994 TO THE 3RD RESPONDENT. EXT.P5 - TRUE COPY OF THE SHOW CAUSE NOTICE DATED 25.4.1995 ISSUED BY 3RD RESPONDENT. EXT.P6 - TRUE COPY OF EXPLANATION TO EXT.P5 DATED 26.6.1995 IN EXT.P4. EXT.P7 - TRUE COPY OF THE ORDER OF THE 3RD RESPONDENT DATED 22.5.1996. EXT.P8 - TRUE COPY OF MEMORANDUM OF APPEAL DATED 21.6.1996. EXT.P9 - TRUE COPY OF ORDER OF THE 2ND RESPONDENT DATED 2.9.1998. /TRUE COPY/ PA TO JUDGE rhs S.SIRI JAGAN, J ================== O.P.No.4937 of 1999 ================== Dated this the 22nd day of September, 2008. J U D G M E N T Petitioners are partners of an establishment engaged in the business of selling coir yarn in bales. They are aggrieved by orders of the original and appellate authorities under the Employees Provident Funds and Miscellaneous Provisions Act, whereby the petitioners establishment was held to be liable to be covered under the Act. In the proceedings under Section 7A, the petitioners took two contentions. One is that it is not an establishment liable to be covered under the Act, by virtue of the fact that the establishment is not a factory conducting any manufacturing process. The second is that even assuming that they are conducting any manufacturing process in their establishment, since they are not employing 20 or more persons in their establishment, their establishment is not liable to be covered under the Act. The 3rd respondent - Regional Provident Fund Commissioner took the view that the establishment is liable to be covered under the Act by virtue of Ext.P3 notification No. G.S.R. 952 dated 3/7/1965. He held that although the spinning sector of coir industry is excluded from O.P.No.4937 of 1999 - 2 - the purview of the notification, since the establishment of the petitioners is engaged in the further process of converting spinned coir yarn into bales by rehanking, they are liable to be covered under the Act. The 3rd respondent also found that the petitioners have been employing 20 or more persons in their establishment. Ext.P7 is the order passed by the authority under Section 7A of the Act. The petitioner challenged the said order before the Appellate Tribunal in an appeal. That appeal was also rejected by Ext.P9 order upholding Ext.P7 order. The petitioner is challenging Exts.P7 and P9 orders in this original petition. The petitioners' contention is that petitioners' business actually does not involve anything more than spinning coir yarn, which is excluded from the purview of Ext.P3 notification. According to the petitioners the process of rehanking is only packing individual coir yarn into bundles which does not involve any manufacturing process whatsoever, apart from spinning and therefore the petitioners establishment is not a factory liable to be covered under the Act. They also dispute the finding of fact that 20 or more persons are employed in their establishment. 3. With the help of a counter affidavit the Provident Fund O.P.No.4937 of 1999 - 3 - Organisation seeks to controvert the contentions of the petitioner. According to them, the rehanking of individual coir yarn making the same into bundles necessarily involves manufacturing process and therefore the petitioners' establishment is a factory carrying on a manufacturing process other than spinning of coir yarn. 3. I have heard the rival contentions in detail. 4. At the outset, I may state that, I am not inclined to interfere with the finding of the lower authorities that the petitioners have been employing 20 or more persons in their establishment. Findings of facts entered into by such authorities can be interfered with by this court in proceedings under Article 226 of the Constitution of India only if the same are demonstrably perverse. On a reading of Exts.P7 and P9, I am unable to persuade myself hold that the findings on fact entered in Exts. P7 and P9 are demonstrably perverse. That being so, I am not inclined to interfere with the finding that the petitioners have been employing 20 or more persons in their establishment. 5. The next question to be considered is as to whether the petitioners' establishment is liable to be covered under the Act by virtue of Ext.P3 notification issued by the Government of O.P.No.4937 of 1999 - 4 - India. Ext.P3 notification reads thus: “G.S.R. 952 - Whereas the Central Government is of the opinion that a provident fund scheme should be framed under the Employees Provident Fund and Misc. Provisions Act, 1952 (19 of 1952), in respect of the employees of the coir (excluding spinning sector) industry. Now, therefore, in exercise of powers conferred by Sub Section (1) of Section 4 of the Employees Provident Fund and Misc. Provisions Act, 1952 (19 of 1952), the Central Government hereby directs that with effect from 30th September, 1965, the said industry shall be added to schedule I of the said Act.” 6. From the same, it is abundantly clear that the spinning sector of coir industry is excluded from the purview of the notification. Therefore, only if the petitioners are undertaking some manufacturing process other than spinning coir yarn, they are liable to be covered by virtue of the said notification. In this connection we must also refer to the provisions relating to application of the Act. Sub Section 3 of Section 1 of the Act, is the relevant provision which reads thus: “[(3) Subject of the provisions contained in section 16, it applies - (a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which [twenty] or more 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 the intention so to do, by notification in the Official Gazette, apply the O.P.No.4937 of 1999 - 5 - provisions of this Act to any establishment employing such number of persons less than [twenty] as may be specified in the notification]” 7. By virtue of Ext.P3 notification clearly the coir industry excepting the spinning sector thereof is brought within the purview of the Act as per notification under Section 3. Clearly the petitioners' establishment is sought to be covered under the Act by virtue of Section 3(a) of the Act. Therefore the next question would be as to whether the petitioners' establishment is a factory engaged in a manufacturing process other than spinning of coir yarn. Admittedly what the petitioners are doing is only rehanking of spinned coir yarn. The ordinary dictionary meaning of 'hanking' is “putting together of several measures of length of cloth or yarn together”. Therefore, essentially rehanking is the process by which spinned coir yarn is made into bundles called bales for the purpose of easy handling and transportation. Individual coir yarns are folded into a specific length and those folded coir yarns are further bound together so as to make it into a bundle called bale. The purchaser who purchases the bales cannot use the same in further manufacturing process as bales themselves. In order to use the coir yarn included in the bales, the bales have to be first cut open and only the individual coir yarns taken out can O.P.No.4937 of 1999 - 6 - be used in further manufacturing process. As such rehanking does not bring into existence a new coir product known to the market other than coir yarn and therefore the process does not involve any manufacturing process at all. Going by Sub Section 3(a) and the notification, only if the petitioner is engaged in a manufacturing process other than spinning of coir yarn, the petitioners' establishment can be brought within the purview of the Act. In the absence of any such manufacturing process, bringing into existence a new commodity known to market called 'bale' which can be used as such, I do not think that the petitioners' establishment can be brought within the purview of a factory engaged in any industry other than spinning of coir yarn. That being so Exts.P7 and P9 orders are clearly unsustainable to that extent. In that view the petitioners' establishment cannot be directed to be covered under the Act. Accordingly, Ext.P7 and Ext.P9 orders are therefore quashed. This original petition is disposed of as above. S.SIRI JAGAN, JUDGE rhs