IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN FRIDAY, THE 6TH MARCH 2009 / 15TH PHALGUNA 1930 OP.No. 776 of 2000(P) -------------------------------- PETITIONER(S): ------------------------ THANKAMMA BABY, PROPRIETRESS, POPY UMBRELLA MART, P.O. BOX NO.4010, IRON BRIDGE P.O. ALAPPUZHA. BY MR.CHACKO GEORGE, SENIOR ADVOCATE BY ADVS.MR.H.RAMANAN MR. ALEX N.MATHEW (KOLLAM) MR.JAMES JOSE MR.PEEYUS A.KOTTAM RESPONDENT(S): ---------------------------- 1. THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI. 2. THE REGIONAL PROVIDENT FUND COMMISSIONER, SUB REGIONAL OFFICE, P.O. BOX NO.1664, BHAVISHYANIDHI BHAVAN, KALOOR, KOCHI 682 017. BY MR.N.N.SUGUNAPALAN, SENIOR ADVOCATE FOR R2 THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 25/03/2009, ALONG WITH OP NO. 4611 OF 2000 THE COURT ON 06/03/2009 DELIVERED THE FOLLOWING: OP. NO.776/2000 APPENDIX PETITIONERS EXHIBITS P1:- COPY OF THE NOTICE NO.KC/15547/ENF.II(4)/97 DT. 30.12.97 ISSUED BY THE 2ND RESPONDENT. P2:- COPY OF THE REGISTRATION CERTIFICATE NO.APY/1/297/96 DT. 12.6.96. P3:- COPY OF THE ORDER DT. 19.2.99 OF THE REGIONAL PROVIDENT FUND COMMISSIONER. P4:- COPY OF THE ORDER DT. 1.6.99 ISSUED BY THE REGIONAL PROVIDENT FUND COMMISSIONER. P5:- COPY OF THE APPEAL NO.ATA 7/38/99 THE PETITIONER HAS FILED AN APPEAL UNDER SECTION 71 BEFORE THE EPE APPELLATE TRIBUNAL, NEW DELHI . 6:- COPY OF THE ORDER IN APPEAL NO.ATA 7/28)99 DT. 29.9.99. R2(a):- COPY OF THE LIST OF EMPLOYEES PRODUCED BY THE PETITIONER TRUE COPY P.A. TO JUDGE TSS S.SIRI JAGAN, J. ================== O.P.Nos.776 & 4611 of 2000 ================== Dated this the 6th day of March, 2009 J U D G M E N T The petitioners in these two original petitions are the proprietrix and proprietor of Poppy Umbrella Mart and St.John's Umbrella Mart, which are factories engaged in the business of manufacturing umbrellas. They are aggrieved by the orders of the Regional Provident Fund Commissioner (RPFC), Kochi, passed under Sections 7A and 7B of the Employees' Provident Funds and Miscellaneous Provisions Act , 1952, bringing the two factories under coverage for the purposes of the Act and a common order passed by the Employees' Provident Fund Appellate Tribunal in the appeals filed by them against the orders of the Regional Provident Fund Commissioner. 2. Originally the RPFC proposed to cover the factories both under Section 1(3)(a) as an industry manufacturing “electrical, mechanical or general engineering products, by virtue of the inclusion of that industry in Schedule I of the Act, and as an establishment engaged in 'Trading and Commercial' activity by virtue of a notification issued by the Government of India under Section 1(3)(b) of the Act. However, in view of a clarification issued by the Central office that umbrella cannot be termed as an 'electrical, mechanical or general engineering product, the RPFC held that the factories of the petitioners o.p.776/00 & cc. 2 are establishments engaged in 'Trading and Commercial' activities and, therefore, liable to be covered under the Act, by virtue of a notification issued by the Government of India under Section 1(3)(b) of the Act. The Appellate Tribunal went a step further and held that the petitioners' establishments are liable to be covered both as a 'general engineering industry' under Section 1(3)(a) and as an establishment engaged in 'trading and commercial' activity as per notification issued under Sec.1 (3)(b). Those orders are under challenge before me in these two original petitions. 3. The first contention of the petitioners is that by no stretch of imagination can the manufacture of umbrella be termed as a 'general engineering product' going by the principles laid down in the decision of the Supreme Court in RPFC Punjab v. Shibu Metal Works, AIR 1965 SC 1076. The second contention is that since the establishments of the petitioners are factories registered under the Factories Act, they cannot be covered as an establishment notified under Section 1(3)(b) in so far as under Section 1(3)(b) the Government can issue notifications applying the provisions of the act only to non-factory establishments and if a factory engaged in an industry has to be brought under coverage, that can only by a notification issued under Section 4 of the Act to add that industry to Schedule I of the Act. Alternately another contention is also raised to the effect that o.p.776/00 & cc. 3 since the petitioners are only assembling umbrellas and the sale is oustsourced the petitioners' establishments cannot be one engaged in trading and commercial activity. 4. The counsel for the Provident Fund Organization seeks to sustain the impugned orders on both counts especially the 2nd contention based on the decision of a Division Bench decision of this Court in Provident Fund Inspector, Quilon Vs. Kerala Janatha Printers and Publishers, AIR 1965 Kerala 130, which was followed by the Bombay High Court in Varjivandas Hirje v. RPFC, 1968 II LLJ 744. 5. I have considered the arguments advanced by both sides in detail. 6. Since my decision on the 2nd contention against the petitioners would render a decision on the first contention unnecessary, for obvious reasons, I shall consider that contention first. The contention is that a factory can be brought under coverage of the Act only under Section 1(3)(a) by adding the industry in which the factory is engaged in, to Schedule I of the Act, by issuing a notification under Section 4. A notification applying the provisions of the Act under Section 1(3)(b) can be issued only in respect of establishments other than factories. Therefore, the establishments of the petitioners being factories cannot be roped in within the scope of the Act, on the basis of o.p.776/00 & cc. 4 a notification issued under Section 1(3)(b). For easy reference, I shall extract Section 1(3), which reads thus: “(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 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 its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than twenty as may be specified in the notification. I am unable to accept the contention of the petitioners going by the plain meaning of the words used in the section. The Act is a beneficial legislation intended for the welfare of the working class. The provisions of the Act have to be interpreted liberally so as to bring within the ambit of the Act as many establishments as are possible. I am of the opinion that the expression 'to any other establishments' occurring in the beginning of sub section (b) cannot be given a narrow meaning to mean establishments other than factories, but should be construed to mean establishments other than those mentioned in sub-section (a) which sub-section has to be read as a whole for the purpose. In other words, any other establishment, in sub clause (b) should be read not as 'establishments other than a factory, but should be read as 'establishment other than a factory engaged in any industry specified o.p.776/00 & cc. 5 in Schedule I'. In that view the Government can exercise the powers vested in it under sub section (b) of Section 1(3) of the Act to issue notification applying the provisions to factories other than those specified in Schedule I as well as non-factory establishments. I am well supported in this view by the Division Bench decision in Kerala Janatha Printers and Publishers case (supra) in which decision the Division Bench has held thus: “(8) The next argument of Mr.Velayudhan Nair is this. Under sub- sec. 3 (a) of Sec. 1 of the Provident Funds Act factories engaged in the industries specified in Schedule I and also employing twenty or more persons came within the ambit of the Act. Under cl.(o) of sub-sec. 3 the Central Government is invested with power to bring other establishments employing twenty or more persons also within the ambit of the Act by notification in the Official Gazette. Section 4 of the Act again confers power on the Central Government to add to Schedule 1, also by notification in the Official Gazette. The counsel argues that all factories can be brought within the scope of the Act only under clause (a) of sub- section 3 of Sec. 1, by adding to Schedule I by means of a notification under Sec.4; and only establishments, which are not factories can be brought in under cl. (b) of sub-sec. 3. He proceeds to contend that the effect of Sec. 15 of the Working Journalists Act was to add to Schedule I of the Provident Funds Act, with the result that, after the promulgation of Sec. 15, Schedule I contained factories employing twenty or more persons, whereas cl. (a) of sub-sec.3 of Sec. 1 as it stood in 1956 still contained the provision that factories to come within the mischief of the Act should employ fifty or more persons. The counsel concludes by pointing out that the result was that Schedule I controlled sub-sec. (3a) of S. 1, which could not, in law, be done. For this argument, Mr.Velayudhan Nair seeks support from the use of the word “factory” in the deeming provision in Sec. 15 of the Working Journalists Act also. (9) This argument appears to be ingenious, and its ingenuity equals its fallacy. By cl. (a) of sub-sec. 3 of the Sec. 1 only factories employing twenty or more men engaged in specified industries are brought within the Provident Funds Act. To all other establishments, factory or non-factory, whether engaged in industry or otherwise, the Act may be applied by resorting to notification under cl.(b) of sub-section 3 of Sec.1. Factories engaged in industries other than those mentioned in Schedule I may also be brought within the ambit of the Act by a notification under Sec. 4, thus adding to Schedule I. What Sec. 15 of the Working Journalists Act does is not to bring newspaper establishments o.p.776/00 & cc. 6 within Schedule I of the Act. Newspaper establishments may still be brought within te scope of the Act by notification under cl. (b) of the sub- sec. 3 of Sec. 1, whether thy are factories or not, whether they are engaged in industries or not; because cl. (b) applies to all establishments, factories or otherwise, with the only exception of factories engaged in the industries specified in Schedule I. (10) If the history of the amendments to the Provident Funds Act is borne in mind, the position will be clear. The Provident Funds Act of 1952 was intended to apply only to factories. But in 1956, by Act 94 of 1956 sub-sec. 3 of Sec. 1 was amended so as to widen the scope of the Act and to bring non-factory establishments also within its ambit by notification by the Central Government. The present position therefore is that if a factory engaged in a particular industry is to be brought within the scope of the Act, it may be done by adding to Schedule I under Sec. 4. If, on the other hand, any establishment, factory or non-factory, whether, engaged in industry or not, is to be brought within the Act, that can be done by issuing a notification under cl. (b) of sub- sec. 3 of Sec.1.” That Division Bench decision is a complete answer to all the contentions of the petitioners in that regard. Therefore, I have no hesitation to hold that the Government can issue a notification under Section 1(3)(b) to apply the provisions of the Act to factories engaged in industries which are not specified in Schedule I as also to non- factory establishments. 7. The contention that since the petitioners are only manufacturing umbrellas and not selling the same they cannot be said to be engaged in 'trading or commercial' activity is too feeble to merit acceptance. The petitioners are manufacturing umbrellas only for sale and derive profit in so far as there is no case that they are not charitable institutions. If they are manufacturing umbrellas the same is for sale either by themselves or through others which is for earning profit for themselves. That would certainly qualify as 'trading and o.p.776/00 & cc. 7 commercial activity'. 8. Therefore, there cannot be any doubt that by virtue of the notification issued by the Government of India applying the provisions of the Act to 'Trading and Commercial establishments' the petitioners' factories are liable to be covered under the Act. 9. In view of my finding on the 2nd contention against the petitioners, consideration of the 1st contention is purely academic although the question as to whether umbrellas are 'mechanical or general engineering products' was worth considering if the 2nd contention was decided in favour of the petitioners. Had I been inclined to go into that question, I would also have had to consider the other question as to whether umbrella is a 'stationery product', which entry also finds a place in Schedule I. However, since in view of my finding on the 2nd contention it is unnecessary to consider the same, I leave it at that. In the result the original petitions do not succeed and hence they are dismissed. Sd/- sdk+ S.SIRI JAGAN, JUDGE S.SIRI JAGAN, J. ================== O.P.Nos.776-P & 4611-Y of 2000 ================== J U D G M E N T 6th March, 2009