Case: The Regional Provident Fundcommissioner, Bombay Vs. Shree Krishna Metal Manufacturingco., Bhandara

only. If the answer to this question is that the said product is sent out in the market for sale, then the activity in question cannot be treated as incidental. In such a case, it may be said that the factory is engaged in both the activities and as such, it is engaged in the industry specified in Schedule I. But the test of sending the product in the market cannot be treated as decisive or even very significant because the definition of the word "manufacture" given in S. 2(ia) shows that a commodity may be produced by the factory as much for sale, transport, delivery or disposal as for its own use. Therefore, the fact that a commodity is produced only for the use of the factory in its other department may not necessarily show that the activity which leads to the production of the said commodity is not the main activity of the factory.20. If a factory is engaged simultaneously in different industrial activities and one of these is in relation to an industry specified in Schedule I, then it can be said that the factory is engaged in the industry specified in Schedule I. The fact that the factory is engaged in other industrial activities will not necessarily take it out of the purview of S. 1(3)(a). The broad test which may safely be applied in dealing with this question is: is the factory engaged in the industry specified in Schedule I from a business point of view?, and the answer to this question would generally give a satisfactory solution to the problem posed by S. 1(3) (a). Whether or not a factory is engaged in any industry specified in Schedule I would, thus, be a question of fact to be determined in the facts and circumstances of each case. That appears to be the view taken by Balakrishna Ayyar J. in the Madras Pencil Factory v. Regional Provident Fund Commissioner : AIR 1959 Mad 235 , and with that view we are in general agreement.21. What remains now is to consider whether the High Court was right in holding that the company and the Mills are outside the purview of S. 1(3)(a). As we have already seen, the company carries on four different kinds of industrial activities, one of which is the manufacturing of brass, copper and kasa circular sheets and the preparation of utensils therefrom. For the manufacture of metal circular sheets, the Co. has a rolling machine. It is common ground that this work would fall within Schedule I of the Act and so, if it can be held that the Co. is a factory engaged in the industry represented by this work, the first rest is satisfied. As we have already observed this Co. carries on four different kinds of activities and it is impossible to hold that the activity in relation to the industry which falls in Schedule I is either minor, subsidiary or incidental to the other activities. This activity is as much the work of the Co. as the other activities are and so, the Co. must be held to be a factory under S. 1(3)(a) so far as the first test is concerned. In regard to the test of the number of employees engaged in the factory, it appears to be the Co.s case that at the relevant time, the number of its total employees in all the four activities did not consistently exceed 50; but that is a point on which the High Court has expressed no opinion, and rightly, because it is a disputed question of fact which cannot be tried in writ proceedings. The appellants case is that the total number of employees engaged by the Co. exceeded 50 at the relevant time and it is on that footing that the present writ petition has been tried in the High Court. Therefore, without deciding this disputed question of fact, it may be assumed that for the purpose of the present writ proceedings, the test of the numerical strength can be said to have been satisfied. The result is the view taken by the High Court that the company is outside S. 1(3)(a) is erroneous in law and must be reversed; and that means that Appeal No. 361 of 1959 filed by the Regional Commissioner is allowed and the writ petition filed by the Co. is dismissed with costs throughout. In the result, the respondent will have to comply with the requisition issued by the appellant against it under the relevant provisions of the Act.In regard to the date from which the respondent should make its statutory contribution to the Provident Fund, the appellant may have to give a direction after consulting the workmen, because from the date so specified by the appellant both the respondent and its workmen will have to make their respective contributions.22. The position with regard to the Mills is, however, different. The main industrial activity of the Mills is the manufacture of hydrogenated vegetable oil named Vanasada and its by-products, such as soap, oil-cakes etc. It is true that in the Mills tin containers are fabricated and this, no doubt, is an activity covered by Schedule I. But it is obvious that this branch of the activity of the Mills forms a very minor portion of its activity. The number of employees engaged in this branch is 31, whereas the total number of employees is 211. Besides the containers are produced only for the use of the Mills. They are not intended to be sold in the market at all. Price for the containers is not also charged from the customers. Indeed, containers are required even for the purpose of storage of the vegetable oil. It is thus clear that the fabrication of tin containers has been undertaken by the Mills only as a feeder activity; it is integrally connected with its main business of producing and marketing vegetable oil and as such, it is a minor part of the said activity.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]It is only factories which are exclusively engaged in any industry specified in Schedule I to which the Act applies, provided of course, they satisfy the other test that there are 50 or more persons employed in them. This argument is based on the fact that when the Act was originally passed in March, 1952, the Legislature had provided for only six industries in Schedule I. The intention of the Legislature was to extend the benefits of the Act to the workmen industry wise step by step. The Legislature was conscious that the relevant provisions of the Act imposed a burden on the employer and so, it took the precaution of confining the operation of the Act only to six important industries specified in Schedule I. Section 1(3)(a) no doubt confers power on the Central Government to extend the provisions of the Act to other factories by issuing a notification, as contemplated by it; and so, whenever the Central Government comes to the conclusion that the benefits of the Act should be extended to workmen engaged in additional categories of factories, it could exercise its power in that behalf and by issuing a notification, bring within the scope of the Act such factories. But this has to be done factory-wise in the sense that it has to be done by reference to the factories engaged in industries included in Schedule I and that shows that it is only factories exclusively engaged in the said industries that are included within the purview of S. 1(3)(a).The definition of the word "factory" prescribed by S. 2(g) of the Act shows that a "factory" means any premises, including the precincts 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. Thus the word "factory" used in S.1(3)(a) has a comprehensive meaning and it includes premises in which any manufacturing process is being carried on as described in the definition. This definition of the word "factory" shows that the factory engaged in any industry specified in Schedule I cannot necessarily mean a factory exclusively engaged in the particular industry specified in the said Schedule.10. Besides, S. 1(3)(a), as it has been amended in 1956, now refers to every establishment which is a factory engaged in any industry specified in Schedule I and the introduction of the word "establishment" clearly shows that it may consist of different factories dealing with different industries and yet considered as one establishment, it may fall under S. 1(3)(a), provided the other requirements of the said section are satisfied. Section 2A which has been added in the Act by the Amending Act 46 of 1960 makes it clear that an establishment may consist of different departments or may have different branches, whether situate in the same place or in different places, and yet all such departments or branches shall be treated as parts of the same establishment. Therefore, the concept of establishment being of such a comprehensive character, the insertion of the word "establishment" in S. 1(3) (a) by the Amending Act of 1956 helps to negative the argument that the factory therein contemplated cannot be a composite factory.11. Besides, the explanation to Schedule I which has been added by Act 37 of 1953 clearly shows that one of the industries originally included in Schedule I in 1952 definitely suggests the idea of a composite factory and would, thus, assist the interpretation of the word "factory" as including a composite factory under S. 1 (3)(a). The Industry in question is electrical, mechanical or general engineering products and the explanation of this industry shows that it includes 25 different items, and so any factory carrying on the work of producing one or more of these items would not be exclusively engaged in producing one or the other of those items and would be in the nature of a composite factory and yet it would definitely fall under S. 1 (3) (a). Therefore, in our opinion, the argument that a composite factory carrying on different industrial operations is outside the purview of S. 1(3)(a) cannot beordinary rule of grammar on which this construction is based cannot be treated as an invariable rule which must always and in every case be accepted without regard to the context. If the context definitely suggests that the relevant rule of grammar is inapplicable, then the requirement of the context must prevail over the rule of grammar. As the provision stands, the word factories is qualified by two clauses. The first adjectival clause is engaged in any industry specified in Schedule I and the second clause is "in which 50 or more persons are employed". In other words, in order that the factories should fall within the scope of the provision, they must satisfy two tests : they must be engaged in any industry specified in Schedule I and they must have employed 50 or more persons. The first adjectival clause is in the nature of a parenthetical clause and so the clause beginning with the words "in which" must necessarily qualify the word "factories" and not the word "industry". Therefore, in our opinion, the requirement as to the prescribed number qualifies the word "factories" and does not qualify the word "industry"; that means the question to ask is : does the factory employ 50 or more persons? The question is not : does the industry employ 50 or more personsmay be said that even if a factory is only partially engaged in any industry specified in schedule I, it would satisfy the test however small or insignificant may be the extent of its operation in the said industry. On this construction, it would follow that if a factory is engaged in several industrial operations one of which relates to an industry specified in schedule I, the factory would fall under S. 1(3)(a) even though its relevant activity in the specified industry may be of a minor, incidental or subsidiary character. The other construction would be that the expression engaged in any industry" means "primarily or mainly engaged in any industry". On this construction, if a factory is engaged in several industrial activities, one of which relates to the industry specified in schedule I, it would be necessary to enquire whether the said specified activity is subsidiary or minor; if it is subsidiary, incidental or minor, the factory cannot be said to be engaged in that industry. Cases may occur where a factory is primarily or mainly engaged in other industrial activities and it is only for feeding one or more of such activities that the factory may undertake an activity in respect of the specified industry. But such an undertaking is merely, for the purpose of feeding its major activity; it is subsidiary, incidental and minor. In that case, the factory cannot be said to be engaged in the industry specified in Schedule I. Both constructions are possible and each one of them presents some anomalies. On the first construction, it would follow that even if half a dozen employees are engaged by the factory in regard to its activity in the industry specified in Schedule I, the provisions of the Act would apply to all the workmen engaged in the whole of the factory because the factory would be deemed to have satisfied the test that it is engaged in the industry specified in Schedule I and that, no doubt, looks anomalous. On the other hand, if the second construction is accepted, though more than 50 persons may be employed in the incidental and subsidiary activity relating to an industry specified in Schedule I, the provisions of the Act will not apply to such workmen because the factory, as a whole, does not satisfy the test that it is engaged in the said industry and that also is anomalous.18. It is true that in dealing with the construction of a clause which is capable of two reasonably possible constructions, it is not easy to make a choice, particularly when both constructions seem to lead to some anomalies. On the whole, however, we are inclined to take the view that the clause "engaged in any industry specified in Schedule I" should be interpreted to mean "mainly engaged in any industry specified in Schedule I. If a factory is engaged in two industrial activities one of which is its primary, principal or dominant activity and the other is a purely subsidiary, incidental, minor or feeding activity, then it is the primary or the dominant activity which should determine the character of the factory under S. 1(3)(a).This view does not purport to add any word to the section; it merely interprets the relevant expression "engaged in any industry specified in Schedule I." When it is said that a person is engaged in any business, it usually means he is engaged mainly or principally in that business; and the same would be the position when the relevant clause refers to an establishment engaged in the specified industry. That is the common sense view which is consistent with the current and accepted denotation of the words "engaged in.19. One of the tests which can sometimes be applied is whether the product of the incidental activity is intended for the market or exclusively for use by the factory in its other department only. If the answer to this question is that the said product is sent out in the market for sale, then the activity in question cannot be treated as incidental. In such a case, it may be said that the factory is engaged in both the activities and as such, it is engaged in the industry specified in Schedule I. But the test of sending the product in the market cannot be treated as decisive or even very significant because the definition of the word "manufacture" given in S. 2(ia) shows that a commodity may be produced by the factory as much for sale, transport, delivery or disposal as for its own use. Therefore, the fact that a commodity is produced only for the use of the factory in its other department may not necessarily show that the activity which leads to the production of the said commodity is not the main activity of the factory.20. If a factory is engaged simultaneously in different industrial activities and one of these is in relation to an industry specified in Schedule I, then it can be said that the factory is engaged in the industry specified in Schedule I. The fact that the factory is engaged in other industrial activities will not necessarily take it out of the purview of S. 1(3)(a). The broad test which may safely be applied in dealing with this question is: is the factory engaged in the industry specified in Schedule I from a business point of view?, and the answer to this question would generally give a satisfactory solution to the problem posed by S. 1(3)we have already seen, the company carries on four different kinds of industrial activities, one of which is the manufacturing of brass, copper and kasa circular sheets and the preparation of utensils therefrom. For the manufacture of metal circular sheets, the Co. has a rolling machine. It is common ground that this work would fall within Schedule I of the Act and so, if it can be held that the Co. is a factory engaged in the industry represented by this work, the first rest is satisfied. As we have already observed this Co. carries on four different kinds of activities and it is impossible to hold that the activity in relation to the industry which falls in Schedule I is either minor, subsidiary or incidental to the other activities. This activity is as much the work of the Co. as the other activities are and so, the Co. must be held to be a factory under S. 1(3)(a) so far as the first test is concerned. In regard to the test of the number of employees engaged in the factory, it appears to be the Co.s case that at the relevant time, the number of its total employees in all the four activities did not consistently exceed 50; but that is a point on which the High Court has expressed no opinion, and rightly, because it is a disputed question of fact which cannot be tried in writ proceedings. The appellants case is that the total number of employees engaged by the Co. exceeded 50 at the relevant time and it is on that footing that the present writ petition has been tried in the High Court. Therefore, without deciding this disputed question of fact, it may be assumed that for the purpose of the present writ proceedings, the test of the numerical strength can be said to have been satisfied. The result is the view taken by the High Court that the company is outside S. 1(3)(a) is erroneous in law and must be reversed; and that means that Appeal No. 361 of 1959 filed by the Regional Commissioner is allowed and the writ petition filed by the Co. is dismissed with costs throughout. In the result, the respondent will have to comply with the requisition issued by the appellant against it under the relevant provisions of the Act.In regard to the date from which the respondent should make its statutory contribution to the Provident Fund, the appellant may have to give a direction after consulting the workmen, because from the date so specified by the appellant both the respondent and its workmen will have to make their respective contributions.22. The position with regard to the Mills is, however, different. The main industrial activity of the Mills is the manufacture of hydrogenated vegetable oil named Vanasada and its by-products, such as soap, oil-cakes etc. It is true that in the Mills tin containers are fabricated and this, no doubt, is an activity covered by Schedule I. But it is obvious that this branch of the activity of the Mills forms a very minor portion of its activity. The number of employees engaged in this branch is 31, whereas the total number of employees is 211. Besides the containers are produced only for the use of the Mills. They are not intended to be sold in the market at all. Price for the containers is not also charged from the customers. Indeed, containers are required even for the purpose of storage of the vegetable oil. It is thus clear that the fabrication of tin containers has been undertaken by the Mills only as a feeder activity; it is integrally connected with its main business of producing and marketing vegetable oil and as such, it is a minor part of the said activity.