Case: State of Punjab Vs. Satpal &amp; Another

20 or more workmen. This ground was not accepted by the High Court. Hence these appeals.5. The Employees Provident Funds Act, 1952 was passed to provide for institution of provident funds for employees in factories and other establishments. It provided for the establishment of a fund in the hands of a Board of Trustees and establishments liable to make contributions of provident fund had to recover the contributions of the workmen, add to them their own contribution plus an administrative charge of 3% and hand over the amount periodically to the Central Provident Funds Commissioner appointed for this purpose. Para 76 of the scheme which was framed under the Act provided for punishment for failure to pay contributions and to furnish returns etc. It is stated in that para that if any person fails to pay any contribution which he is liable to pay under the scheme, deducts or attempts to deduct from the wages or other remuneration of a member the whole or any part of the employers contribution, or fails or refuses to submit any return etc., or obstructs any inspector or other official appointed under the Act or the scheme in the discharge of his duties or fails to produce any record for inspection by such Inspector or other official, or is guilty of contravention of or non-compliance with any other requirement of the 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. The Act, however, gives breathing time to new establishments by providing in Section 16 that the Act is not applicable to them for some specified periods. We are concerned in these appeals with the exemptions granted to infant establishments under S. 16 (1) (b) which reads as follows:"16. Act not to apply to establishments belonging to Government or local authority and also to infant establishments -(1) This Act shall not apply -(a) ** ** **(b) to any other establishment employing fifty or more persons or twenty or more, but less than fifty, persons until the expiry of three years in the case of the former and five years in the case of the latter, from the date on which the establishment is, or has been, set up.Explanation: for the removal of doubts, it is hereby declared that an establishment shall not be deemed to be newly set up merely by reason of a change in its location."6. The contention of the respondents is that the business which they were running in 1964-65 was an entirely different business and was not the same business which Tirath Ram had started. They referred in particular to the kind of articles that Tirath Ram was manufacturing and submit that the manufacturers had been changed when action was taken under the Employees Provident Funds Act. In other words, they draw attention to the difference between the manufacture of Tawas and Knives on the one hand and nails for bullock shoes on the other. We do not think that this makes any difference. In fact, the business had already changed in the hands of the partnership long before the establishment changed its premises. The business of the partnership was running an iron-smithy for the manufacture of iron articles and the factory continued even though the manufacturing process changed from one articles to another. We must, therefore, hold that the same factory continued in spite of the change from Tawas to iron nails in the manufacturing process.7. The next submission on behalf of the respondents is that the partnership changed and therefore a new business came into existence. Here again, we are not concerned with the law of partnership but with the Employees Provident Funds Act.The law takes into account only the existence of establishments and the employment of a certain number of persons in factories over a given period. It is for this purpose that change of location or change of composition of partners or even a change in the manufacturing process is not considered vital in the application of this law.This was laid down by this Court in very explicit terms in Civil Appeals Nos. 572 and 573 of 1964, D/- 6-10-1965 (SC) (Lakshmi Rattan Engineering Works v. Regional Provident Fund Commissioner Punjab).8. The most important question which arises for consideration in this case is whether the period of infancy is to be calculated from 9-11-1957 when the establishment was first begun or from 13-11-1962 when the employment of 20 or more workmen first commenced. This point is also covered in the case we have cited above. A further ruling on the subject exists in R. Ramakrishna Rao v. State of Kerala, (1968) 2 SCR 819 = (AIR 1968 SC 1367 ). In that case also employment of 20 or more persons began later than the commencement of the establishment.Explaining the sub-section, this Court states that the word is in the sub-section clearly indicates a newly started business, and the words has been a business which has been in existence before. It is, therefore, held that the period of infancy must be calculated from the first establishment of the factory and not from the moment of time when the figure of 20 or more is first reached.9. Applying these rulings, it is quite clear that in this case, the factory must be taken to have started in the year 1957 and that is the point of time when the establishment first came into existence. On 13th November, 1962, it had already a life of 5 years, and on that date when 20 workmen came to be employed, the scheme under the Employees Provident Funds Act began to apply. The learned Magistrate was therefore wrong in calculating the period of infancy from the first employment of 20 workmen. He had to calculate that period from the first day on which the establishment came into existence. The acquittal of the respondent Satpal in the three appeals was therefore erroneous and must be set aside.

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

Explanation:
1[ds]We do not think that this makes any difference. In fact, the business had already changed in the hands of the partnership long before the establishment changed its premises. The business of the partnership was running anfor the manufacture of iron articles and the factory continued even though the manufacturing process changed from one articles to another. We must, therefore, hold that the same factory continued in spite of the change from Tawas to iron nails in the manufacturingHere again, we are not concerned with the law of partnership but with the Employees Provident Funds Act.The law takes into account only the existence of establishments and the employment of a certain number of persons in factories over a given period. It is for this purpose that change of location or change of composition of partners or even a change in the manufacturing process is not considered vital in the application of this law.This was laid down by this Court in very explicit terms in Civil Appeals Nos. 572 and 573 of 1964, D/(SC) (Lakshmi Rattan Engineering Works v. Regional Provident Fund Commissioner Punjab).This point is also covered in the case we have cited above. A further ruling on the subject exists in R. Ramakrishna Rao v. State of Kerala, (1968) 2 SCR 819  = (AIR 1968 SC 1367 ). In that case also employment of 20 or more persons began later than the commencement of the establishment.Explaining thethis Court states that the word is in theclearly indicates a newly started business, and the words has been a business which has been in existence before. It is, therefore, held that the period of infancy must be calculated from the first establishment of the factory and not from the moment of time when the figure of 20 or more is first reached.9. Applying these rulings, it is quite clear that in this case, the factory must be taken to have started in the year 1957 and that is the point of time when the establishment first came into existence. On 13th November, 1962, it had already a life of 5 years, and on that date when 20 workmen came to be employed, the scheme under the Employees Provident Funds Act began to apply. The learned Magistrate was therefore wrong in calculating the period of infancy from the first employment of 20 workmen. He had to calculate that period from the first day on which the establishment came into existence. The acquittal of the respondent Satpal in the three appeals was therefore erroneous and must be set aside.