Case: The Associated Industries (P) Ltd Vs. The Regional Provident Fundcommissioner, Kerala Trivandrum

found to fall under S. 1 (3) (a).9. On the other hand, the case of the Oudh Sugar Mills stood on a different basis. The primary activity of the mills was the manufacture of hydrogenated vegetable oil named Vanasada and its by-products, such as soap, oil-cakes, etc. It appeared that a department of the Mills manufactured containers and this part of the industrial activity of the Mills fell under Sch. I. Evidence, however, showed that the fabrication of the containers had been undertaken by the Mills only as a feeder activity which was integrally connected with its primary business of producing and marketing vegetable oil, and since the primary business was outside Sch. I, the factory as a whole was held to be outside S. 1 (3) (a).10. It is true that since this Court dealt with the two respective cases of the Company and the Mills in one judgment, the test as to the principal character of the industrial activity of one industry in relation to the character of the minor industry came to be considered; but the application of the said test became necessary essentially because of the case of the Oudh Sugar Mills. In the case of the Company, however, the several activities were not minor or subsidiary, but were independent, and it was held that the factory of the company fell under S. 1 (3) (a).Therefore, in our opinion, there is no scope for the argument in the present case that the engineering industry which the appellant runs is not the primary or dominant industry but the manufacture of tiles is. Mr. Pai attempted to argue that though engineering industry run by the appellants factory falls under Sch. I, it employs only 24 workers, whereas the tiles industry employs more than 50. He also relied on the fact that the tiles factory was started in 1943 and the engineering works in 1950, and his argument was that judged in the light of the fact that the tiles industry was started first, as well as considered by the application of the test of the strength of the employees working in the two industries, tiles industry should be treated to be the main, dominant and primary industry of the factory, and so, the factory, as a whole, should be held to be outside S. 1 (3) (a). In our opinion, this argument is plainly untenable. If the tiles industry and the engineering industry are independent of each other, then no question arises as to which is principal and which is subsidiary. As soon as it is shown that the factory is carrying on two industries independent of each other one of which falls under Sch. I, it becomes a composite factory to which S. 1 (3) (a) applies. When S. 1 (3) (a) requires that the factory should be engaged in any industry specified in Sch. I. considerations as to whether the industrial activity is major or minor can arise only where some activities are dominant and others are of the nature of feeding activities, but not otherwise. Where the industrial activities are independent and the factory is running separate industries within the same premises and as part of the same establishment and under the same licence, it is difficult to accept the argument that in dealing with such a factory, enquiry would be relevant as to which of the industries is dominant and primary, and which is not. Therefore, in our opinion, the High Court was plainly right in rejecting the appellants case that its factory did not attract the provisions of S. 1 (3) (a) of the Act.11. Mr. Pai wanted to contend that if the appellants factory is treated as falling under S. 1 (3) (a). complications may arise by reason of the fact that the rate of contribution initially prescribed by S. 6 has been amended in 1962 by the Amending Act No. 48 of 1962. Section 6 of the unamended Act provides, inter alia, that the contribution to be paid by the employer to the fund shall be 6-1/4% of the basic wages, dearness allowance and retaining allowance, if any, for the time being payable to each of the employees, and the employees contribution shall be equal to the contribution payable by the employer in respect of him. This section further provided that the employee was competent to make a higher contribution not exceeding 8 and one-third per cent of his emoluments specified in the said section. By the amendment made in 1962, this rate has been enhanced to 8% in respect of 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. We were told that in regard to the engineering industry, this amended sub-section has been extended by a notification, and Mr. Pais apprehension is that if the factory of the appellant is held to be an establishment to which S. 1 (3) (a) applies on the ground that it is a composite factory which runs several industries one of which falls under Sch. I, it is likely that the increased rate may be made applicable to the factory as a whole. We ought to add that Mr. Pai conceded that subsequent to the decision of the appellants writ petition in the High Court, the tiles industry has also been included in Sch. I, but the revised rate has been made applicable to it. Mr. Pai contends that if the factory is treated as falling under S. 1 (3) (a), distinction should be made in the different industries run by the factory for the purpose of calculating the contribution of the employer to the Provident Fund. We do not propose to deal with this contention in the present appeal. That is a matter which may well have to be decided by the respondent, and it is not open to Mr. Pai to request this Court to decide such a hypothetical question in the present proceedings.

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

Explanation:
0[ds]6. Having dealt with this aspect of the matter, this Court proceeded to consider the question as to whether numerical requirement of the employment of 50 persons, as the section then stood, applied to the factory or to the industry, and it held that the said test applied not to the industry but to the factory. Thus, the conclusion was that in order that a factory should fall under S. 1 (3) (a), it must be shown that it is engaged in any such industry as is specified in Sch. I, and the number of its employees should not be less than 50.7. This decision makes it clear that S. 1 (3) (a) is not confined only to factories which are exclusively engaged in industrial work to which Sch. I applies, but it also takes in composite factories which run industries some of which fall under Sch. I and some do not. In order to make the position clear let us state the true legal position in respect of the scope of the application of S. 1 (3) (a) in categorical terms. If the factory carries on one industry which falls under Sch. I and satisfies the requirement as to the number of employees prescribed by the section, it clearly falls under S. 1 (3) (a). If the factory carries on more than one industry all of which fell under Sch. I and its numerical strength satisfies the test prescribed in that behalf, it is an establishment under S. 1 (3) (a). If a factory runs more industries than one, one of which is the primary and the dominant industry and the other are its feeders and can be regarded as subsidiary, minor, or incidental industries in that sense, then the character of the dominant and primary industry will determine the question as to whether the factory is an establishment under S. 1 (3) (a) or not. If the dominant and primary industry falls under Sch. I, the fact that the subsidiary industries do not fall under Sch. I will not help to exclude the application of S. 1 (3) (a). If the dominant and primary industry does not fall under Sch. I, but one or more subsidiary, incidental, minor and feeding industries fall under Sch I, then S. 1 (3) (a) apply. If the factory runs more industries than one all of which are independent of each other and constitute separate and distinct industries, S. 1 (3) (a) will apply to the factory even if one or more, but not all of the industries run by the factory fall under Sch. I. The question about the subsidiary, minor, or feeding industries can legitimately arise only where it is shown that the factory is really started for the purpose of running one primary industry and has undertaken other subsidiary industries only for the purpose of sub serving and feeding the purposes and objects of the primary industry; in such a case, these minor industries merely serve as departments of the primary industry; otherwise if the industries run by a factory are independent, or are not so integrated as to be treated as part of the same industry, the question about the principal and the dominant character of one industry as against the minor or subsidiary character of another industry does not fall to be considered.It is true that since this Court dealt with the two respective cases of the Company and the Mills in one judgment, the test as to the principal character of the industrial activity of one industry in relation to the character of the minor industry came to be considered; but the application of the said test became necessary essentially because of the case of the Oudh Sugar Mills. In the case of the Company, however, the several activities were not minor or subsidiary, but were independent, and it was held that the factory of the company fell under S. 1 (3) (a).Therefore, in our opinion, there is no scope for the argument in the present case that the engineering industry which the appellant runs is not the primary or dominant industry but the manufacture of tilesour opinion, this argument is plainly untenable. If the tiles industry and the engineering industry are independent of each other, then no question arises as to which is principal and which is subsidiary. As soon as it is shown that the factory is carrying on two industries independent of each other one of which falls under Sch. I, it becomes a composite factory to which S. 1 (3) (a) applies. When S. 1 (3) (a) requires that the factory should be engaged in any industry specified in Sch. I. considerations as to whether the industrial activity is major or minor can arise only where some activities are dominant and others are of the nature of feeding activities, but not otherwise. Where the industrial activities are independent and the factory is running separate industries within the same premises and as part of the same establishment and under the same licence, it is difficult to accept the argument that in dealing with such a factory, enquiry would be relevant as to which of the industries is dominant and primary, and which is not. Therefore, in our opinion, the High Court was plainly right in rejecting the appellants case that its factory did not attract the provisions of S. 1 (3) (a) of the6 of the unamended Act provides, inter alia, that the contribution to be paid by the employer to the fund shall be 6-1/4% of the basic wages, dearness allowance and retaining allowance, if any, for the time being payable to each of the employees, and the employees contribution shall be equal to the contribution payable by the employer in respect of him. This section further provided that the employee was competent to make a higher contribution not exceeding 8 and one-third per cent of his emoluments specified in the said section. By the amendment made in 1962, this rate has been enhanced to 8% in respect of 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. We were told that in regard to the engineering industry, this amended sub-section has been extended by a notification, and Mr. Pais apprehension is that if the factory of the appellant is held to be an establishment to which S. 1 (3) (a) applies on the ground that it is a composite factory which runs several industries one of which falls under Sch. I, it is likely that the increased rate may be made applicable to the factory as a whole. We ought to add that Mr. Pai conceded that subsequent to the decision of the appellants writ petition in the High Court, the tiles industry has also been included in Sch. I, but the revised rate has been made applicable to it.Pai contends that if the factory is treated as falling under S. 1 (3) (a), distinction should be made in the different industries run by the factory for the purpose of calculating the contribution of the employer to the Providentdo not propose to deal with this contention in the present appeal. That is a matter which may well have to be decided by the respondent, and it is not open to Mr. Pai to request this Court to decide such a hypothetical question in the present proceedings.