Case: Jessore Industries (India) Limited and Ors Vs. Regional Provident Fund Commissioner and Ors

in view of the provisions of Section 16(1)(d) of the Act it was entitled to the benefit of infancy as a newly set up establishment launched on 1.7.1993 when it started providing employment to the workers. The Provident Fund Organization did not accept the aforesaid contention and directed the Appellant to comply with the provisions of the Act with effect from July, 1993 as a going concern. The order passed by the Provident Fund Organization came to be confirmed; by the learned Single Judge. It further came to be confirmed by the Division Bench of the High Court by the impugned judgment and order. Hence, the original writ, Petitioner is before this Court claiming the exemption Under Section 16(1)(d) of the Act on the ground that it was a; new establishment and the same cannot be said to be a going concern; 3. The learned Counsel appearing on behalf of the Appellant has vehemently submitted that, in the facts and circumstances of the case, the High Court has materially erred in treating the Appellant establishment as a going concern and not considering the Appellant as a new establishment. It is submitted that therefore the High Court has, committed a grave error in holding that the Appellant shall not be entitled to exemption Under Section 16(1)(d) of the Act as a hew establishment. 3.1. The learned Counsel, appearing on behalf of the, Appellant has vehemently submitted that considering the fact that the company (in liquidation) came to be closed in the year 1986 and thereafter the Appellant purchased the scrapped machinery and thereafter installed altogether a new machinery and came out with a altogether new production, the Appellant establishment can be said to a new establishment and, therefore, entitled to the exemption Under Section 16(1)(d) of the Act. It is submitted that, in the aforesaid facts and circumstances of the case, it cannot be said that the Appellant can be said to be a running establishment/factory. 3.2. It is further submitted by the learned Counsel appearing on behalf of the Appellant that therefore, in the facts and circumstances of the case, the High Court has materially erred in relying upon the decision of this Court in the case of Sayaji Mills Ltd. v. Regional Provident Fund Commissioner 1984 (supp) SCC 610 . 3.3. It is further submitted by the learned Counsel appearing on behalf of the Appellant that even as per the agreement entered into between the purchaser and the employees union dated 14.06.1992, the purchaser was required to absorb maximum 150 willing and physically fit persons and that too as fresh employees. It is. submitted that, therefore also, the Appellant establishment cannot be said to be a running establishment. It is submitted that, therefore, the High Court has materially erred in rejecting the claim of the Appellant establishment claiming the exemption Under Section 16(1)(d) of the Act as a new establishment. 4. The learned Counsel appearing on behalf of the Respondents has opposed the present appeal and has supported the impugned judgment and order passed by the Division Bench of the High Court. It is vehemently submitted that there are concurrent findings of fact recorded by the Assessing Authority, the learned Single Judge and the Division Bench of the High Court that the Appellant cannot said to be. a new establishment and it can be said to be a running establishment. 5. Heard learned Counsel appearing on behalf of the respective parties at length. The short question posed for consideration of this Court is whether, in the facts and circumstances of the case, the Appellant is entitled to the exemption claimed Under Section 16(1)(d) of the Act as a new establishment? 6. At the outset, it is required to be noted that, as such, there are concurrent findings of fact recorded by the Assessing Authority, the learned Single Judge and the Division Bench of the High Court holding that the Appellant establishment is a running establishment and cannot be said to be a new establishment. 7. Even otherwise, even on merits and considering the decision of this Court in the case of Sayaji Mills (supra), it cannot be said that the High Court has committed any error in holding that the Appellant establishment is a running establishment and in not, treating and/or considering the Appellant establishment as a new establishment. It is required to be noted that as per the sale notice issued by the Officer Liquidator what was sold in the Court sale was the assets of the company (in liquidation) and not the scrapped machinery. As per the condition imposed by the State Government while leasing out the land in favour of the purchaser, the purchaser/Appellant was required to maintain the position of the factory as it is. The purchaser was under an obligation to employ a maximum 150 employees. Nothing is on record that in fact the entire plant and machinery was scrapped and altogether new machineries were installed. On the contrary, it appears that after some renovation and by installing some additional machinery, the Appellant purchase went ahead with the production. As rightly observed and even as per the decision of this Court in the case of Sayaji Mills (supra), merely because the purchaser went ahead with a new product, by this itself, it cannot be said to be a new establishment. The decision of this Court in the case of Sayaji Mills (supra) would be squarely applicable to the facts of the case on hand: Applying the law laid down by this Court in the case of Sayaji Mills (supra) to the facts of the case on hand, it cannot be said that the High Court has committed any error in not accepting the case of the Appellant as a new establishment. The, High Court has rightly observed and held that the Appellant shall not be entitled to the benefit of exemption Under Section 16(1)(d) of the Act. We are in complete agreement with the view taken by the Division Bench of the High Court.

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

Explanation:
0[ds]6. At the outset, it is required to be noted that, as such, there are concurrent findings of fact recorded by the Assessing Authority, the learned Single Judge and the Division Bench of the High Court holding that the Appellant establishment is a running establishment and cannot be said to be a new establishment.7. Even otherwise, even on merits and considering the decision of this Court in the case of Sayaji Mills (supra), it cannot be said that the High Court has committed any error in holding that the Appellant establishment is a running establishment and in not, treating and/or considering the Appellant establishment as a new establishment. It is required to be noted that as per the sale notice issued by the Officer Liquidator what was sold in the Court sale was the assets of the company (in liquidation) and not the scrapped machinery. As per the condition imposed by the State Government while leasing out the land in favour of the purchaser, the purchaser/Appellant was required to maintain the position of the factory as it is. The purchaser was under an obligation to employ a maximum 150 employees. Nothing is on record that in fact the entire plant and machinery was scrapped and altogether new machineries were installed. On the contrary, it appears that after some renovation and by installing some additional machinery, the Appellant purchase went ahead with the production. As rightly observed and even as per the decision of this Court in the case of Sayaji Mills (supra), merely because the purchaser went ahead with a new product, by this itself, it cannot be said to be a new establishment. The decision of this Court in the case of Sayaji Mills (supra) would be squarely applicable to the facts of the case on hand: Applying the law laid down by this Court in the case of Sayaji Mills (supra) to the facts of the case on hand, it cannot be said that the High Court has committed any error in not accepting the case of the Appellant as a new establishment. The, High Court has rightly observed and held that the Appellant shall not be entitled to the benefit of exemption Under Section 16(1)(d) of the Act. We are in complete agreement with the view taken by the Division Bench of the High Court.