Case: Industrial Factors Limited Vs. V. Prasad, Regional Provident Fund Commissioner, Maharashtra and Goa &amp; Others

2. M/s. Saraiya Industrial and Containers Company Private Limited (hereinafter the original company) manufactures of composite containers started manufacturing activity in October, 1963 at the Wagle Industrial Estate, Thane, but closed down the same in July 1972. In November, 1972 pursuant to lease agreement, the petitioner Industrial Factors Limited (for short the petitioner company) took on lease from the original Company its imported plant machinery and equipments. It also took over from the original Company itsemployees as also its raw materials and stocks. Later, the petitioner company was converted into a subsidiary of Mr. Poysha Industrial Company Limited (for short Poysha) and it started manufacturing operations on the mezzanine floor of Poyshas premises (at Sewree, Bombay) taken on leave and licence.3. Upon enquiry under sectionof the Act, the Regional Provident Funde Commissioner held that there was unity of management and ownership of the two unitsIndustrial Factors Limited and Poysha Industrial Company Limited, that the original Company Mr. Saraiya Industrial and Containers Company Private Limited was already covered under the Act and its business along with machinery having been taken over by the petitioner company, this latter will also, therefore, remain covered under the Act and that change in management would not affect the date of its coverage. The establishment in question was consequently held to be rightly covered with affect from 31st December, 1972. Dues for the period 1st January, 1973 to 31st December, 1975 were then assessed provisionally at Rs. 70,326/under the Provident Fund Account No. I and Rs. 1620/under the Provident Fund Account No. II. The petitioners representation under sectionof the Act was dismissed by the Central Government. Hence this petition.

Court's reasoning:
The case is clearly distinguishable. The press there was sold away; the machinery here was given on lease. The machinery of the press there was altered; the machinery here remained the same. The workers there were not continued; the workers here were continued in employment compensation was paid to the workmen there at the time of the sale by the previous owner; there is in such evidence here. Besides this very authority was referred to by the Supreme Court in (Sayaji Mills Ltd. v. Regional Provident Fund Commissioner)2, (1985)1 Labour Law Journal 238  and distinguished. The Supreme Court has therein also referred to several other rulings in paragraph 7 of its judgment following the view of Tendolkar, J., (of this Court) in Chagganlal Textile Mills Pvt. Ltd. v. P.A. Bhaskar), to the effecta complete change in the whole body of employee cannot make a factory which is establishes, ceased to be established. In any event the Employees Provident Funds Act is a beneficial legislation for the benefit of the employees and every construction of its provisions which would defeat the object of the legislation and lead to an evasion must be rejected, unless the clear language of the Act leaves no portion to the Court but to accept such an interpretation.It is well remember that the Act is a benevolent piece of legislation. It provides for the institution of provident fund, family pension fund andinsurance fund for employees in factories and other establishments. The focus of the benevolent objects is the employee and his welfare. Subject to section 16, the Act applies to every establishment comprehensively covered by sections 1(3) and (4). And once the establishment is so covered, it shall, by virtue of section 1(5) continue to be so covered notwithstanding that the number of employees therein at any time falls below twenty. The coverage, therefore, iswith the life of the establishment. Section 16 is an exemption provision. It must, therefore, be strictly construed. An establishment once set up, the statutory infancy period commences to run. Subsequent changes of location, ownership, management or control makes no difference and does not result in extension of the date on which the establishment is or has been set up nor will it result in benefit once again of the infancy period already availed of by the establishment. Any other interpretation will leave the door wide open for ingenious evasion of the Act. Judicial interpretation of a welfare legislation must be geared to its fulfilment and not its frustration. Welfare legislation must be liberally construed so as to advance and not retard its benevolent purpose, so as to widen and not restrict its legitimate coverage. In all the circumstances therefore, the impugned orders are well justified and deserve to be upheld.8. On the amount, we have as annexure M to the petition the figures of Rs. 24,269.00 under account No. I and Rs. 4.143.50 under No. II account making a total of Rs. 28,412.50. This is a statement based upon extensive details given by the petitioners in their annexure and chart to this petition. There is no return filed. Even in this course of hearing the respondents learned Counsel Mr. Desai did not challenge these figures. In the circumstances, we see no good reason for nevertheless sending back the matter only for the purpose of determining the undisputed amounts. We are inclined to accept the uncontroverted figures supra and which have remained unchallenged all these eight years and more before this Court. In the circumstances, we direct the petitioners to deposit with the Regional Provident Fund Commissioner Rs. 28,412.50 latest by 31st October, 1988. In default, the said amount shall then be deposited with interest thereon from today till actual payment at the rate of 18% per annum in addition to such penalty or penalties as the petitioners may become liable to pay such default.