Case: The Regional Provident Fund Commissioner, Andhra Pradesh Vs. Sri. T.S. Hariharan

1. The appellant in this appeal by certificate granted by the Andhra Pradesh High Court on February 25, 1965 under Article 133 (1) (b) of the Constitution is the Regional Provident Fund Commissioner, Andhra Pradesh A large number of writ petitions by various parties were filed in the High Court praying for writs in the nature of mandamus directing the appellant to forbear from enforcing or taking other proceedings under the provisions of the Employees Provident Funds Act, 1952 (hereinafter called the Act) and the Provident Fund Scheme, 1952 With the exception of perhaps one writ petition, all the rest, including W. P. 907 of 1963 presented by T. S. Hariharan, Proprietor, New Cochin Cafe, Ongole, respondent in this Court were dismissed. Certificates under Article 133 (1) (b) of the Constitution were secured by the appellant in almost all the cases but the present is the only appeal which now survives, all the rest having been dismissed for non prosecution2. The writ petition of the respondent was dismissed which means that the final order made by the High Court was in favour of the appellant.

Court's reasoning:
7. Section 16 which has already been set out in extenso seems to us to throw considerable light on the point raised. It may be recalled that this section excludes from the applicability of the Act establishments belonging to the Government and to local authorities and infant establishments. It is therefore, obvious that this Act is intended to apply only where an establishment has attained sufficient financial stability and is prosperous enough to be able to afford regular contribution provided by the Act. Contribution by the employer is an essential part of the statutory scheme for effectuating the object of inducing the workmen to save some- thing regularly. The establishment, therefore, must posses stable financial capacity to bear the burder of regular contribution to the Fund under the Act. In this connection it may be recalled that by virtue of Section 1 (5) an establishment to which the Act is applied continues to be governed by the Act notwithstanding that the number of persons employed by it at any time falls below the required number. This liability to be governed by the Act ceases only if the terms of the Proviso to Section 1 (5) are complied with. The financial capacity of the establishment to bear the burden must, therefore, have some semblance of a reasonably long term stability. In other words, the employment of requisite number of persons must be dictated by the normal regular requirement of the establishment reflecting its financial capacity and stability. It, therefore, follows from this that the number of persons to be considered to have been employed by an establishment for the purpose of this Act has to be determined by taking into account the general requirements of the establishment for its regular work which should also have a commercial nexus with its general financial capacity and stability. This seems to us to be the correct approach under the statutory scheme8. To accede to the appellants argument would lead to some startling consequences. By way of illustration, if for the purpose of extinguishing accidental fire an establishment is compelled to employ a few persons for about a couple of hours, even then, however weak and unstable its general financial capacity, the establishment would be covered by the Act and would have to contribute towards the provident fund for the benefit of its regular employees, of course, excluding those whose services were utilised for a short while for extinguishing the fire. In this illustration we are assuming that the employees would have no objection to being governed by the Act. This in our opinion, could never have been the intention of the legislature. Similarly, we find it difficult to impute to the legislature an intention to exclude from the application of the Act an establishment which regularly employs for its general business the required number of persons for a major part of the year, say, for 360 days every year, merely because the employment of the required number does not extend to full one year. Both the extreme views, the one canvassed on behalf of the appellant and the other postulated in the observation of the High Court that the required number of persons must continuously work in the establishment for one year, do not conform to the scheme and object of the Act and are, therefore, unacceptable9. Considering the language of Section 1 (3) (b) in the light of the foregoing discussion it appears to us that employment of a few persons on account of some emergency or for a very short period necessitated by some abnormal contingency which is not a regular feature of the business of the establishment and which does not reflect its business prosperity or its financial capacity and stability from which it can reasonably be concluded that the establishment can in the normal way bear the burden of contribution towards the provident fund under the Act would not be covered by this definition. The word "employment" must, therefore, be construed as employment in the regular course of business of the establishment; such employment obviously would not include employment of a few persons for a short period on account of some passing necessity or some temporary emergency beyond the control of the company. This must necessarily require determination of the question in each case on its own peculiar facts. The approach pointed out by us must be kept in view when determining the question of employment in a given caseWe are, therefore, unable to accept this contention on the present record. The general approach of the High Court to the problem raised in this case seems to us to be broadly speaking, correct; so is its final conclusion. The only observation of the High Court which required consideration is that the subsection in question contemplates the required number of persons to work in the establishment continuously for one year. On this point we have clarified the legal positio3. The question requiring our to determination is a very short one. As there is no representation on behalf of the respondent in this Court and, therefore, we do not have the benefit of the respondents point of view we propose to confine ourselves strictly to the limited question of thescope of Clauses (a) and (b) ofsubsection (3) of Section 1and this judgment is not intended to be considered as expressing any opinion on other controversial, aspectsThe language used in the clause does not give any clear indication. We have, therefore, to construe this word in the light of the legislative scheme, the object and purpose of enacting this clause and the ultimate effect of adopting one or the other construction. The relevant sections of the statute have already been reproduced.