Case: R. Ramakrishna Rao Vs. State of Kerala

2. Ananda Bhavan Boarding and Lodging was started by him on December 6, 1949 and Hotel Brinda on January 15, 1959. He had a third establishment which went under the name of Anand Bhavan started on September 15, 1948 but it was sold by him in April, 1962 Complaints were filed against him by the Provident Fund inspector, Trichur on December 16, 1962, alleging that he had contravened paragraphs 36 (2) (a) and (b) and 38 of the Scheme. Under these provisions he was required to submit within 15 days of the close of the month a return of the employees qualified to become members of the Fund for the first time during the preceding month together with a declaration of such qualifying employees and to pay to each member his wages in respect of and period or part of the period for which contributions were payable after deducting the employees contribution from his wages which together with his own contribution as well as an administrative charge were to be paid to a Fund established under the Scheme. He was also required to forward to the Commissioner within 15 days of the close of the month a consolidated statement. The appellant contended that two employees were working in the Anand Bhavan Lodging and 11 members in the Hotel Brinda. He claimed exemption for five years under the Act. His further defence was at the three establishments formed different units and that 20 persons were not employed in any one of those places and that even if the three establishments could be deemed to be a single establishment the number of employees reached the figure 20 (which the Act puts down as the minimum) after Hotel Brinda was opened in January 1959 and he was entitled to an exemption under the Act for a further period of five years from January 15, 1959. Lastly, he pleaded that if there was a doubt on all these points the matter could only be decided after the doubt was cleared by an order of the Central Government under Section 19A of the Act. His pleas were not accepted by the High Court and the Magistrate and he has raised some of the contentions before us.

Court's reasoning:
A part of the Scheme became operative from October 31, 1953; other portions came into operation on subsequent dates. It was not contended before us that the relevant parts of the Scheme were not in force. The Act applies to the whole of India and subject to the provisions contained in Section 16 of the Act it applies (a) to a factory engaged in any industry specified in Schedule I in which 20 or more persons are employed and (b) to "any other establishment employing 20 or more persons or class of such establishments which the Government may by notification in the Official Gazette specify "in this behalf" These establishments come within the (b) and are governed by the appropriate notification issued by the Central Government. No contention has been raised before us that the Act and the Scheme were not applicable to the kind of establishments here.In support of this argument Mr B. R. L. Iyengar emphasises that the use of the participle employing in S. 1(3) (b) shows some continuity of employment of 20 persons and not the first point of time when that number is reached. He contends that it is always intended that a period of 3 or 5 years, as the case may be, must elapse before the provisions of the Act and the Scheme are made applicable. This is an ingenious way of putting the matter but is not admissible. The language of Section 16 (1) (b) is very precise. The last thirteen words of the clause from the date on which the establishment is or has been set up, show both cases where the establishment is new and where the establishment is old. The word is shows that a new establishment is meant and the words has been show that the establishment existed before the number is reached. If it was intended to apply the clause to new establishments the words is set up would have been sufficient. The construction sought to be placed would render the words has been otiose. Further the scheme of Paragraph 26 quoted earlier relates to a period of service and this qualifying period may be in the past as well as in the future. The intention behind Section 16 read with paragraph 26 quite clearly shows that the period is intended to give a breathing time to new establishments. That reason does not hold when the establishment is already old and well founded. The use of the participle is therefore immaterial. Whether a present perfect tense or a participle be used the meaning is the same. Clause (b) of S. 1 (3) which uses the participle and Clause (a) of the same section which employs the present perfect tense both merely describe the establishments and convey no different meanings. The conclusion of the High Court was thus right.