SAYAJI MILLS LIMITED Vs. REGIONAL PROVIDENT FUND COMMISSIONER

JUDGEMENT

(1.) This appeal by Special Leave involves the question whether the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (Act XIX of 1952) (hereinafter referred to as 'the Act') were applicable on the date of the suit out of which this appeal arises to the factory which was purchased by the appellant in the year 1955 in certain liquidation proceedings.

(2.) Prior to December, 1954 a company called 'Hirji Mills Ltd.' was carrying on the business of manufacture and sale of textile goods in its factory situated at Fergusson Road, Lower Parel, Bombay. That company was ordered to be wound up by the High Court of Bombay and its assets were ordered to be sold by the Official Liquidator. At the sale held by ,the Official Liquidator, the appellant which was a Public Limited, Company, purchased the above said factory. It is stated that the workmen had been discharged earlier and the goodwill of the company in liquidation had not been acquired by the appellant. There was discontinuance of the work of the factory for some time The appellant restarted the factory on November 12, 1955. The appellant claims that it invested some fresh capital in the business, renovated the machinery and also employed workmen on fresh contracts though about 70 per cent of the workmen. were formerly working in that factory. It is also contended that the appellant commenced to produce certain new types of goods at the factory after obtaining a new licence to run it. When by the end of February, 1956 the Regional Provident Fund Commissioner made certain enquiries about the working of the factory in order to enforce the Act against it, the appellant wrote to him stating that the factory was an infant factory as it had established it on November 12, 1955 and the period of three years had not elapsed from that date The appellant claimed exemption from the operation of the Act relying upon S. 16 (1) (b) thereof. When the Regional Provident Fund. Commissioner was not convinced about its explanation the appellant filed a writ petition under Art. 226 of the Constitution before the High Court of Bombay in Miscellaneous Application No. 76 of 1957 challenging the applicability of the Act to the factory. That petition was, however, withdrawn. Later on the appellant filed a act before the City Civil Court at Bombay in Short Cause Suit No. 2088 of 1958 for a declaration that the Act and the scheme framed thereunder could not be enforced against the factory until the expiry of three years from November 12, 1955 and that the appellant was not liable to make any contributions under the Act. The appellant also prayed for an injunction against the Regional Provident Fund Commissioner restraining him from enforcing the Act against the factory. The suit was resisted by the Regional Provident Fund Commissioner. He contended that the Act was applicable to the factory when it was in the hands of Hirji Mills Ltd (the company under liquidation) and hence it did not cease to apply merely because there was discontinuance in the working of the factory for a short period and there was change of ownership. It was also pleaded that the factory could not be treated as having been newly established on Nov. 12, 1955 and hence the exemption under S. 16 (1) (b) of the Act was not available The trial Court dismissed the suit with costs. The trial Court while negativing the contention of the appellant observed thus:

(3.) The trial Court held that in view of the several facts established in the case it could not be presumed that a new factory was established by the appellant on Nov, 12 1955. It on the other hand held that the continuity of the old factory had not been broken and as such the appellant was liable to make contributions under the Act. The judgment of the trial Court was affirmed by the Bombay High Court in Appeal No. 406 of 1964. This appeal by Special Leave is filed against the judgment of the High Court.