CANBANK FINANCIAL SERVICES LIMITED BANGALORE Vs. REGIONAL PROVIDENT FUND COMMISSIONERIN KARNATAKA BANGALORE

JUDGEMENT

(1.) of an order dated 16th September, 1993, passed by the respondent under Section 7-A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, hereinafter referred to as the 'Act'. By the said order, the petitioner was held to be a "Trading and Commercial Establishment" within the meaning of the said term as appearing in the notification issued by the Central Government under Section 1(3)(b) of the Act. The facts are few and may therefore be stated first.

(2.) The petitioner company is a subsidiary of Canara Bank and has been incorporated with the object of carrying on business in Equipment Leasing and Merchant Banking, besides other objects set-out in its Memorandum and Articles of Association. It claims to have employed nearly 120 persons in connection with its business for whose benefit it has framed a Provident Fund Scheme, which is said to have been duly approved by the Commissioner of Income Tax, Bangalore.

(3.) It appears that the respondent issued a notice dated 31st of May, 1993 Annexure D to the writ petition, calling upon the petitioner to appear before him in connection with an enquiry proposed to be held under Section 7-A of the Act. In response to the said notice, the petitioner appeared before the respondent and contended that it was not amenable to the provisions of the Act for the reason that the petitioner even though a 'Financial Establishment' was not engaged in the activity of borrowing, lending and advancing of money or dealing with any other monetary transaction with a view to earn 'Interest'. The petitioner, it was contended on its behalf, was engaged only in Equipment Leasing and Merchant Banking and the income earned by it from these two activities could not be said to be 'Interest' so as to bring it within the four corners of the term "Financial Establishment" as envisaged by the notification aforementioned. Borrowing, lending and advancing of money, it was urged, "with a view to earn interest" was a condition precedent for an establishment to fall within the said Entry. Since however, the petitioner was not engaged in any such activity, it did not fall in the said category and therefore could not be subjected to the rigours of the Act.