BHANDARI FORGINGS BANGALORE Vs. REGIONAL PROVIDENT FUND COMMISSIONER

JUDGEMENT

(1.) SECTION 16 (1) (d) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 ('act' for short) exempts a newly set up establishment from the provisions of the said Act for a particular period initially, which is called protection during the infancy period. The question that arises in this case is as to when can an establishment be said to have been set up for the purposes of the said Section 16 (1) (d ).

(2.) THE petitioner herein is M/s. Bhandari Forgings and it is submitted that it is essentially a manufacturing concern, manufacturing non-ferrous and ferrous castings i. e. , forgings. The petitioner sought the protection of the infancy period under Section 16 (1) (d) of the Act on the ground that it is set up in September 1982. Under Annexure-D, however, the respondent-Regional Provident Fund Commissioner held that it must be taken as having been set up not in September 1982, but, in march 1982. Petitioner seeks quashing of the said Annexure-D in this writ petition under Article 226 of the Constitution.

(3.) THE petitioner did sell certain raw materials in March 1982 to its sister concern. Therefore, respondent takes March 1982 as the material date for the purposes of commencing of infancy protection period under section 16 (1) (d ). The actual production i. e. , by way of production or manufacturing of forgings however commenced only in September 1982. The contention of Sri Harikrishna S. Holla, the learned Counsel for the respondent, is that even sale of raw materials is one of the activities covered by the relevant Schedule and as such, when the petitioner sold the raw materials in March 1982, for all purposes, it has commenced its activities from March 1982 and that, therefore, the infancy period must be taken as having commenced in March 1982 and the establishment must be taken as having been set up in March 1982 within the meaning of Section 16 (1) (d ). Sri Harikrishna S. Holla for the respondent therefore urges that the respondent was right in concluding under Annexure-D that the establishment must be taken as having been set up in March 1982. The learned Counsel for the petitioner Sri Somashekar however urges that the petitioner is established solely for the purposes of manufacturing forgings, that sale of raw materials is no part of its activity. Sri somashekar explains that the raw materials came to be sold in March 1982 by the petitioner to its sister concern solely for the reason that, for want of electricity supply, the petitioner could not undertake its main activity of manufacturing forgings and, as such, it was compelled to sell whatever raw materials it had to its sister concern, and that this sale alone cannot be held against the petitioner to conclude that the petitioner-establishment was set up in March 1982. Sri Somashekar refers to Annexure-A, a letter from the Karnataka State Small Industrial Development Corporation, to the effect that instalments towards hire purchase in respect of the shed concerned had not been paid till May 1983. Sri Somashekar refers to Annexure-B, dated 23-4-1982 from the Executive Engineer of the KEB to show that even as in April 1982, the petitioner-establishment had not been supplied with electricity. He than refers to Annexure-C, dated 24-4-1982 from the petitioner to the Executive Engineer, KEB requesting for 25 KVAR Capacitor. It is thus sought to be urged on behalf of the petitioner that even as late as in April 1982, there was no electricity supply to the petitioner and as such, because of the petitioner's inability to commence manufacturing process, it had to sell the raw materials to its sister concern.