KRISHNA FOODS PRIVATE LIMITED BANGALORE Vs. REGIONAL PROVIDENT FUND COMMISSIONER IN KARNATAKA BANGALORE

JUDGEMENT

(1.) KRISHNA Foods Private Limited is a factory in which Cookies/biscuits are manufactured. It had started manufacturing activity in the year 1985. After availing infancy protection for the requisite period under section 16 (1) (b) of the Employees' Provident Funds and Miscellaneous provisions Act, 1952 ('act' for short), petitioner was liable to be covered under the Act depending upon whether, as from a particular date, the number of employees working therein were 20 or more. By an order dated 28-6-1989 at Annexure-E, and after an enquiry under Section 7-A of the Act, respondent Regional Provident Fund Commissioner held that the petitioner is covered under the Act with effect from 31-3-1988, and that the petitioner is required to implement various provisions of the scheme under the Act. In this petition under Article 226 of the Constitution, petitioner seeks quashing of the said order at Annexure-E.

(2.) PETITIONER's contention is this. It had only 16 employees. So far the number of its own employees never came to 20 or above. In passing the order at Annexure-E, respondent has taken into consideration, not only the said 16 employees of the petitioner but also the other employees of M/s. Vijay Enterprises (Vijay' for short ). Clubbing of the employees of the petitioner and that of Vijay, and thereby concluding that, taking the total number of employees as exceeding 20, petitioner is covered under the Act, as done at Annexure-E, is bad for the reason that firstly that the petitioner has ceased to engage itself in manufacturing activity, and secondly that the entire manufacturing activity in the factory concerned has been taken over by Vijay, firstly under the Agreement dated 4-2-1988, and thereafter under the Agreement dated 16-3-1988, that the petitioner is neither concerned with nor has control over the employees of Vijay for carrying on the said manufacturing activity, and, as such, respondent was in error in taking into consideration the said employees of Vijay along with 16 employees of the petitioner to determine that the number has exceeded 20.

(3.) AS said earlier, petitioner had been engaged in the manufacture of cookies/biscuits in the factory concerned. Earlier, Voltas Limited used to place orders with the petitioner in respect of manufacture of the said cookies. Not being happy with the uncertainties in respect of the orders being placed by Voltas from time to time, petitioner entered into an agreement with Vijay on 4-2-1986. The overall effect of various terms and conditions of the said agreement is this. Petitioner has found, after running the factory for six months with the orders of Voltas Limited, that it is not in a position to provide continuous employment to all the workmen, and that it is more practical and economical to give the manufacturing activity on contract basis and therefore, it was entering into an agreement with Vijay, the said Vijay specifically being described in the agreement as contractor. The factory is to be handed over to the contractor with effect from 1-4-1986. Petitioner gives on contract the manufacturing activity i. e. , manufacturing of cookies in its factory situated at no. 17, Platform Road, Bangalore to the contractor. Petitioner will pay to the contractor the actual expenditure plus five per cent. The contractor will be at liberty to employ as many persons as he wishes and persons of his choice. Petitioner will have no say in that regard. However, apart from keeping in view the security aspect of the matter, the contractor should carry out production as per the instructions of the company both in respect of quality and quantity, and the petitioner's technical personnel at the factory will keep a check on the quality. The above said agreement could be understood thus. Petitioner continues to manufacture cookies, but it is unable to provide continuous employment to all its workmen. Therefore, that part of the process in the manufacture of cookies, namely employing of the workmen, is given to the contractor. The contractor shall manufacture cookies of the quality and quantity as specified by the petitioner, for which the contractor would be paid the actual expenditure plus 5 per cent. The product is ultimately of the petitioner. All that the contractor would get is the actual expenditure plus 5 per cent.