BINNY LIMITED BANGALORE Vs. REGIONAL PROVIDENT FUND COMMISSIONER

JUDGEMENT

(1.) THE only question that requires to be considered in this, appeal is whether an exempted establishment under Section 17 of then employees' provident funds and miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the act') is bound to pay interest at the statutory rate at par with the scheme framed as per the Provisions of the act.

(2.) THE brief facts are: the appellant is a limited company having two textile mills, one in Madras and the other in Bangalore. The Bangalore mill is a separate company known as Bangalore woollen, cotton and silk mills company limited. This company and certain other companies were amalgamated in the year 1969 and after such amalgamation the new company is known as binny limited. Prior to its amalgamation the Bangalore mill had its own provident fund which was managed by separate trustees and was exempted under Section 17 from the Provisions of the act. The exemption was granted by the government of India on 31st july, 1953 with effect from 1st november, 1952. It has been asserted by the appellant that from the inception of the fund, the trustees of the funds have been investing money received by the fund in accordance with the pattern laid down by the government of india. 40% of the amount has been invested in government securities yielding low rate of interest. The investments have been made as per the directions of the government. the return of the investments at the relevant point of time was approximately 70 lakhs per annum which was distributed over the total contribution of 769 lakhs which works out to approximately 8. 79% per annum as interest. Statutory rate of interest has been fixed at 10. 15% for the year 1985-86. It is stated that the appellant cannot pay the rate of interest at par with the statutory rate of interest at a higher rate from what it receives on its investments and further that it is not in a position to pay 10. 15% of interest declared by the government of india. respondents in their written objections have stated that the employer is bound to comply with the statutory requirement and conditions subject to which the exemption from some of the Provisions of act and the scheme is granted. Exemption under Section 17 of the act is granted from the operation of all or any of the Provisions of the scheme provided the benefit to the employees to be provided by the exempted establishment is not in any way inferior or lesser to the benefits conferred on the employer under the act and the scheme. learned single judge has dismissed the writ petition holding that the appellant having obtained exemption under Section 17 of the act cannot pay less amount of interest than the statutory interest determined by the central government in consultation with the central board.

(3.) PROVIDENT funds act came into force on 4th march, 1952. The problem of the act state that it is an act to provide for the institution of provident funds, family pension fund and deposit-linked insurance fund for employees in factories and other establishments. The act by Section 1 (3) makes it applicable to every establishment which is a factory engaged in any industry specified in schedule i and in which 20 or more persons are employed and referred to in clause (b) employing 20 or more persons which the central government may, by notification in the official gazette, specify in this behalf. The scheme under Section 5 along with other schemes were issued in the year 1952. Elaborate procedure has been laid down in the act for implementing the Provisions of the act. Section 5 provides that the central government may by notification in the official gazette frame a scheme called employees' provident funds scheme for the establishment of provident fund under this act for employees or any class of employees and specify the establishment or class of establishments to which the said scheme shall apply. soon after the framing of the scheme the fund has to be established in accordance with the Provisions of the act and the scheme. Section 17 speaks of exemption from the operation of the act to the companies applying for it. Section 17 provides that the appropriate government may by issuing a notification in the official gazette and subject to such conditions as may be specified exempt the establishments or factories from the operation of all or any of the Provisions of the scheme. The exempted establishments or companies are not required to deposit the amount of provident fund collected by them with the provident fund commissioner. The said money can be invested by them subject to certain terms and conditions which may be imposed by the government. exemption under Section 17 of the act is granted from the operation of all or any of the Provisions of any scheme provided that the benefit to the employees to be provided by the exempted establishment is not in any way inferior to or lesser than the benefit conferred on the employees under the act and the scheme. Clause 60 of the scheme provides: