PAMADI SUBBARAMA CHETTY Vs. MIRZA ZEWAR ALI

JUDGEMENT

(1.) This revision petition is directed against the judgment dated 17-2-1959 of the City Magistrate, Bangalore in Criminal Case No. 5462 of 1958, convicting the petitioner for an offence under paragraph 76 of the Employees' Provident Fund Scheme read with S. 14(2) of the employees' Provident Funds Act and sentencing him to pay a fine of Rs. 50/- and in default to suffer simple imprisonment for fifteen days.

(2.) The facts of the case briefly stated are as follows: The petitioner was one of the two partners of a partnership firm run under the name and style of Sri Rama Weaving Shed which was engaged in manufacturing silk good. This firm was in existence at the time the Employees' Provident Funds Act, 1952 (Act XIX of 1952) came into force on 1-11-1952. The factory had employed more than fifty persons and therefore the Act automatically applied to the same. The rules framed under the Employees' Provident Funds Act case a duty on every employer of a factory to which the Act was made applicable to submit returns in the prescribed forms; permit the inspection of the registers kept in the factory and to contribute his share of the provident fund of the employees to the account of the Provident Fund Commissioner. Accordingly the manager of the firm of the petitioner remitted the amount of the employer's share of the provident fund regularly till 10-2-1956. The partnership firm was dissolved on 10-2-1956. It is stated that it was so dissolved since the firm was working under loss. The dissolution of the firm is evidenced by a registered agreement entered into between the parties. The assets and the liabilities of the firm were divided between the two partners of the firm, namely, the petitioner and Sri Anan hasubramanya Iyer. Thus the firm ceased to exist from 10-2-1956. This fact was duly intimated by the two partners to all those concerned including the Provident Fund Commissioner immediately after the dissolution. On receipt of this information the Provident Fund Commissioner disbursed the provident fund to all the employees of the firm. Some pieces of machinery including few looms which were being used for manufacturing silk goods and which had fallen to the share of the present petitioner were lying idle in a portion of the premises of the old factory. In January 1957 be petitioner re-started his business of manufacturing silk goods in a portion of the premises making use of these looms. He employed less than twenty labourers in his new factory. It is stated that none of the employees that were working in the old firm are among these twenty employees. On 20-8-1958 the Regional Provident Fund Commissioner in Mysore, Bangalore called upon the petitioner by means of a notice to show cause as to why legal action should not be taken against him under S. 14 of the Employees' Provident Funds Act, 1952 and paragraph 76 of the Scheme framed thereunder for having failed to submit returns in Forms Nos. 2, 3, 5, 6, 9, 10 and 12 as required by the Employees' Provident Funds Scheme, 1952 with effect from 1-1-1957, in spite of repealed reminders and personal contacts made by the Provident Fund Inspector and for having failed to remit the provident fund contributions and administration charges for the period from January 1957 to the date of the notice. The petitioner sent a reply to the said notice. He stated therein that his factory was an infant industry as defined in the employees' Provident Funds Act; that it had no manner of connection with the old factory which was a partnership firm and which Rama Weaving Shed; and that all the workmen of the old factory who were originally covered by the Employees' Provident Funds Scheme had all been discharged with effect from 10-2-1956 after disbursing the provident fund due to them. The petitioner further stated that he started the new business in a portion of the premises and making use of the machinery that had fallen to his share from 1-1-1957 and had employed less than twenty labourers in the same and he was, therefore, not liable to submit any returns nor to pay any contributions and administration charges. The respondent refused to accept the contention of the petitioner that the new factory was an "infant industry" and that the petitioner was entitled for exemption from the operation of the employees Provident Funds Act, 1952. He, therefore, approached the Provident Fund Commissioner in Mysore to obtain sanction of the Government for proceeding against the petitioner under S. 14 of the Employees' Provident Funds Act, 1952 and Paragraph 76 of the Employee' Provident Funds Scheme, 1952. The Regional Provident Fund Commissioner accordingly, wrote to the Government and obtained the sanction to prosecute the petitioner. A charge-sheet was accordingly placed by the respondent against the petitioner before the City Magistrate, Bangalore for an offence under Paragraph 76 of the Employees' Provident Funds Scheme, 1952 read with S. 14 of the Employees' Provident Funds Act, 1952. The petitioner who appeared before the Magistrate in response to the notice pleaded not guilty to the charge which was read over and explained to him. He reiterated his stand that he was not liable to contribute towards the provident fund as his factory was an infant industry and had not employed more than twenty workmen. The respondent examined himself to substantiate his case that the petitioner was running a factory under the name and style of Sri Rama Weaving Shed; that the original firm had been covered by the Employees' Provident Funds Act, 1952 and that from 1-1-1957 the petitioner had failed to remit his quota of the provident fund contributions and the administration charges in spite of repeated reminders. The petitioner examined one witness on his behalf to substantiate his contention that the original firm which was a partnership firm ceased to exist on and from 10-2-1956 as the same was dissolved by an agreement entered into between the partners; that some looms and other machinery which were the assets of the old firm had fallen to his share; that he had kept these goods idle till about January 1957 and started a new Factory with only 18 employees and that the new Factory had nothing to do with the old one which was being run by a firm. The defence witness further asserted that the petitioner had no intention to defeat the rights of his employees at any time. The learned Magistrate accepted the statement of the petitioner that the dissolution of the partnership firm on 10-2-1956 was a genuine one and that it had not been effected by the petitioner with the ulterior object of defeating the claims of any of the employees and shirk his liability to contribute towards their provident fund. But he was of the opinion that since the Factory of which the petitioner was a partner was covered by the Employees' Provident Funds Act, 1952 and the new factory started by the petitioner continued to be covered by it. According to the learned Magistrate the liability which had fastened itself on the old Factory revived itself immediately after the petitioner started the new factory even though less than twenty workmen are employed in it and therefore, the claim of the petitioner for exemption from the liability on the ground that the new factory was an infant industry was untenable. He accordingly rejected the contention put forward on behalf of the petitioner that the firm of which the petitioner is now the proprietor was a new or an infant industry and that the liability that was attached to the old firm did not extend to the new firm and found the petitioner guilty of disobedience under Paragraph 76 of the Employees' Provident Funds Scheme, 1952 framed under the Employees' Provident Funds Act read with S. 14 of the Act and convicted and sentenced him to pay a fine of Rs. 50/- and in default of payment of fine to suffer simple imprisonment for fifteen days. The correctness simple imprisonment for fifteen days. The correctness and legality of this order of conviction are challenged in this revision petition.

(3.) Sri E. S. Venkataramiah, the learned Counsel for the petitioner, strenuously urged that in the state of evidence on record and in the absence of any suggestion by the prosecution that the absence of any suggestion by the prosecution that the dissolution of the partnership from on 10-2-1956 was a deliberate attempt on the part of the petitioner at resorting to a subterfuge in order to defeat the law and deny the benefit of the provident fund to the workers, the learned City Magistrate was not justified in reaching the conclusion that the factory started by the petitioner in January 1957 is a continuation of the factory which was being run by the dissolved firm.