AMAR NATH Vs. REGIONAL PROVIDENT FUND COMMISSIONER DELHI

JUDGEMENT

(1.) The principal question that this petition under Article 226 of the Constitution of India involves is as to the true construction and correct interpretation of sub-section (5) of Section I of the Employees' Provident Funds Act, 1952, hereinafter to be referred as the 'Act', and the proviso to it.

(2.) The facts and circumstances leading to the petition arc not in dispute and may be briefly stated. The establishment of the petitioners was at one time covered by the provisions of the Act and was treated as such, by virtue of the fact that during the said period 20 or more persons were employed in the establishment so as to attract the provisions of sub-section (3) of Section I of the Act. It is a common case of the parties that from June, 1964 to December, 1966, the establishment employed less than 15 persons. By their letter of July 26, 1965, Annexure 'A' to the petition, the petitioners informed the Regional Provident Fund Commissioner, an authority under the Act, that the establishment was employing less than 15 employees since the month of May, 1964 and that the Act would, therefore, not apply to the establishment. The petitioners requested the Commissioner to inform them of "the formalities to be done in this connection". There was no reply to this communication but it appears from the report of Shri M. K. Bhatnagar of September 10, 1965, Annexure 'B' to the petition, that on the said date, Mr. Bhatnagar, an official of the authority under the Act, visited the establishment and, on an examination of its records, was satisfied that the employment strength of the establishment remained "less than 15 from 8/64 to 7/65". The report adds that the establishment had deposited provident fund contribution upto the period ending July, 1965. The report further adds that the said officer had "asked the proprietor to continue implemention of EPF Scheme even though the employment strength is less than 15". By his letter of October-12/13, 1965, Annexure 'C' to the petition, the aforesaid Commissioner drew the attention of the petitioners to certain previous arrears and stated in the last para that further action on the petitioners' letter of July 26, 1965 "requesting exemption under Section 1(5) will be taken on receipt of the above compliance from you". By their letter of February 16, 1966, Annexure 'D' to the petition, the petitioners informed the Commissioner that they had deposited the amount required of them by the letter of October 12/13, 1965 and requested the Commissioner "to please take immediate action on our letter dated 26-7-65 request ing for exemption under section 1(5)". As no steps were taken by the Commissioner, the petitioners sent another letter on December 13, 1967, Annexure 'F' to the petition, reiterating the contents of their earlier letters of July 26, 1965, January 18, 1966 and February 16, 1966 and asserted that the establishment "does not come under this Act". It was further pointed out that one of the Inspectors had examined the records and, after having been satisfied, confirmed that the establishment was not covered under the Act. It was further pointed out that the Inspector had told the petitioners that the petitioners were free to stop compliance with Act and that the petitioners had, therefore, not filed formal return pursuant to it. It appears that quite some time no action was taken on the petitioners' request for "exemption" with the result that the petitioners sent another letter, Annexure 'L' to the Commissioner on April 27, 1970 inviting attention to the earlier comunications and reiterating their contention that the establishmen". did not fall within the provisions of the Act by virtue of the fact that fo ra period of more than one year, the establishment employed less than 15 persons. This was followed by a counsel's notice of September 5, 1970, Annexure 'M' to the petition. It appears that as a result of the counsel's notice, the authority took up the matter because according to Annexure 'H' to the petition, an office note was recorded on November 27, 1970 by which the author of the note expressed the view that a registered A. D. notice was served under Section 1(5) of the Act on December 13, 1967 and as such the management be allowed to opt out of the Act with effect from December, 1967 only. The orders of the Commissioner were sought if the establishment may be .allowed to opt out of the Act with effect from December, 1967 only, and the management be directed to pay the dues from January, 1967 to November, 1967. Apparently, the petitioners were given a hearing by the Commissioner and the plea for opting out of the Act was turned down and the liability of the petitioners with regard to the provident fund contribution and administrative charges was compuicd by an order made by the Commissioner on April 21, 1971, Annexure 'P' to the petition. In the course of the said order, the Commissioner held that the first notice of July 26, 1965 seeking to opt out of the Act under Section 1(5) of it had become infructuous because subsequent to the said notice, the petitioners continued to comply with the requirement of the Act upto December, 1966. It was further held that the second notice of December 13, 1967 seeking to opt out of the Act was not valid because it was not sent within one month of the date of cessation, the employer having ceased to give effect to the Act from January, 1967. It was, therefore, held that the establishment was not entitled to opt out of the Act as the requirements of Section 1(5) of the Act were not complied with. On merits, the Commissioner computed the liability of the petitioners on account of provident fund contribution at Rs. 7,650 for the period January 1967 to March 1971 on the basis of Rs. 150 per month and administrative charges for the said period at Rs. 229. It was further directed that 7 days' notice be given to the petitioners to pay the amount. As the petitioners failed to make payment,-they were required by the Commissioner's notice of August 9, 1971, Annexure 'S' to the petition, to show cause why prosecution should not be launched against them for contravention of para 38 (2) of the Provident Funds Scheme. 1952.

(3.) By this petition, the petitioners challenge the order of the Commissioner of April 21, 1971, Annexure 'P' declining io permit the petitioners to opt out of the Act and holding that the petitioners were liable to pay provident fund contribution and the administrative charges as also the notice, Annexure 'S", threatening the petitioners with prosecution. The petitioners also seek a direction for the refund of the amount already paid by them in respect of the period July. 1965 to December, 1966 during which the petitioners admittedly did employ in the establishment less than 15 persons.