SHANMUGHAM CHETTIAR Vs. REGIONAL PROVIDENT FUND COMMISSIONER

JUDGEMENT

(1.) A limited liability company by name the Cochin Mahalakshmi Cotton Mills, Ltd. was started in 1947 for the manufacture of textiles; and the provisions of the Employees Provident Funds Act and the Scheme framed thereunder were made applicable to the establishment. In 1957 the company was directed to be wound up by the High Court, Even after the winding up order the Mills continued to work; and the High Court directed the Official Liquidator to advertise for the sale of the Mills as a going concern. Consequently, the Mills were sold in public auction and were purchased by the petitioner on 15th October 1960. The sale was confirmed on 18th October; and the sale deed, Ex. P1, was executed by the Official Liquidator on 17th November 1960 in favour of the petitioner. The establishment stopped work on the next day (18th November 1960); and it restarted on 14th December 1960 as a partnership styled the Cochin Lakshmi Mills with the petitioner as one of the partners. The first respondent, the Regional Provident Fund Commissioner, claims that the partnership is only the same old establishment and therefore, the petitioner is liable for contributions to the Provident Fund. On the other hand, the petitioner claims that the Cochin Lakshmi Mills are a new establishment started only on 14th December 1960, and that the same is therefore entitled to protection under S.16(1)(b) of the Act. The question for consideration is whether the Cochin Lakshmi Mills are a new establishment or the same old establishment as the Cochin Mahalakshmi Cotton Mills Ltd. in the hands of new owners.

(2.) Several decisions have been cited before us including the two unreported decisions of the Madras High Court in K.R. Sadanandam Power Loom Factory v. The Regional Provident Fund Commissioner, Madras (Writ Petition No. 840 of 1959) and V. V. Subramania Iyer v. The Regional Provident Fund Commissioner, Madras (Writ Petition No. 1333 of 1961). We do not think there is any difficulty regarding the principles to be followed in this case. The question is when the establishment was set up: whether in 1947 when the Cochin Mahalakshmi Cotton Mills were established and the same establishment continued even after the sale or whether on 14th December 1960 when the Cochin Lakshmi Mills started working after the purchase by the petitioner from the Official Liquidator. On this question, we do not think there in any divergence of opinion in the several decisions cited. The question is one which has to be decided on the facts and circumstances of each case. The change of ownership of an establishment is not the end of one establishment and the commencement of another. It may at the most be only one of the factors to be considered in coming to a decision as to whether one establishment was closed and a new establishment has been set up. All facts and circumstances have to be taken into consideration before a conclusion is arrived at.

(3.) But, reliance is placed by the learned counsel of the petitioner on one or two observations of Veeraswamy, J. in one of the unreported decisions of the Madras High Court, K. R. Sadanandam Power Loom Factory v. The Regional Provident Fund Commissioner, Madras, to the effect that the question as to when an establishment has been set up has to be decided in the context of the employer, because he is made liable for contribution in relation to the establishment. From this the counsel argues that in the case before us, since the original limited liability company was wound up and the present partnership concern was started only about a month later, the question whether the partnership is a new establishment has to be decided in the context of the employer. On the other hand, the learned Government Pleader argues that the question has to be considered bearing in mind that the Employees Provident Funds Act is a beneficial piece of legislation intended to benefit the workers; and that the question has therefore to be decided so as to confer benefits on the workers.