REGIONAL PROVIDENT FUND COMMISSIONER Vs. VITTALDAS JAGANNATHADAS

JUDGEMENT

(1.) THIS writ appeal Is against the order of Anantanarayanan, J. , as he then was, in Writ Petition No. 1018 of 1962, filed by Jagannathadas and Co. hereinafter referred to as the company, granting a writ of mandamus restraining the appellants herein from collecting the employees' provident fund contributions in pursuance of the letter dated 28 June 1962 of appellant 1, the Regional Provident Fund Commissioner, hereinafter referred to as the Commissioner.

(2.) THE facts of this case are clearly stated in the order under appeal and they are not in dispute. One Jagannathadas Govindas, Vallabhada Ealdevadas and Khusaldas Govindas. who constituted members of a Hindu joint family, owned the theatre known as Maharani Talkies, constituting the land and buildings situated on the Tlruvottiyur High Road, Madras, bearing door No. 149, the talkie equipment, machinery, other fittings and the furniture. One S. Raja Chetti and C. V. Narasimhalu Chetti were the original leasees of the Maharani Talkies from 1 October 1948, till the owners got possession of the theatre in pursuance of the decree of this Court in C. S. No. 472 of 1949 dated 16 December 1952. The theatre was vacant till 31 March 1953 and it was then leased from 1 April 1963, to one Munirathnam Naidu on a monthly rent of Rs. 2 450 for a period of five years. The said Munirathnam Naidu obtained another lease-deed on December 1958, for four years from 1 April 1958, in exercise of the powers conferred by Clause (b) of Sub-section (3) of Section 1 of the Employees' Provident Funds Act, 1952, 19 of 1952 (hereinafter referred to as the Act), the Central Government issued a notification dated 19 Juno 1981 in the Gazette of India, extending the Act to cinemas, preview theatres and certain other classes of establishments in each of which twenty or more persona are employed. Munirathnam Naidu, a lessee of the Maharani Talkies, was making provident fund contributions to the Commissioner in pursuance of the demand made on him. This lease in favour of Munirathnam Naidu expired with effect from 31 March 1962 and the respondent-company represented by the sons of Jagannathadas Govindas, one of the mombera of the Hindu joint family which owned the theatre, took a lease of the theatre, Maharani Talkies, with effect from 1 April 1962, though the actual lease-deed was executed some time later on 16 May 1982, for a period of five years on a monthly rent of Ra. 3,500. The respondent-company Is a partnership firm which came Into existence on its registration on 22 March 19 2, The fact that the managing partners of the partnership firm of Lakshmibai Jagannathadas and Co. , are the sons of one of the members of the joint family which owned the theatre, is not relevant for the purpose of this case. Before Munirathnam Naidu, the prior lessee handed over possession of the theatre after the expiry of the lease on 31 March 1962, he discharged all his employees after notice and payment of their dues, including bonus. The respondent-company claimed to have called for application and employed nineteen person to carry on the business of exhibiting: talkie Alms in Maharani Talkies from 1 April 1962. In his counter-affidavit, appellant 1 Commissioner has stated that the respondent-company took over the theatre from 1 April 1962, with nineteen employees who had formerly been working in the establishment and meet of whom were ex-members of the provident fund scheme. In the reply-affidavit of the respondent-company, it is stated that the company did not take over the theatre with the employees, but chose from persons who had applied to the company to serve in its staff. But it is admitted that out of 19 persons employed by the respondent-company, as many as 17 persons were employed by Munirathnam Naidu. The contention of the respondent-company is that their establishment is not the same establishment as that of the previous lessee of the Maharani Talkies, but that it is a totally different entity and so there is a new establishment entitled to exemption under Section 16 of the Employees' Provident Funds Act in favour of an establishment which has not completed five years and comprised less than twenty members.

(3.) ANANTANARAYANAN, J. , as he then was, has In his order referred to several decisions and pointed out the true guiding' principles in dealing with cases arising: under the Act. We shall briefly refer to those principles before considering the main point that arises for decision in this appeal. The Act applies to a factory or establishment as defined In the Act, and not to the owners, and a mere change of ownership cannot suffice to modify or affect the obligation to make contributions on behalf of the members of the establishment towards employees' provident fund once the period of infancy protection has expired. The infancy protection clause in Section 16 (1) (b) of the Act is from the date of the commencement of the establishment, The fact that a new company subsequently takes over or acquires the factory or establishment does not shift the date of commencement of the establishment. The criterion will be unaltered even if the factory ceases production of goods for a certain time, and resumes production later. In other words, as pointed out by the learned Judge, the Impact of the Act is upon the factory or establishment, and not on the owner. Even temporary closure of a factory or establishment or cessation of work for a period will not affect the date of the establishment or factory as the emphasis in the Act is on the factory or establishment. Thus it is abundantly clear from the decisions referred to by the learned Judge in his order that a transferee of a factory or establishment coming under the Act cannot claim, or obtain infancy protection merely on the ground that he acquired interest in the concerned factory or establishment only on the date of transfer in his favour.