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 & 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.The facts of this case are clearly stated in the order under appeal and they are not in dispute. One Jagannathadas Govindas, Vallabhadas Baldevadas 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 Tiruvottiyur 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 lessees of the Maharani Talkies from 1 October, 1948, till the owners got possession of the theatre in pursuance of the decrees 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, 1953, to one Munirathnam Naidu on a monthly rent of Rs. 2450 for a period of five years.

(2.) THE said Munirathnam Naidu obtained another lease-deed on 18 December, 1958, for four years from 1 April, 1958, in exercise of the powers conferred by Cl. (b) of Sub-sec. (3) of S. 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 June, 1961 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 persons are employed. Munirathnam Naidu, a lessee of the Maharani Talkies, was making provident funds contributions to the Commissioner in pursuance of the demand made on him. THE 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 members 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, 1962, for a period of five years on a monthly rent of Rs. 3, 500. THE respondent-company is a partnership firm which came into existence on its registration on 22 March, 1962. THE fact that the managing partners of the partnership firm of Lakshmibai Jagannathadas & 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.

(3.) THE said house of business, which is the establishment in this case, continued to exist without break even after the respondent-company took a lease of the theatre. THE fact that the respondent-company is now employing only nineteen persons is not relevant unless it is found that the establishment now controlled by the respondent-company is found to be a new one which is sought to be brought within the purview of the Act for the first time. But it should be noted that the employees' provident fund contributions were collected for the establishment of Maharani Talkies even during the prior period when Munirathnam Naidu was the lessee. Section 1(5) of the Act states :"An establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed at any time falls below twenty." *In order to invoke the proviso to that section, it is necessary for the respondent-company to prove that the number of persons employed was less than fifteen for a continuous period of not less than one year. It is only in the case of an establishment which is sought to be brought for the first time within the purview of the Act that the minimum number of employees should be less than twenty to claim exemption.Thus the mere fact that the respondent-company appointed its own staff, which included a large numbers of the old staff, will not make the establishment conducted by the respondent, namely, the Maharani Talkies, a new one.THE view expressed above finds clear support from the following passage in the judgment of Srinivasan, J., in R. L. Shani & Co. v. Union of India and Another [1964 - II 169 at 171-172] :". . . It seems to me that looking at the matter broadly, where an establishment, such as a factory, has been set up and the owner of the factory does not run the business on his own but chooses to lease the factory from time to time, every fresh lease cannot give rise to the setting up of the factory afresh. THE case may undoubtedly be different if the factory itself was closed down for some reason or other and it is started afresh under certain circumstances. Equally, it seems to me that the establishment here is the organization which has brought into existence the cinema theatre along with the equipment and other amenities for the exhibition of films.