MANDOVI PELLETS LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is a petition under Art. 226 of the Constitution, inter alia, seeking a declaration that the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 are not applicable to the petitioners and for issue of an appropriate writ quashing the notices dated 26th Dec. 1985, 17th Feb. 1986 and 8th May, 1986 and the proceedings adopted in pursuance thereof by the Regional Provident Fund Commissioner, Maharashtra and Goa.

(2.) THE petitioner's case is that on 19th April, 1985 Chowgule Metal Industries Ltd., came to be incorporated under the Indian Companies Act. That by a resolution dated 13th Dec. 1975, the name of the Company was changed to Mandovi Pellets Ltd. (hereinafter referred to as 'the petitioner'). That in the year 1976, the petitioners put up an iron ore pelletization plant at Shiroda. That the same came to be duly registered under the Factories Act, 1948 on the 7th of Aug. 1979. The factory started its trial runs in May, 1979 and commenced commercial production by Sept. 1979. However, due to shortage of electricity supply and high costs, difficulties arose, and the production of the company for the first two years came to be restricted to 50% of its capacity. In the circumstances the petitioners approached the Central Government to grant them permission to 'Close' down the plant initially for a period of one year which sanction was duly accorded. Later on, this period was extended for a further period of two years and thereafter for a period of another three years. That in so far as the workmen were concerned, a settlement was reached on the 11th of Aug. 1981 under which 218 workmen agreed not to report for duty for a period of six months ending 15th February and the petitioners agreed to give them an ad -hoc monthly payment equal to 75% of their normal wages during the period of voluntary unemployment. This settlement was later extended by mutual consent up to 31st May 1982. In the found hope that the plant would recommence its operation from June, 1982, the petitioners and the Union of the workmen again commenced negotiations for the revision of payscales but on the strict understanding that whatever settlements be arrived at, the same would be implemented if and when the factory reopened for commercial purpose. Hence, not withstanding the decision to keep the plant closed for a period of 3 years i.e. from April, 1982 to March, 1985, the management signed a settlement with the workmen on 14th July, 1982 whereunder approximately 300 workmen including the 218 workmen referred to earlier accepted voluntary unemployment with an ad -hoc monthly payment equal to 65% of their revised wages. It was agreed by and between the petitioners and the said workmen that this 'voluntary unemployment' was to be blinding on the parties until such time as the plant resumed commercial production. However, things went from bad to worse and on 26th Feb. 1985 at a meeting of the Board of Directors, it was decided that the pelletization plant be closed down permanently. Thereafter, another settlement was arrived at between the petitioners and the workers on the 16th of March, 1985 whereunder it was agreed that the employment of the company would voluntary retire as and from 15th June, 1985 and that they would be paid certain benefits listed in the said settlement. It is the petitioners' case that whilst all this was going on, somewhere in 1980 -81, the Union representing the workmen agitated with the Provident Funds Authorities that the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for brevity's sake hereinafter refereed to as 'EPF and MPA 1982') be implemented and enforce. The Provident Fund Inspector thereupon visited the petitioners' plant on several occasions during 1982 and collected information on various points. According to the petitioners, the said Inspector was satisfied that the provision of the EPF and MPA 1952 could not apply and so was the Union. It is the petitioners' case that despite this position, they were surprise to receive a letter dated 2nd Feb. 1985 from the 2nd respondent requiring the petitioners to fill in the questioners and furnishes information. The petitioners by their letter dated 25th Feb. 1985 furnishes the requisite information but maintained that the provisions of the EPF and MPA, 1952 were not applicable to the pelletization plant and that the pelletization plant was not covered by Schedule I of the Act. The Regional Provident Fund Commissioner by his letter dated 26th Dec. 1985 maintained that the petitioners' factory was engaged in the manufacturing of 'iron and steel' and that the Act was applicable to the petitioners' factory as and from 30th of Sept. 1982 and called upon the petitioners to implemented the provisions of the EPF and MPA 1952 with effect from 1st October 1982, the Family Pension Fund Scheme 1971 with effect from 1st January, 1976 and Employees' Deposits Linked Insurance Scheme 1976 with effect from 1st Oct. 1982. The petitioners thereafter addressed a letter dated 22nd Jan. 1986 to the Regional Provident Fund Commissioner setting out what was according to them a brief history of the case and further pointed out that the chemical composition of iron are pellets on the one hand and iron on the other hand were wholly different and the pelletization plant could never fall under the entry 'iron and steel' specified in Schedule I to the said Act. In the said letter, the petitioners further contended that in any event as the plant had started in 1979 and had close down in 1981, i.e. the infancy period of 3 years provided in S. 16(b) of the Act, the question of the applicability of the provisions of the said Act to the petitioners' industry did not arise. The petitioner by their letter dated 5th Feb. 1986 also sought a personal hearing. It is the petitioners' case that instead of receiving a reply, they were saddled with a letter dated 17th Feb. 1986 whereby the petitioners were informed that the 2nd respondent after examined the record was satisfied that the provisions of the Art were wholly applicable to the petitioners' industry. Further correspondent then ensued between the petitioners on the one hand and the respondents on the other. In the course of this correspondence, the petitioners received a letter dated 29th March, 1986 asking the petitioners to see the 2nd respondent on 3rd April, 1986. The petitioners accordingly deputed their representative to attend before the 2nd respondent. At this hearing the petitioners' representing reiterated the stand taken by the petitioners. After the personal hearing was over, the petitioners made further submissions by their letter dated 7th April, 1986 to the same effect. The 2nd respondent by his letter dated 8th May, 1986 informed the petitioners that 2nd respondent had examined the entire position and was satisfied that the provisions of the Act were applicable and called upon petitioners to company with the requisitions contained in his earlier letter dated 17th Feb. 1986. The petitioners by their letter dated 19th May, 1986 addressed to the 2nd respondent indicated to him that since there was a different of opinion between the petitioners on the one hand and the 2nd respondent on the other as to the applicability of the Act, the 2nd respondent should refer the matter to the Central Government. The petitioners followed up this letter by deputing their representative who called upon the Assistant Provident Fund Commissioner and enquired as to what steps the office of the Provident Fund Commissioner was going to take on their letter. The Assistance Provident Fund Commissioner informed the petitioners' representative that the petitioners would receive a reply in due course. But nothing was heard on this point. On the other hand, the petitioners received a letter dated 2nd July, 1986 calling upon them to report compliance of the earlier letters. Being aggrieved by the demands made by the 2nd respondent, the petitioners have filed the present petition.

(3.) THE questions that arise for determination of this petition are (a) whether the petitioners who are manufacturing iron are pellets fall within the ambit of the entry 'iron and steel' (read with its explanation) specified in Schedule I of the Act, (b) whether the provisions of the said Act are applicable to the petitioners' industry since the petitioners' industry had closed down its manufacturing activity within three years of commencement of the production i.e. during the period of infancy specified in S. 16 of the said Act, (c) whether S. 19 -A affords the petitions an alternatives and efficacious remedy which the petitioners are bound to follow, and (d) whether the petitioners would be entitled to any relief.