KARACHI BAKERY MOZAMZAHI MARKET HYDERABAD Vs. REGIONAL PROVIDENT FUND COMMISSIONER A P BARKATPURA HYDERABAD

JUDGEMENT

(1.) The appellant, Karachi Bakery, has filed this writ appeal against the judgment of the learned single Judge dismissing the writ petition and in accepting the correctness of the orders of the Regional Provident Commissioner (hereinafter called 'the P. F. Commissioner), by applying the provisions of the Employees' Provident Fund & Misc. Provisions Act, 1952 (hereinafter called 'the Act), for the period 1-4-77 to 31-3-79 and levying a contribution and administration charges of Rs 20,384-25.

(2.) The view of the PF Commissioner was that if the appellant was having 6 regular and 5 part-time employees (in all 11), and if the appellant had entered into contracts with Devandas Bakery and Ram Bakery for supplying certain Bakery products to the appcllant.the employees of the said two firms-who are 18 in number- should be treated as employees of the appellant-firm inasmuch as the said contracts are in connection with the business of the said firm and fell within S. 2(f) of the Act. At the relevant time, the Act was applicable to establishments having twenty or more employees.

(3.) The appellant is a Bakery in Hyderabad doing wholesale and retail business. There was an inspection by the inspector in respect of the appellant-firm on 19-10-77 and a notice was issued on 27-1-78 alloting a Code No. AP/5452. By that notice, the appellant was asked to comply with the provisions of the Act in respect of all eligible employees by remit- ting-under the various schemes-the contribution and administrative charges The appellant was also directed to submit monthly/yearly statements with effect from 1-4 77 The appellant sent a reply dated 2 2 78 contending that the provisions of the Act did not apply because the emplo- yees of Devandas Bakery and Ram Bakery cannot be treated as the employees of the appellant. The respondent issued a further notice dt 15-2-78 requesting the appellant to comply with the scheme and on the ground that the appellant committed default, a show-cause notice was issued (served on 5-8-78) and an inquiry was started oa 11-8-78. The inquiry went on till 75-79., During the inquiry, the appellant produced the agreements dt. 1-1-76 entered into by it with the above said two firms, its account income-tax particulars etc. No notices were however given by the authority to the Pevandas Bakery or Ram Bakery to' produce their books of account or other particulars. The impugned order was then passed on 21-7-79 holding that the above said two firms having entered into a' contract with the appellant, the emp'oyees of the said two firms who are 18 in number should be treated as the appellant's emptoyees, If that is done, the total number of employees-including the 6 full-time and 5 part time employees of the appellant would come to 29 and then the Act would become applicable. It was stated by the P F Commissioner in his order that in view of the definition of Employees in S 2 (f) of the Act. "It is a matter of operation of the' law, having nothing to do with otherwise independent character of the units''. He observed that after perusing (i) the two agreements dt 1-1-76 entered into between, the appellant on the one hand and each of the aforesaid two firms: (ii) the Trading Account, Profit and Loss Account and Statement of Affairs as on 31-3-78 and (III) the entire circumstances of the easer "it is very clear that the agreement executed is anything but a contract and if so the employees working under these contractors are 'Employees' and hence covered within the meaning of S 2 (f) of the Act, since the aforesaid employees are working in or in connection with the works of the establishment viz, Karachi Bakery and their wages are paid indirectly through the contractors." He held that Ram Bakery atd Devardas Bakery are only contractors covered by S. 2(f), that as per the agreements executed, they are to get labour charges for the services rendered which charges they did, in fact, receive. He held that it is not a matter of grouping or clubbing the employees, but "It is a matter of operation of law" and held that the conditions in S. 2(f) were satisfied, and that the appellant was therefore liable to contribute Rs. 20,384,23 towards Contribution and Administrative charges.