LexM/S L.N. GADODIA & SONS & ANR. versus REGIONAL PROVIDENT FUND COMMISSIONER
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A B c [2011] 11 S.C.R. 508 MIS L.N. GADODIA & SONS & ANR. v. REGIONAL PROVIDENT FUND COMMISSIONER (Special Leave Petition (Civil) No. 11230 of 2008) SEPTEMBER 26, 2011 [J.M. PANCHAL AND H.L. GOKHALE, JJ.] EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT, 1952: s. 7-A of Provident Fund Act read with s. 2(9) of Delhi Shops and Establishments Act - Clubbing of two companies for the purposes of the Provident Fund Act - Two sister concerns with common directors of the same family, common D Managing Director, Commercial Manager and Technical Manager, same registered address and common telephone numbers and a common gram number, employees of the two concerns being swapped - Held: The Provident Fund Commissioner was justified in drawing the inference of E integrity of finance, management and workforce in the two concerns and taking a view that the said companies had to be clubbed together for the purposes of their coverage under the Act - The authority concerned will proceed for determination and recovery of the provident fund dues from the said companies - Delhi Shops and Establishments Act, F · 1954 -ss. 2(5) and 2(9). · DELHI SHOPS AND ESTABLISHMENTS ACT, 1954: s. 2(9) read with s. 2(5) - 'Establishment' and G 'commercial establishment' - Held: In the instant case, the two companies carrying on trade or business for private gain fall within the definition of 'commercial establishment' and consequently, under the definition of 'establishment' as defined in sub-ss. (5) and (9) of s. 2 respectively- Employees H 508 L.N. GADODIA & SONS v. REGIONAL PROVIDENT 509 FUND COMMISSIONER Provident Fund and Miscellaneous Provisions Act, 1952 - s. A 7-A. EVIDENCE ACT, 1872: s. 106 - Burden of proof - HELD: When any fact is especially within the knowledge of any person, the burden of 8 proving that fact lies on him - This rule expects such a party to produce fhe best evidence before the authority concerned, failing which the authority cannot be faulted (or drawing the necessary inference. INTERPRETATION OF STATUTES: Purposive construction - Provident Funds Act - HELD: c Is a welfare enactment and should be construed so as to advance the object with which it is passed and any construction which would facilitate evasion of the provisions D ' of the Act should as far as possible be avoided. The two petitioner-companies, being sister concerns, were issued letter dated 11.6.1990 calling upon them to comply with the provisions of the Employees Provident E Fund and Miscellaneous Provisions Act, 1952. They filed an application and disputed clubbing of the two concerns for the purposes of their coverage under the Act. The Regional Provident Fund Commissioner (Enforcement and Recovery) held that both the units belonged to one establishment and they would be clubbed together for the purposes of application of the Act. He, therefore, passed an order to proceed to determine the dues from the petitioners and directed that further proceedings in F the enquiry be taken up by the Presiding Officer G concerned. The petitioners' appeal was allowed by the Employees Provident Fund Appellate Tribunal. However, the Single Judge of the High Court set aside the order of the Appellate Tribunal and the Division Bench of the High Court dismissed the appeal of the petitioners. H 510 SUPREME COURT REPORTS [2011] 11 S.C.R. A Dismissing the special leave petition filed by the companies, the Court HELD: 1.1 The Provident Funds Act is a welfare enactment with provisions for the employees in the 8 factories and the establishments after their retirement, and for the benefit of their dependents in case of early death of the employees. In the case of Sayaji Mills Ltd.*, this Court has held that the Act should be construed so as to advance the object with which it is passed and any C. construction which would facilitate evasion of the provisions of the Act should as far as possible be avoided. [para 9-10] [518-C; 519-A-D-E] *Sayaji Mills Ltd. Vs. Regional Provident Fund Commissioner 1985 SCR 516 = AIR 1985 SC 323 - relied D on 1.2 On the question as to whether two units should be considered as one establishment or otherwise, there is no hard and fast rule. However, guidelines have been E laid down in the judgments of this Court rendered way back in the years 1959-60 and they are followed from time to time. [para 11] [519-G-H] The Associated Cement ·Companies Ltd
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