M/S. ORISSA CEMENT LTD. versus UNION OF INDIA

Citation: [1962] SUPP. 3 S.C.R. 837 · Decided: 14-03-1962 · Supreme Court of India · Bench: T.L. VENKATARAMA AIYYAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

3 S.C.R. 
SUPREME COURT REPORTS 
M/S. ORISSA CEMEN'f LTD. 
v. 
UNION OF INDIA 
837 
(B. P. SINHA, C.J., K. SUBBA RAO, N. RAJAGOPALA 
AYYANGAR, J. R. MuDHOLKAR and T. L. 
. 
VENKA.TARAMA AIYAR, JJ.) 
Provident Fund-Contract labour-Contribution to provi-
dent fund-If and when principal employer liahle-Providenl 
Fund Act, 1952 (XIX of .1952), ss. 5, 6, 7-Employees' Provi-
dent Fund Scheme, paras. 30, 31, 32, 73A-Notification No. 
S.R.O. 331 dated January 15, 1958-Notification No. G.S.R. 
1461 dated December 2, J.?60. 
' 
The Central Government under s.5 of the Provident 
Funds Act, 1952, published a Scheme under the Act for the 
establishments of the Provident Fund. Paragraph 2(f)(iii) of 
the Scheme defined "Excluded Employees" meaning employees 
employed by or through a contractor. 
Section 6 of the Act 
and paras. 30 to 32 of the scheme provided for the employer 
making contribntion to the fund and the combined effect of 
s.6.and paras. 30 to 32 of the Scheme is that the contribution 
to the Provident Fund is to be 12-1/2% of the basic wages 
and dearness allowance, that is to be borne equally by the 
employer and the employee and that the employer is to pay 
the whole of it, half on his account, and the other half on 
account of the employee and he is to recoupe himself bv 
deducting it from the wages of the employee. 
Paragraph 26 
of the Scheme provided that every employee in a factory or 
establishment other than excluded employee shall be regarded 
to become a member of the fund if he has completed one 
years cOntinuous servict". 
The Government by Notification No. S.R.O. 351 dated 
January 15, 1958, amended Para. 2(f)(iii) of the Sd1eme, 
whereby all employees employed by coµtractor who were 
directly connected with any manllfacturing process carried 
out in a factory or establishment 
became entitled to the 
benefit by' the Act. 
Another Notification No. G. R. E. 1457 
dated December 2, 1960 repealed the said para. 2(f)(iii) added 
a new para. 73A. 
This amendment had the effect of abolish-
ing the distinction between the workmen employed by the 
contractors who "vere directly connected with the manufac-
turing process in the factory or establishment, and those who 
were not so connected, all of whom becaine entitled to !h~ 
1962 
MarchH. 
JYoz 
Orissa Ctmtnt Lid. 
•• 
Ut1ion of India 
838 SUPREME COURT REPORTS [1962] SUPP. 
benefit of the Schcrnc. 
'I'he authorities issued notice on the 
petitioner to comply with the changes introduced hy the 
amcn<ln1en ts . 
The (>(titioncr filed petition under Art.32 of the Constitu-
tion challenging the valirlity of the two notifications as un-
reasonable restrictions and not falling within Art. 19(6) and 
that they .slw~ld be struck down as infringing Art. 19( 1) (g) of 
the Constttutton. 
Held, that the './otification dated Januai:y l'i, 1958 and 
December 21, 1960 ore unconstitutional and void. 
Section 6( 1) of the Act is to make the employer liahlc 
only for a moiety of the provident fund and while the scheme 
of 1952 is \vell designed to carrv out this intentions in ito;; 
application to \\'Orkrnen directly e~ployc<l, by' reasons of the 
combined operation of paras. 30 and 32, it broaks down in its 
extension to contract labour by reason of the inapplicability 
of para. 32. 
It opc.r;ltr.s unfairly and harash.Jy on persons who 
employ contract labour and it further results in discrimination 
bct\\·ecn those \vho employ contract labour anti. those who 
employ direct labour. The scheme. therefore cannot be said 
to he reasonable and inust he stn1ck down as not fallin~ 
v.:ithin the protection afforded hy :\rt.· 19(6). 
OnIGIXAL Ju111snrcnoN : Petition No. 17 of 
l!l6l. 
Petition under Art. :l2 of the ConRtitution 
of Indin. for enforcement of Fund11.ment:1l Rights. 
A. V. Vistcanatha Saslri, K. C .. Jain nnd 13. P. 
Jfahe.~hwari, for tho petitioners. 
Bishan N11rain, Snkumar Ghosc and P. D. Menon, 
for the rospondcnt.. 
1962. 
March 14. 
The Judgment of the Court 
was delivered by 
VE:-;KATAllAMA AIL\H, J.-The first ·petitioner 
is a company cn.rrying on business. in the man~f~c­
ture of cement in the Stale of Ortssa and pet1t10-
ners ~os. 2 and 3 11.re t.wo of its Direotors. They 
have filed 
the prcsont petition under Art. :l2, 
challenging· the validity of two 11otiflc11ti~ns. date<l 
Janua.ry Hi, 1958, and D0cembor 2, 19o0, issue 4 
3 S.C.R. SUPREME COURT REPORTS 
839 
by the Central Government under s. 7(1) of the em· 
ployees' Provident Funds· Act. 1952 hereina

Excerpt shown. Read the full judgment & AI analysis in Lexace.