LexPROVIDENT FUND INSPECTOR, TRIVNDRUM versus SECRETARY, N.S.S. CO-OPERATIVE SOCIETY, CHAN-GANACHERRY
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481
PROVIDENT FUND INSPECTOR, TRIVNDRUM
v.
SECRETARY, N. S.S. CO-OPERATIVE SOCIETY, CHAN·
GANA CHERRY
September 17, 1969
[V. BHARGAYA AND K. S. HEGDE, JJ.J
The Employees Provident Funds Act, 1952 (19 of 1952), s. 16(1)(b)
-Exemption. under-Whether available from
date of settl'ng up of the.
establishment or from date when
Act became applicable-Change of
ownership of establishment-When results in setting up of new establish-
1nent-Tests.
The re.;pondent cooperative
society purchased a Press from another
cooperative society on 21st March 1961. The establishment had been set
up by the vendor originally in 1946 and at the time of purchase by the
respondent only 9 workmen were employed therein.
As the number of
worlrers employed by the respondent went beyond 20 the Employees' Pro-
vident Fund Act, 1952 and the Employees' Provident Fund &heme !952
became applicable to the respondent's establishment with effect from April
1961.
Far not complying with the provisions of the aforesaid Act and
Scheme. the Provident Fund Inspector,
Trivandrum (appellant herein)
launched prosecutions against the respondent.
The specific charges relat-
ed to the failure of the respondent (i) to pay to the Employees' Provident
Fund the employees' and the employer's share of contributions together
with administrative charges !for the twelve quarters
comprised between
May 1961 and February 1964; (ii) to submit the returns in Forms 5 and
10 for the same twelve quatters; (iii) to send statements of recoveries of
contributions in Form 12 for the same quarters; and (iv) to send the initial
return in Form 9 showing the particulars as on 30-4-1961
along with
Form 2 in the manner specified in the Scheme.
On trial the Magistrate
recorded the finding that the establishment as run by the r"'pondent after
1961 could not be held to be an old establishment set up in the 1946, it
had emerged as a new establishment in 1961,
and
consequently for a
period of three years from April 1961, the provisions of the Act would
not apply .to this establishment because
df the
provisions contained in
s. 16(l)(b) of the Act. On this view the respondent was acquitted. The
High Court in appeal did not agree with the Magistrate- that a new estab-
lishment came into being in 1961, but nevertheless upheld the acquittal on
the ground that under s. 16(l)(b) of the Act an establishment is given
exemption for a period of 3 years from the date on which it came within
the purview of the Act. On appeal to this Court by special leave,
HELD: (i) In view of the decision of this Court in R. Ran1akrishna
Rao's case the finding of the High Court that the exemption under
s. 16(1)(b) elf the Act was available for the first three years from the
date when the Jct became applicable ti{) an establishment, was wrong [486
A-C]
.
R. Ramakrishna Rao v. State of Kera/a, [1968] 2 S.C.R. 819, applied.
(ii) However the acquittal of the respondent must be upheld.
The 'burden of proving that the old establishment had continued was
on the appellant.
The evidence showed : that, at the time of the pur-
chase a new owner came in place of the previous owner; the work of the
Press "" stopped on sale and was restarted after a break of about three_
482
SUPREME COURT REPORTS
[1970] 2 S.C.R.
months; the machinery in the Press was also altered; the person.s employ-
ed previously were not continued in service, while a fresh recruitment oi
employees took place amongst whom oniy six happened to be previous em-
ployees; and co-mpensation was paid to the workmen
at the time of the
sale by the previous owner.
On these facts, no other conclusion could be
drawn except that the old establishment was completely closed when the
transfer of ownership took place and an entirely new establishment
\\.'as
set up three months' later, so that in this case the benefit of the Act under
s. 16(1 )(b) .of the Act for a period of three years was availa'>le to the
respondent from June or July 1961 when the new ~tablishment was set
up. [488 E-Gl
Lakshmi Rattan Engineering Works v. Regional Provident Fund Con1-
niissicner, Punjab & Ors. [1966] 1 L.L.J. 741. Jamanadas Agarwalla &
Anr. v. The Regional Provident f'und Conunissioner, We.H Bengal & Ors.
A.LR. 1963 Cal. 513, Mis. Bharat Board Mills Ltd. v. The Regional Pro-
vident Fund Comn1issioner & Ors., A.LR. 1957 Cal 702 and Devi Press
v. Regional Provident Fund Commissioner, Madras & Anr. A.LR. 196Excerpt shown. Read the full judgment & AI analysis in Lexace.