LexSAYAJI MILLS LTD. versus REGIONAL PROVIDENT FUND COMMISSIONER
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' . ·B D E F G H • 5\6. SAYAJI MILLS LTD. .. REGIONAL PROVIDENT FUND COMMISSIONER 2111 Dtcember, 1984 (E.S. VENKATARAMIAH AND R,B. MISRA, JJ.) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (Act XIX of 1952) Section 16(1)(b), .icope of-The appellant a public limited company purchasing "Hlr}i Mil/J Ltd." in certain liquidations proceedingJ from the Official Liq!lidator and recommending the fac1ory after an year of it:r closure with the same machinery and with 70% of t'ltt previous workme1t after investment of some fresh capital in the buslnes:r and renovation of the machi~ ner1-Whether th• factory is a "ntw factory" within the meanint of S.16(1)(b) and the provisions of the Act' are not applicable on the date of the suit to the factory-Interpretation of btnevo!ent legislation. At the sale held by the Official Liquidator under the orders of the Bombay High Court, the appellant a public limited company, purchased tho "Hirji Textile Mills" minus its goodwill and its workmen who were discharged earlier. The appeallnt invested some fresh capital in the business, renovated the machinery and employed workmen on fresh contracts which included 70% of the workmen formerly working in that factory and commenced to produce certain new types of. things at the factory w.e.f. November 12, 1955, after obtaining a new licence to run it. When by the end of February. 1956 the Regional Provident Fund Commissioner made certain enquiries about the working of the factory in order to eri.force the provisions Provident Fund Act against the appellant, the appellant wrote to him stating that the factory was an infant factory having been established on November 12, 1955 and the period of three years had not not elapsed from that date within the meaning of Section 16(1) b) of the Act. When the Regional Provident Fund Commissio· ner was not convinced about its explanation, the appellant first filed a writ petition under Article 226 of the Constitution before High Cotirt of Bombay in MiscellaniOus Application No. 76 of 1957 challenging the applicability of ~he Act to the factory and after withdrawing it, filed Short Cause Suit No. 2088 of 1958 before the City Civil Court at Bombay for a declaration that the Act and the scheme framed thereunder could not be enforced against the factory until the expiry of three years from November 12, 1951 and that the appellant ·was not liable to make ·any contributions under the Act. The trial Court dismissed the suit holdin1 that in view of the several facts established iQ. the case it could not be presumed that a new factory was established by the • '· • 1 • ,.. r SAYAl MILLS V. PROVIDENT FliND COMMR. 517 appellant on November 12, 1955, that the continuity of the old factory had A not been broken and as such the appellant was liable to make contributions under the Act. The judgment of the trial Court was affirmed by the Bombay Hig,h Court in Appeal No. <06/64. Hence the appeal by special leave. Dismissing the appeal, the Court, HELD : I .I. Every statute should be construed so as to advance the B objc,ct with which it is passed and as· far as possible, avoiding any construction whkh would facilitate evasion of the Act. [521-C] 1.2. In consonance with the directions enshrined in Article 43 of the Constitution, Employees• Provident Fund Scheme is intended to encourage the , habit of thrift amongst the employees and to make available to them either at the time of their retirement or earlier, if necessary, substantial amounts for their use from out of the provident fund amount standing to their credit which is made up of the contributions made by the employers as well as the employees concerned. The Act being a beneficient statue and section 16 of the Act being a clause granting exemption to the employer from the liability to make contributions, section 16 should receive a strict construction. [521A·B, 522A) 2.1. The criterion for earning exemption under section 16~l)(b) of the Act is that a period of three years has not yet elapsed from the date of esta· blisbment of the factory in question. It has no reference to the date on which the employer who is liable to make contributions acquired title to the factory which once established may be interrupted on account of factory hu1idays, striki:s, lock outs, temporary breakdown of machinery, periodic repairs to be effected to the machinery in the factory, non~availabilit
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