Judgment:
S.H. Kapadia, J.
1. By this Writ Petition, Backbay Premises Co-operative Society Limited seeks to challenge order passed by Regional Provident Fund Commissioner (RPFC) dated June 3, 1992 seeking to cover and apply the provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter, for the sake of brevity, referred to as 'the said Act, 1952') to the premises owned by the Society on the ground that the Society provides services to its members on payment, as contemplated by Appendix-I to the Employees' Provident Funds Scheme, 1952 (hereinafter, for the sake of brevity, referred to as 'the said Scheme, 1952') vide Item 16(2).
2. Petitioner is a Society registered under the Maharashtra Co-operative Housing Societies Act, 1960 (hereinafter, for the sake of brevity, referred to as 'the said Act, 1960'). It is registered on December 6, 1977 to manage and maintain the building known as Jolly Maker, situate at Nariman Point, Bombay - 400 021. The management of the Society is vested in the Managing Committee. The bye-laws of the Society provides for raising funds by charging entrance fees, issuing shares and by covering cost of the flat and lands from the members of the Society. According to the Society, it employs less than 50 workers. On June 7, 1985, RPFC issued notice to the Society stating as to why the Society should not be covered under the above provisions of Item 16(2) - Appendix-I to the said Scheme, 1952. By the impugned order dated June 3, 1992, RPFC came to the conclusion that the Society stood covered under the provisions of the said Act and accordingly called upon the Society to pay Rs. 57,977.95 as contribution for the period from November 1, 1985 upto April 30, 1985. Accordingly, the Society was called upon to make the said payment. Being aggrieved by the said order, the Society has filed this Writ Petition.
3. According to RPFC, the purpose of the Society is to constitute an organisation of persons who have taken the premises in the building, to manage, administer and maintain the property in accordance with the co-operative principles, to provide social and other amenities to the members who have taken the premises. Under the Bye-laws, the members are required to pay entrance fee as also contribution towards the cost of the flat as also maintenance charges. According to RPFC, recovery of maintenance charges for upkeepment of the building from the members constituted a service being rendered to the members. According to RPFC, since entrance fee is being charged to the members, it amounts to rendering service to the members. According to RPFC, the Establishment is not providing boarding or lodging or both or any facility for amusement, but a bare reading of the objects of the Society indicates that the Society has been set up to manage and administer the property and in order to enforce the said obligations, the Society is required to engage services of 50 or more workers. According to RPFC, this amounts to rendering service to the members. According to RPFC, the Society imposes maintenance charges, recovers municipal taxes and lease rent and even contributions towards sinking funds, repair and maintenance fund and, therefore, it renders service to the members and in the circumstances, the services are rendered in furtherance of the objects of the Society and, therefore, according to RPFC, the Act applies to the Society. According to RPFC, under Item 16(2) of Appendix-I to the said Scheme, 1952, the Act applies to non-factory industries. According to RPFC, the above activity of charging and recovering maintenance from the members, recovery of rent and municipal taxes amounts to service being rendered as contemplated under the said Item 16(2) and in the circumstances, the said Act is applicable. RPFC, however, rejected the contention of the Union that the matter is covered by Item 34 of the said Appendix which deals with all Societies, Clubs and Association which render service to their members, without charging any fee, over and above the subscription fee or the membership fee.
4. In the above circumstances, the short point which arises for my consideration is :
'Whether the petitioner-Society falls within the ambit of Item 16(2) of the Employees' Provident Fund Scheme, 1952 (Appendix-I) read with Sec. 1(3)(b) of the said Act, 1952 ?'.
The second point which was decided by RPFC was whether the Notification issued by the Government, granting exemption under Sec. 16(1)(a) of the said Act, 1952, stands attracted to the facts of this case. RPFC found that the Society engaged 51 workers and it was not working with the aid of power and in the circumstances, the Society was not entitled to claim the benefit of Sec. 16(1)(a).
5. The short point which arises for consideration by this Court is : Whether RPFC was right in covering the Society under the said Act, 1952 by invoking Appendix-I to the Employees' Provident Fund Scheme, 1952. According to RPFC, as stated above, Item 16(2) stood attracted.
6. In order to decide the above point, we are required to look at the Scheme of the Act, 1952. The Act is enacted to provide for institution of Provident Fund for employees' in factories and other Establishments. Sec. 1(3)(a) provides that subject to the provisions of Sec. 16 (which deals with non-applicability of the Act), the Act shall apply to every establishment which is a factory, engaged in any industry specified in Schedule I to the Act and in which twenty (20) or more persons are employed. On the other hand, Sec. 1(3)(b) lays down that subject to the provisions of Sec. 16, the Act shall apply to any other establishment employing twenty (20) or more persons or to such class of establishments which the Central Government may, by Notification in the Official Gazette, specify. In other words, if there is a factory engaged in a specified industry and which factory is an establishment, then the Act automatically shall apply subject to there being twenty (20) or more employees whereas, in the case of any other establishment or non-factory in which twenty (20) or more persons are employed, the Central Government is empowered to issue Notification making the Act applicable to it. In the present case, the Society does not come within the purview of Section 1(3)(a) of the Act. Appendix-I to the said Scheme, 1952 lays down a list of non-factory industries to which the Act has been made applicable from time to time by the Government issuing Notifications under Section 1(3)(b) of the Act. In the present case, we are concerned with the Notification No. 728 dated November 20, 1963 published in the Gazette of India, Part II Page 850. By the said Notification, the Act is made applicable by the Government with effect from May 31, 1963 as indicated by Item 16 to Appendix-I to the said Scheme, 1952. Item 16 is reproduced hereinbelow :
'16(1) Theatres where dramatic performances or other forms of entertainment are held and where payment is required to be made for admission as audience or spectators.
(2) Societies, Clubs and Associations which provide boarding or lodging or both or facility for amusement or any other service to any of their members or to any of their guests on payment.
(3) Companies, Societies, Associations, Clubs or Troupes which give any exhibition or acrobatic or other performances or both, in any arena, circular or otherwise or perform or permit any other forms of entertainment in any place, other than a theatre, and require payment for admission into such exhibition or entertainments as spectators or audience.'
Under Section 1(4) of the said Act, 1952 it is, inter alia, provided that notwithstanding anything contained in Section 16(1), where it appears to the Central Provident Fund Commissioner that the employer and the majority of employees in relation to any establishment, have agreed that the Act shall be made applicable, then the Central Provident Fund Commissioner may, by Notification in the Official Gazette, apply the Act to that establishment on and from the day of such agreement. Section 5(1) provides that the Central Government may, by Notification in the Official Gazette, frame a Scheme to be called the Employees' Provident Fund Scheme for the establishment of Provident Fund under the Act, for employees and the Scheme shall specify the establishments or class of establishments to which it shall apply and a Fund shall be established under the said Scheme in accordance with the provisions of the Act. The above statutory Scheme viz. Employees' Provident Fund Scheme, 1952 has been accordingly framed. Under Clause 1(3)(a) of the said Scheme, it is provided, inter alia, that subject to the provisions of Secs. 16 and 17 of the Act, the Scheme shall apply to all factories and other establishments to which the Act applies under Section 1(3)(a) or to which establishments, the Act is made applicable under Section 1(3)(b). However, the Scheme shall not apply to Tea Factories in the State of Assam, but the Scheme shall apply to establishments which are notified by the Government from time to time with effect from the date given in the said Notification. Under the said Scheme, Appendix-I indicates list of Non-Factory Industries to which the Act is made applicable by the Government under Section 1(3)(b) of the Act, 1952. Item 16 has been reproduced hereinabove. In the present matter, RPFC has come to the conclusion that the Society employs more than 50 workers and in the circumstances, by placing reliance on Item 16(2), RPFC has sought to cover the above Housing Society as falling under the provisions of the said Act, 1952. The scope of Item 17 may now be considered.
7. Item 16(1) indicates that the Act is made applicable to establishments which run theatres where performances or other forms of entertainment are held and where payment is required to be made for admission by the audience or spectators. Item 16(2) deals with Society, Clubs or Associations which provide boarding or lodging or facilities for amusement or any other service to any of their members or to any guests of the members on payment. Item 16(3) deals with Companies, Societies, Associations, Clubs or Troupes which give acrobatic or other performances in an arena or which perform or permit any form of entertainment in any place other than a theatre on payment for admission into such exhibition or entertainment as spectators or audience. A bare reading of Item 16 as a whole indicates that it deals with Non-Factory Industries which consists of theatres rendering performances or other forms of entertainment or which provide facilities like boarding, lodging, amusement to its members or their guests on payment or which exhibit acrobatic and other performances. These activities cannot come within the ambit of a Co-operative Housing Society. This is the main crux of the argument of Shri Patil, learned counsel appearing on behalf of the Society, whereas according to the learned counsel appearing for the Union and the learned counsel appearing for RPFC, the above Housing Society comes under Item 16(2) of Appendix-I inasmuch as the said item deals with any service to the member(s) on payment. I find merit in the contention advanced on behalf of the society. The Act applies, in the first instance ipso facto to every establishment which is a factory and which is engaged in any industry specified in Schedule-I and in which twenty (20) or more persons are employed. However, if the Government wants to apply the Act to any other establishment which does not fall under Section 1(3)(a), then to cover such other establishment, the Central Government is required to issue Notification. This is, of course, subject to the provisions of Sections 16 and 17 of the Employees' Provident Funds Act and it is in this light that the said Scheme, 1952 is required to be read. Appendix I to the said Scheme, 1952 clearly refers to list of Non-Factory Industries.
I am emphasizing the word 'Industry' which occurs in Appendix-I. The various items in Appendix-I only apply to industries which are Non-Factory Industries. For example, Plantations, mines, hotels, restaurants, cinemas, theatres, canteens etc. If one keeps the subject matter of the said Appendix-1 in mind, in the context of the provisions of Section 1(3)(b) of the Act, it is clear that the Government is required to expressly issue Notifications to cover such Non-Factory Industries and such Notification can only be issued in respect of Non-Factory Industries. Therefore, a Housing Society cannot, by any stretch of imagination, come within the ambit of Non-Factory Industries. The word 'Industry' has not been defined under the Act. In the present case, it is not in dispute that the petitioner Society is registered under the Maharashtra Co-operative Societies Act. It is registered as a general Society. On facts RPFC has found that it is not rendering any amusement or boarding or lodging facilities. However, RPFC has found that the establishment levies maintenance charges, municipal taxes, lease rent and recovers contribution towards sinking fund, repair fund and maintenance fund and, therefore, the establishment falls within the category of societies, clubs or associations which provide services to its members. In other words, according to RPFC, therefore, recovery of maintenance and other charges from the members amounts to service being rendered to the members by a Society and in the circumstances, RPFC has applied item 16(2) and has sought to cover the Housing Societies under the Employees' Provident Fund Scheme, 1952. The words 'any other service' is required to be read in the context of the facilities contemplated by item 16(2). Item 16(2) deals with societies, clubs or associations which provide boarding or lodging facilities or which provide facilities for amusement. When the Notification refers to any other service, the said latter expression derives its colour from the services enumerated in the first part of Item 16(2) and, therefore, if one reads the entire item 16(2), it is clear that a Society which provides boarding or lodging facility or which provides for facility for amusement on payment of charges to the members, then such a Society comes within the ambit of Non-Factory Industries. Therefore, the words 'any other service' must go with the earlier part of Item 16(2). The problem can be tackled from another angle also. Item 16(2) categorically states in the latter part that it refers to societies, clubs or associations providing for boarding, lodging or facilities for amusement or any other service not only to the members, but also to any of their guests and subject to payment. Therefore, RPFC is wrong in coming to the conclusion that recovery of maintenance charge would amount to service to the members of their guests on payment.
If a service or a facility is rendered to their guests and that also on payment, it can never cover cases of Housing Societies, which recover charges in respect of maintenance from its members. It does not render any service to the guests of the members. Reading Item 16(2) along with Items 16(1) and 16(3) further shows that where a Society, Club or Association or even a Company or a Theatre renders performances or a facility against payment, and where such facilities are in the nature of boarding or lodging or which contemplates entertainment against payment of charges, then only such activities are re ired to be brought within Appendix-I which deal with Non-Factory Industry. It is for this reason that the expression 'Non-Factory Industries' in Appendix-I is very important. In the present case, we are concerned with the applicability of the provisions of the said Act to the Housing Societies. If the argument on behalf of the RPFC is accepted, it would mean that every Housing Society which levies charges and recovers maintenance charges from its members and which employs twenty (20) or more workers, would stand covered under Item 16(2) of Appendix-I to the said Scheme, 1952 which, as discussed hereinabove, does not apply to such Housing Societies. In the present case, we are not concerned with exemption which is given to establishments, but under Section 16 of the said Act, 1952, it is inter alia laid down that the said Act shall not apply to any establishment registered under the Co-operative Societies Act employing less than 50 workers and which establishment is working without the aid of power. In other words, if an establishment is registered under the Co-operative Societies Act and if it employs less than 50 persons and if it is working without the aid of power, then the Act will not apply to such establishments, but on the other hand, if it is an establishment registered under the Co-operative Societies Act and it employs more than 50 persons and it works with the aid of power, then the Act shall apply. In the present case, RPFC has found that the Society employs 51 workers and that the society is registered under the Co-operative Societies Act. RPFC has also found that the establishment is working without the aid of power. However, when RPFC realised that the Act applies only if a Housing Society comes within the ambit of Section 1(3)(b) of the said Act, 1952 and the Act will not apply unless the Government Notification stands attracted, the RPFC has interpreted Item 16(2) of Appendix-I and the Government Notification dated November 20, 1963 by holding that even if a Society recovers maintenance charges from its members, it would amount to the Society rendering service to the member under Item 16(2) of Appendix-I and by that process, RPFC has held that the Act applies to Housing Societies.
To my mind, an error is committed by RPFC. In the first instance RPFC is required to consider as to whether the Act applies to Housing Societies and as to whether Government has notified Housing Societies to fall in the list of Non-Factory Industries and if Housing Societies do not fall under Non-Factory Industries and if the Notification issued by the Government extending the Act does not cover Housing Societies under Section 1(3)(b) of the Employees' Provident Funds Act, then in that event, RPFC cannot seek to cover Housing Societies only by reference to Section 16(1)(a) of the said Act, 1952. As stated hereinabove, there is a difference between applicability of the Act and the exemption under the Act. In the present dispute, we are concerned with the applicability of the Act to an establishment. The Act does not apply in the first instance to the Housing Societies because it is not a factory. Therefore, we are required to examine whether Government has issued Notification extending the applicability of the Act to Housing Societies and for that purpose, we are required to refer to the list of Non-Factory Industries. In the circumstances, the Government Notification referred to against Item 16(2) does not apply to Housing Societies. I may, clarify that in the present matter, the Society is not rendering any other service or facility. There is no evidence to show that the Society is rendering lodging or boarding or facilities for amusement or entertainment. It is a Society consisting of various premises which are used for business purpose and the members are required to pay maintenance charges and other statutory charges under the provisions of the Co-operative Societies Act and the Bye-laws.
7-A. In the above matter, heavy reliance is placed by RPFC on the provisions of Section 16(1) of the said Act, 1952. Section 16 lays down that the said Act shall not apply to certain establishments. Section 16(1)(a), inter alia, provides that the Act shall not apply to any establishment registered under the Co-operative Societies Act or any other law for the time being in force in any State relating to Co-operative Societies employing less than 50 persons and working without the aid of power. Similarly Section 16(1)(d) lays down that the Act shall not apply to any other establishment newly set up until expiry of three (3) years from the date on which such establishment has been set up. This sub-section provides for the benefit of infancy period. Now, reading Section 1(3) with Section 16(1)(a), it is very clear that in the first instance, the Act applies to every establishment which is a factory engaged in any industry specified in Schedule 1 and in which twenty (20) or more persons are employed. Secondly, it applies to any other establishment employing twenty (20) or more persons to which the Act is made applicable by a Notification of the Central Government. If any establishment is covered by such Notification then the next question that will arise is regarding the applicability of Sec. 16(1). For example, if an establishment is covered by a Notification issued by the Central Government under Section 1(3)(b) of the said Act, 1952 and if the question arises as to whether that establishment is entitled to the benefit of the infancy period, then in that event, if it is found that the establishment is a newly set up establishment, then for three years, being the infancy period, the Act, which is otherwise applicable, is not made applicable. Similarly, if a Co-operative Society is covered by such Notification then the next question that will arise is regarding the applicability of Sec. 16(1). For example if an establishment is covered by Notification issued by the Government then that establishment will fall within the ambit of Section 1(3)(b). However, if that Co-operative Society employs less than 50 workers and if that establishment does not make use of power, then notwithstanding the applicability of the Act, in view of Section 16(1)(a), the Act shall apply. In the present case, therefore, if the Notification issued by the Government as indicated by Item 16 of Appendix I of the said Scheme, 1952 itself is, not attracted, then the subsequent question of applicability of Sec. 16(1) will not arise. In a way, Sec. 16(1) provides for exemption whereas Sec. 1(3)(b) deals with applicability of the Act to any establishment which is a factory. This distinction has not been kept in mind by RPFC and, therefore, the impugned Order is erroneous and liable to be set aside.
8. Before the RPFC, the Union appeared and they contended that in the present matter, Item 34 of Appendix-I is applicable. In fact, according to the Union, only Item 34 is attracted to Housing Societies. Item 34 of Appendix-I reads as follows :
'34. All Societies, clubs and associations which render service to their members, without charging any fee over and above the subscription fee or membership fee shall be covered with effect from November 30, 1974 under Notification No. 1294 dated November 16, 1974 published in the Gazette of India, Part-II dated November 30, 1974.'
However, RPFC has come to the conclusion that in the present matter, Item 34 is not attracted. RPFC has rejected the contention of the Union. I do not see any reason to reverse the finding of fact recorded by RPFC with regard to Item 34 of Appendix-I. In the present matter, Item 34 is also not attracted inasmuch as Item 34 of Appendix-I deals with societies, clubs and associations which render service to their members, without charging any fee over and above the subscription fee or the membership fee. The words 'subscription fee or membership fee' in Item 34 clearly indicates that Item 34 does not apply to Housing Societies under the Maharashtra Co-operative Housing Societies Act which recovers maintenance charges and other charges, as stated hereinabove. In fact, a Housing Society does not render any service to the members as contemplated by Item 34 of Appendix-I. When a member is required to pay maintenance charges, he is required to attend Office of the Society and pay the charges. In the circumstances, Item 34 will not apply to Housing Societies. The Housing Societies do not charge membership fees like club or association. In the case of club or association, a subscription fee which is also referred to in Item 34 or a membership fee is paid by the member because it gives him certain rights to remain as a member. Item 34 provides that if a club, association or society renders service to its members, without charging any fee, over and above subscription fee or membership fee, then such club or association would stand covered in view of the Government's Notification dated November 16, 1974. A member of a Housing Society pays charges to the Housing Society for maintenance of the building. In fact, all the members are the co-owners in the broader sense and to maintain the building, expenses are required to be shared amongst the co-owners. In the circumstances, Housing Society cannot fall within Item 34 of Appendix-I to the said Scheme and even RPFC in the present case, has come to the conclusion that Item 34 of Appendix-I will not apply to Housing Societies.
8-A. Before concluding, it may be mentioned that Shri Patil, learned counsel appearing on behalf of the petitioner Society contended that RPFC had erred in computing the number of workers as 51. Shri Patil contended that 47 persons were in fact employed on October 28, 1983 and 48 persons were employed on October 29, 1983. According to Shri Patil, one worker was on earned leave and three others were on weekly off days. Shri Patil contended that on both the above dates, the number of workers were less than 50 if the workers who were on earned leave or who were on weekly off days were not to be computed. According to Shri Patil, an employee who is on earned leave or an employee who is on a weekly off, is not eligible for wages and is not working and, therefore, they cannot be added to the number of persons employed on a particular date. In this connection, Shri Patil has placed reliance on the provisions of Section 1 and Section 2(f) and he has contended that the word 'employee' in the above two Sections means 'employee in work'. According to Shri Patil, the expression 'employee in work' means persons actually working. According to Shri Patil, if on account of weekly off a person is not working, then he cannot be computed for the purposes of the applicability of the Act. Shri Patil has placed reliance on the Judgment of the Mysore High Court reported in AIR 1969 Mys 300. I do not find any merit in the above contention. The definition of the word 'employee' in Section 2(f) means any person who is employed for wages in any kind of work, manual or otherwise in or in connection with the work of an establishment and who gets his wages directly from the employer. In view of Section 2(f) of the said Act, 1952, it is not open to the Society to claim that an employee who is, on a particular day, on a weekly off or who is on earned leave, should be excluded for the purposes of calculating the number of persons under Section 1(3)(b) of the said Act, 1952. Once an employee is entitled to receive wages with regard to the work in or in connection with the establishment then, in such an event, he is required to be taken into account for the purposes of calculating the number of workers as provided under Section 1(3)(b) of the Act. The Judgment of the Mysore High Court clearly supports the interpretation which I have given to the provisions of Section 1(3)(b). The Mysore High Court has laid down that if an establishment employs twenty persons, even for a single day, then the establishment will come within the purview of the Act. In that case, the Court found that on account of the absence on leave of some permanent workers, some person-substitutes were appointed in an establishment and it is in this light that the question arose as to whether the substituted employee should be taken into account for the purposes of computation. That question does not arise in the facts of our case. It is in the light of that controversy that the Mysore High Court has laid down that if on account of absence some more persons are appointed in an establishment and if on that basis the number of persons exceeds twenty, then the calculation could have been wrong. In the above circumstances, I do not find any merit in the contention of Shri Patil and the finding recorded by the RPFC with regard to the number of workers is not perverse and no interference is called for.
9. Taking into account, all the above facts and circumstances of the case, I find merit in this Writ Petition. Accordingly, the following Order is passed :
ORDER
Rule is made absolute in terms of prayer clauses (a) and (b) with no order as to costs.
In the above matter, on the last occasion I had directed the Society to pay the cost of adjournment. However, today after the entire matter was argued by Shri Patil and also in view of the fact that Shri Patil has now produced the Affidavit of Service of the Bailiff indicating service of Rule Nisi on the respondents and in view of the fact that the learned Advocates appearing for the Union and RPFC very fairly do not insist on the cost of the adjournment being paid by the Society, the earlier Order passed by me, putting the Society to costs, is hereby cancelled.
During the pendency of this petition, however, the Society has furnished a Bank Guarantee. The bank Guarantee will continue to remain in force for a period of four (4) weeks. Accordingly to that extent, the Order passed by me is stayed for four (4) weeks.
Issuance of certified copy expedited.