S.H. Kapadia, J.
1. This Appeal has been preferred by National Textile Corporation (Maharashtra North) against judgment of the learned Single Judge dated November 16/20, 1990 in Writ Petition No. 2338 of 1985 by which the Writ Petition filed by respondents Nos. 1 to 4 stood allowed and a direction was given to the effect that the National Textile Corporation the appellants herein, were liable to pay the provident fund contributions for the period 1965 to 1972 in respect of employees who ceased to be members of the Provident Fund on death, retirement etc. (hereinafter referred to as 'the outgoing employees') after April 1, 1974, being the appointed date under Sick Textile Undertaking (Nationalisation) Act, 1974.
2. The facts giving rise to this Appeal lie within a very narrow compass.
(a) In the year 1965, United Mills Nos. I to V came under the management of the Authorised Controller under Section 18-A of the Industries (Development and Regulations) Act, 1951. The said Controller managed the Mills till 1971 when the Mills were handed over to the Maharashtra State Textile Corporation Limited, respondent No. 8, herein which continued the management as Controllers till 1972. With passing of the Sick Textile Undertaking (Take-over of Management) Act, 1972, the management was taken over by the Central Government in 1972. Finally the said Mills stood nationalised by Sick Textile Undertaking (Nationalisation) Act, 1974 (hereinafter referred to, for the sake of brevity, as 'the said Act, 1974').
(b) As the said outgoing employees were not paid provident fund dues for the period 1965 to 1972, the said employees called upon the Provident Fund Commissioner to pay the said amount. The Provident Fund Commissioner, when faced with the above contention raised by the employees, tried amicably to settle the matter, both with the Government as well as National Textile Corporation. However, the Commissioner failed in his attempt.
(c) In the circumstances, the said outgoing employees filed the above Writ Petition. The said outgoing employees claimed that the Provident Fund Commissioner be directed to pay their provident fund dues for the period 1965 to 1972 which remained unpaid since January 1982. According to the said outgoing employees, they were the members of the Provident Fund Scheme and provident fund contributions were deducted from their wages, but the same were not paid over to the Provident Fund Commissioner by the Authorised Controller during the period when the said mills were under the control of the Authorised Controller, as required under provisions of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952. According to the said outgoing employees, an amount of Rs. 1.90 crores, being the provident fund contribution, was not paid over to the Regional Provident Fund Commissioner by the Authorised Controller for the period 1965 to 1972 when the said Controller was in the management of the mills. In the circumstances, after making several representations to the Commissioner as well as to the Central Government, the Petition came to be filed. The statement annexed as Ex-K indicates that each of the outgoing employees retired etc. after April 1, 1974.
(d) By Affidavit-in-reply filed by the Company Secretary on behalf of appellants, it was submitted that N.T.C. had made certain payments under protest to the said workmen, but after taking opinion of the Solicitor General of India on May 2, 1975, the National Textile Corporation came to the conclusion that the Corporation was not liable to pay the contribution in respect of the period prior to April 1, 1974 (i.e. appointed date under the said Act, 1974). By the said Affidavit-in-reply, it was contended that the liability of the National Textile Corporation to repay the said amount could arise only under the provisions of the Sick Textile Undertaking (Nationalisation) Act, 1974, and that the provisions of the Provident Fund Act, 1952 were not relevant as the provisions of the Provident Fund Act, 1952, were inconsistent with Section 29 of the Sick Textile Undertaking (Nationalisation) Act, 1974. It was further contended that Section 29 of the said Act, 1974, read with Section 5(2)(c) of the said Act, 1974, indicated that the liability to pay provident fund dues to outgoing employees for pre-Nationalisation period was the liability of the owners of the said undertaking and not of the National Textile Corporation and that National Textile Corporation was liable to pay wages, salaries and other dues of the employees of the undertaking only in respect of the period after the management of the undertaking was taken over by the Central Government under the Act, 1974. It was further contended that the provident fund liability prior to Nationalisation docs not constitute wages, salaries and other dues of the employees under Section 5(2)(c) of the said Act, 1974. It was further contended that Section 5(2)(c) of the Act, read with Section 5(3)(c) of the Act, makes it clear that no liability of the undertaking prior to the appointed date i.e. April 1, 1974, was enforceable either against the Central Government or National Textile Corporation. In the circumstances, the claim made by the outgoing employees in the Petition came to be denied by the Affidavit-in reply.
(e) By Judgment under appeal dated November 16/20, 1990, the learned Single Judge came to the conclusion that the outgoing employees were entitled to receive provident fund for the period 1965 to 1972. After examining the scope of Section 5(2) of the said Act, 1974, the learned, Single Judge came to the conclusion that liability to pay provident fund dues for the period 1965 to 1972, clearly was that of National Textile Corporation. According to the learned Single-Judge, Section 5(2)(c) clearly referred to liability in respect of the period prior to the appointed date regarding wages, salaries of the employees of the Sick Textile Undertaking and in the circumstances, liability to pay provident fund dues for the above stated period was that of National Textile Corporation. According to the learned Single Judge, the words 'wages' and 'salaries' used in Section 5(2)(c) included provident fund and, therefore, the liability was of the Corporation to pay. The learned Single Judge rejected the contention of National Textile Corporation that it was the Provident Fund Commissioner under Employees' Provident Fund Act who was solely liable to pay the dues of the workmen as the said Commissioner failed to take appropriate action against the Authorised Controller who collected the provident fund contributions from the employees and did not remit the contributions during the relevant period. In the circumstances, the learned Single Judge allowed the Writ Petition and directed National Textile Corporation to pay the provident fund dues for the aforestated period 1965 to 1972.
(f) Being aggrieved by the said judgment under Appeal, the appellants have preferred this Appeal.
3. Before coming to the contentions raised on behalf of the appellants it would be relevant to refer to the provisions of the Sick Textile Undertaking (Nationalisation) Act, 1974. The preambles of the said Acts 1972 and 1974 show, among other things, that the Acts were enacted because the affairs of the textile mills were mismanaged and it was necessary to invest large sums for reorganisation and rehabilitation of the Mills and thereby protect the interest of the workmen employed therein and to increase the production and distribution of cloth at fair prices to subserve public interest. Section 2(1)(a) of the Act, 1974, define the expression 'appointed date' to mean the April 1, of 1974. Under Section 2(h) of the said Act, 1974, the word 'owner' has been defined in relation to a sick textile undertaking to mean any person or firm which is, immediately before the appointed day, the immediate proprietor, lessee or occupier of the sick textile undertaking or any part thereof, but does not include any person or body of persons authorised under Industries (Development and Regulation) Act, 1951 or Sick Textile Undertakings (Take Over of Management) Act, 1972, to take over the management of the whole or any part of the sick textile undertaking. Section 2(j) defines the expression 'sick textile undertaking' to mean a textile undertaking specified in the First Schedule, the management of which has, before the appointed day, been taken over by the Central Government under the Industries (Development and Regulation) Act, 1951 or the undertaking which vested in the Central Government under the Sick Textile Undertaking (Take Over of Management) Act, 1972. Items 38 to 43 of the said Act, 1974, refer to the take over of the above United India Mills 1 to 5 as also India United Mills, Dye Works, Bombay. Under Section 3(1) which tails in the Chapter dealing with acquisition of the rights of owners of sick textile undertaking, lays down inter alia that on the appointed day, every sick textile undertaking and the right, title and interest of the owner in relation to every such sick textile undertaking shall stand transferred to and vest absolutely in the Central Government. Under Section 3(2) of the Act, every sick textile undertaking which stands vested in the Central Government by virtue of Section 3(1) shall immediately after it has so vested, stand transferred to, and vested in, the National Textile Corporation. Under Section 4 of the said Act, 1974, the sick textile undertaking shall be deemed to include all assets, rights, leaseholds, powers, authorities and privileges and all property, both movable and immoveable, as also cash balances, cash on hand, reserve funds, investments and book debts and all other rights and interests in, or arising out of, such property as were immediately before the appointed date in ownership, possession, power or control of the owner of the sick textile undertaking. Under Section 4(2), all the properties referred to under Section 4(1) of the Act which have vested in the Central Government under Section 3(1) shall vest in the Central Government, free of trusts, obligations, mortgage or lien.
3-A. Section 5, which is relevant for the purpose of deciding this matter, reads as under:
'5(1) Every liability, other than the liability specified in Sub-section (2), of the owner of a sick textile undertaking, in respect of any period prior to the appointed day, shall be the liability of such owner and shall be enforceable against him and not against the Central Government or the National Textile Corporation.
(2) Any liability arising in respect of
(a) loans advanced by the Central Government, or a State Government, or both, to a sick textile undertaking (together with interest due thereon) after the management of such undertaking had been taken over by the Central Government,
(b) amounts advanced to a sick textile undertaking (after the management of such undertakings has been taken over by the Central Government), by the National Textile Corporation or by a State Textile Corporation, or by both, together with interest due thereon, has,
(c) wages, salaries and other dues of employees of the sick textile undertaking, in respect of any period after the management of such undertaking had been taken over by the Central Government,
shall, on and from the appointed day, be the liability of the Central Government and shall be discharged, for and on behalf of that Government, by the National Textile Corporation as and when repayment of such loans or amounts become due or as and when such wages, salaries or other dues become due and payable.
(3) For the removal of doubts, it is hereby declared that-
(a) save as otherwise expressly provided in this section or in any other section of this Act, no liability, other than the liability specified in Sub-section (2), in relation to a sick textile undertaking in respect of any period prior to the appointed day, shall be enforceable against the Central Government or the National Textile Corporation;
(b) no award, decree or order of any Court, tribunal or other authority in relation to any sick textile undertaking passed after the appointed day in respect of any matter, claim or dispute, in relation to any matter not referred to in Sub-section (2), which arose before that day, shall be enforceable against that Central Government or the National Textile Corporation;
(c) no liability of any sick textile undertaking or any owner thereof for the contravention, before the appointed day, of any provisions of law for the time being in force, shall be enforceable against the Central Government or the National Textile Corporation.'
Under Section 5(1) of the said Act, 1974, every liability, other than the liability specified in the above Sub-section (2) of Section 5, of the owner of a sick textile undertaking, shall be the liability of such owner and shall be enforceable against him and not against the Central Government or National Textile Corporation. In other words, every liability except the liabilities contemplated under Section 5(2) of the Act shall be enforceable against the owner and not against National Textile Corporation or Central Government. The basic question, therefore, which arises in the present case is whether the provident fund dues for the period 1965 to 1972 in respect of outgoing employees who cease to be the member of the Provident Fund Scheme after the above appointed day viz. April 1, 1974, is the liability enforceable against the erstwhile owner or is it a liability which is enforceable against National Textile Corporation? Section 5(2)(c) lays down that any liability arising in respect of any period after the management of such undertaking is taken over by the Central Government shall, on and from the appointed day, be the liability of the Central Government which shall be discharged for and on behalf of the Central Government by National Textile Corporation as and when such amounts become due and payable. If the dues become due and payable during the period prior to the take over by the Central Government, then such a liability would be that of the owner and not of National Textile Corporation or the Central Government, but if the liability accrues in the form of dues which become due and payable after management of the undertaking has been taken over by the Central Government, then such a liability is enforceable against National Textile Corporation. In this connection Section 5(3) is also relevant. Section 5(3)(a) lays down that for removal of doubts, it is declared that save and otherwise expressly provided in Section 5 or any other section of the Act, no liability other than the liability specified in Section 5(2) in relation to sick textile undertaking for the period prior to the appointed day, shall be enforceable against the Central Government or National Textile Corporation. Similarly, under Section 5(3)(b) of the Act it is provided that no award, decree or order of any Court or tribunal or authority in relation to any sick textile undertaking passed after the appointed day in respect of any matter, claim or dispute in relation to any matter not referred to in Sub-section (2) of Section 5, which arose before that day, shall be enforceable against the Central Government or National Textile Corporation. Similarly, under Section 5(3)(c) of the Act, it is declared that no liability of any sick textile undertaking or any owner thereof for the contravention, before the appointed day, of any provision of law for the time being in force, shall be enforceable against the Central Government or National Textile Corporation. As indicated hereinabove, Section 5(2)(c), therefore, clearly indicates that if dues become payable after the management of the undertakings has been taken over by the Central Government then such dues would be the liability of the National Textile Corporation or the Central Government and it would be open to the employee to enforce such a liability against National Textile Corporation.
4. The question, therefore, lies within a very narrow scope as to whether the said provident fund dues of the outgoing employees fall within the ambit of the expression 'other dues becoming due and payable after the management of the undertaking has been taken over by the Central Government' under Section 5(2)(c).
5. In order to answer the above question, it would be relevant to refer to the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 and the Employees* Provident Fund Scheme, 1952. The said Act, 1952, was enacted to institute provident fund for employees covered by the Act. The Scheme under the Act is a statutory Scheme which has been enacted for provident fund to be established in order to give to the employees, retirement benefits. The intention of the Legislature was to give minimum benefit to which the employees were entitled on the date of retirement. Section 2(e) defines the word 'contribution' to mean contribution payable in respect of a member under the Scheme. Section 2(h) defines the word 'Fund' to mean a provident fund established under the Scheme, 1952. Paragraph 36 of the said Employees Provident Fund Scheme, 1952, inter alia provides for the duties of the employer. It lays down that every employer shall send to the Commissioner, within fifteen days of commencement of the Scheme, a consolidated return showing basic wages and other allowances paid to such employees. Under Para 38 of the said Scheme, the employer shall, before paying the member his wages in respect of any period or part of the period for which contributions are payable, deduct the employee's contribution from his wages which together with employer's contribution be paid as provident fund contributions to the Provident Fund Commissioner. Para 69 lays down that the said accumulation to the credit of the member shall be payable to the member on retirement from service, after attaining the age of superannuation or on retirement on account of permanent or total incapacity or on termination of service, as the case may be. Under Para 72 of the said Scheme, the amount standing to the credit of the member shall become payable by the Provident Fund Commissioner.
6. The analysis of the Provident Fund Act with the Scheme, show that the employee is required to become a member of the Provident Fund Scheme; that the provident fund will consist of contributions, both of the employer and employee; that the said contribution is required to be made in accordance with the provisions of the Act by the employer who is required to deposit the amount with the Provident Fund Commissioner; that the amount which stands to the credit of the member shall become due and payable to such member only when he ceased to be a member i.e. when he retires from service or on termination of service, as the case may be.
7. Reading Section 5(2)(c) of the said Sick Textile Undertaking (Nationalisation) Act, 1974 alongwith the provisions of the said Provident Fund Act and the Scheme, it is clear that the provident fund dues become due and payable only when an employee ceases to be a member of the Provident Fund.
8. In the present case, it is not in dispute that the outgoing employees did contribute to the provident fund, but the contributions of the period 1965-1972 was not credited by the Authorised Controllers into the Provident Fund. However, under Provident Fund Scheme, the outgoing employees become entitled to their provident fund dues only on their retirement or termination, when they cease to be members of the Provident Fund and which, in the present case, was after nationalisation of the undertaking under the said Act, 1974. In the circumstances, the provisions of Section 5(2)(c) of the said Act, 1974, would squarely apply and there is no merit in the contention of the appellants that the Corporation was not liable as the liability arose prior to April 1, 1974.
9. On behalf of the appellants, it was contended that in any event, as the Respondent No. 5 failed to take appropriate action against the Authorised Controller who failed to contribute to the Provident Fund as stated hereinabove, the liability to pay the provident fund dues was solely of the Provident Fund Commissioner. For that purpose, reliance was placed on the judgment of the Madhya Pradesh High Court in the case of Nathulal v. Regional Provident Fund Commissioner reported in 1984 L.LC.1438. There is no merit in the above submission advanced on behalf of the appellants for the reason that we have come to the conclusion that the outgoing employees become entitled to receive, in the present case, their provident fund only on their retirement, termination or death, which have taken place after nationalisation and the appellants are, therefore, liable under Section 5(2)(c) of the said Act, 1974. Further the question herein never arose in the case of Nathulal (supra) in which National Textile Corporation was not even a party respondent and no relief was claimed against National Textile Corporation.
10. Before concluding, one more aspect may be referred to. The appellants placed reliance on Circular dated May 19, 1992, and the correspondence between Corporation and the Central Government and on that basis, it was contended that in any event, National Textile Corporation was not liable. We do not wish to express any opinion with regard to the said Circular dated May 19, 1992, or the correspondence exchanged between the parties as our decision is based on interpretation of the Act, 1974. In any event, the said Circular dated May 19, 1992, shows that even the Government is of the view that provident fund dues ought to be paid.
11. In the circumstances, the Appeal fails and is dismissed with costs.