Judgment:
Dharmadhikari B.P., J.
1. Petitioner company which is stated to be registered partnership firm has filed this writ petition under Article 226 of Constitution of India challenging order dated 25th March, 1992 passed by Regional Provident Fund Commissioner, Nagpur (respondent) in enquiry under Section 7-A of Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred at as 'E.P.F. Act'). Grievance of the petitioner, in short, is that the definition of term 'employee' in E.P.F. Act is narrower as compared to the definition of the said term in Employees' State Insurance Act (for short 'E.S.I. Act') and the learned Provident Fund Commissioner has relied upon the ruling delivered by Hon'ble Apex Court upon definition of term employee in E.S.I. Act in the impugned order. The facts in brief necessary for decision of above referred point can be summarised as under :
2. The petitioner runs four cinema theatres in Nagpur Municipal limits, they are Liberty Talkies, Variety Talkies, Regent Talkies and Narsing Talkies. All these theatres are covered separately under the E.P.F. Act and the petitioners are paying contribution in relation to the employees engaged in these establishments. By summons dated 14th August, 1991 the respondent Regional Provident Fund Commissioner communicated that upon information received he has reason to believe that the petitioners have failed to remit provident fund duties in request of the employees of canteens and cycle stands in these theaters for the period from August, 1961 to June, 1991. The petitioner was therefore, directed to appear before the said respondent to enable that authority to determine amount due from the petitioner. On 14-9-1991 the petitioner asked respondent copies of documents and information which was laid before the respondent after considering which he had reason to believe that the petitioner failed to remit provident fund dues. The petitioner states that it clearly mentioned that after receipt of such information and documents, they would be filing their detailed reply. On 18-9-1991 the petitioner received another communication by which the respondent asked petitioner to attend proceedings and plead the case. Without taking cognizance of the request letter dated 14-9-1991 sent by petitioner to it. On 23-9-1991 one of the partners of the petitioner firm appeared before the said respondent and stated that unless and until the documents and information is supplied, the petitioners would not be in position of file any effective reply. However, the authority insisted that the said partners should submit their defence whatever they felt and otherwise, the matter would be closed and appropriate orders would be passed. Thus, constrained, partners of the petitioner explained petitioners view that the persons working in the canteen and cycle stand cannot be considered as employees of these theaters and there was no obligation on petitioner to pay their provided fund dues. On 24-9-1991 the respondent forwarded order sheet of proceedings conducted on 23-9-1991 which reflected some of the points as alleged by the petitioners and raised by them in their oral submission on 23-9-1991. The petitioners state that on 23-10-1991 the petitioner submitted their detailed reply without prejudice to its right to know the information and documents and by reserving its right to file additional rejoinder after receipt of documents and information demanded by it. The petitioner explained the position of cycle stands and canteens vis-a-vis each theatre in that reply. The petitioner contends that inspite of it the petitioner did not supply necessary information and passed the impugned order on 25-03-1992. The petitioner challenge the said order on the ground that the canteens and cycle stands are totally distinct and separate establishments and there is no functional integrality between the theaters on one hand and the cycle stands or the canteens on the other hand. It further state that reliance upon definition of term employee in E.S.I. Act to constitute scope of the said term in E.P.F. Act is arbitrary and unsustainable. It is the contention of the petitioners that the employees engaged by respective tenant of cycle stands or canteens are not their employees and they have no connection with the theaters of the petitioner. It is also contended that the respective tenants have engaged these employees and they supervise their work and care for and pay their salary. It is also alleged that cycle stands and canteens are not meant only for spectators visiting the theater but they are for general public and all these aspect, according to the petitioner, are overlooked by the respondent. It is further alleged that the impugned order does not determine liability of petitioners at all and it only calls upon the petitioners to report compliance. Thus, according to the petitioners, there is non-application of mind. It is further stated that period covered by the impugned order is from August, 1961 to June, 1991 and hence, it is time barred. According to the petitioners action ought to have been taken within a reasonable time. It is further stated that several tenants have changed from 1961 onwards and fresh lease has been given on each occasion and hence, the petitioner is not in position to produce any information or record of last 30 years.
3. I have heard learned Advocate H.V. Thakur for petitioner and learned Advocate R.S. Sunderam for the respondent.
4. Advocate H.V. Thakur has argued in support of the grounds which are already briefly stated above. His basic contentions are about the scope of definition of term employee as defined in Section 2(f) of E.P.F. Act. He contends that the said definition is narrower as compared to definition of that terms in Section 2(9) of E.S.I. Act and according to him, this material aspect has been lost sight of by the learned lower Authority. He relies upon judgment of the Division Bench of Andhra Pradesh High Court report at 1987 Lab.I.C. 1288, for this proposition. He also points out that the Hon'ble Apex Court has laid down guidelines as to how its judgments are to be understood and used in reported case at C.C.E. Calcutta v. Alnoor Tobacco : 2004(170)ELT135(SC) . He contends that the judgment in the case of Royal Talkies v. E.S.I. Corporation : (1978)IILLJ390SC is not at all relevant in the facts and circumstances of the case. He further contends that by not disclosing to the petitioner the material with it, respondent has denied effective opportunity to the petitioner to defend itself in the matter and this is in breach of principles of natural justice. He further contends that though there is no express time limit prescribed for order under Section 7-A, such order must be passed in a reasonable period and for that purpose he relies upon the judgment reported at State of Gujarat v. Patel Raghav Natha and Ors. : [1970]1SCR335 , Mansaram v. S.P. Pathak : [1984]1SCR139 , S.B. Gurbaksh Singh v. Union of India, : [1976]3SCR247 , Sushma Fabrics Pvt. Ltd. v. Union of India 1991(3) Bom.C.R. 258 : 1991 Lab.I.C. 1946, Bhagwandas S. Tolani v. B.C. Aggarwal, 1983 E.L.T. 44 (Bom.), in support of his argument about the scope of definition as contained in E.P.F. Act. He further relies upon the judgment of Bombay High Court reported at Tata Engg. & Locomotive Co. Ltd. v. Union of India 1990(2) C.L.R. 815, and S.K. Nasiruddin Beedl Merchant Ltd. v. Central P.F. Commr. 2001(2) S.C.C. 612, to show how on facts approach of the learned Lower Authority is erroneous.
5. As against this Advocate Sunderam points out that the respondent has considered the material on record and has thereafter correctly relied upon the judgment of the Apex Court in case of Royal Talkies. He states that in the said judgment the Hon'ble Apex Court has given wide meaning to the efforts in connection with the work of establishment and the said wide meaning has been correctly accepted and acted upon by the respondent while considering the case of the petitioner, he points out that the Division Bench of this Court in its judgment reported at BASF India Limited v. M. Gurusamy : (2004)IILLJ500Bom , has considered this very phrase in E.P.F. Act and has again relied upon the meaning assigned to it by the Hon'ble Apex Court in Royal Talkies case. He therefore, states that the order passed by respondent is just and proper and does not call for any interference is writ jurisdiction. He further states that the order has been passed after giving due opportunity to the petitioner after receipt of information and hence, action taken is not at all delayed. He further contends that the petitioner has not pointed out as to how the alleged non-supply of material or information by the respondent has prejudiced it. He contends that the ground about breach of principles of natural justice is hypothetical and does not hold any water. In relation to other authorities relied upon by the petitioner he states that those authorities are in totally different circumstances and are not attracted here. He has also tried to demonstrate as to how arguments of learned Counsel for petitioner about functional integrality or about separate and independent existence of canteens and cycle stands are misconceived.
6. In reply Advocate Thakur has taken the Court through photographs and other material placed on record by the petitioner to show that situation of cycle stands or canteens in these establishments is such that these establishments can function independently and even a stranger who has nothing to do with the theaters can use the parking/stand facilities of canteen facility. He again reiterates that these employees of tenants managing cycle stands or canteens have got nothing to do with the cinema theaters and their employment is not in connection with the establishment of cinema theater. He further states that the Division Bench of this Court in the judgment reported at : (2004)IILLJ500Bom has not considered aspect of the employees who are not employees of principal employer but are the employees of contractor. He contends that in any case the aspect of leasing out of the premises for cycle stand and canteen and effect of such leasing out has not been considered by this Division Bench.
7. Having heard the parties, it will be necessary first to consider the definition of term employee as given in E.P.F. Act and E.S.I. Act. Section 2(f) E.P.F. Act defines employee as under :
'employee' 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 or indirectly from the employer, (and includes any person, (i) employees by or through a contractor in or in connection with the work of the establishment; (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961) or under the standing orders of the establishment;)'
Similarly, Section 2, Sub-section (9) of E.S.I. Act defines employee as under:
'employee means any person employees for wages in or in connection with the work of a factory or establishment to which his Act applies and -
(i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work, of the factory or establishment, whether such work is done by the employee in the factory or establishment' or elsewhere; or
(ii) who is employed by a through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or
(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service, (and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sell of the products of, the factory or establishment or any person engaged as under the Apprentices Act, 1961, or under the standing orders of the establishment; but does not include;
(a) Any member of (the Indian) naval, military or air forces; or
(b) Any person so employed whose wages (excluding remuneration for overtime work) such wages as may be prescribed by the Central Government, Provided that an employee whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government at any time after (and not before) the beginning of the contribution period, shall continue to bean employee until the end of that period;)'
It will thus, be seen that the phrase 'in or in connection with the work of establishment' appear in both these definitions. Advocate Thakur has pointed out judgment of Hon'ble Apex Court reported at : 2004(170)ELT135(SC) C.C.E. Calcutta v. Alnoor Tobacco, to state that Court should not place reliance upon the decision without discussing as to how factual situation fits in with the fact situation of the decision on which reliance is placed and observations of the courts are neither to read as Euclid's theorems nor as the provisions of statute and that too taken out of their context. He has relied upon paragraph Nos. 12, 13 and 14 of this judgment to make his point. He has also relied upon the judgment of the Hon'ble Apex Court reported at : (1981)ILLJ402SC , Union of India v. R.C. Jain, to submit that the definition of local authority as used in one Act cannot be mechanically used for understanding the scope of that terms used in payment of Bonus Act. He points out that the Hon'ble Apex Court has found that local fund is a terms not defined in General Clauses Act and the Apex Court has found that meaning given to that phrase in Fundamental Rules and Treasury Code cannot be borrowed as it is not sound rule of Interpretation to seek the meaning of words used in an Act in the definition clause of other statute and definition of an expression in one Act must not be imported into another. Here the Apex Court was concerned with the exemption available under Section 32(iv) of Payment of Bonus Act, to activities carried on by local authorities and therefore, whether Delhi Development Authority is local authority or not. The Hon'ble Apex Court has found that this expression local authority is not defined in Payment of Bonus Act and therefore, one has to come to General Clauses Act to ascertain its meaning. The Apex Court has thereafter concentrated and confined its attention and inquiry to the definition of Local Authority in Section 3(31) of General Clauses Act and this can be ascertained from paragraph No. 2 of the reported judgment and in paragraph 14 has concluded that Delhi Development Authority is local authority and therefore, provisions of Payment of Bonus Act are not attracted.
8. In the facts at hand the definition of term employee either in E.P.F. Act or E.S.I. Act appeared to be more or less similar. The contention of Advocate Thakur that the definition in Section 2(9) of E.S.I. Act is more wide in view of its inclusive part and the words incidental or preliminary to or connected with the work of establishment' used in Sub-clause (i) he therefore, contends that the Hon'ble Apex Court has in its judgment reported at : (1978)IILLJ390SC Royal Talkies v. E.S.I. Corporation, have given very wide meaning to this definition. From paragraph 4 of this ruling he points out that canteens involved in the case before the Hon'ble Apex Court were required to be run only during show hours and the management of those cinema theaters used to pay electricity charges due in respect of those canteens. He therefore, states that Insurance Court there found that the canteens are meant primarily for the convenience and comfort of those visiting cinema theatres and cycle stands are meant exclusively for convenience of persons visiting the theatres (paragraphs 5 and 6 of the reported judgment). Discussion made by the Hon'ble Apex Court in paragraph No. 14 of this judgment is perused, it will be seen that these findings of fact have not influenced it in any manner. The meaning and scope of any phrase used in definition clause is bound to be understood from the statute itself and its scope cannot be curtailed or enhanced depending upon the facts of each case. The Hon'ble Apex Court in paragraph 14 has found that the expression 'in connection with the work or establishment' covers wide variety of workmen who may not be employee in the establishment but may be engaged only in connection with the work of establishment. Some nexus must exist between the establishment and work of employee but it may be a very least nexus and the said phrase only requires some connection between what the employee does and the work of establishment. The Hon'ble Apex Court has held that such employee may not do anything directly for the establishment or he may not do anything statutorily obligatory in establishment or he may not do anything which is primary or necessary for survival or smooth running of the establishment or integrality to the activity of the establishment. The Hon'ble Apex Court has held that it is informed that the employee does some work which is ancillary, incidental or has relevant to the work with the object of the establishment. It has been held that an amenity or facility for the customers who frequently visits the establishment has connection with the work of establishment. The Apex Court has said that the question to be decided is not whether without such amenity or facility the establishment can function or not but whether such amenity or facility howsoever peripheral it may has got some link with the establishment. The Hon'ble Apex Court thereafter has given illustration clarify the sweep of the said phrase. It will thus be seen that the Hon'ble Apex Court has interpreted only phrase in connection with the work of establishment'. The said phrase is also used in definition of term employee in Section 2(f) of E.P.F. Act, 1952. In such circumstances, the discussion by the Hon'ble Apex Court is directly on the point and clinches the issue. The Division Bench of this Court in judgment reported at : (2004)IILLJ500Bom has also relied upon the very same judgment Royal Talkies, Hyderabad v. Employee's State Insurance Corporation through its Regional Director, Hill Fort Road, Hyderabad, : (1978)IILLJ390SC , while interpreting this phrase and has found that 21 car drivers employed by 21 managers of B.A.S.F. India Ltd. are in fact the employees of B.A.S.F. Ltd. and has dismissed the appeal preferred by B.A.S.F. India Ltd. while confirming the order of learned Single Judge.
9. The learned Advocate for the petitioner has placed reliance upon the judgment of learned Single Judge of Andhra Pradesh High Court reported in 1987 L.I.C. 1288 to support his argument that the definition of term employee in E.S.I. Act and its interpretation by the Hon'ble Apex Court in Royal Talkies case (supra) cannot be utilised for understanding the scope of definition of term employee in E.P.F. Act. The discussion in this respect is contained in paragraph No. 3 of that judgment in the learned Single Judge there found that the definition in Section 2(9) of E.S.I. Act does not bear analogy with the material in definition in Section 2(f) of E.P.F. Act and further it has been stated that the learned Counsel appearing for respondents there concedes to this position. Apart from this there is no other discussion of this point and in any case in view of the judgment of the Division Bench of this Court, the said law and judgment of learned Single Judge of Andhra Pradesh High Court cannot come to the rescue of the present petitioner. Thus, arguments of Advocate Thakur in this petition are liable to be rejected.
10. Next grievance about the impugned order is that by the impugned order the period covered is from August, 1961 to June, 1991. The learned Counsel states that though no specific period for such enquiry is prescribed anywhere in E.P.F. Act, still action must be taken in reasonable period. However, he has not pointed out that the action taken is either mala fide or constitutes victimisation of the petitioners. The petitioner has further not pointed out as to how such action would prejudice him if it is held that the petitioner was responsible for payment of provident fund of employees who worked on cycle stands or canteens the petitioner has placed reliance upon various judgments to support his contention. : [1970]1SCR335 is the case which dealt with the revision by Commissioner and the Hon'ble Apex Court has held that though Section 65 of Bombay Land Revenue Code does not prescribe any limitation for that purpose, the power of revision must be exercised in reasonable time and the length of period constituting reasonable time must be determined by reference to facts of each case and the nature of order which is being revised. It will be seen that the Commissioner by his impugned order dated 12th October, 1961 had set aside the order of Collector dated 2nd July, 1960 granting permission to use the same land for non-agricultural purpose. The said permission was granted by the Collector after over-ruling the objection raised by Municipal Committee of Rajkot before it and then Municipal Committee approached the Commissioner under Section 211 of Bombay Land Revenue Code for revision and the Commissioner in turn proceeded to set aside order of Collector granting him permission. The Hon'ble Apex Court in paragraph No. 12 of this judgment has found that leading of Section 211 and Section 65 together reveal that the Commissioner has to exercise his revisional power within few months of the order of collector and the Apex Court has further found that such a time is reasonable because after grant of permission by the Collector, the occupant is likely to spent money on starting building construction and therefore, the order passed by Commissioner after more than one year was found to be passed too late. The facts in present case are totally distinct. Next judgment on which reliance is placed by the petitioner is reported at : [1984]1SCR139 , Mansaram v. S.P. Pathak. There the Hon'ble Apex Court was considering the order of eviction passed by House Allotment Officer after reaching conclusion that initial entry made by tenant 22 years back was an unauthorised entry and further such order was being passed after about 9 years of his retirement. The Hon'ble Apex Court has found that the employee retired in 1967 and at that time the house owner Mr. Sharma was alive. It has further found that after the death of house owner his widow also did not raise any objection. But objection was raised by the stranger. The House Allotment Officer thereafter found that the entry made by the employee in the house 22 years back was unauthorised and his failure to vacate the premises even nine years after his retirement was not proper. The Hon'ble Apex Court has held that in such circumstances, it was not obligatory upon the House Allotment Officer to pass pre-entry order of allotment in the matter in which it has been done. Thus, it will be seen that the facts of the reported case are again different. Third case on which reliance has been placed is reported at : [1976]3SCR247 S.B. Gurbaksh Singh v. Union of India. In this case the Hon'ble Apex Court was again considering the revision powers and has found that the said powers have exercised by the Commissioner without any undue or unreasonable delay. It has our that though time limit is prescribed for filing appeal and for filing revision by the assessee, but for exercise of suo motu power of revision there is no time limit and the revisional Authority has to initiate the proceedings within reasonable time. Thus, this ruling also has got no bearing on the controversy. The judgment at 1991 Lab.I.C. 1946, Sushma Fabrics Pvt. Ltd. v. Union of India, is delivered by the Single Judge of this Court upon the provisions of Section 14(b) of E.P.F. Act only. The impugned order was the order of ascertaining damages under Section 14(b) E.P.F. Act and the learned Single Judge has held that in absence of prescribed period within which Section 14-B becomes operational, does not mean that the authorities can initiate action at any time and they must move within a reasonable period. Here it is admitted position that the petitioner M/s. Sushama Fabrics was called upon to explain lapses relating to period 1970 to 1978 in the year 1984 and then personal hearing was given in 1987. There was earlier notice on 5th May, 1978 calling upon the petitioner to explain delayed remittances and the petitioner had replied to it on 5th May, 1978. It is to be seen that the learned Single Judge has negatived the arguments on the ground of delay by holding that the petitioner was already put on guard vis a vis defaults and liability it had incurred in the penal action under the Act. The last ruling on which reliance is placed is reported in 1983 E.L.T. 44, Bhagwandas S. Tolani v. B.C. Aggarwal and Ors. Here the learned Single Judge of this Court that show cause notice was given to the petitioners in 1966 and thereafter Enforcement Officer issued notice of hearing on 4th January, 1977. The learned Single Judge has held that though no period of limitation has been prescribed for such adjudication and in reply to show cause notice the firm had argued that almost all records have been destroyed and persons in employment have changed. The learned Single Judge has found that is in relation after 11 years. It would, thus, be seen that here, show cause notice was already issued and thereafter no action was taken for 11 years.
11. Thus, all the cases cited by the petitioner above show that some action was already initiated by the departments and thereafter there was delay in following it further. The facts in present case are totally different. The provisions of E.P.F. Act requires petitioner to pay provident fund of employees and according to respondent the petitioner was liable to pay provident fund dues for employees working on cycle stands and in canteens in four theaters. This is statutory liability and admittedly the petitioner has not discharged it. Hence, the petitioner cannot be permitted to defeat the provisions of such welfare legislation by invoking ground of delay. The respondent has only found that the petitioner is liable to report compliance in respect of the employees employed in the canteen and cycle stands attached to the respect theaters as principal employer, The amount of liability has not been quantified as yet. Hence, even if grievance of the petitioner about delay is to be looked into, the said aspect will become relevant at the time of determination of number of employees working on cycle stands or in canteens and while computing their provident fund amount. At present no prejudice has been caused to the petitioner by holding that the petitioner is liable to report compliance. Thus, the second ground raised by the petitioner is also without any substance and deserves to be rejected.
12. Third ground raised by the petitioner is about breach of principles of natural justice as already discussed above, the respondent has only decided the issue whether the petitioner is responsible has only decided the issue whether the petitioner is responsible for payment of provident fund dues of employees working in canteens and on cycle stands. The material available before the respondent or the information received by the said respondent was not used for adjudicating this liability of the petitioner. The petitioner has also not demonstrated any prejudice caused to them on account of non supply of such information or material. Such information or material with the respondent will assume importance while computing the amount of provident fund dues. Hence the petitioners have failed to make out any case to show that principles of natural justice have been breached by respondent while conducting enquiry under Section 7-A of the Provident Fund Act.
13. The learned Counsel for petitioner has relied upon two other authorities. First authority is judgment of Single Judge of this Court reported at 1990(2) C.L.R. 815, Tata Engg. & Locomotive Co. Ltd. v. Union of India and Ors., in the said judgment the Single Judge has found that fourth respondent who was supplier of certain goods required by petitioner in the manufacture of commercial vehicles, is totally independent body and the purchaser from him cannot be made principal employer vis-a-vis his employees. On facts the judgment is distinct. The supplier was having independent existence and independent business and there was no functional integrality at all. The employees with supplier were not working in connection with the work of establishment of principal employer. Other judgment on which reliance has been placed by Advocate Thakur is 2001(2) S.C.C. 612, S.K. Nasiruddin Beedl Merchant Ltd. v. Central P.F. Commr. By this judgment the Hon'ble Apex Court has held that the purpose of enquiry under Section 7-A is determination or quantification of the amount of liability. Accordingly to petitioners, no such amount has been worked out by impugned order and what has been decided is only applicability of the Act and therefore, by relying upon the observations of the Hon'ble Apex Court in paragraph No. 6 it is contended that the impugned order is liable to be quashed and set aside. The second contention which was considered by the Hon'ble Apex Court in this respect was about applicability of the Act and about requiring the employer to pay contribution from anterior date i.e. for the period prior to final determination of the employers' liability under Section 7-A of the Act. The employer contended that it was bona fidely disputing the applicability of the Act and therefore, it would not be proper to saddle the employer with liability to pay the employees contribution for the earlier period during which employer could not and did not deduct the employees contribution from contractors on bona fide grounds. The observations made by the Apex Court on paragraph No. 6 are to be understood in this background. The provisions of Section 7-A are very clear and here the respondent has called upon the petitioner to report compliance and if the petitioner avoids to report compliance or fails to report compliance, the respondent can very well proceed to determine the amount due from the petitioner. Section 7-A(1)(a) also permits the respondent to decide regarding applicability of this Act to the establishment and here the respondent has found that cycle stands and canteens are governed by provisions of E.P.F. Act and the petitioners are liable to pay provident fund dues for employees working in those canteens and cycle stands. Thus, the argument of learned Counsel for the petitioner is without any substance and deserve to be rejected.
14. Perusal of the impugned order clearly reveals that the respondent has considered the material produced before it by the petitioners and has also considered the arguments advanced before it by the petitioner. It has found that the canteens and cycle stands are run by lessees but are definitely doing the work related to cinema theatre and hence, the employees working in such canteens and on such cycle stands cannot be held anything but employees of the establishment. The respondent has considered the law on the point also and has arrived at findings which are not shown as perverse. Thus, there is no error apparent in the said application of mind by the respondent and also there is no jurisdictional error. The impugned order, therefore, calls for no interference in writ jurisdiction.
The petition therefore, fails and is dismissed accordingly with no order as to costs.