Judgment:
ORDER
V.P. Mohan Kumar, J.
1. The petitioner herein impugns Annexure-B and C-proceedings of the respondent. Annexure-B is the order passed by the respondent after enquiry under Section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the Act'). Annexure-C is the consequential notice issued. The contention of the petitioner is that the period of infancy available to the petitioner is to be reckoned from the date of manufacture i.e, June 30, 1992 and not July 18, 1991 as now assigned.
2. The facts of the case in brief are as follows :
The petitioner-establishment, according to the petitioner was established to manufacture plywood and other articles. The factory, according to the petitioner, comes within the ambit of Section 1(3)(a) of the Act. It is not a commercial establishment which is coverable under Section 1(3)(b). The respondent herein initiated proceedings for coverage under the Act reckoning the alleged sale took place on July 18, 1988. Admittedly on July 18, 1988, the petitioner purchased certain quantity of plywood and sold the same, which, according to the petitioner, was with an intention to secure market for the commodity which it intended eventually to manufacture. The respondent, therefore, treated this establishment as the one coming under Section 1(3)(b) of the Act and proceeded to assign the infancy period from July 18, 1988 and thereafter granted 3 years' period of infancy. The contention of the petitioner is that the petitioner is not engaged in the sale of commodities manufactured by other concerns, but it is a factory. It commenced production with effect from June 30, 1999 and, therefore, the period of infancy should be reckoned 3 years from thereafter. This was the dispute between the petitioner and the respondent.
3. It is an admitted fact that the petitioner had purchased certain quantity of plywood from M/s. Nainy Plywood Factory for a sum of Rs. 3,13,868.81. It was marketed for a sum of Rs. 3,23,110.31. Therefore, this activity carried on by the petitioner was admittedly prior to starting commercial production on June 30, 1989. This transaction cannot be ignored totally. It is the activity which converts the petitioner into an establishment which comes one under Section 1(3)(b) of the Act. If, as matter of fact it would come under Section 1(3)(b), the question then would be, whether on the date on which it carried on the activity, it had the required number of employees; that is to say, if there are 20 or more workers, the provisions of the Act would be attracted. If it is shown that the number of workers are more than 20 then even if the establishment comes under Section 1(3)(b) the provisions of the Act will be attracted. The premises of the respondent that the petitioner would then come within the ambit of other establishment contemplated under Section 1(3)(b) is correct. The transaction by the petitioner cannot be ignored in computing the coverage, under the Act. But it is begging the question as to whether on the date on which it carried on the transaction, it had more than 20 workers. If it did not have 20 workers, it would not be 'other establishment' coming within the ambit of the Act. That is an issue to be resolved by further evidence. A fresh adjudication is, therefore, called for in this behalf.
4. Mr. Harikrishna Holla, learned Central Government Standing Counsel for the respondents, submitted that the question of 20 or more workers is irrelevant. If an establishment commenced its activity and in the course of time it employed more than 20 workers, the infancy period is to be reckoned from the initial date and not from the date on which it crossed the limit of 20 workers. That may be a case if the establishment remained in the classification of Section 1(3)(a) throughout or Section 1(3)(b) throughout. But perhaps different considerations may prevail if an establishment which was grouped in one of the categories and changes into the other, then the establishment that seeks exemption is the one coming either under Section 1(3)(a) or Section 1(3)(b) and not the former.
5. It is not correct to say that an establishment comes within the ambit of the Act for the first time only when it employs 20 workers. But when the establishment gets converted into the other class i.e. either from the class referred to in Section 1(3)(a) or Section 1(3)(b), the period of 3 years should commence from the date it became converted into the category. The infancy protection is to that establishment or factory and the relevant date is the date on which that establishment was set up. Its earlier existence in the other category is then of no consequence. If the establishment carried on the said business it commenced first throughout, then the infancy period will end with crossing of the period from its initial commencement. But, if the establishment stopped its initial activity and at that time it did not employ more than 20 workers and commenced different line of activity coverable under the other Sections (i.e., either Section 1(3)(a) or Section 1(3)(b) and it is in evidence it did not carry on the prior activity, then the infancy protection commences from the later date and not earlier. And if the unit had composite activity, then certainly the period will commence from the earlier date and not as now claimed by the petitioner.
6. These are all matters to be examined and gone into by the respondent afresh. I would, therefore, set aside the impugned order and remit the proceedings to the respondent for considering the question afresh and pass appropriate orders. The whole exercise should be completed within four months form the date of receipt of the order. No costs.