Welfare Fund Inspector Vs. Jaya - Court Judgment

P.R. Raman, J.

1. W.A. 2339/2004 arises out of the judgment of the learned Single Judge in O.P. No, 12344 of 2002 and W.A. 2345/2004 arises out of the judgment in O.P. No. 23834 of 2002. Both the Original Petitions raised common question of law and facts and the learned Single disposed of the Writ Petitions by a common judgment dated 12th August, 2004. Hence these Appeals also are disposed of by this common judgment.

2. The appellant in both these Appeals is the Welfare Fund Inspector, Toddy Workers Welfare Fund Board, Ernakulam. In O.P. 23834/2002 petitioner is one T.C. Jose and the 4th respondent is one K.D. Suresh, Thrissur. The petitioner contended that he along with four other persons were the licensees of Toddy Shop Nos. 96-99, 119-122 and 147 of Mamala Range in Ernakulam District for the year 2000-01, that they later transferred the right thereunder to the 4th respondent on the basis of an agreement, that being the immediate employer of the employees working in the said shops, the 4th respondent himself was deducting and recovering the employees' share of the contribution payable in respect of the employees working in those shops for remitting the same to the Kerala Toddy Workers Welfare Fund Board along with the employers' share of contributions thereunder, that the 4th respondent committed default in payment of employer's contribution to the Welfare Fund and that it was thereupon that steps were initiated under Section 8 of the Kerala Toddy Workers Welfare Fund Act for determination of the amount due under the Act, against the petitioner and other licensees and the 4th respondent. It was his further contention that the employees working in the aforesaid Toddy shops had given evidence to the effect that the 4th respondent was conducting the shop and paying wages and recovering their share of contribution to the Welfare Fund. So however, the Welfare Fund Inspector who is the first respondent in the Writ Petition, passed Ext.Pl order of determination dated 25.3.2002, imposing the liability to pay contribution under the Act in respect of the shops in question jointly on the licensees as well as the 4th respondent. During the pendency of Section 8 enquiry two among the licensees filed O.P. 12344 of 2002 challenging the initiation of the proceeding against them. Consequent to Ext.Pl produced in the case, Revenue Recovery proceedings were resorted to and two separate demands were raised under Sections 7 and 34 of the Revenue Recovery Act. Exts.P3 and P4 are the said notices so issued. Though objections were raised, the same were over-ruled. Contending that Ext.Pl is arbitrary and illegal, the Original Petition was filed seeking to quash the same.

3. In O.P. 12344/2002, the contention of the petitioners were that they and three others bid in auction Toddy Shop Nos. 96 to 99, 119 to 122 and 147 of Mamala Range, for the year 2000-01; but they could not conduct the shops and therefore, they were conducted by the 4th respondent therein for the period from 1.4.2000 to 31.3.2001. Proceedings, however, were initiated under the Act for recovery of the amount due as per Ext.P1 dated 18.12.2001, as per which an amount of Rs. l,11,358/- was still payable. But according to the petitioners, instead of taking proceedings against the 4th respondent, the authorities have initiated steps to recover the amount from them. True copy of the notice dated dated 2.2.2002 issued by the second respondent Deputy Tahsildar, Revenue Recovery, was produced as Ext.P2.

4. The main contention of the petitioners was that in so far as the 4th respondent was found, based on enquiry, as the real employer of the employees employed in the shops and accepted by the Department, there was no liability cast on the licensees as they had already, based on an internal arrangement, enabled the 4th respondent to conduct the shops, who alone had recovered the employees' share of contribution, and having conducted the shops, he alone was liable to pay the balance contribution, if any due. The authorities, on the other hand, contended that because of the inclusive definition of the term 'employer' as defined under Section 2(c) of the Act, the licensee is jointly and severally liable along with any other employer as defined under the Act and whatever internal arrangement the licensees had with the 4th respondent will not absolve their liability under the Act to pay the contribution due thereon since they have got an independent liability as they are also employers as defined under the Act.

5. As per the judgment under appeal, the learned Single Judge held that when a workman had tendered evidence and records indicated that it was the 4th respondent who alone was the employer, it was a perverse stand and illogical reasoning, and a proposition difficult to be digested that only for the reason that licence had been obtained in the name of a compendium of persons and that too under the Abkari Act, all of them are to be roped in and made answerable for the contribution to the Employees Welfare Fund and that the attempt is artificial to the core and the legislature might not have envisaged to fasten such liability on a person who had no connection with the actual business. It was further held that having accepted the 4th respondent as the employer in respect of the shops for the relevant year, the respondent is estopped from taking a stand that for technical reasons that some others too are licence holders, such group becomes equally answerable and the inclusive definition was not intended to apply to such a situation at all. It was also held that the 4th respondent alone was responsible and answerable for the contribution and dues could have been collected from him alone. Accordingly, the Original Petitions were allowed and the orders impugned and demands were set aside. It is challenging the said judgment of the learned Single Judge, that the present Appeals are filed.

6. Learned Counsel appearing for the appellants submitted that as per Section 2(c) of the Act, the term 'employer' has been defined and it is an inclusive definition to rope in the licensees as well falling within the ambit of the definition. When the legislative intention is such to enlarge the scope of the definition by including the licensees also within the ambit of the definition clause, there is no room to hold that only the employer satisfying the first limb of the definition clause alone can be fastened with the liability. It will be in violation of the expression used in the definition clause to exclude the licensees from their liability. They also placed reliance on the decision of the Apex Court in Joseph Joseph v. State of Kerala 2002 (1) KLT 827.

7. Heard both sides. The definition of the term employer as defined under Section 2(c) is extracted hereunder:

(c) 'employer' means any person who employs, whether directly or through another person, or whether on behalf of himself or any other person, one or more employees and includes any person who has a licence for the manufacture (distribution, storage or sale) of toddy under the Abkari Act for the time being in force.

The term 'employee' is defined under Section 2(d) of the Act as follows:

(d) 'employee' means any person who is employed for wages in connection with the tapping, manufacture, (transport, storage or sale) of toddy and who gets his wages directly or indirectly from the employer and includes any person employed by or through a contractor or through an agent in or in connection with the tapping, manufacture, (transport, storage or sale) of toddy.

8. As could be seen from Clause 2(c) defining the term 'employer' which is an inclusive definition apart from the person who employs whether directly or through another person or whether on behalf of himself or any other person, one or more employees it also includes within its ambit any person who has a licence for the manufacture (distribution, storage or sale) of toddy under Abkari Act relevant in force. The term 'employee' means any person employed for wages in connection with tapping or manufacture, transport, storage or sale of toddy and who gets his wages directly or indirectly from the employer. Therefore, even though the licensee may not directly pay any wages to his employees attached to the shop but by virtue of the definition clause contained in Section 2(c) he is also made liable for the contribution under the Act. It has to be noticed that for conducting a toddy shop, licence has to be obtained under the Abkari Act and the Rules thereunder more particularly, Kerala Abkari Shops Disposal Rules. Once licence is granted in favour of a person or group of person, such licence is not transferable under the Abkari Laws. Hence the legislature, while enacting the legislation namely, the Kerala Toddy Workers Welfare Fund Act, has specifically included the licensee also within the ambit of the definition clause so that any arrangement made by him dehors the provisions of the law relating to the issuance of licence with any other third party so as to conduct the shop will not absolve him from the liability to pay contribution. In Joseph Joseph's case (2002 (1) KLT 827) the Apex Court held that if, under the Rules, the licensee was not authorised to lease out or sub-let the whole or any portion of the privilege or licence granted to him for conducting the Abkari business, holding the appellants as employer with respect to the licensee's shop would amount to facilitate the violation of the Kerala Abkari Shops Act and the Rules framed thereunder.

9. That was a case where licensee, though admitted to be conducting the shop, the contention of the appellants was that they were not the employers and the licensees of the shop named thereunder were the actual employers. The High Court held that the appellants were also running the business of the shop had employed the workers, they shall be deemed to be the employers vis-a-vis those workers and liable to pay the contribution to the fund under the Act. After perusing the definition contained in Section 2(c) of the Act, the Apex Court held that 'it refers to the person who employs any person, whether directly or through any other person or whether on behalf of himself or any other person, as employer. The employment by any person can be for himself or for any other person. Merely because the person is associated with the conduct of the business of an establishment or shop, it cannot be said that he had employed the workers on his own behalf. There may be cases where it can be shown that besides the owner any other person conducting the business of the said shop may employ workers on his own behalf and not on behalf of original owner. But in the absence of proof to the contrary, particularly in view of the statement of principal employer that he had employed the workers, the intermediary persons could not be held to be the employer of the workers who were employed for the conduct of the business in the shop covered under the Act. Law presupposes the conduct of a legal business and cannot be interpreted in a manner which frustrates the object of the Act and results in not only miscarriage of justice but violation of the statutory provision of law. If under the Rules, the licensee was not authorised to lease out or sub-let the whole or any portion of the privilege or licence granted to him for conducting the Abkari business, holding the appellants as employer with respect to the licensee's shop would amount to facilitate the violation of the Kerala Abkari Shops Act and the rules framed thereunder. Such an interpretation is not called for as it is against the public policy. In any particular case, where the authorities find that besides the licensee any other person conducting the business in a licenced premises under the Abkari Act and the Rules framed thereunder is also liable to contribute to the fund under the Act, they are under the legal duty to assert and positively hold that such persons were the employers vis-a-vis the workers and that they were conducting the business either with the legal authority of the licensee or the licensing authority.

10. It can thus be seen that so long as there is prohibition for transfer of licence, the licensee continues to be the owner and the principal employer of the shop by virtue of the specific inclusive definition of the term 'employer' under Section 2(c). As a matter of fact, when the business in an abkari shop is conducted which mandates a licence to be issued and so long as the licence is not surrendered and continues to be in favour of the petitioners, whatever arrangement they had made with any intermediaries will not absolve their liability under the Act. Thus, they are jointly and severally liable along with the employer satisfying the first limb or the definition clause. Hence, if there is any default in payment of the dues, it will be open to the authorities to proceed to recover the said amount from the licensees after exhausting their remedies against the person found to have employed the persons and directly pays wages to them. When the legislature in its wisdom, with a view to enlarge the scope of the definition, has roped in 'licensees of the shop' also under the definition of the expression 'employer', the Court while interpreting the statute can't go beyond the statute and undo the legislative intend. It is a settled principle of law that if a term stands defined in the Act, the said term is to be given the same meaning wherever it is needed in the Act, unless a contrary intention is expressed. Where the definition is an inclusive definition, the word not only bears its ordinary, popular and natural sense whenever that would be applicable, but it also bears its extended statutory meaning. However, it is quite unusual to say that a statutory definition does not mean or include what it plainly means or includes, particularly when its application to the various provisions of the Act does not present much difficulty. To the extent the learned Single Judge has held that the licensee cannot be held liable, we set aside the judgment.

11. However, we have to add to say that since the authorities themselves have accepted the 4th respondent as the employer, who satisfies the first limb of the definition clause, and contributions were remitted, by him, there is no reason why the balance contribution due for the relevant period in question shall not be recovered from the said employer at the first instance and only after exhausting the remedies against him, should there be any balance amount to recover which could not be recovered from the said employer that proceedings shall be initiated against the licensees. In the present case, it has been found on fact by the learned Single Judge that the authorities themselves have accepted the 4th respondent as their employer. Hence we are not interfering with the relief portion to the extent it has quashed the demand notices as against the petitioners. So however, it will be open to the authorities to proceed against them after exhausting the remedies against the 4th respondent. The Writ Appeals are accordingly disposed of. There will be no order as to costs.