Aravindadevi, J. vs Union of India (UOI) and Another

N.V. Balasubrmanian, J.—The petitioner is the sole proprietrix of the establishment styled Murugan Transport. According to the petitioner,

the business earlier was done by her father-in-law and after his death she became the sole proprietrix of the said business. She has changed the

name of the business of Murugan Transport from Murugan Service, in which name her father-in-law was carrying on the business and he gave the

said business to her mother-in-law and the mother-in-law closed the business and there is only one business in the name and style, Murugan

Transport carried on by the petitioner. According to the petitioner the employees of Murugan Service were covered under the provisions of the

Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter to be referred to as the ""Provident Funds Act""), and on account

of nationalisation of bus routes the petitioner was left with only one bus route with two drivers and two conductors and there are no other

employees. Since the number of persons were reduced to four, the petitioner made an application u/s 16(2) of the Provident Funds Act to the first

respondent, claiming exemption from the operation of the provisions of the Act to the said establishment. The petitioner''s husband who was

running the Murugan Roadways also submitted a similar application seeking exemption. The first respondent by his order, rejected the application

of the petitioner on the ground that the provisions of Section 16(2) of the Provident Funds Act provide for grant of exemption to class of

establishments and not to an individual establishment and hence, the request of the petitioner could not be granted.

The petitioner has filed the writ petition challenging the order of the, first respondent on the ground that the view of the first respondent is

erroneous as the power to grant exemption u/s 16(2) of the Provident Funds Act is not confined to class of establishments, but it is also available

to an individual establishment as well.

The respondents have filed a counter-affidavit stating that the power to grant exemption u/s 16(2) of the Provident Funds Act is restricted only

to a class of establishments and not to an individual establishment. According to the respondents, it is not open to the respondents to grant

exemption to an individual establishment invoking the provisions of Section 16(2) of the Provident Funds Act, and the case of the petitioner that

individual establishment is also entitled to exemption u/s 16(2) of the Provident Funds Act is not sustainable in law.

Mr. S. Balasubramanian, learned counsel for the petitioner, submitted that the order of tile first respondent holding that exemption u/s 16(2) of

the Provident Funds Act is not available to an individual establishment is erroneous in the eye of law, and, according to the learned counsel for the

petitioner, the expression ''class of establishments'' would also include ''individual establishment'', and in the context of Section 16(2) of the

Provident Funds Act, particularly, in the context of the provisions of Sections 16(1) and 17(1) of the Provident Funds Act, the Central

Government has the power to grant exemption in the case of an individual establishment as well. Learned counsel submitted that at the time of grant

of exemption u/s 16(2) of the Provident Funds Act, the Central Government has to take into account not only the financial position of any

establishment, but also, other circumstances of the case and, therefore, according to him the fact that the Central Government is required to take

into account the financial position and other circumstances of the case indicate that with reference to individual establishment also, the power to

grant exemption is available to the Central Government. Learned counsel in this connection referred to a decision of the Calcutta High Court in the

case of Visva Bharati Vs. Regional Provident Fund Commissioner, . Learned counsel also referred to a decision of this Court in the case of

Vittaldas Jagannathadas v. Regional Provident Fund Commissioner, (1966) I LLJ 240 (Mad), and submitted that the expression,"" establishment"" is

not defined in the Act and when the Provident Funds Act applies to every establishment, there is no reason why exemption should not be granted

to an individual establishment invoking the powers u/s 16(2) of the Provident Funds Act.

Learned counsel for the respondent, on the other hand, submitted that the expression employed in Section 16(2) of the Provident Funds Act is

any class of establishments or classes of establishments"", and therefore, the intention of the legislature is to grant exemption only to a class of

establishments and not to an individual establishment. He, therefore, submitted that in the contest of the provisions of Section 16(2) of the

Provident Funds Act, the exemption can be granted only to a class of establishments and the view of the first respondent that individual

establishment is not entitled to exemption is quite justified. He also referred to Section 1(5) of the Act and submitted that the mere fact that number

of employees is reduced to below twenty employees at any point of time would not render the provisions of the Provident Funds Act inoperative,

and, therefore, considering the intention of the Legislature and object of the Act, the view of the first respondent that the exemption is available only

to a class of establishments is justified and valid in the eye of law.

I have carefully considered the submissions of learned counsel for the parties. The question involved in the writ petition relates to the

interpretation of Section 16(2) of the Provident Funds Act, whether the Central Government is empowered to grant exemption to an individual

establishment, and the Section reads as under:

If the Central Government is of opinion that having regard to the financial position of any class of establishments or other circumstances of the

case, it is necessary or expedient so to do, it may, by notification in the Official Gazette, and subject to such conditions, as may be specified in the

notification, exempt, whether prospectively or retrospectively, that class of establishments from the operation of this Act from such period as may

be specified in the notification.

A close reading of Section indicates that the Central Government is empowered to grant exemption to any class of establishments. No doubt, at

the time of grant of exemption, the Central Government is required to take into account the financial position of any class of establishments or other

circumstances of the case and then grant exemption, either prospectively or retrospectively, from the operation of the provisions of the Act to that

class of establishments. Though the expression ""establishments"" is not defined under the provisions of the Provident Funds Act, the expression

establishment"" has received judicial interpretation and the expression has been construed by this Court in Vittaldas Jagannathadas v. Regional

Provident Fund Commissioner, (supra) wherein ANTANARAYANAN, J. as his Lordship then was), has held as under (1996) I LLJ 240 :

After reference to several authorities and Words and Phrases Judicially Defined by BURROWS, volume 2, I find that the most helpful definition

of ""establishment"", at least in the context of the usage of that word in the present Act 19 of 1952, is that available in the OXFORD

DICTIONARY, namely, ''organised body of men maintained for a purpose.'' Once we have this definition in perspective, and also keep in mind

the principle that the Act really applies to the factory or establishment or industrial organisation, whichever it might be termed, and not to changes in

ownership, or to the history of the organisation, which might include temporary closures, it seems to me that the true way of looking at the liability

becomes fairly clear.

I am unable to accept the submission of Mr. S. Balasubramanian, learned counsel for the petitioner that the provisions of Section 16(2) of the

Provident Funds Act should be construed to mean that the power to grant exemption by the Central Government is available to an individual

establishment as well. The expression, ""any class of establishments"" in Section 16(2) of the Provident Funds Act, in my opinion, clearly shows that

the exemption is intended to be conferred only to a class of establishments and the use of the expression ""any"" before the expression ""class of

establishments"" in Section 16(2) of the Provident Funds Act, and the emphasis given to the expression, ""class of establishments"" in Section 16(2)

of the Provident Funds Act show that exemption is intended to be conferred only to a class of establishments. If the intention of the Legislature is

otherwise, the Legislature would have used the expression ""any establishment"" instead of ""any class of establishments."" Moreover, u/s 16(2) of the

Provident Funds Act, the exemption is intended to be conferred only to a class of establishments is ex facie clear by the repetitive use of the

expression ""class of establishments"" in more than one place in the section. Further, the Employees'' Provident Funds Act has been enacted with an

object to institute provident fund for the benefit of the employees in factories and other establishments, and admittedly, it is a labour welfare

measure. Moreover, Parliament has also made its intention clear regarding the continued applicability of the Act, though the number of employees

at one point of time may be reduced to a number below twenty, and the reduction in the strength of employees would not render the provisions of

the Provident Funds Act inoperative for the said establishment. In other words, Section 1(5) of the Provident Funds Act makes it clear that the

provisions of the Provident Funds Act is intended to have continued application and there should be a coverage of the Act to the employees,

though their number is reduced to below the minimum number of employees prescribed for the applicability of the Provident Funds Act. Moreover,

the provisions of Section 16(2) of the Provident Funds Act cannot be construed in isolation but should be construed in the context of other

provisions of the Act as well. The provisions contained in Section 16(1) of the Provident Funds Act show that with reference to individual

establishment, the exemption is granted subject to fulfilment of conditions prescribed in Section 16(1). So also, under- Section 17(1) of the

Provident Funds Act, the Central Government is given the power to grant exemption to an individual establishment on fulfilment of conditions

mentioned in Section 17(1). When Section 16(2) is construed in the light of Sections 16(1) and 17(1) and in the collocation of words found in

Section 16(2) of the Provident Funds Act, in my opinion, Section 16(2) of the Provident Funds Act empowers the Central Government to grant

exemption only to a class of establishments and not to an individual establishment.

Mr. S. Balasubramanian placed reliance on Section 13(2) of the General Clauses Act wherein it has been stated that the word ""singular"" in all

Central enactments shall include ""plural"" and vice versa. Section 13(2) of the General Clauses Act would apply only where there is no repugnancy

to the subject. However, in the context of Section 16(2) of the Provident Funds Act and the object of the Act, the repugnancy is clear and there is

an intention contrary for the inapplicability of the rule embodied in Section 13(2) of the General Clauses Act, to consider the plural expression used

in Section 16(2) as a singular expression as well.

Though there is no direct decided case on this topic which was brought to the attention of this Court, some of the decisions of the Supreme

Court rendered under the provisions of the Industrial Disputes Act, on the question whether an individual dispute can be a subject matter of

adjudication of the Industrial Tribunal prior to introduction of Section 2-A of the Industrial Disputes Act, are of much help. Prior to the amendment

or introduction of Section 2-A of the Industrial Disputes Act, number of cases arose before the Apex Court on the question whether an individual

dispute can also be a subject matter of adjudication by the Industrial Tribunal and the Supreme Court laid down certain tests to find out when the

plural expression used in an enactment can be construed as a singular expression. The Supreme Court in the case of The Newspapers Ltd. Vs.

The State Industrial Tribunal, U.P., , has held that in order to decide the question, the principles that have to be considered are to find out the

reasons for the enactment and the object that was sought to be subserved. In other words, the Act has to be viewed as a whole and the intention

of the Legislature has to be determined by construing all the constituent parts of the Act together, and not by taking detached sections or to take

one word here and another there. The Supreme Court in the above case held that an individual dispute is not covered under the provisions of the

U. P. Industrial Disputes Act, 1947, and the Apex Court held as under in The Newspapers Ltd. Vs. The State Industrial Tribunal, U.P., :

So construed the provisions of the U.P. I.D. Act show that the machinery of the Act has been devised with the object of maintaining industrial

peace so as to prevent interference with public safety or public order or with the maintenance of supplies and services essential to the life of the

community or of employment. The Act is based on the necessity of achieving collective amity between labour and capital by means of conciliation,

mediation and adjudication. The object of the Act is the prevention of industrial strife, strikes and lock-outs and the promotion of industrial peace

and not to take the place of the ordinary tribunals of the land for the enforcement of contracts between an employer and an individual workman.

Thus viewed, the provisions of the Act lead to the conclusion that its applicability to an individual dispute as opposed to dispute involving a group

of workmen is excluded, unless it acquires the general characteristics of an industrial dispute, viz., the workmen as a body or a considerable

section of them make common cause with the individual workman and thus create conditions contemplated by Section 3 of the U. P. Act, which is

the foundation of State Governmental action under that Act. The other provisions, which follow that section, only subserve the carrying out of the

objects of the Act specified therein.

In Management of Indian Cable Company Ltd. v. Its Workmen, 1962 3 SCR 589, the question was again considered by the Supreme Court,

whether an individual dispute of a workman can have the character of an industrial dispute and the Supreme Court, after noticing its various

decisions, held as under:

But the reason on which these decisions rest, viz., that the policy behind the Industrial Disputes Act is to protect workmen as a class against unfair

labour practices and not to enact special provisions for enforcing the claims of individual workmen, would equally militate against the contention

that a dispute, which is essentially individual in character would become an industrial dispute merely because two persons have joined in it. What

imparts to the dispute of a workman the character of industrial dispute is that it affects the rights of the workmen as a class. That is why the above

decisions lay down that the dispute of a single workman would become an industrial dispute, when it is sponsored by a union or by a considerable

number of workmen; for it can then be taken that it does affect them as a class.

Applying the tests laid down by the Supreme Court in the above cases, there can be no dispute that the Provident Funds Act has been enacted

as a labour welfare measure, and, when employees are granted the statutory benefit conferred by the Act, even in case, the strength of the

employees is decreased and reduced to below the minimum limit for the applicability of the Act, the grant of exemption to an establishment

because the employees strength is reduced, would defeat the object of the Act. The provisions of Section 1(5) of the Provident Funds Act also

give a clue regarding the continued applicability of the provisions of the Provident Funds Act. As observed by the Supreme Court in Burhanpur

Tapti Mills Ltd. v. Burhanpur Tapti Mills Mazdoor Sangh, (supra) the contribution to the provident fund is designed to induce thrift so that the

employee may save from his personal earnings a portion for a rainy day or for his old age, and, as the workman cannot be expected to spare very

much, with due regard to the gap between what he earns and what he must spend, the employer is also expected to make a contribution.

Therefore, the grant of exemption on the ground that the employees'' strength has fallen below the minimum would defeat the object of making

contribution to the provident fund, both by the employee and by the employer. As already held by me, in the context of Section 16(2) of the

Provident Funds Act and collocation of the words found in Section 16(2) of the Provident Funds Act, the exemption is meant to be granted to any

class of establishments, and, the section is not meant to confer exemption to an individual establishment. Though, I agree with Mr. S.

Balasubramanian that the Central Government is required to take into account not only the financial position of the said class of establishments, but

also other circumstances before the grant of exemption u/s 16(2) of the Provident Funds Act, unless the exemption is sought for by any class of

establishments, it is not permissible for the Central Government to grant exemption to an individual establishment. I am, therefore, of the view that it

is not possible to enlarge the meaning of the term ""classes of establishments"" to include the term ""an individual establishment"" found in Section 16(2)

of the Act and in my view, the said expression in Section 16(2) of the Provident Funds Act should be construed in a restricted sense, confining its

application to a class of establishments and not to an individual establishment. In the view I have taken, it is not necessary to consider the decision

of the Calcutta High Court in Visva Bharati v. Regional Provident Fund Commissioner, (supra). Moreover, the exemption contemplated u/s 16(2)

of the Provident Funds Act is meant for a specified period and the exemption is meant for temporary suspension of the operation of the Act for a

specified period, but it is not meant to confer permanent exemption for all time to come. Viewed in any manner, the claim of the petitioner that she

is entitled to claim exemption u/s 16(2) of the Act is not sustainable, and, it was rightly rejected by the first respondent. I do not find any infirmity in

the order passed by the first respondent denying exemption u/s 16(2) of the Provident Funds Act. I am not inclined to grant the prayer sought for

in the writ petition. Accordingly, the writ petition fails and it is dismissed. However, in the circumstances, there will be no order as to costs.