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Judgment
JUDGMENT
The petitioner is a Co-operative Society. The short issue arising for consideration in this writ petition is as to whether the petitioner qualifies for the benefits of exemption with reference to the provisions of Section 16(1)(a) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, (hereinafter referred to as ‘the EPF Act’).
The petitioner is a Co-operative Society, stated to have been established in the year 1946. The petitioner is stated to be formed with the objective of looking after the welfare and for protecting and enhancing the well-being of the workers engaged in the collection of ‘black-lime shells’, in the area of its operation. The petitioner states that its members collect black-lime shells from the Vembanad Backwaters, and after removing the flesh from the shells, the shells are sold to its customers. The petitioner was proceeded against under the EPF Act from 2013 onwards. The petitioner took up a contention that it need not be covered under the provisions of the statute, since it is entitled to the benefits of exemption under Section 16(1)(a). This was specifically pointed out before the original authority. The original authority by Ext.P2 dated 20.09.2016 found the afore issue against the petitioner. The petitioner took up the matter in further appeal before the Tribunal (3rd respondent). The Tribunal disposed of the appeal by the order at Ext.P6 dated 20.05.2022, finding the issue against the petitioner. It is seeking to challenge the orders at Exts.P2 and P6 issued as above, that the petitioner has filed the captioned writ petition.
I have heard Sri. Rajesh Nair, the learned counsel for the petitioner, Sri. Sajeev Kumar K.Gopal, the learned Standing Counsel for the EPFO, as well as Sri. T.K.Rajeshkumar, the learned counsel for respondents 4 and 5.
The learned counsel for the petitioner would point out that the petitioner is entitled for the benefit under Section 16(1)(a), since, admittedly, the petitioner is covered by the first limb of Section 16(1)(a) - with respect to the number of employees. It is his submission that the dispute is only as regards the second limb with respect to the use of ‘power’ for the ‘working of the unit’. The learned counsel raises two contentions. The first contention is that the activity noticed by the original authority in Ext.P2 is, in reality, an activity which is taking place after the sale of black lime shell. Without prejudice, he would state that mere use of the power in the establishment, that too for the working of one motor pump having a capacity of 3.5 HP - for the purpose of washing of lime shell - would not amount to any manufacturing activity.
Per contra, Sri. Sajeev, as well as Sri. Rajeshkumar, the learned counsel for the respondents, would contend that the activity carried on by the petitioner is entirely with the aid of power and hence not entitled to the benefits of exemption under Section 16(1)(a).
I have considered the rival submissions as well as the connected records.
The provisions of Section 16(1) (a) of the EPF Act read as under: -
“16(1)(a) to any establishment registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State relating to co-operative societies, employing less than fifty persons and working without the aid of power; or” (underlining supplied) A reading of Section 16(1)(a) would show that it is only in a situation wherein a Co-operative Society is shown to be;
employing less than 50 persons and
working without the aid of power that the Society would be entitled to claim the benefits under Section 16. As regards the first limb of 16(1)(a), as already noticed, there is no dispute insofar as in the order at Ext.P2 it is admitted that the number of employees was less than 50.
Therefore, ultimately, the only question arising for consideration is as to whether the petitioner was ‘working without the aid of power’.
As regards the first submission made by Mr.Rajesh, that the activity was one carried out after the sale, this Court notices that even in Ext.P2, the contentions raised by the petitioner have been specifically recorded. In that order, the afore contention has been specifically considered and positively found that the activity is something which is taking place after the sale.
Similarly, in the appellate order at Ext.P6 under paragraph No.7, the following observations are made: -
“7…. The learned counsel also pointed out that the appellant admitted the fact that the buyers insist for washing and cleaning the product before the same is sold and they are engaging 2 or three employees on piece rate or contractual basis to do the work….. It was admitted during the hearing that Hindustan Newsprint Ltd is one of the major clients and they accept black lime shell only after cleaning and they will ensure that the lime shell brought from the appellant society is properly cleaned from their Quality Control Lab.” (underlining supplied)
From the afore, this Court notices that the petitioner at no point of time had a case to the effect that washing is taking place after the sale. Hence, the contention raised by learned counsel to the afore effect only requires to be recorded and rejected.
The second issue arising for consideration is with respect to the usage of ‘power’, which disentitles the petitioner from claiming the benefit under Section 16. The learned counsel for the petitioner would point out that even if it is taken that power is being used, the said use of power is not for any manufacturing activity. He sought to rely on various judgments, which considered the question with respect to the ‘manufacturing activity’. However, as noticed earlier, Section 16 is not geared to any manufacturing activity, and instead, it is geared to the ‘working’ of the Co-operative Society. Therefore, if in a particular case, it is shown that a Society is ‘working with the aid of power’, needless to say that the afore Society would not be entitled for the benefit under Section 16(1). At this juncture, this Court also notices the judgment relied on by Sri. Sajeev, the learned counsel for the EPF, in Writ Petition No.4173 of 2015 and connected case, wherein the following findings are rendered:-
“7…..There is also no case that the establishment was working with the aid of power. Merely because electricity is used in the premises of the society for providing light and other amenities at the workplace, it cannot be said that the establishment works with the aid of power. Working with the aid of power implies that there must be some work or process carried on in the establishment with the use of power. Such use must be direct and proximate as regards the activity carried on by the establishment. An indirect application such as use of electric bulbs for providing light or electric fans for providing comfortable working environment, does not amount to working with the aid of power. The Respondent society, accordingly, answers fully the description of an establishment covered under clause (a) of sub-section (1) of Section 16, all three characteristics necessary for such coverage being present in its case.”
Thus, it is only in a situation where an indirect application for the use of power, like for merely providing lighting of bulbs, etc., that the benefit of exemption under Section 16 is applicable. In the case at hand, as already noticed, the petitioner is using the power for washing of lime shell, which, in my opinion, would definitely amount to ‘working of the unit’, on account of which the petitioner would not be entitled to the benefit of exemption.
I find no merit in this writ petition, and the same would stand dismissed.