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Judgment
The petitioner challenges the validity of the order of the 1st Respondent dated August 7, 1990, passed u/s 7A of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952, and the consequential order of the 3rd respondent dated July 6, 1991 as illegal and void.
The petitioner is a Co-operative Society registered under the A. P. Co-operative Societies Act. It was registered in 1974. The Secretary of the Petitioner Co-operative Society submits that a group of unemployed Post-graduates in Geology, Geophysics, Physics and Chemistry etc., have registered themselves as a Co-operative Society to provide certain expert consultancy services, and that under the bye-laws every member is a share holder and undertakes consultancy work at the instance of the society. According to the petitioner, there is no master and servant or employer and employee relationship between the society and the member. Each member is a share holder. The treatment of the Petitioner-Society as an establishment within the meaning of Section 1(3)(b) of the Employees'' Provident Funds and Miscellaneous Provisions Act, for short the, "Act'', and the direction to comply with the scheme and the Act from July 1, 1988 is questioned in this write petition.
The respondents filed a counter-affidavit denying that there is no relationship of master and servant. It is averred that the relationship of master and servant exists. It is further stated that the Society had, complied with the direction and remitted the amount due from July 1, 1988 to June 30, 1989 but defaulted in payment of dues from July 1, 1989 to December 12, 1989. . It Is pointed out that as per the determination a sum, of Rs. 2,75,354.10 is due for the period from November 1, 1986 to June 30, 1988 and a further sum of Rs. 1,51,244-25 for the period from July 1, 1989 to January, 31, 1990. . In these circumstances it is prayed that the writ petition be dismissed.
Sri V. V. Prabhakara Rao, the learned Counsel appearing for the petitioner, contends that the petitioner has raised a specific plea before the Regional Provident Fund Commissioner, the 1st respondent herein, that the petitioner-Society is not an establishment within the meaning of Section 1(3)(b) of the Act and that there is no relationship of employer and employee but that aspect has not been considered and no finding is recorded.
The learned standing Counsel for the respondents, Sri R. N. Reddy, on the other hand, contents that there is enough record to show that the petitioner has employed more than 200 persons and that it is paying salaries to them, as such the fact that the petitioner-society is an establishment within the meaning of Section 1(3)(b) of the Act is established.
Whether the petitioner-society is an establishment within the meaning of the Act and has been so determined by die 1st respondent in his order, has to be ascertained from the order itself. I have perused the order dated August 7, 1990 of the 1st respondent. The 1st respondent has exhaustively noted the contentions of both sides and concluded that there was no force in the argument advanced by the representatives of the society inasmuch as the society being a registered body is a legal entity independent of its share holders and is deemed to be an employer insofar as the payment of salaries wages to the member employees is concerned, so there exists employer-employee relationship between the society and its member-employees. It may be pointed out that this finding given by the 1st respondent is a general observation and vague. The Commissioner should, with reference to the records, point out as to whether there are any employees, if so how many, whether they are members of the Society or third parties; the number of employees employed by the society and the salaries paid to them etc. It is on that basis that the first respondent has to record a finding as to whether it is an establishment within the meaning of Section 1(3)(b) of the Act. There is no such finding in the impugned order. In view of this infirmity the order of the 1st respondent cannot be sustained. It is accordingly quashed. It is open to the 1st respondent to consider the question as to whether the petitioner-society is an establishment within the meaning of Section 1(3)(b) of the Act, after giving due notice to the secretary of the petitioner-society and an opportunity of being heard to him. This exercise should be completed within three months from the date of receipt of this order. The Writ Petition is accordingly allowed, but, in the circumstances of the case, there shall be no order as to costs.