1. All the six revision applications arise out of the prosecutions for contravention of the provisions of the Employees' Provident Funds Act, 1952, and the scheme framed thereunder.
2. The applicant here is a public limited company incorporated under the Indian Companies Act. Along with the Company six directors of the company including the resident director were prosecuted. There were six cases filed by the Provident Fund Inspector against the applicant-company and the six directors. The trial Magistrate convicted all the accused in each of those cases holding them guilty under Para. 76(c) of the scheme under the Employees' Provident Funds Act and sentenced to company as well as the six directors to various sentences of fine, excepting the original accused 5, Solao, who was sentenced to simple imprisonment for three months.
3. Against the decisions of the trial Magistrate, the company as well as the directors filed appeals before the Assistant Judge, Nagpur. The Assistant Judge dismissed the appeals. The learned Assistance Judge maintained the convictions of the company as well as the directors, but modified the sentences by imposing fine of Rs. 50 on each of the accused in all the cases.
4. The Central Hindustan Orange and Cold Storage Company, which was one of the accused in all the six cases has now filed these six revision applications challenging its convictions in those cases.
5. The prosecutions were on the basis of the report or complaint made by the Provident Fund Inspector alleging that the applicant company as well as the directors were guilty of offences under the Employees' Provident Funds Act in not paying the provident fund contributions of the employees of the company and the employer's share thereof for the period July, to September, 1962, and October to December, 1962, for not filing the returns for the said periods and for not paying the administrative charges as contemplated by the Employees' Provident Funds Act, 1952. The applicant-company has been registered under the Factories Act and is doing business in the name of the Central Hindustan Orange and Cold Storage Company, Ltd. Formerly, the applicant-company was carrying on the business of preserving fruits and vegetables in cold storage and canning of fruits. In or about 1953, the applicant-company leased out the canning portion to the Nagpur Orange Growers' Association and subsequently the said concern has been sold to the Nagpur Orange Growers' Association, shortly known as 'N.O.G.A.' After the lease of the canning section to the N.O.G.A. company, the applicant had only the business of running a cold storage and along with it also started the business of manufacturing ice. It is the case of the applicant that the cold storage was for the preservation of potatoes therein and these potatoes were brought in by customers to whom space was lent by the company for storing their potatoes under cool conditions.
6. It is not disputed that the applicant-company did not deposit any amount on account of the provident fund, either of the deductions from the employees' salaries or the employer's contribution as required by the Employees' Provident Funds Act. It is also not disputed that the statements of returns were not filed by the applicant-company, nor the administrative charges deposited as required by the provisions of the Provident Funds Act, which shall hereinafter be referred to as the Act. It is contended by the applicant-company that the provisions of the Act are not applicable to the concern and, as such, the company was not liable to either deposit the amounts or to file the statements of returns.
7. The main question, therefore, that arises is whether the applicant-company is covered by the provisions of the Act and whether any breach on its part in not complying with the requirements as aforesaid will make the company liable for the violation of the provisions of the Act.
8. Before I go to that question, it will be necessary first to decide another point which is in the nature of a preliminary point, namely, whether the trial Magistrate could take cognizance of the offenses alleged to have been committed by the company. Sri Moharir, the learned counsel for the applicant-company, contends that before a Court can take cognizance of any offence punishable under the Act, or under any scheme, there must be a report in writing of the facts constituting such offence by an Inspector appointed under S. 13 of the Act with the previous sanction of an authority specified by the appropriate Government. In these cases the complaints have been filed by the Provident Fund Inspector appointed under S. 13 of the Act before the trial Magistrate. The complaint or the report is in writing. It is also stated in the complaint or report that sanction as required by S. 14(3) of the Act for the prosecution has been granted by the Under Secretary to the Government of Maharashtra, Industries and Labour Department, by his sanction dated 5 April, 1963. A copy of the said sanction has also been filed along with each of the complaints.
9. The learned counsel for the applicant-company contends, however, that this sanction is of no effect so far as the company is concerned. The sanction is at Ex. 12 states that the authority concerned was satisfied from the report dated 20 February, 1963, by the Regional Provident Fund Commissioner that Sriman Chandra Chud, director of the Central Hindustan Orange and Cold Storage company (hereinafter described as C.H.O.C.S), Sri Pashupatinath Mahtha, director, C.H.O.C.S. Sri Kritimant Rao, director, C.H.O.C.S. Sri B. Y. Solao, director, C.H.O.C.S. Sri Lal Chakra Dhar Singh, director, C.H.O.C.S. and Sri R. E. Wagle, director, C.H.O.C.S. :
(1) failed to pay the contributions amounting to Rs. 3,713.50 etc., and such failure is an offence punishable under Para. 76(a) of the scheme;
(2) failed to submit the returns, etc., required by the scheme and such failure is an offence punishable under Para. 76(c) of the scheme; and
(3) failed to pay the administrative charges amounting to Rs. 111.42, etc., within the prescribed time under Para. 38 of the scheme and such non-compliance is an offence punishable under Para. 76(e) of the scheme.
10. The sanction further reads :
'Now, therefore, in exercise of the powers conferred by Sub-section (3) of S. 14(3) of the Employees' Provident Funds Act. 1952 (19 of 1952), read with Government notification . . . I, Bhagwant Vasant Laud, Under Secretary to the Government of Maharashtra . . . hereby accord previous sanction to the making of the necessary report to the Court by the inspector, P. R. Oza, for the prosecution of Sri Sriman Chandra Chud, director of C.H.O.C.S., Sri Pashupatinath Mahta, director of C.H.O.C.S., Sri Kritimant Rao, director of C.H.O.C.S., Sri B. Y. Solao, director of C.H.O.C.S., Sri Lal Chakra Dhar Singh, director of C.H.O.C.S., and Sri R. D. Wagle, director of C.H.O.C.S.'
11. Sri Moharir contends that this sanction on the basis of which a report has been made by the Inspector is not and cannot be called a previous sanction as against the applicant-company as required by the provisions of S. 14(3) of the Act. It is contended that the sanction must state the names of all the persons accused of offences and against whom the prosecution is to be launched. It is also contended that the sanction does not show any application of mind by the authority concerned in sanctioning the prosecutions against the company and the other accused. He, therefore, contends that there being no valid sanction at least as against the applicant-company, the trial Magistrate was not competent to take cognizance of any of the offences for which the complaint was lodged and as such, the trial is vitiated and the complaint ought to have been dismissed.
12. So far as the second part of the contention is concerned, the sanction states that the Provident Fund Commissioner had made a report on 20 February, 1963, to the Government and it was on the basis of this report, the Under Secretary to the Government of Maharashtra who was the authority concerned, was satisfied that the contributions were not made, the returns were not filed and the administrative charges were not paid and hence, he felt himself satisfied that the report should be made to the Court for the prosecution of the six directors named therein. It appears that on going through the report and finding that the breaches were committed by these six directors who were in charge of the business of the company, the authority found that there was a prima facie case against these persons and it was satisfied about the breaches committed by them with respect to the said company. The satisfaction which the authority had, was based on the report of the Regional Provident Fund Commissioner and this satisfaction would not be a subject of challenge in this court. It was for the authority to be satisfied that there was a case to be reported and whether to give sanction for the making of the report or not, it is its satisfaction and this Court will not go into the question as to whether that satisfaction was proper or not, or based on sufficient material or not unless it is shown that the sanction was given mala fide, which is not the case here.
13. The second question relating to this sanction is of greater importance. It is argued on behalf of the applicant-company that the previous sanction to the making of the report must state not only the offences which have been committed, but also the offenders who have committed those offences. If the company was an offender, then it was incumbent on the authority to mention the name also of the company and give its sanction for the making of the report against the company also. Since, according to the learned counsel, the sanction was for the prosecution of only the six directors, the said sanction would hold good only so far as those directors are concerned and would be ineffective so far as the company is concerned. In effect, according to him, it would mean that the report which has been made by the Inspector to the Court is not based on any previous sanction from the authority so far as the company is concerned. That being the case the Court was not empowered to take cognizance of any of the offences alleged in the said report as against the company and the complaint as against the company ought to have been dismissed by it.
14. I do not agree with the submission made by Sri Moharir in this behalf. From the reading of the sanction, it would appear that the offences which are alleged to have been committed have been mentioned specifically in the sanction. Any establishment, which is covered by the Act and the scheme, has got to comply with the requirements of the Act. Some of the requirements show that such an establishment has to deduct certain amount from the employees' salary on account of the provident fund and such deductions along with its own contributions have got to be deposited by such establishment with the Government. The second requirement is that periodical returns have got to be filed by such establishment with the Government relating to these deductions from the employees and the third requirement is that such an establishment has to pay to the Government certain amounts on account of administrative charges. These three requirements were not observed by the company. The sanction specifically mentions that there was a breach in not following these three requirements. It is the establishment which has got to follow these provisions. In these cases the establishment was the C.H.O.C.S. company and it was the duty of the company, of course, acting through the resident or managing director or other directors who may be in charge, to deduct the necessary amounts from the salaries of the employees and deposit the same along with the employer's contribution with the Government as well as to submit the periodical returns and pay the administrative charges. The affairs of the company are managed by certain persons the company being an incorporated body and has to act through somebody only. If these directors were responsible for observing the provisions on behalf of the company, the directors also would be liable for the breach. The primary duty being that of the company, the company is undoubtedly liable for the observance of the various requirements. When, therefore, while giving the sanction the various offences that have been committed have been given and when the sanction for the prosecution of the six persons describing them as directors of the company has been given, there is a sufficient indication for the prosecution of the company also for the various offences under the provisions of the Act. The sanction, therefore, could be construed not only as against the six individuals in their capacity as directors, but also against the company itself through these various directors. The sanction, therefore, can be taken to be also in respect of the company.
15. Apart from this, I think that the sanction cannot be challenged on another ground. Section 14(3) if the Act begins with the words, 'no Court shall take cognizance of any offence punishable under this Act except on a report in writing, etc.' The said provision, therefore, precludes a Court from taking cognizance of an offence under this Act if there is no report in writing by the Inspector with the previous sanction of the authority. In order to enable the Court to take cognizance of the offence, there must be a report in writing of the facts constituting such offence and such report must be with the previous sanction of the authority. What is, therefore, required by Sub-section (3) of S. 14(3) of the Act is that the Inspector must make that report in writing to the Court with the previous sanction of such authority. The sanction, therefore, is required to the Inspector to enable him to make a report. What is required is that a report stating the facts constituting an offence committed should be with the previous sanction. Once a sanction is given, the Inspector can make a written report to the Court and in that report he may or may not indicate the persons who are liable for the offences that are committed.
16. In contrast to this provision if we examine the provisions of S. 197 of the Code of Criminal Procedure and S. 6 of the Prevention of Corruption Act, we find that it is not necessary under S. 14(3) of the Act to name the offenders in the sanction. Under S. 197 of the Code of Criminal Procedure, the sanction that is required to be given is the sanction to prosecute a particular public servant. It starts like this :
'When any person who is a Judge within the meaning of S. 19 of the Indian Penal Code, or when any Magistrate, or when any public servant who is not removable from his office save by or with the sanction of a State Government or the Central Government, is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty, no Court shall take cognizance of such offence except with the previous sanction . . .'
17. Section 197, therefore, envisages a sanction for the prosecution of a particular public servant and in granting such sanction it will not be enough only to say that a particular offence has been committed without specifying the public servant, who is guilty of the same. Similarly, in prosecutions under S. 6 of the Prevention of Corruption Act, it also says that Court shall not take cognizance of an offence punishable under certain provisions of that Act alleged to have been committed by a public servant except with the previous sanction, etc. The wording of this section also shows that the public servant who is alleged to have committed an offence has got to be mentioned while granting the sanction. Comparing these provisions with the provisions of S. 14(3) of the Act, we find that reference to an offender is absent from S. 14(3). Under S. 197 of the Code of Criminal Procedure, as also under S. 6 of the Prevention of Corruption Act, it will be found that unless the sanction specifies the offence and the person who has committed the offence, the Court will not be empowered to take cognizance; whereas under S. 14(3) of the Act as soon as there is a report in writing by an Inspector stating the facts constituting that offence to the Court and there is a previous sanction for such report the Court is empowered to take cognizance of the offence. The word 'cognizance' has not been defined in this Act or the Code of Criminal Procedure. The report in writing which is to be made under Sub-section (3) of S. 14(3) of the Act is in fact a complaint as defined by S. 4(1)(h) of the Code of Criminal Procedure. 'Complaint' is defined this :
''Complaint' means the allegation made orally or in writing to a Magistrate, with a view to his taking action under this code, that some person, whether known or unknown, has committed an offence, but it does not include the report of a police officer.'
18. In making a complaint under the Code of Criminal Procedure, it is in fact not necessary to name the alleged offenders, for the purpose of taking cognizance. A cognizance can be taken if the complaint shows that an offence has been committed and the names of the offenders can subsequently also be added. The complaint may name some offenders on which also the Magistrate can take cognizance. But if it is subsequently found that there are also other offenders guilty of commission of the offences mentioned in the complaint, the Magistrate would have jurisdiction to add such offenders also. It would, therefore, not mean that the Magistrate has not taken cognizance of the offence until all the offenders are before him. The cognizance is taken as soon as he entertains the complaint and decides to proceed with the case. In this view, therefore, it appears that the Magistrate could take cognizance of the offences in respect of which the report was made by the Inspector. Even assuming that the complaint was made originally by the Inspector against the six directors only without naming the company and if it was found by the Magistrate that for the offences alleged the company also is liable, the company could be made an accused subsequently and be proceeded against. Therefore, the complaint or the report need not have been against the whole lot of offenders and if that could be so, then the sanction also need not have been for the whole lot of offenders so long as the offences alleged to have been committed had been mentioned in the sanction and the report. In this case, we find that though the sanction does not specifically mention the name of the company, the report which has been made by the Inspector to the Court does mention the same and the Court had only to see whether there was a previous sanction from the authority for making the report of the offences. In this case, we find that there is a sanction from the appropriate authority for making the report to the Court and this sanction was sufficient to enable the Court to take cognizance of the offences. I, therefore, hold that the sanction which has been granted in this case by the appropriate authority under S. 14(3) of the Act is a valid sanction so far as the company also is concerned. I also hold that even though the sanction may not be effective so far as the company is concerned, the Magistrate was not in error in taking cognizance of the case against the company also on the report in writing of the Inspector which also mentioned the name of the company as one of the offenders. With regard to the question regarding validity of the sanction Sri Gadkari appearing on behalf of the non-applicant has urged that this question regarding the validity of the previous sanction was not raised by the accused-applicant before the trial Magistrate and was raised for the first time before the appellate Court. The contention of Sri Gadkari is correct. However, I find that the question in the form in which it has been raised by the learned counsel for the applicant could be raised by him at the appellate stage because it did not involve going into any questions of fact. What Sri Moharir contended was that on the face of the sanction, the name of the accused-company was not mentioned therein and the sanction was of no effect in the absence of any mention of the company in the sanction given and no new facts were required to be gone into for that purpose. The omission, therefore, on the part of the applicant-company to object on the ground of invalidity of sanction before the trial Magistrate would not preclude him from urging such question either before the appellate Court or this Court.
19. The next question that has been urged is regarding the applicability of the Act to the applicant-company's establishment. Formerly the business of this establishment was of running a cold storage and a canning department. Canning department was admittedly a factory and the cold storage which was being run was also previously a part of the factory. A letter dated 29 February, 1964, from the resident director on behalf of the C.H.O.C.S. company to the Regional Provident Fund Commissioner has been placed on record as Ex. 16. This letter gives a short history of the company in which it has been stated that the company had previously started manufacturing of certain food preservation articles in 1949. The company had two different units, viz., cold storage portion and canning portion manufacturing certain food preservation articles. The manufacture of these articles continued till 1953, and subsequently it was leased out to the 'Chocs Canning (Private), Ltd.,' till 1958. Subsequently from 1 November, 1958, the company leased out its canning portion to the 'Nagpur Orange Growers' Association' which was a co-operative society, for a period of seven years. The said canning portion was later on purchased on 14(3) June, 1963, by the Nagpur Orange Growers' Association and this letter states that the company then was left only with the cold storage activities, The said letter further states that in this establishment previously there were two units, viz. -
(1) manufacturing unit, and (2) cold storage unit.
20. After the disposal of the canning portion which was according to this letter the manufacturing unit of this company, there was no manufacturing activity with this company, namely, the C.H.O.C.S. The letter further states :
'As already pointed out, the company stopped preparing or producing anything at the moment when it leased out the canning portion to the society. Thereby no manufacturing unit was in existence with this company any time after 1953, when the same was leased out to Chocs Canning (Private), Ltd.'
21. The letter was written by the resident director on behalf of the company when the company was required by the Regional Provident Fund Commissioner to implement the provisions of the Act. The company was denying its liability for implementing the provisions of the Act and the ground on which it was doing so, was stated in his letter Ex. 16. The letter says :
'Having seen that the company has only cold storage business, the company most humbly states that it should not be covered under the provisions of this Act'
22. and requested for its being exempted from the provisions of the Act. It may be stated at this stage, that this letter was sent on behalf of the company at the time when the prosecution had already been started against the applicant and the other directors. It is however, stated that besides the cold storage the company is also carrying on manufacture of ice, though the manufacture of ice was not stated in the letter Ex. 16.
23. It is not disputed that the ice-manufacturing industry would be covered by the term 'factory' as defined in the Act. The dispute centres round the cold storage. Before the learned Magistrate the accused had raised the contention that the Act and the scheme were not applicable to them because the company was having only a cold storage and was not covered by Sch. I of the Act and as such, S. 1(3)(a) of the Act was not applicable to them. They further contended that the provisions of S. 1(3)(b) of the Act were also not applicable. The learned Magistrate, however, held that the points raised by the company were outside the scope of his jurisdiction and, therefore, he did not decide those questions. Those points were repeated before the Assistant Judge in appeal. From the reading of the judgment, it can be gathered that the learned Assistant Judge was of the opinion that the provisions of the Act were applicable to the applicant-company by virtue of the provisions of Ss. 1(3)(a) and 1(3)(b) as well as S. 1(4) of the Act. He has also discussed the effect of S. 19A of the said Act. The learned Assistant Judge observes towards the end of Para. 9 of the judgment :
'The prosecution has thus established that accused 1 company is carrying on the industry or is an establishment which has been specified in the gazette to which the Act is made applicable and thus covered by Cls. (a) and (b) of Sub-section (3) of S. 1 and Sub-section (4) of S. 1 of the Act.'
24. I have not been able to appreciate as to how the learned Assistant Judge invoked the provisions of Sub-section (4) of S. 1 of the Act. Sub-section (3) of S. 1 states :
'(3) Subject to the provisions contained in S. 16, it applies -
(a) * * *
(b) * * *'
25. Sub-section (4) of S. 1 says :
'Notwithstanding anything contained in Sub-section (3) of this section or Sub-section (1) of S. 16, where it appears to the Central Government, whether on an application made to it in this behalf or otherwise, that the employer and the majority of employees in relation to any establishment have agreed that the provisions of this Act should be made applicable to the establishment, it may, by notification in the official gazette, apply the provisions of this Act to that establishment.'
26. Sub-section (4) of S. 1 of the Act, therefore, requires that there must be either an application made to the Central Government that the employer and the majority of employees have agreed that the provisions of the Act should be made applicable to the establishment, or it may otherwise appear to the Central Government that the employer and the majority of employees have agreed that the provisions of the act should be made applicable to that establishment and when it so appears to the Central Government, then the Central Government may apply the provisions of the Act by issuing a notification in the official gazette. It is not the case of any party that any application was made to the Central Government or it otherwise appeared to the Central Government that the provisions of the Act should be made applicable to the establishment. It is also not the case of any party that there has been a notification in the official gazette in this matter. Unless these conditions are satisfied, the provisions of Sub-section (4) of S. 1 of the Act will not come into play and the provisions of the Act cannot be made applicable to any establishment under this provision. The reference to Sub-section (4) of S. 1 of the Act, therefore, was inappropriate. It will, therefore, have to be seen whether the establishment in question falls within either Clause (a) or (b), or both, of Sub-section (3) of S. 1 of the Act.
27. Clause (a) of Sub-section (3) of S. 1 of the Act reads thus :
'(3) Subject to the provisions contained in S. 16, it applies - (a) to every establishment which is a factory engaged in any industry specified in Sch. I and in which twenty or more persons are employed . . .'
28. There is no dispute regarding the number of persons employed in this establishment. The industries to which the Act is made applicable under Clause (a) have been mentioned in Sch. I attached to the Act. Schedule I begins with 'any industry engaged in the manufacture of any of the following, namely . . .' One of the headings in Sch. I is 'Fruit and Vegetable Preservation Industry.' To this is added an explanation, which is as under :
'Explanation. - . . . The 'fruit and vegetable preservation industry' means any industry which is engaged in the preparation or production of any of the following articles, namely :
* * * (iii) frozen fruits and vegetables;
* * * (ix) any other unspecified items relating to the preservation or canning of fruits or vegetables.'
29. The discussion in the arguments centered round only items (iii) and (ix) and hence they alone have been reproduced. It is contended by Sri Moharir that this establishment of the C.H.O.C.S. is a factory within the meaning of the definition of 'factory' given in this Act because in the premises of establishment a manufacturing process is being carried on with the aid of power. In the first place, his contention is that the manufacture of ice is done with the aid of power and the manufacturing process is carried on for that purpose. 'Factory' has been defined thus :
''factory' means any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on, whether with the aid of power or without the aid of power.'
30. Word 'manufacture' (during the relevant period) has also been defined in the Act thus :
''manufacture' means making, altering, ornamenting, finishing or otherwise treating or adapting any article or substance with a view to use, sale, transport, delivery or disposal.'
31. The business, therefore, of the manufacture of ice is a manufacturing process and as such this part of the establishment is undoubtedly a factory. It is also contended by Sri Moharir that the cold storage establishment is a part this factory and as such, it would also amount to a factory within the meaning of the Act. It is further contended that in the cold storage also the potatoes which are stored therein are treated in the sense that potatoes under ordinary atmospheric conditions are kept in the cold storage and cooled to a particular temperature with a view to preserve them for a period of time. As such this amounts to treating the potatoes and this activity would come within the term 'manufacture' and as in these premises this process is going on, it is a factory. It is, therefore, contended that the whole unit consisting of the ice-manufacturing plant and the cold storage amounts to a factory. On this premise an argument is based on behalf of the applicant company that this being a factory, the provisions of the Act will apply only if this factory is shown to be engaged in an industry specified in Sch. I to the Act and the only head under which it can possibly come is 'fruit and vegetable preservation industry.' According to him, the industry carried on by this establishment does not come under the head, 'Fruit and vegetable Preservation Industry.' It has come on record that the only articles which are dealt with by the applicant-company are potatoes. Undoubtedly, it would fall within the term vegetables. To this heading, however, an explanation has been given which defines what the fruit and vegetable preservation industry means in Sch. I. It means any industry which is engaged in the preparation or production of any of the articles enumerated thereunder. We are not concerned here with the other items except items (iii) and (ix) and that also relating to vegetables only. Reading, therefore, this heading, the explanation and item (iii) thereunder, it is contended that in order to bring the establishment within the clutches of the Act, the establishment must be engaged in the preparation or production of frozen vegetables. If this industry cannot be brought under this heading, then S. 1(3)(a) would not be applicable to such an industry and as such, this industry would not be subject to the provisions of the Act. The question, therefore, that needs consideration is whether the company engages itself in the preparation or production of frozen vegetables. The business of the company so far as the cold storage is concerned is to bring in the potatoes into the cold storage, keep them in the cold storage at a certain degree of temperature and then whenever they are needed outside, to take them out. The articles, therefore, that are brought in the cold storage are vegetables in this case, potatoes. During the period, they are in the cold storage they remain as potatoes and at the time they are taken out they are also potatoes. Therefore, there is no preparation as such, neither production of the potatoes and as such, this would not fall under this heading. It has, however, to be seen whether this industry engages itself in the preparation of frozen potatoes.
32. It is contended by Sri Moharir that 'frozen potatoes' had got a technical meaning. Simply because potatoes are vegetables and cooled to a certain extent, they do not become frozen vegetables or potatoes. When a vegetable is cooled below its normal temperature it can be called a cooled vegetable. Cooling may help the preservation of the potatoes for a period. But mere cooling would not amount to making it into a frozen vegetable unless and until it is nearly dead or dormant. The vegetables are frozen for particular purposes, namely, if the vegetables are to be stored for a pretty long period and are required to be sent out for marketing, it becomes necessary to lower down the temperature of the vegetables to a very great extent. In ordinary cooling that it not so. They are only preserved for the time being as long as they are not required for actual use. What is actually required to be done for freezing the potatoes has been described by Morris B. Jacobs in his book 'The Chemistry and Technology Food and Food Products,' Vol. III, p. 1836. He says :
'Potatoes of the early crop are cured and held from 50 to 70 degrees F., at a humidity of 85 to 90 per cent, but the holding period is shorter than for the late crop. While the greater part of the late crop is held in common storage, potatoes for use in the spring and early summer are refrigerated to about 40 degrees F. The humidity should be from 85 to 90 per cent. So held, they will remain dormant for from five to eight months.
At 40 degrees F. they will accumulate sugar, making the potato unsuited for French frying or chipping. Such stock should be held at 70 to 80 degrees F. until this excess sugar has disappeared. Potatoes will freeze at 29 degrees F.'
33. The difference between cooling and freezing in that the articles are cooled in a cold storage for a transitional period for quick marketing. So long as they are not immediately required for the market, they are kept in the cold storage with a view to preserve them. For this purpose, it is not necessary to cool them down below freezing point, but when the articles are to be required to be preserved for a very long time, then in that case, those articles are frozen below the freezing point so that they become nearly dormant and can be used after a long time. This is why in the two processes the temperatures are lowered down to different extent. In cold storage the articles are cooled to temperatures between 34 or 35 to 40 degrees F., while for the purpose of freezing the vegetables, the temperature is taken to about 29 degrees F., which is below the freezing point. The evidence led in this case on behalf of the accused also shows that within the chambers the potatoes are kept at 34 degrees F. to 38 degrees F. (vide P.W. 1, Deoraj Verma). The other witness, P.W. 2, Raghuram Deodas, deposes that for freezing vegetables minus 15 to 20 degrees F. temperature is required. He further says that there cannot be preparation of frozen vegetables in the accused-company. It, therefore, appears that so far as the cold storage part is concerned, the industry that is carried on by the company is neither of preparation or production of frozen vegetables. The industry does not, therefore, fall within item (iii) of the explanation under the heading 'Fruit and Vegetable Preservation Industry.' It is, however, contended by the learned counsel for the State, as well as for the Provident Fund Commissioner that it would fall under item (ix) which reads :
'any other unspecified item relating to the preservation or canning of fruits or vegetables.'
34. It is contended by Sri Dharmadhikari, learned Assistant Government Pleader, that this industry relates to the preservation of vegetables and as such, will fall under the heading 'Fruit and Vegetable Preservation Industry' given in Sch. I, and even though the industry may not be engaged in preparation of frozen vegetables, still it would amount to carrying on the industry of preserving vegetables. According to him, this item (ix) which is unrelated to the eight items above it, refers to the preservation industry. Some of the articles in items (i) to (viii) cannot be termed either as fruits or vegetables and even then by virtue of the explanation given, they have been brought under 'fruit and vegetables'. He, therefore, contends that item (ix), which cannot be related to any of the eight items must relate back to the heading, namely, 'Fruit and Vegetable Preservation Industry' and according to him, this item (ix), therefore, relates to an industry which is engaged in preservation of vegetables and as such, they fall under that heading in Sch. I. He contends that the explanation does not control the scope of the original item, namely, Fruit and Vegetable Preservation Industry, which has got to be given its natural meaning and if that natural meaning is given to the same, they it would mean that the industry which caries on the business of preserving vegetables would be covered by item (ix) in this explanation. The learned counsel has also referred to certain authorities in the matter of interpreting the explanation. One such case is In re : H. V. Jagdish : AIR1966AP35 . The question that was involved in that case was whether an employee of the Indian Airlines Corporation, which was a corporation established under the Air Corporations Act, 1953, is a 'public servant', within the meaning of Clause 12 of S. 21 of the Indian Penal Code. There was an explanation added to this clause and the purpose of the amendment was to bring within the purview of the anti-corruption law, the employees of statutory trading corporations and Government companies. Clause 12 of S. 21 reads as under :
'12. Every officer in the service or pay of a local authority or of a corporation engaged in any trade or industry which is established by a Central, Provincial or State Act or of a Government company as defined in S. 617 of the Companies Act, 1956.
Explanation 4. - The expression 'corporation engaged in any trade or industry' includes a banking, insurance or financial corporation, a river valley corporation and a corporation for supplying power, light or water to the public.'
35. The term 'trade' given in Clause 12 and Expln. 4 came for interpretation. It was observed that the word 'trade' could not be limited only to activities involving the buying and selling of commodities, but also could be applied to this trade where transportation was being made by the corporation. The High Court observed that the Indian Airlines Corporation was engaged in the trade of air transport service and consequently, it held that the employees of the corporation were public servants. Their lordships observed (p. 37) :
'. . . The obvious intention of the legislature was to spread the net wider. That object would be thwarted if a narrow meaning is given to the word 'trade' by limiting it to activities involving the buying and selling of commodities, thereby excluding employees of corporations like the Indian Airlines Corporation from the category of public servants.
Indeed, what the Indian Airlines Corporation does under the terms of the Air Corporations Act, has all the essential attributes of a trading activity. Section 7 of that Act prescribes that the main function of the corporation is to provide safe, efficient, adequate, economical and properly co-ordinated air transport services, whether internal or international or both, with a view to developing the air transport services to the best advantage and in particular, to ensure that the services are provided at reasonable charges.'
36. In view of this it was held that the Indian Airlines Corporation was engaged in the trade of air transport service. It may be noted that Expln. 4 given to this Clause 12 only sought to widen the scope of the industry by defining corporation engaged in any trade or industry. This definition was an inclusive definition and was added for the purposes of including a banking, insurance or financial corporation, a river valley corporation and corporation for supplying power, light or water to the public. Clause 12, therefore, had to be incidentally construed in order to find out whether any employee of a particular trade or industry would come within the meaning of a public servant and by Expln. 4 some other corporations were specifically included. Therefore, the meaning had to be given to the word 'trade' in Clause 12 to S. 21, Indian Penal Code. The explanation given in the present Act to the heading 'Fruit and Vegetable Preservation Industry' is not of such an inclusive type. The explanation says that 'Fruit and Vegetable Preservation Industry' means such and such industry. Therefore, the heading 'Fruit and Vegetable Preservation Industry' has to be read only as meaning what is stated in the explanation and there is no scope for the interpretation of the original heading 'Fruit and Vegetable Preservation Industry.' That heading can mean only what is stated in the explanation and nothing more. Therefore, we have also to read and interpret item (ix) in the same light. Item (ix) is a general item which is not covered in items (I) to (VIII) of the explanation. The explanation clearly shows that in order that a particular industry may come within the purview of the Act, it must engage itself in the preparation or production of the articles enumerated in the different items. Therefore, the first requirement is that it must engage in preparation of some articles. Those articles are given in items (i) to (viii). So far as item (ix) is concerned, giving a similar meaning, the industry must be engaged in the preparation of article not enumerated in different items (i) to (viii) and relating to the preservation of vegetables. There must, therefore, be some article which is prepared in the industry for the purposes of preservation or which has some relation to preservation of vegetables. It cannot be preservation itself and there is nothing to show that any other article is either prepared or produced in this establishment which relates to the preservation of vegetables. The industry, therefore, cannot be said to fall in item (ix) either and as such, this industry would not come under the heading 'Fruit and Vegetable Preservation Industry.' There is no other industry given in Sch. I under which the company's establishment will fall and as such, I am of the view that the Act cannot be made applicable to the company by virtue of the provisions of S. 1(3)(a) of the Act even though it may be a factory.
37. It is contended on behalf of the complainant that so far as the cold storage portion is concerned, it is not a factory. Full details have in fact not been brought on record in order to find out as to whether the activity of the cold storage is the main activity or whether that of ice manufacturing is the main activity. If these two activities are running side by side, it would have to be seen which is the principal activity and which is the subsidiary one; which is of a primary character and which is of a secondary character. In the absence of any such material it is not possible to say whether the cold storage activity amounts to a factory or not. There is, however, some material on record to show and which consists of the application made by the company itself that after the canning department was leased out from the year 1953 what was left with the company was only the cold storage and in the application which is of the year 1964, that is of a date later than the filing of the complaint, the company asserts that the only business they were carrying on was that of the cold storage. Before going to the question whether the cooling of potatoes amounts to 'manufacture' within the meaning of S. 2(ia) of the Act and if such manufacturing process is going on in the premises so as to make it a factory, I would like to deal with the provisions of S. 1(3)(b) of the Act.
38. It is contended by Sri Moharir that S. 1(1)(b) of the Act relates only to non-factory industries as opposed to factory industries stated to be covered by S. 1(3)(a) of the Act. For this purpose, a strong reliance has been placed on the word 'non-factory' used in the heading in Appendix I at p. 22 of the publication. 'the Employees' Provident Funds Act, 1952, and the Employees' Provident Funds Scheme, 1952, with Short Notes' by the Eastern Book Company. This appendix does not appear to be a part of the Act, but is a compilation of the various notifications issued from time to time by the Government bringing the various industries within the purview of the Employees' Provident Funds Act, 1952. The word 'non-factory' used in this heading in Appendix I, therefore, will not be a good guide to find out whether the provisions of S. 1(3)(b) of the Act are meant only for the 'non-factory' industries. By virtue of S. 1(3)(b) the Act is made applicable to any other establishment which the Central Government may, by notification in the official gazette, specify in this behalf. It appears that Sub-section (3) is divided into two parts. Clause (a) of Sub-section (3) relates to establishments which are factories engaged in the industries specified in Sch. I. It is not made applicable to all the factories but only to those specified in Sch. I. The intention of S. 1(3)(b) appears to be, from the reading of the opening words, 'to any other establishment . . .' to cover all other establishments, whether factory or non-factory and which are not given in Sch. I. Clause (a) of Sub-section (3) of S. 1 of the Act restricts the application to some industries and as soon as the industries are specified in Sch. I, the Act is automatically made applicable to those industries by its own force. So far as the other establishments are concerned, that can only be done by the Central Government issuing a notification. Other establishments are ipso facto not covered unless a notification to that effect is issued. It is contended by the learned counsel for the applicant that the two Cls. (a) and (b) of Sub-section (3) of S. 1 of the Act are mutually exclusive and as Clause (a) refers only to factories, therefore, Clause (b) must necessarily refer to non-factories and factories cannot be included in the same. The reading of these two clauses does not show that these two clauses can be read as mutually exclusive of each other. It only divides all establishments into two compartments, not factory and non-factory, but factory engaged in a scheduled industry and other factories and non-factories with respect to which the Central Government may issue a notification. In that sense they could be said to be mutually exclusive of each other but not in the sense in which the learned counsel for the applicant wants that to be. This view is supported by the decision in Provident Fund Inspector, Quilon v. Kerala Janatha Printers and Publishers (Private), Ltd., and another 1966 I L.L.J. 491, wherein their lordships of the Kerala High Court said (p. 494) :
'By Clause (a) of Sub-section (3) of S. 1 of the Act only factories employing twenty or more men engaged in specified industries are brought within the Provident Funds Act. To all other establishments, factory, or non-factory whether engaged in industry or otherwise the Act may be applied by resorting to notification under Clause (b) of Sub-section (3) of S. 1. Factories engaged in industries other than those mentioned in Sch. I may also be brought within the ambit of the Act by a notification under S. 4, thus adding to Sch. I.'
39. On the reading of the two Cls. (a) and (b) of Sub-section (3) of S. 1 of the Act together, it is thus clear that Clause (b) refers to all the factories which are not included in Sch. I and other establishments which are non-factory establishments. The only requirement for applicability is that there must be a notification by the Central Government. Therefore, the only question that has to be seen is whether there is a notification by the Central Government with respect to the establishment which the company is having. The company is having a cold storage. Item 11 from Appendix I was relied upon by the prosecution. This notification is dated 7 March, 1962, published in the Gazette of India, 1962, Part II, and the trading and commercial establishments covered by this notification are brought under this Act from 30 April, 1962. This notification makes the Act applicable to trading and commercial establishments engaged in the purchase, sale or storage of any goods including establishment of exporters, importers, advertisers, etc. It is contended on behalf of the prosecution that the present industry of the applicant-accused is included by this notification and the Act had been made applicable to it under S. 1(3)(b). The applicant, on the other hand, contends that the establishment engaged in the storage of any goods does not include an establishment which is engaged in running a cold storage. It is contended that in a cold storage, the goods are stored at a lower temperature for the purposes of preserving the goods from deterioration. If the goods are kept under ordinary conditions in a store, such goods will deteriorate early and a special treatment has to be given to such goods so that they can be preserved for a length of time. This is achieved by storing the goods in a cold storage and this would not be included in the storage as stated in the notification. The word 'storage' has been defined in the Oxford English Dictionary as :
(1) capacity or space for storing;
(2) the action of storing or laying up in reservation; the condition or fact of being stored;
(3) a place where something is stored.
40. Cold storage has also been put under this heading and means the storing of provisions in refrigerating chambers as a means of preserving them from decay. The ordinary meaning that would be given to the word 'storage' is a place for storing. That means any place where the goods can be stored. It may be that for different commodities different conditions of storage may be necessary. For a commodity like cotton seed a particular kind of storage or storehouse would be advisable. For kerosene-oil and other articles different conditions may be necessary, but still all these places are the places for storing the various commodities and irrespective of the conditions which may be obtaining in each of these places, they would all be called storages because what is done there is that is that actually the goods or commodities are stored or kept for a length of time. Just as in a commodity like, say cotton seed, certain precautions have got to be taken, similarly in commodities like potatoes, in order that they may not decay early and may remain useful for a pretty long time, it is necessary to store them in certain cool places. There are certain medicines to which nothing will happen if they are placed in ordinary atmosphere. There are other medicines which will decay or deteriorate or lose their efficacy if they are stored or placed in an ordinary atmosphere and need to be stored in a cool place - may be a natural cool place or an artificially cooled place, but still such a place will remain a storage and nothing but a storage. In this case we find that potatoes, in order to keep them marketable for a long period, are required to be placed in a cool place having a temperature between 34 to 38 or 40 degrees F. For this purpose chambers are constructed and arrangement is made to keep these chambers at those low temperatures and by bringing the potatoes inside such chambers they are in fact stored in those chambers as long as they are not required for immediate use. The cold storage thereby does not cease to be a storage. In my view, the word 'storage' used in the notification dated 7 March, 1962, is of a large amplitude and covers all kinds of storages, maintained under different conditions for different purposes. The only primary thing that has to be seen is whether it is a place for storage of commodities. Whether the conditions therein are natural or artificially created, that still would remain as a storage and all such places will be covered by the notification. The establishment of the applicant-company therefore, would fall within this notification which covers a storage and as such, the provisions of S. 1(3)(b) of the Act read with notification dated 7 March, 1962, will make the Act applicable to the applicant-company.
41. Besides this, it has been brought to my notice by Sri Dharmadhikari, the learned Assistant Government Pleader, that the applicant-company is in fact doing the business of purchasing and selling the potatoes. He has referred me to the evidence of D.W. 1, Deoraj, wherein be says that potatoes are stored during season and sold in off-season and that they lease out store-room on rental basis also to some other persons. Later on he says :
'We purchase the potatoes in lots and sort them according to the highness (perhaps their sizes). Then we store the potatoes in wooden racks inside the chambers. The potatoes are loosely stored there. The company had not other activity besides these two things.'
42. Then again he says that when the potatoes are taken out of the store-room they are dried and sent to the market. From this evidence, it appears that the applicant-company is not only running the cold storage for the purposes of storing others' goods on hire but itself also purchases the potatoes, stores them under cool conditions and there after sells them. This being the business of the company it can be said that the applicant-company is a commercial establishment engaged in the purchase or sale of the goods namely, potatoes. On this evidence also the establishment of the applicant-company will by covered by the notification dated 7 March, 1962. In view of this, it is clear they by virtue of the provisions of S. 1(3)(b) of the Act read with the notification dated 7 March, 1962, the Act is made applicable to the applicant-company since 30 April, 1962. In view of this, it is in fact not necessary to find out whether the cold storage in issue is a manufacturing process or not and whether that part of the establishment is a factory or not.
43. Since the applicant-company is thus covered by the Act and since admittedly the applicant-company has not deposited the amount deducted from the employees' salaries as well as their own contributions therefor, nor filed any returns as required by the Act, nor did they pay any administrative charges, they are guilty of the breaches of those requirements. The learned Assistant Judge, agreeing with the trial Magistrate, though on different grounds, has held that the applicant-company along with other directors are guilty of the offences mentioned in the complaint. It is also not necessary in this respect to consider the question regarding the provisions of S. 19A of the Act. The Provident Fund Authority has initiated the prosecution for offences committed by the company and its directors. If the company is covered by the provisions of the Act, then the company would be guilty of the offences and whether there was any doubt or not would not be a matter to be considered. Section, 19A is an enabling provision empowering the Central Government to resolve any difficulty or doubt. If the notification issued is clear so as to cover a particular industry, they any doubt or difficulty entertained by any particular officer of the department will be of no consequence. It is only in a case where different meanings can be given to the establishment mentioned in the notification, then alone the Central Government may issue directions to remove any doubt or difficulty, if there be any, but that power however can be exercised only at the instance of the Provident Fund Commissioner and not at the instance of a private party. The Provident Fund Commissioner did not think it necessary to refer the matter to the Central Government under the provisions of S. 19A of the Act and when by contemplated a prosecution against the company and the directors, he did not feel any difficulty about the interpretation of the notification and about the question whether the establishment of the company was covered or not by the notification. Therefore, not referring the question to the Central Government under S. 19A of the Act is of no consequence.
44. Since I hold that the Act is applicable to the establishment of the company and admittedly the breaches have been committed by the company in three matters as aforesaid, the company was rightly held guilty of those offences and was rightly convicted. I see no reason to interfere with the order of convictions and sentences in all the six cases.
45. In the result, all these six applications are dismissed.