1. By this petition the petitioner seeks to have the order made by the Regional Provident Fund Commissioner quashed. The said order is made under S. 7A of the Employees' Provident Funds Act, 1952 (hereinafter referred to as the Act of 1952), and calls upon the petitioner-firm to pay the sums of Rs. 54,275 and Rs. 1,261 into his office.
2. The petitioner-firm is a partnership doing motor transport business. The Central Government framed a scheme under the said Act called the Employees' Provident Funds Scheme, 1952 (hereinafter referred to as the Scheme). It issued a notification under S. 1(3)(b) of the Act of 1952 and applied the said scheme to road motor transport establishments from 30 April, 1959. Respondent 2 intimated to the petitioner by the letter dated 24 May, 1966, that the petitioner's establishment fulfilled the conditions for the application of the scheme with effect from 31 July, 1961; that code No. MB/6949 was allotted to it and that it should implement the provisions of the Act and the scheme from 1 August, 1961. It also gave other necessary directions. Up to the end of 1966 the petitioner did not do anything to implement it. On 12 July, 1967, respondent 2 wrote another letter to the petitioner intimating that the period from August 1961 to April 1966 would be treated as rediscovery period and gave certain directions in respect of the waiver of the employees' share of the fund amount. By the letter dated 23 November, 1967, respondent 2 proposed 4 December, 1967 for enquiry, to determine the amount payable by the petitioner from August 1961 to December 1966 and called upon it to attend the same with records in his office. The petitioner replied by its letter dated 30 November, 1957 that it would not be able to attend his office and asked for postponement. The inquiry was them postponed to 23 December, 1967 and due intimation was given to the petitioner. The petitioner again made an excuse and did not attend. Respondent 2 them made the order and demanded the said sums from the petitioner (annexure H).
3. Sri Gadgil, for the petitioner, has made three contentions before us :
(1) that the petitioner becomes liable only after a code number is assigned to it;
(2) that by an order under S. 7A of the Act the petitioner cannot be called upon to pay any amount for a period prior to the date of the order; and
(3) that it was not heard before the making of the order.
4. We will first consider the Act and the scheme. Section 1(3) of the Act of 1952 applies in the first instance to factories engaged in industries specified in Sch. I and in which twenty or more persons are employed and Clause (b) of the sub section gives power to the Central Government to apply it to other establishments. Section 2 is a definition section. Section 5 enables the Central Government to frame a provident fund scheme for establishment of provident funds and then to establish a fund in accordance with the Act and the scheme, and, to vest it in Central Board of Trustees, the constitution of which is provided by S. 5A. Section 5B of the Act relates to the appointment of a State Board of Trustees and its powers and S. 5C makes these boards bodies corporate. Section 5D relates to appointment of officers under the Act and S. 5E deals with delegation of powers by the Central Government and the Board to the officers. Section 6 prescribes the quantum of contribution payable by the employer and the employee. Section 7A provides for determination of the amount due from any employer, empowers the Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner or any Regional Provident Fund Commissioner to hold an inquiry, gives him limited powers of a Court, and by Sub-section (4) makes his order final. Section 8 enables the amount due and penalty to be recovered as land revenue. Section 10 provides that the amount standing to the credit of any member cannot be assigned or charged and attached in execution. On the death of the employee the same is to vest in his nominee subject to any deduction authorized by the scheme. Section 14B gives the Central Government power to recover damages not exceeding the arrears in case of default in the payment of any contribution to the fund or in the transfer of accumulations to the fund under S. 15(2). Section 15 makes provisions relating to existing funds and Ss. 16 and 17 provide for exemptions. The rest of the provisions are not very material.
5. There is no section which directly provides that the contributions by the employer and employee shall be payable at any particular time. Section 5(1) of the Act enables the Central Government to frame a scheme for the establishment of the fund and S. 5(1B) provides that a scheme so framed may provide for all or any of the matters specified in Sch. II, item 2 of which speaks amongst other things of the time and manner in which contributions shall be made to the fund by the employers. It is clear that this is to be provided for in the scheme and in our view the scheme has effectively done so.
6. Of the scheme only a few provisions need be considered, viz., Paras. 26, 32, 33, 35, 36 and 38. Paragraph 26 requires that every employee shall become a member of the fund from the beginning of the month following that in which the paragraph comes into force in the establishment if on such date he has completed one year's continuous service or has worked for not less than 240 days during a period of twelve months in that establishment or any other establishment to which the Act applies under the same employer, etc. Sub-section (2) relates to those who qualify after the coming into force of the scheme. Paragraph 26B gives power to the Regional Commissioner to decide in case of doubt whether an employee is entitled to become a member. Paragraphs 33, 35, 36 and 38 are important and so far as relevant are is follows :
'33. Every person who is required or entitled to become a member of the fund shall be asked forthwith by his employer to furnish and shall, on such demand, furnish to him, for communication to the Commissioner, particulars concerning himself and his nominee required for the declaration form in form 2. Such employer shall enter the particulars in the declaration form and obtain the signature or thumb-impression of the person concerned.
35. The employer shall prepare a contribution card in form 3 as may be appropriate, in respect of every employee in his employment at the commencement of the scheme or who is taken into employment after that date and who is required or entitled to become or is a member of the fund including those who produce an account number and in respect of whom so fresh declaration form is prepared.
36. (1) Every employer shall send to the Commissioner, within fifteen days of the commencement of this scheme, a consolidated return ... of the employees required or entitled to become members of the fund showing the basic wage ... paid to each of such employees.
(2) Every employer shall send to the Commissioner within fifteen days of the close of each month a return -
(a) in form 5 of the employees qualifying to become members of the fund for the first time during the preceding month together with the declarations in form 2 furnished by such qualifying employees, and
(b) in such form as the Commissioner may specify, of the employees leaving service of the employer during the preceding month.
(5) Every employer shall maintain such accounts in relation to the amounts contributed to the fund by him and by his employees an the Central Board may, from time to time, direct, and it shall be the duty of every employer to assist the Central Board in making such payments from the fund to his employees as are sanctioned by or under the authority of the Central Board.
38. (1) The employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee's contribution from his wages which together with his own contribution as well as an administrative charge of such percentage ... he shall within fifteen days of the close of every month pay the same to the fund by separate bank drafts or cheques on account of contributions and administrative charge ...
(2) The employer shall forward to the Commissioner, within twenty-five days of the close of the month, a monthly consolidated statement, in such form as the Commissioner may specify, showing recoveries made from the wages of each employee and the amount contributed by the employer in respect of each such employee.'
7. These provisions clearly indicate that it is the duty of the employer to obtain particulars of employees required to become members forthwith (Para. 33), i.e., as soon as conditions of Para. 26 are satisfied and then make returns within fifteen days of the commencement of the scheme and he has to maintain the accounts of the contributions (Para. 36) and start making payments under Para. 38. There is no reference to liability arising on discovery or on making of an order under S. 7A of the Act or on assignment of the code number. Assigning of code number is merely a matter of procedure for the purpose of keeping proper accounts. These paragraphs clearly indicate that the matters necessary for the recovery and payment of respective contributions to the fund particularly of Para. 36, have to be completed within fifteen days of the commencement of the scheme, and contributions by the employer and employee and the deduction of the same from the wages of the latter are not made dependent upon an order of any authority.
8. Sri Gadgil relies upon the decisions in Aluminium Corporation of India, Ltd. v. Regional Provident Fund Commissioner and others : (1959)ILLJ249Cal and Subbaier (K. R.) v. Regional Provident Fund Commissioner : (1963)ILLJ23Mad .
9. The first case has clearly no application. In that case there was a doubt whether the scheme was applicable to the petitioning corporation. The corporation had made a query in that regard and the Regional Provident Fund Commissioner by a letter dated 28 March, 1958 wrote saying.
'subject to confirmation by Government, your factory does not come within the purview of the Employees' Provident Funds Act, 1952.'
10. The matter was then referred to the Central Government under S. 19A which gives it powers to give directions in case of difficulty in the application of the Act or if any doubt arises whether any establishment fails within the Act and the scheme. By the order dated 28 April, 1957, the Central Government held that the Act and the scheme applied to it and called upon the corporation to implement the scheme as from 1 November, 1952 and gave directions to it to make the payment of employer's share of the fund and administration charges, waiving the employees' share. The period between 1 November, 1952 and 1 November, 1956 was treated as if it was rediscovery period. The corporation approached the High Court. The Court held that the scheme could not be applied by the order retrospectively. It is clear that where there is a genuine doubt about the application of the Act, until the doubt is removed the Act and the scheme cannot apply. If the Act and the scheme, therefore, became applicable to the corporation from the date of the order or decision which resolved the doubt, then clearly in so far as the direction for the implementation of the scheme from a prior date was concerned it was bad. The observations of the learned Judge have, therefore, to be read in the context of the fact that the doubt came to be removed only by that order.
11. Subbaier case 1968 I L.L.J. 28 (vide supra) is a case of non-detection. The learned Judge after referring to S. 14B of the Act and Para. 33 of the scheme observes (p. 27) :
'The gist of these provisions is such as to make them operative only on and from the point of time when the authorities hold that a particular unit is within the ambit of the Act and make a consequential demand in terms of the Act and the scheme. Any demand for a back period appears to be not merely illogical and oppressive, but plainly inconsistent with the terms of the enactment, which are manifestly prospective in their operation. It is true that neither harshness nor inequity can defect a statute. There is no duty laid on the Court to yield to absurd construction of statutes. If such a construction can be avoided, the Court will do so and no rule of interpretation can forbid it.'
12. The observations no doubt support Sri Gadgil. With all respect, there is fallacy in the reasoning of the learned Judge. No one is applying the Act and the scheme by an order retrospectively. What is being done is that the same is being enforced from the date from which it became applicable there being no doubt about the matter, nor any question of a decision by the Central Government under S. 19A of the Act arising. We have already indicated that the Act and the scheme automatically apply as soon as the conditions for their application are satisfied, and duties have been cast upon the employer to do certain preliminary things within a fortnight of the scheme applying and to start enforcing it qua such employees as are required to become members of the fund immediately. There is nothing in the Act or the scheme to indicate that the scheme becomes applicable only when the discovery is made and/or an order in that respect is made. This construction, if accepted, would encourage evasion, for as undertaking to whom the scheme is applicable may remain undiscovered either inadvertently or deliberately. 'A construction which leads to such results must be avoided.' See Shanti Prasad v. Director of Enforcement : 2SCR297 and Maxwell, Interpretation of Statutes, 11th Edn., p. 109, where the learned author says :
''The office of the Judge is to make such construction as will suppress the mischief, and advance the remedy, and to suppress all evasions for the continuance of the mischief.' [Magdalen College case (1616) 11 Rep. 716 To carry out effectually the object of a statute, it must be so construed is to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited or enjoined [Com. Dig. Parlmt. (R). 28].'
13. Of course, it goes without saying that the statute must be read fairly and reasonably without overstretching the language. On a fair reading of the provisions of the scheme and the Act, we have no doubt that it becomes effective regarding an establishment immediately it is applied and the conditions for its application are satisfied without an order under S. 7A of the Act and the employer is bound to give it effect, except when a case is governed by S. 19A of the Act. If this is so, if an order is made under S. 7A of the Act by the Regional Provident Fund Commissioner directing, after proper inquiry, the employer to make back-payment, he is not applying the Act and the scheme retrospectively, but is only enforcing it from the date it should have been implemented by the employer. Surely, in this there can be no is justice.
14. Incidentally, it was argued, relying on the Aluminium Corporation of India, Ltd., case : (1959)ILLJ249Cal (vide supra) that in respect of employees who have left the employment the Regional Commissioner has no power to call upon payment. That would seem to be so. The provident fund scheme is introduced for the benefit of the employee and he is the owner of the amount to his credit as Paras. 61 to 78 of the scheme indicate. It is true that Paras. 69(3), 69(5), 69(6) and 71 permit forfeiture to Government of the employer's contribution. These provisions, however, appear prima facie void, being confiscator for no rational reason. However, the question may be decided when the occasion arises. Even if they are valid, having regard to the purpose of the scheme, if the employees have left the employment, it cannot be implemented. But the difficulty in Sri Gadgil's way is that the petitioner does not allege that between 1961 and 1966, when it was called upon to implement the scheme, any employees had left the petitioner's employment and the continuance of the fund in their favour under the provisions of the Act is not possible. This contention also must fail.
15. He also argued that administration charges are improperly levied as there was nothing to be administered during the past period. Administration charges do not consist merely of the expenses for the keeping of account and preparing of the cards. Paragraph 64 of the scheme shows that administration charges consist of quite a large number of items including salaries of the employees, officers, etc. This would also include the detection staff. Moreover, accounts of the employees for the back-period will have to be made. The Regional Provident Fund Commissioner, therefore, was right in calling upon the petitioner to pay the administration charges for the period from 1961 to 1966.
16. The last point that remains is that the petitioner was not heard. The Regional Provident Fund Commissioner gave sufficient opportunity to the petitioner but if its partners turned their back and did not co-operate with the Commissioner, no fault can be found with the order.
17. We recommend that if the petitioner pays the amount demanded from it and then requests the Regional Provident Fund Commissioner to reconsider the case and rescues the actual amount payable by it, he should do so if he can.