Somnath Ayyar, J.
1. These are two appeals preferred by the Provident Funds Inspector, Raichur Division, from order of acquittal made in persecutions commenced under the Employees' Provident Funds Act, 1952. The respondent in each of these appeals is the proprietor of a mining concern known as Pusheli Manganese Mines, Supapeth, in the district of North Kanara.
2. The appellant presented two complaints against the respondent who was accused 1 charging him with transgressions of the provisions of S. 14 of the Employees' Provident Funds Act, 1952, which will be referred to as the Act, and Para. 76 of the Employees' Provident Funds scheme which will be referred to as the scheme. The accusation in one case was that the respondents who will be referred to as accused 1 neglected to make his contribution towards the provident fund constituted under the scheme for the moths of January, February and March 1961. The allegation in the other case was that he failed to furnish returns as required by Para. 36 and the other relevant provisions of the scheme.
3. The Judicial Magistrate, Haliyal, to whom those complaints were presented, convicted accused 1 of both the offences and sentenced him to pay a fine of Rs. 200 for neglect to make the contribution and to pay a fine of Rs. 100 for neglect to furnish the returns. Accused 2, the manager of the mining concern, was acquitted. Accused 1 preferred appeals from those convictions, and, the Sessions Judge, North Kanara, allowed those appeals and set aside the convictions and sentences. The Provident Funds Inspector has presented these two appeals.
4. It is undisputed that to the industry owned by accused 1, the provisions of the Act whose purpose was the institution of provident funds for employees in factories and other establishments, were made applicable by a notification made by the Central Government on 17 August 1957 under S. 1(3)(b) of the Act, with effect from 30 November 1957. It is also undisputed that since the establishment of accused 1 was an infant establishment within the meaning of S. 16 of the Act, by reason of the fact that that establishment was constituted only on 1 January 1957, the provisions of the Act could become applicable to the establishment of accused 1 only from 1 January, 1960, if those provisions were otherwise applicable.
5. At the relevant point of time, the provisions of the Act could become applicable after the expiry of three years after the establishment was constituted if there were fifty or more persons working as employees. It is not necessary to mention here the provision applicable to establishments in which there were less than fifty employees since the case for the prosecution was that the establishment of accused 1 employed more than fifty persons at all relevant points of time.
6. What was alleged in the complaints was that since the establishment of accused 1 employed more than fifty persons, it was his duty to make contributions to the provident fund constituted under the scheme for the months of January, February and March 1960, since the provisions of the Act and the scheme became applicable to his establishment with effect from 1 January, 1960. The scheme was made by the Central Government under S. 5 of the Act and, it is clear from the relevant statutory provisions that the scheme began to operate the moment the Act became applicable to the establishment.
7. The Provident Funds Inspector gave evidence that the number of employees in the establishment of accused 1 exceeded fifty and that accused 1 was, therefore, under a statutory duty under S. 6 of the Act read with the relevant provisions of the scheme to pay his contribution to the provident fund constituted under the scheme. It was also said that there was also a statutory duty imposed upon him by Para. 36 of the scheme to send a return to the prescribed authority specifying the required particulars concerning his employees. The evidence given by the Inspector was that since accused 1 neither paid the contribution nor furnished the returns, he transgressed the provisions of S. 6 of the Act as also the relevant provisions of the scheme, and therefore, committed offences punishable under S. 14 of the Act and Para. 76 of the scheme.
8. The Magistrate depending upon the evidence given by the Provident Funds Inspector, came to the conclusion that the Act and the scheme became applicable to the establishment of accused 1 from 1 January, 1960, and that for months of January, February and March 1960 it was the statutory duty of accused 1 to make his contribution to the provident funds and also to furnish the required returns. But that view taken by the Magistrate did not commend itself to the Sessions Judge who thought that since the Regional Provident Funds Commissioner, Mysore, sent the communication, Ex. 7 to accused 1 only on 3/17 March, 1960, that the Act and the scheme were applicable to the establishment of accused 1 and that he should submit the necessary returns in a particular form, there was no obligation on the part of accused 1 to make any contribution for (sic) even before he received it. So it was that he set aside the convictions in both the cases.
9. In these appeals, Sri Jagannatha Shetti, the learned advocate appearing for the Inspector, has contended that that view taken by the Sessions Judge is open to the criticism that it overlooks the relevant statutory provisions. He contended that the moment the scheme and the Act became applicable, the duty to make the contribution along with the duty to furnish the returns simultaneously came into existence and that it was not permissible for accused 1 to defer the payment of the contribution of the production of his returns until he received the communication from the Provident Fund Commissioner or from anyone. Sri Jagannatha Shetti's further submission was that there was no provision either in the Act or in the scheme supporting the view taken by the Sessions Judge that there could be a postponement of the payment of the contribution or the production of the returns until there was a demand for such payment or production.
10. We have been taken through the relevant provisions of the Act and the scheme and we find that Sri Shetti is right in making the submission that the payment of the contribution or the production of returns cannot properly be postponed until there is a demand for such payment or production. We doubt the correctness of the decision in Sub batter (K. R.) v. Regional Provident Funds Commissioner [1963 - I L.L.J. 23] which to some extent supports the proposition enunciated by the Sessions Judge.
11. The provisions of the Act and those of the scheme are clear. The purpose of the Act is to institute a provident fund and so is the aim of the scheme. The employer under the provisions of the Act and the scheme is required to contribute to the provident fund in the same way in which the employee is required to make the contribution. It is in this manner that the provident fund is constituted.
12. Paragraph 26 of the scheme contains orated provisions in regard to eligibility for membership of the fund and other concomitant matters. Among other matter, it provides that every employee in an establishment to which the scheme is applicable and who has been in continuous service for a period of a year or for a period of 240 days is not only entitled to become a member but could also be required to become one. The date on which such membership commences however is postponed by a period of one months from the date on which the provisions of the scheme begin to operate. There are also other provisions providing for membership of the provident fund for those who were already members of another provident fund. It is not necessary to allude to the other provisions of the paragraph.
13. Paragraph 36 which is the next relevant paragraph in the scheme directs the employer to furnish to the Commissioner to return specifying the particulars of employees who are entitled to become member of the fund or who could be required to become members and are under duty to becomes such members. These provisions of the scheme it clear that an employee becomes entitled to the benefits of a provident fund soon after he become entitled to or could be required to become a member of that fund it the manner provided by the scheme. If that be the true position, the proposition that the liability to make a contribution to that and does not arise until there is a demand for the payment of that contribution or for the production of the return cannot be sound.
14. We are inclined to take the view that the period for which the employer is under a statutory duty to make a contribution to the provident fund is the period commencing from the date on which there is at least one employee who is entitled to or who could be required to become a member of the provident fund under the provisions of Para. 26 of the scheme. We also take the view that not a demand is made for the payment of that contribution and that the liability to make that contribution is born and comes into being on and from the date when at least one employee becomes entitled or could be required to become a member of the fund.
15. It is also clear from the provisions of Para. 36 that the duty of the employer to furnish the return arises the moment the scheme commences to operate and that that return should be furnished within fifteen days from the commencement of the scheme. If that is the provision of Para. 36, it would be unreasonable to suggest that there is no duty to furnish the returns to which Para 36. refers until a demand is made for its production. It is not necessary here in the view that we take to advert to the other provisions of the scheme regulating the production of the other particulars which accused 1 is stated to have neglected to furnish.
16. So, the orders of acquittal in both these appeals cannot be supported on the ground on which the Sessions Judge rested them. Normally, we would have felt persuaded to set aside those orders and convict accused 1 of the offences with which he was charged.
17. But, it seems to us that it is not possible for us to do so and that these appeals have to fail for reasons other than those for which the appeals have succeeded before the Sessions Judge. We have no doubt in our minds that to the establishment of accused 1 the provisions of the Act and the scheme became applicable on and from 1 January 1960. Exhibit 6 which is a document signed by accused 2 makes it abundantly clear that during the months of January and February 1960, the number of employees in the establishment far exceeded fifty. That being so, the period during which the establishment could be considered to be an infant establishment was only a period of three years as provided by S. 16 at the relevant point of time and after the expiry of that period, the Act became applicable together with the scheme which began to operate simultaneously with it. We are not willing to accede to the argument of Sri Swami for accused 1 that the statement made by accused 2 in Ex. 6 does not bind accused 1. That statement was made by accused 2 in his capacity as the manager of the establishment of accused 1 during an enquiry which was made by the Inspector and accused 1 did not produce any evidence that what was stated by accused 2 in Ex. 6 was inaccurate or that the number of employees at the relevant point of time was less than fifty.
18. But the fact that the Act and the scheme began to operate from 1 January, 1960, cannot be of much assistance to the prosecution since it was not established by the prosecution in these cases that there was anyone who became entitled to or who could be required to become a member of the provident fund at any time during the months of January, February or March 1960. There was no employee in the establishment who was already a member of any other provident fund. So, no employee became entitled to or could be required to become a member of the provident fund constituted under the scheme or was bound to become such member before 1 February, 1960, as provided by Para. 26. But what had to be established by the prosecution was that there was at least one employee who was entitled to become a member of the provident fund constituted by the scheme at least on 1 February, 1960.
19. That the prosecution would have been able to prove if evidence had been produced that there was at least one employee who had been continuously in service for a period of one year when Para. 26 commenced to operate or had worked for not less than 240 days during a period of twelve months or less in the establishment before that date. Of that, the prosecution produced no evidence. The Inspector himself had no personal knowledge that there was any such employee who could claim membership or was bound to become a member in that way. He gave evidence that his knowledge on that matter was what he derived from Ex. 12 which was a report made by him in consequence of an enquiry which he made and to which accused 2 affixed his signature. What is stated in that report is that there were at least three persons who were working in the factory from year 1957. So it was that Sri Jagannatha Shetti Constructed the argument that it was completely established by Ex. 12 that there were at least three employees who had worked continuously for a period of a year before Para. 26 came into force and that all those three persons were entitled to become or could be required to become members of the provident fund from 1 February 1960, and that accused 1 was therefore under a duty to make a contribution to the provident fund for at least the months of February and March 1960.
20. But the infirmity in this argument is that Ex. 12 does not state that any of those three employees to whom it refers worked continuously for a period of a year before Para. 26 came into force. Explanation 1 to Para. 26 explains what continuous service means and states that it means uninterrupted service although it includes service which is interrupted by sickness, accident, authorized leave and the like. So what was necessary for the prosecution to prove in these cases was that there was such uninterrupted service in the case of those three employees to which Ex. 12 refers. But Ex. 12 stated nothing about it. What it stated was that they were in service from 1957 without mentioning whether they were during the period subsequent to that year in uninterrupted service or whether they were not. We are disposed to accede to the argument maintained by Sri Shetti that the meaning of Ex. 12 states and those three employees were in continuous service. That is not what Ex. 12 states and we should not be justified in importing into Ex. 12 what is not contained therein or to overlook that the emphasis of Para. 26 is on continuous service.
21. We should therefore say that it is not proved that there was anyone in the employment of the establishment of accused 1 who was entitled or could be required to become a member of the provident fund at any point of time during the months of January, February and March 1960.
22. We take the view that by reason of there being no such employee, there was no duty on the part of accused 1 to furnish the return to which Para. 36 refers. The clear meaning of that paragraph is that the employer is under a duty to furnish the return to which it refers only if there be an employee who is entitled to or who could be required to become a member of the provident fund. If there be none, that paragraph creates no duty to furnish a return.
23. It is for these reasons that we should refuse to disturb the order of acquittal made by the Sessions Judge and not for those for which he made them.
24. We, therefore, dismiss these appeals.