Gyanendra Kumar, J.
1. These two connected Special appeals directed against the common judgment dated 20-3-2967, delivered by the learned single Judge in connected Writ Petitions Nos. 2174 of 1964 and 3003 of 1966, involve similar questions of fact and law. Therefore, we also propose to decide these appeals by a common judgment,
2. The appellants are partnership firms of the district of Muzaffarnagar, established in 1958, by a licence granted under the Factories Act, for manufacturing khandsari sugar by the open pan process. In 1952, the Employees' Provident Funds Act 19 of 1952 (hereinafter called the Act) came into force, along with Schedule I attached thereto, mentioning various industries to which the Act was to apply. Under Section 4 of the Act the Central Government was authorised to add to Schedule I any other industry in respect of the employees whereof it was of the opinion that a provident-fund scheme should be framed and applied.
In 1956, the Central Government, by necessary notification added 'sugar' industry in Schedule I, with the result that the employees' provident fund scheme became applicable to the sugar industry as well. Accordingly, the Regional Provident Fund Commissioner, U. P., by his letter dated 27-5-1961 called upon the appellants in appeal No. 216 of 1967 (M/s. Gulshan Khandsari Udyog) to implement the provident fund scheme for their employees with effect from 31-12-60, Thereupon the Muzaffarnagar Gur and Khandsari Udyog Association made a representation to the Central Government to the effect that the Khandsari units were not engaged in the manufacture of 'Sugar' and therefore, the provisions of the Act were not attracted to their industry.
On 23-11-1963 the Regional Provident Fund Commissioner, U. P., informed the appellants that the Government of India had decided that the Act and the scheme were applicable to those units as well which were engaged in the manufacture of Khandsari. In doing so, the Central Government had obviously acted under the Provisions of Section 19-A, which empowered it to remove difficulties as and when the same arise in giving effect to the provisions of the Act, and if any doubt exists, inter alia, as to whether a factory is engaged in any industry specified in Schedule I,
3. Therefore the Regional Provident Fund Commissioner, by his circular letter dated 19-12-1964 required M/s. U. P. Khandsari Works (who are the appellants in appeal No. 221 of 1967) to submit form 5-A for the period commencing December, 1963 as prescribed by the Act and the scheme framed thereunder.
4. The main point canvassed before the learned single Judge was whether Khandsari is 'sugar' within the meaning of the First Schedule to the Act. Two other points, which were urged before the learned Single Judge, were: firstly, that even if the Act applied to the khandsari Industry, the scheme was not applicable to the appellants' unit inasmuch as it was not a seasonal factory within the meaning of the Act; and secondly the unit did not engage the kind of employees mentioned in paragraph 26 of the scheme, who may be entitled to the benefit of the Provident Fund. As regards these two points, the learned single Judge has rightly pointed out that the appellants had not raised them before the Regional Commissioner, who was entitled to decide the same and whose decision on these points was to be final. The appellants had not even furnished the names and the number of such employees who were claimed not be entitled to the benefits of the scheme. These questions of fact had yet to be decided by the Regional Provident Fund Commissioner, U. P. and they could not, for the first time, be urged in the writ petition.
5. Reverting to the question whether khandsari is sugar within the meaning of Schedule I to the Act, the order of the Central Government in the affirmative had already been received, as provided under Section 19-A of the Act, which lays down that 'the order of the Central Government in such cases shall be final'. Therefore, it is no longer open to the appellants to challenge the same. The learned Single Judge has given very cogent reasons for holding that khandsari is nothing but sugar within the meaning of the 1st Schedule. Such is also the etymological meaning of the word 'sugar', which in Hindustani is called 'Shakar'.
6. Nevertheless, there is another point which seems to have been taken in the writ petition but was not considered by the learned Single Judge, viz. whether the scheme could be made applicable retrospectively. In this connection it may be recalled that though the Act and the Scheme had come into force in 1952, it was only in 1956 that the Central Government had added the sugar industry in Schedule I to the Act. The appellants' units were established in 1958 but it was for the first time in April 1961 that a letter was received from the Regional Commissioner requiring M/s. Gulshan Khandsari Udyog to implement the scheme to the workers of their unit from 1960-61. Likewise, by his circular letter dated 19-12-1964, the Regional Commissioner had called upon M/s. U. P. Khandsari Works to extend the benefits of the Scheme to their employees with effect from December 1963.
7. The contention of Mr. S.N. Kacker, learned counsel for the appellants, in regard to the case of M/s. Gulshan Khandsari Udyog is that inasmuch as the Central Government ruling that Khandsari was sugar within the meaning of Schedule I, was communicated to them on 23-11-1963, their factory cannot be brought under the purview of the Act and the Scheme framed thereunder prior to that date; and at any rate, not prior to April 1961 when they were for the first time required to implement the Scheme with regard to the workers of their unit As regards the case of M/s. U. P. Khandsari Works, Mr. Kacker's contention, likewise, is that its employers should not be asked to extend the benefits of the Scheme to their workers retrospectively from December 1963, inasmuch as they were for the first time asked to implement the same by the Regional Commissioner's letter dated 19th December, 1964. In support of his contention Mr. Kacker has placed reliance on Aluminium Corporation of India (Ltd.) v. Regional Provident Fund Commissioner (1959) 1 Lab LJ 249 = (AIR 1958 Cal 570) and Subbaier v. R. P. F. Commissioner, (1963) 1 Lab LJ 23 = (AIR 1963 Mad 112),
8. In the Aluminium Corporation's case, AIR 1958 Cal 570 a single Judge of the Calcutta High Court held that inasmuch as there was a difficulty or doubt which was resolved by the Central Government later on, the Scheme could apply only from after the doubt or the difficulty had been so removed under section 19-A of the Act and not from a period prior thereto. It has to be noted that in the Calcutta case referred to above, there was already a provident fund scheme in existence for the benefit of the workers of the Corporation and a number of employees had already left the employment of the company after receiving the provident fund amount paid to them under the then existing scheme. This fact seems to have weighed heavily with the learned Judge. Moreover, if there was any difficulty or doubt about any of the matters referred to in section 19-A of the Act, the mere fact that it was resolved by the Central Government later on, cannot make the Scheme inoperative, nor can it be held in abeyance meanwhile. It is true that if the ruling or order of the Central Government went In favour of the employers, the scheme would not be deemed to have come in force and the contributions made by the employers and the employees in pursuance of the Scheme would be refundable to them respectively. But if the finding of the Central Government went against the employers, the implementation of the scheme would be absolutely valid from the time of its initial enforcement.
9. In Subbaier's case, (1983) 1 Lab LJ 23 = (AIR 1963 Mad 112) a learned single Judge of the Madras High Court, relying on the above Calcutta case, (1959) 1 Lab LJ 249-AIR 1958 Cal 570, held that a demand for back period was illegal and oppressive in so far as many workers employed by the factory might have, in the meantime, left service or died and a few might have also been removed or dismissed from service, hence so far as the ex-employees are concerned, there could be no question of being compelled to pay any contribution, to the fund, as required by the Scheme,
10. A similar matter came up before Falshaw, J. (as he then was) in Nadir Ali Khan v. Union of India, AIR 1958 Punj 177. In that case the Regional Commissioner had in 1955 called on the employers to deposit the contributions due as from 1-11-1962. Falshaw, J. relied upon his own observations in a former unreported case, which were in these terms.
'Although it might perhaps have been more reasonable if the Commissioner had merely compelled the petitioners to fall in with the scheme as from 1st of July 1954 when he first brought the matter to their (employers') notice, I could not hold that his demand for the employer's share of tbe provident fund as from 1st November, 1952 was illegal.'
It is noteworthy that in Nadir All Khan's case, AIR 1958 Punj 177 aforesaid the learned Judge did not give any reasoning for taking that view.
11. A somewhat similar question arose before J. Sahai, J. in N. K. Industries (Pvt) Ltd. v. Commissioner, R. P. Fund, AIR 1958 All 474, where It was submitted by the Company that as no demand was made for about three years, it would be deemed to have been waived by the Regional Provident Fund Commissioned and in any case, inasmuch as no deduction had been made from the wages of the employees for the past period and some of the employees had already left the service of the company, the employers could not be liable to make their contributions, because even if those contributions were made by them, in the absence of contributions from the employees, the Provident Fund Scheme could not come into force. The learned Judge referred to para 30 of the Scheme which provides that the employer shall In the first instance pay both the contributions payable by himself and also the contributions payable by the members. Referring to the above provisions of paragraph 30 of the Scheme, J. Sahai, J. held:--
'This would show that it !s the employer who is to make contribution both with regard to his share and with regard to the share of the employee. He can, under paragraph 32, recover the amount of the employee's contribution from the employee .... The scheme was framed as far back as 2-9-1952. Tbe petitioner should have made its own contribution and also that of the employees long before a demand was made from It.... There is a duty cast upon the petitioner to contribute both the shares, i.e. his share as also that of the employee, inasmuch as the petitioner did not do so, it IB to blame itself.'
12. The above decision of J. Sahai, J. was followed by one of us (Broome, J.) in Civil Misc. Writ No. 2450 of 1962, Plastic Product Ltd. V. R. P. F, Commissioner decided on 6-12-1966 (All). In that case the Scheme had become applicable with effect from 1-1-1956. But it was in the year 1959 that the Regional Commissioner realised that the company was not implementing the provisions of the Act and so it was in that year that the company was first asked to implement the Scheme with effect from 1-1-1956. In that case also it was argued that the demand for the enforcement of the Act and the Scheme could be made only for the future, i e. from 1959 onwards, and the demand for implementation for the period between 1956 and 1959 was illegal. The learned Judge in these circumstances held:--
'It Is obvious, that retrospective enforcement can only be illegal, if it is found that the law that is required to be complied with had not been passed or was not in force during the period for which implementation is demanded. In the present case, however, the law was In existence well before 1956 requiring the petitioning company to comply with the provisions of the Provident Fund Scheme framed under the Act and I can see no justification for allowing the company to avoid implementation of the scheme from 1956 onwards merely because the authorities did not detect the petitioner's negligence until 1959.'
13. A similar question was recently considered by a Division Bench of the Punjab High Court in Kapur Bhimber Union v. R. P. F. Commissioner. (1966) 1 Lab LJ 870 (Punj). In the above case it was found that the petitioner company had completed five years of establishment on 31-12-1960, as provided under Section 16(b) of the Act and therefore, it came tinder the purview of the Act and the Scheme with effect from 1-1-1961. Accordingly the Regional Commissioner by his letter dated 18-5-1963 required the company to deposit the employer's share of provident fund contribution for the pre-discovery period, i. e. 1-1-1961 to 31-5-1963. The Division Bench of the Punjab High Court, (1986) I Lab LJ 870 (Punj) relied upon another Bench decision of that Court as also on Nadir Ali Khan's case, AIR 1958 Punj 177 (supra). It duly considered the 1959 case of the Calcutta High Court, (1959) 1 Lab LJ 249= (AIR 1958 Cal 570) and the 1963 case of the Madras High Court. (1963) 1 Lab LJ 23= (AIR 1963 Mad 112) referred to earlier, but did not agree with their opinion. The Bench, however, approved the view of this Court taken by J. Sahai, J. in AIR 1958 All 474 and held that the contribution to the provident fund had to be made initially by the employer on' his own behalf as also on behalf of the employees, the share of the employees being realisable from out of their wages later on. It was pointed out that the Calcutta decision (AIR 1958 Cal 570) cannot be taken to be an authority for the view that the Commissioner could not call upon the employers to deposit contribution with regard to the period called the pre-discovery period, because in that case the company concerned had formulated its own provident fund scheme which had been in operation for the past several years, within which time some of the employees had already left the service after taking their provident fund accumulation. It was further pointed out that the Madras view expressed in 1963 (following the Calcutta decision) had since been dissented from by Srinivasan, J. of that very Court, who held that there was no provision which postponed the application of the Act and the Scheme to the stage of demand being made by the authorities concerned.
14. In order to reach a correct conclusion, it is necessary to keep in view the provisions of Section 16 of the Act, which runs as under:--
'16(1) This Act shall not apply to --
(b) any other factory, established whether before or after the commencement of this Act, unless three years have elapsed from its establishment.
Explanation :-- * * * * * * (2) If the. Central Government is of opinion that having regard to the financial position of any class of factories or other circumstances of the case, it Is necessary or expedient, so to do, it may, by notification in the official Gazette, and subject to such conditions as may be specified in the notification, exempt that class of factories from the operation of this Act for such period as may be specified in the notification,'
15. Thus unless and until the Central Government had specifically exempted the khandsari factories from the operation of the Act (which had not been done), the Scheme would automatically become applicable to the factories of the present appellants, after a lapse of three years from their establishment in 1958, notwithstanding the fact that the Regional Commissioner had required the appellants to implement the Scheme after a lapse of another year or that the Central Government's order saying that the sugar industry mentioned in Schedule I included khandsari was communicated to the employers in November, 1963. The employer's liability to contribute to the provident fund was co-extensive with the application of the Act and the Scheme to their factories and could be enforced retrospectively for what may be called the pre-discovery period, once the Act and the Scheme had become applicable to the units of the appellants. The liability of the employers does not depend upon the demand of their contribution made later on or even on the fact that some of the employees had already left the service or had died, because the ex-employees or their heirs cannot be deprived of the benefits which they could have derived from the membership of the fund during the pre-discovery period of their service in the factory. Needless to add that at the time of payment to such ex-employees or their heirs, the employers would be entitled to deduct and adjust the amount of contribution which the ex-employees were liable to make under the Scheme. Section 16(1)(b) clearly envisages an automatic application of the Act and the Scheme on the expiry of three years in the case of a factory and five years in the case of a company after its establishment, provided, of course, that the number of employees, the period of their work, etc. conform to the requirements of the Act.
16. Thus we find that the appeals haveno force. They are accordingly dismissedwith costs, the stay orders being vacated.