1. This is an appeal under Clause 10 of the Letters Patent against the judgment of Bhutt, J. (as he then was) allowing Miscellaneous Petition No. 202 of 1957 filed under Article 226 of the Constitution of India by the respondent for the issue of a writ of certiorari or other appropriate writ to set aside the order of the Government dated the 31st August 1957 directing the recovery of Rs. 2360.75 nP., as contribution from the respondent under the Employees' Provident Funds Act, 1952, (hereinafter referred to as the Act). The petition was filed in the following circumstances.
2. By a memorandum dated the 23rd March 1955, the Regional Provident Fund Commissioner, Nagpur asked the respondent, a registered firm, to supply in pro forma certain information needed under the Act. In answer the respondent stated that the name of the factory was 'Simghai Moujilal and Sons' and the industry in which the factory was engaged was (a) manufacturing of metal goods and metal engraving, and (b) printing and binding, and that the number of workers employed in the printing industry was thirty-five and in the other industry it was sixteen.
On 19th July 1956 the Regional Provident Fund Commissioner intimated the respondent-firm that as its factory, which was established in 1921, was employing more than fifty workers, 'the provisions of the Act were applicable to the factory with effect from 31st July 1956 and, therefore, it should commence to take action for recovery of the provident fund contribution from the wages 'and clearness allowance earned on and from 1st August 1956. On receipt of this information the respondent informed the Regional Provident Fund Commissioner that the liability to make provident fund contribution arose only in respect of an industry employing fifty or more employees ; and that as in its factory thirty-five persons were employed in one industry and sixteen in an altogether unconnected and separate industry, the Act did not apply to the factory.
When the respondent did not remit the amount of contribution, the Regional Provident Fund Commissioner issued a warning to the respondent-firm that in case it failed to remit the amount within fifteen days of the receipt of the warning the contribution amount would be recovered as arrears of land revenue under Section 8 of the Act. The respondent again failed to remit the amount of contribution. Thereupon the Government made the recovery order which was quashed by the learned Single Judge.
3. The learned Single Judge took the view that under Section 1(3) of the Act, it applied to every establishment which was a factory, as defined in the Act, engaged in any industry mentioned in Schedule I and in which fifty or more persons were employed; that 'factory' meant any premises connected with a manufacturing process; that if in certain premises there were two or more separate industries, which ' were neither interdependent nor subsidiary and consequently two or more independent manufacturing processes were being carried on in the premises, then there would be not one factory but as many factories as there were independent manufacturing processes; and that each such factory must employ fifty or more persons before the Act could be applied.
On the information which was supplied by the respondent-firm and acted upon by the Regional Provident Fund Commissioner, the learned Single Judge came to the conclusion that the making of metal badges, hammers, name and number plates was one industry, and printing and binding was another independent industry; that these two constituted different factories; and that as the number of workers employed in each of these factories was less than fifty, the respondent was not liable to pay any amount as contribution under the Act.
4. In this appeal, the question as to the sustainability of the demand for contribution from the respondent depends on the true interpretation of section 1(3)(a) of the Act. That provision runs as follows:
'Subject to the provisions contained in Section 16, it applies :
(a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which fifty or more persons are employed, and
(b) .... .... ..... ...'
The definition of, 'factory' as given in Section 2(g) is as follows :
' '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;'
The wording of this definition makes the word 'factory' include not merely the area comprised by the walls of the building in which a manufacturing process is carried on, but the whole area comprised within the boundaries of the premises in question. When Section 1(3) and Section 2(g) are read together and are paraphrased, they mean that the Act applies to every establishment located in any premises including the precincts thereof, where, in any part, a manufacturing process in any industry is being carried on or is ordinarily so carried on, whether with the aid of power or without the and of power, and in which fifty or more persons are employed. The requisites for the applicability of the Act by virtue of Section 1(3)(a) are: (i) any premises, a geographical area within a certain boundary; (ii) the carrying on ordinarily with or without the aid of power of a manufacturing process in any part of the premises including the precincts thereof; and (iii) the employment of fifty or more persons in the factory as defined in Section 2(g).
5. On the plain language of Section 1(3), as amended by Act No. 94 of 1956, there can be no doubt that the employment of fifty or mote persons must be in a factory and not in the industry in which the factory is engaged. The expression 'in which fifty or more persons are employed' occurring in Clause (a) obviously governs the word 'factory'. The position was no different under Sub-section (3) of Section 1 as it stood before the amendment in 1956. Before the amendment Sub-section (3) ran as follows:
'Subject to the provisions contained in Section 16, it applies in the first instance to all factories engaged in any industry specified in Schedule I in which fifty or more persons are employed, .......'
6. On a true grammatical construction the words 'in which fifty or more persons are employed' clearly relate to the word 'factories' and not to 'industry'. This is borne out by the wording of the further provision in the old Sub-section (3) which gave to the Central Government power to apply the provisions of the Act to 'all factories employing such number of persons less than fifty'. The provisions of Section 19A of the Act dealing with the power to remove difficulties, as it stood before the amendment, also expressly spoke of employment of fifty or more persons in a factory. The learned Single Judge was, therefore, undoubtedly right in disagreeing with the view expressed in Nagpur Glass Works Ltd. v. Regional Provident Fund Commissioner, (S) AIR 1957 Bom 152, on this point and in holding that even under the old provision the employment of fifty or more persons had to be in a factory and not in any industry.
7. Before us there was no dispute as to the requirement of employment of fifty or more persons in a factory. The contention advanced on behalf of the respondent, which found favour with the learned Single Judge and which has been repeated here, is that for the applicability of the Act to any establishment by virtue of Section 1(3)(a) it is essential that the factory must be engaged in any one of the industries specified in Schedule I. The implication of the argument is that if in any premises including the precincts thereof manufacturing processes in different industries are carried on, then there is not one factory but as many factories as the industries in which manufacturing processes are being carried on and, therefore, Section. 1(3)(a) would have no applicability.
8. We are unable to accept this argument which runs counter to the language of Clause (a) of Sub-section (3) of Section 1, and which, if accepted, would defeat the very object of the Act. Clause (a) of Sub-section (3) uses the words 'engaged in any industry' and not the words 'engaged in any one industry'. There can, therefore, be no justification for narrowing the scope of that clause so as to make it applicable to a factory engaged in any one industry specified in Schedule I.
The definition of the word 'factory1 given in Section 2(g) also does not contain any words of limitation bringing under it only those premises including the precincts thereof where a manufacturing process in one industry only is being carried on or is ordinarily so carried on. The main object of a factory is manufacture and the question whether a particular place is or is not a factory depends on whether a manufacturing process is being carried on therein, no matter whether in one industry or in several industries.
It is difficult to see how if under the definition given in the Act a particular place in which manufacturing process in one industry is being carried on is a factory, it would cease to be so if manufacturing processes of other industries are undertaken. On the argument of the respondent, if in any large and spacious premises having extensive geographical area, several industries, each one of them employing even more than fifty persons and carrying on manufacturing processes, are located, then the premises would not be within the purview of Clause (a). This would be an absurdity.
The question whether a certain place is or is not a factory does not depend, and cannot be decided on the number of industries in which manufacturing processes are carried on or on the consideration whether the employer has for the sake of convenience of management and other reasons divided the establishment into various departments each employing less than fifty persons. So to do would be to defeat the object of the Act in the manner already indicated. The Employees' Provident Funds Act, 1952, is a social legislation providing benefits to the employees. The provisions of the enactment must, therefore, be construed liberally. In J. G. Vakharia v. Regional Provident Fund Commissioner, (1957) 1 Lab LJ 448, Chagla C. J. made the following observations with regard to the interpretation of the Employees' Provident Funds Act, 1952 :
'It is well-settled canon of taxation law that a subject is entitled to avoid paying tax if legally he can do so. Even that canon is looked at rather askance in the context of times that we are living in, but the Act that we are dealing with is not a taxation law. It is a social legislation and the canon of construing a social legislation is very different from the canon of construing a taxation law. The court must not countenance any subterfuge which would defeat the provisions of a social legislation and the court must even if necessary strain the language of the Act in order to achieve the purpose which the legislature had in placing this legislation on the statute book. Therefore, not only the court must disapprove all subterfuges to defeat a social legislation but must actively try to prevent such subterfuges succeeding in their object.'
The construction sought to be put by the respondent on Section 1(3)(a) leaving a door open to the employer for escaping his liability for contribution under the Act cannot, therefore, be accepted.
9. It is worthy of note that under the Act the liability for the payment of contribution in relation to an establishment is on the employer. Under Section 2(c) 'employer' in relation to an establishment which is a factory means the owner or occupier of the factory. It is not the industry that is being carried on or a machinery in any premises that is subject to the liability.
It is the owner or occupier of the premises, which is a factory, who has been made liable for the payment of contribution. The unit for the purposes of liability is, therefore, the premises which under Section 2(g) constitute a factory. If, as we think, for the purposes of liability the premises are the unit, then for the purposes of Section 1(3)(a) it is wholly irrelevant whether in the premises a manufacturing process is being carried on in one or several industries and whether the several industries are interdependent or subsidiary or distinct.
In our judgment, any premises including the precincts thereof wherein manufacturing process is being carried on even if in several industries specified in Schedule I would none-the-less be a factory within the meaning of Clause (a). In this view of the matter, it is immaterial whether each of the industries located in the premises employ fifty or more persons. For the applicability of Clause (a) it is sufficient if fifty or more persons are employed in the entire factory, no matter whether in one industry or more industries.
10. It is not disputed by the respondent that the industries it is carrying on are those falling under Schedule I and that the total number of workers employed in the factory is fifty-one. That being so, the Act clearly applies to the respondent's establishment by virtue of Section 1(3)(a). The demand for contribution made by the Regional Provident Fund Commissioner cannot, therefore, be said to be untenable or illegal.
11. For the foregoing reasons this appeal 3s allowed, the order dated 11th March 1958 of the learned Single Judge is set aside and the respondent's application under Article 226 of the Constitution is dismissed. The appellants shall have the costs here and of the petition before the learned Single Judge Counsel's fee in each Court is fixed at Rs. 75/-.