A.N. Grover, J.
1. This judgment shall dispose of Civil Writ No. 297 of 1964 and five connected petitions (Civil Writs Nos. 304, 305, 306, 375 and 460 of 1964) in which a common question of law is involved.
2. It is necessary to state the facts in the first petition only. The petitioner is a partnership concern carrying on business of manufacturing machine tools and is registered under the Factories Act since 1958. By a letter dated 14 June 1962, the Regional Provident Fund Commissioner (to be referred to as the Commissioner) appointed under the Employees' Provident Funds Act, 1952 (hereinafter called the Act), called for some information in a pro forma which was annexed to the letter with a view to examine whether the petitioner-concern fell within the puryiew of the Act because by means of a Government of India notification dated 7 March 1962, the Act and the scheme framed thereunder had been made applicable to every trading and commercial establishment employing twenty or more persons. This information was furnished along with communication dated 18 June 1962. It was stated in the pro forma (copy annexure B. 1) that the number of all categories of employees employed as on 30 April 1962 was fifteen. On 18 May 1963 the Commissioner wrote to the petitioner saying that according to the enquiries made by the department the petitioner-concern was engaged in industry as specified in Sen. I of the Act, as amended, and it employed 20 persons as on 31 December 1960 and had also completed five years of establishment as provided under Section 16(b) of the Act. As such it was covered by the provisions of the Act and the scheme framed thereunder with effect from 1 January 1961. He further proceeded to say:
Keeping, however, in view the fact that your factory establishment has been discovered for coverage under the Employees' Provident Funds Act, 1952, at a later stage, you are allowed, as a special case, to deposit only the employer's share of provident fund contributions and administration charges at 3 per cent on both employees' and employers' shares of contributions for the pre-discovery period, i.e., 1 January 1961 to 31 May 1963. As far as arrears of contributions of employees shares for the said period are concerned, these may be left to the workers concerned to pay the same if they so desire. The Employees' Provident Funds Scheme, 1952, should, however, be applied in full from 1 June 1963 in your factory/establishment.
The attention of the petitioner was also invited to the consequences of the nature of criminal prosecution and levying of damages, etc., and other charges which would follow in case the provident fund contributions and administration charges were not deposited within a certain time. It is clear from annexure D that the Commissioner informed the petitioner about the code number allotted to It and that it had been covered under the Act with effect from 1 January 1961. On 27 May 1963 the petitioner wrote to the Commissioner saying that under the law it was not liable to pay contributions to the fund retrospectively for the pre-discovery period and referred to certain judgments of the Madras and the Calcutta Courts on the point. On 8 August 1963 the Commissioner sent a reply saying that since the Punjab High Court had held that the employer of a factory was liable to report compliance from the date from which the Act became applicable to the factory, the petitioner had been rightly directed to deposit the provident fund dues and submit the relevant returns from 1 January 1961 to date. The petitioner approached the Government of India by means of a representation but he was informed that his case was not covered by Section 19A of the Act.
3. Sri Dalip Chand Gupta, who represents the petitioner in five of the petitions, contends that respondent 1 had no jurisdiction to demand contribution for what is called the pre-disoovery period, i.e., the period to the date when the Employees' Provident Fund Scheme, 1952 (to be referred to as the scheme), came to be enforced by the Commissioner in its entirety. For instance, in Kapur Bhimber Union case, the facts of which have been set out, the scheme was sought to be applied in full effect from 1 June 1963 although for the period 1 January 1961 to 31 May 1963 a demand was made to deposit the contribution in the fund of the employer's share only on the ground that the aforesaid concern was oovered by the Act with effect from 1 January 1961. It is pointed out that a number of employees for the relevant period had left service and thus the direction given by the Commissioner is impossible of performance. In the return filed in that case, this position is controverted and it is stated that according to the enquiries made, as many as twenty-one employees left the service of the employer on different dates but they had qualified for membership to the fund, i.e., they had served the concern for more than 240 days before the date of coverage, namely, 1 January 1961. A list of these employees along with the dates from which they qualified and the dates till which they were entitled to recover the amount as also the present addresses as supplied by the petitioner has been attached as annexure Rule 3 to the return.
4. It would have been necessary to refer to all the relevant provisions of the Act and the scheme if the matter had been res Integra but in a previous Bench deoision of this Court in Prem Narain Aggarwala v. Union of India (Letters Patent Appeal No. 2D of 1956) decided on 13 February 1957, it was held that the liability to contribute to the fund commenced from 1 November 1952. Under Chap. V of the scheme (Paras. 29 to 33), the employer and the eligible employees had to make contribution to the fund from 1 November 1952. This contribution 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 realizable from out of their wages. In that case also the Commissioner had called upon the employers to deposit only their share from November 1952 and the order was sustained on the ground that the employers were under an obligation to contribute to the fund with effect from the date the scheme came into force under the Act. The Bench affirmed the view expressed by my Lord Falshaw, J. (as he then was), against whose Judgment the appeal had been brought under Clause 10 of the Letters Patent which was disposed of by it. In a later case also in Haji Nadar Ali Khan v. Union of India my Lord Falshaw, J., upheld the order made by the Commissioner calling upon the employers in 1955 to deposit the contribution due as from 1 November 1952 in respect of the employees who had completed one year's service with the employers by that date. Naturally the Bench decision was followed.
5. Sri Gupta says in Aluminium Corporation of India, Ltd. v. Regional Provident Fund Commissioner 1959-I L.L.J. 249, P. B. Mukharji, J., has expressed the view that neither Section 6 of the Act nor Para. 29 of the scheme permits an option to employees to pay or not to pay their contribution. Those provisions insist that the employees' contribution shall be equal to the employer's contribution. An order, therefore, exempting the employees to pay their contribution is inconsistent with the provisions of the Act and it would be entirely against the purpose and objects of the Act to apply a scheme retrospectively. In that case the company which had been called upon to make the contribution under the Act had formulated its own provident fund scheme which had been in operation since 1944. The learned Calcutta Judge felt that it would be contrary to the purposes of the Act to apply a scheme retrospectively to a company for a period within which time some of the employees had already left and presumably left by taking their provident fund accumulations. The Government, by asking the employer to replenish and refund even those moneys was doing something illegal. The position, therefore, in that case was different and although the trend of the reasoning of the learned Judge appears to support the argument of Sri Gupta, the Calcutta decision cannot be taken to be an authority for the view that the Commissioner could not call upon the employers in the present cases to deposit contribution with regard to the period called the pre-discovery period. The Calcutta decision was followed by a learned single Judge of the Madras High Court in Subbaier (K.R.) v. Regional Provident Fund Commissioner 1963-I L.L.J.23. Acoordlng to Jagadlsan, J., the gist of the provisions of the Act relating to payment of contribution towards provident fund by the employer is such as to make them operative only 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. A demand for a back-period is not merely illogical and oppressive but plainly inconsistent with the terms of the enactment which are manifestly prospective in their operation. The learned Judge in that case appears to have been influenced to a certain extent by the fact that the Commissioner had made a demand for contribution and for management expenses for a period of five years. Another learned single Judge, Srinivasan, J., of that Court in Sri Andal & Co, v. Regional Provident Fund Commissioner (Writ Petition No. 205 of 1962 decided on 26 June 1964), dissented from the view of Jagadisan, J., and observed:
Heading the Act and the scheme as a whole, it is clear that the scheme comes into force at once and affects every industry at least from the date on which the scheme was framed. Paragraph 26 of the scheme provides that every employee other than an excluded employee shall be entitled and required to become a member of the fund from the beginning of the month following that in which the paragraph comes into force in such factory or other establishment. The further requirement is that by that date the employee should have completed ...one year's continuous service. The statute therefore makes it compulsory upon the employee to become a member of the fund, and read along with the other provisions which lay an obligation upon the employer to make relevant contribution, the underlying intent is that the scheme comes into force immediately.
He was unable to agree that there existed any provision which postponed the application of the Act and the scheme to the stage of demand being made by the authorities concerned. In N. K. Industries (Private), Ltd. v. Regional Provident Fund Commissioner 1958-II L.L.J. 19, Jagdish Sahai, J., after referring to Section 5 of the Act and Paras. 29, 30 and 32 of the scheme, said that there was a duty cast on the employer to contribute both the shares, i.e., his share as also that of the employee and merely because no demand for contribution was made for about three years, the demand could not be deemed to have been waived by the Commissioner. Thus, there is hardly any other authoritative pronouncement in which a view contrary to the one expressed by the Bench of this Court in Prem Narain Aggarwal case (Letters Patent Appeal No. 2D of 1956) has been taken. We have not been, therefore, persuaded that there is any strong reason for not following the previous decision.
6. Sri Gupta has finally contended that at least so far as those employees who had left the service were concerned, the Commissioner was not justified in calling upon the employers to make contribution to the fund in respect of them. He has called attention to the definition of the word 'contribution' in Section 2(c) of the Act which means a contribution payable in respect of a member under a scheme. A member is denned by Section 2(j) to mean a member of the fund. Chapter IV of the scheme deals with membership of the fund. Paragraph 26 relates to classes of employees entitled and required to join the fund. Paragraph 26B says that if any question arises whether an employee is entitled or required to become or continue as a member or as regards the date from which he is so entitled or required to become a member, the decision thereon of the Regional Commissioner or, where a State Commissioner is appointed, of the State Commissioner shall be final. It is, however, provided that no decision shall be given unless both the employer and the employee have been heard. Chapter V deals with contributions. Paragraph 30 provides that the employers shall in the first instance pay both the contribution payable by himself and also on behalf of the member employed by him. According to Para. 32, the amount of a member's contribution paid by the employer shall, notwithstanding the provisions of the scheme, etc., be recoverable by means of deduction from the wages of the member. Chapter VI relates to declaration, contribution cards and returns. Paragraph 33 provides for a declaration by persons already employed at the time of the institution of the fund. Paragraph 34 relates to the declaration by persons taking up employment after the fund has been established. Paragraph 35 provides for preparation of contribution cards. Sri Gupta's submission is that those employees who have left service of the employers during the pre-discovery period could not be regarded to be members of the fund as all the formalities required by the aforesaid provisions contained in Chap. VI were never complied with. It is noteworthy that Para. 26 lays down that every employee shall be entitled and required to become a member of the fund from the beginning of the month following that in which the scheme comes into force if on the date of such coming into force he has completed one year's continuous service or has actually worked for not less than 240 days during a period of twelve months or less in that factory or other establishment or in any other factory or other establishment to which the Act applies under the same employer or partly in one and partly in the other. In view of what has been found by the Commissioner, it was the duty of the employers in all these cases to require those employees who fulfilled the conditions mentioned in Para. 26 to become members of the fund even during the pre-discovery period. For the sake of illustration in the case of Kapur Bhimber Union, those employees whose names according to the return are given in annexure Rule 3 were entitled to be made members of the fund and even though they may have left service prior to 1 June 1963, it does not follow that they could be deprived of the benefits which they could derive from the membership of the fund merely because during the period 1 June 1961 to 31 May 1963 (sic). Sri Gupta says that the employers are not prepared to accept that all those persons, who left service and who, according to the return, fulfilled the qualifications laid down in Para. 26, did, in fact, fulfil those qualifications, but this is a matter which will have, to be decided by the Commissioner in accordance with Para. 26B after giving a hearing to both the employer and the employee when that stage is reached. For the present all that is to be decided is whether the order made by the Commissioner calling upon the employers to make contribution of their share towards the provident fund for the pre-discovery period is illegal or without jurisdiction. For the reasons which have already been stated, it is not possible to accede to the contentions of Sri Gupta.
7. In the result, all the petitions fail and are dismissed, but in the circumstances there will be no order as to costs.
8. I agree.