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Provident Fund Inspector Vs. Venkatachalam Chettiar (Receiver) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1970)ILLJ455Ker
AppellantProvident Fund Inspector
RespondentVenkatachalam Chettiar (Receiver)
Cases ReferredErnakulam v. Mani
Excerpt:
- - the definition in section 2(e)(ii) states that in relation to an establishment like the one before me 'the person who or the authority which has the ultimate control over the affairs of the establishment .is the 'employer. (by the way, the magistrate would do well to use more temperate or more sober language......to an establishment like the one before me ' the person who or the authority which has the ultimate control over the affairs of the establishment . . . ' is the 'employer.' the order of the sub-court appointing the respondent as receiver is before me: and that shows that the respondent was the plaintiff in the suit and that he was appointed receiver for the properties mentioned in the petition with all powers under the provisions of order xl of the code of civil procedure. the restrictions imposed are that the receiver should take leave of the court to grant leases for terms exceeding three years, to institute suits and appeals and to expend on the repairs of any property more than half its net annual rental. the receiver has also to take permission from the court for withdrawing.....
Judgment:

T.C. Raghavan, J.

1. The Special First Class Magistrate (for Labour Laws) acquitted the respondent in these cases, who was prosecuted by the appellant, the Provident Fund Inspector, under Paras. 76 (a), 76 (c) and 76 (e) of the Employees' Provident Fund Scheme read with Section 14 and 14A of the Employees' Provident Funds Act. The two grounds of acquittal were that the appellant did not obtain sanction from the Sub-Court at Dindigul, which appointed the respondent as receiver in Original Suit No. 19 of 1963 on its file, and that the respondent was not an 'employer' coming within Section 2(e)(ii) of the Employees' Provident Funds Act.

2. The counsel of the appellant has argued the second point first. The counsel has pointed out that the reasoning of the Magistrate on this question is palpably wrong. The definition in Section 2(e)(ii) states that in relation to an establishment like the one before me ' the person who or the authority which has the ultimate control over the affairs of the establishment . . . ' is the 'employer.' The order of the Sub-Court appointing the respondent as receiver is before me: and that shows that the respondent was the plaintiff in the suit and that he was appointed receiver for the properties mentioned in the petition with all powers under the provisions of Order XL of the Code of Civil Procedure. The restrictions imposed are that the receiver should take leave of the Court to grant leases for terms exceeding three years, to institute suits and appeals and to expend on the repairs of any property more than half its net annual rental. The receiver has also to take permission from the Court for withdrawing moneys from the Canara Bank, where ho has to deposit all collections excepting Rs. 5,000 which he could keep with him for current expenses. Again, he has to take permission of Court for appointing additional staff. Barring these restriction, all the provisions in the order show that the receiver has full powers of control over the affairs of the estate. The defendant in the suit, the other partner, and all persons claiming under him are directed to deliver possession of properties, movable and immovable, with account-books, etc., to the respondent. Thus, all the properties of the partnership came into the possession of the respondent as receiver with all powers under Order XL of the Code of Civil Procedure with the only restrictions specified in the order as pointed out hereinbefore. This can only mean that the respondent has 'ultimate control over the affairs' of the estate. It may also be noted that one of the restrictions is that the respondent should obtain permission from Court to appoint additional staff, which means that he has control of the existing staff and has even power to appoint additional staff with the permission of the Court. The Magistrate says:

Therefore, on any stretch of imagination I cannot come to the conclusion that the receiver (accused) is entitled to function as an employer of the establishment having ultimate control over the affairs of the same. By a careful perusal of the said appointment order any sane person can only come to the conclusion that the receiver is appointed only for a very limited purpose as far as the properties are concerned.

(By the way, the Magistrate would do well to use more temperate or more sober language.) I asked the counsel of the respondent where the ultimate control of the affairs of the estate vested if not in the respondent, and the counsel answered that the control remained in the partnership. There is nothing in the receiver order to justify that in spite of the appointment of receiver and handing over of all properties to him, the ultimate control of the affairs of the estate still vested with the partnership.

3. The Magistrate has relied on this decision of this Court in Provident Fund Inspector, Ernakulam v. Mani (P.S.) (formerly lessee, Sree Krishna Talkies) 1967-II L.L.J. 647, where this Court has held in a case of a lease of a cinema house to a tenant that the lessor was the employer and not the lessee since the persons employed in the theatre remained in the control of the lessor even after the lease, the lessor exercising powers of dismissal, discharge, etc., of these persons. This case is obviously different from the one before me. There is nothing in the case before me to show that the control over the labourers in the estate still continued with the partnership. All the powers that were in the partnership at the times of the receiver order passed to the receiver with the only restrictions painted out by me hereinbefore. And what the order indicates is that the respondent has the ultimate control over the affairs of the estate. Therefore, the Magistrate in error on the second question, and the respondent is an 'employer ' as contemplated by Section 2(e)(ii) of the Provident Funds Act.

4. At this stage, the counsel of the appellant submits that I need not decide the first question and the counsel is not pressing that. The first question, as I have already stated, is whether sanction was required before the respondent was prosecuted. The counsel says that on the basis of my decision on the second question the appellant will take other appropriate proceedings for collecting the contributions and administrative charges involved in these cases from the respondent-proceedings otherwise than prosecution. He may do that.

5. Since the decision of the Magistrate on the first question remains, the acquittals have perforce to be confirmed, in spite of my decision on the second question. The acquittals are confirmed and the appeals are dismissed.


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