M.P. Thakkar, C.J.
1. Does the relationship of employer and employee cease when an employer stops his business or does it cease only when it is terminated in accordance with law? If this question had been posed by the competent authority the petitioner would not have been obliged to approach this Court. Assurance benefit was claimed by the petitioner in his capacity as a nominee of an employee of a Mill Company who died on September 11, 1977, in the context of the benefit claimable under the Employees' Deposit Linked Insurance Scheme of 1976. The application was rejected by the Accounts Officer of the Employees' Provident Funds, Gujarat State, Ahmedabad, by his communication dated October, 19, 1959 as per Annexure 'E'. It appears that the Accounts Officer has rejected the claim by reason of the order passed by the Regional Provident Fund Commissioner (respondent No. 1 herein). The petitioner has thereupon approached this Court by way of the present petition under Articles 226 and 227 of the Constitution of India.
2. The following facts are not in dispute:
(1) The deceased was a member of the Fund as defined by Section 2(h) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952;
(2) That he was entitled to the benefits under the Employees' Deposit Linked Insurance Scheme of 1976;
(3) That he had not ceased to be a member of the Fund till his death;
(4) That the petitioner is the brother of the deceased employee and that he has been nominated under the relevant provisions of the Scheme to receive the benefits under the Scheme;
(5) The deceased had not abandoned his employment, nor had he been dismissed from service, nor had his service been terminated by the employer Mills till his death:
(6) The employer, Laxmi Cotton Mills Limited, ran into financial difficulties and stopped its manufacturing activities on Angust 12, 1977;
(7) No notice of termination had been issued by the Company to any of its employees till November 15, 1977. The employee concerned died on September 11, 1977. before his services could be terminated by the Mill concerned along with the rest of the employees.
It is thus clear that till the date of his death on September II, 1977 his employment with the Mill Company had not been determined. No doubt, the Mill Company had stopped its activities on August 12, 1977. However, the Mill Company had not terminated the services of its employees till November 15, 1977. The deceased was also an employee and a member of the Mill Company till his death, his services not having been terminated till the date of his death. Respondent No. 1, however, rejected the claim of the Petitioner on the ground that the Mill Company had closed down on August 12, 1977 before the employee concerned died. Respondent No. 1 did not address himself to the real issue, namely, whether the employment of the deceased stood terminated merely because the Mill Company closed its factory. Respondent No. 1 assumed without any basis that the closure of the Mill Company by itself resulted in the termination of the services of the employees. The contract of service does not automatically stand terminated merely because the Mill Company stops its manufacturing activities. It can be terminated by a notice of termination by recourse to appropriate procedure for collective or individual retrenchment. In the present case, such a procedure was in fact followed and a notice of termination was served on the employees by the Mill Company on November 13, 1977, some two months after the death of the deceased employee. Respondent No. 1 was therefore not justified in attaching importance to the date of the closure of the Mill Company and proceeding on the assumption that cessation of its business activities resulted in automatic termination of the employment of all its employees. This is the only ground on which the claim has been rejected. Since admittedly the employee concerned was in the employment of the Mill Company till the date of his death on September 11, 1977 his claim could not have been rejected on the ground that he had ceased to be an employee. The petition must therefore be allowed.
3. A few observations regarding the working in the office of the Regional Provident Fund Commissioner are called for having regard to the facts revealed by the present petition. The Regional Provident Fund Commissioner has passed a one line order rejecting the application of the petitioner without examining the matter in depth, without holding any inquiry and without considering the question with the seriousness that it deserves. It ought to have been realised that the claim was being made by a nominee of a deceased workman and by the very nature of things, he could not be expected to incur legal expenditure in order to secure his claim. Such matters are required to be dealt with sympathetically and in the right spirit, that is to say, informed with a desire to be helpful. There should not be an anxiety to reject without a close scrutiny and drive the applicant to seek relief in a Court of law. If the Department were to function in this manner the whole object of the benevolent legislation would be defeated. Rejecting the application is the last thing that the competent authority would be expected to do and not the first thing on the slightest pretext. Before rejecting the claim the competent authority would be required to afford an opportunity to the applicant in regard to any aspect which, in the opinion of the competent authority, creates a hurdle in the way of the applicant who is entitled to the amount standing at the credit of the deceased workman. If necessary, the competent authority could also seek legal advice in order to re-assure himself. But, in any case, he must not be in a haste to reject the application as has been done in the present case without holding any inquiry and without examining the matter closely and carefully.
4. An examination of the record also reveals that the applicant was required to obtain a succession certificate in support of his claim though ultimately his claim was rejected. The document placed on record goes to show that the applicant had to incur an expenditure of more than a thousand rupees. Court-fee stamp of Rs. 900/- had to be procured for obtaining the succession certificate. Some amount must have been expended in payment of legal fees for obtaining the succession certificate. Not less than a thousand rupees must have been spent in this connection. It was not realized that having regard to the fact that the deceased workman had made a nomination under Paragraph 23(1) of the Employees Deposit-Linked Insurance Scheme, 1976 (quoted hereinbelow) which categorically provides for payment of the amount due to the nominee, succession certificate was not necessary. Paragraph 23(1) read as under:
The nominations made by an employee under the Employees' Provident Funds Scheme, 1952 shall be treated as nominations under this Scheme and the assurance amount shall become payable to such nominee or nominees.
5. It is hoped that the office of the Regional Provident Fund Commissioner will guide the applicants in such matters so that they are saved from incurring unnecessary expenditure. It is also hoped that the Regional Provident Fund Commissioner will make an appropriate inquiry, obtain legal opinion, if necessary, and pass an appropriate order so that a rightful claimant is not driven to a Court of law in order to obtain his dues under the relevant provision of the benevolent Act and the Scheme which have been specially designed with an eye on amelioration of the workers.
6. In the result, the impugned order passed by respondent No. 1 which was communicated to the petitioner as per Annexure 'E' dated October 19, 1977 is quashed and set aside. Respondent No. 1 is directed to grant the application made by the petitioner in accordance with law after computing the assurance benefit as provided in Paragraph 22 of the Employees Deposit-Linked Insurance Scheme and the relevant provisions. The computation shall be made before 31st December 1981 and payment shall be made latest by January 15, 1982. Rule made absolute in the aforesaid terms with no order as to costs.