1. This is a petition under Article 226 of the Constitution for the issue of a writ of mandamus or other appropriate writ directing the Regional Provident Fund Commissioner to forbear from enforcing his order No. D/MD/598 Regl. dated 28th April, 1957.
2. The petitioner is a firm of partnership running a factory at Tiruchirapalli. The factory was started as early as 1942. The factory was devoted for the purpose of manufacturing (i) tapes for insulation; (ii) lamp wicks; (iii) braided cords; (iv) sewing thread rolls which are reeled from bundles purchased from mills. More than 50 persons have all along been employed in this establishment. The Employees Provident Funds Act (Act XIX of 1952) applies to every establishment which is a factory engaged in any industry specified in Schedule I of the Act and in which 50 or more persons are employed. After the Act came into force the Regional Provident Fund Inspector inspected the petitioner's factory. He scrutinised the samples of the products manufactured in the factory and issued a notice on 28th April, 1957, wherein he stated that the factory came under the Act and the scheme framed thereunder on and from 1st November, 1952. The petitioner was called upon to pay (i) the employer's share of contribution for the back period commencing from 1-11-1952 to 30-4-1957; (ii) the administrative charges in full on both the employees' and employer's share of contribution which works out at 6 per cent of the above and (iii) damages at 61/2 per cent per annum calculated from the date on which the arrears fell due upto the date of remittance. It was claimed that the petitioner's factory fell within the ambit of the Act, as it was engaged in the manufacture of textiles (made wholly or in part of cotton or wool, or jute or silk whether natural or artificial) within the meaning of the said expression under Schedule I of the Act. The petitioner applied to the Central Government under Section 19-A of the Act inviting its decision whether the industry carried on by the petitioner was one within the Act. By the order dated 29-9-1958 passed by the Ministry of Labour and Employment, Government of India, it was held that the Act covered the petitioner's factory. The Central Government however permitted the petitioner to pay the arrears of amount due under the Act in 15 equal monthly instalments. The petitioner still persisted in submitting that the factory was not within the Act and submitted its protest to the Central Government against its decision under Section 19-A of the Act. The Regional Provident Fund Commissioner, Madras, the respondent, by his order dated 1-9-1959, insisted that the petitioner should pay up the amounts due and also threatened to take proceedings under the Revenue Recovery Act in case of default in payment. The petitioner paid about Rs. 3000/- towards the contributions claimed for the period between 1952 to 1957, but yet large arrears to the tune of about Rs. 13,000/-, remained unpaid. It is in these circumstances that the petitioner challenges the jurisdiction of the Regional Provident Fund Commissioner to take proceedings under the Act against the petitioner on the footing that the factory in question attracts the applicability of the Act.
3. The relevant provisions of the Act may now be referred to briefly. Section 1(3) runs thus:
'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 50 or more persons are employed, and
(b) to any other establishment employing 50 or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify in this behalf:'
Schedule I is in these terms:
'Any industry engaged in the manufacture of any of the following namely ......... textiles (made wholly or in part of cotton or wool or jute or silk, whether natural or artificial).'
The Explanation to the Schedule runs thus:
'In this Schedule without prejudice to the ordinary meaning of the expressions used therein ...'
(d) the expression 'textiles' includes the products of carding, spinning, weaving, finishing and dyeing yarns and fabrics, printing, knitting and embroidering.'
'The Central Government may, by notification in the Official Gazette, frame a scheme to be called the Employees' Provident Fund Scheme for the establishment of provident funds under this Act for employees or for any class of employees and specify the establishment or class of establishments to which the said Scheme shall apply and there shall be established, as soon as may be after the framing of the Scheme, a Fund in accordance with the provisions of this Act and the Scheme.' Section 5(2) :
'A scheme framed under Sub-section (1) may provide that any of its provisions shall take effect either prospectively or retrospectively on such date as may be specified in this behalf in the Scheme''.Section 19-A
'If any difficulty arises in giving effect to the provisions of this Act, and in particular, if any doubt arises as to--
(i) whether an establishment which is a factory, is engaged in any industry specified in Schedule I; (i-a) whether any particular establishment is an establishment falling within the class of establishments to which this Act applies by virtue of a notification under Clause (b) of Sub-section (2) of Section 1; or (ii) whether fifty or more persons are employed in an establishment; or (iii) whether three years have elapsed from the establishment of an establishment; or (iv) whether the total quantum of benefit to which an employed is entitled has been reduced by the employer, the Central Government may, by order, make such provision or give such direction, not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for the removal of the doubt or difficulty; and the order of the Central Government, in such cases, shall be final.'
In exercise of the powers conferred by Section 5 of the Act, the Central Government has framed a scheme called the Employees Provident Fund Scheme, 1952. The scheme provides that the Provident Fund shall vest in and be administered by a Board of Trustees and contains detailed and elaborate provisions regarding the contributions to be made by the employer and the employee. It is however unnecessary to refer to them in detail. The substantial question raised by the petitioner is that the factory manufacturing tapes, wicks, braided cords and sewing thread rolls is not an industry engaged in the manufacture of 'textiles', as the term is understood in popular parlance and as it is defined in the statute itself. The statutory elucidation is found in the Explanation, which it must be noted states that products of cording, spanning, weaving, finishing and dyeing yarn and fabrics, printing, knitting and embroidering are included within the meaning of the term. It is an inclusive definition of the term 'textiles'. It seems to me to be clear that the explanation contained in the statute is sufficiently wide to apply the expression 'textiles' to the products manufactured by the petitioner. Tapes and lamp wicks are really the products of weaving, if not knitting. The dictionary meaning of the term 'tape' as given in the Oxford Concise Dictionary is:
'barrow cotton or linen strip used for tying up parcels and in dress making etc.'
A linen strip can only be woven. Lamp wicks can be produced only by adopting the process of weaving or knitting. It is however said that the manufacture of braided cords does not involve any weaving, spinning or knitting. The word 'braid' is given the following meaning in Oxford Concise Dictionary:
(V. t.) 'plait, interweave (hair, flowers, thread):'
The: Chambers dictionary gives this meaning: 'to thread, wind about through'; 'a bend for the hair; a plait especially of hair, a fabric woven in a narrow band.'
It seems to me that necessarily weaving is involved in the production of braid or braided cords. The word 'textile' itself means according to Oxford dictionary 'of weaving'; woven; suitable for weaving, as woven fabrics, materials. I have no hesitation in holding that the petitioner's industry is one falling within the Act, and that the Regional Provident Fund Commissioner has jurisdiction to enforce the provisions of the Scheme framed under the Act.
Section 16 of the Act, as it stood before the amendment introduced by Act XXII of 1958, exempted any establishment belonging to the Government or local authority from the operation of the Act. This exemption no longer subsists and the Act is now applicable to any establishment after the expiry of three years from the date on which such establishment is set up. The demand made by the Regional Provident Fund Commissioner is in respect of contribution for the period from 1-11-1952 to 30-4-1957. During that period the exemption in favour of the Government and local authority was available and subsisting. The learned counsel for the petitioner contends that during that relevant period the statute had made a discrimination against the subject by applying the Act invidiously to the industries categories under Schedule, I owned by a citizen, as against such industries owned by the Government or the local authority, and that such discrimination was clearly violative of the equality clause of the Constitution. The Act does not favour one subject as against another subject similarly placed. The Act has no doubt selected some industries alone as fit and proper subject-matter for the subject of this particular legislation and of course it is not the petitioner's contention that the omission of other industries has brought about a discrimination against the owners of the textile industry or other industries covered by the Act. It is now well settled that there can be legislation in respect of groups, classes or sections, provided they form and constitute reasonable classification, having regard to the object and purpose of the enactment. Employees under the Government or local authority serve under conditions different from the conditions of service governing private employment under individuals. If the Legislature thought that ameliorative measures by way of creating provident funds were necessary for employees other than those under the Government or local authority, and passed an enactment to that end, the classification so brought about is just and proper, and does not offend Article 14 of the Constitution. Any classification, however remote its bearing may be, on the subject and purpose of the enactment, provided it is not totally irrelevant or completely foreign to the subject matter of the enactment, can stand the touch-stone of equality before the law ensured by the Constitution. This is a principle which has now been firmly established by a long catena of decisions of the Supreme Court. I am of opinion that there was no discrimination against the petitioner as Section 16 of the Act stood before its amendment. This argument of the un-constitutionality of the salient provisions of the Act, therefore, fails.
4. The learned counsel for the petitioner submits that the impugned order of the Regional Provident Fund Commissioner dated 28th April, 1957, is illegal and invalid in making a demand for contribution and for management expenses commencing from 1st November, 1952. The demand against the petitioner is in these terms:
'The employer's share of contribution for the back period commencing from 1-11-1952 upto 30-4-1957 and the administration charges in full, that is on both the employees' and employer's share of contribution, with damages at 6-1/4 per cent per annum calculated from the date on which the arrears fell due up to the date of remittance, should be paid into the Employees' Provident Fund account Nos. 1 and 2 respectively (vide paragraph 3 of the letter). The employees, if they so desire, can pay the arrears of their share of contribution to the Employees' Provident Fund and they may be informed accordingly.'
Though the Act came into force in 1952 and the scheme under the Act came into operation on and from 1-11-1952, no steps were taken by the statutory authorities against the petitioner till the issue of notice dated 28-4-1957. It can be said that the petitioner's establishment or undertaking remained undiscovered between the years 1952 and 1957. The petitioner never admitted that the Act was applicable to its business or establishment, and even after receipt of the notice, resisted the application of the Act. The question for consideration is whether it is lawful on the part of the Regional Provident Fund Commissioner to call upon the petitioner to fulfil the obligations under the Act for a period of five years, prior to the issue of the notice. The scheme of the Act is to make the employers and the employee contribute amounts for the creation of the provident Fund. Paragraph 26 of the scheme framed under the Act is as follows:
'Every employee, employed in a factory to which this scheme applies ...... shall be required to become a member of the fund from the date on which the scheme comes into force etc.'
Section 6 of the Act provides,
'The employees' contribution shall be equal to the contribution payable by the employer in respect of him etc.'
Paragraph 33 of the scheme reads:
'The employer shall, before paying the member his wages in respect of any period or part of the period for which contributions are payable, deduct the employees' contribution from his wages which together with his own contribution as well as an administrative charge of such per centage of the total employer's and employee's contributions as may be fixed by the Central Government, he shall within 15 days of the close of every month pay to the fund by separate bank drafts or cheques on account of contributions and administrative charge.'
Section 14-B provides:
'Where an employer makes default in the payment of any contribution to the Fund or in the transfer of accumulation required to be transferred by him under Sub-section (2) of Section 15 or in the payment of any charges payable under any other provision of this Act or of any scheme or under any of the conditions specified under Section 17, the appropriate Government may recover from the employer such damages not exceeding 25 per cent of the amount of arrears, as it may think fit to impose.'
The gist of these provisions is such as to make them operative only on and 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. Any demand for a back period appears to be not merely illogical and oppressive, but plainly inconsistent with the terms of the enactment, which are manifestly prospective in their operation. It is true that neither harshness nor inequity can defeat a statute. There is no duty laid on the Court to (sic) to absurd construction of statutes. If such (sic) construction can be avoided, the Court will do so and no rule of interpretation can forbid it.
'An argument drawn from inconvenience, it has been said, is forcible in law; and no less, but rather more, force is due to any drawn from an absurdity or injustice'.
(Maxwell, Interpretation of Statutes, 10th Edn. p. 191). In the present case, between the years 1952 and 1957, many workers employed under the petitioner might have left service, several might have died and a few might have been removed or dismissed from service. So far as these ex-employees are concerned, there can, of course, be no question of their being compelled to pay any contribution to the fund. But, should the petitioner be under an obligation to provide and contribute towards the Fund in respect of those workmen also? The answer must be clearly in the negative. The result of applying the statute and the scheme from a point of time prior to the date of the demand by the authorities would lead to a queer situation, not likely to have been contemplated by the Legislature even in a beneficent enactment for the welfare of the employees. The claim for the managerial expenses for the back period is indeed strange, as it is obvious that there was nothing to be managed and there was not, in fact, any management during that period. On a proper conspectus of the entire provisions of the Act and the scheme, I have no doubt that the Regional Provident Fund Commissioner exceeded his jurisdiction in calling upon the-petitioner to make demands for the past from 1952 upto 1957.
5. In Aluminium Corporation of India Ltd. v. Regional Provident Fund Commissioner, : (1959)ILLJ249Cal , the Calcutta High Court has also taken the view that the Act could not be applied as it were retrospectively by subjecting the establishment to the purview of the Act for a period prior to the date when the Act is sought to be applied The following headnote sets out the ratio of the decision:
'The object of the Act is the provident fund for employees. It is, therefore, entirely against the purposes and object of the Act to apply a scheme retrospectively to the company for a period within which time some of the employees have already left and presumably left by taking their provident fund accumulations. The Government by calling up the employer to replenish and refund even those moneys is doing something illegal and against the preamble and object of the Act.' With respect I agree with that decision.
6. The learned counsel for the petitioner submits that under Section 14-B of the Act, the quantum of damages should not exceed the maximum of 25 per cent of the amount of arrears. The order of the Commissioner is challenged on the ground that interest claimed at the rate of 61/4 per cent per annum works out to a figure higher than what is permissible, namely, 25 per cent of the arrears. There is really no substance in this plea in view of the averments in paragraph 9 (e) of the counter affidavit filed by the Regional Provident Fund Com-missioner. It reads:
'A demand notice specifying the exact amount due under the head of 'damages' has not yet been issued by the respondent. Actual calculation has not so far been made as dues have not been remitted in full by the petitioner and consequently returns have not been audited. Only general instructions have been issued by the respondent By his notice dated 28-4-1957 referred to in paragraph 4 of the affidavit under reply calling upon the petitioner to pay damages at 61/2 per cent per annum calculated from the date on which the arrears fell due upto the date of remittance. If on actual calculation it is found that the damages calculated? at the rate of 61/2 per cent on the unpaid arrears exceeds 25 per cent maximum limit mentioned in the Section 14-B of the Act, the demand under this head of damages will be limited to the per centage authorised by law.'
Now remains the question as to what should be the direction that this Court should issue against the Regional Provident Fund Commissioner. I have held that the petitioner's establishment is within the scope of the Act. I have also held that the demand from 1-11-1952 to 20-4-1957 is illegal, not being warranted by the provisions of the Act. I am of opinion that a writ of mandamus should issue against the respondent to forbear him from making collections from the petitioner by levy ofcontributions and management expenses for the period 1-11-1952 to 30-4-1957. A rule in these termswill issue. There will however be no order as tocosts.