1. This is a petition under Article 226 of the Constitution wherein the petitioners pray for the issue of a writ of Mandamus or other appropriate writ forbearing the respondent, the Regional Provident Fund Commissioner, Madras, from enforcing the provisions of the Employees' Provident Funds Act, 1952 (Act XIX of 1952) and the Scheme framed thereunder, against them. I shall refer to Act XIX of 1952 as the Act in this judgment.
2. The petitioners constitute a firm of partnership carrying on the business of manufacture and sale of brass and copper vessels in the village of Pallathur in Ramanathapuram district. They purchase brass and copper sheets and circles from the market, and turn these raw materials into household vessels and utensils by employing manual labour. The products so shaped and turned into wares are polished with the aid of electric motor of 6 H. P. According to the petitioners there are only three employees under them who do the packing and despatch of the finished wares. The workers who hammer and shape the sheets and circles into finished products are alleged to be not employees under the petitioners but individuals doing the work on some contract basis. This contract is vaguely set out in paragraph 3 of the petitioner's affidavit in the following terms:
'The metal workers turn out unpolished vessels from the sheets and circles supplied to them according to their will and capacity by beating the plates into shape and are paid per piece of work at the prevailing wage rates, and this at present works out on an average to 3 annas per seer of metal according to the vessel made varying with the shape and nature of the vessel and with due regard to the labour likely to be involved in the production thereof.'
These workers are alleged to be, to quote the language of the affidavit) 'more or less in the nature of independent contractors'.
3. The Inspector, functioning under the Act,visited the establishment on 2-2-1960. He was furnished by the petitioners with such information as he wanted in regard to the manufacturing process involved in the production of the metal wares and the number of employees working in the establishment. On the report furnished by the inspector, the Regional Provident Fund Commissioner informed the petitioners by his letter dated 26-2-1960 that the establishment of the petitioners came within the ambit of the Act. That communication, in so far as it is relevant for the present purpose, reads as follows:
'Your factory comes under the purview of the Employees' Provident Funds Act 1952, and the Scheme framed thereunder from 1-2-1959 as it is engaged in Electrical, Mechanical and General Engineering (products?). One of the industries mentioned in Schedule I to the Employees Provident Funds Act, 1952, has completed three years from the date of commencement of production before 31-1-1959 and has employed 50 or more persons before 31-1-1959.'
The rest of the communication instructs the petitioners as to what they should do in future towards fulfilment of the provisions and terms of the Act and the Scheme.
4. The petitioners sent a reply to the Commissioner on 4-3-1960. They submitted that they were running only 'a cottage industry' that the industry cannot be described as 'electrical, mechanical and general engineering' as set out in Schedule I of the Act, that except 5 persons who were employed on a monthly salary, the other workers were not employees at all, as the term is defined under the Act and that therefore the Commissioner should not apply the Act to them. The Commissioner sent a further communication to the, petitioners on 6-4-1960 reiterating his view, that the petitioners' business employment fell, within the Act and advising them in their own interest to implement the Act and the scheme. By another communication dated 20-4-1960 the Commissioner insisted that the petitioners should make the remittances as per the Act and submit the returns on or before 30-4-1960. Thereupon the petitioners submitted a petition under Section 19-A of the Act to the Central Government on 3-5-1960. Therein they alleged that they have been carrying on business from the year 1950, that the number of employees since 5-2-1960, had only been 47, and that out of these were only 3 persons who were paid monthly salaries, that the rest were not servants employed under them, that they could not be termed employees as defined under the Act, and prayed for a declaration that the Act was not applicable to their establishment. The petitioners filed the above writ petition in this Court on the very next date, namely, 4-5-1960. They now pray for the issue of a writ of Mandamus restraining the respondent, the Regional Provident Fund Commissioner, from implementing his decision that the Act is applicable to them.
5. Learned counsel for the petitioners urged the following contentions before me. (1) The establishment is not a factory engaged in any industry specified in Schedule I of the Act. (2). The Regional Provident Fund Commissioner has no jurisdiction to enforce the Act and the Schemeframed thereunder pending the decision of the Central Government under Section 19-A of the Act. (3) The Commissioner has no jurisdiction to put in operation the Act and the Scheme retrospectively as and from 1-2-1959 by passing an order on 23-2-1960, (4) The number of persons employed in the factory is below 50, the statutory minimum necessary to bring in the operation of the Act, as it stood before its amendment by Act XLV of 1960. (5) The Commissioner acted erroneously in including the workers who were not salaried employees in the factory for the purpose of counting the numberof employees. I shall now deal with these contentions seriatim.
6. The question whether the industry carriedon by the petitioners for the purpose of manufacturing vessels and utensils out of brass and copper sheets and circles is covered by the Act does not present any difficulty. The Schedule to the Act defines the industry which is within the Act in these terms:
'Any industry engaged in the manufacture of any of the following namely:-- electrical, mechanical or general engineering products.'
This expression is further elucidated by the following explanation:
'In this Schedule without prejudice to the ordinary meaning of the expressions used therein--(a) the expression electrical, mechanical or general engineering products includes......(19) 'Products ofmetal rolling and rerolling'.
The language of the statute is quite clear and I have no doubt that conversion of metal sheets and circles into vessels results in products of metal rolling and rerolling. Learned counsel for the petitioners submitted that this metal wares cannot be called electrical, mechanical or general engineering products. But this contention overlooks the explanation which constitutes products of metal rolling as being within the definition of electrical, mechanical or general engineering products. Even if the explanation had not been there, I would have been inclined to take the view that the manufactured products of the petitioners are really mechanical products. So long as a machinery is employed in the course of manufacture of the product, be it for the purpose of merely polishing the ware or for anyother purpose, the ultilisation of the mechanical aid would necessarily lead to the conclusion that the products are mechanical products.
7. My attention is drawn to the decision ofthe Allahabad High Court in Great Eastern Electroplaters Ltd. v. Regional Provident Fund Commr.,UP., : (1957)IILLJ225All , wherein a Single Judgeof that Court held that a torch case is only anarticle for purposes of keeping batteries and notfor purposes of generating electricity, and thattherefore the torch case is not a mechanical orelectrical product, though the ease is produced bycutting, shaping and soldering brass iron sheets bymeans of machineries. The Bombay High Courthas however dissented from this decision of theAllahabad High Court. In Nagpur Glass Worksv. Regional Provident Fund Commr., (S) : (1958)ILLJ281Bom , a Division Bench of the Bombay High Court referring to the Allahabad decision observed thus:
'With utmost respect to the learned Judge wefind it difficult to agree with the interpretation placed by him on the expression. In our opinion, as already stated, the words 'electrical, mechanical and general' have reference to the process of manufacture and not to the use to which the articles produced could be put.'
I am of the same view as that expressed by the Bombay High Court. In my opinion the industry carried on by the petitioners is a scheduled industry under the Act, and is therefore necessarily governed by the Act.
8. The next contention urged on behalf of the petitioners that there should be forbearance of the enforcement of the Act and the Scheme by the Commissioner till a decision is rendered by the Central Government deserves careful consideration. It must be mentioned that till today the application of the petitioners preferred to the Central Government under Section 19-A remains undisposed of. Learned counsel on both sides state that no decision has yet been rendered by the Central Government. An examination of the provisions of the Act and its Scheme is necessarily called for. The Act applies to the following establishments:
(1) Every establishment which is a factory engaged in any industry specified in Schedule I and in which 20 or more persons are employed;
(2) Any other establishment employing 20 or more persons or class of such establishments, which the Central Government may specify and notify in the Official Gazette;
(3) Any establishment employing less than 20 persons which the Central Government may notify in the Official Gazette after giving notice, of not less than two months, of its intention to do so. Prior to the amendment by the Act XLVI of 1960 the minimum number of employees in the establishment was fixed at 50. Excluding establishments which may be notified by the Central Government, the Act would apply to an establishment if the following conditions are fulfilled:
(1) The establishment must be a factory, which is defined under the Act, as any premises in which a manufacturing process is being carried, with or, without the aid of power. (Manufacture means making, altering, finishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or deposit) (S. 2-i-a).
(2) The factory must be engaged in any industry specified in Schedule I of the Act.
(3) The factory must be one in which 20 or more persons are employed. (The number of employees was fixed as 50 or more before the amending Act XLVI of 1960).
The word 'employee' is defined in Section 2(f) as follows:
'Employee means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer, and includes any person employed by or through a contractor in or in connection with the work of the establishment.'
9. The question whether an establishment is within or outside the Act is a mixed question of fact and law. It is certainly not a pure question of law. Now there can be no factory under theAct unless a manufacturing processes carried on in the premises. Whether a manufacturing process is carried on or not would depend upon the activities in the premises. The work done in the premises is purely a question of fact. But whether it constitutes a 'manufacture' within the meaning of the Act would be a question of law. The number of persons employed is a question of fact. Whether the persons engaged in work in the factory are employees for wages, whether their relationship with the employer is that of a servant and a master or whether they are independent contractors is very largely a question of fact. It is quite obvious that the applicability of the Act to a particular establishment turns upon the state of certain basic facts. A dispute whether an establishment is governed by the Act or not cannot be settled without a proper determination of facts forming the corner stone of the whole statutory edifice.
10. The Act is ill-drafted and imperfect in its terms and causes disappointment by the absence of a machinery for settling controversial and disputed questions of fact. The power of the Central Government under Section 19-A to pronounce its opinion for removal of doubts or defects cannot be said to be quite adequate, effective or satisfactory, to obviate the necessity of any special Tribunal or to dispense with such a tribunal altogether. The nature of the function discharged under that Section by the Central Government, and the circumstances under which its jurisdiction can be invoked are not made quite explicit by the language of the statute but are beset with more than an ordinary degree of complexity, as illustrated by judicial decisions, exhibiting conflicting trends or views. It seems to me that Section 19-A affords slender assistance to the proprietor of an establishment who pleads for the non-applicability of the Act, with the utmost bona fides and on good grounds. The Officer of the Central Government at New Delhi dealing with the question whether an establishment at Pallathur in Ramanathapuram district is within the ambit of the Act or not necessarily depends upon the facts contained in the files forwarded by the Regional Provident Fund Commissioner and the averments in the application of the factory owner, which being interested, do not secure full weight. There is no provision in the Act for the Central Government to hold an enquiry in the matter. The employer has no means of letting in evidence to substantiate his pleas. Even the most careful decision of the Central Government may not be calculated to do real and substantial justice to the subject claiming immunity from the Act. The result is that the Act is applied merely on the notions of the Commissioner or the Central Government without due regard to the rights of persons, complaining that the Act is wrongly applied to them. It is manifestly improper that the subject should be saddled with pecuniary obligations on the edict, or ipse dixit of the levying authority without giving him chance to be heard and to substantiate his contentions in the matter. The present position is that obligations under the Act might be thrust on any establishment quite illegitimately leading the employer to protest if he can and if he has no misgivings of its futility.
11. The crucial question is whether in a caseof this description involving a dispute regarding basic facts which must be present to attract the applicability of the Act, the Commissioner should be permitted to enforce the Act and the Scheme because in his view such facts are present, pending the decision of the Central Government, which is the competent authority to decide the dispute and which is already seized of the matter at the instance of the petitioners. I shall now refer to a few decisions cited at the Bar dealing with the scope and ambit of Section 19-A. The section as it stood before the amendment under Act XLVI of 1960 reads thus:
'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 (3) 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 benefits to which an employee 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.'
The section as it now stands reads:
'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; (ii) 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 subsection (3) of Section 1 or (iii) the number of persons employed in an establishment, or, (iv) the number of years which have elapsed from the date on which an establishment has been set up; or (v) whether the total quantum of benefits to which an employee 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 other order of the Central Government, in such cases shall be final.'
I shall first refer to the decision of this Court in Annamalai Mudaliar v. Regional Provident Fund Commr., Madras, : (1955)ILLJ674Mad . That is a decision of Rajagopalan, J. The petitioner in that case was the managing partner of a firm owning a factory at Karur, producing bed sheets and towels on handlooms. The petitioner raised objection that the Act was not applicable on the ground that the number of labourers employed in the business did not come up to the minimum of 50 as required by the Act. The petitioner contended that the workerswere not employees as defined under the Act. The Commissioner, however, treated the establishment as one within the Act. There was no application to the Central Government under Section 19-A either by the petitioner or by the Commissioner. The learned Judge held that the mere application of the Act by the Commissioner would not amount to any decision that the establishment in question fulfilled all the requirements necessary for the ap-. plicability of the Act, that the competent authority to decide that question was not the Commissioner but only the Central Government, and that unless and until such a decision is rendered by the Government the Act cannot be put in operation. At page 272 the learned Judge observed thus:
'In any case there was no decision beyond that implied in the claim by the first respondent that the provisions of the Act applied, which was the basis for the demand notices he issued to the petitioner to pay up the contributions claimed to be due, and also the further steps taken by the first respondent and the second respondent to recover the sums demanded as arrears of land revenue under the provisions of Section 8 of the Act.'
Again at page 273:
'It is not necessary for me either to decide at this stage the scope of the statutory finality accorded by Section 19-A of the Act to the decision of the Central Government in proceedings under Article 226 of the Constitution.'
What the petitioner firm really seeks in this case is that demands for contribution issued to it by the first respondent should not be enforced till the question whether the petitioner's is a factory in which 50 or more persons are employed, and if so, it comes within the scope of Section 1(3) of the Act is decided. That relief, I think, he is entitled to get on the short ground that there is a dispute and that dispute has yet to be decided under Section 19-A of the Act'.
The learned Judge accordingly granted the issue of a mandamus in the following terms:
'The respondents should forbear from enforcing the demands already issued to the petitioner before the question whether the petitioner's is a factory within the meaning of Section 1(3) of the Act, is decided under Section 19-A of the Act.'
12. The Calcutta High Court has taken the same view as that taken by this Court in the decision cited above. That decision is reported in Aluminium Corporation of India Ltd. v. Regional Provident Fund Commr., : (1959)ILLJ249Cal . It is enough to refer to the following observation of P.B. Mukharji, J. at page 574,
'The language of Section 19-A of the Act is such that it' does not lend itself easily to retrospective application. It gives power to the Central Government to remove difficulty or doubt. Until the doubt or difficulty is removed, there is little scope for putting such order in retrospective operation. The language of Section 15(2) is quits clear also. It begins with the words 'on the application of any scheme'. Now the scheme can only apply after the doubt or the difficulty has been removed by an order under Section 19-A of the Act, and not before. It is only then that the scheme applies, and nototherwise. It is only then that the employees can again be said to 'become members of the fund' under Section 15(2) of the Act.'
13. The Bombay High Court had occasion to consider the provisions of Section 19-A of the Act in Nagpur Glass Works Ltd. v. Regional Provident Fund Commr., : AIR1961Bom157 . The view taken by the Bombay High Court is that the expression'doubt or difficulty arising in a matter of giving effect to the provisions of the Act' must be a difficulty experienced by the authorities who are charged with the administration of the provisions of the Act. At page 165 the learned Judges observed,
'That means that if the authorities experienced any difficulty in the actual implementation of the provisions of the Act they may ask the Central Government to pass an order making appropriate provisions or give appropriate directions. But these provisions or these directions must not be inconsistent with the provisions of the Act. If this interpretation is correct, then it follows that if anybody can make a reference to the Central Government for removing the difficulty arising in theimplementation of the Act, it is the Regional Provident Fund Commissioner or the other appropriate authority. It is not open to the factory or the establishment or any one connected therewith to approach the Central Government calling upon them to make a provision or to pass an order in that regard.'
I must now refer to an unreported decision of this Court decided by my learned brother Veeraswami, J. in P. W. No. 619 of 1959. Veeraswami, J, has expressed his concurrence with the view of the Bombay High Court set forth above. In the case which was decided by Veeraswami, J. there was no application by the factory owner to the Central Government pending at the time when the writ petition was taken up for decision in this Court. The extreme contention that was urged on behalf of the petitioner in that case was that even if there was no matter pending before the Central Government it was the duty of the Commissioner to set the machinery under Section 19-A in motion, and that until such a thing is done, the Act cannot be put into operation. If I may say so with respect that contention was rightly negatived by the learned Judge.
14. With great respect to the learned Judges of the Bombay High Court and to my learned brother, Veeraswami, J. who has expresed his concurrence with the Bombay view, I am unable to agree with the construction of Section 19-A, that nobody else except the statutory authorities can move the Government under that provision. I have already pointed out that even the machinery under Section 19-A of the Act to settle disputed questions of fact is not of a satisfactory nature. If the owner of the establishment were to be denied of any right to move the Central Government under Section 19-A questioning the applicability of the Act, it would really mean that he has no remedy, and that he must meekly submit to the application of the Act by the Commissioner however ill-founded it may be. I am very reluctant to adopt such a construction of the statute, which is not warranted by thelanguage of the enactment, and which in any event would be prejudicial and injurious to the rights of the subject.
15. The jurisdiction of this Court under Article 226 of the Constitution should not be exercisedto investigate disputed questions of fact. If thereis a dispute between the Commissioner and thefactory owner on basic questions of fact regardingthe number of persons employed in the factory orregarding the nature of the industry carried ontherein, I cannot envisage the possibility or desirability of this Court settling that dispute invitingevidence to be placed before this Court. As itis there is some machinery provided under the Act,satisfactory or unsatisfactory, which can resolvedisputed questions of fact between the subject andthe State, and that is the machinery enacted under Section 19-A of the Act. Till the dispute is decided bythat appropriate authority, it cannot be said thatthe Act can be legitimately put into operation despitethe protests of the petitioners. With respect, I agreewith the decision of Rajagopalan, J. in : (1955)ILLJ674Mad , and in myopinion mere demand by the Commissioner compelling the petitioners to pay the contributionscannot be a decision by a competent authority onthe dispute raised by the petitioners. I am satisfiedthat a mandamus should be issued forbearing therespondent from enforcing the demands under theAct and the Scheme till the application of the petitioners under Section 19-A of the Act before the CentralGovernment is disposed of and decided one wayor the other.
16. In the view that I have taken, it is unnecessary for me to deal with the other contentions raised by the learned counsel for the petitioner.
17. In the result a writ of mandamus will issue against the respondent forbearing him from enforcing the Act and the Scheme framed thereunder until such time as the petitioner's application to the Central Government under Section 19-A is finally adjudicated upon. The rule nisi is made absolute in these terms. There will, however, be no order as to costs.