Skip to content


Standard Cotton and Silk Weaving Co. Ltd. Vs. Regional Provident Fund Commissioner - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Judge
Reported inAIR1956Mad382; (1955)IILLJ484Mad; (1956)IMLJ169
AppellantStandard Cotton and Silk Weaving Co. Ltd.
RespondentRegional Provident Fund Commissioner
Cases ReferredJathindranath Gupta v. Province of Bihar
Excerpt:
.....scheme, in support of his contention that the specification of the factories in clause 3(a) of the amended scheme was intra vires and well within the powers conferred on the central government by section 6(2) of the act. the test to be satisfied to bring the challenged provision, clause 3(a) of the scheme, within the scope of item 18 of schedule ii, is that it is a provision 'necessary or proper for the purpose of implementing the scheme. it was the statutory duty of the central government to apply the scheme framed under the provisions of the act, that is, sub-section 5(1) in the first instance to all the factories that came within the scope of section 1(3) of the act, and it should be noticed that clause 3(a) of the scheme precisely did that and no more. but then, whatever other..........the scheme notified on 2 september 1952 by inserting clauses 3(a) and 3(b). clause 3(a) of the amended scheme ran:subject to the provisions of sections 16 and 17 of the act this scheme shall apply to all factories to which the act applies or is applied under sub-section (3) of section 1 or section 3 thereof.(6) the provisions of this sub-paragraph shall be deemed to have come into force with effect from 2 september 1952.7. under the provisions of the amended scheme, which was thus given retrospective effect from 2 september 1952, the petitioners were called upon to pay the contributions due from them under the provisions of this act. it is the validity of this demand that was challenged by each of these petitioners in its application for the issue of a writ of prohibition under.....
Judgment:
ORDER

Rajagopalan, J.

1. Since the point involved in both these petitions was the same they were heard together.

2. The Standard Cotton and Silk Weaving Company, Ltd. Calicut, the petitioner in W. P. No. 687 of 1954, was the owner of a factory engaged in the manufacture of handloom fabrics and furnishing materials. The Premier Hosiery Works, Ltd. Calicut, the petitioner in W.P. No. 688 of 1954, was the owner of a factory engaged in the manufacture of hosiery goods. Each of the petitioner firms contended that it had to close down its business in December 1953.

3. The Employees' Provident Funds Act (Act XIX of 1952) came into force on 4 March 1952. Section 1(3) of the Act extended the operation of the Act in the first instance to all factories engaged in any industry specified in Schedule I in which fifty or more persons were employed. 'Textiles' was one of the industries specified in Schedule I. That each of the petitioners came within the scope of Section 1(3) of the Act was not in dispute.

4. Section 5 of the Act, as it was originally enacted, in 1952, provided:

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 factories or class of factories to which the said scheme shall apply.

The scheme framed under the Act was duly notified on 2 September 1952. But neither when the scheme was notified, nor at any time immediately thereafter, did the Central Government issue any notification under Section 5 of the Act specifying the factories or class of factories to which the said scheme should apply.

5. On 14 April 1953 Ordinance I of 1953 came into force, and it was subsequently replaced by an amending Act (XXXVII of 1953) which came into force on 12 December 1953, by which a number of provisions of Act XIX of 1952 were amended. The original Section 5 of the Act was amended and renumbered as Section 5(1) and the amended Section 5(1) also provided:

There should 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.

A new sub-clause was added as Sub-clause 5(2) of the Act which ran:

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.

6. In exercise of the powers vested in the Central Government in the first instance by the provision of the Ordinance corresponding to Section 5(2), the Central Government amended the scheme notified on 2 September 1952 by inserting Clauses 3(a) and 3(b). Clause 3(a) of the amended scheme ran:

Subject to the provisions of Sections 16 and 17 of the Act this scheme shall apply to all factories to which the Act applies or is applied under Sub-section (3) of Section 1 or Section 3 thereof.

(6) The provisions of this sub-paragraph shall be deemed to have come into force with effect from 2 September 1952.

7. Under the provisions of the amended scheme, which was thus given retrospective effect from 2 September 1952, the petitioners were called upon to pay the contributions due from them under the provisions of this Act. It is the validity of this demand that was challenged by each of these petitioners in its application for the issue of a writ of prohibition under Article 226 of the Constitution, to prohibit the respondent, that is, the. Regional Provident Fund Commissioner, from enforcing the provisions of the Act. It should also be noticed that subsequent to the demand coercive steps were taken for the collection of the arrears due from the petitioners.

8. The learned Counsel for the petitioners at one stage relied on the observations of the Federal Court in Jathindranath Gupta v. Province of Bihar 1949 2 M.L.J. 356 and contended that Clause 3(b) of the amended scheme was ultra vires, and that the retrospective effect it purported to give to the provisions of the scheme could not be effective in law. But that argument really overlooks the substantive provision in the Act, that is, in Section 5(2) thereof which specifically authorized the Central Government to give retrospective effect to any scheme notified under Section 5(1) of the Act. It was not contended that Section 5(2) of the Act itself was ultra vires the Central Legislature.

9. The main contention of the learned Counsel for the petitioners was that Clause 3(a) of the amended scheme was itself ultra vires, and it is that limited issue that remains for consideration. Of course, if that contention prevails, namely, that Clause 3(a) is ultra vires and could not have been validly made part of the scheme already notified on 2 September 1952, Clause 3(b) of the scheme, which gave retrospective effect to Clause 3(a), could have no legal effect.

10. The contention of the learned Counsel for the petitioner, that Clause 3 (a) of the scheme was ultra vires and of no legal effect, was based on the plea, that the specification of factories, to which the scheme notified under Section 5(1) should apply, could never be made part of the scheme itself. He urged that Section 5(1) provided for two distinct powers: (1) to frame a scheme and (2) to specify to which factories the scheme should apply. The further argument was that Section 5(1) itself made it clear that the specification of factories to which the scheme would apply could never be a part of the scheme itself and could result only from the exercise of the statutory power vested in the Central Government under Section 5(1) to be exercised after there is a valid scheme in force.

11. The learned Counsel for the petitioners also relied on the provisions of Section 6 of the Act in support of his contention, that the specification of the factories provided-for by Section 5(1) should be distinct from and independent of the scheme and could not be made part of the scheme itself. Section 6(1) provided for the quantum of the contribution payable by the employer to the fund. Section 6(2) runs:

Subject to the provisions contained in Sub-section (1), any scheme may provide for all or any of the matters specified in schedule II.

Schedule II does not specifically provide that as part of the scheme itself the Central Government could specify the factories to which the scheme should apply. The learned Government Pleader referred to item 18 of Schedule II which runs:

Any other matter which will be necessary or proper for the purpose of implementing the scheme,

in support of his contention that the specification of the factories in Clause 3(a) of the amended scheme was intra vires and well within the powers conferred on the Central Government by Section 6(2) of the Act.

12. Section 5(2) of the Act as eventually amended, it should be remembered, specifically enacted that a scheme could provide that any of its provisions could take effect retrospectively. The question, therefore, is whether Clause 3(a) of the amended scheme is a valid 'provision' of the scheme.

13. Any 'provision' of the scheme that falls within the scope of item 18 of Schedule II would certainly be a valid provision of the scheme, and if it is valid, Section 5(2) of the Act authorizes retrospective effect being given to that pro -vision of the scheme. That was what the Government purported to do. The test to be satisfied to bring the challenged provision, Clause 3(a) of the scheme, within the scope of item 18 of Schedule II, is that it is a provision 'necessary or proper for the purpose of implementing the scheme.' As I read Section 5(1) of the Act, though it provides for (1) framing and notification of the scheme and (2) specification of the factories to which the scheme should apply, there is no prohibition in Section 5(1) against the specification of the factories being itself part of the scheme framed and notified under that sub-section. What the Government is authorized by Section 5(1) to do is to issue a notification framing a scheme and specifying the factories to which the scheme should apply. Obviously both the powers of framing a scheme and specifying the factories could be exercised through the medium of a single notification. That, of course, does not dispose of the contention of the learned Counsel for the petitioners, that the specification of the factories could not be validly made part of the scheme itself. I am unable to accept the contention of the learned Counsel for the petitioners, that because Section 5(1) provides for the two items of statutory powers to be exercised, the framing of a scheme and the specifying of the factories, there is an implied prohibition in the terms of Section 5(1) it self against the specification of factories being embodied in the scheme itself. Apart from the language of Section 6(1), it would be a little difficult to hold that the specification of factories in Clause 3(a) of the amended scheme is neither ' necessary ' nor 'proper ' for the purpose of implementing the scheme within the meaning of item 18 of Schedule II. Subject to the powers of exemption which the amended Act gave to the Government, Section 1(3) of the Act should apply in the first instance to all factories engaged in any industry specified in Schedule I in which fifty or more persons were employed, and, as I observed earlier, that the petitioners' factories fell within the scope of Section 1(3) of the Act did not admit of any doubt. It was the statutory duty of the Central Government to apply the scheme framed under the provisions of the Act, that is, Sub-section 5(1) in the first instance to all the factories that came within the scope of Section 1(3) of the Act, and it should be noticed that Clause 3(a) of the scheme precisely did that and no more. Therefore, Clause 3(a) would, in my opinion, appear to be a matter ' necessary ' for the purpose of implementing the scheme, that is necessary to give effect to the statutory provisions in Section 1(3) of the Act. There can be no doubt in any event, that specification of the factories in Clause 3(a) of the scheme, which was in conformity with the statutory provisions in Section 1(3) of the Act, was ' proper' for the purpose of implementing the scheme.

14. The only question that remains therefore is whether Section 5(1) in any way affects the scope of item 18 of Schedule II of the Act. The learned Counsel for the petitioners urged that, as a specific provision was made in Section 5(1) of the Act, under which the Government could specify the factories to which the scheme should apply, it could not be said that a provision in the scheme itself was necessary within the meaning of item 18 of Schedule II for the purpose of implementing the scheme. But then, whatever other factories the Government may specify under Section 5(1) of the Act, the Government could not fail to discharge the statutory duty imposed upon it by Section 1(3) of the Act. I am, therefore, unable to accept the contention of the learned Counsel that, because a specific provision has been made in Section 5(1) of the Act for the specification of the factories, a provision in the scheme itself, specifying the factories would not be a necessary matter for the purpose of implementing the scheme within the meaning of item 18 of Schedule II of the Act.

15. Neither impliedly nor expressly did Section 5(1) of the Act preclude the specification of factories as a 'provision' of the scheme under item 18 of Schedule II of the Act. I therefore hold that Clause 3(a) of the amended scheme is a valid provision of the Act, well with the scope of Section 5(2) of the Act read with item 18 of Schedule II of the Act and is intra vires. As I have already pointed out, if the validity of Clause 3(a) of the scheme is established, there is no bar to the operation of Clause 3(b) which gave retrospective effect to the provisions of Clause 3(a) of the scheme.

16. These petitions fail and are dismissed. No costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //