K.S. Palaniswami, J.
1. The petitioner, a partnership-firm, prays for the issue of a writ of mandamus directing the respondents not to enforce the provisions of the Employees Provident Funds Act, 1952 (hereinafter referred to as the Act) under the following circumstances. The petitioner-firm, said to have been started 25 years ago, is manufacturing snuff. Its factory is situated at Adidravidan Street at Kamuthi, Ranianathapuram District. The firm has also a shop at Nadar Bazar, Kamuthi. On 21st November, 1968, the petitioner-firm furnished some particulars to the Provident Fund Inspector, Sivakasi, stating that 14 women were employed in the factory, that 6 men were employed in the bazar shop and that 9 persons were under their employment continuously for one year. On the basis of this information, the Regional Provident Fund Commissioner issued a notice to the petitioner dated 17th December, 1968 stating that the factory came within the purview of the Act and the scheme framed thereunder, inasmuch as the factory had completed five years from the date of the commencement of production. To that communication, the petitioner-firm replied on 16th January, 1969 stating that the statement given on 21st November, 1968 was only at the instance of the Provident Fund Inspector, that there were not 20 employees as would be seen from the Attendance Register and Pay Disbursement Register and that, therefore, the provisions of the Act were not applicable to them. There was no reply to this communication. The petitioner sent another communication on 24th February, 1969 stating that they were prepared to produce their records to support their contention and requested the Provident Fund Commissioner to give an opportunity. There was no reply even to this communication. On 4th December, 1969 the Regional Provident Fund Commissioner issued a notice stating that the petitioner had violated the provisions of the Act and that if it did not remit the amount mentioned therein, action would be taken to recover the amount by attaching the properties under the Revenue Recovery Act. This was followed by another communication dated 9th December, 1969. The petitioner-firm protested. But without giving an opportunity to the petitioner-firm to establish its contention that the factory did not fall within the purview of the Act another communication was issued on 22nd December, 1969 stating that if the amount was not paid within the specified time, action would be taken for recovery of the same. It is in these circumstances that the petitioner-firm has prayed for the issue of a writ of mandamus alleging inter alia that its establishment does not fall within the purview of the Act, that no opportunity was given to the petitioner-firm to establish its contention that its factory does not fall within the purview of the Act and that, therefore, respondents should be restrained from taking action.
2. In the counter filed on behalf of the respondents it is alleged that the inspection of the factory and shop disclosed that 20 persons had been employed, that, therefore, the establishment falls within the scope of the Act and the scheme, that the petitioner-firm did not ask for an enquiry under Section 7(4), that with-out holding an enquiry it was open to the authorities to make a demand for payment of the contribution on the materials available and that, therefore, the petitioner-firm is not entitled to the relief prayed for.
3. The Act has been passed to provide for the institution of provident fund for the employees in factories and other establishments. It applies to establishments employing 20 or more persons. The contention of the petitioner-firm is that in its factory there are only 14 employees, that the factory his no connection with the shop where six persons are employed, that the information about the number of persons working in the shop was given at the instance of the Provident Fund Inspector who inspected the factory on 21st November, 1968, that the correct position was pointed out subsequently when the demand was made upon the petitioner and that without holding an enquiry as to whether the factory comes within the purview of the Act and the scheme, the Regional Provident Fund Commissioner erred in insisting upon making the payment. The contention is that the Regional Provident Fund Commissioner should have conducted an enquiry to find out whether the petitioner's factory comes within the scope of the Act and the scheme. In support of this contention reliance was placed upon Section 7-A of the Act which provides:
7-A. Determination of moneys due from employers - (1) The Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner or any Regional Provident Fund Comimissioner may, by order, determine the amount due from any employer under any provision of this Act or of the scheme and for the purpose may conduct such enquiry as he may deem necessary.
(2) The Officer conducting the enquiry under Sub-section (1) shall, for the purposes of such enquiry, have the same powers as are vested in a Court under the Civil Procedure Code, 1908, for trying a suit in respect of the following matters, namely:
(a) enforcing the attendance of any person or examining him on oath ;
(b) requiring the discovery and production of documents ;
(c) receiving evidence on affidavit ;
(d) issuing commissions for the examirnation of witnesses ; and any such enquiry shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 and for the purpose of Section 196, Indian Penal Code;
(3)No order determining the amount due from any employer shall be made, under Sub-section (1), unless the employer is given a reasonable opportunity of representing his case;
(4) An order made under this Section shall be final and shall not be questioned in any Court of law.
4. Admittedly, no enquiry was held to find out whether the petitioner's contention that its factory does not fall within the scope of the Act is tenable or not, even though the petitioner-firm gave the particulars in the statement given on 21st November, 1968, to the effect that 14 women were employed in factory and six men were employed in the shop. Before holding that the petitioner's factory comes within the scope of the Act and the scheme, it is necessary to find out whether the petitioner's establishment consists of the factory and the shop. The word ' establishment' is not defined in the Act. But Section 2-A provides:
2-A. Establishment 'to include all departments and branches :. For the removal of doubts, it is hereby declared that where an establishment consists of different departments or has branches whether situate in the same place or in different places, all such departments or branches shall be treated as parts of the same establishment.
The petitioner's contention is that the factory is distinct from the shop where sale takes place, though both the factory and the shop belong to it. The further contention is that if an opportunity had been given to the petitioner-firm by holding an enquiry, it would have been possible for it to show that the Act and the scheme are inapplicable to it.
5. On behalf of the respondents it is contended that Section 7-A extracted above does not contemplate an enquiry being held by any of the officers specified therein for the purpose of findings out whether an establishment comes within the scope of the Act and the scheme and that what the Section contemplates is merely determination of the amount payable by an employer under the provisions of the Act and the scheme. No doubt Section 7-A does not explicitly state that the officers enumerated therein may by order determine the liability of the employer to pay the amount due under the Act and the scheme. The expression is 'may by order determine the amount due from the employer'. The question is whether by virtue of this power the authorities enumerated therein should, before calling upon the employer to pay the amount, find out whether the employer is liable to pay under the provisions of the Act and the scheme. Section 7-A was added by the Amending Act XXVIII of 1963. The statement of objects and reasons appended to the Bill does not help us to find out whether the intention of the Parliament in adding Section 7-A was to confer power upon the authorities to determine the liability of the employer first before determining the amount payable by the employer. The statement of objects baldly refers to the fact that this provision was felt necessary and important in addition to making certain other amendments in the Act, It is contended on behalf of the respondents that to decide the controversy as to the number of persons employed in an establishment, provision is contained in Section 19-A the relevant portion of which reads thus:
19-A. Power to remove difficulties: If any difficulty arises in giving effect to the provisions of this Act, and in particular, if any doubt arises as to -
(iii) the number of persons employed in an establishment, or
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.
This Section was added by the Amending Act XXXVII of 1963. It is true, as pointed OL t by a Bench of this Court in East India Industries v. Regional Provident Fund Commissioner (1964) 1 L.L.J. 706 the provisions of Section 19-A could be invoked not only by the Provident Fund Commissioner but also by the employer. But this decision was given without taking into consideration the provisions of Section 7-A. The contention of the petitioner-firm is that the Regional Provident Fund Commissioner was not justified in making the demand straightaway having regard to its contention that its establishment does not come within the purview of the Act and scheme and that the first respondent should have held an enquiry under Section 7-A after giving an opportunity to the petitioner-firm. The power conferred upon the authorities under Section 7-A is indeed very wide. In holding the enquiry under that Section; the authority has the same powers as are vested in a Court under the Civil Procedure Code for trying a suit in respect of the matters enumerated therein. Sub-section (4) of Section 7-A says that the order made under that Section shall be final and shall not be questioned in any Court of law. No provision is made for preferring an appeal against that decision. Section 7-A does not in explicit terms state at whose instance the authorities enumerated therein could hold an enquiry and the kind of enquiry which they could hold. It is manifest that before an employer is called upon to pay his contribution under the Act, he should be given an opportunity to represent his case fully, that is, with regard to the applicability of the Act to the establishment as well as the question of quantum of the amount due from him. Though it is not explicitly stated in Section 7-A that it is open to the authorities specified therein to determine the liability of the employer, still it would be seen that the pre-requisite for determining the amount of contribution is the liability of the employer. Therefore,, in deciding the amount of contribution payable, it is necessary to decide the question of applicability of the Act also. In a case where a controversy is raised by the employer to the effect that his establishment does not come within the scope of the Act and the scheme, he need not necessarily be directed to approach the Central Government under Section 19-A. The Legislature has conferred power upon the authorities under Section 7-A to determine the amount. It is equally competent for them to decide the question of liability by giving an opportunity to the employer. It may be noted in this connection that there is no express provision in the Act, providing for an enquiry being held with regard to the liability of an employer to contribute. It is presumably for this reason that the Legislature introduced Section
6. In Radhakrishna Ndrayandas V. Regional Provident Fund Commissioner : (1967)IILLJ649MP a Bench of the Madhya Pradesh High Court took the view that under Section 7-A the question as to the applicability of the Act itself should be decided as well as the question regarding the quantum of assessment. The same view was taken by another Bench of that Court in Gunvantai v. Regional Provident Fund Commissioner : AIR1970MP221 A similar view was taken by a Bench of the Orissa High Court in Balasore Motor Association v. Regional Provident Fund Commissioner : (1970)ILLJ559Ori .
7. In the instant case, no doubt, the authorities proceeded on the basis of the information given by the petitioner-firm itself in the particulars given on 21st November, 1968. But at the earliest opportunity the petitioner firm stated under what circumstances those particulars were given and that no action could be taken on the basis of those particulars. The petitioner-firm offered to prove by documentary evidence in the shape of Attendance Register and Pay acquittance roll that its establishment does not come within the purview of the Act and the scheme. Without considering this representation, the first respondent issued the demand and reiterated the demand. This demand is vitiated. An opportunity should have been given to the petitioner-firm by holding an enquiry under Section 7-A. That not having been done, the impugned demand is vitiated.
8. In the result, instead of issuing a writ of mandamus directing the respondents not to enforce the provisions of the Act, I think it proper to issue a writ quashing the demand and to give liberty to the first respondent to initiate action under Section 7-A by giving an opportunity to the petitioner-firm. The writ petition is ordered accordingly. No order as to costs.