interpretation of the expression "so far as may be" has in our judgment, misinterpreted the intent and scope and the purpose of the Act. =whether the employer of an establishment which is an `exempted establishment' under the Employees' Provident Funds

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO_655 OF 2012 (Arising out of SLP(C) No.17298/2009) Regional Provident Fund Commissioner ...Appellant(s) - Versus - The Hooghly Mills Co. Ltd. & Ors. ...Respondent(s) J U D G M E N T GANGULY, J. 1. Leave granted. 2. The question which falls for consideration before this Court in this case is whether the employer of an establishment which is an `exempted establishment' under the Employees' Provident Funds 1 and Miscellaneous Provisions Act, 1952 (hereinafter, `the Act') is subject to the provisions of Section 14B of the said Act whereby in cases of default in the payment of contribution to the provident fund, proceedings for recovery of damages can be initiated against the employer of such an `exempted establishment'. 3. The question was raised by the respondent before the High Court and both the Single Bench and the Division Bench of the High Court have recorded a finding in favour of the respondent and held that the respondent being an `exempted establishment' cannot be subjected to the provisions of Section 14(B) of the Act. 4. The material facts of case are not much in dispute. 5. By notification dated 23.11.1967, the Central Government in exercise of its power under Section 2 17(1) (a) of the Act granted exemption to the respondent, which is a company registered under the Companies Act subject to the provisions specified in Schedule II annexed to the said notification. The material part of the said notification is as follows: "S.O. Whereas, in the opinion of the Central Government: (1) The Rules of the provident fund of the establishment mentioned in Schedule I (hereto annexed and (hereinafter referred to as the said establishments), with the respect to the employees therein then those specified in section 6 of the employees' Provident Fund Act, 1952 (10 of 1952); and (2) The Employees in the said establishments are also in enjoyment of other provident fund benefits which on the whole are not less favourable to the employees than the benefits provided under the Employees' Provident Funds Scheme 1952 (hereinafter referred to as the said School) in relation to the employees in any other establishment of a similar character. Now, thereafter, in exercise of the powers conferred by clause (a) of sub-section (i) of section 17 of the Employees' Provident Fund Act 1952 (19 of 1952), the Central Government, 3 hereby exempt the said establishments with effect from dates mentioned against each of them, respectively from the operation of all the provisions of the said scheme, subject to the conditions specified in scheme hereto annexed, which are in addition to the conditions mentioned in the explanation to sub- section (1) of the said section 17." 6. The respondent company comes under Item No. 5 of the notification. Initially the case of the respondent company is that after the grant of exemption it framed a scheme and created a Trust and appointed a Board of Trustees from the Management of the said Trust fund and was thus enjoying exemption under Section 17(1A) (a) of the Act. It is also common ground that there were defaults on the part of the respondent company in making timely payment of dues towards provident fund for the period between October 1999 to October 2000 and then again from November 2000 to July 2002. In view of such admitted defaults, proceedings were initiated against the respondent company and by notices dated 10.9.2003 and 11.10.2003 enclosing therewith the detailed 4 statement of delayed remittance of provident fund and allied dues. As contemplated under Section 14(B) of the Act, respondent was offered an opportunity to represent their case on several dates by the authorities under the Act and their case was listed for hearing but nobody appeared on their behalf on several dates. Thereafter, on the basis of some representation on their behalf the matter was heard and the Regional Provident Fund Commissioner II, Sikkim and Andaman & Nicobar Islands by a detailed order directed the respondent company to remit an amount of Rs.32,62,153/- by way of damages to the respective accounts, failing which, it was stated that further action as provided under the Act and the Schemes framed thereunder shall be initiated. 7. It is not in dispute that the said order dated 9.6.2004 is an appealable order under the provisions of Section 7I of the Act. However, without filing any appeal the respondent company filed a writ petition before the learned Single Judge of the High 5 Court which ultimately upheld the contention of the respondent company and, inter alia, came to following finding: "Under such circumstances, this court holds that the impugned order cannot be sustained in law as the concerned authority demanded damages from the petitioners not only on account of delayed payment of contribution to the trust fund but also on account of delayed payment of the contribution to the pension fund and insurance fund. The impugned order, thus, stands set aside. The Provident Fund Authority may, however, ascertain damages under Section 14B of the said Act afresh for delayed payment of contribution to the pension fund as well as the insurance fund. The writ petition, thus, stands allowed with the above observation." 8. The learned Single Judge while allowing the writ petition proceeded on the basis that the expression "so far as may be" in Section 17(1A)(a) of the Act will have to be given its proper meaning. If such meaning is given then the provision in Sections 6, 7A, 8 and 14B of the Act cannot be applied in their entirety. The learned Single Judge held that the expression "so far as may be" cannot be treated as a surplusage. 6 9. The learned judge further held that the said expression "so far as may be" used in Section 17(1A)(a) of the said Act is for the purpose of restraining the application of provisions in Sections 6, 7A, 8 and 14B to the exempted establishment. The learned Judge also held that the damages which are recoverable under Section 14B of the said Act could not go to the hand of the individual affected employee. In case of delayed payment, loss of the individual affected employee is compensated by payment of interest under Section 7Q of the said Act. Since the damages which are recovered are not paid for compensating the losses of the individual employee, the expression "so far as may be" used in Section 17(1A)(a) of the said Act, does not require liberal interpretation. The said finding was given by the learned Single Judge in the context of the argument made on behalf of the appellant that the Act being social welfare legislation, needs to be liberally construed. 7 10. The learned Judge ultimately accepted the meaning of the expression "so far as may be" given by the Constitution Bench of this Court in the case of Dr. M. Ismail Faruqui etc. v. Union of India and others - AIR 1995 SC 605. 11.Thereafter, an appeal was taken to the Division Bench of the High Court by the appellant. The Appellate Court also came to the conclusion that Sections 6, 7A, 8 and 14B of the Act would not be attracted to the defaulting `exempted establishment'. 12.In view of the fact that Section 17(1A)(a) makes it clear that those Sections would be applicable "so far as may be", the Appellate Court accepted the reasoning given by the Writ Court and affirmed the judgment. 8 13.It is against such a concurrent finding and interpretation of the aforesaid provision of the Act, we heard learned counsel for the parties. 14.For a proper appreciation on the point at issue, it would be better to set out some of the relevant provisions of the Act. 15.Section 2(e) & 2(fff) define `employer' and `exempted establishment'. Those definitions are as under: "2 (e) "employer" means-- (i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 ( 63 of 1948), the person so named; and (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing 9 director or managing agent, such manager, managing director or managing agent;" "2 (fff) "exempted establishment" means an establishment in respect of which an exemption has been granted under section 17 from the operation of all or any of the provisions of any Scheme or the Insurance Scheme, as the case may be, whether such exemption has been granted to the establishment as such or to any person or class of persons employed therein." 16.Section 14(B) of the Act which provides for recovery of damages reads as under: "Section 14B - Power to recover damages - Where an employer makes default in the payment of any contribution to the Fund, the Pension Fund or the Insurance Fund or in the transfer of accumulations required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of section 17 or in the payment of any charges payable under any other provision of this Act or of any Scheme or Insurance Scheme or under any of the conditions specified under section 17, the Central Provident Fund Commissioner or such other officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf] may recover from the employer such damages, not exceedings the amount of arrears, as it may thinks fit to impose: Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard: Provided further that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation 1 has been sanctioned by the Board for Industrial and Financial Reconstruction established under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), subject to such terms and conditions as may be specified in the Scheme." 17.Section 17(1A) which deals with power to grant exemption reads as under: "17 Power to exempt - (1) The appropriate Government may, by notification in the Official Gazette, and subject to such conditions as may be specified in the notification, exempt, whether prospectively or retrospectively, from the operation of all or any of the provisions of any Scheme. (a) any establishment to which this Act applies if, in the opinion of the appropriate Government, the rules of its provident fund with respect to the rates of contribution are not less favourable than those specified in Section 6 and the employees are also in enjoyment of other provident fund benefits which on the whole are not less favourable to the employees than the benefits provided under this Act or any Scheme in relation to the employees in any other establishment of a similar character; or (b) any establishment if the employees of such establishment are in enjoyment of benefits in the nature of provident fund, pension or gratuity and the appropriate Government is of opinion that such benefits, separately or jointly, are on the whole not less favourable to such 1 employees than the benefits provided under this Act or any Scheme in relation to employees in any other establishment of a similar character. Provided that no such exemption shall be made except after consultation with the Central Board which on such consultation shall forward its views on exemptions to the appropriate Government within such time limit as may be specified in the Scheme. (1A) Where an exemption has been granted to an establishment under Clause (a) of Sub-section (1), (a) the provisions of Section 6, Section 7A, Section 8 and 14B shall, so far as may be, apply to the employer of the exempted establishment in addition to such other conditions as may be specified in the notification granting such exemption, and where such employer contravenes, or makes default in complying with any of the said provisions or conditions or any other provision of this Act, he shall be punishable under Section 14 as if the said establishment had not been exempted under the said Clause (a); (b) the employer shall establish a Board of Trustees for the administration of the provident fund consisting of such number of members as may be specified in the Scheme; (c) the terms and conditions of service of members of the Board of Trustees shall be such as may be specified in the Scheme; (d) the Board of Trustees constituted under Clause (b) shall - 1 (i) maintain detailed accounts to show the contributions credited, withdrawals made and interest accrued in respect of each employee; (ii) submit such returns to the Regional Provident Fund Commissioner or any other officer as the Central Government may direct from time to time; (iii) invest the provident fund monies in accordance with the directions issued by the Central Government from time to time; (iv) transfer, where necessary, the provident fund account of any employee; and (v) perform such other duties as may be specified in the Scheme. 18.Learned counsel for both the parties strenuously urged before us that in this case we are only concerned with the liability of the respondent company in so far as provident fund is concerned. Mr. Prdeep Ghosh, learned senior counsel for the respondent company has very fairly submitted that there are three accounts, namely, provident fund contribution, pension fund contribution and the Insurance fund contribution. The respondent company does not enjoy any exemption in respect of pension 1 fund and insurance fund. Learned counsel further submitted that Section 14B makes a distinction among these three funds namely, provident fund contribution, pension fund contribution and the insurance fund contribution. 19.Ms. Aparna Bhat, learned counsel for the appellant argued that both the Courts i.e. the writ court and the appellate Bench of the High Court placed an erroneous interpretation with regard to application of Section 14B to an `exempted establishment' by misconstruing the expression "so far as may be". Learned counsel also submitted that while construing the provisions of a social welfare legislation, like the Act, the High Court has not given any reason why it should not follow the well known principles of liberal interpretation. 20.Learned counsel also urged that in the judgment of the High Court there is no reason why despite the fact that there exists an efficacious remedy of 1 appeal, the writ petition by the respondent company was entertained. The High Court has come to a finding that the grievance of the respondent company that it was not given adequate opportunity of hearing by the statutory authority is not correct on facts. Therefore, the learned counsel submitted that when an adequate opportunity of hearing was given, but the same was not availed of by the respondent company before the authority which passed the order dated 9.6.2004, it was not open to the respondent company to invoke the extraordinary writ jurisdiction of the High Court. Learned counsel for the respondent company however urged that since the matter rested on an interpretation of various Sections of the Act, an appeal to statutory authority created under the said Act would not be an efficacious remedy. 21.In the peculiar facts of the case and specially having regard to the nature of the proceedings, we do not wish to decide the controversy raised in this 1 case on the question of non-availability of a statutory remedy. The impugned order was passed in the year 2004 and thereafter the writ petition was entertained by the two Benches of the High court and after that the matter is pending before us. Now we are in 2012. To dismiss the order of the two Benches of the High Court inter alia on the ground that the writ petition was entertained despite the existence of a statutory remedy and then send it back to the remedy of appeal after a period of eight years, would not, in our judgment, be a correct exercise of judicial discretion. However, we are of the opinion that normally the statutory remedy of appeal should be availed of in a situation like this. 22. From the aforesaid discussion it is clear that this case calls for interpretation of certain statutory provisions. It is not disputed, and possibly cannot be disputed, that the Act is a social welfare legislation. The Act is one of the earliest Acts 1 after the Constitution came into existence. Prior to its enactment, the requirement of having a suitable legislation for compulsory institutional and contributory provident fund in industrial undertakings was discussed several times at various tripartite meetings in which representatives of the Central and State Governments and employees and workers took part. Initially a non-official Bill on the subject was introduced in the Central Legislature in 1948 and was withdrawn with the assurance that the Government would consider the introduction of a comprehensive Bill. Finally, the proposed legislation was endorsed by the conference of Provincial Labour Ministers in January, 1952 and later on the same was introduced in 1952. This Court had occasion to expressly hold that the said Act is a beneficial social welfare legislation to ensure benefits to the employees. In the case of Regional Provident Fund Commissioner v. S.D. College, Hoshiarpur and others reported in (1997) 1 SCC 241, this Court while interpreting Section 14B of the Act held that the Act envisages the 1 imposition of damages for delayed payment (paragraph 10 at page 244 of the report). This Court also held that the Act is a beneficial social legislation to ensure health and other benefits of the employees and the employer under the Act is under a statutory obligation to make the deposit. In paragraph 11, it has also been held that in the event of any default committed in this behalf Section 14B steps in and calls upon the employer to pay damages. 23.If we look at the modern legislative trend we will discern that there is a large volume of legislation enacted with the purpose of introducing social reform by improving the conditions of certain class of persons who might not have been fairly treated in the past. These statutes are normally called remedial statutes or social welfare legislation, whereas penal statutes are sometime enacted providing for penalties for disobedience of laws making those who disobey, liable to imprisonment, fine, forfeiture or other penalty. 1 24.The normal canon of interpretation is that a remedial statute receives liberal construction whereas a penal statute calls for strict construction. In the cases of remedial statutes, if there is any doubt, the same is resolved in favour of the class of persons for whose benefit the statute is enacted, but in cases of penal statutes if there is any doubt the same is normally resolved in favour of the alleged offender. 25.It is no doubt true that the said Act effectuates the economic message of the Constitution as articulated in the Directive Principles of State Policy. 26.Under the Directive Principles the State has the obligation for securing just and humane conditions of work which includes a living wage and decent standard of life. The said Act obviously seeks to 1 promote those goals. Therefore, interpretation of the said Act must not only be liberal but it must be informed by the values of Directive Principles. Therefore, an awareness of the social perspective of the Act must guide the interpretative process of the legislative device. 27.Keeping those broad principles in mind, if we look at the Objects and Reasons in respect of the relevant Section it will be easier for this court to appreciate the statutory intent. The opening words of Section 14B are, "where an employer makes a default in the payment of contribution to the fund". This was incorporated by way of an amendment, vide Amending Act 37 of 1953. In this connection, the excerpts from the Statement of Objects and Reasons of Act 37 of 1953 are very pertinent. Relevant excerpts are:- "There are also certain administrative difficulties to be set right. There is no provision for inspection of exempted factories; nor is there any provision for the recovery of dues from such factories. An employer can delay payment of provident 2 fund dues without any additional financial liability. No punishment has been laid down for contravention of some of the provisions of the Act. This Bill seeks primarily to remedy these defects'. - S.O.R., Gazette of India, 1953, Extra, Pt.II, Sec.2, p.910." 28.Similarly, in respect of Section 17(1A), clause (a) which makes Section 14B applicable to an exempted establishment also came by way of an amendment, namely, by Act 33 of 1988. Here also if we look at the relevant portion of the Statement of Objects and Reasons of Act 33 of 1988 we will find that they are based on certain recommendations of the High level committee to review the working of the Act. Various recommendations were incorporated in the Objects and Reasons and one of the objects of such amendment is as follows:- "(viii) the existing legal and penal provisions, as applicable to unexempted establishments, are being made applicable to exempted establishments, so as to check the defaults on their part;" 2 29.It is well known that an interpretation of the statute which harmonizes with its avowed object is always to be accepted than the one which dilutes it. 30.The problem of statutory interpretation has been a matter of considerable judicial debate in almost all common law jurisdictions. 31. Justice Felix Frankfurter dealt with this problem rather comprehensively in his Sixth Annual Benjamin N. Cardozo Lecture [See 47 Columbia Law Review 527 (1947)]. The learned Judge opined:- "Anything that is written may present a problem of meaning, and that is the essence of the business of judges in construing legislation. The problem derives from the very nature of words. They are symbols of meaning." 32. About what the words connote, there is a very illuminating discussion by Friedrich Bodmer, a Swiss Philologist in his treaties "The Loom of Language". 2 Bodmer, who was a Professor in the Massachusetts Institute of Technology, said:- "Words are not passive agents meaning the same thing and carrying the same value at all times and in all contexts. They do not come in standard shapes and sizes like coins from the mint, nor do they go forth with a degree to all the world that they shall mean only so much, no more and no less. Through its own particular personality each word has a penumbra of meaning which no draftsman can entirely cut away. It refuses to be used as a mathematical symbol." 33. The aforesaid formulation by Professor Bodmer was cited with approval by the Constitution Bench of this Court in S.C. Advocates-on-Record Association & ors., v. Union of India reported in 1993 (4) SCC 441 at page 553. Justice Holmes in Towne v. Eisner [245 US 418] thought in the same way by saying: "a word is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used." 34.Therefore, about the problem of interpretation we may again go back to what Justice Frankfurter said 2 in the aforesaid article. This is of considerable importance. The learned Judge said: "...The process of construction, therefore, is not an exercise in logic or dialetic: The aids of formal reasoning are not irrelevant; they may simply be inadequate. The purpose of construction being the ascertainment of meaning, every consideration brought to bear for the solution of that problem must be devoted to that end alone..." 35. Therefore, while construing the statute where there may be some doubt the Court has to consider the statute as a whole - its design, its purpose and the remedy which it seeks to achieve. Chief Justice Sinha of this Court, in State of West Bengal v. Union of India reported in AIR 1963 SC 1241 at 1245, emphasized the importance of construing the statute as a whole. In the words of Chief Justice:- "The Court must ascertain the intention of the Legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with the other parts of the law, and the setting in which the clause to be interpreted occurs". 2 36. Lord Greene, Master of Rolls, also gave the same direction in Re, Bidie (deceased), [(1948) 2 All ER 995, page 998]. In the words of Master of Rolls the technique should be:- "to read the statue as a whole and ask oneself the question: `In this state, in this context, relating to this subject- matter, what is the true meaning of that word'?" 37. Therefore, what is required to be done in the instant case for construing the provisions of Section 14B and 17(1A)(a) is to adopt a purposive approach, an approach which promotes the purposes of the Act which have been discussed above. About the development of purposive approach, Bennion on Statutory Interpretation (Fifth Edition) has traced its origin:- "General judicial adoption of the term `purposive construction' is recent, but the concept is not new. Viscount Dilhorne, citing Coke, said that while it is now fashionable to talk of a purposive construction of a statute the need for such a construction bas been recognised since the seventeenth century. In fact the recognition goes considerably further back than that." 2 38. In this connection, the opinion of Lord Diplock in Jones v. Wrotham Park Settled Estates [(1980) AC 74] is very pertinent. At page 105 of the report the learned Law Lord said:- "I am not reluctant to adopt a purposive construction where to apply the literal meaning of the legislative language used would lead to results which would clearly defeat the purposes of the Act. But in doing so the task on which a court of justice is engaged remains one of construction, even where this involves reading into the Act words which are not expressly included in it." 39. This Court has already decided in N.K. Jain and others v. C.K. Shah and others reported in (1991) 2 SCC 495 that for construing the provision of this very Act a purposive approach should be adopted. 40. In N.K. Jain (supra) the question was whether criminal proceedings can be instituted under Section 14 of the Act in respect of an establishment which is exempted under Section 17 thereof, for 2 contravention of the provisions of Section 6 of the Act. 41.Answering the question affirmatively the Court held in paragraph 13: "...legislative purpose must be noted and the statute must be read as a whole. In our view taking into consideration the object underlying the Act and on reading Sections 14 and 17 in full, it becomes clear that cancellation of the exemption granted does not amount to a penalty within the meaning of Section 14(2A). As already noted these provisions which form part of the Act, which is a welfare legislation are meant to ensure the employees the continuance of the benefits of the provident fund. They should be interpreted in such a way so that the purpose of the legislation is allowed to be achieved." 42. In coming to the aforesaid conclusion the learned Judges relied on the famous dictum of Lord Denning in Seaford Court Estates Ltd. v. Asher - (1949) 2 All E.R. 155 (CA) wherein the learned Judge stated the position thus: 2 "...A Judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do so as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases." 43. In view of the interpretation of the Act in N.K. Jain (supra) there is no difficulty in construing the provision of Section 17(1A)(a) where it is provided that when an exemption has been granted to an establishment under Clause (a) of sub-section (1), the provision of Sections 6, 7, 8 and 14B of the Act shall, "so far as may be" apply to the employer of the exempted establishment in addition to such other condition as may be specified in the notification granting such exemption. 44.If we look at sub-section (a) which has been set out hereinbefore, we will find that sub-clause (a) of Section 17(1A) is divided in two parts. The second part is more specific in as much as it has been 2 clearly stated that where an employer contravenes and makes default in compliance with any of the said conditions and provisions or any other provisions of this Act, (this would obviously include Section 14B), he shall be punishable under Section 14 as if the said section had not been exempted under clause (a). Therefore, there is a deeming provision giving clear indication of application of Section 14B of the Act to the `employer' of an `exempted establishment'. 45.Thus, the sweep of the second part of clause (a) of Section 17(1A) which is preceded by the word `and' is very wide. 46.Section 14B may also be considered in this connection. Section 14B is attracted where an `employer' makes a default in the payment of any contribution to the fund. In the instant case admittedly default has taken place. 2 47. The expression `fund' has been defined under Section 2(h) of the Act to mean the provident fund as established under a Scheme. Though the word `scheme' has been defined under Section 2(l) to mean the employees provident fund scheme framed under Section 5, this Court in N.K. Jain (supra) held the definition of the word `fund' would apply to a scheme operating in an establishment exempted under Section 17. In that case it was urged on behalf of the respondent that the expression `fund' and `scheme' must be given a wide interpretation to include fund under a private scheme. Such submission on behalf of the respondent was noted in paragraph 16 at page 518 of the report. In para 17 at page 518 of the report, this Court on consideration of the ratio in the case of Knightsbridge Estates Trust Ltd. v. Byrne - (1940) 2 All E.R. 401 (Ch.D) and the decision of this Court in National Buildings Construction Corporation v. Pritam Singh Gill reported in (1972) 2 SCC 1 and also various other decisions accepted the said construction. Applying 3 these principles, decided in the aforesaid cases, this Court has held "consequently if there is a default in payment of the contribution to such a scheme it amounts to contravention of Section 6 punishable under Section 14(1A)". (See page 517 of the report) 48.Following the same parity of reasoning, we hold if there is a default in payment of contribution to such a scheme it amounts to contravention of Section 14B and damages can be levied. The High Court, with great respect, erred by coming to a contrary conclusion. 49.Apart from that the High Court's interpretation of the expression "so far as may be" as limiting the ambit and width of Section 17(1A)(a) of the Act, in our judgment, cannot be accepted for two reasons as well. 50. The High Court is guided in the interpretation of the word "so far as may be" on the basis of the 3 principle that statutes does not waste words. The High Court has also relied on the interpretation given to "so far as may be" in the case of Dr. Pratap Singh and another v. Director of Enforcement, Foreign Exchange Regulation Act and others reported in AIR 1985 SC 989. It goes without saying that Foreign Exchange Regulation Act is a fiscal statute dealing with penal provisions whereas the aforesaid expression is to be construed in this Act which is eminently a social welfare legislation. Therefore, the parameters of interpretation cannot be the same. Even then in Pratap Singh (supra) this Court while construing "so far as may be" held "if a deviation becomes necessary to carry out the purposes of the Act........................ it would be permissible". Of course the Court held that if such deviation is challenged before a Court of law it has to be justified. 51. In the instant case, the High Court failed to discern the correct principle of interpretation of a social welfare legislation. In this connection we 3 may profitably refer to what was said by Chief Justice Chagla about interpretation of a social welfare or labour legislation in Prakash Cotton Mills (P) Ltd. v. State of Bombay reported in (1957) 2 LLJ 490. Justice Chagla unerringly laid down: "no labour legislation, no social legislation, no economic legislation, can be considered by a court without applying the principles of social justice in interpreting the provisions of these laws. Social justice is an objective which is embodied and enshrined in our Constitution......it would indeed be startling for anyone to suggest that the court should shut its eyes to social justice and consider and interpret a law as if our country had not pledged itself to bringing about social justice." 52. We endorse the same view. In fact this has been endorsed by this Court in N.K. Jain (supra). 53. Reference in this connection may be made to what was said by Justice Krishna Iyyer in the same vein in the decision of Surendra Kumar Berma and others v. Central Government Industrial Tribunal-cum-Labour Court, New Delhi and Anr., reported in 1980 (4) SCC 3 443. The learned judge held that semantic luxuries are misplaced in the interpretation of 'bread and butter' statutes. 54.Unfortunately, the High Court missed this well settled principle of interpretation of social welfare legislation while construing the expression "so far as may be" in interpreting the provision of Section 17 (1A)(a) of the Act and unduly restricted its application to the employer of an exempted establishment. 55. The interpretation of the expression "so far as may be" by this Court in its Constitution Bench decision in M. Ismail Faruqui (supra) was given in a totally different context. The said judgment on a Presidential Reference was rendered in the context of the well known Ram Janam Bhumi Babri Masjid controversy where a special Act, namely, Acquisition of Certain Area at Ayodhya Act was enacted and sub- section (3) of Section 6 of the said Act provides 3 that the provisions of Sections 4, 5 & 7 shall "so far as may be" apply in relation to such authority or body or trustees as they apply in relation to the Central Government. In that context this Court held that the expression "so far as may be" is indicative of the fact that all or any of these provisions may or may not be applicable to the transferee under sub-section (1). The objects behind the said enactment are totally unique and the same was a special law. Apart from this, this Court did not lay down any general principle of interpretation in the application of the expression "so far as may be". Their being vast conceptual difference in the legal questions in that case, the interpretation of "so far as may be" in M. Ismail Faruqui (supra) cannot be applied to the interpretation of "so far as may be" in the present case. 3 56. The High Court's interpretation also was in error for not considering another well settled principle of interpretation. It is not uncommon to find legislature sometime using words by way of abundant caution. To find out whether the words are used by way of abundant caution the entire scheme of the Act is to be considered at the time of interpretation. In this connection we may remember the observation of Lord Reid in I.R. Commissioner v. Dowdall O'Mahoney & Co. reported in (1952) 1 All E.R. 531 at page 537, wherein the learned Law Lord said that it is not uncommon to find that legislature is inserting superfluous provisions under the influence of what may be abundant caution. The same principle has been accepted by this Court in many cases. The High Court by adopting, if we may say so, a rather strait jacket formula in the interpretation of the expression "so far as may be" has in our judgment, misinterpreted the intent and scope and the purpose of the Act. 3 57.For the reasons aforesaid, we are not inclined to accept the interpretation of the High Court and we are constrained to overrule the judgment of the Single Bench as also of the Division Bench. 58.We hold that in a case of default by the employer by an exempted establishment, in making its contribution to the Provident Fund Section 14B of the Act will be applicable. 59.The appeal is allowed. However, parties are left to bear their own costs. .......................J. (ASOK KUMAR GANGULY) .......................J. New Delhi (T.S. THAKUR) January 18, 2012 3

whether the two companies are to be treated as two separate establishments or one establishment for the purposes of this act.=Although the first petitioner had its branches at Bombay, Amritsar, Ahmedabad and Kanpur, the number of employees in the Delhi office of this company and the second petitioner were kept below 20 to avoid coverage under the Provident Funds Act. Having considered all these facts and the submissions by both the parties, the Provident Fund Commissioner came to the conclusion that there was an integrity in the management, finance and the workforce of the two companies, and the entire business was being run by one family.=The Regional Provident Funds Commissioner was therefore, entirely justified in taking the view that on the facts and law, the two petitioners had to be clubbed together for the purposes of their coverage under the Provident Funds Act. The Appellate Tribunal clearly erred in re-appreciating the facts on record and applying wrong propositions of law thereto. The learned Single Judge was therefore required to set-aside the order of the Appellate Tribunal in view of his conclusion that the order was contrary to the facts and the law, and was perverse. The Division Bench has rightly confirmed the order passed by the learned Single Judge.

                                                                                   REPORTABLE


                     IN THE SUPREME COURT OF INDIA


                       CIVIL APPELLATE JURISDICTION


         SPECIAL LEAVE PETITION (CIVIL) NO. 11230 OF 2008


M/s L.N. Gadodia & Sons & Anr.                                                ...Petitioner (s)


                                             Versus


Regional Provident Fund Commissioner                               ...Respondents (s)





                                    J U D G  E M E N T





H.L. GOKHALE J.




               This   Special   Leave   Petition   raises   the   question   as   to   whether   the


respondent   herein   had   erred   in   clubbing   the   two   appellant   concerns   for   the


purposes   of   applying   the   provisions   of   the   Employees   Provident   Funds   and


Miscellaneous Provisions Act, 1952 (hereinafter referred to as the Provident Funds


Act).


         Facts leading to this Special Leave Petition -


2.             The   facts   leading   to   this  petition  are  this   wise.     The  petitioner   no.1


               herein   and  petitioner  no.2  (M/s   Delhi   Farming  and  Construction   Pvt.


               Ltd.) are sister concerns.  The office of the respondent wrote to them


               vide their letter dated 11.6.1990 calling upon them to comply with the


                                 2





provisions of the Provident Funds Act, failing which legal action would


be   initiated   against   them.     The   petitioner   filed   an   application,   and


disputed   clubbing   of   the   two   concerns   for   the   purposes   of   their


coverage   under  the   provisions   of   the  said  Act.    The   application   was


accordingly   heard   by   the   Regional   Provident   Fund   Commissioner


(Enforcement and Recovery) Delhi, under the provisions of section 7A


of   the   Provident   Funds   Act.     He   heard   the   legal   advisor   of   the


petitioners   as   well   as   the   enforcement   officer   representing   the


provident   fund   department.     It   was   submitted   on   behalf   of   the


petitioners that the second petitioner was incorporated in 1930 as the


Delhi Cattle  Farming Private  Limited,  and in the year 1983 it's name


was changed to the present name i.e. Delhi Farming and Construction


Private  Limited  (`Delhi  Company'  for  short).    The  first  petitioner  was


incorporated   as   another   Private   Limited   Company   in   the   year   1941,


and there was no connection between the activities or business of the


two companies.   They were different and separate legal entities, and


should not be clubbed into one establishment.  It was pointed out that


the main business of the second petitioner i.e. the Delhi Company was


to   acquire   lands   and   farms   for   the   purpose   of   cultivation   and   to


engage in other agricultural activities.   After its land was acquired by


Delhi   Administration   in   1959   and   after   receiving   compensation,   the


second petitioner shifted its business to purchase of gas cylinders and


                                         3


      giving


      them   on   hire,   supplying   security   equipments   to   the   Government   of


      India,   and   supply   of   gray/processed   fabrics   to   readymade   garments


      exports though this was only a side business.  It was pointed out that


      as far as the first petitioner is concerned, their business was only as a


      selling  agent of Calico Mills and Tata Mills,  Ahmedabad.   It was also


      trading in whole-sale cloth business.  It was not disputed that both the


      companies   have   their   registered   office   at   1112,   Kucha   Natwan,


      Chandni   Chowk,   Delhi-6   but   it   was   stated   that   the   Delhi   Company


      carries   its   business   and   commercial   activities   at   116,   Hans   Bhawan,


      Bahadur Shah Zafar Marg, New Delhi-110002.  Shri R.G. Gadodia and


      Shri   T.P.   Gadodia   were   no   longer   the   Directors   in   either   of   the   two


      companies,   and   only   Smt.   Sudha   Gadodia   was   Director   in   both   the


      companies.


3.                 On the other hand, the enforcement officer pointed out that


      apart  from  the   fact  that   the  two  companies   had  common  registered


      office,   Shri   R.G.   Gadodia   and   Shri   T.P.   Gadodia   were   the   common


      Directors   in   both   the   units   at   the   time   of   inspection   and   clubbing.


      Apart from Smt. Sudha Gadodia being admittedly a Director in both the


      units, Shri T.P. Gadodia was the Managing Director in both the units.


      It was further pointed out that as per the Audited Report of the Delhi


      Company dated 24.4.1988, it had given a loan of Rs.5 lakh to the first


      petitioner.     Two   officers   viz.   Shri   G.   Ventakeshwaran   and   Shri   S.K.


                                         4


      Shome


      were   employed   by   both   the   units   as   Technical   Manager   and


      Commercial Manager respectively.   The two companies had the same


      telephone nos. i.e. 2512890 and 2513009.  Both the units were using


      the same gram number which was `GadodiaSon'.


4.                 In   rebuttal,   the   petitioners   pointed   out   that   the   Delhi


      Company   had   its   own   separate   staff.     The   above   referred   two


      telephone nos. were in the name of the first petitioner and the second


      petitioner had another telephone no. i.e. 3318668.  As far as the loan


      aspect is concerned, it was pointed out that the loan of Rs.5 lakh was


      just one loan to the first petitioner, and the Delhi Company had given


      loans   to   the   tune   of   about   Rs.   27   lakhs   to   different   entities.     The


      enforcement officer however pointed out that at the time of inspection


      it was noticed that the employees were being swapped between the


      two   companies.   Although   the   first   petitioner   had   its   branches   at


      Bombay, Amritsar, Ahmedabad and Kanpur, the number of employees


      in the Delhi office of this company and the second petitioner were kept


      below  20 to  avoid  coverage  under  the Provident  Funds Act.   Having


      considered all these facts and the submissions by both the parties, the


      Provident Fund Commissioner came to the conclusion that there was


      an integrity in the management, finance and the workforce of the two


      companies, and the entire business was being run by one family.  The


      management   and   the   supervision   was   in   the   hands   of   the   same


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      Managing Director, and the finances of one company were being used


      by the other.  In view of this, he held that both the units belonged to


      one   establishment,   and   they   have   to   be   clubbed   together   for   the


      purposes   of   application   of   the   Provident   Funds   Act.     He   therefore,


      passed   an   order   to   proceed   to   determine   the   dues   from   the


      petitioners,   and   directed   that   further   proceedings   in   the   enquiry   be


      taken up by the concerned Presiding Officer.


5.                This   order   was   challenged   by   the   petitioners   before   the


      Employees   Provident   Fund   Appellate   Tribunal   by   filing   an   appeal


      No.ATA-167(4)/2000   under   Section   7D   of   the   Provident   Funds   Act.


      The Tribunal accepted the submission of the petitioners that the two


      units were separate private limited companies, and since a company is


      a   juristic   person,   merely   because   there   is   a   common   Managing


      Director, the two units cannot be considered to be one establishment.


      One company taking a loan of Rs.5 lakh from another, does not make


      them   financially   integrated.     He   also   observed   that   there   was   no


      evidence to show that the two officers were mentioned as employed at


      the same time in the two companies.  He relied upon section 2A of the


      Act, and submitted that considering different departments or branches


      of   an   establishment   as   one   establishment   was   one   thing,   and


      considering   different   establishments   as   one   establishment   was


      another.   Merely   because   the   departments   or   branches   of   an


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      establishment  are  to  be  treated   as   a  part   of   the  establishment,   two


      establishments cannot be taken to be one.  He, therefore, allowed the


      appeal and held that clubbing was not possible in the facts of the case,


      and set-aside the order of the first respondent.


6.                Being   aggrieved   by   that   order,   the   respondent   filed   a


      petition bearing No. W.P.(C) 5669/2001 in the High Court of Delhi.  A


      Single Judge of Delhi High Court who heard the matter examined the


      material  on  record,  and  considered  the  authorities  cited  by  both  the


      parties   governing   the   legal   position.     Having   considered   all   these


      aspects, he held that the Tribunal was swayed by the fact that the two


      companies   are   separate   legal   entities.     He   noted   that   the   law   laid


      down by this Court on this aspect was clear. What is to be seen is the


      proximity of the two units and common management.   There was no


      error in the order passed by the Provident Fund Commissioner.   The


      Appellate Tribunal had no reason to interfere therein.  In his view, the


      order of the Tribunal was perverse and contrary to law.  He, therefore,


      set-aside the same and allowed the petition.


7.                The   petitioners   filed   an   appeal   against   the   decision   of   the


      Single   Judge   being   LPA   No.399/2007.     After   examining   the


      submissions of both the parties, the Division Bench came to the same


      conclusion as the single Judge and dismissed the appeal by passing a


      detailed judgment and order dated 20.12.2007.


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8.                        


                               The   present   Special   Leave   Petition   has   been   filed   to


                challenge this judgment and order dated 20.12.2007.  We have heard


                Mr.   S.K.   Dholakia,   Sr.   Advocate   for   petitioners,   and   Ms.   Shrabani


                Chakrabarty   for   the   respondent.     We   have   noted   the   submissions


                made  by both the counsel,  as well as the authorities  relied  upon  by


                them.


        Consideration of the rival submissions -


9.              As noted earlier, the main question in this appeal is whether the two


units   are   to   be   regarded   as   one   establishment   for   the   purposes   of   the   Provident


Funds   Act.         Welfare   economics,   enlightened   self   interest   and   pressure   of   trade


unions   led   the   larger   factories   and   establishments   to   introduce   the   schemes   of


provident   fund   for   the   benefit   of   their   employees.     But   the   employees   of   small


factories and establishments remained away from these benefits.  With the increase


in   the   number   of   smaller   factories   and   establishments,   there   was   a   need   of   a


beneficial enactment for the employees engaged therein. The Provident Funds Act,


is   a   welfare   enactment   brought   into   force   for   that   purpose.   The   Parliament   was


concerned with the issue of making an appropriate provision for the employees in


the  factories  and the establishments after  their  retirement,  and for the benefit  of


their dependents in case of early death of the employees.  That is how the Provident


Funds   Act   came   to   be   enacted   in   the   year   1952,   which   requires   a   compulsory


contribution to the fund and which is independently managed by the Provident Fund


Commissioner.   The employer and employees covered thereunder, both contribute


                                                  8


towards this fund.  As


per the present provision of section 6 of the Provident Funds Act, both of them have


to   contribute   to   the   fund   an   amount   equivalent   to   10%   of   the   basic   wage   and


dearness   allowance   (and   retaining   allowance,   if   any)   per   month.     The   Central


Government   has   the   power   to   raise   this   contribution   to   12%   after   making   an


appropriate enquiry.  The contribution to fund earns an appropriate interest thereon.


As stated above, after the retirement of the employee or in the event of need of


finance for specified reasons, or in the event of his death prior thereto, the amount


becomes available.


10.             In   para   5   of  Sayaji   Mills   Ltd.   Vs.   Regional   Provident   Fund


Commissioner  reported   in  [AIR   1985   SC   323]  this   Court   has  explained   as   to


what should be the approach towards this legislation in the following words :-




              "5. At the outset it has to be stated that the Act has been

          brought   into   force   in   order   to   provide   for   the   institution   of

          provident funds for the benefit of the employees in factories

          and establishments. Article 43 of the Constitution requires the

          State   to   endeavour   to   secure   by   suitable   legislation   or

          economic   organisation   or   in   any   other   way   to   all   workers,

          agricultural,   industrial   or   otherwise  among   others   conditions

          of work ensuring a decent standard of life and full enjoyment

          of   leisure.   The   provision   of   the   provident   fund   scheme   is

          intended   to   encourage   the   habit   of   thrift   amongst   the

          employees and to make available to them either at the time

          of   their   retirement   or   earlier,   if   necessary,   substantial

          amounts for their use from out of the provident fund amount

          standing to their credit which is made up of the contributions

          made by the employers as well as the employees concerned.

          Therefore, the Act should be construed so as to advance

          the   object   with   which   it   is   passed.   Any   construction

          which would facilitate evasion of the provisions of the

          Act should as far as possible be avoided......."

                                                                  (emphasis supplied)


                                                    9


        The   present


controversy with respect  to the applicability of the Provident  Funds Act has to be


approached with this perspective.


11.             Now,   on   the   question   as   to   whether   such   two   units   should   be


considered   as   one   establishment   or   otherwise,   there   is   no   hard   and   fast   rule.


However, guidelines have been laid down in two judgments of this Court rendered


way back in the years 1959-60 and they are followed from time to time.   Thus, in


The   Associated   Cement   Companies   Ltd.,   Chaibasa   Cement   Works,


Jhinkpani Vs. Their Workmen reported in [AIR 1960 SC 56], a bench of three


judges was considering  the question as to whether the factory  and the limestone


quarry   belonging   to   the   appellant   company   should   be   considered   as   one


establishment for the purpose of Industrial Disputes Act, 1947.  This Court observed


therein as follows:-


                "11.  ........ What then is `one establishment' in the ordinary industrial
        or business sense? ....... It is, perhaps, impossible to lay down any one test
        as an absolute and invariable test for all cases.   The real purpose of these
        tests is to find out the true relation between the parts, branches, units etc.  If
        in their true relation they constitute one integrated whole, the establishment
        is one; if on the contrary they do not constitute one integrated whole, each
        unit   is   then   a   separate   unit.     How   the   relation   between   the   units   will   be
        judged must depend on the facts proved, having regard to the scheme and
        object of the statute which gives the right of unemployment compensation
        and also prescribes a disqualification therefor.  Thus, in one case the unity of
        ownership, management and control may be the important test; in another
        case functional integrality or general unity may be the important test; and in
        still   another   case,   the   important   test   may   be   the   unity   of   employment.
        Indeed, in a large number of cases several tests may fall for consideration at
        the   same.     The   difficulty   of   applying   these   tests   arises   because   of   the
        complexities  of modern  industrial organization; many enterprises  may have
        functional   integrality   between   factories   which   are   separately   owned;   some
        may be integrated in part with units or factories having the same ownership
        and in part with factories or plants which are independently owned."


                                                  10


        Later           in


paragraph 5 of Management of Pratap Press, New Delhi Vs. Secretary, Delhi


Press Workers' Union Delhi reported in [AIR 1960 SC 1213], another bench of


three   judges   explained   the   above   proposition   in  Associated   Cement   Company


(supra) in  the following words:-


                 " ......While pointing out that it was impossible to lay down any
        one test as an absolute and invariable test for all cases it observed that
        the real purpose of these tests would be to find out the true relation
        between the parts, branches, units etc.  This court however mentioned
        certain tests which might be useful in deciding whether two units form
        part   of   the   same   establishment.     Unity   of   ownership,   unity   of
        management and control, unity of finance and unity of labour, unity of
        employment  and  unity   of  functional   "integrality"  were   the tests  which
        the Court applied in that case.......



12.              Accordingly, depending upon the facts of the particular case, in some


cases the concerned units were held to the part of one establishment whereas, in


some   other   cases   they   were   held   not   to   be   so.    Regional   Provident   Fund


Commissioner Vs. Dharamsi Morarji Chemical Co. Ltd. reported in [1998 (2)


SCC 446] and Regional Provident Fund Commissioner Vs. Raj's Continental


Export (P) Ltd.  reported in  [2007 (4) SCC 239]  are cases where the two units


were   held   to   be   independent.     In  Dharamsi   Morarji  (supra),   the   appellant


company   was   running   a   factory   manufacturing   fertilizers   at   Ambarnath   in   Distt.


Thane, Maharashtra since 1921.  The appellant established another factory at Roha


in   the   adjoining   district   in   the   year   1977   to   manufacture   organic   chemicals   with


separate set of workers, separate profit and loss account, separate works manager,


plant superintendents and separate registration under the Factories Act.   The two


were held to be separate for the purposes of coverage under the Provident Funds


                                                   11


Act.        In       Raj's


Continental Export (supra), Dharamsi Morarji was followed since the two entities


had   separate   registration   under   the   Factories   Act,   Central   Sales   Tax   Act,   1956,


Income Tax Act, 1961, Employee State Insurance Act, separate balance sheets and


audited statements and separate employees working under them.


13.               As against that in  Rajasthan Prem Krishan Goods Transport Co.


Vs.   Regional   Provident   Fund   Commissioner,   New   Delhi  reported   in  [1996


(9)   SCC   454]  and  Regional   Provident   Fund   Commissioner,   Jaipur   Vs.


Naraini Udyog and others reported in [1996 (5) SCC 522] the concerned units


were held to be the units of the same establishment.  In Rajasthan Prem Kishan


Goods  Transport Co. (supra) the trucks piled by the two entities were owned by


their partners, ten out of thirteen partners were common, the place of business was


common, the management was common, the letter-heads bore the same telephone


numbers.     In  Naraini   Udyog  (supra)   the   two   entities   were   located   within   a


distance of three kilometers as separate small-scale industries but were represented


by the members of the same Hindu undivided family.   They had a common head


office  at  New  Delhi,  common branch  at Bombay  and common  telephone  at  Kota.


The   accounts   of   the   two   entities   were   maintained   by   the   same   set   of   clerks.


Separate registration under the Factories Act, The Sales Tax Act and The ESIC Act


were   held   to   be   of   no   relevance   and   the   two   units   were   held   to   be   one


establishment for the purpose of Provident Funds Act.  


14.               In   the   present   case   the   Directors   of   the   two   petitioner   companies


belong   to   the   same   family.     The   Managing   Director   is   common.   The   two   senior


                                                     12


officers                 i.e


Commercial   Manager   and   Technical   Manager   are   common.     At   the   time   of


inspection,   the   Enforcement   Officer   noticed   that   the   employees   of   the   two


companies were being swapped.   Both of them have same registered address and


common telephone numbers and a common gram number.   The audited accounts


revealed that the second petitioner company had given a loan of Rs. 5 lakhs to the


first petitioner in the year 1988.     The two companies are family concerns of the


Gadodia family.  Hence, in the facts of the present case we have to hold that there


is an integrity of management, finance and the workforce in the two private limited


companies.     The   two   companies   have   seen   to   it   that   on   record   each   of   the   two


entities   engage   less   than   twenty   employees,   although   the   number   of   employees


engaged by them is more than twenty when taken together.  The entire attempt of


the   petitioners   is   to   show   that   the   two   entities   are   separate   units   so   that   the


Provident Funds Act does not get attracted. The material on record however, leads


to only one pointer that the two entities are parts of the same establishment and in


which case they get covered under the Provident Funds Act.


15.              As   the   preamble   of   the   Provident   Funds   Act   states,   `it   is   an   act   to


provide   for   the   institution   of   provident   funds,   pension   fund   and   deposit-linked


insurance   fund   for   employees   in   factories   and   other   establishments'.       The   term


factory is defined under section 2 (g) of the Act, however, there is no definition of


an establishment  or a commercial establishment in the statute.   Inasmuch as the


petitioners are entities situated in Delhi, we may profitably rely upon the definition


of   `establishment'   and   `commercial   establishment'   under   the   Delhi   Shops   and


                                                    13


Establishments   Act,


1954.   The definition of establishment is available in section         2 (9) and that of


commercial establishment in section  2 (5) thereof.    These two definitions read as


follows:-


                         "Section 2(9) Establishment-
                 "establishment"   means   a   shop,   a   commercial   establishment,
             residential hotel, restaurant, eating house, theatre or other places
             of   public   amusement   or   entertainment   to   which   this   Act   applies
             and   includes   such   other   establishments   as   Government   may,   by
             notification in the Official Gazette, declare to be an establishment
             for the purposes of this Act;
                         Section 2(5) Commercial establishment
                 2(5) "commercial establishment" means any premises wherein
             any trade, business or profession or any work in connection with,
             or   incidental   or   ancillary   thereto,   is   carried   on   and   includes   a
             society registered under the Societies Registration Act 1860 (XXI of
             1860)   and   charitable   or   other   trust,   whether   registered   or   not,
             which   carries   on   any   business,   trade   or   profession   or   work   in
             connection  with  or incidental  or ancillary  thereto,  journalistic  and
             printing   establishments,   contractors   and   auditors   establishments
             quarries, and mines not governed by the Mines Act, 1952 (XXXV of
             1952),   educational   or   other   institution   run   for   private   gain   and
             premises   in   which   business   of   banking,   insurance,   stocks   and
             shares, brokerage or produce exchange is carried on, but does not
             include a shop or a factory registered under the Factories Act, 1948
             (LXIII of 1948), or theatres, cinemas, restaurants, eating houses,
             residential   hotels,   clubs   or   other   places   of   public   amusement   or
             entertainment;"



It cannot be denied that the two petitioners carry on a trade or business for private


gain   from   the   premises   wherein   the   two   companies   are   situated.     They   would


therefore, fall within the definition of `commercial establishment' and consequently,


under the definition of `establishment'.  The only question is whether they are to be


treated  as  two  separate  establishments   or   one   establishment   for   the  purposes  of


this act.


                                                   14


16.             The


petitioners have contended that the two entities are two separate establishments.


They have tried to draw support from section 2(A) of the Act which declares that


where an establishment consists of different departments or has branches whether


situated in the same place or in different places, all such departments or branches


shall   be   treated   as   parts   of   the   same   establishment.   It   was   submitted   that   only


different departments or branches of an establishment can be clubbed together, but


not different establishments altogether.   In this connection, what is to be noted is


that, this is an enabling provision in a welfare enactment.  The two petitioners may


not  be  different  departments   of  one  establishment  in  the   strict  sense.    However,


when we notice that they are run by the same family under a common management


with common workforce and with financial integrity, they are expected to be treated


as   branches   of   one   establishment   for   the   purposes   of   Provident   Funds   Act.     The


issue is with respect to the application of a welfare enactment and the approach has


to be as indicated by this Court in Sayaji Mills Ltd. (supra).  The test has to be the


one   as   laid   down   in  Associated   Cement   Company  (supra)   which   has   been


explained in Management of Pratap Press (supra).


17.             The Provident Fund Department had issued notice to the petitioners on


11.6.1990 on the basis of their inspection.  It had relied upon the 1988 Audit Report


of the petitioners.   The petitioners had full opportunity to explain their position in


the inquiry before the Provident Fund Commissioner conducted under Section 7A of


the Provident Funds Act.   The petitioners, however, confined themselves only to a


facile explanation.  If according to them, the management, workforce and financial


                                                   15


affairs   of   the   two


companies   were   genuinely   independent,   they   ought   to   have   led   the   necessary


evidence, since they would be in the best know of it.   When any fact is especially


within  the knowledge  of any person, the burden of proving  that fact  lies on him.


This rule (which is also embodied in section 106 of the Evidence Act) expects such a


party to produce the best evidence before the authority concerned, failing which the


authority cannot be faulted for drawing the necessary inference.   In the facts and


circumstances of the present case, the Provident Fund Commissioner was therefore


justified in drawing the inference of integrity of finance, management and workforce


in the two petitioners on the basis of the material on record.


18.             The   Regional   Provident   Funds   Commissioner   was   therefore,   entirely


justified in taking the view that on the facts and law, the two petitioners had to be


clubbed together for the purposes of their coverage under the Provident Funds Act.


The   Appellate   Tribunal   clearly   erred   in   re-appreciating   the   facts   on   record   and


applying wrong propositions of law thereto.  The learned Single Judge was therefore


required to set-aside the order of the Appellate  Tribunal in view of his conclusion


that   the   order   was   contrary   to   the   facts   and   the   law,   and   was   perverse.     The


Division Bench has rightly confirmed the order passed by the learned Single Judge.


19.             In the circumstances, this petition is dismissed.  The concerned officer


of respondent will now proceed for the determination and recovery of the provident


fund dues from the petitioners in accordance with law.  There will be no order as to


the costs.


                                                                        ................................J.

                                                                     ( J.M. Panchal )


                               16





                                                                   

                                            ...................................J.

                                               ( H.L. Gokhale )

New Delhi


Dated :  September 26, 2011