KAN SINGH, J. - (1.) THESE are two writ petitions under Art. 226 of the Constitution questioning the validity of an order of the Central Government dated 20. 2. 65 (Ex. 6 on the record), by which the Central Government made a direction under sec. 19a (iv) of the Employees' Provident Funds Act, 1952, hereinafter to be referred as the "act", to the effect that the establishment of Shree Bijay Cotton Mills Limited, Bijainagar, respondent No. 3, shall be deemed to be set up on 10. 5. 62, for the purposes of sec. 16 (1) (b) of the Act and for seeking appropriate writ, direction or order. The writ petition No. 107 of 1965 is by the Rashtriya Mill Mazdoor Sangh, Bijainagar, and writ petition No. 291 of 1965 is by an individual workman of the Mills. Both the writ petitions can conveniently be disposed of together. The case with which the petitioners have come forward is like this.
(2.) THE Mills run by respondent No. 3, which is a limited company was established in the year 1940. It appears to have worked smoothly till 1953-54 when it temporarily suspended its working. It was faced with a similar situation in the year 1956-57 also when it had again to suspend its working temporarily. THE Mills resumed working on 3. 3. 58, but shortly thereafter on 23. 6. 58, as certain demands of the workers remained unfulfilled, they went on a strike. THE company, on the other hand, declared a lock out on 24. 6. 58. This gave rise to a litigation between the workmen and the company on the question whether it was a case of lock out only so that it did not entail dismissal of workers. Eventually the matter came up to the High Court in revision and it was held by it that the lock out of 24. 6. 58 entailed no dismissal or discharge of the workmen. It appears that after 24. 6. 58 the Mills could not resume working and having remained closed for sufficient time it resumed working on 10. 5. 62 only. THE present controversy relates to the applicability of the scheme of Provident Fund under the Act. The petitioners aver that when the Act was applied in 1952, the Company started making deductions from the wages of the workmen and made its own contributions. They proceeded to say that even after the Mills resumed working from 10. 5. 62 Provident Fund deductions of workers were made by the Company and it regularly made payments to the provident fund together with its contribution, the last such deduction and its contribution is said to have been made in February, 1965. On 27. 2. 65 the Company intimated the workmen that the Company's Mill was exempted from the scheme of Provident Fund under sec. 16 of the Act, and that after February, 1965, it would not be making any Provident Fund deductions or make any contribution of its own. Thereafter the workers made representations, but without any result. The petitioners case is that the order of the Central Government (Ex-6) was bad, because the same was obtained by the Company on false representations. They assert that the Mills could not be said to have been newly established within the meaning of sec. 16 of the Act. All that was done according to them was that only two ring frames were newly put up, but otherwise only the old machinery was being worked. As against 550 workmen only 6 were working on the two ring frames. It is also submitted by the petitioners that the order Ex-6, was passed by the Central Government without hearing the petitioners and was consequently bad. It is further pointed out that the Central Government had no jurisdiction to pass such an order at the instance of the Company. Sec. 19 of the Act, according to the petitioners, was meant only to resolve any doubt or difficulty as may arise in giving effect to the provisions of the Act. This difficulty or doubt, according to the petitioners should be experienced by the officers who have to give effect to the provisions of this Act and action is not to be taken only to help the employer. In short, it is argued that order Ex-6 is bad for two reasons (i) that the Central Government could not have acted on the application of the Company, and (ii) in the alternative it is submitted that the order is vitiated as principles of natural justice were not followed before passing such an order to the prejudice of the workmen, by not affording a hearing to them. The writ petition is contested by respondent No. 3, the Company. The Union of India, respondent No. 1, or the Regional Provident Fund Commissioner, Jaipur, respondent No. 2, have neither entered appearance, nor have they filed any reply to the writ petition. Respondent No. 3, submits that the finding given by the Central Government under sec. 19a of the Act was conclusive and as the order was of an administrative nature it could not be challenged by a writ petition in this Court. It is argued that it was competent for the Central Government to act on the representations made by the Company on the merits. It is stated that when the Mills stopped working on 24. 6. 58 and when finally a lock out was declared on 11. 7. 58 it could not be known that it would re-start working. It is asserted in the circumstances that when it commenced working in February, 1962, it started as a new establishment. In this connection it is submitted that the workers had already withdrawn their provident fund and the licence of the Mills had also been cancelled by the Central Government in 1960, and in February, 1962, it commenced working on a fresh licence. As regards the deductions that is made regarding the Provident Fund and its own contribution from February, 1962 to June, 1965, it was submitted that this was done under protest and on account of the confusion in the mind of the Company about the legal position. It was pointed out that it was advised by its legal adviser only in February, 1965, that it was entitled to the benefit of sec. 16 of the Act. Being a new establishment it approached the Central Government for the clarification of the doubt that it felt. As regards the plea about want of hearing the petitioners, before the Central Government passed the impugned order, it is pointed out that on 21. 12. 64 the petitioners had themselves made a representation to the Central Government whereby they tried to meet the claim put forth by the Company in its representation. From the above narration it will be seen that the fate of the case turns on a proper construction of the provisions of sec. 19a of the Act. Sec. 16 of the Act provides, amongst other things, that the Act shall not apply to establishments employing more than 50 persons until the expiry of three years from the date on which the establishment is, or has been set up. The Company wants to take advantage of this provision by showing that its establishment was set up in February, 1962 only. Sec. 19a which empowers the Central Government to remove difficulties runs a under: Sec. 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 - (i) whether an establishment which is a factory, is engaged in any industry specified in Schedule I; (ii) whether any particular establishment is an establishment falling within the class of establishments to which this Act applies by virtue of a notification under cl. (b) of sub-sec. (3) of sec. 1; or (iii) the number of persons employed in an establishment; or (iv) the number of years which have elapsed from the date on which an establishment has been set up; or (v) whether the total quantum of benefits to which an employee is entitled has been reduced by the employer. the Central Government may, by order, make such provision or give such direction, not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for the removal of the doubt or difficulty; and the order of the Central Government, in such cases shall be final. " As to what is the scope of sec. 19a of the Act and how and at whose instance the Central Government can exercise its powers under this section has come to be considered by the various High Courts, but the cases cited by either party disclose a sharp cleavage in judicial opinion and diametrically opposite views have been taken. The cases placed before us clearly fall in two distinct categories. However, before we come to deal with the cases, we may devote consideration to the language of the statute itself. There is no manner of doubt that the Act is a beneficient measure enacted for the purpose of institution of provident fund for employees in factories and other establishments. The provisions have been made for the better future of the industrial worker on his retirement and for the benefit of his dependents in case of his death while in employment. However, to avoid any hardship to new establishments who may not start making profits in their infancy it has been provided that they shall be exempted from the application of the Act for the stated period. Sec. 5 of the Act provides for sponsoring of the Provident Fund schemes. Then the Act makes elaborate provision about the making of deductions from wages and about the contributions to be made by the establishment for appointment of Inspectors, prosecution of the employer and for awarding of damages in certain circumstances. We need not notice the various provisions of the Act in any detail. However, sec. 5 enacts that the scheme framed shall provide for any of the matters specified in Schedule II. The statutory scheme makes provision amongst other things for removal of doubt and we may reproduce Rule 26b thereof. Rule 26b. Removal of Doubts - If any question 'arises whether an employee is entitled or required to become or continue as a member, or as regards the date from which he is so entitled or required to become a member, the decision thereon of the Regional Commissioner or, where a State Commissioner is appointed, of the State Commissioner shall be final: Provided that no decision shall be given unless both the employer and the employee have been heard. " Now a comparison of Rule 26b with sec. 19a of the Act reveals that, though both are meant for removal of certain doubts the frame of the two provisions differs in material respects. While sec. 19a of the Act contemplates the making of a provision or giving of a direction which should not be inconsistent with the provisions of the Act by the Central Government, Rule 26b of the Scheme contemplates a decision by the Regional Commissioner or the State Commissioner. Then, while sec. 19a does not in terms provide for hearing of the employer and the employee, Rule 26 B makes an express provision for hearing. Then what is significant to note in sec. 19a of the Act is that the difficulty or doubt should arise "in giving effect to the provisions of this Act. " The question immediately arises as to who has to give effect to the provisions of this Act and who will be faced with difficulty or doubt in giving effect to the provisions of the Act. The other allied question is as to what will be the nature of action that the Central Government will be taking when it would be making "such provision or give such direction for the removal of the doubt or difficulty. '' The language of the section to our mind, shows that the provision or the direction that will be issued will be of a general nature, not necessarily having reference to any particular case in hand. By way of analogy we may refer to section 43 of the Motor Vehicles Act where under the State Government issues directions to the State Transport Authority regarding the grant of permits, fixation of fares, freights and other matters. Such directions are not permissible in individual cases, but are of a general nature. We way also refer to some other enactments which make provision for removal of difficulties, for example, sec. 92b of the Rajasthan Panchayat Act, 1953, provides that "if any difficulty arises in giving effect to, enforcing or carrying out the provisions of this Act, the State Government may, by order published in the official Gazette, give such direction and do such things which appear to it to be necessary for the removal of such difficulty. " Similarly, sec. 301 of the Rajasthan Municipalities Act, 1959, provides that "for the purpose of facilitating the transition provisions of the laws repealed. . . . . . . . . . . . . . . , the State Government may, by order published in the official Gazette. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) give such directions as appear to it to be necessary for the removal of any difficulty that may arise in enforcing this Act. " Attention may also be invited to Article 392 of the Constitution where under the President was authorised for the purpose of removing any difficulties, particularly in relation to the transition from the provisions of the Government of India Act, 1935, to the provisions of this Constitution, to direct that this Constitution shall, during such period as may be specified in the order, have effect subject to such adaptations etc. " We are led to think that the provision of sec. 19a was designed to clothe the Central Government with the power of issuing directions of a general nature or to make provision which may be of a general nature and it was never the intention to deal with any individual controversy between the parties, as in the present case. For that they are left to pursue the ordinary remedies under the law particularly when the provisions of the Act do not bar the jurisdiction of the civil courts regarding the settlement of disputes between the employer and employee relating to provident fund. Now we may briefly deal with the two sets of cases on either side of the line. In Bankim Chandra Chakravarty and another vs. Regional Provident Fund Commissioner and others (1), a Bench of the Patna High Court held that "sec. 19a contemplated a direction by the Central Government when any difficulty arose in giving effect to the provisions of the Act, or if any doubt arises as to the matters referred in the section in the mind of the authority who has to deal with the matter. If the authority does not feel any difficulty or doubt then there is no scope for any direction to be given by the Central Government at the instance of a party who may raise a dispute over the matter. " It was further observed that the question of any dispute being raised by the party concerned was foreign to the section. The Bombay High Court in Nagpur Glass Works Ltd. vs. Regional provident Fund Commissioner (2) held that under sec. 19a of the Act it was not obligatory upon the Regional Provident Fund Commissioner to refer any dispute, as to whether a particular section was engaged in an industry prescribed in Schedule 1 for a direction from the Central Government the provision, according to the learned Judges, applied only when the Commissioner found that there was a difficulty regarding the interpretation. The Bombay High Court reaffirmed its view in a later decision of the same title reported as Nagpur Glass Works Limited vs. Regional Provident Fund Commissioner (3 ). In the latter case the learned Judges brought out the distinction between the difficulty arising in giving effect to the provisions of the Act and a particular doubt which could arise in respect of any of the matters enumerated in clauses (i) to (iv ). They held that so far as the difficulty was concerned it was of general nature and must be experienced by the officers administering the Act. In that connection it was observed that it was not open to the establishment to approach the Central Government calling upon it to pass any order in this regard. The Allahabad High Court vide Delhi Cloth and General Mills Company Limited vs. Regional Provident Fund Commissioner, Uttar Pradesh (4), Madras High Court vide India Industries (Madras) (Private), Ltd. vs. Regional Provident Fund Commis-sioner (5) have failed in line with this view.
(3.) IN a very recent case of the Mysore High Court reported as Wadi Stone Marketing Company (Private), Limited vs. Regional Provident Fund Commissioner and another (6), the entire case law for or against the proposition has been reviewed and the learned Judges observed as follows: - "it must be borne in mind that the power given under sec. 19a of the Employees' Provident Funds Act, 1952, is a power to be exercised for the purpose of removing difficulties in giving effect to the provisions of the Act. The persons who can give effect to the provisions of the Act are those who are charged with the duty of enforcing the provisions of the Act. The section does not say that recourse could be had to the provisions therein by persons who are affected by the provisions of the Act. IN other words, the machinery provided under sec. 19 A is one for the benefit of these who have to "give effect to the provisions of the Act. " Therefore, when the section speaks "if any doubt arises," it refers to the doubts of those who are "giving effect to the provisions of the Act. " Sec. 19a does not require the Central Government to decide any dispute that may arise between the authorities enforcing the provisions of the Act and the persons against whom those provisions are enforced. This conclusion is made further clear by the fact that as per the terms of that section the Central Govt. may, by order, make such provision or give such direction not inconsistent with the provisions of this Act. " "the provisions of sec. 19a were not enacted for the benefit of those against whom the provisions of the Act are sought to be enforced. Further it may be noticed that the section does not provide for any enquiry by the Central Government. The parties affected are not required to be heard, nor any decision rendered. On a plain reading of that section it is clear that the order or the direction contemplated thereunder is only an administrative or a ministerial order and not a judicial or quasi-judicial order. The Central Government is not required by the terms of the section to act judicially. Before closing this aspect of the case, it is necessary to mention that in the Act there is no provision barring civil suits. If any party is aggrieved by the stand taken by the authorities or by order of or the direction of the Central Government, it is open to it to challenge the legality or the correctness of the view taken or the order made in a properly instituted suit. The finality contemplated by sec. 19a is a finally as regards the departmental view. That view is not made binding on the opposite party. The order or direction given by the Central Government does not, and in fact it cannot, bind the persons who are not parties before the Central Government. " Dhanalakshmi Weaving Works, Kakkat Cannanore vs. The Regional Provident Fund Commissioner, Trivandrum (7) and Nazeena Traders (p) Ltd. , represented by its Director Masood Ali Khan vs. Regional Provident Fund Commissioner, Hyderabad (8) may be referred as representative decisions of the other view. In the Kerala case (7), the learned Judge was pointedly considering the question whether the Regional Provident Fund Commissioner could apply coercive process under the Act to enforce payment of Provident Fund contributions by the employer without first approaching the Central Government under sec. 19-A of the Act and in that connection he observed as follows - "in the absence of a decision under sec. 19-A of the Act by the Central Government, especially when there is a doubt which relates to the particular matters referred to in the clauses in sec. 19-A, the authorities concerned cannot enforce the provisions of the Statute. It is not without significance that most of the matters referred to in els. (i) to (v) of sec. 19, as it stands at present, relate to matters of a jurisdictional nature, adjudication on which will decide as to whether the Act applies to a particular establishment or not. It must also be borne in mind that liability for payment of contribution is created on the employer under sec. 6; the manner of recovery of contribution, damages and other amounts due from an employer is provided in sec. 8 by having recourse to revenue recovery proceedings, and severe penalties have also been provided under sec. 14 of the Act. There is also an equally stringent penal provision under sub-sec. 2a of sec. 14 of the Act. Apart from all these provisions, there is also a right given to the Department to claim damages at the rate of 25 per cent of the contributions in case of default under sec. 14b of the Act. All these are the consequences of the Act and the Scheme being made to apply to an establishment. These aspects show that it cannot be the intention of the legislature that on the mere statement of a subordinate officer functioning under the statute that the particular establishment comes within his jurisdiction or within the ambit of the Act, when all these consequences will follow without a corresponding right being given to the management to challenge the stand taken by the authorities concerned. " He then proceeded to consider the question whether it is the department who alone could invoke the powers of the Central Government under sec. 19a or the management also can approach the Central Government and he concluded as follows - "there is no other provision in the statute except sec. 19a whereby an adjudication on essential facts has to be made and an investigation conducted by any other authority. Considering the provisions of sec. 19a, having this background provided by the scheme of the Act, and the total absence of any power being given to any other authority to give a finding of tact, regarding the nature of relationship or the number of persons employed or other allied matters, the only reasonable conclusion is that sec. 19a is an enabling section available not only to the Department as such, but also to the managements. " It is remarkable that in the concluding portion of his judgment the learned Judge held that as the Central Government is the only authority who can decide certain points on which a doubt has arisen it must give due opportunity to the parties concerned to place all their points of view regarding the respective stand taken by them. In the second case the learned Judges of the Andhra Pradesh High Court held that in the absence of a decision' of the Central Government under sec. 19-A, the Commissioner cannot put the scheme in respect of any of the establishments in operation and the learned Judges have followed the judgment of Rajago-palan J. , in Annamalai Mudaliar & Bros. , vs. Regional Provident Fund Commissioner, Madras (9 ). Having considered both the conflicting opinions, we are of the view that the view taken by Patna High Court in Bankim Chandra Chakravarty vs. Regional Provident Fund Commissioned (1), Bombay High Court in Nagpur Glass Works Limited vs. Regional Provident Fund Commissioner (2) and the Mysore High Court in Wadi Stone Marketing Company (Pvt.) Limited vs. Regional Provident Fund Commissioner (6), accords with the scheme of the Act and we prefer to follow it. It is also remarkable that even in the Kerala case (7), relied on by the learned counsel for the respondents, it has been laid down that the Central Government will have to hear both the workmen and the employer before giving its decision. If the direction or the provision made by the Central Government under sec. 19a is to be treated as a decision of a dispute, then it is but right that the workmen should have been heard. Facts of the present case show that for two years the Company has been making deductions from the wages of the workers and depositing the same with the Provident Fund Commissioner with its own contribution. The order of the Central Government Ex. 6, clearly results in depriving the workers of their earned benefits. The legislature could not have intended the odd result that the workers should be deprived of their rights by the so-called decision of the Central Government given behind their back. Since, admittedly no hearing was given to the workers, it cannot be said that the order Ex. 6, is in keeping even with the view propounded by the Kerala High Court. Thus, on either consideration we do not find that the order of the Central Government Ex. 6 can be sustained as a valid order. Learned counsel for the respondents emphasised the fact that the union of workers itself had filed the representation. It may be so, but there is nothing to show on this record that the Central Government had applied its mind to that representation; even assuming that a voluntary representation of the kind would meet the requirement of a hearing. Unfortunately, as already observed by us, the Central Government has not chosen to enter appearance or to file any reply. Consequently we are unable to say what operated on its mind in passing the order Ex-6. ;