SWASTIK TEXTILE TRADING COMPANY LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This is plaintiffs Second Appeal directed against the decree dated 28th January 1960 passed by the learned Second Extra Assistant Judge Ahmedabad in Civil Appeal No. 400 of 1958 from the decree in Civil Suit No. 1702 of 1956 by which the learned Second Extra Assistant Judge dismissed the appeal with costs and confirmed the decree passed by the learned Third Joint Civil Judge (Senior Division) Ahmedabad dismissing the suit of plaintiff-appellant with costs. Plaintiff is a limited company registered under the Indian Companies Act. The defendantsrespondents are Union of India State of Gujarat Regional Provident Fund Commissioner Bombay and Provident Funds Inspector Ahmedabad. The main dispute between plaintiff and defendants is about the applicability to plaintiff of the Employees Provident Funds Act 1952 Act No. 19 of 1952 (hereafter called the Act). In order to understand the dispute between the parties it will be useful to state a few facts. At the relevant time plaintiff was engaged in manufacturing three items viz. (i) shuttles (ii) wire healds and (iii) reeds. Plaintiff started manufacturing shuttles in 1948 in the compound of Navbharat Mills at Ahmedabad. It gave the prescribed notice for starting the factory to the Factory Inspector in connection therewith on 1st October 1948. That factory got burnt in 1949 and in January 1950 plaintiff started manufacturing shuttles in a building situated in the compound of the Ambica Oil Mills in the Gomtipur locality at Ahmedabad. The prescribed notice of occupation of these premises was sent to the Factory Inspector on 10th February 1950. In the latter part of 1950 plaintiff started manufacturing wire healds in separate building situated in the same compound but adjoining the building in which shuttles were manufactured. Regular production for wire healds was started on 4th November 1951 when the prescribed notice of occupation was given to the Factory Inspector. Plaintiff started manufacture of reeds on or about 20th November 1954 again in a separate building but situated in the same compound in which the manufacture of the other two articles viz. shuttles and wire healds was carried on and notice of occupation of this building was also given by plaintiff to the Factory Inspector on the same day. Sometime in 1954 which time however has not been made definite either in the pleadings or in the evidence plaintiff ceased manufacturing wire healds in the aforesaid compound and shifted to a place called Amraivadi the manufacture of wire healds which place is about a mile away from Gomtipur in which formerly plaintiff was carrying on the aforesaid activities. On 15th May 1956 a Provident Fund Inspector appointed under the Act wrote a letter to plaintiff enquiring about the number of workers employed in the manufacturing of the aforeaid three articles and thereupon correspondence ensued between plaintiff and the Provident Fund Department at the end of which that Departments on 28th September 1956 required plaintiff to introduce the Provident Fund Scheme under the Act with effect from 1st September 1954 on the ground that it was in the month of August 1954 that the total number of workers employed by plaintiff in the manufacture of the aforesaid three articles exceeded the number 50. Thereupon plaintiff gave the requisite statutory notice to the persons concerned and filed the suit on 28th October 1956 from which this Second Appeal arises. Plaintiff prayed for a declaration that the Act was not applicable to any one of the three activities with which it was concerned and asked for a permanent injunction restraining respondents from enforcing the provisions of the Act against plaintiff. Two questions arose for determination in the suit. The first question was as to whether the Act did or did not apply to any one of the three activities in which plaintiff was engaged. The second question was whether plaintiff was right in contending that in fact there were three factories each independent of the other and that therefore the number of the workers engaged by plaintiff should be calculated in respect of each factory separately and that the number of workers engaged in each of the so-called independent factory was not to be totalled up for the purpose of determining the total number of workers for the purposes of the Act. The trial Court dismissed the suit of plaintiff with costs. Plaintiff went in appeal to the District Court at Ahmedabad. The learned Second Extra Assistant Judge who decided the appeal dismissed the same with costs. As already stated it is against this appellate decree that the present Second Appeal has been filed.

(2.) In support of this Second Appeal Mr. Nanavati has raised the same two questions for decision which I have already indicated above although the arguments which were addressed in support of the Second Appeal were not necessarily the same as they were advanced in the two lower Courts.

(3.) In order to understand the first point raised by Mr. Nanavati it is necesary to read a few sections of the Act in the first instance. The Act came into operation on 4th March 1952. It has been amended by several amending Acts from time to time. However it is common ground that in the present appeal I am concerned with the Act as it stood amended on the date on which the present suit was filed. Therefore in the course of this judgment I propose to confine my attention only to the provisions of the Act as they stood amended on the relevant date and I do not propose to refer to the subsequent amendments except when they are necessary for some purpose relevant for the decision of the points in dispute. Section 1 sub-section (3) of the Act provided that subject to the provisions contained in section 16 which section it is common ground is not relevant for the purposes of the appeal the Act applied in the first instance to all factories engaged in any industry specified in Schedule I in which fifty or more persons were employed. Schedule I originally mentioned only six industries. Under sec. 4 of the Act the Central Government had the power to add any other industries to that Schedule in respect of the employees whereof it was of opinion that a provident fund scheme should be framed under the Act. The section provided that thereupon the industries so added shall be deemed to be an industry specified in Schedule I for the purposes of the Act. In accordance with this power the Central Government added a number of industries in Schedule I from time to time. I am not concerned in the present appeal with any of these added industries. However one of the industries which was originally mentioned in the Schedule was the following:- Electrical mechanical or general engineering products. The case of respondents is based on the allegation that all the three activities in which plaintiff is engaged is covered by this item in Schedule I. An Explanation was inserted to Schedule I by section 18 of the Amending Act 37 of 1953. This explanation inter alia stated that without prejudice to the ordinary meaning of the aforesaid expression electrical mechanical or general engineering products items Nos. 1 to 26 specified in that Explanation were included in that expression. It appears that no reliance was placed upon this Explanation by the department in any of the two lower Courts. However in this Court Mr. Sompura the learned Assistant Government Pleader contended that the aforesaid three activities of plaintiff were covered by items Nos. 7 20 24 and in any case by item No. 25 read with item No. 7. However as already stated in the two lower Courts the contention of the department was that the aforesaid three activities of plaintiff were covered by the general expression electrical mechanical or general engineering products.Plaintiffs contention was that they were not so covered. According to it the aforesaid three articles-shuttles wire healds and reeds-were not either electrical mechanical or general engineering products. Mr. Sompura conceded before me that the aforesaid three articles could not be regarded as electrical products.; However his contention was that in any case the aforesaid three articles were either mechanical or general engineering products. Now before I consider the validity of the rival submissions made by the parties as to whether the three articles aforesaid are or are not covered by the aforesaid part of the general expression mechanical or general engineering products. I would first of all dispose of the alternative argument of Mr. Sompura the learned Assistant Government Pleader that the aforesaid three articles or some of them are included in the aforesaid specified items Nos. 7 20 24 and 25 read with 7 mentioned in the Explanation to Schedule I already referred to.