# ANDBRA PRADFSH v. SHRI T. S. HARIBARAN

- **Citation:** [1971] Supp. 1 S.C.R. 305
- **Court:** Supreme Court of India
- **Decided:** 1971
- **Case number:** CIVIL APPELLATE JUJUSDICTION : Civil Appeal No. 1128 of 1967
- **Bench:** M. Shelat, I. D. Dua, V. Bhargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/andbra-pradfsh-v-shri-t-s-haribaran-5246
- **Pages:** 10

## Headnote

E>npluytti Provident Fund A.ct, 1957, s. 1(3)(a) & (b)-Employmenl
of more than 20 person9--Casual labour whether to be included for dtttrmining number of employees-Minimum period of employment whether
<·an be laid down.
The respondent ran a lloteJ. Due to failure of water supply be had
to employ some persons to brina water from the tank for a short period.
The Provident Fund Commis,,ioner sou&ht to enforce the provisions of the
Employees' Provident Funds Act, 1957 and the Provident Fund Scheme.
1952, against him. The respondent thereupon filed a writ petition in the
High Court. It was held by the High Court that employment of more
than twenty persons for a short period did not bring an establishment within the proviso of s. 1(3)· (a) & (b) of the Act. It was also held that only
those employees should be taken into consideration who were in employment for the full period of one year. While thus laying down the leaal
position the Hiab Court left it to the authorities under the Act to apply the
law to the facts of each case and dismissed the respondent's petition. The
Provident Fund Commissioner appealed to this Coun for further clarification.
HELD: Considering the language of s. 1(3)(b) in the light of the
provisions of s. 16 and s. I (S) as well as the aeneral scheme and object of
the Act it would appear that employment of a few persons on account ,,f
somr emergency or for a very short period necessitated by some abnormal
contingency which is not a reauJar feature of the business of the <Stablisb111ent and which does not reflect its business prosperity or its financial
capacity or stability from which it can reasonably be· concluded that the
establishment can in the normal way bear the burden of the contribution
towards the provident fund under the Act, would not be covered by the
definition. The word 'employment' must therefore be construed as employrnent in the regular course of business of the establishment, such employ·
mcnt obviously would not include. employment of a few persons for a short
period on account of some passing necessecity or some temporary emer·
gency beyond the control of the company. The Hiah Court was riaht in
holdioa •o.
But it went wrona in holdina that the sub-section contemplated the required number of persons to work in the establishment con·
tinuously for one year. It was difficult to impute to the Leaislature an
intention to exclude from the application of the Act an establishment whic~
regularly employs for its aeneral business the required number of persons
for a major pert of the year, say for 360 days every year, merely becau!IO
the employmeili of the required number does not extend to full one year
Therefore -the question must be determined in. each case on its own peculiar
facts.
[313C-O]
CIVIL APPELLATE JUJUSDICTION : Civil Appeal No. 1128 of
1967.
20-1 S.C. India/71
B
c
D
E
1!
G
H
306
SUPREME COURT REPORTS
[1971] SUPP. s.c.R.
A
Appeal from the1udgment and order dated September J, 1964
of the Andhra PradeSh High. Court itt, :Writ Petition No. 907 of
1963.
B
c
D
E
F
G
H
L. M. Singhvi and S; P. Nayar, fpr, !he. appellant.
The respondent did not appear.

## Text

305
REGIONAL PROVIDENT FUND COMMWIONER,
A
ANDBRA PRADFSH
v.
SHRI T. S. HARIBARAN
April I, 1971
(J, M. SHELAT, I. D. DUA AND V. BHARGAVA, JJ.J
E>npluytti Provident Fund A.ct, 1957, s. 1(3)(a) & (b)-Employmenl
of more than 20 person9--Casual labour whether to be included for dtttrmining number of employees-Minimum period of employment whether
<·an be laid down.
The respondent ran a lloteJ. Due to failure of water supply be had
to employ some persons to brina water from the tank for a short period.
The Provident Fund Commis,,ioner sou&ht to enforce the provisions of the
Employees' Provident Funds Act, 1957 and the Provident Fund Scheme.
1952, against him. The respondent thereupon filed a writ petition in the
High Court. It was held by the High Court that employment of more
than twenty persons for a short period did not bring an establishment within the proviso of s. 1(3)· (a) & (b) of the Act. It was also held that only
those employees should be taken into consideration who were in employment for the full period of one year. While thus laying down the leaal
position the Hiab Court left it to the authorities under the Act to apply the
law to the facts of each case and dismissed the respondent's petition. The
Provident Fund Commissioner appealed to this Coun for further clarification.
HELD: Considering the language of s. 1(3)(b) in the light of the
provisions of s. 16 and s. I (S) as well as the aeneral scheme and object of
the Act it would appear that employment of a few persons on account ,,f
somr emergency or for a very short period necessitated by some abnormal
contingency which is not a reauJar feature of the business of the <Stablisb111ent and which does not reflect its business prosperity or its financial
capacity or stability from which it can reasonably be· concluded that the
establishment can in the normal way bear the burden of the contribution
towards the provident fund under the Act, would not be covered by the
definition. The word 'employment' must therefore be construed as employrnent in the regular course of business of the establishment, such employ·
mcnt obviously would not include. employment of a few persons for a short
period on account of some passing necessecity or some temporary emer·
gency beyond the control of the company. The Hiah Court was riaht in
holdioa •o.
But it went wrona in holdina that the sub-section contemplated the required number of persons to work in the establishment con·
tinuously for one year. It was difficult to impute to the Leaislature an
intention to exclude from the application of the Act an establishment whic~
regularly employs for its aeneral business the required number of persons
for a major pert of the year, say for 360 days every year, merely becau!IO
the employmeili of the required number does not extend to full one year
Therefore -the question must be determined in. each case on its own peculiar
facts.
[313C-O]
CIVIL APPELLATE JUJUSDICTION : Civil Appeal No. 1128 of
1967.
20-1 S.C. India/71
B
c
D
E
1!
G
H
306
SUPREME COURT REPORTS
[1971] SUPP. s.c.R.
A
Appeal from the1udgment and order dated September J, 1964
of the Andhra PradeSh High. Court itt, :Writ Petition No. 907 of
1963.
B
c
D
E
F
G
H
L. M. Singhvi and S; P. Nayar, fpr, !he. appellant.
The respondent did not appear.
The Judgment of the Court was delivered by
DUI, J.-Tbe appellant in this appeal by certificate granted by
the Andhra Pradesh High Court on February 25, 1965 undor Art.
133 (I) (b) of the Constitution is the Regional Provident Fund Commissioner, Andhra Pradesh.
A Jar~e 11umber of writ petitions by
various parties were filed in the Htgh Court praying for writs in
the nature of mandamus directin~ the appellant to forbear from
enforcing or taking other proceedmgs under the provisions of the
Employees' Provident Funds Act, 1957 (hereinafter called the AcO
and the Provident Fund Scheme, 1952.
With the exception of
perhaps one writ petition, all the rest, including W. P. 907 of 1963
presented by T. S. Haribaran, Proprietor, New Cochin Cafe,
Ongole, respondent in this Court were dismissed. Certificates under
Article 133 (!) (b) of the Constitution were secured by the appellant in almost all the cases but the present is the. only appeal
which now survives, all the rest having been dismissed for nonprosecution.
The writ petition of the respondent was dismissed which
means that the final order made by the High Court was in favour
of the appellant.
The only grievance raised by the appellant's
learned counsel in this Court was that the High Court bad in
the course of its judgment expressed the view that Clause (a) and
(b) of sub-section (3) of Section I of the Act do not cover casual
labour and since this expression of opinion which be considers to
be legally erroneous would be binding on the appellant in administering the Act, it was necessary to have the correct legal position
enunciated by this Court.
According to the appellant's learnoo
counsel the following passages in the judgment of the High Court
clearly bring out the ar~ents both for . and against the legal
position canvassed by him : -
·
"We have next to consider whether clauses (a) and
(b) of Section 1(3) are wide enough to cover casual labour.
it is maintained by the learned Government PIOlider that
requirement as to the numerical strength is satisfied if
twenty persons are engaged in connection with the work
of an establishment even for a day or a fraction thereof.
This argument is sou~ht to be reinforced by the unreported judgment of a DivtSion Bench of the Madras High
P. F. COMMR. v. HARIHARAN (Dua, J.)
Court·in Writ Appeal No. 193 (183 ?) of 1962. It is true
that this ruling .vouchers. the proposition advanced by the
learned GovenmlenfPleader.
The learned Judges there
observed :
"It )s adqlitted oil behalf of the applicant that
fifty people .worked at least for one day in each year.
Tl!is •. in our opinion. will be sufficient to bring the
case. within the purview of. section
1 (3) of the Act.
The Act is an ameliorative measure extended to
benefit tiie permancl)t workers of an establishment.
What is necessary for those permanent workers to get
the benefit is that there. should be fifty workers in
that factory.
In our view, it would be sufficient if
that .condition is 8atisficcl' at least for one day."
With great respect, we are unable to subscribe to the
rule stated therein. It is true ,that this legislative measure
is an' ameliorative one. All the S8111e, it cannot be over·
looked that benefits are intended to be conferred on workmen iii. establismnents that are in. a position to employ
twerity' 'i>r m0re pers0ns; It may be incidentally mentioned here. that originally, i.e., prior to the Amendment Act,
46 of 1960 the number of employees in the establishment
that would be brought witliin the scope of SCction 1(3)
was fixed at fifty.
·
We find it difficu1t to .11gree with the view that twenty
or more persons ·can be. Said to be employed or that an
establishment employs
tweri~ or ·more· persons merely
because on· one day or two 'days:· the services of twenty or
more persons were engaged:(Oni particillar plltpose. To
accept this Contention wouJd · be' tO unduly erilarge the
content of the Section. To attract the applicability of
Section 1 (3) ihe numbe(of persons should come upto
minimum of· !WeD,ty. The underlying idea seems to be
that' th!' establishment should have ~ty persons on its
mustenolls and working regularly.
Could it be asserted that a factory gives employment
to tw~ty persons merdy · . because twenty . persons are
ellgllged by that factory on a particular day for some special job.
In our opinion, the answer · must ·be in the
negative. The•· sub-section contemplates the required
number of people working continuously in the factory or
other establishment in a year.
B
c
D
E
F
G
ff
308
A
B
c
D
E
F
G
ff
SUPREME COURT REPOR11'
[1971] SUPP. s.c.1..
The other passage occurs a little lower down in that judgment : -
"Section 19-A also seems to strengthen our view. A
doubt as to the number of persons employed in an establishment could arise only if the employment of twenty
persons in the establishment were a nonnal feature.
A
legitimate doubt cannot be said to arise if the condition
as to the number is satisfied if twenty persons work in the
establishment even for a day or two.
It is not necessary
for us to Jabour this point any further as we feel that the
provisions of the Act are inapplicable to establishments
which do not employ twenty or more persons to work
therein for a period of one year.
It follows that 'casual
labour' falls outside the scope of section 1(3).
The fact
that the casual labour is engaged by or through a contractor docs not make any different for the decision of the
question, the only criterion being whether they were
casual labourers or not.
On this discussion, it follows that the establishments
whose employees do not come upto twenty, excluding
casual labourers, do not fall within the purview of Section 1(3' and so the provisions of the Scheme cannot be
applied to them.
The respondents will, therefore, examine this question in the light of these observations and
decide whether the Scheme should be applied to any of
these establishments excluding casual labour."
The appellant's learned counsel had at one stage of his
arguments stated that his client was anxious merely to steer clear
of the observations made by the High Court that "the provisions
of the Act are inapplicable to establishments which do not employ
20 or more persons to work therein for a period of one year."
But while citing certain decided cases he did appear to canvas for
the wide proposition that employment of a person for however
short a period would be employment for the purpose of determining the number of persons employed as contemplated by Section 1 (3) (a) and (b) of the Act.
He relied on the Bench decision
of the Madras High Court reported as Messrs East India .Industries (Madras) v. Regional P. F. Commissioner(') (this decision
was also cited in the High Court as an unrep1>rted judgment) and
pressed us to uphold the reasoning adopted therein.
The question requiring our detennination is a very short one.
As there is no representation on behalf of the respondent in this
Court and, therefore, we do not have the benefit of the respondent's point of view we propose to confine ourselves strictly to the
(I) [1964) I L. L. 1. 441
P. F. COMMA. f. HARIHARAN (Dua, J.)
limited question of the scope of clauses (a) and (b) of sub-section
(3) of Section 1 and this judgment is not intended to be considered as expressing any opinion on other controversial aspects. Before
considering the relevant provisions of the Act it may be pointed
out that according to the respondent's writ petition presented in
the High Court in August, 1963, the New Cochin Cafe (treated as
a hotel) was started in Ongole town on November 20, 1956 and
the respondent usually employed only 18 or 19 persons.
In 1961
there was total failure of rains in the Ongole region and that town
was particularly hard hit.
The respondent had to employ two or
three persons on contract basis for supplying water to the hotel.
Those persons were engaged from June to September, 1961. The
appellant has not questioned the correctness of these assertions
for the purpose of this appeal.
Let us now examine the relevant
provisions of the Act.
The Act was brought on the statute book for providing for
the institution of provident fund for the employees in factories
and other estliblisliments.
The basic purpose of providing for
provident funds appears to be to make provision for the future of
the industrial worker after his retirement or for his dependants in
case of his early death.
To achieve this ultimate object the Act
is designed to cultivate among the workers a spirit of saving something regularly, and also to encourage stabilisation of a steady
labour force in the industrial centres.
This Act has since its initial
enactment been amended several times to extend its scope for the
benefit of industrial workers.
We are, however, concerned with
the Act as it stood in 1962 when notice was sent by the appellant
to the respondent stating that the provisions of the Act had been
made applicable to his establishment.
Sections l (3) (a) and (b).
4 and S may now be reproduced :
"Section 1
(3) Subject to the provisions contained in section 16,
it applies.
(a) to every establishment which is a factory engaged
in any industry specified in Schedule I and in whiCh
twenty or more persons arc employed. and
(b) to any other establishment employing twenty or
more persons or class of such establishments which the
Central Government may, by notification in the Official
Gaz.cttc, specify in this behalf :
Provided that the Central Government may,
after giving not less than two months' notice of its
intention so to do, by notification in the Official
Gaz.cttc, apply the provisions of this Act to any
309
A
B
c
D
E
F
G
H
310
A,
B
c
D
E
ll
G
H
SUPREME COURT REPORTS
[1971] SUPP. s.c.R.
establishment employing such number.of persons less
than fifty as may be specified in the notification."
Sub-Section 4
"Notwithstanding anything contained in sub-section
(3) of this section or sub-section (I) of section 16, where
it appears to the Central Government, whether on an
application made to it in this behalf or otherwise, that the
employer and the majority of employees in relation to any
establishment have agreed that the provisions of this Act
should be made applicable to the establishment it may
by notification in the Official Gazette, apply the pro"isions o.f this Act to that establishment."
Sub-Section 5
"An establishment to which this Act applies shall
continue to be governed by this Act notwithstanding that
the number of persons employed therein at any time falls
below twenty ;
Provided that where, for a continuous period of
not 111$S than one year the number of persons employed therein has been less than fifteen, the employer
in relation to such establishment may cease to give
effect to the provisions of this Act and any scheme
framed thereunder; with effect from the beginning of
the month following the expiry of the said period of
one year, but he shall, within one month of the date
of such cessation, intimate, by registered post, the
fact thereof to such authority as may be specified by
appropriate Government in this behalf."
The original Act was applicable to establishments which . were
factories engaged in the ~ix industries specified in Schedule I but
as a result of persistent demands for extension of provident fund
benefits to all industrial workers, the Act was amended in 1956
by Act 94 of 1956 so as .to enabl,e its extension to other establishments as well. · Earlier,. it may be pointed out, it was amended
in 1953.
It is unnecessary to give the details· of the various
amendments.
We now turn to the relevant definition clauses contained in
Section 2. These definitions are subject to the context providing
otherwise.
In Clause (f) "employee" is defined to mean any
person who is employed for wages ·it! any· kind of work manual
or otherwise . in or in connection with the work of an establishment and whci gets his wages .. directly or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment. Clause
P. F. coMMR. V. l!Allll!AllAN (Dua, J.)
(h) defines "Fund" to mean the provident fund established under
a Scheme.
"Member" is defined in Clau,se (j) to mean a member
of the Fund and "Scheme" is defined in Ciause (I) to mean a
scheme framed under the Act. Section 5 provides for the framing of a scheme called the Employ~es' Provident Fund Scheme
by the Central Government. · Section 6 makes provision for contribution by the employer and the employee to the Fund. Section
14 provides penalties for evasion of payments under the Act or
the Scheme.
Section 16 which excliJdes from the applicability of
,the Act establishments belonging to Government or local authority and also infant factories, reads :
·
"16 .. Act not to apply to establishments belonging to
Governmimt or local authority and also to infant industries,:
This Act shall not apply.-:.
(a) to any establishment registered under the Cooperative Societies Act, 1912, or under any other law
for the time being in force in any St~te relating to cooperative societies, employing less than fifty persons
and working without the aid of powers; or
(bfto any other establishment·employing fifty or
inort persons or twenty or more; but Jess than fifty,
p~rSons until the expiry of three years in' the case of
the former and five Years in the case of the latter,
frmri the date on' which the establishment is, or has
been. · stt up.
ExplaliatiOn.-For the removal of doubts, it is hereby declared ·that an establishment shall not be deemed to
be newly' set up merely by reason of a change in its location.
(2)1f the Central Government is of opinion that
having regard to the financial position of any class of
establishment or other circumstances of the case, it. is
necessary or expedient so to do, it may, by notification .in
the Official Gazette, and subject to such conditions as may
be specified in the notification, exempt that class of establishments from the operation of this. Act for such period
as may be specified in the notification.''
Section 17. invests in tile appropriat~ ·Government power to exempt
certain establ.ishments f;I;<>m the opt;rati.on of all .or any of. the
provisions of any scheme. Section 19-A .vests in the Central Gov·
ernment power to remove .difficulties by making necessary. provision or giving directions not inconsistent with the provisions of
311
A
c
D
E
F
G
H
312
A
B
c
D
E
F
G
H
SUPRIME COURT RIPORTS
(1971] SUPP. S.C.R.
the Act.
The order of the Central Government made under Section 19-A for removing doubts and difficulties is clothed with
finality.
The narrow question which directly arises for our consideration is whether Clause (b) of su~tion (3) of Section I when
it speaks of the establishment employing 20 or more persons means
that the person so employed may be employed by the establishment for any purpose whatsoever and for however short a duration or that the employment must be for some minimum period in
the establishment.
The language used in the clause does not give
any clear indication.
We have, therefore, to construe this word
in the light of the legislative scheme, the object and purpose of
enacting this clause and the ultimate effect of adopting one or the
other construction.
The relevant sections of the statute have
already been reproduced.
Section 16 which has already been set out in extenso seems lo
us to throw considerable light on the point raised.
It may be
recalled that this section excludes from the applicability of the
Act establishments belonging to the Government and to local
authorities and infant establishments.
It is, therefore, obvious
that this Act is intended to apply only where an establishment has
attained sufficient financial stability and is prosperous enough to
be able to afford regular contribution provided by the Act. Contribution by the employer is an essential part of the statutory
scheme for effectuating the object of inducing the workmen to
save something regularly.
The establishment, therefore, must
possess stable financi~I capacity to bear the burden of regular
contribution to the Fund under the Act.
In this connection it may
be recalled that by virtue of Section 1 (5) an establishment to which
the Act is applied continues to be governed by the Act notwithstanding that the number of persons employed by it at any time
falls below the required number.
This liability to be governed by
the Act ceases only if the terms of the Proviso to Section 1(5) are
complied with.
The financial capacity of the establishment to
bear the burden must, therefore, have some semblance of a
reasonably Jong term stability.
In other words, the employment
of requisite number of persons must be dictated by the normal
regular requirement of the establishment reflecting its financial capacity and stability.
It, therefore, follows from this that the number
of persons to be considered to have been employed by an establishment for the purpose of this Act has to be determined by taking
into ac!l:ount the general requirements of the establishment for its
regulai work which should also have a commercial noxus with
its general financial capacity and stability.
This seems to us to
be the correct approach under the statutory scheme.
P. P. coMMR. v. HARltlARAN (Dua, J.)
To ad:e<le to the appellant's argument would lead to some
startling consequences.
By way of illustration, if for the purpose
of extinguishing accidental fire an establishment is compelled to
employ a few persons for about a couple of hours, even then, however weak and 1U1stable its general financial capacity, the establishment would be covered by the Act and would have to contribute towards the provident fund for the benefit of its regular
·employees, of course, excluding those whose services were utilised
for a short while for extinguishing the tire.
In this illustration we
are assuming that the employees would have no objection to being
governed by the Act.
This, in our opinion, could never have
been the intention of the legislature. Similarly, we find it difijcult
to impute to.the legislature an intention to exclude from the application of the Act an establishment which regularly employs for
its general business the required number of persons for a major
part of the year, say, for 360 days every year, merelyi because the
employment of the required number does not extend to full one
year.
Both the ~xtreme views, the one canvassed on behalf of
the appellant and the other postulated in the observation of the
·mgh Court that the required number of persons must continuously
work in the establishment for one year, do not conform to the
·scheme and object of the Act and are, therefore, unacceptable.
Considering the language of Section I (3) (b) in the light of
·the foregoing discussion it appears to us that employment of a
few persons on account of some emergency or for a very short
·period necessitated by some abnormal contingency which is not a
Tegular feature of the business of the establishment and which does
·not reflect its business prosperity or its financial capacity and stability from which it can reasonably be concluded that the establish-
·ment can in the normal way bear the burden of contribution to-
. wards the provident fund under the Act would not be covered by
this definition.
The word "employment" must, therefore, be construed as employment in the regular course of business of the
·establishmen&; such employment obviously would not include employment of a few persons for a short period on account of some
passing necessity or some temporary emergency beyond the control
of the company.
This must necessarily require determination of
the question in each case on its own peculiar facts. The approach
pointed out by us must be kept in view when determining the
question of employment in a given case.
The appellant's learned counsel argued that in the present case
the respondent bas to employ a few persons every year regularly
from June to September for supplying water ti> the hotel because
of failure of rains.
This, according to him, would be a regular
employment and the High C'.ourt was wrong in holding to the
<contrary. . There is no finding of the High Court to this effect and
313
A
B
c
D
E
F
G
H
314
A
B
c
SUPREME C\)URT REPORTS
(1971) SUPP. S.c;.R.
indeed no attempt was made. before us also to substantiate this
bald assertion.
We are, therefore, iinable to accept this conten·
tion on the pri:sent record.
The general approach of the High
Court to the problem raised in this case seems to us to be, broadly
speaking, correct ; so is its final conclusion.
The only ohserva·
ti on of the High Court which required consideration is that the
sub-section in question contemplates the rcqujred number. of per·
sons to work in the establishment continuously for one year. On
this point we have clarified .the legal position.
As the High Court
has dismissed the writ petition after clarifying the pofuts of law
raised leaving it to the appropriate authority to• finally decide the
controversy on a consideration of all the facts and .cU:cumstances
we do not propose to say anything more in. this appeal which ha&
been heard ex parte.
With the; aforesaid. clarification of the legal
position we dismis~ this ap~I, · As .there iS nh representation
on behalf of the respondent there will . be no order a~ to costs.
G.C.
Appeal dismissed.