# R. RAMAKRISHNA RAO v. ~"' ~ "'"· OF KERAl.,l\ ;~;. ~ :: :!3, 1968

- **Citation:** [1968] 2 S.C.R. 819
- **Court:** Supreme Court of India
- **Decided:** 1965-01-11
- **Case number:** Criminal Appeals Nos. 94 of 1965
- **Bench:** M. Hidayatullah, K. S. Hegde
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/r-ramakrishna-rao-v-of-keral-l-3-1968-4242
- **Pages:** 4

## Headnote

Employees Provident Funds Act (19 of 1952), s. 1(3)(b) ands. 16
(l)(b)-Proprietor of hotel starting new hotel-Number of emplo.vees
reaching twenty-Whether employer can claim exemption from appUca·
tlon of Act for 5 y•ars.'
The appellant started running a hotel in 1948. In 1949 he started a
seocnd hotel and in 1959 a third in the same place.
On the addition of
the 3rd hotel the number of employees reached t1:0 figure 20.
On the question whether, even if the three hotels were taken together
as one establishment, the proprietor could not .' ";' ''r,der s. 16(1) (b)
of the Employees Provident Funds Act, 1952, exe1~1pti0": (r!1IT· the appJica~
tion of the provisions of the Act for a period of five y<ars from 1959.
HELD : The period should be counted only from 1948, when the
establishment was first set up.
Under s. 1(3)(b) the Act applies to establishments employing 20 or
more persons. The word 'employing' only describes the establishments to
which the Act applies and does not show that there ·should be continuity
of employment of 20 persons for 5 years.
Under s. 16(1) (b), in the
case of a new establishment, the period Of 5 years is counted forward from
the date the e·stablishment is set up but in the case of an existing establishment from the date tho establishment has been set up. The intention in
either case is to give a breathing time to new establishments. [822 C, D,
E-F]

## Text

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R. RAMAKRISHNA RAO
v.
~"' ~ "'"· OF KERAl.,l\
;~;. ~ :: :!3, 1968
(M. HIDAYATULLAH AND K. S. HEGDE, JJ.J
Employees Provident Funds Act (19 of 1952), s. 1(3)(b) ands. 16
(l)(b)-Proprietor of hotel starting new hotel-Number of emplo.vees
reaching twenty-Whether employer can claim exemption from appUca·
tlon of Act for 5 y•ars.'
The appellant started running a hotel in 1948. In 1949 he started a
seocnd hotel and in 1959 a third in the same place.
On the addition of
the 3rd hotel the number of employees reached t1:0 figure 20.
On the question whether, even if the three hotels were taken together
as one establishment, the proprietor could not .' ";' ''r,der s. 16(1) (b)
of the Employees Provident Funds Act, 1952, exe1~1pti0": (r!1IT· the appJica~
tion of the provisions of the Act for a period of five y<ars from 1959.
HELD : The period should be counted only from 1948, when the
establishment was first set up.
Under s. 1(3)(b) the Act applies to establishments employing 20 or
more persons. The word 'employing' only describes the establishments to
which the Act applies and does not show that there ·should be continuity
of employment of 20 persons for 5 years.
Under s. 16(1) (b), in the
case of a new establishment, the period Of 5 years is counted forward from
the date the e·stablishment is set up but in the case of an existing establishment from the date tho establishment has been set up. The intention in
either case is to give a breathing time to new establishments. [822 C, D,
E-F]
CRIMINAL APPELLATE JURISDICTION :
Criminal Appeals
Nos. 94 of 1965.
Appeals by special leave from the judgment and order dated
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January 11, 1965 of the Kerala High Court in Criminal Revi·
sion Petition No. 90, 107 and 108 of 1964.
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B. R. L. Iyengar and A. G. Ratnaparkhi, for the appellant (in
all the appeals)
R. H. Dhebar, for the respondent (in all the appeals).
The Judgment of the Court was delivered by
Hidayatullah, J. The appellant is the proprietor of two establishments called Ananda Bhavan Boarding & Lodging and Hotel Brinda. Palghat. He was convicted by the Special 1st Class Magistrate, Kozhikode on three counts under paragraphs 76(c) and
( e) of the Employees Provident Fund Scheme 1952 read with
s. 14 of the Employees Provident Funds Act, 1952 for having
failed to submit the returns, statements and other documents required by the Scheme in respect of three quarters July to
820
SUPREME COURT REPORTS
(1968] 2 S C.R.
September, 1961, October to December, 1961 and January to
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Ma.rch, 1 962: . He. was fin.ed Rs. 25 on each count.
His application for rev1s1on m the High Court of Kerala was dismissed. He
has now filed these appeals by special leave of this Court.
Ananda Bhavan Boarding & Lodging was started by him on
December 6, 1949 and Hotel Brinda on January 15, 1959. He
had a third establishment which went under the name of Anand
Bhavan started on September 15, 1948 but it was sold by him
in April, 1962. Complaints were filed against him by the Provident Fund Inspector, Trichur on December 16, 1962, alleging
that he had contravened paragraphs 36(2)(a) and (b) and 38
of the Scheme.
Under these provisions he was required to submit
within 15 days of the close of the month a return of the employees
qualified to become members of the Fund for the first time during
the preceeding month together with a declaration of such qualifying employees and to pay to each member his wages in respect
of any period or part of tht period for \Vhich contributions were
payable after deducting the employees' contribution from his
wages which together with his own contribution as well as an
administrative charge were to be paid to a Fund established under
the Scheme.
He was also required to forward to the Commissioner within 15 days of the close of the month a consolidated
statement.
The appellant contended that two employees were
working in the Ananda Bhavan Lodging and 11 members in the
Hotel Brinda. He claimed exemption for five years under the Act.
His further defence was that the three estalilishments formed different units and that 20 persons were not employed in any one
of these places and that even if the three establishments could be
deemed to ~ a single establishment the number of employees
reached the figure (which the Act puts down as the minimum)
after Hotel Brinda was opened in January 1959 and he was entitled to an exemption under the Act for a further period of five
years from January 15, 1959. Lastly, he pleaded that if there
was a doubt on all these points the matter could only be decided
after the doubt was cleared by an order of the Central Government under s. 19A of the Act.
His pleas were not accepted hy
the High Court and the Magistrate and he has raised some of the
contentions before us.
Before we comider the arguments which have been urged before 1ls we may refer to some of the provisions of the Act. The
Employees Provident Fund Act !>.:came law on March 4, 1952
and the scheme was published on September 2, 1952.
A part
of the Scheme became operative from October 31, 1953; other
portions came into operation on subsequent dates .. It was not
contended before us that the relevant part~ of the Scheme were
not in force.
The Act applies to the whole of India and subject
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RAMAKRISHNA V; KERALA (Hidayatul/ah, J.)
821
to the provisions contained in s. 16 of the Act it applies (a) to a
factory engaged in any industry specified in Schedule I in which
20 or more persons are employed and (b) to "any other establishment employing 20 or more persons or class of such establishments which the Government may by notification in the Official
Gazette specify in this behalf". These estal:>lishments come within cl. (b) and are governed by the appropriate notification issued
by the Central Governme)\t. No contention has been raised before
us that the Act and the Scheme were not applicable to the kind
of establishments here. Since the objection is that s. 16 excludes
the establishments for a period we may read that section here :
"16. Act not to apply to certain establishments.-
( I) 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 State relating to cooperative societies, employing less than fifty persons and
working without the aid of power; or
(b) to .any oth~r establishment ·employing fifty, or
more persons or twenty or more, but less than fifty, persons until the expiry of three years ht the case of the
former and five years in the case of the latter, from the
date on which the establishment is, or has been set up.
Explanation.-For the removal of doubt, it is hereby declared that an establishment shall ndt be deemed
to be newly set up merely by reason of a change in its
location.
(2)
F Paragraph 26 (I) (a) of the Scheme shows the classes of employees entitled and required to join the Fund. It reads as follows :-
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"26 (I )(a) Every employee employed in or in connection with the work of a factory or other establishment
to which this Scheme applies, other than an excluded
employee shall be entitled and required' to become a
member of the Fund from the beginning of the month
following that in which this paragraph comes into force
in such factory or other. establishment, if on the date
of such coming into force he has completed one year's
continuous service or has actually worked for not less
than 240 days during a period of twelve months or less
in that factory or other establishment or in any other factory or other establishment to which the Act applies under the same employ,er, or partly in one and partly in
the other."
q .• ')
st:l'Rl!ME COURT REPORTS
[ 1968) 2 S.C.R.
Now the question in this case is that Hotel Brinda commenced only on January 15, 1959 and the number of employees then
exceeded 20 for the first time. Under the provisions of s. 16 an
exemption from the Act and the- Scheme is claimed for five years
and it is submitted no offence was committed because the establishments even if taken together could not be subjected to the
provisions till a period of five years had expired from January 15,
1959.
In support of this argument Mr. B. R. L. Iyengar emphasises
that the use of the participle 'employing' in s. I ( 3) (b) shows some
continuity of employment of 20 persons and not the first point of
time when that number is rearhed. He contends that it is always
intended that a period of 3 or 5 years, as the case may be, must
elapse before the provisions o' the Act and the Schemes are made
applicable.
This is an ingenious way of putting the matter but
is not admissible. The language of s. 16 (I )(b) is very precise.
The last thirteen words of the clause 'from the date on which the
establishment is or has been set up', show both cases where the
establishment is new and where the establishment is old.
The
word 'is' shows that a new establishment is meant and the words
'has been' show that the establishment existed before the number is reached.
If it was intended to apply the clause to new
establishments the words 'is set up' would have been sufficient.
The construction sought to be placed would render the words 'has
been' otiose. Further the scheme of Paragraph 26 quoted earlier
relates to a period of service and this qualifying period may be
in the past as well a. in the future.
The intention behind s. 16
read with paragraph 26 quite clearly shows that the period is intenJed to give a breathing time to new establishments. That reason does not hold when the establishment is already old and well
founded.
The use of the participle is therefore immaterial.
Whether a present perfect tense or a participle be used the meaning is the same. Clause (b) of s. I ( 3) which uses the participle
and clause (a) of the same section which employs the present
perfect tense both merely describe the establishments and convey
no different meanings.
The conclusion of the High Court was
thus right. The appeals fail and will be dismissed.
V.P.S.
Appeals dismissed.
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