# THE ASSOCIATED INDUSTRIES (P) LTD v. ·THE REGIONAL PROVIDENT FUND COMMISSIONER, KERALA TRIV ANDRUM

- **Citation:** [1964] 2 S.C.R. 905
- **Court:** Supreme Court of India
- **Decided:** 1964
- **Case number:** CIVIL APPELLATE jURlSDICTroN : Civil Appeal No. 324 of 1962
- **Bench:** P. B. Gajendragadkar, K. N. Wanchoo, K. C. Das Gupta, J. C. Shah, N. Rajagopala Ayyangab
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-associated-industries-p-ltd-v-the-regional-provident-fund-commissioner-2857
- **Pages:** 10

## Headnote

Provident
Fund-Compo•ite factory--Two independent
induPtri .. -One as Jailing under the schedule- Whether Eatabliahment-The Employeea' Provident Funds Act, 1952 (19.of
1952), ••· 1 (3) (a) 2,(g) & (i), Schedule I.
The appeliant runs a tile factory and an engineering
works al Qμilon. These two industries are indepedenl of each
other, but they are carried on i/y the same company and on
the same premises. The tile factory was started in .1943 and
the engineering works in 19!'10. The engineering industry was
included in Schedule I of the Act and it employed only 24
workers, whereas the . tile industry employed more than 50.
The license issued- to the appellant under the Factories Act,
1948, was for the entire premises. The appellant moved a
writ petition in the High Cotirt in which he alleged that its
factory did not attract the provisions of s. I (3) (a) of the
Employees' Provident Funds Act 1952. The writ petition
was dismissed with costs. It is against this order that the
appellant has come to this Court.
Held
(i) tllat a factory is an · "establishment" within the
meaning of s. 1 (3) (a) of the Act if it satisfies the requirements
of the section, namely, (I) that its one or all industries fall
under Schedule I of the Act, (2) that it satisfies the numerical ·
strength as prescribed under the section.
(ii) that the character of the dominant .or primary
industry will determine the question of the application ofa. 1
(3) {a) if a factory carries on both the dominant and
subsidiary industries.
·
(iii) That if the factory runs more industries than one
all ?f which arc independent of uch other, s. I '(3) (a) will
J96!J
. AprU 9
1963
AuociaJ1tl ltulustrW
(Pl Lid.
v,
RtgiotUJ{ Protidnit
F1md ComrnissUrnr,
ll 1ral4 Trioatulmn
906
SUPREME COURT REPORTS [1964] VOL.
apply to the factory even if one or more, but n.>t all, of the
industries run by it fall under Shedule l.
(iv)
that neither the tile indust1y was dmninant nor
the engineering industry was subsidiary; rather
both the
industries were independent of each other.
(v)
that the factory of the appellant will be deemed to
be a composite factory and the provisions of s. I (3) (a) will
be attracted as one of its industries i. e. engineering industry,
falls under Schedule I.
TM Regional PtoviMnt Fund Commi•irioner, Btnnbay v.
Shree Kriahna Metal Manufacturing Co.
Bhandara [1962]
Supp.3 S. C. R. 815, approved.
CIVIL APPELLATE jURlSDICTroN : Civil Appeal
No. 324 of 1962.
Appeal from the judgment and decree dated
August 8, 1960 of t.he Kcrala High Coi:rt, io 0. P.
No. 97 of 1953.
G. B. Pai, J. B. DaUn.chanji, 0. 0. Mathur
and Ravimder Narain, for the appellant.
S. V. Gupte, Additi-Onal Solicitor.General of
India,
R.
Ganapathy Iyer, P. D. Menon and
R.H. Dhebar, for the respondent.
1963.
April 9.
The Judgment of the Court
was delivered by
GAJENDRAOADKJ.R J.-.'..The
short
question
which arises io this apl'Cal is whether the factory
run by the appellant, the Associated Industries· (P)
· Ltd., Qμlion, falls within s. l (3) of the employees'
Provident Funds Act, 1952 (No. 19 of 1952) (here·
inafter called
'the Act'). The appellant is a
Company which runs a tile factory and an engineer-
. ing works at Qpilon. The tile factory began its
career in July, 1943, and the engineering works. in
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•
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2 S.C.R.
SUPREME COURT REPORTS · 907
September, 1950. It is common ground· that these
/96J
two industries are separate and distinct and that
·
ed
C
d
Asjo(iatitl lndi.utri11
they are carri
on by the same ompany an on
\P) Ltd.
the same premises. It is also common ground that
•·
Regional PrOvitl1ril
a. licence issued under the Factories Act, 1948, has .. Fund Lommissinrur
been issued to the appellant . for the entire premises
K"at. Triva1idrom
and it is under this licence that the said premi.ses are
Gajmdrat•dk•• J.
allowecl to be used as one factory under the said Act
and the rules framed thereunder.
It appears that the respondent; the Regional
Provident Fund Commissioner, Vanchiyoor, Trivandrum, intimate

## Text

2 s.c.R.
SUPREME COURT REP9RTS
905
THE ASSOCIATED INDUSTRIES (P) LTD.
v.
·THE REGIONAL PROVIDENT FUND
COMMISSIONER, KERALA TRIV ANDRUM
(P. B. GAJENDRAGADKAR, K. N. WANCHOO,
K. C. DAS GUPTA, J. C. SHAH and
N. RAJAGOPALA AYYANGAB JJ.)
Provident
Fund-Compo•ite factory--Two independent
induPtri .. -One as Jailing under the schedule- Whether Eatabliahment-The Employeea' Provident Funds Act, 1952 (19.of
1952), ••· 1 (3) (a) 2,(g) & (i), Schedule I.
The appeliant runs a tile factory and an engineering
works al Qμilon. These two industries are indepedenl of each
other, but they are carried on i/y the same company and on
the same premises. The tile factory was started in .1943 and
the engineering works in 19!'10. The engineering industry was
included in Schedule I of the Act and it employed only 24
workers, whereas the . tile industry employed more than 50.
The license issued- to the appellant under the Factories Act,
1948, was for the entire premises. The appellant moved a
writ petition in the High Cotirt in which he alleged that its
factory did not attract the provisions of s. I (3) (a) of the
Employees' Provident Funds Act 1952. The writ petition
was dismissed with costs. It is against this order that the
appellant has come to this Court.
Held
(i) tllat a factory is an · "establishment" within the
meaning of s. 1 (3) (a) of the Act if it satisfies the requirements
of the section, namely, (I) that its one or all industries fall
under Schedule I of the Act, (2) that it satisfies the numerical ·
strength as prescribed under the section.
(ii) that the character of the dominant .or primary
industry will determine the question of the application ofa. 1
(3) {a) if a factory carries on both the dominant and
subsidiary industries.
·
(iii) That if the factory runs more industries than one
all ?f which arc independent of uch other, s. I '(3) (a) will
J96!J
. AprU 9
1963
AuociaJ1tl ltulustrW
(Pl Lid.
v,
RtgiotUJ{ Protidnit
F1md ComrnissUrnr,
ll 1ral4 Trioatulmn
906
SUPREME COURT REPORTS [1964] VOL.
apply to the factory even if one or more, but n.>t all, of the
industries run by it fall under Shedule l.
(iv)
that neither the tile indust1y was dmninant nor
the engineering industry was subsidiary; rather
both the
industries were independent of each other.
(v)
that the factory of the appellant will be deemed to
be a composite factory and the provisions of s. I (3) (a) will
be attracted as one of its industries i. e. engineering industry,
falls under Schedule I.
TM Regional PtoviMnt Fund Commi•irioner, Btnnbay v.
Shree Kriahna Metal Manufacturing Co.
Bhandara [1962]
Supp.3 S. C. R. 815, approved.
CIVIL APPELLATE jURlSDICTroN : Civil Appeal
No. 324 of 1962.
Appeal from the judgment and decree dated
August 8, 1960 of t.he Kcrala High Coi:rt, io 0. P.
No. 97 of 1953.
G. B. Pai, J. B. DaUn.chanji, 0. 0. Mathur
and Ravimder Narain, for the appellant.
S. V. Gupte, Additi-Onal Solicitor.General of
India,
R.
Ganapathy Iyer, P. D. Menon and
R.H. Dhebar, for the respondent.
1963.
April 9.
The Judgment of the Court
was delivered by
GAJENDRAOADKJ.R J.-.'..The
short
question
which arises io this apl'Cal is whether the factory
run by the appellant, the Associated Industries· (P)
· Ltd., Qμlion, falls within s. l (3) of the employees'
Provident Funds Act, 1952 (No. 19 of 1952) (here·
inafter called
'the Act'). The appellant is a
Company which runs a tile factory and an engineer-
. ing works at Qpilon. The tile factory began its
career in July, 1943, and the engineering works. in
•
•
---
•
,,
2 S.C.R.
SUPREME COURT REPORTS · 907
September, 1950. It is common ground· that these
/96J
two industries are separate and distinct and that
·
ed
C
d
Asjo(iatitl lndi.utri11
they are carri
on by the same ompany an on
\P) Ltd.
the same premises. It is also common ground that
•·
Regional PrOvitl1ril
a. licence issued under the Factories Act, 1948, has .. Fund Lommissinrur
been issued to the appellant . for the entire premises
K"at. Triva1idrom
and it is under this licence that the said premi.ses are
Gajmdrat•dk•• J.
allowecl to be used as one factory under the said Act
and the rules framed thereunder.
It appears that the respondent; the Regional
Provident Fund Commissioner, Vanchiyoor, Trivandrum, intimated to the appellant on March IO, 1953,
that the Act as well as •he scheme framed under it
were applicable to the appellant's factory, and so,
the appellant was cal_led upon to deposit in the Sub-"
Office of the Imperial Bank of India the contributions and administrative charges as required by s .. 6
of the Act.
The same requisition was repeated on
March 25, 1953 and April 24, 1953. The appellant
disputed the correctness of the view taken by the
respondent that the appellant's factory ·fell under
the purview of the Act, and so, it refused to comply
with the respondent's requisition. Thereupon, the
respondent wrote to the appellant on June 16, 1953 informing it that appropriate action would be.taken to
compel the appellant to make the necessary deposit
· and submit returns as re<1uired by the Act in caSe it
failed to comply with the notices issued in that
behalf.
At this stage, the appellant moved . the
High Court of Kerala by a writ petition (0. P.
No. 97 /1953) in which it claimed a writ of certiorari
quashing the notices issued by the respondent against
. it, and restraining the respondent from proceeding
· . further in the matter and for other incidental reliefs.
,
The main contention raised by the appellant
before the High Court was that · the appellant's
factory was . not
an
establishment
to
which
s. l (3) of the Act applied. ·The
High. Cpurt
'
AUIXiald /rulwt1i11
(Pl Ltd.
...
JUPnal P•ovid""
Fwd C.....wiomr,
KaaJo TrioaMtvm
9os SUPREME COURT REPORTS[l964] VOL,
has rejected this contention. Then it was urged
before the High Court on behalf of the appe·
Hant that the effect of the notices served
on
the appellant by the respondent was retrospective in
character and it was urged that the said notices
were illegal. This argument was also rejected by .
the High Court. 1he appellant further contended
before the High Court that since for the relevant
period the employees had not made their contributions, it would be inequitable to enforce the notices
against the appellant. The High Court noticed the
fact that it had been conceded by the respondent
that he did not propose to collect the employees'
share or the contribution to the fund for the relevant
period from the appellant, and it held that
the
concession so made was proper and fair and so, there
was no substance in the grievance made by the
appellant that giving effect to the notices served on
it by the respondent would be inequitable and unjust. On these findings, the writ petition filed by
the appellant was dismissed with costs. It is against
this order that the appellant has come to this Court
with a certificate granted by the High Court.
The principal point which is sought to be raised
by Mr. Pai on behalf of the appellant in this appeal
is concluded by a recent decision of this Court in
The
Regional
Provident
Fund
Commissiooer,
Bombay v. (1) Skree Krishna Metal Manufacturing
Co., Bhancfura, and (2) Oudh S?UJar Mills Ltd.(').
It would be noticed that the relevant sections which
"fell to be construed in dealing with the aprllant's
contention are s. 1 (3), s. 2 (g) and (i) an
s. 6 of
the Act. Section 1 (3) (a) provides, inter alia,
that subject to the provisions contained in s. 16, the
Act applies to every establishment which is a factory
engaged in any industry specified in Schedule I and
in which 50 or more persons are ,employed; the
numerical requirement of 50 has been reduced to 20
by an Amending Act of 1960. Section (2) (g)
(I) A.I.a. (11162) 8.C. 1536,
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2 S.C.R..
SUPREME COURT REPORTS
909
defines a 'factory' as meaning any premises, includ·
ing the precincts thereof, in any part of which a
manufacturing process is being carried on or is or·
dinarily so earned on, whether w,ith the aid of
power or without the aid of power; ·ands. 2 (i) de·
fines an 'industry' as meaning any industry specified
in Schedule I. and includes any other industry added
to the _Schedule by notification under section 4.
Section 6 prescribes for the levy of contributions and
deals with other matters which may be provided for
in Schemes;· and in accordance with the provisions
of this section, the Employees' Provident
Fund
Scheme of 1952 has been framed.
In the case of the Regional Provident Fund
Commissioner, Bombay. (1) this Court has held that
s. 1 (3) (a) does not lend itself to the construction that
it is confined to factories exclusively engaged in any
industry specified in Schedule I. It was observed in
that connection that when the legislature has described ·
facto.des as factories engaged in any industry, it
.did not intend that the said factories should be
exclusively engaged in the industry specified in
Sch. I. Consistently with this view, this Court
further observed that the word 'factory' used in
s·. I. (3) (a) has a comprehensive meaning and it
includes premises in which any manufacturing process
is being carried on as described in the definition,, and
so the factory engaged in any industry specified in
Sch. I does not necessarily mean-a factory exclusively
engaged in the particular industry specified in the
said-Schedule. In construing the scope of s. l (3)(a)
this Court held that composite factories came within
its purview and that the fact that a factory is engaged
in industrial activities some of which fall under the
Schedule and some do not, will take the factory out
of the purview of s. I (3) (a).
Having dealt with this aspect of the matter,
this Court proceeded tn consider the question as to
(I) A I. R. 1962 S. C. 1536.
/)6!
Associottd /ndoslri#
(P) Ltd.
v.
Rltional Ptouid.•t
Funtl r.ommim.,,,
)f1101" Ttivond"""
Gaje.dra1Milw' J•
\
/96J
Associottl lndustri11
(P), ltd.
••
Rttional ProuUl1nt
/'WJl,CommiJsisnp, .
Knola 1riuJndrum
910 SUPREME COURT REPORTS [1964] VOL.
whether numerical requirement of the employment
of 50 persnns, as the section then stood, applied to
th~ factory o~ to the industry, and it held that the
said test applied not to the industry but to the factory.
Thus, the conclusion W'IS that in order that a factory
~h?uld fall under s. I (3) (a), it must be shown that
It is engaged in any such indmtry as is specified in
Sch. I, and the number of its employees should not
be less than 50.
This decision makes it clear that s. l (3) (a)
is not confined only to factories whkh are exclusively engaged in indu~trial work to which Scli. I
applies, but it also .takes in composite factories which
run industries some of which fall under Sch. l and
some do not.
In order to make the position clear
let us state the true legal position in respect of the
scope of the application of s. l (3) (a) in categorical
terms. If the factory carries on one industry which
falls under Sch. l and satisfies the requirement as to
the number of employees prescribed by the section,
it clearly falls under s. l (3) (a). If the factory
carries on more than one industry all of which fell
under Sch. I and its numerical strengh satisfies the
test prescribed in that behalf, it is an establishment
undtr s. l (3) (a). If a factory runs more industries
than one, one of which is the primary and the
dominant indu<try and the others are its feeders and
can be regarded as subsidiary, minor, or incidental
industries in that· sense, then the character of the
dominant and primary industry will determine the
question as to whether the factory is an establishment
under s.
I (3\ (a) or not. If the dominant and
primary industry falls uudcr Sch. I, the fact that t~e
subsidiary industries do not fall -under Sch. I will
not help to exclude• the application ofs. l (3) {a).
lf the dominant and primary industry does not fall
under Sch. I, but one or more subsidiary, incidental,
minor and feeding industries fall under Sch. I, then
s. l (3) (a) will not apply. If the factory runs more
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2 S.C.R.
SUPREME COURT REPORTS
91 L
industries than one all of which are independent of
each other and constitute separate and distinct
industries, s. I {::!) (a) will apply to the factory even
if one or more, but not all, of the industries run by
the factory fall under Sch. l. The question about
the subsidiary, minor, or feeding
industries can
legitimately arise only where it is shown that the
factory is really started for the purpose of running
one primary industry
and has undertaken other
subsidiary industries only for the purpose of subserving and feeding the purposes and objects of. the
primary industry ; in such a case, these minor indm:
tries merely serve as departments of the primary
industry; otherwise if the industries run by a factory
are independent, or are not so integrated as to be
treated as part of the same industry, the question .
about the principal and the dominant character pf
one industry as against the minor or subsidiary ·
character of· another industry does not fall to be
considered.
·
··'It is in . the light .of this position that we may .
revert to the actual decision in The Regional Provident
F·und Commissioner, Bombay (' ).
In that case,
this Court was . dealing with the cases of Shree
Krishna
Metal Manufacturing Co., and· Oudh
Sugar Mills Ltd.
The Metal Company carried on
four different kinds of activities and it was held that
its industrial activity which fell under Sch. I was nei'
ther minor, nor subsidiary, nor incidental to the other
activities. In other words, the industry which the
company ran and which fell under Sch. I was independent of the other industries conducted by the
Company, and so, it was held that the question
about one industry being subsidiary, minor, or inciclental did not arise. In the result, the Company's
factory was found to fall under s. l (3) (a).
On the other hand, the case of the Oudh Sugar
Mills stood on a different basis. The primary activity·
(I) A. I. R. 1962 S C. 1536.
Associated· lndust,i1s
(P) .Ltd.
•.
'
Regicmal Provident
Fund.Commissioner,.
E1rala .. Trivandrtnn
Gojendra111dkar. :1 ,. .
190
Asi.ci.t,,J 1.mum.s
\P) Ltd,
v.
. R1fional Prooi/1111
FuU Cownisfionn,
K11"'4 TriCHmJ,'1111t
912
SUPREME COURT REPORTS [1964) VOL.
of the mills was the manufacture of hydrogenated
vegetable oil named 'Vanasada' and
its by-pro.
ducts, such as soap, oil.cakes, etc.
It appeared that
a department of the Mills manufactured containers
and this part of the industrial activity of the Mills fell
under Sch. I. EV"idence, however, showed that the
fabrication of the containers had been undertaken by
the Mills only as a feeder activity which was integrally connected whith its primary
business of
producing and marketing vegetable oil, and since the
primary business was outside Sch. I, the factory as a
whole was held to be outsides. l (3) (a).
It is true that since this Court dealt with the
two resprctive cases of the Company and the Mills
in one ju<!gment, the test as to the principal character
of the mdustrial activity of one industry in relation
to the character of the minor industry came to be
considered ; but the application of the said test
b~came necessary essentially because of the case of
the Oudh Sugar Mills. In the case of the Company.
however, the several activities were not minor or
subsidiary, but were independent, and it wa~ held that
the factory of the company fell under s. 1 (3) (a).
Therefore, in our opinion, there is no scope for the
argument in the present case that the engineering
industry which the appellant runs is not the primary
or dominant industry but the manufacture of tiles is.
Mr. Pai a1tempted to argue that though engineering
industry run by the appellant's factory falls under
Sch. I, it employs only 24 workers whereas the tiles
industry employs more than 50.
He also relied on
that fact that the tiles factory was started in 1943
and the engineering works in l 950, and his argument
was that judged in the light of the fact that the tiles
industry was started first, as well as considered by the
application of the test of the strength of the employees
working in the two indusfries,tiles industry should be
treated to "be the main, dominant and primary
industry of the factory, and so, the factory, as li
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;
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2 S.C.R.
SUPREME COURT REPORTS
913
whole, should be held to be outside s. l (3) (a).
In our opinion, this argument is plainly untenable.
If the tiles industry and the engineering industry are
independent of each ·other, then no question arises as
to which is principal and which is subsidiary.
As
soon as it is shown that the factory is carrying on
two industries independent of each other one of
which falls under Sch. I, it becomes a composite'
factory to which s. l (3) (a) applies.
When s. l (3)
(a) requires that the factory should be engaged in
any industry specified in Sch. -I, considerations as to
whether the industrial activity is major or minor can
arise only where some activities are dominant and
others are of the nature of feeding activities, but not
otherwise. Where the industrial activities are indepen·
dent and the factory is running separate industries
within the same premises and as part of the same
establishment and under same licence, it is difficult
to accept the argument that in dealing with such a
factory, enquiry would be relevant as to which of
the industries is dominant and primary, and. which
is not.
Therefore, in our opinion, the High Court
was plainly right in rejecting the appellant's- case
that its factory did not attract the provisions of s. 1
(3) (a) of the Act.
Mr. Pai wanted to contend that if the appellant's factory is treated as falling under s. l (3) (a),
complicatiom may arise by reason of the fact that
the rate of contribution initially prescribed by s. 6
has been amended in. 1962 by the Amending AGt
No. 48 of 1962. Section 6 of the unamended Act
provides, inter alia, that the contribution to be paid
by the employer to the fund shall be 6-1/4% of the
basic wages,
dearness allowance and retaining
allowance, if any, for the time being payatle to each
of the employees, and the employees' contribution
shall be equal to the contribution payable by the
employer in respect of him.
This section further
provided that the • employee was competent to
1963
A ~sociated lndustri e J
(P) Ltd.
v.
Regional Providtnl
Fufld Commissioner,
Kera/a Tiivtmdrum
Gaj1ndragcdkar J.
1963
Assotialed lnJuslri1s
(P) Ltd.
v.
Rtgior.al Protidenl
Fund Commissioner,
Kerala T rivandr1Jnt
914
SUPREME COURT REPORTS [1964] \Tot.
make a higher contribution not exceeding 8' and .
~me-third . per c~nt of his emoluments specified·
m the said. section.
By the amendment made in
J!)6t, this rate has been enhanced to b°;;, m rts·
pect of any establishment or class of establishments
which the Central Government, after making such
enquiry as it deems fit, may by notification in the
Official Gazette specify. We were told that in regard
to the engineering industry, this amended sub-section
has been extended by a notification, and Mr. Pai's
apprehension is that if the factory of the appellant
is held to be an establishment to which s. l (3) {a)
applies on the ground that i\ is a composite factory
which runs several industries one of which falls under
Sch. I, it is likely that the increased rate may be
made applicable to the factory as a whole.
We
ought to add that Mr. Pai conceded that subsequent
to the decision of the appellant's writ petition in the
High Court, the tiles industry has also been included
in Sch. I, but the revised rate has been made applicable to it. Mr. Pai contends that if the factorv is
treated as falling under s. l (3) ( l ), a distinction
should be made in the different industries run by
the factory for t"e purpose of calculating the contribution of the employer to the Provident Fund. We
do not propose to deal with this contention in the
present appeal. That is a matter which may well
have to be decided by the respondent, and it is not
open to Mr. Pai to request this Court to decide such
a hypothetical question in the present proceedings.
The result is, the appeal fails and is dismissed
With COils.
'
Appeal dismissed.
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