JUDGMENT : S.K. Ray, A.C.J. 1. Petitioner No. 1 is a registered partnership firm of which Petitioners 2 to 4 are partners. They carry on business of purchase and sale of cocoanuts on wholesale basis since 11-6-1961. 2. On the basis of a report submitted by the provident Fund Inspector, Shri. K.C. Ray, the opposite party addressed a letter dated 31-7-1968 to the Manager of the Petitioner's firm, telling him that Employee's Provident Funds Act, 1952 (hereinafter referred to the Act) and the Schemes framed there under (hereinafter referred to as Schemes), are applicable to the firm, and instructing him to submit returns in prescribed forms as required by the Scheme, before the 25th of August, 1968. This letter is appended to the writ application as Annexure-1. In a reply dated 7-8-1968 to this letter, the partners of the firm asserted that the Act, read with Government notification No. G.S.R 346 dated 7-3-1962 is not legally applicable to business of the firm and that the total number of permanent employees employed in the firm was only 10 in number and that the number of daily labourers employed at different times never exceeded 9 at any time. They also invited the opposite party to make a local inspection and hold a spot enquiry for the purpose of verifying the truth of these assertions. The opposite party in his reply dated 4-9-1968 to the Petitioner No. 3 (Annexure-3). reiterated his original stand as to the applicability of the Act and the Scheme and referred to an enquiry report as showing that the firm had employed 29 employees. The Petitioners were also warned therein that unless action was taken as required in Annexure-I, legal & action would be taken against them. The report referred to was a statement in writing obtained by Inspector Shri K.C. Ray from the Manager of the firm. Action was taken by opposite party obviously on the basis of this statement of the firm's Manager coupled with the report of the Inspector, Shri K.C. Ray. The Petitioners promptly replied on 4-9-1968 to the opposite party (Annexure-4) emphatically asserting that the statement submitted by their Manager Shri Biswanath Rath to which reference has obviously been made in Annexure-3 was made unauthorisedly and against prevailing facts and with a view to further his selfish interests 88 by application of the Act and the Scheme, he would stand to gain financially. They repeated their invitation to opposite party to hold a local enquiry and to sorutinise the records maintained in the office of the firm. It appears from Annexure-5 dated 12-3-1969, Annexure-7 dated 29-10-1969, and Annexure-8 dated 16-12-1969 that despite the invitation of the Petitioners to opposite party to hold an enquiry himself, it was held by & Provident Fund Inspector who determined the amount payable, i.e. to say, a sum of Rs. 1726/- and Rs. 51.89, to the Employees Funds Accounts I and II, for the period of January 1968 to October 1968, and the Petitioners agreed to pay, and to implement the Scheme. The agreement referred to in Annexure-8 is contained in Annexure-7 dated. 29-10-1969. Prior to this alleged agreement, it appears from Annexure-B that another Provident Fund Inspector Shri G. Swain had also made a local inspection and examined the records of the Petitioner's firm and submitted a report dated 22.6.1969. This report throws considerable doubt on the correctness of the earlier report of the Inspector Shri K.C. Ray, and recommends to the opposite party to make further check of the records of the firm after consulting Provident Fund Inspector Shri K.C. Ray, in order to determine the liability of the firm under the Act. There is nothing in the counter of the opposite party to show that the Commissioner himself held any enquiry at all and checked the records of the firm. There is also no documentary evidence proving that the opposite party himself determined the amount u/s 7-A, of the Act of the after holding an enquiry. Para of the counter, coupled with Annexure-7, merely indicates that the opposite party visited the firm on 29-10-1969 and advised the Petitioners to implement the Scheme and that he approved the determination of the amount due from the firm under the Act made by the Inspector. Neither the Petitioners nor its Manager were signatories to this document, in token of the fact that the Petitioners were beard in the matter of the determination of the amount or the applicability of the Act. 3. Neither the Petitioners nor its Manager were signatories to this document, in token of the fact that the Petitioners were beard in the matter of the determination of the amount or the applicability of the Act. 3. In context of the foregoing facts the first contention advanced on behalf of the Petitioners is that the requirement of the Section 7-A, of the Employees' Provident Funds Act, 1952 has not been complied with, and consequently, the Petitioners are under no liability to implement the Scheme by way of submitting return And depositing the dues as determined to be payable u/s 7-A of the Act. The demand and by opposite party in Annexure-6 Is thus unwarranted in law. I will now proceed to extract the relevant portion of Section 7-A, of the Employees Provident Funds Act: 7-A(1) The Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, or any Regional Provident Fund Commissioner may, by order, determine the amount due from any employer under any Provision of this Act or of the Scheme and for this purpose may conduct such inquiry as he may deem necessary. (2)xxx (3) No order determining the amount due from an employer shall be made under Sub-section (1), unless the employer Is given a reasonable opportunity of representing his case. (4) An order made under this section shall be final and shall not be questioned In any Court of law. It has been laid down In the case of T.R. and Company v. R.P.F. Commissioner 1971 (2) C.W.R. 417 that- The Regional Provident Fund Commissioner who is authorised u/s 7-A, of the Act to determine the amount due from any employer, has to conduct an enquiry in the manner laid down in that section and record his clear findings as to whether (1) the establishment is one which comes within the purview of the notification of 7th March, 1962 and (2) whether there are twenty or more persons employed in the establishment. It should also appear from the order on the basis of what materials the Commissioner has assessed the liability of the establishment. The very width of the power given u/s 7-A, of the Act imposes the liability on the authority concerned to exercise that power in a careful manner so that the result may not be arbitrary. It should also appear from the order on the basis of what materials the Commissioner has assessed the liability of the establishment. The very width of the power given u/s 7-A, of the Act imposes the liability on the authority concerned to exercise that power in a careful manner so that the result may not be arbitrary. A Division Bench of this Court has held In the case of Chetram Agarwalla v. The Regional Provident Fund Commissoner Orissa 1971 (2) C.W.R. 838 that the order is to be a speaking order, namely that it should indicate the basis of the calculation on which the quantum of provident fund payable was determined, that the proceeding under the Act is quasi-judicial and that the principle of natural justice is to be strictly followed. Failure of the authorities to give reasonable opportunity of being heard amounts to non observance of the principles of natural justice. Another Division Bench of this Court has held in case of Hazi Ali Mohammed Oswan and Ors. v. The Regional Provident Fund Commissioner Orissa Bhubaneswar 1972 C.L.T. 571 that the determination of the liability is a condition precedent to the making of an order u/s 7-A of the Act and that the exercise of the power under that section should be made in a careful manner so that the result may not be arbitrary. There is nothing on record, as already stated, to indicate that the opposite party held an enquiry as to applicability of the Act or passed any order determining the amount due from the Petitioners under any provision of the Act. There is not even an assertion in the counter filed by the opposite party that he discharged any part of the statutory duty enjoined upon him u/s 7-A of the Act. The second report of another Provident Fund Inspector clearly impeached the correctness of the report of the first Inspector, Shri K.C. Ray (Annexure-A) and the statement made by the Manager of the firm on the basis of which the applicability of the Act was assumed. Enquiry u/s 7-A of the Act is an obligatory step, and that enquiry must relate not only to the determination of the amount but also to the applicability of the Act when it is questioned. That enquiry must be followed by an order of the Provident Fund Commissioner. Enquiry u/s 7-A of the Act is an obligatory step, and that enquiry must relate not only to the determination of the amount but also to the applicability of the Act when it is questioned. That enquiry must be followed by an order of the Provident Fund Commissioner. Far from there being any Prima facie evidence of the opposite party having discharged his duty u/s 7-A of the Act, there is no order as envisaged under that section in existence. On the contrary, Annexure-7 indicates that the determination of the amount due was made by somebody else other than Provident Fund Commissioner which is alleged to have been agreed to by the opposite party. This agreement, assuming it to be a fact, would not make such determination the determination of the Commissioner nor would it absolve the latter of its statutory duty. Section 7-A does not authorise the Commissioner to delegate his powers there under. Further, there is no credible material on record to indicate that the Petitioners were given ample opportunity to be heard or place materials in support of their stand, at any enquiry held u/s 7-A of the Act. In this application, the Petitioners dispute not only the application of the Act to their business but also the amount determined as payable u/s 7-A Both the matters are adjudicatable under this section and the exclusive jurisdiction to determine the same vests in the Commissioner. This appears to be clear on the plain reading of that section. It is also supported by a decision rendered in the case of Gunvantrai Harivallabh Jani Vs. Regional Provident Fund Commissioner, Employees' Provident Fund, M.P., Indore, . For the aforesaid reasons we are satisfied that the opposite party has neither conducted any enquiry nor passed any order determining the amount payable as envisaged u/s 7-A of the Act. When the correctness of the Managers statement Annexure-A has been challenged by the Petitioners, they should also have been given an opportunity to prove the falsity of that statement. It does not appear that any such opportunity has been given to the Petitioners. When the correctness of the Managers statement Annexure-A has been challenged by the Petitioners, they should also have been given an opportunity to prove the falsity of that statement. It does not appear that any such opportunity has been given to the Petitioners. In the circumstances, we are satisfied that neither the Act nor the Scheme made there under can now be held to be applicable to the partnership business and that the Petitioners are, thus not liable either to pay any amount as per Annexure-7 or to submit returns as required by the Act and the Scheme. We direct the opposite party not to apply the provision of the Act or any Scheme framed there under to the Petitioners business or to demand any payment pursuant thereto from them, until he exercises his power fully u/s 7-A and passed a lawful order there under both in regard to the applicability of the Act and the scheme and determines the sum payable there under. 4. Another contention was raised that when there was a controversy as to the applicability of the Act and the Scheme framed there under to the Petitioners, the opposite party should have referred the matter to the decision of the Central Government u/s 19-A of the Act. Since that has not been done, no demand can be made u/s 7-A The question is whether the Commissioner is bound to refer to the Central Government in all cases where a controversy is raised even though he himself does not find any difficult, in reaching a conclusion as to matters in controversy arising u/s 7-A of the Act. There are decisions holding that where the Provident Fund Commissioner does not find any difficulty in coming to his conclusion with regard to the matters contained in Clause (i) to (v) of Section 19-A of the Act, or in giving effect to any provision of the Act, be need not make a reference to the Central Government because that section does not make a reference obligatory upon him in all oases of dispute. It is only when be feels any difficulty that he is required to make a reference. It is only when be feels any difficulty that he is required to make a reference. The connected question which also arises under the section is whether it would be open to the employer of an establishment or owner of a factory to make a reference to the Central Government, if the Provident Fond Commissioner refuses to do so. The section does not say who should refer the dispute to the Central Government. It is, however, not necessary for us to decide these issues, since, on the first point, we agree with the Petitioners. 5. In the result, therefore, we allow this application and Issue directions to the opposite party as Indicated In paragraph 3 above. There will be no order for costs. B.K. Patra, J. 6. I agree.