Judgment :- 1. The petitioner is the North Malabar Gram in Bank. It was established on 12-12-1976 under the Regional Rural Banks Act, 1976 (Act 21 of 1976). The effect of S.16 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 is that the Act would not apply to an establishment such as the petitioner-Bank for a period of three years from the date on which it was set up. That means the petitioner was exempt from any liability to pay any amount towards provident fund for the period between 12-12-1976 and 11-12-1979. However, notwithstanding this exemption (which is generally referred to as infancy protection) the petitioner on the basis of certain directions from the Reserve Bank of India and the Central Government made deductions from the salaries payable to its employees with a view to crediting them to its own provident fund scheme under contemplation. However, no such scheme was adopted by the Bank. But the amounts deducted from the salaries of the employees towards the contemplated provident fund scheme stood to their credit. These amounts were deducted during the period from 1-12-1978 to 1-12-1979. By the impugned orders Exts. P12 and P14, the respondents have directed the petitioner to transfer these amounts to the Employees' Provident Fund established under S.5 of the Act. 2. The petitioner's counsel Shri. M. Ramachandran contends that the Bank was entitled to the protection of S.16 and was, therefore, not under any obligation to make any deduction from the employees' salaries or to pay the employer's contribution towards provident fund. The Bank did not pay the employer's contribution. The Act did not apply to the Bank at the relevant time and consequently the scheme mentioned under S.5 had no application to the Bank in respect of the sums collected during the period of infancy. The sums were collected in the bona fide belief that the scheme which is not governed by the Act, but which is purely contractual, would be adopted in the best interest of the employees. But the scheme was not adopted. In such circumstances, the only obligation of the Bank is to refund the amounts to the employees from whose salaries they were deducted. 3. Ext. P12 is the order of the Provident Fund Inspector. That order speaks of the contributions made by the employees as well as the employer. But the scheme was not adopted. In such circumstances, the only obligation of the Bank is to refund the amounts to the employees from whose salaries they were deducted. 3. Ext. P12 is the order of the Provident Fund Inspector. That order speaks of the contributions made by the employees as well as the employer. The petitioner is called upon by that order to transfer to the Fund under the Scheme not only the amounts deducted from the salaries, but also its part of the contributions which it would have made had its scheme been adopted. But in Exts. P10 and P14 which are orders of the Regional Provident Fund Commissioner, there is no reference to the employer's contribution. 4. Shri Aziz, appearing for the respondents, refers to S.15(2) and submits that the liability of the employer arises as soon as his establishment falls under the Act and upon that event all amounts seen as accumulations in any provident fund of that establishment to the credit of the employees must stand transferred to the Fund under the Scheme. I agree. 5. S.1(3) which refers to the applicability of the Act, says: "1(3) Subject to the provisions contained in S.16, it applies " This shows that the applicability of the Act is limited by S.16. S.16 says: "16. Act not to apply to certain establishments. (1) This Act shall not apply (b) to any other establishment employing fifty, or more persons or twenty or more, but less than fifty persons until the expiry of three years in 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. ' ....................... Accordingly for the period of exemption, the Act has no application. ' ....................... Accordingly for the period of exemption, the Act has no application. S.15(2) provides: "On the application of any Scheme to an establishment the accumulations in any provident fund of the establishment, standing to the credit of the employees who become members of the fund established under the scheme shall, notwithstanding anything to the contrary contained in any law for the time being in force or in any deed or other instrument establishing the provident fund but subject to the provisions, if any, contained in the Scheme, be transferred to the Fund established under the Scheme, and shall be credited to the accounts of the employees entitled thereto in the Fund." The object of this provision is that as on the date on which the Act becomes applicable to an establishment, any amount in any provident fund of that establishment standing to the credit of the employees shall be transferred to the Fund established under the Scheme referred to in S.S. If the employer had himself made his part of the contribution during the period of exemption in addition to the sums deducted from the salaries, the employer shall, notwithstanding the exemption under S.16, which by his action he has or is deemed to have waived, transfer those amounts to the Fund under the statutory Scheme. If on the other hand the employer did not pay his part of the contribution to the provident fund during the period when he had no liability to do so, but had made deductions from the salaries of the employees towards provident fund, such amounts alone fall within the scope of S.15(2). The object of S.15(2) is not to deny the employer the benefit of S.16 or in any manner derogate from the provisions of that Section, but only to prevent him from keeping in his hands monies belonging to the employees and which he has no right to retain. It is to protect the employees as a class whose salaries were subjected to deductions by the employer, at a time when the Act was not applicable to the establishment, that the Legislature in its wisdom provided that such amounts shall not be retained by the employer, but shall be transferred to the Fund under the statutory Scheme for the benefit of the employees. 6. 6. The petitioner who had not made any contribution of its own towards provident fund during the period of infancy has no obligation to transfer to the Fund under the Scheme any amount representing contribution which it would have made had there been a scheme. But the amounts deducted by the petitioner must be transferred forthwith to the Fund under the Scheme The impugned orders shall be understood accordingly in terms of what is stated above. 7. Ext. P12 seems to apply not only to the period of exemption, but also to the periods beyond. The petitioner's counsel points out that the demand is made in excess of the statutory rate. This is a matter on which it is open to the petitioner to submit its objections to the 1st respondent. The respondent's counsel tells me that until that question is decided independently by the Commissioner, no action will be taken for the recovery of amounts in excess of the statutory rate. This is recorded. The Original Petition is disposed of as above. No costs.