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2003 DIGILAW 1219 (RAJ)

Shree Rajasthan Texchem Ltd. v. Union of India

2003-08-29

ANIL DEV SINGH, K.S.RATHORE

body2003
Judgment K.S. Rathore, J.-In the present writ petition, the petitioner has challenged the validity of the Ordinance of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (for short the Act of 1952) and The Employees’ Provident Funds and Miscellaneous Provisions (Amendment) Ordinance, 1997 (for short, the Ordinance 1997) and seeks the following writ, order or directions from this Court: (a) to declare that the Employees’ Provident Funds and Miscellaneous Provisions (Amendment) Ordinance, 1997 is ultra vires, bad in law and void, and in case during the pendency of the writ petition if the Ordinance is replaced by an Amending Act, the same may be declared as ultra vires, unconstitutional and void on the same groups; (b) todeclare that the petitioner establishment is entitled to the infancy period of three years from March 16, 1996 to March 15, 1999; and (c) to restrain the respondents from applying the provisions of Employees’ Provident Funds and Miscellaneous Provisions (Amendment) Ordinance, 1997, or to take any coercive action against the petitioner for not complying with the provisions of the E.P.F. Act as amended by the impugned Ordinance and their directions. The petitioner company is a limited company incorporated and registered under the Companies Act, 1956 and was granted registration and licence to work as a factory under Registration No. RL-2l762 on March 3l, 1996. 2. The petitioner company is manufacturing synthetic spun polyester viscose raw white yarns and started working in the month of December, 1994 and the company completed the erection of the plant at Dungarpur by January, 1996. Vide letter dated December 30, 1996 issued by the Regional Provident Fund Commissioner, the petitioner company was informed that during the inspection made by the Enforcement Officer, Employees’ Provident Fund, it was found that in September, 1997 there were 809 employees-workers in the establishment and also found that the establishment had completed three years on September 22, 1997 and the provisions of the Act of 1952 have become applicable to the petitioner-company with effect from September 22, 1997. 3. In response to the letter dated December 30, 1997 issued by the Enforcement Officer, Employees’ Provident Fund, the petitioner emphatically denied that the establishment had completed the infancy period of three years on September 22, 1997. 4. 3. In response to the letter dated December 30, 1997 issued by the Enforcement Officer, Employees’ Provident Fund, the petitioner emphatically denied that the establishment had completed the infancy period of three years on September 22, 1997. 4. The main thrust of the petitioner is that the infancy period is to be counted from the date the establishment was set up and from the date when the factory started its manufacturing process i.e. from the date the establishment commenced its commercial production. 5. In the Act of 1952 amendment was made by Ordinance, 1997 and the same was published in the Gazette of India on September 22, 1997 and it has become applicable on its publication with immediate effect. The following amending provisions have been made in the Act of 1952:- .(a) Therate of contribution has been raised from 8.33% to 10% to 12% (whichever rates are applicable to the establishment currently) by amending Section 6 of the E.P.F. Act, 1952; .(b) Qualification for appointment of the Presiding Officer ot a Tribunal has been amended by amending Section 7-D of the E.P.F. Act, 1952 and; .(c) Clause (d) of Sub-section (1) of Section 16 and explanation thereto has been deleted by amending Section 16(1). 6. The writ petition is directed mainly against the deletion of Clause (d) of Sub-section (1) of Section 16 and Explanation thereto whereby the infancy protection to the new establishment shall no more be available to the newly set up industrial establishment. 7. In accordancewith the Ordinance, 1997, the Establishment set up after September 22, 1997 shall not qualiir for infancy period and that the Act shall become applicable on the setting of the establishment. 8. The Preamble of the Ordinance says that since the Parliament is not in session, the President is satisfied with circumstances that (sic) exist which render it necessary for the President to take immediate action and that the President in exercise of the power conferred by Clause (1) of Article 123 of the Constitution of India is pleased to promulgate the Ordinance and the Ordinance shall come into force with immediate effect. 9. Mr. 9. Mr. Paras Kuhad, learned counsel for the petitioner challenged the vires of the Ordinance, 1997 on the ground that the Ordinance contravened fundamental rights granted under Articles 14, 19(1)(g) and 21 of the Constitution and also on the ground that there were no circumstances from which any urgency or public interest or unprecedented political situation may be inferred for bringing legislation through an Ordinance which has impact of taking away the benefits already enjoyed by the industrial establishment and which is against the industrial policy of the Central Government as well as the State Government, whereas, with the globalization and liberalisation taking place in the economy, thus, Government plans to give incentive to entrepreneurs to establish new establishment. 10. It was also contended that the President may promulgate an Ordinance subject to the following limitations: (a) the ordinance must be promulgated at a time when both the Houses of Parliament are not in session; (b) the President must be satisfied with the circumstances existing which render it necessary for him to take immediate action that is: (i) the power is to be used to meet the extra-ordinary situation and not for any political ends; .(ii) since it is an emergent power exercisable when the legislature is not in session to deal with the situation which requires immediate action and which cannot wait until the legislature re-assembles. Since Article 85 enjoys that Parliament shall meet atleast in a year in such a way that six months shall not intervene between its last meeting in one session and the date appointed for its first sitting in the next sessions and an Ordinance made by the President must cease to operate at the expiration of six weeks. It is thus obvious that the maximum life of the Ordinance cannot exist 71/2 months. There is no reasonable explanation as to why the President has promulgated this legislation as the amendment made in the PF Act through the Ordinance is of very minor character. There were no circumstances of failure of constitutional machinery or law and order problem or domestic chaos or internal disturbance or external aggression which could have warranted the President to invoke the power to promulgate the ordinance. There were no circumstances of failure of constitutional machinery or law and order problem or domestic chaos or internal disturbance or external aggression which could have warranted the President to invoke the power to promulgate the ordinance. In fact the Central Government needed deposits and to augment finance all industries have been covered by getting an ordinance issued so that the Government immediately may get 24% of the wage packet from all newly set up industries during last three years, as a deposit. It is estimated that during this period lacs of new industries have been set up in the country. The grounds mentioned in the Ordinance are wholly extraneous to the purpose behind Article 123. The exercise of power was improper. There is no nexus between the ground and the power. The Government has defrauded the new entrepreneurs. 11. Mr. Kuhad further submits that by the Ordinance a person cannot be deprived of an accrued right vested in him under a statute or under the Constitution. Thus, doctrine of promissory estoppel is applicable against the Government to prevent fraud or manifest injustice and the case of the petitioner is covered under the doctrine of legitimate expectations and the state cannot withdraw the concession even on the grounds overriding public interest without giving reasonable opportunity to the petitioner of resuming his earlier position as restoration of status quo ante is not possible. 12. Mr. Narendra Jain, learned counsel for the respondents submits that initially under Section 16(1)(b) of the Act of 1952, the infancy period was three years for the establishments employing 50 or more persons and five years for the establishments employing 20-49 persons. 13. In 1980, the Government set up a High Level Committee to review the working of the Employees’ Provident Fund Scheme. The Employees’ Provident Fund Review Committee in 1981 recommended that the infancy period should be uniformly three years for all establishments. 14. TheGovernment accepted the recommendations of the committee and amended the Act accordingly with effect from August 1, 1988. The amended Section 16(1)(d) made the Act as not applicable to any newly set up establishment until the expiry of the period of three years from the date on which the establishment is or has been set up. 15. Mr. Jain further submits that the Trade Union demanded to amend the Act so that an ordinary labourer may not be deprived of his right. 15. Mr. Jain further submits that the Trade Union demanded to amend the Act so that an ordinary labourer may not be deprived of his right. 16. The matter was therefore, examined and it has been felt that restructure of infancy period incorporated in the Act of 1952 had relevance earlier but has now become a source of unfair practice by employer and it was decided to abolish the provisions relating to infancy period altogether. 17. Mr. Jain alsocontended that the present petition is not maintainable because the petitioner has alternative efficacious remedy by way of filing an appeal as provided under Section 7-I of the Act of 1952 to the Tribunal. As per Section 7-I any person aggrieved by a notification issued by the Central Government or order passed by the Central Government, or an order passed by the Central Government authority under the proviso to Sub-section (3), or Sub-section (4), of Section 1 or Section 3, or Sub-section (1) of Section 7-A or Section 7-B. The petitioner without availing alternative efficacious remedy has filed this present writ petition before this Court as the petitioner can challenge the notification issued by the Central Government before the Tribunal under Section 18. Itwas also denied by Mr. Jain that application of the Ordinance has retrospective effect whereas Ordinance is made effective from the date of promulgation of the Ordinance i.e. with effect from September 22, 1997 and also the amending Ordinance is in conformity with Articles 14, 19(1)(g) and 21 of the Constitution of India and does not violate any of the above Articles of the Constitution. 19. Heard. 20. The present writ petition was admitted by this Court on February 9, 1998 and notices were issued in the writ petition as well on the stay application also and the petitioner was directed to deposit PF amount by opening separate account in the bank within 15 days from the date of the passing of the order with the further direction that the said amount so deposited will not be paid to respondent No. 3 till further orders and will be subject to the final decision of this petition. 9.21. 9.21. On August 8, 2000, this Court heard on the application to modiir the stay order dated February 9, 1998 and the interim order dated February 9, 1998 was modified to the extent that the petitioner company may deposit the employees’ share of 12% from February 22, 1997 to March 14, 1999 with the Provident Fund Commissioner, Jaipur and the Provident Fund Commissioner was directed to accept the amount. 10.22. ThePF Act is a piece of social welfare legislation and has been enacted for the benefit of employees employed in factories and establishments and to achieve the objectives, provisions are enacted requiring the employer to contribute to the provident fund, family pension fund and insurance fund and inform the Commission compliance by filing regular returns and submitting details in prescribed forms. 123. TheEmployees’ Provident Fund Act is enacted to provide Provident Funds (Pension Fund and Deposit-Linked Insurance Fund) to Employees employed in factories and other establishments. 124. The purpose behind contribution to the provident fund is to induce thrift so that the employee may lay by from his present earnings a portion for a rainy day or for his old age. As the workman cannot be expected to spare very much, regard being had to the gap between what he earns and what he must spend, the employer is expected to make a contribution. 125. A close look to the Ordinance dated September 22, 1997 reveals that a Bill further to amend the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 has been introduced in Parliament but was not passed as the Parliament was not in session and the President was satisfied that circumstances exist which render it necessary for him to take immediate action to give effect to the provisions of the Bill. 126. A bare perusal of the Ordinance reveals that the Ordinance was made effective from the date of its promulgation i.e. with effect from September 22, 1997 and as per the contention of the petitioner the civil work for the prefect was started in December, 1994 and the company completed the erection of the plant at Dungarpur by January, 1996, the commercial production was commenced on March 15, 1996. Since, in view of the Ordinance, the provisions of the Act of 1952 become applicable to the petitioner-company on September 22, 1997, the petitioner establishment is not entitled to get the benefit of infancy period of three years because the benefit of the infancy period has been taken away by the Ordinance dated September 22, 1997 and the provisions of the Act of 1952 are applicable to the petitioner establishment with effect from September 22, 1997. 127. We have also given our thoughtful consideration to the judgments referred by the petitioner reported in K.S. Paripooran vs. State of Kerala & Ors. AIR 1995 SC 1012 : 1994 (5) 5CC 593, and the case of Mohmedalli & Ors. vs. Union of India & Anr. AIR 1964 SC 980 1963-I-LLJ-536. The ratio decided in these judgments are not applicable to the present case. 128. The petitioner is not able to make out the case to declare the provisions of the Act of 1952 and Ordinance, 1997 as ultra vires. As already discussed hereinabove that the Act of 1952 is a piece of social welfare legislation and has been enacted for the benefit of the employees employed in the factories and establishments. Although the petitioner has alternative efficacious remedy by way of filing appeal as provided under Section 7-I of the Act of 1952 before the Tribunal but without entering into the technicalities on the merit also, we do not find any valid reason to declare this Ordinance, 1997 as ultra vires. 129. Asa consequence of the discussion made hereinabove, the writ petition fails and the same is hereby dismissed with no order as to costs. 30. consequently, the interim order dated February 9, 1998 stands vacated.