Prima Beverages (P) Ltd. v. The Assistant Provident Fund Commissioner, EPFO; Central Government Industrial Tribunal; Sri Sajeevkumar K Gopal, SC, EPF

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE AMIT RAWAL TUESDAY, THE 12[TH] DAY OF JULY 2022 / 21ST ASHADHA, 1944** ## **WP(C) NO. 18465 OF 2022** ## **PETITIONER:** **==> picture [78 x 89] intentionally omitted <==** PRIMA BEVERAGES (P) LTD., BLOCK NO.35, INDUSTRIAL DEVELOPMENT AREA, EDATHALA, ALWAYE, REPRESENTED BY ITS DIRECTOR MR.KUSHAGRA GUPTA. BY ADV PREMJIT NAGENDRAN ## **RESPONDENTS:** 1 THE ASSISTANT PF COMMISSIONER, EPFO, KALOOR, KOCHI-682 017. 2 CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL, X78V+C45 PRIYA SQUARE, ERNAKULAM-682 016. SRI SAJEEVKUMAR K GOPAL, SC, EPF THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12.07.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) No.18465/2022 :2: ## **JUDGMENT** Petitioner is a Private Ltd. Company registered under the Companies Act and also registered under the Factories Act as per Ext.P1 licence issued under the Factories Act. Bureau of Indian Standards have also issued a licence for manufacturing “packaged drinking water”. The petitioner is a manufacturer and a factory under Sections 2(g) and 2(i)(c) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “1952 Act”). In the initial years, had been purchasing and selling the aerated water. On account of this, was confronted with the proceedings under the EPF Act. Such activity was rendered as a trading and commercial. The balance sheets produced before the competent authority reflected that the activity of trading was only for two years and thereafter undertaken activity of manufacturing aerated mineral water by adding certain minerals under the name and style of 'Parle' as per the agreement, in order to avoid any litigation of passing off under the Trade marks and Merchandisation Act. All these factors were brought to the notice of the EPF organisation. However, the Employees Provident Fund Commissioner heavily relied upon the fact that it had employed WP(C) No.18465/2022 :3: more than twenty (20) employees and previous was again held to be a trading and commercial establishment with effect from 1.4.2001. 2. Learned counsel appearing on behalf of the petitioner submitted that as per the Schedule I specified under Section 2(i) and 4 of 1952 Act, packaging of the mineral water do not fall in any of the industry engaged in the manufacturer and thus would not be exigible for contribution of its employees under the 1952 Act. The Provident Fund Commissioner by relying upon the contents of the agreement entered into between the petitioner and M/s.Parle Agro Ltd. erroneously found that the petitioner was issued a license to fill, pack, sell and distribute mineral water and as per the opinion, the said expression would indulge into activity of purchasing and selling in the broader terms which would be a trading and commercial. Such findings are _prima facie_ against the provisions of the Act and the Schedule much less the balance sheets placed on record. There is no adherence or reference to the balance sheets. However, the appellate court also did not take into consideration all the facts except that the balance sheets of three years where the petitioner concededly was carrying on the activity of aeration is liable to make the payment and contribute towards the EPF WP(C) No.18465/2022 :4: Provident Fund, but the subsequent balance sheets of 2010-2011, 2011-2012 and 2012-2013 did not reflect any trading and commercial activity much less did not fall even in the definition of Clause (b) of sub-section (3) of Section 1 of 1952 Act as the aforementioned Section only specify the applicability of the Act to any establishment employing 20 or more persons or class of such establishment, which the Central Government by notification in the official gazette specify in this behalf. The ratio decidendi of the judgment referred to by the Appellate Authority in the impugned order _**Basant Lal Jain v. Regional Provident Fund Commissioner**_ , Writ Petition No.86 of 1962, was in respect of manufacturing of Indian sweets which was not also a notified activity under Schedule I, but was found accessible for contribution on account of the fact that the organisation had employed 16 persons in the sales outlet. There is no sale outlet at the factory premises rendering the activity to the trading and commercial. All these factors according to his submissions have to be examined threadbare by putting to the authorities. 3. On the other hand, learned counsel appearing on behalf of the respondents supported the impugned orders on the premise that concededly for few years from 2001 onwards petitioner WP(C) No.18465/2022 :5: Company was undertaking purchasing and supplying of aerated water, thus had undertaken an activity of trading and commerce and rightly so, the authorities brought the petitioner Company under such expression. No doubt the notified Schedule would not specify the kind of activity of manufacturing and branding under the brand of Parley Agro Ltd. do not fall in the Schedule, but once the previous order had already branded the petitioner Company as a trading and commercial activity, the plea of non applicability of the provisions of the Act have rightly been repelled. 4. I have heard the counsel for the parties and appraised the paper book. ## 5. Sections 2(g) and 2(i)(c) of 1952 Act defining “factory” and “manufacture” are extracted herein below : _“(g) “factory” means any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on, whether with the aid of power or without the aid of power;_ _(ic) “manufacture” or “manufacturing process” means any process for making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal;”_ 6. Section 2 of Schedule I has been promulgated notifying WP(C) No.18465/2022 :6: the activities to be falling under the ambit of 1952 Act. Manufacturing of packaged drinking water does not fall in the aforementioned Schedule. The question which arises for adjudication of this Court while examining the order under challenge is whether the authorities below have been completely swayed away with the previous findings irrespective of the fact that in the subsequent year, the activity of trading and commercial had never been undertaken as reflected from the balance sheets. No doubt the appellate court referred to a balance sheet produced at the time of appeal, but did not advert to the contents to _prima facie_ form an opinion whether the activity undertaken by the petitioner would fall under the expression trading or commercial or manufacturing in a factory premises. The Appellate Authority either could have undertaken the task of examining the balancesheet or sought a report from the Provident Fund Commissioner much less remanded it. But in a most cavalier and cursory manner dismissed the appeal by relying upon the provisions of Clause (b) of sub-section (3) of Section 1 of 1952 Act. The said provisions only pertains to employment of more than 20 employees which was not the question for determination by the authorities. 7. In my _prima facie_ view both the authorities i.e., the WP(C) No.18465/2022 :7: Provident Fund Commissioner and the Appellate Authority have completely been swayed away with previous order of March, 2012 whereby initial period of 2 to 3 years the petitioner Company had undertaken the exercise of trading by purchasing the aerated water which was sold to some other persons. But that activity did not continue for infinite period. The balance sheets are the testimony of the same, but no effort has been made to ascertain the truthfulness in the submissions. The orders have been in my view passed as a complete eye-wash. 8. For the reasons aforementioned, the order Ext.P5 dated 27.3.2012 and Ext.P10 dated 22.10.2021 are set aside. The matter is remitted back to the Provident Fund Commissioner to examine the issue afresh in view of the observations and the additional material permitted to be placed on record on behalf of the petitioner and arrive at a just and equitable decision in accordance with law, within a period of four months from the date of receipt of a certified copy of the judgment. Writ petition stands disposed off. Sd/- **AMIT RAWAL JUDGE** csl WP(C) No.18465/2022 :8: ## **APPENDIX OF WP(C) 18465/2022** ||**APPENDIX OF WP(C) 18465/2022**| |---|---| |PETITIONER'S|EXHIBITS| |Exhibit P1|PHOTOSTAT COPY OF THE LICENSE ISSUED BY THE| ||GOVERNMENT OF KERALA FOR FACTORIES AND| ||BOILERS, DATED 07.12.2011.| |Exhibit P2|PHOTOSTAT COPY OF THE LICENSE NO.CM/L-6270362| ||ISSUED BY THE BUREAU OF INDIAN STANDARDS,| ||DATED 28TH MAY 2001 AND 27TH MAY 2002.| |Exhibit P3|PHOTOSTAT COPY OF THE ALLOTMENT OF NEW EXCISE| ||CONTROL CODE APPLICATION RECEIPT NO.32 DATED| ||11.01.2001.| |Exhibit P4|PHOTOSTAT COPY OF THE KERALA VALUE ADDED TAX| ||ACT REGISTRATION.| |Exhibit P5|PHOTOSTAT COPY OF THE ORDER| ||NO.KR/KC/21201/ETD (5)/2012/2787 ISSUED BY| ||THE FIRST RESPONDENT DATED 27.03.2012.| |Exhibit P6|COPY OF THE APPEAL FILED BY THE PETITIONER| ||BEFORE THE SECOND RESPONDENT.| |Exhibit P7|COUNTER AFFIDAVIT FILED BY THE FIRST| ||RESPONDENT.| |Exhibit P8|REJOINDER AFFIDAVIT FILED BY THE APPELLANT| ||BEFORE THE SECOND RESPONDENT.| |Exhibit P9|STATEMENT SHOWING THE LIST OF PERSONS| ||EMPLOYED AT THE PETITIONER'S FACTORY FROM| ||2001 TO 2012.| |Exhibit P10|PHOTOSTAT COPY OF THE ORDER IN APPEAL| ||NO.717/2019 DATED 22.10.2021 ISSUED BY THE| ||SECOND RESPONDENT DATED 22.10.201.| |RESPONDENTS'|EXHIBITS:| |NIL||