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TMI Blog1966 (1) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... at the petitioners concern is covered by the Act. The Regional Provident Fund Commissioners, Madras, by an order dated 1-9-1959 called upon the petitioner to pay (1) the employer's share of the contribution to the provident fund from 1-11-1952 (the date on which the provident fund scheme framed under the Act before applicable to the firm) upto 30-4-1957, when the petitioner was called upon to pay the contribution by a notice; (2) administrative charges in full, calculated on both the employees' and employer's share of the contribution to the provident fund(under clause 39 of the Provident Fund scheme read with the notification of the Government dated 31-10-1952, the percentage of administrative charges payable by the employer was fixed at 3 per cent of the total employer's and employees' contribution); and (3) damages for default calculated at 61/4 per cent per annum from the date on which the arrears fell due, upto the date of remittance(under section 14-B of the Act, a maximum of 25 per cent of the amount of arrears was fixed for damages). The petitioner urged in the writ petition, that these claims for a back period were unsustainable and that a careful exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms mentioned above and maintained the claim for the arrears of employer's contribution to the provident fund. The learned Judge also followed the decision in (1959)ILLJ249Cal to which we have made reference. Against this decision, the present appeal W.A. 81 of 1963 is filed by the Regional Provident Fund Commissioner. 4. It is common ground in both these cases that before the enactment of the Provident Funds Act, there was not provident fund scheme in existence, in the two firms concerned in these appeals. Clause 26(1) of the Scheme framed under the Act provides: 26(1)(a). Every employee employed in or in connection with the work of a factory or other establishment to which this scheme applies other than an excluded employee shall be entitled and required to become a member of the fund from the beginning of the month following that in which this paragraph comes into force in such factory or other establishment, if on the date of such coming into force he has completed one year's continuous service or has actually worked for not less than 240 days during a period of 12 months or less in that factory or other establishment or in any other factory or other establishment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pay(basic wages, dearness allowances retaining allowance, if any, cash value of food concessions admissible thereon) and having regard to the resources of the fund for meeting its normal administrative expenses. Clause 32 gives power to the employer to recover the employees contribution by deduction from the wages of the member. The proviso to this clause says that no such deduction may be made from any wage other than that which is paid in respect of the period or part of the period in respect of which the contribution is payable. The effect of this proviso is that if the employer, fails to make a deduction of the employees' contribution from the pay paid for a particular period, he is precluded from deducting it subsequently, except in the case of an accidental mistake or clerical error, or where the employee has given a false declaration that he was not already a member of the fund. Section 14-B of the Act states that where an employer makes default in the payment of any contribution to the fund or any payment of any charges payable under any other provisions of the Act or the Scheme, the appropriate Government may recover from the employer such damages, not exceeding 25 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 963. Jagadisan J. held on the former case, that the pre-discovery period must be the period between 1-11-1952 and 30-4-1957, when the employer received a notice from the Provident Fund Inspector making a demand for the contribution. The order of the Central Government under S. 19-A negativing the objection of the employer was passed only on 29-9-1958. But the back period was not reckoned from 29-9-1958, the date of the notice was selected instead, for the purpose. This question did not arise before Veeraswami J. in the latter case, because of a concession by the employer that he was liable to pay the arrears of contribution claimed from 1-3-1954 to 31-3-1958. 9. In regard to the validity of the claim for the pre-discovery period, there have been conflicting views of several courts. One view is that form the date of the coming into force of the Scheme, clause 26 makes it obligatory for all employees who are not exempted, and who have put in 240 days of service to become members of the fund, that thereafter, automatically the liability of the employer to pay both his contribution as well as the employee's contribution, under clause 30 will arise, and that the employer cannot p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible. The claim for the employer's share of the administrative charges would be clearly illegal and inconsistent with the Act, because the administrative charges were intended to meet the cost of administering the fund, and for five years retrospectively there was no fund and therefore no cost of administration incurred therefore. Coming to the damages, the learned Judge observed that at earlier stages the Government had told the employer that the Act did not apply that only after 23-10-1957, the difficulty whether the establishment was a factory or not removed, and that consequently there could be difficulty in the payment of contribution prior to that date. Similar reasons were relied on by Jagadisan J for holding that the retrospective operation of the Act and the Scheme would be not merely illogical and oppressive but inconsistent with the terms of the enactment which were manifestly prospective in their operation. He pointed out that there was no duty laid on the court to yield to absurd construction of statutes and referred to the views of Maxwell. An argument drawn from inconvenience it has been said, is forcible in law and no less but rather more, force is due to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Cromwell after supplanting the Royalist regime, would not have, given an opportunity to his soldiers of making a choice in the matter of allegience. It is clear that require in the above usage, meant a mandate or a command. In contractual obligations the word has been given the meaning of need. In some cases the courts had looked to principles of justice and equity for giving the word a directory rather than a mandatory import. In Cole v. Green (1843) 13 LJCP 30, Tindal C.J. has followed an earlier decision in the King v. Birmingham (1828) 8 B C 29: 6 LJ MC 67, for giving preference to the directory meaning of the word, in interpreting a provision in the Marriage Act, that the consent of the father or guardian is required for the marriage of a minor. It was held by lord Tenterden in (1828) 8 B C 29: 6 LJ MC 67 that the absence of such consent would not make the marriage void if solemnised without consent, and hence the word 'require' must be interpreted to take a directory significance. But on the other hand in Queen v. Justices of Worcestershire, 1900 2 QB 576, the court of Appeal in England had to apply S. 29 of the Alehouse Act, 1828, which required the court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the employer a proper hearing. In our opinion it is in the course of such an enquiry that individual cases of hardship should be pleaded, an relief obtained, for example, regarding employees who have left the service during the pre-discovery period, employees who have been dismissed, employees who are dead and employees in whose cases the employer did not have an adequate opportunity to recover their contributions of necessary even for reasons other than those mentioned specifically in the proviso to Clause 30; it will be also open to the employer to press at such enquiry, for the waiver of the employees share of the contribution for the pre-discovery period(a relief which the respondent has already given to the petitioners in these cases) or even for a period anterior to the order under S. 19-A of the Act, in a proper case. In fact if we view the problems, in the abstract, there is no logical reason why, if the claim for the period anterior to the notice is held to be oppressive, it could not be extended, in a proper case, to the period anterior to the order under Section 19-A . A decision cited before us, of Rajagopalan J in Annamalai Mudaliar and Bros v. R.P.F. Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in N.K. Industries (P) Ltd. v. Regional Provident Fund Commr. U.P. (1958)IILLJ19All (followed in the above Kerala High Court Full Bench decision) have all held the view which we adopt in this case for the reasons stated above. 13. There is one other decisions of the Bombay High Court in Nagpur Glass Works Ltd. v. R.P.F. Commr.AIR1961Bom157 by Mudholkar and Naik JJ. who had to consider Clause 27 of the Scheme, and they held that it was mandatory. While referring to Clause 26 of the Scheme they made a passing observation that the word 'require' used in that clause, could be distinguished form the words shall become in Clause 27 and that the former would not have a mandatory effect. But there has been no discussion in that judgment of the significance of the word 'require' in the context of the Act and the scheme, by reference to authorities. 14. We may also refer to the Supreme Court's decision in Orissa Cement Ltd. Union of India, (1962)ILLJ400SC where they struck down a provision in the Scheme which made it obligatory on the employer to pay the employees contribution for employees under contractors, as there was no provision in the Scheme (as it then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legitimate to infer a default merely because there was no payment by the employer of the contribution during the pre-discovery period. Each case must be examined carefully with respects to its own facts for an inference about the default. Section 7-A of the Act has provided for such an examination is disputed cases. The amendment introducing Sec. 7-A came after the passing of the present orders now in appeal. Therefore, we will remit the claim for damages to a fresh consideration by the appropriate authority under S. 7-A of the Act. Likewise other difficulties in the enforcement of the demand for example claims in respect of persons who have left the employment or persons who have died or whose where abouts are not known and persons who have been dismissed should all be the subject matter of a detailed claim and consideration by the authority under S. 7-A on application made to it for that purpose and a fresh opportunity will have to be given to the petitioner for obtaining such a relief in view of the enactment of S. 7-A after the orders now in dispute had been passed. 17. We will finally deal with the argument of Sri K. K. Venugopal appearing for the respondent in W. A. 80 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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