Document Fragment View

Matching Fragments

3. In the petition taking exception to the order of the Commissioner, the first ground urged is that the liability to remit the contributions began as from the issue of the Notification dated 2nd December, 1980. It is true that in the applications moved by the petitioner and his employees, it was suggested that the coverage be with effect from 1st April, 1978. But it is contended that whatever the petitioner and his employees may have said, the Act applied to the petitioner's establishment only from the date of issue of the Notification. Now the Notification itself does mention the date of its operativeness as being 1st April, 1978. Petitioner and his employees had in their applications given this date as the date of operativeness of the Act and the Scheme. Learned counsel representing the petitioner contends that issue of a Notification under Section 1(4) was an exercise of legislative power and no such power could be exercised with retrospective effect. Reliance is placed upon the Income Tax Officer, Alleppey v. I.M.C. Ponnoose and Ors. . The question arising in that case was about the validity of a Notification issued by the Government of Kerala empowering certain Revenue Officers including the Taluka Tahasildar, to exercise the powers of a Tax Recovery Officer under the Income Tax Act, 1961. That is not the question arising in the instant case. The point here is as to date from which the obligations cast by the Act upon the employer became enforceable vis-a-vis the business being conducted by the petitioner. Section 1(4) deals with voluntary coverage and the two conditions necessary for the attractability thereof are (i) it being made to appear to the Central Government that the provisions of the Act should be made applicable to an establishment, which conclusion it can reach either upon an application made to it or otherwise that the employer and the majority of the employees in relation to an establishment have agreed that the provisions of the Act may be made applicable to the said establishment; and (ii) the issue of a Notification applying the provisions of the Act to the establishment. The mere making of an application by an employer and the majority of the employees for voluntary coverage is not enough. The said application is the basis whereon the Central Government is enabled to take a decision. That decision has to be promulgated by a Notification in the Official Gazette. It is only when this process is completed that the Act and the Scheme under it, can, be said to have become applicable to the institution concerned. No authority is needed for the proposition that the notification would take effect from the date it is published. This of course is subject to the power of the authority concerned to notify with retrospective effect. It was the lack of such a power which led to the amendments to Section 1(4) under the Employees' Provident Fund and Miscellaneous Provisions (Amendment) Act, 1988 (Act No. XIII of 1988). The amendment came in on 2nd June 1988 and after the said amendment, Section 1(4) reads thus:-

The difference between the pre and post amendment positions is clear but Mr. Master representing the Commissioner contends that the amendment has been brought in with a view to clarify the position and by way of an abundant caution. Learned counsel submits that even prior to the amendment the scheme for voluntary coverage envisaged retrospectivity subject of course to an agreement between the employer and the majority of the employees. This contention is not acceptable, for otherwise the amendment would have been unnecessary. The very fact of the Legislature going in for an amendment is evidence of a recognition that the power of giving retrospective effect to the coverage, did not exist in Section 1(4) prior to the amendment. Mr. Master argues that the issue of a Notification is a mere ministerial act and that compliance thereof begins as soon as a code number issued, if not from the date agreed to between the parties. That is not how the statute reads. Section 1(3) lays down the applicability factor vis-a-vis the operation of the Act. In relation to an establishment covered by clause (a) of Sub-section (3) of Section 1, the Act applies by virtue of the establishment being a factory engaged in any industry specified in schedule I having a work force of 20 or more persons. In regard to establishments covered by Clause (b) of Subsection (3), the Act becomes applicable where the establishment employs 20 persons or more or belonging to a class or establishment which the Central Government may by Notification in the Official Gazette, specify in this behalf. The proviso to this subsection enables the Central Government to apply the provisions of the Act to any establishment employing a work force of less than 20, subject to its giving two months' notice of its intention to do so. In regard to Sub-section (4), the applicability becomes final only after the issue of the Notification in the Official Gazette. Therefore, the Notification contemplated by Sub-section (4) of Section 1 is not a mere ministerial act. In fact that is the event which makes the Act applicable to the establishment, where voluntary coverage is sought. Petitioner's contention that the defaults could not be reckoned for the period prior to the Notification has thus to be sustained.