TMI Blog1998 (12) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... he official liquidator has filed report (flag 324) and sought directions. Pursuant to the notice the Provident Fund Commissioner, Bihar and the Corporation have appeared through their respective counsel. Mr. Umesh Prasad Singh, learned counsel for the official liquidator and Mr. R.S. Pradhan, learned counsel for the Regional Provident Fund Commissioner made submissions at length. Mr. Sheo Narain Singh, learned counsel for the Employees State Insurance Corporation adopted the arguments of Mr. R.S. Pradhan. He submitted that since the provisions of the Employees' Insurance Act are similar to those of the Provident Funds Act, similar order may be passed with respect to the Employees' State Insurance Corporation. I, accordingly, proceed to deal with the matter in the context of the provisions of the Provident Funds Act. It is an undisputed position that the establishment of Rohtas Industries Limited (hereinafter referred to as "the company") was exempted from the provisions of the Provident Funds Act in terms of section 17 of the Act as the employees of the company were governed by a scheme under which a trust had been created, which was being administered through trustees with the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Funds Act there must be a factory or an establishment in which the employees work for wages. Since the establishment is not a going concern and is rather in the process of winding up, the official liquidator is not required to make any deductions of their share from their salary nor make his own contributions and deposit the same with the Provident Fund Commissioner. In support of the contention Mr. Umesh Prasad placed reliance on the case of Mahalaxmi Cotton Mills Ltd., In re [1960] 30 Comp Cas 107 ; AIR 1960 Cal 199. Mr. R.S. Pradhan on behalf of the Regional Provident Fund Commissioner submitted that the term "factory" occurring in the relevant provisions of the Provident Funds Act has been substituted by the term "establishment" which is indicative of the legislative intent to enlarge the scope of that Act and make it applicable to a larger body of employees. He pointed out that while the term "factory" as defined in section 2( g ) of the Act, means "any premises or precincts thereof, in any part of which a manufacturing process is being carried on ..." (emphasis 1 supplied), there is no such requirement for constituting an "establishment". In other words, even though n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se ( f ) of subsection (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named ; and italics. ( ii )in relation to any other establishment, the person who, or the authority which has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent." It is noteworthy that in the amended definition of "employee" the word "factory" has been substituted by "establishment". Although the term "establishment" has not been defined in the Act it does appear that the object was to enlarge the ambit of the Act and bring within its fold those who work in an "establishment" as against the "factory". It is also significant that "employer" has been defined separately in relation to an "establishment" which is a factory and in relation to any other establishment. In view of the two-fold definition of the term, I do not think there is any substance in the contention of Mr. Umesh Prasad Singh that in the absence of any similar or corresponding amendment, "employer" has to be understood only in relation to a factory. It is to be kept in min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "The word 'employer' in the Act only shows the machinery or the personality made responsible for the contribution, and should not be given a meaning which defeats the very basis of the operation or impact of the Act, which remains a 'factory engaged in any industry' specified .... No doubt, ordinarily in liquidation, the official liquidator will be asked to wind up a company running a mill or a factory and, therefore, to discharge the employees. In such an event it will no longer be a factory 'engaged' in any industry within the meaning used in section 1(3) of the Act and, therefore, such an official liquidator will not be required to pay contributions under this statute." The Mysore High Court in G.V. Joshi v. State of Mysore, AIR 1969 Mysore 300, held that the word "employ" in section 2( f ) as well as section 1 means "employ in work", that is to say, employed and actually working. The words "except when the business of the company is continued" occurring in sub-section (3) of section 445 of the Companies Act also lead to the same conclusion. The section makes an apparent distinction between the employees of a company whose business is continued even after the passing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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