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of <h1>Scope of EPF Act: Composite Factories & Employment Threshold Clarified</h1> <h3>THE REGIONAL PROVIDENT FUNDCOMMISSIONER, BOMBAY Versus SHREE KRISHNA METAL MANUFACTURINGCO., BHANDARA</h3> THE REGIONAL PROVIDENT FUNDCOMMISSIONER, BOMBAY Versus SHREE KRISHNA METAL MANUFACTURINGCO., BHANDARA - 1962 AIR 1536, 1962 (3) Suppl. SCR 815 Issues Involved:1. Whether composite factories are excluded from the scope of Section 1(3)(a) of the Employee's Provident Funds Act, 1952.2. Whether the requirement of employing 50 or more persons applies to the factory or the industry.3. The interpretation of the expression 'engaged in any industry specified in Schedule I.'4. Application of the Act to Shree Krishna Metal Manufacturing Co. and Oudh Sugar Mills Ltd.Issue-wise Detailed Analysis:1. Composite Factories and Section 1(3)(a):The primary issue was whether Section 1(3)(a) of the Employee's Provident Funds Act, 1952 excludes composite factories from its scope. The respondents argued that only factories exclusively engaged in any industry specified in Schedule I are covered by the Act. However, the court held that the expression 'all factories engaged in any industry specified in Schedule I' does not imply exclusivity. The definition of 'factory' in Section 2(g) includes any premises where a manufacturing process is carried on, thus encompassing composite factories. The court also noted that the inclusion of the word 'establishment' in the amended Section 1(3)(a) further supports the inclusion of composite factories. Therefore, the argument that composite factories are excluded from Section 1(3)(a) was rejected.2. Requirement of Employing 50 or More Persons:The second issue was whether the requirement of employing 50 or more persons applies to the factory or the industry. The respondents contended that this numerical test must be satisfied by the industry, not the factory. The court disagreed, stating that the clause 'in which 50 or more persons are employed' qualifies the word 'factories' and not 'industry.' This interpretation is supported by the latter part of Section 1(3)(a) and the proviso added in 1956, which clearly apply the numerical requirement to the establishment or factory. Thus, the requirement of employing 50 or more persons applies to the factory.3. Interpretation of 'Engaged in Any Industry Specified in Schedule I':The court addressed the meaning of the expression 'engaged in any industry specified in Schedule I.' It considered two possible interpretations: one where any engagement in a specified industry, however minor, would suffice, and another where the factory must be primarily or mainly engaged in the specified industry. The court favored the latter interpretation, stating that the primary or dominant activity should determine the character of the factory under Section 1(3)(a). This interpretation aligns with the common-sense view and the accepted denotation of 'engaged in.' The court also noted that whether a factory is engaged in a specified industry is a question of fact to be determined on a case-by-case basis.4. Application to Shree Krishna Metal Manufacturing Co. and Oudh Sugar Mills Ltd.:- Shree Krishna Metal Manufacturing Co.: The company carried on four different kinds of industrial activities, including the manufacture of brass, copper, and 'kasa' circular sheets, which falls within Schedule I. The court held that this activity is not minor, subsidiary, or incidental and thus, the company is a factory under Section 1(3)(a). The numerical requirement was assumed to be satisfied for the purpose of the proceedings. Consequently, the High Court's view that the company is outside Section 1(3)(a) was reversed, and the company's writ petition was dismissed. The company must comply with the requisitions issued under the Act.- Oudh Sugar Mills Ltd.: The main industrial activity of the Mills is the manufacture of hydrogenated vegetable oil and its by-products. The fabrication of tin containers, although covered by Schedule I, was deemed a minor, feeder activity integral to the main business. With only 31 out of 211 employees engaged in this activity and the containers not being sold in the market, the court concluded that the Mills is not a factory within the meaning of Section 1(3)(a). Thus, the High Court's decision was upheld, and the appeal was dismissed.Conclusion:- C.A. 361 of 1959 (Shree Krishna Metal Manufacturing Co.): Allowed.- C.A. 387 of 1959 (Oudh Sugar Mills Ltd.): Dismissed.
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