Establishment-linked exemption under provident fund law runs from setup date, not from when employee threshold is first reached.

Section 16(1)(b) of the Employees' Provident Funds Act was construed to cover both new establishments and existing establishments that later reached the prescribed employee strength. The exemption period was held to run from the date the establishment is set up, and the threshold-based applicability language in the Scheme did not create a further waiting period after the employee limit was first reached. Reading the provision with paragraph 26(1)(a) confirmed that the exemption was intended to give breathing time only to genuinely new establishments. The contrary construction was rejected.

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Issues: Whether the exemption under section 16 of the Employees Provident Funds Act, 1952 postponed the application of the Act and Scheme until five years after the date on which the employee-strength threshold was first reached, or whether the period ran from the date the establishment was set up.

Analysis: Section 16(1)(b) was construed as dealing with two categories of establishments, namely new establishments and existing establishments that later reached the prescribed strength. The phrase "from the date on which the establishment is, or has been, set up" was read as covering both situations, and the wording was held too precise to permit the appellant's construction. Reading section 16 with paragraph 26(1)(a) of the Scheme showed that the exemption was intended to give breathing time to genuinely new establishments. The participle used in the applicability clause did not alter the meaning, because the language merely described the establishment and did not postpone liability until the threshold continued for a period of time.

Conclusion: The exemption period runs from the date the establishment is set up, not from the date on which the employee threshold is first reached. The appellant's contention failed.

Ratio Decidendi: An establishment-specific exemption that is linked to the date on which the establishment is set up cannot be extended by construing the threshold-based applicability language as requiring a further waiting period after the prescribed number of employees is first reached.

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