Official liquidator treated as employer and occupier for provident fund liability when running a factory as a going concern

An official liquidator authorised to run a factory as a going concern is treated as the employer and occupier for provident fund purposes because actual custody and practical control of the undertaking rest with the liquidator, even though the court retains supervisory control in winding up. The statutory liabilities attaching to operation of the factory under the Employees' Provident Funds Act, 1952 and the Scheme therefore apply. However, the contribution obligation does not extend to employees who are outside the Act's coverage, since no statutory liability arises in respect of them.

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Issues: (i) Whether an official liquidator who is directed to run a factory as a going concern is liable as an "employer" and "occupier" to pay the employer's contribution under the Employees' Provident Funds Act, 1952 and the Employees' Provident Fund Scheme. (ii) Whether the official liquidator is liable to pay such contribution in respect of employees who are not covered by the Act.

Issue (i): Whether an official liquidator who is directed to run a factory as a going concern is liable as an "employer" and "occupier" to pay the employer's contribution under the Employees' Provident Funds Act, 1952 and the Employees' Provident Fund Scheme.

Analysis: The definition of "employer" and "occupier" under the Act turns on ultimate control over the factory. Although the court retains supervisory control in winding up, the official liquidator has actual custody and practical control of the company's property and, where specifically authorised to carry on the factory as a going concern, is the person conducting the business. The scheme of the Act is directed to factories engaged in the specified industry, and the statutory liabilities attaching to such operation cannot be avoided merely because the business is being run through a liquidator under court supervision.

Conclusion: The official liquidator is liable as an "employer" and "occupier" to pay the employer's contribution under the Act and Scheme.

Issue (ii): Whether the official liquidator is liable to pay such contribution in respect of employees who are not covered by the Act.

Analysis: The Act applies only to employees and establishments within its coverage. Where employees are outside the statutory ambit, the contribution obligation under the Act and Scheme does not arise in respect of them.

Conclusion: The official liquidator is not liable to pay the employer's contribution for employees not covered by the Act.

Final Conclusion: The application succeeded in part: the liquidator was held liable for provident fund contribution while running the factory as a going concern, but not in respect of employees outside the Act's coverage.

Ratio Decidendi: When a liquidator is expressly authorised to continue operating a factory as a going concern, he assumes practical ultimate control of the undertaking and is ible for the statutory liabilities attaching to that operation under the provident fund legislation.

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