Supreme Court of India
N.K. JAIN AND OTHERSversusC.K. SHAH AND OTHERS
- Citation
- 1991 INSC 82
- Decided
- 26 March 1991
- Disposal
- Disposed off
- Bench
- S RATNAVEL PANDIAN
Holding
An exempted establishment remains bound by the conditions of its exemption; violation of those conditions, including failure to contribute, attracts the penal provisions of Sections 14(1A) and 14(2A), and cancellation of the exemption is not itself a penalty under Section 14(2A).
Summary
The appellants, managers of an establishment exempted from the Employees' Provident Funds Scheme 1952 under Section 17, failed to make provident‑fund contributions to their own trust in 1974. The Provident Fund Inspector filed criminal complaints under Sections 14(1A), 14(2) and 14(2A) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and threatened to cancel the exemption. The appellants argued that Section 6 did not apply to exempted establishments and that cancellation of exemption was the only penalty, not a criminal offence. The Supreme Court examined the scope of Sections 14 and 17, the meaning of "penalty", and the interpretation of "contribution", "scheme" and "fund" under Section 2. It held that the exemption is conditional; breach of those conditions, such as non‑payment of contributions, constitutes a contravention attracting Sections 14(1A) and 14(2A), and that cancellation of exemption is not a "penalty" within Section 14(2A). Consequently, the criminal proceedings may continue. The appeals were dismissed.
Issues considered
- Whether an establishment exempted under Section 17 of the Employees' Provident Funds Act can be prosecuted under Section 14 for contravention of Section 6.
- Whether failure to make provident‑fund contributions by an exempted establishment amounts to a contravention attracting Section 14(1A) and/or 14(2A).
- Whether cancellation of exemption under Section 17(4) constitutes a "penalty" within the meaning of Section 14(2A).
- How the terms "contribution", "scheme" and "fund" in Section 2 should be interpreted with respect to a private provident‑fund scheme of an exempted establishment.
- Whether Section 14(2A) applies when another penalty is provided elsewhere in the Act.
Legislation cited
- Amendment Act No. 33 of 1988
- Code of Criminal Procedure, 1973s. Chapter XX
- Employees' Provident Funds and Miscellaneous Provisions Act, 1952s. 14, s. 14(1A), s. 14(2), s. 14(2A), s. 17, s. 17(1), s. 17(1A), s. 17(4), s. 17(5), s. 2, s. 5, s. 6
- Employees' Provident Fund Scheme, 1952s. Paragraph 76
- Indian Trusts Act, 1882s. 5
Subjects
Employees' Provident FundSection 17 exemptionSection 6 contributionSection 14 penaltyStatutory interpretationPenal statutesCancellation of exemptionProvident fund scheme
Judgment
N.K. JAIN AND OTHERS
A -v.
C.K. SHAH AND OTHERS
MARCH 26. 1991
B [S. RATNAVEL PANDIAN AND K. JAYACHANDRA
.. - REDDY, 'JJ.)
Empfoye<:s' frovtdent Funds and Miscellaneous Provisions Act,
1952 ·Employees Provic(f,mt Funds Scheme, 1952: Ss: 5,. 6, 14, 17,~
Schedule JI Notification dated 17. 10: 1957 Paragraph 76-Establish-
mems exempted under s. 17-Employ_ers' scheme for co,ntribution of
C provident fund-Employers' .failure to contribute-Whether amounts to
contravention ·of s. 6 and attracts prosecution under s. ·14 or mere
cancellation of exemption 1,1,nder s. 17(4) s. 17( J)(a/-Exemption from
operation of 1952 Scheme granted subject to certain conditions-
Violation of conditions-Whether attracts s. 14(2A)-Nature and
D purpose of exemption explained. Ss. 17(4)-Cance/lation of exemption
granted under s. 17( /)-Whether amounts to 'penalty' as contemplated
by express.ion "if no. other penalty is elsewhere provided by or u_nder this
Act" occurring ins. 14(2A). Ss. 2, 2(c), 2(h}, 2(1)-Expression "unless
the context otherwise requires"--Scope of.-Words "contribution"
"fund" "scheme"-Whether applicable to a provident fund scheme
E instituted by an exempted csrablishment.
Interpretation of Statutes: Penal statutes-Construction of-
F
. Cohte~t in which the words are use(i is also important-Statute must be
read as a. whple-Words to be interpreted to achieve legislative purpose.
Code of Criminal Procedure, 1973: Chapter XX-Trial of
-
summons cases-<;mnp.~nts for offences punishable under ss. 14( IA)
and 14(2A) of £,mployees' Provident Funds and Miscellaneous Provi-
sions Act, 1952 pending-~- Prima fade case against the accused not ruled
out-Applicqtiuns j()r a.cqltittal an4 dropping of proceedings-Main-
tainability of · -
G
Words & Phrases: 'Pen.ci.lty'~Meaningof.
Employees' Provident- _Funds und Miscel}aJieous Provisions Act, --{
1952_ was enacted wi.th a view to prm:i~'e· for institutjon of provident
fund· for employees in factories andothert--stablisbments and was made
H ap_pAicable to '''<!cy e11tahlishment 'lhk~ came withit) too m~Wiing of
938
N:K. JAIN v. C.K. SHAH 939
~ . . '
~factory'. The Central Government under·s. 5 of the Act, framed the A
Employees' Provident Fund Scheme in 1952 for establishment of provi-
dent funds for the employees of the establishments governed by the Act.
Management of such establishments bad to.contribute to the provident
fund of its employees in accordance with s. 6. Contravention or default
in complying with s. 6. was punishable under s 14. Under s. 17 the
appropriate goverment·was empowered to grant exemption from the ~B
~operation of the 1952 Scheme provided the concerned establishment
had instituted its own provident fund scheme and the. rules in this
respect were .not Jess favourable than those specified in s. 6 and the
_ ...... employees were also in the enjoyment of other provident fund benefits.
The Act underwent .major amendments in. 1971 and thereafter.
The appellants were in the. management of. an' establishment
c
governed by the Act. By a notification dated 17.10.1957 the.Central
.'1' Governmen~ granted exemption under s .. 17 to the said establishment
subject to the conditions specified in Schedule II to the notification.
Condition no. 1 was to the effect that the factory was to have a provi-
dent fund scheme in force, the rules of which with respect to the rates:of D
contribution should not be less favourable than those specified ins. 6 of
the Act and the employees should also be in the enjoyment of other
provident fond benefits provided under the Act. Consequently the 1952
).... Scheme did not apply to the. company .as it created a trust and the
management was making contibutions of provident fund to the said
trust. In September/October, 1975, the Inspector Provident Fund tiled E
complaints that the appellants being incharge of the management of the
--- establishment failed to pay contributions to the provident fund trust in
1974 and thereby committed offences .punishable under ss. · 14(1A),
14(2), 14(2A), 14A(l), 14A(2), of the Act and Paragraph 76 of the 19S2
Scheme, the appellants also received notice d_ated 15.9.1975 threatening
\A.._to cancel the exemption granted under s. 17.· In September 1975 the F
company was closed and liquidation proceedings w~re initiated. . ·
·.:
·The appellants filed applications before the Metropolitan Magis-
trate, before whom the~complaints were pending, contendfug thats. 6 of
the Act was not applicable to establishments exempted under s •. 17, and
\. no proceedings under s •. 14 could be initiated against them; and prayed G'
~fOr their acquittal and for dropping of the proceedings. The applica-
tions were rejected.
The appellants thereupon ·filed .revision applications which ,were
dismiSsed by the Addi. Sesssions Judge, holding that s. 6 covered all the
establishments including, the exempted one; that even· an exempted H
940 SUPREME COURT REPORTS . (1991) 1 S.C.R.
)..·
A establishment was required to make full contribution to the provident
fund as provided by s. 6 and failure to pay contributions amounted to
contravention of s. 6 and attracted s. 14(1A)_; and that since the condi-
tions, subject to which exemption was granted under s. 17, were
violated, s. 14(2A) was also attracted.
B In appeal to this Court, it was contended by the appellants that
since the establishment was exempted under s. 17, it was governed ~
neither by the 1952 Scheme nor by s. 6 of the Act; that cancellation of
exemptiol\ under s. 17(4) was a penalty provided by or under the Act;
that If the word 'contribution' was construed strictly as deftned ins. 2,
failure by an exempted establishment in not paying provident fund
C contributions to the trust was not a contravention of s. 6; and that
before the introduction of s. 17(1A) by the Amendment Act 33 of 1988
the penal provisions including s. 14(1A) and 14(2A) were not applicable
to establishment exempted under s. 17.
On the questions whether: (1) for contravention of the provisions·
D of the Employees' Provident Funds and Miscellaneous Provisions Act,
1952 , criminal proceedings could be instituted under s. 14 of the Act
against an establishment exempted under s. 17; and (2) failure by the
establishment in question to pay the provident fund contributions to the
trust attracted the prosecution or only warranted cancellation of the ~
exemption under s. 17(4).
E
Disposing of the appeals, this Court,
HELD: 1.1 An exempted establishment has to provide for its
employees the beneftts whith are In no way less favourable than those
-
provided under the Employees' Provident Funds and Miscellaneous
F Provisions Act, 1952 and the Employees' Providend Fund Scheme 19.52. ...._
Under s. 17 the appropriate government may by notiftcation and sub-~
ject to such conditions as may be specified in the said notiftcation,
exempt an establishment from operation of the 1952 Scheme. if it is
satisfied that the establishment makes contribution to the provident
fund, which can be called a provident fund scheme of its own, and the
G rules governing such scheme are not less favourable than those specifted
ins. 6. [953A-C] 1
~.{
1.2 Contravention or non-compliance of any of the conditions,
subject to which exemption was granted under s. 17 is punishable under
s. 14(2A) if no other penalty is elsewhere provided by or under the Act.
H The essentials of the provisions are that there should be a contravention
N.K. JAIN v. C.K. SHAH 941
·'""' or default in complying with the provisfons of the Act or any of the
conditions subject to which exemption was granted under s. 17; and: A
that there should be no other penalty elsewhere provided by or under
the Act for such contravention or non-compliance. [954F-G]
1.3 In the instant case, the default in making the provident fund ,
contributions to tlte trust by the company amounted to contravention of , B
~- the rules; and consequently condition no. 1 mentioned in Schedule II to
the notification dated 17.10.1957, subject to which the exemption was'
granted, was cle~rly violated. [956D-E]
2.1 In common parlance the word ' penalty' is understood to 1
mean: a legal or official punishment such as a term of imprisonment. In
some contexts it is also understood to mean some other form of punish- ' C
ment such as fine or forfeiture for not fulruling a contract. But in 1
gathering the meaning of this word, the context in which it is used is ,
significant. [956G-H; 957A]
2.2 Section 14 of the Act dealing with penalties shows that every D
contravention or non-compliance mentioned in each of the sub-sections
is punishable with imprisonment and/or fine; and for some offences
minimum punishment is also made compulsory. The penalties men-
~- tioned in this connection would indicate that the Legislature envisaged
that a penalty should necessarily mean imprisonment or at least imposi- '
tion of fine. Having regard to the object underlying the Act, the expres- ,E
- sion 'penalty' in the context in which it is used in s.14 including
s. 14(2A), only connotes imposition of imprisonment or fine. [957A-B)
3.1 It is true that all the penal statutes should be construed
,
'
strictly and the court must see that the thing charged as an offence is 1
( within the plain meaning of the words used, but it must also be borne in F
A mind that the context in which the words are used is important. The
legislative purpose must be noted and the statute must be read as a
whole. The Employees' Provident Funds and Miscellaneous Provisions
Act, 1952 is a welfare legislation ands. 14 including ss. 14(2A) and 17
are part of it: ·and they should be interpreted in such a way so that the
purpose of the legislation is allowed to be achieved. [9638-D] G
~--
MIS International Ore and Fertilizers (India) Pvt. Ltd. v. Emp-
loyees' State Insurance Corporation, AIR 1988 SC 79, relied on.
Seaford Court Estates Ltd. v. Asher, [1949] 2 All E.R. 155, refer· I
red to. H
942 SUPREME COURT REPORTS [1991] 1 S.C.R.
·'A 3.2 Taking into consideration the objectunderlying the Act and
·'on reading ss. 14 and 17 in full, it becomes clear that cancellation of
exemptiOn does not amount to a penalty ·within the meaning of
s. 14(2A). It cannot be said that•mere cancellation ·of.an· exemption
granted under s. 17 amounts to a penalty particularly expected to be
·stringent as contemplated under s. 14. [963C; 957EJ. .
. . ' .
B
· State of Uttar Pradesh through the ProviJent Fund Inspector, -~
U. P. v. Lala Ram Gopal Gupta and th'ree Others, (1973] Allahabad Law
Journal 355, approved. ·· .
· ·· 3.3. Notwithstanding. the exemption granted, the appropriate
'government does not .Jose its hold over the scheme framed by the
C ,_establishment, and there are.builtin safeguards like s. 17(4) to protect
the interests of the employees. Section 17 is a self-contained provision
dealing with the power to grant exemption and the consequent obliga-
tion. The exemption is granted for getting better benfits and to ensure
their continuance for the employees with a view to avoiding duplication
D in framing a scheme by the appropriate government on the lines as
·framed by the establishment itself and. the purpose of the.exemption is
only to ensure such a scheme better than the one under s.. 6. The pro-
·. cedural aspect of s. 17(4) provides for cancellation of such exemption by
which only the privilege granted is being withdrawn by an· executive "°""
order. Such a cancellation does not penalise the management and conse-
E quently does not result in any punishment that is normally allowed in
respect of an offence. [960A-B; 961B-C]
Mohmedalli and Others v. Union of India and Another, (1963]
Suppl. 1 SCR993, relied on.
p · 3.4 So far as unexempted establishments are concerned, there are
several other penal provisions like ss. 14(1), 14(2) and 14AA and also in A
particular Paragraph 76 of the 1952 Scheme. There are other legal
provisions also which apply to unexempted establishments. Therefore
under the Amendment Act No. 33 of 1988 the Legislature wanted to
make•as far as possible these existing legal and penal provisions which
G are applicable to unexempted establishments, applicable also to exemp-
ted establishments. That does not mean that there were no penal prov~
sions earlier applicable to exempted establishinents .. [971E-F]
4. The subject matter and the context in which a particular word
'is used: are .of great importance and it .is axiomatic that the object
'H underlying the Act must always be kept in view in construing the con-
N.K. JAIN v. C.K. SHAH 943.,1
~ text in which a particular word is used. The concept which prompted :i A
the legislature to enact this·welfare law·shotild also be borne in mind in'
interpreting the provisions. Due·weight ought to be given to the words ,
"unless the context 'otherwise reqtiires" occurring ins. 2, which show 1
that restricted meaning in the definitiOns should ·not be applied; and the .
words 'contribution', 'scheme', 'fund' occurring in the said section
should in the "context" be otherwise interpreted as to apply to a pri- ff·
vate scheme also and if there is a default in "contribution" by the
~~ exempted establishment, the same amounts to contravention of· s. 6
punishable under s. 14(1A). [968G-H; 969A; 970D-F]
_ ,..__ :Commissioner of Expenditure-Tax, ·Gujarat, · Ahmedabad v. :
Darshan Surendra Parekh, [1968] 2 SCR 589; Bennet Coleman & Co .
. (P) Ltd. v. Punya Priya Das Gupta, [1970] 1SCR181; Organo Chemi- 'C'
cal Industries and Another v. Union of India and Others, [1979] 4 SCC
~ 573; Kanwar Singh v. Delhi Administration, [1965] 1 SCR 7; State of ,
Gujarat v. Chaturbhuj Magan/al and Another, [1976] 3 SCR 1076 and
Vanguard Fire & Gen; Ins Co, v. Fraser & Ross, AIR 1960 SC 971,
relied on. D · 1
!,.
Parekh Cotton Mills (P) Ltd. v. State of Bombay, [1957] 2 LLJ
490, refferred to.. · '· ' · ; ,'
)... 5. Sections 14(1A) and 14(2A) of the Act are attracted to tl~e facts :
in the 'instant case and it cannot be said that there .is no prima facie case; ' , E :
and col!lSequently the. accused ~cannot claim acquittal even before the
conclusion of the trial under Chapter .XX Cr.P .C. dealing with trial of
summons cases. [972G-H; 973A]
Besides ss.; 14A(l) and. 14A(2) of the Act, not. being applicable, . 1
s. 14(2) dealing with family pension scheme and insurance.scheme is not ·p
\.•~!elev ant in the insfant case.· Similarly Paragraph 76 of the 1952 Scheme , 1
1s also 1iot attracted as the establishment in question is exempted from
operation.ofthe said scheme. [953G-H; 954A; 973Al
R.. v. Smith, [1862] Le & Ca 131; People ex rel Risso v. Randall, 58 ·
N. Y. 2d 265, 268 Misc. 1057; City of Fort Wayne v. Bishop, 92 N.E. 2d G
\ 544, 547, 2~8 Ind. 304; City ofCincinnati v. Wright, 67 N.E. 2d 358 •. '
'r361, 77 Oh10 App. 261; R. v. Clyne, exp. Harrap (1941) VLR 200 at
201; Tolaram ·v. State of Bombay, AIR 1954 SC 496; S.K. Gupta and
Another,v; K.P. Jain and Another; (1979] 3 SCC 54; State Bank of"
India etc. v. ·Yogendra Kumar Srivastava and Others etc: [1987).3 SCC
10; Knightbridge Estates Trust Ltd. v. Byrne and Others, [1940] 2 All H ·
944 SUPREME COURT REPORTS [ 1991] 1 S.C.R.
E.R. 401 and National Buildings Construction Corporation v. Pritam ).-'
A
Singh Gill and Others, (1973] 1 SCR 40, referred to.
· Collins English Dictionary,, Butterworths' Words and Phrases,
Legally defined 3rd Edn. page 345, Principles of Statutory Interpreta-
tion by G.P. Singh Fourth Editfpn, 1988, referred to.
B
CRIMINAL APPELLATE JURISDICTION: Criminal Appral ...1..
Nos. 647-48 of 1979. <"'""\
From the Judgment and Order dated the 9.3.1979 of the Addi-
c
tional Sessions Judge, Ahmedabad in Crl. Revision Application Nos.
356 & 357 of 1978. ...
P. Chidambram, A.T. Patra, S.R. Aggarwal Ms. Monika Mobil
and Ms. Bina Gupta for the Appellants.
S.K. Dholakia, and Anip Sachthey for the Respondents.
D
The Judgment of the Court was delivered by
K.JAYACHANDRA REDDY, J. The question of general
importance that arises in these three appeals is whether criminal pro-
ceedings can be instituted under Section 14 of the Employees' Provi- ~
E dent Funds and Miscellaneous Provisions Act, 1952 ('Act' for short)
against an establishment exempted under Section 17 of the Act for the
contravention of the provisions of Section 6 of the Act?
The appellants, who are common in each of these three appeals,
were connected with the management of MIS Shri Subhlaxmi Mills
F Ltd. (hereinafter referred to as the "said Company") an establishment
governed by the Act. By a Notification dated 17th October, 1957 the . .
Central Government in exercise of the powers under Section 17 of the~ ·
Act granted exemption to the said Company subject to the conditions
specified in Schedule 2 annexed to the said Notification. As a result of
the said exemption the provisions of the employees' Provident Fund
G Scheme 1952 framed under Section 5 of the Act did not apply to the
said Company which created· a Trust and the management made con· ./
tributions of provident fund to the said trust and admittedly the1
exemption continued to be in operatie>n at all material times. In or
about September/October, 1975 the Inspector of Provident Fund filed
criminal complaints in the Court of the Judicial Magistrate Cambay
H against the appellants on the allegation that they being incharge of the
N.K. JAIN v. C.K. SHAH [REDDY, J.] 945
~ management failed to pay the contributions to the provident fund trust
A
and thereby committed offences punishable under Sections 14(1A),
14(2), 14(2A), 14A(l), 14A(2) and Peragraph 76 of the Employees'
Provident Fund Scheme, 1952. The appellants also received notice
dated 15th September, 1975 from the Inspector threatening to cancel
the exemption granted under Section 17 of the Act. However, some
time in September, 1975 the said Company's Mill had to be closed B
down and liquidation proceedings were initiated. The criminal comp·
)...taints persmmt to an order of the High Court were transferred to the
Court of the Second Metropolitan Magistrate, Ahmedabad. The
respondent No. 1, the complainant was examined who in his evidflnce
admitted tha1t the Government of India had exempted the said Com-
~any under :~ection 17 of the Act and the same had not been subse-
quently canc1elled and was in existence at all material times. The appel- c
lants filed an application praying that the proceedings against them
should be dropped and they should be acquitted on the ground that
'ii': Section 6 of the Act was not applicable to the establishment exempted
under Section 17 of the Act and therefore no proceedings under
Section 14 can be initiated against them. The learned Metropolitan D
Magistrate by his order dated 28th November, 1978 rejected the
aforesaid application. Being aggrieved. they filed three criminal revi-
sion applications in the Court of the Additional Sessions Judge,
Ahmedabad who by a common order dismissed the same taking the
all
;..__view that Sec1tion 6 of the Act covers and attracts the establishments
including the exempted establishment. Against that order in those E
three revision applications, the present appeals have been filed.
- Shri P. Chidambaram, learned counsel for the appellants, sub-
mitted that none of the Sections of the Act mentioned in the comp·
laints can be applied as against the appellants since the establishment
in question is exempted under Section 17 of the Act and consequently F
1 is not governed by the 1952 Scheme nor by Section 6 of the Act.
~ccording to the learned counsel, the Act does not provide for pro-
secution in respect of any of the offences enumerated under Section 14
in case of bn~ach by an exempted establishment in not paying the
provident fund contributions to the trust and therefore no prosecution
can be launched and that if at all the management of the establishment G
, had not deposited the provident fund contributions with the trust, the
)6-overnment was empowered only to cancel the exemption which also
amounts to a penalty.
The learned counsel appearing on both sides addressed elaborate
arguments and referred to various provisions of the Act and H
946 SUPREME 'COURT REPORTS ; · [1991] 1 S.C.R.
A, Emplbyees' Provident Fund Schehie .1952 and also took ·us through ~
several citations ahd also some ·passages in various text-books.
· · Before we proceed to consider the same·, ·we ·must note some. ,
undisputed facts . The establishment in q'uestii:m was governed by the.. '
provisions of the Act and it was exempted under Section 17 of the Act ·
B, and it:had its own trust in·respect bf the provident fund contributions·
but failed to· pay the provident fond contributions to the trust for some
period during 1974 and 'thus· there was a default. The controversy~
therefore is whether such faifure attracts the prosecution or only
warrants the cancellation ofthe exemp1ion granted?
This Act (~6. 19 of 19S~) was en~~ted to ~~ovi~e fo~ 'insti~~ion ~
of provident fund for einpMyees in factories and other establishments
and is· made·applicable to every ·establishment which comes within the
meaning of 'factory'. The Act undetwent·major amendments by Act
No. 16 of 1971 anci· also by some amendments thereafter, We are· ';1lf'
mainly concerned with the provisions of the Act that were in force at
o, the relevant· time 'i.e. in 1974: Section 2 contains various definitions ·
and· commences with the w0i-ds "In this Act;· unless the· context '
otherwise requires,?' and thereafter the definitions ate enumerated.· 1
"Contribution" is defined in Section 2(c) which means a contribution.
payable in respect of a member under the Scheme. The words "Con- ·
tribution''; ' "employer", '"employee", · "'factory'',. "fund" and 4..
"scheme" are defined in Sections·2(c), 2(e), 2(f), 2(g), 2(h) and 2('1)
respectively. They' reads as under: ·
2. In this Act, unlessthe context otherwise requires,. ....
"2(c). ':contribution'' means a contribution payable in ·
respect of a member under a Scheme (or the contribution
payable·in r~spect of an employee to whom the Insurance . .
Scheme applies);''; · · · · .' . . · --:
"2( e) "employer'' means-
G (i) in relation to an .establishment; ·which is a factory, the
owner or occupier of the factory, including the agent of .
such owner or occupier, •the legal representative -of a de:..(
ceased owner Or occupier and, where a· person has been
named as a manager of the factory under clause (f) of sub-
. section· ( 1) of Section 8 of the Eactories Act;· 1948, the
1-i person so named; and;
N.K. JAIN v. C.K. SHAH [REDDY, J.] 947
(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;"
B'
,..._,__
I "2(f) "employee" means any person who is employed for
wages in any kind of work, manual or otherwise, in or in
connection with the work of an establishment, and who
gets his wages directly or indirectly from the employer, and
includes any person employed by or through a contractor in
or in connection with the work of the establishment;"
c
"2(g) "factory" means any premises, including the pre-
cints there.of, in any part of which a manufacturing process
is being carried on or is ordinarily so carried on, whether
with the aid of power or without the aid of power;"
D
"2(h) "fund" means the provident fund established under
a Scheme;"
"2( 1) "scheme" means the Employees' Provident Fund
Scheme framed under Section 5;"
E
... Section 5 provides for framing a scheme which is in the following
terms:
"5(1) The Central Government may, by notification in the
Official Gazette, frame a Scheme to be called the
Employees' Provident Fund Scheme for the establishment F
of provident funds under this Act for employees or for any
class of employees and specify the establishments or class
of establishments to which the said scheme shall apply and
there shall be established, as soon as may be after the fram-
ing of the Scheme, a Fund in accordance with the provi-
sions of this Act and the Scheme. G ·
xx xx xx
We may mention here that the Employees' Provident Fund
Scheme 1952 was duly framed as provided under Section 5 and the
relevant provisions of the Scheme shall be referred to at the- appro- H:
948 SUPREME COURT REPORTS [1991] 1 S.C.R.
A priate stages. Section 6 is an important provision which deals with the
contribution and allied matters and.reads thus:
"6. The contribution which shall be paid by the employer
to the Fund shall be six and a quarter per cent of the basic
wages, dearness allowance and retaining allowance (if any)
B
for the time being payable to each of the employees
(whether employed by bim directly or by or through a con-
tractor), and the employees' contribution shall be equal to
the contribution payable by the employer in respect of him
and may, if any imployee so desires and if the Scheme
makes provision therefor, be an amount not exceecling eight
c and one third per cent, of his basic wages, dearness allo-
wance and retaining allowance (if any);
Provided that in its application to any establishment
or class of establishments which the Central Government,
after making such enquiry as it deems fit, may by notifica-
D tion in the Official Gazette specify this section shal be
subject to the modification that for the words "six and a
quarter per cent," the words "eight per cent" shall be
subsituted:
Provided further that where the amount of any con- ...(,
E tdbution payable under this Act involves a fraction of a
rupee, the Scheme inay provide for th_e_ rounding off of such -
- frJtction to fhe nearest rupee-, half o(a rupee or-quarter of a
rµpee.
Explanation 1 For the purposes of this section, dearness
F allowance shall be deemed to include also the cash value of
any food concession allowed to the employee. >
Explanation 2 For the purposes of this section, "retaining
allowance" means an allowance payable for the time being
to an employee of any factory or other establishment dur-
G ing any period in which the establishment is not working,
for retaining his services.
--{
The next important Section is Section 14 which deals with penalties.
1
For the purposes of the present case it would be enough if we extract
H the relevant provisions of Section 14 as mentioned in the complaints.
N.K. JAIN v. C.K. SHAH [REDDY, J.) 949
-...( Penalties:
A
"14( lA) An employer who comtravenes, or makes default
in complying with the provisions of section 6 or clause (a) of
sub-section (3) of section 17 in so far as it relates to the
payment of inspection charges, or paragraph 38 of the
Scheme in so far as it relates to the payment of administra-
tive charges, shall be punishable with imprisonment for a B
term which may extend to six months but-
(a) which shall not be less than three months in case
of default in payment of the employees' contribution which
has been deducted by the employer from the employees'
wages; C
(b) which shall not be less than one month, in any.
other case; and shall also be liable to fine which may extend
to two thousand rupees;
Provided that the court may, for any adequate and special
reasons to be recorded in the judgment, impose a sentence
of imprisonment for a lesser term or of fine only in lieu of
imprisonment;"
"14(2) Subject to the provisions of this Act, the Scheme
(the Family Pension Scheme or the Insurance Scheme) may E
provide that any person who contravenes, or makes default
in complying,with, any of the provisions thereof shall be
punishable with imprisonment for a term which may extend
to six months, or with fine which may extend to one
thousand rupees, or with both."
F
14(2A) Whoever contravenes or makes default in comply-
ing with any provisions of this Act or of any condition
subject to which exemption was granted under Section 17
shall, if no other penalty is elsewhere provided by or under
this Act for such contravention or non-compliance, be
\ punishable with imprisonment which may extend to three G
y months, or with fine which may extend to one thousand
rupees, or with both."
"14A(l) If the person committing an offence under this Act,
the Scheme (the Family Pension Scheme or the Insurance
H
950 SUPREME COURT REPORTS (1991] 1 S.C.R.-
Scheme) is a company, every person, who at the time the ~
A
offence was committed was in charge of, and was responsi-
ble to, the company for the conduct of the business of the
company, as well as the company, shall be deemed to be
guilty of the offence and shall be liable to be proceeded -
against and punished accordingly; '
B
Provided that nothing contained in this sub-section,,..1..,
shall render any such person liable to any punishment, if he
proves that the offence was committed without his know-
ledge or that he exercised all due diligence to prevent the
commission of such offence." ~
c "14A(2) Notwithstanding anything contained in sub-
section ( 1), where an offence under this Act, the Scheme or
the. Family Pension Scheme or the Insurance Scheme has ~
been committed by a company and it is proved that the
offence has been comµiitted with the consent or connivance
D of, or is attributable to, any neglect on the part of, ~ny
director or manager, secretary or other officer of the com-
. pany, such director, manager, secretary or other officer
shall be deemed to be guilty of that offence and shall be
liable to be proceeded against arid punished accordingly. ...J...
E Explanation-For the purposes of this Section,-
( a) "company" means any body corporate and includes a
firm and other association of individuals; and
(b) "director'; in relation to a firm, means a partner in the
firm,"
The next important Section to be noted is Section 17(1)(a) which
empowers the Government to grant exemption which is in the follow-
ing terms:
G "17( 1) The appropriate Government may, by notification
in the Official Gazette and subject to such conditions~
may be specified in the notification, exempt from the
operation of all or any of the provisions of any Scheme-
(a) any establishment to which this Act applies if, in the
opinion of the appropriate Government, the rules of its
N.K. JAIN v. C.K. SHAH [REDDY, J.] 951
provident fund with respect to the rates of contribution are
not less favourable than those specified in Section 6 and the
A
employees are also in enjoyment of other provident fund
benefits which on the whole are not less favourable to the
employees than the benefits provided under this Act or any
Scheme in relation to the employees in any other establish-
ment of a similar character; or B
xx xx xx"
Section 17(4) provides for cancellation of such an exemption if
~ any employer fails to comply with the conditions. The relevant provi-
- sion 17(4) (a) reads thus:
c
"17 (4) Any exemption granted under this section may be
cancelled by the authority which granted it, by order in
writing, if an employer fails to comply,-
(a) iri the case of an exemption granted under sub-section D
(1), with any of the conditions imposed under that sub-
section or with any of the provisions of sub-section (3).
xx xx xx
xx xx ·xx"
E
Section 17(5) deals with transfer of provident fund so far contributed
after such cancellation and it reads as under:.
"17 (5) Where any exemption granted under sub-section
(1), sub-section (lA), sub-section (2), sub-section (2A) or
sub-section (2B) is cancelled, the amount of accumulations F
'· to the credit of every employee to whom such exemption
applies, in the provident fund, the family pension fund or
the insurance fund of the establishment in which he is emp-
loyed shall be transferred within such time and in such
manner as may be specified in the Scheme or the Family
Pension Scheme or the Insurance Scheme to the Credit 9f G
his account In the Fund or the Family Pension Fund orthe
Insurance Fund, as the case may be."
The only other provision to be noted before we proceed further is
paragraph 76 of the 1952 Scheme the contravention of which is also H
mentioned in the complaints. It reads thus:
952 SUPREME COURT REPORTS [ 1991] 1 S.C.R.
"76. Punishment for failure to pay contributions etc.-lf '~
A any person-
(a) deducts or attempts to deduct from the wages or other
remuneration of a member the whole or any part of the
employer's contribution, or ,
B
(b) fails or refuses to submit any return, statement or other~
document required by this Scheme or submit a false return,
statement or other document, or makes a false declaration,
or
~
(c) obstructs any Inspector or other official appointed -.
c under the Act or this Scheme iri the discharge of his duties
or fails to produce any record for inspection by such Ins-
pector or other official, or ~
(d) is guilty of contravention of or non-compliance with
D any other requirement of this Scheme,
he shall be punishable with imprisonment which may
extend to six months or with fine which may extend to one
thousand rupees, or with both."
E On a perusal of the above extracted provisions of the Act the
-
following aspects to the extent relevant to the.present case can be spelt
out. The Management of an establishment has to contribute to the
provident fund and the Government under Section 5 can frame a
scheme called Employees' Provident Fund Scheme and such a scheme
was framed in the year 1952. The scheme provides for the establish-
F ment of provident fund under the Act for employees of the establish-
ments specified therein. Section 6 is the material provision and deal. .
with contributions which may be provided under the Scheme and also
prescribes the rate of contribution to the fund and that the employees'
contribution should be equal to the contribution payable by the emp-
loyer. Section 14 deals with the penalties and section 14(1A) lays down
G that an employer who contravenes, or makes default in complying with
the provisions of Section 6 shall be punishable with imprisonment f~
term which may extend to six months but shall not be less than three
months in case of default in payment of the employees' contribution
which has been deducted by the employer from the employees' wages.
But for adequate reasons it cai;i be less. Paragraph 76 of the Scheme
H also provides for punishment for failure to pay such contributions to
N.K. JAIN V. C.K. SHAH [REDDY, J.) 953
~ the fund. Then we have Section 17 which provides for the exemption.
A
As per the said Section the appropriate Government may be notifica-
tion and subject to such conditions, as may be specified in the notifica-
tion, exemept from the operation of all or any of the provisions of any
Scheme (in the present case 1952 scheme) if the appropriate Govern-
ment is satisfied that the rules of the provident fund which a particuler
establishment is following in the matter of contribution to the provi- B
>.- dent fund are not less favourable than those specified in Section 6 and
that the employees are also in enjoyment of other provident fund
benefits. In other words the exemption from the operation of the
scheme is granted provided the particular establishment makes con-
~- tribution as per its own rules governing the contribution to the fund,
which in other words, can be called a provident fund scheme of its own
are not less favourable than those specified in Section 6. Accordingly c
the exempted establishment has to provide for its employees the be-
~ nefits which are in no way Jess favourable than the ories provided
'~
under the Act and the Scheme.
Now the question is whether failure to make the contribution by D
the exempted establishment to the provident fund as per its one rules
could attract the penal provisions of Section 14? The learned Addi-
tional Sessions Judge, however, as hereinbefore mentioned, held that
>.- Section 6 covers and attracts all be establishments including the ex-
empted establishment. Even otherwise according to him, Section
14(2A) which applies to an exempted establishment is clearly attracted E
- inasmuch as the conditions subject to which exemption was granted
under Section 17 have been violated in the instant case. The learned
Additional Sessions Judge also gave a finding that Section 14(1A) also
is attracted as in his view even an exempted establishment is not
absolved from the liability of employer's contribution as also the emp-
-... loyees' contribution to the provident fund and therefore by necessary F
\4jmplication the employer and the employees of an exempted establish-
ment have to make full contribution to the provident fund as required
under Section 6 of the Act, and if its contribution remains unpaid it
amounts to contravention of the provisions of Section 6 of the Act the
thus attracts Section 14(1A).
G
~-- We may point out at this stage that Section 14(2) and paragraph
76 of the Scheme are not attracted in the present case. So far as Section
14(2) is concerned it can be seen that the provision deals with the
family pention scheme or the insurance scheme etc. We are not
concerned, in the present case, with any such scheme. We are only
concerned with the provident fund as defined under Section 2(h) of the H
954 SUPREME COURT REPORTS [1991] 1 S.C.R.
Act. Similarly paragraph 76 of the 1952 Scheme also is not attracted ~
A
because the establishment herein is admittedly exempted from the
operation of the scheme. We may also mention here that similarly
Sections 14A(l), 14A(2) and 14AA which are also mentioned in the
complaints also are not attracted. Shri S.K. Dholakia, learned counsel
appearing for the respondents, could not dispute the same. Then we
B are left with Sections 14(1A) and 14(2A). While it was the submission
of Mr. Chidambaram, learned counsel for the appellants that even
these two provisions are also not attracted, Shri Dholakia, on the ~
other hand, submitted that both the provisions are attracted and at any
rate Section 14(2A) is clearly attracted and therefore no interference is
called for in these appeals. ..._ __ .... •
c We shall first take up the submissions in respect of Section
14(2A). This Section lays down that whoever contravenes or makes
default fa complying with any provisions of the Act or of any condition ~
(
subject to which exemption_was granted under Section 17 shall, if no ..;
other penalty is elsewhere provided by or under this Act for such contra-
D vention or non-compliance, be punishable with imprisonment a~ d also
fine mentioned therein. Firstly, it is submitted that the only contraven-
tion alleged against the appellants is that no contribution was made to
the provident fund and since it is an exempted establishment, Section 6
is not attracted and therefore it must be held that there is no contra-
vention or non-compliance of any of the provisions of the Act. In other ~
E words, the submission is that Section 6 of the Act applies only to the
-
. non-exempted establishments and covered under the statutory exem-
tion. The learned Additional Sessions Judge, however, as already
noted, has held that Section 6 applies to both exempted and non-
exempted establishments. This aspect we will consider at a later stage
while examining the applicability of Section 14(1A). So far Section
F 14(2A) is concerned, the later part of it specifically is made applicable
to the exempted establishments and if there is contravention of any o f .
the conditions subject to which exemption was granted under Section
17 and if no other penalty is elsewhere provided by or under the Act
then such contravention or non-compliance is 'punishable. The essen-
tials of these provisions are; (i) there should be a contravention or
G default in complying with the provisions of the Act, or (ii) there should
be a contravention or default in complying with any of the conditio~s /
subject to which exemption was granted under Section 17, and (iii}1"
there should be no other penalty elsewhere provided by or under the
Act for such contravention or non-compliance. Only when these essen-
tials are satisfied, the Section is attracted. The learned counsel for the
H appellants submitted that in tbe- present case there is no such contra-
N.K. JAIN V. C.K. SHAH [REDDY, J.] 955
~ vention or non-compliance of any ·of the conditions subject to which
:A
exemption was granted. His further submission in this context is that
the cancellation of an exemption as provided under Section 17(4) is a
penalty provided by or under the Act for such contravention and
therefore Section 14(2A) is not attracted. To appreciate these conten-
tions it becomes necessary to refer to the conditions subject to which
the exemption under Section 17 was granted in the present case. The B
~ relevant conditions for our purposes are Conditions Nos. 1, 2(a), 2(b ),
10 and 15 and they read as under: .
"SCHEDULE-II (Conditions)
- 1. Every factory shall have a provident fund scheme in
force the rules of which with respect to the rates· of con-
tribution shall not be less favourable than those specified in
c
Section 6 of the Act and the employees shall also be in
enjoyment of other provident fund benefits which on the
whole shall not be less favourable to the employees than
the benefits provided under the Act or any Sch~me in rela- D
tion to the employees in any other factory of a similar
character and these rules shall be followed in all respects.
2. The employer in relation to each factory (hereinafter
referred to as the 'employer') shall within three months of
the date of publication of this notification, amend the con- E
-
stitution of the Provident Fund maintained in respect of the
factory in regard to the following matters namely:
(a) The Provident Fund shall vest in a Board of
Trustees and there shall be a valid instrument in writ-
ing which adequately safeguards the interests of the F
employees and such instruments shall be duly regis-
tered under Section 5 of the Indian Trusts Act, 1882;
(b) the Board of Trustees shall consist of an equal
number of representatives of the employees and the
employer and all questions before the Board shall be G
decided by a majority of votes;
xx xx xx
10. The employer shall accept the past provident fund
accumulations or an exempted fund and who-obtains emp-
loyment in his factory. Such an employee shall immediately H
956 SUPREME COURT REPORTS [1991) 1 S.C.R.
be admitted as a member of the factory's Provident Fund. ).--
A His accumulations which shall be transferred within 3
months of his joining the factory shall be credited to his
account.
xx xx xx
15. Exemption granted by this notification is liable to be .-J..._
withdrawn by the Central Provident Fund Commissioner
for breach of any of the aforesaid conditions or for any
other sufficient cause which may be considered appro-
priate."
As per condition No. 1 the exempted factory should have a provident
fund scheme in force the rules of which with respect to the rates of
contribution shall not be less favourable than those specified in Section
-
6. This part of the condition is in conformity with the requirement
under Section 17(1). The condition proceeds to lay down that these
rules shall be followed iri all respects. There is no dispute that as per
the rules governing the provident fund scheme of the exempted
establishment in question, the contributions have to be made regularly
and condition No. 1 lays down that these rules should be followed in all
respects. The default in making the contribution amounts to contra-
vention of the rules and consequently the condition No. 1, subject to ..,,(_
which the exemption was granted, is clearly violated. That there was a
violation of this condition is also made clear by the notice issued by the
Regional Provident Fund Commissioner on 15.9.75. The relevant por- · ..-
ti on of the notice reads thus:
"And thus it has violated the conditions governing grant of
exemption for contravention of which the offenders are
liable for the cancellation of the exemption granted under • ·
Section 17 of the Employees' Provident Fund Act, 1952." ·
We are therefore satisfied that some of the conditions subject to which
the exemption was granted have been violated. So this part of Section
G 14(2A) is satisfied. Now we shall see whether the cancellation under
Section 17( 4) is a penalty provided by or under the Act. ~
In the common parlance the word 'penalty' is understood to
mean; a legal or official punishment such as a term of imprisonment.
In some contexts it is also understood to mean some other form of
H punishment such as fine or forfeiture for not fulfilling a contract. But
N.K. JAIN v. C.K. SHAH [REDDY, J.] 957
in gathering the meaning of this word, the context in which this is used
is significant. In the Act, as already noted, Section 14 deals with A
penalties and enumerates various contraventions or non-compliances
which are punishable with imprisonment. Every contravention
mentioned in each of the sub-sections is punishable with imprisonment
and for offences covered by Sections 14(1A), 14(1B) and 14(2A) minimum
imprisonment is also made compulsory. The imposition of fine also is B
perscribed. The penalties mentioned in this connection would indicate
that the Legislature envisaged that a penalty should necessarily mean
imprisonment or atleast imposition of fine. We find from the reports
that the National Commission of Labour having found that the work-
ing of the Employees' Provident Fund and Family Pension Fund Act,
1952 are not effective and that in order to cheque the growth of arrears
penalties for defaults in payment of provident fund dues should be c
made more stringent and the default should be made ccgnizable.
Accordingly it was proposed to amend the Act so as to render penal
provisions more stringent and to make defaults cognizable offences
and provisions were also made for compulsory imprisonment in case of
non-payment of contributions and administrative and inspection D
charges. The provisions of the Act thereafter are suitably amended.
We must bear this object and reasons in mind in examining whether a
mere cancellation of the exemption granted under Section 17(4) would
amount to a penalty. No doubt under Section 14(2A) one of the
reg uirements is that "there should be no other penalty elsewhere pro-
vided by or under the Act for such contravention or non-compliance," E
but we are not persuaded to hold that the mere cancellation of an
- exemption amounts to a penalty particularly expected to be stringent
as contemplated under Section 14. However, we shall proceed to con-
sider some of the submissions made on this aspect. The learned
counsel referred to certain standard books on words and phrases. In
Butterworths' Words and Phrases, legally defined Third Edition page F
343 the meaning of the word 'Penalty' is given as that the word
'penalty' is large enough to mean, is intended to mean, and does mean,
any punishment whether by imprisonment or otherwise. Blackburn, .T.
in R. v. Smith, [1862] Le & Ca 131 at 138, observed as under:
"I consider that the word "penalty" falls to be read in a G
wide popular sense, . . . and I select two definitions
' y adequately conveying that sense. The late Mr. Roberton
Christie (The Encyclopaedia, Vol. 11, p 204) said:
"Penalty in the broad sense may be defined as any suffering
in person or property by way of forfeiture, deprivation or
disability, imposed as a punishment by law or judicial H
'·
958 SUPREME COURT REPORTS [1991] 1 S.C.R.
authority in respect of ... an act prohibited by statute."
A
The Oxford Dictionary echoes the same wide conception
by referring to "a loss, disability or disadavantage of some
kind ... fixed by law for some offence."
The meaning of the word 'penalty' as given in the Collins English
B Dictionary, is as under:
"Penalty: 1. a legal or official punishment, such as a term
of imprisonment. 2. some other form of punishment, such
as a fine or forfeit for not fulfilling a contract. 3. loss, t
suffering, or other unfortunate result of one's own action,
error, etc. 4. Sport, games etc. a handicap awarded against
c a player or team for illegal play, such as a free shot at goal
by the opposing team, loss of points, etc."
In addition, the learned counsel also relied on some decisions of
foreign courts where the meaning of the word 'penalty' was consi-
D dered. In People ex rel Risso v. Randall, 58 N.Y. 2d 265, 268 Misc.
1057, it was held that:
"A "penalty" may refer to both criminal and civil liability,
being denied as penal retribution, punishment for crime of
offense, the suffering in person, rights or property which is
E annexed by law or judicial decision to commission of a
crime or public offense."
In City of Fort Wayne v. Bishop, 92 N.E. 2d 544, 547, 228 Ind. 304, it
was observed as under:
-
F "The term "penalty" embraces all consequences visited by
law on heads of those who violate police regulations and
extends to all penalties whether exigible by state in interest
of community or by private persons in their own interest,
even when statute is remedial as well as penal."
G In City of Cincinnati v. Wright, 67 N.E. 2d 358, 361, 77 Ohio App. 261,
it was noted that:
"The word "penalty" is not confined to punishment or
crime; it has a broader meaning in law of contracts; it is
used as contradistinguished from liquidated damages. It is
H also used to indicate the sum to be forfeited on breach of a
'
N.K. JAIN v. C.K. SHAH [REDDY, J.] 959
bond. And in common parlance it expresses any dis-
A
advantage resulting from an act."
The learned counsel relying on the above meanings given to the word
'penalty' submitted that a cancellation in ·other words a forfeiture of the
right given amounts to punishment. It is also his submission that this is
a penalty provided by or under the Act inasmuch as such a cancellation B
is contemplated under Section 17(4) and that the word "under" cannot
but be understood to mean that it covers the cancellation of the
exemption also provided under Section 17( 4). In this context he relied
on the meaning of the word "under" as given in Butterworths' Words
and Phrases, legally defined. Third edition page 345:, which reads
thus:
"In one sense every act of a body which is the creature of
statute may be said to be done "under" or by virtue of the
statute creating it."
The author has extracted the observations made by O' Bryan, J. in R. D
v. Clyne, exp Harrap (1941) VLR 200 at 201, as under:
"In another sense the acts of such a body may be said to be
done "under" or by virtue of some provision granting a
general jurisdiction to act in relation to a variety of
matters. But the expression is also quite commonly used in E
- relation to a particular act, when the general jurisdiction to
act is assumed, to designate the· more particular power to
(.
do that particular act. It is rash to attempt to substitute a
different expression for the more simple and usual one
used, but in this connection "under" is perhaps more aptly
translated by the expression "pursuant to" than by the F
phrase "by virtue of." It is necessary to have regard to the
context to determine in which sense the word is used."
(emphasis supplied)
It therefore cannot be gainsaid that the context in which these words
are used is significant. At this juncture we may also note that the G
\ ••- scheme or rules framed by a compan_y in respect of the provident fund
of the employees are meant to be duly complied with. The exemption
under Section 17 is incorporated in the Act for getting better benefits
for the employees and the same. is granted with a view to avoiding
duplication that is to say for framing a scheme by the appropriate
Government on the lines as framed by the establishment itself and H
960 SUPREME COURT REPORTS [1991] 1 S.C.R.
A such an exemption is meant to ensure to the employees the con-
tinuance of the benefits and the purpose of the exemption is only to
ensure such a scheme better than the one under Section 6 of the Act. It
must also be noted that notwithstanding the exemption granted under
Section 17 of the Act the appropriate Govenment does not lose its hold
over the scheme framed by the establishment and there are built-in
B safeguards in Section 17 itself to protect the interests of the employees
and Section 17(4) is one such safeguards. In Mohmedalli and Others v.
Union of India and another, [1963] Suppl. 1SCR993; it is held that:
'"It would appear from the terms of the relevant portion of
c
s. 17 that the exemption to be granted by the appropriate
Government is not in the nature of completely absolving
the establishments from all liability to provide the facilities
contemplated by the Act. The exemptions are to be
~
'.,c
--
.;
granted by the appropriate Government only if in its
opinion the exempted establishment has provisions made
for provident fund, in terms at least equal, if not more
D favourable, to its employees. Jn other words the exemp- ..
tion is with a view to avoiding duplication and permitting the
employees concerned the benefit of the pre-existing scheme,
which presumably has been working satisfactorily, so that
the exemption is not meant to deprive the employees con- ~
cerned of' the benefit of a provident fund but to ensure to
E them the continuance of the benefit which at least is not in
terms less favourable to them. As the whole scheme of pro vi-
dent fund is intended for the benefit of employees, s. 17 only
saves pre-existing schemes of provident fund pertaining to
particular establishments."
(emphasis supplied)
F
Having examined the scope of Section 14(2A) in this background, we
,...._,
find it difficult to agree with the learned counsel that the cancellation
of the exemption granted under Section 17(4) amounts to a penalty
under Act within the meaning of Section 14(2A).
G We may also note that Section 14(2A) was introduced in the year
1953 by Act No. 37 of 1953 whereas sub-section 4 of Section 17 was----.{
introduced in the year 1963 by the amendment Act No. 28 of 1963,
nearly ten years later. This only shows that the cancellation is not
meant to be treated as one of the penalties and the reasonable infe-
rence is, particularly having regard to the object underlying the Act,
H that the expression 'penalty' in the context in which it is used particu-
N.K. JAIN v. C.K. SHAH [REDDY, J.) 961
~ larly in Section 14 including Section 14(2A) pnly connotes imposition
of imprisonment or fine. The cancellation as provideq under Section A
17(4) is only consequential and also rather procedural meant to be
applied to the exemption granted under Section 17(1) in case of npp-
compliance of the conditions subject to which such exemption was
granted. A close perusal of Section 17 and its various sub-sections
would clearly indicate that it is a self-contained provision dealing with IJ
the power to grant exemption and the consequent obligations and th~
~ procedural aspects an~ Section 17(4) is a built-in provision provi<fing
for cancellation of such exemption in case of contravention or non-
complian9e of the conditions. By a cancella,tion of the exemption only
- ..._ the privilege granted is being withrawn·by an executive order. Suffice
it to say that such a cancellation does not penalise the management ;i.nq
consequently does not result in any punishment that is normally
awarded in respect of an offence. In State of Uttar Pradesh through the
c
':It Provident Fund Inspector, U.P. v. Lala Ram Gopal Gupta anq three
Others, [1973] Allahabad Law Journal 355 a Division Bench ~nsi-
dered this very question and held that the cancellation of exemption in
accordance with Section 17(4)(a) does not involve imposition of '! ()
penalty within the meaning of Section 14(2A) of the Act. In our view
the Division Bench of the Allahabad High Court rightly held that
cancellation under Section 17(4)(a) is not an alterantive penalty for
failure to comply with the conditions subject to which the exemption
)..__
was granted and if the Parliament had contemplated that the cancel}a-
ti on of the· exemption amounted:' to penalty· within the meaning of E
- Section 14(2A) it was purposeless to provide for any similar pen;:i.lty
under Section 14(2A). It is thus clear that if the contention of Uw
learn~d counsel is to be accepted then Section 14(2A) woidd become
otoise and reduqdant.
The learned counsel submitted .that these being penal provisions F
'·yA.__ should be interpreted strictly and if so interpreted the qm9ellation of
exemption under Section 17(4) cannot but be a penalty under the Act.
The learned author Justice G.P. Singh in his book Principles of Statu-
tory Interpretation Fourth Edition 1988, has stated the general princi-
ples regardin.g the construction of penal statutes as follows:
G
'y "Clear language is now needed to create a crime ..... If
there is a reasonable interpretation which will ;ivoid the
penalty in any particular case we must adopt that construe-
tion and if there are two reasonabie constrµctionfi WI'! must
give the more lenient one."
H
962 SUPREME COURT REPORTS [1991] 1 S.C.R.
In Tolaram v. State of Bombay, AIR 1954 SC 496. Mahajan, C.J.
A
observed as under:
"If two possible and reasonable constructions can be put
upon a penal provision, the court must lean towards that
construction which exempts the subject from penalty rather
a than the one which imposes penalty. It is not competent to
the court to stretch the meaning of an expression U:sed by
the legislature in order to carry out the intention of the
legislature."
The learned author Justice G.P. Singh after extracting the principles
c laid down by the Supreme Court as well as by the English courts
summed up the principles in the following manner:
-i,
....
"The content of the rule and its limits, in the sense now
~
understood, may be summed up in the following pro-
positions:
D
(1) If the prohibitory words in their known signification
cover only some class of persons or some well-defined
activity, their import cannot be extended to cover other
persons or other activity on considerations of policy or
object of the statute. ,.,i,._
E
-
(2) If the prohibitory words are reasonably capable of
having a wider as also a narrower meaning and if there is no
clear indication in the.statute or in its policy or object that
the words were used in the wider sense, they would be
....
given the narrower meaning.
F
(3) When the prohibitory words are equally open to two
constructions, one of which covers the subject and the
other does not, the benefit of construction will be given to
the subject.
G (4) If the prohibitory words in their known signification
bear a wider meaning which also fits in with the object or
policy of the statute, the words will receive that wider ~
meaning and their import will not be restricted even if in
some other context they can bear a narrower meaning.
H (5) ·If the literal reading of the prohibitory words produces
N.K. JAIN V. C.K. SHAH [REDDY, J.] 963
~ an unintelligible or non-sensual result. but the statute read
A
as a whole gives out its meaning clearly, effect will be given
to that meaning by curing a mere defect in phraseology."
Relying on the aforesaid principles governing the construction of the
penal statute Shri P. Chidambaram, learned counsel for th_e appellants
submitted that the provisions of Section 14(2A) and Section 17(4) B
should reasonably be construed and if so construed Section 14(2A)
~· becomes inapplicable to the facts of the case on hand. It is true that all
the penal statutes should be construed strictly and the court must see
that the thing charged as an offence is within the plain meaning of the
;A., words used but it must also be borne in mind that the context in which
..... the words are used is important. The legislative purpose must be noted
and the statute must be read as a whole. In our view taking into c
consideration the object underlying the Act and on reading Sections 14
-;zt(' and 17 in full, it becomes clear that cancellation of the exemption
granted does not amount to a penalty within the meaning of Section
14(2A). As already noted these provisions which form part of the Act,
which is a welfare legislation are meant to ensure the employees the D
continuance of the benefits of the provident fund. They should be
interpreted in such a way so that the purpose of the Legislation is
allowed to be achieved (vide Mis International Ore and Fertilizers
.__ (India) Pvt. Ltd. v. Employees' State Insurance Corporation, AIR 1988
SC 79. In Seaford Court Estates Ltd. v. Asher, [1949] 2 All ER 155,
Lord Denning, L.J. observed: E
- "The English language is not an instrument of mathemati-
cal precision. Our literature would be much poorer if it
were. This is where the draftsmen of Acts of Parliament
,._ have often been unfairly criticised. A judge, believing him-
self to be fettered by the supposed rule that he must look to
the language and nothing else, laments that the draftsmen
have not provided for this or that, or have been guilty of
F
some or other ambiguity. It would cerainly save the judges
trouble if the Acts ,of Parliament were drafted with divine
prescience and perfect clarity. In the absence of it, when a
defect appears, a Judge cannot simply fold his hands and G
y- blame the draftsman. He must set to work on the construe-
tive task of finding the intention of Parliament, and he must
do this not only from the language of the statute, but also
from a consideration of the social conditions which gave rise
to it and of the mischief which it was passed to remedy, and
then he must supplement the written word so as to give 'force H
964 SUPREME COURT REPORTS [1991] 1 S:C.R.
and life' to the intention of legislature. A Judge should ask 'y
himself 'the question how, if the makers of the .A.ct had
themselves come across this ruck in the texture of it, they
would have straightened it out? He must then do so as tlwy
would have done. A judge must not alter the material of
.which the Act is woven, but he can and should iron out the
creases."
(emphasis supplied) ~
"Thenffore in Ji .case of this nature, a purposive approach is necessary.
'However, in our view the interpretation of the word 'penalty' used in
Section 14(2A) does not present any difficulty and cancellation is not a
punishment amounting to penalty within the meaning of this Section.
c
Shri P. Chidambaram, however, submitted that unless the con-
text otherwise requires, such a purposive or liberal approach need not
be resorted to. He invited our attention to the opening words "unless
the context otherwise requires" occurring in Section 2 which contains
definitions. We may at this juncture point out that these words strictly
apply to definitions and while considering the scope of Section 14(2A)
we have proceeded adhering to the language of the Section. However,
we shalJ consider the effect of these opening words in Section 2A, at a
later stage while considering the submissions of Shri Dholakia regard-
ing the applicability of Section 14( lA).
E
Shri P. Chidambaram, learned counsel for the appeilants, how-
ever, contended that the failure to contribute to the fund under the
1952 Scheme only is punishable as it amounts to "contravention" and
that in the instant case the complaint is that the management failed to
...
I
contribute to the fund maintained by the establishment itself and such
F a failure is not punishable and the word "contribution" must be con-
strued strictly as defined under Section 2 ·and not otherwise as the _A./
context does not otherwise require. Similar words occur in Section 2 of
the Companies Act and in S.K. Gupta and Another v. K.P. Jain and
Another, [ 1979] 3 SCC 54 wherein it is held as under:
G "Where in a definition section of a statute a word is defined
to mean a certain thing, wherever that word is used in that__./
statute, it shall mean what is stated in the definitions unless
the context otherwise requires. But where the definition is
an inclusive definition, the word not only bears its ordi-
nary, popular and natural sense whenever that would be
H applicable but it also bears its extended statutory meaning.
N.K. JAIN v. C.K. SHAH [REDDY, J.] 965
At any rate, such expansive definition should be so con-
A
strued as not cutting down the enacting provisions of an
Act unless the phrase is absolutely clear in having opposite
effect."
In State Bank of India etc. v. Yogendera Kumar Srivastava and Others
etc.' [1987] 3 sec 10 it is observed: B
>-.-.. "Repugnancy of the definition of any term may arise only if
such definition does not agree with the subject or context
of a particular provision. But, surely, any action not in
-- conformity- with the provision of the definition clause will
L
not render the definition of a term repugnant to the subject
or context of any provision of the statute containing the c
term."
'7111.
Relying on the above, passages, the learned counsel for the appellants
further submitted that the context in which the word 'penalty' is used
would show that Section 14(2A) does not necessarily require that there D
should be a punishment of either imprisonment or fine inasmuch as the
"cancellation" also can be a penalty within the meaning of Section
14(2A). At any rate according to the learned counsel for the appellants
there is an ambiguity and that this being a penal law, the provisions
~
should be construed strictly and necessarily the benefit of doubt, if
any, should go to the accused. In view of the discussion already made E
by us on this aspect, this contention does not merit acceptance. In our
- view, there is no ambiguity as suggested by the learned counsel for the
appellants. Even assuming so, in view of the object underlying the Act
the context does definitely require a reasonable interpretation of Sec-
tion 14(2A) so as to make it applicable also to a case· of failure to
contribute to the fund as per the conditions under which the exemption F
',.&.. was granted. Like-wise it must also be interpreted to mean that cancel-
lation does not amount to a penalty. Therefore the submission that
Section 14(2A) is not attracted does not merit acceptance.
Shri Dholakia, learned counsel for the respondents, as already
noted, submitted that in addition to Section 14(2A), Section 14(1A) is G
y also attracted and the appellants are punishable under that provision
for the contravention and non-compliance of Section 6 of the Act. In
his submission, the words "fund" and "scheme" should be given a
wider meaning and cannot be restricted merely because of their defini-
tions as contained in Section 2. According to the learned counsel, the
opening words of Section 2 namely "Unless the context otherwise H
966 SUPREME CQURT REPORTS [1991] 1 S.C.R.
i
requires" give a scope for a wider interpretation ahd they cannot be
A
narrowly understood to mean only "fund" and "scheme" as men-
tioned therein. As this point has been argued in support of the applica-
bility of Section 14( lA) we shall cpnsider the same from that perspec-
tive. Section 2 begins with the words "In this Act, unless the context
otherwise requires.". Section 2(c) defines "contribution" to mean a
B Gontribution payable in respect of a member under a Scheme.Section
2(h) defines "fund" to mean the :provident fund established under a ~
Scheme and Section 2(1) defines "Scheme" to mean the Employees'
Provident _Fund Scheme framed Uihder Section 5. Section 5 empowers
the Central Government by a notirication to frame a scheme and such
a scheme was framed in 1952 called the Employees' Provident Fund
Scheme of 1952. Section 6, as alre~dy noted, lays down that the "con-
c tribution" which shall be paid by tpe employer to the "Fund" shall be
of the percentage mentioned therfin. We shall now examine Section
14( lA). This provision was introd1,1ced in the year 1973 and specifies a· )I;:
penalty laying down that if an employer who contravenes or makes
default in complying with the provisions of Section 6 or clause (a) of
D sub-section (3) of Section 18, sha(l be punishable with imprisonment
mentioned therein. For the puf])ose of this case we have to see
whether there is a contravention or non-compliance with the provi-
sions of Section 6. According to Shri Dholakia the "scheme" should be
interpreted liberally as to mean a 1scheme framed and followed by the _..
employer himself and "fund" in that context should be taken to mean
E a provident fund established under such a scheme by the employer and
the "contribution" should consequently mean a contribution payable
by him under such a private sch~me and consequently if there is a
default in payment of the contribution to such a scheme it amounts to
...
\
contraventiC?n of Section 6 punishable under Section 14(1A). Learned
counsel for the respondents very °luch relied on the opening words of
F Section 2 namely "In this Act, unl¢ss the context otherwise requires,"
and urged that these words can otherwise, than as mentioned in the AJ
definitions, also be interpreted keeping in view the object of the Act.
He further urged that the dutiesj under the scheme framed under
Section 5 i.e. 1952 scheme and the private scheme followed by an
employer because of an exemption granted are one and the same and
G that if viewed from this angle, the expressions "contribution", "fund"
...... and "~che~e" can be understoo~ t? be wide enough to carry the same--.(
meanmgs m respect of the pnvate scheme also and consequently
failure to contribute to the fund under a private scheme framed and
operated by the employer attracts Section 14(1A).
H After a careful consideration we are inclined to agree with the
N.K. JAIN v. C.K. SHAH [REDDY, J.] 967
learned counsel for the respondents. In this context we may note a
passage in Knights bridge Estates Trust Ltd. v. Byrne and Others, A
[ 1940] 2 All ER 401 which reads thus:
"It is perhaps worth pointing out that the words "unless the
context otherwise requires" which we find in the consoli-
dating Act of 1929 are not to be found in the amending Act B
of 1928. I attribute little weight to this fact, for, in my
opinion, some such words are to be implied in all statutes
where the expressions which are interpreted by a definition
-
.... _.,
_
clause are used in a number of sections with meanings
sometimes of a wide, and sometimes . of an obviously
limited, character. On the other hand, I think due weight
ought to be attributed to the words "otherwise requires" in c
the Companies Act, 1929, and it is incumbent on those who
contend that the definition does not apply to sect. 74 to
show with reasonable clearness that the context does in fact
require a more limited interpretation of the word "deben-
ture" then Sect. 380 has assigned to it." D
In National Buildings Construction Corporation v. Pritam Singh Gill
and Others, [1973] 1SCR40 this Court observed as under:
"as is usual with most of the definition sections, with the
clause, "unless there is anything repugnant in the subject or E
context." This clearly indicates that it is always a matter for
argument whether or not this statutory definition is to apply
to the word "workman" as used in the particular clause of
the Act which is under consideration, for this word may
both be restricted or expanded by its subject matter. The
context and the subject matter in connection with which F
the word "workman" is used are accordingly important
factors having a bearing on the question. The propriety or
necessity of thus construing the word "workman" is obvi-
ous because all parts of the Act have to be in harmony with
the statutory intent."
(emphasis supplied) G
y .
In Commissioner of Expenditure-Tax, Gujarat, Ahmedabad v. Dar-
shan Surendra Parekh, [ 1968] 2 SCR 589 it w'as observed as under:
"Undoubtedly the definitions in s. 2 of words and expres-
sions used in the Act apply unless the context otherwise H
968 SUPREME COURT REPORTS (1991) 1 S.C.R.
requires, and if the context ins. 4 requires that the expres- ~
A sion "dependant" should not be given the meaning which is
assigned thereto by the definition in cl. (g) of s. 2, the
Court would be justified in discarding that definition. It is a
settled rule of interpretation that in arriving at the true
meaning which is assigned thereto by the definition in
B cl. (g) to be viewed isolated from its context; it must be
viewed in its whole context, the title, the preamble and all
~
the other enacting parts of the statute. It follows therefrom
that all statutory definitions must be read subject to the qua-
c
lifications expressed in the definition clauses which create
them, such as "unless the context otherwise requires"; or
"unless a contrary intention appears" or "if not inconsis-
tent with the context or subject-matter."
l
...
~
(emphasis supplied)
)C
In Bennett Coleman & Co. (P) Ltd. v. Punya Priya Das Gupta, (1970]
1SCR181 this Court observed thus:
D
"But assuming that there is such a conflict as contended,
we do not have to resolve that conflict for the purposes of
the problem before us.
~-
The definition of s. 2 of the present Act commences with
E the words "In this Act unless the context otherwise
requires" and provides that the definitions of the various
expressions will be those that are given there. Similar qua-
lifying expressions are also to be found in the Industrial
Disputes Act, 1947, the Minimum Wages Act, 1948, the
-
\
C.P. & Berar Industrial Disputes Settlement Act, 1947 and
F certain other statutes dealing with industrial questions. lt
is, therefore, clear that the definitions of "a newspaper ..A1
empolyee" and "a working journalist" have to be cons-
trued in the light of and subject to the context requiring
otherwise."
G The above passages throw a flood of light on the scope of interpreta-
tion of these opening words of Section 2 and it is clear that they must
be examined in the light of the context, the title, the preamble and all ~
the other enacting parts of the statute. Due weight ought to be given to
the words "unless the context otherwise requires". The subject matter
and the context in which a particular word is used are of great impor-
H tance and it is axiomatic that the object underlying the Act must
N.K. JAIN v. C.K. SHAH [REDDY, J,] 969
always be kept in view in construing the context in, which a particular
word is used. In the Statement of Object and Reasons of Act No. 40 of
1973 by which Section 14(1A) was introduced, it is clearly. mentioned
that National Commission of Labour has recommended that in order
to check the growth of arrears, penalties for defaults in payment· ofl
provident fund dues should be more stringent and the default should.
be made cognizable. The concept which prompted the Legislature_ to
enact this welfare law should also be borne in mind in interpretation of
the provisions. Chagla, C.J. in Prakash Cotton Mills (P) Ltd; v. State
of Bombay, [1957l 2 LLJ.490 observed as under:
"no labour legislation, no special legislation, no economic
legislation, can be considered by a court without applying
the principles of social justice in interpreting the provisions
of these laws. Social justice is an objective which is
embodied arid enshrined in our Constitution ..... it would
indeed be startling for anyone to suggest that the court
should shut its eyes to social justice and consider and
interpret a law as if our country had not pledged itself too Jl)
bringing about social justice. "
In Organo Chemical Industries and Another v. Union of India and
Others, [1979}4SCC 573 it was observed that:
"A policy-oriented interpretation, when a welfare legisla- E
tion falls for determination, especially in the context of a
developing country, is sanctioned by principle and prece-
dent and is implicit in Article 37 of the Constitution since
the judicial bram:h is, in a sense, part of the State. So it is
reasonable to assign to 'damages' a larger, fulfilling
1,_. meaning." F
In Kanwar Singh v. Del{li Administration, (1965] 1 SCR 7 it was
observed as under:
"It is the duty of the court in construing a statute to give
effect to the intention of the legislature. If, therefore, G
giving a literal meaning to a word used by the draftsman,
particularly in a penal statute, would defeat the object of
the legislature, which is to suppress a mischief, the court
can depart from the dictionary meaning or even the popu-
laY meaning of the word and instead give it a meaning
which wm 'advaru:e the remedy and suppress me mischief." H
970 SUPREME COURT REPORTS [1991} 1 S.C.R.
~
..,....
In State of Gujarat v. Chaturbhuj Magan/al and Another, [1976] 3 SCR
A 1076 it was observed as under:
"It is well recognised that where the language of a statutory
provision is susceptible of two interpretations, the one
which promotes the object of the provision, comports best
B with its purpose and preserves its smooth working, should
be chosen in preference to the other which introduces
-~
inconvenience and uncertainty in the working of the
system. This rule will apply in full force where the provi--
sion confers ample discretion on the Government for a
specific purpose to enable it to bring about an effective ..t_ ~
result." ~
c
In Vanguard Fire & Gen. Ins. Co. v. Fraser & Ross, AIR 1960 SC 1971
it was held that "the Court has not only to look at the words but also at
the context, the collocation and the object of such words and interpret
the meaning intended to be conveyed by the use of the words under
D the circumstances"
We feel it may not be necessary to multiply the authorities on
this aspect. In this background if we examine the opening words of
Section 2 namely "In this Act, unless the context otherwise, requires," _._
the_n we necessarily feel that there is much in the context to show that
E the restricted meaning in the definitions should not be applied.
So much is about the opening words to Section 2 and it, there-
fore, follows__tha_t the words 'contribution', 'Scheme', 'fund' occurring
in the said section should in the "context" be otherwise interpreted as to
apply to a private scheme also and if there is a default in "contribu-
-
F tion" by the exempted establishment, the same amounts to contraven-
tion of Section 6 punishable under Section 14(1A). •/
Before we conclude we shall however refer to one general sub-
mission of Sri Chidambaram. He submitted that the fact that Section
17(1A) was introduced in 1988 prescribing a penalty in respect of
G contraventions or non-compliances committed by an exempted estab-
lishment, would go to show that Sections 14(1A) and 14(2A) were not
intended to be made applicable to an exempted establishment and that
~
cancellation of the exemption under Section )7(4) was the only pre-
scribed penalty. He also invited our attention to the Statement of
Objects and Reasons of Amendment Act No. 33 of 1988. We see no
H force in this submission. The mere fact that Section 17(1A) was intro-
N.K. JAIN v. C.K. SHAH [REDDY, J.) 971
--...( duced in the year 1988 does not necessarily lead to an inference that
Sections 14(1A) and 14(2A) were not intended to be made applicable A
to an exempted establishment. As stated in the foregoing paragraphs
the object underlying every amendment was mainly intended to render
the penal provisions more stringent in order to check the growth of
arrears and to punish the defaulters. Likewise in the Amendment Act
No. 33 of 1988 also it was intended to make the existing penal pro.vi- B
>--- sions more stringent. This Amendment Act was passed on the recom-
mendations of a high-level committee set up to review the working of
the employees provident fund organisation and to suggest improve-
ments. One of the recommendations was to make the existing penal
. -- i. provisions more stringent and also make the existing legal and penal
provisions as applicable to unexempted establishments being made
applicable to exempted establishments so as to check the defaults on c
their part. The learned counsel for the appellants very much relied on
'J( this part of Objects and Reasons and submitted that it is only by the
introduction of Section 17(1A) that the exempted establishments also
are brought within the purview of the penal provisions which hitherto
were applicable to unexempted establishments, and therefore Sections D
14( lA) and 14(2A) were hitherto inapplicable to exempted establish-
ments. We are unable to agree that this part of the Statement of
Objects and Reasons would necessarily lead to such_ an inference. As
...._ already discussed many aspects are common to both tile types of provi-
dent fund. So far as unexempted establishments are concerned there
are several other penal provisions like Sections 14(1), 14(2) and 14AA E
and also in particular Paragraph 76 of the 1952 Scheme. There are
-- other legal provisions also which apply to unexempted establishments.
Therefore under the Amendment Act No. 33 of 1988 the Legislature
wanted to make as far as possible these existing legal and penal provi-
sions which are applicable to unexempted establishments, applicable
also to exempted establishments. That does not mean that there were F
' ~no penal provisions earlier applicable to exempted establishments.
Section 17(1A) is in the following terms:
"17(1-A) Where an exempti9n has been granted to an
establishment under clause (a) of sub-section (1),-
G
(a) the provisions of Sections 6, 7-A, 8 and 14-B shall, so
far as may be, apply to the employer of the exempted
establishment in addition to such other conditions as may
be specified in the notification granting such exemption,
and where such employer contravenes, or makes default in
complying with any of the said provisions or conditions or H
972 SUPREME COURT REPORTS [1991] 1 S.C.R.
any other provision of this Act, he shall be punishable Y
A under Section 14 as if the said establishment had not been
exempted under the said clause (a);
(b) the employer shall establish a Board of Trustees for the
administration of the provident fund consisting of such
B number of members as may be specified in the Scheme;
(c) the terms and conditions of service of members of the
Board of Trustees shall be such as may be specified in the
Scheme;
( d) the Board of Trustees constituted under clause (b)
c shall-
(i) maintain detailed accounts to show the contributions )c:
credited, withdrawals made and interest accrued in respect
of each employee;
D
(ii) submit such returns to the Regional Provident Fund
Commissioner or any other officer as the Central Govern-
ment may direct from time to time;
(iii) invest the provident fund monies in accordance with
E the directions issued by the Central Government from time
to time;
.r
(iv) transfer, where necessary, the provident fund account
of any employee; and
F (v) perform such other duties as may be specified in the
Scheme." ~
A perusal of this Section would only go to show that some more
provisions, legal and penal, are also made applicable to the exempted
establishments with a view to make the penal provisions more strm-
G gent with a view to check the growth of arrears. Therefore we are
unable to agree with the learned counsel that Sections 14(1A) an~
14(2A) are inapplicable to exempted establishments.
From the above discussion, it emerges that atleast Sections
14( lA) and 14(2A} are attrMted to the faets in the prese11t case and
H fbetefme if cann~t be said tha1! there iS' no- primtl fade cl'fSe and oonse-
N.K. JAIN v. C.K. SHAH [REDDY. J.] 973
-.....( q uently the accused cannot claim any acquittal, even before the con- A
clusion of the trial under Chapter XX Cr. P.C. dealing with trial of
summons cases. Other Sections like 14(2), 14A(l) and 14A(2) and
paragraph 76 of the Employees Provident Fund Scheme 1952 will not
apply to the facts of the present case. Therefore the trial court may
proceed with the trial for the offences punishable under Sections
B
14(1A) and 14(2A) against the appellants and dispose of the matter in
)... accordance with law. Subject to the above directions, these appeals
are disposed of.
R.P. Appeals disposed of.
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