REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO_655 OF 2012 (Arising out of SLP(C) No.17298/2009)

Regional Provident Fund Commissioner ...Appellant(s)

- Versus -

The Hooghly Mills Co. Ltd. & Ors.     ...Respondent(s)

J U D G M E N T

GANGULY, J.

1.Leave granted.

2.The question which falls for consideration before  

this Court in this case is whether the employer of  

an  establishment  which  is  an  ‘exempted  

establishment’ under the Employees’ Provident Funds  

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and Miscellaneous Provisions Act, 1952 (hereinafter,  

‘the Act’) is subject to the provisions of Section  

14B of the said Act whereby in cases of default in  

the payment of contribution to the provident fund,  

proceedings for recovery of damages can be initiated  

against  the  employer  of  such  an  ‘exempted  

establishment’.

3.The question was raised by the respondent before the  

High  Court  and  both  the  Single  Bench  and  the  

Division  Bench  of  the  High  Court  have  recorded  a  

finding in favour of the respondent and held that  

the  respondent  being  an  ‘exempted  establishment’  

cannot  be  subjected  to  the  provisions  of  Section  

14(B) of the Act.

4.The material facts of case are not much in dispute.

5.By  notification  dated  23.11.1967,  the  Central  

Government in exercise of its power under Section  2

17(1)  (a)  of  the  Act  granted  exemption  to  the  

respondent, which is a company registered under the  

Companies Act subject to the provisions specified in  

Schedule II annexed to the said notification. The  

material  part  of  the  said  notification  is  as  

follows:

“S.O. Whereas, in the opinion of the  Central Government:  

(1) The Rules of the provident fund  of  the  establishment  mentioned  in  Schedule  I  (hereto  annexed  and  (hereinafter referred to as the said  establishments), with the respect to  the employees therein then those  specified  in  section  6  of  the  employees'  Provident  Fund  Act,  1952  (10 of 1952); and  

(2) The  Employees  in  the  said  establishments 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  the  Employees'  Provident  Funds  Scheme  1952 (hereinafter referred to as  the said School) in relation to the  employees in any other establishment  of a similar character.  

Now,  thereafter,  in  exercise  of  the powers conferred by clause (a) of  sub-section (i) of section 17 of the  Employees'  Provident  Fund  Act  1952  (19 of 1952), the Central Government,  

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hereby exempt the said establishments  with  effect  from  dates  mentioned  against  each  of  them,  respectively  from  the  operation  of  all  the  provisions  of  the  said  scheme,  subject  to  the  conditions  specified  in scheme hereto annexed, which are  in  addition  to  the  conditions  mentioned in the explanation to sub- section (1) of the said section 17.”  

6. The respondent company comes under Item No. 5 of the  

notification. Initially the case of the respondent  

company  is  that  after  the  grant  of  exemption  it  

framed a scheme and created a Trust and appointed a  

Board of Trustees from the Management of the said  

Trust  fund and  was  thus  enjoying  exemption  under  Section 17(1A) (a) of the Act. It is also common  

ground that there were defaults on the part of the  

respondent company in making timely payment of dues  

towards  provident  fund  for  the  period  between  

October  1999  to  October  2000  and  then  again  from  

November 2000 to July 2002. In view of such admitted  

defaults,  proceedings  were  initiated  against  the  

respondent  company  and  by  notices  dated  10.9.2003  

and  11.10.2003  enclosing  therewith  the  detailed  

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statement  of  delayed  remittance  of  provident  fund  

and allied dues. As contemplated under Section 14(B)  

of the Act, respondent was offered an opportunity to  

represent  their  case  on  several  dates  by  the  

authorities under the Act and their case was listed  

for hearing but nobody appeared on their behalf on  

several  dates.  Thereafter,  on  the  basis  of  some  

representation on their behalf the matter was heard  

and  the  Regional  Provident  Fund  Commissioner  II,  

Sikkim and Andaman & Nicobar Islands by a detailed  

order directed the respondent company to remit an  

amount of Rs.32,62,153/- by way of damages to the  

respective  accounts,  failing  which,  it  was  stated  

that further action as provided under the Act and  

the Schemes framed thereunder shall be initiated.

7.It  is  not  in  dispute  that  the  said  order  dated  

9.6.2004 is an appealable order under the provisions  

of Section 7I of the Act. However, without filing  

any  appeal  the  respondent  company  filed  a  writ  

petition before the learned Single Judge of the High  

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Court which ultimately upheld the contention of the  

respondent  company  and,  inter  alia,  came  to  

following finding:

“Under such circumstances, this court holds  that the impugned order cannot be sustained  in law as the concerned authority demanded  damages  from  the  petitioners  not  only  on  account of delayed payment of contribution  to the trust fund but also on account of  delayed payment of the contribution to the  pension fund and insurance fund.

The  impugned  order,  thus,  stands  set  aside.

The  Provident  Fund  Authority  may,  however, ascertain damages under Section 14B  of the said Act afresh for delayed payment  of contribution to the pension fund as well  as the insurance fund.

The writ petition, thus, stands allowed  with the above observation.”

8.The  learned  Single  Judge  while  allowing  the  writ  

petition proceeded on the basis that the expression  

“so far as may be” in Section 17(1A)(a) of the Act  

will have to be given its proper meaning. If such  

meaning is given then the provision in Sections 6,  

7A, 8 and 14B of the Act cannot be applied in their  

entirety.  The  learned  Single  Judge  held  that  the  

expression “so far as may be” cannot be treated as a  

surplusage.

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9.The  learned  judge  further  held  that  the  said  

expression “so far as may be” used in Section 17(1A)

(a)  of  the  said  Act  is  for  the  purpose  of  

restraining  the  application  of  provisions  in  

Sections  6,  7A,  8  and  14B  to  the  exempted  

establishment. The learned Judge also held that the  

damages which are recoverable under Section 14B of  

the  said  Act  could  not  go  to  the  hand  of  the  

individual  affected  employee.  In  case  of  delayed  

payment, loss of the individual affected employee is  

compensated by payment of interest under Section 7Q  

of  the  said  Act.  Since  the  damages  which  are  

recovered are not paid for compensating the losses  

of the individual employee, the expression “so far  

as may be” used in Section 17(1A)(a) of the said  

Act,  does  not  require  liberal  interpretation.  The  

said finding was given by the learned Single Judge  

in the context of the argument made on behalf of the  

appellant  that  the  Act  being  social  welfare  

legislation, needs to be liberally construed.

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10. The learned Judge ultimately accepted the meaning of  

the  expression  “so  far  as  may  be”  given  by  the  

Constitution Bench of this Court in the case of Dr.  M. Ismail Faruqui etc. v. Union of India and others  – AIR 1995 SC 605.

11. Thereafter,  an  appeal  was  taken  to  the  

Division Bench of the High Court by the appellant.  

The Appellate Court also came to the conclusion that  

Sections 6, 7A, 8 and 14B of the Act would not be  

attracted  to  the  defaulting  ‘exempted  

establishment’.

12. In  view  of  the  fact  that  Section  17(1A)(a)  

makes  it  clear  that  those  Sections  would  be  

applicable “so far as may be”, the Appellate Court  

accepted the reasoning given by the Writ Court and  

affirmed the judgment.

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13. It is against such a concurrent finding and  

interpretation  of  the  aforesaid  provision  of  the  

Act, we heard learned counsel for the parties.

14. For  a  proper  appreciation  on  the  point  at  

issue, it would be better to set out some of the  

relevant provisions of the Act.

15. Section 2(e) & 2(fff) define ‘employer’ and  

‘exempted establishment’.  Those definitions are as  

under:

“2 (e) "employer" means-- (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  deceased  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 7 of the Factories Act, 1948 ( 63  of 1948), the person so named; and (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  

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director  or  managing  agent,  such  manager,  managing director or managing agent;”

“2 (fff) “exempted establishment” means an  establishment  in  respect  of  which  an  exemption has been granted under section  17 from the operation of all or any of the  provisions of any Scheme or the Insurance  Scheme, as the case may be, whether such  exemption  has  been  granted  to  the  establishment as such or to any person or  class of persons employed therein.”

16. Section 14(B) of the Act which provides for  

recovery of damages reads as under:

“Section 14B - Power to recover damages -  Where  an  employer  makes  default  in  the  payment of any contribution to the Fund, the  Pension Fund or the Insurance Fund or in the  transfer  of  accumulations  required  to  be  transferred by him under sub-section (2) of  section 15 or sub-section (5) of section 17  or in the payment of any charges payable  under any other provision of this Act or of  any Scheme or Insurance Scheme or under any  of  the  conditions  specified  under  section  17, the Central Provident Fund Commissioner  or such other officer as may be authorised  by the Central Government, by notification  in the Official Gazette, in this behalf] may  recover from the employer such damages, not  exceedings the amount of arrears, as it may  thinks fit to impose:

Provided that before levying and recovering  such damages, the employer shall be given a  reasonable opportunity of being heard:

Provided further that the Central Board may  reduce  or  waive  the  damages  levied  under  this section in relation to an establishment  which is a sick industrial company and in  respect of which a scheme for rehabilitation  

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has  been  sanctioned  by  the  Board  for  Industrial  and  Financial  Reconstruction  established  under  section  4  of  the  Sick  Industrial  Companies  (Special  Provisions)  Act, 1985 (1 of 1986), subject to such terms  and conditions as may be specified in the  Scheme.”

17. Section 17(1A) which deals with power to grant  

exemption reads as under:

“17 Power to exempt - (1) The appropriate  Government  may,  by  notification  in  the  Official  Gazette,  and  subject  to  such  conditions  as  may  be  specified  in  the  notification,  exempt,  whether  prospectively or retrospectively, 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  provident fund with respect to the rates  of  contribution  are  not  less  favourable  than those specified in Section 6 and the  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  establishment  of  a  similar  character; or (b) any establishment if the employees of  such  establishment  are  in  enjoyment  of  benefits in the nature of provident fund,  pension  or  gratuity  and  the  appropriate  Government  is  of  opinion  that  such  benefits,  separately  or  jointly,  are  on  the  whole  not  less  favourable  to  such  

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employees than the benefits provided under  this  Act  or  any  Scheme  in  relation  to  employees in any other establishment of a  similar character.  Provided that no such exemption shall be  made  except  after  consultation  with  the  Central Board which on such consultation  shall forward its views on exemptions to  the  appropriate  Government  within  such  time  limit  as  may  be  specified  in  the  Scheme.

(1A) Where an exemption has been granted  to  an  establishment  under  Clause  (a)  of  Sub-section (1), (a) the provisions of Section 6, Section  7A, Section 8 and 14B 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  any  other  provision  of  this  Act,  he  shall  be  punishable 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 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) shall -

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(i) maintain detailed accounts to show  the  contributions  credited,  withdrawals made and interest accrued  in respect of each employee; (ii)  submit  such  returns  to  the  Regional  Provident  Fund  Commissioner  or any other officer as the Central  Government  may  direct  from  time  to  time; (iii) invest the provident fund monies  in  accordance  with  the  directions  issued by the Central Government from  time to time; (iv)  transfer,  where  necessary,  the  provident  fund  account  of  any  employee; and (v) perform such other duties as may  be specified in the Scheme.

18. Learned  counsel  for  both  the  parties  

strenuously urged before us that in this case we are  

only concerned with the liability of the respondent  

company in so far as provident fund is concerned.  

Mr.  Prdeep  Ghosh,  learned  senior  counsel  for  the  

respondent  company  has  very  fairly  submitted  that  

there  are  three  accounts,  namely,  provident  fund  

contribution,  pension  fund  contribution  and  the  

Insurance fund contribution. The respondent company  

does not enjoy any exemption in respect of pension  

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fund  and  insurance  fund.  Learned  counsel  further  

submitted that Section 14B makes a distinction among  

these  three  funds  namely,  provident  fund  

contribution,  pension  fund  contribution  and  the  

insurance fund contribution.

19. Ms.  Aparna  Bhat,  learned  counsel  for  the  

appellant argued that both the Courts i.e. the writ  

court  and  the  appellate  Bench  of  the  High  Court  

placed  an  erroneous  interpretation  with  regard  to  

application  of  Section  14B  to   an  ‘exempted  

establishment’ by misconstruing the expression “so  

far as may be”. Learned counsel also submitted that  

while construing the provisions of a social welfare  

legislation, like the Act, the High Court has not  

given any reason why it should not follow the well  

known principles of liberal interpretation.  

20. Learned  counsel  also  urged  that  in  the  

judgment of the High Court there is no reason why  

despite the fact that there exists an efficacious  14

remedy  of  appeal,  the  writ  petition  by  the  

respondent company was entertained. The High Court  

has  come  to  a  finding  that  the  grievance  of  the  

respondent company that it was not given adequate  

opportunity of hearing by the statutory authority is  

not correct on facts. Therefore, the learned counsel  

submitted  that  when  an  adequate  opportunity  of  

hearing was given, but the same was not availed of  

by the respondent company before the authority which  

passed the order dated 9.6.2004, it was not open to  

the respondent company to invoke the extraordinary  

writ jurisdiction of the High Court. Learned counsel  

for the respondent company however urged that since  

the matter rested on an interpretation of various  

Sections  of  the  Act,  an  appeal  to  statutory  

authority created under the said Act would not be an  

efficacious remedy.

21. In  the  peculiar  facts  of  the  case  and  

specially  having  regard  to  the  nature  of  the  

proceedings,  we  do  not  wish  to  decide  the  

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controversy raised in this case on the question of  

non-availability of a statutory remedy. The impugned  

order was passed in the year 2004 and thereafter the  

writ petition was entertained by the two Benches of  

the High court and after that the matter is pending  

before us.  Now we are in 2012.  To dismiss the  

order of the two Benches of the High Court inter  

alia  on  the  ground  that  the  writ  petition  was  

entertained  despite  the  existence  of  a  statutory  

remedy and then send it back to the remedy of appeal  

after a period of eight years, would not, in our  

judgment,  be  a  correct  exercise  of  judicial  

discretion.   However,  we  are  of  the  opinion  that  

normally the statutory remedy of appeal should be  

availed of in a situation like this.

22. From the aforesaid discussion it is clear that this  

case calls for interpretation of certain statutory  

provisions.  It is not disputed, and possibly cannot  

be  disputed,  that  the  Act  is  a  social  welfare  

legislation.  The Act is one of the earliest Acts  

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after the Constitution came into existence. Prior to  

its enactment, the requirement of having a suitable  

legislation  for  compulsory  institutional  and  

contributory  provident  fund  in  industrial  

undertakings was discussed several times at various  

tripartite meetings in which representatives of the  

Central  and  State  Governments  and  employees  and  

workers took part.  Initially a non-official Bill on  

the  subject  was  introduced  in  the  Central  

Legislature  in  1948  and  was  withdrawn  with  the  

assurance  that  the  Government  would  consider  the  

introduction of a comprehensive Bill.  Finally, the  

proposed legislation was endorsed by the conference  

of Provincial Labour Ministers in January, 1952 and  

later  on  the  same  was  introduced  in  1952.   This  

Court had occasion to expressly hold that the said  

Act is a beneficial social welfare legislation to  

ensure  benefits  to  the  employees.  In  the  case  of  

Regional  Provident  Fund  Commissioner v.  S.D.  College, Hoshiarpur and others reported in (1997) 1  SCC 241, this Court while interpreting Section 14B  

of  the  Act  held  that  the  Act  envisages  the  

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imposition of damages for delayed payment (paragraph  

10 at page 244 of the report). This Court also held  

that the Act is a beneficial social legislation to  

ensure health and other benefits of the employees  

and the employer under the Act is under a statutory  

obligation to make the deposit.  In paragraph 11, it  

has also been held that in the event of any default  

committed in this behalf Section 14B steps in and  

calls upon the employer to pay damages.   

23. If we look at the modern legislative trend we  

will  discern  that  there  is  a  large  volume  of  

legislation enacted with the purpose of introducing  

social reform by improving the conditions of certain  

class  of  persons  who  might  not  have  been  fairly  

treated in the past.  These statutes are normally  

called  remedial  statutes  or  social  welfare  

legislation,  whereas  penal  statutes  are  sometime  

enacted providing for penalties for disobedience of  

laws  making  those  who  disobey,  liable  to  

imprisonment, fine, forfeiture or other penalty.  

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24. The normal canon of interpretation is that a  

remedial  statute  receives  liberal  construction  

whereas  a  penal  statute  calls  for  strict  

construction.  In the cases of remedial statutes, if  

there is any doubt, the same is resolved in favour  

of  the  class  of  persons  for  whose  benefit  the  

statute is enacted, but in cases of penal statutes  

if there is any doubt the same is normally resolved  

in favour of the alleged offender.

25. It  is  no  doubt  true  that  the  said  Act  

effectuates the economic message of the Constitution  

as articulated in the Directive Principles of State  

Policy.   

26. Under the Directive Principles the State has  

the  obligation  for  securing  just  and  humane  

conditions of work which includes a living wage and  

decent  standard  of  life.   The  said  Act  obviously  

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seeks  to  promote  those  goals.  Therefore,  

interpretation  of  the  said  Act  must  not  only  be  

liberal but it must be informed by the values of  

Directive Principles. Therefore, an awareness of the  

social  perspective  of  the  Act  must  guide  the  

interpretative process of the legislative device.   

27. Keeping those broad principles in mind, if we  

look at the Objects and Reasons in respect of the  

relevant Section it will be easier for this court to  

appreciate the statutory intent.  The opening words  

of  Section  14B  are,  “where  an  employer  makes  a  

default in the payment of contribution to the fund”.  

This was incorporated by way of an amendment, vide  

Amending  Act  37  of  1953.  In  this  connection,  the  

excerpts from the Statement of Objects and Reasons  

of  Act  37  of  1953  are  very  pertinent.   Relevant  

excerpts are:-

“There  are  also  certain  administrative  difficulties to be set right.  There is no  provision  for  inspection  of  exempted  factories; nor is there any provision for  the recovery of dues from such factories.  An employer can delay payment of provident  

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fund dues without any additional financial  liability.  No punishment has been laid down  for contravention of some of the provisions  of the Act.

This  Bill  seeks  primarily  to  remedy  these defects’. – S.O.R., Gazette of India,  1953, Extra, Pt.II, Sec.2, p.910.”  

28. Similarly,  in  respect  of  Section  17(1A),  

clause (a) which makes Section 14B applicable to an  

exempted  establishment  also  came  by  way  of  an  

amendment, namely, by Act 33 of 1988.  Here also if  

we look at the relevant portion of the Statement of  

Objects and Reasons of Act 33 of 1988 we will find  

that they are based on certain recommendations of  

the High level committee to review the working of  

the Act.  Various recommendations were incorporated  

in the Objects and Reasons and one of the objects of  

such amendment is as follows:-

“(viii) the  existing  legal  and  penal  provisions,  as  applicable  to  unexempted  establishments, are being made applicable to  exempted establishments, so as to check the  defaults on their part;”

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29. It is well known that an interpretation of the  

statute which harmonizes with its avowed object is  

always to be accepted than the one which dilutes it.

30. The  problem  of  statutory  interpretation  has  

been  a  matter  of  considerable  judicial  debate  in  

almost all common law jurisdictions.  

31. Justice  Felix  Frankfurter  dealt  with  this  problem  

rather comprehensively in his Sixth Annual Benjamin  

N. Cardozo Lecture [See 47 Columbia Law Review 527  

(1947)]. The learned Judge opined:-

“Anything  that  is  written  may  present  a  problem of meaning, and that is the essence  of  the  business  of  judges  in  construing  legislation.  The problem derives from the  very nature of words.  They are symbols of  meaning.”

32. About  what  the  words  connote,  there  is  a  very  

illuminating discussion by Friedrich Bodmer, a Swiss  

Philologist in his treaties “The Loom of Language”.  

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Bodmer,  who  was  a  Professor  in  the  Massachusetts  

Institute of Technology, said:-

“Words are not passive agents meaning the  same thing and carrying the same value at  all times and in all contexts. They do not  come in standard shapes and sizes like coins  from the mint, nor do they go forth with a  degree to all the world that they shall mean  only so much, no more and no less. Through  its own particular personality each word has  a penumbra of meaning which no draftsman can  entirely cut away. It refuses to be used as  a mathematical symbol.”

 33. The  aforesaid  formulation  by  Professor  Bodmer  was  

cited  with  approval  by  the  Constitution  Bench  of  

this Court in S.C. Advocates-on-Record Association &  ors., v. Union of India reported in 1993 (4) SCC 441  at page 553.  Justice Holmes in Towne v. Eisner [245  US 418] thought in the same way by saying:

“a word is not a crystal, transparent and  unchanged;  it  is  the  skin  of  a  living  thought and may vary greatly in colour and  content according to the circumstances and  the time in which it is used.”

34. Therefore, about the problem of interpretation  

we  may  again  go  back  to  what  Justice  Frankfurter  

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said  in  the  aforesaid  article.   This  is  of  

considerable importance.  The learned Judge said:

“…The process of construction, therefore, is  not an exercise in logic or dialetic: The  aids of formal reasoning are not irrelevant;  they may simply be inadequate.  The purpose  of construction being the ascertainment of  meaning, every consideration brought to bear  for the solution of that problem must be  devoted to that end alone…”

35. Therefore, while construing the statute where there  

may  be  some  doubt  the  Court  has  to  consider  the  

statute as a whole – its design, its purpose and the  

remedy  which  it  seeks  to  achieve.   Chief  Justice  

Sinha  of  this  Court,  in  State  of  West  Bengal v.  Union of India reported in AIR 1963 SC 1241 at 1245,  emphasized the importance of construing the statute  

as a whole.  In the words of Chief Justice:-

“The Court must ascertain the intention of  the Legislature by directing its attention  not merely to the clauses to be construed  but to the entire statute; it must compare  the clause with the other parts of the law,  and the setting in which the clause to be  interpreted occurs”.    

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36. Lord  Greene,  Master  of  Rolls,  also  gave  the  same  

direction in Re, Bidie (deceased), [(1948) 2 All ER  995, page 998].  In the words of Master of Rolls the  

technique should be:-

“to  read  the  statue  as  a  whole  and  ask  oneself the question:  ‘In this state, in  this  context,  relating  to  this  subject- matter, what is the true meaning of that  word’?”  

37. Therefore,  what  is  required  to  be  done  in  the  

instant  case  for  construing  the  provisions  of  

Section 14B and 17(1A)(a) is to adopt a purposive  

approach, an approach which promotes the purposes of  

the Act which have been discussed above.  About the  

development  of  purposive  approach,  Bennion  on  

Statutory Interpretation (Fifth Edition) has traced  

its origin:-

“General  judicial  adoption  of  the  term  ‘purposive construction’ is recent, but the  concept  is  not  new.   Viscount  Dilhorne,  citing  Coke,  said  that  while  it  is  now  fashionable  to  talk  of  a  purposive  construction of a statute the need for such  a construction bas been recognised since the  seventeenth  century.   In  fact  the  recognition goes considerably further back  than that.”

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38. In this connection, the opinion of Lord Diplock in  

Jones v. Wrotham Park Settled Estates [(1980) AC 74]  is very pertinent.  At page 105 of the report the  

learned Law Lord said:-

“I am not reluctant to adopt a purposive  construction  where  to  apply  the  literal  meaning  of  the  legislative  language  used  would lead to results which would clearly  defeat  the  purposes  of  the  Act.   But  in  doing  so  the  task  on  which  a  court  of  justice  is  engaged  remains  one  of  construction,  even  where  this  involves  reading into the Act words which are not  expressly included in it.”

39. This  Court  has  already  decided  in  N.K.  Jain     and    others v. C.K. Shah and others reported in (1991) 2  SCC 495 that for construing the provision of this  

very Act a purposive approach should be adopted.

40. In  N.K.  Jain (supra)  the  question  was  whether  criminal proceedings can be instituted under Section  

14 of the Act in respect of an establishment which  

is  exempted  under  Section  17  thereof,  for  

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contravention of the provisions of Section 6 of the  

Act.  

41. Answering the question affirmatively the Court  

held in paragraph 13:

“…legislative purpose must be noted and the  statute must be read as a whole. In our view  taking  into  consideration  the  object  underlying the Act and on reading Sections  14 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  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.”

42. In coming to the aforesaid conclusion the learned  

Judges relied on the famous dictum of Lord Denning  

in  Seaford Court Estates Ltd. v.  Asher – (1949) 2  All E.R. 155 (CA) wherein the learned Judge stated  

the position thus:

“…A Judge should ask himself the question  how, if the makers of the Act had themselves  come across this ruck in the texture of it,  they would have straightened it out? He must  then do so as they 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.”

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43. In view of the interpretation of the Act in  N.K.  Jain  (supra) there is no difficulty in construing  the  provision  of  Section  17(1A)(a)  where  it  is  

provided that when an exemption has been granted to  

an  establishment  under  Clause  (a)  of  sub-section  

(1), the provision of Sections 6, 7, 8 and 14B of  

the  Act  shall,  “so  far  as  may  be”  apply  to  the  

employer of the exempted establishment in addition  

to such other condition as may be specified in the  

notification granting such exemption.

44. If we look at sub-section (a) which has been  

set out hereinbefore, we will find that sub-clause  

(a) of Section 17(1A) is divided in two parts. The  

second part is more specific in as much as it has  

been  clearly  stated  that  where  an  employer  

contravenes and makes default in compliance with any  

of the said conditions and provisions or any other  

provisions  of  this  Act,  (this  would  obviously  

include Section 14B), he shall be punishable under  

Section 14 as if the said establishment had not been  

exempted under clause (a).  Therefore, there is a  

deeming  provision  giving  clear  indication  of  28

application  of  Section  14B  of  the  Act  to  the  

‘employer’ of an ‘exempted establishment’.

45. Thus, the sweep of the second part of clause  

(a) of Section 17(1A) which is preceded by the word  

‘and’ is very wide.

46. Section  14B  may  also  be  considered  in  this  

connection.  Section  14B  is  attracted  where  an  

‘employer’  makes  a  default  in  the  payment  of  any  

contribution  to  the  fund.  In  the  instant  case  

admittedly default has taken place.

47. The expression ‘fund’ has been defined under Section  

2(h)  of  the  Act  to  mean  the  provident  fund  as  

established under a Scheme. Though the word ‘scheme’  

has  been  defined  under  Section  2(l)  to  mean  the  

employees provident fund scheme framed under Section  

5,  this  Court  in  N.K.  Jain (supra)  held  the  definition  of  the  word  ‘fund’  would  apply  to  a  

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scheme operating in an establishment exempted under  

Section 17. In that case it was urged on behalf of  

the  respondent  that  the  expression  ‘fund’  and  

‘scheme’  must  be  given  a  wide  interpretation  to  

include fund under a private scheme. Such submission  

on behalf of the respondent was noted in paragraph  

16 at page 518 of the report. In para 17 at page 518  

of the report, this Court on consideration of the  

ratio  in  the  case  of  Knightsbridge  Estates  Trust  Ltd. v. Byrne – (1940) 2 All E.R. 401 (Ch.D) and the  decision  of  this  Court  in  National  Buildings  Construction  Corporation v.  Pritam  Singh  Gill  reported in (1972) 2 SCC 1 and also various other  

decisions accepted the said construction. Applying  

these  principles,  decided  in  the  aforesaid  cases,  

this  Court  has  held  “consequently  if  there  is  a  

default  in  payment  of  the  contribution  to  such  a  

scheme  it  amounts  to  contravention  of  Section  6  

punishable under Section 14(1A)”. (See page 517 of  

the report)

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48. Following  the  same  parity  of  reasoning,  we  

hold  if  there  is  a  default  in  payment  of  

contribution  to  such  a  scheme  it  amounts  to  

contravention  of  Section  14B  and  damages  can  be  

levied.  The High Court, with great respect, erred  

by coming to a contrary conclusion.

49. Apart  from  that  the  High  Court’s  

interpretation of the expression “so far as may be”  

as limiting the ambit and width of Section 17(1A)(a)  

of the Act, in our judgment, cannot be accepted for  

two reasons as well.  

50. The High Court is guided in the interpretation of  

the word “so far as may be” on the basis of the  

principle that statutes does not waste words. The  

High  Court  has  also  relied  on  the  interpretation  

given  to  “so  far  as  may  be”  in  the  case  of  Dr.  Pratap Singh and another v. Director of Enforcement,  Foreign Exchange Regulation Act and others reported  in  AIR  1985  SC  989.  It  goes  without  saying  that  

Foreign Exchange Regulation Act is a fiscal statute  31

dealing with penal provisions whereas the aforesaid  

expression is to be construed in this Act which is  

eminently a social welfare legislation. Therefore,  

the parameters of interpretation cannot be the same.  

Even then in  Pratap Singh (supra) this Court while  construing “so far as may be” held “if a deviation  

becomes necessary to carry out the purposes of the  

Act…………………… it would be permissible”. Of course the  

Court  held  that  if  such  deviation  is  challenged  

before a Court of law it has to be justified.  

51. In  the  instant  case,  the  High  Court  failed  to  

discern the correct principle of interpretation of a  

social  welfare  legislation.  In  this  connection  we  

may  profitably  refer  to  what  was  said  by  Chief  

Justice  Chagla  about  interpretation  of  a  social  

welfare  or  labour  legislation  in  Prakash  Cotton  Mills (P) Ltd. v. State of Bombay reported in (1957)  2 LLJ 490. Justice Chagla unerringly laid down:

“no  labour  legislation,  no  social  legislation, no economic legislation, can be  considered by a court without applying the  

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principles of social justice in interpreting  the provisions of these laws. Social justice  is  an  objective  which  is  embodied  and  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  to bringing about social justice.”

52. We  endorse  the  same  view.  In  fact  this  has  been  

endorsed by this Court in N.K. Jain (supra).

53. Reference in this connection may be made to what was  

said by Justice Krishna Iyyer in the same vein in  

the decision of  Surendra Kumar Berma and others v.  Central  Government  Industrial  Tribunal-cum-Labour  Court, New Delhi and Anr., reported in 1980 (4) SCC  443. The learned judge held that  semantic luxuries  

are misplaced in the interpretation of 'bread and  

butter' statutes.

54. Unfortunately, the High Court missed this well  

settled  principle  of  interpretation  of  social  

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welfare legislation while construing the expression  

“so far as may be” in interpreting the provision of  

Section 17 (1A)(a) of the Act and unduly restricted  

its  application  to  the  employer  of  an  exempted  

establishment.  

55. The interpretation of the expression “so far as may  

be” by this Court in its Constitution Bench decision  

in M. Ismail Faruqui (supra) was given in a totally  different  context.   The  said  judgment  on  a  

Presidential Reference was rendered in the context  

of  the  well  known  Ram  Janam  Bhumi  Babri  Masjid  

controversy where a special Act, namely, Acquisition  

of Certain Area at Ayodhya Act was enacted and sub-

section (3) of Section 6 of the said Act provides  

that the provisions of Sections 4, 5 & 7 shall “so  

far as may be” apply in relation to such authority  

or body or trustees as they apply in relation to the  

Central  Government.   In  that  context  this  Court  

held  that  the  expression  “so  far  as  may  be”  is  

indicative  of  the  fact  that  all  or  any  of  these  

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provisions  may  or  may  not  be  applicable  to  the  

transferee  under  sub-section  (1).   The  objects  

behind the said enactment are totally unique and the  

same was a special law.  Apart from this, this Court  

did  not  lay  down  any  general  principle  of  

interpretation in the application of the expression  

“so far as may be”.  Their being vast conceptual  

difference in the legal questions in that case, the  

interpretation of “so far as may be” in  M. Ismail  Faruqui  (supra)  cannot  be  applied  to  the  interpretation of “so far as may be” in the present  

case.  

56. The High Court’s interpretation also was in error  

for not considering another well settled principle  

of  interpretation.  It  is  not  uncommon  to  find  

legislature sometime using words by way of abundant  

caution. To find out whether the words are used by  

way of abundant caution the entire scheme of the Act  

is to be considered at the time of interpretation.  

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In this connection we may remember the observation  

of  Lord  Reid  in  I.R.  Commissioner v.  Dowdall  O’Mahoney & Co. reported in (1952) 1 All E.R. 531 at  page 537, wherein the learned Law Lord said that it  

is  not  uncommon  to  find  that  legislature  is  

inserting superfluous provisions under the influence  

of what may be abundant caution. The same principle  

has been accepted by this Court in many cases. The  

High Court by adopting, if we may say so, a rather  

strait jacket formula in the interpretation of the  

expression “so far as may be” has in our judgment,  

misinterpreted the intent and scope and the purpose  

of the Act.

57. For the reasons aforesaid, we are not inclined  

to accept the interpretation of the High Court and  

we are constrained to overrule the judgment of the  

Single Bench as also of the Division Bench.

58. We  hold  that  in  a  case  of  default  by  the  

employer by an exempted establishment, in making its  

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contribution to the Provident Fund Section 14B of  

the Act will be applicable.

59. The appeal is allowed. However, parties are  

left to bear their own costs.  

.......................J. (ASOK KUMAR GANGULY)

.......................J. New Delhi (T.S. THAKUR) January 18, 2012

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