Naik, J.:— This is an application under arts. 226 and 227 of the Constitution of India for a writ of certiorari to quash the demand made by the Tehsildar on October 4, 1958, for an amount of Rs. 17,199-5 nP. and also for a writ of certiorari and mandamus against respondents Nos. 1 to 5 prohibiting them from taking steps against the petitioner for the recovery of the aforesaid amount.

2. The material facts may be briefly stated as follows: The petitioner, the Nagpur Glass Works (Ltd.), Nagpur, is a public limited company, registered under the Indian Companies Act 1913. The company has two departments, one department deals in the manufacture of glass-ware and the other department deals in the manufacture of metals, such as, burners, lamps and lanterns. The first department is known as the Glassware Department and the second department is known as the Metal Department. The company had started a private Provident Fund Scheme under the provisions of the Provident Funds Act of 1925. This scheme inter alia contemplated contributions from the workers on the basis of a certain percentage of their basic salaries, to which the company were to add an equal contribution. The Employees' Provident Funds Act No. XIX of 1952 was passed by the Central Legislature and came into being on November 1, 1952. The company continued the original Provident Fund Scheme. On March 16, 1955, the Regional Provident Fund Commissioner, Madhya Pradesh, Nagpur, made a demand upon the petitioner for contributions according to the scheme under the new Act in respect of both the aforesaid departments. Thereupon, the petitioner-company filed an application under art. 226 of the Constitution of India in the High Court of Judicature at Nagpur (Miscellaneous Petition No. 122 of 1956) praying for the quashing of the above said demand on the ground that the provisions of the Employees' Provident Funds Act of 1952 were not applicable to the industry of the petitioner. The Division Bench of the Bombay High Court at Nagpur allowed the petition in so far as it related to the Glass-ware Department and exempted the company in so far as the workers working in that Department is concerned. The High Court held that the Act was not applicable to the Glassware section of the petitioner's industry. The petitioner thereafter started making contributions as per the requirements of the scheme framed under the Act so far as the Metal Department is concerned. Actually, since six months prior to the decision of the High Court the company was making contributions in respect of the Glassware section as well. This they were doing under protest. After the decision of the High Court, the Regional Commissioner, who is respondent No. 1, made a demand on September 17, 1957, in respect of the contributions payable by the petitioner in accordance with the Act. This demand included the petitioner's contribution not only on the basic salary, but also on dearness allowance. After this in December 1957 the petitioner paid a sum of Rs. 50,000 towards the demand for contributions made by the Regional Commissioner. The petitioners, however, disputed their liability (i) in regard to the contributions on the dearness allowance paid by the petitioners to their employees prior to April 1, 1955; and (ii) regarding the liability to pay administrative charges. The petitioners were also insisting that the employers' contributions, which remained unpaid to the employees for some reason or another, should be returned to the company and not forfeited to the fund. They also made a demand that the amount remaining undisbursed should be adjusted against other demands made by the Regional Commissioner. There was some correspondence between the company and the Regional Commissioner on this point. It appears that the Government exempted the employees from paying their share of contributions in respect of the dearness allowance from November 1, 1952, onwards, but continued to insist upon the petitioner making payment in respect of the same. On February 5, 1958, the company wrote a letter to the Central Provident Fund Commissioner setting out their case as outlined above and requesting the latter to clarify the position. The Central Commissioner gave a reply on March 11, 1958, asking the company to approach the Government of India for clarification as they were the proper authorities to give a decision on this point. Thereafter the company wrote a letter to the Secretary, Government of India, Ministry of Labour, asking for clarification and also for decision of the points raised by them in their letter. As the company had not received any reply they sent a reminder on April 30, 1958. On May 27, 1958, the company paid a sum of Rs. 2,000 towards the partial satisfaction of the demand made by the Commissioner. On October 4, 1958, the company received a demand notice from the Tehsildar, Nagpur, for payment of a sum of Rs. 17,199-5 nP., which notice was received by the company on October 7, 1958. The company then approached the Commissioner with a request for staying the recovery proceedings for a period of ten days with a view to enable them to approach the High Court. Thereafter the company filed the present application under arts. 226 and 227 of the Constitution for the reliefs set out above.

3. In the first instance the petitioners had not added the Union of India as party to these proceedings. They were subsequently added and after notice Mr. Peerbhoy has appeared on behalf of the Union of India. He has also put in appearance on behalf of the Regional Provident Fund Commissioner. Mr. M.N Phadke, the learned counsel for the petitioner, has advanced a number of contentions in support of the claim made by the company. We will deal with them one by one.

4. The first point urged by him was that the Provident Fund Scheme framed under the Provident Fund Act does not automatically apply to the petitioner's establishment, but the same has got to be extended in accordance with the provisions contained in the scheme. In this connection he referred to ss. 5, 6 and 15 of the Provident Fund Act and also to paras. 26, 27 and 28 of the Provident Fund Scheme. In order to appreciate the arguments advanced by Mr. Phadke it is necessary to refer to the relevant provisions of the Employees' Provident Funds Act, 1952 (Act No. XIX of 1952 which will hereafter be called ‘The Act’) and the Scheme that was framed thereunder.

5. Section 1(3)(a) of the Act provides that subject to the provisions contained in s. 16, the act applies to every establishment which is a factory engaged in any industry specified in Schedule I and in which fifty or more persons are employed. It is, therefore, clear, nor is there any dispute on this point, that the Act applies to the petitioner industry. The Scheme, which is known as “The Employees' Provident Fund Scheme, 1952,” was prepared by the Central Government by virtue of the powers conferred on them by s. 5 of the Employees' Provident Funds Act. Section 5(1) lays down that—

“The Central Government may, by notification in the Official Gazette, frame a scheme to be called the Employees' Provident Fund Scheme for the establishment of provident funds under this Act for employees or for any class of employees and specify the establishment or class of establishments to which the said Scheme shall apply and there shall be established, as soon as may be after the framing of the Scheme, a Fund in accordance with the provisions of this Act and the Scheme.”

6. Sub-section (2) lays down that—

“A Scheme framed under sub-section (1) may provide that any of its provisions shall take effect either prospectively or retrospectively on such date as may be specified in this behalf in the Scheme.”

7. One of the points in controversy in the present case is from what date the Provident Fund Scheme can be said to have come into operation so far as the petitioner industry is concerned. Before coming to that question we would refer to the other relevant sections in the Act. Section 6, sub-s. (1) provides that:—

“The Contribution which shall be paid by the employer to the Fund shall be six and a quarter per cent, of the basic wages and the dearness allowance for the time being payable to each of the employees, and the employees' contribution shall be equal to the contribution payable by the employer in respect of him and may, if any employee so desires and if the Scheme makes provision therefor, be an amount not exceeding eight and one-third per cent, of his basic wages and dearness allowance.”

8. Sub-section (2) provides that—

“Subject to the provisions contained in sub-section (1), any Scheme may provide for all or any of the matters specified in Schedule II.”

9. Schedule II has enumerated matters on which provisions may be made in a Scheme. There are as many as 18 matters, which have been enumerated in the Schedule. Clauses (7) and (16) are relevant for the purposes of the present discussion. Clause (7) provides—

“The conditions under which withdrawals from the Fund may be permitted and any deduction or forfeiture may be made and the maximum amount of such deduction of forfeiture.”

10. Clause (16) provides—

“The manner in which accumulations in any existing provident fund shall be transferred to the Fund under section 15, and the mode of valuation of any assets which may be transferred by the employers in this behalf.”

11. Section 15 embodies special provisions relating to the existing provident fund and in effect lays down—

“(1) Subject to the provisions of section 17, every employee who is a subscriber to any provident fund of an establishment to which this Act applies shall, pending the application of a Scheme to the establishment in which he is employed, continue to be entitled to the benefits accruing to him under the provident fund, and the provident fund shall continue to be maintained in the same manner and subject to the same conditions as it would have been if this Act had not been passed.

(2) On the application of any Scheme to an establishment, the accumulations in any provident fund of the establishment standing to the credit of the employees who become members of the Fund established under the Scheme shall, notwithstanding anything to the contrary contained in any law for the time being in force or in any deed or other instrument establishing the provident fund but subject to the provisions, if any, contained in the Scheme be transferred to the fund established under the Scheme, and shall be credited to the accounts of the employees entitled thereto in the Fund.”

12. Turning to the provisions of the Employees Provident Fund Scheme framed under the Act, the Scheme as a whole had come into operation with effect from November 1, 1952, although different chapters were applied at different times to different areas. Chapter IV relates to the employees required to join the Provident Fund. Paragraph 26 provides—

“(1) Every employee, employed in a factory to which this Scheme applies, other than an excluded employee, shall be required to become a member of the Fund from the date on which the Scheme comes into force if he has on that date completed one year's completed service in the factory concerned…”

(Relevant provisions cited)

13. The third proviso runs thus:—

“Provided further that an employee who is a member of the Fund shall not cease to be a member thereof on his leaving a factory to which the Scheme applies except as provided in paragraph 27.”

14. Paragraph 27, (the relevant portion cited) is as follows:—

“Notwithstanding, anything to the contrary contained in paragraph 26, a subscriber, other than an excluded employee, to a Provident Fund…shall become a member of the Fund unless he elects, by an application in Form I sent to the Commissioner—

(a) in the case of a subscriber to whom this Scheme applied on or before the 6th January, 1953, not later than the 6th April, 1953,

(b) in the case of a subscriber to whom this Scheme applies at any time after the 6th January 1953, within three months of the date on which the Scheme becomes applicable to him,

to continue to subscribe to such Provident Fund and in that case he shall not be required or be entitled to become a member of the Fund.”

15. The second proviso runs:—

“Provided further that the above option to continue to subscribe to an existing Provident Fund shall be allowed to an employee in a factory only if its Provident Fund Rules with respect to contributions are in conformity with, or are more favourable to, employees than those specified in the Act or the Scheme.”

16. Paragraph 28 relates to transfer of accumulations from the existing Provident Funds. Clauses (4) and (5) provide:—

(4) “The accumulations transferred to the Fund in accordance with this paragraph shall be credited to the account of each of the members of the Fund, to the extent to which he may be entitled thereto having regard to the statement furnished by the authority aforesaid.”

(5) “When the accumulations in any such Provident Fund as is referred to in subparagraph (1) have been so transferred to the Fund, the appropriate Commissioner may, by notification in the Gazette of India, declare that the subscribers of such Provident Fund have now become members of the Fund and that the accumulations aforesaid have now become vested in the Board.”

17. Mr. Phadke laid emphasis upon the provisions of para. 26 and cl. (5) of para. 28 in particular and contended that certain steps must be taken before an employee becomes a member of the Fund. According to him, an automatic membership of a Provident Fund is not contemplated either by the provisions of the Act or by the provisions of the Provident Fund Scheme. So far as para. 26 is concerned, he emphasises the words “shall be required to become a member of the Fund from the date on which the Scheme comes into force.” His argument is that, the wording is distinguishable from the wording, such us the following:

“Shall be deemed to be a member of the Fund.”

18. Mr. Phadke also referred to the definitions of the words, “Contribution,” “Fund” and “Member” in s. 2(c), (h) and (j) respectively. “Contribution” means a contribution payable in respect of a member under a Scheme. Mr. Phadke, therefore, contended that contribution pre-supposes the existence of a member under a Scheme. “Fund” means the Provident Fund established under a Scheme. And “Member” means a member of the Fund. Mr. Phadke, therefore, contended that a fund must be established before there can be any one who is a member of that Fund. In short the argument is that the Provident Fund must be established and after, it is so established there will be a member of that Fund and thereafter contributions would be payable in respect of a member under the Scheme. Mr. Phadke pointed out that s. 15 pre-supposes the application of the Scheme. The opening words of sub-s. (1) are as follows:

“…Every employee who is a subscriber to any provident fund of an establishment to which this Act applies shall, pending the application of a Scheme to the establishment in which he is employed,”

19. Again the opening words of sub-s. (2) are:

“On the application of any Scheme to an establishment…”.

20. Mr. Phadke relying on these words argued that the Scheme must be properly applied to a specific establishment. It is not, however, disputed that the Scheme under the Act i.e “The Employees' Provident Fund Scheme, 1952”, has been applied to the entire area in which the petitioner's factory is situate. We are not prepared to accept the proposition that the application of the Scheme must be in respect of each of the establishment. There is nothing either in the Act or in the Scheme to warrant such an assumption. If that is so, then it can hardly be disputed that the Scheme has been applied to the establishment in question. Mr. Phadke then argued that even if the Scheme is applied still every employee does not automatically become a member of that Scheme. For this purpose he relied upon the wording of para. 26 of the Employees' Provident Fund Scheme, 1952, which says that

“Every employee, employed in a factory to which this Scheme applies, other than an excluded employee, shall be required to become a member of the Fund from the date on which the Scheme comes into force if he has on that date completed one year's continuous service in the factory concerned.”

21. It is, however, to be noted that para. 26 applies to an establishment to which the Employees' Provident Fund Scheme, 1952, has been applied for the first time. After the application of the Scheme every employee who fulfils the conditions laid down in para. 26, namely, that he has completed one year's service and that he is not excluded, shall be required to become a member of the Fund. That means that he will be compelled to subscribe to the Fund which has been newly applied to the establishment. No option will be left to him. All the same Mr. Phadke is right in contending that the employee does not automatically become a member but he becomes such a member only after he subscribes to the Fund, which, of course, he will be compelled to do. Paragraph 26, however, is obviously inapplicable to an establishment where there is already a Provident Fund Scheme in existence. That Scheme may be a Scheme recognised under the Indian Income-tax Act or a Scheme under the Provident Funds Act, 1925. Whatever that may be, if there is already in existence a Provident Fund Scheme then the appropriate paragraph applicable would be para. 27. The wording of para. 27 is crystal clear. The opening words are—“Notwithstanding anything to the contrary contained in paragraph 26”. These words make it clear that the provisions of para. 26 apply to a case to which para. 27 does not apply. Paragraph 27 further lays down that a subscriber to a Provident Fund recognised under the Indian Income-tax Act, 1922, to which the Provident Funds Act, 1925, applies, shall become a member of the Fund unless he elects by application in Form I sent to the Commissioner—(a) … (b) …within three months of the date on which the Scheme be comes applicable to him. The words, “shall become a member of the Fund” are significant and may be contra-distinguished from the words “shall be required to become a member of the Fund” used in para. 26. The words “shall become a member” suggest that a subscriber to an already existing Fund shall be deemed to be a member unless the employee exercises an option within the period prescribed in para. 27. The choice is given to the member concerned to continue to subscribe to the existing Provident Fund. If, however, he does not exercise the choice within the period prescribed, then para. 27 in effect lays it down “He shall be deemed to be a member of the Fund”. Even if the member exercises an option in favour of continuing to subscribe to the old Fund, the last proviso to para. 27 makes it clear that he will not be allowed to continue to subscribe to the existing Provident Fund unless the authorities are satisfied that the Provident Fund Rules are in conformity with or more favourable to the employee, than those specified in the Act or the Scheme. It will thus be clear that the present case will be governed by para. 27 because there was already a Provident Fund Scheme in existence, under the Provident Funds Act, 1925. It is not the case of the petitioners that any of the members had exercised their option in favour of continuing to subscribe to the old Fund. If that is so, then it is clear that the employees must be deemed to have become members of the Fund established under the Provident Fund Scheme, 1952.

22. Turning to Mr. Phadke's argument based on para. 28, the first thing to be noted is that paragraph relates to transfer of accumulations from the existing Provident Funds, as the head-note makes it clear. In this respect it is necessary to go back to the provisions of sub-s. (2) of s. 15 of the Act. Sub-section (2) provides that—

“On the application of any Scheme to an establishment, the accumulations in any provident fund of the establishment standing to the credit of the employees, who become members of the Fund established under the Scheme shall, notwithstanding anything to the contrary contained in any law for the time being in force…but subject to the provisions, if any, contained in the Scheme be transferred to the Fund established under the Scheme, and shall be credited to the accounts of the employees entitled thereto in the Fund.”

23. That shows that after the new Scheme has been applied to the establishment the accumulations in the existing Provident Funds shall be transferred to the Funds under the new Scheme. The only proviso is that these Funds shall be transferred subject to the provisions, if any contained in the Scheme. These provisions are contained in para. 28 and they lay down the procedure under which the accumulations are to be transferred from the existing Fund to the Fund under the new Scheme. Clause (1) of para. 28 casts an obligation on the authority-in-charge of the management of the establishment for transferring the Fund under sub-s. (2) of s. 15 to the appropriate Commissioner. Sub-clauses (i) to (iii) lay down the procedure to be followed by the authority in the matter of transferring the Funds. Clauses (2) and (3) relate to consequential matters with which we need not deal. Clause (4) provides that the accumulations transferred to the Fund in accordance with this paragraph shall be credited to the account of the members of the Fund to the extent to which he may be entitled thereto, having regard to the statements furnished by the authority aforesaid. Clause (5) is the most important clause in this paragraph and the entire superstructure of Mr. Phadke's argument is based on the provisions of this clause. It is, therefore, worthwhile to cite the clause which runs thus:—

“(5) When the accumulations in any such Provident Fund as is referred to in subparagraph (1) have been so transferred to the Fund, the appropriate Commissioner may, by notification in the Gazette of India, declare that the subscribers of such Provident Fund have now become members of the Fund and that the accumulations aforesaid have now become vested in the Board.”

24. Mr. Phadke contends that after the accumulations are transferred the appropriate authority is required to issue a notification. It is clear from the language employed viz. that the subscribers of such Provident Fund have now become members of the Fund, that the issue of a notification is a condition precedent for acquiring the status of membership. He pointed out that no such notification has so far been issued. According to him, that shows that no Provident Fund has come into being and the subscribers have not become members of any new Fund. The argument proceeds that if this is correct, then there is no question of calling upon the petitioner-establishment to make contributions in respect of pay and clearness allowance of the employees till the issue of a such notification. We are unable to accept this argument. Under s. 15(2) the accumulations in the existing Found are statutorily transferable to the Fund established under the new Scheme. At this stage, we may set out the line of Mr. Peerbhoy's reply: ‘Section 15(2) creates a legal fiction that the accumulations standing in the old Provident Fund stand credited to the Fund established under the new Scheme. It is true that before the accumulations in the Fund are actually transferred, it is necessary that certain steps are taken by the authorities who are in charge of that Fund and these steps have been enumerated in para. 28. But, if the authorities in charge of the management did not take the necessary steps and kept the matter pending for years together, that does not mean that the Fund under the new Scheme has not been established, nor does it mean that the accumulations do not become vested in the new Scheme. The authorities in charge of the management cannot he allowed to take advantage of their own default. If the authorities prove intransigent then coercive process for making recovery can be started by the Government under s. 8 of the Act.’ It is not necessary to express any opinion on this part of the argument. Even assuming that Mr. Phadke's argument is correct, it will, have application only so far as the accumulations are concerned. It may be that the accumulations do not vest in the new Fund so long as they have not been actually transferred and the necessary formalities in effecting the transfer have not been got through. That does not, however, mean that the Fund has not come into being or that so far as the future subscriptions are concerned the liability has not accrued due. The distinction suggested above is implicit in the wording of cl. (5) of para. 28, Clause (5) in substance provides that the appropriate Commissioner may declare by a notification that, the subscribers of such Provident Fund have now become members of the Fund and the accumulations aforesaid have now become vested in the Board. The words “subscribers of such Provident Fund have now become members of the Fund” must be read in conjunction with the subsequent words, “and that the accumulations aforesaid have now become vested in the Board.” That means that the employees will be deemed to have become the beneficiaries in respect of the accumulations after they have been transferred to the Fund under the new Scheme because it is only then that the accumulations will be vested in the Board. The words, therefore, “have now become members of the Fund” are restricted to the accumulations in the previous Fund, and membership in respect thereof will arise after they have been transferred in a proper way. In our view, that does not mean that the liability to pay contributions arises only after the issue of a notification mentioned in cl. (5) of para. 28, nor does it mean that membership of the Fund springs into existence only after the issue of the notification. It is one thing to say that the ownership in the accumulations will only become vested in the Board after the accumulations have been transferred to the new Fund and quite another to say that the Fund has not come into existence for any purpose whatsoever. The Fund may have come into existence so far as the liability to make contributions from the date of the establishment of the Fund is concerned, but the members may not claim any vested right in the accumulations till the same have been duly transferred and in that sense it can be said that the subscribers have not yet acquired the status of membership. If this interpretation is correct, then it is clear that the liability on the part of the employer to make contributions in respect of the basic salary as also the dearness allowance of each of the employees springs into existence from the date the Scheme has been applied to the establishment concerned. That liability is not made to depend upon the issue of a notification contemplated by cl. (5) of para. 28. The Scheme was applied to the petitioner-establishment on November 1, 1952, and the liability, of the employer commences from that date, and continues in future. The claim made on the petitioner in respect of contributions on the basic salary as well as the dearness allowance relates to a period from November 1, 1952, to April 1, 1955, which is the date of demand. In our view, the claim is legal and valid and it is not correct to say either that the claim is premature or that it is being made to have retrospective effect.

25. In this connection Mr. Phadke referred to a decision of the Calcutta High Court reported in Aluminium Corpn. of India v. R.P.F Commr. . [1958] A.I.R Cal. 570. Mr. Phadke also referred to the above decision in another context, namely, the effect of reference having been made to Government under s. 19A and also that of exemption having been granted by Government to the employees for making their contributions. We will discuss these aspects of the matter a little later. In the case before the Calcutta High Court, the Government had passed an Virder under s. 19A of the Employees' Provident Funds Act, 1952, to the following effect (p. 571):—

“…your factory will come under the purview of the Employees' Provident Funds Act, 1952, and the Scheme framed thereunder with effect from 1st November 1952…

“As regards payment of contributions for the pre-discovery period (i.e from 1st November, 1952 to 31st October, 1956) you are required to pay the employers' share of contributions and administrative charges on both the shares (employers' and employees') together with damages…to the statutory Fund.

“Regarding payment of the employees' share of contributions for the aforesaid period it may be left to the employees concerned to pay the arrears, if they so desire.

“You are, therefore, required to pay both employers' and employees' share of contributions from 1st November, 1956 onwards together with administrative charges thereon.”

26. The company made an application under art. 226 of the Constitution to the High Court of Calcutta challenging the aforesaid order. The matter was decided by a single Judge Mr. Justice P.B Mukharji. It was argued that the order passed by the Government was bad, inasmuch as it is made retrospectively applicable to the company and the period for such retrospect was as long as five years. Justice Mukharji pointed out how the retrospective implementation will lead to absurdity inasmuch as many workers may have left service in the meanwhile. He held that the workers in service cannot be subjected to deductions of their contributions retrospectively and the employer cannot be made to pay employer's share of contributions in respect of those workers who have left service. His Lordship Mr. Justice Mukharji observed (p. 572):

“It is, therefore, entirely against the purposes and object of the Act to apply a scheme retrospectively to the company for a period of five years within which time some of the employees have already left and presumably left by taking their provident fund accumulations.”

27. In this connection Mr. Justice Mukharji referred to the provisions of para. 26 and also to the provisions of s. 6 of the Act. It appears from the report that there was no Provident Fund Scheme existing at the date when the new Act came into force. That seems to be the reason why para. 26 was held applicable to the case in question. As pointed out above para. 27 applies to an establishment where there is already a scheme in existence and the opening words of para. 27 exclude the application of the provisions of para. 26 to such a case. No reference whatsoever was made to para. 27 in the course of the judgment. As pointed out above there is a striking difference between the wording of para. 26 and the wording; of para. 27. In para. 26 the relevant words used are “shall be required to be a member of the Fund” whereas in para. 27 the words used are “shall become a member of the Fund unless he elects…” In our view, therefore, the principle underlying the decision of the Calcutta High Court is not applicable to the instant case. Furthermore, the decision is given by a single Judge and, therefore, has not the same authority as that of a larger Bench.

28. Mr. Phadke then pointed out that the Government have exempted the employees from their liability to make contributions to the Provident Fund in respect of the part payable by the employees. Section 6 of the Act contemplates that the payment by the employer and the employees shall be equal upto the limit prescribed therein. Of course, it will be open to the employees to make contributions beyond that limit. But the employer is bound under the statute to make an equal contribution upto a minimum prescribed under s. 6. The normal practice is that the share of the employee in regard to the contributions to the Provident Fund is collected by making deductions from the salary payable to him. The employer then adds his own share and credits the entire amount to the account of a particular employee. It is an admitted fact that so far as the dearness allowance is concerned the employer did not make the necessary deductions from the salaries of the employees. Even so, according to the Government, the employer remains statutorily liable to make payment of the employer's share of the contributions together with that of the employees. It appears that the Government had made a demand upon the petitioner-establishment on that basis. It further appears that the Government was pleased to exempt the employer from payment of the employees' share of contributions so far as the dearness allowance is concerned. This exemption appears to have been granted on equitable considerations. The employer had not recovered the employees' share and it was not possible for the employer to make those recoveries with retrospective effect. These considerations may have influenced the Government in allowing the exemption. In the Calcutta case cited above, the Government had stated in the order as follows:—

“Regarding payment of the employees' share of contributions for the aforesaid period it may be left to the employees concerned to pay the arrears, if they so desire.”

29. With reference to this direction Justice Mukharji remarked (p. 572):—

“This is clearly against the statutory finality of S. 6 and paragraph 29 of the Scheme. Neither S. 6 nor paragraph 29 of the Scheme permits this option to pay or not to pay. They insist that ‘the employee's contribution shall be equal’ to the employer's contribution. I have no hesitation in holding that the Government of India cannot suspend the operation of this Act in this matter as against the employees. That is inconsistent with the provisions of the Act…”

30. It is not necessary for us to decide as to whether the view taken by Mr. Justice Mukharji is correct or not. In that case the Government had left it to the choice of the employees to pay the arrears, if they so desired. According to Mr. Justice Mukharji, this was mot correct in view of the mandatory provisions of s. 6 of the Act. In the present case the Government have exempted the employers as well as the employees from paying the arrears in respect of the employees' share of contributions. They are only insisting on the employer paying his share of the contributions. Mr. Phadke contended that inasmuch as the Government have exempted the employer as well as the employees from paying the arrears in respect of the employees' share of the contributions, the Government cannot insist upon the employer paying the arrears in respect of his share of the contributions. He contends that the liability of the employer is co-existensive with that of the employees and there is a reciprocity between the two. If the employee is exempted from making payment, the liability of the employer must automatically cease. For this argument he relies upon the provisions of s. 6, which in effect lays down that the employees' contribution shall be equal to the contributions payable by the employer. He also relies on the observations of Mr. Justice Mukharji cited above. As pointed out above in the case considered by the Calcutta High Court, Government had given a choice to the employees either to pay or not to pay the arrears. According to Mr. Justice Mukharji this was inconsistent with the provisions of the Act. The Calcutta High Court was considering the case to which para. 26 applied and not para. 27. Actually in the present case the exemption granted by the Government has ensured to the benefit of the employer, because the employer has been exempted from making payment so far as the employees' share is concerned, although under the statute the employer is responsible for not only paying his share of the contribution but also the share of the employees.

31. The third argument advanced by Mr. Phadke is based on the provisions of s. 19-A, which runs thus:—

“19-A. Power to remove difficulties—If any difficulty arises in giving effect to the provisions of this Act, and in particular if any doubt arises as to—

(i) Whether an establishment which is a factory, is engaged in any industry specified in Schedule I;

(i-a) whether any particular establishment is an establishment falling within the class of establishment to which this Act applies by virtue of a notification under clause (b) of sub-section (3) of section 1;

(ii) whether fifty or more persons are employed in an establishment;

(iii) whether three years have elapsed from the establishment of an establishment; or

(iv) whether the total quantum of benefits to which an employee is entitled has been reduced by the employer;

the Central Government may, by order, make such provisions or give such directions not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for the removal of the doubt or difficulty; and the order of the Central Government, in such cases, shall be final.”

32. Before considering the application of s. 19A it is necessary to recapitulate a few facts. It appears that the petitioner was contending that his establishment was not governed by the Provident Funds Act and the Scheme framed thereunder. Even after the decision of the High Court the petitioner seems to have continued to harbour the impression that the Scheme was not applicable with effect from November 1, 1952, and that it would come into operation after the same was extended by a notification. After a demand from him on September 17, 1957, the petitioner started correspondence with the Regional Commissioner. In his letter dated February 5, 1958, he has mentioned the ground on which he disputed his liability. The Regional Commissioner by his letter dated March 11, 1958, informed the petitioner that he may approach the Government of India for clarification since they had the authority to give a decision on disputed points. The Regional Commissioner presumably had s. 19A in his mind. In pursuance of the letter of the Regional Commissioner the petitioner sent a letter dated March 18, 1958, seeking for clarification in respect of the points raised by him. That letter does not in terms refer to s. 19A, but we are prepared to assume that the letter or the memorandum was made with a view to call upon the Government to decide the matter by virtue of the powers vested in them under s. 19A. Mr. Phadke, therefore, argues that inasmuch as the Government of India have not taken any decision on this matter under s. 19A, it is premature for the Commissioner of the Provident Fund to start recovery proceedings under s. 8 of the Act. In this respect Mr. Phadke relied upon a decision of the Madras High Court reported in Amtamalai Mudaliar v. Reg. Prov. Fund Commr. . [1955] A.I.R Mad. 387.. The facts of that case were briefly as follows: The petitioner was the managing partner of a firm which owned a factory at Karur where bed-sheets and towels were manufactured on handlooms. The number of labourers employed in the factory exceeded 50. The petitioner contended that the workers were not employees as defined under s. 2(f) of the Act because what was payable to them for the work done by them was not wages. Some correspondence took place between the petitioner and the Regional Commissioner who was respondent No. 1 in the writ petition. No decision was taken in that respect either by the Commissioner or by the Government under s. 19A. The Regional Commissioner, however, claimed that the provisions of the Act applied and on that basis he issued a demand notice to pay up the contributions claimed to be due and also to take other necessary steps. The petitioner filed an application under art. 226 of the Constitution for a writ restraining the Regional Commissioner from enforcing the provisions of the Employees' Provident Funds Act, and the Scheme framed thereunder against the petitioner-firm. The matter was decided by a single Judge, Mr. Justice Rajagopalan. He pointed out that neither the Act nor the Scheme gave any power to the Regional Commissioner to adjudge a dispute, such as, whether the factory was a factory within the meaning and scope of s. 1(3) of the Act. He then referred to the provisions of s. 19A and observed that no order was passed by the Central Government, in pursuance of the provisions of s. 19A. The learned Judge then proceeded to consider the scope of s. 19A but finally contented himself by saying that it was not necessary for him either to decide at that stage the scope of the statutory finality accorded by s. 19A of the Act to the decision of the Central Government in proceedings under art. 226 of the Constitution. He, however, held that the petitioner was entitled to the relief claimed by him on the short ground that there was a dispute and that dispute had yet to be decided under s. 19A of the Act. He came to the conclusion that the demands for contributions should not be allowed to be enforced till the question, whether the petitioner is a factory in which fifty or more persons are employed and if so it comes within the scope of s. 1(3) of the Act, is decided. In our view, the above decision has no bearing on the facts of the present case. The opening words of s. 19A make a distinction between a difficulty arising in giving effect to the provisions of the Act and to a particular doubt which arises in respect of any of the matters enumerated in cls. (i) to (iv). So far as the difficulty is concerned, it is of a general character and it must arise in giving effect to the provisions of the Act. It is significant to note that the Madras case related to doubts in relation to cls. (i-a) and (ii) of s. 19A. So far as the expression “difficulty arising in the matter of giving effect to the provisions of this Act” is concerned it is clear that difficulty must be a difficulty experienced by the authorities who are charged with the administration of the provisions of the Act and the Provident Funds. That means that if the authorities experienced any difficulty in the actual implementation of the provisions of the Act they may ask the Central Government to pass an order making appropriate provisions or give appropriate directions. But these provisions or these directions must not be inconsistent with the provisions of the Act. If this interpretation is correct, then it follows that if anybody can make a reference to the Central Government for removing the difficulty arising in the implementation of the Act, it is the Regional Commissioner or the other appropriate authority. It is not open to the factory or the establishment or anyone connected therewith to approach the Central Government calling upon them to make a provision or to pass an order in that regard. It is possible to argue that so far as a particular doubt in regard to the matters enumerated in cls. (i) to (iv) is concerned, the reference to Central Government may be made by anyone and not merely the authorities administering the Funds. The decision of Mr. Justice Rajagopalan perhaps may have been influenced by this consideration. We do not feel called upon to decide this aspect of the matter. It is, however, clear that the questions raised by the petitioner have no relation to any doubts arising with respect to cls. (i) to (iv). If at all, his case may fall in the first part, namely, a ‘difficulty arising in giving effect to the provisions of the Act’. As pointed out above, in that case it must be the difficulty experienced by the officer concerned and not the difficulty created by the petitioner. In our view, that is the only rational interpretation which can be placed on the words “if any difficulty arises in giving effect to the provisions of this Act,” otherwise every factory or establishment will raise a difficulty of its own and make a memorandum or write a letter to the Central Government asking them to remove the difficulty. After making such a reference they may proceed further and say that till Government has given a decision on the difficulty raised by them, the demand notice should not be enforced again them. Such a view is not in consonance with the provisions of the Act nor the spirit underlying the same. In this connection we may refer to the words, “the Central Government may, by order, make such provisions or give such direction not inconsistent with the provisions of this Act.” These words make it clear that the Central Government is not bound to issue any direction. They may make an appropriate provision or issue an appropriate direction or may not. All that is laid down is if, however, they choose to make a provision or issue a direction, they should not be inconsistent with the provisions of the Act and the order made by them shall be final. It is not necessary for us to consider as to the effect of any decision taken by the Government under s. 19-A and whether the order of the Central Government can or cannot be challenged even under art. 226 of the Constitution. The fact remains that in the present case the Government have not taken any decision and the letters written by the petitioner have simply gone unanswered. Merely because the letters have gone unanswered in regard to a difficulty, which is of the making of the petitioner himself, it does not stand to reason to hold that the Regional Commissioner cannot enforce the demand made by him and must stay his hands till the Government have taken a final decision in that respect. In our view, the decision of the Madras High Court is not correct if it is intended to apply to the first clause, namely with regard, to the ‘difficulty in giving effect to the Act’. We refrain from expressing any opinion as to whether the above decision is correct or not in so far as it relates to specific doubts arising in relation to cls. (i) to (iv), as that question does not arise in the present case, nor are we called upon to consider whether the Central Government is constituted into a tribunal, or a simple administrative machinery has been created to try and settle the disputes or clear the doubts referred to in that section.

33. Mr. Phadke's third argument related to the question as to whether the petitioner is entitled to claim credit in respect of moneys remaining undisbursed to the employees, out of the amounts paid by the petitioner “in respect of his part of the contributions. Mr. Phadke contended that there are sums lying in the existing Fund which have not been disbursed to the employees, for one or other reason, such as some have left the service, some retired or are dead. So far as the petitioner's share in these sums is concerned, according to Mr. Phadke's arguments, they must revert back to the employer. These sums cannot be forfeited as is sought to be contended by the respondents. In order to appreciate this argument it is necessary to refer to the provisions of para. 69 of the Employees' Provident Funds Scheme, 1952. Paragraph 69 relates to circumstances in which accumulations in the Funds are payable to a member. Clauses (1) to (3) relate to the conditions in which a member may withdraw the amount standing to his credit in the Funds, and when, how and what part of contributions may by forfeited. Clause (4) is not relevant for our present discussion. Clause (5) is important and it runs thus:—

“(5) Any sum forfeited to the Fund under sub-paragraphs (1) and (2) shall not be returned to the employer but shall be credited to the ‘Reserve Account’ of the Fund.”

34. Mr. Phadke's argument in this connection was two-fold. Firstly, he argued that para. 69 in so far as it relates to forfeiture is ultra vires the powers vested in the Central Government in framing the Scheme under s. 6(2) and Schedule II. Section 6(2) lays down that any Scheme may provide for all or any of the matters specified in Schedule II. Schedule II enumerates 18 matters for which provision may be made in the Scheme. Mr. Phadke contended that the power to prepare the Scheme does not imply the power to make a provision for forfeiture. We are unable to accept this argument. Item No. 7 of Schedule II runs thus:—

“The conditions under which withdrawals from the Fund may be permitted and any deduction or forfeiture may be made and the maximum amount of such deduction or forfeiture.”

35. So forfeiture is one of the matters for which provision can be made in the Scheme. It is not, therefore, correct to say that the provision for forfeiture exceeds the power conferred by s. 6(2) or the items enumerated in Schedule II. The second line of attack against the provision of forfeiture as set out in the petition was that this provision was of an ex-propriatory character and, therefore, offended the provisions of art. 19 of the Constitution of India. Mr. Phadke, however, did not press this aspect of the matter and, therefore, we need not consider the same. He, however, advanced one more interesting argument and it is this. He said that the amounts standing to the credit of the employee in the funds are meant for the use and benefit of that person. If he does not or cannot withdraw the entire amount, then the part which has come from the source of the contributions made by the employer for his share must revert back to the employer. He further contended that there is no such thing as reserve account in the Provident Fund. The account in the Provident Fund is of each individual and to say that the lapsed amount would be credited to the reserve account is to say something which is not warranted by the provisions of the Act. He argued that the Provident Fund is in the nature of a trust of which the workers individually are beneficiaries. He contended that if the amounts remained unpaid to the individual members, the purpose of the trust has failed to that extent and if these amounts are really contributed by the employer they must revert back to the employer. In support of this argument he relied upon the provisions of s. 83 of the Indian Trusts Act, which runs thus:—

“83. Where a trust is incapable of being executed, or where the trust is completely executed without exhausting the trust-property, the trustee, in the absence of a direction to the contrary, must hold the trust-property, or so much thereof as is unexhausted, for the benefit of the author of the trust or his legal representative.”

36. It is clear that the section in terms cannot apply to our present case. It cannot be said that the trust is incapable of being executed or has been completely executed. The most important point to he noted is that under s. 83 the property or so much thereof as remains unexhausted is held for the benefit of the author of the trust or his legal representative. Mr. Phadke contended that even if the section in terms does not apply to the present case the spirit underlying the section may be applicable. Assuming that the spirit underlying the section is applicable to a case where certain amounts remained unpaid to the beneficiary, still the question remains as to whether there is any person who can be called the author of the trust. Mr. Phadke suggests that the employer can be regarded as the author of the trust so far as his own contributions are concerned. We cannot pursuade ourselves to accept this argument. The trust in relation to the Employees' Provident Fund is not the creation of any individual. It is a statutory trust. The contributions, which an employer makes towards the Fund of the trust, are not his voluntary contributions. The employer is under statutory obligation to make those contributions. The employer, therefore, cannot be called the author of the trust without, doing violence to language. In the present case the statute has provided that the moneys remaining undisbursed to the individual employees shall stand to the credit of the reserve account of the Fund. In other words, instead of the individual beneficiary the whole class of employees of a particular establishment will be the beneficiary so far as the undisbursed sums are concerned. This provision is based on the analogy of the doctrine of cy pres. In our view, there is no question of the reversion of the amounts remaining undisbursed to the source from which they came. Once the contributions are made, the employer is divested of his dominion over the same. These contributions become vested in the board of trustees of the Provident Fund. All that cl. (5) lays down is that the sums remaining undisbursed, which originally stood in the account of the individual employee would be transferred to the general reserve account of the Fund.

37. Before concluding this topic reference must be made to a case reported in Re Gillingham Bus Disaster Fund3—which was cited by Mr. Phadke in the course of his argument. The facts of that case were as follows:— In December, 1951, a motor vehicle ran into a column of cadets, who were marching along a road in Gillingham, killing some of them and injuring others. The mayors of Gillingham, Rochester and Chatham decided to open a memorial fund, and the town clerk of Gillingham wrote a letter to a daily newspaper referring to that decision and stating that the fund was “to be devoted, among other things, to defraying the funeral expenses, caring for the boys who may be disabled and then to such worthy cause or causes in memory of the boys who lost their lives as the mayors may determine”. Money was contributed to the fund anonymously by means of street collections, and also, but to a smaller extent by substantial gifts from known persons. After so much of the fund as was required to discharge the primary objects (i.e, the defraying of general expenses and the earing for disabled boys) had been spent for the benefit of the victims of the accident, application was made to the Court to-determine what should be done with the remainder. It was admitted that the primary objects of the Fund were not charitable. Held, the remainder of the fund was held on a resulting trust in favour of the donors because—

(i) treating the town clerk's letter as the instrument declaring trusts, the trust for “worthy causes” failed for uncertainty, and

(ii) the defect was not cured by the Charitable Trusts (Validation) Act, 1954.

38. We are unable to understand how this decision assists Mr. Phadke in the argument which he had advanced. It seems to have been assumed in the above case that there was an instrument declaring trust and that instrument was provided by the town clerk's letter. In the present case, as pointed out, there is no instrument of trust, and the trust is a statutory one. Furthermore the words, “trust for worthwhile causes” as appearing in the instrument of trust were vague and, therefore, it was held that the trust failed for uncertainty. The trust having failed, it logically follows that the amount must be held in trust for the original donors. There is no question in the present case of the trust failing for uncertainty. We must, therefore, hold that the amount remaining undisbursed to the particular employees must stand to the credit of the reserve account of the Fund as provided for in para. 69 of the Scheme.

39. Mr. Phadke finally argued that in any case the administrative charges cannot be levied because, no work of administrative character could be done or was done in respect of the contributions which have not been collected. We are unable to accept this argument. We have already held that the petitioner is liable to make his contributions for his share in respect of deafness allowance payable to the employees with effect from November 1, 1952. If that is so, the administrative charges, which are consequential upon the above payment, are admissible and, therefore, can be recovered from the employees.

40. The result is that the application fails and is dismissed.

41. In the peculiar circumstance of the case, we direct the parties to bear their respective costs.

42. Application dismissed.