The Employees' Provident Funds and Miscellaneous Provisions Act, 1952, does not apply to which one of the following establishments registered under the Co-operative Societies Act, 1912 ?

Correct — A, (a) Establishments employing fewer than 50 persons and operating without the aid of power. The provision is section 16(1)(a) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, headed 'Act not to apply to certain establishments'. In its own words the Act shall not apply 'to any establishment registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State relating to co-operative societies, employing less than fifty persons and working without the aid of power'.

Read the clause slowly, because the item is built out of its three moving parts.

The threshold is FIFTY, not twenty and not seventy. Twenty is the general threshold in section 1(3)(b) for other establishments the Central Government may notify; fifty is the special number the co-operative-society exemption uses, and it is the only place in the Act where fifty appears in this role.

The comparator is LESS THAN fifty. The exemption is for the small society. A co-operative society employing fifty or more persons is inside the Act, not outside it.

The conjunction is AND, not OR. Both conditions must hold together: fewer than fifty persons AND working without the aid of power. A co-operative society that employs thirty people but runs machinery with power is covered by the Act, because it fails the second limb. A society that employs eighty people without any power is also covered, because it fails the first. Only the society that is small AND power-free falls outside.

Option (a) is the only one that reproduces all three: fewer than fifty, and without the aid of power. That is the establishment to which the Act does not apply.

Why the others are wrong

• (b)Establishments employing fewer than 70 persons and operating with the aid of power. — Two of the three parts are wrong. The threshold in section 16(1)(a) is fifty, not seventy — seventy is not a figure the Act uses anywhere — and the power condition is inverted. The exemption is for a society working WITHOUT the aid of power; this option describes one operating WITH the aid of power, which is exactly the society the Act keeps inside its net however few people it employs. A co-operative society running powered machinery with sixty employees is covered; so is one running powered machinery with thirty, once the general twenty-employee limb of section 1(3) is engaged. Using power is a reason to be covered, never a reason to be exempt.
• (c)Establishments employing more than 50 persons or operating without the aid of power. — The number is right and everything around it is wrong. Section 16(1)(a) exempts a society employing LESS THAN fifty persons; this option says MORE THAN fifty, which describes the larger society that the Act plainly does apply to. It then joins its conditions with 'or' rather than 'and', which would let a society escape the Act by satisfying either limb alone — so a large powered society employing two hundred people would be exempt merely because it employs more than fifty. That is the opposite of what an exemption for small, non-mechanised co-operatives is for. Both the comparator and the conjunction have been flipped, and either flip alone would be fatal.
• (d)Establishments employing fewer than 20 persons or operating without the aid of power. — This borrows the general coverage threshold and drops it into the wrong provision. Twenty is the number in section 1(3)(b), which brings within the Act any other establishment employing twenty or more persons that the Central Government specifies by notification; it is not the co-operative-society figure, which is fifty. The conjunction is also wrong: section 16(1)(a) requires both limbs to be satisfied together, and this option's 'or' would exempt any co-operative society working without power however large it was, and any society with fewer than twenty employees however heavily mechanised. A candidate who half-remembers 'twenty' from the coverage rule and 'without power' from the exemption produces exactly this option.

Section 16 is the Act's exclusion list, and section 16(1)(a) is its oldest entry: a co-operative society registered under the Co-operative Societies Act, 1912 or under a State co-operative-societies law is outside the Act if — and only if — it employs fewer than fifty persons and works without the aid of power. The policy behind the two limbs is the same policy that runs through the Factories Act and much of Indian labour law: size and mechanisation are the two proxies for an establishment being organised enough to bear a compliance burden, and a body that is small on both counts is left alone. Because both limbs must be satisfied, the exemption is narrow. The rest of section 16 works the same way. Section 16(1)(b) keeps out establishments belonging to or under the control of the Central or a State Government whose employees are entitled to the benefit of a contributory provident fund or old-age pension under a Government scheme, and to establishments belonging to or under the control of a State Government whose employees are entitled to such benefits under a State rule. Section 16(2) lets the Central Government exempt, by notification and for a period, a class of establishments on financial or other grounds, and section 17 provides the separate route by which an establishment running its own fund on no-less-favourable terms may be exempted. Read section 16 beside section 1(3), which is what brings an establishment IN — a factory in a Schedule I industry employing twenty or more persons, or any other establishment employing twenty or more persons that the Central Government notifies.

Key facts

• EPF & MP Act, 1952, section 16(1)(a) — the Act does not apply to an establishment registered under the Co-operative Societies Act, 1912, or under any State law relating to co-operative societies, employing less than fifty persons and working without the aid of power.
• Both limbs must be satisfied together; a co-operative society that fails either one is covered by the Act.
• Fifty is specific to the co-operative-society exemption. The general coverage figure in section 1(3) is twenty.
• Section 1(3)(a) — every establishment which is a factory engaged in an industry specified in Schedule I and employing twenty or more persons.
• Section 1(3)(b) — any other establishment employing twenty or more persons, or class of establishments, which the Central Government may specify by notification.
• Section 16(1)(b) — establishments belonging to or under the control of the Central or a State Government whose employees are entitled to a contributory provident fund or old-age pension under a Government scheme or rule are also outside the Act.
• Section 16(2) — the Central Government may, by notification and for a stated period, exempt a class of establishments on financial or other grounds.
• Section 17 — the separate exemption route for establishments running their own provident fund on terms not less favourable than the statutory Scheme.

Common traps

• Answering the positive question. The stem asks to which establishment the Act does NOT apply.
• Importing the general figure of twenty from section 1(3) into the co-operative-society clause, which uses fifty.
• Reading 'and' as 'or'. Both limbs of section 16(1)(a) must hold, so an exemption fails if either does.
• Flipping the comparator. It is 'less than fifty'; a society employing fifty or more is inside the Act.
• Treating the use of power as a ground for exemption. It is a ground for coverage.

• practice — not a real PYQ

  An establishment registered under the Co-operative Societies Act, 1912 employs 40 persons and works with the aid of power. Under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 it is :

  • (a)Outside the Act, because it employs fewer than fifty persons
  • (b)Outside the Act, because it is a co-operative society
  • (c)Not outside the Act, because the exemption requires both fewer than fifty persons and working without the aid of power
  • (d)Outside the Act only if the State Government so notifies

  Answer(c) Not outside the Act, because the exemption requires both fewer than fifty persons and working without the aid of power

• practice — not a real PYQ

  Under section 1(3)(b) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, the Central Government may by notification apply the Act to any other establishment employing :

  • (a)Ten or more persons
  • (b)Twenty or more persons
  • (c)Fifty or more persons
  • (d)One hundred or more persons

  Answer(b) Twenty or more persons