Coconut Construed as a Fruit Under EPF Act and Desiccation Amounts to Preservation: Delhi HC upholds EPFAT Order [Read Order]

The Delhi High Court held that coconut is to be construed as a “fruit” for the purposes of the Employees Provident Funds andMiscellaneous Provisions (EPF) Act, 1952, and that the process of desiccation amounts to preservation, thereby bringing coconut processing units within the ambit of the EPF Act.

The respondent, M/s Shriram Coconut Products (P) Ltd, is engaged in the activity of desiccating coconuts, which is removing moisture from coconuts to produce dried coconut used primarily in the food and confectionery industry.

The EPF authorities initiated proceedings under Section 7A of the EPF Act, and authorities held that the respondent, engaged in desiccating coconuts, fell within the “fruit and vegetable preservation industry” under Schedule I.

This finding was upheld by the EPF Appellate Tribunal. However, the Single Judge reversed the decision, holding that coconut could not be treated as a fruit in common parlance.

Brijesh Kumar Tamber, the counsel for the appellant contended that coconut is scientifically and dictionary-wise a fruit, and the activity of desiccation, which removes moisture and enhances shelf life falls within “preservation”.

The counsel for the appellant further contended that the EPF Act is a beneficial social welfare legislation and must be interpreted purposively to extend coverage to employees. Reliance on common parlance meaning, as adopted by the Single Judge, was assailed as erroneous, when such an approach is relevant in taxation statutes and not welfare legislations.

Sanjay Gupta, the respondent counsel contended that coconut is not treated as a fruit in common parlance and is instead understood as an oilseed or a distinct category. It was submitted that the EPF Act does not expressly include the coconut industry, and therefore, the respondent cannot be brought within its ambit.

It was further submitted by the respondent counsel that desiccation does not amount to “preservation” as contemplated under Schedule I and that the residuary clause must be read ejusdem generis with the specified entries.

Justice C. Hari Shankar and Justice Om Prakash Shukla held that the EPF Act, being a welfare legislation, must be construed liberally to advance its object of providing social security to employees. It observed that adopting a narrow or restrictive interpretation would defeat the purpose of the statute.

The Court further held that desiccation, which involves removal of moisture to extend shelf life constitutes “preservation”. The residuary clause in Schedule I was interpreted broadly to include such activities, thereby preventing exclusion of industries engaged in similar processes.

Accordingly the court upheld the decision of the EPFAT and set aside the impugned judgment of the learned Single Judge.

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