Full Judgment Text
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CASE NO.:
Appeal (civil) 7345 of 2000
PETITIONER:
Regional Provident Fund Commissioner
RESPONDENT:
M/s Raj’s Continental Exports (P) Ltd
DATE OF JUDGMENT: 07/03/2007
BENCH:
Dr. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA
JUDGMENT:
J U D G M E N T
Dr. ARIJIT PASAYAT, J.
Challenge in this appeal is to the judgment rendered by a
Division Bench of the Karnataka High Court dismissing the
Writ appeal filed by the appellant. The learned Single Judge,
whose order was under challenge before Division Bench had
allowed the writ petition filed by the respondent holding that
the order passed under Section 7A of the Employees’ Provident
Funds & Miscellaneous Provisions Act, 1952 (in short the ’Act’)
was not sustainable.
Background facts in a nutshell are as follows:
Respondent claimed in-fancy protection under the
provisions of the Act. It started production in 1984. The
respondent was of the view that it was an extension on the
branch of M/s Continental Exporters, a proprietorship
concern of one Sampathraj Jain, who was also the Managing
Director of the respondent-company. Appellants’ view was
that the respondent was nothing but a department of the
aforesaid "M/s. Continental Exporters". Assailing the
adjudication, respondent filed a writ petition stating that there
was no financial integrity. It was separately registered under
the Factories Act, Central Sales Act 1956, Income Tax Act,
1961 and the Employees State Insurance Act. The concerns
are separate and distinct. They have separate Balance Sheets
and audited statements. The High Court accepted the
contention and held that there was total independent exercise
of power in the two concerns. Though the manufacturing of
goods was in respect of the same article, that by itself was not
sufficient to hold that it was a branch or department of M/s
Continental Exporters. The High Court as a matter of fact
found that there was total independence exercise of the
management and control of the affairs, the employees were
separately appointed and controlled. Taking into account
these factors it was held that that the respondent company
and M/s Continental Exporters were not one and the same.
Challenge was made to the order of learned Single Judge
in the Writ Appeal. The High Court after analyzing the factual
position came to hold that there was nothing in common
between the two establishments. Merely because the
proprietor of the one concern was the Managing Director of the
other that by itself is not sufficient to establish that one was
branch of the other. Accordingly the Writ Appeal was
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dismissed.
In support of the appeal, learned counsel for the
appellant submitted that factual scenario clearly establish that
the respondent was a branch of M/s. Continental Exporters.
Learned counsel for the respondent on the other hand
submitted that in view of the findings recorded by both the
learned Single Judge and the Division Bench of the High
Court, there is no scope for any interference.
At this juncture it would be appropriate to take note of
Section 2A of the Act. The same reads as follows:-
"For the removal of doubts, it is hereby
declared the where an establishment consists
of different departments or has branches,
whether situate in the same place or in
different places, all such departments or
branches shall be treated as parts of the same
establishment."
In Pratap Press, etc. v. Their Workmen (1960 (1) LLJ 497)
it was inter-alia held as follows :
"The question whether the two activities in
which the single owner is engaged are one
industrial unit or two distinct industrial units
is not always easy of solution. No hard and
fast rule can be laid down for the decision of
the question and each case has to be decided
on its own peculiar facts. In some cases the
two activities each of which by itself comes
within the definition of "industry" are so
closely linked together that no reasonable man
would consider them as independent
industries. There may be other cases where
the connection between the two activities is
not by itself sufficient to justify an answer one
way or the other, but the employer’s own
conduct in mixing up or not mixing up the
capital, staff and management may often
provide a certain answer."
In Regional Provident Fund Commissioner and Anr. v.
Dharamsi Morarji Chemical Co. Ltd. (1998 (2) SCC 446), it was
held that unless there is clear evidence to show that there was
any supervisory financial or managerial control, it cannot be
said that one is the branch of the other. As noted by learned
Single Judge, the respondent was separately registered under
the Factories Act. It was separately registered under the
Central Sales Tax Act and the Employees State Insurance Act.
It has also been found by learned Single Judge that there was
total independence of the two units. The learned Single Judge
and the Division Bench were right in their conclusion that the
respondent is not a branch of M/s. Continental Exporters.
The appeal is sans merit, deserves dismissal, which we
direct. There will be no order as to costs.