Anjuman Hami-E-Muslimeen vs Assistant Provident Fund Commissioner

B.S. Patil, J.—Petitioner is a charitable trust registered under the Bombay Public Trust Act, 1950. It was established for the purpose of providing education and also to discharge certain religious functions. It has established several educational institutions. Out of which five educational institutions are admitted to grant-in-aid by the State Government and four are unaided and are covered under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952(hereinafter referred to as the ''Act'').

The background in which the dispute has arisen in this case is, that the Assistant Provident Fund Commissioner, Hubli, initiated action regarding coverage of the trust and its institutions for the purpose of the Act and an order dated 22nd November 2000 came to be passed vide Annexure "E" holding that the action taken by the official to reckon the strength of the employees by clubbing all the unaided institutions, to calculate the number of employees employed therein for the purpose of coverage was right and justified and a direction was issued to the petitioner to immediately comply with the provisions of the Act.

Aggrieved by this order, petitioner trust preferred ATA No. 269(6)/2002 before the Employees Provident Fund Appellate Tribunal, New Delhi. The Tribunal has come to the conclusion that all the educational institutions were set up by the appellant though they were governed by different Boards; the Board had been constituted by the appellant-trust as per the Bye-laws to run the institution. It has further recorded a finding that overall supervision and control remained with the trust and it was the petitioner trust which was the decision making body and therefore because of unity of ownership and supervisory control vested with the trust, all the institutions had been rightly clubbed together for the purpose of assigning a code number holding that they were covered under the provisions of the Act.

Learned counsel for the petitioner has referred to the provisions contained under Section 2-A of the Act and has placed reliance on the judgments rendered by this Court in the case of G. GANAPATHY BHANDARKAR V. REGIONAL PROVIDENT FUND COMMISSIONER, BANGALORE (II CLR H.C. KARN 292 ) and in the case of Devesh Sandeep Associates and Others Vs. Regional Provident Fund Commissioner, Bangalore, (1996) 3 KarLJ 683 : (1997) 1 LLJ 1167 as also on the decision of the Apex Court in the case of Regional Provident Fund Commissioner and Another Vs. Dharamsi Morarji Chemical Co. Ltd., (1998) 2 SCC 446 : (1998) SCC(L&S) 584 to contend that merely because all these institutions were established by the petitioner trust and that ultimate control of the institutions lied with the petitioner trust, the various institutions cannot be termed as branches or departments of the same organization. It is his submission that the test to be applied in such circumstance is, to find out whether one educational institution can survive independently without relying on other educational institution for its survival and not whether the institution can survive independently of the trust. He, therefore, contends that the Tribunal has fallen in error in not adopting a proper method to examine whether there was functional integrality in all these institution.

Learned counsel appearing for the respondent strongly contends that as all the institutions are controlled, supervised and managed by the Boards, the decision making power lied with the trust though different educational institutions established by the petitioner trust may have separate existence and have to be treated as single establishment for the purpose of application of the Act in terms of Section 2-A of the Act. He has also placed reliance on the judgment of the Apex Court in the case of NOOR NIWAS NURSERY PUBLIC SCHOOL v. REGIONAL PROVIDENT FUND COMMISSIONER AND ANOTHER(APPEAL(CIVIL) 3320 1997 disposed of on 08/12/2000.

Having heard the learned counsel for both parties and on consideration of the respective contentions urged, it is clear that in terms of Section 2-A of the Act where an establishment consists of different departments or has different branches of such department or branches, they shall be treated as part of the same establishment. In the instant case, it cannot be said that different educational institutions run by the trust through different Boards of Management or branches of the trust or departments or that they will constitute different departments. They are independent institutions. The trust has established Anjuman Boys High School, Anjuman College for Women and Anjuman Institute of Management. The affairs of these institutions are controlled and managed by respective Boards of Management specifically constituted in respect of these three institutions. Similarly, even the other five aided institutions, which are run by the petitioner trust, are supervised and controlled by different Boards of Management.

It is true petitioner trust has established all these institutions and the affairs of all these institutions are managed in accordance with the Bye-laws framed. But, that cannot be a decisive factor to conclude that these different institutions are branches of one another. Even if Anjuman Boys High School is closed, it will not tantamount to automatically closing the Anjuman College for Men or Anjuman Institution of Management. They will independently exist. It is in this background only as held by this Court in the case of B. Ganapathy Bhandarkar that mere common control in the matter of finance and administration would not establish that one unit is dependent on the other nor would it show that activities were common. In fact, in the said decision, this Court has referred to the judgment of the Supreme Court in the case of The Associated Cement Companies Limited, Chaibassa Cement Works, Jhinkpani Vs. Their Workmen, AIR 1960 SC 56 : (1960) 1 LLJ 1 : (1960) 1 SCR 703 wherein it has been stated that in order to find out that different units constitute one establishment, different tests may have to be applied and that in a given case, integrality of ownership, management and control could be the decisive tests, while in another, functional integrality or general unity and in yet another case, unity of employment may become decisive test.

In the instant case, though the trust has established different institutions, employees employed in different institutions cannot be interchanged by way of transfer from one institution to the other. The institutions themselves carry out different functions inasmuch as one institution is engaged in imparting education at High School level, the other institution is established for imparting education for women whereas the Anjuman Institute of Management is established for imparting provisional training in management. Therefore, though these institutions may be characterized as educational institutions, the nature of functions they are discharging, individual existence of different institutions, the strength of different institutions, staff, are totally different. Hence, it cannot be said that there is functional integrality in respect of all these institutions.

The Boards of Management which are in-charge of these institutions are independent and one Board of Management cannot regulate the affairs of other institution. Merely because all these institutions are established by the trust and that they are governed by a common Bye-laws, it cannot be said that they are all branches of one institution or department of one establishment. Therefore, they cannot be brought under the provisions contained under Section 2-A of the Act. In fact similar view has been expressed in the case of Devesh Sandeep Associates and Ors.(supra) wherein it has been specifically laid down that the most relevant test could be whether one unit would survive in the absence of other or whether second unit would survive on the closure of the other unit. Even if Anjuman Boys High School is closed, Anjuman Institute of Management would survive. It need not be necessarily closed, so also the Anjuman College for Women, as all these institutions have separate establishment having separate staff, building and their affairs are regulated by separate Board of Management.

The decision of the Apex Court on which the counsel for the respondent has placed reliance has no application to the facts of the case inasmuch as when those institutions involved in the facts of Apex Court were inspected, the person in-charge had himself admitted that both units were part of the same establishment and it was only subsequent that it was sought to be urged that the two units were separate and independent. In such circumstance, the Apex Court dismissed the appeal confirming the findings recorded by the competent authority.

Therefore, I am of the clear view that the Assistant Provident Fund Commissioner and the Appellate Tribunal have erred in holding that all the institutions have to be treated as branches or departments of one establishment for the purpose of coverage under the Act.

Hence, this writ petition is allowed. The impugned orders are set aside.