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Judgment
Ravi Malimath, J.—The case made out is that M/s. Southern Ferro Limited, viz., the petitioner was earlier a partnership firm engaged in manufacturing M.S. Angles, bars, etc., It became a public limited company in the year 1992. A mini steel plant was started by it at Belur Industrial Estate, Dharwad. Production commenced from September 1994. The petitioner being unaware of its rights of infancy protection, complied with the provisions of the Employees Provident Fund Miscellaneous Provisions Act 1952 (hereinafter referred to as ''the Act'' for short) for the period from September 1994 to October 1995, in view of the insistence of the respondents. In October 1995, an application was filed by the petitioner seeking exemption from the provisions of the Act, in view of the infancy protection that it was entitled to as on that date. Since the authorities did not concede to the same, a petition u/s 7A of the Act was filed seeking for infancy protection. By the order dated 9.2.1998, vide Annexure-F, the same was rejected. Aggrieved by the same, W.P. No. 10334/1998 was filed before the High Court, wherein by the order dated 23.11.1998 the petition was disposed off directing the petitioner to file an appeal before the appropriate authority. Accordingly the appeal was filed before the Employees Provident Fund Appellate Tribunal. By the impugned order, the Tribunal rejected the appeal. Hence the present petition. Sri Kushal Bolmal, learned counsel for the petitioner contends that the impugned order is bad in law and liable to be set aside. That the reasons assigned are unacceptable. That it cannot be said that both the firms are one and the same. That the findings recorded that both the units are interdependent on each other and consequently there is a functional integrity between both the units, as the management is common and the Board of Directors of both units are common, cannot be accepted. Under these circumstances the petitioner is entitled for the infancy protection as provided under the Act. Even otherwise the scheme of infancy protection did not exist from 1997 onwards. Therefore, the relief is only for the period from 1994 to 1997. It is also pleaded that the infancy protection amount in a sum of Rs. 1,27,600/- for one year, has already been deposited by the petitioner with the respondents.
On the other hand, Sri P.V. Gunjal, learned counsel for the respondents defends the impugned order. He contends that there is no error committed by the authorities that calls for any interference. The appellate Tribunal while considering the plea of the petitioner was of the view that both the units are interdependent on each other. That the products manufactured by the Dharwad unit are raw materials for the unit at Hubli. It was therefore of the view that there appears to be a functional integrity between both the units.
On hearing learned counsels, I am of the considered view that the reasonings assigned by the Tribunal are not sustainable. Even though the final product of one unit constitutes the raw material for another unit, that itself cannot be considered as both the units are one and the same. The reasoning is therefore unsustainable. The separate legal entity for each of the units requires to be considered. Even though the Board of Directors and management may be one and the same, it cannot be said that they are a single unit. However on this account the Tribunal failed to record a positive finding with regard to the functional integrity. On the basis that the final product of one unit is a raw material of another unit, it held that it appears to be a functional integrity. Here too the Tribunal committed an error because there was no positive finding recorded by the Tribunal. When arriving at a finding that there was a functional integrity, the management, finances, employment, etc, would all have to be considered. They are matters of fact. The Tribunal has failed to do so. Therefore the reasoning of the Tribunal holding that the units are one and the same only on the basis of the production pattern, therefore cannot be accepted.
On considering the material on record, it would be appropriate to hold that both the units are separate and distinct. They cannot be considered as one unit. Consequently the petitioner would be entitled to the infancy protection for the Dharwad unit.
Even other wise the relief is only for the year 1994-1997, since the scheme did not exist thereafter. It has been 20 years till now. The long lapse of time is also a relevant consideration. Consequently the petitioner is entitled to relief.
Under these circumstances, I have no hesitation to hold that the impugned orders are bad in law and liable to be set aside. For the aforesaid reasons, the petition is allowed.
(a) The order dated 9.2.2005 in Appeal ATA No. 6(17)/1999 passed by the Employees Provident Fund Appellate Tribunal, New Delhi, vide Annexure-A, is quashed.
(b) The petitioner is entitled for the infancy protection u/s 16(d) of the EPF Act so far as the Dharwad unit is concerned.
(c) The amount said to have been deposited by the petitioner in a sum of Rs. 1,27,600/- with the respondents is ordered to be refunded to the petitioner without any interest.
Rule made absolute.