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Judgment
Ram Mohan Reddy
Two employers aggrieved by the order u/s 7-A of the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952, covering the establishments under the Act and the determination of contributions due by order dated 31.8.2006/1.9.2006, Annexure-C, carried the same in two appeals i.e., ATA Nos.672(6)2006 and 673(6)2006 before the Employees'' Provident Fund Appellant Tribunal, New Delhi, whence the appeals were dismissed by orders of even date 7.2.2011, Annexures-E and F. Hence, these petitions.
Petitions are opposed by filing statement of objections dated 23.8.2011 interalia contending that the Squad of Officers inspected the establishments, found the employment strength to be more than 22, having taken a head count, following which, a mahazar was drawn and after extending reasonable opportunity of hearing to the employers, since there is unity of management, control and ownership, though the two units are situated adjacent to each other, within geographical proximity, undertaking similar activity, were clubbed together as one unit. The orders impugned, it is stated are well merited, fully justified and do not call for interference.
Having heard the learned counsel for the parties, perused the pleadings and examined the orders impugned, what is apparent is the admission of relevant facts as set out in paragraph 8(2) of the order, Annexure-C, which reads thus:
It was accepted by the department that both the units are separately set up; having separate Income Tax, Sales Tax, SSI and separate Books of Accounts and both the firms are partnership firms. And these units can''t be clubbed just because of one partner is common in both the units.
The two establishment are situated in different plots and allotted to different person''s i.e., (a) Site No. 253, to Sri. Arun Padiyar (b) Site No. 254, to Sri. B. Sudhakar Baliga.
Yet again at paragraph 5 of the said order, the Authority recorded the submission of one Sri M. Veeramalia, Enforcement Officer appearing for the Department, stating that on several inspections and verification of both establishments and books of account, it was found that both the establishments were separate partnership firms, allotted separate sites by the KIADB, maintained separate accountants and that there was no transfer of employees, while the Control and Finance was also separate, including Sundry Debtors and Sundry Creditors.
In the face of the report of the Enforcement Officer as extracted in the order and the submission of Veeramalia, supra, both the units being separate and distinct units, having independent existence in all respects, cannot be clubbed together. The Regional Provident Fund Commissioner (I) arrived at a perverse conclusion that both the establishments require to be Clubbed so as to cover them under the Act. If two establishments are situated in different plots of land, however in the very same layout formed by the KIADB, being independent units, it is not known as to how the establishments could be said to have financial integrality. Undoubtedly, there is neither Unity of Ownership nor Unity of Control. It may be that the geographical proximity of the Sites bearing numbers 253 and 254 are located besides eachother, in the industrial estates and also carry on similar business, but that by itself and nothing more, it cannot be said that the establishments are common in all aspects.
Having regard to the submissions as extracted supra in the order of the Regional Provident Fund Commissioner, it is needless to state that the establishments ought not to have clubbed, so as to cover them under the Act as one establishment. Even if the establishments are taken as separate units, there is nothing in evidence to establish that the total number of workmen in each establishment exceeds 20 so as to cover each of the establishments under the Act. Suffice it to state, on facts, the Regional Provident Fund Commissioner fell in error in concluding that the two establishments were common deserving to be clubbed and consequently the determination of contribution due, is unsustainable. The Appellate Tribunal too misdirected itself in not noticing the aforesaid facts while mechanically dismissing the appeals and hence the orders too are unsustainable.
In the result, petitions are allowed. The orders impugned quashed and all further proceedings pursuant to the order dated 12.4.2006, Annexure-A, clubbing the petitioners as one establishment for coverage under the Act, are quashed.
The amount in deposit before the Appellate Tribunal is directed to be released in favour of the petitioners.