D. Prabha v. Assistant Provident Fund Commissioner and Employees' Provident Fund Appellate Tribunal (WP(C) No. 22562 of 2011)

## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ``` THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN THURSDAY, THE 7[TH] DAY OF MARCH 2024 / 17TH PHALGUNA, 1945 ``` ## `WP(C) NO. 22562 OF 2011` ## `PETITIONER:` ``` D.PRABHA, THE SECRETARY, GURUKULAM EDUCATIONAL SOCIETY, Q-445, KOLLAM-691 001. BY ADVS. SRI.E.K.NANDAKUMAR SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.K.JOHN MATHAI ``` ## `RESPONDENTS:` ``` 1ASST. PROVIDENT FUND COMMISSIONER AND EMPLOYEES' PROVIDENT FUND ORGANIZATION,, REGIONAL OFFICE, KERALA, BHAVISHYANIDHI BHAVAN,PATTOM, THIRUVANANTHAPURAM-695 004 2EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, SCOPE MINAR, CORE II, 4TH FLOOR,, LAXMI NAGAR DISTRICT CENTRE, LAXMI NAGAR,, NEW DELHI-110 092. BY ADVS. NITA N.S SRI.N.N. SUGUNAPALAN, SC, P.F. SMT.T.N.GIRIJA SCEPF ORGANISATION ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` W.P(C).22562/2011 2 ## **P. V. KUNHIKRISHNAN, J.** ## **------------------------------------------W.P(C).No.22562 of 2011** ## **------------------------------------------Dated this the 7[th] day of March, 2024** ## **JUDGMENT** ## The above Writ Petition is filed with the following prayers: (1) issue writ of certiorari or any other appropriate writ, order or direction, quashing Exts-P1 & P3 orders passed by respondents 1 and 2: (ii) declare that the two schools owned by the petitioner Society were two different establishments and could not be clubbed under Section 2A of the Employees Provident Fund & Miscellaneous Provisions Act or in the alternative, (iii) remand the matter to the Commissioner with direction to decide the issue afresh after giving the petitioner a reasonable opportunity for production of relevant documents and evidence; AND (iv) to grant such other and incidental reliefs as this Hon'ble Court may deem just and necessary on the facts and circumstances of this case. **==> picture [32 x 12] intentionally omitted <==** W.P(C).22562/2011 3 2. The petitioner is the Secretary of a Charitable Society registered under the provisions of the Travancore Literary Scientific and Charitable Societies Act, 1955. The Society is imparting education and setting up of schools. It is submitted that the society started a primary school under the name City Central School. After commencement of the school, the petitioner also set up a play school for infants upto upper Kindergarden level under the name City Kids School. The City Central School is situated 4 kms away from the City Kids School is the submission. Both the schools were run by professionals with different academic qualifications is the submission. The City Central School had employed 13 staff teaching and non teaching staff and in the City Kids School, 8 persons are employed is the submission. 3. While so, an Enforcement Officer of the Provident Fund Organization insisted the petitioner to submit certain applications to the department is the submission of the petitioner. The respondents covered the establishments clubbing both under section 2A of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 [for short, ‘the Act 1952]. On objections to the W.P(C).22562/2011 4 coverage by the petitioner by his representation dated 21.04.2007, the respondents decided to reopen the coverage and initiate adjudication under section 7A of the Act 1952 is the submission. It is submitted that the petitioner was not conscious of the implications of an enquiry under section 7A of the Act 1952. It is also contended that he was not appraised of the nature of the proceedings likely to follow. The enquiry was adjourned from time to time. However, in spite of of the specific request made, a copy of the report of the Enforcement Officer was not supplied to the petitioner and the petitioner was not given an effective and meaningful opportunity to produce evidence that both the schools were independent and separate is the submission. The 1[st] respondent passed Ext.P1 order fixing both the schools as one under section 2A of the Act 1952 assessing huge amounts towards contribution is the submission. It is submitted that the accounts of both schools were maintained separately and both schools were separate with different academic qualifications. It is also submitted that, there was no transfer of any teaching and non teaching staff from one school to other. The service conditions of the employees W.P(C).22562/2011 5 in both teaching and non teaching in both the schools were totally different and there was no functional integrity or mutual dependability or inter transferability or geographical proximity between the two schools is the submission. The kids from the City Kids schools used to be shifted to other conveniently located play schools/primary schools and there was no priority or compulsion in the matter of selection of children to the Central school from the City Kids School is the submission. In fact, the City Kids school was closed down by resolution dated 04.01.2004 is the further submission. But, the City Central school is functioning which established that there was no inter dependence is the submission of the petitioner. According to the petitioner, the order of the 1[st] respondent was unsustainable. Aggrieved by Ext.P1 order, the petitioner filed an appeal before the 2[nd] respondent contending that the City Central school and City Kids school were different independent organizations with totally different teaching and non teaching staff havivg different academic qualifications, with different Headmaster/Principal, separate accounts and finance and there was no transfer of employees from one school to the other. W.P(C).22562/2011 6 No functional integrity or mutual dependability or no geographical proximity and the service conditions of the employees in both the institutions were totally different and hence at any stretch of imagination, one could not be treated as part or branch or division of the other is the further submission. Ext.P2 is the appeal memorandum. But, it is submitted that the 2[nd] respondent did not consider any of the contentions and dismissed the appeal as per Ext.P3 order. According to the petitioner, the respondents while considering the issue, failed to appreciate the clear meaning of establishment as going by the orders. It is also submitted that Exts.P1 and P3 orders are unsustainable. The petitioner also relied on the judgment of the Apex Court in **Noor Niwas Nursery Public School v. Regional Provident Fund Commissioner and Others** [(2001)1 SCC 1] and the judgment of the Apex Court in **L.N.Gadodia and Sons and Another v. Regional Provident Fund Commissioner [(2011)13 SCC 517]** . 4. Heard learned counsel for the petitioner and the Standing Counsel appearing for the respondents. W.P(C).22562/2011 7 5. This Court perused Exts.P1 and P3 orders. This Court also considered the contention raised by the petitioners. According to the petitioners, the City Central School and City Kids school are different establishments. These two establishments are situated about 4 kms away. It is also the case of the petitioner that, there is no functional integrity between these two establishments. The Apex Court in **Noor Niwas Nursery’s** case (supra) considered the same situation. It will be better to extract the relevant portion hereunder: ‘4. Whether two units are one or distinct will have to be considered in the light of the provisions of Section 2-A of the Act which declares that 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 such cases, the court has to consider how far there is functional integrity between the two units, whether one unit cannot exist conveniently and reasonably without the other, and on the further question, in matters of finance and employment, the employer has actually kept the two units distinct or integrated. In fact, this Court set out certain tests in _Pratap Press v._ W.P(C).22562/2011 8 _Secy., Delhi Press Workers' Union'_ . However, we may point out that each case would depend upon its own peculiar facts and has to be decided accordingly.’ 6. The Apex Court observed that the Court has to consider how far there is functional integrity between the two units, whether one unit cannot exist conveniently and reasonably without the other and on the further question, in matters of finance and employment. From the facts in this case, it is clear that, these two units are different establishments. According to the petitioners, there is no functional integrity between these two units. It is also submitted by the petitioner that, there is no inter transfer of the employees between these two establishments. The finance and other aspects of these two establishments are treated separately. It is also the case of the petitioner that these two establishments are not situated together but the distance between these two establishments is about 4kms. In such circumstances, I am of the considered opinion that the dictum laid down by the Apex Court in **Noor Niwas Nursery’s** case (supra) is squarely applicable to the facts and circumstances of this case. Moreover, in **L.N.Gadodia** W.P(C).22562/2011 9 **and Sons’ case** (supra), the Apex Court considered the same question in detail. It will be better to extract paragraph 16 of the above judgment. ‘16. Now, on the question as to whether such two units should be considered as one establishment or otherwise, there is no hard-and-fast rule. However, guidelines have been laid down in two judgments of this Court rendered way back in the years 1959-1960 and they are followed from time to time. Thus, in _Associated Cement Companies Ltd. v. Workmen_ a Bench of three Judges was considering the question as to whether the factory and the limestone quarry belonging to the appellant Company should be considered as one establishment for the purpose of the Industrial Disputes Act, 1947. This Court observed therein as follows: (AIR pp. 62-63, para 11) "11...... What then is 'one establishment' in the ordinary industrial or business sense? It is, perhaps, impossible to lay down any one test as an absolute and invariable test for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units, etc If in their true relation they constitute one integrated whole, we says that the establishment is one; If on the contrary, they do not constitute one integrated whole, each it is then a separate unit. How the relation W.P(C).22562/2011 10 between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which gives the right of unemployment compensation and also prescribes a disqualification therefor. Thus, in one case the unity of ownership, management and control may be the important test; in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. Indeed, in a large number of cases several tests may fall for consideration at the same time. The difficulty of applying these tests arises because of the complexities of modern industrial organisation; many enterprises may have functional integrality between factories which are separately owned; some may be integrated in part with units or factories having the same ownership and in part with factories or plants which are independently owned." 7. In the light of the above dictum and in the light of the facts narrated in this Writ Petition, I think there is force in the contention of the petitioner. I am of the considered opinion that the impugned orders are unsustainable. Ext.P1 order was passed on 23.09.2004. At this distance of time, I think it is not proper to remand the matter for adducing evidence. The pleadings in the 11 W.P(C).22562/2011 Writ Petition to the effect that, there is no functional integrity is not seriously denied. Considering the facts and circumstances of the case, I think the impugned order can be set aside. Therefore, this Writ Petition is allowed quashing Exts.P1 and P3 orders. Sd/- **P. V. KUNHIKRISHNAN JUDGE** Sbna/ W.P(C).22562/2011 12 ## `APPENDIX OF WP(C) 22562/2011` ## `PETITIONER EXHIBITS` - `EXHIBIT P1: TRUE COPY OF ORDER DATED 23.09.2004 PASSED BY THE 1ST RESPONDENT` - : `EXHIBIT P2: TRUE COPY OF APPEAL MEMORANDUM FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT` ``` EXHIBIT P3: TRUE COPY OF ORDER DATED 20.05.2011 ISSUED BY THE 2ND RESPONDENT. ```