High Court of KeralaSingle Judge2018-03-20Writ petition allowed; matter disposed with dir...

Krishnapillai v. Assistant Provident Fund Commissioner, Employees' Provident Fund Organization

Case / Petition Number:WP(C).No. 22694 of 2007

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: A. Muhammed Mustaque
Judgment Date: 2018-03-20
Court Decision / Holding: Writ petition allowed. Clubbing of the three institutes as one for EPF coverage is set aside. The respondent may consider each institute separately for coverage. Any payments made pursuant to the impugned orders shall be refunded to the petitioner within two months of receiving a copy of this judgment.
Final Disposition: Writ petition allowed; matter disposed with directions for separate consideration of institutes for coverage and refund of payments as noted.

Parties to the Case

Appellants / Petitioners

R. Krishnapillai, Principal, M/S Bharath Institute of Commerce, Vaikom-686 141

Respondents

The Assistant Provident Fund Commissioner, Employees Provident Fund Organization, Sub Regional Office, Chalakuzhy Building, CMS College Road, Kottayam-686 001

Legal Representation & Advocates

Counsels for Petitioners

• Sri S. Radhakrishnan
• Sri S. Raj Mohan

Counsels for Respondents

• Sri Joy Thattil Ittoop, SC

Case Synopsis & Summary

This writ petition concerns Krishnapillai, who operated a typewriting unit since 1944 and ran a tuition center from 1951. He formed a partnership in 1979 with his two children, which was dissolved on 01.10.1984; the dissolution was recorded with the Registrar of Firms, with Form A indicating a dissolution effective from 01.04.1985 (Ext. P4). The Employees’ Provident Fund Organization (EPFO) proceeded to cover the petitioner’s institutes under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, arguing that the three affiliated institutes were a single employer. The petitioner’s son challenged this, contending the three institutes were distinct entities owned by three individuals. The Regional Provident Fund Commissioner initially clubbed the institutes as one for coverage; the Tribunal set aside and remanded for fresh consideration due to lack of notice to other owners. The Assistant Provident Fund Commissioner later issued an order affirming clubbing, but the petitioner produced dissolution documents during review/appeal; the authorities did not rely on these grounds and maintained clubbing. The court ultimately held that clubbing the three institutes was illegal and that the petitioner’s dissolution record warrants treating the entities separately for EPF coverage. The decision cites a controlling principle from a prior judgment (K.K. Bhanumathy) and allows the petition, directing that any payments under the impugned orders be returned within two months.

Provisions of Law Cited

Employees Provident Fund and Miscellaneous Provisions Act, 1952Rules framed under the Indian Partnership ActRule 5 of the Rules framed under the Indian Partnership Act

Legal Doctrines & Maxims

Proximity/relationship of establishments in the same premises does not by itself establish managerial, financial or functional integrity (as interpreted in Regional Provident Fund Commissioner v. K.K. Bhanumathy)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner argued that the three institutes are distinct entities owned by different individuals, and therefore cannot be clubbed for EPF coverage. They produced dissolution documents (Exts. P4, P6, P7 and other exhibits) to show dissolution of the partnership and separate identities of the establishments; they contended that dissolution was prior to the 1996 coverage steps and that mere proximity or common buildings cannot justify clubbing. They urged the court to treat each institute separately for coverage and to refund any amounts collected under the impugned orders if the petition succeeds.

Contentions of Respondents

The respondent counsel contended that the three institutes operate from a single building and are therefore run by the same employer; the absence of a certificate of dissolution alone should not override the initial clubbing order. The EPFO argued that the evidence did not satisfactorily establish three distinct entities and that clubbing was a proper exercise of coverage under the Act.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Regional Provident Fund Commissioner v. K.K. Bhanumathy and others	2016 (3) KHC 80	Positive	The decision cites this case to support that mere proximity of establishments is insufficient to infer managerial, financial or functional unity, justifying separate treatment for EPF coverage.

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Extracted Judgment Text

Exact text extracted from official judgment records.

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE** **TUESDAY, THE 20TH DAY OF MARCH 2018 / 29TH PHALGUNA, 1939** **WP(C).No. 22694 of 2007** **PETITIONER(S) --------------** **R.KRISHNAPILLAI, PRINCIPAL, M/S.BHARATH INSTITUTE OF COMMERCE,, VAIKOM-686 141.** **BY ADVS.SRI.S.RADHAKRISHNAN SRI.S.RAJ MOHAN** **RESPONDENT(S):** **--------------** **THE ASSISTANT PROVIDENT FUND COMMISSIONER, THE EMPLOYEES PROVIDENT FUND ORGANIZATION, SUB REGIONAL OFFICE, CHALAKUZHY BUILDING, CMS COLLEGE ROAD, P.B.NO.36,, KOTTAYAM-686 001.** **BY ADV. SRI.JOY THATTIL ITOOP, SC** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20-03-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **TS** ## **WP(C).No. 22694 of 2007** **APPENDIX** ## **PETITIONER(S)' EXHIBITS** **-----------------------** **EXHIBIT P1:- A TRUE COPY OF HE ORDER DATED 20.4.2007 IN** **ATA NO.661(7) OF 2001 PASSED BY THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL.** **EXHIBIT P2:- A TRUE COPY OF THE PARTNERSHIP DEED DATED 13.9.1979.** **EXHIBIT P3:- A TRUE COPY OF THE AGREEMENT DATED 01.10.1984.** **EXHIBIT P4:- A TRUE COPY OF THE CERTIFICATE ISSUED BY THE REGISTRAR OF FIRMS DATED 17.3.1997.** **EXHIBIT P5:- A TRUE COPY OF THE APPEAL MEMORANDUM ATA 661(7) OF 2001 ALONG WITH ITS ANNEXURES.** **EXHIBIT P6:- A TRUE COPY OF THE ORDER NO.KR/KTM/125277/ENF.I(1) 01 DATED 07.3.2001.** **EXHIBIT P7;- A TRUE COPY ORDER NO.KR/KTM.15277/ENF.I(1)01 DATED 01.10.2001.** **EXHIBIT P8:- A TRUE COPY OF THE WRITTEN REPLY FILED BY THE RESPONDENTS.** **EXHIBIT P9:- A TRUE COPY OF THE REJOINDER DATED 21.10.2002 FILED BY THE PETITIONER.** **EXHIBIT P10:- A TRUE COPY OF THE DEMAND DRAFT NO.404579 DATED 27.11.2001 FOR RS.1,29,880/-** **RESPONDENT(S)' EXHIBITS - NIL** **------------------------------** ## **/TRUE COPY/** **PS TO JUDGE** **TS 04/04/2018** ## **A. MUHAMED MUSTAQUE, J.** ------------------------------------ ## W.P. (C) No.22694 of 2007 ------------------------------------ Dated this the 20[th] day of March, 2018 ## **J U D G M E N T** The petitioner, Krishnapillai, started a typewriting unit in the year 1944. He also opened a tuition center in 1951. Thereafter, he formed a partnership firm in the year 1979 along with his two children. 2. The partnership was dissolved on 01.10.1984. Thereafter, the petitioner was conducting a typewriting institute known as Bharath Institute of Commerce. His eldest son was running Bharath College, a parallel college. The second son was conducting Bharath Tuition Center. The dissolution of the firm was entered with the Registrar of Firms as seen from Ext.P4. Notice of dissolution was also given to the Registrar of Firms. It can be seen from Form A maintained under Rule 5 of the Rules framed under the Indian Partnership Act that the firm has been dissolved with effect from 01.04.1985. **W.P.(C) No.22694/2007** **2** 3. The authorities under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 initiated proceedings to cover the institutes, clubbing together. The petitioner was served with a notice. The petitioner objected to the coverage stating that the three institutes are different entities owned by three individuals. The original notice was issued on 11.02.1996. The petitioner's eldest son Suresh Babu received the notice. He objected to it stating that the three institutes are different and owned by three different individuals. Overruling the objection, the Regional Provident Fund Commissioner, Ernakulam passed an order covering the three institutes as one under the Act. The petitioner's son Suresh Babu appealed against the order before the Tribunal. The Tribunal, noting that the other individuals were not given notice, set aside the order and remanded back the matter for fresh consideration. Thereafter, the Assistant Provident Fund Commissioner, the competent authority, after issuing notice to all the three individuals, passed an order. In this order, it was affirmed that all the three institutes have to be clubbed together for the purpose of coverage. In the order, the petitioner's objection regarding clubbing was overruled on the **W.P.(C) No.22694/2007** **3** premise that the petitioner did not produce dissolution deed as claimed by them. The petitioner gave an explanation that the dissolution deed was with the Chartered Accountant who in the meanwhile passed away and therefore, they could not produce. However, the petitioner filed a review petition to produce the dissolution deed along with a certificate issued by the Registrar of Firms. This was not relied on for the reason that the dissolution was not registered and also for the reason that the petitioner did not state that they were in possession of those documents while the original order was passed. The petitioner thereafter filed an appeal before the Tribunal. Before the Tribunal also, the petitioner produced these documents. However, without adverting to these documents, the Tribunal dismissed the appeal. These orders are under challenge in this writ petition. 4. Learned Standing Counsel appearing for the respondent argued that there was no document produced by the petitioner to show that the three institutes are distinct and separate. On the other hand, the learned counsel points out that the institutes are housed in a single building and therefore, the institutes are to be treated as run by the same **W.P.(C) No.22694/2007** **4** employer. 5. As seen from the certificate issued by the Registrar of Firms produced as Ext. P4, a dissolution has taken place as early as in the year 1985. The petitioner also appears to have produced different income tax returns filed with the Income Tax authorities. In those circumstances, it is not necessary to disbelieve the claim of the petitioner that the partnership was dissolved. The dissolution was entered with the Registrar of Firms as early as in the year 1985. The first step for coverage was only taken in the year 1996. Therefore, the genuineness of such dissolution need not be doubted. ## 6. This Court, in _**Regional Provident Fund Commissioner** vs._ _**K.K. Bhanumathy and others**_ (2016 (3) KHC 80), held that merely on the basis of the relationship between the employers and proximity of the establishments in the same premises, it cannot be held that there is managerial, financial or functional integrity. 7. In light of the facts and circumstances, clubbing all the three institutes as one for the purpose of coverage is illegal. Accordingly, the impugned orders are set aside. **W.P.(C) No.22694/2007** **5** However, it is open for the respondent to consider each of the institutes separately for the purpose of coverage. Leaving open the issues as above, this writ petition is allowed. Any payment made by the petitioner pursuant to the impugned orders shall be returned to the petitioner within a period of two months from the date of receipt of a copy of this Judgment. Sd/- **A. MUHAMED MUSTAQUE JUDGE** eb/smp