Regional Director, E.S.I. Corporation, Thrissur-20 v. Kissan Fertilizers Manufacturing Co.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE M.N.KRISHNAN** **FRIDAY, THE 22ND OCTOBER 2010 / 30TH ASWINA 1932** **Ins.APP.No. 3 of 2010(A)** **----------------------EIC.1/2003 of E.I.COURT, KOZHIKODE** **....................** ## **APPELLANT /RESPONDENT** **------------------------------------** **THE REGIONAL DIRECTOR,E.S.I.CORPORATION, THRISSUR-20.** **BY ADV. SRI.P.SANKARANKUTTY NAIR** **RESPONDENT(S): APPLICANT** **----------------------------------** **M/S.KISSAN FERTILIZERS MANUFACTURING CO. REPRESENTED BY ITS MANAGING PARTNER V.P.ABDURAHIMAN, INDUSTRIAL DEVELOPMENT PLOT, WEST HILL POST, CALICUT-673 005.** **ADV. SRI.T.G.RAJENDRAN** **THIS INSURANCE APPEAL HAVING BEEN FINALLY HEARD ON 22/10/2010, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **M.N. KRISHNAN, J. = = = = = = = = = = = = = = INS.APPEAL NO. 3 OF 2010** **= = = = = = = = = = = = = = = Dated this the 22[nd] day of October, 2010.** **==> picture [128 x 15] intentionally omitted <==** This appeal is preferred against the order of the Employees Insurance Court, Kozhikode in E.I.C.1/03. It was an application filed challenging the clubbing of the two units for the purpose of the coverage and also regarding the quantification. So far as this Court is concerned now the main question to be decided is regarding the clubbing of the two units. The subject matter of the case relates to two units namely Kissan Fertilizers Manufacturing Mixing Unit and Kissan Fertilizers Bone Meal Unit. For brevity I will use the expressions 'mixing unit' and 'bone meal unit'. The mixing unit was constituted under a partnership dead as early as ## **INS.APPEAL NO. 3 OF 2010** -:2:- on 20.5.1980. It is the contention of the Insurance Corporation that the bone meal unit is also a functional integral part of the mixing unit and therefore they have to be clubbed together. There is no dispute that the bone meal unit is already covered whereas the other unit can be covered only if there is clubbing of the two units. The learned E.I.Court judge after elaborate consideration of the materials found against the E.S.I.Corporation and disallowed clubbing. It is against that decision the E.S.I.Corporation has come up in appeal. 2. The question of clubbing is a mixed question of fact and law. It is always to be stated that there cannot be a routine leak proof methodology for finding out the same and it is also not possible to lay any one test as an absolute or invariable test for all cases. The ## **INS.APPEAL NO. 3 OF 2010** -:3:- real purport of these tests is to find out the true relation between the various branches, units etc. If there is true relation as they constitute one integrated whole unit one can say the establishment is one. Normally tests applied are (1) Geographical proximity (2) Unity of ownership (3) Management and control (4) Unity of employment (5) Conditions of service (6) Functional integrity (7) General unity of performance and (8) common management and like. As early as in **Madona Textiles v. E.S.I.Corporation (2000 (2) KLT 741)** this Court held that “If, inspite of the apparent veil, different firms constitute one integrated whole, the establishments in questions are actually one.” So with these principles in mind let me analyze the materials before Court. It has to be stated that both the units are functioning in two different places. One is situated in Door ## **INS.APPEAL NO. 3 OF 2010** -:4:- No.1/460 and the other in Door No.1/461. One is working as a bone meal unit and the other is working as a mixing unit. Both the units are having independent factory registration, independent licence and altogether different products. There is no inter changeability of the workers from one unit to the other unit. There are separate wage registers and separate accounts for different units. The commonality are that the managing partner of both the units are one and the same. The electrical supply is taken from one unit to the other. So far as the income tax balance sheet is concerned it is jointly prepared. 3. Then the learned counsel for the appellant would contend regarding the geographical proximity. It is true that both these units are situated in adjacent buildings with a separate wall having a passage through ## **INS.APPEAL NO. 3 OF 2010** -:5:- that wall. The mixing unit is a manufacturing unit where the power is not used. The out product of the mixing unit and the bone meal unit are totally different. The raw materials used for the manufacture are totally different. The workers do different functions in the unit. Now just because two units are situated in one and the same compound and it is being managed by one managing partner can you club the unit is one of the question. There cannot be any dispute that alone shall not be the criteria. The decision laid down in Madona Textiles case would also relates to unity of employment and conditions of service functional integrity and general unity of performance. So here is a case where geographical proximity is there, unity of ownership is there and you can also say to some extend there is a common management for the reason that there is the same managing partner ## **INS.APPEAL NO. 3 OF 2010** -:6:- for both the units. Then it can be seen that the conditions of service are different. The functional integrity is not all there and there is no general unity of performance. The trial court relied more on functional integrity. The trial court has attempted to find out that whether one unit can exist without the other. After analysing the materials the Court found out that it can exist because the nature of industry or manufacture are distinct and separate and it can exist without the other. When a person is in management of two partnership firms when financial matters are dealt with in a common way that they can never be treated as a criteria for clubbing the units. So I am in agreement with the learned E.I.Court that in the back drop of the present case that functional integrality requires due consideration than the other considerations. ## **INS.APPEAL NO. 3 OF 2010** -:7:- The learned counsel had taken me through Madona's case wherein the learned Judge of this Court had given 17 reasons for the purpose of clubbing the units. It can be seen from the same that from 11 to 17 is totally absent in this case. It was a case where even the very existence of the business such as saries and textiles were inter connected and the supply of materials for the existence of the other was from the same firm and therefore the functional integrity was very much available which made the Court feel that they can be clubbed together. Here as stated even at the risk of repetition, it has to be stated the functional integrity is not there and secondly mere geographical proximity and one person operates as a Managing partner cannot be taken as a criteria for clubbing together. Further in these types of cases being a mixed question of fact and law **INS.APPEAL NO. 3 OF 2010** -:8:- unless there is total lack of appreciation of evidence in a proper manner and mis-carriage of justice done on account of the said wrong appreciation, this Court cannot interfere. Here the learned Judge had given cogent reasons and he had analysed the matter in the correct perspective and therefore this Court is legally not in a position to disturb the finding on facts which would have a direct nexus to the question of law in this case. Therefore from these discussions I confirm the order of the Court and dismiss the appeal without costs. ## **M.N. KRISHNAN, JUDGE.** ul/-