Regional Provident Fund Commissioner v. K.K. Bhanumathy, P.K. Haridas and Employees Provident Fund Appellate Tribunal

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.HARILAL** ## **FRIDAY, THE 29TH DAY OF JANUARY 2016/9TH MAGHA, 1937** **WP(C).NO. 4513 OF 2011 (L) ---------------------------** **PETITIONER:** **------------** **THE REGIONAL PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANISATION, BHAVISHYANIDHI BHAVAN, ERANHIPALAM.P.O., KOZHIKODE DISTRICT, KERALA STATE.** **BY ADV. SRI.THOMAS MATHEW NELLIMOOTTIL,SC, P.F.** **RESPONDENT(S):** **---------------** **1. K.K.BHANUMATHY, PROPRIETRESS, PRAYAGA MOTOR SERVICE, POTTANKULLANGARA HOUSE, CHELLASSERY.P.O., KOOTANAD, PALAKKAD DISTRICT, KERALA STATE-678 533** **2. P.K.HARIDAS, "PRAYAGA" CHALISSERY.P.O., KOOTANAD, PALAKKAD DISTRICT, KERALA STATE. PIN-678533.** **3. EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, REPRESENTED BY ITS REGISTRAR, SCOPE MINAR, 4TH FLOOR, CORE-2 LAXMI NAGAR, DELHI-11009, 2.** **R1,R2 BY ADV. SRI.MILLU DANDAPANI** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 29-01-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **WP(C).NO. 4513 OF 2011 (L)** ## **---------------------------** ## **APPENDIX** ## **---------** ## **PETITIONER'S EXHIBITS:** **---------------------** |**EXT.P1**|**TRUE COPY OF THE APPEAL FILED BY THE RESPONDENTS 1 AND 2**| |---|---| ||**BEFORE THE TRIBUNAL.**| |**EXT.P2**|**TRUE COPY OF THE COUNTER AFFIDAVIT FILED BY THE**| ||**PETITIONER IN EXT.P1 APPEAL.**| |**EXT.P3**|**TRUE COPY OF THE ORDER DT. 25.3.2010 OF THE APPELLATE**| ||**TRIBUNAL IN ATA 847(7)/2005.**| |**EXT.P4**|**TRUE COPY OF THE RECEIPT ISSUED BY THE OFFICER OF THE 1ST**| ||**RESPONDENT IN RESPECT OF EXT.P3 DATED 15.3.2011.**| **RESPONDENTS' EXHIBITS: NIL ---------------------** **//TRUE COPY//** **P.A. TO JUDGE** **DST** “ **CR”** ## **K. HARILAL, J.** **= = = = = = = = = = = = = = = = = = W.P. (C) No.4513 of 2011** **- - - - - - - - - -- - - - - - - - - - -** Dated this the 29th day of January, 2016 ## **J U D G M E N T** The petitioner was the respondent and respondent 1 and 2 herein were the appellants in appeal No.ATA No.847(7)/2005, on the files of the 3[rd] respondent herein, the EPF Appellate Tribunal. Respondents 1 and 2 herein are the mother and son, respectively. The 1[st] respondent is the registered owner of five stage carriages in her name and the 2[nd] respondent is the owner of one stage carriage and service station. The 1[st] respondent is conducting the bus service in the name “Prayaga Motor Service” and the 2[nd] respondent is conducting the service station in the name “Prayaga Auto Garage”, **W.P.(C) No. 4513 of 2011** **-: 2 :-** respectively. According to the petitioner herein, since the said establishments satisfied the conditions for coverage under Section 1(3)(b)read with Section 2A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 ( _hereinafter referred to as 'the Act')_ , those were provisionally covered under the Act. The establishments are interrelated and functioning in the same premises. Thus, there is a functional clubbing of both establishments together and thereby, both establishments must be taken together, as a single unit and thereby, both are covered by the application of Act. 2. The respondents 1 and 2 contended that 'Prayaga Motor Service' and 'Prayaga Auto Garage' are entirely different and distinct establishments owned by different persons. There was no functional or managerial integrity between the two ## **W.P.(C) No. 4513 of 2011** ## **-: 3 :-** establishments and merely on the reason that both establishments are functioning in the same premises and the respondents 1 and 2 are mother and son, liability under the Act cannot be imposed on them, as employers, who are liable to pay employees' provident fund contribution. 3. After examining the rival contentions, the original authority rejected the contentions raised by the respondents 1 and 2 and found that the respondents 1 and 2 are liable to pay employees contribution under the Act, on the reason that employers are mother and son and both establishments are functioning in the same premises and thereby, there is a functional and geographical integrity between the two establishments. Aggrieved by the order passed by the original authority, the respondents 1 and 2 preferred the appeal before the Tribunal and the Appellate Authority, by Ext.P3, ## **W.P.(C) No. 4513 of 2011** ## **-: 4 :-** reversed the findings of the original authority and allowed the appeal. 4. Heard the learned counsel for the petitioner and the learned counsel appearing for the respondents 1 and 2. 5. It is the case of the petitioner that respondents 1 and 2 are mother and son and both establishments are functioning in the same premises. It is also contended that the motor service cannot be functioned, without service station. Thus, there is a functional integrity between the motor service and service station and thereby, both establishments can be clubbed together and taken as a single establishment. 6. As rightly held by the Appellate Authority, it is well settled that two establishments can be treated as one, if there is financial, functional and managerial integrity between the two units and ## **W.P.(C) No. 4513 of 2011** ## **-: 5 :-** the said finding is supported by the decision of the Apex Court in _**The Associated Cement Companies Ltd., Chaibasa Cement Works, Jhinkpani v. Their Workmen**_ [AIR 1960 SC 56]. Thus, the unity, ownership, management and control is the appropriate tests to find out the integrity of two establishments. 7. Going by Ext.P1 order passed by the original authority, it is seen that the original authority has been carried away by the relationship between two employers, as mother and son and also the fact that both establishments are functioning in the same premises. As rightly held by the Appellate Authority, 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. Members of the same family **W.P.(C) No. 4513 of 2011** ## **-: 6 :-** with close relationship, either as mother and son or as brothers or brother and sister, can conduct different establishments in the same premises and merely on the basis of locative proximity, all the establishments cannot be clubbed together as one establishment, falling under the Act, unless the integrity of function and management are supported by sufficient documentary evidence. Such a situation usually occurs, when single ownership divides by family partition. After family partition, different establishments cannot be clubbed together, though, earlier, they were owned and functioned singly. So, functional and managerial integrity are the twin conditions for clubbing different establishments together, as one, falling under the Act. In the instant case, the findings of the original authority are not supported by any kind of documentary or oral evidence and the findings rest **W.P.(C) No. 4513 of 2011** ## **-: 7 :-** on locative appearance of the establishments and relationship between the parties. Therefore, I find that the findings of the original authority are not legally sustainable and Appellate Authority is justified in reversing the findings of the original authority and allowing the appeal. This writ petition is dismissed accordingly. Sd/- **K. HARILAL,** **JUDGE** DST //True copy// P.A. To Judge