Dr. Arijit Pasayat, J.
Challenge in this appeal is to the
judgment rendered by a Division Bench of the Karnataka High Court
dismissing the Writ appeal filed by the appellant. The learned Single
Judge, whose order was under challenge before Division Bench had allowed
the writ petition filed by the respondent holding that the order passed
under Section 7A of the Employees' Provident Funds & Miscellaneous
Provisions Act, 1952 (in short the 'Act') was not sustainable.
facts in a nutshell are as follows:
Respondent claimed in-fancy protection under the provisions of the Act.
It started production in 1984. The respondent was of the view that it
was an extension on the branch of M/s Continental Exporters, a
proprietorship concern of one Sampathraj Jain, who was also the Managing
Director of the respondent-company. Appellants' view was that the
respondent was nothing but a department of the aforesaid "M/s.
Continental Exporters". Assailing the adjudication, respondent filed a
writ petition stating that there was no financial integrity. It was
separately registered under the Factories Act, Central Sales Act 1956,
Income Tax Act, 1961 and the Employees State Insurance Act. The concerns
are separate and distinct. They have separate Balance Sheets and audited
statements. The High Court accepted the contention and held that there
was total independent exercise of power in the two concerns. Though the
manufacturing of goods was in respect of the same article, that by
itself was not sufficient to hold that it was a branch or department of
M/s Continental Exporters. The High Court as a matter of fact found that
there was total independence exercise of the management and control of
the affairs, the employees were separately appointed and controlled.
Taking into account these factors it was held that that the respondent
company and M/s Continental Exporters were not one and the same.
Challenge was made to the order of
learned Single Judge in the Writ Appeal. The High Court after analyzing
the factual position came to hold that there was nothing in common
between the two establishments. Merely because the proprietor of the one
concern was the Managing Director of the other that by itself is not
sufficient to establish that one was branch of the other. Accordingly
the Writ Appeal was dismissed.
In support of the appeal, learned
counsel for the appellant submitted that factual scenario clearly
establish that the respondent was a branch of M/s. Continental
Exporters. Learned counsel for the respondent on the other hand
submitted that in view of the findings recorded by both the learned
Single Judge and the Division Bench of the High Court, there is no scope
for any interference.
At this juncture it would be
appropriate to take note of Section 2A of the Act. The same reads as
"For the removal of doubts, it is
hereby declared the 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 Pratap Press, etc. v. Their
Workmen (1960 (1) LLJ 497) it was inter-alia held as follows :"The
question whether the two activities in which the single owner is engaged
are one industrial unit or two distinct industrial units is not always
easy of solution. No hard and fast rule can be laid down for the
decision of the question and each case has to be decided on its own
peculiar facts. In some cases the two activities each of which by itself
comes within the definition of "industry" are so closely linked together
that no reasonable man would consider them as independent industries.
There may be other cases where the connection between the two activities
is not by itself sufficient to justify an answer one way or the other,
but the employer's own conduct in mixing up or not mixing up the
capital, staff and management may often provide a certain answer."
In Regional Provident Fund
Commissioner and Anr. v. Dharamsi Morarji Chemical Co. Ltd. (1998
(2) SCC 446), it was held that unless there is clear evidence to show
that there was any supervisory financial or managerial control, it
cannot be said that one is the branch of the other. As noted by learned
Single Judge, the respondent was separately registered under the
Factories Act. It was separately registered under the Central Sales Tax
Act and the Employees State Insurance Act. It has also been found by
learned Single Judge that there was total independence of the two units.
The learned Single Judge and the Division Bench were right in their
conclusion that the respondent is not a branch of M/s. Continental
The appeal is sans merit, deserves
dismissal, which we direct. There will be no order as to costs.
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