IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN TUESDAY, THE 14TH OCTOBER 2008 / 22ND ASWINA 1930 Ins.APP.No. 74 of 2007(F) ------------------------------ IC.33/2002 of EMPLOYEES INSURANCE COURT, ALAPPUZHA .................... APPELLANT/APPLICANT: ------------------------------------ JAYA MADHUSUDANAN, PROPRIETRIX, PRIME AUTOMOBILES, 146-A, NORTH FORT GATE, TRIPUNITHURA,ERNAKULAM DISTRICT. BY ADV. SRI.P.RAMAKRISHNAN SRI.T.C.KRISHNA RESPONDENT(S)/RESPONDENT: ------------------------------------- REGIONAL DIRECTOR, E.S.I. CORPORATION, NORTH SWARAJ ROUND, THRISSUR-20. ADV. SRI.T.P.M.IBRAHIM KHAN, SC, ESI CORPN. FOR R1 THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 14/10/2008 , THE COURT ON THE SAME DAY PASSED THE FOLLOWING: M.N. KRISHNAN, J. = = = = = = = = = = = = = = INS.APPEAL NO. 74 OF 2007 = = = = = = = = = = = = = = = Dated this the 14th day of October, 2008. J U D G M E N T This appeal is preferred against the judgment of the Employees Insurance Court, Alappuzha in I.C.33/02. It was an application filed by Prime Automobiles seeking for a declaration that the applicant's establishment is not liable to be covered under the E.S.I. Act and applicant is not bound to comply with the provisions of the E.S.I. Act. It is submitted that the applicant is running a sales office and a service station for Bajaj scooters. According to her they are functioning separately and independently and in one unit the number of persons employed for work is about 5 or 6 and therefore the Act cannot be made applicable to them. 2. On the other hand the E.S.I Corporation would contend that both the units form part and parcel of the same process and therefore it has to be taken as one unit for the purpose of E.S.I Act and contribution and so the Act is applicable to them. Ins. Appeal 74 OF 2007 -:2:- 3. The Court below considered the materials available before it and came to a conclusion that both the units are interconnected and it is having a common supervisory control and therefore held that the stand of the Corporation is correct. It is against that decision the applicant has come up in appeal. 4. Learned counsel for the appellant had placed before me two decisions on the point. In the decision reported in Regional Provident Fund Commissioner v. Dharamsi Morarji Chemical Co. Ltd. (1998 (2) SCC 446), the Apex Court held that “in the absence of evidence of common supervisory, financial or managerial control between two units, mere common ownership thereof, held, not sufficient to infer that the unit established later was not a new establishment but was part and parcel of the older one.” 5. A reference to the facts of the said case would reveal that the only common point involved in that case was Ins. Appeal 74 OF 2007 -:3:- that two factories, i.e., one at Ambarnath and other at Roha were owned by the same person with the same Board of Directors. The other materials were absent. So the Apex Court held that it cannot be clubbed together. In the decision reported in Madona Textiles v. E.S.I. Corporation 2000 (2) KLT 741) also a Division Bench of this Court held that, “Unity of ownership, management and control and unity of employment, will be important tests in this regard. Functional integrality and general unity are also certainly important.” 6. So the basic principles to be borne in mind in arriving at a decision in these types of cases are to find out whether there is interconnection between the units which is evidenced by common supervisory, financial or managerial control. Now, turning to the facts of this case, admittedly, it is a common proprietrix. PW1 is a franchise holder of Bajaj scooters. It is evident from the terms and conditions that is entered into between the applicant and the Bajaj scooters Ins. Appeal 74 OF 2007 -:4:- that applicant has to maintain servicing arrangement also along with their sales operation. Or in other words one forms the integral part of the other and one cannot exist without the other on account of the conditions entered into between the two. It is only on that basis the sales service unit and the servicing unit are established. Admittedly, the vehicles are taken for servicing to the servicing station. It is true that the sales centre and the service centre though situated in one of the same compound are established in two separate buildings. The mere fact that they are existing as two buildings will not by itself disintegrate the common purpose for which it is established. As I said earlier it is owned by the same person, it is controlled by the same person, it is supervised by the same person and one is integral part of the other. Just because, according to her, separate registers are maintained for payment of wages etc. it will not disintegrate the purpose for which it is established. So the principles and guidelines laid down by the Apex Court on the matter when specifically applied in this case goes in Ins. Appeal 74 OF 2007 -:5:- favour of the Corporation and therefore I do not find any fault with the Court below in arriving at the decision that it can be clubbed together for the purpose of the E.S.I Act. The E.S.I Court has already given an opportunity to initiate fresh assessment and I do not want to disturb the said finding. There is no merit in this appeal and it is dismissed without costs. M.N. KRISHNAN, JUDGE. ul/-