IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.K.MOHANAN TUESDAY, THE 9TH JUNE 2009 / 19TH JYAISHTA 1931 OP.No. 3332 of 1997(V) --------------------------------- PETITIONER: ------------------- SHEVEROY ESTATES LIMITED, POST BOX NO. 4260, PANAMPILLY NAGAR, COCHIN – 682 036, REPRESENTED BY ITS GENERAL MANAGER M. THOMAS JACOB. BY ADV. MR.E.K.NANDAKUMAR. RESPONDENTS: ------------------------ 1. THE REGIONAL PROVIDENT FUND COMMISSIONER, ERNAKULAM. 2. LEGAL ADVISER, GOVERNMENT OF INDIA, MINISTRY OF LABOUR, NEW DELHI – 110 001. 3. UNION OF INDIA, REPRESENTED BY SECRETARY, MINISTRY OF LABOUR, NEW DELHI – 110 001. BY MR.P.PARAMESWARAN NAIR, ASST.S.G. THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 01/06/2009, THE COURT ON 09/06/2009 DELIVERED THE FOLLOWING: O.P. NO. 3332/1997-V: ORDER ON C.M.P. NO. 6132/1997 IN O.P. NO. 3332/1997-V CLOSED 09/06/2009. SD/- V.K.MOHANAN, JUDGE. APPENDIX PETITIONERS' EXHIBITS: EXT.P.1: COPY OF THE PERMIT DTD. 14/09/1987. EXT.P.2: COPY OF THE ADVERTISEMENT DTD. 18/11/1989 PUBLISHED IN NEWSPAPER. EXT.P.3: COPY OF THE APPOINTMENT ORDER ISSUED TO ONE MINI ANIRUDHAN DTD. 14/06/1988. EXT.P.4: COPY OF THE REGIONAL PROVIDENT FUND COMMISSIONER'S LETTER DTD. 16/12/1991. EXT.P.5: COPY OF THE LETTER NO. KR/13454/ENF.I(5)/92/15219 DTD. 12/11/1992. EXT.P.6: COPY OF THE LETTER NO. PF.SHV.MF.27-92/3586 DTD. 25/11/1992. EXT.P.7: COPY OF THE LETTER NO. KR/13454/ENF.i(5)/93/10865 DTD. 12/01/1993. EXT.P.8: COPY OF THE REPLY DTD. 18/01/1993. EXT.P.9: COPY OF THE LETTER NO. KR/13454/ENF.I(5)/93/4652 DTD. 14/06/1993. EXT.P.10: COPY OF THE REPLY DTD. 06/07/1993. EXT.P.11: COPY OF THE FURTHER REPLY DTD. 07/07/93. EXT.P.12: COPY OF THE ORDER OF REGIONAL PROVIDENT FUND COMMISSIONER DTD. 15/07/93. EXT.P.13: COPY OF THE SECTION 19A PETITION DTD. 18/09/1993. EXT.P.14: COPY OF THE ORDER DTD. 03/01/1997. RESPONDENTS' EXHIBIT: EXT.R1.A: COPY OF THE APPOINTMENT LETTER DTD. 11/06/1992 ISSUED TO ONE MINI ELIZABETH CHACKO. //TRUE COPY// P.S. TO JUDGE. Prv. V.K.MOHANAN, J. --------------------------------------------- O.P.No. 3332 of 1997 --------------------------------------------- Dated this the 9th day of June, 2009 J U D G M E N T The petitioner is a public limited company registered under the Companies Act, 1956 and its head quarters is at Egmore in Chennai and has preferred this writ petition challenging Exts.P12 and P14 orders issued by the respondents by which the petitioner is denied the benefit of 'infancy protection' under Section 16(1)(d) of the Employees' Provident Funds and Miscellaneous Provisions Act,1952 (hereinafter referred to, for short as 'the Act' only). 2. The case of the petitioner is that the company is engaged in the business of plantation activities and according to the petitioner, the object clause in the Memorandum of Association authorises the company to engage itself in multifarious activities. The company has decided to set up a new industrial undertaking in the Cochin Export Processing Zone for the manufacture of tissue culture plants, cut flowers and value added plants and OP NO.3332 of 1997 :-2-: accordingly, an application dated 10.7.1987 was submitted to the Ministry of Commerce, Government of India for permission for the above purpose. As per Ext.P1, permit was given to the petitioner as sought for. According to the petitioner, the new concern is a new establishment and industrial undertaking in the Cochin Exporting Processing Zone and the same has no functional integrality with the other establishments owned by the petitioner. It is the further case of the petitioner that as per Ext.P4 issued by the first respondent, infancy protection was granted to the petitioner's establishment started at the Cochin Export Processing Zone on the basis of Ext.P1 permit. According to the petitioner, as per Ext.P4, the petitioner was informed that the coverage of the employees under the Act would commence with effect from October, 1991. Thus, according to the petitioner, inasmuch as the Bio-tech Division was accepted as an independent and a new establishment established by the petitioner/company and under such circumstances, it OP NO.3332 of 1997 :-3-: was accorded the benefit of infancy protection under Section 16(1)(d) of the Act. 3. It is the further case of the petitioner that after one year from the date of Ext.P4 granting infancy protection, the first respondent issued Ext.P5 order by which the first respondent reversed Ext.P4 order of exemption and shifted the date of coverage of the establishment to 31.10.1988. Against Ext.P5, the petitioner submitted Ext.P6 letter reiterating its right to get exemption from coverage for a period of three years as provided under Section 16(1)(d) of the Act. Thereafter, the first respondent issued Ext.P7 rejecting the contention of the petitioner raised as per Ext.P6, on the ground that the activities of Tissue Culture Division is part of the main objectives of the company and the Plantation Division at Madras and the Bio-tech Division at Cochin are two divisions of the same establishment. With reference to Ext.P7, the petitioner again sent a letter as per Ext.P8, reiterating its stand. Thereafter, the first respondent issued Ext.P9 directing the OP NO.3332 of 1997 :-4-: petitioner to comply with the provisions of the Act with effect from 11/88 onwards. Again, the petitioner sent Exts.P10 and P11 clarifying the stand of the petitioner and claiming the infancy protection. 4. According to the petitioner, all representations and letters were rejected by the first respondent and Ext.P12 was issued by which the first respondent concluded and directed the petitioner to implement the provisions of scheme with effect from 31.10.1988. As a statutory remedy, aggrieved by Ext.P12, the petitioner had filed a petition under Section 19A of the Act before the second respondent, a copy of the said petition is produced along with this original petition and marked as Ext.P13 whereby the petitioner has tried to apprise the second respondent the factual and legal grounds in support of its claim for exemption. According to the petitioner, without proper application of mind and without consideration of the legal and factual grounds taken by the petitioner, the second respondent has issued an order upon Ext.P13 dismissing the same. OP NO.3332 of 1997 :-5-: Ext.P14 is the said order. Thus, the petitioner preferred this writ petition praying inter alia to issue a writ of certiorari quashing Exts.P12 and P14 orders and also with a prayer to issue a writ of mandamus or other appropriate writ, order or direction directing the first respondent to grant the benefit of infancy protection to the petitioner under the Act. 5. Denying the contentions and averments raised in the writ petition, the first respondent has filed a detailed counter affidavit. According to the respondent, the petitioner-company owns two plantations in Tamil Nadu, covering the Act. On the strength of the memorandum and Articles of Association and in expansion of its business, the petitioner-company established and started the Bio-tech Division in Cochin Export Processing Zone and started functioning in October, 1988. The respondents have not disputed the fact that initially the infancy protection of three years was allowed and Code No.KR/13454 was also issued in favour of the petitioner. But, according to the OP NO.3332 of 1997 :-6-: respondents, at the time of granting the infancy protection, the Area Enforcement Officer was also directed to examine the feasibility of extending the Act to the division from the date of starting, invoking Section 2A of the Act as the branch unit of Sheveroy Estates Limited. Accordingly, the Enforcement Officer conducted a detailed examination and it is reported that the Bio-tech Division is a branch unit of the petitioner- company and has recommended that the coverage be shifted to the date of starting of the unit. Thus, according to the respondents, since the petitioner challenges the above move of the respondents and claims infancy protection, an enquiry was conducted under Section 7A of the Act and the competent authority examined the case in detail and heard the petitioner also and evidence was also taken and accordingly, on the basis of six points mentioned in the counter affidavit, it was held that the petitioner is not entitled to get the benefit especially, in the light of the Supreme Court decision reported in Associated Cement Company Ltd. OP NO.3332 of 1997 :-7-: v. their Workmen (1960(1) LLJ 1) and the judgment of this Court in Eddy Current Controls (India) v. The Regional Provident Fund Commissioner and another (1993(2) KLJ 628). Thus, the sum and substance of the contentions of the respondents is that the Bio-tech unit owned and established by the petitioner-company is a department or branch of the petitioner-company and it is not a new establishment and therefore, the petitioner- company is not entitled to get the benefit. To substantiate the above contention, along with the counter affidavit, the respondent has produced Ext.R1 (a), appointment order issued by the petitioner-company in favour of one Mrs.Mini Elizabeth Chacko whereby it is stated that during the period of her service, she is liable to be transferred to any of the branches. Thus, according to the respondents, the Bio-tech Division in CEPZ is a branch or division of the petitioner-company and not a new establishment so as to avail the benefit under Section 16(1)(d) of the Act. 6. I have heard Sri.E.K.Nandakumar, learned OP NO.3332 of 1997 :-8-: counsel for the petitioner as well as the learned Assistant Solicitor General, appearing for the respondents. 7. At the outset, it is to be noted that the actual beneficiaries of the Act, viz., the workers are not seen raised any claim or dispute regarding the contribution payable by the petitioner- employer. Though the present establishment was started to function with effect from 31.10.1988, no documents are produced or referred connecting with such dispute preferred by the workers at any date after 31.10.1988 or even after passing Exts.P12 and P14 orders till this date. 8. To settle the controversy, the only question to be considered and answered is whether the Bio-tech Division established by the petitioner in Cochin Export Processing Zone is coming under the purview of the establishment as defined in Section 2A of the Act or whether it is a part and parcel of the establishment of the petitioner-company. Relying upon the documents referred in the writ petition, the learned counsel for the OP NO.3332 of 1997 :-9-: petitioner submits that at no stretch of imagination, it can be said that the Bio-tech Division in CEPZ is part of the establishment of the petitioner-company and therefore, the said establishment is entitled to get infancy protection. In support of the above submission, the learned counsel invited my attention to the decision reported in Regional Provident Fund Commissioner and Another v. Dharamsi Morarji Chemical Co.Ltd. (1998 (1) L.L.J.1060). According to learned counsel for the petitioner, the Supreme Court has laid down the test in the said decision, which is applicable to decide the question as to whether the unit of the petitioner will come under separate establishment or part of the company. On the other hand, the learned Assistant Solicitor General submits that on the basis of the enquiry conducted by the Area Enforcement Officer, it is found that the Bio-tech Division of the petitioner- company in CEPZ is a branch or unit of petitioner- company. Further, it is also the case of the respondent that a detailed enquiry was conducted under Section 7A OP NO.3332 of 1997 :-10-: of the Act and after hearing the arguments and also examining the evidence, the petitioner's establishment at CEPZ is not a new establishment and in order to substantiate the above point, the learned counsel argued and elaborated six points mentioned in their counter affidavit. 9. The Hon'ble Apex Court in its decision in Dharamsi Morarji Chemical Co.'s case (cited supra) held in para 4 which runs as follows:- “4. It is true that if an establishment is found, as a fact, to consist of different departments or branches and if the departments and branches are located at different places, the establishment would still be covered by the net of Section 2-A and the branches and departments cannot be said to be only on that ground not a part and parcel of the parent establishment. However, on the facts of the present case, the only connecting link which could be pressed in service by the learned counsel for the appellant was the fact that the respondent- Company was the owner not only of the Ambarnath factory but also of Roha factory. On the basis of common ownership it was submitted that necessarily the Board of Directors would control and supervise the working of Roha factory also and therefore, according to the learned counsel, it could be said that there was interconnection between Ambarnath factory and OP NO.3332 of 1997 :-11-: Roha factory and it could be said that there was supervisory, financial or managerial control of the same Board of Directors. So far as this contention is concerned, the finding reached by the High Court, as extracted earlier, clearly shows that there was no evidence to indicate any such interconnection between the two factories in the matter of supervisory, financial or managerial control. Nothing could be pointed out to us to contradict this finding. Therefore, the net result is that the only connecting link which could be effectively pressed in service by the learned counsel for the appellant for culling out interconnection between Ambarnath factory and Roha factory was that both of them were owned by a common owner, namely, the respondent- Company and the Board Directors were common. That by itself cannot be sufficient unless there is clear evidence to show that there was interconnection between these two units and there was common supervisory, financial and managerial control. As there is no such evidence in the present case, on the peculiar facts of this case, it is not possible to agree with the learned counsel for the appellant that Roha factory was a part and parcel of Ambarnath factory or it was an adjunct of the main parent establishment functioning at Ambarnath since 1921.” (emphasis supplied) In that case, the company has established a factory to manufacture organic chemicals at Ambarnath in Thane District and the same was running from 1921 onwards. It is the said company established a new concern at OP NO.3332 of 1997 :-12-: Roha in Kolaba District of Maharashtra State during the month of July, 1997. It is also relevant to note that in the said Ambarnath factory, the products were heavy inorganic chemicals and mainly fertilizers, while the Roha factory manufactures only organic chemicals. Thus, the products manufactured in these two factories are thus separate, distinct and different. After considering the materials on record in that case and the facts involved therein, the Apex Court had held that though both factories were owned by a common owner and the Board of Directors, who were running the two establishments, were also common, that by itself cannot be sufficient unless there is clear evidence to show that there was interconnection between these two units and there was common supervisory, financial or managerial control. 10. Now let me examine the facts and circumstances involved in the case in the light of the test laid down by the Apex Court through the decision referred above. From the facts which are beyond OP NO.3332 of 1997 :-13-: dispute, it can be seen that even at the time of issuing Ext.P1 permit, the Central Government has accepted the proposal of the petitioner as per the setting up of the new industrial undertaking in the Cochin Export Processing Zone. The contention of learned counsel for the petitioner that newly set up establishment cannot be considered as a branch or department of the petitioner- company cannot be ruled out. According to learned counsel for the petitioner, Bio-tech unit in CEPZ is a new establishment and the same has nothing to do with the company though the ownership of the Bio-tech division is vested with the company. According to the learned counsel, in the Bio-tech unit, separate employees were appointed and there is no functional integrality. According to the petitioner's counsel, the petitioner- company can have more than one establishment and therefore, the new establishment cannot be treated as part of the factory establishment which is already started by the company. It is pointed out that the main business of the establishment in CEPZ is tissue culture OP NO.3332 of 1997 :-14-: and it is an independent division and the same has nothing to do with the plantation division owned and managed by the petitioner-company. The learned counsel submits that the new establishment has got separate profit and loss account and balance sheet, but the company has a whole consolidated balance sheet and profit and loss account which is also prepared as per the provisions of the Companies Act. It is also the point stressed by learned counsel for the petitioner that though in Ext.R1(a), there was a clause for transfer, that is not sufficient to hold that the establishment is a part of the other establishments of the petitioner-company. According to the counsel, the employees were appointed in the Bio-tech Division and they are liable to be transfered only in the branches of Bio-tech Division and they are trained in tissue culture or Bio-tech Division who cannot be transferred and posted in other divisions. So, the employees in the above division cannot be transferred to the plantation division. Learned counsel further argued that none of the above grounds are made OP NO.3332 of 1997 :-15-: in Exts.P12 and P14. 11. Though I have repeatedly perused Exts.p12 and P14, the above aspect is not considered properly and no finding is arrived at. The only material produced before this Court by the respondents to show that the Bio-tech Division of the petitioner-company is part and parcel of the petitioner's establishment is Ext.R1(a) appointment order issued by the petitioner-company. Simply, on the basis of a clause in Ext.R1(a) that the appointee is liable for transfer, it cannot be said that the Bio-tech Division at Cochin is part and parcel of the petitioner-company or another unit or factory of the petitioner's concern. As indicated above, though the evidences were collected, no materials is cited or examined to show that there is financial, managerial and functional integrality between the Cochin Division of Bio-tech and other establishment or division of the petitioner-company. It is also relevant to note that there is no discussion or materials produced to show the products of the various unit of the petitioner-company OP NO.3332 of 1997 :-16-: and how the unit at CEPZ depends on other unit for its function. In short, there is no finding that the present devision cannot exist without the other. It is also relevant to note that Section 2A deals with the establishment to include all departments and branches. The above section does not refer to the “employer” or “owner” of the different departments or branches. If that be so, the actual test laid down by the Apex Court as indicated above is not satisfied in this case. In the present case, no material or document is produced or considered by the respondents to hold that there was inter-connection between the Bio-tech division established in CEPZ or other factory or establishments owned by the petitioner-company and there was common supervisory financial or managerial control. On the above matrix, in the absence of such evidence or materials, though the petitioner is the owner of the Bio-tech Division and the Plantation Division and based upon such common ownership, it cannot be said that there is interconnection so as to draw inference of OP NO.3332 of 1997 :-17-: common supervisory financial and managerial control. Therefore, I have no hesitation to hold that the Bi-tech Division of the petitioner-company in Cochin is a new establishment and not a part and parcel of the petitioner-company and its other establishment for the purpose of Section 16(1)(d) of the Act. In the result, the Original Petition is allowed quashing Exts.P12 and P14. V.K.Mohanan, Judge MBS/ OP NO.3332 of 1997 :-18-: V.K.MOHANAN, J. -------------------------------------------- O.P.NO. 3332 OF 1997 -------------------------------------------- J U D G M E N T DATED: 9-6-2009 OP NO.3332 of 1997 :-19-: