Case: Niton Industries Vs. Union of India &amp; Others

2. The above mentioned writ petitions were filed by M/s. Niton Industries, a partnership Firm registered under the provisions of the Indian Partnership Act, being aggrieved by the order passed by the Regional Provident Fund Commissioner, Maharashtra and Goa dated 23rd September, 1992, in the matter of proceedings under Sectionof the Employees Provident Funds and Miscellaneous Provisions Act, 1952 ("the Act"), against Inventa Valve Industries (Bombay) Private Limited, MH/21449.

Court's reasoning:
22. This decision, in our opinion, however, has no application to the facts of the present case at hand, where there is nothing to show that the three establishments namely; M/ s. Niton Industries, M/s. Niton Industrial Corporation, and Inventa Valves Industries (Bombay) Private Limited were artificially set up as subterfuge to avoid the liability of contribution under the Act or when admittedly, there is notinterdependency in management, control andfinance. In such a situation, it cannot be said that there is functional integrality between thesethis case, Regional Provident Fund Commissioner treated Rajasthan Prem Krishan Goods Transport Company and Rajasthan Prem Krishan Transport Company as one and the same entity, holding the ostensible separate existence of these two particular concerns as artificial and nonexistent even though the two concerns were being treated as separate for the purposes ofAct. It was in this case that the doctrine of piercing the veil was set out for the application of the provisionsof the Act.In our opinion, even this case does not come to the rescue of the respondents. The facts of the above mentioned case were totally different, the integrality between the Firms was obvious, leading to the legitimate inference of subterfuge. No such case is made out in the present case at hand. The factual position totally belies such a suggestion. In our view, therefore, the learned Single Judge committed error in holding that just because there was common ownership and just because all the companies were in the same line of manufacturing of valves, there was functional integrality between them. The observation about financial proximity between three establishments also is not correct, in as much as the loans taken can always be paid off and the shares can be transferred or sold.