Case: Mumbai Mazdoor Sangh Vs. Regional Provident Fund Commissioner Maharashtra &amp; Goa &amp; Others

2. Respondent No. 2 is a partnership firm engaged in the business of trading and selling of umbrellas and in the said name and style it has been in existence for the last about 140 years. It decided to diversify its business activities and, therefore, established a factor for the manufacture of umbrellas some times in the year 1940 and respondent no.3 is the said factory. Respondent No. 2 was brought within the purview of the Act, as a scheduled industry with effect from 1/5/1962 but respondent no.3 was not included as a scheduled industry under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (the P.F. Act for short). It appears on 25/1/1988 respondent no.1 passed an order holding that respondent no.2 was bound to comply with the provisions of the P.F. Act with effect from 1/5/1962 in respect of the employees working in its factory known as M/s. National Umbrella Factory (respondent no.3). This order came to be challenged in Writ Petition No. 727 of 1988 and the petition was allowed on 4/2/1993 by remanding a de novo inquiry to be conducted by respondent no.1 so as to decide whether respondent no.3 is a branch or department of respondent no.2, as envisaged under Section 2A of the P. F. Act. On remand, the parties appeared before the respondent no.1, filed their statement of claims/Written Statements and by his order dated 11/3/1994, the respondent no.1 held that respondent no.3 cannot be called as part and parcel or an integral part of respondent no.2 nor could it be considered as a contractor exclusively engaged by respondent no.2. The findings recorded by the respondent no.1 in the said order are reproduced asg facts and figures would establish that there is nothing common except ownership and consolidation of final accounts between the establishments and there is hardly anyfor their survival. This fact is clear as even when the factory remained closed there was no disruption in the activity of the establishments. A mere fact of common ownership and consolidation of final accounts cannot be substantive factor for considering two separate establishments as one integral whole for the purpose of extending the Provident Fund benefits. In the instant case there is total absence of financial dealing between the establishments and transferability of employees which could be the most important entities for the purpose of considering them as a composite unit.3. This order dated 11/3/1994 passed by the respondent no.1 came to be challenged in Writ Petition No. 1834 of 1994, which petition came to be dismissed by the impugned order passed by the learned Single Judge. The learned Single Judge was pleased to hold that the claim made by the petitionerUnion for treating respondent nos.2 and 3 as one unit within the meaning of Section 2A of the P.F. Act could not accepted and the test of the functional integrality between the two units was not established. The arguments advanced by the petitionerUnion that the respondent no.2 was admittedly the owner of respondent no.3 and was also supplier of raw materials were not accepted to hold that respondent no.3 is part and parcel or a branch/department of respondent no.2.The order dated 11/3/1994 passed by the respondent no.1 referred to the order passed by this court for remand and in the said order this court (Single Bench) had considered the following issues:(i) Whether National Umbrella Factory is a separate and distinct establishment or is merely a branch or department of M/s. Ebrahim CurrimSons(ii) Whether there is a functional integrality between the two units so as to constitute the two units as a single composite establishment(iii) Whether the respondent no.1 has applied the relevant tests for purposes of deciding the above referred questions including the test as to whether the National Umbrella Factory can conveniently or substantially exist even if M/s. Ebrahim CurrimSons (the trading unit) is closed(iv) If not, whether the impugned order suffers from misdirecting in Law and the impugned order is liable to be quashed and set aside with liberty to pas fresh order on remand in accordance with law.8. The respondent no.1, on considering the arguments advanced by both the parties as well as the statement of claim and the statement of defence placed before it, recorded the findings that,(a) respondent no.2 is the owner of respondent no.3;(b) respondent no.2 used to supply raw material for manufacture of umbrellas to respondent no.3 in the same manner as it used to supply such material to other umbrella manufacturers as well;(c) there was no transferability of employees from respondent no.2 to respondent no.3 orthe respondent no.3factory was closed from 20/11/1963 to 20/4/1964;(e) respondent no.2 had originally nine partners but after consent decree was passed in Civil Suit No. 392 of 1963 by this court for dissolution of partnership on 11/3/1963, only five partners joined and formed the reconstituted partnership;(f) both the establishments are located in different premises i.e. the factory is located at Ray Road and respondent no.2 is located at Princess Street, Kalbadevi;(g) respondent no.2 was issued a factory licence by the Bombay Municipality on 12/5/1943 and it has also registered as a small scale industry in the State of Maharashtra as per the certificate dated 23/6/1986 issued by the Directorate of Industries. It also has separate licence under the Central and State Sales Act. It has also been allotted importer/exporter code number by the Ministry of Commerce;(h) each of the establishments is maintaining separate books of accounts and have separate set of employees. At the same time, the accounts of both the establishments are consolidated for the purpose of income tax;(i) the documents regarding purchase of raw material and invoices for supply indicated that the price for material supplied was being adjusted from the amount payable tothe respondent no.3towards supply umbrellas to respondent no.2;(j) the settlement copies placed on record also indicated that the wages of the employees of respondent no.3 were fixed according to the rates applicable to the Umbrella Manufacturers and Traders Association;(k) respondent no.2 is a trading and marketing firm, whereasthe respondent no.3is engaged in the manufacture of umbrellas. At the same time, respondent no.2 is a scheduled industry, where as respondent no.3 has not been impleaded in the schedule to the Act so as to bring it under the coverage of the Act.9. The learned Single Judge considered the findings recorded by the respondent no.1 and the decisions of this court rendered earlier in the case of M/s. Kerula Rubber Company Pvt. Ltd. vs. Regional Provident Fund Commissioner [Special Civil Application No. 198 of 1978] as well as Metazine Pvt. Ltd. vs. Mr. A.M. Gandhi, the Regional Provident Fund Commissioner [ 1992 II LLJ 647] and Allana Sons Pvt. Ltd. vs. Regional Provident Fund Commissioner of Maharashtra [(1991) I CLR 743] as well as the remand decision in the instant case i.e. Ebrahim Currim and Sons vs. Regional Provident Fund Commissioner and anr. [1994 I LLJ 364] and held that though respondent no.2 is the owner of respondent no.3, there was no other material which could be said to indicate that respondent no.3 is the branch/department of respondent no.2. The learned Single Judge while upholding the findings recorded by respondent no.1 observed thus, by referring to the decision in the case of Pratap Press vs. Delhi Press Workers Union (Supra),If this ratio is applied to the determination of the question in the instant case, it would be seen that the two units are located at different places, have different sets of workers engaged in different kind of activities and have separate books of accounts. It is true that there is a common owner of both the units and there is consolidation of accounts of both the units at the years end. But there is no bar to a company establishing more than one unit. In deed, in this case, respondent no.2 decided to establish a factory after carrying trading activity for several years. The mere fact that respondent No.2 ultimately consolidated the accounts of the two units, for the purposes of the Companies Act and theAct, cannot result in a conclusion that, therefore, the two units constitute one establishment. It is not unknown that where one and the same company establishes separate, distinct and different factories at different places with each having its own separate accounts, consolidation is annually effected for the purposes of the Companies Act and theAct. In these circumstances, the petitioners claim for treating the two units as one establishment for the purposes of Section 2A of the Act cannot be accepted.

Court's reasoning:
11. In the instant case, as noted earlier, there was no inter transfer of the staff between two units and in addition there was no evidence to point out that the supervision and control was done by a common management team or by a common manager of both the units. The employees of respondent no.3 were appointed by it alone and they were subject to the disciplinary action by the manager of that unit. We, therefore, do not find any material to hold that the concurrent findings recorded earlier suffer from any error on the face of the record so as to cause interference in this intra court appeal and the findings of facts recorded by the respondent no.1 to hold thatthe respondent no.3is not a branch/department of respondent no.2 have been confirmed by the learned Single Judge and rightly so.12. However, before we part with this judgment, we have noted with concern that the list of scheduled industries has not been updated for a considerably long time. Some of the industries like respondent no.3 or the IT industries employ a large workforce and still they do not find place in the schedule to the Act and the employees working therein and who are eligible to be given the benefits of the Act and the scheme thereunder are deprived of the such benefits. Section 4 of the Act empowers the Central Government by notification in the Official Gazette to add toany other industry in respect of the employees whereof it is of opinion that a Provident Fund Scheme should be framed under the Act and thereupon the industry so added shall be deemed to be an industry specified infor the purposes of the Act. It would be, therefore, necessary for respondent no.1 to undertake a survey of all such non scheduled industries in the State of Maharashtra and take appropriate steps to submit its recommendations to the Central Government through the Ministry of Labour. We hope that such an exercise would be undertaken as expeditiously as possible and a report thereof is submitted to the Central Government along with a copy to be submitted to the Registry of this Court.