REGIONAL PROVIDENT FUND COMMISSIONER Vs. NATH TRADERS

JUDGEMENT

(1.) By this writ petition, the petitioner has challenged the validity of order dated 3rd November, 2000 passed by Employees Provident Funds' Appellate Tribunal( in short ' the Tribunal) whereby the Tribunal allowed the appeal of the respondents and set aside the order dated 7th October, 1999 passed under Section 7-A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952( hereinafter referred to as 'the Act').

(2.) Briefly the facts are that an inspection of the premises of the respondents was conducted by the members of the Squad, under Provident Funds Commissioner, and the squad recommended the applicability of the Act to M/s Nath Oil Company and Nath Trading, stating that the two establishments were one. The enquiry conducted by the Regional Provident Funds' Commissioner, after the report of the squad, revealed that Nath Trading and Nath Oil Company were operating from the same premises at 14, Kailash Colony, New Delhi ? 110048 and there was only one entry to that premises. There was no distinct or distinguishable demarcation distinguishing the two establishments. The employees sitting there were intermingled. Both the establishments had common telephone number being 6432474 on the letterheads of both the firms. Mr. Surender Nath was the overall incharge of both the business. He was sole proprietor of Nath Oil Company and he was one of the two partners in M/s Nath Trading India. The other partner, being his wife, was a sleeping partner. The functions of both the establishments were one. One establishment was having dealership of LPG gas and other was having dealership of distribution of kerosene oil. Their accounts were being looked after by common accountant Mr. R.C. Singh. The combined and cumulative strength of employees of both the establishments was found to be 24. The Regional Provident Funds Commissioner observed that the period of infancy stood expired long before. The combined employees strength of the two establishments was more than the required strength under the Act. He found that there was functional integrity among the two firms, unity of ownership, inter-transfer of employees and geographical proximity, unity of management, supervision and control. He, therefore, ordered M/s Nath Oil Company and Nath Trading to be treated as one establishment for the purpose of the Act.

(3.) In appeal, the Appellate Tribunal observed that since the two firms were dealing in two different commodities, one in kerosene oil and the other in LPG gas, and were having separate licenses from the respective authorities, they were separate units. M/s Nath Oil Company was the sole proprietorship concern and M/s Nath Trading India was a proprietorship. Both were having separate sales tax and income tax registrations. The two could not be considered as one establishment. The Tribunal considered that since one was partnership firm, it could not be clubbed with the sole proprietorship firm since there was another partner who was concerned with profit and loss of the establishment. The Tribunal also observed that the storage arrangement of LPG and kerosene oil was quite different. One establishment could survive without the other and this was the most crucial test in the opinion of the Tribunal, therefore, he allowed the appeal and ordered that the two establishments cannot be clubbed together for the purposes of the provisions of the Act.