GOEL TEXTILE INDUSTRIES Vs. UNION OF INDIA UOI

JUDGEMENT

(1.) M/s. Goel Textile Industries, Pilkhuwa, Ghaziabad, and its partner Sri Prahlad Saran, the petitioners No. 1 and 2 respectively, have challenged the legality of the orders dated January 5, 1979, July 2, 1979, and November 17, 1980. The orders dated January 5, 1979 and July 2, 1979 were passed by the Regional Provident Fund Commissioner, Uttar Pradesh, Kanpur, the respondent No. 2, in exercise of his powers under Section 7-A of the Employee's Provident Funds and Miscellaneous Provisions Act, 1952, hereinafter called the "Act" while the order dated November 17, 1980 was passed by the Central Government the respondent No. 1, in exercise of powers under Section 19-A of the Act.

(2.) The case of the petitioners is that they are carrying on business of manufacturing cotton at a very small scale at Pilkhuwa. The petitioner No. 1 is registered under the provisions of the Sales Tax Act, the Shops and Commercial Establishments Act and the Small Scale Industries Act. On September 20, 1976 the Provident Fund Inspector inspected the premises of the petitioner No. 1. Before the Inspector it was submitted that only seven employees were employed in the Industry and that phirai work was being done through Pilkhuwa Soot Phirai Karyalaya, Pilkhuwa, whose sole proprietor was Sri Chandra Prakash. A statement was made by one Sri Gyan Prakash on behalf of Sri Chandra Prakash, proprietor of Pilkhuwa Soot Phirai Karyalaya and in the statement the names of fourteen workmen and their pay was got recorded. The said Sri Gyan Prakash been (sic) of M/s. Prahlad Textile Industries had no connection with or authority to give and sign statement on behalf of Pilkhuwa Soot Phirai Karyalaya. Inspite of a clear statement before him that only seven employees were employed by the petitioner No. 1 the Provident Fund Inspector erroneously took a view that the firm was employing twenty-one employees including the employees employed by Sri Chandra Prakash of Pilkhuwa Soot Phirai Karyalaya. During the inquiry under Section 7-A of the Act before the Regional Provident Fund Commissioner it was clearly stated that only seven employees were employed by the petitioner No. 1 and the employees of Pilkhuwa Soot Phirai Karyalaya were not the employees of the petitioner No. 1. The case set up before the respondent No. 1 was that the petitioner No. 1 was only getting soot phirai work done on contract basis from Pilkhuwa Soot Phirai Karyalaya, which is a sole proprietor concern of Sri Chandra Prakash and with which the petitioner No. 1 had got nothing to do. Further, the case of the petitioners is that Pilkhuwa Soot Phirai Karyalaya was doing contract work of other concerns also on contract basis. In substance, the case set up by the petitioners that employees of M/s. Pilkhuwa Soot Phirai Karyalaya, Pilkhuwa cannot be deemed to be the employees of M/s. Goel Textile Industries for the purposes of the application of the provisions of the Act.

(3.) On the other hand, the case set up on behalf of the department of the Regional Provident Fund Commissioner is that M/s. Goei Textile Industries is engaged in maufacture of textile and is an establishment within the meaning of the provisions of the Act. The department asserts that Pilkhuwa Soot Phirai Karyalaya is merely a Section of M/s. Goel Textile Industries, Pilkhuwa and M/s. Prahlad Industries, Pilkhuwa and renders soot phirai work without which both the concerns cannot function. According to the department, this is a clear case of subterfuge. To avoid the applicablity of various laws the owners have set up three different units. Sri Satya Prakash, Sri Chandra Prakash and Sri Prahlad Saran are the partners of M/s. Goel Textile Industries. Sri Gyan Prakash and Sri Chandra Prakash are the sons of Sri Prahlad Saran. Sri Chandra Prakash is the proprietor of Pilkhuwa Soot Phirai Karyalaya and Sri Gyan Prakash is a partner of M/s. Prahlad Textile Industries. In these circumstances, all the three establishments have to be clubbed together, although only M/s. Goel Textile Industries and M/s. Pilkhuwa Soot Phirai Karyalaya, Pilkhuwa have been taken into account by the department, for the determination of the question of applicability of the Act.