LAWS(BOM)-1992-9-2

SUNDER TRANSPORT Vs. REGIONAL P F COMMISSIONER

Decided On September 04, 1992
SUNDER TRANSPORT Appellant
V/S
REGIONAL P.F.COMMISSIONER Respondents

JUDGEMENT

(1.) THESE are four writ petitions filed by four partnership firms who have been clubbed together and treated as one establishment by the Regional Provident Fund Commissioner, Bombay for the purpose of determining the liability under the Employees' Provident Funds and Miscellaneous provisions Act, 1952 ("the Act") and asked to pay the provident funds dues with effect from 31. 1. 1975. A common Code number was allotted by the Regional Provident Funds commissioner, Maharashtra and Goa, being Code No. MH/22043 to one of the firms, namely, m/s. Sunder Transport, the petitioner in W. P. No. 1199/88 for itself and the other three firms who are petitioners in the other three writ petitions. The liability under Section 7 of the Act was determined at Rs. 1,99,087. 50 and notice was served on each one of the four firms separately to pay the said amount. The aforesaid demand notices of the Regional Provident Funds commissioner which are dated 20. 2. 1988 and the common order dated 27. 1. 1988 in pursuance of which these demand notices were issued, are the subject-matter of challenge.

(2.) THE petitioner in Writ Petition No. 1199/1988 is M/s. Sunder Transport. This is a partnership firm. It was registered under the Indian Partnership Act in the year 1964. At the relevant time, it had been carrying on the business of transport of chassis and trucks and products of Bharat petroleum to Dhule and various other places. It is composed of three partners. The petitioner in w. P. No. 1200 of 1988 is M/s. Bafna Motors which is also a partnership firm with 4 partners. It holds the dealership of International Tractors and parts thereof. It is also registered as a firm under the Partnership Act. Another firm M/s. Bafna Investment, petitioner in Writ Petition No. 1175 of 1988, is also a partnership duly registered under the Indian-Partnership Act. It comprises of five partners. Business of the firm consists of letting out of premises on rent and commission agency. Similarly, Bafna Finance is - a separate firm registered with the Registrar of Firms. It comprises of four partners. All these four partnership firms are registered as independent firms with the Registrar of Firms and are also registered separately under other enactments viz. Bombay Sales Tax, Act, Bombay Shops and Establishments Act. All these firms have been carrying on their businesses since the year 1964 and are being separately assessed to income-tax as independent firms. The partners of these firms are not identical though there are some common partners.

(3.) THE respondent, Regional Provident Funds Commissioner, Bombay, served the show cause notice dated 10. 11. 1983 to the petitioner firms asking them to show-cause as to why the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, should not have been made applicable to them by treating all the four firms as one establishment. The petitioner-firms showed cause by their letter dated 27. 11. 1983. Their contention was that all of them were different and independent firms and were separate legal entities. None of them employed more than five employees. They were all carrying on their separate businesses having no inter-connection, inter-dependence and integrality of any nature and, therefore, clubbing them together and treating; them as one establishment for the purpose of determining the applicability of the Act, was wrong, illegal and incorrect. All the firms filed relevant documents including the account-books and the income-tax assessment order in support of their contention. In continuation to this letter, another letter dated 15. 11. 1984 was filed explaining why the four firms could not be clubbed together and treated as one establishment. By yet another letter being letter dated 25. 2. 1985, the petitioners drew the pointed attention of the respondent to the fact that there was neither any common supervisory, managerial or financial control by any of the petitioner-firms over the others nor was there any functional integrity amongst them. These contentions of the petitioner-firms did not find favour with the in-charge of 7-A Cell of the respondent who by his communication (Exh. D to the petition) informed the petitioners that with effect from 31. 1. 1975 all the four firms were treated as one establishment as per the provisions of Section 2a of the Act and, accordingly, they had been rightly asked to pay the provident funds dues with effect from 31. 1. 1975. Aggrieved by this communication, the petitioners wrote a letter to the Regional Provident Funds Commissioner reiterating their contentions. It was specifically stated that Section 2a of the Act referred only to branches and departments of one establishment - it did not apply to different establishments. He was also informed that one of the establishments, namely, Sunder Transport had already been closed from 25. 10. 1986. The respondent, however, did not accept the contentions of the petitioners and by order dated 27. 1. 1988 held that the petitioners were liable to pay provident fund contributions, etc. as on clubbing the four firms together the total employees' strength of Sunder Transport including the other three establishments was more than 20 for the month of January 1975. In pursuance of the aforesaid order, a notice dated 10. 2. 1988 was also served on all the four petitioners asking them to pay the provident fund contributions as stated in the said notice from 1. 1. 1975 to October 1987. The order was passed against Sunder Transport (petitioner in Writ Petition No. 1199/1988)including the other three firms (petitioners in the other three petitions) and copy of the order was served on all the petitioners. The petitioners have challenged the aforesaid order of the Regional provident Funds Commissioner and the notice issued in pursuance thereto.