TMI Blog1993 (7) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... ees of the two factories are not mutually transferable. The factory at Coimbatore is having only 16 employees. 2. The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the Provident Funds Act') was made applicable to the factory at Chalakudy with effect from December 31, 1976, under Section 1(3)(a) of the said Act. It is applicable only to the factory owned by the petitioner and not to the petitioner-company as such. The petitioner-company was informed by the Regional Provident Fund Commissioner, in July, 1980, that the factory at Coimbatore is a branch unit of the company and is liable to pay provident fund contribution under the Provident Funds Act, by virtue of Section 2-A of the said Act; copy of that letter is produced as Exhibit P-3. To Exhibit P-3 the petitioner submitted a detailed objection evidenced by Exhibit P-4, dated July 26, 1980. By his order dated August 20, 1982, produced as Exhibit P-5, the Regional Provident Fund Commissioner (first respondent) rejected the objections of the petitioner and directed the petitioner to implement the provisions of the Act and the Scheme in respect of the Coimbatore factory with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 2(g) as follows:- factory means any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on, whether with the aid of power or without the aid of power. 6. It is further seen that under Sub-section (3) of Section 1 of the Provident Funds Act it applies (a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which twenty or more persons are employed, and (b) to any other establishment employing twenty or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify in this behalf. There is a proviso to Section 1(3) which is not very relevant for the purpose of this case. Section 2-A inserted in the Act by amending Act 46 of 1960, reads as follows:- For the removal of doubts, it is hereby declared that where an establishment consists of different departments or has branches, whether situated in the same place or in different places, all such departments or branches shall be treated as part of the same establishment. 7. On a reading of Section 2-A, it is clear that if an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the scheme and object of the statute which gives the right of unemployment compensation and also prescribes a disqualification therefor. Thus, in one case the unity of ownership, management and control may be the important test; in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. Indeed, in a large number of cases several tests may fall for consideration at the same time. 9. On the basis of the principle laid down by the Supreme Court as above, if the branch of an establishment taken with the establishment forms one industrial establishment, Section 2-A of the Provident Funds Act will be attracted and by the application of the above section the employees in the branch will also come within the purview of the Act. Section 2-A specifically provides that if an establishment consists of different departments or has branches, they shall be treated as part of the same establishment so that for the purpose of determining the liability the main establishment as also its branch has to be taken as one unit. This seems to be the correct principle to be applied in such cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch will also come within the purview of the Act. 12. It is in the light of these principles that we have to consider the question as to whether the two establishments of the petitioner-company, one at Chalakudy and the other at Coimbatore, form part of a single unit for the purposes of the Act or whether they are independent units. On the facts found by the Regional Provident Fund Commissioner as also by the Government of India, it is clear that the factories at Chalakudy and Coimbatore are owned by the petitioner-company. The product manufactured in the two factories is the same, namely eddy current clutches and motors, specified in Schedule I to the Act. The fact that only a motor with a lesser horse power is manufactured at Coimbatore is irrelevant. The registered office is the same for both the factories at Chalakudy and Coimbatore. The factory at Coimbatore has been described by the company as a unit and the activity carried on there is the same as that of the factory at Chalakudy. The balance sheet, profit and loss account, income and expenditure account are all common for all the units of the company as per the Eighth Annual Report of the company for the year ending Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt held that they are independent units. But before understanding the ratio of the decisions, it is necessary to quote Section 3 of the Payment of Bonus Act, 1965, which reads: 3. Establishment to include departments, undertakings and branches:- Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this Act: Provided that where for any accounting year a separate balance-sheet and profit and loss account are prepared and maintained in respect of any such department or undertaking or branch, then, such department or undertaking or branche shall be treated as a separate establishment for the purpose of computation of bonus under this Act for that year, unless such department or undertaking or branch was, immediately before the commencement of that accounting year treated as part of the establishment for the purpose of computation of bonus. 14. On a reading of Section 3, it is clear that the principal part of the section lays down that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143 shall be confined to its own facts. In Dharmsi Morarji Chemical Co. Ltd. v. N.G. Desai, (1985-I-LLJ-433), there is no consideration of the impact of Section 2-A. 16. In Andhra Cement Co. Ltd. v. R.P.F. Commissioner, Hyderabad, (1988-II-LLJ-453) the facts were as follows: The petitioner-Company established a cement factory known as 'Andhra Cement Factory' at Vijayawada in the year 1938. In the year 1978 the management established another factory styled 'Visakha Cement Works' at Visakhapatnam, The State Government allowed interest-free sales tax loans, a rebate of 25% in power tariff and other facilities as incentives to the new industry. The Commissioner of Labour also recognised it as a separate establishment. The service conditions were totally different from the service conditions of the workmen working in Andhra Cement Factory. The employment was also different 75% of the wages as recognised by the Central Wage Board was also being paid from November 1, 1979. The workmen accepted the same. Separate balance-sheet and separate accounts were maintained for the new establishment. In 1982 proceedings were initiated by the Andhra Pradesh Regional Provident Fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) Many enterprises may have functional integrality between factories which are separately owned; some may be integrated in part with units or factories having the same ownership and in part with factories or plants which are independently owned. In the midst of all these complexities, it may be difficult to discover the real thread of unity. 17. In the light of the above principles the Andhra Pradesh High Court considered the facts of that case and came to the conclusion that on the facts of that case Visakha Cement Works is a branch of the petitioner-company, and, therefore, cannot claim the benefit of exemption as postulated under Section 16 of the Employees' Provident Funds Act for the infancy benefit. It was further held that the fact that Visakha Cement Works has been registered separately, licensed separately, granted interest-free sales tax loans as well as a rebate of 25% in power tariff cannot be reckoned as contributing factors to be taken as guidelines in finding whether the unit is a separate establishment or a branch of the main unit. 18. We are also of the view that the mere fact that separate licences were obtained under the Factories Act for the two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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