TMI Blog1993 (2) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No. 1 has applied the relevant tests for purposes of deciding the abovereferred questions including the test as to whether the National Umbrella Factory can conveniently or substantially exist even if Ebrahim Currim and Sons (the trading unit) is closed? (d) If not, whether the impugned order suffers from misdirection in law and the impugned order is liable to be quashed and set aside with liberty to pass fresh order on remand in accordance with law? 3. The relevant facts having bearing on the subject matter of this petition are briefly summarised as under :- (a) The petitioner is a partnership firm duly registered under Indian Partnership Act. Since about 125 years, the petitioner firm has been engaged in trading and commerce activities having its office at Princess Street, Bombay. The petitioners are duly registered under Bombay Shops and Establishment Act. This establishment can be conveniently described as trading establishment . The petitioners have been dealing in umbrellas. (b) In or around 1940, the petitioners setup a factory to carry on manufacturing activities in the name and style of National Umbrella . The said factory is situated at Reay Road. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers or formed part of a composite unit i.e integral part of the trading establishment of Ebrahim Currim and Sons. The petitioner has been complying with the provisions of the said Act w.e.f 1st May, 1962 insofar as the employees in their trading establishment are concerned. In reply to the said show cause notice, the petitioner contended that National Umbrella Factory was a separate establishment and the proceedings adopted in the matter by respondent No. 1 were misconceived. The petitioners made written submissions before Respondent No. 1 by addressing several letters to Respondent No. 1 including letters dated 1st September, 1986 and 11th August, 1987. By their written submission dated 11th August, 1987, the petitioner submitted that National Umbrella Factory was engaged in Manufacturing of umbrella which was a non-scheduled activity of Embrahim Currim and Sons. In the said written submission, the petitioner submitted that National Umbrella Factory was doing manufacturing activity of the petitioner and the petitioners were providing raw materials to the said factory. By the said written submission, the petitioner asserted that National Umbrella Factory was a separate and distinct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Pratap Press, New Delhi v. Secretary, Delhi Press Workers' Union, Delhi, AIR 1960 SC 1213, the Hon'ble Supreme Court observed in para 5 of its judgment as under:- In all such cases therefore, the Court has to consider with care how far there is functional integrality meaning thereby such functional interdependence that one unit cannot exist conveniently and reasonably without the other and on the further question whether in matters of finance and employment the employer has actually kept the two units distinct or integrated . 8. In other words, in this case, the Hon'ble Supreme Court has emphasised two of the important tests required to be applied for deciding the issue of functional integrality including the test i.e as to whether the unit sought to be clubbed can exist conveniently and reasonably without the other ? Both these tests have not been applied by Respondent No. 1 in this case. The tests laid down in this case for determining the issue of functional integrality are not exhaustive. 9. In this case, the Hon'ble Supreme Court followed the test laid down in the case of Associated Cement Companies Limited, Chaibassa Cement Works, Jhinkpani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... functional integrality . The relevant criteria formualted by the Hon'ble Division Bench for consideration of the issue involved was as to whether the second unit was liable to be considered as a mere branch or a department of the first unit or whether the second unit could survive on first unit being closed? After referring to the judgment of the Hon'ble Supreme Court in the case of Associated Cement Co. and Management of Pratap Press and several other cases, the Division Bench of our High Court observed that the question required to be determined was as to whether the Aurangabad unit was a separate establishment or merely as a branch or department of an earlier establishment and whether the said unit could survive if the earlier unit were to close. 12. In the case of Metazine Pvt. Ltd. v. Mr. R.M Gandhi, The Regional Provident Fund Commissioner, 1991 Mah LJ 565 : (1991) 1 CLR 505, Daud, J. of our High Court was seized of the similar problem. The learned Judge observed that the test of functional integrality was relevant for application of section 2-A of the Act . The learned Judge quoted passages exclusively from the judgment of the Hon'ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned order passed by Respondent No. 1 on 25th January 1988. The abovereferred important test appears to have totally escaped attention of Respondent No. 1. The Respondent No. 1 has proceeded on the footing that the petitioner has admitted in the written submissions filed before Respondent No. 1 that National Umbrella Factory was a manufacturing unit of the petitioner and that the petitioner was supplying raw materials to the said factory and selling its finished products. The Respondent No. 1 appears to have forgotten that in the same very written submission it was further stated that National Umbrella Factory was a separate unit and it could not be clubbed with the petitioner. When the petitioner contended in the said written submission that National Umbrella Factory was a manufacturing unit of the petitioner, all that it meant was that both the units were owned by the same owner. Mere fact of common ownership by itself is not sufficient to satisfy the test of functional integrality. Similarly mere fact of supply of raw materials or purchase of raw materials for the factory by the petitioner or sale of the finished goods by the petitioner would not be sufficient to satisfy the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the test of a reasonable possibility of survival of the unit sought to be clubbed on closure of the 1st unit was approved or not approved in this judgment. The text of the said judgment is not available. Having regard to clear ratio of the judgment of the Hon'ble Supreme Court in the reported case of Management of Pratap Press, New Delhi referred to hereinabove. I must hold that the ratio of the judgment, of the Supreme Court in the case of Pratap Press must prevail. The ratio of the said judgment appears to have been applied in several subsequent cases including the latest one. 18. The learned counsel for Respondent No. 1 relied on Division Bench Judgment of the High Court of Gujarat delivered by P.D Desai, the then acting Chief Justice of High Court of Gujarat and S.B Majumdar, J., in the case of Indian Rayon Corporation Ltd. v. Miss K.P Sarojini. A copy of the said judgment dated 23rd September, 1983, in Special Civil Application No. 4617 of 1983 is annexed to the affidavit in reply. I have carefully gone through the said judgment. In my opinion the said judgment does not lay down different test for purpose of deciding the issue of functional integrality i.e test in any ..... 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