IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C) No. 21005 of 2003(A)
1. ZEENATH GARMENTS, UNEEN TOWER
... Petitioner
Vs
1. ASST.PROVIDENT FUND COMMISSIONER,
... Respondent
For Petitioner :SRI.P.GOPINATH
For Respondent :SRI.R.SUDHIR, SC, P.F.
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :20/03/2007
O R D E R
S. SIRI JAGAN, J.
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W.P.(C)NO. 21005 OF 2003
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DATED THIS THE 20th DAY OF MARCH, 2007
JUDGMENT
The petitioner is a partnership firm engaged in the business of
sale of ready made garments in the 1st floor of a building leased by
them in the name and style of Zeenath Garments. The firm consists of
the following partners.
” 1. M. Aboobacker Hajee, S/o. Ahammed Hajee,
(Managing Partner).
2. P. Abdul Nazer, S/o. Moideen Hajee.
3. M. Abdul Gafoor, S/o. Muhammed Hajee.
4. M. Shameer Abdul Rahman, S/o. Abdul Rahman
Hajee.”
2. There is another firm running another business in the
ground floor of the same building also on lease owner of the building
being the same in the name and style of Zeenath Textiles. That
partnership firm consists of the following partners.
” a) Abdurahiman Hajee (Managing Partner)
b) M. Abdurahiman Hajee.
c) M. Abdul Salam
d) P. Abdul Shukoor "
3. The respondent- Assistant Provident Fund Commissioner
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issued notice to the petitioner for clubbing these two establishments
together for the purpose of coverage under the Employees’
Provident Funds and Miscellaneous Provisions Act. After taking
evidence, ultimately the respondent passed Ext.P6 order holding
that there is functional integrality between the two establishments
and therefore these two establishments are liable to be clubbed
together for the purpose of coverage under the Employees’
Provident Fund and Miscellaneous Provisions Act. Ext.P6 order is
under challenge in this writ petition. At the outset, the learned
counsel for the petitioner was asked as to why he did not file an
appeal before the Appellate Tribunal. He pointed out that in Ground
C, he has specifically stated as to why he could not file an appeal,
the reason being that at the relevant time the Tribunal was not
sitting on account of certain enquiries pending against the Presiding
Officer of the Tribunal. The learned counsel also submits that the
writ petition was filed in 2003 and at this point of time, the
petitioner would also not be able to file an appeal because the
period of limitation prescribed for filing the appeal is long over. I
find that Ext.P6 order was passed on 1.5.03 and the petitioner has
filed this writ petition on 30.6.03. The petitioner would have
received the order only subsequent to 1.5.03 and therefore it is
clear that this original petition has been filed within the period of
limitation prescribed for filing an appeal. In such circumstances, I
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feel that it would not be in the interest of justice to relegate the
petitioner to the alternate remedy by way of filing an appeal to the
Tribunal. Therefore, I am inclined to consider this case on merits.
4. The learned counsel for the petitioner submits that the
reasons mentioned in Ext.P6 for arriving at the conclusion that there
is functional integrality between the two firms is palpably
inadequate for such a finding. He points out that apart from the
finding that the partners of the two firms are closely related and
that both the firms are using the same staircase for access to their
establishments, there is absolutely no material on record to enter a
finding of functional integrality. He therefore seeks quashing of
Ext.P6 order holding that the two establishments are not liable to be
clubbed together and declaring that the petitioner’s establishment is
not liable to be covered under the Act.
5. Learned counsel for the Provident Fund Organisation
strongly disputes the contentions of the petitioner. He points out
that the Enforcement Officer, who has visited the establishments,
has found that there was only one name board mentioning
“Zeenath”, and no other name board was found in both the
establishments. He would submit that the fact that both the
establishments are using a common staircase, which starts from the
inside of the ground floor would show that once the establishment in
the ground floor is closed there would not be any access to the 1st
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floor which would mean that on closure of the establishment in the
ground floor, the other would also have to be automatically closed
down, which is a test to hold that one establishment is functionally
dependant on the other.
6. I have considered the rival contentions in detail. The
reasons stated by the respondent in Ext.P6 for arriving at the
conclusion that there is functional integralilty between the two
establishments are as follows:
After a lengthy analysis of factual
circumstance and also going through chief
Examination of petitioner Shri.
Abdurahiman Haji, Managing Partner by
Advocate as Exhibit-P.18 and cross
Examination of Shri. Abdurahiman Haji, by
Enforcement Officer as Exhibit.P19 the
following facts are established.
1. Though it cannot be said that
the partners of the firm Zeenath Textiles
are same as of Zeenath Garments the
partners of the two firms are close
relatives.
2. The Managing partner of
Zeenath Textiles M. Abdurahiman Haji and
partner of Zeenath Garments M. Abdul
Gafoor are sons of Shri,. Mohammed Haji.
3. Shri. M. Abdul Salam, Partner,
Zeenath Textiles is son of M. Aboobacker
Haji, Managing Partner of Zeenath
Garments.
4. Shri. Shamer Abdul Rahiman,
Partner of Zeenath Garments is son of Shri.
M. Abdurahiman Haji.
5. it was also established that there is
no access to M/s. Zeenath Garments in
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First Floor through the staircase in the
North Esternmost side of the building,
which cannot be utilized, as the passage to
this staircase connecting the road is
completely closed due to construction of
another building is also agreed by Shri.
Abdurahiman Haji, Managing Partner
(Question and Answer number 22 to 25 of
Exhibit P-19) more over access to Zeenath
Garments through Western side is denied
due to closed wall on that side (Question
and answer number 34 of Exhibit P19).
The only staircase to Zeenath Garments
starts from inside of Zeenath Textiles
showroom and the entrance to Zeenath
Garments in 1st floor is without any
interlocking facility and such staircase is
built only in easternmost side of the “U”
shaped building and not on western side of
the building (Question and Answer Number
40 to 50, Question and Answer number 81
in Exhibit P.19). This reveals that once
the shutter of M/s. Zeenath Textiles is
closed there is no further access to M/s.
Zeenath Garments at I Floor.
6. Initially from 03/1996 to
03/1998 Zeenath Garments and Zeenath
Textiles had only one power connection
and the electricity charges were paid only
by Zeenath Textiles (As observed in Exhibit
P-10 and Exhibit P-17.)”
7. From the same, evidently it is clear that he has not
relied upon the report of the Enforcement Officer that there is only
one name board mentioning ‘Zeenath’ for both the establishments.
Admittedly there are two separate establishments by name
‘Zeenath Garments’ and ‘Zeenath Textiles’, which is not in dispute.
Now as far as first four reasons are concerned, there cannot be any
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doubt that those by themselves are not reasons for holding that
there is functional integrality between the two establishments. It is
also settled law now that common ownership even would not lead to
an automatic inference of functional integrality. Therefore it has to
be examined as to whether those reasons coupled with the other
two reasons would lead to such a conclusion.
8. Admittedly, the building is not owned by either of the
two establishments. The two establishments have separate lease
deeds in respect of their respective portion of the building. They
have separate registrations, licences, accounts etc and the
respondent has not pointed out any other thing common to both.
There is also no allegation of transfer of employees or financial inter
dependence. Of course, it is true that the petitioner is using a
staircase for access to their establishment which starts from inside
of the establishment on the ground floor and therefore if the ground
floor is closed, the petitioner would not get access to the first floor.
I am of opinion that this is not what is contemplated by the test of
functional integrality to see whether on closure of one, the other
would also automatically close down. That test should itself be
relating to the functional integrality between the two establishments
meaning thereby that the business itself must be inter-dependant
on each other and not merely the physical access to the two
establishments. When the two persons, who are conducting the two
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separate business of their own, joins together to take on rent two
floors of the same building which have only one staircase that too
starting from inside the shutter of the ground floor, it cannot be
stated that, that amounts to a presumption of automatic closure of
the one when the shutter of the other is downed. This is all the
more so since as observed by the respondent himself in Ext.P6, the
situation arose because passage to the staircase connecting the
road was completely closed due to the construction of another
building apparently by the owner of the building. As such I am of
opinion that the mere fact that the common stair case starts from
the inside of the ground floor is not at all a factor much less a
determining factor to presume functional integrality between the
two establishments.
9. The 6th ground also does not appear to be supportive of
the conclusion of the respondent. Admittedly the building does not
belong to the petitioner or the other establishment. If the owner
has provided only one power connection and the electricity charges
are paid by one that does not essentially lead to a conclusion of
functional integrality between the two. It is perfectly open to the
two establishments to share the electricity charges.
In the above circumstances, I am satisfied that going by the
reasons mentioned in Ext.P6, no conclusion of functional integrality
can be arrived at on the basis of the dictum laid down in the various
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decisions of the Supreme Court and this Court. Therefore I am
satisfied that the reasons mentioned in Ext.P6 are not sufficient to
come to a conclusion that there is functional integrality between the
two establishments. Resultantly the clubbing of the establishments
together for the purpose coverage under the Act is without
justification. Since the respondent has no case that without clubbing
together the petitioner’s establishment is liable to be covered
separately, the petitioner’s establishment is not liable to be covered
under the Act. Therefore, I am satisfied that Ext.P6 order has been
passed on extraneous considerations and therefore is liable to be
set aside. I do so, but without any order as to costs.
S. SIRI JAGAN, JUDGE
Acd
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