- (1.) Three establishments, namely, M/s Sumitra Nursing Home, Dr. Neeraj Gupta Orthopedic Centre and Kumar Diagnostic Centre are existing and functioning in one premises at Bijnor. It transpires, that an inspection was made in the premises on 25.6.l997 by the Regional Provident Fund authority and found that 22 persons were working in the said premises. Accordingly, a notice dated 2.7.1997 was issued to show cause as to why an order should not be passed holding that the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the 'Act') is applicable on the said establishment and that the petitioner should pay the contribution as per the provisions of the Act. It further transpires, that based on the inspection note, an exparte assessment order dated 12.1.1998 was issued under Section 7-A of the Act. The petitioner, upon getting knowledge of the said exparte order, filed an application dated 12.2.1998 for recalling the said order contending that the proceedings were wrongly initiated, inasmuch as, less than twenty persons were employed in the petitioner establishment. Based on the said application, a fresh inspection was made and it transpires that a fresh report was submitted by the authorities again indicating that there were more 20 employees employed in the premises. The petitioner objected to the said report contending that there exist three different establishments in the premises and all the three establishment cannot be clubbed together treating it as one unit. The objection of the petitioner was not considered and the Regional Provident Fund Commissioner passed an order dated 30.11.2000 holding that the three establishments are part of one and the same establishment and consequently, the provisions of the Act of 1952 was applicable. The petitioner, being aggrieved, filed an appeal, which was dismissed by an order dated 9.5.2005. The petitioner thereafter preferred Writ Petition No.60226 of 2005, which was allowed by a judgment dated 16.9.2005 and the matter was remitted again to the Regional Provident Fund Commissioner to redecide the matter in the light of the observations made by the Court.
(2.) The writ court, while quashing the order of the Regional Provident Fund Commissioner and the appellate authority, held- "Now on the touchstone of the aforementioned propositions of law, it has to be seen as to whether amongst three units there is a functional integrality or not. As already mentioned above Regional authority has not undertaken any exercise on this score and has proceeded on the assumption that there is functional integrality in between three units. As far as Clinic Dr. Neeraj Gupta Orthopaedic Centre and Sumitra Nursing Home is concerned, finding has been returned by the Appellate Authority that wife of Dr. Neeraj Gupta also not a qualified doctor, thus it can be safely inferred that Nursing Home is run by him in the name of his wife, and as clinic is in the same premises, as such it can safely be inferred that patients are being treated in the nursing home. In respect of Kumar Diagnostic Centre, it has been mentioned that as Dr. Neeraj Gupta has got 50% share and this Centre is situated in the same vicinity of two other establishments of Dr. Neeraj Gupta, the same clearly establishes that three establishments can be clubbed together, and the same has rightly been done by the Assistant Provident Fund Commissioner. Merely on geographical proximity and situation of premises, presumption has been drawn treating both of them to be one for the purpose of this Act. No exercise, whatsoever has been undertaken to find out "functional integrity" i.e. such functional interdependence that on unit cannot exist conveniently and reasonably without the other, and if one unit goes dry, the other cannot exist. If one unit can carry on its business without reference to other, it is prima facie material to treat them separate. Thus, question of "functional integrity" in all eventually had to be adverted to along with the further inquiry that in the matter of finance and employment, the employer has actually kept the two units distinct and integrated. Unity of management, could have been one of the factor for proceeding, but unless positive answer was not there, on these two counts mentioned above, no action could be taken. As far as Kumar Diagnostic Centre is concerned, similarly, no finding has been returned qua the "functional integrity" i.e. that one unit cannot exist conveniently and reasonably without the other, and further question whether in the matter of finance and employment, employer has maintained separate account and list of employees. Categorical statement of fact has been mentioned that only scanning machine was there at the Diagnostic Centre. As to whether the said business was totally dependent on the Nursing Home or it was carrying on its business independently is essentially a question of fact. No finding has been returned that there was any functional integrality between Kumar Diagnostic Centre and Sumitra Nursing Home, and merely because it was situated in one premises, presumption of functional integrality could not have been drawn. Veil could have been pierced peculiar feature of the case can also be taken into account, but before arriving at a certain conclusion authorities were obliged to address themselves on two questions which still holds the field (i) The functional integrality in between three units; (ii) In the matter of finance and employment, the employer has kept the three units separate and distinct. As this finding has not been recorded and as this goes to the root of the matter, as such the decision is clearly vitiated. Consequently, writ petition succeeds and is allowed. The impugned orders dated 30.11.2000 and 09.06.2005 are quashed, the matter is remitted back for being decided afresh by the Assistant Provident Fund Commissioner."
(3.) The Court held, that the authority was obliged to address and give a finding on the two questions, namely, functional integrality between the three units and in the matter of finance and employment, the authorities had kept the three units separate and distinct.;