Kerala High Court
The Deputy Regional Director, E.S.I. ... vs Trade Links Enterprises, Represented ... on 24 January, 2003
Equivalent citations: (2003)IIILLJ523KER
JUDGMENT A. Lekshmikutty, J.
1. Against the judgment in T.C. No. 82 of 990 of the E.I. Court, Alappuzha, this appeal is preferred by the opposite party. The respondent, the Trade Links Enterprises, M/s. Trade Links and M/s. Trade Link Agencies are functioning in the same premises. On Suryanarayanan is the Proprietor of M/s. Trade Links. He is the Manager of M/s. Trade Link Agency also. He is also the Power of Attorney holder of the respondent. The total number of employees working in M/s. Trade Links and Trade Link Agencies were more than 19. Trade Link were the importers and dealers of photographic equipments and allied goods. M/s. Trade Link Agencies were dealers in Audio Visual Products and Photographic materials. Therefore the appellant is a covered establishment by clubbing the 3 establishments together.
2. The respondent challenged the above action of the appellant. The Employees Insurance Court held that the action of the appellant in clubbing together the establishments for purpose of coverage is unsustainable. Against the said decision of the E.I. Court, this appeal is preferred by the opposite party.
3. The case of the respondent herein is that the Trade Link Enterprises is a partnership firm engaged in the business of distribution of the products of Hindustan Photo films. It is also the stockists and distributors of photographic products, X-ray films and chemicals. There are 4 partners in the firm. The registered office of the firm is at Madras. There are no employees in the registered office and entire business is carried out in Ernakulam. On the basis of the report of the Insurance Inspector, the appellant informed the respondent that it will come under the purview of the E.S.I. Scheme. The determination of such coverage, according to the respondent, was by treating two other establishments, namely M/s. Trade Links and M/s. Trade Links Agencies. As per the respondent, Trade Links and Trade Links Agencies have nothing to do with the respondent and those are entirely two different establishments. By treating all the units together the appellant determined the coverage and informed the respondent herein to register the employees under the ESI Scheme. After the assessment was made notice dated 23.7.1990 was issued to the respondent. In the said notice, a sum of R.s 62,013.60 was determined as contribution in respect of 27 employees for the period from 2.4.1987 to 31.3.1990. It was objected by the respondent stating the true facts. The Proprietor of M/s. Trade Links Agencies is only a relative of the Partners of the respondent firm. The contention of the appellant is that the respondent and other two establishment are being run in the same premises and one Suryanarayanan was the Proprietor of M/s. trade Link at the time of inspection of the firm. He is the manager of M/s. Trade Links Agencies and was also the Power of Attorney Holder of M/s. Trade Links Enterprises. Since the total number of the employees in these establishments are more than 19, the respondent is liable to the contribution of the employees to the E.S.I. Corporation.
4. On the side of the respondent Exts. P1 to P-13 were marked and PW-1 was examined. Ext. P1 is the partnership deed of the respondent. As per the evidence of PW-1, all the three establishments mentioned in Ext. P9 are distinct and different entities and they are separate legal persons recognised by law. The rent also is paying by the respondent separately for the occupation of the premises. The evidence would further show that one of the partners of the respondent is his wife and the second partner is the brother's wife. The third partner is his mother and 4th partner is his nephew. It is also admitted that PW-1 is the Power of Attorney Holder of the respondent firm. He is managing all the employees of the firm and he is the sole Proprietor of Trade Links. There is no dispute with regard to the fact that all the three establishments are functioning in the same premises. PW-1 is managing the Trade Links also which is a Proprietary concern. The said establishment also is dealing with the photographic chemicals and materials. From the evidence adduced in this case, it can be seen that all the three establishments are owned by the members of the sam family collectively and individually. PW-1 is the Power of Attorney Holder to do all the business of the respondent firm. So, the contention of the respondent that these three units are separate entity cannot be accepted. There is geographical proximity, unity of ownership, management and control, unity of employment, conditions of service, functional integrality, general unity of purpose and common management. As per the lower court, even if all the three establishment are managed by PW-1, they are doing independent business. The observation of the court below that there is no evidence to show that one establishment is functioning with the help of the other and the three units are closely depending on each other for doing the business, it cannot be said that there is functional unity. This observation of the court below is not correct. In the light of the evidence given by PW-1, it can be seen that the three establishments are connected each other and all the establishments are engaged in the business connected with the photographic materials. So, it is to be found that there is close business relationship among the three establishments. In such circumstances, the appellant was justified in clubbing the three establishments. As per the lower court, one of the establishment is having a status of principal employer cannot be accepted. On the other hand, it can be seen that these three establishments have functional unity, common management, geographical proximity, administrative unity and the like. All the three establishments are managed and controlled by PW-1. Not only the members of the three establishment are closely related, but they are only name lenders and business is run by the respondent. In such circumstances, the order under challenge is set aside and the appeal is allowed.