Punjab-Haryana High Court
Regional Provident Fund Commissioner vs M/S Lakhani India Limited on 14 January, 2013
Author: Rajiv Narain Raina
Bench: Rajiv Narain Raina
CWP No.15956 of 2012
-1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
CWP No.15956 of 2012
Date of Decision: 14.01.2013
Regional Provident Fund Commissioner,
Faridabad
..... Petitioner
Versus
M/s Lakhani India Limited
..... Respondent
CORAM:- HON'BLE MR. JUSTICE RAJIV NARAIN RAINA
Present: Mr. Sandeep Goyal, Advocate,
for the petitioner.
1. To be referred to the Reporters or not?
2. Whether the judgment should be reported in the Digest?
RAJIV NARAIN RAINA, J.
The Regional Provident Fund Commissioner has preferred this writ petition against the order dated 10.02.2011 (P-4) passed by the Employee's Provident Fund Appellate Tribunal, New Delhi. By the impugned order, the assessment order passed by the lower authority has been set aside. The appeal has been allowed.
The short dispute involved is that a business was started in the name of M/s Lakbros Shoe Company (P) Ltd. in 1982 which availed benefits of infancy period protection under the provisions of the Employees' Provident Fund & Miscellaneous Provisions Act, 1952 (for short "the Act"). In 1994 the company changed its name to Lakhani India Ltd. There were two other sister concerns of M/s Lakbros Shoe Company (P) Ltd. i.e. M/s Lakhani Rubber Udyog and M/s Lakhani Footwear Ltd. which were covered under the Act. Therefore, the infancy protection under Section 16 of the Act would not be available to M/s Lakhani India Ltd. - the respondent in this CWP No.15956 of 2012 -2- petition. The assessment order proceeded on the premise that M/s Lakhani India Ltd. was part and parcel of M/s Lakhani Rubber Udyog and M/s Lakhani Footwear Ltd. which was already covered under the Act with code numbers assigned, and therefore liability was passed down or inherited. The company is said to be also manufacturing a common product: footwear (Chappals), with common management (Lakhani Group), with possibility of transferability of employees, common financial control with reference to Annexures P-5 to P-7. Therefore, the present respondent company cannot be treated as separate and thus not entitled to avail benefit of period of infancy protection under Section 16 of the EPF & MP Act.
Aggrieved by the order of assessment, the appeal was filed before the Presiding Officer, Employees' Provident Fund Appellate Tribunal. The reasoning given in appeal is that though two or more establishments can be treated as one when there is financial, managerial or functional integrality between the two separate juristic entities but such a finding is not recordable on the material on record. The Appellate Authority has returned its findings as follows:-
"In the case in hand, it is mentioned in the impugned order that all the establishments are owned by one group. Except this there is no specific findings about the functional, financial and managerial integrity. It is only stated that there was possibility of transfer of finance and control. (page 6 of the order). This averment shows that there is no specific finding regarding the functional and financial integrity between the establishments.
In this case, the order does not indicate any financial and functional integrity between the establishments. So, it is not proper to club the appellant with other establishments."
Still further, it has been held as follows:-
"In this case the appellant categorically stated that he gave the contract CWP No.15956 of 2012 -3- for service i.e. for stitching and that the contractors were independent entities. It is stated in the impugned order that the Enforcement Officer reported that the stitching work was done by the independent entities. (page 4 of the order) This averment in the order itself shows that the appellant gave the contract for service and the contractor were independent establishments.
In this case also, though the report of the Enforcement Officer reveals that the contractors were independently doing the job no attempt was made to examine the contractors to know whether they have deposited the contribution or not. Since, the order of the Authority reveals that the appellants gave contract for service cannot be treated as principal employer. The appellant had also not paid the salary to the workers of the contractors and the assessment was made from the amount paid towards the stitching charges."
On the above reasoning, the Appellate Authority had allowed the appeal and set aside the order passed by the Provident Fund authority under Section 7-A of the Act directing the respondents to deposit the dues found outstanding. In the absence of clear and categorical findings with regard to functional integrality between the respondent and the other sister companies, there is no warrant for interfering in the order dated 10.02.2011 (P-4) passed by the Appellate Authority which has given liberty to the authority to verify whether the contractors deposited the contribution for employees engaged by them or not. Though liberty has been granted yet the matter has not been remanded in specific words to the assessing authority on the issue of stitching work carried out by contractors and its effect and impact on assessment proceedings under Section 7-A of the Act as well as the issue of applying tests of financial, managerial or functional integrality. The primary assessing authority is still free to re-examine the matter and probe the inter se status of and between the companies and their contractors viv a vis contributions under the Act for the relevant period for purposes of CWP No.15956 of 2012 -4- clubbing and infancy protection. The impugned order ought to be treated in effect as a remand order for purposes of fresh assessment and not a final order.
The impugned order, therefore, does not warrant interference in writ jurisdiction at this stage.
Dismissed. Parties are left to bear their own costs.
(RAJIV NARAIN RAINA) 14.01.2013 JUDGE manju