Punjab-Haryana High Court
Godrej And Boyce Manufacturing Company ... vs Employees Provident Fund Appellate ... on 11 February, 2005
Equivalent citations: (2005)IILLJ1117P&H, (2005)140PLR811
Author: S.S. Nijjar
Bench: S.S. Nijjar, Mehtab Singh Gill
JUDGMENT S.S. Nijjar, J.
1. We have heard the learned Sr. Counsel appearing for the petitioner at length and perused the paper-book.
2. Mr. Sarin has vehemently argued that the petitioner has been illegally denied the infancy benefits under Section 16(1)(d) of the Employees Provident Fund & Misc. Provisions Act, 1952 (hereinafter referred to as "the Act"). He submits that the Assistant Provident' Fund Commissioner 7-A Authority (hereinafter referred to as "the 7-A Authority") and the Employees Provident Fund Appellate Tribunal (hereinafter referred to as "the Appellate Tribunal") have erred in law by non-suiting the petitioner merely because the parent Company is one. Mere common ownership and unity of Management of both the establishments is not sufficient to hold that there was functional integrality between the two establishments. Both the establishments can function independently of each other i.e. Mohali establishment can continue even it Vikhroli establishment is shut down. Learned Sr. Counsel has pointed out that in fact the Vikhroli establishment has been shut down. The authorities below have wrongly placed reliance on the fact that 2/3 employees of the petitioner were transferred from Vikhroli establishment to Mohali establishment. These employees were transferred on account of their expertise and previous background to help facilitate the setting up of the Mohali establishment. He further emphasised that the authorities below have failed to appreciate the distinction between the different departments and branches of one establishment, vis-a-vis, the altogether different establishments in the context of the provisions of Section 2-A of the Act. Both the 7-A Authority and the Appellate Authority have failed to take into consideration the factors which would indicate that the Mohali unit is wholly independent from the Vikhroli Unit. These factors are that all employees of the Mohali establishment have been recruited independently. They have independent terms and conditions of employment. All appointment letters have been issued from the Mohali establishment itself. Only four employees were transferred from the Vikhroli establishment to the Mohali establishment, of which one has an experience in manufacturing. Of the four employees transferred from the Vikhroli establishment to the Mohali establishment, two went back to Vikhroli establishment after the Mohali establishment was set up. The establishment at Mohali has a separate factory licence as well as separate excise registration. It also has a separate manufacturing licence issued by the Government of India. Mr. Sarin has emphasized that the independence of the Mohali establishment is further substantiated by the grants of sales-tax deferment by the Punjab Government which is given only to a new establishment and not to a Branch or department of an existing establishment. A separate Factory Manager has been appointed at the Mohali establishment. Apart from this, according to the learned Sr. Counsel, the authorities below also failed to take into consideration that various initial supports, if and when required in setting up a new establishment, are provided by the parent Company to a new establishment. This is necessary as the new establishment has neither resources nor an entity of its own. Therefore, when land is required for setting up a new unit, it is very normal for it to be purchased by the parent company in its own name. Learned Sr. Counsel has further pointed out that neither the new establishment nor the old one depends upon each other for their survival and working. There is no inter-charge of products. The Mohali establishment manufactures additional products in the form of 100 Litre Refrigerators which are not being manufactured at the Vikhroli establishment. The day to day management of the Mohali establishment is done locally and is not dependent on the Vikhroli establishment. The Vikhroli establishment which are commissioned only in the year 1996. The two establishments use different technologies. Only frost free Refrigerators are manufactured at Vikhroli establishment whereas Mohali establishment manufacturers only direct cooling refrigerators. Both the units were producing different models of refrigerators. Therefore, they could not be held to be dependent on each other. In fact there is no inter-change of any product manufactured at the two establishments. Products manufactured at both the establishments co-exist in the market and compete with each other. At best, the Mohali establishment could be said to be complementing the product range of the petitioner by manufacturing refrigerators using the same brand name. Learned Sr. Counsel has submitted that this in itself was not sufficient to decline Infancy benefits to the Mohali establishment. He further argues that it such an analogy is adopted by the State Governments, then their attempts to attract industries would be futile. It is not uncommon that state governments offer various sops and tax benefits to industries to invite them to invest in their states. If an already established industry cannot avail of the sops and tax benefits, merely because it is an already established industry in other States, no new Investments will be attracted. According to the learned Sr. Counsel, the 7-A Authority as well as the Appellate Tribunal failed to appreciate that a branch is necessarily dependent for the supply of products from the manufacturers. In other words, a Branch sans a manufactory, does not have any independent existence. In the present case, the Mohali establishment is wholly independent from Vikhroli establishment. In support of the submissions, the learned Sr. Counsel has relied on a number of judgments - viz. Management of Pratap Press, New Delhi v. Secretary, Delhi Press Workers Union Delhi, A.I.R. 1960 Supreme Court 1213, Regional Provident Fund Commissioner and Anr. v. Dharamsi Morarji Chemical Co. Ltd., L.L.J. 1998(1) (S.C.) 34, Metazinc Pvt. Ltd. v. R.M. Gandhi, Regional P.F. Commissioner and Ors., 1992(II) L.L.J. 647, Ebrahim Currim & Sons v. Regional P.F. Commissioner and Anr., 1994(I) L.L.J. 369, Wipro Ltd. Tumkur v. Regional P.F. Commissioner, Karnataka, 1995(I) L.L.J. 120.
3. We have considered the submissions made by the learned Sr. Counsel. A perusal of the order passed by the 7-A authority shows that after appreciating the entire evidence led by the parties, the authority below came to the conclusion that the establishment at Mohali is not in need of breathing time and is not entitled to infancy benefit. In coming to the aforesaid conclusion, the authority below took into consideration the pleadings of the petitioner which have been reflected in the arguments of Mr. Sarin. The authority below noticed that the object of Section 16 of the Act is to afford protection to new industries so as to allow them to establish themselves. The authority below also noticed that the Mohali unit was set up by Godrej Appliances Limited (hereinafter referred to as the GGEAL), with the capital secured by GGEAL, through Bank loan and partly from its own resources. The authority also held that the issue of inter-dependence is not as simple as it seeks to be. The petitioner has admitted that both the Vikhroli and Mohali units produce refrigerators. A third unit situated at Wing produces washing machines and air conditioners. It has been held that all these products are sold under the same brand name and taken together constitute the whole range of appliances. It was, therefore, held that there was inter-dependence between the two units. The authority also took into account that there was transfer of employees. Merely because there were only a few transfers would not render the provision for transfer as non-existent. Even the Provident Fund contribution of the transferred employees continued to be remitted at RPFC, Mumbai and GGEAL Trust. Thus it came to the conclusion that even after the transfer, the employees did not become the employees of the Mohali Unit. The authority below also came to the conclusion that there is free flow of funds from one constituent to the other. This finding is based on the evidence that the Mohali unit was set up with part assistance from GGEAL and there exists revenue sharing between the two units. Thereafter, the 7-A authority considered the judgments cited by the petitioner and distinguished the same.
4. The Appellate Authority has confirmed the findings of fact recorded by the 7-A Authority. It has been held that admittedly, the parent company in this case is one and is having two units for manufacturing the same product i.e. Godrej refrigerator. It has also been held that even the employees at managerial/supervisory level were brought from Vikhroli unit before the Unit at Mobali was made functional. The Appellate Authority has categorically held that no evidence was led by the petitioner before the Assistant Provident Commissioner to show that these employees were brought from Vikhroli unit in order to train the workers at Mohali before the production commenced. Thus transfer-ability of the employees from one Unit to another has been established. It has also been held that the respondents had not set up a new marketing and/or sales network for selling the refrigerators manufactured at Mohali. The petitioner utilised the same marketing and sales network which was in existence when the Godrej Refrigerators manufactured at Vikhroli were sold in the northern region. The Appellate Authority also held that the Company had already built its goodwill and started selling the products manufactured by the Mohali Units in the Northern Region, from day one. The Appellate Authority, therefore, rejected the claim of the petitioner with the observation that the whole objective of providing infancy remission is to grant time to a newly set up establishment to make goodwill of its product in the market.
5. We are of the considered opinion that the aforesaid findings of fact recorded by the authorities below cannot be said to be based on no evidence. We are also unable to hold that the findings of fact can be termed as either perverse or unreasonable. The High Court exercises extraordinary jurisdiction under Articles 226/227 of the Constitution, which is supervisory in nature. It does not have the jurisdiction to examine the findings of fact as an appellate court. The limits within which the supervisory jurisdiction of this Court under Articles 226/227 of the Constitution of India can be exercised, was emphatically laid down by the Supreme Court in the case of Syed Yakoob v. K.S. Radhakrishnan and Ors., . It has been held as under:-
"7. The question about the limits of the jurisdiction of High Courts in issuing a writ of certiorari under Article 226 has been frequently considered by this Court and the true legal position of that behalf is no longer in doubt. A writ of certiorari can be issued for correcting errors of jurisdiction committed by inferior courts or tribunals: these are cases where orders are passed by inferior courts or tribunals without jurisdiction, or is in excess of it, or as a result of failure to exercise jurisdiction. A writ can similarly be issued where in exercise of jurisdiction conferred on it, the Court or Tribunal acts illegally or improperly, as for instance, it decides a question, without giving an opportunity to be heard to the party affected by the order, or where the procedure adopted in dealing with the dispute is opposed to principles of natural justice. There is, however, no doubt that the jurisdiction to issue a writ of certiorari is a supervisory jurisdiction and the court exercising it is not entitled to act as an appellate Court. This limitation necessarily means that findings of fact reached by the inferior Court or Tribunal as result of the appreciation of evidence cannot be reopened or questioned in writ proceedings. An error of law which is apparent on the face of the record can be corrected by a writ, but not an error of fact, however, grave it may appear to be. In regard to a finding of fact recorded by the Tribunal, a writ of certiorari can be issued if it is shown that in recording the said finding, the Tribunal had erroneously refused to admit admissible and material evidence, or had erroneously admitted inadmissible evidence which has influenced the impugned finding. Similarly, if a finding of fact is based on no evidence, that would be regarded as an error of law which can be corrected by a writ of certiorari. In dealing with this category of cases, however, we must always bear in mind that a finding of fact recorded by the Tribunal cannot be challenged in proceedings for a writ of certiorari on the ground that the relevant and material evidence adduced before the Tribunal was insufficient or inadequate to sustain the impugned finding. The adequacy or sufficiency of evidence led on a point and the inference of fact to be drawn from the said finding are within the exclusive jurisdiction of the Tribunal, and the said points cannot be agitated before a writ Court. It is within these limits that the jurisdiction conferred on the High Courts under Article 226 to issue a writ of certiorari can be legitimately exercised (vide Hari Kamath v. Ahmad Ishaque, ; (S) ); Nagendra Nath v. Commercial of Hills Division, 1958 S.C.R. 1240: ) and Kaushalya Devi v. Bachittar Singh, A.I.R. 1960 S.C. 1166.
(8) It is, of course, not easy to define or adequately describe what an error of law apparent on the face of the record means. What can be corrected by a writ has to be an error of law; but it must be such an error of law as can be regarded as one which is apparent on the face of the record. Where it is manifest or clear that the conclusion of law recorded by an inferior Court or Tribunal is based on an obvious misinterpretation of the relevant statutory provision, or sometimes in ignorance of it, or may be, even in disregard of it, or is expressly founded on reasons which are wrong in law, the said conclusion can be corrected by a writ of certiorari. In all these cases, the impugned conclusion should be plainly inconsistent with the relevant statutory provision that no difficulty is experienced by the High Court in holding that the said error of law is apparent on the face of the record. It may also be that in some cases, the impugned error of law may not be obvious or patent on the face of the record as such and the Court may need an argument to discover the said error; but there can be no doubt that what can be corrected by a writ of certiorari is an, error of law and the said error must, on the whole, be of such a character as would satisfy the test that it is an error of law apparent on the face of the record. If a statutory provision is reasonably capable of two constructions and one construction has been adopted by the inferior Court of Tribunal, its conclusion may not necessarily or always been open to correction by a writ of certiorari. In our opinion, it is neither possible nor desirable to attempt either to define or to describe adequately all cases of errors which can be appropriately described as errors of law apparent on the face of the record. Whether or not an impugned error is an error of law and an error of law, which is apparent on the face of the record, must always depend upon the facts and circumstances of each case and upon the nature and scope of the legal provision which is alleged to have been misconstrued or contravened.
6. The aforesaid observations make it abundantly clear that the findings of fact recorded by the authorities below on appreciation of evidence cannot be re-opened or questioned in writ proceedings. The Supreme Court has emphatically laid down that an error of law which is apparent on the face of the record can be corrected by a writ but not an error of fact, however, grave it may appear to be. As noticed earlier, in the present case, we are unable to hold that the findings recorded by the authorities below are based on no evidence or that they are arbitrary or unreasonable conclusions.
7. At the time of arguments, Mr. Sarin admitted that out of the four employees transferred from Vikhroli establishment, two have returned to Vikhroli establishment. It clearly means that two or three employees had permanently remained at Mohali establishment. Therefore, the authorities below have rightly come to the conclusion that there is provision of transferability of employees between the two units. It is also not disputed that the Mohali establishment was set up by utilising the funds of GGEAL. Even the land has been given on lease to GGEAL. There is free flow of funds between the two units. The Board of Directors is common. The product produced is the same i.e. refrigerators. The whole range of goods are sold under the internationally renowned Brand Name "GODREJ". The sale network is common. The Mohali unit has no independent existence as a Company. In such circumstances, it would be difficult to hold that the 7-A Authority or the Appellate Tribunal have committed any error of jurisdiction. The authorities below have reached the conclusions, after taking into consideration various individual factors and after ascertaining the impact of all the factors put together. The decision rendered by the authorities below is not based on any individual factor as sought to be argued by Mr. Sarin. We, therefore, decline to accept the submissions of the learned Senior Counsel.
8. We are also of the opinion that the judgments cited by the learned Sr. Counsel for the petitioner are inapplicable to the facts and circumstances of this case. In the case of Management of Pratap Press (supra), it has been categorically held that no hard and fast rule can be laid down for the decision of the question as to whether different activities of an entrepreneur form part of one single industry. In the aforesaid case, it has been held as follows:-
"2. The question whether the two activities in which the single owner is engaged are one industrial unit or two distinct industrial units is not always easy of solution. No hard and fast rule can be laid down for the decision of the question and each case has to be decided on its own peculiar facts. In some cases, the two activities each of which by itself comes within the definition of industry are so closely linked together that no reasonable man would consider them as independent industries. There may be , other cases where the connection between the two activities is not by itself sufficient to justify an answer one way or the other, but the employer's own conduct in mixing up or not mixing up the capital, staff and management may often provide a certain answer."
9. The aforesaid observations clearly show that the employer's own conduct in mixing up or not mixing up the capital, staff and management may often provide a certain answer. As noticed above, there is considerable evidence to show the inter-mingling of the staff, funds and the ownership of the lease hold rights of the land on which the Mohali unit has been established. The aforesaid observations are, therefore, of no assistance to the case put forward by the petitioner.
10. In the case of Metazinc Pvt. Ltd., (supra), the Bombay High Court came to the conclusion that the two units are manufacturing different products, the Bhiwani unit manufactures Zinc Oxide while Pataiganga unit manufactures sulphuric acid". It was also concluded that the two units are located at different places, have different set of workers, manufacture different products and have separate books of account. On the basis of the aforesaid conclusions, it was held that the petitioner was entitled to the benefit of the exemption under Section 16(1)(d) or the Act. As noticed earlier, both the authorities below in the present case have come to the conclusion that there is functional integrality between the two establishments. The aforesaid observations are, therefore, no assistance to the case put forward by the petitioner.
11. In the case of Dharamsi Morarji Chemical Co. Ltd. (supra), the benefit of Section 16(1)(b) of the Act had been denied to the Company, which approached the Bombay High Court under Article 226 of the Constitution of India. The learned Single Judge of the High Court after hearing the parties, came to the conclusion in the light of the evidence led before him by way of documentary evidence consisting of affidavits and supporting material that Roha factory was a separate establishment and only because it was also owned by the same respondent-Company which had already established since 1921 its Ambanath factory, it could not be said that Roha factory was a part and parcel of Ambanath factory or that it was not entitled to any infancy benefit as a new establishment. In order to come to this conclusion, various salient features of the case which were well established on record were noted by the learned Judge. The salient features noted by the learned Judge in this connection read as under:-
As indicated Ambarnath factory manufactures heavy inorganic chemicals and mainly fertilisers while the Roha factory manufactures only organic chemicals. The products manufactured at these two factories are thus separate, distinct and different. (Emphasis supplied) The workers of these two factories are also separate. Though at the time when the Roha factory was established or set up, about 5 or 6 employees of the Ambarnath factory were sent to Roha factory to take advantage of their expertise and experience and help set up the Roha factory, this circumstance by itself has hardly any significance in deciding as to whether in law the two factories constitute one or separate establishments. In the very nature of things when a new factory is sought to be set up, the benefit of such expertise and experience is and surely can be availed of. This by no stretch can be considered to conclude that the two factories, therefore, constitute one establishment.
4. Other facts and circumstances also militate against the contention on behalf of the respondents that the two factories are indeed one for the purpose of the Act. Thus, the two factories have separate registration numbers. The same are also separately registered under the Factories Act. The said factories also maintain and draw up separate profit and loss accounts. The said two factories also have separate works managers and plant superintendents. And each factory also has a separate and independent set of workmen or employees who are not as such transferable from one factory to the other. The workers at the Roha factory were recruited directly from outside sources. One also does not find any supervisory control by either of these factories on the other. The two factories do not have any interconnection as such in the matter of supervisory, financial or managerial control, interference and conclusion is irresistible that these two factories constitute distinctly different entitles and separate establishments.
12. The appeal filed against the aforesaid findings of the learned Single Judge was rejected by the Supreme Court. It was held by the Supreme Court that on the facts of that case, the only connecting link was the fact that the respondent-Company was the owner of both the Ambarnath and Roha Factories. It was held that the aforesaid factor itself was not sufficient to deny the benefit under Section 16(1)(b) of the Act. It also deserves to be noticed that the learned Single Judge of the Bombay High Court had clearly held that the Ambarnath Factory manufactures heavy inorganic chemical and mainly fertiliser while the Roha Factory manufactures only organic chemical. There was a categoric finding to the effect that the products manufactured at the two factories are separate, distinct and different. It was also observed that each factory has a separate and independent set of workmen or employees who are not as such transferable from one factory to another. These findings are wholly contradictory to the findings recorded by the authorities below in the present case. Therefore, the observations in the aforesaid case are of no assistance to the petitioner. The judgment is clearly distinguishable.
13. In the case of Ebrahim Currim & Sons (supra), the Bombay High Court quashed the orders passed by the Regional Provident Fund Commissioner denying the benefit of Section 16(1)(b) to the petitioner company on the ground that the appellate authority had failed to apply the relevant test in deciding the application of the petitioner-Company for exemption under section 16(1)(b) of the Act. Some of the observations made with particular reference to the facts of that case are as under:-
"II. In the case of B. Ganapathy Bhandarkar v. Regional Provident Fund Commissioner, Bangalore, (1969)75 Fac. J.R. 284, the Karnataka High Court emphasised the test of substantial mutual dependability as the most relevant test of functional integrality. One of the questions to be considered by the authorities and the Court in this case is as to whether National Umbrella Factory can reasonably survive even if the trading establishment of the petitioner were to close. I have heard and re-read the impugned order passed by respondent No. 1 on January 25, 1986. The above referred important test appears to have totally escaped attention of respondent No. 1. The respondent No. 1 has proceeded on the footing that the petitioner had admitted in the written submissions filed before respondent No. 1 that National Umbrelia factory was a manufacturing unit of the petitioner and that the petitioner was supplying law materials to the said factory and selling its finished products. The respondent No. 1 appears to have forgotten that in the same very written statement 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 of 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 test of functional integrality. All the relevant tests must be considered and applied before deciding the issue as to applicability of Section 2A of the Act or of functional integrality between the two units. If the respondent No. 1 would have applied all the relevant tests including the predominant test as to whether the subsequent unit could survive on closure of the first unit or whether the subsequent unit was merely a branch or department of the first unit, the Court would not have interfered with the finding of fact recorded by respondent No. 1. Unfortunately, the finding of fact recorded by respondent No. 1 in the impugned order suffers from mis-direction in law and from crucial omission to apply the relevant test laid down by judicial decisions of the relevant test laid down by judicial decisions of the Apex Court and this Court, on this aspect, the submissions made by learned counsel for the petitioner are well founded.
14. In the present case, such is not the position. Both the authorities have duly appreciated all the material placed before them by the petitioner in support of the application. The authorities below have also taken into consideration all the relevant criteria for determining as to whether the petitioner deserves to be given the benefit or exemption under Section 16(1)(b) of the Act.
15. In the case of Wipro Ltd. (supra), it has been again reiterated by the Karnataka High Court that it is not possible to lay down any one test as absolute and invariable test for the cases. It has been further observed that it depends on the facts and circumstances or each case.
16. Having considered the entire matter, we are of the opinion that no manifest injustice has been caused to the petitioner. It would be wholly inappropriate for this Court to reappreciate the evidence on the basis of which findings of fact have been recorded by the authorities below.
17. In view of the above, we find no merit in the writ petition and the same is dismissed.