Bombay High Court
M/S New Power Supply,A Partnership ... vs The Deputy Regional Director & Another on 18 September, 2019
Author: M. G. Giratkar
Bench: M. G. Giratkar
1 jg.fa 347.06.odt
THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR.
FIRST APPEAL (ESI) NO. 347 OF 2006
M/s. New Power Supply, A
partnership Concern carrying on
the business of manufacturer and
repairers of power transformer
etc. at their factory on Plot No.
S-42/1 M.I.D.C. Hingna Road,
Nagpur - 16, through its Partner. ... Appellant
VERSUS
(1) The Deputy Regional Director,
Employees State Insurance Corporation,
Panchdeep Bhawan, Ganesh Peth,
Nagpur - 18
(2) M/s. Rossian Electricals, A partnership
Concern carrying on its business at
Plot No. S-53, M.I.D.C. Hingna Road,
Nagpur - 16. ... Respondents
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Shri A. P. Wachasunder, Advocate for the appellant
Mrs. B. P. Maldhure, Advocate for the respondent no. 1
Shri N. W. Almelkar, Advocate for the respondent no. 2
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CORAM : M. G. GIRATKAR, J.
Date of reserving the judgment : 27/08/2019. Date of pronouncing the judgment : 18/09/2019. Judgment The appeal is against the judgment of the Industrial Court, ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 ::: 2 jg.fa 347.06.odt Nagpur in Application (ESI) No. 7 of 1993.
2. The material facts which give rise to the present appeal in short is as under.
(i) The appellant and the respondent no. 2 are the separate establishments. Employees State Insurance Inspector Shri Pande visited the premises on 5-9-1991, 6-9-1991, 19-11-1991 and lastly, on 21-11-1991 and submitted report to the respondent no. 1. The respondent no. 1 issued order dated 20-8-1992, 17-3-1993 and notice dated 2-6-1993 directing the appellant to pay Rs. 21,917/- for the period from 3-3-1991 to 30-9-1992. The respondent no. 1 on the basis of report submitted by the Inspector Shri Pande came to the conclusion that the appellant and respondent no. 2 are internally connected and they are one and the same undertaking.
(ii) The application under Section 75(1)(g) of the Employees State Insurance (ESI) Act, 1948 was filed by the appellant before the Industrial Court, Nagpur for setting aside the order and notice issued by the respondent no. 1. After recording the evidence of both the parties, the Industrial Court dismissed the application, hence, the present appeal.
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3. Heard learned Advocate Shri Wachasunder for the appellant. He has pointed out documents and evidence on record. Learned Advocate has submitted that the appellant and the respondent no. 2 are the separate entities. There is no functional interconnectivity and, therefore, both the undertakings are separate. The employees are separately working and, therefore, the provisions of ESI Act are not applicable. He has pointed out evidence of partners, namely, Gurubhau Nardelwar and Shrihari Patil.
4. Shrihari Patil is the common partner in both the undertakings. Learned Advocate for the appellant has pointed out evidence of Pundlik Shelke, Area Manager working in MIDC, Nagpur. Learned Advocate has submitted that Plot No. S-42/1 belongs to appellant and Plot No. S-53 belong to the respondent no. 2. Learned Advocate has submitted that both the undertakings are working on separate plots. Learned Advocate has submitted that there is no interconnection between two undertakings, therefore, the impugned judgment passed by the Industrial Court is liable to be quashed and set aside.
5. Heard learned Advocate Shri Almelkar for the respondent ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 ::: 4 jg.fa 347.06.odt no. 2. He has supported the arguments advanced by learned Advocate Shri Wachasunder.
6. Heard learned Advocate Mrs. Maldhure for the respondent no. 1. She has pointed out the report submitted by Inspector Shri Pande to the respondent no. 1. Learned Advocate has pointed out evidence of Shri Pande and submitted that witness visited the undertaking of the appellant on 5-9-1991, 6-9-1991, 19-11-1991 and lastly, on 21-11-1991. As per his report, the appellant and the respondent no. 2 are working in the same premises. Nature of work is same. Employees of both the undertakings are same. The work of appellant and the respondent no. 2 was carried on Plot No. S-42/1. The machineries were fitted on Plot No. S-42/1. Electric charges were paid by the appellant and not by the respondent no. 2. As per the personal observations of Shri Pande, more than 16 employees were working in the establishments of appellant and the respondent no. 2. Those employees were common. No separate muster roll was prepared by the respondent no. 2 and the appellant. The muster roll does not show the names of employer. One of the employees, namely, Lokhande prepared the challan for both undertakings. All this evidence shows that respondent no. 2 and the appellant ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 ::: 5 jg.fa 347.06.odt are one and the same undertaking having more than 16 employees, and therefore, covered under the ESI Act.
7. Appellant tried to show that both the appellant and the respondent no. 2 are the separate entities. To support their contention, they have examined area manager of MIDC Shri Pundlik Shelke. In his examination-in-chief, he has stated that as per the record, establishment of appellant is on Plot No. S-42/1 and Plot No. S-53 was allotted to the respondent no. 2. In the cross-examination, he has not given any definite answer. He has stated in his cross- examination as under :-
"I could not say whether plot No. S-53 was open prior to 7/9/1991. I could not say about building construction on plot No. S-53......"
Cross-examination of Shri Pundlik Shelke shows that he has no personal knowledge.
8. As per the personal visit of Inspector Shri Pande on 5-9-1991, 6-9-1991, 19-11-1991 and lastly, on 21-11-1991, the appellant and the respondent no. 2 though shown as separate undertakings but they are working on one place. Following ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 ::: 6 jg.fa 347.06.odt comparative chart prepared and proved by Inspector Shri Pande shows the interconnection of the appellant and the respondent no. 2.
Particular New Power Russian Remark
examined Supply Electricals
Names of 1. Shri Gurubhau 1. Shri Shrihari S/o
Partners S/o Visanaji Shamraoji Patil
Nardelwar Age - 37 yrs, R/o
Aged 29 yrs R/o Plot No. 460/12
Somalwada, Anand nagar,
Wardha Road, Behind Sakkardara
Nagpur Police Station,
2. Shri Shrihari S/o Nagpur
Shamraoji Patil 2. Indubai W/o
aged 28 yrs., Now Gurubhau
R/o Plot No. Nardelwar aged
460/12 Anand about 34 yrs
nagar, Behind R/o Plot No. 2 Sita
Sakkardara Police Nagar, Wardha
Station, Nagpur Road, Nagpur
Nature of Extract from the Extract from the
business/ partnership deed partnership deed
activity - page 2 executed on 1/9/90
"That the "The firm shall
business of carry on the
partnership firm business of
shall be repairs & manufacturer and
distribution of repairs of
power winding distribution and
transformers as power
per ssi certificate : transformers,
Mfg./processing current
activity transformers,
(1) Electrical Voltage
transformers (2) transformers and
Power fuse elements and
transformers (3) such other works
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distribution
transformers (4)
Electrical Motor
rewinding,
electrical load -
34 HP.
Place of Originally on Plot S-42/1, There is Russian
business C-78 MIDC (rented plot purchased & Electricals
premises) now construction does not pay
now on S-42/1, work started for any rent to
MIDC (own) separate premises M/s New
on S- Power
Supply for
premises
Electric Electric There is no
Connection Connection separate electric
had connection for this
factory and the
electric is used for
its work from the
connection of New
Power Supply
without cost.
Plant & On Plot No. S-42/1 Machineries of
Machinery Russian Electricals
are kept also kept/
installed in the
factory premises of
M/s New Power
Supply. For example
- L.V. Winding
Machine
Inter (1) All employees Mr. P. F. Lohkhande, Heating
Transferability in one muster a Clerk of New chamber of
/dependence book Power Supply has New Power
of each other (2) Both units in singed delivery Supply is
one premises/ one challans of Russian utilized by
entrance, electric Electricals Russian
power of one used Electricals
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by both
(3) Heating
chamber-
common
(4) Delivery
challan by one
employee for both
Registration 11/14/05156/PMT/ S.S.I. Regn.
Nos. SSI dtd. 8/6/89 Certificate No.
Date of 11/14/11267 dtd.
commencement 20/8/91
of order as per SSI (provisional)
cost - 1/1/89 Registration is
subject to
availability of Plot
in MIDC area.
Nature of business
- C.T.P.T. units, fuse
elements/E/L
motors.
Distribution &
power transformer /
welding
transformers
Books of Common
accounts attendance
register without
any mention of
name of the
factory/firm.
Books of accounts
not made
available said to
be under
preparations
9. The evidence of Inspector Shri Pande and above chart ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 ::: 9 jg.fa 347.06.odt show that though appellant and the respondent no. 2 shown as separate entities but the work of both the establishments are same. The work of both the establishments were going on on Plot No. S- 42/1. No work was found on Plot No. S-53 as contended by the appellant. The common attendance register without mentioning the name of factory/firm was maintained. Near about 16 employees were found working. Therefore, respondent no. 1 issued order for the recovery of Rs. 22,923/-.
10. Learned Advocate Shri Wachasunder has pointed out following decisions :
(1) Associated Cement Companies Limited Vs. Ir Workmen [AIR(SC) 1960 SC 56]. In the cited decision, the factory and lime stone quarry were situated on different locations. The facts in the cited decision are very much different.
(2) Fine Knitting Co. Ltd. Vs. Industrial Court, Bombay [1962 (Suppl.) (3) SCR 196]. Fine Knitting Company established Spinning Section in 1924 as subsidiary to the hosiery section. It is held that hosiery can exist without spinning. (3) Workmen of the Straw Board Manufacturing Company ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 ::: 10 jg.fa 347.06.odt Limited Vs. M/s. Straw Board Manufacturing Company Limited [1974 I LLJ 499]. It was a case of closure. It was observed that each factory was registered separately under the Factories Act. There was a dispute in respect of lay-off/retrenchment. In paragraph no. 18, it was observed by the Apex Court that :
18. On the other hand the circumstances pointed out in favour of the respondent are "that the two units are separate.
Both factories are registered separately under the Factories Act and they are in separate premises. The raw materials used in the two factories are different and it is obtained from different sources. Electricity is obtained by the two factories from different sources, the sale of products manufactured in the respective units is effected from their respective offices, the staff of the two separate mills is separate and wages are paid separately. The accounts of the two mills are maintained separately although finally they are amalgamated into one account of the company. Fire insurance of the two factories is done separately, the local manager of the Employees' State Insurance Corporation has allotted different numbers of provident fund to the two factories, the assessment of sales tax for the sales of products of the two mills is done separately which is obviously due to the fact that the products are different and different rates of sales tax apply to them." There is no provision in the standing orders of the company regarding transfer of workmen from one unit to the other.
In the present case, the employees of appellant and respondent no. 2 were common. There was no separate muster roll prepared by the appellant and the respondent no. 2. It appears that ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 ::: 11 jg.fa 347.06.odt the employees were working for both units. One of the employees namely, Lokhande signed the challan of appellant and the respondent no. 2. Therefore, the cited judgments are not applicable. (4) Kadamba Sub-Urban Transport Corporation Ltd., Goa Vs. Assistant Provident Fund Commissioner, Goa [1999(3) Mh.L.J. 306]. In the cited decision, the Division Bench of this Court has held that "unless there is functional integrality of two units or dependence of one unit on the other to such an extent that if one was closed it will mean automatically closure of the other section 2A could not be said to be covered."
In the present case, the appellant and the respondent no. 2 having same business on Plot No. S-42/1. All machineries were fitted on Plot No. S-42/1. The electric meter was in the name of appellant. All electric charges were paid by the appellant. Therefore, it cannot be said that the respondent no. 2 was separate establishment. (5) Nandinee Travels Pvt. Ltd. Vs. Regional Provident Fund Commissioner, Goa [2003-II-LLJ 810]. In the cited case, it is held that two establishments are separate. Their workers were separate. On the other hand, in the present case, the workers of appellant and ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 ::: 12 jg.fa 347.06.odt the respondent no. 2 are same. Common muster roll was prepared. Common employees were working on Plot No. S-42/1. Electric meter was in the name of the appellant. The electrical charges were paid by the appellant. Shrihari Patil is the common partner. Wife of Nardelwar is the partner of the respondent no. 2. Nardelwar along with Patil are the partners of the appellant. (6) Regional Director, Employees' State Insurance Corporation, Mumbai Vs. Home Engineering Works, Mumbai [2006-I-LLJ 235]. In the cited judgment, the work on the ships and in the factory are located at different places. Moreover, employees for repairing ships are separately engaged. Therefore, it is held that two establishments are separate.
(7) Sunder Transport & Anr. Vs. The Regional P.F. Commissioner [1992 II CLR 977]. In the cited judgment, it is observed that "not only the composition of the partners but the number of partners, their shares etc. all are different. The business of these firms is also not the same. The firms are in existence since 1964 from much before 1975 when the provisions of the Provident Funds Act were made applicable to the activities undertaken by one of the firms, namely, Sunder Transport. It is also, therefore, not ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 ::: 13 jg.fa 347.06.odt possible to contend that these firms were created as separate and independent firms to avoid the liability under the Provident Funds Act. ...."
In the present case, one of the partner i.e. Shrihari Patil is common partner in both the establishments. Wife of Nardelwar is partner in the respondent no. 2. Nardelwar is partner of appellant. Work of both the establishments are same. The employees are same. Therefore, cited judgment is not applicable to the case in hand.
11. Learned Advocate Mrs. Maldhure for the respondent no. 1 has pointed out judgment in the case of Deputy Regional Director, E.S.I. Corporation, Thrissur Vs. Trade Links Enterprises, Ernakulam [2003 I CLR 242] wherein it is held that "due to close business relationship, functional unity, common management, geographical proximity and administrative unity, those establishments can be clubbed together. Coverage justified."
12. In the present case, as per the chart submitted by Inspector Shri Pande, Gurubhau Nardelwar and Shrihari Patil are the partners of the appellant. Shrihari Patil and Indubai W/o Gurubhau ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 ::: 14 jg.fa 347.06.odt Nardelwar are the partners of the respondent no. 2. Therefore, it appears that the partners are common. The business of the appellant is for manufacture, repair and distribution of power transformers. Business of both the establishments are common. The work of both the establishments were found on Plot No. S-42/1. There is electric connection on Plot No. S-42/1. The machineries of both the establishments are on Plot No. S-42/1. All this evidence adduced by the respondent no. 1 clearly show that employees of appellant and respondent no. 2 are common. Therefore, it is clear that there is functional unity and common management. One of the employees, namely, Lokhande signed the challan of the appellant and the respondent no. 2. Common attendance register was prepared. The name of appellant and the respondent no. 2 not shown separately. There was no separate muster roll. Therefore, it cannot be said the the appellant and the respondent no. 2 are separate establishments. Hence, impugned judgment passed by the Industrial Court is perfectly legal and correct. There is no perversity or illegality in the impugned judgment. In the result, the appeal is dismissed with no order as to costs.
JUDGE wasnik ::: Uploaded on - 18/09/2019 ::: Downloaded on - 19/09/2019 05:27:44 :::