REGIONAL PROVIDENT FUND COMMISSIONER, JAIPUR versus M/S. NARAINI UDYOG AND ORS.

Citation: [1996] SUPP. 3 S.C.R. 202 · Decided: 08-07-1996 · Supreme Court of India · Bench: K. RAMASWAMY · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
REGIONAL PROVIDENT FUND COMMISSIONER, JAIPUR 
v. 
MIS. NARAIN! UDYOG AND ORS. 
JULY 8, 1996 
B 
[K. RAMASWAMY AND G.B. PATTANAIK, JJ.] 
Employees Provident Fund and Miscellaneous Provisions Act, 1952 : 
S. I (3 )(a), 7, 7-A-'Establishment'-Two 1111its belo11ging to members of 
C Hindu Undivided Family registered independently and separately 1111der the 
Fact01ies Act and the Sales Tax Act·-Provide11t Fund Commissioner 011 
inquiry rep01ted the functional inte151ity of the units and called upon them to 
collllibute the amount u/s. 7-A-High Cowt holdi11g that the two u11its are 
registered 11nder Companies Act as two different i11dividual identities and both 
cannot be clubbed together for the pwpose of cont1ibution u/s 7-A-Held, the 
D Commissioner recorded, as a fact, the functional unity and i11te151ity between 
the two concems-Definition of establishment would e11compass within its 
ambit the two units as an establishmemfor the pwpose of the Act-Order of 
High Court set aside and that of Commissioner confimied. 
E 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 9490-93 
of 1996. 
F 
From the Judgment and Order dated 7.7.93 of the Rajasthan High 
Court in D.B. (C) S.A. (W) Nos. 120-123 of 1990. 
K.P. Srivastava, C.V.S. Rao and Mrs. Anil Katiyar for the appellant. 
Rajiv Dutta for the Respondent Nos. 3-4. 
The following Order of the Court was delivered : 
Though respondents 1 & 2, namely, M/s. Naraini Udyog, Kola and 
G Mis. Modern Steels, Kata were served, they are not appearing either in 
person or through connsel. Leave granted. In these appeals, we are con-
cerned only with the legality of the order of the Division Bench of the 
Rajasthan High Court in Writ Petition Nos. 120-121/90 etc., etc. made on 
July 7, 1993. As regards the aforesaid two concerns, their functional 
H integrity was found by the Commissioner in his report as under : 
202 
REG NL PRV!DENTFUND COMMR. v. NARAIN! UDYOG 
203 
"The fact of common Head Office at New Delhi, a common branch A 
at Bombay, common Telephone at Kota for residence and factories 
has also been not denied by Shri Krishan Kumar in his evidence. 
Al the same time assertion that the Head Office though located 
in the same building but in separate from lacks credibility. The 
letter-head of the two firms do not give any such indication. The B 
stand of the estt., that the two are registered separately under the 
factories Act, the Sales Tax Act, the ESIC Act, are located at a 
distance of 3 k.m. apart have separate central Excise Nos. are 
registered as separate small- scale industries etc. and, therefore, 
the two should be treated as separate establishment is devoid of 
merit. As already analysed earlier the concept of an establishment C 
for the purposes of the Act is vide enough to include more than 
one factories and as such the factors relied upon by the manage-
ment do not cut across that concept. The purpose of each Act is 
entities for those Act is immaterial so far the E.P.F. and M.P. Act, 
1952 is concerned. The statement by the P.F. Inspector that he had D 
seen some workers of M/s. Naraini Udyog working in M/s. Modern 
Steel has been denied by the employer but it is not very crucial to 
the point at issue. The submission on behalf of the department that 
the office of M/s. Modern Steel is stated in the premises of M/s. 
Naraini Udyog and accounts of the two are maintained by the same 
set of clerks has not been controverted by the employer. Thus, E 
taking into account the totality of the factors, the conclusion that 
the two firms in reality constituted a single establishment for the 
purpose of the Act is unencapable. This is fully supported by the 
provision of Section 2-A of the Act as also the case-laws laid down 
by the Supreme Court mentioned in para 4 earlier." 
F 
On the basis thereof,' the appellant has called upon them to con-
tribute the amount under Section 7-A of the Employees Provident fund 
and Miscellaneous Act, 1952 (for short, the 'Act') holding that the above 
two concerns are establishments within I.he meaning of section 1(3)( a) of G 
the Act. The Division Bench in the impugned order had held that they were 
registered under the Companies Act as two different individual identities, 
though they are represented by the members of the same family. There 
fore, they are two independent companies. Both cannot be clubbed 
together for the purpose of leving contribution under Section 7-A of the 
Act. We have gone through the reasoning given by the

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