REGIONAL PROVIDENT FUND COMMISSIONER versus M/S. RAJS CONTINENTAL EXPORTS (P.) LTD.

Citation: [2007] 3 S.C.R. 636 · Decided: 07-03-2007 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
REGIONAL PROVIDENT FUND COMMISSIONER 
v. 
MIS. RAJ'S CONTINENTAL EXPORTS (P.) LTD. 
MARCH 7, 2007 
B 
[DR.ARIJITPASAYAT ANDLOKESHWARSINGHPANTA,JJ.] 
Employees' Provident Funds & Miscellaneous Provisions Act, 1952-
), • 
ss. 7 A & 2A-Managing Director of Respondent-concern owned a 
C proprietorship concern-Held, that by iJself not sufficienl to estaUlish that 
Respondent was branch of such proprietorship concern-There was no 
supervisory or management control-Respondent was separately registered 
under the Factories Act, Central Sales Tax Act and Employees State Insurance 
Act-Hence, both concerns were totally independent concerns. 
D 
Respondent-company claimed infancy protection under the Employees' 
Provident Funds and Miscellaneous Provisions Act, 1952. Appellant was of 
the view that Respondent was nothing but a department of Mis. Continental 
Exporters, a proprietorship concern whose proprietor was also the Managing 
Director of Respondent-Company. Assailing the adjudications, Respondent 
filed writ petition before High Court contending that the two concerns were 
E separate and distinct having separate balance sheets and audited statements. 
High Court after analyzing the factual position held that there was nothing 
in common between the two establishments and that merely because the 
proprietor of one concern was the Managing Director of the other concern, 
that by itself is not sufficient· to establish that one was the branch of the other. 
F Accordingly the contention of Respondent was accepted and the impugned 
order under Section 7A of the Act was held not sustainable. Hence the present 
appeal. 
Dismissing the appeal, the Court 
G. 
HELD: Unless there is clear evidence to show that there was any 
H 
supervisory financial control, it cannot be said that one is the branch of the 
other. As noted by the Single Judge of High Court, the respondent was 
separately registered under the Factories Act. It was separately registered 
under the Central Sales Tax Act and the Employees State Insurance Act. It 
636 
REGIONAL PROVIDENTFUND COMMNR o·. RAJ'S CONTINENTAL EXPORTS (P.) LTD. [PASAYAT. J J 637 
has also been found by Single Judge that there was total independence of the A 
two units. The Single Judge and the Division Bench were right in their 
conclusion that the respondent is not a branch of Mis. Continental Exporters. 
(Para 7) (639-C-D) 
Regional Provident Fund Commissioner and Anr. v. Dharamsi Morarji 
Chemical Co. Ltd (1998) 2 sec 446, relied on. 
B 
Pratap Press etc. v. Their Workmen (1960) 1 LLJ 497, referred to. 
CIVIL APPELLATE WRISDICTION: Civil Appeal No. 7345 of2000. 
From the Final Judgment and Order dated 27.10.1999 of the High Court C 
ofKarnataka at Bangalore in W.A. No. 2587/1997. 
Ashok Bhan, Asha G. Nair and (For Sahil Kumar Dwivdedi) for the 
Appellant. 
Bharat Sangal, R.R. Kumar, Samyadeep Chatterji and Suchita Sharma for D 
the Respondent. 
The Judgment of the Court was delivered by 
DR. ARIJIT PASA YAT, J. I. Challenge in this appeal is to the judgment 
rendered by a Division Bench of the Karnataka High Court dismissing the E 
Writ appeal filed by the appellant. The learned Single Judge, whose order was 
under challenge before Division Bench had allowed the writ petition filed by 
the respondent holding that the order passed under Section 7 A of the 
Employees' Provident Funds & Miscellaneous Provisions Act, 1952 (in short 
the 'Act') was not sustainable. 
~ 
2. Background facts in a nutshell are as follows: 
Respondent claimed in-fancy protection under the provisions of the 
Act. It started production in 1984. The respondent was of the view that it was 
F 
an extension on the branch of Mis Continental Exporters, a proprietorship G 
concern of one Sampathraj Jain, who was also the Managing Director of the 
respondent-company. Appellants' view was that the respondent was nothing 
> · f. 
but a department of the aforesaid "Mis. Continental Exporters". Assailing the 
adjudication, respondent filed a writ petition stating that there was no financial 
integrity. It was separately registered under the Factories Act, Central Sales 
Act 1956, Income Tax Act, 1961 and the Employees State Insurance Act. The H 
638 
SUPREME COURT REPORTS 
[2007] 3 S.C.R. 
A concerns are separate and distinct. They have separate Balance Sheets and 
audited statements. The High Court accepted the contention and held that 
there was total independent exercise of power in the two concerns. Though 
the manufacturing 

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