The High Court dismissed an appeal by the Provident Fund Commissioner seeking to club partitioned estate parcels as a single establishment. The Court upheld the Single Judge's finding that a real partition and separate management relieved each parcel of the Act's applicability if employee counts remained below 20.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN & THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN
THURSDAY, THE 9TH DAY OF NOVEMBER 2017/18TH KARTHIKA, 1939
WA.No. 2149 of 2017 () IN WP(C).9475/2014
AGAINST THE ORDER/JUDGMENT IN WP(C) 9475/2014 of HIGH COURT OF KERALA DATED 07-12-2016
APPELLANT(S)/1ST RESPONDEN:
THE ASSISTANT PROVIDENT FUND COMMISSIONER EMPLOYEES PROVIDENT FUND ORGANIZATION, SUB REGIONAL OFFICE, KOTTAYAM-686001.
BY ADV. SRI.JOY THATTIL ITOOP, SC, EPF ORGANISA
RESPONDENT(S)/PETITIONERS 1 TO 9 & 2ND RESPONDENT:
R BY SRI.MATHEW JOHN (K)
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 09-11-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
“C.R.”
P.N. Ravindran &
Devan Ramachandran, JJ.
JUDGMENT
Devan Ramachandran, J.
Labour Welfare legislations in India are actuated by the express constitutional imperatives contained in the various Articles of Parts III and IV of the Constitution of India. The Employees Provident Fund and Miscellaneous Provisions Act, 1952 (which will hereafter be referred to as “the Act” for brevity) has its parturition primarily in Article 41 which obligates the State, within the limits of its economic capacity, to make provisions for securing among other things, effective public assistance to employees suffering on account of unemployment, old age, sickness and disablement. Being an important legislation for labour welfare, attempts by establishments to find exemption from its applicability is met with certain resistance from the Competent Authority vested with various powers and supervisory jurisdiction under it. The case before us is no different.
WA 2149/2017
2
determination issued by him in proceedings initiated under section 7A of the Act, whereunder he had assessed the estates owned by the writ petitioners/respondents in this appeal as a single unit, thus bringing it under the sweep of the Act. The contention of the writ petitioners, which has found approval of the learned Single Judge, is that their estates are separate ones, which cannot be clubbed as one and that since each of them employ less than 20 employees, thus taking their establishments out of the rigour of the Act.
WA 2149/2017
3
that the establishment continued to be one with thirteen co-owners and therefore, that its integrity had not been lost merely on account of the death of its erstwhile sole owner Sri.K.E.Mathew.
WA 2149/2017
4
Sri K.E.Mathew has been undertaking operations as independent establishments, the order of the Assistant Provident Fund Commissioner impugned in the writ petition, namely Ext.P11, finding that the establishment continued to be a single unit, cannot be sustained. On such conclusion the learned single judge set aside the order impugned as well as the order passed by the Statutory Appellate Tribunal, which had earlier affirmed Ext.P11, as unconstitutional and incompetent.
5
WA 2149/2017
partitioned the property by metes and bounds into thirteen different parcels. The question thus is whether, by the effect of such a partition deed, the so divided extents of estates would obtain the qualification and character of separate establishments. The Assistant Provident Fund Commissioner, in Ext.P11 order which was passed consequent to a determination under section 7A, held that even after partition of the property the functional character and integrity of the establishment had not been altered and that all the thirteen writ petitioners should be construed to be still running it as a single unit. According to the learned standing counsel for the appellant the mere factum of partition of the property or estate would not automatically lead to an inference that they have become separate establishments and what is to be born in mind is the factual scenario with respect to the property and with respect to the employees employed by such establishment.
WA 2149/2017
6
“4. The decision recognises the position that an establishment need not in all circumstances continue to be the same establishment; a disruption of that establishment is possible on a real and bonafide partition of the estate. The Supreme Court had to deal with a similar question and it had no hesitation in holding that when an establishment had been closed down, the services of the workmen attached to it terminated, the running of the establishment suspended for some time and restarted after an interval employing only some of the workmen whose services had been terminated, the in fancy period for the purpose of S.16 of the Act, must be reckoned from the date of birth of the new establishment and not from the date on which the original establishment had come into being The Supreme Court thus clearly recognised the position that for the purpose of the Act it cannot be said once an establishment always the same establishment.
“9 The only question therefore is whether there has been a real and bonafide division which disrupted the original establishment and gave birth to new and separate and distinct establishments. This question had not been adverted to or considered in the order Ext. P5. The only reasoning contained in the order in Para.2 thereof which we have read proceeded on the basis that even if the partition was real it only involved a change of ownership and the integrity of the original establishment was not affected. This is a wrong approach. In the counter affidavit there are elaborate averments and reference is made to statements said to have been taken from persons who were allegedly in management of parts of the estate. These were not referred to at all in the order Ext. P5
WA 2149/2017
7
and there is no averment that these statements have been made available to the petitioner. The order Ext. P5 cannot be sought to be sustained by statements made before this court in an affidavit. We must be satisfied that the respondent had considered those aspects and had those aspects in mind before he passed the order Ext. P5. There is nothing in the order to indicate that this has been done. Moreover if information had been collected by the 1st respondent he should have made it available to the petitioner before relying on it and the petitioner should have been given an opportunity to rebut what is contained in those statements.
8
WA 2149/2017
(a) Is the partition real and bonafide?
(b) Did it disrupt the integrity of the establishment and create thirteen different establishments? and
(c) Does the separated establishments employ less than twenty persons?
If the answers to these three questions are in the affirmative, then the orders impugned here are certainly liable to be interdicted.
WA 2149/2017
9
affidavit before the appellant Commissioner which has been appended to the writ petition as Ext.P2, wherein the averments are very specific. Since the fate of this case would hinge upon the averments made in the said affidavit, we deem it appropriate that it be read and for this we extract it below:
WA 2149/2017
10
less than 20 employees under each ownership. However authorities assessed the 7 sharers as a single unit on the basis of the fact that it was not partitioned as per official records and as I was supervising and managing the agricultural operations of all the sharers.
WA 2149/2017
11
and it is managed separately. As the number employees working under my establishment is less than 20, the establishment owned by me will not come under the coverage of the Provident Fund and I am not liable to pay any Provident Fund contributions. But as directed in your notice dated 15.5.2002 and without prejudice to my above contentions, I am filing a new ownership return in Form 5A.”
We are told that similar affidavits have been filed by all the other writ petitioners also, who are now holding separate parcels of lands.
WA 2149/2017
12
the first respondent in his affidavit concedes that until the partition, he was managing and supervising the estate on behalf of all the other joint owners, because he was residing therein. However, once the partition deed was executed and each of the sharers allotted separate parcels of land, its functional integrity would cease and the ratio in Zainulabdeen (supra) would squarely apply. This is more so because it is stated in the writ petition that each of the petitioners, who are now independent owners of their respective parcels of land has separate coffee and cardamom registrations, agricultural income tax assessment, etc., leading to an inference, at least prima facie, that the thirteen separate parcels are now being managed and run as separate establishments.
“In the case of this particular estate, the estate was
WA 2149/2017
13
partitioned vide partition deed No.2616 of 2001 dated 20.7.01 due to the death of the two owners and the partition was made between the co-owners in furtherance of a family arrangement. By the above partition, the integrity of the establishment has not been broken since all the partitioned units are carrying on the same business which was carried out by them before partition and the Estate are managed and supervised by one of the share holders of the partitioned unit. The partitioned units of the estate was taken over by the share holders as a line and functioning one. The argument that each partitioned units are paying property tax, building tax and agricultural Income Tax etc. separately has no relevance in view of the fact that payment of taxes separately are not make the integrity of the establishment broken.
In view of the above, I hereby decide the provisions of the EPF & MP Act and the Schemes framed thereunder will continue to apply to all the partitioned units of the establishment since by the partition, the integrity of the establishment was not broken. Accordingly I hereby direct all the partitioned units to comply under the provisions under EPF & MP Act, 1952 w.e.f. the date of partition ie. With effect from 20.7.01 in respect of all the employees employed by them and render relevant returns. For compliance purpose separate code No. can be allowed to them if they desired so.”
of any evidence being gathered by the appellant Commissioner and the
WA 2149/2017
14
fact that he had not even caused an enquiry with the employees of the establishments, to ascertain if the thirteen parcels of units are still under one management, there was no justification to determine amounts from the respondents under Section 7A of the Act, to be amounts payable by the erstwhile Kanjirappally Estate as a single unit.
WA 2149/2017
15
vested in the Commissioner while acting under section 7A of the Act and would, therefore, obtain no forensic support or legal sustenance.
We, therefore, cannot find anything that would persuade us to interfere with the findings and conclusions arrived at by the learned single judge. We are thus left with no other option but to dismiss this appeal, which we do hereby.
On account of the peculiar facts and circumstances of this case, we however make no order as to costs and direct the respective parties to suffer their costs.
(P.N. Ravindran, Judge)
(Devan Ramachandran, Judge)
kav/
2 issues framed by the court
Whether a real and bonafide partition of an estate disrupts the integrity of an establishment under the Employees Provident Fund Act.
Whether the Commissioner is justified in treating partitioned parcels as a single establishment without enquiring into separate management and employee records.
Colour shows how this judgement treated each authority
Zainulabdeen v. Regional Provident Fund CommissionerRelied on¶51
Zainulabdeen v. Regional Provident Fund Commissioner (1974 KLT 708 FB)
2 provisions across 1 enactments
Assistant Provident Fund Commissioner Employees Provident Fund Organization
K.M. Eapen
P.N. Ravindran
Devan Ramachandran
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
