The Madras High Court dismissed an appeal by Maniraj & Co challenging a Labour Court order upholding ESI contribution demands against the establishment and another business run by the same partners, on the applicability of functional integrality.
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.
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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 13.11.2017
CORAM :
THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN
C.M.A.(MD)No.1066 of 2015 and M.P.(MD) Nos.1 and 2 of 2015
Maniraj & Co, Tuticorin, through its Managing Parter, N.Maniraj Kumar ... Appellant
Vs.
E.S.I Corporation, Tirunelveli, Rep.by its Joint Regional Director. ... Respondent
Prayer : Civil Miscellaneous Appeal is filed under Section 82 of the Employees State Insurance Act, 1948 to set aside the order dated 05.06.2015 passed by the Labour Court, Tirunelveli in ESIOP.No.14 of 2012.
For Appellant : Mr.M.E.Ilango For Respondent : Mr.K.C.Ramalingam
JUDGMENT
Heard the learned counsel on either side.
2.The establishment has filed this appeal questioning the dismissal of its petition filed under Section 75(1)(g) of the ESI Act by the ESI Court.
3.Maniraj & Co, Tuticorin is an establishment covered under ESI Act, 1948. Since the employees employed by it dwindled to zero, it stopped remitting contribution. While so, an inspection was conducted by the Social Security Officer on 17.07.2008. It was found that in the first floor of the same building another establishment in the name of Manoharan Electronics was being run. It is not in dispute that both Maniraj & Co and Manoharan Electronics are run by the same partners. The businesses are one and the same. Manoharan Electronics did not have any name board outside the building. It is true that for it separate RC Number had been allotted. In Manoharan Electronics, it was found there were five employees.
https://hcservices.ecourts.gov.in/hcservices/ 4.It is the case of the appellant counsel that out of the five, three were demonstrators of the manufacturers and only two were employees. However, applying the principle of clubbing, notice was
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issued to the appellant. The appellant did not reply to the said show cause notice. Therefore, orders under Section 45 A of the ESI Act came to be passed on 06.09.2012. Challenging the same, the appellant herein filed ESIOP.14 of 2012 before Labour Court, Tirunelveli. The Labour Court dismissed the petition by order dated 05.06.2015. Challenging the same, this appeal has been filed.
5.The learned counsel appearing for the appellant reiterated the contention set out in the grounds of appeal. It is his submission that the two establishments namely, Maniraj & Co and Manoharan Electronics are different entities and that they could not have been clubbed.
6.Per contra, the learned standing counsel appearing for the ESI Corporation pointed out that the principal of functional integrality is clearly applicable in this case. He relied on the decision reported in 2005 (3) LLN 1162 (R.D, E.S.I Corporation v. Aruna Stores, Prop. J.Shantha) . It is not in dispute that Manoharan Electronics is functioning in the very same premises and partners are one and the same. There is not even a name board indicating Manoharan Electronics. The principle of functional integrality was rightly applied in this case. As per Section 1(6) of the ESI Act, when an establishment came to be covered originally, it will continue to remain covered notwithstanding that the number of employees have fallen below the ceiling limit. It is also seen that the demonstrators were paid only bvy the establishment herein and not by the manufacturers.
7.Therefore, I sustain the contention of the learned standing counsel appearing for the ESI Corporation. No substantial question of law arises for determination in this appeal. This appeal stands dismissed. No costs. Consequently, connected miscellaneous petitions are closed.
Sd/Assistant Registrar
/True Copy/
Sub Assistant Registrar
To
Madurai Bench of Madras High Court, Madurai.
SKM
TE/JC/SAR-1 : 30/11/2017 : 2P/4C C.M.A.(MD)No.1066 of 2015 and https://hcservices.ecourts.gov.in/hcservices/ M.P.(MD) Nos.1 and 2 of 2015 13.11.2017
3 issues framed by the court
Whether two establishments run by the same partners in the same premises can be clubbed as one unit under the principle of functional integrality.
Whether the appeal against the Labour Court's dismissal of the ESIOP should be allowed given the application of Section 1(6) of the ESI Act.
Whether the appeal raises a substantial question of law requiring determination.
Colour shows how this judgement treated each authority
E.S.I Corporation v. Aruna StoresReferred¶20
2005 (3) LLN 1162 (R.D, E.S.I Corporation v. Aruna Stores, Prop. J.Shantha)
5 provisions across 1 enactments
Maniraj & Co
E.S.I Corporation
G.R. Swaminathan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
