Allowed

Dakshina bharatha Hindi Prachara Sabha ( Andhr), v. Employees Provident Fund Appellate Tribunal

Telangana HC9 Dec 2010WP/1676/2005

Case brief

AI extract

What is this about?

The High Court of Andhra Pradesh set aside an order confirming the applicability of the EPF Act to the petitioner society. The Court found insufficient evidence of functional integrality between the petitioner and the central body and remanded the matter for a fresh determination after permitting both parties to lead evidence.

What did the court decide?

Set aside impugned order and remitted matter to appellate authority to be disposed of after permitting both parties to lead oral and documentary evidence.

Dakshina bharatha Hindi Prachara Sabha (… — Pension and Retirement Benefits | Telangana HC (2010)

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THE HON’BLE SRI JUSTICE C.V.RAMULU

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W.P.No.1676 of 2005

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ORAL ORDER:

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This writ petition is directed against the order made in A.T.A.No.154(1)/2000 dated 6.1.2005 on the file of first respondent, wherein the order passed by the second respondent in his proceedings dated 18.2.2000 holding that Dakshina Bharat Hindi Prachar Sabha, Hyderabad is coverable under the provisions of Employees Provident Fund Act, was confirmed.

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Petitioner is a registered society functioning in the name and style of “Dakshina Bharatha Hindi Prachara Sabha (Andhra), Khairtabad, Hyderabad” represented by its Secretary S.Dhanamjayudu. According to the petitioner, the society is not amenable to the provisions of Employees Provident Fund Act from the year 1975 to 1993. According to the petitioner, from the year 1993 onwards, society is paying contribution under EPF Act. Therefore, there is no dispute in that regard, however insofar as demand raised for the years from 1975 to 1993 is concerned, petitioner filed an application before the Primary Authority i.e. second respondent. The second respondent held that Employees Provident Fund and Miscellaneous Provisions Act is applicable to Hindi Prachara Sabha, Hyderabad with effect from 1.1.1975 and therefore in exercise of the powers conferred under Section 7-A of Employees Provident Funds and Miscellaneous Provisions Act directed the management of Hindi Prachara Sabha, Hyderabad to implement the scheme provisions from 1.1.1975 and remit the provident fund contributions from the date of appointment in respect of all the employees engaged by them. In this regard, second respondent recorded his findings, which reads as under:

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“Having perused the records of the office and having applied my mind, I conclude that the Hindi Prachar Sabha, Hyderabad is having nexus with the Hindi Prachara Sabha Printing Press at Madras. Hence the E.P.F. & M.P. Act 52 is applicable to the Hindi Prachara Sabha, Hyderabad from the very beginning of its

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start since it is part and parcel of Hindi Prachara Sabha, Chennai only which was covered already w.e.f. 1956. Further Act Provisions made applicable to Hindi Prachara Sabha, Hyderabad w.e.f. 1993 require to be modified and said establishment should comply with the provisions of the Act w.e.f. the date they have commenced their work at Andhra Pradesh. It is evident from the various things i.e. E.S.I. Coverage they have commenced the work w.e.f. 1975 and also the management is not in a position to produce the records prior to 1975, I hold the EPF & MP Act is applicable to the Hindi Prachara Sabha, A.P. w.e.f. 1.1.1975. Therefore, in exercise of the powers conferred upon me under Section 7-A of the Act, I, H.K. Kamble, Regional P.F. Commissioner (Enforcement) direct the Management of Hindi Prachara Sabha, Hyderabad to implement the Scheme Provisions from 1.1.1975 and remit the P.F. contributions from the date of appointment in respect of all the employees engaged by them”.

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Being aggrieved by the said order, petitioner filed appeal in A.T.A.No.154(1)/2000 before the Employees Provident Fund Appellate Tribunal, New Delhi (first respondent). The appellate Tribunal, after elaborate discussion, while upholding the order passed by the Primary Authority, held that there is no material irregularity or illegality committed by the Primary Authority seeking interference into the order passed by it on 18.2.2000, and dismissed the appeal with the following observations:

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“I have considered the rival contentions of both the parties and have perused the appeal record and I do not find any force in the contention of the learned counsel of the appellant. It was for the appellant to have produced sufficient material before the RPFC during the course of enquiry to show that there was no nexus between the appellant and the central sabha. It was also open for the appellant to file necessary application before the authority during the pendency of the enquiry, if it wanted to lead evidence, but nothing of that sort was done. Therefore, this plea cannot be raised at this stage in this appeal. Summary procedure has to be accepted while conducting an enquiry. Besides this, perusal of averments made in the appeal and the booklet containing the constitution of the appellant clearly shows that there was interdependency between the central sabha and the appellant. At page-2 of the appeal, the appellant has used the word ‘main

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institution’, so far as central sabha is concerned, it has been further stated categorically that examination papers were set by the central sabha and the same was adopted by the other organizations in different States. Further that answer sheets for ‘Visarada’ and ‘Praveen’ courses are evaluated by the central sabha. This shows that appellant is dependent on central sabha so far as setting of paper is concerned and also the evaluation of answer sheets in respect of ‘Visarada’, ‘Praveen’ courses. Besides this, constitution of the appellant clearly shows that the Secretary of the Appellant has to be appointed by the central sabha. Appellant has no power even to appoint its own secretary as the same has to be appointed by central sabha. Clause 6 of the constitution further shows that all the members of the appellant ipso-facto become members of the central sabha. These two facts clearly show that the functional integrality and interdependence of appellant establishment and the central sabha is established. From the above, it is also clear that central sabha is the main institution and other institution working in different southern States are seeking guidance from the central sabha in respect of spreading the awareness of Hindi language in southern States. This clearly shows that there is commonness with regard to the ownership as also at the managerial and supervisory level. Since the members of the appellant automatically become members of the central sabha, this also shows the common ownership even though all the institutions are separately registered with different statutory authorities. In view of the above, I am of the opinion that no more material is required to be evaluated and the finding of the RPFC in clubbing both the establishment is correct. Proviso to sub-section (1) of Section 7(B) of the said Act further shows that the competent authority on its own may review its order, if it is satisfied that such grounds exists for doing so. Obviously the word ‘such ground’ refers to the grounds as mentioned in sub-section 1 of Section 7-B of the said Act. Subsection 1 of Section 7-B shows that on discovery of new and important material or evidence the order can be reviewed. Since from the complaint of the employees, even if it was an oral complaint, some new matter had come to the notice of the authority it was fully empowered to review its earlier order. Thus, argument of the appellant on this point is also not tenable”.

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Being aggrieved by the said order, the present writ petition is filed.

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The learned counsel Sri V.Srinivas, appearing for petitioner strenuously contended that firstly petitioner was not permitted to lead any evidence and the contentions raised before the appellate authority in this regard were negatived. Apart from that, the findings recorded by the Primary Authority as confirmed by the Appellate Authority do not disclose as to any functional integrality between Hindi Prachara Sabha, Chennai and the petitioner herein. The authorities by narrating some words here and there in the constitution of Hindi Prachara Sabha, Chennai and the evidence let in by Hindi Prachara Sabha before the Court below in a different matter have came to the conclusion that there is a nexus between these two institutions and therefore they are coverable under the EPF Act. The learned counsel further contended that the context required to hold as to functional integrality of these two institutions, various aspects needs to be taken into consideration, particularly the financial control and the managerial and supervisory control of these two organizations as to whether the employees are working under the supervision of Hindi Prachara Sabha, Chennai, whether they have common source of finance, and whether the petitioner institution is financed by Hindi Prachara Sabha, Chennai. All these aspects were not taken into consideration, therefore it cannot be said that there is a functional integrality between these two organizations.

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Per contra, the learned counsel appearing for respondents Mrs.A.P.Lakshmi supported the order passed by the Primary Authority as confirmed by the Appellate Authority and stated that as seen from the findings recorded by both the authorities, there is any amount of evidence to show that there is nexus between these two organizations, which is nothing but functional integrality of these two organizations. The syllabus is prescribed by Hindi Prachara Sabha, Chennai, which is being followed by the petitioner. Therefore, petitioner organization is liable to be covered under E.P.F. Act.

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I have given my earnest consideration to the respective

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submissions made by the learned counsel on either side and perused the impugned order and other material made available on record.

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Though the learned counsel for respondents tried to impress upon the Court while drawing attention to the findings recorded by the appellate authority and submitted that the very constitution of Hindi Prachara Sabha at Hyderabad itself would show that it is an integral part of Hindi Prachara Sabha, Chennai and the supervisory staff and the Secretary are to be appointed by Hindi Prachara Sabha, Chennai. Therefore there is an integrality. I am afraid, I cannot accept the contention raised by the learned counsel for respondents. The findings recorded, as noticed above, would show that only some stray words here and there were picked up by the authorities for the purpose of holding that there is nexus between these two organizations. The word nexus itself would not satisfy to say that there is a functional integrality between these two organizations. For the purpose of holding that there is functional integrality between these two organizations, various aspects needs to be taken into consideration. In this regard, the learned counsel for petitioner has relied on the decision in EMMANUEL PUBLIC SCHOOL SOCIETY, KISHANGARH, AJMER v. REGIONAL PROVIDENT FUND COMMISSIONER, RAJASTHAN^[1] and drawn the attention of the Court to paragraph 8 of the said judgment, which reads as under:

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“The above reasoning, in our opinion, is not sufficient to hold that the appellant establishment is a coverable establishment under the provisions of the Act. The above reasoning given by the Provident Fund Commissioner has also been specifically answered by the appellant in paragraphs-2 to 6 of the Special Appeal. As pointed out by the learned counsel for the appellant, there is no evidence of common supervisory, financial or managerial control between the two units. In our opinion, the reasoning given by the Provident Fund Commissioner is not sufficient to infer that the establishment was not a new establishment, but was part and parcel of the order one. The Supreme Court and the various High Courts have held that the most important test for determining whether one unit

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is branch or department of another is that of functional integrality and finance/employment and labour. There is no discussion at all by the Provident Fund Commissioner in regard to the functional integrality or that of finance employment and labour. Unless there is direct evidence of inter-connection between two units, there is no question of declaring a particular unit as the branch of the other unit. There must be common supervisory, financial or managerial control. Such evidence, in our opinion, is not available in the present case. In our opinion, the tests to find an establishment coverable U/s 2-A of the Act are distinct depending on facts and figures of each case and that no single test is conclusive to decide the question.”

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Thus, the Supreme Court and the various High Courts have held that the most important test for determining whether one unit is branch or department of another is that of functional integrality and finance/employment and labour. In this case, admittedly there is no discussion at all with regard to functional integrality or that of finance employment and labour. Unless there is direct evidence of interconnection between two units, it cannot be said that a particular unit is a branch of the other unit. There must be common supervisory, financial or managerial control and such evidence is not available on record. In fact, petitioner, at the appellate stage, has categorically urged that absolutely there is no evidence to show that these common factors are available to hold there is a functional integrality between these two organizations or that one is branch of the other.

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Under those circumstances, I am of the opinion that unless and until, both the parties are directed to lead evidence and such evidence is discussed, no decision can be arrived at as to the applicability of provisions under the Act to the petitioner organisation. Therefore, the impugned order passed by the Primary Authority as confirmed by the Appellate Authority are liable to be set aside and are accordingly set aside and the matter is remanded back to the appellate authority with a direction to dispose of the matter, as expediently as possible, after permitting both the parties to lead evidence both oral and documentary.

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The writ petition is accordingly allowed. No order as to costs.

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______________ C.V.RAMULU, J

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Date: 9.12.2010 DA

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THE HON’BLE SRI JUSTICE C.V.RAMULU

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W.P.No.1676 of 2005

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9.12.2010