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Dharamsi Morarji Chemicals Co. Ltd. Vs. N.G. Desai, the Regional Provident Fund Commissioner and Others - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtMumbai High Court
Decided On
Case NumberW.P. No. 1129 of 1980
Judge
Reported in(1984)86BOMLR458; [1984(49)FLR446]; (1985)ILLJ433Bom; 1984MhLJ780
ActsEmployees Provident Funds and Misc. Provisions Act - Sections 16(1)
AppellantDharamsi Morarji Chemicals Co. Ltd.
RespondentN.G. Desai, the Regional Provident Fund Commissioner and Others
Excerpt:
.....different entities and separate establishments. indeed, the facts and circumstances which are mainly undisputed, distinctly point in the other direction. 16(1)(b) of the act qua the roha factory is well justified. the said ruling is thus clearly distinguishable......established on 9th july, 1977 another new factory at roha. district kolaba (hereinafter 'the roha factory') for the manufacture of certain organic chemicals which are not manufactured at the ambarnath factory.2. under s. 16(1)(b) of the employees' provident fund and miscellaneous provisions act, 1952 (hereinafter 'the act'), the provisions of the act were not applicable to the roha factory for a period of three years, that is 9th july, 1980. however, pursuant to a request of the employees of the roha factory, the petitioners agreed to make a representation to the 1st respondent for reducing this exemption or infancy period from three years to two years. the company thus agreed to give up the full advantage of three years and instead avail the same for only one year. application was.....
Judgment:

1. The petitioners are a public limited company (hereinafter 'the Company') in existence since about the year 1921. It had then established a factory at Ambernath, District Thane (hereinafter 'the Ambarnath factory.') This factory manufactures heavy inorganic chemicals and fertilisers, but predominantly fertilisers. Several years thereafter the Company established on 9th July, 1977 another new factory at Roha. District Kolaba (hereinafter 'the Roha Factory') for the manufacture of certain organic chemicals which are not manufactured at the Ambarnath factory.

2. Under S. 16(1)(b) of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter 'the Act'), the provisions of the Act were not applicable to the Roha factory for a period of three years, that is 9th July, 1980. However, pursuant to a request of the employees of the Roha factory, the petitioners agreed to make a representation to the 1st respondent for reducing this exemption or infancy period from three years to two years. The company thus agreed to give up the full advantage of three years and instead avail the same for only one year. Application was accordingly made to the 1st respondent. However, by his Order of 4th March, 1980 the 1st respondent, refused exemption on the ground that the management of the two factories viz., the factory at Ambarnath and the factory at Roha was common and that there was no separate ownership, capital, profit and loss accounts and as such both the units or the establishments were one and, therefore, the Roha factory was covered by the Act from its inception 9th July, 1977. The petitioners replied stating that the two factories were not interdependent at all; they were also separately registered under the Factories' Act; that the Roha factory was not in the least a branch of Ambarnath factory, that the two factories were managed by two separate works managers; that there was no inter-transferability of the workmen of these two factories, that separate there was no supervisory control over either of these two factories by the other; that accounts were also separately maintained throughout the year with consolidation effected only at the end of the year. There was thus, no functional integrity at all. After hearing the petitioners in the matter of their aforesaid representations and submissions, the 1st respondent by his order dated 12th June, 1980 rejected the same. By his subsequent order dated 2nd July, 1980, the petitioners were called upon to implement the provisions of the Act. Hence this petition under Art. 226 of the Constitution for setting aside the orders dated 4th March, 1980, 12th June, 1980 and 2nd July, 1980 disentitling the company from availing itself of any benefit of the normal or even the reduced voluntary infancy period under S. 16(1)(b) of the Act.

3. Hearing Mr. Kapadia learned counsel for the Company and Mr. Master, learned counsel for the respondents, I find this to be a clear case where the company is entitled to the benefit of the reduced voluntary infancy period under S. 16(1)(b) of the Act. As indicated, the Ambarnath factory was established as long back as in the year 1921 or thereabout while the Roha factory was established as late as July, 1977. The Ambarnath factory manufactures heavy inorganic chemicals and mainly fertilizers while the Roha factory manufactures only organic chemicals. The products manufactured at these two factories are thus separate, distinct and different. The workers of these two factories are also separate. Though at the time when the Roha factory was established or set up, about 5 or 6 employees of the Ambarnath factory were sent to Roha factory to take advantage of their expertise and experience in help set up the Roha factory this circumstances by itself has hardly any significance in deciding as to whether in law the two factories constitute one or separate establishments. In the very nature of things when a new factory is sought to be set up, the benefit of such expertise and experience is surely can be availed of. This by no stretch can be construed to conclude that the two factories, therefore constitute one establishment.

4. Other facts and circumstances also militate against the contention on behalf of the respondents that the two factories are indeed one for the purposes of the Act. Thus, the two factories have separate registration numbers. The same are also separately registered under the Factories Act. The said factories also maintain and draw up separate profit and loss accounts. The said two factories also have separate works managers and plant superintendents. And each factory also has a separate and independent set of workmen or employees who are not as such transferable from one factory to the other. The workers at the Roha factory were recruited directly from outside sources. One also does not find any supervisory control by either of these factories over the other. The two factories do not have any inter-connection as such in the matter of supervisory, financial or managerial control. Inference and conclusion is irresistible that these two factories constitute distinctly different entities and separate establishments.

5. Such being the emerging facts and circumstances, it is not possible to accept the contention of Mr. Master, learned counsel for the respondents that there is here what is termed as functional integrity between the two factories. Indeed, the facts and circumstances which are mainly undisputed, distinctly point in the other direction. Except the fact that the two factories are owned by one and the same company, all the other relevant factors lead to the conclusion, fair, just and reasonable, that the two factories are different and separate establishments. The Roha factory is neither a branch of the Ambarnath factory nor its subsidiary nor can it with any justification be termed a feeding factory. There is no bar to a company establishing more than one factory. Indeed, in this case, taking advantage of the incentives given to factories established in backward areas the Company several years after the establishment of their original Ambarnath factory, decided to establish another factory independent and distinct in management, in products, in workmen, etc. at Roha, far away from the factory at Ambarnath. The mere fact that the Company ultimately consolidated the accounts of two factories for the purpose of the Companies Act and the Income-tax Act cannot result in a conclusion that, therefore, the two factories constitute one establishment. It is not unknown that where one and the same company establishes separate, distinct and different factories at different places in the country with each having its own separate accounts, consolidation is annually effected for the purpose of the Companies Act and the Income-tax Act. In all the circumstances, the Company's claim to the benefit of the infancy period under S. 16(1)(b) of the Act qua the Roha factory is well justified.

6. Mr. Kapadia, learned counsel for the Company invited this Court's attention to a Division Bench ruling of this Court in Korula Rubber Company Pvt. Ltd. v. The Regional Provident Fund Commissioner and other, (S.C.A. No. 198 of 1978) decided on 3rd August, 1981 as also to my own judgment dated 15th June, 1984 in Morarji and Pandit Ltd. v. N. G. Desai and another (W.P. No. 1438 of 1980 Albright). Both these rulings support the learned counsel's contentions and fair and squarely govern the instant case in favour of the company herein. However, Mr. Master, learned counsel for the respondent invited my attention to a Division Bench ruling of the Gujarat High Court in Indian Rayon Corporation Ltd. and another v. Miss K. P. Sarojini and another (S.C.A. 4017 of 1983) decided on 23rd September, 1983 which, in the facts and circumstances of that case, took the view that the two units therein involved constituted one establishment and, therefore, covered by the Act. It was expressly found in the Gujarat ruling that the company there in and M/s Jaya Shree Insulators constituted on integrated whole; that the establishment of M/s Jaya Shree Insulators at Hatol was a part and parcel of the unit of the company; that the services of the technical staff of the Company were made available by way of transfer or loan from one or the other unit of the company to M/s Jaya Shree Insulators at Hatol; that the services of as many as ten executives were placed at the disposal or M/s Jaya Shree Insulators at Hatol by way of transfer in the year 1981; that M/s Jaya Shree Insulators at Hatol was looked after by the managerial and executive personnel who were working at the Hooghly units of the company and the technically staff of the Hooghly unit was also transferred loaned to the Hatol unit of M/s. Jaya Shree Insulators. It is thus obvious that the facts and circumstances in the Gujarat ruling were different from those in the present case. It is in the said set of facts and circumstances that the Gujarat High Court confirmed the decision of the Provident Fund Commissioner there that the two units therein involved, constituted functional integrity by ownership, management and control resulting in the said two establishments being but unit. The said ruling is thus clearly distinguishable.

7. That apart, between the two Division Bench ruling viz., one of the Gujarat High Court and the other of this Court, the Division Bench ruling of this Court would bind me. It is also relevant to note that against the Division Bench ruling of this Court, the respondents had preferred Special Leave Petition to the Supreme Court vide statement accordingly made before me by Mr. Master, learned counsel for the respondents. And what is relevant is that the Supreme Court dismissed the said Special Leave Petition. In all the circumstances reliance sought to be placed by Mr. Master on the Gujarat ruling cannot avail the respondents here in this case.

8. In this view of the matter, this petition succeeds and is allowed. The impugned decisions embodied in the 1st respondent's communications dated 4th March, 1980 (Ex. C), 12th June, 1980 (Ex. G) and 2nd July, 1980 (Ex. H) are set aside and quashed. The respondents are restrained from acting thereon. It is held that directed that so far as the Roha factory is concerned, the petitioner company is exempted from the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 for a period of two years from 9th July, 1977.

9. Under orders of this Court the petitioner company has deposited with the 1st respondent Rs. 1,27,600/- being the provident fund contribution of the first two years of the establishment of its Roha factory. As it is now held that the petitioner company is exempted from the aforesaid Act for the said period of first two years qua Roha factory, the 1st respondent is directed to refund to the petitioner company the said sum of Rs. 1,27,600/- as expeditiously as possible and preferably within three months from today. The petitioner-company is also in turn directed that on receipt of the aforesaid amount from the 1st respondent, the petitioner company shall, within one month therefrom, return to the respective workman at Roha factory, his (workman's) respective contribution, if the same had been earlier recovered from him by the company.

10. Rule is made absolute in terms aforesaid. In the circumstances, of the case, however, there will be no order as to costs.


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