R.Krishnapillai, Principal V. The Assistant Provident Fund Commissioner, The Employees Provident Fund Organization, Sub Regional Office, Kottayam

WP(C)/22694/2007

AI Insights

The case revolves around the dispute concerning the coverage of three educational institutes under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The petitioner, R. Krishnapillai, argued that his typewriting institute, Bharath Institute of Commerce, along with his sons' institutions, were distinct entities and should not be clubbed together under a single employer for EPF coverage. The authorities initially clubbed the institutes together, leading to an appeal and subsequent remand by the Tribunal, which was not adhered to by the Assistant Provident Fund Commissioner. The High Court found that the institutes were indeed separate and distinct, supported by documents like the dissolution deed of the partnership and separate income tax returns.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 799080 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 20-03-2018
• Assessment Year: misc
• Other Referred Cases: Regional Provident Fund Commissioner vs. K.K. Bhanumathy and others (2016 (3) KHC 80)
• Laws Referred To: Employees Provident Fund and Miscellaneous Provisions Act, 1952, Indian Partnership Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOY ITOOP
• Assessee Lawyers: S RADHAKRISHNAN; S RAJ MOHAN
• Keywords: Employees Provident Fund; Partnership Dissolution; Coverage of Institutes; Clubbing of Entities
• Section: 5

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE TUESDAY, THE 20TH DAY OF MARCH 2018 / 29TH PHALGUNA, 1939 WP(C).No. 22694 of 2007 PETITIONER(S) -------------- R.KRISHNAPILLAI, PRINCIPAL, M/S.BHARATH INSTITUTE OF COMMERCE,, VAIKOM-686 141. BY ADVS.SRI.S.RADHAKRISHNAN SRI.S.RAJ MOHAN RESPONDENT(S): -------------- THE ASSISTANT PROVIDENT FUND COMMISSIONER, THE EMPLOYEES PROVIDENT FUND ORGANIZATION, SUB REGIONAL OFFICE, CHALAKUZHY BUILDING, CMS COLLEGE ROAD, P.B.NO.36,, KOTTAYAM-686 001. BY ADV. SRI.JOY THATTIL ITOOP, SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20-03-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: TS WP(C).No. 22694 of 2007 APPENDIX PETITIONER(S)' EXHIBITS ----------------------- EXHIBIT P1:- A TRUE COPY OF HE ORDER DATED 20.4.2007 IN ATA NO.661(7) OF 2001 PASSED BY THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL. EXHIBIT P2:- A TRUE COPY OF THE PARTNERSHIP DEED DATED 13.9.1979. EXHIBIT P3:- A TRUE COPY OF THE AGREEMENT DATED 01.10.1984. EXHIBIT P4:- A TRUE COPY OF THE CERTIFICATE ISSUED BY THE REGISTRAR OF FIRMS DATED 17.3.1997. EXHIBIT P5:- A TRUE COPY OF THE APPEAL MEMORANDUM ATA 661(7) OF 2001 ALONG WITH ITS ANNEXURES. EXHIBIT P6:- A TRUE COPY OF THE ORDER NO.KR/KTM/125277/ENF.I(1) 01 DATED 07.3.2001. EXHIBIT P7;- A TRUE COPY ORDER NO.KR/KTM.15277/ENF.I(1)01 DATED 01.10.2001. EXHIBIT P8:- A TRUE COPY OF THE WRITTEN REPLY FILED BY THE RESPONDENTS. EXHIBIT P9:- A TRUE COPY OF THE REJOINDER DATED 21.10.2002 FILED BY THE PETITIONER. EXHIBIT P10:- A TRUE COPY OF THE DEMAND DRAFT NO.404579 DATED 27.11.2001 FOR RS.1,29,880/- RESPONDENT(S)' EXHIBITS - NIL ------------------------------ /TRUE COPY/ PS TO JUDGE TS 04/04/2018 A. MUHAMED MUSTAQUE, J. ------------------------------------ W.P. (C) No.22694 of 2007 ------------------------------------ Dated this the 20th day of March, 2018 J U D G M E N T The petitioner, Krishnapillai, started a typewriting unit in the year 1944. He also opened a tuition center in 1951. Thereafter, he formed a partnership firm in the year 1979 along with his two children. 2. The partnership was dissolved on 01.10.1984. Thereafter, the petitioner was conducting a typewriting institute known as Bharath Institute of Commerce. His eldest son was running Bharath College, a parallel college. The second son was conducting Bharath Tuition Center. The dissolution of the firm was entered with the Registrar of Firms as seen from Ext.P4. Notice of dissolution was also given to the Registrar of Firms. It can be seen from Form A maintained under Rule 5 of the Rules framed under the Indian Partnership Act that the firm has been dissolved with effect from 01.04.1985. W.P.(C) No.22694/2007 2 3. The authorities under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 initiated proceedings to cover the institutes, clubbing together. The petitioner was served with a notice. The petitioner objected to the coverage stating that the three institutes are different entities owned by three individuals. The original notice was issued on 11.02.1996. The petitioner's eldest son Suresh Babu received the notice. He objected to it stating that the three institutes are different and owned by three different individuals. Overruling the objection, the Regional Provident Fund Commissioner, Ernakulam passed an order covering the three institutes as one under the Act. The petitioner's son Suresh Babu appealed against the order before the Tribunal. The Tribunal, noting that the other individuals were not given notice, set aside the order and remanded back the matter for fresh consideration. Thereafter, the Assistant Provident Fund Commissioner, the competent authority, after issuing notice to all the three individuals, passed an order. In this order, it was affirmed that all the three institutes have to be clubbed together for the purpose of coverage. In the order, the petitioner's objection regarding clubbing was overruled on the W.P.(C) No.22694/2007 3 premise that the petitioner did not produce dissolution deed as claimed by them. The petitioner gave an explanation that the dissolution deed was with the Chartered Accountant who in the meanwhile passed away and therefore, they could not produce. However, the petitioner filed a review petition to produce the dissolution deed along with a certificate issued by the Registrar of Firms. This was not relied on for the reason that the dissolution was not registered and also for the reason that the petitioner did not state that they were in possession of those documents while the original order was passed. The petitioner thereafter filed an appeal before the Tribunal. Before the Tribunal also, the petitioner produced these documents. However, without adverting to these documents, the Tribunal dismissed the appeal. These orders are under challenge in this writ petition. 4. Learned Standing Counsel appearing for the respondent argued that there was no document produced by the petitioner to show that the three institutes are distinct and separate. On the other hand, the learned counsel points out that the institutes are housed in a single building and therefore, the institutes are to be treated as run by the same W.P.(C) No.22694/2007 4 employer. 5. As seen from the certificate issued by the Registrar of Firms produced as Ext. P4, a dissolution has taken place as early as in the year 1985. The petitioner also appears to have produced different income tax returns filed with the Income Tax authorities. In those circumstances, it is not necessary to disbelieve the claim of the petitioner that the partnership was dissolved. The dissolution was entered with the Registrar of Firms as early as in the year 1985. The first step for coverage was only taken in the year 1996. Therefore, the genuineness of such dissolution need not be doubted. 6. This Court, in Regional Provident Fund Commissioner vs. K.K. Bhanumathy and others (2016 (3) KHC 80), held that merely on the basis of the relationship between the employers and proximity of the establishments in the same premises, it cannot be held that there is managerial, financial or functional integrity. 7. In light of the facts and circumstances, clubbing all the three institutes as one for the purpose of coverage is illegal. Accordingly, the impugned orders are set aside. W.P.(C) No.22694/2007 5 However, it is open for the respondent to consider each of the institutes separately for the purpose of coverage. Leaving open the issues as above, this writ petition is allowed. Any payment made by the petitioner pursuant to the impugned orders shall be returned to the petitioner within a period of two months from the date of receipt of a copy of this Judgment. Sd/- A. MUHAMED MUSTAQUE JUDGE eb/smp "