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Issues Involved:
(a) Whether National Umbrella Factory is a separate and distinct establishment or merely a branch or department of Ebrahim Currim and Sons? (b) Whether there is a functional integrality between the two units to constitute them as a single composite establishment? (c) Whether the Respondent No. 1 applied the relevant tests for deciding the above questions, including whether National Umbrella Factory can exist independently if Ebrahim Currim and Sons is closed? (d) Whether the impugned order suffers from misdirection in law and should be quashed and set aside with liberty to pass a fresh order on remand in accordance with law? Detailed Analysis: Issue (a): Separate and Distinct Establishment The petitioner, a partnership firm engaged in trading activities for about 125 years, set up a factory named National Umbrella in 1940. The factory is registered under the Factories Act and holds separate licenses. The petitioner contends that National Umbrella Factory is a separate establishment and not just a branch or department of Ebrahim Currim and Sons. The factory's manufacturing activities are non-scheduled under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Issue (b): Functional Integrality The Court examined whether there is functional integrality between Ebrahim Currim and Sons and National Umbrella Factory. Functional integrality involves such interdependence that one unit cannot exist conveniently and reasonably without the other. The Supreme Court in Management of Pratap Press, New Delhi v. Secretary, Delhi Press Workers' Union emphasized the importance of functional interdependence and whether the units are kept distinct in matters of finance and employment. Issue (c): Application of Relevant Tests The Court noted that Respondent No. 1 failed to apply the relevant tests for determining functional integrality, such as whether National Umbrella Factory can survive independently if Ebrahim Currim and Sons is closed. The Court cited several judgments, including Associated Cement Companies Limited and Kerula Rubber Company Pvt. Ltd., which illustrate the importance of considering factors like unity of ownership, management, control, and the ability of one unit to survive without the other. Issue (d): Misdirection in Law The Court found that Respondent No. 1's conclusion that the petitioner was liable to comply with the Act for National Umbrella Factory employees was based on insufficient application of the relevant tests. The impugned order did not adequately consider whether the factory could exist independently of the trading unit. The Court emphasized that mere common ownership or supply of raw materials does not suffice to establish functional integrality. Conclusion: The Court set aside the impugned order dated 25th January 1988, and remanded the proceedings to Respondent No. 1 for fresh adjudication. Respondent No. 1 is directed to hold a detailed inquiry, considering all relevant factors and applying the correct tests for functional integrality. The Court also instructed Respondent No. 1 to determine from what date, if any, the petitioner is liable to pay provident funds for National Umbrella Factory employees and whether the liability can be enforced from 1st May 1962, given that the proceedings started in 1985. The petition succeeds, and the rule is made absolute with no order as to costs. The request for an interim deposit by the petitioner was denied, and all contentions on the main issues remain open for further consideration. The issue of a certified copy is expedited.
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