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of <h1>Court rules Coimbatore factory linked to Chalakudy; petitioner must contribute to Provident Fund.</h1> <h3>Eddy Current Contracts (India) Limited Versus Regional Provident Fund Commissioner</h3> The court determined that the Coimbatore factory is a branch of the Chalakudy factory based on factors such as unity of ownership, management, functional ... - Issues Involved:1. Applicability of Section 2-A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.2. Determination of whether the Coimbatore factory is a branch or independent unit of the Chalakudy factory.3. Impact of separate registration, licensing, and maintenance of accounts on the determination of branch status.Detailed Analysis:Issue 1: Applicability of Section 2-A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952The primary issue is the interpretation and applicability of Section 2-A of the Provident Funds Act. The section states that if an establishment consists of different departments or branches, whether situated in the same place or different places, all such departments or branches shall be treated as part of the same establishment. The court emphasized that the determination of whether the Coimbatore factory is a branch or department of the Chalakudy factory hinges on this interpretation.Issue 2: Determination of whether the Coimbatore factory is a branch or independent unit of the Chalakudy factoryThe petitioner argued that the Coimbatore factory should be considered a separate and independent entity from the Chalakudy factory, given that it does not employ 20 or more persons, and thus should not be covered under the Provident Funds Act. The court examined various factors to determine the relationship between the two factories:- Unity of Ownership, Management, and Control: Both factories are owned by the petitioner-company, and there is a common Managing Director, Finance Manager, and Secretary for both units.- Functional Integrality: The product manufactured in both factories is the same-eddy current clutches and motors, indicating functional integrality.- Financial and Functional Dependency: There is financial interdependence between the two units, as evidenced by the transfer of funds and raw materials between them.- General Unity of Purpose: The factories share a common purpose and operational strategy, further suggesting they are parts of a single establishment.The court referred to the Supreme Court's decision in Associated Cement Companies Ltd. v. Their Workmen, which outlined several tests to determine whether different units constitute one establishment, including geographical proximity, unity of ownership, management, control, employment, and functional integrality. Applying these tests, the court concluded that the Coimbatore factory is a branch of the Chalakudy establishment.Issue 3: Impact of separate registration, licensing, and maintenance of accounts on the determination of branch statusThe petitioner contended that the separate registration and licensing of the two factories under various Acts, and the maintenance of separate accounts, indicated their independence. However, the court found that these factors were not determinative. The court cited the Andhra Pradesh High Court's decision in Andhra Cement Co. Ltd. v. R.P.F. Commissioner, Hyderabad, which held that separate registration and licensing are not relevant considerations in determining whether a unit is a branch or part of the main establishment.Conclusion:The court concluded that the Coimbatore factory is a branch of the Chalakudy factory based on the unity of ownership, management, functional integrality, and financial interdependence. Consequently, Section 2-A of the Provident Funds Act applies, and the petitioner is liable to contribute to the Provident Fund for the employees of both factories. The orders (Exhibits P-5 and P-7) directing the petitioner to implement the provisions of the Act and the Scheme in respect of the Coimbatore factory were upheld, and the petition was dismissed without any order as to costs.
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