Functional integrality under provident fund law requires a full factual test; common ownership alone is not enough.

Section 2-A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 requires a factual inquiry into functional integrality before treating separate units as one establishment. Common ownership, supply of raw materials, or sale of finished goods are not enough by themselves; the authority must examine whether the units are financially, managerially, and operationally distinct, and whether one unit can survive if the other closes. As the impugned order relied mainly on ownership and raw-material supply and failed to apply the full test, the finding of a composite establishment was unsustainable and the matter had to be reconsidered afresh.

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Issues: Whether the factory and trading unit formed one composite establishment under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and whether the impugned order was vitiated by failure to apply the correct tests for functional integrality.

Analysis: Section 2-A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 treats departments and branches of an establishment as parts of the same establishment, but the determination still requires a factual inquiry into functional interdependence. The relevant inquiry includes whether one unit can conveniently and reasonably survive if the other is closed, whether the units are merely branches or departments, and whether the employer has kept them distinct in finance, management, and employment. Common ownership, supply of raw materials, or sale of finished goods by themselves are not sufficient to establish functional integrality. The impugned order proceeded mainly on admissions as to ownership and raw-material supply and did not apply the full range of relevant tests.

Conclusion: The finding that the two units formed a composite establishment could not be sustained, as the order suffered from misdirection in law and omission to apply the relevant tests; the matter was therefore required to be reconsidered afresh.

Final Conclusion: The writ petition succeeded, the impugned order was set aside, and the matter was remanded for fresh inquiry and decision in accordance with law after hearing the petitioner.

Ratio Decidendi: For treating different units as one establishment, the authority must apply all relevant tests of functional integrality, including whether the unit sought to be clubbed can survive independently; common ownership and ancillary supply arrangements alone are insufficient.

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