Clubbing of industrial undertakings cannot rest on common persons alone; de-registration and notices were quashed.

A clarification on clubbing of industrial undertakings treated the undertaking as distinct from its ownership form and limited clubbing to similar forms of ownership. On that basis, a proprietary concern could not be clubbed with a company or partnership concern merely because the same person was connected with them, and action taken on the broader approach was inconsistent with the clarified position. The de-registration action and the impugned show cause notices were quashed.

---

---

Issues: Whether the clarification treating units as liable to clubbing and de-registration merely because of common proprietor, partner or director, and the resulting show cause notices, were in accordance with law.

Analysis: The subsequent clarification dated 17-5-1993 stated that industrial undertaking is distinct from its form of ownership and that clubbing would apply only to similar forms of ownership. On that basis, a proprietary concern could not be clubbed with a company or a partnership concern merely because the persons connected with them were common. The earlier action proceeding on the broader clubbing approach was therefore inconsistent with the clarified legal position.

Conclusion: The clarification-based action for de-registration and the impugned show cause notices were quashed.

Final Conclusion: The petitions succeeded and the challenged administrative action could not be sustained in law.

---