Mukundakam Sharma, C.J.@mdashAll these appeals were argued before us by the counsel appearing for the parties. During the course of hearing
it appeared to us and agreed to by the counsel appearing for the parties that the issues and the facts involved in these appeals are similar. That
being so, we propose to dispose of all these appeals by this common judgment and order.
2. Hotel Jaipur Ashok, Ashok Airport Restaurants, Hotel Samrat and Hotel Kanishka are India Tourism Development Corporation''s Hotels. In
view of disinvestment policy of the Government of India, all these hotels were disinvested and private parties have taken over the management and
control of the said hotels.
3. The issue that arises for consideration is regarding realisation of the dues relating to the provident fund, which is sought to be recovered by the
Regional Provident Fund Commissioner, New Delhi from the appellants herein. It was sought to be submitted before us that the aforesaid
appellants are not branches and units of India Tourism Development Corporation Limited and in fact they are independent establishments and,
Therefore, none of the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the said
Act) are applicable nor any notice could be issued by the Regional Provident Fund Commissioner under the provisions of Section 7A of the said
Act for determination of the dues in respect of the hotels inasmuch as the appellants enjoy protection as provided under the provisions of Section
16 of the said Act. By filing the appeals, the appellants have challenged the legality of the impugned judgment and orders passed by the learned
Single Judge holding that the order passed by the Regional Provident Fund Commissioner u/s 7A of the said Act is legal and valid and that the said
order does not call for any interference. Similar findings and conclusions were recorded in respect of Hotel Jaipur Ashok, Ashok Yatri Niwas
(presently Indraprastha Hotels), Ashok Airport Restaurants, Hotel Samrat and Hotel Kanishka.
4. Counsel appearing for the appellants submitted before us that the aforesaid hotels are neither branches nor units of India Tourism Development
Corporation Limited and that the said hotels are independent establishments and, Therefore, the Regional Provident Fund Commissioner could not
have issued a notice u/s 7A of the said Act and also decide and determine the dues payable by the appellants. It was also submitted that the
aforesaid hotels being independent establishments, the Central Government is the appropriate Government in terms of the provisions of Section
2(a) of the said Act and there being no reference of the Central Government in this matter, the determination of the dues u/s 7A is without
jurisdiction. The other submission which was made before us was that the India Tourism Development Corporation Limited has number of hotels
all over the country and, Therefore, the Regional Provident Fund Commissioners would be different and separate and, Therefore, also the
determination by the Regional Provident Fund Commissioner at Delhi is without jurisdiction. The next submission that was made was regarding the
functional integrality of the appellants. It was submitted that there was neither any functional integrality, financial control and operational activities
between the India Tourism Development Corporation Limited and the various hotels, who are appellants herein. In order to support the said
contention, counsel appearing for the appellant in the appeal filed in respect of Hotel Samrat drew our attention to paragraph M of the grounds,
relying on which it was submitted before us that India Tourism Development Corporation Limited had neither any unity of ownership, functional
integrality or any managerial control or any other control over the hotels in question, who are appellants herein. It was submitted that each of the
hotels has a separate house license under the respective state municipal laws and also has separate license for running the lifts, generating set and
boilers, for preservation of food and other beverages in cold storages. They had separate water and electricity connection. It was also submitted
that the capital employed in any one of the hotels is not being utilised in any other hotel and that the bank accounts of each of the hotels are in their
own name and not in the name of the India Tourism Development Corporation Limited. It was also submitted that fresh recruitments have been
made in each of the hotels by the office of the General Manager of the particular hotel and they are being paid their salary from their respective
hotels. In the light of the aforesaid submissions made, we may now proceed to deal with the issues that fall for our consideration in these appeals.
5. So far the issue with regard to the appropriate Government being the Central Government is concerned, the said contention is on the face of it is
not tenable on a bare reading of the provisions of Section 5D of the said Act, which provides the procedure of appointment of the officers. It is
provided in the said Section that the Central Government would appoint a Central Provident Fund Commissioner who would be the Chief
Executive Officer of the Central Board and would be subject to the general control and superintendence of that Board. Section 7A of the said Act
deals with the manner in which money due from the employers should be determined. When the provisions of Sections 5D and 7A are read
together and harmoniously, it is clearly established that the Officer, who passed orders u/s 7A of the said Act is the Regional Provident Fund
Commissioner. He being an officer appointed under the provisions of Section 5D of the said Act, the contention raised before us regarding the
jurisdiction is on the face of it is not tenable and also without merit. Besides, this issue was never raised at any stage, but we proceeded to decide
the aforesaid issue as the same deals with the jurisdiction and, Therefore, goes to the root of the matter.
6. The next submission that was made by the counsel appearing for the appellants that because India Tourism Development Corporation Limited
has several hotels, Therefore, different Provident Fund Commissioners are required to make the orders. The said submission has no relevance at
all to the facts and circumstances of the present case, as we are concerned with the hotels which are located in Delhi, although they are hotels of
India Tourism Development Corporation Limited.
7. The most crucial issue which was urged before us and is required to be considered at this stage is the issue with regard to the functional
integrality and extent of control and management of the India Tourism Development Corporation Limited in respect of the aforesaid hotels, who
are appellants before us.
8. Counsel appearing for the appellants vehemently submitted that the appellants are separate legal entities within India Tourism Development
Corporation Limited. There is no unity of ownership, unity of control and unity of management between India Tourism Development Corporation
Limited and these hotels particularly when all the hotels are independently managed by a management functioning from the said hotels. The counsel
submitted that each and every hotel is an independent and self-reliant establishment by itself for it is neither a branch nor a department of the India
Tourism Development Corporation Limited. It was submitted that the employees in the office of the India Tourism Development Corporation
Limited do not and are not in any way concerned or connected with the working of the hotels and that there is no integrality connection and
activities between the head office and hotel units. Counsel submitted that muster roll in each of the hotels is separate and each of the hotels have
separate licenses and the profit and loss account of each of the hotels is drawn separately.
9. As against the aforesaid submissions made, Mr.R.C. Chawla appearing for the Regional Provident Fund Commissioner submitted before us that
each one of these hotels, who are the appellants herein, is nothing but part and parcel of India Tourism Development Corporation Limited. It was
also submitted that it is an admitted position that there is an admission on the part of the hotels to the effect that each and every hotel is owned,
managed and operated by the Corporation inasmuch all the hotels are running under the direct control of India Tourism Development Corporation
Limited, for one balance sheet is drawn in respect of all the hotels. It was also brought to our notice that recruitment of all the Executive employees
including trainees is being made by the India Tourism Development Corporation Limited and training is given by India Tourism Development
Corporation Limited and that the executive staff is being transferred from one hotel to the other hotel and also to the India Tourism Development
Corporation Limited. In support of the said contention, our attention is drawn to the 22nd Annual Report of the India Tourism Development
Corporation Limited for the year 1986-87 wherein entire information about the Ashoka Group of Hotels under the India Tourism Development
Corporation Limited is available and combined profit & loss account is drawn.
10. In Ashok Yatri Niwas now Indraprastha Hotels v. UOI and Anr. registered as LPA No. 817/2004, disposed of by a Division Bench of this
Court on 12th January, 2006 almost the same issue, as raised in the present appeals, was under consideration. In the said decision, it was held by
the Division Bench of this Court that Ashok Yatri Niwas is a unit of India Tourism Development Corporation Limited.
11. We may refer to the decision of this Court in M/s Victory Service Station v. Regional Provident Fund Commissioner, which was registered as
LPA No. 198/2007 and disposed of on 4th May, 2007.
12. In Regional Provident Fund Commissioner, Jaipur Vs. Naraini Udyog and Others, , the Supreme Court held that although the two firms are
registered as two independent units and are represented separately by the members of a Hindu Undivided Joint Family, but since there is functional
integrality between the two concerns, the definition of ''establishment'' which was widely defined would encompass within its ambit the two units as
an establishment for the purpose of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952. In M/s Rajasthan Prem Krishan
Goods Transport Co. v. Regional Provident Fund Commissioner, New Delhi and Ors. reported as 1997 LAB.I.C. 146 , the Supreme Court held
that finding by Commissioner that two companies having common place of business, common management, letter heads, bear same telephone
numbers and 10 partners are common, being finding of fact should not be interfered with by exercise of power under Article 226 of the
Constitution of India. In Management of Pratap Press, New Delhi Vs. Secretary, Delhi Press Workers'' Union and Its Workmen, the Supreme
Court expressed the view that the most important test is the ""functional integrality"" test, unity of finance, unity of employment (or labour). It was
said that where two units belong to one proprietor, there is almost always a likelihood of unity of management. ""Functional integrality"" was
explained to mean
...such functional interdependence that one unit cannot exist conveniently and reasonably without the other and on the further question whether in
matters of finance and employment the employer has actually kept the two units distinct or integrated.
13. In Andhra University v. Regional Provident Fund Commissioner reported in 1986 Lab.I.C. 106 it was held by the Supreme Court that the
Employees'' Provident Fund and Miscellaneous Provisions Act is a beneficient piece of social welfare legislation aimed at promoting and securing
the well being of the employees and the Court will not adopt a narrow interpretation which will have the effect of defeating the very object and
purpose of the Act. In the said decision it was held that where the Department of Publications and Press of the University was running a printing
press where the work of printing of text books, journals and magazines for the various constituent and affiliated colleges as well of various items of
stationery such as admission form etc. was carried out and about 100 persons were employed in connection with the said activity in the said
Department, the establishment namely, the Department of Publications and Press could be said to be a ""factory"" as such activities clearly constitute
manufacture within the meaning of the said expression and it was held that since more than 20 persons were employed in concerned establishment,
the establishment would be liable for coverage under the Act. In this connection the decisions of Supreme Court in Noor Niwas Nursery Public
School v. Regional Provident Fund Commissioner reported in 2001 Lab. 323 and also in Regional Provident Fund Commissioner, Jaipur Vs.
Naraini Udyog and Others, are to be taken notice of. In the case of Noor Niwas Nursery Public School (supra) in the context of the findings that
two units are run by the same society and they are located at one and the same address thereby establishing geographical proximity, Supreme
Court came to the conclusion that two units would constitute one single unit. In the case of Regional Provident Fund Commissioner, Jaipur v.
Naraini Udyog and Ors. (supra) it was held by the Supreme Court that the fact that the two units belonged to the members of the same family and
that some of the employees were working for both the units and that the offices of both the units are situated at the same premises and accounts
being maintained by the same set of clerks are relevant. These were the factors which were taken notice of by the Supreme Court for coming to
the conclusion that the two units is one establishment for the purpose of the Act. The sum and substance of the aforesaid decision, there, is that
there is a burden on the court to find out and ascertain whether there is any unity of management and supervision, control and also unity of
functional integrity and geographical proximity between the two units.
14. In the light of the aforesaid submissions and decisions, we have now to ascertain as to whether there is any unity of management and control
and also unity of employees and conditions of service between the India Tourism Development Corporation Limited on one hand and the
appellants - hotels on the other. The records of the case do indicate that the India Tourism Development Corporation Limited considers and deals
with these hotels as its units, for the land on which these hotels exist is either leased out to the India Tourism Development Corporation Limited or
the same exclusively belongs to the India Tourism Development Corporation Limited. In the aforesaid Annual Report of the India Tourism
Development Corporation Limited for the year 1986-87, entire information about the Ashok Group of Hotels of which the appellant hotels are
part and parcel is available. It is also established that a combined profit & loss account is drawn and a consolidated balance sheet in respect of all
the hotels is prepared. The said Annual Report also indicates that the Corporation has introduced the area concept by dividing the hotels into 4
areas and placing them under the administrative control of respective area wise Vice President and Area General Manager. Ashoka Training
Centre imparts training to all the executive officers of the appellant hotels for upgrading their skills. Total employment strength of the Corporation is
also indicated in the said Report, which also incidentally includes the number of employees employed in all the hotels, who are appellants before us.
In the writ petition filed before this Court, which was registered as WP(C) No. 1100/1989 filed by the India Tourism Development Corporation
Limited, it was stated that these appellants, who are appellants herein are the units of India Tourism Development Corporation Limited. In view of
the aforesaid cogent and solid materials on record, it must be held that the hotels in question are all branches and units of India Tourism
Development Corporation Limited and they cannot be treated as separate entity. Therefore, they would not be entitled to infancy protection as
contemplated u/s 16(1)(b) of the said Act. That being so, it is crystal clear that India Tourism Development Corporation Limited is the owner of all
the hotels, who are before us, which are its units. It is also established that the said Corporation control the entire chain of hotels and there is an
unity of management as well as unity of control between the India Tourism Development Corporation Limited and these hotels. There is unity of
labour also as it is established that the executives from one unit is transferred to the other unit and in fact the India Tourism Development
Corporation Limited recruits all top executives after which they are posted at different hotels, from which also they are transferred out on the basis
of exigencies of service to various hotels controlled by India Tourism Development Corporation Limited.
15. There are number of decisions, which were relied upon by the counsel for the appellants during the course of their submissions. Few of the said
decisions, which are relied upon are already referred to in the judgments discussed herein before. Reliance was placed on behalf of the appellants
in the case of The Associated Cement Companies Limited, Chaibassa Cement Works, Jhinkpani Vs. Their Workmen, and also in the decision of
Management of Pratap Press, New Delhi Vs. Secretary, Delhi Press Workers'' Union and Its Workmen, . The aforesaid decisions have been
taken notice of by us along with the decisions referred by us above while coming to our conclusion herein. The other cases to which reference was
made by the counsel for the appellants during the course of their submissions are Management of Wenger and Co. Vs. Their Workmen, ; Western
India Match Co. Ltd. Vs. Their Workmen, ; R. Ramakrishna Rao Vs. State of Kerala, State of Punjab Vs. Satpal and Another, ; Sayaji Mills Ltd.
Vs. Regional Provident Fund Commissioner, ; Gujchem Distillers India Ltd., Ahmedabad v. Regional Provident Fund Commissioner reported in
1985 LAB I.C. 1714 ; Isha Steel Treatment, Bombay Vs. Association of Engineering Workers, Bombay and Another, . In our considered
opinion, the aforesaid decisions do not help the appellants in any manner.
16. Consequently, we are of the opinion that the actions of the respondents do not call for any interference. The appeals have no merit and are
dismissed.
