One Establishment – Test for determination

L.N. Gadodia & Sons v. Provident Fund Commr., (2011) 13 SCC 517, this case dealt with the Employees Provident Fund Act and the question which arose was whether two sister concerns, having different dates of incorporation, could be treated as two separate establishments. The judgments in Associated Cement Companies Ltd. v. Workmen, AIR 1960 SC 56 and Pratap Press v. Delhi Press Workers’ Union, AIR 1960 SC 1213 were referred to for the said purpose. The observations qua Associated Cement Companies Ltd. v. Workmen, AIR 1960 SC 56, insofar as relevant is extracted as under:

“What then is “one establishment” in the ordinary industrial or business sense? … It is, perhaps, impossible to lay down any one test as an absolute and invariable test for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units, etc. If in their true relation they constitute one integrated whole, we say that the establishment is one; if on the contrary they do not constitute one integrated whole, each unit is then a separate unit. How the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which gives the right of unemployment compensation and also prescribes a disqualification therefor. Thus, in one case the unity of ownership, management and control may be the important test; in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. Indeed, in a large number of cases several tests may fall for consideration at the same time. The difficulty of applying these tests arises because of the complexities of modern industrial organisation; many enterprises may have functional integrality between factories which are separately owned; some may be integrated in part with units or factories having the same ownership and in part with factories or plants which are independently owned.’ Shree Vishal Printers Ltd. v. Provident Fund Commr., (2019) 9 SCC 508.

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