CWP-20743-2015 (O&M) and connected cases 1

IN THE HIGH COURT OF PUNJAB AND HARYANA

AT CHANDIGARH

1. CWP-20743-2015 (O&M)

Reserved on: 22.05.2026

Pronounced on: 13.07.2026

Uploaded on: 13.07.2026

GAJANAND DALMIA CHARITABLE TRUST

-PETITIONER

V/S

ASSISTANT PROVIDENT FUND COMMISSIONER AND ANR.

-RESPONDENTS

2. CWP-20750-2015 (O&M)

SETH MURLIDHAR DALMIA CHARITABLE TRUST

-PETITIONER

V/S

ASSISTANT PROVIDENT FUND COMMISSIONER AND ANR.

-RESPONDENTS

3. CWP-20776-2015 (O&M)

PURNI DEVI DALMIA CHARITABLE TRUST

-PETITIONER

V/S

ASSISTANT PROVIDENT FUND COMMISSIONER AND ANR.

-RESPONDENTS

CORAM: HON'BLE MR. JUSTICE KULDEEP TIWARI

Present: Mr. Akshay Bhan, Sr. Advocate, assisted by

Mr. Vivek Salathia, Advocate, and

Mr. Abishai A. George, Advocate

for the petitioners.

Mr. Rajesh Hooda, Advocate

for the respondents.

CWP-20743-2015 (O&M) and connected cases 2

KULDEEP TIWARI, J.

1. These three writ petitions call in question the legality and

validity of the order dated 10.12.2002 passed by the Assistant Provident

Fund Commissioner, whereby, in exercise of powers under Section 2-A of

the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

(hereinafter referred to as “the EPF Act”), the three petitioner-trusts were

held to constitute a single establishment and were consequently directed

to deposit the provident fund dues assessed under Section 7-A of the EPF

Act. Aggrieved thereby, the petitioners preferred statutory appeals before

the Employees’ Provident Fund Appellate Tribunal. However, the appeals

were dismissed vide order dated 21.08.2015. The order dated 21.08.2015

has, therefore, also been assailed in these writ petitions.

2. Since all these writ petitions arise out of identical facts and

involve the determination of a common question of law, they are

amenable to be decided by a common verdict. The principal issue that

emerges for consideration is “whether the three petitioner-trusts

constitute a single establishment within the meaning of Section 2-A of

the EPF Act or whether each of them is a separate and independent

establishment”.

FACTUAL MATRIX

3. All three petitioner-trusts are charitable trusts incorporated

under the provisions of the Societies Registration Act on different dates

during the years 1968 and 1969. Each of the petitioner-trusts is separately

registered under the Income Tax Act and has been granted exemption

thereunder on account of its charitable nature and engagement in

CWP-20743-2015 (O&M) and connected cases 3

providing free medical services. On 14.10.1999, the Assistant Provident

Fund Commissioner issued a show cause notice in the name of M/s

Dalmia Charitable Hospital and also allotted Provident Fund Code

No.PN/22064 in the said name. By the said notice, the petitioner-trusts

were called upon to furnish various statutory returns, both monthly and

annual, for the period from August 1998 to February 1999, besides

submitting their response thereto. In reply, the petitioner-trusts asserted

that no institution or trust by the name of M/s Dalmia Charitable Hospital

existed or was owned or managed by them and, accordingly, requested

that the show cause notice be withdrawn. Despite this, further show cause

notices continued to be issued to the petitioner-trusts, to which they

consistently reiterated that no institution or trust by the name of M/s

Dalmia Charitable Hospital was in existence, nor did they own, possess or

manage any such establishment. It was further asserted that each of the

petitioner-trusts independently employed fewer than twenty persons and,

therefore, none of them was covered by the provisions of the EPF Act.

4. Notwithstanding the consistent stand of the petitioner-trusts,

the Assistant Provident Fund Commissioner initiated proceedings under

Section 7-A of the EPF Act. During the course of the proceedings, the

Enforcement Officer was directed to examine the matter and submit a

comprehensive report regarding the applicability of the provisions of the

EPF Act to M/s Dalmia Charitable Hospital. Upon receipt of the report,

the Assistant Provident Fund Commissioner proceeded to club the three

petitioner-trusts as a single establishment under the name of M/s Dalmia

Charitable Hospital and passed the assessment order dated 10.12.2002

CWP-20743-2015 (O&M) and connected cases 4

under Section 7-A of the EPF Act. Aggrieved by the assessment order, the

petitioner-trusts preferred statutory appeals under Section 7-I of the EPF

Act. The Appellate Tribunal, however, dismissed the appeals vide order

dated 05.04.2010.

5. Deriving grievance from the orders dated 10.12.2002 and

05.04.2010, the petitioner-trusts approached this Court by filing CWP

Nos.10662, 10667 and 10685 of 2010. The said writ petitions were

allowed by a common order dated 06.05.2015, whereby the matter was

remanded to the Appellate Tribunal for fresh adjudication of the statutory

appeals. Pursuant to the remand, the Appellate Tribunal reconsidered the

matter but once again dismissed the appeals vide order dated 21.08.2015.

Consequently, the petitioner-trusts have instituted the present writ

petitions assailing the assessment order dated 10.12.2002 passed under

Section 7-A of the EPF Act as well as the appellate order dated

21.08.2015.

SUBMISSIONS OF LEARNED SENIOR COUNSEL FOR THE

PETITIONER-TRUSTS

6. Learned senior counsel for the petitioner-trusts, at the outset,

contends that the very foundation of the impugned orders is contrary to

Section 2-A of the EPF Act, which contemplates the clubbing only of

different departments or branches of an establishment and does not

envisage the clubbing of separate and independent establishments. It is

submitted that each of the petitioner-trusts is an independent entity,

separately registered under the Income Tax Act, maintaining separate

bank accounts, employing separate staff, and carrying on its activities

CWP-20743-2015 (O&M) and connected cases 5

independently. Despite this, the Assistant Provident Fund Commissioner

erroneously clubbed the petitioner-trusts under the name of M/s Dalmia

Charitable Hospital without conducting the inquiry mandated by Section

2-A of the EPF Act and without applying the well-settled test of

“functional integrality” as propounded by the Hon’ble Supreme Court in

“Management of Pratap Press, New Delhi vs. Secretary, Delhi Press

Workers’ Union, Delhi and Another”, AIR 1960 SC 1213. Reliance has

also been placed upon “Associated Cement Companies Limited vs. Their

Workmen”, AIR 1960 SC 56.

7. Elaborating the aforesaid submission, it is submitted that the

doctors engaged by the respective petitioner-trusts render services on a

part-time basis while carrying on their private practice. Although the

clinics operated by the petitioner-trusts are in the same building, each

clinic functions independently in distinct medical fields without any

interdependence. Reliance has been placed on the inquiry report dated

08.09.1998 to contend that it establishes the independent character and

functioning of each of the petitioner-trusts.

8. It is further contended that no inquiry, as contemplated under

Section 2-A of the EPF Act, was undertaken by the Assistant Provident

Fund Commissioner before clubbing the petitioner-trusts into a single

establishment. Placing reliance upon the judgment of the Hon’ble

Supreme Court in “M/s Torino Laboratories Pvt. Ltd. v. Union of India

& Ors.”, Civil Appeal No. 9540 of 2018, decided on 15.07.2025, it is

argued that the test of functional integrality is the determinative test for

deciding whether different trusts can be clubbed together for the purposes

CWP-20743-2015 (O&M) and connected cases 6

of Section 2-A of the EPF Act. It is submitted that the basic test is

whether the units are so functionally integrated that one cannot exist

without the other and whether, in matters relating to finance and

employment, the employer has integrated the three units into a single

establishment. It is submitted that none of these relevant considerations

was examined by the authorities.

9. It is further contended that the mere fact that three trustees

are common to the petitioner-trusts cannot, by itself, justify clubbing three

distinct entities into a single establishment. In order to lend vigour to this

submission, reliance has been placed upon “Regional Provident Fund

Commissioner vs. Raj's Continental Exports (P) Ltd.”, (2007) 4 SCC

239, wherein it was held that the mere fact that the proprietor of one

concern was the Managing Director of another would not, by itself,

establish that one concern constituted a branch of the other.

10. Proceeding further, learned senior counsel submits that there

is no evidence on record to establish that the twenty-seven employees,

treated by the authorities as employees of M/s Dalmia Charitable

Hospital, were receiving their salaries, either directly or indirectly, from

one unit of the petitioner-trusts. It is contended that there is no material to

demonstrate financial or functional interdependence among the petitioner-

trusts, or that the salary of employees engaged by one trust was being paid

by another. Consequently, the clubbing of the petitioner-trusts under the

impugned assessment order is wholly unsustainable in law. Reliance in

this regard has been placed on “Khoja Lime Udyog vs. Regional

Provident Fund Commissioner”, (1992) 1 LLJ 903 (Raj.), wherein it was

CWP-20743-2015 (O&M) and connected cases 7

held that unless it is established that the employees of the concerns sought

to be clubbed were receiving wages, directly or indirectly, from the same

employer, it would be difficult to hold that such concerns jointly

constitute one establishment.

11. Learned senior counsel also assails the findings recorded by

the Appellate Tribunal as being factually erroneous. It is submitted that

the Appellate Tribunal wrongly assumed that the rental income reflected

in the accounts of petitioner Gajanand Dalmia Charitable Trust pertained

to the building at Amritsar in which all the petitioner-trusts are

functioning. According to the learned senior counsel, the said rental

income, in fact, arises from a flat owned by the said trust at Calcutta and

has no connection whatsoever with the premises at Amritsar. It is,

therefore, contended that the Appellate Tribunal’s finding is founded on a

complete misappreciation of the factual record.

12. Finally, before resting his arguments, learned senior counsel

contends that even the assessment of provident fund dues suffers from

infirmity, inasmuch as no proper inquiry under Section 7-A of the EPF

Act was undertaken for determining the actual liability of the petitioner-

trusts.

SUBMISSIONS OF LEARNED COUNSEL FOR THE

RESPONDENTS

13. Per contra, learned counsel for the respondents puts forward

a fierce defence to the submissions advanced on behalf of the petitioner-

trusts and contends that it is an open-and-shut matter. It is submitted that

the three petitioner-trusts, namely, (i) Seth Murlidhar Dalmia Charitable

CWP-20743-2015 (O&M) and connected cases 8

Trust, (ii) Smt. Purni Devi Dalmia Charitable Trust, and (iii) Gajanand

Dalmia Charitable Trust, were constituted to evade the purview of the

EPF Act. All three petitioner-trusts operate a hospital from the same

building, which is jointly owned by Seth Murlidhar Dalmia Charitable

Trust and Smt. Purni Devi Dalmia Charitable Trust, while Gajanand

Dalmia Charitable Trust occupies the premises as a tenant. It is further

submitted that the petitioner-trusts exist merely on paper and, in

substance, function as a single establishment, with complete unity and

integration of operations among them, as evidenced by their carrying on

the same business activities from the same premises.

14. Learned counsel further submits that the documen ts

produced by the establishment during the proceedings relating to the three

petitioner-trusts were attested by the same individual. Likewise, the

attendance registers of all the three petitioner-trusts, copies whereof were

obtained during the proceedings on 10.12.2002, also bear the signatures of

the same person. According to the learned counsel, these circumstances

clearly establish that the managerial control of all the three petitioner-

trusts vests in the same management. It is further pointed out that Shri

R.N. Dalmia, Shri Kamal Dalmia, and Smt. Veena Dalmia are common

trustees of all the three petitioner-trusts. Besides this, the letterheads of

the petitioner-trusts disclose the same telephone numbers for their

respective clinics and offices. It is submitted that all of these facts

strengthen the contention of unified management.

15. Lastly, placing reliance upon the judgment of the Hon’ble

Supreme Court in “L.N. Gadodia & Sons and another v. Regional

CWP-20743-2015 (O&M) and connected cases 9

Provident Fund Commissioner, (2011) 13 SCC 517”, learned counsel

submits that, by invoking the provisions of Section 2-A of the EPF Act,

not only different branches or departments of one establishment can be

clubbed together, but two establishments can also be clubbed together.

ANALYSIS OF JUDICIAL PRECEDENTS GOVERNING THE

QUESTION OF LAW ARISING IN THE PRESENT WRIT

PETITIONS

16. In Associated Cement Companies Limited (supra), the

Hon’ble Supreme Court, while considering the question whether the

Rajanka limestone quarry formed part of the establishment known as

Chaibasa Cement Works, held that it is impossible to lay down any one

test as an absolute and invariable test for all cases. While examining

various indicia, such as geographical proximity, unity of ownership,

management and control, unity of employment and conditions of service,

functional integrality, general unity of purpose etc., the Supreme Court

observed that 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, the establishment is regarded as one; and

if on the contrary they do not constitute one integrated whole, each unit is

to be regarded as a separate unit. It was further observed that the

manner in which the relationship between the units is to be

determined depends upon the facts proved, having regard to the

scheme and object of the statute. The relevant paragraphs of the

judgment are extracted hereinbelow:-

“7. The evidence was really one sided and the only witness

CWP-20743-2015 (O&M) and connected cases 10

examined was Mr. Dongray, Manager of the Chaibasa Cement

Works. Now, the relation between the limestone quarry and the

factory can be considered from several points of view, such as (1)

ownership, (2) control and supervision, (3) finance, (4)

management and employment, (5) geographical proximity and (6)

general unity of purpose and functional integrality, with

particular reference to the industrial process of making cement.

On all that above points Mr. Dongray gave evidence. It was not

disputed that the Company owned the limestone quarry as also

the factory and there was unity of ownership. Mr. Dongray's

evidence further showed that there was unity of control,

management and employment. He said that the limestone quarry

was treated as a part and parcel of the Chaibasa Cement Works,

that is, as a department thereof and he as the Manager was in

overall charge of both, though there was a Quarry Manager in

charge as a departmental head under him. On this point Mr.

Dongray said:-

“XX XX XX”

This was supported by a circular letter dated March 11, 1952,

which said that the entire factory and the associated quarries

were under the sole control of the Manager, who was responsible

for maintaining full output at economic cost up to the expected

standard. The circular letter further stated that all orders and

contracts were to be issued by the Manager for the working of the

factory and quarries and the relevant bills were to be passed by

him. As to finance and conditions of employment, Mr. Dongray

said:-

“XX XX XX”

Exhibits 1 to 26 filed on behalf of the management, which showed

the working of the quarry and the factory, supported the aforesaid

evidence of Mr. Dongray; they showed, as has been observed by

the Tribunal itself, that the management was maintaining one

common account and the final authority on the spot in respect of

the quarry as also in respect of other departments of the factory

was Mr. Dongray, the Manager. There were also other documents

CWP-20743-2015 (O&M) and connected cases 11

to show that the transfer of members of the staff from the quarry

to the factory and vice versa was made by Mr. Dongray

according to the exigencies of service. It is worthy of note here

that the Union itself gave notice to the Manager of the factory

with regard to the intended strike in the limestone quarry. The

geographical proximity of the limestone quarry was never in

dispute. It was adjacent to the factory, being situate within a

radius of about a mile. As to general unity of purpose and

functional integrality, this was also not seriously in dispute. Mr.

Dongray said that limestone was the principal raw material for

the manufacture of cement and the cement factory at Jhinkpani

depended exclusively on the supply of limestone from the quarry

at Rajanka. His evidence no doubt disclosed that some excess

limestone was sent to the factory at Khelari as well. On this point

Mr. Dongray said:-

“XX XX XX”

Mr. Dongray explained that the normal number of departmental

workers in the quarry before the strike was in the neighbourhood

of 250; but there were about 1,000 workers employed by

contractors. The number of daily-rated workers was in the

neighbourhood of 950 and the total monthly-paid staff varied

from 100 to 105. The wages paid to the workers in the quarry

were debited to limestone account of the Cement Works, and in

the matter of costing, the amount spent on limestone was also

debited. The bank accounts, however, were in the name of the

Company and the persons who were entitled to operate on those

accounts were Mr. Dongray, the Manager, the Chief Engineer,

and the Chief Chemist of the Cement Works.

11. The Act not having prescribed any specific tests for

determining what is 'one establishment', we must fall back on

such considerations as in the ordinary industrial or business

sense determine the unity of an industrial establishment, having

regard no doubt to the scheme and object of the Act and other

relevant provisions of the Mines Act, 1952, or the Factories Act,

1948. What then is 'one establishment' in the ordinary industrial

CWP-20743-2015 (O&M) and connected cases 12

or business sense? The question of unity or oneness presents

difficulties when the industrial establishment consists of parts,

units, departments, branches etc. If it is strictly unitary in the

sense of having one location and one unit only, there is little

difficulty in saying that it is one establishment. Where, however,

the industrial undertaking has parts, branches, departments, units

etc. with different locations, near or distant, the question arises

what tests should be applied for determining what constitutes 'one

establishment'. Several tests were referred to in the course of

arguments before us, such as, geographical proximity, unity of

ownership, management and control, unity of employment and

conditions of service, functional integrality, general unity of

purpose etc. To most of these we have referred while summarising

the evidence of Mr. Dongray and the findings of the Tribunal

thereon. 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 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

CWP-20743-2015 (O&M) and connected cases 13

independently owned. In the midst of all these complexities it may

be difficult to discover the real thread of unity. In an American

decision (Donald L. Nordling v. Ford Motor Company, (1950) 28

A.L.R., 2d. 272) there is an example of an industrial product

consisting of 3,800 or 4,000 parts, about 900 of which came out

of one plant; some came from other plants owned by the same

Company and still others came from plants independently owned,

and a shutdown caused by a strike or other labour dispute at any

one of the plants might conceivably cause a closure of the main

plant or factory.”

17. The ratio laid down in the judgment ( supra) was

subsequently relied upon by the Hon’ble Supreme Court in Management

of Pratap Press (supra), wherein it was held that the question whether the

two activities, in which the single owner is engaged, are one industrial

unit or two distinct industrial units is not always easy of solution. It was

observed that no hard and fast rule can be laid down for the decision of

the question and each case has to be decided on its own peculiar facts.

The Supreme Court further emphasized the significance of the test of

functional integrality and held that, where two units belong to a

proprietor, there is almost always likelihood also of unity of management,

and in all such cases the Court has to consider with care how far there is

functional integrality, meaning thereby 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. The apposite observations enclosed in the judgment read as

under:-

“2. The question whether the two activities in which the single

CWP-20743-2015 (O&M) and connected cases 14

owner is engaged are one industrial unit or two distinct industrial

units is not always easy of solution. No hard and fast rule can be

laid down for the decision of the question and each case has to be

decided on its own peculiar facts. In some cases the two activities

each of which by itself comes within the definition of industry are

so closely linked together that no reasonable man would consider

them as independent industries. There may be other cases where

the connection between the two activities is not by itself sufficient

to justify an answer one way or the other, but the employer's own

conduct in mixing up or not mixing up the capital, staff and

management may often provide a certain answer.

5. In Associated Cement Co., Ltd. v. Their Workmen, AIR 1960

Supreme Court 56, this Court had to consider the question

whether the employer's defence to a claim for lay-off

compensation by the workers of the Chaibasa Cement Works that

the laying off was due to a strike in another part of the

establishment, viz., limestone quarry at Rajanka was good. In

other words the question was: whether the limestone quarry of

Rajanka formed part of the establishment known as the Chaibasa

Cement Works within the meaning of Section 25E(iii) of the

Industrial Disputes Act. While pointing out that it was impossible

to lay down any one test as an absolute and invariable lest for all

cases it observed that the real purpose of these tests would be to

find out the true relation between the parts, branches, units etc.

This court however mentioned certain tests which might be useful

in deciding whether two units form part of the same

establishment. Unity of ownership, unity of management and

control, unity of finance and unity of labour, unity of employment

and unity of functional "integrality" were the tests which the

Court applied in that case. It is obvious there is an essential

difference between the question whether the two units form part of

one establishment for the purposes of Section 25E(iii) and the

question whether they form part of one single industry for the

purposes of calculation of the surplus profits for distribution of

bonus to Workmen in one of the units. Some assistance can still

CWP-20743-2015 (O&M) and connected cases 15

nevertheless be obtained from the enumeration of the tests in that

case. Of all these tests the most important appears to us to be that

of functional "integrality" and the question of unity of finance and

employment and of labour. Unity of ownership exists ex

hypothesi. Where two units belong to a proprietor there is almost

always likelihood also of unity of management. In all such cases

therefore the Court has to consider with care how far there is

"functional integrality" meaning thereby 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.”

18. In M/s Torino Laboratories Pvt. Ltd. (supra), the Hon’ble

Supreme Court again examined the ratio laid down in both the judgments

(supra) and held that several factors are relevant and the significance and

importance of the several relevant factors would not be the same in each

case. The unity of ownership and management and control, general unity

of the two concerns, unity of finance, geographical location, functional

integrality would all be relevant factors depending on the facts of each

case. Moreover, following the ratio laid down in “The Honorary

Secretary, South India Millowners’ Association and Others vs. The

Secretary, Coimbatore Distruict Textile Workers’ Union, [1962] Supp. 2

SCR 926, the Supreme Court further held that Courts cannot stop with

only examining whether the two units are so functionally integrated that

one cannot exist without the other and absent functional integrality

conclude that the units are separate. In fact, Courts are to consider unity of

ownership, unity of finance, unity of management and unity of labour and

the transferability of employees as relevant indicia. The relevant

CWP-20743-2015 (O&M) and connected cases 16

paragraphs of the judgment rendered in M/s Torino Laboratories Pvt.

Ltd. are reproduced hereunder:-

“23. Thus, it will be seen that this Court considered unity of

ownership, unity of finance, unity of management and unity of

labour and the transferability of employees as relevant indicia.

24. It will be clear from South India Millowners’ Association

(supra), Wengers (supra) and Pratap (supra) that Courts cannot

stop with only examining whether the two units are so

functionally integrated that one cannot exist without the other and

absent functional integrality conclude that the units are separate.

In the facts of the present case, it is the case of the appellant that

while the appellant’s unit manufactures tablets and syrups, the

respondent No.3-Vindas manufactures injections and capsules.

According to the written submissions, the appellant contends that

the establishments have completely different range of products

and any movement of man and material between the two of these

may cause gross contamination and there is no interdependence

of any raw material. On the other hand, the authorities contend

that while the manufactured products may be different the

industrial activity is common, namely, they are part of the

pharmaceutical industry.”

REASONS FOR DISMISSING THE PRESENT WRIT PETITIONS

19. Having tested the rival submissions on the anvil of the legal

principles discussed hereinabove and examined the facts of the case in the

light thereof, this Court finds that the present writ petitions are devoid of

merit and warrant dismissal. The reasons for drawing this conclusion are

assigned hereinafter.

20. As regards the principal contention advanced by learned

senior counsel for the petitioner-trusts that separate and independent

establishments cannot be clubbed together for the purposes of Section 2-A

CWP-20743-2015 (O&M) and connected cases 17

of the EPF Act, the said contention is devoid of merit. The issue is no

longer res integra. The Hon’ble Supreme Court in L.N. Gadodia & Sons

(supra) has already considered and rejected the said argument, holding

that Section 2-A of the EPF Act is an enabling provision in a welfare

enactment and, therefore, it is required to be interpreted accordingly.

Moreover, having regard to the fact that the directors of the two

petitioner-companies therein belonged to the same family, the Managing

Director and two senior officers were common to both companies, and the

Enforcement Officer had noticed during inspection that the employees of

the two companies were being swapped, the Supreme Court held that all

these circumstances pointed to one conclusion that the two entities formed

part of the same establishment for the purposes of EPF Act. The

paragraphs embodying the relevant observations are extracted hereunder:-

“20. In the present case the Directors of the two petitioner

companies belong to the same family. The Managing Director is

common. The two senior officers i.e Commercial Manager and

Technical Manager are common. At the time of inspection, the

Enforcement Officer noticed that the employees of the two

companies were being swapped. Both of them have same

registered address and common telephone numbers and a

common gram number. The audited accounts revealed that the

second petitioner company had given a loan of Rs. 5 lakhs to the

first petitioner in the year 1988. The two companies are family

concerns of the Gadodia family. Hence, in the facts of the present

case we have to hold that there is an integrity of management,

finance and the workforce in the two private limited companies.

The two companies have seen to it that on record each of the two

entities engage less than twenty employees, although the number

of employees engaged by them is more than twenty when taken

together. The entire attempt of the petitioners is to show that the

CWP-20743-2015 (O&M) and connected cases 18

two entities are separate units so that the Provident Funds Act

does not get attracted. The material on record however, leads to

only one pointer that the two entities are parts of the same

establishment and in which case they get covered under the

Provident Funds Act.

23. The petitioners have contended that the two entities are two

separate establishments. They have tried to draw support from

section 2(A) of the Act which declares that where an

establishment consists of different departments or has branches

whether situated in the same place or in different places, all such

departments or branches shall be treated as parts of the same

establishment. It was submitted that only different departments or

branches of an establishment can be clubbed together, but not

different establishments altogether. In this connection, what is to

be noted is that, this is an enabling provision in a welfare

enactment. The two petitioners may not be different departments

of one establishment in the strict sense. However, when we notice

that they are run by the same family under a common

management with common workforce and with financial integrity,

they are expected to be treated as branches of one establishment

for the purposes of Provident Funds Act. The issue is with respect

to the application of a welfare enactment and the approach has to

be as indicated by this Court in Sayaji Mills Ltd. (supra). The test

has to be the one as laid down in Associated Cement Companies

Ltd. (supra) which has been explained in Pratap Press (supra).”

21. In M/s Torino Laboratories Pvt. Ltd. (supra), the aforesaid

contention was once again raised that there are two separate juristic

entities and, therefore, theory of clubbing cannot be invoked. However,

the said contention was outrightly rejected. It was observed that nowadays

it is common knowledge that artificial devices, subterfuges and facades

are commonly resorted to, to create a smokescreen of separate entities for

a variety of purposes. The Court of law faced with such a scenario has a

CWP-20743-2015 (O&M) and connected cases 19

duty to lift the veil and see behind applying the well-established tests to

determine whether the entities are really separate entities or are they really

a single entity. Paragraph 31 of the judgment reads as under:-

“31. Hence, it will be clear from this judgment that the contention

of the appellant herein that once there are two separate juristic

entities, theory of clubbing cannot be invoked is completely

untenable and is only stated to be rejected. It is common

knowledge that artificial devices, subterfuges and facades are

commonly resorted to, to create a smokescreen of separate

entities for a variety of purposes. The Court of law faced with

such a scenario has a duty to lift the veil and see behind applying

the well-established tests to determine whether the entities are

really separate entities or are they really a single entity. Myriad

fact situations may arise. Hence, the contention that Section 2A

cannot be applied if ostensibly two separately registered entities

under the Companies Act are involved, has only to be stated to be

rejected. This is especially so when the Court is interpreting a

beneficial legislation like in the present case, namely, the EPF

Act.”

22. Consequently, following the ratio laid down by the Hon’ble

Supreme Court, this Court has no hesitation in rejecting the aforesaid

contention of learned senior counsel and in holding that, by invoking the

provisions of Section 2-A of the EPF Act, the competent authority is fully

empowered to examine whether the three petitioner-trusts are separate and

independent establishments or constitute a single unit for the purpose of

running a hospital.

23. Now, it is time to deal with another star argument raised by

learned senior counsel for the petitioner-trusts pertaining to the clubbing

of trusts without applying the test of functional integrality. There is no

doubt that functional integrality would be a relevant factor, depending on

CWP-20743-2015 (O&M) and connected cases 20

the facts of each case. However, it cannot be the sole criterion applicable

in every case. The Hon’ble Supreme Court, in South India Millowners’

Association (supra), has once again examined the importance of the test

of functional integrality and held that the said test would be relevant and

significant when the Court is dealing with different kinds of businesses

run by the same industrial establishment or employer. It was further held

that, in determining whether two lines of business are functionally

integrated or mutually interdependent, the test of functional integrality

would not be of equal significance where the employer carries on the

same business at two different places. It was also held that the test of

functional integrality is not, and generally cannot be, satisfied by two such

concerns run by the same employer in the same line and, therefore, it

cannot, in any manner, be concluded that the two concerns do not

constitute one unit. The relevant observations recorded in the judgment

are extracted hereinbelow:-

“…..In the complex and complicated forms which modern

industrial enterprise assumes it would be unreasonable to suggest

that any one of the relevant tests is decisive; the importance and

significance of the tests would vary according to the facts in each

case and so, the question must always be determined bearing in

mind all the relevant tests and corelating them to the nature of the

enterprise with which the Court is concerned. It would be seen

that the test of functional integrality would be relevant and very

significant when the Court is dealing with different kinds of

businesses run by the same industrial establishment or

employer. Where an employer runs two different kinds of

business which are allied to each other, it is pertinent to enquire

whether the two lines of business are functionally integrated or

are mutually inter-dependent. If they are, that would, no doubt,

CWP-20743-2015 (O&M) and connected cases 21

be a very important factor in favour of the plea that the two lines

of business constitute one unit. But the test of functional

integrality would not be as important when we are dealing with

the case of an employer who runs the same business in two

different places. The fact that the test of functional integrality is

not and generally cannot be satisfied by two such concerns run

by the same employer in the same line, will not necessarily mean

that the two concerns do not constitute one unit…..” (emphasis

supplied)

24. Following the aforesaid ratio, the Hon’ble Supreme Court, in

M/s Torino Laboratories Pvt. Ltd. (supra), held that the test of functional

integrality may not be stressed in every case without having regard to the

relevant facts of the case and it is not the correct legal position that absent

functional integrality the units have to be necessarily concluded as

separate. The relevant paragraphs of the judgment read as under:-

“21. In Management of Wenger and Co. vs. Their Workmen,

(1963) Supp. 2 SCR 862, one of the questions considered was

whether industrial establishments owned by the same

management constituted separate units or they constituted one

establishment. In the said case, the question was whether the wine

shops and the restaurants form part of one establishment or not.

For the Management, in that case, it was contended that absent

functional integrality, it has to be necessarily concluded that the

units are separate in all cases. Rejecting this argument, this Court

held as under:-

“The question as to whether industrial establishments

owned by the same managements constitute separate units

or one establishment has been considered by this Court on

several occasions. Several factors are relevant in deciding

this question. But it is important to bear in mind that the

significance or importance of these relevant factors would

not be the same in each case; whether or not the two units

constitute one establishment or are really two separate and

CWP-20743-2015 (O&M) and connected cases 22

independent units, must be decided on the facts of each

case. Mr Pathak contends that the Tribunal was in error in

holding that the restaurants cannot exist without the wine

shops and that there is functional integrality between them.

It may be conceded that the observation of the Tribunal

that there is functional integrality between a restaurant

and a wine shop and that the restaurants cannot exist

without wine shops is not strictly accurate or correct. But

the test of functional integrality or the test whether one

unit can exist without the other, though important in some

cases, cannot be stressed in every case without having

regard to the relevant facts of that case, and so, we are not

prepared to accede to the argument that the absence of

functional integrality and the fact that the two units can

exist one without the other necessarily show that where

they exist they are necessarily separate units and do not

amount to one establishment. It is hardly necessary to deal

with this point elaborately because this Court had

occasion to examine this problem in several decisions in

the past, vide Associated Cement Companies Ltd. v. Their

Workmen; Pratap Press, etc. v. Their Workmen,

Pakshiraja Studios v. Its Workmen; South India

Millowners' Association v. Coimbatore District Textile

Workers Union; Fine Knitting Co. Ltd. v. Industrial Court

and D.C.M. Chemical Works v. Its Workmen.”

22. Hence, it is very clear that while the test of functional

integrality, namely, the test whether one unit can exist without the

other may be important in some cases, it may not be stressed in

every case without having regard to the relevant facts of the case

and it is not the correct legal position that absent functional

integrality the units have to be necessarily concluded as separate.

Thereafter, applying the law to the facts, this Court held as

under:-

“Let us then consider the relevant facts in the present

dispute. It is common ground that wherever the employer

CWP-20743-2015 (O&M) and connected cases 23

runs a restaurant and a wine shop, the persons interested

in the trade are the same partners. The capital supplied to

both the units is the same. Prior to 1956, wine shops and

restaurants were not conducted separately, but after 1956

when partial prohibition was introduced in New Delhi,

wine shops had to be separated because wine cannot be

sold in restaurants. But it is significant that the licence for

running the wine shop is issued on the strength of the fact

that the management was running a wine shop before the

introduction of prohibition. In fact, LII licence to run wine

shops has been given in many cases to previous

restaurants on condition that the wine shops are run

separately according to the prohibition rules. It is true that

many establishments keep separate accounts and

independent balance-sheets for wine shops and

restaurants; but that clearly is not decisive because it may

be that the establishments want to determine from stage to

stage which line of business is yielding more profit.

Ultimately, the profits and losses are usually pooled,

together. Thus, generally stated, there is unity of

ownership, unity of finances, unity of management and

unity of labour; employees from the restaurant can be

transferred to the wine shop and vice versa. Besides, it is

significant that in no case has the establishment registered

the wine shops and the restaurants separately under

Section 5 of the Delhi Shops and Establishments Act, 1954

(7 of 1954). In fact, when Mr Nirula, the Secretary of the

Employers’ Association, was called upon to register his

wine shop separately, he protested and urged that separate

registration of the several departments was unnecessary;

and that clearly indicated that wine shop was treated by

the establishment as one of its departments and nothing

more. The failure to register a wine shop as a separate

establishment is, in our opinion, not consistent with the

employers' case that wine shops are separate and

CWP-20743-2015 (O&M) and connected cases 24

independent units. Having regard to all the facts to which

we have just referred, we do not think it would be possible

to accept Mr Pathak's argument that the Tribunal was in

error in holding that the wine shops and restaurants form

part of the same industrial establishments.”

25. In the case at hand, all three petitioner-trusts are engaged in

carrying on the same business, namely, running a hospital, and that too in

the same building. The employees of the three petitioner-trusts are

interchangeable and work in tandem for the effective functioning of the

hospital. Therefore, in view of the ratio laid down by the Hon’ble

Supreme Court in South India Millowners’ Association (supra), this

Court is of the considered opinion that the test of functional integrality is

not determinative for deciding whether the three petitioner-trusts

constitute a single establishment. Rather, the issue is required to be

examined in the light of other relevant indicia, such as unity of finance,

geographical proximity, unity of ownership, management and control, and

general unity of the three trusts.

26. In order to determine the relationship among the three

petitioner-trusts, due regard must be given to the scheme and object of the

statute. Reference may be made to Associated Cement Companies

Limited (supra). To provide an institution of provident funds for

employees working in factories and other establishments, Parliament

enacted the EPF Act. Two other social security schemes were

subsequently added, viz. the pension fund and the deposit-linked

insurance scheme. To achieve the object of creating a mechanism for the

social security of industrial workers after retirement, or for their

CWP-20743-2015 (O&M) and connected cases 25

dependents in the event of early death, the EPF Act makes institutional

provident fund contribution compulsory, with both workers and

employers contributing. The accumulated amount is payable on retirement

or on specified contingencies. A perusal of the Preamble to the EPF Act

makes it clear that the Act is a social welfare measure and should be

liberally interpreted to achieve the desired object, i.e. employees have a

mechanism of social and economic security. The EPF Act provides that

contributions to the provident fund should be made on the basis of basic

pay plus dearness allowance.

27. It is now apposite to examine the provisions of Section 2-A

of the EPF Act upon which the entire controversy revolves. Section 2-A

reads as follows:-

“2A. Establishment to include all departments and branches.-

For the removal of doubts, it is hereby declared that where an

establishment consists of different departments or has branches,

whether situate in the same place or in different places, all such

departments or branches shall be treated as parts of the same

establishment.”

28. As noticed hereinabove, the controversy is no longer res

integra in view of the authoritative pronouncement in L.N. Gadodia &

Sons (supra) that not only different branches or departments of a single

establishment may be aggregated, but, in appropriate circumstances, two

distinct establishments may also be clubbed together for the purposes of

the EPF Act. It must, therefore, now be examined whether the three

petitioner-trusts can be clubbed together by invoking Section 2-A of the

EPF Act.

CWP-20743-2015 (O&M) and connected cases 26

29. It is an undisputed position that all three petitioner-trusts

operate the hospital from the same building, which is jointly owned by

Seth Murlidhar Dalmia Charitable Trust and Smt. Purni Devi Dalmia

Charitable Trust, whereas Gajanand Dalmia Charitable Trust occupies a

portion thereof as a tenant. The competent authority has recorded a

finding of fact that all three petitioner-trusts function as a single

establishment with complete unity and integration of their operations. The

letterheads of the petitioner-trusts disclose identical telephone numbers

for their respective clinics and offices. Further, the attendance registers of

all three petitioner-trusts, which were produced during the proceedings

under Section 7-A of the EPF Act, bear the signatures of the same

individual. These circumstances clearly demonstrate that the managerial

control of all three petitioner-trusts is vested in one and the same

management.

30. Besides the unity of geographical location and common

management and control, there also exists unity of ownership inasmuch as

Shri R.N. Dalmia, Shri Kamal Dalmia, and Smt. Veena Dalmia, all of

whom are members of the same family, are common trustees of each of

the three petitioner-trusts.

31. In view of the foregoing discussion, and upon applying the

relevant indicia, viz. geographical proximity, unity of ownership, unity of

management and control, and unity of purpose, this Court is satisfied that

the three petitioner-trusts constitute a single establishment within the

meaning of Section 2-A of the EPF Act. The material on record clearly

establishes that the petitioner-trusts are collectively operating a single

CWP-20743-2015 (O&M) and connected cases 27

unit, namely, a hospital. Accordingly, the competent authority was fully

justified in clubbing the three petitioner-trusts and treating them as one

establishment for the purposes of the EPF Act.

32. Insofar as the contention of learned senior counsel for the

petitioner-trusts is concerned that no proper inquiry under Section 7-A of

the EPF Act was undertaken to determine the actual liability of the

petitioner-trusts, he has failed to substantiate the argument by pointing to

any procedural infirmity or defect. Accordingly, the said contention is

devoid of merit.

FINAL ORDER

33. As an upshot of the discussion made hereinabove, this Court

finds no illegality or perversity in the impugned orders. Accordingly, the

impugned orders are upheld, and the present writ petitions, being devoid

of merit, are dismissed.

34. Pending application(s), if any, stand disposed of accordingly.

35. A photocopy of this order be placed on file of e ach

connected case.

(KULDEEP TIWARI)

July 13, 2026 JUDGE

devinder

Whether speaking/reasoned : Yes/No

Whether Reportable : Yes/No