ORDER
J.C. Verma, J.
1. M/s. U.P.Hotels Limited, Varanasi and Hotel Clarks Amer, Jaipur have filed the present writ petition for issuance of a direction in the nature of certiorari for quashing the orders dated June 16, 1980 (Annexure-VII), October 5, 1983 (Annexure-XI) passed by Respondent No. 2 and order dated May 4, 1981 (Annexure-VIII) passed by Respondent No. 3. M/s.U.P.Hotels Limited (hereinafter called as 'the petitioner') is a company registered under the Companies Act. Its head quarter is situated at New Delhi. It has got hotels at Varanasi, Agra and had also established Hotel Clarks Amer at Jaipur. It is stated that the Petitioner No. 1 is a company with multifarious activities i.e. to lend money, to establish or to promote establishments, in which the company may be interested to enter into any arrangements with the Government or authority and other activities.
2. It is admitted that the hotel and restaurants fall under the provision of Employees' Provident Funds Act. The Petitioner No. 2, Hotel Clarks Amer (hereinafter called as 'Jaipur Hotel') is one of such projects sponsored by the Petitioner No. 1 and falls within the meaning of Section 1(3)(b) of the provisions of the Employees' Provident Funds Act, 1952 (hereinafter called as 'the Act'). Section 1(3)(b) of the Act provides that if there are more than twenty persons working in any establishment, that establishment is to be governed by the provisions of the Act. However, Section 16 says that the Act shall not apply to any of the establishments employing fifty or more persons or twenty or more till the expiry of three years in the case of former and 5 years in the case of latter (this was the provision at the relevant time when the Petitioner No. 2 was established).
3. It is stated that the Company had established Hotel Clarks at Agra which started functioning in the year 1962 and Agra Hotel was granted three years infancy benefit under Section 16(1)(b) of the Act. The Company had taken second project at Jaipur which was established in the year 1973 and it was similarly entitled to three years infancy benefit under Section 16(1)(b) of the Act. However, on June 12, 1974 the Regional Provident Fund Commissioner (hereinafter called as the 'Commissioner') issued a notice to the petitioner Hotel to furnish information and the Commissioner started the proceedings under Section 7A of the Act. The notice is attached as Annexure-3 to the writ petition. The Company was directed to comply with the provisions of the Act vide Annexure-4 which was challenged before the Central Government under Section 19A of the Act and the Central Government had remanded the case back to the Commissioner, Jaipur for completing the proceedings under Section 7A after giving the party a reasonable opportunity to show cause vide its order attached as Annexure-VI.
4. The Regional Provident Fund Commissioner passed the order under Section 7A of the Act holding that the Jaipur Hotel is owned by M/s.U.P.Hotel and Restaurants Limited, Varanasi and was covered under the Act. On the notice having been issued for covering Jaipur Hotel for the period from 1973 to 1976 the parties had appeared. The petitioners had taken up stand before the Regional Provident Fund Commissioner that in view of Section 16 of the Act, the Jaipur Hotel was not covered because it was entitled to infancy benefit of three years on the ground that Jaipur Hotel had been newly constructed and had started working in 1973 even though it was admitted case that it was one of the several units of the company having its registered office at Varanasi. Because of the (reason that it is a separately registered unit under the Rajasthan Shops and Commercial Establishments Act, 1958 and also separately registered with Tourism Department of Government of India for its import requirements etc. and has got a separate license for foreign liquor and for the reason that staff at Jaipur is under the General Manager of the Hotel at Jaipur and, therefore, on the grounds mentioned above inter alia, it was submitted before the Commissioner that Jaipur Hotel was entitled to infancy. Reliance was made on the provisions of Section 1(3)(b) read with Section 16 of the Act.
5. On behalf of the Department, it was submitted before the Commissioner that as a matter of fact Jaipur Hotel was one of the branches of U.P.Hotels Ltd. for the reason that there was provision regarding transfer of staff from one establishment to other establishment under the rules and regulations for the Hotel Employees framed by Hotel Clarks. It was further averred before the Regional Provident Fund Commissioner that right from the beginning and start of business, the Hotel at Jaipur had received articles of crockery, cutlery etc. from the Company. It was further submitted by the Department that as per admitted position by the Company the operational Head Quarter of Hotel is U.P.Hotel and Restaurants are at New Delhi and branches are Hotel Clarks, Agra, Clarks Hotel, Varanasi, Hotel Clarks Awadh at Lucknow. It was further submitted that the Directors of company were ultimate incharge of all affairs of the Company. There was one combined profit and loss account and balance-sheet was prepared for all units of the Company. After going through the submissions made by the respective parties vide impugned order Annexure-VII, the Regional Provident Fund Commissioner had given a definite finding based on facts (1) that the U.P.Hotel and Restaurants are the owners of Clarks Hotel Amer, Jaipur, Lucknow, Agra and Varanasi, and (2) common management, supervision and control over all the units of the Company and separate General Managers are appointed by the Board of Directors to look after the day today administration of different hotels; and (3) the General Managers are responsible to the Company. The relevant para of the impugned order Annexure- VII reads as under:
'In the present case, M/s.U.P.Hotels and Restaurants Ltd., are the owners of Hotel Clarks Amer, Jaipur and Hotels at Lucknow, Agra and Varanasi. The Company possesses management, supervision and control over all the units of the Company and separate General Managers appointed by the Board of Directors, to look after day to day administration of the different Hotels are answerable to the Directors of the Company. It has not been proved that the General Manager of the Hotel is independent of the Directors in his functions. The regulations for Hotel employees provide that the 'Management' means 'the General Manager or such other person who has been authorised by the U. P. Hotels and Restaurants Ltd., to manage the affairs of the Hotel.' Thus the General Manager is responsible to the Company and consequently it can safely be said that the control, supervision, management and administration of the Hotels vest in the Board of Directors of the Company.'
6. It was further held by the RPFC that even though separate balance-sheets were prepared but it was only prepared to see the financial working results of the unit. The consolidated balance-sheet detected the actual state of affairs of the Company. The RPFC held as under:
'As such while separate Balance Sheet of each unit is prepared only to see financially the working results of that unit, the consolidated Balance Sheet depicts the actual state of affairs of the Company. According to requirements and in the interest ot the company as a whole the funds available in one unit can be transferred to the other units. As such I am inclined to believe that there is financial inter-dependence among various units of the Company.'
7. The Regional Provident Fund Commissioner held that the employees were being transferred from one unit to another unit as found in para 20 of its order and had referred to the Standing Orders of the Company which were common. It was further found that various articles are being sent to and received from other units of the Company by Amer Hotel. The Regional Provident Fund Commissioner held that the hotels are owned by the Company and are engaged in the same business and there is unity of purpose and noticing Section 26A of the Act it came to the finding of fact after going through the evidence that the petitioner Hotel Amer was not entitled for any infancy benefit. The above said order Annexure-VII was challenged before the Central Government. The Central Government vide Annexure-VIII after going through; the evidence and submissions made by the parties came to the conclusion that the order Annexure-VII was in accordance with law.
8. After finding that there was applicabilityof the Act to the petitioner, a notice as requiredunder the Act was issued for deposit of theamount as per Annexure-IX. The petitioner isaggrieved against the orders Annexure-VI, VII,VIII and IX.
9. It is stated by the petitioner that the Hotel Clarks Amer is an establishment in itself and being a new establishment, is entitled to the infancy period exemption under the provisions of the Act.
10. A reply has been filed on behalf of the respondents. The facts are not denied. However, it is submitted that as a matter of fact the. U.P.Hotels is the establishment and is running the branches in the shape of Hotel establishments at various places including Jaipur and in view of certain provision of the Act, is not entitled to any exemption and impugned annexures have been rightly and legally passed. It is further submitted that as per information supplied by the petitioner itself in response to the notice, copy of which has been attached as An-nexure-R-2/1 with the written statement against column 'name and address etc.' the information was given by the petitioner itself that the Head Quarters were of the Company M/s.U. P. Hotels and Restaurants is at New Delhi and Branches are situated at Agra, Varanasi and Lucknow and, therefore, it cannot be said that Amer Hotel at Jaipur was not a branch or establishment in itself. Column 6 of Annexure-R- 2/1 reads as under:
'6. Name and address of Operational Headthe Head Office & Quarters M/s. U.P.branches if any whether Hotels & Restaurantlocated in Rajasthan or 'Surya Kiran'in anywhere in India Kasturba GandhiMarg., New DelhiBranches:
1. Hotel Clarks Shiraz, Raj Road, Agra.
2. Clarks Hotel, Varanasi.
3. Hotel Clarks Awadh, Lucknow.
11. The only question which arises, in the admitted facts of the case is whether the petitioner is entitled to exemption under Section 16 of the Act or not. It shall be relevant to incorporate certain provisions of the Act. Section 1(3)(b) reads as under:
'Section 1(3)(b)(1) This Act may be called the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
(3) Subject to the provisions contained in Section 16, it applies.
(b) to any other establishment employing (twenty) or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify in this behalf:
Provided that the Central Government may, after giving not less than two months' notice of its intention so to do, by notification in the Official Gazette, apply the provisions of the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than (Twenty) as may be specified in the notification.
Section 2A reads as under:
'2-A. Establishment to include all departments and branches-For the renewal ofdoubts, it is hereby declared that where anestablishment consists of different departments or has branches whether situate in thesame place or in different places, all suchdepartments or branches shall be treated aspart of the same establishment.' Section 16 reads as under:
'Act not to apply to certain establishments
(i) This Act shall not apply
(b) to any other establishment employing fifty or more persons or twenty or more, but less than fifty persons until the expiry of; three years in the case of the fomer and five years in the case of the latter, from the date on which the establishment is, or has been, set up.
Explanation - For the removal of doubts, itis hereby declared that an establishmentshall not be deemed to be newly set upmerely by reason of a change in its location.'
12. The counsel for the petitioner relies on the judgment reported in (1960-I-LLJ-497) (SC) and (1974-I-LLJ-499) (SC). None of the judgments relied upon by the petitioner is applicable to the facts of the present case. The judgments quoted relate to payment of bonus under the Payment of Bonus Act wherein it was held that various establishments run by the Company having separate balance-sheets are to be awarded bonus as per the unit of that establishment. Primarily, the establishment has been considered to be a separate establishment for the reason that the workers working in an establishment are entitled to the bonus as per the profit earned by them in the establishment/unit. No coverage of any of the provisions of the Act were involved in that case. In Management of Pratap Press v. Secretary, Delhi Press Workers Union (1960-I-LLJ-497) (SC) (supra) the matter related to the industrial disputes with regard to bonus of the workers of different units. It was held as under at p.500:
'Where the same owner owned a press and published a newspaper which was printed in the press and there was nothing to show that the owner had mixed up the capital of the two, the profits of the two and the labour force of the two units:
Held that the press and the newspaper were distinct and separate industrial units and the question of what bonus was payable to the workmen of the press depended on a proper calculation of the available surplus of the press itself without taking into consideration the loss incurred by the newspaper.
There was no such functional interdependence between the press unit and the paper unit that the two should reasonably be considered as forming one industrial unit.
Similar was the situation so far as the authorities reported in (1974-I-LLJ-499) (SC) (supra) is concerned.'
13. On the other hand the counsel for the respondents relies on the case of R. Ramakrishna Rao v. The State of Kerala (1969-II-LLJ-682) (SC) wherein it has been held and while dealing with establishment falling under Section 16 of the Provident Funds Act, it was observed as under at pp. 684-685:
'He contends that it is always intended that a period of 3 or 5 years, as the case may be, must elapse before the provisions of the Act and the scheme are made applicable. This is an ingenious way of putting the matter but is not admissible. The language of Section 16(1)(b) is very precise. The last thirteen words of the clause 'from the date on which the establishment is or has been set up', show both cases where the establishment is old. The word 'is' shows that a 'new estab-set up', show both cases where the establishment is old. The word 'is shows that a new establishment is meant' and the words 'has been shown that the establishment existed before the number is reached. If it was intended to apply the clause to new establishments the words 'is set-up' would have been insufficient. The construction sought to be placed would render the words 'has been' otiose. Further the scheme of Paragraph 26 quoted earlier relates to a period of service and this qualifying period may be in the past as well as in the future. The intention behind Section 16 read with paragraph 26 quite clearly shows that the period is intended to give a breathing time to new establishments. That reason does not hold when the establishment is already old and well founded. The use of the participle is therefore immaterial. Whether a present perfect tense or a participle be used the meaning is the same. Clause (b) of Section 1(3) which uses the participle and Clause (a) of the same Section which employs the present perfect tense both merely describe the establishments and convey no different meanings. The conclusion of the High Court was thus right. The appeals fail and will be dismissed.'
14. In R. Ramakrishna Rao (supra) case the owner had started two establishments and had claimed infancy in regard to one of the establishments. It was held that he was not entitled to any infancy period for the reason that the purpose of awarding the infancy benefit is only to those establishments which are new and not who are already established enterprises.
15. In Rajasthan Prem Krishan Goods Transport Co. v. Regional Provident Fund Commissioner and Ors. (1996-II-LLJ-662), it was held by the Hon'ble Supreme Court that the finding recorded by the Regional Provident Fund Commissioner after thorough inquiry on facts that there was unity of purpose between the two entities in question and that both were liable to be clubbed together for the purpose of determining the number of employees for the applicability of the EPF Act was held to be finding of fact and could not be overturned.
16. Yet in another case in Regional Provident Fund Commissioner v. Naraini Udhyog and Ors., (1996-II-LLJ-1063), it was held that the firms having functional unity and integrality were rightly held by the Commissioner as constituting a single establishment. The mere fact that they were separately registered under the Companies Act and were represented separately by members of a Hindu Joint Family were held inconsequential. It was observed as under at p. 1064:
'On the basis thereof, the appellant has called upon them to contribute the amount under Section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short 'the Act') holding that the above two concerns are establishments within the meaning of Section 1(3)(b) of the Act. The Division Bench in the impugned order had held that they were registered under the Companies Act as two different individual identities, though they are represented by the members of the same family. Therefore, they are two independent companies . Both cannot be clubbed together for the purpose of levying contribution under Section 7A of the Act. We have gone through the reasoning given by the High Court. We find that the High Court is wholly unjustified in reaching the above conclusion. It is true, as found by the High Court that they are registered as two independent units and represented separately by the members of a Hindu Undivided Joint Family. Nonetheless the Commissioner recorded, as a fact, the functional unity and integrality between the two concerns. Consequently, the definition of 'establishment' which was widely defined would encompass within its ambit the two units as an establishment for the purpose of the Act. Accordingly, the High Court had not considered in proper perspective the provisions of the Act which is a beneficial legislation to provide healthy security to the workmen. In the ultimate analysis the employer get maximum out-turn of his production by ensuring health insurance to its employees which is the fundamental right to the latter'.
17. As per the law laid down by the Supreme Court and as per the facts of the present case, there is no escape but to conclude:
(i) that the Regional Provident Fund Commissioner had given a finding of fact after going through evidence produced by the parties by a very detailed speaking order;
(ii) that the U.P. Hotels is a parent establishment which opens various branches of their hotels in the name of hotel establishment as has been done in Varanasi, Agra, Lucknow and Jaipur. AH are under the control of M/s.U.P.Hotels. There is functional integrality, the finances are supplied by M/s.U.P.Hotels, even though they are registered separately under the Companies Act or under the local laws as required by the State laws such as Shops & Commercial Establishments Act etc. They do not lose the Character of being part and parcel of M/s.U.P.Hotels and cannot be considered as an independent new establishment. As a matter of fact they are the new establishments as branch at various places and so is the case of Hotel Clarks Amer. In Annexure-VII the Regional Provident Fund Commissioner had given detailed reasons even otherwise in Annexure-R-2/1 the petitioner itself has admitted that the functional head-quarters are at New Delhi and other branches are at other places and in view of the clear admission and also for the reason given by the Regional Provident Fund Commissioner which is based on a finding of facts it cannot be held that Hotel Clarks Amer is a new independent establishment for claiming the infancy period exemption under Section 16 of the Act. It has been held in Ram Krishna Rao's case (supra) by the Supreme Court that infancy period concession is meant to give a breathing time to the new establishment and this provision does not apply when the establishment itself is already old and well founded and if a new enterprise is opened by a well founded establishment, it does not fall under the infancy clause for the concession to be given under the provisions of Section 16 of the Act.
18. For the reasons mentioned above, it is held that there is no merit in the writ petition filed by the petitioner and the same is dismissed. For the period since 1973 to 1976 if the petitioner had not deposited the provident fund, the Regional Provident Fund Commissioner shall take immediate steps as required under law without any further delay.
19. The writ petition is dismissed with cost of Rs. 2,000/-.