MANAV SEVA SR. SECONDARY SCHOOL vs THE REGIONAL PF COMMISSIONER & ANR

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on:- 29th May, 2024
Date of Decision:- 22nd August, 2024
+ W.P.(C) 5497/2016
DINA NATH PUBLIC SCHOOL ….. Petitioner
Through: Mr. Mohak Bhadana, Advocate
(M: 9810613822)
versus
ASSISTANT P.F. COMMISSIONER FARIDABAD
AND ORS ….. Respondents
Through: Ms. Inderjeet Sidhu & Mr. Yash Gola, Advocates (M: 9810587998).
Mr. Anuj P. Agarwala, Advocate for
R-3 (M: 9811885242)
WITH
+ W.P.(C) 7048/2016
MANAV SEVA SR. SECONDARY SCHOOL ….. Petitioner
Through: Mr. Shantwanu Singh, Ms. Pragya
Singh & Mr. Akshay Singh, Advs.
(M: 9650750006)
versus
THE REGIONAL PF COMMISSIONER & ANR ….. Respondents

Through: Ms. Inderjeet Sidhu & Mr. Yash
Gola, Advocates (M: 9810587998).
Mr. Anuj P. Agarwala, Advocate for
R-3 (M: 9811885242).
CORAM:
JUSTICE PRATHIBA M. SINGH

JUDGMENT
1. This hearing has been done through hybrid mode.
Background:
2. Two schools Dina Nath Public School (DNPS) and Manav Seva Senior Secondary School (MSPS) have preferred the present writ petitions challenging the order dated 18th April, 2016 passed by the Employment Provident Fund Appellate Tribunal (hereinafter, ‘EPFAT’). Vide the said impugned order, the EPFAT had upheld the order dated 29th October, 2010 passed by the Regional Provident Fund Commissioner (hereinafter, ‘RPFC’) in an inquiry under Section 7A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter, ‘the Act’).
3. The brief background leading to these disputes are that the school DNPS came to be established in 1994 and it obtained recognition initially for middle school on 8th June, 2001. Subsequently, it was recognized till class 10 thereafter, till class 12 by the Faridabad Sub Divisional Educational Officer and, in 2003 and 2004 respectively.
4. The DNPS school was run by Dina Nath Public Trust (hereinafter, ‘DNPT’) which was registered in 1983. The said trust had also set up a DNPS at B Block, 27 Feet Road, Dabua Colony, Faridabad (hereinafter, ‘DNPS Dabua Colony’) in 1980s itself.
5. A teacher of DNPS who was terminated, after an internal inquiry, after obtaining permission from the District Education Officer Faridabad filed a complaint that both schools i.e., DNPS and MSPS were run by the DNPT. She alleged that the school DNPS Dabua Colony, now known as MSPS, was also run by Mr. Ujjal Pal Singh who was the trustee of that school and Ms. Radha Sachdev was the principal. She further alleged that 31 teachers were common between DNPS and MSPS and, thus, MSPS was nothing but a branch of the DNPT. As per the said complaint, Mr. Ujjal Pal Singh and Ms. Radha Sachdeva exercised control over both the schools. Thus, they were functionally, financially, and administratively integrated. It was alleged by the Complainant that the differentiation between the two schools were being maintained only to deprive the employees of provident fund benefits. The said ex-teacher who was the Complainant filed repeated complaints which resulted in an investigation by the Employee Provident Fund Organisation (hereinafter, ‘EPFO’), Haryana.
First inquiry:
6. Initially, a notice was issued by the EPFO on 9th July, 2009 to DNPS for verification of the school documents. The school started responding to the notices issued by the EPFO. DNPS and the EPFO continued to be in correspondence. Raids were also conducted by the EPFO on the schools.
7. The stand of the EPFO was that all the records were not produced and the stand of the DNPS was to the contrary i.e., that relevant registers, staff attendance, records etc., have all been produced.
8. DNPS alleged unending disruption by the EPFO of the school activities based on a complaint by a disgruntled ex-teacher. The school also alleged that unnecessary visits were being conducted during examinations of school students. The school stated that it had produced the teachers’ attendance register, pay roll register, acquittance rolls registers, bank accounts, income tax returns, summary of teachers including class four employees, cash book and leisure etc., and photocopies of the same has also been taken. In reply to letter dated 15th June, 2010 issued by EPFO, a letter dated 29th June, 2010, by DNPS stated that all records were produced and verified by the officials of the EPFO. In the said letter, it was reiterated that the EPO officials visited without prior notice and created disruption during class hours. However, it is stated that communications were unfruitful.
9. A show cause notice was then issued on 20th July, 2010 demanding the Petitioner to submit its records within seven days and as to why prosecution should not be launched against the school (DNPS).
10. On 21st July, 2010, the EPFO took the position that the school had employed 20 persons as of 1st March, 2009 and that the provisions of the Act would be applicable to the school as also to all its other branches and departments located at different addresses. A code number was also allotted and directions were given as to the manner in which the deductions were to be made and contribution to be made for the benefit of the employees. As per order dated 21st July, 2010 passed by the Assistant Provident Fund Commissioner (hereinafter, ‘APFC’), it was directed as under:
– that DNPS engaged more than 20 persons since 1st March, 2009;
– that the head office and the branch offices, even if, situated at different places would be covered provisionally under the Act subject to further verification of records;
– Code No. HR/14314 was also allotted to DNPS;
– Directions were issued to DNPS to deduct the employees’ share to compulsory contribution and to also make its own contribution;
– various returns which DNPS had to maintain were also intimated.
11. The said interim order dated 21st July, 2010 passed by APFC (EPFO) was challenged before the Tribunal and was upheld vide order dated 16th September, 2011 by the EPFAT.
12. During the pendency of the first inquiry, the Petitioner also filed a writ petition W.P. (C) No. 592/2012 challenging the decision qua the interim order dated 16th September, 2011 passed by the EPFAT.
Second inquiry:
13. While the appeal was pending before the Tribunal in the first inquiry, another inquiry was commenced by the Respondent No.1 under Section 7A of the Act. In the second inquiry, a report was received from the Inspectors. Three issues were considered in the said Section 7A inquiry:
i. Whether the covering of DNPS vide order dated 21st July, 2010 with effect from 1st March, 2009 under the Act was valid?
ii. Whether DNPS had more than 19 employees?
iii. Whether the two schools DNPS and MSPS were to be clubbed for the purposes of the applicability of the provisions of the Act?
14. The said inquiry concluded and on 29th October, 2012, Respondent No. 1 ruled against the Petitioner, retroactively applying the provisions of the Act on the schools, by combining DNPS and MSPS as a single entity. The stand of the department (EPFO) was that DNPS employed more than 20 persons as on 1st March, 2009.
15. DNPS countered the stand of the EPFO/ Respondent No.1. Insofar as the employment of 20 persons is concerned, the school’s stand was that the three persons namely, the computer teacher, the principal and the accounts clerk could not be considered as employees.
16. Statements of various witnesses were recorded by the EPFO. The Inquiry Officer, RPFC passed a detailed order dated 29th October, 2012 under Section 7A of the Act, confirming the coverage of both the schools under the Act and further clubbing the two schools together with retrospective effect from 1st April, 1996.
Order dated 29th October, 2012 in second inquiry:
17. The department noted that the school which was known as MSPS located at 27 Feet Road, Dabua Colony, Faridabad, Haryana was earlier known as Dina Nath Public School Dabua Colony, Faridabad. It was a branch of DNPS Nehru Grounds. Both the schools were under the Dina Nath Public Trust established in 1983. An experience certificate dated 5th February, 1987 issued to one Ms. Sunita was signed by one Ms. Vijay Laxmi Saini who was working as headmistress, mentioned in the stamp of headmistress as the Dina Nath Public School, Dabua Colony NIT Faridabad as a branch. Similar such records were found, including the Memorandum of Association where the headmistress was described as “headmistress, Dina Nath Public School Dabua Colony”. Statements of various other teachers were also recorded. The aims and objectives of the trust Dina Nath Public Trust itself mentions as under:
“To promote the mass and ideal education, the Trust will setup schools and colleges wherever it deems fit. However, it is provided that the schools and colleges namely Dinanath Public High School and Dinanath Public Degree College, Nehru Ground, Dinanath Public School, Dabua Colony and Dinanath Public School, DLF, Sector-10 which are already in existence but have semblance of the name Dinanath will not be deemed to be property of the Trust automatically until and unless these Institutions and their proprietors or engagement decide to donate these Institutions and proprietors thereof to the Trust by executing the proper transfer deed as provided under the Law.”

18. On the basis of these documents and statements of teachers, the department (RPFC) concluded that between 1984 to1989, there were two branches of Dina Nath Public School -one Dina Nath Public School, Nehru Grounds Faridabad and second- Dina Nath Public School Dabua Colony. It was concluded that both were owned by Ms. Radha Sachdev. However, insofar as the period post 1989 is concerned, Manav Seva Public School Society was established in 1989 and the school was re-named as Manav Seva Sr. School was started.
19. The allegations of the department (EPFO/RPFC) were as under:-
i. That some students admitted in one school were found studying in another school;
ii. Common purchase & use of school material for use of students;
iii. Records of one school found in another school;
iv. Common activities were conducted under the overall banner of Dina Nath Public Trust;
v. Statements of ex-teachers and students demonstrating the interlink between both the schools;

20. The Inquiry Officer RPFC-II then, vide a detailed order dated 29th October, 2012 held as under:
“29. I have examined the above facts very carefully. It is logical to establish the link of functional unity from the fact that the two Schools use their recognition for mutual benefit. DNPS Nehru Ground has recognition up to Class X and DNPS Dabua/MSPS has recognition upto Class XII and therefore, a student being taught for Class XI in DNPS Nehru Ground has to be shown admitted to DNPS Dabua/MSPS. Thus, there exists the Unity of Purpose among the two Schools. The common purchase and consumption of students material by the two Schools is another strong pointer towards functional cohesiveness between the two Schools. Again, it, is because of a nexus between the two Schools that the record of one School (MSPS) has been found in another (DNPS). The evidence from the then teachers and students about the common activities of the two Schools only buttress these facts. Hence, the point of functional Integrity is well established.”

21. On the issue of unity of ownership and administrative control, it was noticed that Mr. Ujjal Pal Singh was the founding and permanent member of DNPT as well as of the MSPS Society. Ms. Vijay Laxmi Saini was also a founding member and permanent member of DNPT who was the de-facto permanent principal of Manav Seva Sr. Secondary School. The functions of MSPS society were also carried out by Mr. Ujjal Pal Singh and Ms. Vijay Laxmi Saini. Records such as TDS returns of MSPS were found in DNPS Nehru Ground during the raid conducted by the department on 1st October, 2011.Various statutory non-compliances were also stated to be observed. As per the department, the balance sheets and books of accounts were not produced. The details of various members of the two trusts and the societies were called for, but not produced. In this background, the Inquiry Officer, RPFC concluded as under:
“It is thus clear from the above facts that in so far as the two Schools in question are concerned, the existence of the DNPT and MSPS Society is only for namesake. In any case, the two Schools were never legally transferred to or acquired by their purported Trust/Society. Hence, I agree with the Respondents’ argument that the purpose of this Trust and Society is only to mask the real size and activities of the two Schools. The legal ownership of both the Schools, thus, continues with Ms. Radha Sachdev, as established, in paragraph 27 above. Hence, there is unity of ownership and unity of administrative control as well”

22. It was noted by the Inquiry officer (RPFC) that despite claims made by Ms. Radha Sachdev that Dina Nath Public School (DNPS) was handed over to the Trust in 1984 and the Trust provided rent-free land and buildings, there was no documentary evidence to support her claims. Her Letter of Offer dated 1st May, 1994 and a DNPT resolution from the same year are insufficient as they fail to account for the ten-year gap since the alleged transfer. Furthermore, no Minutes Book from the DNPT Governing Body was provided to substantiate the resolution. Further, Ms. Sachdev’s affidavit dated 1st March, 2011 confirmed her ownership of the school since 1983, however no transfer documentation was produced during the Inquiry, indicating that she remained as the owner.
23. Similarly, the Memorandum of Association of the MSPS Society did not mention any takeover of institutions. A lease agreement dated 12th September, 2001 stated that the MSPS Society received a rent-free building, but there was no resolution or proof of the Society taking over any school, implying that no transfer of DNPS Dabua or MSPS to the Society occurred between 1989 and 2001. A document noting that the Troika (comprising individuals such as Ms. Sachdev) owned the land and buildings of the two schools was produced which showed that the land was leased to them rent-free to their respective Trust/Society, which was contrary to the Memorandum of Association of DNPT. There was no evidence of actual transfer of property to the Trust/Society.
24. Insofar as financial control was concerned, the Inquiry Officer (RPFC) noted that Mr. Ujjal Pal Singh was the common figure in both the schools. He was also the joint owner of the property where MSPS was being run. He was also the permanent and founding member of both the trusts as well as the society. The bank accounts of DNPS and MSPS were in the same bank i.e., Indian Bank, A-3/3, Nehru Ground Faridabad. It was noted that both accounts of the two schools were operated by Mr. Ujjal Pal Singh who was the President-cum-Cashier of DNPT and President-cum-Treasurer of MSPS Society. The expenditure of both the schools were controlled by Mr. U.P. Singh. After analyzing the various books of accounts, balance sheets, etc., the Inquiry Officer concluded as under:

“38. It has already been seen in paragraph-27 above that DNPS was functioning through two branches up to 1989. Hitherto discussion in the succeeding paragraphs shows that there is enough evidence in the light of selective records produced by the Plaintiffs that there exists unity of ownership, financial control and above all, the functional integrity among the functioning of the two branches of Dina Nath Public School, Faridabad. However, the earliest date on which the Respondents could satisfactorily establish the presence of 20 or more employees in these two Schools taken together is 01.04.1996. The list submitted by Respondent-1 is well corroborated by the records submitted by the two Schools and has not been rebutted by them. Hence, Dina Nath Public School, having its branches at A-2/C, Nehru Ground, NIT, Faridabad and at B Block, 27 Feet Road, Dabua Colony, Faridabad, is coverable under the provisions of Section 1(3) of the Act with effect from 01.04.1996.”

25. In fact, the Inquiry Officer went to the extent of holding that the creation of the MSPS society was nothing but a veil to camouflage and cover up the commonality between the two schools. The said finding is set out below:
“44. In view of the hitherto discussion, I have no hesitation in holding that the floating of the MSPS Society in 1989 was nothing but a creation of veil to mask the thread of commonality running between the two Schools. The formation of MSPS Society in 1989 was a cover-up act to provide a shield of separate identity in the form of Manav Seva Public School to the already existing Dina Nath Public School at Dabua Colony. Hence, a lot of resistance was put in by the Schools in letting this Inquiry proceed smoothly. Some of such instances have been listed in paragraph-46 below. As regards the production of records, the Plaintiff at one point of time took the plea of destruction of records, but at other instance sought refuge under the plea that the relevant record had been taken away by the Department during the raid. The latter allegation turned out to be a blatant lie because the fact that these the records were not listed in the Seizure Memo provided to the witness on the day the Department conducted the raid, bears ample testimony to the contumacy of the DNPS Principal in making a mockery of the legal procedure. Her subsequent statement that she could not record this fact in the Seizure Memo due to her physical suffering was blown away after viewing the Videographs of the Raid made and produced by the Plaintiff as well as by the Department. Finally, the veil in this case could be pierced because of the record produced in respect of ex-students, the records produced by ex-teachers, the records seized by the Department, etc..”

26. On the basis of these findings, the DNPS and MSPS were clubbed with effect from 1stApril 1996. The operative portion of the said order dated 29th October, 2012 passed by the RPFC is set out below:
“47. The findings of the case with respect to the issues listed in paragraph-4 above are as follows;
(i) Yes, letter dated 21.07.2010 of Respondent-1 covering DNPS u/s-1(3) of the Act with effect from 01.03.2009 is valid because at least 25 employees have been identified in the Establishment on the said date.
(ii) Yes, at least 25 employees have been identified in DNPS from 01.09.2003.
(iii) Yes, DNPS and MSPS are to be clubbed for the purpose of coverage under the Act with effect from 01.04.1996 because at least 23 employees have been identified to be working from the said date.”

27. This order was carried out in the appeal to the Employees’ Provident Fund Appellate Tribunal (hereinafter, ‘EPFAT’). Initially, a status quo order was directed by the EPFAT on 26th September, 2013 with respect to order dated 29th October, 2012. The same was challenged in W.P.(C) 4828/2014.
28. However, this Court adjourned, sine die, both writs i.e., W.P.(C) 592/2012 vide order dated 12th August, 2014 and W.P.(C) 4828/2014 vide order dated 14th November, 2014, till final order of EPFAT. The said orders were confirmed and continued on 1st September, 2015.
29. Subsequently, the EPFAT, vide its final order dated 18th April, 2016 upheld the said order dated 29th October, 2012 and concluded as under:
“9. In case in hand there is no dispute regarding identification of employees, working with appellant establishment. In Impugned order, respondent No. 1 also cited the detail oral evidence of the witnesses produce before him in the said Inquiry. Order of respondent No. 1 is itself self explanatory how and in what manner appellant establishment is coverable under the provisions of the Act. Documents placed on case file duly revels that there is functional Integrity of different Institutions having common governing body and authority in operating bank accounts. Order dated 16.09.2011, passed by this tribunal in ATA No. 620(16)2010 Is fully applicable to the facts of present appeal also regarding applicability of the provisions of the Act.
10. Considering all the facts of the case this Tribunal nowhere find any illegality in the Impugned order passed by respondent No. 1so appeal filed by appellant deserves to be dismissed. Appeal filed by appellant establishment is dismissed. Copy of this order be sent to both the parties as per rule. File be considered to record room after due compliance.”

30. Both Dina Nath Public School and Manav Seva Senior Secondary School have challenged the order dated 18th April, 2016 passed by the EPFAT in the present writ petitions, which are being considered by this Court.
Summary and details of the writ petitions filed:
31. In Dina Nath Public School and Manav Seva Sr. Secondary School sets of matters, there were four writ petitions. The details of the same are as under:
i) W.P.(C) 592/2012 titled Dina Nath Public School v. Assistant P.F. Commissioner and Anr. arose out of an interim order passed by the EPFO dated 21st July, 2010 which thereafter merged with the final order of the RPFC dated 29th October, 2012. The said writ petition was infructuous and was disposed of on 11th August, 2023.
ii. W.P.(C) 4828/2014 titled Regional Provident Fund Commissioner v. Dina Nath Public School and Anr. was a writ petition filed challenging the status quo order granted by the EPFAT on 26th September, 2013 which culminated into the final order dated 18th April, 2016 by EPFAT. Since it was an interim order which merged into the final order, the said writ petition was disposed of on 15th December, 2021.
iii) W.P.(C) 5497/2016 titled Dina Nath Public School v. Assistant P.F. Commissioner, Employees Provident Fund Organization and Ors. is a writ filed by DNPS challenging the order passed by EPFAT dated 18th April, 2016 which upheld the order of the RPFC dated 29th October, 2012 under Section 7A of the Act. The writ petition was initially dismissed on the ground of lack of jurisdiction vide order dated 9th September, 2016 passed by the ld. Single Judge of this Court.
iv) W.P.(C) 7048/2016 titled Manav Seva Sr. Secondary School v. The Regional P.F. Commissioner & Anr. is a writ petition filed by MSPS challenging the same orders i.e., the order dated 18th April, 2016 of EPFAT.
32. The dismissal of the above writ petitions i.e., W.P.(C) 5497/2016 and W.P.(C) 7048/2016 was on the ground of lack of jurisdiction vide order dated 9th September, 2016.
33. DNPS challenged the said decision dated 9th September, 2016 before the ld. Division Bench which up-held the dismissal in LPA 645/2016 titled Dina Nath Public School v. Assistant P.F. Commissioner, Employees Provident Fund Organization and Ors. vide order dated 21st November, 2016.
34. The Supreme Court, however, vide its order dated 23rd March, 2021, passed in Civil Appeal No. 1053/2021 observed as under:-
“5 . In the facts of the present case, as they emerged before the Delhi High Court, it is apparent that the appellant, Dina Nath Public School, is situated in Faridabad, Haryana. Likewise, the second and third respondents are also situated in Faridabad. During the course of the hearing, learned counsel appearing on behalf of the third respondent, who is a former employee of the school, also stated that it would be more convenient for her to pursue the proceedings before the Delhi High Court as opposed to the Punjab & Haryana High Court at Chandigarh. Be that as it may, having regard to the fact that the parties are all situated at Faridabad and since the Delhi High Court has, as a matter of principle followed its own earlier decision and come to the conclusion that It had territorial jurisdiction, but declined to entertain the writ petition only on the ground of forum non-conveniens, we are inclined to set aside the impugned order to restore the proceedings back to the Delhi High Court for disposal.
6. We accordingly allow the appeal and set aside the impugned order of the Division Bench dated 21st November, 2016. As a consequence, the writ petition filed before the Single Judge, namely, Writ Petition (Civil) No. 5497 of 2016, shall stand restored to the file for disposal on merits.
7. In the meantime, the Court has been apprised of the fact that the second respond has instituted Writ Petition (Civil) No 7048 of 2016 before the Delhi High Court, in the circumstance, Writ Petition (Civil) No 7048 of 2016 which was filed before the Delhi High Court by the second respondent shall also stand restored to the file of the Single judge for disposal together with companion writ petition noted above.
8. Mr. Shantwanu Singh, learned counsel appearing on behalf of the second respondent states that the writ petition which was filed before the Punjab & Haryana High Court, CWP No 6100 of 2017, shall be withdrawn before that High Court so as to enable the second respondent to pursue the writ petition which has been filed before the Delhi High Court.
9. We request the learned Single judge of the Delhi High Court to dispose of the pending writ petitions expeditiously, preferably within a period of four months consistent with the exigencies of work.”

35. As can be seen from the above order of the Supreme Court, in both the writ petitions, the dismissal was set aside and both the writ petitions were restored. A direction was given for expeditiously deciding the matters within four months.
36. This order of the Supreme Court came to the knowledge of this Court for the first time on 23rd November, 2021 as there had been a lapse by the Registry in placing the order before this Court.
37. This Court had also directed a report to be filed explaining the delay of more than six months in the listing of the matters. The report was then submitted on 15th December, 2021 and it was stated that due to pandemic conditions the same could not be listed.
38. The earlier two writ petitions i.e., W.P.(C) 592/2012 and W.P.(C) 4828/2014, challenging the initial interim orders, were also considered by this Court. Both the writ petitions were disposed of on 15th December, 2021 and 11th August, 2023 respectively.
39. Thus, only two writ petitions remain to be adjudicated viz., W.P.(C) 5497/2016 and W.P.(C) 7048/2016.
Submissions:
40. Insofar as the first two issues are concerned i.e., the existence of 25 employees and coverage of DNPS under the Act with effect from 1st March, 2009 is concerned, no arguments have been addressed and the same has been accepted by the schools. The only issue over which challenge has been raised is on the question of clubbing of DNPS and MSPS since 1st April, 1996. On the said issue, the submission of Mr. Bhadana, ld. Counsel was that when the initial order was under challenge and was pending in W.P.(C) 592/2012, the inquiry under Section 7A of the Act by the Inquiry Officer could not have been conducted. According to him, there was no functional or financial integration between the two schools. Even if one person in the management was common, both schools are separate, the principals are separate, the affiliations are separate, and the locations are separate. Ld. Counsel has relied upon various decisions to argue that the said two schools could not have been be clubbed.
41. Mr. Bhadana, ld. Counsel argued that DNPS was served a show cause notice dated 20th July, 2010 wherein DNPS was asked to produce a complete record within a period of seven days. Ld. Counsel submitted that the said notice dated 20th July, 2010 was served upon DNPS only on 22nd July, 2010. However, immediately on the intervening day itself i.e., 21st July, 2010, the EPFO passed an order holding that the provisions of the Act would be applicable to DNPS and also allotting code number HR/14314 to the school. As per the EPFO, School (DNPS) had employed 20 persons w.e.f. 1st March, 2009 and the Act would therefore become applicable since the said date. He further submitted that the said order which was passed on 21st July, 2010 was challenged by DNPS before the EPFAT, in which the EPFO did not file any pleadings. The EPFAT then passed the impugned order dated 16th September, 2011 by which the Tribunal held that there was no infirmity in the order holding that the Act would be applicable to the school w.e.f. 1st March, 2009. It was this order that was challenged in W.P.(C) 592/2012.
42. Mr. Bhadana further submitted that the proceedings commenced in September, 2010 and culminated into the order dated 16th September, 2010 passed by EPFAT. He reiterated that before the EPFAT, no reply was filed by the PF Department (EPFO) and it was only once the writ petition being W.P.(C) 592/2012 was filed before this Court that the EPFO had chosen to file a counter-affidavit. Thus, there were no pleadings and the stand of the PF Department (EPFO) was not clear before the EPFAT. While the said writ petition was pending, an inquiry under Section 7A of the Act was conducted and it was concluded that there was common ownership of the two schools, due to various reasons. This, according to ld. Counsel, was procedurally defective as the question of clubbing of the two organizations could not have been considered during the pendency of the first writ petition.
43. Ld. Counsel further raised objections qua the order dated 29th October, 2012 under Section 7A of the Act, stating that the witnesses, who were examined by the EPFO, were not the same persons, who were mentioned in the complaint of Ms. Paramjeet Kaur i.e., Respondent No.3. Ld. Counsel further submitted that the credentials of the witnesses were not verified and only few teachers and students were interviewed by the PF Department (EPFO). However, no opportunity of cross-examination was granted to the Petitioners. Ld. Counsel further submitted that the proceedings before the EPFO, in general, has the trappings of a Civil Court and therefore, an opportunity of cross-examination ought to have been given.
44. It was his further submission that the question would be whether these two organizations were functionally integrated and whether one could survive without the other. This test was not satisfied in the impugned order dated 29th October, 2012 under Section 7A of the Act, according to him. Fundamentally, therefore, the main objection of both the schools was that the schools could not have been clubbed together for the purposes of applicability of the provisions of the Act.
45. Mr. Bhadana, ld. Counsel further submitted that admittedly, insofar as DNPS was concerned, from September 2011, the school had been covered under the Act and has been depositing the provident fund. Insofar as MSPS was concerned, from July, 2010 the school had been covered under the Act, however in terms of the impugned order, an attempt was made to club them since 1st April, 1996.
46. Mr. Shantwanu Singh, ld. Counsel for MSPS further urged that stray incidents like an almanac of one school being carried by a student in other school and two statements made by teachers cannot be sufficient cause for integrating the two schools. Mr. Singh made the following observations during his submissions:
(i) The Petitioner – Manav Seva Sr. Secondary School was run by a separate society, which was established on 7th July 1989, by the name Manav Seva Public School Society. The registration of the said society had been renewed from time to time.
(ii) The liability fastened on the Petitioner to the tune of Rs.15,34,219/- for the period between 1st April, 1996 till December, 2012, is completely unsustainable, inasmuch as it had been presumed that MSPS and DNPS, which were and are run by separate societies, are functionally integrated.
(iii) The Petitioner school (MSPS) came into the ambit of the Act in the year 2010 having crossed the minimum threshold of employees and had voluntarily registered itself with the PF Department (EPFO) with code number HR14314. Thus, the school’s conduct had been bonafide in nature.
(iv) The case of the Inquiry Officer was that MSPS and DNPS are one establishment. The same was based out of the misconception on the basis of a complaint made by Ms. Paramjeet Kaur. The said complainant was working in DNPS and had no connection with the Petitioner -MSPS.
47. Ld. Counsel further submitted that the said order dated 29th October, 2012 of the Inquiry Officer considered some stray aspects of the evidence to arrive at a conclusion that there was functional integrity. The order also relied upon two statements, made by the persons who revealed facts prior to 1989. Ld. Counsel further submitted that the primary ground, on which functional integration was being found, was on the basis of a deduction/presumption that DNPS was earlier running two schools i.e., one at A-2/C, Nehru Ground, Faridabad and another at Dabua Colony. Ld. Counsel submitted that the Dabua Colony branch of DNPS was shut down and thereafter, Manav Seva Sr. Secondary School was set up.
48. Mr. Singh, ld. Counsel concluded his submissions by stating that the findings of the Inquiry Officer in paragraph 27 of the order dated 29th October, 2012 was not borne out of the record inasmuch as, the evidence did not point to the students of Dabua Colony school having been absorbed by Manav Seva Sr. Secondary School and the management of Dabua Colony school having been moved to Manav Seva Sr. Secondary School. Mere commonality of one trustee could not result in functional integrity. He relied on the findings of the said order to the effect that there were 7 common persons, which were trustees which was also again not borne out from the record. The said findings according to the ld. Counsel was based upon certain officials and certain information obtained from Indian Bank, Nehru Ground, Faridabad. However, ld. Counsel further submitted that a perusal of paragraph 30 of the said order would itself show that it was only an adverse inference that had been drawn on the ground that Dina Nath Public School did not furnish information. There was no actual concrete evidence found that the 7 trustees were common.
49. Mr. Singh. ld. Counsel further relied on judgment of Madras High Court in Alaghu Pharmacy B. v. Regional Provident Fund Commissioner, Coimbatore & Anr., (2009 LLR 1123) which categorically held that the test of functional integrity would not be either common ownership, common location of the two units, common products being produced or common services be given. He also relied on judgments of the Bombay High Court and Jharkhand High Court in PIEM Hotels Limited & Anr. v. Regional Provident Fund Commissioner, 2011 LLR 526 and Hotel Yamuna Villa, A Partnership Firm v. Regional Provident Fund Commissioner, Sub-Regional Office ‘C’ and ‘D’ Block & Ors., 2006 LLR 388 respectively.
50. The stand of Ms. Inderjeet K. Sidhu, ld. Counsel appearing for the Department (EPFO) is that, firstly, proper records were not submitted by both the schools i.e., DNPS and MSPS. Repeated attempts were made to camouflage that there were not more than 20 teachers.
51. Ms. Sidhu, ld. Counsel submitted that there were two aspects in this case, one with respect to applicability of the Act and second regarding the clubbing of the schools. She submitted that insofar as the applicability of the Act was concerned, it was no longer disputed. The Act was made applicable to both the schools. In fact, from 2011 onwards both the institutions were being assessed for Provident Funds separately by the PF department (EPFO). However, insofar as the present petitions, she submitted that the period between April, 1996 to 2011 is the relevant period.
52. According to her, the thrust of the arguments of the school was that the investigation was on the basis of a complaint, which is not completely accurate, inasmuch as even the PF department (EPFO) itself had issued several notices to them seeking information. She submitted that even if the investigation had started by way of a complaint, thereafter a proper investigation was conducted by the EPFO. Secondly, she submitted that this Court on judicial scrutiny in respect of the impugned order dated 29th October, 2012 could test legality and validity of the impugned order, whether due process had been followed.
53. Ms. Sidhu, ld. Counsel submitted that the allegation by the Petitioners that cross-examination opportunity was not given is baseless, inasmuch as, more than 100 hearings had taken place in this matter in a period of two years and all evidence was collected and it is only thereafter the impugned orders were passed. She submitted that the schools made repeated attempts to camouflage the fact that there were more than 20 teachers and that in order to try to escape the rigors of the Act, they had shown both schools as independent entities.
54. Ld. Counsel further submitted that in fact, the investigation and the facts revealed that there are more than 25 people working in the school. She asserted that three permanent trustees of both the trusts were the same and many members of the staff were being shown as common. Students admitted in one school were being taught in another school. In some of the cases, the diary of one school was found with the student of another school.
55. Ms. Sidhu submitted that the impugned order dated 29th October, 2012, in fact, shows various reasons why the schools had been considered as one entity. Ld. Counsel further urged that there was a common purchase of school material, records which were found common, activities were common for both schools. Students for one year in one school were shifted to the other school. Thus, for all these reasons, the functional integrity was found by the authority.
56. In the face of these facts, Ms. Sidhu, ld. Counsel submitted that the onus was on the schools to establish that there was no functional integrity, which they failed to discharge. The entire thread of commonality which existed between the two schools, was clearly borne out from all the documents etc. Ld. Counsel concluded by stating that the evidence and the statements of teachers and students, which were recorded highlighted that there was common ownership, common administration, common control of finances and functional integrity. The following cases were relied upon to defend the orders passed by EPFO and EPFAT to demonstrate functional integration based on common staff, common clerks, common management etc. She relied on the following decisions:
i. Noor Niwas Nursery Public School v. Regional Provident Fund Commissioner and Ors., [(2001) 1 SCC 1],
ii. Regional Provident Fund Commissioner, Jaipur v. Naraini Udyog & Ors., [(1996) 5 SCC 522],
iii. M/s Rajasthan Prem Krishan Goods Transport Co. v. Regional Provident Fund Commissioner, New Delhi & Ors., [1997 LAB.I.C. 146] and
iv. M/s. L. N. Gadodia & Sons & Anr. v. Regional Provident Fund Commissioner, [AIR 2012 SC 273]

57. On behalf of the Complainant- Mr. Anuj P. Agarwala, ld. Counsel relied upon the submissions made by the EPFO. It was his submission that the mere fact that the Complainant was an ex-teacher of the school would not make any difference. The issues raised in the complaint deserve to be considered on merits and, thus, he defended the order dated 18th April 2016 passed by the EPFAT.
Analysis and reasoning:
58. A perusal of the findings of the department (EPFO) and the submissions would show that broadly the facts are not disputed. The following facts are admitted:-
* constitution of the trusts i.e., Dina Nath Public Trust and Manav Seva Public School Society;
* the names of the trustees the persons who were appointed as principals;
* the locations of the two schools;
* the fact that MSPS was located in the place where earlier DNPS Dabua Colony was run.
59. The question which arises is only whether the MSPS can be treated as a branch of DNPS.
60. With effect from September, 2011, DNPS has been already covered under the Act, and MSPS has been covered under the Act since July, 2010 itself. The order of clubbing of the two schools would, therefore, be relevant only for the period commencing 1st April 1996 till the said two schools were covered under the Act i.e., a period of approximately 15 years. The records are replete with allegations by the school and by the department (EPFO) against each other. The schools alleged that they were subjected to enormous harassment, inspections, raids, etc., which caused disruptions in the activities of the schools. In fact, it was alleged that students of the schools were being disturbed even during examination times. The allegation of the department was that despite repeated inspections all the relevant records were not produced.
61. As far as the production of the records is concerned, a perusal of the Inquiry Report would show that sufficient records have been obtained by the department.
62. Coming to the two schools, they are run by two different trusts Dina Nath Public Trust (DNPT) and Manav Seva Public School Society. Both the trust/society were established at different points in time. DNPT was established in 1983 and MSPS society was established in 1989. The Memorandum of Association of DNPT showed that DNPS Dabua Colony was already in existence when the said trust was formed. So long as the DNPS Dabua Colony was run as a branch of DNPS Nehru Ground, they could have been together considered as one entity.
63. The stand of MSPS was that the said DNPS Dabua Colony was shut down in 1985-86 and one experience certificate issued by the headmistress Ms. Vijay Laxmi Saini in 1987 was held against the school. There is some sprinkling of evidence:-
* of one student stating that he was initially admitted in DNPS Nehru Ground and then shifted to DNPS Dabua Colony branch;
* one former teacher saying that she was earlier in DNPS Dabua Colony and that there was another school DNPS at Nehru Ground;
* one student carrying an almanac of the other school;
* some staff members being common etc.;
* an accounts clerk who has signed the bill books of MSPS was an employee of DNPS.
64. The question is whether the said factors are sufficient to hold the functional integrity, unity of ownership and unity of administrative control and financial control. In order to determine the same, various tests laid down in judicial decisions have to be seen.
i. Management of Pratap Press v. Secretary, Delhi Press Workers’ Union [AIR 1960 SC 1213]

65. The question in this case was whether an individual proprietor or a firm or a company is engaged in several activities and whether these activities form one industrial unit or separate industrial units. The case arose under the Industrial Disputes Act, 1947 for the purposes of payment of bonus. In this case, the Supreme Court observed as under:
“6. Coming now to the facts of the present appeals we find that the functions of the Press and the Vir Arjun paper cannot be considered to be so interdependent that one cannot exist without the other. That many presses exist without any paper being published by the same owner is common knowledge and is not seriously disputed. Nor is it disputed that an industry of publishing a paper may well exist without the same owner running a press for the printing of the paper. The very fact that Daily Pratap owned by a partnership firm, was being printed at the Pratap Press belonging to Shri Narendra itself shows this very clearly. It cannot therefore be said that there is such functional interdependence between the press unit and the paper unit that the two should reasonably be considered as forming one industrial unit.
7. Along with this it is necessary to consider the conduct of the businessman himself. Has he mixed up the capital of the two, the profits of the two and the labour force of the two units? These are matters on which the employer is the best person to give evidence from the records of his concerns. No evidence has however been produced to show that at any time before the dispute was raised he treated the capital employed in the two units as coming from one single capital fund, nor anything to show that he pooled the profits or that the workmen were treated as belonging to one establishment. It is interesting to note that there is no record showing whether for his own purposes he treated the assets of the two units as forming one composite whole or the assets of two distinct units has been produced. The profit and loss accounts which we find on the record appear to have been prepared sometime in 26-12-1951, — apparently after the reference had been made and the dispute whether these units were one or two, had arisen. No weight can therefore be attached to the fact that in this profit and loss account — both the receipts from the press and the receipts from the Vir Arjun were shown as the income.
8. Some account-books appear to have been produced in Court but it is nobody’s case that these throw any light on the question whether the capital fund or the labour force for the two units were treated as one and the same. It is reasonable to think that the account-books were produced only to show the actual working results of the Vir Arjun. It has to be noticed that the Tribunal thought that the accounts had not been kept in a satisfactory manner and there was room for suspicion about the correctness of the same.”

66. The Supreme Court in the above case observed that there was no evidence to show that the capital was treated as common capital between the two publication units and whether the funds were also pooled. The Supreme Court concluded that the press unit and the paper unit were independent activities. The conclusion of the Supreme Court is extracted below:
“9. The position therefore is that the activities of the press unit are independent of the activities of the paper unit and there is no record from which it can be ascertained how the employer himself treated these two units. When in this position of things we find the employer himself making a statement that “there are two institutions, the Vir Arjun and the press, the account books are kept separately” and that “there are two cashiers”, the conclusion reached by the Tribunal that the Press and the Vir Arjun paper are distinct and separate industrial units appears to be reasonable and cannot be successfully challenged.
10. Once this conclusion is reached the question of what bonus is payable depends on a proper calculation of the available surplus of the Pratap Press itself without taking into consideration the loss incurred by the Vir Arjun. No objection has been taken before us to the calculation made by the Tribunal on that basis. As the only point raised in this appeal, viz., that the Vir Arjun and the Pratap Press form one industrial unit fails the appeal is dismissed with costs.”

67. Thus, the view of the Supreme Court was that the loss incurred by the newspaper Vir Arjun could not be added to the available surplus of the press namely Pratap Press for calculation of the bonus. They were held to be two separate industrial units and the conclusion was in favour of the workers.

ii. Regional Provident Fund Commissioner v. State of Punjab and Haryana [2012 SCC OnLine P&H 11790]

68. In this case, the question was whether two units were functionally integrated or not. The observation of the High Court of Punjab and Haryana is as under:
“15) What can be culled out of the various judgments on the issues, as referred to above, is that no straight-jacket formula has been laid down for considering as to whether two units should be considered one establishment for the purpose of coverage under the provisions of the EPF Act. Various steps, as are required to be considered for the purpose, are in the form of unity of ownership, management, control, finance, labour, employment and functional integrality. Place of business of two units is another factor which may be relevant. The mere fact that both the units are owned by one person or some of the partners are common may not be sufficient to treat two units as one establishment.”

69. Thus, High Court of Punjab and Haryana in the above case held that, there cannot be a single formula to decide functional integration of two units to be considered as single establishment, however the same would be on the basis of the facts of each case.

iii. Alaghu Pharmacy B. v. Regional Provident Fund Commissioner, Coimbatore & Anr. [2009 LLR 1123]

70. In this case, the Regional Provident Fund Commissioner determined that Alaghu Pharmacy’s three units ought to be treated as a single entity due to functional and financial integrity, leading to the combined employee count exceeding 20, thereby making them subject to the Employees’ Provident Funds Act. The Appellant contested this, arguing that each unit was distinct, with separate licenses, financial records, and tax assessments. The ld. Single Judge initially upheld the Commissioner’s decision, noting operational interdependence and shared management. However, the Appellate Court found insufficient evidence of functional integrity, emphasizing that common ownership and managerial control alone do not fulfil the test for functional integrity. Consequently, the Court ruled that the three units are independent for the purposes of the Act, allowing the appeal. The Court observed as under:
“17. In 2005 (2) L.L.J. 629 (Madras) [Regional Director, E.S.I. Corporation vs. Aruna Stores], a Division Bench of this Court had occasion to consider the concept of functional integrality in the context of E.S.I. Act. There, the Insurance Inspector found that the two entities were interdependent, electricity connection and building were common, cash counter and packing section were common, there was common supervision, common security, the same person was controlling both the units; as far as custom house was concerned, one unit was only a section of the other, and there was no independent entrance. The Division Bench, after relying on A.I.R. 1964 S.C. 472 [Pratap Press vs. Their Workmen], held that the concept of functional integrality in industrial law is well known and even though for the purpose of sales tax etc. they are treated as separate units, “the principles of industrial law are different from the principles of other branches of law”. In that case, applying the law laid down by the Supreme Court, the Division Bench was of the opinion that there was functional integrality. We have already referred to Pratap Press’ case (supra) where the Supreme Court had held that there is no hard and fast rule for deciding the test of functional integrality and it would depend upon the peculiar facts. In the present case, it is not merely because the units are separately assessed under the tax enactments that we hold that there is no functional integrality, but we can understand how this close interdependence should be gauged from the judgment in Aruna Stores’ case (supra). The word ‘integrality’ itself indicates that there is a complete whole and one is included as part of a whole. So, perhaps that is why the Karnataka High Court observed that if one cannot exist without the other, there is functional integrality. In this case, we are not able to see any evidence of such interdependence between the two units except for the supervision being done by Jayabalan and use of the services of the driver of one unit for one month. We do not think these indicia are sufficient to pass the test of functional integrality.
18. In the present case, in fact, the original conclusion arrived at during the course of the enquiry was that there is nothing to say that Alagu Pharmacy-B had employed 20 persons. It is only because the three units were owned by the same family and were engaged in the same activity, viz., purchase and sale of medicines, it was decided to examine the possibility of clubbing the three units. So, it appears there should be functional integrality, e.g., the closing down of one unit will result in the closing down of the other or there is such pervasive interdependence between the several units, which makes it difficult to extricate the activity of one from the other. If we apply the aforesaid decisions of the Supreme Court as well as that of Karnataka High Court and Bombay High Court, referred to above, one will have to hold that in the present case, the units are separate for the purpose of invoking the Act and when the test is so applied, we find that there is nothing to show that the three units can be treated as one.”

iv. Regional Provident Fund Commissioner v. Dharamsi Morarji Chemical Co. Ltd.[1998(2) SCC 446]

71. This was again a provident fund case where the Respondent which was already functioning and which had a factory in Ambarnath Thane running since 1921, had established a new concern at Roha in Colaba, Maharashtra. The question which arose in the said case was whether these two premises are one and the same. The department had argued that the new premises is nothing but an integral part of the old factory and observed as under:
“4. It is true that if an establishment is found, as a fact, to consist of different departments or branches and if the departments and branches are located at different places, the establishment would still be covered by the net of Section 2-A and the branches and departments cannot be said to be only on that ground not a part and parcel of the parent establishment. However, on the facts of the present case, the only connecting link which could be pressed in service by the learned counsel for the appellant was the fact that the respondent-Company was the owner not only of the Ambarnath factory but also of Roha factory. On the basis of common ownership it was submitted that necessarily the Board of Directors could control and supervise the working of Roha factory also and therefore, according to the learned counsel, it could be said that there was interconnection between Ambarnath factory and Roha factory and it could be said that there was supervisory, financial or managerial control of the same Board of Directors. So far as this contention is concerned the finding reached by the High Court, as extracted earlier, clearly shows that there was no evidence to indicate any such interconnection between the two factories in the matter of supervisory, financial or managerial control. Nothing could be pointed out to us to contraindicate this finding. Therefore, the net result is that the only connecting link which could be effectively pressed in service by the learned counsel for the appellant for culling out interconnection between Ambarnath factory and Roha factory was that both of them were owned by a common owner, namely, the respondent-Company and the Board of Directors were common. That by itself cannot be sufficient unless there is clear evidence to show that there was interconnection between these two units and there was common supervisory, financial or managerial control. As there is no such evidence in the present case, on the peculiar facts of this case, it is not possible to agree with the learned counsel for the appellant that Roha factory was a part and parcel of Ambarnath factory or it was an adjunct of the main parent establishment functioning at Ambarnath since 1921.”

72. As can be seen from the above, the Supreme Court considered the fact that the same company was the owner of the Ambarnath Factory and the Roha factory. In view of the common ownership, the Board of Directors who could control and supervise the working of the Roha Factory. Hence there was an interconnection which led to supervisory, financial or managerial control. However, it was found therein that both factories had separate registrations numbers. They were separately registered under the Factories Act, 1948 and they drew up separate profit and loss accounts. It was also observed that they had separate lock managers and plant superintendents and they had a separate set of workmen and employees. Thus, the Supreme Court concluded that there was no interconnection between the two units.

v. Regional Provident Fund Commissioner, Jaipur v. Naraini Udyog &Ors.[1996 5 SCC 522]

73. The Supreme Court found in this case, though, the establishments were registered separately under the Factories Act, 1948, Sales Tax Act, 1956 and Employees State Insurance Act, 1948 and had separate central excise numbers, they cannot be treated as separate establishments. The Division Bench of the High Court, however, had held that they are two independent companies and cannot be clubbed for the purposes of levying construction under Section 7A of the Act. In this background, the Supreme Court observed as under:
“2. On the basis thereof, the appellant has called upon them to contribute the amount under Section 7-A 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)(a) 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 7-A 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 gets maximum out-turn of his production by ensuring health insurance to its employees which is the fundamental right to the latter.”

vi. M/s Rajasthan Prem Krishan Goods Transport Co. v. RPFC, New Delhi & Ors. [(1996) 9 SCC 454]

74. In the said case, the Supreme Court again observed that the Regional Provident Fund Commissioner (RPFC) can pierce the veil and held as under:
“6. The finding recorded by the Regional Provident Fund Commissioner is that there is unity of purpose on each count inasmuch as the place of business is common, the management is common, the letterheads bear the same telephone numbers and 10 partners of the appellant are common out of the 13 partners of the third respondent. The trucks plied by the two entities are owned by the partners and are being hired through both the units. The respective employees engaged by the two entities when added together, bring the integrated entities within the grip of the Act; so is the finding. Now, this finding is essentially one of fact or on legitimate inferences drawn from facts. Nothing could be suggested on behalf of the appellant as to why could the Regional Provident Fund Commissioner not pierce the veil and read between the lines within the outwardliness of the two apparents. No legal bar could be pointed out by the learned counsel as to why the views of the Regional Provident Fund Commissioner, as affirmed by the Central Government, be overturned.”

75. The Regional Provident Fund Commissioner found that the two entities in question were essentially unified, sharing management, resources, and employees. This unity brought them under the jurisdiction of the Act and thus the decision of the RPFC to “pierce the corporate veil” to look beyond the outward appearances and recognize the entities’ true integrated nature based on legitimate inferences was upheld by the Supreme Court.

vii. M/s L.N. Gadodia & Sons vs RPFC [AIR 2012 SC 273]
76. In the said case, the entire scheme of the Act was discussed and reliance was placed upon the judgment in The Associated Cement Companies Ltd. v. Their Workmen [AIR 1960 SC 56]. The Supreme Court held that the affairs of the two companies were independent and proper evidence ought to be led to prove the same. The RPFC’s order holding that the two companies were having common control, finance and management was upheld and the Tribunal’s order reversing the RPFC’s order was set aside. The relevant paragraphs of the said judgement are set out below:
“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 the 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. [1984 Supp SCC 610 : 1985 SCC (L&S) 310 : AIR 1985 SC 323] The test has to be the one as laid down in Associated Cement Companies Ltd. [AIR 1960 SC 56] which has been explained in Pratap Press [AIR 1960 SC 1213].
24. The Provident Fund Department had issued notice to the petitioners on 11-6-1990 on the basis of their inspection. It had relied upon the 1988 Audit Report of the petitioners. The petitioners had full opportunity to explain their position in the inquiry before the Provident Fund Commissioner conducted under Section 7-A of the Provident Funds Act. The petitioners, however, confined themselves only to a facile explanation. If according to them, the management, workforce and financial affairs of the two companies were genuinely independent, they ought to have led the necessary evidence, since they would be in the best know of it. When any fact is especially within the knowledge of any person, the burden of proving that fact lies on him. This rule (which is also embodied in Section 106 of the Evidence Act) expects such a party to produce the best evidence before the authority concerned, failing which the authority cannot be faulted for drawing the necessary inference. In the facts and circumstances of the present case, the Provident Fund Commissioner was therefore justified in drawing the inference of integrity of finance, management and workforce in the two petitioners on the basis of the material on record”

77. In Gopi Chand & Ors. v. Employees State Insurance Corp. [2010 SCC OnLine Del 3315] the ld. Single Judge was considering a case where there were six separate units being run by the Appellants. Even in the said case the burden of proof was imposed on the company concerned which was not discharged.
78. In Saraswati Construction Company v. Central Board of Trustees [2010 SCC OnLine Del 1584] the establishment had challenged that it did not employ more than 20 employees. Again, onus was placed on the establishment by the High Court. It was held as under:
“12. It is a settled legal position that if any establishment or employer is not covered under the said Act, then it is for the employer to place sufficient cogent and convincing material before the designated authority in an inquiry under Section 7A so as to satisfy the authority with regard to the non-applicability of the Act and on failure to place any such material, the onus cannot be shifted on the EPF authorities to prove the applicability of the Act, who under no circumstances, can be in possession of necessary records evidencing the extent of strength of employees in any particular establishment. In the case of Himachal Pradesh State Forest Corporation v. Regional PF Commissioner (supra) cited by the Counsel for the petitioner, being distinguishable on facts would not be applicable to the present case. As in the facts of the said case employer itself had admitted its liability under the Act and since due to delay of 16 years period, the employer was not in possession of the records, the Court directed the benefits only with respect to those employees who are identifiable and whose entitlement was proved on evidence. So far as the facts of the present case are concerned, the petitioner itself never came forward to place on record the documents or took any such plea of non-availability of the documents, therefore, the said judgment of the Apex Court will not cut any