Two establishments, functioning together and jointly employing 20 employees, can be clubbed as one establishment for the purpose of coverage under the Employees Provident Fund Act

Om Investment Corporation, Banglore


Assistant Provident Fund Commissioner, Employees Provident Fund Organization, Banglore

Facts of the Case:
Petitioner firm, Om Investment Corporation was assessed by the respondents and was ordered to pay contribution towards Employee’s Provident Fund (EPF). Petitioner challenged the said order before the EPF Tribunal but the petition was dismissed.

Resultantly, a petition was filed before the Karnataka High Court. Petitioner clarified that, the respondent authorities while assessment clubbed 2 establishments, Om Investment Corporation and Giria’s Investment Corporation as one. Due to this, total number of workers reached 20, and it was brought within coverage of the EPF Act. Petitioners claimed that though the partners of these establishments were related to each other, they were not from same family. Also these establishments were individually carrying on different business. Hence, they are not liable for coverage under the EPF Act.

The respondents submitted that during inspection it was found that the manner in which the 2 establishments were functioning establish them as almost one unit. Also the 2 establishments were situated in the same area and used common telephone number in their letter heads. Also they failed to produce any previous years wage register or balance sheet except for current year’s records to reveal number of workers employed by them in previous years.

Hon’ble High Court considering the facts like neighborhood locations, use of common telephone number in letter heads and failure to provide previous years wage register or balance sheet held that the 2 establishments were functioning together as one unit. Thus, as the combined employee strength reached 20, it would be covered under the Act. And the court upholding the respondent’s order the petition was dismissed.


Source: Labour Law Reporter, pg. no. 990, Karnataka High Court, September 2009.


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