An establishment that is functionally integrated with another establishment and has unity of ownership, management and control, as well as unity of employment, cannot be considered a new establishment entitled to exemption from coverage under the Employees Provident Fund Act for an infancy period.

A. SEETARAM REDDY, J.

( 1 ) THE Petitioner, Andhra Cement Company Limited, seeks to issue a writ of certiorari to quash the proceedings dated 6/05/1982 of the Regional Provident Fund Commissioner, Hyderabad.

( 2 ) THE relevant circumstances in which the impugned proceedings have been issued may be set out : The petitioner-Company, incorporated under the Indian Companies Act, established a cement factory known as Andhra Cement Factory at Vijayawada in the year 1938. In the year 1978 the management established another factory styled Visakha Cement Works at Visakhapatnam. The State Government allowed interest-free sales tax loans, a rebate of 25% in power tariff and other facilities as incentives to the new industry. The Commissioner of Labour also recognised it as a separate establishment. The service conditions are totally different from the service conditions of the workmen working in Andhra Cement Factory. The employment also was different. 75 per cent. of the wages as recognised by the Central Wage Board were also being paid from 1/11/1979. The workmen accepted the same. Separate balance sheet and separate accounts are maintained for the new establishment.

( 3 ) THE Parliament, with a view to encourage the growth of industries, exempted new establishments from the coverage of the Provident Fund Act for an infancy period of 3 years or 5 years, as the case may be, and so, Visakha Cement Works is not governed by the provisions of the Provident Fund Act for a period of three years from 1/11/1979.

( 4 ) HOWEVER, on the representation made by the employees of Andhra Cement Factory, the A. P. Regional Provident Fund Commissioner, the 1st respondent herein, issued proceedings dated 6/05/1982 advising the petitioner-Company to cover the employees of Visakha Cement Works under the Provident Fund, treating it as part and parcel of Andhra Cement Factory. Thereupon, the petitioner - Company made a representation to the Government of India under Section 19-A of the Employees Provident Fund Act (for short the Act) stating that Visakha Cement Works is a new establishment and, therefore, it is entitled for exemption under Section 16 of the Act for the infancy benefit of three years, as it cannot be considered as a branch of Andhra Cement Factory. The said representation, however, was turned down. Hence, this writ petition.

( 5 ) THE main question that is involved is whether there is a functional integrality between Andhra Cement Factory, Vijayawada and Visakha Cement Works at Visakhapatnam even though the management is common ?

( 6 ) THE argument advanced for the proposition is that there is absolutely no functional integrity between the two units; they are two separate and independent units and one has nothing to do with the other. The following are the circumstances that have been enumerated : (1) Visakha Cement Works has been considered and treated as a separate industrial establishment by the Joint Commissioner of Labour and a new set of standing orders from that of Andhra Cement Factory are framed under the Industrial Employment (Standing Orders) Act, 1946. (2 ). Section 16 of the Employees Provident Fund Act is meant to provide incentive benefit for the new factory, whether there is any nexus to the proprietorship of the establishment or not. (3) There was a separate profit and loss accont and balance sheet prepared and maintained for the two establishments. (4) The new unit does not depend upon the functioning of the other, and so there is no functional dependence. (5) There is no unity of employment and so, there is no functional integrity.

( 7 ) THE arguments advanced on behalf of the respondents are : (1) It is true that the new unit has got a new licence and is registered as a new factory and the State Government has allowed a rebate of 25% in power tariff and is recognised by the Labour Commissioner as a separate new establishment. That does not, however, alter the situation. (2) Out of 120 employees working in the Visakhapatnam un

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