The Supreme Court elucidates the conditions under which two establishments can be amalgamated for coverage under the EPF Act
In the case of M/S Mathosri Manikbai Kothari College Of Visual Arts V. The Assistant Provident Fund Commissioner, a Division Bench of the Hon’ble Supreme Court recently addressed the legal position concerning the clubbing of different institutes for coverage under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act). The Court concluded, after referencing relevant decisions, that there exists financial integrity between the two institutes, allowing them to be interconnected and clubbed for coverage.
In this case, both institutes were operated by the same society, Ideal Fine Arts Society. While one institute, named Ideal Institute, was established in 1965, the Arts College (the appellant) was set up around 20 years later, in 1985-86. When considering the total number of employees in both institutes, which was 26, they met the requirement for coverage under Section 1(3)(b) of the EPF Act. This section stipulates that an institute employing 20 or more persons is liable to be covered under the EPF Act from March 01, 1988. Additionally, both institutes operated on the same campus.
The Bench, consisting of Justices Hima Kohli and Rajesh Bindal, examined relevant documents and determined, "there is financial integrity between the Society of the appellant as well as the Ideal Institute as substantial funds have been advanced to the Institutes by the Society. Further, both the Institutes are functioning from the same premises."
The case originated when a notice was issued, leading to an order passed by the Commissioner on September 23, 2005, under Section 7-A of the EPF Act. The order assessed the amount of contributions to be made by the appellant under various EPF Act schemes. Despite statutory appeals and a writ petition challenging the order, both the Tribunal and the High Court dismissed the appellant's claims.
The appellant argued that both institutes were independent, managed by the same society, and there was no financial integrity between them. However, the Court held that the documents produced demonstrated the appellant's lack of an independent status and deemed it an extended arm of the society and dismissed the appeal.