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W.P. 9216/12

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 18TH DAY OF SEPTEMBER 2013

BEFORE

THE HON'BLE MR. JUSTICE RAM MOHAN REDDY

WRIT PETITION NO. 9216 OF 2012 (L-PF)

BETWEEN:

THE ASSISTANT PROVIDENT FUND COMMISSIONER


EMPLOYEES' PROVIDENT FUND ORGANISATION
REGIONAL OFFICE
SILVA ROAD, HIGH LANDS
MANGALORE – 575 002.
… PETITIONER

(BY SMT. NANDITA HALDIPUR, ADVOCATE )

AND :

1 R S ENTERPRISES
A PARTNERSHIP FIRM
REP.BY ITS PARTNER
MR. SHUBHA G RAI
101, IBROSE APARTMENT
JAIL ROAD, MANGALORE.

2 THE MANAGING DIRECTOR


KARNATAKA STATE TOURISM
DEVELOPMENT CORPORATION LTD.,
NO. 49, KHANIJA BHAVAN, 2ND FLOOR
WEST ENTRANCE, RACE COURSE ROAD
BANGALORE – 560 001.
… RESPONDENTS

(BY SRI. M I ARUN, ADVOCATE FOR R2


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W.P. 9216/12

R1 – SERVED - UNREPRESENTED)

THIS PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE


CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DT.
24.12.2010, PASSED IN ATA 497(6) 2008 BY THE EMPLOYEES
PROVIDENT FUND TRIBUNAL AT ANN-E; AND ETC.

THIS PETITION IS COMING ON FOR PRL.HEARING IN 'B'


GROUP, THIS DAY THE COURT MADE THE FOLLOWING:

ORDER

The Employees' Provident Fund Organization has invoked the

supervisory jurisdiction under Article 227 of the Constitution of

India, to call in question the order dated 24th December 2010 of

the Employees' Provident Fund Appellate Tribunal in

A.T.A.No.497/6/2008, allowing the appeal filed by first respondent,

setting aside the order dated 1.5.2008 – Annexure-D of the

Assistant Provident Fund Commissioner, holding that the first

respondent is “running the business of Hotel Mayura Nethravathi”

and hence liable to remit the contributions of the employees

covered under the establishment of M/s.Hotel Mayura Nethravathi,

from 8th April 2003 onwards.

2. Smt.Nandita Haldipur, learned Counsel for the petitioner

submits that, Hotel Mayura Nethravathi was a business venture of

Karnataka State Tourism Development Corporation (for short


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'KSTDC'), which when closed down, was taken over by the first

respondent – establishment and continued the business in the very

same name at the very same place and therefore, the first

respondent is liable to pay the employer and employees,

contribution in respect of such of those employees as were

engaged by Hotel Mayura Nethravathi from the date the first

respondent took over the business by securing a licence. According

to the learned Counsel, the Appellate Tribunal was not justified in

recording a finding that, the establishment of Hotel Mayura

Nethravathi and that of the first respondent are two distinct and

separate unconnected units.

3. Per contra, learned Counsel for the second respondent –

KSTDC submits that, though KSTDC, in fact, did carry on the

business of a hotel in the premises in question, nevertheless

discontinued the business and when the immovable property

became vacant, put up for public auction the rights to use the

premises and not the business, whence the first respondent being

the highest bidder, who had quoted the highest value as and

towards lease rent, a concession agreement was entered into

between respondents-2 and 1 in the year 2002 whereafterwards,


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first respondent has been carrying on the business of Hotel Industry

in the said premises. According to the learned Counsel, there is no

business connection in the matter of Hotel Industry carried on by

the first respondent with the second respondent except to receive

lease rents for the use of the premises.

4. Although the concession agreement – Annexure-C does not

reflect any covenant that the first respondent has taken over the

liabilities of the second respondent in the matter of its employees,

engaged, by the second respondent in carrying on the business of

hotel industry in the premises in question, nevertheless, learned

Counsel for the petitioner points to Clause 4.4(b) to contend that

there is a business connection by which the first respondent took

over the renovation, operation and maintenance of the premises

from the second respondent for the period from 5.12.2002 to

4.12.2027 and therefore, is liable to remit the contributions in

respect of the employees of Hotel Mayura Nethravathi from 5.12.02

onwards.

5. A bare perusal of Clause 4.4(b) discloses that the first

respondent had agreed to erect a signboard, of not less than 2feet


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by 4 feet, adjacent to the main entrance to the Project Asset in a

manner such that it is ordinarily visible to any person using such

entrance, displaying the text that the property belongs to KSTDC

Limited and has been handed over to the first respondent for

renovation, operation and maintenance from 5.12.2002 to

4.12.2027.

6. This covenant in the concession agreement by no stretch

of imagination means that the first respondent had taken over a

running Hotel establishment of the second respondent and

therefore, was liable for remittance of contributions from 5.12.2002

in respect of employees of Hotel Mayura Nethravathi.

7. In the absence of clinching evidence to substantiate the

alleged fact, that the first respondent took over the running

concern of Hotel Mayura Nethravathi from the second respondent –

KSTDC, it is well neigh impossible to accept the submission of the

learned Counsel for the petitioner. In my considered opinion, the

Appellate Tribunal was fully justified in recording a conclusion that

Hotel Mayura Nethravathi was closed and the immovable property

belonging to KSTDC was leased out to the first respondent, who


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commenced business afresh and therefore, Section 17-B of the

Employees' Provident Funds & Miscellaneous Provisions Act, 1952,

is inapplicable.

Petition devoid of merit is accordingly rejected.

Sd/-
JUDGE.

KNM/-