Summary of the Supreme Court Judgment in M/s Torino Laboratories Pvt. Ltd. v. Union of India & Ors. (2025 INSC 849)

1. Heading of the Judgment

Case Title: M/s Torino Laboratories Pvt. Ltd. v. Union of India & Ors.
Civil Appeal No.: 9540 of 2018
Court: Supreme Court of India
Bench: Justices K.V. Viswanathan and Joymalya Bagchi
Date of Judgment: July 15, 2025

2. Related Laws and Sections

The judgment primarily interprets and applies the following legal provisions:

• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act):
  Section 2A (Clubbing of establishments)
  Section 7A (Determination of dues by authorities)
  Section 7-I (Appeal to Tribunal)
  Section 16(1)(d) (Infancy protection for new establishments)

• Industrial Disputes Act, 1947 (Referred for tests of functional integrality)

• Companies Act, Factories Act, and other regulatory laws (For separate registrations)

3. Basic Judgment Details

Background:

• Torino Laboratories (Appellant) and Vindas Chemical Industries (Respondent No. 3) were pharmaceutical companies set up by members of the same family.

• Vindas was covered under the EPF Act, while Torino claimed it was a separate entity with fewer than 20 employees (thus exempt).

• EPF Authorities conducted inspections (2005) and found:
  Common premises, management, directors, finances, and infrastructure (telephone, website, security).
  Functional integrality between the two units.

• APFC (2006) and Appellate Tribunal (2011) clubbed Torino with Vindas, making EPF contributions mandatory from September 1995.

• High Court upheld the clubbing (2016).

• Supreme Court appeal filed by Torino.

Key Issues:

1. Whether Torino and Vindas could be clubbed as one establishment under the EPF Act?

2. Whether separate legal registrations under other laws (Companies Act, Factories Act) prevent clubbing?

3. Whether infancy protection (exemption for new units) applied to Torino?

Supreme Court’s Decision:

• Clubbing upheld: Torino and Vindas were functionally integrated (common ownership, management, premises, finances).

• Separate registrations irrelevant: EPF Act is a beneficial welfare legislation; artificial divisions to evade compliance are disregarded.

• Infancy protection denied: Since Torino was part of Vindas since 1995, no separate exemption applied.

• Appeal dismissed.

4. Explanation of the Judgment

(A) Tests for Clubbing Establishments

The Court applied multiple factors to determine if two entities are one establishment:

1. Functional Integrality:
   Do the units depend on each other? (e.g., shared infrastructure, resources).
   Here, both companies operated from the same premises, used common facilities (telephone, security, admin office), and had overlapping directors.

2. Unity of Ownership/Management:
   Same family controlled both companies.

3. Financial Unity:
   Funds sourced from the same HUF (family pool).

4. Geographical Proximity:
   Factories were on contiguous plots.

5. General Unity of Purpose:
   Both were in the pharmaceutical business.

Key Precedents Cited:

• Associated Cement Cos. Ltd. (1960): No single test is absolute; all factors must be weighed.

• Pratap Press (1960): Separate registrations do not override functional unity.

• L.N. Gadodia (2011): Burden of proof lies on the employer to show independence.

(B) Rejection of Torino’s Arguments

1. Separate Legal Entities:
   The Court held that corporate veils can be pierced to prevent evasion of welfare laws.
   Mere separate registrations under Companies Act/Factories Act are not conclusive.

2. No Interchange of Employees:
   Not a decisive factor; other unities (management, finance) mattered more.

3. Infancy Protection:
   Denied because Torino was not a genuinely new unit but an extension of Vindas.

(C) EPF Act as a Beneficial Legislation

• The Court emphasized that the EPF Act is a social welfare law meant to protect workers.

• Strict compliance is required; attempts to bypass coverage via artificial divisions are invalid.

5. Conclusion

• The Supreme Court dismissed Torino’s appeal, upholding the clubbing with Vindas.

• Key Takeaways:
  Clubbing depends on substance over form (functional unity > legal separateness).
  Employers cannot evade EPF obligations by creating paper divisions.
  Separate registrations under other laws do not override EPF compliance.

Final Order:

• Appeal dismissed.

• No costs imposed.