Judgment :- Abdul Gafoor, J. A private limited company is the appellant. It came into existence on 1.2.1994. It is a company engaged in a family business of conducting hotel. Even before the formation of the company, the hotel business was being conducted. There was a restaurant and a bar attached to the hotel by name Dwarka Hotel. As regards the coverage of the employees engaged in the hotel including the bar, there were disputes including as to whether bar was a different establishment. Finally, the matter went up to the Supreme Court and the employer could not succeed. Later, the employer filed an application seeking de-coverage from the Act from 1.10.1989. That was not accepted by the employees’ State Insurance Corporation on the ground that bar and restaurant were part and parcel of the hotel business. It was thereafter the company was formed with the name “Vrindavan Hotels Limited”. The restaurant facility available in the hotel was being run by a lessee, who had been employing his own workmen. In spite of that, the Employees’ State Insurance Corporation clubbed the lodge as well as the restaurant together for the purpose of coverage and issued Ex.C18 notice of assessment and Ext.C19 recovery notice. It was in the above circumstances, the employer filed an application before the Employees’ Insurance Court for a declaration that his establishment became de-covered from the purview of the E.S.I. Scheme with effect from 1.10.1998. Taking into account the history of the establishment it was contended that the restaurant was an inseparable part of the hotel business of the company that the lodge and restaurant were integral part and that the employees in both the sections have to be taken together for the purpose of coverage under the Act and the Scheme. In support of this contention, the ESI Corporation relied on the memorandum of association of the company wherein one among the main objects was to carry on business of the restaurant as well. 2. Appreciating this contention and the evidence on record, the EI court found that the lessee was really an agent of the company and therefore, the restaurant was not a separate establishment and the employees in both the sections have to be taken for the purpose of coverage under the ESI scheme. This is under challenge in this appeal at the instance of that company. 3. This is under challenge in this appeal at the instance of that company. 3. It is contended by the appellant that though the memorandum of association contains that the company does have an object of conducting restaurant, it is not obligatory always to conduct the restaurant. It can also lease out the space in its ownership to another to conduct the restaurant on lease basis and really a lease deed was executed as is revealed by Ext.D3. It provided that the lessee has to arrange his own workmen. Therefore the lessee is the employer and not the company – the lessor. 4. In support of this contention, a decision of the Andhra Pradesh High Court reported in K.V. Ratnam v. Government of India and another (1987 Lab.I.C.1288) is relied on. Another decision of this court in K.C. Thomas v. Regional Director, ESI Corporation (1997 (1) K.L.J. 321) is also relied on. It is further contended that there ought to have been show cause notice under Section 45(a) of the Employees’ State Insurance Act, 1948 before determination. Therefore, the recovery, without such show cause notice and hearing is illegal. Reliance is much placed on the decision reported in Fenner Garments v. E.S.I.C., Madras (1994(2) LLJ 754). 5. On the other hand, it is submitted by the E.S.I. Corporation that the restaurant is an integral part of the hotel business of the appellant. Merely because a lease arrangement is made between the parties, it will not make it a different establishment having a distinct entity. Even in the lease deed Ext.D3, the appellant company is insisting about employment of necessary persons and running the restaurant in a proper manner. That itself is sufficient to make it clear that restaurant is not a separate business of the company. The lessee is none other than the husband of one among the major share holders in the company. Much reliance is placed on the decision reported in Madona Textiles v. E.S.I. Corporation (2000 (2) K.L.T. 741). There is unity of ownership, management and control and unity of employment and with its functional integrity and unity, the lodging house as well as the restaurant shall have to be taken as joint establishment run by the company. When it is viewed so, the number of employees will be more than 20 resulting in coverage. So, there is no reason to interfere with the impugned order. 6. When it is viewed so, the number of employees will be more than 20 resulting in coverage. So, there is no reason to interfere with the impugned order. 6. Ext.D3 is a lease deed even admittedly by the respondent. Merely because the lessor had insisted proper running of the restaurant after employing the necessary workmen by the lessee, it cannot be taken that the restaurant is under the same management of the company. Of course, the decision in K.C. Thomas’s case (1997 (1) K.L.J. 321) relied on by the appellant does not have application to the facts of this case. It is regarding leasing out a factory altogether to a lessee whereby the owner will cease to become liable to pay contribution. But the fact situation in the decision of the Andhra Pradesh High Court in Ratnam’s case is similar to the one arising on the case on hand. In Ratnam’s case, there was a lodge and a restaurant and the restaurant was leased out to a different person. Considering such a situation, the Andhra Pradesh High Court held that: “To attract the application of the act in respect of the employee engaged in the restaurant section being clubbed with the employee engaged in the lodging section, these two in my judgment are different and independent establishments and, therefore, for each establishment the criteria laid down under the Act will have to be satisfied before attracting the application of the Act.” Merely because the lessee is the husband of one among the major share holders of the company, it cannot be taken that the restaurant is a part of the same establishment as the lodge run by the company. 7. It is true that the running of the restaurant is also one of the main objects of the company as per the memorandum of association. But that does not mean that the company shall always run the establishments and businesses mentioned in the memorandum of association. Even if sufficient space is owned by the company to do such business, nothing prevents the company from leasing out the premises for doing some other business. Therefore, the stipulation in the memorandum of association of the company cannot go against the contention of the company. 8. Even if sufficient space is owned by the company to do such business, nothing prevents the company from leasing out the premises for doing some other business. Therefore, the stipulation in the memorandum of association of the company cannot go against the contention of the company. 8. In such circumstances, we are inclined to accept the view taken by the Andhra Pradesh High Court to hold that the restaurant run on lease basis has to be taken as a separate establishment and the employees therein cannot be clubbed to the employees in the lodging house to decide coverage. The decision in Madona Textiles cited by the respondents do not have any application to the facts situation of this case. There is no unity of ownership, management and the company does not have control in that business, as the restaurant is run, based on a lease by a different person. It has to be managed by the lessee and the employees are to be controlled by him and the lessor does not have any role in that regard. So, there is no functional integrity even. Accordingly the appeal is allowed and the order under challenge is set aside. No costs.