Judgment 1. In these two Writ Petitions, Petitioners are calling in question the order passed by the Employees’ Provident Fund Appellate Tribunal, New Delhi dated 4.7.2011 in Appeal No. A.T.A. No. 418(06) of 2008 vide Annexure-M and seeks for quashing of the same. 2. Heard Sri Kasturi, learned Senior Counsel appearing for Petitioners and Smt. Nandita Haldipur, learned Counsel appearing for Respondent. As directed by this Court, learned Counsel appearing for Respondent has also made available the original records. Perused the impugned order, records, statement of objections and the order passed by Respondent under Section 7-A of the Employees’ Provident und & Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘Act’ for the sake of brevity). 3. Respondent has brought the First Petitioner under the purview of the Act with effect from 1.6.2002 by Coverage Memo dated 27.1.2004. Enforcement Officer submitted a report dated 23.1.2004 stating that another unit by name M/s. Kashyap Industries (Petitioner NO.2) is also running the unit in the same building. On account of Petitioners’ establishment raising the dispute with regard to applicability of the Act they were summoned by the Respondent under Section 7-A of the Act and opportunity of personal hearing was extended. On behalf of Petitioners, learned Advocate appeared and filed certain records. Enquiry was adjourned from time to time. Copies of Squad Inspection Report dated 23.1.2004 & 6.12.2006 were furnished to the Petitioners as prayed for. Partner of Second Petitioner also appeared and requested time, to file written arguments on the Issue of applicability of the Act. With regard to applicability of the Act, objections were filed and on behalf of Second Petitioner, Attendance Register, Wage Register and Bonus Register for the period from June 2002 to April 2005 and Books of Accounts were produced. Balance-sheet for the period 2003-2004 was not produced and at the request of Second Petitioner, enquiry was adjourned form time to time. On account of non-appearance of parties on 8.2.2009, Asst. Provident Fund Commissioner (Enforcement) by order dated 27.2.2008 directed the First Petitioner to remit the dues from the date of coverage by concluding the proceedings ex parte. It has been held in the said order as follows: “None appeared on 8.2.2008 nor any representation received from the Employer. It appears that the Employer in relation to the establishment has chosen not to represent the case. It has been held in the said order as follows: “None appeared on 8.2.2008 nor any representation received from the Employer. It appears that the Employer in relation to the establishment has chosen not to represent the case. Therefore, I decide to conclude the inquiry ex parte based on the records available and Enforcement Officer’s report since sufficient opportunities have been afforded to the Employer. 4. After careful examination of the case factor and records produced by both the establishments i.e. M/s. Kapeela Rubbers & M/s. Kashyap Industries and statement and contention of departments through Enforcement Officer’s Reports/Squad Reports dated 23.1.2004, 17.10.2006 & 6.12.2006 and after due Application of my mind, I am of the opinion that the averments made by the Employer against the applicability of the Act with effect from 1.6.2002 is not sustainable and the establishment has been rightly covered w.e.f. 1.6.2002 under Section 1(3)(a) of the Act and allotted Code Number KN/29616.” 5. Aggrieved by this order, First Petitioner preferred an Appeal before the Employees Provident Fund Appellate Tribunal. New Delhi in A.T.A. No. 418(6) of 2008. The Appellate Tribunal dismissed the Appeal and affirmed the order of the Asst. Provident Fund Commissioner (Enforcement) by arriving at a conclusion that establishments have a common telephone number which proves the functional integrality and these establishments share professional charges, which is an indicator of financial integrality and by taking into consideration the functional integrality a the test, it held that there is functional integrality between Two Petitioners. The records produced by the learned Counsel appearing for Petitioner and the reports of the Enforcement Squad was the basis on which the Asst. Provident Fund Commissioner brought the establishment i.e., 1st Petitioner under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. When records are perused it would go to show that authority ha not considered, examined, or evaluated the grounds urged by Petitioners in their statement of objections filed before the authority whereunder, specifically they have denied the fact of functional integrality between two units, in fact, order passed by the Assistant Provident Fund Commissioner (enforcement) dated 27.7.2008 which has been produced by the learned Counsel appearing for Respondent along with a Memo dated 14.2.2012 would go to show and that there is no discussion on the issue of functional integrality at all. The authority proceeded to conclude the enquiry ex parte based on the records available. The authority proceeded to conclude the enquiry ex parte based on the records available. As seen from the order, which is extracted herein supra, as to what are those records which was perused and the basis on which issue of functional integrality between two units have been arrived at, is not explained in the order nor there is iota of discussion in the said order. As seen from the order, reason for bringing First Petitioner under the purview of the Act is on the ground that there is functional integrality between the First Petitioner and the Second Petitioner is based on the report of Enforcement Officer alone. 6. It is no doubt true that authority is entitled and empowered to take a decision based on records. However, said finding or the conclusion arrived should have nexus to the records. On the baste of which such conclusion can be arrived at. On the one hand, Appellate Tribunal proceeds to hold there is functional integrality between Petitioners 1 & 2. On the other hand, the Asst. Provident Fund Commissioner (Enforcement) comes to a conclusion that First Petitioner-Establishment is rightly covered and has been brought within the purview of the Act w.e.f. 1.6.2002, on the basis of the, reports dated 23.1.2004, 17.10.2006 & 6.12.2006, without considering the specific objections raised by the Petitioners in their objection statement with regard to there being no functional integrality, in the absence of reasons being found in the order said cannot be sustained. Appellate Tribunal instead of examining the correctness or otherwise of the said order impugned before it, proceeded to give a tangent finding and has discussed with regard to functional integrality which Issue was not considered by the Asstt. Provident Fund Commissioner (enforcement) though not stated in so many words Asstt. Provident und Commissioner (Enforcement) has tried to draw inference based on the Officers report-squad report dated 23.1.2004, 17.1.2006 & 6.12.2006 to which First Petitioner had filed detailed objections and as such it was incumbent upon the said authority to consider the materials placed by the Petitioners namely Attendance Register. Wage Register, Bonus Register and the Books of Accounts relating to the Second Petitioner, vis-à-vis the nexus to First Petitioner and then arrive at a conclusion as to whether there is functional integrality between two Petitioners. 7. Wage Register, Bonus Register and the Books of Accounts relating to the Second Petitioner, vis-à-vis the nexus to First Petitioner and then arrive at a conclusion as to whether there is functional integrality between two Petitioners. 7. It would be of benefit to note the judgment of this Court in the case of B. Ganapathy Bhandarkar v. R.P.F. Commissioner, Bangalore (Karnataka), 1990 (1) LLN 407 (Kar.) : 19990 LLR 147, whereunder it has been held as under: “As stated xxxx xxxxx no one test can be applied. In a given case, integrality of ownership, Management and control could be the decisive tests; while in another functional integrality or general unity; yet in another, it may be the unity of employment. To illustrate the effect of this observation a person who is carrying on an activity in selling books engages himself also in the manufacture of furniture, could i9t be said that the two units together constitute one establishment for the purpose of the Act. The nature of activities carried on in the two establishments in the illustration are entirely different. One is not a feeder to the other, although there may be unity in capital and Management, can it be said that the two units in such case together constitute one establishment. It must be held that they are different and distinct unless an interconnection between the two units is established mutual dependence of one over the other, so that one cannot function altogether or substantially without the other, or at any rate cannot thrive wholly or substantially in the absence of the other; if one unit goes dry, another unit cannot exist and, therefore, the two units must be held to be one.” 8. It is this test, which the authority had to carry out to discern by piercing the veil it ought to have examined whether there is functional integrality or otherwise between the First & Second petitioner and whether there is any mutual dependency. In the absence of such exercise having been carried out, order of Asstt. Provident Fund Commissioner (Enforcement) dated 27.2.2008 by concluding the proceedings on ex parte basis is erroneous and cannot be sustained. The Appellate Tribunal as observed hereinabove, has also proceeded to record a tangent fining in as much as the issue discussed by the Tribunal has not been considered by the authority which passed Section 7-A Order dated 27.2.2008. Provident Fund Commissioner (Enforcement) dated 27.2.2008 by concluding the proceedings on ex parte basis is erroneous and cannot be sustained. The Appellate Tribunal as observed hereinabove, has also proceeded to record a tangent fining in as much as the issue discussed by the Tribunal has not been considered by the authority which passed Section 7-A Order dated 27.2.2008. It is also required to be observed at this stage itself, that Petitioners had taken a specific plea in their Appeal Memorandum about the order of Asst. Provident Fund Commissioner (Enforcement) being a non-speaking order and this issue was required to be addressed by Appellate Tribunal. In that view of the matter, Tribunal ought to have examined the issue about applicability of the Act to the First Petitioner in the background of these circumstances. Having not done so, the order of the Tribunal also cannot be sustained. 9. In the result, I pass the following: (1) Writ Petitions are allowed. (2) Order dated 4.7.2011 at Annexure-M passed by Employees’ Provident Fund Appellate Tribunal, New Delhi in Appeal NO. A.T.A. No. 418(6) of 2008 affirming the order passed by the Asst. Provident Fund Commissioner (enforcement dated 27.2.2008 is hereby quashed. (3) The matter is remitted back to the Asstt. Provident Fund Commissioner (Enforcement), SAO, Peenya, to redo the matter afresh by taking into consideration the observations made in B. Ganapathy Bhandarkar v. R.P.F. Commissioner, Bangalore (Karnataka), 1990 (1) LLN 407 (Kar.): 1990 LLR 147, as also the observation made hereinabove and any other case law that may be relied upon by either of the parties and pass orders on merits and in accordance with law. (4) Ordered accordingly.