Sathish Ninan, J.

1. These appeals are before us on a reference by a learned Single Judge. However, we find that on the facts and the contentions of the parties, the question posed in the reference does not arise for consideration in these appeals.

2. “P.G.Parameswara Iyer and Sons” was a partnership firm that existed in the year 1930. The firm consisted of one Mr.Parameswara Iyer, his three sons and their sons. The firm was engaged in trading of consumer goods, tea, coffee etc. Since 29.03.1975 the firm had coverage under the Employees State Insurance Act, 1945 (for short “ESI Act”). The firm had three branches, one at Palakkad, another at Kozhikode, and the third one at Coimbatore. Sri.P.G.Parameswara Iyer had died in the year 1955. The three sons of P.G.Paramaswara Iyer decided to dissolve the partnership business to enable partition between the three sons. The business at each of the places was to be conducted independently by each of the sons, as their separate establishment.

3. Accordingly, the business of P.G.Parameswara Iyer and Sons was stopped on 31.03.2001. One among the sons, along with his children, formed a partnership by the name “M/s P.G.Parameswara Iyer and Company” for doing business at Calicut, and another son along with his children formed a partnership as “M/s P.G.P. and Sons” for doing business at Palakkad. The third son along with his children formed yet another firm, which is not being adverted to herein as irrelevant for our case. The new firms were involved in the very same trade. The number of employees in each of the establishments was less than ten. However, the ESI authorities took the stand that the firms are covered under the Act.

4. The firm M/s P.G.Parameswaa Iyer and Company approached the ESI court, Kozhikode, seeking a declaration that it is not covered under the ESI Act from 01.04.2001. Likewise the firm M/s PGP and Sons approached the ESI Court, Palakkad, seeking similar relief. The ESI Court at Kozhikode allowed the application, holding that the applicant firm is independent of the erstwhile “M/s P.G. Parameswara Iyer and Sons” and that the number of employees being less than ten, the present establishment is not covered under the ESI Act. However, the ESI Court at Palakkad held “M/s PGP and Sons” to be a continuation of the establishment and that it is covered under the ESI Act. The ESI Corporation and the concerned applicant are in appeal, challenging the respective orders.

5. We have heard Sri.E.K.Nandakumar, the learned Senior Counsel on behalf of the applicants assisted by Sri.R.Chethan Krishna, and Sri.T.V.Ajaya Kumar, the learned counsel for the Corporation.

6. According to the respective applicants, the firm M/s PGP and sons, Palakkad, was constituted under a partnership deed dated 09.03.01 and the firm M/s P.G.Parameswara Iyer and Company, Kozhikode, was constituted as per partnership deed dated 15.03.2001. It was duly intimated to the Registrar of firms. The business of the firms were to commence on 01.04.01. Therefore, there has been a dissolution of the erstwhile firm P.G. Parameswara Iyer and Sons and cessation of the said establishment as on 31.03.2001. New establishments under the new firms and firm names have come into existence with effect from 01.04.2001. The number of employees in the respective establishments being less than ten, the coverage under the ESI Act is not applicable.

7. Sri.Ajay Kumar, the learned Standing Counsel for the ESI Corporation would on the other hand contend that, the firm P.G.Parameswara Iyer and Sons was dissolved only under a dissolution deed dated 25.09.2002. Therefore, the new establishments can be said to have come into existence only from 26.09.2002. The liability to pay ESI contribution continues till 25.09.2002, it is argued.

8. The dispute involved in these appeals is confined to the liability to pay contribution up to 25.09.2002 viz. the date of execution of the dissolution deed. Even according to the Corporation, since 25.09.2002 viz. the execution of the dissolution deed, the respective applicants are not covered under the Act. Therefore, the question that arises for determination is as to when was the firm P.G.Parameswara Iyer and Sons dissolved and when did the new establishments under the respective applicants come into being and commence business; according to the applicants it was from 31.03.2001, whereas according to the Corporation it was only from 25.09.2002.

9. The question posed in the reference order reads thus :-

                  “The question for judicial resolution is whether the dissolution of a partnership firm which was carrying on, as a family venture, the business of an establishment covered under the E.S.I. Act, and the consequent formation of two new firms for carrying on the same business as a result of family partition, would bring about a disruption of the establishment absolving the newly constituted firms from the obligation of E.S.I. coverage in spite of Section 1(6) of the E.S.I. Act.”

10. However, as noticed above, on the facts and the rival contentions, the said question does not arise for determination in these appeals.

11. Now we proceed to the merits of the cases. According to us, the following circumstances indicate the termination of the erstwhile establishment on 31.03.2001 and the commencement of new establishments under new firms with effect from 01.04.2001. The partnership deeds indicate that the partners in both the applicant firms are different. The name of the firms are different. Fresh capital was brought in by the partners in the respective partnerships. All employees were given their terminal benefits on the cessation of the establishment. New bank accounts have been opened in the name of the new establishments. The partnership deed provides for employing the very same employees by entering into their respective rolls. The application for registration of new firms were sent simultaneously to the Registrar, on execution of the partnership deeds. As per the partnership deeds the firms were to commence with effect from 01.04.2001. The constitution of the firms were duly intimated to Registrar of firms. There has been fresh Sales Tax, Employees Provident Fund and Labour Department registration for the new establishments with effect from 01.04.2001. New pan cards were applied for and issued in respect of the new firms.

12. On the execution of new partnership deeds, and the functioning of the establishment thereunder it can only be held that there has been a dissolution of the erstwhile firm. Since both could not co-exist, the dissolution of a firm can be implied and established by circumstances.

13. On the above materials and circumstances, the mere fact that the dissolution deed was executed only on 25.09.2002 cannot keep the erstwhile partnership alive till then. Incidentally it is also to be noted that the said dissolution deed was executed after the filing of these two ESI cases and that the case of dissolution of partnership and commencement of new establishment was already urged by the respective applicants in their cases.

14. In the circumstances, we hold that the respective applicants are not covered under the ESI Act.

                  Insurance Appeal No.69 of 2004 is accordingly allowed and Insurance Appeal No.48 of 2005 is dismissed.