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K. Kesava Reddiar, G... v. Labour Appellate Tri...
Factual and Procedural Background
The petitioner, a manufacturer and seller of gold jewels at Quilon, applied under Article 226 of the Constitution for a writ of certiorari to quash an order of the Labour Appellate Tribunal at Madras dated 9 May 1956. On 19 November 1954 the Government of Travancore-Cochin ordered a reference under Section 10(1)(c) of the Industrial Disputes Act (Act XIV of 1947). The annexure to that reference contained two questions relating to alleged denial of employment by the management and, in relation to the second question, a list of names was appended (the text of the opinion also later refers to "12 persons" whose names were enumerated in the order of reference).
The reference was heard by the Industrial Tribunal, Trivandrum. The petitioner raised a preliminary objection to jurisdiction, contending that none of the persons named were "workmen" within the meaning of Section 2(s) and hence there was no "industrial dispute" within Section 2(k). The Industrial Tribunal sustained that objection and held it had no jurisdiction. The labourers (represented by their union) appealed to the Labour Appellate Tribunal, which set aside the Industrial Tribunal's order on 9 May 1956 and directed further inquiry, holding that the named persons were workmen within the Act. The petitioner challenged the Appellate Tribunal's decision by way of the present writ petition.
Legal Issues Presented
- Whether the persons named in the Government's reference were "workmen" within the meaning of Section 2(s) of the Industrial Disputes Act.
- Whether, if those persons were not "workmen" within Section 2(s), there existed an "industrial dispute" within the meaning of Section 2(k) such as to give the Industrial Tribunal jurisdiction under Section 10(1)(c).
- Whether the decision of the Labour Appellate Tribunal (holding that the persons were workmen and directing further inquiry) was legally valid and supported by evidence on the record.
Arguments of the Parties
Petitioner's Arguments
- The persons named in the order of reference were not "workmen" as defined by Section 2(s) of the Industrial Disputes Act; therefore there was no industrial dispute within Section 2(k), and the Industrial Tribunal lacked jurisdiction.
- Each item of work entrusted to a person in the shop was a separate contract; the workers were contractors rather than employees (master and servant relationship absent).
- There was no fixed time obligation; workers were not at the disposal of the petitioner for their time — e.g., if a labourer was given ten days to complete an ornament, there was no obligation on either side for the labourer to be present on remaining days or for the petitioner to provide other work.
- Work could be done at the worker's home in the prevailing system (petitioner also admitted allowing some trusted persons to take gold to their homes).
Respondents' / Labourers' Arguments
- The Appellate Tribunal found that the management exercised a "large measure of control" over the named workmen and that they worked in the petitioner's shop, followed instructions, worked within times fixed by the petitioner and received stipulated making charges — indicating an employment relationship.
- The respondents' counsel stressed that the admission (by E.W.1) that a bonus was paid to workers established the relationship of master and servant, on the basis that payment of bonus to a contractor was unlikely.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Annamalai Mudaliar & Bros. v. Regional Provident Fund Commissioner, Madras, W.P. No. 445 of 1954; ((S) AIR 1955 Mad 387 (A)) | The expression "employed" (in statutory contexts) implies the existence of a relationship of master and servant (subject to statutory definitions). | The Court relied on this prior judgment to support the proposition that "employed" in industrial/employment statutes postulates a master-servant relationship when determining whether a person is a "workman". |
| Modern Match Industries Ltd. v. Labour Appellate Tribunal of India, W.P. Nos. 96 and 332 of 1956 (Mad) | When considering the scope of "employed" in Section 2(s) of the Industrial Disputes Act, the test postulates the relationship of master and servant; factual tests include whether the management exercised control and whether the worker's time was at the disposal of the management. | The Court cited this decision as aligning with the view that "employed" requires master-servant relationship and noted that the tests of control and disposal of time were pertinent to the present inquiry. |
| Abdul Kader Sahib v. State of Madras, W.P. No. 476 of 1954 (Mad) | Under the Industrial Disputes Act the existence of an employer-employee relationship is necessary before there can be any industrial dispute; absence of that relationship means no valid reference. | The Court cited the judgment for the general proposition that an employer-employee relationship is necessary for an industrial dispute and noted that, on the facts of that case, the persons were held to be contractors. |
| Modern Match Industries Ltd., Gudiyattam v. Their Workmen, 1956-1 Lab LJ 335 (Tribunal) | A Bench of the Tribunal took the view that the workers were employees (the context related to the interpretation of "employed" / master-servant tests). | The Appellate Tribunal relied on that Tribunal decision (Gudiyattam) as analogous; the Court observed that the Gudiyattam order's validity was itself challenged and heard with related writ petitions, and treated the Gudiyattam decision as a cited point of comparison rather than controlling authority in this record-based inquiry. |
Court's Reasoning and Analysis
The Court identified the central legal question as whether the persons named in the reference were "workmen" within Section 2(s) and therefore whether an industrial dispute (Section 2(k)) existed such that the Industrial Tribunal had jurisdiction. It observed that this was a jurisdictional question properly considered at both tribunal levels.
The Court examined the applicable legal principle: earlier decisions (cited) supported the view that the statutory term "employed" postulates a relationship of master and servant, and that the factual tests include whether the employer exercised control and whether the worker's time was at the disposal of the master. The Court noted that the Appellate Tribunal framed the test as whether the petitioner had a "large measure of control" over the labourers, but regarded the critical inquiry as whether the labourers' time was at the disposal of the master.
The Court then performed a fact-based analysis of the evidence on record. Four witnesses were examined: E.W.1 (Bhima Bhattar, Vice-President of the Travancore-Cochin Gold Merchants' Association), E.W.2 (the petitioner), W.W.1 (Kumaraswami Achari, one of the persons named), and W.W.2 (Padhmanabha Achari, who furnished no real evidence). The Industrial Tribunal had accepted the evidence of E.W.1 and the petitioner, while the Appellate Tribunal preferred parts of E.W.1 over the petitioner where they conflicted.
The Court scrutinised specific factual points:
- E.W.1 and the petitioner both described work as being entrusted on contract basis and stated there was no control over time and that sub-contracting was allowed; however, E.W.1's evidence described practices in his own shop and he lacked personal knowledge of the petitioner's shop.
- In the petitioner's shop (as confirmed by W.W.1), workers had to supply certain materials (rice, husk, charcoal); their tools belonged to the workers; the employer weighed and supplied gold and instructed the design, size and time allowed; wages were fixed for the work; W.W.1's answers indicated constraints on taking outside work, with the practice being that the employer would not allow it.
- The petitioner and E.W.1 asserted that some workers could take work home and that the petitioner allowed some trusted persons to take gold to their homes; but W.W.1 contradicted this to some extent in cross-examination when asked whether workers take gold home (answer: "No. The employer will not give").
- The Court emphasised that doing work at the employer's premises is not by itself determinative of an employment relationship; the critical test is whether the worker's time was at the employer's disposal.
Applying the time-disposal test to the record, the Court concluded that the evidence showed that workers were not under an obligation to present themselves for work except as necessary to complete discrete contract jobs, and there was no obligation on the petitioner to give the worker other work on remaining days. Consequently, the Court found the time-disposal test was not satisfied.
The Court further considered the respondents' contention that payment of bonus demonstrated an employment relationship, but held that bonus payments (admitted to be ex gratia in E.W.1's evidence) are inconclusive and do not by themselves establish master-servant status.
On the whole record, the Court found the Industrial Tribunal's conclusion — that there was no master-servant relationship and hence no workmen within Section 2(s) — to be correct, and found the Appellate Tribunal's contrary conclusion to be unsupported by "real evidence on record."
Holding and Implications
Holding: The petition was allowed and the rule was made absolute; the Court quashed the Labour Appellate Tribunal's order that had set aside the Industrial Tribunal's jurisdictional finding. The opinion records: "Rule made absolute." There was no order as to costs.
Implications:
- The direct effect is that the Appellate Tribunal's decision (holding that the named persons were workmen and directing further inquiry) was set aside and the Industrial Tribunal's finding that it had no jurisdiction (because the persons were not workmen within Section 2(s)) was vindicated on the record before the Court.
- The opinion notes that there was "no real evidence on record" to support the Appellate Tribunal's contrary finding; the decision does not purport to lay down a new legal principle beyond applying established tests (master-servant relationship; control; disposal of time) to the facts. The judgment does not state that it creates any new precedent beyond its application to the present factual record.
Judge's initials recorded in the opinion: H.G.P.
1. The petitioner, who manufactured and sold gold jewels at Quilon, applied under Article 226 of the Constitution for the issue of a writ of certiorari to set aside the order of the Labour Appellate Tribunal at Madras dated 9-5-1956. On 19-11-1954 the Government of Travancore-Cochin State ordered a reference under Section 10(1)(c) of the Industrial Disputes Act (Act XIV of 1947). The “Industrial Disputes” set out in the annexure to that order were:
1. Whether the denial of employment by the management of Sri S. Venkatachalam Achari, V. Thankappan Achari, G. Kumaraswami Achari and P. Padhmanabhan Achari is justified? If not to what reliefs are they entitled? and
2. Whether the following workmen have been denied employment by the management for the whole or part of the period from 31-8-1954 to 3-10-1954, and if so, whether the denial of employment is justifiable? If not, to what reliefs are the workmen entitled?
2. A list of eight names was appended to the second question.
3. The reference came up for adjudication before the Industrial Tribunal, Trivandrum. The labourers were represented by their Union. The petitioner presented a preliminary objection to the jurisdiction claimed by the Industrial Tribunal. The petitioner contended that, as none of the persons mentioned in the order of reference was a “workman” as defined by S. 2(s), there was no “industrial dispute” within the meaning of Section 2(k) of the Industrial Disputes Act. The Industrial Tribunal upheld that objection after an enquiry, and it came to the conclusion that it had no jurisdiction to adjudicate upon the disputes referred to it. The labourers appealed to the Labour Appellate Tribunal.
4. By its order dated 9-5-1956 the Appellate Tribunal set aside the order of the Industrial Tribunal and directed a further inquiry into the disputes referred to the Industrial Tribunal under S. 10(1)(c). The Appellate Tribunal differed from the Industrial Tribunal and held that the labourers, whose names were mentioned in the order of reference, were workmen as defined by the Act, and that therefore the disputes between them and their employer were industrial disputes, within the meaning of Section 2(k) of the Act. It was the validity of that decision of the Appellate Tribunal that the petitioner challenged.
5. The real question for determination was whether the 12 persons, whose names were enumerated in the order of reference under S. 10(1)(c), were “workmen” as defined by Section 2(s) of the Act. If they were not workmen within the meaning of S. 2(s) there could obviously be no industrial dispute within the meaning of S. 2(k). The relevant portion of S. 2(s) runs:
“Workman means any person employed including an apprentice in any industry to do any skilled or unskilled, manual or clerical work for hire or reward……….
6. In my judgment in Annamalai Mudaliar & Bros. v. Regional Provident Fund, Commr., Madras, W.P No. 445 of 1954: ((S) AIR 1955 Mad 387 (A)), I had occasion to discuss the scope and significance of the word “employed” as it occurred in Section 1(3) of the Employees Provident Fund Act (Act XIX of 1952), and I recorded:
“In my opinion the expression ‘employed’ in Section 1(3) taken in the context of the Act as a whole would imply (subject to the statutory definition in S. 2(f) the existence of the relationship of master and servant between the employer and the worker.”
7. In my decision in Modern Match Industries Ltd. v. Labour Appellate Tribunal of India, W.P Nos. 96 and 332 of 1956 (Mad) (B), where the scope of the expression “employed” as it occurs in Section 2(s) of the Industrial Disputes Act arose for consideration, I took the view that it postulated the relationship of master and servant. I had also to consider in that case whether the tests has been satisfied — whether the management exercised control over the workers, and whether the time of the workers was really at the disposal of the management.
8. A similar view was taken by Rajagopala Aiyangar, J.; in Abdul Kader Sahib v. State of Madras, W.P No. 476 of 1954 (Mad) (C), where he observed:
“It does not need much argument to show that under the Industrial Disputes Act the existence of a relationship of employer and employee is necessary before there can be any industrial dispute, and the existence of an industrial dispute is necessary before there can be any valid reference by the Government of such dispute to an industrial tribunal.”
9. The learned Judge, on the facts of that case, came to the conclusion that no such relationship had been established, and that the real position of the persons who worked for the management in that case was that of contractors.
10. In the present case the Appellate Tribunal, no doubt, correctly posed the question for determination:
“The only question is whether they are employed by the management or in other words whether there is a relationship of employees and employer as between them and the gold merchant or whether they are independent contractors.”
11. In paragraph, 13 the Appellate Tribunal pointed out:
“On the above evidence, it is clear that the first respondent (Kesava Reddiar) has a large measure of control over these workmen so as to constitute them his employees.”
12. That was followed up by the finding in paragraph 14 where the Appellate Tribunal stated:
“They work in the first respondent's shop itself, prepare gold jewels according to the instructions of the first respondent and within the time fixed by him and receive the stipulated making charges. The employer, therefore, exercises a good deal of control over them and directs the work to be turned out by them.”
13. The findings on the questions whether the labourers were workmen as defined by Section 2(s) of the Act and if so whether the disputes between them and the petitioner were industrial disputes were findings on what really amounted to a jurisdictional issue. It was rightly treated as such both; before the Industrial Tribunal and before the Appellate Tribunal; and it is the correctness of the decision of the Appellate Tribunal that is now in issue in these proceedings.
14. The test the Appellate Tribunal postulated was whether the petitioner had a large measure of control over the labourers. That may not be quite correct. What the Appellate Tribunal had to consider was whether the time of those who claimed to be employees of the petitioner, as workmen within the meaning of Section 2(s) of the Act, was at the disposal of the master. Another of the grounds on which the Appellate Tribunal rested its decision was that in Modern Match Industries Ltd., Gudiyattam v. Their workmen, 1956-1 Lab LJ 335 (D), a Bench of the Tribunal took the same view, and the position of those who worked for the petitioner in his shop was analogous to that of the workers involved in the industrial dispute that related to the Modern Match Industries Ltd., Gudiyattam.
15. It was the validity of the order of the Labour Appellate Tribunal in the Gudiyattam case that was successfully challenged before me in W.P No. 96 of 1956, which was heard along with W.P No. 322 of 1956 (B).
16. The question at issue, however, has to be decided on the material on record, even as the Appellate Tribunal purported to decide it. Four witnesses were examined during the enquiry held by the Industrial Tribunal. Of these Bhima Bhattar, E.W 1, was the Vice-President of the Travancore-Cochin Gold Merchants' Association, and he spoke to the general practice prevalent in the shops of gold merchants of Quilon. The petitioner himself was examined as E.W 2. Kumaraswami Achari, one of the persons whose names were enumerated in the order of reference and who had been working in the shop of the petitioner was examined as W.W 2.
17. Another, Padhmanabha Achari, who also worked in the shop of the petitioner, was examined as W.W 1, but he furnished no real evidence on any of the questions at issue. The Industrial Tribunal accepted the evidence of Bhima Bhattar and the petitioner. But the Appellate Tribunal was not inclined to place any great reliance on the evidence of the petitioner, E.W 2, where it conflicted with that of Bhima Bhattar, E.W 1. It was, of course, within the jurisdiction of the Appellate Tribunal to assess the evidence on record, and to decide whom it should believe and to what extent. But it was also bound to take into account the entire evidence on record including that of Kumaraswami Achari, W.W 1.
18. Both Bhima Bhattar and the petitioner gave evidence that each item of work entrusted to a person who worked in the shop of the goldsmith was a separate contract, in support of the plea, that at no time was there the relationship of master and servant between the goldsmith and the person who made the jewel. Bhima Bhattar deposed:
“There is no control over the labourer in regard to the time limit. Sub contract is allowed.”
19. When he was cross-examined he stated:
“A person with whom gold is entrusted is allowed to engage others to work for him.”
20. But the Appellate Tribunal discounted the value of this statement on the ground, that E.W 1 was unable to give any details in his cross-examination in regard to them and even conceded that the workers from the neighbouring shop did not come to work in his (Bhima Bhattar's) shop. Bhima Bhattar further stated when he was cross-examined: “Generally workmen come and go when they like.” He admitted that those who worked for a goldsmith even on contract basis were given an annual bonus of 6¼ per cent calculated on the total amounts earned by them under their contracts during the year.
21. It should however be remembered that Bhima Bhattar's evidence related to the circumstances under which work was done in his shop, and he did not speak with personal knowledge of what happened in the petitioner's shop. Bhima Bhattar admitted that the workers in his shop were supplied by him with the husk and charcoal necessary for the work whereas in the petitioner's shop the petitioner claimed that it was the worker that had to find the husk and charcoal, and that was admitted to be correct by Kumaraswami Achari who stated “We have to buy rice, husk and charcoal.” I am only giving these as instances of the variations that might possibly exist between shop and shop. The primary question for consideration was whether those who admittedly worked in the shop of the petitioner were his “workmen” as defined by Section 2(s) of the Act.
22. Keeping aside for the moment the oral evidence of the petitioner, E.W 2. I shall examine the scope of some of the statements made by Kumaraswami Achari, as W.W 1. He stated:
“The system of workers taking gold from the shop, work at the home and to get wages is also prevalent.”
23. When he was cross-examined, in answer to the question, “Do workers take golds for work in their homes?” he stated “No. The employer will not give.” Kumaraswami Achari deposed further:
“The tools for work belong to the workers. The employer will weigh and give the gold to the workers. We have to buy rice, husk and charcoal. When work is given the type of ornament to be made will be instructed. The details will also be said. The size of the ornament and how it should be made will also be instructed. The period in which it can be finished will also be asked. The total wages will be fixed.”
24. One of the claims of the petitioner before the Industrial Tribunal was that those who worked in his shop on a contract basis were masters of their own time and they could take in work not belonging to the petitioner to be done in the premises of the petitioner. When Kumaraswami Achari was questioned “Have you a right to make ornaments for other shops than that of Kesava Reddiar (petitioner)? he did not specifically deny it but stated “The principle is that it should not be done.” Again in answer to the question “if an ornament of 10 or 20 sovereigns is made will you engage workers from outside?” his answer was “That is not the practice. The employer will not allow.”
25. The petitioner examined as E.W 2 categorically stated: “I entrust each work on contract basis.” That was also the claim of Bhima Bhattar examined as E.W 1. The petitioner stated further:
“There is no fixed time for work. They can come and go as they like……….I allow some people in whom I have confidence to take gold to their homes…………”
26. He also stated that if work was entrusted to one person he has the liberty to take other persons and do the work.
27. As I pointed out in my judgment in W.P No. 445 of 1954: ((S) AIR 1955 Mad 387 (A)), that work was done at the premises of either of the contracting parties may not be determinative of the question, was the relationship between the parties that of master and servant, or was the position of the person who did the work that only of a contractor.
28. One of the main tests to be applied in deciding whether the relationship of matter and servant was present is whether the time of the person who worked was at the disposal of the master. Taking the evidence of the petitioner and even that of Kumarasami Achari, it should be fairly clear that test was net satisfied in this case. As the learned counsel for the petitioner pointed out, if a labourer was given ten days within which to complete the ornament, no doubt he was expected to complete it within ten days. Suppose he completed the work in a shorter period, there was no real obligation on the petitioner to give him another jewel to manufacture. There was no obligation on the labourer to present himself for work on the remaining days.
29. In my view on the evidence on record the view taken by the Industrial Tribunal, that there was no relationship of master and servant between the petitioner and those who worked in his shop, was correct, and the view of the Appellate Tribunal that such a relationship did exist was erroneous and was not supported by any real evidence on record.
30. The learned counsel for the respondents urged that the admission of E.W 1 that bonus was paid to the workers, should suffice to show the relationship of master and servant, because payment of bonus to a contractor was unthinkable. Bonus was a payment made ex-gratia even according to the evidence of E.W 1. I fail to see why a person whose real position was that of a contractor could not be paid bonus ex-gratia. Payment of bonus by itself is rather inconclusive as a piece of evidence when the question at issue, is, was the labourer a servant or was he merely a contractor?
31. As I said there was no real evidence on record to support the finding of the Appellate Tribunal, that the persons whose names were enumerated in the order of reference were workmen employed under the petitioner within the meaning of Section 2(s) of the Act. The rule is made absolute and the petition is allowed. There will be no order as to costs.
H.G.P
32. Rule made absolute.
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