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Joseph Joseph And Others v. State Of Kerala And Others
Factual and Procedural Background
The Toddy Workers Welfare Fund Inspector held the present appellants liable, as “employers,” to pay Rs 72,048 in welfare fund contributions and Rs 23,641 in interest under the Kerala Toddy Welfare Fund Act, 1969. The appellants asserted that they were merely employees assisting Respondent 4, Joy Kourian, who held the licence for Abkari Shop No. 68 of Erattupetta Range. The High Court of Kerala rejected their writ petition, concluding that the appellants were employers under Section 2(c) of the Act. The appellants appealed, resulting in the present decision delivered by R.P. Sethi, J.
Legal Issues Presented
- Whether the appellants could be deemed “employers” within the meaning of Section 2(c) of the Kerala Toddy Welfare Fund Act, 1969, in respect of the workers engaged in Abkari Shop No. 68.
- If not, whether the sole liability for welfare fund contributions rested with Respondent 4, the licensed holder of the toddy shop.
Arguments of the Parties
Appellants' Arguments
- They were not employers but employees of Respondent 4, the licence holder, and therefore fell outside the definition in Section 2(c) of the Act.
- Because the Abkari Rules prohibit leasing or sub-letting the licence, any finding that the appellants employed the workers would sanction an illegal arrangement.
Respondent 2 (Welfare Fund Inspector)'s Arguments
- Section 2(c) is broad and includes “any person” who employs workers, directly or indirectly, thereby covering the appellants as well as the licensee.
- A Division Bench decision of the Kerala High Court in Writ Appeal No. 1185 of 1993 had adopted a similar interpretation, supporting the Inspector’s stand.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kerala High Court, Writ Appeal No. 1185 of 1993 | Interpreted “employer” broadly to include persons other than the licensee who conduct business and pay wages. | Referenced by Respondent 2; the Supreme Court distinguished it, stressing the need for proof that such persons legally employ workers and act with authority of the licensee or licensing authority. |
Court's Reasoning and Analysis
The Court examined Section 2(c) of the Act, emphasising that an “employer” is the person who actually employs workers, either for himself or on behalf of another. Mere association with running a shop does not ipso facto create an employer–employee relationship.
Key steps in the Court’s analysis were:
- Statutory definition: Section 2(c) targets those who employ workers. Employment must be established, not presumed.
- Abkari regulatory scheme: Rule 6(23) of the Kerala Abkari Shops Disposal Rules, 2001, prohibits a licensee from leasing or sub-letting the licence. Recognising non-licensees as employers without proof would facilitate a statutory violation, contrary to public policy.
- Evidence on record: Workers’ statements suggested involvement of appellants, but Respondent 4 expressly admitted that he alone conducted the business and was responsible for wages and contributions. In the absence of contrary proof, the licensee’s admission prevailed.
- Burden on authorities: When authorities seek to fasten liability on persons other than the licensee, they must positively establish that those persons employed the workers in their own right and with lawful authority—requirements not met here.
- High Court’s error: The High Court adopted a “general view” without correlating the Act, the Abkari licensing scheme, and the evidentiary burden, rendering its judgment unsustainable.
Holding and Implications
Appeal Allowed; High Court judgment set aside. The appellants are not employers for purposes of the Kerala Toddy Welfare Fund Act. Respondent 4, the licence holder, is solely liable for the assessed contributions and interest. Authorities may proceed against Respondent 4 for recovery. No order as to costs.
Implications: The decision reinforces that liability under the Welfare Fund Act cannot be extended to non-licensees absent concrete proof of their status as employers and lawful authority to run the business, thereby upholding the integrity of the Abkari licensing framework.
R.P Sethi, J.— Leave granted.
2. The Toddy Workers Welfare Fund Inspector, appointed under the Kerala Toddy Welfare Fund Act, 1969 (hereinafter referred to as “the Act”) held the appellants to be the employers of the workers employed for running the toddy shop and thus liable to pay an amount of Rs 72,048 and interest of Rs 23,641 towards the welfare fund. The appellants filed a writ petition in the High Court alleging that they were not the employers of the workers within the meaning of Section 2(c) of the Act as they themselves were the employees of Joy Kourian, Respondent 4 who was the licensee of the shop where the toddy was being sold. The High Court negatived their plea vide the judgment impugned, hence appeal.
3. It is not disputed that the business in Abkari Shop No. 68 of Erattupetta Range was being conducted by Respondent 4 with the help of the appellants. Respondent 4 had been granted the licence and under Rule 6(23) of the Kerala Abkari Shops Disposal Rules, 2001 the licensee is obliged not to sell or otherwise transfer the privilege granted or the licence issued without the written consent of the Assistant Excise Commissioner concerned and subject to the confirmation of the Commissioner of Excise. No licensee can lease out or sub-let the whole or any portion of the privilege or licence granted to him. It is not alleged that any of the appellants was a licensee or a partner or a family member of Respondent 4.
4. In the counter-affidavit filed on behalf of Respondent 2 it is conceded that the aforesaid Joy Kourian was the licensee of the toddy shop. In the inquiry conducted by the Inspector under the Act, the workers and the Trade Union Officers had deposed that the shop was bid in auction by Respondent 4 and that the actual business of the shop was being conducted and wages paid to the workers by V.T Chacko, fifth respondent, C.T Michael, second petitioner, Sunny Kurien, fourth petitioner, Joseph Joseph, first petitioner and Joseph Sebastian, third petitioner. The licensee Joy Kourian filed a statement before the authorities under the Act that he himself was conducting the toddy shop and alone was responsible to pay the welfare fund contribution. Despite his admission, the Welfare Fund Inspector held the appellants also liable for contribution to the welfare fund as they allegedly fell within the definition of “employer” under the Act. Respondent 2 was of the opinion that the definition of employer would include the licensee as well as any other person conducting the business in the shop. It is further contended that a Division Bench of the High Court of Kerala in Writ Appeal No. 1185 of 1993 had taken a similar view.
5. Section 2(c) of the Act defines “employer” as under:
“2. (c) ‘employer’ means any person who employs, whether directly or through another person, or whether on behalf of himself or any other person, one or more employees and includes any person, who has a licence for the manufacture, distribution, storage or sale of toddy under the Abkari Act for the time being in force;”
6. The High Court found that as the appellants were also running the business of the shop and had employed the workers, they shall be deemed to be the employers vis-à-vis those workers and liable to pay the contribution to the fund under the Act.
7. A perusal of Section 2(c) shows that it refers to the person who employs any person, whether directly or through any other person or whether on behalf of himself or any other person, as employer. The employment by any person can be for himself or for any other person. Merely because the person is associated with the conduct of the business of an establishment or shop, it cannot be said that he had employed the workers on his own behalf. There may be cases where it can be shown that besides the owner any other person conducting the business of the said shop may employ workers on his own behalf and not on behalf of original owner. But in the absence of proof to the contrary, particularly in view of the statement of the principal employer that he had employed the workers, the intermediary persons could not be held to be the employer of the workers who were employed for the conduct of the business in the shop covered under the Act. Law presupposes the conduct of a legal business and cannot be interpreted in a manner which frustrates the object of the Act and results in not only miscarriage of justice but violation of the statutory provisions of law. If, under the Rules, the licensee was not authorised to lease out or sub-let the whole or any portion of the privilege or licence granted to him for conducting the abkari business, holding the appellants as employer with respect to the licensee's shop would amount to facilitate the violation of the Kerala Abkari Act and the Rules framed thereunder. Such an interpretation is not called for as it is against the public policy. In any particular case, where the authorities find that besides the licensee any other person conducting the business in a licenced premises under the Abkari Act and the Rules framed thereunder is also liable to contribute to the fund under the Act, they are under the legal duty to assert and positively hold that such persons were the employers vis-à-vis the workers and that they were conducting the business either with the legal authority of the licensee or the licensing authority. The High Court has taken a general view of the matter without reference to the purpose and object of the Act and the law under which the licence to run the shop was granted. The impugned judgment is thus not sustainable.
8. The appeal is accordingly allowed by setting aside the judgment impugned holding that in the instant case the appellants have not been proved to be employers vis-à-vis the workers and that Respondent 4 alone was the employer as admitted by himself. The said respondent is liable for making the contributions and paying the amount sought to be recovered vide the order passed by Toddy Workers' Welfare Fund Inspector. The authorities shall be at liberty to take all necessary steps for effecting recoveries against Respondent 4. No costs.
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