TMI Blog2004 (2) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... rst category only the vegetable or food growers, agricultural cooperative credit societies and agricultural improvement societies are A-class members having voting rights; whereas traders, commission agents and merchants dealing in the commodities grown by the agriculturists are classified as B-class members. They have no right to vote or participate in the management of the Society. The B-class members only, however, are entitled to take part in auctions held in the marketing yards of the Society. Any dispute between the seller member and the purchaser member is resolved through arbitration in terms of the provisions of the Tamil Nadu Cooperative Societies Act, 1961. The land holdings of the members of the society varies from 1/4th acre to five acres averaging two acres per member. They mainly depend on the rainfall as irrigational facilities are not available. The small farmers are economically weak and have no holding power. Many of them have to take loans for their subsistence, when the weather is not good. Many of them are illiterate. The vegetables produced from their lands being subjected to the vagaries of the weather, the merchants with a view to pressurize them either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... growers, they are graded into the different sorts. The number of persons undertaking the job varies depending upon the quantum of work. Admittedly an industrial dispute was raised by 407 persons; of whom 73 are potters and 335 are graders. The job of unloading, unpacking of gunny bags, stitching the gunny bags and putting them into lorries are done by porters whereas gradation of potatoes, weighing the auctioned potatoes in 45 kgs. and packing them into gunny bags are done by graders. Most of them are women. It is stated that the members of the Society or their authorized representatives remain present throughout the auction. The auction is confirmed only with the consent of the members. The member has a right to decline to sell his produce, if he is not satisfied with the highest rate offered by the merchants and is entitled to hold over the same till the next auction takes place. The Society contends that for doing various items of work in the yards, services of certain third parties are made available to the members. They are always available in the yards and any member whether producer or merchant may engage them. The work is done through the workers of the concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e did not exist any relationship of employer and employee between the Society and the concerned persons, observing : 36. In view of the above finding, if we approach this case, there is no convincing evidence placed by the petitioner to establish the master and servant relationship to hold that the persons referred in this dispute are only workmen of the Respondent-Society. 37. Viewed from any angle, either on facts or on law, the petitioner-Union has not substantiated that the persons mentioned in the Annexure are workmen and therefore their non-employment is not justified. Hence this point is found against the Petitioner Union. On the said findings the reference was rejected. PROCEEDINGS BEFORE THE HIGH COURT: Aggrieved thereby the appellant preferred a writ petition before the High Court marked as Writ Petition No.14659 of 1989. During the pendency of the said proceeding, other disputes also ensued resulting in closure of the yards; whereafter, again conciliation proceedings were initiated on or about 3.8.1985. The respondent-Society issued an advertisement in a Tamil newspaper inviting tenders for operations. Questioning the said action on the part of the So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification from the Supreme Court. Till the order is clarified by the Supreme Court, if the parties approach the Supreme Court for this, the appellant will implement the order dated 4.12.1985 by way of an interim arrangement. On an application, this Court by an order dated 13.4.1987, observed : The interim arrangement will continue till disposal of the writ petition in the High Court. Meanwhile the trial of the industrial dispute will be stayed. No order on the application for impleading party. All the CMPs are disposed of accordingly. Another interim order was passed on 29.8.1988 in Writ Petition NO.9334 of 1985 in the following terms : In the result, the 3rd respondent is directed to give employment directly to all the 407 workers and pay the wages directly to them as per the order of the Supreme Court dated 4.12.1988. This petition is ordered accordingly. On an appeal preferred by the Society before a Division Bench marked as W.A. No.1261 of 1988, it was directed : To give quietus to the controversy in the writ petition, we direct that W.P. 9334/85 along with the connected writ petition viz. W.P. No.9333/85 be listed for final hearing on 26.10.1988 at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d insofar as they failed to apply the 'organisation test' in the light of the decisions of this court; (ii) despite having arrived at the conclusion that the respondents society exercises supervision and control over the concerned workmen, in concluding that such supervision and control were not on its own behalf but on behalf of its members; (iii) in arriving at the finding that as the society does not carry out any manufacturing activities; it is not industry, inasmuch as supply of the services by an organisation would also give rise to formation of relationship of an employer and employees. Elaborating his submissions, Mr. Prasad would contend that it is not in dispute that the 407 workmen had been working in the market yard on a daily wage basis and although they are said to have been employed by the third parties but indisputably, the society pays wages to them although the same is said to be reimbursed by the members of the society. It was pointed out that the dispute between the members and members are resolved by the society and furthermore as the concerned persons have been given token and are given gifts during festival season, would lead to an irresistib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The learned counsel would contend that the Industrial Tribunal, the learned Single Judge as also the Division Bench of the High Court having arrived at a finding of fact that there does not exist any relationship of employer and employee, this Court should not interfere therewith. DETERMINATION OF RELATIONSHIP: Determination of the vexed questions as to whether a contract is a contract of service or contract for service and whether the concerned employees are employees of the contractors has never been an easy task. No decision of this Court has laid down any hard and fast rule nor it is possible to do so. The question in each case has to be answered having regard to the fact involved therein. No single test - be it control test, be it organisation or any other test - has been held to be the determinative factor for determining the jural relationship of employer and employee. There are cases arising on the borderline between what is clearly an employer-employee relation and what is clearly the independent entrepreneurial dealing. TESTS: This Court beginning from Shivanandan Sharma Vs. Punjab National Bank Ltd. [1955] 1 L.L.J. 688 : AIR 1955 SC 404 and Dharangadhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employer's concern meaning thereby independent of the concern although attached therewith to some extent. I.T. Smith and J.C. Wood in 'Industrial Law', third edition, at page 8-10 stated: In spite of the obvious importance of the distinction between an employee and an independent contractor, the tests to be applied are vague and may, in a borderline case, be difficult to apply. Historically, the solution lay in applying the 'control' test, i.e., could the employer control not just what the person was to do, but also the manner of this doing it - if so, that person was his employee. In the context in which it mainly arose in the nineteenth century, of domestic, agricultural and manual workers, this test had much to commend it, but with the increase sophistication of industrial processes and the greater numbers of professional and skilled people being in salaried employment, it soon became obvious that the test was insufficient (for example in the case of a doctor, architect, skilled engineer, pilot, etc.) and so, despite certain attempts to modernise it, it is now accepted that in itself control is no longer the sole test, though it does remain a factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be some other kind of contract and the person doing the work will not be a servant. (See Ready Mixed Concrete (South East) Ltd. Vs. Minister of Pensions and National Insurance, 1 [1968] 2 W.L.R. 775) The decisions of this Court lead to one conclusion that law in this behalf is not static. In Punjab National Bank vs. Ghulam Dastagir [(1978) 1 I.L.J. 312 = (1978) 2 SCC 358], Krishna Iyer, J. observed to crystalise criteria conclusively is baffling but broad indications may be available from decisions . The case at hand, as noticed hereinbefore, poses intricate question having regard to the facts and circumstance of the case. In our endevour to find out an answer, let us at the first instance look at the object of the Society. SOCIETY: The Society had a humble beginning but it had a laudable object, as would appear from its bye-laws. The objects of the Society are stated as under : a) To encourage self help, thrift and cooperation among members; b) To purchase seeds, manure, implements and other agricultural requirements for sale or distribution to members or members of the affiliated cooperative societies or to other cooperative societies; c) To arrange for sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieties concerned and shall not do the business as owner on behalf of the society. Any loss arising out of the business shall be borne by the members of the affiliated cooperative societies concerned and not by the society. It is not in dispute that the Society is not a trading society. It cannot buy or sell the agricultural produce or the fruits except in a case where the proviso appended to bye-law 34 is attracted which is in the following terms : When the society enters into a contract with the Government of Military Department of cooperative institutes or with any firm which has entered into a contract with the Government or military department for supply of produce, the Board may purchase the produce outright whenever necessary and sell it as owner on behalf of the society. BURDEN OF PROOF: It is a well-settled principle of law that the person who sets up a plea of existence of relationship of employer and employee, the burden would be upon him. In N.C. John Vs. Secretary Thodupuzha Taluk Shop and Commercial Establishment Workers' Union and Others [1973 Lab. I.C. 398], the Kerala High Court held: The burden of proof being on the workmen to establish th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p the irresponsible of the staff and other workers. Therefore it would not amount to that the Respondent- Society has exercised its powers on their own workers and therefore they are employees. Although in the said letter, the word 'workmen' of the Society had been used, in all probability, the said expression had been used loosely. The Office Order dated 22.8.1963 provides for the job assigned to their regular staff. The job of the Marketing Supervisor is as under : 7. Marketing supervisor : He should attend to the speedy disposal of the potato stocks of the members to their best advantage. He *should see that all the stocks purchased by the Merchants are taken delivery of without delay. He should control the staff working in the potato godowns and see that no complaints are received from members and merchants etc., regarding purchase or sale of potatoes. He should supervise grading, weighing and packing of potatoes promptly and properly. The job of the Marketing Supervisor, therefore, do not show that complete control and supervision is upon the society. The Marketing Supervisor was allotted the job to see that the work is carried out smoothly so that ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess was such which required continuous supervision and furthermore the workmen who were required to work on fixed hours which was not the case in the present one. The learned Tribunal has further found that the volume of job as also the number of persons working depend upon the season inasmuch in the peak season a large number of persons would be appointed whereas in the off season the number of appointments would be less. The Tribunal had further held that the Society acts as a commission agent. The submission of Mr. Prasad to the effect that the Tribunal has ignored the question of employment of contractor, some of whom may be under a legal incapacity to do so but the same again would not be decisive. Furthermore, even in terms of Section 21 of the Contract Labour (Regulation and Abolition) Act, the principal employer has a statutory obligation to see that the concerned employees are paid their wages and deduct the same from the bills of the contractors. It has also come on records that the remuneration paid by the Society on behalf of its members are done through Maistry and not directly to the concerned workers. We have noticed hereinbefore in details the nature of the servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry or wages invariably. They have the right to appoint or not to appoint and the little amount of supervision made by the officers of the Society are for the purpose of overseeing the smooth transactions and not for its own benefit. The contract is entered into by different parties for different purposes. The services of the workmen by the farmers or traders may or may not be taken. There may be disputes between one class of members with the other which incidentally may have some bearing on the performance of job by the concerned workmen. We may further notice that the learned counsel appearing on behalf of the respondents has drawn our attention to the statements made in the counter affidavit to the effect that the President of Petitioner Association runs the biggest private mundy in Mettupalayam and adopts the same procedure of engaging workers and the job of unloading, cleaning, sorting, grading etc. is done by the Respondent society. It has further been stated that there are about 60 such private mundies at Mettupalayam and although every mundy adopts the same pattern of engaging workers but except in the case of the respondent no industrial dispute had been raised in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rought on records. In Municipal Corporation of Greater Mumbai Vs. K.V. Sharamik Sangh and Others [(2002) 4 SCC 609], non- maintenance of records by the contractors was held to be not conclusive for determination as to whether the workmen were working under the contractor. The Court held that such disputed questions of fact cannot be gone into in a civil proceeding. In Sarva Shramik Sangh vs. M/s Indian Smelting Refining Co. Ltd. Ors. [JT 2003 (8) SC 243], this Court observed : ...A jurisdictional fact is one on the existence or otherwise of which depends assumption or refusal to assume jurisdiction by a court, tribunal or the authority. Said fact has to be established and its existence proved before a Court under the Maharashtra Act can assume jurisdiction of a particular case. If the complaint is made prima facie accepting existence of the contractor in such a case what has to be first established is whether the arrangement or agreement between the complainant and the contractor is sham or bogus. There is an inherence admission in such a situation that patently the arrangement is between the complainant and the contractor and the claim for a new and different relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of fact that the intermediaries were mere agents or branch managers appointed by the management and the relationship of employer and employee subsisted between the appellant and the bidis rollers, inter alia, on the ground that the so-called independent contractors served no particular duties and discharged no special functions and had no independence at all. They were impecunious persons who could hardly afford to have any factory of their own and in fact some of them were ex-employees of the appellant. In Silver Jubilee Tailoring House and Others vs. Chief Inspector of Shops and Establishments and Another [(1974) 3 SCC 498], the job required to be performed was skilled and professional in nature. Mathew, J. speaking for the Bench observed that the test of right to control the manner of doing the work as traditionally formulated cannot be treated as an exclusive test. The court applied organization test in the fact situation obtaining therein laying importance on the fact that the employer provides the equipment and stating that where a person hires out a piece of work to an independent contractor, he expects the contractor to provided all the necessary tools and equipme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... men, the veil may have to be pierced to get at the realities. Therefore, it would be not only impossible but also not desirable to lay down abstract principles or rules to serve as a ready reckoner for all situations and thereby attempt to compartmentalize and peg them into any pigeonhole formulae, to be insisted upon as proof of such relationship. This would only help to perpetuate practicing unfair labour practices than rendering substantial justice to the class of persons who are invariably exploited on account of their inability to dictate terms relating to conditions of their service. Neither all the tests nor guidelines indicated as having been followed in the decisions noticed above should be invariably insisted upon in every case, nor the mere absence of any one of such criteria could be held to be decisive of the matter. A cumulative consideration of a few or more of them, by themselves or in combination with any other relevant aspects, may also serve to be a safe and effective method to ultimately decide this often agitated question. Expecting similarity or identity of facts in all such variety or class of cases involving different type of establishments and in dealing wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission was paid for promoting the business of the bank. Having regard to the fact that the banks have control over the deposit collectors, they were considered to be their own workers. In Indian Banks Association (supra) the reference which was made for adjudication of the Industrial Tribunal was as follows : Whether the demands of the Commission Agents or as the case may be Deposit Collectors employed in the banks listed in the annexure that they are entitled to pay scales, allowances and other service conditions available to regular clerical employees of those banks is justified ? If not, to what relief are the workmen concerned entitled and from which date ? Having regard to the evidences both oral and documentary led by the parties, the Tribunal directed : All those Deposit Collectors and Agents who are below the age of 45 years on 3.10.1980 (the date of the first reference of this industrial dispute) shall be considered for regular absorption for the post of clerks and cashiers if they are matriculates and above including qualified graduates and postgraduates. They may be taken to banks services as regular employees if they pass the qualifying examinations c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o works for another for hire. The employment is the contract of service between the employer and the employee whereunder the employee agrees to serve the employer subject to his control and supervision... Following the decision of this Court in Shri Chintaman Rao (supra), this Court in Shankar Balaji Waje vs. The State of Maharashtra [AIR 1962 SC 517], held: Employment brings in the contract of service between the employer and the employed. We have mentioned already that in this case there was no agreement or contract of service between the appellant and Pandurang. What can be said at the most is that whenever Pandurang went to work, the appellant agreed to supply him tobacco for rolling bidis and that Pandurang agreed to roll bidis on being paid at a certain rate for the bidis turned out. The appellant exercised no control and supervision over Pandurang In Dharangadhara Chemical Works Ltd. Vs. State of Saurashtra Ors. [AIR 1957 SC 264], this Court upon noticing several authorities held : The principle which emerges from these authorities is that the prima facie test for the determination of the relationship between master and servant is the existence of the right in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tena of precedents it stands established that the prima facie test of relationship of master and servant is the existence of the right in the master to supervise and control the work done by the servant (the measure of supervision and control apart) not only in the matter of directing what work the servant is to do but also the manner in which he shall do his work... However, we may note that in Workmen of the Canteen of Coates of India Ltd. vs. Coates of India Ltd. (Civil Appeal No.3479/1987 disposed of on 28.8.1996, this Court observed : ...some requirement under the Factories Act of providing a canteen in the industrial establishment, is by itself not decisive of the question or sufficient to determine the status of the persons employed in the canteen. The effect, if any, relating to compliance of the provisions of Factories Act is a different matter which does not arise for consideration in the present case. [See also Bombay Canteen Employees' Association vs. Union of India, [(1997) 6 SCC 723]. On the aforementioned backdrop of legal principles, We may now consider the Constitution Bench judgment of this Court in Steel Authority of India Limited (supra). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a fact at the stage after employment of contract labour stood prohibited; (iii) where in discharge of a statutory obligation of maintaining a canteen in an establishment the principal employer availed the services of a contractor the courts have held that the contract labour would indeed be the employees of the principal employer. The instant case although was sought to be put in category (ii) as referred to Steel Authority (supra) by Mr. Prasad, he, as noticed hereinbefore, took us also to the case law falling in Class (i) and Class (iii) aforementioned. There cannot be any doubt whatsoever that where a person is engaged through an intermediary or otherwise for getting a job done, a question may arise as the appointment of an intermediary was merely sham and nominal and rather than camouflage where a definite plea is raised in Industrial Tribunal or the Labour Court, as the case may be, and in that event, it would be entitled to pierce the veil and arrive at a finding that the justification relating to appointment of a contractor is sham or nominal and in effect and substance there exists a direct relationship of employer and employee between the principal employer and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bles to be auctioned. We must bear in mind that the Society deals with small and marginal farmers who themselves look after the Society for obtaining such assistance as may be necessary from not being exploited by the traders and had been facing the problem of a forced sale of their produce at the throw away price. The totality of the circumstances as opined by the Tribunal and affirmed by the High Court would clearly go to show that although certain activities are carried out in the market yards wherefor requisite infrastructures are provided, the Society in general does not have the necessity of employing any workman either for the purpose of loading, unloading or grading. Ultimately, the remuneration to the concerned workmen are borne either by the farmers or by the merchants. Presumably the amount paid to the loaders, unloaders and the graders would vary, as for example whereas there would be cases where the growers themselves would unload their merchandise either from trucks or carts. In case growers take the assistance of the concerned persons for unloading after the auction is held the payment would be made by the traders. In a situation of this nature and particularly havin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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