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PETITIONER: EMPLOYEES’ STATE INSURANCE CORPORATION AND ANR.

       Vs.

RESPONDENT: TATA ENGINEERING & CO. LOCOMOTIVE CO.LTD. AND ANR.

DATE OF JUDGMENT08/10/1975

BENCH: GOSWAMI, P.K. BENCH: GOSWAMI, P.K. ALAGIRISWAMI, A. UNTWALIA, N.L.

CITATION:  1976 AIR   66            1976 SCR  (1) 199  1975 SCC  (2) 835

ACT:      Employees  State   Insurance  Act,   1948-Sec.  2(9)-An apprentice whether an employee.

HEADNOTE:      The appellant  contended before the Industrial Tribunal that the  apprentices to which the Employees State Insurance Act, 1948  applies.  The  factory  employs  besides  regular employees, two sets of apprentices. Graduate apprentices for a period of two years and Trade apprentices for the duration of 3  years. The graduate apprentices receive stipend of Rs. 250/- per  month for  the first year and Rs. 300/- per month during  the  second  year.  The  trade  apprentices  receive stipend of Rs. 2/- Rs. 2.50 and Rs. 3.00 per diem during the first,  second   and  third   years  of  the  apprenticeship respectively.  No   further  emolument   is  paid   to   the apprentices. A  deed of  apprenticeship  is  signed  by  the company, the  apprentice and the surety by which the company agrees to  provide to  the apprentice  necessary training in its factory and that after the apprentices successfully pass the examination  after the  training is completed they would be considered  for absorption as skilled worker although the Company is  not under  a  legal  obligation  to  offer  them employment. Another term provides that the apprentices would during  the   period  of   apprenticeship   diligently   and faithfully serve  the Company  and to  the utmost  power and skill attend to the Company’s business. The apprentices give a bond  for serving  the Company  for 5  years  after  their training is successfully completed.      The appellant  contended before the Industrial Tribunal that the apprentices are employees within the meaning of the Act. The Tribunal did not accept the appellant’s contention. The High  Court rejected  the writ  petition  filed  by  the appellant. On an appeal by certificate under Art. 133(1) (a) and  (b)  of  the  Constitution  it  was  contended  by  the appellant that  the words  "serve the  Company" appearing in the apprenticeship  agreement introduce a relation of master and servant. ^      HELD :  (1) The word "apprentice" is not defined in the Act. In  ordinary  acceptation  of  the  term  apprentice  a

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relationship of  master and  servant is  not established  in law.  The   dictionary  meaning   does  not  accept  such  a relationship. The heart of the matter or the dominant object in apprenticeship is the intent to impart on the part of the employer and  to accept  on the  part of  the  other  person learning under certain agreed terms. Such a person remains a learner and  not an  employee. The fact that certain payment is made  does not  convert the  apprentice  into  a  regular employee. An  examination of  the provisions  of the  entire agreement leads  us to  the conclusion  that  the  principal object with  which the  parties enter  into the agreement of apprenticeship was offering by me employer an opportunity to learn the  trade or  craft and  the other  person to acquire such knowledge. [201F, 202D-F]      (2) The Apprentices Act, 1850, defines an apprentice as a person  who is  undergoing apprenticeship  training  in  a designated   trade   in   pursuance   of   a   contract   of apprenticeship. Whenever  the legislature intends to include an   apprentice  in  the  definition  of  a  worker  it  has expressly done  so, for  instance, while  defining a  worker under s.  2 of  the Industrial  Disputes Act, 1947. The very next year  while passing  the Employees State Insurance Act, 1948, the  Legislature did  not choose to include apprentice while defining the word employee. Such a deliberate omission on the part of the Legislature can be only 200 attributed to the well known concept of apprenticeship which the Legislature  assumed and took note of for the purpose of the Act.  The apprentices are not given the wages as defined by s.  2(22) of  the Act.  The apprentices  are not  covered within the  definition of the employees under s. 2(9) of the Act. They are not entitled to the daily allowances and other allowances to  which the regular employees are entitled. The apprentice is, therefore, not an employee within the meaning of s. 2(9) of the Act. [202G-H, 203-B-D, 204-B-C]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2113 of 1969.      From the  Judgment and order dated the 3rd May, 1966 of the Patna  High Court  at Patna  in Misc. J. Case No. 289 of 1964.      G. L.  Sanghi, S.  P. Nayar and Girish Chandra, for the Appellant.      M.C. Bhandare,  O.C. Mathur,  D.  N.  Mishra  and  J.B. Dadachanji for respondents.      The Judgment of the Court was delivered by      GOSWAMI, J.  Is an  apprentice an  "employee" under the Employees State  Insurance Act,  1948 ? That is the question raised in  this appeal  by certificate  under article 133(1) (a) & (b) of the Constitution from the judgment of the Patna High Court  by which  it refused to interfere with the order of the  Industrial Tribunal  passed under section 73B of the Employees’ State Insurance Act, 1948 (briefly the Act).      The respondent  is a  public limited company having its registered office at Bombay and its factory at Jamshedpur in the State  of Bihar.  The Act is applicable to the company’s factory. Besides regular employees in the company, there are two sets  of apprentices, namely, graduate apprentices for a period of  two years  and trade apprentices for the duration of three  years. The graduate apprentices receive stipend of Rs. 250.00  per month  in the  first year and Rs. 300.00 per month during  the second year. The trade apprentices receive

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stipend at  the rate  of Rs. 2.00, Rs. 2.50 and Rs. 3.00 per diem  during  the  first,  second  and  third  year  of  the apprenticeship respectively.  No other emoluments except the daily allowance  or the  monthly stipends  are paid  by  the company to  the apprentices.  A deed  of  apprenticeship  is signed by  three parties, namely, the apprentice, his surety and the  company and it contains the terms and conditions of apprenticeship From  the said terms and conditions which are common for  both sets  of apprentices except for the quantum of stipends  and the  duration, it  appears that the company agrees to  provide the apprentice a combined theoretical and practical training  in its factory for the respective period above mentioned  and the  apprentice also  binds himself  to serve the  company for  the purpose of the said training for the said  period. Clause  (7) of the agreement provides that if the  apprentice successfully passes the examination after training he  will be  considered for  absorption as  skilled worker although  the company is under no legal obligation to offer him  employment. There  are other  conditions  in  the agreement with  regard to  matters of  discipline during the apprenticeship. 201      Our attention  was particularly  drawn to the following provisions in the agreement:           "12. In consideration of the company having agreed                to give  the Apprentice training in its Works                (Automobile  Division)   and   to   pay   the                apprentice the  aforesaid daily  allowance or                stipend, the  apprentices and  the surety  as                the father  or  guardian  of  the  apprentice                jointly  and   severally  covenant  with  the                company as follows:-           (i)  That the  apprentice will during the whole of                the said  term of  three  years  of  training                diligently and  faithfully serve  the company                and to  the utmost  power and skill attend to                the company’s  business at  such  places  and                times as  the company  or its representatives                shall direct.                     *       *       *       *       *           (v)  The  apprentice   shall  immediately  on  the                satisfactory completion  of his  training for                the  full  term  of  three  years  serve  the                company for  a period  of five  years, if  so                required by the company on such conditions as                the company  may offer  having regard  to his                personal qualifications  or acquirements  and                complying with the Rules & Regulations as are                contained in the Works Standing Orders of the                company". Without  citing   all  the   terms  and  conditions  of  the agreement, it  is apparent  that an apprentice is not in the regular employment of the company.      It is,  however, submitted  on behalf of the appellants that the  words "serve  the company"  in clause 12(i), which are repeated  in clause  (v), introduce  a  relationship  of master and  servant thus constituting apprentice an employee as ordinarily  understood. We attach no special significance to the  use of  the words  "serve the  company" in the above clauses.      The word ’apprentice’ is not defined in the Act, nor is it specifically  referred to in the definition of ’employee’ by either inclusion or exclusion. We are unable to hold that in  ordinary   acceptation  of   the   term   apprentice   a relationship of  master and servant is established under the

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law. Even  etymologically, as  a matter of pure English, "to serve apprenticeship  means to  undergo the  training of  an apprentice" (Chamber’s Dictionary). According to the Shorter Oxford English  Dictionary apprentice  is "a  learner  of  a craft; one  who is  bound by  legal agreement  to  serve  an employer for  a period  of years,  with a view to learn some handicraft,  trade,   etc.  in   which   the   employer   is reciprocally bound to instruct him".      Stroud’s Judicial Dictionary puts it thus:           "In legal  acceptation, an  apprentice is a person      bound to another for the purpose of learning his Trade,      or Calling; the 202      contract being  of that  nature that the master teaches      and the  other serves  the master with the intention of      learning". While dealing  with the nature of the relationship of master and  servant  in  comparison  with  other  relationships  in Halsbury’s Laws  of England,  Third edition,  Volume 25, the following passage appears at para 877, pages 451-452:           "By a contract of apprenticeship a person is bound      to another  for the  purpose of  learning  a  trade  or      calling, the apprentice undertaking to serve the master      for  the  purpose  of  being  taught,  and  the  master      undertaking to  teach the apprentice. Where teaching on      the part of master or learning on the part of the other      person is  not  the  primary  but  only  an  incidental      object, the  contract is  one of service rather than of      apprenticeship;  but,   if  the   right  of   receiving      instruction exists,  a contract  does not become one of      service because,  to some extent, the person to whom it      refers does  the kind  of  work,  that  is  done  by  a      servant, or  because he receives pecuniary remuneration      for his work."      The  heart   of  the   matter  in   apprenticeship  is, therefore, the  dominant object  and intent to impart on the part of  the employer and to accept on the part of the other person learning  under certain  agreed terms.  That  certain payment is  made during the apprenticeship, by whatever name called, and  that the  apprentice has  to be  under  certain rules of  discipline do  not convert  the  apprentice  to  a regular employee under the employer. Such a person remains a learner and  is not  an  employee.  An  examination  of  the provisions  of   the  entire   agreement  leads  us  to  the conclusion that  the principal object with which the parties enter into  an agreement  of apprenticeship  was offering by the employer  an opportunity to learn the trade or craft and the other  person to  acquire such  theoretical or practical knowledge  that  may  be  obtained  in  the  course  of  the training. This is the primary feature that is obvious in the agreement.      Now coming to the legislative history of our country on the subject,  it is  interesting  to  note  that  more  than hundred years  back we had the Apprentices Act, 1850 and its preamble says  "For better enabling children, and especially orphans and  poor children  brought up by public charity, to learn trades,  crafts and  employments, by  which, when they come  to  full  age,  they  may  gain  a  livelihood......". Learning of  craft or  trade was  the essence  of  the  said legislation. This  Act was  repealed by  section 38  of  the Apprentices Act,  1961. The object of 1961 Act is to provide for the regulation and control of training of Apprentices in trades  and   for  matters   connected  therewith.   By  the definition clause  under  this  Act,  namely,  section  2(a) "’apprentice’   means    a   person    who   is   undergoing

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apprenticeship training  in a  designated trade in pursuance of a contract of apprenticeship". It is, therefore, inherent in the  word  ’apprentice’  that  there  is  no  element  of employment as  such in  a trade  or  industry  but  only  an adequate 203 well-guarded provision  for training  to enable  the trainee after completion  of his  course to  be suitably absorbed in earning employment  as a  regular worker.  The fact  that  a trainee may  have been  absorbed in  the company where he is undergoing the  training, is not relevant for the purpose of comprehending the content of term.      Again we  find that  where the  legislature intends  to include apprentice  in the  definition of  a worker  it  has expressly done so. For example, the Industrial Disputes Act, 1947,  which   is  a  piece  of  beneficial  labour  welfare legislation  of  considerable  amplitude  defines  ’workmen’ under section  2(s) of  that Act  and includes apprentice in express  terms.   It  is   significant  that   although  the legislature was  aware of this definition under section 2(s) under the  Industrial Disputes Act, 1947, the very following year while passing the Employees’ State Insurance Act, 1948, it did  not choose  to include apprentice while defining the word ’employee’  under section  2(9) of the Employees’ State Insurance Act,  1948. Such a deliberate omission on the part of the  legislature can be only attributed to the well-known concept of  apprenticeship which the legislature assumed and took note  of for the purpose of the Act. This is not to say that if  the legislature intended it could not have enlarged the definition  of the  word ’employee’  even to include the ’apprentice’ but the legislature did not choose to do so.      Even then the question is whether such an apprentice is an employee  within the  meaning of  the term  under section 2(9) of  the Act.  If the answer is yes, he will be governed by the  Act and  the  appellants’  claim  for  charging  the company with  liability for  payment of special contribution under Chapter  VA of  the Act  in respect  of the apprentice will be justified.      We may, therefore, turn to the definition of ’employee’ under section  2(9) of  the Act.  So  far  as  is  material, section 2(9) reads as follows:-           " ’employee’  means any  person employed for wages      in or  in connection  with the  work of  a  factory  or      establishment to which this Act applies and-           (i) who  is directly  employed  by  the  principal      employer in  any work  of, or incidental or preliminary      to or  connected with  the  work  of,  the  factory  or      establishment,  whether   such  work  is  done  by  the      employee   in   the   factory   or   establishment   or      elsewhere....."      It is  clear that  in order  to be an employee a person must be  employed for  wages in  the work  of a  factory  or establishment or in connection with the work of a factory or establishment. Wages is defined under section 2(22) and           "means all remuneration paid or payable in cash to      an  employee,   if  the   terms  of   the  contract  of      employment, express  or  implied,  were  fulfilled  and      included any  payment to  an employee in respect of any      period of  authorised leave,  lockout, strike  which is      not   illegal    or   layoff   and   other   additional      remuneration, if  any, paid  at intervals not exceeding      two months, but does not include......" 204      From the  terms of  the  agreement  it  is  clear  that apprentices are  more trainees  for a particular period or a

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distinct purpose  and the  employer is  not bound  to employ them in  their works  after the  period of training is over. During the apprenticeship they cannot be said to be employed in the work of the company or in connection with the work of the company.  That would  have been so if they were employed in a  regular way  by the  company. On  the other  hand  the purpose of  the engagement  under the  particular scheme  is only to  offer training  under certain terms and conditions. Besides, the  apprentices are  not given  wages  within  the meaning of  that term  under the  Act. If  they were regular employees under  the Act,  they would  have been entitled to additional remuneration  such as  daily allowance  and other allowances which  are available to the regular employees. We are, therefore,  unable to  hold that  the apprentice  is an employee within the meaning of section 2(9) of the Act.      Incidentally  we  may  note  that  section  18  of  the Apprentices Act, 1961, provides that-           "save as  otherwise provided  in this  Act,  every      apprentice  undergoing  apprenticeship  training  in  a      designated trade in an establishment shall be a trainee      and not a worker...."      The concept  of apprenticeship  is,  therefore,  fairly known and has now been clearly recognised in the Apprentices Act. Apart  from that, as we have noticed earlier, the terms and conditions  under which these apprentices are engaged or not give any scope for holding that they are employed in the work of the company or in connection with its work for wages within the  meaning of  section 2(9) of the Act. The appeal, therefore, fails  and is  dismissed. There will be, however, no order as to costs. P.H.P.                                     Appeal dismissed. 205