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PETITIONER: GHATGE & PATIL CONCERN’S EMPLOYEES’ UNION

       Vs.

RESPONDENT: GHATGE & PATIL (TRANSPORTS) PRIVATE LTD. & ANR.

DATE OF JUDGMENT: 22/08/1967

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. BHARGAVA, VISHISHTHA

CITATION:  1968 AIR  503            1968 SCR  (1) 300  CITATOR INFO :  RF         1970 SC1334  (12)

ACT: Motor  Transport  Workers Act,  1961--Definition  of  ’Motor Transport   Worker’--’Employed’,   meaning    of--Industrial Dispute--Transport   company  giving  trucks  on   hire   to contractors--Former  drivers of trucks becoming  contractors after  resigning from service of  company--Such  contractors whether  Motor  Transport Workers--Contract  system  whether amounts to unfair labour practice.

HEADNOTE: The respondent company carried on the business of  transport and  removal of goods by road.  It owned a fleet  of  trucks and employed drivers and cleaners to run them.  In 1963  the company,  finding difficulty in observing the provisions  of the  Motor Transport Workers Act 1961, introduced  a  scheme whereby  the  trucks, instead of being run  by  the  company itself  were  hired out to contractors at a fixed  rate  per mile.  Employees of the company who were engaged in  running the trucks resigned their jobs and most of them who had for- merly been drivers became contractors under the scheme.  The workmens’  Union  however raised a dispute  asking  for  the reinstatement of the ex-employees who had been given work on contract basis.  The Tribunal held that the contract  system could  not be said to be an unfair labour practice, for  the ex-employees  were never coerced or forced to  resign  their jobs,  and they got more benefits from the  contract  system than from their original contract of employment.  In  appeal to  this Court the Union contended that the ex-employees  of the  company  continued to be workmen  notwithstanding  that they  were  posed  as  independent  contractors,  that   the beneficent   legislation  conceived  in  the  interests   of transport  workers was being set at naught by  the  company, and  that the setting up of the contract system amounted  to unfair labour practice. Held:  (i)  Since the drivers had resigned their  jobs  they could  not  be said to be employed in  the  Motor  Transport undertaking.  The word ’employed’ in the definition of Motor Transport.   Worker  is not used in the sense of  using  the services  of a person but rather in the sense of  keeping  a person  in one’s service.  Persons who are  independent  and

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hire  a vehicle for their own operation paying a fixed  hire per  mile from their earnings cannot be said to  be  persons employed in the Motor Transport Undertaking in the sense  of persons  kept in service.  The operators were therefore  not Motor Transport Workers within the definition. [304F-H] (ii) There was no bar in law to the introduction of the con- tract  system.   A  person must be  considered  free  to  so arrange his business that he avoids a regulatory law and its penal consequences which he has without the arrangement,  no proper means of obeying.  This, of course, he can do only so long as he does not break that or any other law. [306 B-C] (iii)  Those  who resigned did so voluntarily and  they  got substantial benefits under the new system.  The Tribunal was right  in its conclusion that there was no  exploitation  of the ex-employees.  There  301 was  thus no unfair labour practice.  The present  case  was not analogous to the case of contract labour when employment of  labour through a contractor or middleman put the  labour at  a disadvantage in collective bargaining and thus  robbed labour of an important weapon in its armoury., [305E-306A.]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal NO. 437 of 1966. Appeal by special leave from the Award dated March 31,  1964 of  the Industrial Tribunal, Maharashtra in  Reference  (IT) No. 40 of 1963. H. K. Sowani, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the appellant. H. R. Gokhale and 1. N. Shroff, for respondent No. 1. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by special leave  against the  award dated March 31, 1964 of the Industrial  Tribunal, Maharashtra  in a Reference by Government under s.  10(1)(d) of  the Industrial Disputes Act, 1947.  The appellant  is  a Trade Union established on January 1, 1962 by the  employees of  Ghatge  &  Patil  (Transports)  Private  Ltd.  and   the respondent  is the Company.  The Company has its  registered office  at  Kolhapur  and is engaged in  the  transport  and removal  of  goods by road.  It operates on  a  large  scale owning  at the material time as many as 70 trucks and  plies them from Kolhapur (where the registered office of the  Com- pany  is situate) to far off places such as  Bombay,  Poona, Bangalore, Goa and Madras. On  January  14, 1963, the Union served a notice  of  demand upon  the  Company  asking  for the  abolition  of  a  newly introduced  contract  system for the  running  of  vehicles. This  was  referred first to the Conciliation  Officer,  but later  the  reference  was  made  by  Government  as  stated already.  The dispute arose in the following circumstances: For  the operation of its trucks the Company was  previously employing  70 drivers and an equal number of  cleaners.   On January 8, 1963, the Company advertised in a local newspaper of Kolhapur that it had trucks in working condition for sale and also trucks in working condition to be given for  plying on  a  contract system.  As many as 54 drivers  applied  for obtaining   contracts  having  resigned  their  service   as drivers.   The  Company then entered  into  agreements  with these  drivers  between  January  9  and  31.   Each  driver received  one  motor truck for operation  according  to  the terms of the agreement.  A model agreement has been produced in the case in which the parties, after reciting that  there were  difficulties  in operating motor  transport  vehicles,

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because  of the passing of the Motor Transport Workers  Act, stated  that  the agreement was being entered into  for  the operation of the trucks.  It is not necessary either to  set out the agreement or to analyse all its terms. 302 For our purpose it is sufficient to say that the Company let to these former drivers (to whom we may refer as  operators) a  truck  each on condition that they paid the  Company  Re. 1.00  per  mile  for  its use.   The  Company  on  its  part undertook  to  supply fuel, oil tyres, tubes, etc.  for  the purpose  of running the vehicle.  Under this  agreement  the operator  was at liberty to canvass for goods and  transport them but he was required to give the utmost priority to  the goods  entrusted to the Company for transport.  In this  way the  goods booked with the Company were transported  by  the operator  s in priority and they paid Re. 1.00 per mile  for the use of the truck , all other expenses being borne by the Company.   The  operator s were required to  bring  all  the gross receipts to the Company which deducted its own charges at  Re.  1.00  per mile and handed over  the  balance.   The operators  were responsible for any damage to  the  vehicle, save normal wear and tear, and were required to observe  the terms and conditions of the permit held by the Company.   In this  way, the Company continued to function as a  transport undertaking  while  the  trucks were not  run  through  paid servants but through independent contractors. The above move by the Company was necessary (so the  Company admits)  because of the passing of the Motor Transport  Wor- kers  Act,  1961, on May 20, 1961.  This Act was  passed  to provide  for the welfare of Motor Transport workers  and  to regulate the conditions of their work.  It applies to  Motor Transport  Undertakings,  by  which is  meant,  among  other things,  undertakings engaged in carrying goods by road  for hire or reward.  Such undertakings are required to  register under  the  Act  and an inspecting  staff  is  brought  into existence for the purpose of seeing that the requirements of the  Act  are carried out.  The fourth chapter  of  the  Act (headed  "Welfare and Health") requires the Motor  Transport Undertakings  to provide canteens in every place  where  100 Motor  Transport workers or more are employed-,  rest  rooms for the use of such workers, uniforms, medical and First-Aid facilities.  The fifth chapter prescribes the hours of  work for  Motor Transport workers and in  ordinary  circumstances puts  a  ceiling of 48 hours in a week and a  maximum  of  8 hours  a day and a daily interval for rest after 5 hours  of work,  with a spreadover of not more than 12 hours in  every day.  It also provides for a day of weekly rest.  The  sixth chapter  prohibits the employment of children,  enjoins  the carrying  of  tokens  by employees and  provides  for  their medical  examination.   The  seventh  chapter  applies   the Payment  of  Wages Act and provides for  annual  leave  with wages  and  extra  wage for overtime.   The  eighth  chapter provides  for penalties and procedure and the ninth  chapter gives  power to the Government to grant exemptions, to  make rules and to give directions.  Section 37, which is in  this last chapter, provides that the provisions of the Act  shall have effect notwithstanding anything inconsistent  therewith contained  in  any other law or in the terms of  any  award, agreement  or  contract of service whether  made  before  or after  the  commencement of this Act but not so as  to  take away from a Motor Trans-  303 port  worker  an existing benefit which is  more  favourable than  those  under the Act or to prevent him  from  entering into  an  agreement for better rights  and  privileges  than

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those given to him by the Act. The  Company  frankly  admitted at all stages  that  it  was impossible for it to implement all the conditions of the Act in respect of the drivers of motor vehicles.  It stated that its  motor  drivers. while working in its  employment,  were required  to  go  on long journeys and  it  was  practically impossible to enforce the conditions of hours of work or  of rest.   Since  this  entailed  penal  consequences  and  the possibility of the permits being cancelled, the Company  was forced to adopt a system under which it would not be requir- ed  to  observe the Act because under it the  truck  drivers became independent contractors and were therefore not within the  ambit  of  the  Act.  On  the  other  hand,  the  Union contended that this arrangement was invented to nullify  the beneficial legislation intended to improve the conditions of Motor  Transport  workers in general and  truck  drivers  in particular.   Under  the system, the  Union  submitted,  the drivers  lost the benefit of leave of various  kinds,  over- time  payment,  Provident Fund, gratuity and  insurance  and there  was no control either in respect of hours of work  or of rest which were the main objects of the Act to secure.               "The   matter  of  dispute  referred  to   the               Tribunal was:--               "The  contract  system  for  the  running   of               vehicles which has been newly introduced, must               be  abolished immediately.  Such  ex-employees               of  the Company who have been given this  work               on  contract basis should be  reinstated  with               back wages". The  Tribunal  held that the first part as also  the  second referred  to the 54 drivers who had resigned their jobs  and become operators.  The Tribunal saw difficulty in acting  on the  second  part  because the  drivers  had  resigned.   In dealing  with  this  problem  the  Tribunal  considered  the evidence  and came to the conclusion that the  drivers  were not  coerced  or forced to take this action.   The  Tribunal then  posed the question, how to re-instate persons who  had voluntarily resigned their services and could not be said to be dismissed, discharged or retrenched within the Industrial Disputes  Act?  The Tribunal also held that  the  agreements were  simple  agreements  for transport of  goods  and  were essentially  fair to the operators.  Of course,  there  were advantages  as well as disadvantages but the  employees  not being servants were free agents and could do the work as and when they liked and even accept work from others.  They thus got,  what they considered, more benefit from  the  contract system than from their contract of employment.  None of  the drivers  had  appeared to complain against the  new  system. There was also nothing to show that this system took  unfair advantage  of the former drivers.  The Tribunal,  therefore, held  that the contract system could not be described as  an unfair  labour practice.  The Tribunal also  commented  that under the agreements 304 themselves  the contract was capable of being terminated  by three  days’ notice on either side and hence it  was  hardly necessary  for the Union to take recourse to a Tribunal  for getting it abolished.  Holding that the new system could not be said to be an unfair or anti-labour practice the Tribunal rejected  the claim of the Union.  The Union now appeals  by special leave. The argument on behalf of the Union centres round two facts. Firstly,  that the resignation of the drivers  and  cleaners and  the  setting up of the contract system  amounts  to  an unfair labour practice and exploitation of labour because by

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this  device  these and other transport  workers  are  being victimized;  and,  secondly,  the  salutary  and  beneficial legislation conceived in the best interest of the  transport workers  is being deliberately set at naught.  According  to the  Union  the operators continue to  be  workmen  notwith- standing  that  they are posed  as  independent  contractors hiring  the  trucks.  By this system many  of  the  benefits secured to the Motor Transport workers including drivers and cleaners, have been made inapplicable to a section of  Motor Transport  workers, namely, the former drivers and  cleaners employed  by the Company.  The argument on the side of,  the Company is that the hiring out of trucks to the operators is not  illegal  and  does not amount to  exploitation  of  the former  drivers or an unfair labour practice.  According  to the  Company  the  operators  are  free  agents  and  freely resigned  their  jobs and the Company points out  that  even the,  office-bearers  of  the Union  were  among  those  who resigned  as drivers and entered into agreements  to  become operators.  The Company further points out that many of  the contracts were entered into after the, present reference was made to the Tribunal. There  is  no doubt that the Company is a  Motor  Transport’ Undertaking because it is engaged in carrying goods by  road for  hire or reward.  Since the drivers have resigned  their jobs  they  cannot  be  said to be  employed  in  the  Motor Transport   Undertaking.    The  word  "employed"   in   the definition  of  Motor Transport worker is not  used  in  the sense  of using the services of a person but rather  in  the sense of keeping a person in one’s service.  The  definition is, of course, made wide to take in all persons working in a professional  capacity  in an undertaking  for  running  its affairs  in  any capacity and not only persons  employed  on wages.  The word "wage" has the meaning given to the word in the Payment of Wages Act and takes in all paid employees and also  persons who are employed in a  professional.  capacity although   not  in  receipt  of  wages.   Persons  who   are independent  and  hire  a vehicle for  their  own  operation paying  a fixed hire per mile from their earnings cannot  be said  to  be  persons employed in the  Motor  Transport  Un- dertaking  in  the sense of persons kept  in  service.   The operators, therefore, are not Motor Transport workers within the definition. The  Act  is not only intended to confer benefits  on  Motor Transport   workers  but  is  also  regulatory  with   penal consequences.  305 The  apprehension  of  the  Company is-  that  some  of  the regulatory  provisions  of the Act are  incapable  of  being observed properly in the case of drivers and cleaners  going on  long  journeys because there is no  means  of  enforcing them.   For  example, the provisions about  hours  of  work, hours of rest etc. are not easy to enforce enroute or at far off  places.  Therefore, rather than run the risk of  losing the  permit for want of compliance with the Motor  Transport Workers  Act, the Company has decided not to  run  transport trucks itself but to let them be run by independent  hirers. There  does not appear to be any bar in law to such  action. Section  59  of  the Motor  Vehicles  Act  contemplates  the transfer  of  permits with the permission of  the  Transport Authorities  and this enables any person to whom  a  vehicle covered by the permit is transferred to get the right to use the  vehicle in the manner authorised by the  permit.   Here the  vehicle is not transferred but is only let out on  hire and hence there is prima facie no need for permission.   The Union  made  no  attempt before us  to  establish  that  the

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inauguration  of  the  contract system  offended  the  Motor Vehicles  Act or was prohibited under it.  No  objection  to the  system by the Authorities under the Motor Vehicles  Act was proved in the case.  The operators also seem to be happy because  no  operator  appeared to  complain  and  the  only dissatisfaction  has  been  registered by  the  Union  which apparently lost the allegiance of some of its former members and  even  office bearers.  In view of the findings  of  the Tribunal,  which we see no reason to disapprove, it must  be held that the drivers voluntarily resigned and entered  into the  agreements since they apparently considered them to  be more  favourable than the terms of their former  employment. In this view of the matter it is difficult to hold that  the Tribunal  was wrong in its conclusion that there was no  ex- ploitation  of  the drivers.  It is also equally  true  that there is no bar in law to the introduction of the system. The  Union,  however, contends that on the analogy  of  some cases of this Court in which contract labour was put down as unfair  labour practice because it involved exploitation  of labour, we should declare this system also to be harmful  to the  interests of labour.  Contract labour was  declared  in this  Court  to  be an unfair labour  practice  because  the intention was to introduce a middle man to avoid  observance of laws and to deny to labour the advantages it had acquired by bargaining or as a result of awards.  Such is hardly  the case  here.  The two systems were there for the  drivers  to choose.   It  is reasonable to think that the  drivers  must have chosen a system which was considered by them to be more beneficial  to themselves.  There was no compulsion for  the drivers  to  resign their jobs and they did  so  voluntarily obviously  thinking that the new system was more  profitable to them.  We cannot lose sight of the fact that some of  the office-bearers of the Union were among the first to  resign. Many  of  the  drivers resigned the jobs  and  entered  into agreements even after the dispute was taken up by the Union. The present case is, therefore, not analogous to the case of 306 contract  labour  where  employment  of  labour  through   a contractor or middleman put the labour at a disadvantage  in collective bargaining and thus robbed labour of an important weapon in its armoury. The  matter of dispute no doubt referred in the second  part to ex-drivers but it referred generally to the new system in the  first.   The Tribunal was wrong in  thinking  that  the first part also referred to the ex-drivers (now  operators). On the whole, however, it is clear that the Company has  not done anything illegal.  A person must be considered free  to so arrange his business that he avoids a regulatory law  and its   penal   consequences  which  he   has,   without   the arrangement,  no proper means of obeying.  This, of  course, he  can  do only so long as he does not break  that  or  any other  law.  The Company has declared before us that  it  is quite prepared, if it was not already doing so, to apply and observe the provisions of the Motor Transport Workers Act in respect of its employees proper where such provisions can be made  applicable.   In view of this declaration  we  see  no reason  to interfere, because Parliament has not  chosen  to say  that  transport trucks will be run  only  through  paid employees  and not independent operators.  The appeal  fails but in the circumstances of the case we make no order as  to costs. G.C               Appeal dismissed. 307

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