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CASE NO.: Appeal (civil)  2429 of 2003

PETITIONER: U.P. State Electricity Board.                                    

RESPONDENT: Shiv Mohan Singh & Anr.                                  

DATE OF JUDGMENT: 01/10/2004

BENCH: S.B. Sinha

JUDGMENT: J U D G M E N T W I T H CIVIL  APPEAL NOS.  8383 TO 8386,   7005-06,    9231 TO  9234  &  9679 TO  9681 & 9683 OF 2003 AND   C.A. NOS. 14,  122, 1965, 2193 OF 2004      

S.B. SINHA, J  :

       Section 2(z) of the U.P. Industrial Disputes Act, 1947 defines  ’Workman’ to mean "any person (including an apprentice) employed in  any industry to do any skilled or unskilled, manual, supervisory, technical  or clerical work for hire or reward, whether the terms of employment be  express or implied, and for the purposes of any proceeding under this Act  in relation to an industrial dispute, includes any such person who has been  dismissed, discharged or retrenched in connection with, or as a  consequence of, that dispute, or whose dismissal, discharge or  retrenchment has led to that dispute,\005."  A workman includes apprentice  in terms of the said provision.   

       U.P. Industrial Disputes Act, 1947,  is a general law.  The  Parliament enacted Apprentices Act, 1961 (for short ’the said Act’) which  is a special law.  It deals with the regulation and control of training of  apprentices and for matters connected therewith.   

       The special statute, therefore, shall prevail over the general statute  having regard to the maxim "generalia specialibus non derogant [See  Talcher Municipality Vs. Talcher Regulated Mkt. Committee & Anr.,  [(2004)  6 SCC 178].

       The said Act is a complete code in itself.  An apprentice, as defined  in Section 2(aa) of the said Act, is a person who enters into a contract of  apprenticeship for the purpose of undergoing apprenticeship training in a  designated trade.  Entering into a contract of apprenticeship, therefore, is  the basis for attracting the provisions of the said Act.             The primal question which arises for consideration is as to whether a  person who is an apprentice within the meaning of Section 2(aa) of the said  Act would become a workman and, consequently, would be entitled to the  benefits of various labour laws in the event of breaches of the terms of the  said contract as also non-registration thereof.

       It is neither in doubt nor in dispute that an ’apprentice’ within the  meaning of the provisions of the said Act would per se not be a workman  within the meaning of Section 2(z) of the U.P. Industrial Disputes Act.  It  is further not in dispute that in terms of Section 18 of the Act the

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apprentices being trainees and not workers would not be entitled to the  benefits of provisions of any labour laws.

       Section 4(1) of the said Act provides that a contract of  apprenticeship will have to be executed by the employers and the  apprentice before the apprenticeship training begins.  Such training  commences as soon as the said contract is executed.  Sub-sections (4) and  (5) of Section 4 of the said Act, however, provide that every contract of  apprenticeship shall be sent to the Apprenticeship Advisor for registration  within the period prescribed therefor whereupon, he would register the  same if he is satisfied that they meet the qualifications provided in Section  3 thereof.   

       It is relevant to notice at this juncture that prior to amendment of the  said Act in the year 1973 by Act No. 27 of 1973, Section 4 postulated that  apprenticeship training would not commence till a contract of  apprenticeship was entered into by and between the apprentice and the  employer and the same was registered with the Apprenticeship Advisor.   The provision of Section 4 of the said Act as it existed prior to 1973  assumes importance for the purpose of interpretation thereof.

       It is furthermore not in dispute that the said amendment was brought  about with a view to avoid delay in commencement of training of the  apprentices.   

       Mr. R. Venkataramani, learned senior counsel appearing on behalf  of the Respondents would suggest that despite such amendment the  importance of the registration of the contract of apprenticeship cannot be  held to be diluted having regard to the expressions used therein which are  imperative in character. The learned counsel is not entirely correct.

       Ordinarily, although the word "shall" is considered to be imperative  in nature but it has to be interpreted as directory if the context or the  intention otherwise demands.  (See M/s. Sainik Motors, Jodhpur and  others, Vs. State of Rajasthan, AIR 1961 SC 1480, para 12)  

       It is important to note that in Crawford on Statutory Construction at  page 539, it is stated :

"271. Miscellaneous Implied Exceptions from the  Requirements of  Mandatory Statutes, In General.-Even  where a statute is clearly mandatory or prohibitory, yet, in  many instances, the courts will regard certain conduct  beyond the prohibition of the statute through the use of  various devices or principles.  Most, if not all of these  devices find their jurisdiction in considerations of justice.   It is a well known fact that often to enforce the law to its  letter produces manifest injustice, for frequently equitable  and humane considerations, and other considerations of a  closely related nature, would seem to be of a sufficient  caliber to excuse or justify a technical violation of the   law."            

       It is no doubt true that the Apprenticeship Advisor has certain  statutory duties and functions as contained in Sections 4(5), 5, 7, 8, 9, 10,  15 and 29.  It is furthermore true that Sections 19 and 20 provide for  certain obligations upon the employer to obtain approval of the  Apprenticeship Advisor and forward the records to the concerned  authorities.         Similarly, the rules framed under Section 37 of the Act confer  certain benefits upon the apprentices.  If an employer fails to perform his  statutory duties or deprives an apprentice from the benefits to which he is  entitled to, the Apprenticeship Advisor can file an appropriate complaint  before a competent court of law.  In terms of Section 31 of the Act the only  penalty which can be imposed upon the employer is fine which shall not be

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less than one thousand rupees but may extend to three thousand rupees.   Violation of the provisions of the Act, therefore, does not result in  imprisonment.   

       A question which also arises for consideration is as to whether  Section 18 of the said Act must be strictly construed.

       If a contract of apprenticeship is entered into; the violation of the  terms and conditions thereof, in our opinion, although may lead the penal  consequences but the same would not render the contract of apprenticeship  void or illegal.

       In the event, the Apprenticeship Advisor obtains informations about  such violations, he is entitled to take suitable steps in that behalf under the  Act or the rules but he has not been conferred with any power to declare  such contract of apprenticeship to be ipso facto void ab initio. Section 20  also provides resolution of disputes between an apprentice and the  employer arising out of the contract of apprenticeship which shall be  referred to the Apprenticeship Advisor for decision.  While resolving a  conflict by and between an employer and an apprentice under Section 20 of  the said Act, indisputably he can issue directions which the employer will  have to comply with and on his failure to do so, he would run the risk of  being prosecuted in terms of Section 30 of the Act, but even in such a  situation he cannot bring an end to the contract.  The contract of  apprenticeship like any other contract can be brought to an end by the  parties thereto.

       Once a contract of apprenticeship commences, the same cannot be  brought to an end except in accordance with law.  By reason of non- registration of the contract of apprenticeship, the same does not become a  nullity.  If it is to be held that by reason of non-registration of such contract  of apprenticeship the contract itself comes to an end, it would be  detrimental to the interest of the apprentices, which would frustrate the  object of the Act.    

       The definition of ’Apprentice’ nowhere states that an apprentice  with a view to obtain the benefits of the said Act must also be registered.   Section 18 of the said Act says that an apprentice shall not be a worker.  It  does not say that an unregistered apprentice shall be a worker.

       Only because the  expression "shall" has been employed in sub- section (4) of Section 4, the same may not be held to be imperative in  character having regard to the fact that not only, as noticed hereinbefore, a  contract of apprenticeship commences but also in view of the fact that an  application for registration of apprenticeship contract is required to be  made within a period of three months in terms of Rule 4B of the  Apprenticeship Rules, 1962.  The Act nowhere provides for the  consequences of non-registration.

It is not in dispute that the list of  apprentices used to be sent by the  Apprenticeship Adviser himself and, thus, presumably the preliminary  scrutiny in that regard had been made by the said authority.  If in a given  case, as noticed hereinbefore, the employer fails to get the contract of   apprenticeship registered and/or fails to carry on his obligations in terms of  Section 11 of the Act, he faces penal consequences in terms of Section 31  of the Act.  The employer, furthermore, is liable to pay compensation for  termination of apprenticeship as would appear from Rule 6 of  the  Apprenticeship Rules, 1962, which reads thus : "Compensation for termination of apprenticeship.- Whereas the contract of apprenticeship is  terminated through failure on the part of any  employer in carrying out the terms and conditions  thereof, such employer shall  be liable to pay the  apprentice compensation of an amount equivalent  to is three months’ last drawn stipend; and when

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the said termination is due to failure on the part of  an apprentice in the above  manner, then a training  cost of an amount equivalent to his three months  last drawn stipend shall be made recoverable from  such apprentice or from his guardian in case he is  minor."

No provision of the Act or the rules framed thereunder was brought  to our notice to show that non-registration of the contract of apprenticeship  or violation and/or neglect on the part of the employer to comply with the  other provisions of the Act it would result in invalidation of the contract.   An apprentice remains an apprentice having regard to the definition  contained in Section 2(aa) of the Act and continues to work in the said  capacity.  His status does not change to that of a workman only because the  contract has not been registered or the employer has not carried out his  obligations thereunder.  If such a  construction  is placed, an apprentice  may be held to have ceased to be an apprentice if he himself defaults in  performing his obligations under the contract.  

       Recently, in Canbank Financial Services Ltd. Vs. The Custodian and  Ors.   [2004 (7) SCALE  495] this Bench has held that even if a benami  transaction is prohibited the same per se would not render the transaction  void ab initio and illegal.

It is now well-settled principle of law that if the language used in a  statute  is capable of bearing more than one construction, the true meaning  thereof should be selected having regard to the consequences resulting  from adopting the alternative constructions.  A construction resulting in  hardship, non-fulfillment of the purpose for which statute has been brought  in force should be rejected and should be given that construction which  avoids such results.   

       Sub-section (4) of Section 4 of the said Act can also be held to be  directory having regard to the rule laid down in Heydon’s case. [(1584) 3  Co. Rep. 7a]. [See Ashok Leyland Ltd. Vs. State of Tamil Nadu & Anr.,  (2004) 3 SCC 1 and Ameer Trading Corporation Ltd. vs. Shapoorji Data  Processing Ltd. (2004) 1 SCC 702].   

The mischief rule enables the court to take into consideration the  following four factors for construing an Act:

(i)     What was the law before the making of the Act,  (ii)    What was the mischief or defect for which the law did not  provide, (iii)   What is the remedy that the Act has provided, and (iv)    What is the reason of the remedy.

       The rule then directs that the courts must adopt that construction  which "shall suppress the mischief and advance the remedy".          Prior to 1973, the provision for registration was mandatory in  character.  Only having regard to the delay which has occasioned for  registration of contract of apprenticeship, the said amendment had been  brought about; pursuant whereto or in furtherance whereof the contract of  apprenticeship commences.  If the purpose of amendment was to make the  contract workable even without registration, we fail to see any reason as to  why the provision should be construed as imperative in character so as to  render a contract of apprenticeship a nullity which is possible to be avoided  and the object thereof can be achieved by taking recourse to the penal  provisions.   

       It may be true that rules framed under Section 37 of the Act are  required to be laid before both Houses of Parliament after formulation;  but  even such a provision is directory in nature.

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       It is not a case where any of the apprentices repudiated the contract.   No argument has also been advanced to the effect that the contract of  apprenticeship was merely a camouflage or a ruse so as to establish that in  effect and substance, while appointing a person as an apprentice, the  employer has been taking work from him malafide or with a view to  deprive him from the benefits of the labour legislations, nor any material in  respect thereof had been brought on records.   

       Whether a relationship of an employer and workman or an employer  and an apprenticeship had been brought about, is essentially a question of  fact.  The Court while determining such a dispute must consider the factual  matrix involved therein in the light of the provisions of the said Act.  Once  it is held that a contract of apprenticeship entered into by and between the  employer and the workman is a genuine one and not a camouflage or a  ruse, a presumption would arise that the concerned person is not a  workman.

       It is one thing to say that a contract is illegal being opposed to public  policy so as to render the same void in terms of Section 23 of the Indian  Contract Act but it is another thing to say that by reason of breaches of the  terms and conditions thereof by one of the parties it becomes voidable at  the instance of the other party to the contract.  If a contract is valid in law  the breaches thereof would not render it invalid but the same may only  enable a party thereto, who had suffered by reason of such breach, to avoid  the contract.  Unless the terms and conditions of a contract are avoided by  a party thereto the contract remains valid and all consequences flowing  therefrom would enure to the benefit of the parties thereto.

       Mr. Venkataramani has relied upon a decision of the Court of  Appeals in F.C. Shepherd & Co. Ltd. Vs. Jerrom [(1986) 3 All ER 589]  wherein it is stated:

"If the party against whom frustration is asserted  can by way of answer rely on his own misconduct,  injustice results\005."

       Ex facie the said decision has no application in the present case.   The plea of frustration was not pleaded or established.  It is one thing to  specify as what would be the legal consequences of a breach of a contract  but it is another thing to say that despite subsistence of a valid contract, the  statutory benefits thereof shall not enure to the parties thereto.  In absence  of any specific provision in the statute, we are unable to accede to the  submissions of the learned counsel to the effect that in the event of  commission of a breach by the employer the contract of apprenticeship  shall become a contract of employment.  Such a novation of contract is not  contemplated in law.

       With a view to become a workman, not only the apprentice has to  show that he comes within the purview of the definition of the term  ’workman’ as contained in Section 2(z) of the U.P. Industrial Disputes Act,  1947 but he must further plead and establish that his job is such which  fulfills the requirements of the said term.  [See Mukesh K. Tripathi Vs. Sr.  Divn. Manager, LIC & Ors. \026 JT 2004 (7) SC 232 =  2004 (7) SCALE  442].

In Bruton Vs. London and Quadrant Housing Trust, [1999] 3 All ER  481, a contract of tenancy was held to be binding upon the parties even  though the grantor lacked the necessary power.  A housing association  which itself was a licensee granted a licence which in view of the decision  in Street Vs. Mountford, [1985] AC 809 was treated to be a tenancy even  though the housing association, being themselves mere licensees had no  power to grant a legal tenancy valid against all the world.  It is, therefore,  necessary to ascertain as to how the parties to the contract thought

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thereabout.  Ordinarily, it is impermissible in law for a party to the contract  of apprenticeship to allow it to be worked out and then contend that it was  a contract of employment.

       In The Employees’ State Insurance Corporation and Another vs. The  Tata Engineering & Locomotive Co. Ltd. and Another \026 (1975) 2 SCC  835, it was held :

       "The concept of apprenticeship is, therefore,  fairly known and has now been clearly recognized  in the Apprentices Act.  Apart from that, as we  have noticed earlier, the terms and conditions  under which these apprentices are engaged do 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..."  

       Decisions are galore to show that despite a contract of  apprenticeship coming to an end, the concerned workman must fulfill the  eligibility criteria of appointment.  (See Rajendra Singh and Others Vs.  U.P. State Electricity Board, Shakti Bhawan, Lucknow and Others, 2000  (86) FLR 155, Sri Chittaranjan Das Vs. Durgapore Project Limited & Ors.,  1995 (2) CLJ 388, Babulal and Others Vs. Rajasthan State Road Transport  Corporation and another, 2000 (84) FLR 847 and Mitrangshu Roy  Choudhary Vs. Union of India & Others, (1999) 3 SCC 649)          A Division Bench of the Gujarat High Court in  Ballkhan Doskhan  Joya vs. Gujarat Electricity Board [2002 (92) FLR 914], whereupon Mr.  Venkataramani,  relied, observed :          "\005The Central Legislature was, therefore, fully alive to  the situation that an apprentice, undergoing an  apprenticeship training under an apprenticeship contract  duly registered, would be only a ’trainee’ and not a  ’workman’, to which other laws in respect of labour shall  not apply.  Therefore, in including, in the definition of  ’workman’, ’apprentice’ as well, the legislative intention  appears to be obvious that such apprentices, who are not  undergoing apprenticeship training under a duly  registered ’apprenticeship contract, envisaged by the  Apprentices Act, and to whom provisions of Section 18  of the said Act are not applicable, would, nonetheless, be  included in the definition of ’workman’ under the I.D.  Act and would get all the protection of labour laws.  The  learned single Judge may be right in his reasoning that  even after non-registration of the contract of  apprenticeship, the appellant would only be a ’trainee’, or  an ’apprentice’, as intended by the parties and he would  not be an ’employee’ or a ’workman’, within the  meaning of the Apprentices Act.  Even if, as stated by the  learned single Judge, the appellant, as a result of non- registration of contract of apprenticeship, is deemed to be  a trainee or an ’apprentice’, he would, nonetheless, be  covered within the definition of ’workman’ under Section  2(s) of the I.D. Act."  

The ratio enunciated in the said decision appears to be self- contradictory.  An apprentice cannot both be an apprentice and a workman  under the 1947 Act.

       Similarly, the observations made by the Patna High Court in Ram  Dular Paswan and Others vs. P.O. Labour Court, Bokaro Steel City and  Others   [1998 (80) FLR 399] to the effect that

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       "The Apprentices Act does not deal with the  investigation and settlement of industrial disputes  between the employer and the workmen.  Therefore, so  far as the settlement of the industrial disputes is  concerned, the I.D. Act will prevail over the Apprentices  Act.  If the employer takes the kind of work mentioned in  Section 2(s) of the I.D. Act from the apprentice, the  dispute between them has to be settled under and in  accordance with the said Act.  But if the apprentice does  not perform such work, the I.D. Act will not apply to  him.  The line of demarcation between the apprentice and  the workman is very clear.  If and when a question as to  whether an apprentice is really an apprentice or is a  workman wearing the mask of an apprentice, is raised   the appropriate authority/Labour Court will have to apply  mind to the nature of his work.  The veil has to be lifted  in order to find out the reality.  But such a question  cannot be decided merely on the basis of apprenticeship  contract or on the basis of the label, which a person  wears."

does not appear to be correct, particularly for the reasons that the High  Court has failed to consider that Section 20 of the 1961 Act provides for  settlement of disputes.  Furthermore, as observed hereinbefore, such a  contention has to be specifically pleaded and established.

Moreover in terms of Section 22 of the Act, the employer has no  statutory liability to give employment to an apprentice.

       We are, therefore, are of the considered  view that non-registration  of the contract of apprenticeship would not render the same nugatory.           Subject to the foregoing supplemental reasons, I respectfully concur  with the judgment of Mathur, J.