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PETITIONER: V.   P. GOPALA RAO

       Vs.

RESPONDENT: PUBLIC PROSECUTOR, ANDHRA PRADESH

DATE OF JUDGMENT: 07/03/1969

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. SIKRI, S.M. HEGDE, K.S.

CITATION:  1970 AIR   66            1969 SCR  (3) 875  1969 SCC  (1) 704  CITATOR INFO :  R          1974 SC  37  (19)

ACT: Factories Act (63 of 1948), ss. 2(k)(i), 2(1)-’manufacturing process and ’workers’--Meaning of.

HEADNOTE: The   appellant  who  was  the  manager-cum-occupier  of   a company’s   establishment  at  Eluru  was   prosecuted   for operating a factory without obtaining a licence as  required by  the Factories Act, 1948 and the Andhra  Pradesh  Factory Rules,  1950.  The company had its main factory  at  Bombay. In  the company’s Eluru premises, sun-cured  tobacco  leaves purchased  from  local  producers  were  subjected  to   the processes of moistening, stripping and packing.  The tobacco leaves were moistened so that they could be handled  without breakage.   The  moistening was done for 10 to  14  days  by sprinkling  water on stacks of tobacco and shifting the  top and  bottom  layers.   The stalks  were  stripped  from  the leaves.  The Thukku (wholly spoilt) and Pagu (partly spoilt) leaves  were separated.  The leaves were tied up in  bundles and  stored  in the premises.  From time to time  they  were packed  in gunny bags and exported to the company’s  factory at Bombay where they were used for manufacturing cigarettes. The  appellant’s  defence was that it was not  necessary  to obtain   the   licence,  or  permission   because   (i)   no manufacturing  process was carried on in, the premises;  and (ii) the persons who worked in the premises were not workers as  they  were  employed by  independent  contractors.   The Magistrate  accepted the defence contentions, and  acquitted the appellant.  But the High Court convicted the  appellant. Dismissing the appeal, this, Court :- HELD : The company’s premises at Eluru were a factory. (i)Manufacturing processes as defined in s. 2 (k) (i) of the Factories  Act  were carried on in the premises.   Under  s. 2(k)  (i)  manufacturing  process  means  any  process   for ’making,   altering,   repairing   ornamenting,   finishing, packing, oiling, washing, cleaning, breaking up, demolishing or  otherwise treating or adapting any article or  substance with  a  view  to  its use,  sale,  transport,  delivery  or

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disposal." The definition is widely worded.  The  moistening was  an adaptation of the tobacco leaves.  The ’stalks  were stripped  by  breaking them up.  The leaves were  packed  by bundling  them  up and putting them into  gunny  bags.   The breaking up, the adaptation, and the packing of the  tobacco leaves  were  done with a view to their use  and  transport. All  these,  processes are manufacturing process  within  s. 2(k)(i). [878 B] State  of Kerr v. V. M. Patel, [1961] 1 L.L.J. 549, Sara  C. S.  Andre v. The State, I.L.R. [1965] 15 Rae. 117,  referred to. (ii)The persons employed were workers as defined in s. 2 (1) of the.  Factories Act.  More than 20 persons worked in  the premises regularly every day.  The was the positive evidence of P.W.s that the work of stripping stalks from the  tobacco leaves was done under the supervision," 876 of  the management.  There was no evidence to show that  the other  work  in  the  premises  was  not  done  under   like supervision.   The prosecution adduced prima facie  evidence showing that the relationship of master and servant  existed between  the workmen and the management.  The appellant  did not   produce  any  rebutting  evidence.   In   the   cross- examination  of  P.W. 1, it was suggested that  the  workmen were  employed by independent contracts, but the  suggestion was not borne out by the materials on the record. [881 BEE] Sri Chintaman Rao & Anr. v. State of Madhya Pradesh,  [1958] S.C.R.  1340,  1349, Short v. J. W. Henderson  Ltd.,  [1946] S.C. (H.L.) 24, 33-34, Dharangadhara Chemical Works v. State of  Saurashtra, [1957] S.C.R. 152, State of Kerala v. V.  M. Patel  L1961] 1 L.L.J. 549, Shankar Balaji Wage  v.State  of Maharashtra, [1962] 1 Lab.  L.J. 119, Bridhichand Sharma  v. First Civil Judge, Nagpur, [1961] 2 Lab.  L.J. 86, and D. C. Dewan  Mohinder Saheb & Sons v. United Bidi Workers’  Union, [1964] 2 L.L.J. 638, referred to.

JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 271 of 1968. Appeal  by special leave from the judgment and  order  dated July  3, 1968 of the Andhra Pradesh High Court  in  Criminal Appeal No. 883 of 1966. M.   C.  Setalvad, J. M. Mukhi and G. S. Rama Rao,  for  the appellant. P. Ram Reddy and A. V. V. Nair, for the respondent. The Judgment of the Court was delivered by Bachawat,  J.  M/s.  Golden Tobacco Co., Private  Ltd.  have their  head  office and main factory at  Bombay  where  they manufacture cigarettes.  The appellant is the  occupier-cum- manager of the company’s premises at Eluru in Andhra Pradesh where  sun-cured  country tobacco purchased from  the  local producers  is  collected,  processed  and  stored  and  then transported  to  the  company’s  factory  at  Bombay.    The prosecution  case  is  that the  aforesaid  premises  are  a factory.   The  appellant  was  prosecuted  and  tried   for contravention of 16(1) of the Factories Act 1948 and rules 3 and  5(3)  of  the Andhra Pradesh  Factory  Rules  1950  for operating the factory without obtaining a licence from  the Chief  Inspector  of Factories and his  previous  permission approving  the  plans  of  the  building.   The  appellant’s defence was that the premises did not constitute a  factory and  it was not necessary for him to obtain the  licence  or permission.   The  2nd  Addl.   Munsif  Magistrate,   Eluru,

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accepted the defence contention and acquitted the appellant. According  to  the  Magistrate  the  prosecution  failed  to establish  that  the premises were a factory  ,or  that  any manufacturing process was carried on or that any worker was working therein.  The Public Prosecutor filed an 87 7 appeal  against  the order.  The Andhra Pradesh  High  Court allowed the appeal, convicted the appellant under s. 92  for contravention of s. 6(1) and rules 3 and 5(3) and  sentenced him  to pay a fine of Rs. 50 under each count.  The  present appeal  has  been  filed by the  appellant  after  obtaining special leave. The  question  in  this  appeal  is  whether  the  company’s premises  at  Eluru  constitute  a  factory.   Section  2(m) defines  factory. Under s. 2(m) factory means  any  premises including  the  precincts thereof "Whereon  twenty  or  more workers  are  working, or I were working on any day  of  the preceding  twelve  months,  and  in  any  part  of  which  a manufacturing  process is being carried on with the  aid  of power,  or is ordinarily so carried on." It is not  disputed that more than 20 persons were working on the premises.  The points  in  issue  are  : (1)  whether  those  persons  were "workers";  and  (2) whether any manufacturing  process  was being carried on therein. For the purpose of proving the prosecution case the  respon- dent relied upon the following materials : (1) the testimony of  PW 1 A. Subbarao, the Assistant Inspector of  Factories; (2) his report of inspection of the premises on December 20, 1965; (Ex.  P1); (3) the show cause notice Ex.  P3, and  the appellant’s reply dated January 15, 1966; (Ex.  P5); (4) the testimony  of  PW 2 B. P. Chandrareddi, the  Provident  Fund Inspector; and (5) Six returns (Exs.  P7 to P12),  submitted by  the Eluru establishment, to the Regional Provident  Fund Commissioner. The materials on the record show that in the company’s Eluru premises,  sun-cured tobacco leaves bought from the  growers were subjected to the processes of moistening, stripping and packing.  The tobacco leaves were moistened so that they may be handled without breakage.  The moistening was done for 10 to  14  days by sprinkling water on stacks  of  tobacco  and shifting  the  top  and  bottom  layers.   The  stalks  were stripped  from the leaves.  The Thukku (wholly  spoilt)  and Pagu (partly spoilt) leaves were separated.  The leaves were tied up in bundles and stored in the premises.  From time to time  they  were packed in gunny bags and  exported  to  the company’s  factory  ;it  Bombay where  they  were  used  for manufacturing  cigarettes.  All these processes are  carried on  in the tobacco industry.  In  Encyclopaedia  Britannica, 1965  edition, Vol. 22, page 265 under the  heading"’tobacco industry"  it is stated : "After curing, only  during  humid perio ds  or in special moistening cellars can the  leaf  be handled without breakage.  It is removed from the stalks. or sticks  and graded according to colour, size, soundness  and other  recognizable  elements of quality.  It is  tied  into hands, or bundles, of 15 to 30 878 leaves  by means of a tobacco leaf Wrapped  securely  around the stem end of the leaves.  After grading the leaf is ready for the market." In  our opinion, manufacturing processes as defined in s.  2 (k) (i) were carried on in the premises.  Under s. 2 (k) (i) manufacturing   process  means  any  process  for   "making, altering,   ,repairing,  ornamenting,  finishing,   packing, oiling,  washing,  cleaning,  breaking  up,  demolishing  or otherwise treating or adapting any article or substance with

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a  view to its use, sale, transport, delivery or  disposal." The  definition  is widely worded.  The  moistening  was  an adaptation of the tobacco leaves.  The stalks were  stripped by  breaking  them up.  The leaves were packed  by  bundling them up and putting them into gunny bags.  The breaking  up, the  adaptation and the packing of the tobacco  leaves  were done  with  a view to their use and  transport.   All  these processes are manufacturing processes within s. 2 (k) (i). The reported cases are of little help in deciding whether  a particular process is a manufacturing process as defined  in s. 2 (k)  (i).   In  State of Kerala v. V. M.  Patel(1)  the Court held that the work  of garbling pepper  by  winnowing, cleaning, washing and    drying  it on concrete floor and  a similar process of curing ginger dipped in lime and laid out to  dry in a warehouse were manufacturing  processes.   With regard  to  the decision in Col. Sardar C. S. Angre  v.  The State (2 ) it is sufficient to say that the work of  sorting and  drying  potatoes and packing and re-packing  them  into bags was held not to be a manufacturing process as the  work was  done. for the purpose of cold storage only and not  for any of the purposes mentioned in s. 2 (k) (i). The  next question is whether 20 or. more persons worked  on the  premises.   On behalf of the appellant it  is  admitted that more than 20 persons work there, but his contention  is that  they are employed by independent contractors  and  are not  workers as defined in s. 2(1).  Section 2(1)  reads  :- "worker"  means a person employed, directly or  through  any agency,  whether  for  wages or not,  in  any  manufacturing process,  or  in  cleaning  any part  of  the  machinery  or premises  used for a manufacturing process, or in any  other kind   of  work  incidental  to,  or  connected  with,   the manufacturing  process, or the subject of the  manufacturing process;" In  Sri Chintaman Rao & anr. v. State of  Madhya  Pradesh($) the  Court gave a restricted meaning to the words  "directly or (1) [1961] 1 L.L.J. 549.  (2) I.L.R. [1965] 15 Rai. 117. (3) [1958] S.C.R. 1340, 1349, 879 through  an agency" in s. 2(1) and held that a worker was  a person  employed by the management and that there must be  a contract of service and a relationship of master and servant between them.  On the facts of that case the Court held that certain Sattedars were independent contractors and that they and  the coolies engaged by them for rolling bidis were  not "workers". It  is  a  question  of  fact  in  each  case  whether   the relationship  of  master  and  servant  exists  between  the management   and   the   workmen.    The   relationship   is characterized by contract of service between them.  In Short v. J. W. Henderson Limited(1) Lord Thankerton  recapitulated four  indicia  of  a  contract of  service.   As  stated  in Halsbury’s Laws of England, 3rd ed. vol. 25, p.   448,  Art. 872               "The  following  have been stated  to  be  the               indicia of a contract of service, namely,  (1)               the   master’s  power  of  selection  of   his               servant;  (2)  the payment of wages  or  other               remuneration;   (3)  the  master’s  right   to               control the method of doing the work; and  (4)               the master’s right of suspension or  dismissal               (Short v. J. and W. Henderson Ltd. (1946 S. C.               (H.  L.) 24, at pp. 33, 34, Could v.  Minister               of National Insurance, [1951] 1.    K. B.  731               at  P.  734; [1951] All E. R. 368 at  p.371;

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             Pauley  V. Kenaldo Ltd. [1953] 1 All.   E.  R.               226,  C. A., at p. 228); but modem  industrial               conditions have so affected the freedom of the               master that it may be necessary at some future               time to restate the indicia; e.g., heads  (1),               (2)  and (4) and probably also head  (3),  are               affected by statutory provisions (Short v.  J.               W. Henderson Ltd., supra at p. 34." In  Dharangadhara Chemical Works v. State  of  Saurashtra(2) the Court held that the critical test of the relationship of master and servant is the master’s right of  superintendence and control of the method of doing the work. , Applying this test  workmen  rolling bidis were found to be  employees  of independent  contractors and not workers within s. 2(1),  in State of Kerala v. Patel V. M.(3) and Shankar Balaji Waje v. State of Maharashtra(4) while they were found to be  workers within  S. 2(1) in Bridhichand Sharma v. First Civil  Judge, Nagpur(5)  and workmen within the meaning of s. 2(s) of  the Industrial Disputes Act in D. C. Dewan Mohinder Saheb & Sons v. United Bidi Workers’ Union(6). (1) [1946] S.C. (H.L.) 24, 33-34.(2) [1957] S.C.R. 152. (3) [1961] 1 L.L.J. 549. (4) [1962] 1 Lab. L.J. 119. (5) [1961] 2 Lab. L.J 86.     (6) [1964] 2 Lab. L. J. 638. 880 There  is  no  abstract a priori test of  the  work  control required  for establishing a contract of service.  In  Short v.  J.  N. Henderson Ltd.(1) Lord  Thankerton  quoting  Lord Justice  Clerics  dicta  in an earlier case  said  that  the principal requirement of a contract of service was the right of  the  master "in some reasonable sense"  to  control  the method  of doing the work.  As pointed out in  Bridhichand’s case(2)  the  fact  that the workmen have  to  work  in  the factory  imply  a  certain  amount  of  supervision  by  the management.   The Court held that the nature and  extent  of control  varied  in different industries and that  when  the operation  was  of  a simple nature  the  control  could  be exercised  at the end of the day by the method of  rejecting the bidis which did not come up to the proper standard. In  the present case, the prosecution relied on (1) Ex.   P7 to P12, (2) the testimony of PWI and (3) Exs.  P1 and P5  to prove  that the persons working at the company’s  premises’ at  Eluru were employed by the management.  Exhibits  P7  to P12 are monthly returns for July to December 1966  submitted by  the  company’s  Eluru  establishment  to  the   Regional Provident  Fund  Commissioner under paragraph 38(2)  of  the Employees   Provident  Fund  Scheme,  1952.    The   returns disclosed the number and names of about 200 persons employed every  month  and  the recoveries from  the  wages  and  the company’s contributions on account of the provident fund  of each employee.  At the top of each return it was stated that the employees were contract employees.  Section 2(f) of  the Employees  Provident  Fund Act 1952  defines  "employee"  as including  any person employed by or through  a  contractor. Paragraphs 20 and 30 of the Employees Provident Fund  Scheme 1952   shows   that  the  employer  is   required   to   pay contributions  in respect of all such employees.   Paragraph 26  of  the Scheme shows that employees  who  have  actually worked for not less than 12 months or less in the factory or establishment is entitled and required to become a member of the  Fund.   In  view of the fact that the  returns  are  in respect of all persons employed in the establishment either, by the management or by or through a contractor they are not of  much  help in determining whether  the  employees-  were employed   by  the  management  or  were  employed  by   the contractors.   They only show that in the months of July  to

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December   1966,  200  workers  had  been  working  in   the establishment for not less than 240 days. The  testimony of PWI, A. Subbarao, the Assistant  Inspector of  Factories shows that on December 20, 1965 he  found  120 workmen working in the premises.  He is corroborated by  his inspection  report  Ex.   PI.  In his  reply  Ex.   P-5  the appellant  did  not dispute the fact that 120  persons  were working there.  PW1 (1) (1946] S.C. (H.L.) 24. (2) (19611 2 L.L.J. 86. 881 found  workmen doing the work of stripping stalks  from  the tobacco leaves.  The work of stripping was being done  under the  supervision  of the management’s clerk  J.  Satyanarain Rao.  At the end of the day the clerk collected the stripped tobacco  and  noted the quantity of work done  in  the  work sheet allotted to the worker.  PW1 found some workmen  doing other work. The  onus of proving that the workmen were employed  by  the management  was  on  the prosecution.   We  think  that  the prosecution  has discharged this onus.  It is  not  disputed that  more than 20 persons worked in the premises  regularly every  day.  There is the positive evidence of PW1 that  the work  of stripping stalks from the tobacco leaves  was  done under  the  supervision  of the  management.   There  is  no evidence to show that the other work in the premises was not done  under the like supervision.  The  prosecution  adduced prima facie evidence showing that the relationship of master and servant existed between the work-men and the management. The  appellant, did not produce any rebutting evidence.   In the  cross-examination  of PW1, it was  suggested  that  the workmen  were employed by independent contractors,  but  the suggestion is not borne out by the materials on the  record. We hold that the persons employed are workers as defined  in s.  2(1).   The High Court rightly held that  the  company’s premises at Eluru were a factory. In  the Courts below the appellant produced (1) am order  of the Chief Inspector of Factories, Madras and (2) a letter of Superintendent  of  Central Excise  I.D.O.  Vijayavada.  Mr. Setalvad  conceded,  and in our opinion rightly  that  these documents  throw  no light on the question whether  in  1966 premises were a factory within the meaningof  s.  2  (m). We,therefore say nothing more with regard tothese documents      In the result, the appeal is dismissed. Y.P. Appeal dismissed. 882