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CASE NO.: Appeal (civil)  1351-53 of 2002

PETITIONER: Workmen of Nilgiri Coop. Mkt.Society Ltd.                                                    

RESPONDENT: State of Tamil Nadu & Ors.                           

DATE OF JUDGMENT: 05/02/2004

BENCH: Y.K. Sabharwal & S.B. Sinha.

JUDGMENT: JUDGMENT

S.B. SINHA, J :

BACKGROUND FACTS:

       ’Nilgiris’ is a hill district in the State of Tamil  Nadu.  Mettupalayam is a small town situate in Nilgiris.   The villagers of the surrounding villages for their  livelihood depend on growing of vegetables and tea.  With a  view to see that the small vegetable growers are not  exploited by the vegetable merchants, a society  known as  ’Nilgiris Cooperative Marketing Society Limited’ (Society  for short) was formed as far back as in 1935 with only 116  members.  

       The Society, however, grew in course of time and at  present it has about 22000 members.  The memberships of the  Society are of two categories.  In the first 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 used to force them to sell that at a very low price  or would make them wait for days so that the vegetables  become useless. The majority of the members belong to  ’Badaga’ community which had been declared to be a backward  class by the Government of Tamil Nadu.  Mettupalayam is a

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centre  for potatoes and vegetables trade.

The Society has two big marketing yards at  Mettupalayam.   In the said yards, auction of vegetables  takes place.  Infrastructure therefor such as offices,  godowns yards, weighing machines etc. are provided by the  Society.  There are two separate yards with pucca godowns,  one for potatoes and another for vegetables.  The primary  members of the Society bring their agricultural produce to  the yards by hired lorries or trucks. They remain present  till the agricultural produce brought by them is auction-  sold and they receive the sale price.  The number of primary  members visiting the marketing yards of the Society,  depending upon the season varies from 100 to 200 members per  day. The number of merchants coming to purchase these  commodities also varies from 30 to 100.  The Society  provides for accommodation to the members on a nominal rent.  It also provides dormitory type of accommodation free of  charge.  The months of July to October of year are said to  be a peak season.  Whereas during the peak season about 100  lorries arrive everyday; during the ’off season’ average  number of lorries arriving at the yard  would be around 10.   For the purpose of bringing potatoes gunny bags are supplied  by the Society free of cost.   

The following main jobs are carried out in the said  premises:   

i)      unloading of the gunny bags containing  potatoes from the lorries;

ii)     unpacking the gunny bags and keeping the  potatoes in lots inside the godown;

iii)    grading the potatoes into different sorts;

iv)     weighing the  auctioned potatoes in 45 kgs.  and packing them into gunny bags brought by  the merchants;

v)      stitching the gunny bags and loading them  into lorries hired by the merchants.

                                 Throughout the process, lots brought by the primary  members are kept separate  with clear demarcation as regard  the ownership theref.   Sometimes small farmers unload the  bags of potatoes themselves; some of them bring their  potatoes upon proper grading in their farms and place it in  the yard in a sorted condition.  However, if proper grading  is not done by the vegetable 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.  

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       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  concerned third parties.  Payment therefor is to be made by  the persons engaging them to the said third parties  (contractors).  However, sometimes as the producer members  may not have enough money with them, the Society makes the  payment on their behalf by way of advance, wherefor  allegedly written authority is obtained.  The Society  further contends that the farmers and merchants are at  liberty to engage their own men for doing these items of  work and some of them do the work themselves.   There is no  obligation on the part of the member to bring his produce to  the Society’s yards. He is free to sell is produce in any  manner thought it.

It is not in dispute that the Society does not maintain  any attendance register or wages register. The third parties   are free to engage men of their own choice and no working  hours are fixed or insisted. Any person normally doing the  job may come on any day to work. The third parties engage  more number of persons during peak season and during lean  season less number of persons are engaged. The porters and  graders may take up any other job.

DISPUTE BETWEEN THE PARTIES:

        The appellant-Union, however, on or about 19.4. 1982  served a charter of demands upon the Society claiming, inter  alia, permanency in service and other benefits.  A strike  notice was also given wherefor a conciliation proceeding was  initiated.  The Society thereafter filed a suit being O.S.  No.2293 of 1982.  A writ petition was filed before this  Court being W.P. No.23 of 1983 praying for minimum  facilities like drinking water, toilet, rest-room, maternity  benefits etc.  The Society is said to have declared a lock  out and a conciliation proceeding thereupon started again.   The writ petition was thereafter withdrawn. The conciliation  proceeding ended in a failure.   

REFERENCE:

On or about 19.5.1984, the State of Tamil Nadu issued a  notification in exercise of its power under Section 10(1)(d)  of the Industrial  Disputes  Act, 1947 referring the  following  disputes for adjudication of the Industrial  Tribunal :

"i) Whether the non-employment of the  workmen referred in the reference  is justified ?

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ii)     To what relief ?"

PROCEEDINGS BEFORE THE TRIBUNAL:

In the aforementioned industrial reference before the  Tribunal, witnesses were examined on behalf of the parties.  Documents were also produced.  By reason of an award dated  5.9.1989, the Tribunal opined that there 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  Society, a writ petition was filed in the Madras High Court  which was marked as W.P. No.9333 of 1985 praying therein for  issuance of writ of mandamus directing the State to prohibit  introduction of contract labour system in the Society.  Another writ petition being W.P. No.9334 of 1985 was also  filed wherein the petitioners prayed for issuance of a writ  of or in the nature of mandamus directing the Society not to  engage contract labour purported to be on the ground that  the same is contrary to Sections 25-O and 25-T of the  Industrial Disputes Act and Sections 7 and 12 of the  Contract Labour (Regulation and Abolition) Act, 1970.    Certain interim orders were passed by the High Court and  some appeals were also filed and the matter came up before  this Court also, being Civil Appeal No.5381 of 1985 on or  about 26.9.1986 wherein this Court passed the following  order :                  "On behalf of the Marketing Society,  Dr. Y.S. Chitale, learned Counsel

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assures us that hereafter workmen will  not be permitted to be employed by  contractors to work within the yard of  the Society.  He also assures us that  the 407 workers previously employed may  come back and work in the yard without  any objection.  It is open to any worker  to go and seek employment, but  contractors will be excluded.  The case  now pending before Industrial Tribunal  may be disposed of expeditiously.  Civil  Misc. Petition is disposed of  accordingly."    

By another interim order passed in Writ Petition  No.19310 and 19311 of 1986, a  learned Single Judge of the  Madras High Court directed :

"The third respondent shall give  employment directly to all the 407  workers.  If, after providing employment  to these 407 workers, any more lands are  required, then the management is free to  give employment to such of these  persons.  The Collector of Coimbatore  will see to it that the order of the  Supreme Court extracted above is  implemented in its true spirit."   

In an appeal carried out by the Society being W.A. No.  1372 of 1986, the High Court of Madras issued the following  directions :

"Apparently it appears to us that the  order made by the learned single Judge  runs counter to the order of the Supreme  Court dated 4.12.1985.  Therefore, the  order of the learned Single Judge is  stayed.  Since the order which is in  controversy is that of the Supreme Court,  this is eminently a fit case where the  parties are at liberty to get necessary  clarification 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."

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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  top of the list before the learned  Single Judge, who hears the date-fixed  writ petitions."                 

JUDGMENT OF THE HIGH COURT:

All the three writ petitions came up for hearing before  a learned Single Judge of the Madras High Court.  The said  writ petitions were dismissed observing :

"The writ petitions are liable to be  dismissed.  However, having regard to  the fact that the petitioner has made an  application to the State Government as  early as on 9.8.1985 as seen from  paragraph 13 of the affidavit to  prohibit the employment of contract  labour under section 10 of the Act for  loading, unloading and other activities  of the 3rd respondent society, a  reference to the counter affidavit filed  by the government is necessary.   Paragraphs 12 and 13 of the counter  affidavit are extracted :

       "It submit that the averments in  paragraph 13 are not correct.  The  Union has applied to the State  Advisory Contract Labour Board to  issue directions to the Management  prohibiting the employment of  contract labour under Sec.10 of the  Act. I submit that after consultation  with State Advisory Contract Labour  Board the Government will take a  decision in this matter."

                This counter affidavit has been sworn to  on 5th December, 1986.  Even though  there was no order pending these W.Ps.

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Prohibiting the Government from passing  orders under Sec. 10 of the Act, the  Government has not taken any action in  spite of the averments contained in  paragraphs 12 and 13 of the counter  affidavits.  It is for the Government to  pass orders under Sec. 10 of the Act as  expeditiously as possible, one way or  other."          

Three letters patent appeals were preferred by the  appellant herein being aggrieved by and dissatisfied  therewith.  By reason of the impugned judgment the said  appeals were dismissed.    

The appellant is, thus, before us in these appeals.   Civil Appeal No.1351-52 arise out of Writ Petition No.109  and 110 of 1989 wherein certain interim orders were passed.   Civil Appeal No.1353 of 2001 is the main appeal which arises  out of an award of the Industrial Tribunal.

        SUBMISSIONS:

Mr. N.G.R. Prasad, learned counsel appearing on behalf  of the appellant would take us through the evidences adduced  by the parties both oral and documentary as also the  findings of the Industrial Tribunal and would submit that it  and consequently the High Court committed a manifest error:

(i)     in passing the impugned award 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  irresistible inference that the concerned workmen are  employees of the society.   

       Mr. Prasad would argue that the principal question  which was required to be asked was for whom do the workmen  work and to whom they look up for their wages.  It was  submitted that the relationship between the Society and the  workmen was required to be determined having regard to the  following fact:

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(i)     work is being carried out in the premises  belonging to the society; (ii)    wages are paid by the society; (iii)   from Ex. W7 and W8, it would appear, that the  society exercises control over the workmen; (iv)    on festival occasions, the workmen look to the  society for gift.   

       It was contended that the Tribunal and the High Court  overlooked the evidences on record as regard nature of the  job performed by the workmen as has been admitted by MW1 and  furthermore no finding has been arrived at to the effect  that the so-called third parties are contractors.

       The learned counsel would submit that the Tribunal has  committed a manifest error also in holding that only because  the society takes commission from its members, it cannot be  an employer.  It was contended that for determining the  question as regard existence of the relationship of employer  and employee what is required to be considered is as to  whether the concerned workmen are part and parcel of the  organisation.  Economic reality, the learned counsel would  contend, has also some role to play.   

       The learned counsel would urge that this Court in a  large number of cases lifted the veil so as to come to the  conclusion that the engagement of third parties or  contractors may be a camouflage and there existed a  relationship of employer and employee.  Determination of  such relationship, Mr. Prasad would aruge, do not depend  upon the statutory liability of the employer as even in  relation to non-statutory canteens this Court has held that  the so-called workmen of the contractors are in effect and  substance the workmen of the principal employer.

       Mr. Sudarsh Menon, learned counsel appearing on behalf  of the respondent society, on the other hand, would submit  that the society is a service society and having regard to  the fact that the members are both growers and merchants and  as the porters and the graders are appointed by both growers  and merchants independently, it cannot be said that the  society is the employer of the concerned workmen.  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

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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  Dharangadhara Chemical Works Ltd. Vs. State of Saurashtra  and others [1957] 1 L.L.J. 477 : AIR 1957 SC 264 observed  that supervision and control test is the prima facie test  for determining the relationship of employment.  The nature  or extent of control required to establish such relationship  would vary from business to business and, thus, cannot be  given a precise definition.  The nature of business for the  said purpose is also a relevant factor.  Instances are  galore there where having regard to conflict in decisions in  relation to the similar set of facts, the Parliament has to  intervene as, for example, in the case of workers rolling  bidis.

       In a given case it may not be possible to infer that a  relationship of employer and employee has come into being  only because some persons had been more or less continuously  working in a particular premises inasmuch as even in  relation thereto the actual nature of work done by them  coupled with other circumstances would have a role to play.   

       In V.P. Gopala Rao Vs. Public Prosecutor, Andhra  Pradesh [1970] 2 L.L.J. 59 : AIR 1970 SC 66, this Court said  that it is a question of fact in each case whether the  relationship of master and servant exists between the  management and the workmen and there is no abstract a priori  test of the work control required for establishing the  control of service.  A brief resume of the development of  law in this point was necessary only for the purpose of  showing that it would not be prudent to search for a formula  in the nature of a single test for determining the vexed  question.   

RELEVANT FACTORS:

       The control test and the organization test, therefore,  are not the only factors which can be said to decisive.   With a view of elicit the answer, the court is required to  consider several factors which would have a bearing on the  result : (a) who is appointing authority; (b) who is the pay  master; (c) who can dismiss; (d) how long alternative  service lasts; e) the extent of control and supervision; (f)  the nature of the job, e.g. whether, it is professional or  skilled work; (g) nature of establishment; (h) the right to  reject.

       With a view to find out reasonable solution in a  problematic case of this nature, what is needed is an  integrated approach meaning thereby integration of the  relevant tests wherefor it may be necessary to examine as to  whether the workman concerned was fully integrated into the  employer’s concern meaning thereby independent of the  concern although attached therewith to some extent.           

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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 and  perhaps, in some cases, a decisive one.   In the search for a substitute test,  ideas have been put forward of an  ’integration’ test, i.e. whether the  person was fully integrated into the  employer’s concern, or remained apart  from and independent of it.  Once again,  this is not now viewed as a sufficient  test in itself, but rather as a  potential factor (which may be useful in  allowing a court to take a wider and  more realistic view).  The modern  approach has been to abandon the search  for a single test, and instead to take a  multiple or ’pragmatic’ approach,  weighing upon all the factors for and  against a contract of employment and  determining on which side the scales  eventually settle.  Factors which are  usually of importance are as follows -  the power to select and dismiss, the  direct payment of some form of  remuneration, deduction of PAYE and  national insurance contributions, the  organisation of the workplace, the  supply of tools and materials (though  there can still be a labour-only sub- contract) and the economic realities (in  particular who bears the risk of loss  and has the chance of profit and whether  the employee could be said to be ’in  business on his own account’).  A  further development in the recent case  law (particularly concerning atypical  employments) has been the idea of  ’mutuality of obligations’ as a possible

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factor, i.e. whether the course of  dealings between the parties  demonstrates sufficient such mutuality  for there to be an overall employment  relationship."

(See also Ram Singh and Others Vs. Union Territory,  Chandigarh & Ors. JT 2003 (8) SC 345)

       In Mersey Docks and Harbour Board Vs. Coggins &  Griffith Liverpool Ltd. [1947] A.C. 1, Lord Porter pointed  out:

"Many factors have a bearing on the  result.  Who is paymaster, who can  dismiss, how long the alternative  service lasts, what machinery is  employed, have all to be kept in mind.   The expressions used in any individual  case must always be considered in regard  to the subject-matter under discussion  but amongst the many tests suggested I  think that the most satisfactory, by  which to ascertain who is the employer  at any particular time is to ask who is  entitled to tell the employee the way in  which he is to do the work upon which he  is engaged."

       If the provisions of the contract as a whole are  inconsistent with its being a contract of service,  it will  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

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distribution to members or members  of the affiliated cooperative  societies or to other cooperative  societies;

c)      To arrange for sale of potatoes,  other vegetables and fruits of the  members and the members of  affiliated cooperative societies to  their best advantage;

d)      To advance loans to members and  members of affiliated cooperative  societies on the pledge of their  agricultural produce and for the  purchase of manure to deserving  members of primary societies  provided the loans are given to  such members through the societies  concerned;

e)      To act as agents of the cooperative  institutions in marketing their  produce;

f)      To act as agents for the joint  purchase of the domestic and other  requirements of its members and  members of affiliated cooperative  societies;

g)      To act as agent of those members  which are affiliated societies in  the matter of disbursing and  receiving loans sanctioned to  individual members of such  societies;

h)      To act as the agent of those  members which are affiliated  societies in the matter of  receiving for safe custody in its  godowns or elsewhere the produce  pledged to such societies by their  individual members;

i)      To propagate and supply pure seeds;

j)      To own and hire lorries whenever  necessary for the use of the  members, members of affiliated  cooperative societies and other  public for hire, for the transport  of manure, potatoes, other  vegetables, fruits, implements  etc.;

k)      To disseminate among the members  and members of the affiliated  cooperative societies a knowledge  of the latest improvement in  agriculture by arranging actual  demonstration carried out by each  individual member in his own land  according to the advice of the

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agricultural department;

l)      To process raw material belonging  to the members and members of  affiliated cooperative societies or  purchased by the society; and

m)      To arrange for packing and grading  of agricultural produce of the  members and members of the  affiliated cooperative societies.

n)      Economically weak and small farmers  having no holding power, thus,  subjected to exploitation of the  trading community are the  beneficiaries.   

o)      Clause 34 of the bye-laws states :

"That the Board of Directors may  arrange for the sale of produce of  members and members of affiliated  cooperative societies pledged to or  deposited with the society and disburse  sale proceeds to them immediately after  such lots are sold.  In arranging for  the sale they shall act only as the  agent of the members and members of  affiliated cooperative societies  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

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workmen to establish the employer- employee relationship an adverse  inference cannot be drawn against the  employer that if he were to produce  books of accounts they would have proved  employer-employee relationship."

In Swapan das Gupta and Others Vs. The First Labour  Court of West Bengal and Others [1975 Lab. I.C. 202] it has  been held:

"Where a person asserts that he was a  workmen of the Company, and it is denied  by the Company, it is for him to prove  the fact.  It is not for the Company to  prove that he was not an employee of the  Company but of some other person."  

       The question whether the relationship between the  parties is one of the employer and employee is a pure  question of fact and ordinarily the High Court while  exercising its power of judicial review shall not interfere  therewith unless the finding is manifestly or obviously  erroneous or perverse.

APPLICATION OF LAW IN THE PRESENT CASE:  

       Having regard to the materials on records, we may at  the outset notice the findings of the Industrial Tribunal  which are : (1) having regard to the object of the Society,  there is no need to employ labourers far less giving  continuous employment to them.  Exs.W-7, W-8 and W-12 do not  show that superintendence control in respect of grading,  weighing etc. is absolute.  The memo. dated 27.8.1982  appears to have been issued having regard to a complaint  made by traders who participate in the auction to the effect  that the staff are not showing proper care in grading,  weighing and stacking the goods in the Society and they have  to purchase the under-quality and under-weight vegetables  resulting in continuous loss to them.  It is in that  situation a direction was issued.  A further complain was  made that the Society employs small boys in grading,  weighing and stacking of goods.  In that situation the  Godown Assistants were directed to see that no person who is  less than 18 years is engaged for unloading, grading and  stacking of cabbage and the workmen should be classified  into two groups, one for unloading and another for grading,  weighing and stacking.                    The Tribunal in this behalf observed :

"...Incidentally it is also significant  to note that the society has been formed  to protect the interest of the members.   The society cannot keep quiet by stating  it is the contractors job and it has no  responsibility.  In my opinion nothing  is wrong in issuing the circular Ex.W-8,  only to pull up 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."     

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       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 neither  the purchaser members nor the merchant members are put to  any disadvantage.

       Having regard to the interest of the farmers as also  the merchants, the Marketing Supervisor was asked to  supervise grading, weighing and packing of potatoes promptly  and properly.

       The purported decision of the Society to give certain  benefits to the workmen too is not decisive as the same had  become a conciliation proceeding.  The said conciliation  proceeding, as noticed hereinbefore, had to be initiated  having regard to the consequence upon a strike notice given  by the workmen which could be averted due to conciliatory  efforts.  It would appear from the same that the  conciliation efforts were made by the concerned Conciliation  Officer. However, despite conciliation, graders and porters  went on strike on 19.10.1982 whereafter again a conciliation  proceeding was held pursuant whereto or in furtherance  whereof certain advises and suggestions had been given by  the conciliation officer based on agreement between the  parties.       The finding of the Tribunal in respect of Ex.W-12 is in  the following terms :  

"...Even under Ex.W-12 it has been  stated to pay the festival advance to  the graders through the representatives.   Therefore it cannot be said they have  been asked to pay directly the festival  advance amount.  That apart, it is  relevant to note at this stage that this  document has not been signed by any

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party.  Considering these above facts  and mianly taking into account the  object of the society coupled with the  duties envisaged under Clause 34 under  Ex.M-22 bye-laws, it is impossible to  come to a conclusion that the society  has exercised these powers under Ex.W-7,  Ex.W-8 and Ex.W-12 as an employer..."             

       The Tribunal has further come to the conclusion that  token number had been given to the porters during emergency  to save them from police harassment and no such token was  issued after cessation of emergency.              It is true, as contended by Mr. Prasad, that the  Tribunal sought to distinguish certain cases relied upon by  the learned counsel for the parties holding that in those  cases, the employers were manufacturing units and were doing  regular work but the observation of the Tribunal must be  understood having regard to the totality of the  circumstances as it has observed that in such cases  employers being manufacturing units and were doing regular  work and the nature of business 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 services rendered  by the Society to the different categories of its members,  as also the right of the members to approach the third  parties to take the services of the workmen working under  them for unloading, grading and loading.   

       In nutshell, the following can be deduced :

1.      Growers and merchants are free to engage  their own porters and graders or can do the  work by themselves.  There is, thus, no  obligation on the societies godown or engage  service of the workers, waiting in the yard.

2.      No attendance registers or wage registers are  maintained in respect of graders and porters.

3.      The society has no control as who should do  the work and the  members are free to engage

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any worker available in the yard.

4.      No working hours are fixed for porters and  graders.  They are free to come and go at  will.

5.      The workmen have no obligation to report to  work everyday.

6.      Society has no control regarding the number  of workers to be engaged and the work to be  turned out by the porters and graders.

7.      No appointment order is issued by the  society.

8.      No disciplinary control over the porters and  graders is exercised by the Society.

9.      Total supervision or control is not exercised  by the Society  over the work done by porters  or graders.

10.     Porters and graders can go for other work and  there is no obligation to work only in the  yards.

11.     Payment is normally made to a worker by the  member.  No direct payment is made to workers  by the society. The society makes payment  only on the authorization on behalf of that  member.

12.     Under the price guarantee scheme introduced  by the society if the prices offered by the  merchants are not acceptable to the members  then the society guarantees the minimum  price.  If the produce sold by the society  fetches more than the minimum guaranteed  price excess is passed on to the member, if  the price is less than the minimum price, the  loss therefor is borne by the society.

13.     Porters and graders also work under the  supervision of members and merchants.    Amounts paid by the society to a  worker/authorized by a member is distributed  by him to other workmen and the Society is  not concerned with the number of workers  engaged and amounts distributed to them.   

The farmers themselves are indigent persons.  It is not  a case where the concerned workmen are without any master.   The third parties employ and pay them their salary 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

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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 respect of any other mundy.

EMPLOYMENT AND NON-EMPLOYMENT :             Employment and non-employment indisputably is a matter  which is specified in the Second and the Third Schedules of  the Industrial Disputes Act.  The concept of employment  involves three ingredients, which are :  (i) Employer - one  who employs, i.e. engages the services of other persons;  (ii) Employee - one who works for another for hire; and  (iii) Contract of employment - the contract of service  between the employer and the employee whereunder the  employee agrees to serve the employer subject to his control  and supervision. On the other hand, non-employment being  negative of the expression "employment"  would ordinarily  mean a  dispute when the  workmen is out of service.  When  non-employment is referable to an employment which at one  point of time was existing would be a matter required to be  dealt with differently than a situation where non-employment  would mean a contemplated employment.   

       The question of non-employment in the later category  would arise only when the employer refuses to give work to a  person who pleads and proves to the satisfaction of the  management that he was entitled thereto.  However, the  dispute regarding the refusal to employ the persons who were  promised to be employed is not connected with the employment  or non-employment within the meaning of Section 2(k) of the  Act.  (See Workers of Sagar Talkies VS. Odean Cinema [1957]  1 L.L.J. 639)  

       The reference made by the State of Tamil Nadu was  absolutely vague.  The very fact that reference suggests  that the workmen are not being employed by the Society is  itself a pointer to the fact that it is not the case where  the State Government has proceeded on the basis that there  existed such a relationship. Save and except in certain  situations, as for example when there exists a provision in  the standing order certified under Industrial Employment  (Standing Orders) Act, 1946 or a memorandum of settlement  require the employer to employ certain persons, directions  ordinarily cannot be issued by the Tribunal directing the  employer to give employment. CAMOUFLAGE:

       Whether a contract is a sham or camouflage is not a  question of law which can be arrived at having regard to the  provisions of Contract Labour (Regulation and Abolition)  Act, 1970.  It is for the industrial adjudicator to decide  the said question keeping in view the evidences brought on

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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  relationship itself is a disputed fact.   To put it differently, the complainant  seeks for a declaration that such  arrangement is not a real one but  something which is a fagade.  There is  no direct agreement between the  complainant and the principal employer  and one such is sought to be claimed but  not substantiated in accordance with  law.  The relief in a sense relates to a  legal assumption that the hidden  agreement or arrangement has to be  surfaced..."         It was also observed :

"The common thread passing through all  these judgments is that the threshold  question to be decided is whether the  industrial dispute could be raised for  abolition of the contractor labour  system in view of the provisions of the  Maharashtra Act.  What happens to an  employee engaged by the contractor if  the contract made is abolished is not  really involved in the dispute.  There  can be no quarrel with the proposition  as contended by the appellants that the  jurisdiction to decide a matter would  essentially depend upon pleadings in the

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plaint.  But in a case like the present  one, where the fundamental fact decides  the jurisdiction to entertain the  complaint itself the position would be  slightly different.  In order to  entertain a complaint under the  Maharashtra Act, it has to be  established that the claimant was an  employee of the employer against whom  complaint is made, under the ID Act.  When there is no dispute about such  relationship, as noted in paragraph 9 of  CIPLA’s case (supra) the Maharashtra Act  would have full application.  When that  basic claim is disputed obviously the  issue has to be adjudicated by the forum  which is competent to adjudicate..."                      

CASE LAWS :

       In the aforementioned backdrop, let us take note of  certain decisions operating in the field vis-‘-vis the  factual matrix obtaining therein.

       D.C. Dewan Mohideen Sahib & Sons vs. The Industrial  Tribunal, Madras [(1964 (7) SCR 646 = 1964 (2) LLJ 633] is a  case which involved workers who used to take leaves home for  cutting them in proper shape.  However, the actual rolling  by filling the leaves with tobacco took place in  places  what were called contractors’ factories.  The bidis so  rolled would be delivered to the appellant and nobody-else.  The price of the raw-material as also the finished product  would remain the same as fixed by the appellant therein.  This Court having regard to the materials on records arrived  at a finding 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 equipments, whereas if  he employs a servant he expects to provide the same himself.   The supply of machine was highlighted having regard to that  fact that the sewing machine on which the workers do the  work generally belong to the employer is an important  consideration for deciding the relationship of master and  servant.  Besides the same the right of the employer to  reject the end product and directing the worker to restitch  it also led this court to conclude that the element of

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control and supervision was also present.

       However, in a slightly different fact situation where a  person working as a part-time accountant for a long number  of years who used to look after his own partnership business  after working hours, was held to be not a workman. (See  W.H.D. Cruz & Sons Vs. M.E. Thomas [1996] 1 L.L.J. 706  (Ker.))   

       In M/s Shining Tailors vs. Industrial Tribunal II,  U.P., Lucknow and Others [(1983) 4 SCC 464], payments used  to be made to the workmen on piece-rates in a big tailoring  establishment.  Desai, J. in the facts and circumstances of  the case observed that right of removal of the workmen or  not to give the work had the element of control and  supervision which had been amply satisfied in that case.   The question which arose for consideration was as to whether  only because the concerned workman was paid on piece rate  was itself indicative of the fact that there existed a  relationship of principal employer and independent  contractor.   

It is, however, relevant to note that therein also an  observation was made to the effect that the method of  payment in various occupations is different in different  industries.

       In Indian Overseas Bank vs. I.O.B. Staff Canteen  Workers’ Union and Another [(2000) 4 SCC 245], this Court  observed :

"The standards and nature of tests to  be applied for finding out the existence  of master and servant relationship  cannot be confined to or concretized  into fixed formula(e) for universal  application, invariably in all class or  category of cases.  Though some common  standards can be devised, the mere  availability of any one or more or their  absence in a given case cannot by itself  be held to be decisive of the whole  issue, since it may depend upon each  case to case and the peculiar device  adopted by the employer to get his needs  fulfilled without rendering him liable.   That being the position, in order to  safeguard the welfare of the workmen,  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

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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 with different employers would  mean seeking for things, which are only  impossible to find."                     

       Having regard to the fact that therein a cooperative  canteen was promoted with the consent of the management by  serving members of the Bank staff, which was running within  the bank’s premises and with the funds, subsidy and  infrastructural facilities provided exclusively by the Bank,  it was held that there existed a relationship of master and  servant.   

However, we may notice that almost in a similar  situation in Employers in relation to the Management of  Reserve Bank of India vs. Workmen [(1996) 3 SCC 267], it was  held that in the absence of statutory or other legal  obligations and in the absence of any right in the Bank to  supervise  and control the work or details there in any  manner regarding the canteen workers employed in the three  types of canteens, it cannot be said that relationship of  master and servant existed between the Bank and the various  persons employed in the three types of canteens and in that  situation, the demand for regularization was considered to  be unsustainable.

In our opinion, the statutory canteen or other canteen  run by the employer in his premises stands absolutely on a  different footing.  In determining the relationship of  employer and employee, as has been noticed by this Court in  Steel Authority of India Ltd. & Others vs. National Union  Waterfront Workers and Others [(2001) 7 SCC 1], the said  question has no relevance.   

In Mishra Dhatu Nigam Ltd., etc. vs. M. Venkataiah &  Ors. etc. etc. [JT 2003 (7) SC 95], as the appellants were  required by the Factories Act to provide canteen facilities  and since the workers engaged through the contractors had  been held to be the employees of the principal employers,  this Court held that the workers engaged through contractors  were entitled for regularization of their services.   Although we have reservation about the correctness or  otherwise of the said decision but we need not go into the  said question inasmuch even therein, the court noticed that  the decision in Steel Authority of India Ltd. (supra) stands  on a different footing.

In Indian Banks Association vs. Workmen of Syndicate  Bank and Others [(2001) 3 SCC 36], the question which arose  for consideration was as to whether the deposit collectors

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who received commission is in reality a wage which would  depend on the productivity. Such 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  conducted by the banks.  Those who are  absorbed shall be treated on a par with  regular clerical employees of the Bank.   Those who have qualified 8th class and  below matriculation shall be considered  for absorption as sub-staff by  conducting qualifications examination.

       As regards the Deposit Collectors  and Agents who are above 45 years of age  on the date 3.10.1980 and also those who  are unwilling to be absorbed in regular  banks service shall be paid the full  back wage of Rs.750.00 per month linked  with a minimum deposit of Rs.7500.00 per  month and they should be paid incentive  remuneration at 2% for collection of  over and above 7500.00 per month and  they should also pay uniform conveyance  of Rs.50 per month for deposit of less  than  Rs.10,000.00 and Rs.100.00 per  month for deposits of more than  Rs.10,000.00 up to or above Rs.30,000.00  per month they should be paid gratuity  of 15 days’ commission for each year of  service rendered."           Thus in that decision, a scheme was formulated.

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                However, we may notice that in Union of India and  Others vs. K.V. Baby and Another [(1998) 9 SCC 252], this  Court observed :          "...However, persons who are engaged on  the basis of individual contracts to  work on a commission basis cannot, by  the very nature of their engagement, be  equated with regular employees doing  similar work..."  

In Bharat Heavy Electricals Ltd. vs. State of  U.P. &  Others [(2003) 6 SCC 528], the concerned workmen were  engaged as gardeners to sweep, clean, maintain and look  after the lawns and parks inside factory premises and campus  of the residential colony of the appellant through the  agencies of the Respondent Nos.3 to 5; therein their  services were terminated pursuant whereto an industrial  dispute was raised before the Tribunal, the employer did not  produce any records.  Having applied the control test and in  view of the fact that the records of the concerned workmen  had not been produced, this Court did not interfere with the  award of the Tribunal and the judgment of the High Court.

In Shri Chintaman Rao and Another vs. The State of  Madhya Pradesh [1958 SCR 1340], this Court observed :

"...The concept of employment involves  three ingredients (1) employer (2)  employee and (3) the contract of  employment.  The employer is one who  employs, i.e. one who engages the  services of other persons.  The employee  is one who 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"                          

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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 the  master to supervise and control the work  done by the servant 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, or to borrow  the words of Lord Uthwatt at page 23 in  Mersey Docks and Harbour Board v.  Coggins & Griffith (Liverpool) Ltd.,  [[1947] 1 A.C. 1, at p. 23.], "The  proper test is whether or not the hirer  had authority to control the manner of  execution of the act in question".  The nature or extent of control  which is requisite to establish the  relationship of employer and employee  must necessarily vary from business to  business and is by its very nature  incapable of precise definition. As has  been noted above, recent pronouncements  of the Court of Appeal in England have  even expressed the view that it is not  necessary for holding that a person is  an employee, that the employer should be  proved to have exercised control over  his work, that the test of control was  not one of universal application and  that there were many contracts in which  the master could not control the manner  in which the work was done (Vide  observations of Somervell, L.J., in  Cassidy v. Ministry of Health (supra),  and Denning, L.J., in Stevenson, Jordan  and Harrison Ltd. v. MacDonald and Evans  (supra).)  The correct method of approach,  therefore, would be to consider whether  having regard to the nature of the work  there was due control and supervision by  the employer or to use the words of  Fletcher Moulton, L.J., at page 549 in  Simmons v. Health Laundry Company  [[1910] 1 K.B. 543 at pp. 549, 550] :-  "In my opinion it is impossible to  lay down any rule of law  distinguishing the one from the  other. It is a question of fact to  be decided by all the circumstances  of the case. The greater the amount  of direct control exercised over  the person rendering the services  by the person contracting for them  the stronger the grounds for  holding it to be a contract of  service, and similarly the greater  the degree of independence of such  control the greater the probability

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that the services rendered are of  the nature of professional services  and that the contract is not one of  service."  

In Management of M/s Puri Urban Cooperative Bank vs.  Madhusudan Sahu and Another [AIR 1992 SC 1452], this Court  observed :

"...It stands established that  Industrial Law revolves on the axis of  master and servant relationship and by a  catena 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  principal question which arose for consideration therein was  as to whether having regard to the provisions contained in  Section 10 of the Contract Labour (Regulation  and  Abolition) Act, the workmen employed by the contractors in  the event of abolition of contract labour were entitled to  be automatically absorbed in the services of the principal  employer.  While answering the question in the negative the  court reversed the earlier decision of this Court in Air  India Statutory Corporation and Others vs. United Labour  Union and Others [(1997) 9 SCC 377].  This Court referring  to a large number of decisions and tracing the history of  the Contract Labour (Regulation and Abolition) Act, noticed  that the Industrial Tribunal although prior to coming into  force could issue directions for such regularization but  such directions could not be issued after coming into force  of the Act.  In view of the Constitution Bench decision in  M/s Gammon India Ltd. and Others etc. vs. Union of India and  Others [(1974) 1 SCC 596], the Court held that although the

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principle that a beneficial legislation needs to be  construed liberally in favour of the class for whose favour  it is intended, the same would not extend to reading in the  provisions of the Act what the legislature has not provided  whether expressly or by necessary implication, or  substituting remedy or benefits for that provided by the  legislature. Upon analyzing the case law, the  categories   of cases were sub-divided into three stating :

"An analysis of the cases, discussed  above, shows that they fall in three  classes : (i) where contract labour is  engaged in or in connection with the  work of an establishment and employment  of contract labour is prohibited either  because the industrial adjudicator/court  ordered abolition of contract labour or  because the appropriate Government  issued notification under Section 10(1)  of the CLRA Act, no automatic absorption  of the contract labour working in the  establishment was ordered; (ii) where  the contract was found to be a sham and  nominal, rather a camouflage, in which  case the contract labour working in the  establishment of the principal employer  were held, in fact and in reality, the  employees of the principal employer  himself.  Indeed, such cases do not  relate to abolition of contract labour  but present instances wherein the Court  pierced the veil and declared the  correct position as 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 the workman.   The decision of this Court in Hussainbhai, Calicut vs. The  Allath Factory Thezhilali Union, Kozhikode and Others  [(1978) 4 SCC 257] will fall in that category.  

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ANALYSIS:

       Having regard to the aforementioned findings, we are of  the opinion, the High Court has rightly affirmed the award  of the Industrial Tribunal.  The Tribunal as also the High  Court further rightly arrived at a finding to the effect  that the concerned workmen were not able to discharge their  burden of proof that they were employed by the Society.   

       The decisions referred to hereinbefore are indicative  of the fact that the different tests have been applied in  different cases having regard to the nature of the problem  arising in the fact situation obtaining therein.  Emphasis  on application of control test and organization test have  been laid keeping in view the question as to whether the  matter involves a contract of service vis-‘-vis contract for  service; or whether the employer had set up a contractor for  the purpose of employment of workmen by way of a smoke  screen with a view to avoid its statutory liability.    

In the present case we are faced with a peculiar  situation.  The society is a service society which has been  formed with the object of protecting the growers from being  exploited at the hands of the traders.   It has been found that the employment of the workmen  for doing a particular piece of work is at the instance of  the producer or the merchants on an ad hoc basis or job to  job basis and, thus, the same may not lead to the conclusion  that relationship of employer and employee has come into  being.  Furthermore, when an employee has a right to work or  not when an offer is made to him in this behalf by the  producer or by the merchants will also assume significance.

       For the purpose of earning livelihood, a person has to  involve himself into certain kinds of activities wherefor,  he must subject himself to some sort of discipline or  control, which is even otherwise implicit.

The findings arrived at by the learned Tribunal as well  as the High Court would clearly go to show that the  concerned workmen are engaged both by the growers as also  the traders.  Only on some occasions, payment is made to the  concerned workmen through the third parties only in a case  where the grower is not immediately in a position to pay the  same as he was yet to receive the price of the vegetables 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

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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 having regard to  the fact that the respondent is a cooperative society which  only renders services to its own members and despite the  fact that in relation thereto it receives commission at the  rate of one per cent both from the farmers as also the  traders; it does not involve in any trading activity.   Although rendition of such service may amount to carrying  out an industrial activity within the meaning of the  provisions of the Industrial Disputes Act, 1947 but we are  in this case not concerned with the said question.  What we  are concerned with is as to whether the concerned workmen  have been able to prove that they are workmen of the  Society.  They have not.   CONCLUSION :

In view of what has been found hereinbefore, we are of  the opinion that the decision of the Tribunal as affirmed by  the High Court cannot be said to be perverse warranting our  interference.

For the reasons aforementioned, we do not find any  merit in these appeals which are dismissed accordingly.  No  costs.

However, before parting with the matter, we may observe  that we have no doubt in our mind keeping in view the  assurances given to the High Court by the Society, as  recorded in its order dated 12.12.2000, the Respondent will  continue to see that the concerned employees are provided  with employment.