2004 Supreme(SC) 154

2004(2) Supreme 50
Supreme Court of India
(From Madras High Court)
Y.K. Sabharwal & S.B. Sinha, JJ.
Workmen of Nilgiri Coop. Mkt. Society Ltd. -Appellant
versus
State of Tamil Nadu and Ors. -Respondents
Civil Appeal Nos. 1351-53 of 2002
Decided on 5-2-2004
Counsel for the Parties :
For the Appellant : N.G.R. Prasad, S. Guru Krishna Kumar, S.R. Setia, Advocates.
For the Respondent No. 2 : Sudarsh Menon, Bharat Swaroop Sharma, Advocates.
For the Respondent No. 1 : Subramonium Prasad, Gopalakrishnan, S.N. Jha, Abhay Kumar, P.N. Ramalingam, Advocate (NP)/Advocates.

Important point
It is a question of fact in each case whether the relationship of master and servant exists between the management and the workmen and no single test be it control test, be it organisation or any other test has been held to be the determinative factor for determining the jural relationship of employer and employee.

Headnote:(i) Labour Law-Permanency in service and other benefits-Claim of workers-Employer-employee relationship-Nature or extent of control required to establish such relationship-Only because some persons had been more or less continuously working in a particular premises-It may not be possible to infer that a relationship of employer and employee has come into being-Control test and organization test are not the only factors which can be said to be decisive-Integration of relevant tests.

       Held : 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 for determining the jural relationship of employer and employee. (Para 33)

       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. (Para 36)

       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. (Paras 38 and 39)

       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. (Paras 67 and 68)

       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 records. (Para 70)

       (ii) Labour Law-Industrial Disputes Act, 1947-Sections 25-O, 25-T-Contract Labour (Regulation and Abolition) Act, 1970-Sections 7 and 12-Regularization-Nilgiris Cooperative Marketing Society formed in 1935 by small vegetable growers-Society grew in course of time now having about 22,000 members-The Society has two big marketing yards where auction of vegetables takes place-Infrastructure therefor such as offices, godowns yards, weighing machines etc. are provided by the Society-The primary members of the society bring their agricultural produce to the yards by hired lorries or trucks-A number of persons are involved in unloading of gunny bags containing potatoes from lorries, unpacking gunny bags, grading the potatoes into different sorts, packing them again etc. etc.-Industrial dispute raised by 407 persons including potters and graders, working on daily wages, claiming permanency in service and other benefits-Society does not maintain any attendance register or wages register-Third parties are free to engage men of their choice-No working hours fixed or insisted-Conciliation proceedings ended in failure-Reference-Society is not a trading society-Whether relationship between the parties is one of the employer and employee-(No).

       Held : 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 grounds, one for uploading and another for grading, weighing and stacking. (Para 53)

       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 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 by the concerned workmen. (Paras 64 and 65)

       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.­ (Para 100)