Judgement

P. JAGANMOHAN REDDY, J. :- These appeals are by special leave in which the question which falls for consideration is whether the appellant is a person employed within the meaning of section 2 (12) (iii) of the Madras Shops & Establishment Act, 1947 (Madras Act No. XXXVI of 1947) (hereinafter called the Act ). The first respondent, a private limited company hereinafter termed as the holding company or the Madras company ), having been empowered by the Memorandum of Association, promoted another company known as the Gordon Woodroffe Leather Manufacturing Company (hereinafter called the subsidiary company or the Pallavaram company ) in which it held 80% preference shares and 70% equity shares. The holding company was also the managing agent of the subsidiary company. In 1959 the managing agency of the holding company was terminated but nevertheless in view of its shareholding it continued to control the subsidiary company. The appellant who was a Chartered Accountant qualified in London had applied for and was offered employment as an Assistant in the holding company on the terms and conditions contained in the letter dated 19-10-1963. He accepted the employment and the terms and was accordingly appointed by the holding company. On 28-10-65 the holding company, in order to simplify the accounting procedures informed the appellant of its decision to offer revision of the terms of engagement with effect from 1st July, 1965 relating to the basis salary. D. A. and bonus, all other terms of service remaining unaltered. The Appellant was asked to confirm his acceptance of these terms which it appears he did. He was thereafter permitted to cross the efficiency bar. It may here be mentioned that after his appointment the appellant was given training in the Madras company for two month after which it is alleged that the Director had asked him to go to the Pallavaram company to work there. Even while working there his salary was being paid by the Madras company though it was by an arrangement between the two companies being debited to the Pallavaram company. The appellant continued to work in the Pallavaram company till 15th October 1966 on which date his services were terminated by the holding company. The appellant thereupon filed an appeal before the Additional Commissioner for Workmen s Compensation under under 41 (2) of the Workmen s Compensation Act. The 1st respondent however raised an objection before the Additional Commissioner that the appellant was not a person employed within the meaning of the Act and, therefore, the provisions of the said Act would not be applicable to him. In view of this objection an application was filed by the appellant under section 51 of the Act for declaring that he is a person employed and some time thereafter got his application under section 41 (2) stayed. The lis between the parties on the application under section 51 as well as under section 41 (2) was whether the appellant was an employee of the holding company or of the subsidiary company. The appellant claimed that under the terms of the offer of appointment which was accepted by him he was required to work either in the Madras office or the Pallavaram office or at any other office or place of business of the company and though he was working in the Pallavaram office, his salary was being paid by the holding company, his bonus for the year ending 1964 was also paid by that company which also terminated his services. The 1st respondent averred that though the petitioner might have been appointed or dismissed by the Madras company he was actually a person employed in the Pallavaram company. It was also admitted that while the salary of the appellant was paid initially by the Madras company it was recovered from the Pallavaram company as is evident from the registers of account maintained that such recoveries from the Pallavaram company were effected, and that for purpose of the Act what is relevant is not employment by but empl