Judgement RAY, C.:- The provisions of the Beedi and Cigar Workers (Conditions of Employment) Act, 1966 referred to as the Act are impeached as unconstitutional in these petitions and appeals. 2. Broadly stated, the Act is challenged on these grounds. First, Parliament has no legislative competence to enact this measure. It is a legislation for regulating beedi and cigar industry. Therefore, it falls under Entry 24 in State List II. Second the restrictions imposed by the Act violate freedom of trade and business guaranteed under Article 19(1)(g). The Act imposes unreasonable burdens in cases where a manufacturer or trade mark holder of beedi has no master and servant relationship and no effective control on independent contractors or home workers. The manufacturer or trade mark holder is rendered liable as the principal employer of contract labour. Third, Section 4 of the Act imposes conditions which are arbitrary, excessive, extraneous. Fourth, Section 7(1)(c) regarding entry into industrial premises, Sections 26, 27 regarding annual leave with wages, Section 31 regarding one month s wages in lieu of notice. Section 37 regarding application of Maternity Benefits Act, 1961 and therules for rejection of beedis are unconstitutional. These provisions are unreasonable restrictions on the freedom of trade and business. 3. The petitioners and the appellants are of two character. The majority are proprietors of beedi factories and owners of trade mark registered under the Trade Marks Act in relation to beedis. Some are home workers. 4. The beedi industry is widespread in this Country. The manufcture of beedi is done in stages. The tobacco is blended often with some other ingredient. A small quantity of it is part on the beedi leaf which is previously wet to render it flexible to prevent any crushing of leaf and is also cut to size. The beedi leaf is then rolled keeping the tobacco within it and its ends are then closed. The beedis thus rolled are collected and warmed or roasted after which they are ready for packing, labelling and sale. Where the propreitor owns a trade mark, the trade mark lables are affixed to the individual beedis as also on the packets. 5. The work of wetting and cutting of the wrapper leaves is one of the items of work in the process. Power is seldom employed for the purpose. The industry depends entitrely human labour. Where the propreitor owns a trade mark, the trade mark lables are affixed to the individual beedis as also on the packets. 5. The work of wetting and cutting of the wrapper leaves is one of the items of work in the process. Power is seldom employed for the purpose. The industry depends entitrely human labour. If more than 20 workers are employed in a particular place for the manufacture of beedis, the provisions of the Factories Act, 1940 will apply to the premises. 6. Three systems are adopted in the manufacture of beedis. First, is the factory system. There the manufacturer is an owner of the factory. Workers gather and work under his supervision as his employees. Second is the contract system of employment. That is the most prevalent form. Under this system, the proprietor gives to the middlemen quantities of beedi leaves and tobacco. The contractor on receiving the materials manufactuers beedis (i) by employing directly labourers and manufacturing beedis or (ii) by distributing the materials amongst the home workers, as they are called, mostly women who manufacture beedis in their own homes with the assistance of other members of their family including children. The third system is that of outworkrs. They roll beedis out of the tobacco and beedi leaves supplied by the proprietor himself without the agency of middlemen. The beedis thus supplied whether by the outworkers or contractor are roasted, labelled and packed by the proprietor and sold to the public. 7. Under these systems, the contractor engages labourers less than the statutory number to escape the application of the Factories Act. There is a fragmentation of the place of manufcture of beedis with a view to evading the factory legislation. Sometimes there is no definite relationship of master and servant between the actual worker and the ultimate proprietor. Branch managers of contractors are often men of straw. The proprietor will not be answerable for the wages of the outworkers because there is no privity of contract between them. A large body of actual workers are illiterate women who could with impunity be exploited by the proprietors and contractors. There is in this background an indiscriminate and undetectable employment of child labour. The contractor being himself dependent on the proprietor has little means to have any organized system. Women and infirm persons can earn something by rolling beedis. A large body of actual workers are illiterate women who could with impunity be exploited by the proprietors and contractors. There is in this background an indiscriminate and undetectable employment of child labour. The contractor being himself dependent on the proprietor has little means to have any organized system. Women and infirm persons can earn something by rolling beedis. The dependence of these people particularly the women shows that they have little bargaining against powerful proprietors or contractors. 8. A typical contractor agrees with the proprietor to purchase tobacco and to pay for it at the ruling rate and to supply the proprietor with such quantity of beedis as will be fixed by the proprietor. He also undertakes not to use any tobacco other than that supplied by the proprietor. The proprietor has the authority to send his representative to inspect the place or places of manufacture. The contractor undertakes not to enter into any agreement of similar nature with any other concern to make beedis. The agreement stipulates that the contractor will be the sole employer answerable in regard to the disputes raised by the workers. 9. There was a Royal Commission on Labour in India in 1931. The findings were these. The making of beedi is an industry widely spread over the country. It is partly carried on in the home but mainly in the workshops in the bigger cities and towns. Every type of building is used, but small workshops preponderate. It is there that the graver problems mainly arise. Many of these places are small airless boxes. There are no windows where workers are crowded. There are dark semi basements with damp mud floors. Similarly conveniences and arrangements for removal of refuse are practicaly absent. Payment is by piece rate. The hours are unregulated. Many smaller workshops are open day and night. There are no intervals for meals. There are no weekly holidays. 10. In 1944, the Government of India appointed a Committee under the Chairmanship of Shri D. V. Rege to investigate conditions of industrial labour. The report referred to the contract system whereby the factory owner engaged a large number of middlemen, supplied them with raw materials and purchased finished products from them. The report found that unhealthy working conditions, long hours of work, employment of women and children, deduction from wages and the sub-contract system of organisation required immediate attention. The report referred to the contract system whereby the factory owner engaged a large number of middlemen, supplied them with raw materials and purchased finished products from them. The report found that unhealthy working conditions, long hours of work, employment of women and children, deduction from wages and the sub-contract system of organisation required immediate attention. It was desirable to abolish outworker system and to encourage establishment of big industries if protective labour legislation was to be enforced with success. 11. In 1946, the Government of Madras appointed a Court of Inquiry into labour conditions in beedi, cigar, Snuff curing and tanning industries. There were 90,000 workers depending on beedi industry in Madras. Of these, 26,500 workers were women. Employment of children in the Industry was universal. 2/5ths of the total workers were children. Home workers were predominant. There were full time workers but they were paid less than fair wages. Working conditions were extremely unsatisfactory from the standpoint of floor space, sanitation, ventilation and lighting. 12. In 1954, the Government of India appointed Shri Natraj, Inspector of Factories to assess the situation with a view to affording maximum legislative protection to the workers. The Report was as follows. Although the number of workers engaged in the manufacture of beedi exceeded one lakh, only 17,544 were employed in factories. The contract and home work systemsa enriched proprietor at the expense of the worker and also deprived the latter of his bargaining power in regard to conditions of labour. The poverty as well as illiteracy of the workers was taken advantage of by the employers. There were long hours of work with low wages, deplorable working conditions and unrestricted employment of women and children. 13. The entire beedi industry was unorganised and scattered over the entire State, employing a large force of women. It called for radical reforms in the organisation. There was reluctance of the manufacturer to provide certain amenities to the workers such as rest sheds, canteens, creches, ambulance rooms, etc. Under the indirect employment system conditions obtaining in the industry were still worse. The middlemen contractors did not observe any higher standards in the premises than in those under the manufacturers. The Payment of Wages Act applied to factories, but it was difficult to detect violations of the Act because the prescribed registers were not maintained. Under the indirect employment system conditions obtaining in the industry were still worse. The middlemen contractors did not observe any higher standards in the premises than in those under the manufacturers. The Payment of Wages Act applied to factories, but it was difficult to detect violations of the Act because the prescribed registers were not maintained. The Madras Maternity Benefit Act which applied to factories was rendered practically ineffective as far as petty industry was concerned because there was no record to prove that women were employed. The Report stated that the employers suceeded in organised circumvention of all existing legislation by resorting to splitting up of their factories into smaller units run by contractors who had no knowledge in respect of social laws. 14. The conditions in working places were bad. The Report suggested licensing of premises to fix responsibility of the employer for maintenance of minimum standards of ventilation, lighting and sanitation in working places. 15. The employment of women and children, wages and wage structure in the industry were all considered by the Committee. The Committee recommended solution of unhealthy working conditions under miserable environments, long working hours with its attendant evils, unregulated employment of women and children and deduction from wages. The contract of home work system of employment was found to be designed solely for the promotion of trade but not the industry of which the labour forms the integral part. It was, therefore, expected that the beedi industry should carry the labour along with it as it developed and was organised in such manner that it discharged its social and moral responsibilities towards the workers. 16. It is in this background that the Act came into existence. In State of Madras v. Rajagopalan, (1955) 2 SCR 541 this Court held that the previous material in the shape of Reports of Commissions to review the working of the industry was admissible in evidence about the prevailing system and conditions of industry. 17. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966 is an Act to provide for the welfare of the workers in beedi and cigar establishments and to regulate the conditions of their work and for matters connected therewith. The special feature of the industry was the manufacture of beedis through contractors and by distributing work in the private dwelling house, where the workers took raw materials given by the employers of contractors. The special feature of the industry was the manufacture of beedis through contractors and by distributing work in the private dwelling house, where the workers took raw materials given by the employers of contractors. The relationship between employers and employees was not well defined. The application of the Factories Act met with difficulties. The labour in the industry was unorganised and was not able to look after its own interests. The industry was highly mobile. The attempt of some of the States to ligislate in this behalf was not successful. The necessity for central legislation was felt. A bill was mooted to provide for the regulation of the contract system of work, licensing of beedi and cigar industrial premises and matters like health; hours of work, spread over, rest periods, over time, annual leave with pay, distribution of raw materials etc. The anxiety was expressed by several Committees to introduce some regulation in the employer-employee relationship and to obtain certain benefits to the employees which were denied to them. 18. The so-called contractor or the employer as styled by the employees has been a matter of some concern to the employees as well as to the State. There were certain good and bad points about the systems that were prevalent in the manufacture of beedi. The contractor was very often a man of straw. He was said to be the creation of the principal employer who put him forward on many occasions as a screen to avoid his own responsibility towards the employees. Another broad grievance was that there was double checking and rejection of beedis or double chhat, out of which the second chhat at the principal employer s place was invariably in the absence of the employee. This chhat was alleged to be most irrational and depending upon the whim of the employer. As far as the house work system was concerned there was an advantage to the employee with some kind of disadvantage to the employer. Persons who could space time in their houses but could not move out for the purpose of employment got ready employment and could supplement their income from agriculture or other sources. They were in a position to work as and when leisure was available and like a factory employee there was no rigour of attending the factory or work at stated time and for stated number of hours. They were in a position to work as and when leisure was available and like a factory employee there was no rigour of attending the factory or work at stated time and for stated number of hours. It appeared that pilfering was a vice of this industry. By pilfering tobacco which is the most valuable ingredient, the employees were able to earn some income by again rolling it into beedis and selling them. 19. The relationship between the proprietor, middlemen and outworkers came up for consideration in this Court in Chintaman Rao v. State of Madhya Pradesh (1958) SCR 1340. The proprietor of a beedi factory was prosecuted under the Factories Act for non-compliance with the provisions of that act. The proprietor pleaded that the workers were not under his employment. The contention was that the sattedars who were found in the factory were independent contractors and not workers. The management issued tobacco and sometimes beedi leaves to sattedars who manufactured beedis in their own factories or by an arrangement with a third party. The sattedars collected the beedis thus made and supplied to the factories for a consideration. It was held that the sattedars were independent contractors and not the agents. The enforcement of factory and labour legislation could be rendered impossible by adopting the simple device of disintegrating what normally will be a factory. The legislature wanted to regulate the contract system. The legislation did not want to stop the contract system. The provisions in the Act recognisted the contractor as a part and parcel of the beedi industry. The contractor is referred to where the terms contract labour or principal employer or `employer have been defined. Several functions which the employer has to perform are also perfomred by the contractor. He delivers tobacco and leaves to the home worker and collects the rolled beedis after application of chhat. He makes payment to them. Therefore, the contractor has been retained as an integral part through the attempt is to eliminate the vices which crept into the industry. 20. The Madras High Court in M/s. K. Abdul Azeez Sahib and Sons. Four Horse Beedi Manufacturers. He makes payment to them. Therefore, the contractor has been retained as an integral part through the attempt is to eliminate the vices which crept into the industry. 20. The Madras High Court in M/s. K. Abdul Azeez Sahib and Sons. Four Horse Beedi Manufacturers. Vellore v. Union of India (1973) 2 Mad LJ 126 held the definitions of employer and principal employer in Section 2 (g)(a) and 2 (m) of the Act to be valid but held that Sections 26 and 27 of the Act are wholly unenforceable against the trade mark holders whether with reference to home workers or with reference to employees working in any industrial premises. The Madras High Court held that since a worker in a beedi industry is not required to work regularly for an prescribed period of hours in a day or evey day after day for any inter specified period from the very nature of the case, the provisions in the Maternity Benefit Act, 1961 are unworkable with regard to such home workers, and therefore they will have no application to them. The Madras High Court held that Section 7(1)(c), 7(2), 26, 27, 31 and 37 (3) in so far as they relate to home workers are ultra vires and illegal and unenforceable against trade mark holders in beedis and contractors in the manufacture of beedis. The Madras High Court hled that Sections 7(1)(c), 7(2), 26 and 27 are ultra vires and illegal and unenforceable against the petitioners who are manufacturers of cigar or cigar rollers. 21. The Bombay High Court in M/s. Chhotabhai Purshottam Patel v. State of Maharashtra, (1972) 1 Lab LJ 130 held that the provisions of Sections 2(g)(a) and 2(m) of the Act are invalid to be in excess of the requirements of the situation because if the principal employer is fased with the proposition of bearing all the civil and criminal responsibilities of omission and commission of contractors under him the inevitable results will be that the manufacturer will gave up to Gharkata system and may think of some other system less onerous under the Act. The Bombay High Court also said that the words "in relation to other labour" contained in Section 2(g) (b) are to be deleted. The Bombay High Court further held that the provisions of Sections 26 and 27 of the Act will not apply to home workers at all. 22. The Bombay High Court also said that the words "in relation to other labour" contained in Section 2(g) (b) are to be deleted. The Bombay High Court further held that the provisions of Sections 26 and 27 of the Act will not apply to home workers at all. 22. The Mysore High Court in P. Syed Saheb & Sons v. State of Mysore, (1972) 1 Mys LJ 450 held that Sections 3 and 4 of the Act are constitutional and not violative of Articles 14 and 19(1)(g) of the Constitution. section 3 of the Act prohibits establishmen of an industrial premises without obtaining a licence granted under the Act. Section 4 of the Act provides for the procedure for the issue, renewal and cancellation of a licence. The Mysore High Court further held that Sections 26 and 27 of the Act are not unreasonable restrictions and it is possible to find out whether a home worker has qualified himself for annual leave and it is possible himself for annual leave and it is possible to make up for the lost wages. The Mysore High Court also held that S.31 of the Act is valid and R.29 does not impose unreasonable restriction by compelling the employer to accept beedis when they are sub-standard and the sub-standard beedis and cigars exceed 5 per cent. If the employer find that the sub-standard beedis and cigars are above 5 per cent then he has to refer the matter to the Inspector. 23. The Kerala High Court in C. Chandrasekharan v. Union of India, (1972) 1 Lab LJ 240 held that provisions of Sections 2(g)(a), 2(m), 3, 4, 21, 26 and 27 of the Act impose unreasonable restrictions on business or trade and are violative of Article 19(1)(g) of the Constitution. The Kerala High Court held that the words "in relation to other labour" occurring in S.2(g)(b) have also to be deleted. The Kerala High Court held Section 3 and 4 to be valid. The Kerala High Court held that Sections 26 and 27 will not apply to home workers. The Kerala High Court struck down Rule 29 of the Kerala Rules on the ground that the imposition of 5 per cent on the maximum amount of rejection is an arbitrary percentage. Kerala Rule 29 stated that no employer shall ordinarily reject more than 2-5 per cent. The Kerala High Court struck down Rule 29 of the Kerala Rules on the ground that the imposition of 5 per cent on the maximum amount of rejection is an arbitrary percentage. Kerala Rule 29 stated that no employer shall ordinarily reject more than 2-5 per cent. The provisions states that there can be rejection up to 5 per cent for reasons recorded in writing. This imposition of 5 per cent limit in the provisio was construted by the Kerala High Court to be unreasonable inasmuch as the quality of beedis would go down if the workers are assured that more than 5 percent will not be rejected. 24. The Andhra Pradesh High Court in Civil Appeals No. 1972 and 1988 of 1971 (Andh Pra), held that S.3 and 4 of the Act offend Articles 14 and 19(1)(g) of the Constitution and are, therefore, void. The Andhra Pradesh High Court came to the conclusion that the provisions contained in Sections 3 to 27 of the Act do not apply to home workers. The High Court held that the Act is applicable to an independent contractor where he is employing labour for and on his own behalf. There hs is the principal employer. No artificial relationship of master and servant arises as a result of the operation of the definitions in Sections 2(g)(a)(b) and 2(m) of the Act. The Gujarat High Court, in Civil Appeal No. 585 of 1971 (Guj), upheld the provisions of the Act to be constitutional. 25. The first contention on behalf of the petitioners and the appellants is that the act of 1966 is invalid on the ground of lack of legislative competence. The High Courts of Madras, Kerala, Gujarat, Mysore and Andhra Pradesh have rightly held the Act to have constitutional competence. Counsel on behalf of the petitioners contended that Entry 24 in List II is the only legislative Entry for the piece of Legislation. Entry 24 speaks of industries subject to the provisions of Entries 7 and 52 of List 1. Entry 7 in List I speaks of Industries declared by Parliament by law to be necessary for the purpose of defence or for the prosecution of war. Entry 52 in List I speaks of Industries the control of which by the Union is declared by Parliament by law to be expedient in the public interest. Entry 7 in List I speaks of Industries declared by Parliament by law to be necessary for the purpose of defence or for the prosecution of war. Entry 52 in List I speaks of Industries the control of which by the Union is declared by Parliament by law to be expedient in the public interest. The legislation in the present case does not fall within Entry 24 in List II or Entries 7 and 52 in List I. Entry 24 in List III speaks of Labour including conditions of work, provident funds, employers liability, workmen s compensation, invalidity and old age pensions and maternity benefits. The Act is for welfare of labour. It is not an Act for industries. The true nature and character of the legislation shows that it is for enforcing better conditions of labour amongst those who are engaged in the manufacture of beedis and cigars. 26. The scheme of the Act relates to provisions regarding health and welfare, conditions of employment, leave with wages, extension of benefits by applying othr Acts to Labour. To illustrate, Section 28 of the Act extends benefits of the Payment of Wages Act to industrial premises, Section 31 of the Act provides for security of service, Section 37 of the Act extends the benefit of Industrial Standing Orders Act, 1946. Again, Section 37(3) of the Act makes provisions of the Maternity Benefit Act applicable to every establishment. Section 38(1) of the Act applies the safety provisions contained in Chapter IV of the Factories Act to industrial premises. Section 39(1) of the Act makes the Industrial Disputes Act, 1947 appliable to matters arising in respect of every industrial premises. Section 39(2) of the Act provides that disputes between an employee and an employer in relation to issue of raw materials, rejection of beedis and cigars, payment of wages for the beedis and cigars rejected by the employer, shall be settled by such authority as the State Government may specify. An appeal is provided to the appellate authority whose decision is final. Section 39(1) of the Act applies to industrial premises. Section 39(2) of the Act applies to every establishment. 27. The Act speaks of licensing of industrial premises. The benefits under the Act are extended to both industrial premises and establishments. Establishments mean also places where home workers work. 28. Section 39(1) of the Act applies to industrial premises. Section 39(2) of the Act applies to every establishment. 27. The Act speaks of licensing of industrial premises. The benefits under the Act are extended to both industrial premises and establishments. Establishments mean also places where home workers work. 28. The pith and substance of this Act is regulation of conditions of employment in the beedis and cigar industry. The Act deals with particular subject matter as regards the establishments and industrial premises. These matters are regulation of conditions of employment in the industry and the industrial relations between the employer and the employee. Entries 22 to 24 in List III are wide enough to cover this piece of labour welfare measure. Entry 22 deals with labour welfare. Entry 23 deals with social security, employment and unemployment. Entry 24 deals with welfare of labour including conditions of work provident funds, employer s liability; workmen s compensation, invalidity and old age pensions and maternity benefits. The Act is valid and falls within Entries 22, 23 and 24 of List III. 29. Sections 3 and 4 of the Act were challenged as violative of Art. 19(1)(g) and Art. 14 on account of procedural unreasonableness and conferment of unfettered powers on the licensing authority without the requisite safeguards. These two sections require licence in respect of industrial premises. The provisions are applicable both to trade mark holders as well as contractors. There is no difficulty with regard to manufacturers to obtain licence in respect of industrial premises. If contractors are employers of labour for and on their own behalf, the contractors will have to obtain licences for manufacture of beedis in industrial premises. The relevant authorities have to refer to certain matters in the grant or refusal of a licence. There is no difficulty with regard to manufacturers to obtain licence in respect of industrial premises. If contractors are employers of labour for and on their own behalf, the contractors will have to obtain licences for manufacture of beedis in industrial premises. The relevant authorities have to refer to certain matters in the grant or refusal of a licence. These matters as set out in Section 4 of the Act are (a) suitability of the place or premises which is proposed to be used for the manufacture of beedi or cigar or both (b) the previous experience of the applicant, (c) the financial resources of the applicant including his financial capacity to meet the demands arising out of the provisions of the laws for the time being in force relating to the welfare of labour (d) whether the applicable is made bona fide on behalf of the applicant himself or any other persons and (e) welfare of the labour for the locality in the interest of the public generally and such other matters as may be prescribed. The licensing authority is required to communicate his reason in writing when he refuses to grant a licence. Section 5 of the Act provides an appeal to the appellate authority against such order. The power to grant or refuse a licence is sufficiently controlled by necessary guidance. There are safeguards preventing the abuse of power. The right of appeal is a great safeguard. The various matters indicated in Section 4 in regard to the grant of licence indicate not only the various features which are to be considered but also rule out any arbitrary act. There is machinery as well as procedure for determining the grant or refusal of a licence. The application for grant of a licence is to be determined on objective considerations as laid down in the section. There is neither unfairness nor unreasonableness in Sections 3 and 4 of the Act. 30. The validity of the Act was challenged on the principal ground that the Act imposed unreasonable restrictions on the manufacturers in their right to carry on trade and business in the manufacture of beedis and cigars. There is neither unfairness nor unreasonableness in Sections 3 and 4 of the Act. 30. The validity of the Act was challenged on the principal ground that the Act imposed unreasonable restrictions on the manufacturers in their right to carry on trade and business in the manufacture of beedis and cigars. The unreasonable restriction was said to be the imposition of vicarious liability on the manufacturers for acts and omissions in case of independent contractors through whom they get beedis and cigars and over whose employees they do not have any control and with whom they do not come in contract. The provisions of Section 2(g)(a) and 2(m) read with Ss. 2(e) and (f) of the Act are said to create a totally artificial and fictional definition of employer and thereby to cast vicarious liabilities upon a manufacturer of land trader in beedis in respect of diverse matters which entail civil and criminal liabilities. Liabilities are imposed on manufacturer or trader in beedis in respect of home workers whom it is said, they cannot control. The home workers are in thousands. It is impossible for manufacturer to have any idea of the identity of the persons rolling beedis or the premises where they work. Raw materials are delivered to workers to do the work of rolling the beedis himself and not having done by anyother person. It is, therefore, said, there is no rational basis for imposing vicarious liability. Though liabilities and obligations are great in relation to contract labour there is said to be no corresponding creation of rights which normally exist in employer in respect of his employees. The cumulative effect and impact of the various previsions of the Act imposing liability on the manufacturer is said to render it impossible for the manufacturer or trader to carry on his business. From a commercial point of view, the restrictions are said to be drastic and unreasonable. 31. The Act defines in Sec.2(e) contract labour meaning any person engaged or employed in any premises by or through a contractor with or without the knowledge of the employer in any manufacturing process. From a commercial point of view, the restrictions are said to be drastic and unreasonable. 31. The Act defines in Sec.2(e) contract labour meaning any person engaged or employed in any premises by or through a contractor with or without the knowledge of the employer in any manufacturing process. Section 2 (f) of the Act defines employee to mean a person employed directly or through any agency whether for wages or not in any establishment to do any work skilled and unskilled and includes (i) any labourer who is given raw materials by an employer or a contractor for being made into beedi and cigar or both at home (hereinafter referred to in this Act as `home worker ) and (ii) any person not employed by an employer or a contractor but working with the permission of or under agreement with, the employer or contractor. Section 2(g) of the Act defines "employer" to mean (a) in relation to contract labour the principal employer, and (b) in relation to other labour, the person who has the ultimate control over the affairs of any establishment or who has, byreason of his advancing money, supplying goods or otherwise, a substantial interest in the control of the affairs of any establishment, and includes any other person to whom the affairs of the establishment are entrusted, whether such other person is called the managing agent, manager, superintendent or by any other name. Sec. 2(m) of the Act defines `principal employer to mean a person for whom or on whose behalf any contract labour is engaged or employed in an establishment. Section 2 (h) of the Act defines `establishment to mean any place or premises including the precincts thereof in which or in any part of which any manufacturing process connected with the making of beedi or cigar or both is being, or is ordinarily carried on and includes an industrial premises. Section 2 (i) of the Act defines `industrial premises to mean any place or premises in which any industry or manufacturing process connected with the making of beedi or cigar or both is being or is ordinarily, carried on with or without the aid of power. 32. These definitions indicate these features. First, there are workers in industrial premises and workers in an establishment. Second, the Act recognises home workers. Third, the Act recognises contract labour by or though contractor. 32. These definitions indicate these features. First, there are workers in industrial premises and workers in an establishment. Second, the Act recognises home workers. Third, the Act recognises contract labour by or though contractor. Fourth, any person who is given raw materials by an employer or a contractor is an employee. Again, any person though not employed by an employer or a contractor but working with the permission or under agreement with the employer or a contractor is an employee. Fifth, in relation to contract labour the principal employer is a person for whom and on whose behalf labour is engaged or employed in an establishment. Sixth, the employer in relation to other labour is a person who has ultimate control over the affairs of any establishment or who has by reason of advancing money, supplying goods or otherwise a substantial interest in the affairs of any establishment. 33. The two classes of employers are broadly defined as the employer and the principal employer. The first kind is the manufacturer who directly employs labour. Such a manufacturer becomes an employer within the meaning of Section 2 (g)(b) of the Act by engaging labour. The second class of employer is the principal employer who through a contractor as defined in Section 2 (e) of the Act engages labour which is known as contract labour. This labour is engaged by or on behalf of the manufacturer who becomes the principal employer. The third cateogry of employer is a contractor who engages labour for executing work for and on his own behalf. Such a conctractor may undertake work from a manufacturer or a trade mark holder but he becomes the principal employer in relation to contract labour on he ground that the labour is engaged for and on his own behalf. The fourth class of employer is where a contractor becomes what is known as sub-contractor, of a contractor. A contractor in such a case would ask the sub-contractor to engage labour for and on behalf of the contractor. In such a case the contractor would be the principal employer because the sub-contractor is engaging contract labour for and on behalf of the contractor who is the principal employer. The fifth class of employer is where a person by reason of advancing money or supplying goods or otherwise having a substantial interest in the control of any establishment becomes the employer of labour. The fifth class of employer is where a person by reason of advancing money or supplying goods or otherwise having a substantial interest in the control of any establishment becomes the employer of labour. To illustrate, a mortagagee in possession of an industrial premises, a hypotheticatee of goods manufactured in industrial premises or in any establishment, a financier in relation to a manufacturer or a contractor or a subcontractor may become employer by reason of such consideration mentioned in the Act. 34. In cases where the manufacturer or trade mark holder himself employs labour there is direct relationship of master and servant and therefore liability is attracted by reason of that relationship. There cannot be any question of unreasonableness is such a case. In the second category the manufacturer or trade mark holder engages contract labour through a contractor and he becomes the principal employer. Though such labour may be engaged by a contractor with or without the knowledge of the manufacturer or trade mark holder, this contract labour is engaged for the principal employer who happens to be the trade mark holder or the manufacturer. The liability arises by reason of contract labour engaged for or on behalf of the principal employer. In the third category the contractor becomes the principal employer because the contractorl engages labour for or on his own behalf. Where the contractor engages labour for the manufacturer it is not unreasonable restriction to impose liability on the manufacturer for the labour engaged by the manufacturer throuugh the contractor. It is important to notice that the Ac fastens liability on the person who himself engages labour or the person for whom and on whose behalf is engaged or where a person has ultimate control over the affairs of the establishment by reason of advancement of money or of substantial interest in the control of the affairs of the establishment. 35. Therefore, the manufacturers or trade mark holders have liability in respect of workers who are directly employed by them or who are employed by them through contractors. Workers at the industrial premises do not present any problems. The manufacturer or trade mark holder will observe all the provisions of the Act by reason of employing such labour in the industrial premises. Workers at the industrial premises do not present any problems. The manufacturer or trade mark holder will observe all the provisions of the Act by reason of employing such labour in the industrial premises. When the manufacturer engages labour through the contractor the labour is engaged on behalf of the manufacturer, and the latter has therefore liability to such contract labour. It is only when the contractor engages labour for or on his own behalf and supplies the finished product to the manufacturer that he will be the principal employer in relation to such labour and the manufacturer will not be responsible for implementing the provisions of the Act with regard to such labour employed by the contractor. If the right of rejection rests with the manufacturer or trade mark holder, in such a case the contractor who will prepare beedis through the contract labour will find it difficult to establish that he is the independent contractor. If it is genuine sale transaction by the contractor to the manufacturer or trade mark holder it will point in the direction of an independent contractor. 36. This Court in Dewan Mohidden Sahib v. United Bidi Worker s Union Salem (1964) 7 SCR 646 said that the so-called independent contractor in that case was supplied with tobacco and leaves and was paid certain amounts for the wages of the workers employed and for his own trouble. The so-called independent contractor was merely an employee or an agent of the appellant in that case. The so called independent contractor had no independence at all. The proprietor could at his own choice supply raw material or refuse to do so. The contractor had no right to insist on supply of raw materials to him. The work was distributed between a number of so called independent contractors, who were told to employ not more than 9 persons at one place to avoid regulations under the Factories Act. This court held that the relationship of master and servant between the appellant and the employees employed by the independent contractor was established in that case. If it is found that manufactureres or trade mark holders are not responsible on the ground that the persons with whom they are dealing are really independent contractors then such independent contractor will have to be considered as principal employers within the meaning of the Act. 37. If it is found that manufactureres or trade mark holders are not responsible on the ground that the persons with whom they are dealing are really independent contractors then such independent contractor will have to be considered as principal employers within the meaning of the Act. 37. The contention on behalf of the petitioners and the appellants that in common law a person cannot be made responsible for actions of an independent contractor and that he should not be penalised for the contravention of any law by an independent contractor is to be examined in view of the language employed in defining the expressions contract labour, contract, establishment, employer and principal employer. It was particularly said that when home workers were given tobacco and leaves directly by the manufacturers the home workers would not be under their control and the manufacturer should not be made responsible for providing any amenities or leave facilities for those home workers. 38. This Court in Silver Jubilee Tailoring House v. Chief Inspector of shops and Establishment (Civil) Appeal No. 1706 of 1969 decided on 25-9-1973 discussed the question as to whether employer employee relationship existed between the tailoring house and the workers in that case. The definition of a person employed in that case was a person wholly or principally employed therein in connection with the business of the shop. The workers were paid on piece rate basis. They attended the shop if there was work. The rate of wages paid to the workers was not uniform. The rate of dependent upon the skill of the workers and the nature of the work. The workers were given cloth for stitching. They were told how the stitching was to be done. If they did not stitch it according to the instructions, the employer rejected the work. The workers was asked to restitch. If the work was not done according to the instruction no further work was given to a worker. A worker did not have to make an application for leave if he did not come to the shop on a day. If there was no work, the employes was free to leave the shop. All the workers could take cloth for stitching to their homes. 39. Mathew J. speaking for the Court referred to the decisions of this Court and English and American decisions and came to these conclusions. If there was no work, the employes was free to leave the shop. All the workers could take cloth for stitching to their homes. 39. Mathew J. speaking for the Court referred to the decisions of this Court and English and American decisions and came to these conclusions. First, in recent years the control test as traditionally formulated has not been treated as an exclusive test. Control is an important factor. Second, the organisation test, viz., that the workers attend the shop and work there is a relevant factor. If the employer provides the equipment this is some indication that the contract is a contract of service. If the other party provides the equipment this is some evidence that he is an indepdendent contractor. No sensible inference can be drawn from the factor of equipment where it is customary for servants to provide for their own equipment. Little weight can today be put upon the provisions of tools of minor character an opposed to plant and equipment on a large scale. Third, if the employer has a right to reject the end product if it does not conform to the instructions of the employer and direct the worker to re-stitch it, the element of control and supervision as formulated in the decisions of this court is also present. Fourth, a person can be a servant of more than one employer. A servant need not be under the exclusive control of one master. He can be employed under more than one employer. Fifth, that the workers are not obliged to work for the whole day in the shop is not very material. In the ultimate analysis it would depend on the facts and circumstances of each case in determining the relationship of master and servant. 40. The present legislation is intended to achieve welfare benefits and amenities for the labour. That is why the manufacturer or trade mark holder becomes the principal employer though he engages contract labour through the contractor. He cannot escape liability imposed on him by the statute by stating that the he has engaged the labour through a contractor to do the work and therefore he is not responsible for the labour. The contractor in such a case employs the labour only for and on behalf of the principal employer. He cannot escape liability imposed on him by the statute by stating that the he has engaged the labour through a contractor to do the work and therefore he is not responsible for the labour. The contractor in such a case employs the labour only for and on behalf of the principal employer. The contractor being an agent of the principle employer for manufacturing beedis is amenable to the control of principal employer. That is why the statute says that even if the contractor engages labour without the knowledge of the employer the principal employer is answerable for such labour because the labour is engaged for or on his behalf. That Act and the rules thereunder prescribe maintenance of log books and registers. Where the manufacturer or the trade mark holder engages labour directly, the manufacturer maintains registers and log books. Where the manufacturer engages contract labour through a contractor the manufacturer will require the contractor to maintain such log books of the contract labour and through such books and registers will keep control over not only the contractor but also the labour. 41. The principal employer is the real master of the business. He has real control of the business. He is held liable because he exercise supervision and control over the labour employed for and on his behalf by contractor. The benefits of the welfare measure reach the workmen only by direct responsibility of the principal employer. The basis of the welfare measure is in the interest of the workers with regard to their health, safety and wages including benefits of leave and family life. The Bombay High Court and the Kerala High Court struck down the provisions contained in Sections 2(g)(a) and 2(m) of the Act in regard to the principal employer being liable for contract labour as an unreasonable restriction on the manufacturer s right to carry on business. This view proceeds on the basis that the principal employer is liable for acts of the independent contractor. The Act does not define an independent contractor, nor mention the independent contractor. The Act speaks of the principal employer in relation to contract labour and employer in relation to other labour. When a contractor engages labour for or on behalf of another person that other person becomes the principal employer. The Act does not define an independent contractor, nor mention the independent contractor. The Act speaks of the principal employer in relation to contract labour and employer in relation to other labour. When a contractor engages labour for or on behalf of another person that other person becomes the principal employer. The Attorney General rightly said that if it were established on the facts of any particular case that a person engaged labour for himelf he would be the principal employer of contract labour. In such an instance there is no question of agency on behalf of another person. 42. In case where an industrial manufacturer finds it convenient to give work on contract rather than do it by employing his own men he cannot have the advantages of employing the labour without corresponding obligations. If the contractores could be made responsible for the working conditions of labour or their wages or their leave or their other benefits then no question would arises. It is not uncommon for labourers to work for a contractor on terms which are designed to satisfy the law that they are not servants but independent contractors. 43. In the present case, it is not material to find out as to who can be called an independent contractors are those who employ labour for and on behalf of themselves in so far as the present Act is concerned. The only scope for inquiry is whether a person has employed labour for and on his own behalf. If the answer be in the affirmative then such a contractor would be a principal employer within the meaning of S.2(g)(a). 44. It appears that the principal employer or the employer as the case may be, is liable on the ground that the labour is employed for or on behalf of the principal employer or the employer. In relation to contract labour the principal employer is the person for whom or on whose behalf any contract labour is engaged in any establishent. An employer in relation to other labour is the person who has the ultimate control over the affairs of any estabishment or has a substantial interest in the control of the affairs of any establishment as defined in Section2 (g) (b) of the Act. There is no vicarious liability in the case of the principal employer or in the case of employer. There is no vicarious liability in the case of the principal employer or in the case of employer. The Act does not define an independent contractor. The Act does not prevent an independent contractor from being the principal employer in relation to contract labour. It will be a question of fact in each case as to who is the person for whom or on whose behalf contract labour is engaged. If such a contractor who is referred to as an independent contractor employs labour for himself the liability will attach to him as the principal employer and not to the manufacturer or trade mark holder. There is no restriction on the right of the manufacturer or the trade mark holder to carry on business. They are liable under the Act for contract labour employed for or on behalf of them. 45. For the foregoing reasons the provisions of the Act in particular contained in Sections 2 (g) (a), 2 (g) (b) and 2(m) are constitutionally valid and do not impose any unreasonable restriction on the manufacturer or trade mark holder. 46. On behalf of the petitioners and the appellants, it is said that Section 26 of the Act, gives substantive rights with regard to leave and Section 27 of the Act is the procedural part in computing wages. The contention advanced was that Section 26 of the Act speaks of employees in an establishment and, therefore, these sections do not apply to hom workers. The contentions are that Sections 26 and 27 of the Act cast an unreasonable burden and impose obligations which are not practically capable of fulfilment are thus violative of Article 19 (1) (f) and (g) of the Constitution. In any event Sections 26 and 27 of the Act are said to be unenforceable in regard to home workers and are, therefore, violative of Article 19 (1) (f) and (g) so far as the same are applicable to home workers. These two sections deal with leave and wages during leave period. Broadly stated Section 26 allows leave at the rate of one day for every 20 days of work performed by an adult employee during the previous calendar year. In the case of young person leave is at the rate of one day for every 15 days of work during the previous calendar year. Broadly stated Section 26 allows leave at the rate of one day for every 20 days of work performed by an adult employee during the previous calendar year. In the case of young person leave is at the rate of one day for every 15 days of work during the previous calendar year. There are provisions as to calculation of leave which are not material in the present case. 26. I have referred to the state of the record before us because, speaking for myself, I think it is imperative for a petitioner invoking the writ issuing jurisdiction of a High Court, whoever the petitioner may be, to set out facts with sufficient particulars to enable the High Court to exercise its writ issuing prerogative powers correctly. In the case before us, I find it very difficult to hold that the High Court had erred in rejecting the appellants writ petition in limine. As it gave no reasons for the rejection we do not know what they were. There could, on facts stated above, be more than one good ground for rejecting the writ petition in limine. It also rejected an application for grant of a certificate under Article 133 (1) (c) of fitness of the case for an appeal to this Court after merely expressing the opinion that it was not a fit case for certification. Thus, we are faced, at the outset, with the difficulty that unless we were to assume certain state of facts giving rise to question of law, it would be difficult to find the question we could or should consider and decide in this appeal by special leave. We have not got before us any judgment in which essential facts are elucidated. The Writ-Petition-cum-affidavit, set out in full above is devoid of indispensable particulars. 27. Learned Counsel for the petitioner seemed to me to assume that the so-called "Bangalore Scheme does exclude plying of stage carriages over overlapping portion of three miles between Hiryur and V. V. Sagar simply because it is a notified route. This is exactly what had to be shown to us from the contents of the scheme, after applying correct principles of interpretation to it, and from facts asserted and found showing which out of thelarge number of notified routes was being used by the respondent operator. This is exactly what had to be shown to us from the contents of the scheme, after applying correct principles of interpretation to it, and from facts asserted and found showing which out of thelarge number of notified routes was being used by the respondent operator. Even in the course of arguments learned Counsel for the appellant did not show us on which route the strip between Hiriyur and V. V. Sagar fell. This was essential because plying on overlapping parts of each one of 94 notified routes is not by itself, I find, forbidden by the relevant provisions of the scheme which I propose to consider. 1949 28. It appears to be the submission of learned Counsel for the appellant that, as the Bangalore Scheme was actually considered and interpreted earlier in the judgment of 17-5-1974 by a bench of this Court and certain general propositions of law were also discussed and enunciated there, we should, simply for that reason, consider those very questions of law again on assumed facts and rectify what, it is submitted on behalf of the appellant, are errors in the opinion of the Bench which decided the cases mentioned above. The main argument against the view expressed in that judgment is that these are not reconcilable with earlier decisions, and in particular, with 1962 Supp (1) SCR 728 case. This contention rests on a failure to appreciate what was really in dispute in earlier cases and what was the ratio decidendi of Mysore State Road Transport Corporations case decided on 17-5-1974 (SC). 29. I think Dr. A. L. Goodhart has correctly said, in an elaborate essay on "Determining the Ratio Decidendi of a case (See Jurisprudence in Action, 1953, Essays published by the Association of the Bar of New York), that the principle of a case is determined by taking into account the facts treated by the Judge deciding a case as material and his decision "as based thereon. Salmond, in his "Jurisprudence. (12th Ed. p. 181) has observed that Courts, in their quest for "the rule which the Judge thought himself to be applying, tend to ignore this method in practice. It was stated there: "any such rule must be evaluated in the light of facts considered by the Court to be material. Salmond, in his "Jurisprudence. (12th Ed. p. 181) has observed that Courts, in their quest for "the rule which the Judge thought himself to be applying, tend to ignore this method in practice. It was stated there: "any such rule must be evaluated in the light of facts considered by the Court to be material. Therefore, we have to find out what was really the basis of the dicision of 17-5-1974 (SC) in Mysore stated Road Transport Corporations case (supra) before attempting to deduce any general principle or proposition of law from it which could be said to be in conflict with earlier decisions of this Court given upon other scheme and in a different legal setting. 30. A persusal of the judgment of 17-5-74 (SC) in Mysore State Road Transport Corporations case reveals that it dealt with 22 appeals by special leave and thirteen special leave petitions involving 3 different schemes. All these were connected and heard together because of a common question of law said to be involved there. This Court could not, therefore, go into the facts of each case separately. It framed the common question of law an answer to which could decide all the cases before it. It then found that the answer could not be given without reference to the provisions of and an interpretation of each particular scheme. 31. The judgment starts by accepting as correct the position found in Nilkanth Prasads case (1962 Supp (1) SCR 728 and in (1973) 2 SCR 925 that a scheme could exclude plying of stage carriages on hire by private operators completely on a route if that is what was intended by it. It then referred to the relevant provisions of law for framing of a scheme, including the rules notified in the Mysore Gazette dated 27-2-1958 laying down specification of certain particulars as necessary conditions to be observed in framing schemes so as to make it clear which private operators were excluded either wholly or partially from plying upon any route or portion of a route. These particulars were required by the rules framed so that a duty imposed by Section 68-C of the Motor Vehicles Act (hereinafter referred to as the Act) may be discharged. It was also difficult, without these particulars, to apply Section 68-F meant for the enforcement of the scheme. These particulars were required by the rules framed so that a duty imposed by Section 68-C of the Motor Vehicles Act (hereinafter referred to as the Act) may be discharged. It was also difficult, without these particulars, to apply Section 68-F meant for the enforcement of the scheme. The cases were decided on an interpretation of each scheme in the light of the rules. The correctness of the decision of each case by interpreting the provisions of each scheme, stands apart from the meaning to be attributed to the term "route under the provisions of the Act. 32. As one of the schemes whose provisions were interpreted by the judgment of 7-5-1974 was the Bangalore Scheme, not before us, we have to look at the provision of that scheme to test the correctness of the decision on the assumption that the term "route for the purposes of this aspect of interpretation, must be equated with a highway or road covered by it. Proceeding on this assumption, for the purposes of this argument, we may examine the Bangalore Scheme. 33. We find that sub-rules (3) and (4) of Rule 1 are repeated in the headings of clauses 3 and 4 of the scheme, given on the left hand side with the relevant contents of the scheme under the appropriate heading on the right hand side against each heading. The relevant clauses read thus: 1950. 3. The route or routes (with their starting points, terminii, intermediate stations and route length) in which the State Road Transport Undertaking shall introduce its services to the exclusion of private operators. (a) The passenger transport services on the routes appearing at SI. Nos. 1 to 22 and 24, 25, 26, 27, 28, 39 and 53 of the statement appended including services between any two places therein should be run and operated by the State Transport Undertaking to the complete exclusion of other operators; (b) Subject to (a) above, the State Transport Undertaking should operate services on the remaining routes appearing in the statement appended between the two specified terminals only to the complete exclusion of all other operators, excluding the intermediate routes. 4. The number of existing stage carriages on each route with the number of trips and the names their operators. 4. The number of existing stage carriages on each route with the number of trips and the names their operators. At present only the Mysore Government Road Transport Department is operating services on these routes, and in the number of existing stage carriages and number of trips are as in statement appended. 34. In the preamble to the Bangalore Scheme, we find that the scheme submitted by the Mysore State Transport Undertaking was approved under Section 68-D (2) of the act by the government of Mysore subject to the following modifications. "(a) that the passenger transport service on the routes appearing at SI. Nos. 1 to 22 and 24, 25, 26, 27, and 53 of the statement appended including services between any two places therein should be run and operated by the State Transport Undertaking to the complete exclusion of other operators; (b) Subject to (a) above, the State Transport Undertaking should operate services on the remaining routes appearing in the statement appended between the two specified terminals only, to the complete exclusion of all other operators, excluding the intermediate routes; (c) the approved scheme shall come into force from the date of its publication in the Mysore Gazette. Neither proposals originally made nor the decisions given thereon, apart from what is stated in the preamble were placed before us to throw light on the precise meaning of any ambiguous parts of the contents under headings 3 and 4 of the scheme. We also find that the headings 3 and 4 mechanically repeat the provisions of sub-rules (3) and (4) of Rule 1 of the Mysore rules. The contents of the scheme against the heading similarly repeat faithfully the provisions of the preamble except that route Nos. 28 and 39 are found added in class (a). It is quite clear that notified routes are divided into two classes. In class (a) are placed routes numbered 1 to 22 and 24 to 28 and 39 and 53, whereas the remaining routes are placed in class (b). A glance at the purported copy of the scheme placed before us shows that there were altogether 94 routes separately numbered. Each route is identified by its terminii with a separate column for intermediate stations of each route. Out of these routes, only 29 are placed in class (a) of complete exclusion of private operators from them, including services between "any 2 places therein. Each route is identified by its terminii with a separate column for intermediate stations of each route. Out of these routes, only 29 are placed in class (a) of complete exclusion of private operators from them, including services between "any 2 places therein. The remaining 65 notified routes obviously fall in class (b) of exclusion of private operators from services "between 2 specified terminals only. In other words, plying on overlapping portions, which did not constitute service "between the 2 specified terminals only of a notified route, was not excluded. This interpretation is clarified further and reinforced by the specific statement that the complete exclusion of all other operators in class (b) was subject to the exclusion of "intermediate routes from the exclusion clause itself. This is the only distinction between the 2 classes and its only reasonably possible meaning. Otherwise, there was no point in dividing the 94 routes into two classes. 35. In cases falling within class (a) of the Bangalore Scheme one could perhaps reasonably assume complete exclusion 1951 of private operators but not in class (b) where exclusion of private operators from overlapping parts of routes was expressly exempted. Indeed, this meaning becomes even more reasonable and evident if the term "route is identified with a "highway or a "road. Plying between an "intermediate portion of a specified route as a part of the highways necessarily implies running on overlapping portions of highways. The Bench, in its decision of 17-5-1974, was unable to relate the facts of the cases before it to a prohibition of overlapping of routes. This also meant that it could not determine whether cases before the Court relating to the Bangalore Scheme fell within class (a) or class (b). It pointed out that the Mysore Transport Undertaking had the remedy for this uncertain state of affairs in its own hands if complete exclusion of private operators from every overlapping part of a notified route was also intended by the framers of the scheme. It could go before the State Government with a proposal to get the Bangalore scheme appropriately clarified and modified under Section 68-E of the Act. It could go before the State Government with a proposal to get the Bangalore scheme appropriately clarified and modified under Section 68-E of the Act. Instead of doing that, the Mysore state Road Transport Corporation had preferred to litigate over this issue from 1968 onwards in an attempt to exclude other operators who may have been operating even before the scheme came into force but who were not treated as excluded operators by the scheme itself as they only used overlapping parts of certain routes. It was essential to show us, before asking us to infer a complete exclusion that, even on the assumption made above, the overlapping part involved in a case falls at least under class (a) of notified routes. 36. Speaking for myself, I am unable to discover any flaw in the reasoning of the Division Bench decision of 17-5-1974 of this Court. It did not deal with such questions as the failure of the Mysore State Road Transport Corporation either to object to earlier renewals or to challenge any possible subsequent renewals in cases where renewals had expired during the pendency of appeals in this Court because doing that would have meant burdening the judgment with questions relating to individual cases. It was not necessary to do so far the decision of all the cases on a common question of law. 37. The Bangalore Scheme was found to be too ambiguous to be capable of implying a prohibition in all the cases before the Court which were set up with no greater clarity and definiteness than the case now before us has been set up. Indeed, I suspect that the meagre statement of facts in the Writ Petition of the case before us and in other cases which were decided on 17-5-1974 and the failure of the appellant to base its case upon a clear assertion that it fell squarely within the four corners of class (a) of the excluded operators may be due to the fact that the case actually fell in class (b) I do not find it possible, on the statements made in the petition before us or in the orders of the Transport Authorities, to correlate any particular part of the route of the respondent with a route falling within class (a) of the 29 routes dealt with in class 3 (a) of the scheme. A similar view underlay the decision of 17-5-74 by a Bench of this Court. It said: "Lastly, as regards the Bangalore scheme, the case of the appellant Corporation may seem better inasmuch as the words used there are: the complete exclusion of all other operators excluding the intermediate routes. But even here, the exclusion appears to be only of operators providing services between the terminii mentioned there and not merely using overlapping portions of the notified routes incidentally. 38. The reasons for this view are now given by me more elaborately and explicitly and with special reference to the assertions made by the appellant in the case before us. 39. I will not turn to the question whether the concept of a "route, which was held to be correct, by the Division Bench in the judgment dated 17-5-1974, in the context of the schemes before it and the change of law after the amendment of the Motor Vehicles Act by the Act No. 56 of 1966, adding a definition of "route, was in conflict with any of the earlier decisions. Inasmuch as neither the provisions of the schemes interpreted by the judgment of 17-5-1974 nor the amended law was before this Court on any earlier occasion, I find it very difficult to accept the view that we are still bound by a declaration of law by this Court on other schemes or on law prior to amendment relied upon in the judgment of 17-5-1974. Indeed, I think that the bench of this Court respectfully followed the rule of interpretation deducible from Nilkanath Prasads case (1962) Supp (1) SCR 728 that the 1952 meaning to be assigned to the term "route depends upon the relevant provisions of law for interpretation before the Court. It has been contended on behalf of the appellant itself that each approved scheme constitutes law. Accepting this submissions, which is supported by pronouncements of this Court, an interpretation of each separate scheme would be an interpretation of a different law to be given in the context of the provisions of that scheme. 40. Hidayatullah, J., in Nilkanth Prasads case 1962 Supp (1) SCR 728 did not consider the concept of a "route found in 1946 AC 338 to be incorrect. 40. Hidayatullah, J., in Nilkanth Prasads case 1962 Supp (1) SCR 728 did not consider the concept of a "route found in 1946 AC 338 to be incorrect. The learned Judge said (at p. 736): "The distinction made by the Privy Council is right; but it was made with reference to the words used in the Ordinances there under consideration. The Division Bench of this Court in the judgment of 17-5-1974 also found this meaning of a "route to be correct in a context different from the one which was before the Court when it decided Nilkanth Prasads case (supra). The reasons why the bench of this Court, in its judgment dated 17-5-1974, did not equate the term "route with "road were two-fold : firstly, a different concept underlay each of the three schemes before the Court, including the Bangalore Scheme and the relevant rules to be observed in framing such schemes; and, secondly, the newly introduced definition constituted an amendment of or a departure from the definition of "route found in Nilkanth Prasads case (supra). Obviously, neither Nilkanth Prasads case nor other cases are applicable authorities either on any question of interpretation of the provisions of the Bangalore Scheme or on the question whether the law giving the meaning of "route had changed in the direction indicated by the judgment of 17-5-1974. 41. I may now elaborate the two sets of reasons underlying the definition of the term "route adopted in the judgment of 17-5-1974 although as I have explained earlier, a new definition of the term "route was not absolutely necessary for the decision of 17-5-1974 or of the case before us because of the ambiguities resulting from the very meagre assertions, devoid of particulars with which the appellant petitioner went to the High Court. Their scantiness could perhaps be only matched by the paucity of the provisions of the Bangalore Scheme itself. 42. It will first take up the second of the two sets of reasons given above for accepting a new definition of "route, as that seems to me to raise the narrow question into which the main difference between the views of my learned brethren for whom I have the greatest respect and mine resolves itself. 42. It will first take up the second of the two sets of reasons given above for accepting a new definition of "route, as that seems to me to raise the narrow question into which the main difference between the views of my learned brethren for whom I have the greatest respect and mine resolves itself. That question is: Did the addition of a definition of "route by Section 2 (28-A) of the Motor Vehicles Act in 1966 signify a departure from or change in any difinition of it by this Court deducible from the judgment in Nilkanth Prasads case, 1962 Supp (1) SCR 728 43. The rules to be employed in answering such a question were laid down long ago in Heydons case, (1584) 3 Co Rep 7a (8) where, in what appears to us the rather quaint 16th century language, it was said: "that for the sure and true interpretation of all statutes four things are to be discerned and considered: 1st, What was the Common Law before the making of the Act? 2nd, what was the mischief and defect for which the Common Law did not provide? 3rd, What remedy the Parliament hath resolved and appointed to cure the disease of the Commonwealth: and, 4th, The true reason of the remedy And then the office of the all the Judges is to make such construction as shall suppress the mischief and advance the remedy.... according to the true intent of the makers of the Act. 44. This Court, which has repeatedly applied these rules, pointed out, in Bengal Immunity Co. v. State of Bihar (1955) 2 SCR 603 at p. 633 that the method of interpretation found in what is known as the "Mischief Rule is "as necessary now as it was when Lord Coke reported Heydons case, (1584) 3 Co Rep 7A (8). Expressed in modern terms it only means that the purpose and significance of an enactment is to be found after exploring the short-comings or the defects which were sought to be removed by means of it by Parliament which does not legislate in vain or without some reason or need for it. Expressed in modern terms it only means that the purpose and significance of an enactment is to be found after exploring the short-comings or the defects which were sought to be removed by means of it by Parliament which does not legislate in vain or without some reason or need for it. And as all law, including enacted law, is a response to a need which has arisen, we have to examine the situation or the context in which the need for an amendment in it arose by an addition in it or alteration of it in order to appreciate its true meaning. Law after all, is not static. It changes in response to the growing needs it has to serve so as to advance the public good. 1953 45. Ours is a developing country in which Motor Transport serves an essential need for locomotion by members of the public who, as workers, as businessmen, or as persons pursuing their various avocations in life must be transported conveniently and rapidly from one place to another if they are to efficiently work and add to national wealth. It is obvious that the expenditure and organisation involved in maintaining an efficient and comfortable motor transport service extending over long distances is so great that only the State can meet this public need satisfactorily ,. It was for this reason that the amending Act 100 of 1956 introduced the provisions of Chapter IV-A into the Motor Vehicles Act so that (See Section 68-C) schemes may be framed for running motor transport services by State run undertakings for the purpose of providing "efficient, adequate, economical, and properly co-ordinated road transport services, when it is found to be necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State Transport Undertaking, whether to the exclusion, complete or partial, or other persons or otherwise. It is noticeable that the power given to frame a scheme which has the force of law was to be exercised in such a way as to give all persons affected, including members of the public, for whose benefit a scheme was to be framed, due opportunity of being heard so that there may be a proper adjustment between the amount of exclusion needed for maintaining an efficient State-owned motor transport service and the needs of the public; particularly on smaller routes which could, in certain cases, perhaps be better served by private operators. Such private operators may be more aware, more watchful, and better able to meet the needs of the public of a particular locality. Hence, consistently with our mixed economy, the provision made was not for a total exclusion of private operators, automatically by the mere fact of a notification of a route or area, but, for framing of schemes with necessary particulars indicating the extent to which private operators were to be excluded or still allowed to operate in any manner on notified routes. The schemes could be of either total or partial exclusion of private operators from routes or areas. 46. Another noticeable feature of the law, as bound in Section 68-C of the Act, is that it confers power to excluded private operators only from proposed "services of particular areas or routes. Each scheme was meant to contain "particulars of the nature of the services proposed to be rendered, the area or route proposed to be covered and such other particulars, respecting thereto as may be prescribed. The whole object of these provisions was to make a scheme elastic enough to be capable to serving public needs by such combinations or mutations of State Transport as well as private transport services as may be shown to best subserve public convenience and interests, although, where this was found necessary for satisfying public needs, complete exclusion of private operators from certain routes and areas is possible. Furthermore, the framers of Section 68-C spoke of "the area or route proposed to be covered. by services but avoided using the word "road. Furthermore, the framers of Section 68-C spoke of "the area or route proposed to be covered. by services but avoided using the word "road. It seemed,therefore, that they intended to distinguish the right of the public to use the highways which are, as is well settled in law dedicated to the use of members of the public in various ways (See Himat Lal K. Shah v. Commissioner of Police, Ahmedabad, AIR 1973 SC 87 at p. 103; Municipal Board, Manglaur v. Mahandeoji Maharaj, (1965) 2 SCR 242 form the right to provide moter transport services to passengers paying for these services on specified routes or in particular areas. The right to provide these services could be vested wholly or partially in State undertakings. It is only in this sense that a particular "route of a stage carriage representing a right to provide a particular service exclusively, could "vest in a state undertaking. 47. It is also noticeable that, before the addition of Section 2(28-A) of the Act by the Amendment Act 56 of 1966, there was no definition of the term "route. The result was that this Court had indicated its own definition in Nilkanth Prasads case 1962 Supp (1) SCR 728 This case related to a route from Gaya to Khijirisarai on which, according to the statement of facts in the case, the Rajya Transport, Bihar "was exclusively allowed to operate. No question to exclusion of a private operator from merely an overlapping part of a route was involved there. It appeared that there private operators claimed a right to ply for hire over the 1954 whole of a notified route on the ground that it was included in their longer route. In this context, this Court, after holding the definition of "route given by the Privy Council in Kelani Valley Motor Transit Cos case 1946 AC 338 to be correct, in its own context, said (at pp. 737 -738): "The distinction between route as the notional line and road as the physical track disappears in the working of Chapter IV-A, because you cannot curtail the route without curtailing a portion of the road, and the ruling of the Court to which we have referred, would also show that even if the route was different, the area at least would be the same. The ruling of the Judicial Committee cannot be made applicable to the Motor Vehicles Act, particularly Chap. IV-A, where the intention is to exclude private operators completely from running over certain sectors or routes vested in State Transport Undertakings. In our opinion, therefore, the appellants were rightly held to be disentitled to run over those portions of their routes which were notified as part of the scheme. It could be and was therefore, urged before us that this amounted to really identifying the term route with a road. In addition, there was the observation that certain sectors or routes " vested in State Transport Undertakings. 48. In Nilkanath Prasads case 1962 (Supp 1 SCR 728 this Court relied upon a passage from AIR 1961 SC 82 which did not really deal with a definition of a route but only pointed out that there was "no unherent inconsistency between an area and a route and that "the proposed route is also an area limited to the route. In Kondala Raos case (supra) this court said: The scheme may as well propose to operate a transport service in respect of a new route from point A to point B and that route would certainly be an area within the meaning of S. 68-C. But, in that case, this Court did not go so far as to say that the "route viewed as the road itself over which it ran, vested in the State Undertaking. On the other hand, it spoke of the States power to exclude from "service only of an area or a route. It said of Section 68-C (at p. 87): "The section enables the State of take over a particular class of a service, say, the bus service, and exclude all or some of the persons doing businesss in that class of service. Classes of "service could be most conveniently indicated by "service between certain specified termini and at given times If the termini or timings were different a "service may be different even if it meant an overlapping part of service between other termini. 49. The result of this state of law was that there was no clear definition of the term "route. Nilkanth Prasads case 1962 Supp (1) SCR 728 had practically identified the term route with a road and contained an observation that the "route vested in the undertaking. 49. The result of this state of law was that there was no clear definition of the term "route. Nilkanth Prasads case 1962 Supp (1) SCR 728 had practically identified the term route with a road and contained an observation that the "route vested in the undertaking. If this view was to be carried to its logical conclusion, the State Transport Undertaking could exclude even the user of a road by anyone for any purpose whatsoever provided it notified a route which ran over it. Such a consequence appeared to be quite alarming. In any case, until a scheme made it clear what was really excluded, a Court had to be careful not to exclude operators who may be serving an urgent public need without damaging the interests of any State Undertaking. 50. While this was the state of our law before the definition of the term "route by Act 58 of 1966, there was another definition of this term contained in Kelani Motor Transit Cos case 1946 AC 338. It was held there with reference to the provisions of certain Ordinances from Colombo: (at pp. 345-346): "... in their Lordships opinion it is impossible to say that route and highway in the two Ordinances are synonymous terms. In both Ordinances, particularly in Section 54 of the original Ordinance and Section 7 of the amending Ordinance, the two words are used, and certainly not interchangeably. A highway is the physical track along which an omnibus runs, whilst a route appears to their Lordships to be an abstract conception of a line of travel between one terminus and another, and to be something distinct from the highway traversed. 51. A highway is the physical track along which an omnibus runs, whilst a route appears to their Lordships to be an abstract conception of a line of travel between one terminus and another, and to be something distinct from the highway traversed. 51. A perusal of the judgment of the Privy Council in Kelani Valley Motor transit Cos case 1946 AC 338 = (AIR 1946 PC 137) (supra) shows that, in arriving at the conclusion set out above, it thought that it was very significant: "that every applicant for a licence for an omnibus shall specify in his application particulars of the route or routes on which it is proposed to provide a service under the licence; 1955 that, every licencing authority, had, under Section 54, to "specify on every licence for an omnibus issued by that authority- (a) the approved route or routes on which that omnibus may ply or stand for hire, and the number, if any, assigned to each route under Section 57; (b) the two places which shall be the termini of each such route; and (c) the highway or the several high ways to be followed by the omnibus in proceeding from one terminius to the other. that, the Commissioner had to "specify in the licence the route or routes on which the service is to be provided in the licence. It is clear that these features, which were present under the Ordinances interpreted by the Privy Council, are also present under our Motor Vehicles Act. Moreover, it is very difficult to conceive of anyone getting a monopoly to use certain roads merely because of an exclusive right to ply over a particular route given for the purpose of providing particular services between given termini. Some overlapping of routes, particularly in a large city, whether it is Delhi, or London, or New York, or Colombo, is quite unavoidable where a number of services between different termini have to be provided. The routes are invariably numbered as they are under the Bangalore Scheme. This fact was also considered significant by the Privy Council in reaching its conclusion which appears to conform of a general practice world over to meet practical requirements and exigencies. It is particularly useful in framing schemes which have to specify what particular services are to be provided by State agencies and which by other operators. This fact was also considered significant by the Privy Council in reaching its conclusion which appears to conform of a general practice world over to meet practical requirements and exigencies. It is particularly useful in framing schemes which have to specify what particular services are to be provided by State agencies and which by other operators. Particular routes, irrespective of overlapping over their portions, could be separately numbered and indicated for particular classes of service. This seems quite unavoidable if the convenience of the public using the highways and elasticity in the framing of schemes are to be governing factors. These considerations are meant to be decisive both under section 47 of the Act as well as under Section 68-C of Chapter IV-A of the Act. 52. One is, therefore, driven irresistibly to the conclusion that an amendment in the definition of a route was considered necessary by Act 56 of 1966 by Parliament as the concept of "route contained in Nilkanth Prasads case 1962 Supp (1) SCR 728 was highly inconvenient and unsatisfactory in framing schemes of transport services for the benefit of the public for whose use the highways are dedicated, and that it preferred the definition of a route as an abstract "line of travel between two termini. In fact, this is exactly what the definition said when it laid down in Section 2 (28-A): " route means a line of travel which specifies the highway which may be traversed by a motor vehicle between one terminus and another. 53. In the definition set out above, introduced by the amending Act 56 of 1966, there is a clear distinction between "the line of travel between two termini, which a route is, and the highway which is to be traversed by a motor vehicle to which a "route, as a "line of travel may be assigned. To identify a route as a line of travel with the actual road on which vehicles traverse would, it appears to me, amount to altering the definition set out above into: "a route is that part of the highway on which a motor vehicle may travel. If that was the real meaning there was no point in introducing the concept of a "line of travel, which is abstract, and mentioning the highway as the concrete surface of the earth over which a vehicle traverses or the route lies. If that was the real meaning there was no point in introducing the concept of a "line of travel, which is abstract, and mentioning the highway as the concrete surface of the earth over which a vehicle traverses or the route lies. What is superimposed as a "line of travel only can only be conceived of as an abstraction or a separable essence. 54. It seems to me that there is nothing in the working of the provisions of Chapter IV-A of the Act which conflicts with the new definition laying down that a route is "a line of travelas an abstract concept. Section 68-F of the Act, which enables the curtailment of a route, does not appear to me to have anything to do with the concept of a route. It merely provides for the consequences of the enforcement of a scheme which may involve the curtailment of a route or area so as to fulfil the requirements of the scheme, whatever may be the meaning of "route. The curtailment of a route does not imply that the route is to be necessarily equated with a highway or that its curtailment eliminates overlapping of routes. 55. For all the reasons given above, I think that the new definition of a route introduced by Act 56 of 1966 was not intended to merely declare the law, which is a judicial function, but to amend the law as declared by this Court in Nilkanth Prasads case 1962 Supp (1}) SCR 728 so as to bring it in the line with public needs and 1956 convenience. It answered a "felt necessity. On this view of the matter, I think it could not be urged that either Nilkanth Prasads case (supra) or that S. Abdul Khader Sahebs cases (1973) 2 SCR 925 which do not deal with the law as we find it laid down in the amended provision, would stand in the way of the view taken in the judgment of 17-5-1974. 56. I may now briefly dispose of the first of the two sets of reasons given for adopting what may be called the "abstract definition of "route discussed above...that the provisions of the Bangalore scheme fit in with a such a definition. 56. I may now briefly dispose of the first of the two sets of reasons given for adopting what may be called the "abstract definition of "route discussed above...that the provisions of the Bangalore scheme fit in with a such a definition. In support of this approach, as already mentioned above, one could cite Nilkanth Prasads case 1962 Supp (1) SCR 728 itself because that decision had proceeded on the view that the definition of a route must vary with the legal provisions to be interpreted. If each scheme embodies a set of rules which have the force of law it is possible for the term "route to bear a different meaning under each separate scheme unless there is some statutory provision which prevents this from being done. I have already considered the statutory provision which has, in my opinion, introduced an abstract concept of a "route even though it is linked with a highway so that the two routes may be different, even when the termini are identical, if the highways specified and to be traversed are different. The specification of the termini as well as of intermediate stations is intended to indicate only the direction to be followed or the highways to be traversed. It does not mean that the route is to be identified with a highway to be traversed in taking a route. This view seems to me to be borne out by the provisions of the Rules 3 and 4 in framing the schemes and also by the contents of the Bangalore scheme. 57. In reaching a conclusion about the meaning of the term "route to be found in Bangalore scheme, the Judgment of 17-5-1974 shows that this Court accepted the argument advanced on behalf of the private Inter-State operators that the failure to specify their names in entries against heading 4 as required by Rule 4, indicated that they were not considered by the framers of the scheme to be plying on any of the notified routes at all. In other words, although they were plying on overlapping portions of notified routes, yet, the scheme treated them as persons not plying on the notified routes. The entry actually was that only State owned vehicles were plying on notified routes. In other words, although they were plying on overlapping portions of notified routes, yet, the scheme treated them as persons not plying on the notified routes. The entry actually was that only State owned vehicles were plying on notified routes. This meant that the concept of the route in the minds of the framers of the scheme was an abstract one of service between two termini only with certain given intermediate stations indicating the directions to be taken by the line of travel and that they did not consider mere user of overlapping portions of routes by private operators, who were actually already there, as provisions of services on those routes. 58. To counter this argument in the cases decided on 17-5-1974, as in the case before us, Learned Counsel for the appellant Corporation tried to contend that private operators had been introduced only after the scheme had come into force in 1960. This assertion is based on no evidence whatsoever. On the other hand, all the probabilities of the case are against the correctness of such a sweeping claim. The whole scheme governs, according to the copy of it handed in by the learned Counsel of the Appellant Corporation, 94 routes, including a very large number of routes starting from Bangalore and others from Mysore City. It seems quite inconceivable that in 1960 no private stage carriages were providing any service on any of the roads covered by ninety four routes. The only rational explanation of the statement that only State transport services ran on these routes in 1960 is that routes were identified by their termini and intermediate stations. The highways were to be specified to distinguish them from and not to identify them with routes. The two concepts were different. 59. Furthermore, route No. 39 is mentioned merely as "Mysore City Service. In other words, it is described as a "service which is an abstract concept. In Col. 3 meant for intermediate stations, in the statement annexed to the scheme, occur the words: "all routes in the city of Mysore and its suburbs. Now, "Mysore City Service could not conceivably be any highway. The entries in Col. 3 of the statement are not of intermediate stations but "all routes in the City of Mysore and its suburbs. 3 meant for intermediate stations, in the statement annexed to the scheme, occur the words: "all routes in the city of Mysore and its suburbs. Now, "Mysore City Service could not conceivably be any highway. The entries in Col. 3 of the statement are not of intermediate stations but "all routes in the City of Mysore and its suburbs. ;; If the intention was that all the roads in the city of Mysore were reserved exclusively for the use of vehicles of the State Transport Undertaking, it would completely paralyse the business of all private operators who could not enter Mysore City at all. I do not think that we could adopt 1957 such a unreasonable interpretation of the Bangalore scheme. If that was the intention of its framers they should have clearly said so. In that case, the constitutional validity of such a provision could be considered because the Constitution postulates the exercise of all power, including legislative power, reasonably and for satisfying the purposes for which it is meant. The restriction or deprivation could not be excessive or more than what was needed to serve the purpose for which it was to be imposed. Section 68-C of the Act restricts schemes to be framed under it to purposes given there. A scheme of complete exclusion of private operators from any number of "routes as defined by Section 2(28-A) and explained above, could satisfy these tests. But, their complete exclusion from the user of certain highways may violate Article 19(1)(g) of the Constitution in addition to falling outside the purview of Section 68-C of the Act. It is a well established rule of construction that even where two alternative interpretations are equally open, the one which avoids an invalidity should prevail. This mode of construction is only an application of the principle us res magis valeat quam pereat. 60. It, therefore, appears to me that the difficulties mentioned above could only be overcome by accepting the view that both the introduction of a new definition of route by Act 56 of 1966 as well as the provisions of the Bangalore scheme are based upon a definition of a "route which coincides with the view taken of very similar provisions by the Privy Council in the Kelani Valley Motor Transit Cos case 1946 AC 338. If we were to accept this concept of a route the mere overlapping of some portions of a route, whether it falls in class (a) or class (b) of the routes mentioned against heading 3 of the Bangalore scheme, would not debar a private operator from plying on his own but different route which is not notified at all. 61. An objection to the meaning of the term "route adopted by me is that, if it was accepted, by provisions of a scheme could be defeated by creating almost wholly overlapping but very slightly longer or shorter routes. I have no doubt that, it mala fide attempts were made to deliberately circumvent provisions of a scheme, neither transport authorities nor Courts would allow them to succeed. It was for this reason that the State Transport Tribunal had evolved its own formula that overlapping beyond five miles should not be permitted. This limit set by it did not, in my opinion, contravene any provision of the scheme which is silent on the matte.r In any case, I do not see why Courts and not those who can fill up gaps by amending a scheme should be called upon to convert into a prohibition what seems, on ground given above, to be permitted to citizens as incidents of their rights to use highways. 62. For all the reasons given above, I see no reason whatsoever to take a different view from the one I took in the judgment of 17-5-1974. The result is that I would dismiss this appeal with costs. Appeal allowed. For Citation: AIR 1974 SC 1940 Vikas Info Solutions Pvt. Ltd.