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2010 DIGILAW 338 (JK)

Divisional Manager v. State Of J&K

2010-06-03

Hakim Imtiyaz Hussain, Sunil Hali

body2010
1. This appeal is directed against the judgment and order dated 02.06.2009 of learned Single Judge in OWP Nos: 959/2003 and 37/2007 titled Divisional Manager and ors v. State of J&K & Ors. 2. Brief facts of the case are as under: Provident Fund Commissioner (Enforcement) Jammu (for short "the Commissioner") has issued various notices to the State Forest Corporation asking them to deposit the contribution for the workers engaged by the Contractors/Mates of the Corporation for extration of Work under the Jammu and Kashmir Employees Provident Funds (And Miscellaneous Provisions) Act, 1961 (for short "the Act"). The Corporation, however, failed to make contributions so recovery proceedings were initiated against the Corporation by the Special Tehsildar (Recovery) Assistant Collector 1st Class Jammu. A writ petition OWP No. 959/2003 was filed by the Corporation seeking quashment of the notices issued by the Special Tehsildar (Recovery). During the pendency of the said writ petition, another writ petition OWP No. 37/2007 was also filed by the Corporation seeking direction to the Commissioner not to proceed against the Corporation Under the provisions of the Act. These petitions were considered by the Court and vide a common judgment dated 02.06.2009, learned Single Judge, allowed both the petitions and quashed the recovery notices impugned in these petition. The learned Single Judge, however, directed the Commissioner to determine the amount payable by the Corporation as employer’s/employees contribution under the Act and the Scheme in force after holding an enquiry and hearing the Corporation in this behalf in terms of the provisions of Section 8-A of the Act. Learned Single Judge thus found that the Act was applicable to the Corporation also but found that the notices impugned were not in accordance with the provisions of Section 8-A of the Act. 3. Feeling aggrieved of the findings of the learned Single Judge, the Corporation has now filed the present appeal seeking setting aside of the judgment and order dated 2.6.2009. Various pleas have been taken to assail the judgment interalia that the provisions of the Act are not applicable in the case of the Corporation and that the learned Single has wrongly interpreted section 2(d) of the Act which defines the employee covered under the provisions of the Act. Various pleas have been taken to assail the judgment interalia that the provisions of the Act are not applicable in the case of the Corporation and that the learned Single has wrongly interpreted section 2(d) of the Act which defines the employee covered under the provisions of the Act. Section 2(d) of the Act provides as under: "2(d) " Employee" means any persons whose services are non-pensionable and who is employed for wages in any kind of work, manual or otherwise in or in connection with the work of an establishment and who get his wages directed or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of establishment." The learned Single Judge while interpreting the word "employee" found that the definition included even those persons who are employed by or through a contractor, in connection with the work of an establishment. The learned Single Judge observed that labour engaged by the contrator/mate who were admitted by the Corporation to be doing the work of the Corporation fell within the definition of the "employee" in terms of the provisions of the Act. Wages drawn by a worker may not thus have any relevance in determining his/her status for the purpose of considering the applicability of the provisions of the Act to an employee, seeking deposit of contributions under the Act with the Provident Fund Commissioner. 4. Mr. Bhardwaj, learned counsel for the appellants would assail the said finding by submitting that wages payable to the workers would not fall within the definition of basic wages so the provisions of the Act would not apply to the employers. 5. Heard. 6. We have given thoughtful consideration to the submissions of the learned counsel for the appellants and have also gone through the well reasoned judgment and order of the learned Single Judge which is under challanged in the present appeal. 7. 5. Heard. 6. We have given thoughtful consideration to the submissions of the learned counsel for the appellants and have also gone through the well reasoned judgment and order of the learned Single Judge which is under challanged in the present appeal. 7. A plain reading of the section 2(d) of the Act reproduced above, would show that the "employee" means any persons whose services are non-pensionable and who is employed for wages in any kind of work, manual or otherwise in or in connection with the work of an establishment and who gets his wages directly or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of an establishment. The word "employee" under section 2(d) includes any person employed by or through a contractor in or in connection with the work of an establishment. 8. Crux of the appellant-Corporation’s case is, that the Corporation is not required to deposit contributions under the Act for the workers engaged by its contractor or mate. Such a requirement and liability is only in respect of the permanent employees of the Corporation. But, as noticed above, the definition of employee given in section 2(d) of the Act is very clear and unambiguous. An employee includes any person employed by or through even a contractor in or in connection with the work of establishment. Admittedly the workers whose employer’s contribution is sought to be recovered in terms of the notices impugned in the writ petition, though engaged by the Contractor/Mate have been doing the Corporation work, which it had entrusted to its contractors. Finding on these lines is even returned by the learned Single Judge. Learned Single Judge has regarding liability of the employer/establishment to make contribution in this behalf. What was said by the learned Single Judge reads as under: "In terms of the provisions of Section 9-A of the Act the amount of employer’s and employee’s contribution payable under the Act, by the contractor, is recoverable by the principal employer/establishment for whose work the workers are employed, meaning thereby that the Act in the first instance ensures deposit of employer’s contribution, as also the employee’s contribution, in terms of the provisions of the Act and the Scheme framed thereunder and thereafter provides for the recovery of contribution payable by the employer/contractor, by the Principal Employer/establishment. The Corporation, therefore, appears to be under a misconception that it was not obliged to pay the employer’s and employee’s contribution of the workers engaged .by the Contractors/Mates for the Corporation work. The Corporation cannot thus avoid its liability to deposit employer’s contribution and that of the employee’s contribution under the Act and the Scheme framed thereunder, in case the contribution of the employee is not so paid. Petitioner’s learned counsel’s submission that the Corporation is not obliged to deposit the employer’s and employee’s contribution for the workers engaged by the Contractors/Mates, is thus found to be unsustainable, hence rejected." 9. The real question which arises for determination is whether the workers/labourers engaged by the contractors of the Corporation are also entitled to the benefit .under the Act. As noticed above clause (d) of section 2 of the Act defines an "employee" to mean any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer, and includes any person employed by or through a contractor in or in connection with the work of the establishment." 10. To be an employee there must be the relationship of master and servant with the employer. The question is whether such a relationship exists between the Corporation and a worker/labourer engaged by a contractor or a mate of the Corporation. 11. In Chintaman Rao v. State of Madhya Pradesh AIR 1958 SC 388 , the Supreme Court held that independent contractors, known as Sattedars, with, whom a manufacturer contracted for the supply of beedis could not be described as workers within the definition of sub-s. (I) of S. 2 of the Factories Act, nor could their coolies, because the Sattedars undertook to supply the beedis by manufacturing them in supply their own factories or by entrusting the work to third parties. The Sattedars were not subject to a right of control by the manufacturer in respect of the manner in which the work was to be done. The Sattedars were not subject to a right of control by the manufacturer in respect of the manner in which the work was to be done. The Court applied the principle that the test for determining the relationship of master and servant lay in the existence of the right in the master to supervise and control the work done by the servant not only in the matter of directing what work the servant was to do but also the manner in which he should do it. In Birdhichand Sharma v. First Civil Judge, Nagpur AIR 1961 SC 644 , the Apex Court, however, considered a case where the manufacturer had employed Workmen in his beedi factory and who were at liberty to work at their homes. The Court held that the conditions in which they worked made them "workers" within the meaning of clause (1) of S. 2 of the Factories Act. The Court observed that in the case of the beedi industry the right of rejection of the beedis if they did not come up to the proper standard was evidence of the supervision and control exercised by the manufacturer. Noting that the nature and extent of supervision and control varied in different industries, the Court said:- "Taking the nature of the work in the present case it can hardly be said that there must be supervision all the time when biris are being prepared and unless there is such supervision there can be no direction as to the manner of work. In the present case the operation being a simple one, the control of the manner in which the work is done is exercised at the end of the day, when biris are ready, by the method of rejecting those which do not come up to the proper standard. In such a case it is the right to supervise and not so much the mode in which it is exercised which is important." 12. Orissa Cement Ltd. v. Union of India AIR 1962 SC 1402 , was a case where the question was whether a notification was valid which made the employer liable to pay into the provident fund, constituted under the Provident Funds Act, 1952, the share of workers who were in fact the employees of independent contractors. Orissa Cement Ltd. v. Union of India AIR 1962 SC 1402 , was a case where the question was whether a notification was valid which made the employer liable to pay into the provident fund, constituted under the Provident Funds Act, 1952, the share of workers who were in fact the employees of independent contractors. The Court drew a careful distinction between labour employed by the manufacturer and that employed by an independent contractor and upheld the notification. , 13. Most of these cases were considered by the Supreme Court in D.C. Dewan Mohideen Sahib and Sons v. Industrial Tribunal, Madras, AIR 1966 SC 370 and while reviewing the law the Court rejected the plea of the manufacturers against the application of the Industrial Disputes Act on the ground that the workers ostensibly employed by the "so-called contractors" were in fact the workmen of the appellants who had employed them through their agents or servants. The Court reiterated the view expressed in Birdhichand Sharma’s case (supra) that the rolling of beedis was work of such a simple nature that supervision was not required all the time and it was sufficient if supervision was exercised at the end of the day through the system of rejecting defective beedis. 14. In Silver Jubilee Tailoring House v. Chief Inspector of Shops and Establishments AIR 1974 SC 37 the Court, reviewed the earlier decisions and pointed out that the test of control as traditionally formulated was no longer treated as an exclusive test. It was observed "It is exceedingly doubtful today whether the search for a formula in the nature of a single test to tell a contract of service from a contract for service will serve any useful purpose. The most that profitably can be done is to examine all the factors that have been referred to in the cases on the topic. Clearly, not all of these factors would be relevant in all these cases or have the same weight in all cases. It is equally clear that no magic formula can be propounded which factors should in any case be treated as determining ones. The plain fact is that in a large number of cases, the Court can only perform a balancing operation weighing up the factors which point in one direction and balancing them against those pointing in the opposite direction". 15. The plain fact is that in a large number of cases, the Court can only perform a balancing operation weighing up the factors which point in one direction and balancing them against those pointing in the opposite direction". 15. A Constitution Bench of the Supreme Court had occasion to Consider the issue in Mangalore Ganesh Beedi Works case AIR 1974 SC 1832 , which questioned the validity of the Beedi and Cigar Workers (Conditions of Employment) Act, 1966. The Court adopted the test of rejection of defective beedis for determining whether the beedi workers were the employees of the manufacturer or the independent contractors. The Court observed : - "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 problem. 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 fight 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." 16. If the fight 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." 16. In P.M. Patel & Sons v. Union of India AIR 1987 S.C 447 , the Court was interpreting clause (f) of S. 2 of the Employees’ Provident Funds Act which defines an "employee" to mean "any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer, and includes any person employed by or through a contractor in or in connection with the work of the establishment." This definition of employee was similar to the definition of employee as given in section 2(d) of the Act. The Court noticed that the terms of the definition are wide. They include not only persons employed directly by the employer but also persons employed through a contractor. The Court observed that they include not only persons employed in the factory but also persons employed in connection with the work of the factory. It was held that: "It seems to us that a home worker, by virtue of the fact that he rolls beedis, is involved in an activity connected with the work of the factory. We are unable to accept the narrow construction sought by the petitioners that the words "in connection with" in the definition of "employee" must be confined to work performed in the factory itself as a part of the total process of the manufacture". 17. Though the cases cited mainly deal with the cases of beedi workers but the principle adopted by the Apex Court in these cases can be applied to the present case too. Admittedly the workers/labourers engaged by the contractors/mates of the Corporation have to work as per the overall supervision and guidelines/instructions of `the Corporation. For example if an employee or a labourer is employed by a contractor to cut a tree, such a labourer has to cut only such trees as are earmarked by the Corporation. While doing so the contractor or a mate can extract work from the labourer only as per the instructions of the Corporation. For example if an employee or a labourer is employed by a contractor to cut a tree, such a labourer has to cut only such trees as are earmarked by the Corporation. While doing so the contractor or a mate can extract work from the labourer only as per the instructions of the Corporation. Thus though such a labourer is engaged by the contractor/mate but since the engagement is for a kind of work in connection with the work of establishment, such a person will be treated as an employee of the Corporation within the definition of section 2(d) of the Act. What we could gather from the arguments of Mr. Bhardwaj is that the Corporation apprehends that when it engages contract labour there is no privity of contract between the Corporation and the workmen who actually do the work. It is the contractor who engages them, and pays wages to them. The Corporation has as such no direct relationship with them. In such circumstances the obligation of the Corporation to contribute every month to the provident fund of the employee is incapable of performance as the Corporation is not in a position to know what wages had been agreed between the contractor and the labourer and that further as the Corporation does not maintain any muster rolls as regards labourer employed through contractors. 18. The difficulties may be there but they are not, in our view, of sufficient weight to deny the benefit to such employees which accrue to them from the Act. The Act is welfare legislation, the parties should find out ways and means to overcome the difficulties rather than find an excuse to defeat its object. We find there should be no difficulty in the Corporation requiring the contractor at the time of the agreement to give the particulars of the employees/labourers, so as to implement the provisions of the Act. 19. In these circumstances we could not find any force in any of the submissions of Mr. Bhardwaj. We are of the view that the learned Single Judge has given due reasons to arrive at a conclusion and the findings returned by him are just and proper. On the facts and circumstances of the case we do not find any other view particularly the view putforth by Mr. Bhardwaj, is possible at all. 20. Bhardwaj. We are of the view that the learned Single Judge has given due reasons to arrive at a conclusion and the findings returned by him are just and proper. On the facts and circumstances of the case we do not find any other view particularly the view putforth by Mr. Bhardwaj, is possible at all. 20. We therefore, find no ground made out for admission of this appeal which is hereby dismissed. In view of the order passed in the present appeal, LPA (OW) No: 41/2009 shall also stand dismissed.