Joseph Joseph and Others vs State of Kerala and Others

Sethi, J.—Leave granted.

The Toddy Workers Welfare Fund Inspector, appointedunder the Kerala Toddy Welfare Fund Act, 1969 (hereinafterreferred to "the Act") held the appellants to be theemployers of the workers employed for running the Toddy shopand thus liable to pay an amount of Rs. 72,048/- and interestof Rs. 23,641/- towards Welfare Fund. The appellants filed awrit petition in the High Court alleging that they were notthe employers of the workers within the meaning of Section 2(c) of the Act as they themselves were the employees of JoyKourian, respondent No. 4 who was the licensee of the shopwhere the toddy was being sold. The High Court negativedtheir plea vide the judgment impugned, hence appeal.

It is not disputed that the business in the Abkari ShopNo. 68 of Erattupetta Range was being conducted by respondentNo. 4 with the help of the appellants. Respondent No. 4 hadbeen granted the licence and under Rule 6(23) of the KeralaAbkari Shops Disposal Rules, 2001 the licensee is obligednot to sell or otherwise transfer the privilege granted orthe licence issued without the written consent of theAssistant Excise Commissioner concerned and subject to theconfirmation of the Commissioner of Excise. No licensee canlease out or sub-let the whole or any portion of theprivilege or licence granted to him. It is not alleged thatany of the appellants was licensee or a partner or a familymember of respondent No. 4.

In the counter affidavit filed on behalf of therespondent No. 2 it is conceded that the aforesaid JoyKourian was the licensee of the toddy shop. In the inquiryconducted by the Inspector under the Act, the workers andthe Trade Union officers had deposed that the shop was bidin auction by the respondent No. 4 and that the actualbusiness of the shop was being conducted and wages paid tothe workers by V.T. Chacko, fifth respondent, C.T. Michael,second petitioner, Sunny Kurien, fourth petitioner, Josephand Joseph, first petitioner and Joseph Sebastian, thirdpetitioner. The licensee Joy Kourian filed a statementbefore the authorities under the Act that he himself wasconducting the toddy shop and alone was responsible to paythe welfare fund contribution. Despite his admission, theWelfare Fund Inspector held the appellants also liable tocontribution to the welfare fund as they allegedly fellwithin the definition of "employer" under the Act. Therespondent No. 2 was of the opinion that the definition ofemployer would include the licensee as well as any otherperson conducting the business in the shop. It is furthercontended that a Division Bench of the High Court of Keralain Writ Appeal No. 1185 of 1993 had taken a similar view.

Section 2(c) of the Act defines "employer" as under:

"2(c) employer means any person who employs,whether directly or through another person, orwhether on behalf of himself or any other person,one or more employees and includes any person whohas a license for the manufacture, distribution,storage or sale of toddy under the Abkari Act for the time being in force."

The High Court found that as the appellants were alsorunning the business of the shop and had employed theworkers, they shall be deemed to be the employer vis-a-visthose workers and liable to pay the contribution to the fundunder the Act.

A perusal of Section 2(c) shows that it refers to theperson who employs any person, whether directly or throughany other person or whether on behalf of himself or anyother person, as employer. The employment by any person canbe fr himself or for any other person. Merely because theperson is associated with the conduct of the business of anestablishment or shop, it cannot be said that he hademployed the workers on his own behalf. There may be caseswhere it can be shown that besides the owner any otherperson conducting the business of the said chop may employworkers on his own behalf and not on behalf of originalowner. But in the absence of proof to the contrary,particularly in view of the statement of principal employerthat he had employed the workers, the intermediary personscould not be held to be the employer of the workers who wereemployed for the conduct of the business in the shop coveredunder the Act. Law pre-supposes the conduct of a legalbusiness and cannot be interpreted in a manner whichfrustrates the object of the Act and results in not onlymiscarriage of justice but violation of the statutoryprovision of law. If, under the Rules, the licensee was notauthorised to lease out or sub-let the whole or any portionof the privilege or licence granted to him for conductingthe Abkari business, holding the appellants as employer withrespect to the licensee's shop would amount to facilitatethe violation of the Kerala Abkar Shops Act and the Rulesframed thereunder. Such a interpretation is not called foras it is against the public policy. In any particular case,where the authorities find that besides the licensee anyother person conducting the business in a licenced premisesunder the Abkar Act and the Rules framed thereunder is alsoliable to contribute to the fund under the Act, they areunder the legal duty to assert and positively hold thatsuch persons were the employers vis-a-vis the workers andthat they were conducting the business either with the legalauthority of the licensee or the licensing authority. TheHigh Court has taken a general view of the matter withoutreference to the purpose and object of the Act and the lawunder which the licence to run the shop was granted. Theimpugned judgment is thus not sustainable.

The appeal is accordingly allowed by setting aside thejudgment impugned holding that in the instant case theappellants have not been proved to be employers vis-a-visthe workers and that respondent No. 4 alone was the employeras admitted by himself. The said respondent is liable formaking the contributions and paying the amount sought to berecovered vide the order passed by Toddy Workers WelfareFund Inspector. The authorities shall be at liberty to takeall necessary steps for effecting recoveries againstrespondent No. 4. No costs.

*A reproduction from ILR (Kerala Series)