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Judgment
Prashant Kumar Mishra, J.
Heard learned counsel for the parties.
Petitioner has assailed the legality and validity of the order dated 27.11.2002 passed by the Controlling Authority under the Payment of Gratuity Act, 1972 (for short "the Act, 1972") and the appellate order passed by the appellate authority under the Act, 1972 on 14.2.2007/20.2.2007. Petitioner is a Beedi manufacturer. The respondent was working under the petitioner as Gharkhata Beedi worker in its branch at Navapara w.e.f. 1.6.1974 and was allotted P.F. No. MP/2875/1387. After cessation of work, when gratuity was not paid to her, she preferred a claim before the Controlling Authority under the Act, 1972 claiming payment of gratuity. The Controlling Authority by a detailed order allowed the claim of the respondent and directed the petitioner to make payment of gratuity amount of Rs. 8487 along with interest @ 10% from the date gratuity became payable on separation from service till the date of payment to the respondent. The said order has been affirmed in appeal by the appellate authority.
Learned counsel for the petitioner would make two fold submissions; firstly that the claim under the Act, 1972 was barred by limitation and secondly; the respondent was a Gharkhata Beedi worker and as such, she being not an employee employed in the factory or establishment of the petitioner, is not covered under the Act, 1972. The Controlling Authority has rejected both the contentions as has been raised before this Court.
Section 7 of the Act, 1972 makes a provision for determination of the amount of gratuity making it obligatory for the employer to determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable, whether or not application referred in sub-section 1 thereof has been made by the concerned employee. Rule 10 of the Payment of Gratuity (Central) Rules, 1972 (for short "the Rules, 1972") makes following provision with regard to submission of application before the Controlling Authority for payment of gratuity:
Application to controlling authority for direction-(1) If an employer-
(i) refuses to accept a nomination or to entertain an application sought to be filed under rule 7, or
(ii) issues a notice under sub-rule (1) of rule 8 either specifying an amount of gratuity which, is considered by the applicant less than what is payable or rejecting eligibility to payment of gratuity, or
(iii) having received an application under rule 7 fails to issue any notice as required under rule 8 within the time specified therein, the claimant employee, nominee or legal heir, as the case may be, may, within ninety days of the occurrence of the cause for the application, apply in Form ''N'' to the controlling authority for issuing a direction under sub-section (4) of section 7 with as many extra copies as are the opposite parties:
Provided that the controlling authority may accept any application under this sub-rule, on sufficient cause being shown by the applicant, after the expiry of the specified period.
(2) Application under sub-rule (1) and other documents relevant to such an application shall be presented in person to the controlling authority or shall be sent by registered post acknowledgement due.
On a reading of the provision contained in Section 7 and rule 10 (supra), it would be apparent that at the first instance the application of the employer to determine the amount of gratuity and thereafter, in the given set of conditions, as provided under rule 10, if the employer fails, it confers a right on the employee to move application before the Controlling Authority. The proviso to sub-rule (1) of rule 10 confers power on the Controlling Authority for condoning the delay in moving the application on showing sufficient cause by the applicant.
The Controlling Authority initially condoned the delay in moving the application by its order dated 22.2.1999 against which the petitioner preferred an appeal before the R.L.C. (Central). The appellate authority remitted the matter for hearing the parties afresh and thereafter the Controlling Authority again passed an order condoning, the delay in moving the application. Once the appellate authority has been clothed with power to condone the delay and the authority has exercised the discretion in the given set of facts after considering that the Act is a beneficial legislation, this Court would not interfere in the said exercise of discretion. Therefore the fact that the application was barred by limitation has been duly dealt with and once the delay has been condoned, it cannot be said that the application was barred by limitation.
The next limb of argument raised by learned counsel for the petitioner is that the respondent being a gharkhata beedi worker is not an employee within the meaning of Section 2(e) of the Act, 1972; therefore, the order is without jurisdiction.
In order to appreciated the contention raised by the learned counsel appearing for the petitioner, it is necessary to, reproduce the definition of ''employee'' & ''employer'', as provided in Sections 2(e) &, 2(f) of the Act, 1972, respectively, which read as under:
(e) ''employee'' means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or (sic(tion with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central'' Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.
(f) ''employer'' means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop--
(i) belonging to, or under the control of, the Central Government or a State Government a person or authority appointed by the appropriate Government for the supervision and control of employees, or where no person or authority has been so appointed, the head of the Ministry or the Department concerned,
(ii) belonging to, or under the control of, any local authority, the person appointed by such authority for the supervision and control of employees or where no person has been so appointed, the chief executive officer of the local authority,
(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a manager, managing director or by any other name, such person;
On a reading of the definitions of ''employee'' & ''employer'', as reproduced above, it would manifest that there has to be a relation between the ''employee'' & ''employer'' and the place of work i.e. the place of rolling beedis is not the determining factor. When no such distinction has been made, a gharkhata beedi worker engaged by the manufacturer would definitely be covered within the meaning of ''employee'', as provided u/s 2(e) of the Act, 1972, because the employee is rolling beedis in his/her home for the benefit of the manufacturer.
It is not a case of the manufacturer/employer that certain quantity of beedi leaves or tobacco were sold to the gharkhata workers and after rolling beedis they re-sale it to the manufacturer. On the contrary, it appears to be an admitted position that the gharkhata beedi workers were provided raw material by the employer/manufacturer and after rolling beedis for the benefit and to the satisfaction of the manufacturer/employer, they return it back, which is ordinarily the job of an employee working in the work place.
The Beedi and Cigar. Workers (Conditions of Employment) Act, 1966 (for short ''the Act, 1966'') also contains protective provisions for out workers or workers who do not work at the premises of the beedi manufacturers, but who worked at the residential premises.
In the opinion of this Court, the word ''any establishment'' occurring in the definition of ''employee'' u/s 2(e) would mean not only the business premises of the manufacturer, but any other premises where a beedi worker employed by a beedi manufacturer works for him, and in this manner it becomes an extended establishment of the beedi manufacturer.
While making the above interpretation of the definition of ''employee'' u/s 2(e) of the Act, 1972, this Court is fortified by the decision of the Division Bench of the Gujarat High Court rendered in Patel Hiralal Ramlal and Co. Vs. Chandbibi Pirubhai and Others, , which was subsequently been followed by the Karnataka High Court in Bagi Beedi Factory, Hubli Vs. The Appellate Authority under the Payment of Gratuity Act and Joint Labour Commissioner, Bangalore and Others, .
While dealing with a similar issue arising out of applicability of Employees Provident Funds and Miscellaneous Provisions Act, 1952, in the matter of P.M. Patel and Sons and Others Vs. Union of India (UOI) and Others, , the Supreme Court has held that to be an employee it is necessary that the relationship of master and servant should exist with the employer. Elaborating the principle, the Supreme Court has held in paras 8, 9& 10 thus:--
There is no dispute that pursuant to the impugned notification dated 17-5-1977 the beedi industry has been brought within the scope of the Employees'' Provident Funds Act and that the impugned notification dated 23-5-1977 has made the Scheme applicable to the beedi industry. Clause (a) of sub-section (3) of Section 1, of the Employees'' Provident Funds Act applies that Act to every establishment which is a factory engaged in any industry specified in Schedule I and in which twenty or more persons are employed. Admittedly, the factory belonging to the manufacturer is, therefore, drawn within the compass of the Employees'' Provident Funds Act and the Scheme. It is also admitted by the petitioners that the workers employed within the factory premises would be covered by the Act and the Scheme. The real question is whether the home workers are entitled to that benefit. Clause (f) of Section 2 of that 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". It will be 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. Moreover, they include not only persons employed in the factory '' but also persons employed in connection with the work of the factory. 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.
Now to be an employee it is necessary that the relationship of master and servant should exist with the employer. The principal question is whether such a relationship exists between the manufacturer and a home worker. Several cases were placed before us by the parties in this connection, and reference may be made to them. In Chintaman Rao v. State of M.P. this 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-section (1) of Section 2 of the Factories Act, nor could their coolies, because the Sattedars undertook to supply the beedis by manufacturing them in 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 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 passing, the Court referred to home workers employed by the Sattedars for making beedis in, their respective homes, and the Court observed that they could not be regarded as persons employed by the manufacturer directly or through any agency. Thereafter, in Birdhichand Sharma v. First Civil Judge, Nagpur this Court considered a case where the manufacturer had employed workmen in his beedi factory and who were at liberty to work at their homes, and the Court held that the conditions in which they worked made them "workers" within the meaning of clause (1) of Section 2 of the Factories Act The significant feature of the judgment lies in the observation of the Court 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.
Reference may be made next to Shankar Balaji Waje v. State of Maharashtra. The majority view taken on the particular facts of that case was that the workers were not subject to the control and supervision of the manufacturer. The learned Judges constituting the majority appear to have overlooked the observations in Birdhichand Sharma that the right of rejection of the beedis prepared by the workers in itself constituted a sufficient element of supervision and control. Our attention was also invited by the petitioners to Orissa Cement Ltd. v. Union of India but this is 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. Most of these cases were considered thereafter by this Court in D.C. Dewan Mohideen Sahib and Sons v. Industrial Tribunal, Madras 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. It may be pointed out, however, that the Court reiterated the view expressed in Birdhichand Sharma case 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. The law took a major shift in Silver Jubilee Tailoring House v. Chief Inspector of Shops and Establishments as to the criteria which determined the relationship of master and servant. Mathew, J., who spoke for the Court, reviewed the earlier decisions of this Court as well as some of the decisions rendered in England, and pointed out that the test of control as traditionally formulated was no longer treated as an exclusive test. He observed: (SCC pp. 507-08, paras 28 & 29)
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.
During the last two decades the emphasis in the field has shifted and no longer rests so strongly upon the question of control. Control is obviously an important factor and in many cases it may still be the decisive factor, But it is wrong to say that in every case it is decisive. It is now no more than a factor, although an important one.
He was dealing with a case where the workers who were tailors went to tailoring shops and were given work as and when work was available, and when cloth was given for stitching to a worker he was told how he should stitch it, and if the instructions were not carried but the work was rejected and he was asked to re-stitch it. Some of the workers were allowed to take the clothes home for stitching. The Court held that there was a relationship of master and servant because of the right in the employer to reject the work done, and it reiterated that "the degree of control and supervision would be different in different types of work". In the present cases, the right of rejection can similarly be said to represent the control and supervision exercised by the manufacturer over the beedis prepared by the home workers. Quite obviously, while in Silver Jubilee Tailoring House case it was possible for the employer to direct re-stitching of the garment, no such direction can be reasonably envisaged in the case of substandard beedis. A Constitution Bench of this Court had occasion to consider the law in Mangalore Ganesh Beedi Works v. Union of India 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: (SCC p. 62, para 35)
...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 products 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.
In the context of the conditions and the circumstances set out earlier in which the home workers of a single manufacturer go about their work, including the receiving of raw material, rolling the beedis at home and delivering them to the manufacturer subject to the right of rejection there is sufficient evidence of the requisite degree of control and supervision for establishing the relationship of master and servant between the manufacturer and the home worker. It must be remembered that the work of rolling beedis is not of a sophisticated nature, requiring control and supervision at the time when the work is done. It is a simple operation which, as practice has shown, has been performed satisfactorily by thousands of illiterate workers. It is a task which can be performed by young and old, men and women, with equal facility and it does not require a high order of skill. In the circumstances, the right of rejection can constitute in itself an effective degree of supervision and control. We may point out that there is evidence to show that the rejection takes place in the presence of the home worker. That factor, however, plays a merely supportive role in determining the existence of the relationship of the master and servant. The petitioners point out that there is no element of personal service in beedi rolling and that it is open to a home worker to get the work done by one or the other member of his family at home. The element of personal service, it seems to us, is of little significance when the test of control and supervision ties in the right of rejection.
(emphasis supplied)
In M/s. P.M. Patel (supra) it has also been held by the Supreme Court that the said provisions under the Act, 1966, applies not only to industrial premises as defined u/s 2(i) of the Act but also to an establishment as defined under clause (h) of Section 2 of the Act, 1966. Thus, by a deeming fiction, the home worker has been treated as part of establishment of a beedi manufacture.
In view of the judgment of the Supreme Court in M/s. P.M. Patel (supra), the argument raised by learned counsel for the petitioner that the gharkhata beedi worker who rolls beedis in his/her home is not covered under the definition of employee, as provided u/s 2(e) of the Act, 1972, is not acceptable.
As an upshot, the writ petition, sans substratum, deserves to be and is hereby dismissed. There shall be no order as to costs.