Whiteway Dresses vs Addl. Labour Court and Another

Ramanujam, J.—The petitioner herein is a partnership concern engaged in the manufacture and sale of readymade garments at No. 9,

Memorial Hall Street, Madras-3. The second respondent herein along with 7 others filed Claim Petition No. 15 of 1971 on the file of the Labour

Court, first respondent herein, u/s 33C(2) of the Industrial Disputes Act claiming in all a sum of Rs. 4,448 as and for holidays and leave wages for

a period of six years ending 1970. We are not concerned with the claim put forward by the other claimants in this writ petition. We are concerned

in this case only with the claim put forward by the second respondent.

The claim was resisted by the petitioner on the grounds : (1) that the second respondent is not a "" person employed "" as denned in Section 2(12)

of the Tamil Nadu Shops and Establishments Act, 1947 (hereinafter referred to as the "" Act""); (2) that the second respondent had no manner of

right for wages for weekly closing days and for the national and festival holidays when the shop remained closed ; and (3) that he is not eligible for

any relief under Chapter 6 of the Act.

The first respondent, however, held that the second respondent is a "" person employed "" as defined in Section 2(12) of the Act, that, therefore,

he is entitled to claim the benefits of the Act, and that he is entitled to the sum claimed by him in the claim petition. In this view the Labour Court

awarded a sum of Rs. 4,448 as claimed by the second respondent, by an order dated 14th June, 1973. The validity of the said award has been

challenged in this writ petition.

Firstly, it is contended that the second respondent cannot be brought within the definition of a "" person employed"" u/s 2(12) of the Act,

Secondly, it is contended that even if the second respondent is taken to be a "" person employed""'', he is not entitled to the entire amount claimed

by him, and that the first respondent erred in allowing the claim put forward by the second respondent in its entirety, overlooking the provisions of

the said Act and the Tamil Nadu National and Festival Holidays Act under which the second respondent will be entitled, if at all, only to a lesser

sum.

On the question as to whether the second-respondent is a "" person employed "" as defined in Section 2(12) of the Tamil Nadu Shops and

Establishments Act, 1947, the learned Counsel for the petitioner refers to the facts established in this case and contends that the second-

respondent is only a piece-rate worker and is not in the regular employment of the petitioner. According to him, there was no compulsion for the

second respondent to come and work, the amount paid to him always depended upon the number of garments stitched by him and there was no

control or supervision of the work to be done by the second respondent as a tailor except for the fact that the ultimate garments stitched by him

should be in accordance with the design given by the petitioner. The learned Counsel for the petitioner refers to the decision of a Division Bench of

the Court in Ratnaswamy Mudaliar In re, I.L.R.(1959) Mad 245, in support of his plea that such a piece-rate worker cannot be brought within the

definition of a "" person employed "". That was the case of a weaving concern where bed-sheets and towels were manufactured by piece-rate

workers. The question arose whether there was relationship of master and servant between the owner of the weaving factory and the persons who

undertook the job of weaving bed-sheets and towels on the basis of piece-rates, and whether these persons would come within the definition of

the worker as defined under the Factories Act. This Court held that there being no effective control or supervision of the owners of the factory

sheds in which weaving was done over the persons working in the sheds, there was no contract of service between them and that the

miscellaneous, hetrogenous and irregular piece workers employed therein cannot be treated as workers as defined in the Factories Act. According

to the learned Judges it was purely a case of contract for service of independent contractors and the relationship between them will not attract the

provisions of Factories Act.

However, in view of the later decisions of this Court and of the Supreme Court, the above decision of this Court cannot be said to hold the field.

In D.C. Dewan Mohideen Sahib and Sons v. United Bidi Workers'' Union (1964) 26 F.J.R. 238, the Supreme Court had occasion to deal with

the scope of the definition of workman u/s 2(s) of the Industrial Disputes Act. In that case, a bidi manufacturer engaged a number of persons on

contract for getting the work of rolling the bidis done and such persons in turn engaged a number of other persons who took the leaves home for

cutting them in proper shapes and rolling the bidis. The work of rolling the bidis was done by such persons in the premises of the intermediaries

with the materials supplied to them by such intermediaries. The necessary materials like thread, bidi leaves and tobacco were supplied to the

intermediaries by the bidi manufacturer. Payment to the bidi rollers was made on piece-rate basis by the intermediaries. The intermediaries were

paid by the manufacturer the commission as well as piecefates. On these materials, the Tribunal had held that the real employer of the bidi rollers

Was the bidi manufacturers. When the matter was taken to the Supreme Court, it took the view that the bidi rollers were the employees of the bidi

manufacturer, that the intermediaries were merely branch managers appointed by the bidi manufacturer, and that the relationship of master and

servant subsisted between the bidi rollers and the bidi manufacturer. After referring to certain earlier decisions rendered by it, the Supreme Court

ultimately observed (at pages 244-245) :

It is in the light of these decisions that we have to decide whether the workmen who work under the so-called independent contractors in these

cases are workmen of the appellants. It has been found by the Tribunal and this view has been confirmed by the appeal Court that the so-called

independent contractors were mere agents or branch managers of the appellants. We see no reason to disagree with this view taken by the

Tribunal and confirmed by the appeal Court on the facts of these cases. We are not unmindful in this connection of the view taken by the learned

single Judge when he held that on the agreements and the facts found the so-called intermediaries were independent contractors. We are, however,

of opinion that the view taken by the appeal Court in this connexion is the right one. As the appeal Court has rightly pointed out, the so called

independent contractors were indigent persons who were in all respects under the control of the appellants. There is, in our opinion, little doubt that

this system has been evolved to avoid regulations under the Factories Act.

In a later decision in Madurai General Workers'' Union (by secretary) Vs. Brinda Textiles Handloom Factory (by sole proprietor) and Others, ,

Ramakrishnan, J., had held that even when the workers are paid on piece-work basis, they can be treated as workmen under the Industrial

Disputes Act, if there is regularity of attendance ; if they have to work on specified warps supplied by the management during specified hours, and

if there are supervision and control in making the article.

In this case, it has been found that the petitioner''s shop is open for specified hours and persons like the second respondent have to work during

these hours ; that there is regularity of attendance ; that the second respondent is to stitch the garments inside the petitioner''s manufactory and that

ultimate garments stitched by the second respondent should be in accordance with the design given by the petitioner. On the evidence, it appears

to be very clear that the persons like the second respondent have been employed to work inside the petitioner''s premises for stated hours, though

wages paid to them depend upon the number of garments stitched out of the materials supplied by the petitioner. The learned Counsel for the

petitioner says that except as to the proper design of the garments, there is no control on the work done by the second respondent. I am of the

view, having regard to the nature of the work undertaken by the second respondent-of stitching the garments which have to be ultimately sold to

the market- the petitioner should have necessarily a quality control. It is also not in dispute that if the garments are not stitched as per the

instructions of the petitioner, he can ask the second respondent to rectify the defects, if any. That means that the petitioner has got a right of

rejection also of the work done by the second respondent. There is also a register maintained showing the number of days worked and the weekly

payments made by the petitioner to persons like the second respondent. That also indicates that there is some regularity in the work done by the

second respondent and others, within the premises of the petitioner. From the mere fact that the second respondent has been paid on piece-rate

basis rather than on a regular monthly basis, it cannot be said that there is no master-servant relationship between the petitioner and the second

respondent. The mode of payment cannot decide the issue whether or not the relationship between the petitioner and the second respondent is one

of master-servant. It is always open to the employer to choose the mode of payment ; it may be either on the basis of number of hours of work or

on a piece-rate basis. Therefore, the mere fact that the second respondent was paid on piece-rate basis will not take him outside the definition of a

person employed "", if there are other circumstances which indicate that his employment was regular and his work was under the control of the

petitioner. In my view, therefore, the first respondent is right in holding that the second respondent is a "" person employed"" and that he can maintain

the claim petition against the petitioner under the provisions of the Shops and Establishments Act.

The next contention of the learned Counsel for the petitioner is that the Labour Court is in error in accepting the claim of the second respondent

in toto without going into the question as to whether the second respondent is entitled to any payment under the provisions of the National and

Festival Holidays Act. This contention of the learned Counsel has, however, to be accepted. In the claim petition, as far as the second respondent

is concerned, the following three amounts were claimed :

Average piece-rate wages per day Rs, 8/-

RS.

Wages due for weekly holidays : 2,496

52 weeks x 6 years x Rs. 8

Wages due for leave : 36 days x 1,568

6 years x Rs. 8

Wages due for National Festival 384

holidays : 8 days x 6 years x Rs. 8

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Total ... 4,448

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It was not stated in the counter-statement of the petitioner that there is no liability for payment of the amount claimed, apart from saying that the

second respondent, not being a "" person employed "", was not entitled to claim any amount u/s 33C(2) of the Act.

A perusal of the impugned order of the Labour Court indicates that it first took the question whether the second respondent is a "" person

employed"" and after holding that he is a ""person employed"" it straightaway proceeded to hold that the claim made by the second respondent is

reasonable and, therefore, it has to be allowed. In doing so, the Labour Court has completely shut its eyes to the various provisions of the Tamil

Nadu Shops and Establishments Act and the National and Festival Holidays Act.

In this case, a sum of Rs. 2,495 hag been claimed as wages due for weekly holidays and that has been calculated for 52 weeks for six years at

the rate of Rs, 8 per day. Next, a sum of Rs. 1,568 has been claimed as wages due for earned leave, sick leave and casual leave, for 36 days for a

period of six years, at the same rate Rs. 8 per day. It has already been noted that the second respondent has been paid on a piece-rate basis and

not on a regular monthly basis. The register of wages which has been marked as Ext. R1 also shows that the second respondent, along with some

others, has been paid wages on weekly basis for the number of garments made by him. The wage register indicates that different amounts were

paid for different weeks. In this case the second respondent has claimed wages under three heads at the rate of Rs. 8 per day. He has not shown

how the rate of Rs. 8 per day has been claimed by him. The average rate of wages per day has to be calculated by dividing the total wages paid to

a "" person employed""'' by year or month, whichever is taken as basis. Therefore, the Labour Court should have actually ascertained the ordinary

average rate of wages by dividing the total wages paid in a particular month by the number of days worked during that month. In this case, the

Labour Court has blindly accepted the wage rate at Rs. 8 per day as claimed by the second respondent without going into the question as to

whether it represents the average rate of wage paid per day.

Item I, which relates to wages claimed for weekly holidays, has to be dealt with u/s 11 of the Tamil Nadu Shops and Establishments Act,

1947. That section says that every shop shall remain entirely closed on one day of the week and that the persons employed in the shop shall be

allowed in each week a holiday of one whole day. As regards the claim for wages for earned leave, sick leave and casual leave, we have to look

into Section 25 of the Act. . Section 25(1) of the Act entitled a person employed to have a period of 12 days earned leave after twelve months

continuous service in the subsequent period of twelve months, provided that such holidays cannot be accumulated beyond a period of 24 days.

Explanation to the said sub-section provides for the manner of determining the continuous period of service. Sub-section (2) entitles a person

employed to have 12 days leave on the ground of sickness incurred or accident sustained by him and also to casual leave with wages for a period

of 12 days on any reasonable grounds. Sub-section (3) provides the conditions which are to be satisfied before a person employed becomes

entitled to 12 days annual holidays. Thus, before a person employed is granted the monetary compensation in lieu of weekly holidays, annual

holidays, sick leave and casual leave, certain conditions set out in Section 25 have to be complied with.

The learned Counsel for the petitioner contends that in respect of sick leave and casual leave, there is no provision for encashment of the leave

not availed of and, therefore, the second respondent is not entitled to claim compensation u/s 33C(2) in respect of sick leave and casual leave not

availed of. It is also contended that the claim for wages in lieu of annual holidays not availed of, if at all, has to be restricted to a period of 24 days

as provided under the Act. It is also contended that even for the maximum period of 24 days of annual holidays, the person employed can encash

the same only in the event of conditions set out in Sub-section (3) of Section 25 being satisfied and not otherwise. As regards the claim made

under the third head which relates to national holidays, before a person employed claims compensation for those holidays, he must satisfy the

conditions provided in Sub-section (3) of Section 5 of the National and Festival Holidays Act read with Rule 6.

However, in this case, as already stated the Labour Court has chosen to straight-away allow the claim made by the second respondent without

going into the question as to the second respondent''s entitlement for the three items of claim made by him and as to the quantum to which he is

entitled under the provisions of Sections 10(2), 11(2) and 25 of the Shops and Establishments Act and Sections 3 and 5 of the National and

Festival Holidays Act.

The learned Counsel for the petitioner referred to certain decisions touching the interpretation of Section 25 of the Shops and Establishments

Act and they are : Dalmia Cement (Bharat) Ltd. v. Their Workmen, (1960) 21 F.J.R. 1 and The Bombay Gas Co. Ltd. Vs. R.N. Kulkarni and

Another, .

As the Labour Court has not considered the second respondent''s claim in the light of the statutory provisions set out above, I have to remit the

matter to the Tribunal for fuller consideration and, therefore, it is not necessary to consider the scope of the above decision at this stage. The order

of the Labour Court is, therefore, set aside with a direction to consider the second respondent''s claim in the light of the provisions set out above

and to decide (1) whether the second respondent is entitled to the claims of salary under the three heads set out above and (2) if so, what is the

quantum of money payable by the petitioner to the second respondent in the light of the above provisions. This writ petition is, therefore, allowed.

Both the parties are at liberty to adduce oral and documentary evidence with reference to the above two questions. The finding given by the

Labour Court that the second respondent is a "" person employed "" is affirmed. No costs.