# GHATGE & PATIL CONCERN'S EMPWYEES' UNION v. GHATGE &: PATIL (TRANSPORTS) PRIVATE LTD. & ANR

- **Citation:** [1968] 1 S.C.R. 300
- **Court:** Supreme Court of India
- **Decided:** 1967-08-22
- **Bench:** M. HlDAYATULLAH, V. Bhargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ghatge-patil-concern-s-empwyees-union-v-ghatge-patil-transports-private-ltd-anr-4124
- **Pages:** 7

## Headnote

Motor Transport Workers Act, 1961-Definition of 'Motor Transport Worker'-'Employed', meaning of-lnd!Utrial Disvute-Transport compony giving trucks on hire to contractors-Former drlveri
of trucks becoming contractors after resigning from service of company-Such contractors whetlter Motor Tral!8port Workers-Contract system whether amounts to unfair laboor practice.
The respondent company carried on the business of transport
and removal of goods by road. It owned a fleet of trucks and employed
drivers and cleaners to run them. In 1963 the company, finding difficulty in observing the pro.visions of the Motor Transport Workers
Act 1961, introduced a scheme whereby the trucks, instead of being
run by the company itself were hired out to contractors at a fixed
rate per mile. Employees of the company who were engaged in running the trucks resigned their jobs and most of them who had formerly been drivers became contractors under the scheme. The workmens' Union however raised a dispute .asking for the reinstatement
of the ex-employees who had been given work on contract basis. The
Tribunal held that the contract system could not be said to be an
unfair labour practice, for the ex-employees were never coerced or
forced to resign their jobs, and they got more benefits from the contract system than from their original contract of emp)oyment. In
appeal to this Court the Union contended that the ex-employees of
the company continued to be workmen notwithstanding that they
were posed as independent contractors, that the beneficent legislation conceived in the interests of transport workers was being set
at naught by the company, and that the setting up of the contract
system amounted to unfair labour practice.
Held: (i) Since the drivers had resigned their jobs they could
not be said to be employed in the Motor Transport undertaking, The
word 'employed' in the definition of Motor Transport. Worker is not
used in the sense of using the services of a person but rather in the
sense of keeping a person in one's service. 1Persons who are independent and hire a vehicle for their own operation paying a fixed hire
per mile from their earnings cannot be said to be persons employed
in the Motor Transport Undertaking in the sense of persons kept in
service. The operators were therefore not Motor Transport Workers
within the definition. [304F-H)
(ii) There was no bar in law to the introduction of the contract system. A person must be considered free to so arrange his
business that he avoids a regulatory law and its penal consequences
which he has without the arrangement, no proper means of obeying.
This, of course, he can do only so long as he does not break that or
any other law. [306 B-C]
(iii) Those who resigned did so voluntarily and they got substantial benefits under the new system. The Tribunal was right in its
conclusion that there was no exploitation of the ex-employees. There
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llllPLOYHI UNION~. G i; P (TR4Nl!P011i'll) (P) LTD. (Hida~atullah. J.) 301
was thus no unfair labour practice. The present case was not analogous to the case of contlact labour when employment of labour
through a contractor or middleman put the labour at a disadvantage
in collective bargaining and thua robbed labour of an
important
weapon in its armoury. [305E-306A]
CIVIL APPELLATE JURJSDICI'ION: Civil Appeal No. 437 of
1966.
Appeal by special leave from the Award dated March 31, 1964
of the Industrial Tribunal, Maharashtra in Reference (IT) No. 40
of 1963.
·
H. K. Sowani, K. Rajendra Chaudhuri and K. R. Chaudhuri,
for the appellant.
H. R. Gokhole and /. N. Shroff, for respondent No. I.

## Text

GHATGE & PATIL CONCERN'S EMPWYEES' UNION
v.
GHATGE &: PATIL (TRANSPORTS) PRIVATE LTD. & ANR.
August 22, 1967
[M. HlDAYATULLAH AND V. BHARGAVA, JJ.)
Motor Transport Workers Act, 1961-Definition of 'Motor Transport Worker'-'Employed', meaning of-lnd!Utrial Disvute-Transport compony giving trucks on hire to contractors-Former drlveri
of trucks becoming contractors after resigning from service of company-Such contractors whetlter Motor Tral!8port Workers-Contract system whether amounts to unfair laboor practice.
The respondent company carried on the business of transport
and removal of goods by road. It owned a fleet of trucks and employed
drivers and cleaners to run them. In 1963 the company, finding difficulty in observing the pro.visions of the Motor Transport Workers
Act 1961, introduced a scheme whereby the trucks, instead of being
run by the company itself were hired out to contractors at a fixed
rate per mile. Employees of the company who were engaged in running the trucks resigned their jobs and most of them who had formerly been drivers became contractors under the scheme. The workmens' Union however raised a dispute .asking for the reinstatement
of the ex-employees who had been given work on contract basis. The
Tribunal held that the contract system could not be said to be an
unfair labour practice, for the ex-employees were never coerced or
forced to resign their jobs, and they got more benefits from the contract system than from their original contract of emp)oyment. In
appeal to this Court the Union contended that the ex-employees of
the company continued to be workmen notwithstanding that they
were posed as independent contractors, that the beneficent legislation conceived in the interests of transport workers was being set
at naught by the company, and that the setting up of the contract
system amounted to unfair labour practice.
Held: (i) Since the drivers had resigned their jobs they could
not be said to be employed in the Motor Transport undertaking, The
word 'employed' in the definition of Motor Transport. Worker is not
used in the sense of using the services of a person but rather in the
sense of keeping a person in one's service. 1Persons who are independent and hire a vehicle for their own operation paying a fixed hire
per mile from their earnings cannot be said to be persons employed
in the Motor Transport Undertaking in the sense of persons kept in
service. The operators were therefore not Motor Transport Workers
within the definition. [304F-H)
(ii) There was no bar in law to the introduction of the contract system. A person must be considered free to so arrange his
business that he avoids a regulatory law and its penal consequences
which he has without the arrangement, no proper means of obeying.
This, of course, he can do only so long as he does not break that or
any other law. [306 B-C]
(iii) Those who resigned did so voluntarily and they got substantial benefits under the new system. The Tribunal was right in its
conclusion that there was no exploitation of the ex-employees. There
800
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llllPLOYHI UNION~. G i; P (TR4Nl!P011i'll) (P) LTD. (Hida~atullah. J.) 301
was thus no unfair labour practice. The present case was not analogous to the case of contlact labour when employment of labour
through a contractor or middleman put the labour at a disadvantage
in collective bargaining and thua robbed labour of an
important
weapon in its armoury. [305E-306A]
CIVIL APPELLATE JURJSDICI'ION: Civil Appeal No. 437 of
1966.
Appeal by special leave from the Award dated March 31, 1964
of the Industrial Tribunal, Maharashtra in Reference (IT) No. 40
of 1963.
·
H. K. Sowani, K. Rajendra Chaudhuri and K. R. Chaudhuri,
for the appellant.
H. R. Gokhole and /. N. Shroff, for respondent No. I.
The Judgment of the Court was delivered by
Hiclayatullalt, J. This is an appeal by special leave against
the aiward dated .March 31,,1964 of the Industrial Tribunal, Maharashtra in a Reference by Government under s. IO(l)(d) of the
Industrial Disputes Act, 1947. The appellant is a Trade Union
established on January I, 1962 by the employees of Ghatge &
Patil <Transports) Private Ltd. and the respondent is the Company.
The Company has its registered office at Kolhapur and is engaged
in the transport and removal of goods by road. It operates on a
large scale owning at the material time as many as 70 trucks and
plies them from Kolhapur (where the registered office of the Company is situate) to far off places such as Bombay, Poona, Bangalore, Goa and Madras.
On January 14, 1963, the Union served a notice of demand
upon the Company asking for the abolition of a newly introduced
contract system for the running of vehicles. This was referred first
to the Conciliation Officer, but later the reference was made by
Government as stated already. The dispute arose in the following
circumstances :
For the operation of its trucks the Company was previously
employing 70 drivers and an equal number of cleaners. On January 8, 1963, the Company advertised in a local newspaper of
Kolhapur that it had trucks in working condition for sale and also
trucks in working condition to be given for plying on a contract
system. As many as 54 drivers applied for obtaining contracts having resigned their service as drivers. The Company then entered
into agreements with these drivers between January 9 and 31. Each
driver received one motor truck for operation according to the
terms o1. the agreement. A model agreement has been produced
in the case in which the parties, after reciting that there were difficulties in OpeJ"atiug motor transport vehicles, because of the passing
of the Motor Transport Workers Act, stated that the agreement
was being entered into for the operation of the trucks. It is not
necessary either to set out the agreement or to analyse all its terms.
L.'&lSOI-6
302
SUl'lllUlll: OOURT RSPORTS
[11168) l 8,0,R,
•
For our purpose it is sufficient to say that the Company let to
A
these former drivers (to whom we may refer as operators) a truck
each on condition that they paid the Company Re. 1.00 per mile
for its use. The Company on its part undertook to supply fuel, oil,
mes, tubes, etc. for the purpooe of running the vehicle. U oder this
agreement the operator was at liberty to canvass for goods and
transport them but he was required to give the utmost priority to
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the goods entrusted to the Company for transport. In this way the
goods booked with the Company were transported by the operators
in priority and they paid Re. LOO per mile for the use of the truck,
all other expenses being borne by the Company. The operators
ji
were required to bring all the gross receipts to the Company which
\
deducted its own charges at Re. 1.00 per mile and handed over the
~
balance. The operators were responsible for any damage to the c
~
vehicle, save normal wear and tear, and were required to observe
the terms and conditions of the permit held by the Company. In
~
this way, the Company continued to function as a transport under-
•
taking while the trucks were not run through paid servants
but
~
through independ~nt contractors.
The above move by the Company was necessary (so the ComD
pany admits) because of the passing of the Motor Transport Workers Act, 1961, on May 20. 1961. This Act was Jassed to provide
for the welfare of Motor Transport workers an to regulate the
conditions of their work. It applies to Motor Transport Undertakings, by which is meant, among other things, undertakings engaged
..
in carrying goods by road for hire or reward. Such undertakings
are required to register under the Act and an· inspecting staff js
E
brought into existence fur the purpose of seeing that the requirements of the Act are carried out. The fourth chapter of the. ,Act
(headed "Welfare and Health") requires the Motor Transport
Undertakings to provide canteens in every place where 100 Motor
Transport workers or more are employed; rest rollms for the use
of such workers, uniforms, medical and First-Aid facilities. The
fifth chapter prescribes the hours of work for Motor Transport
workers and in ordinary circumstances puts a. ceiling of 48 ljllurs
in a week and a maximum of 8 hours a day and a daily intervaJ.
F
for rest after S hours of work, with a spreadover of not more than
12 hours in every day. It also provides for a day of weekly rest.
The sixth chapter prohibits the employment of children, enjoins
the carrying of tokens by employees and provides for their medical
examination. The seventh chapter applies the Payment of Wages
G
Act and provides for annual leave with wages and extra wage for
over-time. The eighth chapter provides for penalties and procedure
and the ninth chapter gives power to the Government to grant
exemptillns, to make rules and to give directions. Section 37, which
is in this last chapter, provides that the provisions of the Act shall
have effect notwjthstanding anything inconsistent therewith conR
tained in any other law or in the terms of any award, agreement
or contract of service whether made before or after the commencement of this Act but not so as tll take away from a Motor Trans-
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EMPLOYEES UNION v. G & p (TAANSPOllTS) (P) LTD. (Hidayatullah, J.) soa
port worker an existing benefit which is more favourable than
those under the Act or to prevent hinr from entering into an agreoment for better rights and privileges than those given to him by
the Act.
·
The Company frankly admitted at all stages that it was impossible for it to implement all the conditions of the Act in respect
of the drivers of motor vehicles. It stated that its motor drivers,
while working in its employment, were required to go on long
journeys and it was practically impossible to enforce the conditions
of hours of work or of rest. Since this entailed penal consequences
and the possibility of the permits being cancelled, the Company
was forced to adopt a system under which it would not be required to observe the Act because under it the truck drivers became
independent contractors and were therefore not within the ambit
of the Act. On the other hand, the Union contended that this ar·
rangement was invented to nullify the beneficial legislation intend·
ed to improve the conditions of Motor Transport workers in general and truck drivers in particular. Under the system, the Union
submitted, the drivers lost the benefit of leave of various kinds,
over-time payment, Provident Fund, gratuity and insurance and
there was no control either in respect of hours of work or of rest
which were the main objects G( the Act to secure.
The matter of dispute referred to the Tribunal was: -
"The contract system for the running of vehicles which
has been newly introduced, must be abolished immediately. Such ex-i;mployees of the Company who have been
given this work on contract basis should be reinstated
with back wages".
The Tribunal held that the first part as also the second referred to
the 54 drivers who had resigned their jobs and become operators.
The Tribunal saw difficulty in acting on the second part because
the drivers had resigned. In dealing with this problem the Tribunal considered the evidence and came to the conclusion that the
drivers were not coerced or forced to take this action. The Tribunal then posed the question, how to re-instate persons who had
voluntarily resigned their services and could not be said to be dismissed, discharged or retrenched within the
Industrial Disputes
Act? The Tribunal also held that the agreements were simple
agreements for transport of goods and were essentially fair to the
operators. Of course, there were advantages as well as disadvanta·
ges but the employees not being servants were free agents and
could do the work as and when they liked and even accept work
from others. They thus got, what they considered, more benefit
from the contract system than from their contract of employment.
None of the drivers had appeared to complain against the new system. There was also nothing to show that this system took unfair
advantage of the former drivers. The Tribunal, therefore, held that
the contract sYstem could not be described as an unfair labour
practice. The Tribunal also commented that under the agreements
LIS'SCT~(•)
304
SUP!ll!llll COURT REPORTS
(1968) 1 s.c.a.
themselves the contract was capable of being terminated by three
A
days' n~tice on either side and hence it was hardly necessary for
the l!nion to take recourse to a Tribunal for getting it abolished.
Holding that the new system could not be said to be an unfair or
anti-labour practice the Tribunal rejected the claim of the Union.
The Union now appeals by special leave.
The argument on behalf of the Union centres round two facts.
Firstly, that the resignation of the drivers and cleaners and the
setting up of the contract system amaunts to an unfair labour practice and exploitation of labour because by this device these and
other transport workers are being victimized; and, secondly, the
salutary and beneficial legislation conceived in the best interest of
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the transport workers is being deliberately set at naught. Accord- c
ing to the Union the operators continue to be workmen notwithstanding that they are posed as independent contractors hiring the
trucks. By this system many of the benefits secured to the Motor
Transport workers including drivers and cleaners, have been made
inapplicable to a section of Motor Transport workers, namely,
the former drivers and cleaners employed by the O>mpany. The
argument on the side of the Company is that the hiring out of D
trucks to the operators is not illegal and does not amount to
exploitation of the former drivers or an unfair labour practice.
According to the Company the operators are free agents and freely
resigned their jobs and the Company points out that even the
office-bearers of the Union were among those who resigned as
drivers and entered into agreements to become operators.
The
Company further points out that malny of the contracts were enterE
ed into after the present reference was made to the Tribunal.
There is no doubt that the Company is a Motor Transport
Undertaking because it is engaged in carrying goods by road for
hire or reward. Since the drivers have resigned their· jobs they
cannot be said to be employed in the Motor Transport Undertaking. The word "employed" in the definition of Motor Transport
worker is not used in the sense of using the servides of a person but r
rather in the sense of keeping a person in one's service. The definition is, of course, made wide to take in all persons working in a
professional capacity in an undertaking for running its affairs in
any capacity and not only persons employed on wages. The word
"wage" has the meaning given to the word in the Pieyment of
Wages Act and takes in all paid employees and also persons who
are employed in a prolessional capacity although not in receipt of G
wages. Persons who are independent and hire a vehicle for their
own operation paying a fixed hire pe~ mile from their ea.filings
cannot be said to be persons employed m the Motor Transport Undertaking in the sense of persons kept in service. The operators.
therefore, are not Motor Transport workers within the definition.
The Act is not only intended to confer benefits on Motor
Transport workers but is also regulatory With penal consequences.
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KllPLOYl_l!S Ul(ION V. G & P (TllANSPOllT8) (P) LTD. (Hidayatullah, J.) 305
The apprehension of the C~pany is that some of the regulatory
provisions of the Act are incapable of being observed properly in
the case of drivers and clesners going on long journeys because
there is no means of enforcing them. For example, the provisions
about hours of work, hours of rest etc. are not essy to enforce enroute or at far off places. Therefore, rather than run the risk of
losing the permit for want of compliance with the Motor Transport
Workers Act, the Company has decided not to run transport trucks
itself but to Jet them be run by independent hirers. There does not
appear to be any bar in Jaw to such action. Section 59 of the Motor
Vehicles Act contemplates the transfer of permits with the permission of the Transport Authorities and this enables any person to
whom a vehicle covered by the permit is tranMerred to get the right
to use the vehicle in the manner authorised by the permit. Here the
vehicle is not transferred but is only let out on hire and hence there
is prima facie no need for permission. The Union made no attempt
before us to establish that the inauguration of the contract system
offended the Motor Vehicles Act or was prohibited under it. No
objection to the system by the Authorities under the Motor Vehicles Act was proved in the case. The operators also seem to be
happy because no operator appeared to complain and the only
dissatisfaction has been registered by the Union which apparently
lost the allegiance of some of its former members and even officebearers. Jn view of the findings of the Tribunal, which we see no
reason to dis-approve, it must be held that the drivers voluntarily
resigned and entered into the agreements since they apparently
considered them to be more favourable than the terms of their
former employment. Jn this view of the matter it is difficult to hold
that the Tribunal was wrong in its conclusion that there was no exploitation of the drivers. It is also equally true that there is no bar
in law to the introduction of the system.
The Union, however, contends that on the analogy of some
cases of this Court in which contract labour was put down as unfair labour practice because it involved exploitation of labour, we
should declare this system also to be harmful to the interest.~ of
labour. Contract labour was declared in this Court to be an unfair
labour practice because the intention was to introduce a middle
man to avoid observance of laws and to deny to labour the advantages it had acquired by bargaining or as a result of awards. Such
is hardly the case here. The two systems were there for the drivers
to choose. It is reasonable to think that the drivers must have
chosen a system which was considered by them to be mt>re beneficial to themselves. There was no compulsion for the drivers to
resign their jobs and they did so voluntarily obviously thinking .
that the new system was more profitable to them. We cannot lose
sight of the fact that some of the office-bearers df the Union were
among the first to resign. Many of the drivers resigned the jobs and
entered into agreements even after the dispute was taken up by the
Union. The present case is, therefore, not analogous to the case of
S06
llUPUlll OOUBT llBPOBTS
(1968} 1 B.Cl.B.
cootract labour where employment of labour through a contractor
A
or middleman put the labour at a disadvantage in collective bargaining and thus robbed labour of an imDl>rtant weapon in its
armoury.
The matter of dispute no doubt referred in the second part to
ex-drivers but it referred generally to the new system in the first.
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The Tribunal was wrong in thinking that the first part also referred
to the ex-drivers (now operators). On the whole, however, it is clear
that the Company has not done anything illegal. A person must
be considered free to so arrange his business that he avoids a regulatory law and its penal consequences wh.ich he has, without the
arrangement, no proper means of obeying. This, of course, he can
db only so long as he does not break. that or any other law. The
C
Company has declared bofore us that it is quite prepared, if it was
not already doing so, to apply and observe the provisions of the
· Motor Transport Workers Act in respect of its employees proper
where such provisions can be made applicable. In view of this deolaration we see no reason to interfere, because Parliament has not
chosen to say that transport trucks will be run only through paid
employees and not independent operators. The appeal fails but in
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the circumstances of the case we make no order as to costs.
o.c
Appeal dismissed.