# March 15 195L Shicnandan Sharma v. The .P-unjab National Barik Ltd

- **Citation:** [1955] 1 S.C.R. 1427
- **Court:** Supreme Court of India
- **Decided:** 1953-08-31
- **Case number:** Civil .. Appeal No. 207 of 1954
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/march-15-195l-shicnandan-sharma-v-the-p-unjab-national-barik-ltd-349
- **Pages:** 18

## Headnote

.
'
-
! 't
S.C~R ..
SUPREllIE COURT REPORTS·
1427
and of the Calcutta High Court in. 11Iathurapore
19;5
Zamindary Co. Ltd. v. Bhasaram · lllandal(')
and
lk"-h- 5 ·
/
Prabashinee Debi v. Rasiklal Banerji(') are correct. Juga '' v":'. ara
As at present advised, I would like to express no
RawC-Otton
opinion as to whether the expression "by operation
· Co. Ud.
of law" can be given the interpretation suggested by
my learned brother Das, J., as it is uiinecessary to do
so in the present appeal. .
·
·
·
·
·
·
· ·
·
·
·. Appeal di;"inissed.
SHIVNANDAN ·SHARl\IA
. v.
THE PUNJAB NATIONAL BANK LTD.· ·
-
--
.
[ViviA:N Bos~, JAG~NNADHADAS and SINIIA JJ.].
-. ' .
-
Master and servant-Banker-Agreement .. between Bank and -
TreasUrers~Treasurers, wheth'e:Y sirvantS or independent - contractors
-Cashier appointed by Treasitrer-Whether servant of the Bank.
.
..
I
.
•
'
•
• l
_ .
. ,
{.
•
· l
. The appellant was appoiμted head. cashier in one of the branches
of the .respondent Ballk by,'tbe Tfeasurers who .wer_e ~D. charge Qf~h6
Cash Department of the Bank by virtue of an agreeffient between
them .. The question arose as to whetner the appellant' was' an•: em·
p!oyee of the Bank.
•. · '
·
·
. 1
Held, (i) that the te~s oi the ~gree~ent ciearly showecl that
the Treasurers were servants ofthe Bank and not fodependent con~
tractors; and tha~
·1
•
1
t
:-" · ... ,
(ii) as the direction and control of the appellant ancl of the
ministerial staff in charge of tlie· Cash Departl!lent of the Bank was
··entirely vested.in:the Bank, the appellan~was an.employee of the
Bank.
·
...
·
. ,
,
.
.... .
t
· · , ·
.
If a ma."sier employ"s a s~rvant and autho.rizes hiin-to e~ploy·a
number of persons to do a. particular job and -to guarantee_the_ii fide~
lity and efficiency for a cash consideration, the ·employe8s thUS appointed by the servant would be, equally with the employer, servants
of the master. ·
... i
. ! · · ;
Th.e question a3 to whose employe0 a parlicUlar : person'; hi h~~
to be determined with reference to tb6 facts ·and( circUmstarices 'of
·each individual case, and among the many ~sts · by which to as~r
tain who is the employer, the most satisfactory one is to ask who fa
entitled to tell the employee the way in which ha is to .do the work
upon which he is enga:;ed. ·
·
.
:
. (1) [192!] I.L.R. 51 Cal. 703.
(2) [1931] I.L.R. 59 Cal. 297.
ImamJ.
1955
March 15
195L
Shicnandan
Sharma
v.
The .P-unjab
National Barik Ltd.
1428
SUPREME :coURT:REPORTS ,.
[1955] ·
' Don6van· -V. lAing, Wharton'&·· Down·,.COnitruction Syndicate
([1893] 1 Q.B.D. 629) and Mersey.Pocks & Harbour }3oard v . . r;ogginr
& Griffit~ (Liverpool) Ltd. (l1947] A.C.I.), referred to. · ·
· C1v1L
APPELLATE
· JuR1so1cnoN :
Civil .. Appeal
No. 207 of 1954.
Appeal by special leave from the Judgment ' and
Order· dated· the 31st day of August 1953 of the La'
bour
Appellate Tribunal
of
India;
Lucknow, · rn
Appeal No. III-57 ot 1953.
A. S. R. Chari
(Ba";;;a-Shzv Charan Singh and
M. R. Krishna Pillai, with him), for the appellant.
Achhru Ram (Naunit Lal, with him), for the re'-
~~=
.
.
1955.
March
15.
The Judgment . of the Court
was delivered by
·S1NHA.
J.'-This is an appeal. by special
leave
against the orders of · · the Lucknow Bench of the
Labour Appellate Tribunal ·of India (hereinafter ·.to be
referred to as "The Appellate Tribunal") dated the .
31st August 1953, setting aside the award dated ·the
13th October 1952 made by . the · Chairman, ·Central
Government
Industrial
Tribunal,
Calcutta
(herein·
after ·to be referred to as · "The· Tribunal") reinstating 'ihe appellant as the head cashier. with ,back salarv
under the Punjab National Bank (hereinafter called
... The Bank").
..
.
The facts leading up to this appeal may shortly be
stated. The appellant started his service as the head
cashier in the Una Branch of the Bank on the 18th
June 1949. The Cash Department of the Bank is in
charge of Treasurers. The relation between the Bank
and the Treasurers . is evidenced by ail agreement d3ted
the 1st Ma

## Text

.
'
-
! 't
S.C~R ..
SUPREllIE COURT REPORTS·
1427
and of the Calcutta High Court in. 11Iathurapore
19;5
Zamindary Co. Ltd. v. Bhasaram · lllandal(')
and
lk"-h- 5 ·
/
Prabashinee Debi v. Rasiklal Banerji(') are correct. Juga '' v":'. ara
As at present advised, I would like to express no
RawC-Otton
opinion as to whether the expression "by operation
· Co. Ud.
of law" can be given the interpretation suggested by
my learned brother Das, J., as it is uiinecessary to do
so in the present appeal. .
·
·
·
·
·
·
· ·
·
·
·. Appeal di;"inissed.
SHIVNANDAN ·SHARl\IA
. v.
THE PUNJAB NATIONAL BANK LTD.· ·
-
--
.
[ViviA:N Bos~, JAG~NNADHADAS and SINIIA JJ.].
-. ' .
-
Master and servant-Banker-Agreement .. between Bank and -
TreasUrers~Treasurers, wheth'e:Y sirvantS or independent - contractors
-Cashier appointed by Treasitrer-Whether servant of the Bank.
.
..
I
.
•
'
•
• l
_ .
. ,
{.
•
· l
. The appellant was appoiμted head. cashier in one of the branches
of the .respondent Ballk by,'tbe Tfeasurers who .wer_e ~D. charge Qf~h6
Cash Department of the Bank by virtue of an agreeffient between
them .. The question arose as to whetner the appellant' was' an•: em·
p!oyee of the Bank.
•. · '
·
·
. 1
Held, (i) that the te~s oi the ~gree~ent ciearly showecl that
the Treasurers were servants ofthe Bank and not fodependent con~
tractors; and tha~
·1
•
1
t
:-" · ... ,
(ii) as the direction and control of the appellant ancl of the
ministerial staff in charge of tlie· Cash Departl!lent of the Bank was
··entirely vested.in:the Bank, the appellan~was an.employee of the
Bank.
·
...
·
. ,
,
.
.... .
t
· · , ·
.
If a ma."sier employ"s a s~rvant and autho.rizes hiin-to e~ploy·a
number of persons to do a. particular job and -to guarantee_the_ii fide~
lity and efficiency for a cash consideration, the ·employe8s thUS appointed by the servant would be, equally with the employer, servants
of the master. ·
... i
. ! · · ;
Th.e question a3 to whose employe0 a parlicUlar : person'; hi h~~
to be determined with reference to tb6 facts ·and( circUmstarices 'of
·each individual case, and among the many ~sts · by which to as~r
tain who is the employer, the most satisfactory one is to ask who fa
entitled to tell the employee the way in which ha is to .do the work
upon which he is enga:;ed. ·
·
.
:
. (1) [192!] I.L.R. 51 Cal. 703.
(2) [1931] I.L.R. 59 Cal. 297.
ImamJ.
1955
March 15
195L
Shicnandan
Sharma
v.
The .P-unjab
National Barik Ltd.
1428
SUPREME :coURT:REPORTS ,.
[1955] ·
' Don6van· -V. lAing, Wharton'&·· Down·,.COnitruction Syndicate
([1893] 1 Q.B.D. 629) and Mersey.Pocks & Harbour }3oard v . . r;ogginr
& Griffit~ (Liverpool) Ltd. (l1947] A.C.I.), referred to. · ·
· C1v1L
APPELLATE
· JuR1so1cnoN :
Civil .. Appeal
No. 207 of 1954.
Appeal by special leave from the Judgment ' and
Order· dated· the 31st day of August 1953 of the La'
bour
Appellate Tribunal
of
India;
Lucknow, · rn
Appeal No. III-57 ot 1953.
A. S. R. Chari
(Ba";;;a-Shzv Charan Singh and
M. R. Krishna Pillai, with him), for the appellant.
Achhru Ram (Naunit Lal, with him), for the re'-
~~=
.
.
1955.
March
15.
The Judgment . of the Court
was delivered by
·S1NHA.
J.'-This is an appeal. by special
leave
against the orders of · · the Lucknow Bench of the
Labour Appellate Tribunal ·of India (hereinafter ·.to be
referred to as "The Appellate Tribunal") dated the .
31st August 1953, setting aside the award dated ·the
13th October 1952 made by . the · Chairman, ·Central
Government
Industrial
Tribunal,
Calcutta
(herein·
after ·to be referred to as · "The· Tribunal") reinstating 'ihe appellant as the head cashier. with ,back salarv
under the Punjab National Bank (hereinafter called
... The Bank").
..
.
The facts leading up to this appeal may shortly be
stated. The appellant started his service as the head
cashier in the Una Branch of the Bank on the 18th
June 1949. The Cash Department of the Bank is in
charge of Treasurers. The relation between the Bank
and the Treasurers . is evidenced by ail agreement d3ted
the 1st May 1944 (Ex. 1) which will be noticed in
· detail
hereinafter~ That · was an agreertrent ·between
the Bank ··'and · "Messrs Rai Bahadur Karam ' Chand
Puri & Bros". That firm was appointed the Tr.casurers
at the head office .of the Bank -and other places iri and
outside the Punjah. On the 28th Septemhcr-1951 the
District Manager of the Northern Circle of the Bank
wrote a letter (Ex. 4)
to the· · Treasurers bforming
.•
v'
I
-
-
'
...
S.C.R ..
SUPREME COURT· REPORTS:
1429
them that · it had been decided · to close the Una office
of the B,mk with effect from the dose ot business on
the 3rd November 1951.
In pursuance of that letter
the
Treasurers
intimated
by
a
letter . dated
2nd
October 1951 enclosing a copy of Ex. 4 to the . appellant that the l.Tna Branch of the Bank will .cea~e to
function .from the close of business on the 3rd November 1951 and that . his services will not · be required
after that date.
The Punjab National
Bank
Employees' Union (P_unjab) took .. up .the cause of the
appellant . as .also that of .other employees . and made
representations to the Government
of
India.
. The
Government of India by a notification No. SR0-432
dated the 8th March 1952 published in the Gazette of
India, Part II-Sec .. 3, in exercise of !ts .powers _under
section 10 of the Industrial Disputes Act XIV of 1947
(hereinafter
called the Act) referred . the . industrial
dispute between . the Bank and its workmen named
in . schedule : 2. (concerning . workers dismissed)
and
schedule 3 (relating to workers ·transferred) for adjudication to the ·Industrial Tribunal at Calcutta con_.
stituted under section 7 of the Act. Schedule 1 in so
far as it is necessary for purposes of this .case contains
the following points of disp1Jte between the ·employer
and the workmen :.....::.
.
. . .
"L . Wrongful dismissal
of the .workmen mentioned iii. schedule II and their reinstatement.
"2.
In .the event· of any order for reinstatement
payment of wages and other allowances from the date
of dismissal to the date of reinstatement" ..
l
The appellant is No. 5 in schedule 2 aforesaid. The
Tribunal gave its ·award on the 13th October 1952 in
respect of a number of employees whose . cases were
actually .in controversy before it. It is only necessary
to refer to the award in so far as it concerned the
appellant. · ·After
overruling
the
preliminary
objec•
tion of ·the Bank .that the Union had no locus standi
to represent the · appellant the Tribunal' formulated
the· following point for its decision :- .
"On merits the- main ·point . involved . is . as· . to
whether the services of an cmployey of ... the Cash
1955
Shirml ur!rm
Shmmn
'\(·
The Punjab
~ational B. nk Ltd ..
Sinhr .:I
..
1430 :
SUPREl\IE.COUR'f REPORTS
[1955]
f9ss
Departnien t can be terinliia ted on a change made in
.the services ofthe·Contractor Cashier".
Shi'flnandais
'
-
Sharma
'It answered this point in these words:-
v.
•: .: "This point has been agitated in more than one
The Punjab -
case and I have also held in Reference No. 3 of 1951
·Nati<mazBankI.td •. ·
Ch .
. f I d t . 1 T "b
I (P N B . k d"
_
_
· as _ airman o
n us na
n una
. .
.
an
isSinha J;
pute) relating to 5 cashiers that the employees of the
.---
Cash Department are the employees of the Bank and
·not the. nominees of the Contractor Cashiers so far
service conditions are concerned, and I think it will
serve no useful purpose to discuss all the legal prece-
·dents cited, more especially when the point has been
.set at rest by their Lordships of. the Supreme Court
in Civil Appeal No. 66 of 1952 in tlie matter of United
.Commercial Bank Ltd. v. Secretary, U. P. Bank Employees' Union and Others. I am of the· opinion that
the dismissal of Shi-i Sharma was wrongful and liable
to be set aside.·· Now the normal remedy is reinstatement and I have no h·esitation in allowing the same:
He will also be paid his back salary and allO\".ance
from the date of dismissal to the date of reinstate-
'ment".
•-. \Vhatever may be the merits of the answer given
• to the question propounded by the Tribunal, there is
no doubt that the question posed had been wrongly
·framed. The· discharge' or dismissal of the appellant
had nothing to do with the change in the personnel
of- the Treasurers. The appellant's services were dispensed with on the ground that the Una Branch
where he was employed as head cashier being an un-
.ecc;momic unit had to be closed and that therefore the
,appellant's services_were no more required.. TJ.ic rcs-
.pondent's case appears to have been. that the firm
known as l\Iessrs R. B. Karam Chand Puri & Bros .
. have been contractors for the Cash Department of the
_Bank at the head office and some of the other offices
in the Punjab and beyond; that from time to tim.e
agreements were executed between the Bank and the
aforesaid firm; that the last agreement was executed
on the 1st l\Iay 1954 (Ex. I); that . the appellant
.according to the respondent-Bank was the nominee of
the said firm, and that his services had been dispensed

·1955
s· ivnandan
Sharma
v.
1"he Punjab
~Y
~tional Ba_nk Ltdi
s_inha J.
1432
SUP-REME CQUR'F REPORTS
[1.955]
award: hy the .Tribunal was,. in the. result, set:::aside , and
the .Bank?s appeal ._allowed.,•
, . , , ;
· ·The appellant · in "this: Court- through his • counsel
Shri 'Chari,- argued· that' the Appellate Tribunal ·had
misinter-preted
the ·provisions of the. Industtial
Disputes -Act in coming, to the conclusion that the Tribunal ·had no- jurisdiction to entertain the-dispute simply,
on the . ground that one of the parties to the: dispute
had· successfully denied .. the relationship; of : employer
and employee; "that· the· Appellate · Tribunal misconceived its ·functions- -by ·basing· its ; findings: .on
the
interpretation of the: :written · agreement . between· the
Bank and · its· Treasurers ;when - it :should. have ·gone
inro all the relevant .facts to -·determine the · substance
oi. the· matter; -and finally; :rhat: the Appellate ·Tribunal mlsdiretted. itself on<the question of· the interpretation of the agreement for coming : to the conclusion
that the appellant was not· :an employee ·of the Bank
but was a ·nom'inee' of'· the "Treasurers"; ·It' was· further
argued on behalf·· of -the 'appellant tliat •the :Tribunal
having ·based • its dicisicin on its ' previous award dated
the ·16th· ·September . 1952 in Reference ·No ... 3 ·of 1951
between' •persons 'IIlOre or less -in· the same .. position ·as
the•• appellant•· and the respondent-Bank, . 'in ·the ·background· of the decision·• of ·the previous Tribunals,· e.g.,
the· award' ' of the Conciliation Board preside-cl over by
Mr. Justice ' Bind Basni· Prasad of the Allahabad High
Court,· the award- by the Tribunal presided over by
Mr. K, · C. Sen. and the award of the All India Ii:tdustrial Tribunal . (Bank Disputes);• presided over by Sri
S. Panchapagesa Sastri and the award dated the 24th
March 1951 · in Reference No: 20, the award of the
Tribuna} was ·really
final: The -argument
was
that
the award · of · the Tribunal was . based: on considerations · :of· facts ' and · · c'ircurnstarices
disclosed · ·in
those
earlier awards·· to: which the ·Bank and': its cashiers· and
other employees : employed· ·in the Cash
Department
were parties:· ·It was· thus a •final finding of fact which
was not ·open 'to appeal.:before the Appellate· Tribunal.
It. was therefore contended' that the Appellate Tribunal had no jurisdiction to etitertain the appeal . and . to
reverse the award of the Tribunal.
"'
-
-
•
-
-
•
I ;
S.C.R.
SUPREME COURT REPORTS·
1433
On behalf of the respondent-Bank it was contended
that no specific grounds had been taken either before
the Appellate Tribunal or ·in the
memorandum of
appeal to this Court that the Appellate Tribunal had
no jurisdiction on the ground now taken ·by the appellant in this Court, nor was that ground taken in the
statement of case. On merits it was .contended
by
the· respondent's· counsel that the Tribunal is as much
bound ·by the rules of evidence and procedure as any
other Tribunal and as the Tribunal had not addressed
itself to
the question
whether the cashier-appellant
was an employee · of the Bank, the question was open
before the Appellate Tribunal which
was
competent
to pronounce -on that basic· question. Finally it was
· argued that on a true construction of the provisions
of the agreement (Ex. I) this Court should accept the
finding of the Appellate Tribunal that the appellant
was not an employee of the Bank and that · on that
account· the ·Tribunal had no jurisdiction to grant ahy
relief to· the . appellant. . · ·
On behalf of the ·respondent the case was practically
rested on the construction of· the agreement (Ex. 1).
With ·reference to· the terms of the
agreement . the
learned counsel for the respondent argued that the
Treasurers . were not servants or employees of the
Bank but were
"independent contractors" and that
the appellant and other employees in the Cash Department having been nominees . of the "independent contractors", there could not be any relation of employer
and employee ·between the Bank and the appellant.
It is therefore necessary to examine in some detail the
terms of the agreement aforesaid. We set out below,
underlining important words, the terms of the agreement in so far as they are relevant for the determination of the true relation between the
Bank and the
· Treasurers. Though this agreement is
dated the 1st
May 1944, cl. (1) provides that it will be deemed to
have commenced and come into force from the 15th
March 1942, the · date of the death of R. B. Karam
Chand Puri and will take the place of the previous
agreement · dated the 26th July 1941,
thus maintain.
ing the .continuity of the relationship between the
1955
Shivnandarr
Sharma
v.
The Punjab
National Bank [,t,/
Sinha J.
1434
SUPREl\IE.COURT REPORTS
[1955)
' -
t9ss
Bank and the Tr!lasurers'. The·agreement provides
that the Tceasurers.sbal.l diligently and 'aith'ully serve
Shivnandan
J'
"J
Sharma
the Bank at the Head Office and its various offices
T.
mentioned in schedule A attached to and forming part
The Punjab
of the agreement and at 9ther offices where they may
NationalBankUa. hereafter be appointed treasurers and shall in all res-
.
Si,.haJ.
_ pects diligently and faithfully obey and observe all lawful orders and instructions of_tbe Bank or the person
placed by the Bank in authority over them in rela~
tion to the due discharge of their duties as Treasurers.
The Treasurers in addition to the duties, liabilities
and responsibilities devolving upon them by virtue of
· the provisions oftbe agreement shall also be liable to
perform such duties and discharge such responsibili~
ties as by custom usually devolve on treasurers in the
employ of a bank._ The Treasurers shall be -paid_ ·for
their services a remuneration as μientioned in schedule
A aforesaid or such remuneration as the General
· Board of Directors of the Bank may de'termine from
time to time. Out of the remuneration paid to tbeni by
the Bank the Treasurers shall pay salaries to their nominees employed by them for performing the duties of. a
cashier in the Bank on their behalf or other functionaries of a similar nature. The salaries of such nominees employed by them will be fixed by the Treasurers
themselves but the same will be subjeet to the approval
of th·e Bank. The remuneration of the Treasurers will-..
be tbenet amount which will-be left to them after paying salaries to their nominees employed by · them for
working as cashiers, etc. ·The Treasurers themselves
will not be entitled to any kind of allowances besides
·the net remuneration as aforesaid but their nominees
or working cashiers will be entitled to allowances which
the authorities of the Bank may sanction for members of
· . the staff from (ime to time. The Treasurers -shall employ the number of men at each office as ·mentioned
iri schedule A.aforesaid. The Board of Directors shall
have the power to increase or decrease the number of
their nominees for any particular office and the
amount of rem unera ti on fixed for that office. The Trea-
. surers.' shall be responsible for the due safety, both
within and outside the premises of the B:mk at any
•
•
s:c.R.
:SUPREME •COURTiREP,OR'fS
. 1435
:Office pfacoo 1:t!llde;r their charge, of' all mOfley, , •specie,
ornaments, .. bullion, •cash,
etc. :and ";cif other
~aluable
documents received by them for :arid . on behalf. of the
Bank .or from the 'Bank and shall be answerable to the
Bank for all fosses occurring · either inadvertently or
:by or through the .negligence .or misconduct · of the
Treasurers . or :any of their nominees .. The Treasurers
shall be entitled to resign the services of the Bank by
•giving three calendar months' notice
to
the
Bank.
The Bank shall also be ·entitled to dispense with the
Treasurers' .services on giving three . months' notice.
In case of gross :negligence or misconduct or of any
fraud,
.misappropriation
or
embezzlement
by
the
Treasurers or any of the nominees in the discharge of
.their duties as ·such Treasurers, no notice shall be
necessary and the Bank shall have the right to dispense
with their services forthwith. The Bank shall have the
right to take the Treasurers into the servioe of the Bank
after settlement of remuneration with :the Treasurers at
any other ·office or offices of the Bank. The Treasurers
·and their nominees shall obey all the orders, rules and
.regulations prescribed by the Ban•k with regard to the
discharge of their duties by the cashiers :as well as
with regard to the amount of balance they are allowed to keep with .them. It shall be the duty .of the
cashiers to inform the manager of the Bank as soon
as .the balance in hand exceeds the prescribed limit
.and to ask for orders on the point. 'The Treasurers
· shall not engage any person as their assistant or peon
about
whose
character,
conduct ·or
reliability
the
manager of the Board of Directors of the Bank may
. have any objection. The Treasurers shall also arrange
that
no person under
employment
absents
himself
from duty withol.lt the written permission of .the manager . for the time being. If any
such employee is
absent without leave, or , he is ·turned out on the
objection of. the ,Board or the . Manag~r, the Treasurers
shall. forth'Yith . app9int a
substitute ·in
his
place.
The Treasurers
shall
be
responsible
for.:. the .1 acts
and defaμlts
.of
all . their . n0mi1,1ees.
The .. Treasurers and ,thefr nominees .. shall be.·:entitled to ·travelling
allotJ!ancf] .according to . .rates. s~<;tioned .,py ·the ,Board
~9li5
.. Shivnandan
.ShlJTfllfl
·V.
T:he Pu,Yab
.Jlofltional Bank J. td,
Sinha J.
1955
Shivnandan
Sharma
"·
The Pury'iih
National Bank Ltd.
Sinha ].
1436
SUPREME COURT REPORTS
[1955]
of Directors of' the Bank. The Treasurers_ have de-
. posited security of the value of Rs. 15,000/- on which
they shall be entitled ·to receive interest at the rate of
· 3! per cent. per annum. As a further security for the
·due performance of the terms and .conditions of the
agreement as -a cover for loss that may be caused to
the Bank by. any act or omission of themselves or any
one of
their
nominees,
the Treasurers hypothecated
properties as per . schedule C attached . to and forming
part of the agreement. Schedule A aforesaid contains
the names of the offices, the monthly remuneration of
the Treasurers in respect of each one of those offices
separately, net savings of the Treasurers after paying
the salaries of the total number of · men . including
cashiers, etc., as stated against each one of the offices.
Apart from the · terms set out· above bearing on the
relation between the
Bank and the Treasurers, some
of which apply equally to their nominees, the · following terms of the agreement bear directly on the relation between the nominees of the Treasurers, · like the
appellant, and the Bank. In this connection the · agreement provides that the Board of Directors shall have
the power to increase or decrease the number of the
Treasurers' nominees for any particular office
and the
amount of remuneration fixed
for
that office.
Such
nominees shall be entitled as servants of the Bank to
any bonus which may from time to time be declared
for the members of the staff. The bonus of the
Treasurers shall · be limited to
the amount of their
own net remuneration and no further. They shall not
be entitled to any bonus · to which their cashiers are
not eligible under the rules of the Bank. The nominees of the Treasurers shall be entitled to participate
as ordinary members of the staff in ·the provident fund
constituted by the Bank. Such nominees shall also
be entitled to travelling allowance according to rates
sanctioned by
the Board of Directors of the Bank
whenever they are
required to go to out-stations on
bank business.
From the terms of the agreement. aforesaid set out
above almost
verbatim omitting
such clauses and
words as 'are not relevant· to this case, it will appear
\ ·•
-1,
J.
S.C.R.
SUPREME COURT REPORTS
1437
that the Treasurers are under the employment of the
Bank on a monthly basis for an indefinite term, that
is to say, until such time as either party to the agreement
terminated it in
accordance with
the
terms
quoted above. They are under the complete control
and direction of the
Bank through its
manager or
other functionaries. The Treasurers have to take their
orders from day to day as regards the cash balance or
other cognate matters relating to the safe custody of
cash, valuable documents, etc. belonging to the Bank
or its constituents. The Treasurers receive in respect
of each office under their charge a certain named sum
out of which they have to pay the salary of a stated
number of their assistants who may be head cashiers
or cashiers or assistant cashiers and other such functionaries. They are entitled to receive bonus on the
net amount secured
to them as their
remuneration,
being the lump sum fixed in respect of each office,
minus the salary of the assistants. It is true that
these Treasur~rs are not and cannot be expected to be
personally present to discharge
their onerous duties
at each one of the large number of offices spread over
the Punjab and outside. Naturally they
had
to
be
authorized to engage head cashiers, cashiers, or assistant cashiers in respect of each of the offices placed in
their charge. They had to guarantee the fidelity of
the persons so
employed as
their
assistants. Those
assistants had
to
be
persons
in
whose
reliability,
honesty and efficiency both the Bank and the Treasurers had confidence. The Treasurers have the right
to nominate
those assistants but
the Bank had
the
final words in the choice. The Bank Manager has
complete control over such nominees in the matter of
leave of absence, discipline and conduct in the discharge of their duties as assistants managing the cash
and other valuables in the custody of the Bank. From
the very nature of things it had to be a dual control
in the sense that the Treasurers had to nominate the
assistants who
are
to
discharge
those
responsible
functions in connection with cash and other valuables
of the Bank and the
Bank could
not
abdicate its
powers of full control over the day to day working ot
17-90 S. C. India/59
195.S
Shivnandan
Sharma
v.
The Punjab
National Bank Ltd.
Sinha J.
1955
Shiunandatt
Sharma
v.
The Punjab
Jfational Bank Ltd.
I
Sinh~ ].
1438
SUPREME COURT REPORTS
[1955]
the Cash Department. The nominees of the Treasurers are treated on the same footing as the other servants of the Bank in the matter of bonus, travelling
allowanc.e and provident fund,
etc. It is true those
nominees are. to be paid by the Treasurers but it is
out of the. money provided by the Bank.
It is not always. easy to determine.whether the relation between two parties, in the present case of the
Treasurers vis-a-vis the Bank, is that ' of · servants
to
a master or of
independent
contractors
who
have
undertaken to do a particular job for their employer.
The question has generally arisen in connection with
the determination of
vicarious liability
of
an
employer in respect of .acts done by his agent (using a
neutral word which includes an independent· ·contractor as also a servant). The distinction between a servant and an
independent
contractor
has
been
the
subject matter of a large
volume of
case-law
from
which the text-book writers on torts have attempted
to
lay
down
some
general
tests. For example, in
Pollock's Law. of
Torts,*. the
distinction
has
thus
been brought out:
"A master is one who not only prescribes to the
workman the end of his work, but directs or at any
moip.ent may direct the means also, or, as it has been
put, 'retains the power · of
controlling
the
work', a
servant is a person subject to
the command
of his
master as to the manner in which he shall do his work
.... An independent contractor is one who undertakes
to produce a given result but so that
in the
actual
execution of the work he :is not under the order or
control ·of the person for whom he does it, and may
use his own discretion in things not specified beforehand ................ ".
Clerk & Lindsell on Torts (11th Edn.) at p. 135
have
adopted
the
description
of
an
independent
contractor given by Pollock as quoted above.
In the 11th Edn. of Salmond's Treatise on the Law
of Torts, the same distinction has been clearly indicated in the following passage· a~ p. 98:-
- *Pages 62 & 63 of Pollock on Torts, 15th Edn.
.._,
-
)
S.C.R.
SUPREME COURT REPORTS
1439
"What then, . is the test of . this distinction between a . servant and an independent . contractor? The
test IS the existence of a right of control .over the
agent m respect of the manner in which· his work is
to be .done. A . servant is an agent who works under
the supervision and direction of his employer; an independent contractor
IS one who
IS his own master.
A servant
IS
a person
engaged to obey
his
employer's 9rders from time to time; an independent
contractor is ·a person engaged to do certain work,
but to exercise his own discretion as to the mode and
time of doing it-he IS bound by his contract, but
not by his employer's orders".
Those learned authors have discussed m great detail
cases illustrative of those distinctions, indicating the
circumstances in which the general rule has been· applied to individual cases with such modifications as
the facts and circumstances of a particular case required. We are here not concerned with those mce
distinctions which
have been drawn m connection
with the rule of vicanous liability in torts. We are
here concerned only with the question how far the
test laid down by the standard authors as'· quoted
above can be applied to determine the present controversy whether the Treasurers of the Bank were
its
servants as contended on behalf of the appellant or
independent contractors as claimed on behalf of the
respondent-Bank. The agreement between the parties,
as summarised above, IS a composite transaction constituting the Treasurers agents of the Bank, the former
agreemg to indemnify the latter
against any
lo~s
occasioned to the Bank due to the lack of fidelity and
efficiency of the ministerial
staff entrusted with the
charge of the Bank's cash and valuable
documents.
The Treasurers have been charged with the duty of
nominating their assistants who are to be responsible
m their day to day work to the Bank which all the
time has full control over them in the matter of their
leave of absence, as to how they shall keep the cash
and other valuables and as to how they shall be under
the general direc~ion of the ·Bank's manager or some
1955
Shivnandan
Sharma
v.
The Punjab
National Bank Ltd.
Sinha ].
Shiv1Uf1J.{/O.n
Sha,.ma
v.
The Punjab.
National Bank Ltd.
Sinha J.
1440
SUPREME COURT REPORTS
[1955]
other functionary who may be nominated by
the
Bank to supervise the work of the Cash Department.
The Bank makes itself answerable to the employees
thus appointed by the Treasurers with the
concurnonce of the Bank for their bonus, provident fund and
travelling allowance. For those purposes these
assistants are to be on the same footing as the other employees of the Bank.
It was contended on behalf of the respondent Bank
that its agreement with the Treasurers shows that the
latter had the fullest responsibility for the appointment and dismissal and payment of salary of the employees
in charge of the Cash Department of the
Bank and that therefore the Treasurers could not but
be
independent contractors.
It has
already
been
noticed that the appointment of such assistants
as
are entrusted with the work· of the Cash Department
is not under the absolute power of the Treasurers.
The appointment has to be approved by the Bank
and the Treasurers cannot continue to employ those
workmen in whose fidelity and efficiency
the Bank
has no confidence.
Hence both in the matter of
appointment and dismissal of the employees the Bank
reserves to itself the power to give direction to the
Treasurers. Similarly in the matter of the payment
of salary the money comes out o.f the coffers of the
Bank, though it may be paid by the hand of the
Treasurers. In this connection it was contended on
behal£ of the appellant that payment of salary of the
employees in the Cash Department is made ·through
the Bank itself but we have no tangible evidence in
this case beyond the bare assl!rtiOn at the Bar. But,
in our opinion, the situation in respect of the appointment, dismissal and payment of salary of the employees of the Cash Department is analogous to that of
the employees of a particular department of Government, in which appointment and dismissal of ministerial staff may rest with an authority so empowered
by the head of the department. Payment of salary
may also be made by the appointing authority but
the money comes out of the Government treasury. In
those
Circumstances, can it be rightly
asserted
that
' ·-
-
-
-
-
·•
)
S.C.R.
SUPREME COURT REPORTS
1441
those employees are not the servants of Government?
The analogy may not be perfect, because, in the present case, the appointment and dismissal of the employees of the Cash Department IS the joint responsibility of the Bank and its Treasurers. It has got
to be so because the Treasurers are the guarantors of
the fidelity and efficiency of the employees and the
Bank has to exercise complete control over the day
to day discharge of their functions because it Is the
Bank which is vitally and immediately concerned with
the efficient and honest discharge of the duties of the
assistants in the Cash Department, the efficient running of which is the most important of a bank's functions.
It will further be noticed with reference to the
terms of the agreement set out above that whereas
the Treasurers and their nominees have to take their
orders from the Bank Manager or other such functionary,
there
Is
no specific provision that those
nommees shall discharge their day to day functions
under the direct control of the Treasurers or that
they will be subject to the immediate control of the
Treasurers m the discharge of their daily duties and
in the matter of the grant of leave of absence. There
rnuld not be such a provision, as a dual control of
that kind in the daily work of the employees would
lead to a great deal of confusion and lack of discipline amongst the ministerial
staff.
The employees
of the Cash Departmen~ have of necessity to be under
the direct· control of the Bank Manager or of some
::>ther functionary appointed by the Bank. It is the
Bank which has undertaken the responsibility m the
matter of their pay and prospects m the service and
naturally therefore,
such
employees, even as other
employees of the Bank, have -to take their orders from
the Bank. It ·must therefore be held that the Treasurers are the servants of the Bank and that their
nominees must equally be so.
The Appellate Tribunal held that on a reading as
~ whole of the clauses of the agreement aforesaid the
appellant was an employee· of the Treasurers and
not of the Bank. It did not address itself pointedly
1955
Shivnandan
Sharma
v.
The !'u,Yab
National Bank Ltd.
Sinha J.
1955
Shivnandtu1
Sharma
v.
The Punjab
·National Bank Ltd.
Sinha -J.
1442
SUPREME COURT REPORTS
[1955)
i:o the question as to · what was the exact relation
between the Bank and the •Treasurers.
It did
not
also consider the question as tO· ·what would · be the
position of ' the employees ·of the· Cash·· Department
vis-a-vis the Bank if it were ·held that the Treasurers
themselves · were the servants : of the Bank and . not
independent contractors.
Before
the ·Appellate· Tribunal 'both parties appear to· have. concentrated their
attention · on the question ·as to whether the employees of the Cash·· 'Department were . servants . of" the
Bank or· of the· Treasurers. In our opinion,. that was
not a correct approach· to·. the · determination of the
controversy
between ·the parties. ·. If the · Treasurers'
relation to the Bank was that of servants to a master,
simply because ·the servants were authorized to· appoint and dismiss the ministerial · staff of the Cash
Department would not make the employees· in the
Cash Department independent· of the Bank. In· that
sittiation the ultimate employer would be the· Bank
through the agency of 'the Treasurers. jt was ·argued
on' behalf of 'the· respondent that even if it were held
that ··the Treasurers· were the servants of: the. Bank
and . not independent contractcirs; the. legal position of
the· employees of the Cash Department · vis-a-vis the
Bank would be the same;· namely, · that they will· be
in·· law the :servants of the Treasurers. In our opinion,
there is no · substance 'in that contention. .If . a master
employs' a servant and authorizes him to employ- a
number· ·of persons
to do · a particular job and to
guarantee their fidelity and efficiency for· ·a Tash consideration, the employees· thus· appointed by .the .. servant 'Wou!O'·be··equal!y·•with the employer;: servants of
the· master. 'It is ·not -always correct to· say ·that· persons appointed and liable to· be dismissed: by : an· in·
dependent contractor can -in· no ·circumstances •be . the
employees of· ·the third· party. This would be ·· clear
from the following observations· of Lord · Esher, M.R.,
in the case of Donovan v. Laing,·' Wharton & -Down
Construction Syndicate(1) :~ ,
.
.
. .
.
,.
"It· -is . true that .the defendants,. selected the man
and paid·his.wages; and these· are .circumstances which,
if .nothing •else intervened;• would- be·.strong'·to. show
(1)
[18~3] t n. B. D629 at 632.
-
-
S.C.R.
SUPREME COURT REPORTS
1443
that he. was the servant of the defendants. ·So; indeed,
he was as to a great many things; but as to the working
of the crane he was no longer their servant, but bound
to work ·under the orders of Jones & Co., and, if they
saw the man misconducting. himself in working the
crane or disobeying thei.r orders, they would . have a
right to discharge him from that employment?'.
Those observations have 'been · approved in the latest
decision of the House of Lords in the case of Mersey
Docks & Harbour Board v. Goggins & Griffith (Liverpool) Ltd.(1).
The House of Lords distingllished that
ruling on facts but did not depart from the general
rule laid down in the earlier decision that the determinative factor is as to which party had control . over
the workers·· as to how they would do · their job from
day to day. Lord Macmillan in his speech at p. 14
has observed as follows :-
·
"Many reported cases were cited to your Lordships but ·where, as all agree, the question in each case
turns on its own circumstances, decisions in other
cases
are
rather
illustrative than determinative.
So
far as attempts have been made to formulate a criterio:1 of general application, it cannot be said that
these attempts have been very successful".
It would thus appear that the question 4s to whose
employee a particular person was has to be determined with reference to the facts and circumstances
of each individual ·case. . Lord Porter in the course of
his speech in the reported case (supra) at p. 17 has
observed as follows :-
"Many factors have a bearing on the result. . Who
is paymaster, who can dismiss, how long the alternative service lasts, what machinery is employed, have
all to be kepf in mind. The expressions used in any
individual case must always be considered in regard
to the subject matter under discussion but amongst
the many·· tests suggested I . -think that . the most satisfactory,· by which to ascertain who is the employer at
any particular time, is to ask who is entitled to tell ·
the _employee th.e way in which he is to do the· work
upon which he is engaged" ..
(1) [1947] A.C. I,
1955
Shivnatrdan
Sharma
v.
The Punjab·
National Bank Ltd.
Sinha :J.
1955
~
Shivnandan
S!iafrrid
v.
Ti,, Punjqb
National Bahk l.Jd.
Sinha J.
1955
March 15
1444
SUPREME COURT REPORTS
(1955f
As indicated above, in the present case the direction and control of the appellant and of the ministerial staif in charge of the Cash Department of the
Bank was entirely vested in the Bank through its
manager or other superior officer. We have therefore
no hesitation in differing from the conclusion arrived
at by the Appellate Tribunal and in holding that the
appellant was an employee of the Bank. That being
so, the Tribunal had the jurisdiction to make the
directions
it did in respect of
the
appellant. The
respondent did not at any stage of the proceedings
challenge· the orders of the Tribunal on its merits.
That conclusion being reached, there is no difficulty
in upholding the orders of the Tribunal in respect of
the appellant,
It is therefore not necessary
to pronounce upon the other points raised by the parties.
The
appeal
1s
accordingly
allowed
with
costs
throughout.
BHIM SEN
ti.
Appeal allowed.
THE STATE OF U.P.
[VIVIAN BosE, JAGANNADHADAs and SINHA JJ. J
U. P. Panchayat Raj Act, 1947 (U. P. Act XXVI of 1947), ss.
49 (1)(2)(4), 52, 55-Rule 84 framed by Stat< Government-Thef' of
the value of Rs. J..().0_ committed by three accused-One of the accused
belonging to Madhya Pradesh State-Panchayat Ada/at constituted
under the provisions of s. 49 of the Act and Rule 84 framed there·
under to try the present case-Whether could be properly constituted
-Rule 84-W hether Intra vires-/urisdiction of ordinary courtsJJ/hether excluded-Bar under s. 55---Scope of.
Three accused were c.onvicted by a Magistrate under s. 379 of
the Indian Penal Code of the offence of theft of the value of
Rs. 3 and sentenced to a fine 0£ . Rs. 25 /- each. The question for
determination was
whether t~e case should have been tried
by a
Panchayat Ada:lat cortstituted under the U. P. PanchaYat Raj Act,
1947 and the Magistrate had no jurisdiction to try it. Two of the
accused belonged to U.P. State and the third belonged to Madhya
Pradesh State.
Section 52( I) of the Act provides that certain specified offences
(including the offence of theft when the value of stolen property does
-