# MESSRS. P.M. PATEL & SONS AND OTHERS, ETC v. UNION OF INDIA AND OTHERS, ETC

- **Citation:** [1985] Supp. 3 S.C.R. 55
- **Court:** Supreme Court of India
- **Decided:** 1985-09-25
- **Bench:** V·D· Tulzapurkar, R.S. Pathak, Amarendra Nath Sen
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/messrs-p-m-patel-sons-and-others-etc-v-union-of-india-and-others-etc-9159
- **Pages:** 16

## Headnote

Employees' Provident Funds and Miscellaneous Provisions Act
1952
Section 2(f)
-
Workers
employed at their homes
in
manufacture of beedis - Whether entitled to benefit of the Act.
Relationship of Master and servant - Element of personal
service - Of little significance when test of control and
supervision enables a right of rejection.
The labour employed in the manufacture of beedis consists
of different categories. At the factory, which constitutes the
formal establishment, there are administrative and cleriCal
staff, accountants, packers, checkers and bhattimen, The work of
rolling the beedis itself is done by one or the other of
different categories of workers. The first category is where the
'iiork may be entrusted by the manufacturers directly to workers
who prepare the beedis at home after obtaining a supply of the ·
raw material consisting of tobacco, beedi leaves and thread from
the lllllllUfacturers. The
second category consists of workers
employed
by
the manufacturers
through contractors and the
manufacturers pass on the raw material to such workers for
rolling the beedis in their dwelling houses and then supplying
beedis.
There is thus
a
direct relationship
between
the
manufacturers and workers. The third category of home workers are
those to whom the work is entrusted by independent contractors
who treat the workers aa their own employees and get the work
cloDe by them either at their own premises or in the dwelling
'-a of the workers in order to fulfil and complete contracts
entered into with the manufacturers for the supply of the
fillished
product
from
the
raw. material
supplied. .bY
the
manufacturers to the contractors.
The home workers attend the factories within specified
hours everyday and collect the raw material for taking to their
homes for rolling beedis, In the case of home workers who hold a
direct relationship with the manufacturers, the rolled beedis are
brought by the home workers to the factory and the beedis which
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SUPREME COURT REPORTS
[1985] SUPP.3 s.c.R.
conform to the standards envisaged by the manufacturers are
accepted while those which do not are rejected. The staff at the
factory maintains registers in which regular entries are made of
the raw material supplied to home workers, and of the rolled
beedis which are delivered by them at the factory. The payment of
B wages to such home workers may be made directly or distributed
through the contractors engaged by the manufacturers. In the case
of
contracts
between
the
manufacturers
and
independent
contractors,
the manufactured product is collected by the
contractors from their home workers and delivered to the
manufacturer. The manufacturer is concerned only with the payment
under the contract to the contractors, and the payment of wages
C to the home workers is a matter between the contractors and the
home workers.
The Employees' Provident Funds and Miscellaneous Provisions
Act, 1952 provides for the institution of provident funds for
employees in factories and other establishments. Originally, it
did not extend to the beedi industry. For the first time, by a
D Notification dated May 17, 1977 made by Government of India the
beedi industry was added to Schedule I of the Act with effect
from May 31, 1977. This was followed by another Notification
dated May 23, 1977 issued by the Central Government amending
clause (b) of sub-paragraph 3 of paragraph I of the Employees'
Provident Funds Scheme, 1952 in order to bring the beedi industry
E within the province of that scheme with effect from May 31, 1977.
The Central Government Provident Funds Conmissioner thereupon
wrote to all the Regional Provident Funds Comnissioners for the
enforcement of the scheme in the beedi industry.
The petitioners in the Writ Petitions who were engaged in
F the manufacture and sale of beedis, challenged the constitutional
validity of the Notifications dated May 17, 1977 and May 23,
1977, and the enforcement of the Scheme in so far as it related
to home

## Text

55
MESSRS. P.M. PATEL & SONS AND OTHERS, ETC.
v.
UNION OF INDIA AND OTHERS, ETC.
SEPTEMBER 25, 1985
[V·D· TULZAPURKAR, R.S. PATHAK AND AMARENDRA NATH SEN, JJ.]
Employees' Provident Funds and Miscellaneous Provisions Act
1952
Section 2(f)
-
Workers
employed at their homes
in
manufacture of beedis - Whether entitled to benefit of the Act.
Relationship of Master and servant - Element of personal
service - Of little significance when test of control and
supervision enables a right of rejection.
The labour employed in the manufacture of beedis consists
of different categories. At the factory, which constitutes the
formal establishment, there are administrative and cleriCal
staff, accountants, packers, checkers and bhattimen, The work of
rolling the beedis itself is done by one or the other of
different categories of workers. The first category is where the
'iiork may be entrusted by the manufacturers directly to workers
who prepare the beedis at home after obtaining a supply of the ·
raw material consisting of tobacco, beedi leaves and thread from
the lllllllUfacturers. The
second category consists of workers
employed
by
the manufacturers
through contractors and the
manufacturers pass on the raw material to such workers for
rolling the beedis in their dwelling houses and then supplying
beedis.
There is thus
a
direct relationship
between
the
manufacturers and workers. The third category of home workers are
those to whom the work is entrusted by independent contractors
who treat the workers aa their own employees and get the work
cloDe by them either at their own premises or in the dwelling
'-a of the workers in order to fulfil and complete contracts
entered into with the manufacturers for the supply of the
fillished
product
from
the
raw. material
supplied. .bY
the
manufacturers to the contractors.
The home workers attend the factories within specified
hours everyday and collect the raw material for taking to their
homes for rolling beedis, In the case of home workers who hold a
direct relationship with the manufacturers, the rolled beedis are
brought by the home workers to the factory and the beedis which
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SUPREME COURT REPORTS
[1985] SUPP.3 s.c.R.
conform to the standards envisaged by the manufacturers are
accepted while those which do not are rejected. The staff at the
factory maintains registers in which regular entries are made of
the raw material supplied to home workers, and of the rolled
beedis which are delivered by them at the factory. The payment of
B wages to such home workers may be made directly or distributed
through the contractors engaged by the manufacturers. In the case
of
contracts
between
the
manufacturers
and
independent
contractors,
the manufactured product is collected by the
contractors from their home workers and delivered to the
manufacturer. The manufacturer is concerned only with the payment
under the contract to the contractors, and the payment of wages
C to the home workers is a matter between the contractors and the
home workers.
The Employees' Provident Funds and Miscellaneous Provisions
Act, 1952 provides for the institution of provident funds for
employees in factories and other establishments. Originally, it
did not extend to the beedi industry. For the first time, by a
D Notification dated May 17, 1977 made by Government of India the
beedi industry was added to Schedule I of the Act with effect
from May 31, 1977. This was followed by another Notification
dated May 23, 1977 issued by the Central Government amending
clause (b) of sub-paragraph 3 of paragraph I of the Employees'
Provident Funds Scheme, 1952 in order to bring the beedi industry
E within the province of that scheme with effect from May 31, 1977.
The Central Government Provident Funds Conmissioner thereupon
wrote to all the Regional Provident Funds Comnissioners for the
enforcement of the scheme in the beedi industry.
The petitioners in the Writ Petitions who were engaged in
F the manufacture and sale of beedis, challenged the constitutional
validity of the Notifications dated May 17, 1977 and May 23,
1977, and the enforcement of the Scheme in so far as it related
to home workers and sought a declaration that the Employees'
Deposit-Linked Insurance Scheme and the F.mployees' Family Pension
Scheme framed under the Employees' Provident Funds Act are
G unenforceable in respect of the beedi industry, contending that:
(i) while the Employees' Provident Funds Act and the Scheme may
be applicable to the workers employed in the factory itself, they
cannot be extended to home workers because there is no relationship of employer and employee between the manufacturers and the
home workers, (ii) the Employees' Provident Funds Act and the
t:=
H Scheme cannot be applied to home workers in the beedi industry
illSSDIUCh as they are subject to no retirement age and there is no
P.M. PATEL V• U.O.I.
57
power in the lll&llllfacturer to retire such home workers . on the
ground of aupermmuation, and (iii) the enenaion of the Schelle
to the beedi industry constitutes an unreasonable restrictiou on
the flmdamental Bights of the petitioners guaranteed by sub-cl.
(g) of clause (1) of Article 19 of the Conatitutiou and also
A
·violates Articles 14 and 31 of the Conatitution iD&SllllCh as the
B
ffn•ncfal burden occasioned thereby is so excessive that it is
obvious that the Central Government did not apply its l!lind to the
paying capacity of the industry•
Oa the question whether the workers employed at their homes
in the lll&llllfacture of beedis are entitled to the benefit of the
c
F.mployees' Provident Funds Scheme and Miscel.laaeous Provisiona
Act 1952 and the Schemes fr8J!ll!d thereunder.
Dismissing the Writ Petitiona,
lll!LD: l. The home workers are "employees" within the
o
definitiou of 'employee' contained in clause (f) of s. 2 of the
F.mployees' Provident Fuads Act 1952, and the Schemes framed
thereunder. The terms of the definition of 'employee' in section
2(f) of the Act are wide. They include not only persona employed
directly by the employer but also persona employed through a
contractor. Moreover, they include not only persona employed in
E
the factory but also persona employed in conaectiou with the work
of the factory. A home worker, by virtue of the fact that he
rolls beedis, is involved in an· activity connected with the work
of the factory. It is therefore not possible to accept the narrow
construction sought by the petitioners that the words
'in
connection with' in the definition of 'employee' in section 2(f)
lmlBt be confined to work performed in the factory itself as a
F
part or the total process of the lll&llllfacture. [67 G, 63 C-E]
2. The conditions and the circumstances 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 lll&llllfacturer subject to the right
of
G
rejectiou indicates sufficient evidence of the requisite degree
of control and supervision for establishing the relationahip of
master and servant between the manufacturer and the home worker.
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 has
been performed
satisfactorily by thousands of illiterate workers. It is a task
H
which can be performed by young and old, men and women, with
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SUPREME COURT REPORTS
[1985] SUPP.3 S.C.R.
equal facility. It does not require a high order of skill. 7'be
right of rejection can constitute in itself an effective degree
of superviaion and control, and there is evidence to show that
the rejection takes place iu the presence of the home 'l>'Orker.
This factor however plays a merely supportive role in determining
the existence of the relationship of master and servant. 7'be
element of personal service ia of little significsnce when the
test of control and superviaion lies in the right of rejection.
(67 C-F]
Sbri CbintallSD Bao and Another v. The State of Madhya
Pradesh, [1958] s.c.R. 1340, Sbri Jlirdhicbsnd Shsrllla v. First
Civil Judae, lilagpur and Others, [1961] 3 S.C.R. 161. Sbankar
lalaji liaje v. State of Maharashtra [1962] Suppl. l
s.c.R. 249,
M/so Orissa Cenent Ltd. Vo Onion of India, [1962] Suppl. 3 S.C.R.
837, DoC• Dewan Mob1ndeen Sahib and Solls Vo The Industrial
Tribunal, lladras, (1964] 7 s.c.R. 646, Silver Jubilee Tailor.Ing
!louse Vo Chief Inspector of Shops & Establisi-nts, [1974] l
s.c.R. 747, Mangalore Ganeah Beedi Works etc. v. Union of India
etc. [1974] 3 s.c.J,l. 221, referred to.
3. Clause (a) of sub-para. (l) of Para 69 of the Employees'
Provident Funds Scheme provides thst "a member may withdraw the
full amount standing to his credit in the fund on retiring from
service after attaining the age of 55 years". The law does not
envisage the fixation of a retirement age before that provision
csn apply. A worker is entitled ~o withdraw the moount in the
Fund if he retires at any time after attaining the age of 55
yesrs. There is no reference to any pre-determinded age of
superannuation. [68 A-BJ
4. The expression 'retirement' does not, in the absence. of
anything more, necessarily imply a fixed age for leaving service.
It baa a wide connotation. In a context where no age of
superannuation has been fixed, the expression IWSt take on its
ordinary meaning of the normal cessation of service by an act of
the employer or of the worker• That a person may retire even
before reaching any specified age is exemplified by cl. (b) of
sub-para (l) of para 69 whicb speaks of "retirement on account of
permanent and total incspacity for work due to bodily or mental
infirmity." [68 CJ
.
Delhi Cloth & General llills Co. Ltd. v. Workmen and other
etc. [1969] 2 s.c.R. 307, referred to.
Regfonsl Provident Fund Cccmrlssioner, Andhra Pradesh Vo
Sbr1 T.So Baribaran, [1971] Suppl. s.c.R. 305, diatinguished·
•
P.M. PATEL v. U.O.I. [PATHAK, J.]
59
5. The Beedi and Cigar Workers (Conditions of &iployment)
Act, 1966 and the Hules made thereunder by the Maharashtra
Gowrmaent haw been framed specifically on the basis that in
certain matters home workers enjoy a status akin to the . general
category of workers. In the Maharashtra Beedi and Cigar Workers
A
(Conditions
of
&iployment)
Hules
1968,
there is specific
B
provision in respect of the payment of wages to home workers• 'lbe
contention that the provisions of the &iployees Provident Funds
Act and the .Schemes cannot be implemented at all in respect of
the beedi industry has therefore to be rejected. [69 C, E, F)
ORIGINAL JURISDICTION : Writ Petitions Nos• 3605 to 3609 of
C
1978 etc.
(Under Article 32 of the Constitution of India.)
M.N. Phadke, B. Kanta Rao,
M.Q. Qazi, V.N. Ganpule and
Mrs. Veens Khanna for the Petitioners.
D
Abdul Khader, Girish Chander and Miss A. Subhashini for the
Respondents.
Mr. Rameshwar Nath for the Interveners.
The Judgment of the Court was delivered by
PATHAK, J. This and the connected cases raise the important
question whether the ·workers employed at their. homes in the
manufacture of beedis are entitled to the benefit of the
Employees' Provident Funds and Miscellaneous Provisions Act, 1952
E
and the Scheme framed thereunder•
F
. The question for consideration is surrounded by a welter of
facts, many of which are disputed through affidavits filed on the
recotd, and it has not been an easy task to pick our way through
them to arrive at an intelligent and coherent picture for the
purpose of deciding these cases •. We
propose to take Writ
G
Petitions Nos. 3605 to 3609 of 1978 filed by Messrs. P.M. Patel &
Sons and others as the leading group of cases, because the
principal arguments on the several points arising in these cases
were argued by learned counsel in those writ petitions.
The petitioners are engaged in the manufacture and sale of
beedis. lbe labour employed in the manufacture of beedis consists
of different categories. At the factpry, which constitutes the
formal establishment, there is an administrati".e and clerical
H
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SUPREME COURT REPORTS
[1985] SUPP.3 s.c.R.
staff, accountants, packers, checkers and bhattimen. The work of
rolling the beedis itself is done by one or the other of
different categories of workers. The work may be entrusted by the
manufacturers directly to ~orkers who prepare the beedis at home
after obtaining a supply of the raw material consisting of
tobacco, beedi leaves and thread from the manufacturers. Another
category consists of workers employed by the manufacturers
through contractors, and the manufacturers pass on the raw
material to such workers for rolling the beedis in their dwelling
houses, and there is, in a sense, a direct relationship between
the manufacturers and those workers. The third category of home
workers are those to whom the work is entrusted by independent
contractors who treat the workers as their own employees and get
the work done by them either at their own premises or in the
dwelling homes of the workers in order to fulfil and complete
contracts entered into with the manufacturers for the supply of
the finished product from the raw material supplied by the
manufacturers to the contractors. According to the manufacturers
the home workers attend at the factories within specified hours
every day and collect the raw material for taking to their homes
for rolling beedis. While that is true of home workers employed
directly by the manufacturers or who have been placed in employmen~ through contractors with the manufacturer, in the case of
home workers employed by independent contractors that may not be
so. In the case of home workers who hold a direct relationship
with the manufacturers, the rolled beedis are brought by the home
workers to the factory and the beedis which conform to the
standards envisaged by the manufacturers are accepted while those
which do not are rejected. The acceptance or rejection is
effected in the presence of the home worker to whom the work was
entrusted. The staff at the factory maintains registers in which
regular entries are made of the raw material supplied to home
workers, and of the rolled beedis which are delivered by them at
the factory. The payment of wages to such home workers may be
made directly or distributed through the contractors engaged by
the manufacturers for engaging them. In the case of contracts
between the manufacturers and independent contractors, the manufactured product is collected by the contractors from their home
worker and delivered to the manufacturer. It is evident that the
G manufacturer is concerned only with payment under the contract to
the contractors, and the payment of wages to the home workers is
a matter between the contractors and the home workers.
The Employees' Provident Funds and Miscellaneous Provisions
Act, 1952 (hereinafter referred to as the "Employees' Provident
H Funds Act") provides for the institution of provident funds for -
P.M. PATEL v. U.Q.I. [PATHAK, J.]
61
employees in factories and other establishments. Originally, it
A
did not extend to the beedi industry. For the first time, by
Notification No.
GSR,
660 dated May 17,
1977 made by the
Government of India under sub-s. (1) of s. 4 of that Act, the
beedi industry was added to Schedule I of the Act with effect
from May 31, 1977. This was followed by Notification No. GSR. 677
dated May 23, 1977 issued by the Central Government amending
B
clauS.j! (b) of sub-paragraph 3 of paragraph l of the Employees'
Prov+aent Funds Scheme, 1952
(hereinafter referred to as the
"Scheme~') so as to bring the beedi industry within the province
of that Scheme with effect from May 31, 1977. Closely thereafter,
the Central Government Provident Funds Collllllissioner wrote to all
the Regional Provident Funds Collllllissioners about the extension of
C
the Scheme to the beedi industry with effect from June 1, 1977.
By
these
writ
petitions
the
petitioners
challenge
the
constitutional validity of the Notifications dated May 17, 1977
and May 23, 1977 and the proceedings taken by the respondents
againat
the petitioners for the purpose of enforcing the
EinPloyees' Provident Funds Act and the · Scheme so far as they
D
relate t6 home workers. The petitioners also seek a corresponding
declaration that the EJnployees' Deposit-Linked Insurance Scheme
and the Employees'
Family Pension Scheme
framed under the
Employees' Provident Funds Act are unenforceable in respect of
the beedi industry.
The principal grounds on which the petitioners challenge
the impugned Notifications may be shortly enumerated:-
(1) While the Employees' Provident Funds Act and the
Scheme may be applicable to the workers employed in
the factory itself, they cannot be extended to home
E
workers because there is no relationship of employer
F
and employee between the manufacturers and the home
workers. It is submitted that a home work.er cannot be
described as an "employee" within the definition set
forth in ·clause (f) of s. 2 of the Employees'
Provident Funds Act.
(2) The EJnployees' Provident Funds Act and the Scheme
cannot be applied to home workers in the beedi
industry inasmuch as they are subject to no retirement
age and there is no power in the manufacturer to
retire
such
home
workers
on
the
ground
of
superannuation. Having regard to the peculiar features
of
the
arrangements
under
which
home
workers
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SUPREME COURT REPORTS
[1985].SUPP.3 s.c.R.
manufacture beedis, it is not reasonably possible to
apply and implement the provisions of the Employees'
Provident Funds Act and the Scheme in relation to
them.
(3) The extension of the Efilployees' Provident Funds
Act and the Scheme to the beedi industry consistitutes
an unreasonable restriction on the Fundamental Rights
of the petitioners guaranteed by s.ub-cl. (g) of clause
l of Article 19 of the Constitution and also violates
Articles 14 and 31 of the Constitution inasmuch as the
financial burden occasioned thereby is so excessive
that it is obvious that the Central Government did not
apply·its mind to the paying capacity of the industry.
Moreover, the burden imposed on the industry bears no
nexus to the object of the statute, namely, to provide
post retirement benefits.
Having considered the material on the record befoie us in
this leading group of writ petitions it appears that some of the
home workers have been working regularly for several years
exclusively for a single manufacturer, and depend for their
livelihood on this work, that they attend the factory during
spec.if ied hours to secure raw material for making beedis at home
and for delivering the manufactured beedis to the staff at the
factory, that the quantity of leaves and tobacco supplied is
fixed by the manufacturer, and that registers of the raw material
and of payment of wages are maintained at the factory, that a
record is maintained of the manufactured beedis received from the
home workers and the quantity rejected, and that a log book or a
wage card is issued to the home workers.
In order to organise the conditions in which the bee di
workers· worked and to give them greater security of employment
Parliament enacted the Beedi and Cigar Workers (Conditions of
Employment) Act,
1966 and the State Governments framed rules
under that statute. The said Act applied to home workers, as is
clear from the definition of "employee" in clause (f) of s. 2 of
that Act and provides for the application of certain labour laws.
There
is
no
dispute
that
pursuant
to
the
impugned
Notification dated May 17, 1977 the beedi industry has been
brought within the scope of the Employees' Provident Funds Act
and that the impugned. Notification dated May 23, 1977 has made
the Scheme applicable to the beedi industry. Clause (a) of sub-s.
P.M. PATEL Vo u.o.I. [PATHAK, J.]
63
( 3) of s. l of the Employees' Provident Funds Act applies that
A
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
B
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 s. 2 of that Act. defines im "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
c
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, •hey include not only persons employed in
o
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
E
· 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 petween
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 Sbri O.inhmJan Bao and Another v. lhe State of
lladbya
Pradesh,
[1958]
S.c.R.
1340,
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-s. (l) of ·s. 2
of the Factories Act, nor could their collies, 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
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[1985] SUPP.3 s.c.R.
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 a• persons
employed by the manufacturer directly or through any agency.
Thereafter, in Sbri Birdhicband Sbama v. First Civil Judge,
Hagpur and Others, [1961] 3 s.c.R. 161, this Court considered a
case where the manufacturer had employed workmen
~n 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 ( l) of s. · 2 of the
Factories Act. The significant feature of the judgment lies in
the observation of the Court that in the csse 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 csse it
csn hardly be said that there must be supervision all
time when biris are being prepared and unless there is
such supervision there can be no direction as to the
manner of work. In t'.1e present csse 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
csse it is the right to supervise and not so much the
mode in which it is exercised which is important."
Reference may
b~ made next to Shanker Bslaji Waje v. State of
Kabarashtra, [1962] Suppl. 1 s.c.R. 249. 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 Birclhicband Sharma (supra) 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
H/s. Orissa Cell!nt Ltd. v. Union of Iudia [1962] Suppl. 3 s.c.R.
837, but this is a csse where the question was whether a
notification was valid which made the employer liable to pay into
.'
'•
'
P.M. PATEL v. U.O.I. [PATHAK, J.]
65
the provident fund, constituted under the provident Funds Act,
1952, the share of workers who were in fact the employees of
independent contraccors. The Court drew a careful distinction
between labour employed by the manufacturer and that employed by
an independent contractor. Most of these ~ases were considered
thereafter by this
Court in D.C. Iewn &bicleen Sahib 8Dd Sons
v· Ibe Industrial Tribunal, Madras,
[1964] 7 s.c.a. 646, 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 Birdhichaud Sbarma's case
(supra) 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 8Dd others v. Qlief
Inspector of Shope 8Dd l!atablishnents 8Dd another [1974 j 1 s.c.R.
747, 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
a~ 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 :-
"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 contract for service will
serve any useful purpose. The most that profitably can
be done is to examine all the factors that have been
A
B
c
D
E
referred to in the cases on the topic. Clearly, not
F
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
G
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
H
66
SUPREME COURT REPORTS
[1985] SUPP.3 s.c.R
A
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
B
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 out the work was rejected and he was asked to
restitch 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
c
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 the Silver Jubilee Tailorillg Bouse case
(supra) it was possible for, the employer to direct re-stitching
D
of the garment, no such direction can be reasonably envisaged in
the case of sub-standard beedis. A Constitution Bench of this
Court had occasion to consider the law in lfangalore Ganesh Beedi
Works etc. v. Union of India etc. [1974]· 3 s.c.R. 221, which
questioned
the
validity
of
the
Beedi
and
Cigar Workers
(Conditions of Employement) Act, 1966. The Court adopted the test
E
of rejection of defective beedis for determining whether the
beedi workers were the employees of the manufacturer or the
independent contractors. The Court observed:-
" ••• the manufacturers or trade mark holders have
liability in respect of workers who are directly
F
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
G
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 product to the manufacturer that
he will be the principal employer in relation to such
H
labour and the manufacturer will not be responsible
-
P.M. PATEL v. U.O.I. [PATHAK, J.]
67
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 mas.ter and
servant between the manufacturer and the home worker. It aiust 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 peersonal 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 lies in the right of
rejection.
In our opinion, the home workers are "employees" within the
definition contained in cl. (f) of s. 2 of the Employees'
Provident Funds Act.
;
The next question is whether having regard to the peculiar
features of the home workers' system of employment the provisions
of the Employees' Provident Funds Act and Scheme can be applied
on their terms to home workers. The principal contention in this ·
A
B
c
D
E
F
G
connection is that no retirement age is fixed in the case of home
H
68
SUPREME COURT REPORTS
[1985] SUPP.3 s.c.R.
workers and, therefore, the Scheme cannot be implemented in
A
respect of them. Cl. (a) of sub-para (1) of Para. 69 of the
Employees' Provident Funds Scheme provides that "a member may
withdraw the full 811Xlunt standing to his credit in the Fund on
retirement from service after attaining the age of 55 years". It
seems to. us that the law does not envisage the fixation of a
retirement age before that provision can apply. A worker is
B
entitled to withdraw the 811Xlunt standing to his credit in the
fund if he retires at any time after attaining the age of 55
years. There is no reference to any pre-determined age of
superannuation. The expression "retiremeut" does.· not, in the
absence of anything more necessarily imply a fixed age for
leaving service. It has a wide connotation. In a context where no
age of superannuation has been fixed, the expression must take on
c
its ordinary meaning of the normal cessation of service by an act
of the employer or of the worker. That a person may "retire" even
before reaching any specified age is exemplified by cl.
(b) of
sub-para. (1) of Para. 69 which speaks of "retirement on account
of permanent and total incapacity for work due to bodily or
mental infirmity". We may point out that in Delhi Cloth & General
MUls Co. Ltd., v. Workmen and others etc• [1969] 2 s.c.R. 307,
D
this Court has held that a gratuity scheme could be effective
even if no age of superannuation was fixed· Learned counsel for
the petitioners had ref erred us to Regional Provident Fund
Coumissiooer, Audhra Pradesh v. Sbri T.s. llarihsran [1971] Suppl.
s.c.R.
305,
where this Court observed in respect of the
Employees' Provident Funds Act:-
E
F
G
H
"The Act was brought on the statute book for providing
for the institution of a provident fund for the
employees in factories and other establishments. The
basic purpose of providing for provident funds appears
to be to make provision for the future of the
industrial worker after his retirement or for his
dependants in case of his early death. To achieve this
ultimate object the Act is designed to cultivate among
the workers a spirit of saving something regularly,
and also to encourage stabilisation of a steady labour
force in the industrial centres,"
and it is pointed out that the Court rejected the plea that the.
Act could apply to short term employees also. The case, in our
opinion, is distinguishable because the workers there were taken
in employment on account of an emergency and for a very short
period necessitated by an abnormal contingency. That is not the
P.M. PATEL v. U.O.I. [PATHAK, J.J
69
position here. In the present cases, the employment was entered
A
into in the regular course of business. We hold that there is no
substance in the contention of
the petitioners
that
the
provisions of the Employees' Provident Funds Act and the Scheme
cannot be applied at all to home workers. There is no reason why
the provisions of the Act and Scheme should not apply where their
terms permit such application.
B
We may also point out that the Beedi and Cigar Workers
(Conditions
of
Employment)
Act,
1966
and
the rules made
thereunder
by
the Maharashtra Government
have
been framed
specifically on the basis that in certain matters hOllle workers
enjoy a status akin to the general category of workers. Not only
c
do these provisions apply to "industrial premises'" as defined
'
under
clause
(i)
of
s.2
of
that
Act
but
also
to
an
"establishment" as defined in clause (h) of s. 2 of the Act.
There are several provisions which apply to employees in
establishments and are not confined to industrial premises. An
"establishment", by the terms of its definition is wide enough to
D
include the dwelling house of a home worker. A home worker would
be entitled, therefore, to annual leave with wages and wages
during leave period among other things. In the Maharashtra Beedi
and Cigar Workers (Conditions of Employment) Rules, 1968 there is
specific provision in respect of the payment of wages to home
workers. The Rules relating to the issue of raw material by the
E
employer would extend to home workers also.
Accordingly, we reject the contention that the provisions of
the Employees Provident Funds Act and the Schemes cannot be
implemented at all in respect of the beedi industry.
The last contention of learned counsel for the petitioners
is that the financial burden which will be suffered by the beedi
industry in consequence of the Employees' Provident Funds Act and
the Schemes envisaged by it being extended to the industry will
be beyond the financial capacity of the beedi industry and will
severely
handicap
it
in
competing
with
the
cigarette
manufacturing industry. There is no nexus, it is said, betwe•m
the burden imposed on the industry and the object of the statute
of providing postretirement benefits. It is urged that this
aspect did not engage the attention of the Central Government
when the impugned Notifications were promulgated. On the basis of
this submission the petitioners contend that their Fundamental
Rights under Article 14, sub-cl. (g) of cl. (1) of Article 19 and
Article 31 of the Constitution have been violated. We have
F
G
H
A
B
70
SUPREME COURT REPORTS
[1985} SUPP.3 s.c.R.
carefully examined the record before us and we are unable to find
adequate material in support of this submission. We need say
nothing more. The contention is rejected.
In the result, we see no force in these writ petitions, the
connected writ petitions and
the connected special leave
petitions, and they are all accordingly dismissed. Tllere is no
order as to costs.
N.V.K.
Petitions dismissed.