# The Salem Sri Ramaswami Bank Ltd v. The Additional Commissioner

- **Citation:** [1973] 1 S.C.R. 213
- **Court:** Supreme Court of India
- **Decided:** 1972-04-18
- **Case number:** Civil Appeals Nos. 1421 and 1422 of 1968
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-salem-sri-ramaswami-bank-ltd-v-the-additional-commissioner-5780
- **Pages:** 11

## Headnote

•
213
T. DEV ADASAN
v .
M/S. GORDON WOODROFFE & CO. (MADRAS) PRIVATE
LTD. & ANR.
April 18, 1972
B
(C. A. VAIDIALINGAM,
P. JAGANMOHAN REDDY AND
c
D
E
F
G
H
K. K. MATHEW, JJ.]
Workmen's Compensation Act-S.41 (2)-Scope of-Whether the em·
ployee in question was a person employed within the meaning of the
Madras Shops and Establishments Act 1947.
The appellant was appointed by Respondent No. 1, a Madras Company,
which was the holding compa&y of another, a subsidiary, known as the
Pallavaram company.
After 2 years, the holding company revised the terms of engagement
ol the appellant relating to basic salary, D.A. and Bonus, all other terms
of service remalning unaltered.
The appellant was given training in the
Madras Company for 2 months and later, he was asked to go to Pallavaram Company and. work there, which the appellant did.
His salary
was paid by the Madras Company; but by an agreement between the two
companies, his salary was debited to the
Pallavaram Company.
The
appellant worked till 1966 when his services
were terminated by the
holding company.
The appellent. therefore, filed an appeal before the Additional Com·
missioner for Workn1cn's Compensation under S.41(2) of the Workmen's
Compensation Act.
The respon~ent raised the objection by saying that
since the appellant was a person wh011y or prinoipally employed by the
Pallavaram Company, •he appellant was not a "person employed" within
the meaning of the Madras Shops and Establishments A~t, 1947 and therefore, the provisions of the said Act would not be applicable to him. Tho
main question for decision was whether the appellant was an employee of
the holding company or of the subsidiary company.
Allowing th~ appeal,
HELD : On the facts and circumstances of the case, the Pallavaram
Company is not the employee of the appellant. All relevant facts . point
to the conclusion that the employer is the Madras Company. It was this
company that appointed the appellant.. The appointment order shows that
he was appointed as an Assistant in that Company.
The ter1ns of the
order further show that apart from the salary set out there, on w.hich he
was appointed, he was to receive dearness allowances at the rate of 35
per cent of the basic salary, or such other rate as the Board of. that company may decide from time to time. He has to become a member of the
Provident Fund to which both he and Madras Company have to
subscribe.
Annual bonus was to be calculated in the same manner as the
annual bonus payable to other assistance of the company. His service can
only be terminated ·by the Madras Company an<! the income-tax dedue·
tions were also made by the Madras company.
All these facts
clearly
show that the a,ppellant was an employee of the Madras Company and
not Pallavaram Company, where the company directed tho appellant to
work and the appellant was under an obligation to work wherever
the
company directs. him to work. [220GJ
214
SUPREME COURT REPORTS
[1973] l S.C.R.
The Salem Sri Ramaswami Bank Ltd. v. The Additional Commissioner
for Workmeri's Compensation, Chepauk, Madras and another,
.~1956) 2
M.L.J. 254, T. P. Chandra y. The Commissioner for Workmen's Compensation, Madras and Another, A.I.R. 1957 Vol. 44 p. 668 ancl T. Prem
Sagar v. The. Standard Vacuum Oil Company Mtiaras and Others, [1964]
5 S.C.R. I 030, discussed and distinguished .
. CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1421
and 1422 of 1968.
Appeals by special leave from the order dated J~nuary 18, 1968
of the Additional Commissioner for workmen's compensation,
Madras in M.S.E. Case No. 131of1966, and from the Order dated
the 9th January, 1968 of the Commissioner of Labour, Madras in
A
B
No. C2. 13897 of 1967 respectively.
c
0. P. Malhotra, Sat Pal and Ashok Grqyer, for the appellant
(in both the appeals) .
M. Natesan and D. N. Gupta, for respondent No. 1 (in both
the appeals) .
The Judgment of the Collrt was delivered by
P. Jagamnohan Reddy, J.-These appeals are by special
leave in which the question which falls for

## Text

•
213
T. DEV ADASAN
v .
M/S. GORDON WOODROFFE & CO. (MADRAS) PRIVATE
LTD. & ANR.
April 18, 1972
B
(C. A. VAIDIALINGAM,
P. JAGANMOHAN REDDY AND
c
D
E
F
G
H
K. K. MATHEW, JJ.]
Workmen's Compensation Act-S.41 (2)-Scope of-Whether the em·
ployee in question was a person employed within the meaning of the
Madras Shops and Establishments Act 1947.
The appellant was appointed by Respondent No. 1, a Madras Company,
which was the holding compa&y of another, a subsidiary, known as the
Pallavaram company.
After 2 years, the holding company revised the terms of engagement
ol the appellant relating to basic salary, D.A. and Bonus, all other terms
of service remalning unaltered.
The appellant was given training in the
Madras Company for 2 months and later, he was asked to go to Pallavaram Company and. work there, which the appellant did.
His salary
was paid by the Madras Company; but by an agreement between the two
companies, his salary was debited to the
Pallavaram Company.
The
appellant worked till 1966 when his services
were terminated by the
holding company.
The appellent. therefore, filed an appeal before the Additional Com·
missioner for Workn1cn's Compensation under S.41(2) of the Workmen's
Compensation Act.
The respon~ent raised the objection by saying that
since the appellant was a person wh011y or prinoipally employed by the
Pallavaram Company, •he appellant was not a "person employed" within
the meaning of the Madras Shops and Establishments A~t, 1947 and therefore, the provisions of the said Act would not be applicable to him. Tho
main question for decision was whether the appellant was an employee of
the holding company or of the subsidiary company.
Allowing th~ appeal,
HELD : On the facts and circumstances of the case, the Pallavaram
Company is not the employee of the appellant. All relevant facts . point
to the conclusion that the employer is the Madras Company. It was this
company that appointed the appellant.. The appointment order shows that
he was appointed as an Assistant in that Company.
The ter1ns of the
order further show that apart from the salary set out there, on w.hich he
was appointed, he was to receive dearness allowances at the rate of 35
per cent of the basic salary, or such other rate as the Board of. that company may decide from time to time. He has to become a member of the
Provident Fund to which both he and Madras Company have to
subscribe.
Annual bonus was to be calculated in the same manner as the
annual bonus payable to other assistance of the company. His service can
only be terminated ·by the Madras Company an<! the income-tax dedue·
tions were also made by the Madras company.
All these facts
clearly
show that the a,ppellant was an employee of the Madras Company and
not Pallavaram Company, where the company directed tho appellant to
work and the appellant was under an obligation to work wherever
the
company directs. him to work. [220GJ
214
SUPREME COURT REPORTS
[1973] l S.C.R.
The Salem Sri Ramaswami Bank Ltd. v. The Additional Commissioner
for Workmeri's Compensation, Chepauk, Madras and another,
.~1956) 2
M.L.J. 254, T. P. Chandra y. The Commissioner for Workmen's Compensation, Madras and Another, A.I.R. 1957 Vol. 44 p. 668 ancl T. Prem
Sagar v. The. Standard Vacuum Oil Company Mtiaras and Others, [1964]
5 S.C.R. I 030, discussed and distinguished .
. CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1421
and 1422 of 1968.
Appeals by special leave from the order dated J~nuary 18, 1968
of the Additional Commissioner for workmen's compensation,
Madras in M.S.E. Case No. 131of1966, and from the Order dated
the 9th January, 1968 of the Commissioner of Labour, Madras in
A
B
No. C2. 13897 of 1967 respectively.
c
0. P. Malhotra, Sat Pal and Ashok Grqyer, for the appellant
(in both the appeals) .
M. Natesan and D. N. Gupta, for respondent No. 1 (in both
the appeals) .
The Judgment of the Collrt was delivered by
P. Jagamnohan Reddy, J.-These appeals are by special
leave in which the question which falls for consideratiOI). is
whether the appellant is a person employed :within the meaning of
section 2 ( 12) (iii) of the Madras Shops & Establishments Act,
1947 (Madras Act No. XXXVI of 1947) (hereinafter called 'the
Act'). The first respondent, a private limited company, (hereinafter termed as 'the holding company' or the 'Madras company'),
having been empowered by the Memorandum of Association,
promoted another company known as the Gordon Woodroffe
Leather Manufacturing Company (hereinafter called the subsidiary company' or the "Pallavaram company') in which it held80% preference shares and 70%
equity shares. The holding
company was also the managing agent of the subsidiary company.
In 1959 the managing agency of the holding company was terminated but nevertheless in view of its shareholding it continued to
control the subsidiary company.
The appellant 'who was a
Chartered Accountant qualified in London had applied. for and
was offered employment as· an Assistant in the holding company
on the terms and conditions contained in the letter dated 19-101963. He accepted the employment and the terms
and was
accordingly appoin1ed by th~ holding company. On 28-10-1965
the holding company, in order to simplify the accounting procedures, informed the appellant of its decision to o.ffer revision of
the· terms of engagement with effect from !st July, 1965 relating
tg ·the. basic salary, D.A. and bonus, all other terms of service
remaining unaltered.
The Appellant was asked to confirm his
acceptance of these terms which it appears. he did. He was
E
F"
H.
•
A
B
c
E
F
G
H
. T. DEVADASAN v. GORDON
WOODROFFE
(Jaganmohan 215.
Reddy, J.)
thereafter permitted to cross the efficiency bar. It may here be
menuoned tnat after his appointment, the appellant was
give11
training in the Madras companf for two months after which it is
alleged that the Director had asked him to go to the Palla".aram
company to work there.
Even while working there his salary
was being paid by the Madras company though it wa,s by an
arrangement between the two companies being debited to the
Pallavaram company. The appellant continued to work tn the
Pallavaram company till 15th October, 1966 on which date his
services were terminated by the holding company: The appellant
thereupon filed an appeal before the Additional Commissioner
for Workman's Compensation under section 41 (2) of the Workmen's Compensation Act.
The 1st respondent, however, raised
an objection bi:fore the ~dditional Commissioner that the appellant was not a person employed within the meaning of the Act
and, therefore, the provisions of the said Act would not be
applicable to him.
In view of this objection, was filed by the
appellant under section 51 of the Act for declaring that he is a
person employed and some time thereafter got his
application
under section 41 (2) stayed.
The~ between the parties on th~
application tinder section 51 as well as under section 41 ( 2) was
whether the appellant was an employee of the holding company
or of the subsidiary company. The appellant claimed that . under
the terms of the offer of appointment which was accepted by him
he was required to work either in the Madras office or the Pallavaram office or at any other office or place of business of the
company and though he was working in the Pallavaram office, his .
salary was being paid by the holding company, his bonus for the
year ending 1964 was also paid by that company which alSO'
terminated his services. The 1st respondent averred that though the·
petitioner might ha¥e been appointed or dismissed by the Madras
company he was actually a person employed in the Pallavaram
company.
It was also admitted that while the sruary of the
appellant was paid initially by the Madras company it was
recovered from the Pallavarani company as is evident front the
registers of account maintained that such recoveries from
the
Pallavaram company was effected, and that for the purposes · of
!h~ Act what is relevant is not. 'employment by' but employment
m . If so as he was employed m the Pallavar~m company he was
not a person employed within the difinition of ithe Act by the
Madras company. The Commissioner of Labour by his order of
9th January, 1968 accepted the !st respondent's contention and
held that t~e petitione(cannot be declared to be a person employd
under secuon 2(12) (m) of the Act and that even under section
2(12) (ii) of the Act, the petitioner cannot be treated as a person
employed vis-a-vis the Pallavaram Company as admittedly the
avoellant was not a member of the clerical staff employed in the
Pallavaram company. The petition was accordingly dismissed.
216
SUPREME COURT REPORTS
[1973] l S.C.R.
After this appeal was dismissed the appeal filed under section
41 ( 2) of the Act was disposed of by the Additional Commissioner for Workmen's Compensation who held that in view__of the
. .findings given by the competent authority under Section 51 of the
Act on the question of applicability of the provisions of that Act
to the appellant, he had no jurisdiction to go into the merits of
the appe;tl. He accordingly dismissed that appeal also.
It ihay be stated that the appellant's Special Leave Petition
·Was filed against both the Orders but in view of the objection
raised by the office, two S.L.Ps. were filed and this Court gave
leave on them.
These two appeals were subsequently conso\i-
·dated.
On behalf of the appellant the following two questions were
llrged for determination : ( 1) whether on the facts and circum-
.stances of the case and on a true construction of clause (iii) sub-
:section ( 12) of section 2, the appellant being wholly and principally employed in connection with the business of the Ma~as
:establishment was a person employed, (2) whether the jurisdiction of the authority under section 41 sub-section (2) is circumscribed by the provisions. of section 51. I.n our view !he second
question is pu11~ly academic because if the jurisdiction of the
authority under section 41 ( 2) is circumscribed by the provisions
of section 51 the question whether the decision of the Commissioner of Labour under section 51 that the appellant is a person
employed will nevertheless arise for decision and if it is not even
then that question wguld fall for determination. In any view we
have to ascertain what under the provisions of the Act is meant
by a person employed and whether the appellant is one such. If
he is a person employed then the Additional Commissioner of
Workmen's Compensation has to go into the allegation of the
appellant that his services were not terminated in accordance with
the provisions of section 41 ( 1).
A person employed has been defined under the Act and in so
far as it is releVa.nt for the purposes of the appeal, section 2(12) (ii)
& (iii) alone need be considered. These are set out as under :--
"2 ( 12) ''person employed" means-
•
•
•
*
•
•
(ii) in the case of a factory or an industrial undertaking, a member of the clerical staff employed in such
factory or undertaking;
'
(iii) in the case of a commercial establishment
other than a clerical department of a factory or an inilustrial undertaking, a person wholly or
principally
A
B
c
D
E
F
G
H
A
B
c
1)
F
H
r.'oEVADASAN v. GORDON WOODROFFE (Jaganmohan
217
Reddy, 1.)
employed in connection with the business of the establishment, and includes a peon;" · ·
It is not disputed that the Pallavaram company is a fact?IY and
that the appellant is not a member of the clerical staff m that
factory. In view of this, adntission, ~e appellant canno~ be a
person employed under clause 2(12)(n) not because he is em'
ployed in the Pallavaram company which is itself a matter that
· has to be deterntined, but because he is not a member of !he
clerical staff employed in that factory.
The appellant's case,
therefore, has to be exantined under clause (iii) of sub-section
(12) of section 2. It has to be noticed that an establishment for
the purposes of the clause must be a Conlttletcial
establishtnen~
and even if the clerical department of a factory or an industrial
undertaking falls within the definition of commercial establishment, he is not a person in the clerical department of a factory or
;an industrial undertaking, but is 'one who is wholly or principally
,CJilployed in connection with the business of the commercial
'establishment. Before we examine the meaning of these terms,
it is also necessary to consider the definition given in the Act of
the terms '.commercial establishment', 'employer' and 'establish-.
ment' givon respectively under clauses ( 3), ( S) & ( 6) of section
2. These are as follows :-
" ( 3) "commercial establishment" means an establishment which is not a shop but which carries on the
business of advertising, ·commission, forwarding or commercial agency, or which is a clerical department of a
factory or industrial undertaking or which is an insur-
, ance company, joint stock company, bank, brokers'
office or exchange and includes such other establishment
as the (State) Government may by notification declare
·to be a commercial establishment for the purposes of
this Act;
"(5) "employer" means a person owning, or having charge of; the business of an establishment and
includes the manager, agent or other person acting in
the general management or control of an establishment;
( 6) "establiehment" means a shop, commercial establishm1<1;1t, restaur_ant, eating-hou~, residential hotel,
theatre or any place of public amusement or entertainment and includes such establishment as the (State)
Government may by notification declare to be an establishment for the purposes of this Act;"
It. is evident that the Madras company is a 'commercial establiskment', in terms of the definition as it is a joint stock company, forwarding agents and carries on other activities of a cDnJmerclal
t5-l 208SupCI/72
218
SUPREME COURJJ REPORTS·
[1973] 1 S.C.R~
nature. It may also be mentioned that under that definition the
clerical department of tbe Pallavaram factory is also a commercial
establishment.
A
As we said earlier, the reason why in clause 2( 12) (iii) of
the definition a person who is employed in a clerical department
of a factory or an industrial undertaking has been excluded from
the definition of a: person is because without those .words of exception he would have been included. As it was the intention of
the Act to confine the definition of a person employed only to a
commercial establishment other than clerical de;>artment of a
factory or· ·an industrial undertaking the words of exception had
to be introduced in the definition to reflec~ that intention. The crucial
question for determining whether a person is a person employed
is whether he is wholly or principally employed in connection
with the business of the establishment. It would not be accurate
to focus our attention as was done by the Labour Commissioner
only on the question whether the appellant. was 'employed in' or
'employed by' because these words. 'employed in without the
further requirement that he should' be employed in connectiori
with the business of the establishment would be misleading.
c
The Respondent's Advocate has referred to the Preamble, the
Statement of Objects & 'Reasons and laid emphasis on the intention of ithe Act which was to cover only cases of those persons
who were· actually working in a commerd.tl undertaking and
not those who were employed in a factory or industrial undertaking.
What is sought to be impressed upon is that the test to be
applied for ascertaining whether a person is a person employed
is not who employs him but where he is .employed or works. On
this assumption it is contended· on behalf of the respondent that
it is possible for a person to be employed by one establishment
and assigned to work in another establishment and what will
determine whether the person so assigned is a person employed-is
whether the place where he works is or.is not a commerciarundertaking and if it is not then he is not a person employed. Applying this thesis to the facts of this case, it is submitted that though
the Madras Company has empfoyed the Appellant, it has. employ·
ed him for working in Pallavaram, the salary though paid by the
Madras company was reimbursed fr0m the Pallavaram company
E
and since the appellant on his own admission worked in the Pa:llavaram company ever since he was appointed he is not a person
,employed because he was wholly or principally employed
in
,connection with the business of the PaUavaram company which
.11.
is a factory registered under the Failfaries Act. In support of
this contention he has referred us to J'he Salem Sri Rama:YWami
Bank Ltd. v. The Additional Commissioner for Workmen's Com1'".
A
B
c
D
E
F
'
G
H
. -
T. DEVADASAN v. GORDON WOODROFFE (Jaganmohan
219
Reddy, 1.)
pensation, Chepauk, Madras and another(1), T. P. Chandra v.
The Commissioner fr:>r Workmen's Campensaaon, Madras
and
anofher(2 )-and T. Prem Sagar v. The Standard Vacuum Oil Company Madras and Others(').
What was considered in the first case is not whether the person
is a person employed within the meaning of section 2 (12) of the
Act but whether under section 4(1) (a) which provides that nothing contained in the Act shall apply to persons employed in any
establishment in a position of management, the 2nd respondent
therein was a person in the position of management and if so
whether his appeal under section 41 ( 2 y was incompetent.
It is
evident from this case that the two objections to the maintainability
of the appeal preferred by the second respondent under section
41 (2) of the Act which were taken before the Additional Commissioner were :
( 1)
that under section
4 ( l ) (a)
of the
. Act the second respondent had been employed in the Bank in a
position of management and (2) that the contention cf the second
respondent that if he could not be re-instated as Secretary, be
could be reinstated as Cashier was untainable because by a valid
notification issued by the Government, Cashiers had been excluded
from the purview of the Act The Additipnal Commissioner did
not record any specific findings on the issue whether the second
respondent had been erirployed as Cashier and whether he is entitled to prefer the appeal under s. 41(2). That Court did not
in view of the facts of that case consider it nec.essary to pursue the
matter further.
It was only on the question whether the second
respondent was occupying a position of management, as such his
appeal could not be entertained under section 4 (1 ) (a) that was
considered llild decided. The observations of Rajagopalan, J. at
page 257 that he \Vas using the expression employed only to mean
assign the work of is b!1ing sought to support the contention that
these words would furnish a test in determining whether a person
is a person employed -under section 2 (12 )(iii). These observations have been tom out of the context, because what the learned
Judge says immediately thereafter would negative any such contention. What is said is this :-
''In my opinion it is an assignment of work, a yalid
assignment of the work, by the employer, that should
furnish the real test in deciding whether a given employee is a person employed in a position of management within the meaning of section 4(1)1(a1."
We find that throughout the judgment the . question whether a
person was a perspn employ~ within the meaning of section 2
(12)(iii) has not been mooted. In the second Calie of Chandra
(1) 1956 Vol. 2 M.L.J. p. 254.
·,(2) 1957 A.I.It. Vol. 44 p.668.
(~) (1964](5) S.C.R. 10\IO.
SUPREME COURT REPORTS
(1973] l S.C.R.
also this question was not considered a;; is clearly apparent from
the observations of the learned Chief Justice delivering the Jud<:·
ment of the Bench at page 669 that it was not contended before
them that the Appellant was not a person employed within the
meaning of section 2 (12) of the Act.
In the third case similarly the decision of this Court turned
on the question whether the appellant therein was employed in
a position of management. It was held on the facts of that case
that he was not a person employed in a wsition of management
and as such did not fall within the exemption of section 4 (1) (a) .
On the other hand what has been stated by reference to section
2(12)(iii) are useful.
Gajendragadkar, J. as he then was
observed at page 1036 :
"The test which has to be applied in determining
the question as to whether a person is employed in a
commercial establishment is whether he is wholly or
principally employed in connection with the business
of the said establishment. As soon as 1t is shown that
the emlpoyment 9f the person is either wholly
or
principally connected with the business of the establishment, he falls within the definition."
The key to section 2(12) (iii) is whether a J)erson is wholly
or principally employed in connection with the business of the
commercial establishment.
On the very
threshold. what
we
have to determine is by whom the respondent is employed.
Is
he employed by the Madras company or by the Pallavaram company which is a factory and if he is by the former which it is
not disputed he is, is he wholly or principally employed by it ? It
is contended that the Appellant is employed wholly or principally by the Pallavaram Company because it is the place where
he has been working. In our view there is no validity in this
submission.
On the facts of this case the Pallavaram company
is not the employer of the appellant.
All relevant facts
that
have been established and are not disputed point to the irrestible
conclusion that the employer is the Madras company. It was this
company that appointed the appellant: The appointment Order
of 19th October, 1963 shows that he was appointed as an Assistant in that company. The terms of the Order further show that
apart from the salary set out therein on which he was appointed,
he was to receive dearness allowance at the rate of 35 per cent
of the basic salary or such other rate as the Board of that company may decide fr0n1 time to time. He has to become a member of the Provident Fund to which both he and the Madras
company have to subscribe. The annual bonus· was to be calculated in the same manner as the annual bonus payable to other
A
B
c
D
E
F
G
H
,.
A
B
c
D
E
F
G
H
T. DEVADASAN v. GORDON WOODROFFE (Jaganmohan· 221
Reddy, 1.)
Assistants of the company. ·His services can only be terminated
by the Madras company in terms of paragraph 6 of the Order
and under paragraph 5 he was required to work either in Madras Office (Office hours 9.15 a.m. to 5.30 p.m.) or Pallavaram
(office hours 8 a.m. to 4.30 p.m.) or at any other office or place
of business of the company. It is dear from this letter of a;>pOintment that he has to work wherever the company directs him to
work as si.ch lie would be a person wholly or principally employed in connection with the business of the Madras comPany.
Inasmuch as it is apparent that the obligation to work at Pallavaram is under the directions of the company it will be considered to be a part of the business of the company aS- indeed the
words. ''business of the CO!Jlpany" in p;;iragraph 5 govern not only
the ooligation to., work at Pallavarani but at any other place or
places where the company directs him to work.
The revised
terms of employment of the appellant dated the 28th October,
1965 also .show that those terms 3.l'e applicable to the contracts of
all Assistants of the company. It is also to be noticed that the
IJQnus was paid by the Madras company nor is it disputed that
his salary and bonus was being paid by that company. The
income-tax deductions were made by
the
Madras
cornpany
which also furnished a certificate to the tax authority as per Ex.
P.9. That company further certified to the Madras Housing
Board on January 8, 1966 what the appellant's salary per month
and the total shlary and allowances which are paid to him by
that company were.
It may also be mentioned that the appellant's leave had to be granted by the Madras company and not
by the Pallavaram company.
Ext.M-II would show
that the
application for leave was made by the i!Ppellant to the Managing Director of the Madras company.
One other fact which
appears from the evidence of R.W.l., Director of the Madras
company who was a1w the Secretary of the Pallavaram company is that the appellant was signing bills ~or Tullies Woodroffee
factory at Pallavaram which is another subsidiary of the Madras
company.
He was a!So signing the bills of. sale of
all such
manufacture purely for administrative convenience.
All these
facts support the conclusion that the appellant was employed on
the business of the Madras company because he was
working
under the;r directions wherever they wanted him to work
and
whatever •vork was entrusted to him in tern1s of the appointment
order.
The mere fact that he was wqrking in Pallavaram d~
not make him an employee of that company nor doos the Pallavarm company become his employer because neither that company pays his salary nor does it grant leave, nor 'Ila' it any obligatioa towards the appellant in respect of Provident Fund, bonus
or any other emoluments, nor for that matter can it suspend or
dismiss him.
Indeed .:he very order of termination of his services was made by he Madras compa'.ly and not by the Palla-
222
SUPREME COURT REPORTS
(1973] 1 S.C.R.
vann company.
On the 15th O\:to~r, 1966 this is what the
Director of the Madras compaμy wrote to the appellant:-
"I refer to our letter of appointment of 19th October, 1963. I
I have given ve1y serious consideration to the Q\l!=S·
tion of renewing your Agreement but have COll\e to
the conclusion that in the period during which you have
been employed by this company your work has not
reached the standard which was expected and therefore
it is not possible to renew your appointment.
Will you kindly therefore take this letter as being
the requisite one mon!h's notice of termination of your
services in iwcor\lance with paragra.ph 6 of the Jetter
under reference.
If you wish to discuss this matt~ wiWr m~ I will be
available at 3.30 p.m. on ~aY !he lith ()c;t~r,
but I must advise you th~t i have taken an irr.evoc;i\lle
decision in the maner."
This letter .clearly shows tha.t Uie emp.lo~r is
the Madras
company because it is only the employer who c<i.11 termilutt<: the
services of an employee.
It i&, t\l,erefore, iQ!e to sμggest
that
the Pallavaram company was tlie employer merefy \lec<1use t~
Madras company had asked him to work in that COJ11P<\IlY·
It is further submit!¢ by the resvondent that the Ma\lras
~mpany and the Pa!lavaraw company being two incorpo,rated
<:O!npanies they were separate and independent legal entities and
that merely because the Madras company has a controlling interest
in the Pallavaram company does not vest th.e administration ot
Pallavaram company in the Madras company. Whether it is so
or not we have no evi\lence, nor js there anything to show under
what arrangements between the two companies, the Madras company was managing the affairs of the PaUavaram company. If
we have to accept the contention of the learned Advocate for ihe
respondent that because th.e appellant was pen;nitted by the Madras company to work in the Pallavaram c9mpany he was employed wholly or principa.1\Y in c9nnection wi\h the business of the
Pallavllram company, lie will be an employer-Iess-e1i1Ployee because even though Pallavaram company has no ~ontrol over him
or his work nor has it !he power to sQspend or c\ischa~ge him, he
would nQlletheless \le an employee of that comp;my for the purposes of section 2 ( 12 )(iii) . This would result in an iμcongruity
and would have . the effect of arming the employer with a device
to circumvent the provisions of tl1e Act inasmuch as all that an
employer has to do is to make the employee· work art places which
A
B
c
D
E
F
G
H
'.,
I
T •. DEVADASAN v . . GOROON WOODROFFE ([aganmohan 223
Reddy,/.)
A,
lire factories or industrial .undertakings and plead, when he dismisses him without reasonable cause, that he is not a person employed. We do not think that such a result w:is intended, nor is
a conclusion so baneful deducible from the pl'OVisions of the
Act.
8
We accordingly allow the appeals with <;os1$, one set and
remand the case to the Additional Commi5$ioncr, of Workmen's.
Coml1Cl1sation tQ hear and dispose at f?le. appeal filed by the
appellant.
.
S.N.
A.pl"al:i al/qwed.