1. A government Labour Officer and Inspector of the Office of the commissioner of Labour, Gujarat State, filed a complaint against the present respondents for contravention of Rule 21 of (the Rules frames under) the Contract Labour (Regulations and Abolition) Act, 1970, hereinafter referred to as 'the said Act', and for the non-compliance with the order issued under the said Act punishable under S. 24 of the said Act. The same complaint was registered as Criminal Case No. 49 of 1977 in the Court of the Metropolitan magistrate at Ahmedabad.
2. On behalf of the complaint, one Mr. K. T. Vazirani was examined. His evidence is brief and we may note the same at the outset. He stated that he was working as an Inspector under the provisions of the said Act and as such on 18.2.1977 he visited one Nayan Trading Company at about 9.00 a.m. One Shirish Shah, accused No. 2 was present. He was the principal employer. Thereafter, at about 3.30 p.m., the same Shirish Shah and the complainant went to the place of business of the accused No. 1, M/s. Vogue Garments. He found that 30 or 32 persons were doing the stitching work. The machines were run by the electric power. They were preparing the Shirts. They were working for Nayan Trading Company. According to the complainant, Nayan Trading company had given a contract to accused No. 1 firm and it was Nayan Trading Co., which was supplying the goods tot he accused No. 1. According to the complainant, nobody on behalf of the accused No. 1 was present. Only supervisor was present. Accused No. 3 Yogeshbhai came there at about 6.00 p.m. Accused Nos 2 to 7 are the partners of the accused No. 1. They are doing business and after the goods are prepared, they are sent to Nayan Trading Company. The complainant states that the accused did not obtain the necessary licence under the provisions of the said Act. Hence, the complaint was filed.
3. In his cross-examination, he admitted that he had not read any written contract given by Nayan Trading Company to the accused No. 1. He also admitted that he did not examine the books of accounts of the accused No. 1-firm, nor has he given any show cause notice to it. He has also admitted that he did not know the nature of the work which was to be carried out by accused No. 1.
4. This is the evidence of Mr. Vazirani. The perusal of the evidence makes it very clear that Mr. Vazirani carried out the investigation in a very desultory manner. He has not cared to do the obvious thins, as for example, inspecting the books of accounts of the accused No. 1-firm. He has also not cared to ascertain what was the nature of employment which the accused No. 1 has undertaken for Nayan Trading Company. He has also not cared to inquire what the business of the accused No. 1-firm and how was the same business carried on. We are at a loss to understand as to on what exact basis has Mr. Vazirani endeavoured to cover the accused No. 1-firm and its partners under the mischief of the said Act. This infirmity in the prosecution case becomes all the more obvious when we further take into account the deposition of the defence witness. In the meantime, we may note that prosecution has examined one more witness Gunvantlal Manilal, a Labour Officer, who has stated that he had filed the complaint and that he had signed a cyclostyled form of complaint. He admits that he has no personal knowledge about the contents of the complaint.
5. When the statement of the accused was recorded, the defence put forth was that the provisions of the said Act were not applicable to the accused No. 1-firm. During the course of the statement, it was further submitted that the business of the accused Np. 1-firm was to manufacture goods and that it was not doing any work, under a contract of labour. The accused No. 3 Yogeshbhai Mahendrabhai Shah, was examined as a defence witness. He has stated that the accused No. 1 was a garment factory wherein he was working as a Manger. The business of the accused No. 1 firm was to manufacture and sell garments. The Accused No. 1 was registered under the Factories Act. On behalf of the accused, the bill-book was produced to show that the accused No. 1 firm purchased clothes and was manufacturing garments from the clothes so purchased. The accused No. 1 firm was selling readymade garments. Yogeshbhai has stated on oath that the accused No. 1-firm was not doing business as a contract labour.
6. In the cross-examination, Yogeshbhai stated that it was not true that Nayan Trading Company was supplying material to the accused No. 1-firm and it was also not true that the accused No. 1-firm was returning the material after stitching garments to Nayan Trading Company.
7. The above stated resume is the only evidence led by the rival sides.
8. The learned Magistrate convicted the accused and sentenced each of them to pay a fine of Rs. 200 on each of the two counts and to suffer one month's simple imprisonment in default of payment of fine.
9. Being aggrieved by the order of conviction, the accused preferred Criminal Appeal No. 196 of 1978 in the Court of the learned Additional Sessions Judge, Ahmedabad, who has, for the reasons stated in his judgment allowed the appeal and has set aside the conviction and sentence imposed by the trial Judge. It is against this order of acquittal, dated 31.3.1979, that the present appeal is filed by the State.
10. Mr. M. B. Shah, the learned Public Prosecutor, read before us the definition of a 'workman' contained in S. 2(2)(b), 'contractor' contained in S. 2(2)(g) as well as Ss. 12, 13 of the said Act and Rule 21 of the Rules framed under the said Act. Mr. Shah submitted that the moment it is shown that an establishment has ins its employment 20 or more workmen on any day of the preceding 12 months as contract labour, the provisions of the said Act are attracted. In the present case, Mr. Shah submitted, there was no dispute that ar the relevant time there were more than 20 persons employed and as per the statement of Mr. Vazirani, they were working for Nayan Trading Company. In Mr. Shah's submission, that was enough for the application of the said Act and since there was no dispute that accused had no obtained a licence as required under the said Act, the accused were liable to be convicted under S. 24 of the said act. Mr. Shah submitted that it did not matter if the accused was doing its own work independent of the principal employment and it also did not matter that the accused was doing work for other principal employer. The moment it was establishment that the accused No. 1 had engaged more than 20 persons and that they were working for the principal employer under a contract labour, the conviction must follow. In support of his submissions, Mr. Shah cited a ruling in the case of M/s. Gammon India Ltd., etc. etc., v. Union of India, reported in [1974-I L.L.J. 489]. He emphasised the contents of paras 11 and 12 of the said judgment. Mr. Shah's argument was that it was not necessary that the contractor must work on the premises of the principal employer and that in the present case, even if the employees were working on the premises belonging to accused No. 1-firm, the provisions of the said Act were nevertheless attracted.
11. On perusal of the aforesaid ruling submitted by Mr. Shah, we are of the view that the tenor of the ruling does not help Mr. Shah. In the reported ruling, the question had arisen because the employees were to work on a building site which was not exactly the business place of a banking company. The argument in that case was that if the employees were hired to do the work of a building construction for a Bank, it could not be said to be 'the work of an establishment'. That argument was negatived. It was also argued therein that the employees were not to work ar the business place of the principal employer, but that argument too was negatives on the ground that if the employees were to work at a building site of the bank wherein the construction of the building was to be carried out, that site was also a part of the premises of the principal employer. As a matter of fact, the observations made in par. 17 of the reported ruling run in favour of the present appellant ('respondent') accused. The observation run as under :
'17. A contractor under the Act in relation to an establishment is a person who under takes to produce a given result for the establishment through a given result for the establishment through contract labour. A contractor is a person who supplies contract labour for any work of the establishment. The entire context shows that the work of the establishment is the work site. The work site is an establishment and belongs to the principal employer who has a right of supervision and control, who is th owner of the premises and end product and from whom the contract labour receives its payment either directly or through a contractor. It is the place where the establishment intends to carry on its business, trade, industry, manufacture, occupation after the construction is complete.'
We may emphasise the observation of the Supreme Court that a contractor was a person who supplied contract labour for any work of the establishment. The charges levelled against the accused were to be appreciated in the entire context of the facts of each case. It is found observed that in that particular place, the work of the establishment was the work site. The work site was an establishment and belonged to the principal employer who had a right of supervision and control who was the owner of the premises and the end product and from whom the contract labour received its payment either directly or through a contractor. The observation that the principal employer had the right of supervision and control would imply that it would be one of the important considerations for deciding whether a particular contract amounted to a 'contract labour' or not. All contracts undertaken by one for another would not necessarily imply a contract of contract labour. It appears that the whole proposition is to be ascertained in the context of the circumstances where the right of control over the employees is one of the important criteria. It is, therefore, that we are of the view that the tenor of the reported ruling cited by Mr. M. B. Shah runs in favour of the accused.
12. The definition of a 'contractor' as given in S. 2(2)(c) is very relevant and must be considered with precision. It runs thus :
'(c) 'contractor' in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than a mere supply of goods of articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor.'
13. The contractor thus means a person who undertakes to produce a given result through contract labour or who supplies contract labour for any work of establishment and includes a sub-contractor. The words 'contract labour' used in the definition of a contractor in S. 2(2)(c) has a statutorily defined meaning and therefore that meaning we must gather from S. 2(2)(b) which runs thus :
'a workman shall be deemed to be employed as 'contract labour' in or in connection with he work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer.'
The contractor, therefore, is one who supplies contract labour to an establishment undertaking to produce a given result for it. He hires labour in connection with the work of an establishment.
14. Mr. Ashok L. Shah, the learned Advocate for the respondents Nos. 1& 3, submitted that the word 'hire' which is used in S. 2(2)(b) of the said Act has a significant connotation and that it was not an equivalent of an employment and was not synonymous with it. Mr. Shah invited our attention tot he word 'hire' in Biswas Encyclopaedic Law Dictionary (1979 Edition). The relevant portion of the explanation of the word 'hire' runs as under :
'Payment for the temporary use of something or for labour or personal services'; wages.
A bailment for a reward or compensation. It is divisible into four sorts - (1) The hiring of a thing for use. (2) The hiring of work and labour. (3) The hiring or care and services to be performed or bestowed on the thing delivered. (4) The hiring of the carriage of goods from one place to another. The three last are but sub-divisions of the general head of hire of labour and services. Wharton's law Lexicon.'
15. Mr. Ashok L. Shah, submitted that the word 'hire' implied that the services of a labour is employed for a specific job and in the present case that job must be of the principal employer. On the other hand, Mr. Shah submitted that the word 'employment' has an altogether different connotation, inasmuch as the employment would be continuous in nature and it would not be conterminous with a particular undertaking of a job. In the present case, the employees of the accused No. 1-firm were engaged on a salary basis to do work of the accused No. 1-firm which included its own independent work as well as the work undertaken on behalf of other customers. Even when it was admitted that the purpose of the Act was benevolent for the protection of the contract labour and its applicability should not be unnecessarily restrained one has to objectively judge whether in a given set of circumstances, it would apply or not. In Mr. Shah's submission it was a misconception to confuse between a regular employment on the hand and an ad hoc hiring for a particular job only on the other. Merely because the employees of the accused No. 1 were more than 20 in number and they were carrying out the work entrusted to the accused No. 1-firm by the principal employer namely, Nayan Trading Company, were not the only circumstances which were to be taken into account while determining the applicability of the provisions of the said Act. There were other important and significant factors which were overlooked by Mr. Vazirani when he inspected the premises of the accused No. 1-firm. The accused No. 1-firm was dealing in large transactions with firms other than the present principal employer, as for example, in respect of purchase of cloth of large quantities, manufacturing garments out of them and selling them to its customers. It was not as if the employees were engaged by accused No. 1-firm for the job work entrusted to them by Nayan Trading Company, the principal employer. Mr. Shah submitted that the bill-book it self showed that the accused No. 1-firm was doing considerable work for other concerns as well and also its own independent business on a large-scale of selling manufactured garments.
16. We have perused the judgment of the learned Appellate Judge where in also an argument on similar lines has been accepted. The learned Appellate Judge has emphasised the fact that tit was the accused No. 1-firm who was all throughout having the supervision an control over the employees and that they were working on the premises of the accused No. 1-firm. We agree with the reasoning of the learned Appellate Judge. We confirm his view that the provisions of the said Act Act not attracted to the accused No. 1-firm under a set of circumstances on which the complaint is based. In the result, therefore, we dismiss the appeal and confirm the order of acquittal passed by the Appellate Judge.