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Surat Jari Vepari Mandal Vs. State of Gujarat and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtGujarat High Court
Decided On
Judge
Reported in(1977)18GLR831
AppellantSurat Jari Vepari Mandal
RespondentState of Gujarat and ors.
Cases ReferredNarottamdas v. P.B. Gowar
Excerpt:
.....constituted the first advisory committee under section 5(1)(a) of the act on june 20, 1966 and that committee submitted its report on august 16, 1967. the stand taken by the petitioners' association before the committee was that akhadedars are not 'employees' but the committee, on the evidence collected by it, recommended to the government fixation of minimum rates of wages for the akhadedars and the government fixed minimum wages for workers employed by the akhadedars but not for them. 9. strong reliance was placed by the learned counsel on the decision of the supreme court in silver jubilee tailoring house v. it is well-settled that no general proposition can belied down that under no circumstances an independent contractor can be considered to be a 'worker' within the meaning of its..........material gold, silver or copper is given to them by merchants engaged in jari industry for making jari. jari industry is a very ancient industry and akhadedars are the craftsmen or artisans who by several processes ultimately produce jari out of gold, silver or copper. it is a cottage industry confined to surat. it is an hereditary occupation of the akhadedars and that is the only class of artisans that can make jari. the main processes of manufacturing jari consists of (i) preparation of silver bar; (ii) drawing of silver wire coarse, medium, find and superfine; (iii) gilding; (iv) flattening the wire (lametta); (v) dyeing of raw silk; (vi) winding of layette on silk, art silk or cotton thread; (vii) winding of silver thread on bobbins: (viii) reeling: and (ix) packing. these are.....
Judgment:

S. Obul Reddi, C.J.

1. This Special Civil Application is filed by Shri Surat Jari Vepari Mandal and two jari merchants of Surat challenging two notifications issued by the State of Gujarat, on: dated August 6, 1970 and the other dated December 16, 1975, fixing the minimum rates of wages under the former notification and revising the minimum rates of Wages under the latter notification in respect of the employment in jari industry in the State of Gujarat.

2. The first petitioner is an Association consisting of persons engaged in the business of manufacture and sale of jari goods. Petitioners Nos. 2 and 3 are merchants engaged in the trade and business of manufacture and sale of jari goods. The main case of the petitioners is that Akhadedars are not 'employees' as defined in Section 2(i) of the Minimum Wages Act, 1948, (hereinafter referred to as 'the Act') and, therefore, they are not entitled to the benefit of the minimum rates of wages fixed under the two notifications. According to the petitioners, the Akhadedars in respect of whom the minimum rate of wages is fixed are job contractors engaged in the process of jari winding which they do on their own machines. The work is entrusted to them on labour contract basis and either they execute the work by employing members of their families or, in addition, by employing their own labour by paying them fixed labour charges.

3. To appreciate the questions raised by the petitioners that Akhadedars are not 'employees' within the meaning of Section 2(i) of the Act, it is necessary to know what the term 'Akhadedar' means and the nature and character of the work turned out by an Akhadedar. Akhadedars are skilled artisans who make jari out of gold, silver and copper. The material gold, silver or copper is given to them by merchants engaged in jari industry for making jari. Jari industry is a very ancient industry and Akhadedars are the craftsmen or artisans who by several processes ultimately produce jari out of gold, silver or copper. It is a cottage industry confined to Surat. It is an hereditary occupation of the Akhadedars and that is the only class of artisans that can make jari. The main processes of manufacturing jari consists of (i) preparation of silver bar; (ii) drawing of silver wire coarse, medium, find and superfine; (iii) gilding; (iv) flattening the wire (lametta); (v) dyeing of raw silk; (vi) winding of layette on silk, art silk or cotton thread; (vii) winding of silver thread on bobbins: (viii) reeling: and (ix) packing. These are highly specialised processes which can be only done by skilled artisans who have come to be known by the name Akhadedars. Nearly 30, 000 artisans are directly or indirectly engaged in the manufacture of jari. In the report of the Advisory Committee appointed by the Government of Gujarat for fixing minimum wages in the employment in jari industry, it is stated that the persons engaged in the jari manufacture now could be classified as (1) Merchants; (2) merchant-manufacturers';' (3) Akhadedars; and (4) employees or workmen who carry out the work at the unit where they are engaged at their homes including adult males, females, adolescents and children. The merchant generally is one who has no machinery of his own and gets the required processes carried out by Akhadedar by supplying the requisite raw material. The Akhadedar owns the machinery to process the raw material into various stages. After carrying out the processes, he returns the finished product, jari, to the merchant who gave him the raw material at the rate fixed according to the weight of the raw material. There are also merchant-manufacturers who get the various processes done at their units on their machinery and also get certain other processes done outside their premises through Akhadedars by supplying the requisite raw material or unfinished product and receive back the finished product. Akhadedars are ultimately the persons who, either by themselves and with the aid of the members of their families or with the aid of labour employed by them, process the raw material through several stages and ultimately deliver the finished product 'Jari' to the merchants. The process involved in the manufacture of jari is not done by any single Akhadedar. There are three categories of Akhadedars viz., Pawthawalas, Tanias and Vintwawalas. The work to be executed by each of the three classes of Akhadedars is different. The merchant gives the raw material to Pawthawala for the preparation of bar and the initial processing of the bar. Then he takes back the semi-processed material from Pawthawala and hands over that material to Tania. Similarly, he takes back the material, to the extent processed by the Tania and then hands that over to Vintwawalas for final processing of jari. It thus transpires that the preparation of bar is done by one class of Akhadedars, wire drawing-coarse, medium, fine and superfine is done by another class of Akhadedars, gilding and flattening the wire (lametta) is done by another class of Akhadedars. Dyeing and colouring of yarn, winding of Lametta on silk, art silk or cotton yarn, winding of jari thread on bobbins is also done by the last class of Akhadedars. Thus the merchant steps in at every stage of processing of raw material. In this petition we are only concerned with the rates of wages fixed for Tanias and Vintwawalas. No rates have been fixed by the impugned notifications for the Pawthawalas.

4. The Government, for the purpose of fixing minimum wages for the employment in this industry constituted the first Advisory Committee under Section 5(1)(a) of the Act on June 20, 1966 and that Committee submitted its report on august 16, 1967. The stand taken by the petitioners' Association before the Committee was that Akhadedars are not 'employees' but the Committee, on the evidence collected by it, recommended to the Government fixation of minimum rates of wages for the Akhadedars and the Government fixed minimum wages for workers employed by the Akhadedars but not for them. The Government again appointed a second. Advisory Committee on May 16, 1968 for the same purpose of fixing minimum rates of wages for Akhadedars. It would appear that the Petitioners Association did not partake in the proceedings before the Committee but they, however, submitted a written representation to the Government of India contending that Akhadedars are in the nature of contractors and not employees. The Akhadedars participated in the inquiry conducted by the second Advisory Committee and the Committee submitted its report recommending minimum rates of wages for the Akhadedars so as to enable them to make payments to the employees engaged by them. The rates were so fixed as to ensure each Akhadedar, a monthly income of Rs. 250/-.

5. The Government issued the notification after considering the report of the Committee and also the Advisory Board on August 6, 1970 fixing minimum rates of wages for the Akhadedars. That notification was challenged by the petitioners in Special Civil Application No. 1140 of 1970 , questioning the jurisdiction of the State Government to fix minimum rates of wages for the Akhadedars. During the dependency of the writ petition, a third Advisory Committee was appointed by the Government for fixing the rates of wages of Akhadedars fixed under the notification dated August 6, 1970. A representative of the petitioners was also on this third Committee appointed for the purpose of revision of the rates of wages. On the basis of the report of the third Committee, the wages were revised under the impugned notification dated December 16, 1975.

6. The main contention of Mr. I.M. Nanavati is that the contract between the Akhadedars in question and the merchants is one 'for service' and not a contract 'of service' and, therefore, an Akhadedar is not an 'employee' within the meaning of Section 2(i). According to him the Akhadedar executes the work on his own account. He is not under the control or supervision of the merchant, Akhadedar employs his own workmen and they work under the control and supervision of the Akhadedar. The merchant entrusts the processing work and remunerates him on contract basis. It is also pointed out from the Report of the Advisory Committee that each Akhadedar owns machinery costing about Rs. 7,500/- and the total value of the machinery owned by all Akhadedars in Surat District is estimated at Rs. 2 crores. It is, therefore, contended by him that persons who own such costly and sophisticated machinery and who employ others to work under them and who are not under the control, management or supervision of the merchant, cannot be brought within the ambit of the definition of 'employee' merely for the reason that an Akhadedar is an 'out-worker' to whom raw material is given by the merchant.

7. In support of his contention Mr. Nanavati relied upon certain decisions to which we shall refer presently. Mr. J.R. Nanavati, learned Assistant Government Pleader, contended that the decisions on which reliance has been placed by the learned Counsel for the petitioners, have no bearing on the facts of the case in view of the definition of 'employee' which includes an out-worker.

8. So, the only question to be determined is whether an Akhadedar is an 'employee' within the meaning of Section 2(i), Section 2(i) reads-

2. In this Act, unless there is anything repugnant in the subject or context,--

xxx xxx xxx

(i)'employee' means any person who is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment in respect of which minimum rates of wages have been fixed: and includes an out worker to whom any articles or materials are given out by another person, to be made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the purposes of the trade or business of that other person where the process ; is to be carried out either in the home of the out-worker or in some other premises not being premises under the control and management of that other person; and also includes an employee declared to be an employee by the appropriate Government: but does not include any member of the Armed Forces of the Union.

'An Akhadedar to come within the definition of 'employee' must satisfy the essential requirements specified in the definition. That he is an outworker is not in dispute. That articles or materials are given to him by the merchant class is also not in dispute. That he processes the article or material given to him is beyond dispute. The question then is, whether he processes the materials for sale for the purposes of the trade or business of the other person or for his own. According to Mr. Nanavati, the processing work done by an Akhadedar is done on his own account and, therefore, he is not an 'employee' and the relationship of an employer and employee does not exist between the merchant and the Akhadedar.

9. Strong reliance was placed by the learned Counsel on the decision of the Supreme Court in Silver Jubilee Tailoring House v. Chief Inspector of Shops and Establishments : (1973)IILLJ495SC . In that case the meaning of the expression 'person employed' came to be construed. 'Person employed' as defined in Section 2( 14) of the Andhra Pradesh (Telengana Area) Shops and Establishments Act, 1951, means, in the case of a shop a person wholly or principally employed therein in connection with the business of the shop. The tailors in that case were paid on piece-rate basis. They generally attended the shops of the proprietor every day if there was work. The rate of wages paid to them was not uniform and depended upon the skill of the worker and the nature of the work When cloth was given for stitching to a worker after it had been cut, the worker was told how he should stitch it and if he did not stitch it according to he instruction, the employer rejected the work and he generally asked the worker to rest itch the same. When the work was not done by a worker according to the instructions, generally no further work was to be entrusted to mm. There was no obligation on the part of the worker to go for work to the shop on any day nor to make any application for leave. He was not obliged inform the employer that he will not attend the shop for work. Almost all he workers worked in the shop. Some were allowed to take cloth for stitching to their homes on certain days with the permission of the proprietor of the shop. The machines installed in the shop belonged to the proprietor of the shop and the premises in which the work was carried on also belonged to him. The question which arose for decision in hat case was whether the relationship of employer and employee.

10. The Supreme Court held that the fact that the workers worked on the machines supplied by the proprietor of the shop important consideration m determining the nature of the relationship. If the employer provided the equipment, that is some indication that the contracts a contract of service, but if the other party provided the equipment This is some evidence that he is an independent contractor It is on the ground that the machinery equipment is owned by the Akhadedar that the learned Counsel for the petitioners contended if it goes to indicate that the contract is a 'contract for service' and not a 'contract observe The other circumstance that the employer had the right to reject the end production it did not conform to the instructions given by him and direct the worker to re-stitch the cloth was also taken into consideration for holding that the relationship of master and servant in that case Mathew J., not only considered the earl Supreme Court but also the English.

11. It may be noted that for several centuries the been working on their own machinery provide their own equipment. The equipment or the machinery of the type which the Akhadedars have is useful only manufacturing jari. Ordinarily, in the expects the employer to provide all the necessary machine and but having regard to the peculiar nature and character of the Jari industry the equipment came to be provided only by the Akhadedar, the merchants have installed the machinery and under them. Therefore, from the Akhadedar, it cannot be concluded that the Akhadedar is an independent contractor.

12. The Supreme Court in Dhrungadhra Chemical, Works Ltd v. State of Saurushtra : (1957)ILLJ477SC , had occasion to consider the distinction between a workman and a contractor. The broad distinction as observed by Bhagwati, J. is that the workman agrees himself to work while the independent contractor agrees to get other persons to work It was' also pointed out by him that a person who agreed himself to work and so worked, did not cease to be such by reason merely of the fact that he got other persons to work along with him and that those persons were controlled and paid by him. The determining factor, as held by the Supreme Court in that case, whether a person is a workman or an independent contractor, is whether he had agreed to work personally or not. If he had agreed to work personally, then he is a workman and the fact that he took assistance from other parsons would not affect hu status as a workman. The Akhadedar works personally on his machine He not only renders personal service to process the raw material into jari but undertakes to get the work done. Simply because he has the assistance of the members of his family and sometimes the assistance of others who 'work under him, it cannot be said that the relationship of employee and employer does not exist between him and the merchant and that he ceases to be an 'employee'. The essential requirement to make him an 'employee' is that he must have consented to work him self, thus giving his personal services. As summarized in Halsburv's of England, volume 14, pages 651-652-Laws

The workman must have consented to give his personal services and not merely to get the work done, but if he is bound under his contract to work personally he is not excluded from the definition, simply because he has assistance from others work under him.

The question before the Supreme Court in the Saurashtra case was whether Agarias are independent contractors or workmen. The Agarias worked in the Salt Works at Kuda in the Rann of Kutch. Each Agaria was given a plot of land for purpose of manufacturing salt. At the time of allotment of the plot, the appellant, Dhrangadhra Chemical Works Limited, paid an advance. The Agarias prepared pans according to the standards and after salt crystals begin to form in the pans, they are tested for quality by the authorities. Thereafter they are allowed to collect salt. Then the crystals are collected, they are loaded into the railway wagons a h transported to the depots where salt is stored. There again salt is test d Salt which is rejected is taken by the Dhrangadhra Chemical Works Limited. Account is made up at the end of the season when the advances which have been paid to the Agarias from time to time also the amounts due from the Agarias to the grocery shop were taken account and on a final settlement of the accounts, the amount d by the Dhrangadhra Chemical Works Limited to the Agarias ascertained and such balance was paid to the Agarias. The A worked themselves with their families on the plots allotted to the they engaged extra labour. They made payments to the laborers on their account and not on account of the Dhrangadhra Chemical Works Limited. Disputes arose between the Agarias and Dhrangadhra Chemical Works Limited as to the conditions under which the Agarias should be engaged in the manufacture of salt. The Government of Saurashtra, referred the dispute for adjudication to the Industrial Tribunal, Rajkot. The Dhrangadhra Chemical Works Limited contested the proceedings on the ground, inter alia, that the status of the Agarias was that of independent contractors and not of workmen and that the State was not competent to refer their disputes for adjudication under Section I of the Industrial Disputes Act. Ultimately, when the matter came to the Supreme Court on appeal preferred by Dhrangadhra Chemical Works Limited, the Supreme Court held that the Agarias were professional laborers and the fact that they were free to engage others to assist them and also paid them would not make any difference so as to affect their status as workmen. The ratio of this decision is that where the professionals undertake to execute the work themselves and work themselves even if it be with the assistance of labour, none-the-less, they would be workmen and not independent contractors. The mere fact that Akhadedars engage labour to assist them in the process of jari manufacture and that the Akhadedar pays them and controls them will not militate against the contract being one of service.

13. Subba Rao, J., as he then was, in Chintaman Rao v. State of Madhya Pradesh : 1958CriLJ803 , stated that distinction between a contractor and a worker. But that distinction was drawn by the learned Judge on the basis of the definition of 'worker' in Section 2(1) of the Factories Act which runs thus:

worker means a person employed, directly or through any agency, whether for wages or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process.

Therefore, the distinction drawn between an independent contractor and a worker on the basis of the definition in that Act can have no bearing on the definition of 'employee' which is of wider amplitude. An 'out-worker' is not-included in the definition of 'worker' in Section 2(1) of the Factories Act. The 'employee' here works for the purpose of the trade or business of the merchant at a place not being under the control or management of-the merchant. It is well-settled that no general proposition can belied down that under no circumstances an independent contractor can be considered to be a 'worker' within the meaning of its definition in the Act. (See : 1958CriLJ803 ). We have, therefore, to go by the definition given in the Act bearing in mind the guidelines or the tests laid down by the Supreme Court to the extent they re applicable to the language employed in the definition.

14. Ray C.J., in M.G. Beedi Works v. Union of India : (1974)ILLJ367SC , after a review of the earlier cases of his Court observed:

In the ultimate analysis it would depend on the facts and circumstances of each case in determining the relationship of master and servant.

15. The Madhya Predesh High Court in Narottamdas v. P.B. Gowar-ikar : (1961)ILLJ442MP , dealing with the case of an out-worker preparing bidis from the raw material supplied to him observed:..if an out-worker prepares goods at his own residence and then supplies them to the employer, he has for the purposes of the Minimum Wages Act to be treated as an employee.

It is significant that the employers Association dissociated itself with the work of the second Committee. It has been found as a question of fact that the Akhadedars generally executed the work with the help of their own family labour and engaged some outside labour as well. It is an admitted fact that the Akhadedar does not own the raw materials and has no proprietary rights in the finished work. The position of an Akhadedar is very peculiar. He is a worker. At the same time he employs outside labour. The question that Akhadedars are not 'employees' was never raised by the petitioners before the first Advisory Committee which gave an unanimous report recommending minimum rates of wages for all the employees including Akhadedars. No effort was made to place any evidence before the second Advisory Committee by the petitioners. A representative of the employers was on the first Advisory Committee which gave an unanimous report. It is to be borne in mind that the Akhadedars have no right or interest in the product 'jari' manufactured by them by various processes. What they receive by way of labour charges is simply the remuneration for the labour depending upon the weight of the material supplied to them. They are employed for hire to do the skilled work in the scheduled employment, that is, jari industry. The term 'employee' is of wide amplitude to take in Akhadedars. Akhadedar satisfies the essential requirements of the definition. He is an out-worker. Raw material is supplied to him by the other person. The processing of the raw materials is not for the purposes of his trade or business but for the purposes of the trade or business of the petitioners. The essential requirement is that what is processed or manufactured by him should be for sale for the purposes of the trade or business of the person who supplies the materials to him. There is nothing in the definition to indicate that if the processing of the material or article supplied to the.Akhadedar is done on his own, machinery that he will not be an 'employee'.

16. It is immaterial whether he processes the raw material on his own machinery or on the machinery supplied by the merchants. What is required is that he should process the material for sale for the purpose of the trade or business of J the petitioners as an out-worker. The Akhadedar does not do any' trade or transact any business in jari. The sale is made by the other person who gives the materials to the Akhadedar. The question of control or supervision is not relevant. All that is necessary is that' the processing should be carried out in the house of the out-worker or in some other premises which is not under the control and management of the merchant. The three Committees which have elaborately considered the material gathered by them opined that Akhadedars arc not independent contractors. On the material placed before us we hold that employer and employee relationship exists between the petitioners and the Akhadedars. We therefore, hold that Akhadedars come within the sweep and ambit of the definition of 'employee' in Section 2(i).

17. In the result the petition fails and is accordingly dismissed. Rule discharged with costs.


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