Employees' State Insurance Corporation
& ANR Vs. Tata Engineering & Co. Locomotive Co. Ltd. & ANR [1975] INSC
251 (8 October 1975)
GOSWAMI, P.K.
GOSWAMI, P.K.
ALAGIRISWAMI, A.
UNTWALIA, N.L.
CITATION: 1976 AIR 66 1976 SCR (1) 199 1975
SCC (2) 835
ACT:
Employees State Insurance Act, 1948-Sec.
2(9)-An apprentice whether an employee.
HEADNOTE:
The appellant contended before the Industrial
Tribunal that the apprentices to which the Employees State Insurance Act, 1948
applies. The factory employs besides regular employees, two sets of
apprentices. Graduate apprentices for a period of two years and Trade
apprentices for the duration of 3 years. The graduate apprentices receive
stipend of Rs. 250/- per month for the first year and Rs. 300/- per month
during the second year. The trade apprentices receive stipend of Rs. 2/- Rs.
2.50 and Rs. 3.00 per diem during the first, second and third years of the
apprenticeship respectively. No further emolument is paid to the apprentices. A
deed of apprenticeship is signed by the company, the apprentice and the surety
by which the company agrees to provide to the apprentice necessary training in
its factory and that after the apprentices successfully pass the examination
after the training is completed they would be considered for absorption as
skilled worker although the Company is not under a legal obligation to offer
them employment. Another term provides that the apprentices would during the
period of apprenticeship diligently and faithfully serve the Company and to the
utmost power and skill attend to the Company's business. The apprentices give a
bond for serving the Company for 5 years after their training is successfully
completed.
The appellant contended before the Industrial
Tribunal that the apprentices are employees within the meaning of the Act. The
Tribunal did not accept the appellant's contention.
The High Court rejected the writ petition
filed by the appellant. On an appeal by certificate under Art. 133(1) (a) and
(b) of the Constitution it was contended by the appellant that the words
"serve the Company" appearing in the apprenticeship agreement
introduce a relation of master and servant.
HELD : (1) The word "apprentice" is
not defined in the Act. In ordinary acceptation of the term apprentice a
relationship of master and servant is not established in law. The dictionary
meaning does not accept such a relationship. The heart of the matter or the
dominant object in apprenticeship is the intent to impart on the part of the
employer and to accept on the part of the other person learning under certain
agreed terms. Such a person remains a learner and not an employee. The fact
that certain payment is made does not convert the apprentice into a regular
employee. An examination of the provisions of the entire agreement leads us to
the conclusion that the principal object with which the parties enter into the
agreement of apprenticeship was offering by me employer an opportunity to learn
the trade or craft and the other person to acquire such knowledge. [201F,
202D-F] (2) The Apprentices Act, 1850, defines an apprentice as a person who is
undergoing apprenticeship training in a designated trade in pursuance of a
contract of apprenticeship. Whenever the legislature intends to include an
apprentice in the definition of a worker it has expressly done so, for instance,
while defining a worker under s. 2 of the Industrial Disputes Act, 1947. The
very next year while passing the Employees State Insurance Act, 1948, the
Legislature did not choose to include apprentice while defining the word
employee. Such a deliberate omission on the part of the Legislature can be only
200 attributed to the well known concept of apprenticeship which the
Legislature assumed and took note of for the purpose of the Act. The
apprentices are not given the wages as defined by s. 2(22) of the Act. The
apprentices are not covered within the definition of the employees under s.
2(9) of the Act. They are not entitled to the daily allowances and other
allowances to which the regular employees are entitled. The apprentice is,
therefore, not an employee within the meaning of s. 2(9) of the Act. [202G-H,
203-B-D, 204-B-C]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 2113 of 1969.
From the Judgment and order dated the 3rd
May, 1966 of the Patna High Court at Patna in Misc. J. Case No. 289 of 1964.
G. L. Sanghi, S. P. Nayar and Girish Chandra,
for the Appellant.
M.C. Bhandare, O.C. Mathur, D. N. Mishra and
J.B.
Dadachanji for respondents.
The Judgment of the Court was delivered by
GOSWAMI, J. Is an apprentice an "employee" under the Employees State
Insurance Act, 1948 ? That is the question raised in this appeal by certificate
under article 133(1) (a) & (b) of the Constitution from the judgment of the
Patna High Court by which it refused to interfere with the order of the
Industrial Tribunal passed under section 73B of the Employees' State Insurance
Act, 1948 (briefly the Act).
The respondent is a public limited company
having its registered office at Bombay and its factory at Jamshedpur in the
State of Bihar. The Act is applicable to the company's factory. Besides regular
employees in the company, there are two sets of apprentices, namely, graduate
apprentices for a period of two years and trade apprentices for the duration of
three years. The graduate apprentices receive stipend of Rs. 250.00 per month
in the first year and Rs. 300.00 per month during the second year. The trade
apprentices receive stipend at the rate of Rs. 2.00, Rs. 2.50 and Rs. 3.00 per
diem during the first, second and third year of the apprenticeship
respectively. No other emoluments except the daily allowance or the monthly
stipends are paid by the company to the apprentices. A deed of apprenticeship
is signed by three parties, namely, the apprentice, his surety and the company
and it contains the terms and conditions of apprenticeship From the said terms
and conditions which are common for both sets of apprentices except for the
quantum of stipends and the duration, it appears that the company agrees to
provide the apprentice a combined theoretical and practical training in its
factory for the respective period above mentioned and the apprentice also binds
himself to serve the company for the purpose of the said training for the said
period. Clause (7) of the agreement provides that if the apprentice
successfully passes the examination after training he will be considered for
absorption as skilled worker although the company is under no legal obligation
to offer him employment. There are other conditions in the agreement with
regard to matters of discipline during the apprenticeship.
201 Our attention was particularly drawn to
the following provisions in the agreement:
"12. In consideration of the company
having agreed to give the Apprentice training in its Works (Automobile
Division) and to pay the apprentice the aforesaid daily allowance or stipend,
the apprentices and the surety as the father or guardian of the apprentice
jointly and severally covenant with the company as follows:- (i) That the
apprentice will during the whole of the said term of three years of training
diligently and faithfully serve the company and to the utmost power and skill
attend to the company's business at such places and times as the company or its
representatives shall direct.
* * * * * (v) The apprentice shall immediately
on the satisfactory completion of his training for the full term of three years
serve the company for a period of five years, if so required by the company on
such conditions as the company may offer having regard to his personal
qualifications or acquirements and complying with the Rules & Regulations
as are contained in the Works Standing Orders of the company".
Without citing all the terms and conditions
of the agreement, it is apparent that an apprentice is not in the regular
employment of the company.
It is, however, submitted on behalf of the
appellants that the words "serve the company" in clause 12(i), which
are repeated in clause (v), introduce a relationship of master and servant thus
constituting apprentice an employee as ordinarily understood. We attach no
special significance to the use of the words "serve the company" in
the above clauses.
The word 'apprentice' is not defined in the
Act, nor is it specifically referred to in the definition of 'employee' by
either inclusion or exclusion. We are unable to hold that in ordinary
acceptation of the term apprentice a relationship of master and servant is
established under the law. Even etymologically, as a matter of pure English,
"to serve apprenticeship means to undergo the training of an apprentice"
(Chamber's Dictionary). According to the Shorter Oxford English Dictionary
apprentice is "a learner of a craft; one who is bound by legal agreement
to serve an employer for a period of years, with a view to learn some
handicraft, trade, etc. in which the employer is reciprocally bound to instruct
him".
Stroud's Judicial Dictionary puts it thus:
"In legal acceptation, an apprentice is
a person bound to another for the purpose of learning his Trade, or Calling;
the 202 contract being of that nature that the master teaches and the other
serves the master with the intention of learning".
While dealing with the nature of the
relationship of master and servant in comparison with other relationships in
Halsbury's Laws of England, Third edition, Volume 25, the following passage
appears at para 877, pages 451-452:
"By a contract of apprenticeship a
person is bound to another for the purpose of learning a trade or calling, the
apprentice undertaking to serve the master for the purpose of being taught, and
the master undertaking to teach the apprentice. Where teaching on the part of
master or learning on the part of the other person is not the primary but only
an incidental object, the contract is one of service rather than of
apprenticeship; but, if the right of receiving instruction exists, a contract
does not become one of service because, to some extent, the person to whom it
refers does the kind of work, that is done by a servant, or because he receives
pecuniary remuneration for his work." The heart of the matter in
apprenticeship is, therefore, the dominant object and intent to impart on the
part of the employer and to accept on the part of the other person learning
under certain agreed terms. That certain payment is made during the
apprenticeship, by whatever name called, and that the apprentice has to be
under certain rules of discipline do not convert the apprentice to a regular
employee under the employer. Such a person remains a learner and is not an
employee. An examination of the provisions of the entire agreement leads us to
the conclusion that the principal object with which the parties enter into an
agreement of apprenticeship was offering by the employer an opportunity to
learn the trade or craft and the other person to acquire such theoretical or
practical knowledge that may be obtained in the course of the training. This is
the primary feature that is obvious in the agreement.
Now coming to the legislative history of our
country on the subject, it is interesting to note that more than hundred years
back we had the Apprentices Act, 1850 and its preamble says "For better
enabling children, and especially orphans and poor children brought up by
public charity, to learn trades, crafts and employments, by which, when they
come to full age, they may gain a livelihood......".
Learning of craft or trade was the essence of
the said legislation. This Act was repealed by section 38 of the Apprentices
Act, 1961. The object of 1961 Act is to provide for the regulation and control
of training of Apprentices in trades and for matters connected therewith. By
the definition clause under this Act, namely, section 2(a) "'apprentice'
means a person who is undergoing apprenticeship training in a designated trade
in pursuance of a contract of apprenticeship". It is, therefore, inherent
in the word 'apprentice' that there is no element of employment as such in a
trade or industry but only an adequate 203 well-guarded provision for training
to enable the trainee after completion of his course to be suitably absorbed in
earning employment as a regular worker. The fact that a trainee may have been
absorbed in the company where he is undergoing the training, is not relevant
for the purpose of comprehending the content of term.
Again we find that where the legislature
intends to include apprentice in the definition of a worker it has expressly
done so. For example, the Industrial Disputes Act, 1947, which is a piece of
beneficial labour welfare legislation of considerable amplitude defines
'workmen' under section 2(s) of that Act and includes apprentice in express
terms. It is significant that although the legislature was aware of this
definition under section 2(s) under the Industrial Disputes Act, 1947, the very
following year while passing the Employees' State Insurance Act, 1948, it did
not choose to include apprentice while defining the word 'employee' under section
2(9) of the Employees' State Insurance Act, 1948. Such a deliberate omission on
the part of the legislature can be only attributed to the well-known concept of
apprenticeship which the legislature assumed and took note of for the purpose
of the Act. This is not to say that if the legislature intended it could not
have enlarged the definition of the word 'employee' even to include the
'apprentice' but the legislature did not choose to do so.
Even then the question is whether such an
apprentice is an employee within the meaning of the term under section 2(9) of
the Act. If the answer is yes, he will be governed by the Act and the
appellants' claim for charging the company with liability for payment of
special contribution under Chapter VA of the Act in respect of the apprentice
will be justified.
We may, therefore, turn to the definition of
'employee' under section 2(9) of the Act. So far as is material, section 2(9)
reads as follows:- " 'employee' means any person employed for wages in or
in connection with the work of a factory or establishment to which this Act
applies and- (i) who is directly employed by the principal employer in any work
of, or incidental or preliminary to or connected with the work of, the factory
or establishment, whether such work is done by the employee in the factory or
establishment or elsewhere....." It is clear that in order to be an employee
a person must be employed for wages in the work of a factory or establishment
or in connection with the work of a factory or establishment. Wages is defined
under section 2(22) and "means all remuneration paid or payable in cash to
an employee, if the terms of the contract of employment, express or implied,
were fulfilled and included any payment to an employee in respect of any period
of authorised leave, lockout, strike which is not illegal or layoff and other
additional remuneration, if any, paid at intervals not exceeding two months,
but does not include......" 204 From the terms of the agreement it is
clear that apprentices are more trainees for a particular period or a distinct
purpose and the employer is not bound to employ them in their works after the
period of training is over.
During the apprenticeship they cannot be said
to be employed in the work of the company or in connection with the work of the
company. That would have been so if they were employed in a regular way by the
company. On the other hand the purpose of the engagement under the particular
scheme is only to offer training under certain terms and conditions.
Besides, the apprentices are not given wages
within the meaning of that term under the Act. If they were regular employees
under the Act, they would have been entitled to additional remuneration such as
daily allowance and other allowances which are available to the regular
employees. We are, therefore, unable to hold that the apprentice is an employee
within the meaning of section 2(9) of the Act.
Incidentally we may note that section 18 of
the Apprentices Act, 1961, provides that- "save as otherwise provided in
this Act, every apprentice undergoing apprenticeship training in a designated
trade in an establishment shall be a trainee and not a worker...." The
concept of apprenticeship is, therefore, fairly known and has now been clearly
recognised in the Apprentices Act. Apart from that, as we have noticed earlier,
the terms and conditions under which these apprentices are engaged or not give
any scope for holding that they are employed in the work of the company or in
connection with its work for wages within the meaning of section 2(9) of the
Act. The appeal, therefore, fails and is dismissed. There will be, however, no
order as to costs.
P.H.P. Appeal dismissed.
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