C.E.S.C.
Ltd. Vs. Subhash Chandra Bose & Ors [1991] INSC 297 (15 November 1991)
Misra,
Rangnath (Cj) Misra, Rangnath (Cj) Punchhi, M.M. Ramaswamy, K.
CITATION:
1992 AIR 573 1991 SCR Supl. (2) 267 1992 SCC (1) 441 JT 1991 (6) 373 1991 SCALE
(2)996
ACT:
Employees' State
Insurance Act, 1948----Section 2(9)--"Employee"
---Definition---Employees of contractor under works contract--Whether covereel
under Right of principal employer to reject or accept work done by contrac- tor
through his employees whether includes "supervision" Emplovees 'State
Insurance Act, 1948---Object and purpose of Interpretation of
Statutes---Constitution of India, 1950 (preamble. Chapter IV) and Employees 'State
Insurance Act, 1943 [Section 2(9)]---Construction of-strict interpretation when
leads to unjust situation, duty of Judges, indicated.
Constitution
of India, 1950---Articles 39,21--Health and
strength of workers--Medical care and health. facilities---Purpose of--Right to
social justice--Whether fundamental--Right to health Nature of.
Words
and phrases--"Health ", "Supervision ", "To super.
vise
"--Construction.
Indian
Contract Act, 1872--Sections 182, 184, 23--"Agent",
"Principal" Meaning--'Agent' u/s. 2(9) (ii) of the Employees' State
Insurance Act, 1948--Construction---Method indicated--Contractor under a works
contract whether agent of Corporation.
HEAD NOTE:
The
appellant-Corporation engaged the respondents-con- tractors to carry out work
of excavation, conversion of over-head electric lines and laying of underground
cables under public roads and for repair and maintenance.
On
26.8.1975, the Regional Director of the Employees' State Insurance Corporation
noticed the appellant that the employees, whose wages were being paid through
the respond- ents-contractors, would come under the provisions of Section 2(9)
of the Employees' State Insurance Act, 1948.
268
The appellant directed the representative body of the contractors--respondents'
Association-to comply with the provisions of the Act immediately, failing which
a lumpsum of 7% would be deducted from their bills. When the respond- ents'
Association refused to carry out such obligation, the appellant started to
deduct the E.S.I. contribution amount at the rate of 10% from their bills from
1984 and continued deducting till 1985.
The
respondents-contractors challenged the deductions from bills by filing a writ
petition before the High Court, contending thai for carrying out their
contracts, the re- spondents were not supervised by the appellant, the princi-
pal employer and they were carrying out the allotted work under the contracts
of sites outside the factory establish- ment of the appellant and that the
employees of the respond- ents did not come within the definition of the term,
'em- ployee' under section 2(9) of the Act.
On
23.3.1984, the Single Judge of the High Court passed an interim order
permitting the appellant to respond to the notice issued by the E.S.I.C. and
staying the realisation of the E.S.I. contribution from the
respondent-contractors.
On
30.3.1985, under section 45-A of the Act, the Region- al Director, E.S.I.C.
held that the appellant was liable to pay the E.S.I. contribution in respect of
the employees of its contractors and directed to pay the same.
The
appellant challenged that order under Article 226 of the Constitution of India
by filing another writ petition.
The
Single Judge hearing both the writ petitions togeth- er, dismissed them,
holding that the ultimate supervision was that of the appellant and hence the
Act was applicable.
Following
the decision of this Court in M.G. Beedi Works case (AIR 1974 SC 1952), the
Single Judge further held that the respondents-contractors were agents of the
appellant--the principal employer, and that the appellant the principal
employer could not escape the liability for the works of its agents - the
respondents - contractors.
The
Division Bench, in appeal, reversed the judgment of the Single Judge, against
which the present appeals by special leave were made to this Court posing the
question--whether on the facts, the right of the principal employer to reject
or accept work on 269 completion, on scrutinizing compliance with job require- ments,
as accomplished by a contractor, the immediate em- ployer, through his
employees, is in itself an effective and meaningful 'supervision' as envisaged
under section 2(9) of the E.S.I. Act, 1948?" The appellants contended that
the High Court fell in error in giving a restricted meaning to the word, 'supervi-
sion', occurring in section 2(9) of the Act and in taking out the final act of
rejection or acceptance of work from the purview of that word.
Dismissing
the appeals, this Court, HELD: Per Ranganath Misra, CJ.
1. The
legislative intention should have been brought out more clearly by undertaking
appropriate legislation once this Court took a different view. The legislation
is benefi- cial and if by interpretation put by the Court the intention is not
properly brought out it becomes a matter for the legislature to attend to. [278
E] Per M.M. Punchhi. J.
1. In
whatever manner the word 'employee' under Section 2(9) be construed, liberally
or restrictidly, the construc- tion cannot go to the extent of ruling out the
function and role of the immediate employer or obliterating the distance
between the principal employer and the immediate employer.
In
some situations he is the cut-off. He is the one who stumbles in the way of
direct nexus being established, unless statutorily fictioned, between the
employee and the principal employer. He is the one who in a given situation is
the principal employer to the employee, directly employed under him. If the
work by the employee is conducted under the immediate gaze or overseeing of the
principal employer, or his agent, subject to other conditions as envisaged
being fulfilled, he would be an employee for the purpose of sec- tion 2(9).
[284 B-D]
2. In
the ordinary dictional sense "to supervise" means to direct or
over-see the performance or operation of an activity and to over-see it, watch
over and direct. It is work under eye and gaze of someone, who can immediately
direct a corrective and tender advice. In the textual sense 'supervision' of
the principal employer or his agent is on 'work' at the places envisaged and
the word 'work' can neither be construed so broadly to be the final act of 270
acceptance or rejection of work, nor so narrowly so as to be supervision at all
times and at each and every step of the work. A harmonious construction alone
would help carry out the purpose of the Act, which would mean moderating the
two extremes. [284 G-H]
3.
When the employee is put to work under the eye and gaze of the principal
employer, or his agent, where he can be watched secretly, accidently, or
occasionally, while the work is in progress, so as to Scrutinise the quality
thereof and to detect faults therein, as also put to timely remedial measures
by directions given, finally leading to the satis- factory,completion and
acceptance of the work, that would be supervision for the purposes of Section
2(9) of the Act. It is the consistency of vigil, the proverbial 'a stich in
time saves nine'. The standards of vigil would of course depend on the facts of
each case. [284 H-285 B]
4.
Section 182 of the Indian Contract Act, 1872 defines "agent" as a
person employed to do any act or to represent another in dealing with third
persons, the person for whom such act is done, or is so represented is called
the "prin- cipal". Section 184 of the said Act further provides that
as between Principal and the third person any person may become a, agent so as
to be responsible to his principal. [288 E]
5. The
agent has an identity distinct from his Princi- pal in one sense and a
fictional identity with his Principal in the other. The agreement nowhere
amalgamates the identity of the electrical contractor with that of the
principal (C.E.S.C.) by undertaking to provide adequate supervision for the
purposes of the Act, on behalf of the C.E.S.C. The agreement no doubt provides
that the electrical contractor would provide adequate supervision while
carrying on with the work, the purpose dominant is to safeguard obtaining
quality work and safety safeguards and to conform to the provisions of the
Electricity Supply Act. [288 E-G]
6. The
creation or deduction of principal-agent rela- tionship throws one towards the
statutory scheme of keeping distinct the concept of the principal and immediate
employ- er, because of diverse and distinct roles. [285 D]
7. The
electrical contractor is obliged to provide competent supervision while
carrying out the work. The electrical contractor 271 is otherwise a licensee
under the Indian Electricity Act and the Rules made thereunder. [286 C]
8. The
principal employer can not delegate the function of supervision to his agent
who in the eye of law is his second self, i.e., a substitute of the principal
employer.
The
immediate employer can by statutory compulsion never be the agent of the
principal employer. If such a relationship is permitted to be established, it
would, not only obliter- ate the distinction between the two, but would violate
the provisions of the Act as well as the contractual principle that a
contractor and a contractee cannot be the same per- son. [285 B-C]
9. Checking
of work after the same is completed and supervision of work while in progress
is not the same. These have different perceptions. Checking of work on its comple-
tion is an activity, the purpose of which is to finally accept or reject the
work, on the touchstone of job specifi- cations. Thereafter if accepted, it has
to be paid on the acceptance of the work. This step by no means is supervision
exercised. It cannot be the terminating point of an agency when the interests
of the so called principal and the so called agent become business-like. [288
H-289 B]
10.
Supervision rested with persons holding valid cer- tificates of competency for
which a register of supervision was required under the licence to be
maintained. [289 C]
11.
Under the contracts, the electrical contractors cannot in one breath be termed
as agents of the C.E.S.C.
undertaking
supervision of the work of their employees and innately under the licence to
have beforehand delegated that function to the holder of the certificate of
competency.
[289
C-D]
12.
Even if, the terms of the contract and the terms and conditions of the licence,
the first being at the behest of the C.E.S.C. and the second being at the
behest of the Government, be suggested to be complementing each other, still
these cannot be so interplayed to mean that an agency, express or implied, has
been created by the C.E.S.C. in favour of the electrical contractor appointing
him to super- vise work as envisaged under Section 2(9) of the Act, and thus to
have established a direct link between the employee and the C.E.S.C. to the
exclusion of the electrical contrac- tor. [288 C-D]
13. On
the terms of the contract read with or without the terms of the licence, no
such agency, factually or legally, stood ere- 272 ated on behalf of the
C.E.S.C. in favour of the electrical contractors, and none could be, as that
would violate the statutory scheme of distinction well marked under Section
2(9) of the Act. The supervision taken was to fulfil a contractual obligation simplicitor.
[289 D]
14.
The employees of the electrical contractors, on the facts and circumstances do
not come in the grip of the Act and thus all demands made towards ESI
contribution made against the C.E.S.C. and the electrical contractors were
invalid. [289 E-F] M.G. Beedi Works v. Union
of lndia, AIR 1974 SC 1952;
Royal
Talkies v. E.S.I.C, [1979] 1 SCR 80; Regional Director E.S.I.C. Trichur v. Ramanuja
Match Industries, [1985] 2 SCR 119; M/s. P.M. Patel & Sons & Others v. Union of India & Ors. [1986]1 SCC 32; The
Superintendent of Post Offices etc.
etc., v.P.K.
Rajamma etc. etc., AIR 1977 SC 1677, referred to.
Halsbury's
Laws of England (Hailsham Edition) Vol-1 at page
193, referred to.
Per K.
Ramaswamy, J. (Dissenting)
1. The
Employees' State Insurance Act, 1948 seeks to serve the twin objects namely,
social security, i.e., medi- cal benefits in case of sickness, maternity and
employment injury and other matters relating thereto and to augment the
efficient performance of the duty. [289 H-290 A]
2.
Section 2(9) of the Act encompasscs employees em- ployed for wages in or in
connection with the work of a factory or establishment to which the Act applies
(i) who arc directly employed by the principal employer or (ii) employed by or
through "an immediate employer"; and whose services are temporarily
lent or let on hire to the princi- pal employer by the person with whom the
person is entered into a contract of service. [293 B-C]
3.
Clause 2(9)(ii) (applicable to the facts on hand) attracts a person employed by
or through an immediate em- ployer as an employee of the principal employer
provided the f. flowing conditions are satisfied, namely, (1) the immedi- ate
employer employs an employee on the premises of the factory or establishment of
the principal employer; (2) or "under the supervision of the principal
employer". (3) "his agent" on work which is ordinarily part of
the 273 work of the factory or establishment or which is preliminary to the
work carried out in or incidental to the purpose of the factory or
establishment. [293 C-D]
4.
Article 39(2) of the Constitution enjoins the State to direct its policies to
secure the health and strength of workers. The right to social justice is a
fundamental right.
Right
to livelihood springs from the right to life guaran- teed under Art. 21. The
health and strength of a worker is an integral facet of right to life. The aim
of fundamental rights is to create an egalitarian society to free all citizens
from coercion or restrictions by society and to make liberty available for all.
Right to human dignity, development of personality, social protection, right to
rest and leisure as fundamcntal human rights to common man mean nothing more
than the status without means. To the tillers of the soil, wage earners, labourers,
wood cutters, rickshaw pullers, scavengers and hut dwellers, the civil and politi-
cal rights are 'mere cosmetic" rights. Socio-economic and cultural rights
are their means and relevant to them to realise the basic aspirations of
meaningful right to life. [293 F-H]
5. The
Universal Declaration of Human Rights, Interna- tional Conventions of Economic,
Social and Cultural Rights rccognise their needs which include right to food,
clothing, housing, education, right to work, leizure, fair wages, decent
working conditions, social security, right to physi- cal or mental health,
protection of their families as inte- gral part of the right to life. Our
Constitution in the Preamble and Part IV reinforce them compendiously as social
economic justice, a bed-rock to an egalitarian social order.
The
right to social and economic justice is thus fundamental right. [293 H-294 B]
6. The
term 'health' implies more than an absence of sickness. Medical care and health
facilities not only project against sickness but also ensures stable man power
for economic development. Facilities of health and medical care generate
devotion and dedication to give the workers' best, physically as well as
mentally in productivity. It enables the worker to enjoy the fruit of his labour,
to keep him physically fit and mentally alert for leading a success- ful,
economic, social and cultural life. The medical facili- ties, arc thcrefore,
part of social security and like gilt edged security, it would yield immediate
return in the increased production or at any rate reduce absenteeism on grounds
of sickness, etc. health is thus a state of complete physical, menial and social
well being and nut merely the absence of disease or infirmity. [294 E-G] 274
7.
Right to health is a fundamental human right to workmen. The maintenance of
health is a most imperative constitutional goal whose realisation requires
interaction by many social and economic factors. Just and favourable condition
of work implies to ensure safe and healthy working conditions to the workmen.
The periodical medical treatment invigorates the health of the workmen and
harnesses their human resources. Prevention of occupational disabilities
generates devotion and dedication to duty and enthuse the workmen to render
efficient service which is a valuable asset for greater productivity to the
employer and national production to the State. [294 H - 29S B] 8.The Employees'
State Insurance Act aims at relieving the employees from health and
occupational hazards. The interpretation calls for in this case is of the
meaning of the meanings 'supervision' and 'agent' in s.2(9)(ii) of the Act. The
legal interpretation is not an activity sui gener- is. The purpose of the
enactment is the touch-stone of interpretation and every effort would be to
give effect to it. The judge acts as a vehicle of communication between the
authors and the recipients. The end result is to promote rule of law and to
enliven social order and humane rela- tions. [295 C-D]
9. In
an attempt to construe the provisions of the statute, construction, as a
balancing wheel, should be meaningful so as to make the statute workable and
not to render it futile or sterile. Whenever strict interpretation of the
statute gives rise to unjust situation or results, the Judges can ensure their
good sense to remedy it by reading words in, if necessary, so as to do what
Parliament would have done had they had the situation in mind. The meaning of
the same words in a statute may be mended in the laborynth of interpretation
and may be enlarged or restrict- ed in order to harmonise them with the
legislative intention of the entire statute. The spirit of the statute would
prevail over the literal meaning. The jurisprudence and principle, therefore,
in such a situation, would be the contextual interpretation to subserve the
constitutional scheme and to alongate the legislative purpose, harmonising the
individual interest with the community good so as to effectuate social
transformation envisioned in the preamble of the Constitution. [297 D-F]
10.
The word "supervision" is not one of precise import and is broad
enough to require either supervisor's constant presence during work supervised
or his devotion thereto if only time necessary to see that it complies with
contract specifications, advise as to details, prepare necessary sketches and
drawings, etc. [298 C] 275
11.
The Employees' State Insurance Act does not give its own definition of the word
"supervision". Therefore, it must be construed in the context the
ultimate purpose the Act aims to serve and the object behind the Act, i.e. to
extend sickness benefits and to relieve the employee from occupa- tional
hazards consistent with the constitutional and human rights scheme. Under the
Electricity Act and the Rules, the Corporation, licencee, is enjoined to
perform the acts and duties contemplated thereunder to lay overhead lines,
under- ground cables, their repairs and maintenance there of, etc.
It authorised,
under the contract, the immediate employer to perform, on its behalf, those
acts and duties. The immediate employer would get the work done through their
employees employed for that purpose. It is not a sporadic work but a constant
and an ongoing process, so long as the licencee generates, transmits and
supplies electrical energy to the consumers of their supply area. Had the
principal employer performed those acts and duties through its employees,
indisputably, their employees would be covered under the Act, though the work
was got done at highways or at places other than the factory or the
establishment. When the prin- cipal employer authorises the respondents as its
contractors under contracts the need for constant supervision is obviat- ed
relegating that function to its immediate employers.
Otherwise
the need for contracts would be redundant. The Corporation retained, under the
contract, the power of acceptance or rejection of the work done or supervision
effected in maintenance of the work got done by the immedi- ate employer,
subject to overall supervision by the Electri- cal Inspector, on behalf of the
State Government. The super- vision in the fact situation is not the day to day
supervi- sion but legal control, i.e. right to accept or reject the work done
or maintenance effected. The exercise of right of acceptance or rejection is
the supervision as envisaged in the contract between the principal employer and
the immedi- ate employer. It would supply the needed unifying or con- necting
thread between the constitutional creed of social justice i.e., social security
under the Act and supervision of the acts or duties by the principal employer vis-a-vis
the employees of the immediate employer under the contract who ultimately
perform them on behalf of the principal employer. Undoubtedly in a bilateral
contract between the corporation and the respondents qua their rights and liabil-
ities under the contracts, strict interpretation of the words cngrafted
therein, be of paramount relevance and call for attention as per Contract Act.
[301 C-302 B]
12. In
the context of the statutory interpretation of "supervision" under
the Act of the works undertaken under the contract, the 276 interest of the
workmen or the welfare schemes for the employees under the Act interposed and
call attention to and need primacy. In its construction the courts must adopt
contextual approach to effectuate the statutory animation, namely, social
security. The literal interpretation would feed injustice in perpetuity denying
to the employees of sickness benefit etc. under the Act, which would be
avoided, lest the purpose of the Act would be frustrated. [302 B-C]
13.
The application of the golden rule to the word "agency" under the
Indian Contract Act between the respond- ents and the corporation, perhaps,
does not encompass agency in strict sense under the Act. But public policy of
the Act, the constitutional and human right's philosophy to provide social
security to protect the health and strength of the workers must be kept at the
back of the mind to construe the word "agent" under s. 2 (9) (ii) of
the Act, in contradis- tinction with the bilateral stipulations under the
contract.
In
this regard public policy interposes and plays a vital role to read into the
contracts the extended meaning of agency to bring about connecting links
between the respond- ents and the licencee corporation. Lest the contract, if
intended to deny welfare benefits to workmen, would be opposed to public'
policy and would become void under s. 23 of the Indian Contract Act. Such an
intention would be avoided by reading into the contract the extended meaning of
agency but not fiduciary. [302 E-G]
14.
The contractors, respondents, knew at the date of the agreements that the
Corporation, as principal employer, is under statutory obligation to execute or
keep executed the works and keep them repaired and maintained as an inte- gral
activity of generation, transmission and distribution of the electrical energy
to the consumers within their area of supply. On authorisation, the respondents
execute and keep executed the works and repairs or kept them repaired and the
maintenance thereof effected through their employ- ees, which in law is on
behalf of the Corporation, principal employer. The genesis and aim of the
transaction was to act on behalf of the Corporation. The agency of the
respondent with the Corporation, thus, springs into being. The prohibi- tion of
the qualified supervisors, while in service of the respondents, to disengage
themselves with third parties in terms of the contract was only to extract
unstinted and exclusive devotion to duty and no further. It stands no
impediment to construe that/he respondents are agents to the Corporation as
immediate employers. [303 F-H] 277
15. The
employees working under the respondents perform their duties in execution of
the works, repairs and mainte- nance thereof in connection with the generation,
transmis- sion and distribution of the electrical energy by the Corpo- ration
licensee. The Corporation is the principal employer.
The
respondents' immediate employers execute the work etc.
under
the supervision of the Corporation as its agents.
Their
employees, in law, work under the supervision of the principal employer,
corporation. They are covered under s.2(9) (ii) of the Act entitling to the
sickness benefits, etc. envisaged therein and the respondents are liable to
make their contribution to the Employees' Insurance Fund. [304 A-B]
Senior
Electric Inspector & Ors. v. Laxmi Naravan Chopra
Muddala
Veeramallapa & Ors., [1961] 2 SCR 295 at p. 313;
Massachusetts
Bonding & Insurance Co. v. United States of America, 352 US 128, 1 Led 2d
189; Atma Ram Mittal v. Ishwar Singh Punia, [1988] 4 SCC 284; Owen v. Evans
& Owen (Build- ers) Ltd., 1962(1) Weekly Law Reports 933; Regional Direc- tor,
E.S.I.C v. South India Flour Mills (P) Ltd., 1986 (69) F.J.R. 77; A.P. State Electricitv
Board v.E.S.I.C, Hydera- bad, [1977] 51 F JR 171(A.P.); Regional Director. E.S.I.C,
Bangalore v. Davangere Cotton Mills, [1977] 2
LLJ 404; E.S.I.C Chandigarh v. Oswal Woolien Mills Ltd., [1980] 57 F JR 171
(P&H) (F.B.); Birohichand Sharma v. First Civil Judge, Nagpur & Ors.,
[1961] 3 SCR 161; D.C Dewan Mohideen Sahib & Sons v. The Industrial
Tribunal. Madras, [1964] 7 SCR 646; Nagpur Electric Light & Power Co. Ltd.
v. Regional Director E.S.I.C, [1967] 3 SCR Reprint 92; Kirloskar, Pneu- matic
Co. Ltd. v.E.S.I.C, [1987] 70 FJR 199 (Bom.); Royal Talkies, Hyderabad &
Ors. v.E.S.I.C, [1979] 1 SCR 80; M/S. P.M. Patel & Sons & Ors. v. Union
of India & Ors., [1986] 1 SCC 32, Superintendent of Post Office v.P.K. Rajamma,
[1977] 3 SCR 678; Prenn v. Simmonds, 1971 (1) Weekly Law Reports 1381 (H.L.),
referred to.
World Labour
Report - 2, at Chapter 9 (Safety and Health); Lawyer Oct. 1987 Page 5; Report
of the Committee on Labour Welfare, 1969 in paragraph 5.77 of Chapter 5;
Webster Comprehensive Dictionary (International Edition) at page 1260, in Vol,
1I; Corpus Juris Secundum, Vol. 83 at page 900; The Words and Phrases.
Permanent Edition, Vol. 40A; Halsbury's Laws of England (Hailsham Edition);
Chitty on Contracts, 26th Edition, paragraph 2502 at page 4, A.G.Guest:Anson's
Law of Contract, 26th Edition, at page 308 - referred to.
278
& CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3197-98 of 1988.
From
the Judgment and Order dated 4.4.1988 of the Calcutta High Court in Appeal Nos.
16 and 438 of 1986.
P.P. Rao,
M.K. Ramamurthy, S.S. Ray, Raj Kumar Gupta, V.J. Francis, N.M. PopIi, S.K. Nandy,
P.K. Dutta and A.D. Sikri for the appearing parties.
The
Judgment of the Court was delivered by RANGANATH MISRA, CJ. I have had the
advantage of perus- ing the draft judgments prepared by my learned brethren Punchhi
and Ramaswamy, JJ. While Justice Punchhi has gone by the literal construction
of the statute, brother Ramaswamy has tried to find out the spirit of the
legislation and with a view to conferring the benefit on the workmen, has
adopted a construction different from the reported decision of this ) Court.
I
agree with Justice Punchhi that the appeals should be dismissed and the
judgment of the Division Bench should be sustained. At the same time, 1 would
like to add that the legislative intention should have been brought out more
clearly by undertaking appropriate legislation once this Court took a different
view in the decision referred to in brother Punchhi's judgment. The legislation
is beneficial and if by interpretation put by the Court the intention is not
properly brought out it becomes a matter for the legi- siatture to attend to.
PUNCHHI,
J. The sole question which falls for determi- nation in these appeals is,
whether on the facts found, the right of the Principal employer to reject or
accept work on completion, on scrutinizing compliance with job require- ments,
as accomplished by a contractor, the immediate em- ployer, through his
employees. is in itself an effective and meaningful "supervision" as
envisaged under Section 2(9) of the Employees' State Insurance Act, 19,;8 (,for
short the Act)? The said provision, as it stood at the relevant time, is set
out below, as is relevant for our purpose:- "2(.9') - 'employee' means any
person em- ployed 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 on any work of, or inciden- tal or preliminary to or
connected 279 with the work of, the factory or establish- ment, whether such
work is done by the employ- ee in the factory or establishment or else- where;
or (ii) who is employed by or through an immediate employer on the premises of
the factory or establishment or under the supervi- sion of the principal
employer or his agent on work which is ordinarily part of the work of the
factory or establishment or which is preliminary to the work carried on in or
incidental to the purpose of the factory or establishment; or (iii) whose
services are temporarily lent or let on hire to the principal employer by the
person with whom the person whose services are so lent or let on hire has
entered into a contract of service;
The
Calcutta Electricity Supply Corporation (India) Ltd., hereinafter referred to
as the C.E.S.C. engages var- ious contractors to carry out work of excavation,
conversion of overhead electric lines and laying of underground cables under
public roads, as well as for repair and maintenance of the aforesaid works. Subhash
Chandra Bose & some others, the private respondents herein, were given such
contracts, terms and conditions in respect of each were reduced to writing.
They
would be adverted to at the appropriate time common as they are to all. The
C.E.S.C. was on notice alerted by the Regional Director of the Employees State
Insurance Corpora- tion (for short 'E.S.I.C. ') by means of communication dated
26August,1975 that the employees whose wages were being paid through such a
contractor would fall within the scope of Section 2(9) of the Act and for
reasons and details men- tioned in the communication. Thereupon the C.E.S.C. on
its part engaged in correspondence with the Association of Electrical
Contractors of Eastern India, a representative body of the contractors who are parties
respondents herein, requiring them to comply with the provisions of the said
Act immediately or else it will deduct a lumpsum of 7% from their bills. The Association
questioned the move and strong- ly refuted such obligation. After indulging in
some corre- spondence on the subject, the C.E.S.C. started making deduc- tions
from their bills on account of contribution to the Employees State Insurance
Fund on and from 1984 and contin- ued deducting till 1985 at the rate of 10%.
Some more corre- spondence ensued, but in vain.
The
electrical contractors then moved the High Court of Calcutta on December 6,
1985 by means of a writ petition under Article 226 of the Constitution against
the E.S.I.C.
and
its officers as also the C.E.S.C. as 280 well as the Union of India so as to
have the entire basis of the demand and deductions from bills annulled. It was
the categoric stand of the writ petitioners that for carrying out their
contracts they were not supervised by the C.E.S.C., the principal employer, and
they were carrying out works allotted to them at sites outside the factory estab-
lishment of the C.E.S.C. Claiming that there employees did not come within the
definition of the; term 'employee' in Section 2(9) of the Act, they required of
the High Court to determine this jurisdictional fact and issue the asked for
writ, direction or order appropriate in the case to have it nipped in the bud.
The matter was enter`ained by the High Court and was heard on affidavits. The
dispute necessarily centred round as to whether the C.E.S.C. exercised any
supervision while the contracts were being executed, and as to whether the
terms thereof, assuming that they were faith- fully observed. amounted to work
being carried out under the supervision and gaze of the C.E.S.C. The respective
parties put in supportive affidavits to their respective stands. A learned
Single Judge of the High Court, when seized of the matter, on March 23, 1984,
passed an interim order, giving leave to the C.E.S.C. to respond to the notice
issued by the E.S.I.C. and avail of the opportunity of being heard. as required
by law, and till then stayed the realisation of the contribution. The matter
was then thrashed by the Regional Director of the E.S.I.C., who on March 30,
1985, passed an order under Section 45-A of the Act holding that the C.E.S.C.
was liable to pay Rs. 16,21,564.05 on account of contribution to the Employees
State Insurance in respect of employees of its contractors and askedil to pay
the same within the time allotted. This order of the Regional Direc- tor of the
E.S.I.C. gave legitimacy to the deductions from the bills of the private
electrical contractors already made by the C.E.S.C. But sinceil was otherwise
aggrieved of the foisting of the obligation, it moved another writ petition of
its own under Article 226 of the Constitution against the E.S.I.C. and others
claiming that it was not obliged to demand contributions on account of
insurance in: respect of the employees of the electrical contractors.
These
two writ petitions were beard together and were dismissed by a learned Single
Judge of the High Court on January 11, 1986. The learned Single Judge construed
the contracts between the electrical contractors and ire C.S.E.C., whereunder
the contractors were obliged to super- vise on their own the work undertaken,
so as to held that in the facts and circumstances of the case the ultimate
super- vision was that of the E.S.I.C.,and hence the Act was ap- plicable. The
learned Single Judge also took the view that the Act being a beneficial piece
of legislation, enacted for the protection and benefit of workers, required
liberal interepretation, as was held by this Court in M.G. Beedi Works v. Union
of India, AIR 1974 SC 1952, and then proceed- ed to hold that the contractors
as supervisors were in the nature of agents of the C.E.S.C., the principal
employer.
The
learned 281 Single Judge also took the view that since ultimate energis- ing of
the transmission lines was invariably effected by the C.E.S.C. after proper
checks were effected for laying of cables or other maintenance work, that step
by itself was "supervision' so as to attract the provisions of the Act.
Such
finding was based on the fact that even though the agreement specified that
work was to be done under the supervision of the electrical contractor the
C.ES.C. re- tained the ultimate power or supervision and in fact did supervise
the work executed by the contractors. It is then that the learned Single Judge
abruptly come to the conclu- sion that the principal employer could not escape
the li- ability for the works of his contractors, as the latter was acting as
the agent of the principal, ,'red in sense contin- ued the view of the Regional
Director of the E.S.I.C.
Two
appeals were filed against the dismissal of the two writ petitions before the
Division Bench of the High Court who, after re-considering the matter, reversed
the learned Single Judge, which has given cause for these appeals by special
leave and the poser of the question mentioned at the outset.
Now it
is noteworthy that the Regional Director of the E.S.I.C. drew deductions of
facts in his impugned order dated March 30,1985 in this manner:
"The
job which is performed by these employees engaged through the contractors. was princi-
pally maintenance and distribution of elec- tricity generated by the C.E.S.C.
and also consumers' service. It was conceded during the course of hearing that
after the work entrust- ed to such contractors was completed, it was subject to
checking by C.E.S.C. for compliance with their job specifications and the work
related to main business of the C.E.S.C. It cannot therefore be argued that
merely because such job was performed outside the factory premises as stated,
it did not concern the C.E.S.C. The definition of the term 'premises' includes
such work site where the job of the factory is being done. 1 cannot agree
there- fore with the argument that such .job was not done for the factory
and/or that there was no supervision of the C.E.S.C. over such job. It could
not but be a fact that ( E. ,S. C. was executing its own job through lite
agency of the coontractors engaged by them. The C.E.S.C's contention that they
have acted upon the guidelines as provided in the letter dated 26.8.75 does not
hold good as the letter dated 26.8.75, Annexure E, issued by the Regional
Director of E.S'.I. Corporation. does not hold good as the said letter only
con- 282 tained broad guidelines regarding provisions of the E.S.I. Act and the
truth has to be ascertained from the realities of the situa- tion". [underlining
ours] In place thereof the Division Bench of the High Court taking stock of the
admitted facts opined as follows:
"There
is no dispute that respondent no.4 (ESIC) is the principal employer in respect
of the said work and that the appellants (elec- trical contractors) are the
immediate employ- ers of the said employees in connection with the said work.
There is no dispute that the employees of the appellants are not directly
employed by the respondent no.4 (ESlC). There is also no dispute that the
employees of the appellants (electrical contractors) do not carry out the
aforesaid work either in the premises or the factory or establishment of
respondent no. 4 (E.S.I.C.). It is also not disputed that the work which is
carried out by the employees of the appellants (electrical contractors) can be
stated to be work ordi- narily part of the work of the respondent no.4 (ESIC)
or preliminary or incidental to such work. The only dispute appears to be
whether there is any supervision of the employees of the appellants (electrical
contractors) by the respondent no.4 (E.S.I.C.) or its agents." [bracketing
ours] Commenting on the impugned order of the Regional Director of the E.S.I.C.
dated March 30, 1985 afore-extract- ed, the Division Bench observed as follows:
"It
has not been found by the respondent no.2 (Regional Director) as a fact that in
carrying out the aforesaid work the employees of the appellants are under the
supervision of the respondent no.4 or its agents. All that has been found is
that after the works which are entrusted to the appellants axe completed, the
same are checked by the respondent no.4. From the aforesaid it is obvious that
it has not been found by the ESI Authorities that there is actual supervision
by the respondent no.4 or its agents of the aforesaid works which are performed
by the employees of the appellants.
All
that has been found is that after the aforesaid work is completed the
respondent no.4 checks the same. In our view, checking of a work after the same
is completed and super- vision of the same while the same is being performed
are entirely different. Checking of a work after its completion is always done
in every case by the person who ordered the same to be done so that the work
283 can be finally accepted and payment made therefor. After the work is
completed, a further checking cannot mean or imply any or any further
supervision." Vehemently was it urged on behalf of the appellants that the
High Court fell in error in giving a restricted meaning to the word
'supervision' occurring in Section 2(9) of the Act and in taking out the final
act of rejection or accept- ance of work from the purview of that word. Strong
reliance was placed on a decision of this Court in Royal Talkies v.E..S.I. C,
[1979] 1 SCR 80, to project that this Court has spelled out that the main aim
of the Act was to insure all employees in factories or establishments against
sickness and allied disabilities, but the funding. to implement the policy of
insurance was by contribution from the employers and the employees. In the same
breath it was observed that since the benefits belong to the employees and are
intended to embrace as extensive a circle as is feasible, the social
orientation, protective purpose and human coverage of the Act were important
considerations in the statutory construc- tion, more weighty than mere logomachy
or grammatical nice- ty. Reliance also was placed on Regional Director,
E.S.I.C, Trichur v. Ratnanuja Match Industries, [1985] 2 SCR 119 in which it
was ruled that beneficial legislation such as the Act is to receive a liberal
interpretation. The Court yet ruled that it could not travel beyond the scheme
of the statute and extend the scope of it on pretext of extending statutory
benefits to those not covered by the scheme of the statute. The Act being not
meant for universal converage, the negatives in the Act, one of them being that
the Act did not apply to factories or establishments with less than 20
employees, was taken into account to rule that liberal construction would not
go to hold a partner to be an employ- ee as he would be a person who would not
answer the defini- tion.
A
judgment of this Court in M/s. P.M. patel & Sons & Others v. Union of
India & Ors., [1986] I SCC 32 rendered in the context of the Employees
Provident Fund and Miscellane- ous Provisions Act, 1952 was pressed into
service on behalf of the appellants to contend that when rolled beedis, pre-
pared by the worker elsewhere, were placed for acceptance or rejection,
conforming to the standards envisaged by the manufacturers, that in itself was
held constituting an effective decree of supervision and control. The benefit
of the said Act was extended to beedi workers employed through contractors and
the question arose whether such workers came within the definition of
'employee' in Section 2(f) of the said Act. The definition of the word
'employee' provided that it shall include any person employed by or through a
contractor, in or in connection with work of the establish- ment, which words
were held wide enough 284 to include work performed elsewhere than the factory
itself, including the dwelling house of a home worker, as also that the
manufacturing operation, simple as it was, performed by illiterate workers,
young and old, subjecting to rejection and acceptance, was by itself an
effective degree of super- vision and control, establishing the relationship of
master and servant.
In
whatever manner the word 'employee' under Section 2(9) be construed, liberally
or restrictedly, the construc- tion cannot go to the extent of ruling out the
function and role of the immediate employer or obliterating the distance
between the principal employer and the immediate employer.
In
some situations he is the cut-off. He is the one who stumbles in the way of
direct nexus being established, unless statutorily fictioned, between the
employee and the principal employer. He is the one who in a given situation is
the principal employer to the employee, directly employed under him. If the
work by the employee is conducted under the immediate gaze or overseeing of the
principal employer, or his agent, subject to other conditions as envisaged
being fulfilled, he would be an employee for the purpose of sec- tion 2(9).
Thus besides the question afore-posed with regard to supervision of the
principal employer the subsidiary question is whether instantly the contractual
supervision exercised by the immediate employer (the electrical contrac- tors)
over his employee was exercised, on the terms of the contract, towards
fulfilling a selfobligation or in dis- charge of duty as an agent of the
principal employer.
P.M
Patel's case can also be no help to interpret the word 'supervision' herein.
The word as such is not found employed in Section 2(1) of The Employees
Provident Fund and Miscellaneous Provisions Act, 1952 but found used in the
text of the judgment. It appears to have been used as a means to establish
connection between the employer and the employee having regard to the nature of
work performed. But what has been done in Patel's case cannot ipso facto be
imported in the instant case since the word 'supervision' in the textual
context requires independent construction. In the ordinary dictional sense
"to supervise" means to direct or over-see the performance or
operation of an activity and to over-see it, watch over and direct. It is work
under eye and gaze of someone who can immediately direct a corrective and
tender advice. In the textual sense 'supervision' of the priucipal employer or
his agent is on 'work' at the places envisaged and the word 'work' can neither
be construed so broadly to be the final act of acceptance or rejection of work,
nor so narrowly so as to be supervision at all times and at each and every step
of the work. A harmonious construction alone would help carry out the purpose
of the Act. which would mean moderating the two extremes. When the 285 employee'is
put to work under the eye and gaze of the prin- cipal employer, or his agent,
where he can be watched se- cretly, accidently, or occasionally, while the work
is in progress, so as to scrutinise the quality thereof and to detect faults
therein, as also put to timely remedial meas- ures by directions given, finally
leading to the .satisfac- tory completion and acceptance of the work, that
would in our view be supervision for the purposes of Section 2(9) of the Act.
It is the consistency of vigil, the proverbial 'a stitch in time saves nine'.
The standards of vigil would of course depend on the facts of each case. Now
this function, the principal employer, no doubt can delegate to his agent who
in the eye of law is his second self, i.e., a substitute of the principal
employer. The immediate employer, instant- ly, the electrical contractors, can
by statutorily compul- sion never be the agent of the principal employer. If
such a relationship is permitted to be established it would not only obliterate
the distinction between the two, but would violate the provisions of the Act as
well as the contractual principle that a contractor and a contractee cannot be
the same person. The E.S.I.C. claims establishment of such agency on the terms
of the contract, a relationship express or implied. But, as is evident, the
creation or deduction of such relationship throws one towards the statutory
scheme of keeping distinct the concept of the principle and immediate employer,
because of diverse and distinct roles. The defini- tion is well drawn in Halsbury's
Laws of England (Hailsham Edition) Vol. 1 at page 193 as follows:
"An
agent is to be distinguished on the one hand from a servant, and on the other
from an independent contractor. A servant acts under the direct control and
supervision of his master and is bound to conform to all reasona- ble orders
given to him in this course of his work; an independent contractor, on the
other hand, is entirely independent of any control or interference and merely
undertakes to produce a specified result, employing his own means to produce
that result. An agent, though bound to exercise his authority in accordance
with all lawful instructions which may be given to him from time to time by his
princi- pal, is not subject to its exercise to the direct control and
supervision of the princi- pal".
AND
this statement of law was used with approval by this Court in AIR 1977 SC 1677
titled as The .Superintendent of post Offices etc. etc. v. P.K. Rajamma etc.
etc.
Now
coming to the subsidiary question the High Court took up one particular
contract dated January
20,1984 be- tween one
of the electrical contractors and the C.E.S.C. The material portion thereof is
as follows:
286
"The said contract relates to laying of new undergound cables and
conversion of overcad mains and service to underground system at Barrackpore
Trunk Road between Paikpare Junc- tion to D.F. 1/6 and from Baranagar P/T to
D.FI/67.
Please
note that you will have to provide competent supervision while carrying out the
work in accordance with the provisions of the Indian Electricity Rules, 1956.
You will also have to provide adequate watch and ward ar- rangement for the
safe custody of the materi- als till such time and complete installation is
handed over to us. You will be required to insure against theft and pilferage
of all materials while held in your site godown".
The
obligation embodied, as is plain, is for the elec- trical contractor to provide
competent supervision while carrying out the work. The electrical contractor is
other- wise a licensee under the Indian Electricity Act and the Rules made thereunder
and the conditions of his licence read as follows:
"Mr./Messrs.
Eastern Engineers & Constructions is/are hereby authorised to carry out electri-
cal installation work in the State of West Bengal. This licence is issued subject to the compliance with the
conditions set out on the reverse, and also to the continued compliance with
the conditions set out in Regulation 24 of the Regulations under Rule 45(,1) of
the Indian Electricity Rules, 1956.
(1)
All electrical installation work coming within the purview of Rule 45 (1) of
the Indian Electricity Rules, 1956 undertaken by the holder of this licence,
shall be car- ried out under the direct supervision of a person holding a valid
certificate of compe- tency...
(2)
The holder of this licence shall maintain a register of supervision and workmen
in the form below and shall produce the regis- ter for inspection on demand by
an Electrical Inspector or other person authorised in this behalf the Licensing
Board.
(3) On
the completion of any electrical installation work coming within purview of
rule 45(1) of the Indian Electricity Rules, 1956, a test report in the form
prescribed by the Board shall be submitted by the holder of this licence to the
Secretary. The report shall be signed by the supervisor under whose supervision
the work has been carried out, 287 and countersigned by the holder of this li- cence,
who shall be wholly responsible for the due execution of the work.
(4) If
the holder of this licence ceases to be in possession of a valid supervisor's
certificate of competency, ceases to retain in his said employment at least one
supervisor holding valid certificate of competency, this licence shall be
invalid.
(5) If
the holder of this licence accepts an employment under any other firm or person
for the purpose of carrying out or supervising any electrical installation work
coming within the purview of rule 45(1) of the Indian Elec- tricity Rules, 1956
this licence shall be invalid and the holder shall return the same to the
Secretary for cancellation.
The
terms and conditions of the licence postulate the licensee to carry out the
installation work of the kind mentioned under the direct supervision of a
person holding a valid certificate of competency. For that purpose the licen-
see shall maintain a register of supervision. Such register is open to
inspection on demand by an electrical inspector or other person authorised in
this behalf by the Licensing Board. On completion of the installation work of
the kind mentioned, a test report shall be submitted by the licensee to the
Secretary, which report shall first be signed by the supervisor under whose
supervision the work had been carried out and then countersigned by the
licensee who shall be wholly responsible for the due execution of the work. The
licence further enjoins the licensee either to retain a valid supervisory
certificate of competency or keep one such person retained in his employment
failing which the licence can be invalidated. Same is the position if the
licensee accepts employment under any other firm or person for the purpose of
carrying out or supervision any electrical in- stallation work of the kind
mentioned. In that situation, the license is to be returned to the Secretary
for cancella- tion.
On the
conjoint reading of the contract with the C.E.S.C. and the terms and conditions
of the licence, assum- ing the terms were to be faithfully obeyed, could it
other- wise be held that the C.E.S.C. could appoint the electrical contractor
as its agent to have the work carried out under the latter's supervision, in
place of C.E.S.C. As is evi- dent, the contract relates to laying of new
underground cables, conversion of overhead mains and service and mainte- nance
to the underground system. The work being highly sophisticated in nature,
requiring special skill and exper- tise, is given by the C.E.S.C. to the
contractor on the condition that the latter will have to provide competent
supervision while the work progresses, in ac- 288 cordance with the provisions
of the Indian Electricity Rules, 1956, which, in the larger interest of the
electrical network and community and its safeguards, require an elec- trical
contractor obtaining a licence to carry out electri- cal installation work of
the kind mentioned. Then the Rules obligate him to take in his services a
person holding a valid certificate of competency under whose direct supervi- sion
the work is required to be carried out, and on comple- tion its final report
being first signed by the supervisor supervising the work and then countersiged
by the holder of the licence, who will be responsible for the due execution of
the work. The licence is capable of being rendered in- valid or liable for
cancellation due to nonemployment of a supervisor given in the terms and
conditions. Even if, the terms of the contract and the terms and conditions of
the licence, the first being at the behest of the C.E.S.C and the second being
at the behest of the Government of West Bengal, be suggested to be
complementing each other, still these cannot be so interplayed to mean that an
agency, express or implied, has been created by the C.E.S.C. in favour of the
electrical contrator appointing him to super- vise work as envisaged under
Section 2(9) of the Act, and thus to have established a direct link between the
employee and the C.E.S.C. to the exclusion of the electrical contrac- tor.
Section
182 of the Indian Contract Act, 1872 defines "agent" as a person
employed to d3 any act or to represent another in dealing with third person,
the person for whom such act is done, or is so represented is called the "prin-
cipal". Section 184 of the said Act further provides that as between
principal and the third person any person may become an agent so as to be
responsible to his principal. Now it is to be understood that the agent has an
identity distinct from his principal in one sense and a fictional identity with
his principal in the other. The agreement nowhere amalgamates the identity of
the electrical contractor with that of the principal (C.E.S.C) by undertaking
to provide adequate supervision for the purposes of the Act, on behalf of the
C.E.S.C. The agreement no doubt provides that the electrical contractor would
provide adequate supervision while carrying on with the work, the purpose
dominant is to safeguard obtaining quality work and safety safeguards, and to
conform to the provisions of the Electricity Supply Act.
To the
Division Bench of the High Court it was obvious that the Regional Director of
the E.S.I.C. had nowhere found that there was actual supervision, either by the
C.E.S.C or its duly appointed agents, over works which were performed by the
employees of the electrical contractors. All that has been found is that the
said works on completion were checked by the C.E.S.C. and then accepted.
Checking of work after the same is completed and supervision of work while in
progress is not the same. These have different perceptions.
Checking
289 of work on its completion is an activity, the purpose of which is to
finally accept or reject the work, on the touch- stone of job specifications.
Thereafter, if accepted, it has to be paid for. Undisputably electrical
contractors had to be paid on the acceptance of the work. This step by no means
is Supervision exercised. Neither can it be the terminating point of an agency
when the interests of the so called principal and the so called agent become
business-like.
Besides,
the High Court has found that the work done by employees was under the
exclusive supervision of the elec- trical contractors or competent supervisors
engaged by them trader the terms of the contract and the licence. By neces- sary
implication supervision by the C.E.S.C. or its agents stood excluded.
Supervision rested with persons holding valid certificates of competency for
which a register of supervision was required under the licence to be
maintained.
Under
the contracts, the electrical contractors cannot in one breath be termed as
agents of the C.E.S.C., undertaking supervision of the work of their employees
and innately under the licence to have beforehand delegated that function to
the holder of the certificate of competency. Thus we hold that on the terms of
the contract read with or without the terms of the licence, no such agency,
factually or legally, stood created on behalf of the C.E.S.C. in favour of the
electrical contractors, and none could be, as 'hat would violate the statutory
scheme of distinction well marked under Section 2(a) of the Act. The
supervision taken was to fulfil a contractual obligation simplicitor and we
leave it at the level.
Thus
on both counts, the principal question as well as the subsidiary question must
be answered against the ESIC holding that the employees of the electrical
contractors, on facts and cricumstances, established before the Division Bench
of the High Court, do not come in the grip of the Act and thus all demands made
towards ESI contribution made against the C.E.S.C. and the electrical
contractors were invalid. We affirm the view of the High Court in that re- gard.
The
appeals are accordingly dismissed. In the circum- stances, however, we make no
order as to costs.
K.
RAMASWAMY, J. From the midst of personal warmth 1 am enjoying with my learned
brethren, I have to cool off from the discomfortable breeze generated by the
draft judgment of brother Punchhi, J., given my anxious reflections of its
consequences and with due respect, 1 express my inability to fail in line with.
The
Employees' State Insurance Act 34 of 1948 (for short 'the Act') seeks to serve
the twin objects namely, social security i.e. medical 290 benefits in case of
sickness, maternity and employment injury and other matters relating thereto
and to augment the efficient performance of the duty. The respondents (immedi-
ate employers) had contracts with the Calcutta Electricity Corporation (India)
Ltd. (for short 'the Corporation'), the Principal employer, to carry out
excavation, erection of overhead electric lines and laying of underground
cables beneath public roads as well as their repairs and mainte- nance. The Act
enjoins the employer to contribute his 50% share towards medical reimbursement
with a proportionate cut from the wages of the employees and to debit it to the
Employees' State Insurance Corporation fund to render medi- cal assistance etc.
to the employees. In consequence there would be cut, to the extent of 10% or as
may be specified from time to time, in the "profit packet" of the
immediate employers. For some time, it was complied with but late assailed
their liability under Art. 226 of the Constitution.
The
conflagration of the claims between the immediate em- ployers and their
employees gave rise to the lis. The imme- diate employers arming themselves
with independent contrac- tor's clout summon the services of the "gramarian"
and tells him that "our contracts with the Corporation are bilateral untramelled
by routine supervision or agency with the Corpo- ration under s. 2(9) of the
Act and tell us whether your "golden rule" does not apply to us? Like
Shylock, are we not entitled to prevent inroad into our profit pocket not even
a farthing from minimal of 10%, though the workman may give us efficient
service on receiving medical treatment ?" The employees request the social
engineer to sharpen his foren- sic skills of his instruments to provide them
social secunty from health and occupational hazards fastering a part of the
liability on the immediate employers whom they serve. Wheth- er the social
engineer would avoid unjust result like Port- jo's judgment ? Whether the words
in the contract would be masters by golden rules ? Whether the words "Supervision"
or "agent" in s.2(9) of the Act would be so construed or adopt- ed by
purposive approach as to do what justice and equity required ? The result of
the combat between the granmarian and the social engineer would provide the
answer to these searching questions.
Before
adverting to angle into their perceptions, it is of utility to keep abreast the
brass facts that lie in a short compass. The Corporation had from the State
Govt.
Licensor,
licence under s.3 of the Indian Electricity Act 9 of 1910 (for short the
'Electricity Act') to generate, transmit and supply electrical energy to the
consumers of the area. The Corporation is enjoined to erect electric supply
lines and also overhead lines, service lines, under- ground cables through
which energy is to be supplied to the either distributing main or immediately
from the suppliers' premises etc. It entered into contracts with the
respondents to lay undergound cables, to erect overhead lines, their repairs
and maintenance and for execution thereof employed their own employees.
291
The Elecricity Act empowers the Corporation as licensee, under s. 12 thereof,
to open and break Up the soil etc. and lay down electricity supply lines and
other works, repair, alter or remove the same and do all other acts necessary
for due supply of energy. It also empowers under Sec. 13 to execute new works
in compliance of that section. Under Sec.
14
& 15 it is empowered alteration of the pipes or wires.
Sec.
10 empowers a licensee to place any overhead lines along or across any street
etc. Sec. 20 empowers the licen- see or "any person duly authorised by a
licensee" to enter upon any premises, at reasonable time on prior
intimation to the occupier of any premises or land etc. upon which the
electricity supply line or other works have been lawfully placed for the
purpose of (a) inspecting, testing, repairing or altering the electricity
supply, lines meters, fittings, works and apparatus for the supply of energy
belonging to the licensee etc. Thus, the Corporation, as a licensee, is
ordinarily and as an integral scheme, to execute the works or duly authorise on
its behalf any other person to execute any of the works enumerated herinbefore
or inspection, repair, testing or alteration of the works and maintenance
thereof.
A conjoint
reading of s. s. 3 (2) (b) of the Electricity Act and Clause (1) (a) of the
Schedule shows that the licen- see is required to show to the
"satisfaction of the State Government that the Corporation is in a
position to fully and efficiently discharge the duties and obligations imposed
upon him by the licence throughout the area of the supply.
On its
failure, the State Govt. under s. 4 (1) (c) (i) is entitled to revoke the licence.
In terms of s. 15(1) "the duly authorised persons" of the licensee is
to operate under the Act to lay new electric supply lines or other works etc.
Equally
Clause V (1) of the Schedule provides to lay down distributing mains for public
lighting of any street on a requisition made by two or more owners of occupiers
of the premises. The Indian Electricity Rules, 1956 (for short 'the Rules')
made under s. 37 of the Electricity Act provides the procedure in this regard.
Rule 36 adumberates handling of electric supply lines. apparatus. only "by
authorised per- son" who is required to take safety measures
"approved by the electrical Inspector", appointed under s. 36 of the
Electricity Act. Sub-rule (2) of Rule 36 provided thus:
"No
person shall work on any live electric supply line or apparatus and no person
shall assist such person on such work, unless he is authorised in that behalf
and takes the safety measures approved by the Inspector".
Rule
45 provides precautions to be taken by electrical workmen, suppliers etc.
Unless electrical contractor, li- censed in this behalf by the 292 State Govt.,
appoints a person holding a certificate of competency and a permit in this
behalf issued or recognised by the State Govt., the contractor shall not be
entitled to undertake any installation work etc. Rule 51 provides cer- tain
safety measures to be taken to the satisfaction of the Inspector so as to
prevent danger. Rule 64 requires an authorised person to carry out the acts
mentioned therein subject to the supervision provided in Clause (b) thereof by
the Electrical Inspector. Rule 123(4) speaks of examination of flexible cables
by authorised persons and Rule 125(8) enjoins that all apparatus to be operated
only by those persons who are authorised for the purpose.
It
could, thus, be seen that the Corporation as a licen- see is empowered and
enjoined to lay the works production, transmission and distribution of
electrical energy to the consumers within the area of supply. It is also authorised
to entrust, any person authorised by it in this behalf, to perform the duties
of the licensee under the Act and the Rules. The contractor in turn appoint a
qualified supervisor to have works executed and maintained or repaired, subject
to inspection and supervision by the Electrical Inspector of the State Govt.
The primary duty and responsibility is that of the Corporation as the Principal
employer to have the works etc. executed, repaired and maintained through its
employees. It duty authorises the contractor to have these works done, repaired
or maintained, on its behalf, though the media of contract. The question
emerges whether the respondents are not immediate employers executing the works
etc. under the supervision of the Principal empleyer or as its agents ?
From
the above backdrop of statutory operation, the scope of s. 2(9) is to be gauged
which reads thus:- "2(9) - '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 on any
work of, or inciden- tal 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 elswhere; or (ii) who is employed by or through an
immediate employer on the premises of the factory or establishment or under the
supervi- sion of the principal employer or his agent on work which is
ordinarily part of the work of the factory or establishment or which is
preliminary to the work carried 293 on in or incidental to the purpose of the
factory or establishment; or (iii) Whose services are temporarily lent or let
on hire to the principal employer by the person with whom the person whose
services are so lent or let on hire has entered into a contract of service
." It encompasses employees employed for wages in or in connection with
the work of a factory or establishment to which the Act applies (i) who are
directly employed by the principal employer or (ii) employed by or through
"an imme- diate employers"; and whose services are temporarily lent or
let on hire to the principal employer by the person with whom the person is
entered into a contract of service.
Clause
2(9)(ii) (applicable to the facts on hand) in turn attracts a person employed
by or through an immediate em- ployer as an employee of the principal employer
provided the following conditions are satisfied, namely, (1) the immedi- ate
employer employs an employee on the premises of the factory or establishment of
the principal employer; (2) "or under the supervision of the principal
employer"; (3) this agent on work which is ordinarily part of the work of
the factory or establishment or which is preliminary to the work carried out in
or incidental to the purpose of the factory or establishment. Clauses (i) and
(iii) of s. 2(9) are inapplicable to the facts.
Article
25(2) of Universal Declaration of Human Rights, 1948 assures that everyone has
the right to a standard of living adequate for the health and well being of
himself and of his family ....including medical care, sickness, disa- bility
..... ,Art. 7(b) of the International Convention on Economic, Social and
Cultural Rights, 1966 recognises the right of everyone to the enjoyment of just
and favourable conditions of work which ensure, in particular, safe and healthy
work- ing conditions. Article 39(e) of the Constitution enjoins the State to
direct its policies to secure the health and strength of workers. The right to
social justice is a funda- mental right. Right to livelihood springs from the
right to life guaranteed under Art.21. The health and strength of a worker is
an integral fact of right to life. The aim of fundamental rights is to create
an egalitarian society to free all citizens from coercion or restrictions by
society and to make liberty available for all. Right to human digni- ty,
development of personality, social protection, right to rest and leisure as
fundamental human rights to common man mean nothing more than the status
without means. To the tillers to the soil, wage earners, labourers, wood
cutters, rickshaw pullers, scavengers and hut dwellers the civil and political right
are 'mere cosmetic' rights. Socio-economic and cultural rights are their means
and relevant to them to realise the basic aspirations of meaningful right to
life.
The
Universal Declaration of Human Rights, International Conventions of Economic,
294 Social and Cultural Rights recognise their needs which include right to
food, clothing, housing, education, right to work, leizure, fair wages, decent
working conditions, social security, right to physical or mental health, protec-
tion or their families as integral part of the right to life. Our Constitution
in the Preamble and Part IV reinforce them compendiously as socioeconomic
justice, a bed-rock to an egalitarian social order. The right to social and econom-
ic justice is thus fundamental right.
In
World Labour Report - 2, at Chapter 9 (Safety and Health) it is stated that
"in every three minutes somewhere in the world one worker dies and in
every second that passes at least three workers are injured". In India on an average every day 1100
workers are injured and three are killed "in industrial
establishments" vide (Lawyer Oct. 1987 page 5).
In
26th I L.O. Convention held in Philadephia in April 1944, recommendation No. 69
laid down norms for medical care for workers. In October 1943, the Government
of India appointed Health Survey and Development Committee known as Sir Joseph Bhore
Committee which laid emphasis on "Preventive Schemes".
I.L.O.
Asian Regional Conference held in Delhi in 3947, resolved that in very scheme for medical care in any Asian
country the need for the prevention of disease and the improvement of the
general standard of health must be con- sidered as of almost importance. The
Act had culminated in its birth of these recommendations providing in a limited
area social security to the employees from health and occu- pational hazards.
The
term health implies more than an absence of sick- ness. Medical care and health
facilities not only protect against sickness but also ensures stable man power
for economic development. Facilities of health and medical care generate
devotion and dedication to give the workers' best, physically as well as
mentally, in productivity. It enables the worker to enjoy the fruit of his labour,
to keep him physically fit and mentally alert for leading a successful
economic, social and cultural life. The medical facilities are, therefore, part
of social security and like gilt edged security, it would yield immediate
return in the increased production or at any rate reduce absentecism on grounds
of sickness, etc. Health is thus a state of complete physical, mental and
social well being and not merely the absence of disease or infirmity. In the
light of Arts. 22 to 25 of the Universal Declaration of Human Rights, International
Conven- tion on Economic, Social and Cultural Rights, and in the light of
socio-economic justice assured in our Constitution, right to health is a
fundamental hUman right to workmen. The maintenance of health is a most
imperative constitutional goal whose realisation requires interaction by many
social and economic factors. Just and favourable condition of work implies to
ensure 295 safe and healthy working conditions to the workmen. The periodical
medical treatment invigorates the health of the workmen and harnesses their
human resources. Prevention of occupational disabilities generates devotion and
dedication to duty and enthuse the workmen to render efficient service which is
a valuable asset for greater productivity to the employer and national
production to the State. Yet in the report of the Committee on Labour Welfare,
1969 in paragraph
5.
77of Chapter 5, reveals that, private employers generally feel that this burden
shall not be cast upon them." The Act aims at relieving the employees from
health and occupational hazards. The interpretation calls for in this case is
of the meaning of the meanings 'supervision' and 'agent' in s.2(9) (ii) of the
Act. The legal interpretations is not an activity sui generis. The purpose of
the enactment is the touch-stone of interpretation and every effort would be to
give effect to it. The judge acts as a vehicle of communication between the
authors and the recipients. The end result is to promote rule of law and to
enliven social order and humane relations.
In
Senior Electric Inspector & Others v. Laxmi Narayan Chopra & Ors.,
[1962] 3 SCR 146 at p. 156, K. Subba Rao, J.
(as he
then was) for unanimous Court held thus:
"In
a modern progressive society it would be unreasonable to confine the intention
of a Legislature to the meaning attributable to the word used at the time the
law was made, for a modern Legislature making laws to govern a society which is
fast moving must be presumed to be aware of an enlarged meaning the same
concept might attract with the march of time and with the revolutionary changes
brought about in social, economic, political and scientific and other fields of
human activity.
Indeed,
unless a contrary intention appears, an interpretation should be given to the
words used to take in new facts and situations, if the words are capable of
comprehending them." In M. Pentiah & Ors. v. Muddala Veermallappa
& Ors., [1961] 2 SCR 295 at p. 313 in a separate but concurrent judgment, Sarkar,
J. held "Where the language of a statue, in its ordi- nary meaning and
grammatical construction, leads to a manifest contradiction of the apparent
purpose of the enactment, or to some inconven- 296 ience or absurdity, hardship
or injustice, presumably not intended, a construction may be but upon it which
modifies the meaning of the word, and even the structure of the sentence".
This
court approved the ratio in Seaford Court Estates Ltd. v.Asher, [1949] 2 All
E.R. 155 at 164, Denning, L.J. who said, "When a defect appears a judge
cannot simply fold his hands and blame the draftsman. He must set to work on
the constructive task of finding the intention of Parliament ......
and
then he must supplement the written word so as to give "force and
life" to the inten- tions of the legislature ..... A judge should ask
himself the question how, if the makers of the Act had themselves come across
'his ruck in the texure of it, they would have straightened it out ? He must
then do as they would have done. A judge must not alter the material of which
the Act is woven, but he can and should iron out the creases".
I
conceive it my duty, therefore, so read the new Act, unless I am prevented by
the intrac- tability of the language used, as to make it carry out the obvious
intention of the legis- lature".
In
Massachusetts Bonding & Insurance Co. v. United States of America, 352 U.S.
128 ed 2d 189; Frankfurther, J., speaking per himself, joined by Reed, Clark,
and Brennan, JJ. held at headnotes 8 & 9 thus:
"On
more than one occasion, but evidently not frequently enough, Judge Learned Hand
has warned against restricting the mean- of a statute to the meaning of its
"plain" words.
"There
is no surer way to misread any document than to read it literally...." Of
course one begins with the words of a statute to ascer- tain its meaning, but
one does not end with them. The notion that the plain meaning of the words of a
statute defines the meaning of the statute reminds one of T.H. Huxley's gray observation
that at times "a theory survives long after its brains are knocked
out." One would suppose that this particular theory of statutory
construction had had its brains knocked out in Boston Sand & Gravel C.v.
United States, [278 US 41, 48, 73 Led 170, 177, 49 S Ct 52]. The words of this legisla-
tion are as plain as the Court finds them to be only if the 1947 amendment is
read in misleading isolation. An amendment is not a repeal. An amendment is
part of the legisla- tion it amends. The 1947 amendment to the Federal Tort
Claims Act of 1946 must be read to harmonise with the central purpose of the
original 297 Act. The central purpose of the original Act was to allow recovery
against the United States on the basis and to the extent of recoveries for like
torts committed by private tortfeasors in the State in which the act or
omission giving rise to the claim against the United States occurred. The 1947
amendment filled the gap, a very small gap, that was disclosed in the scheme
formulated by the 1946 Act".
In Atma
Ram Mittal v. Ishwar Singh Punia, [1988] 4 SCC 284, this Court held that the purpose
of interpretation in a social amelioration legislation is an imperative irrespec-
tive of anything else. It was further held that the con- tents, subject matter,
the effects and consequences or the spirit and reason of the law shall be taken
into account.
The
words must be construed with the imagination "of purpose behind
them".
(emphasis
supplied) Therefore, in an attempt to construe the provisions of the statute
construction, as a balancing wheel, should be meaningful so as to make the
statute workable and not to render it futile or sterile. Whenever strict
interpretation of the statute gives' rise to unjust situation or results, the
Judges can ensure their good sense to remedy it by reading words in, if
necessary, so as to do what Parliament would have done had they had the
situation in mind. The meaning of the same words in a statute may be mended in
the laborynth of interpretation and may be enlarged or restrict- ed in order to
harmonise them with the legislative intention of the entire statute. The spirit
of the statute would prevail over the literal meaning. The jurisprudence and
principle, therefore, in such a situation, would be the contextual
interpretation to subserve the constitutional scheme and to alongate the
legislative purpose, harmonising the individual interest with the community
good so as to effectuate social transformation envisioned in the preamble of
the Constitution.
Let
me, therefore, consider the arebit of the word 'supervision' under s.2(9) (ii)
of the Act. In Webster Comprehensive Dictionary (International Edition) the
word 'supervision' has been defined at page 1260 in Vol. II as "authority
to direct or supervise", supervise means - have a "general oversight
of'. "In Corpus Juris Secundum", Vol 83 at page 900 it is stated that
The word "supervision" is not of the precise import and when not
limited by the context is broad enough to cover more than one subject. It
implies oversight and direction, and does not necessarily exclude the doing of
all manual labour, but may properly include the taking of an active part in the
work". "Supervision" is defined as meaning "the 298 act of
overseeing or supervising; having general oversight of, especially as an
officer vested with authority; inspec- tion; oversight; superintendence."
The Words and Phrases, Permanent Edition, Vol. 40A defines that the
"Supervision" means oversight, an act of occupation of supervision;
in- spection. "Supervision" is an act of overseeing or supervi- sion;
having general oversight of, especially as an officer vested with authority;
inspection; oversight; superintend- ence, "Control" is the act of
superintending; care and foresight for purpose of directing and with authority
to direct; power or authority to check or restrain; restraining or directing
influence; regulating power. Contract of em- ployment to "supervise"
construction of power plant, steam distribution system held to require time and
attention to work needed to see that it was properly and promptly done,
regardless of number of hours spent there on. The word "supervision"
is not one of precise import and is broad enough to require either supervisor's
constant presence during work supervised or his devotion thereto if only time
necessary to see that it complies with contract specifications, advise as to
details, prepare necessary sketches and drawings, etc. In Owen v. Evans &
Owen (Buuilders) Ltd., [1962] 1 Weekly Law Reports 933 the Court of Appeal was
called upon to consider the meaning of the words "immediate
supervision" under Building (Safety, Health and Welfare) Regulations,
1948.
Whether
the presence of the supervisor is necessary at all times? It was held no. Ormerod,
L.J. held that in each case the question must be decided how much supervision
is re- quired in the circumstance of the case being considered? If every move
was fraught with danger, then clearly supervision of the most constant kind
would be demanded, and the super- visor must be there all the time. On the
other hand, there may be certain parts of the work, if not the Whole of it, which
do not give rise to any foreseeable danger, and in those circumstances it may
well be that the intention of the regulation is that supervision need not be so
strict. Up- john, L.J., as he then was, while agreeing held that the real
question is whether there was a supervision for the purposes of the regulation
and was that a proper or adequate supervision? The regulations are formulated
for the protec- tion of the workman, but, at the same time, they must be given
a practical effect. The degree of supervision must entirely depend upon the
task, and it cannot mean that there must always be a constant supervision
throughout. There may be times during a demolition failing within regulation
79(5) where a particular operation is a dangerous one. That cannot always be
avoided, and it may be that the danger is such that the supervisor must give a
constant supervision during that time. But there will be other times where the particu-
lar operation is a simple one, involving no danger to a building labourer. Then
the supervisor may properly go away and perform other tasks. He may answer to
the telephone or supervise other groups. All depends on the fact of each case.
299 In
Regional Director, E.S.I.C v. South India Flour Mills (P) Ltd. (1986) 69 FJR
77, this Court held that the defintion of the term'employee' under s.2(9) of
the Employ- ees' State Insurance Act, 1948 is "very wide and includes
within it any person employed on any work incidental or preliminary to or
connected with the work of a factory or establishment". Any work that is
conducive to the work of the factory or establishment or that is necessary for
the augmentation of the work of the factory or establishment will be incidental
or preliminary to or connected within the work of the factory or establishment.
The casual employees shall also be brought within it and held that they are
entitled to the benefits under the Act. The casual labour employed to construct
additional buildings for expansion of the factory were held to be employees
under the Act. It was also held that the Act is a piece of social security legis-
lation enacted to provide for certain benefits to the em- ployees in case of
sickness, etc. It was further held that the endeavour of the Court should be to
interpret the provi- sions liberally in favour of the persons for whose
benefits the enactment has been made. This Court upheld the view taken by A.P.,
Karnataka and Punjab and Haryana High Courts in A. P. State Electricity Board
v. Employee's State Insur- ance Corporation, Hyderabad, [1977] 51 FJR 171 AP;
Regional Director, Bangalore v. Davangere Cotton Mills, (1977) 2 L.L.J. 404 and
E.S.I.C, Chandigarh v. Oswal Woolien Mills Ltd., (1980) 57 F.J.R. 171 (P &
H) (F.B.). that casual employees are employees within the meaning of the term
"employee" defined in s.2(9) of the Act.
In Birohichand
Sharma v. First Civil Judge, Nagpur & Ors., [1961] 3 SCR 161 this Court
considered whether the piece rate worker is a worker within the meaning of s.2(1)
of the Factories Act, 1948. The facts found were that there was no fixed hours.
They made payment to the work done at piece rate. It was open to the workmen to
absent from work without leave. They were not given any specific work, but the
management had "the right to reject" (emphasis supplied) the Bidis prepared
by them, if the Bidis do not come upto the proper standard. On those facts, it
was held "the right of rejection is a supervision" connecting the
work and the employment. Accordingly it was held them to be workmen. The same
ratio was followed in D.C. Dewan Mohideen Sahib & Sons v. The Industrial
Tribunal Madras., [1964] 7 SCR 646. In Nagpur Electric Light & Power Co.
Ltd. v. Regional Director, E.S.I.C [1967] 3 SCR Reprint 92 the employees
employed outside the factory or establishment as Cable Jointer.
Mistri,
Lineman, Coolies and Vanman for inspection of lines, digging the pits,
erection, distribution and service .-line were held to be employees within the
meaning of s.2(9) (i) of the Act, In Kirloskar Pneumatic Co. Ltd. v. Employees'
State Insur- ance Cor- 300 poration, [1987] 70 F JR 199 a division Bench of the
Bombay High Court, speaking through my learned brother P.B. Sawant, J., as he
then was, also took the same view and held that the employees engaged for
repairs, site clearing, construc- tion of buildings, etc. of the principal
employer are em- ployees within the meaning of s.2.(9) of the Act. In Royal
Talkies, Hvderabad & Ors. v. Employees State Insurance Corporation, [1979]
1 SCR 80 interpreting s.2(9) (ii) of the Act, this Court held that the Cycle
Stand or Canteen are for better amenities to the customers and improvements of busi-
ness in Cinema. The appellant, as the owner, leased out the Cycle Stand and
Canteen under instrument of leases to the contractors, who employed their own
employees to run the Canteen and the Cycle Stand. It was held that vis-a-vis
the employees of the Contractors, the cinema owner was held to be the principal
employer. It was further held that it is enough if the employee does some work
which is ancilliary, incidental or has relevance or linked with the job of the
establishment, amenities or facilities to the cine goers has connection with
the work of the establishment. The employees of the Canteen and the Cycle Stand
were held to have been employed in connection with the work of the
establishment.
The
case M/s P.M. Patel & Sons & Ors. v. Union of India & Ors., [1986] 1 SCC 32 though arose under the
Employees Provident Funds and Miscellaneous Provisions Act, 1952, the principle
laid therein applies on all fours to the facts of the case. The appellants
therein were engaged in the manu- facture and sale of Bidis. The work of
rolling Bidis was entrusted to the contractors who in turn got the work pre-
pared at workers homes, after obtaining materials either directly from the
manufacturer or through the contractors.
The
contractors treated the workers as their own employees and get their work done
at the workers' premises or contrac- tors' premises. It was contended that the
workers engaged by the contractors were not their workmen under that Act. This
Court by a Bench of three Judges negatived their contention and held that in
the context of conditions and the circum- stances in which the home workers or
manufacturer go about their work including receiving of raw materials, rolling
of Bidis at home and delivering them to the manufacturer sub- ject to the right
of rejection, there is sufficient evidence of the requisite "degree of
control and supervision" for establishing relationship of master and
servant between the manufacturer and the home workers. This ratio does support
the conclusion that a connecting link between the finished product and the work
of the establishment is sufficient;
neither
the manner of actual performance of the duties decisive nor the actual control
or the supervision of the work a material ingredient. Incidental connection
with the ultimate business activities of the manufacturers and right to
rejection is the con- 301 trol and would be the balancing wheel to attract the provi-
sions therein. The extended purposive construction was applied to give effect
to the social security provided under the Employees Provident Fund ,'red
Miscellaneous Provisions Act, 1952.
In
Superintendent of post Office v. P.K, Rajamma, [1977] 3SCR 678 the question was
whether the extra departmental agents serving in Post and Telegraph Department
were agents or held civil post within the meaning of Art. 31112) of the
Constitution. This Court while holding that they held civil post attracting Art.311(2)
of the Constitution approved the passage from Halsbury's Laws of England (Hailsham
edition) of the distinction between agents, servants or independent
contractors. The contractual relation therein inter se does not apply to the tacts
of this case.
The
Act does not give its own definition of the word "supervision".
Therefore, it must be construed in the con- text the ultimate purpose the Act
aims to serve and the object behind the Act, i.e. to extend sickness benefits
and to relieve the employee from occupational hazards consistent with the
constitutional and human rights scheme. Under the Electricity Act and the
Rules, the Corporation, licencee, is enjoined to performthe acts and duties
contemplated thereun- der to lay overhead lines, underground cables, their
repairs and maintenance thereof, etc. It authorised, under the contract, the
immediate employer to perform, on its behalf, those acts and duties. The
immediate employer would get the work done through their employees employed for
that purpose.
It is
not a sporadic work but a constant and on going proc- ess, so long as the licencee
generates, transmits and sup- plies electrical energy to the consumers of their
supply area. Had the principal employer performed those acts and duties through
its employees, indisputably. their employees would be covered under the Act,
though the work was got done at highways or at places other than the factory or
the establishment. When the principal employer authorises the respondents as
its contractors under contracts the need for constant supervi- sion is obviated
relegating that function to its immediate employers. Otherwise the need for
contracts would be redun- dant. The Corporation retained, under the contract,
the power of acceptance or rejection of the work done or super- vision effected
in maintenance of the work got done by the immediate employer, subject to over
all supervision by the Electrical Inspector, on behalf of the State Government.
The supervision in the I,act situation is not the day to day supervision but
legal control, i.e. right to accept or reject the work done or maintenance
effected. The exercise of right of acceptance or rejection is the supervision
as envisaged in the contract between the principal employer and the immediate
employer. It would supply the needed unifying or connecting 302 thread between
the constitutional creed of social justice i.e. social security under the Act
and supervision of the acts or duties by the principal employer vis-a-vis the
employees of the immediate employer under the contract who ultimately perform
them on behalf of the principal employer.
Undoubtedly
in a bilateral contract between the corporation and the respondents qua their
rights and liabilities under the contracts, strict interpretation of the words
engrafted therein, be of paramount relevance and call for attention as per
Contract Act. But in the context of the statutory inter- pretation of
"supervision" under the Act of the works under- taken under the
contract, the interest of the workmen or the welfare schemes for the employees under
the Act interposed and call attention to and need primacy. In its construction
the courts must adopt contextual approach to effectuate the statutory
animation, namely, social security. The literal interpretation would feed
injustice in perpetuity denying to the employees of sickness benefit etc. under
the Act which should be avoided, lest the purpose of the Act would be
frustrated.
The
contention that the respondents being independent contractors are not agents of
the licencee, corporation, is also devoid of force. It is seen that under ss.
15 & 20 etc. and the relevant rules the authorisation given by the corpo-
ration through the media of the contracts enabled the re- spondents to step
into its shoes to do the acts or perform the duties under the Electricity Act
and Rules which are ordinarily of the Corporation. The contract is an authorisa-
tion to do those acts on behalf of the principal employer.
The
application of the golden rule to the word "agency" under the Indian
Contract Act between the respondents and the corporation, perhaps, does not
encompass agency in strict sense under the Act. But public policy of the Act,
the constitutional and human right's philosophy to provide social security to
protect the health and strength of the workers must be kept at the back of the
mind to construe the word "agent" under s.2(9) (ii) of the Act, in
contra dis- tinction with the bilateral stipulations under the contract.
In
this regard public policy interposes and plays a vital role to read into the
contracts the extended meaning of agency to bring about connecting links
between the respond- ents and the licencee corporation. Lest the contract, if
intended to deny welfare benefits to workmen, would be opposed to public policy
and would become void under s.23 of the Indian Contract Act. Such an intention
would be avoided by reading into the contract the extended meaning of agency
but not fiduciary. Chitty on Contrac; is, 26th Edition, in paragraph 2502 at
page 4 stated of the use of the terms agent and agency. Some persons who
describe themselves or are described by others as agents are not really such in
any legal sense of 303 the word, but rather independent merchants, dealers,
con- sultants or intermediaries. Others may be agents in the sense that they
owe the internal duties of the agent to his principal (mainly the fiduciary
duties) .... The substance of the matter prevails over the form and the use of
the words "agent" or "agency ", or even a denial that they
are applicable, is not conclusive that any particular type of relationship
exists. (emphasis supplied). In A.G. Guest Anson's Law of Contract. 26th
Edition, at page308 it is stated that the application of cannons of 'public
policy to particular instances necessarily varies with the progressive
development of 'public opinion and morality, but, as Lord Wright has said
extra-judicially: Public policy like any other branch of the common law ought
to be, and I think is, governed by the judicial use of precedents... If it is
said that rules of. public policy have to be moulded to suit new conditions of
a changing world, that is true; but the same is true of the principles of the
common law generally.' In Prenn v. Simmonds, 1971 (1) Weekly Law Reports 1381
(H.L.) Lord Wilberforce laid the rule that in construing a written agreement
evidence of negotiations or of the par- ties' intentions ought not to be
received by the court, and that evidence should be restricted to evidence of
factual background known to the parties at or before the date of the contract,
including evidence of the "genesis" and objective- ly the
"aim" of the transaction.
The
contractors, respondents, knew at the date of the agreements that the
Corporation, as Principal employer, is under statutory obligation to execute or
keep executed the works and keep them repaired and mainrained as an integral
activity of generation, transmission and distribution of the electrical energy
to the consumers within their area of supply. On authorisation, the respondents
executed and kept executiug the works and repairs or kept them repaired and the
maintenance thereof effected through their employees, which in law is on behalf
of the Corporation, principal employer. The genesis and aim of the transaction
was to act on behalf of the Corporation. The agency of the respondent with the
Corporation, thus, springs into being. The prohibi- tion of the qualified
supervisors, while in service of the respondents, to disengage themselves with
third parties in terms of the contract was only to extract unstinted and
exclusive devotion to duty and no further. It stands as no impediment to
construe that the respondents are agents to the Corporation as immediate
employers.
Accordingly
I hold that the employees working under the respondent perform their duties in
execution of the works, repairs and maintenance thereof in connection with the
generation, transmission and distribution of 304 the electrical energy by the
Corporation ficensee. The Corporation is the Principal employer The respondents
imme- diate employers execute the work etc. under the supervision of the
Corporation as its agents. Their employees, in law, work under the supervision
of the principal employer, corpo- ration. They are covered under s.2.(9) (ii)
of the Act entitling them to the sickness benefits, etc. envisaged therein. and
the respondents are liable to make their con- tribution to the Employees
Insurance Fund.
The
appeals are accordingly allowed. The writ appeal Nos. 16 & 438/86 and
matter No.1650 of 1985 dated April 4, 1988 in the Calcutta High Court stand
dismissed confirming the order of the learned single Judge dated December 11,
1986, but in the circumstances parties are directed to bear their own costs.
V.P.R.
Appeals dis- missed.
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