JUDGMENT
1. A Public Charitable Trust registered under the Bombay Public Trust Act, 1950 by name M/s. Shree Kutchi Visha Oshwal Mahila Mandal having its office at 99/101, Keshavji Naik Road, Bombay, is the petitioner. The petition challenges the legality of the order dated July 13, 1978 passed by the Regional Provident Fund Commissioner, Maharashtra & Goa, as also order dated June 7, 1985 passed by the Government of India under Section 19A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the “Act”). By the aforesaid two orders, the authorities under the Act sought to cover the petitioner’s establishment at Bombay under the Act on the ground that the petitioner is employing more than 19 persons.
2. The petitioner contends that it is Public Charitable Trust having a laudable object of charity and mainly uplifting the lot of needy women by offering them employment. Any woman desirous of availing the facilities provided by the trust has to merely fill an application form and then she is allowed to participate in the scheme. The petitioner contends that by no stretch of imagination, the activities carried on in the establishment can be treated as trading or commercial activities. It is specifically contended that in any view of the matter, it cannot be said that the petitioner has employed more than 19 employees as required by the provisions of the Act for the establishment being liable to coverage under the Act. What is contended is that several needy women voluntarily come to the petitioner, make an application and voluntarily work for the manufacture of papads, khakra and other eatables. Some payment is made for the work, but in the submission of the petitioner, that can never be treated as wages.
10th December, 1991
3. Admittedly, the establishment run by the petitioner is manufacturing eatables like papads, khakra, etc. It is clear that the establishment would be a factory and, in fact, the said fact is not challenged either before the authorities under the Act or before me.
4. The crucial question would be whether apart from the admitted employees doing sales work, the women who come there to prepare these eatables and who are paid wages on daily rate or piece rate also could be treated as employees and, therefore, the number of employees in the establishment would be more than 19.
5. In this behalf, it requires to be notice that by letter dated July 13, 1978, the petitioner Trust was informed that the said factory/establishment engaged in the scheduled activity i.e. trading and commercial has completed five years from the date of commencement of production and has employed 20 employees and, therefore, the Act becomes applicable to the said establishment obliging the petitioner – Trust to implement the various provisions of the Act and the Scheme with effect from May 1, 1978 for which Code No. MH/17686 is allotted to the petitioner. Paras 2, 3 and 4 of letter call upon the petitioner to take specific steps for implementation of the provident scheme and also family pension contribution. Para 5 calls upon the petitioner to supply certain information and take some steps for implementing the scheme. Para 6 of the letter specifically calls upon the petitioner to send a representative to the office of the Regional Provident Fund Commissioner in case the petitioner finds any difficulty to implement any of the provisions of the scheme so that required guidance can be give to the petitioner. It appears that no response was received by the authorities from the petitioner in the matter. However, a representation dated December 27, 1984 appears to have been made to the Government of India purporting to an application under Section 19A of the Act. It was represented that the Mandal is registered under the provisions of the Bombay Public Trust Act, 1950. The main activities of the Trust are to help the poor and less fortunate women by providing them some work. The membership of the Mandal is voluntary and such member can undertake the work also voluntarily. It was emphasised that the organisation is mainly working for the welfare of the downtrodden women of the society.
6. Ultimately, by order dated June 7, 1985 the Government of India rejected the application preferred under Section 19A of the Act. The order observes that the profit and loss account of the establishment for the year ending 1978 shows that the Mandal purchases raw-material and gets eatables prepared by paying wages. The establishment makes profit and loss which is carried over to the balance-sheet. It is further observed that the establishment is engaged in trading activities and, therefore, it is covered as a trading and commercial establishment. The order further mentions that the balance-sheet shows that the establishment is engaged for only one activity, viz. manufacturing and sale of eatables, though the Mandal is formed to be engaged in other activities also. It was observed that the activity of manufacture and sale of eatables which is the only activity carried on by the Mandal should decide the character of the establishment. It was further observed that the object of the Mandal is no doubt laudable but that cannot be a ground for not covering the Mandal as the activities carried on by the Mandal are trading activities, viz., trading in eatables by getting them manufactured by the ladies and selling those eatables through the sales counters. The order further observes that there is no dispute that the employees at the sales counter are less than 19 and there is no dispute about the relationship of employer-employee between the Mandal and those sales employees. The order further shows that the females voluntarily sign a declaration that they will abide by the discipline of the Mandal and they can resign from the membership of the Mandal also. The moment they sign the declaration, they bind themselves to abide by the discipline and the code of ethic of the Mandal. The Mandal has the power to do away with their services if found guilty of misconduct. The authority, therefore, found that the Mandal itself exercise disciplinary powers over these females. It was noted in the order that no doubt, these women are paid on piece-rate basis i.e. they are paid fixed amount for a particular quantity prepared by them. However, payment of remuneration on piece-rate basis is a well recognised mode of payment to the workers and that fact is not sufficient to do away with the relationship of the employer-employee between the Mandal and these females. The character of the amount received by such females is that of wages. This is also supported by the declaration given by the Mandal itself in the questionnaires as also the entries in the account books which show that these females are paid wages and their status is that of wage paid females. The authority also found that the females are subject to the disciplinary action by the Mandal. The authority further found that these female members do not get any profit or dividend as members, but they get only wages on piece-rate basis. They do not share profits earned by the Mandal and, therefore, the mere description of these workers as members of the Mandal would not change the character of their employment. It was, therefore, held there is relationship of employer and employee between the Mandal and these females and that coverage of the establishment under the Act was lawful and correct. Being aggrieved by this order and the coverage, the Mandal has filed this petition under Article 226 of the Constitution of India.
7. Mr. Pathak, learned counsel appearing for the petitioner in support of the petition, contended that the Mandal is created with object of helping the needy women in society by providing them with employment. It is a Trust registered under the provisions of the Bombay Public Trust Act and whatever profits are made by the Mandal are mainly deposited in the account of building fund with a view of constructing building to help the needy persons in the society as, at present, the establishment is being run in rented premises. Mr. Pathak emphasised the fact that the other members of the Trust do not make any profit or do not gain anything and as such, these women who voluntarily become members and are paid for working voluntarily cannot be called employees of the Mandal. Mr. Pathak also relied upon the constitution of the Mandal and referring to certain clauses therein, he submitted that basically and essentially, the status of these women working in the Mandal for manufacturing eatables is that of a member of the trust of Mandal and they cannot be treated as employees. Mr. Pathak, therefore, submitted that establishment cannot be covered under the provisions of the Act. Mr. Rege, learned counsel appearing for respondents, on the other hand, pointed out that the facts and circumstances of the case make it abundantly clear that they are employees as rightly held by the authorities. He urged that the coverage and the order by the Government of India should be upheld.
8. I have heard both the parties. I have also perused the record. It is relevant to notice that so far as the activity of manufacturing eatables and selling them is concerned, there is no controversy that it would be trading activity. It is further not in dispute that the employees working at the sales counter are the employees of the Trust. The only dispute between the parties is regarding the status of individual women workers who come to the premises of the establishment to manufacture eatables out of the raw-materials supplied to them by the Trust and who are admittedly paid at piece-rate. After going through the record, I have no manner of doubt in mind that these women are nothing but workers and authorities were more than justified in covering the establishment under the provisions of the Act. It is relevant to notice certain provisions in the Constitution of Shree Kutchi Visha Oshwal Mahila Mandal. Mr. Pathak has handed over a free English translation of some of the provisions of the Constitution of the Mandal. Provision regarding membership states that any married or unmarried woman can become a member who attained the age of 18 years. The application shall be considered by the Executive Committee and only upon consent given by the Executive Committee, she she shall be admitted as member. There is a provision for life member also with which we are not concerned. Thereafter, there is provision for cancellation of membership which provides for voluntary resignation subject to acceptance as also for misbehaviour. The Executive Committee by majority of 2/3rd of the members present can expel a member for misbehaviour. The member shall not be entitled to know the reason for expulsion. In fact, we are not concerned with the membership for which the aforesaid provisions are made in the Constitution. We are directly concerned with what is “associate member”. It is provided that the Executive Committee can admit any needy woman by receiving an application any needy woman by receiving an application form her and subject to acceptance of such application. Membership contribution for associate membership would be Rs. 2/-. It is further provided that such associate members will be given their services in the activities being carried on in the Mandal as per the directives of the office bearers and such associate member shall work under the supervision of either Executive Committee or Managing Committee. Sub-clause (3) specifically provides that the associate member shall not be allowed to participate in the management of the Mandal. Such member shall not be entitled to attend any meetings of the Mandal and shall not vote at any meetings. They shall not contest election and shall not occupy any position of membership in the Managing Committee of the Mandal. Sub-clause (4) provides that officer bearers can remove such associate member without disclosing any reason to her but by giving her a notice in writing, or associate member herself herself could voluntarily relieve from the Mandal by giving resignation in writing within 30 days. These provisions make it amply clear that so-called associate membership does not give any right to such a member in respect of the activities or management of the Mandal at all. Such member does not have any right to participate in the management or attend the meeting and, in fact, for doing anything in connection with an activities except to manufacture eatables on payment of wages at piece-rate. The matter is beyond doubt that by no stretch of imagination, they can be treated as members of the Mandal. The devise of obliging them to make an application to become associate member before they are allowed to work on wages at piece-rate cannot change their legal status as employees. On the basis of admitted facts and circumstances of the case, there is hardly any doubt in my mind that the relationship between the so-called associate members and the Mandal is that employee and employer and the authorities have properly and correctly covered the establishment under the provisions of the Act.
9. Mr. Pathak, in support of his submissions, relied upon the decision of the Karnataka High Court in Regional Provident Fund Commissioner v. Hotel Highway Ltd. (1992 Lab. IC. 1201 (Karn). After considering the facts and circumstances of the case and the decisions which were cited before it, the Division Bench of the Karnataka High Court observed as under :-
“Where, therefore, only training is imparted and no wages are paid, we are unable to see as to how they could be called employees at all.”
Mr. Pathak also relied upon the decision of the Andhra Pradesh High Court in Employees’ State Insurance Corporation, Hyderabad v. M/s. Laxmi Power Loom Weavers Co-operative and Sales Society Ltd. 1986 L.I.C. 370. The said decision has laid down that when the very Constitution of the Society registered under the Co-operative societies Act pre-supposes employment of its members as part of its scheme, they cannot be described as employees of the society simply because the Society is declared as Corporation and thereby treating the Society as the master and the members as the servants. The jural relationship of master and servant cannot be attributed by mere fact of members happened to work for remuneration. Thus, not only the facts and circumstances of the cases before the Andhra Pradesh High Court and the High Court of Karnataka were different, but the ratio is not at all applicable to the case before me. As already stated, though called as associates members, these women working with the petitioner’s establishment are not members at all so far as the Mandal is concerned. On the other hand, the nature of their work and the character of the payment is clearly that of wages.
10. In the result, I find no substance in the petition. The rule stands discharged with costs, the interim stay stands vacated.
11. Certified copy of the judgment to be supplied immediately.
12. Mr. Pathak applies for continuation of the stay for four weeks. In the facts and circumstances of the case and the view of the record of the matter, I am not inclined to continue the stay as requested. The application for continuation of the stay stands rejected.