PETITIONER: V. P. GOPALA RAO Vs. RESPONDENT: PUBLIC PROSECUTOR, ANDHRA PRADESH DATE OF JUDGMENT: 07/03/1969 BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. SIKRI, S.M. HEGDE, K.S. CITATION: 1970 AIR 66 1969 SCR (3) 875 1969 SCC (1) 704 CITATOR INFO : R 1974 SC 37 (19) ACT: Factories Act (63 of 1948), ss. 2(k)(i), 2(1)-'manufacturing process and 'workers'--Meaning of. HEADNOTE: The appellant who was the manager-cum-occupier of a company's establishment at Eluru was prosecuted for operating a factory without obtaining a licence as required by the Factories Act, 1948 and the Andhra Pradesh Factory Rules, 1950. The company had its main factory at Bombay. In the company's Eluru premises, sun-cured tobacco leaves purchased from local producers were subjected to the processes of moistening, stripping and packing. The tobacco leaves were moistened so that they could be handled without breakage. The moistening was done for 10 to 14 days by sprinkling water on stacks of tobacco and shifting the top and bottom layers. The stalks were stripped from the leaves. The Thukku (wholly spoilt) and Pagu (partly spoilt) leaves were separated. The leaves were tied up in bundles and stored in the premises. From time to time they were packed in gunny bags and exported to the company's factory at Bombay where they were used for manufacturing cigarettes. The appellant's defence was that it was not necessary to obtain the licence, or permission because (i) no manufacturing process was carried on in, the premises; and (ii) the persons who worked in the premises were not workers as they were employed by independent contractors. The Magistrate accepted the defence contentions, and acquitted the appellant. But the High Court convicted the appellant. Dismissing the appeal, this, Court :- HELD : The company's premises at Eluru were a factory. (i)Manufacturing processes as defined in s. 2 (k) (i) of the Factories Act were carried on in the premises. Under s. 2(k) (i) manufacturing process means any process for 'making, altering, repairing ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal." The definition is widely worded. The moistening was an adaptation of the tobacco leaves. The 'stalks were stripped by breaking them up. The leaves were packed by bundling them up and putting them into gunny bags. The breaking up, the adaptation, and the packing of the tobacco leaves were done with a view to their use and transport. All these, processes are manufacturing process within s. 2(k)(i). [878 B] State of Kerr v. V. M. Patel, [1961] 1 L.L.J. 549, Sara C. S. Andre v. The State, I.L.R. [1965] 15 Rae. 117, referred to. (ii)The persons employed were workers as defined in s. 2 (1) of the. Factories Act. More than 20 persons worked in the premises regularly every day. The was the positive evidence of P.W.s that the work of stripping stalks from the tobacco leaves was done under the supervision," 876 of the management. There was no evidence to show that the other work in the premises was not done under like supervision. The prosecution adduced prima facie evidence showing that the relationship of master and servant existed between the workmen and the management. The appellant did not produce any rebutting evidence. In the cross- examination of P.W. 1, it was suggested that the workmen were employed by independent contracts, but the suggestion was not borne out by the materials on the record. [881 BEE] Sri Chintaman Rao & Anr. v. State of Madhya Pradesh, [1958] S.C.R. 1340, 1349, Short v. J. W. Henderson Ltd., [1946] S.C. (H.L.) 24, 33-34, Dharangadhara Chemical Works v. State of Saurashtra, [1957] S.C.R. 152, State of Kerala v. V. M. Patel L1961] 1 L.L.J. 549, Shankar Balaji Wage v.State of Maharashtra, [1962] 1 Lab. L.J. 119, Bridhichand Sharma v. First Civil Judge, Nagpur, [1961] 2 Lab. L.J. 86, and D. C. Dewan Mohinder Saheb & Sons v. United Bidi Workers' Union, [1964] 2 L.L.J. 638, referred to. JUDGMENT:
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 271 of
1968.
Appeal by special leave from the judgment and order dated
July 3, 1968 of the Andhra Pradesh High Court in Criminal
Appeal No. 883 of 1966.
M. C. Setalvad, J. M. Mukhi and G. S. Rama Rao, for the
appellant.
P. Ram Reddy and A. V. V. Nair, for the respondent.
The Judgment of the Court was delivered by
Bachawat, J. M/s. Golden Tobacco Co., Private Ltd. have
their head office and main factory at Bombay where they
manufacture cigarettes. The appellant is the occupier-cum-
manager of the company’s premises at Eluru in Andhra Pradesh
where sun-cured country tobacco purchased from the local
producers is collected, processed and stored and then
transported to the company’s factory at Bombay. The
prosecution case is that the aforesaid premises are a
factory. The appellant was prosecuted and tried for
contravention of 16(1) of the Factories Act 1948 and rules 3
and 5(3) of the Andhra Pradesh Factory Rules 1950 for
operating the factory without obtaining a licence from the
Chief Inspector of Factories and his previous permission
approving the plans of the building. The appellant’s
defence was that the premises did not constitute a factory
and it was not necessary for him to obtain the licence or
permission. The 2nd Addl. Munsif Magistrate, Eluru,
accepted the defence contention and acquitted the appellant.
According to the Magistrate the prosecution failed to
establish that the premises were a factory ,or that any
manufacturing process was carried on or that any worker was
working therein. The Public Prosecutor filed an
87 7
appeal against the order. The Andhra Pradesh High Court
allowed the appeal, convicted the appellant under s. 92 for
contravention of s. 6(1) and rules 3 and 5(3) and sentenced
him to pay a fine of Rs. 50 under each count. The present
appeal has been filed by the appellant after obtaining
special leave.
The question in this appeal is whether the company’s
premises at Eluru constitute a factory. Section 2(m)
defines factory. Under s. 2(m) factory means any premises
including the precincts thereof “Whereon twenty or more
workers are working, or I were working on any day of the
preceding twelve months, and in any part of which a
manufacturing process is being carried on with the aid of
power, or is ordinarily so carried on.” It is not disputed
that more than 20 persons were working on the premises. The
points in issue are : (1) whether those persons were
“workers”; and (2) whether any manufacturing process was
being carried on therein.
For the purpose of proving the prosecution case the respon-
dent relied upon the following materials : (1) the testimony
of PW 1 A. Subbarao, the Assistant Inspector of Factories;
(2) his report of inspection of the premises on December 20,
1965; (Ex. P1); (3) the show cause notice Ex. P3, and the
appellant’s reply dated January 15, 1966; (Ex. P5); (4) the
testimony of PW 2 B. P. Chandrareddi, the Provident Fund
Inspector; and (5) Six returns (Exs. P7 to P12), submitted
by the Eluru establishment, to the Regional Provident Fund
Commissioner.
The materials on the record show that in the company’s Eluru
premises, sun-cured tobacco leaves bought from the growers
were subjected to the processes of moistening, stripping and
packing. The tobacco leaves were moistened so that they may
be handled without breakage. The moistening was done for 10
to 14 days by sprinkling water on stacks of tobacco and
shifting the top and bottom layers. The stalks were
stripped from the leaves. The Thukku (wholly spoilt) and
Pagu (partly spoilt) leaves were separated. The leaves were
tied up in bundles and stored in the premises. From time to
time they were packed in gunny bags and exported to the
company’s factory ;it Bombay where they were used for
manufacturing cigarettes. All these processes are carried
on in the tobacco industry. In Encyclopaedia Britannica,
1965 edition, Vol. 22, page 265 under the heading”‘tobacco
industry” it is stated : “After curing, only during humid perio
ds or in special moistening cellars can the leaf be
handled without breakage. It is removed from the stalks. or
sticks and graded according to colour, size, soundness and
other recognizable elements of quality. It is tied into
hands, or bundles, of 15 to 30
878
leaves by means of a tobacco leaf Wrapped securely around
the stem end of the leaves. After grading the leaf is ready
for the market.”
In our opinion, manufacturing processes as defined in s. 2
(k) (i) were carried on in the premises. Under s. 2 (k) (i)
manufacturing process means any process for “making,
altering, ,repairing, ornamenting, finishing, packing,
oiling, washing, cleaning, breaking up, demolishing or
otherwise treating or adapting any article or substance with
a view to its use, sale, transport, delivery or disposal.”
The definition is widely worded. The moistening was an
adaptation of the tobacco leaves. The stalks were stripped
by breaking them up. The leaves were packed by bundling
them up and putting them into gunny bags. The breaking up,
the adaptation and the packing of the tobacco leaves were
done with a view to their use and transport. All these
processes are manufacturing processes within s. 2 (k) (i).
The reported cases are of little help in deciding whether a
particular process is a manufacturing process as defined in
s. 2 (k) (i). In State of Kerala v. V. M. Patel(1) the
Court held that the work of garbling pepper by winnowing,
cleaning, washing and drying it on concrete floor and a
similar process of curing ginger dipped in lime and laid out
to dry in a warehouse were manufacturing processes. With
regard to the decision in Col. Sardar C. S. Angre v. The
State (2 ) it is sufficient to say that the work of sorting
and drying potatoes and packing and re-packing them into
bags was held not to be a manufacturing process as the work
was done. for the purpose of cold storage only and not for
any of the purposes mentioned in s. 2 (k) (i).
The next question is whether 20 or. more persons worked on
the premises. On behalf of the appellant it is admitted
that more than 20 persons work there, but his contention is
that they are employed by independent contractors and are
not workers as defined in s. 2(1). Section 2(1) reads :-
“worker” means a person employed, directly or through any
agency, whether for wages or not, in any manufacturing
process, or in cleaning any part of the machinery or
premises used for a manufacturing process, or in any other
kind of work incidental to, or connected with, the
manufacturing process, or the subject of the manufacturing
process;”
In Sri Chintaman Rao & anr. v. State of Madhya Pradesh($)
the Court gave a restricted meaning to the words “directly
or
(1) [1961] 1 L.L.J. 549. (2) I.L.R. [1965] 15 Rai. 117.
(3) [1958] S.C.R. 1340, 1349,
879
through an agency” in s. 2(1) and held that a worker was a
person employed by the management and that there must be a
contract of service and a relationship of master and servant
between them. On the facts of that case the Court held that
certain Sattedars were independent contractors and that they
and the coolies engaged by them for rolling bidis were not
“workers”.
It is a question of fact in each case whether the
relationship of master and servant exists between the
management and the workmen. The relationship is
characterized by contract of service between them. In Short
v. J. W. Henderson Limited(1) Lord Thankerton recapitulated
four indicia of a contract of service. As stated in
Halsbury’s Laws of England, 3rd ed. vol. 25, p. 448, Art.
872
“The following have been stated to be the
indicia of a contract of service, namely, (1)
the master’s power of selection of his
servant; (2) the payment of wages or other
remuneration; (3) the master’s right to
control the method of doing the work; and (4)
the master’s right of suspension or dismissal
(Short v. J. and W. Henderson Ltd. (1946 S. C.
(H. L.) 24, at pp. 33, 34, Could v. Minister
of National Insurance, [1951] 1. K. B. 731
at P. 734; [1951] All E. R. 368 at p.371;
Pauley V. Kenaldo Ltd. [1953] 1 All. E. R.
226, C. A., at p. 228); but modem industrial
conditions have so affected the freedom of the
master that it may be necessary at some future
time to restate the indicia; e.g., heads (1),
(2) and (4) and probably also head (3), are
affected by statutory provisions (Short v. J.
W. Henderson Ltd., supra at p. 34.”
In Dharangadhara Chemical Works v. State of Saurashtra(2)
the Court held that the critical test of the relationship of
master and servant is the master’s right of superintendence
and control of the method of doing the work. , Applying this
test workmen rolling bidis were found to be employees of
independent contractors and not workers within s. 2(1), in
State of Kerala v. Patel V. M.(3) and Shankar Balaji Waje v.
State of Maharashtra(4) while they were found to be workers
within S. 2(1) in Bridhichand Sharma v. First Civil Judge,
Nagpur(5) and workmen within the meaning of s. 2(s) of the
Industrial Disputes Act in D. C. Dewan Mohinder Saheb & Sons
v. United Bidi Workers’ Union(6).
(1) [1946] S.C. (H.L.) 24, 33-34.(2) [1957] S.C.R. 152.
(3) [1961] 1 L.L.J. 549. (4) [1962] 1 Lab. L.J. 119.
(5) [1961] 2 Lab. L.J 86. (6) [1964] 2 Lab. L. J. 638.
880
There is no abstract a priori test of the work control
required for establishing a contract of service. In Short
v. J. N. Henderson Ltd.(1) Lord Thankerton quoting Lord
Justice Clerics dicta in an earlier case said that the
principal requirement of a contract of service was the right
of the master “in some reasonable sense” to control the
method of doing the work. As pointed out in Bridhichand’s
case(2) the fact that the workmen have to work in the
factory imply a certain amount of supervision by the
management. The Court held that the nature and extent of
control varied in different industries and that when the
operation was of a simple nature the control could be
exercised at the end of the day by the method of rejecting
the bidis which did not come up to the proper standard.
In the present case, the prosecution relied on (1) Ex. P7
to P12, (2) the testimony of PWI and (3) Exs. P1 and P5 to
prove that the persons working at the company’s premises’
at Eluru were employed by the management. Exhibits P7 to
P12 are monthly returns for July to December 1966 submitted
by the company’s Eluru establishment to the Regional
Provident Fund Commissioner under paragraph 38(2) of the
Employees Provident Fund Scheme, 1952. The returns
disclosed the number and names of about 200 persons employed
every month and the recoveries from the wages and the
company’s contributions on account of the provident fund of
each employee. At the top of each return it was stated that
the employees were contract employees. Section 2(f) of the
Employees Provident Fund Act 1952 defines “employee” as
including any person employed by or through a contractor.
Paragraphs 20 and 30 of the Employees Provident Fund Scheme
1952 shows that the employer is required to pay
contributions in respect of all such employees. Paragraph
26 of the Scheme shows that employees who have actually
worked for not less than 12 months or less in the factory or
establishment is entitled and required to become a member of
the Fund. In view of the fact that the returns are in
respect of all persons employed in the establishment either,
by the management or by or through a contractor they are not
of much help in determining whether the employees- were
employed by the management or were employed by the
contractors. They only show that in the months of July to
December 1966, 200 workers had been working in the
establishment for not less than 240 days.
The testimony of PWI, A. Subbarao, the Assistant Inspector
of Factories shows that on December 20, 1965 he found 120
workmen working in the premises. He is corroborated by his
inspection report Ex. PI. In his reply Ex. P-5 the
appellant did not dispute the fact that 120 persons were
working there. PW1
(1) (1946] S.C. (H.L.) 24.
(2) (19611 2 L.L.J. 86.
881
found workmen doing the work of stripping stalks from the
tobacco leaves. The work of stripping was being done under
the supervision of the management’s clerk J. Satyanarain
Rao. At the end of the day the clerk collected the stripped
tobacco and noted the quantity of work done in the work
sheet allotted to the worker. PW1 found some workmen doing
other work.
The onus of proving that the workmen were employed by the
management was on the prosecution. We think that the
prosecution has discharged this onus. It is not disputed
that more than 20 persons worked in the premises regularly
every day. There is the positive evidence of PW1 that the
work of stripping stalks from the tobacco leaves was done
under the supervision of the management. There is no
evidence to show that the other work in the premises was not
done under the like supervision. The prosecution adduced
prima facie evidence showing that the relationship of master
and servant existed between the work-men and the management.
The appellant, did not produce any rebutting evidence. In
the cross-examination of PW1, it was suggested that the
workmen were employed by independent contractors, but the
suggestion is not borne out by the materials on the record.
We hold that the persons employed are workers as defined in
s. 2(1). The High Court rightly held that the company’s
premises at Eluru were a factory.
In the Courts below the appellant produced (1) am order of
the Chief Inspector of Factories, Madras and (2) a letter of
Superintendent of Central Excise I.D.O. Vijayavada. Mr.
Setalvad conceded, and in our opinion rightly that these
documents throw no light on the question whether in 1966
premises were a factory within the meaningof s. 2 (m).
We,therefore say nothing more with regard tothese documents
In the result, the appeal is dismissed.
Y.P. Appeal dismissed.
882