Case Note & Summary
The dispute arose between Basti Sugar Mills Ltd. and twenty-one workmen over termination of services and payment of wages below the minimum prescribed wage of Rs.55 per month for vacuum pan sugar factories in Uttar Pradesh. The workmen had been engaged from November 21, 1958 to February 5, 1959 in removing press-mud in the appellant's sugar factory. Their services were terminated on February 6, 1959, and they were allegedly paid less than the statutory minimum. The Governor of Uttar Pradesh referred the industrial dispute to the Labour Court, Lucknow on July 31, 1962. The appellant contended that the workmen were employed by a contractor, Banarsi Das, not by the management, and therefore the company was not their employer under the Uttar Pradesh Industrial Disputes Act, 1947. The Labour Court accepted that the work was done through the contractor but held that under Section 2(i)(iv) of the Act the appellant was in law the employer. It directed payment of wages at the minimum rate, difference of wages for the period worked, and reinstatement of the workmen if not already employed. The appellant challenged this award by special leave before the Supreme Court. The legal issues were whether the extended definition of employer included the appellant; whether such definition violated Article 19(1)(g) of the Constitution; and whether the workmen fell within the Standing Orders definition of 'workmen' for minimum wage purposes. The appellant argued that the definition should not apply, that it violated fundamental rights, and that the Standing Orders phrase 'employed by a factory' excluded contractor's workmen. The Court reasoned that the purpose of Section 2(i)(iv) was to make the owner of an industry the employer of workmen engaged through contractors for work ordinarily part of the industry, preventing evasion of labour laws. Section 2(z) already included such persons as workmen. Any restriction on trade was in the interest of the general public and hence constitutional. The words 'employed by a factory' were held to include every person employed to do the work of the factory, including contractor's labour, because the use of 'by' rather than 'in' was to cover work inside or outside the factory. The Supreme Court dismissed the appeal and upheld the Labour Court's award, holding the appellant liable as employer and the workmen entitled to minimum wages, difference in wages, and reinstatement.
Headnote
A) Industrial Dispute - Definition of Employer - Owner of industry contracting for work ordinarily part of industry is employer of contractor's workmen - Uttar Pradesh Industrial Disputes Act, 1947, Sections 2(i)(iv) and 2(z) - The 21 workmen were employed by contractor Banarsi Das to remove press-mud in the appellant's sugar factory, work ordinarily part of the industry. The Court held that sub-clause (iv) of Section 2(i) makes the owner of the industry the employer of workmen engaged through a contractor, and read with Section 2(z), the respondents were workmen of the appellant. Held that the appellant's contention to the contrary was untenable and fantastic; first point rejected. (Paras 1-6) B) Constitutional Law - Right to Trade and Business - Extended employer definition not violative of Article 19(1)(g) - Constitution of India, Article 19(1)(g) - The appellant argued that making the owner the employer of contractor's labourers imposed restrictions on its right to carry on trade. The Court held that even if restrictions existed, they were in the interest of general public to prevent evasion of industrial disputes legislation through contractor devices. Held that the definition was constitutional. (Paras 1-6) C) Labour Law - Standing Orders - Interpretation of 'employed by a factory' - Uttar Pradesh Industrial Disputes Act, 1947, Section 3(b) and Standing Orders dated October 3, 1958 - The Standing Orders defined workmen as any person employed by a factory; the appellant contended this excluded contractor's workmen. The Court held that in ordinary grammatical sense, 'employed by a factory' includes every person employed to do the work of the factory, including contractor's workmen, and they were entitled to minimum wages. Held that the workmen were entitled to the benefit of Standing Orders. (Paras 1-6)
Issue of Consideration
Whether the appellant company was the employer of the 21 workmen under Section 2(i)(iv) read with Section 2(z) of the Uttar Pradesh Industrial Disputes Act, 1947; Whether the extended definition of employer violated Article 19(1)(g) of the Constitution; Whether the respondents were workmen under the Standing Orders and entitled to minimum wages
Final Decision
The Supreme Court dismissed the appeal and upheld the Labour Court award. It held that the appellant company was the employer of the 21 workmen under Section 2(i)(iv) read with Section 2(z) of the Uttar Pradesh Industrial Disputes Act, 1947; the extended definition did not violate Article 19(1)(g); and the respondents were entitled to minimum wages under the Standing Orders. The Labour Court's directions for payment, wage difference, and reinstatement were affirmed.
Law Points
- Definition of employer under Section 2(i)(iv) U.P. Industrial Disputes Act
- 1947 includes owner of industry contracting for work ordinarily part of industry
- Section 2(z) definition of workman is wide enough to include persons employed by contractor
- Read together
- contractor's workmen are workmen of principal employer
- Restriction on right to trade under Article 19(1)(g) is in interest of general public
- Standing Orders definition 'employed by a factory' includes contractor's workmen
- Device of engaging contractor cannot be used to evade Industrial Disputes Act
