Bombay Wires Healds Manufacturing Company, Bombay vs Employees State Insurance Corporation

Messrs. Bombay Wire Healds Manufacturing Company of Sonawala Estate, Goregaon (East), Bombay, are an ancillary unit engaged in the manufacture of Wire Healds which are used by textile mills in their Weaving Departments. The purchasing mills require a bundle of 500 pieces of wire and though the wires are manufactured in the factory premises at Goregaon by the Appellant Company, they find it economical, with a view to conserve scarce floor space of their premises, to get the threading of these wires and bundling them together from house-wives who do the work at their own premises. The material required viz., the wires, the thread etc. is supplied by the factory to the house-wives who collect the same in the factory premises in the morning, take them to their respective homes and after completing the threading and bundling work, return the packages the next day. These packages are then examined by checkers and packers and the house-wives are paid at the rate of 10 paise per bundle of 500 wires. Sometimes, even the permanent employees of the factory take the material and the thread at home to augment their income but generally it is done by non-working house-wives who prefer to work in their respective homes. It matters little to the factory as to who does this piece-work so long as it is done and done well.

The Regional Director, Employees'' State Insurance Corporation, held that these workers who do the threading work at home are employees within the meaning of S. 2(9) of the Employees'' State Insurance Act, 1948 (''the Act''), and called upon the company to comply with the provisions of the Act by making contributions to the E.S.I. Fund. The Company failed to get relief against this order before the Employees'' Insurance Court at Bombay, and hence the present appeal.

It is common ground that the purchasing textile mills would not purchase the wires manufactured by the company unless these are in bundles of 500 duly threaded and packed and hence there is no gainsaying of the fact that threading of the wires is a work "connected with the work of the factory or establishment" within the meaning of Cl. (i) of Sub-s. (9) of S. 2 of the Act. It is only as a matter of convenience and saving of valuable floor space that the company finds it economical to get the work done from persons who are willing to do the same at their respective homes.

That brings us to the question whether the house-wives who are doing this work of threading the wires at 10 paise per bundle of 500 wires can be called ''employees'' on the ground that they are "directly" employed by the factory for a work which is connected with the work of the factory.

Whilst distinguishing the relationship of master and servant from that of an employer and independent contractor, the traditional test has been "the control" test and a contrast of service was thought to be one by virtue of which the employer cannot only order or require what is to be done but how it shall be done. This test has been criticised by modern writers (Winfield and Jolowicz on ''Tort'', Twelfth Edition, W.V.H. Rogers, Pages 574-575) on the ground that in modern conditions the notion that a master has the right to control the manner of work of all his servants, save perhaps in the most attenuated form, contains more of fiction than of fact. Attempt was made by Denning L.J. to draw a distinction between a contract of service and a contract of services, Stevenson, Jordon and Harrison Ltd. v. Macdonald (1952) I.T.L.R. 101 Weir, Casebook on Tort, 5th ed., p. 225; of Petter v. Metropolitan Properties Co. Ltd. (1973) E.G. 973, by saying that :

"It is often easy to recognise a contract of service when you see it, but difficult to say wherein the distinction lies".

xxx xxx xxx

"The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance would differ from facts of each case."

In the instant case, the pattern of engagement of these house-wives for the threading work gets reflected in Exhibit A-3 which is an acquittance roll for month of September 1970, under the caption - "Roll Threading Charges". As many as 30 persons have been paid for their job work of threading in this month; the highest amount received by a person being Rs. 84.60 p. and the lowest Rs. 1.65 p. There are hardly 10 persons who have been paid more than Rs. 20/- in the month. Another 12 are in the range of Rs. 10/- to Rs. 20/- while 15 of them got less than Rs. 7.50 p. as per payment is on piece work basis. One could easily see then in this pattern their is no continuity in the engagement of these persons for the threading work.

It is no doubt true that the factory does exercise a certain amount of control over these workers to the extent that when they deliver the threaded and packed material to the factory the packers and the checkers would ensure that each bundle contains 500 wires duly threaded. But this partakes more of the concept of inspection after the work is executed rather than control over stage-by-stage work, when the servant is in the process of executing the work. A check on the quality of the finished product is more an index of relationship between an independent contractor and an employer rather than that of the master and servant as would be apparent by taking as analogy from building construction contracts where periodic payments are made on the basis of certificate given by an architect. The rate of payment is fixed at 0.10 paise per bundle of 500 wires which manner compares favourably with that of an item rate contract in building construction work where payment at running feet or square feet is made on the basis of the end-product after measurement. It hardly matters who supplies the material. In the instant case, as the wires had to be threaded it goes without saying that the wires which have been manufactured by factory have to be supplied by the factory. At most the factory could have asked the casual workers to purchase their own thread and needles for threading wires into bundles of 500 each. Probably with a view to ensure quality control the factory themselves supplied the threads and nothing would turn on this fact alone.

The entire scheme of the Act which is a piece of special welfare legislation is to grant benefit to a person who has a certain amount of continuity of service in the establishment where he works. That is why the First Schedule to the Act which gives the rates of contributions speaks about a wage period and how average daily wages are to be calculated and a weekly contribution made. No doubt, sometimes the average daily wages can go as low as Rs. 2/- but the concept of calculating the average wages carries with it a concept of continuity of service for a determined period. As the table Exhibit A-3 in the present case shows, in the whole month most of the workers in threading business have earned less than Rs. 15/- per month which would mean that they had threaded hardly 150 bundles throughout the month. This type of work is more on piece basis or a casual one like hiring a taxi-cab for travelling fixed distance on payment of stipulated fare etc. Reference was made to the judgment of the Supreme Court on Royal Talkies, Hyderabad and Others Vs. Employees State Insurance Corporation, , wherein employees of cycle stand and canteen run in a cinema theatre by contractors were held to have been covered by the definition of ''employee'' in this Act. In Royal Talkies case the establishments were such that they had to cater on day-to-day basis to the needs of the patrons visiting the theatre and hence the running of a canteen or maintenance of a cycle stand was a feature which has continuity. To a dispassionate viewer, the cycle stand and canteen are so integrated in the show business of exhibiting pictures, that he would place the persons working there along with the usherers in one and the same class of employees. The feature of continuity does not exist in respect of the workers in our present case who earn 1.65 paise in the entire month.

In these premises, I find that the lower Court was wrong in rejecting the application of the Appellant factory. The appeal is, therefore, allowed and it is declared that the persons doing the threading work in the Appellant factory are not employees of the factory under the Act. However, in view of the peculiar circumstances of the case, the parties shall bear their respective costs.