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Judgment
P. Ramakrishnan, J.—The short question which arises for consideration in this writ petition is whether the petitioner who runs a handloom as
well as power-loom factory is a person who is bound to make a contribution under the Employees'' State Insurance Act for the employees in his
establishment. The petitioner took up the* stand that in his establishment there were no employees as defined in Section 2 (9) of the Act XXXIV
of 1948, the Employees'' State Insurance Act, 1948, that what obtained between himself and the workers in his factory was only a contract for
service and not a contract of service and therefore he was not bound to pay contribution in respect of the workers under the aforesaid Act. But the
Employees'' State Insurance authorities rejected his contention and held that he was liable to pay the contribution under the Act. Against the order
of the Regional Director of the Insurance Corporation demanding payment of contribution the petitioner filed an appeal u/s 75 of the Act in the
Court of the Additional Commissioner for Workmen''s Compensation, Madras, who confirmed the order of the Director. Aggrieved against that
order the petitioner has come to this Court for relief under Article 226 of the Constitution by way of a writ of certiorari.
I may mention at this stage that earlier the matter was brought before this Court as an appeal in C.M.A. No. 84 of 1962 against the order of the
Additional Commissioner. But Veeraswami, J., held that an appeal was not competent and rejected the appeal. This writ petition is filed as a
consequence of the dismissal of the appeal.
It is contended by the learned Counsel appearing for the petitioner, Sri N. R. Raghavachariar, that the findings of the Tribunals below about the
nature of the employment would attract the principles laid down by this Court in Palaniappa Mudaiiar v. Additional First Class Magistrate, Kulitalai
ILR (1958) Mad. 999 : (1958) M.L.J. 699 : (1958) M.L.J. 346 : (1958) L.L.J. 744, a judgment of Balakrishna Ayyar, J., as well as the decision
of the Supreme Court in Shankar Balaji Waje Vs. State of Maharashtra, . Before examining the applicability of these decisions to the present case
I will set down briefly what are the findings of fact arrived at by the tribunals below regarding the nature of the work done in the petitioner''s
factory.
The petitioner''s contention was that in his factory the business done is weaving of bed sheets, ribbons and dhothies and that he has maintained
both power-looms as well as hand looms for the purpose. At a time about 70 persons work at the power-looms and about 120 persons work at
the handlooms. The petitioner contended that weavers in the neighbourhood go over to his factory, undertake weaving of bed-sheets, dhothies and
ribbons out of the yarn supplied by the petitioner, that the weaving is done in the premises itself, that payment is not made as wages for work done
at any particular time but is made according to the rates stipulated for a particular fabric woven and turned out by each individual weaver. The
weavers had no fixed hours of work. They can work in the premises at any time convenient to them. The workers can go as they like and come as
they like and work on such days as are convenient to them. In such circumstances, the petitioner contended that there was no relationship of
master and servant and there is only a contract for service instead of a contract of service. But the finding of the Additional Commissioner for
Workmen''s Compensation who inspected the factory on 20th June, 1961, gives a substantially different picture of the nature of the employment.
He found that there were two sections of machines in the business, one for power-looms for manufacturing cloth and ribbon and the other for
handlooms for manufacturing dhothies. Handloom weavers are paid on the basis of yards of ribbon manufactured by them once a week.
Powerloom weavers are paid on the basis of quantity of cloth produced by them once a week. One significant point was that the workmen are
required to make dhothies, etc., out of the yarn supplied by the applicant only as specified by the applicant. The applicant controls the type of cloth
to be made and the quality also. The Additional Commissioner found that it was evident that the applicant had full control over the workmen when
they were employed inside the establishment, though they were paid only at piece rate basis.
In the judgment of Balakrishna Ayyar, J., in S. Palaniappa Mudaliar Vs. Additional First Class Magistrate and Others, also a weaving
establishment was dealt with. There also the workmen were under no obligation to come and work on any particular day. They were free to come
at any time and go at any time and work on bed-sheets and towels. They could not be prevented from working for a competing manufacturer. This
is also a feature that obtains in the present establishment. But Balakrishna Ayyar, J., at page 751 of the report after referring to the above features
observed : -
The petitioner cannot tell him that h'' : should work on towels and not on bed-sheets or vice versa. If the worker so pleases, he can work on
towels though the petitioner would prefer him to work on bed-sheets.
But as observed above, here the employer had clear control over the workers on the type of cloths they had to manufacture, whether they were
bed-sheets or dhothies and they were required to work on the premises of the employer. The employer was clearly interested in seeing that the
workers manufactured the clothes which he has specified and according to the directions which he had specified regarding their quality, etc. It is
legitimate to infer that in such circumstances the employer would have exercised constant supervision over the process of weaving to ensure that
the required quality of the product is turned out from the power-looms or handlooms as the case may be.
Taking up Shankar Balaji Waje Vs. State of Maharashtra, it was a case where the factory was engaged in the rolling of beedies which were
given to workers for being rolled. The Supreme Court found that the appellant had no control or supervision over the details of the rolling of
beedies. The management simply told the labourers to produce beedies rolled in a certain form. How the labourer carried out the work was his
own concern and was not controlled by the management which was concerned only with getting beedies rolled in a particular style with certain
contents.
On the other hand the Supreme Court decision in Dharangadhara Chemical Works Ltd. Vs. State of Saurashtra, had laid down the principles
for distinguishing a contract of service from a contract for service. The principal requirement of a contract of service is the right of the master in
some reasonable sense to control the method of doing the work; the nature or the extent of the control must necessarily vary from business to
business and is by its very nature incapable of precise definition. In the present case it is clearly established that the master had a voice in the
selection of the goods to be manufactured and also in the quality of the goods. He had also provided that the work should be done in his own
premises by the workers even though they might be paid at a piece rate basis. In the above circumstances it will be a necessary concomitent of the.
agreement between them, that the management will have constant supervision over the work of the labourer, to ensure that the labourer does not
waste the warp that the management had supplied to him, and that the net product that emerges from the loom, conforms to the specified
requirements of the employer. One can visualise the management insisting that the weaving of threads should be sufficiently close, that the threads
used from time to time are not broken too frequently, leading to too many knots in the woven fabric. All these are incidental details of supervision
in a situation like the present, when a master-weaver engages a number of workers to work at looms in his own factory for producing articles
according to his stipulation, and of the desired quality and desired variety. I therefore, find that the Tribunal below was right in holding this to be a
contract of service and not a contract for service, and that the provision of the Employees'' State Insurance Act are attracted.
The Writ Petition is dismissed. No order as to costs.