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Judgment
Raghavan, J.—The Petitioners in the above batch of writ petitions are manufacturers of beedies and have been marketing them under their
trade name. Writ Petition No. 2090 and 2167 to 2171 of 1971 have been filed seeking for the issue of Writ of Prohibition/prohibiting the Industrial
Tribunal Madras-1, from proceeding with the enquiry in Industrial Dispute No. 23 of 1971, on the strength of G. O. Rt. No. 599, Labour, dated
18th March 1971, referring the dispute for adjudication by the Industrial Tribunal, Madras. Similarly the Petitioners in Writ Petition No. 3614 to
3616 and 3644 of 1971, seek to issue a Writ of Prohibition prohibiting the Industrial Tribunal, Madras-1, from proceeding with Industrial Dispute
No. 63 of 1971 on the strength of G.O. Rt. No. 1306 of 1971, dated 25th June 1971. The contentions in the above two batches are substantially
the same and we shall take Writ Petition No. 2090 of 1971, etc., batch first and deal with the additional points raised in Writ Petition No. 3614 of
1971, batch in due course.
We shall now take up Writ Petition No. 2090 of 1971, by way of example. The Petitioner is a manufacturer of beedies and is marketing them
under their trade name. There are three systems adopted by beedi trade-mark holders in North Arcot district in the manufacturer and rolling of
beedies viz., (1) factory system, (ii) contract system and (iii) out-work system.
Factory system.--Under the system, the roller of beedi has to work inside the factory and is governed by the provisions of the Factory Act and
is paid for the work turned out by him and under this system the master and servant relationship according to the Petitioner, exist between the
employer and the worker.
Contract System .--Under this system, which is adopted by most of the beedi trade mark holders in North Arcot District, the trade-mark holder
would issue the raw material for the manufacture of beedies to a contractor, who engages his own labour for the purpose of rolling the beedies.
The finished product viz. the rolled beedies are delivered by the contractor to the trade-mark holder, who makes them. The rate per thousand
beedies rolled is negotiated by the trade-mark holder with the contractor. The contractor gets the beedies rolled by engaging workers at rates fixed
by him, retaining a margin of profit for himself. It is the entire responsibility of the contractor to decide the manner in which or the means by which
the beedies are to be rolled the trade mark holder having no say in the manner in which the work is done. The contractor issues raw materials to
individual beedi rollers, who roll beedies in their home either by themselves or through other members of their family, both on a full time or on a
part time basis. The trade-mark holder has no hold or control over the beedi rollers either with regard to the time they should spend for rolling
beedies or with regard to the manner of manufacture. The trade-mark holder looks to the contractor for getting the beedies rolled and he is
concerned only with the finished product and under this system the Petitioner''s case is that there is no relationship of master and servant between
the trade-mark holder and the beedi roller.
Out Work System .--Similarly as regards out work system the trade mark holder directly issues raw materials to workers, who come to his
premises for collecting the raw-materials. Each worker will have a pass-book under the Central Excise Rules showing the maximum quantity of
tobacco permitted to them to be in their possession. The quantity issued by the trade-mark holder to the worker is entered in the pass-book and
the raw-material is taken by him to his home. The worker rolls beedies by himself or with the help of the members of his family either on a full-time
basis or during his spare time. The finished products is brought to the trade mark holder''s premises for delivery, and as in the case of contract
system the trade-mark holder receives the finished product after rejecting the defective, broken or sub-standard beedies. As in the ease of contract
system the trade-mark holder is not concerned with the question as to how exactly the beedies are rolled or who rolls them. No control or
supervision is exercised by the trade-mark holder over the manner in which the beedi roller does his work. The Petitioner''s contention is that even
in this system, which eliminates the contractor, there is no relationship of master and servant between the trade-mark holder and the beedi roller, as
the trade-mark holder has no control over the work of the roller of beedies.
The Petitioner has his business premises in Gudiyatham, North Arcot district. The beedi rollers are members of Union called The Gudiyatham
Beedi Workers'' Union, Dharnampet, which is impleaded as the fourth Respondent in the writ petition. The third Respondent in the writ petition, is
the Secretary of the North Arcot district beedi workers'' union, Vellore. By a charter of demands dated 5th November 1969 the fourth
Respondent made two demands against the Petitioner management and six others who are called Beedi Manufacturers of Gudiyatham. The first of
such demands was for payment of bonus for the year 1967-68 and 1968-69 before Deepavali and Ramzan to all beedi rollers at 25 percent of the
annual wages. The second demand was for the grant of festival holidays with wages for Deepavali and Ramzan under the Madras Industrial
Establishment (National and Festival Holidays) Act, 1958. A copy of the charter of demands was sent to the Labour Officer, Vellore, and was
duly served on the Petitioner Management. The Labour Officer by his letter dated 15th November 1969 called upon the Petitioner -management
to file their statements in answer to the charter of demands and the Petitioner submitted their objections. The contentions put forward by the
management in the objection statements inter alia are: (i) that there is no relationship of master and servant between the managements and the beedi
rollers ; (ii) that the premises or residences of beedi rollers are not establishments as defined under the payment of Bonus Act and Industrial
Establishments as defined under the Madras Industrial Establishments (National and Festival Holidays) Act, 1958 and that consequently there is no
liability on the part of the management to pay any bonus. A further contention arose during conciliation proceedings regarding the representative
capacity of the fourth Respondent. The Labour Officer in his report, dated 12th January 1970 stated on the first question that he could not bring
about conciliation on the first demand, on the second question, namely, that the same cannot be a subject matter of conciliation and on the third
question, namely, that out of a total of 6,800 workers under the contract and out-work system in all the 7 beedi companies in Gudiyatham, only
800 workers are members of the Gudiyatham Beedi Worker''s Union. While matters stood thus the Executive Committee of the third Respondent
Union resolved to make demands against trade-mark holders in respect of several matters including a demand for bonus under the payment of
Bonus Act, 1965, for the years 1968-69 and 1969-70 and copies of the resolution were sent to the trade-mark owners and to the Labour
Commissioner, Madras. The workers went-on strike on the failure of the Management denying the demands. There was an informal discussion
between the Commissioner of Labour and the representatives of the Union and the Management and a settlement was arrived at on July 7, 1970,
under which the beedi workers were assured of 1,500 beedies a day for rolling and payment of the wages at the rates as per the settlement of 8th
July l968 and that the strike should be called off immediately. So far as the claim for bonus and other matters not covered by the above terms of
settlement, the settlement itself stated as follows: regarding other issues the Commissioner of Labour will be writing to the parties.
The Petitioner''s case is that meanwhile the Government had in G. O. Rt. No. 599, Labour, dated 18th March 1971, referred u/s 10(1)(d) of
the Industrial Disputes Act, 1947, for adjudication to the Industrial Tribunal, Madras, the following issue.
Whether the demand of the workmen of the beedi establishment mentioned below for bonus for the year 1969-70 is justified, and if so, to fix the
quantum.
The contention of the Petitioner is that the fourth Respondent at no time made a demand for payment of bonus for the year 1969--70, that their
demand was only with reference to the previous two years, that the informal discussion before the Commissioner did not relate to bonus at all, that
as, per the settlement dated July 7, 1970, it was specifically provided that regarding the other claims the Commissioner of Labour would be writing
to the parties and that the Commissioner of Labour did not write to the parties about the claim for the bonus for the year of 1969-70. On the
above facts the Petitioner sought for the issue of writ of prohibition prohibiting the Industrial Tribunal, Madras from proceeding with Industrial
Dispute No. 23 of 1971 on the strength of the above G. O. on the following grounds:
(i) The jurisdiction of the Government to refer a dispute for adjudication arises only in a case where an Industrial dispute exists or is apprehended.
There was no claim for bonus by the fourth Respondent for the year 1969-70 against the management and that consequently no question of
industrial dispute with reference to their claim for bonus for the year 1969-70 arose and the reference is wholly without jurisdiction.
(ii) By Central Act XXXII of 1966 known as Beedi and Cigar Workers (Conditions of Employment) Act, 1966, which is a complete code dealing
exhaustively and exclusively with the rights and conditions of beedi and cigar workers, the Payment of Bonus Act, 1965 is not made applicable to
Managements manufacturing beedies under the provisions of the Beedi and Cigar Workers (Conditions of Employment) Act, 1966. There is,
therefore, no liability on the part of the manufacturers of beedi to pay bonus to beedi rollers. The reference is, therefore, wholly without jurisdiction.
(iii) Respondents 3 and 4 have no representative capacity, and as such, any demand by such Union would not clothe the demand with the
character of a statutory demand under the Industrial Disputes Act enabling the Government to refer the alleged dispute for adjudication.
(iv) Both under the contract system and out-work system there is no relationship of employer and employee between the beedi manufacturers and
the beedi rollers and the provisions of the Industrial Disputes Act being applicable only to cases where the relationship of master and servant exists,
and in the present case no such relationship existing between the manufacturers of beedies and the rollers of beedies, the Government has no
jurisdiction to refer for adjudication any question under the Industrial Disputes Act.
(v) The fourth Respondent has filed a counter denying all the allegations of the Petitioner and contending as follows: The fourth Respondent is a
beedi workers registered trade Union having a membership of the beedi workers employed in all the beedi establishments in Gudiyatham, North
Arcot District. There are six beedi establishment in including the Petitioner Management and more than 50 percent of the workers employed in
these establishments are members of the fourth Respondent Union. The Petitioner is the actual and real employer of the beedi workers and under
the contract system the contractors act on behalf of the trade mark owner and it is not correct to say that the beedi rollers are employed by the
sot-called contractors. The so-called contract system has been deliberately brought about so as to make it appear that the Petitioner is not the real
employer and the system is nothing, but a sham and nominal arrangement made by the Petitioner seeking to avoid all legal obligations towards the
workers (Beedi Rollers). It is the trade mark owner who actually exercises supervision and control over the work of beedi rollers and this control
is exercised in the form of rejecting defective, broken or sub-standard beedies. Regarding the workers engaged in the out-work system they are
provided with pass books got at the instance and expense of the Petitioner under the Central Excise Rules without which no worker would be
allowed to take the tobacco to his place of residence. The trade-mark owner himself directly issues leaves and tobacco to the workers who should
come to his industrial premises for collecting the same. The workers both under the contract system and the out-work system are compelled to mix
only that tobacco given by the employer and make beedies of the size indicated by the Petitioner. The Petitioner exercises supervision and control
in various forms and there is no substance in the contention of the Management that there is no relationship of master and servant between the
Petitioner and the beedi rollers. The Beedi and Cigar workers (conditions and Employment) Act, 1966, includes all the beedi rollers whether under
the out-work system or the so-called contract system under the definition workmen. The question whether there is master and servant relationship
between the beedi rollers and the trade -mark owners, is a question that has to be decided by the Tribunal which has got initial jurisdiction to
decide the question and a writ of prohibition is wholly misconceived.
(vi) The charter of demand, dated 5th November 1969 raised a dispute with all the beedi managements is Gudiyatham regarding bonus for the
years 1967-68 and 1968-69. The said dispute was taken up for conciliation and on its failure the Labour Officer concerned submitted his report to
the Government. Meanwhile the third Respondent union raised an industrial dispute sometime in January 1970 in all the Beedi establishments in the
North Arcot District demanding bonus for the year 1969-70. This issue of bonus for the year 1969-70 was not separately raised by the fourth
Respondent, as the third Respondent had already raised a dispute in that regard. It is stated that all the workers in all the establishments including
the Petitioner-management will be entitled to the benefits thereunder. Thereafter there was a strike by the workers of all the beedi establishments
including the Petitioner management which necessitated the intervention of the Commissioner of Labour and a settlement u/s 12(3) of the Act was
arrived at between the parties which included the Petitioner management also, on certain issues other than the demand for bonus for 1969-70. A
reference by the Government need not necessarily be preceded by conciliation proceedings and it is open to the Government to refer the dispute
straight away without having conciliation proceedings. The reference regarding bonus for the year 1969-70 is valid and the same cannot be
questioned on any of the grounds raised by the Petitioner. The beedi Cigar Workers (Conditions of Employment) Act, 1966 is not a complete
code and it does not deal with, the question of bonus. The Payment of Bonus Act 1965 alone provides for payment of bonus for the workers in all
factories and establishments and the workmen in beedi establishments are entitled to claim bonus under the Bonus Act. Even on the Petitioner''s
own showing, no writ of prohibition will lie and the Government has ample jurisdiction to refer the dispute to the Tribunal.
(ii) On behalf of the first Respondent a common counter affidavit in the two batches of writ Petitions was filed by the Joint Secretary to
Government, Labour and Employment Department, Madras-9. In the counter affidavit it was pointed out that the Supreme Court in its judgment in
1964 II Labour Law Journal page 633 at 638 has held that employer-employee relationship subsists between the Beedi managements and beedi
rollers. On the question of the representative character of the fourth Respondent it was pointed out that the North Arcot District Beedi Workers''
Union has also been impleaded as a party to the dispute and that both the Unions together represent more than 1,500 workmen and the dispute is
an industrial dispute as defined u/s 2(k) of the Industrial Disputes Act, 1947. On the question of the applicability of the Payment of Bonus Act as
also the question whether the premises or residences of beedi rollers are establishments under the Payment of Bonus Act, 1965 and under the
Tamil Nadu Industrial Establishments (National and Festival Holidays) Act it was pointed out in the counter affidavit that these question would be
considered by the Industrial Tribunal to which the dispute has been referred on the report of the Labour Officer that conciliation failed, the
reference was validly made. It was further pointed out that it is open to the Government to refer any dispute for adjudication even if they
apprehend a dispute and Gudiyatham Beedi Workers'' Union having raised an industrial dispute on the issue of bonus for 1969-70 in respect of
which the Labour Officers had sent a failure report over bonus for 1969 the Government referred the dispute for 1969-70 and consequently the
reference is in order. On the contention that the Beedi Rollers are not workmen, the judgment in Writ Petition No. 1790 of 1969, dated 11th
November 1969, where in the learned Judge held that the master and servant relationship existed between the management and the Beedi Rollers
was relied upon. It was further pointed out that it is open to raise the other questions before the Industrial Tribunal to whom a reference has been
made and that a writ of Prohibition prohibiting the Tribunal from proceeding further with the enquiry cannot lie.
Mr. K. K. Venugopal, the learned Counsel for the Petitioner raises the following contentions:
(i) The relationship of master and servant does not exist between the Petitioner and the beedi workers represented by the fourth Respondent and,
therefore, the provisions of the Payment of Bonus Act, 1965 do not apply to the facts of the present case;
(ii) The Beedi and Cigar Workers (Conditions of the Employment) Act, 1966 is a complete code exhaustively and exclusively dealing with all rights
and conditions of employment of beedi and cigar workers and the Payment of Bonus Act, which was earlier in point of time not having been
specifically referred to and made applicable the said Act (Payment of Bonus Act) has no application to the workers under the Beedi and Cigar
workers (Conditions of Employment) Act, 1966; and
(iii) The fourth Respondent has no representative character and, therefore, the reference by the Government is incompetent. We shall refer to the
Beedi and Cigar Workers (Conditions of Employment Act 1966, as the Beedi Workers Act and the Payment) of Bonus Act, 1965, as the Bonus
Act in the course of our judgment.
We shall, at the outset mention that a Writ of Prohibition asked for cannot be issued on the facts of the case as the questions raised are
jurisdictional issues, which could be decided by the Tribunal. But in view of the fact that the learned Counsel argued the questions in full, we
propose to deal with the points raised.
The Beedi Workers Act, which is a Central Enactment has a long history behind it. The State of Madras in 1958 enacted in the Madras Beedi
Industrial Premises (Regulation of Conditions of Workers) Act, (XXXII of 1958). The validity of the said Act was questioned in Abdul Bahim v.
State of Madras (1961) 2 M.L.J. 42. Ramachandra Iyer, J., as he then was, who delivered the judgment on behalf of the Bench, traced the history
of this Industry. In 1944 a Committee under the Chairmanship of Mr. D. V. Regeo, I.C.S., was appointed by the Government of India to
investigate into the conditions of the Industrial Labour obtaining in the beedi, cigar and cigarette industries. The Committee enquired into the
conditions obtaining in the beedi, cigar and cigarette industries and its report makes a reference to the widely prevalent contract system whereby
the factory owners engaged a large number of middle men, supplied them with raw materials and purchased finished products from them. The
report concluded thus:
To conclude, matters requiring immediate attention in the beedi and cigar industries are the unhealthy working conditions, long hours of work,
employment of women and children deduction from wages and the sub-contract system of organization. It is desirable to abolish the out-work
system and to encourage establishment of big factories, in the beedi and cigar industries if productive labour legislation is to be enforced with any
degree of success. In view of the large number of women workers in the beedi industry, appointment of a women factory inspector in the important
beedi making provisions is desirable.
In 1946, the Government of Madras appointed a Court of Enquiry into labour conditions in beedi, cigar, snuff, tobacco-curing and tanning
industries. The report of the Court of Enquiry gave valuable information in regard to the organisation of those industries in South India. It was found
that approximately there were about ninety thousand workers dependent on the beedi industry in the Madras Stare'' that out of them about twenty-
six thousand and five hundred were women and that employment of children in the industry was universal, and that two fifths of the total workers
would be children. The report further mentioned how the simple minded purdah women were cheated by their employers. In July 1954, the
Government of India, observing the tendency on the part of the employers in beedi industry to resort to devices to circumvent the operation of the
Factories Act, suggested to the various State Governments to assess the situation in all its aspects and with a view to affording maximum legislative
protection to the workers. The State Government appointed Mr. M. A. Natarajan, the Regional Inspector of Factories, for this purpose. His
report disclosed the distressing conditions of the work in that industry and the undue advantage taken by the employers in exploiting the poor and
illiterate workers without regard to their welfare and he recommended that legislation should be under taken to regulate the working conditions of
the workers in the beedi industry. It was under these conditions and circumstances the State Government enacted the Madras Beedi Industrial
Premises (Regulation of Conditions of Work) Act (XXXII of 1958). The validity of the Act was substantially upheld.
Three system are adopted in the manufacture of beedies. They are:
(i) Where the manufacturer is the owner of a factory, workers gather and work under his super vision as his employees.
(ii) The contract system of employment under which the proprietor gives a middlemen called branch managers or contractors, quantities of beedi
leaves, tobacco and packing materials etc, supplied. The contractor, on receiving the raw materials ,manufactures beedies by employing indirectly
labourers or by distributing materials amongst the home workers, as they are called, mostly women who manufacture beedies in their own homes
with the assistance of other members of their family including children.
(iii) The proprietor himself, without the agency of middlemen, supplies the tobacco and beedi leaves to the various out-workers who roll beedies
and art paid at a particular rate. The finished products are labelled and packed by the proprietor and sold to the public.
The above three systems may be referred to as the factory system, contract labour system and outworker system. With regard to the factory
system the provisions of the Factories Act and other Labour Legislations are attracted. As. regards the contract system, the trade-mark owners as
well as the, manufacturers of the beedies try to escape from their obligations under the various labour enactment by calling the contractors as the
independent contractors, while as a matter of fact they are only their employees. As regards third system none of the provisions of the Factories
Act or any other enactments are applicable.
In 1966 the Government of India enacted a law on the subject on all India basis. The preamble to the enactment runs as follows:
The working conditions prevailing in the beedi and cigar establishments are unsatisfactory. Though at present the Factories Act 1948, applied to
such establishments, there has been a tendency on the part of the employers to split their concerns into smaller units and thus escape from the
provisions of the said Act. A special feature of the industry it the manufacture of beedies through contractors and by distributing work in the private
dwelling houses where the workers take the raw materials given by the employers or the contractors. Employer employee relationship not being
well defined the application of the Factories Act has not been without difficulties. The labours is unorganised and not able to look after its interests.
(2) One or two State Governmental passed special Act, to regulate the conditions of work of those workers but found themselves unable to
enforce the law owing to the fact that the industry is highly mobile and tended to move on to an area where no such restrictive laws prevailed. It
became necessary therefore to have Central Legislation on the subject. The Bill seeks to provide for the regulation of the contract system of work,
licensing of beedi and cigar industrial premises and matters like health, hours of work, spread-over, rest periods, over-time, annual leave with pay,
distribution of raw materials, etc.
In dealing with the contention of the Learned Counsel that the Act is a self-contained code, it is necessary for us to refer to the provisions of the
Act. Section 1(d) defines contractor as follows:
Contractor"" means a person who, in relation to a manufacturing process, undertakes to produce a given result by executing the work through
contract labour or who engages labour for any manufacturing process in a private dwelling house and includes a sub-contractor, agent, munshi,
thekedar or sattedar.
Section 2(e) defines contract labour as follows:
contract labour"" means any person engaged employed in any premises by or through character, with or without the knowledge of the employer, in
any manufacturing process.
Section 2(f) defines employee as follows:
employee"" means a person employed directly -or through any agency, whether for wages or not, in any establishment to do any work, skilled
unskilled, manual or clerical and includes--
(i) any labour who is given raw materials by an employer or a contractor for ""being made into beedi or cigar or both at home (hereinafter referred
to in the Act as (''home worker""); and
(ii) any person not employed by an employer or a contractor but working with the permission or, under agreement with the employer or
contractor.
Section 2(g) defines employer as meaning--
(a) in relation to contract labour, the principal employer; and
(b) in relation to other labour, the person who has the ultimate control over the affairs of any establishment or who has, by reason or his advancing
money, supplying goods or otherwise, a substantial interest in the control of the affairs of any establishment and includes any other person to whom
the affairs of the establishment are entrusted, whether such other person is called the managing agent, manager, superintendent or by any other
name.
Section 2(h) defines establishment as meaning--
any place or premises including the precincts thereof in which or in any part of which any manufacturing process connected with the making of
beedi or cigar or both is being, or is ordinarily, carried on and includes an industrial premises.
Section 2(i) defines industrial premises as meaning --
any place or premises (not being a private dwelling house), including the precincts thereof, in which or in any part of which any industry or
manufacturing process connected with the making of beedi or cigar or both is being, or is ordinarily, carried on, with or without the aid of power.
Sections 3 to 7 deal with the licensing of an industrial premises, issue of licences, appointment and powers of inspectors, etc. Sections 8 to 16 deal
with health and speedy measures. Sections 17 to 27 deal with working hours, wages for over-time work, interval for rest, weekly holidays,
prohibition of employment of children and women or any persons between stated hours, annual leave with wages, wages during leave period which
correspond to similar provisions under the Madras Shop and Establishment Act 1947. Section 28 relates to the application of the Payment of
Wages Act, 1936 to industrial premises. Sections 29 and 30 deal with special provision. Section 31 deals with the dismissal of the employees and
the appeals therefrom to the appellate authority. Section 38 is an indemnity provision. Sections 36 precludes any Court from taking any cognizance
of offence punishable under this Act. Section 37 to 39 refer to the application of other enactments, such as, Maternity Benefit Act, 1961, the
Factories Act, 1948, the Industrial Disputes Act, 1947, and the Industrial premises under the Beedi Workers Act. Section 40 provides for the
application of this Act, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the terms of any
award, agreement or contract of service whether made before or after the commencement of the Act. The proviso to the said section makes it
clear that where any such award, agreement, contract of service or otherwise which contained terms more favourable to the employees are found,
such terms would be applicable to the employees instead of the benefits under the Act. Section 41 deals with exemption power of the State
Government. Section 42 gives power to the Central Government to give directions and Section 43 specifically provides that the Act is inapplicable
to self-employed persons in private dwelling houses. Section 43 is the rule-making power.
The contention; of Mr. K. K. Venugopal is that the Act has made detailed and elaborate provisions dealing with all aspects of employment of
beedi workers and as such it is a self-contained enactment and consequently the provision of the Bonus Act, which is not one of the enactments
referred to by the beedi workers. Act, cannot be made applicable to beedi workers. The learned Counsel relied upon Section 40(1) of the Beedi
Workers Act and contended that the provision of the Beedi Workers Act alone is applicable. In other words the contention is that the Bonus Act
is inconsistent with the provisions of the Beedi Workers Act and consequently the provisions of the Beedi Workers Act alone should apply. In
order to appreciate this contention it is necessary to refer in brief to the provisions, of the Bonus Act. u/s 1(3) the Bonus Act shall apply to every
factory and every other establishment in which twenty or more persons are employed any day during an accounting year. Section 2(13) defines
employee and Section 2(14) defines employer. Section 2(15) define establishment in private sector and Section 2(16) defines establishment in
public sector. Section 2(2) defines salary or wage. Section 8 of the Act runs as follows:
Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act,
provided he has worked in the establishment for not less than thirty working days in that year.
Section 10 deals with payment of minimum bonus. Section 11 relates to ""payment of maximum bonus. Section 32 of the Act enumerates certain
classes of employees to whom the Act is in applicable. Section 34 is a overriding provision and Sub-clause (1) of Section 34 runs as follows:
34 (1) Save as otherwise provided in this section the provision of this Act shall have effect notwithstanding anything inconsistent therewith
contained in, any other law for the time being in force on in the terms of any award, agreement, settlement or contract of service made, before, the
29th May 1965.
The contention of Mr. K. K. Yenugopal is that while the Beedi Workers Act makes a special reference to certain of the enactments as being
applicable has omitted to mention the payment of Bonus Act, which was enacted a year before and consequently the Bonus Act is inapplicable to
the workers under the Beedi Workers Act. We have already referred to Section 40 of the Beedi Workers Act and unless it is established that
there is inconsistency between the Bonus Act and the Beedi Workers Act, Section 40 cannot be relied upon to exclude the applicability of the
Bonus Act to the employees covered by the Beedi Workers Act, and mere non reference to the Bonus Act in the Beedi Workers Act is
immaterial. It is farther seen for example that the Minimum Wages Act is not referred to in the Beedi Workers Act although its provisions are
applicable to employees, under the Beedi Workers Act. It is no doubt true that the Payment of Wages Act the Industrial Employment Act, 1946,
has been specifically referred to. But it cannot be inferred therefrom that the non-reference to the Bonus Act excludes its application to employees
under the Beedi Workers Act. The Bonus Act has not been specifically excluded and we are, therefore, of opinion that the Bonus Act will be
applicable to employees falling under the Beedi Workers Act. No inconsistency has been established between the provisions contained in the
Bonus Act and the Beedi Workers Act. The overriding provision viz., Section 40 of the Beedi Workers Act will apply only when there is
inconsistency between the two enactments, viz., the Bonus Act and the Beedi Workers Act, in which case alone the Bonus Act will have to give
way and the provisions of the Beedi Workers Act alone will be applicable. There being no inconsistency between the two enactments, we are of
opinion that the Bonus Act will be applicable to employees falling under the provisions of the Beedi Workers Act.
Mr. Venugopal next referred to the judgment of the Supreme Court in Sanghvi Jeevraj Ghewar Chand and Others Vs. Secretary, Madras
Chillies, Grains and Kirana Merchants Workers Union and Another, . The Supreme Court dealt with the two appeals one related to workman
engaged by certain Chillies and Kirana shops in Madras who were members of the Respondents-Union, who made a demand for payment of
bonus for the years 1964-65 and the conciliation proceeding having failed, the dispute referred to the Industrial Tribunal, Madras. In the other
appeal the Appellant company was an establishment in public sector to which Section 20 of the payment of Bonus Act did not apply. The Tribunal
held that the Act did not apply in the case of Workman engaged by Chillies and Kirana shops in Madras by reason of Section 1(3) of the Act. In
the other case the Tribunal held that by reason of Section 32(x) the employees were held entitled to claim bonus. It is this decision of the Tribunal
in both cases that was the subject of the appeal in the Supreme Court. Shelat J., who delivered the judgment on behalf of the Bench at page 533
posed the question for decision in both the appeal as follows whether in view of the non-applicability of the Act the establishment not being
factories and which employ less than 20 persons therein as the Appellants in appeal No. 1630 of 1967 are and the exemption of employees in an
establishment in public sector though employing more than 20 person as the Appellant company in appeal No. 1721 of 196.7, is u/s 32(x) of the
Act, the employees in both these establishments could claim bonus dehors the Act. The learned Judge traced the history of the legislation relating to
bonus and observed at page 543 as follows:
Considering the history of the legislation, the-background and the circumstances in which the Act was enacted the object of the Act and its scheme
it is not possible to accept the construction suggested on behalf of the Respondents that the Act is not an exhaustive Act dealing comprehensively
with the subject matter of bonus in all its aspects or that Parliament still left it open to those to whom the Act does not apply by reason of its
provisions either as to exclusion or exemption to raise a dispute with regard to bonus through industrial adjudication under the Industrial Disputes
Act or other corresponding law.
In tracing the history of the legislation relating to bonus Shelat J., at page 540 observed as follows:
As already seen there was until the enactment of this Act no statute under which payment of bonus was statutory obligation an the part of an
employer or a statutory right therefore of an employee. Under the Industrial disputes Act, 1947 and other corresponding Acts workmen of
industrial establishments as defined therein could raise an industrial dispute and demand by way of bonus a proportionate share in profits and
Industrial Tribunals could under this Acts adjudicate such disputes and oblige the employers to pay bonus on the principle that both capital and
labour had contributed to the making of the profits and, therefore, both were entitled to a share therein the right to the payment -of bonus and the
obligation to pay it arose on principles of equity and fairness in settling such disputes under the machinery provided by the Industrial Acts and not
as a statutory right and liability as provided for the first time by the present Act. In providing such statutory liability, Parliament had laid down a
statutory formula on which bonus would be calculated irrespective of whether the establishment in question has during a particular accounting year
made profit or not. It can further lay down that the formula it has evolved and the statutory liability at provides in the Act shall apply only to certain
establishments and not to all. Since there was no such statutory obligation under any previous Act, there would not be any question of Parliament
having to delete either such obligation or right. In such circumstances, since Parliament is providing for such a right and obligation for the first time
there would be no question also of its having to insert in the Act an express provision of exclusion. In other words it has to provide by express
words that henceforth no bonus shall be payable under the Industrial Disputes Act or other corresponding Act as those Acts did not confer any
statutory right to bonus.
Relying on the aforesaid decision Mr. Venugopal contended that the Bonus Act constituted a complete and exhaustive code dealing with the bonus
and there cannot be a claim for bonus dehors the statute. The further contention put forward by the learned Counsel is that the Beedi Workers Act
is a complete, code for some of the workers of beedi and cigar establishment and conditions of their work. We are unable to accept this
contention that the Beedi Workers Act is a complete code for some of the workers of beedi and cigar establishments and conditions of their work
for the obvious reason that the Act itself does not make any specific provision for payment of wages and several other matters relating to
conditions of their work. Taking into account the history of the legislation relating to bonus, the background and the circumstances under which the
Beedi Workers Act was enacted we are unable to accept the contention that the Beedi Workers Act constitutes an exhaustive, exclusive and
complete code in all matters relating to the terms of the employment, rights benefits, conditions of work and welfare of the Beedi Workers.
The Learned Government Pleader appearing for the first Respondent pointed out that the Bonus Act is admittedly applicable to Beedi
Workers in factories and that it will be inequitable to deny the Benefit of the Bonus Act to similar workers working under the contract system or
under the out-work system. There is considerable force in this contention.
We are therefore, of opinion that the provisions of the Beedi Workers Act does not exclude the applicability of the Bonus Act to the Industrial
premises where the industry or manufacturing process connected with the making of beedi or cigar or both is carried on with or without the aid of
power.
On the question whether the relationship of master and servant exists between the Petitioner and the beedi workers, the Supreme Court in
D.C. Dewan Mohideen Sahib and Sons Vs. The Industrial Tribunal, Madras, after referring to the earlier decisions observed as follows:
The question whether the relation between the parties was one as between an employer and employee or master and servant was a pure question
of fact, depending upon the circumstances of each case.
After referring to the several decisions of the Supreme Court on this question Wanchoo J., as he then was on behalf of the Bench observed at 37(5
as follows:
It is in the light of these decisions that we have to decide whether the workmen who work under the so-called independent contractors in these
cases are workmen of the Appellants. It has been found by the tribunal and this view has been confirmed by the appeal Court that the so-called
independent contractors were mere agents or branch managers of the appellants .We see no reason to disagree with this view taken by the
Tribunal and confirmed by the appeal Court on the facts of these cases. We are not unmindful in this connection of the view taken by the learned
Single Judge when he held that on the agreements and the facts found the so-called intermediaries were independent contractors. We are,
however, of opinion that the view taken by the appeal Court in this connection is the right one. As the appeal Court has rightly pointed out the so-
called independent contractors were indigent persons who were in all respects under the control of the Appellants. There is in our opinion little
doubt that this system has been evolved to avoid regulations under the Factories Act. Further there is also no doubt from whatever terms of
agreement as available on the records that the so-called independent contractors have really been independent at all. As the appeal Court has
pointed out they are impecunious person who could hardly afford to have factories of their own. Some of them are even ex-employees of the
Appellant. The contract is practically one sided in that the proprietor can at his choice supply the raw materials or refuse to do so, the so-called
contractors having no right to insist upon the supply of raw materials to him. The so called independent contractor is even bound not to employ
more than nine persons in his so-called factory. The sale of raw materials to the independent contractor and re-sale by him of the manufactured
beedies is also a more camouflage, the nature of which is apparent from the fact that the so-called contractor never paid for the materials. All that
happens is that when the manufactured beedies are delivered by him to the Appellants amounts due for the so-called sale of raw materials is
deducted from the so-called price fixed for the beedies . In effect all that happened is that the so-called independent contractor is supplied with
tobacco and leaves and is paid certain amounts for the wages of the workers employed and for his own trouble. We can, therefore, see no
difficulty in holding that the so-called contractor is merely an employee or an agent of the Appellants as held by the appeal Court and as such
employee or agent he employs workers to roll beedies on behalf of the Appellants. The work is distributed between a number of so-called
independent contractors who are told not to employ more than nine persons at one place to avoid regulations under the Factories Act. We are not,
however, concerned with that aspect of the matter in the present appeals. But there can be no doubt that the workers employed by the so-called
contractors are really the workmen of the Appellants who are employed through their agents or servants whom they choose to call independent
contractors.
Following the observations contained in the above decision we hold that both under the contract sys"" tem and out-work system the relationship of
master and servant exists between the trade-mark holder and the beedi roller.
On the last question whether the fourth Respondent, has a representative character or not is not a matter which could be decided in a Writ
Petition and as already observed by us it is a matter for consideration by the Tribunal before whom the dispute is pending.
We are therefore, of opinion the Writ of prohibition asked for cannot be granted.
We shall next take up Writ Petitions No. 3614 to 3636 and 3644 of 1971 which are Writ Petitions seeking for the issue of Writ of Prohibition
prohibiting the Industrial Tribunal, Madras, from proceeding with the enquiry in Industrial Dispute 63 of 1971 on the strength of G. O. Rt. No.
1306, dated 25th June 1971. There the third Respondent Union claimed bonus for the years 1968-- 69 and 1969-70. The bonus for the year
1969--70, according to the Petitioner became due, and mature only after 1st April 1970 and the contention on behalf of the management is that
the demand of bonus for 1969-70 which was made in pursuance of the resolution of the third, Respondent, dated 15th March 1970 is illegal. The
other questions raised are similar to the other batch of Writ Petitions. In this batch of writ petitions similar questions arise for consideration. We
shall take up writ petition No. 3614 of 1971 by way of example. The fourth Respondent presented a charter of demand, dated 5th November
1969 with the Petitioner making various demands inclusive of payment bonus for the years 1967-68 and 1968-69.
The Labour Officer called upon the management to file a statement of their objections in ans. were to the charter of demand. The negotiations
having failed, the Labour Officer reported failure of conciliation. While matters stood thus, the third Respondent by a resolution, dated 15th March
1970 resolved to make demands against the trade-mark holders in respect of several matters including a demand for bonus for the years 1968-69
and 1969-70 the Commissioner of Labour called upon the management and the representatives of the labour for a discussion regarding the bonus
for the year 1968-- 69 and 7th July. 1970 a settlement was arrived at. The settlement itself ran as follows:
Regarding other issues, the Commissioner of Labour will be writing to the parties.
While so, G.O. Rt. No. 1306, dated 25th June 1971, referring u/s 10(1)(d) of the Industrial Disputes Act was made by the Government on the
following issue:
Whether the demand of the workmen of the establishment mentioned in Annexure I for Bonus of 1968-69 and 1969-70 is justified and if so to fix
the quantum, the management mentioned in the Government order includes the name of the Petitioners and several others against whom as stated
earlier, the fourth Respondent union made a charter of demand on 5th November 1969 for payment of bonus for the year 1967-68 and 1968-69.
In pursuance of the above reference made by the first Respondent Government, the Tribunal took on file Industrial Disputes No. 63 of 1971. Sri
Habibullah Badsha who appeared for the Petitioners in this batch of Writ Petitions contends that a reference is bad because bonus for 1969-70
has not approved. It is no doubt true that the bonus for 1969-70 has not accrued although the bonus for the prior years had accrued. But u/s 10 of
the Industrial Dispute Act, 1947, an apprehended dispute may; also be referred by the Government and in our view the dispute exists regarding
bonus for 1967-68 and-I968-69 and regarding the year 1969-70 a dispute is apprehended. We, therefore consider that there is no substance in
this contention. The dispute has not been solved and, therefore, the reference by the Government cannot be said to be without jurisdiction.
The second contention raised by the learned Counsel is that the relationship of master and servant does not exist between the Petitioner and
the beedi workers. This is a matter that can be inquired into by the Tribunal and, therefore, cannot invalidate the reference by the Government. The
Tribunal can go into the question of the representative character of the Union. We are, therefore, of opinion that there is no substance in any of the
contentions put forward by the learned Counsel for the Petitioner and the Tribunal will go into everyone of the objections raised by the
Management. The writ of Prohibition asked for by the Petitioners in each of the writ petitions cannot be granted.
Both the above batch of writ petitions are dismissed with costs of the contesting Respondents.