Karnataka Handloom Development Corporation Ltd. Represented by Its Managing Director Vs. Karnataka State Handloom Co-ordinate Committee Represented by Its President and Labour Officer and Authority Under Minimum Wages Act, 1948 - Court Judgment

Excerpt:
labour and industrial - minimum wages - variable dearness allowance - section 20 of the minimum wages act, 1948 - conversion charges for converting yarn to fabric paid by the petitioners to the weavers - no day to day supervision or disciplinary control over a weaver - petitioner contended that there was no employer-employee relationship between the petitioner and the weavers - held, degree of control and supervision to create the relationship of master and servant, would turn on the conditions and circumstances - payment on piece-rate did not disprove the relationship of master and servant - authority was clearly in error in not addressing the glaring circumstances - writ petition dismissed - section 69 & bangalore development authority (allotment of sites) rules, 1984, rule 9(2): [b.s......orderanand byrareddy, j. 1. the petitioner is a government of karnataka undertaking. it is established with the object of promoting and developing the handloom industry. handloom development and other export oriented projects sanctioned by the government of india are implemented through the petitioner. the main thrust has been to provide organisational support to weavers and to ensure their independence and self sufficiency - through the co-operation movement.2. the facts giving rise to the present petition are, that weavers avail yarn supplied from the yarn depots set up by the petitioner corporation. the weaver converts the yarn to fabric and surrenders the same at the project centres of the petitioner and obtains conversion charges from the petitioner. there is no day to day.....

Judgment:
ORDER

Anand Byrareddy, J.

1. The petitioner is a Government of Karnataka undertaking. It is established with the object of promoting and developing the Handloom industry. Handloom development and other Export oriented projects sanctioned by the Government of India are implemented through the petitioner. The main thrust has been to provide organisational support to weavers and to ensure their independence and self sufficiency - through the co-operation movement.

2. The facts giving rise to the present petition are, that weavers avail yarn supplied from the yarn depots set up by the petitioner corporation. The weaver converts the yarn to fabric and surrenders the same at the project centres of the petitioner and obtains conversion charges from the petitioner. There is no day to day supervision. Nor is there any disciplinary control over a weaver. The weaver is free to undertake weaving work for any other person or entity. The weavers work at their will in his own premises with or without the assistance from his family or employees.

3. The first respondent made a claim, on behalf of nine weavers, before the second respondent in the year 1996 to contend that the said weavers were being paid wages on piece rate basis and that they have been denied variable dearness allowance from 1.4.1994 to August 1996.

4. The petitioner resisted the claim primarily on the ground that there was no employer-employee relationship as between the petitioner and the said weavers.

5. On the basis of the pleadings and evidence tendered before the second respondent - the petitioner was directed to pay the difference in minimum wages on account of non payment of variable Dearness Allowance. It is this which is under challenge in this writ petition.

6. Shri. Subramanya, appearing for the petitioner contends that the impugned order is contrary to the statutory provisions of the Minimum Wages Act, 1948 (hereinafter referred to as 'the Act' for brevity). Section 20 of the Act stipulates that a claim on account of non-payment of minimum wages ought to be preferred within six months from the date it is due. The claim was belated and the delay was unexplained and hence it ought to have been rejected.

7. That the conversion charges paid by the petitioners to the weavers cannot be treated as wages.

8. That having regard to the admitted circumstances as to the relationship as between the petitioner and the weavers - the authority was clearly in error in not addressing the glaring circumstances. He would contend that apart from the regular employees of the petitioner, the weavers are not on the rolls of the Corporation and they are plainly independent contractors. The finding that they are employed on wages would have far reaching consequences and would adversely affect the business of the petitioner, threatening its very existence.

9. The counsel seeks to rely on the following authorities in support of his case:

C.E.S.C. Ltd. etc. v. Subash Chandra Bose and Ors. I LLJ SC 475: This was a case where the meaning of the word 'supervision' for purposes of Section 2(9) of the Employees' State Insurance Act, 1948 (hereinafter referred to as 'the ESI Act' for brevity) came in for consideration. On facts, the Supreme Court held that supervision would not include the right of principal employer to reject or accept work on completion, on scrutinising compliance with job requirements as accomplished by the contractor through his employees. Supervision means watching the work while the work is in progress so as to scrutinize the quality thereof and to detect faults therein and to put timely remedial measures for satisfactory completion. By the same token of reasoning the counsel would contend that the right of rejection reserved by the petitioner would not suffice to create a relationship of employer and employee as between the petitioner and the said weavers.

World wide Traders and Ors. v. The Regional Director, ESI Corporation MFA 2846/98 & connected cases disposed of on 22.9.1999: Wherein a Division Bench of this Court has followed the judgment of the Supreme Court in C.E.S.C. Ltd. supra while considering whether the right of rejection by a ready made garment manufacturer, of goods finished through job contractors.

Punjab Khadi Mandal v. The Regional Provident Fund Commissioner, Punjab and Anr. 1996 (3) LLJ 60: In deciding whether there was an employer employee relationship as between a Khadi Mandal and weavers who were provided raw material to prepare Khadi for remuneration. Held in the negative.

Air Freight Ltd v. State of Karnataka and Ors. 1999 LLR 1008: Wherein the Supreme Court held that under the provisions of the Minimum Wages Act if the employer is paying a total sum which is higher than minimum wages fixed, including variable dearness allowance - he would not be required to pay the said allowance, separately. By this token of reason the counsel for the petitioner in the case on hand, would contend that in the alternative to his contention that there was no relationship of employer-employee - since the conversion charges paid exceeds the minimum wage fixed - there is no further legal obligation on the petitioner.

10. Per contra, the counsel for the respondent would seek to support the impugned order and would place reliance on the following authorities:

P.M. Patel & Sons and Ors. v. Union of India I LLN SC 55: In answering the question whether the workers employed at their homes in the manufacture of beedies are entitled to the benefit for the Employees Provident Fund & Miscellaneous Provisions Act, 1952 & the Schemes framed thereunder. The Court held, the scope of the term 'employee' as defined under the Act is wide. They include not only persons employed directly by the employer but also persons employed through a contractor. Moreover, they include not only persons employed in connection with the work of the factory. A home worker by virtue of the fact that he rolls beedies is involved in an activity connected with the work of the factory. The narrow construction sought to be placed on the definition was not accepted.

The degree of control and supervision to create the relationship of master and servant would turn on the conditions and circumstances.

Shining Tailors v. Industrial Tribunal II, U.P., Lucknow 1983 SCC (L&S;) 533: The Supreme Court held that for the purposes of the Industrial Disputes Act, 1947, 'Workman' as defined under Section 2(5) of the Act that in a Tailoring establishment, payment on piece rate by itself does not disprove the relationship of master & servant and that the right to reject the work or to refuse further work - held, establishes the master-servant relationship.

11. On these rival contentions I hold that the facts and circumstances of the case are clearly covered by the cases of P.M. Patel & Sons, as also Shining Tailors (Supra) in finding a relationship of master and servant as between the petitioner and the weavers in question.

12. The line of cases sought to be relied upon by the counsel for the petitioner are clearly distinguishable on facts and with reference to the statutory provision with reference to which the same were rendered.

13. The contention in the alternative as to the petitioner in any case paying a sum greater than the minimum wage fixed so as to absolve itself of any obligation, is raised for the first time before this Court, which is not permissible, as it involves a possible finding of fact and therefore is not material.

14. The writ petition is accordingly dismissed.