Indian Kanoon - Search engine for Indian Law

(3) GROUND-C :- That S. 4 is hit by Arts. 14 and 19(1)(g) which impose conditions which are arbitrary, excessive, extraneous, vague and unintelligible and particularly Rule 3(4) also suffers from the same defect of excessive delegation.

(I) Historical background and the scheme of the Act :-

2. Before we consider these grounds of attack, it would be proper at the outset to consider the historical background of or the circumstances prevailing in this beedi industry to find out the mischief which was intended to be prevented and the remedy which was sought to be advanced by the Legislature for regulating the conditions of employment in the beedi and cigar establishments. This historical background has been elaborately discussed in Bhikusha Yamasha Kshatriya Private Ltd. v. Union of India, [1963 - I L.L.J. 270]; A.I.R. 1963 S.C. 1591. Their Lordships pointed out at page 1595 that in 1929 at Royal Commission of Labour in India was appointed to make a detailed investigation into labour problems. The commission investigated into the conditions in various industries including the beedi making industry and submitted its report in June 1931 revealing the deplorable state of affairs which prevailed in this industry. As mentioned in the said report the Commission had at that time recommended enactment of a separate Act for these beedi workers. Even the Labour Investigation Committed appointed in February, 1944 to investigate conditions of employment in respect of various industries including the conditions of workmen in beedi, cigar and cigarette industry found that the working conditions in the beedi industry had remained the same. The prominent features of the beedi and cigar industries are long hours and insanitary conditions of work and employment of child labour. Women were also employed in large numbers in this industry. The beedi and cigar labour satisfied many of the criteria of sweated labour such as sub-contract system. Long hours, insanitary working conditions, home-work (in beedi), employment of women and children, irregularity of employment, low wages, and lack of bargaining power. The conditions prevailing in the province of Bombay were summarised by saying that the conditions of these workshops, so far as sanitation, light and ventilation were concerned, beggar description. They were dark, dingy places with very few, if any, windows and the approaches were very insanitary. The workers were huddled together, men, women and in some cases children, and there was hardly any space to move. One could see bags of tobacco heaped in one corner and manufactured beedis in another. Most of the workshops had no lavatories and were, they were in a most deplorable condition. Some of the workshops had low wooden ceilings above under which some workers sat and carried on their work. These were not usually reached by staircases and the workers had to go up with great difficulty. The Committee recorded its conclusion by saying that the matters requiring immediate attention in the bidi and cigar industries were the unhealthy workings conditions, long hours of work, employment of women and children, deduction from wages and the sub-contract system of organization. It was desirable to abolish the outwork system and to encourage establishment of big factories, if protective labour legislation was to be enforced with any degree of success. Their Lordships, therefore, summarised the entire position by saying that in these circumstances the application of factory legislation to protect the legitimate interest of beedi rollers was a crying necessity. It was assumed as can be seen from the two decisions by the High Courts of Bombay in The State v. Alisaheb Kasim Tamboli, A.I.R. 1955 Bom. 209, and by the High Court of Patna in Ram Chandra Prasad v. State of Bihar, A.I.R. 1957 Pat. 247, that the Factories Act, 1948, would cover these establishments in which beedi making was carried on because the expression "employed" in S. 2(1) of the Factories Act included mere engagement or occupation in a manufacturing process without any contract giving rise to a relation of master and servant. Unfortunately this assumption was found to be wrong because when the matter was finally taken up before the Supreme Court, a restricted interpretation was put on the definition of the term 'worker' in S. 2(1) of the Factories Act. In Chintamanrao v. State of M. P., [1958 - II L.L.J. 252]; A.I.R. 1958 S.C. 388 at page 391, it was held that even though S. 2(1) defined a worker as a person employed "directly or through any agency", it could be given only a restrictive interpretation. The expression 'employed' was interpreted as covering that relation between 'employer' and 'employee' where the employment was under a contract of service. The contract of service was to be decided by the usual prima facie test of the power of the control of the master. In view of this common law concept of master and servant relationship as decided by that prima facie test of control which was evolved in the context of determination of tortious liability of the master for the act of the servant the Sattedars or workers of the Sattedars were held not to be workers within the meaning of this restrictive test. Applying the same test in Birdhinchand Sharma v. First Civil Judge, [1961 - II L.L.J. 86]; A.I.R. 1961 S.C. 644, it was held by their Lordships that the concerned workers were covered within the definition as they were working on the premises of the employer and they were not at liberty to work at their home and because the employer could exercise the power of control by rejecting the sub-standard beedis. In Shankar Balaji Waje v. State of Maharashtra, A.I.R. 1960 Bom. 517, however, it was held that as there was no obligation on the employees to work on the premises of the employer, there was no control and those persons were held not entitled to the benefit of leave with wages under the Factories Act, especially as such a benefit could never be computed in such cases where there was no control on such home-workers who were not working on the employer's premises. In D. N. Sahib & Sons v. Union of U. B. Workers, A.I.R. 1966 S.C. 370, in view of the modus operandi adopted the agreement with the contractor was found to be a mere camouflage, and the test of master and servant relationship in the context of similar definition of "workman" under S. 2(s) of the Industrial Disputes Act, 1947, was held to be satisfied. It should be noted that that was also a case where the employees were required to work on the premises of the employer and, therefore, the control could be implied, especially when the contractor was only given a mere labour contract.

3. From this history it is obvious that because of the restricted interpretation given to the definition of the term 'worker' in S. 2(1) of the Factories Act, 1948, and under S. 2(s) of the term 'workman' in the Industrial Disputes Act, 1947, the labour employed in the beedi industries, even though it was employed in the manufacturing process, was denied these benefits of the Factories Act and of this vital piece of industrial legislation like the Industrial Disputes Act if the employment was as contract labour or as home-worker. The power of control by way of rejection of sub-standard beedis was sure to be exercises even in case of this part of the labour force working in this industry, but so long as they would not be working on the employer's premises under a contract of employment, the restricted definition came in their way from getting the same rights and benefits which their counter-parts who were employed under a direct contract of employment by the employer obtained. Even as regards the minimum wages, when revised minimum wages were fixed for workers in the beedi industries and the notification provided an integral scheme to made the implementation of this minimum wages fixation effective by laying down the manner in which the employer should make payment for chhat or discarded beedis, it was held in Bidi, Bidi Leaves and Tobacco Merchants' Association v. State of Bombay, [1961 - II L.L.J. 663]; A.I.R. 1962 S.C. 486, that such a notification was ultra vires the power of the State Government, because the relevant provisions of the Minimum wages Act did not authorize the State Government to make rules for the decision of the disputes in this connection and for the payment of minimum rates of wages on the basis of such decision. Therefore, if the employer chooses to reject the beedis as sub-standard beedis, these employees could not even get minimum wages which were sought to be secured to these workers and they were helpless in raising any labour or industrial dispute in this connection because of the restricted definition of the term "workmen" even in the Industrial Disputes Act, 1947. In these circumstances an attempt was made by some State Government like the State of Bombay to issue a notification under S. 85 of the Factories Act, 1948. This gave rise to the aforesaid decision in Bhikhusha Yamasha Kshatriya Pvt. Ltd.'s case, [1963 - I L.L.J. 270]; A.I.R. 1963 S.C. 1591. At page 1597 their Lordships pointed out that the Factories Act was enacted primarily with the object of protecting workers employed in factories against industrial and occupational hazards. For that purpose it seeks to impose upon the owners or the occupiers certain obligations to protect workers unwary as well as negligent and to secure for them employment in conditions conducive to their health and safety. The Act required that the workers should work in healthy and sanitary conditions and for that purpose it provided that precautions should be taken for the safety of workers and prevention of accidents. Incidental provisions were made for securing information necessary to ensure that the objects were carried out and the State Governments were empowered to appoint Inspectors, to call for reports and to inspect the prescribed registers with a view to maintain effective supervision. The duty of the employer was to secure the health and safety or workers and extended to providing adequate plant, machinery and appliances, supervision over workers, healthy and safe premises, proper system of working and it further extended to giving reasonable instructions. Detailed provisions were, therefore, made in diverse chapters of the Act imposing obligations upon the owners of the factories to maintain inspecting staff and for maintenance of health, and provisions for amenities such as lighting, drinking water etc. etc. Provisions were also made for safety of workers and their welfare, such as restrictions on working hours and on the employment of young persons and females, and grant of annual leave with wages. Their Lordships, therefore, pointed out that even though the employment in a manufacturing process was at one time regarded as a matter of contract between the employer and the employee and the State was not concerned to impose any duties upon the employer, it was, however, now recognised that the State had a vital concern in preventing exploitation of labour and insisting upon proper safeguards for the health and safety of the workers. The Factories Act undoubtedly imposed numerous restrictions upon the employers to secure to the workers adequate safeguards for their health and physical well-being. But imposition of such restriction was not and could not be regarded, in the context of the modern outlook on industrial relation, as unreasonable. Their Lordships further added that extension of the benefits of the Factories Act to premises and workers, not falling strictly within the purview of the Act, was intended to serve the same purpose. By authoring imposition of restriction for the benefit of workers who in view of the State stood in need of some or all the protections afforded by the Factories Act, but who were not governed by the Act, the Legislature was merely seeking to effectuate the object of the Act, i.e., it authorised extension of the benefit of the Act to persons to whom the Act, to fully effectuate the object, should have been, but as had (sic) on account of administrative or other difficulties not been extended. Their Lordships in terms pointed out that the Factories Act primarily applied to establishments in which ten or more persons were working where power was used and twenty or more persons where no power was used thereby excluding from its operation small establishments. That was done presumably as it would impose great administrative strain upon governmental machinery, and involve hardships ordinarily not commensurate with the benefit secured thereby. Thereafter their Lordships made the pertinent observations that the Legislature, however, with a view to prevent circumvention of the provisions of the Factories Act, and to secure to the persons working in establishments where manufacturing process was carried on adequate safeguards where necessity was felt, had authorised the State Government by notification to declare any place which did not fall within the definition of 'factory' to be a factory and to make all or any of the provisions of the Act applicable thereto. The Act was primarily intended to govern relations of persons standing as master and servant in connection with manufacturing processes in factories, and liberty of contract otherwise was not sought to be affected by the principal provisions of the Act. But exclusion from restrictions inherent in the definitions of 'factory' and 'worker' had its source not in any desire to afford special privileges to any class of owners, and, therefore, the Legislature authorised the State Governments to issue notifications extending the Act even to those establishments which were deemed to be factory and in which persons were working only with the permission or under the agreement with the owners but not as employees of the owners and were to be regarded as only deemed workers. In this context their Lordships held that the power conferred by S. 85 to extend the regulatory provisions of the Act was not arbitrary power to pick and choose between establishments similarly situate. It was a power granted to extend those provisions where the necessity to regulate having regard to the circumstances was felt. It was granted with a view to secure protection of the persons engaged in industrial occupations in the light of special circumstances of a particular industry, a locality or an establishment, where circumstances justifying the extension of the protection existed. It was to carry out effectively the object underlying the Act that power had been given to the State Government to decide with reference to local conditions whether it was desirable that the provisions of the Act or any of them should be made applicable to any establishment which was not covered by the definition of 'factory' or to workers in a factory who were not entitled to the benefits of the Act because of the definition of 'employment'. That is why in this context this extension of the provisions of the Factories Act of the benefit of these deemed workers who were working in the premises which were deemed factories was regarded as not unreasonable within the meaning of Art. 19(1)(g) of the Constitution. The difficulty of invoking S. 85, which would extend benefit even to the deemed workers and even to premises which did not satisfy the test of the term factory, was that it was dependent on the notification being issued by the State Government. Therefore, unless such a notification was issued, these beedi workers continued to remain sweated labour working under the same unhygienic conditions even though their counterparts who were employed under regular contract of service with the employer could get these benefits, provided they were employed on the premises which came within the definition of the term factory. Thus, contract labour or the deemed workers who did identical work could not get any benefits of this labour welfare measure and they continued to work in such unhygienic conditions only because of the fact that this relevant statute was interpreted in a restrictive manner to cover only such employment which was under a contract of master and servant and the test of contract of service was the common law test of the master's control which was evolved in the context of tortious liability cases. Their Lordships, however, pointed out that whenever there was an extension by definition as in the case of S. 85 notification, the same benefits could be extended to those worker working under the permission or agreement with the employer, and thereby they could be secured same benefits of the Factories Act which were available to those regular employees. That is why the Parliament has now intervened in these circumstances so that this sweated labour even after 18 years of our independence could be secured the minimum decent conditions of service for such a manufacturing process and their ordinary just rights which were already given to those similarly employed under a regular contract of employment. It was to put down those practices which had grown up in this industry of disintegrated factories by carrying on the same manufacturing process on the contractor's premises or through aid of such home-workers at their homes and to avoid this exploitation by discouraging such devices that the Parliament had now to intervene by enacting this comprehensive labour measure to secure just conditions of work and employment for these sweated labour which had all along remained exploited.

9. Re. GROUND No. A : Whether the Parliament has the legislative competence to enact the Act :- The first contention raised by the petitioners is thoroughly misconceived. The pith and substance of this legislation is obviously regulation of the conditions of employments in this beedi and cigar industry. It regulates the industrial relations of the employer-employee relationship in this sweated industry. The Act does not seek to regulate the beedi and cigar industry as such. It only deals with this particular subject-matter as regards these establishments, viz., regulating conditions of employment in this industry and the industrial relations therein between the employer and employees. Therefore, the pith and substance test would immediately show that this is a labour welfare measure which is enacted for the benefit of the workers working in this industry. Its impact if at all on the beedi industry as such is not direct and sub-stantial but only indirect and incidental. It is well-settled that the legislative competence has always to be judged on the doctrine of pith and substance and not by the test of incidental encroachment. The entries 22 to 24 in the concurrent List III are wide enough to cover such a labour welfare measure. Entry 22 deals with trade unions and industrial and labour disputes. Entry 23 is social security, employment and unemployment; and entry 24 is welfare of labour including conditions of work, provident funds, employer's liability, workmen's compensation, invalidity and old age pensions and maternity benefits. The other entry which was said to be in the field was entry 24 in List II which was "industries subject to the provisions of entries 7 and 52 of List I." The pith and substance of this legislation is that it is a labour welfare measure prescribing conditions of employment in the beedi and cigar industry regulating the terms of employment and resulting in better relations by avoidance of industry, and labour disputes in this industry, providing where necessary for the employer's liability, maternity benefits etc. This legislations could never be beyond the competence of the Parliament. It is only if the legislation was in pith and substance covering entry 24 of List II that there would be any question of lack of competence. The Act nowhere seeks to regulate the beedi industry as such but it merely seeks to regulate employments in the industry by providing proper conditions of work and giving other benefits so that proper industrial relations could be maintained in this industry. Therefore on this ground, the Act cannot be attacked as incompetent. That is why both the learned advocates vehemently confined their attack on the second ground that this was a colourable piece of legislation by giving an artificial definition of employer-employee relationship. This measure was turned into a labour welfare measure by this ingenious device, and that was a fraud committed by the Legislation on the Constitution to usurp the power to enact this legislation. There is hardly any substance in this contention. We must bear in mind the various directive principles under our Constitution in this connection. Under Art. 39(e) the State shall, in particular, direct its policy towards securing that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength. Under Art. 42 the State shall make provision for securing just and humane conditions of work and for maternity relief. Article 43 provides that the State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities and, in particular, the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas. Therefore, in any event these relevant articles lay down directive principles of the State policy of our welfare State which under Art. 38 shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social economic and political, shall inform all the institutions of the national life. This welfare State could never remain wedded to the age-old worn out concept of master and servant relationship in labour welfare measure so as to deny the benefits of such measure to all other employees or workers who do not work under the direct contract of service. Whenever the worker constitutes the labour force of the industry, he is a part and parcel or a limb of the industry. The workers may work under a direct contract of service or not, it is their collaboration in the industry which results in the production, manufacture or industrial activity. Whether he is a direct employee or not, the Legislature must provide for his welfare. Therefore, no labour welfare measure can ever become complete, unless it embraces in its scope the entire labour force, howsoever employed in the industry. To deny legislative competence on the basis that only employment under a direct contract of service can be regulated by the Legislature in a labour welfare measure would be to deny any scope for evolution of the industrial law in this country. As Professor H. S. Kirkaldy in his lectures on "The Spirit of Industrial Relations" (1947 edition) points out in his first lecture on 'The Spirit of Industrial Relations' at pages 4 to 7 the problems of industrial relations arise with and from the divorce of the worker from the ownership of the instruments and materials of production. In primitive industry, the worker was the owner, not only of his labour, but also commonly of both the instruments and materials of production. He sold his product rather than his labour. Therefore, the primitive workman was the first independent producer who had not to face any problem of any industrial relations. On the introduction of commercial methods and the evolution of the factory system which gathered a larger number of workers at a common place of employment, the worker was reduced to the position of a wage earner while his employer became the owner of the instruments and the materials of production and the product. The obvious elements of a conflict of interest exist between the employer who wishes to buy labour cheaply and the worker who wishes to sell it dearly. The whole problem of industrial relations can be very shortly stated as the devising of means to reconcile that conflict of interest. The learned author points out at page 5 that the sense of deprivation which has resulted from loss of independence can be compensated only by a realisation of partnership in a greater enterprise and a greater adventure than man ever undertook in isolation. The realisation of partnership is not only, or even mainly, a matter of monetary reward; it is a matter of spirit; it is a question of human dignity; it is what differentiates the worker from the machine. Until the spirit of partnership becomes the spirit of industrial relations, conflict as to the division of the existing product of industry obscures the need for co-operation towards greater productivity out of which alone can come real advance in material prosperity. If the origin of the problem of industrial relations lies in the divorce of the worker from the ownership of the instruments and materials of production, the solution must be sought in realization of this co-partnership. That is why even the industry is defined as any organised activity where the capital and labour co-operate or production of material goods or material services essential for the community. It is this co-operation as a co-partner in the joint venture which is imprinted on the product. The is the sine qua non for the success of the industrial enterprise, wherein not only the capital and labour are interested but the State as a whole and the community at large are also vitally interested. It is only by maintaining this co-operative effort which will increase productivity so that not only the employer and the labour force can reap the benefits of the large production but the State would be benefited by a large slice of taxation, excise and other incidental benefits and the community would get cheaper goods. That is why an effort has been made to have peaceful industrial relations so that the production does not suffer and there is no class warfare which endangers production by strike, lock-out, go-slow and other subversive activities. A labour welfare measure should, therefore, always seek to solve the problem of industrial relations by maintaining industrial peace between these two co-operators. In order to face the challenge of this problem, the legislation must take within its embrace not only a small class of workers who work directly under the contract of service with the employer but the entire labour force which is the real co-operator in the industry. That is why in such a class of legislation, the employer-employee relationship can never be always restricted to the common law concept of the contract of service satisfying the prima facie test of control which the master had on the servant as regards the details of the, which was evolved in the context of tortious liability cases. In the context of modern industrial legislations different tests would have to be evolved so that the real employer-employee problems can be faced and a proper labour legislation can be enacted in its proper modern context.

It is therefore, clear from these observations that the modern industrial conditions would require these indicia to be restated, especially as the statutory provisions could very well affect this prima facie test of right of control. In Montreal v. Montreal Locomotive Works Ltd., (1947) 1 D.L.R. 161 P.C., Lord Wright said at page 169 as under :-

"In earlier cases a single test, such as the presence or absence of control, was often relied on to determine whether the case was one of master and servant, mostly in order to decide issues to tortious liability on the part of the master or superior. In the more complex conditions of modern industry, more complicated tests have to be applied. It has been suggested that a fourfold test would in some cases be more appropriate, a complex involving (1) control; (2) ownership of the tools; (3) chance of profit; (4) risk of loss. Control in itself is not always conclusive. Thus the master of a chartered vessel is generally the employee of the shipowner though the charterer can direct the employment of the vessel. Again the law of the limits the employer's right to interfere with the employee's conduct, as also do trade union regulations. In may cases the question can only be settled by examining the whole of the various elements which constitute the relationship between the parties. In this way it is in some cases possible to decide the issue by raising as the crucial question whose business is it, or in other words by asking whether the party is carrying on the business, in the sense of carrying it on for himself or on his own behalf and not merely for a superior."