1964 (4) TMI 133 - SC - Indian Laws

Supreme Court ruling: Bidi workers are employees, not contractors. Wage reduction unjustified.

D.C. Dewan Mohideen Sahib And Sons Versus The Industrial Tribunal, Madras

The Supreme Court upheld the lower courts' findings that bidi workers were employees of the appellants, not independent contractors, and that the wage ... - Issues Involved:1. Determination of the relationship between the bidi workers and the appellants.2. Justification of the wage reduction by annas two per thousand bidis.3. Competency of the reference made by the Government of Madras.4. Applicability of the Industrial Disputes Act.Detailed Analysis:1. Determination of the relationship between the bidi workers and the appellants:The primary issue was whether the bidi workers employed under the so-called independent contractors were actually employees of the appellants. The tribunal found that the system of manufacture was a mere camouflage devised by the appellants to avoid statutory obligations. The contractors were found to be indigent persons who performed no significant functions other than transporting raw materials and finished products. The tribunal concluded that the contractors were not independent but were functioning as branch managers or employees of the appellants. This finding was confirmed by the appeal court, which noted that the intermediaries were impecunious and under the control of the appellants. The appeal court held that the appellants were the real employers of the workmen, and the so-called contractors were merely agents. The Supreme Court agreed with this view, noting that the so-called independent contractors had no real independence and were essentially employees or agents of the appellants.2. Justification of the wage reduction by annas two per thousand bidis:The tribunal held that the reduction in wages by annas two per thousand bidis was not justified and ordered the restoration of the old rates. This decision was based on the finding that the bidi workers were employees of the appellants and not of the so-called independent contractors. The appeal court upheld this decision, and the Supreme Court found no reason to disagree with the tribunal and appeal court's conclusions.3. Competency of the reference made by the Government of Madras:The appellants contended that the reference made by the Government of Madras was incompetent because there was no relationship of employer and employee between them and the bidi workers. The tribunal rejected this contention, finding that the bidi workers were indeed employees of the appellants. The appeal court confirmed this finding, and the Supreme Court upheld the tribunal's decision, thereby affirming the competency of the reference.4. Applicability of the Industrial Disputes Act:The tribunal and the appeal court both found that the relationship between the appellants and the bidi workers fell within the scope of the Industrial Disputes Act, as the workers were employees of the appellants. The Supreme Court agreed, citing previous judgments that established criteria for determining whether a person is an employee or an independent contractor. The Court noted that the nature and extent of control exercised by the employer is a key factor in this determination. In this case, the control and supervision exercised by the appellants over the bidi workers were sufficient to establish an employer-employee relationship.Conclusion:The Supreme Court dismissed the appeals, upholding the tribunal and appeal court's findings that the bidi workers were employees of the appellants and that the wage reduction was unjustified. The Court also affirmed the competency of the reference made by the Government of Madras and the applicability of the Industrial Disputes Act. The appeals were dismissed with costs.