2019 (7) TMI 1855 - SC - Indian Laws

Interpretation of statute - scope of employee Under Section 2(f) of the EPF Act - whether the women workers employed by the Respondent Company are covered by the definition of employee Under Section 2(f) of the EPF Act or not? - HELD THAT - The definition of employee Under Section 2(f) of the EPF Act is an inclusive definition and is widely worded to include any person engaged either directly or indirectly in connection with the work of an establishment - In the present case the women workers employed by the Respondent Company were provided all the raw materials such as the fabric thread buttons etc. from the Respondent - Employer. With this material the women workers were required to stitch the garments as per the specifications given by the Respondent Company. The women workers could stitch the garments at their homes and provide them to the Respondent Company. The Respondent Company had the absolute right to reject the finished product i.e. the garments in case of any defects. The mere fact that the women workers stitched the garments at home would make no difference. It is the admitted position that the women workers were paid wages directly by the Respondent Company on a per-piece basis for every garment stitched. The issue in the present case is squarely covered by the decision of this Court in Silver Jubilee Tailoring House and Ors. v. Chief Inspector of Shops and Establishments and Ors. 1973 (9) TMI 100 - SUPREME COURT . The Appellants therein were engaged in the business of producing garments. They employed workers who were provided with the cloth and were instructed by the Appellants how to stitch it. The workers were paid on piece-rate basis. If a worker failed to stitch a garment as per the instructions the Appellants rejected the work and asked the worker to re-stitch the garment. This Court held that such workers fell within the definition of person employed Under Section 2(14) of the Andhra Pradesh (Telangana Area) Shops and Establishments Act 1956. In the present case the women workers were certainly employed for wages in connection with the work of the Respondent Company. The definition of employee Under Section 2(f) is an inclusive definition and includes workers who are engaged either directly or indirectly in connection with the work of the establishment and are paid wages - In the present case the women workers were directly engaged by the Management in connection with the work of the Respondent Company which was set up as a ready-made garments industry in Marathwada. The women workers were paid wages on per-piece basis for the services rendered. Merely because the women workers were permitted to do the work off site would not take away their status as employees of the Respondent Company. The Order dated 19.04.1993 passed by the Appellant No. 1 is restored. The Respondent Company is directed to deposit the amount assessed by Appellant No. 1 towards Provident Fund dues of the women workers within 1 month from the date of this Judgment - appeal allowed.

Summary

Issues Involved:
1. Whether the women workers employed by the Respondent Company are covered by the definition of "employee" under Section 2(f) of the EPF Act.
2. The applicability of previous judgments and legal principles to the present case.
3. The interpretation of the EPF Act as a beneficial social welfare legislation.

Detailed Analysis:

Issue 1: Definition of "Employee" under Section 2(f) of the EPF Act

The primary issue for consideration was whether the women workers employed by the Respondent Company fall under the definition of "employee" as per Section 2(f) of the EPF Act. Section 2(f) defines an "employee" as any person employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer. This inclusive definition also covers persons employed by or through a contractor in connection with the work of the establishment.

The Respondent Company argued that the women workers were independent contractors, not employees, as they worked from home using their own sewing machines and were not under the direct control or supervision of the company.

However, the Court noted that the women workers were provided with all raw materials (fabric, thread, buttons) by the Respondent Company and were required to stitch garments as per the company's specifications. The company had the right to reject defective garments, indicating a degree of control and supervision over the work.

Issue 2: Applicability of Previous Judgments

The Court referred to several precedents to support its decision:

1. Silver Jubilee Tailoring House and Ors. v. Chief Inspector of Shops and Establishments and Ors. (1974) 3 SCC 498: This case involved workers provided with cloth and instructions by their employer, paid on a piece-rate basis. The Court held that the right to reject work indicated an element of control and supervision, establishing an employer-employee relationship.

2. Shining Tailors v. Industrial Tribunal II, U.P., Lucknow and Ors. (1983) 4 SCC 464: The Court rejected the notion that piece-rate payment negates an employer-employee relationship. It emphasized that the right to reject work and refuse further work demonstrates control and supervision, thus establishing a master-servant relationship.

3. M/s. P.M. Patel & Sons and Ors. v. Union of India and Ors. (1986) 1 SCC 32: The case involved bidi workers who rolled bidis at home with materials provided by the employer. The Court held that such workers were employees under Section 2(f) of the EPF Act due to the employer's control over the final product through the right of rejection.

Issue 3: Interpretation of the EPF Act as Beneficial Legislation

The Court emphasized that the EPF Act is a beneficial social welfare legislation designed to protect the interests of workers. In The Daily Partap v. The Regional Provident Fund Commissioner, Punjab, Haryana, Himachal Pradesh and Union Territory, Chandigarh (1998) 8 SCC 90, it was held that the Act should be interpreted in a manner beneficial to workmen, particularly those from weaker sections of society.

Conclusion:

Based on the above analysis, the Court concluded that the women workers were indeed employees under Section 2(f) of the EPF Act. The Bombay High Court's judgment was set aside, and the Order dated 19.04.1993 by the Provident Fund Officer was restored. The Respondent Company was directed to deposit the assessed Provident Fund dues within one month.

The Civil Appeal was allowed, and all pending applications were disposed of accordingly.