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TMI Blog1999 (8) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... d that its maximum employee strength was 17 employees. It appears that thereafter an officer of Respondent No. 1 namely, Raj Kumar examined the attendance register, cash book and ledger of the Petitioner and submitted a report dated 29th November, 1969 to the effect that the petitioner had 16 direct employees and 7 contractor's workers. Accordingly, Raj Kumar was of the view that the Petitioner may be covered by the provisions of the Act under the head ink industry . 5. As a result of the report prepared by Raj Kumar, a notice dated 3rd February, 1970 under Section 7-A of the Act was sent to the Petitioner in response to which the petitioner sent a letter dated 23rd February, 1970 denying that it was covered by the provisions of the Act and praying for withdrawal of the notice. In support of its contention, the Petitioner submitted an affidavit of its partner Jagdish Singh and one Umrao Ali, the contractor who was allegedly working for the Petitioner. Unfortunately, the notice dated 3rd February, 1970 has not been placed on the record. 6. Proceedings under Section 7-A of the Act were held against the Petitioner and an inquiry was conducted on several dates such as 28-2-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be given to M/s Katari colouring factory to deposit the amount failing which the dues may be recovered through the D.C.O. as arrears of Land revenue. 8. Steps were taken by the Petitioner to challenge the orders dated 6th and 23rd April, 1970 and ultimately the Petitioner applied to the Central Government on 30th May, 1970 under Section 19-A of the Act (as it then stood) to have the order dated 23rd April, 1970 set aside. The Petitioner was given a hearing by the officer on special duty in the Ministry of Labour and Rehabilitation on 5th June, 1973 and by an order dated 1st August, 1973, the Central Government confirmed the order of Respondent No. 1 to the effect that the Petitioner is covered by the provisions of the Act. 9. Feeling aggrieved, the Petitioner filed Civil Writ No.1062/73 in this Court praying for a direction to the effect that the Petitioner's establishment and Umrao Ali's establishment are two independent entities and for quashing the order of Respondent No. 1 directing the Petitioner to pay the provident fund dues and to quash the apprehended proceedings for prosecution for non payment of the provident fund. 10. Sometime in March 1986, the Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yees of Umrao Ali drew their wages from him and worked only under his control and supervision and there was nothing on record to show that there was any master - servant relationship between the Petitioner and the employees of Umrao Ali. 16. It was submitted, in the alternative, that even if it is held that Umrao Ali was not an independent contractor, his employees could not be covered by the definition of the word employee within the meaning of Section 2(f) of the Act. 17. It was then contended by learned counsel for the Petitioner that Respondent No. 1 did not grant him a reasonable opportunity of hearing and that the finding arrived at by Respondent No. 1 is perverse. It was submitted that the proceedings before Respondent No. 1 are quasi judicial proceedings and that there must be some evidence on record before Respondent No. 1 can give an adverse finding against the Petitioner. It was contended that in the instant case the report of Raj Kumar was neither exhibited nor proved nor was Raj Kumar produced in evidence so that he could be cross examined. On the other hand, the Petitioner had filed affidavits of its partner, and Umrao Ali but these were not even taken note of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxx 1(5) xxx xxx 2(f) Employee means any person who is 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 and includes and person employed by or through a contractor in or in connection with the work of the establishment. 23. What has to be seen in the present case is whether the employees of Umrao Ali are covered by the last part of this definition and are persons employed by or through a contractor in or in connection with the work of the Petitioner. This will necessarily involve an examination of several aspects of the relationship between the Petitioner and Umrao Ali. 24. There is no dispute about the fact that Umrao Ali carries on his business of preparation of black ink (roshanai) at 25-A, East Azad Nagar, Delhi. This is as per his affidavits dated 23rd February, 1970 and 1st May, 1970. 25. The initial notice dated 14th August, 1969 which was sent by the office of the Regional Provident Fund Commissioner (for short RPFC) to the Petitioner was at 25, East Azad Nagar, Delhi. This notice was received by the Petitioner who also sent a reply the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ali's workers are shown in the Petitioner's register for which no explanation was/or is given by the, Petitioner. Nor has this fact been denied by the Petitioner that the workers of Shri Umrao Ali are not in the Petitioner's register. This averment has not been controverted by the Petitioner. 30. The record of proceedings conducted under Section 7A of the Act also indicates that sufficient opportunity was given to the petitioner to establish its case that there was no interconnection between the Petitioner and Umrao Ali. On 28th February, 1970 an opp that amongst other things, the right of rejection can constitute in itself an effective degree of supervision and control. 31. More recently, in the case of Rajasthan Prem Krishan Goods Transport Co. v. Regional Provident Fund Commissioner, 1997 Lab. IC 146, the and Jagdish Singh on 16th March, 1970 to produce all the documents including attendance register, wages register, cash book, ledger and sales tax registration of Umrao Ali. It appears that no documentary evidence was produced on the next date also, that is, 6th April, 1970 and it was recorded that Amar Singh could not substantiate his arguments by documentary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Respondents submitted that in the proceedings held on 28th February, 1970, it was stated by Jagdish Singh that Umrao Ali is an independent ink seller who supplies ink and gum for manufacture of ink while the rest of the ingredients are mixed by the Petitioner. It was contended by learned counsel for the Respondents that this clearly shows that Umrao Ali supplied a semi-finished product called roshanai which would then be mixed with certain ingredients for the manufacture of ink. While this may be so, there does not appear to be sufficient material on record to hold that Umrao Ali only supplied a semi-finished product to the Petitioner. 37. However, the crux of the matter, as rightly contended by both the learned counsel is whether the Petitioner exercises any control and supervision over the work being done by the employees of Umrao Ali. What exactly is the nature of supervision and control that is required to attract the provisions of Section 2(f) of the Act? 38. In Andhra University v. Regional Provident Fund Commissioner of Andhra Pradesh and Ors., 1986 Lab. IC 103, the Supreme Court has held in para 7 that In construing the provisions of the Act, we have to bear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shments Act, 1951. 43. While dealing with the interpretation of the words in connection with occuring in the definition of employee in Section 2(9) of the Employees State Insurance Act, 1948, the Supreme Court held in the case of Royal Talkies (supra) that a canteen or cycle stand or a cinema magazine booth is incidental to the purpose of a theater. The cinema goers ordinarily find such work an advantage, a facility, an amenity and sometimes a necessity. The Supreme Court was of the view that the operations of keeping a cycle stand and running a canteen are incidental or adjuncts to the primary purpose of the theater. The Supreme Court held that the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment. A narrower construction may be possible but a larger ambit is clearly imported by a purpose-oriented interpretation. The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises, whether they are in the work or are merely in connection with the work of the establishment. 44. The decisions cited above are unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring House case (supra) that It is exceedingly doubtful today whether the search for a formula in the nature of a single test to tell a contract of service from a contract for service will serve any useful purpose. The most that profitably can be done is to examine all the factors that have been ferred to in the cases on the topic. Clearly, not all the these factors would be relevant in all these cases or have the same weight in all cases. It is equally clear that no magic formula can be propounded which factors should in any case be treated as determining ones. The plain fact is that in a large number of cases, the court can only perform a balancing operation weighing up the factors which point in one direction and balancing them against those pointing in the opposite direction. 49. Applying the principles laid down by the Supreme Court, it is quite clear that the following facts are material, namely, unity of purpose, that is, the similarity of business being carried on by the Petitioner and Umrao Ali; that the same business is being run from the same premises; that the major supply of Umrao Ali is to the Petitioner and most importantly, that the records of the Petitioner sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered partnership firm and that it has two establishments. The fact that both the Petitioner and Umrao Ali are registered for the purpose of sales-tax was also not in dispute. The only other document that was on some relevance was the affidavit of Umrao Ali who stated, inter alia, that he had no concern with the Petitioner. This affidavit (Annexure-M) is dated 1st May, 1970, that is, after the impugned orders dated 6th April, 1970 and 23rd April, 1970. Obviously, therefore, this affidavit could not have been considered by Respondent No. 1. 55. However, a somewhat similar affidavit of Umrao Ali was sent by the Petitioner alongwith its letter dated 23rd February, 1970 which was in response to the notice dated 3rd February, 1970. Unfortunately for the Petitioner this affidavit cannot be relied on for the simple reason that (unlike Raj Kumar) Umrao Ali did not at all attend the proceedings under Section 7A of the Act. In fact, the record of proceedings of 10th March, 1970 shows that a summons was directed to be issued to Umrao Ali to appear as a witness on 6th April, 1970. On the adjourned date of 6th April, 1970 Umrao Ali did not appear. Instead, his accountant appeared. Consequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w laid down in these cases, in the present case, however, the facts are different. The Petitioner was issued a notice dated 2nd April, 1970 to attend the enquiry in the office of the RPFC on 6th April, 1970 'for determining under Section 7A of the Employees' provident Fund Act, 1952 amount due from you as employer of M/s Katari Colouring Factory'. Unfortunately, this notice has also not been filed by any of the parties to the writ petition. In any event, the Petitioner did attend the hearing on 6th April, '1970 and (as stated in the order dated 23rd April, 1970) on the basis of the material available with him, the RPFC passed an order determining the provident fund contribution and administrative charges for the period April, 1969 to March 1970 at ₹ 2,082/- and ₹ 60/- respectively. It is true that the RPFC has not given the arithmetical calculations, but I really do not think it was imperative for him to do so. The reason for this is that in a letter dated 17th December, 1969 the office of the RPFC had advised the Petitioner to deposit the arrears of contributions at the rate provided in paragraph 29th of the Employees Provident Fund Scheme, 1952 as well ..... X X X X Extracts X X X X X X X X Extracts X X X X
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