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TMI Blog1991 (11) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... ht out it becomes a matter for the legislature to attend to. M.M. Punchhi, J. : 3. The sole question which falls for determination in these appeals is, whether on the facts found, the right of the Principal employer to reject or accept work on completion, on scrutinizing compliance with job requirements, as accomplished by a contractor, the immediate employer, through his employees, is in itself an effective and meaningful supervision as envisaged under Section 2(9) of the Employees State Insurance Act, 1948 (for short the Act)? The said provision, as it stood at the relevant time, is set out below, as is relevant for our purpose: 2(9) - 'employee' means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and: (i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or else where; or (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... categoric stand of the writ petitioners that for carrying out their contracts they were not supervised by the C.E.S.C., the principal employer, and they were carrying out works allotted to them at sites outside the factory establishment of the C.E.S.C. Claiming that there employees did not come within the definition of the term 'employee' in Section 2(9) of the Act, they required of the High Court to determine this jurisdictional fact and issue the asked for writ, direction or order appropriate in the case to have it nipped in the bud. The matter was entertained by the High Court and was heard on affidavits. The dispute necessarily centered round as to whether the C.E.S.C. exercised any supervision while the contracts were being executed, and as to whether the terms thereof, assuming that they were faithfully observed, amounted to work being carried out under the supervision and gaze of the C.E.S.C. The respective parties put in supportive affidavits to their respective stands. A learned Single Judge of the High Court, when seized of the matter, on March 23, 1984, passed an interim order, giving leave to the C.E.S.C. to respond to the notice issued by the E.S.I.C. and avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ractors. It is then that the learned Single Judge abruptly come to the conclusion that the principal employer could not escape the liability for the works of his contractors, as the latter was acting as the agent or the principal, and in sense confirmed the view of the Regional Director of the E.S.I.C. 7. Two appeals were filed against the dismissal of the two writ petitions before the Division Bench of the High Court who, after re-considering the matter, reversed the learned Single Judge, which has given cause for these appeals by special leave and the poser of the question mentioned at the outset. 8. Now it is noteworthy that the Regional Director of the K.S.I.C. drew deductions of facts in his impugned order dated March 30, 1985 in this manner: The job which is performed by these employees engaged through the contractors, was principally maintenance and distribution of electricity generated by the C.C.S.C. and also consumers service. It was conceded during the course of hearing that after the work entrusted to such con-tractors was completed, it was subject to checking by C.E.S.C. for compliance with their job specifications and the work related to main business of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts are under the supervision of the respondent No. 4 or its agents. All that has been found is that after the works which are entrusted to the appellants are completed, the same are checked by the respondent No. 4. From the aforesaid it is obvious that it has not been found by the ESI Authorities that there is actual supervision by the respondent No. 4 or its agents of the aforesaid works which are performed by the employees of the appellants. All that has been found is that after the aforesaid work is completed the respondent No. 4 checks the same. In our view, checking of a work after the same is completed and supervision of the same while the same is being performed are entirely different. Checking of a work after its completion is always done in every case by the person who ordered the same to be done so that the work can be finally accepted and payment made therefor. After the work is completed, a further checking cannot mean or imply any or any further supervision. 11. Vehemently was it urged on behalf of the appellants that the High Court fell in error in giving a restricted meaning to the word 'supervision' occurring in Section 2(9) of the Act and in taking o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyed by or through a contractor, in or in connection with work of the establishment, which words were held wide enough to include work performed elsewhere than the factory itself, including the dwelling house of a home worker, as also that the manufacturing operation, simple as it was, performed by illiterate workers, young and old, subjecting to rejection and acceptance , was by itself an effective degree of supervision and control, establishing the relationship of master and servant. 13. In whatever manner the word 'employee' under Section 2(9) be construed, liberally or restrictedly, the construction cannot go to the extent of ruling out the function and role of the immediate employer or obliterating the distance between the principal employer and the immediate employer. In some situations he is the cut-off. He is the one who stumbles in the way of direct nexus being established, unless statutorily fictioned, between the employee and the principal employer. He is the one who in a given situation is the principal employer to the employee, directly employed under him. If the work by the employee is conducted under the immediate gaze or overseeing of the principal employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time saves nine'. The standards of vigil would of course depend on the facts of each case. Now this function, the principal employer, no doubt can delegate to his agent who in the eye of law is his second self, i.e., a substitute of the principal employer. The immediate employer, instantly, the electrical contractors, can by statutorily compulsion never be the agent of the principal employer. If such a relationship is permitted to be established it would not only obliterate the distinction between the two, but would violate the provisions of the Act as well as the contractual principle that a contractor and a contracted cannot be the same person. The E.S.I.C. claims establishment of such agency on the terms of the contract, a relationship express or implied. But, as is evident, the creation or deduction of such relationship throws one towards the statutory scheme of keeping distinct the concept of the principle and immediate employer, because of diverse and distinct roles. The definition is well drawn in Halsbury's Laws of England (Hailsham Edition) Vol.1 at page 193 as follows: An agent is to be distinguished on the one hand from a servant, and on the other from an ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rical installation work coming within the purview of Rule 45(1) of the Indian Electricity Rules, 1956 undertaken by the holder of this licence, shall be carried out under the direct supervision of a person holding a valid certificate of competency.... 2) The holder of this licence shall maintain a register of supervision and workmen in the form below and shall produce the register for inspection on demand by an Electrical Inspector or other person authorised in this behalf by the Licensing Board. 3) On the completion of any electrical installation work coming within the purview of Rule 45(1) of the Indian Electricity Rules, 1956, a test report in the form prescribed by the Board shall be submitted by the holder of this licence to the Secretary. The report shall be signed by the supervisor under whose supervision the work has been carried out, and countersigned by the holder of this licence, who shall be wholly, responsible for the due execution of the work. 4) If the holder of this licence ceases to be in possession of a valid supervisor's certificate of competency, ceases to retain in his said employment at least one supervisor holding valid certificate of competency, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectricity Rules, 1956, which, in the larger interest of the electrical network and the community and its safeguards, require an electrical contractor obtaining a licence to carry out electrical installation work of the kind mentioned. Then the Rules obligate him to take in his services a person holding a valid certificate of competency under whose direct supervision the work is required to be carried out, and on completion its final report being first signed by the supervisor supervising the work and then countersigned by the holder of the licence, who will be responsible for the due execution of the work. The licence is capable of being rendered invalid or liable for cancellation due to non-employment of a supervisor given in the terms and conditions. Even if, the terms of the contract and the terms and conditions of the licence, the first being at the behest of the C.E.S.C. and the second being at the behest of the Government of West Bengal, be suggested to be complementing each other, still these cannot be so inter-played to mean that an agency, express or implied, has been created by the C.E.S.C. in favour of the electrical contractor appointing him to supervise work as envisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y them under the terms of the contract and the licence. By necessary implication supervision by the C.E.S.C. or its agents stood excluded. Supervision rested with persons holding valid certificates of competency for which a register of supervision was required under the licence to be maintained. Under the contracts, the electrical contractors cannot in one breath be termed, as agents of the C.E.S.C., undertaking supervision of the work of their employees and innately under the licence to have beforehand delegated that function to the holder of the certificate of competency. Thus we hold that on the terms of the contract read with or without the terms of the licence, no such agency, factually or legally, stood created on behalf of the C.E.S.C. in favour of the electrical contractors, and none could be, as that would violate the statutory scheme of distinction well marked under Section 2(a) of the Act. The supervision taken was to fulfil a contractual obligation simplicitor and we leave it at that level. 20. Thus on both counts, the principal question as well as the subsidiary question must be answered against the ESIC holding that the employees of the electrical contractors, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ket not even a farthing from minimal of 10%, though the workman may give us efficient service on receiving medical treatment? The employees request the social engineer to sharpen his forensic skills of his instruments to provide them social security from health and occupational hazards fastening a part of the liability on the immediate employers whom they serve . Whether the social engineer would avoid unjust results like Portio's judgment? Whether the words in the contract would be masters by golden rules ? Whether the words supervision or agent in Section 2(9) of the Act would be so construed or adopted by purposive approach as to do what justice and equity required? The result of the combat between the gramarian and the social engineer would provide the answer to the searching questions. 24. Before adverting to angle into their perceptions, it is of utility to keep abreast the brass facts that lie in a short compass. The Corporation had from the State Govt. Licensor, licence under, Section 3 of the Indian Electricity Act 9 of 1910 (for short: the 'Electricity Act') to generate, transmit, and supply electrical energy to the consumers of the area. The Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of any street on a requisition made by two or more owners or occupiers of the premises. The Indian Electricity Rules 1956 (for short 'the Rules') made under Section 37 of the Electricity Act provides the procedure in this regard. Rule 36 adumbrates handling of electric supply lines, apparatus, only by authorised person'' who is required to take safety measures approved by the electrical Inspector , appointed under Section 36 of the Electricity Act. Sub-rule (2) of Rule 36 provides thus: No person shall work on any live electric supply line or apparatus and no person shall assist such person on such work, unless he is authorised in that behalf and takes the safety measures approved by the Inspector. 27. Rule 45 provides precautions to be taken by electrical workmen, suppliers etc. Unless electrical contractor, licensed in this behalf by the State Govt., appoints a person holding a certificate of competency and a permit in this behalf issued or recognised by the State Govt., the contractor shall not be entitled to undertake any installation work etc. Rule 51 provides certain safety measures to be taken to the satisfaction of the Inspector so as to prevent d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se services are so lent or let on hire has entered into a contract of service. 29. It encompasses employees employed for wages in or in connection with the work of a factory or establishment to which the Act applies (i) who are directly employed by the Principal employer or (ii) employed by or through an immediate employer ; and whose services are temporarily lent or let on hire to the principal employer by the person with whom the person is entered into a contract of service. Clause 2(9)(ii) (applicable to the facts on hand) in turn attracts a person employed by or through an immediate employer as an employee of the principal employer provided the following conditions are satisfied, namely, (1) the immediate employer employs an employee on the premises of the factory or establishment of the principal employer; (2) or under the supervision of the principal employer ; (3) his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried out in or incidental to the purpose of the factory or establishment, Clauses (i) and (iii) of Section 2(9) are inapplicable to the facts. 30. Article 25(2) of Universal Declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 5). In 26th I.L.O. Convention held in Philadelphia in April 1944, recommendation No.69 laid down norms for medical care for workers. In October 1943, the Government of India appointed Health Survey and Development Committee known as Sir Joseph Bhore Committee which laid emphasis on Preventive Schemes . I.L.O. Asian Regional Conference held in Delhi in 1947, resolved that in every scheme for medical care in any Asian country the need for the prevention of disease and the improvement of the general standard of health must be considered as of utmost importance . The Act had culminated in its birth of these recommendations providing in a limited area social security to the employees from health and occupational hazards. 32. The term health implies more than an absence of sickness. Medical care and health facilities not only protect against sickness but also ensures stable man power for economic development. Facilities of health and medical care generate devotion and dedication to give the workers' best, physically as well as mentally, in productivity. It enables the worker to enjoy the fruit of his labour, to keep him physically fit and mentally alert for leading a successfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws to govern a society which is fast moving must be presumed to be aware of an enlarged meaning the same concept might attract with the inarch of time and with the revolutionary changes brought about in social, economic, political and scientific and other fields of human activity. Indeed, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations, if the words are capable of comprehending them. In M. Pentiah and Ors. v. Muddala Veeramallappa and Ors. [1961] 2 SCR 295 in a separate but concurrent judgment, Sarkar, J. held thus : Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. This court approved the ratio in Seaford Court Estates Ltd. v. Asher (1949)2 All E.R. 155 Denning, L.J., who said, when a defect appears a judge can-not simply fold his hands and blame the draftsman. He must set to work o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated by the 1946 Act. In Atma Ram Mittal v. Ishwar Singh Punia (1994) IIILLJ 972 SC this Court held that the purpose of interpretation in a social amelioration legislation is an imperative irrespective of anything else. It was further held that the contents, subject matter, the effects and consequences or the spirit and reason of the law shall be taken into account. The words must be construed with the imagination. of purpose behind them . (emphasis supplied) 35. Therefore, in an attempt to construe the provisions of the statute construction, as a balancing wheel, should be meaningful so as to make the statute workable and not to render it futile or sterile. Whenever strict interpretation of the statute gives rise to unjust situation or results, the Judges can ensure their good sense to remedy it by reading words in, if necessary, so as to do what Parliament would have done had they had the situation in mind. The meaning of the same words in a statute may be mended in the labyrinth of interpretation and may be enlarged or restricted in order to harmonise them with the legislative intention of the entire statute. The spirit of the statute would prevail over the literal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led upon to consider the meaning of the words immediate supervision under Building (Safety, Health and Welfare) Regulations, .1948. Whether the presence of the supervisor is necessary at all times? It was held no. Ormerod, L.J. held that in each case the question must be decided how much supervision is required in the circumstance of the case being considered? If every move was fraught with danger, then clearly supervision of the most constant kind would be demanded, and the supervisor must be there all the time. On the other hand, there may be certain parts of the work, if not the whole of it, which do not give rise to any foreseeable danger, and in those circumstances it may well be that the intention of the regulation is that supervision need not be so strict. Upjohn, L.J., as he then was, while agreeing held that the real question is whether there was a supervision for the purposes of the regulation and was that a proper or adequate supervision? The regulations are formulated for the protection of the workman, but, at the same time, they must be given a practical effect. The degree of supervision must entirely depend upon the task, and it cannot mean that there must always be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worker within the meaning of Section 2(1) of the Factories Act, 1948. The facts found were that there was no fixed hours. They made payment to the work done at piece rate. It was open to the workmen to absent from work without leave. They were not given any specific work, but the management had the right to reject the Bidis prepared by them, if the Bidis do not come upto the proper standard. On those facts, it was held the right of rejection is a supervision connecting the work and the employment. Accordingly it was held them to be workmen. The same ratio was followed in D.C. Dewan Mohideen Sahib Sons v. The Industrial Tribunal, Madras [1964] 7 SCR 646. In Nagpur Electric Light . Power Co. Ltd. v. Regional Director, E.S.I.C. (1967) IILLJ 40 SC the employees employed outside the factory or establishment as Cable Jointer, Mistri, Lineman, Coolies and Vanman for inspection of lines, digging the pits, erection, distribution and service line were held to be employees within the meaning of Section 2(9)(i) of the Act. 39. In Kirloskar Pneumatic Co. Ltd. v. Employees' State Insurance Corporation F.J.R. (1987) 199 a division Bench of the Bombay High Court, speaking through my ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision for establishing relationship of master and servant between the manufacturer and the home workers. This ratio does support the conclusion that a connecting link between the finished product and the work of the establishment is sufficient; neither the manner of actual performance of the duties decisive nor the actual control or the supervision of the work a material ingredient. Incidental connection with the ultimate business activities of the manufacturers and right to rejection is the control and would be the balancing wheel to attract the provisions therein. The extended purposive construction was applied to give effect to the social security provided under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. 41. In Superintendent of Post Office v. P.K. Rajamma (1977) 3 SCR 32 the question was whether the extra departmental agents serving in Post and Telegraph Department are agents or held civil post within the meaning of Article 311(2) of the Constitution. This Court while holding that they held civil post attracting Article 311(2) of the Constitution approved the passage from Halsbury's Laws of England (Hailsham Edition) of the distinction between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e immediate employer under the contract who ultimately perform them on behalf of the principal employer. Undoubtedly in a bilateral contract between the corporation and the respondents' qua their rights and liabilities under the contracts, strict interpretation of the words engrafted therein, be of paramount relevance and call for attention as per Contract Act. But in the context of the statutory interpretation of supervision under the Act of the works undertaken under the contract, the interest of the workmen or the welfare schemes for the employees under the Act interposed and call attention to and need primacy. In its construction the courts must adopt contextual approach to effectuate the statutory animation, namely social security. The literal interpretation would feed injustice in perpetuity denying to the employee of sickness benefit etc. under the Act which would be avoided, lest the purpose of the Act would be frustrated. 43. The contention that the respondents being independent contractors are not agents of the licencee, corporation, is also devoid of force. It is seen that under Sections 15 20 etc. and the relevant rules the authorisation given by the corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s said that rules of public policy have to be moulded to suit new conditions of a changing world, that is true; but the same is true of the principles of the common law generally.' 45. In Prenn v. Simmonds 1971(1) WLR 1381, Lord Wilberforce laid the rule that in construing a written agreement evidence of negotiations or of the parties' intentions ought not to be received by the court, and that evidence should be restricted to evidence of factual background known to the parties at or before the date of the contract, including evidence of the genesis and objectively the aim of the transaction. 46. The contractors, respondents, knew at the date of the agreements that the Corporation, as Principal employer, is under statutory obligation to execute or keep executed the works and keep them repaired and maintained as an integral' activity of generation, transmission and distribution of the electrical energy to the consumers within their area of supply. On authorisation, the respondents execute and keep executed the works and repairs or kept them repaired and the maintenance thereof effected through their employees, which in law is on behalf of the Corporation, princi ..... 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