s:c.R.

SUPREME COURT REPORTS 1331

I would allow the appeal and the petition with costs.

BY COURT: The appeal and the petition are dismissed.

There will be no order as to costs.

Appeal and Petition di.imissed.

KASHINATH SANKARAPPA WANI v.

NEW AKOT COTTON GINNING & PRESSING CO., LTD.

(BHAGWkTI, J. L. KAPUR and GAJENoRAGADKAR JJ.)

Limitation-Suit on deposit receipt-Acknowledgment of iiability-EUidence-Balance sheet obtained from Registrar of Companies-Admissibility-Presumption. of awthenticitu andi corr.ectness-Commercial Documents Evidence Act (XXX of 1939), s. 3(b).

The appellant advanced various sums of money to the respondent, in lieu of which the respondent passed a deposit receipt for 12 months from August 1, 1939 to July 31, 1940. On June 16, 1944 the appellant filed a suit to recover the amount with interest on the allegation that the amount became due on May 17, 1941 when the demand for the amount was made and limitation for the suit expired on May 17. 1944 and the suit was filed on the reopening day of the Court thE>reafter.

The appellant also relied upon the acknowledgments of his debt by the i:espondent in the resolution passed by the Board of Directors on May 20, 1941 and in the balance sheet of the respondent for the year 1940-41 dated October 10, 1941:

Held, that the suit was barred by limitation as the monies due under the deposit receipt became payable on July :n, 1941 and as no 'agreement had been proved th<it the monies due under the deposit receipt were re-payable on demand.

Held further, that limitation was not saved by tile alleged. acknowledgments.

The resolution Qf the Board of Directors merely proposed a settlement of a claim of the appellant, which, if accepted by the appe}lant, was to be placed before a general meeting of the share-holders. The resolution onfy referred to a past liability of the respondent to the appellant and it could not be construed

19ii8

K. IS. Srinii-a.san

Uiii011. of India

Bu•e J,

February 18.

KaahinatA Sanl:arappa Wani

New Akol Collon Ginning &: PresMng

Oo., Ltd.

BluI/Jwati J.

as an acknowledgment of the liability of tlte respondent unde~ the deposit recelipt in question.

A copy of the balance sheet of 1940-41 obtained, from the Registrar of Companies which was tiled in the case was wrongly rejected by the High Court as inadmissible on the ground that no evidence was adduced to prove it. This copy was admissible under s. 3(b) of the Commercial "Documents Ev:iden0e Ao!.

Under that section the Court could nlso raise a presumption as regards the balance sheet having been duly made by or under the appropriate authority or in regard to the statements contained therein. The presumption was not compulsory, but was discretionary with the Court. In the circumstances of this case. where there were facVions in the Company and the regularity of the meeting at which the balance sheet was passed was in dispute. the High Court would have been perfectly justified in not raising the presumption.

Consequently, the acknowlerl11meni in the balance sheet was of no avail to the appellant.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 77 of 1954.

Appeal from the judgment and decree dated August 25, 1949, of the former Nagpur High Court in First Appeal No. 91 of 1945 arising out of the judgment and decree dated July 31. 1945, of the Court of Second Additional District Judge, Akola in Civil Suit No. 7-B of 1944.

C. B. Agarwa/a and Ratnaparkhi A. G. for the appellant.

Veda Vyasa and Ganpat Rai, for the respondent.

1958. February 18. The following Judgment of the Court was delivered by

BHAGWATI, J.-This appeal with a certificate under s. 109(a) read with s. 1 IO of the Code of Civil Procedure (Act V of 1908) is directed against the judgment and decree passed by the Nagpur High Court dismissing the appeal of the appellant and confirming the dismissal of his suit by the learned Second Additional District Judge, Akola.

The appellant, who was the plaintiff in the trial court filed in the Court of the First Additional District Judge,

Akola, Civil Suit No. ;:: of 1944 against the respondent a limited company incorporated under the Indian Companies Act of 1882, which owned a Ginning and Pressing Factory

S.C.R.

SUPREl\U~ COURT REPORTS 1333

and carried on business of ginning and pressing cotton a.t 1958 Akot in District Akola. KCUJhi'IUlf; h Sanlcarappa W a.ni The appellant alleged that he was one of the creditors New A~':,;1 Cotton of the company which used to borrow money from him for Ginning cf: Pres1i1111 about 35 years past. He claimed to have acted as Banker of

00 ·• Ltd. the company and the sums borrowed from him were entered Blwfl'i'<lti •1 in the account books of the company in two khatas, one known as current account or "chalu khata" and the other described as "fixed deposit khata". An account used. to be made up at the end of every year and the a.mount found due at the foot of the account was entered in the balance-sheet of the company which was adopted at the Annual General Meeting of the company. Deposit receipts also used to be passed for the amounts standing in the fixed dep0sit khata from time to time and at the end of the year ending July

1939, a sum of Rs. 79,519-12-9 was found due by the company to him on both these accounts. On January 15, .1940, the company passed a deposit receipt in his favour for this amount which he demanded from the company by his letters dated May 10, 1941 and May 17, 1941. The company failed and neglected to pay the said amount with the resut that he filed on June 16, 1944, a suit against the company for recovery of a sum of s. 1,03,988 made up of Rs. 79,519-12-9 for principal and Rs. 24,468 as interest from August l, 1939, to January 15, 1944.

The claim as laid in the plaint was that all these amounts which bad been borrowed by the company from him were payable on demand to be made by him as creditor and they were deposits with the company, but in order that the company may not be compelled to pa, y a big sum on demand, items in the current account were being transferred to the fixed deposit account from time to time.

The amounts of these deposits being thus payable on demand the cause of action accrued to him on May 17, 1941, and limitation for the suit expired on May 17, 1944. But, as the courts were closed on tha.t day, the suit was filed on the first

19/iS

Kai:; hin'llh Sa.nkarappa lVaui •.

New Akot CottO'fl, Cinning &t Presainu

Co., Ltd.

Blia[Jwati J.

SUPl{Ei\'!E UOUR'r REPORTS [1958]

opening day i.e:, June 16, l\144, and limitation was therefore saved by s. 4 of the Limitation Act. He also relied upon the acknowledgments of his debt made by the company in (a) the resolution passed by the Board of Directors on May 20, 1941, (bl the balance-sheet of the company for the year 1940- 41 dated October 10, 1941, and for the years 1941-42 and J 942-43, and (c) the entry in the khata of the plaintiff in the books of the company made on or about July 31, 1941, and signed by the Chairman of the company. He further relied upon an application made under s. 162 of the Companies Act to liquidate the company on June 16, 1941, which a.pplication was however dismissed by the court on June 16, 1944, stating that as he was bona fide prosecuting this application for the same relief as claimed in the suit and as the court was unable to entertain the appliation because the debt was disputed by the company, he was entitled to deduct from the period of limitatiorl, the time spent by him under s. 14 of the Limitation Act.

This claim of the appellant was contested by the respondent mainly on the ground that the suit was barred by the law of limitation. Both the courts below negatived his claim. The trial court dismissed his suit and the High Court, oh appeal, dismissed his appeal and confirmed the dismissal of his suit by the trial court; hence this appeal.

The only question which arises for our consideration in this appeal is .whether the. appellant's suit was barred by limitation. The appellant, in the first instance, relied upon the deposit receipt which was passed by the company in his favour on January 15, 1940. This receipt (Ex. P-1) evidenced a deposit of Rs. 79,519-12-9 for 12 months from August 1, 1939, to July 31, 1940, and the amount at the foot thereof became due and payable by the respondent to him on July 31, 1940. The appellant, however, sought to extend the commencement of the period of limitation to May 17, 1941, on the ground that the monies, the subject-matter of that deposit receipt, were payable to him on demand, that such demand was made by him on May 17, 1941, and that therefore that

s.c.n.

SUPRE111E COURT :REPORTS

was the dale for the commencement of the period of limita-

/!JSR tion. No !!A.press agreement in this behalf could be proved Ka,, Jd11<11/1 by him nor could an agreement be implied from the course -~" 11 l-n"'Pt'.' Wm•; of dealings between him and "the company for the period of °!'."111• .Hot Cullu11 5 d h' h h d )" d b h Uh11ti n!J :f: Prt~1Jiu9 2 years unng w 1c t e et! mgs contmue etween t e

1.,,., !H. parties. As a matter of fact. such an agreement. either express or implied, was negatived by the very terms of the deposit receipt which. apart from mentioning that the monies were received by the company as deposit for 12 months from August I, 1939, to July 31. 1940, contained on the reverse a note that interest would cease on due date. This was sufficient to establish that the amount due at the foot of the deposit receipt became due and payable on the due date mentioned therein and that there was no question of the amount being payable at any time thereafter on demand being made in this behalf by the creditor.

The course of dealings between the parties also negatived any such agreement because it appears from the record tha.t such deposit receipts were passed by the company in his favour from time to time, each of such receipts being for a fixed period in the same terms as the deposit receipt in question and the receipts containing similar notes on the reverse that interest would cease on due date. Both the courts below were therefore right in coming to the conclusion that there was no agreement of the kind put forward by the appellant that the monies due at the foot of the deposit receipt in question were re-payable on demand and that monies due at the foot thereof became due and payable by the company to him on July 31, 1940.

The next question to consider is whether the bar of limitation which set in on July JI, 1943, was saved by reason of the circumst<111ces set out in the plaint for a.voidance of the same. Out of the three acknowledgments of debt pleaded by the appellant the third was abandoned by him in the course of the hearing and the only two acknowledg- . ments which were pressed were (a) the resolution passed by tlte Board of Directors on May 20, 1941, and (b) the balancesheet of the company for the year 1940-41 dated October 10,

JJ/tflfjll'llf i ,) ,

1336 (l958]

1941. Jt may be nokd that he made no auempt at all to

KM1'i>weh prove the balance-sheets of the company for the years 1941- Sanknrappa Trani 42 and l942-43.

v. l\T evi A kut Coffm1 Ginning &; Prcssi11fJ

Co., Ltd.

Bl1ll{l11mti .I.

in regard to the resolution passed by the Board of Directors on May 20, 1941, the position is that at that meet

ing one Pandurang Narsaji Hadole, who was one of the Directors of the company, made a reference to a proposed settlement of the claim of the appellant for a sum of Rs. 67,939 as found due at the end of July 1936, which had been resolved upon by the Board of Directors on December 22, 1936, but had not been accepted by the appellant. The resolution then requested the appellant to inform the company again if even then he was prepared to abide by the terms of that proposed settlement which would be plnced before the general meeting of all the share-holders of the company if a reply was received from him in the affirmative.

This resolution of the Board of Directors was alleged by the appellant to be an acknowledgment of a subsisting liability in regard to the debt due by the company to him at the foot of the deposit receipt in question. We do not see how it could ever be spelt out as such acknowledgment. The contents of the resolution only referred to a past liability of the company to the appellant and there was nothing therein which could be a.ny stretch he construed as referring to the liability of the company, to him at the foot of the deposit receipt dated January 15, 1940. Our attention was drawn to the deposit receipts which had been passed by the company in favour of the appellant on May 30. 1935, October 18.

1936, and November 30, 1938, each of which was for a. sum of Rs. 47,500. No connection was. however. established between the sum of Rs. 47,500 the subject-matter of these receipts, and the sum of Rs. 79,519-12-9, the subject-matter of the deposit receipt in question and in the absence of any such connection having been established the appellant could not avail himself of the alleged acknowledgment of liability contained in the resolution of the Board of Directors dated May 20. 1941, even if it could perchance be construed as

RC.R.

SUP1lEME COURT REPORTS 1337

an acknowledgment of a subsisting liability. This resolution 1958 of the Board of Directors dated May 20, 1941, could not, Kaakinatk therefore,. avail the appellant as an acknowledgment of his Sankara~~ Wani debt.

New Akot Cotton Ginning cb Pressing In reg:rd to the balance-sheet of the company for the Co., Ltd. ye1r 194041 dated October 10, 1941. it is to be noted that, Bhagwat.i J. even though the appellant app ied before the trial court for filing the balance-sh<:et of 1940-41 on April 28, 1945, he expressly stated that he did not want to adduce any oral evidence to prove .it. He was, however, aliowed to file the same. But it was. realised later that the balance-sheet did not prove itse'f and he therefore made another application on July l l, t 945, for permission to file a copy from the Registrar 9f Companies and contended that this proved itselt This document was, howev(:r, rejected by the trial court as file:i too late. When the appeal came up for hearing before the High Court, it was contended on behalf of the appellant that the copy which was adduced from the. office of the Registrar was admissible in evidence but that evidence was rejected by the High Court on a consideration of ss. 65 and 74(2) of the Evidence Act. The attention of the High Court was evidently not drawn to the Commercial Documents Evidence Act (XXX of 1939) which has amended the Law of Evidence with resp;:ct to certain commercial documents.

Section 3 of that Act enacts that "for the purposes of the Indian Evidence Act, 1872, and notwithstanding anything contained therein, a Court:

(a) .................................................................... .

(b) may presume, within the meaning of that Act, in relat10n to documents included in Pt. II of the Schedule: - • That any document purporting to be a document included in Part I or Part II of the Schedule, as the case may be, and to have been duly made by or under the appropriate authority, was so made and that the statements contained therein are accurate."

Item No. 21 in Pt. II of the Schedule menti.ons:-

L/S4SCI-10

1958 "Copy, certified by the Registrar of Companies of the

KaskinaJh Balance Sheet, Profit and Loss Account, and audit report of Bankarappa Wani a company, filed with the said Registrar under the Indian v.

NewAko!Cotl"" Companies Act, 1913 and the rules made thereunder." Ginning Prusing

Go., Ltd,

Bhagwati J.

If the attention of the High Court had been drawn to this provision of law. we are sure, it would not have rejected the copy of the balance-sheet obtained by the appel:ant from the office of the Registrar of Companies.

We are of the opinion that the copy should have been admitted in evidence and we do hereby admit the same.

The appellant contends that that balance-sheet which was signed by the Directors contained an acknowledgment of the debt due by the company to the appellant for the sum of Rs. 67,939 as and by way of fixed deposit and that was sufficient to save the bar of limitation.

The question therefore arises whether any nresumption can be raised as regards the balance-sheet having been duly made by or under the appropriate authority or in regard to the accuracy

of the statement contained therein under s. 3(b) of the Commercial Documents Evidence Act (XXX of 1939).

It is to be noted that this presumption is not compulsory as in the case of s. 3(a) of the Act; it is discretionary with the court. The difficulty in the way of the appellant here is however insuperable because we find that there were factions in the company at or about the relevant time.

A Directors' meeting was held on April 27, 1941, and the resignation of the appellant as the Chairman was accepted and another person was appointed in his place.

A second meeting was called for May 17, 1941, but it had to be adjourned for want of a quorum. The adjourned meeting was held on May 20, 1941, but no balance-sh.eel was passed at that meeting. There is nothing on the record to show that there was another meeting of the Board of Directors for passing the balance-sheet of the company for the year 1940-

41. A general meeting of the Shareholders was called for November 16, 1941, to pass the balance-sheet. This also had to be adjourned to the following day for want of a quorum.

S.C.R.

SUPRK\lE COURT HRPOHTS

At the adjourned meeting the shareholder~ then present 19.; r;, refused lo pass the accounts and it was not till some five g,,,, J.inof/i weeks later, namely on Dec.:.nhcr 30. 1941. that the rival So;•k•11"'l'P" lfn;,; faction met and passed. the. accounts. But his meting only Sei,, _-i1.'.;;1 Oottnn

purpoted to be a cont111uat1on of the meetmg which had to Oinninff .c- Prc~"i••rt be adjourned for want of a quorum and that dearly was Co.

Ltd. irregular because the adjourned meeting had to -be called within twentyfour hours. It did not purport to be a fresh meeting convened after due notice. etc. Under the circumstances, it could not be urged that the balance-sheet was duly passed.

Even if the attention of the Hi!zh Court had been drawn to the provision's of s. 3 <b) of the Commerci; tl Documents Evidern:e Act. \XXX of I 939l it would have been perfectly justified in not raising the presumption in regard to the balance-sheet having been duly made by or under the appropriate authority and in regard to the accuracy of the statement contained therein.

We are, therefore, of the opinion that this alleged acknowledgment also is of no avail to the appellant.

In regard to s. 14 of the Indian Limitation Act which was sought to be relied upon by the appellant, it may be shortly stated that the liquidation proceedings had not been filed in the courts beow and there is nothing to show that the requirements of s. 14 were at all satisfied. No cogent argument has been advanced before us on behalf of the appellant which would induce us to hold that the conclusion reached by the High Court in this behalf was incorrect in any manner whatever.

On all the above grounds we have come to the conclusion that the appellant's claim was clearly time-barred and the dismissal of his suit by the trial court as well as the dismissal of his appeal by the High Court were in order.

This appeal will therefore stand dismissed with costs.

Appeal dismissed.

KASHINATH SANKARAPPA WANI

NEW AKOT COTTON GINNING & PRESSING CO. LTD

L. KAPUR

Commercial Documents Evidence Act

s. 3(b)

August 1, 1939

July 31, 1940

June 16, 1944

May 17, 1941

May 17. 1944

May 20, 1941

October 10, 1941

KaahinatA Sanl:arappa Wani

s. 3(b)

CIVIL APPELLATE JURISDICTION

C. B. Agarwa

Ratnaparkhi A. G.

Veda Vyasa

Ganpat Rai

BHAGWATI

s. 109(a)

s. 1

the Code of Civil Procedure

Nagpur High Court

First Additional District Judge,

Akola

Companies Act

January 15, .1940

May 10, 1941

s. 1

August l, 1939

January 15, 1944

May 17, 1944

Blia[Jwati

s. 4

Limitation Act

s. 162

Companies Act

June 16, 1941

s. 14

Limitation Act

January 15, 1940

Pandurang Narsaji Hadole

December 22, 1936

May 30. 1935

October 18.

1936

November 30, 1938

Kaakinatk

Bhagwat.i J.

July l l, t 945

ss. 65 and 74(2)

Commercial Documents Evidence Act

Section 3

Indian Evidence Act, 1872

Bankarappa Wani

Companies Act, 1913

Ginning Prusing

Go., Ltd

Bhagwati

s. 3(b)

Commercial Documents Evidence Act

s. 3(a)

April 27, 1941

November 16, 1941

S.C.R.

SUPRK\lE COURT HRPOHTS

Dec.:.nhcr 30. 1941

s. 3

s. 14

Limitation Act

s. 14


Fd>ruorg 18.

SUPREME COURT REPORTS (1958]

SHRI CHINT AMAN RAO AND ANOTHER

THE STATE OF MADHYA PRADESH

(B. P. SINHA, JAHR !MAM and SUBBA RAO JJ.)

\Vorker-Test for determining-Sattedars contractina to supply bidis to bidi factoTy andl coolies of such Sattedars-If

workers in the factory-Factories Act (LXIII of 1948). ss. 2(1). 62, 63 and 92.

The appellant was the manager of a liidi factory which had contracts with certain independent contractors, known as Sattedars, for the supply of bidis. The Sattedars undertook to supply the bidis by manufacturing them in their own factories or by entrusting the work to third parties. at a pvice to be paid by the management after delivery and approval. The Inspector of Factories found working in the appellant's factory certain Sattedars and their coolies who had come to deliver bidis manufactured by them. The appellant was prosecuted and convicted under s. 92, Factories Act for violation of the proV'isions of ss. 62

and 63 for failure to maintain the .register of adult workers and for allowing the workers to work in the factory without making beforehand the entries of their attendance in the reis' ter:

Held, that the Sattedars and their coolies were not workers wtithin 'he definition in s. 2(1) of the Act and. therefore, the noninclusion of their names in the register or lthe absence of entries in regard to them therein did not constitute an offence under s. 92 of the Act. To determine whether a person emptoye, j is a worker the. test is whether or not the employer had oontTol and supervision over the manner in which the work was to be done, The Sattedars were not under the control of the factory management and could manufacture the bidis wherever they pleased.

The coolies were neither employed by the management directly nor were they employed by the management through the Sattedars.

Dharangadhara Chemical Works Ltd. v. State of Saurashtra, P9571 S, C, R, 152, applied.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 93 of 1955.

Appeal by special leave from the judgment and order dated September 16, 1954, of the former Nagpur High Court in Criminal Revision No. 295 of 1954, arising out of the judgment and order dated March 8, 1954, of the Second Additional Sessions Judge at Sagar in Criminal Appeal No. 368 of 1953, against the order dated August 5, 1953, of the Judge Magistrate. Sagar. in Criminal Case No. 146 of 1953.

N. C. Chatterjee and Rameslnvar Nath, for the appellants.

I. N. 'Shroff, for the respondent.

1958. February 18. The following Judgment of the Court was delivered by

SUBBAI RAO J.-This appeal by Special Leave is directed against the Order of the High Court of1Judicature at Nagpur and raises the question of construction of some of the provisions of the Factories Act (LXIII of 1948) (hereinafter referred to as the Act). Before posing the questions raised it would be convenient and useful at the outset to state the facts either found by the High Court or admitted by the parties.

Messrs. Brijlal Manila! and Company is a bidi factory situated in Sagar. The I st Appella.nt, Chintamanrao, is the Managing-Partner of the. firm while the 2nd appellant, Kantilal, is its active Manager. The Company manufactures bidis. The process of manufacture, so far as is relevant to the question raised, is carried out in two stages.

The first stage: The management enters into a contract with independent contractors, known as Sattedars, for the supply of bidis locally. The documents embodying the terms of the contract entered into by the Sattedars were not produced in th~ case. But the terms of the contract are not in dispute. The Management supplies tobacco to the .Sattedars and in some cases bidi leaves. Some of the Sattedars maintain a. small factory where they get bidis manufactured by engaging coolies. Others give tobacco and bidi leaves to outsiders who prepare bidis in their houses.

After bidis are rolled in the Sattedars collect the bidis so manufactured and take them to the factory directly or through coolies where they are sorted and checked by the workers in, the factory.

The selected or approved bidis are separately packed in bundles of IO and 25 and taken 'by the Sattedars or the coolies in gauze trays to tandul and left there. The rejected bidis, commonly known as 'chhant' are again rebundled by the Sattedars and delivered to the factory. The management

L/S4SCI-11 (11)

8/iri Okintaman

Rao & Another

The State of Madhya l'radf!llt

Suhbti Rao J.

8kri Ohinblma:•

Rao &r AnolJu, r

The State of Matlhya Praduh

SubbaRaoJ.

1342 SUPRElliE COURT REPORTS (1958]

pays the Sattedars the cost of the manufacture of bidis after deducting therefrom the cost of tobacco supplied to them.

Thereafter the second stage of the process of the manufacture begins in the factory. It is carried out exclusively by the labourers employed in the factory. It consists of warming of bidis to give taste, wrapping them in tissue papers, labelling and finally bundling them in the 'Pudas'. The finished product is then marketed. Jlrom the aforesaid description of the dual process of manufacture of bidis it is manifest that a Sattedar is only an independent contractor, who undertakes to do a specific job of work, i.e., the supply of bidis. directly or indirectly through his coolies, by manufacturing theni either in his own factory or by entrusting the work to third parties, at a price to be paid by the management after delivery and approval. He (Sattedar) or his coolies neithec work in the appellants' factory nor are they subject to tl-:e supervision or control of the appellants. The coolies or the third parties, to whom the work of making of bidis is en trusted by the Sattedars, are employed by the Sattedars and are paid by them. None of them works in the factory though they bring bidis to the factory for delivery in accordance with the terms of the contract. It may also be pointed out that the factory employs workers who are under the direct control and supervision of the factory management and who attend to the second part of the process of manufacture described above.

On December 9, 1952, Sri B. V. Desai, the Inspector of Factories, Madhya Pradesh, Nagpur, visited the factory at

5-30 p.m. At the time of his inspection he found the following persons in the factory :

l. Pirbaksha, son of Amir.

2. Abdul Sagir, son of Sk. Alam.

3. Deviprasad. son of Uddam.

4. Ramshankar, son of Mulchand.

5. Gopal, son of Mulchand.

6. Nirpat, son of Bhagirath.

7. Ramchand, son of Gyan.

8. Gotiram, son of Lila.

9. Basodi, son of Gulu.

Of the aforesaid persons, Deviprasad, Nirpat and Gotiram are Sattedars a.nd the rest are coolies employed by the Sattedars .. The Inspector found the first seven persons sorting out bidis and packing them into bundles of 10 and 25 in the premises and the last two bringing the bidis to" the room in jali for warming; The said facts are practically admitted by some of the aforesaid persons, who ga.ve evidence in the case, and they explained that they came to the factory on that day for delivering the bidis manufactured. by them to the factory.

Thereafter .the Chief Inspector of Factories filed a complaint in the Court of the Judge-Magistrate, Sagar, against the appellants for violation of the provisfons of ss. 62 and 63 of the Act, under the former for failure to n; iaintain the register of adult workers with all the prescribed entries duly filled in and under the latter for allowing the workers to work in the factory without making beforehand the entries of their attendance in the register of adult workers. The Judge-Magistrate, Sagar, held that the appellants contravened the provisions of the aforesaid sections and on that finding convicted them under s. 92 of the Act and directed them to pay a fine of Rs. 50 and Rs. 25 respectively. On appeal the Second Additional Sessions Judge, Sagar, confirmed the conviction of the 2nd appellant for contravening the provisions of ss. 62 and 63 but set •aside that of the lst appellant in regard to s. 6~ but confirmed the conviction for contravening s. 63 of the Act. The Revision Petition filed by the appellants in the High Court of Judicature at Nagpur was dismissed. As aforesaid with Special Leave of this Court, this appeal was filed against the Order of the High Court.

The conflicting contentions of the parties may l>riefly be stated. The learned counsel for the appellants contends that a Sattedar is an independent contractor, who undertakes to do a specific job of work for other persons without submitting himself to their control, and that he or his . employee is itot a worker within the defulltion of s: 2(1) of the Act and therefore the appellants are not under duty to coply with

Shri Ohintaman

Rao&. Another

The Stal,,, of Madhya Prad .. T.

8ul>ba Rao J,

Sliri Cltinfnman.

Rao .v. , 11wther

~'he 8tuJe Qj ,1/adliyn Prw.:'-<Jh

Subba Rao J.

1344 SUPRK\fE COURT REPORTS [1958]

the conditions of ss. 62 or 63 in respect of them. Whereas the learned Counsel for the State argues that the definition of the word 'worker' is comprehensive enough to take in all persons who work in the factory. whether employed by the factory or not.

The answer to the question raised turns upon the construction of the relevant provisions of the Act. They read:

Section 62. Register of adult workers:

The manager of every factory shall maintain a register of adult workers, to be available to the Inspector at all times during working hours, or when any work is being carried on in the factory, showing-

(a) the name of ea.ch adult worker in the factory;

(b) the nature of his work:

(c) the group, if any, in which he is included;

(d) where his group works on shifts, the relay to • which he is allotted;

(e) such other particulars as may be prescribed:

Provided that, if the Inspector is of opinion that any muster roll or register maintained as part of the routine of a fa.ctory gives in respect of any or all the workers in the factory the particulars required under this section, he may, by order in writing, direct that such muster roll or register shall to the corresponding extent be maintained in place of, and be treated as, the register of adult workers in that factory.

Section 63. Hours of work to correspond with notice under Section 61 and register under Section 62-

No adult worker shall be required or allowed to work in any factory otherwise than in accordance with the notice of periods of work for adults displayed in the factory and the entries made before-hand against his name in the register of adult workers of the factory.

Section 92. General penalty for offences.

Save as is otherwise expressly provided in this Act and subject to the provisions of section 93, if in, or in respect of, any factory there is any contravention of any of the provisions of. this Act or. of any rule made thereunder or of

any order in writing given thereunder, the occupier and manager of the factory shall each be guilty of an offence and punishable with imprisonment for a term which may extend to three months or with fine which may extend to five. hundred rupees or with both, and if the contravention is continued after conviction, with a. further fine which may extend to seventy-five rupees for each day on which the contravention is so continued.

Section 2(1) 'worker' means a. person employed, directly or through any agency, whether for wages or not, in any manufacturing process, or in cleaning any part of the machinery r premises used for manufacturing process, or in any other kincf of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process.

Section 2(m) "factory" means any premises including the precincts thereof-

(i) Whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or

(ii) Whereon twenty or more workers .are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is. ordinarily so carried on, .................................... :

Section 2(n) "occupier" of a factory means the person who has ultimate control over the affairs of the factory,

The gist of the aforesaid provisions relevant to the question raised may be stated thus: The .Manager of a factory-factory is defined under the Act as the premises wherein a specified number of workers are working and in any part of which a manufacturing process is carried on, with or without the aid of power-shall maintain a register of adult workers working in that factory, show1ng the necessary particuJars mentioned in s. 62 of the Act.

Skri OMntama" Rao er. AllOtw

"' The Staid of Madhya Praduh

&diba Rao J.

JY.i8

fJ'hri Cld11tama.n

Rew &, A1wll1er

v. 'l'lie St<1fo uf Madhya. PradEtA

SttLba Ruo J.

l34(i

SUPHEME COUHT REPOHTS [1958]

adult worker shall be required or allowed to work in any such factory otherwi.se than in accordance with the notice of periods of work for adults displayed in the factory and the entries made beforehand against his name in the register of adult workers of the factory. If there is any contravention of the said provisions, the occupier, who is defined as a person who has ultimate control over the affairs of the factory, and the manager are guilty of offences punishable under the Act.

Admittedly the names of the 9 persons, stated supra, were not entered in the register of adult workers maintained by the factory. Neither any notice of the periods of work allotted to them was displayed in the factory nor any entries made beforehand against their names in the register of adult workers of the factory.

The appellants, therefore, would have certainly contravened the provisions of the Act, if, in fact, the said persons were workers in the factory as defined under the Act.

This takes us to the consideration of the definition of the term 'worker' under the Act. 'Worker' is defined to mean a person employed, directly or through any agency, whether for wages or not, in any manufacturing process. It is and it cannot be disputed that the making of bidis is a manufacturing process. But is a Sa, ttedar a person 'employed', directly or through agency, within the meaning of the definition "employed". The concept of employment involves three in gredients: (I) employer (2) employee and (3) the contract of employment. The employer is one who employs, i.e., one who engages the services of other persons. The employee is one who works for another for hire. The employment is the contract of service _between the employer and the employee whereunder the employee agrees to serve the em

ployer subject to his control and supervision. Can it be said that a Sattedar is employed by the management of the fac tory to serve under it? There is a well understood distinction between a contractor and a workman and between contract for service and contract of service. In Stroud's Judicial Dictionary (Third Edition, Volume I, Page 616) the distinction between a. contractor and a workman is brou&ht out in bold relief in the following manner :

"Of course, every person who makes _an agreement with another for the doing of work is a contractor, in a general sense; but as used in Workmen's Compensation Act, 1897

(60 & 61 Viet., c. 37), s. 4 "contractpr" and "WORKMAN" "have come to have a more restricted and distinctive meaning," and "contractor" means 'one who makes an agreement to carry out certain work specified, but not on a contract of service'."

The same idea is repeated in a different terminology thus:

"A 'contractor' is a person who, in the pursuit of an independent business, undertakes to do specific jobs of work for other persons, without submitting himself to their control in respect to the details of the work".

There is, therefore, a clear-cut distinction between a contractor and a workman. The identifying mark of the latter is that he should be under the control and supervision of the employer in respect of the details of the work. This Court in Dharangadhara Chemical Works Ltd. v. State of Saurashtra(') in the context of the definition of "workman" under the Industrial Disputes Act (XIV of 1947) made the following observations at page 157:

"The essential condition of a person being a workman within the terms of this definition is that he should be employed to do the work in that industry, that there should be, in other words, an employment of his by the employer and that there should be the relationship between the employer and him as between employer and employee or master and servant. Unless a person is thus employed there can be no question of his bCing a workman within the definition of the term as contained in the Act."

Elaborating the point further, Bbagwati J. who delivered

<') (1957] $.C.R. 152.

19Ji8

Skri Ohintaman

Rao &: Another

. v.

The State of M adliya Pradull

SubbaRao J,

Shri Chintaman

&w fh .Another

The Stale of Madhya Pra<i"h

Subia Rao J,

the jud!l"'1ent on behalf of the Court proceeded to state:

"The test which is uniformly applied in order to determine the relationship is the existence of a right of control in respect of the manner in which the work is to be done."

After oonsideri~ the Case-la~ on the subject the learned Iudge restated the principle a.t page 160 thus:

"The principle which emerges from these authorities is that the prima facie test for the determination of the relationship between master and servant is the existence of the right in the master to supervise and control the work done by the servant not only in the matter of directing what work the servant is to do but also the manner in which he shall do his work, or to borrow the words of Lord Uthwa.tt at page 23 in Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) Ltd., and another ([19471 I A.C. 1, 23), "The proper test is whether or not the hirer had authority to control the manner of execution of the act in question."

After noticing the subsequent trend. of decisions wherein it is observed that the test of control is not one of universal application, the learned Judge expresses his view thus:

"The correct method of approach, therefore, would be l'O consider whether having regard to the nature of the work there was due control and supervision by the employer ......

" ... _ .. _ ....................................... .

There is no reason why the test laid down by this Court in the context .of. the definition of 'workman' under the Industrial Disputes Act of 1947, cannot be invoked or applied for ascertaining whether a person is a 'worker' under the Act.

If the test be appiled, it is not possible to hold that Sattedars in the present case, having regard to the nature of the work undertaken by them and the terms whereunder their services were engaged, a.re "workers" within the meaning of the definition under the Act. .It has been established in the present case that the Sattedar is only an indep, endent contractor and the agreement between the tnanagement and the Sa.ttedar is '

only that the Sattedar should receive tobacco from the management and supply them rolled in bidis for cqnsideration. He

i& not under the control of the factory management and he can manufacture bidis wherever he pleases. It is immaterial to the management whether he makes the bidis in his own factory or distributes. tobacco to different individuals for making bidis under a separate agrment entered into by him with them. The management cannot regulate the manner of discharge of his work. His liability is discharged by his supplying bidis and delivering them in the factory. The terms of the contract between the management and the Sattedar, as disclosed in the evidence, do not enjoin on the latter to work in the factory. His only obligation is to deliver bidis at the factory. That would be an obligation imposed on any contractor who undertakes to supply and deliver the goods to the other party. We, therefore, bold that the Sattedars in this case were not employed by the management as workers but were only indepcpdent :contractors who performed their part of the act bf tt)aking '?idis. and delivering them at

th~ factory. · ·

If the Satt(!dars, i.e., three out of the nine persons found at the factory, were' oot workers within the meaning of the Act, can it be said that the other persons, .who were coolies . . .

I employed by the Sattedars to enable them to keep up their contract with t, he management of the factory, were workers as defined under the Act?' A "worker" under the def4iition means a person employed, directly or through any agency.

The words 'directly or through any agency' indicate that the emplo'yment is by the management directly or through some kind of employment agency and in either case there i& a contract of employment between the management and the persons employed .. Admittedly the coolies were not employed by the management; there was no privity of contract between them and the management. It is not disputed that the coolies were not employed by the Sattedars for or on behalf of the management of the factory. They were employed by the Sattedars on their own acaunt and they paid them for .the

l!JJ8

Shri Chiutaman Roo &: Another

v. 2' he State of M rulkya Pradesh

Subba l!ao J.

1!J; J8

::ihri'. CltintamtHi

RM 4: Anotlu!.r ...

Tlw Stale Qj Jlarlhya Prade8/t.

Su.bba llim .T.

1350 SUl'REllfE OOUHT REPORTS [1958]

work extracted from them. On the aforesaid facts it is obvious that the coolies were not employed by the management directly nor were they employed by the management through the agency of Sattedars. If so, it follows that coolies employed by the Sattedars are not workers within the meaning of the definition in the Act.

The evidence discloses a third category of persons who took some part in the manufacturing process of bidis. They were the persons to whom the Sattedars distributed tobacco for making bidis in their respective homes. It does not appear from the evidence that any one of the nine persons found in the factory belongs to that category. That apart those persons cannot, in any sense of the term, be called the persons employed by the management directly or through any agency.

That that should be the construction of the provisions of s. 2(1) of the Act is reinforced by other relevant provisions of the Act. Chapter 6 is headed "Working hours of Adults". Section 51 prescribes the weekly hours of work for a worker. Section 52 provides that no adult worker shall be required or allowed to work in a factory on the first day of the week and if he is made to work on that day for the substitution of another holiday in its place. Section 53 gives compensatory holiday to a worker who is made to work on a regblar holiday. Section 54 fixes the daily hours of work and s. 55 intervals for rest. Section 56 limits the spreadover of period of work for an adult worker to 10! hours in a day, including the intervals for rest. Sections 57, 58, and 59 deal with night shifts prohibition of overlaping shifts and extra wages for overtime. Section 60 prohibits double em ployment. i.e., employment of the same worker in a factory on any day on wch he. has already been working in any other factory. Section 61 enjoins qn the management of the factory to display and maintain the notice of periods of work for adults, showing clearly for every day the periods during which the adult workers may be required lo work and directs

that the said notice shall be such that the workers working for those periods would not be working in ontravention of any of the provisions of SS. 51, 52, 54, 55, 56 and 58 of the Act. Section 62, for breach of which provisions the prosecution was launched in the present' case, imposes a duty bn the manager of every factory to maintain a register of adult workers, showing .the name of each adult worker in the factory, the nature of his work, the group, if any, in which he is included, where his group works on shifts, the relay to which he is allotted and such other particulars as may be prescribed. Section 63' directs that the hours of work of an adult worker should correspond with the particulars given . in the notice under s. 6 l u.nd the reiister under s. 62. Section 92 constitutes the contravention of any of the provisions of the Act or any rules made thereunder an offence punishable with imprisonment or fine or with both .. the scheme of the aforesaid provisions indicates that the workmen in the factQry are under the direct supervision and control of the management. The conditions of service are statutorily regulated and the ma.nagement is to conform to the rules laid down at the risk of being penalised for dereliction of any of the statutory duties. The management obviously cannot fix the working

hours, weekly holidays, arrange for night shifts and comply with other statutory requirements, if the persQns like the Sattedars, working in their factories and getting their work done by others or through coolies, are workers within the meaning of the Act. It is well nigh impossible for the management of the factory to regulate their work or to comply with the mandatory provisions of the Act. The said provisions, therefore, give a clear indication that a worker under the definition of the Act is a person who enters into a contract of service under the management and does not include an independent contractor or his coolies or servants who are not under the control and supervision of the employer.

Thei:e is a. conflict of decisions between the Allahabad and the Nagpur High Court~ on the construction of s. 2(1) of the Act. A Divisional Bench of the Nagpur High Court

Shri Chintaman Rao th A nather

Tlie Stat' of Madhya Pra<W; ih

,<fohha Rao .T.

19.>8

Sl1ri Ohintawon Jff1.0 d: Ano(/11.r ,._

TIH' 8/A, ff' of

fmll•11a Prarfl'.li

.':• 11hbn Rno ./.

1352 SOPRE~IE COUllT REPORTS [1958)

in Prm•i11cia/ Gm•emment, Central Provinces and Berar v.

Robinson(') considered the scope .of the definition of the word "worker" in the Factories Act. There the facts were: On November l 0, 1943, a new battery of boilers was being erected. on the premises of the Jubbulpore Electric Supply Co. in order to supply energy to the New Ordnance Factory at Khamaria.

The work of erectiop. was entrusted to Messrs. Babcock and )Vilcox of Calcutta. The persons who were employed by Messrs. Babcock and Wilcox were found working in the premises of the Electric Supply Co. in contravention of the provisions of the Factories Act.

The question was whether the employees of an independent .contractor were workers as defined under s. 2(1) of the Act.

Pollock J. who delivered the judgment of the Division Bench stated at page 44 thus:

"The definition of "worker" is a very wide one, and it is wide enough, in our opinion, to include persons employed in repairing machinery or putting up new machinery, even if such a machinery is not in actual use at the time."

It may be noticed that no contention was raised in that case that the persons found in the factory were not the employees of Jubbulpore Electric Supply Co. The only question raised and decided was whether the persons employed in repairing the machinery or putting up new ma.chinery were persons engaged in any manufacturing process or any work incidental to or connected with it. The question now raised was not before the learned Judge and therefore there was no occasion for them to express any opinion thereon. The fact that if this question was raised and decided in the way we did, the conclusion of the learned Judges would have been different cannot make the said decision an authority on a point not raised or decided upon by the learned Judges.

Another Bench of the Nagpur High Court in The State

v. liwabhai(') gave a. wide connotation to the word "employed" under s. 66(l)(b) of the Factories Act. The learned

(') I.L.R. (1947] Nagpur 43. (') l.L.R. (1953] Nagpur 67.

Judges observed that the word "employed", in their opinion, did not only connote employed on wages but also being occuP..ied or engaged in some form of activity. If the learned Judges meant by that observation that if a person is found engaged in some form of activity in a factory, irrespecte of whether there was any contract of employmeAt or not between him and the employer, he is a worker, we should express our respectful dissent from the said observa.tion. But, on the other hand, if they had only emphasized on the fact, which is obvious from the provisions of s. 2(1), that the employment need not be for wages, the statement is unobjectionable.

The decision in State v. Shri Krishna Prasad Dar(') need not be considered in detail as the learned Judges therein accepted the same interpretation that we have placed on the provisions of s. 2(1) of the Act and came to the conclusion, on the facts of that' case, that the persons therein were workers of the factory.

We, therefore, hold that neither the Sattedars nor the coolies found by the Inspector to be working in the factory were workers, as they were not employed by the factory.

As they were not workers, the non-inclusion of their names in the register of adult workers or the absence of any entries in regard to them in the .said register would not constitute an offence under s. 92 of the Act.

Before leaving. this case we would like to make one observation. Our decision is not intended to lay down a general proposition that under no circumstances a Sattedar can be considered to be a worker within the meaning of its definition in the Act.

Whether a particular person, under whatever designation he may be known, is a worker or not under the Act depends upon the terms of the contract entered into between him and the employer. In the case before us no attempt has been made by the prosecution to establish that the Sa.ttedars were employed by the management for

(') A.I.R. (1954] Allahabad 44.

19.5/i

811ri Cltinlfnn,, n

llfln & A 1wtl1f'r , .. '1 1'1e 8111-h o/' Jind/11111 l'rade•ll.

Shri Chintnm.nn

Rnn &: A)u1/lu,,.

v. 'l'ltt S!fllfrf ; l{rullt!ff1 J'-rml1.<fi

S1d1hri Jf11n .1.

doing work in the factory. The uncontradicted evidence is that they were independent contractors who came to the factory to deliver the bidis or sent their coolies to do the same. Our decision is. therefore, confined to the facts of this case.

In the result we allow the appeal and set aside the convictions of the appellants under s. 92 of the Act and the sentences imposed upon them. The fines if paid, will be refunded.

A ppea/ allowed .

CHINT AMAN RAO AND ANOTHER

THE STATE OF MADHYA PRADESH

B. P. SINHA

Factories Act

ss. 2(1)

s. 92

Factories Act

ss. 62

and 63

s. 2(1)

s. 92

N. C. Chatterjee

Rameslnvar Nath

I. N. 'Shroff

SUBBAI RAO

Factories Act

Brijlal Manila

Sagar

Chintamanrao

Kantilal

State of Madhya

Suhbti Rao

Sattedar

Sattedars

December 9, 1952

B. V. Desai

Madhya Pradesh

Nagpur

Abdul Sagir

Deviprasad

Ramshankar

Gopal

Nirpat

Ramchand

Gotiram

Basodi

Deviprasad

Nirpat

Gotiram

Court of the Judge-Magistrate, Sagar

ss. 62 and 63

s. 92

Second Additional Sessions Judge, Sagar

ss. 62 and 63

s. 6

s. 63

High Court of Judicature at Nagpur

Ohintaman

Rao

ba Rao

Sliri Cltinfnman.

Rao

Subba Rao

ss. 62

Section 62

Section 63

Section 61

Section 62

Section 92

section 93

Section 2(1)

Section 2(m)

Section 2(n)

s. 62

OMntama" Rao

&diba Rao

SttLba Ruo

Stroud

Compensation Act, 1897

s. 4

Dharangadhara Chemical

Industrial Disputes Act

Bbagwati

Ohintaman

19Ji8

Skri Ohintaman

Rao &: Another

.

State of M adliya Pradull

SubbaRao

Chintaman

Subia Rao

Uthwa.tt

Industrial Disputes Act

Chiutaman Roo

State of M rulkya Pradesh

Subba l!ao J.

s. 2(1)

Section 51

Section 52

Section 53

Section 54

s. 55

Section 56

Sections 57, 58

Section 60

Section 61

SS. 51, 52, 54, 55, 56 and 58

Section 62

Section 63

s. 6

s. 62

Section 92

Allahabad

Nagpur High Court~

s. 2(1)

Chintaman Rao

Ohintawon

Factories Act

l 0, 1943

Khamaria

Babcock

Vilcox

Calcutta

Factories Act

s. 2(1)

Pollock

Jubbulpore Electric Supply Co.

Nagpur High Court

s. 66(l)(b)

Factories Act

s. 2(1)

s. 2(1)

s. 92

s. 92