C.W.P.No.3351 of 1989 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision:- 21. 04.2009 C.W.P.No.3351 of 1989 Bhag Masih ....Petitioner(s) vs. Labour Court Bhatinda and another ....Respondent(s) C.W.P.No.3352 of 1989 Harchand Singh ....Petitioner(s) vs. Labour Court Bhatinda and another ....Respondent(s) C.W.P.No.3353 of 1989 Gurcharan Singh ....Petitioner(s) vs. Labour Court Bhatinda and another ....Respondent(s) C.W.P.No.3356 of 1989 Mohan Dass ....Petitioner(s) vs. Labour Court Bhatinda and another ....Respondent(s) C.W.P.No.3357 of 1989 Budh Singh ....Petitioner(s) C.W.P.No.3351 of 1989 -2- vs. Labour Court Bhatinda and another ....Respondent(s) C.W.P.No.3358 of 1989 Harbans Singh ....Petitioner(s) vs. Labour Court Bhatinda and another ....Respondent(s) C.W.P.No.3359 of 1989 Jagtar Singh ....Petitioner(s) vs. Labour Court Bhatinda and another ....Respondent(s) C.W.P.No.3360 of 1989 Doola Singh ....Petitioner(s) vs. Labour Court Bhatinda and another ....Respondent(s) C.W.P.No.9670 of 1989 Gurcharan Singh ....Petitioner(s) vs. Labour Court Bhatinda and another ....Respondent(s) C.W.P.No.13388 of 1991 Gurdial Singh ....Petitioner(s) C.W.P.No.3351 of 1989 -3- vs. Labour Court Bhatinda and another ....Respondent(s) C.W.P.No.8183 of 1989 Food Specialities Limited Moga ....Petitioner(s) vs. The Presiding Officer, Labour Court, Bhatinda and another ....Respondent(s) *** CORAM:- HON'BLE MR.JUSTICE AUGUSTINE GEORGE MASIH *** Present:- Mr.I.K.Mehta, Sr. Advocate with Mr.M.S.Kohli, Advocate for the petitioner/claimants. Mr. P.K.Mutneja, Advocate, for respondent No.2-Company. Mr.M.L.Sarin, Sr.Advocate with Mr.B.B.Mahajan, Advocate for Petitioner Company in CWP No. 8183 of 1989. Mr.I.K.Mehta, Sr. Advocate with Mr.M.S.Kohli, Advocate, for respondent No.2-claimant in CWP No. 8183 of 1989. *** AUGUSTINE GEORGE MASIH, J. By this order, I propose to decide C.W.P.Nos.3351, 3352, 3353, 3356, 3357, 3358, 3359, 3360, 9670 of 1989 and 13388 of 1991 filed by the workmen challenging the awards passed by the Labour Court, Bathinda, on their references which have not been accepted vide the impugned awards as also C.W.P.No.8183 of 1989 filed by the company challenging the finding given by the Labour Court vide the impugned award holding C.W.P.No.3351 of 1989 -4- that the claimants were the workers of the company prior to the termination of the agreement between the parties, relying on a judgment of this Court in L.P.A.No.37 of 1976. Counsel for the parties have submitted that the basic facts and the point in issue to be decided by this Court are common in all these writ petitions and, therefore, can be decided together. Counsel for the parties have, therefore, addressed their arguments in C.W.P.No.3351 of 1981 and C.W.P.No.8183 of 1989. For the sake of convenience, the facts are being taken from C.W.P.No.3351 of 1989. Counsel for the petitioner has contended that the award passed by the Labour Court is not sustainable as the Labour Court has not properly appreciated the evidence produced by the workmen before the Labour Court. He contends that the company manufactures food products and one of the major ingredients is milk. The milk is purchased by the company from the farmers who rear milch cattle in the surrounding areas of the factory. Since the milk which is supplied to the company is collected from various farmers, it is scattered over a large area and for this purpose, the company engages the services of various people for collecting milk on their behalf. This milk is collected by them in the morning and evening. For the milk so collected, these persons are paid by the company . He contends that they are paid salary for this purpose. He further contends that they are supplied with the equipment to collect and test the quality of the milk. They are paid the rental of the place where the Collection Centres are situated. Even the electricity charges are paid by the Management. The nature of work being performed by the persons so engaged is of the nature of workmen, the control is of the Management and therefore, for all intents C.W.P.No.3351 of 1989 -5- and purposes, the relationship of employer and employee exists between the parties. He further contends that the evidence which has been produced by the workman goes to show that even after 1968, the relationship between the Management and the claimants continued and, therefore, the findings as recorded by the Labour Court with regard to there being no relationship after 1968, cannot be sustained. He further contends that the award passed by the Labour Court cannot be sustained. He on this basis, contends that the evidence which has been placed on record by the Management does not show that there was a relationship of principal and agent between the petitioner-claimants and the respondent-Management. He relies upon the agreement to contend that the relationship of principal and agent that is alleged to have come into existence between the petitioner-claimants and the Management is based on an agreement between unequal parties. The Management being in a dominant position, the petitioner-claimants had no option, but to enter into the agreement. He further contends that the agreement was in English language whereas the workmen were rustic villagers who did not know English, as is apparent from the agreement itself as the same was signed by them in Urdu. Therefore, the agreement, even if held to be entered into, was without the knowledge of the workmen. He has referred to the evidence produced before the Labour Court to contend that the relationship of master and servant existed between the petitioner-claimants and the respondent-Management. On the other hand, Mr. Sarin, learned Senior Advocate, for the company submits that it is true that the company manufactures food products and milk is one of the most important raw material which goes into the production of the food products and is purchased from the farmers. C.W.P.No.3351 of 1989 -6- Since the number of farmers supplying milk is large and scattered over a large area, the company engages agents for this purpose and enters into agreement/contract with them for different areas under which milk from farmers and other milch cattle owners is collected by them in the morning and evening. These agents are paid commission for collecting milk and the amount payable is based upon the quality and quantity of the milk. The agent who comes forward for collecting milk may be a farmer, a shop- keeper, a Lamberdar of the village or even an official of a cooperative society or any other person. There is no embargo on these agents to continue to pursue their own business/occupation even for the period during which they hold agency for collection of milk. It is further not necessary for an agent to collect milk himself and, he may do this work through his family members or co-villagers who may be deputed to collect milk on his behalf. The farmers or other rearers of milch cattle bring their milk to the agency in the morning and evening at the appointed time and the agents collect the same and bring it to the point which is fixed for picking up the milk for haulage to the factory. These agents are paid commission for the services provided by them. He contends that there is no direct control or supervision by the company over these agents. No minimum wages are given to these agents. What is being granted to them is the commission which they are entitled to depending upon the quality and quantity of the milk. He, therefore, contends that there is no relationship of employer and employee between the company and the milk commission agents. Counsel further contends that it is an admitted position that an agreement between the company and the claimants was entered into on C.W.P.No.3351 of 1989 -7- 19.6.1967, copy whereof is attached as Annexure P-1 with C.W.P.No.8183 of 1991. Referring to various clauses of the said agreement, counsel has submitted that it has been clearly pointed out therein that the relationship between the petitioners and the company was that of principal and agent alone. He further contends that after this agreement which came to an end in the year 1968, no further agreement was entered into by the company with the claimants. The claimants preferred an application under Section 33-A of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act) submitting therein that the Management had contravened the provisions of Section 33 of the Act inasmuch as the services of the claimants had been terminated by the respondent-Management with effect from 30.6.1968 by way of punishment for their having refused to enter into illegal and unauthorized agreement as desired by the Management and that no prior approval had been obtained by the Management for taking such an action against the claimants. During the pendency of these references before the Industrial Tribunal, Punjab Chandigarh, after the evidence of the complainant had been concluded and the complaints were fixed for evidence of Management on 23.10.1970, an application was moved by the complainants through their authorised representatives and the President of the Union stating therein that since they did not wish to pursue the complaints, the same may be disposed of as having been withdrawn, subject to their rights to raise a regular dispute at an appropriate time. The said prayer of the complainants was accepted and the complaints were accordingly disposed of as having not been pressed, however subject to their rights to raise a regular dispute at an appropriate time, if deemed necessary by them. Counsel, on this basis, thus contends that thereafter the C.W.P.No.3351 of 1989 -8- complainants after a period of 11 years and 5 months for the first time submitted a demand notice dated 9.4.1982 alleging therein that their services had been terminated on 26.3.1982 without any notice, charge-sheet, enquiry or compensation and thus, claiming reinstatement with continuity of service and full back wages. He contends that after 30.6.1968 when the agreement (Annexure P-1) stood terminated automatically on completion of the period for which it was entered into which was neither extended nor any agreement thereafter was ever entered into between the parties, there can, by no stretch of imagination, be said to be any dispute pending between the parties which would call for adjudication. No evidence had been brought on record by the claimants to prove any relationship, what to say of employer and employee after 30.6.1968. He, with reference to a judgment of this Court in LPA No.37 of 1976, reliance whereof was placed by the Labour Court for holding a relationship of employer and employee being in existence between the commission agent and the company wherein it was held that the claimant therein was a workman, submits that it was a case of its own type where specific evidence was adduced by the claimants wherein he produced certain letters written by officer of company which indicated a direct control over the then milk collector. It was also in evidence that in that case the said milk collector was paid the minimum wage of Rs.80/- per month. He, on this basis, contends that the judgment in LPA No.37 of 1976 cannot be said to be applicable to the present case where no evidence has been brought on record by the claimants that they were either being paid minimum wages or there was direct control or supervision by the company over the claimants. He further relies upon a later Division Bench judgment of this Court reported as Nestle India Limited vs. Presiding Officer C.W.P.No.3351 of 1989 -9- Labour Court, Bhatinda and another, 2002 (Labour and Industrial cases) 43, relating to this very company against another claimant who was also a commission agent wherein this Court has held that the agent engaged under the similarly worded agreement as Annexure P-1, cannot be termed as a workman. Replying to this contention raised by the counsel for the company, Mr.Mehta, learned Senior Advocate for the claimants, has contended that the nomenclature of the post would not be relevant for holding the relationship between the parties being either employer and employee or principal and agent. What would be important is the nature of work being performed by the claimants. He submits that even if an agreement has been entered into between the claimants and the company, reliance whereof has been made by the company, to show the relationship of principal and agent, the nature of work being performed by the claimants did not change by coming into existence of the said agreement. They were all through performing the same duties which were assigned to them prior to the agreement. There was no change as such with regard to the responsibilities of the claimants nor there was any change with regard to the supervision and control of the company. As a matter of fact, there was a direct control and supervision of the company over the process, procedure and the way the work was to be performed. The claimants were actually putting into effect the directions as given by the company. Counsel, on this basis, submits that since the work being performed by them continued to be the same, so also the effective supervision and control of the company, they would fall within the definition of workman for all intents and purposes despite there being an agreement. He relies upon the judgments of the C.W.P.No.3351 of 1989 -10- Hon'ble Supreme Court in the case of Kanpur Electricity Supply Company Limited vs. Shamim Mirza, (2009) 1 SCC 20, C.Gupta vs. Glaxo-Smithkline Pharmaceuticals Limited, (2007) 7 SCC 171, Ram Singh and others vs. Union Territory, Chandigarh and others (2004) 1 Supreme Court Cases 126 & Bhagaband Collery vs. Their Workmen, 1962 (2) LLJ 356. He further contends that the Labour Court has gone beyond the reference while deciding the award impugned herein. He contends that the question referred to by the Labour Court was whether the termination of services of the workman was justified and instead of deciding that issue, the Labour Court has proceeded to hold that the reference is incompetent on the ground that there exists no relationship of employer and employee between the parties. He submits that this could not have been done by the Labour Court as it had no jurisdiction to go beyond the reference. Counsel relies upon the judgment of the Division Bench judgment of the Bombay High Court in Sitaram Vishnu Shirodkar vs. The Administrator, Government of Goa and others, 1984 (1) LLJ 480 as also the judgment of the Hon'ble Supreme Court in the case of Pottery Mazdoor Panchayat vs. Perfect Pottery Co. Ltd. and another, AIR 1979 SC 1356. Learned Senior Counsel for the company, Mr.Sarin, submits that on the basis of the pleadings, the issues have to be culled out and on the basis thereof, the parties led their respective evidence. Accordingly, the Labour Court had culled out four issues which subsequently were reduced to three. No objection was raised by the claimants at that stage or during the proceedings before the Labour Court, however, the Management did object to the reduction of the one of the issues which was challenged by C.W.P.No.3351 of 1989 -11- way of C.W.P.No.2263 of 1985 which came to be decided by this Court by observing that the Company would be entitled to lead evidence to show whether the claimant was their employee or not. From this, counsel submits that the issues have to be culled out from the pleadings and it is not merely the reference which is relevant but the issues framed by the Court on the basis of the pleadings which determine the lis between the parties. On the findings returned on the basis of the pleadings and the evidence led by the parties on the issues, the reference has to be decided. For this contention, he relies upon a judgment of the Hon'ble Supreme Court in the case of Delhi Cloth General Mills Company Limited vs. Their Workmen and others, 1967 (1) LLJ 423. I have heard learned counsel for the parties and have gone through the pleadings and the evidence led by the parties before the Labour Court as well as the records of the case with the able assistance of the counsel for the parties. There can be no dispute with regard to the contention raised by the counsel for the claimants that it is not merely the nomenclature of the post held by the claimants which would determine the relationship between the parties. What is therefore, important is the nature of work being performed. The responsibility, the control and the freedom to perform the work without supervision of the company and the nature of work being performed can either be determined on the basis of agreement entered into between the parties, the terms which have been settled between them and if there are certain Rules governing that particular engagement, then those would be the guiding factors. The position with regard to the pre-agreement stage between the parties is of not much relevance as it has come on record, and has been C.W.P.No.3351 of 1989 -12- admitted by both the parties that a written agreement came into existence between them on 19.6.1967 as referred to above. The agreement reads as follows:- “AN AGREEMENT made this Nineteenth day of June, 1967 BETWEEN Messrs Food Specialties Limited, Moga, a company registered under the Companies Act, 1956, and having its registered office at Link House, 3, Bahadur Shah Zafar Marg, New Delhi, hereinafter called the Company of the one part and Shri Jagtar Singh son of Shri Gurcharan Singh, resident of village Malisan Kalan hereinafter called the Commission Agent of the other part. WHEREAS the Company has requirements for collection of milk for their Factory situated at Moga; and WHEREAS the Commission Agent is living in that area and is willing to collect milk as commission agent and supply the same to the Company. It is hereby agreed as follows:- (1) The Commission Agent will arrange supply of milk of the required quality after collecting the same from the approved/registered producers. The commission agent will strictly observe the instructions issued by the Company in the regard to this agreement from time to time. (2) The company will accept the milk after testing the same for its quality and will reject the milk which does not conform to the standards set by the Company. Any milk which is sour will be charged from the Commission Agent C.W.P.No.3351 of 1989 -13- if such milk is supplied deliberately and/or negligently. (3) The Commission Agent will arrange at his won risk and responsibility for the haulage of milk to the pick up points fixed by the company. (4) For supplies made from time to time the Commission Agent will submit the bills which will be paid by the Company to the producers directly for which purpose he will submit his daily slips and the Commission Agent would be entitled to commission as agreed to in paragraph 8. He will also be responsible for any discrepancy in weight at the Centre and the Factory. (5) The Commission Agent will deposit Rs. 500/- as a security for proper discharge of the agreement on his part. The amount may be deposited by the Commission Agent in lump sum at the time of execution of the agreement or this security may be accumulated by deductions of Rs. 30/- per month from the Commission due to the Commission agent. (6) The Commission Agent will be free to take up any other assignment which is not inconsistent with the proper discharge of his obligations under these presents. (7) It is clearly understood that time is the essence of the contract and the commission agent will collect milk in accordance with the time schedule fixed by the Company and will ensure that there is no delay in the delivery of the milk to the Company. C.W.P.No.3351 of 1989 -14- (8) The Commission Agent will be entitled to a commission in respect of the milk accepted by the Company at the following rate:- Rs. 5.00 paisa per 100 Kgs. of fresh milk upto first 2000 Kgs. And Rs. 1.60 paise per 100 Kgs, of fresh milk for any additional quantity in a calander month. The Commission is inclusive of all expenses and costs the commission agent may incur for collecting the milk from various places and haulage of the same. However, the Company will reimburse the commission agent the rent, if any, of the premises where milk collection is arranged by him. No commission shall be payable for the milk which is of substandard quality. (9) The Commission Agent will himself be responsible for all expenses incurred in supplying the milk and also for any shortage before it is delivered to the Company. (10) If the commission Agent engages any person they will be his employees or agents and the Company will not have any concern whatsoever with them and will not be liable for the expenses incurred in that connection. (11) If the Commission Agent does not supply the milk for two consecutive weeks due to any reason, the Company may terminate the agreement without notice C.W.P.No.3351 of 1989 -15- and/or without any compensation and may make any other suitable arrangements. (12) If the Commission Agents commits a breach of any of the condition of this agreement or in any way acts against the interest of the Company or acts in any manner which may adversely affect the Company's business or reputation or commits any act which is incompatible with the continuance of the relations of principal and Agent, the Company shall be at liberty to terminate this agreement without any notice and further the Company may withhold any other dues which might have become payable to the Commission Agent and his security to reimburse any loss or damage which the company may have suffered or may be likely to suffer for such act or acts on the part of the Commission Agent. (13) This contract is initially for a period of one year commencing from first day of July, 1967 and can be terminated by either party on giving one month's notice.” A perusal of the above agreement would show that the nature of the engagement of the claimants was purely that of a commission agent of the company. This agreement defines the responsibilities and the rights of the commission agents. A perusal of the same would show that the contention as raised by the company that there was a relationship of principal and agent between the parties is correct. A perusal of the evidence C.W.P.No.3351 of 1989 -16- as led by the parties before the Labour Court, reference whereof has been made by the counsel for the parties during arguments, does not show that the work being performed by the claimants was, in any manner, different from what was assigned to them under the agreement entered into by the parties. The evidence of the parties does not prove that there was direct control or supervision of the company over the working of the agents although certain parameters were defined but how to go about them was the exclusive domain of the agent. It was open to the claimants to either do the collection work themselves or through some other persons. He was at liberty to do his own work as is apparent from Clause 6 of the agreement. Clause 8 clearly shows that he was entitled to commission in respect of milk accepted by the company from him. The costs which the commission agent incurred for collecting the milk from various places and haulage of the same was to be incurred by the commission agent himself as it was inclusive in the commission. What was granted to him was the rent of the premises where milk collection is arranged by him. Clause 10 further shows that he could engage any person for performing the work of collection and further clause 12 clearly spelt out that the agreement was terminable in case of breach of any of the conditions which would entail the severance of continuance of relations of principal and agent. Clause 13 provided for the period of contract which was fixed for one year commencing from 1st July, 1967. It is the case of the company that thereafter the said agreement was neither extended nor any fresh agreement was entered into between the