IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTY NINTH DAY OF DECEMBER TWO THOUSAND AND FOUR PRESENT THE HON'BLE MR JUSTICE P.S.NARAYANA WRIT PETITION NO : 701 of 1997 Between: All India Crochet Lace Exporters Asscociation, Rep by its General Secretary A.S.Narayana, R/o Sivalayam Street , Narsapur. ..... PETITIONER AND 1 The Government Of Andhra Pradesh, Rep by its Secretary, Labour Department, Hyderabad. 2 The Commissioner of Labour, Hyderabad. 3 The Assistent Commissioner of Labour, Eluru, West Godavari District. 4 The Labour Officer, Bhimavaram , West Godavari District. 5 The Assistant Labour Officer, Palakole , West Godavari District. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue a Writ, Order or Direction more particularly one in the nature of Writ of Mandamus , declaring that the artisans who knit the laces and sell the same to an exporter, can never be deemed as "Workman" or an "Employee" of such purchaser within the meaning of any of " The Shops and Establishments Act" ."The Minimum wages Act" or the "Labour welfare Act"; that having regard to the special nature of the service of exporters, such as collecting the lace pieces, exporting them to foreign countries and earning foreign exchange, cannot be deemed as an establishment; that therefore either the artisans who do the lace work during his/her idle time, by their special art, or the persons who purchase such lace pieces and export them, cannot be governed for any rights or liabilities by either the shops and Establishments Act, the Minimum Wages Act or Labour Welfare Act; that the respondents are not entitled to enforce those said enhancements against any of the exporters either for prosecuting or otherwise; that the enforcement of such laws against the Lace exporters is highly arbitrary, contrary to law, violative of the Constitution of India and the principles of natural justice; and to direct the respondents not to take any action under the provisions of the aforesaid Acts, either against or in favour of the exporters or the artisans of the laces in the ends of justice. Counsel for the Petitioner:MR.D.RAMALINGA SWAMY Counsel for the Respondents : GP FOR LABOUR, EMPLOYMENT & TRAINING The Court made the following : ORDER: All India Crochet Lace Exporters Association, represented by its General Secretary, filed the present Writ Petition praying for a writ of mandamus declaring that the artisans who knit the laces and sell the same to an exporter can never be deemed as “workman” or “employee” of such purchaser within the meaning of any of The A.P. Shops and Establishments Act, 1988, The Minimum Wages Act, 1948 or the A.P.Labour Welfare Fund Act, 1987 having regard to the special nature of service of exporters such as collecting the lace pieces, exporting them to foreign countries and earning foreign exchange cannot be deemed as an establishment; that therefore either the artisans who do the lace work during his/her idle time by their special art or the persons who purchase such lace pieces and export them cannot be governed for any rights or liabilities by either The Shops and Establishments Act, 1988, The Minimum Wages Act, 1948 or the A.P. Labour Welfare Fund Act, 1987; that the respondents are not entitled to enforce those said Enactments against any of the exporters either for prosecuting or otherwise; that the enforcement of such laws against the lace exporters is highly arbitrary, contrary to law, violative of Constitution and the principles of natural justice and to direct the respondents not to take any action under the provisions of the aforesaid Acts, either against or in favour of the exporters or the artisans of the laces in the ends of justice. The petitioner is a registered society and the main grievance ventilated by the petitioner is that the respondents and their subordinates have been harassing the members of the petitioner association, lace exporters, by issuing individual notices threatening to prosecute them unless minimum wages are paid and registration is made as ‘establishment’ under The A.P. Shops and Establishments Act, 1988, hereinafter in short referred to as “Act”, for the purpose of convenience. The grievance ventilated by the petitioner in the present Writ Petition is knitting laces is an ancient art and these workers cannot be styled as workers at all but only artisans and there is no employee and employer relationship between these artisans and the purchasers of the lace goods and hence they are not governed by the welfare labour Legislations specified supra and hence these establishments need not be registered under the Act. The stand taken in the counter affidavit is that in the light of the provisions of the Act and also the provisions of the Minimum Wages Act, 1948 and the A.P. Labour Welfare Fund Act 1987 it cannot be said that these workers would not fall under the definition of ‘workmen’ and there is no employer and employee relationship and hence these establishments are to be registered under the Act and they are governed by the provisions of the Minimum Wages Act, 1948 and also A.P. Labour Welfare Fund Act, 1987. Sri D.Ramalinga Swamy, the learned Counsel representing the petitioner had traced the historical background of this ancient art and would contend that these artisans cannot be styled as workmen so as to attract the Labour Legislations and there is no employer and employee relationship between these exporters and artisans and hence the provisions of the Act are not attracted and consequently the other Labour Legislations also cannot be made applicable to these Units. The learned Counsel also placed reliance on certain decisions in this regard. Per contra, the learned Government Pleader for Labour, Employment and Training had taken this Court through the counter affidavit filed by the respondents and would contend that in the light of the specific provisions of the Act and also the provisions of the Minimum Wages Act, 1948 and the A.P. Labour Welfare Fund Act, 1987, taking into consideration the activities of these Units, these Units definitely fall within the meaning of ‘commercial establishment’ and hence these Units are to be registered under the Act and also these Units are governed by the provisions of the Minimum Wages Act, 1948 and also A.P. Labour Welfare Fund Act, 1987. Heard the Counsel. The petitioner society had been constituted and registered for the benefit of exporters of lace goods for solving common problems. The European Community came to India while setting forth their colonies and also missionaries and found that the Indian women who were very poor were dedicated to the domestic life and only seasonal agriculture work and had been idle wasting valuable time and hence they encouraged the poor women residing in the three coastal Districts i.e., East Godavari, West Godavari and Krishna, to learn the art of lace knitting of fine variety of lace works and finding this as a very good craft most of the poor women residing in these Districts learnt the craft and used to do lace works. It is stated that there is no demand for the lace goods in our country and hence the European missionaries encouraged some people to purchase these lace pieces from the artisans and to export them to foreign countries where there had been good demand for fine lace goods. Thus the entire production of the lace is being exported to the foreign countries such as Australia, England, United States, France and to various other countries. It is also stated that our country is securing a foreign exchange of not less than Rs.50 crore per annum due to these transactions. It is also stated that this art of craft is well flourishing only because of non-interference by the Governmental agencies at any point of time. It is stated that the artisans have no fixed hours and they do not work at any specific place but work only at their respective houses whenever they find time and the artisans are under no obligation to sell their goods only to a particular exporter and they can act at their sweet will and pleasure and hence these artisans would not fall under the definition of ‘workman’ and there is no employer and employee relationship between these exporters and the artisans. It is further stated that the employees of the Labour Department have been asserting that the lace deals will come within the meaning of the Act and the artisans would fall under the definition of ‘workmen’ and the exporting agencies should register themselves under the provisions of the Act and the Labour Legislations and the provisions thereof are to be followed. Certain notices had been issued and prosecutions had been launched. The petitioner association made several representations both to the Central and the State Governments not to apply the provisions of the Legislations specified supra in relation to the lace work and their exporters. In fact, the Ministry of Commerce, Government of India, New Delhi sent letter dated 27-8-1996 to the then Minister for Labour and Employment, Andhra Pradesh calling for the views regarding the pleas taken by the petitioner association in their representation. It is stated that the State Government had not taken any action thereon. Taking advantage of the same, the officials of the Labour Department have been harassing the lace exporters by issuing individual notices and also threatening to prosecute them unless minimum wages are paid and unless these Units are registered as establishments under the A c t. In such circumstances, the petitioner association filed the present Writ Petition. In the counter affidavit, the facts relating to historical background no doubt had not been specifically denied but it was specifically averred that depending on the demand for the lace products and after getting samples, the lace manufacturers get lace items manufactured in their Establishments only. However, they also give some work to Home workers who are house wives and used to do lace knitting in their houses. The lace exporters supply thread to the direct workers working in their establishments (usually residential houses of exporters are being used for production of lace items) and also to the house workers while giving the model. After home workers and direct workers knit the lace items as per models, all of them bring the manufactured items to the establishment of the lace exporters to verify them with the model and accept only those items which are in uniformity with the model supplied by them. Rejections will also be there and the home workers and direct workers have to bear the loss. The workers will be paid wages depending on the thread used by them for the production of lace items. Even after acceptance of the manufactured lace items the lace exporters in their establishments get the items finished by giving touches and making minor corrections and get them bundled, packed and exported. For all these purposes, the lace exporters maintain an establishment having some skilled workers to do finishing work and also unskilled workers for miscellaneous works of packing, bundling, exporting and accounts, maintenance etc. The home workers will also be paid basing on their work turn out. Thus it is false to say that there is no employee and employer relationship between the workers and the lace exporters. It is also stated that due to increase of awareness among workers and Trade Unions about the implementation of Labour Legislations especially the minimum wages and the other welfare Legislations there were several complaints in this regard from East Godavari, West Godavari and Krishna Districts during the past two years in view of the failure to pay minimum wages to these poor workers who are mostly illiterate and unorganized women working without any restriction on hours in case of home workers and working for more than normal working hours in case direct workers straining themselves as the lace manufacturing work required lot of concentration and causes stress on the eyes of the workers but the workers are being exploited by not being paid minimum wages and not restricting the timings of 8 hours as guaranteed under the Act. During the course of meeting with the lace manufacturers association and Trade Unions the lace exporters came forward with a plea that there cannot be restriction on opening hours and closing hours of lace manufacturing Units and for this purpose they were advised to approach the Commissioner of Labour for relaxation from the specific Clauses in the Act. In the counter affidavit different provisions of the relevant Legislations also had been specified in detail and the cases pending in the Court of Judicial First Class Magistrate, Narsapur for not registering the establishments and claims under the Minimum Wages Act 1948 filed before the authority and also the details of certain lace establishments who had registered under the Act also had been specified. The main grievance ventilated by the writ petitioner is that there is no employer and employee relationship and these Units would not fall within the meaning of ‘commercial establishment’ under the Act and hence the Labour Department cannot enforce the welfare Labour Legislations specified supra. Before proceeding to decide the present Writ Petition, the object of these Labour Legislations which are social welfare Legislations made for protecting the workers from exploitation by the employers may have to be kept in mind. The Counsel for the writ petitioner placed reliance on SHANKAR BALAJI WAJE Vs. THE STATE OF MAHARASHTRA where the Apex Court had explained the concept of employment under Section 2(1) of The Factories Act, 1948 wherein the Apex Court while dealing with Beedi factory and Beedi roller, in view of the fact that there is no obligation to work in Factory and there was freedom to attend and leave factory at any time and as the payment is being made on the basis of piece work and quantity to be turned out per day not fixed, held that the Beedi roller was not a worker within the meaning of Section 2(1) of the Factories Act, 1948. This view was expressed by the majority in the decision referred to supra and the decision in CHINTAMAN RAO Vs. STATE OF MADHYA PRADESH also had been referred to in the decision referred (1) supra. The A.P. Shops and Establishments Act, 1988, Act 20 of 1988, is an Act to consolidate and amend the law relating to the regulation of conditions of work and employment in shops, commercial establishments and other establishments and for matters connected therewith. Section 2 of the Act deals with definitions. Section 2(5) of the Act defines ‘commercial establishment’ as hereunder : “commercial establishment means an establishment which carries on any trade, business, profession or any work in connection with or incidental or ancillary to such trade, business or profession or which is a clerical department of a factory or an industrial undertaking or which is a commercial or trading or banking or insurance establishment and includes an establishment under the management and control of a co- operative society, an establishment of a factory or an industrial undertaking which falls outside the scope of the Factories Act, 1948 (Central Act 63 of 1948), and such other establishment as the Government may, by notification, declare to be a commercial establishment for the purposes of this Act but does not include a shop.” Section 2(9) of the Act defines ‘employer’ as hereunder : “employer means a person having charge of or owning or having ultimate control over the affairs of an establishment and includes the Manager, Agent or other person acting in the management or control of an establishment”. Section 2(10) of the Act defines ‘establishment’ as hereunder : “establishment means a shop, restaurant, eating house, residential hotel, lodging house, theatre or any place of public amusement or entertainment and includes a commercial establishment and such other establishment as the Government may, by notification, declare to be an establishment for the purposes of this Act”. Section 2(11) of the Act specifies that ‘factory’ means factory within the meaning of the Factories Act, 1948 (Central Act 63 of 1948). Section 2(18) of the Act defines ‘register of establishment’ as hereunder : “register of establishment means a register maintained for the registration of establishments under this Act.” Section 2(19) of the Act defines ‘registration certificate’ as hereunder : “registration certificate means a certificate issued under this Act”. Section 2(21) of the Act defines ‘shop’ as hereunder : “shop means any premises where any trade or business is carried on or where services are rendered to customers and includes a shop run by a co-operative society, an office, a storeroom, godown, warehouse or work place whether in the same premises or otherwise, used in connection with such trade or business and such other establishments as the Government may, by notification declare to be a shop for the purposes of this Act, but does not include a commercial establishment.” Section 2(23) of the Act defines ‘wages’ as hereunder : “wages means every remuneration, whether by way of salary, allowance, or otherwise expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied were fulfilled, be payable to an employee in respect of his employment or of work done in such employment, and includes – a. any remuneration payable under any settlement between the parties or order of a Tribunal or Court; b. any remuneration to which the employee is entitled in respect of overtime work or holidays or any leave period; c. any additional remuneration payable under the terms of employment, whether called a bonus or by any other name; d. any sum which by reason of the termination of employment of the employee is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made; e. any sum to which the employee is entitled under any scheme framed under any law for the time being in force; but does not include, - i. any bonus, whether under a scheme of profit sharing or otherwise, which does not form part of the remuneration payable under the terms of employment, or which is not payable under any award or settlement between the parties or order of a Court; ii. the value of any house accommodation or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the Government; iii. any contribution paid by the employer to any person or provident fund, and the interest which may have accrued thereon; iv. any traveling allowance or the value of any travelling concession; v. any sum paid to the employee to defray special expenses entailed on him by the nature of his employment; vi. any service compensation payable on the termination of employment in cases other than those specified in sub-clause (d); vii. the subscription paid by the employee to life insurance and the contribution paid by the employer to the life insurance of the employee under the provisions of this Act and the bonus which may have accrued thereon; or viii. house rent allowance payable by the employer; Section 3 of the Act dealing with Registration of Establishments reads as hereunder : (1) Every employer of an establishment shall - i. in the case of an establishment existing on the date of commencement of this Act, within thirty days from that date; and ii. in the case of a new establishment, within thirty days from the date on which the establishment commences its work, send to the Inspector concerned a statement, containing such particulars, together with such fees, as may be prescribed. (2) On receipt of such statement, the Inspector shall register the establishment in the register of establishments in such manner as may be prescribed and shall issue in the prescribed form a registration certificate to the employer who shall display it at a prominent place of the establishment. (3) Every registration certificate issued under sub-section (2), shall be valid with effect from the date on which it is issued upto the 31st day of December following. (4) Every employer shall give intimation to the Inspector, in the prescribed form, any change in any of the particulars in the statement made under sub-section (1) within fifteen days after the change has taken place. The Inspector shall, on the receipt of such intimation and the fees prescribed thereof make the change in the register of establishments in accordance with such intimation and shall amend the registration certificate or issue a fresh registration certificate, if necessary. (5) The employee shall, within fifteen days of the closure of the establishment, give intimation thereof in writing to the Inspector, who shall, on receipt of such intimation, remove the name of the establishment from the register of establishments and cancel the registration certificate : Provided that, where the Inspector is satisfied otherwise than on receipt of such intimation, that the establishment has been closed, he shall remove the name of such establishment from the register and cancel the registration certificate.” In exercise of the powers conferred by sub-section (1) of Section 71 of the Act, G.O.Ms.No.169, Women’s Development, Child Welfare and Labour (Lab.II), dated 28-10-1991, A.P. Shops and Establishments Rules, 1990 were framed and the said Rules came into force with effect from 1-11-1991. Rule 3 dealing with Registration of Establishments and Renewal of Registration Certificate reads as hereunder : 1. The statement specified in sub-section (1) of Section 3 of the Act shall be submitted by the employer in Form-I to the Inspector of the area concerned. The statement shall be accompanied by a challan in support of the payment of fees prescribed in Schedule-I. 2. The Inspector shall maintain Register of Establishments in Form V. 3. The Inspector shall issue a Certificate of Registration in Form II. 4. Every application for renewal of Registration Certificate made under Section 4 of the Act shall be submitted by the employer to the Inspector of the area concerned in Form III. The application for renewal of Certificate of Registration shall be accompanied by a challan for the fees prescribed in Schedule I. 5. The period of renewal of Certificate of Registration shall be one year or upto three years from the date of its expiry, at the option of the employer. 6. On receipt of application for renewal of Certificate of Registration, the Inspector shall issue Renewal of Registration Certificate in Form IV. 7. Where the application for Renewal of Registration Certificate is not made within the date i.e., at least 30 days before its expiry, penalty as specified shall be levied. 1 . Application submitted on or after 2nd December, but before 31st December - 25% of the fees prescribed. 2. Application submitted on or after 1st January - 50% of the fees prescribed Provided that the Government or subject to the control of the Government the Chief Inspector may, if they are or he is satisfied that there is sufficient reason for the employer in not sending the application for the renewal of the Certificate of Registration before the expiry of the time limit specified in sub- section (2) of Section 4, by an order and for reasons recorded therein, waive the payment of penalty either in part or wholly by the employer in respect of the renewal of the Certificate of Registration applied for.” Rule 29 of the Rules dealing with Maintenance of registers and records and display of notices reads as hereunder : Every employer shall maintain registers and records and display notices in the following manner :- 1. Every employer shall maintain a Register of Employment in Form XXII. 2. Every employer shall maintain a Register of Wages in Form XXIII. 3. Every employer of an establishment other than a shop shall exhibit in