ICTION: Civil Appeal No. 3197 98 of 1988.
From the Judgment and Order dated 4.4.1988 of the Calcutta High Court in Appeal Nos. 16 and 438 of 1986.
P.P. Rao, M.K. Ramamurthy, S.S. Ray, Raj Kumar Gupta, V.J. Francis, N.M. PopIi, S.K. Nandy, P.K. Dutta and A.D. Sikri for the appearing parties.
The Judgment of the Court was delivered by RANGANATH MISRA, CJ.
I have had the advantage of perus ing the draft judgments prepared by my learned brethren Punchhi and Ramaswamy, JJ.
While Justice Punchhi has gone by the literal construction of the statute, brother Ramaswamy has tried to find out the spirit of the legislation and with a view to conferring the benefit on the workmen, has adopted a construction different from the reported decision of this ) Court.
I agree with Justice Punchhi that the appeals should be dismissed and the judgment of the Division Bench should be sustained.
At the same time, 1 would like to add that the legislative intention should have been brought out more clearly by undertaking appropriate legislation once this Court took a different view in the decision referred to in brother Punchhi 's judgment.
The legislation is beneficial and if by interpretation put by the Court the intention is not properly brought out it becomes a matter for the legi siatture to attend to.
PUNCHHI, J.
The sole question which falls for determi nation in these appeals is, whether on the facts found, the right of the Principal employer to reject or accept work on completion, on scrutinizing compliance with job require ments, as accomplished by a contractor, the immediate em ployer, through his employees.
is in itself an effective and meaningful "supervision" as envisaged under Section 2(9) of the , 19,;8 (,for short the Act)? The said provision, as it stood at the relevant time, is set out below, as is relevant for our purpose: "2(.9 ') 'employee ' means any person em ployed for wages in or in connection with the work of a factory or establishment to which this Act applies and (i) who is directly employed by the principal employer on any work of, or inciden tal or preliminary to or connected 279 with the work of, the factory or establish ment, whether such work is done by the employ ee in the factory or establishment or else where; or (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervi sion of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or (iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; The Calcutta Electricity Supply Corporation (India) Ltd., hereinafter referred to as the C.E.S.C. engages var ious contractors to carry out work of excavation, conversion of overhead electric lines and laying of underground cables under public roads, as well as for repair and maintenance of the aforesaid works.
Subhash Chandra Bose & some others, the private respondents herein, were given such contracts, terms and conditions in respect of each were reduced to writing.
They would be adverted to at the appropriate time common as they are to all.
The C.E.S.C. was on notice alerted by the Regional Director of the Employees State Insurance Corpora tion (for short 'E.S.I.C. ') by means of communication dated 26August,1975 that the employees whose wages were being paid through such a contractor would fall within the scope of Section 2(9) of the Act and for reasons and details men tioned in the communication.
Thereupon the C.E.S.C. on its part engaged in correspondence with the Association of Electrical Contractors of Eastern India, a representative body of the contractors who are parties respondents herein, requiring them to comply with the provisions of the said Act immediately or else it will deduct a lumpsum of 7% from their bills.
The Association questioned the move and strong ly refuted such obligation.
After indulging in some corre spondence on the subject, the C.E.S.C. started making deduc tions from their bills on account of contribution to the Employees State Insurance Fund on and from 1984 and contin ued deducting till 1985 at the rate of 10%.
Some more corre spondence ensued, but in vain.
The electrical contractors then moved the High Court of Calcutta on December 6, 1985 by means of a writ petition under Article 226 of the Constitution against the E.S.I.C. and its officers as also the C.E.S.C. as 280 well as the Union of India so as to have the entire basis of the demand and deductions from bills annulled.
It was the categoric stand of the writ petitioners that for carrying out their contracts they were not supervised by the C.E.S.C., the principal employer, and they were carrying out works allotted to them at sites outside the factory estab lishment of the C.E.S.C.
Claiming that there employees did not come within the definition of the; term 'employee ' in Section 2(9) of the Act, they required of the High Court to determine this jurisdictional fact and issue the asked for writ, direction or order appropriate in the case to have it nipped in the bud.
The matter was enter`ained by the High Court and was heard on affidavits.
The dispute necessarily centred round as to whether the C.E.S.C. exercised any supervision while the contracts were being executed, and as to whether the terms thereof, assuming that they were faith fully observed.
amounted to work being carried out under the supervision and gaze of the C.E.S.C.
The respective parties put in supportive affidavits to their respective stands.
A learned Single Judge of the High Court, when seized of the matter, on March 23, 1984, passed an interim order, giving leave to the C.E.S.C. to respond to the notice issued by the E.S.I.C. and avail of the opportunity of being heard.
as required by law, and till then stayed the realisation of the contribution.
The matter was then thrashed by the Regional Director of the E.S.I.C., who on March 30, 1985, passed an order under Section 45 A of the Act holding that the C.E.S.C. was liable to pay Rs. 16,21,564.05 on account of contribution to the Employees State Insurance in respect of employees of its contractors and askedil to pay the same within the time allotted.
This order of the Regional Direc tor of the E.S.I.C. gave legitimacy to the deductions from the bills of the private electrical contractors already made by the C.E.S.C.
But sinceil was otherwise aggrieved of the foisting of the obligation, it moved another writ petition of its own under Article 226 of the Constitution against the E.S.I.C. and others claiming that it was not obliged to demand contributions on account of insurance in: respect of the employees of the electrical contractors.
These two writ petitions were beard together and were dismissed by a learned Single Judge of the High Court on January 11, 1986.
The learned Single Judge construed the contracts between the electrical contractors and ire C.S.E.C., whereunder the contractors were obliged to super vise on their own the work undertaken, so as to held that in the facts and circumstances of the case the ultimate super vision was that of the E.S.I.C.,and hence the Act was ap plicable.
The learned Single Judge also took the view that the Act being a beneficial piece of legislation, enacted for the protection and benefit of workers, required liberal interepretation, as was held by this Court in M.G. Beedi Works vs Union of India, AIR 1974 SC 1952, and then proceed ed to hold that the contractors as supervisors were in the nature of agents of the C.E.S.C., the principal employer.
The learned 281 Single Judge also took the view that since ultimate energis ing of the transmission lines was invariably effected by the C.E.S.C. after proper checks were effected for laying of cables or other maintenance work, that step by itself was "supervision ' so as to attract the provisions of the Act.
Such finding was based on the fact that even though the agreement specified that work was to be done under the supervision of the electrical contractor the C.ES.C. re tained the ultimate power or supervision and in fact did supervise the work executed by the contractors.
It is then that the learned Single Judge abruptly come to the conclu sion that the principal employer could not escape the li ability for the works of his contractors, as the latter was acting as the agent of the principal, , 'red in sense contin ued the view of the Regional Director of the E.S.I.C. Two appeals were filed against the dismissal of the two writ petitions before the Division Bench of the High Court who, after re considering the matter, reversed the learned Single Judge, which has given cause for these appeals by special leave and the poser of the question mentioned at the outset.
Now it is noteworthy that the Regional Director of the E.S.I.C. drew deductions of facts in his impugned order dated March 30,1985 in this manner: "The job which is performed by these employees engaged through the contractors.
was princi pally maintenance and distribution of elec tricity generated by the C.E.S.C. and also consumers ' service.
It was conceded during the course of hearing that after the work entrust ed to such contractors was completed, it was subject to checking by C.E.S.C. for compliance with their job specifications and the work related to main business of the C.E.S.C.
It cannot therefore be argued that merely because such job was performed outside the factory premises as stated, it did not concern the C.E.S.C.
The definition of the term 'premises ' includes such work site where the job of the factory is being done.
1 cannot agree there fore with the argument that such .job was not done for the factory and/or that there was no supervision of the C.E.S.C. over such job.
It could not but be a fact that ( E. ,section C. was executing its own job through lite agency of the coontractors engaged by them.
The C.E.S.C 's contention that they have acted upon the guidelines as provided in the letter dated 26.8.75 does not hold good as the letter dated 26.8.75, Annexure E, issued by the Regional Director of E.S '.I. Corporation.
does not hold good as the said letter only con 282 tained broad guidelines regarding provisions of the E.S.I. Act and the truth has to be ascertained from the realities of the situa tion".
[underlining ours] In place thereof the Division Bench of the High Court taking stock of the admitted facts opined as follows: "There is no dispute that respondent no.4 (ESIC) is the principal employer in respect of the said work and that the appellants (elec trical contractors) are the immediate employ ers of the said employees in connection with the said work.
There is no dispute that the employees of the appellants are not directly employed by the respondent no.4 (ESlC).
There is also no dispute that the employees of the appellants (electrical contractors) do not carry out the aforesaid work either in the premises or the factory or establishment of respondent No. 4 (E.S.I.C.).
It is also not disputed that the work which is carried out by the employees of the appellants (electrical contractors) can be stated to be work ordi narily part of the work of the respondent no.4 (ESIC) or preliminary or incidental to such work.
The only dispute appears to be whether there is any supervision of the employees of the appellants (electrical contractors) by the respondent no.4 (E.S.I.C.) or its agents." [bracketing ours] Commenting on the impugned order of the Regional Director of the E.S.I.C. dated March 30, 1985 afore extract ed, the Division Bench observed as follows: "It has not been found by the respondent no.2 (Regional Director) as a fact that in carrying out the aforesaid work the employees of the appellants are under the supervision of the respondent no.4 or its agents.
All that has been found is that after the works which are entrusted to the appellants axe completed, the same are checked by the respondent no.4.
From the aforesaid it is obvious that it has not been found by the ESI Authorities that there is actual supervision by the respondent no.4 or its agents of the aforesaid works which are performed by the employees of the appellants.
All that has been found is that after the aforesaid work is completed the respondent no.4 checks the same.
In our view, checking of a work after the same is completed and super vision of the same while the same is being performed are entirely different.
Checking of a work after its completion is always done in every case by the person who ordered the same to be done so that the work 283 can be finally accepted and payment made therefor.
After the work is completed, a further checking cannot mean or imply any or any further supervision.
" Vehemently was it urged on behalf of the appellants that the High Court fell in error in giving a restricted meaning to the word 'supervision ' occurring in Section 2(9) of the Act and in taking out the final act of rejection or accept ance of work from the purview of that word.
Strong reliance was placed on a decision of this Court in Royal Talkies vs
E. S.I. C; , , to project that this Court has spelled out that the main aim of the Act was to insure all employees in factories or establishments against sickness and allied disabilities, but the funding.
to implement the policy of insurance was by contribution from the employers and the employees.
In the same breath it was observed that since the benefits belong to the employees and are intended to embrace as extensive a circle as is feasible, the social orientation, protective purpose and human coverage of the Act were important considerations in the statutory construc tion, more weighty than mere logomachy or grammatical nice ty.
Reliance also was placed on Regional Director, E.S.I.C, Trichur vs Ratnanuja Match Industries, in which it was ruled that beneficial legislation such as the Act is to receive a liberal interpretation.
The Court yet ruled that it could not travel beyond the scheme of the statute and extend the scope of it on pretext of extending statutory benefits to those not covered by the scheme of the statute.
The Act being not meant for universal converage, the negatives in the Act, one of them being that the Act did not apply to factories or establishments with less than 20 employees, was taken into account to rule that liberal construction would not go to hold a partner to be an employ ee as he would be a person who would not answer the defini tion.
A judgment of this Court in M/s. P.M. patel & Sons & Others vs Union of India & Ors., [1986] I SCC 32 rendered in the context of the Employees Provident Fund and Miscellane ous Provisions Act, 1952 was pressed into service on behalf of the appellants to contend that when rolled beedis, pre pared by the worker elsewhere, were placed for acceptance or rejection, conforming to the standards envisaged by the manufacturers, that in itself was held constituting an effective decree of supervision and control.
The benefit of the said Act was extended to beedi workers employed through contractors and the question arose whether such workers came within the definition of 'employee ' in Section 2(f) of the said Act.
The definition of the word 'employee ' provided that it shall include any person employed by or through a contractor, in or in connection with work of the establish ment, which words were held wide enough 284 to include work performed elsewhere than the factory itself, including the dwelling house of a home worker, as also that the manufacturing operation, simple as it was, performed by illiterate workers, young and old, subjecting to rejection and acceptance, was by itself an effective degree of super vision and control, establishing the relationship of master and servant.
In whatever manner the word 'employee ' under Section 2(9) be construed, liberally or restrictedly, the construc tion cannot go to the extent of ruling out the function and role of the immediate employer or obliterating the distance between the principal employer and the immediate employer.
In some situations he is the cut off.
He is the one who stumbles in the way of direct nexus being established, unless statutorily fictioned, between the employee and the principal employer.
He is the one who in a given situation is the principal employer to the employee, directly employed under him.
If the work by the employee is conducted under the immediate gaze or overseeing of the principal employer, or his agent, subject to other conditions as envisaged being fulfilled, he would be an employee for the purpose of sec tion 2(9).
Thus besides the question afore posed with regard to supervision of the principal employer the subsidiary question is whether instantly the contractual supervision exercised by the immediate employer (the electrical contrac tors) over his employee was exercised, on the terms of the contract, towards fulfilling a selfobligation or in dis charge of duty as an agent of the principal employer.
P.M Patel 's case can also be no help to interpret the word 'supervision ' herein.
The word as such is not found employed in Section 2(1) of The Employees Provident Fund and Miscellaneous Provisions Act, 1952 but found used in the text of the judgment.
It appears to have been used as a means to establish connection between the employer and the employee having regard to the nature of work performed.
But what has been done in Patel 's case cannot ipso facto be imported in the instant case since the word 'supervision ' in the textual context requires independent construction.
In the ordinary dictional sense "to supervise" means to direct or over see the performance or operation of an activity and to over see it, watch over and direct.
It is work under eye and gaze of someone who can immediately direct a corrective and tender advice.
In the textual sense 'supervision ' of the priucipal employer or his agent is on 'work ' at the places envisaged and the word 'work ' can neither be construed so broadly to be the final act of acceptance or rejection of work, nor so narrowly so as to be supervision at all times and at each and every step of the work.
A harmonious construction alone would help carry out the purpose of the Act.
which would mean moderating the two extremes.
When the 285 employee 'is put to work under the eye and gaze of the prin cipal employer, or his agent, where he can be watched se cretly, accidently, or occasionally, while the work is in progress, so as to scrutinise the quality thereof and to detect faults therein, as also put to timely remedial meas ures by directions given, finally leading to the .satisfac tory completion and acceptance of the work, that would in our view be supervision for the purposes of Section 2(9) of the Act.
It is the consistency of vigil, the proverbial 'a stitch in time saves nine '.
The standards of vigil would of course depend on the facts of each case.
Now this function, the principal employer, no doubt can delegate to his agent who in the eye of law is his second self, i.e., a substitute of the principal employer.
The immediate employer, instant ly, the electrical contractors, can by statutorily compul sion never be the agent of the principal employer.
If such a relationship is permitted to be established it would not only obliterate the distinction between the two, but would violate the provisions of the Act as well as the contractual principle that a contractor and a contractee cannot be the same person.
The E.S.I.C. claims establishment of such agency on the terms of the contract, a relationship express or implied.
But, as is evident, the creation or deduction of such relationship throws one towards the statutory scheme of keeping distinct the concept of the principle and immediate employer, because of diverse and distinct roles.
The defini tion is well drawn in Halsbury 's Laws of England (Hailsham Edition) Vol. 1 at page 193 as follows: "An agent is to be distinguished on the one hand from a servant, and on the other from an independent contractor.
A servant acts under the direct control and supervision of his master and is bound to conform to all reasona ble orders given to him in this course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result.
An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his princi pal, is not subject to its exercise to the direct control and supervision of the princi pal".
AND this statement of law was used with approval by this Court in ; titled as The .Superintendent of post Offices etc.
vs P.K. Rajamma etc.
Now coming to the subsidiary question the High Court took up one particular contract dated January 20,1984 be tween one of the electrical contractors and the C.E.S.C.
The material portion thereof is as follows: 286 "The said contract relates to laying of new undergound cables and conversion of overcad mains and service to underground system at Barrackpore Trunk Road between Paikpare Junc tion to D.F. 1/6 and from Baranagar P/T to D.FI/67.
Please note that you will have to provide competent supervision while carrying out the work in accordance with the provisions of the Indian Electricity Rules, 1956.
You will also have to provide adequate watch and ward ar rangement for the safe custody of the materi als till such time and complete installation is handed over to us.
You will be required to insure against theft and pilferage of all materials while held in your site godown".
The obligation embodied, as is plain, is for the elec trical contractor to provide competent supervision while carrying out the work.
The electrical contractor is other wise a licensee under the Indian Electricity Act and the Rules made thereunder and the conditions of his licence read as follows: "Mr./Messrs.
Eastern Engineers & Constructions is/are hereby authorised to carry out electri cal installation work in the State of West Bengal.
This licence is issued subject to the compliance with the conditions set out on the reverse, and also to the continued compliance with the conditions set out in Regulation 24 of the Regulations under Rule 45(,1) of the Indian Electricity Rules, 1956.
(1) All electrical installation work coming within the purview of Rule 45 (1) of the Indian Electricity Rules, 1956 undertaken by the holder of this licence, shall be car ried out under the direct supervision of a person holding a valid certificate of compe tency. (2) The holder of this licence shall maintain a register of supervision and workmen in the form below and shall produce the regis ter for inspection on demand by an Electrical Inspector or other person authorised in this behalf the Licensing Board.
(3) On the completion of any electrical installation work coming within purview of rule 45(1) of the Indian Electricity Rules, 1956, a test report in the form prescribed by the Board shall be submitted by the holder of this licence to the Secretary.
The report shall be signed by the supervisor under whose supervision the work has been carried out, 287 and countersigned by the holder of this li cence, who shall be wholly responsible for the due execution of the work.
(4) If the holder of this licence ceases to be in possession of a valid supervisor 's certificate of competency, ceases to retain in his said employment at least one supervisor holding valid certificate of competency, this licence shall be invalid.
(5) If the holder of this licence accepts an employment under any other firm or person for the purpose of carrying out or supervising any electrical installation work coming within the purview of rule 45(1) of the Indian Elec tricity Rules, 1956 this licence shall be invalid and the holder shall return the same to the Secretary for cancellation.
The terms and conditions of the licence postulate the licensee to carry out the installation work of the kind mentioned under the direct supervision of a person holding a valid certificate of competency.
For that purpose the licen see shall maintain a register of supervision.
Such register is open to inspection on demand by an electrical inspector or other person authorised in this behalf by the Licensing Board.
On completion of the installation work of the kind mentioned, a test report shall be submitted by the licensee to the Secretary, which report shall first be signed by the supervisor under whose supervision the work had been carried out and then countersigned by the licensee who shall be wholly responsible for the due execution of the work.
The licence further enjoins the licensee either to retain a valid supervisory certificate of competency or keep one such person retained in his employment failing which the licence can be invalidated.
Same is the position if the licensee accepts employment under any other firm or person for the purpose of carrying out or supervision any electrical in stallation work of the kind mentioned.
In that situation, the license is to be returned to the Secretary for cancella tion.
On the conjoint reading of the contract with the C.E.S.C. and the terms and conditions of the licence, assum ing the terms were to be faithfully obeyed, could it other wise be held that the C.E.S.C. could appoint the electrical contractor as its agent to have the work carried out under the latter 's supervision, in place of C.E.S.C.
As is evi dent, the contract relates to laying of new underground cables, conversion of overhead mains and service and mainte nance to the underground system.
The work being highly sophisticated in nature, requiring special skill and exper tise, is given by the C.E.S.C. to the contractor on the condition that the latter will have to provide competent supervision while the work progresses, in ac 288 cordance with the provisions of the Indian Electricity Rules, 1956, which, in the larger interest of the electrical network and community and its safeguards, require an elec trical contractor obtaining a licence to carry out electri cal installation work of the kind mentioned.
Then the Rules obligate him to take in his services a person holding a valid certificate of competency under whose direct supervi sion the work is required to be carried out, and on comple tion its final report being first signed by the supervisor supervising the work and then countersiged by the holder of the licence, who will be responsible for the due execution of the work.
The licence is capable of being rendered in valid or liable for cancellation due to nonemployment of a supervisor given in the terms and conditions.
Even if, the terms of the contract and the terms and conditions of the licence, the first being at the behest of the C.E.S.C and the second being at the behest of the Government of West Bengal, be suggested to be complementing each other, still these cannot be so interplayed to mean that an agency, express or implied, has been created by the C.E.S.C. in favour of the electrical contrator appointing him to super vise work as envisaged under Section 2(9) of the Act, and thus to have established a direct link between the employee and the C.E.S.C. to the exclusion of the electrical contrac tor.
Section 182 of the defines "agent" as a person employed to d3 any act or to represent another in dealing with third person, the person for whom such act is done, or is so represented is called the "prin cipal".
Section 184 of the said Act further provides that as between principal and the third person any person may become an agent so as to be responsible to his principal.
Now it is to be understood that the agent has an identity distinct from his principal in one sense and a fictional identity with his principal in the other.
The agreement nowhere amalgamates the identity of the electrical contractor with that of the principal (C.E.S.C) by undertaking to provide adequate supervision for the purposes of the Act, on behalf of the C.E.S.C.
The agreement no doubt provides that the electrical contractor would provide adequate supervision while carrying on with the work, the purpose dominant is to safeguard obtaining quality work and safety safeguards, and to conform to the provisions of the Electricity Supply Act.
To the Division Bench of the High Court it was obvious that the Regional Director of the E.S.I.C. had nowhere found that there was actual supervision, either by the C.E.S.C or its duly appointed agents, over works which were performed by the employees of the electrical contractors.
All that has been found is that the said works on completion were checked by the C.E.S.C. and then accepted.
Checking of work after the same is completed and supervision of work while in progress is not the same.
These have different perceptions.
Checking 289 of work on its completion is an activity, the purpose of which is to finally accept or reject the work, on the touch stone of job specifications.
Thereafter, if accepted, it has to be paid for.
Undisputably electrical contractors had to be paid on the acceptance of the work.
This step by no means is Supervision exercised.
Neither can it be the terminating point of an agency when the interests of the so called principal and the so called agent become business like.
Besides, the High Court has found that the work done by employees was under the exclusive supervision of the elec trical contractors or competent supervisors engaged by them trader the terms of the contract and the licence.
By neces sary implication supervision by the C.E.S.C. or its agents stood excluded.
Supervision rested with persons holding valid certificates of competency for which a register of supervision was required under the licence to be maintained.
Under the contracts, the electrical contractors cannot in one breath be termed as agents of the C.E.S.C., undertaking supervision of the work of their employees and innately under the licence to have beforehand delegated that function to the holder of the certificate of competency.
Thus we hold that on the terms of the contract read with or without the terms of the licence, no such agency, factually or legally, stood created on behalf of the C.E.S.C. in favour of the electrical contractors, and none could be, as 'hat would violate the statutory scheme of distinction well marked under Section 2(a) of the Act.
The supervision taken was to fulfil a contractual obligation simplicitor and we leave it at the level.
Thus on both counts, the principal question as well as the subsidiary question must be answered against the ESIC holding that the employees of the electrical contractors, on facts and cricumstances, established before the Division Bench of the High Court, do not come in the grip of the Act and thus all demands made towards ESI contribution made against the C.E.S.C. and the electrical contractors were invalid.
We affirm the view of the High Court in that re gard.
The appeals are accordingly dismissed.
In the circum stances, however, we make no order as to costs.
K. RAMASWAMY, J. From the midst of personal warmth 1 am enjoying with my learned brethren, I have to cool off from the discomfortable breeze generated by the draft judgment of brother Punchhi, J., given my anxious reflections of its consequences and with due respect, 1 express my inability to fail in line with.
The 34 of 1948 (for short 'the Act ') seeks to serve the twin objects namely, social security i.e. medical 290 benefits in case of sickness, maternity and employment injury and other matters relating thereto and to augment the efficient performance of the duty.
The respondents (immedi ate employers) had contracts with the Calcutta Electricity Corporation (India) Ltd. (for short 'the Corporation '), the Principal employer, to carry out excavation, erection of overhead electric lines and laying of underground cables beneath public roads as well as their repairs and mainte nance.
The Act enjoins the employer to contribute his 50% share towards medical reimbursement with a proportionate cut from the wages of the employees and to debit it to the Employees ' State Insurance Corporation fund to render medi cal assistance etc.
to the employees.
In consequence there would be cut, to the extent of 10% or as may be specified from time to time, in the "profit packet" of the immediate employers.
For some time, it was complied with but late assailed their liability under article 226 of the Constitution.
The conflagration of the claims between the immediate em ployers and their employees gave rise to the lis.
The imme diate employers arming themselves with independent contrac tor 's clout summon the services of the "gramarian" and tells him that "our contracts with the Corporation are bilateral untramelled by routine supervision or agency with the Corpo ration under section 2(9) of the Act and tell us whether your "golden rule" does not apply to us? Like Shylock, are we not entitled to prevent inroad into our profit pocket not even a farthing from minimal of 10%, though the workman may give us efficient service on receiving medical treatment ?" The employees request the social engineer to sharpen his foren sic skills of his instruments to provide them social secunty from health and occupational hazards fastering a part of the liability on the immediate employers whom they serve.
Wheth er the social engineer would avoid unjust result like Port jo 's judgment ? Whether the words in the contract would be masters by golden rules ? Whether the words "Supervision" or "agent" in s.2(9) of the Act would be so construed or adopt ed by purposive approach as to do what justice and equity required ? The result of the combat between the granmarian and the social engineer would provide the answer to these searching questions.
Before adverting to angle into their perceptions, it is of utility to keep abreast the brass facts that lie in a short compass.
The Corporation had from the State Govt.
Licensor, licence under s.3 of the Indian Electricity Act 9 of 1910 (for short the 'Electricity Act ') to generate, transmit and supply electrical energy to the consumers of the area.
The Corporation is enjoined to erect electric supply lines and also overhead lines, service lines, under ground cables through which energy is to be supplied to the either distributing main or immediately from the suppliers ' premises etc.
It entered into contracts with the respondents to lay undergound cables, to erect overhead lines, their repairs and maintenance and for execution thereof employed their own employees.
291 The Elecricity Act empowers the Corporation as licensee, under section 12 thereof, to open and break Up the soil etc.
and lay down electricity supply lines and other works, repair, alter or remove the same and do all other acts necessary for due supply of energy.
It also empowers under Sec. 13 to execute new works in compliance of that section.
Under Sec.
14 & 15 it is empowered alteration of the pipes or wires.
10 empowers a licensee to place any overhead lines along or across any street etc.
20 empowers the licen see or "any person duly authorised by a licensee" to enter upon any premises, at reasonable time on prior intimation to the occupier of any premises or land etc.
upon which the electricity supply line or other works have been lawfully placed for the purpose of (a) inspecting, testing, repairing or altering the electricity supply, lines meters, fittings, works and apparatus for the supply of energy belonging to the licensee etc.
Thus, the Corporation, as a licensee, is ordinarily and as an integral scheme, to execute the works or duly authorise on its behalf any other person to execute any of the works enumerated herinbefore or inspection, repair, testing or alteration of the works and maintenance thereof.
A conjoint reading of section section 3 (2) (b) of the Electricity Act and Clause (1) (a) of the Schedule shows that the licen see is required to show to the "satisfaction of the State Government that the Corporation is in a position to fully and efficiently discharge the duties and obligations imposed upon him by the licence throughout the area of the supply.
On its failure, the State Govt.
under section 4 (1) (c) (i) is entitled to revoke the licence.
In terms of section 15(1) "the duly authorised persons" of the licensee is to operate under the Act to lay new electric supply lines or other works etc.
Equally Clause V (1) of the Schedule provides to lay down distributing mains for public lighting of any street on a requisition made by two or more owners of occupiers of the premises.
The Indian Electricity Rules, 1956 (for short 'the Rules ') made under section 37 of the Electricity Act provides the procedure in this regard.
Rule 36 adumberates handling of electric supply lines.
apparatus.
only "by authorised per son" who is required to take safety measures "approved by the electrical Inspector", appointed under section 36 of the Electricity Act.
Sub rule (2) of Rule 36 provided thus: "No person shall work on any live electric supply line or apparatus and no person shall assist such person on such work, unless he is authorised in that behalf and takes the safety measures approved by the Inspector".
Rule 45 provides precautions to be taken by electrical workmen, suppliers etc.
Unless electrical contractor, li censed in this behalf by the 292 State Govt., appoints a person holding a certificate of competency and a permit in this behalf issued or recognised by the State Govt.
, the contractor shall not be entitled to undertake any installation work etc.
Rule 51 provides cer tain safety measures to be taken to the satisfaction of the Inspector so as to prevent danger.
Rule 64 requires an authorised person to carry out the acts mentioned therein subject to the supervision provided in Clause (b) thereof by the Electrical Inspector.
Rule 123(4) speaks of examination of flexible cables by authorised persons and Rule 125(8) enjoins that all apparatus to be operated only by those persons who are authorised for the purpose.
It could, thus, be seen that the Corporation as a licen see is empowered and enjoined to lay the works production, transmission and distribution of electrical energy to the consumers within the area of supply.
It is also authorised to entrust, any person authorised by it in this behalf, to perform the duties of the licensee under the Act and the Rules.
The contractor in turn appoint a qualified supervisor to have works executed and maintained or repaired, subject to inspection and supervision by the Electrical Inspector of the State Govt.
The primary duty and responsibility is that of the Corporation as the Principal employer to have the works etc.
executed, repaired and maintained through its employees.
It duty authorises the contractor to have these works done, repaired or maintained, on its behalf, though the media of contract.
The question emerges whether the respondents are not immediate employers executing the works etc.
under the supervision of the Principal empleyer or as its agents ? From the above backdrop of statutory operation, the scope of section 2(9) is to be gauged which reads thus: "2(9) 'employee ' means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and (i) who is directly employed by the principal employer on any work of, or inciden tal or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elswhere; or (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervi sion of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried 293 on in or incidental to the purpose of the factory or establishment; or (iii) Whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service .
" It encompasses employees employed for wages in or in connection with the work of a factory or establishment to which the Act applies (i) who are directly employed by the principal employer or (ii) employed by or through "an imme diate employers"; and whose services are temporarily lent or let on hire to the principal employer by the person with whom the person is entered into a contract of service.
Clause 2(9)(ii) (applicable to the facts on hand) in turn attracts a person employed by or through an immediate em ployer as an employee of the principal employer provided the following conditions are satisfied, namely, (1) the immedi ate employer employs an employee on the premises of the factory or establishment of the principal employer; (2) "or under the supervision of the principal employer"; (3) this agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried out in or incidental to the purpose of the factory or establishment.
Clauses (i) and (iii) of section 2(9) are inapplicable to the facts.
Article 25(2) of Universal Declaration of Human Rights, 1948 assures that everyone has the right to a standard of living adequate for the health and well being of himself and of his family . including medical care, sickness, disa bility . . ,article 7(b) of the International Convention on Economic, Social and Cultural Rights, 1966 recognises the right of everyone to the enjoyment of just and favourable conditions of work which ensure, in particular, safe and healthy work ing conditions.
Article 39(e) of the Constitution enjoins the State to direct its policies to secure the health and strength of workers.
The right to social justice is a funda mental right.
Right to livelihood springs from the right to life guaranteed under Art.21.
The health and strength of a worker is an integral fact of right to life.
The aim of fundamental rights is to create an egalitarian society to free all citizens from coercion or restrictions by society and to make liberty available for all.
Right to human digni ty, development of personality, social protection, right to rest and leisure as fundamental human rights to common man mean nothing more than the status without means.
To the tillers to the soil, wage earners, labourers, wood cutters, rickshaw pullers, scavengers and hut dwellers the civil and political right are 'mere cosmetic ' rights.
Socio economic and cultural rights are their means and relevant to them to realise the basic aspirations of meaningful right to life.
The Universal Declaration of Human Rights, International Conventions of Economic, 294 Social and Cultural Rights recognise their needs which include right to food, clothing, housing, education, right to work, leizure, fair wages, decent working conditions, social security, right to physical or mental health, protec tion or their families as integral part of the right to life.
Our Constitution in the Preamble and Part IV reinforce them compendiously as socioeconomic justice, a bed rock to an egalitarian social order.
The right to social and econom ic justice is thus fundamental right.
In World Labour Report 2, at Chapter 9 (Safety and Health) it is stated that "in every three minutes somewhere in the world one worker dies and in every second that passes at least three workers are injured".
In India on an average every day 1100 workers are injured and three are killed "in industrial establishments" vide (Lawyer Oct. 1987 page 5).
In 26th I L.O. Convention held in Philadephia in April 1944, recommendation No. 69 laid down norms for medical care for workers.
In October 1943, the Government of India appointed Health Survey and Development Committee known as Sir Joseph Bhore Committee which laid emphasis on "Preventive Schemes".
I.L.O. Asian Regional Conference held in Delhi in 3947, resolved that in very scheme for medical care in any Asian country the need for the prevention of disease and the improvement of the general standard of health must be con sidered as of almost importance.
The Act had culminated in its birth of these recommendations providing in a limited area social security to the employees from health and occu pational hazards.
The term health implies more than an absence of sick ness.
Medical care and health facilities not only protect against sickness but also ensures stable man power for economic development.
Facilities of health and medical care generate devotion and dedication to give the workers ' best, physically as well as mentally, in productivity.
It enables the worker to enjoy the fruit of his labour, to keep him physically fit and mentally alert for leading a successful economic, social and cultural life.
The medical facilities are, therefore, part of social security and like gilt edged security, it would yield immediate return in the increased production or at any rate reduce absentecism on grounds of sickness, etc.
Health is thus a state of complete physical, mental and social well being and not merely the absence of disease or infirmity.
In the light of articles 22 to 25 of the Universal Declaration of Human Rights, International Conven tion on Economic, Social and Cultural Rights, and in the light of socio economic justice assured in our Constitution, right to health is a fundamental hUman right to workmen.
The maintenance of health is a most imperative constitutional goal whose realisation requires interaction by many social and economic factors.
Just and favourable condition of work implies to ensure 295 safe and healthy working conditions to the workmen.
The periodical medical treatment invigorates the health of the workmen and harnesses their human resources.
Prevention of occupational disabilities generates devotion and dedication to duty and enthuse the workmen to render efficient service which is a valuable asset for greater productivity to the employer and national production to the State.
Yet in the report of the Committee on Labour Welfare, 1969 in paragraph 5.
77of Chapter 5, reveals that, private employers generally feel that this burden shall not be cast upon them.
" The Act aims at relieving the employees from health and occupational hazards.
The interpretation calls for in this case is of the meaning of the meanings 'supervision ' and 'agent ' in s.2(9) (ii) of the Act.
The legal interpretations is not an activity sui generis.
The purpose of the enactment is the touch stone of interpretation and every effort would be to give effect to it.
The judge acts as a vehicle of communication between the authors and the recipients.
The end result is to promote rule of law and to enliven social order and humane relations.
In Senior Electric Inspector & Others vs Laxmi Narayan Chopra & Ors., ; at p. 156, K. Subba Rao, J. (as he then was) for unanimous Court held thus: "In a modern progressive society it would be unreasonable to confine the intention of a Legislature to the meaning attributable to the word used at the time the law was made, for a modern Legislature making laws to govern a society which is fast moving must be presumed to be aware of an enlarged meaning the same concept might attract with the march of time and with the revolutionary changes brought about in social, economic, political and scientific and other fields of human activity.
Indeed, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations, if the words are capable of comprehending them." In M. Pentiah & Ors.
vs Muddala Veermallappa & Ors., ; at p. 313 in a separate but concurrent judgment, Sarkar, J. held "Where the language of a statue, in its ordi nary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconven 296 ience or absurdity, hardship or injustice, presumably not intended, a construction may be but upon it which modifies the meaning of the word, and even the structure of the sentence".
This court approved the ratio in Seaford Court Estates Ltd. vs
Asher, at 164, Denning, L.J. who said, "When a defect appears a judge cannot simply fold his hands and blame the draftsman.
He must set to work on the constructive task of finding the intention of Parliament . and then he must supplement the written word so as to give "force and life" to the inten tions of the legislature . .
A judge should ask himself the question how, if the makers of the Act had themselves come across 'his ruck in the texure of it, they would have straightened it out ? He must then do as they would have done.
A judge must not alter the material of which the Act is woven, but he can and should iron out the creases".
I conceive it my duty, therefore, so read the new Act, unless I am prevented by the intrac tability of the language used, as to make it carry out the obvious intention of the legis lature".
In Massachusetts Bonding & Insurance Co. vs United States of America, ; ed 2d 189; Frankfurther, J., speaking per himself, joined by Reed, Clark, and Brennan, JJ.
held at headnotes 8 & 9 thus: "On more than one occasion, but evidently not frequently enough, Judge Learned Hand has warned against restricting the mean of a statute to the meaning of its "plain" words.
"There is no surer way to misread any document than to read it literally. " Of course one begins with the words of a statute to ascer tain its meaning, but one does not end with them.
The notion that the plain meaning of the words of a statute defines the meaning of the statute reminds one of T.H. Huxley 's gray observation that at times "a theory survives long after its brains are knocked out.
" One would suppose that this particular theory of statutory construction had had its brains knocked out in Boston Sand & Gravel C.v.
United States; , , 48; , , 177; , The words of this legisla tion are as plain as the Court finds them to be only if the 1947 amendment is read in misleading isolation.
An amendment is not a repeal.
An amendment is part of the legisla tion it amends.
The 1947 amendment to the Federal Tort Claims Act of 1946 must be read to harmonise with the central purpose of the original 297 Act.
The central purpose of the original Act was to allow recovery against the United States on the basis and to the extent of recoveries for like torts committed by private tortfeasors in the State in which the act or omission giving rise to the claim against the United States occurred.
The 1947 amendment filled the gap, a very small gap, that was disclosed in the scheme formulated by the 1946 Act".
In Atma Ram Mittal vs Ishwar Singh Punia, ; , this Court held that the purpose of interpretation in a social amelioration legislation is an imperative irrespec tive of anything else.
It was further held that the con tents, subject matter, the effects and consequences or the spirit and reason of the law shall be taken into account.
The words must be construed with the imagination "of purpose behind them".
(emphasis supplied) Therefore, in an attempt to construe the provisions of the statute construction, as a balancing wheel, should be meaningful so as to make the statute workable and not to render it futile or sterile.
Whenever strict interpretation of the statute gives ' rise to unjust situation or results, the Judges can ensure their good sense to remedy it by reading words in, if necessary, so as to do what Parliament would have done had they had the situation in mind.
The meaning of the same words in a statute may be mended in the laborynth of interpretation and may be enlarged or restrict ed in order to harmonise them with the legislative intention of the entire statute.
The spirit of the statute would prevail over the literal meaning.
The jurisprudence and principle, therefore, in such a situation, would be the contextual interpretation to subserve the constitutional scheme and to alongate the legislative purpose, harmonising the individual interest with the community good so as to effectuate social transformation envisioned in the preamble of the Constitution.
Let me, therefore, consider the arebit of the word 'supervision ' under s.2(9) (ii) of the Act.
In Webster Comprehensive Dictionary (International Edition) the word 'supervision ' has been defined at page 1260 in Vol.
II as "authority to direct or supervise", supervise means have a "general oversight of '.
"In Corpus Juris Secundum", Vol 83 at page 900 it is stated that The word "supervision" is not of the precise import and when not limited by the context is broad enough to cover more than one subject.
It implies oversight and direction, and does not necessarily exclude the doing of all manual labour, but may properly include the taking of an active part in the work".
"Supervision" is defined as meaning "the 298 act of overseeing or supervising; having general oversight of, especially as an officer vested with authority; inspec tion; oversight; superintendence.
" The Words and Phrases, Permanent Edition, Vol.
40A defines that the "Supervision" means oversight, an act of occupation of supervision; in spection.
"Supervision" is an act of overseeing or supervi sion; having general oversight of, especially as an officer vested with authority; inspection; oversight; superintend ence, "Control" is the act of superintending; care and foresight for purpose of directing and with authority to direct; power or authority to check or restrain; restraining or directing influence; regulating power.
Contract of em ployment to "supervise" construction of power plant, steam distribution system held to require time and attention to work needed to see that it was properly and promptly done, regardless of number of hours spent there on.
The word "supervision" is not one of precise import and is broad enough to require either supervisor 's constant presence during work supervised or his devotion thereto if only time necessary to see that it complies with contract specifications, advise as to details, prepare necessary sketches and drawings, etc.
In Owen vs Evans & Owen (Buuilders) Ltd., [1962] 1 Weekly Law Reports 933 the Court of Appeal was called upon to consider the meaning of the words "immediate supervision" under Building (Safety, Health and Welfare) Regulations, 1948.
Whether the presence of the supervisor is necessary at all times? It was held No. Ormerod, L.J. held that in each case the question must be decided how much supervision is re quired in the circumstance of the case being considered? If every move was fraught with danger, then clearly supervision of the most constant kind would be demanded, and the super visor must be there all the time.
On the other hand, there may be certain parts of the work, if not the Whole of it, which do not give rise to any foreseeable danger, and in those circumstances it may well be that the intention of the regulation is that supervision need not be so strict.
Up john, L.J., as he then was, while agreeing held that the real question is whether there was a supervision for the purposes of the regulation and was that a proper or adequate supervision? The regulations are formulated for the protec tion of the workman, but, at the same time, they must be given a practical effect.
The degree of supervision must entirely depend upon the task, and it cannot mean that there must always be a constant supervision throughout.
There may be times during a demolition failing within regulation 79(5) where a particular operation is a dangerous one.
That cannot always be avoided, and it may be that the danger is such that the supervisor must give a constant supervision during that time.
But there will be other times where the particu lar operation is a simple one, involving no danger to a building labourer.
Then the supervisor may properly go away and perform other tasks.
He may answer to the telephone or supervise other groups.
All depends on the fact of each case.
299 In Regional Director, E.S.I.C vs South India Flour Mills (P) Ltd. , this Court held that the defintion of the term 'employee ' under s.2(9) of the Employ ees ' State Insurance Act, 1948 is "very wide and includes within it any person employed on any work incidental or preliminary to or connected with the work of a factory or establishment".
Any work that is conducive to the work of the factory or establishment or that is necessary for the augmentation of the work of the factory or establishment will be incidental or preliminary to or connected within the work of the factory or establishment.
The casual employees shall also be brought within it and held that they are entitled to the benefits under the Act.
The casual labour employed to construct additional buildings for expansion of the factory were held to be employees under the Act.
It was also held that the Act is a piece of social security legis lation enacted to provide for certain benefits to the em ployees in case of sickness, etc.
It was further held that the endeavour of the Court should be to interpret the provi sions liberally in favour of the persons for whose benefits the enactment has been made.
This Court upheld the view taken by A.P., Karnataka and Punjab and Haryana High Courts in A. P. State Electricity Board vs Employee 's State Insur ance Corporation, Hyderabad, AP; Regional Director, Bangalore vs Davangere Cotton Mills, and E.S.I.C, Chandigarh vs Oswal Woolien Mills Ltd., & H) (F.B.).
that casual employees are employees within the meaning of the term "employee" defined in s.2(9) of the Act.
In Birohichand Sharma vs First Civil Judge, Nagpur & Ors., ; this Court considered whether the piece rate worker is a worker within the meaning of s.2(1) of the .
The facts found were that there was no fixed hours.
They made payment to the work done at piece rate.
It was open to the workmen to absent from work without leave.
They were not given any specific work, but the management had "the right to reject" (emphasis supplied) the Bidis prepared by them, if the Bidis do not come upto the proper standard.
On those facts, it was held "the right of rejection is a supervision" connecting the work and the employment.
Accordingly it was held them to be workmen.
The same ratio was followed in D.C. Dewan Mohideen Sahib & Sons vs The Industrial Tribunal Madras.
, ; In Nagpur Electric Light & Power Co. Ltd. vs Regional Director, E.S.I.C [1967] 3 SCR Reprint 92 the employees employed outside the factory or establishment as Cable Jointer.
Mistri, Lineman, Coolies and Vanman for inspection of lines, digging the pits, erection, distribution and service . line were held to be employees within the meaning of s.2(9) (i) of the Act, In Kirloskar Pneumatic Co. Ltd. vs Employees ' State Insur ance Cor 300 poration, a division Bench of the Bombay High Court, speaking through my learned brother P.B. Sawant, J., as he then was, also took the same view and held that the employees engaged for repairs, site clearing, construc tion of buildings, etc.
of the principal employer are em ployees within the meaning of s.2.(9) of the Act.
In Royal Talkies, Hvderabad & Ors.
vs Employees State Insurance Corporation, ; interpreting s.2(9) (ii) of the Act, this Court held that the Cycle Stand or Canteen are for better amenities to the customers and improvements of busi ness in Cinema.
The appellant, as the owner, leased out the Cycle Stand and Canteen under instrument of leases to the contractors, who employed their own employees to run the Canteen and the Cycle Stand.
It was held that vis a vis the employees of the Contractors, the cinema owner was held to be the principal employer.
It was further held that it is enough if the employee does some work which is ancilliary, incidental or has relevance or linked with the job of the establishment, amenities or facilities to the cine goers has connection with the work of the establishment.
The employees of the Canteen and the Cycle Stand were held to have been employed in connection with the work of the establishment.
The case M/s P.M. Patel & Sons & Ors.
vs Union of India & Ors.
, ; though arose under the , the principle laid therein applies on all fours to the facts of the case.
The appellants therein were engaged in the manu facture and sale of Bidis.
The work of rolling Bidis was entrusted to the contractors who in turn got the work pre pared at workers homes, after obtaining materials either directly from the manufacturer or through the contractors.
The contractors treated the workers as their own employees and get their work done at the workers ' premises or contrac tors ' premises.
It was contended that the workers engaged by the contractors were not their workmen under that Act.
This Court by a Bench of three Judges negatived their contention and held that in the context of conditions and the circum stances in which the home workers or manufacturer go about their work including receiving of raw materials, rolling of Bidis at home and delivering them to the manufacturer sub ject to the right of rejection, there is sufficient evidence of the requisite "degree of control and supervision" for establishing relationship of master and servant between the manufacturer and the home workers.
This ratio does support the conclusion that a connecting link between the finished product and the work of the establishment is sufficient; neither the manner of actual performance of the duties decisive nor the actual control or the supervision of the work a material ingredient.
Incidental connection with the ultimate business activities of the manufacturers and right to rejection is the con 301 trol and would be the balancing wheel to attract the provi sions therein.
The extended purposive construction was applied to give effect to the social security provided under the Employees Provident Fund , 'red Miscellaneous Provisions Act, 1952.
In Superintendent of post Office vs P.K, Rajamma, [1977] 3SCR 678 the question was whether the extra departmental agents serving in Post and Telegraph Department were agents or held civil post within the meaning of article 31112) of the Constitution.
This Court while holding that they held civil post attracting Art.311(2) of the Constitution approved the passage from Halsbury 's Laws of England (Hailsham edition) of the distinction between agents, servants or independent contractors.
The contractual relation therein inter se does not apply to the tacts of this case.
The Act does not give its own definition of the word "supervision".
Therefore, it must be construed in the con text the ultimate purpose the Act aims to serve and the object behind the Act, i.e. to extend sickness benefits and to relieve the employee from occupational hazards consistent with the constitutional and human rights scheme.
Under the Electricity Act and the Rules, the Corporation, licencee, is enjoined to performthe acts and duties contemplated thereun der to lay overhead lines, underground cables, their repairs and maintenance thereof, etc.
It authorised, under the contract, the immediate employer to perform, on its behalf, those acts and duties.
The immediate employer would get the work done through their employees employed for that purpose.
It is not a sporadic work but a constant and on going proc ess, so long as the licencee generates, transmits and sup plies electrical energy to the consumers of their supply area.
Had the principal employer performed those acts and duties through its employees, indisputably.
their employees would be covered under the Act, though the work was got done at highways or at places other than the factory or the establishment.
When the principal employer authorises the respondents as its contractors under contracts the need for constant supervi sion is obviated relegating that function to its immediate employers.
Otherwise the need for contracts would be redun dant.
The Corporation retained, under the contract, the power of acceptance or rejection of the work done or super vision effected in maintenance of the work got done by the immediate employer, subject to over all supervision by the Electrical Inspector, on behalf of the State Government.
The supervision in the I,act situation is not the day to day supervision but legal control, i.e. right to accept or reject the work done or maintenance effected.
The exercise of right of acceptance or rejection is the supervision as envisaged in the contract between the principal employer and the immediate employer.
It would supply the needed unifying or connecting 302 thread between the constitutional creed of social justice i.e. social security under the Act and supervision of the acts or duties by the principal employer vis a vis the employees of the immediate employer under the contract who ultimately perform them on behalf of the principal employer.
Undoubtedly in a bilateral contract between the corporation and the respondents qua their rights and liabilities under the contracts, strict interpretation of the words engrafted therein, be of paramount relevance and call for attention as per Contract Act.
But in the context of the statutory inter pretation of "supervision" under the Act of the works under taken under the contract, the interest of the workmen or the welfare schemes for the employees under the Act interposed and call attention to and need primacy.
In its construction the courts must adopt contextual approach to effectuate the statutory animation, namely, social security.
The literal interpretation would feed injustice in perpetuity denying to the employees of sickness benefit etc.
under the Act which should be avoided, lest the purpose of the Act would be frustrated.
The contention that the respondents being independent contractors are not agents of the licencee, corporation, is also devoid of force.
It is seen that under sections 15 & 20 etc.
and the relevant rules the authorisation given by the corpo ration through the media of the contracts enabled the re spondents to step into its shoes to do the acts or perform the duties under the Electricity Act and Rules which are ordinarily of the Corporation.
The contract is an authorisa tion to do those acts on behalf of the principal employer.
The application of the golden rule to the word "agency" under the between the respondents and the corporation, perhaps, does not encompass agency in strict sense under the Act.
But public policy of the Act, the constitutional and human right 's philosophy to provide social security to protect the health and strength of the workers must be kept at the back of the mind to construe the word "agent" under s.2(9) (ii) of the Act, in contra dis tinction with the bilateral stipulations under the contract.
In this regard public policy interposes and plays a vital role to read into the contracts the extended meaning of agency to bring about connecting links between the respond ents and the licencee corporation.
Lest the contract, if intended to deny welfare benefits to workmen, would be opposed to public policy and would become void under s.23 of the .
Such an intention would be avoided by reading into the contract the extended meaning of agency but not fiduciary.
Chitty on Contrac; is, 26th Edition, in paragraph 2502 at page 4 stated of the use of the terms agent and agency.
Some persons who describe themselves or are described by others as agents are not really such in any legal sense of 303 the word, but rather independent merchants, dealers, con sultants or intermediaries.
Others may be agents in the sense that they owe the internal duties of the agent to his principal (mainly the fiduciary duties) .
The substance of the matter prevails over the form and the use of the words "agent" or "agency ", or even a denial that they are applicable, is not conclusive that any particular type of relationship exists.
(emphasis supplied).
In A.G. Guest Anson 's Law of Contract.
26th Edition, at page308 it is stated that the application of cannons of 'public policy to particular instances necessarily varies with the progressive development of 'public opinion and morality, but, as Lord Wright has said extra judicially: Public policy like any other branch of the common law ought to be, and I think is, governed by the judicial use of precedents.
If it is said that rules of.
public policy have to be moulded to suit new conditions of a changing world, that is true; but the same is true of the principles of the common law generally. ' In Prenn vs Simmonds, 1971 (1) Weekly Law Reports 1381 (H.L.) Lord Wilberforce laid the rule that in construing a written agreement evidence of negotiations or of the par ties ' intentions ought not to be received by the court, and that evidence should be restricted to evidence of factual background known to the parties at or before the date of the contract, including evidence of the "genesis" and objective ly the "aim" of the transaction.
The contractors, respondents, knew at the date of the agreements that the Corporation, as Principal employer, is under statutory obligation to execute or keep executed the works and keep them repaired and mainrained as an integral activity of generation, transmission and distribution of the electrical energy to the consumers within their area of supply.
On authorisation, the respondents executed and kept executiug the works and repairs or kept them repaired and the maintenance thereof effected through their employees, which in law is on behalf of the Corporation, principal employer.
The genesis and aim of the transaction was to act on behalf of the Corporation.
The agency of the respondent with the Corporation, thus, springs into being.
The prohibi tion of the qualified supervisors, while in service of the respondents, to disengage themselves with third parties in terms of the contract was only to extract unstinted and exclusive devotion to duty and no further.
It stands as no impediment to construe that the respondents are agents to the Corporation as immediate employers.
Accordingly I hold that the employees working under the respondent perform their duties in execution of the works, repairs and maintenance thereof in connection with the generation, transmission and distribution of 304 the electrical energy by the Corporation ficensee.
The Corporation is the Principal employer The respondents imme diate employers execute the work etc.
under the supervision of the Corporation as its agents.
Their employees, in law, work under the supervision of the principal employer, corpo ration.
They are covered under s.2.(9) (ii) of the Act entitling them to the sickness benefits, etc.
envisaged therein.
and the respondents are liable to make their con tribution to the Employees Insurance Fund.
The appeals are accordingly allowed.
The writ appeal Nos. 16 & 438/86 and matter No.1650 of 1985 dated April 4, 1988 in the Calcutta High Court stand dismissed confirming the order of the learned single Judge dated December 11, 1986, but in the circumstances parties are directed to bear their own costs.
V.P.R. Appeals dis missed.


Summary:
The appellant Corporation engaged the respondents con tractors to carry out work of excavation, conversion of over head electric lines and laying of underground cables under public roads and for repair and maintenance.
On 26.8.1975, the Regional Director of the Employees ' State Insurance Corporation noticed the appellant that the employees, whose wages were being paid through the respond ents contractors, would come under the provisions of Section 2(9) of the . 268 The appellant directed the representative body of the contractors respondents ' Association to comply with the provisions of the Act immediately, failing which a lumpsum of 7% would be deducted from their bills.
When the respond ents ' Association refused to carry out such obligation, the appellant started to deduct the E.S.I. contribution amount at the rate of 10% from their bills from 1984 and continued deducting till 1985.
The respondents contractors challenged the deductions from bills by filing a writ petition before the High Court, contending thai for carrying out their contracts, the re spondents were not supervised by the appellant, the princi pal employer and they were carrying out the allotted work under the contracts of sites outside the factory establish ment of the appellant and that the employees of the respond ents did not come within the definition of the term, 'em ployee ' under section 2(9) of the Act.
On 23.3.1984, the Single Judge of the High Court passed an interim order permitting the appellant to respond to the notice issued by the E.S.I.C. and staying the realisation of the E.S.I. contribution from the respondent contractors.
On 30.3.1985, under section 45 A of the Act, the Region al Director, E.S.I.C. held that the appellant was liable to pay the E.S.I. contribution in respect of the employees of its contractors and directed to pay the same.
The appellant challenged that order under Article 226 of the Constitution of India by filing another writ petition.
The Single Judge hearing both the writ petitions togeth er, dismissed them, holding that the ultimate supervision was that of the appellant and hence the Act was applicable.
Following the decision of this Court in M.G. Beedi Works case (AIR 1974 SC 1952), the Single Judge further held that the respondents contractors were agents of the appellant the principal employer, and that the appellant the principal employer could not escape the liability for the works of its agents the respondents contractors.
The Division Bench, in appeal, reversed the judgment of the Single Judge, against which the present appeals by special leave were made to this Court posing the question whether on the facts, the right of the principal employer to reject or accept work on 269 completion, on scrutinizing compliance with job require ments, as accomplished by a contractor, the immediate em ployer, through his employees, is in itself an effective and meaningful 'supervision ' as envisaged under section 2(9) of the E.S.I. Act, 1948?" The appellants contended that the High Court fell in error in giving a restricted meaning to the word, 'supervi sion ', occurring in section 2(9) of the Act and in taking out the final act of rejection or acceptance of work from the purview of that word.
Dismissing the appeals, this Court, HELD: Per Ranganath Misra, CJ. 1.
The legislative intention should have been brought out more clearly by undertaking appropriate legislation once this Court took a different view.
The legislation is benefi cial and if by interpretation put by the Court the intention is not properly brought out it becomes a matter for the legislature to attend to.
[278 E] Per M.M. Punchhi.
In whatever manner the word 'employee ' under Section 2(9) be construed, liberally or restrictidly, the construc tion cannot go to the extent of ruling out the function and role of the immediate employer or obliterating the distance between the principal employer and the immediate employer.
In some situations he is the cut off.
He is the one who stumbles in the way of direct nexus being established, unless statutorily fictioned, between the employee and the principal employer.
He is the one who in a given situation is the principal employer to the employee, directly employed under him.
If the work by the employee is conducted under the immediate gaze or overseeing of the principal employer, or his agent, subject to other conditions as envisaged being fulfilled, he would be an employee for the purpose of sec tion 2(9).
[284 B D] 2.
In the ordinary dictional sense "to supervise" means to direct or over see the performance or operation of an activity and to over see it, watch over and direct.
It is work under eye and gaze of someone, who can immediately direct a corrective and tender advice.
In the textual sense 'supervision ' of the principal employer or his agent is on 'work ' at the places envisaged and the word 'work ' can neither be construed so broadly to be the final act of 270 acceptance or rejection of work, nor so narrowly so as to be supervision at all times and at each and every step of the work.
A harmonious construction alone would help carry out the purpose of the Act, which would mean moderating the two extremes.
[284 G H] 3.
When the employee is put to work under the eye and gaze of the principal employer, or his agent, where he can be watched secretly, accidently, or occasionally, while the work is in progress, so as to Scrutinise the quality thereof and to detect faults therein, as also put to timely remedial measures by directions given, finally leading to the satis factory,completion and acceptance of the work, that would be supervision for the purposes of Section 2(9) of the Act.
It is the consistency of vigil, the proverbial 'a stich in time saves nine '.
The standards of vigil would of course depend on the facts of each case.
[284 H 285 B] 4.
Section 182 of the defines "agent" as a person employed to do any act or to represent another in dealing with third persons, the person for whom such act is done, or is so represented is called the "prin cipal".
Section 184 of the said Act further provides that as between Principal and the third person any person may become a, agent so as to be responsible to his principal.
[288 E] 5.
The agent has an identity distinct from his Princi pal in one sense and a fictional identity with his Principal in the other.
The agreement nowhere amalgamates the identity of the electrical contractor with that of the principal (C.E.S.C.) by undertaking to provide adequate supervision for the purposes of the Act, on behalf of the C.E.S.C.
The agreement no doubt provides that the electrical contractor would provide adequate supervision while carrying on with the work, the purpose dominant is to safeguard obtaining quality work and safety safeguards and to conform to the provisions of the Electricity Supply Act.
[288 E G] 6.
The creation or deduction of principal agent rela tionship throws one towards the statutory scheme of keeping distinct the concept of the principal and immediate employ er, because of diverse and distinct roles.
[285 D] 7.
The electrical contractor is obliged to provide competent supervision while carrying out the work.
The electrical contractor 271 is otherwise a licensee under the Indian Electricity Act and the Rules made thereunder.
[286 C] 8.
The principal employer can not delegate the function of supervision to his agent who in the eye of law is his second self, i.e., a substitute of the principal employer.
The immediate employer can by statutory compulsion never be the agent of the principal employer.
If such a relationship is permitted to be established, it would, not only obliter ate the distinction between the two, but would violate the provisions of the Act as well as the contractual principle that a contractor and a contractee cannot be the same per son.
[285 B C] 9.
Checking of work after the same is completed and supervision of work while in progress is not the same.
These have different perceptions.
Checking of work on its comple tion is an activity, the purpose of which is to finally accept or reject the work, on the touchstone of job specifi cations.
Thereafter if accepted, it has to be paid on the acceptance of the work.
This step by no means is supervision exercised.
It cannot be the terminating point of an agency when the interests of the so called principal and the so called agent become business like.
[288 H 289 B] 10.
Supervision rested with persons holding valid cer tificates of competency for which a register of supervision was required under the licence to be maintained.
[289 C] 11.
Under the contracts, the electrical contractors cannot in one breath be termed as agents of the C.E.S.C. undertaking supervision of the work of their employees and innately under the licence to have beforehand delegated that function to the holder of the certificate of competency.
[289 C D] 12.
Even if, the terms of the contract and the terms and conditions of the licence, the first being at the behest of the C.E.S.C. and the second being at the behest of the Government, be suggested to be complementing each other, still these cannot be so interplayed to mean that an agency, express or implied, has been created by the C.E.S.C. in favour of the electrical contractor appointing him to super vise work as envisaged under Section 2(9) of the Act, and thus to have established a direct link between the employee and the C.E.S.C. to the exclusion of the electrical contrac tor.
[288 C D] 13.
On the terms of the contract read with or without the terms of the licence, no such agency, factually or legally, stood ere 272 ated on behalf of the C.E.S.C. in favour of the electrical contractors, and none could be, as that would violate the statutory scheme of distinction well marked under Section 2(9) of the Act.
The supervision taken was to fulfil a contractual obligation simplicitor.
[289 D] 14.
The employees of the electrical contractors, on the facts and circumstances do not come in the grip of the Act and thus all demands made towards ESI contribution made against the C.E.S.C. and the electrical contractors were invalid.
[289 E F] M.G.
Beedi Works vs Union of lndia, AIR 1974 SC 1952; Royal Talkies vs E.S.I.C, ; ; Regional Director E.S.I.C. Trichur vs Ramanuja Match Industries, ; M/s. P.M. Patel & Sons & Others vs Union of India & Ors.
[1986]1 SCC 32; The Superintendent of Post Offices etc.
etc., vs
P.K. Rajamma etc.
; , , referred to.
Halsbury 's Laws of England (Hailsham Edition) Vol 1 at page 193, referred to.
Per K. Ramaswamy, J. (Dissenting) 1.
The seeks to serve the twin objects namely, social security, i.e., medi cal benefits in case of sickness, maternity and employment injury and other matters relating thereto and to augment the efficient performance of the duty.
[289 H 290 A] 2.
Section 2(9) of the Act encompasscs employees em ployed for wages in or in connection with the work of a factory or establishment to which the Act applies (i) who arc directly employed by the principal employer or (ii) employed by or through "an immediate employer"; and whose services are temporarily lent or let on hire to the princi pal employer by the person with whom the person is entered into a contract of service.
[293 B C] 3.
Clause 2(9)(ii) (applicable to the facts on hand) attracts a person employed by or through an immediate em ployer as an employee of the principal employer provided the f. flowing conditions are satisfied, namely, (1) the immedi ate employer employs an employee on the premises of the factory or establishment of the principal employer; (2) or "under the supervision of the principal employer".
(3) "his agent" on work which is ordinarily part of the 273 work of the factory or establishment or which is preliminary to the work carried out in or incidental to the purpose of the factory or establishment.
[293 C D] 4.
Article 39(2) of the Constitution enjoins the State to direct its policies to secure the health and strength of workers.
The right to social justice is a fundamental right.
Right to livelihood springs from the right to life guaran teed under article 21.
The health and strength of a worker is an integral facet of right to life.
The aim of fundamental rights is to create an egalitarian society to free all citizens from coercion or restrictions by society and to make liberty available for all.
Right to human dignity, development of personality, social protection, right to rest and leisure as fundamcntal human rights to common man mean nothing more than the status without means.
To the tillers of the soil, wage earners, labourers, wood cutters, rickshaw pullers, scavengers and hut dwellers, the civil and politi cal rights are 'mere cosmetic" rights.
Socio economic and cultural rights are their means and relevant to them to realise the basic aspirations of meaningful right to life.
[293 F H] 5.
The Universal Declaration of Human Rights, Interna tional Conventions of Economic, Social and Cultural Rights rccognise their needs which include right to food, clothing, housing, education, right to work, leizure, fair wages, decent working conditions, social security, right to physi cal or mental health, protection of their families as inte gral part of the right to life.
Our Constitution in the Preamble and Part IV reinforce them compendiously as social economic justice, a bed rock to an egalitarian social order.
The right to social and economic justice is thus fundamental right.
[293 H 294 B] 6.
The term 'health ' implies more than an absence of sickness.
Medical care and health facilities not only project against sickness but also ensures stable man power for economic development.
Facilities of health and medical care generate devotion and dedication to give the workers ' best, physically as well as mentally in productivity.
It enables the worker to enjoy the fruit of his labour, to keep him physically fit and mentally alert for leading a success ful, economic, social and cultural life.
The medical facili ties, arc thcrefore, part of social security and like gilt edged security, it would yield immediate return in the increased production or at any rate reduce absenteeism on grounds of sickness, etc.
health is thus a state of complete physical, menial and social well being and nut merely the absence of disease or infirmity.
[294 E G] 274 7.
Right to health is a fundamental human right to workmen.
The maintenance of health is a most imperative constitutional goal whose realisation requires interaction by many social and economic factors.
Just and favourable condition of work implies to ensure safe and healthy working conditions to the workmen.
The periodical medical treatment invigorates the health of the workmen and harnesses their human resources.
Prevention of occupational disabilities generates devotion and dedication to duty and enthuse the workmen to render efficient service which is a valuable asset for greater productivity to the employer and national production to the State.
[294 H 29S B] 8.The aims at relieving the employees from health and occupational hazards.
The interpretation calls for in this case is of the meaning of the meanings 'supervision ' and 'agent ' in s.2(9)(ii) of the Act.
The legal interpretation is not an activity sui gener is.
The purpose of the enactment is the touch stone of interpretation and every effort would be to give effect to it.
The judge acts as a vehicle of communication between the authors and the recipients.
The end result is to promote rule of law and to enliven social order and humane rela tions.
[295 C D] 9.
In an attempt to construe the provisions of the statute, construction, as a balancing wheel, should be meaningful so as to make the statute workable and not to render it futile or sterile.
Whenever strict interpretation of the statute gives rise to unjust situation or results, the Judges can ensure their good sense to remedy it by reading words in, if necessary, so as to do what Parliament would have done had they had the situation in mind.
The meaning of the same words in a statute may be mended in the laborynth of interpretation and may be enlarged or restrict ed in order to harmonise them with the legislative intention of the entire statute.
The spirit of the statute would prevail over the literal meaning.
The jurisprudence and principle, therefore, in such a situation, would be the contextual interpretation to subserve the constitutional scheme and to alongate the legislative purpose, harmonising the individual interest with the community good so as to effectuate social transformation envisioned in the preamble of the Constitution.
[297 D F] 10.
The word "supervision" is not one of precise import and is broad enough to require either supervisor 's constant presence during work supervised or his devotion thereto if only time necessary to see that it complies with contract specifications, advise as to details, prepare necessary sketches and drawings, etc.
[298 C] 275 11.
The does not give its own definition of the word "supervision".
Therefore, it must be construed in the context the ultimate purpose the Act aims to serve and the object behind the Act, i.e. to extend sickness benefits and to relieve the employee from occupa tional hazards consistent with the constitutional and human rights scheme.
Under the Electricity Act and the Rules, the Corporation, licencee, is enjoined to perform the acts and duties contemplated thereunder to lay overhead lines, under ground cables, their repairs and maintenance there of, etc.
It authorised, under the contract, the immediate employer to perform, on its behalf, those acts and duties.
The immediate employer would get the work done through their employees employed for that purpose.
It is not a sporadic work but a constant and an ongoing process, so long as the licencee generates, transmits and supplies electrical energy to the consumers of their supply area.
Had the principal employer performed those acts and duties through its employees, indisputably, their employees would be covered under the Act, though the work was got done at highways or at places other than the factory or the establishment.
When the prin cipal employer authorises the respondents as its contractors under contracts the need for constant supervision is obviat ed relegating that function to its immediate employers.
Otherwise the need for contracts would be redundant.
The Corporation retained, under the contract, the power of acceptance or rejection of the work done or supervision effected in maintenance of the work got done by the immedi ate employer, subject to overall supervision by the Electri cal Inspector, on behalf of the State Government.
The super vision in the fact situation is not the day to day supervi sion but legal control, i.e. right to accept or reject the work done or maintenance effected.
The exercise of right of acceptance or rejection is the supervision as envisaged in the contract between the principal employer and the immedi ate employer.
It would supply the needed unifying or con necting thread between the constitutional creed of social justice i.e., social security under the Act and supervision of the acts or duties by the principal employer vis a vis the employees of the immediate employer under the contract who ultimately perform them on behalf of the principal employer.
Undoubtedly in a bilateral contract between the corporation and the respondents qua their rights and liabil ities under the contracts, strict interpretation of the words cngrafted therein, be of paramount relevance and call for attention as per Contract Act.
[301 C 302 B] 12.
In the context of the statutory interpretation of "supervision" under the Act of the works undertaken under the contract, the 276 interest of the workmen or the welfare schemes for the employees under the Act interposed and call attention to and need primacy.
In its construction the courts must adopt contextual approach to effectuate the statutory animation, namely, social security.
The literal interpretation would feed injustice in perpetuity denying to the employees of sickness benefit etc.
under the Act, which would be avoided, lest the purpose of the Act would be frustrated.
[302 B C] 13.
The application of the golden rule to the word "agency" under the between the respond ents and the corporation, perhaps, does not encompass agency in strict sense under the Act.
But public policy of the Act, the constitutional and human right 's philosophy to provide social security to protect the health and strength of the workers must be kept at the back of the mind to construe the word "agent" under section 2 (9) (ii) of the Act, in contradis tinction with the bilateral stipulations under the contract.
In this regard public policy interposes and plays a vital role to read into the contracts the extended meaning of agency to bring about connecting links between the respond ents and the licencee corporation.
Lest the contract, if intended to deny welfare benefits to workmen, would be opposed to public ' policy and would become void under section 23 of the .
Such an intention would be avoided by reading into the contract the extended meaning of agency but not fiduciary.
[302 E G] 14.
The contractors, respondents, knew at the date of the agreements that the Corporation, as principal employer, is under statutory obligation to execute or keep executed the works and keep them repaired and maintained as an inte gral activity of generation, transmission and distribution of the electrical energy to the consumers within their area of supply.
On authorisation, the respondents execute and keep executed the works and repairs or kept them repaired and the maintenance thereof effected through their employ ees, which in law is on behalf of the Corporation, principal employer.
The genesis and aim of the transaction was to act on behalf of the Corporation.
The agency of the respondent with the Corporation, thus, springs into being.
The prohibi tion of the qualified supervisors, while in service of the respondents, to disengage themselves with third parties in terms of the contract was only to extract unstinted and exclusive devotion to duty and no further.
It stands no impediment to construe that/he respondents are agents to the Corporation as immediate employers.
[303 F H] 277 15.
The employees working under the respondents perform their duties in execution of the works, repairs and mainte nance thereof in connection with the generation, transmis sion and distribution of the electrical energy by the Corpo ration licensee.
The Corporation is the principal employer.
The respondents ' immediate employers execute the work etc.
under the supervision of the Corporation as its agents.
Their employees, in law, work under the supervision of the principal employer, corporation.
They are covered under s.2(9) (ii) of the Act entitling to the sickness benefits, etc.
envisaged therein and the respondents are liable to make their contribution to the Employees ' Insurance Fund.
[304 A B] Senior Electric Inspector & Ors.
vs Laxmi Naravan Chopra Muddala Veeramallapa & Ors., ; at p. 313; Massachusetts Bonding & Insurance Co. vs United States of America, ; , ; Atma Ram Mittal vs Ishwar Singh Punia, ; ; Owen vs Evans & Owen (Build ers) Ltd., 1962(1) Weekly Law Reports 933; Regional Direc tor, E.S.I.C vs South India Flour Mills (P) Ltd., ; A.P. State Electricitv Board vs
E.S.I.C, Hydera bad, ; Regional Director.
E.S.I.C, Bangalore vs Davangere Cotton Mills, ; E.S.I.C Chandigarh vs Oswal Woolien Mills Ltd., &H) (F.B.); Birohichand Sharma vs First Civil Judge, Nagpur & Ors., ; ; D.C Dewan Mohideen Sahib & Sons vs The Industrial Tribunal.
Madras, ; ; Nagpur Electric Light & Power Co. Ltd. vs Regional Director E.S.I.C, [1967] 3 SCR Reprint 92; Kirloskar, Pneu matic Co. Ltd. vs
E.S.I.C, ; Royal Talkies, Hyderabad & Ors.
E.S.I.C; , ; M/S. P.M. Patel & Sons & Ors.
vs Union of India & Ors.
, ; , Superintendent of Post Office vs
P.K. Rajamma; , ; Prenn vs Simmonds, 1971 (1) Weekly Law Reports 1381 (H.L.), referred to.
World Labour Report 2, at Chapter 9 (Safety and Health); Lawyer Oct. ; Report of the Committee on Labour Welfare, 1969 in paragraph 5.77 of Chapter 5; Webster Comprehensive Dictionary (International Edition) at page 1260, in Vol, 1I; Corpus Juris Secundum, Vol. 83 at page 900; The Words and Phrases.
Permanent Edition, Vol.
40A; Halsbury 's Laws of England (Hailsham Edition); Chitty on Contracts, 26th Edition, paragraph 2502 at page 4, A.G.Guest:Anson 's Law of Contract, 26th Edition, at page 308 referred to.