Case: Bhikuse Yamasa Kshatriya Private Limited &amp; Another Vs. Union of India &amp; Another

1. The first petitioner is a private limited Company incorporated under the Indian Companies Act, 1913 and the second petitioner is a Director of the Company. The Company maintains 23 establishments for manufacturing bidis in the District of Nasik, Poona and Ahmednagar in the State of Maharashtra. A large majority of these establishments are borne on the registar of factories maintained by the Chief Inspector of Factories under the Factories Act, 63 of 1948. Craftsmen called rollers, attend these establishments and prepare bidis, using materials supplied by the Company. The establishments remain open during specified hours but the rollers are not bound to attend for any fixed period; a roller may come to and leave the establishment according as is convenient to him, and he is paid for the bidis turned out by him according to a fixed tariff. It appears that this is the accepted modus of work in bidi establishments in the Maharashtra region. These establishments were, it was held by the Bombay High Court, factories and the rollers working therein were workers within the meaning of the Factories Act 63 of 1948 : The State v. Alisaheb Kashim Tamboli [I.L.R. 1955 Bom. 624  .]. In that case the High Court held that the expression employed in s. 2(1) of the Factories Act, 1948 does not necessarily involve the relationship of master and servant, and therefore owners of bidi establishments had to conform to the requirements of the Factories Act and to afford to the workers the benefits provided under that Act, even though the workers did not maintain uniform hours of attendance, and were paid only for bidis turned out by them. But this Court in Shankar Balaji Waje v. The State of Maharashtra [(1962) Supp. 1 S.C.R. 249.) - (Subba Rao, J. dissenting) - held in dealing with the case of workers in an establishment for manufacturing bidis whose attendance was characterised by the features hereinafter set out, that they were not employed within the meaning of s. 2(1), and could not claim the privileges accorded to workers by ss. 79 and 80 of that Act. The features noticed by the Court were, that there was no agreement or contract of service between the owner of the establishment and the bidi roller; the bidi roller was not bound to attend the factory for any fixed hours or to work for any fixed period; he was free to go to the factory at any time he liked and was equally free to leave the factory whenever he liked; the bidi roller could be absent from work on any day and if his absence was expected to be of a duration longer than ten days he informed the owner not because he had to obtain permission or leave, but for assuring the owner that he did not intend to give up work at the factory; there was no actual supervision of work which the bidi roller did in the factory, and he was paid at fixed rates on the quantity of bidis turned out there being no stipulation for turning out any minimum quantity of bidis in a day; bidi leaves were supplied to the rollers for being taken home and cut and tobacco was supplied at the factory, but they were not bound to roll bidis at the factory - they could take the materials outside after obtaining permission of the owner; at the close of the day the bidis used to be delivered to the owner and bidis not up to the standard were rejected; and the bidi workers attendance was not noted though the days he worked could be ascertained from the work register. The Court held on these facts that the bidi roller could no be said to be employed by the owner and was not therefore a worker, there being no contract of employment, under which the bidi roller agreed to serve the employer subject to his control and supervision.Since this judgment was pronounced, owners of bidi-making establishments in the State of Maharashtra commenced denying to the bidi rollers benefit of weekly holidays and wages in lieu of holidays previously accorded to them and even denied access to the Inspectors appointed under the Factories Act to their establishments. There are in the State of Maharashtra more than 35000 bidi rollers borne on the pay rolls of bidi-making establishments on the register maintained by the Chief Inspector of Factories. There are also many other bidi-making establishments which are not so borne on the register of the Chief Inspector. There was grave unrest among the bidi rollers resulting form the denial of benefits previously enjoyed by them. With a view to protect the bidi rollers against exploitation by the owners of bidi making establishments and against deprivation of the benefits enjoyed by them, the Government of Maharashtra issued the following Notification in exercise of the powers vested under s. 85 of the Factories Actexercise of the powers conferred by section 85 of the Factories Act, 1948 (LXIII of 1948), the Government of Maharashtra hereby declares that all the provisions of the said Act shall apply to the places specified in column 2 of the Schedule appended hereto wherein a manufacturing process is carried on with or without the aid of power or is so ordinarily carried on the establishments specified against them in column 3 of the said Schedule notwithstanding that the persons working therein are not employed by the owner of such places but are working with the permission of or under agreement with such ownerProvided that the manufacturing process is not being carried on by the owner only with the aid of his family."2. To the notification was appended a Schedule (including many of the establishments of the Company) setting out the particulars of Districts, the places where the establishments were situate and the names of the establishments. The effect of the Notification was to make bidi rollers in places set out in the Schedule deemed workers, and on that account entitled to the benefits provided to workers under the Factories Act.

Court's reasoning:
3. Premises in which a manufacturing process is carried on where the number of workers is less than the minimum prescribed do not fall within the definition of factory. Again a person to be a worker must be employed in a manufacturing process or in cleansing machinery used for the process, or in any work incidental to or connected with the manufacturing process. To attract the provisions of the Factories Act which confer certain benefits and privileges upon workers and impose obligations upon owners of factories qua those workers, there must, therefore, be a manufacturing process carried on in any premises, the number of persons working in the manufacturing process or cleansing machinery used for the process or in work incidental to or connected therewith be not less than the number specified in the definition in s. 2(m) and that the persons so working must be employed (under a contract of service) for wages or not and directly or indirectly. A person working in a factory, but not under a contract of service cannot be regarded as a worker within the meaning of that expression in s. 2(1) of the Act.Section 85 of the Factories Act which occurs in Ch.The policy underlying s. 85 authorising the State Government to extend the benefit of the Act is apparent on its face. The section aims at making provision for securing the health and safety of persons engaged in hazardous employments, and for that purpose the Legislature has entrusted to the State Governments, in the case of establishments not falling expressly within the regulatory provisions of the Act, authority to extend those provisions, where the necessity to regulate, having regard to the circumstances, is felt. The power to extend the regulatory provisions of the Act is therefore not intended to confer an arbitrary power to pick and choose between establishments similarly situate : it is granted with a view to secure the protection of persons engaged in industrial occupations in the light of special circumstances of a particular industry, a locality or an establishment, where circumstances justifying the extension of the protection exist. The conditions of small establishments in different parts of the country may and do widely vary. Control in respect of some industries or establishments not governed by the Factories Act may not be necessary, whereas necessity in that behalf may be acutely felt in others. It is to carry out effectively the object underlying the Act that power has been given to the State Government to decide with reference to local conditions whether it is desirable that the provisions of the Act or any of them should be made applicable to any establishment which is not covered by the definition of "factory" or to workers in a factory who are not entitled to the benefits of the Act, because of the definition of "employment.It is true that even if a statute which permits executive action to be taken is not ultra vires, but the executive action taken under the statute in the matter of selection may be ultra vires if it infringes any fundamental right. In the present case, however, the affidavit of Mr. V. N. Pimenta, Under Secretary to Government of Maharashtra in the Industries and, Labour Department, discloses clearly the basis on which the factories mentioned in the Schedule were selected by the Notification under s. 85(1). In paragraph 7 of his affidavit it is stated"On careful consideration of the facts of this (Shankar Balaji Wajes) case the Government of Maharashtra was of the view that for the purpose of protecting the bidi rollers against any arbitrary treatment by the bidi manufacturers, and to maintain the protection given to them under the Factories Act which they had hitherto obtained prior to the decision of this Honble Court in the case of Shankar Balaji Waje a Notification under s. 85 of the Factories Act, 1948 should be issued. Accordingly, the Government of Maharashtra issued the impugned Notification including therein those factories which were on the register of Factories maintained by the Chief Inspector of Factories."He further stated that probably there were other bidi manufacturing establishments to which the provisions of the Factories Act were applicable, but these factories were not within the purview of the impugned Notification because they were not on the register of factories maintained under the Factories Act and on the basis of which the impugned Notification was issued. But such establishments were not included in that register because of the failure of the owners to register them. Mr. Pimenta said that the Government was making enquiries about such other factories and that they would or would not be brought under the purview of the Act, as circumstances demanded, by amendment of the impugned notification under s. 85 of the Factories Act when the enquiries were over. He further stated that the impugned Notification was issued to maintain industrial peace and harmony. There is nothing on the record to discredit these statements. Before the impugned Notification was issued, the Bombay and other High Courts had held that bidi workers who though not servants of the owners of the bidi factories in which they were working, were still employed in a manufacturing process to whom the benefits of the Factories Act were admissible. As a result of the clarification of the legal position by the decision of this Court in Shankar Balaji Wajes case [(1962) Supp. 1 S.C.R. 249.], there was grave unrest among bidi rollers and the State Government felt obliged to intervene for the protection of bidi rollers against deprivation of benefits previously accorded to them for an appreciable length of time, and with that object in view in the first instance applied the provisions of the Factories Act by Notification issued under s. 85(1) to all such establishments as were included in the list maintained by the Chief Inspector of Factories and commenced an enquiry for including others which were not included in that list. In the situation which arose inclusion of bidi manufactories registered as factories with the Chief Inspector of Factories in which bidis were rolled by workers must be deemed to be a rational basis for classification. The fact that to other factories carrying on the same business but not included in the list of the Chief Inspector of Factories, the provisions of the Act were not extended immediately does not expose the Notification to a charge of absence of rational classification. Selective application of a law by an authority such as a State based on an objective test such as entry in the list maintained by the Chief Inspector of Factories in the exercise of statutory authority, would in the light of the emergency, be deemed to be a rational basis for classification. It also appears from the affidavit of Mr. Pimenta that the Government of Maharashtra is holding enquiries about other factories which may properly be, but are not, included, because of absence of adequate information. The exclusion of owners of bidi establishments, not on the list of the Chief Inspector of Factories, is ex facie not due to any differentiation made with "an evil eye or uneven hand" but on account of the felt necessity of a situation which caused great hardship to a large number of workers, and rectification of which in the interest of maintaining industrial peace brooked no delay.It was urged, however, that the application of all the provisions of the Factories Act without considering the appropriateness of extending the individual provisions, infringed Art. 19 of the Constitution. It was submitted that provisions like ss. 79 and 80 which only apply to factories employing persons who work under contracts of service with the owner would be wholly inapplicable to persons who work under contracts not of service with the owner of the factory and who are under no obligation to attend the factory for any fixed duration during working hours or for any fixed number of days during the year, and providing benefits for such persons by extending those provisions amounts to imposing unreasonable restrictions upon the right of the owner of the factory. Section 79(1) provides for grant of annual leave with wages for the number of days calculated at certain rates to every worker who has worked for a period of 240 days or more in a factory during a calendar year. Section 80 is consequential upon s. 79 : it provides that a worker shall be paid for the leave allowed to him at the rate equal to the daily average wage of his total full time earnings for the days on which he worked during the month immediately preceding his leave exclusive of any over-time and bonus but inclusive of dearness allowance and cash equivalent of the advantage accruing through the concessional sale to the worker of foodgrains and other articles. Section 79 clearly applies to workers who work for the full period of employment during factory hours and for the prescribed number of days and it may appear at first sight somewhat inappropriate that the benefit of annual leave with wages should be extended by Notification under s. 85(1) to persons who do not work for the hours fixed for the establishment. But it is in our judgment clear that s. 79 if it is made applicable by notification under s. 85 would apply to those workers only who work in the factory for the full period prescribed under ss. 61, 71 and 66(1) of the Factories Act by the employer for not less than the number of qualifying days. A "deemed worker" who is paid only for work done by him and who is under no obligation to attend at any fixed time may be entitled to benefit of annual leave with wages only if he fulfils the working conditions applicable to workers as defined in s. 2(1) of the Act. The privilege of working for a period less than the period prescribed for regular workers in a factory will not, if he works for less than the prescribed hours, come to the aid of a deemed worker so as to enable him to claim the benefits of s. 79; but that privilege will not deprive him, if he fulfils the conditions relating to the duration of work, of the benefit of s. 79. The fact that a deemed worker in a factory, to which s. 79 is extended by a Notification, by virtue of his contract or otherwise is not bound to attend at times fixed by the owner of the factory does not mean that he can never fulfil the conditions relating to attendance for earning leave with wages. If a deemed worker attends the factory for the full duration fixed as factory hours and works for 240 days or more during a calendar year, he would be entitled to the benefits of ss. 79 and 80 of the Act.The observations made in Shankar Balaji Wajes case [(1962) Supp. 1 S.C.R. 249.], that Pandurang was not bound to work for the period of work displayed in the factory and therefore "his days of work for the purpose of s. 79 could not be calculated" is not inconsistent with the view expressed by us. In Shankar Balaji Wajes case [(1962) Supp. 1 S.C.R. 249.], no Notification under s. 85 was issued by the State Government, and the Court was considering, whether having regard to the conditions governing his attendance, he could be regarded as a worker. The observation relied upon does not mean and could not have intended to mean that if a Notification under s. 85 had been issued and the workers concerned had worked for the full period of work displayed in the factory for more than 240 days in the preceding year, he would still not have been entitled to annual leave with wages. In our judgment the right to leave with wages arises in favour of a worker or deemed worker under s. 79 only if he has worker or deemed worker under s. 79 only if he was worked during the full period of factory employment for the prescribed number of days in the previous year because by the use of the expression days in s. 79, working for the full period of work displayed in the factory under the appropriate section of the Factories Act is contemplated. Work for a period less than the period displayed will not, in computing the number of days, be taken into account as a day within the meaning of s. 79.11. We may also observe that in Bridhichand Sharma v. First Civil Judge, Nagpur [(1961) 3 S.C.R. 161.], this Court in dealing with the question whether rollers in a bidi factory who were obliged to work within the factory hours, but not for the entire period were entitled to the benefit of s. 79, held on a consideration of all the circumstances, that the bidi rollers being employed in the factory were workers within the meaning of s. 2(1) of the Factories Act, and entitled to that benefit. It was also observed that the leave provided under s. 79 arises as a matter of right when the worker has attended for the minimum number of working days and he is entitled to it, and absence of the worker from attendance for a longer period than that provided by s. 79 had no bearing on his right to leave under that section. That was again a case not covered by a Notification under s. 85. On the facts proved the Court held that the workers in the factory were employed and would if they fulfilled the requirements of s. 79 - viz, the total number of days of work - be entitled to the benefit of leave with pay. The attendance to qualify for leave in that case had obviously to be for the appropriate full period fixed by the owner of the factory.As we have already observed the Act primarily applies to workers strictly so called who are employed in any manufacturing process in a factory, but it is open to the State Government by a Notification to apply all or any of the provisions of the Act to any place wherein any manufacturing process is carried on and if such a Notification is issued the place so declared is to be deemed a factory under the Act, the owner to be deemed an occupier and the person working therein a worker notwithstanding the fact that the number of persons working therein are not employed by the owner thereof but are working with the permission of or under agreement with such owner. If by imposing liability to afford to workers strictly so-called under the Act, there is no infringement of the fundamental right of the owner of the factory to carry on his business, a similar obligation in favour of deemed workers, who satisfy the requirements of s. 79, cannot, having regard to the object of the statute, be regarded as infringing that fundamental right. Therefore by imposing liability to afford to "deemed worker" annual leave with wages under s. 79 and s. 80 in the same manner and to the same extent as is afforded to workers strictly so-called under s. 2(1) of the Factories Act, no unreasonable restriction has been imposed upon the occupier or the owner of the factory.12. To conclude : in our judgment s. 85 which authorises the State Government to issue a Notification applying all or any of the provisions of the Act to any place in which a manufacturing process is carried on, and which involves the consequence that the place is deemed a factory and the persons working therein are deemed workers is not by itself discriminatory so as to infringe Art. 14 of the Constitution; nor does the provision amount to authorising imposition of unreasonable restriction upon the fundamental right of the owner of the factory to carry on his business. The impugned Notification issued under s. 85(1) is also not open to attack on the ground that the State has issued the Notification by selecting for application of the provisions of the Act, some out of the places in which bidi manufacturing processes are carried on. Nor does the Notification in so far as it seeks to apply the provisions of the Act imposing upon the owner or an occupier of the factory obligation to grant annual leave with wages impose any unreasonable restriction.