Case: Maharashtra Sugar Mills Limited Vs. State of Bombay &amp; Others

1. The appellants are a company registered under the Indian Companies Act, and have got mills at Tilaknagar, District Ahmednagar, in the State of Bombay, for manufacturing sugar. For the purpose of their business, they employ muster labour and contract labour.2. By a notification datedpublished in the Govt. Gazette, under S:2 (4), Bombay Industrial Relations Act, 1946 (Bombay Act XI [11] of 1947), the Provincial Govt. applied the provisions of the Act to sugar industry with effect fromA dispute arose between the employees of the appellants including the seasonal and contract labour and the appellants as regards the demand made by the employees for payment of six months wages as bonus for the yearand as the dispute was not resolved by conciliation, the Govt. of Bombay issued the following notification on 1an industrial dispute has arisen between the Maharashtra Sugar Mills Ltd., Belapur Road, District Ahmednagar and its employees (hereinafter referred to as the said industrial dispute) in respect of payment of six months wages as bonus for the yearto all employees including the seasonal and contract labour;And whereas the provincial Govt. is satisfied that the said industrial dispute is not likely to be settled by other means;Now. therefore, in exercise of the powers conferred by S.73. Bombay Industrial Relations Act, 1946 (Bombay Act XI [11] of 1947), the Govt. of Bombay is pleased to refer the said industrial dispute to the arbitration of the Industrialwas urged on behalf of the appellants before the Industrial Court that contract labour was not covered by the definition of employee under the Act and that the Court had, therefore, no jurisdiction to go into the dispute in regard to contract labour. The Industrial Court held that contract labour was within the definition of employee and that it had jurisdiction to decide the dispute. It made its award onwhereby it awarded bonus equal toof the total basic earnings" of each worker earned during the yearon the condition as stated therein. The award was published in the Govt. Gazette onand the appellants were ordered to pay the said bonus both to the seasonal labour and contract labour.3. The appellants filed a petition in the High Court of Bombay, urging that contract labour were not in fact employed by them nor were they their employees within the definition contained in S. 3 (13) (a), Bombay Industrial Relations Act, 1946, and that being so, there was no industrial dispute between the appellants and the contract labour and the reference to the Industrial Court was without jurisdiction. It was prayed that the award be quashed. The petition was heard by Bhagwati J. and he held that the Industrial Court had no jurisdiction to make the award with respect to the contract labour as that Class of labour was not covered by the definition of employee contained in the Act and he granted a writ of certiorai quashing the award.4. The State of Bombay appealed against this decision and the appeal Court onreversed this decision and held that contract labour was covered by the definition of the word employee contained in the Act and that the Industrial Court had jurisdiction to make the award. The result was that the order of Bhagwati J. was set aside and the petition was dismissed. This is an appeal by special leave from that decision.

Court's reasoning:
7. We are of the opinion that none of these contentions has force in view of the terms of Ex. I which is a specimen agreement regarding, the operations of sugar cane cutting and transport,, entered into by, the company with thecontractors. cls. 4, 12, 13 and 16 of this agreement tell a differentcannot be seriously disputed that the contractors engaged by the company were under the responsibility of employing responsible servants (as the company may approve of) for carrying on the operation entrusted to them and that these servants or coolies were to be paid wages by the contractor, and if thought necessary by the company directly. The modus operandi of the company with the contractors was that each contractor was asked how much men he could supply. Usually a contractor agreed to supply between 5 to 25 people and according to the capacity, for work of this number he was entrusted with the operations on the farm. The contract labour got the same amenities from the company as the muster roll labour. They got grains at concession rates from grain shops, they were supplied housing material free, they also got concessions with regard to green fodder, sugar cane, green crops; Cloth was also distributed to labour of this type. In the face of this material, it is not possible to uphold the contention raised by Mr. Chatterjee. In these circumstances it cannot be said that the appeal Court was in error in holding that the persons employed by the contractor were his employees within the definition of that expression given in theHigh Court drew the inference and in our opinion, legitimately, from the evidence that the position of thecontract labour was identical with harvesting contract labour. That labour was also recruited in the same manner through the instrumentality of the contractors. It appears to us that the only difference between muster roll labour and contract labour employed by the company inwas that in case of the former there was a direct contract between the company while in the case of the latter the relationship was brought about through the intervention or interposition of a contractor.