Case: Hussainbhai, Calicut Vs. Alath Factory Thozhilali Union,Kozhikode And Ors

1. The petitioner before us in this special leave petition is a factory owner manufacturing ropes. A number of workmen were engaged to make ropes from within the factory, but those workmen, according to the petitioner, were hired by contractors who had executed agreements with the petitioner to get such, , work doneTherefore, the petitioner contended that the workmen were not his workmen but the contractors workmen. The industrial award, made on a reference by the State Government, was attacked on this round. The learned single Judge of the High Court, in an elaborate judgment, rightly held that the petitioner was the employer and the members of then were employees under the, petitioner. A division Bench upheld this stand and the petitioner has sought special leave from this Court.

Court's reasoning:
2. It is not in dispute that 29 workmen were denied employment which led to the reference. It is not in dispute that the work done by these workmen w as an integral part of the industry concerned; that the raw material was supplied by the Management; that the factory premises belonged to the Management; that the equipment used also belonged to the Management and that the finished product w as taken by the Management for its own trade. The workmen were broadly under the control of the Management and defective articles were directed to be rectified by the Management. This concatenation of circumstances is conclusive of the question. Nevertheless, this issue is being raised time and again and so we proceed to pass a speaking order3. This argument is impeccable in laissez faire economics red in tooth and claw and under the Contract Act rooted in English Common Law. But the human gap of a century yawns between this strict doctrine and industrial jurisprudence. The source and strength of the industrial branch of Third World Jurisprudence is social justice proclaimed in the Preamble to the Constitution. This Court in Ganesh Beedis case 1974 (1)LLJ 367   has raised on British and American rulings to hold that mere contracts are not decisive and the complex of considerations relevant to the relationship is different. Indian Justice, beyond Atlantic liberalism, has a rule of law which runs to the aid of the rule of life. And life, in conditions of poverty aplenty, is livelihood and livelihood is work with wages. Raw societal realities, notn legal niceties, not competitive market economics but complex protective principles, shape the law when the weaker, working class sector needs succour for livelihood through labour. The conceptual confusion between the classical law of contracts and the special branch of law sensitive to exploitative situations accounts for the submission that the High Court is in error in its holding against the petitioner4. The true test may, with brevity, be indicated once again. Where a worker or group of workers labours to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He has economic control over the workers subsistence, skill, and continued employment. If he, for any reason, chokes off, the worker is, virtually, laid off. The presence of intermediate contractors with whom alone the workers have immediate or direct relationship ex contractu is of no consequence when, on lifting the veil or looking at t he conspectus of factors governing employment, we discern the naked truth, though draped in different perfect paper arrangement, that the real employer is the Management, not the immediate contractor. Myriad devices,n in fold after fold of legal form depending on the degree of concealment needed, the type of industry, the local conditions and the like, may be resorted to when labour legislation casts welfare obligations on the real employer, based on Articles 38, 39, 42, 43 andA of the Constitution. The court must be astute to avoid mischief and achieve the purpose of the law and not be misled by the maya of legal appearances.If the livelihood of the workmen substantially depends on labour rendered to produce goods and services for the benefits and satisfaction of an enterprise, the absence of direct relationship or the presence of dubious intermediaries or thee trappings of detachment from the Management cannot snap thee bond. The story may vary but the inference defies ingenuity. The liability cannot be shaken off5. Of course, if there is total dissociation in fact between the disowning management and the aggrieved workmen, the employment is, in substance and ine terms, by another. The Managements adventitious connections cannot ripen into real employment.