HUSSAINBHAI, CALICUT versus ALATH FACTORY THOZHILALI UNION, KOZHIKODE AND ORS.

J.-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 done. Therefore, 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 ground. The learned single Judge of the High Court, in an elaborate judgment, rightly held that the petitioner was the employer and the members of the respondent-Union were employees under the petitioner. A division Bench upheld this stand and the petitioner has sought special leave from th.is Court.

p. 1074, margin A

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 was 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 was 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 concatonation of circumstances is conclusive of the question. Nevertheless, this issue is being raised time and again and we proceed to pass a speaking order. We should have thought that even cases where this impressive array of factors were not present, would have persuaded an industrial court to the conclusion that the economic reality was employer-employee relationship and, therefore, the industrial law was compulsively applicable. Even so, let us look at the issue afresh.

p. 1074, margin C

Who is an employee, in Labour Law? That is the short, diehard question raised here but covered by this Court's earlier decisions. Like the High Court, we give short shift to the contention that the petitioner had entered into agreements with intermediate contractors who had hired the respondent-Union's workmen and so no direct employer-employee vinculum juris existed between the petitioner and the workmen.

p. 1074, margin F

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 Beedi's case 1974 (l)LLJ 367 has raised on British and American rulings to hold that mere contracts are not decisive and the complex of

p. 1074, margin G

·. >nuss~INBHAI v. (Krish!'E_]Yer,_J.).__1075 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 o( poverty aplenty, is livelihood and livelihooc! is work with wages. Raw societal realities, not fine-spun legal niceties, not :ompetitive 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 petitioner.

p. 1075

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 the conspectus cf 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, half-hidden 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 3 8, 39, 42, 43 and 43-A of the Constitution. The court mnst be astute to avoid mischief and achieve the. purpose of the law and not be misled by ·the of legal appearances.

p. 1075, margin B

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 cf dubious intermediaries or the make-believe trappings of detachment from the Management cannot snap the .real-life bond. The story may vary but the inference defies .ingenuity. The liability cannot be shaken off.

p. 1075, margin F

Of course, if there is total dissociation in fact between the disowning management and the aggrieved . workmen, the employment is, in substance and in real-life terms, by another. The Management's adventitious connections cannot ripen into real employrnent.

p. 1075, margin F

Herc, on the ·facts, the conclusion is correct and leave _must be refused. S.R. Petitio11 dismissed. 329SCIJ78

p. 1075, margin G