M/S. Kirloskar Oil Engines vs Hanmant Laxman Bibawe

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 523 of 1961

Decision Date: 31 July 1962

Coram: Gajendragadkar

In this case the Supreme Court of India delivered its judgment on 31 July 1962 concerning a dispute between M/s Kirloskar Oil Engines (the petitioner) and Hanmant Laxman Bibawe (the respondent). The dispute arose under section 33A of the Industrial Disputes Act, 1947 and required the Court to decide whether the respondent was an employee of the petitioner for the purposes of the Act. The respondent had been engaged as a watchman under a scheme administered by the Police Department. Under that scheme a private person may apply to the District Superintendent of Police for the supply of a watchman if a suitable candidate is available. The police recover the watchman’s pay in advance each month, credit it to a watchman’s fund, deduct a uniform allowance of Rs 250 and then remit the balance to the watchman. The police also require the party receiving the watchman to give a fortnight’s notice if they wish to discontinue the service. The watchmen are mustered at the police station, their work is supervised by the police night patrol and they remain under the disciplinary control of the District Superintendent of Police. The respondent’s services were terminated while an industrial dispute between the petitioner and its workmen was pending. The respondent filed a complaint before the Industrial Tribunal at Bombay invoking section 33A, alleging that he was an industrial employee of the petitioner and that his discharge required the Tribunal’s approval. The Tribunal accepted the application. The petitioner contended that the respondent was not its employee because the watchman’s services were supplied by the police scheme, not directly by the petitioner. The Court held that the question of whether a person is an employee of another must be decided on the facts and circumstances of each individual case. Although the right to direct the manner in which work is performed is an important factor, it cannot be treated as a definitive test in all cases. After considering all relevant facts the Court concluded that the respondent could not be said to be the employee of the petitioner and therefore could not claim the protections of section 33A. The Court referred to Shivanandan Sharma v. Punjab National Bank, [1955] 1 S.C.R. 1427, and noted that Docks & Harbour Board v. Goolgins and Griffith (Liverpool) Ltd., [1947] A.C.I., was inapplicable. The judgment concerned Civil Appeal No. 523 of 1961, an appeal by special leave from the award dated 2 September 1960 of the Industrial Tribunal Maharashtra at Bombay in Complaint (I.T.) No. 38 of 1960. Counsel for the appellant and the respondent were instructed, and the judgment was delivered by Justice Gajendragadkar.

The respondent, Bibawe, asserted that he had been engaged by the appellant, M/s Kirloskar Oil Engines, Limited, as a watchman beginning on 21 July 1958 and that, over time, he had become a permanent workman of the company. He further claimed that on 15 May 1960 the Security Officer of the appellant orally informed him that he was being discharged from service effective that date. In his application under section 33‑A of the Industrial Disputes Act, 1947, the respondent argued that at the moment the discharge was communicated an industrial dispute was already pending between the appellant and its employees before an Industrial Tribunal, and therefore the appellant could not lawfully terminate his employment without first obtaining the Tribunal’s approval. Accordingly, he contended that his dismissal violated the provisions of section 33 and formed the basis of his application under section 33‑A.

The appellant denied that the respondent was its employee. It explained that the respondent’s services were provided to the appellant through an arrangement that expressly stipulated that, even while performing duties as a watchman for the appellant, the respondent was not an employee of the appellant in the legal sense. The appellant maintained that, because the respondent was not an employee, the provisions of section 33 were not breached and the application made under section 33‑A was therefore incompetent.

The narrow issue that the Industrial Tribunal had to decide was whether the respondent could be characterised as an employee of the appellant and consequently as a workman whose status fell within the industrial dispute then before the Tribunal at the time of his discharge. The Tribunal set out the opposing contentions of the parties on this point and observed that it could not accept the extreme positions advanced by either side. Nevertheless, the Tribunal appears to have concluded, in substance, that section 33 had been contravened by the appellant. As a result, it issued an order directing the appellant to reinstate the respondent and to pay him full back wages calculated from the date of his dismissal.

The appellant challenged this order by obtaining special leave to appeal before this Court. Counsel for the appellant argued that the Tribunal’s view—that the respondent was the appellant’s employee—was plainly inconsistent with the scheme under which the respondent was engaged as a watchman. He submitted that the oral evidence presented by the parties during the present proceedings demonstrated that the Tribunal’s conclusion was erroneous. In the opinion of this Court, that contention is well founded and must be upheld.

Examining the scheme by which the respondent was engaged, the Court finds that the material terms of the arrangement emphatically indicate that the respondent could not be treated as the appellant’s employee nor could he claim the status of an industrial employee. The scheme, which was developed to supply watchmen through the police department to various employers, clearly delineated the respondent’s position as outside the legal definition of employee. Consequently, the appellant’s discharge of the respondent did not fall within the prohibitions of section 33, and the application under section 33‑A was indeed incompetent.

In this case the Court explained that the scheme for supplying watchmen had been created because private individuals expressed a clear demand for such personnel. The documentation of the scheme contains several paragraphs that set out its essential terms and conditions. Under the scheme any private person who requires the services of a watchman must first apply to the District Superintendent of Police. The Superintendent will then supply a watchman only if he is satisfied that a suitable candidate is available. Once a watchman is assigned, the employer is required to pay the amount due for the watchman’s wages in advance each month. The advance payment is to be credited to a special Watchman Fund upon receipt of the advance bills that are submitted by the office of the Superintendent of Police. From the amount recovered from the employer, a deduction of five annas and eight paise per month is made to meet the cost of clothing that is supplied to the watchman, and the remaining balance is paid directly to the watchman. The Inspector‑General of Police has the authority to vary this rate in any district that falls under his control, but the variation may not exceed a maximum of thirty rupees per annum. The work performed by the watchman is supervised by subordinate police officers, and especially at night the night patrols verify the presence and alertness of the watchmen, since they are aware of the locations where police watchmen are employed. The watchmen are mustered for duty in the police section that corresponds to the area where the employer’s bungalow is situated, and they receive their salary directly from the Superintendent of Police in the same manner as ordinary police personnel. The watchmen remain wholly under the departmental control and orders of the Superintendent of Police; only the Superintendent may impose fines or punishments upon them, and the employer has no authority to do so. When assigning a watchman, the Superintendent must exercise caution to ensure that the employer is a person who is likely to make punctual payments without the need for demands or correspondence. If an employer wishes to discontinue the service of a watchman, he must give the Superintendent a fortnight’s notice. All credits related to the pay of watchmen are made to the Watchman Fund. Under this arrangement the Superintendent of Police acts as the sole agent through whom watchmen are employed, and he alone possesses the powers that ordinarily belong to a master over his servant. He undertakes this special duty in the interest of public safety, which is his responsibility to secure. These points summarise the main features of the scheme through which the respondent’s services were provided as a watchman to the appellant. The Court observed that each of these terms clearly demonstrates that, although the respondent performed watch‑man duties for the appellant, the legal relationship of master and servant did not exist between them. The appellant did not make direct payment to the respondent, could not supervise the respondent’s work, and was not empowered to take any disciplinary action against him if his conduct proved unsatisfactory; those powers rested solely with the Superintendent of Police under the scheme.

The Court observed that, according to the scheme, the rights of a master were vested in the Deputy Superintendent of Police with respect to persons such as the respondent whose services were temporarily assigned to private individuals. In the Court’s view, given the language of the scheme, it was difficult to accept the Tribunal’s conclusion that the respondent qualified as an employee of the appellant, that he was an industrial employee, and consequently a workman involved in the dispute that was pending adjudication at the time of his discharge. Turning to the oral evidence, the Court found the same factual picture. The respondent testified in support of his case and admitted that, after being selected, he was instructed by the appellant to proceed to the police office to obtain a uniform, which he did. He further stated that, upon joining service, he was required to complete a form and that, while serving as a watchman, he might have received certain orders from an officer of the appellant. The respondent also claimed that he applied to the appellant for casual leave, sick leave and privilege leave; however, the Court noted that this claim was inconsistent with the terms of the scheme already described and with the categorical statement made by Mr Chorpade, the Sub‑Inspector. Mr Chorpade affirmed that leave was sanctioned by the police office, adding that, on occasion, a watchman might submit a casual‑leave application through the employer or directly to the office. Consequently, the Court held that it could not be said that sick leave, privilege leave or casual leave were routinely granted to the respondent by the appellant. The respondent further admitted that he and the other watchmen were escorted to the gate of Kirloskar Company by a police Jamadar when they were interviewed, and that Mr Pansare visited the premises once or twice a month to inquire with management about the quality of the watchmen’s work. He also acknowledged that his wages were not determined through any discussion with the appellant. Examination of Mr Chorpade’s evidence reinforced the Court’s conclusion that the terms of employment and the manner in which the respondent was treated by the appellant as a watchman were fully consistent with the conditions of the scheme previously referenced. The Court noted that the uniform supplied to the watchmen, although slightly different from a constable’s uniform, was prepared in accordance with Rule 426 of the Police Manual, bore a specific buckle number, and could not be worn by a private person. A Jamadar was posted at the police station to supervise all watchmen employed, and at each place of duty a senior watchman was tasked with supervising other watchmen. At Kirloskar Oil Engines, the Jamadar functioned as the senior watchman, performing supervisory duties in line with the scheme.

The Court noted that the remuneration of the watchmen was determined by the District Superintendent of Police. In factories that employed ten to fifteen watchmen, the factory was required to forward the attendance register, known as the hajri, of all watchmen to the Police Office during the first week of each month for the preceding month. The police station maintained a muster roll on which the attendance of the watchmen was entered. If the District Superintendent of Police learned that a watchman’s performance was unsatisfactory, he possessed the authority to withdraw that watchman from service. Police staff also conducted inspections, and whenever a watchman was found to be absent or engaged in undesirable conduct, he could be withdrawn even without the owner’s consent. The same authority to withdraw also extended to the power to transfer a watchman, and both powers were vested exclusively in the District Superintendent of Police. The Court observed that this oral evidence confirmed the conclusion that arose inevitably from the nature of the system under which the respondent performed his duties for the appellant.

Consequently, the Court held that the Tribunal had erred in concluding that the respondent was the appellant’s employee. The respondent, through counsel, cited the Supreme Court’s decision in Shivnandan Sharma v. The Punjab National Bank Limited. In that case the Court examined the criteria to be applied in determining whether one person is the employee of another. The Court emphasized that the answer to such a question depended on the facts and circumstances of each case. The judgment then quoted Lord Porter, who had remarked:

“Many factors have a bearing on the result. Who is the paymaster, who can dismiss, how long the alternative service lasts, what machinery is employed, all have to be kept in mind. The expressions used in any individual case must always be considered in regard to the subject‑matter under discussion but among the many tests suggested I think that the most satisfactory, by which to ascertain who is the employer of any particular time, is to ask who is entitled to tell the employee the way in which he is to do the work upon which he is engaged.”

Mr. Chaudhury relied heavily on the test identified by Lord Porter, arguing that the appellant directed the respondent on how to perform his watch‑keeping duties and therefore the respondent should be deemed the appellant’s employee. The Court, however, agreed with Lord Porter’s view that the employer‑employee relationship must be determined by examining all relevant facts and circumstances, and that no single test could be declared decisive. A factor that may be decisive in one situation may be irrelevant in another, and the Court therefore declined to adopt any one test as controlling in every case.

Lord Porter’s observation, which Dr. Choudhury relies upon, suggested that a particular test—identifying the person who is entitled to direct the manner in which an employee performs his work—might be most satisfactory in the facts before Lord Porter. However, with respect, the Court held that although that test may have been appropriate for the specific circumstances considered by Lord Porter, it would be unreasonable to treat it as a universally applicable rule in every case. To illustrate the limitation of the test, the Court described a typical situation in an industrial establishment where the premises include bungalows occupied by officers. The establishment employs gardeners and watchmen for those bungalows, pays their wages, and exercises control and supervision over them. In the course of their daily duties, the gardeners and watchmen naturally receive instructions from the officers who are residing in the bungalows at that time. Because the occupants of the bungalows may change from time to time, and because the establishment may transfer the gardeners and watchmen from one bungalow to another, the fact that they obey the orders of the current occupants does not make them servants of those officers during the officers’ tenure. Consequently, the test that focuses solely on who tells the employee how to do his work would break down in such a scenario. For this reason, the Court declined to accept Mr. Choudhury’s contention that the test has universal application and can be deemed satisfactory in all circumstances. In the present matter, the respondent had become a watchman for the appellant under a scheme that supplies watchmen to private employers. Although the private employer may give orders to the watchmen, the Court found that this fact was not the decisive consideration. Instead, the Court emphasized that the other terms and conditions governing the arrangement, together with all the relevant facts, must be taken into account to reach a final conclusion. After examining the totality of the circumstances, the Court was satisfied that the respondent could not be characterized as an employee of the appellant; therefore, he could not claim the status of an industrial employee and could not be treated as a workman involved in the industrial dispute that was before adjudication at the relevant time. Accordingly, the appeal was allowed, the order passed by the tribunal was set aside, and the respondent’s application under section 33‑A was dismissed. No order as to costs was made.