Full Judgment Text
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PETITIONER:
EMPLOYEES’ STATE INSURANCE CORPORATION AND ANR.
Vs.
RESPONDENT:
TATA ENGINEERING & CO. LOCOMOTIVE CO.LTD. AND ANR.
DATE OF JUDGMENT08/10/1975
BENCH:
GOSWAMI, P.K.
BENCH:
GOSWAMI, P.K.
ALAGIRISWAMI, A.
UNTWALIA, N.L.
CITATION:
1976 AIR 66 1976 SCR (1) 199
1975 SCC (2) 835
ACT:
Employees State Insurance Act, 1948-Sec. 2(9)-An
apprentice whether an employee.
HEADNOTE:
The appellant contended before the Industrial Tribunal
that the apprentices to which the Employees State Insurance
Act, 1948 applies. The factory employs besides regular
employees, two sets of apprentices. Graduate apprentices for
a period of two years and Trade apprentices for the duration
of 3 years. The graduate apprentices receive stipend of Rs.
250/- per month for the first year and Rs. 300/- per month
during the second year. The trade apprentices receive
stipend of Rs. 2/- Rs. 2.50 and Rs. 3.00 per diem during the
first, second and third years of the apprenticeship
respectively. No further emolument is paid to the
apprentices. A deed of apprenticeship is signed by the
company, the apprentice and the surety by which the company
agrees to provide to the apprentice necessary training in
its factory and that after the apprentices successfully pass
the examination after the training is completed they would
be considered for absorption as skilled worker although the
Company is not under a legal obligation to offer them
employment. Another term provides that the apprentices would
during the period of apprenticeship diligently and
faithfully serve the Company and to the utmost power and
skill attend to the Company’s business. The apprentices give
a bond for serving the Company for 5 years after their
training is successfully completed.
The appellant contended before the Industrial Tribunal
that the apprentices are employees within the meaning of the
Act. The Tribunal did not accept the appellant’s contention.
The High Court rejected the writ petition filed by the
appellant. On an appeal by certificate under Art. 133(1) (a)
and (b) of the Constitution it was contended by the
appellant that the words "serve the Company" appearing in
the apprenticeship agreement introduce a relation of master
and servant.
^
HELD : (1) The word "apprentice" is not defined in the
Act. In ordinary acceptation of the term apprentice a
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relationship of master and servant is not established in
law. The dictionary meaning does not accept such a
relationship. The heart of the matter or the dominant object
in apprenticeship is the intent to impart on the part of the
employer and to accept on the part of the other person
learning under certain agreed terms. Such a person remains a
learner and not an employee. The fact that certain payment
is made does not convert the apprentice into a regular
employee. An examination of the provisions of the entire
agreement leads us to the conclusion that the principal
object with which the parties enter into the agreement of
apprenticeship was offering by me employer an opportunity to
learn the trade or craft and the other person to acquire
such knowledge. [201F, 202D-F]
(2) The Apprentices Act, 1850, defines an apprentice as
a person who is undergoing apprenticeship training in a
designated trade in pursuance of a contract of
apprenticeship. Whenever the legislature intends to include
an apprentice in the definition of a worker it has
expressly done so, for instance, while defining a worker
under s. 2 of the Industrial Disputes Act, 1947. The very
next year while passing the Employees State Insurance Act,
1948, the Legislature did not choose to include apprentice
while defining the word employee. Such a deliberate omission
on the part of the Legislature can be only
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attributed to the well known concept of apprenticeship which
the Legislature assumed and took note of for the purpose of
the Act. The apprentices are not given the wages as defined
by s. 2(22) of the Act. The apprentices are not covered
within the definition of the employees under s. 2(9) of the
Act. They are not entitled to the daily allowances and other
allowances to which the regular employees are entitled. The
apprentice is, therefore, not an employee within the meaning
of s. 2(9) of the Act. [202G-H, 203-B-D, 204-B-C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2113 of
1969.
From the Judgment and order dated the 3rd May, 1966 of
the Patna High Court at Patna in Misc. J. Case No. 289 of
1964.
G. L. Sanghi, S. P. Nayar and Girish Chandra, for the
Appellant.
M.C. Bhandare, O.C. Mathur, D. N. Mishra and J.B.
Dadachanji for respondents.
The Judgment of the Court was delivered by
GOSWAMI, J. Is an apprentice an "employee" under the
Employees State Insurance Act, 1948 ? That is the question
raised in this appeal by certificate under article 133(1)
(a) & (b) of the Constitution from the judgment of the Patna
High Court by which it refused to interfere with the order
of the Industrial Tribunal passed under section 73B of the
Employees’ State Insurance Act, 1948 (briefly the Act).
The respondent is a public limited company having its
registered office at Bombay and its factory at Jamshedpur in
the State of Bihar. The Act is applicable to the company’s
factory. Besides regular employees in the company, there are
two sets of apprentices, namely, graduate apprentices for a
period of two years and trade apprentices for the duration
of three years. The graduate apprentices receive stipend of
Rs. 250.00 per month in the first year and Rs. 300.00 per
month during the second year. The trade apprentices receive
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stipend at the rate of Rs. 2.00, Rs. 2.50 and Rs. 3.00 per
diem during the first, second and third year of the
apprenticeship respectively. No other emoluments except the
daily allowance or the monthly stipends are paid by the
company to the apprentices. A deed of apprenticeship is
signed by three parties, namely, the apprentice, his surety
and the company and it contains the terms and conditions of
apprenticeship From the said terms and conditions which are
common for both sets of apprentices except for the quantum
of stipends and the duration, it appears that the company
agrees to provide the apprentice a combined theoretical and
practical training in its factory for the respective period
above mentioned and the apprentice also binds himself to
serve the company for the purpose of the said training for
the said period. Clause (7) of the agreement provides that
if the apprentice successfully passes the examination after
training he will be considered for absorption as skilled
worker although the company is under no legal obligation to
offer him employment. There are other conditions in the
agreement with regard to matters of discipline during the
apprenticeship.
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Our attention was particularly drawn to the following
provisions in the agreement:
"12. In consideration of the company having agreed
to give the Apprentice training in its Works
(Automobile Division) and to pay the
apprentice the aforesaid daily allowance or
stipend, the apprentices and the surety as
the father or guardian of the apprentice
jointly and severally covenant with the
company as follows:-
(i) That the apprentice will during the whole of
the said term of three years of training
diligently and faithfully serve the company
and to the utmost power and skill attend to
the company’s business at such places and
times as the company or its representatives
shall direct.
*
(v) The apprentice shall immediately on the
satisfactory completion of his training for
the full term of three years serve the
company for a period of five years, if so
required by the company on such conditions as
the company may offer having regard to his
personal qualifications or acquirements and
complying with the Rules & Regulations as are
contained in the Works Standing Orders of the
company".
Without citing all the terms and conditions of the
agreement, it is apparent that an apprentice is not in the
regular employment of the company.
It is, however, submitted on behalf of the appellants
that the words "serve the company" in clause 12(i), which
are repeated in clause (v), introduce a relationship of
master and servant thus constituting apprentice an employee
as ordinarily understood. We attach no special significance
to the use of the words "serve the company" in the above
clauses.
The word ’apprentice’ is not defined in the Act, nor is
it specifically referred to in the definition of ’employee’
by either inclusion or exclusion. We are unable to hold that
in ordinary acceptation of the term apprentice a
relationship of master and servant is established under the
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law. Even etymologically, as a matter of pure English, "to
serve apprenticeship means to undergo the training of an
apprentice" (Chamber’s Dictionary). According to the Shorter
Oxford English Dictionary apprentice is "a learner of a
craft; one who is bound by legal agreement to serve an
employer for a period of years, with a view to learn some
handicraft, trade, etc. in which the employer is
reciprocally bound to instruct him".
Stroud’s Judicial Dictionary puts it thus:
"In legal acceptation, an apprentice is a person
bound to another for the purpose of learning his Trade,
or Calling; the
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contract being of that nature that the master teaches
and the other serves the master with the intention of
learning".
While dealing with the nature of the relationship of master
and servant in comparison with other relationships in
Halsbury’s Laws of England, Third edition, Volume 25, the
following passage appears at para 877, pages 451-452:
"By a contract of apprenticeship a person is bound
to another for the purpose of learning a trade or
calling, the apprentice undertaking to serve the master
for the purpose of being taught, and the master
undertaking to teach the apprentice. Where teaching on
the part of master or learning on the part of the other
person is not the primary but only an incidental
object, the contract is one of service rather than of
apprenticeship; but, if the right of receiving
instruction exists, a contract does not become one of
service because, to some extent, the person to whom it
refers does the kind of work, that is done by a
servant, or because he receives pecuniary remuneration
for his work."
The heart of the matter in apprenticeship is,
therefore, the dominant object and intent to impart on the
part of the employer and to accept on the part of the other
person learning under certain agreed terms. That certain
payment is made during the apprenticeship, by whatever name
called, and that the apprentice has to be under certain
rules of discipline do not convert the apprentice to a
regular employee under the employer. Such a person remains a
learner and is not an employee. An examination of the
provisions of the entire agreement leads us to the
conclusion that the principal object with which the parties
enter into an agreement of apprenticeship was offering by
the employer an opportunity to learn the trade or craft and
the other person to acquire such theoretical or practical
knowledge that may be obtained in the course of the
training. This is the primary feature that is obvious in the
agreement.
Now coming to the legislative history of our country on
the subject, it is interesting to note that more than
hundred years back we had the Apprentices Act, 1850 and its
preamble says "For better enabling children, and especially
orphans and poor children brought up by public charity, to
learn trades, crafts and employments, by which, when they
come to full age, they may gain a livelihood......".
Learning of craft or trade was the essence of the said
legislation. This Act was repealed by section 38 of the
Apprentices Act, 1961. The object of 1961 Act is to provide
for the regulation and control of training of Apprentices in
trades and for matters connected therewith. By the
definition clause under this Act, namely, section 2(a)
"’apprentice’ means a person who is undergoing
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apprenticeship training in a designated trade in pursuance
of a contract of apprenticeship". It is, therefore, inherent
in the word ’apprentice’ that there is no element of
employment as such in a trade or industry but only an
adequate
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well-guarded provision for training to enable the trainee
after completion of his course to be suitably absorbed in
earning employment as a regular worker. The fact that a
trainee may have been absorbed in the company where he is
undergoing the training, is not relevant for the purpose of
comprehending the content of term.
Again we find that where the legislature intends to
include apprentice in the definition of a worker it has
expressly done so. For example, the Industrial Disputes Act,
1947, which is a piece of beneficial labour welfare
legislation of considerable amplitude defines ’workmen’
under section 2(s) of that Act and includes apprentice in
express terms. It is significant that although the
legislature was aware of this definition under section 2(s)
under the Industrial Disputes Act, 1947, the very following
year while passing the Employees’ State Insurance Act, 1948,
it did not choose to include apprentice while defining the
word ’employee’ under section 2(9) of the Employees’ State
Insurance Act, 1948. Such a deliberate omission on the part
of the legislature can be only attributed to the well-known
concept of apprenticeship which the legislature assumed and
took note of for the purpose of the Act. This is not to say
that if the legislature intended it could not have enlarged
the definition of the word ’employee’ even to include the
’apprentice’ but the legislature did not choose to do so.
Even then the question is whether such an apprentice is
an employee within the meaning of the term under section
2(9) of the Act. If the answer is yes, he will be governed
by the Act and the appellants’ claim for charging the
company with liability for payment of special contribution
under Chapter VA of the Act in respect of the apprentice
will be justified.
We may, therefore, turn to the definition of ’employee’
under section 2(9) of the Act. So far as is material,
section 2(9) reads as follows:-
" ’employee’ means any person employed for wages
in or in connection with the work of a factory or
establishment to which this Act applies and-
(i) who is directly employed by the principal
employer in any work of, or incidental or preliminary
to or connected with the work of, the factory or
establishment, whether such work is done by the
employee in the factory or establishment or
elsewhere....."
It is clear that in order to be an employee a person
must be employed for wages in the work of a factory or
establishment or in connection with the work of a factory or
establishment. Wages is defined under section 2(22) and
"means all remuneration paid or payable in cash to
an employee, if the terms of the contract of
employment, express or implied, were fulfilled and
included any payment to an employee in respect of any
period of authorised leave, lockout, strike which is
not illegal or layoff and other additional
remuneration, if any, paid at intervals not exceeding
two months, but does not include......"
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From the terms of the agreement it is clear that
apprentices are more trainees for a particular period or a
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distinct purpose and the employer is not bound to employ
them in their works after the period of training is over.
During the apprenticeship they cannot be said to be employed
in the work of the company or in connection with the work of
the company. That would have been so if they were employed
in a regular way by the company. On the other hand the
purpose of the engagement under the particular scheme is
only to offer training under certain terms and conditions.
Besides, the apprentices are not given wages within the
meaning of that term under the Act. If they were regular
employees under the Act, they would have been entitled to
additional remuneration such as daily allowance and other
allowances which are available to the regular employees. We
are, therefore, unable to hold that the apprentice is an
employee within the meaning of section 2(9) of the Act.
Incidentally we may note that section 18 of the
Apprentices Act, 1961, provides that-
"save as otherwise provided in this Act, every
apprentice undergoing apprenticeship training in a
designated trade in an establishment shall be a trainee
and not a worker...."
The concept of apprenticeship is, therefore, fairly
known and has now been clearly recognised in the Apprentices
Act. Apart from that, as we have noticed earlier, the terms
and conditions under which these apprentices are engaged or
not give any scope for holding that they are employed in the
work of the company or in connection with its work for wages
within the meaning of section 2(9) of the Act. The appeal,
therefore, fails and is dismissed. There will be, however,
no order as to costs.
P.H.P. Appeal dismissed.
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