Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7
PETITIONER:
GHATGE & PATIL CONCERN’S EMPLOYEES’ UNION
Vs.
RESPONDENT:
GHATGE & PATIL (TRANSPORTS) PRIVATE LTD. & ANR.
DATE OF JUDGMENT:
22/08/1967
BENCH:
HIDAYATULLAH, M.
BENCH:
HIDAYATULLAH, M.
BHARGAVA, VISHISHTHA
CITATION:
1968 AIR 503 1968 SCR (1) 300
CITATOR INFO :
RF 1970 SC1334 (12)
ACT:
Motor Transport Workers Act, 1961--Definition of ’Motor
Transport Worker’--’Employed’, meaning of--Industrial
Dispute--Transport company giving trucks on hire to
contractors--Former drivers of trucks becoming contractors
after resigning from service of company--Such contractors
whether Motor Transport Workers--Contract system whether
amounts to unfair labour practice.
HEADNOTE:
The respondent company carried on the business of transport
and removal of goods by road. It owned a fleet of trucks
and employed drivers and cleaners to run them. In 1963 the
company, finding difficulty in observing the provisions of
the Motor Transport Workers Act 1961, introduced a scheme
whereby the trucks, instead of being run by the company
itself were hired out to contractors at a fixed rate per
mile. Employees of the company who were engaged in running
the trucks resigned their jobs and most of them who had for-
merly been drivers became contractors under the scheme. The
workmens’ Union however raised a dispute asking for the
reinstatement of the ex-employees who had been given work on
contract basis. The Tribunal held that the contract system
could not be said to be an unfair labour practice, for the
ex-employees were never coerced or forced to resign their
jobs, and they got more benefits from the contract system
than from their original contract of employment. In appeal
to this Court the Union contended that the ex-employees of
the company continued to be workmen notwithstanding that
they were posed as independent contractors, that the
beneficent legislation conceived in the interests of
transport workers was being set at naught by the company,
and that the setting up of the contract system amounted to
unfair labour practice.
Held: (i) Since the drivers had resigned their jobs they
could not be said to be employed in the Motor Transport
undertaking. The word ’employed’ in the definition of Motor
Transport. Worker is not used in the sense of using the
services of a person but rather in the sense of keeping a
person in one’s service. Persons who are independent and
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7
hire a vehicle for their own operation paying a fixed hire
per mile from their earnings cannot be said to be persons
employed in the Motor Transport Undertaking in the sense of
persons kept in service. The operators were therefore not
Motor Transport Workers within the definition. [304F-H]
(ii) There was no bar in law to the introduction of the con-
tract system. A person must be considered free to so
arrange his business that he avoids a regulatory law and its
penal consequences which he has without the arrangement, no
proper means of obeying. This, of course, he can do only so
long as he does not break that or any other law. [306 B-C]
(iii) Those who resigned did so voluntarily and they got
substantial benefits under the new system. The Tribunal was
right in its conclusion that there was no exploitation of
the ex-employees. There
301
was thus no unfair labour practice. The present case was
not analogous to the case of contract labour when employment
of labour through a contractor or middleman put the labour
at a disadvantage in collective bargaining and thus robbed
labour of an important weapon in its armoury., [305E-306A.]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal NO. 437 of 1966.
Appeal by special leave from the Award dated March 31, 1964
of the Industrial Tribunal, Maharashtra in Reference (IT)
No. 40 of 1963.
H. K. Sowani, K. Rajendra Chaudhuri and K. R. Chaudhuri, for
the appellant.
H. R. Gokhale and 1. N. Shroff, for respondent No. 1.
The Judgment of the Court was delivered by
Hidayatullah, J. This is an appeal by special leave against
the award dated March 31, 1964 of the Industrial Tribunal,
Maharashtra in a Reference by Government under s. 10(1)(d)
of the Industrial Disputes Act, 1947. The appellant is a
Trade Union established on January 1, 1962 by the employees
of Ghatge & Patil (Transports) Private Ltd. and the
respondent is the Company. The Company has its registered
office at Kolhapur and is engaged in the transport and
removal of goods by road. It operates on a large scale
owning at the material time as many as 70 trucks and plies
them from Kolhapur (where the registered office of the Com-
pany is situate) to far off places such as Bombay, Poona,
Bangalore, Goa and Madras.
On January 14, 1963, the Union served a notice of demand
upon the Company asking for the abolition of a newly
introduced contract system for the running of vehicles.
This was referred first to the Conciliation Officer, but
later the reference was made by Government as stated
already. The dispute arose in the following circumstances:
For the operation of its trucks the Company was previously
employing 70 drivers and an equal number of cleaners. On
January 8, 1963, the Company advertised in a local newspaper
of Kolhapur that it had trucks in working condition for sale
and also trucks in working condition to be given for plying
on a contract system. As many as 54 drivers applied for
obtaining contracts having resigned their service as
drivers. The Company then entered into agreements with
these drivers between January 9 and 31. Each driver
received one motor truck for operation according to the
terms of the agreement. A model agreement has been produced
in the case in which the parties, after reciting that there
were difficulties in operating motor transport vehicles,
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7
because of the passing of the Motor Transport Workers Act,
stated that the agreement was being entered into for the
operation of the trucks. It is not necessary either to set
out the agreement or to analyse all its terms.
302
For our purpose it is sufficient to say that the Company let
to these former drivers (to whom we may refer as operators)
a truck each on condition that they paid the Company Re.
1.00 per mile for its use. The Company on its part
undertook to supply fuel, oil tyres, tubes, etc. for the
purpose of running the vehicle. Under this agreement the
operator was at liberty to canvass for goods and transport
them but he was required to give the utmost priority to the
goods entrusted to the Company for transport. In this way
the goods booked with the Company were transported by the
operator s in priority and they paid Re. 1.00 per mile for
the use of the truck , all other expenses being borne by the
Company. The operator s were required to bring all the
gross receipts to the Company which deducted its own charges
at Re. 1.00 per mile and handed over the balance. The
operators were responsible for any damage to the vehicle,
save normal wear and tear, and were required to observe the
terms and conditions of the permit held by the Company. In
this way, the Company continued to function as a transport
undertaking while the trucks were not run through paid
servants but through independent contractors.
The above move by the Company was necessary (so the Company
admits) because of the passing of the Motor Transport Wor-
kers Act, 1961, on May 20, 1961. This Act was passed to
provide for the welfare of Motor Transport workers and to
regulate the conditions of their work. It applies to Motor
Transport Undertakings, by which is meant, among other
things, undertakings engaged in carrying goods by road for
hire or reward. Such undertakings are required to register
under the Act and an inspecting staff is brought into
existence for the purpose of seeing that the requirements of
the Act are carried out. The fourth chapter of the Act
(headed "Welfare and Health") requires the Motor Transport
Undertakings to provide canteens in every place where 100
Motor Transport workers or more are employed-, rest rooms
for the use of such workers, uniforms, medical and First-Aid
facilities. The fifth chapter prescribes the hours of work
for Motor Transport workers and in ordinary circumstances
puts a ceiling of 48 hours in a week and a maximum of 8
hours a day and a daily interval for rest after 5 hours of
work, with a spreadover of not more than 12 hours in every
day. It also provides for a day of weekly rest. The sixth
chapter prohibits the employment of children, enjoins the
carrying of tokens by employees and provides for their
medical examination. The seventh chapter applies the
Payment of Wages Act and provides for annual leave with
wages and extra wage for overtime. The eighth chapter
provides for penalties and procedure and the ninth chapter
gives power to the Government to grant exemptions, to make
rules and to give directions. Section 37, which is in this
last chapter, provides that the provisions of the Act shall
have effect notwithstanding anything inconsistent therewith
contained in any other law or in the terms of any award,
agreement or contract of service whether made before or
after the commencement of this Act but not so as to take
away from a Motor Trans-
303
port worker an existing benefit which is more favourable
than those under the Act or to prevent him from entering
into an agreement for better rights and privileges than
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7
those given to him by the Act.
The Company frankly admitted at all stages that it was
impossible for it to implement all the conditions of the Act
in respect of the drivers of motor vehicles. It stated that
its motor drivers. while working in its employment, were
required to go on long journeys and it was practically
impossible to enforce the conditions of hours of work or of
rest. Since this entailed penal consequences and the
possibility of the permits being cancelled, the Company was
forced to adopt a system under which it would not be requir-
ed to observe the Act because under it the truck drivers
became independent contractors and were therefore not within
the ambit of the Act. On the other hand, the Union
contended that this arrangement was invented to nullify the
beneficial legislation intended to improve the conditions of
Motor Transport workers in general and truck drivers in
particular. Under the system, the Union submitted, the
drivers lost the benefit of leave of various kinds, over-
time payment, Provident Fund, gratuity and insurance and
there was no control either in respect of hours of work or
of rest which were the main objects of the Act to secure.
"The matter of dispute referred to the
Tribunal was:--
"The contract system for the running of
vehicles which has been newly introduced, must
be abolished immediately. Such ex-employees
of the Company who have been given this work
on contract basis should be reinstated with
back wages".
The Tribunal held that the first part as also the second
referred to the 54 drivers who had resigned their jobs and
become operators. The Tribunal saw difficulty in acting on
the second part because the drivers had resigned. In
dealing with this problem the Tribunal considered the
evidence and came to the conclusion that the drivers were
not coerced or forced to take this action. The Tribunal
then posed the question, how to re-instate persons who had
voluntarily resigned their services and could not be said to
be dismissed, discharged or retrenched within the Industrial
Disputes Act? The Tribunal also held that the agreements
were simple agreements for transport of goods and were
essentially fair to the operators. Of course, there were
advantages as well as disadvantages but the employees not
being servants were free agents and could do the work as and
when they liked and even accept work from others. They thus
got, what they considered, more benefit from the contract
system than from their contract of employment. None of the
drivers had appeared to complain against the new system.
There was also nothing to show that this system took unfair
advantage of the former drivers. The Tribunal, therefore,
held that the contract system could not be described as an
unfair labour practice. The Tribunal also commented that
under the agreements
304
themselves the contract was capable of being terminated by
three days’ notice on either side and hence it was hardly
necessary for the Union to take recourse to a Tribunal for
getting it abolished. Holding that the new system could not
be said to be an unfair or anti-labour practice the Tribunal
rejected the claim of the Union. The Union now appeals by
special leave.
The argument on behalf of the Union centres round two facts.
Firstly, that the resignation of the drivers and cleaners
and the setting up of the contract system amounts to an
unfair labour practice and exploitation of labour because by
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7
this device these and other transport workers are being
victimized; and, secondly, the salutary and beneficial
legislation conceived in the best interest of the transport
workers is being deliberately set at naught. According to
the Union the operators continue to be workmen notwith-
standing that they are posed as independent contractors
hiring the trucks. By this system many of the benefits
secured to the Motor Transport workers including drivers and
cleaners, have been made inapplicable to a section of Motor
Transport workers, namely, the former drivers and cleaners
employed by the Company. The argument on the side of, the
Company is that the hiring out of trucks to the operators is
not illegal and does not amount to exploitation of the
former drivers or an unfair labour practice. According to
the Company the operators are free agents and freely
resigned their jobs and the Company points out that even
the, office-bearers of the Union were among those who
resigned as drivers and entered into agreements to become
operators. The Company further points out that many of the
contracts were entered into after the, present reference was
made to the Tribunal.
There is no doubt that the Company is a Motor Transport’
Undertaking because it is engaged in carrying goods by road
for hire or reward. Since the drivers have resigned their
jobs they cannot be said to be employed in the Motor
Transport Undertaking. The word "employed" in the
definition of Motor Transport worker is not used in the
sense of using the services of a person but rather in the
sense of keeping a person in one’s service. The definition
is, of course, made wide to take in all persons working in a
professional capacity in an undertaking for running its
affairs in any capacity and not only persons employed on
wages. The word "wage" has the meaning given to the word in
the Payment of Wages Act and takes in all paid employees and
also persons who are employed in a professional. capacity
although not in receipt of wages. Persons who are
independent and hire a vehicle for their own operation
paying a fixed hire per mile from their earnings cannot be
said to be persons employed in the Motor Transport Un-
dertaking in the sense of persons kept in service. The
operators, therefore, are not Motor Transport workers within
the definition.
The Act is not only intended to confer benefits on Motor
Transport workers but is also regulatory with penal
consequences.
305
The apprehension of the Company is- that some of the
regulatory provisions of the Act are incapable of being
observed properly in the case of drivers and cleaners going
on long journeys because there is no means of enforcing
them. For example, the provisions about hours of work,
hours of rest etc. are not easy to enforce enroute or at far
off places. Therefore, rather than run the risk of losing
the permit for want of compliance with the Motor Transport
Workers Act, the Company has decided not to run transport
trucks itself but to let them be run by independent hirers.
There does not appear to be any bar in law to such action.
Section 59 of the Motor Vehicles Act contemplates the
transfer of permits with the permission of the Transport
Authorities and this enables any person to whom a vehicle
covered by the permit is transferred to get the right to use
the vehicle in the manner authorised by the permit. Here
the vehicle is not transferred but is only let out on hire
and hence there is prima facie no need for permission. The
Union made no attempt before us to establish that the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7
inauguration of the contract system offended the Motor
Vehicles Act or was prohibited under it. No objection to
the system by the Authorities under the Motor Vehicles Act
was proved in the case. The operators also seem to be happy
because no operator appeared to complain and the only
dissatisfaction has been registered by the Union which
apparently lost the allegiance of some of its former members
and even office bearers. In view of the findings of the
Tribunal, which we see no reason to disapprove, it must be
held that the drivers voluntarily resigned and entered into
the agreements since they apparently considered them to be
more favourable than the terms of their former employment.
In this view of the matter it is difficult to hold that the
Tribunal was wrong in its conclusion that there was no ex-
ploitation of the drivers. It is also equally true that
there is no bar in law to the introduction of the system.
The Union, however, contends that on the analogy of some
cases of this Court in which contract labour was put down as
unfair labour practice because it involved exploitation of
labour, we should declare this system also to be harmful to
the interests of labour. Contract labour was declared in
this Court to be an unfair labour practice because the
intention was to introduce a middle man to avoid observance
of laws and to deny to labour the advantages it had acquired
by bargaining or as a result of awards. Such is hardly the
case here. The two systems were there for the drivers to
choose. It is reasonable to think that the drivers must
have chosen a system which was considered by them to be more
beneficial to themselves. There was no compulsion for the
drivers to resign their jobs and they did so voluntarily
obviously thinking that the new system was more profitable
to them. We cannot lose sight of the fact that some of the
office-bearers of the Union were among the first to resign.
Many of the drivers resigned the jobs and entered into
agreements even after the dispute was taken up by the Union.
The present case is, therefore, not analogous to the case of
306
contract labour where employment of labour through a
contractor or middleman put the labour at a disadvantage in
collective bargaining and thus robbed labour of an important
weapon in its armoury.
The matter of dispute no doubt referred in the second part
to ex-drivers but it referred generally to the new system in
the first. The Tribunal was wrong in thinking that the
first part also referred to the ex-drivers (now operators).
On the whole, however, it is clear that the Company has not
done anything illegal. A person must be considered free to
so arrange his business that he avoids a regulatory law and
its penal consequences which he has, without the
arrangement, no proper means of obeying. This, of course,
he can do only so long as he does not break that or any
other law. The Company has declared before us that it is
quite prepared, if it was not already doing so, to apply and
observe the provisions of the Motor Transport Workers Act in
respect of its employees proper where such provisions can be
made applicable. In view of this declaration we see no
reason to interfere, because Parliament has not chosen to
say that transport trucks will be run only through paid
employees and not independent operators. The appeal fails
but in the circumstances of the case we make no order as to
costs.
G.C Appeal dismissed.
307
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7