Holding

An appraiser engaged on a commission basis without the bank's right to control the manner of work does not constitute a master‑servant relationship and therefore is not a "workman" under the Industrial Disputes Act, 1947.

Summary

The Puri Urban Cooperative Bank engaged Madhusudan Sahu as an appraiser on a commission basis to weigh and assess gold ornaments pledged for loans, with his services terminable at any time. After about 19 months the bank terminated his engagement, and the Labour Court, on a government reference, set aside the termination and ordered his reinstatement, denying back wages. Both parties appealed, and the High Court upheld the Labour Court's decision, holding Sahu to be a "workman" under Section 2(s) of the Industrial Disputes Act, 1947. The Supreme Court examined whether a master‑servant relationship existed, focusing on the degree of control the bank could exercise over Sahu's work. It found that Sahu retained freedom in how he performed the appraisal, was not obliged to accept work, and the bank had no right to supervise the manner of his work, indicating the absence of a master‑servant relationship. Consequently, the Court held Sahu was not a workman for the purposes of the Act and set aside the lower courts' orders, allowing the bank's appeal.

Issues considered

Whether the engagement of an appraiser on a commission basis creates a master‑servant relationship within the meaning of the Industrial Disputes Act, 1947.
Whether the appraiser qualifies as a "workman" under Section 2(s) of the Industrial Disputes Act, 1947.

Legislation cited

Industrial Disputes Act, 1947s. 2(s)

Subjects

master‑servant relationshipworkman definitionIndustrial Disputes Actappraisercommission basistermination of servicereinstatementback wages

Judgment

MANAGEMENT OF MIS. PURI URBAN COOPERATIVE BANK A
v.
MADHUSUDAN SAHU AND ANR.

APRIL 29, 1992

)... [LAUT MOHAN SHARMA AND MADAN MOHAN PUNCHHI, JJ.] B

Industrial Disputes Act, 1947:

="""'-
Section 2(s)--Appraiser engaged by Bank for weighing and testing gold

l
ornaments brought to Bank for pledging-Remuneration 011 commission c
basis-No relationship of master and servant-Whether a workman.
).., The respondent was engaged as an appraiser by appellant bank, for
weighing and testing, gold ornaments offered to be pledged to the appel-
lant-Bank to secure loans, whenever required on commission basis. His
services were terminable at any time. After about one year and seven D
months the appellant Bank terminated his services. On a reference from
the Government, at the instance of the respondent, the Labour Court set
aside the termination order, holding it as illegal and unjustified and
ordered his reinstatement in service. However, it held that he was not
entitled to back wages since those were not capable of a precise computa- E
tion and involved an ·element of speculation.
-t
On appeal by both the appellant-Bank as well as the respondent, the
High Court affirmed the view of the Labour Court.

In the appeal before this Court on behalf of the appellant-Bank, it F
was contended that though the appellant might be a workman as common-
ly understood. unless there was a jural. relationship of master and servant
~~·
between the respondent and the Bank, he could not be termed as a
workman, for the purposes of the Industrial Disputes Act, 1947.

Allowing the appeal, this Court,
G

HELD : 1.1. Though the respondent claims to be a workman as com-
monly understood, be was not 'employed' as such, so as to establish a mas-
).- ter and servant relationship, which could warrant a re~union in the event
the
of disruption, by. intervention of the Labour Court. (980 H, 981 A) H
977
978 SUPREME COURT REPORTS (1992} 2 S.C.R.

A 1.2. Engaging the respondent was to require him to weigh the oma·
ments, brought in the Bank for pledging and to appraise their quality, ~
purity and value. He could be directed to do this, but not the manner in
which be shall do it. That was left to him exclusively, as it depended on bis
skill, technique and experience. Besides, under the terms or engagement
be was required to, and be did, execute a bond indemnifying and holding
B himself responsible to the Bank for all his acts and commissions as an
....(
appraiser, and be accountable for the loss sustained by the Bank on
account or under-valuation or the gold pledged with it. These terms inhered
in the Bank the power to warn him and to remind him that he. was not

c
expected to be negligent in his duty. Still there was a fair element of
freedom though coupled with responsibility for the respondent in the
.........
...,..
manner in which he could do his work. (980 F·G]

1.3. It is also an uncontroverted position that the respondent was a ~
reputed goldsmith and had remained gainfully employed so as to disentitle
him any back wages and that the Bank has, on its approved list, other such
D like appraisers and it was not obligatory for the Bank to allot work to the
~spondent or any other, at all. Additionally, in no event can he ask for
work, or periodic remuneration or idling wages. These particulars, not by
thems~lves, but in the totality of circumstance indicate lack of master and
servant relationship. (981 BJ .
E
1.4. In the circumstances, the courts below were wrong in holding ...,._
that any master and servant relationship stood established in engaging the
respondent as an appraiser or ornaments. (981 CJ

F
D.C. Works Ltd. v. State of Saurashtra, AIR 1957 SC 264 and Chin·
taman Rao v. State of-M.P., AIR 1958 SC 388, referred to. -
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1813 of
1992.
-r/-
From the Judgment and Order dated 14.3.1991 of the Orissa High
G Court in O.JC No. 1483 of 1985.

Narasing Murthy, Kirti Mishra and Sanjib Das for the Appellant.

The Judgment of the Court was delivered by

H 'PUNCHHI, J. In this matter challenge has been made to the jtidg·
PURI CO-OP. BANK v. M. SAHU [PUNCHHI, J.) 979

ment and order dated 14.3.1991 of the Orissa High Court passed in OJC A
~ No. 1483 of 1985. Notice was issued to Madhusudan Sahu, respondent, the
.. person concerned, indicating that the matter shall be disposed of at the
notice stage. Despite presumptive service, no one appeared on his behalf.
We heard only learned counsel for the appellant.
B
.. >- Special leav.! is granted.

The respondent, Madhusudan Sahu (hereafter referred as "Sahu")
was engaged as an appraiser by Puri Urban Cooperative Bank, the appel-
,__. lant herein, pursuant to an advertisement dated January 10, 1978. As an
y
appraiser his job was to be available in the Bank, when called, for perform-c
ing the services of weighing and testing the gold ornaments offered to be
pledged to the Bank to secure loans. It was stipulated in the advertisement
">- that the appraiser's commission (termed wages by the High Court) shall
be 25 paisa per hundred rupees of loan but in no case shall remuneration
be less then Rs. 2 per appraisal. Besides the said commission/wages the D
appraiser could claim no other sum for his services. As stipulated, Sahu's
services were terminable at any time. His services were terminated by the
Bank on 27.8.1979. He successfully sought a reference from the Govern-
ment to the Labour Court. The Labour Court went into the matter and
vidc Award dated March 27, 1985; set aside the order of termination
E
terming it as illegal and unjustified, ordering Sahu's reinstatement in ser-
vice. He was held disentitled to back wages since those were not capable
of a precise computation and involved an element of speculation. The
appellant-Bank as well as Sahu approached the High Court of Orissa
challenging correspondingly the Award of the Labour Court insofar as it
had gone agai1:1St their respective interests. The High Court affirmed the F
view of the Labour Court, which has given cause to the appellant-Bank to
move this Court.
""""""'-··•(
The High Court has taken the view, as did the Labour Court, that
Sahu is a worker as defined in Section 2(s) of the Indus.trial Disputes Act, G
1947 and on that basis alone entitled to reinstatement. The word 'workman'
has been defined therein to mean any person, including an apprentice,
employed in any industry to do any manual, unskilled, skilled, technical,
~ operational, clerical or supervisory work for hire or reward, whether the
terms of employment be express or implied. That does not include inter H
980 SUPREME COURT REPORTS (1992) 2 S.C.R.

A alia ~rsons employed in supervisory capacity drawing wages exceeding Rs.
1600 per mensem etc. Due to the wide amplitude of the definition of the
word 'workman' the High Court endorsed the view of the Labour Court
that Sahu was a workman and thus came within the definition, and was thus
.entitled to the protection of the Industrial Disputes Act, 1947.
B
It was contended on behalf of the appellant that the appellant may
be a workman as .commonly understood, but work of appraising in the
context is partly manual, as goes the weighing part, and partly mentai as
goes the appraising part, wholly or partially skilled and/or technical and
wages/commission for that work may fall within the expression 'hire or
c reward'. Still, it is maintained, that unless there was a jural relationship of
master and servant between Sahu and the Bank, he could not be termed
as a workman, for the purposes of the Industrial Disputes Act, 1947. It
stands established that Industrial Law revolves on the axis of master and
servant relationship and by a catena of precedents it stands established that
D the prima f acie test of relationship of master and servant is the existence
of the right in the master to supervise and control the work done by the
servant (the measure of supervision and control apart) not only in the
matter of directing what work the servant is to do but also the manner in
which he shall do his work. See in this regard D.C. Works Ltd. v. State of
Saurashtra, AIR 1957 SC 264 at p. 268 and Cltintaman Rao v. State of M.P.,
E AIR 1958 SC 388 at p.392. And this principle holds the field.

Now engaging Sahu was to require him to weigh the ornaments
brought in the Bank for pledging and to appraise their quality, purity and
value. He could be directed to do this but not the manner in which he shall
f do it. That was left to him exclusively, as it depended on his skill, technique
and experience. Besides under the terms of engagement he was required
to, and he did, execute a bond indemnifying and holding himself respon~
sible to the Bank for all his acts and commissions a.s an appraiser, and be
accountable for the loss sustained by the Bank on account of under~valua
' .._
tion of the gold pledged with it. These terms inhered in the Bank the power
G to warn him and to remind him that he was not expected to be negligent
in his duty. Still there was a fair element of freedom though coupled with
responsibility, for Sahu in the manner in which he could do his work.

Therefore, we are of the view that though Sahu claims to be a
R workman as commonly understood, he was not 'employed' as such, so as
PURI CO-OP. BANK v. M. SAHU [PUNCHHI, J.) 981

to establish a master and servant relationship, which could warrant a A
re-union in the event of disruption, by the interventio11 of the Labour Court.
The allegation of the Bank before the Labour Court, as well as here, that
Sahu is a reputed goldsmith and had remained gainfully employed so as to
disentitle him any back wages, which appealed to the Labour Court, has
remained uncontroverted before us. It also remains uncoJitroverted before
us that the Bank has, on its approved list, other such like appraisers and B
it is not obligatory for the Banlc to allot work to Sahu or any other, at all.
. Ad&tionally, in no event can he ask for work, or periodic remuneration or
idling wages. These particulars, not by themselves, but in the totality or
circumstances mdicate lack of master and servant relationship.

In view of these jurisdictional facts, as gathered by us, it is diffiCult
to uphold the view of the High Court and that of the Labour Court that C
any master and servant relationship stood established in engaging Sahu as
~ appraiser of ornaments.

For these reasons this appeal is allowed, setting aside the orders of
the High Court of Orissa and that of the Labour Court, but without costs. ·

N.P.V. Appeal allowed.

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