MESSRS. P.M. PATEL & SONS AND OTHERS, ETC.versusUNION OF INDIA AND OTHERS, ETC.

                                                                 55

                                                                      A
           MESSRS. P.M. PATEL & SONS AND OTHERS, ETC.
                               v.
                UNION OF INDIA AND OTHERS, ETC.

                      SEPTEMBER 25, 1985
                                                                      B
   [V·D· TULZAPURKAR, R.S. PATHAK AND AMARENDRA NATH SEN, JJ.]

     Employees' Provident Funds and Miscellaneous Provisions Act
1952 Section 2(f) - Workers employed at their homes in
manufacture of beedis - Whether entitled to benefit of the Act.
                                                                      c
      Relationship of Master and servant - Element   of personal
service - Of little significance when test of        control and
supervision enables a right of rejection.

        The labour employed in the manufacture of beedis consists
of different categories. At the factory, which constitutes the        D
 formal establishment, there are administrative and cleriCal
staff, accountants, packers, checkers and bhattimen, The work of
rolling the beedis itself is done by one or the other of
different categories of workers. The first category is where the
'iiork may be entrusted by the manufacturers directly to workers
who prepare the beedis at home after obtaining a supply of the ·      E
raw material consisting of tobacco, beedi leaves and thread from
 the lllllllUfacturers. The second category consists of workers
employed by the manufacturers through contractors and the
manufacturers pass on the raw material to such workers for
rolling the beedis in their dwelling houses and then supplying
beedis. There is thus a direct relationship between the
manufacturers and workers. The third category of home workers are     F
those to whom the work is entrusted by independent contractors
who treat the workers aa their own employees and get the work
cloDe by them either at their own premises or in the dwelling
' - a of the workers in order to fulfil and complete contracts
entered into with the manufacturers for the supply of the
fillished product from the raw. material supplied. .bY the            G
manufacturers to the contractors.

      The home workers attend the factories within specified
hours everyday and collect the raw material for taking to their
homes for rolling beedis, In the case of home workers who hold a
direct relationship with the manufacturers, the rolled beedis are
brought by the home workers to the factory and the beedis which       H
    56               SUPREME COURT REPORTS      [1985] SUPP.3 s.c.R.

A
  conform to the standards envisaged by the manufacturers are
  accepted while those which do not are rejected. The staff at the
  factory maintains registers in which regular entries are made of
  the raw material supplied to home workers, and of the rolled
  beedis which are delivered by them at the factory. The payment of
B wages to such home workers may be made directly or distributed
  through the contractors engaged by the manufacturers. In the case
  of contracts between the manufacturers and independent
  contractors, the manufactured product is collected by the
  contractors from their home workers and delivered to the
  manufacturer. The manufacturer is concerned only with the payment
  under the contract to the contractors, and the payment of wages
C to the home workers is a matter between the contractors and the
  home workers.

        The Employees' Provident Funds and Miscellaneous Provisions
  Act, 1952 provides for the institution of provident funds for
  employees in factories and other establishments. Originally, it
  did not extend to the beedi industry. For the first time, by a
D Notification dated May 17, 1977 made by Government of India the
  beedi industry was added to Schedule I of the Act with effect
  from May 31, 1977. This was followed by another Notification
  dated May 23, 1977 issued by the Central Government amending
  clause (b) of sub-paragraph 3 of paragraph I of the Employees'
  Provident Funds Scheme, 1952 in order to bring the beedi industry
E within the province of that scheme with effect from May 31, 1977.
  The Central Government Provident Funds Conmissioner thereupon
  wrote to all the Regional Provident Funds Comnissioners for the
  enforcement of the scheme in the beedi industry.

          The petitioners in the Writ Petitions who were engaged in
F the manufacture and sale of beedis, challenged the constitutional
  validity of the Notifications dated May 17, 1977 and May 23,
  1977, and the enforcement of the Scheme in so far as it related
  to home workers and sought a declaration that the Employees'
  Deposit-Linked Insurance Scheme and the F.mployees' Family Pension
  Scheme framed under the Employees' Provident Funds Act are
G unenforceable in respect of the beedi industry, contending that:
  (i) while the Employees' Provident Funds Act and the Scheme may
  be applicable to the workers employed in the factory itself, they
  cannot be extended to home workers because there is no relation-
  ship of employer and employee between the manufacturers and the
  home workers, (ii) the Employees' Provident Funds Act and the         t:=-
H Scheme cannot be applied to home workers in the beedi industry
  illSSDIUCh as they are subject to no retirement age and there is no
                                P.M. PATEL V• U.O.I.                     57

                                                                               A
         power in the lll&llllfacturer to retire such home workers . on the
         ground of aupermmuation, and (iii) the enenaion of the Schelle
         to the beedi industry constitutes an unreasonable restrictiou on
         the flmdamental Bights of the petitioners guaranteed by sub-cl.
         (g) of clause (1) of Article 19 of the Conatitutiou and also
        ·violates Articles 14 and 31 of the Conatitution iD&SllllCh as the     B
         ffn•ncfal burden occasioned thereby is so excessive that it is
         obvious that the Central Government did not apply its l!lind to the
         paying capacity of the industry•

               Oa the question whether the workers employed at their homes
         in the lll&llllfacture of beedis are entitled to the benefit of the   c
         F.mployees' Provident Funds Scheme and Miscel.laaeous Provisiona
         Act 1952 and the Schemes fr8J!ll!d thereunder.

               Dismissing the Writ Petitiona,

                lll!LD: l. The home workers are "employees" within the         o
         definitiou of 'employee' contained in clause (f) of s. 2 of the
         F.mployees' Provident Fuads Act 1952, and the Schemes framed
          thereunder. The terms of the definition of 'employee' in section
         2(f) of the Act are wide. They include not only persona employed
         directly by the employer but also persona employed through a
         contractor. Moreover, they include not only persona employed in       E
         the factory but also persona employed in conaectiou with the work
         of the factory. A home worker, by virtue of the fact that he
         rolls beedis, is involved in an· activity connected with the work
         of the factory. It is therefore not possible to accept the narrow
         construction sought by the petitioners that the words 'in
         connection with' in the definition of 'employee' in section 2(f)
         lmlBt be confined to work performed in the factory itself as a        F
         part or the total process of the lll&llllfacture. [67 G, 63 C-E]

                2. The conditions and the circumstances in which the home
          workers of a single manufacturer go about their work, including
          the receiving of raw material, rolling the beedis at home and
          delivering them to the lll&llllfacturer subject to the right of      G
          rejectiou indicates sufficient evidence of the requisite degree
          of control and supervision for establishing the relationahip of
          master and servant between the manufacturer and the home worker.
          The work of rolling beedis is not of a sophisticated nature,
          requiring control and supervision at the time when the work is
,,,,.   · done. It is a simple operation which has been performed
          satisfactorily by thousands of illiterate workers. It is a task      H
          which can be performed by young and old, men and women, with
    58                SUPREME COURT REPORTS      [1985] SUPP.3 S.C.R.

A
    equal facility. It does not require a high order of skill. 7'be
    right of rejection can constitute in itself an effective degree
    of superviaion and control, and there is evidence to show that
    the rejection takes place iu the presence of the home 'l>'Orker.
    This factor however plays a merely supportive role in determining
    the existence of the relationship of master and servant. 7'be
B
    element of personal service ia of little significsnce when the
    test of control and superviaion lies in the right of rejection.
    (67 C-F]

           Sbri CbintallSD Bao and Another v. The State of Madhya
    Pradesh, [1958] s.c.R. 1340, Sbri Jlirdhicbsnd Shsrllla v. First
    Civil Judae, lilagpur and Others, [1961] 3 S.C.R. 161. Sbankar
c   lalaji liaje v. State of Maharashtra [1962] Suppl. l s.c.R. 249,
    M/so Orissa Cenent Ltd. Vo Onion of India, [1962] Suppl. 3 S.C.R.
    837, DoC• Dewan Mob1ndeen Sahib and Solls Vo The Industrial
    Tribunal, lladras, (1964] 7 s.c.R. 646, Silver Jubilee Tailor.Ing
    !louse Vo Chief Inspector of Shops & Establisi-nts, [1974] l
    s.c.R. 747, Mangalore Ganeah Beedi Works etc. v. Union of India
    etc. [1974] 3 s.c.J,l. 221, referred to.
D
          3. Clause (a) of sub-para. (l) of Para 69 of the Employees'
    Provident Funds Scheme provides thst "a member may withdraw the
    full amount standing to his credit in the fund on retiring from
    service after attaining the age of 55 years". The law does not
    envisage the fixation of a retirement age before that provision
E
    csn apply. A worker is entitled ~o withdraw the moount in the
    Fund if he retires at any time after attaining the age of 55
    yesrs. There is no reference to any pre-determinded age of
    superannuation. [68 A-BJ

          4. The expression 'retirement' does not, in the absence. of
F   anything more, necessarily imply a fixed age for leaving service.
    It baa a wide connotation. In a context where no age of
    superannuation has been fixed, the expression IWSt take on its
    ordinary meaning of the normal cessation of service by an act of
    the employer or of the worker• That a person may retire even
    before reaching any specified age is exemplified by cl. (b) of
G   sub-para (l) of para 69 whicb speaks of "retirement on account of
    permanent and total incspacity for work due to bodily or mental
    infirmity." [68 CJ          .

          Delhi Cloth & General llills Co. Ltd. v. Workmen and other
    etc. [1969] 2 s.c.R. 307, referred to.
H
          Regfonsl Provident Fund Cccmrlssioner, Andhra Pradesh Vo
    Sbr1 T.So Baribaran, [1971] Suppl. s.c.R. 305, diatinguished·
                    P.M. PATEL v. U.O.I. [PATHAK, J.]              59

                                                                         A
          5. The Beedi and Cigar Workers (Conditions of &iployment)
    Act, 1966 and the Hules made thereunder by the Maharashtra
    Gowrmaent haw been framed specifically on the basis that in
    certain matters home workers enjoy a status akin to the . general
    category of workers. In the Maharashtra Beedi and Cigar Workers
    (Conditions of &iployment) Hules 1968, there is specific             B
    provision in respect of the payment of wages to home workers• 'lbe
    contention that the provisions of the &iployees Provident Funds
    Act and the .Schemes cannot be implemented at all in respect of
    the beedi industry has therefore to be rejected. [69 C, E, F)

          ORIGINAL JURISDICTION : Writ Petitions Nos• 3605 to 3609 of    C
    1978 etc.

          (Under Article 32 of the Constitution of India.)

          M.N. Phadke, B. Kanta Rao, M.Q. Qazi, V.N. Ganpule and
    Mrs. Veens Khanna for the Petitioners.                               D
•
         Abdul Khader, Girish Chander and Miss A. Subhashini for the
    Respondents.

          Mr. Rameshwar Nath for the Interveners.
                                                                         E
          The Judgment of the Court was delivered by

          PATHAK, J. This and the connected cases raise the important
    question whether the ·workers employed at their. homes in the
    manufacture of beedis are entitled to the benefit of the
    Employees' Provident Funds and Miscellaneous Provisions Act, 1952
    and the Scheme framed thereunder•                                    F

         . The question for consideration is surrounded by a welter of
    facts, many of which are disputed through affidavits filed on the
    recotd, and it has not been an easy task to pick our way through
    them to arrive at an intelligent and coherent picture for the
    purpose of deciding these cases •. We propose to take Writ           G
    Petitions Nos. 3605 to 3609 of 1978 filed by Messrs. P.M. Patel &
    Sons and others as the leading group of cases, because the
    principal arguments on the several points arising in these cases
    were argued by learned counsel in those writ petitions.

          The petitioners are engaged in the manufacture and sale of
    beedis. lbe labour employed in the manufacture of beedis consists    H
    of different categories. At the factpry, which constitutes the
    formal establishment, there is an administrati".e and clerical
    60                 SUPREME COURT REPORTS     [1985] SUPP.3 s.c.R.


  staff, accountants, packers, checkers and bhattimen. The work of
A rolling the beedis itself is done by one or the other of
  different categories of workers. The work may be entrusted by the
  manufacturers directly to ~orkers who prepare the beedis at home
  after obtaining a supply of the raw material consisting of
  tobacco, beedi leaves and thread from the manufacturers. Another
  category consists of workers employed by the manufacturers
B through contractors, and the manufacturers pass on the raw
  material to such workers for rolling the beedis in their dwelling
  houses, and there is, in a sense, a direct relationship between
  the manufacturers and those workers. The third category of home
  workers are those to whom the work is entrusted by independent
  contractors who treat the workers as their own employees and get
  the work done by them either at their own premises or in the
c dwelling homes of the workers in order to fulfil and complete
  contracts entered into with the manufacturers for the supply of
  the finished product from the raw material supplied by the
  manufacturers to the contractors. According to the manufacturers
  the home workers attend at the factories within specified hours
  every day and collect the raw material for taking to their homes
  for rolling beedis. While that is true of home workers employed
D directly by the manufacturers or who have been placed in employ-
    men~   through contractors with the manufacturer, in the case of
  home workers employed by independent contractors that may not be
  so. In the case of home workers who hold a direct relationship
  with the manufacturers, the rolled beedis are brought by the home
  workers to the factory and the beedis which conform to the
E standards envisaged by the manufacturers are accepted while those
  which do not are rejected. The acceptance or rejection is
  effected in the presence of the home worker to whom the work was
  entrusted. The staff at the factory maintains registers in which
  regular entries are made of the raw material supplied to home
  workers, and of the rolled beedis which are delivered by them at
F the factory. The payment of wages to such home workers may be
  made directly or distributed through the contractors engaged by
  the manufacturers for engaging them. In the case of contracts
  between the manufacturers and independent contractors, the manu-
  factured product is collected by the contractors from their home
  worker and delivered to the manufacturer. It is evident that the
G manufacturer is concerned only with payment under the contract to
  the contractors, and the payment of wages to the home workers is
  a matter between the contractors and the home workers.

        The Employees' Provident Funds and Miscellaneous Provisions
  Act, 1952 (hereinafter referred to as the "Employees' Provident
H Funds Act") provides for the institution of provident funds for
                                                                        -
                 P.M. PATEL v. U.Q.I. [PATHAK, J.]                61


employees in factories and other establishments. Originally, it         A
did not extend to the beedi industry. For the first time, by
Notification No. GSR, 660 dated May 17, 1977 made by the
Government of India under sub-s. (1) of s. 4 of that Act, the
beedi industry was added to Schedule I of the Act with effect
from May 31, 1977. This was followed by Notification No. GSR. 677
dated May 23, 1977 issued by the Central Government amending            B
clauS.j! (b) of sub-paragraph 3 of paragraph l of the Employees'
Prov+aent Funds Scheme, 1952 (hereinafter referred to as the
"Scheme~') so as to bring the beedi industry within the province
of that Scheme with effect from May 31, 1977. Closely thereafter,
the Central Government Provident Funds Collllllissioner wrote to all
the Regional Provident Funds Collllllissioners about the extension of   C
the Scheme to the beedi industry with effect from June 1, 1977.
By these writ petitions the petitioners challenge the
constitutional validity of the Notifications dated May 17, 1977
and May 23, 1977 and the proceedings taken by the respondents
againat the petitioners for the purpose of enforcing the
EinPloyees' Provident Funds Act and the · Scheme so far as they         D
relate t6 home workers. The petitioners also seek a corresponding
declaration that the EJnployees' Deposit-Linked Insurance Scheme
and the Employees' Family Pension Scheme framed under the
Employees' Provident Funds Act are unenforceable in respect of
the beedi industry.
                                                                        E
      The principal grounds on which the petitioners challenge
the impugned Notifications may be shortly enumerated:-

           (1) While the Employees' Provident Funds Act and the
           Scheme may be applicable to the workers employed in
           the factory itself, they cannot be extended to home
           workers because there is no relationship of employer         F
           and employee between the manufacturers and the home
           workers. It is submitted that a home work.er cannot be
           described as an "employee" within the definition set
           forth in ·clause (f) of s. 2 of the Employees'
           Provident Funds Act.
                                                                        G
           (2) The EJnployees' Provident Funds Act and the Scheme
           cannot be applied to home workers in the beedi
           industry inasmuch as they are subject to no retirement
           age and there is no power in the manufacturer to
           retire such home workers on the ground of
           superannuation. Having regard to the peculiar features
           of the arrangements under which home workers                 H
    62                   SUPREME COURT REPORTS   [1985].SUPP.3 s.c.R.


              manufacture beedis, it is not reasonably possible to
A             apply and implement the provisions of the Employees'
              Provident Funds Act and the Scheme in relation to
              them.

              (3) The extension of the Efilployees' Provident Funds
              Act and the Scheme to the beedi industry consistitutes
B             an unreasonable restriction on the Fundamental Rights
              of the petitioners guaranteed by s.ub-cl. (g) of clause
              l of Article 19 of the Constitution and also violates
              Articles 14 and 31 of the Constitution inasmuch as the
              financial burden occasioned thereby is so excessive
              that it is obvious that the Central Government did not
              apply·its mind to the paying capacity of the industry.
c             Moreover, the burden imposed on the industry bears no
              nexus to the object of the statute, namely, to provide
              post retirement benefits.

          Having considered the material on the record befoie us in
    this leading group of writ petitions it appears that some of the
    home workers have been working regularly for several years
D   exclusively for a single manufacturer, and depend for their
    livelihood on this work, that they attend the factory during
    spec.if ied hours to secure raw material for making beedis at home
    and for delivering the manufactured beedis to the staff at the
    factory, that the quantity of leaves and tobacco supplied is
    fixed by the manufacturer, and that registers of the raw material
E
    and of payment of wages are maintained at the factory, that a
    record is maintained of the manufactured beedis received from the
    home workers and the quantity rejected, and that a log book or a
    wage card is issued to the home workers.

          In order to organise the conditions in which the beedi
F   workers· worked and to give them greater security of employment
    Parliament enacted the Beedi and Cigar Workers (Conditions of
    Employment)   Act,   1966 and the State Governments framed rules
    under that statute. The said Act applied to home workers, as is
    clear from the definition of "employee" in clause (f) of s. 2 of
    that Act and provides for the application of certain labour laws.
G
         There is no dispute that pursuant to the impugned
    Notification dated May 17, 1977 the beedi industry has been
    brought within the scope of the Employees' Provident Funds Act
    and that the impugned. Notification dated May 23, 1977 has made
    the Scheme applicable to the beedi industry. Clause (a) of sub-s.
H
                 P.M. PATEL Vo u.o.I. [PATHAK, J.]              63


  ( 3) of s. l of the Employees' Provident Funds Act applies that     A
  Act to every establishment which is a factory engaged in any
  industry specified in Schedule I and in which twenty or more
  persons are employed. Admittedly, the factory belonging to the
  manufacturer is, therefore, drawn within the compass of. the
  Employees' Provident Funds Act and the Scheme. It is also
  admitted by the petitioners that the workers employed within the    B
  factory premises would be covered by the Act and the Scheme· The
  real question is whether the home workers are entitled to that
  benefit· Clause (f) of s. 2 of that Act. defines im "employee" to
  mean "any person who is employed for wages in any kind of work,
  manual or otherwise, in or in connection with the work of an
  establishment, and who gets his wages directly or indirectly from   c
  the employer, and includes any person employed by or through a
  contractor in or in connection with the work of the
  establishment." It will be noticed that the terms of the
  definition are wide. They include not only persons employed
  directly by the employer but also persons employed through a
  contractor. Moreover, •hey include not only persons employed in     o
  the factory but also persons employed in connection with the work
  of the factory. It seems to us that a home worker, by virtue of
  the fact that he rolls beedis, is involved in an activity
  connected with the work of the factory. We are unable to accept
  the narrow construction sought by the petitioners that the words
  "in connection with" in the definition of "employee" must be        E
· confined to work performed in the factory itself as a part of the
  total process of the manufacture.

      Now to be an employee it is necessary that the relationship
of master and servant should exist with the employer. The
principal question is whether such a relationship exists petween
the manufacturer and a home worker. Several cases were placed         F
before us by the parties in this connection, and reference may be
made to them. In Sbri O.inhmJan Bao and Another v. lhe State of
lladbya Pradesh, [1958] S.c.R. 1340, this Court held that
independent contractors, known as Sattedars, with whom a
manufacturer contracted for the supply of beedis could not be
described as workers within the definition of sub-s. (l) of ·s. 2     G
of the Factories Act, nor could their collies, because the
Sattedars undertook to supply the beedis by manufacturing them in
their own factories or by entrusting the work to third parties.
The Sattedars were not subject to a right of control by the
manufacturer in respect of the manner in which the work was to be
done. The Court applied the principle that the test for
determining the relationship of master and servant lay in the         H
    64                SUPREME COURT REPORTS      [1985] SUPP.3 s.c.R.


    existence of the. right in the master to supervise and control the
A   work done by the servant not only in the matter of directing what
    work the servant was to do but also the manner in which he should
    do it. In passing, the Court referred to home workers employed by
    the Sattedars for making beedis in their respective homes, and
    the Court observed that they could not be regarded a• persons
    employed by the manufacturer directly or through any agency.
B   Thereafter, in Sbri Birdhicband Sbama v. First Civil Judge,
    Hagpur and Others, [1961] 3 s.c.R. 161, this Court considered a
    case where the manufacturer had employed workmen ~n his beedi
    factory and who were at liberty to work at their homes, and the
    Court held that the conditions in which they worked made them
    "workers" . within the meaning of clause ( l) of s. ·2 of the
    Factories Act. The significant feature of the judgment lies in
c   the observation of the Court that in the csse of the beedi
    industry the right of rejection of the beedis if they did not
    come up to the proper. standard was evidence of the supervision
    and control exercised by the manufacturer. Noting that the nature
    and extent of supervision and control varied in different
    industries, the Court said :-
D              "Taking the nature of the work in the present csse it
               csn hardly be said that there must be supervision all
               time when biris are being prepared and unless there is
               such supervision there can be no direction as to the
               manner of work. In t'.1e present csse the operation
               being a simple one, the control of the manner in which
E              the work is done is exercised at the end of the day,
               when biris are ready, by the method of rejecting those
               which do not come up to the proper standard. In such a
               csse it is the right to supervise and not so much the
               mode in which it is exercised which is important."
F   Reference may b~ made next to Shanker Bslaji Waje v. State of
    Kabarashtra, [1962] Suppl. 1 s.c.R. 249. The majority view taken
    on the particular facts of that case was that the workers were
    not subject to the control and supervision of the manufacturer.
    The learned Judges constituting the majority appear to have
    overlooked the observations in Birclhicband Sharma (supra) that
G   the right of rejection of the beedis prepared by the workers in
    itself constituted a sufficient element of supervision and
    control. Our attention was also invited by the petitioners to
    H/s. Orissa Cell!nt Ltd. v. Union of Iudia [1962] Suppl. 3 s.c.R.
    837, but this is a csse where the question was whether a
    notification was valid which made the employer liable to pay into
H
                         P.M. PATEL v. U.O.I. [PATHAK, J.]               65


         the provident fund, constituted under the provident Funds Act,
         1952, the share of workers who were in fact the employees of          A
         independent contraccors. The Court drew a careful distinction
         between labour employed by the manufacturer and that employed by
         an independent contractor. Most of these ~ases were considered
         thereafter by this Court in D.C. Iewn &bicleen Sahib 8Dd Sons
         v· Ibe Industrial Tribunal, Madras, [1964] 7 s.c.a. 646, and
         while reviewing the law the Court rejected the plea of the            B
         manufacturers against the application of the Industrial Disputes
         Act on the ground that the workers ostensibly employed by the
         "so-called contractors" were in fact the workmen of the
         appellants who had employed them through their. agents or
         servants. It may be pointed out, however, that the Court
         reiterated the view expressed in Birdhichaud Sbarma's case            c
         (supra) that the rolling of beedis was work of such a simple
         nature that supervision was not required all the time and it was
.'       sufficient if supervision was exercised at the end of the day
         through the system of rejecting defective beedis. The law took a
         major shift in Silver Jubilee Tailoring House 8Dd others v. Qlief
         Inspector of Shope 8Dd l!atablishnents 8Dd another [1974 j 1 s.c.R.   D
         747, as to the criteria which determined · the relationship of
         master and servant. Mathew, J;, who spoke for the Court, reviewed
         the earlier decisions of this Court a~ well as some of the
         decisions rendered in England, and pointed out that the test of
         control as traditionally formulated was no longer treated as an
         exclusive test. He observed :-                                        E

                    "It is exceedingly doubtful today whether the search
                    for a formula in the nature of a single test to tell a
                    contract of service from contract for service will
                    serve any useful purpose. The most that profitably can
                    be done is to examine all the factors that have been
                    referred to in the cases on the topic. Clearly, not        F
                    all of these factors would be relevant in all these
                    cases or have the same weight in all cases. It is
                    equally clear that no magic formula can be propounded
                    which factors should in any case be treated as
                    determining ones. The plain fact is that in a large
                    number of cases, the court can only perform a              G
                    balancing operation weighing up the factors which
                    point in one direction and balancing them against
                    those pointing in the opposite direction.

                    During the last two decades the emphasis in the
                    field has shifted and no longer rests so strongly upon
                    the question of control. Control is obviously an           H
'•

     '
                                                                        •

    66                SUPREME COURT REPORTS      [1985] SUPP.3 s.c.R


A              important factor and in many cases it may still be the
               decisive factor. But it is wrong to say that in every
               case it is decisive. It is now no more than a factor,
               although an important one".

    He was dealing with a case where the workers who were tailors
B   went to tailoring shops and were given work as and when work was
    available, and when cloth was given for stitching to a worker he
    was told how he should stitch it, and if the instructions were
    not carried out the work was rejected and he was asked to
    restitch it. Some of the workers were allowed to take the clothes
    home for stitching. The Court held that there was a relationship
    of master and servant because of the right in the employer to
c   reject the work done, and it reiterated that "the degree of
    control and supervision would be-different in different types of
    work". In the present cases, the right of rejection can similarly
    be said to represent the control and supervision exercised by the
    manufacturer over the beedis prepared by the home workers. Quite
    obviously, while in the Silver Jubilee Tailorillg Bouse case
    (supra) it was possible for, the employer to direct re-stitching
D   of the garment, no such direction can be reasonably envisaged in
    the case of sub-standard beedis. A Constitution Bench of this
    Court had occasion to consider the law in lfangalore Ganesh Beedi
    Works etc. v. Union of India etc. [1974]· 3 s.c.R. 221, which
    questioned the validity of the Beedi and Cigar Workers
    (Conditions of Employement) Act, 1966. The Court adopted the test
E   of rejection of defective beedis for determining whether the
    beedi workers were the employees of the manufacturer or the
    independent contractors. The Court observed:-

              " ••• the manufacturers or trade mark holders have
              liability in respect of workers who are directly
F             employed ·by them or who are employed by them through
              contractors. Workers at the industrial premises do not
              present any problem. The manufacturer or trade mark
              holder will observe all the provisions of the Act by
              reason of employing such labour in the industrial.
              premises. When the manufacturer engages labour through
G             the contractor the labour is engaged on behalf of the
              manufacturer, and the latter has therefore liability
              to such contract labour. It is only when the
              contractor engages labour for or on his own behalf and
              supplies the finished product to the manufacturer that
              he will be the principal employer in relation to such
H             labour and the manufacturer will not be responsible
                   P.M. PATEL v. U.O.I. [PATHAK, J.]              67


              for implementing the provisions of the Act with regard     A
              to such labour employed by the contractor. If the
              right of rejection rests with the manufacturer or
              trade mark holder, in such a case the contractor who
              will prepare beedis through the contract labour will
              find it difficult to establish that he is the
              independent contractor."                                   B
          In the context of the conditions and the circumstances set
    out earlier in which the home workers of a single manufacturer go
    about their work, including the receiving of. raw material,
    rolling the beedis at home and delivering them to the
    manufacturer subject to the right of rejection there is              c
    sufficient evidence of the requisite degree of control and
    supervision for establishing the relationship of mas.ter and
    servant between the manufacturer and the home worker. It aiust be
    remembered that the work of rolling beedis is not of a
    sophisticated nature, requiring control and supervision at the
    time when the work is done. It is a simple operation which, as       D
    practice has shown, has been performed satisfactorily by
    thousands of illiterate workers. It is a task which can be
    performed by young and old, men and women, with equal facility
    and it does not require a high order of skill. In the
    circumstances, the right of rejection can constitute in itself an
    effective degree of supervision and control. We may point out        E
    that there is evidence to show ·that the rejection takes place in
    the presence of the home worker. That factor, however, plays a
    merely supportive role in determining the existence of the
    relationship of the.master and servant. The petitioners point out
    that there is no element of peersonal service in beedi rolling
    and that it is open to a home worker to get the work done by one
    or the other member of his family at home. The element of            F
    personal service, it seems to us, is of little significance when
    the test of control and supervision lies in the right of
    rejection.

         In our opinion, the home workers are "employees" within the
    definition contained in cl. (f) of s. 2 of the Employees'            G
    Provident Funds Act.
                              ;
         The next question is whether having regard to the peculiar
    features of the home workers' system of employment the provisions

-   of the Employees' Provident Funds Act and Scheme can be applied
    on their terms to home workers. The principal contention in this ·
    connection is that no retirement age is fixed in the case of home    H
    68                SUPREME COURT REPORTS      [1985] SUPP.3 s.c.R.


    workers and, therefore, the Scheme cannot be implemented in
A   respect of them. Cl. (a) of sub-para (1) of Para. 69 of the
    Employees' Provident Funds Scheme provides that "a member may
    withdraw the full 811Xlunt standing to his credit in the Fund on
    retirement from service after attaining the age of 55 years". It
    seems to. us that the law does not envisage the fixation of a
    retirement age before that provision can apply. A worker is
B   entitled to withdraw the 811Xlunt standing to his credit in the
    fund if he retires at any time after attaining the age of 55
    years. There is no reference to any pre-determined age of
    superannuation. The expression "retiremeut" does.· not, in the
    absence of anything more necessarily imply a fixed age for
    leaving service. It has a wide connotation. In a context where no
    age of superannuation has been fixed, the expression must take on
c   its ordinary meaning of the normal cessation of service by an act
    of the employer or of the worker. That a person may "retire" even
    before reaching any specified age is exemplified by cl. (b) of
    sub-para. (1) of Para. 69 which speaks of "retirement on account
    of permanent and total incapacity for work due to bodily or
    mental infirmity". We may point out that in Delhi Cloth & General
    MUls Co. Ltd., v. Workmen and others etc• [1969] 2 s.c.R. 307,
D   this Court has held that a gratuity scheme could be effective
    even if no age of superannuation was fixed· Learned counsel for
    the petitioners had ref erred us to Regional Provident Fund
    Coumissiooer, Audhra Pradesh v. Sbri T.s. llarihsran [1971] Suppl.
    s.c.R. 305, where this Court observed in respect of the
    Employees' Provident Funds Act:-
E
               "The Act was brought on the statute book for providing
               for the institution of a provident fund for the
               employees in factories and other establishments. The
               basic purpose of providing for provident funds appears
               to be to make provision for the future of the
F              industrial worker after his retirement or for his
               dependants in case of his early death. To achieve this
               ultimate object the Act is designed to cultivate among
               the workers a spirit of saving something regularly,
               and also to encourage stabilisation of a steady labour
               force in the industrial centres,"
G
    and it is pointed out that the Court rejected the plea that the.
    Act could apply to short term employees also. The case, in our
    opinion, is distinguishable because the workers there were taken
    in employment on account of an emergency and for a very short
    period necessitated by an abnormal contingency. That is not the
H
                P.M. PATEL v. U.O.I. [PATHAK, J.J              69


position here. In the present cases, the employment was entered     A
into in the regular course of business. We hold that there is no
substance in the contention of the petitioners that the
provisions of the Employees' Provident Funds Act and the Scheme
cannot be applied at all to home workers. There is no reason why
the provisions of the Act and Scheme should not apply where their
terms permit such application.                                      B

     We may also point out that the Beedi and Cigar Workers
(Conditions of Employment) Act, 1966 and the rules made
thereunder by the Maharashtra Government have been framed
specifically on the basis that in certain matters hOllle workers
enjoy a status akin to the general category of workers. Not only    c
do these provisions apply to "industrial premises'" as defined
under ' clause (i) of s.2 of that Act but also to an
"establishment" as defined in clause (h) of s. 2 of the Act.
There are several provisions which apply to employees in
establishments and are not confined to industrial premises. An
"establishment", by the terms of its definition is wide enough to   D
include the dwelling house of a home worker. A home worker would
be entitled, therefore, to annual leave with wages and wages
during leave period among other things. In the Maharashtra Beedi
and Cigar Workers (Conditions of Employment) Rules, 1968 there is
specific provision in respect of the payment of wages to home
workers. The Rules relating to the issue of raw material by the     E
employer would extend to home workers also.

     Accordingly, we reject the contention that the provisions of
the Employees Provident Funds Act and the Schemes cannot be
implemented at all in respect of the beedi industry.

     The last contention of learned counsel for the petitioners     F
is that the financial burden which will be suffered by the beedi
industry in consequence of the Employees' Provident Funds Act and
the Schemes envisaged by it being extended to the industry will
be beyond the financial capacity of the beedi industry and will
severely handicap     it   in competing with the cigarette
manufacturing industry. There is no nexus, i t is said, betwe•m     G
the burden imposed on the industry and the object of the statute
of providing postretirement benefits. It is urged that this
aspect did not engage the attention of the Central Government
when the impugned Notifications were promulgated. On the basis of
this submission the petitioners contend that their Fundamental
Rights under Article 14, sub-cl. (g) of cl. (1) of Article 19 and
Article 31 of the Constitution have been violated. We have          H
    70               SUPREME COURT REPORTS       [1985} SUPP.3 s.c.R.


    carefully examined the record before us and we are unable to find
A
    adequate material in support of this submission. We need say
    nothing more. The contention is rejected.

         In the result, we see no force in these writ petitions, the
    connected writ petitions and the connected special leave
B
    petitions, and they are all accordingly dismissed. Tllere is no
    order as to costs.




    N.V.K.                                       Petitions dismissed.