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Hussainbhai, Calicut vs. Alath Factory Thozhilali Union, Kozhikode: Supreme Court

Brief Facts:
The petitioner in this case is the owner of factory producing ropes. He agreed with some contractors for hiring workmen in his industry. The job of contractor was to hire the workmen and fulfill the requirement of petitioner. Some of the workers were denied employment by stating that they were not the factory�s workmen. These 29 workmen applied for compensation and reinstatement.

The State Government of Kerala referred the dispute as an industrial dispute to the industrial court. The petitioner applied for special leave petition in Kerala High Court. There the case was heard by a Learned Single Judge and Divisional Bench of Judges.

Hussainbhai, Calicut vs. Alath Factory Thozhilali Union, Kozhikode & ors.
Supreme Court of India
Petitioner: Hussainbhai, Calicut  v/s Respondent: Alath Factory Thozhilali Union, Kozhikode & ors.
Date of Judgment: 28th of July,1978
Bench: Justice V. R. Krishna Iyer; Justice D.A Desai; Justice O. Chinnapa Reddy

Arguments by the side of petitioner
Petitioner argued that there was no employer employee relation between him and workmen. He contended that the workers were employed by the contractor and he is not liable to provide them the job. These workmen do not fall under the definition of workmen of an industry according to section 2(s) of Industrial Dispute Act, 1947.

Arguments from the side of respondent
The respondents were 29 workers whom the work was denied; they contended that the factory was their only source of employment. It was the duty of the employer to provide them the work. They applied for the compensation for the days the job was not provided to them.

Issues involved
Do workers employed by independent contractors to work in an employer's factory also fall under the definition of "Workman" as stated in Section 2(s) of the Industrial Disputes Act of 1947?

Procedural History
The matter was referred to the Industrial Court by the State Government of Kerala. The petitioner (Employer) made a special leave petition in High Court of Kerala. In the honorable High Court the case was heard by the Learned Single Judge, where the Judge ruled in the favor of Workmen. The matter was then referred to the Divisional Bench of High Court which upheld the decision of Single Judge. Then the petitioner appealed to the Apex Court against the judgment of Kerala High Court for special leave petition.

The Supreme Court upheld the decisions of High Court and discussed that the workmen by performing their work in industry contributed in production. And the management of factory contributes by giving raw material, equipments and the factory premises. The management also had control over the workmen. These state of affairs show that there is an established employer- employee relationship between the management and the workmen.

The Supreme Court then added that when the workmen contribute their labor in production of any goods or services which are required for another business, those workmen fall under the definition of workmen and the person employing them is the employer. Supreme Court stated that not having the direct relationship with the workers, does not rule out the bond between the employer and employee. When the veil is lifted, the relation between the workmen and the management is clear.

The court stressed that mere contracting with the intermediary, the management cannot waive off its liabilities towards the workmen.

The court threw light on the basic rights of the labor. The constitutional rights of labors were in question. It was stated that the labor legislations casts an obligation on the employer based on articles 38, 39, 42, 43, and 43-A of Constitution. It was said that the court while pronouncing the judgment must avoid the mischief and achieve the purpose of law. It should not mislead by mere appearances. Here the livelihood of workers is totally depended on the industry; hence, the liability cannot be shaken off.

In the words of the learned Judge Krishna Iyer, �Raw societal realities, not fine-spun legal niceties, not competitive market economics but complex protective principles, shape the law when the weaker, working-class sector needs succor for livelihood through labor.�

India is a country where the maximum population is labor class. People work in industries and earn their livelihood. India is a developing country and industries play a major role in employment. But with the development of the nation, another thing that is developing is unemployment and exploitation of labors. So there are legislations that secure the rights of the labors. The Industrial Dispute Act 1947, secures the rights of labors, provides the remedies and process for resolving the industrial disputes.

Here the question arises what is an industrial dispute, an industrial dispute according to section 2(k) of Industrial Dispute Act 1947, is any dispute between the employer and employee, employer and employee and employee and employee, which is related to the employment, non employment or the terms of employment.

For any industrial dispute i.e. between the employee and employer, there should be fulfillment of triple test:

  1. There should be an establishment of a systematic activity.
  2. The systematic activity should be between the employee and the employer in the establishment.
  3. The activity should give the output resulting out from production of goods, or, distribution of goods, or, the catering of services (not being religious or spiritual in nature, exception - Prasad making establishment)

This triple test was established in the case of Bangalore Water Supply & Sewerage Board v. A. Rajappa and followed in this case. The Supreme Court in this case examined the established employer and employee relationship, the systematic activity and the goods and services produced.

This case is referred as a precedent as it stated that there is no need for the direct relation between employee and employer and the workmen who are appointed by the contractor are also the workmen of an industry. This judgment of this case went beyond the provisions of law and prevailed social justice in the society. Justice Iyer marked that the purpose of law is more important than the law itself.

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