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CASE NO.:

Appeal (civil) 3355 of 1998

PETITIONER:

INDIAN BANKS ASSOCIATION

RESPONDENT:

WORKMEN OF SYNDICATE BANK AND ORS.

DATE OF JUDGMENT: 13/02/2001

BENCH:

S. RAJENDRA BABU & S.N. VARIAVA

JUDGMENT:

JUDGMENT

2001 (1) SCR 1011

The Judgment of the Court was delivered by

S.N. VARIAVA, J. Leave granted in SLP (C) No. 9000/1998.

All these Appeals are against a common judgment dated 30th March, 1997, A

common question arises in all these Appeals.

The Government of India, Ministry of Labour by an Order dated 3rd October,

1980 referred the following dispute under Sections 7A and 10(l)(d) of the

Industrial Disputes Act between the Management of 11 Banks and the Deposit

Collectors to the Industrial Tribunal, Hyderabad for adjudication:

"Whether the demands of the Commission Agents of as the case may be Deposit

Collectors Employed in the banks listed in the Annexure that they are

entitled to pay scales, allowances and other service conditions available

to regular clerical employees of those banks is justified? If not, to what

relief are the workmen concerned entitled and from which date?"

Before the Tribunal parties lead evidence both oral and documentary. After

hearing the parties the Tribunal by its Award dated 22nd December, 1988

held that the Deposit Collectors were workmen of the concerned Bank. The

Tribunal then directed as follows:

"All those Deposit Collectors and Agents who are below the age of 45 years

on 3.10.1980 (the date of the first reference of this industrial dispute)

shall be considered for regular absorption for the post of Clerks and

cashiers if they are matriculates and above including qualified Graduates

and Post Graduates. They may be taken to banks service as regular employees

if they pass the qualifying examination conducted by the banks, Those who

are absorbed shall be treated on par with regular clerical employees of the

Bank. Those who are qualified with 8th Class and below Matriculations shall

be considered for absorption as Sub-Staff by conducting qualifications

examination.

As regards the Deposit Collectors and Agents who are above 45 years of age

on the date 3-10-1980 and also those who are un-willing to be absorbed in

Regular Banks service they shall be paid the fall back wages of Rs. 750.00

per month linked with minimum deposit of Rs. 7,500,00 per month and they

should be paid incentive remuneration at 2 per cent for collection of over

and above 7,500.00 per month and they should also pay uniform conveyance of

Rs. 50 per month for deposit of less than Rs. 10,000.00 and Rs. 100.00 per

month for deposits of more than Rs. 10,00.00 upto or above Rs. 30,000,00

per month they should be paid Gratuity of 15 days commission for each year

of service rendered.'"

Various Writ petitions were filed by various Banks and the Indian Banks

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Association. All were disposed off by the impugned judgment dated 20th

March, 1997.

Before the High Court it has been conceded that relief of being absorbed as

regular staff of the banks in clerical cadre was not available to be

granted; on this concession the High Court set aside the directions of the

Tribunal to absorb the Deposit Collectors as regular staff. The high Court

however upheld the other directions of the Tribunal regarding payment of

fall back wages, conveyance allowance, gratuity etc.

Except for C.A. No. 3356 of 1998, all these Appeals have been filed by the

Various banks and/or the Indian banks Association. C.A. No. 3356 of 1998

has been filed by the National Confederation of Bank Employees. This Appeal

is against that portion Of the impugned judgment, whereunder the relief of

absorption as a regular employee has been set aside.

On behalf of the Appellants it has been submitted that the Deposit

Collectors could not be treated as workmen since their engagement were

purely a matter of contract between the parties. It was submitted that the

Agreements were, in all cases, for a specific period. It was submitted that

the Deposit Collectors did their work without any control or supervision of

the Banks. It was submitted that the Deposit Collectors could also do other

works and take on other employment. It was submitted that the Deposit

Collectors had no fixed time or period to devote to their work as Deposit

Collectors or for their attendance in the Bank. It was submitted that these

Deposit Collectors could come to the Bank at any time and make the

deposits. It was further submitted that there was no qualification or age

limit for a person to be engaged as a Deposit Collector and that, infact,

many of the Deposit Collectors were well advanced in age. It was submitted

that no disciplinary action could be taken against the Deposit Collectors.

It was submitted that all the above mentioned facts showed that there was

no relationship of master and servant and that, therefore, these Deposit

Collectors were not workmen.

Reliance has also been placed on Section 10 of the Banking Regulation Act.

The relevant portion of Section 10 reads as follows :

"10. Prohibition of employment of managing agents and restrictions on

certain forms of employment:- (1) No banking company

(a) Shall employ or be managed by managing agent; or

(b) Shall employ or continue the employment of any person:

(i) Who is, or at any time has been adjudicated insolvent, or has suspended

payment of has compounded with his creditors, or who is, or had been,

convicted by a Criminal Court of an offence involving moral turpitude; or

(ii) Whose remuneration or part of whose remuneration take the form of

commission or of a share in the profits of the company.

Provided that nothing contained in this sub-clause shall apply to the

payment by a banking company of-

(a) any bonus, in pursuance of a settlement or award arrived at or made

under any law relating to industrial disputes or in accordance with any

scheme framed by such banking company or in accordance with the usual

practice prevailing in banking business

(b) any commission to any broker (including guarantee broker) cashier

contractor, clearing and forwarding agent, auctioneer or any other person,

employed by the banking company under a contract otherwise than as a

regular member of the staff of the company; or

xxx xxx xxx

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It was submitted that Section 10(b) clearly lays down that a banking

company cannot employ any person whose remuneration or part of whose

remuneration takes the form of commission or of a share in the profits of

the company. It was submitted that it was an admitted position that

commission was paid to the deposit Collectors. It was submitted that it can

never be presumed that the Bank were employing persons contrary to the

provisions of the Banking Regulation Act. It was submitted that this showed

that these Deposit Collectors were not employed by the Banks. It was

submitted that the proviso (b), which permitted payment of commission under

a contract to a person who was not a regular member of the staff, was

merely an extension and did not detract from the main provision which

prevented employment on commission basis.

It was also submitted that the Deposit Collection Schemes were un-

remunerative and were not viable. Certain charts and Figures were shows to

the Court and it was submitted that the Banks were suffering a loss in

running these Schemes. It was submitted that neither the Tribunal nor the

High Court had gone into viability of the Schemes.

Mr. P.P. Rao further submitted that the Banking Regulation Act is an Act of

1949. He took the Court through the definition of the term "workman" On the

Industrial Disputes Act as well as various other Acts like Beedi and Cigar

Workers (Conditions of Employment) Act, Coal Mines Provident Found

and Misc. Provisions Act Contract Labour (Regulation and Abolition) Act

etc. He submitted that under each Act the definition was framed as per the

purpose of the Act. He pointed out that depending on the purpose of the

Act, either a wide or narrow definition had been given to the term

"worker". He pointed out that the proviso to Section 10 of the Banking

Regulation Act has been operative since 1949. He submitted that in the

Industrial Disputes Act the definition of the term "worker" in Section 2(s)

was amended in 1984. He submitted that even in 1984 the Legislature did not

think it fit to include in this definition a person who was receiving

commission. He submitted that this clearly indicated that persons receiving

commission were not meant to be and were not workmen within the meaning of

the term as laid down in the Industrial Disputes Act.

Mr. P.P. Rao further submitted that if the Deposit Collectors are not

workmen, then their entitlement has to be as per their contract or as per

the provisions of a statute. He submitted that the Tribunal had no power to

change the contract between the parties and/or to impose conditions of

service. He submitted that the Tribunal could only have done so, provided

it was statutorily permitted or it was so provided in the Contract. He

submitted that the gratuity which has been awarded by the tribunal is

neither as per the contract between the parties nor as per the provisions

of the Payment of Gratuity Act. He submitted that the Deposit Collectors

have concealed what they were receiving from the other employment. He

submitted that this information should have been called for. He submitted

that the entire liability has been foisted on the Banks, when in fact the

other employer should be sharing the burden imposed on the Banks.

It was submitted on behalf of the Appellants that for all the above

reasons, the impugned Order and the directions given by the Tribunal should

be set aside.

On the other hand Mr. Sharma, on behalf of the Respondents, submitted that

the Deposit Collectors had to regularly visit the small depositors, i.e.,

small traders, house wives, students etc. He submitted that they would have

to go to these depositors at times which were convenient to those person or

at times when they would be in a position to give the deposit. He submitted

that the Deposit Collectors may also ha veto make more than one visit to

small depositors. He submitted that the Deposit Collectors would have to

collect deposits from all these persons and then taken the collections to

the banks and make the deposits after making the relevant entries and

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filing up the relevant forms. He submitted that the work of Deposit

Collectors was manual inasmuch as they had to make the collections by going

from place to place and from depositor to depositor and that it was also

clerical inasmuch as they had to fill up various forms, accounts, registers

and pass books every day. He submitted that over and above this work many

of the Deposit Collectors were also made to do other sundry works of a

clerical nature in the banks. He submitted that amount received by the

Deposit Collectors by way of commission was wage linked to productivity. He

submitted that it was incorrect to state that the banks had no control over

the Deposit Collectors. He submitted that the banks exercised control over

the Deposit Collectors and laid down various stipulations which were to be

followed by these Deposit Collectors. He submitted that merely because the

nature of the control was different did not mean that there was no control.

Mr. Sharma relied upon the definition of the term "Wages" in Section 2 (rr)

of the Industrial Disputes Act, which reads as follows:

"2 (rr) "wages" means all remuneration capable of being expressed in terms

of money, which would, it the terms of employment express or implied, were

fulfilled, be payable to a workman in respect of his employment or of work

done in such employment, and includes-

(i) such allowances (including dearness allowance) as the workman is for

the time being entitled to;

(ii) the value of any house accommodation, or of supply of light, water,

medical attendance or other amenity or of any service or of any

concessional supply of foodgrains or other articles;

.(iii) any travelling concession;

(iv) any commission payable on the promotion of sales or business or both;

but does not include-

(a) any bonus;

(b) any contribution paid or payable by the employer to any pension fund

or provident fund or for the benefit of the workman under any law for the

time being in force;

(c) any gratuity payable on the termination of his service;" points out

that, under sub-clause (iv) of the above definition, "wage" includes

commission payable on promotion of sales or business or both. He submitted

that the commission which was received by Deposit Collectors was promotion

of the business of the banks, viz., receiving deposits from on investors.

Mr. Sharma submitted (hat the proviso to Section 10 clearly laid down that

commission could be paid to a person who was not in the regular employment

of a bank. He submitted that, therefore, Section 10 of the Banking

Regulations Act did not prevent Deposit Collectors from being workmen as

defined in the Industrial Disputes Act. In support of this submission he

relied upon an authority of the Madras High Court in the ease of The

Management of Indian Bank v. The Presiding Officer, Industrial Tribunal (c)

& Anr., reported in (1990) 1 LLJ 50. In this case it has been held that

Deposit Collectors satisfy the definition of "workmen" under the Industrial

Disputes Act and that they are "workmen" as defined in the Industrial

Disputes Act. It has been held that the banks have control over such

Deposit Collectors and that Section 30 of the Banking regulations act did

not help the banks in contending that Deposit Collectors were not workmen.

Mr. Sharma relied upon the case of Silver Jubilee Tailoring House & ors. v.

Chief Inspector of Shops and Establishments & Anr., reported in(1974) 1 LLJ

747, In this case the question was whether certain tailors working with the

Appellant Company were employees of the Appellant and were covered by the

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Andhra Pradesh Shops and Establishments Act and Payment of Wages Act. The

question which arose for consideration Were whether the Appellants had

control over these tailors and whether the fact that these tailors could

work for more than one employee meant that there was no relationship of

master and servant. This Court held that during the last two decades the

emphasis in deciding the question of relationship of employer and employee

had changed. It held that while control was an important factor it was

wrong to say that in every case it would be a decisive factor. It held that

the degree of control and supervision would be different in different types

of business and that what was essential was an element of authority over

the workers in the performance of the work, so that the employee was

subject to the directions of the employer; It also held that working with

more than one employer did not militate against being the employee of the

proprietor of the shop where he attended the work. It held that a servant

need not be in the exclusive control of one master, ft held that the fact

that the workers were not on obliged to work whole day was also not very

material. It held that all that was necessary was that the workman was

principally employee by that employer.

Mr. Sharma also relied upon the case of Dharangadhara Chemical Works Ltd v.

State of Saurashtra, reported in [1957] SCR, 152. in this case the

Appellants were lessees holding a licence for the manufacture of salt on

certain landed. The salt was manufactured by labourers known as Agarias

from rain water that got mixed saline matter in the soil. The work was

seasonal in nature and commenced In October after the rains and continued

till June. Thereafter the Agarias left for their own villages and did their

own cultivation work. During the season the lands were devided into plots

and plots were allotted to the Agarias. Generally the same plot was

allotted to the same Agaria every year. After manufacturing of salt the

Agarias were paid at the rate of 5 as. 6 pies per maund, At the end of each

season the accounts were settled and the Agarias were paid the balance due

to them. During the season the Agarias worked with the members of their

families and were free to engages extra labour on their own, if they so

desired. No hours of work were prescribed, no master roll maintained, nor

were working hours controlled by the Appellants. There were no rules as

regards leave or holidays and the Agarias were free to go out of the

factory after making arrangements for manufacturing Of salt. The question

for consideration before this Court was whether the Agarias were workmen

within the meaning of the Industrial Disputes Act. This Court held that the

prima facie test of master of servant between employer and employee was the

existence of the right in the employee not merely to direct what work was

to be done but also to control the manner in which it was to be done, the

nature or extent of such control varying in different industries and being

by its nature incapable of being precisely defined. This Court held that

the correct approach, therefore, was to consider whether, having regard to

the nature of the work, there was due control and supervision of the

employer. This Court further held that the question whether the

relationship between the parties was one as between ah employer and

employee was a question of fact and where the Industrial Tribunal Came to a

finding, such finding of fact was not open to question in a proceeding

under Article 226 of the Constitutions, unless it could be shown to wholly

unwarranted by the evidence, Mr. Sharma submitted that in this case the

Tribunal had, on consideration of evidence and material before it, arrived

at a positive finding that there was control by the banks and that there

was a relationship of master and servant. He submitted that such finding of

fact was based upon the evidence on record and nothing had been shown that

such finding was Unwarranted or unsustainable on the basis of evidence on

record. He submitted that the High Court was thus right in not interfering

with such findings of fact.

On the question of the Scheme being un-remunerative, Mr. Sharma showed

certain pamphlets and circulars recently issued by one of the banks, which

is before this Court. He pointed out, from these pamphlets and circulars,

that far from the Scheme being un-remunerative the banks were receiving

large amounts as deposits through such Schemes. He pointed out that the

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banks were wanting to continue with such Schemes.

Mr. Sharma submitted that gratuity need not be only under the Payment of

Gratuity Act. He submitted that the Tribunal had not said that it was

awarding gratuity under the Gratuity Act. He submitted that the Tribunal

has powers, dehors the Gratuity Act, to direct payment of Gratuity. He

submitted that the Tribunal always has power and jurisdiction to modify

conditions of service and, in this case, it has been found by the Tribunal

that there was no fixed pay scales, no bonus, no gratuity, ho dearness

allowance and, therefore, the Tribunal had given the direction, as set out

hereinabove, as and by way of a package. He submitted that earlier

commission was being paid at a rate of 3.5 per cent by most of the banks.

He pointed out that now, over and above the sum of Rs. 7,500 the commission

had been reduced to 2 per cent. He submitted that to that extent Deposit

Collectors were loosing, but as this was part of the package as given by

the Tribunal it was being accepted by the Deposit Collectors. He submitted

that the directions given by the Tribunal were fair and just and absolutely

right. He submitted that the Order of the High Court was correct and this

Court should not interfere.

Mr. Nageshwar Rao, who appeared for the Appellants in C. A. No. 3356 Of

1998, supported Mr. Sharma in all his submissions. He, however, submitted

that the High Court was wrong in setting aside the directions regarding

regularisation of service. He submitted that the concessions which had been

made before the High Court had not been made on behalf of his clients and

his clients could not be held to be bound by such concession. He submitted

that in any case the Deposit Collectors should get the pay scales,

allowance and other service conditions of the other employees of the banks.

He submitted that even though the Deposit Collectors may not have been

absorbed as regular employees of the banks yet they should have been

granted the pay scales, allowance and their service conditions of the

employees of the banks, He submitted that most of these Deposit Collectors

had been working for 20 to 25 years and that there was nothing wrong if

they were either absorbed in the banks of given the pay scales allowances

and other service conditions of the other employees of the banks.

We have considered the rival submissions. In our view, Mr. Sharma was right

when he submitted that on the basis of evidence before it the Tribunal has

given findings of fact that the Deposit Collectors were workmen within the

meaning of Section 2 (develop) of the Industrial Disputes Act. On the

evidence on record it could not be said that this finding was

unsustainable. Having been shown the relevant evidence we are also of the

opinion that the Tribunal correctly arrived at a conclusion that these

Deposit Collectors were workmen.

Further, as seen from Section 2 (rr) of the industrial Disputes Act, the

commission received by Deposit Collectors is nothing else but wage, which

is dependent on the productivity. This commission is paid for promoting the

business of the various banks.

We also cannot accept the submission that the banks have no control over

the Deposit Collectors. Undoubtedly, the Deposit Collectors are free to

regulate their own hours of work, but that is because of the nature of the

work itself. It would be impossible to fix working hours for such Deposit

Collectors because they have to go to various depositors. This would have

to be done at the convenience of the depositors and at such times as

required by the depositors. If this is so, then no time can be fixed for

such work. However, there is control inasmuch as the Deposit Collectors

have to being the collections and deposit the: same in the banks by the

very next day. They have to then fill in various forms, accounts, registers

and pass books. They also have to do such other clerical work as the bank

may direct. They are, therefore, accountable to the bank and under the

control of the bank.

We also see no force in the contention that Section 10 of the Banking

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Regulations Act prevents employment of persons on commission basis. The

proviso to Section 10 makes it clear that commission can be paid to persons

who are not in regular employment Undoubtedly the Deposit Collectors are

not regular employees of the Bank, But they nevertheless are workers within

the meaning of the term as defined in the industrial Disputes Act. There is

clearly a relationship of master and servant between the Deposit Collectors

and the concerned Bank.

Mr. Nageshwar Rao is right in his submission that the concession was not

binding on his clients. However, what has been conceded has been correctly

conceded. No question arose of directing absorption of the Deposit

Collectors as regular workmen, No such demand had been made and, therefore,

there could have been no such direction. Such direction were beyond the

reference. Even otherwise, the question of absorption would be fully

covered by an authority of this Court in the case of Union of India & ors.

v. K.V. Baby & Anr., reported in (1999) 1 LLJ 1290. In this case it has

been held that persons who are engaged on the basis of individual contracts

to work on commission basis cannot be equated with regular employees doing

similar work. It has been held that the mode of selection and

qualifications are not comparable with those of the employees, even though

the employees may be doing similar works. In the present case, not only

care the modes of selection and qualifications not comparable, but even the

work is not comparable. The work which the Deposit Collectors do is

completely different from the work which the regular employees do. There

was thus no question of absorption and there was also no question of the

Deposit Collectors being paid the same pay scales, allowances and tower

service conditions of the regular employees of "the banks.

We also see no substance in the contention that these Schemes are un-

remunerative. The Banks have introduced these Schemes because they want to

encourage the common man to make small and regular deposits. As a result of

such Schemes, the number of depositors have become much larger. We have no

doubt that such Schemes are continued because the Banks find them

remunerative. The Banks have large collections through such Schemes.

For the reasons set out hereinabove, we see no substance in any of these

Appeals. All the Appeals accordingly stand dismissed. There will however,

be no Order and to costs.