SHIVNANDAN SHARLIA versus THE PUNJAB NATIONAL BANK LTD.

S.C~R .. SUPREllIE COURT REPORTS·

and of the Calcutta High Court in. 11Iathurapore 19;[[5 ]]Zamindary Co. Ltd. v. Bhasaram · lllandal(') and lk"-h- 5 · Prabashinee Debi v. Rasiklal Banerji(') are correct. Juga '' v":'. v":'. ara As at present advised, I would like to express no RawC-Otton opinion as to whether the expression "by operation · Co. Ud. of law" can be given the interpretation suggested by ImamJ. my learned brother Das, J., as it is uiinecessary to do so in the present appeal. . · · · ·

19;[[5 ]]lk"-h- 5 · / '' v":'. v":'. ara RawC-Otton · Co. Ud. ImamJ.

· · ·. Appeal di;"inissed.

SHIVNANDAN ·SHARl\IA . v.

1955 March 15

THE PUNJAB NATIONAL BANK LTD.· ·

[ViviA:N Bos~, JAG~NNADHADAS and SINIIA JJ.].

[ViviA:N and SINIIA SINIIA JJ.]. -. ' . -Master and servant-Banker-Agreement .. between between Bank and TreasUrers~Treasurers, wheth'e:Y sirvantS or independent sirvantS or independent - contractors -Cashier appointed by Treasitrer-Whether servant of the by Treasitrer-Whether servant of the Treasitrer-Whether servant of the of the the Bank. . .. I . • ' • • l _ . . , {. • · l . The appellant was appoiµted head. cashier in one of the branches of the .respondent Ballk by,'tbe Tfeasurers who .wer_e ~D. charge Qf~h6 Cash Department of the Bank by virtue of an agreeffient between them .. The question arose as to whetner the appellant' was' an•: em· p!oyee of the Bank. •. · ' · · . 1 Held, (i) that the te~s oi the ~gree~ent ciearly showecl that the Treasurers were servants ofthe Bank and not fodependent con~ tractors; and tha~ ·[1 ]• 1 t :-" · ... , (ii) as the direction and control of the appellant ancl of the ministerial staff in charge of tlie· Cash Departl!lent of the Bank was ··entirely vested.in:the Bank, the appellan~was an.employee of the Bank. · ... · . , , . .... . t · · , · . If ma."sier employ"s s~rvant and autho.rizes hiin-to e~ploy·a number of persons to do a. particular job and -to guarantee_the_ii fide~ lity and efficiency for cash consideration, the ·employe8s thUS ap-pointed by the servant would be, equally with the employer, servants of the master. · ... i . ! · · ;

Master and servant-Banker-Agreement .. between between Bank and -TreasUrers~Treasurers, wheth'e:Y sirvantS or independent sirvantS or independent - contractors -Cashier appointed by Treasitrer-Whether servant of the by Treasitrer-Whether servant of the Treasitrer-Whether servant of the of the the Bank.

Th.e question a3 to whose employe0 parlicUlar : person'; hi h~~ to be determined with reference to tb6 facts ·and( circUmstarices 'of ·each individual case, and among the many ~sts · by which to as~r­tain who is the employer, the most satisfactory one is to ask who fa entitled to tell the employee the way in which ha is to .do the work upon which he is enga:;ed. · · . :

. (1) [192!] I.L.R. 51 Cal. 703. (2) [1931] I.L.R. 59 Cal. 297.

them that · it had been decided · to close the Una office of the B,mk with effect from the dose ot business on the 3rd November 1951. In pursuance of that letter the Treasurers intimated by letter . dated 2nd October 1951 enclosing copy of Ex. 4 to the . appel-lant that the l.Tna Branch of the Bank will .cea~e to function .from the close of business on the 3rd Novem-ber 1951 and that . his services will not · be required after that date. The Punjab National Bank Em-ployees' Union (P_unjab) took .. up .the cause of the appellant . as .also that of .other employees . and made representations to the Government of India. . The Government of India by notification No. SR0-432 dated the 8th March 1952 published in the Gazette of India, Part II-Sec .. 3, in exercise of !ts .powers _under section 10 of the Industrial Disputes Act XIV of 1947 (hereinafter called the Act) referred . the . industrial dispute between . the Bank and its workmen named in . schedule : 2. (concerning . workers dismissed) and schedule 3 (relating to workers ·transferred) for adju-dication to the ·Industrial Tribunal at Calcutta con_. stituted under section 7 of the Act. Schedule 1 in so far as it is necessary for purposes of this .case contains the following points of disp[1]Jte between the ·employer and the workmen :.....::. . . . . "L . Wrongful dismissal of the .workmen men-tioned iii. schedule II and their reinstatement. "2. In .the event· of any order for reinstatement payment of wages and other allowances from the date of dismissal to the date of reinstatement" .. The appellant is No. 5 in schedule 2 aforesaid. The Tribunal gave its ·award on the 13th October 1952 in respect of number of employees whose . cases were actually .in controversy before it. It is only necessary to refer to the award in so far as it concerned the appellant. · ·After overruling the preliminary objec• tion of ·the Bank .that the Union had no locus standi to represent the · appellant the Tribunal' formulated the· following point for its decision :- .

"On merits the- main ·point . involved . is . as· . to whether the services of an cmployey of ... the Cash

1955 Shirml ur!rm Shmmn '\(· The Punjab ~ational B. nk Ltd .. Sinhr .:I

1430 : SUPREl\IE.COUR'f REPORTS

Departnien t can be terinliia ted on change made in

.the services ofthe·Contractor Cashier". ' -'It answered this point in these words:-•: .: "This point has been agitated in more than one case and I have also held in Reference No. 3 of 1951 · as _ · Ch . airman . o I n us t . na 1 T n "b una I (P . . N . k . an d" is-pute) relating to 5 cashiers that the employees of the Cash Department are the employees of the Bank and ·not the. nominees of the Contractor Cashiers so far service conditions are concerned, and I think it will serve no useful purpose to discuss all the legal prece-·dents cited, more especially when the point has been .set at rest by their Lordships of. the Supreme Court in Civil Appeal No. 66 of 1952 in tlie matter of United .Commercial Bank Ltd. v. Secretary, U. P. Bank Em-ployees' Union and Others. I am of the· opinion that the dismissal of Shi-i Sharma was wrongful and liable to be set aside.·· Now the normal remedy is reinstate-ment and I have no h·esitation in allowing the same: He will also be paid his back salary and allO\".ance from the date of dismissal to the date of reinstate-'ment".

Shi'flnandais ' Sharma v. The Punjab -·Nati<mazBankI.td •. · _ _ Sinha J; .---

•-. \Vhatever may be the merits of the answer given • to the question propounded by the Tribunal, there is no doubt that the question posed had been wrongly ·framed. The· discharge' or dismissal of the appellant had nothing to do with the change in the personnel of- the Treasurers. The appellant's services were dis-pensed with on the ground that the Una Branch where he was employed as head cashier being an un-.ecc;momic unit had to be closed and that therefore the ,appellant's services_were no more required.. TJ.ic rcs-.pondent's case appears to have been. that the firm known as l\Iessrs R. B. Karam Chand Puri & Bros . . have been contractors for the Cash Department of the _Bank at the head office and some of the other offices in the Punjab and beyond; that from time to tim.e agreements were executed between the Bank and the aforesaid firm; that the last agreement was executed on the 1st l\Iay 1954 (Ex. I); that . the appellant .according to the respondent-Bank was the nominee of the said firm, and that his services had been dispensed

with by the said firm whose employee he was and= — 7955swithnot by “the: the employment Bank which of had cashiers nothing and directly other workersto GO nandSharmanot by “the: the employment Bank which of had cashiers nothing and directly other workersto GO nandSharma by “the: the employment Bank which of had cashiers nothing and directly other workersto GO nandSharma “the: the employment Bank which of had cashiers nothing and directly other workersto GO nandSharmain the Cash Department which was in charge ofthe=».-Treasurers described. as.“Contractor Treasurers”,The Punjab-Hence the main question in controversy between the National Bank Ltd.theparties Bank was or,of. whether thethe said appellant “Contractor wasan Treasurers”, employeeofparties Bank was or,of. whether thethe said appellant “Contractor wasan Treasurers”, employeeof Bank was or,of. whether thethe said appellant “Contractor wasan Treasurers”, employeeof was or,of. whether thethe said appellant “Contractor wasan Treasurers”, employeeof or,of. whether thethe said appellant “Contractor wasan Treasurers”, employeeof whether thethe said appellant “Contractor wasan Treasurers”, employeeof thethe said appellant “Contractor wasan Treasurers”, employeeofthe said appellant “Contractor wasan Treasurers”, employeeof said appellant “Contractor wasan Treasurers”, employeeof appellant “Contractor wasan Treasurers”, employeeof “Contractor wasan Treasurers”, employeeof wasan Treasurers”, employeeof Treasurers”, employeeof employeeofgay~"whomwe shall call the “Treasurers” for the sake of||_ brevity.The Tribunal did notaddressitselfto the=_|- determination of that question.This Court also did_|ssnot No. discuss 66 of 1952, and but decide assumed the matter that cashiers in*Civil ofthe Appeal Bank|_were itsemployees. If that question had been decided=...aeby ,this _Court,.as.the Tribunal erroneously thought._-this Court had, in Civil Appeal No. 66 of 1952,. the Court had, in Civil Appeal No. 66 of 1952,. the had, in Civil Appeal No. 66 of 1952,. the in Civil Appeal No. 66 of 1952,. the Civil Appeal No. 66 of 1952,. the Appeal No. 66 of 1952,. the No. 66 of 1952,. the 66 of 1952,. the of 1952,. the 1952,. the the|-.gontroversy would -have been at an end.- Therefore —when the respondent preferred an appeal to theoeAppellate Tribunal, the Bank at the forefrout ofits-attack against the award of the Tribunal raised the||~ ground that the Tribunal had not determined the|—basic question which could have given jurisdiction to|the Tribunal to decide the dispute whether the head|cashier was an employee of the Bank or was nominee||... ofthe “Treasurer” as contended: on behalf of the"Bank. The Bank relied very strongly before the;_.Appellate Tribunalon the memorandum of agreement\_(Ex. 1) and the correspondence that passed between-.. - the Bank and the “Treasurers” on the one hand and >_the latter and the appellant before us.on the otheroe* ,(Exs.2, 3, 4 and 5).rei~The Appellate Tribunal rightly remarked that the Appellate Tribunal rightly remarked that the rightly remarked that the remarked that the that the the|

swithnot by “the: the employment Bank which of had cashiers nothing and directly other workersto GO nandSharmanot by “the: the employment Bank which of had cashiers nothing and directly other workersto GO nandSharma by “the: the employment Bank which of had cashiers nothing and directly other workersto GO nandSharma “the: the employment Bank which of had cashiers nothing and directly other workersto GO nandSharma

theparties Bank was or,of. whether thethe said appellant “Contractor wasan Treasurers”, employeeofparties Bank was or,of. whether thethe said appellant “Contractor wasan Treasurers”, employeeof Bank was or,of. whether thethe said appellant “Contractor wasan Treasurers”, employeeof was or,of. whether thethe said appellant “Contractor wasan Treasurers”, employeeof or,of. whether thethe said appellant “Contractor wasan Treasurers”, employeeof whether thethe said appellant “Contractor wasan Treasurers”, employeeof thethe said appellant “Contractor wasan Treasurers”, employeeofthe said appellant “Contractor wasan Treasurers”, employeeof said appellant “Contractor wasan Treasurers”, employeeof appellant “Contractor wasan Treasurers”, employeeof “Contractor wasan Treasurers”, employeeof wasan Treasurers”, employeeof Treasurers”, employeeof employeeof

this Court had, in Civil Appeal No. 66 of 1952,. the Court had, in Civil Appeal No. 66 of 1952,. the had, in Civil Appeal No. 66 of 1952,. the in Civil Appeal No. 66 of 1952,. the Civil Appeal No. 66 of 1952,. the Appeal No. 66 of 1952,. the No. 66 of 1952,. the 66 of 1952,. the of 1952,. the 1952,. the the

i~The Appellate Tribunal rightly remarked that the Appellate Tribunal rightly remarked that the rightly remarked that the remarked that the that the theaTribunal had recorded no finding on that basic ques-»eetion and had assumed that the respondent before—_-.¥t- was an employee of the Bank... The Appellate“Tribunal took the view that the agreement (Ex.1)*.was decisive of that question. After referring in great—idetail to the terms of the agreement the Appellate'.‘Tribunal came to the conclusion that the cashier was—not an employee of the Bank .but of the Treasurers—.and that therefore the Tribunal had no jurisdiction|to give any relief to the complainant before it... The.

aean|

·1955 s· ivnandan Sharma v. 1"he Punjab ~Y ~tional Ba_nk Ltdi s_inha J.

1432 SUP-REME CQUR'F REPORTS [1.955]

award: hy the .Tribunal was,. in the. result, set:::aside , and the .Bank?s appeal ._allowed.,• , . , , ; · ·The appellant · in "this: Court- through his • counsel Shri 'Chari,- argued· that' the Appellate Tribunal ·had misinter-preted the ·provisions of the. Industtial Dis-putes -Act in coming, to the conclusion that the Tribu-nal ·had no- jurisdiction to entertain the-dispute simply, on the . ground that one of the parties to the: dispute had· successfully denied .. the relationship; of : employer and employee; "that· the· Appellate · Tribunal miscon-ceived its ·functions- -by ·basing· its ; findings: .on the interpretation of the: :written · agreement . between· the Bank and · its· Treasurers ;when - it :should. have ·gone inro all the relevant .facts to -·determine the · substance oi. the· matter; -and finally; :rhat: the Appellate ·Tribu-nal mlsdiretted. itself on<the question of· the interpre-tation of the agreement for coming : to the conclusion that the appellant was not· :an employee ·of the Bank but was ·nom'inee' of'· the "Treasurers"; ·It' was· further argued on behalf·· of -the 'appellant tliat •the :Tribunal having ·based • its dicisicin on its ' previous award dated the ·16th· ·September . 1952 in Reference ·No ... 3 ·of 1951 between' •persons 'IIlOre or less -in· the same .. position ·as the•• appellant•· and the respondent-Bank, . 'in ·the ·back-ground· of the decision·• of ·the previous Tribunals,· e.g., the· award' ' of the Conciliation Board preside-cl over by Mr. Justice ' Bind Basni· Prasad of the Allahabad High Court,· the award- by the Tribunal presided over by Mr. K, · C. Sen. and the award of the All India Ii:tdus-trial Tribunal . (Bank Disputes);• presided over by Sri S. Panchapagesa Sastri and the award dated the 24th March 1951 · in Reference No: 20, the award of the Tribuna} was ·really final: The -argument was that the award · of · the Tribunal was . based: on considera-tions · :of· facts ' and · · c'ircurnstarices disclosed · ·in those earlier awards·· to: which the ·Bank and': its cashiers· and other employees : employed· ·in the Cash Department were parties:· ·It was· thus •final finding of fact which was not ·open 'to appeal.:before the Appellate· Tribunal. It. was therefore contended' that the Appellate Tribu-nal had no jurisdiction to etitertain the appeal . and . to reverse the award of the Tribunal. "'

On behalf of the respondent-Bank it was contended that no specific grounds had been taken either before the Appellate Tribunal or ·in the memorandum of appeal to this Court that the Appellate Tribunal had no jurisdiction on the ground now taken ·by the appel-lant in this Court, nor was that ground taken in the statement of case. On merits it was .contended by the· respondent's· counsel that the Tribunal is as much bound ·by the rules of evidence and procedure as any other Tribunal and as the Tribunal had not addressed itself to the question whether the cashier-appellant was an employee · of the Bank, the question was open before the Appellate Tribunal which was competent to pronounce -on that basic· question. Finally it was · argued that on true construction of the provisions of the agreement (Ex. I) this Court should accept the finding of the Appellate Tribunal that the appellant was not an employee of the Bank and that · on that account· the ·Tribunal had no jurisdiction to grant ahy relief to· the . appellant. . · ·On behalf of the ·respondent the case was practically rested on the construction of· the agreement (Ex. 1). With ·reference to· the terms of the agreement . the learned counsel for the respondent argued that the Treasurers . were not servants or employees of the Bank but were "independent contractors" and that the appellant and other employees in the Cash Depart-ment having been nominees . of the "independent con-tractors", there could not be any relation of employer and employee ·between the Bank and the appellant. It is therefore necessary to examine in some detail the terms of the agreement aforesaid. We set out below, underlining important words, the terms of the agree-ment in so far as they are relevant for the determina-tion of the true relation between the Bank and the · Treasurers. Though this agreement is dated the 1st May 1944, cl. (1) provides that it will be deemed to have commenced and come into force from the 15th March 1942, the · date of the death of R. B. Karam Chand Puri and will take the place of the previous agreement · dated the 26th July 1941, thus maintain. ing the .continuity of the relationship between the

1955 Shivnandarr Sharma v. The Punjab National Bank [,t,/ Sinha J.

1434 SUPREl\IE.COURT REPORTS [1955)

t9ss Bank and the Tr!lasurers'. The·agreement provides Shivnandan that the Tceasurers.sbal.l diligently and 'aith'ully serve J' "J Sharma the Bank at the Head Office and its various offices T. mentioned in schedule attached to and forming part The Punjab of the agreement and at 9ther offices where they may NationalBankUa. hereafter be appointed treasurers and shall in all res-. Si,.haJ. _ pects diligently and faithfully obey and observe all law-ful orders and instructions of_tbe Bank or the person placed by the Bank in authority over them in rela~ tion to the due discharge of their duties as Treasurers. The Treasurers in addition to the duties, liabilities and responsibilities devolving upon them by virtue of · the provisions oftbe agreement shall also be liable to perform such duties and discharge such responsibili~ ties as by custom usually devolve on treasurers in the employ of bank._ The Treasurers shall be -paid_ ·for their services remuneration as µientioned in schedule aforesaid or such remuneration as the General · Board of Directors of the Bank may de'termine from time to time. Out of the remuneration paid to tbeni by the Bank the Treasurers shall pay salaries to their nomi-nees employed by them for performing the duties of. cashier in the Bank on their behalf or other func-tionaries of similar nature. The salaries of such nomi-nees employed by them will be fixed by the Treasurers themselves but the same will be subjeet to the approval of th·e Bank. The remuneration of the Treasurers will-.. be tbenet amount which will-be left to them after pay-ing salaries to their nominees employed by · them for working as cashiers, etc. ·The Treasurers themselves will not be entitled to any kind of allowances besides ·the net remuneration as aforesaid but their nominees or working cashiers will be entitled to allowances which the authorities of the Bank may sanction for members of · . the staff from (ime to time. The Treasurers -shall em-ploy the number of men at each office as ·mentioned iri schedule A.aforesaid. The Board of Directors shall have the power to increase or decrease the number of their nominees for any particular office and the amount of rem unera ti on fixed for that office. The Trea-. surers.' shall be responsible for the due safety, both within and outside the premises of the B:mk at any

:SUPREME •COURTiREP,OR'fS

:Office pfacoo 1:t!llde;r their charge, of' all mOfley, , •specie, ornaments, .. bullion, •cash, etc. :and ";cif other ~aluable documents received by them for :arid . on behalf. of the Bank .or from the 'Bank and shall be answerable to the Bank for all fosses occurring · either inadvertently or :by or through the .negligence .or misconduct · of the Treasurers . or :any of their nominees .. The Treasurers shall be entitled to resign the services of the Bank by •giving three calendar months' notice to the Bank. The Bank shall also be ·entitled to dispense with the Treasurers' .services on giving three . months' notice. In case of gross :negligence or misconduct or of any fraud, .misappropriation or embezzlement by the Treasurers or any of the nominees in the discharge of .their duties as ·such Treasurers, no notice shall be necessary and the Bank shall have the right to dispense with their services forthwith. The Bank shall have the right to take the Treasurers into the servioe of the Bank after settlement of remuneration with :the Treasurers at any other ·office or offices of the Bank. The Treasurers ·and their nominees shall obey all the orders, rules and .regulations prescribed by the Ban•k with regard to the discharge of their duties by the cashiers :as well as with regard to the amount of balance they are allow-ed to keep with .them. It shall be the duty .of the cashiers to inform the manager of the Bank as soon as .the balance in hand exceeds the prescribed limit .and to ask for orders on the point. 'The Treasurers · shall not engage any person as their assistant or peon about whose character, conduct ·or reliability the manager of the Board of Directors of the Bank may . have any objection. The Treasurers shall also arrange that no person under employment absents himself from duty withol.lt the written permission of .the man-ager . for the time being. If any such employee is absent without leave, or , he is ·turned out on the objection of. the ,Board or the . Manag~r, the Treasurers shall. forth'Yith . app9int substitute ·in his place. The Treasurers shall be responsible for.:. the .1 acts and defaµlts .of all . their . n0mi1,1ees. The .. Treas-urers and ,thefr nominees .. shall be.·:entitled to ·travelling allotJ!ancf] .according to . .rates. s~<;tioned .,py ·the ,Board

~9li5 .. Shivnandan .ShlJTfllfl ·V. T:he Pu,Yab .Jlofltional Bank J. td, Sinha J.

1955 Shivnandan Sharma The "· Pury'iih National Bank Ltd. Sinha ].

of Directors of' the Bank. The Treasurers_ have de-. posited security of the value of Rs. 15,000/- on which they shall be entitled ·to receive interest at the rate of · 3! per cent. per annum. As further security for the ·due performance of the terms and .conditions of the agreement as -a cover for loss that may be caused to the Bank by. any act or omission of themselves or any one of their nominees, the Treasurers hypothecated properties as per . schedule attached . to and forming part of the agreement. Schedule aforesaid contains the names of the offices, the monthly remuneration of the Treasurers in respect of each one of those offices separately, net savings of the Treasurers after paying the salaries of the total number of · men . including cashiers, etc., as stated against each one of the offices. Apart from the · terms set out· above bearing on the relation between the Bank and the Treasurers, some of which apply equally to their nominees, the · follow-ing terms of the agreement bear directly on the rela-tion between the nominees of the Treasurers, · like the appellant, and the Bank. In this connection the · agree-ment provides that the Board of Directors shall have the power to increase or decrease the number of the Treasurers' nominees for any particular office and the amount of remuneration fixed for that office. Such nominees shall be entitled as servants of the Bank to any bonus which may from time to time be declared for the members of the staff. The bonus of the Treasurers shall · be limited to the amount of their own net remuneration and no further. They shall not be entitled to any bonus · to which their cashiers are not eligible under the rules of the Bank. The nomi-nees of the Treasurers shall be entitled to participate as ordinary members of the staff in ·the provident fund constituted by the Bank. Such nominees shall also be entitled to travelling allowance according to rates sanctioned by the Board of Directors of the Bank whenever they are required to go to out-stations on bank business. From the terms of the agreement. aforesaid set out above almost verbatim omitting such clauses and words as 'are not relevant· to this case, it will appearthat the Treasurers are under the employment of the Bank on monthly basis for an indefinite term, that is to say, until such time as either party to the agree-ment terminated it in accordance with the terms quoted above. They are under the complete control and direction of the Bank through its manager or other functionaries. The Treasurers have to take their orders from day to day as regards the cash balance or other cognate matters relating to the safe custody of cash, valuable documents, etc. belonging to the Bank or its constituents. The Treasurers receive in respect of each office under their charge certain named sum out of which they have to pay the salary of stated number of their assistants who may be head cashiers or cashiers or assistant cashiers and other such func-tionaries. They are entitled to receive bonus on the net amount secured to them as their remuneration, being the lump sum fixed in respect of each office, minus the salary of the assistants. It is true that these Treasur~rs are not and cannot be expected to be personally present to discharge their onerous duties at each one of the large number of offices spread over the Punjab and outside. Naturally they had to be authorized to engage head cashiers, cashiers, or assist-ant cashiers in respect of each of the offices placed in their charge. They had to guarantee the fidelity of the persons so employed as their assistants. Those assistants had to be persons in whose reliability, honesty and efficiency both the Bank and the Trea-surers had confidence. The Treasurers have the right to nominate those assistants but the Bank had the final words in the choice. The Bank Manager has complete control over such nominees in the matter of leave of absence, discipline and conduct in the dis-charge of their duties as assistants managing the cash and other valuables in the custody of the Bank. From the very nature of things it had to be dual control in the sense that the Treasurers had to nominate the assistants who are to discharge those responsible functions in connection with cash and other valuables of the Bank and the Bank could not abdicate its powers of full control over the day to day working ot 17-90 S. C. India/59

195.S Shivnandan Sharma v. The Punjab National Bank Ltd. Sinha J.

1955 Shiunandatt Sharma v. The Punjab Jfational Bank Ltd. I Sinh~ ].

the Cash Department. The nominees of the Treas-urers are treated on the same footing as the other ser-vants of the Bank in the matter of bonus, travelling allowanc.e and provident fund, etc. It is true those nominees are. to be paid by the Treasurers but it is out of the. money provided by the Bank. It is not always. easy to determine.whether the rela-tion between two parties, in the present case of the Treasurers vis-a-vis the Bank, is that ' of · servants to master or of independent contractors who have undertaken to do particular job for their employer. The question has generally arisen in connection with the determination of vicarious liability of an em-ployer in respect of .acts done by his agent (using neutral word which includes an independent· ·contrac-tor as also servant). The distinction between ser-vant and an independent contractor has been the subject matter of large volume of case-law from which the text-book writers on torts have attempted to lay down some general tests. For example, in Pollock's Law. of Torts,*. the distinction has thus been brought out:

"A master is one who not only prescribes to the

workman the end of his work, but directs or at any moip.ent may direct the means also, or, as it has been put, 'retains the power · of controlling the work', servant is person subject to the command of his master as to the manner in which he shall do his work .... An independent contractor is one who undertakes to produce given result but so that in the actual execution of the work he :is not under the order or control ·of the person for whom he does it, and may use his own discretion in things not specified before-hand ................ ".

Clerk & Lindsell on Torts (11th Edn.) at p. 135 have adopted the description of an independent contractor given by Pollock as quoted above.

In the 11th Edn. of Salmond's Treatise on the Law of Torts, the same distinction has been clearly indi-cated in the following passage· a~ p. 98:-

- *Pages 62 & 63 of Pollock on Torts, 15th Edn.

S.C.R. SUPREME COURT REPORTS

"What then, . is the test of . this distinction bet-ween . servant and an independent . contractor? The test IS the existence of right of control .over the agent m respect of the manner in which· his work is to be .done. . servant is an agent who works under the supervision and direction of his employer; an in-dependent contractor IS one who IS his own master. servant IS person engaged to obey his em-ployer's 9rders from time to time; an independent contractor is ·a person engaged to do certain work, but to exercise his own discretion as to the mode and time of doing it-he IS bound by his contract, but not by his employer's orders".

Those learned authors have discussed m great detail cases illustrative of those distinctions, indicating the circumstances in which the general rule has been· ap-plied to individual cases with such modifications as the facts and circumstances of particular case re-quired. We are here not concerned with those mce distinctions which have been drawn m connection with the rule of vicanous liability in torts. We are here concerned only with the question how far the test laid down by the standard authors as'· quoted above can be applied to determine the present con-troversy whether the Treasurers of the Bank were its servants as contended on behalf of the appellant or independent contractors as claimed on behalf of the respondent-Bank. The agreement between the parties, as summarised above, IS composite transaction con-stituting the Treasurers agents of the Bank, the former agreemg to indemnify the latter against any lo~s occasioned to the Bank due to the lack of fidelity and efficiency of the ministerial staff entrusted with the charge of the Bank's cash and valuable documents. The Treasurers have been charged with the duty of nominating their assistants who are to be responsible m their day to day work to the Bank which all the time has full control over them in the matter of their leave of absence, as to how they shall keep the cash and other valuables and as to how they shall be under the general direc~ion of the ·Bank's manager or some

Shivnandan Sharma v. The Punjab National Bank Ltd.

Sinha ].

Shiv1Uf1J.{/O.n Sha,.ma v. The Punjab. National Bank Ltd. Sinha J.

those employees are not the servants of Government? The analogy may not be perfect, because, in the pre-sent case, the appointment and dismissal of the em-ployees of the Cash Department IS the joint respon-sibility of the Bank and its Treasurers. It has got to be so because the Treasurers are the guarantors of the fidelity and efficiency of the employees and the Bank has to exercise complete control over the day to day discharge of their functions because it Is the Bank which is vitally and immediately concerned with the efficient and honest discharge of the duties of the assistants in the Cash Department, the efficient run-ning of which is the most important of bank's func-tions.It will further be noticed with reference to the terms of the agreement set out above that whereas the Treasurers and their nominees have to take their orders from the Bank Manager or other such func-tionary, there Is no specific provision that those nommees shall discharge their day to day functions under the direct control of the Treasurers or that they will be subject to the immediate control of the Treasurers m the discharge of their daily duties and in the matter of the grant of leave of absence. There rnuld not be such provision, as dual control of that kind in the daily work of the employees would lead to great deal of confusion and lack of disci-pline amongst the ministerial staff. The employees of the Cash Departmen~ have of necessity to be under the direct· control of the Bank Manager or of some ::>ther functionary appointed by the Bank. It is the Bank which has undertaken the responsibility m the matter of their pay and prospects m the service and naturally therefore, such employees, even as other employees of the Bank, have -to take their orders from the Bank. It ·must therefore be held that the Treas-urers are the servants of the Bank and that their nominees must equally be so.

The Appellate Tribunal held that on reading as ~ whole of the clauses of the agreement aforesaid the appellant was an employee· of the Treasurers and not of the Bank. It did not address itself pointedly

Shivnandan Sharma v.

The !'u,Yab National Bank Ltd. Sinha J.

1955 Shivnandtu1 Sharma v.

The Punjab ·National Bank Ltd. Sinha -J.

i:o the question as to · what was the exact relation between the Bank and the •Treasurers. It did not also consider the question as tO· ·what would · be the position of ' the employees ·of the· Cash·· Department vis-a-vis the Bank if it were ·held that the Treasurers themselves · were the servants : of the Bank and . not independent contractors. Before the ·Appellate· Tri-bunal 'both parties appear to· have. concentrated their attention · on the question ·as to whether the emplo-yees of the Cash·· 'Department were . servants . of" the Bank or· of the· Treasurers. In our opinion,. that was not correct approach· to·. the · determination of the controversy between ·the parties. ·. If the · Treasurers' relation to the Bank was that of servants to master, simply because ·the servants were authorized to· ap-point and dismiss the ministerial · staff of the Cash Department would not make the employees· in the Cash Department independent· of the Bank. In· that sittiation the ultimate employer would be the· Bank through the agency of 'the Treasurers. jt was ·argued on' behalf of 'the· respondent that even if it were held that ··the Treasurers· were the servants of: the. Bank and . not independent contractcirs; the. legal position of the· employees of the Cash Department · vis-a-vis the Bank would be the same;· namely, · that they will· be in·· law the :servants of the Treasurers. In our opinion, there is no · substance 'in that contention. .If . master employs' servant and authorizes him to employ- number· ·of persons to do · particular job and to guarantee their fidelity and efficiency for· ·a Tash con-sideration, the employees· thus· appointed by .the .. ser-vant 'Wou!O'·be··equal!y·•with the employer;: servants of the· master. 'It is ·not -always correct to· say ·that· per-sons appointed and liable to· be dismissed: by : an· in· dependent contractor can -in· no ·circumstances •be . the employees of· ·the third· party. This would be ·· clear from the following observations· of Lord · Esher, M.R., in the case of Donovan v. Laing,·' Wharton & -Down Construction Syndicate([1]) :~ , . . . . . ,. "It· -is . true that .the defendants,. selected the man and paid·his.wages; and these· are .circumstances which, if .nothing •else intervened;• would- be·.strong'·to. show (1) [18~3] t n. B. D629 at 632.

that he. was the servant of the defendants. ·So; indeed, he was as to great many things; but as to the working of the crane he was no longer their servant, but bound to work ·under the orders of Jones & Co., and, if they saw the man misconducting. himself in working the crane or disobeying thei.r orders, they would . have right to discharge him from that employment?'.

Those observations have 'been · approved in the latest decision of the House of Lords in the case of Mersey Docks & Harbour Board v. Goggins & Griffith (Liver-pool) Ltd.(1). The House of Lords distingllished that ruling on facts but did not depart from the general rule laid down in the earlier decision that the deter-minative factor is as to which party had control . over the workers·· as to how they would do · their job from day to day. Lord Macmillan in his speech at p. 14 has observed as follows :-·

"Many reported cases were cited to your Lord-ships but ·where, as all agree, the question in each case turns on its own circumstances, decisions in other cases are rather illustrative than determinative. So far as attempts have been made to formulate cri-terio:1 of general application, it cannot be said that these attempts have been very successful".

It would thus appear that the question 4s to whose employee particular person was has to be deter-mined with reference to the facts and circumstances of each individual ·case. . Lord Porter in the course of his speech in the reported case (supra) at p. 17 has observed as follows :-

"Many factors have bearing on the result. . Who is paymaster, who can dismiss, how long the alterna-tive service lasts, what machinery is employed, have all to be kepf in mind. The expressions used in any individual case must always be considered in regard to the subject matter under discussion but amongst the many·· tests suggested I . -think that . the most satis-factory,· by which to ascertain who is the employer at any particular time, is to ask who is entitled to tell · the _employee th.e way in which he is to do the· work upon which he is engaged" .. (1) [1947] A.C. I,

1955 Shivnatrdan Sharma v. The Punjab· National Bank Ltd. Sinha :J.

1955 Shivnandan ~ As indicated above, in the present case the direc-S!iafrrid tion and control of the appellant and of the minis-v. terial staif in charge of the Cash Department of the Ti,, Punjqb National Bahk l.Jd. Bank was entirely vested in the Bank through its manager or other superior officer. We have therefore Sinha J. no hesitation in differing from the conclusion arrived at by the Appellate Tribunal and in holding that the appellant was an employee of the Bank. That being so, the Tribunal had the jurisdiction to make the directions it did in respect of the appellant. The respondent did not at any stage of the proceedings challenge· the orders of the Tribunal on its merits. That conclusion being reached, there is no difficulty in upholding the orders of the Tribunal in respect of the appellant, It is therefore not necessary to pro-nounce upon the other points raised by the parties. The appeal 1s accordingly allowed with costs throughout.

Appeal allowed.

1955 March 15

BHIM SEN

THE STATE OF U.P.

[VIVIAN BosE, JAGANNADHADAs and SINHA JJ. J

U. P. Panchayat Raj Act, 1947 (U. P. Act XXVI of 1947), ss. 49 (1)(2)(4), 52, 55-Rule 84 framed by Stat< Government-Thef' of the value of Rs. J..().0_ committed by three accused-One of the accused belonging to Madhya Pradesh State-Panchayat Ada/at constituted under the provisions of s. 49 of the Act and Rule 84 framed there· under to try the present case-Whether could be properly constituted -Rule 84-W hether Intra vires-/urisdiction of ordinary courts-JJ/hether excluded-Bar under s. 55---Scope of.

Three accused were c.onvicted by Magistrate under s. 379 of the Indian Penal Code of the offence of theft of the value of Rs. 3 and sentenced to fine 0£ . Rs. 25 /- each. The question for determination was whether t~e case should have been tried by Panchayat Ada:lat cortstituted under the U. P. PanchaYat Raj Act, 1947 and the Magistrate had no jurisdiction to try it. Two of the accused belonged to U.P. State and the third belonged to Madhya Pradesh State.

Section 52( I) of the Act provides that certain specified offences (including the offence of theft when the value of stolen property does