CHAPTER – 1

BASICS OF EMPLOYMENMT

By Service we mean for the purposes of this hand-book, employment. Jurisprudence means ‘study of legal systems including judicial precedents. Thus we have civil jurisprudence, criminal jurisprudence, service jurisprudence etc. Therefore the term service jurisprudence can be described as ‘study of legal system relating to employment in general taking into consideration judicial pronouncements interpreting or laying down the law. Employer-employee relationship

For any employment to come into being there must be an employer and an employee. This implies that there must exist an ‘employer-employee’ relationship. The question arises who is an employer and who is an employee and what are the ingredients of this relationship. Before embarking upon examining the indicia of the ‘employer-employee’ (also sometimes called master-servant) relationship, it is desirable to have an idea how the terms employer and employee have defined in various enactments. Such terms have been defines in many of the labour laws as under: (a) Employer

The Workmen’s Compensation Act, 1923 defines ‘employer’ as follows:

Section 2(e) "employer" includes any body of persons whether incorporated or not and any managing agent of an employer and the legal representative of a deceased employer, and, when the services of workman are temporarily lent or let on hire to another person by the person with whom the workman has entered into a contract of service or apprenticeship means such other person while the workman is working for him.

The Industrial Employment (Standing Orders) Act, 1946, defines employer as:

Section 2(d) "employer" means the owner of an industrial establishment …, and includes—

(i) in a factory, any person named under clause (j) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), as manager of the factory;

(ii) in any industrial establishment under the control of any department of any Government in India, the authority appointed by such Government in this behalf, or where no authority is so appointed, the head of the department;

(iii) in any other industrial establishment, any person responsible to the owner for the supervision and control of the industrial establishment;

The Industrial Disputes Act, 1947 defines ‘employer’ in section 2(g) which reads:

Section 2 (g) "employer" means—

(i) in relation to an industry carried on by or under the authority of any department of the Central Government or a State Government, the authority prescribed in this behalf, or where no authority is prescribed, the head of the department;

(ii) in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority;

Section 2(e) of the Minimum Wages Act, 1948 defines ‘Employer’ as:Section 2(e) "employer" means any person who employs, whether directly or through another person, or whether on behalf of himself or any other person, one or more employees in any scheduled employment in respect of which minimum rates of wages have been fixed under this Act, and includes, except in sub-section (3) of section 26 –

(i) in a factory where there is carried on any scheduled employment in respect of which minimum rates of wages have been fixed under this Act, any person named under clause (f) of sub- section (1) of section 7 of the Factories Act, 1948 (63 of 1948), as manager of the factory;

(ii) in any scheduled employment under the control of any Government in India in respect of which minimum rates of wages have been fixed under this Act, the person or authority appointed by such Government for the supervision and control of employees or where no person or authority is so appointed, the head of the department;

(iii) in any scheduled employment under any local authority in respect of which minimum rates of wages have been fixed under this Act, the person appointed by such authority for the supervision and control of employees or where no person is so appointed, the chief executive officer of the local authority;

(iv) in any other case where there is carried on any scheduled employment in respect of which minimum rates of wages have been fixed under this Act, any person responsible to the owner for the supervision and control of the employees or for the payment of wages;

Section 2(13) and (17) of the Employees’ State Insurance Act, 1948 distinguish between ‘immediate’ and ‘principal’ employer and define them as:

Section 2(13) "immediate employer", in relation to employees employed by or

through him, means a person who has undertaken the execution, on the premises of a factory or an establishment to which this Act applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment, and includes a person by whom the services of an employee who has entered into a contract of service with him are temporarily lent or let on hire to the principal employer; and includes a contractor;

(17) "principal employer" means—(i) in a factory, the owner or occupier of the factory and includes

the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as the manager of the factory under the Factories Act, 1948 (63 of 1948), the person so named;

(ii) in any establishment under the control of any department of any Government in India, the authority appointed by such Government in this behalf or where no authority is so appointed, the head of the department;

(iii) in any other establishment, any person responsible for the supervision and control of the establishment;

‘Employer’ as per the Employees’ Provident Fund Act, 1952 is defined as under:

Section 2

(e) "employer" means—(i) in relation to an establishment which is a factory, the owner

or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and

(ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent.

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 defines an employer as:

Section 2(c) "employer" means any person who employs one or more other

persons to do any work in an establishment for remuneration and includes any person entrusted with the supervision and control of employees in such establishment;

Similarly Section 2 of the Payment of Bonus Act, 1965 defines employer in following terms:

Section 2(14) "employer" includes—

(i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and where a person has been named as a manager of the factory under clause (f) of sub- section (I) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and

(ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent;

The Contract Labour (Regulation and Abolition) Act, 1970 defines ‘principal employer’ as:

Section 2(g) "principal employer" means—

(i) in relation to any office or department of the Government or a local authority, the head of that office or department or such other officer as the Government or the local authority, as the case may be, may specify in this behalf,

(ii) in a factory, the owner or occupier of the factory and where a person has been named as the manager of the factory under the Factories Act, 1948 (63 of 1948) the person so named,

(iii) in a mine, the owner or agent of the mine and where a person has been named as the manager of the mine, the person so named,

(iv) in any other establishment, any person responsible for the supervision and control of the establishment.

Explanation.--For the purpose of sub-clause (iii) of this clause, the expressions "mine", "owner" and "agent" shall have the meanings respectively assigned to them in clause (j), clause (l) and clause (c) of sub-section (1) of section 2 of the Mines Act, 1952 (35 of 1952);

In terms of section 2 of the Payment of Gratuity Act, 1972:Section 2(f) "employer" means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop—

(i) belonging to, or under the control of, the Central Government or a State Government, a person or authority appointed by the appropriate Government for the supervision and control of employees, or where no person or authority has been so appointed, the head of the Ministry or the Department concerned,

(ii) belonging to, or under the control of, any local authority, the person appointed by such authority for the supervision and control of employees or where no person has been so appointed, the chief executive officer of the local authority,

(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a manager, managing director or by any other name, such person;

Therefore an employer is a person or body who:

a) Owns or manages an establishment and in case of manager is responsible to the owner for the supervision and control of the industrial establishment;

b) Employs persons (pays wages); c) Exercises Supervision and control of employees.

Many establishments do not employ persons directly. They do so through intermediaries and the system is called labour contract. This introduces the classification of intermediate and principal employer. (b) Employee

Like ‘employer’ the term ‘employee’ or ‘workman’ has also been variously defined in Labour Laws.

The term ‘workman’ is defined in section 2(s) of the Industrial Disputes Act, 1947 as:

Section 2(s) "workman" means any person (including an apprentice)

employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person—

(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or

(ii) who is employed in the police service or as an officer or other employee of a prison; or

(iii) who is employed mainly in a managerial or administrative capacity; or

(iv) who, being employed in a supervisory capacity, draws wages exceeding one thousand six hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

The Fundamental Rule 56 distinguishes government servant and workman in so far as their age of superannuation is concerned. Clauses (a) and (b) read as under :

“F.R. 56(a) Except as otherwise provided in this rule, every government servant shall retire from service on the afternoon of the last day of the month in which he attains the age of fifty-eight years.

(b) A workman who is governed by these rules shall retire from service on the afternoon of the last day of the month in which he attains the age of sixty years.

Note.— In this clause, a workman means a highly skilled, skilled, semi-skilled, or unskilled artisan employed on a monthly rate of pay in an industrial or work-charged establishment.”The Factories Act, 1948 defines worker as:

(l) "worker" means a person employed, directly or by or through any agency (including a contractor) with or without the knowledge of the principal employer, whether for remuneration or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process but does not include any member of the armed forces of the Union;

Section 2(i) of the Minimum Wages Act, 1948 defines ‘employee’ thus:

“Employee” means any person who is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment in respect of which minimum rates of wages have been fixed; and includes an out-worker to whom any articles or materials are given out by another person to be made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the purposes of the trade or business of that other person where the process is to be carried out either in the home of the out-worker or in some other premises not being premises under the control and management of that other person; and also includes an employee declared to be an employee by the appropriate Government; but does not include any member of the Armed Forces of the Union.’

The Employees’ State Insurance Act, 1948 defines ‘employee’ as:Section 2 (9) "employee" means any person employed for wages in or in

connection with the work of a factory or establishment to which this Act applies and—(i) who is directly employed by the principal employer on any

work of, or incidental or preliminary to or connected with the

work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or

(ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or

(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service;

and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment; but does not include (a) any member of the Indian naval, military or air forces; or (b) any person so employed whose wages (excluding remuneration

for overtime work) exceed such wages as may be prescribed by the Central Government:

Provided that an employee whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period;

The Employees’ Provident Fund Act, 1952 defines employee as: (f) "employee" means 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 the employer, and includes any person—(i) employed by or through a contractor in or in connection with the work of the establishment; (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment.

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 defines employee as follows:

Section 2 (b) "employee" means any person who is employed in an

establishment to do any work for remuneration; Similarly the Payment of Bonus Act, 1965 defines employee and

employer in following terms:(13) "employee" means any person (other than an apprentice)

employed on a salary or wage not exceeding three thousand and five hundred rupees per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward whether the terms of employment be express or implied;

The Contract Labour (Regulation and Abolition) Act, 1970 defines ‘workman’ as:

Section 2(i) "workman" means any person employed in or in connection with

the work of any establishment to do any skilled, semiskilled or un-skilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied, but does not include any such person—

(A) who is employed mainly in a managerial or administrative capacity; or

(B) who, being employed in a supervisory capacity draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature; or

(C) who is an out-worker, that is to say, a person to whom any articles or materials are given out by or on behalf of the Principal employer to be made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the purposes of the trade or business of the principal employer and the process is to be carried out either in the home of the out-worker or in some other premises, not being premises under the control and management of the principal employer.

The Payment of Gratuity Act, 1972 defines employee as follows:Section 2

(e) "employee" means any person (other than an apprentice) employed on wages in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi- skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.

Thus an employee is a person who is employed to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward. The essential requirement is ‘to work for wages at monthly rate’.

The government also runs industrial establishments like telephone and Ordinance factories, Therefore the Fundamental Rules governing the service conditions of the government servants distinguishes between a government servant and a workman in so far as their age of superannuation is concerned. A government servant retires at the age of fifty eight years (FR 56(a)) whereas a workman retires at the age of sixty years (FR 56(b)). It was held in Chandigarh Admn. v. Mehar Singh, 1992 Supp (3) SCC 43 that the question whether an employee is a ‘workman’ within the meaning of clause (b) of F.R. 56 depends on the nature of his work. A person who is an artisan employed on a monthly rate of pay in an industrial or work-charged establishment qualifies is a workman. It does not matter whether the workman is a skilled or a semi-skilled or an unskilled artisan. All artisans, who are workmen, whether skilled or otherwise, qualify for the benefit of clause (b), provided they are employed on a monthly rate of pay in an industrial or work-charged establishment.

Although employee and workman are commonly understood as being synonymous, in industrial employment every employee is not a workman. Labour laws generally prescribe a limit on monthly wages for an employee to qualify as workman. However it is not the only criteria. Whether an employee is a workman or not is to be decided not on the basis of the grades in which they are placed but on the basis of their duties, responsibilities and powers. It has to be appreciated that “workmen” as well as non-workmen being in the same grade does not imply that the distinction between the two categories ceased to exist, or that they belonged to the same class. Mukand Ltd. v. Mukand Staff & Officers' Assn., (2004) 10 SCC 460

Indicia of Employer-employee relationship An employment is characterized by employer-employee relationship.

It is often said that employment is a contract between the two parties albeit having unequal bargaining powers. However not all contracts give rise to employer-employee relationship.

A service contract may be of two kinds: ‘Contract for service’ and ‘Contract of service’. In the first case the master dictates what is to be done and not the mode or manner of doing it. For example if contract is awarded for unloading bags of food grains from rail and loading in trucks, the Food Corporation decides the rate per bag and is not concerned with how many labours the contractor employs and at what rate he pays them. The corporation is also not concerned with conditions of the employment of the labours. Such labours do not become employees of the corporation. Such a contract would not create employer-employee relationship between the labours and the corporation. Similarly if a company appoints franchisee for its products the employees of the franchisee cannot claim to be employees of the company.

In the second case, i.e., ‘contract of service’ the master not only requires what is to be done but also how it is to be done. This cannot be done unless the service is closely watched and constant guidance and control is exercised. Such contracts generally result in employer-employee relationship. For example if a person is employed as data entry operator, he is to be told what data to be entered, in what manner, under which software, what should be the retrieval mechanism so on and so forth. This requires guidance, supervision and control on a continuing basis and demands effective involvement of the employer with the employee. This gives rise to employer-employee relationship.

A contract of service in absence of any statutory provisions must be preceded by an offer and acceptance. A contract of service in absence of any statute is also governed by the provisions of the Indian Contract Act. Until then the employer-employee relationship does not come into being and the person cannot have any legal right or acquire a status. Sultan Sadik v. Sanjay Raj Subba, (2004) 2 SCC 377

Employment can broadly be classified in three categories: government (or public), industrial and private. Public employment is governed by statutory rules, industrial employment is governed by labour laws and private employment is governed by contract. There is clear distinction among these three. Contract of personal service cannot be enforced under law. The dismissed employee can only sue for damages and not reinstatement. Courts will neither declare such termination to be a nullity

nor declare that the contract of employment subsists nor grant the consequential relief of reinstatement. SBI v. S.N. Goyal, (2008) 8 SCC 92. In industrial employment governed by Labour Laws the dismissal can be set aside by the Labour court/ Industrial Tribunal or courts of law; but this will not automatically result in reinstatement or entitlement to back wages. Reinstatement or back wages are to be specifically ordered. In case of government service governed by statutory rules, setting aside of dismissal/removal/termination automatically entitles the employee to all consequential benefits. Therefore government service confers a status on the employee because he acquires a legal right to service till superannuation by virtue of the statutory rules governing his service conditions. He also cannot be recruited/removed/ terminated/ dismissed without following prescribed rules and procedures. These rules and procedures can be enforced by the Courts under Articles 226 of the Constitution. Although the certified Standing Orders are said to have force of the statutory rules, they are not statutory rules and cannot be enforced as such.

This brings us to the ingredients or indicia of the employer-employee relationship. Four ingredients or indicia which can turn a contract of service into employer-employee relationship were identified and laid down by the House of Lords more than six decades ago. These indicia or ingredients as laid down by the House of Lords in Short v. J.W. Henderson Ltd. (1946) 174 Law Times 417 (quoted by the Supreme Court in Union Public Service Commission v. Girish Jayanti Lal Vaghela. (2006) 2 SCC 482: AIR 2006 SC 1165: 2006 Lab IC 1020: 2006 AIR SCW 844: 2006 (2) Scale 115: 2006 (2) Supreme 221: 2006 (1) BLJR 437) are:

(a) the master’s power of selection of his servant; (b) the master’s responsibility of payment of wages or other

remuneration; (c) the master’s right of suspension or dismissal; and (d) the master’s right to control the method of doing the work.

These ingredients however have been held to be neither exhaustive nor imperative. The employer-employee relationship may still exist even if some of these are absent altogether or are present in any other form. The essence of this relationship is the right of the master in some reasonable sense to control the method of doing the work. ‘Control’ used to be the decisive factor in determining whether an employer-employee relationship exists. It is no longer so, though it is an important factor and may still be decisive in some cases. (See State of Assam v. Kanak Chandra Dutta, AIR 1967 SC 884: 1967 1 SCR 679 and State of Gujarat v. Raman Lal Keshav

Lal Soni AIR 1984 SC 161) The employer has power over the employee not only to direct what work the servant is to do, but also the manner in which the work is to be done. The servant undertakes to serve the master and obey the reasonable orders within the scope of his duty. It is implicit in such relationship that the servant may disobey the master’s order only at his peril. (K. Veeraswami v. Union of India (1991) 3 SCC 655)

There is no dispute regarding the first three ingredients. Questions have arisen however with respect to scope and ambit of the power of control and supervision.

It has become settled that ‘control’ is not the sole determinative factor in ‘employer-employee relationship’. Instead the Supreme Court propounded the concept of integrated approach or test in Ram Singh v. Union Territory, Chandigarh. (2004) 1 SCC 126 It was held:

15. In determining the relationship of employer and employee, no doubt, “control” is one of the important tests but is not to be taken as the sole test. In determining the relationship of employer and employee, all other relevant facts and circumstances are required to be considered including the terms and conditions of the contract. It is necessary to take a multiple pragmatic approach weighing up all the factors for and against an employment instead of going by the sole “test of control”. An integrated approach is needed. “Integration” test is one of the relevant tests. It is applied by examining whether the person was fully integrated into the employer’s concern or remained apart from and independent of it. The other factors which may be relevant are — who has the power to select and dismiss, to pay remuneration, deduct insurance contributions, organise the work, supply tools and materials and what are the “mutual obligations” between them.

This view was reiterated in Workmen of Nilgiri Coop. Mkt. Society Ltd. v. State of T.N. (2004) 3 SCC 514 wherein it was held:

37. The control test and the organisation test, therefore, are not the only factors which can be said to be decisive. With a view to elicit the answer, the court is required to consider several factors which would have a bearing on the result: (a) who is the appointing authority; (b) who is the paymaster; (c) who can dismiss; (d) how long alternative service lasts; (e) the extent of control and supervision; (f) the nature of the job e.g. whether it is professional or skilled work; (g) nature of establishment; (h) the right to reject.38. With a view to find out reasonable solution in a problematic case of this nature, what is needed is an integrated approach meaning thereby integration of the relevant tests wherefor it may be necessary to examine as to whether the workman concerned was fully integrated into the employer’s concern meaning thereby independent of the concern although attached therewith to some extent. 41. If the provisions of the contract as a whole are inconsistent with its being a contract of service, it will be some other kind of contract and the person doing the work will not be a servant. 65. … The concept of employment involves three ingredients, which are: (i) employer — one who employs i.e. engages the services of other persons; ( ii) employee — one who works for another for hire; and (iii) contract of employment — the contract of service between the employer and the employee whereunder the employee agrees to serve the employer subject to his control and supervision.

This provision came to be considered by the Supreme Court in the case of C.E.S.C. Ltd. v. Subhash Chandra Bose, (1992) 1 SCC 441 wherein it was held :

In whatever manner the word ‘employee’ under Section 2(9) be construed, …, the construction cannot go to the extent of ruling out the function and role of the immediate employer or obliterating the distance between the principal employer and the immediate employer. …. He is the one who stumbles in the way of direct nexus being established, …, between the employee and the principal employer. He is the one who in a given situation is the principal employer to the employee directly employed under him.

C.E.S.C. Ltd. v. Subhash Chandra Bose, (1992) 1 SCC 441If the work by the employee is conducted under the immediate gaze or overseeing of the principal employer, or his agent, subject to other conditions as envisaged being fulfilled, he would be an employee for the purpose of Section 2(9). Thus besides the question afore-posed with regard to supervision of the principal employer the subsidiary question is whether in the instant case the contractual supervision exercised by the immediate employer (the electrical contractors) over his employee was exercised, on the terms of the contract, towards fulfilling a self-obligation or in discharge of duty as an agent of the principal employer.

The expression ‘supervision’ was interpreted and elaborated as under (C.E.S.C. Ltd. v. Subhash Chandra Bose, (1992) 1 SCC 441) :

In the ordinary dictionary sense “to supervise” means to direct or oversee the performance or operation of an activity and to oversee it, watch over and direct. It is work under eye and gaze of someone who can immediately direct a corrective and tender advice. … When the employee is put to work under the eye and gaze of the principal employer, or his agent, where he can be watched secretly, accidentally, or occasionally, while the work is in

progress, so as to scrutinise the quality thereof and to detect faults therein, as also put to timely remedial measures by directions given, finally leading to the satisfactory completion and acceptance of the work, that would in our view be supervision for the purposes of Section 2(9) of the Act. It is the consistency of vigil, the proverbial ‘a stich in time saves nine’. The standards of vigil would of course depend on the facts of each case.

The principal employer can delegate the function of supervision to his agent who in the eye of law is his second self, i.e., a substitute of the principal employer. However, the immediate employer can by statutory compulsion never be the agent of the principal employer. If such a relationship is permitted to be established it would not only obliterate the distinction between the two, but would violate the provisions of the Act as well as the contractual principle that a contractor and a contractee cannot be the same person. An agent is distinct from both the ‘servant’ and ‘an independent contractor’. A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given to him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result. An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control and supervision of the principal. (see Superintendent of Post Offices v. P.K. Rajamma, (1977) 3 SCC 94 : 1977 SCC (L&S) 374 : AIR 1977 SC 1677) In conclusion it was held that the employees of the intermediate employer were not employees of the principal employer.