Jagdish Sahai, J. - (1.) The respondents were prosecuted under Section 27 of the U. P. Shops and Commercial Establishments Act 1947, for breach of Rules 13 and 15 of the Rules on the allegation that the respondent Brij Lal Gulati was the proprietor and the respondent Ved Prakash was the manager of the Railway Booking Agency Shaheedganj, Saharanpur. They had neither maintained nor produced for inspection on demand by Sri O.N. Avasthi, Inspector of Shops and Commercial Establishments, Saharanpur, the prescribed registers of attendance and wages in Form E, the register of leave in Form F, the register of fine and deduction in Forms D and C and the Inspection Book and they also did not display the close day and weekly holiday notices in Forms A and B and the abstract of the Act and the Rules in the premises on 14th of March 1958. The learned magistrate who tried the respondents acquitted them by his order dated 30-8-1958. It is against that order of acquittal that the present appeal has been filed by the State under Section 417 Cr. P. C. The learned magistrate accepted the plea of the respondents and held, firstly, that the booking agency did not come within the purview of the Shops and Commercial Establishments Act (hereinafter referred to as the Act) and secondly that the respondents were governed by the Payment of Wages Act and not by the Act. I have heard Mr. B.N. Sapru for the State and Mr. Asif Ansari for the respondents. Mr. Ansari has supported the judgment of the trial court on the grounds mentioned in it and has further added that railways being a central' subject, the State legislature could not have either intended to or was competent to have legislated in respect of a railway agency. The Act was passed by the U. P. legislature under the provisions of the Government of India Act, 1935 (hereinafter referred to as the 1935 Act). Its long title runs as follows:- "An Act to regulate the hours of employment and certain other conditions of employment in shops and commercial establishments." The preamble of the Act is in the following words:- "Whereas it is expedient to provide for holidays and to regulate the hours of employment and certain other conditions of employment in shops and commercial establishments; It is hereby enacted as follows:- Section 4 of the Act runs thus:- "4. Nothing in this Act shall apply to- (a) persons occupying positions of a confidential, managerial or supervisory character; Provided that the number of employees so exempted in any shop or commercial establishments shall not exceed ten per cent of the total number of persons employed in such shop or commercial establishment; Provided also that in any shop or commercial establishment which employs five persons or less no employee shall be exempt from the provisions of this Act; (b) persons whose work is inherently intermittent, such as a traveller or canvasser; (c) offices of Government or of local authorities; (d) establishments for the treatment or the care of the sick, infirm, destitute or mentally unfit; (e) members of the family of any employer". This section provides that the offices of the government or of local authorities shall be exempt from the operation of the Act. If the railway agency is one of the offices of the Government it is obvious that the case of the respondents would not be governed by the Act. The respondents got connected with file railway agency under an agreement entered into between the President of India through the Northern Railway administration and the respondent No. 1 Brij Lal Gulati on 29th September 1953. The second paragraph of the agreement reads as follows:- "Whereas the Railway Administration has established a city booking agency at Saharanpur via 'Saharanpur Railway Station with a sub agency at the junction of the railway and city roads for the purpose of outward booking of passengers, their luggage and parcels (outward) only attached to the latter, and outward booking of passengers from and through booking of parcels and goods (in "smalls" and in wagon loads) in local and through booking both inward and outward (except live stock, coal and goods in bulk or loose, dangerous and explosive goods and arms and ammunition) between the said city booking agency and all stations on the Northern Railway and other connected railways and city booking and out agencies with which the Northern Hallway has or may hereafter have through booking arrangements of passengers, their luggage and parcels (outward) only attached to the latter, and booking and conveyance of parcels and goods (in smalls and in wasron loads) in local and through booking both inward and outward booked to and from the said city booking agency between the city booking agency nnd Saharanpur Railway Station, and whereas the Contractor has agreed with the Railway Administration to book passengers parcels, and goods and carry parcels and goods (in "smalls" and in wagon loads) in local and through booking both inward and outward as aforesaid in connection with the said booking agency upon the terms and conditions hereinafter contained in this agreement." The opening words of this paragraph clearly show that it is the railway administration which has established the city booking agency at Saharanpur. The words "has established" ate important and in my opinion indicate that the owner of the city booking agency is the railway administration. It is true that respondent No. 1 has been described as a contractor and it is he who carries on the work to a considerable extent of the booking agency. That, however, in my opinion does not make him the owner of the agency. It is quite common for owners of establishments to employ persons on contractual basis to carry on the work of the establishment.
(2.) It is open to an owner either to engage labour on the basis of daily or monthly wages or an amount fixed by contract. The contractor in that case is the employee or agent of the owner and does not become the owner himself. The agreement clearly shows that the owner of the city booking agency is the railway administration. Clause II of the agreement which runs as follows makes the point still more clear: "II The contractor shall be deemed to be the agent of the Railway Administration and shall be subject to the legal liabilities as such as are laid down or defined in the law relating to agents in force in India for the booking of passengers from and booking and conveyance of parcels and goods (in 'smalls' and in wagon loads) from and to the said city booking agency." The agreement clearly describes the respondent No. 1 as agent of the railway establishment. An agent obviously cannot be the owner. Clause IV(b) of the agreement empowers the railway administration "to inflict a penalty to the extent of Rs. 50/- (Rupees fifty only) in each case, on the contractor in addition to any other liabilities to which the contractor may be liable under the provisions of this Act for failure to perform the services. Clause IX(1) provides that: "the contractor shall carry on the business of the city booking agency in strict accordance with the terms and conditions contained in this Agreement and will forthwith deposit with the Financial Adviser and Chief Account Officer of the Northern Railway, Delhi, a sum of rupees five hundred (Rs. 500/-) as security for the due fulfilment of each and all of the said terms and conditions to be observed by him." These two clauses clearly show that the respondent No. 1 is not only under the disciplinary control of the railway administration but has also to carry on the business of the agency in the manner set out by the railway administration and embodied in the agreement. Clause X of the agreement runs as follows: "X. The books and accounts of the city looking agency shall at all proper times nnd places be open to the insneetion and audit of the Northern Railway Accounts Establishment in the same manner as is customary in the case o the books and accounts maintained at railway station on the Northern Railway." This clause also clearly shows that the agency belongs to the railway administration. If that had not been the case there would have been no obligation on the part of the contractor to make available the accounts of the agency for' inspection and audit to the Northern Railway Accounts Establishment in the same manner as is customary in the case of the books and accounts maintained at the railway stations. If respondent No. 1 was an owner of the agency such a condition could not have existed in the agreement deed. The respondent No. 1 under the terms of the agreement was not free to act as he liked which would be the case if the business of the agency were his own. Clause XX of the agreement runs as follows; "XX The contractor shall comply with and observe each and all of the terms and conditions hereinafter set forth and provided for carrying on the business of the city booking agency, that is to say: The contractor shall maintain proper books and accounts to the satisfaction of the Railway Administration of the entire city booking agency's business carried on under this agreement, and will duly account to the proper officers of the Railway Administration for all passengers, parcels, and goods and moneys received on account thereof of in connection therewith; such books and accounts shall be, at all times and proper places, open to inspection and audit by the Railway Administration or any officers deputed by them in the same manner as is customary in the case of the books and accounts maintained at railway station on the Northern Railway." This clause again would show that the railway administration is the owner of the agency and exercises in respect of performance of the work at the agency all rights of an owner. Sub-clause (3) of Clause XX provides that respondent No. 1 "shall keep up such number of conveyances as may in the opinion of the Railway Administration, be sufficient for the purpose of efficiently carrying on the business of the city booking agency and will at all times maintain them to the satisfaction of the Railway Administration." Sub-clause (12) of Clause XX provides that the respondent No. 1: "shall make no charges of any kind whatsoever to the passenger or consignor or consignee for the booking of passengers and booking and conveyance of any parcels and goods or for any duty which he should perform in pursuance of this agreement, or of the city booking agency's business carried on thereunder, beyond the ordinary fares, freight, wharfage, or demurrage charges prescribed in the aforesaid appendix 'B' or for the time being in force as hereinbefore provided." Sub-clause (18) of Clause XX contemplates inspection of the city booking agency by the officers of the railway administration. Clause XXIII of the agreement fixes on the railway administration liability to pay to the contractor actual rent subject to a maximum of Rs. 21/- per month with effect from 1-6-1948 of. The premises used exclusively for the city booking agency. This clause shows that the business belongs to the railway and the respondent No. 1 was an employee or agent of the railway to run the business of the railway for which he received 2 1/2 per cent of the earnings at the agency. Under the terms of the agreement the premises of the agency in which the business would be carried on shall be inspected and approved by an afficer deputed by the Railway Administration. Clause XIV of the agreement provides that the Railway Administration will supply at the cost of the contractor movable boards marked "Northern Railway" to be hung on all vehicles carrying the city booking agency's parcels and goods. Clause XXIX of the agreement provides that in the event of termination of the contract under Clause XV(1) or (2) the Railway Administration shall, if so desired, be at liberty to take over any building, land or halting place used by the Contractor to facilitate the work of his successor.
(3.) After having read the various clauses of the agreement I have no manner of doubt in my mind that the business of the agency belongs to the railway administration and the respondent No. 1 is only an agent or employee of the railway administration, and instead of being paid a monthly salary or daily wage his remuneration is adjusted on the basis of commission, calculated at the rate of 2 1/2 per cent of the earnings at the agency, I must, therefore be held that the agency is an office of the railway. The Northern Railway like other railways in the country belongs to the Central Govt. The booking agency therefore to my mind is an office of the Government within the meaning of Clause (c), of Section 4 of the Act. That being so the provisions of the Act would not apply to the present case.;