What was the core issue in this case?

Whether bidi rollers were employees of the appellants or independent contractors, based on control and supervision over their work.

Which legal test did the Court apply?

A control-and-supervision test: who supplies materials, fixes prices, supervises quality, and controls conditions.

What did the Supreme Court finally decide?

The Court held the bidi workers were employees of the appellants, as the contractors acted as agents and the appellants exercised real control.

Why is this case important?

It shows courts look at the true relationship and won’t let contractor labels hide employment to avoid labour protections.

Does job label or written agreement decide the result?

No. The Court checks actual practice—who controls work and pay—over formal labels or contracts.

Diwan Mohideen Sahib v. Industrial Tribunal, Madras (AIR 1966 SC 370)

Quick Summary

Main Question: Are bidi rollers employees of the appellants or just contractor labour?

Answer: Employees. The Supreme Court found real control with the appellants—materials, prices, supervision, and wage terms—so the contractor setup was a camouflage.

Issues

Should bidi workers be classed as employees or independent contractors?
Was there enough control & supervision to prove an employment relationship?

Rules

Employment exists when the alleged employer controls how work is done, supervises quality and process, and sets conditions like price/wages—even if contractors stand in the middle. The issue is fact-based and varies by industry.

Facts (Timeline)

Simple Timeline

Appellants ran bidi businesses; gave tobacco & leaves to contractors.

Workers cut leaves at home; rolling done at contractor-managed places.

No attendance registers or fixed hours; pay on piece-rate.

Contractors paid by appellants per 1,000 bidis; raw material cost deducted; balance kept as commission.

Contracts barred selling materials/bidis elsewhere; only appellants could receive finished goods.

Tribunal: workers are employees (contractor setup is a sham). HC single: reversed. HC appellate: restored Tribunal.

Supreme Court (SLP): examined control, pricing, supervision, wage decisions.

Timeline for Diwan Mohideen Sahib case on bidi workers

Arguments

Appellants

Workers engaged by contractors, not by us.
No fixed hours/attendance → no control.
We just buy finished bidis at a fixed rate.

Workmen/Union

Appellants supplied materials and fixed prices.
Supervision via quality checks; wage terms controlled.
Contractors were merely agents, not independent.

Judgment

The Supreme Court upheld the Appellate Bench: bidi rollers were employees of the appellants. The contractor device could not hide the real relationship. Control over materials, price, supervision, and wage decisions proved an employment link.

Ratio Decidendi

Substance over form: When the principal controls inputs, conditions, quality, and pay, contractors may be agents and workers are employees entitled to labour protections.

Why It Matters

Shields home-based and piece-rate workers with real employer test.
Prevents misuse of contractor labels to avoid labour laws.
Guides industries using distributed production models.

Key Takeaways

Control Test

Materials, methods, and quality checks show who’s the employer.

Price & Wages

Fixing rates and wage terms points to employer control.

Sham Arrangements

Contractors acting as agents ≠ independent contractors.

Mnemonic + 3-Step Hook

Mnemonic: “M-P-Q = Employer” — Materials • Price • Quality.

Materials: Who supplies and controls inputs?
Price: Who fixes rates/wage terms?
Quality: Who sets and enforces standards?

IRAC Outline

Issue: Are bidi rollers employees of the appellants?

Rule: Employment turns on control & supervision of work and conditions; industry context matters.

Application: Appellants supplied inputs, fixed prices, supervised quality, and controlled wage terms; contractors functioned as agents.

Conclusion: Employment relationship confirmed; workers get labour law protections.

Glossary

Control & Supervision: Who dictates how, when, and to what standard work is done.
Piece-Rate: Payment per unit produced (e.g., per thousand bidis).
Agent vs Contractor: Agent acts for the principal; independent contractor acts on their own account.