Madras High Court
Bhel Complex Society Labour vs The Executive Director on 26 November, 2010
Author: R.S.Ramanathan
Bench: R.S.Ramanathan
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 26/11/2010 CORAM THE HON'BLE MR.JUSTICE R.S.RAMANATHAN W.P.(MD)No.10562 of 2007 and M.P.(MD)Nos.1 and 2 of 2007 BHEL Complex Society Labour Welfare Association, YT-11-Dr.Ambedkar Nagar, Kailasapuram, Tiruchirapalli-14. Rep by its President M.Marimuthu ... Petitioner vs. 1. The Executive Director, Bharat Heavy Electricals Limited, Tiruchirapalli-14. 2. Assistant General Manager, Human Resource, Bharat Heavy Electricals Limited, Tiruchirapalli-14. 3. Senior Manager, Human Resources/ Recruitment and Systems, Bharat Heavy Electricals Limited, Tiruchirapalli-14. ... Respondents Writ Petition filed under Article 226 of the Constitution of India for issuance of a writ of mandamus directing the first respondent to take steps to regularise as an one time measure, the services of the irregularly appointed Contract Labour Society Workers who had worked for ten years or more in duly sanctioned post, but, not under the cover of order of Court or of Tribunals and subject to the reservation Roster. !For petitioner ...Mr.S.K.Mani ^For respondents ...Mr.K.Jayaraman :ORDER
The writ petition is filed by the petitioners seeking a writ of mandamus directing the first respondent to take steps to regularise as an one time measure, the services of the irregularly appointed Contract Labour Society Workers who had worked for ten years or more in duly sanctioned post.
2. Bharat Heavy Electricals Limited (BHEL) has employed persons on permanent basis and with a view to avoid direct employment, BHEL devised a method of constituting a Labour Contract Co-operative Society (LCS) and getting the workers through the Society on contract basis. The persons , who are employed through LCS possess required qualification to be absorbed as permanent employee of BHEL and they have worked for more than ten years as contract labour. The petitioner Association was founded with the intention of protecting all contract employees and according to the petitioner, there is no justification for BHEL to recruit the contract labour through LCS and the contract for employment of the contract labour through LCS is a sham and nominal one and it is merely a camouflage and LCS, though registered as a co-operative society, is manned by the officials of BHEL and therefore, it is not an independent identity and therefore, as per the judgment of the Honourable Supreme Court in the case of SECRETARY, STATE OF KARNATAKA v. UMADEVI(3) ((2006) 4 SCC 1), those workers are liable to be made permanent and therefore, the writ was filed for the relief as stated above.
3. The respondents filed counter contending that the petitioner has no locus standi or competency to file the present writ petition and the writ petition is also not maintainable without impleading the LCS. The contract employees are competent to raise a dispute against LCS which is an independent body and without raising industrial dispute or taking proceedings under section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA Act), the present writ petition is not maintainable. It is further stated that LCS is a registered Co-operative Society as defined under the Tamil Nadu Co-operative Societies Act and is a body corporate and a legal entity. It is not under the control of the respondents and the contract entered into between the respondents and LCS is a genuine contract and LCS has obtained licence under CLRA Act and labour employed through LCS are governed by the provisions of CLRA Act. It is further stated that the contract labour in the first respondent company has not been abolished and if at all the petitioner Association is aggrieved by the terms of the contract, they will have to approach the appropriate Govt. under section 10 of the Act. The LCS is supervised and managed by the Deputy Registrar, Joint Registrar and Registrars of the Co-operative Societies and the respondents also dispute the allegations that the Society is catering only to the needs of BHEL. The respondents further stated that as per the judgment of this court rendered in W.P.(MD) No.2672 of 2004, it has been held that there is no relationship of employer and employee between the contract labour and the respondents and contract labour will not come within the ambit of workmen of the respondents herein under section 10 of the Industrial Disputes Act. It is further stated that the writ petition filed by the petitioner without following the procedure under the CLRA Act is not maintainable.
4. Mr.S.K.Mani, learned counsel for the petitioner submitted that as per the judgment of the Honourable Supreme Court in Umadevi(3)'s case as referred to above, the contract labour employed by the respondents are entitled to be regularized in service and relied upon para 53 of that judgment wherein the Honourable Supreme Court has directed the Union of India, State Government and their instrumentalities should take steps to regularise as a one-time measure, the services of such irregularly appointed, who have worked for ten years or more in duly sanctioned posts but not under cover of orders of the courts or of tribunals and should further ensure that regular recruitments are undertaken to fill those vacant sanctioned posts that require to be filled up. In the above judgment, a time frame was also given directing the authorities to start the process within six months from the date of judgment. He, therefore, relied upon the said judgment and contended that admittedly, the contract labour are employed for more than 10 years in sanctioned posts and they are doing the same work as done by the regular employees of BHEL and LCS is only a front Organization and it is controlled by the BHEL and therefore, the contract labour is a sham and nominal one and the appointment of contract labour through LCS is a camouflage to avoid giving the permanent status to the employees by giving more wages. Therefore, the learned counsel contended that as per the judgment in Umadevi(3)'s case, the services of the contract labour are to be regularised.
5. On the other hand, Mr.K.Jayaraman, learned counsel for the respondents submitted that the decision rendered in Umadevi(3)'s case will not be applicable to the facts of this case and having regard to the admitted fact that the members of the petitioner Association are contract labour governed by the provisions of CLRA Act and the fact that there is no prohibition to employ contract labour in the respondent organisation, the remedy open to the petitioner, if any, is to approach the Labour Court under the provisions of the Industrial Disputes Act or work out their remedy under section 10 of the CLRA Act. He further contended that LCS is not a Society set up by the respondents for the purpose of avoiding permanent status to the employees and LCS is a registered Co-operative Society controlled by the Government and the respondents have no control over the affairs of the LCS and therefore, the contract entered into between the LCS and the respondents cannot be construed as a sham and nominal one and it is not a camouflage. Even assuming that the contract between BHEL and LCS is a sham and nominal one as alleged by the petitioner, that cannot be decided under Article 226 of the Constitution of India and that can be decided only before an appropriate Industrial Adjudicator under the Industrial Disputes Act or under the provisions of section 10 of CLRA Act. The learned counsel also relied upon the following judgments:-
1) INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL AIR CARGO WORKERS' UNION ((2009) 13 SCC 374)
2) STEEL AUTHORITY OF INDIA LTD. v. NATIONAL UNION WATERFRONT WORKERS ((2001) 7 SCC 1)
3) A.P.SRTC v. G.SRINIVAS REDDY ((2006) 3 SCC 674)
4) Judgment in W.P.(MD) Nos.2775 to 2787 of 2007 dated 13.4.2007 and submitted that in the judgment reported in (2009) 13 SCC the right of the contract labour has been discussed in detail and therefore, as per the judgment of the Honourable Supreme Court, the writ is not maintainable.
6. Heard both the counsel.
7. In this case, it is admitted that the respondents engage contract labour through LCS which is a registered contractor as per the provisions of CLRA Act and the Government has not prohibited employment of contract labour in the respondent Organization. Therefore, in the absence of any prohibition, the respondents are entitled to engage contract labour and the rights of the contract labour are governed by the provisions of the said Act.
8. A reading of Umadevi(3)'s case would make it clear that the Honourable Supreme Court did not deal with the contract labour who are governed by CLRA Act and the Honourable Supreme Court was concerned with the plight of the workers who are appointed irregularly against the sanctioned post and are working in Government and Quasi-Government authorities for a period of more than ten years.
9. On the other hand, the right of the contract labour has been decided by the Honourable Supreme Court in the case of GUJARAT ELECTRICITY BOARD v. HIND MAZDOOR SABHA ((1995) 5 SCC 27). In the above judgment, the Honourable Supreme Court has held as follows:-
"42. ... the exclusive authority to decide whether the contract labour should be abolished or not is that of the appropriate Government under the said provision. It is further not disputed before us that the decision of the Government is final, subject, of course, to the judicial review on the usual grounds. However, as stated earlier, the exclusive jurisdiction of the appropriate Government under Section 10 of the Act arises only where the labour contract is genuine and the question whether the contract is genuine or not can be examined and adjudicated upon by the court or the industrial adjudicator, as the case may be. Hence in such cases, the workmen can make a grievance that there is no genuine contract and that they are in fact the employees of the principal employer.
..... .....
53(ii) If the contract is a sham or not genuine, the workmen of the so- called contractor can raise an industrial dispute for declaring that they were always the employees of the principal employer and for claiming the appropriate service conditions. When such dispute is raised, it is not a dispute for abolition of the labour contract and hence the provisions of Section 10 of the Act will not bar either the raising or the adjudication of the dispute. When such dispute is raised, the industrial adjudicator has to decide whether the contract is a sham or genuine. It is only if the adjudicator comes to the conclusion that the contract is a sham, that he will have jurisdiction to adjudicate the dispute. If, however, he comes to the conclusion that the contract is genuine, he may refer the workmen to the appropriate Government for abolition of the contract labour under Section 10 of the Act and keep the dispute pending. However, he can do so if the dispute is espoused by the direct workmen of the principal employer. If the workmen of the principal employer have not espoused the dispute, the adjudicator, after coming to the conclusion that the contract is genuine, has to reject the reference, the dispute being not an industrial dispute within the meaning of Section 2(k) of the ID Act. He will not be competent to give any relief to the workmen of the erstwhile contractor even if the labour contract is abolished by the appropriate Government under Section 10 of the Act."
In view of the provisions of Section 10 of the Act, it is only the appropriate Government which has the authority to abolish genuine labour contract in accordance with the provisions of the said section. No court including the industrial adjudicator has jurisdiction to do so."
10. This judgment was partly overruled by the Honourable Supreme Court in AIR INDIA STATUTORY CORPORATION v. UNITED LABOUR UNION ((1997) 9 SCC 377) and the Honourable Supreme Court only differed in the matter of automatic absorption of contract labour by the principal employer on the abolition of contract labour system and has held as follows:-
"58. ... The moment the contract labour system stands prohibited under Section 10(1), the embargo to continue as a contract labour is put an end to and direct relationship has been provided between the workmen and the principal employer. Thereby, the principal employer directly becomes responsible for taking the services of the workmen hitherto regulated through the contractor. ... .... ....
66. ... The linkage between the contractor and the employee stood snapped and direct relationship stood restored between the principal employer and the contract labour as its employees. Considered from this perspective, all the workmen in the respective services working on contract labour are required to be absorbed in the establishment of the (employer)."
11. The observation of the Honourable Supreme Court made in Air India case referred to above that there will be automatic observation by the principal employer of all the contract labour on abolition of contract labour system was overruled by the Larger Bench of the Honourable Supreme Court in the matter of STEEL AUTHORITY OF INDIA LTD. v. NATIONAL UNION WATERFRONT WORKERS ((2001) 7 SCC
1). In the above judgment rendered in SAIL, the Honourable Supreme Court has held as follows:-
"This Court made it clear that neither Section 10 nor any other provision in the CLRA Act provides for automatic absorption of contract labour on issuing a notification by the appropriate Government under Section 10(10 of the CLRA Act and consequently the principal employer cannot be required to absorb the contract labour working in the establishment."
12. Further, the Honourable Supreme Court has summarized the principles in the decision reported in (2006) 3 SCC 674 referred to above, and the relevant principles are stated as under:-
"125(5). On issuance of prohibition notification under Section 10(1) of the CLRA Act prohibiting employment of contract labour or otherwise, in an industrial dispute brought before it by any contract labour in regard to conditions of service, the industrial adjudicator will have to consider the question whether the contractor has been interposed either on the ground of having undertaken to produce any given result for the establishment or for supply of contract labour for work of the establishment under a genuine contract or is a mere ruse/camouflage to evade compliance with various beneficial legislations so as to deprive the workers of the benefit thereunder. If the contract is found to be not genuine but a mere camouflage, the so-called contract labour will have to be treated as employees of the principal employer who shall be directed to regularize the services of the contract labour in the establishment concerned subject to the conditions as may be specified by it for that purpose in the light of para 6 hereunder.
(6). If the contract is found to be genuine and prohibition notification under Section 10(1) of the CLRA Act in respect of the establishment concerned has been issued by the appropriate Government, prohibiting employment of contract labour in any process, operation or other work of any establishment and where in such process, operation or other work of the establishment the principal employer intends to employ regular workmen, he shall give preference to the erstwhile contract labour, if otherwise found suitable and, if necessary, by relaxing the condition as to maximum age appropriately, taking into consideration the age of the workers at the time of their initial employment by the contractor and also relaxing the condition as to academic qualifications other than technical qualifications.
126. We have used the expression "industrial adjudicator" by design as determination of the questions aforementioned requires enquiry into disputed questions of facts which cannot conveniently be made by High Courts in exercise of jurisdiction under Article 226 of the Constitution. Therefore, in such cases the appropriate authority to go into those issues will be the Industrial Tribunal/Court whose determination will be amenable to judicial review."
13. The principle enunciated in SAIL case was confirmed by the Honourable Supreme Court in INTERNATIONAL AIRPORT AUTHORITY CASE referred to above and the Honourable Supreme Court held as follows:-
"36. But where there is no abolition of contract labour under Section 10 of the CLRA Act, but the contract labour contend that the contract between the principal employer and the contractor is sham and nominal, the remedy is purely under the ID Act. The principles in Gujarat Electricity Board continue to govern the issue. The remedy of the workmen is to approach the industrial adjudicator for an adjudication of their dispute that they are the direct employees of the principal employer and the agreement is sham, nominal and merely a camouflage, even when there is no order under Section 10(1) of the CLRA Act.
37. The industrial adjudicator can grant the relief sought if it finds that contract between the principal employer and the contractor is sham, nominal and merely a camouflage to deny employment benefits to the employer and that there is in fact a direct employment, by applying tests like: who pays the salary; who has the power to remove/dismiss from service or initiate disciplinary action; who can tell the employee the way in which the work should be done, in short, who has direction and control over the employee. But where there is no notification under Section 10 of the CLRA Act and where it is not proved in the industrial adjudication that the contract was a sham/nominal and camouflage, then the question of directing the principal employer to absorb or regularise the services of the contract labour does not arise."
14. In the case of A.P.SRTC AND OTHERS referred to above, the Honourable Supreme Court reiterated the principle laid down in SAIL case. Therefore, a reading of the above judgments rendered by the Honourable Supreme Court, it has been made clear that a remedy under Article 226 of the Constitution of India is not available to the petitioner even assuming that the contract labour are entitled to be absorbed as permanent employee and LCS is only a camouflage and the contract between LCS and the respondents is a sham and nominal one. As laid down by the Honourable Supreme Court, the petitioner has to prove that the contract is a sham and nominal one and LCS is only a camouflage and all these can be done only before an Industrial Adjudicator by leading evidence and this court under Article 226 of the Constitution of India cannot go into that question.
15. Further, as pointed out by the learned counsel for the respondents, the writ is also not maintainable without impleading the LCS who has supplied the contract labour. Therefore, having regard to the fact that there is no prohibition of engaging contract labour and LCS is a recognized and duly licensed contractor supplying contract labour to the respondents, the remedy open to the petitioner for regularization of employment is only to approach the Labour Court under the provisions of the Industrial Disputes Act or to invoke the provisions of section of CLRA Act and the writ petition is not maintainable. In the result, the writ petition is dismissed. No costs. The connected miscellaneous petition are also dismissed.
Ssk.
To
1. The Executive Director, Bharat Heavy Electricals Limited, Tiruchirapalli-14.
2. Assistant General Manager, Human Resource, Bharat Heavy Electricals Limited, Tiruchirapalli-14.
3. Senior Manager, Human Resources/ Recruitment and Systems, Bharat Heavy Electricals Limited, Tiruchirapalli-14.