Gujarat High Court
Krishak Bharti Cooperative Limited vs Labour Court on 29 June, 2022
Author: Biren Vaishnav
Bench: Biren Vaishnav
C/SCA/14758/2019 ORDER DATED: 29/06/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 14758 of 2019
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KRISHAK BHARTI COOPERATIVE LIMITED
Versus
LABOUR COURT
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Appearance:
M R BHATT & CO.(5953) for the Petitioner(s) No. 1
MUNJAAL M BHATT(8283) for the Petitioner(s) No. 1
MR RAJESH P MANKAD(2637) for the Respondent(s) No. 2
NOTICE SERVED for the Respondent(s) No. 1,3
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
Date : 29/06/2022
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C/SCA/14758/2019 ORDER DATED: 29/06/2022
ORAL ORDER
1. Rule. Mr. Rajesh Mankad, learned advocate waives service of notice of rule on behalf of respondent no. 2. Krishak Bharti Co-operative Limited, the principal employer has challenged the awards of the Labour Court, Surat dated 04.06.2019 by which the Labour Court has directed the petitioner to pay compensation of Rs.50,000/- to each of the respondent workmen.
2. Facts of Special Civil Application No. 14758 of 2019 are discussed:
3. The petitioner - Co-operative Society is in the co-operative sector engaged in the production and distribution of Urea and other farm products. It set up a plant at Hazira in the year 1985. The plant has a bagging section known as Production Handling Plant with phases I and II. The activities involved filling urea into bags, their stitching, stacking, destacking, loading into trucks/railway wagons and unloading. Tenders for awarding contracts for such activities are issued and for strategic reasons two contractors are engaged for each phase of the plant. 3.1 The contractor who is awarded work holds a valid license as required under section 12 of the Contract Labour (Regulations and Page 3 of 10 Downloaded on : Sat Dec 24 20:01:58 IST 2022 C/SCA/14758/2019 ORDER DATED: 29/06/2022 Abolishment) Act, 1970 ('the CLRA' for short). The petitioner has a requisite registration certificate under section 7 of the Act. The contractor so engaged employs contract workers. At the instance of these contract workers references came to be filed before the Labour Court, Surat. The workmen filed a statement of claim contending that they were working with the petitioner co-operative limited; that their contractor was one A.K. Singh, Marco Engineering; that their services were terminated in violation of provisions of Section 25F of the Industrial Disputes Act and they therefore were required to be reinstated. The petitioner was originally arraigned as respondent no. 2 before the Labour Court. It filed a written statement pointing out that they were not the immediate employer. That it was the contractor who was engaging the workmen and therefore there was no relationship of employer and employee between the petitioner and the workmen. That a separate reference was filed for declaring the contract as sham and bogus in which an award was rendered on 20.05.2010 holding that the contract workers were not entitled to claim the status of regular employees.
3.2 The Labour Court after discussing the submissions of the respective parties awarded compensation as above.
4. Mr. M.R. Bhatt, learned Senior Counsel appearing with Mr. Page 4 of 10 Downloaded on : Sat Dec 24 20:01:58 IST 2022 C/SCA/14758/2019 ORDER DATED: 29/06/2022 Munjal Bhatt and Mr. Mayur Kishanchandani, learned advocates for the petitioner made the following submissions:
(i) The terms of Reference are only with as to whether the respondent workman was terminated. There is no term as to whether the contract was sham, bogus. Thus, the Tribunal was bound by the terms of reference. In the instant case, the Tribunal has exceeded the terms of Reference.
(ii) The petitioner has requisite registration and the Contractor has requisite license. It is no one's case that any Notification prohibiting such contract has been issued under Section 10 of the Contract Labour Regulation Act, 1970.
(iii) Thus, there being no occasion to discuss the aspect of the nature of contract, the Tribunal could not have gone on the aspect of general discussion.
(iv) In series of orders, which were placed on record, either the Industrial Tribunal or the Labour Court, as the case may be, in various References with regard to the similar set of contract workers working in the bagging contract, had held that there was Page 5 of 10 Downloaded on : Sat Dec 24 20:01:58 IST 2022 C/SCA/14758/2019 ORDER DATED: 29/06/2022 no employer - employee relationship between KRIBHCO and the contract workers.
(v) There is also no allegation with regard to any breach committed by the principal employer.
(vi) The plethora of evidence though noted has not even been discussed in the impugned award.
(vii) It is a settled legal position of law that once the Contract is legal and valid, the parties to the contract, namely, principal employer and the contractor are required to act as per the terms of the Contract. In the instant case, accounts have been settled between KRIBHCO and the respective Contractor and nothing is due and payable. In such a situation, there cannot be any onerous liability on KRIBHCO without there being a finding with regard to any breach committed by KRIBHCO. Further, the liability of contractor cannot be straightway shifted on the principal employer without any finding to that effect as required under the provisions of Section 21 of the Contract Labour and Regulation Act.
(viii) It is an admitted position between the parties that and so Page 6 of 10 Downloaded on : Sat Dec 24 20:01:58 IST 2022 C/SCA/14758/2019 ORDER DATED: 29/06/2022 admitted by the contract worker that he was employed by the contractor. The contractor also admits that he had employed the contract worker. In such a fact situation, the Tribunal fell in error in observing that the first party No.2 KRIBHCO had failed to adduce evidence that the Contract workers were not employed by it.
4.1 Mr. Bhatt would therefore submit that the awards of the Labour Court directing payment of compensation by the petitioner is illegal. He would during the course of submission take the court through the relevant provisions of the CLRA namely Sections 7, 10, 11 and 12 to submit that the petitioner was registered under the provisions of the Act, the contractor was a licenced contractor who engaged the workmen, there was no issue of whether the notification declaring the activity under the CLRA was bad despite which the Tribunal went on to award compensation.
5. Mr. Rajesh Mankad, learned counsel for the respondent workmen would submit relying extensively on the provisions of the contract and the terms of agreement that the term specifically provided that the laws pertaining to Labour Law shall be strictly followed from time to time. That KRIBHCO will be liable for any charges arising out of non Page 7 of 10 Downloaded on : Sat Dec 24 20:01:58 IST 2022 C/SCA/14758/2019 ORDER DATED: 29/06/2022 compliance by the contractor and the same could be recovered from the contractor. He would further submit that the labour court was rightly concerned about the termination of the contract and did not commit any illegality by awarding Rs.50,000/- as compensation as ultimately it was the liability of the principal employer. He would refer to clause 2 of the terms of payment conditions with regard to the responsibilities of the contractor and the employer. Ultimately, if there has been a termination of a contractual workmen, if the award of the labour court is interfered, the workmen will be left high and dry without any recourse or compensation.
6. Having considered the submissions made by the learned counsels for the respective parties, what emerges is that initially when the dispute was raised before the Assistant Commissioner of Labour, the contractor - Marco Engineering Company was made the first party and the petitioner as party no. 2. However, while drafting the statement of claim, the parties were interchanged. Admittedly, perusal of the award of the labour court would indicate that the petitioner had entered into a contract with A.K. Singh, Marco Engineering wherein the workmen were involved for packing of urea sacks.
6.1 Even as per the written statement, it was the defence of the Page 8 of 10 Downloaded on : Sat Dec 24 20:01:58 IST 2022 C/SCA/14758/2019 ORDER DATED: 29/06/2022
petitioner that they had no inter se connection except that the contractor holds a valid license for handling the job work carried out by the respondents. Even the contractor during his deposition at Ex. 35 given by one Jaykishore Gupta categorically stated that he was working in the bagging plant under AK Singh, Marco Engineering. It was therefore very clear that the respondent workmen were that of the contractor and not of the petitioner employer. The labour court clearly fell in error by misreading this as an admission on the part of the contractor to be under direct employment of the petitioner company.
6.2 Despite the stand of the petitioner in its written statement that the workmen were engaged in the handling job by the contractor, the labour court fell into the arena of getting into the discussion with regard to the provisions of the CLRA Act when even otherwise it was the case of the workmen that they were driven out by the contractor as was evident from their deposition below Ex. 24.
7. From the evidences discussed namely by production of the references namely copy of the award in Reference IT No. 56 of 1989 it was clearly spelled out from the evidence that the contract labour through their union had initiated proceedings claiming parity of wages. The matter was investigated and after conciliation having failed, Reference Page 9 of 10 Downloaded on : Sat Dec 24 20:01:58 IST 2022 C/SCA/14758/2019 ORDER DATED: 29/06/2022 IT No. 44 of 1994 was made. The Tribunal was pleased to hold that the contracts entered into between KRIBHCO and the respective contractors were not sham and bogus and in view of Reference IT No. 56 of 1989, the contract workers were not entitled to get status of regular employees.
8. In light of these sets of evidences before the labour court, and in light of the settlement which too was produced before the labour court dated 16.10.1992, wherein it was accepted that the employer - employee relationship existed only between the contract workers and the contractors, the labour court clearly fell in error in awarding the relief of compensation against the petitioner. In absence of a finding with regard to any breach committed by the petitioner, the labour court could not have fastened the liability of compensation straight away on the principal employer. When it was an admitted case that the workmen were engaged by the contractors.
9. For the aforesaid reasons, petitions are allowed. The awards of the Labour Court, Surat dated 04.06.2019 in respective references challenged in the captioned petitions are hereby quashed and set aside. Rule is made absolute. No costs.
(BIREN VAISHNAV, J) DIVYA Page 10 of 10 Downloaded on : Sat Dec 24 20:01:58 IST 2022