Delhi District Court
Sh. Jaswant Singh vs M/S. Bennett Coleman & Co. Ltd on 18 July, 2017
IN THE COURT OF SHRI UMED SINGH GREWAL
PILOT COURT / POLCXVII ROOM NO. 22 :KKD
COURTS: DELHI
LC 2408/16 (Old DID 92/08)
Unique ID No.02402C0395632008.
IN THE MATTER OF:
Sh. Jaswant Singh
S/o Inspector Singh
C/o Delhi Pradesh General Mazdoor Kalyan Mourcha (Regd.),
L1417, Mangolpuri, Delhi110083.
..............Workman
Versus
1. M/s. Bennett Coleman & Co. Ltd.
7, Bahadurshah Zafar Marg, New Delhi.
2. Hemant Kumar Gupta & Co.
7, Bahadurshah Zafar Marg, New Delhi.
.............Managements
DATE OF INSTITUTION : 29.05.2008.
DATE ON WHICH AWARD RESERVED : 10.07.2017.
DATE ON WHICH AWARD PASSED : 18.07.2017.
A W A R D :
1. This is a Direct Industrial Dispute filed by the
workman under Section 104(A) of the Industrial Disputes Act,
1947 (hereinafter referred as "the Act") for reinstatement with
continuity of service and full back wages.
LC 2408/16. 1/38
2. Claimant's case is that he had joined the management
as Skilled Worker on 06.10.1996 at the last drawn salary of
Rs.7,832/ per month. He had worked with management at
premises No. 7, Bahadurshah Zafar Marg, New Delhi, but later, he
was transferred to premises No. 13/1, Site No. 4, Sahibabad,
District Ghaziabad, U.P., without issuing any transfer letter. He
worked honestly and sincerely to the utter satisfaction of the
management and never gave any chance of complaint but the
management was not providing him legal facilities for which he
was demanding long orally. Every time, he was assured that his
demands shall be met. Due to his persistent demands, the
management got annoyed and started adopting anti labour practice
and due to that reason, his service was terminated on 15.05.2008
without notice and without tendering notice pay and retrenchment
compensation. He had sent demand notice dated 16.05.2008 to
both managements for reinstatement but his demand was not
considered. He had filed complaints dated 16.05.2008 and
19.05.2008 through union in the office of Additional Labour
Commissioner, Ghaziabad, U.P. and Labour Commissioner of
Delhi requesting them to take appropriate legal action against
managements. Despite instructions by the Labour Inspector, Delhi
and Ghaziabad, he was not reinstated. It is further mentioned that
the management No. 2 is a formal party because he was never
LC 2408/16. 2/38
employed by it as he used to work under the supervision of
management No. 1.
3. Written statement of management No. 1 is to the
effect that claimant was never engaged by it and hence, there was
no relationship of employer and employee between it and claimant.
On enquiry, it came to know that he was employed with
management No. 2 which was engaged by it as a contractor. The
claimant used to work under the direct supervision and control of
management No. 2. It had nothing to do with his engagement by
management No. 2 as it had entered into contractual agreement
with management No. 2 from time to time for providing
contractual service at its various premises. The relationship
between both managements was on principal to principal basis. It
was management No. 2 which used to send its bills to management
No. 1 for the service provided which were cleared by it after
necessary verification. It had obtained registration certificates
under the Contract Labour (Regulations & Abolitions) Act, 1970
from the concerned labour department. The management No. 2
had also obtained necessary licence to provide manpower. The
claimant was engaged by management No. 2 and was deputed to
its site at Sahibabad, District Ghaziabad, U.P. after obtaining a
registration certificate from the Additional Labour Commissioner,
LC 2408/16. 3/38
Ghaziabad. It was management No. 2 who used to pay salary to
him. His provident fund and ESI contribution were also used to be
deducted by management No. 2 and were duly deposited under its
own code number allotted by concerned departments. As the
claimant was deputed by management No. 2 to work at its cite
situated at Sahibabad, the appropriate government to deal with the
matter is Government of Uttar Pradesh and not Government of
NCT of Delhi. Therefore, this Court lacks territorial jurisdiction.
It is further mentioned that a person namely, Sh. Birender Singh
was engaged and deputed by management No. 2 to work in its
premises at Sahibabad. Due to his negligence, a major blast had
taken place in its premises which could have resulted into inferno
in the night of 13.05.2008, but the incident was averted due to
timely intervention of its officers. Sh. Birender Singh apologized
orally but when he was asked to furnish written apology, he
refused saying that he would first consult his fellow workers. Sh.
Birender Singh demanded some alternative work from
management No. 2 on 15.05.2008 which was not available and
hence, Sh. Singh and 13 others protested and left the place. The
claimant was one of them. These persons had refused to work on
baseless pleas. Nowadays, the claimant is gainfully employed.
The claimant had first approached the conciliation machinery of
Ghaziabad by filing statement of claim of which notice was issued
LC 2408/16. 4/38
to it and it had filed detailed written submissions. Due to that
reason, this Court does not have jurisdiction to decide the case.
4. Written statement of management No. 2 is that it had
entered into agreements with management No. 1 from time to time
to supply manpower. To fulfill contractual obligations, it had to
engage and deploy persons to the premises of management No. 1
from time to time. These persons used to work under its direct
supervision and control. It was management No. 2 which used to
pay them wages and deposit ESI and PF contribution in their
account. The relationship between both managements was
principal to principal and the only duty of management No. 1 was
to pay for the services rendered by management No. 2. For the
sake of statutory compliance, the management No. 2 has obtained
licence as a Labour Contractor under the Contract Labour
(Regulations & Abolitions) Act, 1970 from the Office of
Additional Labour Commissioner, Ghaziabad. It was management
No. 2 which used to provide PF and ESI benefits to the persons
working under its supervision and control. The claimant was its
employee who was deputed to the premises of management No. 1
situated at Sahibabad, Ghaziabad. Another employee namely,
Birender Singh was also deployed there temporarily but he was
negligent and due to his negligence, a major blast took place in the
LC 2408/16. 5/38
godown of management No. 1 in the night of 13.05.2008, but the
major fire was averted due to timely intervention of officers of
management No. 1. Sh. Birender Singh had apologized orally but
he had refused to submit written explanation. Sh. Birender Singh
had demanded some alternative work from it on 15.05.2008 which
was not available. Fourteen coworkers and Sh. Birender Singh
joined a protest against it and refused to work from 15.05.2008
onwards. The claimant was given several opportunities by way of
telegrams and letters to join back, but he did not join. In this way,
he had abandoned the job. It is next mentioned that claimant was
deployed by it to the premises of management No. 1 situated at
Sahibabad, Ghaziabad and hence it is the Government of Uttar
Pradesh and not the Government of NCT of Delhi, to deal with the
matter. The claimant and his 14 associates had approached the
conciliation machinery of Ghaziabad where it had filed detailed
written statement. So, this Court has no territorial jurisdiction to
decide the case. The claimant had not sent it any demand notice.
5. Following issues were framed on 19.11.2014:
1. Whether there was relationship of employer and
employee between the claimant and management No.
1? OPW.
2. Whether this Court has territorial jurisdiction to
entertain and try the present dispute? OPW
LC 2408/16. 6/38
3. Whether the services of claimant have been
terminated by management No. 1 illegally or
unjustifiably? OPW.
4. Relief.
6. In order to substantiate the case, the claimant tendered
his affidavit in evidence as Ex.WW1/A mentioning all the facts
stated in statement of claim. He relied upon following
documents:
1. Mark W1 is copy of letter dt. 28.07.08.
2. Mark W2 is copy of letter dt. 28.07.08.
3. Mark W3 is copy of objection under Section 36(4) of the
I.D. Act, 1947.
4. Mark W4 is copy of notice dt. 21.07.08 sent to management.
5. Mark W5 is copy of application dt. 29.08.08 filed by the
workman.
6. Mark W6 is copy of reply dt. 28.07.08 to the letter.
7. Mark W7 is copy of two speed post receipts and Mark W7A
is UPC receipt.
8. Mark W8 is copy of letter dt. 04.08.08 sent to Chawki
Incharge, Sahibabad.
9. Mark W9 is copy of letter dt. 31.05.08 sent to management.
10. Mark W10 copy of letter dt. 31.05.08 sent to Sh. B.N.
Suman, General Secretary.
11. Mark W11 is copy of letter dt. 24.05.08 by Sh. B.N.
Suman, General Secretary to Deputy Commissioner
LC 2408/16. 7/38
of Police.
12. Mark W12 is copy of demand notice dt. 24.05.08 by
Mohd. Rajique and Indrapal to the management.
13. Mark W13 is copy of postal receipt dt. 26.05.08.
14. Mark W14 is copy of postal receipt dt. 26.05.08.
15. Mark W15 is copy of UPC receipt.
16. Mark W16 is copy of postal receipt dt. 26.05.08.
17. Mark W17 is copy of postal receipt dt. 26.05.08.
18. Mark W18 is undated letter by Mr. B.N. Suman, General
Secretary to the management nos. 1 & 2.
19. Mark W19 is copy of postal receipt dt. 26.05.08.
20. Mark W20 is copy of letter dt. 24.05.08 sent to
management nos. 1 & 2.
21. Mark W21 is copy of letter dt. 19.05.08 by Mr. B.N.
Suman.
22. Mark W22 is copy of letter dt. 16.05.08 by the workman to
management no. 1.
23. Mark W23 is copy of two postal receipts.
24. Mark W24 is copy of UPC receipt.
25. Mark W25 is copy of letter dt. 16.05.08 by Mr. B.N.
Suman to ALC.
26. Mark 26 is copy of statement of claim filed before
Conciliation Officer.
27. Mark W27 is copy of espousal letter dt. 19.02.08.
28. Mark W28 is copy of proposal for revision of salary of
FLT Operators and Supervisors.
29. Mark W29 is copy of transfer challan dt. 11.03.08 by
LC 2408/16. 8/38
management no. 1.
30. Mark W30 is copy of shift matrix (FLT operator and
supervisor).
31. Mark W31 is copy of gate pass dt. 12.02.02 issue by
management no. 1.
32. Mark W32 is certified copy of order dt. 11.09.07.
Additionally, he deposed that he was still ready to join
the service of the management.
7. The management No. 1 examined its Manager
(Personnel) Sh. Sushil Kumar Sharma as MW1, who repeated the
contents of written statement. He relied upon following
documents :
1. Ex. MW1/1 (colly. page 1 to 6) (OSR) is photocopy of
agreement with management No. 2.
2. Ex. MW1/2 (colly. page 7 t o 11) (OSR) is photocopy of
agreement with management No. 2.
3. Ex. MW1/3 (OSR) is photocopy of bill raised by
management No. 2 to management No. 1.
4. Ex. MW1/4 (OSR) is photocopy of bill raised by
management No. 2 to management No. 1.
5. Ex. MW1/5 is photocopy of purchase order of management
No. 1.
6. Ex. MW1/6 is photocopy of purchase order of management
No. 1.
7. Ex. MW1/7 (colly. page No. 37 to 38) is photocopy licence
under Factories Act and registration under Contract Labour
LC 2408/16. 9/38
(Regulations & Abolitions) Act of management No. 1.
8. Ex. MW1/8 is Exemption under Employees Provident Fund
and miscellaneous Provisions Act, 52 of management No. 1.
9. Ex. MW1/9 (colly. page 33 to 34) is photocopy of sample
appointment letters of regular employees of management
No. 1.
10.Ex. MW1/10 is photocopy of sample pay slips of regular
employees of management No. 1.
11. Ex. MW1/11 (colly. page 16 to 18) is photocopy of Labour
Inspector report alongwith relevant documents.
12.Ex. MW1/12 (colly. page 19 to 32) is photocopy of reply
and submissions of management before Deputy Labour
Commissioner.
13.Ex. MW1/13 (colly. page 39 to 42) is photocopy of one of
the orders of ALC, Delhi alongwith notice of Ghaziabad
labour authority for termination and for payment of wages
8. The management No. 2 examined its proprietor Sh.
Hemant Kumar Gupta as M2W1, who tendered his affidavit in
evidence as Ex. M2W1/A. His evidence is no more than written
statement. He relied upon following documents :
1. Ex. M2W1/1 (06 pages) is photocopy of contract agreement
for the year 2007.
2. Ex. M2W1/2 (05 pages) is photocopy of contract agreement
for the year 2008.
3. Ex. M2W1/3 (02 pages) is photocopy of PF return for the
period March, 1999 to February, 2000.
4. Ex.M2W1/4 (06 pages) is photocopy of PF return for the
LC 2408/16. 10/38
period April, 2000 to March, 2001.
5. Ex. M2W1/5 (06 pages) is photocopy of PF return for the
period April, 2001 to March, 2002.
6. Ex. M2W1/6 (04 pages) is photocopy of PF return for the
period April, 2003 to March, 2004.
7. Ex. M2W1/7 (04 pages) is photocopy of PF return for the
period April, 2004 to March, 2005.
8. Ex. M2W1/8 (04 pages) is photocopy of PF return for the
period April, 2005 to March, 2006.
9. Ex. M2W1/9 (09 pages) is photocopy of return of
contribution of ESIC for the period April, 2008 to Sept.,
2008.
10.Ex. M2W1/10 (08 pages) is photocopy of return of
contribution of ESIC for the period Oct., 2007 to March.,
2008.
11.Ex. M2W1/11 (13 pages) is photocopy of return of
contribution of ESIC for the period April, 2007 to Sept.,
2007.
12.Ex. M2W1/12 (10 pages) is photocopy of return of
contribution of ESIC for the period Oct., 2006 to March.,
2007.
13.Ex. M2W1/13 (10 pages) is photocopy of return of
contribution of ESIC for the period April, 2006 to Sept.,
2006.
14.Ex. M2W1/14 (07 pages) is photocopy of return of
contribution of ESIC for the period Oct., 2005 to March.,
2006.
15.Ex. M2W1/15 (09 pages) is photocopy of return of
contribution of ESIC for the period April, 2005 to Sept.,
2005.
LC 2408/16. 11/38
16.Ex. M2W1/16 (08 pages) is photocopy of return of
contribution of ESIC for the period Oct., 2004 to March.,
2005.
17.Ex. M2W1/17 (06 pages) is photocopy of return of
contribution of ESIC for the period April, 2004 to Sept.,
2004.
18.Ex. M2W1/18 (06 pages) is photocopy of return of
contribution of ESIC for the period Oct., 2003 to March.,
2004.
19.Ex. M2W1/19 (05 pages) is photocopy of return of
contribution of ESIC for the period April, 2003 to Sept.,
2003.
Issue No. 2.
9. Ld. ARM argued that claimant was appointed by
management No. 2 and after appointment, he was sent to the
premises of management No. 1 situated at Sahibabad, Ghaziabad
to work. His service had come to an end from Sahibabad. His last
working day was in Sahibabad and hence only Ghaziabad Court
had jurisdiction to decide the case and that is why the claimant had
filed a complaint in the Labour Office of Ghaziabad.
On the other hand, ld. ARW argued that claimant had
joined management No. 1 and had worked in its office situated at
Bahadurshah Zafar Marg, New Delhi. Thereafter, he was
transferred to Sahibabad, Ghaziabad. The salary used to be paid
by management No. 1 by sending an employee from Delhi to
LC 2408/16. 12/38
Sahibabad. PF and ESI contribution was also used to be deposited
in Delhi. Office of management No. 1 is also situated in Delhi.
10. In M/s. Lohia Starlinger Ltd. & Anr. Vs. Govt. of
NCT of Delhi & Ors., 2006 Lab. I.C. 3462, the dispute before
Hon'ble High Court of Delhi was which of the Court shall have
territorial jurisdiction. Whether it will be Court from where the
claimant was transferred or the Court situated at the place from
where the service of the workman was terminated. The Hon'ble
High Court held as under :
"49... It is within the area of employment
that the order of termination operates and
the workman losses his right to hold the post
and receive wages therefor..."
"51... The petitioner stood transferred to
Kanpur the order of termination of her
services at Kanpur was effected after
holding disciplinary proceedings at Kanpur.
It would be authorities at Kanpur who would
have the jurisdiction to deal with the
complaint..."
On the same point, Hon'ble High Court of Patna held
in Paritosh Kumar Pal Vs. State of Bihar and others, 1984 Lab.
I.C. 1254 as under :
"14...Consequently, the situs of the
workman's employment in the case of the
LC 2408/16. 13/38
termination of his services is patently a
paramount factor if not being wholly
conclusive. It is within the area of
employment that the order of termination
operates and the workman ceases to be a
workman and loses his right to hold the post
and receive wages therefor. Therefore, on
the anvil of the principle of where the
impugned order operates the situs of
employment of the workman is patently
significant. Can it possibly be said that the
order of termination of a workman does not
operate within the area of his employment?
The answer, therefore, has to be in favour of
the Tribunal having territorial jurisdiction
over the place of work of the situs of
employment."
16... It is axiomatic that the territory within
which the services of an employee are
wrongfully terminated would be the territory
where the cause of action substantially
arises and in a case if not wholly but a part
of the cause of action so arises. On this acid
test also the situs of employment of the
workman would forthwith give jurisdiction to
the Civil Courts and a fortiori to the
Tribunals and the Labour Courts under the
Act.
In Shri Shailender Kumar Vs. Secretary (Labour)
and Anr. WPC No.1113/15, decided by Hon'ble Delhi High
Court on 12.10.15, the claimant had taken plea that Delhi Court
LC 2408/16. 14/38
had jurisdiction to decide his case as before transfer to some other
place, he had been appointed in Delhi and had worked in Delhi.
His PF and ESI were also deposited by management in Delhi. The
management had Head Office in Delhi, but his pleas were rejected
by the Hon'ble High Court with following observations :
9. In M. Vadivelu (supra), the Labour Court
had dismissed the application filed by the
petitioner under Section 33C(2) of Industrial
Disputes Act, 1947 claiming all arrears of
salary and other allowances. The claim was
contested by the respondent and one of the
grounds of challenge was that the Labour Courts at Delhi had no territorial jurisdiction to entertain the application as the petitioner was not employed by respondent no.1 at Delhi but was working with its establishment at Dadri, Uttar Pradesh. It was further contended that the application filed by the petitioner was not maintainable as he was performing supervisory function and as such, was not a workman within the meaning of Section 2(s) of the Act. The Labour Court framed preliminary issue as to whether the court could adjudicate the issue about status of the claimant as a workman under Section 33C(2) of the Act and whether the Labour Courts at Delhi would have the territorial jurisdiction to entertain the application. The application of the petitioner was dismissed on holding that the status of the petitioner as a workman was disputed one and Labour LC 2408/16. 15/38 Court dealing with the application under Section 33C(2) of the Act did not have the jurisdiction to adjudicate the issue relating to the status of the applicant as a workman. Further, neither any cause of action had arisen in Delhi nor did the petitioner worked in Delhi and, therefore, the Labour Courts at Delhi did not have the jurisdiction to entertain the petitioner's application. Aggrieved by the dismissal of the application, the writ petition was filed. It was held that the courts exercising jurisdiction over territories where cause of action had arisen, alone would have the jurisdiction to entertain applications / petitions / complaints under the Act. Since in that case, the application under Section 33C (2) emanates from the employment of the petitioner at Dadri, U.P, the cause of action, obviously, also arise in U.P. The cause of action in such cases is inextricably linked with the situs of employment. The situs of an office of the employer does not give rise to a cause of action within that territory. By relying upon the decisions rendered in D.L.F Universal Ltd. (supra), B. B. Verma vs. National Project Construction Corporation Ltd. 80 (1990) DLT 498, Patel Roadways Ltd. vs. Tropical Agro Systems Pvt. Ltd. AIR 1992 SC 1514, it was held that merely because the respondents have an office in Delhi would not enable the Labour Court of Delhi to exercise jurisdiction in the matter.
10. Reverting to the case in hand, as per the LC 2408/16. 16/38 claim petition itself, though the petitioner was initially appointed by M/s Khanna Engineering Corporation on 20.07.2000 and was made to work at Delhi, but as per his own case the management closed its factory at the said address and started new firm by the name of M/s Ashoka Gears and shifted to Noida, District Gautam Budh Nagar, U.P where he worked till 2006. Thus, the situs of the employment was in Noida and not at Delhi. The termination also took place at Noida which is the cause for petitioner raising the dispute and consequently seeking reference. The notice of demand was also sent by him at the address of management at Noida, U.P. The situs of the employment of the petitionerworkman at the time of termination of his services was at Noida, Uttar Pradesh, thus, the subject matter of the dispute substantially arose in the State of Uttar Pradesh. Consequently, as the immediate occasion which resulted in the alleged infraction of the rights of the petitioner workman occurred in the State of Uttar Pradesh, the Courts in Delhi cannot be vested with territorial jurisdiction on the allegations that the initial appointment of the petitioner was at Delhi or that PF etc. was being deposited in Delhi or even the head office of the management is at Delhi. The decision rendered in Bikash Bhushan Ghosh was duly considered and dealt with in Braham Parkash (supra).
LC 2408/16. 17/3811. The management No. 1 had entered into contract with management No. 2 for supplying of manforce. These contracts ranging from 01.09.2008 to 31.12.2008 and from 01.01.2009 to 31.12.2009, have been placed on file by management No. 1 as Ex. MW1/1 and Ex.MW1/2 respectively. The first line of these contracts prove that the contract was executed at Sahibabad, Ghaziabad on 20.12.2007. The fourth line shows that the address of printing press of management No. 1 is "Plot No. 13, Site No. IV, Industrial Area, Sahibabad, District Ghaziabad. It is mentioned in second paragraph of both documents that the management No. 1 had entered into contract with management No. 2 for the purpose of supplying manforce at its plot No.13, Site No. IV, Sahibabad, Ghaziabad. The management No. 1 had taken licence Ex. MW1/7 from Deputy Director Factories in which its address is mentioned as Plot No. 13, Site No. IV, Industrial Area, Sahibabad, Ghaziabad. The management No. 1 had responded to the notice of Labour Department, Government of NCT of Delhi by filing reply Ex. MW1/12 in which it is mentioned in para No. 12 that the claimants were working with it at its site at Ghaziabad, U.P. Upper Labour Commissioner, Ghaziabad had issued registration certificate to management No. 1 in which its address is mentioned as Plot No.13, Site IV, Sahibabad, Ghaziabad. The most relevant document is notice Ex. MW1/13 dated 13.02.2009 LC 2408/16. 18/38 issued by Sh. M.K. Gaur, Assistant Labour Commissioner, Government of NCT of Delhi to workman with following contents: "...In the rejoinder dated 05.06.2008, you have admitted that all the 15 workmen were working in Sahibabad, U.P and their services were terminated from Sahibabad unit itself. In another claim of alleged illegal termination of above mentioned 15 workmen filed in this office, the management has also submitted that you have also filed the similar claim before the authorities in Ghaziabad, U.P and thereafter, you have filed another claim before the Labour Court No. 17, Karkardooma Court, Delhi directly under the provisions of Section 10 of the I.D. Act and the same is pending adjudication in ID No.86/2008 and 100/2008 before the Labour Court.
The above notice also suggests that claimant had filed a case against termination in Labour Office Ghaziabad. In the case filed before Conciliation Officer Ghaziabad against illegal termination, the concerned officer Sh. Mohan Singh had issued a notice dated 31.05.2008 to the management on its address as 13/1, Site No. IV, Sahibabad, Ghaziabad. The claimant had also sent a complaint dated 11.06.1998 to Labour Inspector, Lohia Nagar, Ghaziabad against management for compelling management to pay them wages. The above document proves, no doubt, that claimants were at the printing press of the management No. 1 situated at LC 2408/16. 19/38 Sahibabad, Ghaziabad
12. It is the case of the claimant in statement of claim itself that after some time, he was transferred by management No. 1 to Sahibabad, Ghaziabad. It is mentioned in para No. 11 of statement of claim that he had filed a complaint through union before Additional Labour Commissioner Ghaziabad, U.P. He admitted in cross examination that his last place of working was in Sahibabad, U.P when his service was terminated on 15.05.2008. At the end of cross examination, he admitted that he was working in Sahibabad when his service came to an end. He admitted it correct that he had filed a complaint in Labour Office in Ghaziabad against termination. In view of specific stand of claimant in statement of claim, affidavit in evidence and cross examination, it can be safely held that claimant was lastly posted in Sahibabad, Ghaziabad from where his service was terminated. Situs of employment is the predominant factor in the territorial jurisdiction of the Labour Courts. Place of appointment, place of serving the management for some time and place of deposit of PF and ESI contribution are not so significant factors. Hence, it is held that this Court does not have territorial jurisdiction to decide the case.
Issue No. 1.
LC 2408/16. 20/3813. Ld. ARW argued that all the claimants were employee of management No. 1 as they used to do the work of management No. 1 under the direct supervision and control of management No. 1 but in order to deprive them off legal facilities, management No. 2 was created by management No. 1 as a fake entity and the agreement entered into between both managements was sham and camouflage. This Court should lift corporate veil. On the other hand, Ld. AR for management No. 1 argued that sham and camouflage agreement between both managements was not argued before the labour office and that is why, the labour secretary did not send reference to that effect. She further submitted that this court is bound by the terms of reference and cannot travel beyond it.
In Ashok Kumar & Ors. Vs. The State and Anr. WPC Nos. 943842 and 944549/2004 decided by Hon'ble High Court of Delhi on 20.12.2006, the terms of reference did not include the sham and camouflage agreement between both managements and so, the writ petition filed by workers was dismissed by the High Court with following observations: "7 It is obvious that the workmen in this case did not raise correct dispute and did not approach the appropriate Government with the contentions that the contract was sham and camouflage or that the contract labour system should be abolished. They got referred a LC 2408/16. 21/38 dispute that they were the employees of the management and were not being regularized. This claim was found false. The Labour Court had no alternative but to dismiss the claim. It is settled law that the Labour Courts / Tribunals cannot travel beyond the terms of reference. If no reference had been made to the Labour Court for determining whether the contract was sham and camouflage, the Labour Court could not have entered into this issue and decided whether the contract was sham and camouflage".
To the same effect is Pottery Mazdoor Panchayat Vs. Perfect Pottery Co. Ltd. & Anr. (1979) 3 of Supreme Court cases 762 and Ram Bhawan and Ors. Vs. N.D.M.C., 140 (2007) DLT
392. In view of above discussion, it is held that this court cannot hold that agreement between both managements was sham and camouflage because such issue was not referred to this court in terms of reference.
14. Ld. AR for management No. 1 argued that even if the Court entertains the plea of the claimant that the Court should lift the corporate veil, there is nothing on the file with the help of which the court may come to the conclusion that there was a sham agreement between both managements. She further submitted that LC 2408/16. 22/38 for deciding such agreement as sham, the courts are to look into four factors.
(i) The master's power of selection of his servant. (ii) The payment of wages or other remuneration. (iii) The master's right to control the method of doing the work and (iv) The master's right of suspension or dismissal. She further submitted that courts are also required to keep into account other factors like who deducted insurance contribution, who organized the work, who supplied tools and materials and what were the obligations between them. She further submitted that the parent company must exercise control over the composition of the Board Directors of the subsidiary company and, should have a controlling interest of over 50% of the equity shares and voting rights of the subsidiary company. She further submitted that the claimants were required to prove that the management No. 2 had effective and absolute control over them but they have failed to prove that fact.
15. Leading case on lifting corporate veil in Balwant Rai Saluja Vs. Air India Ltd. 2014 (3) LLN 568 (SC) in which following was held by Apex Court:
52. McKeena J. further referred to Lord Thankerton's four indicia" of a contract of service said in Short v. J & W Henderson Ltd, 1946(62) TLR 427. The J & W. Henderson case (supra) at p.429 observes as follows :
LC 2408/16. 23/38a) The Master's power of selection of his Servant;
b) the payment of wages or other remuneration;
c) The Master's right to control the method of doing the work, and
d) the Master's right of suspension or dismissal.
55. In Ram Singh V. Union Territory, Chandigarh, 2004(1) LLN 511(SC), 2004 (1) SCC 126, as regards the Concept of Control in an EmployerEmployee relationship, observed as follows :
"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 determine 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 weighting up all the factors for and against an employment instead of going by the sole "test of control". As 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 the independent of it. The other factors which may be relevant arewho has the power to select and dismiss, to pay remuneration, deduct insurance contributions, organise the workman, supply tools and materials and what are the "mutual obligations" between them."LC 2408/16. 24/38
56. In the case of General Manager (OSD), Bengal Nagpur Cotton Mills Vs. Bharat Lal, 2011(1) LLN 368, this court observed that : "9. In this case,the Industrial Adjudicator has granted relief to the First respondent in view of its finding that he should be deemed to be a direct Employee of the Appellant. The question for consideration is whether the said finding was justified.
10. It is now well settled if the Industrial Adjudication finds that the Contract between the Principal Employer and the Contractor to be a sham, nominal or merely a camouflage to deny employment benefits to the Employee and that there was in fact a direct employment, it can grant relief to the Employee by holding that the workman is the direct employee of the Principal Employer. Two of the well recognised tests to find out whether the Contract Labourer are the direct Employees of the Principal Employer are (i) whether the Principal Employer pays the salary instead of the Contractor; (ii) whether the Principal, Employer controls and Supervises the work of the Employee. In this case, the Industrial Court answered both questions in the affirmative and as a consequence held that the First Respondent is a direct Employee of the Appellant."
57. Further, the above case made reference to the case of the International Airport Authority of India Vs. International Air LC 2408/16. 25/38 Cargo Workers' Union, 2009(3) LLN 489 (SC), wherein the expression "control and supervision" in the context of Contract Labour was explained by this court. The relevant part of the International Airport Authority of India case (supra), as quoted in General Manager (OSD), Bengal Nagpur Cotton Mills Vs. Bharat Lal, 2011 (1) LLN 368, is as follows : "38. If the contract is for supply of labour, necessarily, the labour supplied by the Contractor will work under the directions, supervision and control of the Principal Employer but that would not make the worker a direct Employer of the Principal Employer, if the salary is paid by a Contractor, if the right to regulate the employment is with the Contractor, and the ultimate supervision and control lies with the Contractor.
"39. The Principal Employer only controls and directs the work to be done by a Contract Labour, when such labour is assigned/alloted/sent to him. But it is the Contractor as Employer, who chooses whether the worker is to be assigned/allotted to the Principal Employer or used otherwise. In short, worker being the Employee of the Contractor, the ultimate supervision and control lies with the Contractor as he decides where the Employee will work and how long he will work and subject to what conditions. Only when the Contractor assigns/sends the worker to work under the Principal Employer, the worker works under the supervision and control of the Principal Employer but that is LC 2408/16. 26/38 secondary control. The primary control is with the Contractor.
58. A recent decision concerned with the Employer Employee relationship was that of the National Aluminum Co. Ltd. Vs. Ananta Kishore Rout and Ors, 2014 (6) SCC 756. In this case, the Appellant had established two schools for the benefit of the wards of its Employees. The Writ Petitions were filed by the Employees of each school for a declaration that they be treated as the Employees of the AppellantCompany on grounds of, inter alia, real control and supervision by the latter. This court, while answering the issue canvassed was of the opinion that the proper approach would be to ascertain whether there was complete control and supervision by the Appellant therein. In this regard, reference was made to the case of Dhrangdhra Chemical Works Ltd. vs. State of Saurashtra, AIR 1957 SC 274, wherein this court had observed that : "14. The principle, which emerged from these authorities is that the prima facie test for the determination of the relationship between master and servant is the existence of the right in the master to supervise and control the work done by the servant not only in the matter of directing what work the servant is to do, but also the manner in which he shall do his work, or to borrow the words of Lord Uthwatt at P.23 In Mersey Docks and Harbour Board Vs. Coggins and Griffith (Liverpool) Ltd., 1952 SCR 696 "The proper test is whether or not the hirer had authority to control the manner of execution of the act in question".
60. It was concluded by this court in the National Aluminium Co. Ltd VS. Ananta Kishore Rout and Ors, 2014(6) LC 2408/16. 27/38 SCC 756, that there may have been some element of control with NALCO because its officials were nominated to the Managing Committee of the said schools. However, it was observed that the abovesaid fact was only to ensure that the schools run smoothly and properly. In this regard, the Court observed as follows : "30. However, this kind of "remote control"
would not make NALCO the Employer of these workers. This only shows that since NALCO is shouldering and meeting financial deficits, it wants to ensure that the money is spent for the rightful purposes."
61. Thus, it can be concluded that the relevant factors to be taken into consideration to establish an EmployerEmployee relationship would include, interalia (i) who appoints the Workers ; (ii) who pays the salary remuneration; (iii) who has the authority to dismiss; (iv) who can take disciplinary action; (v) whether there is continuity of service; and (vi) extent of control and supervision, i.e whether there exists complete control and supervision. As regards, extent of control and supervision, we have already taken note of the observations in General Manager (OSD), Bengal Nagpur Cotton Mills Vs. Bharat Lal, 2011 (1) LLN 368 (SC), the International Airport Authority of India Vs. International Air Cargo Workers' Union, 2009 (3) LLN 489 (SC); and the National Aluminium Co. Ltd. Vs. Ananta Kishore Rout and Ors, 2014 (6) SSC 756.
62. In the present set of Appeals, it is an admitted fact that the HCI is a wholly owned subsidiary of the Air India. It has been urged by the learned Counsel for the Appellants that this Court should pierce the veil and declare that the HCI is a sham and camouflage. Therefore, the liability regarding the Appellants here would fall upon the Air India, not the HCI. In this regard, it would be pertinent to elaborate upon the Concept of a Subsidiary LC 2408/16. 28/38 Company and the Principle of Lifting the Corporate Veil.
63. The Companies Act in India and all over the world have statutorily recognized Subsidiary Company as a separate legal entity. Section 2(47) of the Companies Act, 1956 (for short "the Act, 1956") defines 'Subsidiary Company' or 'subsidiary', to mean a Subsidiary Company within the meaning of Section 4 of the Act, 1956. For the purpose of the Act, 1956, a Company shall be, subject to the provisions of subsection (3) of Section 4, of the Act, 1956, deemed to be subsidiary of another. Clause (1) of Section 4 of the Act, 1956 further imposes certain preconditions for a company to be a subsidiary of another. The other such Company must exercise control over the composition of the Board of Directors of the Subsidiary Company, and have a controlling interest of over 50% of the equity shares and voting rights of the given Subsidiary Company.
78. As regards HCI's Articles of Association, it is stated therein that the HCI shall be a whollyowned subsidiary of the Air India and that its share capital shall be held by the Air India and /or its nominees. Furthermore, the said Articles included provisions whereby Air India controls the composition of the Board of Director of the HCI, including the power to remove any such director or even the Chairman of the Board. Further, Air India has the right to issue directions to the HCI, which the latter is bound to comply with. In this regard, it may be contended that the Air India has effective and absolute control over the HCI and that therefore latter is merely a veil between the AppellantsWorkmen and Air India. We do not agree with this contention.
82. It may be noticed again that the National Aluminium Co. Ltd. v. Ananta Kishore Rout and Ors., 2014 (6) SCC 756, dealt with a similar issue. In that case, the Court had observed that the daytoday functioning of the school as setup by the Appellant LC 2408/16. 29/38 therein was not under NALCO, but under a Managing Committee therein. Further, the said Manging Committee was a separate and distinct legal entity from NALCO, and was solely responsible for recruitment, disciplinary action, termination, etc. of its staff. The Court therefore had held that the Respondents therein could not be said to be employed by NALCO. In the present case, HCI is a separate legal entity incorporated under the Act, 1956 and is carrying out the activity of operating and running of the given Canteen. The Said Articles of Association of the HCI, in no way give control of running the said Canteen to the Air India. The functions of appointment, dismissal, disciplinary action, etc. of the Canteen staff, are retrained with the HCI. Thus, the exercise of control by the HCI clearly indicated that the said Respondent No. 2 is not a sham or camouflage created by Respondent No. 1 to avoid certain statutory liabilities.
85. Therefore, in our considered view and in light of the above, the AppellantsWorkmen could not be said to be under the effective and absolute control of Air India. The Air India merely has control of supervision over the working of the given statutory Canteen. Issues regarding appointment of the said workmen, their dismissal, payment of their salaries, etc. are withing the control of the HCI. It cannot be then said that the Appellants are the workmen of Air India and therefore are entitled to regularization of their services.
16. In National Aluminium Company Ltd. & Ors. Vs. Ananta Kishore Route & Ors. (2014) 6 Supreme Court cases 756, the facts were that the school was established by NALCO which was also providing necessary infrastructure. It had also given adequate financial support. NALCO had also placed staff quarters LC 2408/16. 30/38 at the disposal of the schools which were alloted to the employees of the schools. Employees of the schools were also accorded some other benefits like recreation facilities etc. Despite it, the Apex Court did not take the employees of the school as the employees of NALCO with following observations:
21. We have considered the aforesaid submissions with reference to the record of this case. No doubt, the school is established by NALCO. NALCO is also providing necessary infrastructure. It has also given adequate financial support inasmuch as deficit, after meeting the expenses from the tuition fee and other incomes received by the schools, is met by NALCO. NALCO has also placed staff quarters at the disposal of the schools which are allotted to the employees of the schools. Employees of the schools are also accorded some other benefits like recreation club facilities, etc. However, the poser is as to whether these features are sufficient to make the staff of the schools as employees of NALCO.
23. It has been established from the documents on record that both the schools have their own independent Manging Committees. These managing committees are registered under the Societies Registration Act. It is these Managing Committees which not only recruit teaching and other staff and appoint them, but all LC 2408/16. 31/38 other decisions in respect of their service conditions are also taken by the Managing Committees. These range from pay fixation, seniority, grant of leave, promotion, disciplinary action, retirement, termination, etc. In fact, even the Service Rules, 1995 have been framed which contain the provisions; delineating all necessary service conditions. Various documents are produced to show that appointment letters are issued by the Managing Committees, disciplinary action is taken by the Managing Committees, pay fixation and promotion orders are passed by the Manging Committees, pay fixation and promotion orders are passed by the Managing Committees and even orders of superannuation and termination of the staff are issued by the Managing Committees. It, thus, becomes clear that daytoday control over the staff is that of the Managing Committees. These Managing Committees are having statutory status as they are registered under the Societies Registration Act. Therefore, Mr. Venugopal is not right in his submission that Managing Committees do not have their own independent legal entities.
30. No doubt, there may be some element of control of LALCO because of the reason that its officials are nominated to the Managing Committees of the schools. Such provisions are made to ensure that schools are run smoothly and properly by the LC 2408/16. 32/38 society. It also becomes necessary to ensure that the money is appropriately spent.
However, this kind of "remote control"
would not make NALCO the employer of these workers. This only shows that since NALCO is shouldering and meeting the financial deficits, it wants to ensure that money is spent for rightful purposes.
35. We say at the cost of repetition that there is no parity in the nature of work, mode of appointment, experience, educational qualifications between the NALCO employees and the employees of the two schools. In fact, such a comparison can be made with their counter parts in the government schools and/or aided or unaided schools. On that parameter, there cannot be any grievance of the staff which is getting better emoluments and enjoying far superior service conditions.
36. We thus, are of the opinion that the impugned judgment of the High Court is unsustainable. Allowing these appeals, the judgment of the High Court is hereby set aside. There shall, however, be no order as to costs.
17. Claimant deposed that he had started working with management No. 1 from 06.10.1996, but he did not place on record any document to that effect. On the other hand, case of the management Nos. 1 & 2 is that he was employee of management LC 2408/16. 33/38 No. 2. The management No. 1 has placed on record the contract for service as Ex. MW1/1 and Ex. MW1/2, according to which management No. 2 had agreed to supply manforce to management No. 1 at its premises in Sahibabad, Ghaziabad. The management No. 2 has placed on record PF returns from March, 1999 to March, 2006 as Ex. M2W1/3 to Ex. M2W1/8 respectively. Those PF returns prove that PF was deducted from his salary and deposited in the concerned department by management No. 2. It has also placed on record ESI returns from April, 2003 to September, 2008 as Ex. M2W1/9 to Ex.M2W1/19. As per those returns, it was management No. 2 who used to deduct ESI contribution from salary of the claimant and used to deposit with the concerned department.
It has been admitted by claimant in cross examination that it was management No. 2 who used to pay him salary. It was management No. 2 who used to deduct PF and ESI contribution from his salary.
Wage registers for 01.04.2000 to 31.03.2001 Ex. WW1/M1, 01.04.2004 to February - 2005 Ex. WW1/M2 were put to the claimant in cross examination and he denied his signatures at points A on those registers, but admitted his signatures at points B on register for the months of April 2004 to August 2004 and November 2004 to February 2005 of Ex. WW1/M2. He was also LC 2408/16. 34/38 put register for the period from 01.04.2005 to 31.03.2006 Ex. WW1/M2 and he admitted his signatures at points B on those registers.
18. From above discussion, it becomes clear that it was management No. 2 who had agreed to supply manforce to management No. 1 at its premises in Sahibabad. It was management No. 2 who used to pay salary to claimant. It was management No. 2 who used to deduct PF and ESI contribution from his salary and used to deposit in the concerned department. On the other hand, claimant did not place on record that he was employed by management since 16.10.1996. So, it is held that claimant was employee of management No. 2 and not of management No. 1. This issue is decided in favour of management No. 1 and against claimant and management No. 2.
Issue No. 3.
19. It has already been decided in issue No. 1 that claimant was not employed with management No. 1 and that he was employed by management No. 2 and so, there was no occasion for management No. 1 to terminate his service.
Case of management No. 2 is that claimant had himself abandoned the job on 15.05.2008 and did not report for LC 2408/16. 35/38 duty thereafter. It has been deposed by MW1 that claimant alongwith other employees, including Sh. Birender Singh was deployed at the premises of management No. 1 and due to negligence of Birender Singh, a major blast took place in the night of 13.05.2008, but the inferno was averted due to timely intervention of officers of management No. 1. Said Sh. Birender Singh apologized orally but he had refused to submit written explanation. It has been further deposed by MW1 that Sh. Birender Singh had demanded some alternative work from management No. 2 on 15.05.2008 which was not available. Claimant, Birender Singh and other employees joined protest against it and left the work from 15.05.2008. Thereafter, the claimant was given several opportunities by way of telegram and letters to join back but he did not join.
The management No. 2 had sent a letter dated 28.07.2008 to the claimant and that fact has been admitted by claimant himself. Vide that letter, the management had called him upon to join back as he was going absent w.e.f. 15.05.2008. He was asked to join on 04.08.2008. In response, the claimant had sent reply Mark W6 mentioning that he alongwith other workers had appeared before the gate of management on 04.08.2008 to work, but management No. 2 had refused to take him and others back on duty. In the same way, the claimant and other workers LC 2408/16. 36/38 had sent complaint Mark W8 to the Incharge, Police Post Sahibabad, Ghaziabad, U.P. to the effect that management had asked them vide letters dated 28.07.2008 that they should join back duty on 04.08.2008 and when they reached to the gate of the premises at 9.00 a.m, they were not allowed to work and that its officers were hellbent to quarrel with them. The management No. 2 did not place on record any other communication with the claimant vide which it might had asked him to join duty or explain his absence. It did not issue him any chargesheet. It did not conduct any domestic enquiry. Hence, the termination of service of claimant by management No. 2 is held illegal because no notice was given and no notice and retrenchment compensation were tendered to him before termination. This issue is decided in favour of management No. 1, against management No. 2 and partly in favour of claimant.
Issue No. 4.
20. It has been observed in issue No. 3 that service of the claimant was terminated illegally by management No. 2, but ARW Sh. Jai Narayan had made statement on oath before the Court on 19.11.14 that he was not seeking any relief against management No. 2. In view of that statement and in view of the finding on issue No. 2, it is held that claimant is not entitled to relief.LC 2408/16. 37/38
Statement of claim is dismissed. Parties to bear their own costs. Award is passed accordingly.
21. The requisite number of copies be sent to the Govt. of NCT of Delhi for publication of the award. File be consigned to record room.
Dictated to the Steno & announced (UMED SINGH GREWAL) in the open Court on 18.07.2017. PILOT COURT/ POLCXVII KKD COURTS, DELHI.LC 2408/16. 38/38