Madras High Court
Madras Refineries Limited vs The Chief Commissioner For Persons With on 26 April, 2012
Author: K.Chandru
Bench: K.Chandru
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 26.04.2012 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.Nos.4368 of 2009, 26724 of 2010, 6371 of 2011 and Connected Miscellaneous Petitions Madras Refineries Limited, Now Known as Chennai Petroleum Corporation, Rep.by its Company Secretary, Manali, Chennai - 600 068. ..Petitioner in W.P.No.4368/2009 The Management of M/s.Chennai Petroleum Corporation Limited (Previously known as Madras Refineries Limited, MRL Campus, Manali, Chennai - 600 068 Rep. By its Company Secretary, M.Sankarnarayanan ..Petitioner in W.P.No.26724/2010 Madras Refineries Limited INDCO Serve Society Limited, Manali, Chennai - 600 068 Rep. By its Special Officer. ..Petitioner in W.P.No.6371/2011 Vs. 1.The Chief Commissioner for persons with Disabilities, Sarojini House, 6, Bhagwan Dass Road, New Delhi - 110 001. 2.E.Seshadri 3.C.Vijayakumar 4.MRL Industrial Co-operative Service Society Ltd., (Through Chairman) MRL Campus, Manali, Chennai - 600 068. ..Respondents in W.P.No.4368/2009 1.The Presiding Officer, Central Government Industrial Tribunal- Cum-Labour Court, Shastri Bhavan, 26, Haddows Road, Chennai - 600 006. 2.The General Secretary, Madras Refineries Workers Union, MRL Campus, Manali, Chennai - 600 068. 3.M/s.Madras Refineries Limited INDCO Service Society Limited, MRL Campus,Manali, Chennai - 600 068. ..Respondents in W.P.No.26724/2010 1.The Presiding Officer, Central Government Industrial Tribunal- cum Labour Court, Shastri Bhavan, No.26, Haddows Road, Chennai - 600 006. 2.The General Secretary, Madras Refineries Workers Union, MRL Compound, Manali, Chennai - 600 068. 3.The Management, Chennai Petroleum Corporation Limited, Previously known as Madras Refineries Ltd., MRL Campus, Manali, Chennai - 600 068 Rep. By its Company Secretary. ..Respondents in W.P.No.6371/2010 W.P.No.4368 of 2009 preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari, to call for the records connected with Case No.3232 of 2006 on the file of the first respondent, i.e., Chief Commissioner for Persons with Disabilities, New Delhi and to quash the order dated 30.01.2009 made therein. W.P.No.26724 of 2010 preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari, to call for the records relating to the Award dated 30.08.2010 passed by the first respondent/ Central Government Industrial - cum - Labour Court, Chennai in I.D.No.128 of 2001 and to quash the same. W.P.No.6371 of 2011 preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari, to call for the records from the file of the first respondent in I.D.No.128 of 2001 and to quash the award dated 30.08.2010 passed therein. For Petitioners : Mr.Sanjay Mohan for M/s.Ramasubramaniam & Associates in W.P.Nos.4368/2009 and 26724/2010 Mr.S.Jayaraman in W.P.No.6371/2011 For Respondents : Mr.B.Vijayakumar for R2 and R3 in W.P.No.4368/2009 Mr.V.Prakash, Sr.Counsel for Ms.Ramapriya Gopalakrishnan for R2 in W.P.No.26724/2010 and for R2 in W.P.No.6371/2011 Mr.S.Jayaraman for R3 in W.P.No.26724/2010 Mr.Sanjay Mohan for M/s.Ramasubramaniam Associates for R3 in W.P.No.6371/2011 C O M M O N O R D E R
W.P.No.4368 of 2009 is filed by the Management of Madras Refineries Limited, now known as Chennai Petroleum Corporation Limited (for short CPCL), seeking to challenge an order of the Chief Commissioner for Persons with Disabilities, New Delhi, dated 30.01.2009.
2. In that case, the Commissioner, on an complaint made by two workmen M/s.E.Seshadri and C.Vijayakumar found that they were party to the industrial dispute before the Central Government Industrial Tribunal (for short CGIT) in I.D.No.128 of 2001 and an Award was passed on 30.08.2010 by the CGIT. It also observed that CGIT will take care of the general issues relating to absorption of employees including the two complainants. But with reference to the compliance of the provisions of Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 is concerned, it is for the Commissioner to go into the issue to ensure that the complainants get their entitlement guaranteed to them under the provisions of the Act. Therefore, the Commissioner gave a direction to CPCL to calculate reservation for persons with disabilities as against the vacancies filled since 1996 in Group 'A', 'B', 'C' and 'D' based on separate 100 points rosters in which points number 1, 34 and 67 were earmarked for persons with disabilities and absorb the complainants against any Group 'D', 'C' posts like Handyman / Yardman, Office Assistant, Chair Recaner, Plumber, etc., against the backlog reservation within 45 days from the date of receipt of the order. It was further directed that the concerned Liaison Officer nominated by the CPCL shall ensure correctness of calculation of reservation and maintenance of rosters for Persons with Disabilities and prepare a plan of action to conduct a Special Recruitment Drive to fill backlog reservation for persons with different disabilities in accordance with the provisions of the Act.
3. That writ petition was admitted on 25.03.2009. Pending the writ petition, notice was ordered in the interim stay application. Subsequently, this Court by a detailed order dated 18.11.2009 dismissed the stay application. When that writ petition came up on 14.07.2011, and the matter being mentioned by the learned counsel for the Management, other connected matters were directed to be posted along with this writ petition.
4. W.P.No.26724 of 2010 is filed by the Management of CPCL, seeking to challenge an Award of the CGIT made in I.D.No.128 of 2001 dated 30.08.2010 and seeks to set aside the same. By the impugned Award, the CGIT answered the reference in favour of the workmen represented by the second respondent Trade Union.
5. That writ petition was admitted on 26.11.2010. Pending the writ petition, an interim stay was granted for a period of four weeks. Subsequently, it was extended on three more occasions. On 20.01.2011, this Court observed that when specific assurance was made by the Management of CPCL that interest would be paid, if they lose in the writ petition, and taking into consideration the financial constraint and implication of deposit of a huge sum of money by a public sector undertaking, the interim stay was made absolute without any condition. It also recorded the undertaking given by the third respondent viz.,Madras Refineries Limited INDCO Service Society Limited that they would continue to grant benefits whatever granted earlier till the disposal of the writ petition.
6. W.P.No.6371 of 2011 is filed by the Madras Refineries Limited INDCO Serve Society Limited, (for short INDCO Serve) challenging the very same Award in I.D.NO.128 of 2001 dated 30.08.2010. That writ petition was admitted on 15.03.2011 and it was directed to be posted along with the writ petition filed by the Management of CPCL.
7. Since all the three writ petitions are interconnected, they were grouped together and at the consent of parties, they were heard together and a common order is passed.
8. For the sake of convenience, Management is referred to as CPCL, Contractor is referred to INDCO Serve, Tribunal is referred to as CGIT and workers are referred to as workmen as the case may be.
9. Since the disposal of W.P.No.26724 of 2010 and W.P.No.6371 of 2011 will decide the outcome of W.P.No.4368 of 2009, challenge to the Award was taken up for disposal first. Petitioners have filed voluminous records containing as many as 18 typed sets, which represents the documents filed and evidence let in before the CGIT.
10. CPCL, a Public Sector Company incorporated under the provisions of Companies Act is engaged in refining Crude Oil and manufacture of all petroleum products. It commenced its manufacturing operations at Chennai near Manali in the year 1969 and has got number of permanent employees engaged in the manufacturing operations. It also engages contractors from time to time for doing various works. CPCL is a registered Principal Employer under the Contract Labour (Regulation and Abolition) Act, 1971.
11. According to them, INDCO Serve is one such contractor of CPCL, which had also obtained license under the Contract Labour (Regulation and Abolition) Act, 1971. Prior to the year 1983, the employees of the Contractors had been working under the Contractors and in order to avoid exploitation by the Contractors, the workmen had grouped together and was registered as a Society under the Tamil Nadu Co-operative Societies Act, 1961, thus forming INDCO Serve. After formation of INDCO Serve, various other workmen working under some other contractors also joined the INDCO Serve after submitting necessary forms and paying the share capital. The INDCO Serve issued share certificate to its respective members. The CPCL also became a member of INDCO Serve during 1983 by contributing a sum of Rs.50,000/- towards the share capital of the Society.
12. It was stated that the main object of the INDCO Serve is to take up and execute various works entrusted to it by the CPCL. Every worker of the INDCO Serve are its members and they are shareholders of INDCO Serve. The INDCO Serve has its own Bye-laws, which was duly certified under the Industrial Employment (Standing Orders Act), 1946 governing the terms of employment and various other aspects. As per the bye-laws of the INDCO Serve, elections were conducted from time to time. The workmen Directors were elected to serve the Board. In view of the supersession of the Board of Directors, the State Government had appointed a Special Officer to manage the affairs of the Co-operative Societies. In the absence of elected Board of Directors, it was the Special officer, who was manning the INDCO Serve. The INDCO Serve was paying salaries to its members/workers and was exercising control and supervision over them. It also revise wages from time to time by entering into a settlement with the Trade Union representing the workmen. The INDCO Serve is also paying dividends to its members from time to time and also comply with all statutory requirements such as payment of ESI and PF Contributions to the workers engaged by them and also pay the Income Tax. The workmen engaged by INDCO Serve themselves have formed another Cooperative Thrift Society in their welfare. INDCO Serve had received Best Society Award and Letter of Appreciation from the State Government for its excellent functioning and achievements.
13. It was further stated that subsequent to the formation of INDCO Serve, its members through their Trade raised an industrial dispute seeking absorption/ permanent employment of its members in CPCL. This issue was taken before the Conciliation Officer appointed by the Central Government. However, the said issue was settled by way of settlement entered into between the parties under Section 12(3) of the Industrial Disputes Act, 1847 on 15.12.1997. By the said settlement, certain employees of INDCO Serve were taken on the rolls of CPCL.
14. Despite the settlement being binding, the Trade Union once again raised an industrial dispute before the Central Government, Labour Department and as it could not bring about compromise between the parties, the Conciliation Officer sent a failure report to the Government of India. The Government of India, Ministry of Labour vide its order dated 28.05.1999 referred the following dispute for adjudication by the CGIT.
"Whether the demand of Madras Refineries Workers Union for absorption of workmen listed in Annexure A as regular employees of Madras Refineries Ltd. is justified? If so, to what relief the workmen is entitled?
[Annexure A -omitted]"
15. On receipt of the order of reference made under Section 10(1) of the I.D.Act, the Industrial Tribunal registered the dispute as I.D.No.96 of 1999 and notice was issued to parties. The Trade Union filed a claim statement on 05.09.2000. In view of the formation of CGIT, the dispute was transferred to the file of CGIT and it was re-numbered as I.D.No.128 of 2001. A list of INDCO Serve workers was also furnished along with the claim statement, which contains the names of 381 workers. The CPCL filed a counter statement dated 04.05.2007. An additional counter statement dated Nil (January 2008) was also filed by CPCL.
16. A preliminary issue was raised that the demand for absorption of workmen was covered by a settlement under Section 12(3) of the I.D.Act dated 15.02.1997 and pursuant to which, already certain employees were recruited and therefore, the reference was without jurisdiction.
17. It was contended that reference made by the Central Government is not for a declaration that the contract between CPCL and the INDCO Serve is sham, whereas, the reference was whether the workmen serving under the INDCO Serve should be treated as employees of CPCL from the date of their commencement of their services in the INDCO Serve. Hence, the reference is beyond the competence of the CGIT to decide the claim made by the Trade Union and it must be rejected.
18. The INDCO Serve represented through its Special officer has also filed a counter affidavit dated 15.03.2001. An additional counter affidavit dated 14.05.2007 was also filed.
19. Before the CGIT, on behalf of the workmen, one R.Rajendran was examined as W.W.1 and on their side 129 documents were filed and marked as Exs.W1 to W129. On the side of the CPCL, One K.Rajan was examined as M.W.1 and B.Issac was examined as M.W.2. On their side, they filed all the statutory liability and insurance liabilities for the workers involved in the dispute, which was marked as Ex.M1.
20. The CGIT on an analysis of materials placed before it both (oral and documentary) came to the conclusion that INDCO Serve is only a creature of CPCL. For the formation of INDCO Serve, the foetus or embryo germinated from the will followed by the action of the CPCL. The formation of the INDCO Serve was at a time after coming into force of the Contract Labour (Abolition and Regulation) Act, 1970. The various items of work which were being entrusted and got done through the so-called workers of the Society were not items of work prohibited from being carried out through Contract Labour. There was no difficulty for the CPCL to get the work done as though through Contract Labour. When once a society is formed, it has to necessarily formulate bye-laws. Meetings of the Board of Directors will have to take place from time to time. There has to be recording of minutes as a corollary to the said meetings. Dividends have to be paid on annual basis. The existence of all these requisites does not hold out or proclaim itself that the instrumentality concerned is in every respect a legal and separate entity. Despite the presence of all such features for a valid society, it is open to the CGIT to pierce the veil to see what is the reality behind or in the background of the very entity if circumstances or facts warrant to direct itself to such a course. Therefore, under the circumstances of the case, the CGIT found that CPCL is the promoter or the founder of the INDCO Serve for making a gain for its oblique purposes and did not have any genuine or valid objective such as improving the economic conditions of the workmen, abolition of contract labour etc. The said oblique motive is discernibly nothing other than treating the Society workers merely as contract workers to extend lesser benefits than those extended to the regular workers. On piercing the veil what emerged was that the INDCO Serve is a mere camouflage and that the contract workmen are real employees of the Principal employer. INDCO Serve was formed as a sham and nominal to achieve the said purposes of reaping the benefits so as to exploit the workmen in the name of so-called Society with lesser benefits extended to them. Therefore, as a sham the society was given a formation which was made to believe to be a Contractor under the CPCL and the CPCL was exploiting the workers by extracting their labour at a cheaper cost than that of the direct workmen.
21. A reference was also made to the judgment of the Supreme Court in the decision of Gujarat Electricity Board v. Hind Mazdoor Sabha (AIR-1995-SC 1893). Thereafter, the CGIT referred to the mandate contained in the Directive principles of State Policy enshrined under the Constitution more particularly Articles - 38, 39, 41, 42, 43 and 47. Since the INDCO Serve workers are direct workers of CPCL and the contract between the CPCL and the INDCO Serve not proved to exist for the whole period from the beginning till now but is only available for broken periods could only be paper devices calculated to create a maya of legal appearances and hence, the CGIT held that the so called contract between INDCO Serve and the CPCL is only sham and nominal and it is only a camouflage.
22. The CPCL's argument was that the INDCO Serve has its own bye-laws, constitution of Board of Directors, having regular Board meetings, passing of resolutions, incurring expenditure, recording of minutes of meetings, maintenance of Profit and loss accounts, payment of dividends to shareholders etc. is only found to be counter productive leading to disprove the case of the CPCL. INDCO workers are really the workmen of CPCL and therefore, they are entitled to be regularised into the service of CPCL. The fact that they were engaged for more than 15 years right from the inception of their service was indicative of the fact that their work is perennial and permanent in nature, so essential and integral to the main business of the CPCL. Their services cannot be parted with for any reason on the ground either they are over aged or not qualified or have to be certified as medically fit, because even without the Award, they would have continued to work in the INDCO Serve. Hence, a direction was issued that the members of the Trade Union covered by reference were absorbed into the services of the CPCL with retrospective effect from the date of their initial entry into the service of INDCO Serve with resultant backwages and attendant benefits.
23. Assailing the Award, Mr.Sanjay Mohan representing M/s.S.Ramasubramaniam Associates, counsel for CPCL submitted that the Award of the CGIT is perverse. The CGIT did not take into account the voluminous materials produced before it and went at a tangent to grant relief to the workmen which was not even based upon the order of reference. The reference merely stated whether the workmen are entitled for absorption as regular employee of the Refineries Limited and to what relief they are entitled to. On the other hand, the CGIT had granted regulariation even from the day one on which they entered into the service of INDCO Serve whereas the demand for absorption came much later. The INDCO Serve itself was party respondent to the dispute and separately filed a counter statement and resisted the reference.
24. The witness of the workman, W.W.1 R.Rajendran, who was the General Secretary of the Madras Refineries Workers Union both in his Chief examination as well as in his cross examination had admitted the fact that the INDCO Serve was periodically obtaining license under the Contract Labour Act. Before raising the dispute, they never claimed that between the INDCO Serve and the Management, the arrangement is sham or that the Society was a sham. W.W.1 agreed that he was not aware as to when the arrangement between the CPCL and INDCO serve became a sham. INDCO Serve was manned by a Special Officer appointed by the State Government and the employees of the CPCL were also Directors of the INDCO Serve. In fact, W.W.1 himself is a Director of the INDCO Serve.
25. Copy of the Minutes of General Body meeting held by the Board of Directors was filed as Exs.W44 and W45. List of Board of Directors elected since 1983 till the date of Industrial dispute was marked as Exs.W62. Copies of the election notice held to the INDCO Serve was marked as Ex.W63. List of elected Board of Directors from the year 1988 was marked as Ex.W64. Subsequent to the supersession of the Board by State enactment, special officers were appointed and the list of special officers from 1989 till the date of dispute, was marked as Ex.W65. One of the order of the State Government appointing one Agnisundaram was marked as Ex.W66. The said Agnisundaram continued to be a Special Officer till the date of dispute. It is the INDCO Serve which pays salary to the Special officer. Salary details of R.Rajendran, W.W.1 was marked as Ex.W97. Society had appointed its own Supervisors and assigned work to them. The Society was also declaring dividends for its members, who are also employees of CPCL. Copy of the dividends declared by INDCO Serve for the period from 1998 till the date of dispute was marked as Ex.W69. W.W.1 himself has admitted that he had received dividends from the said Society and continued to get dividend as a shareholder of the Society. The Trade Union of which W.W.1 is a General Secretary viz., Madras Refineries Workers Union had entered into a settlement with the INDCO Serve. The workers used to place their charter of demands with INDCO Serve. Ex.W71 is the copy of charter of demands, dated 20.10.1995 made by the Union. Ex.W72 is also a copy of charter of demands made by the Union, dated 12.06.2000.
26. A settlement was signed between MRL Anna Workers Union and INDCO Serve, which was marked as EX.E73. Copy of charter of demands submitted by MRL Anna Workers Union to the INDCO Serve was marked as Exs.W74 and W75. Copy of Settlement between Anna Workers Union and the INDCO Serve was marked as Ex.W76. Copy of the letter written by INDCO Serve to the Union accepting the charter of demands made by the Union was marked as Ex.W77. A copy of the letter from EPF organisation to the INDCO serve allotting separate Code Number was marked as Ex.W85. The PF Trust created by the Society had its own Rules and the Rules of the PF Trust was marked as Ex.W86. The INDCO Serve was submitting their own returns under the PF Act, which was marked as Ex.W87. Copy of the proceedings relating to PF loan disbursement made by the INDCO Serve to its employees was marked as Ex.W88. One of the employee also claimed family pension from the PF Trust and the copy of the claim was marked as Ex.W89. INDCO Serve is also covered separately by Employees State Insurance Corporation and the returns submitted by them under the ESI Act was marked as Ex.W94. Employees engaged by INDCO Serve had their own separate canteen. The employees working under the Society have floated their own Cooperative Thrift society and got a certificate of registration and that certificate was marked as Ex.W90. The application made by the employees of INDCO Serve for Thrift loan was marked as Ex.W92. The INDCO Serve was also assessed for income tax and the Income Tax returns submitted by them was marked as Ex.W95 series. The Society for its own members floated a voluntary retirement scheme to reduce its work force and that scheme floated by them was marked as Ex.W25 and the scheme was approved by the General Body Meeting, the members of which are employees of CPCL and members of the Trade Union which espouse the cause of INDCO Serve. The Society also received various certificates of appreciation and Awards from the State government for the best run society and those testimonials were marked as Ex.W70 series. In the teeth of these documents, workers never claimed that INDCO Serve was a fictional society and its arrangement with CPCL was sham and nominal.
27. Mr.K.Rajan, Special Officer of the INDCO Serve was examined as M.W.1. In his evidence, he stated that the Board of Directors had 11 members. Out of which 5 Directors were elected from among the members of the INDCO Serve. There were three nominees among the employees of the CPCL. The wages of the employees of INDCO Serve were directly paid by the society to its employees by crediting into their respective bank account. The INDCO Serve has a full fledged office, secretary and administrative staff helping them to manage the affairs. The INDCO Serve employees while entering the premises will have to punch their card to mark their attendance. They are also supplying uniform for their employees and were licensed under the Contract Labour and Abolition Act. It provides a canteen for its own employees and 20 employees of INDCO Serve are deputed to man the canteen and they include supervisors, cooks and assistants. It is INDCO Serve which purchases vegetables and groceries for the canteen run by it. In order to regulate the terms and conditions of its employees, they have a certified standing order. In case of any misconduct, disciplinary action is taken by the INDCO Serve. They are also covered by PF and ESI Act and separately having code numbers. The employees of the INDCO Serve floated their own Cooperative Thrift society. The INDCO Serve was also paying dividends to the members who are working as contract labour of the CPCL. It is also assessed to income tax. In case of death, retirement or resignation, it is the INDCO Serve, which pays gratuity to its employees.
28. M.W.1. also denied the suggestion that the CPCL and INDCO serve are one entity in reality. He further denied the suggestion that the arrangement between CPCL and INDCO serve and CPCL was sham and nominal. The CPCL also examined one B.Issac, Manager Personnel as M.W.2. He deposed that there was no master and servant relationship between the employees of the INDCO serve and CPCL since the refinery run by CPCL is a protected area and necessarily, the workers will have to carry cards for entry into the establishment. In his cross examination, he admitted that INDCO Serve employees perform the same work as done by other workers employed by the principal employer.
29. In the light of these facts, Mr.Sanjay Mohan, learned counsel pleaded that the Award has to be set aside.
30. In the written submission made by INDCO serve before the CGIT, they also referred a settlement under Section 12(3) of the I.D.Act dated 15.12.1997. In that settlement, Clause No.2 states that it shall be endeavour of the CPCL to absorb all the INDCO workers, subject to their rules and regulations and as and when there is requirement of permanent workmen. Therefore, it was submitted that the present reference is contrary to the settlement signed between the parties under Section 12(3) of the I.D.Act as the said settlement is still in force and hence, the present reference made by the Government was invalid.
31. In the written submission made by the Management of CPCL, it was stated that there was no dispute for a declaration that the contract entered into between the Management of CPCL and the INDCO serve was not genuine. The dispute is only for absorption of employees. It is only in case where the contract is sham and nominal, the workman of the so-called contractor can raise a dispute for declaring that they were always the employee of the principal employer. W.W.1 in his cross examination has admitted that at no point of time, they had contended that the arrangement between the CPCL and INDCO Serve was sham.
32. The learned counsel for CPCL further submitted that inspite of oral evidence as well as voluminous documentary evidence filed, the CGIT did not deal with the same. In effect, the CGIT did not even considered the plea of estoppel pleaded by the Management namely that the previous settlement reached between the parties namely settlement under Section 12(3) of the Act dated 15.12.1997 marked as EX.W17. The CGIT also did not consider that there was no sham or nominal in the workmen engaged by INDCO serve and it is not a paper arrangement. The said society had its own independent existence. The office officials manned the INDCO Serve and also entered into a settlement between the INDCO Serve and the employees engaged by them. It was paying dividends to the members, who are none other than the employees of the CPCL including W.W.1, who has admitted receiving dividends. In the teeth of these facts, the CGIT was wrong in directing absorption of the employees engaged by the INDCO serve as the employees of the CPCL.
33. The learned counsel also referred to an unreported decision of this Court in W.P.Nos.10981 and 16704 of 2001 dated 08.06.2010 [The Management of Ennore Foundries Limited v. The Workmen rep. By the General Secretary, Ennore Foundries Co-op. Canteen Employees Union, the Management of Ennore Foundries Ltd., Cooperative Canteen and another], wherein, this Court after taking exception to the Tribunal not discussing all relevant issues set aside the Award and remitted the matter for fresh disposal.
34. Mr.Sanjay Mohan, learned counsel also referred to the dictionary meaning of the term 'sham' and it reads as follows:-
"Sham, n.1. Something that is not what it seems; a counterfeit. 2. A person who pretends to be something that he or she is not; a faker. Sham, vb.-sham,adj."
35. The learned counsel further submitted that when once a settlement is in force or not terminated in accordance with Section 19 of the I.D.Act, it continues to be binding on the party to the settlement and therefore, the reference was invalid. Secondly, the Tribunal answered the reference as if the absorption should took place with the CPCL from the date of their initial entry into INDCO serve which itself is not even the demand of the trade union.
36. Mr.S.Jayaramnan, learned counsel appearing for INDCO serve supported the contention of the Management and stated that they have independently filed a counter statement and also let in evidence to prove that the employees of the INDCO serve are their own and they are independently covered by the ESI and PF Act. They have also appointed supervisors to supervise the work of the workmen. The workmen were given uniform and paid wages directly to the employees covered by the reference. Therefore, it was erroneous on the part of the CGIT to reject the society and its employees and direct the employees of the of INDCO Serve to be absorbed as employees of CPCL from their date of regular entry.
37. Mr.V.Prakash, learned Senior Counsel assisted by Ms.Ramapriya Gopalakrishnan, counsel for the Trade Union contended that it is always open to the CGIT to go behind the paper arrangement between the CPCL and the INDCO serve. In this case, the CGIT held that the arrangement was only on paper and in effect, it is CPCL who is the employer. The premises of the INDCO serve is situated within the same factory premises and the entire affairs of the INDCO serve is operated by the employer's representative. The learned Senior counsel made two alternative submissions.
38. Firstly, the Award need not be interfered with even though another view may be possible. The second submission was that the ingredients to establish that the contract was sham and nominal was fully proved before the CGIT and the parameters to decide the question of employer employee relationship was completely kept in mind by the CGIT.
39. The learned Senior Counsel referred to a judgment of the Supreme court reported in (2003) 6 SCC 545 [Chandra Singh and others v. State of Rajasthan and another] for contending that in the exercise of extraordinary jurisdiction under Article 226 of the Constitution, the Court may not strike down an illegal order although it would be lawful to do so. In a given case, the High Court can refuse to extend the benefit of discretionary relief.
40. The learned Senior Counsel further referred to the judgment of the supreme Court reported in (1976) 1 SCC 810 [The Hindustan Construction Co. Ltd., v. Shri G.K.Patankar and another] for contending that the High Court can refuse to interfere with an Award on the ground that substantial justice has been done. If such an exercise undertaken by the High Court cannot be considered to be arbitrary and in such matters, the Supreme Court refuse to interfere in such circumstances.
41. The learned Senior Counsel further referred to a judgment of the Supreme Court reported in (1975) 2 SCC 557 [State of Andhra Pradesh and others v. Chitra Venkata Rao] for contending that if for reasons relied on by the Tribunal for its conclusion turns out to be extraneous or unsustainable, the decision would be vitiated will apply to cases in which the conclusion is arrived and not on objective facts or evidence but on subjective satisfaction, in case where conclusions are based on objective facts and evidence and if there were legal evidence before the Tribunal, even if some of them are irrelevant, a superior court would not interfere if the finding can be sustained on the rest of the evidence.
42. On the second line of submission, the learned Senior Counsel submitted that as to who is a workmen under the I.D.Act came to be considered in several decisions of the Supreme Court.
43. The learned Senior Counsel has referred to the judgment of the Supreme Court reported in (1978) 4 SCC 257 [Hussainbhai, Calicut v. The Alath Factory Thezhilali Union, Kozhikode and others]. Reliance was placed on the following passages found in paragraphs 5 and 6:-
"5. The true test may, with brevity, be indicated once again. Where a worker or group of workers labours to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He has economic control over the workers' subsistence, skill, and continued employment. If he, for any reason, chokes off, the worker is, virtually, laid off. The presence of intermediate contractors with whom alone the workers have immediate or direct relationship ex contractu is of no consequence when, on lifting the veil or looking at the conspectus of factors governing employment, we discern the naked truth, though draped in different perfect paper arrangement, that the real employer is the Management, not the immediate contractor. Myriad devices, half-hidden in fold after fold of legal form depending on the degree of concealment needed, the type of industry, the local conditions and the like may be resorted to when labour legislation casts welfare obligations on the real employer, based on Articles 38, 39, 42, 43 and 43-A of the Constitution. The court must be astute to avoid the mischief and achieve the purpose of the law and not be misled by the maya of legal appearances.
6. If the livelihood of the workmen substantially depends on labour rendered to produce goods and services for the benefit and satisfaction of an enterprise, the absence of direct relationship or the presence of dubious intermediaries or the make-believe trappings of detachment from the Management cannot snap the real life-bond. The story may vary but the inference defies ingenuity. The liability cannot be shaken off."
44. The learned Senior counsel further referred to a judgment of the Supreme Court reported in (1995) 5 SCC 27 [Gujarat Electricity Board, Thermal Power Station v. Hind Mazdoor Sabha]. Reliance was placed on the following passages found in paragraphs 33 and 42:-
"33. These decisions in unambiguous terms lay down that after the coming into operation of the Act, the authority to abolish the contract labour is vested exclusively in the appropriate Government which has to take its decision in the matter in accordance with the provisions of Section 10 of the Act. This conclusion has been arrived at in these decisions on the interpretation of Section 10 of the Act. However, it has to be remembered that the authority to abolish the contract labour under Section 10 of the Act comes into play only where there exists a genuine contract. In other words, if there is no genuine contract and the so-called contract is a sham or a camouflage to hide the reality, the said provisions are inapplicable. When, in such circumstances, the workmen concerned raise an industrial dispute for relief that they should be deemed to be the employees of the principal employer, the court or the industrial adjudicator will have jurisdiction to entertain the dispute and grant the necessary relief.
42. ...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."
45. The learned Senior Counsel further referred to the judgment of the Supreme court reported in (1985) 4 SCC 114 [Workmen v. Associated Rubber Industry Ltd., Bhavnagar and another]. Reliance was placed on the following passages found in paragraph 4:-
"4. It is true that in law The Associated Rubber Industry Ltd. and Aril Holdings Ltd. were distinct legal entities having separate existence. But, in our view, that was not an end of the matter. It is the duty of the court, in every case where ingenuity is expended to avoid taxing and welfare legislations, to get behind the smoke-screen and discover the true state of affairs. The court is not to be satisfied with form and leave well alone the substance of a transaction....."
46. The learned Senior Counsel also referred to the judgment of the Supreme Court reported in (1999) 3 SCC 601 [Secretary., Haryana SEB v. Suresh and others]. Reliance was placed on the following passages found in paragraph 20:-
"20. It has to be kept in view that this is not a case in which it is found that there was any genuine contract labour system prevailing with the Board. If it was a genuine contract system, then obviously it had to be abolished as per Section 10 of the Contract Labour Regulation and Abolition Act after following the procedure laid down therein. However, on the facts of the present case, it was found by the Labour Court and as confirmed by the High Court that the so-called contractor Kashmir Singh was a mere name lender and had procured labour for the Board from the open market. He was almost a broker or an agent of the Board for that purpose. The Labour Court also noted that the management witness Shri A.K. Chaudhary also could not tell whether Shri Kashmir Singh was a licensed contractor or not. That workman had made a statement that Shri Kashmir Singh was not a licensed contractor. Under these circumstances, it has to be held that factually there was no genuine contract system prevailing at the relevant time wherein the Board could have acted as only the principal employer and Kashmir Singh as a licensed contractor employing labour on his own account. It is also pertinent to note that nothing was brought on record to indicate that even the Board at the relevant time was registered as the principal employer under the Contract Labour Regulation and Abolition Act. Once the Board was not a principal employer and the so-called contractor Kashmir Singh was not a licensed contractor under the Act, the inevitable conclusion that had to be reached was to the effect that the so-called contract system was a mere camouflage, smoke and a screen and disguised in almost a transparent veil which could easily be pierced and the real contractual relationship between the Board, on the one hand, and the employees, on the other, could be clearly visualised."
(Emphasis added)
47. The learned Senior counsel also referred to the judgment of the Supreme court reported in (2000) 3 SCC 312 [Subhra Mukherjee v. Bharat Coking Coal Ltd.,]. Reliance was placed on the following passages found in paragraph 12:-
"12. There can be no dispute that a person who attacks a transaction as sham, bogus and fictitious must prove the same. But a plain reading of Question 1 discloses that it is in two parts; the first part says, whether the transaction in question is a bona fide and genuine one which has to be proved by the appellants. It is only when this has been done that the respondent has to dislodge it by proving that it is a sham and fictitious transaction. When the circumstances of the case and the intrinsic evidence on record clearly point out that the transaction is not bona fide and genuine, it is unnecessary for the court to find out whether the respondent has led any evidence to show that the transaction is sham, bogus or fictitious."
(Emphasis added)
48. The learned Senior counsel further referred to the judgment of the Supreme Court reported in (2001) 7 SCC 1 [Steel Authority of India Ltd. and others v. National Union Waterfront Workers]. Reliance was placed on the following passages found in paragraphs 107 and 125(5):-
"107. An analysis of the cases, discussed above, shows that they fall in three classes: (i) where contract labour is engaged in or in connection with the work of an establishment and employment of contract labour is prohibited either because the industrial adjudicator/court ordered abolition of contract labour or because the appropriate Government issued notification under Section 10(1) of the CLRA Act, no automatic absorption of the contract labour working in the establishment was ordered; (ii) where the contract was found to be a sham and nominal, rather a camouflage, in which case the contract labour working in the establishment of the principal employer were held, in fact and in reality, the employees of the principal employer himself. Indeed, such cases do not relate to abolition of contract labour but present instances wherein the Court pierced the veil and declared the correct position as a fact at the stage after employment of contract labour stood prohibited; (iii) where in discharge of a statutory obligation of maintaining a canteen in an establishment the principal employer availed the services of a contractor the courts have held that the contract labour would indeed be the employees of the principal employer.
125. The upshot of the above discussion is outlined thus:
(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 regularise 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.
(Emphasis added)
49. The learned Senior counsel lastly referred to the judgment of the Supreme Court reported in (2004) 1 SCC 126 [Ram Singh and others v. Union Territory, Chandigarh and others]. Reliance was placed on the following passages found in paragraph 16:-
"16. Normally, the relationship of employer and employee does not exist between an employer and a contractor and the servant of an independent contractor. Where, however, an employer retains or assumes control over the means and method by which the work of a contractor is to be done, it may be said that the relationship between employer and employee exists between him and the servants of such a contractor. In such a situation the mere fact of formal employment by an independent contractor will not relieve the master of liability where the servant is, in fact, in his employment. In that event, it may be held that an independent contractor is created or is operating as a subterfuge and the employee will be regarded as the servant of the principal employer. Whether a particular relationship between employer and employee is genuine or a camouflage through the mode of a contractor, is essentially a question of fact to be determined on the basis of the features of the relationship, the written terms of employment, if any, and the actual nature of the employment. The actual nature of relationship concerning a particular employment being essentially a question of fact, it has to be raised and proved before an industrial adjudicator."
50. In the light of these legal precedents, the learned Senior Counsel submitted that the Award does not call for any interference and prayed for dismissal of the two writ petitions filed by the Management of CPCL and INDCO Serve. In respect of the third writ petition, he submitted that the order passed by the Chief Commissioner for Persons with disabilities also do not suffer and it is a mandate of the enactment to provide employment to the physically challenged person.
51. In the light of these facts it has to be seen whether the Award is liable to be interfered with.
52. Though the learned counsel for the Trade Union contended that even though another view is possible, the Court will not substitute another view on a finding of fact. But in the present case, it is not a mere question of finding of fact. But on the marshaled facts, whether the conclusion reached by the CGIT is legally sustainable. Since reliance was placed upon the judgment of the Supreme Court in Hussainbhai's case (cited supra), an attempt was made to contend that there is enough supervision and control over the workmen engaged through INDCO Serve and therefore, the real owner is the CPCL.
53. On the other hand, the question as to when the employees of the contractor will become employees of the Principal Employer came to be considered in the judgment of the Supreme Court reported in (2004) 3 SCC 514 [Workmen of Nilgiri Coop. Mkt. Society Ltd. v. State of T.N. and others]. The Supreme Court held that the supervision and control test are not the only test. In paragraphs 32, 34, 35 and 37, it was held as follows:-
"32. Determination of the vexed questions as to whether a contract is a contract of service or contract for service and whether the employees concerned are employees of the contractors has never been an easy task. No decision of this Court has laid down any hard-and-fast rule nor is it possible to do so. The question in each case has to be answered having regard to the fact involved therein. No single test be it control test, be it organisation or any other test has been held to be the determinative factor for determining the jural relationship of employer and employee.
34. This Court beginning from Shivnandan Sharma v. Punjab National Bank Ltd.1 and Dharangadhra Chemical Works Ltd. v. State of Saurashtra2 observed that supervision and control test is the prima facie test for determining the relationship of employment. The nature or extent of control required to establish such relationship would vary from business to business and, thus, cannot be given a precise definition. The nature of business for the said purpose is also a relevant factor. Instances are galore there where having regard to conflict in decisions in relation to similar set of facts, Parliament has to intervene as, for example, in the case of workers rolling bidis.
35. In a given case it may not be possible to infer that a relationship of employer and employee has come into being only because some persons had been more or less continuously working in a particular premises inasmuch as even in relation thereto the actual nature of work done by them coupled with other circumstances would have a role to play.
37. The control test and the organisation test, therefore, are not the only factors which can be said to be decisive. With a view to elicit the answer, the court is required to consider several factors which would have a bearing on the result: (a) who is the appointing authority; (b) who is the paymaster; (c) who can dismiss; (d) how long alternative service lasts; (e) the extent of control and supervision; (f) the nature of the job e.g. whether it is professional or skilled work; (g) nature of establishment; (h) the right to reject.
54. The Supreme Court in the very same judgment in paragraph 47 has held that in such case, the burden of proof lies on the person who sets up the plea. Paragraph 47 reads as follows:-
"Burden of proof
47. It is a well-settled principle of law that the person who sets up a plea of existence of relationship of employer and employee, the burden would be upon him."
55. If it is seen in the context of the above ruling and the facts adduced before the CGIT, the following facts emerges:-
i) INDCO Serve is a registered Society and it has its own office and a Special Officer manning the same. It has got its own supervisors to supervise the work of the persons employed by INDCO Serve.
ii)The employees engaged by INDCO Serve are also the members of the Society and they also elect their own office bearers and control the Society until the State Government appointed a Special Officer through legislation.
iii) Even otherwise, the members of the INDCO Serve receive dividend from the Society.
iv)INDCO Serve pays salary to its workmen and it enters into a settlement with the workmen either under Section 18(1) or under Section 12(3) of the I.D.Act regarding their service conditions.
v) INDCO Serve also provides uniform to the workmen and the workmen are covered by ESI and PF Act under a separate code.
vi)Employees of INDCO Serve themselves have formed another Co-operative Thrift Society in their welfare.
56. At which point of time, the workmen claimed that they were no longer members of the Society was not established. But the CGIT on the other hand gave relief as if from day one they were the employees of the CPCL. The INDCO Serve is a registered contractor and the CPCL has registered itself as Principal employer under the provisions of Contract Labour (Regulation and Abolition) Act, 1971. The workmen employed in INDCO Serve are governed by their own Standing Orders and the special Bye-laws applicable to them. The employees of INDCO Serve are not appointed by CPCL by any recruitment process conducted by them but they were appointed by Contractors as well as by INDCO Serve.
57. These facts will clearly show that the arrangement which CPCL has with INDCO Serve is not sham and nominal as understood in industrial law. The employees of the INDCO Serve were the employees of the Contractor namely INDCO Serve and the Contract cannot be said to be repugnant either under the provisions of I.D.Act or under the Contract Labour (Regulation and Abolition) Act, 1971. Therefore, the demand raised by the workmen are misconceived and are not legally sustainable.
58. Apart from the above facts, by a 12(3) Settlement, the process of regularisation of contract labour have been agreed to and will be done in piece manner and that settlement is continued to be binding as it has not been terminated in the manner known to law. Even if the terms of the settlement expires, it continues to be binding on the parties unless it is terminated in terms of Section 19(2) of the I.D.Act as held by the judgment of the Supreme Court reported in (1981) 1 SCC 315 [Life Insurance Corporation of India v. D.J.Bahadur and others]. Hence, the reference itself to the contrary is not maintainable.
59. Once it is held that the contract is genuine, then the remedy open to the workmen or their Trade Union is to seek for abolition of contract labour in the various processes under the CPCL in terms of notification to be issued under Section 10(1) of the Contract Labour (Regulation and Abolition) Act, 1971 from the appropriate Government as held by the Supreme Court in the judgment in SAIL case (cited supra).
60. In view of the above, the impugned Award suffers from material irregularity and illegal hence, the I.D.No.128 of 2001 stands set aside. W.P.No.26724 of 2010 and W.P.No.6371 of 2011 will stand allowed. However, the parties are allowed to bear their own costs. Consequently, connected miscellaneous petitions are closed.
61. In W.P.No.4368 of 2009, the order of the Chief Commissioner for Persons with Disabilities, New Delhi is under challenge. The authority himself observes the fact that the absorption issue is pending consideration did not give any relief on the question of absorption and delegated the parties to the outcome of the Award. Now that the Award has been set aside, the question of absorbing the workmen will not arise. The other direction given by the Commissioner namely, in future CPCL should recruit by giving due weightage to the physically disabled persons and to go for a backlog recruitment, the case of the complainants will have to be considered. But merely because that two individuals are already working in INDCO Serve by itself will not give them any preference and while CPCL advertises for the post including the post directed to be reserved for physically challenged person in terms of the mandate of 1995 Act and if those two employees apply, their cases will be considered and due preference will be given due to their long service in the CPCL establishment under the INDCO Serve. Exemption also can be granted from the requirement viz., sponsorship by Employment Exchange as well the upper age limit.
62. W.P.No.4368 of 2009 is disposed of with the above directions. No costs.
svki To
1.The Chief Commissioner for persons with Disabilities, Sarojini House, 6, Bhagwan Dass Road, New Delhi - 110 001.
2.The Presiding Officer, Central Government Industrial Tribunal-
Cum-Labour Court, Shastri Bhavan, 26, Haddows Road, Chennai 600 006