Karnataka High Court
The Management Of vs Mr Vijayakumar And 4 Ors on 10 April, 2023
Author: Suraj Govindaraj
Bench: Suraj Govindaraj
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WP No. 31261 of 2016
C/W WP No. 57652 of 2017
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 10TH DAY OF APRIL, 2023
BEFORE
THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ
WRIT PETITION NO.31261/2016 (L-RES)
C/W
WRIT PETITION NO.57652/2017 (L-RES)
IN W.P.NO. 31261/2016
BETWEEN:
THE MANAGEMENT OF
M/S. LEOTECH
#70, 2ND MAIN ROAD,
INDUSTRIAL TOWN
RAJAJINAGAR
BENGALURU-560 044
REPRESENTED BY ITS:
PARTNER
MR.S.VENKATESH.
... PETITIONER
Digitally signed (BY SRI. ANAND K.R., ADVOCATE)
by
NARAYANAPPA
LAKSHMAMMA AND:
Location: HIGH
COURT OF
KARNATAKA MR VIJAYAKUMAR AND 4 ORS
C/O KARNATAKA WORKERS UNION (R)
V.G.GOPAL BUILDING,
NO.20/1, LALBAGH FORT ROAD,
BENGALURU-560 004.
... RESPONDENTS
(BY SRI. A.J. SRINIVASAN., ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT IN
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WP No. 31261 of 2016
C/W WP No. 57652 of 2017
THE NATURE OF CERTIORARI AND/OR WRIT OR ORDER AND QUASH
THE IMPUGNED AWARD DATED 18.2.2016 AT ANNEXURE-H PASSED
BY THE HON'BLE PRINCIPAL LABOUR COURT, BENGALURU IN
REFERENCE NO.14/2012 AND PASS SUCH OTHER ORDER/S OR
DIRECTIONS AS THIS HON'BLE COURT DEEMS FIT TO PASS IN THE
CIRCUMSTANCES OF THE CASE.
IN W.P.NO. 57652/2017
BETWEEN:
1. VIJAYA KUMAR B
AGED ABOUT 50 YEARS
NO.118(BUILDING OF LOKESH OWNER)
10/C CROSS, 14TH MAIN
AGRAHARA DASARAHALLI
MAGADI ROAD
BANGALORE-560079
2. M H ASHOKA
AGED ABOUT 50 YEARS
NO.2724/2967
GADIMUDDANNA ROAD
SRIRAMANAGARA
KAMAKSHIPALYA
BANGALORE-560079
3. M R GANGADHAR
AGED ABOUT 30 YEARS
NO.1208, 1ST MAIN ROAD
KAMALANAGAR SLUM
BANGALORE-560079
4. H K SHEKHAR
AGED ABOUT 28 YEARS
NO.25, 2ND MAIN ROAD, 2ND CROSS,
FRANK PUBLIC SCHOOL OPPOSITE
KANAKANAGAR, MUDALPALYA
BANGALORE-560079
5. M MURALI
AGED ABOUT 39 YEARS
NO.303, BHUVANESHWARI NAGARA
10TH MAIN, 68TH CROSS
RAJAJINAGAR
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WP No. 31261 of 2016
C/W WP No. 57652 of 2017
BANGALORE-560010
... PETITIONERS
(BY SRI. A.J. SRINIVASAN., ADVOCATE)
AND:
THE MANAGEMENT OF M/S. LEOTECH
REP BY ITS MANAGING PARTNER
SRI. S. VENKATESH
#70, 2ND MAIN ROAD,
INDUSTRIAL TOWN
RAJAJINAGAR
BENGALURU-560 044
... RESPONDENT
(BY SRI. ANAND.K.R., ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF
CERTIORARI OR ANY OTHER APPROPRIATE WRIT OR ORDER,
QUASHING THAT PORTION OF THE AWARD DTD. 18.02.2016 IN REF
NO.14/2012, A ORIGINAL COPY OF WHICH IS AT ANNEXURE-A,
ONLY TO THE EXTENT OF THE PETITIONERS BEING AGGRIEVED AND
MODIFY THAT PORTION OF THE AWARD AND GRANT FULL BACK
WAGES, AS THOUGH THE PETITIONER IS CONTINUED IN
EMPLOYMENT FROM THE DATE OF REFUSAL OF EMPLOYMENT TILL
THE DATE OF REINSTATEMENT AND ETC.
THESE WRIT PETITIONS COMING ON FOR ORDERS AND
HAVING BEEN RESERVED FOR ORDERS ON 16.02.2023, THIS DAY,
THE COURT PRONOUNCED THE FOLLOWING:
ORDER
1. The petitioner-employer in W.P.No.31261/2016 is before this Court seeking for the following reliefs:
"The Petitioner humbly prays that this Hon'ble Court may be pleased to issue a writ in the nature of certiorari and/or writ or order and quash the impugned Award dated 18.2.2016 at Annexure-H -4- WP No. 31261 of 2016 C/W WP No. 57652 of 2017 passed by the Hon'ble Principal Labour Court, Bengaluru in Reference No.14/2012 and pass such other Order/s or directions as this Hon'ble Court deems fit to pass in the circumstances of the case".
2. The petitioner-workman in W.P.No.57652/2017 is before this Court seeking for the following reliefs:
"Wherefore, the petitioners respectfully prays that this Hon'ble Court may be pleased to call for the entire records relating to Ref.No.14/2012., on the file the Principal Labour Court, Bangalore and grant the petitioners of the following reliefs:
a. Issue a Writ of Certiorari or any other appropriate writ or order, quashing that portion of the Award dtd. 18.02.2016 in Ref No.14/2012, a original copy of which is at Annexure-A, only to the extent of the petitioners being aggrieved and modify that portion of the award and grant full back wages, as though the petitioner is continued in employment from the date of refusal of employment till the date of reinstatement.
b. Issue a writ of Mandamus or any other appropriate writ or order or direction, directing the respondent management to pay full back wages, as though the petitioner is continued in employment from the date of refusal of employment till the date of reinstatement.
c. Direct the contesting respondent management to pay the petitioners costs throughout, and d. Grant such other relief or reliefs as this Hon'ble Court may be pleased to grant, in the facts and circumstances of the case, to meet the ends of justice.
3. The petitioner is a small-scale industry and a partnership firm manufacturing moulded components -5- WP No. 31261 of 2016 C/W WP No. 57652 of 2017 in Thermoset with about 40 workmen working in the Unit. The Union was affiliated to Hind Mazdoor Sabha and known as 'General Workers Union'. Several settlements were signed with the Union from time to time and the last settlement was executed on 1.6.2011 and prior to that on 7.7.2007.
4. The employer engaged a contractor M/s Madhu Enterprises, who in turn deployed 16 of its employees to carry out work which is alleged to be unskilled in nature and not perennial.
5. On a demand being made by contractor for enhancement in salary, etc, of the contract workmen, the same not being acceptable to the employer, the contract came to be terminated which resulted in the Union raising an industrial dispute in respect of 5 workmen. Conciliation proceedings having failed, the appropriate government referred the dispute to the Prl. Labour Court at Bangalore which came to be registered as Ref. No.14/2012.
6. The points for reference are as under;
-6- WP No. 31261 of 2016 C/W WP No. 57652 of 20171. ಅ ಾರ ಾದ, ೕ ಜಯಕು ಾ ಾಗೂ ಇತ ೆ ಾಲು ಮಂ ೇ ಾ , ಕ ಾ ಟಕ ವಕ ಯೂ#ಯ$(%), . .&ೋ'ಾ( )*+ಂ,, ನಂ.20/1, .ಾ( /ಾ, 0ೕ1 ರ2ೆ3, /ೆಂಗಳ5ರು-04, ಇವರುಗಳ6 7:ಮಧು ಎಂಟ'ೆ:ಸ<, ನಂ.199, =ೆ<> 'ಾ? ರ2ೆ3, 15 ಮತು3 16 ೇ ಾ <, ಮಧ@ದ*A, 7.ೆAೕಶCರಂ =ೆ<>, /ೆಂಗಳ5ರು-55, ಈ ಸಂ2ೆEಯ ಾF ಕ ೆಂದು ಆಡIತ ವಗ ದವ ಾದ 7*JೕKೆ?, ನಂ.70, 2 ೇ ಮುಖ@ ರ2ೆ3, ಇಂಡMNಯ( Kೌ$, ಾPಾ ನಗರ, /ೆಂಗಳ5ರು, ಇವರು 2ಾQೕತುಪSಸುವ ೇ?
2. ಾTಲAದ ಪUದ*A ೕ. ಜಯಕು ಾ ಾಗೂ ಇತರ ಾಲು ಮಂ , ಇವರುಗಳನುV ಆಡIತವಗ ದವ ಾದ 7*JೕKೆ?, ನಂ.70, 2 ೇ ಮುಖ@ ರ2ೆ3 ಇಂಡMNಯ( Kೌ$, ಾPಾ ನಗರ, /ೆಂಗಳ5ರು ಇವರು ೆಲಸ ಂದ # ಾಕ%MರುವWದು ಾ@ಯಸಮXತ=ೇ?
3. ಾTಲAದ ಪUದ*A ಸದ% ಅ ಾರರು ಾಗೂ ಇತ ೆ ಾಲು ಮಂ ಇವರುಗಳ6 Yಾವ %ೕZಯ ಪ% ಾರ ೆ ಅಹ ರು, 6.1. The labour Court raised additional issues viz.,
a) Whether first party proves existence of employer and employee relationship between themselves.
b) Whether the second party is justified in the alleged action of refusing work to the said 5 workmen.
7. The labour court vide its award dated 18.02.2016 directed the employer to reinstate all the workmen to their original post with continuity of service but denied back wages. It is aggrieved by the same that -7- WP No. 31261 of 2016 C/W WP No. 57652 of 2017 the employer is before this Court in W.P. No.13261/2016 seeking for the aforesaid reliefs. The workmen are also before this Court in 57562/2017 seeking for the aforesaid reliefs:
8. Sri.K.R.Anand, learned counsel for the employer submits that 8.1. The labour court mistook and misunderstood the issues framed and consequently travelled beyond the reference made and as such, the award passed, being beyond the reference, is required to be set- aside.
8.2. The labour Court was required to adjudicate on the existence of an employer-employee relationship but has failed to do so. The labor Court has given a finding as regards the validity, legality and justification of engagement of contract labour in the employer's establishment which was not required for the purpose of adjudication. The workmen not having produced any document to establish the -8- WP No. 31261 of 2016 C/W WP No. 57652 of 2017 existence of an employer-employee relationship between the employer and the workmen, without a finding on the same, the labour Court has committed a serious lapse requiring the award to be set aside.
8.3. The burden of proof was on the workmen to establish the employer-employee relationship, insofar as the employer is concerned, the employer by the production of necessary document, has categorically established that the workmen were the employees of a contractor and not employed by the employer.
8.4. The Labour court ought not to have engaged itself with and given a finding as regards the permanency or otherwise of the works to be carried out since the same was not referred to.
8.5. In this regard, he relies upon the following decisions:
-9- WP No. 31261 of 2016 C/W WP No. 57652 of 20178.6. Oshiar Prasad v. Sudamdih Coal Washery1, more particularly, para 23, 24, 25 and 26 thereof, which are reproduced hereunder for easy reference:
23. Coming now to the facts of this case, it is an admitted case that the services of the appellants and those at whose instance the reference was made were terminated long back prior to making of the reference. These workers were, therefore, not in the services of either the Contractor or/and BCCL on the date of making the reference in question.
Therefore, there was no industrial dispute that "existed" or "apprehended" in relation to the appellants' absorption in the services of BCCL on the date of making the reference.
24. Indeed a dispute regarding the appellants' absorption was capable of being referred to in reference for adjudication, had the appellants been in the services of the Contractor or/and BCCL. But as said above, since the appellants' services were discontinued or/and retrenched (whether rightly or wrongly) long back, the question of their absorption or regularisation in the services of BCCL, as claimed by them, did not arise and nor could this issue have been gone into on its merits for the reason that it was not legally possible to give any direction to absorb/regularise the appellants so long as they were not in the employment.
25. It is a settled principle of law that absorption and regularisation in service can be claimed or/and granted only when the contract of employment 1 (2015) 4 SCC 71
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017subsists and is in force inter se employee and the employer. Once it comes to an end either by efflux of time or as per the terms of the contract of employment or by its termination by the employer, then in such event, the relationship of employee and employer comes to an end and no longer subsists except for the limited purpose to examine the legality and correctness of its termination.
26. In our considered opinion, the only industrial dispute, which existed for being referred to the Industrial Tribunal for adjudication was in relation to termination of the appellants' employment and whether it was legal or not? It is an admitted fact that it was not referred to the Tribunal and, therefore, it attained finality against the appellants.
8.7. Relying on the above, he submits that labour contract having been terminated and the workman not being in service, the labour Court could not have directed absorption and regularization of such workmen.
8.8. Bharath Heavy Electricals Ltd., vs. Mahendra Prasad Jakhmola and ors2, more particularly, para 19 thereof, which is reproduced hereunder for easy reference:
2[2019-LLR- Page No.515]
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19. The expression 'control and supervision' were further explained with reference to an earlier judgment of this Court as follows:
"12. The expression "control and supervision" in the context of contract labour was explained by this Court in International Airport Authority of India v. International Air Cargo Workers' Union thus: (SCC p.388, paras 38-39) "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 employee 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.
8.9. Merely because the workmen supplied by a contractor were to supervised by the employer, the same would not amount to control being vested with the employer resulting in the workmen of the contractor becoming the workers of the employer.
8.10. Gujarat Electricity Board Thermal Power Station, Ukai, Gujarat vs.Hind Mazdoor
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Sabha and ors.3 more particularly, para 13, 15 and 18 thereof, which are reproduced hereunder for easy reference:
13. It is not necessary for us to go into the question of the finality of the decision under Section 10 of the Act since as held by this Court in Vegoils Pvt. Ltd., B.H.E.L. Workers' Association, Catering Cleaners of Southern Railway, and Dena Nath [supra], the exclusive authority to decide whether the contract labour should be abolished or not is that of the appropriate Government under the said provision. It is further not disputed before us that the decision of the Government is final subject, of course, to the judicial review on the usual grounds. However, as stated earlier, the exclusive jurisdiction of the appropriate Government under Section 10 of the Act arises only where the labour contract is genuine and the question whether the contract is genuine, or not can be examined and adjudicated upon by the court or the industrial adjudicator, as the case may be. Hence in such cases, the workmen can make a grievance that there is no genuine contract and that they are in fact the employees of the principal employer.
15. The answer to the question as to what would be the status of the erstwhile workmen of the contractor, once the contract labour system is abolished is therefore that where an industrial dispute is raised, the status of the workmen will be as determined by the industrial adjudicator. If the contract labour system is abolished while the industrial adjudication is pending or is kept pending on the concerned dispute, the adjudicator can give direction in that behalf in the pending dispute. If, 3 [1995 LLR Page No.552],
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however, no industrial dispute is pending for determination of the issue, nothing prevents an industrial dispute being raised for the purpose.
18. Our conclusions and answers to the questions raised are, therefore, as follows :
[i] In view of the provisions of Section 10 of the Act, it is only the appropriate Government which has the authority to abolish genuine labour contract in accordance with the provisions of the said Section. No Court including the industrial adjudicator has jurisdiction to do so.
[ii] if the contract is sham or not genuine, the workmen of the so called contractor can raise an industrial dispute for declaring that they were always the employees of the principal employer and for claiming the appropriate service conditions. When such dispute is raised, it is not a dispute for abolition of the labour contract and hence the provisions of Section 10 of the Act will not bar either the raising or the adjudication of the dispute. When such dispute is raised, the industrial adjudicator has to decide whether the contract is sham or genuine. It is only if the adjudicator comes to the conclusion that the contract is sham, that he will have jurisdiction to adjudicate the dispute. If, however, he comes to the conclusion that the contract is genuine, he may refer the workmen to the appropriate Government for abolition of the contract labour under Section 10 of the Act and keep the dispute pending. However, he can do so if the dispute is espoused by the direct workmen of the principal employer. If the workmen of the principal employer have not espoused the dispute, the adjudicator, after coming to the conclusion that the contract is genuine, has to reject the reference, the dispute being not an industrial dispute within the meaning of Section 2 (k) of the ID Act. He will not be competent to give any relief to the workmen of the erstwhile contractor even if the labour contract is abolished by the appropriate Government under Section 10 of the Act.
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[iii] If the labour contract is genuine a composite industrial dispute can still be raised for abolition of the contract labour and their absorption. However, the dispute, will have to be raised invariably by the direct employees of the principal employer. The industrial adjudicator, after receipt of the reference of such dispute will have first to direct the workmen to approach the appropriate Government for abolition of the contract labour under Section 10 of the Act and keep the reference pending. If pursuant to such reference, the contract labour is abolished by the appropriate Government, the industrial adjudicator will have to give opportunity to the parties to place the necessary material before him to decide whether the workmen of the erstwhile contractor should be directed to be absorbed by the principal employer, how many of them and on what terms. If, however, the contract labour is not abolished, the industrial adjudicator has to reject the reference.
[iv] Even after the contract labour system is abolished, the direct employees of the principal employer can raise an industrial dispute for absorption of the ex-contractor's workmen and the adjudicator on the material placed before him can decide as to who and how many of the workmen should be absorbed and on what terms.
8.11. So long as the law protects the employer to engage the service of a contractor and or a contract labour, the employer would be well within his rights to engage such labour through a contractor. It is only in the event of a notification under Section 10 of the CLRA being
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issued, then there would be an embargo on the employer engaging the labour contractor.
8.12. In the present case, there being no such embargo issuing notification under Section 10 of the CLRA, the contract entered into by the employer being proper and correct, the workmen cannot seek for absorption or regularization.
8.13. General Manager (OSD), Bengal Nagpur Cotton Mills v. Bharat Lal4, more particularly, para 10 thereof, which is reproduced hereunder for easy reference:
10. It is now well settled that if the industrial adjudicator 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 labourers are the direct employees of the principal employer are: (i) whether the principal employer pays the salary instead of the contractor; and (ii) whether the principal employer controls and 4 [(2011) 1 SCC 635]
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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.
8.14. It is only if the principal employer pays the salary instead of contractor and when the principal employer controls and supervises the work of the employee, that the contract labourer can be said to be direct employees of the principal employer.
8.15. Mathura Prasad Shrivastava v. Sagar Electric Supply Co. Ltd5., more particularly, para 3 which is reproduced hereunder for easy reference:
3. We shall first take the question of bonus. It has again been urged before us that the coal coolies employed by the so-called independent contractor are also entitled to bonus. We however agree with the Tribunal that the question whether these coolies were the employees of the Company or of an independent contractor was not raised in the reference and that question cannot be considered indirectly while determining the question of bonus. The Tribunal has accepted the evidence of the 5 [(1966) 2 LLJ 307]
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contractor who stated that the coal coolies were his employees and not that of the Company. In these circumstances the question whether the coal coolies are the contractor's employees or of the Company cannot be decided in this indirect manner without even a proper reference on the question of abolition of contract labour. We therefore agree with the Tribunal that the coal coolies employed by the contractor are not entitled to any bonus.
8.16. Relying on the above, he submits that whether the labour were the employees of the contractor or that of the employer cannot be decided without a proper reference in that regard having been made, in the present case no such question having been referred, the labour Court ought not to have pronounced its judgment on the same.
8.17. Sindhu Resettlement Corpn. Ltd. v.
Industrial Tribunal of Gujarat6, more particularly, para 4 and 5 thereof, which are reproduced hereunder for easy reference:
4. The second ground urged on behalf of the appellant is that, in this case, no dispute relating to reinstatement was actually raised either by 6 [AIR 1968 SC 529]
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Respondent 2 or Respondent 3 before the reference was made to the Industrial Tribunal by the Government of Gujarat and, consequently, that reference itself was without jurisdiction. When Mr A.K. Sen, counsel for the appellant, raised this ground, it was urged by Mr Gopalakrishnan on behalf of the respondents that this ground was being taken for the first time in this Court and had not been raised at any earlier stage, so that it should not be allowed to be taken in this Court. It, however, appears that the question of jurisdiction of the State Government to refer the demand for reinstatement for adjudication to the Tribunal was specifically urged in the High Court and the High Court actually dealt with it in its judgment, dismissing the petition filed on behalf of the appellant. The High Court clearly mentions that the counsel for the appellant contended that the Industrial Tribunal had no jurisdiction as the question referred to it and which it was called upon to adjudicate relating to reinstatement of Respondent 3 in the service of the Corporation would not fall within the scope of Item 3 in the Second Schedule to the Industrial Disputes Act, 1947. It was further urged that, since the third respondent was neither discharged nor dismissed by the appellant, the question of relief of reinstatement would not arise under that item and, there being no item under which the demand would fall, the State Government had no jurisdiction to refer such a demand for adjudication to the Tribunal. These points urged before the High Court would cover the ground now urged by Mr Sen before us. It is true that the form in which it was urged before the High Court was slightly different. There, the point raised was that a demand for reinstatement, when there had been retrenchment only and no discharge or dismissal, could not be held to constitute an industrial dispute. On the facts of the case as they appeared
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from the material before the Tribunal, it is now urged that, in fact, the demand, which was being pressed with the management by both the respondents, was in respect of retrenchment compensation and not reinstatement. The demand for reinstatement seems to have been given up, because the respondents realised that the services of Respondent 3 had not been terminated by discharge or dismissal, but by retrenchment only, and that retrenchment not being the result of any unfair labour practice or victimization, Respondent 3 could only claim retrenchment compensation. In the evidence given before the Tribunal, there were included two letters written by the two respondents containing the demand for retrenchment compensation. We have already referred to one of these letters which was sent on 7th March, 1958 by Respondent 3 to the Administrative Officer of the appellant. The other letter was sent on 10th July, 1958 by the General Secretary of Respondent 2 in which again it was stated that Sindhu Hotchief had paid retrenchment dues to Respondent 3 in respect of the services he had rendered in that Company, but the appellant Corporation was responsible for his retrenchment dues for the service which had been rendered by Respondent 3 in the appellant Corporation. The prayer was that, as the appellant had refused him re-employment, arrangement should be made to pay his retrenchment dues according to Section 25-F of the Industrial Disputes Act, 1947. Thus, both the respondents, in their claims put forward before the management of the appellant, requested for payment of retrenchment compensation and did not raise any dispute for reinstatement. Since no such dispute about reinstatement was raised by either of the respondents before the management of the appellant, it is clear that the State Government was not competent to refer a question of
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reinstatement as an industrial dispute for adjudication by the Tribunal. The dispute that the State Government could have referred competently was the dispute relating to payment of retrenchment compensation by the appellant to Respondent 3 which had been refused. No doubt, the order of the State Government making the reference mentions that the Government had considered the report submitted by the Conciliation Officer under sub-section (4) of Section 12 of the Industrial Disputes Act, in respect of the dispute between the appellant and workmen employed under it, over the demand mentioned in the Schedule appended to that order; and, in the Schedule, the Government mentioned that the dispute was that of reinstatement of Respondent 3 in the service of the appellant and payment of his wages from 21st February, 1958. It was urged by Mr Gopalakrishnan on behalf of the respondents that this Court cannot examine whether the Government, in forming its opinion that an industrial dispute exists, came to its view correctly or incorrectly on the material before it. This proposition is, no doubt, correct; but the aspect that is being examined is entirely different. It may be that the Conciliation Officer reported to the Government that an industrial dispute did exist relating to the reinstatement of Respondent 3 and payment of wages to him from 21st February, 1958, but when the dispute came up for adjudication before the Tribunal, the evidence produced clearly showed that no such dispute had ever been raised by either respondent with the management of the appellant. If no dispute at all was raised by the respondents with the management, any request sent by them to the Government would only be a demand by them and not an industrial dispute between them and their employer. An industrial dispute, as defined, must
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be a dispute between employers and employers, employers and workmen, and workmen and workmen. A mere demand to a Government, without a dispute being raised by the workmen with their employer, cannot become an industrial dispute. Consequently, the material before the Tribunal clearly showed that no such industrial dispute, as was purported to be referred by the State Government to the Tribunal, had ever existed between the appellant Corporation and the respondents and the State Government in making a reference, obviously committed an error in basing its opinion on material which was not relevant to the formation of opinion. The Government had to come to an opinion that an industrial dispute did exist and that opinion could only be formed on the basis that there was a dispute between the appellant and the respondents relating to reinstatement. Such material could not possibly exist when, as early as March and July 1958, Respondent 3 and Respondent 2 respectively had confined their demands to the management to retrenchment compensation only and did not make any demand for reinstatement. On these facts, it is clear that the reference made by the Government was not competent. The only reference that the Government could have made had to be related to payment of retrenchment compensation which was the only subject-matter of dispute between the appellant and the respondents.
5. So far as the third ground is concerned, it loses force and does not arise in view of our decision relating to the first ground. We have already held, when dealing with the first ground, that the appellant had neither dismissed Respondent 3, nor had it discharged him from service. There was no question of wrongful dismissal or discharge by the appellant. It was not even a case of retrenchment,
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because Respondent 3 had willingly gone to join the service under Sindhu Hotchief. He obviously joined the service in Sindhu Hotchief because of the financial advantages that were to accrue to him. In September 1953, he was drawing a salary of Rs 200 p.m. in the scale of Rs 150-10-250 while serving the appellant. The site allowance of 20 per cent, which he had been receiving earlier, had been discontinued from March 1952 and he was not getting it at the time when he went to join Sindhu Hotchief, where he was given a start of Rs 240 in the grade of Rs 200-20-400. Consequently, in addition to the immediate rise in salary of Rs 40 p.m., he had the advantage of working in the higher grade, in which, within two years, he exceeded the maximum of the scale in which he had been working with the appellant. He served Sindhu Hotchief for a period of about 4½ years and became confirmed there in accordance with the terms and conditions which were offered to him by Sindhu Hotchief. In these circumstances, the respondents cannot urge that the services of Respondent 3 were retrenched by the appellant, either when he went and joined Sindhu Hotchief, or when he wanted to get back to his post with the appellant. His appointment in the service of the appellant having terminated, no question could arise of retrenching him at the stage when he wanted to come back after serving Sindhu Hotchief. His services were, in fact retrenched by his new employer, Sindhu Hotchief, and from that Company he received retrenchment compensation. The third ground, therefore, needs no consideration.
8.18. Relying on the above, he submits that the Labour Court could not decide the dispute merely because it was raised before it unless
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it is raised before the Government who after examination of the same was of the opinion that it would have to be referred to the labour Court on account of failure of conciliation.
Without an opportunity and specific reference of a dispute to the labour Court, the labour Court would not have jurisdiction to decide on the same.
8.19. In the case of Jaipur Udyog Ltd. v. Cement Work Karmachari Sangh7, more particularly, para 7 thereof, which is reproduced hereunder for easy reference:
7. In our view, if the Tribunal had taken care to examine what was the dispute between the parties when the Government made the order of reference it would have had no difficulty in realising that no dispute was raised either by the workman or the Union that the age of superannuation governing the workman was not 55 years. It was certainly open to the workman to contend that his age of superannuation should be fixed at 58 and not 55 years and it would have been equally open to the union to raise the point in their representation to the Conciliation Officer. If that had been done, the Government of Rajasihan could have properly made 7 [(1972) 1 SCC 691]
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a reference of a dispute between the parties regarding the correct age of superannuation and the adjudication of the dispute regarding the superannuation of the workman concerned on that basis. Nothing was however shown to us, apart from the documents already referred to enable us to find that any question had been raised before the Government of Rajasthan relating to the age of superannuation of the workman at the quarries or that there was any basis for apprehension of such a dispute and it was therefore not open to the Tribunal to enlarge the ambit of the dispute between the parties by reference to the difference in the age of superannuation under the two sets of Standing Orders. Mr Setalvad drew our attention to the judgment of this Court in Sindhu Resettlement Corporation Lid. v. Industrial Tribunal of Gujarat [AIR 1968 SC 425 : (1968) 1 SCR 515 : (1968) 1 Lab LJ 834] for the proposition that unless a dispute was raised by the workman with their employer it could not become an industrial dispute. Respondent 3 before this Court in that case was employed by the appellant as an accounts clerk at Gandhidham in the year 1950. Some years thereafter his services were placed at the disposal of the subsidiary company of the appellant. The respondent was appointed in the said subsidiary company on a different set of conditions of service. He worked with that company up to February 1958, when his services were terminated after payment of retrenchment compensation and other dues by the said subsidiary company. The respondent then went to the appellant and requested that he might be given posting orders. The appellant declined to do so on the ground that the post which he was occupying in 1953 had been permanently filled up. Thereupon the respondent demanded retrenchment compensation from the appellant also. As the representations of the respondent were not fruitful, conciliation proceedings were started and ultimately, on the report of the
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Conciliation Officer, the State of Gujarat referred the dispute to the Industrial Tribunal. The matter referred for adjudication was, "whether the said respondent should be reinstated in the service of the appellant and be paid back wages from February 21, 1958". The Tribunal directed reinstatement and payment of back wages. In allowing the appeal, this Court observed that the respondent workman had only asked for payment of retrenchment compensation and did not raise any dispute for reinstatement. According to this Court (see p. 622):
"... the evidence produced clearly showed that no such dispute (i.e. relating to reinstatement) had ever been raised by the respondent with the management of the appellant. If no dispute at all was raised by the respondents with the management, any request sent by them to the Government would only be a demand by them and not an industrial dispute between them and their employer".
Relying on the above decision Mr Setalvad argued that in order that a reference can be construed to embrace a particular dispute it must be shown that a demand had been made by the workman and not accepted by the employers so as to give rise to a dispute which in the view of the Government required adjudication. Mr Ramamurty on behalf of the respondents drew our attention to the provisions of Section 10(1) of the Industrial Disputes Act and in particular to clauses (c) and (d) thereof. He argued that it was open to the appropriate Government in an appropriate case to refer a dispute along with any matter appearing to be connected with or relevant to the dispute and no objection could be taken to the award of the Tribunal where the Tribunal had not transgressed the limits of clauses (c) and (d) of Section 10(1) of the Act. It was further contended that the proper age of superannuation applicable to the company as a whole was so intimately connected
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017with or relevant to the dispute which actually arose between the parties prior to the order of reference as to lead us to hold that the Tribunal had not gone beyond its jurisdiction in construing the order of reference to embrace an adjudication as to proper age of superannuation of a workman like Bhisham Verma. In our view, the finding of the Tribunal that the Company could not fix a lower age limit of superannuation for workmen at the quarries went beyond the scope of reference which had to be gathered from the circumstances preceding the Government Order. The Tribunal never addressed itself to the point of view of the workman that his proper age was only 50 and 55; nor did it come to a finding that the true age of the workman being 50 years in 1968 there was no question of his superannuation in that year.
8.20. Relying on the above, he submits that the labour Court cannot go beyond what was referred to it.
8.21. Delhi Cloth & General Mills Co. Ltd. v.
Workmen8, more particularly, para 3 and 4 thereof, which are reproduced hereunder for easy reference:
3. The Management filed a statement of case before the Special Tribunal on April 9, 1966 and the Unions filed separate statements of case between April 10, 1966 and April 13, 1966. There were Replications and Rejoinders up to May 21, 1966.8
[AIR 1967 SC 469]
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WP No. 31261 of 2016 C/W WP No. 57652 of 20174. On June 3, 1966, the Company prayed before the Industrial Tribunal that Issues 1, 3 and 4(set out in the terms of reference) may be decided before the parties were called upon to lead their evidence. As regards Issues 3 and 4, the contention of the management was that the fundamental basis of these two matters was that there was a strike at the Delhi Cloth Mills and a sit-down strike at the Swatantra Bharat Mills and the only question referred to the Tribunal for decision related to the legality and justification of the said strikes. All the four Unions contended before the Tribunal that there was no strike at the Delhi Cloth Mills. Two of the Unions' case was that the strike at Swatantra Bharat Mills was in sympathy with the workmen of the Delhi Cloth Mills; while the other two Unions' case was that there was a lockout in the Swatantra Bharat Mills. As regards the first issue, the case of the Management was that there was a settlement on December 13, 1965 relating to the computation of bonus for the year 1963-64 between the Company and the two major Unions. It was stated further that the settlement referred to the computation of bonus in accordance with the provisions of the Payment of Bonus Act, 1965 and in arriving at the settlement, all the available and relevant financial statements had been shown to the Unions which accepted the accounts based on allocation of share capital and reserves during the years previous to and including 1963-64. Further, according to the Management, one of the Unions had entered into another settlement with the Management of the DCM Silk Mills with regard to that Union for the year 1964-65, and in view of these settlements, it was not open to the workmen of the Delhi Cloth Mills and Swatantra Bharat Mills to question the correctness and reasonableness of the allocations made by the Management towards share capital and reserves of these two units.
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WP No. 31261 of 2016 C/W WP No. 57652 of 20178.22. Relying on the above, he submits that it is only the workmen of the employer who could raise a dispute with reference to that employer. The workmen of another employer, in this case a contractor cannot raise a dispute with the petitioner inasmuch as they are not the employees of the petitioner.
8.23. Hindustan Aeronautics Limited vs. their Workmen and others9 more particularly, para 5 thereof, which is reproduced hereunder for easy reference:
5. The first demand on behalf of the workmen as respects the education allowance of the children was chiefly based upon the educational facilities said to be available to the workmen of Bangalore. On behalf of the management it was pointed out that certain educational facilities were given to the employees living in the township of Bangalore out not in the city of Bangalore. The workmen working at Barrackpore had also been provided with certain educational facilities. We, however, do not propose to go into the merits of the rival contentions. In our opinion the award directing the company to pay Rs. 12/- per month to each employee to meet educational expenses of their children irrespective of the number of children a particular workman may have is beyond the scope of the issue referred for adjudication. The 9 [1975 II LLJ SC 336]
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Tribunal while discussing this issue felt constrained to think that strictly speaking claim for allowance for the education of employees' children could not form a subject matter of industry. dispute. Really it was a matter to be taken into consideration at the time of fixing their wages. In substance and in effect the directions given by the Tribunal is by way of revision of the pay structure of the Barrackpore employees. No such reference was either asked for or made. The Tribunal, therefore, had no jurisdiction to change the wage structure in the garb of allowing educational expenses for the employees' children. We may add that on behalf of the appellant it was stated before us that the latest revised wage structure has taken the matter of education of the employees' children into consideration, while, Mr. A. K. San, appearing for the workmen, did not accept it to be so. If necessary and advisable a proper industrial 1) dispute may be raised in that regard in future but the award as it stands cannot be upheld.
8.24. The labour Court would not have jurisdiction to change the wage contract by awarding any expenses if the said expenses had not been claimed before the government and that issue had not been referred for adjudication to the labour Court.
8.25. On the basis of the above, he submits that the reference ought to have been answered in
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017favour of the employer and the claims by the workmen ought to have been rejected.
9. Sri.A.J.Srinivasan, learned counsel for the workmen submits that, 9.1. While supporting the award passed by the labour court submits that when reinstatement has been ordered, the labour court as a natural consequence ought to have directed the payment of full back wages. The order of termination or refusal of employment when set aside as being illegal and unjustified, the workmen would be entitled to reinstatement with all consequential benefits like continuity of service including back wages. It is only in exceptional circumstances, that back wages could be denied.
9.2. The labour court having held in favour of the workmen has not given any reason whatsoever for depriving the workmen of consequential benefits and full back wages.
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WP No. 31261 of 2016 C/W WP No. 57652 of 20179.3. The workmen being prevented from working at the employer's place by the employer on account of an illegal termination the principle of 'no work no pay' would not apply and the employer would be liable to make payment of the full back wages.
9.4. In support of the above contentions, he relies upon the following Judgments:
9.5. SAIL v. National Union Waterfront Workers10, more particularly para No.119(5) which is reproduced hereunder for easy reference:
119 (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 10 [(2001) 7 SCC 1],
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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.
9.6. Relying on the above, learned counsel submits that if the labour contract is found not to be genuine but a mere camouflage, the contract labour will have to be treatd as employees of the principal employer.
9.7. Bhilwara Dugdh Utpadak Sahakari Samiti Ltd. v. Vinod Kumar Sharma11, more particularly para No.4 which is reproduced hereunder for easy reference:
4. The facts of the case are given in the judgment of the High Court dated 23-8-2004 [Bhilwara Dugdh Utpadak Sahakari Sangh Ltd. (1) v. Vinod Kumar Sharma, SAW No. 577 of 2004 decided on 23-8-2004 (Raj)] and we are not repeating the same here. It has been clearly stated therein that subterfuge was resorted to by the appellant to show that the 11 [(2011) 15 SCC 209]
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workmen concerned were only workmen of a contractor. The Labour Court has held that the workmen were the employees of the appellant and not employees of the contractor. Cogent reasons have been given by the Labour Court to come to this finding. The Labour Court has held that, in fact, the workmen concerned were working under the orders of the officers of the appellant, and were being paid Rs 70 per day, while the workmen/employees of the contractor were paid Rs 56 per day. We are of the opinion that the High Court has rightly refused to interfere with this finding of fact recorded by the Labour Court.
9.8. Relying on the above, he submits that if the labour Court has given an opinion after examining the facts of the matter that the workmen are indeed the workmen of the employer, the same being a finding of fact, this Court ought not to interfere.
9.9. Chief General Manager, RBI v. Presiding Officer12, more particularly para No.18, 20 and 21 thereof, which are reproduced hereunder for easy reference:
12[2000 SCC OnLine Kar 276]
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18. The second respondent Tribunal has adjudicated the industrial dispute between the parties as per the points of dispute referred to it by the Union of India.
It has conducted an enquiry under Section 11 and 15 of the I.D. Act and answered the points of dispute referred to it in favour of the concerned workmen holding that the petitioner Bank has not justified in not regularising the concerned Ticca-Mazdoors whose names are mentioned in the order of reference after considering the material evidence on record by assigning valid and cogent reasons. The Tribunal has referred to at paragraph 7 of the impugned Award with reference to the pleadings and the documents produced on record by the parties before it. It has considered the statistics given by the concerned workmen when they have been working as ticca mazdoors which fact is not disputed by the bank and therefore Tribunal has recorded a finding in favour of the concerned workmen. Further at paragraph 8 of the Award it has stated that from the admitted facts set out in Para 2 out of 32 workmen, 12 workmen have been working as ticca mazdoors since 1982, 3 have been working since 1983, one has been working since 1984, as many as 13 have been working since 1986 and 4 ticca mazdoors have been working since 1988. It is further held that it is not as if that the 32 workmen were recruited as ticca mazdoors to work in casual vacancies accrued recently. All the ticca mazdoors involved in the reference have been working for a long time ranging from 7 to 13 years as on the date of passing the award by the Tribunal and they have been working as Ticca mazdoors even now. With reference to the said factual aspect, the Tribunal further at paragraph 9 of the impugned Award considered the law laid down by the Apex Court in the case reported in the case of The Gen. Secy., Bihar State Road Transport Corporation, Patna v. The Presiding Officer, Industrial Tribunal, Patna [(1988) 2 LLJ 109.] which is similar to the case of the concerned workmen who
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017are covered in the order of reference made to the Tribunal and further the learned presiding officer of the Tribunal, placed reliance on the law laid down by the Apex Court wherein it has held that "Since it is admitted by the bank that a large number of people have been working as casual labourers for a long number of years, the question whether they were initially appointed regularly or irregularly becomes immaterial for purposes of answering the real question involved in this case as per the points of dispute and the dispute is resolved between the parties and further at paragraph 10 of the Award it has placed reliance upon the judgment of the Supreme Court in the case of Bhagavati Prasad v. Delhi State Mineral Development Corporation [1990 (1) LLJ 320.] , at paragraph 6 of the said judgment the Apex Court has held stating that "once the appointments of the concerned workmen were made as daily rated workers and they have allowed to work for a considerable length of time in the Bank therefore, it would be hard and harsh to deny them the confirmation in the respective posts on the ground that they lack the prescribed Educational qualification". With reference to the law laid down in the said case, the learned Presiding Officer of the Tribunal has recorded a finding holding that the law laid down in the said case will all fours applicable to the present case for the reason that all the 32 concerned workmen have the necessary qualification to be appointed as permanent employees in their respective posts.
20. Further at paragraph 13 of the impugned award the Tribunal has referred to entry at serial 10 of the V Schedule to Section 2(ra) under the heading unfair Labour Practice on the part of the employer as enumerated under the I.D. Act which clearly states employing workmen as casuals or temporaries and to continue them as such for years, with the object of depriving them of the status and privileges of
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017permanent workmen, is an unfair labour practice. With reference to the said entry in the V Schedule, the Presiding Officer of the Tribunal has recorded a finding holding that the action of the Bank in not regularising the 32 concerned workmen as permanent Mazdoors would clearly amounts to unfair labour practice. The Tribunal has also considered the legal submissions made on behalf of the Bank placing reliance on the judgment of the Apex Court, reported in, in the case of Maharashtra State Co- operative Cotton Grower's Marketing Federation Ltd. v. Maharashtra State Co-operative Cotton Growers' Marketing Federation Employees' Union [1994 Supp (3) SCC 385 : AIR 1994 SC 1046.] which relates to the seasonal employees, therefore the Tribunal has rightly held that the ratio laid down in that case has no application to the facts of the case on hand. Further, reliance is placed by the Bank upon another judgment of the Supreme Court reported in 1993 (II) LLJ 937 in the case of Piara Singh v. State of Haryana [1993 (11) LLJ 937.] , wherein the Supreme Court has noticed that some initial recruitments were in violation of the norms and rules. In that process, some employees had secured employment through the back door method. Under the said circumstances, the Apex Court set aside the judgment of the Punjab and Haryana High Court and held that it would be difficult to sustain the direction of the Punjab and Haryana High Court holding that all those ad-hoc employees who have put in one year's service should be regularised, and the direction was given without reference to the existence of vacancies. The law laid down in the said case has been considered by the Presiding Officer of the Tribunal and the observations made in the said judgment at paragraph 51 is also considered wherein the Apex Court has clearly held that if a casual labourer is continued for a fairly long spell, say 2 or 3 years, the presumption may arise that there is regular need for his services. In such a situation, it
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017becomes obligatory for the concerned authority to examine the feasibility of his regularisation, and while doing so, the authorities ought to adopt a positive approach coupled with an empathy for the person. The said judgment has been considered and distinguished and applied to this case, relying upon the observations made at paragraph 51 of said judgment and it has rightly held that the concerned workmen have been working a long spell and they have been continued to work in the Bank and therefore the Tribunal has held that concerned workmen in the dispute are entitled to be regularised as permanent workmen in their respective posts.
21. The Apex Court in the case of H.D. Singh v. Reserve Bank of India [(1985) 4 SCC 201.] considering various provisions under Section 2(oo), 2(A), 25-B(2)(a)(ii), 25-F, 25-N and 25-Q and also with reference to the fifth Schedule Item No. 10 and Sections 25-T and 25-U at paragraphs 13 and 14 has made certain observations with reference to the confidential circular which are extracted hereunder:
"13. The confidential circular directing its officers that workmen like the appellant should not be engaged continuously but should as far as possible, be offered work on rotation basis and the case that the appellant is a badli worker, have to be characterised as unfair labour practice. The Fifth Schedule to the Industrial Disputes Act contains a list of unfair labour practises as defined in Section 2(ra). Item 10 reads as follows:
To employ workmen as 'badlis', casuals or temporaries and to continue them as such for years, with the object of depriving them to the status and privileges of permanent workmen.
We have no option but to observe that the bank, in this case, has indulged in methods amounting to
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unfair labour practice. The plea that the appellant was a badli worker also has to fail.
14. We thought it necessary to refer to the actual details in the case only to show our concern at the manner in which the employer in this case, the Reserve Bank of India, who should set a model for other employers being a prestigious institution, behaved towards its employees. It must have been his helpless condition and abject poverty that forced the appellant to accept a job on Rs. 3/- per day. Still see how he has been treated. We will not be far from truth if we say that the Bank has deliberately indulged in unhealthy labour practice by rotating employees like the appellant do deny them benefits under the industrial law. It has disturbed us to find that the appellant was denied job because he had become better qualified perhaps the Reserve Bank of India and its Officers are not aware of the grave unemployment problem facing the youth of this Country and also not aware of the fact that graduates, both boys and girls, sweep our roads and post-graduates in hundreds, if not in thousands, apply for the posts of peons. It has been our sad experience to find employers trying to stifle the efforts of employees in their legitimate claims seeking benefits under the Industrial Law by tiring them out in adjudication proceedings raising technical and hyper-technical pleas. Industrial adjudication in bona fide claims have been dragged on by employers for years together on such pleas. It would always be desirable for employers to meet the case of the employees squarely on merits and get them adjudicated quickly. This would help industrial peace. It is too late in the day for this Court to alert the employers that their attempt should be to evolve a contended labour. We do not forget at the same time the fact that it is necessary for the labour also to reciprocate to prevent industrial unrest. In this case, for example, the Bank should have treated the
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appellant as a regular hand in List II. Instead, the Bank has, by adopting dubious methods, invited from us, remarks which we would have normally avoided".
9.10. If the employer were to engage the contract labour only for the purpose of reducing its burden and thereby seek to take advantage of the position of the workmen, the same would amount to unhealthy labour practice requiring the labour Court to interfere which the labour Court has done. Hence, no fault could be found in relation thereto.
9.11. Shankar Balaji Waje v. State of Maharashtra13, more particularly para 37 which is reproduced hereunder for easy reference:
37. With this background let us look at the definition of "worker" in Section 2(1) of the Act. "Worker" is defined to mean "a person employed, directly or through any agency, whether for wages or not, in any manufacturing process ...". Under this definition, a person employed in a manufacturing process is a worker. The question raised in this case turns upon the interpretation of the word "employed" in the 13 [AIR 1962 SC 517]
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definition. This Court in Chintaman Rao v. State of Madhya Pradesh [1958 SCR 1340] defined the word "employed" thus at p. 1346:
"The concept of employment involves three ingredients : (1) employer (2) employee and (3) the contract of employment. The employer is one who employs i.e. one who engages the services of other persons. The employee is one who works for another for hire. The employment is the contract of service between the employer and the employee whereunder the employee agrees to serve the employer subject to his control and supervision."
In making out the distinction between an employer and an independent contractor, this Court in the above case quoted the following observations of Bhagwati, J., in Dharangadhara Chemical Works Ltd. v. State of Saurashtra [(1957) SCR 152, 157] :
"The test which is uniformly applied in order to determine the relationship is the existence of a right of control in respect of the manner in which the work is to be done."
The same view was reiterated by this Court in State of Kerala v. V.M. Patel [ Criminal Appeal No. 42 of 1949 (Judgment dated 12-10-60)] . That was a case where 23 persons were employed in the process of garbling pepper and packing them in bags. Hidayatullah, J., speaking for the Court, stated:
"It was observed that, to determine whether a person was a 'worker', the proper test was to see whether or not the 'employer' had control and supervision over the manner in which the work was to be done".
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017Adverting to the distinction between an independent contractor and a servant, the learned Judge proceeded to state:
"An independent contractor is charged with a work, and has to produce a particular result; but the manner in which the result is to be achieved is left to him. A servant, on the other hand, may also be charged with the work and asked to produce a particular result, but is subject to the directions of the master as to the manner in which the result is to be achieved."
This decision also emphasized that a right to control or supervise is one of the tests for determining the relationship of master and servant. In this context a judgment of the Madras High Court in Palaniappa v. Court of Additional First Class Magistrate, Kulitalai [ILR 1958 Mad 999] is strongly relied upon on behalf of the appellant. There, the petitioner was the owner of a weaving concern at Karur. He had put up a thatched shed where he had installed a certain number of handlooms and where towels and bed-sheets were manufactured. His office consisted of only two clerks, who were the permanent members of his establishment. Some of the residents of the village, most of whom were agriculturists, but who knew weaving, used to go to the petitioner's shed when they had time, and when they felt inclined to do so and they were supplied with yarn. These, they wove into bed-sheets and towels and they were paid at certain rates for the articles they wove. These persons came in and went out when they liked. On those facts, Balakrishna Ayya, J., held that they were not "workers" within the definition of the word "worker" in the Factories Act. After considering the relevant decisions cited and after distinguishing the cases arising under the Industrial Disputes Act, the learned Judge proceeded to state at p. 1009 thus:
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"An examination of these decisions confirms what one was inclined to suspect at the outset viz. that 'employed' is a word with a varying content of meaning and that it signifies different things in different places.... On the other hand, when we say that X is employed by Y we ordinarily imply that Y remunerates X for his services and that he has a certain measure of control over his time and skill and labour. But the degree and extent of control, may be nominal or extensive.... In between lie infinite grades of control and supervision. But a certain amount of supervision or control is necessarily implied in the connotation of the word 'employed'."
Having said that, the learned Judge graphically describes the relationship between the parties thus at p. 1010:
"The worker can come any day he likes, work as long as he likes or as short as he likes and go away. He may work fast or he may work slow. The petitioner cannot tell him that he should work on towels and not on bed-sheets or vice versa... And, more important of all, the petitioner cannot prevent anybody from working for a competing manufacturer. Come when you like, go when you like, work when you like, stop when you like, work as fast as you like, work as slow as you like, work on what you like or not at all, that is the position of the workers vis-a-vis the petitioner. Such persons cannot, in my opinion, be said to be 'employed' by the petitioner within the meaning of clause (1) of Section 2 of the Factories Act."
It is not necessary to express our opinion whether the conclusion of the learned Judge on the facts of that case is correct or not. But the principle accepted by him, namely, that a certain amount of supervision or control is necessarily implied in the
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017connotation of the word "employed", has been accepted by this Court in earlier decisions and this decision is only an application of that principle to a different set of facts.
9.12. Relying on the above, he submits that the employer maintain the productivity of the workmen inasmuch as it is the employer who fixes the deliverables and not the contractor, therefore, it is the workmen who had charged with the contract and not the contractor thereby amounting that the workmen were direct employees under the direct supervision of the employer.
9.13. Bhuvnesh Kumar Dwivedi v. Hindalco Industries Ltd14., more particularly para Nos. 24, 25, 26, 27, 30, 31, 32, 34 and 35 thereof, which are reproduced hereunder for easy reference:
24. The respondent, in order to mitigate its conduct towards the appellant has claimed that the appellant was appointed solely on contract basis, and his service has been terminated in the manner permissible under Section 2(oo)(bb) of the ID Act.14
[(2014) 11 SCC 85],
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017However, we shall not accept this contention of the respondent for the following reasons:
(i) Firstly, the respondent has not produced any material evidence on record before the Labour Court to prove that it meets all the required criteria under the Contract Labour (Regulation and Abolition) Act, 1970, to be eligible to employ employees on contractual basis which includes licence number, etc.
(ii) Secondly, the respondent could not produce any material evidence on record before the Labour Court to show that the appellant was employed for any particular project(s) on the completion of which his service has been terminated through non-renewal of his contract of employment.
25. Therefore, we deem it fit to construe that the appellant has rendered continuous service for six continuous years (save the artificially imposed break) as provided under Section 25-B of the ID Act and can therefore be subjected to retrenchment only through the procedure mentioned in the ID Act or the State Act in pari materia.
26. Therefore, we answer Point (ii) in favour of the appellant holding that the Labour Court was correct in holding that the action of the respondent employer is a clear case of retrenchment of the appellant, which action requires to comply with the mandatory requirement of the provisions of Section 6-N of the U.P. ID Act. Undisputedly, the same has not been complied with and therefore, the order of retrenchment has been rendered void ab initio in law.
Answer to Point (iii)
27. Having answered Point (ii) in favour of the appellant, we also answer Point (iii) in his favour
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017since we construe that the appellant is a worker of the respondent Company providing continuous service for 6 years except for the artificial breaks imposed upon him with an oblique motive by the respondent Company. We hold that the termination of service of the appellant amounts to "retrenchment" in the light of the principle laid down by the three-Judge Bench decision of this Court in SBI v. N. Sundara Money [(1976) 1 SCC 822 : 1976 SCC (L&S) 132 : AIR 1976 SC 1111] and attracts the provisions of Section 6-N of the U.P. ID Act. The case mentioned above, N. Sundara Money case [(1976) 1 SCC 822 : 1976 SCC (L&S) 132 : AIR 1976 SC 1111] illustrates the elements which constitute retrenchment. The relevant paragraphs read as under : (SCC pp. 826-27, para 9) "9. A breakdown of Section 2(oo) unmistakably expands the semantics of retrenchment. 'Termination ... for any reason whatsoever' are the key words. Whatever the reason, every termination spells retrenchment. So the sole question is, has the employee's service been terminated? Verbal apparel apart, the substance is decisive. A termination takes place where a term expires either by the active step of the master or the running out of the stipulated term. To protect the weak against the strong this policy of comprehensive definition has been effectuated. Termination embraces not merely the act of termination by the employer, but the fact of termination howsoever produced. May be, the present may be a hard case, but we can visualise abuses by employers, by suitable verbal devices, circumventing the armour of Section 25-F and Section 2(oo). Without speculating on possibilities, we may agree that 'retrenchment' is no longer terra incognita but area covered by an expansive definition. It means 'to end, conclude, cease'. In the present case the employment ceased, concluded, ended on the expiration of one year ten months nine
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017days -- automatically may be, but cessation all the same. That to write into the order of appointment the date of termination confers no moksha from Section 25-F(b) is inferable from the proviso to Section 25-F(1) [sic 25-F(a)]. True, the section speaks of retrenchment by the employer and it is urged that some act of volition by the employer to bring about the termination is essential to attract Section 25-F and automatic extinguishment of service by effluxion of time cannot be sufficient. An English case R. v. Secy. of State for Social Services, ex p Khan [(1973) 1 WLR 187 : (1973) 2 All ER 104 (CA)] was relied on, where Lord Denning, M.R. observed : (WLR pp. 189-90) '... I think that the word "terminate" or "termination" is by itself ambiguous. It can refer to either of two things--either to termination by notice or to termination by effluxion of time. It is often used in that dual sense in landlord and tenant and in master and servant cases. But there are several indications in this paragraph to show that it refers here only to termination by notice.' Buckley, L.J., concurred and said : (WLR p. 191) '... In my judgment the words are not capable of bearing that meaning. As [Counsel for the Secretary of State] has pointed out, the verb "terminate" can be used either transitively or intransitively. A contract may be said to terminate when it comes to an end by effluxion of time, or it may be said to be terminated when it is determined at notice or otherwise by some act of one of the parties. Here in my judgment the word "terminated" is used in this passage in para 190 in the transitive sense and it postulates some act by somebody which is to bring the appointment to an end, and is not applicable to a case in which the appointment comes to an end merely by effluxion of time.'
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017Words of multiple import have to be winnowed judicially to suit the social philosophy of the statute. So screened, we hold that the transitive and intransitive senses are covered in the current context. Moreover, an employer terminates employment not merely by passing an order as the service runs. He can do so by writing a composite order, one giving employment and the other ending or limiting it. A separate, subsequent determination is not the sole magnetic pull of the provision. A pre- emptive provision to terminate is struck by the same vice as the post-appointment termination. Dexterity of diction cannot defeat the articulated conscience of the provision."
28. Section 6-N of the U.P. ID Act which is in pari materia with Section 25-N of the ID Act reads thus:
"6-N. Conditions precedent to retrenchment of workmen.--No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until--
(a) the workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired or the workman has been paid in lieu of such notice, wages for the period of notice:
Provided that no such notice shall be necessary if the retrenchment is under an agreement which specifies the date of termination of service;
(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen day's average pay for every completed year of service or any part thereof in excess of six months; and
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(c) notice in the prescribed manner is served on the State Government."
Evidently, the abovesaid mandatory procedure has not been followed in the present case. Further, it has been held by this Court in Anoop Sharma v. Public Health Division [(2010) 5 SCC 497 : (2010) 2 SCC (L&S) 63] as under
"3. ... no workman employed in any industry who has been in continuous service for not less than one year under an employer can be retrenched by that employer until the conditions enumerated in clauses
(a) and (b) of Section 25-F of the Act are satisfied.
In terms of clause (a), the employer is required to give to the workman one month's notice in writing indicating the reasons for retrenchment or pay him wages in lieu of the notice. Clause (b) casts a duty upon the employer to pay to the workman at the time of retrenchment, compensation equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months. This Court has repeatedly held that Sections 25-F(a) and (b) of the Act are mandatory and non-compliance therewith renders the retrenchment of an employee nullity--State of Bombay v. Hospital Mazdoor Sabha [AIR 1960 SC 610] , Bombay Union of Journalists v. State of Bombay [AIR 1964 SC 1617 : (1964) 6 SCR 22] , SBI v. N. Sundara Money [(1976) 1 SCC 822 : 1976 SCC (L&S) 132 : AIR 1976 SC 1111] , Santosh Gupta v. State Bank of Patiala [(1980) 3 SCC 340 :
1980 SCC (L&S) 409] , Mohan Lal v. Bharat Electronics Ltd. [(1981) 3 SCC 225 : 1981 SCC (L&S) 478] , L. Robert D'Souza v. Southern Railway [(1982) 1 SCC 645 : 1982 SCC (L&S) 124] , Surendra Kumar Verma v. Central Govt. Industrial Tribunal-cum-Labour Court [(1980) 4 SCC 443 :
1981 SCC (L&S) 16] , Gammon India Ltd. v. Niranjan Das [(1984) 1 SCC 509 : 1984 SCC (L&S)
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144] , Gurmail Singh v. State of Punjab [(1991) 1 SCC 189 : 1991 SCC (L&S) 147] and Pramod Jha v. State of Bihar [(2003) 4 SCC 619 : 2003 SCC (L&S) 545].This Court has used different expressions for describing the consequence of terminating a workman's service/employment/engagement by way of retrenchment without complying with the mandate of Section 25-F of the Act. Sometimes it has been termed as ab initio void, sometimes as illegal per se, sometimes as nullity and sometimes as non est. Leaving aside the legal semantics, we have no hesitation to hold that termination of service of an employee by way of retrenchment without complying with the requirement of giving one month's notice or pay in lieu thereof and compensation in terms of Sections 25-F(a) and (b) has the effect of rendering the action of the employer as nullity and the employee is entitled to continue in employment as if his service was not terminated."
(emphasis supplied) Therefore, in the light of the law provided in the ID Act and its State counterpart through the U.P. ID Act and also on the basis of the legal principle laid down by this Court, we hold that the termination of service of the appellant was illegal and void ab initio.
29. Therefore, the Labour Court was correct on factual evidence on record and legal principles laid down by this Court in a catena of cases in holding that the appellant is entitled to reinstatement with all consequential benefits. Therefore, we set aside the order of the High Court and uphold the order of the Labour Court by holding that the appellant is entitled to reinstatement in the respondent Company.
30. On the issue of back wages to be awarded in favour of the appellant, it has been held by this Court in Shiv Nandan Mahto v. State of Bihar
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017[(2013) 11 SCC 626] that if a workman is kept out of service due to the fault or mistake of the establishment/company he was working in, then the workman is entitled to full back wages for the period he was illegally kept out of service. The relevant paragraph of the judgment reads as under:
"5. ... In fact, a perusal of the aforesaid short order passed by the Division Bench would clearly show that the High Court had not even acquainted itself with the fact that the appellant was kept out of service due to a mistake. He was not kept out of service on account of suspension, as wrongly recorded by the High Court. The conclusion is, therefore, obvious that the appellant could not have been denied the benefit of back wages on the ground that he had not worked for the period when he was illegally kept out of service. In our opinion, the appellant was entitled to be paid full back wages for the period he was kept out of service."
31. Further, in Haryana Roadways v. Rudhan Singh [(2005) 5 SCC 591 : 2005 SCC (L&S) 716] , the three-Judge Bench of this Court considered the question whether back wages should be awarded to the workman in each and every case of illegal retrenchment. The relevant paragraph reads as under : (SCC p. 596, para 8) There is no rule of thumb that in every case where the Industrial Tribunal gives a finding that the termination of service was in violation of Section 25- F of the Act, entire back wages should be awarded. A host of factors like the manner and method of selection and appointment i.e. whether after proper advertisement of the vacancy or inviting applications from the employment exchange, nature of appointment, namely, whether ad hoc, short term, daily wage, temporary or permanent in character, any special qualification required for the job and the
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017like should be weighed and balanced in taking a decision regarding award of back wages. One of the important factors, which has to be taken into consideration, is the length of service, which the workman had rendered with the employer. If the workman has rendered a considerable period of service and his services are wrongfully terminated, he may be awarded full or partial back wages keeping in view the fact that at his age and the qualification possessed by him he may not be in a position to get another employment. However, where the total length of service rendered by a workman is very small, the award of back wages for the complete period i.e. from the date of termination till the date of the award, which our experience shows is often quite large, would be wholly inappropriate. Another important factor, which requires to be taken into consideration is the nature of employment. A regular service of permanent character cannot be compared to short or intermittent daily-wage employment though it may be for 240 days in a calendar year."
32. Subsequently, in Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya [Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya, (2013) 10 SCC 324 : (2014) 2 SCC (L&S) 184] it was held by this Court as under:
The propositions which can be culled out from the aforementioned judgments are:
In cases of wrongful termination of service, reinstatement with continuity of service and back wages is the normal rule.
Ordinarily, an employee or workman whose services are terminated and who is desirous of getting back wages is required to either plead or at least make a statement before the adjudicating authority or the
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court of first instance that he/she was not gainfully employed or was employed on lesser wages. If the employer wants to avoid payment of full back wages, then it has to plead and also lead cogent evidence to prove that the employee/workman was gainfully employed and was getting wages equal to the wages he/she was drawing prior to the termination of service. This is so because it is settled law that the burden of proof of the existence of a particular fact lies on the person who makes a positive averment about its existence. It is always easier to prove a positive fact than to prove a negative fact. Therefore, once the employee shows that he was not employed, the onus lies on the employer to specifically plead and prove that the employee was gainfully employed and was getting the same or substantially similar emoluments.
In a number of cases, the superior courts have interfered with the award of the primary adjudicatory authority on the premise that finalisation of litigation has taken long time ignoring that in majority of cases the parties are not responsible for such delays. Lack of infrastructure and manpower is the principal cause for delay in the disposal of cases. For this the litigants cannot be blamed or penalised. It would amount to grave injustice to an employee or workman if he is denied back wages simply because there is long lapse of time between the termination of his service and finality given to the order of reinstatement. The courts should bear in mind that in most of these cases, the employer is in an advantageous position vis-à-vis the employee or workman. He can avail the services of best legal brain for prolonging the agony of the sufferer i.e. the employee or workman, who can ill-afford the luxury of spending money on a lawyer with certain amount of fame. Therefore, in such cases it would be prudent to adopt the course suggested in Hindustan Tin Works (P) Ltd. v. Employees
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(emphasis supplied)
33. In the present case, the respondent has made a vague submission to the extent that:
"the conduct of the workman throughout the proceedings before the High Court during 2002 to 2011 shows that he is continuously gainfully employed somewhere. Admittedly even in the counter-affidavit in the said writ petition, it has not been stated that the workman was not employed."
(emphasis supplied) Therefore, on the basis of the legal principle laid down by this Court in Deepali Gundu Surwase case [Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya, (2013) 10 SCC 324 : (2014) 2 SCC (L&S) 184] , the submission of the respondent that the appellant did not aver in his plaint of not being employed, does not hold since the burden of proof that the appellant is gainfully employed post termination of his service is on the respondent. The claim of the respondent that the appellant is gainfully employed somewhere is vague and cannot be considered and accepted. Therefore, we hold that the appellant is entitled to full back wages from the date of termination of his service till the date of his reinstatement.
Answer to Point (iv)
34. The present case is a clear case of violation of the constitutional principles expressly mentioned in the text. Before we make our concluding findings and reasons, we wish to revisit Harjinder Singh case [Harjinder Singh v. Punjab State Warehousing Corpn., (2010) 3 SCC 192 : (2010) 1 SCC (L&S) 1146] which made some pertinent points as under :
(SCC pp. 205-09, paras 22 & 27-29)
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"22. In Y.A. Mamarde v. Authority under the Minimum Wages Act [(1972) 2 SCC 108] , this Court, while interpreting the provisions of the Minimum Wages Act, 1948, observed : (SCC p. 116, para 13) The anxiety on the part of the society for improving the general economic condition of some of its less favoured members appears to be in supersession of the old principle of absolute freedom of contract and the doctrine of laissez faire and in recognition of the new principles of social welfare and common good. Prior to our Constitution this principle was advocated by the movement for liberal employment in civilised countries and the Act which is a pre-Constitution measure was the offspring of that movement. Under our present Constitution the State is now expressly directed to endeavour to secure to all workers (whether agricultural, industrial or otherwise) not only bare physical subsistence but a living wage and conditions of work ensuring a decent standard of life and full enjoyment of leisure. This directive principle of State policy being conducive to the general interest of the nation as a whole, merely lays down the foundation for appropriate social structure in which the labour will find its place of dignity, legitimately due to it in lieu of its contribution to the progress of national economic prosperity.'
27. In 70s, 80s and early 90s, the courts repeatedly negated the doctrine of laissez faire and the theory of hire and fire. In his treatise : Democracy, Equality and Freedom, Justice Mathew wrote:
'The original concept of employment was that of master and servant. It was therefore held that a court will not specifically enforce a contract of employment. The law has adhered to the age-old rule that an employer may dismiss the employee at will. Certainly, an employee can never expect to be completely free to do what he likes to do. He must
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face the prospect of discharge for failing or refusing to do his work in accordance with his employer's directions. Such control by the employer over the employee is fundamental to the employment relationship. But there are innumerable facets of the employee's life that have little or no relevance to the employment relationship and over which the employer should not be allowed to exercise control. It is no doubt difficult to draw a line between reasonable demands of an employer and those which are unreasonable as having no relation to the employment itself. The rule that an employer can arbitrarily discharge an employee with or without regard to the actuating motive is a rule settled beyond doubt. But the rule became settled at a time when the words "master" and "servant" were taken more literally than they are now and when, as in early Roman Law, the rights of the servant, like the rights of any other member of the household, were not his own, but those of his paterfamilias. The overtones of this ancient doctrine are discernible in the judicial opinion which rationalised the employer's absolute right to discharge the employee. Such a philosophy of the employer's dominion over his employee may have been in tune with the rustic simplicity of bygone days. But that philosophy is incompatible with these days of large, impersonal, corporate employers. The conditions have now vastly changed and it is difficult to regard the contract of employment with large-scale industries and government enterprises conducted by bodies which are created under special statutes as mere contract of personal service. Where large number of people are unemployed and it is extremely difficult to find employment, an employee who is discharged from service might have to remain without means of subsistence for a considerably long time and damages in the shape of wages for a certain period may not be an adequate compensation to the employee for non-employment. In other words,
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damages would be a poor substitute for reinstatement. The traditional rule has survived because of the sustenance it received from the law of contracts. From the contractual principle of mutuality of obligation, it was reasoned that if the employee can quit his job at will, then so too must the employer have the right to terminate the relationship for any or no reason. And there are a number of cases in which even contracts for permanent employment i.e. for indefinite terms, have been held unenforceable on the ground that they lack mutuality of obligation. But these cases demonstrate that mutuality is a high-sounding phrase of little use as an analytical tool and it would seem clear that mutuality of obligation is not an inexorable requirement and that lack of mutuality is simply, as many courts have come to recognise, an imperfect way of referring to the real obstacle to enforcing any kind of contractual limitation on the employer's right of discharge i.e. lack of consideration. If there is anything in contract law which seems likely to advance the present inquiry, it is the growing tendency to protect individuals from contracts of adhesion from overreaching terms often found in standard forms of contract used by large commercial establishments. Judicial disfavour of contracts of adhesion has been said to reflect the assumed need to protect the weaker contracting part against the harshness of the common law and the abuses of freedom of contract. The same philosophy seems to provide an appropriate answer to the argument, which still seems to have some vitality, that the servant cannot complain, as he takes the employment on the terms which are offered to him.'
28. In Govt. Branch Press v. D.B. Belliappa [(1979) 1 SCC 477 : 1979 SCC (L&S) 39] , the employer invoked the theory of hire and fire by contending that the respondent's appointment was purely temporary and his service could be terminated at
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any time in accordance with the terms and conditions of appointment which he had voluntarily accepted. While rejecting this plea as wholly misconceived, the Court observed : (SCC p. 486, para 25) '25. ... It is borrowed from the archaic common law concept that employment was a matter between the master and servant only. In the first place, this rule in its original absolute form is not applicable to government servants. Secondly, even with regard to private employment, much of it has passed into the fossils of time. "This rule held the field at the time when the master and servant were taken more literally than they are now and when, as in early Roman law, the rights of the servant, like the rights of any other member of the household, were not his own, but those of his paterfamilias." The overtones of this ancient doctrine are discernible in the Anglo- American jurisprudence of the 18th century and the first half of the 20th century, which rationalised the employer's absolute right to discharge the employee. "Such a philosophy", as pointed out by K.K. Mathew, J. (vide his treatise : Democracy, Equality and Freedom, p. 326), "of the employer's dominion over his employee may have been in tune with the rustic simplicity of bygone days. But that philosophy is incompatible with these days of large, impersonal, corporate employers." To bring it in tune with vastly changed and changing socio-economic conditions and mores of the day, much of this old, antiquated and unjust doctrine has been eroded by judicial decisions and legislation, particularly in its application to persons in public employment, to whom the constitutional protection of Articles 14, 15, 16 and 311 is available. The argument is therefore overruled.'
29. The doctrine of laissez faire was again rejected in Glaxo Laboratories (I) Ltd. v. Presiding Officer
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[(1984) 1 SCC 1 : 1984 SCC (L&S) 42] , in the following words : (SCC p. 9, para 12) '12. In the days of laissez faire when industrial relation was governed by the harsh weighted law of hire and fire the management was the supreme master, the relationship being referable to contract between unequals and the action of the management treated almost sacrosanct. The developing notions of social justice and the expanding horizon of socio- economic justice necessitated statutory protection to the unequal partner in the industry, namely, those who invest blood and flesh against those who bring in capital. Moving from the days when whim of the employer was suprema lex, the Act took a modest step to compel by statute the employer to prescribe minimum conditions of service subject to which employment is given. The Act was enacted as its long title shows to require employers in industrial establishments to define with sufficient precision the conditions of employment under them and to make the said conditions known to workmen employed by them. The movement was from status to contract, the contract being not left to be negotiated by two unequal persons but statutorily imposed. If this socially beneficial Act was enacted for ameliorating the conditions of the weaker partner, conditions of service prescribed thereunder must receive such interpretation as to advance the intendment underlying the Act and defeat the mischief.'"
35. We therefore conclude and hold that the Labour Court was correct on legal and factual principles in reinstating the appellant along with full back wages after setting aside the order of termination. The High Court, on the other hand, has erred by exceeding its jurisdiction under Article 227 of the Constitution of India in holding that the appellant has in fact, resigned by not joining his duty as a Badli worker and also awarding that retrenchment compensation
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017to the tune of Rs 1,00,000 will do justice to the appellant without assigning reasons which is wholly unsustainable in law.
9.14. Relying on the above, he submits that the workmen having been engaged at the workplace of the employer for a long period of time, the works which have been carried out by the workmen being perennial in nature, the employer of the workmen could not have been discharged by terminating the contract of the contractor. In such case, the requirement of Section 25-F of the I.D. Act is required to be followed. Without doing so, any termination would be bad in law entitling the workmen to be reinstated with all consequential benefits.
The employer cannot by relying upon the doctrine of laissez faire contend that it will do as it pleases and terminate the workmen who have been working for a long period of time.
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WP No. 31261 of 2016 C/W WP No. 57652 of 20179.15. On the basis of the above, he submits that the contract entered into by the employer with the contractor being a sham document, the real employer being the employer and not the contractor, the termination of the service of the workmen under the guise of termination of the labour contract is impermissible. The workmen apart from being reinstated are required to be awarded back wages.
10. Heard Sri.Anand.K.R, learned counsel for the employer and Sri.A.J.Srinivasan, learned counsel for the workmen. Perused papers.
11. The points that arise for determination are:
1. Whether the labour Court would be justified to examine whether a labour contract is a sham or camouflage in all cases where a reference is made as regards termination of services of contract labour, or would the labour Court be restricted by the terms of reference and be ineligible to examine the genuineness or the validity of a labour contract?
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WP No. 31261 of 2016 C/W WP No. 57652 of 20172. In the event of the labour contract being held to be a sham and camouflage, would the workmen, as a matter of right be entitled to reinstatement, continuity of service, and consequent benefits, including full back wages?
3. Whether the award passed by the labour Court suffers from any legal infirmity requiring interference at the hands of this Court?
4. What Order?
12. I answer the above points as under:
13. ANSWER TO POINT NO.1: Whether the labour Court would be justified to examine whether a labour contract is a sham or camouflage in all cases where a reference is made as regards termination of services of contract labour, or would the labour Court be restricted by the terms of reference and be ineligible to examine the genuineness or the validity of a labour contract?
13.1. The contention of Sri.K.R.Anand, learned counsel for the employer is that the Labour Court has travelled beyond the reference.
Unless there being any reference made as regards whether the agreement entered into between the employer and the contractor being
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017a sham transaction, the Labour Court could not have ventured into this aspect and pronounce on the same, which could not have been done and therefore, is contrary to the Judgments of the Hon'ble Apex Court in the cases of Oshiar Prasad, Sindhu Resettlement Corporation Limited, Jaipur Udyog Ltd and Delhi Cloth and General Mills co. Ltd.
13.2. In the present matter, the employer claims that the workers were engaged by and were employees of the contractor, whereas the workers claim that though they were employees of the contractor, they were under the day-to-
day supervision and instructions of the employer and as such, the contractor was not their employer. The employer had made use of the methodology of appointing a contractor to reduce its financial burden inasmuch as the employer is paying Rs.76/- per day to the workmen on its rolls, whereas Rs.56/- is paid
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017insofar as the contract employees were concerned. This amount of Rs.56/- per day is inclusive of the amounts payable to the contractor, it is in that background that upon the termination of the contract of the contractor resulted in the denial of employment to the workers engaged through the contractor that a dispute was raised which went through conciliation and failed and thereafter referred to the industrial tribunal by the appropriate government.
13.3. It is that background that it is required to be considered by this Court while answering the above question. The reference being made as regards a few of the workmen, the appropriate government referred the matter on the points of reference viz., whether the refusal of employment to the workmen was proper or not? What is the compensation to be paid to such workmen? The main question which had
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017been referred to was whether the workmen were to establish that they were employed by the employer?
13.4. What is not in dispute is that the workmen were engaged by the contractor, in furtherance of which the workmen were discharging their duties at the factory of the employer. The only question is whether the workmen were directly working with the employer or for the contractor?
13.5. The evidence on record which has been dealt with by the labour Court categorically indicates that the instructions were being issued by the employer, the targets were set by the employer and it is only the supply of labour which was made by the contractor to the employer. The aspect of determining whether the workmen were employees of the employer or that of the contractor would therefore require examination of the contract between the employer and the
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017contractor in order to come to a decision on the above point. Thus, unless the contract is one which cannot be said to be sham or camouflage, the workmen would continue to be those engaged by the contractor and not by the employer. However, if the contract is said to be sham and camouflage a conclusion could be arrived at that the workmen were employees of the employer. Thus this aspect of whether the contract was sham and camouflage is in my considered opinion an integral part of the question to determine whether the aggrieved workmen were the direct employees of the employer or the contractor. Thus, the decision relied upon by Sri.K.R.Anand in Sindhu Resettlement Corpn. Ltd's case (supra6) that unless the issue was specifically raised before the government and the government referred the same to the Industrial Tribunal, the
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017Tribunal cannot advert to the same would not be applicable.
13.6. Similarly, the decisions in Jaipur Udyog Ltd.
(supra7), Delhi Cloth & General Mills Co.
Ltd. (supra8), which have been pressed into service to contend that the present workers being the workmen employed by the contractor, those workmen could not raise the dispute against the present employer are not applicable since the contract is a sham and camouflage. The decision in Oshiar Prasad's case (supra1) relied upon by Sri.K.R.Anand that a labour contract having been terminated, the workmen could not seek for regularization would also not be applicable since the very termination of the contract appears to be for the purpose of getting rid of the contract labour who have been working in perennial jobs for a long time with the employer.
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WP No. 31261 of 2016 C/W WP No. 57652 of 201713.7. The decision in Mahendra Prasad Jakhmola's case (supra2) relied upon by the learned counsel to contend that mere supervision would not make a contract worker, a worker of the employer is not applicable for the reason that in the present case, it is not just supervision, but also allotment of work fixing of targets for each of the contract workmen was made by the employer. Whether the salary is paid directly by the principal employer to the workmen or through contractor, in my considered opinion, would not make much of a difference if the engagement of the workmen is made through a contractor as a camouflage. It is only when a contractor has been hired who in turn deputes workmen for a specific period of time to conduct non-perennial work, that the decision in Bharatlals' case (supra4) relied upon by Sri.K.R.Anand would be applicable and not in a situation where a workmen having been
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017engaged for a long period of time though a contractor to provide services for the employer.
13.8. The last contention of Sri.K.R.Anand in this regard is that so long as the contract labour is permitted and there is no embargo under Section 10 of the CLRA, any employer can make use of contract labour and that labour cannot seek for regularization is also in my considered opinion not a proposition to be applied to the present case.
13.9. The engagement of contract labour being permitted merely on account of no prohibition under Section 10 of CLRA being made would not entitle an employer to use the said process for its own benefit in reducing its burden and or depriving the workmen of their just wages. In the event of a notification under Section 10 being issued, it is very clear that no contract labour could be used. If any workmen are engaged through a contractor then they would
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017get the preference for being considered for appointment as and when there is a vacancy which arises. Even otherwise, though no notification under Section 10 is issued if the employer were to terminate a contract with a contractor and the employer were to engage new labour, it would be the duty of the employer to provide employment to those workmen as and when vacancy arises, as also for the employer not to engage any other workmen other than the contract workers for the said post without offering the same to the contract workers. Thus, whether a notification is issued under Section 10 of CLRA or not, the right of the workmen to raise industrial dispute of they being denied work would still continue.
13.10. The Judgments relied upon by Sri.A.J.Srinivasan in the case of National Union Waterfront Workers (supra10) and Vinod Kumar Sharma (supra11) would be applicable inasmuch as if
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017the 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 and this determination would be a preliminary determination for the purpose of adjudicating the dispute between the principal employer and the workmen.
13.11. Considering the above, I answer point No.1 by holding that the labour Court would be justified to examine whether the labour contract is a sham and camouflage in all cases where references are made as regards termination of service of contract labour since this would be a preliminary question to be answered before examining whether the termination is proper or not, whether the denial of work is proper or not and thereafter to examine whether the workmen have to be reinstated or not.
14. ANSWER TO POINT NO.2: In the event of the labour contract being held to be a sham and camouflage, would the workmen, as a matter of
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017right be entitled to reinstatement, continuity of service, and consequent benefits, including full back wages?
14.1. Whenever a labour contract is held to be sham and camouflage, the workman who is denied work by either termination of the contract with the contractor or by termination of services of the workman himself, on a dispute being raised, the labour Court would have to consider whether such workman would be entitled for reinstatement, continuity of service, consequential benefits including full backwages or not. There is no strict rule applicable to this nor is a straight jacket formula applicable.
These aspects would have to be considered by the labour Court on merits of individual cases.
14.2. In the event of a labour contract being held to be sham and camouflage, there would be a right vested with the workmen to be offered employment. In the event of the employer
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017seeking to engage any other person for the very same job or engaging another contractor to deliver the same services by engaging contract labour, until and unless such action is sought to be taken by the employer, there is no vested right in the workmen to be reinstated automatically. But the aspect of whether the workmen would be entitled for reinstatement, continuity of service and consequential benefits, being dependent on the above the factual matrix would have to be determined by the labour court before ordering any of the above.
15. ANSWER TO POINT NO.3: Whether the award passed by the labour Court suffers from any legal infirmity requiring interference at the hands of this Court?
15.1. As regards awardal of back wages, the labour Court has * denied full back wages to the workmen, I am of the considered opinion that the said order meets ends of justice. Though the workmen *Deleted vide Court order dated 06.06.2023
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017were prevented from discharging their work on account of the stand taken by the employer, the fact remains that the workmen have not carried out any work for the employer and the employer has not derived any benefits from the said workers. Thus, *denial of back wages, in my considered opinion, would in the present case serve the interest of justice.
15.2. In view of my answer to Points NO.1 and 2, the labour Court having rightly come to a conclusion that the labour contract entered into to reduce the burden of the employer, the workmen being supervised by the employer, the targets being set by the employer, the workmen reporting to the employer rather than the contractor having been taken into consideration by the labour Court in a proper perspective, I am of the considered opinion that the said order does not suffer from any legal *Replaced vide Court order dated 06.06.2023
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WP No. 31261 of 2016 C/W WP No. 57652 of 2017infirmity requiring interference at the hands of this Court.
16. ANSWER TO POINT NO.4: What order?
16.1. In view of the above, I pass the following:
ORDER i. The writ petition filed by the employer in W.P. No.31261/2016 challenging the impugned award dated 18.02.2016 passed by the Prl. Labour Court, Bangalore in Reference No.14/2012 stands dismissed.
ii. The writ petition filed by the workmen in W.P.No.57652/2017 seeking for modification of the award by granting full back wages is also dismissed.
Sd/-
JUDGE LN List No.: 1 Sl No.: 168