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Punjab High Court · body

2007 DIGILAW 1609 (PNJ)

Basant Lal v. State Of Punjab

2007-09-06

ADARSH KUMAR GOEL, S.D.ANAND

body2007
Judgment Adarsh Kumar Goel, J. 1. This petition has been filed by the workman against the award of the Labour Court, rejecting his claim for reinstatement with back wages. 2. Claim of the workman was that he was appointed on 6.6.1993 by the management of Guru Nanak Dev Thermal Plant, Bathinda, the unit of the Punjab State Electricity Board through contractors as Helper in the Coal Handling Plant. His work was to clear the chocked coal from Jalies, clearing of pit and coal handling belt. His services were terminated vide verbal order dated 9.10.2000. He was drawing a salary of Rs. 1,854/- per month. His work was of perennial nature and was necessary for the working of the plant. He worked from the date of appointment till termination of his services continuously, though contractors remained changing. The place of work belonged to the principal employer and supervision and control was of the principal employer, but the principal employer engaged contractors to avoid responsibilities inder the labour laws. Contract between principal employer and the contractor was a sham contract. The workman was thus to be treated as direct employee of the principal employer. Termination of services of the workman was mala fide, unfair labour practice, violative of Section 25-F of the Industrial Disputes Act, 1947 (for short, `the Act) and Articles 14, 16 and 21 of the Constitution. The claim was contested by respondent Nos. 3 to 6 who were respondents 1 to 4 before the Labour Court, the principal employer, by submitting that the principal employer never employed the workman. The contract for execution of a job having been given to a contractor, claim of the workman, if any, was against the contractor. The principal employer had no control whatsoever in engaging the workman. The work was not a regular work and depended upon receipt of coal rakes. No relationship of employer and employee existed between the workman and the principal employer. 3. The contractor took the plea that the workman abandoned the job of his own after working for some days on daily wages basis. The Labour Court framed the following issues : "1. Whether there exist relationship of employer and employee between the parties ? (OPW) 2. If issue No. 1 is proved whether services of workman stand validly terminated ? (OPR) 3. Whether claim of the workman is not maintainable ? (OPR) 4. Relief." 4. The Labour Court framed the following issues : "1. Whether there exist relationship of employer and employee between the parties ? (OPW) 2. If issue No. 1 is proved whether services of workman stand validly terminated ? (OPR) 3. Whether claim of the workman is not maintainable ? (OPR) 4. Relief." 4. Under issue No. 1, it was held that the workman was not the employee of the principal employer, but only of the contractor and since the claim of the workman was only against the principal employer, the workman was not entitled to any relief. The Labour Court referred to the evidence on record. It was noticed that the workman appeared as WW1 and filed his affidavit Ex. W/1 and photo copies of identity cards Exs. W2 to W5 and PF subscription slips Ex.W6 to Ex.W/8. MW1 Ajaib Singh Malli appeared on behalf of the management and stated that gate pass was countersigned on account of engagement of the workman by the contractor. He also proved letter Ex. M/1. MW2 Er. Sat Pal Goyal deposed that the workman was never engaged by the PSEB and the work of coal handling plant was given on contract basis after inviting tenders and a written agreement was entered into with the contractor which was proved as Ex. M2 to Ex. M/11 for the period 1991-2000. MW3 Bhushan Kumar Prasher deposed that bills were passed by his office regarding the work done by the contractor and payment was made by cheque. The workman made a statement that he did not make any claim against the contractor. 5. Judgment of the Honble Supreme Court, in Secretary, Haryana State Electricity Board v. Suresh, AIR 1999 SC 1160 was distinguished by submitting that the contractor in that case was not a licensed contractor. Judgment of the Jharkhand High Court in Employers Relation to the management of Angarpathra Colliery of Bharat Coking Co. Ltd. v. Presiding Officer, Central Govt. Industrial Tribunal No. (2) 2003(4) SCT 505, was distinguished by pointing out that in that case the contract was a camouflage. The judgment of the Honble Supreme Court in Ram Singh and others v. Union Territory, Chandigarh & others 2004(1) SCT 366 (SC) was distinguished by submitting that the workmen were never employed by the principal employer. Industrial Tribunal No. (2) 2003(4) SCT 505, was distinguished by pointing out that in that case the contract was a camouflage. The judgment of the Honble Supreme Court in Ram Singh and others v. Union Territory, Chandigarh & others 2004(1) SCT 366 (SC) was distinguished by submitting that the workmen were never employed by the principal employer. It was also held that no appointment letter was issued by the principal employer and the salary was admittedly paid by the contractor. There was nothing to show that the contractor was not a licensed contractor. The attendance register or the payment registers were never summoned by the workman to prove the relationship with the principal employer. The terms and conditions of the contract as per agreement Ex. M-2, dated 11.6.1991, showed that the contract was not a sham transaction. Identity cards or subscription slips did not prove the workman to be employee of the principal employer. 6. Learned counsel for the petitioner mainly relied upon the judgment of the Honble Supreme Court in Suresh (supra) and it was also submitted that there being a provision in the contract for approval of the workmen recruited by the contractor, the workmen should be held to be the employees of the principal employer. We have considered the rival submissions and perused the record. 7. The question for consideration is whether the view taken by the Labour Court that the workman was not employee of the principal employer, can be held to be perverse so as to call for interference under Article 226 of the Constitution. 8. Before adverting to the issue, we may notice the development of law on the point. The Honble Supreme Court in Standard Vacuum Refining Co., of India Ltd. v. Its Workmen, AIR 1960 SC 948, observed that it was desirable for the management that work of perennial nature, incidental to the manufacturing process should be done by a regular workman and not by contract labour. The issue was discussed by the Indian Labour Conference and on its recommendations, Contract Labour (Abolition and Regulation) Act, 1970 (CLAR) was passed. The Act provided for abolition of contract labour system wherever possible or practicable and for regulation of working conditions of contract labour to ensure payment of wages and provision of essential amenities. The issue was discussed by the Indian Labour Conference and on its recommendations, Contract Labour (Abolition and Regulation) Act, 1970 (CLAR) was passed. The Act provided for abolition of contract labour system wherever possible or practicable and for regulation of working conditions of contract labour to ensure payment of wages and provision of essential amenities. These developments have been discussed by the Honble Supreme Court, inter-alia, in Gammon India Ltd. M/s. v. Union of India, AIR 1974 SC 960 and Catering Cleaners of Southern Railway v. Union of India, AIR 1987 SC 777. The validity of the Act was upheld by a Constitution Bench of the Honble Supreme Court in Gammon India Limited (supra). 9. The issue whether an employee was infact an employee of the principal employer and instrumentality of contractors was a sham transaction as also the issue whether on abolition of contract labour, an employee becomes direct employee of the principal employer, has been subject matter of several decisions. 10. A Constitution Bench of the Honble Supreme Court in Steel Authority of India Ltd. v. National Union Water Front Workers, AIR 2001 SC 3527 examined the issue after referring to the earlier case law on the point. Reversing the view, to the contrary in Air India Statutory Corporation v. United Labour Union, AIR 1997 SC 645, it was held that on abolition of contract labour, the employees will not get automatically absorbed as employees of the principal employer. In para 105, it was observed :- "105. An analysis of the cases, discussed above, shows that they fall in three classes; (i) where contract labour is engaged in or in connection with the work of an establishment and employment of contract labour is prohibited either because the Industrial adjudicator/Court ordered abolition of contract labour or because the appropriate Government issued notification under Section 10(1) of the CLRA Act, no automatic absorption of the contract labour working in the establishment was ordered; (ii) where the contract was found to be sham and nominal rather a camouflage in which case the contract labour working in the establishment of the principal employer was held, in fact and in reality, the employees of the principal employer himself. Indeed, such cases do not relate to abolition of contract labour but present instances wherein the Court pierced the veil and declared the correct position as a fact at the stage after employment of contract labour stood prohibited; (iii) where in discharge of a statutory obligation of maintaining canteen in an establishment the principal employer availed the services of a contractor and the Courts have held that the contract labour would indeed be the employees of the principal employer. The next issue that remains to be dealt with : B. Whether on a contractor engaging contract labour in connection with the work entrusted to him by a principal employer, the relationship of master and servant between him (the principal employer) and the contract labour emerges". Discussing the category of cases falling under the head (ii), it was observed : "114. We find no substance in the next submission of Mr. Shanti Bhushan that a combined reading of the definition of the terms `contract labour, `establishment and `workman would show that a legal relationship between a person employed in an industry and the owner of the industry is created irrespective of the fact as to who has brought about such relationship. 115. We have quoted the definitions of these terms above and elucidated their import. The word `workman as defined in wide terms. It is a generic term of which contract labour is a species. It is true that a combined reading of the terms establishment and workman shows that a workman engaged in an establishment would have direct relationship with the principal employer as a servant of master. But what is true of a workman could not be correct of contract labour. The circumstances under which contract labour could be treated as direct workman of the principal employer have already been pointed out above. We are not persuaded to accede to the contention that a workman, who is not an out worker, must be treated as a regular employee of the principal employer. It has been noticed above that an out worker falls within the exclusionary clause of the definition of `workman. The word `out worker connotes a person who carries out the type of work, mentioned in sub-clause (c) of Cl. It has been noticed above that an out worker falls within the exclusionary clause of the definition of `workman. The word `out worker connotes a person who carries out the type of work, mentioned in sub-clause (c) of Cl. (i) of S.2, of the principal employer with the material supplied to him by such employer either (i) at his home or (ii) in some other premises not under the control and management of the principal employer. A person who is not an out worker but satisfies the requirement of the first limb of the definition of workman would by the very definition fall within the meaning of the term `workman. Even so, if such a workman is within the ambit of the contract labour, unless he falls within the aforementioned classes, he cannot be treated as regular employee of the principal employer." 11. The matter was again considered by the Honble Supreme Court in Workmen of Nilgiri Co-op Mkt. Society Ltd. v. State of T.N., AIR 2004 SC 1639, in the context of the contention that engagement of contractor may be a comouflage. The question posed was whether the contract was "of service" or "for service". In Para 32, it was observed : "DETERMINATION OF RELATIONSHIP" 32. Determination of the vexed questions as to whether a contract is a contract of service or contract for service and whether the concerned employees are employees of the contractors has never been an easy task. No decision of this Court has laid down any hard and fast rule nor it is possible to do so. The question in each case has to be answered having regard to the fact involved therein. No single test be it control test, be it Organisation or any other test has been held to be the determinative factor for determining the jural relationship of employer and employee." 12. Thereafter, the Honble Supreme Court referred to the control test discussed in Shivanandan Sharma v. Punjab National Bank Ltd., AIR 1955 SC 404 and Dharangadhara Chemical Works Ltd. v. State of Saurashtra and others, AIR 1957 SC 264. Other tests were considered in Ram Singh and others v. Union Territory, Chandigarh and others, JT 2003(8) SC 345. It was observed that integrated approach was required to be adopted by integration of relevant tests to examine whether the workman was integrated in the employers concern. Other tests were considered in Ram Singh and others v. Union Territory, Chandigarh and others, JT 2003(8) SC 345. It was observed that integrated approach was required to be adopted by integration of relevant tests to examine whether the workman was integrated in the employers concern. It was also held that the burden of proof was on the workman to prove that he was employee of the principal employer. In the context of CLAR, the earlier decisions of the Honble Supreme Court were also referred to. It was concluded as under : 98. It has been found that the employment of the workmen for doing a particular piece of work is at the instance of the producer or the merchants on an ad hoc basis or job to job basis and, thus, the same may not lead to the conclusion that relationship of employer and employee has come into being. Furthermore, when an employee has a right to work or not when an offer is made to him in this, behalf by the producer or by the merchants will also assume significance. 99. For the purpose of earning livelihood, a person has to involve himself into certain kinds of activities wherefor, he must subject himself to some sort of discipline or control, which is even otherwise implicit. 100. The findings arrived at by the learned Tribunal as well as the High Court would clearly go to show that the concerned workmen are engaged both by the grower as also the traders. Only on some occasions, payment is made to the concerned workmen through the third parties only in a case where the grower is not immediately in a position to pay the same as he was yet to receive the price of the vegetables to be auctioned. We must bear in mind that the Society deals with small and marginal farmers who themselves look after the Society for obtaining such assistance as may be necessary for not being exploited by the traders and had been facing the problem of a forced sale of their produce at the throw away price. We must bear in mind that the Society deals with small and marginal farmers who themselves look after the Society for obtaining such assistance as may be necessary for not being exploited by the traders and had been facing the problem of a forced sale of their produce at the throw away price. The totality of the circumstances as opined by the Tribunal and affirmed by the High Court would clearly go to show that although certain activities are carried out in the market yards where for requisite infrastructures are provided, the Society in general does not have the necessity of employing any workman either for the purpose of loading, unloading or grading. Ultimately, the remuneration to the concerned workmen are borne either by the farmers or by the merchants. Presumably the amount paid to the loaders, unloaders and the graders would vary, as for example whereas there would be cases where the growers themselves would unload their merchandise either from trucks or carts. In case growers take the assistance of the concerned persons for unloading after the auction is held the payment would be made by the traders. In a situation of this nature and particularly having regard to the fact that the respondent is a co-operative society which only renders services to its own members and despite the fact that in relation thereto it receives commission at the rate of one per cent both from the farmers as also the traders; it does not involve in any trading activity. Although rendition of such service may amount to carrying out an industrial activity within the meaning of the provisions of the Industrial Disputes Act, 1947 but we are in this case not concerned with the said question. What we are concerned with is as to whether the concerned workmen have been able to prove that they are workmen of the Society. They have not." 13. In Suresh (supra), mainly reliance was placed on judgment in Air India Statutory Corporation (supra), which was overruled in Steel Authority (supra). It was also found that there was no genuine contract labour system. The said judgment is, thus, distinguishable. 14. Coming to the facts of the present case, in the light of observations of the Honble Supreme Court in Steel Authority and Nilgiri Co-op. Marketing Society. It was also found that there was no genuine contract labour system. The said judgment is, thus, distinguishable. 14. Coming to the facts of the present case, in the light of observations of the Honble Supreme Court in Steel Authority and Nilgiri Co-op. Marketing Society. Ltd. (supra), the finding recorded by the Labour Court that the workman was not employed by the principal employer and was covered by a genuine contract, we are unable to hold that the finding of the Labour Court is perverse so as to call for interference under Article 226 of the Constitution. The writ petition is dismissed.