M/S Icici Prudential Asset ... vs Union Of India & Anr.
2011 Latest Caselaw 4130 Del

            *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                          Date of decision: 25th August, 2011
+                              W.P.(C) 13663/2009

         M/S ICICI PRUDENTIAL ASSET MANAGEMENT
         CO. LTD.                                     ..... Petitioner
                        Through: Mr. A.B. Dial, Sr. Adv. with
                                 Mr. Sundeep Srivastava and Mr.
                                 Ujhwal K Jha, Advs.

                                      versus

         UNION OF INDIA & ANR.                    ..... Respondents
                       Through: Mr Rono Mohanty, Adv. for R-2.

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.       Whether reporters of Local papers may        Yes
         be allowed to see the judgment?

2.       To be referred to the reporter or not?             Yes

3.       Whether the judgment should be reported            Yes
         in the Digest?

RAJIV SAHAI ENDLAW, J.

1. The petition impugns the reference under section 10 of the Industrial

Disputes Act, 1947 dated 8th December, 2008 made by the respondent

No.1. Union of India as the appropriate government within the meaning

of Section 2(a) of the Act of the dispute raised by the respondent No.2

against the petitioner, for adjudication to the Industrial Adjudicator.

Notice of the petition was issued and vide ex-parte order dated 8th

December, 2009 which continues to be in force, further proceedings before

the Industrial Adjudicator in pursuance to the reference were stayed.

Counter affidavit and an application for vacation of stay have been filed by

the respondent no.2 and to which rejoinder has been filed by the petitioner.

The counsels have been heard.

2. The reference made to the Industrial Adjudicator is as under:-

"Whether the contract between the management of Prudential ICICI Asset Management Co. Ltd., New Delhi and the contractor M/s Service Max Facility Management Pvt. Ltd. Delhi with regard to the employment of Shri Dharamvir Singh S/o Shri Rashi Singh, is sham and bogus? If yes, whether the action of the principal employer i.e., M/s Prudential ICICI Asset Management Co. Ltd., in terminating service of the above workman w.e.f 04.12.2005, is just, fair and legal? If not, to what relief is he entitled?"

3. The case of the petitioner is that it had entered into an agreement

with M/s Service Max Facility Management Pvt. Ltd. (hereinafter called

„the contractor‟) and the respondent No.2 workman was an employee of

the said contractor and was being paid his salary by the contractor only;

that the respondent No.2 however indulged in acts of forgery and

manipulation and owing whereto the petitioner asked the contractor to

withdraw the respondent No.2 from deployment; that the respondent No.2

raised a false and frivolous dispute claiming to be an employee of the

petitioner instead of the contractor.

4. The petitioner contends that the appropriate government, without

impleading the contractor as a necessary party has made the reference; that

though the petitioner applied to the Industrial Adjudicator for

impleadment of the said contractor but the said application was dismissed

by the Industrial Adjudicator vide order dated 16th November, 2009.

5. The Industrial Adjudicator has in the order dated 16 th November,

2009 held that the presence of the contractor is not necessary for

adjudicating whether contract between the petitioner and the contractor

was sham and bogus. It was further held that if it were to be held that the

said contract is bogus then the question of validity of termination of the

services of the respondent No.2 and of the relief to be granted to the

respondent No.2 would arise; however if the contract was to be held to be

not bogus and sham, the respondent no. 2 would not be entitled to any

relief. It was held that presence of the contractor would only delay the

adjudication. I may however notice that the petitioner has in the present

petition not expressly impugned the said order of the Industrial

Adjudicator.

6. Attention of the senior counsel for the petitioner has been invited to

Management of Sterling Hi Tech Ltd. vs Govt. of NCT of Delhi

MANU/DE/2138/2011 where on conspectus of the case law, the practice

of challenging the reference and during which challenge the reference lies

dormant, as has happened in the present case also, was deprecated and it

was held that the challenge if any has to be against the final award only of

the Industrial Adjudicator. The intra court appeal being LPA No. 614/2011

against the said judgment was dismissed on 2nd August, 2011. It was thus

enquired from the counsel as to why the petition should not be dismissed

with costs for occasioning the delay in adjudication of the reference.

7. The senior counsel for the petitioner refers to Workmen of Wings

Wear Corporation vs Governor of Delhi 1984 LabIC 798. However the

same was a case of challenge to the order of refusal to make the reference

and thus has no application to the facts of the present case.

8. The senior counsel for the petitioner has next contended that without

a prohibition notification under the Contract Labour (Regulation &

Abolition) Act, 1970, an agreement of contract labour as entered into by

the petitioner with the contractor cannot be challenged. He has further

contended that contract labour has not been prohibited in the work for

which the petitioner had entered into the agreement with the contractor.

Reliance is placed on Steel Authority of India Ltd. vs Union of India &

Ors. (2006) 12 SCC 233. Attention is also invited to Section 10(5) of the

Industrial Disputes Act empowering the appropriate government to, at the

time of making the reference or at any time thereafter but before the

submission of the award, include in that reference any other establishment

likely to be interested in or affected by the dispute.

9. I am unable to accept the contention of the senior counsel for the

petitioner of the reference being in contravention of the Contract Labour

(Regulation and Abolition) Act, 1970. The question is not of prohibition of

contract labour but of the validity of the agreement which the petitioner

claims to have entered into with the contractor. The Supreme Court in

International Airport Authority of India v. International Air Cargo

Workers' Union (2009) 13 SCC 374 has held that a dispute as to whether a

labour contract is genuine or sham is maintainable before the Industrial

Adjudicator even when there is no notification for abolition of contract

labour under Section 10(1) of the Contract Labour (Regulation &

Abolition) Act and that the Industrial Adjudicator can declare that the so

called contract labour are in fact direct employees of principal employer

and contract is only a camouflage to deny employment benefits to

employees. It was further held that only if the contract is found to be

genuine and also there is no notification abolishing the contract labour

under Section 10(1), that the principal employer cannot be directed to

absorb the contract labour. In fact the Apex Court in SAIL relied upon by

the senior counsel for the petitioner had also reiterated (the view earlier

taken in Steel Authority of India Ltd. v. National Union Waterfront

Workers (2001) 7 SCC 1) that an Industrial Adjudicator even in the

absence of a notification under Section 10(1) of the Contract Labour

(Regulation & Abolition) Act would have jurisdiction to determine

whether the contract purportedly awarded by the management in favour of

the contractor was really a camouflage or a sham one.

10. I am also unable to accept the contention that the reference without

inclusion of the contractor can be said to be bad. The question to be

adjudicated by the Industrial Adjudicator is as to whether the agreement

between the petitioner and contractor is sham and bogus. The evidence to

be led in this regard is in control and possession of the petitioner and if at

all the petitioner feels that the presence of the contractor is necessary, the

petitioner can always summon the contractor as its witness. Even

otherwise, all the said questions as are being raised by the petitioner ought

to be raised by the petitioner before the Industrial Adjudicator and if the

petitioner remains aggrieved from the award of the Industrial Adjudicator,

will have his remedy thereagainst.

11. Faced with the aforesaid, the senior counsel for the petitioner has

contended that the reference ought to have been as to whether the

respondent No.2 workman is the employee of the petitioner.

12. In my opinion, the reference as worded is to the same effect. If the

Industrial Adjudicator finds the contract to be sham and bogus, the

necessary corollary thereof would be of the respondent No.2 being an

employee of the petitioner and then the question of the validity of

termination of services and the relief if any to which the respondent No.2

is entitled would be gone into. However if the petitioner succeeds in

establishing that the contract is not sham and bogus, and in which case the

necessary corollary would be of there being in existence no relationship of

employer and employee between the petitioner and respondent No.2

workman, the question of the petitioner being required to justify the

termination of services of the respondent No.2 would not arise. In my

view, the reference does not suffer from any ambiguity and the present

petition has been filed in the abuse of the process of this Court and to delay

the adjudication of the reference.

13. I may also notice that the Supreme Court recently in Bhilwara

Dugdh Utpadak Sahakari S. Ltd. v. Vinod Kumar Sharma

MANU/SC/1013/2011 has observed that the employers, in order to avoid

their liability under various labour statutes are very often resorting to

subterfuge by trying to show that their employees are, in fact, the

employees of a contractor and it is high time that this subterfuge must

come to an end and the Court cannot countenance such practices anymore.

14. I have in the Management of Sterling Hi Tech Ltd. (supra) imposed

costs of ` 1 lac on the employer for delaying the process of adjudication

of the industrial dispute so as to send a message to the Bar to desist from

such frivolous litigation. The petitioner herein also has succeeded in

delaying the adjudication for nearly two years. In the circumstances, it is

deemed expedient to impose costs on the petitioner herein also of

` 30,000/- payable to the respondent No.2 workman on the date next

before the Industrial Adjudicator. The Industrial Adjudicator is also

requested to adjudicate the dispute as expeditiously as possible.

RAJIV SAHAI ENDLAW (JUDGE) August 25, 2011/mb.

(corrected and released on 7th September, 2011)