Nafe Singh vs M/S. Sh. Ganga Ram Hospital
2015 Latest Caselaw 6365 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI
+                                        Judgment delivered on: August 28, 2015

%       W.P.(C) No. 2167/2004


       RANBIR SINGH                                                    ..... Petitioner
                                Through:          Mr. Pankaj Singh and Mr. Pradeep Kr.
                                                  Arya, Advocates

                                versus

        M/S. SH. GANGA RAM HOSPITAL.                 .....Respondent
                      Through: Mr. Alok Bhasin and Ms. Poonam Das,
                               Advocates.
AND

+       W.P. (C) No. 6922/2004
        NAFE SINGH                                                     ..... Petitioner
                         Through:                 Mr. Pankaj Singh and Mr. Pradeep Kr.
                                                  Arya, Advocates

                                versus

        M/S. SH. GANGA RAM HOSPITAL.                 .....Respondent
                      Through: Mr. Alok Bhasin and Ms. Poonam Das,
                               Advocates.

        CORAM:
        HON'BLE MR. JUSTICE I.S.MEHTA

                                         JUDGMENT

I. S. MEHTA, J.

1. The petitioners, i.e., Shri Ranbir Singh in W.P. (C) No. 2167/2004

and Shri Nafe Singh in W.P. (C) No. 6922/2004 have preferred the

present Writ Petitions under Articles 226 and 227 of the Constitution of

India for quashing the impugned Awards dated 10.04.2003 and

08.04.2003 passed in I.D. no. 199/94 and I.D. no. 179/94 respectively by

Presiding Officer, Labour Court - II, Karkardooma Courts, Delhi.

2. The brief facts are that the petitioner-workmen, Shri Ranbir Singh

and Shri Nafe Singh, have alleged that they were employees of the

respondent, i.e., Ganga Ram Hospital (hereinafter referred to as

„management no. 1‟), and were later shown to be employees of M/s.

Rama Security Services (hereinafter referred to „management no. 2‟)

under the garb of an alleged sham and bogus agreement executed between

management no. 1 and management no. 2. Subsequently, management no.

1 terminated their services w.e.f. 28.07.1992. The termination of the

services of petitioner-workmen from the employment of management no.

1 is alleged to be a result of an oral general demand made by the

petitioner-workmen to the management no. 1. The subsequent transfer of

the petitioner-workmen from management no. 1 to management no. 2 was

allegedly done through a sham and bogus agreement used by the

management no.1 as a tool to escape the legal obligations under the

Industrial Disputes Act, 1947. It is further alleged that the petitioners are

the employees of management no. 1 and non-giving of employment to

them w.e.f. 28.07.1992 amounts to illegal termination of their

employment for no fault on their part. The petitioners i.e., Shri Ranbir

Singh and Shri Nafe Singh raised their issues before the competent

authority and the same were referred by the Secretary (Labour),

Government of NCT of Delhi for adjudication to the Labour Court vide

notification no. F.24. (1476)/93-Lab./12046-52 and notification no. F.24

(1474)/93-Lab./12032-38 respectively, dated 30.03.1994, which are as

under:

"Whether the services of Sh. Ranbir Singh have been terminated illegally and/or unjustifiably by the management and if so, to what relief, is he entitled and what directions are necessary in this respect?"

"Whether the services of Sh. Nafe Singh have been terminated illegally and/or unjustifiably by the management and if so, to what relief, is he entitled and what directions are necessary in this respect?"

The petitioners in their statement of claim pray that they be reinstated

w.e.f. 28.07.1992 with continuity in service and full back-wages. The

management no. 1 in its written statement had denied that the

management no. 1 had ever given any employment to the petitioners and

asserted that there was no employer-employee relationship at any point of

time between the management no. 1 and the petitioners. It is stated that

the management no. 2, i.e., M/s. Rama Security Services was providing

security services to management no. 1, i.e., Ganga Ram Hospital till

22.07.1992. The security guards were deployed by M/s. Rama Security

Services alone. The aforesaid agreement was terminated w.e.f.

23.07.1992. The contract between management no. 1 and management

no. 2 was an independent contract. It is further alleged that management

no. 2, i.e., M/s. Rama Security Services was paying wages to its

employees including the petitioners and also exercised supervision and

control over them and thereafter, the petitioners were gainfully employed

elsewhere. M/s. Rama Security Services too had filed written statement

and stated that the management no. 2, i.e., M/s. Rama Security Service

had closed down their business on 23.07.1992 and the same was informed

to the petitioner-workmen vide notice dated 24.06.1992 and the reference

made by the government is incompetent. Management no. 2 prays for

dismissal of claim of the petitioners, rejoinder to written statement filed,

and reaffirm the averments made to the statement of claim.

Issues in both the petitions were framed on 12.12.1996. Thereafter,

both the petitioners examined themselves as WW-1 and relied upon the

documents as stated in their affidavit. The management no.1 examined

itself as MW-1 and relied upon documents as stated in its affidavit.

After completion of the pleadings and the evidence, the impugned

Awards dated 10.04.2003 and 08.04.2003 were passed. Aggrieved by the

impugned Awards, both the workmen preferred their respective Writ

Petitions i.e., W.P. (C) No. 2167/2004 and W.P. (C) No. 6922/2004.

3. The learned counsel appearing on behalf of the petitioner-workmen

submitted that Shri Lala Ram Yadav was the proprietor of M/s. Rama

Security Services and he too was an employee of the management no. 1.

The learned counsel further submits that management no. 1 used to pay

the salary of the employees and management no. 1 was in financial

control and was also having supervision over its employees. The learned

counsel further submitted that management no. 1 used to remit the PF as

employer of the petitioners. The learned counsel further submitted that

the I-Cards were issued by the management no. 1 and the attendance

records of the employees were maintained by management no. 1.

Therefore, the petitioners were employees of management no. 1 and they

be reinstated with continuity in service and full back-wages.

4. The learned counsel, Shri Alok Bhasin, causing appearance on

behalf of management no. 1, has drawn the attention of this Court to the

fact that the petitioner-workmen were never in the employment of

management no.1. Therefore, the relief as claimed in the statement of

claim cannot be given to the petitioners.

5. The whole dispute hinges around the question as to whether there

was any employer-employee relationship between the petitioners and the

management no.1.

To determine whether there was a relationship of employer and

employee between the petitioners and the management no. 1, the Apex

Court in para 125(5) of the case titled as Steel Authority of India Ltd.

and Ors. vs. National Union Water Front Workers and Ors., (2001) 7

SCC 1, has laid down the test, which is as under:

"(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 of various beneficial legislations so as to deprive the workers of the benefit thereunder. If the contract is found to be not genuine but a mere camouflage, the so-called contract labour will have to be treated as employees of the principal employer who shall be directed to regularize the services of the contract labour in the establishment concerned subject to conditions as may be specified by it for that purpose in the light of para 6 hereunder.

(6) If the contract is found to be genuine and prohibition notification under Section 10(1) of the CLRA Act in respect of the concerned establishment has been issued by the appropriate Government, prohibiting employment of contract labour in any process, operation or other work of any establishment and where in such process, operation or other work of the establishment the principal employer intends to employ regular workmen, he shall give preference to the erstwhile contract labour, if

otherwise found suitable and, if necessary, by relaxing the condition as to maximum age appropriately, taking into consideration the age of the workers at the time of their initial employment by the contractor and also relaxing the condition as to academic qualifications other than technical qualifications." (Emphasis Supplied)

6. The Apex Court while laying down the aforesaid test directed the

industrial adjudicator to determine the genuineness of the contract

executed between the principal employer and the contractor. The contract

executed between the principal employer and contractor should be of

such a nature that the executed contract, meets the aims and objectives of

the Industrial Disputes Act, 1947, it should not be a sham and bogus

contract, to escape the liability, imposed upon the employer under the

Industrial Disputes Act, 1947.

7. In the instant case, the alleged illegal termination of the petitioner-

workmen by the principal employer, i.e., management no. 1 is dated

28.07.1992. In order to prove the allegation of illegal termination of the

petitioner-workmen by the management no. 1, it is imperative that the

petitioner-workmen first establish the relationship of employer and

employee between themselves and the management no.1.

The petitioner-workmen either have to prove that they were

working with the management no. 1 and were issued their respective

appointment letters or place on record other documents by which they

could show that they had completed 240 days of continuous service in a

calendar year with the management no. 1. The workmen while

discharging this burden of proof, that, they were employed by

management no. 1, as security guards, since their dates of appointment

i.e. 01.11.1986 and 10.03.1985 on a monthly salary of Rs. 958/- have

examined themselves as WW-1 and their statements lack confidence

without supporting appointment letters or other documents pertaining to

their employment with the management no. 1 for a continuous period of

240 days in a calendar year.

8. The petitioner-workmen filed their respective statement of claim

against management no. 1, i.e., Ganga Ram Hospital as employer and

M/s. Rama Security Services as management no. 2 and further alleged

that the contract executed between management no. 1 and management

no. 2 is sham and bogus and the same has been executed as a device to

escape liability under the Industrial Disputes Act, 1947.

9. The onus to prove that the petitioner-workmen were employees of

management no. 1, too, was upon the petitioner-workmen. It is an

admitted fact that the petitioner-workmen were never issued an

appointment letter by management no. 1 at any point of time since the

date of their appointments i.e., 01.11.1986 and 10.03.1985 respectively

till the date of their termination i.e., 28.07.1992. As per the allegation of

the petitioner-workmen, they were employed with the management no. 1

and their services were terminated on 28.07.1992 but the workmen were

unable to produce salary slips of management no. 1 to prove that

management no. 1 paid their salaries from their respective dates of

appointment i.e. 01.11.1986 and 10.03.1985 till the date of their

termination i.e. 28.07.1992. As per the allegation, the petitioner-workmen

worked with the management no. 1 for a period of more than five years.

There is no allegation till date on behalf of the petitioner-workmen that

their salaries for the aforesaid period is due against the management no. 1

which means that either the petitioner-workmen are not coming to this

Court with clean hands or they are hiding something which they should

not have.

10. The management no. 2, M/s. Rama Security Services claims that

after the closure notice dated 24.06.1992, dues in all respects have been

paid to the petitioner-workmen and nothing is due against the

management no.2 in favour of the petitioner-workmen.

11. Further, what is to be seen is whether the contract executed

between management no. 1 and management no. 2 is genuine or sham

and bogus i.e., whether it is a device to avoid the legal obligations under

the Industrial Disputes Act, 1947.

The petitioner-workmen mainly alleged that Shri Lala Ram Yadav

was an employee of Ganga Ram Hospital. The petitioner-workmen

further stated that Shri Lala Ram Yadav, as per the contract, is the

proprietor of M/s. Rama Security Services. The PF is also remitted by

management no. 1 and not by M/s Rama Security Services which

otherwise means that M/s. Rama Security Services was acting as agent of

management no. 1. Therefore, the contract executed between the

management no. 1 and management no. 2 was not a genuine contract but

factually a camouflage, sham and bogus contract.

12. The management no. 1 outsourced the security services of Ganga

Ram Hospital vide agreement dated 10.05.1988 with M/s. Rama Security

Services and thereafter similar agreements were executed between the

parties in subsequent years, the last one executed on 01.04.1992. The

contractor, Shri Lala Ram Yadav was a licensed contractor and his firm

M/s. Rama Security Services (H. No. 1619, Sector 4, Gurgaon) had been

registered with the Delhi Government on 30.06.1988 vide license no.

CLA/C/989/88/LC and, therefore, he was authorised to enter into

agreements with any of the principal employers in outsourcing of security

services.

13. The bank vouchers dated 03.05.1990, 04.06.1990, 02.07.1990,

01.08.1990, 04.09.1990, 05.10.1990, 01.11.1990, 01.12.1990,

01.01.1991, 02.02.1991, 01.03.1991, 02.04.1991, 06.05.1991,

06.06.1991, 03.07.1991, 03.08.1991, 05.09.1991, 03.10.1991,

01.11.1991, 03.12.1991, 03.01.1992, 06.02.1992, 04.03.1992,

01.04.1992, 04.05.1992, 03.06.1992, 06.07.1992, and 01.09.1992,

indicate the making of payments in respect of outsourced security

services to management no.2 by management no.1.

So far as the depositing of provident fund by management no. 1 qua

against the petitioner-workmen and other employees is concerned, the

same does not create the relationship of employer and employee between

management no. 1 and the petitioners.

Section 2(f) of The Employees‟ Provident Funds and

Miscellaneous Provisions Act, 1952 is reproduced hereinunder:

"2(f) „employee‟ means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer, and includes any person,-

(i) employed by or through a contractor in or in connection with the work of the establishment;

(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961) or under the standing orders of the establishment;"

(Emphasis Supplied)

The aforesaid definition does not create the relationship of

employer and employee under the Industrial Disputes Act, 1947 and is

meant for the limited purpose of The Employees‟ Provident Funds and

Miscellaneous Provisions Act, 1952. The contractor's employees are

deemed to be the employees of the principal employer for the purposes of

the Employees‟ Provident Funds and Miscellaneous Provisions Act if

they satisfy the attributes as defined in Section 2(f) of the aforesaid Act.

14. Further, Section 6 of The Employees‟ Provident Funds and

Miscellaneous Provisions Act, 1952 provide that the employer shall remit

the provident fund contribution in respect of the employees employed by

him directly or by or through a contractor. Section 6 of the aforesaid Act

is reproduced hereinunder:

"6. Contributions and matters which may be provided for in Schemes. - The contribution which shall be paid by the employer to the Fund shall be ten percent of the basic wages, dearness allowance and retaining allowance, if any, for the time being payable to each of the employees whether employed by him directly or by or through a contractor, and the employees‟ contribution shall be equal to the contribution payable by the employer in respect of him and may, if any employee so desires, be an amount exceeding ten percent of his basic wages, dearness allowance and retaining allowance if any, subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section...." (Emphasis Supplied)

15. Further, Para 30 of The Employees‟ Provident Funds Scheme, 1952

is reproduced hereinunder:

"30. Payment of contributions. - (1) The employer shall, in the first instance, pay both the contribution payable by himself (in this Scheme referred to as the employer‟s contribution) and also, on behalf of the member employed by him directly or by or through a contractor, the contribution payable by such member (in this Scheme referred to as the member's contribution).

(2) In respect of employees employed by or through a contractor, the contractor shall recover the contribution payable by such employee (in this Scheme referred to as the member‟s contribution) and shall pay to the principal employer the amount of member‟s contribution so

deducted together with an equal amount of contribution (in this Scheme referred to as the employer‟s contribution) and also administrative charges.

(3) It shall be the responsibility of the principal employer to pay both the contribution payable by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor and also administrative charges."

(Emphasis Supplied)

Para 30 of the aforesaid scheme clearly indicates that it shall be the

responsibility of the principal employer to pay both the contributions

payable by himself in respect of employees directly employed by him and

also in respect of employees employed by or through a contractor.

16. The Employees‟ Provident Funds and Miscellaneous Provisions

Act, 1952 and The Employees‟ Provident Funds Scheme, 1952 cast the

responsibility and statutory obligation on the principal employer to remit

the PF contributions even in respect of contractor's employees.

Mere remittance of the provident fund by the management no. 1,

i.e., the principal employer ipso facto does not create any employer-

employee relationship between the management no. 1 and petitioner-

workmen.

17. The plea of the petitioners in respect of I-Cards and attendance

records loses its significance in the presence of financial and monetary

transactions between management no. 1 and management no. 2 and

further, in presence of the bank vouchers dated 03.05.1990, 04.06.1990,

02.07.1990, 01.08.1990, 04.09.1990, 05.10.1990, 01.11.1990,

01.12.1990, 01.01.1991, 02.02.1991, 01.03.1991, 02.04.1991,

06.05.1991, 06.06.1991, 03.07.1991, 03.08.1991, 05.09.1991,

03.10.1991, 01.11.1991, 03.12.1991, 03.01.1992, 06.02.1992,

04.03.1992, 01.04.1992, 04.05.1992, 03.06.1992, 06.07.1992, and

01.09.1992, issued by management no.1 in favour of management no. 2.

The I-Cards and attendance records do not show that the same have not

been maintained by management no. 2.

18. In the instant case, the contractor is a registered licensed contractor

vide license no. CLA/C/989/88/LC. The agreement executed between

management no. 1 and management no. 2 cannot be said to be

camouflage, bogus and sham merely on ground that the principal

employer has deposited the PF of the contractor's employees i.e., the

petitioner-workmen, which duty was cast upon the management no.1

under The Employees' Provident Funds and Miscellaneous Provisions

Act, 1952. The aforesaid bank vouchers are an evidence of genuine

execution of contract between the management no. 1 and management no.

2. The failure on part of the petitioner-workmen in producing the

appointment letters or any other document of their engagement with the

management no. 1 for a continuous period of 240 days disentitles them to

be a workmen under Section 2(s) of the Industrial Disputes Act, 1947.

19. As discussed above, this Court while exercising its power of

judicial review finds no illegality and perversity in the impugned Awards

dated 10.04.2003 and 08.04.2003.

20. Consequently, both the Writ Petitions, i.e. W.P. (C) No. 2167/2004

and W.P. (C) No. 6922/2004 are dismissed. No order as to costs.

One copy of this judgment be placed on the file of the W.P. (C) No.

6922/2004.

I.S.MEHTA, J

AUGUST 28, 2015 j