Delhi High Court
M/S. Indian Railway Finance Co. ... vs Yatender Kumar Sharma & Anr. on 10 September, 2015
Author: Pradeep Nandrajog
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on : September 01, 2015
Judgment Delivered on : September 10, 2015
+ LPA 502/2013
M/S. INDIAN RAILWAY FINANCE CO. LTD. .....Appellant
Represented by: Mr.Sunil K.Jain, Advocate with
Ms.Reeta Choudhary and
Mr.Shaantanu Jain, Advocates
Mr.Neeraj Kumar, Director
(Finance) in person
versus
YATENDER KUMAR SHARMA & ANR. .....Respondents
Represented by: Mr.Gautam Awasthi, Advocate
with Mr.Ayush Choudhary,
Advocate
LPA 710/2013
SH.YATENDER KUMAR SHARMA .....Appellant
Represented by: Mr.Gautam Awasthi, Advocate
with Mr.Ayush Choudhary,
Advocate
versus
INDIAN RAILWAY FINANCE
CORPORATION LTD. & ANR. .....Respondents
Represented by: Mr.Sunil K.Jain, Advocate with
Ms.Reeta Choudhary and
Mr.Shaantanu Jain, Advocates
Mr.Neeraj Kumar, Director
(Finance) in person
LPA 503/2013
M/S. INDIAN RAILWAY FINANCE CO. LTD. .....Appellant
LPA No.502/2013 & conn.matters Page 1 of 24
Represented by: Mr.Sunil K.Jain, Advocate with
Ms.Reeta Choudhary and
Mr.Shaantanu Jain, Advocates
Mr.Neeraj Kumar, Director
(Finance) in person
versus
RAJINDER PRASAD & ORS. .....Respondents
Represented by: Mr.Piyush Sharma, Advocate
LPA 316/2014
RAJINDER PRASAD .....Appellant
Represented by: Mr.Piyush Sharma, Advocate
versus
INDIAN RAILWAY FINANCE
CORPORATION LTD. & ANR. .....Respondents
Represented by: Mr.Sunil K.Jain, Advocate with
Ms.Reeta Choudhary and
Mr.Shaantanu Jain, Advocates
Mr.Neeraj Kumar, Director
(Finance) in person
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE MUKTA GUPTA
PRADEEP NANDRAJOG, J.
CM No.14101/2013 in LPA No.502/2013
CM No.14773/2013 in LPA No.503/2013
1. Since while deciding LPA No.503/2013 we would be taking note
of such documents which are relevant and would be relied upon by
learned counsel for the Indian Railway Finance Corporation Ltd., and
have prayed to be taken on record as additional documents in CM
No.14773/2013, we allow said application. Similarly while deciding LPA
No.502/2013 we would be taking note of such documents which are
relevant and reference has been made thereto in the arguments by learned
counsel for Indian Railway Finance Corporation Ltd. and have prayed to
be taken on record as additional documents in CM No.14101/2013, we
allow said application.
LPA Nos.502/2013, 710/2013, 503/2013 & 316/2014
1. Indian Railway Finance Corporation Ltd. generates revenue
through fixed term bonds. The revenue is used to augment the rolling
stock of Indian Railways. Of necessity, the Corporation engages share
transfer agents who maintain not only the record of transactions
transacted by the agents and even accounts relatable thereto.
2. One such agent was M/s.Karvy Consultants Pvt. Ltd. previously
another consultant was appointed by the name Allied Computer
Techniques Pvt. Ltd. The terms and conditions on which the said two
agents were to work for the Corporation were listed in the contract
between the Corporation and said two agents.
3. Claim of Rajinder Prasad was that he was actually employeed by
the Corporation after he was interviewed and so were eight other persons,
but as a ruse they were shown to be initially employees of Allied
Computers Techniques Pvt. Ltd. and thereafter as employees of
M/s.Karvy Consultants Pvt, Ltd. He sought regularization of his service,
which was denied. He raised an industrial dispute which was referred to
the Industrial Tribunal by the appropriate government. The term of the
reference was :
"Whether it is fact that Shri Rajinder Kumar is a workman of
the Indian Railway Finance Corporation (IRFC)? If so,
whether the action of the management in not regularizing the
services of the applicant by the management is proper and
justified? If not, what relief he is entitled to?"
4. The Corporation had awarded another contract to M/s.Hingorani M
& Co. Chartered Accountants Ltd. for preparation of necessary vouchers,
maintenance of books of accounts, control of monthly profit and loss
account and balance sheet. As per the contract it was the obligation of
M/s.Hingorani to send two representatives to the office of the
Corporation to attend to such works concerning the contract works and
one of them was Yatender Kumar who used to sit in the accounts office
of the Corporation to execute the necessary works. He too claimed
regularization under the Corporation. The claim was denied. He raised
an industrial dispute when the contract with M/s.Hingorani came to an
end and because said company terminated his services. The appropriate
government made the following reference to the Industrial Tribunal:-
"Whether the termination of the services of Sh.Yatender Kumar
w.e.f. 7.6.99 by the management of IRFC Ltd. is legal, fair and
justified? If not, what relief the workman concerned is entitled
to and from which date?"
5. Award dated October 15, 2010 in favour of Yatender Kumar
Sharma has discussed the documentary evidence proved by Yatender
concerning his working in para 20 to 22 of the award. It reads as under:-
"20. Though the claimant could not show that he was ever
appointed by the Corporation, yet a peculiar fact has been
brought over the record by him. He had proved documents
Ex.WW1/1 to Ex.WW1/7. These documents are the applications
submitted by the claimant to the Corporation for release of his
travelling allowance for the month of July, 1997, January,
April, May, June and July, 98 Ex.WWI/7 is an application
submitted by the claimant for release of expenses incurred by
him in performance of his duties with the Corporation. When
perused it emerge over the record that he claimed travelling
allowance from his residence to the office of the Corporation
and sometimes from the office of the Corporation to his
residence. His application was considered and granted. A sum
of `15,207/- was ordered to be released in his favour by the
Corporation. In the same manner his applications Ex.WW1/5,
Ex.WW1/2, Ex.WW1/1, Ex.WW1/4 and Ex.WW1/3 were granted
for the month of January, April, May, June and July, 98.
Consequently it is evident that for the period referred above the
Corporation sanctioned traveling allowance, incurred by the
claimant for attending to his duties with the Corporation.
21. Question for consideration comes as to in what capacity
the Corporation sanctioned travelling allowance, for the period
referred above in favour of the claimant. Whether he could
have claimed those allowances from the Corporation, while
being an employee of Retainer of Accounts? Without being an
employee of the Corporation, the claimant cannot put forward
his claim for release of travelling allowance in his favour. By
granting applications of the claimant, the Corporation
conceded that there existed some relationship between it and
the claimant. What were those relations is a proposition which
the Corporation ought to have answered. The Corporation
simply asserts, that he was an employee of the Retainer of
Accounts, which assertion stands brushed aside by the fact that
Corporation opted to release travelling allowance in favour of
the claimant. Therefore, the documents referred above make it
clear that impliedly the Corporation established relationship of
employer and employee between it and the claimant.
22. When relationship of employee and employer was
established by the Corporation with the claimant, in that
situation Hingorani M. & Co. was in a capacity of a juristic
person, who was interposed in between by the Corporation.
Arrangement made by the Corporation in that regard cannot be
termed as genuine. It was sham, bogus, ruse or camouflage
with a view to avoid legal relationship between the parties and
to deny legal rights of the claimant. Therefore, it is concluded
that relationship of employer and employee were there between
the Corporation and the claimant, since July, 1997. The
claimant has been able to tilt the scale in his favour by proving
the documents referred above. Consequently it is announced
that relationship of employer and employee were there between
the parties. Issue is, therefore, answered in favour of the
claimant and against the Corporation."
6. Noting that Yatender Kumar Sharma had started working with the
Corporation in April, 1997 and served continuously till May, 1999 vide
award dated October 15, 2010 the Tribunal held that since Section 25F of
the ID Act, 1947 was violated he would be entitled to reinstatement in
service with continuity, but back wages were restricted to 25%. Noting
that the evidence establish that one Mr.Kannan who was engaged on
temporary basis by the corporation as an Assistant was regularized in
service the Tribunal held that Yatender Kumar would be entitled to be
regularized in service post reinstatement.
7. Though not expressly stated by the Tribunal, it is apparent that the
Tribunal has held that the agreement with M/s.Hingorani M & Company
Chartered Accountants was a sham and that the direct employer-
employee relationship was between the Corporation and Yatender Kumar
Sharma.
8. Concerning Rajinder Prasad, the award dated October 27, 2010,
which is in favour of Rajinder Prasad has discussed the evidence in
paragraphs 15 to 21 and thereafter in paragraphs 23 to 28 as under:-
"15. When a dispute is raised in respect of existence of
relationship of employer and employee between the parties, in
that situation onus lies on the claimant to establish such
relationship. To discharge that onus the claimant has
examined Shri K.R.Menon, Vice President of Karvy Computer
Share Pvt. Ltd., who were working as registrar and share
transfer agent for the Corporation since 19th August, 1998. He
unfolds that an agreement, which is Ex.WW1/1, was entered
into between the Corporation and Karvy Consultants Ltd., on
the strength of which the latter firm undertook to perform and
fulfill such functions, duties and obligations and to provide
such service as mentioned in the agreement. In the agreement
it was not stipulated that the share transfer agent would be
employing any person with the Corporation. Therefore, out of
facts unfolded by Shri Menon it is crystal clear that the share
transfer agents were not to employ any person for rendering
services as detailed in Ex.WW1/1 with the Corporation. The
Corporation could not get facts out of the mouth of the
witnesses to establish that the claimant was an employee of
share transfer Agent.
16. Shri Shakul Puri, Vice President of Karvy Consultants
Pvt. Ltd., now known as Karvy Computer Share Pvt. Ltd.
entered the witness box to lift the curtain in respect of
relationship between the claimant and the Corporation. He
unfolds that he had seen the claimant working in the office of
the Corporation. The claimant had filed a writ petition before
High Court of Delhi wherein Karvy Consultants Pvt. Ltd. was a
party. He filed affidavit Ex.WW2/1 before the High Court.
When Ex.WW2/1 is perused, it came to light that Karvy
Consultants Pvt. Ltd. was appointed as registrar and transfer
agent of the Corporation in August, 1998. The Corporation
requested Shri Puri to route salary bill of 9 (nine) employees
employed by the Corporation through its record on and around
October, 98. Salary bill of nine employees were being routed
through M/s Allied Computer Techniques Pvt. Ltd. till then,
who were previous registrars and transfer agents. Routing of
salary of nine persons was a friendly accommodation, which
arrangement was entered into to foster and cement a healthy
working relationship between the Corporation and registrar
and share transfer agent. During the course of his cross
examination, he projects that there was an oral arrangement
between M/s.Karvy Consultants Pvt. Ltd. and the Corporation
and in pursuance of the said arrangement no appointment letter
was issued to those nine persons, referred by him in his
affidavit Ex.WW2/1. He denied that Shri Rajinder Prasad was
employed by Karvy Consultants Pvt. Ltd. However, he admits
that he was paid by Karvy Consultants Pvt. Ltd. and money was
being reimbursed by the Corporation as per arrangement. The
arraignment started in November, 1998 and lasted till April or
May, 2000. Facts projected by Shri Puri gives a jolt to the
stand taken by the Corporation to the effect that the claimant
was not its employee.
17. Shri Vipin Senger had placed documents Ex.WW3/1 to
Ex.WW3/11 over the record, which are certified under Banker‟s
Book Evidence Act. Those documents relate to saving bank
account No.01/008095 maintained by the claimant at
Corporation Bank Bhikaji Cama Place, New Delhi. These
documents project that certain cheques were deposited in the
aforesaid saving bank account by the claimant. The document,
so referred by Shri Senger, would be considered in subsequent
sections if need be. Shri Manohar Lal placed copies of
documents Ex.WW4/1 to Ex.WW4/26 over the record which
were brought by him from the office of the Corporation. These
documents would be considered in subsequent sections, if need
be.
18. Shri Rajinder Prasad swears in his affidavit Ex.WW5/A
that he was an employee of the Corporation since January, 96.
He was employed in Bond Section of the Corporation.
Ex.WW5/1 to Ex.WW5/4 refer to payments made by the
Corporation directly to him. Ex.WW5/8 is a document initiated
by him which was signed by Shri S.K.Ajmani, Manager of the
Corporation and Shri C.S.Verma, Company Secretary of the
Corporation respectively. Attendance sheet Ex.WW5/9 to
Ex.WW5/11 project that he regularly worked for the
Corporation for the month of July, 97, August, 97 and June, 98.
Copy of the minutes held on 14.7.98 were prepared by him
which were signed by Shri Sondhi, S.K.Ajmani and Shri
S.Balachandran, Executive Director and Shri C.S.Verma,
Company Secretary of the Corporation, which minutes are
Ex.WW5/12 and EX.WW5/13. Copy of the salary list of the
staff of the Corporation, containing his name for the month of
June, 99, and July, 99 are Ex.WW5/14 and Ex.WW5/15, which
list has been signed by Sureshan, Accountant of Karvy
Computers Pvt. Ltd. at point A, Madhu Accountant of Karvy
Computers Pvt. Ltd. signed at point B and Shri S.K.Ajmani,
Manager of the Corporation at point C and C.S.Verma
Company Secretary of the Corporation at point D. He had also
relied documents Ex.WW5/16 to Ex.WW5/23, to show that he
was an employee of the Corporation. During the course of his
cross examination he projects that he was interviewed by Shri
C.S.Verma, Group Manager on 21st of January, 96. He
admitted that there was no authority with him to prepare
copies, which are Ex.WW5/5 to Ex.WW5/23, from its originals.
19. Shri S.K.Ajmani presents that the Corporation is
competent to outsource matters relating to issuance of bonds
and for that purpose it had appointed registrars. Registrars are
required to be registered with SEBI. Registrar are not
supposed to pay salary to the employees of the Corporation.
Shri Harish Chand Sondhi unfolds that the claimant was
appointed in the Corporation by Shri C.S.Verma. Shri Verma
interviewed the claimant and then appointed him. He (witness)
worked on the post of Deputy Manager with the Corporation
since 1990-91 and worked there upto 2002. Shri Harish Chand
Sondhi projects that he retired as Deputy Manager from the
Corporation in 1990-91. After his retirement he rendered his
services as Consultant with the Corporation till 2002.
Claimant was appointed by Shri C.S.Verma, who took his
interview and engaged him. Claimant was working under him
in the Bond Section. He was working as Incharge in the Bond
Section since 1988. When he left the Corporation in 2002, the
claimant was working there at that time. During the course of
his cross examination he concedes that wages of the claimant
were being paid by Karvy Consultants, the registrars appointed
by the Corporation.
20. Shri S.Radhakrishnan swears in his affidavit Ex.MW1/A
that the claimant was never employed by the Corporation either
as an Assistant or as L.D.C. The Corporation have its share
transfer agents, internal auditors and retainer of accounts, who
work at its premises. An employee of share transfer agent,
internal auditor and retainer of accounts cannot be an
employee of the Corporation. The claimant is trying to get a
back door entry in the service of the Corporation. The claimant
is trying to get a back door entry in the service of the
Corporation. He was not appointed by the Corporation at any
point of time. During the course of his cross examination he
concedes that Ex.WW5/18 and Ex.WW5/21 bear his signatures
while Ex.WW5/23 bear signatures of Shri C.S.Verma at point A.
He further concedes that contents of Ex.MW1/W2 highlight that
M.Kannan was appointed on a short term vacancy, whose
services have been regularized. Ex.MW1/W2 highlights that at
one point of time there were 15 employees who were working
with the Corporation.
21. When facts unfolded by the witnesses of the claimant and
Shri R.Radha Krishnan are appreciated, it came to light that
there was an arrangement between the Corporation and share
transfer agents to route salary bill of nine employees, employed
by the Corporation though share transfer agents since 1998. It
also emerge over the record, as unfolded by Shri Menon, that
share transfer agents were not to employ any person for
rendering services to the Corporation. Affidavit Ex.WW2/1 was
filed by Shri Puri before High Court of Delhi, wherein he
projected facts relating to the arrangement between the
Corporation and share transfer agents. Therefore, out of facts
unfolded by Shri Menon and Shri Puri, it is evident that nine
employees, appointed by the Corporation were shown as
employees of share transfer agent through whom their salary
bills were routed. Share transfer agents were interposed in
between by the Corporation. These facts led High Court of
Delhi to pass order Ex.WW2/M1, making observation to the
effect that industrial adjudicator shall decide the matter in the
light of the decision by the Apex Court in Steel Authority of
India (supra). In writ jurisdiction, the High Court was not
supposed to adjudicate disputed facts. Claimant claimed before
the High Court that he was an employee of the Corporation,
which fact was disputed. Shri Puri placed factum of
arrangement before the High Court by his counter affidavit and
brought it to the light of the day that nine employees were
engaged by the Corporation through share transfer agents.
Therefore, evidently, the share transfer agents were interposed
as a Contractor and in fact it was the principal employer,
namely, the Corporation who had employed him.
22. x x x
23. In view of the law laid by the Apex Court, factual matrix
would be appreciated. As unfolded by Shri Puri claimant and
eight others were employed by the Corporation, interposing the
share transfer agents in between. Shri Puri makes it clear that
salary bill of those nine employees were routed by the
Corporation through share transfer agents. His testimony
makes it clear that in fact it was the Corporation who was their
employer. Consequently it is evident that the arrangement so
made by the Corporation with share transfer agents was ruse
and camouflage, entered with a view to evade benefits available
to their employees. Veil, which stood lifted through the
affidavit of Shri Puri which is Ex.WW2/1, make it clear that in
fact the claimant and 8 others were employees of the
Corporation. Consequently this Tribunal is constrained to
conclude that the arrangement so interposed is shame and
bogus, brought in between by the Corporation with a view to
avoid benefits to the claimant. Resultantly it is announced that
the claimant was in fact an employee of the Corporation.
24. Findings recorded above are reaffirmed from the
documents, which would be appreciated now. Ex.WW5/1 to
Ex.WW5/4 are cheques issued by the Corporation in favour of
the claimant. Ex.WW5/1 is the cheque for a sum of `7307/-
only issued on 23rd of February, 98 by the Corporation in
favour of the claimant. Ex.WW5/2 was issued by the
th
Corporation on 5 of May, 98 in favour of the claimant for a
sum of `1130/-. Ex.WW5/4 is the another cheque issued in
favour of the claimant by the Corporation for a sum of `20007/-
No explanation was offered as to why and for what services
rendered by the claimant, the cheques were issued by the
Corporation in his favour. Claimant agitates that he was an
employee of the Corporation and these Cheques were issued in
that capacity.
25. The relationship of employer and employee is constituted
by a contract, express or implied between employer and
employee. A contract of service is one in which a person
undertakes to serve another and to obey his reasonable orders
within the scope of the duty undertaken. A contract of
employment may be inferred from the conduct which goes to
show that such a contract was intended although never
expressed and when there has, in fact, been employment of the
kind usually performed by the employees. Any such inference,
however, is open to rebuttal as by showing that the relation
between the parties concerned was on a charitable footing or
the parties were relations or partners or were directors of a
limited company which employed no staff. While the employee,
at the time, when his services were engaged, need not have
known the identity of his employer, there must have been some
act or contract by which the parties recognized one another as
master or servant.
26. Cheques referred above bring it over the record that the
Corporation dealt with the claimant as its employee, when
aforesaid cheques were issued in his favour. Ex.WW5/6 is a
letter received by the Corporation from Surinder Kaur Bajaj,
wherein she had showed her annoyance for time taken in
transfer of bonds in her name. The said letter was marked to
the claimant by Sh.S.K.Ajmani for disposal at his ends. Shri
Ajmani enquired from the claimant as to what was the problem
in transfer of bonds in the name of the lady. Piyush Aggarwal
wrote for Allora Traders Ltd. to the Company Secretary of the
Corporation seeking redemption of 100 bonds while sending
Ex. WW6/7 by fax, Shri Aggarwal invited attention of the
claimant for action in the matter. Claimant dealt with an
application of Dunlop Employees Provident Fund for splitting
of 1000 bonds into 19 certificates. He records Ex.WW5/8
detailing therein that certificates were signed by the Directors
on 24.6.98 and common seal of the Corporation was fixed by
him on those bonds in presence of Manager bonds and Mr.
Rishi. HE presented Ex.WW5/8 for consideration of Shri
S.K.Ajmani, Manager (bonds), who confirms the factum of
affixation of seal of the Corporation and forward the document
to Group General Manager (bonds), who ordered registration
of those bonds in the name of Dunlop Employees Gratuity
Fund. Ex.WW5/14 and Ex.WW5/15 are list of the staff of the
Corporation prepared for release of salary for the month of
June and July, 99, wherein name of the claimant appears as
Shri R.P.Chamoli. These documents bear signature of Shri
Sureshan in the capacity of Accountant, Karvy Consultants Pvt.
Ltd. and Shri S.K.Ajmani, Deputy General Manager (bonds) of
the Corporation. In the same manager Ex.WW5/17 is the list of
the employees for release of arrears from April, to November,
96 and salary for the month of February, 97. Ex.WW5/19 is the
document issued by Shri S.K.Ajmani commanding Shri Harish
Chand Shondhi and the claimant to visit the Office of Karvy
Consultants on 19th of September, 98 to assess progress of
computerization of 3rd series data. Ex.WW4/13 is the document
wherein the claimant deals with the bills presented by M/s
Shiva Associate for payment. He recommends that the payment
of `5650/- may be made to M/s. Shiva Associates. His
recommendations were dealt with by Shri S.K.Ajmani and by
Shri C.S.Verma. In the same manner he dealt with a bill of M/s.
Shiva Associates which document is Ex.WW4/15. Ex.WW4/17
was initiated by the claimant in respect of conveyance charges
wherein he recommends that those charges may be restricted to
`250/- each only, which recommendation is contained in
Ex.WW4/17. He also deals with the bill of M/s.Shiva Associates
and records that a sum of `6,280/-, including conveyance
charges of `630/- may be passed for payment, which facts are
projected in document Ex.WW4/21. In the same manner he
submits Ex.WW4/22 for sanction of payments of bill amounting
to `6280/- including conveyance charge of `630/- in favour of
M/s Shiva Associates. These documents were dealt with by the
officers of the Corporation after recommendation so recorded
by the claimant. Besides the documents referred above,
Ex.WW4/25 is note sheet presented by Shri Rajinder Singh to
his superiors and ultimately it was dealt with by Shri
S.K.Ajmani and General Manager (bonds) and Company
Secretary. Out of the documents, referred above, one and the
only conclusion emerges is that the claimant was performing
his duties as an employee of the Corporation, who used to
report to the Manager (bonds). Besides the above documents
claimant have brought photo copy of attendance register over
the record which are Ex.WW5/9, Ex.WW5/10 and Ex.WW5/11.
Hence it is crystal clear that the claimant was working as an
employee of the Corporation.
27. Shri Harish Chand Shondhi unfolds in unequivocal
words that the claimant was working in bond section of the
Corporation under him, who was interviewed and appointed
C.S.Verma, General Manager (bonds). Claimant worked there
alongwith him till 2002. When he left the Corporation in 2002,
the claimant was working there at that time. Facts so unfolded
by Shri Harish Chand Shondhi gives corroboration to the
findings recorded hereinabove. Consequently, it is concluded
that relationship of employer and employee existed between the
claimant and the Corporation. The Corporation took direct
services of the claimant and rooted his salary though share
transfer agents, which modus operandi is deprecated by law.
28. Claimant projects that he filed a writ petition before
High Court of Delhi, wherein order dated 24.3.99 was passed,
which is Ex.W-1 restraining the Corporation from terminating
his services. His writ petition was disposed of vide order dated
29.1.2003 with permission to raise dispute before the
appropriate Government and the industrial adjudicator was
commanded to decide the matter in pursuance of the decision of
the Apex Court in Steel Authority of India Ltd. (supra), copy of
the order passed by High Court of Delhi is Ex.WW2/M1. He
projects that at that stage, the Corporation had not „allowed
him and his other colleagues to enter its premises. He was
removed from the service of the Corporation and he
approached the Conciliation Officer. Facts projected by
Claimant remained unassailed, when the Corporation tried to
purify his testimony by an ordeal of cross examination.
Consequently, it is evident that the claimant was in continuous
service of the Corporation since 1996 till January, 2001."
9. Concerning Rajinder Prasad, we need to highlight that to discharge
the onus upon him, he examined seven witnesses one of whom was
Sh.K.R.Menon, Vice President of Karvy Computer Shares Pvt. Ltd.
which was the registrar and share transfer agent for the Corporation since
August 19, 1999 and as per the agreement Ex.WW-1/1 entered into
between the Corporation and Karvy Consultants Ltd. It was not a term
that the Karvy Consultants Ltd. would be sending any person to the office
of the Corporation. Shakun Puri, the Vice President of Karvy
Consultants Pvt. Ltd. deposed that he had seen Rajinder Prasad working
in the office of the Corporation. His testimony was that after Karvy
Consultants Pvt. Ltd was appointed as a registrar and share transfer agent
of the Corporation, at the request of the Corporation he agreed that salary
of 9 employees directly engaged by the Corporation would be paid by
Karvy Consultants Pvt. Ltd. and reimbursed by the Corporation and that
one of the said 9 persons was Rajinder Prasad. As per him it was a
friendly accommodation gesture and the arrangement was entered into to
foster and cement a healthy working relationship between the
Corporation and the registrar and share transfer agent. Rajinder Prasad
proved Ex.WW-5/1 to Ex.WW-5/4 concerning payment directly made to
him by the Corporation. He also proved Ex.WW-5/8, a document
initiated by him in the files of the Corporation. He also proved Ex.WW-
5/9 to Ex.WW-5/11 which were the attendance sheets signed by him and
as maintained by the Corporation for the month of July, 1997, August,
1997 and June, 1998. He proved minutes written by him concerning
board meetings of the Corporation, Ex.WW-5/12 and Ex.WW-5/13.
Sh.Harish Chand Sondh Deputy Manager of the Corporation was also
examined as a witness by him deposed that one Sh.C.S.Verma had
interviewed Rajinder Prasad before he was given work in the
Corporation. He deposed that Rajinder Prasad was working in the bond
section under him but wages were being paid by the transfer agent.
10. The testimony of the witnesses have found a reflection in the
reasoning of the Tribunal, and suffice it to record that findings of fact
recorded by the Tribunal are final unless shown to be perverse.
11. In the written submissions filed by the Corporation not even an
attempt has been made to list, or for that matter even approach to list, any
perversity in the finding of fact recorded by the Tribunal concerning
Rajinder Prasad.
12. Thus as regards Rajinder Prasad, we concur with the finding
recorded by the Tribunal that he had successfully shown that he was
directly employed by the Corporation; he was working directly for the
Corporation and he discharging duties in the bond section which had no
concern with the work awarded as per the contract awarded to the share
transfer agent. He has established that a strategy of contrivance was
adopted by the Corporation to route his salary through the share transfer
agent.
13. To what relief Rajinder Prasad would be entitled to would be
discussed a little later.
14. As regards Yatender Kumar the only documentary evidence on
strength whereof he has been granted relief is Ex.WW-1/1 to Ex.WW-1/7
concerning payment of some travelling allowance to him.
15. In the decision reported as AIR 2009 SC 3063 International
Airport Authority of India Vs. International Air Cargo Workers‟ Union &
Anr. it was held in para 20 as under:-
"20. But where there is no abolition of contract labour under
Section 10 of CLRA Act, but the contract labour contend that
the contract between principal employer and contractor is
sham and nominal, the remedy is purely under the ID Act. The
principles in Gujarat Electricity Board continue to govern the
issue. The remedy of the workmen is to approach the industrial
adjudicator for an adjudication of their dispute that they are
the direct employees of the principal employer and the
agreement is sham, nominal and merely a camouflage, even
when there is no order under Section 10 (1) of CLRA Act. The
industrial adjudicator can grant the relief sought if it finds that
contract between principal employer and the contractor is
sham, nominal and merely a camouflage to deny employment
benefits to the employees and that there is in fact a direct
employment, by applying tests like: who pays the salary; who
has the power to remove/dismiss from service or initiate
disciplinary action; who can tell the employee the way in which
the work should be done, in short who has direction and control
over the employee. But where there is no notification under
Section 10 of the CLRA Act and where it is not proved in the
industrial adjudication that the contract was sham/nominal and
camouflage, then the question of directing the principal
employer to absorb or regularize the services of the contract
labour does not arise. The tests that are applied to find out
whether a person is an employee or an independent contractor
may not automatically apply in finding out whether the contract
labour agreement is a sham, nominal and is a mere
camouflage. For example, 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
contractor, if the right to regulate employment is with the
contractor, and the ultimate supervision and control lies with
the contractor. The principal employer only controls and
directs the work to be done by a contract labour, when such
labour is assigned/allotted/sent to him. But it is the contractor
as employer, who chooses whether the worker is to be
assigned/allotted to the principal employer or used otherwise.
In short worker being the employee of the contractor, the
ultimate supervision and control lies with the contractor as he
decides where the employee will work and how long he will
work and subject to what conditions. Only when the contractor
assigns/sends the worker to work under the principal employer,
the worker works under the supervision and control of the
principal employer but that is secondary control. The primary
control is with the contractor."
16. On the parity of reasoning concerning Mr.Kannan engaged
temporarily and later on made permanent i.e. the reasoning on the
strength whereof regularization of service of Yatender Kumar was
ordered, the award directs that upon reinstatement Rajinder Prasad would
be regularized in service
17. W.P.(C) No.3701/2011 filed by the Corporation challenging the
award dated October 15, 2010 in favour of Yatender Kumar has been
partly allowed. The direction in the award to regularize his service has
been set aside.
18. W.P.(C) No.3702/2011 filed by the Corporation pertaining to the
award dated October 27, 2010 in favour of Rajinder Prasad has likewise
been partly allowed. The direction in the award to regularize his services
has been set aside.
19. This explains four intra-court appeals. In LPA No.502/2013 and
LPA No.503/2013 the Corporation is aggrieved insofar relief of
reinstatement and payment of 20% back wages granted by the Tribunal to
Rajinder Prasad have not been set aside by the learned Single Judge and
insofar relief of reinstatement and payment of 25% back wages granted
by the Tribunal to Yatender Kumar have not been set aside by the learned
Single Judge. Yatender Kumar has filed LPA No.710/2013 challenging
the decision of the learned Single Judge which has set aside the award
which directed his service to be regularized and Rajinder Prasad has filed
LPA No.316/2014 challenging the decision of the learned Single Judge
which has set aside the award which directed his services to be
regularized.
20. With reference to the evidence led by Yatender Kumar, which we
find concerns payment of some travelling allowance paid to him in the
form of Ex.WW-1/1 to Ex.WW-1/7, in view of the law declared by the
Supreme Court in International Air Cargo's case (supra), the Tribunal
has clearly erred in holding that the said evidence would show a direct
employer-employee relationship between the Corporation and Yatender
Kumar. No notification under Section 10 of the Contract Labour
(Regulation & Abolition) Act, 1970 was proved by Yatender Kumar to
have been issued, thus Yatender Kumar had to lead evidence of the kind
contemplated by the Supreme Court in International Air Cargo's case
(supra) to establish that the contract between the Corporation and
M/s.Hingorani M & Co. Chartered Accountants was a sham. His attempt
to prove that the contract with M/s.Hingorani M & Co. Chartered
Accountants was a sham through Ex.WW-1/1 to Ex.WW-1/7 is not
sufficient evidence to show that the contract was sham. In International
Air Cargo's case (supra), it was held that in a case of supply of labour,
necessarily, the labour supplied by the contractor will work under the
direction, 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 the contractor and if the right to regulate
employment is with the contractor and the ultimate supervision and
control lies with the contractor because the principal employer only
controls and directs the works to be done by contract labour when such
labour is sent to him. But it is the contractor, as employer, who chooses
which worker to be sent. Similar would be the position with respect to a
person concerning accounts.
21. Thus, as regards him there is no question of reinstatement or
regularization under the Corporation because it was not the Corporation
which terminated his contract. As the contract with M/s.Hingorani M &
Co. Chartered Accountants Ltd. expired, the said company terminated his
employment and any claim by him as a workman had to be against
M/s.Hingorani M & Co. Chartered Accountants Ltd. Thus, LPA No.
503/2013 filed by the Corporation concerning the award in favour of
Yatender Kumar has to be allowed and LPA No.710/2013 filed by
Yatender Kumar has to be dismissed.
22. As regards Rajinder Prasad, we find that he has successfully
established a direct employer-employee relationship between him and the
Corporation. He has proved that before he was employed he was
interviewed by Sh.C.S.Verma. He has proved that he was working in the
bond section of the Corporation directly under the supervision and control
of the officers of the company who used to direct what work he had to do.
He has proved that before Carvy Computer Shares Pvt. Ltd. were
engaged as registrar and share transfer agent for the Corporation said
work was given to Allied Computer Techniques Pvt. Ltd., and around
said time, after interviewing 9 persons, including him, he was made to
work in the bond section of the Corporation and that payment of salary to
him and 8 others through the so called registrar and share transfer agent
was a ruse. The Tribunal has returned a finding of fact that his so called
employment through the registrar and share transfer agent was a sham.
23. In the decision reported as (2014) 7 SCC 190 Hari Nandan Prasad
& Ors. Vs. Employer I/R To Management of Food Corporation & Anr.,
with reference to regularization of service, taking note of the law declared
by the Supreme Court in the decision reported as (2006) 4 SCC 1 State of
Karnataka vs. Umadevi, the Supreme Court held that what was perceived
to be a conflict in the law declared by the Supreme Court in the decision
reported as (2007) 5 SCC 755 U.P.Power Corporation Ltd. vs. Bijli
Mazdoor Sangh and the decision reported as (2009) 8 SCC 556
Maharashtra SRTC vs. Casteribe Rajya Parivahan Karamchari
Sanghatana, was an incorrect perception and that a Labour Court or an
Industrial Tribunal could direct regularization upon proof that there was
a regular post available when the employee was taken in service. The
Court noted that if there was law akin to MRTP Act and PULP Act,
notwithstanding the decision in Umadevi's case (supra), regularization
was permissible. The observations of the Supreme Court in paragraphs
34 to 39 of the said decision need to be noted. They read as under:-
"34. A close scrutiny of the two cases, thus, would reveal that
the law laid down in those cases is not contradictory to each
other. In U.P. Power Corporation, this Court has recognized
the powers of the Labour Court and at the same time
emphasized that the Labour Court is to keep in mind that there
should not be any direction of regularization if this offends the
provisions of Article 14 of the Constitution on which the
judgment in Umadevi is primarily founded. On the other hand,
in Bhonde case, the Court has recognized the principle that
having regard to the statutory powers conferred upon the
Labour Court/Industrial Court to grant certain reliefs to the
workmen, which includes the relief of giving the status of
permanency to the contract employees, such statutory power
does not get denuded by the judgment in Umadevi's case. It is
clear from the reading of this judgment that such a power is to
be exercised when the employer has indulged in unfair labour
practice by not filling up permanent posts even when available
and continuing to workers on temporary/daily wage basis and
taking the same work from them and making them do some
purpose which was being performed by the regular workers
but paying them much less wages. It is only when a particular
practice is found to be unfair labour practice, as enumerated
in Schedule IV of the MRTP and PULP Act, and it necessitates
giving direction under Section 30 of the said Act, that the
Court would give such a direction.
35. We are conscious of the fact that the aforesaid judgment
is rendered under MRTP and PULP Act and the specific
provisions of that Act were considered to ascertain the powers
conferred upon the Industrial Tribunal/Labour Court by the
said Act. At the same time, it also hardly needs to be
emphasized that the powers of the industrial adjudicator under
the Industrial Disputes Act are equally wide. The Act deals
with industrial disputes, provides for conciliation, adjudication
and settlements, and regulates the rights of the parties and the
enforcement of the awards and settlements. Thus, by
empowering the adjudicator authorities under the Act, to give
reliefs such as a reinstatement of wrongfully dismissed or
discharged workmen, which may not be permissible in
common law or justified under the terms of the contract
between the employer and such workmen, the legislature has
attempted to frustrate the unfair labour practices and secure
the policy of collective bargaining as a road to industrial
peace.
36. In the language of Krishna Iyer, J:
"22. The Industrial Disputes Act is a benign
measure which seeks to pre-empt industrial tensions,
provide the mechanics of dispute-resolutions and set
up the necessary infrastructure, so that the energies
of the partners in production may not be dissipated in
counterproductive battles and the assurance of
industrial justice may create a climate of goodwill."
LIC vs.D.J.Bahadur, (1981) 1 SCC 315 (p.334, para
22, ) per Krishna Iyer, J.)" .
In order to achieve the aforesaid objectives, the Labour
Courts/Industrial Tribunals are given wide powers not only to
enforce the rights but even to create new rights, with the
underlying objective to achieve social justice. Way back in the
year 1950 i.e. immediately after the enactment of Industrial
Disputes Act, in one of its first and celebrated judgment in the
case of Bharat Bank Ltd. v. Employees of AIR 1950 SC 188
this aspect was highlighted by the Court observing as under:-
"61......In settling the disputes between the employers
and the workmen, the function of the tribunal is not
confined to administration of justice in accordance
with law. It can confer rights and privileges on either
party which it considers reasonable and proper,
though they may not be within the terms of any
existing agreement. It has not merely to interpret or
give effect to the contractual rights and obligations of
the parties. It can create new rights and obligations
between them which it considers essential for keeping
industrial peace."
37. At the same time, the aforesaid sweeping power
conferred upon the Tribunal is not unbridled and is
circumscribed by this Court in New Maneckchowk Spinning
and Weaving Co. Ltd. v. Textile Labour Association AIR 1961
SC 867 in the following words:
"6.....This, however, does not mean that an
industrial court can do anything and everything
when dealing with an industrial dispute. This power
is conditioned by the subject matter with which it is
dealing and also by the existing industrial law and it
would not be open to it while dealing with a
particular matter before it to overlook the industrial
law relating to that matter as laid down by the
legislature or by this Court."
38. It is, thus, this fine balancing which is required to be
achieved while adjudicating a particular dispute, keeping in
mind that the industrial disputes are settled by industrial
adjudication on principles of fair play and justice.
39. On harmonious reading of the two judgments discussed in
detail above, we are of the opinion that when there are posts
available, in the absence of any unfair labour practice the
Labour Court would not give direction for regularization only
because a worker has continued as daily wage
worker/adhoc/temporary worker for number of years. Further,
if there are no posts available, such a direction for
regularization would be impermissible. In the aforesaid
circumstances giving of direction to regularize such a person,
only on the basis of number of years put in by such a worker as
daily wager etc. may amount to backdoor entry into the service
which is an anathema to Article 14 of the Constitution.
Further, such a direction would not be given when the worker
concerned does not meet the eligibility requirement of the post
in question as per the Recruitment Rules. However, wherever it
is found that similarly situated workmen are regularized by the
employer itself under some scheme or otherwise and the
workmen in question who have approached Industrial/Labour
Court are on a par with them, direction of regularization in
such cases may be legally justified, otherwise, non-
regularization of the left-over workers itself would amount to
invidious discrimination qua them in such cases and would be
violative of Article 14 of the Constitution. Thus, the industrial
adjudicator would be achieving the equality by upholding
Article 14, rather than violating this constitutional provision."
24. In the absence of any evidence led by Rajinder Kumar that at the
time he was employed for work, albeit under a shroud through Allied
Computers Techniques Pvt. Ltd. and thereafter M/s.Karvy Consultants
Pvt. Ltd., but actually under the Corporation a regular vacancy existed i.e.
there was a post available which was validly created against which he
worked, it would be difficult for him to obtain relief. The tenuous
evidence that one Mr.Kannan, initially taken on ad-hoc basis by the
Corporation and then made permanent as an Assistant would not be of
any help to Rajinder Prasad because of the law declared by the Supreme
Court in Hari Nandan Prasad's case (supra). The law declared by the
Supreme Court in Umadevi's case comes in his way to be regularized.
25. But, having once determined that between him and the Corporation
there was a direct employee-employer relationship and that he had
worked for more than 240 days when his services were terminated and
there being a violation of Section 25F of the ID Act, 1947 the relief
which he has been granted by the learned Single Judge i.e. of being
reinstated in service with 25% back wages cannot be faulted and has to be
upheld. Thus, both LPA No.502/2013 and LPA No.710/2013 are liable
to be dismissed.
26. The four captioned appeals are accordingly disposed of as under:-
(i) LPA No.502/2013 is dismissed.
(ii) LPA No.710/2013 is dismissed.
(iii) LPA No.503/2013 is allowed and the award in favour of Yatender
Kumar is set aside.
(iv) LPA No.316/2014 is dismissed.
27. Parties shall bear their own costs all throughout.
(PRADEEP NANDRAJOG)
JUDGE
(MUKTA GUPTA)
JUDGE
SEPTEMBER 10, 2015
mamta
