Karnataka High Court
The Mysore Electrical Industries ... vs Engineering & General Workers ... on 23 February, 2023
Bench: Suraj Govindarajpresided Bysgrj
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WP No. 3788 of 2012
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23RD DAY OF FEBRUARY, 2023
BEFORE R
THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ
WRIT PETITION NO. 3788 OF 2012 (L-RES)
BETWEEN:
THE MYSORE ELECTRICAL INDUSTRIES LIMITED
( A GOVERNMENT OF KARNATAKA UNDERTAKING)
HAVING ITS REGISTERED OFFICE AT
TUMKUR ROAD, P B NO. 2221,
YESWANTHAPUR, BANGALORE- 22
REP BY ITS MANAGER ( P & IR)
...PETITIONER
(BY SRI: H M MURALIDHAR, ADVOCATE)
AND
ENGINEERING & GENERAL WORKERS UNION
NO.2, MILL CORNER, SAMPIGE ROAD,
MALLESWARAM
Digitally
signed by BANGALORE-560003
POORNIMA ...RESPONDENT
SHIVANNA (BY SRI: K B NARAYANA SWAMY, ADVOCATE)
Location:
HIGH
COURT OF THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
KARNATAKA OF THE CONSTITUTION OF INDIA PRAYING TO
CALL FOR THE RECORDS ON THE FILE OF THE INDUSTRIAL
TRIBUNAL, BANGALORE IN ID NO.5/2000, PERUSE THE SAME,
ALLOW THE WRIT PETITION, QUASH THE IMPUGNED AWARD DATED
3RD DECEMBER 2011 PASSED IN ID NO.5/2000 VIDE ANNEXURE-A
BY ISSUE OF A WRIT IN THE NATURE OF CERTIORARI
CONSEQUENTLY, DISMISS THE DISPUTE.
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WP No. 3788 of 2012
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS COMING ON FOR PRONOUNCEMENT OF ORDERS, THIS
DAY, THE COURT MADE THE FOLLOWING:
ORDER
1. The petitioner-employer is before this Court seeking
for the following reliefs:
a) Call for the records on the file of the Industrial
Tribunal, Bangalore, in I.D.No.5/2000, peruse the
same, allow the writ petition, quash the impugned
Award dated 3rd December 2011 passed in
I.D.No.5/2000 vide Annexure 'A' by issue of a writ in
the nature of certiorari, consequently, dismiss the
dispute.
b) Or in the alternative pass such other order/s as this
Hon'ble Court deem fit to pass on the facts and in the
circumstances of the case, in the interest of justice
and equity.
2. The employer is an undertaking of State of Karnataka
engaged in manufacture and sale of power breakers
of various capacities. It has its own service rules,
Cadre and Recruitment Rules for appointment of
regular employees which is what is alleged to have
been followed by the employer.
3. The services which are concerned with in the present
matter are those related to house-keeping,
WP No. 3788 of 2012
gardening, loading and unloading which is alleged to
require only a few hours a day. It is on that basis
that the employer had entrusted those works to
labour contractors for lumpsum amount by entering
into contract.
4. The contractors are alleged to have engaged their
own men to carry out the said work. The house-
keeping and gardening work was entrusted to
"Sri.Shankar Nursery (associated)", work of loading
and unloading was entrusted to "M/s Associated
Detective & Security Services".
5. On 7.03.2000, Sri Shankar Nursery terminated the
contract relating to house keeping and gardening.
Similarly on 24.03.2000, M/s Associated Detective &
Security Services terminated the contract and
thereafter withdrew their men.
6. In pursuance thereof, the employer entrusted the
work to "M/s Essential Services" vide contract dated
29.03.2000 which also came to be withdrawn by the
said contractor vide letter dated 29.11.2000. It is
WP No. 3788 of 2012
alleged that thereafter the employer has not engaged
any contract workers.
7. The persons engaged by Sri Shankar and M/s
Associated Detective & Security Services had filed a
petition on 31.03.1999 through the respondent Union
before the Deputy Labour Commissioner for a
declaration that the workers whose names are
mentioned in Annexure-A thereto were always
employees of the employer and therefore they are
entitled to get all the benefits as applicable to the
permanent workmen from the date of their joining
service. It was contended that the said workers
were discharging their work which were perennial in
nature along with other permanent workmen and
therefore they are entitled to be declared as
permanent workmen.
8. The employer opposed the said petition by
contending that the persons named in annexure to
the petition were not discharging their jobs as
mentioned against their name, the employer does
WP No. 3788 of 2012
not even know them. The work entrusted to the
contractors was house-keeping, gardening, loading
and unloading which required only few hours of work
in a day and therefore, the same cannot be said to
be perennial in nature and therefore, they were not
entitled to be treated as permanent workmen.
9. The matter having been referred to conciliation, the
conciliation efforts failed and as such, the State
Government in exercise of powers conferred under
Section 10(1)(d) of the Industrial Disputes Act, 1947
[for short 'ID Act'] referred the points of dispute for
adjudication to Industrial Tribunal, Bengaluru on
14.12.1999.
10. The points which were referred for adjudication are
as under:
i. Whether the management of Mysore Electrical
Industries Ltd., Tumkur Road, Bangalore, are
justified in engaging contract workers as packers,
Electricians, Welders, Cook, Stores, Painters,
House-Keeping, Driver, Typist, Draftsman,
Librarian etc., and getting done permanent and
perennial nature of work through them and
whether the said contract system in sham?
WP No. 3788 of 2012
ii. If not, to what relief the workers shown in
Annexure 'A' who are represented by Engineering
and General Workers Union, No.2, Mill Corner,
Malleswaram, Bangalore-3 are entitled?
11. During the pendency of the said adjudication 19 of
66 workmen raised a conciliation proceeding
contending that employer had refused them work
from February 2000, which was opposed by the
employer contending that they are not even
employees of the company, hence, the question of
refusing them work would not arise. This issue was
also referred to conciliation which ended in a failure.
The State government vide order dated 7.03.2001
referred this dispute for adjudication on the question.
"Whether the management of Mysore Electrical
Industries Limited, Tumkur Road, Bangalore was
justified in refusing work to 19 contract workers, if not
what relief that the said workers entitled to?
12. The Labour Court, Bangalore took up the same as
Reference No.5/2001 and since the earlier dispute
was pending before the Industrial Tribunal, the same
was referred to the Industrial Tribunal.
WP No. 3788 of 2012
13. While the matter was pending, the Union filed an
interlocutory application on 14.12.2000 under
Section 11 of the ID Act seeking for a direction to the
employer to restore the services of the workmen
listed in the annexure to the affidavit. The Industrial
tribunal after hearing the matter vide order dated
12.04.2001 directed the employer to restore the
services of the workmen listed in the annexure. Said
order was challenged before this Court in W.P.
No.18358/2001 wherein an order of stay was
declined. W.A. No.3517/2001 having been filed, the
Division Bench of this Court stayed the operation of
the order and subsequently disposed of the matter
with a direction to the tribunal to dispose of the
proceedings before the Tribunal expeditiously.
14. The Tribunal after considering the matter directed
the employer to restore the services of the workmen
and it is aggrieved by the same that the petitioner-
employer is before this Court.
WP No. 3788 of 2012
15. Sri.H.N.Muralidhar, learned counsel for the
petitioner-employer would submit that,
15.1. There is no prohibition in terms of Section 10(1)
of the Contract Labour Abolition Act ['CLRA' for
short] prohibiting the employer from engaging
the services of contractors by engaging contract
labour. In the absence of such prohibition, the
employer is entitled to enter into a contract
with a contractor which cannot be found fault
with unless a notification is issued under
Subsection (1) of Section 10 of the CLRA, the
Industrial adjudicator would not get any right to
adjudicate any dispute relating to contract
labour.
15.2. The precondition for the workman to raise a
dispute under the CLRA before the labour
adjudicator is the issuance of a notification
under Section 10(1) of the CLRA Act.
15.3. In the present case there being no such
notification, the industrial Tribunal ought to
WP No. 3788 of 2012
have considered this aspect which it has failed
to do.
15.4. In the other matter, where the workman had
approached the labour Court which was
subsequently transferred to Industrial tribunal
alleging that the employer had refused work,
the Tribunal had come to a conclusion that
there is no relationship between the employer
and the workman, therefore, the question of
refusing work would not arise.
15.5. The Tribunal having come to such a conclusion
in the subsequent matter could not have
directed the employer to reinstate the workmen
by way of the impugned order.
15.6. The Tribunal has not adjudicated and or given
any finding on the questions referred to it but
has only directed implementation of the earlier
order passed by the tribunal on 12.4.2001
which could not have been done. By way of the
final order, the tribunal has only confirmed the
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interlocutory order without adjudicating the
issues in question. Therefore, the order of the
tribunal is required to be set-aside.
15.7. In support of his case, Sri.H.M.Muralidhar,
learned counsel relies upon the decision in
Steel Authority of India Ltd. And others (SAIL)
-v- National Union Waterfront Workers and
others1, more particularly para 125 thereof
which is reproduced hereunder for easy
reference:
125.The upshot of the above discussion is outlined
thus:
(1)(a) Before 28-1-1986, the determination of the
question whether the Central Government or the
State Government is the appropriate Government in
relation to an establishment, will depend, in view of
the definition of the expression "appropriate
Government" as stood in the CLRA Act, on the
answer to a further question, is the industry under
consideration carried on by or under the authority of
the Central Government or does it pertain to any
specified controlled industry, or the establishment of
any railway, cantonment board, major port, mine or
oilfield or the establishment of banking or insurance
company? If the answer is in the affirmative, the
Central Government will be the appropriate
(2001)7 SCC 1
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Government; otherwise in relation to any other
establishment the Government of the State in which
the establishment was situated, would be the
appropriate Government;
(b) After the said date in view of the new definition
of that expression, the answer to the question
referred to above, has to be found in clause (a) of
Section 2 of the Industrial Disputes Act; if (i) the
Central Government company/undertaking concerned
or any undertaking concerned is included therein eo
nomine, or (ii) any industry is carried on (a) by or
under the authority of the Central Government, or
(b) by a railway company; or (c) by a specified
controlled industry, then the Central Government will
be the appropriate Government; otherwise in relation
to any other establishment, the Government of the
State in which that other establishment is situated,
will be the appropriate Government.
(2)(a) A notification under Section 10(1) of the CLRA
Act prohibiting employment of contract labour in any
process, operation or other work in any
establishment has to be issued by the appropriate
Government:
(1) after consulting with the Central Advisory Board
or the State Advisory Board, as the case may be, and
(2) having regard to
(i) conditions of work and benefits provided for the
contract labour in the establishment in question, and
(ii) other relevant factors including those mentioned
in sub-section (2) of Section 10;
(b) Inasmuch as the impugned notification issued by
the Central Government on 9-12-1976 does not
satisfy the aforesaid requirements of Section 10, it is
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quashed but we do so prospectively i.e. from the
date of this judgment and subject to the clarification
that on the basis of this judgment no order passed or
no action taken giving effect to the said notification
on or before the date of this judgment, shall be
called in question in any tribunal or court including a
High Court if it has otherwise attained finality and/or
it has been implemented.
(3) Neither Section 10 of the CLRA Act nor any other
provision in the Act, whether expressly or by
necessary implication, provides for automatic
absorption of contract labour on issuing a notification
by the appropriate Government under sub-section
(1) of Section 10, prohibiting employment of contract
labour, in any process, operation or other work in
any establishment. Consequently the principal
employer cannot be required to order absorption of
the contract labour working in the establishment
concerned.
(4) We overrule the judgment of this Court in Air
India case [(1997) 9 SCC 377 : 1997 SCC (L&S)
1344] prospectively and declare that any direction
issued by any industrial adjudicator/any court
including the High Court, for absorption of contract
labour following the judgment in Air India case
[(1997) 9 SCC 377 : 1997 SCC (L&S) 1344] shall
hold good and that the same shall not be set aside,
altered or modified on the basis of this judgment in
cases where such a direction has been given effect to
and it has become final.
(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
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either on the ground of having undertaken to
produce any given result for the establishment or for
supply of contract labour for work of the
establishment under a genuine contract or is a mere
ruse/camouflage to evade compliance with various
beneficial legislations so as to deprive the workers of
the benefit thereunder. If the contract is found to be
not genuine but a mere camouflage, the so-called
contract labour will have to be treated as employees
of the principal employer who shall be directed to
regularise the services of the contract labour in the
establishment concerned subject to the conditions as
may be specified by it for that purpose in the light of
para 6 hereunder.
(6) If the contract is found to be genuine and
prohibition notification under Section 10(1) of the
CLRA Act in respect of the establishment concerned
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.
16. Per contra, Sri.K.B.Narayana Swamy, learned
counsel for the Union would submit that,
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16.1. The workmen had been engaged with the
employer even before the contractor came into
the picture, the services of the workmen were
shifted by the employer unilaterally to the
contractor with a sole purpose of obviating
compliance with the applicable labour laws, as
also making payment of lesser amounts that
required to be made.
16.2. The arrangement between the employer and
the contractor is a sham transaction. It has
come in evidence that there is no agreement
which has been entered into between the
employer and the contractor and no such
agreement has been produced before the
Tribunal.
16.3. The employer has not registered himself under
Section 7 of CLRA, the contractor has not
registered himself under Section 12 of the
CLRA, hence the question of a non-registered
employer entering into a contract for labour
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with a non-registered contractor would not
arise. The same apart from being a violation of
the mandate of the CLRA would establish the
transaction to be a sham transaction between
the employer and the contractor.
16.4. Many of the workmen being in the service of
the employer from as far back as 1995 and
various other workmen having joined
subsequently, have been discharging various
works like that of house-keeping, painter,
packer, cook, welder, typist, etc, on a
continuous basis. The fact that they have been
rendering such work for several years would by
itself establish that the works being carried out
by the workmen are perennial and permanent
in nature.
16.5. The workmen having earlier been engaged on
the rolls of the employer, it is only with an
intention to violate the requirements of the
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applicable labour law that the methodology of
contract labour has been resorted to.
16.6. The services rendered by the workmen being
essential for the running of the factory of the
employer, the workmen of the Union are
required to be treated on par with the regular
employees of the employer who have also been
engaged to render similar service, that is to say
that not only workman belonging to the
respondent Union, but certain other workmen
have been engaged by the employer to render
the very same service.
16.7. The workers remaining the same, nature of
work being the same, the employer resorted to
unilaterally shift the workers who were working
with the employer to the rolls of the contractor
and many different contractors thereafter with
an intention to pay less money than what is
required and therefore, the entire transaction is
a sham transaction.
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16.8. Learned counsel relies upon the decision of the
Hon'ble Apex court in Gujarat Electricity
Board, Thermal Power Station, UKAI,
Gujarat2, more particularly paragraphs 10, 33,
53 to 59 which are extracted hereunder for
easy reference:
10. In view of the aforesaid contentions, the
questions that fall for consideration in this appeal,
which are common to all the appeals are as follows:
(a) Whether an industrial dispute can be raised for
abolition of the contract labour system in view of
the provisions of the Act?
(b) If so, who can raise such dispute?
(c) Whether the Industrial Tribunal or the appropriate
Government has the power to abolish the contract
labour system? and
(d) In case the contract labour system is abolished,
what is the status of the erstwhile workmen of the
contractors?
33. These decisions in unambiguous terms lay down
that after the coming into operation of the Act, the
authority to abolish the contract labour is vested
exclusively in the appropriate Government which has
to take its decision in the matter in accordance with
the provisions of Section 10 of the Act. This
conclusion has been arrived at in these decisions on
the interpretation of Section 10 of the Act. However,
(1995)5 SCC 27
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it has to be remembered that the authority to abolish
the contract labour under Section 10 of the Act comes
into play only where there exists a genuine contract.
In other words, if there is no genuine contract and the
so-called contract is a sham or a camouflage to hide
the reality, the said provisions are inapplicable. When,
in such circumstances, the workmen concerned raise
an industrial dispute for relief that they should be
deemed to be the employees of the principal
employer, the court or the industrial adjudicator will
have jurisdiction to entertain the dispute and grant
the necessary relief. In this connection, we may refer
to the following decisions of this Court which were
also relied upon by the counsel for the workmen.
53. Our conclusions and answers to the questions
raised are, therefore, as follows:
(i) In view of the provisions of Section 10 of the Act, it
is only the appropriate Government which has the
authority to abolish genuine labour contract in
accordance with the provisions of the said section. No
court including the industrial adjudicator has
jurisdiction to do so.
ii) If the contract is a sham or not genuine, the
workmen of the so-called contractor can raise an
industrial dispute for declaring that they were always
the employees of the principal employer and for
claiming the appropriate service conditions. When
such dispute is raised, it is not a dispute for abolition
of the labour contract and hence the provisions of
Section 10 of the Act will not bar either the raising or
the adjudication of the dispute. When such dispute is
raised, the industrial adjudicator has to decide
whether the contract is a sham or genuine. It is only if
the adjudicator comes to the conclusion that the
contract is a sham, that he will have jurisdiction to
adjudicate the dispute. If, however, he comes to the
conclusion that the contract is genuine, he may refer
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the workmen to the appropriate Government for
abolition of the contract labour under Section 10 of the
Act and keep the dispute pending. However, he can do
so if the dispute is espoused by the direct workmen of
the principal employer. If the workmen of the principal
employer have not espoused the dispute, the
adjudicator, after coming to the conclusion that the
contract is genuine, has to reject the reference, the
dispute being not an industrial dispute within the
meaning of Section 2(k) of the ID Act. He will not be
competent to give any relief to the workmen of the
erstwhile contractor even if the labour contract is
abolished by the appropriate Government under
Section 10 of the Act.
(iii) If the labour contract is genuine a composite
industrial dispute can still be raised for abolition of the
contract labour and their absorption. However, the
dispute will have to be raised invariably by the direct
employees of the principal employer. The industrial
adjudicator, after receipt of the reference of such
dispute will have first to direct the workmen to
approach the appropriate Government for abolition of
the contract labour under Section 10 of the Act and
keep the reference pending. If pursuant to such
reference, the contract labour is abolished by the
appropriate Government, the industrial adjudicator will
have to give opportunity to the parties to place the
necessary material before him to decide whether the
workmen of the erstwhile contractor should be
directed to be absorbed by the principal employer,
how many of them and on what terms. If, however,
the contract labour is not abolished, the industrial
adjudicator has to reject the reference.
(iv) Even after the contract labour system is abolished,
the direct employees of the principal employer can
raise an industrial dispute for absorption of the ex-
contractor's workmen and the adjudicator on the
material placed before him can decide as to who and
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how many of the workmen should be absorbed and on
what terms.
54. It is in the light of the above position of law which
emerges from the provisions of the Act and the
judicial decisions on the subject that we have to
answer the contentions raised in different civil appeals
before us. As regards the present civil appeal, the
facts of which have already been referred to earlier,
Shri Venugopal, the learned counsel for the appellant-
Board contended that none of the direct workmen of
the Board had espoused the cause of the contract
labour and hence the Tribunal had no jurisdiction to
entertain the reference. He also submitted that any
amount of consent by the appellant-Board for such a
reference will not confer jurisdiction on the Tribunal to
entertain the reference.
55. As has been pointed out earlier, the order of
reference of the dispute to the Tribunal was made by
the State Government on the basis of a joint
application for reference under Section 10(2) of the
ID Act. The application was duly signed by the
present appellant-Board, all the seven contractors
involved in the dispute and by the then Surat Labour
Union which had both direct as well as contract
labourers, as its members. The respondent-Union is
the successor of the said Surat Labour Union. These
facts show two things, viz., that contrary to the
submission made by the learned counsel, the direct
employees of the Board had espoused the cause of
the contract labourers, and the appellant-Board had
also accepted the fact that the dispute in question
was raised and supported also by the said employees.
No objection was taken before the Tribunal or the
High Court either to the order of reference or to the
adjudication of the dispute by the Tribunal that the
dispute was not espoused by the direct employees of
the appellant-Board. This would also show that the
fact that the dispute was espoused by the direct
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employees of the Board was accepted by the Board
and never questioned till this date. Apart from the
fact, therefore, that the Board had signed the joint
application for reference and therefore it cannot in an
appeal by special leave under Article 136 of the
Constitution for the first time raise the question which
is a mixed question of law and fact, we are of the
view that even on facts as they stand, it will have to
be held that the dispute was in fact espoused by the
direct employees of the appellant-Board. We therefore
reject the said contention.
56. It was next contended that the dispute raised by
the workmen was for abolition of the contract and
such a dispute could not have been entertained by the
Tribunal in view of the provisions of Section 10 of the
Act. For this purpose, the learned counsel relied upon
clause (1) of the order of reference. We find nothing
in the said clause which supports the contention of
the learned counsel. The clause reads as follows:
"Whether the workers whose services are engaged by
the contractors, but who are working in the Thermal
Power Station of Gujarat Electricity Board at Ukai, can
legally claim to be the employees of the Gujarat
Electricity Board?"
It will be obvious from a reading of the said clause
that what in fact is referred for adjudication is the
determination of the status of the workmen, viz.,
whether though engaged by the contractors, they are
legally the workmen of the appellant-Board? In other
words, implicit in the said clause is the assertion of
the workmen that they are in law the workmen of the
appellant-Board and not of the contractors, and they
wanted the Tribunal to decide their exact legal status.
This is clear also from the statement of claim filed by
the workmen in support of their demand. In para 3 of
the statement of claim, it is averred that the Board
has been employing Mukadam Supervisors "who are
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draped in different paper arrangements and are now
known as contractors of the Thermal Power Station"
and the Board and the so-called contractors have
joined hands for mass victimisation and termination of
services even without payment of due wages. Again,
in para 5 of the statement of claim, it is stated that
the workmen are being paid wages by the
Management of the Board through Mukadam
Supervisors now known as contractors of the Board.
The contractors come and go but the workmen are
working throughout since the inception of the Thermal
Power Station. The control, direction and initiation of
these workmen are in the hands of the supervisors
and technical staff of the Thermal Power Station. It is
also alleged in the said para that the so-called
contractors are not contractors as none of them have
taken licence. It is also averred there that it is
abundantly clear that the workmen employed to
perform the permanent and perennial nature of duties
are the employees of the Board. In para 10 of the
statement of claim, it is prayed that "the Tribunal
should hold and declare that the workers deployed in
the Thermal Power Station under the garb of
contractor are the permanent employees of the
Thermal Power Station managed and controlled by the
appellant-Board". In para 6 of the application for
interim relief which was filed on behalf of the
workmen, it was averred that the Board was through
different agreements showing the workmen as if they
were working under some intermediaries and the said
intermediaries are "make-believe trappings" and are
'dubious' in nature and it was only to deprive the
workmen of the benefits which are available to the
employees of the Board that the said "make-believe
trappings" were employed by the Board. It is
therefore not correct to say that the present reference
was for the abolition of the contract. The reference,
on the other hand, was for a declaration that the
workmen were in fact and in law the employees of the
appellant-Board and that they should be given the
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service conditions as are available to the direct
employees of the Board.
57. It was then contended by the learned counsel
that the Industrial Tribunal has nowhere recorded a
finding that the contract in question was a sham, a
camouflage, a make-believe or a subterfuge. On the
contrary, according to him, the Tribunal has held that
the contract labour of each of the contractors must be
deemed to be the employees of the appellant-Board,
firstly because the Board and the contractors had not
produced valid proof of the registration certificate and
the licences respectively, relying on the decisions of
the Madras and Karnataka High Courts, and secondly,
because of the nature of the work. He submitted that
the decisions of the Madras and Karnataka High
Courts have been expressly overruled by this Court in
Dena Nath case [(1992) 1 SCC 695 : 1992 SCC (L&S)
349] . As regards the nature of work, the exclusive
jurisdiction to record a finding in that behalf is of the
appropriate Government under Section 10 of the Act
and the Tribunal is precluded from recording a finding
in that behalf and abolishing the contract on the basis
of such finding. In fact, the Tribunal has no
jurisdiction to abolish the contract.
58. In the first instance, we find that the contention
that the Tribunal has held that the workmen in
question are the employees of the Board only because
of the non-production of the valid proof of the
certificate and the licences in question, is not correct.
The Tribunal has, on the basis of the evidence on
record, come to the conclusions, among others, that
(i) the work was being done on the premises of the
Board itself as the coal was being used for the
purposes of the Board, viz., generation of electricity;
(ii) the workmen were broadly under the control of
the Board; (iii) there was overall supervision of the
work by the officers of the Board; (iv) the work was of
a continuous nature; and (v) the work was an integral
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part of the overall work to be executed for the
purposes of the generation of the electricity and that
it had to be performed within specified time-limits as
part of the integrated process. The Tribunal has also
in this connection referred to a decision of this Court
reported in Hussainbhai case [(1978) 4 SCC 257 :
1978 SCC (L&S) 506] to support its conclusion that in
the aforesaid circumstances found by it, the workmen
in question were the employees of the Board. It is
true that the Tribunal has not in so many words
recorded a finding that the contract was a sham or
bogus or a camouflage to conceal the real facts. It is
also true that the Tribunal has referred to the
decisions of the Madras and Karnataka High Courts
and on its finding that the Board and the contractors
had not produced valid proof of the registration
certificate and the licences for the relevant period has
held that the workmen should be deemed to be the
employees of the Board. However, the decision of the
Tribunal has to be read as a whole. Thus read, the
decision makes it clear that the Tribunal has based its
conclusion both on the ground that the workmen were
in fact engaged by the appellant-Board and not by the
contractors who were merely intermediaries set up by
the Board and also on the ground that there was no
valid proof of the registration certificate and the
licences in the possession of the Board and the
contractors respectively. It is not, therefore, correct
to say that the decision of the Tribunal is based only
on the latter ground. We are of the view that there is
a factual finding recorded by the Tribunal that the
labour contracts in question were not genuine and the
decision of the Tribunal is based on this ground as
well.
59. It is also not correct to say that to arrive at the
finding as to whether the labour contracts are genuine
or not, the court or the industrial adjudicator cannot
investigate the factors mentioned in clauses (a) to (d)
of Section 10(2) of the Act. The Explanation to
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Section 10(2) makes the decision of the appropriate
Government final only on the question whether the
process or operation or the work in question is of a
perennial nature or not, and that too when a dispute
arises with regard to the same. If no such question
arises, the finding recorded by the Court or the
Tribunal in that behalf is not ineffective or invalid.
Further, in all such cases, the Tribunal is called upon
to record a finding on the factors in question not for
abolishing the contract but to find out whether the
contract is a sham or otherwise. The contract may be
genuine even where all the said factors are present.
What is prohibited by Section 10 is the abolition of the
contract except by the appropriate Government, after
taking into consideration the said factors, and not the
recording of the finding on the basis of the said
factors, that the contract is a sham or bogus.
16.9. By relying on the above decision, he submits that
the abolition of contract labour by issuance of
notification under Section 10 of the CLRA comes
into play when there exists a genuine contract. If
there is no genuine contract and the contract is a
sham or camouflage to hide the reality, the
provision of Section 10 would not be applicable. In
such circumstances, if the workmen raise industrial
dispute, they should deem to be employees of the
principal employer. He further submits that there is
no need for issuance of any notification under
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Section 10 for the industrial adjudicator to get
jurisdiction in a matter relating to CLRA.
16.10. Reliance is placed upon the decision in Oil and
Natural Gas Corporation Limited -v- Petroleum
Coal Labour Union and Others3 more particularly
paragraphs 27, 29 and 30, which are extracted
hereunder for easy reference:
Whether jurisdiction of the Tribunal to direct
the Corporation to regularise the services of
the workmen concerned in the posts is valid
and legal?
27. The Central Government in exercise of its
powers under Section 10 of the Act referred the
existing industrial dispute between the workmen
concerned and the Corporation to the Tribunal
which rightly adjudicated Point (i) of the dispute
(supra) on the basis of the facts, circumstances and
evidence on record and passed an award dated 26-
5-1999 directing the Corporation that the services
of the workmen concerned should be regularised
with effect from the date on which all of them
completed 480 days, subsequent to their
appointment by the memorandum of appointment.
The contention urged on behalf of the Corporation
that the Tribunal has no power to pass such an
award compelling the Corporation to regularise the
services of the workmen concerned is wholly
untenable in law. Even if we consider the same, the
said contention is contrary to the legal principles
laid down by this Court in Hari Nandan Prasad v.
(2015)6 SCC 494
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Food Corpn. of India [Hari Nandan Prasad v. Food
Corpn. of India, (2014) 7 SCC 190 : (2014) 2 SCC
(L&S) 408] , wherein the decisions in U.P. Power
Corpn. Ltd. v. Bijli Mazdoor Sangh [U.P. Power
Corpn. Ltd. v. Bijli Mazdoor Sangh, (2007) 5 SCC
755 : (2007) 2 SCC (L&S) 258] and Maharashtra
SRTC v. Casteribe Rajya Parivahan Karmchari
Sanghatana [Maharashtra SRTC v. Casteribe Rajya
Parivahan Karmchari Sanghatana, (2009) 8 SCC
556 : (2009) 2 SCC (L&S) 513] and Umadevi (3)
[State of Karnataka v. Umadevi (3), (2006) 4 SCC
1 : 2006 SCC (L&S) 753] were discussed in detail.
29. Further, it is very clear from the facts that all
the workmen concerned have got the qualifications
required for their regularisation, except one of
them and have been employed by the Corporation
even prior to 1985 in the posts through various
irregular means. The Tribunal has got every power
to adjudicate an industrial dispute and impose upon
the employer new obligations to strike a balance
and secure industrial peace and harmony between
the employer and workmen and ultimately deliver
social justice which is the constitutional mandate as
held by the Constitution Bench of this Court in a
catena of cases. This abovesaid legal principle has
been laid down succinctly by this Court in Bharat
Bank Ltd. v. Employees [1950 SCC 470 : AIR 1950
SC 188] , the relevant paragraph of the said case is
extracted hereunder: (AIR p. 209, para 61)
61. "We would now examine the process by which
an Industrial Tribunal comes to its decisions and I
have no hesitation in holding that the process
employed is not judicial process at all. 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
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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. An industrial
dispute as has been said on many occasions is
nothing but a trial of strength between the
employers on the one hand and the workmen's
organisation on the other and the Industrial
Tribunal has got to arrive at some equitable
arrangement for averting strikes and lock-outs
which impede production of goods and the
industrial development of the country. The Tribunal
is not bound by the rigid rules of law. The process it
employs is rather an extended form of the process
of collective bargaining and is more akin to
administrative than to judicial function. In
describing the true position of an Industrial Tribunal
in dealing with labour disputes, this Court in
Western India Automobile Assn. v. Industrial
Tribunal [(1949-50) 11 FCR 321] quoted with
approval a passage from Ludwig Teller's well-known
work on the subject, where the learned author
observes that: (FCR p. 345)
'... industrial arbitration may involve the extension
of an existing agreement or the making of a new
one, or in general the creation of new obligation or
modification of old ones, while commercial
arbitration generally concerns itself with
interpretation of existing obligations and disputes
relating to existing agreements.'
The views expressed in these observations were
adopted in its entirety by this Court. Our
conclusion, therefore, is that an Industrial Tribunal
formed under the Industrial Disputes Act is not a
judicial tribunal and its determination is not a
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judicial determination in the proper sense of these
expressions."
It has been further held by this Court in LIC v. D.J.
Bahadur [(1981) 1 SCC 315 : 1981 SCC (L&S) 111]
, as follows: (SCC p. 334, para 22)
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."
30. Thus, the powers of an Industrial
Tribunal/Labour Court to adjudicate the industrial
dispute on the points of dispute referred to it by the
appropriate government have been well established
by the legal principles laid down by this Court in a
catena of cases referred to supra. Therefore, the
Tribunal has rightly passed an award directing the
Corporation to regularise the services of the
workmen concerned.
16.11. Relying on the above, he submits that the Tribunal
had a jurisdiction to direct the employer to
regularize the services of the workman in order to
strike a balance and secure industrial peace and
harmony between the employer and workmen and
ultimately to deliver social justice which is a
constitutional mandate as held in catena of cases.
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16.12. By referring to sub-para 5 of paragraph 125 of the
decision in SAIL1 which is extracted hereinabove,
he submits that the contract when not genuine and
uses as a mere ruse and camouflage to evade
compliance with beneficial legislation so as to
deprive the workers of the benefit, the contract
labour will have to be treated as employees of the
principal employer who has to be directed to
regularize the services of the contract labour in the
establishment which is what the tribunal has done
by directing the employer to provide work to the
workmen if they report to work and found medically
fit which is what had been directed in the
Interlocutory order dated 12.04.2011. He,
therefore, submits that the order passed by the
Tribunal is in accordance with law and does not
require interference.
17. Sri.H.M.Muralidhar, learned counsel in rejoinder would
submit that,
17.1. The decision in Gujarat Electricity Board2 has
been over ruled by the decision in SAIL1 and in this
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regard he refers to paragraphs 102, 103, 104 and
105 thereof which are extracted hereinabove for
easy reference. He submits that merely on issuance
of a notification under 10(1) of the CLRA, the
workers would not get automatically regularized,
there cannot be an automatic absorption. The
grounds and factors as that exist would have to be
appreciated by the Industrial adjudicator to
ascertain whether the workmen are entitled to
absorption or not. In this regard he also refers to
sub-para 5 of para 125 of judgment in SAIL1 and
submits that the absorption post issuance of
notification under Section 10(1) of the CLRA is
subject to sub-para 6 of para 125 of the judgment
in SAIL1 and the absorption could only occur by
giving preference to the contract labour if the
principal employer intends to employ regular
workmen, if necessary by relaxing age criteria, as
also the academic and other technical qualification.
17.2. Thus, he submits that if contract labour is abolished
and the employer were not to engage any other
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persons in their place, the erstwhile contract labour
would not get any right to work. It is only a
preferential right that is vested in them which
comes into play only when employer were to
engage other regular workmen, in that instead of
party being engaged, the employer would have to
consider erstwhile contract labour. In the present
case, he again reiterates that there being no
notification under Section 10(1) of CLRA, the
Industrial adjudicator would not get any jurisdiction
to decide the dispute. In the present case, he
again reiterates that there being no notification
under Section 10(1) of the CLRA, the Industrial
adjudicator would not get any jurisdiction to decide
the dispute.
18. Sri.K.B.Narayana Swamy in reply to the rejoinder would
submit that,
18.1. The decision in Gujarat Electricity Board2 has
been overruled to a limited extent as regards the
automatic absorption post the issuance of
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notification under Section 10(1) of the CLRA. By
the decision in SAIL1 in terms of which only a
preferential right has been granted to the workmen
to seek for employment in the event of employer
engaging anyone else. The aspect of jurisdiction of
the Industrial adjudicator to decide the matter in
the absence of a notification under Section 10(1) of
the CLRA has not been set-aside by the SAIL1.
Therefore, he submits that the said finding in
Gujarat Electricity Board's case2 as regards
jurisdiction of the Industrial Adjudicator stands
undisturbed.
19. Heard Sri.H.M.Muralidhar, learned counsel for the
petitioner-employer and Sri.K.B.Narayana Swamy,
learned counsel for the respondent-workmen. Perused
papers.
20. The points that arise for consideration are:
20.1. Whether a notification under Section 10(1) of
CLRA is a pre-requisite for the Industrial
tribunal to have jurisdiction to decide the
matter relating to reinstatement,
regularization or services of contract labour?
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20.2. Whether in the event of the contract,
arrangement of transaction between the
employer and the contractor being found to be
sham, camouflage to make payment of lesser
amounts to the workman, then what is
required to be paid. Could the workmen be
directed to be paid the same wages as that
paid to other workmen?
20.3. Whether the works of house keeping, painter,
driver, typist, welder, cook, electrician,
packer, loader, unloader, can be said to be
perennial work and not temporary work?
20.4. Whether the order passed by Industrial
tribunal suffers from any legal infirmity
requiring interference at the hands of this
Court?
20.5. What order?
21. ANSWER TO POINT NO.1: Whether a notification
under Section 10(1) of CLRA is a pre-requisite for
the Industrial tribunal to have jurisdiction to decide
the matter relating to reinstatement, regularization
or services of contract labour?
21.1. The contention of Sri.H.N.Muralidhar, learned
counsel for the employer is that unless a
notification under Section 10(1) of CLRA is
issued, the Industrial tribunal would have no
jurisdiction over a dispute raised by the alleged
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contractor. Section 7 of the CLRA requires an
employer to register himself which reads as
under:
7. Registration of certain establishments.- (1) Every
principal employer of an establishment to which this Act
applies shall, within such period as the appropriate
Government may, by notification in the Official Gazette,
fix in this behalf with respect to establishments generally
or with respect to any class of them, make an application
to the registering officer in the prescribed manner for
registration of the establishment:
Provided that the registering officer may entertain any
such application for registration after expiry of the period
fixed in this behalf, if the registering officer is satisfied
that the applicant was prevented by sufficient cause from
making the application in time.
(2) If the application for registration is complete in all
respects, the registering officer shall register the
establishment and issue to the principal employer of the
establishment a certificate of registration containing such
particulars as may be prescribed.
21.2. Section 12 of the CLRA requires a contractor to
register himself which reads as under:
12. Licensing of contractors.- (1) With effect from such
date as the appropriate Government may, by notification
in the Official Gazette, appoint, no contractor to whom
this Act applies, shall undertake or execute any work
through contract labour except under and in accordance
with a licence issued in that behalf by the licensing officer.
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(2) Subject to the provisions of this Act, a licence under
sub-section (1) may contain such conditions including, in
particular, conditions as to hours of work, fixation of
wages and other essential amenities in respect of contract
labour as the appropriate Government may deem fit to
impose in accordance with the rules, if any, made under
section 35 and shall be issued on payment of such fees
and on the deposit of such sum, if any, as security for the
due performance of the conditions as may be prescribed.
21.3. From the above it is clear that it is only the
employer who is registered under Section 7 can
engage a contractor registered under Section
12. As a corollary if an employer who is not
registered under Section 7, then he cannot
engage services of a contractor though
registered under Section 12 of CLRA and vice
versa, that is to say a employer registered
under Section 7 cannot engage services of a
contractor who is not registered under Section
12 of CLRA. It is therefore, required that both
the employer and the contractor are registered
under Section 7 and 12 respectively.
21.4. Section 10 of the CLRA reads as under:
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10 Prohibition of employment of contract
labour. - (1) Notwithstanding anything contained
in this Act, the appropriate Government may, after
consultation with the Central Board or, as the case
may be, a State Board, prohibit, by notification in
the Official Gazette, employment of contract
labour in any process, operation or other work in
any establishment.
(2) Before issuing any notification under sub-
section (1) in relation to an establishment, the
appropriate Government shall have regard to the
conditions of work and benefits provided for the
contract labour in that establishment and other
relevant factors, such as-
(a) whether the process, operation or other work is
incidental to, or necessary for the industry, trade,
business, manufacture or occupation that is carried
on in the establishment;
(b) whether it is of perennial nature, that is to say,
it is of sufficient duration having regard to the
nature of industry, trade, business, manufacture or
occupation that is carried on in that establishment;
(c) whether it is done ordinarily through regular
workmen in that establishment or an establishment
similar thereto;
(d) whether it is sufficient to employ considerable
number of whole-time workmen.
Explanation. -If a question arises whether any
process or operation or after work is of perennial
nature, the decision of the appropriate Government
thereon shall be final.
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21.5. A perusal of Section 10 would indicate that the
State Government can in certain cases prohibit
contract labour which would necessarily mean
that it is only as regards the areas where State
government by exercise of powers under
Section 10 can prohibit it. The reference made
by Sri.H.N.Muralidhar, learned counsel as
regards Section 10, in my considered opinion is
completely misconceived inasmuch as Section
10 relates to prohibition of contract labour in
certain industries. The submission of
Sri.Muralidhar that unless there is prohibition of
notification under Section 10, an employer can
engage contract labour, is according to me is
again misconceived. Merely because there is
no notification under Section 10 of CLRA, the
same would not permit an employer who is not
registered under Section 7 to enter into a
contract for contract labour with a contractor
who is not registered under Section 12. The
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requirement of Section 7 and 12 are to be
complied with irrespective of whether there is a
notification under Section 10 or not.
21.6. Section 10 only prohibits an engagement of a
contract labour and would have no bearing and
is not a pre-requisite for a workman who is
engaged by employer under a contract to raise
a dispute for redressal of his grievance.
21.7. In the present matter, the facts on record and
which are not in dispute indicate that the
workman had been engaged by the employer
and were working with him, subsequently their
services were shifted by the employer to certain
agencies without their consent and they were
regarded as contract labour. It is also on
record that employer has not registered himself
under Section 7 of CLRA and the contractor has
not registered under Section 12 of CLRA, let
alone the labour being registered under the
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contractor as contract labour. Thereafter the
contractor terminated the contract which was
accepted by the employer resulting in the
workers being without employment. The
tribunal has come to a categorical finding that
the so-called agreement between the employer
and contractor is a sham agreement entered
into with the sole purpose and intention of
making payment of lesser amount to the
workers.
21.8. On enquiry if the agreement has been produced
though it was first contended by Sri.Muralidhar
that agreement has been produced, he is
unable to show the same. A perusal of the list
of document produced before the Industrial
Tribunal would establish that there is no such
agreement between the employer and the
contractors which has been produced before the
Industrial Tribunal. Thus, not only are there no
registration under Section 7 and 12 of CLRA,
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but there is no agreement also between the
employer and contractor.
21.9. In such a situation, it is clear that the claim
made by the employer is completely false one
and sham. There is no need for this Court to
ascertain if the agreement is a camouflage,
more so when the agreement itself has not
been placed on record.
21.10.The claim of the employer itself appears to be
completely dishonest and such a claim without
due compliances appears to be only for the
purpose of depriving the workers of their due
amounts.
21.11.Hence, I answer Point No.1 by holding that
notification under Section 10(1) of CLRA is not
a pre-requisite for the Industrial Tribunal to
have a jurisdiction to decide the matters
relating to reinstatement or regularization of
services of contract labour.
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22. ANSWER TO POINT NO.2:Whether in the event
of the contract, arrangement of transaction
between the employer and the contractor being
found to be sham, camouflage to make
payment of lesser amounts to the workman,
then what is required to be paid. Could the
workmen be directed to be paid the same
wages as that paid to other workmen?
22.1. As held in answer to point No.1, the employer is
not registered under Section 7, the contractor
is not registered under Section 12 and there is
no notification under Section 10(1) of CLRA.
There is no agreement between the employer
and contractor, as also the contractor and the
workmen which has been placed on record.
22.2. The finding of the labour Court as regards the
alleged transaction being a sham and
camouflage has already been upheld in answer
to point No.1 above. Once this Court comes to
a finding that the agreement is sham and
camouflage, the workmen cannot be denied
their just benefits. In the present case, there is
no agreement at all, it is only a contention by
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the employer. The said contention is also sham
and to cover up the liability of the employer to
make payment of due amounts to the
workmen. The Hon'ble Apex Court in SAIL's1
case has held that if a contract is found to be
not genuine but mere camouflage, so-called
labour will have to be treated as employes of
the principal employer, who shall be directed to
regularize the services of the contract labour in
the establish concerned subject to there being a
vacancy and if there is no vacancy, if the
principal employer intends to employ regular
workmen, he shall give preference to the
erstwhile contract labour, if found suitable and
if it is necessary, by relaxing the conditions as
to maximum age appropriately, taking into
consideration the age of the workman at the
time of their initial employment by the
contractor and also relaxing the condition as to
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academic qualification other than technical
qualification.
22.3. The workmen being in employment from the
year 1995 onwards, it cannot be said that they
lack any qualification. The workmen being in
employment from the year 1995 also indicates
that there are vacancies. If that be so, the
workmen need to be adequately provided for
and absorbed and until such absorption would
continue to render service as contract labour
directly under the employer with the employer
making payment of equal pay for equal work as
held by this Court in TUMAKURU CITY
CORPORATION v. TUMKURU POURA
KARMIKARA SANGHA4 case.
23. ANSWER TO QUESTION NO.3: Whether the works of
house keeping, painter, driver, typist, welder, cook,
electrician, packer, loader, unloader, can be said to
be perennial work and not temporary work?
W.P. NO. 28392/2022 dated 6th December 2022.
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23.1. This question is rendered academic on account of
finding as regards point Nos.1 and 2. However, the
same requires to be answered. The work of house
keeping viz. cleaning and other services is required
to be discharged on daily basis; in a industry a
painter is also required to be at hand since there
are various paint jobs which are required to be
carried out from time to time; Drivers are required
on regular basis for transport of people; a typist
would be required on regular basis to type out
certain documents; in a large establishment a
welder would be required for carrying out repairs; a
cook is required on daily basis for preparing food,
more so three times a day for all the workmen; a
electrician in a industry is a regular feature and
required to take care of any electrical issues that
arise; an industry manufacturing a product would
require packer, loader and unloader on regular
basis, firstly to unload any raw material which
comes to the factory, secondly to unpack any item
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received and pack an item to be transported, and
load the same into the transport vehicle.
23.2. These jobs profiles being ones whose services are
required on a day today basis, as also for months
on end. I am of the considered opinion that these
jobs are perennial in nature and therefore would
not be temporary as contended by
Sri.H.N.Muralidhar, learned counsel.
24. ANSWER TO POINT NO.4:Whether the order passed
by Industrial tribunal suffers from any legal
infirmity requiring interference at the hands of this
Court?
24.1. The Tribunal by way of impugned order directed
restoration of services of the workmen. Though the
said order could have been better worded, I do not
find any infirmity with the said order inasmuch as
the Tribunal has come to a conclusion that the job
profile is perennial in nature.
24.2. The Tribunal has come to a right conclusion that the
alleged agreement between the employer and the
contractor is sham and camouflage and the workers
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have been engaged for a long period of time and
the instrumentality of contract workers has been
used only to deprive them of their just amounts.
The interim order having earlier been passed
directing the employer to provide work for the
workmen and the same not having been provided,
the labour court directed the employer to comply
with the said order.
24.3. As afore-observed, the said order could have been
better worded, but the essential meaning of the
operative portion of the said order, which I can
gather from reading of the entire order is that the
alleged contract being sham and camouflage, the
labour Court instead of directing continuation of
service and later absorption has passed a short
order, I do not find any infirmity in the same, but,
however, I am of the considered opinion that the
same is required to be explained which would be
done in the operative portion of this order.
25. ANSWER TO POINT NO.5: What order?
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25.1. In view of my finding to the aforesaid points, I pass
the following:
ORDER
i. The writ petition is dismissed.
ii. The workmen belonging to respondent-Union
shall be treated as employees of the
petitioner. Petitioner shall regularize their
services subject to availability of vacancies
and in the event of there being no vacancies,
as and when vacancies arise, the petitioner
shall give preference to the members of the
respondent-Union, if they are found suitable
by relaxing the condition as to maximum age,
as also academic qualifications.
iii. The petitioner shall maintain proper records of
sanctioned posts, number of workmen posted
to such sanctioned posts or number of
vacancies as and when vacancies arise, the
same shall be notified to the members of the
Union who shall be provided work at the
petitioner's establishment.
iv. Needless to say that the petitioner shall
reinstate the workman within a period of four
weeks from the date of receipt of copy of this
order.
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WP No. 3788 of 2012
v. Petitioner to act on a printout of the uploaded
copy of this order on the website of this
Court, if so furnished by the respondent,
without waiting for certified copy thereof. If
petitioner has any doubt about the order,
petitioner may verify the contents of the
order from the website of this Court and or
from the learned panel advocate appeared in
the matter.
Sd/-
JUDGE
LN
