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M/S. Indian Iron and Steel Company Limited. Vs. State of West Bengal and Others - Court Judgment

LegalCrystal Citation
CourtKolkata Appellate High Court
Decided On
Case NumberW.P. No. 10528 (W) of 2001
Judge
AppellantM/S. Indian Iron and Steel Company Limited.
RespondentState of West Bengal and Others
Appellant AdvocateMr. L.K. Gupta; Mr. L. Pal, Advs
Respondent AdvocateMs. J. Dhar Quader, Adv
Cases ReferredAir India Statutory Corporation vs. United Labour Union
Excerpt:
.....a cheque for payment of rs.8,48,500/- to the complainant. the cheque was drawn by the accused no.1 company against the account maintained with andhra bank , jawahar marg, indore branch. the petitioners have filed this application seeking to quash the proceedings in criminal case no.11638/ss/2009 registered before the metropolitan magistrate, ballard pier and the process issued therein. the facility was given and availed at indore. the accused no.1 had issued the cheque in question at indore against its account maintained with andhra bank, indore branch and the cheque was presented to the drawee bank at indore through hdfc bank, indore branch by the complainant. vs. national panasonic india pvt.ltd. (2009) 1 scc 720, the metropolitan magistrate, mumbai, has no jurissdictin and therefore..........respondent no.3 also did not dispute the existence of the said settlements whereby more than 1500 contract labours had been absorbed excluding the added respondents. such witness admitted that since the contract between m/s. kaycee industries (hereafter kaycee) and the company was not renewed, the added respondents services were no longer required. payments were admittedly made to the added respondents through kaycee and that the company had not issued any appointment letter in their favour. they had not even been interviewed for appointment on any post. they were not paid directly by the company. no disciplinary control was exercised by the company and on a couple of occasions when some of the added respondents did not conduct themselves properly, kaycee was advised to initiate.....
Judgment:

1. An industrial dispute between M/s. Indian Iron & Steel Company Limited, Burnpur Works (hereafter the company) and their workmen represented by ABK Metal & Engineering Workers Union, Purnahat (hereafter the respondent no.3) was referred to the 9th Industrial Tribunal at Durgapur for adjudication. The Tribunal was required to decide the following issue:

Whether retrenchment of Sarbashree Narayan Chandra Jhariat, Balaram Hela, Jaharwarilal Bauri, Lakshmi Kumar Karmakar and Sridhar Tantubay by Indian Iron & Steel Co. Ltd. Burnpur Works, Burnpur by way of nonrenewal of contract with M/s. Kaycee Industries is justified?

To what relief, if any, are these workmen entitled?

2. The Tribunal after hearing the parties passed an award dated 11th December, 2000. It was ordered as follows:

The reference case u/s. 10 is allowed on contest. An award be passed to the effect that the order of retrenchment of Sarbashree Narayan Chandra Jhariat, Balaram Hela, Jaharwarilal Bauri, Lakshmi Kumar Kar and Sridhar Tantubay by Indian Iron & Steel Co. Ltd., Burnpur Works, Burnpur, by way of non-renewal of contract with M/s. Kaycee India is unjustified. The Employer is directed to reinstate them with full back wages.

3. The said award of the Tribunal is the subject matter of challenge in the present petition.

4. Mr. L.K. Gupta, learned senior advocate appearing for the company, contended that the award entirely satisfies the ingredients for which it could be termed perverse. Relevant evidence on record that would have, in ordinary circumstances, demolished the claim of the five workmen (hereafter the added respondents) was not considered. On the face of the evidence, no reasonable person would come to the conclusion the Tribunal reached. There was no evidence that the added respondents applied for appointment in the company. No plea of the contract being sham was raised. Existence of contracts could be evident on bare perusal of the three tripartite settlements, which were exhibited before the Tribunal. The witness adduced by the respondent no.3 also did not dispute the existence of the said settlements whereby more than 1500 contract labours had been absorbed excluding the added respondents. Such witness admitted that since the contract between M/s. Kaycee Industries (hereafter Kaycee) and the company was not renewed, the added respondents services were no longer required. Payments were admittedly made to the added respondents through Kaycee and that the company had not issued any appointment letter in their favour. They had not even been interviewed for appointment on any post. They were not paid directly by the company. No disciplinary control was exercised by the company and on a couple of occasions when some of the added respondents did not conduct themselves properly, Kaycee was advised to initiate appropriate action. It was, therefore, not proper on the part of the Tribunal to come to a finding that the added respondents should be deemed to be the direct employees of the company and that existence of Kaycee has no relevance.

5. It was also contended that the Tribunal approached the issue from a wrong angle and did not pose the correct question before it. The added respondents were demonstrably contract labours, and even if the contract with Kaycee had been renewed their status would not have changed. Their status would continue to be that of contract labours and, therefore, remedy of the added respondents lies with Kaycee, which employed them. From the evidence on record it could not have been shown that the contract was sham and, therefore, no relief ought to have been granted.

6. In support of his submissions, Mr. Gupta relied on several decisions. According to him, the present dispute squarely falls within the parameters of the decision in International Airport Authority of India vs. International Air Cargo Workers Union, reported in (2009) 13 SCC 374 where the expression control and supervision in the context of contract labour was explained. Paragraphs 125(5) and (6) of the decision in Steel Authority of India Ltd. and ors. vs. National Union Waterfront Workers and ors., reported in (2001) 7 SCC 1 was referred to for enabling the Court to decide on the basis of the law laid down therein as to whether the added respondents could be categorized as the direct employees of the company or not. Dhampur Sugar Mills Ltd. vs. Bhola Singh, reported in (2005) 2 SCC 470, Haryana State Electronics Development Corporation Ltd. vs. Mamni, reported in (2006) 9 SCC 434; Gangadhar Pillai vs. Siemens Ltd., reported in (2007) 1 SCC 533, Chandra Shekhar Azad Krishi Evam Prodyogiki Vishwavidhyalaya vs. United Trades Congress, reported in (2008) 2 SCC 552 and Shakti Sankar Dey vs. Union of India, reported in 2005 (3) CHN 161 are the other decisions on which reliance was placed by him to demonstrate that the award deserves to be quashed. 7. Mr. Datta, learned advocate representing the added respondents, submitted that the High Court in exercise of writ jurisdiction ought not to disturb findings of fact returned by the Tribunal on appreciation of the evidence on record. There is neither patent illegality nor perversity in the award and, therefore, the Court should be loath to interfere. He next contended that the contract between the company and Kaycee is a sham contract to deprive the added respondents of benefits that have accrued to them in lieu of rendering uninterrupted service. The contract itself was not exhibited before the Tribunal and, therefore, there is grave doubt as to whether such contract did at all exist. He thereafter contended that the added respondents were paid bonus by the company in terms of the Payment of Bonus Act (hereafter the Bonus Act). The provisions of the Bonus Act do not contemplate payment of bonus to contract labours and this itself is sufficient to lead one to the irresistible conclusion that the added respondents are direct employees of the company. It was also urged that no licence was produced by the company as is required to be obtained by a contractor under the Contract Labour (Regulation and Abolition) Act (hereafter the CLRA Act). Lastly, he submitted that the Court ought to lift the veil for reaching a finding as to whether relationship of employer-employee existed between the company and the added respondents or not.

8. In support of his submissions, Mr. Dutta relied on the decisions in SAIL (supra), A.P.SRTC vs. G. Srinivas Reddy, reported in (2006) 3 SCC 674, Secretary, H.S.E.B. vs. Suresh, reported in (1999) 3 SCC 601 and Divisional Railway Manager, Eastern Railway, Asansol Division vs. Satyajit Majumdar, reported in 1992 (1) CHN 75. He, accordingly, prayed for dismissal of the writ petition.

9. Ms. Dhar Quader, learned Advocate appearing for the State supported the claim of the added respondents. According to her, the Tribunal by holding in their favour did not act in the exercise of its jurisdiction illegally and, therefore, the award ought to be upheld.

10. In reply, Mr. Gupta argued that the question of the contract between the company and Kaycee being sham does not and cannot arise. The added respondents and/or the respondent no.3 did not object to the Memorandum of Settlements dated 22nd August, 1980 and 8th April, 1982 between the management of the company and the representatives of the functioning unions being marked as exhibits. In such settlements reference was made to the contracts between the company and Kaycee bearing Nos.M/1/33/5503/79 and M/1133/5504/79. It was further agreed by and between the management of the company and the functioning unions that the contract labours covered by Annexure I thereto would be absorbed whereas the contract labours covered by Annexure II would not be absorbed. Number of contract labours employed under the same contract along with the added respondents has been absorbed. Since the settlements were taken on record without any protest from the side of the respondent no.3, it was not necessary for the company to produce the contract itself under which the added respondents were employed in the company. The settlements themselves were self-explanatory and, the Tribunal by not taking note thereof committed gross error. Even otherwise, the point of the contract being sham not having been raised by the union, he submitted that the company ought not to suffer a decision against it.

11. So far as payment of bonus under the Bonus Act to the added respondents is concerned, it was contended by him that the provisions thereof do not exclude payment of bonus to contract labours and since the Bonus Act is a social welfare legislation, the company had extended bonus to the added respondents as well as to other contract labours also. Such benevolent action of the company in making payment of bonus would by itself not be decisive as to whether the contract labours like the added respondents were the direct employees of the company or not. Payment of bonus under the Bonus Act to the added respondents, according to him, cannot be construed to mean that they are the permanent and regular employees of the company. In this connection reference was made to the documents by which the added respondents were held entitled to payment of bonus. He emphasized that payments were made after Kaycee raised bills. Kaycee was entitled to reimbursement of bonus and leave wages payment from the company and accordingly was advised to prepare statement/bills for submission upon being certified by the departmental heads.

12. Insofar as non-production of licence under the CLRA Act is concerned, it was submitted that the licence is required to be obtained by the contractor and not the company; besides, no such point was raised before the Tribunal and the workmen ought not to raise a point which the company had no occasion to meet before the Tribunal.

13. The decisions cited on behalf of the added respondents by Mr. Datta, except Steel Authority of India Ltd. (supra), were sought to be distinguished by submitting that the same would have no application in the facts and circumstances of the present case. Additionally, it was submitted that the decisions in Suresh (supra) and Satyajit Majumdar (supra) are no longer good law in view of the decision in Steel Authority of India Ltd. (supra).

14. I have heard learned advocates for the parties and considered the materials on record. The Tribunal appears to have granted relief to the added respondents on the ground that they had worked for more than 240 days even after the tripartite settlements. According to the Tribunal, continuous work performed by the added respondents conferred on them a legal status. The Tribunal placed heavy reliance on the decision of the Supreme Court in Suresh (supra). The added respondents, according to the Tribunal, could not in the circumstances be treated as adhoc employees merely in view of the tripartite settlements or for existence of Kaycee. They are employees of the company by legal fiction and, therefore, they were entitled to notice prior to termination of their service. Since no notice had been served on the added respondents as required under the Industrial Disputes Act, termination of their services was illegal and, therefore, they were entitled to reinstatement in service as well as back wages.

15. Much water has flown down the Ganga since the decision in Suresh (supra), which followed the decision in Air India Statutory Corporation vs. United Labour Union, reported in (1997) 9 SCC 377. The Constitution Bench in Steel Authority India Ltd. (supra) prospectively overruled Air India (supra). It has been declared that any direction issued by any industrial adjudicator/any Court including the High Court for absorption of contract labour following the decision in Air India (supra) shall hold good and that the same shall not be set aside, altered or modified on the basis of the concerned judgment in cases where such direction has been given effect to and it has become final. In the present case, the award of the Tribunal having been challenged before this Court and the company not having complied with the direction by reinstating the added respondents, the company is entitled to urge the Court to apply the law laid down in Steel Authority of India Ltd. (supra) and the decisions following it for deciding the issue raised herein.

16. In paragraph 125(5) of its decision in Steel Authority of India Ltd. (supra), this is what the Supreme Court said :

125(5) On issuance of prohibition notification under Section 10(1) of the CLRA Act prohibiting employment of contract labour or otherwise, in an industrial dispute brought before it by any contract labour in regard to conditions of service, the industrial adjudicator will have to consider the question whether the contractor has been interposed either on the ground of having undertaken to produce any given result for the establishment or for supply of contract labour for work of the establishment under a genuine contract or is a mere ruse/camouflage to evade compliance 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.

17. Since the Tribunal proceeded to grant relief to the added respondents on the ground that they had completed 240 days of work even after the tripartite settlements between the company and the functioning unions, it did not decide the question as to whether the contract between the company and the contractor is a genuine one for supply of contract labour for work of the establishment or a mere ruse or camouflage to evade compliance with various beneficial legislation so as to deprive the workers of the benefit thereunder. To the extent the Tribunal has not given any finding on the nature of the contract between the Company and Kaycee prior to directing reinstatement, the same has to be held to be perverse.

18. It has not been shown to me that any notification under Section 10 of the CLRA Act has been issued prohibiting employment of contract labour in the department of the company where the added respondents were in fact employed. As noticed above, no finding was given that the contract is a sham contract, which was pressed into service for defeating the claim of the contract labours like the added respondents. In my opinion, the controversy in issue can be set at rest having regard to the law laid down in International Airport Authority of India (supra). It was held there as follows:

35. As noticed above, SAIL [(2001) 7 SCC 1] did not specifically deal with the legal position as to when a dispute is brought before the industrial adjudicator as to whether the contract labour agreement is a sham, nominal and merely a camouflage, when there is no prohibition notification under Section 10(1) of the CLRA Act.

36. But where there is no abolition of contract labour under Section 10 of the CLRA Act, but the contract labour contend that the contract between the principal employer and the contractor is sham and nominal, the remedy is purely under the ID Act. The principles in Gujarat Electricity Board [(1995) 5 SCC 27] 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 the CLRA Act.

37. The industrial adjudicator can grant the relief sought if it finds that contract between the principal employer and the contractor is sham, nominal and merely a camouflage to deny employment benefits to the employer 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 a sham/nominal and camouflage, then the question of directing the principal employer to absorb or regularise the services of the contract labour does not arise.

38. 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 a contractor, if the right to regulate the employment is with the contractor, and the ultimate supervision and control lies with the contractor.

39. 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. (underlining for emphasis by me)

19. Applying the tests laid down to the facts of the present case, it appears that there is no evidence of payment being made to the contract labours by the company directly. Whatever amount was paid to them was through Kaycee. The company did never exercise disciplinary control over the added respondents. In fact on one or two occasions, the company did complain to the contractor in respect of misconduct committed by some of the added respondents and asking it to take action. Insofar as supervision and control exercised by the officers of the company on the added respondents are concerned, it is quite but natural that the contract labour while performing functions would have to act in terms of the directions of the officers of the company who would mark their attendance and allot work to them and also in respect of all matters incidental to their employment. However, such supervision and control is secondary control, the primary control resting with the contractor.

20. The remaining contentions raised by Mr. Dutta are now taken up for consideration. There is no warrant for the proposition that in every case where bonus is paid to an employee, the same is an indicator of the employee being a regular employee. The company is an establishment in public sector. The provisions of the Bonus Act would apply to it only if it satisfies the condition mentioned in sub-section (1) of Section 20 thereof. If indeed the company was obliged to pay bonus to its regular employees and had in the process shared its profits with the contract labours by paying them bonus in terms of the Bonus Act, the very action of extending benefits of a social welfare legislation to such labours would not change their status to regular employees of the company. Equally unmeritorious is the contention regarding non-production of licence to employ contract labour. If at all the contractor did not obtain the necessary licence, it would be open to the authority concerned to take action against it under Section 23 of the CLRA Act but for that the company cannot be penalized and the contract labours employed by such erring contractor be thrust upon it. Non-obtention of licence, without anything more, would not clothe the added respondents with any legal right to claim that they are direct employees of the company and hence entitled to continue in service despite the contract with Kaycee not being renewed.

21. The decisions cited by Mr. Dutta have duly been considered. Even after lifting of the veil, it does not appear that the added respondents could validly claim to be direct employees under the company. The precedential value of the decision in Satyajit Majumder (supra) stands substantially eroded having regard to the subsequent Supreme Court decisions referred to above and is therefore of no assistance to him.

22. In the result, I hold that the added respondents are not direct/regular employees of the company and hence were not entitled to notice, as erroneously held by the Tribunal. Consequent to such finding, the impugned award stands quashed. The writ petition is allowed, without any order for costs. Urgent photostat certified copy of this judgment, if applied for, may be furnished expeditiously.


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