1. On failure of conciliation,the case of 3404 workmen was referred for adjudication to the Central Government Industrial Tribunal (for short "CGIT"). Following three questions were referred vide notification dated 27.01.93:-
"I. Whether the action of the Mines Manager, Koteshwar Lime Stone Mines of Steel Authority of India Ltd.in terminating services of 3404 (3380+24-as per list attached) mine workers in March, 1996 who ceased to be contract labour after prohibition of employment of contract labour in Lime Stone Mine vide Notification No.S.O.707 dated 17.3.93 was legal, fair and justified If not, what relief the concerned workmen or heirs in case of deceased worker are entitled to II. Whether the action of the Mines Manager, Koteshwar Lime Stone Mines of Steel Authority of India Ltd. in denying terminal benefit of gratuity,retrenchment, compensation and exgratia applicable to VRS seeking employees is fair and justified. If not, to what relief these workers/heirs are entitled to III. Whether the action of the management of the Mines Manager, Koteshwar Lime Stone Mines of Steel Authority of India Ltd.in disregarding Clause-8 of Memorandum of Agreement signed between the Steel Authority of India, New Delhi and their Unions including HMS and employing workers through contractors on jobs of permanent and perennial nature in Mines between 5-20 years even without ensuring statutory wages and service conditions was legal, fair and justified If not, to what relief concerned workmen/heirs are entitled ?"
Vide notification dated 22.2.2005, following question was also referred for adjudication :-
"Whether the employment of the workmen mentioned in this Ministry's order of even number dated 27.1.2003 through contractors is sham and bogus and whether in effect there is direct employment by the company? If so, to what relief the workmen concerned are entitled ?"
2. According to the case set up by the Union/Workmen, the Steel Authority of India Ltd. (hereinafter referred to as "SAIL") has owned a captive Lime Stone and Dolomite Mine at Kuteshwar in District-Katni, Madhya Pradesh. Agreement dated 27.10.1970 and 5.7.1989 have been relied upon providing that the industry shall not employ labour through contractor or engage contractor's labour on jobs of permanent and perennial nature. Agreement of 1989 also provided for abolition of contract labour. Approximately 5,000 labourers had been employed by the SAIL in violation of the agreement from May,1979 at Kuteshwar and they were not paid similar wages as regular workers for similar work violating the statutory right of the workers under the Mines Act and Under Contract Labour (Regulation and Abolition) Act, 1970 (in short "CLRA Act"). Labourers were working in captive mine of Lime Stone & Dolomite. Management of Kuteshwar Lime Stone exercises the supervisory power over the workers employed by the contractors. They had the right to reject the product. Management used to issue directions with reference to disciplinary action and work. The attendance used to be marked by the employees of SAIL. The wages of the workers were paid by the SAIL. The contractors were mere commission agents and contract itself was sham and bogus. The work was of perennial and permanent nature. The workers were infact and in law the workers of SAIL.
3. The workers also claimed for their regularization and for payment of similar wages. As the Management failed to regularize the workers, Union took up the matter with the Labour Department. Labour Department referred the matter to the Contract Labour Advisory Board. The Board recommended prohibition of contract labour. The Central Government thereafter vide notification dated 17.3.93 prohibited the employment of contract labour in respect of raising of minerals including breaking sizing, sorting of lime stone, dolomite and transportation of lime stone and dolomite which includes loading and unloading from Trucks, dumpers, conveyors and transportation from mine site to the Factory. The contractors' labour were doing the same work prohibited under the notification dated 17.3.1993. They did the work till April,1996 when all of a sudden they were stopped from entering the work place and prevented from doing their duties.
4. All the workers have completed 240 days service in a calendar year. They claimed reinstatement with full back wages, interest and compensation along with other reliefs. Action of the Management amounts to unfair labour practice. During pendency of the disputes, several workers died. It is also submitted that 2040 workers filed their cases under Minimum Wages Act in which High Court directed to pay the Minimum Wages. The action of the Management in terminating the services was illegal, unfair and unjustified.
5. The Management contended that the reference is bad due to non-application of mind, the Union should produce certificate of its registration to establish its true identity. The SAIL is a Govt. of India undertaking. SAIL has one of the captive Lime Stone & Dolomite Mine at Kuteshwar, District- Katni, Madhya Pradesh. Certain wage agreements were entered into at the level of NJCS where representative of main steel producers and their Unions representing their workman were the parties. Agreement dated 27.10.1970, 5.7.1989, 18.5.1995 were entered into. There is no violation of the aforesaid agreements.
It is denied that at any time 5000 contract labourers were employed by the SAIL at Kuteshwar Lime Stone Mine.
6. It is further contended that the Chief Labour Commissioner (C) has exclusive jurisdiction under the provision of Rule 25(2) of Contract Labour (Regulation & Abolition) Central Rules, 1971 (hereinafter referred to as "CLRA Rules") to decide whether the type of work performed is similar. It has also been denied that contract labour performed the same work as the regular workers. The dispute as to the wages being paid has been separately agitated under the Minimum Wages Act.
7. It is further contended that there is no violation of rights of contract labour. Management ensured that the contractors complied with the provision of CLRA Act. The contractors were to produce lime stone of specified grades and size at specified rates of production. Penalties were also provided for deviation in the contract. Management of the Kuteshwar Lime Stone Mine inspected and ensured that lime stone of agreed grade and size were being sent to the Steel Plants as it was provided under the Mines Act. However, it has been denied that Management was exercising power of supervision or disciplinary authority. The contractors supervised and controlled the labourers for all purposes.
8. It is not disputed that SAIL did blasting work as per notification dated 15.12.1979 with effect from 22.6.1980. It is true that many of the activities of the mines have been going for long periods. Contractors were engaged for doing mining activities through contract labours where it was difficult to use machineries. It was done by inviting tenders. The notification dated 17.3.93 was issued without proper application of mind under Section 10(2) of the CLRA Act by the Government and the Committee especially constituted for the purpose. The Central Government is not an appropriate Government with respect to transportation on public roads. M/s Eastern Mineral Trading Agency working at Kuteshwar filed writ petition before the Calcutta High Court where interim order was passed. Contractors abandoned the work in 1997. The writ petition was dismissed on 1.4.1998 and the stay was vacated. However, some other contractors had also filed writ before the Calcutta High Court challenging notification dated 17.3.93 in which order was passed in the year 1994 restraining the respondents including the Union of India and SAIL from giving effect to the said notification. Said interim order is still in force. Services of contract labourers were terminated by the contractors sometime in March,1996. There was no relationship of master and servant between the management of SAIL and the contract labourers.
9. The CGIT framed as many as seven issues and has passed Award dated 16th September, 2009. The Tribunal has held that the contract of Principal Employer with the Contractors in regard to the contract labour after notification dated 17.3.93 became sham and bogus. However, at the same time, the Tribunal also recorded a finding that before the date of the said notification contract was not sham and bogus. The Tribunal also held that remedy of the workers is confined to penal provisions contained in Section 23 to Section 25 of CLRA Act. Question of grant of terminal benefits does not arise. The workers were not the employees of SAIL Management, no absorption process of contract labour took place. Contract labours were not employees of SAIL as such they were not entitled for wages as per agreement. Aggrieved by the Award, the writ petitions have been preferred by the Union as well as by the Management.
10. Shri P.S.Nair, learned Sr.Advocate appearing on behalf of the Union has submitted that the alleged contracts prior to 17.3.93 and subsequent to 17.3.93,the date on which the prohibition notification was issued under Section 10(2) of CLRA Act are sham and bogus. SAIL Management used to discharge the statutory liability as envisaged in CLRA Act, Mines Act and other Labour Laws. Vocational Training used to be imparted to the persons who are employed or to be employed in the mine. Under Mines Creche Rules,1966, the facility used to be provided to 1500 female workers. Maternity Benefit Act, 1961 is also applicable. The total control on all workers was of Mines Manager. The workers can enter the mine only with the permission of the Manager. Form B service record is required to be signed by the Manager. Annual leave used to be provided by the Management. The medical examinations are carried out by officers of SAIL. Various committees such as Safety Committee for Workers, Health & Sanitation, provision for drinking water, construction of latrines and urinals, water and machine, first aid, etc. is the function of the Management. Similarly, the Management used to provide canteen facility. Welfare officers looked after the welfare of the contract labours. Inspection, supervision, installation, running and maintenance of machinery is the function of the Management. Various other statutory provisions have also been referred including the statement of Shri T.K.Dhali and other Management witnesses that supervisory powers over the total affairs of the mine used to be exercised as per statutory provisions by the Management of Kuteshwar Lime Stone. The action of employing the contract labour is against the provision of agreements entered into by the Management with the workers.
11. It is further submitted by the Union that work is of perennial nature. Reading of the contract indicates that power to reject was with the Management. Various terms of the contract established total control and supervision of SAIL Management. The action of the respondent in throwing out the workers is violative of Section 23 of the Contract Act. The contracts prior to prohibition notification and subsequent thereto were sham and bogus. The workers have to be treated as employees of the Management. The witnesses of the Management fall short of proving the documents, they were not having any personal knowledge. The workers are poor, illiterate and tribal, they are out of employment for the last so many years, still they have adduced sufficient evidence. Adverse inference ought to have been drawn by the CGIT due to non- examination of material witnesses. The relevant record, inspite of the directions issued by the CGIT, have not been produced by the Management. The alleged contract after issue of notification under Section 10 of CLRA Act was wholly unjustified. Contract itself is prohibited and what is unauthorized in law is sham and bogus. Since the contract is prohibited, it cannot be genuine under any circumstances. In the prohibition notification issued under Section 10 of CLRA Act by Govt. of India various factors have been taken into consideration. The work is carried on in the premises of SAIL. Inspite of the fact that Tribunal held that contract after prohibition notification was sham and bogus, has failed to give appropriate relief to the workers employed by the contractors. They infact were the employees of the Management. The Tribunal has failed to appreciate the correct position of law, the conclusions drawn from the facts on record are not legally sustainable. The finding recorded that there was no master and servant relationship is perverse. The reinstatement of the workmen be ordered with back wages and the LRs of the workers who have died be ordered to be paid the terminal benefits.
12. On behalf of SAIL, it was submitted by Shri J.Dhankar, learned Sr.Advocate that no interference can be made by this Court in exercise of jurisdiction under Article 227 of the Constitution of India. Though the petition is under Article 226/227 of the Constitution, same is an essence under Article 227. Thus, the finding of fact recorded by Industrial Tribunal cannot be interfered with. The findings recorded by the Tribunal are based on cogent material and do not call for any interference. This Court cannot sit as an appellate forum. Burden to prove the case lies upon the Union. The Union has failed to discharge the same. The Union has putforth inconsistent plea. The decision in Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others (2001) 7 SCC 1 clearly lays down that there is no automatic absorption of the workers. The contracts cannot be said to be sham and bogus. Question with respect to the contract being sham and bogus is essentially an issue of fact. In case provisions of CLRA Act are violated by employing the contract labours after 17.3.93, the only remedy is provided under Section VI of CLRA Act. The work being of perennial nature will not ipso facto make the contract sham and bogus. The notification is illegal because of gross non- compliance of Section 10(2) of CLRA Act. The want of compliance of statutory provision under CLRA Act will by that reason not at all make the contract sham and bogus. The employees may be Tribals or Harijans, but were the contract labours. Contract cannot be said to be sham and bogus when adjudged on legal parameters. The NJCs agreement is not applicable to the contract labour, said agreement was applicable for regular employees of SAIL. The contract labours were not party to the agreement. Section 29 of the ID Act provides for consequence of breach of any settlement. Settlement does not spell out any crystallization of right in favour of contract labours in the event of its disregard. The decision in Air India Statutory Corporation and others vs. United Labour Union and others (1997) 9 SCC 377 has been expressly overruled by the Apex Court. Submission based upon Section 25-N of ID Act is misconceived as SAIL is not the employer of the contract labours nor their services have been terminated by it.
13. The main question of consideration in the case is whether in view of prohibition notification issued under Section 10 of CLRA Act on 17.3.93 employment of contract labour by SAIL under the contract can be said to be sham and bogus and the SAIL has to take the work prohibited under Section 10(1) of the notification from regular workmen not from contract labour, and if so, whether workers who worked are entitled to be regularized as held by Apex Court in Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others (supra).Even if contract is not sham and bogus whether workers are entitled for relief as per para 125(6) of Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others (supra).
14. Before dilating upon the various submissions raised by learned counsel appearing for the parties, it is considered appropriate to consider the pronouncement of the Apex Court in Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others(supra). The Apex Court has laid down that due to coming into force of the notification issued under Section 10 of CLRA Act, there is no automatic absorption of the contract labour working in the establishment. The Apex Court has laid down the six consequences follow on issuance of prohibition notification under Section 10 of CLRA Act. That contract labour will cease to function, the contract comes to an end, no contract labour can be employed by the principal employer,the contract labour continues in the employment of the contractor. The contractor can utilise the services of the contract labour in any other establishment in respect of which no notification under Section 10 (1) has been issued, if a contractor intends to retrench his contract labour he can do so only in conformity with the provisions of the I.D.Act.
The Apex Court has further laid down that by enacting CLRA Act, the Parliament intended to create bar on engaging contract labour in the establishment covered by the prohibition notification, by a principal employer so as to leave no option with him except to employ the workers as regular employees directly. The Apex Court has laid down thus :-
"88. If we may say so, the eloquence of the CLRA Act in not spelling out the consequence of abolition of contract labour system, discerned in the light of various reports of the Commissions and the Committees and the Statement of Objects and Reasons of the Act, appears to be that the Parliament intended to create a bar on engaging contract labour in the establishment covered by the prohibition notification, by a principal employer so as to leave no option with him except to employ the workers as regular employees directly. Section 10 is intended to work as a permanent solution to the problem rather than to provide a one time measure by departmentalizing the existing contract labour who may, by a fortuitous circumstance be in a given establishment for a very short time as on the date of the prohibition notification. It could as well be that a contractor and his contract labour who were with an establishment for a number of years were changed just before the issuance of prohibition notification. In such a case there could be no justification to prefer the contract labour engaged on the relevant date over the contract labour employed for longer period earlier. These may be some of the reasons as to why no specific provision is made for automatic absorption of contract labour in the CLRA Act."
The Apex Court has further laid down in Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others(supra) that there is no automatic absorption , where the contract was found to be a sham and nominal, rather a camouflage, in which case the contract labour working in the establishment of the principal employer were held, in fact and in reality, the employees of the principal employer himself. The Apex Court has given Conclusions No.(1) to (6) in para 125 thus :-
"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 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 concerned Central Government company/undertaking or any undertaking 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 railway company; or (c) by 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 afore-said requirements of Section 10, it is 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 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 concerned establishment;
(4) We over-rule the judgment of this court in Air Indias case (supra) 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 Indias case (supra), 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 either on the ground of having undertaken to produce any given result for the establishment or for supply of contract labour for work of the establishment under a genuine contract or is a mere ruse/camouflage to evade compliance of various beneficial legislations so as to deprive the workers of the benefit there under. If the contract is found to be not genuine but a mere camouflage, the so-called contract labour will have to be treated as employees of the principal employer who shall be directed to regularize the services of the contract labour in the concerned establishment 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 concerned establishment has been issued by the appropriate
Government, prohibiting employment of contract labour in any process, operation or other work of any establishment and where in such process,operation or other work of the establishment the principal employer intends to employ regular workmen he shall give preference to the erstwhile contract labour, if otherwise found
suitable and, if necessary, by relaxing the condition as to maximum age appropriately taking into consideration the age of the workers at the time of their initial employment by the contractor and also relaxing the condition as to academic qualifications other than technical
The Apex Court has laid down that there is no automatic absorption on issuance of prohibition notification under Section 10 of CLRA Act. The decision in Air India Statutory Corporation and others vs. United Labour Union and others (supra) has been over ruled with certain savings of the action taken under the said decision. In case direction issued by the Industrial Adjudicator/Court has attained finality. If the contract is found to be not genuine but mere camouflage so called contract labours will have to be treated as employees of the principal employer who shall be directed to regularize the services of the contract labour. It has to be considered whether employment was to avoid compliance of beneficial legislations so as to deprive the workers of the benefit thereunder. If the contract is found to be genuine and prohibition notification under Section 10(1) of the CLRA Act 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 labours.
The Apex Court has further laid down that the expression "industrial adjudicator" has been used with reference to Industrial Tribunal/Court whose determination will be amenable to judicial review by the High Court under Article 226 of the Constitution. The Apex Court has laid down thus :-
"126. We have used the expression
"industrial adjudicator" by design as determination of the questions afore- mentioned requires inquiry into disputed questions of facts which cannot conveniently be made by High Courts in exercise of jurisdiction under Article 226 of the Constitution. Therefore, in such cases the appropriate authority to go into those issues will be industrial tribunal/court whose determination will be amenable to judicial review."
15. Whether there is employer and employee relationship multiple factors are required to be taken into consideration. The control is one of the important test but is not the sole test. An integrated approach is needed. "Integration" test is one of the relevant tests. Other factors relevant are power to select and dismiss, to pay remuneration, deduct insurance contributions, organize the work, supply tools and material and what are the "mutual obligations" between them. The Apex Court has laid down aforesaid tests to be the relevant in Ram Singh and others vs. Union Territory, Chandigarh and others (2004) 1 SCC 126 and has laid down thus :-
"15. In determining the relationship of employer and employee, no doubt,
"control" is one of the important tests but is not to be taken as the sole test. In determining the relationship of employer and employee, all other relevant facts and circumstances are required to be considered including the terms and conditions of the contract. It is necessary to take a multiple pragmatic approach weighing up all the factors for and against an employment instead of going by the sole "test of control". An integrated approach is needed. "Integration" test is one of the relevant tests. It is applied by examining whether the
person was fully integrated into the employer's concern or remained apart from and independent of it. The other factors which may be relevant are who has the power to select and dismiss, to pay remuneration, deduct insurance contributions, organize the work, supply tools and materials and what are the "mutual obligations" between them."
16. In Steel Authority of India Ltd. vs. Union of India and others (2006) 12 SCC 233 (II) the Apex Court has laid down that the determination of questions as to whether the contract labour should be abolished or not is within the exclusive domain of the appropriate Government under Section 10 of CLRA Act. It is to be determined as per the procedure detailed therein. It is not for the Labour Court under the ID Act or for the Writ Court to determine the said question. However, when a contention is raised that the contract entered into by and between the management and the contractor is a sham one, an industrial adjudicator would be entitled to determine the said issue. The Apex Court has further held that CLRA Act is a complete code by itself. It not only provides for regulation of contract labour but also abolition thereof. Relationship of employer and employee is essentially a question of fact. Determination of the said question would depend upon a large number of factors. The Apex Court Steel Authority of India Ltd. vs. Union of India and others (supra) has laid down thus :-
"20. The 1970 Act is a complete code by itself. It not only provides for regulation of contract labour but also abolition thereof. Relationship of employer and employee is essentially a question of fact. Determination of the said question would depend upon a large number of factors. Ordinarily,a writ court would not go into such a question.
24. When, however, a contention is raised that the contract entered into by and between the management and the contractor is a sham one, in view of the decision of this Court in Steel Authority of India Limited (supra), an industrial adjudicator would be entitled to determine the said issue. The industrial adjudicator would have jurisdiction to determine the said issue as in the event if it be held that the contract purportedly awarded by the management in favour of the contractor was really a camouflage or a sham one, the employees appointed by the contractor would, in effect and substance, be held to be direct employees of the management."
The Apex Court in Municipal Corporation of Greater Mumbai vs. K.V.Shramik Sangh and others (2002) 4 SCC 609 has laid down that the contract was a sham or it was only a camouflage cannot be arrived at as a matter of law for non-compliance with the provisions of the CLRA Act but a finding must be recorded based on evidence, particularly when disputed, by an industrial adjudicator. It being a disputed question of fact has to be adjudicated by the industrial adjudicator. Absorption of the contract labours cannot be automatic. Whether the contract is genuine, sham or camouflage when disputed cannot be decided directly by the High Court under Article 226 of the Constitution. Industrial adjudicator has to be approached.
In Silver Jubilee Tailoring House and others vs.Chief Inspector Shops and Establishments and another (1974)3 SCC 498 the Apex Court has held that in order to determine relationship of employer and employee in the context of tailoring shop and tailors. The tailors generally attend the shop every day, their work was checked, then though there may not be regular hours of work or obligation to attend everyday, and the tailors could take the work home, there was relationship of employer and employee between the tailoring shop and tailors. Right to control the manner of doing the work cannot be treated as an exclusive test. While determining the relationship of employer and employee, it is relevant to consider the workers attend the shop belonging to the employer and work on the machines of the shop and they can be removed if the work is not satisfactory. After stitching the cloth, work was liable to be checked and returned if not found satisfactory, the ultimate authority over the performance of the work resided in the employer and this shows that the worker was subject to directions of the latter. It is not necessary that a servant should be under the exclusive control of one master and should work whole time in the shop. The Apex Court has further laid down that control and supervision is consistent with the character of business and if the employer has the right to reject the end product, the element of control and supervision is also present. A person can be servant of more than one employer. Servant need not be under exclusive control of one master. The Apex Court came to the conclusion that there was relationship of master and servant. The Apex Court has also held that control means, power to direct how the servant should do his work. The Apex Court has laid down in Silver Jubilee Tailoring House and others vs.Chief Inspector Shops and Establishments and another (supra) thus :- "21. In Montreal v. Montreal Locomotive Works Ltd. etc. (1947) 1 DLR 161 at p.1969 Lord Wright said that a single test, such as the presence or absence of control, was often relied on to determine whether the case was one of master and servant, mostly in order to decide issues of tortious liability on the part of the master or superior and that in the more complex conditions of modern industry , more complicated tests have often to be applied. He said that it would be
more appropriate to apply, a complex test involving (i) control; (ii) ownership of the tools; (iii) chance of profit; (iv) risk of loss, and that control in itself is not always conclusive. He further said that in many cases the question can only be settled by examining the whole of the various elements which constitute the relationship between the parties.
23. In U.S. v. Silk 331 US 704 the question was whether men working for the plaintiffs, Silk and Greyvan, were "employees" within the meaning of that word in the Social Security Act, 1935. The judges of the Supreme Court of U.S.A., agreed upon the test to be applied, though not in every instance upon its application to the facts. They said that the test was not "the common law test," viz., "power of control, whether exercised or not, over the manner of performing service to the undertaking," but whether the men were employees "as a matter of economic reality." Important factors were said to be "the degrees of control, opportunities of profit or loss, investment in facilities, permanency of relations and skill required in the claimed independent operation.
31. The further fact that "a worker can be removed" which means nothing more than that the employer has the liberty not to give further work to an employee who has not performed his job according to the instructions of the employer, or who has been absent from the shop for a long time as spoken to by the Inspector of Labour in his evidence, would bespeak of control and supervision consistent with the character of the business.
34. Quite apart from all these circumstances, as the employer has the right to reject the end product if it does not conform to the instruction of the employer and direct the worker to restitch it, the element of control and supervision as formulated in the decisions of this court is also present.
36. That some of the employees take up the work from other tailoring establishments and do that work also in the shop in which they generally attend for work, as spoken to by the proprietor in his evidence, would not in any way militate against their being employees of the proprietor of the shop where they attend for work. A person can be a servant of more than one employer. A servant need not be under the exclusive control of one master. He can be employed under more than one employer.
38. We think that on the facts and circumstances of the case the Chief Inspector of Shops and Establishments and the High Court came to the right conclusion that employer and employee relationship existed between the parties and that the Act was therefore applicable. We therefore dismiss the appeal, but in the circumstances, we do not make any order as to costs."
In M/s Shining Tailors vs. Industrial Tribunal II, U.P., Lucknow and others (1983) 4 SCC 464 the Apex Court has laid down that right to reject the work or to refuse further work establishes master servant relationship. In para 5 the Apex Court has held thus :- "5. But the test employed in the past was one of determining the degree of control that the employer wielded over the workmen. However, in the identical situation in Silver Jubilee Tailoring House vs. Chief Inspector of Shops and Establishments (1974) 3 SCC 498, Mathew, J. speaking for the Court observed that the control idea was more suited to the agricultural society prior to Industrial Revolution and during the last two decades the emphasis in the field is shifted from and no longer rests exclusively or strongly upon the question of control. It was further observed that a search for a formula in the nature of a single test will not serve the useful purpose, and all factors that have been referred to in the cases on topics, should be considered to tell a contract of service. Approaching the matter from this angle, the Court observed that the employer's right to reject the end product if it does not conform to the instructions of the employer speaks for the element of control and supervision. So also the right of removal of the workman or not to give the work has the element of control and supervision. If these aspects are considered decisive, they are amply satisfied in the facts of this case. The Tribunal ignored the well laid test in law and completely misdirected itself by showing that piece-rate itself indicates a relationship of independent contractor and error apparent on the record disclosing a total lack of knowledge of the method of payment in various occupations in different industries. The right of rejection coupled with the right to refuse work would certainly establish master-servant relationship and both these tests are amply satisfied in the facts of this case. Viewed from this angle, the respondents were the workmen of the employer and the preliminary objection, therefore, raised on behalf of the appellant-employer was untenable and ought to have been overruled and we hereby overrule it."
In M/s P.M.Patel And Sons and others vs. Union of India and others (1986) 1 SCC 32 the Apex Court also considered the right of rejection to be effective supervision and control. The Apex Court has laid down thus :- "10. In the context of the conditions and the circumstances set out earlier in which the home workers of a single manufacturer go about their work,including the receiving of raw material, rolling the beedis at home and delivering them to the manufacturer
subject to the right Of rejection there is sufficient evidence of the requisite degree of control and supervision for establishing the relationship of master and servant between the manufacturer and the home worker. The work of rolling beedis is not of a
sophisticated nature, requiring control and supervision at the time when the work is done. It is a simple operation which,as practice has shown, has been performed satisfactorily by thousands of illiterate workers. It is a task which can be performed by young and old, men and women, with equal
facility and it does not require a high order of skill. In the circumstances,the right of rejection can constitute in itself an effective degree of supervision and control.We may point out that there is evidence to show that the rejection takes place in the presence 35
of the home worker. That factor, however, plays a merely supportive role in determining the existence of the relationship of master and servant. The petitioners point out that there is no element of personal service in beedi rolling and that it is open to a home worker to get the work done by one or the other member of his family at home. The element of personal service, it seems to us, is of little significance when the test of control and supervision lies in the right of rejection."
The Tribunal has considered the decision of Apex Court in Workmen of Nilgiri Cooperative Marketing Society Ltd. vs. State of Tamil Nadu and others 2004 (101) FLR 137 in which the Apex Court has held thus :- "The control test and the organization test, therefore, are not the only factors which can be said to decisive. With a view of elicit the answer, the court is required to consider several factors which would have a bearing on the result (a) who is appointing authority; (b) who is the pay master; (c) who can dismiss; (d) how long alternative service lasts; (e) the extent of control and supervision; (f) the nature of the job,e.g whether, it is professional or skilled work; (g) nature of establishment; (h) the right to reject."
Keeping in mind the aforesaid relevant factors, we proceed to determine in the instant case whether there was employer- employee relationship between the workers and the management, and contract of the management with the contractors was sham or a camouflage. Various workers have rendered their duties for the period 5 to 20 years. It is not in dispute that work is permanent and perennial. Considering the nature of work , prohibition notification under Section 10(2) of CLRA Act has been issued on 17.3.93. The said notification prohibited the employment of contract labours in a Lime Stone & Dolomite Mines in the following jobs :-
"(1) Raising of mineral including breaking, sizing, sorting of limestone/dolomite, and
(2) Transportation of limestone and dolomite which includes loading into and unloading from trucks, dumpers, conveyors, and transportation from mine site to factory."
It is not in dispute that the workers were employed before issuance of the notification and subsequent to the notification they continued to perform the aforesaid prohibited jobs.
17. It is also not in dispute that workers had claimed minimum wages before the Authority under Minimum Wages Act, matter travelled to this Court, minimum wages were ordered to be paid and matter is pending before the Apex Court. Question of minimum wages has not been rightly raised in the instant petitions.
18. It is also not in dispute that the agreement dated 27.10.70, 5.7.89 and 18.5.95 were entered into. In all the agreements it was provided that industry shall not employ labour through contractors or engage contractors' labour in jobs of permanent and perennial nature. Following are the relevant clauses of the various agreements :- AGREEMENT PROVISIONS IN RELEVANT CLAUSE Dated 27.10.1970 Clause 6.4 Abolition of contractor's Labour It is an agreement in principle that the industry shall not employ labour through contractors or engage contractors labour in jobs of permanent and perennial nature. The progress of implementation of this clause will be reviewed by this Committee from time to time. 5.7.1989 8.0 : General 8.1: Abolition of Contract Labour
8.1.1 : Industry shall not employ labour through contractor or engage contractor's labour on jobs of permanent and perennial nature. 8.1.2 : Jobs of permanent and perennial nature, which are at present being done departmentally will continue to be done by regular employees. 8.1.3 : Implementation of this clause and the progress made thereon will be reviewed by NJCS every three months. 18.5.1995 3.5 : General 3.5.1 : Abolition of Contract Labour 22.214.171.124. Jobs of permanent and perennial nature, will continue to be done by regular employees. 126.96.36.199 Industry shall not employ labour through contractors or engage contractors' labours on jobs of permanent and perennial nature. 188.8.131.52 Implementation of this clause and the progress made thereon will be reviewed by NJC periodically.
The aforesaid clauses provided for abolition of contract labour. The plea of Management is that aforesaid agreements were not entered into with the contract labours, hence it cannot be said to be binding vis a vis to the contract labour Union over the Management. The submission is liable to be rejected. Contract labours were not supposed to be party to such an agreement but the mandate of the agreements which is binding is that the Management was bound not to engage workers on contract basis in jobs of permanent and perennial nature. The Apex Court in Balbir Kaur and another vs. Steel Authority of India Ltd. and others (2000) 6 SCC 493 has held that the agreement of 1989 is a tri partite agreement.
19. What is the effect of aforesaid agreement on the employment of the contract labour has to be adjudged in the facts and circumstances of the instant case applying the test of master and servant relationship laid down by the Apex Court in various aforesaid decisions. The operation of the mines in question is governed by various Acts and the Rules framed for the purpose of welfare of the workers employed therein. Shri T.K.Dhali in Reference Case No.21/05 has stated in para 36 of his deposition that "Mines Act and Rules, Contract Abolition Act, Minimum Wages Act and Rules are applicable in mine. We were required to obey all these Rules and the Acts." In Reference Case No. 40/03 Shri T.K. Dhali management witness has stated that "Records used to be maintained as per provisions of Mines Act and the Rules framed therein. Form B,C,D and E were also maintained as per the Mines Act. Form B is a permanent register. From 1993 to 1995 in Form B approximately names of 1500 workers were entered. Form B register was maintained under supervision of Mines Manager by the Contractor. Unauthorized person cannot enter the prohibited area of the mines. Even a labourer employed by the Contractor could not enter the mine without permission of Labour Mines Manager employed by the Management. CGIT has also observed in para 45 that SAIL management used to discharge statutory liability as envisaged in CLRA Act, Mines Act and other Labour Laws. When we consider the various statutory provisions under which the Labours used to work in the mines, the Mines Vocational Training Rules, are applicable to all persons employed in a mine. Rule 5 specify standard of training to be imparted to such a person. Rule 18 deals with the training centre for imparting training to be undergone by the workers. Such training centre has to be run by the owner, agent or manager of every mine. Rule 28 deals with issuance of training certificate which has to be signed by the owner, agent or manager.
The Mines Chreche Rules, 1966 provides various provisions for welfare of women workers.In the instant case, out of 3404 workers, approximately 1500 workers were females. Rule 3 of the Mines Chreche Rules provides for creches, rule 4 provides for standard for creches, rule 5 provides for latrines, rule 6 provides for bathrooms, rule 7 provides for amenities to be provided, rule 8 provides for the time when creches shall be kept open, rule 9 provides for medical arrangement and rule 10 provides for provisions of staff.
Maternity Benefit Act is also applicable. The "employer" is defined in Section 3(iii) to be the person having ultimate control over the affairs of the establishment called manager, managing director, managing agent, etc. Section 4 of the Maternity Benefit Act provides restriction of employment of a woman for six weeks following the day of her delivery. As per section 5 every woman shall be entitled for payment of maternity benefit at the rate of average daily wage for the period of her actual absence, preceding the day of her delivery. Section 5-A, 6,9, 9A and Section 10 deals with other benefits provided to the women. It was submitted that the women contract workers enjoyed the aforesaid benefits. Thus,there was control of mines manager on all women employees, more than 1500 in number.
Provision of Section 48 of Mines Act, 1952 has also been referred to by the Union which provides for Registers of persons employed, other details, nature of employment, and their was prohibition under sub-section 43
(3) of Section 48 carving out that no person shall be employed in a mine until the particulars required have been recorded in the register. Sub-section (6) of section 48 provides that no person shall enter any open cast working or any working below ground unless he is permitted by the manager or his authorized under this Act to do so. Form B is required to be signed by the manager. Section 52(5) of the Mines Act deals with the annual leave wages of 15 days to be granted by the manager of the mine. Such leave used to be granted to the contract workers by the mines manager under the aforesaid rule. Under Rule 29(A),(B),(C) and (D) the employee's medical examination has to be carried out by the SAIL. Rule 29 V provides for safety committees. Chapter V provides for health and sanitation of workers. Rule 30 provides for supply of drinking water. Rule 33 provides for construction of latrines and urinals. Rule 36 provides for providing water and washing facility etc. Chapter VI provides for first aid and medical appliances. Rule 44 provides for first aid station. Under Rule 53, register of leave with wages has to be maintained by the management. Under Rule 54 such information has to be published on notice board. Beside, overtime register has to be maintained under Rule 59. Chapter IX provides for Welfare Amenities. Rule 64 provides for facility of Canteen. Rule 72 requires compulsory appointment of welfare officer by the management. Rule 73 provides for duties of Welfare Officer. He is supposed to take various welfare measures as provided in Rule
73. Identity tokens are required to be issued under Rule 77-A by the management. For the purpose of entry, register of daily attendance is also to be maintained under Section 48(4). Thus, it was submitted that there is deep and pervasive control and supervision of management.
20. Provision of Metalliferous Mines Regulations, 1961 have also been referred to by the Union to show the obligations and control of the management. Regulation 39 provides for appointment of officials and competent persons for the purpose of inspection of mine and the equipment thereof. A thorough supervision of all operations in the mine, the installation, running and maintenance,in safe working order of all machinery in the mines, the enforcement of the requirements of the Act and the Regulations and the Orders made thereunder. Under Regulation 40, the management shall provide for safety and proper discipline of persons employed in the mine and no person who is not an official or a competent person shall give instructions to a person employed in a mine who is responsible to the manager. Regulation 44 provides the duties and responsibility of managers. In every mine daily personal supervision shall be exercised by the manager. In case of workings below ground, he shall visit and examine the workings below ground on at least four days in every week to see that safety in every respect is ensured. The manager shall also ensure sufficient supply of proper materials and appliances for the purpose of carrying out the provisions of the Act and for ensuring safety of the mines and persons employed therein. Manager shall also examine representation or complaints made to him by the employees of the mine as to any matter affecting the safety or health of persons in or about the mine. The manager has the power under Regulation 44(10) to "suspend or take such disciplinary action" against any employee in contravention of any of the provisions of the Act, the regulations in question or orders made thereunder. Thus, it is clear that for any Act of indiscipline of any employee including the contract labour, the power vests under the Regulation in the management. Regulation 47(C) of Metalliferous Mines Regulations, 1961 provides that if any person is found in a place other than one assigned to him, he may be removed out of mine. Mining mate or other competent person appointed under Regulation 116 has to ensure under Regulation 47(D) that no inexperienced person is employed on any work except under the supervision of an experienced person. Thus, it is clear from the aforesaid provisions that Vocational Training has to be imparted. Various welfare majors have to be provided including safety and security of the workers. Disciplinary powers including power to suspend lies with the management in certain exigencies, as discussed above. Thus, as per aforesaid various statutory provisions, control and supervision is exercised by the management not by the contractor as per the deposition of witnesses of management.
21. The contract which was entered into by the Management with the Contractors interalia provided that the grades of minerals are approved and decided by the engineer. Contract include railway siding including sorting out of reject and of grade material, stock pilling, loading and unloading from the material into the wagon as per direction, control and supervision of SAIL.The Engineers/Mines Manager have full power to issue further instructions during the progress of the work for proper and adequate execution of the works. The Engineer/Mines Manager were at liberty to object to and require the contractor to remove forthwith from the works any person employed by the contractor in or about the execution or maintenance of the works who misconducts himself or is incompetent or negligent or is considered to be undesirable and such person shall not be again employed in the work. Contractor is also prohibited from bringing any labour from outside. He has to engage the same labour entered in Form-B relating to contract labour under the Mines Act. Dumping place for reject and off grade material was to be determined by the engineers/mines manager. Following are the relevant clauses in the contract providing the aforesaid supervision/control of SAIL :- "(vii) Grade of minerals are approved and decided by Engineer.
(viii) Contract include Railway Siding including sorting out of reject and of grade material, stock pilling, loading and unloading from the Trucks and loading the material into wagon as per direction, control and supervision of SAIL.
"5.2 The Engineer/Mines Manager shall have full power and authority to supply to the contractor from time to time during the progress of the works such further instruction as shall be necessary for the purpose of the proper and adequate execution of the works and the contractor shall carry to and be bound by the same."
"6.5 The contractor shall execute complete and maintain the works in strict accordance with the contract to the satisfaction of the Engineer/Mine Manager and shall comply with the adhere strictly to the Engineer's/Mines Manager (instruction and direction) on any matter whether mentioned in the contract or not. The contractor shall take instructions and directions only from the Engineer's/Mines Manager or (subject to the limitations referred to in the Clause 2.1 hereto) from the Engineer's representative."
(x) The agent of the Contractor has to be approved by the engineer and has to be removed on instructions of the Engineer. (xi) The contractor shall follow all directions and instructions of the Engineer (Mines Manager) or the Engineer's representative.
"6.8(2) The Engineer/Mines Manager shall be at liberty to object to and require the contractor to remove forthwith from the works any person employed by the contractor in or about the execution or maintenance of the works who in the opinion of the engineer/Mines Manager misconducts himself or is incompetent or negligent in the proper performance of his duties of whose employment is otherwise considered by the engineer/Mines Manager to be undesirable and such person shall not be again employed upon the works without the written permission of the engineer/Mines Manager any person so removed from the works shall be replaced without delay by competent substitute approved by the engineer/Mines Manager." The contractor is prohibited from bringing any labour force from outside. He should engage the same labour force already working in the mines and whose names are entered in the form-B relating to contract labour in the mines Act."
"7.5 Daily programme of drilling & blasting may be obtained by Contractor from Mines Manager/Engineer's Representative in order to regulate his work for collecting of ROM, cleaning of face and carrying out subsequent operations viz sizing, sorting, etc."
"9. Reject & Off-grade material dumps Rejects and Off grade material as defined under (5) shall be dumped on approved Site or in such places that may be determined by the Engineer/Mines Manager from time to time within a led of 2 (two) kms. The rejects ad fines that are likely to be generated during the processes of obtaining the approved grade and sized limestone will be about 35% to 40% of the finished product. It is presumed that the tenderers have inspected the work sites and have satisfied themselves about the different types and quantity of reject fines and off grade to be removed to get the approved quantity and quality of limestone. For any variation in the quantity and type of off-grade material and fines as mentioned above no extra claim shall be entertained by the Employer. The Engineer/Mines Manager reserves the right to ask the contractor to dump the rejects and off grade material on such sites and at such placed within a lead of 2 (two) kms. The contractor has to make his own service roads from pit head to the different dump sites at his own
22. Shri T.K.Dhali,witness of management in his evidence in para 30 has stated that "as per the material specification clause of the contract agreement the management of Kuteshwar Limestone Mines SAIL, had every right to accept or reject the materials produced by the contract labour through their contractors." Shri R.K.Jha has also made similar statement. The Tribunal has also found in Para 71(6) of the Award that SAIL has the right to reject the lime stone if it was not within the specified approved grade.
23. Shri Pramod Pandey who was Supervisor of M/s M.C.C.Company with effect from 16.10.1986 has stated that workers mentioned in the order of reference were initially appointed by the contractor, they had been working from very beginning. After 17.3.93 the workers were employed by the SAIL. The contractor did not come to the place thereafter. When the workers claimed their right in the year 1996 they were removed. After 17.3.93 the entire control supervision of the workers were by representative of the Management. All the employees were having gate pass and their provident fund used to be deducted.
Shri Ram Naresh Dubey who was working in Kuteshwar Lime Stone from 1984 has stated that he was an active member of Isptat Khadan Janta Mazdoor Union. After the notification was issued on 17.3.93 the workers continued to work on the same post, same place, same job which was prohibited under the provisions of CLRA Act. Captive Mine at Kuteshwar was of Bokaro Steel Plant. When they demanded for regularization police authorities destroyed the union office and crushed more than 1000 cycles at the meeting place. The workers were terminated without compliance of provisions of Section 25-N and 25-O of ID Act. The work was perennial. There was no justification to terminate the services. The terminal benefits were not given. Even VRS was not offered though the SAIL made the profit of 1471 crores. The workers were denied their just dues. Minimum wages were not paid. SAIL exercised full control over the workers. The workers continued to work for more than 240 days in every year from 1973 to 1993 and thereafter also. Shri T.K.Dhali, witness of the management, has stated that tender was for raising of approved SMS grade limestone at Kuteshwar Mines by manually/deploying mechanical equipments, and earth moving machineries and transporting the same to the Railway Siding. Eight contractors were awarded the work. The witness was unable to state when the contract was given to single enterprise and to other contractors. He was unable to say how much wages used to be paid to the workers. Minimum Wages Act was applicable to Kuteshwar Mines. Record used to be maintained under Minimum Wages Act, and also Forms B,C,D and E under the Mines Act. The Provident Fund used to be deducted by the contractors and used to be deposited with the PF authorities. Against notification dated 17th March,1993 several contractors filed writ petitions. The High Court of Calcutta on 15.3.94 and 11.4.94 stayed the operation of the said notification. In November, 1996 the contract labours of the contractor went on illegal strike. The contractors issued notice to the labours to join their duties. As they did not resume their duties, thus, the contractor terminated the services of the contract labours. Thereafter the labours were not allowed to enter the mine's premises for safety reasons. He has admitted that various agreements provide for abolition of contract labour. The agreements of 1970, 1975,1979,1983 and 1999 provide that on job of permanent and perennial nature , a regular employee shall work and the Company shall not employ labour through the contractors. The clauses in the agreement only provided statement of intent. The agreements are neither tripartite nor bi partite settlement and are not binding upon the management. The contracts were genuine. The Mines Manager exercised supervisory powers over the total affairs of mines as mandated under Section 17 of the Mines Act. It is also stated that B form used to be prepared by the contractor which used to be counter signed by the Mines Manager who used to retain a copy of Form B in his custody. Form B of 1500-1600 workers was prepared. The witness was unable to say whether they were the claimants in the reference. He has also admitted that no one can work inside the mine without permission of the Mines Manager as it is a prohibited area. He was unable to say that from 1996 any unskilled worker was recruited in the mine. One copy of wage sheet used to be retained by the management. He has also admitted that in case Mines Manager felt that presence of any person is undesirable in the mine, he could have asked the contractor to remove such person. The witness was unable to state what was the nature of the work in the mine in question which was of permanent and perennial nature. They had taken the work after prohibition notification also from the contract labours. He has denied that the contract was sham. Whether the workers had worked for 5 years or 20 years could be ascertained from Form B. The witness was never posted in Kuteshwar Limestone Mines. Shri R.K.Jha, witness of the Management had joined Kuteshwar Limestone in January, 1996. He has stated that he has signed various contracts after 1996. He was not able to state the names of the contractors. From 17.3.93 to 15.3.94 there was no stay order. Physical size and chemical quality material used to be checked by the employees of the management. Some contractors used to be paid in advance for making payment of the wages to workers.
24. In Reference Case No.21/2005, Shri T.K. Dhali has stated that they were following the various statutory provisions, material produced was used by the SAIL. They have the details of total number of workers, but have not filed it. SAIL has not challenged the notification dated 17.3.93. Shri A.K.Mishra, Manager has stated that during 1983 to 1997 contracts were genuine. He was not having any personal knowledge of the facts stated by him in the affidavit. He was unable to state the names of Foreman, Mining Mate, Timekeeper which was the statutory post. He has not sent the Form 12 maintained under Rule 74 by Principal Employer with respect to contract labours. The amount of provident fund used to be deducted by the management. Once it was deposited by the Contractor, it used to be released to him. Mobilization advance used to be given to the contractors. Central Industrial Security Force used to look after the security of Kuteshwar Mines. The entry of the workers was on the basis of identity cards issued by the Contractor. After January, 1996, permission was not given to the workers to enter as their services were terminated by the contractors.
25. The Apex Court in Hussainbhai vs. Alat Factory AIR 1978 SC 1409 has laid down that mere contracts are not decisive. Indian justice is, beyond Atlantic liberalism, has a rule of law which runs to the aid of the rule of life. Economic control over the workers' subsistence, skill and continued employment when, on lifting the veil or looking at the conspectus of factors governing employment. On piercing the veil, it is found that real employer is the management not the immediate contractor. The Apex Court has laid down thus :-
"5. The true test may, with brevity, be indicated once again. Where a worker or group of workers labours to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He has economic control over the worker's subsistence, skill and continued employment. If he, for any reason, chokes off, the worker is, virtually laid off. The presence of intermediate contractors with whom alone the workers have immediate or direct relationship ex contractu is of no consequence when, on lifting the veil or looking at the conspectus of factors governing employment, we discern the naked truth, though draped in different perfect paper arrangement, that the real employer is the Management, not the immediate contractor. Myriad devices, half-hidden in fold after fold of legal form depending on the degree of concealment needed, the type of industry, the local conditions and the like, may be resorted to when labour legislation casts welfare obligations on the real employer, based on Arts, 38-39- 42,43 and 43-A of the Constitution. The court must be astute to avoid the mischief and achieve the purpose of the law and not be misled by the maya of legal appearances."
The said decision has been followed by the Apex Court in Krantikari Suraksha Rakshak Sanghatana vs. Bharat Sanchar Nigam Ltd.& Ors. 2009 AIR SCW 317; Parimal Chandra Raha and others vs. Life Insurance Corporation of India and others AIR 1995 SC 1666; Gujrat Electricity Board, Thermal Power Station, Ukai vs. Hind Mazdoor Sabha and others AIR 1995 SC 1893; Secretary, Haryana State Electricity vs. Suresh and others Board AIR 1999 SC 1160; State Bank of India and Ors. vs. State Bank of India Canteen Employees' Union (Bengal Circle) and others AIR 2000 SC 1518; Bharat Bhawan Trust vs. Bharat Bhawan Artists Association and another AIR 2001 SC 3348;Steel Authority of India Ltd. and others vs. National Union Water Front Workers and others AIR 2001 SC 3527;M/s Bharat Heavy Electrical Ltd. vs. State of U.P. and others AIR 2003 SC 3024;Ram Singh and others vs. Union Territory, Chandigarh and others AIR 2004 SC 969;Workmen of Nilgiri Co- op.Mkt. Society Ltd. vs. State of Tamil Nadu and others AIR 2004 SC 1639; State of Karnataka & Ors. vs. KGSD Canteen Employees Welfare Association & Ors. AIR 2006 SC 845.
26. There is yet another facet to the instant case. Employment of the contract labour was prohibited by issuance of notification on 17.3.1993. The Committee which was constituted under CLRA Act consisted of 17 members, 7 representatives of All Central Trade Unions, 7 representatives of various Managements, 3 representatives of the Govt. of India and the President. The Committee after examining various factors, nature of the work, recommended abolition of contract labour and Govt. of India accepted the recommendation and issued notification under Section 10 of CLRA Act. The decision taken under Section 10 is final and binding. The Committee has found that process of operation and other works is incidental to or necessary for the industry. Job is of perennial nature. The job is to be done ordinarily through regular workmen in that 61
establishment or an establishment similar thereto. It is sufficient to employ considerable number of whole time workmen. Thus, the prohibition notification was issued.
27. In the instant case employment of contract labour continued even after prohibition notification was issued on 17.3.93. What is not permitted by law is opposed to the public policy. Employment of the contract labour was prohibited. The action was opposed to the principles enshrined in Section 23 of the Contract Act as laid down in Waman Shriniwas vs. RB & Co. AIR 1959 SC 689. The Apex Court has laid down that it is not permissible to any person to rely upon a contract making of which the law prohibits. Any contract prohibited by enactment is also against public policy has held in Central Inland Water Transport Corporation vs. Brojo Nath Ganguli and Anr. AIR 1986 SC 1571 and in M/s Oswal Agro Furane Ltd. & Anr.Oswal Agro Furance Workers Union & Ors.(2005) 3 SCC 224.
28. The effect of the notification under Section 10(1) of CLRA Act is that the contract labour working in the establishment concerned at the time of issuance of notification will cease to function. The contract of the principal employer with the contractor comes to an end, though contract labour can be employed by the principal employer, the contract labour continued in the employment of the contractor, and services of the contract labour can be utilized by the contractor in any other establishment with respect to which no notification under Section 10(1) has been issued. If the contractor intends to retrench the contract labour, he can do so only in conformity with the provisions of ID Act. The Apex Court has laid down in Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others (supra) thus :- "68. We have extracted above Section 10 of the CLRA Act which empowers the appropriate Government to prohibit employment of contract labour in any process, operation or other work in any establishment, lays down the procedure and specifies the relevant factors which shall be taken into consideration for issuing notification under sub-section (1) of Section 10. It is a common ground that the consequence of prohibition notification under Section 10(1) of the CLRA Act, prohibiting employment of contract labour, is neither spelt out in Section 10 nor indicated anywhere in the Act. In our view, the following consequences follow on issuing a notification under Section 10 (1) of the CLRA Act:
(1) contract labour working in the concerned establishment at the time of issue of notification will cease to function;
(2) the contract of principal employer with the contractor in regard to the contract labour comes to an end;
(3) no contract labour can be employed by the principal employer in any process,operation or other work in the establishment to which the notification relates at any time thereafter; (4) the contract labour is not rendered unemployed as is generally assumed but continues in the employment of the contractor as the notification does not sever the relationship of master and servant between the contractor and the contract labour; (5) the contractor can utilise the services of the contract labour in any other establishment in respect of which no notification under Section 10 (1) has been issued where all the benefits under the CLRA Act which were being enjoyed by it, will be available;
(6) if a contractor intends to retrench his contract labour he can do so only in conformity with the provisions of the I.D.Act. The point, now under consideration, is : whether automatic absorption of contract labour working in an establishment,is implied in Section 10 of the CLRA Act and follows as a consequence on issuance of the prohibition notification thereunder. We shall revert to this aspect shortly."
29. The contract of the management with the contractor came to an end and the contract labour ceased to function in the concerned establishment and principal employer was prohibited from employing contract labour, it was submitted that some of the contractors filed writ petition before the Calcutta High Court . However, the fact remains that there was no stay granted by any Court for a period of one year up to 1994. There were several contractors under whom the contract workers were employed. The reference made in May, 1997 to CGIT, Jabalpur by the Central Government indicates that workers were employed by seven contractors. M/s Singhal Enterprises had employed 700 contract workers, M/s Power United 550, M/s I.S.S.Construction Co.450, M/s Sri Krishna Mehrotra 400, M/s Singhal Enterprises 50, M/s R.Harnath Reddi 59 and M/s Eastern Mineral Trading Agency had employed 85 contract workers. Only M/s Eastern Mineral Trading Agency obtained stay from Calcutta High Court of which 85 workers were involved. It is not shown any other aforesaid contractors obtained stay.In case some of the contractors with respect to the mines situated in West Bengal have obtained stay, that would not have inured for the benefit of contractors in the State of M.P. In the State of Madhya Pradesh, WP No.4968/1993 was filed which was dismissed by a Division Bench of this Court on 16.12.93. Ultimately after chequered history of litigation between the parties, the Apex Court has ordered that matter is such which should be adjudicated by the industrial adjudicator as Industrial Adjudicator can examine whether the agreement is sham and bogus.
30. The Industrial Tribunal has held that the workers who were continuing on the date of prohibition notification, same workers continued to work till April,1996. Management has a copy of Form-B register of the workers who worked till April,1996. The Tribunal was correct in finding that there was no automatic absorption of the employees as held in Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others (supra I).
31. In the instant case, no order attained finality in favour of the workers, thus, no right accrued on the strength of Air India Statutory Corporation and others vs. United Labour Union and others (supra) in their favour.
32. It was submitted by Shri J.Dhankar, learned counsel appearing on behalf of the Management that High Court cannot interfere in the finding of fact recorded by the Labour Court or Industrial Court in an industrial dispute. He has relied upon decision of Apex Court in Mananagement of Madurantakam Coop.Sugar Mills Ltd. vs. S.Viswanathan (2005) 3 SCC 193 in which it has been laid down that only the finding of fact is perverse or not based on legal evidence, High Court can interfere under Article 226/227 of the Constitution. For doing so writ Court must record reasons why it intends reconsidering a finding of fact. He has also referred to the decision in Municipal Corporation, Faridabad vs. Siri Niwas (2004) 8 SCC 195 in which it has been laid down that while exercising discretionary jurisdiction under Article 226 of the Constitution, interference with the finding of Industrial Tribunal is not justified unless the same is found to be illegal of irrational. Reasons have to be assigned to make interference otherwise the order would be bad in law. The Apex Court also laid down that High Court erred in setting aside award of the Tribunal only on the basis of an adverse inference drawn against the applicant for not producing the muster roll. Reliance has also been placed on a decision of the Apex Court in Factory Manager, Cimmco Wagon Factory vs. Virendra Kumar Sharma and another (2000) 6 SCC 554 in which the finding of fact was recorded by the Labour Court that respondent was not workman. It was based on evidence on record. The Apex Court laid down same ought not to have been interfered with by the Division Bench of the High Court in its writ jurisdiction. In Management & Ghaziabad Engineering Co.(P) Ltd. vs. Its Workmen(1969) 2 SCC 319, it has been observed that the Tribunal has on appreciation of evidence came to the conclusion that financial position of the Company was sound, in a Special Leave to Appeal the Apex Court will not be justified in interfering with the finding of the Tribunal. In D.P.Maheshwari vs. Delhi Administration & Ors. (1983) 4 SCC 293, it has been laid down that finding of Industrial Tribunal based on proper appraisal of evidence is not open to the Court's interference under Article 226 or 136 of the Constitution. In Steel Authority of India Ltd. vs. Union of India and Others (supra II) it has been laid down that relationship of employer and employee is essentially a question of fact, said question would depend on large number of factors. Ordinarily a writ Court would not go into such a question. In original writ jurisdiction, for the first time, it would not be appropriate to examine such a question. However, in Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others (supra) the Apex Court has laid down that once a decision is rendered by an industrial adjudicator, it would be open to judicial review to the High Court under Article 226/227 of the Constitution of India. There is no dispute with the proposition advanced by Shri Dhankar that Court can interfere only after giving reasons not otherwise and only in the case where the findings recorded by the Tribunal are found to be perverse or irrational. Jurisdiction under Article 226/227 of Constitution of India is not to be readily exercised. It can be exercised only in appropriate cases. The power of the High Court to pass appropriate orders has been recognized in Navindhandra Shekharchand Shah vs. Ahmadabad Corporation Ltd.1979 (1) LLJ 60, Gujrat Steel Tubes Ltd. vs. Its Mazdoor Sabha AIR 1980 SC 1896 and Surya Dev Rai vs. Ram Chander Rai & Ors. 2003 (6) SCC 675.
33. Coming to the findings recorded by the Industrial Tribunal, in the instant case, the Tribunal has found that it has not been established that prior to 17.3.93 contract workers were the employees of SAIL and the contract was sham and bogus, however, it was sham and bogus after 17.3.1993. The Tribunal has held that wage slips were issued by the Contractors. However, it is apparent that wage slips register was also retained by the management and management used to retain the amount of provident fund and till it was proved that it has been credited to the accounts of the workers, the retained amount used to released to the contractors. We find that supervision and control was by management. The agreements entered into time to time prohibited employment of the contract labour in perennial and permanent nature of work. It has not been disputed that Dolomite & Lime Stone are necessary ingredients of manufacture of steel and work is perennial and permanent in nature. It has also not been disputed that Government of India has prohibited the aforesaid work to be taken from 17.3.93 by the contract labour, still it was taken by the SAIL from the workers without there being any interim stay till 1994 and thereafter also till 1996, and still it is not disputed at Bar the work is being taken by and large through the contract labours.The prohibition notification has not been enforced for the reasons best known to the SAIL so far. It has failed to satisfy this Court that there is any interim stay with respect to Koteshwar Mines obtained by any contractor which is operative as on today. A vague submission has been raised that some of the contractors of SAIL had obtained interim stay from Calcutta High Court. In case any of the contractors from Kuteshwar Limestone had obtained the stay, till which date it continued, whether the petition is pending, counsel on behalf of the SAIL was unable to point it out specifically.
34. The Tribunal while deciding the issue whether the contract is sham and bogus after 17.3.93 has held that the contract is sham and bogus. This finding has been recorded by the Tribunal in para 85 of the award. The finding recorded by the Tribunal that same workers continued till 1996 has not been disputed at Bar.
35. We find admission of Shri T.K.Dhali that only the incumbents who successfully passed the Vocational Training under the Rules were promoted to work in the mine and there was power with the management to ask the contractor to remove a worker as mentioned above. From evidence it is clear that the amount used to be paid in advance by the management to the contractor for payment to the workers. Infact, they were actual masters to make the payment. We are conscious of the fact that no single test can be said to be determinative factor. While recording the finding that only contractor could remove or transfer the employees, various other provisions of Acts and Rules of control, supervision, taking disciplinary action were being observed by the management, as admitted by their witnesses. The finding of Tribunal that contractors had full control and supervision over the work is also a perverse finding. In view of the Scheme of the functioning of the mines, the total control and supervision was that of management and without their permission, workers could not have entered into the mine itself and even if he was found at wrong place, his removal could have been ordered from the mine itself and such an incumbent against whom disciplinary action is taken by the management could not have been re-employed by the contractor as provided in the terms of the contract. It is also a perverse finding that contractor has full control over the skilled and professional work, infact the entire work was done under strict supervision and control of the management as apparent from the various provisions quoted above which were observed by management. The effect of power to reject the lime stone has also not been considered in accordance with the law laid down by the Apex Court in Silver Jubilee Tailoring House and others vs.Chief Inspector Shops and Establishments and another (supra), M/s Shining Tailors vs. Industrial Tribunal II, U.P., Lucknow and others (supra) and M/s P.M.Patel And Sons and others vs. Union of India and others (supra). Considering the following factors we are of the considered opinion that contract was sham and bogus:- (i) The agreement dated 27.10.1970 clearly provided for abolition of contract labour in the matter of work of a perennial nature. This was reiterated in agreements dated 5.7.1989 and 18.5.1995 and other agreements referred to above;
(ii) Right to reject the work was with SAIL;
(iii) There was direct supervision and control, under various mines laws and rules, of the SAIL. Under the Mines Act & Rules effective control and supervision was by principal employer on entry/leave/wages/safety/ other amenities/maintenance of leave wage register/welfare etc. Ultimate authority over performance resided in principal employer.
(iv) Work is permanent and perennial. (v) Vocational training used to be given to workers before they could start specialized working in mine.
(vi) SAIL could have taken disciplinary action and could have ordered removal of the employees, on that the contractor was bound to remove such employee and that was disqualification for his further engagement in the mines. Manager had power to suspend and take disciplinary action against any employee under Regulation 44(10) of Metalliferous Mines Regulations,1961. Power to remove him from the place of work was with the principal employer. Mines authorities had power to direct removal of worker who is undesirable, negligent or incompetent.
(vii) Women contract workers were entitled to provision of Mines Chreche Rules,1966 and Maternity Benefit Act. (viii) Inspection of mines and equipments was duty of employer, tools were also provided by the principal employer.
(ix) Piling, loading, unloading/sorting out was under the supervision of SAIL.
(x) Dumping of reject was controlled by SAIL.
(xi) There was total prohibition on engagement of contract labour with effect from 17.3.93.
(xii) There was no interim stay by Calcutta High Court w.e.f. 17.3.93 till 15.3.94 still the work was taken from contract labour. It appears only one of contractor M/s Eastern Mineral Trading Agency who employed 85 workers obtained stay.
(xiii) Contract between the principal employer and contractor came to an end by issuance of notification dated 17.3.93 under Section 10(1) of CLRA Act.
(xiv) There was no concept of contract labour after 17.3.93. Thus, taking work from the contract workers under the same very contracts was clearly sham and bogus. It was prohibited under the law also.
In our opinion the contract was sham and bogus considering the functioning of the mines.There was absolutely no justification after 17.3.93 to continue with the contract workers.By their continuance on lifting the veil, it becomes clear that the contract under the guise of which they were continuing was sham and bogus as found by the Tribunal also and in our opinion there was relationship of master and servant between the workers and principal employer.
36. Coming to the submission raised by Shri Dhankar, learned senior counsel appearing for the SAIL that in case the prohibition notification issued under Section 10(1) of the CLRA Act has been violated by SAIL, the penal consequences have been spelt out in Sections 23 to 25 of CLRA Act. Section 23 provides for penalty of imprisonment for a term which may extend to three months, or with fine which may extend to one thousand rupees or with both. Section 24 provides if any person contravenes any of the provisions of the CLRA Act or of any rules made thereunder for which no other penalty is elsewhere provided, he shall be punishable with imprisonment for a term which may extend to three months, or with fine which may extend to one thousand rupees, or with both. Section 25 deals with the offences by companies.
37. In our opinion, the aforesaid provisions of Section 23 to 25 of CLRA Act cannot be said to be exhaustive of the remedies available as clearly laid down by the Apex Court in para 125(5) of Steel Authority Of India Ltd. & Ors. vs.National Union Water Front Workers & Ors.(supra) in case agreement is sham and bogus, the workers have to be treated as servants of the principal employer. Thus, the view taken by the CGIT that only remedy in such a situation is to prosecute a person for violation of the provision and no other relief can be given cannot be accepted. In Haryana State Electricity Board vs. Suresh & Ors. (1999) 3 SCC 601 the Apex Court considered the continuance of agreement and effect of notification under Section 10 of CLRA Act. The Apex Court has laid down that in case a general contract was existing, it had to be abolished as per Section 10 of CLRA Act. The contract was not found to be genuine on facts. The Apex Court in Secretary, Haryana State Electricity Board vs. Suresh & Ors.(supra) has laid down thus :-
"It has to be kept in the view that this is not a case in which it is found that there was any genuine contract labour system prevailing with the Board. If it was a genuine contract system, then obviously, it had to be abolished as per Section 10 of the Contract Labour Regulation and Abolition Act after following the procedure laid down therein. However, on the facts of the present case, it was found by the Labour Court and as confirmed by the High Court that the so called contractor Kashmir Singh was a mere name lender and had procured labour for the Board from the open market. He was almost a broker or an agent of the Board for that purpose.The Labour Court also noted that the Management witness Shri A.K. Chaudhary also could not tell whether Shri Kahsmir Singh was a licensed contractor or not. That workman had made a statement that Shri Kashmir Singh was not a licensed contractor. Under these circumstances, it has to be held that factually there was no genuine contract system prevailing at the relevant time wherein the Board could have acted as only the principal employer and Kashmir Singh as a licensed contractor employing labour on his own account. It is also pertinent to note that nothing was brought on record to indicate that even the Board at the relevant time,was registered as principal employer under the Contract Labour Regulation and Abolition Act. Once the Board was not a principal employer and the so called contractor Kashmir Singh was not a licensed contractor under the Act, the inevitable conclusion that had to be reached was to the effect that the so called contract system was a mere camouflage, smoke and a screen and disguised in almost a transparent veil which could easily be pierced and the real contractual relationship between the Board, on the one hand, and the employees, on the other, could be clearly visualised."
38. It was submitted on behalf of the Union that for non-production of the documents, non- examination of the contractor,an adverse inference ought to have been drawn against SAIL by the Tribunal. Shri Nair, learned Sr.Counsel has submitted that Union filed an application on 25.7.2006 for production of statutory records maintained by the management such as Form A,B,C,D and E maintained under Section 48(3) of the Mines Act/Rules, copies of the memorandum of agreements/NJCs executed on different dates, muster roll, etc. With reference to the employment of the workers, the management opposed the prayer on the ground that no such documents are available with the management. Tribunal on 5.6.06 and 22.8.06 held that management cannot be insisted to produce those documents which are not in their possession. However, Tribunal, at the same time,observed that implication of non-production of statutory records shall be considered at the time of final award.As discussed above, the witnesses of the management have admitted that they were having Form B registers, etc. in their possession and the record of wages which would have included attendance also. Thus, it is apparent that certain documents which were in possession of management were not produced, the existence of which has also been admitted by the witnesses. It was also submitted by Shri J.Dhankar, learned senior counsel appearing on behalf of the Management that burden to prove the case is upon the Union and they have failed to discharge the same. He has relied upon decisions of Apex Court in Uttar Pradesh State Electricity Board and Another vs. Aziz Ahmad (2009) 2 SCC 606, Ranip Nagar Palika vs. Babuji Gabhaji Thakore and others (2007) 13 SCC 343 and Workmen Of Nilgiri Coop. Mkt. Society Ltd. vs. State of T.N. and others (2004) 3 SCC 514.
Whatever that may be, considering the facts on record and prohibition notification dated 17.3.93 and the legal provisions under which Mines are operated the contract was sham and bogus.
39. It was submitted by Shri Nair, learned Sr. Counsel that the contract workers/their heirs are entitled for terminal benefit/gratuity retrenchment compensation, ex-gratia, etc. He has also submitted that the workers who are alive are also entitled for back wages. In his submission the case in hands is unparallel and workers have been subjected to inhuman, arbitrary and un- principled misuse of power, the action is against constitutional philosophy. The workers were forcibly prevented by the police from entering the work place, no employment opportunity was available to them as most of them were tribals and downtrodden they could not get any employment. 3404 workers and their family have suffered starvation for the last several years and approximately 300 of them had died and several of their family members have suffered due to non-employment. They are poor, illiterate workers, 95% of them are tribals and Harizans. They were deprived of minimum wages. He has further submitted that unfair labour practice had been resorted to. The workers are suffering slow poisoning for the last 16 years. The action is violative of various International Convention and various articles of Universal Declaration of Human Rights, 1948. The termination of services was in violation of Section 25-N of ID Act. The workers shall be deemed to be in employment and are entitled for wages. He has relied upon decisions in Punjab National Bank vs. AIPNBE Fed.AIR 1960 SC 1960, Swadeshi Ind. Ltd. vs. Workmen AIR 1960 SC 1258, M/s Hindustan Tin Works Pvt. Ltd. vs. Emp. (1979) 2 SCC 80, Surendra vs. CGIT (1980) 4 SCC 443,Mohan Lal vs. Bharat Electronics (1981) 3 SCC 225, D.K.Yadav vs. JMA Industries (1993) 3 SCC 259, Jasbir Singh vs. Punjab & Sind Bank (2007) 1 SCC 566, Uttaranchal Forest vs. Jasbir Singh (2007) 2 SCC 112, Novartis India vs. State of WB (2009) 3 SCC 124, Gammon India Ltd. vs. Niranjan Das (1984) 1 SCC 509, A.L. Kalra vs. Project and Equipment Corporation Of India Ltd.(1984) 3 SCC 316, L. Robert D'Souza vs.Executive Engineer, Southern Railway and another (1982) 1 LLJ 330. It is not the case of either party that provisions of ID Act were complied with while terminating the services. It was submitted on behalf of management that it was for contractor to comply with the provisions of ID Act. We have found that management was the real employer after 17.3.93, which aspect is material in the case.
40. There is yet another important facet in the case due to which the workers are entitled for relief of reinstatement, even assuming for the time being that contract was not sham and bogus, however, fact remains that prohibition notification to employ the contract workers came into force with effect from 17.3.93. Work could not have been taken thereafter from the contract workers. The Apex Court in Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others (supra) has laid down in para 125 (6) that preference has to be given to the erstwhile contract labour while employing the regular workmen. Thus, the preference has to be given to the erstwhile contract labours by relaxing the condition as to maximum age, etc. subject to the suitability. It is not proper for SAIL to continue with the contract labour once the notification of prohibition under Section 10(1) of CLRA Act has come into force in the year 1993. Not appointing the regular workers and taking the work from contract workers is illegal, arbitrary and violative of the notification issued under Section 10 of CLRA Act.
41. As we have found the contract to be not genuine but mere camouflage in the facts and circumstances and considering prohibition notification under Section 10(1) of CLRA Act, inevitable conclusion is that the contract labours have to be treated as employees of the principal employer.
42. Considering the large number of workers involved in the instant case and the notification issued under Section 10 of CLRA Act, the regular workmen have to be ultimately employed by the SAIL. We decline to grant the back wages to the workers in the instant case. It would not be appropriate to saddle the huge liability of back wages. However, we direct that the SAIL to start the process of regular employment. The workers who were in the employment from 1993 till 1996 are ordered to be reinstated, and their cases be considered for regularization in accordance with the directions issued by the Apex Court in para 125 of Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others (supra).
43. Resultantly, the writ petition filed by Union is partly allowed to the aforesaid extent. The writ petition preferred by the Management is dismissed. No costs.