1. Ext.P5 Award passed by the 7th respondent/Industrial Tribunal is under challenge at the instance of the Management.
2. Respondents 1 to 6 were admittedly the workers of a Society, functioning in the name and style as Udyogamandal Labour Contract Co-operative Society, (a Society registered under the Kerala Co-operative Societies Act/Rules), engaged for the purpose of branding/stenciling gunny bags purchased by the petitioner Company (which is a Govt. of India Enterprise) from elsewhere for packing various fertilizers. Such engagement of the workers was by entering into a contract with the Society, who appointed the workers, who were being paid, supervised and controlled by the Contractor Society. It is stated that there is no employer-employee’ relationship between the petitioner and the said workers/respondents at any point of time.
3. While so, in tune with the administrative requirements/exigencies, the petitioner decided to put an end to the practice of manual branding and stencilling of gunny bags and decided to procure branded gunny bags from elsewhere. As a result, the contract with the society was not extended beyond 31.12.1991, as it was not renewed.
4. Though the workers, as above, were doing such work under the Society, on piece-rate wages and were not engaged from 01.01.1992, they sought to raise an Industrial Dispute under Section 2-A of the Industrial Disputes Act nearly five years thereafter, by filling Ext.P1 complaint before the Regional joint Labour Commissioner, Ernakulam on 19.02.1996, arraying the petitioner as the sole opposite party. Since the conciliation did not turn to be fruitful, the matter was referred for adjudication by the appropriate Government as per Ext. P2 order of Reference dated 28.09.1996, with the issue framed as follows:
“whether the following six employees are workmen of the Fact Udyogamandal. If so, what relief they are entitled for their termination of service
1. K.A. Ayyappan Pillai
2. K. Sreemathy
3. P.C. Veroni
4. N.P. Sumathy
5. N.S. Jeyarajan
6. P.V. Joy
5. The workers filed Ext.P3 ‘claim Statement’ before the 7th respondent, which was sought to be resisted by the Management by filling Ext.P4 written statement. One witness each was examined from either side and Exts. M1 to M6 were marked on the side of the Management, while Exts. W1 to W4 were marked on the workers’ side. On conclusion of the trial, the Industrial Tribunal passed Ext. P5 Award, holding that the appropriate Government had issued a Gazette Notification dated 10.01.1989 prohibiting contracts labour in the process of handling and moving of raw materials of Rock phosphate, Sulphur and empty gunny bags inside the factory premises of FACT, Udyogamandal; that though the workers were working in the premises of the Management under a contract with the Society, their work came within the notification as aforesaid and as such, they were liable to be treated as workmen under the Management from the date of coming into force of the notification; however, observing that in view of change in the method of working arrangement, there was no question of absorption of workmen in service, but for declaring their eligibility to obtain terminal benefits. It was also observed as follows;
In view of the fact that these workmen were compelled to work as contract labour despite Ext. M2 notification, the period during which they worked as Contract Labour has to be treated as regular service for all purpose. Such regular service would deem to have commenced from the date of commencement of Ext.W2 notification.”
Based on the said finding, it was also observed that the termination w.e.f. 01.01.1992 was not in conformity with the provisions of Sec. 25-F of the I.D. Act and hence it was declared that the workers were supposed to be in service till they were validly terminated. The petitioner/Management challenges the said Award on many a ground, legal and factual.
6. During the pendency of the above Original Petition, various C.M.Ps were preferred claiming the benefit of S.17B of the Industrial Disputes Act. After considering the factual position and the mandate under the relevant provisions of law, the above C.M.Ps were dismissed, as per the common order dated 18.11.2000 holding that no reinstatement was ordered as per Ext. P5 Award and as such, the so called workers were not entitled for any relief contemplated under Sec. 17B of the Act. So an appeal was preferred as W.A. 14/2001 by some of the aggrieved workers, wherein also interference was declined and the appeal was dismissed as per the judgment dated 06.07.2001.
7. Mr.Benny Thomas P, the learned Counsel appearing for the petitioner/Management submits that the impugned Award passed by the Tribunal is per se wrong and illegal in all respects; that the Tribunal has exceeded its jurisdiction having travelled much beyond the issue referred to; that the question whether the concerned workers came within the purview of the Notification dated 10.01.1989 prohibiting contract labour in respect of the specified category, was not an issue referred to the Tribunal; that the said notification was issued in respect of another set of employees doing totally different job; that the respondents were continuing their work under the Society for branding and stencilling the gunny bags for nearly three years even after the Notification; that no industrial dispute was raised by them for quite long (5 years) from the date of loss of work, ie. from 01.01.1992 till 19.02.1996 when Ext. P1 complaint was preferred; that the cause of action, if at all any, had become stale; that the Tribunal, based on the materials on record had arrived at a finding that the workers were employees of the Society; that there was no finding that the contract was a ’sham agreement’, under which circumstance, there was no jurisdiction for the Tribunal to proceed further and that the law is well settled in view of the declaration made by the Apex Court in Steel Authority of India vs. National Union Waterfront Workers and others [(2001)7 SCC 1 .
8. Mr. P. Ramakrishnan, the learned Counsel for the respondents 1,5 and 6 submits that Ext. P5 order passed by the Tribunal is very much on the specific issue referred for adjudication and for deciding such issue, reference to the relevant notification issued by the Government prohibiting Contract Labour was necessary, which exercise alone has been pursued by the Tribunal. It is stated that the evidence adduced before the Tribunal has also revealed that the workers were discharging similar functions as carried out by the other set of workers, at whose instance the Notification was issued by the Government prohibiting Contract Labour and that the comparative analysis made by the ‘Tribunal’ leading to the inference is perfectly in order. The learned Counsel appearing for the respondents 2 to 4 also supported and supplemented the submissions, as aforesaid with reference to the materials on record.
9. The scope of engagementwith reference to the provisions under the Contract Labour (Regulation and Abolition) Act, 1970 has been well explained by the Constitution bench of the Apex Court in Steel Authority of India Ltd. v. National Union Water front Workers (2001 (7) SCC 1 ) wherein the relevant provisions of the said Act, as they existed before and after the amendment in 1986, have been discussed in detail. If there was a notification prohibiting the contract labour’ under Section 10 of the Act, whether the employees would get automatic regularization, was also a matter considered by the Bench and it was held, among other points, that even in such a case, the matter had, to be adjudicated by the Industrial Court and was automatic.
10. Later, as per the decision of the Apex Court in International Airport authority of India v. International Air Cargo Workers’ Union (2009-IV-LLJ 31), it was held that, in the absence of a notification under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 prohibiting the employment of contract labour in the operation of cargo handing work, the workmen employed as contract labourers were not entitled to claim absorption and that the contract labourers were not direct employees of the appellant therein. In a still recent case, ie,. General Manager (OSD), Bengal Nagpur Cotton Mills, Rajnandgaon vs. Bharat Lal (2011-I- LLJ 321), the supreme Court has held that the two well recognized tests to find out whether an employee is a contract labour or a direct employee of the principal employer are:
1. Whether the principal employer pays salary, instead of contractor; and
2. Whether the principal employer controls and supervises the work of the employee.
In other words, the crucial question is, whether the agreement executed by the Employer/Management to have the operations carried out by engaging a contractor is a ‘Sham transaction’ or not.
11. Viewed in the above background, there is no specific case for the respondents/workers that the contract entered into between the petitioner Management and the Society, was a, sham document, or that they were not the workers of the society. The claim was that several other similarly situated persons were given the benefit of regularization, which was virtually denied to the workers herein, who were engaged for handling, stenciling and branding of gunny bags and that the work was being supervised by the officers of the petitioner Management Company. It was contended that the service of the workers was terminated without following the requirements contemplated under Section 25-F of the Industrial Disputes Act and that there was no justification for not regularising the service of the workers by the petitioner/Management. It was in the said circumstance, that a declaration was sought for as per Ext.P3 claim Statement, simultaneously seeking for regularization of their service with retrospective effect and for consequential benefits.
12. After discussing the pleadings and evidence, the 7th respondent/Tribunal has arrived at a finding in Ext. P5 Award that the workers were engaged by the concerned Society and that they were being paid by the society. The contract so entered into, between the petitioner Management and Society, has never been declared as a sham document; nor is it branded as an attempt to wriggle out from the liability by the petitioner. In the absence of any such finding, the respondents/workers cannot be heard to say that they can seek for and obtain wider rights/benefits than the extend flowing from the contract and the terms of appointment issued by the concerned society. In no case, can they successfully contend under such circumstance, that the are eligible to be treated as workers of the petitioner Management; more so, in view of the law declared by the Apex court on the point in Steel Authority of India Ltd. V. National Union Waterfront Workers (2001(7) SCC 1), International Airport Authority of India v. International Air Cargo Workers’ Union (2009-IV-LLJ 31) and also in General Manager (OSD), Bengal Nagpur Cotton Mills, Rajnandgaon vs. Bharat Lal (2011-I-LLJ 321).
13. Coming to the Notification dated 10.01.1989 issued by the Stated, prohibiting the contract employment in the premises of the petitioner Management, the relevant portion (Ext.W2 before the Tribunal) reads as follows: “Item of work: 1. The contract labour engaged in the process of handing and moving of raw materials of rock phosphate, sulphur and empty gunny bags inside the factory premises FACT, Udyogamandal,”
The said notification was issued pursuant to a complaint preferred by the concerned Union before the State Advisory Board under the Act, for a declaration to the said extent. It is also relevant to note that, when such a claim was raised by the said Union in respect of a different set of workers, the workmen concerned herein, who were in no way connected with handling and moving of raw materials of Rock phosphate, sulphur and empty gunny bags but for having assigned piece-rate work by the Society in the matter of branding/stenciling the gunny bags, had never raised any such plea that they were also liable to be regularised. Even after issuance of such notification dated 10.01.1989, the workers herein continued their engagement as ever before till 31.12.1991, which by itself shows that they did not have a case that they were also liable to be governed by the Notification, as aforesaid. The said workers kept silence for’ five more years’, even after the loss of employment w.e.f.,01.01.1992 and it was only on 19.02.1996 that they preferred Ext.P1 complaint before the Regional Joint Labour Commissioner, Ernakulam.
14. The point to be considered is whether the branding and stenciling of gunny bags was a ‘core activity’ in respect of the manufacturing process pursued by the petitioner Management, so as to have it brought under the purview of the Notification prohibiting contract labour. As mentioned hereinbefore, Ext.W2 Notification itself is very specific, referring to moving of raw materials and empty gunny bags as above, held as a ‘core activity’ in the manufacturing process, which led to the Notification. Unlike this, the “branding/stenciling of gunny bags” procured by the petitioner/Management is only as incidental job, which was being assigned and awarded to the Society, who was getting it done on piece-rate basis, by engaging the respondents 1 to 6 herein. Despite the specific reference to the Notification and handling and moving of raw materials like Rock phosphate, Sulphur and empty gunny bags in paragraph 5 of Ext.P5 Award, when it came to the operative portion, the Tribunal wrongly drew an analogy to the work being performed by the respondents 1 to 6, merely by referring to the handling and stenciling of gunny bags (leaving out of the core activity in the manufacturing process as to the moving and handling of the raw materials and empty gunny bags), which does not appear to be correct or proper. The reason given by the Tribunal to treat the respondents 1 to 6 as workers under the petitioner Management from the date of coming into force of Ext.W2 Notification is absolutely without any basis.
15. Going by the admitted nature of the work that is being performed by the respondents 1 to 6 and the contents of Ext.W2 Notification (extracted by the Tribunal in paragraph ‘5’ of Ext.P5 Award). This court finds that, it does not come within the purview of the said Notification. This being the position, interference made by the Tribunal to have the respondents 1 to 6 treated as the workers of the petitioner/Management, notwithstanding the admitted nature of their engagement through the Contractor Society and further in the absence of any finding that such contract was a ‘sham transaction’, is not correct or sustainable. That apart, whether Notification covered the engagement of workers concerned (respondents 1 to 6) or not, was not an issue referred for adjudication before the Tribunal, as the issue referred by Ext.P2 was something else.
16. The basic issue referred was whether the ‘six’ employees were workmen of the FACT, Udyogamandal. Since there is a finding that the workers were engaged by the Contractor Society, in the absence of a finding that contract was a sham contract, no consequential direction could have been issued by the Tribunal, to have them treated as workers of petitioner Management and to pay them the terminal benefits till they were validity retrenched, satisfying the requirements under Section 25-F of the Indusdrial Disputes Act. This is more so, when the change in the organizational requirments has been noted and accepted by the Tribunal in paragraph ‘10’of the Award. Further, the dispute itself was raised much belatedly, ie. more than seven years after the notification dated 10.01.1989 prohibiting contract employment and at least five years after the loss of employment w.e.f.01.01.1992-the effect of which plea raised in Ext.P3 claim statement, though referred to in paragraph ‘3’, has not been discussed anywhere in Ext.P5 Award.
17. In the above facts and circumstance, this Court finds that the Tribunal was not right in travelling beyond the issue referred to it vide Ext.P2 and the reasoning given by the Tribunal does not support the finding. This Court holds that the respondents 1 to 6 are not entitled to have any relief. Ext.P5 Award is set aside and the original petition is allowed. No cost.