JUDGMENT Yatindra Singh, J.
1. M/s. Brij Basi Udyog (the petitioner) is a firm registered with Registrar of Firms, Bombay. It manufactures fire-fighting equipments at Mathura. There was another firm named M/s. Brij Basi Engineers (the other firm for short), which was registered with Registrar of Firms. U. P., Lucknow. The other firm functioned as a contractor for supply of the unfinished fabricated components for the petitioner. It had no other business except to act as a contractor for the petitioner. It was dissolved due to non-availability of work from the petitioner due to which its workmen were retrenched on 13.12.1981. Thirty one workmen raised an industrial dispute about termination of their services, which was referred to the Labour Court by the State Government. The Labour Court by its award dated 22.12.1984 has held that :
the petitioner and other firm are one and the same - the other firm being a camouflage for the petitioner :
one workman, namely, Gopi Nath was not employed by the other firm but was employee by the petitioner. He was rightly retrenched on 9.12.1981 (there is no dispute about him in this writ petition) ;
the remaining 30 workmen were not rightly retrenched and were entitled to be reinstated with full back wages :
two workmen who had received retrenchment compensation were also entitled to be reinstated. The retrenchment amount that they had received was to be deducted from the amount towards their back wages.
It is against this award that the present writ petition has been filed.
POINTS FOR DETERMINATION
2. I have heard Shri Tarun Agarwal, counsel for petitioner and Shri A, S. Diwakar, counsel for the contesting respondents. The following points arise for determination in this case :
(i) Was the petitioner the real employer ? Was the other firm a camouflage for the petitioner?
(ii) Are some of the contesting respondents, who have received retrenchment compensation, estopped from raising an industrial dispute? Have they waived their rights to raise it?
(iii) Was retrenchment of the contesting respondents valid?
(iv) What are the principles for awarding back wages? Should the contesting respondents be awarded full back wages?
1st POINT : WAS PETITIONER THE REAL EMPLOYER?
3. When can one be held to be an employer of persons employed by others? This has been discussed by the Supreme Court in Hussaini Bhai v. Alath Factory Tezhilall Union' (Hussaini Bhai's case). The Supreme Court has held that the true test (is) 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 workers 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 contract 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. The labour court has applied these principles to the facts of the case and has held that even though the petitioner and the other firm were different firms. had different partners, and began their business at two different places ; yet the petitioner was a real employer of the contesting respondents. This was in view of the facts that the other firm :
was producing goods only for the petitioner ;
had shifted its production unit to the premises of the petitioner ;
had Identity card of its workmen on the letter head of the petitioner (the labour court disbelieved the explanation given by the petitioner) ;
had no separate workshop ;
had office at the same place as the petitioner from where wages etc. were distributed to their workmen.
If the principles of the Hussaini Bhai's case apply, as they are, then there is no fault in the award on this score.
4. Sri Tarun Agrawal learned counsel for the petitioner has argued that Hussaini Bhai's case may be read with another decision in Punjab National Bank v. Ghutam Dastgir2 (Dastgir's case). Here the bank had given a car along with allowances for petrol, driver, etc, to the manager yet the manager instead of the bank was held to be the real employer of the driver. According to Shri Agrawal this was because the real control and direction over the driver was not with the bank but with the manager. He argues that this is the case here : the petitioner had no real control or direction over the contesting respondents ; it was with the other firm ; the petitioner cannot be held to be the employer.
5. The Dastgir's case is distinguishable. The Court in paragraph 3 of Dastgir's case had held that there is nothing on record to indicate that the control and direction of the driver vested in the bank. The driver was not manufacturing or producing any goods for the bank as the case here. Apart from it the Court in paragraph 2 says that the question (who is the real employer) in each case turns on its own circumstances and decisions in other cases are rather illustrative than determinative. The Dastgir's case turns upon its own facts where there was paucity of evidence. But here, there is some evidence. In any case, it is a two judge decision whereas Hussaini Bhai's case is a three-Judge decision [though of the same Judge], Hussaint Bhai's case has also been cited with approval in a latter decision in Secretary. Haryana State Electricity Board v. Suresh3.
6. The Hussaini Bhai's case is applicable to the facts of the present case as the group of workers working in the other firm used to produce goods for the business of the petitioner only. The petitioner (in view of Hussaini Bhai's case) had the economic control over the workers'" subsistence, skill and continued employment. The finding recorded by the Labour Court is neither perverse nor so unreasonable that no reasonable person could have reached it on the basis of the evidence on record. It cannot be set aside in the writ jurisdiction.
2nd POINT : ACCEPTANCE OF THE RETRENCHMENT COMPENSATION-WAIVER
7. The petitioners in their written statement had pleaded that seven workers had accepted the retrenchment compensation and are estopped from raising the industrial dispute. Before the labour court, the petitioner filed documents in respect of three of them only. The labour court has held that : one of them had not received retrenchment compensation as the person who had received the retrenchment compensation was named Balbir and in the reference there is no Balbir but one Brijbir : two of them, namely, Devi Ram and Punna Lal, had accepted retrenchment compensation but they are to be reinstated and the retrenchment compensation be deducted from the amount of back wages. The labour court has not discussed if they have waived their rights or are estopped from raising the dispute.
8. Have these two waived their rights to raise the industrial dispute? Are they estopped? Should they be denied the relief of reinstatement on this ground? The Calcutta High Court1 and the Patna High Court2 have taken the view that such workmen who have received retrenchment compensation, cannot be estopped from questioning their retrenchment or claiming benefits under the Act. The Madras High Court3 has sounded a different chord, the workers were estopped from claiming subsequently the benefits conferred by the Act as they had deliberately contracted themselves out of the statute.
9. The Supreme Court in Workmen of Subong Tea Estate v. Outgoing Management of Subong Tea Estate4, has observed that such objections are technical pleas and should not be entertained in an industrial adjudication. This is clear from the words 'apart from the fact that such technical pleas are not generally entertained.' Twenty-eight out of thirty have not received retrenchment compensation. The labour court has exercised its discretion in not permitting the petitioner to raise this plea. There is no reason why petitioner should be permitted to do so. I don't think that I would be justified in permitting the petitioner to raise it.
3rd POINT : WAS RETRENCHMENT VALID?
10. The labour court has held that the retrenchment was illegal on the ground that the notice has been given by the other firm and there was no such occasion for closure as the petitioner and the other firm are one and the same. This approach of the labour court is not correct. The notice for the retrenchment was given by the other firm as it had employed the contesting respondents. Once the labour court came to the conclusion that the other firm and the petitioner were one and the same, the notice given by the other firm should have been treated to be the notice on behalf of the petitioner and the validity of the retrenchment ought to have been judged on this basis-the petitioner may not be manufacturing unfinished fabricated component (the material manufactured by the other firm) and may be purchasing it from some where else. The finding in this regard is therefore illegal.
4th POINT : PRINCIPLES - BACK WAGES
11. The labour court has reinstated the contesting respondents with full back wages. Before 1 comment upon it let's discuss the general principles regarding back wages.
12. Section 11A and Sub-section (2A) in Section 6 have been Inserted in 1971 and 1978 in the Industrial Disputes Act (The Central Act) and the U. P. Industrial Disputes Act [the State Act) respectively. They are substantially same and give discretion to the labour court to impose terms and conditions in case discharge/dismissal/removal of a workman is being set aside. Back wages is a term, a condition, which is at the discretion of the labour court. Even prior to it the law was the same-back wages were in the discretion of the labour court. But the discretion has to be exercised judicially.
13. The general rule in labour jurisprudence is that the back wages are awarded from the date of the termination order and not from the date of the order holding termination of service to be illegal.' And certainly the normal rule on reinstatement, is full back usages since the order of termination is non est. Even so, the industrial court may unwell slice off a part. ... To what extent wages for the long interregnum should be paid is therefore, a variable dependent on a complex of circumstances.2 The Courts in different cases have explained these complex circumstances. Here are some relevant factors, which should be considered while making deductions in back wages. The full back wages may not be awarded if :
(i) the Industry may close down or might be in severe financial doldrums or the relief of back wages may place an impossible burden on the employer.3 Or the unit has started making profits but has still not cleared its accumulated loss.4
(ii) the conduct of the workman is such-he may not be wholly blameless ; or strike may be unjustified.5
(iii) the nature of the work is such-the workman may be a casual a seasonal or a daily wager. He may not get work every day.6 The Court may find out for how long he could have got the work and one of the methods may be to take the average of last three years and direct payment of back wages on that basis.7
(iv) there was delay in raising the dispute, though the delay after raising the dispute is net relevant. The dispute should be raised at the earliest.
(v) the activity conducted by the industry is such. Many activities have been held to be an industry though they are not profit making. Charitable. research oriented, educational, welfare activities of the Stale or similar activities even if they are industry within the meaning of the State or the Central Act, yet have to be differentiated with profit making activities so far as back wages on reinstatement are concerned.
(vi) the workman was gainfully employed somewhere else. He cannot take double advantage.
(vii) no efforts were made by the workman to seek employment. It is also relevant. The workman should minimise the loss.
There may be other reasons. This list is by no means exhaustive.
14. The relevant factors for not awarding full back wages If are not apparent from the record have to be pleaded and proved. As far as the first three factors, namely : an impossible burden and its effect on the management ; the conduct of the workman ; and the nature of work, are concerned, it is for the employer to plead and prove it. The fourth and the fifth factor, namely, delay and the nature of activity may be obvious from the record itself and the Court can consider it. But if it is not so, then the employer has to plead and prove it. But so far as the last two factors-namely, gainfully employed somewhere else and the effort made by the employee are concerned-it is a difficult question. If this question is raised, then as the facts about the employment or non-employment during the period of enforced idleness or the efforts made by workman to get a job are within special knowledge of the workman. It is fair that he should state first if he was gainfully employed or not or if any efforts were made by him for securing alternative employment. It is in this sense that initial burden may be on the employee. But once he has discharged it, then it is for the employer to prove that he (workman) was gainfully employed.2
15. In this case, the only relevant consideration was, if the contesting respondents were gainfully employed or not. There is no discussion in the award in this regard. One doesn't know if it was raised and if there is any evidence on the part of the contesting respondents that they were not gainfully employed. The petitioner has filed a supplementary affidavit indicating that the contesting respondents are gainfully employed at other places. The names of the firms are also mentioned. There is no specific denial of this. This has also been mentioned in the rejoinder-affidavit. As the case is being sent back, this question may be decided after affording reasonable opportunity to the parties to adduce evidence.
CONCLUSION
16. In view of the finding given above the award dated 22.12.1984 is quashed so far as the finding on question Nos. 3 and 4, namely : the legality of the retrenchment ; and back wages are concerned. The findings on the other questions, namely : that the petitioner was the real employer ; some of the contesting respondent can not be estopped from raising the industrial dispute for having have received retrenchment compensation ; and Gopi Nath was rightly retrenched, are upheld. These findings will not be reopened. The labour court will re-decide the question numbers 3 and 4 in accordance with law after affording reasonable opportunity to the parties to adduce evidence in that regard. The case should be decided expeditiously. In view of partial success, cost will be on parties.
With these directions the writ petition is allowed. The parties will appear before the Labour Court on September 20. 1999.