Heard Sri Vivek Ratan, learned counsel for the petitioner, Sri Ashok Mehta, learned Senior Counsel assisted by Sri Gautam Chaudhary, learned counsel appearing for respondent no. 3 and learned Standing Counsel.
The present writ petition arises out of an award dated 20.6.2007 passed by the Presiding Officer, Labour Court (U.P.), Allahabad in Adjudication Case No. 28 of 2007. An industrial dispute was raised by respondent no. 3-workman on the ground that his services have been illegally terminated by the petitioner employer and he was an employee of IFFCO the petitioner and not of contractor M/s H.S. Construction, respondent no. 4. The State Government referred the dispute to the Labour Court for adjudication as under:-
"whether the termination of services of workman, Sri Manoj Kumar Kumar Gupta, 'Data Entry Operator' with effect from 3.6.1999, by the employer is justified and/or legal? If not, then to what relief and compensation, the workman is entitled and its effect?"
In reference, the name of the petitioner M/S Indian Farmers Fertilizer Cooperative Ltd., Phulpur, Allahabad and the contractor M/s H.S. Construction, Pure Maharat, Phulpur, Allahabad have been mentioned as employers. The dispute raised by the workman before the Conciliation Officer was that the workman was appointed on 15.6.1993 on the post of casual typist and later on has been designated as Data Entry Operator. He was wrongly shown as workman engaged through contractor. He was discharging duties which were permanent in nature and his services have wrongly been terminated with effect from 3.6.1999. The petitioner IFFCO contested the claim and denied the master servant relationship between IFFCO and the workman. The stand was that the workman was engaged by M/s H.S. Construction Company, a contractor of IFFCO licensed under the Contract Labour (Regulation & Abolition) Act,1970 (In short "1970 Act"). As the workman was not an employee of IFFCO and hence no industrial disputes existed between them. In the written statement, the workman took the plea that he was working under direct control and supervision of IFFCO and his job was of permanent nature. He has completed 240 days in each calender year. His work was never supervised by the contractor. The contractor was only an agent of IFFCO and was a camouflage. There was no control over working of the employee by the contractor, only salary was being paid through contractor whereas the attendance of the workman was noted by the authorities of IFFCO. However, no appointment letter was given to the workman and by an oral termination his services have been dispensed with. The workman is entitled for reinstatement with full back wages from the date of termination. On 24.9.2002, an award was passed by the Labour Court wherein it was held that the workman was not an employee of IFFCO but was an employee of the contractor M/s H.S. Construction and he was not entitled to any relief.
Challenging the said award, a Writ Petition No. 10173 of 2003 was filed which was allowed on 2.2.2005. The award was set aside and the matter was remanded back to the Labour Court for reconsideration after affording opportunity of hearing to the parties concerned. It was directed that the Labour Court while considering the matter afresh shall take into consideration the reason assigned in the judgment of this Court dated 4.5.1999 in Writ Petition No. 18684 of 1990 in respect of 88 workmen of IFFCO. After remand, an award dated 20.6.2007 was passed which was published on 14.12.2008. The present writ petition has been filed, challenging the said award.
Assailing the award, first submission of Sri Vivek Ratan, learned counsel for the petitioner is that the Labour Court did not take into consideration the judgment of this Court dated 4.5.1999 in Writ Petition 18684 of 1990 in respect of 88 workmen of IFFCO, in its true and spirit. The directions in the judgment and order dated 2.2.2005 in Writ Petition No. 10173 of 2003 passed by this Court was inter se parties and therefore, the award cannot be sustained.
Submission is that only limited question for consideration was there before the Labour Court to see the effect of judgment dated 4.5.1999 of this Court. Other questions were not left open to be considered. No fresh finding could have been arrived by the Labour Court after fresh appreciation of the evidence on record as the said issue was not left open by this Court while deciding the Writ Petition No. 10173 of 2003, challenging the previous award dated 24.9.2002 in Adjudication Case No. 11 of 2001 between the parties.
Dealing with the said submission, suffice it to say that this Court, while allowing the writ petition, has quashed the award dated 24.9.2002 passed by the Labour Court. The matter was remanded to the Labour Court to consider afresh with specific reference to the Judgment of this Court dated 4.5.1999, after affording opportunity of hearing to the parties concerned, without being influenced in any manner with the finding recorded therein. A reading of the directions given by this Court shows that while quashing the previous award, the Labour Court was required to record fresh finding after affording opportunity of hearing to all the parties concerned. The contention of learned counsel for the petitioner that the fresh finding could not have been recorded by the Labour Court after appreciation of the evidence on record, therefore, is without any force. The same is rejected as such.
On the merits of the award, submissions of learned counsel for the petitioner are as follows:-
(1)A specific plea was taken by the employer that the workman was a contract employee engaged through contractor. His wages was being paid by the contractor. Several document relating to contract, wage payment register and muster roll of contract employee were brought on record to establish that the workman was a contract employee. However, the Labour Court illegally rejected the documentary evidences filed by the employer for recording a finding that he was an employee of IFFCO.
(2)IFFCO was registered under 1970 Act and the contractor was having a valid licence of contract.
(3)Statement of contractor before the Labour Court also indicates that he was having a valid contract for engagement of labours.
(4)The provisions of 1970 Act have been strictly followed in engagement of contractor by the principal employer and IFFCO has taken requisite steps to ensure that the contractor also may not contravene the 1970 Act and in order to ensure that payment of wages be made on time to every workman engaged through contractor, wage payment chart was prepared in the name of the contractor, mentioning the names of labours and the wages payable to them. The said chart was duly signed by the representative of the employer after satisfying himself that each labour has been paid the wages, on time.
(5)Provident fund of each workman was deducted and contributions were deposited in the account of the contractor as per provisions of Employees' Provident Funds and Miscellaneous Provisions Act.
(6)The post of 'Data Entry Operator' was a permanent post and the said post did not exist during the period of employment of the workman. Management witness specifically deposed that the work of 'Data Entry Operator' was being done by the officers at the relevant point of time and the workman had never discharged such duties.
(7)The workman admitted that wages was being paid by the contractor. He filed an application before the Conciliation Officer in C.P. Case to implead contractor as an employer. No dispute was raised by the workman at any point of time and he was well aware of the contract. The submission of workman before the Conciliation Officer and the application moved by him before authorities at IFFCO for regularisation of his services are clear admission of the fact that he was a contract employee.
(8)Denial of the contractor that the workman was engaged by him is of no consequence as the contractor did not deny having a valid contract at the relevant point of time.
(9)The petitioner establishment IFFCO was validly registered under the Contract Labour (Regulation and Abolition) Act 1970 and the contractor M/s H.S. Construction had a valid licence to engage the workman. The wages of the workman was being paid by the contractor. The principal employer in order to ensure the compliance of the provision of 1970 Act had prepared the payment chart to monitor that the wages were distributed to each contract employee by the contractor. After satisfying himself that each employee has been paid wages, the payment chart was signed by the representative of the principal employer IFFCO. The allegation of unfair Labour Court practice is baseless and was not contended before the Labour Court and hence no finding has been arrived at. The fact that provident fund was paid to every contract employee itself suggest that the IFFCO has never indulged in unfair Labour practice.
On the strength of judgment of Apex Court in Steel Authority Of India Ltd vs. Union Of India & Others 2006 (III) FLR 483, learned counsel for the petitioner submits that in view of clear admission of the workman before the Conciliation Officer and in various applications for regularisation of his services and his admission before the Labour Court that he was engaged through contractor and wages was being paid by the contractor, the contention of the workman before the Labour Court that he was working on the post of 'Data Entry Operator' under the control and supervision of IFFCO being a contradictory and inconsistent plea could not have been considered by the Labour Court being impermissible in law. Common law principles of estoppel, waiver and acquiescence are applicable in an industrial adjudication.
Sri Ashok Mehta, learned Senior Counsel for the workman repelling the above submissions of learned counsel for the petitioner vehemently argued that the engagement of workman through contractor was nothing but a camouflage. In fact, the contractor was not having a contract to provide workers for the work of Data Entry Operator, he was not having a valid licence for such work. And as such the workman hired in connection with the work of the establishment, would be an employee of the principal employer. The work of 'Data Entry Operator' was in the nature of permanent employment and the workman was in direct supervision of the officers of IFFCO. Only wages was being paid through contractor in order to deprive the workman benefits of direct employment. The contractor himself admitted that he had no such contract to provide man-power for work of 'Data Entry Operator'. Learned Senior Counsel vehemently submits that merely because the wages was being paid to the workman through contractor, it does not mean that the workman was an employee of the contractor. In such situation, the legal question arose for determination is whether the contractor is a mere camouflage. If the answer is affirmative then the workman will be an employee of the principal employer i.e. IFFCO.
Referring to the stand of the employer and the statement of the contractor before the Labour Court, learned Senior Counsel submits that the contractor had specifically deposed that he had never engaged the workman. The workman was engaged by IFFCO. The contractor had no licence for engagement of Data Entry Operator or casual typist. The wages was being paid by IFFCO and after deducting his commission, the contractor paid the wages to the workman. Lastly the contractor has specifically stated that he had neither engaged the workman nor removed him. The contractor was having license of supply of man-power and maintenance and up keep of store which was terminated on 30.6.2001 and was not renewed thereafter.
On the basis of statement of the contractor, Sri Ashok Mehta, learned Senior Counsel submits that as the contractor himself denied that he did not engage the workman, the finding recorded by the Labour Court that the workman was an employee of IFFCO need not be interfered to.
Merely because the workman has moved applications for regularisation of his services and has stated that the wages was paid through contractor, it cannot be concluded that he has admitted his status as an employee of the contractor. Plea of camouflage was specifically taken before the Labour Court in the written statement filed by the workman itself and was rightly considered and decided by the Labour Court. A finding of fact has been arrived after consideration of the oral and documentary evidence on record and it was found by the Labour Court that the employer has failed to discharge the burden by producing cogent evidence that the workman was an employee of the contractor. The said finding based on the evidence on record, is not open for inference by this Court in exercise of Article 226 of the Constitution of India.
Sri Ashok Mehta, learned Senior Counsel further submits that the test as to whether the engagement of a workman through a contractor is a camouflage, laid down by the Apex Court in Para '71' of the Steel Authority of India Ltd. and others vs. National Union Waterfront Workers and others (2001) 7 SCC 1 is to be applied. It is held that where a workman is hired in or in connection with the work of an establishment by the principal employer through a contractor, the contractor merely acts as an agent so there will be master and servant relationship between the principal employer and the workman. He submits that if the said test is applied in the present case, the fact that the contractor was a camouflage, is clearly established from the documents on record particularly in view of the statement of the contractor and therefore, the workman cannot but be an employee of IFFCO. He also referred to the judgment of the Apex Court in Indian Petrochemicals Corporation Ltd. Versus Sharmik Sena (1999) 6 SCC 439 in support of the above submission.
In support of the plea of the camouflage, Sri Ashok Mehta, learned Senior Counsel submits that from the facts on record, it is an admitted case of the employer that till 1995 the provident fund contribution of the workman was being deposited in the account of the trust of IFFCO and the P.F. Code was allotted to the contractor only thereafter. The said fact also supports the plea of the workman that the contract was a sham, a camouflage.
In rejoinder, learned counsel for the petitioner refuting the submissions of Sri Ashok Mehta, learned Senior Counsel for the workman, urged that the Contract Labour Act, 1970 permits engagement of contract employee with restrictions. The principal employer has been entrusted with the responsibility to ensure that the rights of employees are protected. The definition of "employee" as contained in Section 2 (f) of the Employees Provident Fund Act includes the workmen engaged through contractor. Simply because P.F. has been deducted and deposited in the account of the trust would be of no benefit to the workman.
Plea of camouflage was not taken before the Labour Court and the said word has been coined to give a new colour to the case of the workman for the first time in the present writ petition. The denial by the contractor is bald and vague and cannot be said to be sufficient to conclude that the workman was not engaged through contractor. It is admitted that the provident fund of every employee, was deducted and the contribution of the contract employee was deposited in the account of the contractor after 1995. Merely because at some point of time, the provident fund contribution was being deposited in the account of trust, would not mean that the workman was an employee of IFFCO and not a contract employee particularly in view of the fact that at that time, i.e. after 1995, the contractor was allotted separate P.F. Code. He had a valid licence for supplying labour as required under 1970 Act. He vehemently submits that there is no allegation of unfair labour practice even before the Labour Court. The plea of camouflage was not taken and in view of the admission of the workman that he was engaged through contractor, it cannot be said that there was any direct employer-employee relationship between IFFCO and the workman. There were sufficient documents before the Labour Court to establish the said fact, however, those were illegally discarded by it. The award passed by the Labour Court is illegal and cannot be sustained.
Referring to the judgment of Jharkhand High Court in Their Workmen, Bihar Colliery Kamgar Union and another Versus Bharat Coking Coal Ltd and another (2014) LLR 842, learned counsel for the petitioner submits that the workman being the employee of the contractor, the ultimate supervision and control lies with the contractor as it was for the contractor to assign work to the worker employed by him. The principal employer under whom the worker worked had only secondary control and supervision over the workman. The contractor had a valid contract and salary was being paid by him. Therefore, ultimate supervision and control lies with the contractor.
In reply to the rejoinder submissions of learned counsel for the petitioner on the strength of decision in Steel Authority Of India Ltd versus. Union Of India & Ors. (supra), Sri Ashok Mehta, learned Senior Counsel for the workman added that the plea of estoppal, waiver and acquiescence would not be available in the present case as mere admission of workman that he was engaged through contractor and the wages was being paid to him by the contractor would not be sufficient for the reason that the workman has come out with the categorical plea before the Conciliation Officer as also the Labour Court that the contractor was nothing but a camouflage. The workman appointed by the contractor would, in effect and substance, be direct employee of IFFCO.
Having heard learned counsel for the parties and perused the record, this Court finds that before the Conciliation Officer, the workman has specifically averred that he was wrongly termed as an employee of the contractor who did not have a valid contract. In the written statement filed before the Labour Court specific plea of the contractor being a camouflage has been taken in paragraphs '7' and '8' which reads as under:-
(7)That the work of the petitioner fully conducted and supervised by respondent no. 1 not by contractor and the respondent no. 2 only was agent of respondent no. 1 and he was only camouflage, because the work of the petitioner was perennial in nature and contractor was go out of seen and no any made registration of work of typist and Data Entry Operator by respondent no. 1 before competent authority and no any license was in possession by respondent no. 2 before licensing authority to do work of typist of Data Entry Operator as required by Contract Labour Law.
(8)That the over all control of working of contract labour by the principal employer not by contractor and no genuine contract system prevailing and hence the contract system being a mere camouflage and the relationship of employer and workman between respondent no. 1 and concerned workman because the work of doing by the workman is fully permanent job and no such of work can be done by contract labour.
In Paragraph '10' of the written statement, the workman specifically averred as under:-
(10) That the payment was made to the petitioner workman by respondent no. 2 only getting to the respondent no. 1 and disbursed to the petitioner workman and the attendance of the petitioner was noted by respondent no. 1.
In Paragraph '13' of the written statement, it is stated by the workman that he has demanded for permanency of his services and gave a letter to the Labour department and made complaint of unfair labour practice of the employer and hence they became annoyed and terminated his services.
In Paragraph 10, 11, 12, 13, 14 and 16 of the written statement filed by the employer, it was stated that IFFCO had awarded contract to number of licensed contractors under 1970 Act. There was no employer and employee relationship between IFFCO and the workman. There was no post of Data Entry Operator in the factory of IFFCO at Phulpur, Allahabad. As there was no master servant relationship and hence there was no question of termination of the services of the employee by IFFCO. In Paragrah '13' of the written statement filed by IFFCO, it was stated that employee of contractor cannot be deemed employee of the principal employer.
However, plea of camouflage taken by the contractor has been denied in the rejoinder statement filed by the employer.
Contents of paragraph '15' of the written statement filed by the employer was denied in the rejoinder statement by the workman and plea of camouflage was reiterated. Thus, considering the rival submissions of workman and IFFCO in the written statement and rejoinder statements, it is apparent that the workman has specifically pleaded before the Labour Court that the contractor was a sham or a camouflage and the workman was an employee of IFFCO though wages was paid through contractor and the said plea was denied by the employer. Therefore, the contention of learned counsel for the petitioner that camouflage is a word coined for the purpose of present writ petition is not worthy of acceptance and is to be thrown out at its threshold.
Now only question remains to be decided as to whether the finding recorded by the Labour Court that the workman was an employee of IFFCO and not of contractor can be sustained on the basis of evidence on record and in view of the law laid down by the Apex Court in the case of Steel Authority of India Ltd. v. National Union Water Front Workers (supra).
To answer the said question, it would be apposite to go through the provisions of Contract Labour (Regulation and Abolition) Act 1970, the Rules framed thereunder and the judgments of Apex Court relating to contract employees relevant to deal with the issue.
Relevant provisions of the Contract Labour Act, 1970 are as under:-
Section 2(b) provides for definition of "contract labour":- (b) a workman shall be deemed to be employed as "contract labour" in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer.
Section 2 (c) defines "contractor":- (c) "contractor", in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than a mere supply of goods of articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor.
Section 21(4) provides that in case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor and can recover the amount so paid from the contractor.
Section 23 further provides that contravention of any provision of this Act or of any rules or any condition of license granted under the Act, shall be publishable with imprisonment or with fine.
Rule 18 of the Contract Labour (Regulation and Abolition) Act, Central Rules 1971 provides in 'Form II' of the certificate of registration granted to a establishment for engagement of a contractor to supply the contract labour.
Rule 18 reads as under:- 18. Grant of certificate of registration.--(1) The certificate of registration granted under sub-section (2) of section 7 shall be in Form II. (2) Every certificate of registration granted under sub section (2) of section 7 shall contain the following particulars, namely:--
(a) the name and address of the establishment;
(b) the maximum number of workmen to be employed as contract labour in the establishment; (c) the type of business, trade, industry, manufacture or occupation which is carried on in the establishment;
(d) such other particulars as may be relevant to the employment of contract labour in the establishment.
(3) The registering officer shall maintain a register in Form III showing the particulars of establishment in relation to which certificates of registration have been issued by him.
(4) If, in relation to an establishment, there is any change, in the particulars specified in the certificate of registration, the principal employer of the establishment shall intimate to the registering officer, within thirty days from the date when such change takes place, the particulars of, and the reasons for, such change.
Rule 25 provides for terms and conditions of license in 'Form VI' to be granted to the contractor. Relevant clauses of Rule 25 giving terms and conditions of license are as under:--
Rule 25 (2) (ii), (iv), (vii), (viii) as under:-
(2) Every licence granted under sub-rule (1) or renewed under rule 29 shall be subject to the following conditions, namely:--
(ii) the number of workmen employed as contract labour in the establishment shall not, on any day, exceed the maximum number specified in the licence;
(iv) the rates of wages payable to the workmen by the contractor shall not be less than the rates prescribed under the Minimum Wages Act, 1948 (11 of 1948), for such employment where applicable and where the rates have been fixed by agreement, settlement or award, not less than the rates so fixed;
(vii) the licensee shall notify any change in the number of workmen or the conditions of work to the licensing officer;
(viii) the licensee shall, within fifteen days of the commencement and completion of each contract work submit a return to the Inspector, appointed under section 28 of the Act intimating the actual date of the commencement or, as the case may be, completion of such contract work in Form VIA);
Chapter VII as contained in Rules 1971 provides for registers and records and collection of statistics of contract labours to be maintained by the contractor.
Relevant rule 74, 75 and 76 are reproduced below:-
74. Register of contractors.--Every principal employer shall maintain in respect of each registered establishment a register of contractors in Form XII.
75. Register of persons employed.--Every contractor shall maintain in respect of each registered establishment where he employs contract labour a register in Form XIII.
76. Employment Card.--(i) Every contractor shall issue an employment card in Form XIV to each worker within three days of the employment of the worker. (ii) The card shall be maintained upto date and any change in the particulars shall be entered therein.
Rule 78 further provides for maintenance of muster roll, wage registers, deduction registers and overtime registers in prescribed forms namely XVI, XVII, XVIII, XX and XXII; respectively.
Rule 80 further provides the manner in which the registers and other records are to be maintained under the Act and the Rules.
Rule 80 is as under:- (1) All registers and other records required to be maintained under the Act and rules, shall be maintained complete and up-to-date, and, unless otherwise provided for, shall be kept at an officer or the nearest convenient building within the precincts of the workplace or at a place within a radius of three kilometres.
(2) Such registers shall be maintained legibly in English and Hindi or in the language understood by the majority of the persons employed in the establishment.
(3) All the registers and other records shall be preserved in original for a period of three calendar years from the date of last entry therein.
(4) All the registers, records and notices maintained under the Act or rules shall be produced on demand before the Inspector or any other authority under the Act or any person authorised in that behalf by the Central Government.
(5) Where no deduction or fine has been imposed or no overtime has been worked during any wage period, a ''nil' entry shall be made across the body of the register at the end of the wage period indicating also in precise terms the wage period to which the ''nil' entry relates, in the respective registers maintained in Forms XX, XXI, and XXIII respectively.
Rule 82 further provides for submission of half yearly return to the licensing officer by the contractor and principal employer to the registering officer.
A careful reading of the Act 1970 and Rules 1971 shows that proper safeguards have been provided to ensure that the contract labours are not exploited by the contractor or the principal employer. A responsibility has been fixed upon the principal employer to ensure that full wages are paid to each contract labour on time. The contractor and the principal employer are under obligation to submit the return of contract labour engaged by them before the licensing officer and the registering officer. The registers and records of contract labours specifying wages of each worker, period and days of work rendered by them in the establishment and the wages paid and deductions, if any, from their wages is to be mentioned in the registers to be maintained for the purpose. Every entry relating to payment of wages and the muster roll-cum-wage register should be authentic bearing initials of the contractor or his authorised representative and shall be duly certified by the authorised representative of the principal employer.
Rule 73 provides the manner in which authorised representative of the principal employer will record a certificate under his signature at the end of the entries in the register of wages or the register of wage-cum-muster roll.
Rule 73 as under:- The authorised representative of the principal employer shall record under his signature a certificate at the end of the entries in the Register of Wages or the Register of Wages-cum-Muster Roll as the case may be, in the following form:
"Certified that the amount shown in column No. ... has been paid to the workman concerned in my presence on ..... at ....."
Now provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952 are required to be looked into with a bird's eye view.
Section 2 (f) defines 'employee' under Provident Fund Act. The same is quoted below:
Section 2 (f) "employee" means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment and who gets his wages directly or indirectly from the employer, and includes any person,-
(i) employed by or through a contractor in or in connection with the work of the establishment;
(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961) or under the standing orders of the establishment;
Now the law laid down by the Apex Court relevant to decide the controversy as to whether the contractor was a camouflage. The admitted case of both the parties is that the workman was engaged through contractor and was paid wages by the principal employer through contractor..
The Apex Court in Steel Authority of India Ltd. v. National Union Water Front Workers (supra) gave a test to determine as to whether the workman engaged through a contractor for the work of an establishment is actually the workman of the contractor or the principal employer. Paragraph '71' as contained in the report reads as under:-
"By definition the term contract labour is a species of workman. A workman shall be so deemed when he is hired in or in connection with the work of an establishment by or through a contractor, with or without the knowledge of the principal employer. A workman may be hired. (1) in an establishment by the principal employer or by his agent with or without the knowledge of the principal employer, (2) in connection with the work of an establishment by the principal employer through a contractor or by a contractor with or without the knowledge of the principal employer. Where a workman is hired in or in connection with the work of an establishment by the principal employer through a contractor, he merely acts as an agent so there will be master and servant relationship between the principal employer and the workman. But where a workman is hired in or in connection with the work of an establishment by a contractor, either because he has undertaken to produce a given result for the establishment or because he supplies workman for any work of the establishment, a question might arise whether the contractor is a mere camouflage as in Hussainbhai, Calicuts case (supra) and in Indian Petrochemicals Corporations case (supra) etc.; if the answer is in the affirmative, the workman will be in fact an employee of the principal employer; but if the answer is in the negative, the workman will be a contract labour."
In International Airport Authority of India Versus International Air Cargo Workers' Union and Another 2009 (13) SCC 374 the tests to apply in order to find out as to whether the contract between the principal employer and a contractor is sham/nominal and merely a camouflage to deny employment benefits to the employee and that there is a fact of direct employment has been discussed in paragraph 37, 38, 39 which are as under:-
(37) The industrial adjudicator can grant the relief sought if it finds that contract between principal employer and the contractor is sham, nominal and merely a camouflage to deny employment benefits to the employer and that there is in fact a direct employment, by applying tests like: who pays the salary; who has the power to remove/dismiss from service or initiate disciplinary action; who can tell the employee the way in which the work should be done, in short who has direction and control over the employee. But where there is no notification under section 10 of the CLRA Act and where it is not proved in the industrial adjudication that the contract was sham/nominal and camouflage, then the question of directing the principal employer to absorb or regularize the services of the contract labour does not arise.
(38) The tests that are applied to find out whether a person is an employee or an independent contractor may not automatically apply in finding out whether the contract labour agreement is a sham, nominal and is a mere camouflage. For example, if the contract is for supply of labour, necessarily, the labour supplied by the contractor will work under the directions, supervision and control of the principal employer but that would not make the worker a direct employee of the principal employer, if the salary is paid by contractor, if the right to regulate employment is with the contractor, and the ultimate supervision and control lies with the contractor.
(39) The principal employer only controls and directs the work to be done by a contract labour, when such labour is assigned/allotted/sent to him. But it is the contractor as employer, who chooses whether the worker is to be assigned/allotted to the principal employer or used otherwise. In short worker being the employee of the contractor, the ultimate supervision and control lies with the contractor as he decides where the employee will work and how long he will work and subject to what conditions. Only when the contractor assigns/sends the worker to work under the principal employer, the worker works under the supervision and control of the principal employer but that is secondary control. The primary control is with the contractor.
In a recent judgment General Manager, (OSD), Bengal Nagpur Cotton Mills, Rajnandgaon Versus Bharat lal and Another 2011 (1) SCC 635 relying upon the tests laid down in International Airport Authority (supra), it was held that while answering the questions as to whether the employee is in contract employment or of principal employer, two well recognized tests are to be applied.
Relevant paragraphs 10, 11, 12 and 13 are quoted as under:-
(10) It is now well-settled that if the industrial adjudicator finds that contract between the principal employer and contractor to be sham, nominal or merely a camouflage to deny employment benefits to the employee and that there was in fact a direct employment, it can grant relief to the employee by holding that the workman is the direct employee of the principal employer. Two of the well-recognized tests to find out whether the contract labour are the direct employees of the principal employer are (i) whether the principal employer pays the salary instead of the contractor; and (ii) whether the principal employer controls and supervises the work of the employee. In this case, the Industrial Court answered both questions in the affirmative and as a consequence held that first respondent is a direct employee of the appellant.
(11) On a careful consideration, we are of the view that the Industrial Court committed a serious error in arriving at those findings. In regard to the first test as to who pays the salary, it placed the onus wrongly upon the appellant. It is for the employee to aver and prove that he was paid salary directly by the principal employer and not the contractor. The first respondent did not discharge this onus. Even in regard to second test, the employee did not establish that he was working under the direct control and supervision of the principal employer. The Industrial Court misconstrued the meaning of the terms "control and supervision" and held that as the officers of appellant were giving some instructions to the first respondent working as a guard, he was deemed to be working under the control and supervision of the appellant.
(12) The expression "control and supervision" in the context of contract labour was explained by this court in International Airport Authority of India v. International Air Cargo Workers Union (Supra) thus:
"38. if the contract is for supply of labour, necessarily, the labour supplied by the contractor will work under the directions, supervision and control of the principal employer but that would not make the worker a direct employee of the principal employer, if the salary is paid by contractor, if the right to regulate employment is with the contractor, and the ultimate supervision and control lies with the contractor.
39. The principal employer only controls and directs the work to be done by a contract labour, when such labour is assigned/allotted/sent to him. But it is the contractor as employer, who chooses whether the worker is to be assigned/allotted to the principal employer or used otherwise. In short, worker being the employee of the contractor, the ultimate supervision and control lies with the contractor as he decides where the employee will work and how long he will work and subject to what conditions. Only when the contractor assigns/sends the worker to work under the principal employer, the worker works under the supervision and control of the principal employer but that is secondary control. The primary control is with the contractor."
(13) Therefore we are of the view that the Industrial Court ought to have held that first respondent was not a direct employee of the appellant, and rejected the application of the first respondent.
Thus, the legal position to find out as to whether the respondent workman was the direct employment of IFFCO as culled out from the above decisions are two of the well recognised tests as under:-
(i) whether the principal employer (IFFCO in the instant case) pays the salary instead of the contractor; (ii)whether the principal employer (IFFCO) controls and supervises the work of the employee. If in a case, the said questions are answered in affirmative the consequence would be that the respondent workman is a contract employee of petitioner IFFCO. Now it is to be examined as to whether the facts of present case would pass the test as mentioned above. As culled out from the records discussed above, the factual position in the instant case is; (1) no doubt the workman was in continuous employment and has raised demand for regularisation of his services. (2) the workman though stated that he was engaged through contractor, however, claimed since the beginning that the contract was sham or nominal to deny benefits of the employment to the petitioner. (3) the contractor had a contract to supply the man-power.
(4) the contractor appeared in the witness-box and categorically stated that the workman was engaged by IFFCO. The contractor was getting payment for IFFCO and after deducting his commission, he used to make payment to the workman. The contractor has categorically stated that the workman was neither engaged by him nor removed.
(5) there is no dispute about the fact that the workman was engaged on 15.6.1993 and had continued in service till 3.6.1999. Only dispute raised by the principal employer i.e. the petitioner is that the workman was not appointed on the post of Data Entry Operator and he was merely a contract employee.
(6) In order to establish that the workman was a contract employee, the documents filed by the principal employer IFFCO are the labour payment certificate for the period from 1.5.1999, 31.5.1999, 1.6.19999 and 30.6.1999, muster roll and payment sheet in Form XVII for the aforesaid period, application moved by the workman for regularisation of his services, registration certificate under Contract Labour (Regulation & Abolition) Act 1970 and the licence of the contractor.
After perusal of the said documents, the Labour Court has recorded a finding that these documents are not admissible in evidence as they have not been proved. The muster roll i.e. attendance sheet is a document of the contractor which was not counter signed by the authorised representative of the principal employer as required under Rule 73 of the Contract Labour (Regulation and Abolition) Act, Rules 1971. Thus, it was found that the principal employer has failed to establish that the workman was engaged through contractor.
Applying the test to ascertain as to whether the contract was a camouflage, finding of fact has been arrived at by the Labour Court on the basis of oral and documentary evidences.
The findings are as under:-
(1) the payment of wages/salary to the workman was by the principal employer though the contractor. The contractor has not paid salary to the workman for the services rendered by him at the establishment namely IFFCO. The contractor has categorically denied that he has engaged the workman. On the basis of the statement of the contractor that the payment of salary to the employee was made by IFFCO, the finding is that it cannot be said that the workman was an employee of the contractor.
(2) the principal employer had failed to establish by adducing necessary evidence that the respondent was not engaged by them. In view of the categorical denial of the contractor it was incumbent upon the principal employer to produce cogent evidence to establish the said fact. The muster roll maintained by the contractor was not sufficient to establish the said fact as the same was not counter signed by the authorised representative of the principal employer as per requirements of the Rules. The documents namely the payment sheet maintained by the contractor and the muster roll have been discarded by the Labour Court for the reason that the same were documents of the contractor and have not been duly proved by the principal employer by producing any document maintained by them or by the contractor.
(3) so far as the control and supervision is concerned, the finding is that the respondent was working on the post of Data Entry Operator and has discharged the duties of entering the datas in computers regularly from 15.6.1993 to 2.6.1999. The said fact was neither disputed nor any cross-examination was done by the principal employer from the workman on this aspect. The representative of the principal employer, who has appeared before the Labour Court only denied the suggestion that the workman had discharged the duties of Data Entry Operator, however, continuous working of the workman in the establishment was not disputed. The contractor in the cross-examination has categorically stated that the workman was not engaged by him rather he was kept by IFFCO. The contractor was only getting payment of the wages of the workmen including his commission from the IFFCO and used to disburse the same to the workmen after deduction of his commission.
In view of this fact, it was found by the Labour Court that the respondent was working under direct control and supervision of IFFCO.
In view of the above finding, it was concluded by the Labour Court that the workman was direct employee of IFFCO and the contractor was a camouflage.
The Labour Court has considered one more aspect of the matter that is provident fund records of the workman. It was found that initially the provident fund deductions of the workman was being deposited in the account of trust of IFFCO. From 1995 onwards, after the contractor was allotted a separate P.F. Code, the provident fund deductions of the workman were deposited in the P.F. Account of the Contractor. As the deductions were being deposited in the P.F. Accounts of the employer, this was treated as another factor to arrive at a finding that the workman was direct employee of IFFCO.
Challenging the finding of the Labour Court, the submission of learned counsel for the petitioner is that oral evidence of representative of the principal employer has been wrongly interpreted by the Labour Court. The documentary evidences such as labour payment certificate, the muster roll and payment sheet has been rejected illegally. The burden of proof that the workman was direct employee of IFFCO was upon the workman and has wrongly been laid upon the principal employer. The finding that IFFCO has failed to prove that the workman was contract employee is totally perverse. The workman has failed to establish that he had completed 240 days of services, therefore, the award of reinstatement with back wages is illegal.
Having examined the legal position, the records of the case and the submission of the learned counsel for the parties, in the facts and circumstances of the case as discussed above this Court finds as under:-
(1) The contractor appeared in the witness box and was cross-examined, however, the documents filed by the IFFCO management, stated to be the documents of the contractor, were not proved. No cross-examination of the contractor was done on this aspect. The Labour Court, therefore, has rightly discarded these documents as they were not duly proved before it.
(2) The Labour Court further found that the muster roll (attendance register) stated to be maintained by the contractor is not worthy of reliance as it was not duly signed by the authorised representative of IFFCO against the rules.
(3) There is no dispute that the initial burden was upon the workman to prove that he was an employee of IFFCO. In the facts and circumstances of the case, the Labour Court found that once the workman has come out with the clear case that he was a direct employee of the IFFCO and the contract was sham or nominal as he was engaged through contractor to deny employment benefits and proved that he was worked for 240 days continuously for about a period of 6 years, onus shifted on IFFCO and then it was for IFFCO to prove by producing evidence that the workman was the contractor's employee. More so in view of the fact that the contractor had appeared in the witness-box and denied that the workman was his employee.
(4) In the present case, the contractor possessed a contract to supply man-power and up keep of stores. As the contract was for supply of labours, the tests that are applied generally to find out whether a person was an employee or a contractor engagement would not apply automatically to find out whether the contract labour agreement is sham or nominal and is a camouflage as has been held in International Airport Authority (supra) (emphasis supply to paragraph 38 and 39).
(5) Oral statements of witness of IFFCO and the contractor also lead to the conclusion that wages/salary was paid by IFFCO to the workman and the contractor was only distributing it every month on behalf of IFFCO. The wage register was not maintained by the contractor but by the principal employer. The contractor in fact acted as a mediator/link between the principal employer and the workman and had no control and supervision over working of the employee.
(6) The witness of IFFCO management though denied that the workman was working on the post of 'Data Entry Operator', however, there was no denial of his continuous engagement/working since 15.6.1993 i.e. from the date of his engagement till 3.6.1999 the date of termination. There is no specific averment of the work and nature of duties performed by the workman for a period of 6 years.
From the above discussion, it is established in the present that the salary was paid by IFFCO management and not by the contractor.
Now it remains to be seen/examined as to with whom the ultimate control and supervision lies. The contractor categorically stated that the workman was neither kept nor removed by him. The workman was kept by IFFCO. The said statement could not be controverted by IFFCO management.
Thus, it is apparent that the principal employer not only controlled and directed the work to be done by the contract labour but also decided where and how long the employee would work and the conditions for his working. It cannot, therefore, be said that the principal employer had only secondary control over the working of the employee and the primary control was with the contractor.
In view of the above discussion, the two tests applicable to determine whether the contract is a sham/nominal and a camouflage are fully satisfied in the facts and circumstances of this case. The conclusions, therefore, are as under:-
(1) It is established from the evidence on record that the principal employer/IFFCO was paying wages to the workman.
(2) The officers of IFFCO were assigning duties directly to workman and regulate the place and period of working of the employee and therefore, it should be deemed that he was working under the direct control and supervision of the petitioner.
(3) The workman was, therefore, a direct employee of IFFCO and the contract was sham and camouflage.
Lastly there is one more aspect of the matter, admittedly, the P.F. contribution of the workman were being deposited in the account of trust of IFFCO till the year 1995. The P.F. contributions were transferred in the account of the contractor only thereafter. In case the workman was a contractor's employee there was no reason for IFFCO to deposit the P.F. contributions in the account of the trust. This fact also add to the conclusion that the workman was a direct employee of IFFCO.
The Labour Court has recorded a finding of fact that the workman has worked for a period of more than 240 days in one year and was continuously working in the establishment. The said fact has not been disputed by employer IFFCO at all. It was, therefore, rightly found by the Labour Court that the services of the workman was illegally terminated by the petitioner.
However, from the record, it cannot be found that the concerned workman was discharging the duties of 'Data Entry Operator' and hence the award passed by the Labour Court is modified to the extent that the workman is entitled for reinstatement on the same position on which he was working prior to his disengagement on 3.6.1999. The workman is entitled for reinstatement and payment of current wages from the date of this judgment. He would not be entitled for back wages as awarded by the Labour Court.
With the above modifications, the award passed by the labour Court dated 20.6.2007 is hereby affirmed. However, the parties shall bear their own costs.
The writ petition is dismissed.
Order Date :- 19.12.2014 B.K. (Sunita Agarwal, J.)