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H.V. Subramani & Another v/s The Management of M/s. Ran flex India Pvt., Ltd., Represented by its General Manager & Another

    Writ Petition Nos. 21205, 4952 of 2014 (L-TER)

    Decided On, 21 March 2019

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE R. DEVDAS

    For the Appearing Parties: K. Kasturi, Sr. Counsel, T. Narayanaswamy, J. Kanikaraj, K.R. Anand, Advocates.



Judgment Text

(Prayer: This Writ Petition is filed under Articles 226 & 227 of the Constitution of India praying to set aside the award dated 22.10.2013 passed in I.D.No.428/2006 by the I Additional Labour Court, Bengaluru in so far as denial of 50% of back wages to the petitioner vide Annexure-E and order to pay full back wages and etc.)

This Writ Petition is filed under Articles 226 & 227 of the Constitution of India praying to quash the award dated 22.10.2013 passed by the I Additional Labour Court, Bengaluru in I.D. No.428/2006 vide Annexure-A and etc.)

(Oral):

1. These two petitions arise out of an award in I.D. No.428/2006 passed by the I Additional Labour Court, Bengaluru, wherein the claim statement of the 1st party workman is allowed and a direction is issued to the 2nd party No.1- Management to reinstate the 1st party workman into the service with continuity of service and other consequential benefits. The workman was also held to be entitled for 50% of the back wages. The management has filed W.P.No.4952/2014 seeking to assail the award, while the workman has filed W.P.No.21205/2014 seeking 100% back wages. Both these petitions are clubbed and heard together and disposed of by this common order.

2. It is the contention of the workman that he was appointed on 23.07.1996 by the respondent No.1-Management and appointed as a confined employee. It is contended that he was working under the control of the respondent no.1-Management, as Operator. It is contended by the workman that the Management paid the salary along with other benefits like attendance allowance, washing allowance and production incentives etc. It is contended by the workman that in the year 2004, the management started issuing pay slips and at that time, the workman did not notice that in the pay slips, the name of another establishment known as G & G Enterprises was mentioned in the pay slips. G. & G Enterprises, the Contractor is respondent No.2 herein. The workman contends that he requested the management to issue pay slip in the name of the management and not in the name of G & G Enterprises. It is further contended that on 08.11.2005, the security

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refused to allow the workman into the factory premises. Since he was persistently denied work, he sent letters dated 02.12.2005 and 24.01.2006 under certificate of posting requesting for job. It is further contended that the management did not budge and therefore, he was constrained to raise the dispute under Section 10(4-A) of the Industrial Disputes Act, 1947. It was contended by the workman before the Tribunal that denial of work tantamounted to retrenchment as defined under Section 2(II) of the Industrial Disputes Act, 1947.

3. After issuance of notice, the Management entered appearance and filed the counter statement and also filed an impleading application seeking impleadment of G & G Enterprises. The said application, though objected by the workman, the Tribunal allowed the application and G & G Enterprises was impleaded as 2nd party. The workman examined himself as WW.1 and got 15 documents marked as Exs.W1 to W15. The 2nd party examined 2 witnesses, one being the Deputy General Manager and the other was the Proprietor of G & G Enterprises. 27 documents were marked on behalf of the management which were marked as Erxs.M1 to M27.

4. The following issues and additional issues were framed by the Tribunal:

1. Whether second party management is justified in refusing employment to0 the first party workman as alleged?

2. If not, whether first party workman is entitled to be reinstated with full backwages, continuity of service was alleged.

3. To what relief, first party workman is entitled?

Additional Issues

4. Whether first party proves that there exist relationship of employer and employee between second party (1) and First party?

5. Whether first party further proves that w.e.f. 8.11.2005, second party (1) has refused work to him?

6. Whether second party (1) and 920 proves that first party was and employee of second party (2)?

7. Whether second party (2) further proves that w.e.f. 8.11.2005 first party has stopped coming to work?

5. The learned Senior Counsel Sri. K. Kasturi appearing for the Management submits that the Tribunal, after having noticed that the workman failed to produce any document to substantiate his contention that he was directly employed by the management and that he received salary from the management and after having noticed that the copy of the appointment order dated 23.07.1996 was not produced in the original, erred in holding that the workman has proved that he was directly employed by the management. While taking this Court through the evidence and cross examination of the workman, the learned Senior Counsel pointed out that the workman infact admitted that he did not have the original letter of appointment dated 23.07.1996. However, the leaned Senior Counsel further pointed out from the copy of the letter of appointment dated 23.07.1996, which is purported to have been issued by one Sri. Shankar Joshi, (Executive-Works), one of the condition was that the workman will have to work under labour contractor. Therefore, the learned Senior Counsel submits that even assuming, without conceding, for the sake of arguments that the letter of appointment was issued by the management, the condition that the workman has to work under the labour contractor, cannot be ignored. The learned Senior Counsel submits that in the counter statement of the management and the respondent No.2 – G & G Enterprises, who is the contractor, it was contended that the workman was never appointed by the Management but he was appointed by the respondent No.2 – contractor and was deputed by the contractor to work under the respondent No.1 – Management. It was the specific contention of the second party that the workman was employed under the contractor, salary, ESI, provident Fund and all other benefits were paid by the contractor and therefore, the workman could not contend that he was employed by the Management. The learned Senior Counsel has taken this Court through the evidence placed before the Tribunal such as Ex.M7 – Salary Certificate, Ex.M8 – Allotment of P.F. Number, Ex.M9 – Statement regarding particulars of employees, Ex.M10to 12. Statements which show that till 2002, the employees under the respondent No.2 – contractor were paid salary in cash and thereafter, salary of the employees were credited to their respective Bank accounts, Salary transfer advice given to the bank for the months of October, November and December 2005, Ex.M17- photo copy of the Muster roll and wage register for the period August 1996 to January 1997 and such other documents to contend that respondents have placed all the required materials to substantiate their contention that the workman was indeed employed by the contractor and was under the control and supervision of the contractor directly.

6. The learned Senior Counsel submits that the only document relied upon by the workman is a copy of the alleged letter of appointment dated 23.07.1996. It was contended that the Tribunal, erred in relying upon the letter of appointment, which was marked as Ex.W3, which could not have been relied upon since the original was not produced. In that regard, the learned Senior Counsel placed reliance on the judgment of the Hon’ble Apex Court in the case of Life Insurance Corporation of India and another v/s Ram Pal Singh Bisen reported in 2010 4 SCC 491. It was pointed out that in the said decision, the Hon’ble Apex Court has held that mere admission of the document in evidence does not amount to its proof. In other words, mere marking of an exhibit on a document does not dispense with its proof, it is required tobe done in accordance with law.

7. The learned Senior Counsel submits that the Tribunal erroneously come to the conclusion that the contractor failed to establish that he was a licensed contractor and that there was no legitimate agreement between the management and the contractor and therefore, proceeded on a wrong premise that the contractor had no valid license under the provisions of Contractor Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as CLRA Act) and further erred in holding that the workman was deemed to have been employed by the Principal i.e., respondent No.1 – Management. The learned Senior Counsel pointed out from the award that though the decision of the Hon’ble Apex Court in the case of Steel Authority of India Limited and another v/s State of West Bengal and others reported in 2009 1 LLJ 241 was relied upon by the respondents, the Tribunal has brushed aside the same stating that the decision would not help the respondents herein. The Tribunal having placed reliance upon the decision of the Hon’ble Apex Court in the case of R.K. Panda and others v/s Steel Authority of India and others reported in 1994 5 SCC 304 and Bhilwara Dugadh Utpadak Sahakari Sangh Limited v/s Vinod Kumar Sharma reported in 2011 ILR 1079 proceed to hold that the workman is an employee of the Management.

8. The learned Senior Counsel, while taking this Court through the full Bench decision of this Court in Steel Authority of India Limited v/s Steel Authority of India Limited, Contract Workers Union, reported in ILR 1991 KAR 3679, submitted that the question which fell for consideration before the full Bench was, “Whether the failure of the contractor through whom contract labour is engaged to obtain a license under Section 12 of the Contract Labour (Regulation and Abolition) Act, 1970, will bring about the relationship of employer and employee between the said contract labour and the Principal employer?” While taking this Court through the findings and conclusion f the full bench, it was submitted that the full bench of this Court has categorically held that the effect of the contravention of any of the provisions of the Act is to be located from the various provisions of the Act, and it is not possible to infer a consequence which may result in imposing higher burdens or larger liabilities on a person who is not directly connected with the contravention of the law as in the case of a registered establishment engaging a contractor who in turn fails to obtain license and therefore there is absolutely no warrant to deem a direct relationship of employer and employee between the Principal employer and the contract labour only because the contractor fails to obtain a license. Such deeming will result in enlarging the scope of the penal provisions without any express words to that effect. This submissions were made by the learned Senior Counsel since the Tribunal proceeded to give a finding that the contractor failed to establish that he was a licensed contractor and he was holding a valid license as provided under Section 12 of the Act and that the agreement dated 01.04.1994, which was marked as Ex.M.18, could not be believed to be a genuine document. The learned Senior Counsel submits that even if the Tribunal were to hold that the agreement dated 01.04.1994 between the Management and the contractor was not a genuine document, the Tribunal could not have proceeded to give a finding that there was a relationship of employer and employee established between the workman and the management on the premise that the contractor did not have a valid agreement with the management. The learned Senior Counsel further submits that the decision of the full Court in Steel Authority of India (supra) was further confirmed by the Constitutional Bench of the Hon’ble Supreme Court in the case of Steel Authority of India Limited and others v/s National Union Waterfront Workers and others and reported in 2001 7 SCC 1.

9. The learned Senior Counsel also placed reliance on the case of International Airport Authority of India v/s International Air Cargo Workers Union and others reported in 2009 13 SCC 374 to contend that 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. It was pointed out from the decision in International Airport Authority (Supra) that if the contract is for supply of labour, necessarily, the labour supplied by the contractor will work under the directions, supervisions and control of the Principal employer but that would not make the worker a direct employee of the Principal employer, if the salary is paid by a contractor, if the right to regulate the employment is with the contractor, and the ultimate supervision and control lies with the contractor. Further, in determining the relationship of employer and employee, it is submitted that their lordships in the case of Workmen of Nilgiri Co-op. Marketing Society Ltd. v/s State of Tamil Nadu and others reported in 2004 3 SCC 514, have held that the control test and the organization test, therefore, are not the only factors which can be said to be decisive. With a view to elicit answer, the Court is required to consider several factors, which would have a bearing on the result. (a) Who is the 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 eg. Whether it is professional or skilled work. (g) Nature of establishment. (h) The right to reject.

10. While placing reliance on this judgment, the learned Senior Counsel submits that the Tribunal, disregarding the decision of the Hon’ble Apex Court in the case of Steel Authority of India (supra), wrongly concluded that since the contractor did not have valid license, it is axiomatic that a person employed by the contractor and lent to the Principal employer will become an employee of the Principal employer.

11. The learned counsel for contractor has taken this Court through the evidence and cross-examination of the workman to point out that the workman has indeed admitted that he has signed the Muster roll and wage register which is marked as Ex.M-17. The learned counsel has also pointed out form the evidence that the workman has admitted that he was indeed appointed by the contractor and he was aware that he was receiving salary from the contractor and the ESI and Provident Fund contributions were also being deducted by the contractor and paid into the account, in accordance with law. The learned counsel has also pointed out from the records that the contractor issued a notice calling upon workman to join work within a period of 7 days from the date of notice, failing which, it will be taken that the workman has no interest in joining the service. In the light of the admitted facts, the learned Counsel submits that the workman was indeed employed by the contractor and not by the Management. At the end of the argument of the learned counsel for the contractor, it was submitted that even now the contractor is willing to take the workman provided he is interested.

12. Per contra, the learned counsel for the workman submits that the Tribunal did not err in passing the award based on the evidence placed on record. heavy reliance is placed by the learned counsel on the agreement dated 01.04.1994 to contend that it was clearly established that the agreement between the Management and the contractor was a sham contract and therefore, the Tribunal was justified that there was no valid contract or license with the contractor and therefore, the Tribunal, rightly declared the workman as an employee under the Management. The learned counsel places reliance on the judgment of a Division bench of the Gujarat High Court in the case of Food Corporation of India Workers’ Union, Calcutta v/s Food Corporation of India, New Delhi and others reported in 1990 LAB.I.C. 1968 to contend that the contractor, having no valid certificate of registration under Sections 7 and 12 of the Act, the workmen engaged by the contractor working for Principal employer are deemed to be the workmen engaged by Principal employer itself. Further, while placing reliance on a judgment of the Hon’ble Apex Court in the case of G.M., O.N.G.C., Shilchar v/s O.N.G.C. Contractual Workers Union reported in 2008 AIR SCW 3996, it was submitted that the Hon’ble Apex Court has rightly upheld the decision of the Division Bench of the High Court in lifting the veil in order to determine the nature of employment in the light of the judgment quoted thereby.

13. Heard Sri K. Kasturi, learned Senior Counsel for the Management, Sri K.R. Anand, learned counsel for the Contractor-G.G.Enterprises and Sri T. Narayanaswamy, learned counsel for the workman.

14. What is noticeable is that the workman was appointed on 23.07.1996 and till 14.03.2005, the workman did not notice that the salary slip was being issued in the name of the Contractor. It was only on 14.03.2005, for the first time, the workman makes a representation to RJS Associates, requesting that the salary slip be issued for the purpose of obtaining loan from the Bank. The important piece of evidence that is the muster roll and wage register for the month of August 1996 to January 1997 which was maintained by the Contractor has been marked and exhibited as Ex.M17. This document clearly shows that the workman was indeed receiving salary from the Contractor. The workman, during his cross-examination has admitted to this fact. Moreover, there is material on evidence, marked as Exs.M10 to 12, which would show that from the month of September 2005 to November 2005, the salary of the workman was directly being deposited by the Contractor into the savings account of the workman through the Bank. Ex.M13 is a document which shows that the Employees ‘Provident Fund with respect to the workman for the period March 2005 to February 2006 was deposited by the Contractor and Ex,M13 is the submission of annual returns in that regard. Similarly, for the period of March 2004 to February 2005 and March 2003 to February 2004 the submission of annual returns of the EPF pertaining to the workman employed by the Contractor is also placed on record. All these documents would testify the fact that the workman was indeed employed by the Contractor and not the respondent-Management.

15. There is not a single piece of evidence tendered by the workman to show that he was directly employed by the Management. Heavy reliance is placed by the Tribunal on the agreement dated 01.04.1994 to conclude that the agreement between the Management and the Contractor never existed and the agreement is a sham document. The tribunal thereafter proceeds to hold that since there was no valid licence and agreement between the principal employer and the Contractor, the workman would automatically become an employee of the principal employer. In this context, the decision of Full bench of this Court in Steel Authority of India Limited Vs. Steel Authority of India Ltd., Contract Workers’ Union, reported in ILR 1991 KAR 3679 makes it clear that the very same question fell for consideration i.e., “Whether the failure of the contractor through whom contract labour is engaged to obtain a license under Section 12 of the Contract Labour (Regulation and Abolition) Act, 1970, will bring about the relationship of employer and employee between the said contract labour and the Principal employer?”

16. The Full bench concluded that it is impermissible to read into the definition of ‘contractor’ under the Act as the holder of a valid licence under the Act. The employer is not responsible for the failure of the Contractor to obtain a licence under Section 12 of the Act and there is no compulsion imposed on him under the Act that he should continue to engage only a licenced contractor. The effect of the contravention of any of the provisions of the Act is to be located from the various provisions of the Act, and it is not possible to infer a consequence which may result in imposing higher burdens or larger liabilities on a person who is not directly connected with the contravention of the law, as in the case of a registered establishment engaging a contractor who in turn fails to obtain licence. There is absolutely no warrant to deem a direct relationship of employer and employee between the principal employer and the contract labour only because the contractor fails to obtain a licence. Such deeming will result in enlarging the scope of the penal provisions without any express words to that effect. Regularisation of the contract labour, whether employed through a licenced contractor or through an unlicenced contractor, is not one of the objects stated anywhere in the Act. The decision of the Full Bench in Steel Authority of India has been upheld by the Constitution bench of the Apex Court in Steel Authority of India Ltd. And Others vs. National Union Waterfront Workers And Others, reported in (2001) 7 SCC 1. The Constitution bench has further held that the principal employer cannot be required to order absorption of the contract labour working in the establishment concerned. Therefore, it is clear that even if there was no legitimate agreement between the Management and the Contractor, that by itself will not enure to the benefit of the workman to claim that he is employed by the principal employer.

17. As a result, the reasoning of the Tribunal is contrary to the decision and the law laid down by the Full Bench of this Court and that of the Hon’ble Apex Court. Therefore the petition filed by the Management should succeed.

18. The writ petition filed by the Management in W.P.No.4952/2014 is accordingly allowed and the impugned judgment and award dated 22.10.2013 passed in I.D.No.428/2006 is quashed and set aside. W.P.No.21205/2014 filed by the workman stands dismissed
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