General Manager
(OSD), Bengal Nagpur Cotton Mills Rajnandgaon Vs. Bharat Lal & ANR.
JUDGMENT
R.V.RAVEENDRAN, J.
1.
Leave
granted. IA 5/2007 for bringing on record an additional document (certificate
relating to employment of first respondent with another employer from 1985) is
allowed. Heard.
2.
The
appellant entered into a security service agreement dated2.12.1975 with the
second respondent, for its Mills premises, governed by the provisions of
Contract Labour (Regulation & Abolition) Act, 1970(`CLRA Act' for short).
The first respondent was one of the persons appointed by the second respondent,
and he was deployed for guard duties at the appellant's Mill on 15.12.1980. The
second respondent discharged the first respondent from service on 27/28.7.1982.
The appellant terminated the security service agreement with the second
respondent on 16.8.1982.
3.
Five
years after his termination, in the year 1987, the first respondent filed an
application under section 31(3) of the Madhya Pradesh Industrial Relations Act,
1960 (for short `MPIR Act') for a declaration that his termination from service
was illegal. He also sought a consequential direction to the appellant and
second respondent to extend all the benefits which the employees of the
appellant were being extended, from the date of termination, alleging that he
was unemployed and without income. The appellant contested the claim and the
second respondent remained ex parte. The Labour Court by order dated 28.10.1991
allowed the application in part and directed the appellant to reinstate the
first respondent in his previous post and pay him all arrears. Feeling
aggrieved, the appellant filed an appeal before the Industrial Court against
the said award of the Labour Court. While admitting the appeal, the Industrial
Court directed the appellant to comply with section 65(3) of the MPIR Act which
required the employer to pay to the employee the full wages last drawn by him,
during the pendency of the appeal.
4.
The
appellant issued a letter dated 25.2.1992 offering reinstatement from
30.12.1991 on a salary of Rs.1000/- per month, though he was getting only a
salary of Rs.200/- from second respondent at the time of his disengagement.
Shortly thereafter the appellant's mills were closed on31.10.1992 and it was
declared to be a sick industry by the Board for Industrial & Financial
Reconstruction on 6.5.1993.
5.
The
Industrial Court heard and dismissed the appellant's appeal by judgment dated
19.5.2001. The Industrial Court held that after the CLRA Act came into force,
it would not be possible to rely upon the definition of` employee' under
Section 2(13) of MPIR Act to contend that a workman employed by the contractor
was a workman of the principal employer. The Industrial Court also held that
first respondent was appointed by the second respondent. However it held that the
agreement between appellant and second respondent was sham/nominal and the
first respondent should be treated as a direct employee of appellant for the
following reasons: (i) the appellant failed to establish by adducing necessary
evidence that the salary of first respondent was not directly paid by it and
that it was being paid by the second respondent and therefore it should be
deemed that the appellant was directly paying wages to the first respondent; and
(ii) the officers of appellant were assigning duties directly to the first
respondent and therefore it should be deemed that he was working under the
direct control and supervision of the appellant.
6.
The
appellant challenged the order of the Industrial Court by filing a writ
petition in the High Court. The High Court by judgment dated12.1.2006 dismissed
the writ petition without examining the contentions of the appellant on merits,
merely on the ground that the appellant did not comply with section 65(3) of
the MPIR Act and the scope of interference under Article 226/227 was very
limited. The said order is challenged in this appeal by special leave.
7.
The
appellant relied upon the decisions of this Court in National Thermal Power
Corporation v. Badri Singh Thakur [2008 (9) SCC 377]where this court held that
the provisions of CLRA Act would override the provisions of the MPIR Act and
Municipal Corporation of Greater Mumbai vs. K.V. Shramik Sangh [2002 (4) SCC
609] where this court observed that merely because the principal employer and
contractor have not complied with the provisions of the CLRA Act in regard to
registration, the system of carrying out work through labour contract could not
be termed as sham.
8.
In
this case, the Industrial adjudicator has granted relief to the first respondent
in view of its finding that he should be deemed to be a direct employee of the
appellant. The question for consideration is whether the said finding was
justified. 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.
9.
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. 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 [2009 (13)SCC 374] thus: "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. 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." 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.
10.
There
is a yet another reason why the first respondent should be denied any relief as
there is sufficient material to infer that he deliberately suppressed and
misrepresented facts. The first respondent was careful enough not to disclose
his address (either his residence or place of work) at any stage of the
proceedings before the Labour Court or Industrial Court or the High Court or
this Court. He all along gave his address as care of his counsel Sri Harish
Chandra Rishi, Advocate, Rajnandgaon, Chattisgarh. In the application before
the Labour Court as also before the Industrial Court and the High Court, he
asserted that he was unemployed. Even in the counter affidavit dated 29.4.2008
filed in this court, he stated that he is "suffering from unemployment and
mental agony since 1987", thereby giving an impression that he has been
continuously unemployed. The appellant has produced before us an employment
certificate issued by the current employer of the first respondent. The
appellant has stated that it could not earlier ascertain whether the first
respondent was otherwise employed as it did not have his particulars as he was
not its employee and his whereabouts were not known; and that only after the
filing of the special leave petition, it could trace the place of employment of
the first respondent and secure the particulars. The certificate produced is a
communication dated 17/18.1.2007from Western Coalfields Ltd., a Govt. of India
Undertaking, Nagpur, addressed to the appellant, stating that the first
respondent took up employment under Western Coalfields Ltd. on 5.6.1985 and
that in January,2007 he was working in Wani area in WCL in Maharashtra and was
being paid a gross salary of Rs.12435/-. This has not been denied or
controverted by the first respondent.
11.
11.
The proviso to section 65(3) of the MPIR Act makes it clear that if the employee
had been otherwise employed and receiving adequate remuneration during
the pendency of the appeal or subsequent periods, the court shall order that no
wages shall be payable under section 65(3). As noticed above the first
respondent approached the Labour Court only in the year 1987, five years after
his disengagement by the second respondent. After he was disengaged in July,
1982, the first respondent took up employment with Western Coalfields on
5.6.1985 and has been earning a far larger amount than what he was earning
earlier. Two years thereafter he approached the Labour Court. He continues to
be employed with Western Coalfields during the pendency of this appeal. That is
an additional ground to deny any back wages or direction to pay wages during
the pendency of the litigation. It is also a ground to reject the claim on
account of the deliberate suppression and misrepresentation.
12.
In
view of the foregoing, we allow this appeal and set aside the orders of the
Labour Court, Industrial Court and High Court. Consequently the application of
first respondent filed before the Labour Court, Rajnandgaon under Section 31(3)
of MPIR Act stands dismissed.
................................J.
(R V Raveendran)
...............................J.(A K Patnaik)
New
Delhi
December
14, 2010.
Back
