Dismissed

Bhartiya Mazdoor Sang U.P. v. the Presiding Officer Industrial Tribunal (4) and 7 Others

Allahabad HC5 Dec 2018WRIC/30468/2018

Case brief

AI extract

What is this about?

In a writ petition, the Union challenged an Industrial Tribunal award regarding 25 security personnel hired via a genuine contractor. The court applied the Steel Authority of India Ltd precedent, holding that contract labour hired through a valid contract is not the direct employee of the principal employer.

What the court decided

AI extract

Bhartiya Mazdoor Sang U.P. Vs the… — Pension and Retirement Benefits | Allahabad HC (2018)

RESERVED

Court No. - 36

Case :- WRIT - C No. - 30468 of 2018 Petitioner :- Bhartiya Mazdoor Sang U.P. Respondent :- The Presiding Officer Industrial Tribunal (4) And 7 Others Counsel for Petitioner :- Shyam Narain,Gopal Narain Srivastava Counsel for Respondent :- C.S.C.,Ayank Mishra

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Hon'ble Mrs. Sunita Agarwal,J.

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Heard Sri Gopal Narain Srivastava, learned counsel for the petitioner and Sri Ayank Mishra, learned counsel for the respondents.

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The present petition is directed against the award dated 17.07.2017 published on the notice board on 09.07.2018 passed by the Industrial Tribunal, (4), U.P. Agra in Adjudication Case No.48 of 1991. The dispute referred to the tribunal for adjudication reads as under:-

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1- D;k lsok;kstdksa }kjk layXu ifjf'k"V esa mfYyf[kr vius 25 Jfedksa dks fnukad 25-04-1990 ls dk;Z ls i`Fkd@ofpra fd;k tkuk vuqfpr ,oa voS/kkfud gS\ ;fn gka] rks lacaf/kr Jfed D;k fgrykHk@{kfriwfrZ ikus ds vf/kdkjh gSa\

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2- ;fn mDr okn fcUnq lacaf/kr Jfedksa ds i{k ea fu.khZr s gS] rks D;k lacaf/kr Jfedksa dks muds in ij fu;fer@LFkk;h fd;k tkuk pkfg,\ ;fn gka] rks fdl frfFk ls\

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The petitioner-Union raised an industrial dispute regarding termination of services of 25 workmen w.e.f 25.04.1990, who allegedly were working with the respondentcorporation. The award dated 29.08.1995 was passed in favour of the workmen and it was held that these workmen fell within the definition of 'workman' in terms of Section 2(z) of the U.P. Industrial Disputes Act' 1947 (hereinafter referred as Act' 1947), because they were doing work for the Board. It was

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held that there was relationship of employer-employee between the Board and the workmen though they were engaged through an agency known as M/s ISS (Industrial Security Services), Allahabad, for the reason that these security personnel were working at the dictates of the engineers of the Board and their contract was abruptly terminated under the direction of the officers of the Board.

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The Labour Court had issued direction to absorb them in the regular staff of the Board as security personnel on a priority basis as and when the vacancies were available in accordance with their seniority which would be counted from the date when they were employed under the contract from 12.09.1988 onwards. This award was challenged in a Writ Petition No.12070 of 1996 filed by the U.P. State Electricity Board i.e. the employer.

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This Court while setting aside the award had held that the tribunal did not deal with the matter in the correct perspective, in as much as, there was no clear finding on the question whether the contractor was not a licenced contractor or that the contract was not genuine. In absence of any positive finding on record with regard to the contract being not genuine, and the workers being direct employees of the Board, it was held that the tribunal had committed illegality in holding that 25 security personnel engaged by the contractor should be treated as regular employees of the Board. The matter had been relegated to the tribunal for fresh decision.

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Pursuant thereto, the impugned award has been passed recording a categorical finding that 25 security personnel were hired through a security agency namely M/s ISS (Industrial Security Services), Allahabad. The said security agency was hired through the process of tendor and a valid agreement was executed between the Board and the

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contractor/security agency. These 25 personnel were infact hired by the security agency and not by the principal employer namely the Board.

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It was, thus, held that the security personnel who raised industrial dispute were workers of the contractor and not of the Board. They could not be considered being retrenched workman under Section 6-N of the Act' 1947. They were held not entitled for regularization on the premises that their services had been abruptly ended w.e.f 25.04.1990, by the principal employer.

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Challenging the award impugned, the submissions of learned counsel for the petitioner are two folds. Firstly, it is contended that the entire claim of the petitioner union was based on the definition of 'workman' under Section 2(z) of the Act' 1947 as also the definition of 'employer' under Section 2(i) of the said Act which was not considered in correct perspective.

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It is contended that a combined reading of the said definitions, indicates that the owner of the industries, where the workmen have been engaged in the course of or for the purpose of conducting the industry, through the contractor for the execution of the whole or any part of such work, would be included in the definition of 'employer'. Resultantly, the 'workman' as defined under the Act' 1947 though does not include the contract labours, but the contract workers working in connection with the work of the Board, shall be treated as 'workmen' of the respondent-Board, it being their employer. In the case of Basti Sugar Mills Vs. Ram Ujagar & others reported in AIR 1964 SC 355, the Apex Court while dealing with the aforesaid definitions had held that the persons employed in the industry by a contractor with whom the company had contracted in the course of conducting the

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industry, shall ordinarily be the 'workmen' of the company and the company would be their employer.

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The second submission of learned counsel for the petitioner is that the absorption of contract labour on termination of contract of the contractor had been directed by the tribunal vide award passed on 20.08.1995. The field as on the date of passing of the said award was occupied by the judgement of the Apex Court in the case of Basti Sugar Mills (supra). Further during pendency of the writ petition filed by the Board challenging the earlier award, the law laid down by the Apex Court in AIR India Statutory Corporation & others Vs. United Labour Union & others reported in 1997 (9) SCC 377 decided on December 6, 1996 was occupying the field. In AIR India Statutory Corporation (supra), it was held by the Apex Court that with the abolition of contract labour system from any establishment under Section 10 of the Act' 1947 by the appropriate government, the erstwhile contract labours covered by the scheme of such abolition for the activities concerned would be entitled to be treated as direct employees of the employer, on whose establishment they were earlier working and they would be entitled to be treated as regular employees, at least from the day, on which the contract labour system in the establishment for the work which they were doing, gets abolished.

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This position has been turned down by the Apex Court in the case of Steel Authority of India Ltd & others Vs. National Union Waterfront workers & others reported in 2001 7 SCC 1 decided on August 30, 2001. The judgment in AIR India Statutory Corporation (supra) had been overruled prospectively and it has been held by the Apex Court in Steel Authority of India (supra) that any direction issued by any industrial adjudicator/any court including High Court, for absorption of contract labour following the judgment in Air

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India's case (supra), shall hold good and that the same shall not be set aside, altered or modified on the basis of the judgment in Steel Authority of India (supra) case, where such a direction has been given effect to and it has become final.

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The submission is that the direction by the tribunal for absorption of contract labours (security personnel) on termination of the contract of the contractor, under the award dated 20.08.1995 has attained finality with the law laid down by the Apex Court in AIR India Case (supra) pronounced on 06.12.1996. It was, therefore, not open for the High Court to upset the same vide judgement and order dated 18.09.2001 on the basis of the law laid down in Steel Authority of India (supra).

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Consequently, the impugned award passed by the tribunal subsequent to the order of the High Court dated 18.09.2001 cannot be sustained. The situation as on the date of the previous award dated 20.08.1995 has to be affirmed as such.

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So far as the second submission of learned counsel for the petitioner is concerned, the same is found wholly misconceived, in as much as, present case is not a case of abolition of contract labour system by issuance of a prohibition notification under Section 10 of the Contract Labour (Regulation and Abolition) Act' 1970 (hereinafter referred as Act' 1970) rather it is admitted to the petitioners that they were hired through a contractor engaged by the principal employer i.e. the Board. The reference to the judgement of Apex Court in AIR India (supra) and Steel Authority of India (supra) on the question of consequence of issuance of prohibition notification under Section 10 of the Act 1970 is, thus, wholly out of the context.

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Now the only question remains as to whether the

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members of the petitioner-Union i.e. 25 security personnel engaged through the contractor namely M/s ISS (Industrial Security Services), Allahabad shall be treated as direct employees of the Board or not. Answer to the said question has been given by the Apex Court in Steel Authority of India (supra). In the said case, the question emerged for consideration was “whether on a contractor engaging contract labour in connection with the work entrusted to him by a principal employer, the relationship of master and servant between him (the principal employer) and the contract labour emerges?”.

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After analysis of a catena of decision on the issue and the object and purpose of the Act' 1970, it was held therein that the said Act' 1970 was made by the Parliament to deal with the abuse of the contract labour system. It has adopted twin measures to curb the abuses of employment of contract labour:- (i) the first is to regulate employment of contract labour suitably and (ii) the second is to abolish it in certain circumstances. While dealing with the consequence of abolition of contract labour system as a result of prohibition notification issued by the appropriate government under Section 10(1) of the Act' 1970, it was held that it does not contemplate automatic absorption of the contract labour working in the establishment.

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On the question as to whether the relationship of master and servant between the principal employer and the contract labour emerges with the engagement of contract labours through a contractor, in connection with the work entrusted to him by a principal employer, it was held that such a relationship cannot be contemplated within the meaning of the Act' 1970, which permits an establishment to hire the contractor to do certain work in the said establishment as a principal employer, where the contract is found to be genuine.

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Only where the contract is found to be a sham and nominal rather a camouflage, in such case the contract labour working in the establishment of the principal employer can be held, in fact and in reality, the employee of the principal employer himself. These are the cases where the court/industrial tribunal shall pierce the veil and declare the correct position.

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As to the law laid down by the Constitution Bench in Basti Sugar Mills (supra), it was held that the said case was decided on the wide language of statutory definition of the terms “workman” and “employer”. The definition of 'workman' under the Act' 1947 though is wide but being a generic term would not include the contract labour. It was concluded in paragraph no.117, 118 and 119 in Steel Authority of India (supra) as under:-

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“117. We find no substance in the next submission of Mr. Shanti Bhushan that a combined reading of the definition of the terms contract labour, establishment and workman would show that a legal relationship between a person employed in an industry and the owner of the industry is created irrespective of the fact as to who has brought about such relationship.

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118. We have quoted the definitions of these terms above and elucidated their import. The word workman is defined in wide terms. It is a generic term of which contract labour is a species. It is true that a combined reading of the terms establishment and workman shows that a workman engaged in an establishment would have direct relationship with the principal employer as a servant of master. But what is true of a workman could not be correct of contract labour. The circumstances under which contract labour could be treated as direct workman of the principal employer have already been pointed out above.

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119. We are not persuaded to accede to the contention that a workman, who is not an out-worker, must be treated as a regular employee of the principal employer. It has been noticed

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above that an out-worker falls within the exclusionary clause of the definition of workman. The word out worker connotes a person who carries out the type of work, mentioned in subclause (C) of clause (i) of Section 2, of the principal employer with the materials supplied to him by such employer either (i) at his home or (ii) in some other premises not under the control and management of the principal employer. A person who is not an out worker but satisfies the requirement of the first limb of the definition of workman would, by the very definition, fall within the meaning of the term workman. Even so, if such a workman is within the ambit of the contract labour, unless he falls within the afore-mentioned classes, he cannot be treated as a regular employee of the principal employer.”

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In the instant case, it is admitted that 25 security personnel were hired through a contractor whose contract was found valid and genuine. It is also admitted by the learned counsel for the petitioner during the course of argument that on the decision of the security committee, the then existing security staff provided by the contractor had been replaced with the understanding that they will be adjusted against other contract. The said fact is also reflected from the finding recorded by this Court in the judgement and order dated 18.09.2001.

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In the said scenario, in absence of any material to assail the findings recorded by the tribunal regarding genuineness of the contract of the contractor, the members of the petitioner union cannot be said to be the direct employees of the principal employer i.e. the Board.

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The award impugned cannot be interfered on the aforesaid submissions of learned counsel for the petitioner.

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The writ petition is, accordingly, dismissed .

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Order Date:- 05.12.2018

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Himanshu

Bhartiya Mazdoor Sang U.P. v. the Presiding Officer Industrial Tribunal (4) and 7 Others

Case brief

What is this about?

What the court decided

Bhartiya Mazdoor Sang U.P. v. the Presiding Officer Industrial Tribunal (4) and 7 Others

Case brief

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