Jharkhand High CourtM/S.B.C.C.L. vs Their Workmen & Anr on 1 July, 20091

             IN THE HIGH COURT OF JHARKHAND AT RANCHI
                       W.P. (L) No. 2952 of 2001

             M/s. Bharat Coking Coal Limited           ...        ...   Petitioner
                                                  Versus
             Their Workmen & Another                   ...        ...   Respondents

             CORAM: HON'BLE MR.JUSTICE AJIT KUMAR SINHA

             For the Petitioner:              Mr.   Anoop Kumar Mehta, Advocate,
                                              Mr.   Amit Kumar Sinha, Advocate,
             For the Respondents:             Mr.   R.S.Mazumdar, Advocate,
                                              Mr.   P.A.S. Pati, Advocate,
                                           ..........

             C.A.V. on 25.06.2009                      Pronounced on      01. 07.2009.
                                         ORDER
06/ 01.07.2009The present writ petition has been preferred for quashing
             the Award dated 13.3.2001 of the Central Government Industrial Tribunal
             No.1, at Dhanbad in Ref. No. 230/94.2.     The facts in brief are set out as under:-On 4.8.92, the Secretary of the Bihar Colliery Kamgar Union raised
             an industrial dispute alleging arbitrary stoppage of work of Shri Sohar
             Vishwakarma and others by the Management of Amlabad Colliery. It was
             stated that they were stopped from work from December, 1991 and they
             continued working since 1980. the Conciliation Officer vide its letter dated
             27.4.93 gave its reply that there was no workman named as Sohar
             Vishwakarma in the manpower roll of Amlabad Project / Mine and as such
             there was no question of stoppage of his work. It was also submitted that
             there was no employer-employee relationship and the named workman
             was actually employed by a contractor M/s. Electro Mech Corporation who
             was engaged by the Management purely on contractual basis as and
             when required for temporary nature of job of repairing machineries. The
             said contractor was also engaged for installation and commissioning of
             Koepe Winder and for repairing of machineries etc. on contractual basis.The conciliation, however, failed and the appropriate Government by
             reasons of its order dated 31.8.1994 referred the dispute for adjudication
             to the Central Government Industrial Tribunal No. 1, at Dhanbad and the
             reference is quoted as under:-"Whether the demand of Bihar Colliery Kamgar Union that Sri Sohar
                    Vishwakarma and 9 others (as per list annexed) should be treated
                    as employees of Amlabad Colliery of M/s. B.C.C.Ltd. is justified? Is
                    so, to what relief the persons concerned are entitled to?"After considering the entire pleadings, evidence on record and the
             facts and the deposition of the witnesses the learned Tribunal vide its2impugned Award dated 13.3.2001 answered the reference in favour of the
Union Respondent No. 1, directing absorption of the concerned persons as
permanent employees of M/s B.C.C. Ltd., which is sought to be challenged
in the present writ petition.3.     The main contention raised by Sri Anup Kumar Mehta, the learned
counsel for the petitioner is that the Tribunal has committed serious and
apparent error of facts and law and the Award of the Tribunal was
perverse and liable to be set aside. It is further submitted on behalf of
the petitioner that there was no employer-employee relationship and thus
the direction for absorption was on the face of it illegal and unsustainable
since the employee concerned were employed by the contractor M/s.
Electro Mech Corporation, Asansol. It has further been submitted that
there is already a permanent and surplus labour and the company is sick
and the enquiry in terms ofSection 16(1)of the Sick Industrial Companies
(Special Provisions) Act is pending before BIFR and thus the Award of
absorption / employment is liable to be set aside.4.     It has further been submitted that the Tribunal committed serious
error of law in holding that the respondent workmen have completed
more than 240 days in a calendar year and even assuming but not
admitting they had completed 240 days in a calendar year, that by itself
does not give any right to be absorbed in view of the settled law. It has
further been contended by the learned counsel for the petitioner that the
workmen have neither pleaded nor proved that the engagement of the
contract is against the prohibited nature of job by issuing notification
underSection 10(1)of the CLRA Act and no evidence was produced nor
any finding has been given that the contract was ruse, sham or a
camouflage. No finding of fact has been recorded by the learned Tribunal
in its award. It has further been contended that even in the SAIL case
reported in (2001) 7 SCC pg.1 it was held that there cannot be any
automatic absorption of contract labour engaged in a prohibited category
of job as laid down in para-125(5 & 6) by the Hon'ble Supreme Court,
unless the labour court/Industrial Tribunal gives a finding that the contract
was ruse, sham or camouflage.5.     The learned counsel for the petitioner has further referred to and
relied upon a judgment reported in (2002) 4 SCC pg 609 to submit that it
is only the labour court who can return the finding on this issue as to
whether the contract was sham or ruse or camouflage and in absence of
any finding the award is illegal.He has also referred to and relied upon a case reported in (1992)
1 SCC pg 695 (Dinanath case) which has been reiterated by the3Hon'ble Supreme Court in SAIL(Supra) judgment at para-96 to submit that
the effect of non registration and lack of license will lead to prosecution as
provided underSection 23and25of the CLRA Act and the same has been
explained in para-105 of the Constitution Bench Judgment in SAIL
matter(Supra).6.      The learned counsel for the respondent has stated that the
judgment reported in (2006) 3 SCC p. 674 and 2006 (4) SCC pg 1
applies to service jurisprudence and not to labour/industrial disputes. The
respondents have further submitted that they have been performing
permanent nature of jobs under the control and supervision of the
petitioner Management. It has also been contended that the contract was
ruse, sham and thus, a camouflage and thus, they were entitled to be
absorbed as per the law laid down in 2001 (7) SCC pg. 1. The learned
counsel for the respondent further submits that the work was perennial in
nature and the workman had completed 240 days of work in a calendar
year.The learned counsel for the respondent has further relied upon
paragraph-107 of the SAIL judgment which is quoted as under:"107. An analysis of the cases, discussed above, shows that
             they fall in three classes: (i) where contract labour is engaged
             in or in connection with the work of an establishment and
             employment of contract labour is prohibited either because the
             industrial adjudicator/court ordered abolition of contract
             labour or because the appropriate Government issued
             notification underSection 10(1)of the CLRA Act, no
             automatic absorption of the contract labour working in the
             establishment was ordered; (ii) where the contract was found
             to be a sham and nominal, rather a camouflage, in which case
             the contract labour working in the establishment of the
             principal employer were held, in fact and in reality, the
             employees of the principal employer himself. Indeed, such
             cases do not relate to abolition of contract labour but present
             instances wherein the Court pierced the veil and declared the
             correct position as a fact at the stage after employment of
             contract labour stood prohibited; (iii) where in discharge of a
             statutory obligation of maintaining a canteen in an
             establishment the principal employer availed the services of a
             contractor the courts have held that the contract labour would
             indeed be the employees of the principal employer".47.    I have considered the rival submission, the pleadings and the case
laws cited. Before dealing with the merits of the matter, it is relevant to
quote the relevant portion of the judgment of SAIL Case as reported in
(2001) 7 SCC pg. 1. The Constitution Bench of Hon'ble Supreme Court
in para-125, sub-para 3,4,5 & 6 has held as under:"(3) NeitherSection 10of the CLRA Act nor any other provision in
      the Act, whether expressly or by necessary implication, provides for
      automatic absorption of contract labour on issuing a notification by
      the appropriate Government under sub-section (1) ofSection 10,
      prohibiting employment of contract labour, in any process, operation
      or other work in any establishment. Consequently the principal
      employer cannot be required to order absorption of the contract
      labour working in the establishment concerned.(4) We overrule the judgment of this Court in Air India case
      prospectively and declare that any direction issued by any industrial
      adjudicator/any court including the High Court, for absorption of
      contract labour following the judgment in Air India case shall hold
      good and that the same shall not be set aside, altered or modified on
      the basis of this judgment in cases where such a direction has been
      given effect to and it has become final.(5) On issuance of prohibition notification underSection 10(1)of the
      CLRA Act prohibiting employment of contract labour or otherwise,
      in an industrial dispute brought before it by any contract labour in
      regard to conditions of service, the industrial adjudicator will have to
      consider the question whether the contractor has been interposed
      either on the ground of having undertaken to produce any given
      result for the establishment or for supply of contract labour for work
      of the establishment under a genuine contract or is a mere
      ruse/camouflage to evade compliance with various beneficial
      legislations so as to deprive the workers of the benefit thereunder. If
      the contract is found to be not genuine but a mere camouflage, the so-called contract labour will have to be treated as employees of the
      principal employer who shall be directed to regularise the services of
      the contract labour in the establishment concerned subject to the
      conditions as may be specified by it for that purpose in the light of
      para 6 hereunder.(6) If the contract is found to be genuine and prohibition notification
      underSection 10(1)of the CLRA Act in respect of the establishment
      concerned has been issued by the appropriate Government,
      prohibiting employment of contract labour in any process, operation
      or other work of any establishment and where in such process,
      operation or other work of the establishment the principal employer
      intends to employ regular workmen, he shall give preference to the
      erstwhile contract labour, if otherwise found suitable and, if
      necessary, by relaxing the condition as to maximum age
      appropriately, taking into consideration the age of the workers at the
      time of their initial employment by the contractor and also relaxing
      the condition as to academic qualifications other than technical
      qualifications."And at para-126 it held as under:"126. We have used the expression "industrial adjudicator" by design
      as determination of the questions aforementioned requires enquiry
      into disputed questions of facts which cannot conveniently be made by
      High Courts in exercise of jurisdiction underArticle 226of the
      Constitution. Therefore, in such cases the appropriate authority to go5into those issues will be the Industrial Tribunal/Court whose
        determination will be amenable to judicial review."8.          It will be evident that the ratio of the Judgment as laid down in
sub-para 5 & 6 will apply to cases where there is issuance of prohibition
notification underSection 10(1)of the CLRA Act. Likewise, the Hon'ble
Supreme Court also held at para-126 that the High Court cannot decide
disputed questions which requires enquiry in exercise                   of       its writ
jurisdiction underArticle 226of the Constitution of India and the
appropriate authority to decide will be the Industrial Tribunal/labour Court
since it will have to deal with the disputed facts and evidence to come to
the conclusion as to whether the contract labour for work of the
establishment      was     under     a   genuine      contract    or    is   a     mere
ruse/camouflage to evade compliance of various beneficial legislations so
as to deprive the workers of the benefit thereunder.                    Thus, it was
imperative and binding on the Industrial Tribunal/Labour Court to give a
finding based on evidence as to whether the contract was sham, ruse and
or a camouflage.The aforesaid issue was also considered earlier in the case of
Gujrat Electricity Board Vrs. Hind Mazdoor Sabha reported in
(1995) 5 SCC 27 at para-53 (ii) which has been reiterated by the
Hon'ble Constitution Bench (Supra).9.      In a recent Judgment an identical issue came up for hearing in
National      Thermal       Power        Corporation       &     Ors.    Vs.      Badri
SinghThakur reported in (2008) 9 SCC pg. 377 and the Hon'ble
Supreme Court after considering all the earlier judgments reiterated the
same even in cases where no prohibition notification has been issued
underSection 10 (1)of CLRA Act and while upholding the order of the
learned Single Judge set aside the order passed by the Division Bench.
The Hon'ble Supreme Court while reiterating the view taken by the SAIL
Judgment as well as Municipal Corp. of Greater Mumbai Judgment
reported in (2002) 4 SCC pg. 609 held at para-19 as under:19. Now, we proceed to consider the validity and correctness of the
        impugned judgment and order in the light of judgment of the
        Constitution Bench in SAIL case. The High Court held that the work
        entrusted to the members of the Union continued to be basically the
        work of the Corporation itself of perennial nature; the Corporation
        has chosen to carry out the work under the so-called system of labour
        contract without complying with the provisions of theCLRA Actand
        as such the labour contract was a camouflage. We must state here
        itself that the Union in the writ petition alleged that the labour6contract was a sham and the Corporation specifically denied it in its
       counter-affidavit but the High Court did not go into this question and
       did not record a finding that the labour contract in the present case
       was a sham or a camouflage considering the material on record; even
       otherwise, this being a serious and disputed fact in terms of the
       Constitution Bench judgment aforementioned, the High Court could
       not have appropriately adjudicated on the issue exercising
       jurisdiction underArticle 226of the Constitution. It appears to us
       that the High Court proceeded to conclude that the labour contract
       was not genuine and the workers of the Union were employees of the
       Corporation because the Corporation and the contractors did not
       comply with the provisions of theCLRA Act. Conclusion that the
       contract was a sham or it was only a camouflage cannot be arrived at
       as a matter of law for non-compliance with the provisions of theCLRA Actbut a finding must be recorded based on evidence,
       particularly when disputed by an industrial adjudicator as laid down
       in various decisions of this Court including the Constitution Bench
       judgment in SAIL. The cases on which the High Court placed reliance
       were the cases where finding of fact was recorded by the Labour
       Courts on evidence.      ..........................................10.    Thus, it has been conclusively held in the aforesaid Judgment that
in both situations that is on issuance of prohibition notification underSection 10of CLRA Act and/or of cases in which no notification of
prohibition has been issued that by itself cannot entitle or give a right to
the workmen for automatic absorption. The reliance to para-107 of Steel
Authority case by the learned counsel for the respondents is also
misplaced since those are cases where notification underSection 10of
CLRA Act was issued and it was found that the labour contract was a
sham or a camouflage. Even in these paragraphs it is reiterated that the
absorption is not automatic but it is subject to the aforesaid situation and
a finding has to be arrived at by the Industrial Court based on evidence.
On perusal of the impugned award, I find that there is no finding with
regard to the fact that the contract was ruse, sham or a camouflage nor
any evidence has been rendered to substantiate it before the learned
Tribunal.In the instant case, neither there is any finding with regard to
nature of the contract and as to whether it was a camouflage or sham nor
there is any pleading or finding that any prohibition notification was issued
underSection 10(1)of the CLRA Act.11.    The learned Tribunal clearly erred in holding that in absence of
Registration Certificate and non issuance of license underSection 7and712of the CLRA Act will result in absorption/regularization. The aforesaid
finding of the Tribunal is an error of law. The Hon'ble Supreme Court in
SAIL (supra) case and in (2002) 4 SCC pg. 609 and (2006) 3 SCC pg.
674 has clearly held it to the contrary. It was also specifically held at
para-72 that in absence of Registration Certificate and License as required
underSections 7&12of the CLRA Act with the respondent undertakings
and the contractor concerned respectively, the workmen concerned do not
become the direct employees and instead the remedy is provided by way
of prosecution underSections 23and25of the CLRA Act.12.    The learned Tribunal has further erred in holding that merely on
completing 240 days in a calendar year the workmen were entitled to be
absorbed. This issue is no more res-integra and the law declared by the
Hon'ble Supreme Court reported in (2006) 4 SCC pg 1                 (State of
Karnataka Vrs. Uma Devi's Case) even though rendered by the
Constitution of India in service jurisprudence equally apply to industrial
disputes and at para-39 while considering the case of the petitioner's
company itself in Bhurkunda Colliery it was held that the court cannot
direct absorption or regularization or make the worker permanent. The
same view was also considered in (2007) 1 SCC pg. 533 in -Gangadhar
Pillai Vrs. Siemens; (2007) 1 SCC 408-IDPL Vrs. Workmen; (2007) 6
SCC 207, HAL Vrs. Dan Bahadur.In the aforesaid judgment it has been held that merely because the
workmen have worked continuously for more than 240 days in a calendar
year, no right of absorption/ regularization follows.13.    The learned Tribunal further committed an error in holding that
since the control and supervision was of the management and thus the
workmen were entitled to absorption. In a recent judgment the Hon'ble
Supreme Court in International Airport Authority of India Vrs.
International Air Cargo Workers' Union case (C.A. No. 2244 of
2002) held as under:"Merely because the contract labour work is under the
              supervision of the officers of the principal employer, it cannot
              be taken as evidence of direct employment under the principal
              employer. Exercise of some control over the activities of
              contract labour while they discharge their duties as labourers,
              is inevitable and such exercise is not sufficient to hold that the
              contract labour will become the direct employees of the
              principal employer."14.    This court also had occasions to consider similar issues in 2004(1)
JLJR 227, 2004(1) JLJR 76 and 2004 (3) JCR 265 wherein on the8pleading of the petitioner company with regard to surplus manpower and
also the fact that the petitioner was registered with BIFR and sick
company this court while relying on SAID judgment it directed that the
workmen therein will be given preference if otherwise found suitable by
relaxing their age as and when regular vacancy and regular employment
of workmen takes place.15.     Considering the aforesaid facts and circumstances of the case, I
find that the Award dated 13.3.2001 is erroneous, illegal and against the
settled law as laid down by the Hon'ble Supreme Court. This writ petition
is accordingly allowed and the Award dated 13.3.2001 passed by Central
Government Industrial Tribunal No.1, at Dhanbad in Ref. No. 230/94.19 is
hereby quashed. However, the petitioner is directed to give preference to
the workmen by relaxing their age as and when regular vacancy and
regular appointment takes place.(Ajit Kumar Sinha, J.)
Jharkhand High Court, Ranchi
Dated the    01 July, 2009
D.S./sudhir   N.A.F.R.