1 HIGH COURT OF MADHYA PRADESH; INDORE BENCH (DIVISION BENCH : HON'BLE SHRI SHANTANU KEMKAR AND HON'BLE SHRI S.C.SHARMA, JJ.) Writ Petition No.8211 of 2006 (s) 1. Arvind Badhoria S/o Shri Jomdar Singh, House No.D-12/11, Kewarli Line, S.A.F. First Battalion, INDORE. 2. Tribhuwan Mishra S/o Shri Dharma Narayan, 29, Gomti Nagar, Near Sangam Nagar, INDORE. 3. Lakhan Singh S/o Shri Govind Singh, 162/C/S-1, Scheme No.78, Aranya, Vijay Nagar, Indore. 4. Hukum Chand S/o Shri Ramlal Jaiswal, 16, Banganga Main Road, Indore. 5. Uttam Singh S/o Shri Umrao Singh, 140/2 Nandanagar, Kachi Colony, Indore. PETITIONERS VERSUS 1. Rama Phosphates Ltd. Dharampuri, Sanwer Road, Indore, Through its Factory Manager. 2. Shubham Security Services, Comform Plaza 3, Nehru Nagar Square, Bhopal. RESPONDENTS ********************************************************* For Petitioners : Shri S.H.Moyal, learned counsel. For respondents : Shri G.S.Patwardhan, learned counsel. ********************************************************* 2 O R D E R (Passed on 9 th day of August, 2011) PER SHANTANU KEMKAR, J : This order shall also govern disposal of Writ Petition No.7189/2006 as both the writ petitions are arising out of common order dated 19.09.2006 passed by the President Industrial Court of M.P. Indore in C.As.No.113 to 117/2006 and C.As.No.121 to 125/2006. For the sake of convenience facts are taken from Writ Petition No.8211/2006 (s). 2. Briefly stated the petitioners/employees had filed applications under Section 31 (3) read with Sections 61 and 62 of the M.P. Industrial Relations Act, (for short the Act) before the Labour Court, Indore against the oral order of their termination from 06.04.2002. The said applications were opposed by the respondents on various grounds including the ground that the petitioners are not the employees of first respondent Rama Phosphates Ltd. but are employees of the second respondent Contractor. 3. On the basis of the pleadings raised by the parties the Labour Court framed as many as six issues. After recording the evidence led by the parties, it held the termination of the petitioners services to be illegal retrenchment vide order dated 28.03.2006. The Labour Court also recorded a finding that the petitioners are employees of the first respondent Rama Phosphates Limited and not of the second respondent contractor. Having held so, the Labour Court directed reinstatement of the petitioners with the first respondent with 50% backwages. 4. Dissatisfied by denial of full backwages the petitioners employees filed appeals before the Industrial Court claiming full backwages in place of 50% backwages awarded to them by the Labour Court. The first respondent Rama Phosphates also challenged 3 the order of the Labour Court holding the petitioners to be its employees as also the part of the order by which the petitioners have been directed to be reinstated with 50% backwages. 5. Both sets of appeals were heard and decided by the President Industrial Court by a common order dated 19.09.2006. The Industrial Court after examining and going through the evidence on record and after re-appreciation of the evidence recorded a finding that the petitioners services were terminated in violation of Section 25-F of the Industrial Disputes Act and held the termination of their services to be illegal. It is also on appreciation of evidence held that the petitioners were employees of the first respondent Rama Phosphates and not the employees of the second respondent contractor. Having held so the Industrial Court maintained the order of Labour Court about reinstatement but reduced the backwages awarded by the Labour Court to the petitioners from 50% to 25%. The Industrial Court dismissed the appeals filed by the employees by which they claimed full backwages. Feeling aggrieved by the order passed by the Industrial Court, the petitioners employees and the first respondent Rama Phosphates have filed these petitions. 6. Shri S.H.Moyal, learned counsel for the employees though initially argued that the petitioners should have been awarded full backwages but then fairly stated that the petitioners would be satisfied if order of reinstatement with 25% backwages is maintained. As regards the finding recorded by both the Court holding the petitioners to be employees of Rama Phosphates and not of contractor he argued that in view of the clear admission made by the witnesses of the first respondent Rama Phosphates to the effect that the entire control over the petitioners was of the first respondent the finding of fact needs no interference in this petition under Article 227 of the Constitution of India. 7. Shri G.S.Patwardhan, learned counsel appearing for the first respondent Rama Phosphates argued that in view of the settlement 4 (Annexure P-14) arrived at between the parties before the Assistant Labour Commissioner it was not open for the petitioners employees to have contended that they are employees of the first respondent Rama Phosphates. 8. Having considered the submissions made by the learned counsel for the parties and having gone through the pleadings and records of the case, we are of the view that the finding recorded by two Courts below that the petitioners are employees of the first respondent being based on sound appreciation of evidence no interference is called for in the matter. The Labour Court after due appreciation of evidence led by the parties recorded a finding of fact that the entire control on the employees was of the first respondent. On appreciation of the documentary evidence and the oral evidence, it appears that the Labour Court has recorded a correct finding that the termination of the services of the petitioners employees being in violation of provisions contained in Section 25F of the Industrial Disputes Act the termination is illegal and is liable to be set aside. The two Courts below have rightly held that on the basis of the agreement dated 28.03.2001 (Annexure P-14) it cannot be held that the petitioners were employees of the Contractor and were not employees of the first respondent. In our considered view, this finding of fact recorded by the two Courts below cannot be interfered into by this Court in a petition under Article 227 of the Constitution of India. 9. The Supreme Court in the case of General Manager, (OSD), Bengal Nagpur Cotton Mills, Rajnandgaon vs. Bharatlal and another 2011 (1) SCC 635 after taking into consideration the earlier judgment passed by it in the case of NTPC vs. Badri Singh Thakur (2008) 9 SCC 377 and Inernation Airport Authority of India vs. International Air Cargo Workers' Union (2009) 13 SCC 374 has held that there are two well recognized tests to find out whether contract labourers are direct employees of principal employer and the 5 tests are (i) whether principal employer pays salary instead of contractor, and (ii) principal employer controls and supervises work of employee. The Supreme Court examined the expression “control and supervision” in the context of contract labour, which was explained in the case of Inernation Airport Authority of India vs. International Air Cargo Workers' Union (supra) in paragraph 12 which reads thus :- “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 thus : (SCCp.388, paras 38-39) “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 a contractor, if the right to regulate the 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 / alloted / sent to him. But it is the contractor as employer, who chooses whether the worker is to b 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 6 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.” 10. Having considered the evidence led by the parties on the touchstone of the judgments referred to above, we find that the finding recorded by the labour court which has been affirmed by the Industrial Court leads to no room of doubt that the petitioners were working even prior to the contract being given to the second respondent. The document exhibit P-14 on which much reliance was placed by the first respondent also supports the petitioners' contention that they were employed much prior to the entry of the second respondent as a contractor in the first respondent industry. Paragraph 1 of the said agreement letter dated 28.03.2001 (Annexure P-14) reads thus :- 1- ;g fd xr o"kksZ esa tks lqj{kk Bsdsnkj Fkk mlds vUrxZr mDr lqj{kk dehZ dke dj jgs Fks ,oa orZeku esa Hkh u;s Bsdsnkj ds ekrgr mDr lqj{kk dfeZ;ksa dh lsok,a fujarj gSA mDr Bsdsnkj ,oa lqj{kk dfeZ;ksa ds e/; ;g lgefr gqbZ fd os mudh lsok,a fujarj j[ksxsaA ,oa Hkfo"; esa ;fn Bsdsnkj esa ifjoZru gksrk gS rks Hkh mudh lsok,a vkus okys Bsdsnkj ds ikl VzkUlQj gksdj fujarj jgsxhA ,slk izcU/kd jkek QkLQsVl }kjk vk'oLr fd;k x;k gSA ftl ij lqj{kk dfeZ;ksa }kjk lgefr izxV dh xbZ A bl laca/k esa ;g Hkh lgefr gqbZ gS fd ;fn dksbZ Bsdk dehZ vuq'kklughurk djrk gS vFkok viuh fo'oluh;rk [kks nsrk gS rks Bsdsnkj ,oa izca/kd fu;ekuqlkj vuq'kklukRed dk;Zokgh gsrq Lora= jgsaxsA 11. In the circumstances we are in complete agreement with the view taken by the two Courts below holding the petitioners to be employees of the first respondent. At this point of time we would like 7 to mention that with his usual fairness Shri S.H.Moyal, learned counsel for the petitioners during the course of the arguments had stated that the petitioners Tribhuwan Mishra, Lakhan Singh, Hukum Chand and Uttam Singh having gainfully worked after their order of termination being passed with other employers they may not be granted any backwages awarded to them. He also stated that the employee Hukum Chand having settled the matter as per the order- sheet recorded by the Labour Court in case No.77/06 MPIR (Misc) on 17.03.2007 he is forgoing also the right of reinstatement of Hukum Chand apart from backwages. He reiterated his submission that the other petitioners shall be satisfied, if the order of grant of reinstatement with backwages to the extent of 25% is maintained in their favour. 12. Having regard to the aforesaid and also the law laid down by the Supreme Court in the case of General Manager, (OSD), Bengal Nagpur Cotton Mills, Rajnandgaon vs. Bharatlal and another (supra) in our considered view, we find no infirmity in the order of reinstatement with 25% backwages passed by the Industrial Court. With the aforesaid directions, both the petition stands disposed of. (Shantanu Kemkar) (S.C.Sharma) Judge Judge AM.