IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 19.02.2010 CORAM: THE HONOURABLE MR. JUSTICE K. CHANDRU Writ Petition Nos.19353 to 19358 of 2000 and 11023 to 11027 of 2001 W.P.Nos.19353 to 19358 of 2000 THE MANAGEMENT OF T.N.S.T.C. [ PETITIONER IN ALL WPs) REP. BY ITS Managing Director BYE PASS RD. MADURAI-1. Vs 1 THE PRESIDING OFFICER LABOUR COURT, MADURAI ..1st respondent in all cases 2 P. SARAVANAKUMAR ..R2 in W.P.No.19353/00 D. DHANAPALAN ..R2 in W.P.No.19354/00 K.SUBRAMANIAN ..R2 in W.P.No.19355/00 K. SAMAYAMUTHU ..R2 in W.P.No.19356/00 A.JEYARAJ ..R2 in W.P.No.19357/00 R. BALASUNDER ..R2 in W.P.No.19358/00 Petitions under Article 226 of the Constitution of India praying for a writ of certiorari to call for the records of the 1st respondent in its award dated 25.10.1999 and received on 03.02.2000 made in I.D.No.11, 13, 17, 21, 23, 25 of 1991, and quash the same. For Petitioner : Mr.Rajnish Pathiyal in all WPs For Respondents No.2: Mr.D.Saravanan, (R2) in all WPs W.P.Nos.11023 to 11027 of 2001 P. SARAVANAKUMAR ...Petitioner in W.P.No.11023/01 R. BALASUNDER ...Petitioner in W.P.No.11024/01 https://hcservices.ecourts.gov.in/hcservices/ A.JEYARAJ ...Petitioner in W.P.No.11025/01 K.SUBRAMANIAN ...Petitioner in W.P.No.11026/01 K. SAMAYAMUTHU ...Petitioner in W.P.No.11027/01 -vs- 1. The Presiding Officer Labour Court, Madurai. 2. The Managerment of Tamilnadu State Transport Corporation rep. By its Managing Director By pass road, Madurai 1 ..Respondents Petitions under Article 226 of the Constitution of India praying for a writ of certiorari to call for the records relating to in I.D.No.11, 25, 23, 17 and 21 of 1991, on the file of the Labour Court, Madurai, the first respondent herein and quash the award dated 25.10.1999 made therein in so far as the denial of entire backwages. For Petitioners in : Mr.Rajnish Pathiyal WP Nos.19353 to 19358 of 2000 For 2nd Respondents in : Mr.Rajnish Pathiyal WP 11023 to 11027 For Petitioner in WP NOS.11023 : Mr.D.Saravanan to 11027 of 2001 and 2nd Respondent in WP Nos.19355 to 19358 of 2000 O R D E R Heard both sides. All the writ petitions were directed against the common Award dated 03.02.2000 passed by the Labour Court, Madurai. While the Management has filed six writ petitions (W.P.Nos.19353 to 19358 of 2000) against the Award in ordering reinstatement of the workmen, the other five writ petitions (W.P.Nos.11023 to 11027 of 2001) were filed by the concerned Workman challenging the denial of back wages to them. In view of the interconnectivity among all the writ petitions they were heard together. https://hcservices.ecourts.gov.in/hcservices/ 2. It is seen from the records that the workmen covered by these writ petitions were employed as Loaders in the Management Corporation. According to them, these workmen were engaged for more than one year and they were paid Rs.14/- per day as wages. Their services came to be terminated on 15.06.1990 by an oral order. Thereafter, the workmen sent a representation dated 19.06.1990 to the Management Corporation. When there was no response, they raised an Industrial Dispute individually under Section 2-A of the Industrial Disputes Act. The Labour Officer, Madurai as he could not bring about mediation, gave a failure report dated 12.11.1990. On the strength of the failure report, the workmen filed claim statements before the first respondent Labour Court. Their claim statements were taken on file and they were assigned different Industrial Dispute Numbers viz., I.D.Nos.11/91, 13/91, 17/91, 21/91,23/91 and 25/91. Notice was issued to the Management Corporation. The Management Corporation filed identical counter statements dated Nil (1991) resisting the claim of the workmen. 3. The contention raised by the Management before the Labour Court was that the Corporation is doing transport business and they have their own permit and regular workers like drivers, conductors, checking inspectors and clerks. Incase of any incidental works which are non processing and non productive such an loading and unloading, they engage independent contractors. Those contractors duly execute an agreement with the respondent Corporation and it is only for a specific period of time and by efflux of time, the work will come to an end. They do not have any control or supervision over these contractors. They also did not admit the years of service and the wages paid to them. In the absence of any renewal of contract, their service will come to an end on their own. 4. Before the Labour Court, on behalf of the workmen one K.Subramanian, (petitioner in W.P.No.11026 of 2001) was examined as W.W.1. On the side of the Management, two witnesses M/s P.Pandi and G.Raju were examined as M.W.1 and M.W.2. On the side of the workmen, 30 documents were filed and they were marked as Exs.W.1 to W.30. On the side of the Management 16 documents were filed and were marked as Exs.M.1 to M.16. 5. The petitioners workmen also produced copy of the standing orders applicable to the Management as Ex.W.8. A copy of the attendance register prepared on the basis of salary vouchers for the period from March 1989 to June 1990, was also marked as Ex.W.9. In respect of each individual workers, the number of actual days worked by them in the Corporation was also filed as Ex.W.10 series. 6. The Labour Court, on an analysis of the materials placed before it, came to the conclusion that the workmen are all covered by the Industrial Disputes Act and they are not independent contractors. https://hcservices.ecourts.gov.in/hcservices/ The Labour Court also analysed the so called contract agreement dated 01.03.1989 and came to the conclusion that notwithstanding the said contract signed between the parties the workman and the employer, the Management never claimed, that they were registered under the provisions of the Contract Labour Abolition Regulation Act, 1970 and also that after referring to the Judgment of the Supreme Court in the case of D.C.Dean Mohideen Sahib and Sons and another vs. United Beedi Workers' Union, Salem and another reported in 1964 II LLJ 633, held that the contract was not a real contract. Further, the labour Court referring to the Judgment of the Supreme Court rendered in Silver Jubilee Tailoring House and others and Chief Inspector of Shops and Establishment and another reported in 1973 II LLJ 498 came to the conclusion that they are workers under the Management. 7. The Labour Court considering the so called agreement signed as per Exs.M.6,M.7 and M.8 and from the evidence of W.W.1 found that this contract was signed once in six months in the name of each of the three workers i.e., Saravanakumar, Samayamuthu and Jeyaraj and monies were disbursed only through those workers on turns. The workers also deposed before the Court that all of them are workers under the Management including the person who had signed the so called agreements. For convenience sake, the Management was disbursing the salaries in the name of one worker, which amount was equally shared by all the workmen. Though the Management pressed into service the Judgment of the Supreme Court in Dena Nath and others vs. National Fertilizers Limited reported in 1992 I LL Notes 53, the Labour Court rejected the said contention on the ground that there was nothing to indicate that either the Management had licence to engage contract labourers under the provisions of the Contract Labourers (Regulation and Abolition) Act, 1970 or the contracts were registered and given licence under the provisions of the Act. Therefore, the labour Court refused to accept the contentions raised by the Management that the workers were all independent contractors and not workmen under the provisions of the Industrial Disputes Act. 8. In that view of the matter the labour Court found that the workmen having put in more than one year of service, dispensing with their services would amount to retrenchment under Section 2(OO) of the Industrial Disputes Act. Inasmuch as the Management did not comply with the conditions precedents prescribed under Section 25-F of the Industrial Disputes Act, their termination is illegal and therefore they are liable to be reinstated. But, at the same time, considering the nature of the work, deprived the entire backwages to these workmen. It is this award, which is the subject matter of challenge both by the Management and by five Workmen. 9. The Management contended that the Labour Court failed to take note of the Judgment of the Supreme Court in Gujarat Electricity Board, Thermal Power Station vs. Hind Mazdoor Sabha reported in (1995) 5 SCC 27. It is also stated that the Labour Court was wrong in https://hcservices.ecourts.gov.in/hcservices/ granting the relief only because the workmen had worked within the premises of the Management and failed to consider that they are contract labourers covered by the provisions of the Contract Labour Act. Secondly the contention raised is that whether the present workers come within the meaning of Section 2(s) of the Industrial Disputes Act. 10. The said contention as it relates to facts for which materials will have to be placed before the Labour Court. Once the labour Court appreciate the materials placed before it and comes to the conclusion in a particular way, this court under Article 226 of the Constitution cannot interfere with such finding of fact. The contention raised by the Management that Gujarat Electricity Board case will apply has no merit. The said Judgment has been subsequently considered and distinguished by the Larger Bench of the Supreme Court in Steel Authority of India vs. National Union Waterfront Workers reported in 2001 7 SCC 1. Paragraph 125 (5) of the said Judgment reads as follows:- "... 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 ..." 11. In that case, the Supreme Court has categorically held that only in case of proper engagement of contract labour, then the abolition of it will have to be sought for from the Advisory Board constituted by the appropriate Government and the decision of the Government under Section 10 of CLAR Act is required. But in a case where the workmen contends that the contract is sham and nominal and when that is disputed, the worker can raise a dispute about the nature of contract. Courts have got power to go into the terms of contract and decide the issue in one way or other. In the present case, the workers contention was that the contract was sham and https://hcservices.ecourts.gov.in/hcservices/ nominal and it is only a paper arrangement between the Management and the workmen. Even as per the exhibits M.6,7 and 8 referred to by the Management, the contract has been renewed from time to time in the name of different workers and each of the workers who had signed the contract have also rendered actual service as workman. It is also found that for the sake of convenience, the amounts were channeled through one of the worker whose name is found in the contract and the Labour Court has correctly found that it is only a paper arrangement and cannot be relied for the purpose of excluding the workmen from approaching the Court. Hence this contention cannot be found acceptance. 12. In this context, it is necessary to refer to two Judgments of the Supreme Court. One is Hindalco Industries Limited vs. Association of Engineering Workers reported in (2008) 13 Supreme Court Cases 441. In that case, the Supreme Court has dealt with the case of a workmen engaged in the canteen. The contention raised was that they are not employees of the principal employer. The workmen made a complaint before the Industrial Court in Maharashtra. The Industrial Court found that the Management's action in not regularising those workmen would amount to unfair labour practice prescribed by the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. The order of the Industrial Tribunal finally came to be upheld by the Supreme Court in Hindalco Industries case referred to above. The Court held that there is necessity for the employer to provide canteen to do their regular business and therefore that cannot be said to be not related to the employers business. The Court also rejected the argument that since it is a public sector, such regularisation cannot be ordered. 13. Once again the Supreme Court very recently in Maharashtra State Road Transport Corporation vs. Casteribe Rajya Parivahan Karmchari Sanghatana reported in (2009) 8 SCC 556 dealt with the case of body washers engaged on a contract basis at the rate of Rs.1.50 per bus by the Maharashtra Transport Corporation. The work was held to be regular work. But the Management of the Transport Corporation did not regularise their services. Therefore, the workmen approached the Industrial Tribunal complaining that it was an act of unfair labour practice in denying them permanency and a complaint was lodged under Section 30(1)(b) read with Section 32 and Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. The Industrial Court gave a direction to the Transport Corporation to absorb them. Challenging the order of the Industrial Court, the matter went to the Supreme Court. Before the Supreme Court, heavy reliance was placed upon Umadevi (3) case reported in 2006 4 SCC 1. The Supreme Court distinguished Umadevi's case and held that Umadevi's case is a case of regularistion of an adhoc and temporary employees who are not regularly appointed in terms of the recruitment rules. But that judgment will not affect in case of any local enactment giving guarantee of employment to the https://hcservices.ecourts.gov.in/hcservices/ workmen. In that view of the matter the order passed by the Industrial Court was upheld by the Supreme Court. 14. It must be noted that the Industrial Disputes Act prevents commission of an unfair labour practice which term is defined under Section 2(ra). The unfair labour pracitce by an employer have been listed in Schedule V of the Industrial Disputes Act. Part I of the V schedule lists various unfair practices by an employer. Item 10 of the said schedule shows that the employer cannot engage workman as Badlis, Casuals or temporaries and continue them for years with the object of depriving them the status and privileges of the permanent workman. This entry is identical to the entry dealt with by the Supreme Court in relation to the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. Schedule IV of that Act is also reproduced as Schedule V in the Industrial Disputes Act. 15. Under Section 25-T of the Industrial Disputes Act, an employer is prohibited from committing unfair labour pracitce. In the case of commission of such unfair labour practice section 25-U provides for penalty. Therefore, in the present case, insofar as the employers contending that the workmen are not their workmen cannot be accepted. As correctly held by the labour Court, it is only a paper arrangement which the labour Court can pierce its veil and found out as to who was the true employer. In that context, the finding of the labour Court are not assailable. The case of the petitioner is almost similar to the Body Washers case dealt with by the Supreme Court in the recent Maharashtra State Road Transport Corporation,s case cited supra. 16. Once it is found that the workmen are employees of the Transport Corporation, the finding that they have worked for more than 240 days which have been established before the Labour Court both by oral and documentary evidence, that finding cannot be disturbed. Once it is held that the workmen have put in more than one year of service and the employer had not dispensed with their service, in the manner known to law and the condition precedent under Section 25-F were fulfilled then, the workmen are entitled to get reinstatement. In the present case, the Labour Court had precisely held that for the infraction of Section 25 F of the Industrial Disputes Act they are eligible for reinstatement. In that view of the matter the labour Court directed reinstatement but denied the backwages. 17. In view of the above, the impugned Award does not suffer from any infirmity and the writ petitions filed by the Management in W.P.No.19353 to 19358 of 2000 will stand dismissed. https://hcservices.ecourts.gov.in/hcservices/ 18. Coming to the case of the workmen claiming full wages, it must be noted that in the present case, the workmen were engaged on a daily wages though there is a paper arrangement. Though they had completed beyond one year of service, it cannot be said to be long service. Secondly, with reference to the payment of backwages, it must be noted that even in cases of violation of Section 25-F of the Industrial Disputes Act, it is not necessary the entire wages can be ordered. This question came up for consideration by the Supreme Court in Rajasthan Lalit Kala Academy vs. Radhey Shyam reported in (2008) 13 Supreme Court Cases 248. In that case, the Supreme Court went into the identical issue and held in paragraph 21 as follows:- "21. It appears to us that in the present case there has not been due application of mind either by the Labour Court or by the High Court on the question of reinstatement and payment of 25% backwages. The only ground on which reinstatement and continuity of service has been ordered is because the order of termination has been held to be unlawful. Similarly, 25% back wages have been awarded for the reason that the services of the petitioner were terminated with immediate effect but no specific reason as such has been assigned for the award of the said back wages. In our opinion, though, illegality of the order of termination is one of the prime considerations for determining the question and quantum of back wages, but it cannot be the sole criterion therefor. A host of other factors, a few enumerated above, are required to be taken taken into consideration before issuing directions in that behalf. Therefore, the award of the Labour Court to that extent cannot be sustained. However, we feel that at this distant time, it would not be fair to the respondent workman to remit the matter back to the Labour Court or the High court for fresh consideration of the issue". (Emphasis added) 19. Once again, similar question came up before the Supreme Court in Reetu Marbles vs. Prabhakant Shukla reported in (2010) 1 MLJ 1313 (SC) and in paragraph 13, the Supreme Court has held as follows:- "13. The only limited issue to be determined by us, in this appeal, is whether the High Court was justified in granting full back wages to the respondent in spite of the denial thereof by the Labour Court. In our opinion the High Court erred in law in not examining the factual situation. The High Court merely stated that it was not the case https://hcservices.ecourts.gov.in/hcservices/ of the employer that the workman had been gainfully employed elsewhere. Although it noticed the principle that the payment of backwages having a discretionary element involved in it, has to be dealt with in the circumstances of each case and no strait jacket formula can be evolved, yet the award of the Labour Court was modified without any factual basis". (emphasis added) 20. It must be noted that by the interim order dated 03.10.2001, the workmen are also getting last drawn monthly wages in terms of Section 17B of the Industrial Disputes Act as ordered by this Court. 21. In the light of the above, the claim made by the Workmen in W.P.No.11023 to 11027 of 2001 cannot be entertained. Hence, those writ petitions are also liable to be rejected. 16. In the result, all the writ petitions will stand dismissed. No costs. Sd/- Asst. Registrar. /true copy/ Sub Asst. Registrar. rg To 1 THE PRESIDING OFFICER LABOUR COURT, MADURAI Copy to The Section Officer, VR Section, High Court, Madras. + 7 ccs to M/S.Rajnish Pathiyil, Advocate, CC SR 11962 to 11968 + 11 ccs to Mr.D.Saravanan, Advocate, CC Sr 11592 W.P.Nos.19353 to 19358 of 2000 and 11023 to 11027 of 2001 RSM (CO) RH (4.3.10) https://hcservices.ecourts.gov.in/hcservices/