IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN TUESDAY, THE 1ST DECEMBER 2009 / 10TH AGRAHAYANA 1931 OP.No. 201 of 2000(Y) --------------------- PETITIONER(S): ------------------------ THE EXECUTIVE DIRECTOR, KELTRON CONTROLS, AROOR. BY ADVS. MR.M.GOPIKRISHNAN NAMBIAR MR.T.P.KELU NAMBIAR, SENIOR ADVOCATE RESPONDENT(S): --------------- 1. THE WORKMEN OF KELTRON CONTROLS, AROOR, REPRESENTED BY THE GENERAL SECRETARY, SHERTALLAI TALUK, INDUSTRIAL EMPLOYEES UNION (CITU). AROOR P.O., SHERTALLAI, 2. THE DIRECTOR, EX-SMOSS, VAYALAR, SHERTALLAI. 3. THE INDUSTRIAL TRIBUNAL, ALAPPUZHA. BY ADV.MR.P.RAMAKRISHNAN FOR R1 THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 30/11/2009, THE COURT ON 01/12/2009 DELIVERED THE FOLLOWING: OP.No. 201 of 2000(Y) APPENDIX PETITIONER'S EXHIBITS: EXT.P1 - TRUE COPY OF AWARD, DATED 3.3.1990, IN I.D. NO.5/89, INDUSTRIAL TRIBUNAL, ALAPPUZA. EXT.P2 - TRUE COPY OF JUDGMENT DATED 6.2.1992 IN O.P. NO. 10352/90 EXT.P3 - TRUE COPY OF JUDGMENT DATED 17-6-1998 IN W.A. NO. 441/92. EXT.P4 - TRUE COPY OF AWARD, DATED 30.6.1999. IN I.D. NO. 5 OF 1989, INDUSTRIAL TRIBUNAL, ALAPPUZHA, PUBLISHED IN THE KERALA GAZETTE NO.37 DATED 21.9.1999. // TRUE COPY // PA TO JUDGE rhs S. SIRI JAGAN, J ................................................ O.P. No. 201 of 2000 ................................................. Dated this the 1st day of December, 2009 J U D G M E N T The Management in I.D. No. 5/89 before the Industrial Tribunal, Allapuzha is the petitioner herein who is challenging Ext.P1 award passed by the Tribunal in that I.D. The issue referred for adjudication was the validity of the termination of service of 27 security personnel employed by the Management company through a contractor. Originally by Ext.P1 award dated 3.3.1990, the Tribunal held that since the Contract Labour (Regulation and Abolition) Act prescribes that a principal employer who intends to engage workers through a contractor and the contractor who employs 20 or more workman shall get registration/licence under the Act and the Management company and the contractor did not obtain such licence, the contract between the management and the contractor is a sham contract and therefore the workman are employees of the management themselves and that the workmen were terminated from service without following the procedure prescribed under the Industrial Disputes Act. The Tribunal directed that the workman shall be allowed to continue in their O.P. No. 201 of 2000 -2- respective places in which they were working, till they are replaced by security guards/ Supervisors through Kerala Public Service Commission. The workmen were directed to be reinstated, but backwages were limited to from the date of publication of the award. Both the management and the workmen challenged the award to the extent the same was not favourable to them. By Ext.P2 common judgment, in O.P. Nos. 10352 and 10766 of 1990 a learned single Judge of this court set aside the award holding that security guards in question are not workmen as defined under the Industrial Disputes Act denying the relief to them. The workmen challenged the same in W.A. No. 441 of 1992. By Ext.P3 judgment, a Division Bench of this Court held that although the mere absence of registrations/licence under the Contract Labour (Regulation and Abolition) Act does not ipso facto lead to the conclusion that the contract is a sham transaction, the question as to whether the workmen are employees of the principal employer depends on evidence adduced by the parties before the Tribunal. In that view, the Division Bench remanded the matter for fresh consideration, on the basis of the evidence to be adduced by both sides. Ext.P3 judgment is dated 17.6.1998. Thereafter the Industrial Tribunal again considered the matter. By that time, the Supreme Court O.P. No. 201 of 2000 -3- rendered another decision, namely Secretary, Haryana State Electricity Board v. Suresh and Others [1999 (3) SCC 601] which held that the mere absence of registration/ licence under the Contract Labour (Regulation and Abolition) Act itself would render the contract between the principal employer and the contractor, a sham transaction and that the workmen are employees of the principal employer. Relying on that decision without going into any other question as directed by the Division Bench, the Tribunal by Ext.P4 award again held that in the absence of the registration/ licence under the Contract Labour (Regulation and Abolition) Act the contract between the petitioner and the contractor is a sham arrangement and therefore the workers concerned were the employees of the management establishment. On that finding the Tribunal by Ext.P4 award, again re-issued the same direction as in Ext.P1 award except regarding backwages. That award is under challenge before me. The petitioner challenges Ext.P4 award on the ground that by Ext.P3 judgment a Division Bench of this court had held that mere absence of registration/licence under the above said Act itself would not be sufficient to hold that the workmen are workmen of the principal employer and directed the Tribunal to consider the matter on the basis of evidence to be adduced by the O.P. No. 201 of 2000 -4- parties. However, the Tribunal has without considering anything else only on the basis of the absence of registrations/licence held that the workman are direct workman of the petitioner management. According to the petitioner this is in direct violation of Ext.P3 judgment and for that reason alone Ext.P4 liable to be quashed. He would further contend that in this case the management had adduced sufficient evidence to show that the contract between the employer and the contractor is a bonafide, genuine contract for employment of contract labour and therefore the workmen are workmen of the contractor and not that of the principal employer. 2. The 1st respondent union would support the award. According to them, the absence of registration / licence is one of the major factors which would support the conclusion that the contract is a sham contract, in view of the decision of the Supreme Court in Haryana State Electricity Board's case. They would further contend that the evidence available before the Tribunal was sufficient to come to the conclusion that the entire transaction was only a sham transaction to avoid the legal consequences flowing from the Industrial Disputes Act in respect of the workmen in question. O.P. No. 201 of 2000 -5- 3. I have considered the rival contentions in detail. 4. Apart from the decision of Dena Nath and others v. National Fertilizers Ltd. and others [1992(1) SCC 695] relied upon by this court in Exts.P2 and P3 judgments and the decision in Haryana State Electricity Board's case several other decisions have been cited before me, namely the Steel Authority of India Limited and others v. National Union Waterfront Workers and others [2001 (7) SCC 1] and APSRTC and others v. Sreenivas Reddy and others [2006 (3) SCC 674]. I am of opinion that the conclusion which can be drawn from all these decisions is that there cannot be any strait-Jacketed formula for deciding the question as to whether a contract for employment of contract labour is a sham contract or not. It depends on the facts and circumstances of each case. The mere fact that there was no registration/licence under the contract Labour (Regulation and Abolition) Act itself would not lead to the conclusion that it is a sham transaction as held in Steel Authority of India Limited's case. Of course the Haryana State Electricity Board's case was not referred to in steel authority of India Ltd's case. But Dena Nath's case which was approved by the Supreme Court in Steel Authority of India limited's case certainly holds that the absence of O.P. No. 201 of 2000 -6- registration /licence is not the absolute criterion to decide the question either way. I am of opinion that that question would largely depend upon the contract itself. In other words, the terms of the contract between the principal employer and the contractor should be the main determining factor to decide the question as to whether the contract is a sham contract or not. There would be other factors as well, such as whether the work in question is of perennial nature, whether the work is in the premises of the employer, the control of the principal employer on the workman, the extent of supervision of the work of the workman by the principal employer, whether the work is an integral part of the overall work of the principal employer and the like. The Tribunal has to come to a conclusion after considering the evidence on all these aspects taken together instead of deciding the question solely on the basis of absence of licence/registration under the Contract Labour (Regulation and Abolition) Act. In Ext.P4 award, the Tribunal has decided the matter only on the basis of absence of registration/licence, relying upon the decision in Haryana State Electricity Board's case which should be taken to be impliedly overruled to that extent by the decision in Steel Authority of India Ltd's case. In view of my above findings, necessarily the matter O.P. No. 201 of 2000 -7- has to be remanded to the Industrial Tribunal for a fresh adjudication taking into account the entire evidence adduced by both sides in accordance with the direction hereinabove. Accordingly, Ext.P4 is quashed. The Tribunal is directed to re-adjudicate the dispute in the light of the finding hereinabove. Fresh award shall be passed, as expeditiously as possible, at any rate, within four months from the date of receipt of a copy of this judgment. The parties shall appear before the Tribunal on 18.1.2010. The original petition is disposed of as above. sd/- S. SIRI JAGAN, JUDGE rhs // True copy // PA to Judge