IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated 30..7..2008 Coram: The Hon'ble Mr. Justice K.CHANDRU W.P. No. 481 of 2004 THE MANAGEMENT SALEM DISTRICT CONSUMERS CO-OPERATIVE WHOLE- SALE STORES LTD. SALEM.9. ... PETITIONERS Vs 1. THE INSPECTOR OF LABOUR AUTHORITY UNDER T.N. INDUSTRIAL ESTABLISHMENTS (CONFERMENT OF PERMANENT STATUS TO WORKMEN) ACT, 1981 SALEM 2. A.ARJUNAN 3. K.CHELLAMUTHU 4. KARUPPANNAN 5. S.RAJU S/O.SAMIYAPPA PADAIYACHI. 6. P.MARIMUTHU S/O.PERUMAL 7. R.GOPAL S/O. RAMASWAMY 8. C.KANDASWAMY S/O. CHINNA GOUNDER 9. CHINNAIYAN S/O. ILAYAPERUMAL. 10. R.ALAGAPPAN S/O. RAMA GOUNDER 11. K.RAJU S/O. KANDASWAMY. https://hcservices.ecourts.gov.in/hcservices/ 12. MARIYAPPAN S/O. PACHIYAPPAN. 13. P.ARJUNAN S/O. PALANIAPPAN 14 AYYAHDHURAI S/O. MUTHUSAMY. 15 VEERAPIPAN S/O. AYYAMPERUMAL 16 A. MANI S/O. ARUMUGAM 17 P.ARUMUGAM PALANI GOUNDER. 18 R.MURUGESAN S/O. RAJU 19 P.MURUGESAN S/O. RAJU 20 T. JAYAKODI S/O. THANGAVEL. 21 T.ARUMUGAM S/O.THASI. 22 MARIYAPPAN S/O. MARIMUTHU 23 P.GOPAL S/O.PALANI. 24 A.MARIYAPPAN S/O.ARUMUGAM. 25 C.SHANMUGAM S/O. CHINNU 26 SUNDARAJAN S/O. RASAPPAN @ KANDASAMY 27 A.GANESAN S/O. ABIMANYU 28 MARIYAPPAN SS/O. KANDAN https://hcservices.ecourts.gov.in/hcservices/ 29 CHINRAJ S/O. THASI. 30 KALIYAPPAN S/O. MARIMUTHU 31 VENGAN S/O. ARUMUGAM 32 AYYADHURAI S/O. KARUPPANNAN 33 KARUMALAI S/O. PALANIYAPPAN 34 THANGAVELU S/O.MUTHUSAMY .. RESPONDENTS Petition filed under Article 226 of the Constitution of India seeking for issuance of writ of Certiorari calling for the records in Na. Ka. No. Aa./3874/2000 on the file of the Inspector of Labour, Authority under Tamil Nadu Industrial Establishments (Conferment of Permanent Status to workmen) Act, 1981, Salem – 7 the first respondent and quash the order dated 27.01.2003. For Petitioner : Mr. M.R. Raghavan For Respondent : No appearance O R D E R Heard the arguments of the learned counsel for the parties and have perused the records. 2. The petitioner is the Co-operative Society and it is running a District Consumer Co-operative Wholesale Stores Limited at Salem. They are having five godowns at Salem. Those five godowns are grosseries, packing, cosmetics, stationery, LPG, and empty carton stores. For the purpose of loading and unloading operation of goods from the godowns, they are engaging many workers. However, the wages for these workmen were paid in the name of the second respondent and he was made to appear as if he was the loading and unloading contractor. But he does not have a licence to be a contractor under the Contract Labour (Regulation and Abolition) Act [for short, 'CARA Act']. Even the petitioner store, being the principal employer, was not licenced. https://hcservices.ecourts.gov.in/hcservices/ 3. The petitioner store has in fact, given certificates stating that he was a khalasi working in the stores. The wages for the loading and unloading operation is fixed by the petitioner store on piece rate basis and one such circular dated 29.6.1998 was filed before the first respondent. The Provident Fund subscription for nine employees was also paid by the petitioner. Since the workmen were engaged regularly for a long number of years, but, on piece rate basis, the respondents 2 to 34 filed a petition before the first respondent authority seeking for permanency of their service in terms of Section 3 of the Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981 [for short, 'Permanent Status Act'], which was received by the first respondent on 23.5.2000. 4. Notice was ordered and the petitioner Management filed a counter statement dated 03.01.2001 refuting the stand of the contesting respondents. They took the contention that the provisions of the Permanent Status Act will not apply as they are neither a shop nor an "establishment" within the meaning of 2(b) of the Tamil Nadu Shops and Establishments Act [for short, 'Shops Act']. They also contended that the workmen are not their employees and they were engaged by the second respondent and the workmen were also doing similar work in other places. They also disputed the number of days worked by them. 5. Before the authority, documents were filed. They also recorded evidence of the contesting respondents who filed affidavits setting forth the details regarding their employment. On their behalf, the second respondent was examined as a witness, who was cross-examined by the petitioner stores. On behalf of the petitioner Management, their Office Manager was examined. 6. The first respondent statutory authority, on an analysis of materials placed before it, came to the conclusion that the second respondent was not a contractor and was a worker on daily wages since 1981. This finding was made on the basis that the certificate granted by the Special Officer dated 05.6.1995 as well as the circular dated 29.6.1998 which had fixed the rates of wages in terms of the items loaded and unloaded. Out of 43 workers, the Management had paid the PF amounts for 9 workers who made the claim for permanency. No documents were filed to prove that the contract was given to him in a genuine fashion. 7. On the contrary, the first respondent found that the workmen were directly employed under the supervision of the Management. It also found that the loan account ledger showed that the workmen were given employment on daily basis and, therefore, they had worked for 480 days of work within 24 calendar months. He also held that they were not being sponsored by the Employment Exchange was not relevant since they are unskilled https://hcservices.ecourts.gov.in/hcservices/ workmen. Under the provisions of the Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 [for short, 'Employment Exchanges Act'] will not apply. Therefore, rejecting the contention of the Management, the workers whose names were found in Schedule I of the impugned order, viz., respondents 2 to 34 were directed to be made permanent with effect from the date found against their names and in respect of 9 workers, the claim was rejected as per Schedule II. 8. This Court after perusing the records, finds that the case filed by the Management is not legal and proper. Since the petitioner Management had not filed the entire proceedings before the first respondent, the records were summoned from the first respondent and it was circulated by the Registry. 9. It is seen from the records that the Management was not licenced to engage any contract labour and the so-called contractor was also not having any licence. Prima facie, it shows that the alleged contract was sham and nominal. In any event, the so-called contractor (second respondent) himself was examined as a witness for the workmen and in the cross- examination, the Management could not elicit any favourable answer. It was pointed out that the wages are paid in lump sum to the second respondent which was to be divided among all the workers. On the contrary, the revision of rates by the Management as well as the Service Certificate given by the second respondent clearly shows that the workmen were directly employed under the supervision of the petitioner. Apart from that, even the Provident Fund contributions were made by the employer in the name of 9 workmen and the certificates for having collected money from various societies towards loading and unloading charges were also produced. 10. In this context, it is relevant to refer to the recent judgment of the Supreme Court (vide its judgment dated 16.5.2008), in G.M., O.N.G.C., Shilchar v. O.N.G.C. Contractual Workers Union [2008 AIR SCW 3996], wherein it had reviewed the previous case laws and in paragraphs 11 to 18, the Court held as follows:- Para 11: "It will be seen therefore that each case has to be examined to a very large extent on its specific facts, and a universal yardstick should not be attempted. Para 12: In the instant case, on a consideration of material produced before it, the Tribunal came to the following conclusions: (1) That there existed a relationship of master and servant. https://hcservices.ecourts.gov.in/hcservices/ (2) That there was no contractor appointed by ONGC. (3) That the ONGC used to supervise and allot works to individual workers. (4) That the ONGC took disciplinary action and called for explanations from the workers. (5) The workers were paid wages though they did not attend their duties due to Cachar Bandh and due to flood. (6) The wages were paid direct to the workers by the ONGC and the acquaintance roll was prepared by the Management to make payment to the workmen". Para 13: It has also been observed that even the ONGC had admitted that since 1988, there was no licensed contractor and that the wages were being paid through one of the leaders of the Union and one such contractor, Manik has been named. The Tribunal then opined that it appeared from the record that Manik himself was a workman and not a contractor as he too was shown in the acquaintance roll to have received wages. We find that the real issue was as to the status of the workmen as employees of the ONGC or of the contractor, and it having been found that the workmen were the employees of the ONGC they would ipso-facto be entitled to all benefits available in that capacity, and the issue of regularization would, therefore, pale into insignificance. We find that in this situation, the Industrial Tribunal and the Division Bench of the High Court were justified in lifting the veil in order to determine as to the nature of employment in the light of the judgments quoted above. We, therefore, find that the ratio of the judgment in Uma Devi's case (supra) would not be applicable and that the facts of Pandey's case are on the contrary more akin to the facts of the present one. Para 14: We are therefore of the opinion that in the light of the aforesaid observations, Mr. Dave's argument that the workmen being on a contractual, were not entitled to any relief, cannot be accepted and the large number of judgments cited by Mr. https://hcservices.ecourts.gov.in/hcservices/ Dave, on this aspect, cannot be applied to the facts of the case. Para 15: We have also considered Mr. Dave's argument with regard to the nature of the reference. We re- produce the reference as made: "Whether the demand of the ONGC `Contractual Workers' Union, Silchar on the management of ONGC, Cachar Project, Silchar for regularization of the services of the contractual workers is justified. If so, what relief are the workmen concerned entitled to?" Para 16: It is true that the underlined portion of the reference prima facie does give the impression that it pre-supposes that the workmen were contractual employees and the only dispute was with regard to the regularization of their services. It is equally true that the reference appears to have been rather loosely worded but as observed by the Industrial Tribunal and the Division Bench, both parties were aware of the real issues involved in the light of the protracted litigation and the efforts made during conciliation proceedings. The Division Bench has, thus, rightly observed that it was open to the Industrial Tribunal to have lifted the veil so as to determine the nature of the employment and the dispute between the parties and for that purpose to look into the pleadings and evidence produced before it. Para 17: In Delhi Cloth & General Mils Co. Ltd. vs. The workmen & Others AIR 1967 SC 469, this is what the Court had to say: "In our opinion, the Tribunal must, in any event, look to the pleadings of the parties to find out the exact nature of the dispute,because in most cases the order of reference is so cryptic that it is impossible to cull out therefrom the various points about which the parties were at variance leading to the trouble. In this case, the order of reference was based on the report of the Conciliation Officer and it was certainly open to the Management to show that the dispute which had been referred was not an industrial dispute at all so as to attract jurisdiction under the Industrial https://hcservices.ecourts.gov.in/hcservices/ Disputes Act. But the parties cannot be allowed to go a stage further and contend that the foundation of the dispute mentioned in the order of reference was non-existent and that the true dispute was something else". Para 18: The pleadings in the present matter would show that the core issue before the Tribunal was with regard to the status of the employees as employees of the ONGC or of the contractor and that it was this issue simpliciter on which the parties went to trial. Mr. Dave's argument with regard to the decision of the Tribunal being beyond the reference, is to our mind, and in the circumstances, hyper technical. In this background, we feel that the judgments cited by Mr. Dave pertaining to regularization of contract labour are not applicable to the facts of the case." 11. With reference to actual days of employment and whether the workmen were engaged, the credit ledger between the petitioner Management and various societies clearly shows that there was employment for these workmen almost on all the days. Further, the argument of the Management that the workmen are not sponsored through Employment Exchange and, therefore, they have no right of employment, cannot be accepted because under the Employment Exchanges Act, unskilled office workers were exempted from the purview of the Act. This position of law has been clarified by this Court in School Committee, Tilak Vidyalaya Higher Secondary School, Kallakurichi v. District Educational Officer, Tirunelveli [1991 TLNJ 1]. The Management was not able to show that there are circulars issued by the State Government to fill up even these vacancies through Employment Exchanges. Therefore, reliance placed by the Management on the judgment of the Division Bench in L. Justine and another v. Registrar of Co-operative Societies, Chennai [2002 (4) CTC 385] as confirmed by the Supreme Court in A.Umarani v. Registrar, Co-operative Societies and others [2004 (7) SCC 112] will have no application to the facts and circumstances of the case. 12. The further contention that the petitioner Society is not covered by the provisions of the Permanent Status Act cannot be accepted for the simple reason that the Co-operative Societies have got exemption from the Shops Act only from few provisions which itself will show that the Act will otherwise apply to them. Once it is an establishment within the meaning of Section 2(6) of the Shops Act, then by virtue of Section 3 of the Permanent Status Act, the said Act will apply since the petitioner Management admittedly engaged more than 20 workers. This Court, under https://hcservices.ecourts.gov.in/hcservices/ Article 226 of the Constitution, cannot interfere with the finding of fact by the first respondent. 13. In the light of the above, the impugned order does not suffer from any infirmity or illegality. Therefore, the writ petition will stand dismissed. However, there will be no order as to costs. gri Sd/- Assistant Registrar / True Copy / Sub. Assistant Registrar To THE INSPECTOR OF LABOUR AUTHORITY UNDER T.N. INDUSTRIAL ESTABLISHMENTS (CONFERMENT OF PERMANENT STATUS TO WORKMEN) ACT, 1981 SALEM 1 Cc To Mr.M.R.Raghavan, Advocate, SR.41470 1 cc to the Government Pleader, SR.41522 rb (co) dv/7.8. Order in W.P. No. 481 of 2004 https://hcservices.ecourts.gov.in/hcservices/