; '<fs.!lt3^'-vw '^ fiL 4FA HIGH COURT OF CHHATTISGARH : BILASPUR Writ Petition No.29of2005 The Managing Director & Others' Versus Industrial Cwurt & Others Post for pronouncement ofJudgmentw /o day ofAugust, 2009 Sd/- Satish K. Agnihotri Judge 1 . <J\- u^^' .as-a*-- HIGH COURT OF CHHATTISGARH : BILASPUR PETITIONERS RESPONDENTS Writ PetitioaNo,^9 of2005 1 The Managing Director, Steel Authority of India Limited, Bhilai Steel Plant, Bhilai, Distt. Durg (CG). 2 The Chairman, Steel Authority of India Limited, Ispat Bhavan, Lodhi Road, New Delhi-110003. 3 General Manager, Rail & Stmctural Mill, Welfare Building No._, Bhilai Steel Plant, Bhilai, Distt. Durg (CG). Versus 1 Industrial Court, Bench at Raipur 2 I.T.W. Signode India Limited, 5, S.P. Road, Begampet, Hyderabad, Andhra Pradesh. 3 Deepak, S/o Shatrughan. 4 Girdhar, S/o Udel Ram. 5 Panch Ram, S/o Kuwar Singh. 6 Mahadev, S/o Dhansay. 7 Niranjan, S/o Gangaram. 8 Mohd. Arif, S/o Mohd. Kasim. 9 Ramkishan, S/o Jhumuklal. 10 Madhu Ram, S/o Topu Ram 11 Pila Singh, S/o Manrakhan 12 Bisahul, S/o Bisalik Ram 13 Gopal, S/o Mansuram 14 Rajkumar Chandrakar, S/o Kamla Prasad 15 Samir Kumar Ghosh, S/o Sarvanand Ghosh 16 Roop Singh, S/o Baratia Yadav 17 Kirtan Tandi, S/o Dhingra Tandi 18 Anand Ram, S/o Kartik Ram 19 Pitambar, S/o Duta Bibhar. 20. Kamal Roy, S/o Late A.N. Roy, Joint Secretary, C/o Mindustan Steel Employees' H-;) ': Union, Shivaji Nagar, Khursipar, Bhilai. Present Address ofrespondents No. 2 to 20 : C/o Shri Kamal Roy, Qr. No. 13/D, Street No.IO, Sector - 5, Bhilai Nagar, Dist. Durg (Writ petition under Article 226/227 ofthe Constitution oflndia) Single Bench : Hon'ble Shri Satish K. Agnihotri, J Present: Shri R.N. Singh, Sr. Advocate & Dr. N.K. ShuMa, Sr. Advocate with Shri Gautam Bhaduri, Shri Rahul Diwaker & Shri ManishNigam, Advocates forthe petitioners. Shri Pradeep Saxena, counsel for the respondent No.2. Shri P.K. Maitra, counsel for the respondents No.3 to 20. JUDGMENT (Passed on this I Q' day ofAugust, 2009) 1. Heard leamed counsel for the parties. 2. By this petition, the petitioners - Steel Authority of India Limited, Bhilai Steel Plant (for short "the petitioner/company ") seek to challenge the legality and validity of the common order dated 29 October, 2004 (Armexure - P/l) passed by the Industrial Court, Chhattisgarh, Raipur, in C. Appeal No-289/MPIR Act/II/2002 (Ram Kishan & Others vs. Managing Director & Others), C. Appeal No. 290/MPIR Act/A-II/2002 (Deepak & Others vs. Managing Director & Others), C. Appeal No. 291/MPIR AcVA-II/2002 (Rajkumar Chandrakar & Others vs. Managing Director & Others) and C. Appeal No. 306/MPIR Act/A-II/2002 (Ram Kishan & Others vs. Managing Director & Others) whereby the appeals preferred by the respondents No.3 to 20 herein (for short "the workers") have been allowed with a direction to the petitioners to grant pay-scale ^u j and salary of regular employees of the petitioners to the respondents/ workers and absorb them into the services ofthe petitioners/company. 3. The facts, in nutshell, as projected by the petitioner/company, are that the petitioner/company is a public sector undertaking and is registered under the provisions of the Companies Act, 1956. The respondent No.2 - I.T.W. Signode India Limited (for short "the respondent No.2/contractor") has been awarded the contract ofunitization ofRail & Stmctural Mill Products in Railway Wagons before dispatoh under the revised CP-41 conditions imposed by the Indian Railway Administration (Annexure P/2). It was the responsibility of the respondent No.2/contractor to engage his own labour, provide necessary equipments, pay wages to them and exercise control and supervision in respect of the employees eagaged by the respondent No.2/contractor to carry out the contract work. For executing the contract work, the respoadent No.2/contractor engaged the respondents No.3 to 20/workers. The respondent No.2/contractor was paying the wages to the workers engaged by him and exercising full control and supervision on them. On completion of the contract period on 30 September, 1998, the respondent No.2/coatractor disengaged . the services of the respondents/workers. 4. The workers filed a case being No.l04/97/MPIR Act before the Labour Court, Durg, (Annexure - P/3) claiming the minimum wages payable to the employees of Shipping Section of Rail & Stmctural Mill with retrospective effect along with difference ofpay. The petitioner company .<' -('l. •A"'^ S "i^N®;. S ^^ .^' v^-Jy '!t!'»^..„-«<"" submitted its written statement to the said application and contended that no master and servant relatioaship exists between the petitioner company and the workers. After hearing the parties, the Labour Court by its order dated 9 September, 2002 (Annexure - P/6) dismissed the application filed by some workers (respondents herein) 5. Some of the workers i.e. respondents No.3 to 8 have filed another application being case No.l60/MPIR/98 before the Labour Court, Durg (Annexure - P/7) for reinstating them in service w.e.f. 1 October, 1998 and to give them continuity of service with back wages, to which the petitioner/conipany submitted written statement denying the allegations made by the workers. The Labour Court by order dated 21 August, 2002 (Annexure - P/ll) dismissed the application filed by the workers i.e. respondents No.3 to 8. 6. Respondents No.9 to 13 and the respondents No.14 to 16 have also filed two similar applications, as has been filed by the respondents No.3 to 8, in case No.l61/MPIR/98 (Annexure - P/12) and 159/MPIR/98 (Annexure - P/17). Both the applications were dismissed by the Labour Court, Durg by orders dated 19 August, 2002 (Annexure - P/16) and 20 August, 2002 (Annexure - P/21), respectively. 7. Being aggrieved by the orders passed by the Labour Court, the respondents/workers have filed civil appeals before the Industrial Court, Chhattisgarh, Raipur, being C. Appeal No-289/MPIR Act/II/2002 (Ram Kishan & Others vs. Managing Director & Others), C. Appeal No. 290/MPIR AcVA-II/2002 (Deepak & Others vs. Managing Director & Others), C. Appeal No. 291/MPIRAcVA-II/2002 (Rajkumar Chandrakar & Others vs. Managing Director & Others) and C. Appeal No. 306/MPIR AcVA-II/2002 (Ram Kishan & Others vs. Managing Director & Others). The Industrial Court by its order dated 29 October, 2004 (Annexure - P/l) allowed the appeals filed by them aad set aside the orders passed by the Labour Court. Thus, tUis petition. 8. Shri R.N. Singh & Dr. N.K. Shukla, learaed senior counsel appearing with Shri Gautam Bhaduri, Shri Rahul Diwaker & Shri Manish Nigam, leamed counsel for the petitioner/company, would submit that the order passed by the Industrial Court is contrary to facts that the respondents/workers were employed by the respondent No.2/contractor and payment of their wages, bonus, etc was throughout made by the respondent No.2/contractor. The Industrial Court has not at all considered the fact that there was valid and genuine contract awarded to the respondent No.2/contractor and in the said contract the respondeut No.2/contractor was required to engage his own workers and equipments for executing the work. Leamed counsel would further submit that the workers were employed by the respondent No.2/ contractor on daily wages basis and they did not hold any post. Recmitment, procedure of selection and qualification for employment as regular employee with the petitioner company was never uadertaken. Leamed counsel would next submit that as per the provisions of the M.P./Chhattisgarh Industrial Relations Act, 1960 (for short 'the Act, 1960')joint application in respect 6 of several workers cannot be filed and, as such, the joint appeals filed by the workers were not maintainable under law. 9. Per contra, Shri Maitra, leamed counsel appearing for the respondents No.3 to 20/workers, would submit that the petitioner/ company has suppressed the fact that the workers have been working in the petitioner/company since 1988 continuously and without any break and prior to 1988 only Bhilai Steel Plant workers were doing the job. The order passed by the Labour Court, Durg was legally and factually mcorrect. 10. Shri Saxena, leamed counsel appearing for the respondent No.2/contractor, would submit that the respondent No.2/contractor was awarded a contract by the petitioner/company, which came to an end on the 30 September, 1998. After completion ofthe contract, the services of the workers eagaged by respondent No. 2 automatically stood terminated. 11. I have heard leamed counsel appearing for the parties, pemsed the pleadings and the documents appended thereto. th 12. The petitioners and the respondent No. 2 executed an agreement on 30 December, 1995 (Annexure P/2) for executing the work ofUnitisation of R.S.M. Products before dispatch under revised CP-41 condition wherein clause 2.4 ofthe specific conditioas provides for the contractor to supply, inter alia, labour for execution of the work. Clause 8-Labour Payment specifically provides that the contractor shall pay his labourers engaged in the work minimum wages DA + VDA, cycle allowance for attendin^ 7 the work, hutmeat allowance etc. For ready reference, clause 2.4 and clause 8 reads as under: "2.4 The contractor shall supply labour, strap, seal tools and tackles etc. complete for the execution of the work. The maintenance of the tools & tackles etc. will be the responsibility ofthe contractor." "8.0 LABOUR PAYMENT 8.1 The contractor shall pay his labourers engaged in the work a minimum wage ofRs. 1025/- as basic & Rs. 525/- as DA per month plus VDA @ Rs. 1.25 per point variation in AICPI 1206 as on 31-3-94. 8.2 Cycle allowance @ 1.60 per day of attendance per month shall be paid by the contractor to his labourers. Eligibility for cycle allowance will be on minimum attendance of 15 days per month. 8.3 Hutment allowance @ Rs. 60/- per month on a minimum attendance of 15 days in a month shall be paid by a contractor to his labourer. In case of sickness/matemity the period thereof will be counted towards eligibility ofHutment Allowance. Both the above clause will be applicable from 1.5.95. In the month ofcommencement/completion of work, ifworking days are less than 15, payment of cycle allowance will be made on the basis of actual attendance. However, payment of hutment allowance will be made for full month." 13. It appears that the contractor, accordingly appointed labourers for the project which according to the respondent No. 2 came to an end with the completion ofthe project on 30 September,1998. The Labour Court, in its order dated 19th August, 2002 (Annexure P/16), in case No. 161/MPIR/1998 filed by Ram Kishan (the respondent No. 9 herein) & 4 others, held that there was no notification under section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 (for short 'the Act, 1970') prohibiting employment of the contract labour in the establishment in question, and as such they cannot be held as workers of ^^•"ssse^t^ ,-^'s^y^. ^'ir-""''s ~i&. &s^. "! ^ i I "ss^, s 's ^ 8 vli the petitioners. The coatract awarded to the respondent No.2 for specific purpose which came to an end and as such, workers-respondents are not entitled to any relief as they were appointed on daily wages basis as unskilled worker for a specific project. The petitioners have not employed them and as such, application filed by the workers was dismissed. The Labour court dismissed another application filed by some of the respondent employees i.e. Raj Kumar (respondent No. 14 herein) and 2 others, on 20th August, 2002 (Annexure P/21) in case No. 159/MPIR71998, on the same ground and further held that the respondents cannot be held as workers ofthe petitioners and as such they are not workers under provisions of section 2(13), 2(14) ofthe the Act, 1960. A similar petition filed by the other respondents/workers was dismissed on 21st August, 2002 in case No. 160/MPIR/1998 (Annexure P/ll) on the similar grouads. The fourth case i.e. case No. 104/MPIR/1997 was also dismissed on 9th September, 2002 (Armexure P/6) on the same grounds. The respondent workers, being aggrieved, filed separate civil appeals against the above stated four dismissal orders. All the appeals were heard together by the Industrial Court. The Industrial Court, without examining the nature of the appointment and other findings recorded by the Trial court, took a different stand that the work was of permanent nature and as such, the contract labour was not permissible and the respondents-workers became employee of the principal employer i.e. the petitioners. On the question asto whether there was any specific notification under provisions of section 10 ofthe Act, 9 ( .. i '-•,) 1970, the leamed Industrial Court, without recording finding on the issue of notification held that "but when the workmen establish that contract labour system was only a sham, and camouflage to deny their legitimate rights, then these courts have to decide the cases, to vindicate legitimate rights of the poor labourers". It appears that the leamed Tribunal has proceeded at tangent, conto'ary to the fmdings recorded by the Labour Court in respect of the employer employee relationship between the petitioners/company and the respondents/workers. The appeals were accordingly allowed holding that termination of the service of the respondents 3 to 20 was illegal. It was directed to the petitioners to reinstate them in services with 50% back wages. Further, the respondent No. 3 to 20 were directed to be absorbed as regular employee in the petitioners' establishment on minimum wages prevailing in the establishment. 14. From pemsal of the contract and the fmdings recorded by the Labour Court, it appears that it is evident that the respondent No. 3 to 20 were not employee of the petitioner-establishment and further there was no notification under section 10 ofthe Act, 1970 which can be issued by an appropriate govemmeat only. Thus, holding that termination of the respondent No. 3 to 20 was illegal and they shall be treated as employee ofthe petitioner-establishment is unsustainable. 15. In the identical facts, a Division Bench ofHigh Court ofMadhya Pradesh in Badri Singh Thakur & Others v. N.T.P.C. & Others set aside the ' 2004(2) MPLJ 348 10 '""y^^ <€"*""'%. ^ ^^S^^h;, ?' 'f order passed by the leamed Single Judge and allowed the petition of the workers/employee by the contractors holding that the principal employer was NTPC. The Supreme Court, after having considered the provisions of section 7, 10 and 12 of the Act, 1970, in National Thermal Power Corporation and others v. Badri Singh Thakur and others held that the Division Bench was not justified in its conclusion and on the contrary, the leamed Single Judge had correctly analysed the position oflaw. The Supreme Court observed as under: 29. Sections 7, 10 and 12 ofthe Act have also relevance. The^read as follows: 7. Registration of certain establis}tments^.^-,(\\ Every principal employer.of an establishment to whicK fhis Ac't applies shall, within sych. period a^^the. appropriate Gdyemment may, by aotificatidn m theOfficial G-azetfe, fix in this behalf withrespect,to establishments,.generallypr with respect to any.class ofthem, make an application to the registerihg officer' in the prescribed manner for registration oFthe establishment: Provided that the registermg officer may entertain any such application for. registratjon after expiry of the p,er}o3 fixed in.this behalf, iftKe re^istenng.officer is satisfied^that the applicant was grevented 6y sufficient cause from making the application in time. (2) If the application for registration is complete in all respects, the registering officer shall register the establishment and issue to the principal employer of the establishment a certificate of registration cohtaining such particulars as may be prescribed. 10. Prohibition of employment of contract labour.— (1) Notwithstanding anything contaiaed in this Act, the appropriate Govemment may, after consultation with the Central Board or, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment bf contract labour in any process, operation or other work in any establishment. (2) Before issuing any notification under sub-section (1) in relation to an establishment, the appropriate Govemment shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors, such as— (a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupaiion that is carried on in the establishment; (2008) 9 SCC 377 11 (6) whether it is ofpererunial nature, that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment; (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; (d) whether it is sufficient to employ considerable number ofwhole-time workmen. Explanation.— If a question arises whether any process or pperatiqn or other work is of perennial nature, the decislon of the appropriate Govemmeat thereon shall be final. 12. Licensing ofcontractors.—(1)With effect from such date as the appropriate Govemment may, by notification in the Official Gazette, appoint no contractor to whom this Act applies, shall undertake or execute any work through contract labour except under and in accordance with a licence issued in that behalfby the licensing officer. (2) Subject to the provisions ofthis Act, a licence under sub-section (1) may contain such conditions including, in particular, coaditions as to hours of work, fixation of wages and other essential amenities in respect of contract labour as the appropriate Govemment may deem fit to impose in accordance with the mles, ifany, made under Section 35 and shall be issued on payment of such fees and on the deposit of such sum, if any, as security for the due performance of the conditions as may be prescribed." 30. In view of what has been stated above, the Division Bench was not justified in its conclusions and on the contrary, the leamed Single Judge had correctly analysed the position in law. That being so, civil appeals are allowed. There will be no order as to costs. 16. Further, in Ram Singh & Others v. Union Territory, Chandigarh & Others , the relationship of employer and employee has been defmed as under: "15. In determining the relationship of employer and employee, no doubt, "control" is one of the important tests buf is not to be taken as the sole test. In determining the relationship of employer and employee, all other relevant facts and circumstances are required to be considered including the terms and conditions of the contract. It is necessaiy to talte a multiple pragmatic approach weighing up all the factors for and against an employment instead of gbing by the sole "test ofcontrol". An integrated approach is (2004) 1 SCC126 12 .eeded. "Integration" test is one of the relevant tests. It is applied by examining whether the person was fully integrated into the employer's concem or remained apart from and independent of it. The other factors which may be relevant are — who has the power to select and dismiss, to pay remuneration, deduct insurance contributions, organise the work, supply tools and materials and what are the "mutual obligations" between them. (See Industrial Law, 3rd Edn., by I.T. Smith and J.C. Wood, at pp. 8 to 10.) 16. Normally, the relationship of employer and employee does not exist between an employer and a contractor and the seivant of an independent contractor. Where, however, an employer retains or assumes control over the means and method by which the work of a contractor is to be done, it may be said that the relationship between employer and employee exists between him and the servants of such a contractor. In such a situation the mere fact of formal employment by an independent contractor will not relieve the master of liability where the servant is, in fact, in his employment. In that event, it may be held that an independent contractor is created or is operating as a subterfuge and the employee will be regarded as the servant of the principal employer. Whether a particular relationship between employer and employee is genuine or a camouflage fhrough the mode ofa contractor, is essentially a question of fact to be determined on the basis of the features of the relationship, the written terms of employment, if any, and the actual nature ofthe employment. ..." 17. Applying the well settled principles oflaw with regard to relationship of employer and employee, it was observed in Ram Singh & Others (supra), that the employer should retain or assumes control over the means and method by which the work ofa contractor is to be done. In the present case, under the agreement, there was no control on appointment or placement of the workers, timing of the workers or any other incidental working conditions except that the workers employed by the contractors must be paid the minimum statutory wages. Thus, it cannot be held that the relationship of employer and employee between the petitioners and the workers/respondents 3 to 20 existed. Even otherwise, the Industrial Court has not examined the 13 /?<S'^A --'%& .s'y^ "%. iy & ., '%. 1 I I ^Bsisilj %*C^E?^ facts with regard to fhe relationship of employer and employee before taking contrary stand to the findings recorded by the Labour Court. 18. It has been established that the workers/respondents 3 to 20 were employed on daily wages basis and their services came to an end with the completion ofthe project. The Supreme Court in Surinder Prasad Tiwari v. U.P.Rajya Krishi Utpadan Mandi Parishad & Others "28. In Umadevi (3) case this Court has also dealt with another aspect of the matter and observed as under: (SCC p. 39, para 47) "47. When a person enters a temporary employment or gets engagement as a contractual or casual worker and the engagement is not based on a proper selection as recognised by the relevant mles or procedure, he is aware of the consequences ofthe appointment being temporary, casual or contractual in nature. Such a person cannot invoke the theory of legitimate expectation for being confirmed in the post when an appointment to the post could be made only by following a proper procedure for selection and in cases concemed, in consultation with the Public Service Commission." 29. The ratio of the aforementioned judgment is that the courts cannot encourage appointments which are made outside the constitutional scheme and it is improper for the courts to give any du-ection for regularisation of the person who has not been appomted by following the procedure laid down under Articles 14,16 and 309 ofthe Constitution. 38. In view of the clear and unambiguous constitutional scheme, the courts cannot countenance appointments to public office which have been made against the constitutioaal scheme. In the backdrop of constitutional philosophy, it would be improper for the courts to give directions for regularisation of services of the person who is working either as daily-wager, ad hoc employee, probationer, temporary or contractual employee, not appointed following the procedure laid down under Articles 14, 16 and 309 of the Constitution. In our constitutional scheme, there is no room for back door entry in the matter of public employment." (2006) 7 SCC 684 14 ^ 'lli^. *<(.,-",A' 19. Further, in State of M.P. v. Lalit Kumar Verma the Supreme Court observed that the appointment of the employees made not in terms of statutory rules but on daily wages basis or contract basis are not entitled to any regular pay scale attached to any posts, they could not have been directed to be regularized in service having regard to the Constitution c"' Bench decision in Secy., State ofKarnataka v. Umadevi (3) . 20. In Pinaki Chatterjee and'.others v. Union of India and others , the \ Supreme Court observed as uhder: "10. The appellants, indisputably, were appointed as daily- rated casual labourers for project work. The said project having been undertaken for electrification ofthe Railways at Ranchi was a time-bound one. It did not have its own cadre. Engagement of any casual labour under the said project, therefore, did not amount to any regular recruitment. It may be that the Railway Administration had committed serious illegalities in making recruitment directly to the said posts, the same by itself would not confer any right upon the appellants for being regularized in Group C post. 11. The question, however, which arises for consideration is as to whether in the peculiar facts and circumstances of this case, the High Court should have directed regularization of the services of the appellants. It has not been denied or disputed that railway electrification was a temporary project. As noticed hereinbefore, the posts held by