THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO.4534 of 2000 Dated: 6.8.2010 Between: 1. Kasturi & Sons Limited., rep., by its Joint Managing Director Kasturi Buildings .. Petitioner And 1. Ommi Surya Prasad Rao and another. ….Respondents. This Court made the following: THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO.4534 of 2000 ORDER: This writ petition is filed seeking a Writ of Certiorari to quash the award in I.D.No.499 of 1995, dated 23.9.1999 passed by the 2nd respondent as notified in G.O.Rt.No.2136 dated 20.11.1999. The 1st respondent herein filed an application under Section 2- A (2) of the Industrial Disputes Act before the Industrial Tribunal-cum- Labour Court, Visakhapatnam, seeking the relief of reinstatement with back wages and continuity of service. It is his case that he was appointed in the petitioner-Organization on 18.5.1990 initially as a dispatch clerk, and was later promoted as a supervisor. It is his grievance that he was removed on 28.3.1994 without a charge-sheet being issued, and without any domestic enquiry being conducted. In its counter-affidavit before the Tribunal, the petitioner herein contended that the 1st respondent was not an employee but he was engaged by a contractor Sri Ch. Macharao; and, since he was only an employee of the contractor Ch. Macharao, the 1st respondent could not have raised a dispute as against the petitioner. The Tribunal held that it could not be said that the workman did not work with the petitioner herein, and the so called contractor was only a veil to cover up the management’s case by setting up a person as a contractor through whom the workman was working in the same premises under the contractor of the petitioner-management. While accepting that amounts were paid by the contractor towards ESI and PF in respect of the 1st respondent workman, the Tribunal held that the effective control still remained with the management, and that the work which the petitioner was doing was perennial in nature and integrally connected with that of the petitioner. The Tribunal further observed that, even assuming that the petitioner was only a principal employer, it had to be treated that the petitioner was the direct employer of the workman, that he was working under the petitioner-management only, and the so called contractor was only a veil for the petitioner to escape its responsibility. The Tribunal observed that, since the 1st respondent was not permitted to attend duties it would amount to removal from service; as the criminal case filed against him ended in acquittal, and the first respondent kept quiet thereafter, he would not be entitled for backwages or financial benefits from the date of acquittal i.e., 28.3.1994 till the award is passed. As a result, the Tribunal set aside the order of removal directing the petitioner to reinstate the 1st respondent workman without back wages, but with continuity of service. Sri V. Padmanabhan, learned Counsel for the petitioner, would raise several contentions including that the findings recorded by the Industrial Tribunal are perverse and based on no evidence, and that the award as passed is without jurisdiction inasmuch as the question, whether or not engaging of a contractor was a veil, could not have been examined in proceedings under Section 2-A(2) of the Industrial Disputes Act. Learned Counsel would place reliance on the judgment of this Court in Oil and Natural Gas Corporation Limited, K.G. Project, Rajahmundry Vs. N. Satyanarayana and others[1]. It is wholly unnecessary for this Court to examine any of the other contentions urged by the learned Counsel inasmuch as the writ petition is liable to be allowed, and the impugned award liable to be set aside, on the sole ground that the question whether engagement of a contractor by the petitioner was a veil to avoid an employer- employee relationship with the 1st respondent was a question which the Tribunal could not have examined in proceedings under Section 2- A(2) of the Industrial Disputes Act. Section 2-A of the Industrial Disputes Act reads as under: “Section 2-A. Dismissal, etc., of an individual workman to be deemed to be an Industrial Dispute:- Where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman, any dispute or difference between that workman and his employer connected with, or arising out of, such discharge, dismissal retrenchment or termination shall be deemed to be an industrial dispute notwithstanding that no other workman nor any union of workmen is a party to the dispute. (2):- Notwithstanding anything in Section 10, any such workman as is specified in sub-section (1) may, make an application in the prescribed manner direct to the Labour Court for adjudication of the dispute referred to therein; and on receipt of such application the Labour Court shall have jurisdiction to adjudicate upon any matter in the dispute, as if it were a dispute referred to or pending before it, in accordance with the provisions of this Act; and accordingly all the provisions of this Act, shall apply in relation to such dispute as they apply in relation to any other industrial dispute.” It is evident therefrom that a workman is entitled to approach the Industrial Tribunal/Labour Court, by way of an application under Section 2-A(2) of the Industrial Disputes Act, only where his employer has discharged, dismissed, retrenched or otherwise terminated his services. In such a case, it is open to the workman not to raise a dispute under Section 2(k) of the Act or seek a reference under Section 10 of the Act and to approach the Labour Court directly. The very basis for invocation of the jurisdiction of the Tribunal/Labour Court, under Section 2-A(2) of the Industrial Dispute Act, is that there exists an employer-employee relationship between the petitioner herein and the 1st respondent. In the case on hand, admittedly, there is a contractor engaged by the petitioner, with whom the 1st respondent was working. The question whether the system of appointing a contractor is a sham or a veil for the petitioner herein to avoid a direct employer-employee relationship with the 1st respondent are matters beyond the scope of examination in proceedings under Section 2-A(2) of the Industrial Disputes Act, and the remedy available to an aggrieved employee/workman is to raise a dispute and seek a reference under Section 10 of the Act, in which case the Industrial Tribunal would be well within its jurisdiction to decide the question whether or not the contractor appointed was sham and a veil for the petitioner to avoid a direct employer-employee relationship between it and the 1st respondent. In more or less similar circumstances, this Court in Oil and Natural Gas Corporation Limited, K.G. Project, Rajahmundry Vs. N. Satyanarayana and others observed:- “………As observed earlier, the objection is as to the form in which the dispute is raised before the 4th respondent. It was observed that to invoke Section 2-A there should not exist any dispute as to the person invoking it having been under the employment of the employer and the termination thereof. The adjudication will be only as to the mode of discharge, dismissal, retrenchment or termination and the consequences thereof. When it is categorically held by the Supreme Court that a contract labour can never be treated as an employee of the principal employer, it is too difficult to imagine that such a contract labour stands discharged, dismissed, retrenched or terminated, with the expiring of the labour contract. Even where a notification under Section 10(1) of the CLRA Act is issued, the Supreme Court categorically held that such a notification could only bring about an end to the contract between the principal employer and the labour contractor. It was further observed that the relationship of the master and servant between the labour contractor and contract labour would continue to exist even after such a notification. When this is the legal and factual aspect, it cannot be said that there existed any relationship of master and servant or employer and employee between the contract labour on the one hand and the petitioner herein on the other till 30.6.1997 and that the contract labour stood discharged, dismissed, retrenched or terminated with effect from 1.7.1997. Therefore, the applications filed by the contract labour before the 4th respondent under Section 2A of the Act were not maintainable. It is true that the rights and status of the contract labour vis-a- vis the principal employer need to be adjudicated in the event of a notification being issued under Section 10(1) of the CLRA Act. Sub- paragraphs 5 and 6 of Para 125 of the judgment in Steel Authority of India (SAIL) v. National Union Waterfront Workers and others (2001(7) SCC 1) mandate that such an exercise should be undertaken. Whether there was any warrant for such adjudication in this case is a different question. Even where the facts warrant such an adjudication by the Labour Court or Industrial Tribunal, as the case may be, the subject matter of adjudication is totally different from the one contemplated under Section 2A of the Act. The adjudication in such proceedings would not be as to whether there was any illegal discharge, dismissal, retrenchment or termination of the contract labour, much less, an individual contract labour. The subject matter of the adjudication will be as to whether the labour contractor was a ruse or camouflage. Finding on this aspect will lead to certain consequences, as provided for under Sub-Paras 5 or 6, as the case may be. By no stretch of imagination, such an adjudication can fit into the kinds of disputes contemplated under Section 2A of the Act. This, however, cannot be construed as saying that the contract labour are without any remedy. It is certainly open to them to raise a dispute as contemplated under Section 2(k) and the matter can be brought before the concerned Labour Court through a reference under Section 10(1) of the Act. What is found not permissible is treating the individual disputes under Section 2-A as those under Section 2(k) of the Act……..” Since the question whether engagement of a contractor is a sham or not is beyond the scope of an enquiry in a petition under Section 2-A(2) of the Industrial Disputes Act, the finding recorded by the Tribunal that the appointment of contractor is a veil for the petitioner to avoid a direct employer-employee relationship, is a finding which the Tribunal could not have recorded in proceedings under Section 2-A (2) of the Industrial Disputes Act. Since the alleged contractor engaged by the petitioner, with whom the 1st respondent was working and ESI and PF deductions were remitted by the contractor, it cannot be said that the 1st respondent was directly employed by the petitioner herein. The award of the Labour Court in I.D.No.499 of 1995, dated 23.9.1999 is quashed. It is made clear that the order now passed will not preclude the 1st respondent from raising a dispute under Section 2(k) of the Act and seeking reference under Section 10 of the Industrial Disputes Act on the question whether or not engagement of a contractor by the petitioner is a sham and a veil to avoid a direct employer-employee relationship between the petitioner and the 1st respondent. The writ petition is allowed. However, in the circumstances without costs. _________________________ Justice Ramesh Ranganathan Dated: 6.8.2010 Nn. THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO.4534 of 2000 Dated: 6.8.2010 [1] 2003(3) ALD 711