IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25.02.2010 CORAM: THE HONBLE MR. JUSTICE K.CHANDRU W.P.Nos.7776,7815,7973,7974 and 21044 of 2000 P.SureshKumar .. Petitioner in (died) W.P.No.7776 of 2000 M.Selvam ... Petitioner in W.P.No.7815 of 2000 P.Balasundari ... Petitioner in W.P.No.7973 of 2000 A.Ponnuchamy ... Petitioner in W.P.No.7974 of 2000 The Management, The National Small Industries Corporation Ltd., 29 & 30 SIDCO Industrial Estate, Dindigul 624 006. ... Petitioner in W.P.No.21044 of 2000 Vs. 1.The Presiding Officer, Labour Court, Trichy 2.The Management of National Small Industries Corporation Ltd., 29 & 30 SIDCO Industrial Estate, Dindigul 624 006. .. Respondents 1 and 2 in
W.P.Nos.7776,7815,7973,7974/2000
1.The Presiding Officer,
Labour Court, Tiruchirapalli.
2.P.Balasundari
3.P.Sureshkumar (Deceased)
4.M.Selvam
5.A.Ponnusami
6.Mrs.R.Arunai Princy
7.Jayaprakasi
8.S.Karthik Raja (Minor) …Respondents in Rep.by Jayaprakasi(mother) W.P.No.21044/2000)
(R6 to R8) are substituted as legal heirs of
deceased R3 as per order dated 05.08.2009
by SNJ in WPMP 896/08 in W.P.No.21044 of 2000
W.P.Nos.7776,7815,7973,7974/2000
Prayer : Petitions under Article 226 of the Constitution of India praying for a Writ of Certiorarified mandamus, calling for the records in I.D.Nos.303/95,304/95,290/95 and 305/95 respectively and from the first respondent, Labour Court, Trichy and quash the impugned Award dated 09.08.1999 in so far as the first respondent has negatived the claim of the petitioners in respect of the backwages and to direct the second respondent to reinstate the petitioners in service with full backwages and consequential benefits in any of the establishments.
W.P.No.21044/2000
Prayer : Petition under Article 226 of the Constitution of India praying for a Writ of Certiorari, calling for the records of the first respondent in I.D.Nos.290/95, 303/95, 304/95 and 305/95 and quash its award dated 09.08.99.
W.P.Nos.7776,7815,7973,7974/2000
For Petitioners : Mr.K.M.Ramesh
For Respondents : Mr.S.Ravindran for
M/s.T.S.Gopalan & Co.
for R2
W.P.No.21044/2000
For Petitioner : Mr.S.Ravindran for
M/s.T.S.Gopalan & Co.
For Respondents : Mr.K.M.Ramesh
for R2,R4 and R5
C O M M O N O R D E R
Heard Mr.S.Ravindran, learned counsel for the Management and Mr.K.M.Ramesh, learned counsel appearing for the workmen.
2. These 5 writ petitions, W.P.No.21044 of 2000 was filed by the Management of National Small Industries Corporation Ltd, aggrieved by the common Award passed by the Labour Court, Trichy at its Dindigul Camp dated 09.08.1999. By the aforesaid Award, the Labour Court directed reinstatement of the contesting respondents with continuity of service but without backwages.
3. The writ petition was admitted on 14.12.2000. In the meanwhile, the aggrieved workmen also filed writ petitions being W.P.Nos.7776, 7815, 7973 and 7974 of 2000, challenging that portion of the award declining backwages to be paid to the workmen.
4. During the pendency of the writ petitions, the third respondent, Mr.P.Suresh Kumar unfortunately passed away and his Legal representatives were brought on record.
5. The workmen alleged that they were engaged as Store Assistant, Trainee Instructor, Driver and Office boy. Their salaries ranged from Rs.350/- to Rs.550/- The workman in I.D.290/95 was engaged from 26.09.1991 as a Store Assistant. The workman in I.D.303/95 was engaged as Trainee Instructor from 11.05.1992. The Workman in I.D.304/95 was engaged as Driver from 23.02.1992 and the workman in I.D.305/95 was engaged as Office boy from 01.01.1992. According to the workmen, they were engaged without any appointment order and were signing the attendance register. Instead of paying monthly salary directly, they were paid through an agency with a consolidated cheque which was encashed and given to the workmen. The Management did not maintain any records. There were 75 trainees with necessary office staff. The headquarters of the organisation was at Delhi and it was owned by the Central Government. They were also having branches in various cities including Chennai and Puducherry etc. The said organisation established an unit in Dindigul for the purpose of training youths in leather and lock manufacture to get self-employment. However, the workmen herein were abruptly stopped from work during January 1993 and June 1993 by oral orders.
6. Thereafter, the workmen raised industrial disputes before the Assistant Commissioner of Labour, Dindigul. On the strength of the failure report given by him, they filed separate claim statements before the Labour Court at Tiruchirapalli which had its camp sittings at Dindigul. The claim statements filed by the workmen were taken on file and assigned various ID numbers. Notices were issued to the Management.
7. The Management filed counter statements denying employment relationship between them and the workmen. They contended that the workmen were engaged by one Annai Security Services and they were contract employees. It was contended that the Management had no direct relationship with these workmen.
8. Before the Labour Court on the side of the workmen, 37 documents were filed and marked as Exs.W1 to W37. On the side of the Management 33 documents were filed and marked as Exs.M1 to M33. All the workmen examined themselves as witnesses on their side as W.W.1 to W.W.4. Apart from that they also examined one R.Sekar as W.W.5. On the side of the Management, one Ramakrishnan, the Joint Manager was examined as M.W.1 and Velankanni, the owner of Annai Security Services was examined as M.W.2.
9. The Labour Court on an appreciation of materials placed before it came to the conclusion that the documents filed as Exs.M20,M22,M24,M27,M30 and M33 were prepared only for the case. The letter head of the Annai Security Services was used to make it appear as though these workmen were engaged through that agency. Even though the agency was paying salaries for the workmen, the supervisory control of the workmen was only with the Management. M.W.2.,Velankanni, was only name lender and the employer-employee relationship was only with the Management. In that view of the matter, the Labour Court came to the conclusion that the workmen were ‘workmen’ within the meaning of Section 2(s) of the Industrial Disputes Act, 1947 (for short I.D.Act) and they were workmen of the Management. The theory of there being on contract for employment was rejected by the Labour Court. Though the Management wanted to implead the Annai Security Services as a party to the IDs, the Court came to the conclusion that they are not a necessary party as the relief was claimed only against the Management. After holding that the workmen are workmen of the Management, the Labour Court on the question of relief came to the conclusion that the workmen having worked for more than one year and since their termination was done contrary to Section 25-F of the I.D.Act, they are entitled to reinstatement. That they were stopped after the end of the contract period was not believed. But however, the Labour Court held that the workmen were not entitled to get any backwages. The Labour Court directed only the reinstatement of the workmen without backwages but with service continuity.
10. Mr.S.Ravindran, learned counsel appearing for M/s.T.S.Gopalan and Co. submitted that the Management had filed documents Exs.M31,M20,M33,M31,M22,M23,M24,M25 and M26 to show that there was a perfect contract between the Management and the Annai Security Services. But the Labour Court simply accepted the contentions made by the counsel of the workmen as though the proof of their employment with the Management. It did not consider the materials produced before the Court.
11. The learned counsel for the Management relied upon a judgment of the Supreme Court in International Airport Authority of India v. International Air Cargo Workers’ Union and another reported in 2009 LLR 923. In paragraph 20, it was held as follows:
“20. But where there is no abolition of contract labour under section 10 of CLRA Act, but the contract labour contend that the contract between principal employer and contractor is a sham and nominal, the remedy is purely under the ID Act. The principles in Gujarat Electricity Board continue to govern the issue. The remedy of the workmen is to approach the industrial adjudicator for an adjudication of their dispute that they are the direct employees of the principle employer and the agreement is sham, nominal and merely a camouflage, even when there is no order under Section 10(1) of CLRA Act. The industrial adjudicator can grant the relief sought if it finds that contract between principal employer and the contractor is sham, nominal and merely a comouflage to deny employment benefits to the employee and that there is in fact a direct employment, by applying tests like: who pays the salary; who has the power to remove/dismiss from service or initiate disciplinary action; who can tell the employee the way in which the work should be done, in short who has direction and control over the employee. But where there is no notification under section 10 of the CLRA Act and where it is not proved in the industrial adjudication that the contract was sham/nominal and comouflage, then the question of directing the principal employer to absorb or regularise the services of the contract labour does not arise. The tests that are applied to find out whether a person is an employee or an independent contractor may not automatically apply in finding out whether the contract labour agreement is a sham, nominal and is a mere camouflage. For example, if the contract is for supply of labour, necessarily, the labour supplied by the contractor will work under the directions, supervision and control of the principal employer but that would not make the worker a direct employee of the principal employer, if the salary is paid by contractor, if the right to regulate employment is with the contractor, and the ultimate supervision and control lies with the contractor. The principal employer only controls and directs the work to be done by a contract labour, when such labour is assigned/allotted/sent to him. But it is the contractor as employer, who chooses whether the worker is to be assigned/allotted to the principal employer or used otherwise. In short worker being the employee of the contractor, the ultimate supervision and control lies with the contractor as he decides where the employee will work and how long he will work and subject to what conditions. Only when the contractor assigns/sends the worker to work under the principal employer, the worker works under the supervision and control of the principal employer but that is secondary and control of the principal employer but that is secondary control. The primary control is with the contractor.”
(Emphasis added)
12. Therefore, he stated that if the Contractor assigns or sends the worker to work under the supervision and control of the principal employer it is only secondary control. The primary control is with the contractor. The mere control by the Principal employer will not change their status as contract labourers. Therefore, the finding of the Labour Court is perverse and liable to be interfered with.
13. Per contra, Mr.K.M.Ramesh learned counsel for the workmen contended that documents produced by the Management even if accepted at its face value, will show that the Annai Security Services only supplies labour and it is not as if they had supplied Security Guards. On the other hand, at the instance of the Management, the persons who were sent for work were Training Instructor, Driver, Office boy and Assistant. Therefore, the work of the agency was labour suppliers. In any event, the purpose for which the Management established a centre at Dindigul was to train youths of that area to get specialised with the local industrial manufacture of locks and leather products for which Dindigul Town was famous. This entrepreneurial programme which was undertaken by them in various places. Therefore workmen were engaged for the purpose of running their training programmes and it is misnomer to call them as contract employee. Work performed by them were part of the training programmes. That the Management had nothing to do with the labour supplied by the agency cannot be accepted.
14. Even in the judgment referred to by the learned counsel namely International Airport Authority of India’s case (cited supra), the Supreme Court stated that even if the contract was not abolished and if the contention of the workmen was that the contract between the principal employer and contractor as sham and nominal, the remedy is still open to the workmen to raise dispute under the Industrial Disputes Act. In the present case, the workmen have convinced the Labour Court that they were workmen of the principal employer and not of the Agency who supplied their services. This finding of fact cannot be disturbed in a writ petition filed under Article 226 of the Constitution.
15. Alternatively Mr.S.Ravindran, learned counsel for the Management stated that they have filed an additional affidavit sworn to by the General Manager of the NSIC Technical Services Centre dated 13.12.2000. In paragraph 2, it was averred as follows:
“2. It is submitted that as a mater of policy, the petitioner establishes training centre in an area where certain trade is in existence and there is scope to train the people in that trade with a view to develop such industrial activities. With that objective, about 10 years ago, the petitioner started a training centre at Dindigul. By the year 1999, it was felt that the objective of the training centre at Dindigul, to train the artisans in and around Dindigul area in lock making industry and leather goods making industry has been sufficiently achieved and hence the petitioner decided to discontinue its training operations at Dindigul. With that view, with the approval of Government of India, it was decided to close the centre and with effect from December 1999, the operations in the centre came to an end. During February 2000, the staff, workmen and supervisory personnel were transferred to various other centres based on their suitability. In September 2000, the Officer In-charge of the Sub-centre was also transferred. The petitioner has already shifted the machinery, furniture, fittings, etc. and it is in the process of selling the factory and land. It is thus submitted that in view of the recent developments, the impugned award of the first respondent dated 09.08.99 in ID Nos.293, 356, 357 and 358/93 granting relief of reinstatement to respondents 2 to 5 does not survive any longer.”
16. Though a copy of the additional affidavit was served on the counsel for the workmen as early as 14.12.2000, no reply was forthcoming.
17. Mr.K.M.Ramesh, learned counsel for the workmen fairly states that it is a fact that the centre at Dindigul is not functioning. But that was not a ground to deny them employment because the other regular office staff were shifted to other centres. Since the workmen were also working in the office, they can also be given alternate employment in other centres. It is also stated that the workmen have come forward to challenge the denial of backwages to them.
18. Pending the writ petitions, this Court by an order dated 05.02.2002 directed the Management to pay the last drawn salary to the workmen in terms of Section 17-B of the I.D.Act with effect from 01.01.2002 and continuously to pay the same till the disposal of the writ petitions. In that view of the matter, the earlier grant of stay was modified and the direction to pay monthly wages was also made. It is now stated that the said order has been complied with by the Management.
19. In the light of the above, three questions arises for consideration:
i)whether the Award passed by the Labour Court is legally sustainable.
ii)If this Award is held to be valid, whether the claim of the workmen for full wages for the period of their unemployment can be granted.
iii)Alternatively, since in view of the closure of the Dindigul centre, whether the workmen can be given compensation in lieu of their claims in various IDs.
20. In the present case,this Court is not inclined to interfere with the findings of the Laour Court, viz., that the workmen are workmen of the Management and not of the Annai Security Services. The Award of the Labour Court though not precise but somewhat it was convinced that the arrangement between Annai Security Services and the Management was only paper arrangement. The workmen were rendering services only to the Management and they can be deemed to be the workmen of the principal employer and not that of the contractor. Therefore that finding of the Labour Court is not disturbed.
21. But at the same time, the Labour Court having found that these workmen have worked only for 1 = years and still they are eligible for reinstatmenet with continuity of service cannot be appreciated. As per the additional affidavit filed by the Management and accepted by the workmen, the Centre at Dindigul came to be closed from December 1999 onwards with the approval of the Government of India. Therefore, in any event, from the date of termination till the date of closure, the workmen would have worked only for 7 years. For that period though the interim stay was in operation, the workers have been paid monthly salary in terms of the interim order passed by this Court with effect from 2002 onwards. If the factum of closure is accepted, then the question of reinstatement will not arise. In that view of the matter, workmen’s claim can be considered for compensation. In the present case, from 01.01.2002 workmen have been paid last drawn wages till date. Therefore, while deciding the question of compensation, these factors can be taken into consideration. Further the factor the Labour Court had denied backwages for the workmen for the period of their non-employment that is from the date from 1993 till 1999, when the award came to passed on 09.08.1999 must also be taken into account.
22. Therefore, under the overall circumstances of the case, if these factors are taken into account viz., their monthly salary, duration of work and the factum of closure, it will be just and proper if each the workmen are paid Rs.25,000/- as an over all compensation towards their full claims. The amounts paid in terms of Section 17-B of the I.D.Act cannot be recovered as it is considered as subsistence allowance. (See: Dena Bank v.Kritikumar T. Patel 1998 (1) L.L.N.375).
23. In the light of the above, the impugned Award in W.P.No.21044 of 2000 stands modified and the petitioner -Management is directed to pay Rs.25,000/- to each of the workman within four weeks from the date of receipt of a copy of this order. In respect of late P.Sureshkumar, his widow R.Arunai Princy will be paid the said amount. On such payment, no further claims are available to the workmen to be claimed from the Management.
24. With the above directions, the writ petitions are disposed of. No costs. Consequently, connected miscellaneous petitions are closed.
svki
To
The Presiding Officer,
Labour Court,
Trichy