BHARAT HEAVY ELECTRICALS LTD. versus MAHENDRA PRASAD JAKHMOLA & ORS. on 20 February 2019

[2019] 4 S.C.R.

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BHARAT HEAVY ELECTRICALS LTD.

v.

MAHENDRA PRASAD JAKHMOLA & ORS.

(Civil Appeal No. 1799-1800 of 2019)

BFEBRUARY 20, 2019

[R. F. NARIMAN AND VINEET SARAN, JJ.]

Contract Labour (Regulation and Abolition) Act, 1970:Notification dated 24.4.1990 issued under the Act, 1970 – Exemptionfrom its applicability to BHEL – Held: BHEL, insofar as their UPoperations are concerned, in Haridwar, in particular, are exemptedfrom the applicability of the Notification – Labour laws.

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Contract Labour (Regulation and Abolition) Act, 1970:Termination of worker – Award of reinstatement by Labour Court –Labour Court based its finding on direct relationship between theDparties on the gate passes issued by the appellant, and on aconcession made by the appellant’s representative – Held: Evidenceshowed that the gate passes were issued only at the request of thecontractor for the sake of security and safety and also fromadministrative point of view – This evidence was missed by LabourECourt when it arrived at a conclusion that a direct relationship oughtto be inferred from this fact – Moreover there was nothing to showthat the work performed by the contract labour was ordinarily partof the industry of appellant – Labour Court’s award is perverseand is set aside in exercise of jurisdiction under Art.226 –Constitution of India – Art.226 – Uttar Pradesh Industrial DisputesFAct, 1947.

Contract Labour (Regulation and Abolition) Act, 1970:Whether employed labourers were direct or contractual employees– Held: Principal employer cannot be said to control and supervisethe work of the employee merely because he directs the workers ofGthe contractor ‘what to do’ after the contractor assigns/ allots theemployee to the principal employer – In the instant case, evidenceled on behalf of appellant showed that no wages were ever beenpaid to workers by appellant – Workers themselves admitted thatthere was no appointment letter, provident fund number or wageHslip from appellant insofar as they were concerned – Further, it was

also specifically pointed out that the names of 29 workers were onthe basis of a list provided by the contractor in a bid that was madeconsequent to a tender notice by appellant – Therefore, there wasnothing on facts to show that the contract labour that was engaged,even de hors a prohibition notification, was in the facts of the instantcase ‘sham’ – Thus, Labour court erred in holding that the allegedcontract with the contractor was “sham”.

Concession: Where a question is a mixed question of fact andlaw, a concession made by a lawyer or his authorised representativeat the stage of arguments, cannot preclude the party for whom suchperson appears from re-agitating the point in appeal – Concessionon mixed questions of fact and law cannot decide cases as theevidence as a whole has to be weighed and inferences drawntherefrom.

Words and phrases: Expression ‘control and supervision –Meaning of, in the context of contract labour – Labour laws.

Allowing the appeals, the Court

Conclusion

HELD: 1.1 The Award of the Labour Court sets downnotification dated 24.04.1990 that was issued under the 1970 Act.A reading of the said notification makes it clear that the appellant,insofar as their UP operations are concerned, in Haridwar, inparticular, are exempted from the said notification. Despite this,however, the Labour Court went on to apply the said notification,which would clearly be perverse. The Labour Court based itsfinding on direct relationship between the parties only on thegate passes being issued by the appellant, and on a concessionmade by the appellant’s representative. The said gate passeswere issued, as has been stated by the appellant’s witness, onlyat the request of the contractor for the sake of safety and alsofrom the administrative point of view. The idea was security, asotherwise any person could enter the precincts of the factory.This evidence was missed by the Labour Court when it arrivedat a conclusion that a direct relationship ought to be inferredfrom this fact alone. [Paras 10-11][513-B-F]

1.2 Where a question is a mixed question of fact and law, aconcession made by a lawyer or his authorised representative atthe stage of arguments cannot preclude the party for whom such AB

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Aperson appears from re-agitating the point in appeal. It would beperverse to decide based only on a concession, without more,that a direct relationship exists between the employer and theworkmen. Equally perverse is finding that the extended definitionof ‘employer’ contained in the Act would automatically apply. Theextended definition is contained in section 2(i)(iv) of the UttarBPradesh Industrial Disputes Act. In order that section 2(i)(iv)apply, evidence must be led to show that the work performed bycontract labour is a work which is ordinarily part of the industryof BHEL. On the facts of the instant case, that no such evidencewas, in fact, led. Consequently, this finding is also a findingCdirectly applying a provision of law without any factual foundationfor the same. [Paras 13-15][514-F, G; 515-B, E, F]

2. In the instant case, the contractor pays the workmentheir wages. Secondly, the principal employer cannot be said tocontrol and supervise the work of the employee merely becauseDhe directs the workmen of the contractor ‘what to do’ after thecontractor assigns/ allots the employee to the principal employer.The Labour Court’s Award being perverse ought to have beenset aside in exercise of jurisdiction under Article 226. Theworkmen have themselves admitted that there is no appointmentletter, provident fund number or wage slip from BHEL insofar asEthey are concerned. Apart from this, it is also clear from theevidence led on behalf of BHEL, that no wages were ever beenpaid to them by BHEL as they were in the service of the contractor.Further, it was also specifically pointed out that the names of 29workers were on the basis of a List provided by the contractor in Fa bid that was made consequent to a tender notice by BHEL.There is nothing on facts to show that the contract labour that isengaged, even de hors a prohibition notification, is in the facts ofthis case ‘sham’. [Paras 20, 23, 25, 26][520-A, D-F]

Basti Sugar Mills Ltd. v. Ram Ujagar and Ors. [1964] 9GSCR 838; Steel Authority of India Ltd. And Ors. v.National Union Waterfront Workers and Ors. (2000) 7SCC 1 : [2001] 2 Suppl. SCR 343; Swami KrishnanandGovindanand v. Managing Director, Oswal Hosiery(Regd.) (2002) 3 SCC 39 : [2002] 2 SCR 1; C.M.Arumugam v. S. Rajgopal (1976) 1 SCC 863 : [1976] 3

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BHARAT HEAVY ELECTRICALS LTD. v. MAHENDRAPRASAD JAKHMOLA & ORS.

SCR 82; General Manager, (OSD), Bengal NagpurCotton Mills, Rajnandgaon v. Bharat Lala and Another2011 (1) SCC 635; Balwant Rai Saluja and Another v.Air India Limited and Others (2014) 9 SCC 407 – reliedon.

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Calcutta Port Shramik Union v. Calcutta River TransportAssociation and Others (1988) Supp SCC 768 : [1988]Suppl. SCR 1034; Pepsico India Holding PrivateLimited v. Grocery Market and shops Board and Others(2016) 4 SCC 493 : [2016] 2 SCR 305; Harjinder Singhv. Punjab State Warehousing Corporation (2010) 3 SCC192 : [ 2010] 1 SCR 591; Steel Authority of India Ltd.And Others (2001) 7 SCC 1 : [2001] 2 Suppl. SCR 343– held inapplicable.

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Case Law Reference

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1799-1800 of 2019

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From the Judgment and Order dated 24.04.2014 of the High Courtof Uttarakhand at Nainital in Writ Petition No. 1021 of 2011(M/S) and order dated 11.09.2014 in Review Application No. 644 of2014 in Writ Petition No. 1021 of 2011 (M/S)]

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Civil Appeal Nos.1837-38, 1915-16, 1919-20, 1885-86, 1883-84,1887-88, 1913-14, 1917-18, 1921-22, 1893-94, 1865-66, 1897-98, 1899-1900, 1867-68, 1909-10, 1803-04, 1805-06, 1807-08, 1809-10, 1907-08,1887-88, 1871-72, 1873-74, 1905-06, 1877-78, 1817-18, 1819-20, 1903-B04, 1821-22, 1879-80, 1891-92, 1895-96, 1825-26, 1901-02, 1843-44, 1841-42, 1845-46, 1875-76, 1815-16, 1813-14, 1847-48, 1811-12, 1849-50, 1851-52, 1801-02, 1911-12, 1839-40, 1863-64, 1861-62, 1859-60, 1857-58, 1835-36, 1855-56, 1881-82, 1853-54, 1827-28, 1833-34, 1829-30, 1889-90, 1831-32, 1823-24 of 2019.

Sudhir Chandra, Sr. Adv., Parijat Sinha, Ms. Reshmi Rea Sinha,Gaurav Ghosh, Rudra Dutta, Devesh Mishra, Anil Kumar Mishra,Ms. Asha Jain Madan, Mukesh Jain, Ms. Madhu Talwar, Rahul Verma,Mrs. D. Bharathi Reddy, Ms. Rachna Gandhi, Advs. for the appearingparties.

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The Judgment of the Court was delivered byD

R. F. NARIMAN, J. 1. The present appeals arise out of ajudgment dated 24.04.2014 and a review dismissal from the aforesaidjudgment dated 11.09.2014, by which the High Court of Uttarakhandhas dismissed a writ petition against a Labour Court’s Award.

E2. The brief facts necessary to decide these appeals are as follows:

3. By Reference Order dated 09.11.2004 under Section 4(k) ofthe Uttar Pradesh Industrial Disputes Act, 1947, the following disputewas referred to the Labour Court:

“Whether termination of services of workman Shri MahendraFPrasad Jakhmola, s/o Late Shri Vachaspati Jakhmola, Helper bythe employer, w.e.f. 13.11.2001, is justified and/or as per law? Ifnot, what benefit/relief the concerned workman is entitled for andwith what other details?”

4. Similar Reference Orders were made in 63 other cases.G

5. Pleadings were filed before the Labour Court at Haridwar andevidence was led on behalf of the appellant as well as by the workmen.By an Award dated 01.11.2009, the Labour Court held, referring to anotification, which is, notification dated 24.04.1990 under the ContractLabour (Regulation and Abolition) Act, 1970 (hereinafter referred to asH‘1970 Act’), that the said notification, on application to the appellant,

would show that the workmen were not deployed to do the workmentioned in the notification. It was further held that based ondocumentary evidence in the form of gate passes, the workmen, whowere otherwise employed by a contractor, were directly employed bythe appellant. It was also held to have been fairly conceded by theemployer’s representative that supervision, superintendence andadministrative control of all these workmen were with the appellant. Itwas also held that under the extended definition of “employer” in theUttar Pradesh Industrial Disputes Act, 1947, even if the workmen areregarded as workmen of a contractor, they would yet be workmen ofthe appellant as the appellant was within the extended definition of“employer” under the Act. This being the case, it was held that all suchworkers, being 64 in number, were entitled to be reinstated with immediateeffect but without backwages. From this Labour Award, a review petitionwas filed by the appellant, in which it was clearly stated that no suchconcession, as recorded by the Labour Court, was made before it. Further,notification dated 24.04.1990 had no application as Bharat HeavyElectricals Ltd. (BHEL) was exempted therefrom and, therefore, toapply this notification to the facts of this case was also wrong. On18.05.2011, this review was dismissed by the Labour Court holding:

“Considering the above noted discussion, as made in award dated01.11.2009, I find force in the argument of opposite part-2 that asfar as notification dated 24.04.1990 is concerned, this court hasalready considered and has given its verdict on this notificationand now on review application no contrary inference can bedrawn by this court as prayed by the applicant. As far asNotification dated 23.07.2010 (supra) is concerned, this notificationwas not issued by Government when award was passed. Assuch, this notification cannot be said applicable at that time and nobenefit of later issued notification dated 23.07.2010 can be givento applicant. Moreover, if applicant was exempted vide notificationon dated 24.04.1990, in such a case what was the necessity toissue the second notification dated 23.07.2010 (supra) forexemption of contract labour.

On perusal of all the documents and legal preposition of lawlaid down by Apex Court in Uttar Pradesh State RoadwayTransport Corporation versus Imtiaz Hussain (supra). I am inagreement with the Opposite Party-2 that except arithmetical orclerical errors, the order which was passed by the court on merit, ABCDE

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Acannot be changed, amended or altered. As far as case in hand isconcerned no clerical or arithmetical mistake is involved. As such,application A-2 is liable to be rejected.”

6. A writ petition was filed, being W.P. No. 1021/2011, against theaforesaid orders. This writ petition was dismissed by the first impugnedBorder dated 24.04.2014 in which the High Court recorded that“undisputedly” all petitioners, i.e., workmen, were performing the dutieswhich were identical with those of regular employees. Therefore, it canbe said that they were under the command, control, management of theBHEL and, concomitantly, the contractor has absolutely no control overthe workmen in performing such duties. It was, therefore, held that theCalleged contract with the contractor was “sham” and, consequently, theLabour Court Award was correct in law and was upheld. Against thisorder, a special leave petition was filed which was disposed of as follows: - “…….

“…….

In the impugned order the High Court records,D“Undisputedly, all the petitioners, herein, were performingthe skilled/unskilled duties with the regularly appionted staffof BHEL in BHEL Factory Premises and were reporting onduties along with regular employees to perform identical dutiesand had been working for fixed hours along with regularEemployees of BHEL.”

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Mr. Sudhir Chandra, learned senior counsel for the petitionersubmits that the above position was seriously disputed and theHigh Court has wrongly recorded “Undisputedly”.

If that be so, the course open to the petitioner is to approachFthe High Court seeking review of the impugned order. Thesubmission cannot be entertained for the first time by this Courthaving regard to the statement of fact recorded in the impugnedorder.

We observe that if review applications are filed within twoGweeks, the same will not be dismissed on the ground of delay.

Since special leave petitions are not being entertained onthe above ground, liberty is granted to the petitioner to challengethe impugned order, in case, review applications are dismissed bythe High Court.

H Special leave petitions are disposed of.”

7. The appellant, then filed a review petition before the High Court,which disposed of the review stating:

“BHEL has submitted written statement before the learnedLabour Court. Paragraph 3 thereof reads as under:

“3.The workman concerned in the dispute Sri Mahendra PrasadJakhmola was never engaged by BHEL Haridwar and he wasnot their employee and they were not his employers. It appearsthat he might have been engaged and employed by thecontractor Sri Madan Lal who also has been made party asemployer in the Industrial Dispute under reference.”

Plain reading of paragraph 3 of the written statement wouldgo to suggest that even BHEL is not sure as to whether workmenwere supplied by the contractor or were engaged by the BHEL.That being so, even if there was any Contract Labour Agreementbetween the BHEL and Madan Lal, alleged contractor, sameseems to be sham transaction and camouflage.

Not only this, the BHEL/employer-I has not placed on recordany material to demonstrate that under the alleged LabourContract Agreement payment was ever made in favour of MadanLal/alleged contractor for supplying labourers/workmen inquestion; no material is available on the record to say what wasthe period of supplying the labourers under the contract.

In view of the above discussion, I do not find any good orvalid reason to review the judgment under review. Consequently,all the review applications fail and are hereby dismissed.”

8. Shri Sudhir Chandra, learned senior counsel appearing on behalfof the appellant, has argued before us that the Labour Court Award wasperverse. Accordingly to him, it could not have applied the notificationdated 24.04.1990 as his client was excluded from such notification, andbeing excluded from such notification, there was, consequently, noprohibition on employment of contract labour. Further, if the evidence isto be read as a whole, it is clear that the representative of BHEL madeit clear that, in point of fact, there were agreements with contractorsand that it is workers of such contractors, who were paid by them, thatare involved in the present dispute. He also added that no concessionwas made before the Labour Court, as was pointed out in the reviewpetition, but, unfortunately, this plea was also turned down by the Labour A

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ACourt, dismissing the review petition. Merely to state that because gatepasses were given, does not lead to inference that there was any directrelationship between the appellant and the respondent-workmen. Healso argued that the High Court, in the first round, not only missed thefact that the Labour Court Award was perverse, but committed the sameerror by stating that the admitted position before the High Court wasBalso that the labour was directly employed by the appellant. This is why,according to him, the Supreme Court sent his client back in review, butthe review order, after setting down a paragraph of the written statementfiled by the so-called employer, then arrived at an opposite conclusionfrom what is stated therein. For all these reasons, therefore, accordingCto him, the judgments of the High Court and the Labour Court Awardought to be set aside. He also cited certain judgments before us tobuttress his argument that there was no manner of direct employmentbetween his client and the workmen.

9. Ms.Asha Jain, on the other hand, has pointed out to us that weDshould not exercise our discretionary jurisdiction under Article 136 ofthe Constitution, inasmuch as the Labour Court Award is a fair Award,as only reinstatement was ordered without backwages. She also arguedthat, at no stage, had BHEL, which is a Government Company, reinstatedher clients despite the fact that there is no stay granted in their favour.She went on to add that the concession that was made was rightly madeEbefore the Labour Court, and that the review petition did not contain anystatement by any authorised representative, who made such concession,that he had not done so. She countered the argument that gate passeswere not the only basis of the Labour Court, concluding that a directrelationship exists between the appellant and her clients. She arguedFthat despite the change of contractors four times over, the same workerscontinued showing, therefore, that there was a direct relationship betweenthese workmen and the employer. She also pointed out from certaindocuments that the contractor got a 10 per cent profit and otherwise hehad nothing to do with the labour that was provided by him. She then relied upon certain judgments which state that the power of judicial reviewGof the High Court ought to be exercised with circumspection, and thatmere errors of law or fact cannot be interfered with. She also stronglyrelied upon the judgment in ‘Basti Sugar Mills Ltd. v. Ram Ujagar andOrs.’ [(1964) (2) SCR 838) to state that, in any event, even if theseemployees were employees of the contractor, yet by the extendedHdefinition of ‘employer’ in the Uttar Pradesh Industrial Disputes Act, a relationship of employer and workmen would exist under the said Act.She went on to cite certain passages in the ‘Steel Authority of IndiaLtd. And Ors. v. National Union Waterfront Workers and Ors.’ [(2001)7 SCC 1] to buttress her contention that even if there were agreementswith the contractor, they were only ‘sham’ or nominal on the facts ofthis case.

10. Having heard learned counsel for both the sides, it is important,first, to advert to the Award of the Labour Court. The said Award setsdown the notification dated 24.04.1990 that was issued under the 1970Act. A reading of the aforesaid notification makes it clear that theappellant, insofar as their UP operations are concerned, in Haridwar, inparticular, are exempted from the aforesaid notification. Despite this,however, the Labour Court went on to apply the said notification, whichwould clearly be perverse. In addition, though Ms. Jain stated thatdocumentary evidence was filed, yet the Labour Court based its findingon direct relationship between the parties only on the gate passes beingissued by the appellant, and on a concession made by the appellant’srepresentative.

11. What is clear from the evidence that was led by the parties isthat the aforesaid gate passes were issued, as has been stated by theappellant’s witness, only at the request of the contractor for the sake ofsafety and also from the administrative point of view. The idea wassecurity, as otherwise any person could enter the precincts of the factory.This evidence was missed by the Labour Court when it arrived at aconclusion that a direct relationship ought to be inferred from this factalone. Further, as has been correctly pointed out by Shri Sudhir Chandra,the appellant has, not only in the first review, but also in the writ petitionfiled, taken the plea that no such concession was ever made. Moreover,quite apart from this plea and the counter plea of Ms. Jain that theperson who has made such concession should have stated that he didnot do so, concessions on mixed questions of fact and law cannot decidecases as the evidence as a whole has to be weighed and inferencesdrawn therefrom.

12. Even a concession on facts disputed by a respondent in itswritten statement cannot bind the respondent. Thus, in SwamiKrishnanand Govindananad v. Managing Director, Oswal Hosiery(Regd.) [(2002) 3 SCC 39, this Court held:

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“2. ……. It appears that when the case was posted for trial, thelearned counsel appearing for the respondent conceded the factsdisputed by the respondent in his written statement before theCourt. That statement of the advocate was recorded by theAdditional Rent Controller thus: “The respondent’s learned counselhas admitted the ground of eviction and also the fact that theapplicant is a public charitable institution and for that purpose itrequired the premises.” ……….

3. ………. Whether the appellant is an institution within themeaning of Section 22 of the Act and whether it required bonafide the premises for furtherance of its activities, are questionstouching the jurisdiction of the Additional Rent Controller. Hecan record his satisfaction only when he holds on these questionsin favour of the appellant. For so holding there must be materialon record to support his satisfaction otherwise the satisfaction notbased on any material or based on irrelevant material, would bevitiated and any order passed on such a satisfaction will be withoutjurisdiction. There can be no doubt that admission of a party is arelevant material. But can the statement made by the learnedcounsel of a party across the Bar be treated as admission of theparty? Having regard to the requirements of Section 18 of theEvidence Act, on the facts of this case, in our view, theaforementioned statement of the counsel for the respondent cannotbe accepted as an admission so as to bind the respondent.Excluding that statement from consideration, there was thus nomaterial before the Additional Rent Controller to record hissatisfaction within the meaning of clause (d) of Section 22 of theAct. It follows that the order of eviction was without jurisdiction.”

13. Equally, where a question is a mixed question of fact and law,a concession made by a lawyer or his authorised representative at thestage of arguments cannot preclude the party for whom such personappears from re-agitating the point in appeal. In ‘C.M. Arumugam v. S.Rajgopal’ [(1976) 1 SCC 863], this Court held:

“8. ………. That question is a mixed question of law and fact andwe do not think that a concession made by the first respondent onsuch a question at the stage of argument before the High Court,can preclude him from reagitating it in the appeal before this Court,when it formed the subject-matter of an issue before the High Court and full and complete evidence in regard to such issue wasled by both parties……….”

14. It would be perverse to decide based only on a concession,without more, that a direct relationship exists between the employer andthe workmen. Equally perverse is finding that the extended definition of‘employer’ contained in the Act would automatically apply. The extendeddefinition contained in section 2(i)(iv) of the Uttar Pradesh IndustrialDisputes Act reads as follows:

“2. Definitions.

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(i) ’Employer’ includes-

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(iv) where the owner of any industry in the course of or for thepurpose of conducting the industry contracts with any person forthe execution by or under such person of the whole or any part ofany work which is ordinarily part of the industry, the owner ofsuch industry;”

15. A look at this provision together with the judgment in ‘BastiSugar Mills Ltd. v. Ram Ujagar and Ors.’ [(1964) (2) SCR 838) reliedupon by Ms. Jain, would show that in order that section 2(i)(iv) apply,evidence must be led to show that the work performed by contract labouris a work which is ordinarily part of the industry of BHEL. We find, onthe facts of the present case, that no such evidence has, in fact, beenled. Consequently, this finding is also a finding directly applying a provisionof law without any factual foundation for the same.

16. This being the case, it is clear that the Labour Court has arrivedat a conclusion which no reasonable person could possibly arrive at andought, therefore, to have been set aside. Apart from the Labour Courtdismissing a review from its own order, we find that the High Court, inthe first impugned judgment dated 24.04.2014, has also arrived at findingswhich are contrary to the evidence taken on record. First and foremost,it could not have said that “undisputedly”, the labour that was employedthrough contractors were performing identical duties as regular employees A

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Aand that, therefore, without any evidence, it can be said that they wereunder the control, management and guidance of BHEL. Secondly, whenit said that alleged contracts that were awarded in favour of contractorsand how many labourers, in what type of work etc. were asked for,were not furnished, is also directly contrary to the evidence led on behalfof the BHEL, in which such documents were specifically provided. Thus,BShri Naveen Luniyal, in his evidence-in-chief, had pointed out:

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Thus, we entered into contract of workers with the contractorswhich are document No. 8 and 9 of the above list and the sameCare marked Exhibit E-6 and E-7 respectively. The period ofcontract used to be extended for the completion of assignment incase the work was not completing in time or the same was beingextended. The concerned workman filed writs before Hon’bleDelhi High Court seeking their regularization while impleadingBHEL as a party and it was ordered by the court that you mayDprefer your suit for regularization before C.G.I.T.

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There is no master employer and servant relationship of theEworkers with BHEL and BHEL was also not making any paymentof salary to them as the workers were in the service of thecontractor. Thus, there does not arise any question of giving thememployment.

The workers were being issued gate passes at the request ofFthe contractor, for the sake of safety and also from administrativepoint of view, it was specifically bearing the mention that they arethe workers of the contractors. Any worker cannot enter in theworkplace if such gate passes are not issued. CISF takes care ofthe safety in our organisation.”

G17. Equally, the review judgment apart from being cryptic, drawsan unsustainable conclusion after setting out paragraph 3 of the writtenstatement of BHEL in the Labour Court. What was stated by BHEL inparagraph 3 was that the workmen were only engaged by the contractorand were not their employees. The written statement then goes on to bespeculative in stating that it appears that a workman might have beenH

engaged as an employee by a particular contractor. A plain reading ofthis written statement would certainly not suggest that BHEL is not sureas to whether workmen were or were not supplied by a contractor, orengaged by BHEL. What is clear from the written statement is thatBHEL has denied that the workmen were engaged by BHEL or that theworkmen were BHEL’s workmen. From this to conclude that thetransaction seems to be ‘sham’, is again wholly incorrect. Apart fromthis, it is also incorrect to state that BHEL has not placed on record anymaterial to demonstrate that under the alleged labour contract, paymentwas ever made in favour of Madan Lal, the alleged contractor. It hasbeen correctly pointed out by learned counsel appearing on behalf ofBHEL that in the very first sentence of the cross examination of theworkmen, before the labour court, the workmen admitted that paymentsof their wages were made by four contractors including Shri MadanLal. Also, the fact that Madan Lal was paid under the agreement withBHEL was never disputed. Indeed, Ms. Jain’s argument that MadanLal only derived a 10 per cent profit from the agreement with himpresupposes payment to Madan Lal by BHEL under the agreement withhim. This finding again is wholly incorrect.

18. We, now come to some of the judgments cited by Shri SudhirChandra and Ms. Asha Jain. In ‘General Manager, (OSD), BengalNagpur Cotton Mills, Rajnandgaon v. Bharat Lala and Another’[2011 (1) SCC 635], it was held that the well recognised tests to find outwhether contract labourers are direct employees are as follows:

“10. It is now well settled that if the industrial adjudicator findsthat the contract between the principal employer and the contractorto be a sham, nominal or merely a camouflage to deny employmentbenefits to the employee and that there was in fact a directemployment, it can grant relief to the employee by holding thatthe workman is the direct employee of the principal employer.Two of the well-recognized tests to find out whether the contractlabourers are the direct employees of the principal employer are:(i) whether the principal employer pays the salary instead of thecontractor; and (ii) whether the principal employer controls andsupervises the work of the employee. In this case, the IndustrialCourt answered both questions in the affirmative and as aconsequence held that the first respondent is a direct employee ofthe appellant”

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A19. The expression ‘control and supervision’ were furtherexplained with reference to an earlier judgment of this Court as follows:

“12. The expression “control and supervision” in the context ofcontract labour was explained by this Court in InternationalAirport Authority of India v. International Air Cargo Workers’BUnion thus: (SCC p.388, paras 38-39)

“38…. if the contract is for supply of labour, necessarily, thelabour supplied by the contractor will work under the directions,supervision and control of the principal employer but that wouldnot make the worker a direct employee of the principalCemployer, if the salary is paid by a contractor, if the right toregulate the employment is with the contractor, and the ultimatesupervision and control lies with the contractor.

39. The principal employer only controls and directs the workto be done by a contract labour, when such labour is assigned/Dallotted/sent to him. But it is the contractor as employer, whochooses whether the worker is to be assigned/allotted to theprincipal employer or used otherwise. In short, worker beingthe employee of the contractor, the ultimate supervision andcontrol lies with the contractor as he decides where theemployee will work and how long he will work and subject toEwhat conditions. Only when the contractor assigns/sends theworker to work under the principal employer, the worker worksunder the supervision and control of the principal employer butthat is secondary control. The primary control is with thecontractor.”

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20. From this judgment, it is clear that test No. 1 is not met on thefacts of this case as the contractor pays the workmen their wages.Secondly, the principal employer cannot be said to control and supervisethe work of the employee merely because he directs the workmen ofthe contractor ‘what to do’ after the contractor assigns/ allots theGemployee to the principal employer. This is precisely what paragraph 12explains as being supervision and control of the principal employer thatis secondary in nature, as such control is exercised only after suchworkman has been assigned to the principal employer to do a particularwork.

21. We may hasten to add that this view of the law has beenreiterated in ‘Balwant Rai Saluja and Another v. Air India Limitedand Others’ [2014(9) SCC 407], as follows:

“65. Thus, it can be concluded that the relevant factors to betaken into consideration to establish an employer-employeerelationship would include, inter alia:

(i) who appoints the workers;

(ii) who pays the salary/remuneration;

(iii) who has the authority to dismiss;

(iv) who can take disciplinary action;

(v) whether there is continuity of service; and

(vi) extent of control and supervision i.e. whether there exists complete control and supervision.

As regards extent of control and supervision, we have alreadytaken note of the observations in Bengal Nagpur Cotton Millscase [(2011) 1 SCC 635], International Airport Authority ofIndia case [2009 13 SCC 374] and Nalco case [(2014) 6 SCC”756].

22. However, Ms. Jain has pointed out that contractors werefrequently changed, as a result of which, it can be inferred that theworkmen are direct employees of BHEL. There is no such finding ofthe Labour Court or any reference to the same by the High Court.Consequently, this argument made for the first time in this Court togetherwith judgments that support the same, is of no consequence.

23. Ms. Jain also pointed out three judgments of this Court in‘Calcutta Port Shramik Union v. Calcutta River TransportAssociation and Others [1988 (Supp) SCC 768], Pepsico IndiaHolding Private Limited v. Grocery Market and Shops Board andOthers [2016 4 SCC 493] and ‘Harjinder Singh v. Punjab StateWarehousing Corporation’ [(2010) 3 SCC 192] for the propositionthat judicial review by the High Court under Article 226, particularlywhen it is asked to give relief of a writ of certiorari, is within wellrecognised limits, and that mere errors of law or fact are not sufficientto attract the jurisdicton of the High Court under Article 226. There isno doubt that the law laid down by these judgments is unexceptionable.

A

B

C

D

E

F

G

H

AWe may only state that these judgments have no application to the factsof the present case. The Labour Court’s Award being perverse ought tohave been set aside in exercise of jurisdiction under Article 226.

24. Ms. Jain then argued that since no backwages were grantedbut only reinstatement was ordered, we should not exercise our jurisdictionBunder Article 136 to set aside the said Award. When it is found that thefindings of the Labour Court are perverse, it is difficult to accede to thisargument. Equally, the argument that the so-called employer has notcomplied with the Labour Court’s Award, despite there being no stay, isan argument that must be rejected. In that a contempt petition couldalways have been moved on behalf of the workmen for implementation.CNo such thing has been done in the present case.

25. The argument that the contractor, in the facts of the presentcase, gets only a 10 per cent profit and nothing more, is again an argumentthat needs to be rejected in view of the clear and unequivocal evidencethat has been led in this case. The workmen have themselves admittedDthat there is no appointment letter, provident fund number or wage slipfrom BHEL insofar as they are concerned. Apart from this, it is alsoclear from the evidence led on behalf of BHEL, that no wages wereever been paid to them by BHEL as they were in the service of thecontractor. Further, it was also specifically pointed out that the namesEof 29 workers were on the basis of a List provided by the contractor ina bid that was made consequent to a tender notice by BHEL.

26. Ms. Asha Jain’s reliance upon the judgment in ‘Steel Authorityof India Ltd. And Others’ [(2001) 7 SCC 1] is also misplaced. There isnothing on facts to show that the contract labour that is engaged, evenFde hors a prohibition notification, is in the facts of this case ‘sham’.

27. Given this, we set aside the impugned judgments of the HighCourt and the Labour Court’s Award.

The appeals are allowed in the aforesaid terms.

G

Devika Gujral

Appeals allowed.

H