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CASE NO.:

Appeal (civil) 12845 of 1996

PETITIONER:

CIPLA LTD.

Vs.

RESPONDENT:

MAHARASHTRA GENERAL KAMGAR UNION & ORS.

DATE OF JUDGMENT: 21/02/2001

BENCH:

S. Rajendra Babu & S.N. Phukan.

JUDGMENT:

J U D G M E N TL...I...T.......T.......T.......T.......T.......T.......T..J

RAJENDRA BABU, J. :

The first respondent, which is a Union of the workmen,

filed a complaint against the appellant for unfair labour

practices under Section 28 of the Maharashtra Recognition of

Trade Unions & Prevention of Unfair Labour Practices Act,

1971 (for short the Act) under Item 1(a) by way of

victimisation; (b) not in good faith, but in the colourable

exercise of the employers right; (d) for patently false

reasons; and (f) in utter disregard of the principles of

natural justice in the conduct of domestic enquiry or with

undue haste of Scheduled IV of the Act. Before the Seventh

Labour Court at Bombay it was claimed by the respondent

herein that the statutory duty of the appellant is not only

to keep the factory premises clean, hygienic and dust free

but also the surroundings thereof in terms of Schedule M

of Drugs & Cosmetics Act, 1940 and the employees engaged for

such process are, therefore, employees of the company

itself; that, in fact, the appellant had been directly

employing the workmen to attend such work and the appellant

used to appoint such persons on casual or temporary basis

and terminate their services from time to time with a view

to depriving them of the permanent status and wages and

other benefits as applicable to permanent workmen of the

appellant; that this situation continued till the year

1990-91 when such casual or temporary workmen engaged in

cleaning process joined the respondent-Union in order to

protect their rights for permanency in the

appellant-company; that since about 1991 the appellant has

been engaging persons but on paper they are shown as

contract workmen working for contractor, respondent No. 2

herein; that the second respondent is only a name lender

whereas the appellant is the real employer of the workmen;

that the appellant through the second respondent terminated

the services of such workmen employed through second

respondent the moment the persons completed 11 months of

services thereby depriving them of the status of permanent

workmen; that the entire effort being made to avoid giving

permanency to the workmen concerned with sanitation,

sweeping and in keeping the factory premises and surrounding

thereof in a hygienic condition. It is further alleged that

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there are about 30 such workmen who were engaged in such

activities; that in keeping with the past practice, the

respondent had reasons to apprehend that the moment any of

the workmen completes 11 months of service, the services of

such employee would be terminated. It is submitted on

behalf of the respondent that the recruitment of such

workmen is done by the appellant and upon selection such

workmen are sent to appellants doctor for medical check up.

However, they are not given any appointment letters but are

given attendance cards by the second respondent only to show

that they are the employees of the second respondent and not

that of the appellant. They claimed that they are the

workmen working under the direct supervision, control and

direction of the officers of the appellant who assign work

to them and they are granted leave by the officers of the

appellant and are also paid by the appellant; that the

company is the real employer apart from being the employees

because of statutory obligation of the company to employ

such workmen; that, however, the appellant denied the

relationship of employer-employee from various stages; that

such denial of relationship is only to deprive the workmen

of permanency in the company and payment of wages as are

applicable to the permanent workmen of the company; that

the company has denied this relationship as employer and

thus this cause of action has arisen in this complaint;

that the appellant has engaged in unfair labour practices in

terms of Act and it be directed to cease and desist from

continuing to do so.

The appellant, apart from denying that it is guilty of

unfair labour practices under Items 1(a), (b), (d) and (f)

of Scheduled IV of the Act, contended that the persons

listed in Exhibit A and referred to in the complaint are

not the employees of the company nor are they employed

ostensibly through the second respondent. The appellant

categorically denied that they are the employees of the

company and there has never been any employer-employee

relationship between them and, therefore, the question of

terminating the services of the employees employed by the

second respondent would not arise. The appellant contended

that since it is engaged in the manufacture of

pharmaceutical products for which a high degree of

cleanliness and hygiene is required to be maintained and,

therefore, it is necessary for the company to seek the

services of the specialised agencies and this practice has

been in vogue for several years and in the last eight year

such services have been obtained from three different agency

and they are (i) M/s Estate Services, (ii) M/s Advent Clean

& Care Corporation and (iii) M/s Deluxe Estate Services.

The second respondent had been engaged as an agency for

rendering house- keeping and hygiene services and the terms

of the engagement were set out in a letter dated 28.2.1992.

Pursuant to such rendering of services the second respondent

had engaged services of the persons named in Exhibit A.

The appellant contended that the named persons in the

Exhibit A to the complaint are those who have joined the

second respondent only during the last 3 to 8 months. The

appellant denied that it interviewed and selected the

persons to be employed by the second respondent, but it was

expected that persons employed by the second respondent were

subjected to periodical medical examination in order to

comply with the statutory requirements for maintaining

proper hygiene integrity of the manufacturing processes of

the company. It is also denied by the appellant that the

workmen are working under the direct control and supervision

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of the officers of the company and there is any

employer-employee relationship between them. It was

submitted that the second respondent pays wages to those

employees in accordance with or more than the minimum wages.

It is also contended that the appellant has obtained

registration as required under the earlier Act and the copy

of which was produced in the proceedings. The second

respondent supported the contentions made by the appellant.

The Labour Court on the basis of these pleadings framed

the following issues: ISSUES@@

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1. Does the complainant prove that the company indulged

in unfair labour practices as alleged ?

2. ---------deleted---------

3. Does he prove that he is entitled the relief as

prayed for?

4. What order ?

ADDITIONAL ISSUES

3A. Whether the complaint is maintainable? 3B.

Whether the complainant prove that the names in Annexure

A are the workmen of the Respondent No.1? 3C. Whether

this Court has jurisdiction to entertain the complaint?

The Labour Court, after elaborate consideration of the

pleadings and evidence on record, came to the following@@

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conclusion:@@

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It can be seen from the evidence on record and the

documents filed by the parties that different contractors

engaged by the first respondent company and these workmen

had never worked in the first respondent company but they

had worked through second respondent. Hence, the

arrangement between the respondent No. 1 & 2 can be said to

be legal and bonafide. The second respondent has also

obtained licence No. 2796 under the provisions of Contract

Labour (Regulation & Abolition) Act, 1971 which is at

Exh.C-14 at page 5. The respondent No. 2 has its own

separate and independent establishment which has been

registered under the provisions of Bombay Shops and

Establishment Act, 1948. It is also independently and

separately registered under the provisions of Employees

Provident Fund and Miscellaneous Provisions Act. These

documents are produced At Sr.No.10 of Exh.C-14. From these

documents, it is crystal clear that it is a separate entity

and there is a contract between the first respondent and

second respondent in respect of sweeping and cleaning in the

company premises.

After further examination, it was held that the

arrangement between the appellant and the second respondent

can only be termed as legal and bona fide and hence the

matter of abolition of contract labour in the process of

house-keeping and maintenance of the premises of the factory

can be agitated only under the provisions of Contract Labour

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(Regulation and Abolition) Act, 1970. Therefore, the Labour

Court dismissed the complaint filed by the first

respondent-Union. When the matter was carried by revision

under the Act the Industrial Court dismissed the revision

application by reiterating the views of the Labour Court.

In the writ petition the Division Bench of the High

Court took a different view of the matter and allowed the

complaint. Before the High Court several decisions were

referred to including the decision of this Court in General

Labour Union (Red Flag), Bombay v. Ahmedabad Mfg. & Calico

Printing Co. Ltd & Ors., 1995 Supp. (1) SCC 175. In that

case the complaint of the Union was that 21 workmen who were

working in one of the canteens of the respondent-company

were not given the service conditions as were available to

the other workmen of the company and there was also a threat

of termination of their services. This Court proceeded to

consider the case on the basis that their complaint was that

the workmen were the employees of the company and,

therefore, the breach committed and the threats of

retrenchment were cognizable by the Industrial Court or the

Labour Court under the Act. Even in the complaint no case

was made out that the workmen had ever been accepted by the

company as its employees. On the other hand, the complaint

proceeded on the basis as if the workmen were a part of the

work force of the company. This Court noticed that the

workmen were never recognised by the company as its workmen

and it was the consistent contention of the company that

they were not its employees. In those circumstances, the

Industrial Court having dismissed the complaint and the High

Court having upheld the same, this Court stated that it was

not established that the workmen in question were the

workmen of the company and in those circumstances, no

complaint could lie under the Act as was held by the two

courts. In that case it was the admitted position that the

workmen were employed by a contractor, who was given a

contract to run the canteen in question. Thereafter, the

High Court adverted to the decision of this Court in Gujarat

Electricity Board, Thermal Power Station, Ukai, Gujarat v.

Hind Mazdoor Sabha & Ors., 1995 (5) SCC 27, wherein it was

noticed that the first question to be decided would be

whether an industrial dispute could be raised for abolition

of the contract labour system in view of the provisions of

the Act and, if so, who can do so. The High Court was of

the view that the decision in General Labour Union (Red

Flag), Bombay v. Ahmedabad Mfg. & Calico Printing Co. Ltd

& Ors. (supra) would make it clear that such a question can

be gone into and that the observations would not mean that

the workmen had to establish by some other proceedings

before the complaint is filed or that if the complaint is

filed, the moment the employer repudiates or denies the

relationship of employer and employees the court will not

have any jurisdiction. The observation of this Court that

it is open to the workmen to raise an appropriate industrial

dispute in that behalf if they are entitled to do so has to

be understood in the light of the observations of this Court

made earlier. The High Court further held that the judgment

in General Labour Union (Red Flag), Bombay v. Ahmedabad

Mfg. & Calico Printing Co. Ltd & Ors. (supra) was

confined to the facts of that case. On that basis the High

Court proceeded to further consider the matter and reversed

the findings recorded by the two courts and gave a finding

that the workmen in question are the workmen of the

appellant-company.

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In this Court it was submitted that the High Court had

proceeded entirely on wrong lines. In Gujarat Electricity

Board, Thermal Power Station, Gujarat v. Hind Mazdoor Sabha

(supra) the question raised was whether the workers whose

services were engaged by the contractors but who were

working in the thermal power station of the Gujarat

Electricity Board at Ukai can legally claim to be the

employees of the Gujarat Electricity Board. The industrial

tribunal had adjudicated the matter and held that the

workmen concerned in the reference could not be the workmen

of the contractors and, therefore, all the workmen employed

by the contractor should be deemed to be the workmen of the

Board. The industrial tribunal also gave consequential

directions to the Board for payment of wages, etc. The

award of the industrial tribunal was upheld by the High

Court in appeal. The contention put forth before this Court

was that after coming into force of the Act it is only the

appropriate Government, which can abolish the contact labour

system after consulting the Central Board or the State

Board, as the case may be, and no other authority including

the industrial tribunal has jurisdiction either to entertain

such dispute or to direct abolition of the contract labour

system and neither the appropriate Government nor the

industrial tribunal has the power to direct that the workmen

of the erstwhile contractor should be deemed to be the

workmen of the Board. The Central Government or the

industrial tribunal, as the case may be, can only direct the

abolition of the contract labour system as per the

provisions of the Act but it does not permit either of them

to declare the erstwhile workmen of the contract to be the

employees of the principal employer. As to what would

happen to an employee engaged by the contractor if contract

employment is abolished is another moot question yet to be

decided by this Court. But that is not a point on which we

are called upon to decide in this matter.

contract covered by But one thing is clear - if the

employees are working under a the Contract Labour

(Regulation & Abolition) Act then it is clear that the

labour court or the industrial adjudicating authorities

cannot have any jurisdiction to deal with the matter as it

falls within the province of an appropriate Government to

abolish the same. If the case put forth by the workmen is

that they have been directly employed by the appellant-

company but the contract itself is a camouflage and,

therefore, needs to be adjudicated is a matter which can be

gone into by appropriate industrial tribunal or labour

court. Such question cannot be examined by the labour court

or the industrial court constituted under the Act. The

object of the enactment is, amongst other aspects, enforcing

provisions relating to unfair labour practices. If that is

so, unless it is undisputed or indisputable that there is

employer-employee relationship between the parties, the

question of unfair practice cannot be inquired into at all.

The respondent union came to the Labour Court with a

complaint that the workmen are engaged by the appellant

through the contractor and though that is ostensible

relationship the true relationship is one of master and

servant between the appellant and the workmen in question.

By this process, workmen repudiate their relationship with

the contractor under whom they are employed but claim

relationship of an employee under the appellant. That

exercise of repudiation of the contract with one and

establishment of a legal relationship with another can be

done only in a regular industrial tribunal/court under the

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I.D.Act.

Shri K.K. Singhvi, the learned senior Advocate

appearing for the respondent, submitted that under Section

32 of the Act the labour court has the power to decide all

matters arising out of any application or complaint referred

to it for the decision under any of the provisions of the

Act. Section 32 would not enlarge the jurisdiction of the

court beyond what is conferred upon it by other provisions

of the Act. If under other provisions of the Act the

industrial tribunal or the labour court has no jurisdiction

to deal with a particular aspect of the matter, Section 32

does not give such power to it. In the cases at hand before

us, whether a workmen can be stated to be the workman of the

appellant establishment or not, it must be held that the

contract between the appellant and the second respondent is

a camouflage or bogus and upon such a decision it can be

held that the workman in question is an employee of the

appellant establishment. That exercise, we are afraid,

would not fall within the scope of either Section 28 or

Section 7 of the Act. In cases of this nature where the

provisions of the Act are summary in nature and give drastic

remedies to the parties concerned elaborate consideration of

the question as to relationship of employer-employee cannot

be gone into. If at any time the employee concerned was

indisputably an employee of the establishment and

subsequently it is so disputed, such a question is an

incidental question arising under Section 32 of the Act.

Even the case pleaded by the respondent-Union itself is that

the appellant establishment had never recognised the workmen

mentioned in Exhibit A as its employees and throughout

treated these persons as the employees of the second

respondent. If that dispute existed throughout, we think,

the labour court or the industrial court under the Act is

not the appropriate court to decide such question, as held

by this Court in General Labour Union (Red Flag), Bombay v.

Ahmedabad Mfg. & Calico Printing Co. Ltd & Ors. (supra),

which view was reiterated by us in Vividh Kamgar Sabha v.

Kalyani Steels Ltd. & Anr., 2001 (1) SCALE 82.

However, Shri Singhvi very strenuously contended, by

adverting to the scope of the Payment of Wages Act, 1936 and

the scope of Section 32C(2) of the Industrial Disputes Act,

that these questions can be gone into by the courts and, in

this context, he relied upon the decision of the High Court

of Bombay in Vishwanath Tukaram v. The General Manager,

Central Railway, V.T., Bombay, 59 BLR 892. In determining

whether the wages had been appropriately paid or not, the

authority under the Payment of Wages Act was held to have

jurisdiction to decide the incidental question of whether

the applicant was in the employment of the railway

administration during the relevant period. It means that at

one time or the other the concerned employee was

indisputably in employment and later on he was found to be

not so employed and in those circumstances, the court stated

that it was an incidental question to be considered.

India Ltd. v. Next decision relied upon by Shri

Singhvi is the Central Bank of P.S. Rajagopalan etc., 1964

(3) SCR 140, to contend that even in cases arising under

Section 33C(2) of the Industrial Disputes Act the scope,

though very limited, certain incidental questions can be

gone into like a claim for special allowance for operating

adding machine which may not be based on the Sastry Award

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made under the provisions of Chapter V-A. The learned

counsel pointed out that in the event we were to hold that

it is only in clear cases or undisputed cases the labour

court or the industrial tribunal under the Act can examine

the complaints made thereunder, the whole provision would be

rendered otiose and in each of those cases provisions of the

Bombay Industrial Relations Act, 1946 or the Industrial

Disputes Act will have to be invoked. We are afraid that

this argument cannot be sustained for the fact that even in

respect of claims arising under Section 33C(2) appropriate

dispute can be raised in terms of Section 10 of the

Industrial Disputes Act and that has not been the position

in the present case. Nor can we say that even in cases

where employer-employee relationship is undisputed or

indisputably referring to the history of relationship

between the parties, dispute can be settled and not in a

case of the present nature where it is clear that the

workmen are working under a contract. But it is only a veil

and that will have to be lifted to establish the

relationship between the parties. That exercise, we are

afraid, can also be done by the industrial tribunal under

the Bombay Industrial Relations Act, 1946 or under the

Industrial Disputes Act. Therefore, we are afraid that the

contention advanced very ably by Shri Singhvi on behalf of

the respondents cannot be accepted. Therefore, we hold that

the High Court went far beyond the scope of the provisions

of the Act and did not correctly understand the decisions of

this Court in Gujarat Electricity Board, Thermal Power

Station, Gujarat v. Hind Mazdoor Sabha (supra) and General

Labour Union (Red Flag), Bombay v. Ahmedabad Mfg. & Calico

Printing Co. Ltd & Ors. (supra). The correct

interpretation of these decisions will lead to the result,

which we have stated in the course of this order

In the view we have taken on the question of

jurisdiction of the Labour Court under the Act, the decision

given by the High Court on other questions need not be

considered.

In the circumstances, we allow this appeal, set aside

the order of the High Court and restore that of the

industrial court affirming the order of the labour court.

No costs.

[ S. RAJENDRA BABU ]

[S.N. Phukan]@@

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FEBRUARY 21, 2001.