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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@@                        JJJJJJ

   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@@                              JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ conclusion:@@ JJJJJJJJJJJ

   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]@@ JJJJJJJJJJJJJ

FEBRUARY  21, 2001.