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CASE NO.: Appeal (civil)  3166 of 2002 Appeal (civil)  3200 of 2002 Appeal (civil)  3167 of 2002

PETITIONER: Ram Singh and others  

RESPONDENT: Union Territory, Chandigarh & Ors        

DATE OF JUDGMENT: 07/11/2003

BENCH: Shivaraj V. Patil & D.M. Dharmadhikari

JUDGMENT:

J U D G M E N T Dharmadhikari J.         The Department of Engineering, Chandigarh Administration, is  maintaining electricity supply to the Government Medical College and  Hospital, Chandigarh.  It has established a sub-station for that  purpose.

       All the appellants in this batch of appeals are trained  electricians and skilled workmen. They have been employed through  different Contractors for various jobs connected with the sub-station  set up to maintain electricity supply.          The employees working at the sub-station in the Medical  College and Hospital premises approached the Central Administrative  Tribunal, Chandigarh with a prayer that the work of the employees  for maintaining supply of  electricity in the College and Hospital  premises being of a perennial nature, the Engineering Department of  Chandigarh Administration be directed to regularise their services in  the Administration.    By its detailed judgment passed on 13.8.1988  the Tribunal rejected the petitions filed by the employees on merits  as also on the ground that  the employees engaged through  contractor cannot be held to be holders of  ’civil post’ as defined  under Section 3(q) of the Administrative Tribunals Act hence the  Tribunal has no jurisdiction to grant any relief.

       The employees then filed separate Writ Petitions under Article  227 of the Constitution in the High Court of Punjab and Haryana  which have been dismissed by the impugned common judgment  passed on 3.8.2000.

       The contention advanced by the contract employees before the  High Court was that although they were employed on various jobs by  the Contractor for maintaining supply of electricity to the College and  Hospital the Engineering Department of the Chandigarh  Administration exercises complete control over their work.  According  to them the real employer is the Engineering Department of the  Chandigarh Administration and the Contractor has been introduced  only to pay them salary or wages.  It was argued that in order to  deny the employees benefits of regular employment under  Chandigarh Administration, the agency of Contractor has been  resorted to.  The employees sought annulment of the order of the  Tribunal and in the alternative sought issuance of  directions for  consideration of their cases for regularisation of their services under  the Chandigarh Administration. They also sought directions to  prohibit by issuance of a notification under the provisions of the  Contract Labour (Regulation and Abolition) Act 1970, engagement of  

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labour through contractor for maintaining electricity supply to the  government hospitals and other college premises.

       In this batch of appeals, learned counsel appearing for the  employees have drawn our attention to certain conditions of the  contracts which have been awarded to various Contractors for  maintaining supply of electricity. Reading those contentions of the  contract, it is argued that they clearly indicate that Engineering  Department of Chandigarh Administration has retained complete  control on the employment, work and continuance of service  of the  contract labour.  It is further argued that maintenance of supply of  electricity to hospital and college premises being a work of  permanent and perennial nature, employment of the staff for it  through contractor is an unfair labour practice.         

       The respondent Chandigarh Administration has not disputed the  fact that the maintenance of electricity supply to the Hospital and  College building is under the Engineering Department of Chandigarh  Administration. Its case is that the Engineering Department of  Chandigarh Administration does not have adequate maintenance staff  to execute the job, hence the work has been awarded to Contractors  through the process of tender.  With regard to the certain terms of  the contract it is explained that to ensure efficiency and quality of  work, which is of a technical nature to be carried under technical  guidance and as the Contractors’ availability at the site for all twenty  four hours is not possible, work of supervision is kept with the regular  staff of the Engineering Department attached to the College and  Hospital.  In the event of emergency, the employees have to seek  guidance from the available staff at the Hospital.  This is said to be  the reason for incorporating conditions in the contract that the  contract employees would be directly under the control of the  Department.  It is submitted that such control is only for the purpose  of ensuring efficiency and quality of work.

       Similarly, it is explained that the contract labour has been  employed for technical work.  Insistence has been made in the  condition of contract for engaging qualified electricians and helpers to  avoid any danger and hazard in the maintenance of electricity.  The  condition that the staff provided by the contractor would not be  changed without approval of the Department is for the sake of  convenience since the staff already engaged by the Contractor would  become familiar with the electrical system of the Hospital and  frequent change in the staff might impair normal work.  Thus  explaining the various conditions of the contract it is submitted that  the employees have been engaged through the Contractor for  maintenance of electricity from the sub-station. This, it is said, is a  temporary arrangement till the Administration creates requisite  number of posts and decides to recruit employees under the  Department on deputation or by direct recruitment.

       We have examined the contentions advanced by the employees  before the Tribunal and in the High Court.  Before the Tribunal and  the High Court, the appellants did not dispute the fact that they are  employees of the Contractor. They sought relief of regularisation of  their services under the Engineering Department of Chandigarh  Administration on the ground that the work of maintaining supply of  electricity for which they have been employed being of a permanent  and perennial nature, they should be directed to be directly employed  by the Administration.

       In these appeals before us there appears to be a shift from the  stand taken by the employees before the Tribunal and in the High  Court.  What is now being urged is that the electricity supply is to be  maintained by the Engineering Department of the Administration and  instead of directly employing the appellants, the Administration has

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resorted  to the mode of appointment through Contractor.  Relying on  the terms and conditions of the contract it is submitted that entire  control exercised on the employees is of the Engineering Department.   They are,  in fact, employed by the Engineering Department though  under the garb of contractual appointment which is fake and a  camouflage.  It is argued that this Court can lift the veil of make- believe relationship and hold that the appellants are in fact the  employees of the Engineering Department of the Administration.   Strong reliance is placed on  [1978 (4) SCC 257] Hussainbhai,  Calicut vs. The Alath Factory Thezhilali Union Kozhikode;  [1999 (3) SCC 601] Secretary, HSEB vs. Suresh; [2003 (6)  SCC 528 BHEL vs. State of UP.

       Learned counsel appearing for the respondent on the side of  the Administration submitted that in the Constitution Bench decision  of this Court in the case of Steel Authority of India Ltd. vs.  National Union Waterfront Workers [2001 (7) SCC 1], after  considering all previous decisions, this Court has explained the nature  of right of contract employees in various contingencies such as where  there exists a notification issued under Section 10(1) of CLRA Act  prohibiting employment of contract labour in particular establishment  and where there is no such prohibition.  The Constitution Bench has  also explained the legal position of the contract labour where it is  employed through the agency of contractor although in reality such  employment is directly under the principal employer and for the  employer’s work or processes in the establishment.  

       Reference has also been made by counsel for the parties to the  decision of this Court in Municipal Corporation of Greater  Mumbai vs.  KV Shramik Sangh  [2002 (4) SCC 609] in which the  Constitution Bench decision in Steel Authority of India (supra)  has  been relied to direct the employees to seek remedy by availing forum  of industrial adjudication under the Industrial Disputes Act.  It is held  that it is only in industrial adjudication that facts and circumstances  can be investigated to ascertain the nature of employment.  

       On behalf of the Delhi Administration, it is stated that its  Engineering Department is registered under Section 7 of the CLRA  Act.  It is not disputed by the parties that no notification under  section 10(1) of the CLRA Act has been issued prohibiting  employment of contract labour in the Engineering Department of  Chandigarh Administration.  

       We have considered the arguments advanced on behalf of the  employees based on the terms of the contract.    

       In determining the relationship of employer and employee, no  doubt ’control’ is one of the important tests but is not to be taken as  the sole test.  In determining the relationship of employer and  employee all other relevant facts and circumstances are required to  be considered including the terms and conditions of the contract.  It  is necessary to take a multiple  pragmatic approach weighing up all  the factors for and against an employment instead of going by the  sole ’test of control’.   An integrated approach is needed.   ’Integration’ test is one of the relevant tests. It is applied by  examining whether the person was fully integrated into the  employer’s concern or remained apart from and independent of it.   The other factors which may be relevant are - who has the power to  select and dismiss, to pay remuneration, deduct insurance  contributions, organise the work, supply tools and materials and what  are the ’mutual obligations’ between them (see Industrial Law \026Third  edition by I.T. Smith and JC Wood \026  at pages 8 to 10).   

       Normally, the relationship of employer and employee does not  exist between an employer and Contractor and servant of an

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independent Contractor.  Where, however, an employer retains or  assumes control over the means and method by which the work of a  Contractor is to be done it may be said that the relationship between  employer and the employee exists between him and the servants of  such a Contractor.  In such a situation the mere fact of formal  employment by an independent Contractor will not relieve the master  of liability where the servant is, in fact, in his employment.  In that  event, it may be held that an independent Contractor is created or is  operating as a subterfuge and the employee will be regarded as the  servant of the principal employer.  Where a particular relationship  between employer and employee is genuine or a camouflage through  the mode of  Contractor is essentially a question of fact to be  determined on the basis of features of relationship, the written terms  of employment, if any,  and the actual nature of the employment.  The actual nature of relationship concerning a particular employment  being essentially a question of fact, it has to be raised and proved  before an industrial adjudicator.  Conclusion Nos. 5 & 6 of the  Constitution Bench decision of this Court in Steel  Authority of  India (supra) are decisive for purposes of this case which read as  under:

"(5). On issuance of prohibition notification under  section 10(1) of the CLRA Act prohibiting employment  of contract labour or otherwise, in an industrial  dispute brought before it by any contract labour in  regard to conditions of service, the industrial  adjudicator will have to consider the question whether  the contractor has been interposed either on the  ground of having undertaken to produce any given  result for the establishment or for supply of contract  labour for work of the establishment under a genuine  contract or is a mere ruse/camouflage to evade  compliance with various beneficial legislations so as to  deprive the workers of the benefit thereunder.  If the  contract is found to be not genuine but a mere  camouflage, the so-called contract labour will have to  be treated as employees of the principal employer who  shall be directed to regularise the services of the  contract labour in the establishment concerned  subject to the conditions as may be specified by it for  that purpose in the light of para hereunder.

(6) If the contract is found to be genuine and  prohibition notification under Section 10(1) of the  CLRA Act in respect of the establishment concerned  has been issued by the appropriate Government,  prohibiting employment of contract labour in any  process, operation or other work of any establishment  and wherein such process, operation or other work of  the establishment the principal employer intends to  employ regular workmen, he shall give preference to  the erstwhile contract labour, if otherwise, found  suitable and, if necessary, by relaxing the condition as  to maximum age appropriately, taking into  consideration the age of the workers at  the time of  their initial employment by the contractor and also  relaxing the condition as to academic qualifications  other than technical qualifications."

       In case of Steel Authority of India (supra) after recording the  above conclusions, the Constitution Bench added :-  

"We have used the expression "industrial adjudicator"  by design as determination of the questions  aforementioned requires enquiry into disputed

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questions of facts which cannot conveniently be made  by High Courts in exercise of jurisdiction under  Article 226 of the Constitution.  Therefore, in such  cases the appropriate authority to go into those issues  will be the Industrial Tribunal/Court whose  determination will be amenable to judicial review."

       Relying on the Constitution Bench decision of this Court, in the  case of Municipal Corporation of Greater Mumbai vs. KV  Shramik Sangh [2002 (4) SCC 609] the employer who had lost the  case in the writ petition before the High Court was directed to  approach the appropriate court for industrial adjudication.

       The rulings of this Court which have been relied but which are  earlier to the decision of the Constitution Bench in case of Steel  Authority of India (supra) can be of little assistance to support the  contentions on behalf of the appellants.  The other decision strongly  relied in the case of BHEL (supra) [2003 (6) SCC 528] is  distinguishable.  The decision in favour of the workmen was rendered  in that case after an industrial adjudication had ended in their favour.

       In view of clear and binding pronouncement of law by the  Constitution Bench of this Court in the case of  Steel Authority of  India (supra), in the present appeals which arise from  writ petitions  preferred against the adverse judgment of the Central Administrative  Tribunal (CAT), none of the reliefs, as prayed for, can be granted to  the employees. Without ascertaining through the industrial forum,  factual aspects of inter se relationship between the Chandigarh  Administration, the Contractor and the contract employees, no relief  can be granted.  

       For the aforesaid reasons, these appeals are dismissed but  without prejudice to the rights of the employees to resort to the  remedy of industrial adjudication in accordance with law as explained  above.  

       In the circumstances, we make no order as to costs in these  appeals.