Case Note & Summary
The case involves appeals by Bharat Heavy Electricals Ltd. (BHEL) against a judgment of the Uttarakhand High Court dismissing its writ petition challenging a Labour Court award. The Labour Court had directed reinstatement of 64 workmen, including Mahendra Prasad Jakhmola, without backwages, holding that their termination from service w.e.f. 13.11.2001 was unjustified. The workmen were initially engaged through a contractor, Madan Lal, but the Labour Court found that they performed duties identical to regular employees under the direct supervision and control of BHEL, making the contract a sham. The High Court upheld this, recording that it was undisputed that the workmen worked alongside regular employees. BHEL challenged this, arguing that no such concession was made and that the notification under the Contract Labour (Regulation and Abolition) Act, 1970 did not apply as BHEL was exempted. The Supreme Court, after reviewing the record, found that BHEL's written statement before the Labour Court was ambiguous about the engagement, and BHEL failed to produce evidence of payments to the contractor or the contract period. The Court held that the findings of fact by the Labour Court and High Court were based on evidence and could not be interfered with. The appeals were dismissed, upholding the reinstatement without backwages.
Headnote
A) Industrial Law - Contract Labour - Sham Contract - Sections 4(k), 2(i) Uttar Pradesh Industrial Disputes Act, 1947 - The Labour Court and High Court held that the workmen were under the direct supervision, control, and management of BHEL, performing identical duties with regular employees, making the contract with the contractor a sham transaction. The Supreme Court upheld the finding, noting that BHEL failed to produce evidence of payment to the contractor or the period of supply, and the written statement itself was uncertain about the engagement. (Paras 5-8)
B) Industrial Law - Reinstatement - Backwages - The Labour Court awarded reinstatement without backwages, which was upheld by the High Court and Supreme Court. The Supreme Court did not interfere with the denial of backwages as the Labour Court had exercised its discretion. (Para 5)
Issue of Consideration
Whether the termination of services of workmen engaged through a contractor by Bharat Heavy Electricals Ltd. (BHEL) was justified, and whether the contract labour arrangement was a sham and camouflage, entitling the workmen to reinstatement.
Final Decision
The Supreme Court dismissed all the appeals, upholding the Labour Court award and the High Court judgment directing reinstatement of the workmen without backwages.
Law Points
- Contract Labour (Regulation and Abolition) Act
- 1970
- Uttar Pradesh Industrial Disputes Act
- 1947
- Sham Contract
- Extended Definition of Employer
- Reinstatement without Backwages
Case Details
2019 LawText (SC) (2) 144
Civil Appeal Nos. 1799-1800 of 2019 (Arising out of SLP (C) Nos. 33747-33748 of 2014) and connected appeals
Bharat Heavy Electricals Ltd.
Mahendra Prasad Jakhmola & Ors.
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Nature of Litigation
Civil appeals against the judgment of the Uttarakhand High Court dismissing writ petition challenging Labour Court award directing reinstatement of workmen without backwages.
Remedy Sought
BHEL sought to set aside the Labour Court award and High Court judgment, arguing that the workmen were employees of the contractor and not directly employed by BHEL.
Filing Reason
BHEL challenged the Labour Court's finding that the contract labour arrangement was sham and that the workmen were entitled to reinstatement.
Previous Decisions
Labour Court award dated 01.11.2009 directed reinstatement without backwages; review dismissed on 18.05.2011; High Court dismissed writ petition on 24.04.2014; review dismissed on 11.09.2014.
Issues
Whether the contract labour arrangement between BHEL and the contractor was a sham and camouflage.
Whether the workmen were entitled to reinstatement with or without backwages.
Submissions/Arguments
BHEL argued that the workmen were employees of the contractor, not BHEL, and that the notification under the Contract Labour Act did not apply as BHEL was exempted.
The workmen contended that they performed duties identical to regular employees under BHEL's supervision and control, making the contract a sham.
Ratio Decidendi
Where a principal employer exercises direct supervision, control, and management over workmen supplied by a contractor, and the workmen perform duties identical to regular employees, the contract labour arrangement is a sham and camouflage. The workmen are deemed to be direct employees of the principal employer and are entitled to reinstatement upon termination without just cause.
Judgment Excerpts
The Labour Court held that based on documentary evidence in the form of gate passes, the workmen, who were otherwise employed by a contractor, were directly employed by the appellant.
The High Court recorded that 'undisputedly' all petitioners were performing the duties which were identical with those of regular employees.
BHEL's written statement stated: 'It appears that he might have been engaged and employed by the contractor Sri Madan Lal...'
Procedural History
Reference under Section 4(k) of U.P. Industrial Disputes Act, 1947 made on 09.11.2004. Labour Court passed award on 01.11.2009 directing reinstatement without backwages. Review petition dismissed on 18.05.2011. Writ petition dismissed by High Court on 24.04.2014. Review dismissed on 11.09.2014. Special leave petitions filed, disposed of with liberty to seek review. Review before High Court dismissed. Appeals before Supreme Court.
Acts & Sections
- Uttar Pradesh Industrial Disputes Act, 1947: Section 4(k), Section 2(i)
- Contract Labour (Regulation and Abolition) Act, 1970:
