Management of Turbo Energy Ltd. vs Presiding Officer, Additional Labour Court and Others

T. Raja, J.—There are two writ petitions W.P. No. 11751 of 2010 has been filed by the Management of Turbo Energy Limited, Pullivalam Village & Post, (Via) Banavaram, challenging the correctness of the impugned Award passed by the 1st Additional Labour Court, Vellore in I.D. Nos. 98, 100, 101, 107, 109, 110, 112, 118, 122, 128 and 131 of 2008 to quash and set aside the same, in and by which the learned Labour Court, directed the second respondent before the Labour Court, to reinstate the petitioners in the above Industrial Disputes in service forthwith, with continuity of service. However, the other persons are concerned, industrial disputes were dismissed.

The other W.P. No. 26251 of 2010 has been filed by 22 other employees, who lost their claim before the same learned Additional Labour Court, Vellore by dismissing their I.D. Nos. 90/2008 to 97/2008, 99/08, 102/08, 103/08, 108/08, 111/08, 113/08, 116/08, 117/08, 119/08, 120/08, 121/08, 127/08, 129/08 and 130/08 and praying for remand to the same Labour Court, after impleading the necessary parties. Both the matters were taken up for joint disposal, with the consent of the parties.

Mr. S. Ravindran, learned Counsel appearing for the petitioner/Management in W.P. No. 11751 of 2010, earnestly urged this Court, to dismiss the impugned award directing the petitioner/Management to reinstate the contract employees of the second respondent herein, the JMN Security Services, as there was no any privity of contract between the petitioner/Management and the respondents 3 to 13, who were claimants before the Labour Court. He contended that the learned Labour Court without even appreciating the admitted position, utterly failed to take into account that all the workmen, namely, respondents 3 to 13, were directly appointed by the second respondent/the JMN Security Services represented by one Mr. S.P. Joseph, who is the licensed contractor and after his death merely because the said licence was not renewed by his son, wrongly came to a presumption that all the workmen shall be deemed to be employed by the petitioner/Management. This approach is completely contrary to one another admitted fact that, although the proprietor Mr. S.P. Joseph, had taken licence under the Contract Labour (Registration & Abolition) Act, died on 15.4.2007, subsequently his two other family members continued to act as contractor and the payments were also made by cheque in the name of the firm. Ignoring the fact that there was no privity of contract between the petitioner/Management and the workmen, wrongly gave a finding that since both the petitioner/Management and the second respondent herein, have not explained as to who is the employer after the death of Late S.P. Joseph, the Proprietor of JMN Security Services, the deficiency on the part of the petitioner/Management and the second respondent should not prejudice the rights of the workmen, who have really served in the company till 8.2.2008.

Learned Counsel further contended that the petitioner-company is manufacturing turbo charges, that is a device fitted in automobile vehicles to reduce smoke emission, harness the unspent energy, in order to make it available for optimum use of the fuel which in turn improve the fuel efficiency of the vehicle. One year after the petitioner''s company was established, another company called ABI Showtech India Limited was put up adjacent to the petitioner-company for machining aluminium castings and CI castings. Again in the year 1995, started yet another company by name Light Alloy Products Limited, a foundry in an adjacent premises for manufacture of castings. While the petitioner/Management registered as a principal employer under the Contract Labour (Regulation and Abolition) Act, as early as 1990 and the certificate of registration issued to it covered various contracts, the nature of job attended by them and the number of contract labourers to be employed were also specifically prescribed. However, in the year 2002, the petitioner/Management decided to go in for external security agency to provide security services. Accordingly, the JMN Security Services having its headquarters at Kannagi Nagar, Korattur, Chennai was approached. Similarly, two other adjacent companies mentioned above, also registered as Principal employers under the Contract Labour (Regulation and Abolition) Act had engaged second respondent as their contractor. The second respondent was supplying manpower to all the three companies. The petitioner/Management awarded to the second respondent the contract for providing security services. In November, 2002, 15 security personnel were employed and subsequently in 2005, the number of personnel were increased to 20. In view of that, the second respondent also had taken a license under the Contract Labour (Regulation & Abolition) Act.

It was further contended by the learned Counsel for the petitioner/Management that, unfortunately, Mr. S.P. Joseph, the proprietor of the second respondent-Security Services died on 15.4.2007. However, his two other family members, represented by his son Mr. S.J. Nelson continued to act as a contractor and payments were also made to the second respondent, by the petitioner/Management in the name of the firm and the said Mr. S.J. Nelson also changed his name, as an authorised signatory of the firm. As a result the payments were continuously made by cheque, which Mr. Nelson used to encash, in order to disburse wages to the workmen. Whileso, in the year 2008, all the security personnel deployed by the second respondent in all the three establishments made a demand for increase in their wages. As it was denied by the second respondent, the workmen decided to abandon their post and resorted to work stoppage. When their efforts to settle the matter amicably failed, disputes were raised before the Conciliation Officer, Vellore, alleging termination of employment on 9.2.2008. Making the petitioner and the second respondent as parties, with the allegations that all the workmen who were employed through contract employment by the second respondent, in the petitioner''s Management, were directly paid by the petitioner-Management, after the death of Mr. S.P. Joseph on 15.4.2007, without there being any renewal of licence for contract labourers, respondents 3 to 13 were employed by the petitioner/Management on direct payment and the second respondent was not legally a security contractor for the petitioner. On this basis, prayed for a direction for reinstatement against the petitioner/Management.

Although, the second respondent examined its Manager Mr. B. Nandagopal, who deposed that their security personnel were deployed to three companies including the petitioner, that the concerned security guards applied to their Chennai office for employment and the workmen were provided with all statutory benefits, subsequently they demanded increase in wages, as their demand was not met they themselves abandoned the work and therefore the question of reinstatement does not arise, as they were all only contract labourers directly employed by the second respondent and not by the petitioner/Management. From the side of the petitioner/Management, the Divisional Manager-Personnel was examined, who also spoke about the certificate of registration, the engagement of the second respondent as contractor and that the concerned security guards were employed by the second respondent, that the petitioner/Management was in no way answerable or connected with the contract workmen. However, the first respondent, Labour Court, passed an order holding that the second respondent was an independent-Security Service and also a licensed contractor of the petitioner/Management, further, after the death of Late S.P. Joseph on 15.4.2007, the license was changed in the name of S.J. Nelson but the same was not even produced. On this basis, the Labour Court had wrongly come to a conclusion that after the death of Late S.P. Joseph on 15.4.2007, the contract labourers, namely, the workmen/respondents 3 to 13 were directly employed by the petitioner/Management in their unit, by giving direct payment to them, therefore, the petitioner/Management is the Principal Employer. The Labour Court being concerned about the status of employees under the Industrial Disputes Act and not under the Contract Labour (Regulation & Abolition) Act, it was pleaded, ought not to have directed the petitioner/Management, reinstatement of respondents 3 to 13 with continuity of service.

Assailing the approach of the learned Labour Court and the impugned award, learned Counsel heavily contended that when it is an admitted fact that the contract was terminated on 10.2.2008, WW1 also had admitted the factum of termination of contract in his deposition, whileso, for the mere fact that the letter terminating the contract was not produced, could not make the termination of contract as if having not taken place. Moreover, after the death of Mr. S.P. Joseph, the license for contract labour was changed in the name of his son Mr. S.J. Nelson. However, non-production of the renewed license, cannot give any presumption inferring that the second respondent is neither the contractor nor the employer nor the relationship between the contractor and the employees could vanish. Adding further, it is stated that there is no semblance of evidence produced by the workmen/respondents 3 to 13 to show that they were employed by the petitioner/Management and are directly paid. Ignoring all these vital aspects, throwing minimum light on the relationship of employer and employee between the petitioner/Management and the respondents 3 to 13, erroneously allowed the claim of respondents 3 to 13. Such an approach is absolutely unwarranted. In fact, the petitioner/Management was in no way connected to the respondents 3 to 13 or at any point of time they directly appointed them, after the death of the original licensee Late Mr. S.P. Joseph. It is unfair and unjustifiable on the part of the learned Labour Court to come to an inference that the respondents 3 to 13, who worked in the second respondent Management as Security Guards, have continued to work in the same capacity even after the death of Mr. S.P. Joseph in the petitioner-Management, hence, they are deemed to have worked as a workmen in the second respondent-Management only.

Mr. S. Ravindran, taking support from the judgment of the Apex Court in the case of Dena Nath and others Vs. National Fertilisers Ltd. and others, reported in, attempted to support the prayer to set aside the impugned Award, accordingly, submitted that upon abolition of the contract labour, the labourers would be directly absorbed by the principal employer and had considered a consequence of non-compliance with sections 7 and 12 of the CLRA Act.

Mr. S.T. Varadharajulu, learned Counsel appearing for the respondents 3 to 13, supporting the impugned Award, submitted that, some of the workmen/respondents 3 to 13 are ex-servicemen, applied for employment under the second respondent, only based on their applications they were deployed as security guards in M/s. Light Alloy Products Ltd. and M/s. Turbo Energy Ltd. After the death of Mr. S.P. Joseph on 15.4.2007, the petitioner/Management continued to employ them, by making direct payment. In view of lesser salary given, during 2008, a demand was made by them for a hike in salary. All of a sudden, in view of the claim made by the workmen, they were denied employment. In view of that, the Labour Court has admitted the claims of the workmen and ordered for reinstatement of respondents 3 to 13 in W.P. No. 11751 of 2010, by dismissing the case of the petitioner/Management stating that, there was no privity of contract between the petitioner/Management and the respondents 3 to 13, cannot be accepted. After the death of Mr. S.P. Joseph on 15.4.2007, without there being any renewal of licence for contract labourers and there being no license holder for M/s. JMN Security Services, the petitioner/Management, in law, should be considered as the principal employer. On this basis, prayed for no interference with the direction of reinstatement, of respondents 3 to 13 in the petitioner/Management company, however, on the contrary, disagreeing with the second prayer, requesting to give reinstatement for the rest of the employees who have filed W.P. No. 26251 of 2010, he prayed to remand the matter back to the Labour Court to give a chance to prove that all of them have worked for more than 240 days in the petitioner/Management, before the alleged retrenchment took place on 9.2.2008.

But, this Court is unable to agree with the arguments placed to support the impugned order. Primarily, the petitioner/Management having registered as a Principal employer under the Contract Labour (Regulation & Abolition) Act, has got the certificate of registration to cover various contracts and to deploy several contract labourers. However, in the year 2002, the petitioner/Management had decided to outsource the security services from the external security agency, namely, the second respondent, M/s. JMN Security Services. Accordingly, contract was given to the second respondent for providing security services in November, 2002 for deploying 15 security personnel and the number got increased to 20 in the year 2005. The Proprietor of the second respondent-firm, Mr. S.P. Joseph had died on 15.4.2007. However, his two other family members, represented by his son S.J. Nelson had continued to act as a contractor and the petitioner/Management were making payments to the second respondent in the name of the firm. Subsequently, the contract labourers had made a demand for payment of higher salary before the second respondent. As a result, they had approached the Labour Court, when the conciliation process had failed to evoke any positive response.

The second respondent in his counter-affidavit filed before the Labour Court, had made it clear that Mr. M. Nagaraj applied for employment on 24.3.2003, accepting his application he was employed as a Security Guard at the premises of M/s. ABI Showatech (India) Ltd., from 7.7.2003 but he was never deployed to work under the petitioner/Management. Similarly, the second respondent also took a stand that Mr. V.N. Shanmugam, R. Sagadevam and G. Velu, all deployed with the second respondent therein, demanded to increase their wages forthwith and insisted for an agreement to be signed. Subsequently, none of the workers agreed to report for duty on the next day, although it was explained to them that the issue could be discussed on the next day, they refused to cooperate and they all left the premises. Nowhere, the second respondent in their counter, had whispered or mentioned that either any of the respondents 3 to 13 in the first writ petition or any of the petitioners in the second writ petition were directly deployed by the petitioner/Management.

That apart, the petitioner/Management had also filed a detailed counter, taking a firm stand that none of the workmen, namely, the respondents 3 to 13 or the petitioners in W.P. No. 26251/2010 have ever worked under their control or supervision. In support of the claim, Exh. M-17 was produced. As per Exh. M-17, one Mr. S.P. Joseph was found to be the license holder of the petitioner/Management, under section 12(1) of the Contract Labour (Regulation and Abolition) Act, from 9.8.2005 and the same was also found valid upto 31.12.2007 and as per the conditions of license the number of contract labours shall not on any date exceed 20. The findings of the Labour Court on this issue indicates that perusal of Exh. M-18 also reveals that the petitioner/Management has sought for amendment from the second respondent herein and after the said amendment for more contract labourers also, the petitioner/Management was permitted to have only 20 contract labourers through the second respondent herein. Moreover, two other companies by name M/s. Light Alloy Products Ltd., and ABI Showatech (Indus) Ltd., were permitted to take contract labourers upto 8 and 15 respectively, as per Exh. M19 and Exh. M20.

Considering these two material evidences, the learned Labour Court has also come to a conclusion that it is evident that the second respondent herein is a Labour Contractor not only for the petitioner-company but also for two other companies. After accepting the documents Exh. M-19 and Exh. M-20, which clearly show that the petitioner/Management has not employed any of the contract labourers namely, the respondents 3 to 13 herein or the petitioners in W.P. No. 26251 of 2010, without even any iota of evidence and piece of record to show that the respondents 3 to 13 have been directly employed by the petitioner/Management by making direct payment to them, rejecting the case of the petitioner/Management, that there was no any privity of contract between the petitioner/Management and the respondents 3 to 13 and the petitioners in W.P. No. 26251 of 2010, accepting the claim of the workmen that they were directly employed by the petitioner/Management, as mentioned above without any semblance of evidence, the Labour Court cannot order for reinstatement. As a matter of fact, the learned Labour Court before ordering reinstatement of service of any workmen, should have ordinarily satisfied with atleast some basic documents like salary slip, ID card or any communication between the Management and the workmen to throw at least some light on the service of employment. Unfortunately, in the present case without there being any iota of evidence whatsoever, only on surmises that after the death of Mr. S.P. Joseph on 15.4.2007 his contract labourers having continuously been employed under petitioner/Management, has erroneously construed that they were directly employed as contract labourers by the petitioner/Management. Hence, in my considered opinion, there is no any evidence, whatsoever, produced by the workmen to show that they were direct employees of the petitioner/Management. Moreover, it was neither established before the Labour Court or this Court that they have completed 240 days of continuous service in a year, directly receiving the salary from the petitioner/Management. Therefore, the impugned Award is liable to be set aside and accordingly the same is set aside. Hence, the Writ Petition No. 11751 of 2010 is allowed and the common impugned Awards of the first respondent relating in I.D. Nos. 98, 100, 101, 107, 109, 110, 112, 118, 122, 128 and 131 of 2008 dated 7.4.2010 are set aside. However, in respect of the prayer for remand, this Court finds that, when the petitioners were unable to prove their case that they have worked for 240 days under the petitioner/Management, by producing atleast some basic documents, no purpose would be served by remanding back the case to the Labour Court. Therefore, this Court finds no merit in the prayer. Accordingly, the Writ Petition No. 26251 of 2010 filed by the workmen fails and the same is dismissed. Consequently, the connected M.Ps are closed. No order as to costs.