Kirloskar Brothers Limited vs. Ramcharan and Ors. - (Supreme Court) (05 Dec 2022)

In the absence of any notification under Section 10 of the CLRA Act and in the absence of any findings that the contract was sham, High Court cannot direct reinstatement

MANU/SC/1578/2022

Labour and Industrial

The principal employer – Kirloskar Brothers Limited has preferred the present appeals feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Single Judge of the High Court and the impugned judgment and order passed by the Division Bench of the High Court, by which the High Court has confirmed the judgment and order passed by the Industrial Tribunal ordering reinstatement and directing that concerned employees / workmen were the employees of the Appellant principal employer.

The contesting Respondents herein were the contractual labourers of the Respondent No. 7 – contractor, who was a contractor engaged by the Appellant in terms of the contract dated 22.04.1995, which was renewed from time to time. It is an admitted position in the present case that, no notification under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA Act) has been issued by the State Government / appropriate Government, prohibiting the contract labour. It also appears that upon entering into the contract, necessary compliance under the CLRA Act was also completed by the Appellant and the Respondent No. 7 – contractor. On the labour contract coming to an end, the services of the contesting respondents were dispensed with by the contractor.

On going through the entire material on record, no documentary evidence was produced, by which it can be said that the contesting Respondents were the employees of the Appellant. There is no provision under Section 10 of the CLRA Act that the workers/employees employed by the contractor automatically become the employees of the Appellant and/or the employees of the contractor shall be entitled for automatic absorption and/or they become the employees of the principal employer. Even the direct control and supervision of the contesting Respondents was always with the contractor. There is no evidence on record that any of the respondents were given any benefits, uniform or punching cards by the Appellant.

Under the contract and even under the provisions of the CLRA, a duty was cast upon the Appellant to pay all statutory dues, including salary of the workmen, payment of PF contribution, and in case of non- payment of the same by the contractor, after making such payment, the same can be deducted from the contractor’s bill. Therefore, merely because sometimes the payment of salary was made and/or PF contribution was paid by the Appellant, which was due to non-payment of the same by the contractor, the contesting Respondents shall not automatically become the employees of the principal employer – Appellant herein.

In the absence of any notification under Section 10 of the CLRA Act and in the absence of any allegations and/or findings that the contract was sham and camouflage, both the Industrial Tribunal as well as the High Court have committed a serious error in reinstating the contesting Respondents and directing the Appellant - principal employer to absorb them as their employees. The impugned judgment(s) and order(s) passed by the High Court as well as the judgment and order passed by the Industrial Tribunal are quashed and set aside. The judgment and award passed by the Labour Court is restored. Appeals allowed.

Tags : REINSTATEMENT DIRECTION LEGALITY