Holding

The appellant is the principal employer of the gardeners and the award of reinstatement and compensation is upheld.

Summary

Gardeners were engaged through an agency to maintain lawns within the premises of Bharat Heavy Electrical Ltd (the appellant). Their services were terminated and they raised an industrial dispute, claiming reinstatement and compensation under Section 6‑N of the Uttar Pradesh Industrial Disputes Act, 1947. The Labour Court held that the appellant was the principal employer and directed reinstatement and payment of compensation; the High Court affirmed this finding. On appeal, the Supreme Court examined whether the appellant could be deemed the employer despite the agency arrangement, applying the test of control and the inclusive definition of "employer" in Section 2(i)(iv) of the Act. The Court found that the appellant exercised direct supervision, control, and attendance‑keeping over the workers, that the agency was a sham, and that the workers had worked more than 240 days, thereby confirming the lower courts' findings. Consequently, the appeals were dismissed and the award upheld.

Issues considered

Whether Bharat Heavy Electrical Ltd is the principal employer of the gardeners under Section 2(i)(iv) of the Uttar Pradesh Industrial Disputes Act, 1947 despite the agency arrangement.
Whether the test of control applies to determine employer‑employee relationship in this case.
Whether the gardeners had worked for more than 240 days in a calendar year to attract liability under Section 6‑N.
Whether the award of reinstatement and compensation is perverse or unsupported by evidence.

Legislation cited

Contract Labour (Regulation and Abolition) Act, 1970
Uttar Pradesh Industrial Disputes Act, 1947s. 14-A, s. 2(i)(iv), s. 6-N

Subjects

principal employercontrol testindustrial disputeUttar Pradesh Industrial Disputes Actreinstatementcompensationcontract laboursham agency

Judgment

MIS. BHARAT HEAVY ELECTRICAL LTD. A
v.
STATE OF U.P. AND ORS.

JULY 21, 2003

[SHIVARAJ V. PATILANDD.M. DHARMADHIKARI,JJ.] B

Labour Laws:

Uttar Pradesh Industrial Disputes Act, 1947-Termination of services-
Industrial dispute-Company pleading that workmen not employed by them- C
Labour Court holding Company to be principal employer and directing re-
employment of workmen-High Court upholding the same-Justification of-
Held: Applying test ofcontrol, evidence on record and facts and circumstances
of the case, workmen under direct employment, supervision and control of the
Company-Thus, concurrent finding of courts below justified. D
Gardeners were engaged to look after the lawns and parks inside
the factory premises and the campus of the residential colony of the
appellants through an agency. Their services were terminated and they
raised an industrial dispute. Appellant pleaded that since they did not
employ the gardeners, they were not liable to re-instate them or pay E
compensation. Labour court held that the appellant was the principal
employer and passed the award directing re-employment and payment of
compensation for non-compliance of Section 6-N of Uttar Pradesh
Industrial Disputes Act, 1947. High Court upheld the order. Hence the
present appeals.
F
Appellant contended that the findings recorded by the Labour Court
as upheld by the High Court are perverse being contrary to the evidence
placed on record; that the High Court committed a serious error in
applying test of control in relation to the work of the respondent-workmen
having regard to the definition of 'employer' in Section 2(i)(iv) of the Act G
as the work of the respondent-workmen was not part of the industry; and
that the respondents-workmen had not worked for 240 days to complain
violation of Section 6-N of the Act.

Dismissing the appeals, the Court

625 H
626 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.

A HELO: I.I. The definition of'employer' given in Section 2(i)(iv) of the
Uttar Pradesh Industrial Disputes Act, 1947 is an inclusive definitio.n. The
true test of control is that where workmen-labour is engaged to produce goods
or services for the business of another, the other is employer. In the instant

B
case, the work of the respondents-workmen is not totally disassociated in fact
between them and the appellant to say that they were not employees of the
appellant The respondents-workmen were employed with the appellant to work
,.
in their premises and which fact is found established after removing the mask
or facade of make~believe employment under the contractor, the appellant "'
cannot escape its liability. Furthermore, the other evidence and facts and
circumstances of the case supports such a finding. Also the appellant did not
c produce the records alleging that they were not available which led to drawing
adverse inference against them. (631-0, B; 632-DI

1.2. Considering the evidence, the facts and circumstances of the case
and findings of fact recorded by the Labour Court, the High Court held
that the workmen were under the direct employment, supervision and
D control of the appellant. It did not find any illegality and irregularity in
the award passed by the Labour Court so as to interfere with it exercising
the writ jurisdiction. Hence it cannot be said that concurrent findings
recorded by the Labour Court and the High Court that the workmen were
to be treated as the employees of the appellant are either perverse or based
on no evidence or untenable at all.1629-D-E; 630-A; 632-EI
E
Hussainbhai Calicut v. The Alath Factory Thozhilali Union, Kozhikode
and Ors., (19781 4 SCC 257 and Steel Authority of India Ltd. and Ors. v.
National Union Waterfront Workers and Ors., 120011 7 SCC 116, referred
to.
F 2. It also does not appear that any contention was urged before the
High Court that the respondents-workmen did not work for more than
240 days in 12 calendar months. Be that as it may, in view of the finding
of fact recorded by the Labour Court as upheld by the High Court that
the respondents-workmen worked for more than 240 days in 12 calendar
G months, there is no good reason to take a different view. 1632-FI

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2459-2461 of
1999.

From the Judgment and Order dated 17.2.1999 of the Allahabad High
"""
H Court in C.M.W.P. Nos. 2109/97, 41787/98 and 1654of1999.
BHARATHEAVYELECTRICALLTD.v. STATE(PATIL.J.] 627

Sudhir Chandra, Ms. lndu Malhotra, Ms. Madhu Sweta and Achintya A
Dwivedi for the Appellants.

Dr. Maya Rao and S.C. Patel, for the Respondents.

The Judgment of the Court was delivered by
B
SHIV ARAJ V. PATIL, J. Respondent nos. 6- 19 (in writ petition before
the High Court) were engaged as Garndeners (Malis) to sweep, clean and
maintain and look after the lawns and parks inside the factory premises and
the campus of the residential colony of the appellant through the agency of
respondent nos. 3-5. Their services were terminated on 1.12.1988. They raised
industrial disputes before the Labour Court. The appellant took up a plea that C
they were never employed by it and it was not liable to pay any amount of
compensation or to reinstate them in service. The Labour Court, on
consideration of respective contentions and the evidence placed before it,
passed the award dated 5.7.1996 directing to re-employ them and for payment
of compensation of Rs. 15,000 each for non-compliance of the provisions of D
Section 6-N of Uttar Pradesh Industrial Disputes Act, 1947 (for short 'the
Act') besides ordering Rs. 500 as costs to each one of them. Aggrieved by
the award, the appellant filed Civil Misc. Writ Petition No. 2109 of 1997
before the High Court. On 30.11.1998, Deputy Labour Commissioner issued
a certificate to the Collector for recovery of Rs. 2, 17,000. Challenging the
said certificate, Civil Misc. Writ Petition No. 41787 of J998 was filed by the E
appellant. In the 3rd Writ Petition No. 1654 of 1999, the appellant questioned
the validity and correctness of the order dated 2.1.1999 under which the
appellant was asked to show-cause why prosecution should not be launched
under Section 14-A of the Act.

The High Court by the impugned common order dismissed Writ Petition F
Nos. 2109 of 1997 and 41787 of 1998 concurring with the findings recorded
by the Labour Court. Writ Petition No. 1654 of 1999 was disposed of directing
no further action for initiating criminal proceedings under Section 14-A of
the Act if the appellant deposited a sum of Rs. 2, 17 ,000 within a period of one
month and in the event of failure of depositing the amount, there would be G
no impediment in launching criminal proceedings against the appellant.

Aggrieved by and no satisfied with this common impugned order, these
appeals are brought before this Court.

On behalf of the appellant, the following contentions _were urged:- H
628 SUPREME COURT REPORTS (2003] SUPP. I S.C.R.

A (I) That the findings recorded by the Labour Court as affirmed by
the High Court are perverse being contrary to the evidence placed
on record.
(2) That the High Court committed a serious error in applying test
of control in relation to the work of the respondents-workmen
B having regard to the definition of 'employer' contained in Section
2(i)(iv) of the Act as the work of the respondents-workmen was
not part of the industry.
(3) That the respondents-workmen had not worked for 240 days to
complain violation of Section 6-N.
c Submissions were made on behalf of the respondent-workmen supporting
the impugned order.

The Labour Court on the basis of the evidence concluded that the
appellant was the principal employer. In the award, the Labour Court in this
D regard has state thus:-

"From the statements of Ram Swarup who is Head Mali under
Employer No. I. It appears that though the concerned workers were
employed at work by the contractor but he himself used to take work
from them in the capacity of Head Gardener and he also used to look
E after their work. The contractor used to pay salary only and their
attendance were used to be marked in a separate Register by another
Head Gardener Sadhu Ram and the Register was got tom by Manager
Shri Varshney so that no proof may remain and after tearing ofregister
workers were removed. From these, it appears that employer no. I
had control over the plaintiff workers and they cannot be said to be
F the workers only of the contractor. It appears that with the object to
keep them out of the ambit of U.P. Industrial Dispute Act, this method
was adopted that work was taken from them by the employee of the
employer and payment should be shown to have been made by the
contractor. From the statements of Shri K.P.S. Chauhan contractor it
G appears that he still has work contract in BHEL (Laying of Sewer
Pipe Line). From the complaints made by workers in this regard this
fact is confirmed. As per the statements of worker Vinond Kumar,
before tearing of the Attendance Register, worker had got photocopies
of these done by taking these registers from Head Mali which copies
have been filed by the worker party in the Court.
H
BHARAT HEAVY ELECTRICAL LTD. v. STATE [PATIL,J.] 629
Not filing the records concerning the attendance of workers by A
both employer no. I and 2 and destroying the same and filing of
photocopies of the same by the worker party prove that employer no. I
can also not escape from the liability of illegal termination of services
of these workers. Hence, it is decided that the Respondent No. I is
also the employer of plaintiff-workers, though principle employer."
B
The High Court took note of the fact that the respondents-workmen
were engaged for working as gardeners in the factory premises, campus and
residential colony of the appellant; Ram Swarup, Head Mali was admittedly
employed by the appellant; he used to supervise the work of the respondents-
workmen; another employee of the appellant, namely, Sadhu Ram used to C
maintain the record of attendance of the respondents-workmen; when dispute
arose consequent upon disengagement of the workman, he destroyed the
attendance register by tearing it off at the instance of one Mr. Varshney who
was working as Manager with the appellant. Further, in the impugned order,
the High Court observed that if the respondents-workmen were in fact engaged
by independent contractors, the record of their attendance should have been D
maintained by them and to show their control and supervision of the work
performed by the workmen. Thus, considering the evidence, the facts· and
circumstances of the case and findings of fact recorded by the Labour Court,
the High Court held that the workmen were under the direct employment,
supervision and control of the appellant observing that sometimes, the E
employers, with a view to get over stringent provision of the labour law, resort
to engage the workmen through some intermediary and such an arrangement
has to be termined as artificial. Further after referring to the case of Hussainbhai
Calicut v. The Alath Factory ThizolaliUnion Kozhikode and Ors., [1978] 4
SCC 257, the High Court in the impugned order has stated thus:-
F
"The findings of facts recorded by the Labour Court cannot be
scrutinized or sifted in this Writ Petition. The tone and tenor of the
employment of the Respondent-workmen makes it amply clear that
they were, for all practical purposes, were the employees of Petitioner.
The Petitioner had retained directed control over the work and the
duties of the Respondent-workmen. The attendance of the workmen G
was also recorded by an employee of the Petitioner. The involve1nent
of the alleged direct contractors was merely a figurative. The
engagement of the contractor was sham and not genuine. Therefore,
if the fictitious agency, which was brought into existence as a device
to camouflage the status of the Respondent-workmen, is ignored, they H
630 SUPREME COURT REPORTS [2003) SUPP. I S.C.R.

A would be treated to be in the direct employment of the Petitioner."

High Court did not find any illegality or irregularity in the award passed
by the Labour Court so as to interfere with it exercising writ jurisdiction. We
have n(l good reason or valid ground to upset the concurrent finding of fact
recorded by the Labour Court as affirmed by the High Court in this regard.
B
It appears to us that the argument based on the definition of employer
under Section 2(i)(iv) of the Act was not urged before the High Court. It was
urged on behalf of the appellant that aforesaid Hussainbhai Calicut case was
distinguishable and it has no application to the facts of the present case
stating that the work done by the workmen in that case was an integral part
c of the industry concerned and in the present case, the workmen were engaged
as Gardeners and their work was not an integral part of the industry. There
is nothing in the said judgment to say that the workmen engaged for the work
in the premises of the industry though their work was not an integral part of
the industry, cannot be employees of the industry. The two tests stated in
D the said case are available in paragraphs 5 and 6 which read:-

"5. The true test may, with brevity, be indicated once again. Where
a worker or group of workers labour~ to produce goods or services
and these goods or services are for the business of another, that other
is, in fact, the employer. He has economic control over the workers'
E subsistence, skill, and continued employment. If he, for any reason,
chokes off, the worker is, virtually, laid off. The presence of intermediate
contractors with whom alone the workers have immediate or direct
relationship ex contracts is of no consequence when, on lifting the
veil or looking at the conspectus of factors governing employment,
we discern the naked truth though drapped in different perfect paper
F arrangement, that the real employer is the Management, not the
immediate contractor, Myriad devices, half-hidden in fold after fold of
legal form depending on the degree of concealment needed the type
of industry, the local conditions and the like may be resorted to when
labour legislation casts welfare obligations on the real employer based
G on Articles 38, 39, 42, 43 and 43-A of the Constitution. The court must
be astute to avoid the mischief and achieve the purpose of the law
an not be misled by the maya of legal appearances.

6. If the livelihood of the workmen substantially depends on labour
rendered to produce goods and services for the benefit and satisfaction
H of an enterprise, the absence of direct relationship or the presence of
BHARAT HEAVY ELECTRICAL LTD. v. STATE [PATIL,J.] 631
dubious intermediaries or the make-believe, trappings of detachment A
from the Management cannot snap the real life-bond. The story may
vary but the inference defies ingenuity. The liability cannot be shaken
off."

Looking to what is stated in paras extracted above, it is clear that where
workman-labour is engaged to produce goods or services and these goods B
or services are for the business of another, the other is employer. The work
of the respondents-workmen is not totally disassociated in fact between them
and the appellant to say that they were not employees of the appellant judged
by what is stated in para 7 of the same judgment in the following words:-

"7. Of course, ifthere is total dissociation in fact between the disowning C
Management and the aggrieved workmen, the employment is, in
substance and in real-life terms, by another. The Management's
adventitious connections cannot ripen into real employment."

The definition of 'employer' given in Section 2(i)(iv) of the Act is an D
inclusive definition. If the respondents-workmen as a matter of fact were
employed with the appellant to work in their premises and which fact is found
established after removing the mask or facade of make-believe employment
under the contractor, the appellant cannot escape its liability.

The learned counsel for the appellant wanted to take support from the E
Constitution Bench judgment of this Court in Steel Authority of India Ltd
and Ors. v. National Union Waterfront Workers and Ors., [2001] 7 SCC I. For
that purpose he took us through paras I07 to 116. In the said judgment, the
provisions of The Contract Labour (Regulation and Abolition) Act, 1''70 came
up for consideration and interpretation. After detailed analysis of the provisions
and consideration of various decisions, in para I07 contract labours were F
classified in three categories. In para I08-116, the issue whether on a contractor
engaging contractor, labour in connection with the work entrusted to him by
a principal employer, the relationship of master and servant between him (the
principal employee) and the contract labour emerges. An extreme stand was
taken by learned Senior Counsel in that case that the engagement of contract G
labour by the contractor in any work of or in connection with the work of an
establishment, the relationship of master and servant is created between the
principal employer and the contract labour. In dealing with the said contention,
various earlier cases decided by this Court were referred to including the case
of Hussainbhai Calicut (supra). The extreme contention was rejected. From
the preusal of paragraphs I07-116, it is clear whether a workman is an employee H
632 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.

A of principal employer or not depends on the facts and· circumstances of a
given case. The case of Hussainbahi Calicut (supra) is neither dissented nor
diluted. On the other hand, it is held that the said case is covered by class
(ii) of para 107 which reads:-

"I 07 .......................................................................................................................... .
B (ii) where the contract was found to be a sham and nominal, rather a
camouflage, in which case the contract labour working in the
establishment of the principal employer were held, in fact and in
reality, the employees of the principal employer himself. Indeed, such
cases do not relate to abolition of contract labour but present instances
wherein the Court pierced the veil and declared the correct position
c as fact at the stage after employment of contract labour stood
prohibited ............."

This apart, the finding that the respondents-workmen were the employees
of the appellant, do.es not rest merely on the test of control. The other
D evidence and facts and circumstance of the case were also kept in mind in
recording such a finding including a vital fact that the appellant did not
produce the records alleging that they were not available which led to drawing
adverse inference against them. It is not possible for us to hold that such
concurrent findings recorded by the Labour Court and the High Court that
the workmen were to be treated as the employees of the appellant are either
E perverse or based on no evidence or untenable at all.

From the impugned order, it also does not appear that any contention
was urged before the High Court that the respondents-workmen did not net-
work for more than 240 days in 12 calendar months. Be that as it may, in view
F of the finding of fact recorded by the Labour Court as affirmed by the High
Court that the respondents-workmen worked for more than 240 days in 12
calendar months, we do not find any good reason to take a different view.

Thus, we find no merit in any of the submissions made on behalf of the
appellant. Consequently, these appeals are liable to be dismissed. Accordingly,
G they stand dismissed with no order as to costs.

N.J. Appeals dismissed.