1999 Supreme(SC) 396

1999(3) Supreme 277
Supreme Court of India
(From Punjab & Haryana High Court)
S.B. Majmudar & Umesh C. Banerjee, JJ.
Secretary, Haryana State Electricity Board -Appellant
versus
Suresh & Ors. etc. etc. -Respondents
Civil Appeal Nos. 11335-11359/95
With
Civil Appeal Nos. 10863/96, 10541/96
And
Con. Pet. 403-427/98 in CA 11335-11359/95
Decided on 30-3-1999
Counsel for the Parties :
For the Appellant : Sumant Balra, Ms. Asha Bharmula, Ms. Nandini Gore and Ashok K. Mahajan, Advocates.
For the Respondents : Manoj Swarup, Advocate.

Important Points
1. Doctrine of lifting of veil enunciated in Soloman v. Soloman can be applied to decide the relationship of employer-employee in cases falling under contract labour.
2. Where State Electricity Board employed workers through Contractor to maintain elenliners in plant, but the actual overall control of contract labour including administrative control rested with the Electricity Board and further, neither the Board was registered as principal employer nor the contractor was licensed contractor, it was held that the real employer was the Board and the workers were enti­tled to be regularised in the Boards service.

Headnote:(i) The Contract Labour (Regu­lation and Abolition) Act, 1970-Section 10-Industrial Disputes Act, 1947-Contract labour-Regularisation of service under principal employees-Haryana State Electricity Board awarding contracts to contractors to undertake work of keeping plants and station clean and hygienic-Contract itself stipulate minimum number of karamcharis to be employed-Karamcharis having put in 240 days of service claiming regularisation by State Electricity Board-Labour Court ordering reinstatement with continuity of service along with 10 back wages-High Court holding that there existed relationship of employer and workman between Electricity Board and karamcharis and upholding order of labour court but without back wages-Justified-Maintenance work in plant not seasional in nature but a continued afforts to achieve purpose of its existence in terms of Statute-Overall control of contract labour including administra­tive control rest with Electricity Board-Neither contractor a li­censed contractor nor Electricity Board registered as principal em­ployer-So called contract system was a mere camouflag, smoke and scree-Real contractual relationship is between Board and karamcharis.

       Held : Ours is a socialist State as the Preamble depicts and the aim of socialism, therefore, ought to be to distribute the common richness and the wealth of the country in such a way so as to sub-serve the need and the requirement of the common man. Article 39 is a pointer in that direction. Each clause under the Article specifically fixes certain social and economic goal so as to expand the horizon of bene­fits to be accrued to the general public at large. In particular reference to Article 39(a) it is seen that the State ought to direct its policies in such a manner so that the citizens-men and women equally, have the right of an adequate means of livelihood and it is in this perspective again that the enactment in the statute book as noticed above (The Contract Labour (Regulation and Abolition) Act 1970) ought to be read and interpreted so that social and economic justice may be achieved and the constitutional directive be given a full play. (Para 3)

       The legislation subserves twin purpose, to wit :

        (i) to abolish the contract labour; and

        (ii) to regulate the working conditions of contract labour wher­ever such employment is required in the interest of the industry.

       There is however, a total unanimity of judicial pronouncements to the effect that in the event, the contract labour is employed in an establishment for seasonal workings, question of abolition would not arise but in the event of the same being of perennial in nature, that is to say, in the event of the engagement of labour force through intermediary which is otherwise in the ordinary course of events and involves continuity in the work, the legislature is candid enough to record its abolition since, involvement of contractor may have its social evil of labour exploitation and thus the contractor ought to go out of scene bringing together the principal employer and the contract labourers rendering the employment as direct, and resultantly a direct employee. (Paras 11 & 12)

       The Contract Labour Regula­tion Act being a beneficial piece of legislation as engrafted in the statute book, ought to receive the widest possible interpretation in regard to the words used and unless words are taken to their maximum amplitude, it would be a violent injustice to the framers of the law. As a matter of fact law is well settled by this court and we need not dilate much by reason, therefor to the effect that the law courts exist for the society and in the event of there being a question posed in the matter of interpretation of a beneficial piece of legislation, question of interpreting the same with a narrow pedantic approach would not be justified. On the contrary the widesh possible meaning and amplitude ought to be offered to the expressions used as otherwise the entire legislation would loose its efficacy and contract labour would be left on the mercy of the intermediary. As noticed above Draconian concept of law is no longer available for the purpose of interpreting a social and beneficial piece of legisation specially on the wake of the new millennium. The democratic policy oght to survive with full vigour; socialist status as enshrined in the Constitution ought to be given in full play and it is in this perspective the question arises-is it permissible in the new millen­nium to decry the cry of the labour force desirous of absorption after working for more than 240 days in an establishment and having their workings supervised and administered by an agency within the meaning of Article 12 of the Constitution-the answer cannot possibly be in the affirmative-the law courts exist for the society and in the event law courts feel the requirement in accordance with principles of justice, equity and good conscience, the law courts ought rise up to the occasion to meet and redress the expectation of the people. The expression ‘regulation’ cannot possibly be read as contra public interest but in the interest of public. (Paras 16 & 17)

       The Haryana State Electricity Board in the usual course of business has had to maintain the plant and stations as a licencee within the meaning of Indian Electricity Act, 1910 and Elec­tricity Supply Act, 1948. This maintenance work cannot by any stretch be ascribed to be of seasonal nature but a continued effort to achieve the purpose of its existence in terms of the statute. The number of employees required for such purpose had been specified in the contract itself and as a matter of fact supervision of the Board as regards the attendance has also not been disputed before the Labour Court: Mainte­nance of records pertaining to other statutory duties and liabilities has also not been disputed. Documents, as disclosed before the Labour Court, (to wit Exb. M5) depict the overall control of the workings of the contract labour including administrative control being with the Board. (Para 14)

       This is not a case in which it is found that there was any genuine contract labour system prevailing with the Board. If it was a genuine contract system, then obviously, it had to be abolished as per Section 10 of the Contract Labour Regu­lation and Abolition Act after following the procedure laid down therein. However, on the facts of the present case, it was found by the Labour Court and as confirmed by the High Court that the so called contractor Kashmir Singh was a mere name lender and had procured labour for the Board from the open market. He was almost a broker or an agent of the Board for that purpose. The Labour Court also noed that the Management witness Shri A.K. Chaudhary also could not tell whether Shri Kahsmir Singh was a licensed contractor or not. That workmen had made a statement that Shri Kashmir Singh was not a licensed contractor. Under these circumstances, it has to be held that factually there was no genuine contract system prevailing at the relevant time wherein the Board could have acted as only the principal employer and Kashmir Singh as a licensed contractor employing labour on his own account. It is also pertinent to note that nothing was brought on record to indicate that even the Board at the relevant time, was registered as principal employer under the Contract Labour Regulation and Abolition Act. Once the Board was not a principal employer and the so called contractor Kashmir Singh was not a licensed contractor under the Act, the inevitable conclusion that has to be reached was to the effect that the so called contract system was a mere camouflage, smoke and a screen and disguised in almost a trans­parent veil which could easily be pierced and the real contractual relationship between the Board, on the one hand, and the employees, on the other, could be clearly visualised. (Para 19)

       (ii) Industrial Jurisprudence-Lifting of veil for determination of real employer employee relation­ship-Applicability of doctrine enunciated in Soloman v. Soloman.

       Held : While it is true that the doctrine enunciated in Soloman v. Soloman4 came to be recognised in the corporate jurisprudence but its applicability in the present context cannot be doubted, sincethe law court invariably has to rise up to the occasion to do justice betweenthe parties in a manner as it deems fit. Rescopound stated that the greatest virtue of the law court is flexibility and as whenthe situation so demands, the law court ought to administer justice in accordance therewith and as per the need of the situation. (Para 9)