The Labour Court's determination that a sham contract exists may classify workers as employees of the principal employer, thereby validating their claims for service conditions and protections under the Industrial Disputes Act.

JUDGMENT :

BIREN VAISHNAV, J.

1. This appeal, under Clause 15 of the Letters Patent, has been filed by the Gujarat Energy Transmission Corporation Limited (GETCO), on being aggrieved by the oral order dated 28.06.2022 passed by the learned Single Judge dismissing the petition filed by the Corporation and in turn confirming the award dated 19.10.2016 passed by the Labour Court, Anand in Reference (Demand) No. 1 of 2012.

2. Briefly stated, the facts in the petition indicate that the petitioner - Gujarat Energy Transmission Corporation Ltd. had engaged workmen according to its perception on security contracts. These security workers engaged by the appellant raised an industrial dispute inter alia stating that they were the direct employees of the Corporation and the contractor through which they had been engaged was really a contract which was sham and bogus and therefore they should be treated as employees of the Corporation. The Labour Court vide its award dated 19.10.2016 allowed the reference declaring that the workmen of the respondent union were the workmen of the Corporation and the Corporation was therefore directed to pay regular wages as if they were the employees of the Corporation. Aggrieved by the award which held thus, the petition was filed. Facing dismissal, the present appeal has been filed.

3. Mr. Dipak Dave, learned counsel for the appellant would submit that the employees – workmen engaged by the contractor could not have been termed as the workmen of the Corporation as they were not recruited through a regular procedure i.e. issuance of an advertisement and a competitive examination and/or personal interview. He would submit that the Tribunal committed an error when in fact one of its contractors Shri Prajapati Chandrakant Manibhai was a Supervisor appointed by the contractor and for the Tribunal to hold that he was a workman of the Corporation who was infact supervising the work is illegal.

3.1 Mr. Dave raising a preliminary contention with regard to the maintainability of the reference as also with regard to the existence of an industrial dispute, would submit that in the form the strength of the employees was shown as 50 whereas in fact the strength is 13,000. The union was not a recognised union and therefore neither there was an industrial dispute nor the union having its membership could have a right to raise an industrial dispute.

3.2 Mr. Dave, inviting the court’s attention to the terms of reference, would submit that reading the terms would indicate that the question that was framed by the Labour Court was whether the workmen shown in the schedule who are so called workmen of the contractor can be treated as workmen of GETCO. The reference declared that the contract was sham and bogus. He would therefore submit that the Labour Court went beyond the reference. In support of his submissions, he would rely on the decision in the cases of Pottery Mazdoor Panchayat v. Perfect Pottery Co. Ltd. [(1979) 3 SCC 762, paras-10, 15, 16)] and F T & R Co of India (P) Ltd. v. Its Workmen [(1981) 3 SCC 541, para-9].

3.3 Mr. Dave would further submit that the reasons given by the Labour court are totally perverse. He submitted that the Labour Court proceeded on the basis that it was the responsibility of the employer to prove that the contract is not sham and bogus. The approach of the Labour Court was therefore entirely wrong. The reasons for drawing adverse inference on the ground that the appellant had not been able to produce documentary evidence to show that the contract was not sham and bogus therefore was illegal. He would submit that except the testimony of one witnes