Violations Of The Contract Labour Act By Contractor, Does Not Per See Confer Employment Rights;Guwahati High Court Clarifies

Background

Six contract labourers (petitioners) challenged an award passed by the Central Government Industrial Tribunal, Guwahati, which dismissed their claim for reinstatement and regularization as employees of the Oil and Natural Gas Corporation (ONGC). The petitioners were directly employed by ONGC in 1985-1986 and were later shifted to contract work; soon, they were disengaged in 1995/1996. They argued that this shift was a sham designed to obscure their true employer-employee relationship with ONGC.

The petitioners relied on an earlier order by the Guwahati High Court, where it directed the Assistant Labour Commissioner (Central), Guwahati, to investigate their employment status. The Commissioner's report indicated that the petitioners had worked for ONGC both under a direct payment system and later under a contractor (Mr. Phukan), primarily performing loading, unloading, and handling tasks. This work formed the basis of their claim for reinstatement.

Arguments

Firstly, the petitioners contended that they were initially directly employed by ONGC and that the engagement under the contractor from 1987 onward was only a facade to disguise the ongoing direct employment relationship. Secondly, they argued that since the contractor did not have the requisite license under Section 12 of the Contract Labour (Regulation and Abolition) Act, 1970, during the early years of their engagement, the contract system was invalid, and ONGC should be recognized as their true employer. Lastly, they also pointed to a government notification issued in 1994 that prohibited certain categories of work, such as storekeeping, from being outsourced to contract labour. They argued that since they assisted storekeepers, this prohibition applied to their work as well. In support, the petitioners cited several Supreme Court decisions, including Hussainbhai, Calicut v. Alath Factory Thezhilali Union (1978 AIR SC 1410), Steel Authority of India Ltd. v. National Union Waterfront Workers (2001 INSC 407), and Gujarat Electricity Board, Thermal Power Station v. Hind Mazdoor Sabha (1995 AIR SC 1893). They argued that when workers produce goods or services for a business, the presence of contractors is irrelevant if the “real employer” is the principal company.

However, ONGC denied any direct employment relationship with the petitioners. They maintained that the workers were always employed by the contractor. Said contractor had been supplying labourers to ONGC since 1985, despite his license being obtained only in 1989. ONGC argued that the absence of a contractor's license did not make ONGC the employer. They cited the case of Dena Nath v. National Fertilizers Ltd. (1992 AIR SC 457), which held that contract labourers do not automatically become permanent employees only because the contractor violated the 1970 Act. Moreover, ONGC argued that the petitioners had not produced any salary slips or appointment letters from the company, and that the issuance of work certificates or gate passes alone did not create an employer-employee relationship.

The Tribunal's Ruling

The Tribunal dismissed the petitioners' claims, finding that they had not provided sufficient evidence. It stated that “the names of the workers, their wages, and the signatures of the contractor” appeared on the wage payment records, indicating that the contractor was responsible for their employment. It also noted that while the wages were paid by the contractor, all wage payment records were countersigned by ONGC officials. However, it held that such countersigning alone could not make ONGC the employer, as the legal responsibility for payment rested with the contractor. The “mere issuance of a certificate by an officer of the establishment could not make the workers direct casual workers under ONGC.”

The Tribunal also relied on the Supreme Court's judgment in Balwant Rai Saluja v. AIR India Ltd. (2015 AIR SC 375), which identified six key factors in determining employer-employee relationships: appointment authority, payment of wages, authority to dismiss, disciplinary control, continuity of service, and extent of control. However, the petitioners failed to demonstrate ONGC's control over any of these factors. Furthermore, the Tribunal also dismissed the argument regarding the 1994 notification, due to absence of any evidence that the petitioners had worked as storekeepers. Their tasks were limited to lifting, shifting, and handling materials in the godowns, which did not fall under the prohibited categories mentioned in the notification.

High Court's Decision

The High Court agreed with the Tribunal, and dismissed the petitioners' claim for reinstatement and regularization. It stated that “the petitioners have not been able to show any document indicating they had been engaged by ONGC or that they were getting paid by ONGC.” The evidence did not support the existence of an employer-employee relationship, and the absence of a contractor's license during certain periods only attracted penal provisions under the 1970 Act. It did not automatically render ONGC liable as the employer.

The Court also disagreed with the argument that the contract with the contractor was a sham, since, the contractor had paid wages, kept records, and disengaged the workers. Concurrently, the petitioners also failed to prove that ONGC had exercised control over their employment to establish an employer-employee relationship, as none of the standards set by Balwant Rai Saluja v. AIR India Ltd. (2015 AIR SC 375) were met. Lastly, the court explained the limited scope of judicial review it has over Tribunal decisions. It held that unless the decision was perverse or based on no evidence, there were no grounds to interfere under Articles 226 and 227 of the Constitution. It thus, rejected all claims of the petitioners.

Decided on: 04.10.2024

 WP(C)/3871/2020

JATIN RAJKONWAR AND 6 ORS VERSUS UNION OF INDIA AND 2 ORS. 

Advocate for the petitioner: Mr. A D Gupta, Mr. A Dasgupta, Ms. B Das

Advocate for the respondent: Asstt. S.G.I., Ms. T J Sahewalla (R-2, R-3), Mr. M Sahewalla (R-2, R-3), Mr. H K Sarma (R-2, R-3), Mr. G N Sahewalla