Summary
The Court set aside an award reinstating contract workers as BHEL employees and the High Court judgments sustaining it. Gate passes issued for security, disputed concessions and ordinary directions about assigned work did not establish direct employment or a sham contract. The Labour Court had applied an inapplicable prohibition notification and the extended statutory employer definition without the necessary evidence. The resulting findings were perverse and amenable to judicial review.
Issues
- Whether the evidence established direct employment by BHEL or a sham contract-labour arrangement.
- Whether the extended employer definition applied without proof of the nature of the contracted work.
Provisions considered
- Section 2(i)(iv), Uttar Pradesh Industrial Disputes Act, 1947Required evidence that the contracted work was ordinarily part of the industry before applying the extended employer definition. (¶¶ 14, 15)
- Article 226, Constitution of IndiaPerverse Labour Court findings warranted judicial review despite the established limits on certiorari. (¶¶ 16, 23)
Held
- BHEL’s relevant operations were exempt from the notification relied on by the Labour Court. Security gate passes issued at contractors’ request did not themselves establish direct employment. (¶¶ 10, 11)
- A disputed concession on the mixed question of employment status could not substitute for weighing the evidence. The findings of direct employment and sham contracting contradicted BHEL’s pleadings and the contractual and wage-payment evidence. (¶¶ 11, 12, 13, 14, 16, 17)
- Section 2(i)(iv) required a factual foundation that the contracted work was ordinarily part of BHEL’s industry. No such evidence had been led, so automatic application of the extended definition was impermissible. (¶¶ 14, 15)
- Relevant employment factors include appointment, remuneration, dismissal, discipline, continuity and the degree of control. Directions about assigned work constitute secondary supervision and do not alone establish the principal employer’s complete control; here the contractors paid wages and the evidence did not establish direct employment. (¶¶ 18, 19, 20, 21, 25)
- No factual basis established a sham arrangement. The award’s perversity justified setting it aside notwithstanding that it granted reinstatement without back wages. (¶¶ 23, 24, 25, 26, 27)
Result
Appeals allowed; High Court judgments and Labour Court reinstatement award set aside.