Case BriefsHigh Courts

Bombay High Court: Reiterating the well-settled position that, contractual employees are not the employees of the principal employer, N.B. Suryawanshi, J., held that,

Contractual employees are engaged through contractors, their service conditions are governed by the contracts between them, hence in case of any grievance, they shall approach the contractor and not a principal employer.

Two Primary Questions:

  • Whether a complaint of contractual employees seeking to exercise their rights, as provided under the Maharashtra Industrial Relations Act, 1946 and Bombay Industrial Relations Rules, 1947, is maintainable under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971?
  • Whether contractual employees can file a complaint under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 for challenging the impugned order, which is not passed by the Principal Employer?

Factual Matrix

Petitioner-Original Respondent Company had 806 permanent employees working. Petitioner outsourced its peripheral activities to several contractors and for that purpose registered itself as the principal employer under Section 7 of the Contract Labour (Regulation and Abolition) Act, 1970.

Contracts of the petitioner have obtained license under Section 13 of the Act of 1970, there was no registered Trade Union in the local area of the petitioner establishment.

Respondent 16 – Government Labour Officer declared the election programme for conducting elections under Section 28 of the MR Act, for electing 5 representatives of the employees. 301 contractual workers submitted a representation stating to add their names to the voter’s list and to give them a right to vote.

For the above-stated representation, Management informed the contractual workers that the decision in the said regard cannot be taken by the Management and they may approach the Government Labour Officer or the Labour Commissioner. Some contractual workers submitted their representation to the Labour Commissioner seeking inclusion of their names to which the Commissioner rejected while citing the decision in Sunflag Iron & Steel Co. Ltd. v. State of Maharashtra, 2008 III CLR 983 contractual workers are not directly employed by the principal employer, and therefore, their names cannot be included in the voter’s list.

Respondents approached the Industrial Court and stated that the Labour Commissioner has committed unfair labour practice within the meaning of Item 9 o Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971.

Petitioner opposed the complaint stating the there was no employer and employee relationship between the complainants and the petitioner.

Industrial Court rejected the application but prima facie held that complaint is maintainable and it has jurisdiction to entertain it.

Petitioner submitted that Industrial Court has no power of superintendence over respondent 2 and therefore, the complaint is not maintainable and the same is liable to be rejected summarily.

Analysis, Law and Decision

Settled Legal Position

Contractual Employees are not employees of the principal employer.

In the decision of Supreme Court, Vividh Kamgar Sabha v. Kalyani Steel Ltd., (2001) 2 SCC 381, it was held that “the provisions of MRTU and PULP Act can only be enforced by persons who admittedly are workmen. If there is dispute as to whether the employees are employees of the Company, then that dispute must be first be gotten resolved by raising a dispute before the appropriate forum. It is only after the status as a workmen is established in an appropriate Forum that a complaint could be made under the provisions of MRTU and PULP Act”

In Central Labour Union (Red Flag) Bombay v. Ahemdabad Mfg. and Calico Printing Co. Ltd., 1995 Supp (1) SCC 175, the Supreme Court held that “where the workmen have not been accepted by the Company to be its employees, then no complaint would lie under the MRTU and PULP Act.”

High Court opined that for a complaint to be maintainable under the MRTU and PULP Act, admitted employer and employee relationship is a pre-condition. The provisions of the MRTP and PULP Act can be enforced only after the status of a workman is established before an appropriate forum.

In the present scenario, the contractual employees are the employees of the contractor and not of the petitioner. Hence they are not entitled to file a complaint against the petitioner claiming commission of unfair labour practice.

Therefore, the complaint filed under MRTU and PULP Act by the respondents/contractual employees, is not maintainable.

Under MIR Act, jurisdiction is conferred with the Labour Court and the Industrial Court are conferred with the power to decide the disputes on reference. For enforcing the rights under the MIR Act, forum is provided.

Bench opined that for enforcing the rights available under the MIR Act, a complaint cannot be filed under the MRTU and PULP Act.

Contractual employees are engaged through contractors, their service conditions are governed by the contracts between them. The appointment orders to the contractual employees are not given by the principal employer, but are given by the contractor. They work with the principal employer through contractor, only during the contract period. After the contract period is over, their contractor may enter into a contract with another establishment and shift them to work there. From that view of the matter also, they cannot be treated like permanent employees of the principal employer, and therefore, they cannot claim voting rights at par with the permanent employees.

Since the contractual employees are governed by the contract between contractors, their service conditions, wages, etc. are also governed by the same, hence in case of any grievance they shall approach the contractor and not the principal employer.

Misread and Misconstrued

Industrial Court had ignored the settled legal position that the complaint of unfair labour practice was maintainable only if there was admitted employer and employee relationship between the parties. The contractual employee, being the employee of the contractor and not of the principal employer, cannot file a complaint under the MRTU and PULP Act.

Therefore, Industrial Court’s decision was unsustainable.

While allowing the petition, Court concluded stating that complaint filed under the MRTU and PULP Act by the contractual employees for exercising their rights under the MIR Act is not maintainable and the Industrial Court has no jurisdiction to entertain it. [Mahindra and Mahindra Ltd v. Satish, WP No. 668 of 2020, decided on 20-09-2021]


Advocates before the Court

Shri. R. B. Puranik, Advocate for the Petitioner

Shri. S. B. Dhande, Advocate for the Respondent Nos.2 to 11 and 13 to 15

Ms. T. H. Khan, Asst. G. P. for the Respondent Nos. 16 to 17.

Case BriefsHigh Courts

Bombay High Court: The Division Bench of S.C. Gupte and M.S. Karnik, JJ., expressed that for an employer to come to a conclusion of a possible case of cartelization, it is not necessary that the same can happen only after the opening of commercial bids.

Petitioner claimed to be a sole proprietor of a firm carrying on the business of fresh water supply through barges. Petitioner had been one of the contractors supplying water to respondent 1 ONGC.

Respondent 1 invited Indigenous Open Tender for e-procurement for supply of water to its offshore facilities, including the Nhava Supply Base. The said tender was a two bid system – a technical bid followed by a commercial bid.

Along with the petitioner, there were three others who had submitted the bids.

Respondent ONGC had cleared the technical bids of all 4 bidders, including the petitioner and his father at the stage of consideration of commercial bids, the bids of both petitioner and his father were not opened.

Upon evaluation of offers submitted by petitioner and Royal Traders, it came to the notice of Respondent ONGC that the proprietors of two firms were respectively the son and father. Hence considering that the two would have access to vital information pertaining to the bid submitted by the other, the employer concluded that both the bidders have an undisclosed understanding with each other, which would restrict competitiveness thereby offending Section 2 of the Integrity Pact.

Section 2 of the Integrity Pact is as follows:

Commitments of the Bidder/contractor

  1. The Bidder/Contractor will not enter with other Bidders into any undisclosed agreement or understanding, whether formal or informal. This applies in particular to prices, specifications, certifications, subsidiary contracts, submission or non – submission of bids or any other actions to restrict competitiveness or to introduce cartelisation in the bidding process.

Analysis and Decision

High Court stated that the grounds urged by petitioner in support of their challenge to acceptance of bids did not commend the Court.

Though the petitioner and his father had shown as proprietors of different concerns, but they operate from the same premises.

Further, in an earlier contract involving another employer, the petitioner had not only acted both for himself and his father, but had also issued cheques from the same account towards the contracts of himself and his father.

Above being a purely administrative matter, to fault the respondent employer’s decision there must be a case of either perversity in the decision or a colourable exercise on the part of the employer.

Bench expressed that even if the State cannot act in a matter of commercial contract in wholly unreasonable or arbitrary or capricious manner, its administrative decision cannot be put on the pedestal of a quasi-judicial decision.

Court added that as long as the respondent’s decision was reasonably supported by material on record and there was no case of victimization or colourable exercise, the decision could not be faulted.

There is nothing sacrosanct about finding the technical bid of a bidder responsive in a two bid system so as to make it obligatory on the employer to open the commercial bid. The employer may well come upon knowledge of some relevant information, which disqualifies the particular bidder, and in that case may choose not to open his commercial bid. If his disqualification is supported by some material on record, there is nothing further for this Court to inquire.

High Court found no merit in the grounds of challenge urged by the petitioner. [O.K. Marine v. ONGC, 2021 SCC OnLine Bom 799, decided on 8-06-2021]


Advocates before the Court:

Mr. R.D. Soni, i/b. Irvin D’souza, for the Petitioner

Dr. Abhinav Chandrachud, a/w. Mr. Nishit Dhruva, Mr. Prakash Shinde, Ms. Khushbu Chhajed, Mr. Abhishek Bhavsar and Ms. Alisha Shah, i/b. MDP & Partners, for Respondent Nos. 1 and 3.

Mr. Kunal Gaikwad, for Respondent No.4.

Mr. Karl Tamboly, a/w. Mr. Ramiz Shaikh and Mr. Akshay Bafna, i/b. Bafna Law Associates, for Respondent No.5.

Case BriefsHigh Courts

Delhi High Court: J.R. Midha, J., while addressing a motor accidents claim application decided on the issue whether it would be fair to deny compensation for loss of dependency to a parent, who may not be dependent on his/her child at the time of accident per se but would become dependent at his/her later age?

In the instant application, the appellants challenged the award of the Claims Tribunal and sought enhancement of the award amount.

The deceased was aged 23 years at the time of the accident and was survived by his parents who claimed compensation. Deceased was self-employed as a Contractor earning Rs 55,000 to Rs 60,000 per month.

Claims Tribunal held that since the deceased’s father was working with the Delhi Police as Sub-Inspector, hence was not dependent upon the deceased. Also, the deceased’s mother could not be said to be dependent upon the deceased as her husband was employed with the Delhi Police.

Therefore the Claim Tribunal had concluded that the deceased’s parents were not entitled to compensation for loss of dependency but only to compensation for loss of the estate in terms of the principles laid down in Keith Rowe v. Prashant Sagar, 2011 ACJ 1734.

Analysis, Decision and Law

  • Whether the mother of the deceased is entitled to compensation for the death of her son?

Court opined that the parents of the deceased were considered in law as dependent on their children, considering that the children are bound to support their parents in their old age, when the parents would be unable to maintain themselves and the law imposes a responsibility on the children to maintain their parents.

Further, the Bench added that

Even if the parents are not dependent on their children at the time of the accident, they will certainly be dependent, both financially and emotionally, upon their children at the later stage of their life, as the children were dependent upon their parents in their initial years.

With regard to loss of dependency, the Court held that it would be unfair as well as inequitable to deny compensation for loss of dependency to a parent, who may not be dependent on his/her child at the time of accident per se but would become dependent at his/her later age.

Following are legislations that recognize the legal rights of parents to be maintained by their children:

♦ Section 125 of the Code of Criminal Procedure, 1973

♦ Section 20 of Hindu Adoption and Maintenance Act, 1956, and Maintenance and Welfare of Parents and Senior Citizens Act, 2007

Bench referred to the following decisions:

Vijaya Manohar Arbat v. Kashirao Rajaram Sawai, (1987) 2 SCC 278.

In Magma General Insurance Co. Ltd. v. Nanu Ram, (2018) 18 SCC 130 Supreme Court had reaffirmed the with respect to the rights of parents to compensation in case of accidental death of a child.

Mahendrakumar Ramrao Gaikwad v. Gulabbai Ramrao Gaikwad, 2001 CriLJ 2111

In Sarla Verma v. D.T.C., (2009) 6 SCC 121, the Supreme Court held that the mother of the deceased bachelor is entitled to compensation by taking 50% of his income as loss of dependency on the premise that the deceased would not contribute more than 50% to his mother after marriage. The Supreme Court further observed that the mother would be considered as a dependent even if the father was employed and earning.

In light of the above decisions, the High Court held that the parents of the deceased child are considered as dependents for computation of compensation. Further, the Bench also highlighted that the principles relating to the loss to the estate shall apply only to claimants other than parents, children and spouse.

Hence, the deceased’s mother in the instant case is entitled to compensation for loss of dependency.

Compensation

Taking the income of the deceased as Rs 4,131 per month, adding 40% towards future prospects, deducting 50% towards personal expenses and applying the multiplier of 18, the loss of dependency is computed as Rs 6,24,607.20.

Court directed the appellant 1 to remain present in Court before the next date of hearing along with the passbook of her savings bank account near the place of her residence as well as PAN card and Aadhaar card.

Appellant 1 shall produce the original passbook of her individual savings bank account with the necessary endorsement on the next date of hearing. However, the bank concerned shall permit appellant 1 to withdraw money from her savings bank account by means of a withdrawal form.

While concluding in light of the above-stated, Court asked for the copy of this Judgment to be sent to Delhi Judicial Academy to sensitize the Claims Tribunals about the principles laid down by this Court in the present Judgment. [Indrawati v. Ranbir Singh, 2021 SCC OnLine Del 114, decided on 08-01-2021]


Advocates for the parties:

For the Appellants: Santosh Kumar Chauriha, Advocate

For the Respondents: Atul Nigam, Advocate along with Anubhav Tyagi and Randhir Kumar, Advocates for R-3

Case BriefsHigh Courts

Uttaranchal High Court: A Division Judge Bench of K.M. Joseph and Sharad Kumar Sharma, JJ., had allowed a revision which was filed aggrieved by the order of the Trade Tax Tribunal.

The assessment was done under the U.P. Trade Tax Act, 1948 and the respondent was assessed to tax in respect of sale of imported cement, imported sheet tiles & steel and self-manufactured tiles. The Assessing Officer had also assessed respondent in regard to the sale of steel scrap, sale of discarded items and tender forms. In Appeal, the Appellate Authority had dismissed the Appeal. Thereafter, the respondent preferred Second Appeal No. 117 of 1999 before the Trade Tax Tribunal, which partly allowed the appeal filed by the respondent and had sustained the tax assessed in respect of steel scrap, old discarded items and tender forms. The assessment order in so far it relates to the tax levied in respect of the imported cement, sale of imported sheet tiles & steel and self-manufactured tiles was interfered with. Thus the instant revision was filed.

The issue to be dealt was whether the Commercial Tax Tribunal has erred in law in holding that supply of cement, steel and bricks etc. to the contractors by the Government Department, for which cost is deducted from the bills of the contractors, does not amount to sale? And was it not liable to tax?

The Court relied on the Supreme Court judgment in N.M. Goel & Co. v. Sales Tax Officer, (1989) 1 SCC 335, wherein the Court noted that the appellant was a building contractor and registered dealer under the Madhya Pradesh General Sales Tax Act. The C.P.W.D. invited tenders for construction of foodgrain godown. In the tender submitted by the appellant the prices of the material to be used for construction cost of iron, steel and cement were included. The P.W.D. agreed to supply from its stores iron, steel and cement for the construction work and to deduct the price of material so supplied and consumed from the construction from the final bill of the appellant. It was found that all materials supplied to the contractors under the clause remain absolute property of the Government and could not be removed on any account from the site of the work and was at all times open to inspection by the Engineer-in-charge. The clause in fact inter alia provided that the contractor was bound to procure and to supply the material from stores as from time to time required for use of work for the purpose of contract only, and value of the full quantity of the materials and stores so supplied was specified at a rate and got set off or deducted from any sum due or that became due thereafter to the contractor.

The Court keeping in view these observations held that Tribunal was in error in taking the view that no tax to be paid on the sale of imported cement, sheet piles & steel and sale of self-manufactured tiles. The Court also noticed that definition of sale under the U.P. Trade Tax Act under Section 2-h includes transfer of property in goods involved in the execution of a works contract. The Court allowed the revision restoring the order of the Assessing Officer.[Commr., Commercial Tax v. Executive Engineer,  2018 SCC OnLine Utt 193, decided on 21-02-2018]


Suchita Shukla, Editorial Assistant has put this story together