Dispute Referral By State Government To Central Labour Tribunal Valid Only When Authorized By Central Government: Allahabad HC

Allahabad High Court: A single bench of Justice Subhash Vidyarthi declared that the canteen workers of Hindustan Aeronautics Ltd. (HAL) were direct employees of the company, despite the existence of a contract with a third-party canteen operator. However, the court ruled that the question of whether the contract between HAL and the canteen operator was a “sham” was beyond the tribunal's mandate, as it was not mentioned in the reference. Additionally, the court held that the Central Government was the “appropriate government” for HAL, but in this case, the State Government had the power to refer the dispute to an Industrial Tribunal under the Central Act. Background The dispute arose from the retrenchment of 57 canteen employees on November 25 and December 23, 2000, by Hindustan Aeronautics Ltd. (HAL). The canteen was being operated by a contractor, who in turn engaged workers to run it. On 23.12.2000, HAL sent letters to the canteen workers stating that their contract expired, and their services were terminated. Following which, the affected canteen workers, through Hindustan Aeronautics Karmchari Sabha (HAKS), approached a Tribunal constituted by the State Government. The tribunal issued an award, which is being challenged by HAL. Arguments HAL, represented by Counsel P.K. Sinha, contended that the canteen workers were not directly employed by HAL; they were engaged by the contractor, who was solely responsible for their employment terms and wages. They further argued that the 'appropriate government' for HAL is the Central Government. Consequently, the state government could not have referred the dispute to a tribunal constituted by it under the Industrial Disputes Act (Central Act). He further argued that the question of the contract between HAL and the canteen contractor being sham was beyond the Tribunal's mandate as it was not mentioned in the reference. HAKS, represented by Counsel Dhruv Mathur, argued that the employment relationship between the canteen workers and HAL was direct, despite the intermediary role of contractors. According to HAKS, the workers had provided long-term, exclusive continuous services, and HAL exercised significant control over their work. HAKS argued that this established an employer-employee relationship. HAKS also argued that the 'appropriate government' is the State Government, and under Section 4-B of the U. P. Industrial Disputes Act (State Act), it could refer the dispute to the Tribunal. Court's Reasoning Firstly, the court held that the Central Government is the appropriate Government for HAL. It noted that more than 51% of HAL's shares are held by the Central Government, and Section 2(a) of the Central Act mandates that in such cases, the “appropriate Government” would be the Central Government. Secondly, the court ruled that the State Government had the power to refer the dispute to an Industrial Tribunal. The court noted that by a notification, the Central Government had delegated its powers to the state government. It further underscored that as per Section 10 of the Central Act, if the Central Government were the appropriate government, it could have referred the dispute to an Industrial Tribunal. Thus, the court concluded that exercising its delegated powers, the State Government too could refer a dispute to the Industrial Tribunal under the Central Act. Thirdly, the court held that the tribunal could not have adjudicated whether the contract between HAL and the canteen operator was a sham. It observed that Section 10(4) of the Central Act mandates the Tribunal to confine its adjudication only to matters mentioned in the reference. The question of a sham contract, the court noted, was beyond the reference and therefore could not be ruled upon. Fourthly, the court held that the workers were not employees of HAL, and were instead employees of the contractor. It noted that the canteen contractor used to select and appoint the canteen workers, he used to pay them salaries, and assign them work. The court further mentioned that the workers were not performing any duties relating to the principal business of HAL, i.e., manufacturing aircraft parts. Thus, it concluded that the canteen workers were not HAL's employees. Consequently, the court allowed the writ petition quashed the tribunal's award. Decided on: 04-11-2024 Neutral Citation: 2024:AHC-LKO:72745 Counsel for the Petitioner: Mr. P.K. Sinha Counsel for the Respondent: Mr. Dhruv Mathur, Mr. Avinash Pandey, Mr. Pranav Agarwal, Mr. Ravindra Kr. Yadav, Ms. Vasundhara Mathur Click Here To Read/Download The Order

Dispute Referral By State Government To Central Labour Tribunal Valid Only When Authorized By Central Government: Allahabad HC

Pranav Kumar

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