REPORTABLE

IN THE SUPREME COURT OF INDIA  

CIVIL  APPELLATE  JURISDICTION  

CIVIL   APPEAL NO.  2585  OF  2006

BHILWARA DUGDH UTPADAK  SAHAKARI S. LTD. Appellant (s)

VERSUS

VINOD KUMAR SHARMA DEAD BY  LRS & ORS. Respondent (s)

O   R   D  E   R  

 Heard learned counsel for the appearing parties.  

 This Appeal has been filed against the impugned judgments dated 23.08.2004 and  

dated 21.09.2004 passed by the High Court of Judicature at Rajasthan.   

This Appeal reveals the unfortunate state of affairs prevailing in the field of labour  

relations in our country.   

In order to avoid their liability under various labour statutes employers are very often  

resorting to subterfuge by trying to show that their employees are, in fact, the employees  

of a contractor.  It is high time that this subterfuge must come to an end.   

Labour  statutes  were  meant  to  protect  the  employees/workmen  because  it  was  

realised that the employers and the employees are not on an equal bargaining position.  

Hence,  protection  of  employees  was  required  so  that  they  may  not  be  exploited.

However,  this  new technique  of  subterfuge  has  been  adopted  by  some employers  in  

recent years in order to deny the rights of the workmen under various labour statutes by  

showing  that  the  concerned  workmen  are  not  their  employees  but  are  the  

employees/workmen of a contractor, or that they are merely daily wage or short term or  

casual  employees when in fact they are doing the work of regular employees.   

This Court cannot countenance such practices any more.  Globalization/liberalization  

in the name of growth cannot be at the human cost of exploitation of workers.   

The facts of the case are given in the judgment of the High Court dated 23.08.2004  

and we are not repeating the same here.  It has been clearly stated therein that subterfuge  

was resorted to by the appellant to show that the workmen concerned were only workmen  

of a contractor.  The Labour Court has held that the workmen were the employees of the  

appellant and not employees of the contractor.  Cogent reasons have been given by the  

Labour  Court  to  come to  this  finding.   The Labour  Court  has  held  that,  in  fact,  the  

concerned workmen were working under the orders of the officers of the appellant, and  

were being paid Rs 70/- per day, while the workmen/employees of the contractor were  

paid Rs. 56/- per day.   

We are of the opinion that the High Court has rightly refused to interfere with this  

finding of fact recorded by the Labour court.   

The Judgment of this Court in Steel Authority of India vs. National Union Waterfront  

Workers (2001) 7 SCC 1 has no application in the present case.  In that decision the  

question was whether  in  view of Section 10 of the Contract  Labour (Regulation and  

Abolition) Act, 1970 the employees of contractors stood automatically absorbed in the  

service  of  the  principal  employer.   Overruling  the  decision  in  Air  India  Statutory

Corporation vs. United Labour Union, (1997) 9 SCC 377 this Court held that they did  

not.   

In the present case that is not the question at all.  Here the finding of fact of the  

Labour Court is that the respondents were not the contractor’s employees but were the  

employees of the appellant.  The SAIL judgment (Supra) applies where the employees  

were initially employees of the contractor and later claim to be absorbed in the service of  

the principal employer.  That judgment was considerating the effect of the notification  

under Section 10 of the Act.  That is not the case here.  Hence, that decision is clearly  

distinguishable.   

Mr. Puneet Jain, learned counsel for the appellant submitted that the High Court has  

wrongly held that the appellant resorted to a subterfuge, when there was no such finding  

by the Labour Court.  The Labour Court has found that the plea of the employer that the  

respondents were employees of a contractor was not correct, and in fact they were the  

employees of the appellant.  In our opinion, therefore, it is implicit in this finding that  

there was subterfuge by the appellant to avoid its liabilities under various labour statutes.  

For the reasons given above, there is no infirmity in the impugned judgment of the  

High Court.  The Appeal is dismissed accordingly.  No costs.    

……………………………………………J [MARKANDEY KATJU]

……………………………………………J [CHANDRAMAULI KR. PRASAD]

NEW DELHI; SEPTEMBER 01, 2011