Bharat Heavy Electricals Ltd. v. Mahendra Prasad Jakhmola & Ors.
Background
A group of workmen employed through contractors at BHEL's Haridwar unit were terminated, and a Labour Court reference asked whether this was justified. The Labour Court held that the workmen were, in substance, direct employees of BHEL (not the contractor) based on gate passes issued to them and an alleged concession by BHEL's representative, and ordered reinstatement without backwages for 64 workers. The Allahabad High Court (Uttarakhand) upheld this award, and after an earlier round before the Supreme Court sent the matter back for review, the High Court's review again went against BHEL, prompting this batch of appeals.
Decision Breakdown
The Supreme Court held that the Labour Court's findings were perverse. It found that the gate passes were issued only for safety/administrative reasons at the contractor's own request, not as evidence of a direct employer-employee relationship, and that the "concession" relied upon was disputed and, in any event, could not bind BHEL on a mixed question of fact and law. Applying settled tests (who pays wages, and who exercises primary control and supervision), the Court found the contractor, not BHEL, paid wages and exercised primary control, so the contract was not a "sham." It also held there was no evidence that the contract workers performed work "ordinarily part of" BHEL's industry, which was necessary to invoke the extended statutory definition of "employer." The impugned High Court and Labour Court orders were set aside and the appeals allowed.
Lesson Learnt
Merely being issued a company gate pass or working alongside regular staff does not, by itself, make a contract worker a direct employee of the principal employer: courts look at who actually pays wages and who exercises real, primary control over the work, and a lawyer's concession on a mixed question of law and fact cannot bind a party in later proceedings.