# B.B. Udyog, Mathura v. State of U.P. & others

- **Citation:** (1999) 2 ILRA 250
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 1999
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/b-b-udyog-mathura-v-state-of-u-p-others-39334
- **Pages:** 9

## Text

THE INDIAN LAW REPORTS [1999
250
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Case law discussed.
AIR 1978 SC 1410
AIR 1978 SC - 481
AIR 1999 SC - 1160
AIR 1965 Cal. 166
1970 Lab.I.C.629:1970 FLR 70
AIR 1967 SC- 420
(1966) 1 LLJ 730 (S.C.)
1980 (2) SCC. 593-(1980) 1 LLJ- 137
1981 LLJ 369 (SC)
1983 Lab- I.C. 670 (S.C.)
1996 (2) LLJ- 720
AIR 1984 SC- 286
1982 (3) SCC.- 386

1999
------
August, 13
2 All.] ALLAHABAD SERIES
251
By the Court

1.M/S Brij Basi Udyog (the Petitioner) is a firm registered with
Registrar of Firms, Bombay. It manufactures Fire-fighting
equipments at Mathura. There was another firm named M/s Brij Basi
Engineers (the other firm for short), which was registered with
Registrar of Firms U.P. Lucknow. The other firm functioned as a
contractor for supply of the unfinished fabricated components for the
petitioner. It had no other business except to act as a contractor for
the petitioner. It was dissolved due to non-availability of work from
the petitioner due to which its workmen were retrenched on
13.12.1981 Thirty - one workmen raised an industrial dispute about
termination of their services, which was referred to the Labour Court
by the State Government. The Labour court by its award dated
22.12.1984 has held that:

the petitioner and other firm are one and the same - the other
firm being a camouflage for the petitioner;

One workman namely Gopi Nath was not employed by the
other firm but was employed by the petitioner. He was rightly
retrenched on 9.12.1981 (there is no dispute about him in this writ
petition);

The remaining 30 workmen were not rightly retrenched and
were entitled to be reinstated with full back wages;
Two workmen who had received retrenchment compensation were
also entitled to be reinstated. The retrenchment amount that they had
received was to be deducted from the amount towards their
backwages.

It is against this award that the present writ petition has been filed.

POINTS FOR DETERMINATION

I have heard Sri Tarun Agrawal, counsel for petitioner and Sri
A.S. Diwakar , counsel for the contesting respondents. The following
points arise for determination in this case:

(i)
Was the petitioner the real employer? Was the other firm a
camouflage for the petitioner?
1999
------
B.B. Udyog,
Mathura
 Vs.
State of U.P.
& others
------
Yatindra
Singh, J.
THE INDIAN LAW REPORTS [1999
252
(ii)
Are some of the contesting respondents, who have received
retrenchment compensation, estopped from raising an industrial
dispute? Have they waived their rights to raise it?
(iii)
Was retrenchment of the contesting respondents valid?
(iv)
What are the principles for awarding back wages? Should the
contesting respondents be awarded full back wages?

Ist POINT: WAS PETITIONER THE REAL EMPLOYER?

3.
when can one be held to be an employer of persons employed
by others? This has been discussed by the Supreme Court in Husaini
Bhai vs. Alath Factory Tezhilali Union (Husaini Bhai's case). The
Supreme Court has held that the true test (is) where a worker or
group of workers labours to produce goods or services and these
goods or services are for the business of another that other is, in fact,
the employer. He has economic control over the workers subsistence,
skill, and continued employment. If he, for any reason, chokes off,
the worker is, virtually, laid off. The presence of intermediate
contractors with whom alone the workers have immediate or direct
relationship ex contract is of no consequence when, on lifting the
veil or looking at the conspectus of factors governing employment,
we discern the naked truth, though draped in different perfect paper
arrangement, that the real employer is the Management, not the
immediate contractor,. The labour court has applied these principles
to the facts of the case and has held that even though the petitioner
and the other firm were different firms, had different partners, and
began their business at two different places; Yet the petitioner was a
real employer of the contesting respondents. This was in view of the
facts that the other firm:

•
was producing goods only for the petitioner;

•
had shifted its production unit to the premises of the petitioner;

•
had identity card of its workmen on the letter head of the
petitioner (the labour court disbelieved the explanation given by
the petitioner);

•
had no separate workshop;

•
had office at the same place as the petitioner from where wages
etc. were distributed to their workmen.
1999
------
B.B. Udyog,
Mathura
 Vs.
State of U.P.
& others
------
Yatindra
Singh, J.
2 All.] ALLAHABAD SERIES
253

 If the principles of the Hussaini Bhais case apply, as they are, then
there is no fault in the award on this score.

4.
Sri Tarun Agarwal, learned counsel for the petitioner has
argued that Hussaini Bhai's case may be read with another decision
reported in Punjab National Bank vs. Ghulam Dastgir (Dasgir's
Case)(AIR 1978 SC 481). Here the bank had given a car alongwith
allowances for petrol, driver etc. to the manager yet the manager
instead of the bank was held to be the real employer of the driver.
According to Sri Agarwal this was because the real control and
direction over the driver was not with the Bank but with the
manager. He argues that this is the case here: the petitioner had no
real control or direction over the contesting respondents; it was with
the other firm; the petitioner cannot be held to be the employer.

5.
The Dastagir's case is distinguishable. The Court in
paragraph 3 of Dastgir's case had held that there is nothing on record
to indicate that the control and direction of the driver vested in the
bank. The driver was not manufacturing or producing any goods for
the bank as the case here. Apart from it the court in paragraph 2 says
that the question (who is the real employer) in each case turns on its
own circumstances and decisions in other cases are rather illustrative
than determinative. TheDastagir's case turns upon its own facts
where there was paucity of evidence. But here, there is some
evidence. In any case, it is a two judge decision whereas Husain
Bhai's case is a three Judge decision (though of the same Judge).
Husain Bhai's case has also been cited with approval in a latter
decision reported in Secretary, Haryana State Electricity Board, vs.
Suresh.

6.
The Husaini Bhai's case is applicable to the facts of the
present case as the group of workers working in the other firm used
to produce goods for the business of the petitioner only. The
petitioner (in view of Husain Bhai's case) had the economic control
over the workers' subsistence, skill and continued employment. The
finding recorded by the Labour Court is neither perverse nor so
unreasonable that no reasonable person could have reached it on the
basis of the evidence on record. It cannot be set aside in the wirt
Jurisdiction.

1999
------
B.B. Udyog,
Mathura
 Vs.
State of U.P.
& others
------
Yatindra
Singh, J.
THE INDIAN LAW REPORTS [1999
254
2nd
POINT;
ACCEPTENCE
OF
THE
RETRENCHMENT
COMPENSATION- WAIVER

7.
The petitioners in their written statement had pleaded that
seven workers had accepted the retrenchment compensation and are
estopped from raising the industrial dispute. Before the Labour court,
the petitioner filed documents in respect of three of them only. The
Labour court has held that: one of them had not received
retrenchment compensation as the person who had received the
retrenchment compensation was named Balbir and in the reference
there is no Balbir but one Brijbir; two of them, namely Devi Ram
and Punna Lal , had accepted retrenchment compensation but they
are to be reinstated the retrenchment compensation be deducted from
the amount of back wages. The labour court has not discussed if they
have waived their rights or are estopped from raising the dispute.

8.
Have these two waived their rights to raise the industrial
dispute? Are they estopped? Should they be denied the relief of
reinstatement on this ground? The Calcutta High Court and the Patna
High Court have taken the view that such workmen who have
received ratrenchment compensation, can not be estopped from
questioning their retrenchment or claiming benefits under the Act.
The Madras High Court has sounded a different chord, the workers
were estopped from claiming subsequently the benefits conferred by
the Act as they had deliberately contracted themselves out of the
statute.

9.
The Supreme Court in Workmen of subong Tea Estate, vs
Outgoing Management of Subong Tea estate, has observed that such
objections are technical pleas and should not be entertained in an
industrial adjudication. This is clear from the words 'apart from the
fact that such technical pleas are not generally entertained.' Twentyeight out of thirty have not received retrenchment compensation. The
Labour Court has exercised its discretion in not permitting the
petitioner to raise this plea. There is no reason why petitioner should
be permitted to do so. I don't think that I would be justified in
permitting the petitioner to raise it.

3rd POINT: WAS RETRENCHMENT VALID?

10.
The Labour Court has held that the retrenchment was illegal
on the ground that the notice has been given by the other firm and
1999
------
B.B. Udyog,
Mathura
 Vs.
State of U.P.
& others
------
Yatindra
Singh, J.
2 All.] ALLAHABAD SERIES
255
there was no such occasion for closure as the petitioner and the other
firm are one and the same. This approach of the Labour Court is not
correct. The notice for the retrenchment was given by the other firm
as it had employed the contesting respondents. Once the labour court
came to the conclusion that the other firm and the petitioner were
one and the same, the notice given by the other firm should have
been treated to be the notice on behalf of the petitioner and the
validity of the retrenchment ought to have been judged on this basis
- the petitioner may not be manufacturing unfinished fabricated
component (THE MATERIAL Manufactured by the other firm) and
may be purchasing it from some where else. The finding in this
regard is therefore illegal.

4th POINT: PRINCIPLES - BACK WAGES

11.
The Labour Court has reinstated the contesting respondents
with full back wages. Before I comment upon it, Let's discuss the
general principles regarding back wages.

12.
Section 11-A and sub-section (2-A) in Section 6 have been
inserted in 1971 and 1978 in the Industrial Dispute Act (The Central
Act) and the U.P. Industrial Dispute Act (the State Act) respectively.
They are substantially same and give discretion to the Labour Court
to impose terms and conditions in case discharge/dismissal/removal
of a workman is being set aside. Back wages is a term, a condition,
which is at the discretion of the Labour Court . Even prior to it the
law was the same - back wages were in the discretion of the labour
court. But the discretion has to be exercised judicially.

13.
The general rule in labour jurisprudence is that the back wages
are awarded from the date of the termination order and not from the
date of the order holding termination of service to be illegal. And
certainly the normal rule on reinstatement, is full back wages since
the order of termination is nonest. Even so, the industrial court may
well slice off a part. To what extent wages for the long interreghum
should be paid is, therefore, a variable dependent on a complex of
circumstances. The Courts in different cases have explained these
complex circumstances Here are some relevant factors, which should
be considered while making deductions in back wages. The full back
wages may not be awarded if:

(i)
the Industry may close down or might be in severe financial
doldrums or the relief of back wages may place an impossible burden
1999
------
B.B. Udyog,
Mathura
 Vs.
State of U.P.
& others
------
Yatindra
Singh, J.
THE INDIAN LAW REPORTS [1999
256
on the employer. Or the unit has started making profits but has still
not cleared its accumulated loss.
(ii)
The conduct of the workman is such - he may not be wholly
blameless; or strike may be unjustified.
(iii)
The nature of the work is such - the workman may be a
casual, a seasonal or a daily wager. He may not get work every day.
The court may find out for how long he could have got the work and
one of the methods may be to take the average of last three years and
direct payment of back wages on that basis.
(iv)
There was delay in raising the dispute, though the delay after
raising the dispute is not relevant. The dispute should be raised at
the earliest.
(v)
The activity conducted by the industry is such. Many activities
have been held to be an industry though they are not profit making.
Charitable, research oriented educational, welfare activities of the
State or similar activities even if they are Industry within the
meaning of the State or the Central Act, yet have to be differentiated
with profit making activities so far as back wages on reinstatement
are concerned.
(vi)
The workman was gainfully employed somewhere else. He
can not take double advantage.
(vii)
No efforts were made by the workman to seek employment. It
is also relevant. The workman should minimise the loss.

There may be other reasons. This list is by no means exhaustive.

14.
The relevant factors for not awarding full back wages if are
not apparent from the record have to be pleaded and proved. As far
as the first three factors namely: an impossible burden and its effect
on the management: the conduct of the workman; and the nature of
work, are concerned, it is for the employer to plead and prove it. The
fourth and the fifth factor namely delay and the nature of activity
may be obvious from the record itself and the court can consider it.
But if it is not so then the employer has to plead and prove it. But so
far as the last two factors namely gainfully employed somewhere
else and the effort made by the employee are concerned - it is a
difficult question. If this question is raised then as the facts about the
employment or non employment during the period of enforced
idleness or the efforts made by workman to get a job are within
special knowledge of the workman. It is fair that he should state first
if he was gainfully employed or not or if any efforts were made by
him for securing alternative employment. It is in this sense that
1999
------
B.B. Udyog,
Mathura
 Vs.
State of U.P.
& others
------
Yatindra
Singh, J.
2 All.] ALLAHABAD SERIES
257
initial burden may be on the employee. It is in this sense that initial
burden may be on the employee. But once he has discharged it, then
it is for the employer to prove that he (workman) was gainfully
employed.

15.
In this case the only relevant consideration was, if the
contesting respondents were gainfully employed or not. There is no
discussion in the award in this regard. One doesn't know if it was
raised and if there is any evidence on the part of the contesting
respondents that they were not gainfully employed. The petitioner
has filed a supplementary affidavit indicating that the contesting
respondents are gainfully employed at other places. The names of the
firms are also mentioned. There is no specific denial of this. This has
also been mentioned in the rejoinder affidavit. As the case is being
sent back , this question may be decided after affording reasonable
opportunity to the parties to adduce evidence.

CONCLUSION

16
In view of the finding given above the award dated 22.12.1984
is quashed so far as the finding on question nos.3 and 4 namely: the
legality of the retrenchment; and back wages are concerned. The
findings on the other question namely: that the petitioner was the
real employer; some of the contesting respondent can not be
estopped from raising the industrial dispute for having have received
retrenchment compensation; and Gopi Nath was rightly retrenched,
are upheld. These findings will not be reopened. The Labour Court
will re-decide the question number 3 and 4 in accordance with law
after affording reasonable opportunity to the parties to adduce
evidence in that regard. The case should be decided expeditiously. In
view of partial success, cost will be on parties.

With these directions the writ petition is allowed. The parties will
appear before the Labour Court on 20th September 1999.

1999
------
B.B. Udyog,
Mathura
 Vs.
State of U.P.
& others
------
Yatindra
Singh, J.
THE INDIAN LAW REPORTS [1999
258
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Counsel for the Petitioner
: Sri Rajiv Gupta

 Sri H.K. Misra
Counsel for the Respondents
: Sri Gautam Chaudhary

 S.C.

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Case Law discussed.
AIR 1992 SC - 2130
1990 (2) SCC. 396 _ AIR 1990 SCC- 883
1990 Suppl. (I) Sec. 562 - 2228
AIR 1991 SC 295

By the Court

The petitioner was appointed as Beldar on 1.10.1969 He
continued to work without any break in service on fixed salary of
Rs. 1675/- P.M. He worked continuously till 30.6.94. The Executive
Engineer, Irrigation . Division (Ist) Deoria, by order dated 29.6.1994
terminated the services of the petitioner treating him to be a
temporary employee under the U.P. Temporary Government
Servants (Termination of Services) Rules 1975 (in brief rules) The
1999
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July, 27