DECISION ' These are two sets of appeals by eleven appellants arising from judgment of Sindh Labour Court No. 4, Karachi whereby petitions under section 25-A of the I.R.O., 1969 filed by the workers against their oral termination as weavers were dismissed.
2. The facts in brief are that the appellants were employed as weavers in Weaving Department of Dawood Cotton Mills Limited respondent No. 1 from 1985. These workers were not issued any appointment letters, Identity Cards or Tickets and Gate Passes. They were said to be workers of the Contractors and receiving payment from the Contractors but the Weaving Machines, Tools, raw material were supplied by the Mills and the distribution of the cloth was also done by the mills. The mills were responsible for the quality of the cloth and the overall supervision of the production. The mills had entered into Agreements with the Contractors which was said to be renewed from time to time without any amendment or improvement.
3. It is the case of the appellants that the Contractors were paid employees of the mill and the contracts were not genuine and they were prepared for the purpose of defeating the labour laws.
4. It is on the other hand the case of the Dawood Cotton Mills that the Weaving Department was under the' Contractors and payment was made to them for labour only according to Meters of cloth manufactured by them.
5. The learned Labour Court found that there was no relationship of workers and employers between the appellants and Dawood Cotton Mills and since the workers themselves had absolved the Contractors from any liability. The petitions under 25-A of the I.R.O. Were dismissed against the Mills as well as against the Contractors.
6. The law on this question has been explained under section 20 of the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968. Section 20 reads as under:-- "20. Liability of employer.--The employer of the Industrial and Commercial Establishment shall personally be held responsible for the proper and faithful observance of the Standing Orders whether or not the workmen of such establishment are employed through Contractors."
7. Thus, even where the labour has been supplied by the Contractors the factory owners nave been held responsible for observance of the Labour Laws unless the Department of the Contractor is considered entirely independent and distinct under the control of the Contractors so that the management of the Department cannot be regarded to be the same as that of the entire mill or factory.
8. There are various decisions of Superior Courts discussing this aspect of the matter as to how for the proprietors of the mills are responsible for application of the Labour laws in relation to the workers. The question such as ownership of the machinery, supply of raw material, control of the workers, supervising the work, payment to the workers and the payment under the allied laws such as Workmen's Compensation, Social Security etc; are to be considered and weighed to divide responsibility.
9. In the present case the so-called Agreements on Ten Rupees Stamp Papers have been produced. According to them the supply of raw materials, machinery, tools and services rests with the mills while the Contractors supplied the labour. The price of the cloth keeps changing with the intrinsic value of currency but the payment clause for the Contractors remains constant. The actual payment evidence has not been produced by the mills either in the Trial Court or even at the Appellate stage. This would show that possibly these contracts are not genuine but have been executed for the purpose of denying the relationship of employer and employee by the mills with the workers. It is hard to believe that while the wages of the workmen keep changing from time to time, the consideration for the making of the cloth payable to Contractors would remain the same throughout the period.
10. On this point a very interesting decision of Supreme Court of India has been produced by the appellants. The question before the Supreme Court was identical namely---"Who is the employer whether the management or the intermediate Contractor is the employer---Whether Vinculum juris existed between the management and the workmen---Held: in a laisses faire economy based on common law and the Central Act, the position may be different but in the industrial bench of Third World Jurisprudence, based on social justice, mere contracts are not decisive and a complex of considerations are relevant in deciding the real dispute".
11. In course of the order it was observed as under:-- "5. The true test may, with brevity, be indicated once again. 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 contracts 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.
Myriad devices, half-hidden in fold after fold of legal form depending on the degree of concealment needed, the type of industry, the local conditions and the like may be resorted to when labour legislation casts welfare obligations on the real employer, based on Article 38, 39, 42, 43 and 43-A of the Constitution. The Court must be astute to avoid the mischief and achieve the purpose of the law and not be misled by the maya of legal appearances."
12. In another case of this Tribunal in Appeal No. KAR-370 of 1968, by learned brother Ahmad Ali U.
Qureshi, J. Was also of the view that where a machinery and the tools are owned by the mills and the raw materials and the finished goods are entirely controlled and checked by the mills and the Weaving Masters belonged to the mills there was no doubt that the appellants were workers of the mill owners and not of the contractors.
13. A similar decision of this Court appears in the case of Al-Karam Textile Mills reported in 1995 CLC
680. In that case also the raw material and other services like electricity, water, gas, telephone were supplied by the mills and the Contractor supplied only labour and was not responsible for the profits and losses. The employees could be regarded as employees of the mills and not the Contractors and the mills were responsible for the proper observance of Standing Orders.
14. This practice by the mills of employing Contractors as suppliers of labour is in a fact employed to defeat the responsibility o1 'the proprietors imposed by the Standing Orders in respect of the workers employed by them. The workers are in such cases left at the mercy of the Contractors who are sometimes fictitious Contractors and they can neither be served with grievance notices nor can they satisfy the grievance of the workers.
15. In the present case also the services of the workers were terminated orally in contravention of Order 12 of the Standing Orders Ordinance and they were made to sign resignation after they were paid the dues to defeat any future action or claim.
16. The Manager Administration of Dawood Cotton Mills has produced two decisions of Agha Ali Hyder, J. Reported in 1992 PLC 1292 and an unreported judgment in Appeals Nos. KAR-110 and 150 of 1991. In these judgments there was overwhelming evidence that the benefits and privileges of the workers were being attended to by the Contractor who was paying wages to them and supervising work." The mills were, therefore, observed from liability. In the other case also the Lease Deeds of the mills were found to be genuine. The appeals of the workers against the mills were, therefore, dismissed but such is not the case in these eleven appeals. The mills are not leased out to the Contractor lessees and they are very much in possession of the Dawood Cotton Mills. In the absence of evidence of actual payments made to the Contractors, I am inclined to believe that the Agreements exhibited in the case are not genuine. Therefore, under Order 20 of the Standing Orders the mills are themselves liable for application of the Standing Orders and their observance for the benefit of the workers. Under Order 12 of the Standing Orders Ordinance services of these workmen could not be terminated nor could the workmen be removed except by an order in writing stating reasons for the action taken. The workers were orally terminated and they were made to sign the resignation on payment though the workers have denied having executed these documents.
17. The order of the Labour Court is accordingly set aside and the appellants workers are directed to be reinstated in service of Dawood Cotton Mills within thirty days of the making of this order. The workers are also D allowed back benefits for the period they remained out of job.
18. The appeals are allowed accordingly.