Kundan Singh vs. State Of Uttarakhand And Others

Held

The Court held that the arrangement made by the State Government through UPNL is a sham and that the State Government is the Principal Employer. The Court found that the UPNL was not registered under Section 7 or licensed under Section 12 of the Contract Labour (Regulation and Abolition) Act, 1970, and that its use as an intermediary was a camouflage to deny benefits to workmen. The Court ruled that the employees sponsored by UPNL are entitled to at least the minimum of the pay-scale being paid to their counterparts on the principle of 'Equal Pay for Equal Work', along with dearness allowance and arrears. The Court also held that no GST or Service Tax can be deducted from the salary of the petitioners without any authority of law, as salary is property within the meaning of Article 300-A of the Constitution of India. The Court found the State's reliance on the Uma Devi case to be misplaced. The Court directed the State Government to regularize the employees sponsored through UPNL in a phased manner within one year, to ensure they receive the minimum pay-scale with dearness allowance and arrears within six months, and to cease deducting GST or Service Tax from their salaries.

Facts

The Uttarakhand UPNL Savinda Karamchari Sangh, through an impleadment application, highlighted the alleged exploitation of workmen by the State Government and local bodies. It was stated that workmen were paid an honorarium of Rs. 8,400, from which GST at 18% and 2.5% Service Tax were deducted. The Sangh contended that these workmen performed duties similar to their regularly appointed counterparts and were under the administrative, disciplinary, and financial control of the establishments where they worked. The State Government was directed to provide information regarding regularization schemes, salary components, honorarium revisions, the number of persons employed through UPNL, their pay structure compared to regular employees, and their engagement dates. The State submitted an affidavit stating that UPNL was established to provide employment to ex-servicemen and their dependants, and only when suitable candidates were unavailable, others could be sponsored. The State also indicated that there was no plan to regularize these outsourced employees, citing the Supreme Court's judgment in "State of Karnataka vs. Uma Devi."

Key Issues

1. Whether the arrangement made by the State Government through UPNL is a sham and the State Government is the Principal Employer, thereby entitling the workmen to the benefits of regularization and regular pay scales, considering the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 and Articles 14 and 16 of the Constitution of India. 2. Whether the deduction of GST and Service Tax from the salary of the employees sponsored through UPNL is legally permissible, given that salary is considered property under Article 300-A of the Constitution of India. Petitioner's Contentions: The arrangement through UPNL is a sham, and the State Government is the Principal Employer. The UPNL is not registered under Section 7 or licensed under Section 12 of the Contract Labour (Regulation and Abolition) Act, 1970. The employees are entitled to at least the minimum pay scale of their counterparts on the principle of 'Equal Pay for Equal Work' and should not have GST and Service Tax deducted from their meager honorarium without authority of law. The State's reliance on the Uma Devi case is misplaced as the State itself frames regularization rules but not for UPNL employees. The action is arbitrary and unreasonable, violating fundamental rights. Revenue/State's Contentions: The State Government relied on the judgment of the Hon'ble Supreme Court in "State of Karnataka vs. Uma Devi" to argue that persons engaged through UPNL cannot be regularized. The State also indicated that the UPNL was primarily set up for sponsoring ex-servicemen and their dependants.