Contract labour and direct employment require proof beyond gate passes or disputed concessions; sham contract finding was unsustainable.

Contract labour could not be treated as direct employment merely on the basis of gate passes, an alleged concession, or the extended definition of employer under the Uttar Pradesh Industrial Disputes Act, 1947. The exemption notification under the Contract Labour (Regulation and Abolition) Act, 1970 applied to the operations in question, and the Labour Court erred in treating it as a basis for relief. Gate passes issued for security and administrative purposes at the contractor's request did not by themselves prove an employer-employee relationship, and a disputed concession by counsel could not bind the party. No evidence was led to show that the labour was engaged in work ordinarily forming part of the industry, so the findings of sham contract and direct employment were unsustainable.

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Issues: Whether the contract labour arrangement was a sham or camouflage so as to justify a finding of direct employment; whether the Labour Court and High Court could infer employer-employee relationship from gate passes, alleged concessions and the extended definition of employer under the Uttar Pradesh Industrial Disputes Act, 1947.

Analysis: The exemption notification under the Contract Labour (Regulation and Abolition) Act, 1970 was applicable to the appellant's operations, and the Labour Court erred in applying it as a basis for relief. The finding of direct employment could not rest merely on gate passes, which were issued for security and administrative reasons at the contractor's request, or on an alleged concession on a mixed question of fact and law that was disputed in the pleadings. A concession by counsel could not bind the party on such disputed issues. The extended definition of employer under Section 2(i)(iv) of the Uttar Pradesh Industrial Disputes Act, 1947 required evidence that the contract labour was engaged in work ordinarily part of the industry, but no such evidence was led. The High Court also proceeded on findings contrary to the record and treated disputed facts as undisputed.

Conclusion: The findings of direct employment and sham contract were unsustainable, and the orders of the Labour Court and the High Court were set aside in favour of the appellant.

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