Dear Shyam: CGIT has the power to declare a contract arrangement to be sham. I am adding some case law
A contract of employment with any contractor is sham and nominal when over all day-to-day administrative control and supervision upon those workers is exercised by the principal employer through its officials in addition to payment of wages, allowances and other benefits are borne by the principal employer and the work is of regular nature. When it is proved that the employment contract with the contractor is sham and nominal, the employees of the contractor will be having their right to be absorbed as regular employees of the principal employer
General Manager, Bharat Heavy Electricals Limited Ranipet vs. Canteen workers of BHEL
2015 LLR 580 (Mad HC)
When the principal employer is registered under the Act, wages of the contract labour were paid by the contractor, the contractor was license holder under the Act, principal employer was making payment to the contractor, same contractor was supplying contract labour to other companies also, workman had never worked under the control and supervision of the principal employer, the contractor's workmen would not have relationship of employer-employee with the principal employer. When workmen failed, by any evidence on record, to prove their direct engagement by the principal employer, they are not entitled to seek any relief from the principal employer by raising an industrial dispute. If a workman fails to prove that in the preceding 12 month she had worked in 240working days, the dispute raised by him in respect of his termination of services or for any other relief under the ID Act is not sustainable being not covered under the ‘industrial dispute' as defined under the ID Act 1947.
Management of Turbo Energy Ltd rep. By its Executive Director vs. Presiding Officer, Additional Labour Court, Vellore & Others
2015 LLR 145 (Mad)
Bhavnagar Municipal Corporation etc vs. Jadeja Govubha Chhanubha & Anr
2015 LLR 160 (SC)
16. Contract between principal employer and contractor is sham, nominal, and camouflage if attendance of such workman is recorded in a register, separately kept with the principal employer, such workmen are to perform duty, as per direction, supervision and control of principal employer, material record to prove or disprove the relationship of employer-employee and is not produced by the principal employer.
If the contract between the principal employer and the contractor is proved to be sham, nominal or camouflage,the employees of the contractor would be treated as employees of principal employer, entitled to all benefits of regular employees of the principal employer.
A contract is neither sham nor camouflage if the wages are paid to the workman by the contractor, right to regulate employment i.e., appointment, placement, disciplinary action, termination, contractor, ultimate control and supervision lies with the contractor as he decides where the employee will work and how long he will work and subject to what conditions. An employee of the contractor cannot claim to be employee of the principal employer only by alleging that he has been working under the control, supervision and direction of the principal employer in relation to assignment of quantum of work, procedure to complete the work, etc. If the wages are paid to him by the contractor, right to regulate employment i.e., appointment, placement, disciplinary action, termination, etc is with the contractor, ultimate control and supervision lies with the contractor.
Management of Ramjas Public School (Day boarding) Rep. by its Chairman vs. Dharmender & Ors.
2015 LLR 1126 (Del)
International Airports Authority of India vs. International Air Cargo Workers Union & Anr.
3009 (13) LLR 923 (SC)