Employee Having Business With Same Company As A Contractor

Hi Everyone,
I have a confusion of Dual Employment please help me
For example A person is working in a company as permanent employee, whether he can do business in same company as a Manpower contractor?
Please answer me, If No, Then why? If yes , How?

Dear Kanimsw,
No organization would ever allow its employees to work for their vendor / customers or suppliers. If any employee is found working as a freelancer / part time or have a share in their business, the organization term it as illegal / dual employment which in turn can / will lead to termination of that employee on disciplinary grounds.
In your case, a employee can be terminated for outsourcing the the company activities to his company which he is a member / owner.
A legal action can also be taken against that employee and his settlement can be withold by the management.

Kanimsw,
As Ankit rightly pointed out, dual employment is unethical (as well as illegal if your firm has that in the HR policy). My recommendation on dual employment scenarios is specific - immediate termination.
Just to make sure that I understand you right - you are curious to know if 'X', who is an employee in your firm (any function or department) can provide your firm a service as a Manpower consultant (even if X is not part of the HR or Recruiting team) and if this is termed as 'Dual Employment' ?
If I have got your question correct, then my response is that this is dual employment since X is a full time employee of your firm as well as a full time employee of a business (as a proprietor, head or associated in some capacity).
If you are X, then you are on a very shaky wicket

I understand but thing is that employee is doing this Manpower contract business with the knowledge of company and company is also fine with this.
my question is whether this is illegal or If the management is fine with this can proceed?

It is illegal in nature, but since the management is aware of the fact then the risk factor is nullified. As the management has to challenge

Dear friends,
I know that there are certain big companies running satellite units in the names of their most confident employees and in fact I had an occasion to handle a dispute of such a satellite unit regarding benefits to its employees on par with the employees of the parent unit.But on verification of the documents, I found the incumbent a middle-management cadre employee and there was no specific clause in the ap[plicable service regulations barring such simultaneous extra engagement. Interestingly the individual argued that he was the real owner of the satellite unit and the management of the parent co moved the High Court against taking cognizance of the dispute on the ground of misjoinder of party with an ulterior motive .Of course it was an unethical practice or a benami transaction to circumvent labour laws. Coming to your question, when it happens with the knowledge and concurrence of the management, how it could be termed as illegal?