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SCA/662/2011 43/ 43 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 662 of 2011
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CHEMICAL
MAZDOOR PANCHAYAT - Petitioner(s)
Versus
SECRETARY
THROUGH DESK OFFICER & 2 - Respondent(s)
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Appearance
:
MRS
SANGEETA N PAHWA for
Petitioner(s) : 1,
MR YV VAGHELA for Respondent(s) : 1 - 2,
MRS
MAUNA M BHATT for Respondent(s) :
3,
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CORAM
:
HONOURABLE
MR.JUSTICE H.K.RATHOD
Date
: 26/04/2011
ORAL
ORDER
1. Heard
learned advocate Mrs.Sangeeta N. Pahwa for petitioner, learned
advocate Mr.Y.V.Vaghela for respondent Nos.1 and 2 and learned
advocate Mrs.Mauna M. Bhatt for respondent No.3.
2. With
consent of learned advocates appearing on behalf of respective
parties, the matter is taken up for final hearing today.
3. In
present petition, petitioner has challenged order passed by
respondent No.1 dated 10.5.2010 refusing to refer industrial dispute
raised by petitioner Union to Industrial Tribunal Central while
exercising powers under Section 12(5) of I.D.Act,1947.
4. In
present petition, petitioner Union submitted charter of demand to
respondent No.3 dated 13.6.2007, inter alia, submitting various
demands whereby 39 workmen listed along with schedule were to be
treated as workmen of principal employer and various other benefits
were also prayed for. On 31.7.2008, petitioner requested respondent
No.2 to intervene and to initiate conciliation proceedings, inter
alia, submitting various demands whereby 39 workmen listed along with
schedule were to be treated as workmen of principal employer and
various other demands were also prayed for. According to petitioner
Union, it is very categorically stated that major thrust of demand is
to dispense with paper arrangement of so called labour contract
system which has been alleged to be sham and bogus and not genuine
contract and employees of Gujarat Refinery. According to petitioner,
in an identical demands related to 436 workmen has been referred for
adjudication being Reference Nos.12/1993, 11/1996 and 4/2000.
4.1 On
8.10.2009, petitioner requested respondent No.2 to permit to amend
the charter of demand dated 13.6.2007 and requested to add another 31
workmen in the schedule. Accordingly, conciliation proceedings were
initiated and failure report was sent to appropriate Government by
respondent No.2 on 16.10.2009. On 10.5.2010, respondent No.1 through
Desk Officer passed impugned order informing petitioner that demand
of petitioner Union cannot be referred by appropriate Government for
adjudication to concerned Industrial Tribunal.
4.2 Affidavit-in-reply
is filed by respondent No.3 opposing admission of present petition
and raised a contention that complaint was made under Rule
25(2)(v)(a) of Contract Labour (Regulation & Abolition) Rules and
competent authority has held that contract workers do not perform
same or similar nature of works as those performed by regular
employees of IOCL. Copy of order is also produced on record as
Annexure-R-I.
4.3 It
is necessary to consider that failure report which has been submitted
by Conciliation Officer under Section 12(4) of I.D.Act,1947 dated
16.10.2009. In failure report, comments made by both parties have
been narrated in detail by Conciliation Officer. According to
petitioner Union, the contract system which is going on with
respondent No.3 is not true and genuine but, it is sham and bogus.
The review application which was preferred by petitioner Union
(Annexure-E, Page-30) dated 1.5.2010. Even in that also, a specific
stand has been taken by petitioner Union that contract system which
is going on is sham and bogus and merely a paper arrangement and it
is not genuine and real contract system continued with respondent
No.3. Therefore, industrial dispute raised by petitioner Union to
consider contract employees engaged by contractor on the job and
regularize service of contract employees in job of principal
employer. This specific aspect has not been considered by respondent
No.1 – appropriate Government because merely claimants are
engaged by contractor on the job in which employment a contract
labour is not prohibited under provisions of Contract Labour
(Regulation & Abolition) Act,1970, that itself is not enough
but, real dispute is that claimants those who are engaged by
contractor on job as a contract labour that contract system itself is
merely a paper arrangement made between principal employer and
contractor and such contract system is sham and bogus and not
genuine. Therefore, it required to be considered that claimants those
who are engaged by contractor on the job being an employee of
principal employer or not ? This aspect has been considered by Apex
Court in case of Sarva Shramik Sangh v. Indian Oil Corporation Ltd. &
Ors., reported in 2009 Lab.I.C. 2297. Relevant observations of
aforesaid decisions are in Para.10, 11 to 15 are quoted as under :
“10. The
assumption that there is an absolute bar on inconsistent pleas being
taken by a party, is also not sound. What is impermissible is taking
of an inconsistent plea by way of amendment thereby denying the other
side, the benefit of an admission contained in the earlier pleading.
Mutually repugnant and contradictory pleas, destructive of each other
may also not be permitted to be urged simultaneously by a
plaintiff/petitioner. But when there is no inconsistency in the facts
alleged, a party is not prohibited from taking alternative pleas
available in law. Similarly, on the same facts, different or
alternative reliefs can also be claimed. When the case of the workers
is that the contract was sham and nominal, they could seek a relief
that they should be declared as the direct employees of the principal
employer; and if that contention failed and it is found that the
contract was valid, then they can seek issue a direction to the
Central Government to consider their representation for abolition of
contract labour. Similarly where the workers contend that the
contract between principal employer and the contractor was sham and
merely a camouflage to deny them the benefits of labour laws, and if
their prayer for relief under CLRA Act is rejected, they can then
seek relief under the ID Act. The contention of IOC that on account
of the dismissal of the first petition, the second petition for a
different relief was barred either by principle of res judicata or by
principle of estoppel is liable to be rejected.
11. We
will next consider whether the decision in SAIL-II relied on by the
respondents, is in any way applicable. That decision related to a
dispute raised by the contract labour employed by VISL (an unit of
SAIL) for prohibition of employment of contract labour in the
process/operation in which they were employed and they should be
absorbed as regular permanent employees of VISL. The state government
referred the said dispute to the Tribunal under section 10(1)(c) of
the ID Act. Before the Labour Court, VISL contended that as the
matter related to regulation and abolition of contract labour,
governed by the provisions of the CLRA Act, there could be no
reference of the dispute to the Labour Court for adjudication under
section 10(1)(c) of the ID Act. It was also submitted that as the
state government had not issued any notification prohibiting
employment of contract labour in terms of section 10 of the CLRA Act,
the contract labour did not have a legal right to claim absorption.
11.1) At
that stage, presumably to get over the said objection regarding
maintainability, the workmen filed an additional claim statement
alleging that the contract entered into between VISL and the
contractor was sham and bogus and they should be deemed to be the
direct employees of the management. The Labour Court held that the
dispute referred was whether the contract workers who were employed
in the particular nature of contract work were justified in demanding
absorption as regular employees; that the said dispute pre- supposed
that the employees were contract workers under the contractors and
the question therefore was whether the contract labour system should
be abolished and contract workers had to be absorbed by the principal
employer; that the employees who sought absorption by VISL were
contract labour was evident from the averments made in the claim
statement; and that the only remedy available to them was to file
writ petition seeking a direction to the central government to take a
decision under section 10 of CLRA Act to prohibit employment of
contract labour. The Labour Court held that the question under
reference related to abolition of contract labour and as the said
question could be decided only by appropriate Government under
section 10 of the CLRA Act, the dispute was not maintainable under ID
Act. Therefore the Labour Court made an award holding that the
reference was not maintainable.
11.2) The
said award of the Labour Court was challenged in the High Court. A
learned single Judge allowed the writ petition and directed the Union
of India to treat the writ petition as a petition submitted by the
Union raising an industrial dispute in terms of section 2(k) read
with section 12(1) of the ID Act as also under the provisions of CLRA
Act. The learned Judge further directed the central government to
refer the said dispute to the Industrial Tribunal. The appeal filed
against the said judgment of the learned Single Judge was dismissed
by a division bench. Aggrieved thereby SAIL approached this Court. It
is in that background this Court held that the workmen having taken a
definite stand that they were working under the contractors, and as
the dispute that was referred was one which arose under the CLRA Act,
the workmen could not, by amending the claim statement filed before
the Labour Court, take a contradictory and inconsistent plea that the
contract between VISL and the contractor was sham and bogus and they
were the direct employees of VISL. This Court observed that it was
impermissible to raise such mutually destructive pleas in law, having
regard to the principles of estoppel, waiver and acquiescence which
were also applicable in industrial adjudication.
11.3) We
have referred to the factual situation in detail to demonstrate that
the said observations made in the context of the peculiar facts of
that case, where the reference by the state government under the ID
Act was in regard to a specific dispute that they were employees of
the contractor and that after prohibiting the contract labour system
under section 10 of the CLRA Act, they should be absorbed as direct
employees of VISL. This court therefore held that in such a reference
under ID Act, raising a contention that the contract between VISL
and the contractor was bogus and sham and that they were direct
employees of principal employer contradicted the case on the basis of
which the reference was sought and reference was made, and the two
contentions being mutually destructive, such a plea which would
destroy the very reference could not be permitted to be raised. The
decision in SAIL-II is therefore of no assistance to the respondents.
What was held to be impermissible in SAIL-II was raising inconsistent
and mutually destructive pleas in the same proceedings. It does not
bar a particular relief being sought in a writ petition, and when it
is found that such a relief was inappropriate, then seeking
appropriate relief in a different proceedings.
11.4) The
facts are completely different here. The issue in the first writ
petition was with reference to section 10 of CLRA Act. The issue in
the second petition was whether the dispute (relating to their claim
that they were the direct employees of IOC) should be referred under
section 10(1)(c) of the ID Act. The decision in SAIL II will not
therefore apply. When the parties are different, issues are
different, reliefs are different, the question of either res
judicata, or finality of proceedings, acquiescence or estoppel will
not arise.
Re
: Question (ii)
12. It
is true that making a reference under section 10(1) of the ID Act is
within the discretion of the appropriate government. Referring to the
unamended section 10(1) of ID Act this court in State of Madras v.
C.P.Sarathy [1953 (4) SCR 334], laid down the following principles:
(I) The
government should satisfy itself, on the facts and circumstances
brought to its notice, in its subjective opinion that an `industrial
dispute’ exists or is `apprehended.
(ii) The
factual existence of a dispute or its apprehension and the expediency
of making reference are matters entirely for the government to
decide.
(iii) The
order making a reference is an administrative act and it is not a
judicial or a quasi-judicial act.
(iv) The
order of reference passed by the government cannot be examined by the
High Court in its jurisdiction under art 226 of the Constitution to
see if the government had material before it to support the
conclusion that the dispute existed or was apprehended.
12.1) The
opening words of section 10 of ID Act “if any industrial
dispute exists or is apprehended the appropriate government may”
were replaced by the words “where the appropriate government is
of the opinion that any industrial dispute exists or is apprehended
it may at any time” by Act 18 of 1952. The issue was thereafter
again considered in Rohtas Industries Ltd. v. SD Agarwal [AIR 1969 SC
707]. After referring to the propositions in Sarathy, this Court held
:
“This
interpretation of s 10(1) is based on the language of that provision
as well as the purpose for which the power in question was given and
the effect of a reference. That decision cannot be considered as an
authority for the proposition that whenever a provision of law
confers certain power on an authority on its forming a certain
opinion on the basis of certain facts, the courts are precluded from
examining whether the relevant facts on the basis of which the
opinion is formed had in fact existed.” (emphasis supplied)
12.2) The
amended section 10 was considered in Western India Match Co. v.
Western India Match Co. Workers’ Union [1970 (1) SCC 225]. This
court, again, after referring to the observation in Sarathy that the
order of the government is an administrative function, observed thus
:
“…….the
government cannot go into the merits of the dispute, its function
being only to refer such a dispute for adjudication so that the
industrial relations between the employer and the employees may not
continue to remain disturbed, and the dispute may be resolved through
a judicial process as speedily as possible.”
12.3) In
State of Bombay v. K.P. Krishnan [1961] 1 SCR 227, this court
referred to the scope of section 10(1) thus :
“Section
10(1) provides that where the appropriate Government is of opinion
that any industrial dispute exists or is apprehended, it may at any
time by order in writing refer the dispute to one or the other
authority specified in clauses (a) to (d). This section is of basic
importance in the scheme of the Act. It shows that the main object of
the Act is to provide for cheap and expeditious machinery for the
decision of all industrial disputes by referring them to
adjudication, and thus avoid industrial conflict resulting from
frequent lock-outs and strikes. It is with that object that reference
is contemplated not only in regard to existing industrial disputes
but also in respect of disputes, which may be apprehended. This
section confers wide and even absolute discretion on the Government
either to refer or to refuse to refer an industrial dispute as
therein provided. Naturally this wide discretion has to be exercised
by the Government bona fide and on a consideration of relevant and
material facts.”
This
court clarified that the writ court can direct the government to
reconsider whether a reference should be made or not after leaving
out the relevant and extraneous considerations.
12.4) In
Bombay Union of Journalists & Ors. v. The State of Bombay &
Anr. [1964] 6 SCR 22, this court once again discussed the scheme of
reference and observed:
“…
section 10(1) confers discretion on the appropriate Government either
to refer the dispute, or not to refer it, for industrial adjudication
according as it is of the opinion that it is expedient to do so or
not … in entertaining an application for a writ of mandamus against
an order made by the appropriate Government under s. 10(1) read with
s. 12(5), the Court is not sitting in appeal over the order and is
not entitled to consider the propriety or the satisfactory character
of the reasons given by the said Government. … It is no doubt
desirable that the party concerned should be told clearly and
precisely the reasons why no reference is made, because the object of
s. 12(5) appears to be to require the appropriate Government to state
its reason for refusing to make a reference, so that the reasons
should stand public scrutiny; but that does not mean that a party
challenging the validity of the Government’s decision not to
make a reference can require the court in writ proceedings to examine
the propriety or correctness of the said reasons.”
This
court however made it clear that if the appropriate government
refuses to make a reference for irrelevant considerations, on
extraneous grounds or acts mala fide, a party would be entitled to
move the High Court for a writ of mandamus.
12.5) This
position was reiterated in Hochtif Gammon v. State of Orissa [1975
(2) SCC 649]. In Hochtif Gammon, this Court observed thus:
“The
executive have to reach their decisions by taking into account
relevant considerations. They should not refuse to consider relevant
matter nor should take into account wholly irrelevant or extraneous
consideration. They should not misdirect themselves on a point of
law. Only such a decision will be lawful. The courts have power to
see that the executive acts lawfully. It is no answer to the exercise
of that power to say that the executive acted bona fide nor that they
have bestowed painstaking consideration. They cannot avoid scrutiny
by courts by failing to give reasons. If they give reasons that they
are not good reasons, the courts can direct them to reconsider the
matter in the light of relevant matters, though the propriety,
adequacy or satisfactory character of those reasons may not be open
to judicial scrutiny. Even if the executive considers it inexpedient
to exercise their powers they should state their reasons and there
must be material to show that they have considered all the relevant
facts.”
12.6) Thereafter
the matter came up for consideration in Avon Services (supra) relied
upon by the High Court. In Avon Services, this Court reiterated the
principles thus:
“Section
10(1) confers a discretionary power and this discretionary power can
be exercised on being satisfied that an industrial dispute exists or
is apprehended. There must be some material before the Government on
the basis of which it forms an opinion that an industrial dispute
exists or is apprehended. The power conferred on the appropriate
Government is an administrative power and the action of the
Government in making the reference is an administrative act. The
formation of an opinion as to the factual existence of an industrial
dispute as a preliminary step to the discharge of its function does
not make it any the less administrative in character. Thus the
jurisdictional facts on which the appropriate Government may act are
the formation of an opinion that an industrial dispute exists or is
apprehended which undoubtedly is a subjective one, the next step of
making reference is an administrative act. The adequacy or
sufficiency of the material on which the opinion was formed is beyond
the pale of judicial scrutiny. If the action of the Government in
making the reference is impugned by a party it would be open to such
a party to show that what was referred was not an industrial dispute
and that the Tribunal had no jurisdiction to make the Award but if
the dispute was an industrial dispute, its factual existence and the
expediency of making a reference in the circumstances of a particular
case are matters entirely for Government to decide upon, and it will
not be competent for the Court to hold the reference bad and quash
the proceedings for want of jurisdiction merely because there was, in
its opinion, no material before Government on which it could have
come to an affirmative conclusion on those matters.
Merely
because the government rejects a request for a reference or declines
to make a reference, it cannot be said that the industrial dispute
has ceased to exist…… The industrial dispute may nonetheless
continue to remain in existence and if at a subsequent stage the
appropriate government is satisfied that in the interest of
industrial peace and for promoting industrial harmony it is desirable
to make a reference, the appropriate government does not lack power
to do so under s 10(1), nor is it precluded from making the reference
on the only ground that on an earlier occasion it had declined to
make the reference.”
12.7) In
Ram Avtar Sharma vs. State of Haryana [1985 (3) SCC 189], this Court
considered a refusal by the government as it found that the services
of the employee were terminated only after charges against him were
proved in a domestic enquiry, that this Court held that a clear case
of grant of writ of mandamus was made out on the ground of the
following reasoning:
“The
assumption underlying the reasons assigned by the Government are that
the enquiry was consistent with the rules and the standing orders,
that it was fair and just and that there was unbiased determination
and the punishment was commensurate with the gravity of the
misconduct…….. The reasons given by the Government would show
that the Government examined the relevant papers of enquiry and the
Government was satisfied that it was legally valid and that there was
sufficient and adequate evidence to hold the charges proved. It would
further appear that the Government was satisfied that the enquiry was
not biased against the workmen and the punishment was commensurate
with the gravity of the misconduct charged. All these relevant and
vital aspects have to be examined by the Industrial Tribunal while
adjudicating upon the reference made to it. In other words, the
reasons given by the Government would tantamount to adjudication
which is impermissible. That is the function of the Tribunal and the
Government cannot arrogate to itself that function. Therefore if the
grounds on which or the reasons for which the Government declined to
make a reference under Section 10 are irrelevant, extraneous or not
germane to the determination, it is well settled that the party
aggrieved thereby would be entitled 10 move the Court for a writ of
mandamus. It is equally well settled that where the Government
purports to give reasons which tantamount to adjudication and refuses
to make a reference, the appropriate Government could be said to have
acted on extraneous, irrelevant grounds or grounds not germane to the
determination and a writ of mandamus would lie calling upon the
Government to reconsider its decision.”
12.8) In
Telco Convoy Drivers Mazdoor Sangh vs. State of Bihar [1989 (3) SCC
271], this Court held that while exercising power under section 10(1)
of the Act, the function of the appropriate government is an
administrative function and not a judicial or quasi-judicial
function. In performing this administrative function the government
cannot delve into the merits of the dispute and take upon itself the
determination of the lis, which would certainly be in excess of the
power conferred on it by section 10 of the Act. However, there may be
exceptional cases in which the state government may, on a proper
examination of the demand, come to a conclusion that the demands are
either perverse or frivolous and do not merit a reference. But the
government should be slow to attempt an examination of the demand
with a view to declining reference and courts will always be vigilant
whenever the government attempts to usurp the powers of the Tribunal
for adjudication of valid disputes, and to allow the government to do
so would be to render section 10 and section 12(5) of the Act
nugatory. Where, as in the instant case, the dispute is whether the
persons raising the dispute are workmen or not, the same cannot be
decided by the government in exercise of its administrative function
under section 10(1). When the dispute was whether the convoy drivers
were employees or workmen of TELCO, that is to say, whether there was
relationship of employer and employees between TELCO and the convoy
drivers, the Deputy Labour Commissioner and/or the state government
was not justified in holding that the convoy drivers were not workmen
and accordingly, no reference could be made. When it is found that
the dispute should be adjudicated by the Industrial Tribunal and the
state government had persistently declined to make a reference under
section 10(1) despite chances given by High Court and Supreme Court
to reconsider the matter, the court would direct the government to
make a reference of the dispute to the appropriate industrial
tribunal. The principles were reiterated in Sultan Singh vs. State of
Haryana [1996 (2) SCC 66 and Secretary, Indian Tea Association vs.
Ajit Kumar Barat [2000 (3) SCC 93].
13. Thus
it can safely be concluded that a writ of mandamus would be issued to
the appropriate government to reconsider the refusal to make a
reference, where (I) the refusal is on irrelevant, irrational or
extraneous grounds; (ii) the refusal is a result of the appropriate
government examining the merits of the dispute
and prejudging/adjudicating/determine the dispute; (iii) the refusal
is mala fide or dishonest or actuated by malice; (iv) the refusal
ignores the material available in the failure report of the
Conciliation Officer or is not supported by any reason.
14. This
case is squarely covered by the decisions in Ram Avtar Sharma and
Telco Convoy Drivers Mazdoor Sangh. The state government has examined
the merits of the dispute and has refused to make the reference on
the ground that the workers were not the employees of IOC, when the
very dispute that required reference was whether the workers should
be considered as the employees of IOC.
15. In
view of the above we allow this appeal and direct the Central
Government to reconsider the matter in the light of the observations
above and take an appropriate decision on the request for reference
of the dispute to the Industrial adjudicator. As and when the state
government makes the reference, it is for the Industrial Tribunal to
consider the dispute on merits, on the basis of materials placed
before it, uninfluenced by the observations of the High Court or this
Court.”
4.4 It
is necessary to note that in identical industrial dispute raised by
contractor employees represented by petitioner Union wherein
industrial dispute (page-46) has been referred for adjudication by
order dated 11.1.2000 which is quoted as under :
“Whether
the union, Chemical Mazdoor Panchayat has locus standi to raise the
dispute on behalf of 129 contractual workmen ? If so, whether the
contract works between the management of Gujarat Refinery, Baroda,
and its various contractors (in respect of these 129 contractual
workmen) are sham and bogus contracts ?”
Whether
the Notification No.779(E) dated 9.12.1976 is applicable to the
establishment of Gujarat Refinery, Indian Oil Corporation Ltd.,
Baroda ?
Whether
the charter of demands raised by the President Chemical Mazdoor
Panchayat, Ahmedabad, vide representation dated 24.9.1999 against the
management of Gujarat Refinery, Baroda, is proper and justified ? If
so, to what relief the 129 concerned workmen (list enclose) are
entitled to and from which date and what other directions are
necessary in the matter ?”
4.5 Similarly,
another identical industrial dispute has been referred by
appropriate Central Government dated 18.4.1996 (Page-48) between
contract labours and OIC Ltd. being registered as Reference
No.11/1996 which has been raised by Union – Gujarat Mazdoor
Panchayat, which is quoted as under :
“Whether
the demand of the Union that the workmen listed in the annexure
appointed by the labour contractor should be treated as the direct
workmen of the principal employer, i.e., Gujarat Refinery of Indian
Oil Corporation Ltd. is justified ?
“Whether
the charter of demands raised by the union vide representation dated
7.9.93 against the management of Gujarat Refinery, Indian Oil
Corporation Ltd., Baroda, is justified ? If so, to what relief the
concerned workmen are entitled ?”
4.6 Third
identical industrial dispute referred for adjudication by appropriate
Central Government dated 5.5.1993 (page-51) where dispute is raised
by Gujarat Mazdoor Panchayat being Reference No.12/1993. The schedule
is quoted as under :
“Whether
the charter of demands raised by the General Secretary, Gujarat
Mazdoor Panchayat, Ahmedabad vide its representation dated 18th
November,1991 against the management of Gujarat Refinery Baroda is
justified. If so, what relief the concerned workmen are entitled to.”
4.7 All
these details have been supplied by petitioner Union to respondent
No.1 in review application dated 1.5.2010 (Annexure-E, Page-30) and
specific stand has been taken that contract system which is going on
with respondent No.3 is not genuine and true but, it is sham and
bogus and is merely a paper arrangement between contractor and
respondent No.3 – Principal employer. The petitioner Union has
also referred decision of Apex Court in case of Steel Authority of
India v. National Union Water Front Workers. Relevant Para.4 thereof
is quoted as under :
“An
analysis of the cases, discussed above, shows that they fall in three
classes; (i) where contract labour is engaged in or in connection
with the work of an establishment and employment of contract labour
is prohibited either because the Industrial adjudicator/Court ordered
abolition of contract labour or because the appropriate Government
issued notification under Section 10(1) of the CLRA Act, no automatic
absorption of the contract labour working in the establishment was
ordered;
(ii)
where the contract was found to be sham and nominal rather a
camouflage in which case the contract labour working in the
establishment of the principal employer was held, in fact and in
reality, the employees of the principal employer himself. Indeed,
such cases do not relate to abolition of contract labour but present
instances wherein the Court pierced the veil and declared the correct
position as a fact at the stage after employment of contract labour
stood prohibited;
(iii)
where in discharge of a statutory obligation of maintaining canteen
in an establishment the principal employer availed the services of a
contractor and the Courts have held that the contract labour would
indeed be the employees of the principal employer.
(5)
On issuance of prohibition notification under S. 10(1) of the CLRA
Act prohibiting employment of contract labour or otherwise, in an
industrial dispute brought before it by any contract labour in regard
to conditions of service, the industrial adjudicator will have to
consider the question whether the contractor has been interposed
either on the ground of having undertaken to produce any given result
for the establishment or for supply of contract labour for work of
the establishment under a genuine contract or is a mere
ruse/camouflage to evade compliance of various beneficial
legislations so as to deprive the workers of the benefit thereunder.
If the contract is found to be genuine but a mere camouflage, the
so-called contract labour will have to be treated as employees of the
principal employer who shall be directed to regularize the services
of the contract labour in the concerned establishment subject to
conditions as may be specified by it for that purpose in the light of
para 6 hereunder.
(6)
If the contract is found to be genuine and prohibition notification
under S. 10(1) of the CLRA Act in respect of the concerned
establishment has been issued by the appropriate Government,
prohibiting employment of contract labour in any process, operation
or other work of any establishment and where in such process,
operation or other work of the establishment the principal employer
intends to employ regular workmen he shall give preference to the
erstwhile contract labour, if otherwise found suitable and, if
necessary, by relaxing the condition as to maximum age appropriately
taking into consideration the age of the workers at the time of their
initial employment by the contractor and also relaxing the condition
as to academic qualifications other than technical qualifications.
We
have used the expression “industrial adjudicator” by design
as determination of the questions aforementioned requires inquiry
into disputed question of facts which cannot conveniently be made by
High Courts in exercise of jurisdiction under Art. 226 of the
Constitution. Therefore, in such cases the appropriate authority to
go into those issues will be Industrial Tribunal / Court whose
determination will be amenable to judicial review.
It
is clear that the present demand of the union is under second
category of cases, “which do not relate to abolition of
contract labour but present in stances wherein the Court pierced the
veil and declared the correct position as a fact” and “if
the contract is found to be not genuine but a mere camouflage (to
evade compliance of various beneficial legislation so as to deprive
the worker’s of the benefit there under), the so called contract
labour will have to be treated as employees of the principle employer
who shall be directed to regularize the services of the contract
labour in the concerned establishment”.
4.8 Recently,
Division Bench of this Court, in case of Thakor Nagjibhai Bhailal v.
IPCL, Now Amalgamated with Reliance Inds. Ltd. & Ors., reported
in 2011 I CLR 183. Relevant observations of aforesaid decisions are
in Para.20 to 26 are quoted as under :
“20. In
the case of Sarva Shramik
Sangh vs. Indian Oil Corporation Ltd.,
reported in (2009) 11 SCC 609, the Supreme Court observed as follows
:-
“29. It
is true that making a reference under Section 10(1) of the ID Act is
within the discretion of the appropriate Government. Referring to
the unamended Section 10(1) of the ID Act this Court in State
of Madras vs. C.P. Sarathy, AIR
1953 SC 53 laid down the following principles :-
(i) The
Government should satisfy itself, on the facts and circumstances
brought to its notice, in its subjective opinion that an “industrial
dispute” exists or is “apprehended”.
(ii) The
factual existence of a dispute or its apprehension and the expediency
of making reference are matters entirely for the Government to
decide.
(iii) The
order making a reference is an administrative act and it is not a
judicial or a quasi-judicial act.
(iv) The
order of reference passed by the Government cannot be examined by the
High Court in its jurisdiction under Article 226 of the Constitution,
to see if the Government had material before it to support the
conclusion that the dispute existed or was apprehended.”
20A. In Rohtas
Industries Ltd. vs. S.D. Agarwal, reported in (1969) 1 SCC
325, the Supreme Court held as follows :-
“7. ….
This interpretation of Section 10(1) is based on the language of that
provision as well as the purpose for which the power in question was
given and the effect of a reference. That decision cannot be
considered as an authority for the proposition that whenever a
provision of law confers certain power on an authority on its forming
a certain opinion on the basis of certain facts the courts are
precluded from examining whether the relevant facts on the basis of
which the opinion is said to have been formed were in fact existed.”
21. Whether the Government
can go into the merits of the dispute was the question raised before
the Supreme Court in Western
India Match Co. Ltd. vs. Western India March Co. Workers’ Union,
reported in (1970) 1 SCC 225. Therein, at para 9, the Supreme Court
observed as under :-
“9. …
the Government cannot go into the merits of the dispute, its function
being only to refer such a dispute for adjudication so that the
industrial relations between the employer and his employees may not
continue to remain disturbed and the dispute may be resolved through
a judicial process as speedily as possible.”
22. If the appropriate
Government refuses to make a reference for irrelevant considerations,
on extraneous grounds or acts mala fide, a party would be entitled to
move the High Court for a writ of mandamus. This was the view of the
Supreme Court in Hochtief
Gammon vs. State of Orissa, reported in (1975) 2 SCC 649,
wherein the Supreme Court made the following observations :-
“13. The
executive has to reach their decisions by taking into account
relevant considerations. They should not refuse to consider relevant
matter nor should they take into account wholly irrelevant or
extraneous consideration. They should not misdirect themselves on a
point of law. Only such a decision will be lawful. The courts have
power to see that the executive acts lawfully. It is no answer to
the exercise of that power to say that the executive acted bona fide
nor that they have bestowed painstaking consideration. They cannot
avoid scrutiny by courts by failing to give reasons. If they give
reasons and they are not good reasons, the court can direct them to
reconsider the matter in the light of relevant matters, though the
propriety, adequacy or satisfactory character of those reasons may
not be open to judicial scrutiny. Even if the executive considers it
inexpedient to exercise their powers they should state their reasons
and there must be material to show that they have considered all the
relevant facts.”
23. Section 10(1) of the ID
Act confers a discretionary power and is exercised on being satisfied
that an industrial dispute exists or is apprehended. There may be
some material before the Government on the basis of which it forms an
opinion. The adequacy or sufficiency of the material on which the
opinion was formed is beyond the pale of judicial scrutiny. If the
action of the Government in making the reference is impugned by a
party, it would be open to such a party to show that what was
referred was not an industrial dispute and that the Tribunal had no
jurisdiction to make the award but if the dispute was an industrial
dispute, its factual existence and the expediency of making a
reference in the circumstances of a particular case are matters
entirely for Government to decide upon, and it will not be competent
for the court to hold the reference bad and quash the proceedings for
want of jurisdiction merely because there was, in its opinion, no
material before the Government on which it could have come to an
affirmative conclusion on those matters. Such was the finding of the
Supreme Court in Avon
Services Production Agencies (P) Ltd. vs. Industrial Tribunal,
reported in (1979) 1 SCC 1.
In the very same case,
however, the Supreme Court held that “….merely because the
Government rejects a request for a reference or declines to make a
reference, it cannot be said that the industrial dispute has ceased
to exist. ….. The industrial dispute may nonetheless continue to
remain in existence and if at a subsequent stage the appropriate
Government is satisfied that in the interest of industrial peace and
for promoting industrial harmony it is desirable to make a reference,
the appropriate Government does not lack power to do so under Section
10(1), nor is it precluded from making the reference on the only
ground that on an earlier occasion it had declined to make the
reference.”
24. In Ram
Avtar Sharma vs. State of Haryana, reported in (1985) 3
SCC 189, the Supreme Court considered a refusal by the Government
which has decided on merit. That was the case where the services of
the employee were terminated after charges against him were proved
in a domestic enquiry. In the said case, the Supreme Court observed
as follows :-
“….
The reasons given by the Government would show that the Government
examined the relevant papers of enquiry and the Government was
satisfied that it was legally valid and that there was sufficient and
adequate evidence to hold the charges proved. It would further
appeal that the Government was satisfied that the enquiry was not
biased against the workman and the punishment was commensurate with
the gravity of the misconduct charged. All these relevant and vital
aspects have to be examined by the Industrial Tribunal while
adjudicating upon the reference made to it. In other words, the
reasons given by the Government would tantamount to adjudication
which is impermissible. That is the function of the Tribunal and the
Government cannot arrogate to itself that function. Therefore if the
grounds on which or the reasons for which the Government declined to
make a reference under Section 10 are irrelevant, extraneous or not
germane to the determination, it is well settled that the party
aggrieved thereby would be entitled to move the court for a writ of
mandamus .. … It is equally well settled that where the Government
purports to give reasons which tantamount to adjudication and refuses
to make a reference, the appropriate Government could be said to have
acted on extraneous, irrelevant grounds or grounds not germane to the
determination and a writ of mandamus would lie calling upon the
Government to reconsider its decision.”
25. In Telco
Convey Drivers Mazdoor Sangh vs. State of Bihar, reported
in (1989) 3 SCC 271, the Supreme Court held as under :-
“….
While exercising power under Section 10(1) of the Act, the function
of the appropriate Government is an administrative function and not a
judicial or quasi-judicial function. In performing this
administrative function the Government cannot delve into the merits
of the dispute and take upon itself the determination of the lis,
which would certainly be in excess of the power conferred on it by
Section 10 of the Act. However, there may be exceptional cases in
which the State Government may, on a proper examination of the
demand, come to a conclusion that the demands are either perverse or
frivolous and do not merit a reference. But the Government should be
very slow to attempt an examination of the demand with a view to
declining reference and courts will always be vigilant whenever the
Government attempts to usurp the powers of the Tribunal for
adjudication of valid disputes, and to allow the Government to do so
would be to render Section 10 and Section 12(5) of the Act nugatory.
…. … …. …. ….
Where,
as in the instant case, the dispute is whether the persons raising
the dispute are workmen or not, the same cannot be decided by the
Government in exercise of its administrative function under Section
10(1). When the dispute was whether the convoy drivers were
employees or workmen of TELCO, that is to say, whether there was
relationship of employer and employees between TELCO and the convoy
drivers, the Deputy Labour Commissioner and/or the State Government
was not justified in holding that the convoy drivers were not workmen
and accordingly, no reference could be made.
… …. …. …. ….
When
it is found that the dispute should be adjudicated by the Industrial
Tribunal and the State Government had persistently declined to make a
reference under Section 10(1) despite chances given by the High Court
and Supreme Court to reconsider the matter, the Court would direct
the Government to make a reference of the dispute to the appropriate
Industrial Tribunal.”
26. When
similar matter fell for consideration before the Supreme Court in
Sharad Kumar vs. Govt. of NCT
of Delhi, reported in AIR 2002 SC 1724, the Supreme Court
observed that where determination of the question required
examination of factual matters for which materials including oral
evidence will have to be considered, in such matters, the State
Government could not arrogate on to itself the power to adjudicate on
the question.
4.9 Recently,
Supreme Court has considered this aspect in case of International
Airport Authority of India v. International Air Cargo Workers’ Unio &
Anr., reported in 2009 (6) Scale 169. Relevant observations of
aforesaid decision are in Para.16 to 20, which is quoted as under :
“16. When
the learned Single Judge considered the matter, the legal position
was governed by the decision in Gujarat Electricity Board vs. Hind
Mazdoor Sabha – 1995 (5) SCC 27, partly modified by Air India
Satutory Corporation vs. United Labour Union – 1997 (9) SCC
377. By the time the Division Bench decided the writ appeal, the
decision of the Constitution Bench in Steel Authority of India Ltd.,
vs. National Union Waterfront Workers – 2001 (7) SCC 1 (for
short `SAIL’) had been rendered, but on account of the short
gap between the two dates, the Division Bench did not notice the
decision in SAIL.
17. In
Gujarat Electricity Board, this Court held :
“…..
the exclusive authority to decide whether the contract labour should
be abolished or not is that of the appropriate Government under the
said provision. It is further not disputed before us that the
decision of the Government is final subject, of course, to the
judicial review on the usual grounds. However, as stated earlier,
the exclusive jurisdiction of the appropriate Government under
Section 10 of the Act arises only where the labour contract is
genuine and the question whether the contract is genuine, or not can
be examined and adjudicated upon by the court or the industrial
adjudicator, as the case may be. Hence in such cases, the workmen can
make a grievance that there is no genuine contract and that they are
in fact the employees of the principal employer.
If
the contract is sham or not genuine, the workmen of the so called
contractor can raise an industrial dispute for declaring that they
were always the employees of the principal employer and for claiming
the appropriate service conditions. When such dispute is raised, it
is not a dispute for abolition of the labour contract and hence the
provisions of Section 10 of the Act will not bar either the raising
or the adjudication of the dispute. When such dispute is raised, the
industrial adjudicator has to decide whether the contract is sham or
genuine. It is only if the adjudicator comes to the conclusion that
the contract is sham, that he will have jurisdiction to adjudicate
the dispute. If, however, he comes to the conclusion that the
contract is genuine, he may refer the workmen to the appropriate
Government for abolition of the contract labour under Section 10 of
the Act and keep the dispute pending. However, he can do so if the
dispute is espoused by the direct workmen of the principal employer.
If the workmen of the principal employer have not espoused the
dispute, the adjudicator, after coming to the conclusion that the
contract is genuine, has to reject the reference, the dispute being
not an industrial dispute within the meaning of Section 2(k) of the
ID Act. He will not be competent to give any relief to the workmen of
the erstwhile contractor even if the labour contract is abolished by
the appropriate Government under Section 10 of the Act.”
In
view of the provisions of section 10 of the Act, it is only the
appropriate government which has the authority to abolish genuine
labour contract in accordance with the provisions of the said
section. No court including industrial adjudicator has jurisdiction
to do so.
18. Gujarat
Electricity Board was partly overruled in Air India in regard to the
question whether on abolition of contract labour system, the contract
labour have to be automatically absorbed by the principal employer,
this Court held as follows in Air India : “The moment the
contract labour system stands prohibited under section 10(1), the
embargo to continue as a contract labour is put an end direct
relationship has been provided between the workmen and the principal
employer. Thereby, the principal employer directly becomes
responsible for taking the services of the workmen hitherto regulated
through the contractor. The linkage between the contractor and the
employee stood snapped and direct relationship stood restored between
the principal employer and the contract labour as its employees.
Considered from this perspective, all the workmen in the respective
services working on contract labour are required to be absorbed in
the establishment of the employer.”
19. A
course correction, if we may use that expression, was applied by the
Constitution Bench, in SAIL. This Court made it clear that neither
section 10 nor any other provision in CLRA Act provides for automatic
absorption of contract labour on issuing a notification by the
appropriate government under section 10(1) of the CLRA Act and
consequently the principal employer cannot be required to absorb the
contract labour working in the establishment. This Court further held
that on a prohibition notification being issued under section 10(1)
of the CLRA Act, prohibiting employment of contract labour in any
process, operation or other work, if an industrial dispute is raised
by any contract labour in regard to conditions of service, the
industrial adjudicator will have to consider whether the contractor
has been interposed either on the ground of having undertaken to
produce any given result for the establishment or for supply of
contract labour for work of the establishment under a genuine
contract, or as a mere ruse/camouflage to evade compliance with
various beneficial legislations so as to deprive the workers of
statutory benefits. If the contract is found to be sham or nominal
and merely a camouflage, then the so called contract labour will have
to be treated as direct employees of the principle employer and the
industrial adjudicator should direct the principle employer to
regularize their services in the establishment subject to such
conditions as it may specify for that purpose. On the other hand if
the contract is found to be genuine and at the same time there is a
prohibition notification under section 10(1) of CLRA Act, in respect
of the establishment, the principal employer intending to employ
regular workmen for the process, operation or other work of the
establishment in regard to which the prohibition notification has
been issued, it shall give preference to the erstwhile contract
labour if otherwise found suitable, if necessary by giving relaxation
of age. As noticed above, SAIL did not specifically deal with the
legal position as to when a dispute is brought before the Industrial
Adjudicator as to whether the contract labour agreement is sham,
nominal and merely a camouflage, when there is no prohibition
notification under section 10(1) of CLRA Act.
20. But
where there is no abolition of contract abour under section 10 of
CLRA Act, but the contract labour contend that the contract between
principal employer and contractor is sham and nominal, the remedy is
purely under the ID Act. The principles in Gujarat Electricity Board
continue to govern the issue. The remedy of the workmen is to
approach the industrial adjudicator for an adjudication of their
dispute that they are the direct employees of the principle employer
and the agreement is sham, nominal and merely a camouflage, even when
there is no order under section 10(1) of CLRA Act. The industrial
adjudicator can grant the relief sought if it finds that contract
between principal employer and the contractor is sham, nominal and
merely a camouflage to deny employment benefits to the employer and
that there is in fact a direct employment, by applying tests like:
who pays the salary; who has the power to remove/dismiss from service
or initiate disciplinary action; who can tell the employee the way in
which the work should be done, in short who has direction and control
over the employee. But where there is no notification under section
10 of the CLRA Act and where it is not proved in the industrial
adjudication that the contract was sham/nominal and camouflage, then
the question of directing the principal employer to absorb or
regularize the services of the contract labour does not arise. The
tests that are applied to find out whether a person is an employee or
an independent contractor may not automatically apply in finding out
whether the contract labour agreement is a sham, nominal and is a
mere camouflage. For example, if the contract is for supply of
labour, necessarily, the labour supplied by the contractor will work
under the directions, supervision and control of the principal
employer but that would not make the worker a direct employee of the
principal employer, if the salary is paid by contractor, if the right
to regulate employment is with the contractor, and the ultimate
supervision and control lies with the contractor. The principal
employer only controls and directs the work to be done by a contract
labour, when such labour is assigned/allotted/sent to him. But it is
the contractor as employer, who chooses whether the worker is to be
assigned/allotted to the principal employer or used otherwise. In
short worker being the employee of the contractor, the ultimate
supervision and control lies with the contractor as he decides where
the employee will work and how long he will work and subject to what
conditions. Only when the contractor assigns/sends the worker to work
under the principal employer, the worker works under the supervision
and control of the principal employer but that is secondary control.
The primary control is with the contractor.”
4.10 Recently,
this Court has also taken view in case of Food Corporation of India
Workers’ Union v. Food Corporation of India, reported in 2001 (1) GLH
90. Relevant observations are in Para.14 which is quoted as under :
14. I have considered the submissions of all the learned advocates. The question is that yet no notification has been issued by the appropriate Government
prohibiting labour contract in the field of the FCI at Gandhidham
Depot and that the respondent No. 6 is having legal and valid
licence of engaging contract labour. These are the facts which are
not in dispute between the parties. Rest of the averments
are in dispute between the parties. The prayers of the
petitioner union either to abolish the contract system or to direct
the respondent corporation to absorb the members of the
petitioner union as a regular employee in such a situation
cannot be entertained by this court because all these are the
disputed questions of fact. In such a situation, the petitioner
union can raise industrial dispute under the Industrial
Disputes Act, 1947 on the ground that the contract labour system
is camouflage, sham and bogus. It is also open for the
petitioner union to approach the machinery under the provisions
of the Contract Labour (Regulation and Abolition) Act,1970
with a prayer to issue notification for prohibiting labour
contract system at Gandhidham. According to me, the petitioner union
can simultaneously approach the machineries under both the
legislations namely Industrial Disputes Act as well as the
Contract Labour (Regulation and Abolition) Act, 1970. Similar
situation has arisen in past before this court in case of Gujarat
Mazdoor Panchayat versus State of Gujarat reported in 1992
(2) LLJ 486. In paragraph 29 and 30 of the decision, division bench
of this court has held as under:
“29. It, therefore, becomes clear that the references for declaration that workmen are direct employees of the principal employer and the intermediary contractor is a camouflage will have to be adjudicated upon on their own merits under the ID Act and they operate in their own field, viz. in the personal field i.e. personal relation between the workmen on the one hand and the principal employer on the other, while references for abolition of contract labour system under sec. 10 of the Act would operate in their own field and they touch upon the industrial activities themselves, their nature and upon the question whether such activities can be allowed to be subject to contract labour system or not. Thus, former references investigate upon and cover personal relationship between the contesting parties while the latter references deal with objective aspects of industrial activities as such. These two types of references operate in different fields and they do not overlap nor do they intermix and both these types of references can be considered on their own merits under the respective Acts by the respective appropriate authorities.
30. In view of the aforesaid contingencies, resulting from interaction of the principal dispute under the ID Act and subsidiary dispute under the Contract Labour Act, from the point of view of time when such disputes get decided and the nature of respective decisions under these two Acts, it is not possible to agree with the contentions of the learned advocate for the respondents that once the dispute regarding abolition of given labour contract system is in the offing and is referred to the appropriate Government under sec.10(1) of the Contract Labour Act is decided, no industrial dispute about de facto existence of such labour contract system can ever survive for reference under the ID Act. In this connection, it will be necessary to note that even if contract labour is in vogue in a concern, employees employed by the contractor can validly raise the following contentions which may buttress their grievance that even though they are the direct employees of the principal employer, they have wrongly been treated as employees of the contractor who is not a real intermediary. Such types of disputes under the ID Act can legitimately be raised in the following cases which are mentioned by way of illustrations only without suggesting that they are exhaustive;
(1) when it is alleged that the employees were directly employed by the principal employer and subsequently contract system was introduced for the same activities resulting in snapping of relationship of employee-employer between the workmen on the one hand and the main employer on the other, thus, violating sec. 9A of the ID Act.
(2) When there is absence of proper registration of concerned principal employer under the Contract Labour Act.
(3) When there is absence of proper licensing of the concerned contractor who employs contract labour at a given point of time.
(4) Even though principal employer may be registered employer under the Act and the concerned contractor may be licensed contractor under the Act, his licence may not cover the activity which is carried on by the contract labour.
(5) Even though principal employer may be registered employer under the Contract Labour Act and the contractor may be having a valid license to employ contract labour, under the Contract Labour Act, for a given activity, still licence issued to him may not cover exact number of permissible employees employed by him meaning thereby member of permissible employes under the licence may be less than number of employees actually employed and qua such excess number of employees, protective umbrella of licence would not be available to the contractor so far as the activity covered by the licence is concerned.
(6) Even though principal employer may be registered employer and the contractor may be licensed contractor and the workmen employed by him might be covered by the permissible number of employees as recognised by the licence and even though such activities may be covered by licence, in fact and in substance, control including disciplinary control and supervision of the entire activity may be with the principal employer and the wages of the employees may in fact be coming out of coffers of the principal employer, and may be getting paid through the contractor who may operate as a mere conduit pipe. Such type of control, supervision and payments being outside the scope of sec. 10(2) read with secs. 20 and 21 of the Contract Labour Act would give rise to a legitimate contention that the principal employer is in fact and substance the real employer and the so called contract is an eye wash.”
5. Learned
advocate Mrs.Mauna Bhatt has raised contention that in fact, there is
no employer – employee relationship with workers, on whose
behalf industrial dispute has been raised by petitioner Union. She
also submitted that these employees are engaged by contractor on job
in which employment of contract labour is not prohibited and
therefore, they are not entitled to raise industrial dispute to
consider their service being regularized in job of principal employer
– respondent No.3. Therefore, she submitted that appropriate
Government – respondent No.1 has rightly examined matter and
decided the same and for that, no interference is required.
6. In
view of aforesaid submissions made by learned advocate Mrs.Mauna
Bhatt, question involved and raised in present petition requires
detailed examination. Hence, Rule.
7. Learned
advocate Mr.Y.V.Vaghela waives service of notice of Rule on behalf of
respondent Nos.1 and 2 and learned advocate Mrs.Mauna M. Bhatt waives
service of notice of Rule on behalf of for respondent No.3.
8. Learned
advocate Mrs.Sangeeta Pahwa for petitioner submitted that decision
which has been taken by appropriate Government – respondent
No.1 dated 10.5.2010 wherein industrial dispute raised by petitioner
Union itself is decided on merits. For that, appropriate Government
has no jurisdiction to examine question on merits in respect to
industrial dispute raised by petitioner Union.
8.1
Learned advocate Mrs.Sangeeta Pahwa has placed reliance on the
decision of Apex Court in case of Telco Convoy Drivers Mazdoor Sangh
and Anr. v. State of Bihar and Others, reported in AIR 1989 SC 1565.
Relevant observations of aforesaid decision are in Para.11 to 16,
which reads as under:
“11.
It is true that in considering the question of making a reference
under Section 10(1), the Government is entitled to form an opinion as
to whether an industrial dispute “exists or is apprehended”,
as urged by Mr. Shanti Bhusan. The formation of opinion as to whether
an industrial dispute “exists or is apprehended” is not the
same thing as to adjudicate the dispute itself on its merits. In the
instant case, as already stated, the dispute is as to whether the
convoy drivers are employees or workmen of TELCO, that is to say,
whether there is relationship of employer and employees between TELCO
and the convoy drivers. In considering the question whether a
reference should be made or not, the Deputy Labour Commissioner
and/or the Government have held that the convoy drivers are not
workmen and, accordingly, no reference can be made. Thus, the dispute
has been decided by the Government which is, undoubtedly not
permissible.
12.
It is, however, submitted on behalf of TELCO that unless there is
relationship of employer and employees or, in other words, unless
those who are raising the disputes are workmen, there cannot be any
existence of industrial dispute within the meaning of the term as
defined in Section 2(k) of the Act. It is urged that in order to form
an opinion as to whether an industrial dispute exists or is
apprehended, one of the factors that has to be considered by the
Government is whether the persons who are raising the disputes are
workmen or not within the meaning of the definition as contained in
Section 2(k) of the Act.
13.
Attractive though the contention is, we regret, we are unable to
accept the same. It is now well settled that, while exercising power
under Section 10(1) of the Act, the function of the appropriate
Government is an administrative function and not a judicial or quasi
judicial function, and that in performing this administrative
function the Government cannot delve into the merits of the dispute
and take upon itself the determination of the lis, which would
certainly be in excess of the power conferred on it by Section 10 of
the Act. See Ram Avtar Sharma v. State of Haryana, (1985) 3 SCR 686 :
(AIR 1985 SC 915) ; M.P. Irrigation Karamchari Sangh v. State of
M.P., (1985) 2 SCR 1019 : (AIR 1985 SC 860) ; Shambu Nath Goyal v.
Bank of Baroda, Jullundur, (1978) 2 SCR 793: (AIR 1978 SC 1088).
14.
Applying the principle laid down by this Court in the above
decisions, there can be no doubt that the Government was not
justified in deciding the dispute. Where, as in, the instant case,
the dispute is whether the persons raising the dispute are workmen or
not, the same cannot be decided by the Government in exercise of its
administrative function under Section 10(1) of the Act. As has been
held in M.P. Irrigation Karamchari Sangh’s case (supra), there may be
exceptionl cases in which the State Government may, on a proper
examination of the demand, come to a conclusion that the demands are
either perverse or frivolous and do not merit a reference. Further,
the Government should be very slow to attempt an examination of the
demand with a view to declining reference and Courts will always be
vigilant whenever the Government attempts to usurp the powers of the
Tribunal for adjudication of the valid disputes, and that to allow
the Government to do so would be to render Section 10 and Section
12(5) of the Act nugatory.
15.
We are, therefore, of the view that the State Government, which is
the appropriate Government, was not justified in adjudicating the
dispute, namely, whether the convoy drivers are workmen or employees
of TELCO or not and, accordingly, the impugned orders of the Deputy
Labour Commissioner acting on behalf of the Government and that of
the Government itself cannot be sustained.
16.
It has been already stated that we had given one more chance to the
Government to reconsider the matter and the Government after
reconsideration has come to the same conclusion that the convoy
drivers are not workmen of TELCO thereby adjudicating the dispute
itself. After having considered the facts and circumstances of the
case and having given our best consideration in the matter, we are of
the view that the dispute should be adjudicated by the Industrial
Tribunal and, as the Government has persistently declined to make a
reference, under Section 10(1) of the Act, we think we should direct
the Government to make such a reference. In several instances this
Court had to direct the Government to make a reference under Section
10(1) when the Government had declined to make such a reference and
this Court was of the view that such a reference should have been
made. See Sankari Cement Alai Thozhiladar Munnetra Sangam v. Govt. of
Tamilnadu, (1983) 1 Lab LJ 460; Ram Avtar Sharma v. State of Haryana,
(1985) 3 SCR 686 : (AIR 1985 SC 915); M. P. Irrigation Karamchari
Sangh v. State of M. P., (1985) 2 SCR 1019: (AIR 1985 SC 860); Nirmal
Singh v. State of Punjab, (1984) 2 Lab LJ 396 : (AIR 1984 SC 1619).”
8.2 She
has also placed reliance on the decision of Apex Court in case of GEB
Thermal Power Station, Ukai v. Hind Mazdoor Sabha and Others,
reported in AIR 1995 SC 1893. Relevant observations of aforesaid
decision are in Para.11 and 13, which reads as under:
“11.
These decisions in unambiguous terms lay down that after the coming
into operation of the Act, the authority to abolish the contract
labour is vested exclusively in the appropriate Government which has
to take its decision in the matter in accordance with the provisions
of Section 10 of the Act. This conclusion has been arrived at in
these decisions on the interpretation of Section 10 of the Act.
However, it has to be remembered that the authority to abolish the
contract labour under Section 10 of the Act comes into play only
where there exists a genuine contract. In other words, if there is no
genuine contract and the so called contract is sham or a camouflage
to hide the reality, the said provisions are inapplicable. When, in
such circumstances, the concerned workmen raise an industrial dispute
for relief that they should be deemed to be the employees of the
principal employer, the Court or the industrial adjudicator will have
jurisdiction to entertain the dispute and grant the necessary relief.
In this connection, we may refer to the following decisions of this
Court which were also relied upon by the counsel for the workmen.
In
Standard –Vacuum Refining Co. of India Ltd. v. Its Workmen (AIR 1960
SC 948) (supra), an industrial dispute was raised by the workmen of
the appellant-company with respect to the contract labour employed by
the company for cleaning maintenance work at the refinery including
the premises and plants belonging to it. The workmen made a demand
for abolition of the contract system and for absorbing workmen
employed through the contractor into the regular service of the
company. The matter was referred for adjudication to industrial
Tribunal. The company objected to the reference on the ground (1)
that it was incompetent inasmuch as there was no dispute between it
and the respondents and it was not open to them to raise a dispute
with respect to the workmen of some other employer, viz., the
contractor, and (2) in any case, it was for the company to decide
what was the best method of carrying on its business and the Tribunal
could not interfere with that function of the management. The
Tribunal held that the reference was competent. It was of the opinion
that the work which was being done through the contractor was
necessary for the company to be done daily, that doing this work
through annual contracts resulted in deprivation of security of
service and other benefits of the workmen of the contractor and hence
the contract system with respect to that work should be abolished. In
appeal, this Court held that the dispute raised was an industrial
dispute within the meaning of Section 2 (k) of the Industrial
Disputes Act because (i) the respondent-workmen had a community of
interest with the workmen of the contractor, (ii) they had also
substantial interest in the subject-matter of the dispute inasmuch as
the class to which they belonged was substantially affected thereby,
and (iii) the company could give relief in the matter. The Court
further held that the work in question was incidental to the
manufacturing process and was necessary for it and was of perennial
nature which must be done every day. Such work is generally done by
workmen in the regular employment of the employer and there should be
no difficulty in having direct workmen for that kind of work. The
matter would be different if the work was of intermittent or
temporary nature or was so little that it would not be possible to
employ full time workmen for the purpose. While dealing with the
contention that the Tribunal should not have interfered with the
managements’ manner of having its work done in the most economical
and convenient way that it thought proper, and that the case in
question was not one where the contract system was a camouflage and
the workmen of the contractors were really the workmen of the
company, the Court held that it may be accepted that the contractor
in that case was an independent person and the system was genuine and
there was no question of the company carrying on the work itself and
camouflaging it as if it was done through contractors in order to pay
less to the workmen. But the fact that the contract in the case was a
bona fide one would not necessarily mean that it should not be
touched by the Industrial Tribunals. If the contract had been mala
fide and a cloak for suppressing the fact that the workmen were
really the workmen of the company, the Tribunal would have been
justified in ordering the company to take over the entire body of
workmen and treat it as its own workmen. But because the contract in
the case was bona fide, the Tribunal had not ordered the company to
take over the entire body of workmen. It had left to the company to
decide for itself how many workmen it should employ and on what
terms, and had merely directed that when selection is being made,
preference be given to the workmen employed by the contractor. The
Court also held that the only question for decision was whether the
work which was perennial and must go on from day to day and which was
incidental and necessary for the work of the refinery and was
sufficient to employ a considerable number of whole-time workmen and
which was being done in most concerns through direct workmen, should
be allowed to be done by contractors. Considering the nature of the
work done and the conditions of service in the case, the Court opined
that the Tribunal’s decision was right and no interference was called
for.
This
decision is of seminal importance for two reasons. It laid down the
tests for deciding whether contract labour should be continued in a
particular establishment, occupation or process etc. Section 10 of
the Act incorporates more or less the same tests as laid down by this
decision. Secondly, it also spelt out the circumstances when the
workmen of an establishment can espouse the cause of other workmen
who were not the direct employees of the establishment and raise an
industrial dispute within the meaning of the ID Act.
This
being a case decided prior to the coming into operation of the Act,
the Court had held here that even if the contract is a genuine one,
the industrial adjudicator will have jurisdiction to abolish the
contract labour and give appropriate relief as the industrial
Tribunal had done in the case. Its importance lies in the fact that
it lends support to the proposition that even after the coming into
operation of the Act, the industrial adjudicator will have, in
appropriate cases, jurisdiction to investigate as to whether the
contract is genuine or not, and if he comes to the conclusion that it
is not, he will have jurisdiction also to give suitable relief. It
may also appear that even where the contract is genuine but it comes
to be abolished by the appropriate Government under Section 10 of the
Act, the industrial adjudicator will have jurisdiction to determine
the status of the workmen of the erstwhile contractor.
In
Hussainbhai, Calicut v. The Alath Factory Thozhilali Union, Kozhikode
(1978) 4 SCC 257 : (AIR 1978 SC 1410), a number of workmen were
engaged in the petitioner’s factory to make ropes. But they were
hired by contractors who had executed agreements with the petitioners
to get such work done. When 29 of these workmen were denied
employment, an industrial dispute was referred by the State
Government. The Industrial Tribunal held them to be workmen of the
petitioner. This award was challenged by the petitioner before the
High Court and the learned single Judge held that the petitioner was
the employer and the workmen were employees under the petitioner.
The Division Bench of the High Court upheld this decision. While
dismissing the special leave petition against, the said decision,
this Court observed that the facts found were that the work done by
the workmen was an integral part of the industry concerned. The raw
material was supplied by the management, the factory premises
belonged to the management, the equipment used also belonged to the
management and the finished product was taken by the management for
its own trade. The workmen were broadly under the control of the
management and the defective articles were directed to be rectified
by the management. These circumstances were conclusive to prove that
the workmen were workmen of the petitioner. The Court further held
that if the livelihood of the workmen substantially depends on labour
rendered to produce goods and services for the benefit and
satisfaction of the enterprise, the absence of direct relationship or
the presence of dubious intermediaries cannot snap the real life
bond. If however, there is total dissociation between the management
and the workmen, the employer is in substance and in real life terms
another. The true test is where the workers or group of workers
labour to produce goods or services and these goods or services are
for the business of another, that another is in fact, the employer.
He was economic control over the worker’s skill, subsistence, and
continued employment. If for any reason, he chokes off, the workers
are virtually laid off. The presence of intermediate contractors with
whom alone the workers have immediate direct relationship ex
contractu is of on consequence when on lifting the veil or looking at
the consepectus of factors governing employment, the naked truth is
discerned and especially since it is one of the myriad devices
resorted to by the management to avoid responsibility when labour
legislation casts welfare obligations on real employer based on
Articles 38,39,42,43,and, 43A (sic) of the Constitution.
In
R. K. Panda v. Steel Authority of India Ltd. (1994) 5 SCC 304 : (1994
AIR SCW 2460), the contract labourers by filing a writ petition under
Article 32 claimed party in pay with direct employees and also
regularisation in the employment of the respondent-authority. They
were continuing in employment for periods ranging from 10 to 20
years. The contractors used to be changed but the new contractors
were under the terms of the agreement required to retain the workers
of the predecessor contractors. The workers were employed through the
contractors for different purpose like construction and maintenance
of roads and buildings within plant premises, public health,
horticulture, water supply etc. In the agreement with the
contractors, it was stated that the parties shall be governed by the
provisions of the Act as well as by the provisions of the payment of
Bonus Act. On these facts, this Court observed as follows (at p. 2466
of AIR) :-
“It
is true that with the passage of time and purely with a view to
safeguard the interests of workers, many principal employers while
renewing the contracts have been insisting that the contractor or the
new contractor retains the old employees. In fact such a condition is
incorporated in the contract itself. However, such a clause in the
contract which is benevolently inserted in the contract to protect
the continuance of the source of livelihood of the contract labour
cannot by itself give rise to a right to regularisation in the
employment of the principal employer. Whether the contract labourers
have become the employees of the principal employer in course of time
and whether the engagement and employment of labourers through a
contractor is a mere camouflage and a smokescreen, as has been urged
in this case, is a question of fact and has to be established by the
contract labourers on the basis of the requisite material. It is not
possible for the High Court or this Court, while exercising writ
jurisdiction or jurisdiction under Article 136 to decide such
questions, only on the basic of the affidavits. It need not be
pointed out that in all such cases, the labourers are initially
employed and engaged by the contractors. As such at what point of
time a direct link is established between the contract labourers and
the principal employer, eliminating the contractor from the scene, is
a matter which has to be established on material produced before the
Court. Normally, the labour Court and the Industrial Tribunal, under
the Industrial Disputes Act are the competent for a to adjudicate
such disputes on the basis of the oral and documentary evidence
produced before them.”
Taking
into consideration the developments during the pendency of the writ
petition in this Court and the offer made by the respondent-authority
to the workmen either to accept voluntary retirement on the terms
offered by it or to agree to be absorbed on regular basis and the
scheme of modernisation which was in the process of implementation,
the Court gave certain directions in respect of 879 workmen who were
involved in that case. Those directions included, among other things,
regularisation of those workmen who had put in 10 years’ continuous
service provided they were below 58 years of age which was the age of
superannuation under the respondent-authority. The workmen so
regularised were not to receive any difference in their contractual
and regular wages till the date of their absorption which was to be
completed within four months of the date of the order. The
respondent-authority was further at liberty to retrench workmen so
absorbed in accordance with law. The said direction was further
applicable to 142 out of 246 jobs in view of the fact that contract
labour had already been abolished in 104 jobs.
13.
It is not necessary for us to go in to the question of the finality
of the decision under Section 10 of the Act since as held by this
Court in Vegoils Pvt. Ltd. (AIR 1972 SC 1942 ) , B.H.E.L. Workers’
Association (AIR 1985 SC 409), Catering Cleaners of Southern Railway
(AIR 1987 SC 777) and Dena Nath (1991 AIR SCW 3026) (supra), the
exclusive authority to decide whether the contract labour should be
abolished or not is that of the appropriate Government under the said
provision. It is further not disputed before us that the decision of
the Government is final subject, of course, to the judicial review on
the usual grounds. However, as stated earlier, the exclusive
jurisdiction of the appropriate Government under Section 10 of the
Act arises only where the labour contract is genuine and the question
whether the contract is genuine, or not can be examined and
adjudicated upon by the Court or the industrial adjudicator, as the
case may be. Hence in such cases, the workmen can make a grievance
that there is no genuine contract and that are in fact the employees
of the principal employer.”
8.3 In
view of aforesaid decisions of Apex Court and decision of Division
Bench of this Court, as referred above and considering reasoning
given by respondent No.1 – appropriate Government, which is
quoted as under :
“The
claimants are engaged by the Contractor on the job in which
employment of contract labour is not prohibited under the provisions
of Contract Labour (Regulation and Abolition) Act,1970. Hence, the
demand of regularization in the job of the Principal Employer cannot
be construed as an Industrial Dispute.”
9. The
aforesaid reasoning is apparently considered by appropriate
Government on merits because if the claimants are engaged by
contractor on job in which employment contract labour is not
prohibited, even though claimants can raise industrial dispute before
appropriate Government under provisions of the I.D.Act,1947 to the
effect that their services may be regularized by principal employer
because they are working under control of principal employer. But
whether in fact they are working under control of principal employer
or not and arrangement made by respondent No.3 with contractor is
merely paper arrangement or not and contract labour system is real or
sham and bogus or genuine or not, that question is to be examined
by Adjudicator but, this decision apparently on merits and question
as to whether claimants are having any relationship with principal
employer or not, that question only can be examined by Adjudicator
and not by appropriate Government.
10. In
light of these reasoning which found apparently on merits and for
that, appropriate Government has no jurisdiction to decide it and
appropriate Government must have to consider only whether industrial
dispute exists at the time when it has been raised by Union or not.
If there is industrial dispute exists, then appropriate Government
must have to refer such industrial dispute for adjudication before
appropriate concerned Industrial Tribunal.
11. However,
contention raised by learned advocate Mrs.Mauna Bhatt that there is
no relationship between claimant and respondent No.3 as an employer –
employee. If that be so, such contention can be raised by respondent
No.3 before Industrial Tribunal wherein such industrial dispute is
referred for adjudication.
11.1 The
petitioner has also made application for review before appropriate
Government – respondent No.1. Even that review application is
also rejected by appropriate Government by order dated 15.6.2010
without giving separate reasons while dealing with contention raised
by Union in its review application which suggests clear
non-application of mind of respondent No.1.
12. In
view of this, order passed by appropriate Government dated 10.5.2010
as well as order passed in review application dated 15.6.2010 are
hereby quashed and set aside, with a direction to appropriate
Government – respondent No.1 to re-consider entire matter a
fresh in light of decision relied and referred by this Court and
thereafter, to pass appropriate orders of reference under Section
10(1) of I.D.Act,1947 within a period of two months from date of
receiving copy of present order. This order has been passed by this
Court without expressing any opinion on merits. Rule is made absolute
to the aforesaid extent.
[
H.K.RATHOD, J. ]
(vipul)
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