Karnataka High Court
General Secretary Hindustan Latex ... vs The General Manager Hindustan Latex ... on 15 September, 2018
Bench: L.Narayana Swamy, B.M.Shyam Prasad
IN THE HIGH COURT OF KARNATAKA,
DHARWAD BENCH
DATED THIS THE 15TH DAY OF SEPTEMBER, 2018
PRESENT
THE HON'BLE MR. JUSTICE L. NARAYANA SWAMY
AND
THE HON'BLE MR. JUSTICE B. M. SHYAM PRASAD
WRIT APPEAL NO.100013/2016
IN
WRIT PETITION NO.64994/2009 (L-RES)
BETWEEN:
GENERAL SECRETARY,
HINDUSTAN LATEX LTD.,
EMPLOYEES ASSOCIATION
AT PO KANAGALE, TQ: HUKKERI,
BELAGAVI DISTRICT.
REPRESENTED BY ITS VICE PRESIDENT
SRI C A KARADE,
THE AUTHORIZED REPRESENTATIVE
...APPELLANT
(BY SRI S.L. MATTI, ADV.)
AND:
THE GENERAL MANAGER,
HINDUSTAN LATEX LTD.,
PO KANAGALE, TQ: HUKKERI,
BELAGAVI DISTRICT.
...RESPONDENT
(BY SRI B.C. PRABHAKAR, ADV. FOR
SRI M. B. HIREMATH, ADVOCATE)
2
THIS APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT, 1961, PRAYING TO CALL FOR
RECORDS AND ON PERUSAL OF THE SAME BE PLEASED TO
SET ASIDE AN ORDER DATED 13.08.2015, PASSED BY THE
HON'BLE SINGLE JUDGE OF THIS HON'BLE COURT IN
WP.NO.64994/2009 (L-RES) AND ALSO PLEASED TO QUASH
JUDGMENT AND AWARD DATED 18.12.2008 PASSED BY
HON'BLE ADDITIONAL LABOUR COURT, HUBBALLI IN
REFERENCE NO.15/2003 BY ALLOWING THIS APPEAL AND
ALLOWED THE CLAIM PETITION FILED BY THE APPELLANT IN
THE REFERENCE NO.15/2003 BEFORE THE HON'BLE
ADDITIONAL LABOUR COURT, HUBBALLI.
THIS WRIT APPEAL HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 02.07.2018 AND COMING ON
FOR PRONOUNCEMENT, THIS DAY B.M. SHYAM PRASAD J.,
DELIVERED THE FOLLOWING:
JUDGMENT
This intra-Court appeal is filed by the appellant, a registered Trade Union, impugning the Writ Court's order dated 13.08.2015 in W.P.No.64994 of 2009. The Writ Court by its order dated 13.08.2015 has dismissed the writ petition filed by the appellant impugning the award dated 18.12.2008 by the Addl. Labour Court, Hubli in Reference No.15/2003 under Section 10(1)(c) of the Industrial Disputes Act, 1947 (for short, 'ID Act'). 3
2. The appellant, a Trade Union registered under Section 8 of the Trade Unions Act, 1926, submitted a charter of demands with the respondent on 15.10.1999 espousing the cause of 19 Contract Workers (for short, 'Contract Workers') in seeking their absorption. The appellant approached the competent officer for conciliation under Section 12(1) of the ID Act. This conciliation, commenced at the instance of the appellant, did not fructify and a report in this regard was filed on 29.06.2003 under Section 12(4) of the ID Act. The Government of Karnataka referred the dispute to the Labour Court for reference under Section 10(1)(c) of the ID Act vide order of reference dated 02.05.2003. The dispute referred to the Labour Court, which is extracted in the counter statement filed by the respondent before the Labour Court, reads as follows;
(a) Whether Hindustan Latex Ltd., Employees' Association (CITU), Kanagala is justified in making demand on the management of Hindustan Latex Ltd., for regularization of services of Sri. 4 Ankush Shiraguppi and 18 other "contract workers"?
(b) If not, for what reliefs the workmen are entitled?
3. The Labour Court upon entering reference issued notice/s of hearing, and after completion of pleadings formulated issues for its consideration. The Labour Court formulated issues as regards whether the appellant was justified in making a demand with the respondent for regularization of the services of the Contract Workers and to what relief these workmen would be entitled to, if the appellant was justified in making such demand. The Labour Court recorded witnesses and by the impugned award dated 18.12.2008 rejected the Reference and directed the Government to publish the award as required under the provisions of the ID Act.
4. The Labour Court concluded that the appellant had failed to produce any cogent or believable evidence to establish that the contract/s issued to the contractor/s, 5 who had employed the Contracts Workers, were sham and camouflage contracts. Further, the Labour Court, referring to the evidence placed on record on behalf of the appellant, concluded that the Contract Workers, who were engaged by contractors only for the purposes of assorting and disposing waste materials, were not engaged in manufacturing, that Contract Workers had not made any application seeking appointment with the respondent, that Contract Workers were not under the direct supervision and control of such respondent and that there was no employer-employee relationship between the respondent and the Contract Workers. The Labour Court in arriving at this conclusion also considered the undisputed fact that the respondent, a central government undertaking, was engaged in manufacturing of health care products and had employed more than 350 permanent employees in manufacture of health care products.
5. The appellant impugned the order of the Labour Court before the writ Court. The appellant, reiterating the 6 submission urged before the Labour Court, contended before the Writ Court that the employment of Contract Workers by the respondent through the agency of contractors was a subterfuge camouflaged by the respondent to hide the true employee - employer relationship and that the Contract Workers were employed with the respondent for discharging the work that was perennial in nature. It was urged before the Writ Court that the respondent had registered itself under Section 7 of the Contract Labour (Regulation and Abolition) Act - for short, 'CLRA Act' and secured Certificate of Registration in Form II under the Contract Labour (Regulation and Aboliton) Central Rules 1971 - for Short - "CLRA Rules" - only in 1999, but the Contract Workers were indisputably engaged through the contractor/s way back in the year 1990. It was also urged that registration under Section 7 of the CLRA Act and CLRA Rules is obtained mentioning the nature of work for which contract labour could be employed viz. for packing, staking of scrap materials, segregation of waste materials, salvaging raw material 7 supply and site development and such registration did not include the nature of work for which the contract workers were employed viz. for the purposes of house keeping and maintenance.
6. The respondent refuted the appellant's case asserting inter alia that the appellant was canvassing questions of facts for the first time in writ proceedings and beyond the scope of reference made by the Government under Section 10(1) (c) of the ID Act, and therefore, the writ petition was not maintainable on this ground alone.
7. The Writ Court, examining the terms of Certificate of Registration obtained by the respondent under the CLRA Act and Rules, and marked as M-2, concluded that the description of the nature of work in the Certificate of Registration was not exhaustive but was inclusive and that the nature of work is mentioned ejusdem generis in the certificate; therefore, the respondent was entitled to engage the Contract Workers for the work 8 mentioned ejusdem generis in the Certificate of Registration. The Writ Court, on examination of the entire records, also concluded that no efforts were made to implead the contractors and the submission that efforts were made to implead the contractors was factually incorrect. The Writ Court, in view of the aforesaid finding, including that it could not examine serious questions of disputes, dismissed the writ petition. And insofar as the decision that was relied upon by the appellant, it was held that the proposition of law canvassed in the case of Maharashtra Road Transport Corporation and Another Vs Casteribe Rajys P. Karmchari Sanghatana, reported in 2009(8) SCC 556, would not apply to the facts and circumstances of the case.
8. The Learned counsel for the appellant, in support of the appeal, canvassed that the Central Government had issued Notification dated 09.12.1976 under the provisions of Section 10 of the CLRA Act prohibiting engaging contract labour for sweeping, cleaning, dusting and 9 watching of buildings, owned or occupied by establishment in respect of which the Central Government is the appropriate Government under the provisions of the CLRA Act, and the Contract Workers were indeed engaged by the respondent for the purposes as mentioned in the notification. As such, the respondent could not have engaged the services of the respondent through contractors; consequentially the provisions of the ID Act would apply and the Contract Workers would be entitled for regularization of services.
9. The learned counsel also submitted that the respondent had obtained the registration under Section 7 of the CLRA Act, in 1999, but the Contract Workers have been in employment with the respondent, though engaged through the contractors, from the year 1990. Therefore, the respondent had contravened the provisions of Sections 7, 10 and 12 of the CLRA Act, and the consequence thereof would be the applicability of the ID Act entitling the Contract Workers for regularization of services. 10
10. Next, the learned counsel for the appellant submitted that if the contracts for hiring the services of contract labour are sham or camouflaged transactions, and if such sham and camouflage are pierced and the relationship of employer and employee is established, the contract workers would be entitled for regularization of services. The learned counsel placed reliance upon the decision of the Hon'ble Supreme Court in the case of Standard-Vaccum Refining Company of India Ltd., Vs Workmen and Another1, and submitted that if the nature of work done by the contract workers was incidental to the main work of manufacturing and is necessary for such manufacturing, such work would be perennial in nature and could be said that the workmen were in the regular employment of the employer. He also placed reliance upon the decision of the Hon'ble Supreme Court in the case of Secretary, Haryana State 1 AIR 1960 SC 948 11 Electricity Board Vs Suresh and Others2 to contend that if an employer and the contractor are not registered as principal employer and licensed contractor respectively, the contract system would be a mere camouflage which could be easily pierced and the relationship of employer and employee established. He also relied upon the decision of the Hon'ble Supreme Court in the case of Bharat Heavy Electricals Ltd., Vs State of UP3 to contend that because the respondent had failed to produce the contractors' details and other details as sought for, it would be justifiable to draw adverse inference, as an aid to pierce the camouflage and hold that the contract workers were in regular employment with the respondent and therefore entitled for regularization.
11. The learned counsel for the respondent, on the other hand, contended that the case canvassed by the appellant in the writ petition and before this Court is 2 in 1999 LAB.I.C. 1323 3 (2003) 6 SCC 528 12 outside the scope of Reference which would be impermissible. The Reference by the Government under Section 10 of the ID Act was whether the appellant was justified in making a demand on the respondent for regularization of Contract Workers. This is crucial because it is admitted, even according to the claim statement filed by the appellant, that the contract workers were in contract employment with the respective contractors. The learned counsel pointed out from the claim statement that the appellant had not set up a case of sham contractual system or subterfuge or camouflage in support of the claim on behalf of the Contract Workers for regularization and therefore the appellant cannot now traverse beyond the Reference or the pleadings on which the reference is made.
12. The learned counsel for the respondent also submitted that the writ Court has rightly concluded that the Certificate of Registration obtained by the respondent under Section 7 of the CLRA Act was for such nature of 13 work which was described ejusdem generis. The learned counsel also submitted that even if there is any violation of the provisions of the CLRA Act, after the decision of the Constitutional Bench in the case of Steel Authority of India Ltd. and Others Vs National Union Water Front Workers and Others4, it is settled that the contractual workers would not be on the rolls of the respondent automatically or that they would be entitled for regularization of services under the provisions of the Act. The learned counsel for the appellant relied upon different decisions to reiterate these very grounds urged by him.
13. Thus, while the appellant seeks interference with the impugned Order of the Writ Court and the Labout Court on the grounds referred to above, the respondent urges that neither the order of the Labour Court nor the order of the Writ Court calls for any interference. Therefore, this Court will have to examine, whether any 4 II LLJ SC 1087 14 ground is made out by the appellant to justify interference by this Court in this intra-court appeal with the Writ Court's Order declining to interfere with the Labour Court's impugned award.
14. The appellant's claim for confirmation of the Contract Workers as permanent employees with the respondent, for which an industrial dispute was raised and conciliation proceedings were conducted leading to a reference under Section 10 of the Act, is on the admitted position that the Contract Workers were employed by different contractors, including M/s Hindustan Latex Employees Multi Purpose Co-operative Society. The appellant has not stated in the claim statement anything about the respondent's contracts with the Contractor/s to engage the Contract Workers being a sham or the respondent having practiced any subterfuge in entering into contract with the Contractor/s. The appellants have not laid out any foundation in their Claim Statement to establish that the engagement by the Contractors was a 15 subterfuge or camouflage. Significantly, as noticed by both the Labour Court and the Writ Court, no Contractor is made a party to the proceedings. The Contractors ought to have been made parties to the proceedings and in the absence of the Contractors the disputed questions of fact cannot be gone into, and this aspect has been considered both by the Labour Court and the Writ Court. The Reference to the Labour Court under Section 10 of the ID Act is whether the appellant was justified in seeking regularization of Contract Workers. If the Reference is such, the pleading is confined and the Contractors are not arrayed as party-respondents, the question would be whether the Labour Court could have traversed beyond the scope of Reference and decided whether the Contract Workers were engaged under a sham contractual engagement and whether the respondent had indulged in subterfuge.
15. If the appellant's case was that the Contract Workers had been engaged by the respondent through the 16 contractors to avoid permanent employment of the Contract Workers though the respondent's actual intendment was to engage the Contract Workers as permanent workmen to do perennial work, the appellant had to set up a dispute specifically in those terms enjoining the Government to make a Reference in terms thereof, and the respondent having failed to set up such a dispute, cannot seek to amplify the Reference under the provisions of Section 10 of the ID Act. It is settled law that an Industrial Tribunal/Labour Court is a creature of statute and it acquires jurisdiction in terms thereof, and therefore, an Industrial Tribunal/Labour Court has to confine itself to the scope of the subject matter of Reference and it cannot traverse beyond the reference made5. If the Labour Court, in the specific facts and circumstances of this case, had examined the questions of 'sham transactions' or 'camouflage' or 'subterfuge' in the matter of the respondent entering into contract with the 5 TISCO Ltd. Vs. Jharkhand (2014) 1 SCC Page 536 17 Contractor, M/s Hindustan Latex Employees Multi Purpose Co-operative Society (who is not a party to the proceedings), the Labour Court would have undoubtedly amplified the scope of Reference and traversed beyond the scope of subject matter of Reference. As such, none of the decisions relied upon by the learned counsel for the appellant as regards piercing the transaction, examination of employer-employee relationship and determination of the nature of employment would be of any significance in the facts and circumstances of the case, and the Labour Court has rightly refused to go into such questions of sham or camouflage by the respondent.
16. The Writ Court, examining the admitted facts and the terms of registration as contained vide M-3, has concluded that the Certificate of Registration issued in Form II in terms of the provisions of Section 7 of the CLRA Act and Rule 18 of the CLRA Rules was to engage Contract Labour in packaging, stacking of scrap material, segregation of waste material and salvaging of raw 18 material and the description of the work in the Certificate of Registration is ejusdem generis including any allied work. There is no dispute that the Contract Workers, who were hired by the Contractors, were engaged in packaging, stacking of scrap material, segregation of waste material and salvaging of raw material. If the respondent in terms of the Certificate of Registration is entitled to engage contract labour in packaging, stacking of scrap material, segregation of waste material and salvaging of raw material and other allied work, and if the Contract Workers are engaged in such work, there would be no cause for any dispute for absorption or regularization.
17. The learned counsel for the appellant as regards the alleged breach of the provisions of the CLRA Act by the respondent, has made twofold submissions. Firstly, that Notification dated 9th December 1976 is issued under the provisions of Section 10(1) of the CLRA Act prohibiting employment of contract labour on and from the 1st March 1977 for sweeping, cleaning, dusting and watching of 19 buildings owned or occupied by establishments in respect of which the appropriate Government under the said Act is the Central Government and that the respondent, despite such notification, has engaged Contract Workers for such work. Secondly, the Contract Workers have been employed right from the year 1990 contrary to the notification dated 9th December 1976 issued under the provisions of Section 10 of the CLRA Act and the registration under Section 7 of the CLRA Act has been obtained only in the year 1999, and therefore, there is violation of the provisions of Section 7 as well as Section 10 of the CLRA Act and as such the Contract Workers would be entitled for regularization of services.
18. Insofar as the first of the submissions, it is an admitted fact that the Contract Workers were engaged in packaging, stacking of scrap material, segregation of waste material, salvaging of raw material and allied work. The Notification dated 9th December 1976 issued under Section 10 of the CLRA Act is not for this kind of work. 20 Therefore, there is no breach of such Notification. The respondent has obtained Certificate of Registration under the provisions of Section 7(2) of the CLRA Act. Further, if the description of work in the Certificate of Registration is ejusdem generis and if Contract Workers are engaged in work that could be said to be covered under the Certificate of Registration, it cannot be held that there is violation of Section 10 of the CLRA Act or the other provisions of CLRA Act and the CLRA Rules. As such, the first of the submissions obviously does not hold water.
19. Even as regards the second submission, the Hon'ble Supreme Court in the case of Steel Authority of India Ltd., and Others Vs National Union Water Front Workers and Others, reported in II LLJ SC 1087, has held that Section 10 of the Contract Labour (Regulation and Abolition) Act does not either expressly or impliedly allude to an automatic absorption and the consequence of breach of the provisions of Sections 7 & 12 of the Contract Labour (Regulation and Abolition) Act is penal as provided 21 under Section 23 and 25 of the Contract Labour (Regulation and Abolition) Act. The enunciation in Para 103 of this decision reads as follows:
"103. The principle that a beneficial legislation needs to be construed liberally in favour of the class for whose benefit it is intended, does not extend to reading in the provisions of the Act what the legislature has not provided whether expressly or by necessary implication, or substitution remedy or benefits for that provided by the legislature. We have already noticed above the intendment of the CLRA Act that it regulates the conditions of service of the contract labour and authorizes in Section 10(1) prohibition of contract labour system by the appropriate Government on consideration of factors enumerated in Sub- section (2) of Section 10 of the Act among other relevant factors. But, the presence of some or all those factors, in our view, provide no ground for absorption of contract labour on issuing notification under Sub-section (1) of Section 10. Admittedly when the concept of automatic absorption of contract labour as a consequence of issuing notification under Section 10(1) by the appropriate Government, is not alluded to either in Section 10 or at any other place in the Act and the consequence of violation of Sections 7 and 12 of the CLRA Act is explicitly in Sections 23 and 25 a different sequel, be it absorption of contract labour in the establishment of principal employer or a lesser 22 or a harsher punishment. Such an interpretation of the provisions of the statute will be far beyond the principle of ironing out the creases and the scope of interpretative legislation and as such clearly impermissible. We have already held above, on consideration of various aspects, that it is difficult to accept that the Parliament intended absorption of contract labour in the establishment of principal employer or a lesser or a harsher punishment. Such an interpretation of the provisions of the statute will be far beyond the principle of ironing out the creases and the scope of interpretative legislation and as such clearly impermissible. We have already held above, on consideration of various aspects, that it is difficult to accept that the Parliament intended absorption of contract labour on issue of abolition notification under Section 10(1) of CLRA Act".
For the foregoing reasons, this Court is of the considered opinion that the appellant has not made out any ground to justify interference by this Court in this intra-court appeal with the Writ Court's Order declining to 23 interfere with the Labour Court's impugned award. Hence, the writ appeal is liable to be rejected and the writ appeal is accordingly rejected.
Sd/-
JUDGE Sd/-
JUDGE Msr*