Madras High Court
Mrf United Workers Union vs The Chief Inspector Of Factories on 11 March, 2010
Author: K.Chandru
Bench: K.Chandru
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 11.03.2010
CORAM
THE HONOURABLE MR.JUSTICE K.CHANDRU
W.P.NOs.5198, 9102 and 9103 of 2004 and 17363 of 2009
and
WPMP Nos.6035, 8586 OF 2004, 10620 and 10621 of 2004
and M.P.NOS.1 AND 2 OF 2009
MRF United Workers Union.
Represented by its General Secretary,
Mr.G.Shankar,
No.9/174, Sholingar Road,
Arakonam-631 001.
Vellore District .. Petitioner in
W.P.NOs.5198, 9102 and
9103 of 2004
MRF United Workers Union,
(Regn.No.1169/VLR)
rep. by its General Secretary,
Adaullah Street,
Sholindar Road,
Arakonam Taluk .. Petitioner in
W.P.No.17363 of 2009
Vs.
1.The Chief Inspector of Factories,
Chepauk,
Chennai-600 005.
2.The Inspector of Factories,
Vellore.
3.The Commissioner,
The Office of Regional Commissioner
of Provident Fund,
Zonal Office,
Royapettah,
Chennai-600 014.
4.Employees of State Insurance Corporation
represented by its Regional Director
Office of the ESI Corporation,
143, Sterling Road,
Chennai-600 006.
5.The Government of Tamil Nadu,
represented by the Secretary,
Department of Labour & Employment,
Chennai-600 009.
6.The Chairman & Managing Director,
MRF Limited,
124 Greams Road,
Chennai-600 006.
7.The General Manager,
MRF Limited,
Itchiputtur Plant,
Arakonam-631 003. .. Respondents 1 to 7 in
W.P.Nos.5198, 9102 and
9103 of 2004
8.The Superintendent of Police,
Vellore District. .. Respondent No.8 in
W.P.No.5198 of 2004
1.The Chief Inspector of Factories,
Chepauk,
Chennai-600 005.
2.The Inspector of Factories,
Vellore.
3.The Government of Tamil Nadu,
rep. By its Secretary,
Department of Labour & Employment
Fort St. George,
Chennai-600 009.
4.MRF Limited,
rep. By the Chairman and Managing Director,
125, Greams Road,
Chennai-600 006.
5.The Plant manager,
MRF Limited,
Ichiputhur Plant,
Arakonam-631 003.
6.Chakra Pani,
K.S.Venkataraman & co. Pvt. Ltd.
No.19, Cenotaph Road, Chennai-18.
7.C.Grishkumar,
Vishal Engineering Enterprises,
No.6, Mahavishnu Nagar, Tiruthani.
8.B.Mani,
Lamis Outsourcing Solutions,
43/395, Indira Gandhi Salai,
Rajajipuram, Tiruvallore.
9.T.D.Vijayakumar,
Aswini Contract,
H.A./9, Avildhar Muniswamy Street,
Thiruthani.
10.P.Abdul Bashir,
General Manager (Projects)
P.K.Mohamed & Co.,
91, MTH Road,
Munnurpet, Chennai-50.
11.P.Senthamarai,
Senthamarai Contract,
Ichiputhur Village and post,
Arakonam Taluk,
12.Mrs.Susi,
M.D.Contract,
173, Jothi Nagar, Tiruthani.
13.V.Siva,
Siva Contract,
46, Jothi Nagar, Tiruthani.
14.S.Bharanikumar,
M.M.Enterprises,
68, Jothisamy Street,
Tiruthani.
15.K.Narasimhan,
Vijayalakshmi Contract,
Pattabiramapuram Village,
Tiruthani Taluk.
16.A.Sudhakar,
Sudhakar Contract,
R.N.Kandigai, Arakonam Taluk,
17.R.Dhananchezhian,
Raj Enterprises,
297, MIT TNHB Salai, Arakonam.
18,V.Dhandapani,
Yuvan Yuva Shree Contract,
220. Gandhi Road, Arakonam.
19.N.Vasudevan
Vasudevan Contract,
1, Gandhi Road, 3rd Lane, Tiruthani.
20.G.Maheswaran,
Maheswaran Contract,
96, Muthumariamman Koil Street,
Ichiputhur, Arakonam
21.R.Kesavalu Naidu
Ram Prasad Contract
Thanigaipolur Village and post,
Arakonam Taluk.
22.Mrs.Indira,
Aishwarya Contract,
Arakonam Road, Tiruthani.
23.Prince Koshi
St.Mary's Contract,
75-A Chennai Bye-pass Road,
Tiruthani.
24.K.V.Thomas,
K.V.Thomas Caterers,
147, K.K.R.Garden,
Madavaram, Chennai-600 006.
25.S.Ganesan,
Swamy Security Service
Flat D, Dhivya Complex, Block I,
Nerkundram West,
Vadapalani,
Chennai-26.
26.Aishwaryah Constructions,
No.132/51A, Village Street,
Chennai.
27.SDE Enterprises,
C/o MRF Ltd. Ichiputhur, Arakonam.
28.Embashri Engineering,
C/o.MRF Ltd. Ichiputhur, Arakonam
29.P.Vasudevan Contract,
No.10/22, Nehruji Nagar,
1st Cross, 5th Street, Arakonam.
30.Bharatraj Contrat,
Narasimhapuram, Arakonam.
31.Balakrishna Industries,
C/o.MRF Ltd. Ichiputhur, Arakonam.
32.Devishree Electrical,
C/o.MRF Ltd. Ichiputhur, Arakonam
33.Indian Commerce & Industries Co. Pvt. Ltd.
C/o.MRF Ltd. Ichiputhur, Arakonam
34.Welcome Insulation,
C/o.MRF Ltd. Ichiputhur, Arakonam
35.Sri Venkateswara Enterprises,
C/o.MRF Ltd. Ichiputhur, Arakonam
36.Vijitha Enterprises,
C/o.MRF Ltd. Ichiputhur, Arakonam
37.Jothi Engineering,
3, Jothi Illam, Pondicherry.
38.Guna Electricals,
3/1, Head Post office Road,
Arakonam. .. Respondents in
W.P.No.17363 of 2009
W.P.No.5198 of 2004 has been preferred under Article 226 of the Constitution of India praying for the issue of a writ of mandamus to direct the Superintendent of Police, 8th respondent to act upon the complaint of the petitioner union dated 28.2.2004 and to remove the unauthorised persons from the factory premises of MFR Limited, Itchiputhur and investigate the practices adopted by the MRF Limited and to take such criminal action as against the offenders.
W.P.No.9102 of 2004 has been preferred under Article 226 of the Constitution of India for the issue of a writ of mandamus directing the third respondent to take appropriate action in respect of workers, working at Itchiputhur plant in Arakonam under the 7th respondent belonging to 6th respondent with regard to coverage under Provident Fund scheme.
W.P.No.9103 of 2004 has been preferred under Article 226 of the Constitution of India for the issue of a writ of mandamus directing the respondents 1, 2 and 5 to inspect and investigate the number of workmen utilized by the 6th and 7th respondents as the contract labour in direct processes and take appropriate steps in law to enforce the provisions of the contract labours Act and Rules in respect of workmen employed in the 7th respondent factory of MRF Limited at Itchiputhur plant and to secure for the workmen, their legitimate right of security of employment in accordance with law.
W.P.No.17363 of 2009 has been preferred under Article 226 of the Constitution of India for the issue of a writ of mandamus to direct the respondents 1 to 3 to revoke the registration certificates issued to the principal employer, i.e. respondents 4 and 5 and the licenses issued to the contractors, i.e. respondents 6 to 38 under the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 and the Tamil Nadu Contract Labour (Regulation and Abolition) Rules.
For Petitioners : Mr.V.Prakash, SC
for M/s.Ramapriya Gopalakrishnan,
Mr.K.Ramkumar
Mr.P.Chandrasekaran
For Respondents : Mr.G.Masilamani, SC
for M/s.King and Partridge
Mr.S.Ravindran for M/s.T.S.Gopalan & Co,
Mr.Sanjay Mohan
for M/s.Ramasubramaniam Associates.
Mr.P.Subramanian, AGP
Mr.K.Gunasekaran
Mr.D.Jawahar
Mr.Srinath Sridevan
Mr.K.C.Ramalingam (counsel for ESIC)
Mr.S.Gunasekar, ACGSC (Counsel for EPF Dept.)
- - - -
COMMON ORDER
All the four writ petitions were filed by the petitioner Trade Union with registration No.1169/VLR, represented by its General Secretary. These writ petitions were directed to be posted before this court by an order of the Hon'ble the Chief Justice, dated 3.3.2010 on being specially ordered. Hence all these writ petitions were posted before this court.
2.In the first writ petition i.e. W.P.No.5198 of 004, the prayer of the writ petitioner was for a direction to the Superintendent of Police, Vellore District to act upon the complaint of the petitioner Union, dated 28..2004 and also to remove the unauthorised persons found in the factory premises belonging to MRF Limited at Itchiputhur Plant in Arakkonam and to investigate into the practices adopted by the MFR Limited and to take such criminal action as against the offenders. The writ petition was admitted on 5.3.2004.
3.Pending the writ petition, though one MRF Cycle Tyre Unit Employees Association filed an application in WPMP No.8586 of 2004 to implead itself as 9th respondent, no order was passed in that miscellaneous petition. The petitioner also took out an application for an ad interim direction directing the Superintendent of Police, Vellore to afford police protection to the workmen and members of the petitioner union in their Itchiputhur plant. This Court on 18.3.2004, after hearing both sides, directed the Chief Inspector of Factories (CIF), Chepauk to inspect the Units in the presence of the General Secretary of the petitioner Union and to submit a report on 22.3.2004. Accordingly, a report was filed stating that three factories have obtained licences to employ a maximum number of 2000 workers in the Tyre plant, 500 workers in Tube plant and 50 workers in Conveyor Belting plant. The total number of contractors in respect of those three factories were 15 contractors in Tyre Plant, 9 contractors in Tube Plant and 2 contractors in Conveyor Belting Plant. It was also stated that at the time of inspection by the Chief Inspector of Factories, he found that the contract workers were engaged in the work, for which registration certificate was issued. The Register of Contractors in Form No.XII was maintained in all the three factories. It was verified and found to be correct. Form No. XVI, which is a muster roll of all contract workers, was also maintained by the contractors, which was also verified and found to be correct. The Muster Roll under Rule 103 prescribed under the Tamil Nadu Factories Rules, 1950 was also verified. He also found that there was no unauthorised persons working or available inside the factory premises.
4.On notice from this court, 6th and 7th respondents management have filed a counter affidavit, dated 17.3.2004. In the counter affidavit, it was stated that such a writ petition is not maintainable, since the management is a private employer. If at all the Union has any grievance, they should raise an industrial dispute under Section 2(k) of the Industrial Disputes Act, 1947. The factory at Ichiputhur in Arakkonam was started in the year 1972. It engaged in the manufacturing of Passenger Radial tyres, Bias Tyres, two and three wheeler tyres, tubes, flaps and conveyor belt. There are approximately 1267 employees working and are having cordial industrial relations with them. They had engaged various contractors in building construction, civil maintenance, engineering maintenance, security services, boiler maintenance, electrical erection work, gardening, loading and unloading, house keeping and structural erection, etc. They also have registration certificate for employing contract labours. There are no outsiders in the factory. The contractors are licensed and their employees are covered both under the ESI and EPF Act. It is the petitioner union which indulged in violence. The allegation that the workmen engaged by the contractors were doing the same work as that of the permanent employees was denied. Therefore, they sought for dismissal of the writ petition.
5.The petitioner had filed an affidavit, dated 15.4.2004, stating that the report submitted by the Chief Inspector of Factories pursuant to his visit on 19.3.2004 were objected to. The first respondent did not inform the union about his inspection. The General Secretary who was permitted to accompany the officer was taking his lunch around 11.30 a.m. He skipped his lunch and went to the spot. But he was informed that they had already visited the plant. In the meanwhile the Contract labours were sent out from doing production work. The management knowing in advance the visit of the Chief Inspector of Factories had removed the contract workers from the scene. On that day, the production got reduced and that can be seen from that day's electricity consumption. They had also filed a typed set of papers about various objections raised by their union and the report sent by the General Secretary to the President of the Union.
6.In the meanwhile, the petitioner union filed W.P.Nos.9102 and 9103 of 2004. Both the writ petitions were admitted on 5.4.2004. In the first writ petition, the petitioner union prayed for a direction to the third respondent Regional Commissioner of Provident Fund to take an appropriate action in respect of workers working in the Itchiputhur plant and to cover them under the PF Scheme. Pending the writ petition, a direction was sought for to give details of workmen who are employed in the factory and whose services were utilized by the management with regard to their coverage under the Provident Fund Act. In that petition, only notice was ordered.
7.In W.P.No.9103 of 2004, the prayer was to direct the respondents, i.e. the Chief Inspector of Factories, Inspector of Factories and the Government to inspect and investigate the number of workmen utilized by the respondents as contract labours in direct processes and to take appropriate steps to enforce the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 (for short CLRA Act) and to secure for them their legitimate right of employment in accordance with law. Pending the said writ petition, an interim injunction was sought for restraining the management from deploying contract labours in direct manufacturing process and from engaging them in any other process other than for which the management had obtained registration under Section 7 of the CLRA Act, in which also only notice was ordered.
8.In the said two writ petitions, on behalf of the management, two counter affidavits, dated 10.10.2009 were filed. In the first counter affidavit, the management had stated that in the year 2004, there were 1267 permanent workers in the tyre plant. They are having 26 contractors, who are licensed under the provisions of the Act. The workmen of the contractors were also allowed to us the canteen facility. They are covered by the ESI Act. In the second counter affidavit, it was denied that the contract workers are engaged in direct process. The Chief Inspector of Factories who visited the factory found that the allegation made by the union was not correct.
9.On behalf of the PF Department, a counter affidavit was filed by the Assistant Provident Fund Commissioner (Legal), dated 2.5.2005. It was claimed that there cannot be any discrimination between the workers engaged directly and those who are engaged by the contractors. In both the cases, they are covered by the PF Act. As soon as the petitioner union sent its representation, appropriate actions have been taken and the said representation was under their consideration. Since the management had obtained an interim stay in W.P.No.6062 of 2004, further proceedings will be initiated after the disposal of the said writ petition.
10.It was thereafter, the petitioner union filed the fourth writ petition being W.P.No.17363 of 2009, seeking for a direction to revoke the registration certificate issued under CLRA Act to the management and also to revoke the licenses granted to the contractors for engaging contract labours. The contractors were impleaded as respondents 6 to 38. Various licenses issued in favour of the contractors were also enclosed in the typed set filed along with the writ petition.
11.When the matter came up on 26.8.2009, notice was directed to be issued to the respondents privately. Accordingly, notices were issued. Pending the writ petition, the petitioner filed two miscellaneous petitions. One is for restraining the management in engaging contract labours at their Itchiputhur plant except in process where valid certificate of registration is issued to the Principal employer and valid licenses are available with the contractors and to act strictly in accordance with the CLRA Act. In the second miscellaneous petition, the petitioner sought for an assistance of an independent person to report to this court as to the number of contract labours engaged at their Itchiputhur plant.
12.On notice being received privately, the respondents have filed counter affidavits. Most of the contractors have also filed counter affidavits denying the allegations made by the union.
13.On behalf of the management (MRF Factory), a counter affidavit, dated 22.10.2009 was filed. In that counter affidavit, they had claimed that there are about 1400 permanent employees as on date. Upto the year 2008, there were 32 contractors and 59 contracts. In the year 2009, number of contractors were increased to 43 having 74 contracts. The names of contractors and the license in which maximum number of workers they can employ as well as number of workers engaged by the contractors were set out in paragraph 8 of the counter affidavit. Apart from repeating previous averments in the previous affidavits, they had stated that they are going strictly by the provisions of the CLRA Act. It was also stated that the ESI Act is also extended to the workmen. It was further claimed that a settlement was reached with the recognised union under Section 18(1) of the I.D. Act on 9.5.2009. Out of 1400 workers, 955 workers have accepted the terms of settlement. The grievance projected by the union cannot be entertained under Article 226 of the Constitution of India.
14.In the counter affidavit filed on behalf of the Chief Inspector of Factories and Inspector of Factories, Vellore, it was claimed that the Deputy Chief Inspector of Factories, I Division, Vellore visited the factory on 27.6.2009. It was claimed that the contract workers are engaged in the work which are stipulated in the registration certificate and the contract licenses. The instances of contract labours engaged in manufacturing process were not noticed. These facts were notified to the union. But the union has filed the present writ petition. It was also claimed that since contractors were having valid licenses and the Principal Employer was having certificate of registration, any revocation can be done only under Section 8 of the CLRA Act and that too if it is proved that those certificates were obtained by misrepresentation or suppression of any material facts. Since it was not brought to the knowledge of the Inspector of Factories, the power under Section 8 was not invoked.
15.It was also claimed that the Government has not issued any prohibitory order under Section 10(1) of the CLRA Act prohibiting employment of contract labours. In the absence of any express prohibition of engagement of contract labours by the Government, the Inspector of Factories cannot suo motu stop the workmen engaged by the contractors. It was also stated that the Contract labours were allowed to be engaged on valid licence given by the department and certain errors found in the licences cannot be magnified. The department was satisfied that the contract workers are employed in accordance with the provisions of the Factories Act, 1948. The minimum wages are paid to them. The department had not noticed any violation of sanction of employment in terms of certificate of registration and licence. No offence has been brought to the notice for launching prosecution under CLRA Act. The renewal of licences have been done in conformity with the provisions of Section 7(2) of the CLRA Act. The other allegations made by the union were also denied. With reference to the mistakes found in some of the licences, the same was sought to be explained in paragraph 7 of the counter affidavit, which is as follows:
"7....All the relevant details such as nature of work, period of work and the maximum number of workmen to be engaged by each contractor are captured in the annexure to Form 1. It cannot be said that the license is not in accordance with the requirements of the Tamilnadu Contract Labour Rules just because the nature of work revealed in the Certificate of Registration is not reflected in the License issued by 2nd respondent whereas item 2 of the License was not properly printed. Hence, the 2nd Respondent had made it a practice to super-scribe by hand on top of the License the nature of work for which license is granted. It is possible that by oversight a few licenses may not have this detail. But it is respectfully submitted that the validity of the license cannot be faulted just because a particular detail viz. Nature of work, which is available in Form 1 (Application for License) Form 2 (Certificate of Registration) Form IV (Application for License) is not reflected in Form VI (License) in a very few cases. "
16.Each of the contractor have filed counter affidavits denying the allegations made against them. They have also stated that filing of a writ petition was a clear abuse of process of court. Hence the writ petition is not maintainable.
17.The petitioner union has filed an additional typed set containing representations sent by the union dated 2.1.2010 and 29.1.2010 and a reply sent by the Deputy Chief Inspector of Factories, Vellore, dated 11.2.2010. In that letter, the department requested the union to furnish the names of workers' representative in order to conduct further inspection in the factory.
18.The petitioner union itself has also produced a copy of communication sent by the Deputy Chief Inspector of Factories, dated 23.7.2009. In that he had informed the union that when an inspection was made in those three factories, the workers were engaged in the following process, i.e. transporting the manufacturing parts from one place to other, cleaning work and storing work. Only the number of the workers specified in the registration certificate and the licenses issued to the contractors alone were found working. During inspection, no workers who are not covered by the registration certificate or by the contract licences were found working. Only permanent workers are working in the direct processes. In the complaint sent by the union, they have not given the names of contract workers and the machines in which they are working. If on further inspections, any contractors are found violating the license terms, they will be duly attended to.
19.Mr.V.Prakash, learned Senior Counsel appearing for the petitioner union submitted that in a writ petition under Article 226 of the Constitution of India, this court has got ample powers to decide whether the Principal employer was registered in terms of Section 7 and whether the contractors are having valid licences under Section 12. It is one thing to state that on paper, the establishment has registration and some of the contractors were having licenses. It is other thing to see that whether the workers who are covered by the licenses are working only in the area for which licenses were issued or that some contractors are using licenses to smuggle the workers to work in places other than for which they were licensed. He also submitted that when they issued certificate under Section 7 and licenses under Section 12, there must be an application of mind before the grant of such certificate of registration or licenses, as the case may be.
20.The learned Senior Counsel refers to Rules 17 and 18 of the Tamil Nadu Contract Labour Rules, 1975 read with Form V. There is aim and purpose in prescribing the rules, was to mention the maximum number of workers to be employed as contract labours and type of business carried on including particulars which may be relevant to the employment of the contract labours. If these particulars are not found in the Form of license, then the very purpose for regulating the contract labours for which the Act has been enacted will be lost. He further submitted that it is under Form VI, licenses were granted. Any amendment of the license is to be separately made as per Rule 28. The renewal has to be made under Rule 29. The annexure to the rule contains several clauses to be filled up by the licensing officer. The renewal is granted by merely making an endorsement after noting the renewal fee. In some of the licenses, the nature of work in which they were engaged was not mentioned. It was also stated that under Rule 19, if application for registration is not complete in all respects, the registering officer shall require the principal employer to amend the application. If he fails to do so, the registering officer should reject the application. Similarly, under Rule 23, the licensing officer can make an enquiry to satisfy himself about the eligibility of the application for license. Such an exercise was not granted.
21.It was further stated that under Rule 25(2)(v), the workman employed by the contractor if he performs the same or similar kind of work as that of workman directly employed by the principal employer, then they should enjoy the same service conditions. The registering officer can make a decision in this regard. Any aggrieved party must file an appeal to the Commissioner for Labour. In other case, the rates of wage, holidays, hours of work and conditions of service of the workmen of the contractor can be specified by the Commissioner for Labour. The department has not taken any such steps to rectify the injustice caused to the workers.
22.The learned Senior Counsel also stated that the licensing authority before the grant of licenses must keep in mind the parameters prescribed under Section 10(2) of the CLRA Act, wherein it is stated that the appropriate Government can prohibit the employment of contract labours in the following circumstances. Section 10 reads as follows:
"10.Prohibition of employment of contract labour.- (1)Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process, operation or other work in any establishment.
(2)Before issuing any notification under sub-section (1) in relation to an establishment, the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors, such as-
(a)whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment;
(b)whether it is of perennial nature, that is to say, it is of sufficient duration, having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment;
(c)whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto;
(d)whether it is sufficient to employ considerable number of whole time workmen.
Explanation.-If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final."
23.Therefore, when the licensing authority grants license to engage contract labour, he should see to it that he does not grant license in terms of Section 10(2), which was not done in the present case.
24.Per contra, Mr.Sanjay Mohan, learned counsel representing for M/s.Ramasubramaniam Associates, stated that the claim made by the workmen cannot be countenanced by this court. In so far as the first writ petition is concerned, it had become infructuous. The second and third writ petitions were sufficiently answered by the respondents. The fourth writ petition was only a repetition of the first writ petition. In any event, the petitioner union without exhausting remedies under the Act, cannot file such writ petitions invoking the power of this Court under Article 226 of the Constitution of India. Inasmuch as the company has got certificate of registration to employ specified number of contract workers in various processes and the contractors have also been granted licenses, the same cannot be revoked by the order of this court without there being any credible material. The fact situation pleaded in the present case are at variance. In fact, the first report of the Chief Inspector of Factories is against the union. Also the report based upon the inspection, dated 27.6.2009 followed by the counter affidavit by the department will clearly repudiate the complaint made by the union.
25.It was further stated that the Deputy Chief Inspector of Factories sent a letter to the union, dated 23.7.2009, wherein he had denied the allegations made by the union and that is not under challenge. In fact, none of the reports of the department are under challenge. He also stated that if on application by the employer if the department gives the certificates and licenses in a particular format, neither the management nor the contractor can be penalised. The non observance of any particular form cannot be put against the employer as it is not their mistake. It was further stated that neither registering authority nor licensing authority can conduct any enquiry as if they are quasi judicial authorities. They are merely administrative authorities the provisions of the Act and no quasi judicial determination arises. They cannot deny license if proper criteria were found in the application made by the principal employer and the contractor. It was also stated that no one can introduce new elements for granting license which are relevant for abolishing contract labour. The Act contemplates twin objects, i.e. Regulation and Abolition of contract labour. Only in case where it is abolished, the question of regulation will become insignificant. In the absence of any notification under Section 10(1) of the CLRA Act, no one can prevent the employer from engaging contract labour whether in direct processes or indirect processes. But, in so far as the respondents are concerned, even as per the findings of the department, no worker is engaged in direct processes.
26.Mr.G.Masilamani, learned Senior Counsel for M/s.King and Partridge, Mr.S.Ravindran for M/s.T.S.Gopalan & Co, Mr.P.Subramanian, (G.A), M/s.K.Gunasekar, D.Jawahar, Srinath Sridevan, K.C.Ramalingam (ESI), Gunasekar (PF), learned counsels appearing for other respondents were also heard.
27.Mr.G.Masilamani, learned Senior Counsel stated that there is no prohibition for engagement of contract labours. The authorities granting licenses cannot adjudicate upon the issues raised by the union. In the absence of the petitioner union or its members filing an application under Section 8 for revocation of license, they cannot make such arguments before this court.
28.In addition to such submissions, Mr.Srinath Sridevan, learned counsel for one respondent submitted that in so far as his client is concerned, they are engaged in construction work duly covered by the licence and such work is not prohibited by the Act. Hence he prayed for dismissal of the writ petition.
29.In the light of these contentions, the controversies between the parties will have to be decided.
30.Before proceeding to consider the rival submissions, the parameters under which this court can go into the questions in matters arising out of CLRA Act under Article 226 has to be noted. It is necessary to refer to the constitution bench judgment of the Supreme Court in Steel Authority of India Ltd. v. National Union Waterfront Workers Union reported in (2001) 7 SCC 1. It is necessary to extract paragraphs 125 and 126 of the said judgment, which are as follows:
"125. The upshot of the above discussion is outlined thus:
(1)(a) Before 28-1-1986, the determination of the question whether the Central Government or the State Government is the appropriate Government in relation to an establishment, will depend, in view of the definition of the expression appropriate Government as stood in the CLRA Act, on the answer to a further question, is the industry under consideration carried on by or under the authority of the Central Government or does it pertain to any specified controlled industry, or the establishment of any railway, cantonment board, major port, mine or oilfield or the establishment of banking or insurance company? If the answer is in the affirmative, the Central Government will be the appropriate Government; otherwise in relation to any other establishment the Government of the State in which the establishment was situated, would be the appropriate Government;
(b) After the said date in view of the new definition of that expression, the answer to the question referred to above, has to be found in clause (a) of Section 2 of the Industrial Disputes Act; if (i) the Central Government company/undertaking concerned or any undertaking concerned is included therein eo nomine, or (ii) any industry is carried on (a) by or under the authority of the Central Government, or (b) by a railway company; or (c) by a specified controlled industry, then the Central Government will be the appropriate Government; otherwise in relation to any other establishment, the Government of the State in which that other establishment is situated, will be the appropriate Government.
(2)(a) A notification under Section 10(1) of the CLRA Act prohibiting employment of contract labour in any process, operation or other work in any establishment has to be issued by the appropriate Government:
(1) after consulting with the Central Advisory Board or the State Advisory Board, as the case may be, and (2) having regard to
(i) conditions of work and benefits provided for the contract labour in the establishment in question, and
(ii) other relevant factors including those mentioned in sub-section (2) of Section 10;
(b) Inasmuch as the impugned notification issued by the Central Government on 9-12-1976 does not satisfy the aforesaid requirements of Section 10, it is quashed but we do so prospectively i.e. from the date of this judgment and subject to the clarification that on the basis of this judgment no order passed or no action taken giving effect to the said notification on or before the date of this judgment, shall be called in question in any tribunal or court including a High Court if it has otherwise attained finality and/or it has been implemented.
(3) Neither Section 10 of the CLRA Act nor any other provision in the Act, whether expressly or by necessary implication, provides for automatic absorption of contract labour on issuing a notification by the appropriate Government under sub-section (1) of Section 10, prohibiting employment of contract labour, in any process, operation or other work in any establishment. Consequently the principal employer cannot be required to order absorption of the contract labour working in the establishment concerned.
(4) We overrule the judgment of this Court in Air India case2 prospectively and declare that any direction issued by any industrial adjudicator/any court including the High Court, for absorption of contract labour following the judgment in Air India case2 shall hold good and that the same shall not be set aside, altered or modified on the basis of this judgment in cases where such a direction has been given effect to and it has become final.
(5) On issuance of prohibition notification under Section 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 with various beneficial legislations so as to deprive the workers of the benefit thereunder. If the contract is found to be not 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 regularise the services of the contract labour in the establishment concerned subject to the 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 Section 10(1) of the CLRA Act in respect of the establishment concerned 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.
126. We have used the expression industrial adjudicator by design as determination of the questions aforementioned requires enquiry into disputed questions of facts which cannot conveniently be made by High Courts in exercise of jurisdiction under Article 226 of the Constitution. Therefore, in such cases the appropriate authority to go into those issues will be the Industrial Tribunal/Court whose determination will be amenable to judicial review." (Emphasis added)
31.With reference to the provisions of the Act in respect of contract labours, in the very same judgment in paragraph 87, it was observed as follows:
"87. Now turning to the provisions of the Act, the scheme of the Act is to regulate conditions of workers in contract labour system and to provide for its abolition by the appropriate Government as provided in Section 10 of the CLRA Act. In regard to the regulatory measures, Section 7 requires the principal employer of an establishment to get itself registered under the Act. Section 12 of the Act obliges every contractor to obtain licence under the provisions of the Act. Section 9 of the Act places an embargo on the principal employer of an establishment, which is either not registered or registration of which has been revoked under Section 8, from employing contract labour in the establishment. Similarly, Section 12(1) bars a contractor from undertaking or executing any work through contract labour except under and in accordance with a licence. Sections 23, 24 and 25 of the Act make contravention of the provisions of the Act and other offences punishable thereunder. With regard to the welfare measures intended for the contract labour, Section 16 imposes an obligation on the appropriate Government to make rules to require the contractor to provide canteen for the use of the contract labour. The contractor is also under an obligation to provide restrooms as postulated under Section 17 of the Act. Section 18 imposes a duty on every contractor employing contract labour in connection with the work of an establishment to make arrangement for a sufficient supply of wholesome drinking water for the contract labour at convenient places, a sufficient number of latrines and urinals of the prescribed type at convenient and accessible places for the contract labour in the establishment, washing facilities etc. Section 19 requires the contractor to provide and maintain a first-aid box equipped with prescribed contents at every place where contract labour is employed by him. Section 21 specifically says that a contractor shall be responsible for payment of wages to workers employed by him as contract labour and such wages have to be paid before the expiry of such period as may be prescribed. The principal employer is enjoined to have his representative present at the time of payment of wages. In the event of the contractor failing to provide amenities mentioned above, Section 20 imposes an obligation on the principal employer to provide such amenities and to recover the cost and expenses incurred therefor from the contractor either by deducting from any amount payable to the contractor or as a debt by the contractor. So also, sub-section (4) of Section 21 says that in the case of the contractor failing to make payment of wages as prescribed under Section 21, the principal employer shall be liable to make payment of wages to the contract labour employed by the contractor and will be entitled to recover the amount so paid from the contractor by deducting from any amount payable to the contractor or as a debt by the contractor. These provisions clearly bespeak treatment of contract labour as employees of the contractor and not of the principal employer."
32.The Supreme Court also emphasised that only in case of abolition of contract labours notified under Section 10(1), various consequences that may flow from such notification. Hence the following passage found in paragraph 88 may be usefully extracted below:
"88. If we may say so, the eloquence of the CLRA Act in not spelling out the consequence of abolition of contract labour system, discerned in the light of various reports of the Commissions and the Committees and the Statement of Objects and Reasons of the Act, appears to be that Parliament intended to create a bar on engaging contract labour in the establishment covered by the prohibition notification, by a principal employer so as to leave no option with him except to employ the workers as regular employees directly. Section 10 is intended to work as a permanent solution to the problem rather than to provide a one-time measure by departmentalizing the existing contract labour who may, by a fortuitous circumstance be in a given establishment for a very short time as on the date of the prohibition notification. It could as well be that a contractor and his contract labour who were with an establishment for a number of years were changed just before the issuance of prohibition notification. In such a case there could be no justification to prefer the contract labour engaged on the relevant date over the contract labour employed for a longer period earlier. These may be some of the reasons as to why no specific provision is made for automatic absorption of contract labour in the CLRA Act."
33.In the absence of any prohibition of engagement of contract labours and if the workmen is able to contend that the contract was mere camouflage and ruse to evade the complaint to various beneficial legislation so as to deprive the workers of their benefit under it, the remedy of the petitioner should be only as what was provided in paragraph 125.5 of the said judgment, as set out above.
34.In the very same judgment, in paragraph 107, it was observed as follows:
107. 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 a sham and nominal, rather a camouflage, in which case the contract labour working in the establishment of the principal employer were 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 a canteen in an establishment the principal employer availed the services of a contractor the courts have held that the contract labour would indeed be the employees of the principal employer."
35.In a contingency when the contract being found sham and nominal is established before the industrial court, there can be scope for claiming absorption against the principal employer and even if that employer is a public sector undertaking. Not withstanding the observation made in Uma Devi's case reported in 2006 (4) SCC 1, the said view was reiterated in ONGC v. ONGC Contractual Workers Union reported in (2008) 12 SCC 275. The following passage found in paragraph 21 may be usefully extracted below:
21. In the instant case, on a consideration of material produced before it, the Tribunal came to the following conclusions:
(1) That there existed a relationship of master and servant.
(2) That there was no contractor appointed by ONGC.
(3) That ONGC used to supervise and allot works to individual workers.
(4) That ONGC took disciplinary action and called for explanations from the workers.
(5) The workers were paid wages though they did not attend their duties due to Cachar Bandh and due to flood.
(6) The wages were paid directly to the workers by ONGC and the acquaintance roll was prepared by the management to make payment to the workmen. It has also been observed that even ONGC had admitted that since 1988, there was no licensed contractor and that the wages were being paid through one of the leaders of the Union and one such contractor, Manik has been named. The Tribunal then opined that it appeared from the record that Manik himself was a workman and not a contractor as he too was shown in the acquaintance roll to have received wages. We find that the real issue was as to the status of the workmen as employees of ONGC or of the contractor, and it having been found that the workmen were the employees of ONGC they would ipso facto be entitled to all benefits available in that capacity, and the issue of regularisation would, therefore, pale into insignificance. We find that in this situation, the Industrial Tribunal and the Division Bench of the High Court were justified in lifting the veil in order to determine as to the nature of employment in the light of the judgments quoted above. We, therefore, find that the ratio of the judgment in Umadevi (3) case10 would not be applicable and that the facts of Pandey case12 are on the contrary more akin to the facts of the present one."
36.But, in the present case, the petitioner union has not chosen the course of action either for seeking abolition of contract labour on the ground that the work in which the contract labour were engaged was essentially covered by reasons found in Section 10(2) of the CLRA or that the licenses issued by the State Government were fraudulently obtained or it is being used for some collateral purposes. They can very well raise an industrial dispute before the appropriate conciliation officer and get the issue adjudicated.
37.However, Mr.V.Prakash, learned Senior Counsel appearing for the petitioner contended that notwithstanding those options open to the union, it can still urge this court that the licenses have to be revoked for the reasons already set out by him. But, in the present case, the contractors, who were made as respondents 6 to 38 had obtained licenses in their favour. Therefore, the stage to prevent them from getting license is already over and their licenses have been renewed from time to time. The only option is to move the appropriate authority under Section 8 for revocation of registration or under Section 14 for revocation of license as rightly contended by the official respondents. It is when the authority is posted with necessary information as laid in those provisions, the licenses can be revoked by the authority concerned.
38.The Supreme Court had forewarned the High Courts from taking over the role of industrial adjudicators as found in paragraph 126 of the SAIL case (cited supra). Though the learned senior counsel urged that the theory of alternative remedy is only a self imposed restriction and this court has power to decide the issue under Article 226 of the Constitution and such power can strike of injustice caused to any person, theoretically such formulations may be correct. But in the present case, not only private respondents have denied the allegations made by the petitioner. But even the official respondents that too reports of inspection dated 22.3.2004 and 27.6.2009 have denied the misuse of licenses and refuted the contentions that licenses have been fraudulently obtained.
39.The private respondents have contended that they are using the licenses as granted by the department and even it was not strictly in the form prescribed under the Rule for that reason, they cannot be blamed. The official respondents have stated that in some cases, there could be mistakes while writing details. Ultimately, the only solution is for the official respondents to strictly prepare a new format encompassing the form prescribed and grant licenses accordingly. Instead of using the same form for renewal, they can even provide a Booklet under which relevant datas can be furnished. Though official respondents have contended that as soon as any renewal fee is paid, they are bound to renew the license, such a contention cannot be accepted. But, at the same time, in the guise of granting a certificate or license, the authority was not expected to take into account the objects behind Section 10(2). That they can refuse the license if any labours are engaged in such areas as contended by the learned senior counsel for workmen also cannot be countenanced.
40.In this context, it is worthwhile to refer to the decision of the Karnataka High Court in M.Gopal Vs. Assistant Labour Commissioner and Registrar/Licensing Authority, Bangalore reported in 1997 LAB.I.C. 3428. Almost an identical view was taken by this court and the following passage found in para 18 may be reproduced:
"18.The order impugned has sought to exercise its power as if it is exercising the power conferred under Section 10 of the Act and on that basis he has declined to renew the licence. It has adverted to the decision of the Supreme Court which deals with the power under Section 10. The principles therein is more apposite while examining the question of abolition. The existence or otherwise of these circumstances may be a ground to consider whether the registration/licence be declined or granted. But, the circumstance that the contract labour in the larger interest should be abolished in exercise of the power under Section 10 is not a ground to decline the registration/licence/renewal. Hence, the whole process adopted by the Officer is incorrect...."
41.Yet at the same time, in the same judgment, the purpose of providing complete details in the forms prescribed has also been emphasised in para 14, which is as follows:
"14.....This will furnish the intimation whether the number of days employed is perennial or intermittent, as the case may be. Hence, when the Rule mentions "complete" details, the inference is that it be complete and correct information required to be furnished. If, therefore, the informations furnished are incorrect or that it is not true and does not enable the Authority to come to the correct conclusion as to whether the application made be allowed either under Section 7 or Section 12 of the Act, then necessarily the authority has power to reject the registration or licence, as the case may be, and on such refusal of registration or licence, it certainly does not amount to abolition of the contract labour."
42.On the other hand, strict observance of statutory forms by noting the areas in which the workmen were engaged can be a relevant contemporaneous record and will be helpful to the Government if it ultimately decides to abolish the contract labour by issuing a notification under Section 10(1) of the CLRA Act. Therefore, the authority should not think that there are only two classes of persons alone are involved in implementing the CLRA Act i.e. one is a form filler and the other is the form filer. There is aim and purpose in gathering information as required by the statutory rule read with forms prescribed. The excuse given by the official respondents cannot be entertained in this regard. At least in future, they should carefully follow the rule, failing which this court will be constrained to take an appropriate action against those officers who are showing either indifference or lackadaisical approach in administering the provisions of CLRA Act. In fact the authorities under the Act have got a greater role even in ascertaining whether the workmen employed by the contractor perform same or similar kind of work as the workmen directly employed by the principal employer. In those cases, they can even direct similar service conditions to be extended to those workmen. At the time of grant of license, the authority will have to consider under Rule 22(b) by which he has to take into account that whether the appropriate Government had abolished the contract labour or if there was any settlement or Award abolishing contract labour in respect of a particular type of work in the establishment. Therefore, it requires application of mind and no renewal can be done immediately on the deposit of renewal fee.
43.In this context, it is necessary to refer to the judgment of the Supreme Court in Panki Thermal Power Station v. Vidyut Mazdoor Sangathan reported in (2009) 11 SCC 277 where the rule 25(2)(v)(a) was considered. In paragraph 14, it was observed as follows:
"14. The pivotal provision for resolving the dispute is Rule 25(2)(v)(a). The same reads as under:
25. (2)(v)(a) in cases where the workmen employed by the contractor perform the same or similar kind of work as the workmen directly employed by the principal employer of the establishment, the wage rates, holidays, hours of work and other conditions of service of the workmen of the contractor shall be the same as applicable to the workmen directly employed by the principal employer of the establishment on the same or similar kind of work:
Provided that in the case of any disagreement with regard to the type of work the same shall be decided by the Labour Commissioner, U.P. whose decision shall be final; A bare reading of the provision makes the position clear that in cases where the workmen employed by the contractor perform the same or similar kind of work as employed directly by the principal employer of the establishment the wage rates, holidays, hours of work and other conditions of service of the workmen of the contractor shall be the same as are applicable to the (sic workmen of the) principal employer. In case of disagreement with regard to the type of work the same shall be decided by the Commissioner."
44.A learned Judge of this court held that under Sections 7 and 12, only the establishment or the contractor alone can be a "person aggrieved" in terms of appeals provided under Section 15, workers or their union cannot prefer an appeal vide judgment in Management of Manali Petrochemical Ltd., Manali, Chennai Vs. Deputy Commissioner of Labour II, Chennai and others reported in 2007 (1) LLN 786. In paragraph 15, it was observed as follows:
"15.Thus, it is clear that in an appeal arising out of an order under S.7 or 12, only the "establishment" or the "contractor" alone could be the "person aggrieved" within the meaning of S.15 and in an appeal arising out of S.8 or 14, even a third party could be a "person aggrieved" if the order under S.8 or 14 was passed at his instance. Therefore, I am of the considered view that the appeal filed by the third respondent under S.15 of the Act against the order of the second respondent issued under S.7 of the Act was clearly not maintainable."
That may not be a correct perspective in interpreting a labour enactment, especially where the right of the workers are vitally affected. In fact they can be heard at all contingencies and their rights cannot be curtailed.
45.Even the labour enactments having provisions relating to grant of exemption from application of those enactments even if they do not provide specific hearing to be given to workmen, the Supreme Court vide its judgment in Secretary, Housing Department, Madras vs. K.Sabanayagam reported in JT 1997 (9) SC 316 has held that as a matter of course, while exercising of such power, the Government should hear the worker either individually or in a representative capacity. Even in interpreting the provisions of Section 75 under the ESI Act, where the ESI Court can deal with disputes and the Act did not specifically provide any notice to the workmen, the Supreme Court has held that such notices are mandatory, without which no adjudication is permissible by the ESI Court. See: ESI Corporation Vs. Bhakra Beas Management Board and another reported in 2009 (10) SCC 671.Therefore, the labour enactments to have wider meaning it can at no point of time edge out the workmen from having their views recorded.
46.The Supreme Court consistently held that any matter affecting the right of workmen either workmen or their representative can make a grievance to higher forum including this Court. It is only because such remedies are provided under the Act, the Supreme Court has held that such matter could not be decided by this court under Article 226. The provisions will have to be interpreted in tune with the spirit of labour enactments. Therefore, this court is unable to agree with the stand taken in the case referred to above.
47.Further, in the present case, private respondents have also seriously disputed the stand of the petitioner union. Preciously for all these reasons, the petitioner is seeking for an appointment of an outsider to visit the factory and submit a report. Since the Act itself provides sufficient safeguards and the petitioner union is not seeking for any larger relief, the relief claimed here cannot be granted by this court. In the light of the SAIL judgment (cited supra), this court is unable to countenance the prayer made in these writ petitions.
48.Hence, all the four writ petitions will stand dismissed. No costs. Consequently, connected miscellaneous petitions stand closed.
11.03.2010 Index : Yes Internet : Yes vvk To
1.The Chief Inspector of Factories, Chepauk, Chennai-600 005.
2.The Inspector of Factories, Vellore.
3.The Commissioner, The Office of Regional Commissioner of Provident Fund, Zonal Office, Royapettah, Chennai-600 014.
4.The Regional Director Employees of State Insurance Corporation Office of the ESI Corporation, 143, Sterling Road, Chennai-600 006.
5.The Secretary, The Government of Tamil Nadu, Department of Labour & Employment, Chennai-600 009.
6.The Chairman & Managing Director, MRF Limited, 124 Greams Road, Chennai-600 006.
7.The General Manager, MRF Limited, Itchiputtur Plant, Arakonam-631 003.
8.The Superintendent of Police, Vellore District.
K.CHANDRU, J.
vvk PRE DELIVERY ORDER IN W.P.NOs.5198, 9102 and 9103 of 2004 and 17363 of 2009 11.03.2010