Gujarat High Court
Chemical vs Secretary on 26 April, 2011
Author: H.K.Rathod
Bench: H.K.Rathod
Gujarat High Court Case Information System
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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) Top