Madhya Pradesh High Court
Steel Authority Of India Limited And ... vs Authority Under The Minimum Wages Act ... on 24 January, 2006
ORDER Ajit Singh, J.
1. This petition is directed against the order dated December 2, 2003 passed in Claim Case No. MWA-169/1998 by the authority under the Minimum Wages Act, 1948 whereby he has allowed the claim of Rupees 45,16,84,280.00 along with five times compensation amounting to Rupees 225,84,21,400.00; total amount Rupees 271,01,05,680.00 in favour of the respondent Nos. 3 to 2042 who are being represented through Ispat Khadan Janta Mazdoor Union, Koteshwar Limestone Mine, Gairtalai, Katni.
2. Petitioner, Steel Authority of India Limited, is a Government Company and Public Sector Enterprise. It is engaged in running steel plants at various places. For manufacturing of steel, bulk quantity of limestone is required in the plants as raw material. It has, therefore, obtained the lease of captive mines of, limestones in different places including one known as Koteshwar Limestone Mine in District Katni. For the purposes of mining and other allied works, petitioner has been engaging licensed contractors who, in turn, engaged Labour. The contractors are required to pay wages as per the Minimum Wages Act, 1948 (hereinafter referred to as "the Act, 1948").
3. The Government of India issued a notification dated March 17, 1993 under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as "the Act, 1970") prohibiting "contract labour" in such mines. The effect and validity of the notification came for consideration before the Supreme Court in the case of Air India Statutory Corporation v. United Labour Union wherein it was held that as a consequence of abolition of contract labour, the principal employer directly became responsible for taking the services of the workmen hitherto regulated through the contractor. The Ispat Khadan Janta Mazdoor Union espousing the cause of such workmen, who were working in the mines through the contractors, filed two writ petitions No. 4108/1996 and 921/1997 before this Court. A single Bench of this Court following the decision of the Supreme Court in Air India Statutory Corporation (supra) by a common order dated October 23, 1997 held that such employees would be entitled to be given work by the petitioner company and that they would be also entitled to wages at par with the regular employees of the petitioner company. The petitioner company did not: comply with this order and filed L.P.A. Nos. 326/1997 and 18/1998 challenging its legality. The Supreme Court transferred both the L.P. As. to its own file on November 19, 1999.
4. In the meantime, 2040 employees (respondent Nos. 3 to 2042) of Koteshwar Limestone Mines of the Petitioner Company filed claim applications under Section 20 of the Act, 1948 between June 1998 and November. 1998. Since their claims related to same wage periods and against the same employer, all 2040 applications were clubbed together and processed simultaneously treating them as one single case.
5. The Petitioner company raised an objection on different grounds before the authority regarding its jurisdiction to entertain the claim applications. The objection was overruled by the authority by a detailed order dated August 5, 1999. The petitioner company in Writ Petition No. 4036/1999 before this Court challenged the order dated August 5, 1999 of the authority. A single Judge by order dated October 29, 1999 refused to interfere with the order as the same was interlocutory and disposed the Writ Petition No. 4036/1999 by observing that Air India case of the Supreme Court was referred to the larger Bench and decision is shortly awaited. The learned Judge also observed that Petitioner Company may approach the Supreme Court for necessary orders. The petitioner company, dissatisfied with the order dated October 29, 1999 filed L.P.A. No. 418/1999 challenging its legality. The Division Bench dismissed the same on May 1, 2000 by the following order:
After hearing learned Counsel for parties for sometime, we find that proceedings in L.P.A. No. 326/97 and L.P.A. No. 18/98 of this Court have been stayed by the Apex Court on August 17, 1998 and the appeals stand transferred by a subsequent order. Consequently, it would not be appropriate for this Court to deal with any matter arising out of these appeals. Parties may, if they so choose, approach the Apex Court for appropriate order, direction, clarification.
6. The petitioner company challenged the order dated May 1, 2000 passed in L.P.A. No. 418/1999 before the Supreme Court. Resultantly the record of L.P.A. No. 418/99 was also transferred to the Supreme Court.
7. The Constitution Bench of the Supreme Court in Steel Authority of India Limited v. National Union Water Front Workers overruled the earlier decision in Air India Statutory Corporation's case (supra) holding that there was no provision in the Contract Labour (Regulation and Abolition) Act, 1970 for automatic absorption of contract labourers. The Supreme Court, however, said that the Air India Statutory Corporation's case was being prospectively overruled meaning thereby that if any direction was given by any authority or Court in pursuance of the decision of Air India Statutory Corporation's case which has been given effect to that will not be affected by overruling of that case. The relevant parts of the observation of the Supreme Court are reproduced below:
122. (4) We overrule the judgment of this Court in Air India's case (1997 Lab IC 365) (supra) prospectively and declare that any direction issued by any industrial adjudicator/any Court including High Court, for absorption of contract labour following the judgment in Air India's case (supra), 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.
128. L.P.A. Nos. 326/1997 and 18/1998 on the file of the High Court of Judicature, Madhya Pradesh Bench, Jabalpur were transferred and numbered as TC Nos. 17/2000 and 18/2000. The L.P.As. were directed against the order of a learned single Judge allowing the writ petitions and directing absorption of the members of the respondent-union. The claim of the petitioners was based on a notification issued by the Central Government on March 17, 1993 prohibiting with effect from the date of publication of the notification the employment of contract labour in the limestone and dolomite mines in the country, in the works specified in the schedule to the notification. The points that arise in these cases are: (i) the validity of the notification and (ii) the consequential orders that may be passed on issue of the abolition notification. Having regards to the facts of these cases, we consider it appropriate to direct that the cases be transferred back to the High Court to be decided by the High Court in the light of the main judgment. Transferred cases are disposed of accordingly.
129. This appeal arises from the order of the High Court of Judicature at Jabalpur in L.P.A. No. 418/1999 dated May 1, 2000. The High Court declined to pass any order and dismissed the L.P.A. as this Court had stayed proceeding in the connected L.P.A. Nos. 326/97 and 18/98 on August 17, 1998. Inasmuch we have now transferred back those LPAs, we consider it appropriate to transfer this case also back to the High Court to be heard and decided along with the said cases. The appeal is accordingly disposed of.
With these observations the L.P.As. No. 326/1997, 18/1998 and 418/1999 were sent back to this Court for decision.
8. The Division Bench on July 16, 2002 decided both the L.P.As. as well as L.P.A. No. 418/1999. As in the meantime the respondent Nos. 3 to 2042 had raised an industrial dispute before the competent authority and the matter was then pending at the stage of conciliation, the Division Bench decided the L.P.As. by directing the conciliation officer to proceed expeditiously. The Division Bench also observed that no writ of mandamus could be issued for directing absorption of employees by the principal employer as there could not be automatic absorption because of notification abolishing contract labour though this matter could form a subject-matter of industrial dispute. As regards proceedings pending under Section 20 of the Act 1948 the Division Bench in L.P.A. No. 418/1999 observed that the petitioner company may raise its objection before the authority regarding jurisdiction and maintainability of the claims who shall decide the same without being influenced by its earlier order. The judgment dated July 16, 2002 of the Division Bench was affirmed by the Supreme Court in Civil Appeal No. 9656/2003 by order dated December 8, 2003.
9. Since the conciliation failed, the Central Government by order dated January 27, 2003 referred the following dispute for adjudication under Section 10 of the Industrial Disputes Act 1947 by the Industrial Tribunal, Jabalpur:
1. Whether the action of the Mines Manager, Koteshwar Limestone Mines of Steel Authority of India Ltd. in terminating services of 3404 (3580+ 24-as per list attached) mine workers in March 1996 who ceased to be contract labour after prohibition of employment of contract labour in Limestone Mine vide Notification No. S.O. 707 dated March 17, 1993 was legal, fair and justified. If not, what relief the concerned workmen or heirs in case of deceased worker are entitled to?" 2. "Whether the action of the Mines Manager Koteshwar Limestone Mines of Steel Authority of India Ltd. in denying terminal benefits of gratuity, retrenchment compensation and ex-gratia applicable to VRS seeking employees is fair and justified. If not, to what relief these workers/heirs are entitled to?" 3. "Whether the action of the management of the Mines Manager, Koteshwar Limestone Mines of Steel Authority of India Ltd. in disregarding Clause-8 of Memorandum of Agreement signed between the Steel Authority of India, New Delhi and their Unions including HMS and employing workers through contractors on jobs of permanent and perennial nature in Mines between 5-20 years even without ensuring statutory wages and service conditions was legal, fair and justified? If not, to what relief concerned workmen/ heirs are entitled?
10. The objection raised by the petitioner company before the authority regarding its Jurisdiction was overruled by the authority by order dated February 27, 2003.
11. The petitioner company in Writ Petition No. 1847/2003 before this Court challenged the order dated February 27, 2003 of the authority. A single Judge by order dated June 25, 2003 allowed the writ petition and set aside the order dated February 27, 2003. The learned Judge also stayed the proceedings before the authority till the adjudication of the industrial dispute by the Central Government Industrial Tribunal. The respondents, contract labourers, filed L.P.As. No. 380/2003 and 381/2003 challenging the order dated June 25, 2003 of the learned single Judge. The Division Bench decided the same on September 29, 2003. It modified the order dated June 25, 2003 and passed a conditional order directing the petitioner company to deposit Rs. 1,50,00,000.00 before the authority within a stipulated period for its disbursement amongst the contract labourers failing which the authority shall proceed with the matter and pass appropriate orders in accordance with law.
12. The judgment dated September 29, 2003 of the Division Bench was challenged by the petitioner company before the Supreme Court in Special Leave Petition (C) No. 22339-40/2003. On December 5, 2003 the Supreme Court confirmed the direction of this Court for depositing Rs. 1,50,00,000.00 but stayed its disbursement. Since the petitioner company did not deposit the amount in compliance of the decision dated September 29, 2003 of the Division Bench, the authority by the impugned order dated December 2, 2003 finally decided the claims of respondent Nos. 3 to 2042 as mentioned above particularly in the absence of any stay order of the Supreme Court. The Supreme Court on May 6, 2004 ultimately dismissed the Special Leave Petition (C) No. 22339-40/2003 of the petitioner company as the same having been rendered infructuous after the final decision by the authority.
13. The authority has held that it has the jurisdiction to decide the claim applications of respondent Nos. 3 to 2042 regarding their payment of minimum wages. The authority allowed their claim for wages for the period from March 17, 1993 up to April 30, 1998 along with five times compensation total amounting to Rs. 271,01,05,680.00.
14. It was argued strenuously on behalf of the petitioner company that the authority had no jurisdiction to entertain the claim applications of the respondent Nos. 3 to 2042 more particularly till the adjudication of the dispute by the Industrial Tribunal referred by the Central Government as mentioned above. It was also argued that the authority committed an illegality in allowing the claim for wages of the respondent Nos. 3 to 2042 from January 1, 1997 upto April 30, 1998 as they were neither absorbed nor they were workmen of the petitioner company nor they did any work during this period and that proper opportunity was not given to contest their claims on merit. On the other hand, the learned Counsel for the respondent Nos. 3 to 2042 strongly defended the legality and validity of the impugned order.
15. The argument that the authority had no jurisdiction to decide the claim applications because of the pending industrial dispute, cannot be accepted. The authority had jurisdiction to decide whether the workers had been paid minimum wages for the period during which they had worked for the benefit of the petitioner company as contract labourers. No provision in the Industrial Disputes Act has been pointed out barring the jurisdiction of the authority pending adjudication of the industrial dispute on such a question.
16. The submission of the petitioner company that it was not given proper opportunity to contest the claim applications is factually incorrect. The order sheet dated May 30, 2000 of the proceedings before the uthority reveals that Petitioner Company had stated before it that it is not required to give evidence of payment of minimum wages to the alleged workers. On that date after the recording of evidence of witnesses namely; Jaggu Bhagwat and Ganpat on behalf of workers it was agreed by both the parties that the remaining workers shall be asked to give evidence in the form of affidavit. On March 28, 2003 affidavits and documents on behalf of workers were filed and evidence of witnesses Pradeep Kumar Gautam and Bacchan Nayak was recorded. Counsel for Petitioner Company did not cross-examine the witnesses and prayed for time. The authority adjourned the hearing for April 7, 2003 but with a direction to the petitioner company to produce evidence and witnesses on that day. On April 7, 2003 also the petitioner company did not produce any evidence. The authority, therefore, closed the hearing of the case with a further opportunity to both the parties for submitting their arguments, statements by April 30, 2003. The petitioner company did not file any reply on merits nor did it deny any of the allegations and confined itself to raising preliminary objections. The authority in Para 25-viii of the impugned order has even observed that 2039 affidavits were lying for examination and cross examination but the petitioner's counsel expressed vehement irritation on watching the plethora of evidence although these affidavits were filed in compliance of the order which was agreed upon by him. The petitioner company in fact did not avail the opportunity at all given by the authority.
17. The entire claim before the authority made by the respondent Nos. 3 to 2042 proceeds on the basis that they became automatically absorbed as workmen of the petitioner company on abolition of the contract labour by notification dated March 17, 1993. Their claim was based totally on the decision of the Supreme Court in Air India Statutory Corporation's case (1997 Lab IC 365). It was also averred that the National Joint Committee in Steel Industry (hereinafter referred to as "NJCS") signed a memorandum of agreement relating to wage structure and other service conditions of the employees of the petitioner company including those employed in the mines of various category. In the agreement of NJCS it is stated "wage- the wages of employee shall primarily consist of basic wage and dearness allowance". The nature of employment in Koteshwar Limestone Mine is covered under Schedule of employment in Minimum Wages Act and the Central Government has fixed the Rates of Wages vide notification No. S.O. 192 (E) dated March 6, 1990. In Clause 5 of the notification it is stated "where the existing rates of wages of any employee, based on contract or agreement or otherwise are higher than the rates notified herein the higher rates shall be protected and treated as the minimum rates of wages applicable for the purpose of this notification to such employee". Thus, according to respondent Nos. 3 to 2042, the rates of wages fixed under NJCS and subsequently revised from time to time became the minimum wages for the employees of the petitioner company being higher rates than the rates fixed under the notification.
18. The respondent Nos. 3 to 2042 do not dispute that for the period between 1993 and 1996, they were paid minimum wages as notified under the Act 1948. Their claim for this period is a difference between NJCS rates and the rates notified under the Act 1948 and this difference they claim from the principal employer petitioner company. It is also not disputed by them that they did not do any work whatsoever during the period from January 1, 1997 up to the date of filing the claim applications in the year 1998.
19. The reasoning of the authority in allowing the claim of the respondent Nos. 3 to 2042 is as follows:
The authority under the Act 1948 has full jurisdiction to decide whether the respondent Nos. 3 to 2042 were paid minimum wages for the period they worked as contract labourers. The adjudication of the industrial dispute by the Industrial Court will only determine the status of contract labourers after prohibition of employment of contract labour vide notification No. S.O. 707 dated March 17, 1993. If the dispute is decided in favour of the petitioner company then also it cannot escape from the responsibility of payment of minimum wages according to NJCS rates for in Rule 25(2)(v)(a) of the Contract Labour (Regulation and Abolition) Service Rules, 1971 (hereinafter referred to as "Rules 1971") it is provided that workmen employed by the contractor shall be paid the same wages as the workmen directly employed by the principal employer if the nature of work is similar thus making the NJCS rates applicable to contract labourers. The authority then relies upon Section 21(4) of the Act 1970 which provides that in case the contractor fails to make payment of wages or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due as the case may be, to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.
20. Rule 25(2)(v)(a) of the Rules 1971 reads as under:
In cases where the workman 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 wages 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.
21. The decision of the authority against the petitioner company for the period between 1993 and 1996 is based on Rule 25(2)(v)(a) of the Rules 1971, which is a term of the license under which the contractor worked. The liability of the contractor is derived from this term to pay NJCS rates as minimum wages. Thereafter, the authority relies upon Section 21(4) of the Act, 1970 to hold that if the licensee contractor fails to pay full minimum wages the principal employer will pay the same and recover it from the contractor. But this reasoning, according to the petitioner, suffers from the flaw that the license along with all its terms including that which is derived from Rule 25(2)(v)(a) of the Rules, 1971 came to an end on issue of the notification dated March 17, 1993 abolishing contract labour and, therefore, contractor was not liable to pay NJCS rates as minimum wages. The principal employer argues the petitioner could be made liable to pay NJCS rates only if the workmen were deemed to have been automatically absorbed which is not possible in view of the overruling of Air India Statutory Corporation's case (supra) by the Steel Authority of India Limited case (supra). The question of absorption is pending as an industrial dispute in the Industrial Court which has not yet been decided. In the circumstances, the petitioner submits that the authority could not make the principal employer liable to pay the difference between the wages to which the respondent Nos. 3 to 2042 claim they were entitled and the wages paid by the contractor.
22. But the fact remains that in spite of the prohibition of contract labour by notification dated March 17, 1993 the respondent Nos. 3 to 2042 worked as contract labourers during the period 1993 and 1996 the benefit of which was received by the petitioner company. It is not the petitioner's case that some fresh agreement was entered into between the petitioner and contractors different from the license as contemplated by Rule 25 of the Rules, 1971. It has, therefore, to be held that licenses of the contractors were continued under the same terms by implied consent of the parties. The respondent Nos. 3 to 2042 therefore became entitled to receive minimum wages as provided in Rule 25(2)(v)(a) of the Rules, 1971. As the contractors did not pay these wages the petitioner company is liable to pay to the respondent Nos. 3 to 2042 under Section 20 of the Act, 1948 the difference between the minimum wages which the respondent Nos. 3 to 2042 ought to have received under the above mentioned Rule and the wages actually paid for the period 1993 to 1996. The amount for this period comes to Rs. 21,38,42,243.00 which was not disputed by the petitioner company before the authority.
23. As regards the claim for the period between January 1, 1997 and April 30, 1998 is concerned, the respondents did not work at all in the petitioner's mine. As their absorption in the work force of the petitioner company cannot be assumed until it is so decided in the industrial dispute pending adjudication, the authority was clearly wrong in allowing their claim for this period.
24. The authority in my considered opinion was also wrong in directing the petitioner company for the payment of five times compensation. The petitioner is a Government Company and Public Sector Enterprise. During the proceeding before the authority the law on contract labourers was changing and not settled. The respondent Nos. 3 to 2042 were admittedly contract labourers. The petitioner company contested their claim for minimum wages on the ground that till their industrial dispute referred under Section 10 of. the Industrial Disputes Act, 1947 is finally adjudicated the authority had no jurisdiction to entertain the same. The petitioner company pursued this objection upto the Supreme Court. The objection of the petitioner company cannot be said to be mala fide and baseless. Moreover, the claim for the period during which the respondent Nos. 3 to 2042 did not work was clearly unjustified and the company was entitled to contest the same. In my opinion, justice would be met if the respondent Nos. 3 to 2042 are allowed 6% interest as compensation on the amount of Rs. 21,38,42,243.00 which is being allowed from the date of the impugned order of the authority till its payment.
25. Consequently, I set aside the impugned order so far it directs the petitioner company to pay Rs. 271,01,05,680.00. Instead the petitioner company shall pay Rs. 21,38,42,243.00 with 6 % interest as compensation from the date of the impugned order till the payment of amount.
26. The petition is partly allowed.