No 19 of 1986 etc
Under Article 32 of the Constitution of India
R Venkataramani KB Rohtagi
CV Subba Rao and Miss Sushma Relan for the appearing parties
The Judgment of the Court was delivered by CHINNAPPA REDDY J
The petitioners describe themselves as catering cleaners of Southern Railways represented by V China Thambi and M Mohan of the Vegetarian Refreshment Room Central Station Madras 
The petition is claimed to be filed in a representative capacity on behalf of about three hundred and odd catering cleaners working in the catering establishments in various railway junctions of the Southern Railway and in the pantry cars of long distance trains running under the control of the Southern Railway
Since a long time they have been agitating for the abolition of the Contract system under which they are employed to do cleaning work in the catering establishments and the pantry cars and for their absorption as regular employees of the principal employer namely the Southern Railway
They complain that they are not even paid minimum wages
They are paid a pittance averaging from Rs 200 to Rs250 per day
Although the contract system has been abolished in almost all the other Railways the Southern Railway persists in employing contract labour for cleaning its catering estab lishments and pantry cars
As the several representations made by them to the authorities concerned proved fruitless they have been forced to seek the intervention of this Court 167 under article 32 of the Constitution to direct the respondents to exercise their powers under Section 101 of the and to abolish the contract system in respect of catering cleaners in the Southern Railway and further to direct the respondents to regularise the services of the existing catering cleaners employed in the catering establishments at various junctions and in the pantry cars of long distance trains and to absorb them as employees of the catering establishments of the Southern Railway
They also seek a direction to extend to them the service benefits presently available to other categories of employees in the catering establishments of the Railways
We issued notice to the respondents on January 21 1986
After some considerable time the writ petition was listed before us on August 5 1986
We were informed at that time that in almost all the railways except the Southern Railway the contract labour system had been abolished in regard to catering cleaners
We wondered why the Southern Railway could not also fall in line and directed the Southern Rail way Administration to consider whether the contract labour system could not be abolished in the Southern Railway also and whether the services of the catering cleaners could not be suitably regularised
The learned counsel for the workmen complained before us that the workmen were not even being paid the minimum wages
As the Railway Administration was the principal employer we directed the Railway Administra tion to take immediate steps to see that the minimum wages were paid to the catering cleaners
As the interim order of the Court regarding payment of wages was not complied with the petition was adjourned from time to time
On April 19 1986 we also made a further order that the Southern Railway Administration should not take any further action pursuant to the tenders invited by them for contract labour
On December 4 1986 the Additional Solicitor General who ap peared on behalf of the Railway Administration undertook to deposit the arrears due from August upto date with the Deputy Labour Commissioner Madras
We also directed the learned counsel for the employees to file a list of the employees entitled to be paid wages
We directed that the amount should be paid after verification by the Deputy Chief Superintendent Southern Railway
We were told that there is some dispute about the names of the employees
We now direct that the Deputy Labour Commissioner Madras will enquire into the question as to who were working as catering clean ers in the Madras Central Station and also to determine the wages due to them from August 1986 upto date giving credit to any amount that may have been paid to them
On such determination the Railway 168 Administration shall deposit the amount with the Deputy Labour Commissioner who shall pay over the same to the employees
The determination by the Deputy Labour Commis sioner is directed to be completed before February 28 1987 and the deposit by the Administration is directed to be made before March 15 1987
This part of the order covers only the catering cleaners employed in the Central Station Madras
In answer to the writ petition the Railway Administra tion has adopted a somewhat unhelpful attitude
According to the Administration it has not been found to be possible to abolish the contract labour system because the nature of the cleaning work in the catering units of the Southern Railway was fluctuating and intermittant
The contract labour system is followed not only in the Southern Railway but also in the South Central Railway and the South Eastern Railway
They claim that any departmental units not working profitably could be handed over to a private licensee and this was the alternative that was adopted by the Southern Railway in the case of catering cleaners
Experience showed that it was difficult to extract work from catering cleaners if they were engaged on a regular basis by the railway and it was not possible to supervise their work effectively
According to them all pros and cons were examined before entrusting the cleaning work to private contractors
The Southern Railway had a moral responsibility to the public to ensure satisfactory service and that was the reason why the work was entrusted to a private agency which was considered the most suitable method of doing the work
We notice that the Railway Administration has not chosen to support its statements by any facts and figures but has contended itself by making vague and general statements
No attempt has been made to explain why what has been done in most of the other railways cannot be and should not be done in the Southern Railway too
It is not explained why clean ing work is considered to be intermitted and what difficulty exists in supervising the work
The Railway Administration wants to suggest that the units are working at a loss with out expressly saying so
The suggestion is implicit in the statement that departmental units not working profitably could always be handed over to private licensees
We are afraid that everything that has been said by the Administra tion of the Southern Railway against abolishing the contract labour system and regularising the services of the catering cleaners has been contradicted by the Parliamentary Commit tee of Petitions under the Chairmanship of Shri KP Tewari who went into the question in some depth
The Committee was submitting its report 169 on the complaint of Shri Samar Mukherji a member of Parlia ment regarding the grievances of the railway catering work ers working under contractors in the Southern Railway
The Committee first dealt with the grievances of the Bearers and Servers
In paragraph 219 of their report the Committee noticed that the railway catering department was earning a profit of about Rs50 lakhs per annum
In paragraph 221 the Committee dealt with the grievances of the catering clean ers
We think that it will be useful to extract here the whole of paragraph 221 of the report
It is as follows  It has been submitted in the representa tion that as the job of the cleaners is of permanent nature these cleaners should be absorbed by the Railways on regular basis
During their study visit it was pointed out by the petitioners to the Committee that cleaners were not paid minimum wages statuto rily fixed by State Governments by the con tractors and there was no machinery set up by the Southern Railway to ensure that all labour laws regarding minimum wages overtime allow ances payment of compensation etc
were implemented in their case
In this connection the Ministry of Railways Railway Board in their written note have stated that the work of cleaning is entrusted to contractors as per the recommendations of High Power Committee Alagesan Committee appointed by the Ministry of Railway in the year 1955 so that the estab lishment cost could be kept down
If this work is entrusted to the regular railway employees the establishment cost would go up and this would prove to be an uneconomical proposition
The Ministry have further stated that the cleaning contractors at Madras and Bangalore City have engaged 61 and 22 cleaners respec tively who are paid fair living wage of Rs525 per head at Madras Central Railway Station and at Rs806 per cleaner per day at Bangalore City Railway Station as fixed by the State Government of Tamil Nadu and Karnataka
These payments are witnessed by the Railway s representative
The Committee however are of the opinion that the job of cleaning in Railway Catering Units is of a permanent nature
Further if the work which is at present being done by a very small number of cleaners em ployed through the contractors by the Southern Railway is entrusted to the regular employees the establishment cost would increase 170 only marginally and it will not in any way affect the profits being earned by the Cater ing Department
The Committee recommended that the Government should review the present practice of employment of cleaners through contractors and consider their employment directly by the Railways
This would end the exploitation of cleaners which has also been alleged in the representation
New Delhi KP Tewari Dated the 30th April 1984 Chairman Vaisaka 10 1906 Saka Committee of Petitions
 The Report we see states that the railway catering department was earning a profit that the work of the cater ing cleaners was of a perennial nature that the cost of entrusting the work to regular employees would increase the establishment cost only marginally and that the laws relat ing to minimum wages over time allowance etc
and other labour laws were not being observed in regard to catering cleaners
The recommendation of the Committee was that in order to prevent the exploitation of cleaners it was neces sary that the Government should review the existing practice of employing them through contractors and consider their direct employment by the Railway Administration
Strength ened by the report of the Committee the catering cleaners submitted several memoranda to the authorities concerned but to no avail
The practice of employing labour through contractors for doing work inside the premises of the primary employer known to researchers of the International Labour Organisa tion and other such organisations as Labour only contract ing  or inside contracting  system has been termed as an arobaic system and a relic of the early phase of capitalist production which is now showing signs of revival in the more recent period
Of late there has been a noticeable tendency on the part of big companies including public sector companies to get the work done through contractors rather than through their own departments
As pointed out by a group of researchers in the Economic and Political Weekly Review of Management dated November 29 1986 it is a matter of surprise that employment of contract labour is steadily on the increase in many organised sectors including the public sector which one expects to function as a model employer
More than a quarter of a century ago in the Stand ard Vacuum Refining Company of India Ltd vs Its Workmen  this Court had 171 occasion to refer to some of the pernicious features of the contract labour system
It is an important decision unfor tunately not very much noticed in later cases
The impor tance of the case lies in the fact that it was held to be competent for an Industrial Tribunal functioning under the Industrial Disputes Act to abolish the contract labour system in an industrial undertaking which happened to be a private enterprise in that case
The facts are interesting
A dispute was raised by the workmen of the company with respect to contract labour employed by the company the Standard Vacuum Refining Company of India Limited for cleaning maintenance of the refinery plant and premises belonging to the company
The system was that the work was entrusted to a contractor who engaged the labour
The regu lar workmen of the Company made a demand for abolition of the contract system and for absorbing the workmen employed through the contractors into the regular service of the company
The complaint of the workmen was that the contract labour had no security of service though they were doing the work of the company and that they were being paid much less than the wages paid by the company to its unskilled regular workmen
They were also not entitled to other benefits and amenities such as provident fund gratuity bonus privilege leave medical facilities and subsidised food and housing to which the regular workmen of the company were entitled
Their case was that though the work was of a permanent nature the contract system had been introduced to deny them the rights and benefits which the company gave to its regu lar employees
On behalf of the company it was contended that the reference under Section 10 of the Industrial Dis putes Act was incompetent as there was no dispute between the Company and its workmen that it was a matter for the Company to decide what was the best method of carrying out its business whether by employing a Contractor or otherwise and that the Industrial Tribunal could not interfere with that function of the management
The dispute regarding wages and conditions of service was really one to be settled between the Contractor and his employees and had nothing to do with the Company
The Tribunal by its award gave a direc tion to the company to discontinue the practice of getting the work done through contractors and to have it done through workmen engaged by itself
The company was directed to engage regular workmen for this work and to give prefer ence to the workmen employed by the contractor
There was an appeal to the Supreme Court by special leave under Article 136 of the Constitution
The Supreme Court held that the Tribunal was justified in giving the direction for the abolition of the contract system observing that it was relevant to bear in mind that industrial adjudication gener ally did not encourage the employment of contract labour in 172 modern times
Quoting from the report of the Royal Commis sion on Labour it was said that whatever merit there was in the system in primitive times it was now desirable for the management to discharge completely the complex responsibili ty laid upon it
The Court also referred to similar opinions expressed by several Labour Enquiry Committees appointed in different States
Proceeding to consider the merit of the contract labour system in the case before them Wanchoo J speaking for the Court observed The contract in this case related to four matters
But the reference is confined to one only viz cleaning maintenance work at the refinery including premises and plant and we shall deal with that only
So far as this work is concerned it is incidental to the manufac turing process and is necessary for it and of a perennial nature which must be done every day
Such work is generally done by workmen in the regular employ of the employer and there should be no difficulty in having regular workmen for this kind of work
The matter would be different if the work was of inter mittent or temporary nature or was so little that it would not be possible to employ full time workmen for the purpose
Under the cir cumstances the order of the tribunal appears to be just and there are no good reasons for interfering with it
 The Court held that the contract in the case was a bona fide contract but that it did not affect the issue
The award of the Tribunal was upheld
The Supreme Court having pronounced on the primitive  and baneful nature of the system of contract labour there was a cry raised against the system by the Planning Commis sion and various other committees appointed by the Govern ment
The Indian Labour Conference discussed the award of the Tribunal in 1959 and following its recommendation but after considerable delay the Contract Labour Abolition and Regulation Act was passed in The Statement of Objects and Reasons was as follows The system of employment of contract labour lends itself to various abuses
The question of its abolition has been under the considera tion of Government for a long time
In the second Five Year Plan the Planning Commission made certain recommendations namely under taking of studies 173 to ascertain the extent of the problem of contract labour progressive abolition of system and improvement of service conditions of contract labour where the abolition was not possible
The matter was discussed at various meetings of Tripartite Committee at which the State Government were also represented and general consensus of opinion was that the system should be abolished wherever possible or practicable and that in cases where this system could not be abolished altogether the working conditions of contract labour should be regulated so as to ensure payment of wages and provision of essential amenities
The proposed Bill aims at abolition of con tract labour in respect of such categories as may be notified by appropriate Government in the light of certain criteria that have been laid down and at regulating the service conditions of contract labour where abolition is not possible
The Bill provides for the setting up of Advisory Boards of a tripartite character representing various interests to advise Central and State Governments in admin istering the legislation and registration of establishments and contractors
Under the Scheme of the Bill the provision and mainte nance of certain basic welfare amenities for contract labour like drinking water and first aid facilities and in certain cases rest rooms and canteens have been made obli gatory
Provisions have also been made to guard against details in the matter of wage payment
 The long title of the Act describes it as an Act to regu late the employment of contract labour in certain establish ments and to provide for its abolition in certain circum stances and for matters connected therewith
14 makes the Act applicable to all establishments in which 20 or more workmen are employed or were employed on any day of the preceding 12 months as contract labour and to every contractor who employs or who employed on any day of the preceding 12 months 20 or more workmen
15 makes the Act inapplicable to establishments in which work only of an intermittent or casual nature is performed and further provides that the question whether work performed in an establishment is of an intermittent or casual nature if raised shall be decided by the appropriate Govt
in consul tation with the Central Board or State Board as the case may be and that such decision final
 c e and g define Contract Labour Contractor Establishment and Principal Employer in the following terms b a workman shall be deemed to be employed as contract labour in or in connec tion with the work of an establishment when he is hired in or in connection with such work by or through a contractor with or without the knowledge of the principal employer c contractor in relation to an estab lishment means a person who undertakes to produce a given result for the establishment other than a mere supply of goods or articles of manufacture to such establishment through contract labour or who supplies contract labour for any work of the establishment and includes a sub contractor e establishment means i any office or department of the Government or a local authority or ii any place where any industry trade business manufacture or occupation is carried on g principal employer means i in relation to any office or department of the Government or a local au thority the head of that office or department or such other officer as the Government or the local authority as the case may be may specify in this behalf ii in a factory the owner or occupier of the factory and where a person has been named as the manager of the factory under the  the person so named iii in a mine the owner or agent of the mine and where a person has been named as the manager of the mine the person so named iv in any other establishment any person responsible for the supervision and control of the establishment
175 Explanation For the purpose of sub clause iii of this clause the expres sions mine owners and agent shall have the meanings respectively assigned to them in clause j clause I and clause c of sub section 1 of section 2 of the 
 Section 3 and 4 provide for the constitution of the Central and State advisory Boards
Sec 7 provides for the registration of establishments
Sec 8 provides for revoca tion of registration in certain cases and Sec
9 prescribes the effect of non registration
10 provides for the prohibition of employment of contract labour in certain processes operations or other work in establishments by the appropriate Government after consulation with the Central or State Board as the case may be
10 is as follows 101 Notwithstanding anything contained in this Act the appropriate Government may after consulation with the Central Board or as the case may be a State Board prohibit by notification in the Official Gazette employment of contract Labour in any process operation or other work in any establishment
2 Before issuing any notification under sub sec1 in relation to an establish ment the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors such as a whether the process operation or other work is incidental to or necessary for the industry trade business manufacture or occupation that is carried on in the estab lishment b whether it is of perennial nature that is to say it is of sufficient duration having regard to the nature of industry trade business manufacture or occupation carried on in that establishment c whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto d whether it is sufficient to employ consid erable number of whole time workmen
176 Explanation If a question arises whether any process or operation or other work is of perennial nature the decision of the appropriate Government thereon shall be final
 Sec 12 provides for licensing of contractors
Sec 13 14 and 15 provide for the grant revocation suspension and amendment of licensces and appeals
Sections 16 to 21 make detailed provision for the Welfare  Health of contract labour
16 deals with canteens Sec 17 with Rest rooms Sec 18 with facilities for drinking water latrines urinals and washing and Sec 19 with first aid facilities
20 provides that if any amenity required to be provided under Sec
16 to 19 for the benefit of contract labour employed in an establishment is not provided by the contrac tor within the prescribed time such amenity shall be provid ed by the Principal Employer within such time as may be prescribed
Sec 21 while making the contractor responsible for payment of wages to each worker employed by him as contract labour further provides that every Principal Employer shall nominate a representative duly authorised by him to be present at the time of disbursement of wages by contractor to ensure and certify that wages are paid in the prescribed manner
It is further provided that if the Con tractor fails to pay wages within the prescribed time or makes short payment it shall be the liability of Principal Employer to make payment of wages in full
22 to 27 provide for penalties and procedure
28 provides for appointment of inspecting staff
30 makes the provi sions of the Act effective notwithstanding anything incon sistent therewith contained in arms of any agreement or contract of service or any standing orders applicable to the establishment
Any favourable benefits that the Contract labour may be entitled to under the agreement contract of service or standing orders are however saved
Sec 31 pro vides for exemptions
33 enables the Central Govt
to give directions to any State as to the carrying into execu tion in the State the provisions of the Act
35 pro vides for the making of rules for carrying out the purposes of the Act
The Rules made by the Central Govt
are required to be placed before the Parliament
The Central Govt
 in exercise of the powers conferred by Sec
35 of the Act has made the Contract Labour Regula tion and Abolition Central Rules 1971
Chapter II of the rules relates to matters pertaining to the Central Board while Chapter III of the Rules deals with registration of establishments and licensing of contractors
Rule 25 pre scribes the forms terms  condition of licence and in particular Rule 25iiiv prescribes that it shall be the condition of every licence 177 that the rates of wages shall not be less than the rates prescribed under the 
Rule 25iiiv prescribes that it shall be the condition of every licence that the rates of wages shall not be less than the rates prescribed under the for such employment where applicable and where the rates have been fixed by agreement settlement or award not less than the rates so fixed Rule 25iiva prescribes that it shall be the condition of every licence that In cases where the workmen employed by the contractor perform the same or similar kind of work as the workmen directly employed by the principal employer of the establishment the wage rates holidays hours of work and other conditions of service of the workmen of the contractor shall be the same as applicable to the workmen directly employed by the principal employer of the establishment on the same or similar kind of work Provided that in the case of any disagreement with regard to the type of work the same shall be decided by the Chief Labour Commisioner Central whose decision shall be final Similarly Rule 25iivb provides that in other cases the wage rates holidays hours of work and conditions of serv ice of the workmen of the contractor shall be such as may be specified in this behalf by the Chief Labour Commissioner Central
While determining the wage rates holidays hours of work and other conditions of service under Rule 25iivb the Chief Labour Commissioner is required to have regard to the wages rates holidays hours of work and other conditions of service obtaining in similar employ ments
On the facts presented to us and on the report of the Parliamentary Committee of Petitions it appears to be clear that the work of cleaning catering establishments and pantry cars is necessary and incidental to the industry or business of the Southern Railway and so requirement a of section 102 is satisfied that it is of a perennial nature and so re quirement b is satisfied that the work is done through regular workmen in most Railways in the country and so requirement c is satisfied and that the work requires the employment of sufficient number of whole time workmen and so requirement d is also satisfied
Thus all the relevant factors mentioned in S102 appear to be satisfactorily accounted for
In addition we have the 178 factor of profitability of the catering establishments
On these facts the petitioners straight away invite us to issue a mandamus directing the Central Government to abolish the contract labour system under which cleaners in catering establishments and pantry cars are at present employed in the Southern Railway
But we refrain from doing so because under Section 10 Parliament has vested in the appropriate Government the power to prohibit the employment of contract labour in any process operation or other work in any estab lishment
The appropriate Government is required to consult the Central Board or the State Board as the case may be before arriving at its decision
The decision of course will be subject to judicial review
But we do not think that we will be justified in issuing the mandamus prayed for unless and until the Government fails or refuses to exercise the power vested in it under section 10
In the circumstances the appropriate order to make in the present case is to direct the Central Government to take appropriate action under section 10 of the Contract Labour Abolition and Regulation Act in the matter of prohibiting the employment of contract labour in the work of cleaning catering establishments and pantry cars in the Southern Railway
This must be done within six months from today
Without waiting for the decision of the Central Government the administration of the Southern Rail way will be free of its own motion to abolish the Contract labour system and to regularise the services of the employed in the work of cleaning catering establishments and pantry cars in the Southern Railway
In any case the administra tion of the Southern Railway will refrain until the deci sion of the Central Government under section 10 from employing Contract labour
The work of cleaning catering establish ments and pantry cars will be done departmentally by employ ing those workmen who were previously employed by the Con tractor on the same wages and conditions of work as are applicable to those engaged in similar work by the Western Railway
If there is any dispute whether an individual workman was or was not employed by the Contractor such dispute shall be decided by the Deputy Labour Commissioner Madras
Any further directions may be sought if necessary from the Madras High Court
If the Central Government does not finally decide the question within six months from today the Southern Railway administration will within three months thereafter absorb the workmen into their service and regularise their services
SR Petition disposed of


Summary:
More than a quarter of a century ago in the Standard Vacuum Refining Company vs Its Workmen  the Supreme Court affirmed the direction of the Industrial Tribunal for the abolition of the contract system of labour
As a result thereof the Contract Labour Abolition and Regulation Act came to be passed to regulate the employ ment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith
The Central Government in exercise of its powers conferred by section 35 of the Act has made the Contract Labour Abolition and Regulation Central Rules 1971 Section 10 of the Act empowers the appropriate Government to prohibit by notification in the Official Gazette employment of contract labour in any process Operation or other work in any establishment sub ject to the fulfilment of the conditions in sub section 2 thereof and after consulting the Central Board or the State Board as the case may be
Rule 25 prescribes the forms terms and condition of licence including the payment of minimum wages under the holiday hours of work etc
The Writ Petitioners alleged that in spite of the Report of the Parliamentary Committee of Petitions under the Chairmanship of Shri KP Tiwari dated 304
1984 and their representations the Southern Railway persisted in employing contract labour for cleaning its catering establishments and pantry cars by paying a pittance averaging Rs200 to Rs250 per day
Most of the other Railways had abolished the 165 system of employing labour through a contractor
Therefore they sought relief for the abolition of the Contract Labour system by the issuance of a writ of mandamus under Article 32 of the Constitution and for a direction to treat them as regular employees
Issuing an appropriate writ in the nature of a direc tion the Court HELD 11 It is clear that on the facts presented and on the report of the Parliamentary Committee of Petitions the work of cleaning catering establishments and pantry cars is necessary and incidental to the industry or business of the Southern Railway and so requirement a of S102 is satisfied that it is of a perennial nature and so require ment b is satisfied that the work is done through regular workmen in most Railways in the country and so requirement c is satisfied and that the work requires the employment of sufficient number of whole time workmen and so require ment d is also satisfied
Thus all the relevant factors mentioned in section 102 of the Contract Labour Abolition and Regulation Act are satisfactorily accounted for
In addi tion there is the factor of profitability of the catering establishments
177F H 178A Despite this the Supreme Court will not issue of writ of mandamus to the Railway unless and until the Government of India fails or refuses to exercise the power vested in it under section 10 of the Act
Under section 10 Parliament has vested in the appropriate Government the power to prohibit the employment of Contract Labour in any process operation or other work in any establishment
The appropriate Govern ment is required to consult the Central Board or the State Board as the case may be before arriving at its decision
The decision of course will be subject to judicial review
In the circumstances the appropriate order to make in the present case is to direct the Central Government to take appropriate action under section 10 of the Contract Labour Abolition and Regulation Act in the matter of prohibiting the employment of contract labour in the work of cleaning catering establishments and pantry cars in the Southern Railway within a period of six months
178B D The Court further directed that i without waiting for the decision of the Central Government the administration of the Southern Railway will be free of its own motion to abolish the Contract labour system and to regularise the services of those employed in the work of cleaning catering establishments and pantry cars in the Southern 166 Railway
In any case the administration of the Southern Railway will refrain until the decision of the Central Government under section 10 from employing Contract labour ii The work of cleaning catering establishments and pantry cars will be done departmentally by employing those workmen who were previously employed by the Contractor on the same wages and conditions of work as are applicable to those engaged in similar work by the Western Railway
If there is any dispute whether an individual workman was or was not employed by the Contractor such dispute shall be decided by the Deputy Labour Commissioner Madras iii Any further directions may be sought if necessary from the Madras High Court iv If the Central Government does not finally decide the ques tion within six months the Southern Railway administration will within three months thereafter absorb the workmen into their service and regularise their services
178D G