1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.70 OF 1998 ... General Employees Association ...Petitioner v/s. 1.Hindustan Petroleum Corporation Ltd. 2.The Director (Personnel),HPCL 3.The Executive Director, HPCL 4.The General Manager, HPCL 5.Dy.General Manager,HPCL ...Respondents ... Mr.K.J.Phakale i/b S.S.Phakale for the Petitioner. Mr.M.D.Siodia i/b Rustomji & Giniwala for Respondent No.1. ... CORAM: D.K.DESHMUKH, & R.S.MOHITE, JJ. DATED: 15th July, 2009 JUDGMENT: (PER D.K.DESHMUKH, J.) 2 1. By this petition filed under Article 26 of the Constitution of India, the Petitioner challenges the communication dated 1st April, 1996 of the Respondent/Corporation. It also seeks a direction to the Corporation to reinstate the workmen in service, in relation to which the communication at Annexure D has been addressed. The facts that are relevant and material for deciding this petition are: 2. The Petitioner is a registered trade- union. It claims that the persons working in the canteen of the Respondent-corporation at its refinery in Mahul are its members. It appears to be an admitted position that the Respondent-corporation has refinery at Mahul in Mumbai. It is a factory within the meaning of the Factories Act and there is a canteen maintained by the Corporation, which it is 3 obliged to maintain under the provisions of the Factories Act. Persons for running that canteen were provided by a contractor to the Corporation. It appears that the Petitioner- union had made an application for abolition of the contract labour under the Contract Labour (Regulation and Abolition) Act, 1970. The trade-union also filed writ petition No. 3027 of 1987 in this Court seeking a writ of this court restraining the Corporation from employing contract labour in the canteen at Mahul. Writ Petition was rejected by the learned single Judge by order dated 21st September, 1987. In the appeal that was filed against that order, being Appeal No.11 of 1987, a statement was made on behalf of the Union of India that the application of the Union dated 21st July, 1987 filed under the Contract Labour (Regulation and Abolition) Act, 1970 (herein after referred to Contract 4 Labour Act ) would be considered and decided within a period of six weeks. Therefore, the Division Bench permitted the trade-union to withdraw its petition and the order passed by the learned single Judge was set aside. It appears that, thereafter, the Central Government made an order under Section 10 declining to make an order for abolition of the contract labour. Writ Petition No.909 of 1989 was filed in this court challenging that order of the Central Government. Writ Petition No.909 of 1989 was decided by the Division Bench of this Court by its order dated 22-1-1996. The Division Bench held that the Central Government was not justified in rejecting the application filed by the trade- union for abolition of the contract labour under the Contract Labour Act. It also held that the court can not make an order for abolition of the contract labour. That order 5 can be made under Section 10 only by the appropriate Government and therefore, the court disposed of the petition with the following directions: 10. For the reasons stated above, we allow the writ petition. Rule is made absolute and the following order is passed:- (i) Respondent Nos.1 and 2 are directed to abolish the system of contract labour existing in the canteen attached to the refineries of respondent No.2 at Mahul, Bombay, forthwith. (ii) Respondent Nos.1 and 2 shall determine the complement of different categories of workmen required for running the canteen within the refineries departmentally. Such number of 6 workmen from amongst the present workers working in the canteen determined as the required complement shall stand absorbed as regular workmen in the employment of the 2nd respondent. (iii) Upon absorption in the service of the 2nd respondent, the concerned workmen shall be entitled to the emoluments and conditions of service as are applicable to the workmen of corresponding categories in the other canteens. (iv) If any workmen from amongst the existing contract labour are found surplus to the requirement in any category, the 2nd respondent shall discharge such workmen after complying with the 7 provisions of Chapter V of the Industrial Disputes Act. While doing so, the 2nd respondent shall keep in mind the fact that the workmen concerned had been rendering service in the refinery canteen for over a period of time and, therefore, they ordinarily have a right to continue in employment and every effort shall be made to continue them in service. (v) No order as to costs. 3. The order of the Division Bench was challenged in Supreme Court by the Respondent/corporation. The Appeal was registered as Appeal (Civil) No.19125 of 1996. The Supreme Court disposed of the Appeal by order dated 13-9-1996 by making 8 some modifications in the order passed by the Division Bench. The order of the Supreme Court reads as under: Upon hearing counsel the Court made the following ORDER: In view of the law laid down by the Court in Parimal Chandra Raha and Ors. vs. Life Insurance Corporation of India and Ors., 1995 Supp (2) SCC 611, there is no scope to interfere with the impugned judgment of the High Court, We, however, direct that all the workmen who are to be given the benefit of the impugned judgment of the High Court shall fulfill the following conditions: 1)At the time of initial appointment the workmen should be complying with the minimum and the maximum age limits prescribed under the policy of the Corporation; 2) They must be medically fit according to the standards prescribed by the Corporation; 3) Those who were appointed prior to the filing of the writ petition must have three years minimum service to their credit on the date of the judgment of the High Court; 4) Those who were appointed during the pendency of the writ petition, they must have four 9 years of minimum service to their credit on the date of judgment of the High Court; 5) All those who are not absorbed in the service of the Corporation for any of the reasons indicated above, their cases shall be considered in accordance with the provisions of the Industrial Disputes Act, 1947 when fresh recruitment to the canteen staff is made by the Corporation. All the workmen who are not absorbed for any of the conditions enumerated above, shall be given retrenchment compensation in accordance with law. The Special leave petition is disposed of in the above terms. 4. After the order of the Supreme Court, according to the Respondent-Corporation, it held necessary inquiry. According to the Respondent/Corporation, there were in all 180 employees working in the canteen through the contractor. All those 180 employees were considered in accordance with the directions of the Division Bench and the Supreme Court 10 and 110 employees were absorbed as regular employees of the Corporation. 68 of employees of the contractor did not fulfil the various conditions laid down by the Supreme Court in its order referred to above and therefore they were paid retrenchment compensation as directed by the Supreme Court. It is at this juncture that the present petition has been filed. 5. According to the Petitioners, 68 employees have been retrenched by the Respondent/Corporation without following the procedure laid down by Section 25-N of the Industrial Disputes Act, and therefore the retrenchment is illegal and liable to be set aside and those 68 employees are entitled to be reinstated in service. Whereas according to the Respondent/Corporation for retrenchment of the 68 employees, the 11 procedure laid down in Section 25-N of the Industrial Disputes Act is not to be followed, but only retrenchment compensation is to be paid in accordance with the provisions. That has been done by the Corporation and therefore as the action of the Corporation is perfectly in consonance with the order of the Division Bench and the order of the Supreme Court, the petition deserves to be dismissed. 6. The learned Counsel appearing for the Petitioners submits that the Supreme Court had directed that all the workmen who are not absorbed after holding scrutiny as per the directions of the Supreme Court shall be given retrenchment compensation in accordance with law. The learned Counsel submits that similar directions were given by the Division Bench of this Court by its order dated 26th 12 April, 2000 in Writ Petition No.979 of 2000 in the case of Shramik Sena v/s. M/s.Indian Petrochemicals Corporation Ltd. & anr. That judgment was challenged before the Supreme Court, which was Civil Appeal No. 892 of 2001. That Civil Appeal was dispose;d of by the Supreme Court by order dated 29-1-2001. In that judgment the Supreme Court had issued similar directions in relation to the retrenched employees. In that case also the procedure under Section 25-N was not followed. Therefore, Writ Petition No.2020 of 2001 was filed in this Court, which was decided by the Division Bench of this Court dated 25-9-2002 and the Division Bench after considering the order of the Supreme Court and though it was the defence of the employer in that case also that in relation to the retrenched employee only payment of retrenchment compensation is to be made 13 according to the provisions of Section 25-N of the Act and the procedure under Section 25-N need not be followed, held that the employer in that case was obliged to follow while effecting the retrenchment even the procedure under Section 25-N of the Act. The learned Counsel submits that the Supreme Court has already dismissed the Special Leave Petition against the judgment of the Division Bench dated 25-9-2002 in Indian Petrochemicals case. He submits that as the directions issued in both the cases are similar, following judgment of the Division Bench in Petrochemicals case we should also direct in this case that the procedure under Section 25-N is also to be followed. 7. The learned Counsel appearing for the Respondent-corporation , on the other hand, submits that the orders passed by the 14 Division Bench and the Supreme Court in Indian Petrochemicals case are not relevant in this case, because in the case of Petrochemicals there was a finding recorded that the contractor engaged for providing labour was a camouflage and that the canteen was being conducted by the employer himself and therefore, the employees engaged in the canteen were the employees of the employer himself and not of the contractor. Whereas in this case, an application has been made for abolition of the contract labour under Section 10 of the Contract Labour Act and that application being rejected by the Central Government, a writ petition was filed in this court and this court also directed the Government of India to abolish the contract labour, but the Union of India did not in fact issue any notification abolishing the contract labour. Therefore, on the date 15 on which absorption and retrenchment took place the persons working in the canteen were not the employees of the Corporation, but they were the employees of the contractor and therefore in this case the procedure under Section 25-N in relation to retrenchment cannot be followed. The learned counsel also submitted that in the alternative the directions issued by the Division Bench in Indian Petrochemicals case for following procedure under Section 25-N cannot be said to be correct reading the judgment of the Supreme Court in Indian Petrochemicals case. The learned Counsel submits that in that case also the Supreme Court had directed that what is to be done is, compensation under Section 25-N is to be paid, but the procedure under that provisions is not to be followed. But the Division Bench misread the directions of the Supreme Court and directed that even the 16 procedure under Section 25-N is required to be followed. 8. Now, on the basis of these rival submissions it is clear that the question that falls for consideration is whether in terms of the order of the Division Bench and the order of the Supreme Court, the provisions of Section 25-N of the Industrial Disputes Act were to be followed by the Respondent-Corporation in all respects or only in so far as the payment of retrenchment compensation is concerned. Perusal of paragraph 10 of the order of the Division Bench quoted above shows that the Division Bench directed the Respondent/corporation to comply with the provisions of Chapter V of the Industrial Disputes Act in relation to the workmen who are found surplus. Perusal of the order of the Supreme Court quoted above 17 shows that paragraph 5 of that order is relevant. The Supreme Court by paragraph 5 directs that those persons who are not absorbed in the service of the Corporation shall be considered for fresh recruitment to the canteen in accordance with the provisions of the Industrial Disputes Act, and then it directs all the workmen who are not absorbed for any of the conditions enumerated above shall be given retrenchment compensation in accordance with law. The Supreme Court in so far as payment of retrenchment compensation has not even referred to the provisions of the Industrial Disputes Act, though in so far as their absorption in case of fresh recruitment the provisions of Industrial Disputes Act have been specifically referred to. All that the Supreme Court said is that the payment of retrenchment compensation shall be made in 18 accordance with law. Perusal of provisions of Section 25-N of the Industrial Disputes Act shows that before bringing about retrenchment, prior permission of the appropriate government is to be obtained. Retrenchment cannot be brought about without obtaining prior permission. Had it been the intention of the Supreme Court to make provisions of Section 25-N applicable to the retrenchment to be carried out at the end of the process of absorption, then the Supreme Court would have specifically said so. The Supreme Court has not specifically said that the provisions of Section 25-N of the Industrial Disputes Act shall be followed. Perusal of the order of the Division Bench quoted above shows that the Division Bench had specifically directed that the provisions of Chapter V of the Industrial Disputes Act are to be followed while discharging the 19 workmen who are found to be surplus. The Supreme Court made the order in modification of the order made by the Division Bench and directed all the workmen who are not absorbed for any of the conditions enumerated above, shall be given retrenchment compensation in accordance with law. The Supreme Court, thus, modified the directions issued by the Division Bench that while discharging the workmen found to be surplus the provisions of Chapter V of the Industrial Disputes Act have to be followed. Had it been the intention of the Supreme Court not to modify the order of the Division Bench in thar regard, the Supreme would not have issued the direction which is quoted above. In our opinion, therefore, the provisions of the Industrial Disputes Act only in relation to computing the amount of retrenchment compensation to be paid would only be 20 relevant and not the procedure laid down to be followed before bringing about the retrenchment. 9. So far as reliance placed on the judgment of the Division Bench of this court in the case of Indian Petrochemicals is concerned, it is to be seen that in that case first judgment of the Division Bench was in Writ Petition No.2206 of 1997, which was decided on 29th August, 1997. A finding was recorded in that judgment that the persons who are working in the statutory canteen are the employees of the principal employer namely Indian Petrochemicals Corporation. There was a finding recorded that the contract entered into with the labour contractor was merely a camouflage and that the workmen were the direct employees of the principal employer. The Division Bench in its 21 judgment in Writ Petition No.979 of 2000 decided on 26th April, 2000 has referred to the judgment of the Supreme Court in the case Petrochemicals Corporation and has observed in paragraph 6 as under: 6........Moreover, regard must be had in the present case to the finding of the Supreme Court that the workers were as a matter of fact the employees of the Respondent-Corporation and the contractor was a mere camouflage. In other words, this was not a case where a genuine arrangement of the engagement of contract labour through a contractor was sought to be discontinued by the abolition of the contract labour. In fact, before the Supreme Court, one of the submissions urged by the learned Counsel for the Corporation was that there was no abolition of contract labour and until an abolition took place it was open to the management to manage the canteen through a contractor. This was rejected by the Supreme Court with the following observations: This argument would have some substance if in reality the management had engaged a contractor who was wholly independent of the management, but we have come to the conclusion on facts that the contractor in the present case is 22 engaged only for the purpose of record and for all purposes the workmen of the management. In the background of this finding, the last argument of Mr.Andhyarujina should also fail. The finding of the Supreme Court, therefore, is that the workmen for whose benefit the proceedings were initiated were only ostensibly engaged through a contractor but they were in fact and in substance the employees of the Corporation. (emphasis supplied) It is, thus, clear that the Division Bench has found that in the case of Petrochemical Corporation a genuine arrangement of engagement of contract labour through the contractor was not in existence and therefore, there was no need to seek discontinuation of that system by abolition of the contract labour. It is because of this situation that the Supreme Court in its judgment in Civil Appeal No.892 of 2001 in Indian Petrochemicals Corporation Ltd. s case has observed thus: 23 The second part directs payment of retrenchment compensation in accordance with law. To understand the import of these two parts, it will be necessary to bear in mind that the High Court imposed the aforementioned conditions for purposes of absorption of the workmen in the service of the management because though they were teated as the employees of the management under the Factories Act, they were purportedly working as the employees of the contractor. Now, in the context of the aforementioned findings recorded (that they are in fact the workmen of the management) and the direction issued by this Court for their `regularisation in the service of management that both the parts of condition (e) have to be interpreted. It is difficult to assume that while conferring the benefit of regularisation on the workmen, subject of course to the said conditions, this Court impliedly took away the rights available to the unabsorbed workmen under the I.D.Act. There is nothing in the judgment of this Court, in the above-mentioned appeals, to suggest that the status of the workmen who remained unabsorbed for non-fulfillment of conditions (a) to (d) would be changed to that of retrenched employees. Equally there is nothing therein to infer that it directs their retrenchment in accordance with 24 law. It is needless to point out that once it is held that they are the employees of the management, they can be retrenched only in accordance with the provisions of the I.D.Act. 10. It is clear from the above observations of the Supreme Court in Indian Petrochemicals Corporation Ltd. s case that in that case what was being done was that the services of the employees were being regularised because a finding was already recorded that they are employees of Petrochemicals Corporation and therefore the provisions of the Industrial Disputes Act were applicable. So far as the present case is concerned, the persons who are retrenched were not employees of the Respondent- corporation, they were employees of the contractor. Had it been the case of the Petitioner that the contract entered into by the Corporation with the contractor is bogus and sham, they would not have applied to the 25 Central Government for abolition of the contrat labour. In this case, they have applied for abolition of the contrat labour with the Central Government, the Central Government declined to do that , therefore, they filed Writ Petition No.909 of 1989 in this Court. This court set aside the order of the Central Government and directed the Central Government to abolish the system of contract labour. What is observed by the Court in paragraph 9 of that order is relevant. It reads as under: 9. We are conscious that the power to abolish contract labour system is exclusively vested in the appropriate Government and not in the Court or Tribunal. The glaring facts in this case, however, leave us with a distinct impression that the statutory authority which is vested with the power of abolition of contract labour under Section 10 of the Act is not having an open mind. We have arrived at this conclusion by considering the conduct of the Central Government referred to above, 26 namely, the basis for refusing to abolish the contract labour was neither disclosed in the affidavit filed in reply to the petition or produced before us at the time of hearing of this petition. In a situation like the present one, and more particularly, keeping in view the ratio of the judgments in Parimal Chandra Raha s case (supra) and in Gujarat Electricity Board s case (supra), this is a fit case where we should exercise power under Article 226 of the Constitution and issue directions to respondent Nos.1 and 2 to abolish contract labour in the refinery canteen of respondent No.2. 11. It is an admitted position that the Central Government has not acted pursuant to the order of the High Court. Power of the Central Government in this regard is contained in sub-section 1 of Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970. Sub-section 1 of Section 10 of the Act is relevant. It reads as under: 27 10(1) Notwithstanding anything contained in this Act, (but, subject to the provisions of Clause (c) of sub-section (5) of Section 1) the appropriate Government may, after consultation with the Central Board or, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process, operation or other work in any establishment. Perusal of sub-section 1 of Section 10 shows that it does not really contemplate abolition of the contract labour. What it contemplates is that the State Government issues notification prohibiting the employer from employing labour through the contractor. By the order of the High Court the Central Government was directed to issue notification in the official gazette as required by Section 10 prohibiting the Respondent/Corporation from employing contract labour. That notification though 28 ordered to be issued by the High Court, has not yet been issued. Therefore, the employees in relation to which the High Court and the Supreme Court made the order were employees of the contractor, they were to be absorbed in the services of the Respondent/ Corporation. Thus, in our opinion, there is a significance difference in the relevant fact in the case of Petrochemicals Corporation and the present case. In the present case, the provisions of the Section 25-N of the Industrial Disputes Act will not become applicable, because the persons who are to be retrenched were not in the employment of the Respondent/Corporation on the date of the alleged retrenchment. 12. In this view of the matter, therefore, in our opinion, the Petitioners are not justified in claiming that as the 29 retrenchment of 68 workmen was not brought about, after following the procedure under section 25-N of the Industrial Disputes Act, the retrenchment is invalid and the employees are entitled to reinstate in service. The Petition, in our opinion, is liable to be dismissed. It is, however, clarified that