LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 1 of 46 HIGH COURT OF DELHI AT NEW DELHI LPA 38/2007 Reserved on: November 12, 2009 Decision on: December 18, 2009 INDIRA GANDHI AIRPORT TDI KARAMCHARI UNION ..... Appellant Through Mr. Colin Gonsalves, Sr. Adv. with Mr. Vipin M. Benjamin, Adv. versus UNION OF INDIA & ORS ..... Respondents Through Mr. Sachin Dutta, Adv. for UOI. Dr. A.M. Singhvi, Sr. Adv. with Mr. Saket Singh, Mr. Harminder Singh, Mr. Mohit Gupta, Advs. for DIAL. Mr. V.P. Singh, Sr. Adv. with Ms. Anjana Gosain, Adv. for AAI. Mr. Ajay Kapur with Mr. M.P. Sahay, Advs. for R- 6. LPA 1065/2007 UNION OF INDIA & ANR ..... Appellants Through Mr. Sachin Dutta, Adv. for UOI. versus INDIRA GANDHI AIRPORT TDI KARAMCHARI UNION & ORS ..... Respondents Through Mr. Colin Gonsalves, Sr. Adv. with Mr. Vipin M. Benjamin, Adv. for R-1. Dr. A.M. Singhvi, Sr. Adv. with Mr. Saket Singh, Mr. Harminder Singh, Mr. Mohit Gupta, Advs. for R-3. Mr. V.P. Singh, Sr. Adv. with Ms. Anjana Gosain, Adv. for AAI. Mr. Ajay Kapur with Mr. M.P. Sahay, Advs. for R- 5. LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 2 of 46 W.P. (C) 139/2008 DELHI INTERNATIONAL AIRPORT P.LTD ..... Petitioner Through Dr. A.M. Singhvi, Sr. Adv. with Mr. Saket Singh, Mr. Harminder Singh, Mr. Mohit Gupta, Advs. versus UNION OF INDIA & ORS. ..... Respondents Through Mr. Sachin Dutta, UOI. Mr. Colin Gansalves, Sr. Adv. with Mr. Vipin M. Benjamin, Adv. for R-4. W.P.(C) 6763/2008 AIRPORTS AUTHORITY OF INDIA ..... Petitioner Through Mr. V.P. Singh, Sr. Adv. with Ms. Anjana Gosain, Adv. for AAI. versus UNION OF INDIA & ORS. ..... Respondents Through Mr. Sachin Dutta, Adv. for UOI. Mr. Colin Gansalves, Sr. Adv. with Mr. Vipin M. Benjamin, Adv. CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE DR. JUSTICE S. MURALIDHAR 1. Whether reporters of the local newspapers be allowed to see the judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes S. MURALIDHAR, J. Introduction 1. These four cases arise out of the same facts and therefore are being disposed of by this common judgment. LPA No. 38 of 2007 is directed LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 3 of 46 against the impugned order dated 28th November, 2006 passed by the learned single Judge dismissing W.P(C) No. 15156 of 2006 filed by the Appellant seeking a direction to the Respondent No. 2 Airport Authority of India (AAI) to forthwith take on duty the workers previously engaged in trolley retrieval at the Delhi Airports as permanent workers and to pay them wages accordingly. The further prayer in the said writ petition was that a direction should be issued to AAI to abolish the contract labour system in trolley retrieval at the Delhi Airports in terms of the Notification dated 26th July, 2004 issued by the Union of India, Respondent No.1 under Section 10 (1) of the Contract Labour (Regulation and Abolition) Act, 1970 (CLRAA). LPA No. 1065 of 2007 is by the Union of India against the same judgment dated 28th November, 2006 passed by the learned single Judge dismissing W.P.(C) No. 15156 of 2006. 2. W.P.(C) No. 139 of 2008 is by the Delhi International Airport Private Limited (DIAL) challenging an order dated 24th September, 2007 passed by the Chief Labour Commissioner (Central) declaring the Central Government to be the appropriate Government for the airport establishment of DIAL under the CLRAA as well as the Industrial Disputes Act, 1947 (ID Act). It also challenges the consequential order dated 22nd November, 2007 passed by the Chief Secretary to the Government of the National Capital Territory of Delhi (GNCTD) transferring the industrial disputes and records/files LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 4 of 46 pertaining to the registration and licenses granted to DIAL to the office of the Regional Labour Commissioner (Central), New Delhi. 3. W.P. (C) No. 6763 of 2008 is by the AAI seeking the quashing of the Notification dated 26th July, 2004 issued by the Union of India under Section 10(1) CLRAA prohibiting the employment of contract labour in the job of trolley retrieval in the establishment of the AAI at Indira Gandhi International Airport and domestic airport at Delhi. It also seeks the quashing of the recommendation dated 6th February, 2004 made by the Central Advisory Contract Labour Board (CACLB) on the basis of which the aforementioned Notification dated 26th July, 2004 was issued by the Union of India. Background facts 4. In 1992 around 136 workers were employed through a contractor for the work of trolley retrieval at the domestic and international airports at Delhi. In view of the perennial nature of the work, where they were employed on three shifts in a day, the workmen approached the CACLB for abolishing the contract labour system in trolley retrieval and for their absorption in AAI as regular employees. On 20th July, 1999 the CACLB made a recommendation declining to abolish the contract labour system in trolley retrieval in the Delhi airports. The above decision dated 20th July, 1999 was challenged by the Indira Gandhi Airport TDI Karamchari Union (the workers union) by LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 5 of 46 filing W.P. (C) No. 5248 of 2002. By a judgment dated 5th November, 2003 the learned single Judge of this Court quashed the recommendation dated 20th July, 1999 and directed the CACLB to reconsider the matter. In the course of the judgment it was clarified by the learned single Judge that in case a recommendation was made for the abolition of trolley retrieval and an appropriate notification was issued by the Central Government, then in terms of the judgment of the Constitution Bench of the Supreme Court in Steel Authority of India Limited v. National Union Waterfront Workers (2001) 7 SCC 1 (hereafter „the SAIL case‟), the workmen would be entitled to preference/regular employment in accordance therewith and the breaks, if any, in their employment shall not come in their way. 5. At this stage, it may be mentioned that the Union of India took a policy decision for privatization of airports in the country sometime in 2003. On 7th May, 2003 a Bill preceding the amendment to the Airport Authority of India Act, 1994 (AAI Act) was tabled in Parliament. It was stated that with a view to improving the standard of services and facilities at the airports and to bring them at par with international standards there was a need for infusion of private sector investments as also for restructuring of the airports. Since the AAI Act was applicable to all airports, significant private sector investments in the project of restructuring the airports would require an “effective legal framework within which the investor would feel safe and secure about their operational and managerial independent”. Accordingly, LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 6 of 46 the AAI Act was sought to be amended by insertion of Clause (aa) in sub- section (3) of Section 12 as well as new Section 12A to enable the AAI inter alia to “lease the above premises to private operators with the prior approval of the Central Government”. By the said amendment it proposed that some of the functions of the AAI can be assigned to lessees subject to the exception that at airports air traffic service or watch and ward and functions will continue to be provided by the AAI. The aforementioned amendments were brought about with effect from 1st July, 2004 by the passage of the AAI (Amendment) Act, 2003. 6. On 5th December, 2003 the services of the workers engaged in trolley retrieval in Delhi airports was terminated and fresh contract labourers were inducted through a new contractor. Meanwhile the CACLB, which included representatives of both the employers and the employees, reheard the remanded case and by a report dated 6th February, 2004 unanimously recommended the abolition of the contract labour system in trolley retrieval in the Delhi airports. The CACLB concluded that the work of trolley retrieval was incidental to the main function of the AAI. It had to be continued on a day to day basis and therefore was of permanent and perennial nature with sufficient duration. It was held that the respondents TDI International Private Limited (TDIPL), which had originally been engaged by AAI to provide the contract labourers and M/s Sindhu Holding Private Limited (SHPL) which was subsequently engaged by the AAI, were LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 7 of 46 „contractors‟ within the meaning of Section 2(c) of the CLRAA and their workers were „contract labour‟ within the meaning of Section 2(b) CLRAA. The aforementioned recommendation dated 6th February, 2004 of the CACLB was accepted by the Union of India which issued the following Notification dated 26th July, 2004 under Section 10(1) of the CLRAA. “Ministry of Labour and Employment Notification New Delhi, the 26th July, 2004 S.O. 848 (E) – In exercise of the powers conferred by Sub-section (1) of Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 (37 of 1970), the Central Government, after consultation with the Central Advisory Contract Labour Board, and having regard to the working conditions and benefits provided to contract labour and other relevant factors enumerated in Sub- section (2) of Section 10 of the said Act, hereby prohibits the employment of contract labour in the job of trolley retrieval in the establishment of the Airport Authority of India at Indira Gandhi International Airport and Domestic Airport at Delhi with effect from the date of publication of this notification in the Official Gazette. [E.No.S-16014/60/2002-LW.(Vol.-II)] Manohar Lal, Jt. Secy.” 7. SLP(C) No. 22424 of 2003 filed by the workers union against the judgment dated 5th November, 2003 was dismissed by the Supreme Court by its order dated 5th December, 2003. The workers engaged by the TDIPL were replaced by fresh workers of SHPL on the intervening night of 5th/6th LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 8 of 46 December, 2003. The workers belonging to the Appellant union were not allowed to continue. 8. AAI filed W.P. (C) No. 13953 of 2004 in this court challenging the Notification dated 26th July, 2004. The workers were not made party to the writ petition. An ex parte stay of the Notification was granted by this court on 23rd August, 2004. Subsequently, by a judgment dated 3rd February, 2005 the learned single Judge disposed of W.P. (C) No. 13953 of 2004 holding that the High Powered Committee (HPC), set up by the Central Government pursuant to the order passed by the Supreme Court in Oil and Natural Gas Commission v. Collector of Central Excise 1995 Supp. (4) SCC 541, had to grant permission to the AAI to litigate since the writ petition was against the Central Government. Accordingly the writ petition was disposed of by directing the AAI, the Union of India and the other Respondents to appear before the HPC on 15th February 2005. The HPC was to grant a hearing and pass orders within three months. 9. On 27th May 2005, the HPC passed an order recommending that the Ministry of Labour should keep the interest of workmen engaged by TDIPL in view and ensure to the maximum extent possible that these workers should be provided work either by SHPL, the new contractor, or by engaging more than one contractor for the international and domestic airports so that the workers who were engaged by TDIPL and whose services were not LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 9 of 46 engaged by the new contractor SHPL could be engaged by the other contractors. The CACLB was once again asked to look into the terms and conditions of the employment of the workmen by the contractors in the job of trolley retrieval. 10. The CACLB met on 30th /31st August, 2005 at Hyderabad to reconsider the question of abolition of contract labour in the work of trolley retrieval at the Delhi airports. The CACLB was of the view that it would be worthwhile for the parties to make a genuine effort to reach an understanding. The Chief Labour Commissioner (Central) also offered his services to bring about a settlement. On 27th /28th December, 2005 the CACLB gave one last chance to the management of AAI to take necessary steps and communicate the results of the deliberations by the end of the first week of February 2006 to enable the CACLB to take a decision at the next meeting. At the next meeting of CACLB held in Kolkata on 16th /17th February 2006, the status of the workers was again evaluated. The CACLB was asked by the AAI for more time and the matter was adjourned by two months. 11. In the meanwhile, the privatization of the Delhi airports took place and an agreement called the Operation, Management and Development Agreement (OMDA) dated 4th April, 2006 was entered into between AAI and DIAL which was a joint venture corporation (JVC) in which the AAI LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 10 of 46 held 26% shares and a group of companies held the balance 74%. This group, defined in the agreement as the “Prime Member” Group, included GMR Infrastructure Ltd. (31%), GMR Energy Ltd. (10%), Fraport AG Frankfurt Airport Services Worldwide (10%), Malaysia Airports (Mauritius) Pvt. Ltd. (10%). Other shareholders were GVL Investment Pvt. Ltd. (9%) and India Development Fund (3.9%). In terms of Clause 2.2.3 the JVC (i.e. DIAL) “shall undertake/provide aeronautical services and essential services at the Airport Site.” The term “Airport Site” was defined to mean “the underlying land forming part of the demised premises (as defined in the lease deed.” In terms of the Clause 5.1 of the OMDA from the effective date of the agreement “the rights and obligations associated with the operation and management of the Airport would stand transferred to the JVC, who shall be solely responsible and liable for the performance of all Aeronautical Services, Essential Services and all other activities and services as presently undertaken at the airport (other than Reserved Activities)”. The JVC was to perform “all existing contracts and agreements between AAI or any Relevant Authority and any third party as relatable to the Airport from the effective date, as if JVC was an original party to such contracts and agreements instead of AAI and towards this end shall perform all responsibilities, liabilities and obligations of AAI at JVC‟s risk and cost (including payment obligations to counter parties)”. During the Transition Phase, AAI was to provide assistance to JVC on a best endeavour basis. The term “essential services” is defined to mean those services listed in Schedule 16 to the LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 11 of 46 OMDA which in turn specifies trolleys, toilets, passenger baggage handling and drinking water. 12. It requires to be mentioned that before the CACLB an argument was advanced that with the advent of privatization there was a change in the situation concerning the engagement of contract labour in trolley retrieval. This was considered and it was opined by the CACLB, in its meeting on 6th February 2004, that there would be nevertheless a demand for more labourers for trolley retrieval. When the case went before the HPC in terms of the order dated 3rd February 2005 of this Court, a similar argument was advanced. In the minutes of its meeting held on 27th May 2005, the HPC concurred with the CACLB and recommended that while issuing the notification under Section 10 (1) CLRAA, the central government should keep in view the interests of the workers engaged by TDIPL. 13. Meanwhile pursuant to the application made by DIAL to the Central Government for registration of the establishment under the CLRAA, a certificate dated 27th April, 2006 was issued to it under Section 7(2) CLRAA. By a letter dated 24th May, 2006 the AAI wrote to the Secretary, CACLB informing inter alia that DIAL had taken over the day to day operations, management, control and development of the IGI airport with effect from the intervening night of 2nd /3rd May, 2006. On 25th September 2006 the workers‟ union filed W.P. (C) No. 15156 of 2006 in this Court LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 12 of 46 seeking the reliefs as mentioned earlier. Immediately thereafter DIAL applied for and obtained a certificate of registration dated 8th November 2006 from the Government of the NCT of Delhi under the CLRAA. 14. By the impugned order dated 28th November, 2006 the learned single Judge dismissed the writ petition holding that the Appropriate Government in respect of DIAL would be the GNCTD and not the Central Government since Respondent No. 5 DIAL “is not a company working under the directions or control of the Central Government”. It was accordingly held that the notification dated 26th July, 2004 issued under Section 10(1) CLRAA “was not applicable to the Respondent No. 5 since it has not been issued in respect to the Respondent No. 5”. It is further noted by the learned Single Judge that the workers‟ union had raised an industrial dispute under Section 10 of the ID Act contending that “a contract entered into between the Respondent No. 6 TDI International Pvt. Ltd. and the AAI was sham and camouflage and they should be regularized as permanent workmen of AAI”. It was observed that the present stand that the workmen were employees of AAI and that they should be directed to be absorbed by AAI or Respondent SHPL was contrary to the stand taken before the Industrial Tribunal. It was held that since AAI had been divested of and DIAL had taken over the management of the Delhi airports, and the notification dated 24th July 2006 issued by the Union of India had not been extended to DIAL, unless the GNCTD issued a fresh notification under Section 10 CLRAA, DIAL would LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 13 of 46 not be bound by the earlier notification. It was further observed that “although the trolley retrieval work has been shown as an essential function but the petitioner has failed to show any clause by which the liability has been foisted on the Respondent No. 5 to take the earlier contractor‟s employees as its own employees”. LPA Nos. 38 and 1065 of 2007 are by the Workers‟ Union and the Union of India respectively against the aforementioned judgment of the learned single Judge. 15. On 31st January 2007, the Deputy Chief Labour Commissioner issued an office memorandum stating that consequent upon AAI leasing out some of its Delhi airport‟s function to DIAL, “AAI may be treated as Principal Employer and DIAL its agent so far as the Delhi Airport is concerned. Under the circumstances, Central Government will continue to be the Appropriate Government for the functions carried out by DIAL as an agent of AAI”. This was followed up by a letter dated 24th September 2007 written by the Union of India to DIAL stating that the appropriate Government with respect to the ID Act as well as the CLRAA was the Central Government. A communication to the same effect was addressed also to the Delhi Government on 28th September 2007. These have been challenged by the DIAL in its writ petition. LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 14 of 46 16. On 16th October 2007 the CACLB made a renewed recommendation for abolition of the contract labour system reiterating its earlier recommendation made on 6th February 2004 on the basis of which the impugned notification dated 26th July 2004 was issued by the Central Government. It recommended that “the Contract Labour System in the job of trolley retrieval in Delhi Airport should be abolished”. It is stated that in May 2008 despite the aforementioned observations, the AAI inducted fresh contract labourers at the domestic and international terminal in Delhi through a new contractor. Submissions of counsel 17. We have heard Mr. Colin Gonsalves, learned senior counsel for the workers‟ union in both appeals and the writ petitions. On behalf of the DIAL Mr. Sudhir Chandra, Senior Advocate, Mr. P.P. Rao, Senior Advocate and Dr. A.M. Singhvi, Senior Advocate appeared. Mr. V.P. Singh, learned Senior Counsel appeared for the AAI. Mr. Sachin Dutta, learned Advocate appeared for the Union of India. 18. The first issue raised concerns the validity of the Notification dated 26th July 2004 issued by the central government under Section 10 (1) CLRAA. AAI and DIAL have assailed the CACLB‟s recommendations dated 6th February 2004, on the basis of which the aforesaid Notification was issued, on the ground that the CACLB ought to have awaited the completion of the process of privatization as by the date of its recommendation the AAI LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 15 of 46 Amendment Act had already been enacted by the Parliament having received the assent of the President on 7th September 2003. The other criticism is that a fresh evaluation was required to be undertaken by the CACLB after the remand to it of the entire case by the learned Single Judge. It is submitted that with the impending privatization of the airports in Delhi, the parameters for assessing whether there was justification for prohibiting contract labour in trolley retrieval work were likely to undergo a change and therefore the CACLB erred in opining to the contrary. It was generally submitted that there was non-application of mind to the specific requirements of Section 10 CLRAA by the central government since it was not supposed to mechanically accept the findings of the CACLB but make an independent assessment. 19. The next point raised is that in any event the Notification dated 26th July 2004 cannot bind DIAL. It has been contended by DIAL that one must look into the definition of “industrial establishment or undertaking” under Section 2(ka) of the ID Act under which different units of a larger industrial establishment may themselves be considered to be separate industrial establishments. It is submitted that the definition of „appropriate government‟ in the ID Act as it was originally enacted, was „incorporated‟ in the definition of „appropriate government‟ with effect from 28th January 1986 and not merely „referred to‟. Consequently, the subsequent amendment LPA Nos. 38-07, 1065-07 & WP(C) Nos.139-08 & 6763-08 Page 16 of 46 with effect from 11th October 1995 to the definition of that term in Section 2 (a) of the ID Act to include the AAI as well as air transport service as specified industries would not affect the definition of „appropriate government‟ under the CLRAA. It is further urged that under Section 2(j) of the ID Act “industry” means any business, trade, undertaking, manufacture or calling of employers and includes any calling, services, employment, handicraft, or industrial occupation or avocation of workmen. A reference is also made to Section 2(k) which defines “industrial dispute” to mean any dispute or difference between employers and workmen. It is submitted that in view of the definition of “appropriate government” under Section 2(1) (a) CLRAA, the definition of that term in Section 2 (a) of the ID Act would be relevant. It is submitted that under Section 2(a)(i) ID Act the “appropriate Government” in relation to any industrial dispute concerning the AAI constituted under Section 3 of the AAI Act, or an air transport service, is the Central Government. If the industry is carried on by or under the authority of the Central Government then and then alone can it be said that the appropriate government would be the Central Government and in all other cases it would be the State Government. 20. DIAL contends that it is not an agent of AAI. Further, since AAI is itself