THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY Writ Petition Nos.26970/2009; 17673/2000; 16580/2003; 16582/2003; 16737/2003; 17290/2003; 23284/2009; 23285/2009; 5192/2005; 27241/2009; 27242/2009; 27244/2009; 27245/2009; 27247/2009; 27248/2009; 27250/2009; 27255/2009 27258/2009 AND 27261/2009 COMMON ORDER: Dt:17-08-2010 Between : M/s Sirpur Paper Mills Ltd., Sri Ramanlal P. Patel and others ..petitioners And The Commissioner of Labour, Govt. of A.P., Chikkadpally, Hyderabad & others .. Respondents Counsel for the petitioners: Sri S. Ashok Anand Kumar Counsel for respondents : G.P for Labour < GIST >HEAD NOTE: ? CASES REFERRED : 1) AIR 1974 SUPREME COURT 960 2) 1998 (1) ALT 345 3) 2006 (6) SCJ 406 THE HON’BLE MR JUSTICE L. NARASIMHA REDDY Writ Petition No.26970 of 2009 & batch COMMON ORDER: M/s Sirpur Paper Mills Limited established a factory in Adilabad (for short ‘the Company’). It undertakes manufacture of paper and other allied activities, as part of its activity. It engages employees on regular basis and avails the services of contract labour also. The State of Andhra Pradesh is the appropriate Government, in relation to the Company. In exercise of its power under Sections 3 and 5 of the Minimum Wages Act, 1948 (for short ‘the M.W Act’), it issued notifications, fixing the minimum wages for the persons, employed in the manufacture of “paper and paper boards (including straw board), including hand made paper”, occurring in Part- I of the Schedule of that Act, from time to time, and they are published in the State Gazette. The Company filed W.P.No.16737 of 2003 and batch, challenging the successive notifications, mainly on the ground that the wages prescribed under the notifications cannot be made applicable to contract labour, engaged by it. 2. According to the Company, the Contract Labour (Regulation and Abolition) Act, 1970 (for short ‘the C.L Act’) and the Rules made thereunder alone regulate the conditions of the engagement of the contract labour. It is also pleaded that the activity undertaken by the contract labour is referable to the one, undertaken by the respective labour contractors, and such activity, in turn, does not fall within the definition of ‘Scheduled Employment’, under Section 2(g) of the M.W Act. Another contention is that the C.L. Act, together with the Rules made thereunder, is a self-contained Code, and it not only prevails upon the M.W Act, but also governs and controls every activity of the contract labour. It is further urged that the machinery under the M.W Act can not be pressed into service, for enforcement of the provisions of the C.L. Act. 3. Section 35 of the C.L. Act confers power upon the appropriate Government to frame Rules, touching on various aspects of the matter, covered by that Act. The list in the section covers the matters such as, appointment of members to the Advisory Board, conditions of working of the contract labour, filing of returns. Section 12 of that Act provides for grant of licence to the labour contractors. Sub-section (2) thereof directs that the licence may contain conditions, such as the hours of work, fixation of wages, provision of such essential amenities, in respect of contract labour, as the appropriate Government may deem fit, to impose in accordance with the Rules made under Section 35. In exercise of power under Section 35 of the Contract Labour Act, the Government of Andhra Pradesh framed A.P. Contract Labour (Regulation and Abolition) Rules, 1971 (for short, ‘the Rules’). Rule 25 thereof deals with the wage rates. The Commissioner of Labour issued notification dated 13-06-2000, amending Condition No.12 specified under Rule 25 (b) of the Rules. The amended Rule is to the effect that, where no rates of wages agreed to in a settlement or award, and if the wages are not prescribed under the M.W Act, for such employment, the contractor shall pay them @ Rs.1,950/-, per month, for unskilled, Rs.2,470/-, for semi-skilled, and Rs.2,990/- for skilled workers, subject to revision, from time to time. The terms “skilled”, “semi-skilled” and “unskilled” are also defined. The labour contractors who supply labour to the Company have filed W.P.No.16737 of 2003. Initially, they challenged the notification dated 13-06-2000. Thereafter the validity of Rule 25 itself is assailed, by seeking amendment to the prayer. 4. The petitioners contend that the Commissioner of Labour has no jurisdiction to stipulate various Rules, in exercise of power under Rule 25 of the Rules, and that the Rule itself is ultravires of the provisions of the C.L. Act. It is also their case that, stipulation of minimum wages is an activity under the exclusive purview of the M.W Act and such an exercise cannot be undertaken under the C.L. Act, or the Rules made thereunder. 5. Counter-affidavits are filed in both the writ petitioners, by the concerned respondents. The Government of Andhra Pradesh resisted the writ petitions, stating that the contention of the petitioners, that they cannot be compelled to pay minimum wages to the contract labour, is totally untenable. It is urged that, by challenging every step, taken in that direction, the petitioners are successfully avoiding payment of minimum wages to the contract labour, and are exploiting them. 6. It is also their contention that though a labour contractor may supply the contract labour, the minimum wages are payable for the work, for which the labourers are engaged. It is stated that the activity of supplying labour, by itself, cannot be treated as an independent avocation, from the point of view of labourers, in the context of the definition of ‘scheduled employment’. 7. Sri S. Ashok Anand Kumar, learned counsel for the petitioners, in both the batches of writ petitions, submits that the provisions of the M.W Act do not apply for the instances, wherever the contract labour are engaged. He contends that the ‘scheduled employment’, as defined under Section 2(g) of the M.W Act has no application for such category of persons, nor do they answer the description of ‘employees’, as defined under Section 2(i) of that Act. 8. Learned counsel further submits that Section 12 of the C.L. Act, dealing with the grant of licences, does not have much, to do with the stipulation of wages. According to the learned counsel, various clauses of Rule 25 of the Rules are in conflict with the other provisions of that very Rule. It is also urged that the power to amend the licence conditions cannot be exercised by the Commissioner. 9. Learned counsel for the respondents, on the other hand, submit that, by challenging every possible step taken by the Government, the Company has been avoiding payment of minimum wages to the contract labour for the last several years. They contend that, a comparative reading of the provisions of the two enactments and the relevant Rules clearly discloses that, even where a person is engaged as contract labour, he is entitled to be paid minimum wages, if he discharges the functions of a regular employee. They further submit that the Commissioner of Labour is vested with the power to undertake verification of the payment of wages and to take necessary steps in accordance with law; and ultimately contend that the writ petitions are devoid of merits. 10. An industrial undertaking would normally employ its work force on regular basis, and the persons, engaged by it, are called its employees, or workmen, as defined under the relevant enactments, such as Industrial Disputes Act, Minimum Wages Act. It is not uncommon that, whether on account of temporary nature of the work, and uncertainty, as to the strength of the work force, persons are engaged otherwise than on regular basis. If the workmen are engaged in such a manner by the establishment itself, the relationship of employer and employee, though different in purport, would come into existence. Instead of choosing and employing such persons, by itself, the industrial establishment would avail the services of certain agencies, who undertake supply of work force, known as labour contractors. They are required to obtain licence under the C.L. Act. 11. A typical regime exists in such cases. The labour contractor would be treated as the ‘employer’, for the work force, supplied by him, from the point of view of complying with the provisions of different laws, enacted for the benefit of the workmen. In addition to that, the industrial establishment, which availed the services of the contract labour, shall be treated as the ‘principal employer’. In case any default occurs with the labour contractor, the complying provisions of law, vis-à-vis the contract labour, the principal employer would be equally held liable. 12. Prescription of minimum wages is one of the important steps in the domain of labour welfare. The M.W Act empowers the appropriate Government to prescribe minimum wages for various categories of employment, mentioned in the relevant schedules, collectively called as ‘scheduled employment’, within the meaning of Section 2(g) of the M.W Act. A machinery is provided, for ensuring that minimum wages are paid to the respective categories of employees. There exists a dichotomy of opinion, as to whether a contract labour, engaged by an industrial establishment, answers the description of ‘employee’, under Section 2(i) of the Act. However, that does not directly arise for consideration in this batch of writ petitions. There is not even a claim that the contract labours are the direct employees of the Company. 13. The C.L. Act was brought into existence with an objective of regulating the activity of supplying the labour force and prevention of the exploitation of labourers. It prohibits any agency to act as a labour contractor, except by obtaining a licence, under Section 12 thereof. Provisions are made for protection of the rights of the contract labour, and the obligation in that regard is placed not only on the labour contractor, but also on the principal employer. The licence issued under Section 12 of that Act is required to contain various conditions, including those, relating to the hours of work, payment of wages, amenities at work place, etc. Rules are also framed by the appropriate Government, for enforcement of the provisions of the C.L. Act. 14. In discharge of its functions under Section 3 of the M.W Act, the Government of Andhra Pradesh issued notifications, prescribing the wages for different categories of employees, duly following the procedure prescribed under Section 5 thereof. The notification covers categories of employees, engaged by the company also. The Authorities of the Labour Department sought to enforce the wages, vis- à-vis, the contract labour also, on the ground that they are discharging the same functions, as are any regular employees. The principal objection raised by the company in this regard is that the notification does not apply to contract labour. It is in this context, that the Commissioner of Labour exercised his powers conferred upon him under the Rules, framed under the C.L. Act. As against these steps, the Labour Contractors, have not only opposed the steps, but also have challenged the very vires of Rule 25 of the Rules. The net result is that the contract labours, engaged by the Company, are denied the benefit under the M.W Act, as well as the protection under the C.L. Act, and the Rules made thereunder. 15. To appreciate the contentions advanced by the parties, it is necessary to refer to certain provisions of both the enactments. Sections 3 and 5 of the M.W Act not only confer power upon the appropriate Government, but also cast a duty upon it, to prescribe the minimum wages in the categories of employments, mentioned in the Schedule. Such exercise, however, can be only in respect of ‘scheduled employment’ defined under Section 2(g). The principal object underlying the C.L. Act, on the other hand, is to ensure regulation and control of contract labour. Section 12 of that Act provides for registration of a labour contractor, and Section 14 deals with the power to revoke, suspend and amend licences. Section 35 confers power upon the appropriate Government to make Rules, on the aspects, referred to therein. Section 12 and 35 of C.L. Act reads as under: “Sec.12: Licensing of contractors:- (1) With effect from such date as the appropriate Government may, by notification in the Official gazette, appoint, no contractor to whom this Act applies, shall undertake or execute any work through contract labour except under and in accordance with a licence issued in that behalf by the licensing Officer. (2) Subject to the provisions of this Act, a licence under sub-section (1) may contain such conditions including, in particular, conditions as to hours of work, fixation of wages and other essential amenities in respect of contract labour as the appropriate Government may deem fit to impose in accordance with the rules, if any, made under Section 35 and shall be issued on payment of such fees and on the deposit of such sum, if any, as security for the performance of the conditions as may be prescribed”. (emphasis supplied) “Sec.35. Power to make rules:- (1) The appropriate Government may, subject to the condition of previous publication make rules for carrying out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:- xxx (f) the form of a licence which may be granted or renewed under Section 12 and the conditions subject to which the licence may be granted or renewed, the cess to be levied for the grant or renewal of a licence and the deposit of any sum as security for the performance of such conditions”. 16. A combined reading of Sections 12(2) and 35(2)(f) discloses that the appropriate Government is competent to incorporate the conditions in the licences, touching on various aspects, including the wages. The Government of Andhra Pradesh framed the Rules in the year 1971. The provision relevant for the purpose of this case is, Rule 25 of the Rules, and it reads, “Rule-25: Forms and terms and conditions of licence:- (1) Every licence granted under sub-section (1) of Section 12 shall be in Form VI. (2) Every licence granted under sub-rule (1) or renewed under Rule 29 shall be subject to the following conditions, namely:- (i) the licence shall be non-transferable; (ii) the number of workmen employed as contract labour in the establishment shall not, on any day, exceed the maximum number specified in the licence; (iii) save as provided in these rules, the fees paid for the grant, or as the case may be, for renewal of the licence shall be non-refundable; (iv) the rates of wages payable to the workmen by the contractor shall not be less than the rates prescribed under the Minimum Wages Act, 1948 (11 of 1948), for such employment where applicable, and where the rates have been fixed by agreement settlement or award, not less than the rates so fixed; (v)(a) 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 Commissioner of Labour, Andhra Pradesh, whose decision shall be final. (b) in other cases the wage rates, holidays, hours of work and conditions of service of the workmen of the contractor shall be such as may be specified in this behalf by the Commissioner of Labour, Andhra Pradesh, Hyderabad”. 17. It is urged on behalf of the petitioners that the Commissioner is not the Rule Making Authority, and he does not have the jurisdiction to incorporate or amend the conditions of service in the forms of licence. At the first blush, it may appear that the Commissioner has exercised the powers of Rule Making Authority, in issuing the notification dated 13-06-2000, stipulating wages for unskilled, semi-skilled, and skilled workers. However, if one closely looks at Rule 25(v)(b), it becomes clear that the appropriate Government, which framed the Rules, conferred such power upon the Commissioner, and the notification was issued in exercise thereof. It is not uncommon that the Rule Making Authority vests powers in officials, within the hierarchy of the department, to enforce the provisions of the Act and Rules. Viewed in this context, the notification issued by the Commissioner is nothing, but a step, in the direction of enforcing the C.L. Act and the Rules made thereunder. Therefore, the contention of the petitioners cannot be accepted. 18. Now it needs to be seen as to whether the contention of the petitioners as regards the steps taken under the M.W. Act deserve to be accepted. 19. It is true that the notifications issued under the M.W Act, prescribing the minimum wages, do not apply directly to the contract labour. However, if one takes into account the purport of Condition No.12 of the Licences, to be issued under Section 12 of the C.L. Act, it becomes evident that, if the contract labour discharges the same functions, as any other regular worker, he shall be entitled to be paid the wages for such work, if prescribed. Under Rule 25 (v)(a) the Commissioner is vested with the power to decide, whether or not the duty performed by a contract labour is equivalent to that of a regular worker, for whom minimum wages are prescribed. Therefore, though not directly, the wages prescribed under the M.W Act become applicable to contract labour, indirectly, in some cases. 20. Since some uncertainty was noticed, as regards the equation of the duties performed by the contract labour, on the one hand, and the regular worker, on the other hand, in the establishment of the Company, the Commissioner issued notifications, from time to time, in exercise of power under Rule 25 of the Rules, stipulating wages for unskilled, semi-skilled and skilled workers. Obviously because the notifications so issued cannot be challenged, as it accords with the Rule 25, that provision was challenged in some of the writ petitions. In this context, it is relevant to mention that, identical provision made by the State of Karnataka, was upheld by the Hon’ble Supreme Court, in GAMMON INDIA LTD. v. UNION OF INDIA[1]. Hence, there is no substance in the contention of the petitioners. 21. The Judgment in COLLECTOR OF CENTRAL EXCISE v. NEW TOBACCO CO.[2] is cited, to contend that the Rules made or notifications issued under the C.L. Act cannot be given retrospective effect. It was not even alleged that the Rules or notifications are given retrospective effect. The judgment in LINGEGOWD DETECTIVE & SECURITY CHAMBER (P) LTD. v. MYSORE KIRLOSKAR LTD.,[3] has no relevance to the facts of the case. That case dealt with the security personnel arranged to an organization, is not a ‘scheduled employment’, with reference to the organization availing the services. In the instant case, the petitioners do not deny that the contract labour were engaged for extracting the work, referable to ‘scheduled employment’. 22. Here itself, one facet of the arguments advanced by the petitioners needs to be dealt with. It is pleaded that the relationship of ‘employer’ and ‘employee’ is mainly between the contract labour and labour contractor, and the nature of activity that can be attributed to the labour contractor would be of supply of labour force, and the same does not fall within the definition of ‘scheduled employment’. On this basis, it is urged that the provisions of the M.W Act do not apply, at all. 23. This contention is not correct. The reason is that, obviously by anticipating such hyper-technical approaches, Parliament provided for, not only grant of licences under Section 12 of the C.L. Act, but also for incorporation of Conditions of Licence. The aspects, which the conditions must cover, are also indicated. Wages is one such condition. The conditions of licence and the power conferred on the appropriate Government to frame Rules under Section 35 of that Act, specifically cover this area. It is for the purpose of enforcement of condition as to wages, that a safe method of relying upon the notifications issued under the M.W Act for similar employments are engaged, are made applicable. If no such equation exists, a different set of wages are mentioned by specifically mentioning them in Condition No.12 of the licence itself. Therefore, if an attempt was made to enforce the minimum wages, in respect of contract labour also, it is not by treating the activity of the labour contractor, as ‘scheduled employment’, but in the process of enforcing the conditions of licence. 24. This Court is not inclined to grant any relief to the petitioners. The writ petitions are accordingly dismissed. There shall be no order as to costs. _______________________ L. NARASIMHA REDDY, J. Dt.17-08-2010. Note: L.R copy to be marked. (B/O) KO [1] AIR 1974 SUPREME COURT 960 [2] 1998 (97) ELT 388 (S.C.) [3] 2006 (6) SCJ 406