^fov Misc.Petit.ion Ho ^^ C^\T^,, . 5S'.^/1990 . •"•^- ! 'f / IN THE HIGH COmT ©FMAmiYA 01AHESH AT JABALPUR., Steel Authority of India Ltd< Bhilai Steel i31ant J:^i ly ov'/ THROI3GH s tnagtng Mrector milai Steel Plant B M i 1 a i '^/ /" «?''/ / / VERS13S M / ('l^ Shri V.N.Sh^&la Presidiag Gfficer Central Qoveroment Industrial Sc'ibimal-Ctam-Lab&ur Court, Ja b a 1 ^ u i? '^1 ^ 1 t. Sam3nakta Khadaa izdoor Sangfe r (AIT^O _; ^ _ ,"_, Balll Rajhara, Distt.©tM°g (MP) THROUGH s Its Secretary 5» Ws Kondekasa IIlning Co» ? ^ ^ '?•©• Dalli Ba^Mara, Mstt,Durg 5^^» Shri Pakhraj Jaia» Contractor P.Q.Dalli Ra3haTa,®istt.®targ ^ ^< Ifae President M/s Ba^faara Truck Traasport Sahakari Samiti» PO Balli Bajhara ©istt.Durg 6. M/s Shyaa S^ioder Soai Gan^para»Darg ?• K/s I^habir T^ansport Co», P,0» Balli Ra^hara, Distt,Durg 8» K/s Eastem Trading Corpa., P.0. Dalli Rajhara»Mst-fc.Durg« 9. N/s A^ay Sraasport Co., M P.0, BaUi Ba,]hara,Mstt*Burg. 10»I^/s Jay 'Eransport Co», P.O.Balli Rajhara, Bistt.Eurg 11.M/S R.M.Sbukla P« 0»Dalli Rajhara,Bistt,Birg» 9 12.K/S Life Tabewell Prfeo Ltd., P<0»Dalli Rajfaara,Bistt»Durg. '-•^-^ PETITIONEB ~-< \ [ «fr^« •^^^^•••''^ ^SSI^^'fe' ..^" ^^— ,/' 15. Q 14. ^. : 16. ^ 17. ^18. 19, -2- M/s ASay Drilling & Sraiasport Co., P.0. Balli Ra^Iiara,©istt»Durg I^/s PEikhra^ Jain, P.O.Balli Ra3laara,2Sistt«INrg aae Eresident M/s Jharand.alli Khadaa Kazdoor Sangh Sahakari Samiti Ltd., P»O.Dalii Kajhara,Ms-fct»Burg» K/s Upadhyaya & Co., P«0<Balll Ra<]hara,Distt«Durg M/s Coamerifcial Traasport Co», P,O.Balli Rajhara, Dist-fc.Eterg. M/s Kalyaa lyaders, i'.O.Balll Rajhara,Bis-fct,Barg, Iteion o£ ladia Mintstry o£ Labour Shraa Sfciakti Bhawan, New Delhi ^ IN THE MTTE& OF iETITIOH UIBEii ARIICLE 226/227 OF THSCOHSTITUTION OF INDIA A N B • II SHE MTTER~"STTroi?S'f&IAL ©ISPUTESACT /' 1947 AKB RUL^F&AMED THSlEONDEEt; JM THE MATfEdr A%AB®MTEB 25TH JVLY 1990 IN REFmETCE CASE mSESS. CGIT/LC(B)(5)/1981. •^:^^i y^^ "T HIGH COURT OF CHHATTISGARH, BILASPUR SINGLEBENCH : HON'BLE SHRI MANINDRA MOHAN SHRIVASTAVA,J. PETITIONER Writ Petition No.2500/1990 Steel Authority of India Ltd. BhUai Steel Plant RESPONDENTS Versus V. N. Shukla & Ors. ORDER ^ POST ON ' 'DECEMBER. 2010 . Sd/- Manindra Mohan Shrivastava Judge 'iS -••^: ^ HIGH COURT OF CHHATTISGARH : BILASPUR S.B^ : HON'BLE SHM MANINDRA MOHAN SHRIVASTAVA,J. PETITIONER RESPONDENTS Writ Petition No.2500/1990 Steel Authority of India Ltd. Bhilai Steel Plant Versus V. N. Shukla 85 Ors. Appearance: Dr. N. K. Shukla, Sr. Advocate with Shri Shailendra Shukla, counsel for the petitioner. Shri K.R. Nair, Advocate, appears on behalf of respondents 2 to 18. Shri Anand Verma, counsel for respondent No. 19/Union of India. ORDER (Passed on J_.12.2010) 1. The petitioner by this petition has assailed correctness, legality and validity of award dated 25th July, 1990 passed by the Central Governnient Industrial Tribunal-cum-Labour Court Jabalpur and has prayed for issuance of writ of certiorari or any other appropriate writ, direction or order and calling for records of the Case No. CGIT/LC(R)(5)/1981), and quash the impugned award. 2. The petitioner is a company incorporated and registered under the Companies Act, 1956 and is a Government Company within the meaning of Section 617 of the Companies Act. The petitioner - corapany, as stated in the petition, owns several steel plants in -2- :£';.^t different parts of India and one of such steel plant is situated at Bhilai. The petitioner pleaded that it owns certain iron ore captive mines at Dalli Rajhara. Some of them are mechanized, whereas rest are manual. According to the petitioner, in the mines operated manually, raising of iron ore and its transportation is performed by the contractors who are given contract for such activities. Such contractors employ their own workman to execute their contract. According to the petitioner, such contracts are awarded on the basis of invitation of tenders as also the rates are settled by negotiations. However, many Steel Labour Cooperative Societies have also been formed by the workman and such Cooperative Societies undertake the work of raising iron ore and transportation on contract. Thus, the work of raising of iron ore as well as its transportation is undertaken by the contractors and Labour Cooperative Societies who are awarded contract by inviting tender. 3. In the letter dated 9th November, 1977 (Annexure P-1) addressed to the Assistant Labour Commissioner (C), copy endorsed to the petitioner and all the contractors functioning in the iron ore group of mines at Dalli Rajhara, the Secretary of respondent No.2 raised certain demand for payment of compensation by the petitioner being principal employer at the time of their superannuation/retirement/ termination. It was also demanded that the liability for payment of gratuity to contract workers should also be undertaken by the management. On such demand, notices were given by Conciliation Officer initiating conciliation proceedings, that ended in failure and the conciliation failure report was submitted by the Assistant -3- ^•^ ^c^ ":^sm Labour Commissioner to the Central Government. Upon \ec^pt of the failure report, vide order dated 21st January, 1981 (Annexure P- 2), the Central Govt. in purported exercise of powers under Section 10 (1) (d) ofthe Industrial Disputes Act, 1947 (hereinafter referred to as uthe Act of 1947} referred the dispute for adjudication to the Central Govt. Industrial Tribunal-cum-Labour Court. The reference was registered by C.G.I.T. and after giving notice to all concerned, on the basis of pleading and oral as well as documentary evidence led by the respective parties, the Tribunal passed the impugned award to the effect that the management of BSP is liable for ensuring continuity of service in respect of the workmen employed in Dalli Rajhara group of inines during the successive contract since 1972 by way of absorption of those workmen who have neither received nor have been given retrenchraent conipensation and the date of inter se seniority shall be fixed by the management in consultation with Union under intiraation to the workraen concerned with backwages and consequential benefits from the date of their discontinuity of service. The Tribunal also gave award that the workmen who have already been employed by the management of BSP shall not be entitled to retrenchment compensasion. In respect of both the categories of workraen, it was also held that they shall be entitled to gratuity for the period they have worked prior to their absorption/continuity in accordance with the Payment of Gratuity Act, if so entitled and if not paid by the successive contractors, from the management irrespective of any contract to the contrary mcluding those workmen who have gone out of the -4- ?.3.3» <^-.- ^." ..."" "'^i^^^ eniployment due to superannuation/death or otherwise as provided under the law. Under the award, it was held that the contractors/societies workmen gone out of the employment after 1972 due to superannuation/death or otherwise shall also be entitled to gratuity, if any, as per law. It was also held in the award that principal employer, may chose to recover the amount of gratuity as paid as per the findings of the Tribunal from the respective contractors/societies through the proper forum. The Tribunal held in its operative paragraph of the award that other terrainal benefits are not considered as they do not form. of reference and are beyond the scope of reference. The Tribunal further held that claim of payment of gratuity cannot be considered in the proceedings on a reference under the provisions of the Act of1947, but the employer shall have to consider the claim of gratuity. 4. Before this Court proceed to consider the contention raised by the petitioner, it is pertinent to mention at this stage that on 29.6.2005, this Court directed issuance of SPC to the petitioner and respondents. Though representation was made on behalf of the petitioner, on behalf of respondents No.2 to 18 8& respondent No.19, no representation was made. On 17.11.2006, this Court requested Shri K. R. Nair, Advocate to appear on behalf of the respondents No. 2 to 18. 5. Learned counsel for the petitioner submitted that the Tribunal has travelled beyond the terms of reference and overlooking the objection ofthe petitioner., the Tribunal proceeded to decide an issue as to whether there existed a relationship of employer and employee ^^^^^ ,-lpc^ •"wsm -5- between the petitioner and the contract labour. Learned counsel for the petitioner subniitted that neither the Union (respondent No.2) raised any demand for departmentalization or abolition of contract labour in iron ore group of mines of the petitioner nor the Central Govt. made any reference to this effect. He submits that in view of the provisions contained in Section 10 of the Act of 1947, the Tribunal enjoys a limited jurisdiction and adjudication is confined to the dispute actually referred to it by the Govt. and other issue could not be taken up for enquiry and decision. Further subm-ission is that the background in which the reference was -raade by the Govt. clearly shows that it was neither raised nor it was ever intended by the Govt. that the Tribunal should decide the issue as to whether there existed any relationship of inaster and servant between the Company and the contract labourers who are employed by the contractors. According to him, the Tribunal completely misdirected itself and decided other issue, as the reference itself proceeds upon the basis that the contract labourers concerned were the employees of the contractors and the liability for payment of retrenchment compensation was primarily that of the contractor. According to him, the question referred was whether the petitioner would also be held liable for ensuring continuity of ser^ice of those contract labourers and consequently terminal benefits in the form of payment of retrenchment compensation and gratuity of such workers. 6. It was contended that the background in which the reference was raade and the terms of reference in its proper construction and -6- :^^}^ meaning, the question whether the employees of the contractors are in fact and in reality employees of the petitioner was wholly foreign to the scope of reference. The other submission of learned counsel for the petitioner is that the Tribunal has no jurisdiction to adjudicate the reference made to it by the Central Govt. as the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter refereed to as uthe Act of 1970'} is a comprehensive legislation and therefore any dispute of the nature as contained in the terras of reference was clearly outside the scope of ambit of industrial dispute and consequently, the Tribunal acted without jurisdiction in adjudicating and passing award on the reference made to it by the Central Government. Learned counsel for the petitioner submits that the reference itself is bad and untenable in law as such dispute could not at all be referred to the Tribunal because the liability of a principal employer in respect of the contract labourers employed by a contractor, under the scheme of the Act of 1970, does not constitute an industrial dispute so as to make applicable the provision of Section 10 of the Act of1947. 7. According to him, such disputes, if raised by the Union on behalf of contract labourers employed by the contractor are not covered by the industrial dispute and therefore, the very reference niade by the Govt. and adjudication on such reference with the Tribunal are without the authority of law. Learned counsel for the petitioner further argued that in view the judgment of Supreme Court in the case of Steel Authoritv of India Ltd. fi& Ors. Vs. National Union :^ fL.,..--^ ;|j^ ^^.^^ ^.^tf ^^2S^^ -7- Waterfront Workers & Ors.1, the contract labour engaged by the contractors cannot be treated as eraployees of the principal employer and in case of retrenchment, no liability can be fastened upon the petitioner in addition to those in the capacity as principal employer, by assuming the petitioner to be the actual employer of the contract labour. In order to buttress his submissions, learned counsel for the petitioner relies upon the decision in the cases of Steel Authoritv of India Ltd. Vs, Union pf India SB Ors.2 & National Union Waterfront Workers (supra). 8. On the other hand, learned counsel for respondents No. 2 to 18 would submit that the dispute of the nature contained in the terms of reference clearly amount to industrial dispute as defined under Section 2 (k) of the Act of 1947 and therefore there is no illegality in the order of reference of the Central Govt. He further submits that in view of the definition of workman as contained in Section 2 (s) of the Act of 1947, the contract labour employed in an industry is also a workman and merely because they are contract labour and some of their service conditions are governed by the Act of 1970, the jurisdiction of the Industrial Tribunal is not taken away. Further submission oflearned counsel for respondents No. 2 to 18 is that as the Tribunal has been constituted under Section 7-A of the Act of 1947, it is empowered to adjudicate industrial dispute relating t( any matter, whether specified in 2nd Schedule or the 3rd Schedule. According to him as the subject matter of the dispute falls in the 3rd i (2001) 7 SCC 1 2 AIR 2006 SC 3229 ^^'\ ^ ii t 1 ? \.^y -8- Schedule therefore, the reference raade to the Tribunal is fully competent. 9. Further submission of learned counsel for respondents No. 2 to 18 is that there is no reference made by the Government for departmentalization or absorption of any contract labour. Learned counsel for the respondents also submits that the terms of reference and the background in which such reference was made, the issue with regard to the true and correct relationship between the petitioner and the contract labour was iraplicit in it. He also argued that in view of the provision contained in Section 10 (4) of the Act of 1947, the Tribunal has ample jurisdiction to adjudicate not only the matter expressly referred in the terms of reference but also matter incidental thereto. The B.S.P denied the terminal benefits to the retrenched workmen on the ground that they were not their eraployees and the contractors also denied them terminal benefits by stating that it was the BSP which was their employer and they were only niiddlemen receiving certain fixed percentage as their commission for making available contract labour. As all workraen were retrenched without payment of compensation or gratuity etc. though thousand of contract labour were absorbed by the petitioner in its establishment without giving them any benefit of their seniority relating to past ser^ices, the Union raised the demand, but the management did not accept and it was in this background that the Central Govt. made a reference of the question to the Industrial Tribunal. 1:%. /^ -9- 10. According to hira, the reference was relating to continuity of ser^ice and consequential terminal benefits of payment of retrenchment compensation and gratuity and the Tribunal after making detailed enquiry and adverting to all relevant questions raised by the parties including those issues which arose for consideration being incidental in nature and after analyzing the oral and documentary evidence on record passed an award after coming to the conclusion that there did exist a relationship of raaster and servrant, eraployer and employee between the petitioner and the contract labour and that the Tribunal actually pierced the veil by holding that the contract was a sham one in order to deprive the workman employed of various benefits under various Labour Welfare Legislations and for all legal and practical purposes, the contract labours employed were actually not the eraployees ofthe contractor but the eraployees of the petitioner corapany. He subinits that such a detailed finding of the Tribunal cannot be said to be either without jurisdiction or in excess ofjurisdiction or perverse. He submitted that if the terms of reference is read in its proper perspective in the background of the prevailing dispute, it necessarily required decision as to the nature of relationship between the petitioner and the contract labour represented through the Union and in fact, decision on the said issue alone would lead to decision on the issue as to whether the petitioner would be liable for ensuring continuity of service and consequential terminal benefits in the form of payment of retrenchment compensation and gratuity. In support of his submission, learned counsel for respondents No. 2 to 18 relied upon -10- iy the decisions in the cases of J. D. Jain Vs. Management of State Bank of India and another3 and Panda R.K. and others Vs. Steel Authority oflndia and others4. 11. Learned counsel for the respondent No.l9/Union of India has supported the order of reference made by the Central Govt. by arguing that the reference made by the Central Govt. is in accordance with law. Further submission is that in any case, the petitioner never challenged the order of reference and even froni the order of the Industrial Tribunal, it is nowhere reflected that the issue with regard to correctness and validity of reference was raised. He submits that such issue could not have been raised before the Tribunal. Even in this petition, the petitioner has not raised any specific challenge to the correctness, legality and validity of reference made by the Central Govt. vide its order dated 21st January, 1981 (Annexure P-2) and therefore, any challenge based on argument to that effect, is liable to be ignored. 12. I have considered the rival subniission made by learned counsel for the parties and perused the records. ^3. The foremost contention raised by learned counsel for the petitioner that the reference itself was incoinpetent as the terras of reference and the dispute raised by the representatives of the contract labour, on the basis of which reference was made, is not an industrial dispute within the meaning of industrial dispute as defined in Section 2 (k) of the Act of1947,goes to the root of the matter. It has 3 AIR 1982 SC 673 4 2000-11-LLJ 1419 ^ -11- been the contention of learned counsel for the petitioner that as the contract labour/their representatives have not raised a dispute of the nature that the contract is not genuine but only a sham contract or a caraouflage or a sniokescreen and in fact, the contract labourers are employees and there existed a master and ser^ant relationship between theni and the principal employer, but raised a dispute proceeding on an assertion that they are contract labour eniployed by contractors to work in an industry, and the principal employer is obliged to extend various benefits to them in his capacity, as such, it could not be a subject matter of a reference for adjudication by treating it to be an industrial dispute under the provisions ofthe Act of 1947. 14. The petitioner had raised such an issue with regard to very maintainability of the reference and jurisdiction of the Tribunal to adjudicate upon the dispute referred to it by the Govt. under the reference before the Tribunal itself which is clear from the order of the Tribunal, wherein, in paragraph 9, the case of the petitioner- company has been stated. A reading of paragraph 25 of the said order also shows that the company did raise an objection to the effect that in the terms of reference, it is not an issue whether there existed a relationship of employer and employee between management of BSP and workman employed by the contractors. 15. In its pleading before this Court also, the management has seriously raised the issue with regard to the very maintainability of the reference on the premise that though the petitioner is the principal employer in relation to contract labours, there exists no relationship "^ss. .7 ^ ^s^^j ^.^......9 -12- of employer and employee and as the terms of reference did not contain such an issue for adjudication by the Tribunal, the dispute as contained in the terms of reference is not an industrial dispute and therefore, the Tribunal itself had no jurisdiction to go into and adjudicate upon the dispute in the absence of it being an industrial dispute under Section 2 (k) ofthe Act of 1947. 16. The dispute raised by the Union on the basis ofwhich, the reference was made by the Government to the Tribunal, contained in its letter dated 9th November, 1977 (Annexure P-1) needs to be noted, being extremely relevant to deal with the contentions raised by the parties. A perusal of the aforesaid letter of the Union would show that in the entire document there is no case put fonvard nor any dispute raised to the effect that the contract was sham and not genuine and was m-erely a camouflage and that there exists a relationship of employer and employee between the petitioner and the contract labourers. On the contrary, it proceeds on an assertion that the labourers used to be engaged by the contractors from time to time and that the management had ensured continuity of servrice of the contract workmen including carrying fonvard the leave with wages, CPF, gratuity etc. from the outgoing contractor to incoming contractor from 1972. Contract labourers through their representatives demanded that irrespective of change of contract, continuity in ser^ice should be maintained and the new employer i.e. successive confractor should be held liable to pay workman, in the event of his retrenchraent, compensation on the basis that his services have been continuous and not interrupted by the transfer of eniployer. ;A -13- The contents of the said letter shows that the grievance was raised on account of peculiar terms and conditions of the contract which envisages that the contractor will be liable for the benefits accruing to labourers as a result ofcontinuance employment from the date he takes over the work from the old contractor. The apprehension raised was that under such a terra of contract with the ever changing contractor, who will be responsible for payment of compensation, gratuity etc.. The grievance which led to raising the dispute was that the management and the contractors have deprived the workmen from their legal claims particularly continuity which would adversely affect their claims at the time of their superannuation/retirenient/ termination. The demand which was raised in that letter was as below (61) The contract workers should be paid compensation for the period they have worked with different contractors immediately. If the contractors are not available the same should be paid by the principal employer i.e. BSP management. BSP management should clearly take responsibility to pay the compensation to contract workers at the tirne of their superannuation/retirement /terinination.w 2) For the purpose of payment of Gratuity to contract workers the responsibility should be borne by the BSP managementw 17. Thus from the contents of the demand made and the dispute raised by the representatives of the contract labourers, it was nowhere raised that the contract were sham and not genuine and/or that there exists a relationship of niaster and servrant, the employer and -14- '^^^ employee between the petitioner and the contract labourers and consequently the management was liable to extend benefit treating the contract labourrers as its employees. In substance, the contract labourers through their representatives did not dispute their status as contract labours and that they were employed by the contractors, but they demanded that in the event of change of contractor, continuity in all respect should be maintained so that all terrainal benefit or other benefits are extended to thera on the basis of such continuity and that if the contractors are not available, the petitioner should be saddled with the liability to make all such payment in its capacity as principal employer. 18. It is not in dispute between the parties that the conciliation proceedings drawn on such dispute raised, eventually failed and in the backdrop of such issue raised by the contract labourers through their representatives that the Govt. made a reference to the Tribunal vide its order dated 21st Januaiy, 1981 (Annexure P-2). The Schedule which incorporated the terms of reference, being extremely relevant for decision ofthe core issue, is reproduced as below. SCHEDULE "Having regard to the fact that the Principal Employer, viz. Management of Bhilai Steel Plant makes payment of leave wages under the Mines Act and the