IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 02.08.2011 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.Nos.15079 and 15080 of 2007 L.P.G.Delivery Employees' Union (Reg.No.3171/CNI) Rep. By its President, 6, Katchaleeswarar Agraharam, Chennai - 600 001. ...Petitioner in both WPs Vs. Indianoil Corporation Ltd., Rep. By its General Manager, Indianoil Bhavan, Mahatma Gandhi Road, Nungambakkam, Chennai - 600 034. ...Respondent in W.P.No.15079 of 2007 1.Government of Tamil Nadu Rep. By the Secretary to Government, Labour and Employment Department, Fort St.George, Chennai - 600 009. 2.The Commissioner of Labour Labour Welfare Building, D.M.S.Compound, Teynampet, Chennai - 600 006. 3.The Regional Provident Commissioner, Tamil Nadu and Pondicherry, Employees' Provident Fund Organisation, Royapettah High Road, Chennai - 600 014. 4.The Regional Director, Employees' State Insurance Corporation, Sterling Road, Nungambakkam, Chennai - 600 034. 5.Indane Distributors Association (TN and Pondy) Sl.No.80/2004, Rep. By its President, No.9, Premier Towers, Karur, Tiruchi -2. https://hcservices.ecourts.gov.in/hcservices/ 6.Indian Oil Corporation Ltd., Rep. By its General Manager, Indian Oil Bhavan, Nungambakkam, Chennai - 600 034. ...Respondents in W.P.No.15080 of 2007 (R5 impleaded as per order dated 27.04.2009 by NKKJ in M.P.No.2 of 2008 in W.P.No.15080 of 2007. R6 impleaded as per order dated 01.07.2011 by KCJ in M.P.No.1 of 2011 in W.P.No.15080 of 2007) W.P.No.15079 of 2007 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of Mandamus, to direct the respondent as a Principal employer to ensure and monitor that the delivery employees employed by the distributors appointed by the respondent for supplying Indane LPG cylinders to the customers are complying with the statutory requirements of payment of minimum rate of wages, coverage under the Employees Provident fund scheme, coverage under Employees State Insurance Scheme and other social welfare laws. W.P.No.15080 of 2007 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of Mandamus, to direct the respondents herein to take appropriate and necessary action against the Indane Distributors in the State of Tamilnadu to implement Minimum Wages Act, Employees Provident Fund Scheme and Employees State Insurance Scheme respectively within a time frame. For Petitioner : Mr.R.Yashod Vardhan, Senior Counsel for Mr.K.M.Ramesh (in both WPs) For Respondents : Mr.A.L.Somayaji for M/s.T.S.Gopalan and Co for R1 in W.P.No.15079/2007 &for R6 in W.P.No.15080/2007 Mr.V.Subbiah for R1 and R2 Mr.K.Ramu for R3 Ms.S.Jayakumari for R4 Mr.S.Venkateswwaran for R5 in W.P.No.15080 of 2007 C O M M O N O R D E R Both the writ petitions are filed by the very same Employees' Union. In the first writ petition (W.P.No.15079 of 2007), the petitioner Union sought for a direction to the respondent Indian Oil Corporation Ltd., (IOC), being a Principal Employer to ensure and monitor that the delivery employees employed by the distributors, https://hcservices.ecourts.gov.in/hcservices/ appointed by the respondent for supplying Indane LPG cylinders to the customers are complying with the statutory requirements of payment of minimum rate of wages, coverage under the Employees Provident fund scheme, coverage under Employees State Insurance Scheme and other social welfare laws. 2. In the second writ petition (W.P.No.15080 of 2007), the same Trade Union representing the LPG Delivery Employees sought for a direction to the respondents to take appropriate and necessary action against the Indane Distributors in the State of Tamil Nadu for implementing the Minimum Wages Act, Employees Provident Fund Scheme and Employees State Insurance Scheme respectively within a time frame. 3. In the second writ petition, initially, the Government of India, Commissioner of Labour, Regional Provident Commissioner and the Regional Director of Employees' State Insurance Corporation were made as parties. Both the writ petitions were admitted and directed to be posted immediately after service. 4.Subsequently, M/s.Indane Distributors Association (TN and Pondy) filed M.P.No.2 of 2008, seeking for impleadment in the second writ petition to represent the interest of Indane Distributors and that Association was impleaded as 5th respondent by an order of this Court dated 27.04.2009. The petitioner Union has also filed M.P.No.1 of 2011 seeking to implead the IOC represented by its General Manager, Chennai as party respondent and accordingly, they were impleaded as 6th respondent by an order dated 01.07.2011. 5. In the first writ petition, the sole respondent IOC had filed a counter affidavit dated 24.12.2007. In the second writ petition, respondents 3,4 and 5 have filed separate counter affidavits dated 27.06.2011, 27.06.2011 and 21.06.2011 respectively. 6. Mr.R.Yashod Vardhan, learned Senior Counsel appearing for Mr.K.M.Ramesh, counsel for the petitioner submitted that the IOC had employed Distributors for supplying Indane LPG Cylinders to the customers. The respondent IOC is a Public Sector undertaking owned by the Government of India and it is engaged in the distribution of petroleum products including LPG Gas Cylinders. In so far as LPG Indane Cylinders are concerned, IOC is having direct customers which are consumers of LPG. The respondent instead of supplying the LPG Cylinders directly to its customers, it had appointed Distributors. Those Distributors take delivery of LPG cylinders from the IOC and supply it to the customers. The delivery employees engaged by those Distributors, who in turn supply the LPG Cylinders door to door at the place of the customers. Those Distributors are protected with customers and are getting commission. It was stated that they are paid a commission of Rs.19.05 for each 14 Kg. Cylinder and Rs.50/- for each non-domestic cylinder of 19 kg. The Distributors are assured of around 8000 refills per month in rural areas and a minimum of 15,000 refills in metro cities. Apart from this, IOC was https://hcservices.ecourts.gov.in/hcservices/ also offering a rebate of Rs.40/- to Rs.80/- on each of the non- domestic 19 Kgs Cylinder and the same was reimbursed by the IOC. It further offers a subsidy to the tune of Rs.60,000/- to furnish office accommodation of the Distributors. The respondent is also supplying at its cost, uniforms and shoes to the delivery employees employed by the Distributors. Therefore, the relationship between Indian LPG Distributors and the IOC is one of 'Contractor' and 'Principal Employer' within the meaning of Contract Labour (Regulation and Abolition) Act, 1970. 7. It was further stated that the Distributors are appointed on the basis of public notification. Though the Indane Distributors are getting substantial commission, the service conditions of the employees are pathetic. No welfare labour legislations like ESI, PF have been extended to them. The Distributors appropriates the entire commission. Most of the Distributors are paying Rs.500/- per month and only a few Distributor is paying Rs.2,000/- to delivery employees. Though a Memorandum of Agreement was signed between IOC and the Distributors, there is no specification that they should comply with the labour laws. IOC appoints Sales Officers covering 10 to 15 distributors, but they are not supervising the payment of wages given to the delivery employees. The action of the IOC in having the delivery system completely outsourced without any further commitment for implementation of labour laws is illegal. Therefore, it was stated that an appropriate direction should be given for implementation of the labour laws. 8. In reply to these averments, in the first writ petition, the sole respondent IOC had stated that the Government of India had evolved policy towards retail marketing and IOC is not engaged in retail marketing of LPG. In the agreement signed between IOC and the Distributors, it has been specifically provided in paragraph 15 that it is the distributors concerned to implement the laws relating to labour. Clause 15 reads as follows:- "15. The Distributor shall be solely responsible for and shall himself bear all expenses of and in connection with the business including administration, office, insurance premia, showroom, telephone, transport storage rents, license or other fees, rates, taxes and all other charges and outgoings of every kind connected with the said business and shall pay the same promptly and without fail. The Distributor shall also be solely responsible for any breach or contravention by himself, his employees, agents or sub-agents of any rules, regulations or bye-laws of the Central and/or State Governments and/ or Municipal local and/or other authorities as may be applicable to the business including without prejudice to the generality of the foregoing, the concerned authorities respectively appointed under the Petroleum Act, Payment of Wages Act, Shop and Establishments Act, https://hcservices.ecourts.gov.in/hcservices/ Factories and the Workmen's Compensation Act, Indian Explosives Act, 1884, Gas Cylinders Rules, 1940, or any other Statutory Act, Rules or Bye laws applicable from time to time and the Corporation shall not be responsible in any manner for any liabilities arising out of non-compliance by the Distributor with the same. The Distributor shall at all times indemnify and keep indemnified the Corporation against all actions, proceedings, claims and demands made against it by the Central and/or by any Government and/ or Municipal local and/or other authorities and/or by any customer of the gas and/or by any other third party as a result of or in consequence of any act or omission of whatsoever nature of the Distributor, his servants, agents or sub-agents including, without prejudice to the generality of the foregoing, any accident or loss or damage arising out of the storage, handling and/or transportation of the gas cylinders and/or connected equipment whether or not such act or omission or accident or loss or damage was due to any negligence, want of care or any misconduct of the Distributor, his servants and agents or sub-agents." 9. It was also stated in the counter affidavit that the Distributors are separate legal entities and each Distributor is carrying on his own trade or business in the matter of distribution of LPG. There are about 419 Distributors of the IOC in the State of Tamil Nadu and 114 in the City of Chennai. The Distributors cannot be said to be contractors and the workmen cannot be said to be a contract labour under the Contract Labour (Regulation and Abolition) Act. Therefore, it was contended that no relief can be claimed against IOC. 10. In the counter affidavit filed by the fifth respondent in the second writ petition, it was stated that the agreement stipulates that a distributor shall act as a Principal and not as agent of the Corporation and the distributor indemnifies the IOC against all liabilities. In paragraphs 10 and 13 of the counter affidavit, it was averred as follows:- "10. All these delivery staff are paid minimum wages as stipulated by the State and Labour authorities. These distributors keep a watchful eye on the condition of work. The allegations contra are vague and unsubstantiated. The delivery staff are given ESI and PF benefits as per their eligibility. Many distributors whose staff strength is less than the stipulated 20 members are also providing their staff with Provident Fund on voluntary basis. A minimum bonus of 8.5% is given by all the distributors. https://hcservices.ecourts.gov.in/hcservices/ 13. These staff are also given casual, earned and sick leave. They got extra wages if they work on Sundays and holidays. The delivery staff have never complained about their working conditions." 11. In the counter affidavit filed by the PF Department, in paragraph 3, it was stated as follows:- "3. This respondent had already covered the Indian Distributors, who have employment strength of 20 or more on record. In the same analogy, if the petitioner provides the details of the other distributors, who are not covered, this respondent will examine the same and action would be taken, in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act 1952 and rules framed thereunder." 12. In the counter affidavit filed by the ESI Department, in paragraph 6, it was averred as follows:- "6. The Indian Oil Corporation Marketing Division, Korukkupet Terminal has already been covered under code No.51-89384. Further, the respondent Corporation has already covered the LPG distributors of Bharat Gas, Indane etc who are coverable as per the provisions of the Act. For eg., the following Indane distributors are covered since above distributors comes under the purview of the Act. S.No Name of the employer Code No. Date of Coverage 1 M/s Gas Links (Indane Distributor) 51-86735-96 3.10.2006 2 M/s.Dev Agencies (Distributors Indane) 51-87066-96 2.4.2007 13. Mr.A.L.Somayaji, learned Senior Counsel appearing for the IOC submitted that the petitioner's prayer is very vague and the relief claimed by them without any material particulars cannot be countenanced by this Court. It was also stated that the agreement between IOC and the Indane LPG Distributors completely covers the issue raised by the petitioner Union and any of its members are still aggrieved, they can make a specific complaint to the appropriate authorities for taking action under various labour laws. The impleadment of the IOC in the two writ petitions is totally unwarranted. It is for the workmen to work out their rights against the respective employer. 14. The learned Senior Counsel for the IOC also referred to the judgment of the Supreme Court in Indian Oil Corporation v. Consumer Protection Council, Kerala and another in Civil Appeal No.7330 of https://hcservices.ecourts.gov.in/hcservices/ 1993 dated 07.12.1993. In that case, after referring to the various clauses of agreement, the Supreme Court held that there was no privity of contract between IOC and consumers of LPG Gas and if LPG Gas Distributor provides for an unauthorised connection, it is not open to any consumer forum to complain against IOC for deficiency of service within the meaning of Section 2(g) of the Consumer Protection Act. 15. It is necessary to refer to Section 2(g) of the Consumer Protection Act, which reads as follows:- "(g) "deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service". 16. It is not clear as to how the said judgment helps the case of the IOC. There the question was whether the IOC can be held responsible for any deficiency of service on the part of its Distributors that too at the instance of a consumer of LPG. In the present case, the question is slightly different. Even in the counter affidavit filed by the IOC, a reference was made to clause 15 of the agreement, wherein, the Distributor has been made solely responsible for implementing the provisions of Payment of Wages Act, Shops and Establishment Act, Factories Act, Workmen's Compensation Act or any other statutory Act applicable from time to time and the Corporation will not be held responsible in any manner for the liabilities arising out of non-compliance by the Distributor for the same. From the above clause, it is made clear that the IOC being the party to the agreement compels the other authority to implement the various labour laws and they are only getting protection from any claim made by third parties only because of the dues to be paid by the other contracting party. But that agreement is an agreement between the Distributors and IOC and that cannot be an answer to the various labour legislations, which if they are applicable and any liability is fastened on them due to the non-implementation of those labour laws by the Distributors. 17. It is no doubt true that the work relating to distribution has been done through retail outlets and technically, it is not run by IOC. The application of the Act to a workmen is defined under Section 2(b) of the The Contract Labour Act, 1970, which is as follows:- "2(b) a workman shall be deemed to be employed as "contract labour" in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without knowledge of the principal employer;" https://hcservices.ecourts.gov.in/hcservices/ 18. The term Contractor is also defined under Section 2(c) of the Act, which is as follows:- "2(c): 'Contractor", in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than mere supply of goods or articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor;" 19. The term Principal Employer is defined under Section 2(g), wherein, it is stated that any person responsible for the supervision and control of the establishment will be a Principal Employer. Under Section 21(4) of the Act, if any sums due to the employee from a Contractor is not paid them, then it has to be paid only by the Principal Employer. 20. Rule 25 of The Contract Labour (Central) Rules, 1971, provides prescription of terms and conditions to grant license to a Contractor. Under Section 30 of the Act, overriding effect has been given to the provisions of the Act over any agreement entered into between the parties. 21. Similarly, under the PF Act, the term employee includes any person who is employed by or through a Contractor in or in connection with the work of establishment. In the same way, under ESI Act, 1948, the term Employee found under section 2(9), a similar definition is provided. 22. As rightly stated by the PF Department in their counter affidavit that if the workmen makes a complaint, the Department will examine the same and action will be initiated as per law. Neither in the affidavit filed by the petitioner nor in the typed set, there is any reference to the representation sent by the petitioner Union with reference to implementation of these labour legislation or that any complaint has been made by any of its members about the lack of implementation of the laws. When only such complaints are made, it will enable the statutory authorities to comply with the provisions of the Act and pass appropriate orders. In the absence of any complaint, this court cannot give any theoretical finding with reference to the exact nature of the IOC and various distributors appointed by them. But at the same time, the grievance projected by the workmen cannot be minimimised and the IOC having doled out largesse to outsiders and yet complacent about their non- implementing the labour laws, it is advisable that they should stipulate more clearly in their agreement about the need for the Distributors to implement the various laws which are applicable. The Supreme Court gave a number of guidelines to various authorities to strictly implement the provisions of various enactments concerning https://hcservices.ecourts.gov.in/hcservices/ labour. 23. In the decision reported in (1982) 3 SCC 235, People's Union for Democratic Rights v. Union of India, the relevant portions are reproduced below;- "15. Before leaving this subject, we may point out with all the emphasis at our command that whenever any fundamental right which is enforceable against private individuals such as, for example, a fundamental right enacted in Article 17 or 23 or 24 is being violated, it is the constitutional obligation of the State to take the necessary steps for the purpose of interdicting such violation and ensuring observance of the fundamental right by the private individual who is transgressing the same. Of course, the person whose fundamental right is violated can always approach the court for the purpose of enforcement of his fundamental right, but that cannot absolve the State from its constitutional obligation to see that there is no violation of the fundamental right of such person, particularly when he belongs to the weaker section of humanity and is unable to wage a legal battle against a strong and powerful opponent who is exploiting him. The Union of India, the Delhi Administration and the Delhi Development Authority must therefore be held to be under an obligation to ensure observance of these various labour laws by the contractors and if the provisions of any of these labour laws are violated by the contractors, the petitioners vindicating the cause of the workmen are entitled to enforce this obligation against the Union of India, the Delhi Administration and the Delhi Development Authority by filing the present writ petition. The preliminary objections urged on behalf of the respondents must accordingly be rejected." 24. Further, in paragraph 16, it was held as follows:- "16. ...So far as observance of the other labour laws by the contractors is concerned, the Union of India, the Delhi Administration and the Delhi Development Authority disputed the claim of the petitioners that the provisions of these labour laws were not being implemented by the contractors save in a few instances where prosecutions had been launched against the contractors. Since it would not be possible for this Court to take evidence for the purpose of deciding this factual dispute between the parties and we also wanted to ensure that in any event the provisions of these various laws enacted for the benefit of the workmen were strictly observed and https://hcservices.ecourts.gov.in/hcservices/ implemented by the contractors, we by our order dated May 11, 1982 appointed three ombudsmen and requested them to make periodical inspections of the sites of the construction work for the purpose of ascertaining whether the provisions of these labour laws were being carried out and the workers were receiving the benefits and amenities provided for them under these beneficent statutes or whether there were any violations of these provisions being committed by the contractors so that on the basis of the reports of the three ombudsmen, this Court could give further direction in the matter if found necessary. We may add that whenever any construction work is being carried out either departmentally or through contractors, the Government or any other governmental authority including a public sector corporation which is carrying out such work must take great care to see that the provisions of the labour laws are being strictly observed and they should not wait for any complaint to be received from the workmen in regard to non-observance of any such provision before proceeding to take action against the erring officers or contractors, but they should institute an effective system of periodic inspections coupled with occasional surprise inspections by the higher officers in order to ensure that there are no violations of the provisions of labour laws and the workmen are not denied the rights and benefits to which they are entitled under such provisions and if any such violations are found, immediate action should be taken against defaulting officers or contractors. " 25. Subsequently, the Supreme Court in the judgment relating to labours reported in (1983) 2 SCC 181, once again dealt with the plight of the construction workers and in which the Labourers, Salal Hydro Project v. State of Jammu and Kashmir, in paragraph No.7, held as follows:- "7. ...It is only if the officers of the National Hydroelectric Power Corporation and the Central Government are sensitive to the misery and suffering of workmen arising from their deprivation and exploitation that they will be able to secure observance of the labour laws and to improve the life conditions of the workmen employed in such construction projects." 26. Subsequently, the Supreme Court in a petition under Article 32 dealt with the case of the bonded labourers vide its Judgment relating to Bandhua Mukti Morcha v. Union of India reported in (1984) 3 SCC 161. The relevant portion in paragraphs 37 and 38, it is held https://hcservices.ecourts.gov.in/hcservices/ as follows:- "37. ....We must not be content with the law in books but we must have law in action. If we want our democracy to be a participatory democracy, it is necessary that law must not only speak justice but must also deliver justice. 38. ...There have also been occasions where the Magistrate and judicial officers have scotched prosecutions and acquitted or discharged the defaulting employers on hypertechnicalities. This happens largely because the Magistrates and judicial officers are not sufficiently sensitised to the importance of observance of labour laws with the result that the labour laws are allowed to be ignored and breached with utter callousness and indifference and the workmen begin to feel that the defaulting employers can, by paying a fine which hardly touches their