IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 9411 of 1998 For Approval and Signature: Hon'ble MR.JUSTICE R.BALIA. ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements? 2. To be referred to the Reporter or not? 3. Whether Their Lordships wish to see the fair copy of the judgement? 4. Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? -------------------------------------------------------------- GUJARAT NARMADA VALLEY FERTILIZERS CO LTD. Versus STATE OF GUJARAT -------------------------------------------------------------- Appearance: NANAVATI ASSOCIATES for Petitioner GIRISH PATEL ASSOC for Respondent No. 1 NOTICE SERVED BY DS for Respondent No. 2 MR AY KOGJE for Respondent No. 3 -------------------------------------------------------------- CORAM : MR.JUSTICE R.BALIA. Date of decision: 12/05/99 ORAL JUDGEMENT #. The petitioner Gujarat Narmada Valley Fertilizers Company Limited (GNFC, for short) challenges the Notification dated 29.8.98 published in the Government Gazette of the State on 29.8.98 issued under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter called the Act) prohibiting engagement of security personnel through contractor. #. The respondent No.2, the Union of workmen has been espousing since long the cause of workmen for abolishing the contract labour in various processes/operations carried on by the petitioner company at its establishments. In the first instance, the Union filed Special Civil Application No. 5478 of 1989 inter alia asking for abolition of contract labour system prevalent at the company and also for direction that the workmen concerned be treated as the workmen of the company directly. The said petition came to be withdrawn on August 27, 1991 for enabling the petitioner (Union) to pursue alternative remedy for raising industrial dispute for the purpose of treating the contract labour employees as directly employed under the company on the ground that the contract labour agreements were sham and not real, and with liberty to file fresh petition for the grievance about abolition of contract labour in operations in which the same has not been abolished. The ad interim relief protecting the services of the workmen under the employer by contract labour which was granted during the pendency of the petition was continued for two weeks. During pendency of the said petition by notification dated 28.9.90, issued under Section 10 of the Act, prohibiting engagement of contract labour in five system out of many process in respect of which such prohibition was demanded, was issued. The operations in which contract labour system were abolished were (1) sweeping and cleaning removal of refuse and garbage in factory premises; (2) removal and disposal of garbage, small scrap, cut grass, debris, rocks etc. (3) canteen, through cooperative society may be explored; (4) cleaning of ammonia and urea plants; and (5) cleaning and miscellaneous job in urea plant. However, contract labour system in watch and ward, with which the present petition relates was not abolished. Application No. 6265 of 1991 was filed by the union, challenging the decision of the Government of Gujarat not to abolish contract labour system in respect of security staff of GNFC. In reply thereto the State Government stated the following reasons for not abolishing the contract system into the sphere of security: "7. It is pertinent to note that respondent No.2 is a public limited company and respondent government is holding only 26% of the equity and this company is concerned with manufacturing fertilizer, which are of vital importance to the economy of the nation. The respondent government has decided in policy that security of all joint sector companies, government companies and units controlled by the Governments of where the Government is interested as share holders should be entrusted to a security force like Central Industrial Security force, which would be manned by thoroughly trained professional whose function would be to protect properties of such manufacturing units. 8. It is submitted that needful is being done for the formation of such a force by the respondent Government such a body force is likely to be formed in near future. It has been felt by the respondent government that such a force should be quite independent from the staff of the unit company, whose properties are to be protected. 9. It is further submitted that in the event of labour unrest members of such a force would be more effective and reliable rather than a person who is a member of local labour union, who might be swayed with his feelings for his brother workers, and while doing so, might permit damage or loss to such units and therefore the employees of such units are not to be entrusted with the work of security. #. The Division Bench which heard the petition was of the view that there was no full and meaningful consultation with the advisory board before the Government took the decision not to abolish contract labour in the security operations, inter alia on the ground that the Government has taken into consideration other material over and above the report of the Advisory Board, then in existence, and the material which has gone into taking policy decision in not abolishing the contract labour in the companies belonging to public sector or joint sector was not placed before the advisory board and there was no dialogue with the advisory board on the basis of that material. Thus, finding lack of requisite consultation with the State Advisory Board which was considered to be a prerequisite before a decision under Section 10 could be taken, the petition was allowed and the Government was directed to re-examine and reconsider its decision not to abolish contract labour for the security operations in accordance with law. By disposing of the said petition, on 13/15.4.94, the court issued certain directions for the purpose of protecting the services of the watch and ward staff engaged with the GNFC on contract basis. In making the aforesaid direction, the Court has referred to the existing report of the advisory board dated 24.2.1986 which by majority had recommended abolition of contract labour in security operations as well. #. On 16.1.1996, the Government issued another Notification prohibiting employment of contract labour in security operations of the company. Company challenged the notification by filing Special Civil Application No. 1388 of 1996. The said petition came to be allowed by this Court on 1.8.1997. The court was of the opinion that reversal of earlier decision not to abolish contract labour for security operations has been taken without application of mind by assuming that allowance of Special Civil Application NO. 6265 of 1991 was to accept the recommendation of the advisory board without any further application of mind. The notification had been issued without making any further consultation with the advisory board after the decision of the court in Special Civil Application No. 6295 of 1991. The Court was further of the view that the report of the advisory board which was submitted in 1986 has become sufficiently old and the advisory board should have been consulted afresh and either of the parties could have supplemented their grounds before advisory board had the Government sent the matter for consultation de-novo and sought fresh report from the advisory board. Thus for the very same reason for which Special Civil Application NO. 6395 of 1991 had been allowed, the Special Civil Application No. 1388 of 1996 was also allowed for want of active application of mind afresh for taking diagonally opposite decision and no reason or justification was shown by the respondents in support of the impugned notification either oral or in writing before the Court. The Court directed the Government to take decision afresh after due consultation with the advisory board. It was further directed that the advisory board may consider the entire material after hearing all the sides. The parties may supplement their grounds and may place any material before the advisory board which they think proper and thereafter on a fresh report by the advisory board the Government may take a decision afresh in accordance with law. #. Pursuant to this, the company as well as union presented themselves before the newly constituted advisory board and participated in the proceedings before the advisory board. On 24.8.98 the company demanded a copy of the report submitted by it to the Government which was declined. As a result the company filed Special Civil Application No. 6914 of 1998 seeking mandamus to secure the report submitted by the advisory board, in order to enable it to make proper representation before the Government before it could take decision. On 29.8.98, in the said writ petition, the State Government produced a copy of the Notification of even date prohibiting employment of contract labour in watch and ward operations by the company. Thus Notification having been issued, the Special Civil Application No. 6914 of 1998 was dismissed as having become infructuous, and the present petition was filed on 10.11.98 challenging the Notification dated 29.8.98. #. On behalf of the petitioners three principal contentions have been raised. Firstly, there has been no effective and proper consultation with the State advisory Board inasmuch as the purported report submitted by the Board is not a report of the Board but is a report submitted by only a committee constituted by the Board, therefore, on such report only a decision taken by the Government can at best be in consultation with committee but cannot be considered to be a decision taken in consultation with the advisory board. The second contention raised on behalf of the petitioners is that the petitioners have not been given effective hearing. The decision to abolish or not to abolish engagement of contract labour in any process of operation of the company is to be taken by the appropriate Government. As the decision is taken only in respect of one company whether the decision is to be considered as quasi-legislation, subordinate legislation or an administrative action, a hearing ought to have been afforded to the petitioner by the authority taking a decision, the hearing and participation before the advisory board does not fulfil the requirement of natural justice or of a fair procedure. Lastly, it has been urged that the decision to abolish engagement of contract labour in security department only in respect of the petitioners company, while in most of other companies of the like nature, engaging security staff through contractor in the same area, which was pointed before the advisory board has not been affected, has resulted in violation of petitioners fundamental rights under Article 14. They being discriminated without any reasonable ground, in the matter of issuing notification under Section 10, affecting their freedom to manage their affairs adversely. At any rate, even if the action be not treated as violative of Article 14, it suffers from non consideration of relevant factors which are required by the statute to be taken into consideration before issuing Notification under Section 10 prohibiting the engagement of contract labour in any process or operation of any establishment, with particular emphasis to the fact that clause (c) of subsection (2) of Section 10 specifically requires to take into consideration the practice prevalent in same or similar establishment in that connection. Neither the advisory board nor the State Government before issuing notification has taken into consideration these factors. #. It is the requirement of statute that under Section 10 an appropriate Government acts only after consultation with the Advisory Board. It is a condition precedent. The consultation with the Board is a pre condition for prohibiting employment of contract labour in any process, operation or other work in any establishment. It can also be not doubted that essence of consultation is communication of a genuine invitation to give advice and a genuine consideration of that advice which in turn depends on sufficient information and time being given to the party concerned to enable it to tender useful advice. #. An order required to be made after consultation is open to attack on two grounds. Firstly, it can be challenged on the ground that in fact there has been no consultation. Secondly, it can be shown by the challenger that the consultation effected lacks the characteristics of an effective genuine consultation. The requirement of consultation is not an empty formality. I need not elaborate on this inasmuch in the checkered history of their case itself twice over the court has pronounced upon the necessity of effective and meaningful consultation and finding it to be wanting has asked the State Government, the appropriate Government, in the present case, to reconsider the whole issue in consonance with that requirement. In the first instance while considering the Special Civil Application No. 424 of 1984, which was decided on 4.5.94, the court found that the appropriate Government has not shared the information and material, that it had with it and on which ultimate decision depended. This lack of sharing relevant information with the Advisory Board which could have vital effect on genuine consultation, was held to vitiate the final decision of the appropriate Government. Once again the court while deciding Special Civil Application No. 1388 of 1996 on 1.8.97, held the direction issued vide Notification dated 16.1.1996 under Section 10 prohibiting employment of contract labour by the petitioner in security department vitiated, because it was founded on stale material, the information gathered by Advisory Board some ten years before and without involving the concerned parties in the process of consultation. For that purpose directions were also issued. #. The first limb of the contention is to existence of pre condition necessary for exercising authority under Section 10. There is no dispute, nor there can be that where a condition precedent is laid down for a statutory power being exercised by a subordinate authority, it must be fulfilled before such subordinate authority can exercise such delegated power. Where there is recital of fulfillment of such condition precedent the presumption about the regularity of the order including the fulfillment of condition-precedent exist in its favour. The burden in such case lie on the person, who challenges the order, to show that the recital was not correct and that the conditions precedent were not in fact complied with by the authority. In the absence of such recital as to fulfillment of condition precedent in the order, on its legality being challenged, the burden is on the authority to show that such conditions have been fulfilled. That can be shown by furnishing affidavit of person exactly the authority. See. Swadeshi Cotton Mills v. S.I. Tribunal AIR 1961 SC 1881. ##. In this connection as noticed above the first limb of petitioner's contention is that there has been no consultation with the State Advisory Board, by the appropriate Government, but only a committee of the Advisory Board has been consulted. The relevant part of the Notification reads : "And Whereas the Government of Gujarat has consulted State Advisory Contract Labour Board after receiving the order of Hon'ble Gujarat High Court. The State Advisory Contract Labour Board have provided adequate opportunities to the parties concerned to file their representatives in the matter of contract labour system prevalent in the Security Department of the G.N.F.C., Bharuch." ##. The Notification in no unmistakable terms state that the Government of Gujarat has consulted State Advisory Contract Labour Board. The presumption stand in favour of such consultation by the appropriate Government. The petitioner has sought to dislodge this presumption by pointing out that the report purporting to be of Board bears signatures of only three persons viz., the Chairman, the Employer's Representative and the Worker's Representative but not all the members of the Board, which cannot be less than eleven including the Chairman and Labour Commissioner. It was also urged in this connection that the Board in exercise of its power under Section 5 of the Act of 1970 has constituted a committee and only that committee has made the report, under the signatures of the members of such committee. Hence the report on the basis of which the Government of Gujarat has acted cannot be said to be report of entire Board. ##. Having bestowed my anxious consideration and perused the report, which was produced before the court during the course of hearing and copy of which was also made available to learned counsel for the petitioner as well as to learned counsel representing the workmen, I am unable to accept it. Firstly, it is not the requirement of law that the report of Board be signed by all the members of the Board, before it can be considered as the recommendation of the Board. There is no reason that a report which is signed by the Chairman above with or without signatures of other members who participated in the deliberation be not considered report of the Board. One has to make a distinction between minutes of meeting and its ratification by members and the decision that is formulated and communicated on the basis of such deliberation. While minutes of a meeting may require to be signed by all the participants in the minute book. The document that ultimately conveys the decisions taken by the members present and participating, usually only bears the signature of Chairman or the Secretary. Therefore, no inference can be drawn, as suggested by learned counsel for the petitioner that report made by the Board under the signature of its Chairman and two of its members is not the report of the Board but of a sub committee only and on that basis to further hold that the Board was not consulted by the Government. ##. A perusal of the report of the Board dated 14.7.1998 reveal that in its meeting dated 9.3.98 it has consulted a committee for collecting the data and information and facts. The report refers to argument advanced by the company as well as the Union before referring to committee report, and considered the arguments of both the representatives in the light of finding by the committee. It is not the case of the petitioner that hearing was not afforded to them by the Board but only by the Committee. The factum of hearing by the Board negatives the contention that final report is not by the Board but by a sub committee only. ##. It is worthy to notice from the report following excerpts: "We would like to draw attention towards the important decision with regards expression of the opinion of the members to the recommendations. It was unanimously decided in the meeting of 02/07/1998 that the practice of filling up of proforma may be discontinued and now instead of that the members of the Board as a whole would be agreed to the decision and recommendations given by the Committee and a consent to that regard may be also obtained from the members. So the committee member's opinion will be the opinion for the whole of the Board in connection with the recommendations" "The members are unanimously agreed and member Shri Arunbhai Jariwala (representing the employers') is also agreed so Mr. Meghjibhai Maheshwari (representing the workers') agreed to this recommendation and so we would like to recommend as follows" ##. passage from the report The above clearly shows that earlier practice of merely obtaining a `yes' or `no' from members of Board as answer to a proforma question the committee finding has been abandoned and the report was made subject matter of hearing and consideration by the Board. The ultimate report submitted to the Government of Gujarat was the unanimous opinion of the members of the Board to which the members representing interest of employer and workers also agreed to. It is in consideration of this the report contains three signatures. I have no hesitation in concluding that the petitioner has failed to discharge his burden that the report submitted to State Government was not that of the Board but of the Committee only and that as a pre condition the State Government has not consulted with the Board. The presumption arising from such recital in the notification as to factum of consultation with the Board is not rebutted in the present case. ##. The second limb of the contention is that the appropriate Government has not taken into account while issuing the notification under Section 10 which it was required to take under the statute more particularly it has failed to consider, in spite of specifically being pointed out by the petitioner before the Board, that the security work is ordinarily done through contract labour in similar establishments, in the region and that for long the petitioner is engaging security staff through the security agencies for the better services of the security personnel from the other workmen. In its statements it pointed out in detail the need for engagement of security staff through the outside agencies which was practically on the lines which weighed with the State Government while issuing first notification not to include security department in notification under under Section 10 of the Act. ##. It was urged that notwithstanding raising this question before the Advisory Board neither the committee constituted by the Board nor the the ultimate report alludes to this aspect of the matter which is a prerequisite of consideration before notification as per clause (c) of subsection (2) of Section 10. Even the notification which states about consideration of other relevant aspects required to be considered before issuance of notification does not make reference to this aspect of the matter. The contention has two points to make. Firstly, that the authority entrusted to discharge a function under the statute has acted without taking into consideration relevant factors which it was required to take into consideration before exercise of its authority and therefore the action would be ultravires the provisions of the Act, and secondly it has the dimension of challenging the action being discriminatory in choosing the petitioner to be brought under prohibitive notification under Section 10 while other similarly situated units have not been subjected to the same rigor, which has resulted in hostile discrimination violating Article 14 of the Constitution of India. For the present, the first aspect need be considered first. ##. For the purpose of examination of this issue it has been assumed that notification is a piece of subordinate legislation. The principle is well settled that a subordinate legislation or delegate entrusting to exercise authority under the statue is under an obligation to act on relevant consideration leaving out extraneous consideration, before exercise of power. It is well known premise on the basis of which a subordinate legislation can be challenged if it has failed to take into account vital facts either expressly required to be taken into account under the statute under which it acts or so required by necessary implication. ##. In Indian Express Newspapers (Bombay) Private Limited and others v. Union of India (1985) 1 SCC 641 the Court explained the principles on the grounds on which the subordinate legislation can be subjected to challenge. The Court said: "A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent Legislature. Surbordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made." ##. The Court further said: "On the facts and circumstances of a case, a subordinate legislation may be struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution." ##. In Union of India and another v. Cynamide India Ltd. and another etc., AIR 1987 SC 1802 the court was considering the validity of price fixation under the Essential Commodities Act. The act of price fixation was considered