IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 5192 of 1999 For Approval and Signature: Hon'ble MR.JUSTICE AKSHAY H.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO 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 concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------- GUJARAT MAZDOOR SABHA Versus STATE OF GUJARAT -------------------------------------------------------------- Appearance: 1. Special Civil Application No. 5192 of 1999 MR MUKUL SINHA for Petitioner No. 1 M/S PATEL ADVOCATES for Respondent No. 1 MR KS NANAVATI, SR. COUNSEL FOR SINGHI & BUCH ASSO. for Respondent No. 2 MR ASIM J PANDYA, ADDL. CENTRAL GOVT. STANDING COUNSEL for Respondent No. 3-4 MR KM PATEL for Respondent No. 5 -------------------------------------------------------------- CORAM : MR.JUSTICE AKSHAY H.MEHTA Date of decision: 08/10/2002 CAV JUDGEMENT 1. In this petition several controversies are involved, but the main controversy is which is the 'appropriate Government' under Section 2 (1) (a) of the Contract Labour (Regulation and Abolition) Act (hereinafter referred to as 'the Act') in relation to respondent no. 2 i.e. Indian Farmers Fertilizers Cooperative Ltd. (hereinafter referred to as 'IFFCO'). Rest of the controversies are incidental. To resolve these controversies certain relevant facts are required to be stated. They are as under :- 2. IFFCO is a cooperative society. It was initially formed under the Multi-Unit Cooperative Societies Act and after repeal of the said Act under the provisions of the Multi State Cooperative Societies Act. Its area of operation extends to the whole of the Indian union. The main objects for which IFFCO has been formed and registered as a multi - unit cooperative society are as under :- "The object of IFFCO shall be to promote the economic interest of its members by undertaking manufacture of chemical, fertilizers and allied products/bye products and their conversion, storage, transportation and marketing, undertake manufacture/processing of pesticides, seeds, agricultural machinery and implements and other agricultural inputs and their storage, transportation and marketing and undertake such other activities which are conducive and incidental thereto. (B) In furtherance of above objects IFFCO may undertake one or more of the following activities :- (i) to set up plant or plants for manufacture of chemical, fertilizers and allied products/bye products, (ii) to undertake production, processing and manufacture of insecticides, pesticides, deeds, agricultural machinery and implements and other agricultural production, requisites by setting up or taking on lease manufacturing unit either directly or in collaboration with or in the cooperative institution/public sector enterprises or any other agency. xxx xxx xxx xxx xxx xxx xxx (ix) to promote and organise other cooperative societies in the field of manufacturing, production and marketing of fertilizers and other agricultural production, requisites and agricultural and rural development." IFFCO is having its units and production plants at different places such as Phulpur in U.P., Kandla in District Kachchha and Kalol in District Mehsana in Gujarat. 2.1. The petitioner is a registered trade union and according to it, it is having majority of the workmen engaged by the IFFCO for the operation of loading and unloading of urea filled bags to be packed, despatched in railway wagons and trucks. 2.2. IFFCO engages contract labour for the purpose of stacking the urea bags on the platform and loading and unloading them in and from railway wagons and the trucks. According to the petitioner, in the year 1984 the IFFCO Karmachari Sangh moved the State Government as the appropriate Government under section 10 of the Act for abolition of the contract labour system in the operation of stacking and loading/unloading of urea bags and also for certain other operations in IFFCO. The said case of the IFFCO Karmachari Sangh came to be referred as Reference No. 3/1984 before the State Advisory Board constituted u/S. 10 of the Act. As per the information of the petitioner, in the year 1986 the said Advisory Board recommended to the State Government abolition of contract labour system in the operations of stacking and loading and unloading of urea bags. However, the State Government did not act on the recommendation of the Advisory Board for considerable time. With the result the system of engaging contract labour in those operations continued. Some time in the year 1995 the concerned workmen became members of the petitioner and the petitioner thereafter took adequate interest in the direction of getting the system of contract labour abolished in these operations. It, therefore, gave notice to the Secretary of the Labour and Employment Department of the State Government dated 14th August, 1995 with a request to abolish the system of engaging contract labour in the operations of stacking and loading and unloading of urea bags in transport. In the said notice it was stated that under the guise of contract labour the concerned workmen were being exploited and, therefore their plight was miserable. According to the petitioner, this notice also did not invoke any response from the State Government and ultimately it was constrained to file Special Civil Application No. 8686 of 1995 before this Court praying for direction on the State Government to decide the issue of abolition of the contract labour system within a definite time frame schedule. This Court, therefore, vide order dated 17th November, 1995 directed the State Government to decide the application which was submitted by the petitioner in accordance with the provisions of section 10 of the Act within a period of 4 weeks from the date of service of the said order on the State Government. In view of the aforesaid order of this Court, the State Government issued notification dated 27th December, 1995 whereby in certain operations in IFFCO engagement of contract labour was prohibited. However, the said notification did not include the operation of loading and unloading of the urea bags into the means of transportation for the final despatch. Since, according to the petitioner, the main activity wherein the abolition of contract labour was most needed was not included in the notification dated 27th December, 1995, it again approached this Court challenging the said notification by filing Special Civil Application No. 3066 of 1996. In the same way IFFCO also challenged the said notification by filing Special Civil Application No. 243 of 1996. In these petitions the common consent order was passed on 1st July, 1996, whereby this Court directed the State Government to reconsider the issue of prohibiting contract labour system as per application under Reference No. 3/1984, after affording opportunity of hearing to the parties. Another notification was issued by the State Government dated 18th October, 1996. This notification also remained on the line of the earlier notification wherein the contract labour system was abolished in the staking operation alone of the urea bags, excluding the operation of loading and unloading thereof for transport. This again resulted into filing of petitions from both the sides, namely, the petitioner and IFFCO. The petitioner challenged the said notification by filing Special Civil Application No. 8580 of 1996 and IFFCO challenged it by filing Special Civil Application No. 10116/1996. Those petitions alongwith one another Special Civil Application No.476/1997 were disposed of by a common judgment dated 6th March, 1998 [Coram : M.R. Calla, J.]. In that judgment direction to the State Government was given by this Court to reconsider the question of inclusion of operation of loading and unloading of urea bags in the notification keeping in view the said judgment. Ultimately another notification was issued by the State Government on 3rd June, 1998 amending its earlier notification dated 18th October, 1996 and in the amended notification it included the operation of loading and unloading of urea bags in the railway wagons and the trucks. 2.3. IFFCO challenged the amended notification by filing Special Civil Application No. 4950 of 1998 before this Court, which was dismissed by this Court [Coram : H.L. Gokhale, J.] by judgment dated 11th September, 1998. Against the said judgment, IFFCO has preferred Letters Patent Appeal No. 1281 of 1998 which is pending before the Division Bench for disposal. However, no interim relief has been granted in the same. Similarly, against the judgment of M.R. Calla, J. the Letters Patent Appeals Nos. 749 of 1998, 762 of 1998 and 780 of 1998 have been filed and the same are pending final disposal and in that also no interim relief has been granted in favour of the IFFCO. 2.4. According to the petitioner, inspite of the abolition of contract labour system in the operations of stacking and; loading and unloading of urea bags, IFFCO availed the service of contractor to carry on these operations by contriving a device to approach the Central Government and obtain its permission for that purpose. It is further averred that IFFCO also obtained registration certificate under the Act from the said authority and managed to get the notifications issued by the Labour Commissioner, State of Gujarat dated 23rd March, 1998 and 17th February, 1999, declaring that for certain industries in Gujarat the appropriate Government was the Central Government for the purpose of various labour legislations including the Act. It is in these circumstances, the licences granted by respondent no. 3 i.e. the Registration and Licencing Authority (Central) under the Act at Ahmedabad are challenged. The challenge is based on the ground that the Central Government is not the appropriate Government vis-a-vis IFFCO and it has no authority to do so. 2.5. As against that, the IFFCO has put forward its case stating that vis-a-vis IFFCO power of the State Government to act as appropriate Government in relation to the provisions of the Act has come to an end. According to him, IFFCO, in accordance with certain directions issued by the State Government as well as the Central Government in light of the judgment of the Apex Court rendered in the case of Air India Staturoty Corporation v/s. United Labour Union reported in (1997) 9 S.C.C. page 377 (hereinafter referred to as 'Air India Statutory Corporation or AISC's case), has continued to engage contract labour under the licence that was granted by the Registration and Licencing Authority (Central). The State Government , therefore, has no authority to issue notifications for abolition of system of engaging contract labour in the matter of stacking and loading and unloading of urea bags in IFFCO. IFFCO has further stated that it is the Central Government which is the appropriate Government and when the Licencing Authority under the Central Government has granted licence, no illegality is committed by IFFCO in engaging contract labour for the aforesaid operations. It has also stated that the question with regard to the validity of the notifications issued by the State Government is still not finally decided since it is the subject matter of Letters Patent Appeals pending before the Division Bench of this Court and, therefore, it cannot be said that for IFFCO in the operations of stacking and loading and unloading there is abolition of the system of contract labour under the Act. IFFCO's case further is that the activity of IFFCO is to manufacture chemicals and fertilizers such as urea and the activities of stacking and loading and unloading of urea bags are merely ancillary to the main activity. These activities namely, stacking and loading and unloading are not of permanent or perennial nature as they entirely depend on the factors such as availability of means of transport, demand of fertilizer in the market, production, etc. In that view of the matter, it is not feasible or practical to have permanent employees to carry on those operations and only engaging contract labour is workable solution. It has also stated that since the IFFCO is not a 'State' or 'instrumentality of State' under Article 12 of the Constitution of India, a petition of this nature against it cannot be entertained in law. 2.6. So far the Union Government i.e. respondents nos. 3 and 4 are concerned, their say is that in view of the decision of the Apex Court in Air India Statutory Corporation's case the Central Government is the appropriate Government in relation to various labour legislations including the Act for certain industries in Gujarat including the IFFCO and respondent no. 3 was, therefore, justified in issuing licence in favour of the contractor as well as registration to the IFFCO. 2.7. The same stand has been taken by respondent no. 5 i.e. contractor, whose labour has been engaged by the IFFCO to carry out the aforesaid operations. 3. In this background of the case, the controversies that have arisen can be stated as under :- (I) which is the appropriate Government vis-a-vis IFFCO under the Act, (II) what are the effects of abolition of the contract labour system pursuant to notification issued by the State Government , (III) whether the Central Government could issue the licences under the provisions of the Act when the question with regard to the validity of the notifications issued by the State Government was pending final disposal before the Division Bench of this Court in the Letters Patent Appeals without approaching this Court and seeking its permission. (IV) In case it is held that Central Government is not the 'appropriate Government qua the IFFCO, what will be its effect on the contract labour engaged by IFFCO in the operations of stacking and loading & unloading of urea bags between the period from the date of abolition by the State Government and date of the finding given by this Court. 3.1. There are other controversies also, but they are not required to be highlighted here as they are merely offshoots of the aforesaid major controversies. 4. I have heard Mr. Mukul Sinha, learned counsel for the petitioner as well as Mr. K.S. Nanavati, learned Senior Advocate for respondent no. 2 and Mr. K.M. Patel, learned counsel for respondent no. 5 - the contractor whose contract has come to an end during the course of hearing of this petition and Mr. Asim J. Pandya, learned Addl. Central Government Standing Counsel appeared for respondents nos. 3 and 4. 4.1. Mr. Mukul Sinha for the petitioner has submitted before me that considering the long history of this case and the fact that all throughout it is the State Government which has remained as the 'appropriate Government' under the provisions of the Act vis-a-vis IFFCO, the Central Government cannot be said to be the 'appropriate Government' and the sudden change has been brought about only with a view to favour IFFCO and to circumvent State Government's notification of abolishing contract labour and also the judgments of this Court upholding the State Government's action. He has further submitted that the definition of 'appropriate Government' under section 2 (1)(a) of the Act, is as per the definition of the 'appropriate Government' given in the Industrial Disputes Act, and IFFCO which is a cooperative formed under the provisions of the Multi-State Cooperative Societies Act, does not fall in any of the categories of the industries mentioned therein. Mr. Sinha has contended that IFFCO is not an industry carried on by or under the authority of the Central Government nor it is a railway company nor it is named in the list of controlled industry as may be specified in this behalf by the Central Government nor it is an industry named in the definition and hence the Central Government cannot be the 'appropriate Government' for it under the Act. He has further submitted that with the judgment rendered by the Apex Court in the case of Steel Authority of India v/s. National Union Water Front Workers reported in (2001) 7 S.C.C. p. 1 (SAIL's case for short) the ratio laid down by Air India Statutory Corporation's case with regard to appropriate Government stands overruled. He further contended that now law laid down by SAIL's decision prevails and as per it IFFCO cannot have Central Government as its appropriate Government. He has submitted that apart from this, even according to ratio laid down by AISC's case Central Government cannot be the appropriate Government because IFFCO is not an instrumentality of the State. Lastly on this count he has submitted that in relation to IFFCO, when the matter is pending before this Court for considering the validity of the power of the State Government to issue notifications under the Act prohibiting abolition of contract labour in certain operations whether it was proper for the Central Government to issue such notifications without approaching this Court and without obtaining any clarification from this Court. This amounted to showing gross disrespect to this Court especially when the learned Single Judges have upheld the validity of these notifications. 4.2. As against that, Mr. K.S. Nanavati, the learned counsel for the respondent - IFFCO has submitted that in view of the notifications declaring the Central Government as the 'appropriate Government' it has employed contract labour in the operations of stacking and loading and unloading of the urea bags. The concerned contractor has also obtained necessary licence from the Central Government and engaging contract labour in the aforesaid operations by the IFFCO cannot be said to be illegal. He has further submitted that considering the circumstances of the case, so far IFFCO is concerned, it is the Central Government, which is the appropriate Government and not the State Government. 4.3. Mr. K.M. Patel, the learned counsel for the contractor has stated that in view of the development to the effect that his client is no more in the picture as his contract has come to an end with the IFFCO, he has no submissions to be on this count. 4.4. Mr. Asim J. Pandya, the Ld. Addl. Central Govt. Standing Counsel has submitted that whether Central Government is the appropriate Government in the case of IFFCO is yet to be decided by the Department of Labour, Central Government and since the issue is pending before it, this Court may not enter into and decide that issue. 4.5. For the present I only discuss the aforesaid contention of the counsels on the issue of 'appropriate Government'. The other contentions raised by them will be mentioned and discussed little later in the course of the judgment. 4.6. With a view to appreciate this submission, the definition of "appropriate Government" given in the Act is required to be seen. It may be noted that in the year 1986 the definition of 'appropriate Government' as given in Section 2 (1)(a) was amended by Contract Labour (Regulation and Abolition) Amendment Act, 1986. This amendment was brought into effect from 28th January, 1986. Prior to the amendment, the definition stood as under :- Section 2 (1) - (a) "appropriate Government means - (1) in relation to - (i) any establishment pertaining to any industry carried on by or under the authority of the Central Government or pertaining to any such controlled industry as may be specified in this behalf by the Central Government or (ii) any establishment of any railway, cantonment board, major port, mine and oilfield or (iii) any establishment of a banking or insurance companies of the Central Government, (2) in relation to any other establishment, the Government of State in which other establishment is situated." After the amendment, definition of 'appropriate Government' reads as under :- "2(1) In this Act, unless the context otherwise requires.- (a) 'appropriate Government' means - (i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act, 1947 (14 of 1947), is the Central Government (ii) in relation to any other establishment, the Government of the State in which that other establishment is situated." It will therefore, be necessary to refer to the definition of 'appropriate Government' given under clause (a) of section 2 of the Industrial Disputes Act (for short 'I.D. Act'). It is as under :- "2(a) "appropriate Government" means- (i) in relation to any industrial disputes concerning any industry carried on by or under the authority of the Central Government or by a railway company or concerning any such control industry as may be specified in this behalf by the Central Government or relation to an industrial dispute concerning a Dock Labour Board established under Sec. 5-A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948), or the Industrial Finance Corporation Act, 1945 (15 of 1948), or the Employees' State Insurance Corporation established under Sec. 3 of the Employees' State Insurance Act, 1948 (34 of 1948), or the Board of Trustees constituted under Sec. 3-A of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (45 of 1948), or the Central Board of Trustees and the State Board of Trustees constituted under Sec. 5-A and Sec. 5-B, respectively, of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (19 of 1952) , or the "Indian Airlines" and "Air India" Corporations established under sec. 3 of the Air Corporation Act, 1953 (27 of 1953), or the Life Insurance Corporation of India established under Sec. 3 of the Life Insurance Corporation of India established under Sec. 3 of the Life Insurance Corporation Act, 1956 (31 of 1956), or the Oil and Natural Gas Commission established under Sec. 3 of the Oil and Natural Gas Commission Act, 1959 (43 of 1959), or the Deposit Insurance and Credit Guarantee Corporation established under Sec. 3 of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), or the Central Warehousing Corporation established under Sec. 3 of the Warehousing Corporations Act, 1962 (58 of 1962), or the Unit Trust of India established under Sec. 3 of the Unit Trust of India Act, 1963 (52 of 1963), or the Food Corporation of India established under Sec. 3 or a Board of Management established for two or more contiguous States under Sec. 16 of the Food Corporation Act, 1964 (37 of 1964), or the International Airports Authority of India constituted under Sec. 3 of the International Airports Authority of India Act, 1971 (43 of 1971), or a Regional Rural Bank established under Sec. 3 of the Regional Rural Banks Act, 1976 (21 of 1976), or the Export Credit and Guarantee Corporation Limited or the Industrial Reconstruction Corporation of India Limited or a banking or an insurance company, a mine, an oilfield, a Cantonment Board, or a major port, the Central Government, and (ii) in relation to any other industrial dispute, the State Government;" Plain reading of unamended as well as amended definitions show that prior to amendment and subsequent to it the Central Government would be the 'appropriate Government' if the industry was either carried on by or under the authority of the Central Government or the industry was controlled industry as may be specified in that behalf by the Central Government. With the categories contained in clauses (ii) and (iii) of unamended definition, we are not concerned in this case. So far the amended definition is concerned, it has been divided into two parts. Clause (i) of section 2 (a) of the Act deals with industries in relation to which the appropriate Government is the Central Government, whereas clause (ii) is in relation to State Government. In the amended definition the entire definition of the 'appropriate Government' as given under the Industrial Disputes Act, 1947 is stated to be the definition of 'appropriate Government' in section 2 (1) of the Act. Thus the industries covered under clause (i) can be categorised for the purpose of this definition as follows :- (1) Industries carried on by the Government (2) Industries carried on under the authority of the Government (3) Railway company (4) Controlled industries as may be specified by the Central Government in this behalf, (5) Industries named in the definition. Now it can be seen that so far the first part of the unamended and amended definition is concerned, it is more