IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 31.10.2011 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.No.14971 of 2009 and M.P.No.1 of 2009 The Special Officer, Salem Cooperative Sugar Mills, Mohanur-637 015 Namakkal District. .. Petitioner Vs. 1.The Deputy Chief Inspector of Factories, authority under the Tamil Nadu Industrial Establishments (Conferment of Permanent Status) Act, 1981, No.51, Gokulam Road, Fairlands, Salem-16. 2.The Salem Cooperative Sugar Mills, National Workers' Union, Registration No.3792, Mohanur-637 015 Namakkal District rep by its Secretary, A.Palanisamy .. Respondents This writ petition is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records of the first respondent dated 24.6.2009 made in No.A.1091/2008 and quash the same. For Petitioner : Ms.G.Thilakavathi For Respondents : Mr.V.Subbiah, Spl.G.P. For R-1 Mr.R.Rengaramanujam for R-2 ORDER The petitioner is the Salem Cooperative Sugar Mills represented by its Special Officer at Mohanur. They have come forward to challenge an order passed by the first respondent Deputy Chief Inspector of Factories and the Authority constituted under the Tamil Nadu Industrial Establishments (Conferment of Permanent Status) Act, 1981, dated 24.06.2009. By the impugned order, the https://hcservices.ecourts.gov.in/hcservices/ first respondent being the Inspector notified under the Act directed grant of permanent status to 37 workers whose names were listed in the modified annexure, dated 6.7.2009 issued subsequent to the impugned order dated 24.6.2009 and they were directed to be made permanent with effect from 1.3.2008. 2.Aggrieved by the said direction, the writ petition came to be field and was admitted on 31.7.2009. Pending the writ petition, this court had granted an interim stay. 3.Heard the arguments of Ms.G.Thilakavathi, learned counsel appearing for the petitioner, Mr.V.Subbiah, learned Special Government Pleader appearing for the first respondent and Mr.R.Rengaramanujam, learned counsel appearing for the second respondent trade union. 4.It is the stand of the petitioner mill that it is a Sugar industry and it is seasonal in character. It has got crushing capacity of 2500 MTs per day. Based upon the crushing capacity, requirement of staff and workers were assessed and sanctioned by the Director of Sugars. The mill has got 186 regular and 45 seasonal staff and 95 regular and 180 seasonal workers. Apart from this, there are 161 NMRs engaged during the season. Since the initial staff pattern was not accepted by the trade unions, subsequently the revised staff pattern was brought into force by a settlement under Section 18(1) of the Industrial Disputes Act. There was also ban on recruitment during the period from 1999-2000 and vacancies were not filled up. As a stopgap arrangement and as no regular appointment can be made, on contract basis appointments were sought to be made and tenders were called for for supply of labours on contract basis on 9.2.2007. 5.The second respondent union filed a writ petition before this court being W.P.No.7290 of 2007 challenging the said tender notice. It was claimed by the union that the members of the union have put more than 10 years of service as casual labours and they should be regularized before they go for outsourcing any work. The said writ petition was dismissed with certain observations vide its order dated 28.3.2007. It was stated by this court that since the workers have taken the matter before the authority under the Industrial Disputes Act, they should seek remedy under the said Act. Even a complaint was filed by the second respondent before the Conciliation Officer under Section 33A. In the meanwhile, the State Government by order in G.O.(D)No.762, Labour and Employment Department, dated 25.10.2007 had declined to refer the dispute regarding regularization of temporary casual workers. It was contended that since recruitments were made on need based, they are not eligible for the said request. It was thereafter, the second respondent sent a representation to the first respondent stating that 89 casual labours are working for number of years in the mill. Hence they are eligible to be made permanent on the basis of Section 3 of the Conferment of Permanent Status Act. On receipt of the said representation, a notice was issued to the petitioner mill. They had also filed a counter statement, dated Nil (2008). https://hcservices.ecourts.gov.in/hcservices/ 6.It was claimed by them that the sugar industry is a seasonal industry as per the Government notification, dated 20.7.1998. Hence the provisions of the Conferment of Permanent Status Act will not apply. It was further stated that the workmen have not put in 480 days of continuous service within a period of 24 calendar months. Once again the second respondent union filed another writ petition being W.P.No.14700 of 2008 challenging the tender notice dated 12.6.2008 and for a consequential direction not to engage contract workers in the place of 84 employees who have filed an application before the first respondent. That writ petition came to be disposed of by a common order dated 4.9.2008. This court while directing the second respondent to pursue their remedy before the first respondent, but also directed the petitioner mill to continue their services until a decision is taken by the authority in accordance with law. It was thereafter, the matter was taken up and the authority had passed the impugned order dated 24.6.2009 followed by a corrigendum dated 6.7.2009. The authority held that no doubt it was a seasonal industry and only if workers are working during crushing seasons alone, it will be covered by the term seasonal industry. But these workers were also engaged even during the period when there was no crushing season, which fact was not denied. Therefore, it cannot be held that the exemption found under the Tamil Nadu Act 46/81 will apply to the case of the present workmen. In that view of the matter, the 37 workers whose names were mentioned in the annexure alone will get the benefit of permanency. He also held that the stopping of workmen was made only to deny them the benefit of conferment of permanent status. Therefore, the authority held that they are eligible for grant of permanent status. 7.Ms.G.Thilakavathy, learned counsel appearing for the petitioner Sugar Mill contended that inasmuch as the sugar mill is a seasonal industry, the Act will not cover the industry in view of the exception found under Section 1(3) of the Tamil Nadu Act 46 of 1981. She placed reliance upon a judgment of this court in Badhili Dina Cooli Thozhilalar Munnetra Sangam Vs. Managing Director, Tamil Nadu Sugar Corporation Ltd. and others reported in Vol 101 (2002) FJR 242. In that case, the casual labours doing seasons work in the sugar mill were held to be not covered by the provisions of the Tamil Nadu Act 46 of 1981. The learned Judge in that case placed reliance upon a judgment of a division bench of this court in T.N.C.S.C. Workers' Union Vs. T.N.C.S.C. Ltd. reported in 1998 (1) LLJ 728 (Mad). In that case, the division bench dealt with the demands of the workmen engaged in direct purchase centres attached to the Corporation for procuring Paddy from the agriculturists during the harvest period. It was held that in case of seasonal industry, the workers cannot seek for regularization in terms of the Act. In page 246, the learned Judge had observed as follows: “...However, it is to be noted that the findings of the Division Bench is that the second respondent mill is not an industry and the same could not be brought within the purview of the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act. The Division Bench did not deny the https://hcservices.ecourts.gov.in/hcservices/ benefit of regularisation only on the ground that they were not recruited through the employment exchange. The claim of the petitioner was negatived on the ground that the claim cannot be brought within the provisions of the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act. Therefore, in my considered view, the judgment of the Division Bench is equally applicable to the facts of the present case as it makes no difference between the employees recruited through the employment exchange and those who were not recruited through the employment exchange.” 8.In that case, the learned Judge also referred to another judgment of the Supreme Court in Morinda Cooperative Sugar Mills Ltd. Vs. Ram Kishan reported in (1996) 1 LLJ 870 = (1995) 5 SCC 653, wherein the Supreme Court had considered the application of Chapter V-A in relation to seasonal workers in a sugar mill. Since Chapter V-A was made applicable to an industry, which is not seasonal in character, the provisions relating to retrenchment will not apply. In that view of the matter, the workmen's claim which was directly made under Article 226 of the Constitution and not routed through the authority constituted to decide under Tamil Nadu Act 46 of 1981 was declined. 9.The learned counsel also submitted that the Government by its letter dated 20.7.1998 addressed to the President, INTUC attached to South Arcot District Cooperative Sugar Mills Workers and Staff Federation, Vellore, in which an opinion was expressed that the pattern of employment of labours in sugar mills is classified as regular and seasonal and that the sugar industry is a seasonal industry. It is necessary to reproduce the letter, dated 20.7.1998 addressed by the Secretary to Government, Industries Department to the Union and in paragraphs 1 and 2 it was stated as follows: “1.The Commissioner of Sugar has stated that the Sugar Industry being an agro based Industry, the main function, namely manufacturing of Sugar is seasonal in nature. Moreover the yield and other factors mainly depend on rainfalls. Crushing operation is not being carried out throughout the year. The pattern of Employment of Labour in Sugar Mills is classified regular and seasonal. The regular worker will be given employment throughout the year and the seasonal worker will be given employment only during the period of crushing operation. Hence, he has opined that Sugar Industry is a seasonal industry. 2.The Government have examined your request in the light of our remarks offered by Commissioner of Sugar in para 2 above and lane decided to accept the suggestion of Commissioner of Sugar. I am therefore to state that your request for declaring Sugar industry as permanent industry cannot be complied with.” (Emphasis added) https://hcservices.ecourts.gov.in/hcservices/ In the light of the same, she contended that exemption found under Section 1(3) will apply to the sugar mills. 10.The next contention of the learned counsel Ms.G.Thilakavathy was that the workmen through their union raised a dispute regarding regularization and that was declined by the State Government by G.O.(D)No.762, L&E Department, dated 25.10.2007 and that is not challenged. But, the individual workmen had approached the authority for grant of permanent status under Tamil Nadu Act 46 of 1981. Very recently also, after filing of the petition, the trade union had filed a petition before the Deputy Commissioner of Labour, Salem raising an industrial dispute under Section 2(k) of the ID Act complaining of unfair labour practice allegedly indulged by the petitioner mill including complaint regarding the non regularization of the workmen by the management. In view of the above, they cannot pursue the remedy before the authority under the Act, i.e., the first respondent. 11.The learned counsel submitted that the workmen were sought to be terminated and only under the orders of this court, they are continuing. So long as the action of the management is not questioned, the authority cannot decide the said matter of restoration of service in view of the grant of permanent status. 12.Lastly Ms.G.Thilakavathy submitted that the burden of proof that they had worked for 480 days within a period of 24 calendar months was not discharged by them before the authority. In the absence of any legal evidence, the authority could not have granted them the status. 13.Per contra, Mr.R.Rengaramanujam, learned counsel appearing for the second respondent contended that even if the sugar industry's operation of crushing of sugar is of seasonal activity, but there are other activities which are conducted in the sugar factory throughout the year which include maintenance and repair works. Therefore, it cannot be said that the workmen were engaged only during the crushing season. On the contrary, the authority had found that they were not seasonal workers and their services were utilized even during off season. He further submitted that the workmen covered are technical workers and their services were utilized throughout the year in the factory. When they filed an application before the first respondent, they had given in the annexure to their application the number of days worked by each workman yearwise. When a notice was ordered on the application, in the counter statement filed during 2008, in paragraphs 5 and 6, it was stated as follows: “5....this respondent categorically places on record that even such of those employees worked for nearly 3 – 4 years as on date, have not put in continuous service which alone will entitle the workman employee to be regularized even as per the provisions of this Act the contentions of the petitioner herein to be rejected. In the absence of any such concrete proof by the employee to state that he had worked for 480 days in a period of https://hcservices.ecourts.gov.in/hcservices/ 24 Calendar months, only an adverse inference could be drawn as the workman has not adduced cogent evidence in this regard. 6....the petitioners have not satisfied the criteria laid down under the statute which was warranting a fixed execution of work of 480 days in two consecutive years to make an individual casual labourer eligible for relaxation.” 14.They had not disputed the number of days worked and that their only contention was that it was not continuous. Therefore, he stated that Section 3 of the Tamil Nadu Act 46 of 1981 in Explanation-I clearly covered even discontinuous period for the purpose of calculating “continuous service” and so long as the term of contract of appointment continuous and they had put in actual service of 480 days within a period of 24 calendar months even if it breaks, that will be covered for the purpose of qualifying service to get permanent status. 15.On the question of not pursuing the dispute in which the Government had declined reference, he submitted that when the management went for outsourcing certain employment, the union filed a writ petition contending that these employees should be made permanent as they have already moved first respondent and any filling up of those posts will deny them the benefit of permanency. While disposing of the writ petition in W.P.No.14700 of 2008, this court in paragraph 4 had observed as follows: “4.....Considering the fact that pursuant to the interim order of injunction passed by this Court, the 2nd respondent has employed 84 workers of the petitioner union and proceedings initiated under Tamil Nadu Act 46 of 1981 are pending before the competent authority, I am of the considered view that to meet the ends of justice, the 2nd respondent should be permitted to proceed with the tender notification in respect of the recruitment not only regarding category Nos.12 to 14 for which the petitioner has no objection, but also in respect of other categories also subject to the condition that the 84 employees of the petitioner Union, who have been employed pursuant to the order of interim injunction granted by this Court, shall be continued with permission to the 2nd respondent to appoint any further employees on contract pursuant to the impugned notification dated 12.6.2008. The employment of 84 members of the petitioner Union shall be continued till the authority under the Tamil Nadu Act 46 of 1981 complete the proceedings and pass final orders. The Deputy Chief Inspector of Factories, before whom the proceedings initiated by the petitioner Union under the Tamil Nadu Industrial Establishments (Conferment of Permanent Status) Act, 1981 in Proceedings No.A/1091/2008 are pending, is directed to complete the enquiry, after following the procedure established under https://hcservices.ecourts.gov.in/hcservices/ the Act and pass appropriate orders on merits and in accordance with law expeditiously, in any event, within a period of 3 months from the date of receipt of a copy of this order. The 2nd respondent shall cooperate with the authority under the Act by filing necessary counter affidavit so as to enable him to complete the enquiry in an appropriate manner. The Writ petition is ordered accordingly. No costs. It is made clear that after the decision is rendered by the authority under Tamil Nadu Act 46 of 1981, it is open to the 2 nd respondent to act in accordance with the decision arrived at by the said authority....” (Emphasis added) 16.Further the remedy available under the Tamil Nadu Act 46 of 1981 is an independent remedy available and that the Government order declining reference is only administrative in character and it does not decide the right of the parties. He also submitted that there is no order of any competent authority either under the Tamil Nadu Act 46 of 1981 or under the Industrial Disputes Act declaring the entire operation in the sugar mill is of seasonal character and that the provisions of the Act will not apply. He further stated that the artificial breaks given to certain workers, i.e. 33 days in May and June, 2006 and 15 days during June 2007 was given only with a view to get away their permanent status and that such breaks cannot be considered as disqualifying service. 17.As a matter of fact, the authority found that the workmen during crushing season were engaged for repair works and machine operations and in the off season, they were engaged for maintenance including repair works of machineries which was not denied in the counter statement. In that view of the matter, there is no case for interference with the impugned order. 18.In the light of the rival contentions, the issues that arises for consideration by this court are as follows: (1)Whether in view of the exception found under Section 1(3) of the Tamil Nadu Act 46 of 1981, the petitioner mill is excluded from the purview of the Act? (2)Whether the workmen have failed to prove that they were qualified under Section 3 for getting permanent status? (3)Whether the authority was justified in granting permanent status to workmen despite the fact that the petitioner management had stated that 84 casual labours were stopped from work on 10.4.2008 as per letter dated 6.5.2008? 19.Since reliance was placed upon Section 1(3) of the Tamil Nadu Act 46 of 1981, it is necessary to extract the same which reads as follows: “1(3)It applies to every industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than fifty workmen were employed on any day of https://hcservices.ecourts.gov.in/hcservices/ the preceding twelve months. If any question arises whether an industrial establishment is of a seasonal character or whether work is performed therein only intermittently the decision of the Government thereon shall be final: Provided that the Government may, by notification, apply the provisions of this Act to any industrial establishment employing such number of workmen less than fifty as may be specified in the notification.” (Emphasis added) 20.The State Government subsequently had issued a notification fixing minimum number of workers for coverage under the Act to 20 workers vide notification in G.O.Ms.No.2043, Labour and Employment Department, dated 24.9.1982. The said notification reads as follows: “[G.O.Ms.No.2043, Labour and Employment, 24th September, 1982 (Puratasi 8, Thunthubi, Thiruvalluvar Aandu 2013).] No.II(2)/LE/5527/82. In exercise of the powers conferred by the proviso to sub-section (3) of section 1 of the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981 (Tamil Nadu Act 46 of 1981), the Governor of Tamil Nadu hereby applies the provisions of the said Act to all industrial establishments (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than twenty workers were employed on any day of the preceding twelve months.” (Emphasis added) 21.Therefore, in case of any doubt as to whether a particular industry is seasonal in character, the Government's decision alone is final. Insofar as the present case is concerned, the petitioner had not produced any order from the competent authority to decide under the Act that all employments in sugar mill are seasonal in character. The terminology used in Section 1(3) as well as in the subsequent statutory notification is only borrowed from Section 25A of the Industrial Disputes Act. Section 25A of the ID Act reads as follows: “25-A. Application of Sections 25-C to 25-E.—(1) Sections 25-C to 25-E inclusive shall not apply to industrial establishments to which Chapter V-B applies, or— (a) to industrial establishments in which less than fifty workmen on an average per working day have been employed in the preceding calendar month; or (b) to industrial establishments which are of a seasonal character or in which work is performed only intermittently. (2) If a question arises whether an industrial establishment is of a seasonal character or whether work https://hcservices.ecourts.gov.in/hcservices/ is performed therein only intermittently, the decision of the appropriate Government thereon shall be final.” 22.Similar definition is also adopted in Section 25-K of the I.D. Act for the purpose of applying Chapter V-B of the I.D. Act. Unfortunately, both the I.D. Act as well as Tamil Nadu Act 46 of 1981 have left the determination of the issue to the parties, failing which a determination by the appropriate Government. Apart from these two enactments, the term “seasonal character” is also found under the ESI Act. By Amending Act 44 of 1966 which came into force with effect from January 28, 1968, the definition of 'seasonal factory' has been amended. The definition as amended reads: "2. (12) * * * ‘Seasonal factory’ means a factory which is exclusively engaged in one or more of the following manufacturing processes, namely, cotton ginning, cotton or jute pressing, decortication of groundnuts, the manufacture of coffee, indigo, lac, rubber, sugar (including gur) or tea or any manufacturing process which is incidental to or connected with any of the aforesaid processes and includes a factory which is engaged for a period not exceeding seven months in a year- (a) in any process of blending, packing or re-packing of tea or coffee; or (b) in such other manufacturing process as the Central Government may, by notification in the official Gazette, specify; The expressions ‘manufacturing process’ and ‘power’ shall have the meaning respectively assigned to them in the Factories Act, 1948"; (Emphasis added) 23.Unlike the I.D. Act and Conferment of Permanent Status Act, Section 2(12) of the ESI Act as amended by the Amending Act 44 of 1966 makes the issue without giving room for any controversy in respect of the said Act. 24.Even in respect of the Payment of Bonus Act, the question as to whether wages earned during off season by seasonal workers in the name of seasonal allowance can count for the purpose of calculating the Bonus on the wages earned during the accounting year, the Supreme Court had held that such an allowance also will count for the purpose of reckoning the bonus even in respect of off season workers vide its judgment in Chalthan Vibhag Sahakari Khand Udyog v. Govt. Labour Officer reported in (1981) 2 SCC 147 and in paragraphs 6, it was observed as follows: “6.There can be no doubt that the retaining allowance paid to the workmen during the off-season https://hcservices.ecourts.gov.in/hcservices/ falls within the substantive part of the definition of the expression “salary or wage”. It undoubtedly is remuneration which would, if the terms of employment, express or implied, were fulfilled, be payable to any employee in respect of his employment. The retaining allowance is a remuneration on a lower scale which is paid to the workmen by the management during the off-season for their forced idleness. The payment of such allowance by the management to its workmen during the off-season when there is no work and when the factory is not working, is indicative