1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 4814 OF 2009 The General Manager (P & A) ] Hindustan Petroleum Corporation Ltd., a ] Government of India Enterprise and ] Company incorporated under the ] Companies Act,1956 and having their ] registered office at 17, Jamshedji Tata Road] Churchgate, Mumbai - 400 020. ] Petitioner Versus 1. The General Secretary, ] General Employees Association, ] Tel Rasayan Bhavan, Tilak Road, ] Dadar, Mumbai - 400 014. ] 2. List of Workmen (1-16) represented ] through Bhartiya Kamgar, Karmachari ] Mahasangh, 5, Navalkar Lane, ] Prathana Samaj, Girgaon, ] Mumbai - 400 004. ] 1. Anil C. Patil ] 2. Kishor D. Kamble, ] 3. Prakash H. Mhatre, ] 4. Anil N Salve, ] 5. Suresh B. Patil, ] 6. Shambu Prasad, ] 7. D.J. Mane, ] 8. L.J. Mane, ] 9. M. Arun Kumar, ] 10.Anand Karupayya Kannan ] 11.N. Shekhar ] 12.Bhayyaram Patel, ] 13.C. Manokar, ] 14.Gopal Swamy, ] 15.V. Thangaraj, ] 16.S. Arumugam, ] ] 2 3. Shri. A.A. Lad, ] Presiding Officer, (CGIT) No.2, ] Mumbai. ] Respondents Shri. J.P. Cama, Sr. Counsel a/w M.D. Siodia i/b M/s. Rustamji and Ginwala for the Petitioner Smt. R.J. Todankar for Respondent No. 1 Shri. R.D. Bhat with G.S. Bhaj for Respondent No. 2 CORAM : SMT. V.K. TAHILRAMANI, J Reserved on : 30th July, 2009 Pronounced on : 4th March, 2010 JUDGMENT : 1. Heard the learned counsel for the Petitioner and Respondent Nos. 1 and 2. None appears for Respondent No. 3 though served. 2. Respondent No. 1 - Union filed Writ Petition No. 767 of 2007 in this Court for regularization of the service of 37 contract workmen. The Court disposed of the said Petition with an order directing the appropriate government to refer the matter to the Central Tribunal for adjudication. The Tribunal passed an award directing the Petitioners to treat the said contract employees as their permanent workmen. Hence, this Petition. 3. The Petitioner is engaged in Refining activities of crude oil and marketing of the Petroleum Products and runs its own Refinery and various Plants/Terminals including administrative offices at various places. Besides permanent employees, the Petitioners have also 3 employed contract workers in various processes, jobs and works including the job of housekeeping and valve operators. 4. This matter pertains to 37 persons who are engaged in the work of sweeping, cleaning and dusting of the buildings and plant in the Refinery which is owned and occupied by the Petitioners or they have been working there as valve operators and helpers for 15 to 20 years. 5. The workmen involved in this petition are employed on contract basis by the Petitioners - Management through various contractors and they have been working there for more than 15 to 20 years continuously. 6. The Government of India issued a notification dated 9th December, 1976 under Section 10 of the Contract Labour (Abolition & Regulation) Act, 1970, thereby prohibiting the employment on Contract basis in the process of cleaning, sweeping, dusting etc. of the building owned and occupied by the establishment for which the appropriate Government is the Central Government. It is not in dispute that, the present workmen are working in the premises owned and occupied by the Petitioners and the appropriate Government in respect of the Petitioners is the Central Government. 4 7. According to the Respondents - Unions the Notification dated 9.12.1976 was applicable to the Petitioners and it ought not to have employed contract labour for attending the job of sweeping, cleaning, dusting and valve operating. 8. Thereafter, another Notification dated 30th January, 1996 came to be issued prohibiting the employment of Contract Labour in the works mentioned in Schedule annexed thereto with effect from 1st March, 1996. The Respondent - Union submitted that, the employment of contract labour for the job of housekeeping, valve operators and helpers is prohibited under the said Notification dated 30th January, 1996 and that, both the Notifications dated 9th December, 1976 and 30th January, 1996 are applicable to the 37 workers. 9. The Respondent Union contended that the jobs which these workmen perform and attend to is squarely covered under the said notifications and therefore the Petitioner is not supposed to employ contract labour in their establishment for the work of sweeping, cleaning, maintenance, i.e. housekeeping and valve maintenance. The work carried out at said Refinery is of permanent and perennial nature. Services of the concerned workmen are very much required by the the Management to run their Refinery therefore the workers involved in the 5 reference be regularized. The case of the Unions is that by virtue of the said Notifications workmen involved in the Reference became the regular and direct employees of the Petitioners and they are entitled to get the status of the regular workers with all consequential benefits and privileges. 10. Pursuant to the Notification dated 30th January, 1996 issued by the Union Government under Section 10 (1) of the Industrial Disputes Act, 1947 the Union filed Writ Petition No. 367 of 1996 in High Court on behalf of many contract workers working in the establishment of the Petitioner and who were covered by the said Notification dated 30th January, 1996 for a declaration that, the said workmen were the regular employees of the Petitioner. 11. The Learned Single Judge of this Court vide order dated 10th July, 1996 directed the Petitioners to abolish the contract labour system in respect of the jobs covered by the said Notification dated 9th December, 1976 and 30th January, 1996 and absorb the said workers in their employment. 12. The learned counsel for the Respondents - Unions submitted that, inadvertently the names of the 37 workers involved in the present case 6 remained to be included in the Exhibit “A” to Writ Petition No. 367 of 1996 and as they have been working continuously with the Petitioners for more than 15-20 years without any break, they should also be absorbed. 13. The case of the Respondents - Unions is that the work is perennial in nature and the Petitioner has its own direct and regular employees who do the same and similar nature of work as that done by the present workers. However, these workers are paid less wages than the wages paid to the direct workers doing similar nature of work. These workmen are entitled to get same or similar wages and service conditions as paid to direct workers. However, the concerned workmen are subjected to exploitation by giving them service conditions which are inferior to the service conditions of the direct workmen of the Petitioner and their rights and benefits to which they are entitled under various social and labour welfare legislation have been denied. The Petitioners are in the habit of changing the contractors periodically without disturbing the workers. The said procedure was adopted by the Petitioners in order to ensure that these workers should not claim regularization. It is further their case that the work of these workmen is supervised, controlled and administered by the Petitioners - Management and therefore in all respects the workmen involved in the 7 reference are the employees of the Petitioners. The contractors used by the Petitioner are the dummy and sham Contractors and these contractors have no role to play at all. The contract between the Petitioner and the so called contractors are sham and bogus and those are a mere camouflage to deprive the concerned employees of the benefits available to permanent workmen in the same category of the Petitioner - Management. The only object of employing these workers on contract basis is to deny them their legitimate salary and other benefits as are being paid to regular employees of the Petitioners though the concerned workmen are serving with the Petitioner for a large number of years. It is the case of the Unions that on lifting the veil and looking at the conspectus of factors governing employment, the real employer of the workmen concerning the present dispute is the Petitioner. 14. Thus, by the Union, it was prayed that the workmen involved in the reference are entitled to be declared as permanent workmen of the Petitioners - Management right from the date of their joining service and they are entitled to the wages and consequential benefits attached to the posts of permanent workmen employed in the same category employed by the Petitioners. As stated earlier, the Tribunal passed an award in favour of the workers. 8 15. Mr. Cama, the learned counsel for the Petitioner-Management claims that these employees were not engaged by them but they were engaged by the respective contractors who are licenced contractors under the provisions of Contract Labour (Regulation & Abolition) Act, 1970 and the choice of persons recruited is at the discretion of the contractors and the employer herein had no say or any supervision or control on the employees employed by the contractors. The contractors have been engaged for specific jobs and the Petitioner has no say in the choice of persons engaged by the contractor and it is entirely the decision of the contractor. 16. Mr. Cama contended that, in the performance of its functions, the refinery has to engage apart from regular workmen, a number of contractors for specific jobs and accordingly certain number of contractors are always engaged for certain projects and other jobs which are not performed by the regular workmen. He denied that the jobs done by these workmen are perennial in nature. He submitted that all regular jobs are carried out by its regular workmen. He further submitted that the required manpower is around 550 workmen only as per national and international standards, however against such norm, the Refinery at Mumbai engages around 1770 employees with surplus of manpower. One of the causative factor of surplus manpower in any 9 public sector undertaking are the number of project affected persons and the undertaking given by the Government while acquiring the property for the purpose of putting up its industry. He submitted that the petitioner is obliged to award certain job contracts to the contractors through tender system for execution of project jobs such as housekeeping, horticulture, grass cutting, repair and cleaning of drainage, repair and cleaning of roads, maintenance of flower plants, loading and transportation of crude from refinery, construction of building, repairing of compound walls, roads, pavements etc. 17. It is submitted that since the area occupied by the Refinery is about 350 acres of land it becomes necessary to engage contractors for performance of jobs not connected with the regular and continuous work in the refinery. The activities of the petitioner are so spread out and enormous that it becomes necessary to entrust certain jobs which have no nexus with the manufacturing activities and to give those jobs on contract so that the petitioner is only concerned about the end achievement of the jobs entrusted to the Contractors and do not have to monitor jobs thus diverting their attention from the manufacturing activities. 18. The learned counsel for the petitioner contended that, the 10 contractors engaged by it are not dubious contractors. The contractor has to obtain necessary licence as required under the provisions of the Contract Labour (Regulation & Abolition) Act, 1970. The petitioners for non-perennial/core job floated tender enquiries for contracts to carry out the same. After scrutinizing the tender enquiries, as per the purchase procedure the petitioners placed purchase order on the contract to the lowest bidder on a year to year contract basis. The Contractors who are having valid Labour Licence as per Contract Labour ( Regulation & Abolition) Act, 1970 are authorized through Annual Purchase Orders to carry out the jobs entrusted to them. The contractor is paid a lump sum amount and he has to bring his workman and his tools and equipments. He brings number of workers as the work demands and the workers work under his supervision and control. 19. It is contended that, the concerned workmen are not regular workmen, the Petitioner has no relationship of master and servant with the workers. The concerned workmen were not employed by it directly for wages or otherwise but they were engaged by their respective Contractors who are licenced contractors under the provisions of the Contract Labour (Regulation & Abolition) Act, 1970. The petitioner invites public tenders to carry out its certain time bound project jobs as per its contracts and purchase procedure. The eligible licenced 11 contractors apply as per terms and conditions specified in the job schedule and submit their applications for open bidding and as per Contract Committee’s recommendations, the job is awarded to the lowest bidding party to carry out the specified jobs. Mr. Cama submitted that the number and choice of the workmen to be engaged is entirely the discretion and decision of the contractors. The Petitioner has no say in the matter. The supervision or control on the contract workmen employed by the contractor is totally that of the contractor. The petitioner neither control nor supervise the contractor’s workmen. The service conditions, fixation of pay scales, dearness allowance, conveyance, washing allowance, leave etc. are the terms and conditions of employment between the contractors and their workmen. The petitioner is not concerned with the same. 20. It is submitted that the petitioner has not engaged the services of any of these workmen. The workers are employed by the Contractor and they have not been engaged by the Contractor on the advice or direction of the petitioner. In fact the petitioner entrusted the job contracts to the Contractors and the petitioner has no say in the selection and recruitment of the persons employed by the Contractor. and it is left to the discretion and judgment of the Contractor to chose the person whom he wants to recruit. 12 21. Mr. Cama submitted that the petitioner does not intervene with the contract workmen in any supervisory capacity and the concerned workers are not directly reporting to the petitioner nor engaged by it. The contractors have to pay the workers engaged by them directly and the Contractors are not obliged to pay the same wages and benefits payable to direct workers . Mr. Cama, submitted that however, the Petitioner being the principal employer, the employer monitors the contractors to see that, the workmen engaged by the Contractor were not paid less than prescribed minimum wages and other statutory benefits. The Petitioner is disabled from recruiting any employee whoever applies for a job. The petitioner has to follow recruitment rules, reservation policy etc. in selection of any employee. It is stated that, it is possible that, these workmen have been working continuously with the respective Contractors but that is the discretion of the Contractor and it has nothing to do with the Petitioner. 22. It is further submitted that, the Petitioner has its own direct and regular employees who are designated to carry out the work entrusted to them and the work performed by the regular employees is in no way connected with the work performed by the Contractors’ employees nor the Contractors’ employees were engaged to supplement the work of the direct employees nor the work performed by the contractors 13 employees overlap with the work of the regular employees. The regular employees and the Contractors’ employees do not perform the work together complementing each other. He contended that the jobs are not perennial in nature. As far as the long period of employment is concerned, he submitted that the workers are continuing only because of status quo order passed by the Court. 23. It is submitted by Mr. Cama that, it is incorrect to allege that, the Petitioner at any time supervise or control the services of the employees engaged by the Contractor as the Petitioner is only interested in seeing that the job entrusted to the Contractor is fulfilled by the Contractor in time as required by the principal employer. It is denied that, the Contractor engaged by the Petitioner - Employer has been sham or dummy Contractor as alleged or at all. Lastly, Mr. Cama contended that the workmen who are involved in the present petition not being the direct employees nor belonging to temporary, casual or badli categories they are not entitled for permanency and regularization of their employment with the petitioner. 24. The learned counsel for the petitioner submitted that the Notification dated 09.12.1976 of the Government of India, relied upon by the Respondents has been struck down and hence it is not applicable to 14 the petitioner. In support of his contention that the notification dated 9th December,1976 has been quashed, Mr. Cama placed reliance on the decision in case of Steel Authority of India Ltd V/s. National Union Waterfront Workers and Others (2001) 7 SCC 1. Mr. Cama further submitted that the Contract Labour (Regulation and Abolition) Act, 1970 does not imply the concept of automatic absorption of the contract labour by the principal employer on issuance of abolition notification. Thus, he submitted that if the contract labour is engaged in connection with the work entrusted to the contract labour by the principal employer, it does not culminate in any master servant relationship between the principal employer and the contract labour. 25. Mr. Cama submitted that so far as the direct labour is concerned, it is now governed by the decision of Constitution Bench of the Supreme Court in the matter of Steel Authority of India Ltd. & Others (Supra) and hence, all proceedings will have to be dealt with only in accordance with the directions laid down in the said judgment. Claiming employment by back door entry with the Petitioner is against the rules, procedures and policy. The Petitioner being a Public Sector Corporation is bound to follow the rules and policy in its recruitment. 26. Mr. Cama submitted that in SAIL (supra) the Apex Court has held 15 that, unless the Appropriate Government abolishes the contract labour under Section 10 of Contract Labour (Regulation & Abolition) Act, the workman engaged by contractor cannot seek reference to the Tribunal for adjudication. He submitted that, in the instant case the contract labour has not been abolished under Section 10 of the Contract Labour (Regulation & Abolition) Act, and direct reference made by the Central Government to the Tribunal is wholly erroneous and is opposed to the law laid down in SAIL. Hence, the Reference ought to have been rejected. 27. Mr. Cama, stated that the Petitioner is a Government Company. He submitted that when the Respondents have not been appointed by following necessary procedure i.e they were appointed without any advertisement being issued, interview being conducted etc., in such cases, the Respondents cannot claim regularization merely on the ground that they had been working for a long time. In support of this contention, he placed reliance on the decision in case of National Fertilizers Ltd & Ors Vs. Somvir Sangh; JT 2006(11) SC 279. 28. Mr. Cama, also placed reliance on the decision in the case of A. Umarani Vs Registrar, Co-operative Societies and Ors 2004 III CLR 85 in support of his contention that when the appointment is made in 16 deviation of the procedure laid down in the Statutory Rules, such appointees cannot claim regularization. The appointment made in violation of the mandatory provisions of the statute and other essential qualifications would be wholly illegal and this illegality cannot be cured by taking recourse to regularization. In support of his contention that the employees who have been employed dehors the procedure cannot claim any right, reliance was placed on the decision in the case of Secretary, State of Karnataka and others Vs Umadevi (3) and others (2006) 4 Supreme Court Cases 1. In Umadevi's case, the Court was not concerned with the provisions of the Contract Labour (Regulation and Abolition)Act and the power of the industrial adjudicator to grant appropriate relief in a reference under the Industrial Dispute Act in such cases. The case does not even deal with the judgment in the Steel Authority of India's case. Both the decisions operate in different fields. So also in Umarani and National Fertilizers Ltd (Supra), the facts were different, hence, they would not be applicable. 29. Mr. Cama, submitted that of late a trend amongst the contract labourers is discernible that after having worked for some years, they make a claim that they should be absorbed by the principal employer and be treated as the employees of the principal employer especially 17 when the principal employer is the central government or the State Government or an authority which can be held to be State within the meaning of Article 12 of the Constitution, although no right flows from the provisions of the Act for the contract labours to be absorbed or to become the employees of the principal employer. The act has provided for its abolition by the Central Government in appropriate cases under Section 10 of the Act. He further submitted that neither the Act nor the Rules framed by the central government or by any appropriate government provide that upon abolition of the contract labour, the labourers would be directly absorbed by the principal employer. In support of this contention, he placed reliance on R.K. Panda V/s. Steel Authority of India, 1994(5) SCC 304. However, in the very next para of this judgment, it is observed that whether the contract labourers have become the employees of the principal employer in course of time and whether the engagement and employment of labourers through a contractor is a mere camouflage and a smokescreen, is a question of fact and has to be established by the contract labourers on the basis of the requisite material. Hence, it would be necessary to advert to the evidence which I shall do shortly. 30. Mr. Cama submitted that 'Control' is no longer the sole test though it does remain a factor and perhaps, in some cases, a decisive 18 one. According to him, the factors which are usually of importance are as follows - the power to select and dismiss, the direct payment of some form of remuneration, deduction of pay, the supply of tools and materials (though there can still be a labour -only sub-contract) and he placed reliance on the decision in case of Workmen of Nilgiri Co-op Marketing Society Ltd Vs. State of Tamilnadu 2004 Law Suit (SC) 142 wherein it is observed as under:- “37 The control test and the organization test, therefore, are not the only factors which can be said to decisive. With a view of elicit the answer, the Court is required to consider several factors which would have a bearing on the result: (a) who is appointing authority; (b) who is the pay master; same (c) who can dismiss; (d) how long alternative service lasts; (e) the extent of control and supervision; (f) the nature of the job, e.g. whether, it is professional or skilled work; (g) nature of establishment; (h) the right to reject. 38 With a view to find out a reasonable solution in a problematic case of this nature, what is needed is an integrated approach meaning thereby integration of the relevant tests wherefor it may be necessary to examine as to whether the workman concerned was fully integrated into the employers' concern meaning thereby independent of the concern although attached therewith to some extent. Mr. Cama also relied on this decision in support of his contention that the burden that there was existence of relationship of employer and employee would be on the Respondents and not on the Petitioner. He 19 submitted that the Industrial Court has wrongly put the onus on the Management whereas it ought to have been placed on the Unions. 31. Mr. Cama, further submitted that multi prong approach has to be taken while deciding whether the master employee relationship exists and to find out whether the contract is genuine or a sham contract. In support of this contention, he placed reliance of Ram Singh