Case: Standard-Vacuum Refining Company of India Limited Vs. Its Workmen &amp; Others

it has done so.In dealing with this question it may be relevant to bear in mind that industrial adjudication generally does not encourage the employment of contract labour in modern times.As has been observed by the Royal Commission on Labour"whatever the merits of the system in primitive times, it is now desirable, if the management is to discharge completely the complex responsibility laid upon it by law and by equity, that the manager should have full control over the selection, hours of work and payment of the workers". The same opinion has been expressed by several Labour Enquiry Committees appointed in different States.We agree that whenever a dispute is raised by workmen in regard to the employment of contract labour by any employer it would be necessary for the tribunal to examine the merits of the dispute apart from the general consideration that contract labour should not be encouraged, and that in a given case the decision should rest not merely on theoretical or abstract objections to contract labour but also on the terms and conditions on which contract labour is employed and the grievance made by the employees in respect thereof.As in other matters of industrial adjudication so in the case of contract labour theoretical or academic considerations may be relevant but their importance should not be over-estimated. Let us then consider the contract labour system in the present case. 11. The contract in this case related to four matters. But the reference is confined to one only, viz., cleaning maintenance work at the refinery including premises and plant and we shall deal with that only. So far as this work is concerned, it is incidental to the manufacturing process and is necessary for it and of a perennial nature which must be done every day. Such work is generally be done every day. Such work is generally done by workmen in the regular employ of the employer and there should be no difficulty in having regular workmen for this kind of work. The matter would be different if the work was of intermittent or temporary nature or was so little that it would not be possible to employ full time workmen for the purpose. Under the circumstances the order of the tribunal appears to be just and there are no good reasons for interfering with it. 12. Our attention in this connection was drawn to D. Macropollo and Co. (Private) Ltd. v. D. Macropollo and Co. (Private) Ltd. Employees Union, AIR 1958 SC 1012 M, and it was urged that the tribunal should not have interfered with the managements manner of having its work done in the most economical and convenient way that it thought proper. It was pointed out that this was not a case where the contract system was a camouflage and the workmen of the contractor were really the workmen of the company.It may be accepted that the contractor in the present case is an independent person and system is genuine and there is no question of the company carrying on this work itself and camouflaging it as if it was done through contractors in order to pay less to the workmen. But the fact that the contract in this case is a bona fide contract would not necessarily mean that it should not be touched by the industrial tribunals.If the contract has been mala fide and a cloak for suppressing the fact that the workmen were really the workmen of the company, the tribunal would have been justified in ordering the company to take over the entire body of workmen and treat it as its own workmen. But because the contract in this case was bona fide the tribunal has not ordered the company to take over the entire body of workmen. It has left to it to decide for itself how many workmen it should employ and on what terms and has merely directed that when selection is being made preference should be given to the workmen employed by the present contractor. In Macropollo case, AIR 1958 SC 1012 , this Court held that the reorganisation had been adopted by the employer for reasons of economy and convenience and was bona fide. In that case the main business of the concern was the selling agency of various cigarette manufacturing concerns. Before 1946 the concern used to employ distributors for the purpose and these distributors used to employ salesmen. In 1946 there were communal riots in Calcutta and therefore the concern took over the salesmen in its direct employment in order to reorganise them on communal basis in the then prevailing circumstances. In 1954 the concern decided to close down its own outdoor sales department and revert to the distributor system. It was in that context that certain workmen had to be retrenched, and this Court held that the reorganisation scheme adopted in 1954 for reasons of economy and convenience was bona fide and if it resulted in retrenchment that was inevitable. These facts would show that in that case there was reorganisation of the business resulting in retrenchment. In the present case no such things arises and the only question for decision is whether the work which is perennial and must go on from day to day and which is incidental and necessary for the work of the refinery and which is sufficient to employ a considerable number of whole-time workmen and which is being done in most concerns through regular workmen should be allowed to be done by contractors. Considering the nature of the work and the conditions of service in the present case we are of opinion that the tribunals decision is right and no interference is called for, except that the date should now be changed, for such a direction cannot be put into force with retrospective effect from November 1, 1958. It appears that a few months remain before the present contract will come to an end. We think that for these few months the present system may continue.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The first part thus refers to the factum of a real and substantial dispute, the second part to the parties to the dispute and the third to the subject-matter of the dispute. The contention of the learned Solicitor-General is two-fold in this connection, namely, (i) that there is no real or substantial dispute between the company and the respondents, and (ii) that the subject-matter of the dispute is such that it cannot come within the terms of the definition in S. 2(k)7. The first submission can be disposed of shortly. There is undoubtedly a real and substantial dispute between the company and the respondents on the question of the employment of contract-labour for the work of the company. The fact that the respondents who have raised this dispute are not employed on contract basis will not make the dispute any the less a real or substantial dispute between them and the company as to the manner in which the work of the company should be carried on. The dispute in this case is that the company should employ workmen directly and not through contractors in carrying on its work and this dispute is undoubtedly real and substantial even though the regular workmen (i. e. the respondents) who have raised it are not employed on contract labourThus out of the three ingredients of S. 2 (k) the first is satisfied; the second also is satisfied because the dispute is between the company and the respondents;it is the third ingredient which really calls for determination in the light of the decision in Dimakuchi case, 1958 SCR 1156 : (AIR 1958 SC 353 )There can be no doubt that there is community of interest in this case between the respondents and the workmen of Ramji Gordhan and Company. They belong to the same class and they do the work of the same employer and it is possible for the company to give the relief which the respondents are claiming. The respondents have in our opinion also a substantial interest in the subject matter of the dispute, namely, the abolition of the contract system in doing work of this kindWe may, however, mention that the test laid down is that the workmen espousing the cause should have substantial interest in the subject matter of the dispute, and it was only when illustrating the practical application of the test that this Court used the words "may prejudicially affect their interest"We do not think it necessary to go into this aspect of the matter as we have already indicated that prejudicial effect is only one of the illustrations of the practical application of the test laid down in Dimakuchi case, 1958 SCR 1156  : (AIR 1958 SC 353 ), viz., substantial interest in the sense that the class to which the aggrieved party belongs is substantially affected thereby.It seems to us therefore that the respondents have a community of interest with the workmen of Ramji Gordhan and Company who are in effect working for the same employer. They have also a substantial interest in the subject-matter of the dispute in the sense that the class to which they belong (namely workmen) is substantially affected thereby. Finally the company can give relief in the matter. We are therefore of opinion that all the ingredients of S. 2 (k) as interpreted in Dimakuchi case, 1958 SCR 1156  : (AIR 1958 SC 353 ), are present in this case and the dispute between the parties is an industrial dispute and the reference was competentAs in other matters of industrial adjudication so in the case of contract labour theoretical or academic considerations may be relevant but their importance should not be over-estimated11. The contract in this case related to four matters. But the reference is confined to one only, viz., cleaning maintenance work at the refinery including premises and plant and we shall deal with that only. So far as this work is concerned, it is incidental to the manufacturing process and is necessary for it and of a perennial nature which must be done every day. Such work is generally be done every day. Such work is generally done by workmen in the regular employ of the employer and there should be no difficulty in having regular workmen for this kind of work. The matter would be different if the work was of intermittent or temporary nature or was so little that it would not be possible to employ full time workmen for the purpose. Under the circumstances the order of the tribunal appears to be just and there are no good reasons for interfering with itIt may be accepted that the contractor in the present case is an independent person and system is genuine and there is no question of the company carrying on this work itself and camouflaging it as if it was done through contractors in order to pay less to the workmen. But the fact that the contract in this case is a bona fide contract would not necessarily mean that it should not be touched by the industrial tribunals.If the contract has been mala fide and a cloak for suppressing the fact that the workmen were really the workmen of the company, the tribunal would have been justified in ordering the company to take over the entire body of workmen and treat it as its own workmen. But because the contract in this case was bona fide the tribunal has not ordered the company to take over the entire body of workmen. It has left to it to decide for itself how many workmen it should employ and on what terms and has merely directed that when selection is being made preference should be given to the workmen employed by the present contractIn the present case no such things arises and the only question for decision is whether the work which is perennial and must go on from day to day and which is incidental and necessary for the work of the refinery and which is sufficient to employ a considerable number of whole-time workmen and which is being done in most concerns through regular workmen should be allowed to be done by contractors. Considering the nature of the work and the conditions of service in the present case we are of opinion that the tribunals decision is right and no interference is called for, except that the date should now be changed, for such a direction cannot be put into force with retrospective effect from November 1, 1958. It appears that a few months remain before the present contract will come to an end. We think that for these few months the present system may continue.