Case: Gujarat Electricity Board,Thermal Power Station, Ukai, Guja Vs. Hind Mazdoor Sabha &amp; Ors

question of the status of the workmen of the erstwhile contractor once the contract is abolished by the appropriate Government. Hence as far as the question of determination of the status of the workmen is concerned, it remains open for decisions by the industrial adjudicator. There is nothing in the Act which can be construed to have deprived the industrial adjudicator of the jurisdiction to determine the same. So long as, therefore, the said jurisdiction has not been taken away from the industrial adjudicator by any express provision of the Act or of any other statute, it will have to be held that jurisdiction which, as pointed out above, has been recognised even by the decisions in Dimakuchi (AIR 1958 SC 353 ) and Standard Vacuum (AIR 1960 SC 948 ) cases (supra) continues to exist. In the exercise of the said jurisdiction, the industrial adjudicator can certainly make a contract between the workmen of the excontractor and the principal employer and direct the principal employer to absorb such of them and on such terms as the adjudicator may determine in the facts of each case. We find nothing in the decisions relied upon on behalf of the appellant which goes counter to this proposition of law. The decisions in Indian General Navigation and Railway Company Ltd. (1966 (1) Lab LJ 735); Krishna Kurup (AIR 1987 SC 163 ) and Gurmail Singh (1991 (1) SCC 189 ) (supra), on which reliance is placed on behalf of the appellant for the purpose, have already been discussed by us above. The only additional decisions which is pressed into service in this behalf is Sanghi Jeevaraj Ghewar Chand v. Secretary, Madras Chillies, Grains Kirana Merchants Workers Union, (1969 (1) SCR 366 : AIR 1969 SC 530 ). By a common decision in this case, two appeals were decided by this Court. In one appeal, the establishment employed less than 20 employees and it was not a factory; in the other appeal, the establishment was in the public sector. By reasons of exclusion under S.1(3) of the Payment of Bonus Act, 1965, the establishment in the first appeal was excluded from the application of that Act whereas by reason of exemption under S.32(x), the establishment in the other appeal stood exempted from the operation of the said Act. On these facts, the question was whether the employees of the two establishments could claim bonus dehors the Payment of Bonus Act and the Court held, considering the history of the legislation, the background and the circumstances in which the Bonus Act was enacted, and the object of the Act and its scheme, that the Act was an exhaustive Act, dealing comprehensively with the subject matter of bonus in all its aspects, and the Parliament had not left it open to those to whom the Act did not apply, the reason of its provisions either as to exclusion or exemption, to raise a dispute with regard to bonus through industrial adjudication under the ID Act or other corresponding law. The ID Act itself did not provide for a statutory right for payment of bonus although it had provided substantial rights for workmen with regard to lay off, retrenchment compensation etc. It will thus be clear that the right to bonus which was spelt out by the judicial decisions was expressly denied by the Bonus Act to the workmen in the establishment concerned in that case, and yet the workmen claimed the bonus on the basis of the alleged provisions of the ID Act. In the present case, there is nothing in the Act as pointed out earlier, which has either expressly or impliedly taken away the raising of an industrial dispute to absorb the excontractors workmen in the principal establishment when the dispute has been espoused by the direct workmen or the jurisdiction of the Tribunal to give a direction for the purpose, of course, on such terms as it deems fit in the circumstances of each case.For all these reasons, we are unable to accept the contention that the industrial adjudicator cannot direct the principal employer to engage excontractors workmen as direct employees.24. It was then contended that the bulk of the contract labour was engaged by the contractors in the process of unloading coal, and since the year 1989 the process of unloading coal had been fully mechanised at the Ukai Thermal Power with which we are concerned and as such, no labour was required in the process of the unloading of coal. For this purpose, reliance was placed on the contents of the additional affidavit filed by the Board during the hearing of the present appeal. We are concerned in the present appeal with the award of the Tribunal dated 22nd February, 1988. If a situation has, thereafter, arisen where the workmen directed to be employed by the award have become surplus, it is open for the appellant - Board to retrench them in accordance with the provisions of law. However, the situation in 1989 cannot be pressed into service to negative the award of 1988 by which the dispute raised in 1982 was adjudicated.25. The last argument was that the appellant - Board has several other thermal Power plants in the State where certain type of the works done through contract labour only by contractors and the present Thermal Power plant is only one of them. Any decision in the present appeal will have, therefore, according to the Board serious repercussions in the other plants. It is contended that this might also result in total break down of the functioning of the Board which would not be in the interest of the workers as a class. To say the least, the argument is one in terrorem and has only to be stated to be rejected. The Board has to manage its affairs according to the provisions of law. The Courts cannot grant it exemption from the law on the ground that it will not be in a position to run its affairs.

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

Explanation:
0[ds]15. It is no doubt true that neither S.10 of the Act nor any other provision thereof provides for determination of the status of the workmen of the erstwhile contractor once the appropriate Government abolishes the contract labour. In fact, on the abolition of the contract, the workmen are in a worse condition since they can neither be employed by the contractor nor is there any obligation cast on the principal employer to engage them in his establishment. We find that this is a vital lacuna in the Act. Although the Act has been placed on the statute book with all benevolent intentions, and elaborate provisions are made to prevent the abuse of the contract labour system as is evident from the Statement of objects and Reasons and the provisions of the Act referred to by us in detail earlier, the legislature has not provided any relief for the concerned workmen after the contract is abolished. One reason for the same pointed out to us was that the workmen engaged by the contractor may not be qualified to be engaged by the principal employer according to the latters rules of recruitment. In this respect, we envisage two different situations, first where a similar type of work is being carried out by the direct employees of the principal employer and, second where the contract labour is engaged to execute work which is not being carried out by any section of the direct employees of the principal employer. As regards the first situation, the condition No. (5) of the licence to be granted to the contractor in Form VI under R.25(1) of the Rules requires that wage rates, holidays, hours of work and other conditions of service of the contract workmen shall be the same as applicable to the workmen directly employed by the principal employer for performing the same or similar type of work. In other cases, the wage rates, holidays, hours of work and other conditions of service of the workmen of the contractor, as per condition (6) of the said Form, shall be such as may be specified by the Chief Labour Commissioner (Central). When the legislature has been careful enough to take such precautions, we are unable to appreciate as to why it could not have provided also for the absorption of the workmen who have been doing the work in question. It is possible that the contractor has been transferring his workmen from one job to another and the same workmen may not be working for the time in the same establishment or the process. But as pointed out earlier, the application for registration under R.17(1), the certificate of registration under R.18(1), the register of establishment under R.18(3), the application for licence under R.21(2) and the licence granted under R.25(1) all require the particulars of contract labour to be furnished in the prescribed form. Hence it should not be difficult to verify the workmen who were actually working in the establishment in question for a given period of time and the period for which they had worked since the record of payment of wages made to them would be available as it is to be made in presence of representative of the principal employer who is also responsible to make the payment of the whole of the wages or the balance of it in case the contractor makes default. For ensuring the payment to the workmen, the muster roll has necessarily to be maintained. If they have in fact worked for a reasonably long time satisfactorily and have thus gained experience, it should not be difficult to identify and absorb them. In fact, they will any time be better than fresh recruits and their engagement would be beneficial to the establishment concerned. On account of the abolition of the contract labour, the establishment will in any case require replacement of the contract labour. It may be that the establishment may not require the whole complement of the workmen erstwhile employed by the contractor. But that also may not always be correct since the contractor would more probably than not have employed less work force than may be necessary in order to keep his margin of profit as wide as possible. Whatever the case, the logic in not employing the workmen of the erstwhile contractor or those of them who may be necessary, in the principal establishment after the contract is abolished, does not appear to be sound.The legislature probably did not consider it advisable to make a provision for automatic absorption of the erstwhile contract labour in the principal establishment on the abolition of the contract labour, fearing that such provision would amount to forcing the contract labour on the principal employer and making a contract between them. The industrial adjudicator however is not inhibited by such considerations. He has the jurisdiction to change the contractual relationship and also make new contracts between the employer and the employees under the ID Act. It is for this reason that in all cases where the contract labour is abolished, the industrial adjudicator, depending upon the facts of the case will have the authority to direct the principal employer to absorb such of the workmen of the erstwhile contractor and on such terms as he may determine on the basis of the relevant material before him. Hence the legislature could have provided in the Act itself for a reference of the dispute with regard to the absorption of the workmen of the erstwhile contractor to the industrial adjudicator after the appropriate Government has abolished the contract labour. That would also have obviated the need to sponsor the dispute by the direct workmen of the principal employer. That can still be done by a suitable amendment of thehave therefore to see whether the respondents who have raised this dispute have a direct interest in the subject matter of the dispute or a substantial interest therein in the sense that the class to which the respondents belong is substantially affected thereby and whether there is community of interest between the respondents and those whose cause they have espoused. 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 kind. The learned Solicitor General particularly emphasised that there was no question of the interest of the respondents being prejudicially affected by the employment or non employment or the terms of service or conditions of labour of the workmen of Ramji Gordhan and Company and placed reliance on the words "may prejudicially affect their interest" appearing in the observations quoted above. We may, however, mention that the test laid down is that the workmen espousing the cause should have a 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". Besides it is contended by Mr. Gokhale for the respondents that even if prejudicially affect on the interest of workmen espousing the cause is necessary, this is a case where the respondents interest may be prejudicially affected in future in case the contract system of work is allowed to prevail in this branch of the work of the company. He submits that if the company can carry on this part of work by contract system it may introduce the same system in other branches of its work which are now being done by its regular workmen. 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 (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 (AIR 1958 SC 353 ), are present in this case and the dispute between the parties is an industrial dispute and the reference was competent.Our conclusions and answers to the questions raised are, therefore, asIn view of the provisions of S.10 of the Act, it is only the appropriate Government which has the authority to abolish genuine labour contract in accordance with the provisions of the said Section. No Court including the industrial adjudicator had jurisdiction to do so.(iii) if the contract is sham or not genuine, the workmen of the so called contractor can raise an industrial dispute for declaring that they were always the employees of the principal employer and for claiming the appropriate service conditions. When such dispute is raised, it is not a dispute for abolition of the labour contract and hence the provisions of S.10 of the Act will not bar either the raising or the adjudication of the dispute. When such dispute is raised, the industrial adjudicator has to decide whether the contract is sham or genuine. It is only if the adjudicator comes to the conclusion that the contract is sham, that he will have jurisdiction to adjudicate the dispute. If, however, he comes to the conclusion that the contract is genuine, he may refer the workmen to the appropriate Government for abolition of the contract labour under S.10 of the Act and keep the dispute pending. However, he can do so if the dispute is espoused by the direct workmen of the principal employer. If the workmen of the principal employer have not espoused the dispute, the adjudicator, after coming to the conclusion that the contract is genuine, has to reject the reference, the dispute being not an industrial dispute within the meaning of S.2(k) of the ID Act. He will not be competent to give any relief to the workmen of the erstwhile contractor even if the labour contract is abolished by the appropriate Government under S.10 of the Act.(iii) If the labour contract is genuine a composite industrial dispute can still be raised for abolition of the contract labour and their absorption. However, the dispute, will have to be raised invariably by the direct employees of the principal employer. The industrial adjudicator, after receipt of the reference of such dispute will have first to direct the workmen to approach the appropriate Government for abolition of the contract labour under S.10 of the Act and keep the reference pending. If pursuant to such reference, the contract labour is abolished by the appropriate Government, the industrial adjudicator will have to give opportunity to the parties to place the necessary material before him to decide whether the workmen of the erstwhile contract should be directed to be absorbed by the principal employer, how many of them and on what terms. If, however, the contract labour is not abolished, the industrial adjudicator has to reject the reference.(iv) Even after the contract labour system is abolished, the direct employees of the principal employer can raise an industrial dispute for absorption of the excontractors workmen and the adjudicator on the material placed before him can decide as to who and how many of the workmen should be absorbed and on what terms.It was next contended that the dispute raised by the workmen was for abolition of the contract and such a dispute could not have been entertained by the Tribunal in view of the provisions of the S.10 of the Act. For this purpose, the learned counsel relied upon Clause (i) of the order of Reference. We find nothing in the said clause which supports the contention of the learnedthe first instance, we find that the contention that the Tribunal has held that the workmen in question are the employees of the Board only because of the non production of the valid proof of the certificate and the licences in question, is not correct. The Tribunal has, on the basis of the evidence on record, come to the conclusions, among others, that (i) the work was being done on the premises of the Board itself as the coal was being used for the purposes of the Board, viz., generation of electricity;(ii) the workmen were broadly under the control of the Board; (iii) there was overall supervision of the work by the officers of the Board; (iv) the work was of a continuous nature and ; (v) the work was an integral part of the overall work to be executed for the purposes of the generation of the electricity and that it had to be performed within specified time limits as part of the integrated process. The Tribunal has also in this connection referred to a decision of this Court reported in Hussainbhai, Calicut case, (1978 (4) SCC 257 : AIR 1978 SC 1410 ), to support its conclusion that in the aforesaid circumstances found by it, the workmen in question were the employees of the Board. It is true that the Tribunal has not in so many words recorded a finding that the contract was sham or bogus or a camouflage to conceal the real facts. It is also true that the Tribunal has referred to the decisions of the Madras and Karnataka High Courts and on its finding that the Board and the contractors had not produced valid proof of the registration certificate and the licences for the relevant period has held that the workmen should be deemed to be the employees of the Board. However, the decision of the Tribunal has to be read as a whole. Thus read, the decisions makes it clear that the Tribunal has based its conclusion both on the ground that the workmen were in fact engaged by the appellant - Board and not by the contractors who were merely intermediaries set up by the Board and also on the ground that there was no valid proof of the registration certificate and the licences in the possession of the Board and the contractors respectively. It is not, therefore, correct to say that the decision of the Tribunal is based only on the later ground. We are of the view that there is a factual finding recorded by the Tribunal that the labour contracts in question were not genuine and the decisions of the Tribunal is based on this ground as well.The next contention of the learned counsel that the reference with regard to the abolition of the contract labour was not maintainable after the coming into force of the Act has been sufficiently answered by us earlier while discussing and recorded our conclusions on the position of law in that behalf. Even on facts we have pointed out that the present reference was not for the abolition of contract labour but for a declaration that the workmen were in law the employees of the appellant - Board. The industrial adjudicator has undoubtedly no jurisdiction to abolish a genuine labour contract in view of the provisions of S.10 of the Act. However, it is not correct to say that the reference for the abolition of the contract, itself stands barred. It is the terms of the reference which will determine the jurisdiction of the industrial adjudicator to entertain and decide the reference. The dispute as to whether the labour contract is genuine or not can be agitated by the workmen and the industrial adjudicator has jurisdiction to examine the controversy. If the contract is held to be genuine, the dispute if it is espoused by direct workmen of the principal employer can be kept pending by the industrial adjudicator and the workmen may be referred by him to the appropriate Government for the abolition of the contract. If the appropriate Government abolishes the contract, the industrial adjudicator can thereafter grant further relief, if claimed, viz., of the absorption of the workmen of the erstwhile contractor in the principal establishment. If, however, the appropriate Government does not abolish the contract, the industrial adjudicator may reject the reference, as stated earlier. It is not therefore, correct to say that the reference of an industrial dispute seeking to abolish the contract is per se barred, as contended by the learnedis also not correct to say that the Act is a complete Code by itself and, therefore, the Industrial Tribunal has no jurisdiction to give a direction to the principal employer to absorb the workmen in question. We have already pointed out that the Act is silent on the question of the status of the workmen of the erstwhile contractor once the contract is abolished by the appropriate Government. Hence as far as the question of determination of the status of the workmen is concerned, it remains open for decisions by the industrial adjudicator. There is nothing in the Act which can be construed to have deprived the industrial adjudicator of the jurisdiction to determine the same. So long as, therefore, the said jurisdiction has not been taken away from the industrial adjudicator by any express provision of the Act or of any other statute, it will have to be held that jurisdiction which, as pointed out above, has been recognised even by the decisions in Dimakuchi (AIR 1958 SC 353 ) and Standard Vacuum (AIR 1960 SC 948 ) cases (supra) continues to exist. In the exercise of the said jurisdiction, the industrial adjudicator can certainly make a contract between the workmen of the excontractor and the principal employer and direct the principal employer to absorb such of them and on such terms as the adjudicator may determine in the facts of each case. We find nothing in the decisions relied upon on behalf of the appellant which goes counter to this proposition of law. The decisions in Indian General Navigation and Railway Company Ltd. (1966 (1) Lab LJ 735); Krishna Kurup (AIR 1987 SC 163 ) and Gurmail Singh (1991 (1) SCC 189 ) (supra), on which reliance is placed on behalf of the appellant for the purpose, have already been discussed by us above. The only additional decisions which is pressed into service in this behalf is Sanghi Jeevaraj Ghewar Chand v. Secretary, Madras Chillies, Grains Kirana Merchants Workers Union, (1969 (1) SCR 366 : AIR 1969 SC 530 ). By a common decision in this case, two appeals were decided by this Court. In one appeal, the establishment employed less than 20 employees and it was not a factory; in the other appeal, the establishment was in the public sector. By reasons of exclusion under S.1(3) of the Payment of Bonus Act, 1965, the establishment in the first appeal was excluded from the application of that Act whereas by reason of exemption under S.32(x), the establishment in the other appeal stood exempted from the operation of the said Act. On these facts, the question was whether the employees of the two establishments could claim bonus dehors the Payment of Bonus Act and the Court held, considering the history of the legislation, the background and the circumstances in which the Bonus Act was enacted, and the object of the Act and its scheme, that the Act was an exhaustive Act, dealing comprehensively with the subject matter of bonus in all its aspects, and the Parliament had not left it open to those to whom the Act did not apply, the reason of its provisions either as to exclusion or exemption, to raise a dispute with regard to bonus through industrial adjudication under the ID Act or other corresponding law. The ID Act itself did not provide for a statutory right for payment of bonus although it had provided substantial rights for workmen with regard to lay off, retrenchment compensation etc. It will thus be clear that the right to bonus which was spelt out by the judicial decisions was expressly denied by the Bonus Act to the workmen in the establishment concerned in that case, and yet the workmen claimed the bonus on the basis of the alleged provisions of the ID Act. In the present case, there is nothing in the Act as pointed out earlier, which has either expressly or impliedly taken away the raising of an industrial dispute to absorb the excontractors workmen in the principal establishment when the dispute has been espoused by the direct workmen or the jurisdiction of the Tribunal to give a direction for the purpose, of course, on such terms as it deems fit in the circumstances of each case.For all these reasons, we are unable to accept the contention that the industrial adjudicator cannot direct the principal employer to engage excontractors workmen as direct employees.24. It was then contended that the bulk of the contract labour was engaged by the contractors in the process of unloading coal, and since the year 1989 the process of unloading coal had been fully mechanised at the Ukai Thermal Power with which we are concerned and as such, no labour was required in the process of the unloading of coal. For this purpose, reliance was placed on the contents of the additional affidavit filed by the Board during the hearing of the present appeal. We are concerned in the present appeal with the award of the Tribunal dated 22nd February, 1988. If a situation has, thereafter, arisen where the workmen directed to be employed by the award have become surplus, it is open for the appellant - Board to retrench them in accordance with the provisions of law. However, the situation in 1989 cannot be pressed into service to negative the award of 1988 by which the dispute raised in 1982 was adjudicated.25. The last argument was that the appellant - Board has several other thermal Power plants in the State where certain type of the works done through contract labour only by contractors and the present Thermal Power plant is only one of them. Any decision in the present appeal will have, therefore, according to the Board serious repercussions in the other plants. It is contended that this might also result in total break down of the functioning of the Board which would not be in the interest of the workers as a class. To say the least, the argument is one in terrorem and has only to be stated to be rejected. The Board has to manage its affairs according to the provisions of law. The Courts cannot grant it exemption from the law on the ground that it will not be in a position to run its affairs.