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

. 5497/95, S. L. P. (C) No. 2613 of1991The appellant - board runs a Thermal Power Station at Ukai in Gujarat where it generates and distributes electricity to the consumers. At the relevant time besides the direct workmen, the Board deployed through various contractors 1500 skilled and unskilled manual laboureres to carry on the work of loading and unloading of coal and for feeding the same in the hoppers and for doing the cleaning and other allied activities in its power station. It appears that these workmen hailed from the adivasi area and many of them had lost their land on account of the construction of the Thermal Power Project of the Board with the result that the employment in the power station was the only means of livelihood left for them. The contractors, according to the respondent - Union, exploited these workmen by flouting labour laws. Ultimately, the workmen organised themselves into a trade union. But on that count they were victimised and on 16th November, 1981, the services of a thousand of these workmen were abruptly terminated. The Union, therefore, filed a writ petition in the High Court praying for direction to reinstate the workmen and for implementing and enforcing the Factories Act, the Employees Provident Fund Act, the Payment of Wages Act and other labour enactments. The High Court by its order of 16th December, 1981 appointed one Shri Israni as a Court Commissioner to make detailed enquiries regarding the allegations made in the writ partition and also to try to remove the dispute between the parties. The Commissioner held talks with the concerned parties and also associated the officers of the Labour Department of the Government with the said talks. It was agreed by and between the parties, viz., the Board and the contractors on the one hand and the workmen on the other, that all the workmen whose names and numbers were mutually agreed to, be allowed to enter the power station for work from 4th January, 1982 and that a settlement under S.2(p) of the Industrial Disputes Act, 1947 (for short the ID Act) be duly executed in that behalf. It was further agreed that the remaining disputes between the parties, viz., those relating to the revision of wages of the workmen, their rights and privileges arising out of the Factories Act, Employees Provident Fund Act, Maternity Benefits Act and the Workmens Compensation Act as well as the disputes with regard to the workmens contention that they were the employees of the Board, be referred for adjudication by a joint reference under S.10 (2) of the ID Act. Accordingly, a joint application was made to the Assistant Commissioner of Labour under S.10 (2) of the ID Act requesting him that the disputes mentioned therein be referred for adjudication to the Industrial Tribunal and consequently the reference from which the present proceedings arise was made. The terms of the reference were as followsWhether the workers whose services are engaged by the contractors, but who are working in the Thermal Power Station of Gujarat Electricity Board at Ukai, can legally claim to be the employees of the G.E.B.? (2) If yes, whether such employees can claim the following rights which the other employees of Gujarat Electricity Board are already enjoying? (a) weekly off, (b) sick leave (c) C. L., (d) Earned or Privilege Leave, (e) Maternity Leave and other benefits to female employees, (f) Gratuity, (g) Provident Fund, (h) Bonus and (i) Wage scales, etc., (3) If they are not held to be the employees of Gujarat Electricity Board, what are their rights in respect of the matters mentioned in (2) above, against their respective employers? (4) Whether such employees prove that during the years 1979, 1980 and 1981, they or any of them were made to work overtime. If yes, what would be due to them on that account and from whom? (5) Whether such employees are entitled to revision of their present wages? If yes, what should be their revised wages and from which date? (6) Whether the said employees prove that so far as their services are concerned, there have been breaches of any of the provisions of the Factories Act, Employees Provident Fund Act, Maternity Benefits and Workmens Compensation Acts. If yes, what relief can be legally given to them in that respect and from whichBefore the Tribunal, the Union filed the statement of claim as well as an application for interim relief. Both the Board and the contractors submitted their reply to the application for interim relief. The Tribunal gave its award being Award Part I dated 30th April, 1982 giving interim relief whereby the Board was directed to pay wages to the workmen at the rate of Rs. 9.40 per day from lst April, 1982 till the disposal of the main reference. Under the said Award, the Board was directed to give to the workmen leave with wages and weekly off in accordance with the provisions of the Factories Act, and maternity benefits as per the provisions of the Maternity Benefits Act.To the main reference, written statements were filed both by the Board and the contractors. The Board also filed application stating therein that in the meanwhile some of the contractors who were engaged and who were parties to the reference were no longer working with it and that new contractors were engaged in their place. The Tribunal joined the new contractors as parties to the dispute. Likewise, the Union also made an application for joining some of the contractors as parties and they were joined as parties to the reference. Some contractors filed applications for decision on the preliminary point raised in their written statement that since demand Nos. 1 and 2 in the reference amounted to a demand for abolition of contract labour system, the Tribunal had no jurisdiction to entertain the said demand and that the said point should be heard first. This application was rejected by the Tribunal.After recording evidence and hearing the parties, the Tribunal by its award came to the conclusion that quite a number of skilled and unskilled employees were employed in the Thermal Power Station for unloading of coal wagons, breaking of coal, feeding them in hoppers, stacking, cleaning earth work, fabrication jobs etc., that the labourers were the local adivasis and they were not given any leave or other facilities before 1982 except the wages which were very meagre, that workmen were doing all types of unskilled jobs which they were asked to do and that they were rotated in different jobs. Further, while the contractors had changed, the workmen continued to work and the workmen were working for periods ranging from 5 to 8 years. The contractors had not maintained any records and were not providing any facilities whatsoever. The contractors had no licence under the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as the Act) and that no relevant original certificate of registration or licence had been brought on record. The registration certificate and four licences produced by the Board were ignored by the Tribunal on the ground that they were only copies and nothing had been produced in support of their authenticity. The Tribunal also held that even otherwise, these documents were not relevant since the registration certificate produced pertained to the contractors who were not concerned in the present case while the licences produced were for a period subsequent to the date of the reference. The Tribunal relied on the decisions of the High Court of Madras and Karnataka, viz., Workmen of BEST and Crompton Industries Ltd. v. Management of BEST and crompton Engineering Ltd., Madras (1985 (1) Lab LJ 492), and Food Corporation of India Loading and Unloading Workers Union v. Food Corporation of India (1987 (1) Lab LJ 407), respectively and held that the workmen concerned in the reference could not be the workmen of the contractors. The Tribunal then proceeded to analyse the position of each of the seven contractors involved in the reference, and held, on the basis of the evidence concerning the said contractors and the workmen working under them, that the workmen of all the seven contractors should be deemed to be the workmen of the Board. The Tribunal also gave consequential direction for payment of arrears of wages to the workmen by adjusting the advances which were given to them by the interim directions of the tribunal. Against the said award of the Tribunal, the Board preferred a writ petition before the High Court.The High Court by its decision under challenge before us, held, among other things, that there was no demand for abolition of contract labour system as contended by the Board and hence the preliminary objection raised by the Board that the Tribunal had no jurisdiction to consider the question of the abolition of contract labour system in view of the provisions of the Act, had no merit in it. The High Court held that the Tribunal was called upon to decide as to whether the workers who were engaged for working in the Thermal Power Station were employees of the Board or of the contractors. Hence the Tribunal was required to examine the reality behind the facade after piercing the veil. The High Court also held, negativing the contention to the contrary, that the Tribunal had not based its finding on the sole ground that there were no valid licences for certain periods for certain contractors issued under the provisions of the Act. The Tribunal had decided the question on overall consideration of the facts and circumstances and on the grounds apart from the absence of valid licences. One of the factors taken into consideration by the Tribunal was the continuous nature of work.

Reasoning:
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.