Case: Sociedade de Fomento Industrial (P) Ltd Vs. Mormugao Dock Labour Board

9. Petitioner No. 1 is a company registered under the Companies Act, 1956 and is engaged in mining and export of mineral ores particularly iron ore. Petitioner No. 2 is a shareholder and the Managing Director of Petitioner No. 1. Petitioner No. 3 is a partnership firm carrying on the business of stevedoring in Mormugao Harbour and are engaged by petitioner No. 1 to handle the loading operations of petitioner No. 1 at Mormugao Port. Feeling aggrieved by the circulars dated March 19, 1983 increasing the general levy as well as welfare levy and imposing the special levy the petitioners filed the writ petition giving rise to these appeals. In the said writ petition they assailed the validity of the impugned circulars mainly on the ground that the said circulars were violative of the right to equality guaranteed under Article 14 of the Constitution inasmuch as much higher levy has been imposed in respect of loading of ore done through ocean going vessels fitted with grab cranes as compared to loading of ore through transhipper fitted with grab cranes. It was submitted that although grab cranes were used for loading by both the modes the petitioners were saddled with the levy in respect of notional wages for gang workers although the services of the gang workers were not being required for the loading operation through grab cranes and that while wages of gang worker are not taken into account in the matter of fixing the levy in respect of loading through transhipper, the notional wages of the gang workers have been taken into account while imposing the levy in respect of loading done through ocean goingvessels fitted with grab cranes.The other ground that was urged was that the increase in the levy has been made applicable with retrospective effect on the basis that the approval of the Central Government was obtainedfacto and that such retrospective increase in the levy was not permissible under the Scheme. 10. On behalf of the Board it was pointed out that the owners of the transhipper stand on a different footing from the petitioners inasmuch as the transhippers are not required to utilise the services of the Board by requisitioning the supply of dock workers under the agreements arrived at between the transhippers and the Board and that still they pay levy for handling of ore and that the amount of such levy was originally fixed at 7 paise in 1977 which was increased to 21 paise in September, 1980 and that now a formula has been evolved with consent whereunder the amount of levy payable bycomes to about 35 paise per tonne. In this regard it was also submitted that the owners of transhippers are required to invest huge capital cost and the same are manned by a staff crew as required under the Merchant Shipping Act and that the transhippers are made to operate on special conditions imposed on them by the Government of India and that transhippers are required to have their own set of workers for operating their cranes and other equipment with the result that they have to maintain two sets of crew and further the transhipper owners do not draw labour from the Board, not even winch drivers. In the reply to the writ petition filed on behalf of the Board it was stated that the Board has been suffering budgetary deficits sinceIt was pointed out that one of the factors for the continuous drain on the finances of the Board has been the increasedof iron ore byvessels fitted with grab cranes.According to the Board inonly two small vessels fitted with grab cranes called at Mormugao Port. Inthe number of such vessels was three while init was five, but inthe said number was 11 and some of them were large vessels and this has resulted in loss of opportunity of employment for the registered dock workers. It was submitted that since the Board has to pay amount of minimum guaranteed wages and other amounts under the Scheme to workers irrespective of work being available or not, the financial burden on the board has increased. It was pointed out that efforts have been made since 1979 to reduce the strength of registered dock workers on the roll of the Board by introducing voluntary retirement scheme and other schemes and it has been brought down from 2314 to 1148 (consisting of 864 gang workers and 284 winchmen) and that the impugned increase in levy was justified and is not unreasonable, arbitrary or discriminatory. 11. The High Court has rejected the contention urged on behalf of the petitioners that the impugned circulars are violative of Article 14 of the Constitution. The High Court has pointed out that in vessels fitted with grab cranes the services of the reserve pool winch drivers are required during the loading operation only whereas the owners of the transhippers use winch drivers employed by them throughout the year as monthly workers and the liabilities of the Board towards the latter workers are much lower than theliabilities towards the former and that apart from the liability for the payment of the dues to the reserve pool workers the Board has also to incur expenses in order to keep in readiness an adequate number of reserve pool workers to satisfy the needs of the registered employers as and when required, even though the services of the reserve pool workers may be required for only two or three days at a time and therefore, it could not be said that grab crane fitted vessels and transhippers are equals. According to the High Court though both use mechanised method for loading of cargo on thevessels the dissimilarities resulting from different systems of engaging dock workers are so marked, significant and of such import that make them unequal and a classification distinguishing them one from another was reasonable and justified. In this context, the High Court has also mentioned that a registered employer engaging monthly worker like the transhipper has to pay all the dues such as salary, provident fund, gratuity, etc. whereas in the case of reserve pool worker the burden to pay all the dues including disappointment money and the attendance allowance is borne by the Board and that these two factors have a direct impact on the cost of operating the scheme and the liability of the Board. The High Court has also rejected the contention that the levy which involves imposition in respect of notional employment of gang workers is unreasonable and arbitrary since no gang worker is employed for handling cargo in the grab crane fitted vessels. The High Court has pointed out that use of grab crane method gave cause to unemployment of gang workers in an increasing proportion and that while under the conventional method the maximum output of a unit of four winch drivers and ten gang workers is 300 tonnes of cargo per hook per shift, the cargo handled by grab crane fitted vessels is on an average 2520 tonnes per grab crane per shift and that this gives cause to a higher rate of unemployment of dock workers (both winch drivers and gang workers) from the reserve pool with the consequent increase in the liabilities of the Board if the grab crane method of handling cargo is used. The High Court has observed that the responsibility for such unemployment was impliedly admitted by some users of the grab crane method of cargo handling inasmuch in the agreement that was entered into on October 17, 1970 it was agreed that whenever gangs are not booked for work the employer shall pay double the levy to the Board chargeable for one gang for each working grab crane which implies that the principle of charging levy on notional employment of gang workers was found to be reasonable and fair by the trade, labour and the Board. While upholding the validity of the impugned circulars the High Court has, however, held that the said increased levy could not be realised with retrospective effect and can only operate prospectively. In this context, the High Court has pointed out that in view of Clause 54(3) of the Scheme prior approval of the Central Government was required before the Board could sanction any levy exceeding 100% of the estimated total wage bill calculated on the basis of daily wage rate and that the increase in the levy under the impugned circular exceeded 100% of the estimated total wage bill and therefore, the levy could only be imposed after obtaining the approval of the Central Government. According to the High Court Clause 54(3) of the Scheme denotes that the Board cannot fix the levy retrospectively and since the approval of the Central Government is a condition precedent to the levy and without it no levy could be imposed the resolution passed by the Board on October 30, 1982 has no value since it has to be preceded by the approval of the Central Government. The High Court has, therefore, held that the impugned circular regarding enhancement of the general levy and welfare levy could not have retrospective effect from October 30, 1982 and it could take effect only from March 19, 1983. Similarly as regards the special levy the High Court has observed that the said levy could only take effect from July 14, 1983 the date of the resolution clarifying the matter and not from March 14, 1983 as communicated by the impugned circular. 12. Both sides have filed appeals against the judgment of the High Court. C.A. No. 258/85 has been filed by the petitioners while C.A. No. 541/85 has been filed by the Board.

Court's reasoning:
6. Insofar as the owners of transhippers are concerned since they were employing their own winchmen they claimed that they were not required to register themselves under the Scheme and they were not liable to pay any levy under the scheme on the ground that the cargo handled by them was outside the Scheme. A writ petition (W.P.No. 47 of 1971) was filed by M/s. ChowguleCo. Pvt. Ltd., owners of a transhipper vessel, in the Court of Judicial Commissioner of Goa wherein it was contended that the owners of the transhipper were not doing dock work within the meaning of the Scheme and they were entitled to employ their own labour and they were not required to pay any levies for the cost of administering the Scheme. The said writ petition was disposed of by the Judicial Commissioner by his judgment dated August 19, 1974 whereby the contention that the owners of the transhipper were outside the Scheme and did not perform dock work was rejected and it was held that they were liable to pay levy for the winchmen. It was, however, held that the owners of the transhipper were not liable to pay notional levy on the basis of gangmen who were not actually utilised by the said owners. The Board as well as the owners of the transhipper filed appeals against the said judgment of the Judicial Commissioner in this Court and the said appeals were disposed of in terms of an agreement dated July 8, 1977 whereby it was agreed that the owners of the transhipper shall register themselves as employers within the meaning of the Scheme with liberty to employ their own workmen on their transhipper who would be treated as monthly workers under the Scheme and that the owners of the transhipper would pay a flat rate levy of 7 paise per tonne of cargo handled through the transhipper which rate of levy would not be changed except by mutual consent of the parties. It appears that similar agreements were entered into with other owners of transhipper vessels in 1977. The rate of levy was revised from 7 paise per tonne to 21 paise per tonne and in April 1983 a formula was agreed upon for future revision of the same. The said levy is composite and allthe same time the Board decided to increase the percentage of general levy in respect of handling by grab crane fitted ships from 200% to 400% and the welfare levy from 30% to 60%. The Central Government gave its approval to the said increase by its order dated March 11,1983. Thereafter the Board issued the impugned circular dated March 19, 1983 increasing the general levy from 200% to 400% and the welfare levy from 30% to 60%. Similarly the Board decided to impose a special levy @ Re. 1/per tonne in respect of all cargo handled manually by the registered dock workers. The said proposal was approved by the Central Government by letter dated March 14, 1983 and thereupon the impugned circular dated March, 19, 1983 was issued by the Board imposing the special levy @ Re. 1/per tonne in respect of all cargos manually handled by the registered dock workers with effect from March 14, 1983. The said circular was clarified by the Board by resolution dated July 14, 1983 that the special levy is authorised to be collected in respect of all cargos handled with the help of registered dock workers whether gang workers or winch drivers. The said clarification was also approved by the Central Government by its letter dated December 21, 1983.As regards the first contention urged by the learned counsel for the petitioners based on clause 54 of the Scheme it is necessary to bear in mind that the object of the Scheme as set out in clause 2(1) is to ensure greater regularity of employment for dock workers and to secure that an adequate number of dock workers is available for the efficient performance of dock work. The Scheme seeks to achieve these twin objects by maintaining a reserve pool of registered dock workers who are available for work and a worker in the reserve pool is guaranteed minimum wages in a month under clause 32 as well as attendance allowance under clause 33 and disappointment money under clause 35. Clause 54(1) empowers the Board to recover from registered employers the cost of operating the Scheme. Since the Scheme applies to gang workers the cost of operating the Scheme includes that payments made to gang workers under the various clauses of the Scheme. Normally a gang consists of four winchmen and 10 gang workers to operate a crane per shift. For operating the grab crane only winchmen are required and gang workers are not required. But insofar as the Board is concerned it has to keep gang workers on its rolls and to pay their minimum wages and other allowances payable under the Scheme to the gang workers in the reserve pool. Since the wages and allowances payable to the workmen under the Scheme form part of the cost of operating the Scheme it would be permissible for the Board to recover the said cost by way of levy by treating the gang workers as notionally employed in the matter of loading the ore by thevessel fitted with grab crane. There is nothing in clause 54 which prohibits the Board from recovering such cost of operating the Scheme in this manner.Coming to the other contention based on Article 14 of the Constitution we are in agreement with the view of the High Court thatfitted vessels cannot be equated with transhippers fitted with grab cranes for the purpose of levy and that there are features which indicate that they cannot be treated at par. In this context, it has to be noted that transhippers employ regular winchmen to operate the grab cranes fitted on the transhippers as their monthly workers are responsible for paying all their dues such as salary, provident fund, and gratuityregard to all these circumstances we are unable to accept the contention urged on behalf of the petitioners that since transhipper as well as thevessels fitted with grab cranes both use grab cranes for the purpose of loading the ore they should be treated alike in the matter of imposition of levies by theenhancing the general levy and welfare levy under the impugned circular dated March 19, 1983 the Board, keeping in view the economics of the cost of loading under the various modes, has sought to balance its financial deficit caused on account of increasedof ore throughvessels fitted with grab cranes by enhancing the levies which has led to increase in the cost of loading throughvessels fitted with grab cranes.In doing so the Board cannot be said to have acted arbitrarily or unreasonably or having subjected the petitioners to hostile or invidiousHigh Court has held that the circular dated March 19, 1983 regarding increase in the general levy and welfare levy from 200% to 400% and 30% to 60% respectively could only operate from the date of such circular and could not be made operative with effect from October 30, 1982, the date of passing of the resolution, for the reason that prior approval of the Central Government was required in view of clause 54(3) of the Scheme and the proposal made by the Board in its resolution dated October 30, 1982 was approved by the Central Government only on March 14, 1983. We do not find any infirmity in this approach of the High Court. Similarly as regards circular dated March 19, 1983 for imposition of special levy the High Court has rightly held that the said circular could not have retrospective effect.