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

The appellant is the Standard Vacuum Refining Company of India Limited (hereinafter called the company). A dispute was raised by the workmen of the company (hereinafter called the respondents) with respect to contract labour employed by the company for cleaning maintenance of the refinery; (plant and premises) belonging to the company. The system in force in the company is that this work is given to contractors for a period of one year from October 1, to. At the time when the reference was made the contract was with Ramji Gordhan and Company for the period from October 1, 1957 to September 30, 1958. On April 27, 1957, the respondents made a demand for abolition of the contract system that prevailed in the company and for absorbing the workmen employed through the contractors into the regular service of the company with retrospective effect from the date of their employment in the company through the contractors. The case of the respondents was that the contractor used to change sometimes from year to year with the result that the workmen employed by the previous contractor were thrown out of employment. As an instance, it as said that previous to October 1, 1957, the contract was with Gowri Construction Company. That company employed 67 workmen to do the work. But when the contract was given to Ramji Gordhan and Company, all these 67 workmen were thrown out of employment, though 40 of them were subsequently re-employed as fresh employees by Ramji Gordhan and Company. The result of the system therefore was that there was no security of service to the workmen who were in effect doing the work of the company. Besides the contractors were paying much less to the workmen than the amount paid by the company to its unskilled regular workmen. Further the workmen of the contractors were not entitled to other benefits and amenities such as provident fund gratuity, bonus, privilege leave, medical facilities and subsidized food and housing to which the regular workmen of the company were entitled. The work was of a permanent nature, but the contract system was introduced to deny the workmen the rights and benefits which the company gave to its own workmen2. The dispute was taken to the conciliation officer. When conciliation failed, the Government of Bombay made the following reference on May 13, 1958:"The contract system for cleaning the premises and plant should be abolished and workers working in the refinery through the Ramji Gordhan and Company should be treated as workers of the Standard -Vacuum Refining Company of India Limited, Bombay and wage-scales, conditions of service, etc., that are applicable to the workers of the refinery be made applicable to them. Past service of these workers should be counted and they should be treated as continuously in the service of the STANVAC refinery from the date of their entertainment."3. The company resisted the claim and raised two main contentions. In the first place it was contended that the reference under S. 10 of the Industrial Disputes Act, No. 14 of 1947, (hereinafter called the Act) was incompetent. In the second place it was contended that the work done by the contractors workmen was not germane to the manufacturing process and was therefore entrusted to the contractor. If the workmen of the contractor were not satisfied with the conditions of service they could take up the matter with the contractor and the company had nothing to do with it. As to the difference between the wages and benefits and amenities of the regular workmen, it was said that the work of the two sets of workmen was very different and that in any case this was a matter between the contractor and its workmen. The contractor was an independent employer and it was incorrect to say that the real employer was the company. It was for the company to decide what was the best method of carrying on its business and the industrial tribunal should not interfere with that function of the management4. The tribunal held that the reference was competent. On the merits it was of opinion that the work which was being done through the contractor was necessary for the company and had to be done daily, though it was not a part of the manufacturing process. It further held that doing of this work through annual contracts resulted in the deprivation of security of service and other benefits privileges, leave etc., for the workmen of the contractor. Therefore considering the nature of the case it was of opinion that this was a proper case where a direction should be given to the company to abolished the contract system with respect to this work. In the result the company was directed with effect from November 1, 1958, to discontinue the practice of getting this work done through contractors and to have it done through workmen engaged by itself. The other part of the demand, namely, that all the workmen of the contractor should be taken over by the company and their past services should be counted and that they should be given the same wage-scale and conditions of service etc. which were applicable to the regular workmen of the company was rejected. The company was further directed to engage regular workmen for this work and in so doing it was to given preference to the workmen employed by Ramji Gordhan and Company. Wage-scale and other benefits to be given to these workmen were left to the company to be determined by it.

Court's reasoning:
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.