Case: The Paper Products Limited Vs. K.R. Powar

( 1 ) PETITIONER No. 1 in the above petition is the Paper Products Ltd. , a company incorporated under the Indian Companies Act having its registered office at Delhi, a branch office at Bombay and a factory at Roha in Kolaba District. Petitioner No. 2, Expert Services Bureau Private Ltd. , is a private limited company incorporated under the Indian Companies Act (hereinafter referred to as "bureau") engaged in providing amongst other things a security personnel to industrial units in India and particularly in the State of Maharashtra. The Bureau was established in 1961 and is a member of the World Secret Service Association and of the Association of British Detectives, london, and claims to be represented in all parts of the world. The Bureau undertakes contracts of watch and ward and security work in industrial undertakings. In the course of its business the bureau has undertaken contract of watch and ward and of security in respect of petitioner No. 1s factory at Roha. The Bureau claims to have similar contracts for various other units numbering about 42 all over the State of2 ) ON November 23, 1965, the Deputy Commissioner of Labour (Administration), Bombay, in exercise of his powers conferred by(2) of S. 10 as delegated under S. 39 of the Industrial disputes Act, 1947, referred a dispute between petitioner No. 1 and its workmen to the Industrial tribunal, Maharashtra at Bombay. The dispute arose out of two demands of the workers, viz. , (1)a demand for leave provision and paid holidays, the details of which are not relevant for this petition, and (2) a demand for abolishing the existing contract system regarding watchmen and to make all watchmen working at the Roha factory and its premises direct employees of petitioner no. 1 company from the dates on which the said watchmen were respectively appointed. It is undisputed that the watchmen engaged by petitioner No. 2 Bureau neither appeared in the proceedings before the Tribunal, nor did they support the demand made on behalf of the workmen of petitioner No. 1 company for the abolition of the said contract system. The Tribunal passed an award on June 16, 1966 granting reliefs in respect of the two demands of the workers. Regarding the second demand, the Tribunal directed the abolition of the contract system and absorption of all the workmen serving as watchmen as direct employees of petitioner No. 1 company. Feeling aggrieved by the reliefs granted in respect of the demands of the workers, the petitioners have moved this Court under Arts. 226 and 227 of the Constitution of India challenging the legality and correctness of the award in respect of the two reliefs. But at the hearing of the petition Mr. Singhavi, the learned counsel for the petitioners, stated that the petitioners were not challenging the reliefs granted by the Tribunal in respect of demand No. 1 in view of a settlement arrived at between petitioner No. 1 and the workmen on September 24, 1969. The relief granted by the Tribunal in respect of demand No. 2 is challenged by the petitioners on the ground that the Tribunal acted without jurisdiction and unjustly in directing the abolition of the contract system notwithstanding its finding that the contract system prevailing in the factory of petitioner No. 1 did not result in exploitation of labour.( 3 ) THE only question which, therefore, arises in this petition is as to whether the Tribunal which relied on the decision of the Supreme Court in Standard Vacuum Refg. Co. v. Their Workmen, [1960II L. L. J. 233], in directing the abolition of the contract system, correctly applied the principles laid down in the said decision and otherwise acted legally and justly in abolishing the said system. Petitioner No. 2 although not a party to the original dispute, has joined in the petition submitting that it is vitally concerned in the dispute between petitioner No. 1 and its workmen inasmuch as its entire business is likely to be affected by the impugned4 ) IN coming to the conclusion that the contract system should be abolished in view of the principles laid down by the Supreme Court in the aforesaid case, the Tribunal relied on certain assumptions and inferences based on the materials before it and also on certain general considerations. These assumptions and considerations may be summed up as followsThe Tribunal held that the work of the watchmen, viz. , of maintaining watch, was incidental to the running of the factory and this work was necessarily not of a temporary nature, nor intermittent, but a work that had to be maintained for all the 24 hours of the day and night and all round the year even when the factory was not working and hence the work was permanent and perennial. (2) The work had to be done in and near the premises of the factory under the vigilant supervisor and managerial staff of the employer company. (3) It was a matter of common knowledge that in most of the concerns in almost all the industries in the region, the watch is maintained by the direct employees and not under the contract system. (4) Although taking into consideration the salary paid to the watchmen under the contract system and the salary paid under settlement dated July 13, 1965 to a peon, who, according to the tribunal, was treated on an equal footing with a watchman, it appeared that there was no exploitation under the contract system, there was nothing to show that there was any special training given to these watchmen engaged by the Bureau which justified the contract system. (5) Having regard to the conditions of the Service imposed by the Bureau on its employees, and, in particular, that they shall not form or join any trade union, and also the condition that they should not mix up with the factory workers, it was clear that deliberately there was imbibed in the watchmen a sense of aloofness or separateness from the other workmen and this made the workmen think that the training imparted to the watchmen was the training in spying and hence lead to a distrust between the workers of petitioner No. 1 company and the management which was unhealthy and detrimental to the maintenance of industrial peace and harmony. For these reasons, the Tribunal came to the conclusion, relying on the principles laid down by the Supreme Court in the aforesaid case, that the contract system deserved to be abolished.( 5 ) IT must be noticed that after the petition filed by the petitioners was admitted, a civil application was filed, viz. , Civil Application No. 2257 of 1966, by which the petitioners prayed that they may be allowed to proceed against respondents Nos. 2 and 3, who are workers employed in the factory at Roha under O. I. r. 8 of the Civil Procedure Code as representing themselves and all other persons employed by petitioner No. 1 or deriving a benefit under the impugned order. That prayer was granted and it was further directed that the Chemical Mazdoor sabha, the trade union who appeared before the Tribunal, should be given notice of the petition. The Chemical Mazdoor Sabha has appeared on behalf of the workers through their counsel Mr. Sowani.

Court's reasoning:
( 13 ) THE statements made by Mr. Dantas are not disputed by the workers in this case or by the union for whom Mr. Sowani appears. A perusal of these conditions show that the Tribunal was quite right in holding that there was no exploitation of the workers employed as watchmen. Mr. Sowani concedes this position in so far as monetary exploitation is concerned; but he contends that contract labour so employed, though it participates in the production in the factory of petitioner No. 1, is denied its fair share in the profits of the company in which other workers through their union are vitally interested. He, therefore, submits that the finding of the Tribunal that there is no exploitation of labour by the system of contract labour in the present case is erroneous. This contention must be rejected having regard to the conditions of service mentioned in the aforesaid affidavit and not disputed by respondents Nos. 2 or 3 or the union. In our judgment, the exploitation suggested by Mr. Sowani not only does not exist but must be ignored as the watchmen themselves have not come forward to support the demand of the workers in the present15 ) MR. Sowani contended that in any event, the Tribunal was quite right in its conclusion that the system must be stuck down as it generates distrust between employees and employers because the watchmen were trained as spies and a material part of their work was to spy over trade unionactivities. This contention must be rejected because the Tribunals conclusion is not based on any evidence or material on the record. After referring to the grievance of the workmen, the Tribunal merely relied on a theory of industrial peace and harmony. As pointed out by the Supreme Court in the above case, theoretical grounds are relevant, but they must be considered along with the nature and conditions of the contract labour in a particular case before deciding whether the contract labour should be16 ) THERE is no material in the present case to show that the watchmen employed by the Bureau spied on the trade union activities. The finding of the Tribunal that "evidently a distrust is created among the workers" is also not based on any evidence or any other material. No such material are referred to either in the affidavit in reply filed by the General Secretary of the Union in this Court or in the course of his arguments by Mr. Sowani. The Tribunal had no jurisdiction to come to such a conclusion without any basis or material on the record. If there was any material to show that the watchmen had acted as spies on the trade union activities, the further question as to whether such spying should be prohibited would have arisen. In our judgment, however, it is not necessary for us to go into that question in the facts of the present case as there is nothing to show that the watchmen employed by the Bureau in the factory did any spying on the trade union activities in the factory. The trade union and the workers cannot possibly have any reason to distrust the watchmen merely because they act as spies to prevent thefts or pilfering or to maintain peace in the factory premises. It is possible that it is in the interest of the workers themselves that such watchmen should belong to an independent agency like the Bureau just as it would be in the interest of the employees doing accounts work that there should be an independent audit by auditors who are also not17 ) THE other circumstances mentioned by the Tribunal as circumstances justifying its conclusion to stop the contract labour of appointing watchmen do not by themselves support the said conclusion. That the work done by the watchmen is permanent or perennial and is done on the factory premises cannot by itself make the contract system an evil to be put an end to. We are, therefore, of the opinion that there is no legal or factual basis for the conclusion of the tribunal to grant demand No. 2 of the workers in the present case for abolition of the contract system under which the watchmen are appointed. Applying the principles laid down by the supreme Court in the above Standard Vacuum Refining Companys case and taking into consideration all that is urged by Mr. Sowani against the contract labour system and the nature and conditions of the work of watchmen employed at the factory of petitioner No. 1, we must unhesitatingly hold that the Tribunal was not justified in directing the abolition of the contract system.(19 ) MR. Sowani drew our attention to the Contract Labour (Regulation and Abolition) Bill, 1967 stating that it was passed by the Rajya Sabha and is pending before the Lok Sabha.We cannot rely on the bill for any purpose as it has not yet become law. We have to decide the present case on the basis of the law at present in force. As stated above, in our opinion, there is no principle of law which prohibits absolutely all contract systems in all cases. The Industrial Tribunal has to consider each case on its merits and decide whether the contract system deserves to be contained or prohibited. Even the statement of objects and reasons annexed to the bill referred to by Mr. Sowani does not show that the bill was intended to prohibit absolutely the system of contract labour. It isthat contract labour is frowned upon by labour commissions and labour enquiry committees whenever such contract labour results in exploitation ofstated above, the Tribunal has not applied all that is stated in the criteria on the basis of the material on record. Moreover, even the bill does not say that the moment the criteria are satisfied the contract labour system should be abolished. Even under the bill, an advisory board has to advise the State Government as to whether in the particular case, the contract labour system should be prohibited. If and when the act comes into force and the advisory board is of the view that such a contract system should be abolished, the matter may be different. At the moment, however, we have no doubt that there was no material before the Tribunal to show that the system of employing watchmen under the contract labour in the present case was an evil system which required to be stopped. In the absence of any such material, the Tribunal was not justified in prohibiting it.