\ l

B.H.E.L. WORKERS' ASSOCIATION

HARDWAR & ORS., ETC. ETC.

UNION OF INDIA & ORS., ETC. ETC.

January 18, 1985

[0. (HINNAPPA REDDY AND V. KHALID, JJ.)

Contract Labour (Regula/ion and Abolition) Act 1910. Section 10 anii D Contract Labour (Regular ion and Abolition) Centr<il Rules 1971, Rule 25.

Public.Sector Undcrtaking-'con, tract labour' engagement of by contractors -"Claim of'contract / ... hour' ofperfarmance of san1e work as workers 'directly en1ployed' by undertaking b1.f receiving lesser Wages- Whether court enti t!ed to issue declaration :1bolishing 'contract fabo.ur' systen1.

Constitution of India 1950, Article 32.

En1pluyment of conract labour' in public sector undertaking-Compe~ . tency of court to enquire into quesi h•n and issue declaration abolishing 'contract

labour' system.

The petitionerunion contended in the writ petitions to this Court that out of the 16,000. and odd workers working within the premises of therespondentundertaking as many as a thousand workers were treated as 'contract labour• and placedunder the control 'and at-the mercy of contractors and that though they did the same work as the workers directly employed by the undertaking, they were not paid the same wages not were their conditions of service the same. It was further alleged that the management pa)'> to •he contractors and in turn the contractrrs pay them their salary after deducting substantial commission, l.nd that the wages received by them bear no cornpatison with the wages paid to those direct, Jy employed by the undertaking:. In view of these circumstances it was alleged that the rights of these workers were infringed under Articles 14 and 19(1) (0 and a declaration was sought from the Court, that the system of contract. labour prevalent in the respondent-undertaking was illegal, that the 'contract labour' employees were direct employees of the respondent-undertaking and entitled to equal pay as the workmen directly employed,

SUPREME COURT REPORTS

'(1985} 2 S.C.

The respondent-undertaking opposed the writ petitions and contended that if the petitioners had any genuine grievance they could have availed themselves of the rights seced to them under the Contract Labour (Regulation and Abolition) Act, 1970 Minimum \Vages Act, 19-t&. Equal Remuneration Act 1976 etc .• for ventilation their grievances and seeking appropriate relief, instead of invoking Article 32. It was further contended • .that certain jobs .though required to be done within the plant area could be more cOnveniently and efficiently done on a job--contract basis by contr3ctors. and . this was _actually :due to the incorporation of new techriology for expansion of production programme with foreign co11aboration.

The jobs themselves were entrusted to contractors and it was not appropriate 10 say that the contractors merely supplied the labour, they were required to do the total job and payment was made on the basis of the quantum of wo"rk involved and not on the bsi~ of.the workesemployed by the. contractor.

Dismissing the writ petitions,

HELD: 1. The Co.ntract Labour (Regulation and Abolition) Act, 19i0 does not provide for the total abolition of contract Jabour, but only for its abolition in certain circumstances,. and for the: regulation of the employment of contract Jabour in certain establishments. The 'Act is not confined to private employers only_.., The definitions of 'establishment• section 2(e),. and 'principal employc.r' section 2(g)~ expressly include t1'e Government or any of its departments.

[616F, 617]

. 2. No invidious distinction can be made against contract Jabour. Contract Jabour is entitled to the same wages, holidays. hours of work. and conditions of service as are app1iCable to workmeO. 'directly employed by the principal employer or the establishment on the s3.ri:ie .or similar kind or work. They are entitled to recover their wages and their conditions of service in the same manner as workers employed by the principal employer under 1_ the appropriate. Industrial and Labour Laws. If there is any dispute with regard to the type of work. the dispute has to be decided by th' Chief Labour Commissioner (Central). [620A-C]

3. Parliament has ot abo1ished contract labour . but has pfOvided for its. abolition by the Central Government in appropriate cases under sec. 10 of the Contract Labour (Regulation and Abolition) Act. 1970. It is not for the court to F enquire into-the .question 1 and to decide whether :the employment. of contract labour .in any process; operation or other i work in any, establishment should be abolished or-not. This is amJ.tter fOr the decision of the Government after consi dedng the matters required to be considered undec sec. 10 of the Acto l620CD}.

•· 4: \Vhether the work dOne by.the Contract Labour is. the same or similar work a! that done by the workmen directly employed by the principal employer of any establishment is a matter to be decided by the, Chie(:Labour Commissioner G under the proviso to Rule: 25(ii) 1v) (a) .of the Contract Labour) (Regulation and Abo!i6on) Centra!Rules, 1971. [6400-E) -· ' ·, ·.,.

In the instant case, from the allegationsand counter-allegations made in the writ petition it is not possible in an application under Arti 32 to embark into an enquitf whether the thousand and odd workmen working in various czpacities ll. nd en~<\-ged in CQq1tiradoys:· activities do-· work-. identical. witb work done by

BHEL WORKERS~-ASSOCIATION J'.1 UNION 613'

the workmen directly employed by the BHEL and .whether for -that ieason~ they· '-t... should be treated not as contract labourbut as difect employees of the under- -

takings .. There are other forums created under, statutes designed for decid ng such question.

~ I I •

5. A direction would issue to the Central Government to consider' whether the employment of Contract Labo'ur should not be proh'bited under sec~ 10 of the Act in any processs, operation or other work of the public undertaking:

[620EI

6. There will also. be a, direction to the Chief Labour Commissioner to

~ enquire into the questivn whether the work done by_ the workmen employed by the contractors is the same type orwork as that done by the workmen d rect1y' employed by the principal employer in the undertakingJ [620E•F]

ORIGINAL JURISDICTION: Writ Petition (Civil) Nos. 7982, 9874 and 9H9 of 1983

(Unaer articlei32 of the Constitution of India)

R.K. Garg, D.K, Garg and: A.K. Goer for the 1 Petitioners ..

G.L. Sanghi, Kapil Sibal, V.C. Mahajan. Miss Meera Mathur, S, Sukumaran, O.C •. Mathur, . D.N, Mishra, Ashok. Grover,_ C.K.· Mahajqn, l.S. Goel,.R.N. Poddar. and C.V. Subba -Rao for the: Respondents... · ·

The Judgment of the Court was delivered by

CliINNAPPA REDDY, J; These three Writ Petitions Art:undfr32' of the COnstit.ution of India appear to us to be entirely mis.conceived.

In. Writ Petition.No. 7982.of 1983 and Writ Petition No. 9874 of' 1983, the respective petitioners are the BHEL' Workers Association; Hard war and .others. and. Bharat Heavy Electricals Karamchari' Sangh, Ranipur, Hard war. They allege that out of the 16,000 imd odd' • workers workig _within the premises of the BHEL factory at 'Had- ,._..... war, as many_ as a thousand workers are treated as. 'contract labour'

and placed under the control and at the mery of contractors. Though'. . they.do the sam> work as the workers directly emplciyed "bjr .the.

BHEL, they are not paid .the same wages nor are their~ conditions: of service the same. They.allegethat the management.pays. their. salary to the contractors and in.turn .the contractors pay them their salary aftbr deducting .substantial commission. The wages received by. them bear no comparison with. the .wages paid to those directly employed A. by. the BHEL. They.say.that they work. within the. premises of the.

BHEL in different 'departments under the direct supervision and control of the Chargemen, Foremen and Engineers of the llHEL:. Their

c •


[1985] 2 S.C.R.

working hours are as stipulated by the BHEL. They work on the machines of the BHEL and they are essentially part of the organi sation involved in the production process of manufacture carried on by the BHEL. They are entitled to be declared as regular employees of the BHEL and further entitled to the same scales of pay as the workers of the BHEL. They allege that their rights under Art. 14 and 19 (i) (f) are infringed. It is claimed that whenever a demand is made by them, they are thrown out of emploment. They want a declaration from this Court that the system of contract Jabour is illegal, that they are direct employees of the BHEL and that they are entitled to equal pay as the workmen of the BHEL.

An affidavit has been filed on behalf of the BHEL by Shri P.C.

Rao, Deputy General Manager, who while denying the allegations made in the petition, has pointed out that if the petitioners had any genuine grievance, they shbuld have availed themselves of the rights secured to them under the Contract Labour (Regulation and Aboli- - ..,, lion) Act, Minimum Wages Act, Equal Remuneration Act, etc, for ventilating their grievances and seeking appropriate relief instead of rushing to this Court under Act. 32 of the Constitution. It is pointed out in the counter-affidavit that certain jobs though required to be done within the plant area can be more conveniently and efficiently done on a job contract basis by contractors. This is particularly so in regard to the incorporation of new technology for expansion of pro- ( duction programme, called the LSTG programme with foreign collaboraiion. The jobs t{Jemselves are entrusted to the contractors and it is not true to say th,'!! the contractors .merely supply labour. They are required to do the total job and payment is made on the basis of the quantum of the work involved and not on the basis of the number of workers employed by the contractor. It is further pointed out that contract lal>our on the basis of job contracts is usually employed In connection with construction, erection and commissioning activities

which are purely of a temporary nature, transportation including load; "-- 0 Ing and unloading from wagons, trucks, trailers, tractors etc. as well as internal transport, jungle clearance, weed removal and other horticultural activities. Work in connection with cleaning and upkeep of approach roads and plant areas and work relating to modernisation and rationalisation, such as shifting of equipment, etc. is also done on a job contract basis. These activities require varying number of workers at different times and it 'is considered, as a matter of policy, that the works are better done by job contractors than by the BHEL .· J. itself which has to concern itself primarily with the manµfacture Of turbipes, etc.

. BHEL WORKERS' ~SSN ••• UNION (Chinnappa Reddy, J.) 61 s

--..

It is clear from the allegations and counter-allegations that it is uot possible for this Court in an application under Art 32 of the Constitution to embark into an enquiry whether these thousand and odd workmen working in various capacities and engaged in multi- . farious activities do work identical with work done by the workmen directly employed by the BHEL and whether for that reason they .; should be treated not as contract labour but as direct employees of the BHEL ? There •are other forums created under other statutes ' dsigned for deciding such and like questions. Perhaps realising and futility of asking us to compare the nature of the work done by those directly employed by the B HEL and those employed by contractors, the learned counsel chose to advance the extreme argument that the court must declare a total ban on the employment of contract Jabour by public sector undertakings. It was argued that the employment of contract labour has been frowned upon by various committees _ appointed by the Government and Parliament itself thought that the "' employment of contract labour was undesirable and therefore, enacted the Contract Labour !Regulation and Abolition) Act 1970. It was submitted that in order to give effect the intention of Parliament as well as the Directive Principles of State Policy, the court should declare illegal the employment of contract labour by the State or by any public sector undertaking which for the purposes of Art. 12 of the Constitution is the State. In other words, the counsel wants this Court • by its writ to abolish the employment of contract labour by the State ,. and by all public sector undertakings. We are afraid that would be nothing but the exercise of legislative activity with which function the Court is not entrusted by the Constitution.

It is true that for a Jong time, the maleficent nature of the system of contract labour and the destructive results which flow from it had been noticed by various committees appointed by the Government including the Planning Commission and that as a result of the reports and the discussions etc. that took place, the Contract Labour (Regulation and Abolition) Act, 1970 was passed. According to the Statement of Objects and Reasons :-

"The system of employment of contract labour lends itself to .various abuses. The question of its abolition has been under the consideration of Government for a Jong time In the secondfive year plan, the. Planning Commission made certain recommendations, namely, undertaking 9f studies to ascertain the extent of the problem of 7ontract

616 SIJP1U!MI! eomr tu!POJl.TS

(1985) 1 s.c.2.

./ labour, progressive abolition of system and improvement of service, conditions of contract labour. wbere. the abolition

was not possible. The matter was discussed at various. meet- . ings of Tripartite Committees .. at which the State Governments" were .also represented and general consensus of opinion was that the system sheuld be abolished wherever possible or practicable and that in cases where this system could not be abolished altogether, the working conditions of contract 'labour should be regulated so as to .. nsure pay- ... ment of wages and provision of essential amenities. •

.. 2. The propsed Bill aims at abolition of conlrct . labour in respect f such categories as may be . notified by appropriate Government in the light of certain criteria that . have bCen laid down, and at regulating tlie service conditions . or contract labour where abolition is not possible. The Bill provides for the.setting up of Advisory Boards of a tripartite character, representing various. interests,. to" advise _Central and State Governments in administering the legislation and registration of establishments and contractors. Under the .

Scheme of the Bill, the provision and maintenance of certain basic weifare amenities for contract labour, lik~ . drinking water 'and first-aid facilities, and in 'certain cases rest-ronms .. arid canteens, have been made obligatory. Provisions have also been made to guard against details in the matter of ·

wagC Payment". ,. ' . . . . .

The long title of the Act describes it as "an Act to . regulate the employment of contract labour in certain establishments and. to provide for its abolition 'in certain circumstances and for matters connected therewith." As the long title itself indicates the Act doeS not provide for the iota! abolition of contract labour, but only for its abolition iii certain circumstances;· and for the regulation of the . employment of contract labour in certain establisbments.fSection I (4l . _applies to all establishments in . which 20 or more workmen are employed or were employed on any day of the preceding 12 months as contract labour and to every contractor who employs or bas employed on any day of the preceding 12 months 10 or. more work- , men.· The Act does not apply to .. establishments in which work of an intermittent or casual nature alone is performed. Section 2 (e) def mes an establishment as meaning : (l) any ollke or department of the Government or local authority; or (ii) any place where any industry, trade, business, manufacture or occupation is carried on. Section 2

(g) defines "principal emyloyer" as meaning :

'.'f{i)'in. tel!rtion ; to any; office; 'Or department of the -G&"Yemment or a locaJiauthotity, the head of• that office or departmeflt-or such <lrner d:fficer •as ibe Govemment'or>the localauthority, as the case may be, may specify in this behalf,

(ii)' in it f!!Ctory; the owner or occupier of the factory and where a person' has been named as the manager of the fttotyunder'the Fiictorres Att,1948, !be perron'so' named,

-(iii) in a.mine, tbe-.owner or-.agent of the mine and

where a person hru> been named as the manajer of the mine, c the , person se> , named,

(iv) in any other establishment, any person responsible ,,,("' . for the supervision' and. t'oilti'ot or ihe-t!it"blishtilent."

The definitions of 'establishment' and 'principal employer' clearly'do not exclutle but•onthe "<fther -mrid expressly include the Government or any of itsdeparttrtentund!tlleAct applied to them too. The Act is not confined to private employers only. Section 2 (c) defines a contractor, in relation to• an, establishment, as meaning 'a . person who undertakes to proquceagiven resultfor,.\h.e.establishment

-Other than a m, r~ supply•of; gGoosQr'1l, rticles, ofma11µfacture to such

estahlishment, through oonllatt claboor e< who -s11pplied .c9ntract -labour for any work of, the•ejo(ablishment and includes a sub cmitrac r, tor. Secti@.ns 3 and 4 provide f<u the constitution of Gentral and

State A<!lvise>IY. Boards.! Section 7 provides for. the registration of an establishment.<Seetion 8 , provides for Aihe revocation of gi&tration -llllCI 9tc. f) provides for Ute .. effect of oon-r~11istration. Section 10 . 'Which is draportant pmvides for and. \m&bles the prohibition of

employment of 0011trat labour in al)y processes, i;>perations or ,.; therwork., employ<W!llt w .any .establishment. Section 10 may be

usefully.extracted :

' . "'(!) 'Notwitbsfllnding1mythlng cdt\tained •in this 1Act, 'the appr6ptiateGovernmen't may, after•llom111!1ation "with

tbe'Centtal'rd dr,'11s the case may 1b'e, a State 'Biard,·

- prtihibit,'ty'nodticatlon' In th'e' Oil'lelal Baittte; emplo)'mcl1t ·

of colltfact labo'O'.r'in'anfp'roceSS,"aperatio'n or•otber 'l'IOTk in any est!blislil'llent. ·• ·

F .

618 . ~!Jl'RllMB COURT .REPORTS

(1985] 2 S.C.R •

(2) Before i1suiog any notitication under sub-section (I) in lation to an est11hlishment,., the appropriate Govern- ; rment:shall have regar4 to the conditions of work and benefits provided for the <:ontractl labour in that establishment and other relevant factors, such as-

(a) whethr the process, operation or other work is incidental to, or necessary for the industry, trade, business, ma1iµfacture or occupation tat is carried on in the establishment ;

(b) whether it is of perennial nature, that is to say, it is or sufficient durafron having regard to the nature of industry, trade, business, manufacture or -Occupation carried on in that establishment ;

.. ' \

(cl whether it is done ordinarily through regular '°"-.., workmen in that establishment or an establishment r similar thereto ;,

(d) whether.it is sufficient to employ considerable number of whole-time workmen,"

Section 12 provides for the licensing of contractors. Sections 13, 14 and 15 provide for the grant of licences, revocation, suspension and amendment of licences and a}>peal. Sections 16 to 21 make detailed' provision for the welfare.and health of contract labour. Section 20 iii partieillat provides that if any amenity required to be provided for the benefit of the contract labour employed in an establishment is not provid.,. by the contractor within the prescribed time such amen"ity shall be provided by the principal employer. Section 21 makes the contractor responsible for payment of wages to each worker employed by him as !!>On tract labour but further prescribes that t'IH(principal employer shall nominate a representative duly authorised by him to be present at'tho time of disbursement of wages by the contractor, Sections 22 to 27 provide for penalities and procedure.

Section 28 provides for the appointment of inspecting staff. Section . 30 makes the provisions ()f the Act effective notwithstanding anything inconsistent therewith contaiqd in, any ot,~C\r law or in the terms of a0y aj)'eemw, t:or cQntract .of service or :Illy standing orders applicable to th.e establishment. H, howevei:, saves to . the contract labour any favourable benefits that the contract labour may be entitled to under the agreement, contract of service or stal)ding orders. Section 35

BHEL WORKERS' ASSN. v. UNION (Chinnappa Reddy, J.) 619

invests the appropriate Government with power to make rules for A carrying out the purposes of the Act. Rules made by the Central Government are required to be laid before each House of Parliament for a total period of 30 days. In exercise of the powers conferred by section 35 of the Contract Labour (Regulation and Abolition) Act, l 970, the Central Government has made the Contract Labour (Regulation and Abolition) Central Rules, 19il. Chapter II of the rules relates to matters pertaining to the Central Advisory Contract B Labour Board while Chapter Ill of the Rules deals with registration of establishments and licensing of contractors. Rule 25 prescribes the forms terms and conditions of licence. Rule 25 (ii) (iv) prescribes that it shall be the condition of every licence that the rates of wages shall not be less than the rates prescribed under the Minimum Wages Act, 1948 for such employment where applicable, and where the rates c have been fixed by agreement, settlement or award, not less than the rates so fixed. Rule 25 (ii) (v) (a) prescribes that it shall be the condition of every licence that-

"(v) (a) in ca, es where the workmen employed by the contractor perform the same or similar kind or work as the workmen directly employed by the principal employer of the establishment, the wage rates, holidays, hours of work and other conditions of service of the workmen of the contractor shall be the same as applicable to the workmen directly employed by the principal employer of the establishment on the same or similar kind of work : ·

Provided that i_n the case of any disagreement with regard to the type of work the same shall be decided by the Chief Labour Commissioner (Central) whose decision shall be final. "

Similarly Rule 25 (ii) (v) (b) provides that in other cases the wage rates, holidays, hours of work and conditions of service of the workmen of the contractor shall be such as may be specified in this behalf by the Chief Labour Commissioner (Central). While determining the wage rates, holidays, hours of work and other conditions of service nnder Rule 25 (ii} (v) (b) the Chief Labour Commissioner is required to have regard to the wage rates, holidays, hours of work and other conditions of service obtaining in similar employments. Tl\ere is no dispute before us that the Payment of Wages Act applies as much to contract labour as to labour directly employed by the principal. employer of the establishment.

SUl'lll!MB COUR.1' REPORTS {!985] 2 s.c.R.

'Thuswe see that no invidious distinction can be made against contract labour. 'OJntracti!l'.bouris entitled to the same wages, holi- days; hours of work and coriditions of service as are applicable to workmen directly employed by the principal employer of the establi- •shment on'the same or similar kind Of work. 'They are entitled to -recover their wages and their conditions of.service inthe same man- -ner-as•workersemployed by the' principal employer tinder the appro- •priate Indastrial and Labour Lllws. If there is any di!pute with regard •tttthe't)'Pe of work, the dispute has to be decided by the Chief bbon!' Commissioner (Central). It is clear that Parliament has not '1tbolished contract labour as such but has provided : for its abolition 'by•t'lle Central Government in appropriate cases•under sec. 10 of the '€ontract11abour (Regulation and Abolition) Act, 1970. It is not for <the court foenquire into the question and to decide whether the .•employment of contract labour in any process, -Operation or other 'WOrk in any e!!ta:blishment should be abolished or not. This is a matter for the decision of the Government •afwr considering •the matters required to be considered under sec. 10 of the Act. Similarly the question whether the work done by Contract labour is the same or similar work as that done by the workmen directly employed by the. principal employer of any establishment is a matter to be decided bylhe Chief Lltbour Commissioner under the proviso to Rule 25 (ii) (v)(a). In these circumstances, we have no option but to dismiss both 'tb'.e writ petitions but with a direction to the Central Government to consider whether the employment of contract labour should not be prohibited under sec. 10 of the Act in any process, operation or other work of the BHEL, Hard war. There will also be a direction to the Chief Labour Commissioner to enquire into the question whether .tbe work done by the workmen employed by the contractors is the same type of work as that done by the workmen directly employed by the principal employer in the BHEL, Hard war.

In Writ Petition No. 9249 of 1983. the, petitioners are the .employees.of.Lal Jhanda National Fertilizer Limited Mazdoor Union

Panipat ... They pray for similaneliefs against the National Fertilizer G .. Limited, Panipat.as in the BHEL Cl\Sll •. This writ petition is also

.dismis&ed. subject to similar directions to the State of Haryana and .the appropriate authority in the State of Haryana as' those issued in . the:BHEL.case.

N.V.K. 'Petitions 'dismissed.