Kepargaon Taluka Sakhar Kamgar v. Godavari Sugar Mills Ltd.

#### 342 SUPREME COURT REPORTS **[1961]** _**Der: ember**_ _**16:**_ KEPARGAON TALUKA SAKHAR KAMGAR #### GODAV ARI SUGAR MILLS LTD. ##### _v._ SABHA, SAKARWADI ##### (P. B. GAJENDRAGADKAR, K. N. WANCHOO and ## K. c. DAS GUPTA, JJ.) _Industrial Disptde-System of_ _contract_ _labour-Abolition_ _by_ _Industrial Court-]t<risdiction-lf violative of employer's funda-_ _mental_ _rig/zt_ _to_ _carry_ _on_ _business-Bombay J.nd,.strial Relations_ _Act, r947(II of r947)._ _ss._ _3(r8),_ _42(2),_ _73A, Item_ (2) _Sch._ _II, Item_ (6) _Sch._ _III-Constitution of India, Art._ r9(r)(g). A dispute having arisen between the eppellant-employer and its workmen regarding the employment of contract labour in the appellant's mills, the union representing the workmen which is the respondent in the present case after serving notice on the appellant under s. 42(2) of the Bombay Industrial Relations Act made reference to the Industrial Court under s. 73A of the Act demanding the abolition of the system of employing contractors' labour and the permanent increment of employees in the respective departments. The contention of the appellant, inter alia, was that the Industrial Court had no jurisdiction to decide the dispute which was within the exclusive jurisdiction of a Labour Court under item (6) of Sch. III of the Act, and that any awerrl directing the abolition of contract labour would contravene the appellant's fundamental right to carry on business under Art. r9(r)(g) of the Constitution. The Industrial Court decided that the .Industrial Court would have jurisdiction as the matter was covered by item (2) of Sch. II of the Act.and that there was no contravention of the fundamental rights of the appellants. On appeal the Labour Appellate Tribunal, held, that the Industrial Court had jurisdiction to decide the matter although it was not covered by item (2) of Sch. II of the Act. As regards the question of contravention of the fundamental right it heJcl that the question whether the restriction imposed was reasonable depend**ed upon the facts of each case and** **the** **matter** **was** **outside** **the** **powers of a court of appeal.** **Eventually it set aside the entire** award on the merits. On appeal 'by the appellant by special **leave,** _Held,_ that the Industrial Court had jurisdiction to deal with the matter. Whatever might be the ambit of the word "employment" used in item (6) of Sch. Ill, if a matter was covered by Sch. II it could only be referred to the Industrial Court under s. 73A. A question relating to the abolition o[ contract Jabour inevitably raised a dispute relating to matters contained in items (2), (9) and (Io) of Sch. II, namely, permanent increase in the number of ##### 3 S.C.R. SUPREME COURT REPORTS 343 persons employed, the employees' wages, hours of work and rest intervals and could, therefore, be referred only to an Industrial Court. _**Godavari**_ _**Sugar**_ _**Mills**_ _**Ltd.**_ The power given to the Industrial Court which was a quasi- v. judicial tribunal to decide whether contract labour should be _Kepargaon Taluk_ abolished or not would not make the. definition of "industrial _Sakhar_ Kamga• **tnatter" in so far as it referred to the mode** **of employment an** _**.'·inbha**_ _**Sakarwaa**_ unreasonable restriction on the fundamt'ntal right of the em- ' **ployer _to** **carry on** **his trade** **and as such there** **was no** **contravtn-** tion of his fundamental right by providing in s. 3(18) that an "industrial matter" included also the mode of employment of the .employees. CIVIL APPELLATE JumsDIC'l'ION: Civil Appeal _No._ 352 of 1958. Appeal by special leave from the judgment and order dated July 27, 1956, of the Labour Appellate Tribunal of India, Bombay, in Appeal (Born.) No. 72 of 1956. _G._ _S._ Pathal~, _J._ _B. Dadachanji, S. N. 'Andley_ and _Ranieshwar Nath,_ for the appellant. _D._ _S. Nargoulkar_ and _K. R. Choudhitri,_ for the respondent No. 1. _B._ _P. Maheshwari,_ for the Interveners. 1960. December 16. The Judgment of the Court was delivered by ##### WANCHOO, J.-This is an appeal by special leave in Wanchoo ]. an industrial matter. The appellant owns two sugar mills. There was a dispute betwe(ln the appellant and its workmen with respect to the employment of contract labour in . the two mills. Consequently, a notice of change under s. 42 (2) of the Bombay Industrial Relations Act, No. XI of 1947, (hereinafter called the Act) was given to the appellant by the union representing the workmen. Thereafter the union, which is the respondent in the present appeal, made two references to the industrial court, one with respect to each ·mill, nndor s. 73A of the Act, and the main demand in the references was that "the system of employing contractors' labour should be abolished and the strength of the employees of the respective departments should be permanently increased sufficiently ##### 344 . SUPREME COURT REPORTS [1961] _i96o_ and accordingly". The appellant raised two main #### G d 0 -. 5 contentions before the industrial court, namely, (i) that ##### 0 ;~~:· Lt;.c~r the industrial court had no jurisdiction to decide the v. dispute as the matter was covered by item (6) of Sch. #### ·r<.pargaon Taluka III of the Act, which is within the exclusive jurisdio##### Sakhar K•mgar. tion of a labour court; and (ii) that any award direct _Sabha, Sakarwad•_ ing abolition of contract labour would contravene the _Wanchoo_ _1._ fundamental right of the appellant to carry on business under Art. 19(l)(g) of the Constitution. The industrial court decided both the points against the appellant; on the question of jurisdiction it held #### that the matter was covered by item (2) of Sch. II of the Act and therefore the industrial court would have. jurisdiction, and on the second point it held that there ##### was no contravention of the fundamental right con- ferred on the appellant under Art. 19(1)(g). It may be mentioned ~hat the second point arose on the stand taken by the appellant thatthe workmen of the contractors were not the workmen of the appellant. The industrial court then dealt with the merits of the case and passed certain orders, with which we are however not concerned in the present appeal. #### It may be mentioned that there were cases relating ##### to a number of other sugar mills raising the same points, which were decided at the same time by the ##### industrial court. In consequence, there were a number of appeals to the Labour Appellate Tribunal by the mills and 6ne by one of the unions (though not by the respondent-union). All these appeals were heard together by the appellate tribunal, where also the same two points relating to jurisdiction and contravention of the fundamental right guaranteed by Art. 19( 1 )(g) were raised. The Appellate Tribunal did not agree with the industrial court that the references #### were covered by item (2) of Sch. II to the Act. It, however, held that the word "employment" in item (6) #### of Sch. III to the Act had to be given a restricted ### meaning. It pointed out that the three ·Schedules did not exhaust the comprehensive provisions of s. 42(2) and the subject-matter of dispute, namely, the abolition of contract labour was a question of far. reaching and important change which could not have 3 S.C.R. · SUPREME COURT REPORTS 345 been intended to be dealt with in a summary way by _1960_ a labour court, which is the lowest in the hierarchy of ### courts est1J.blished under the Act. It therefore held God••.ari Sugar that the industrial court had jurisdiction to decide the _Mills_ _Ltd._ ##### matter. On the question of contravention of the Keparga:~ Taluka fundamental right, the appell11>te tribunal took the _Sakhar_ _Kamg••_ view that the question whethP,r the restriction impos- _Sabha, Sakarwadi_ ## ed was reasonable depended upon the facts of each - case and therefore was a matter outside its power as a _Wanchoo_ _f._ #### court of appeal. It then considered the merits of the matter and came to the conclusion that the approach ##### of the industrial court to the questions raised before it was not correct and therefore it found it difficult to support the award. Eventually it set aside the award and remanded the matter for early hearing in the light of the observations made by it. Further, it decided that in the interest of justice the entire award should be set aside, even though there was no appeal before it by the unions in most of the cases. The appellant then came to this Court and was granted special leave; a.nd that is how the matter has come up before us. Mr. Pathak ou behalf of the appellant has raised the same two points before us. We shall first deal with the question of jurisdiction. Reliance in this connection is placed on item(6) of Sch. III of the Act, which is in these terms: "Employment including(i) reinstatement and recruitment; (ii) unemployment of persorts previously employed in the industry concerned." ##### It is not in dispute that matters contained in Sch. III are within the jurisdiction of a labour court and an industrial court has no jurisdiction to decide any matter in a reference under s. 73A of the Act which is within ##### the jurisdiction 0£ a labour court. Mr. Pathak con- tends that item (6) of Sch. III speaks of "employ ment" and includes in it two matters which might otherwise not have been thought to be included iu it. Therefore, according to him, employment as used in ##### item (6) is wider than the two matters included in it 44 ## _, #### 346 SUPREME COURT REPORTS [1961] ### ~ and the questioh whether contract labour should be _Godavari sugar_ employed or not would be a matter of employment _.Uills_ _Ltd._ within the meaning of that word in item (6) of Sch. ##### •· III. 'Ve do not think it necessary for purposes of this _Hepargaon_ Taluka_ appeal to consider what \Vould be the ambit of employ##### s [sbahkhar5I•k•mgadr. ] [ment as used in item ][(6) ] [of ][Sch. ] [III. ] [The scheme ] [of ] [1] ##### • a, a aiwa [1] th A t h. h t d 71 d ' ' _ e c s ows t a un er ss. an 72 the Jurisdiction _wanchoo_ _]._ of a labour court and an industrial court is concurrent with respect to any matters which the State Government may deem fit to refer to them; but under s. 73A reference by a registered union which is a representative of employees and which is also an approved union, caq only be made to an industrial court, subject to the ##### proviso that no such dispute can be referred to an industrial court where under the provisions of the Act ##### it is 'required to be referred to the labour court for its decision. Sec. 78 of the Act provides for jurisdiction of #### labour courts and matters specified in Sch. II are not within their ordinary jurisdiction. Therefore, when a registered union wishes to refer any matter which ##### is contained in Sch. II of the Act such reference can be made by it only to the industrial court. It follows in consequence that whatever may be the ambit of the word "employment" used in item (6) of Sch. III, if any matter is covered by Sch. II it can only be referred to the industrial court under s .. 73A. Now the question whether contract labour should be abo; ##### lished (on the assumption that contract labour is not in the employ of the mills) immediately raises ques. tions relating to permanent increase. in the number of persons employed, their. wages including the period and mode of payment, hours of work and rest inter##### vals, which are items (2), (9) and (10) of Sch. II. Therefore, a question relating to abolition of contract labour is so inextricably mixed up with the question of permanent increase in the number of persons employed,' their wages, hours. of work and rest intervals ##### that any dispute relating to contract labour would inevitably raise questions covered by Sch. II. There- fore, a disp_ute relating to contract labour if it is to be referred under s. 73A by a registered union can only be referred to an industrial court as it immediately ## ' ' ' ##### ·, ##### 3 S.C.R. SUPREME COURT REPORTS 347 raises matters contained in items (2), (9) and (10) of _i96o_ ~ch. II. Mr. Patha~ urges'h?wever that mat~ers relat- _Godov;;-Sugar_ mg to permanent mcrease m the number of persons _Mill.<_ _Ltd._ employed due to the abolition of contract labour, their v. wages, hours of work and rest intervals wen~ not _I<epargaon Taluka_ ##### really disputed at all by the appellant. It 'appears Sakhar .Ka>ngar. that in the written-statements of the appellant, these _Sabha, Sakarw•d•_ points were not raised; but the decision of the appel- _wa,,choo_ _]._ late tribunal shows that one of the contentions raised ##### before it by the sugar-mills was that the workmen concerned were not employees of the sugar mills. Therefore, as soon as this contention is raised a dispute as to permanent incrnase in the number of persons employed, their wages, hours of work and rest #### intervals would immediately arise. It must therefore be held that a question relating to the abolition of conti:act labour inevitably raises a dispute with respect ##### to these three items contained in Sch. II. In the cir cumstances we are of opinion that the industrial court had jurisdiction to deal with the matter. In particular, we may point out that in their petitions the unions had raised at least the question as to the permanent increase in the number of persons employed and that would immediately bring in item (2) of Sch. ##### II. It is true that the question of permanent increase in the number of persons employed, their wages, hours of work and rest intervals would only arise if contract labour is to be abolished; but in our opinion these are matters so inextricably mixed up with the question relating to abolition of contract labour that they must be held to be in dispute as soon as the dispute is niised about the abolition of contract labour, (assuming always that the employer does not accept contract labour as part 0f its labour force). The contention about jurisdiction must therefore be rejected. This brings . us to the second contention raised by l\Ir. Pathak. He bases his argument in this behalf on ##### s. 3( 18), which defines an " industrial matter" as meaning any matter relating to employment, work, wagPs, hours of work, privileges, rights or duties of employers or employees, or the mode, terms and 348 SUPREME COURT REPORTS [1961] _r960_ conditions of employment. Mr. Pathak urges that the ##### definition of "industrial matter" contravenes the #### G d [-. ] [s ] _**o**_ _**a11a1s**_ _**ugar**_ f d 1 • h t d d A 9( _Mills_ _Ltd._ un amenta rig t guaran ee un er rt. 1 l)(g), v. when it provides that the mode of employment is also _Kepargaon Taluka_ included within it. Reference is also made to s. 3(17) _Sakh•r_ _Kamgar._ which defines an "industrial dispute" as any dispute _Sabha, Sakarwad•_ or difference which is connected with any industrial ##### wanchoo J. matter. Mr. Pathak therefore urges that reading the two definitions together the industrial court is given the power to decide disputes as to the mode of ##### employment and that contravenes the fundamental right guaranteed under Art. 19(l)(g), for it enables an industrial court to adjudicate on the mode of employment and thus interfere with the right of the employer to carry on hiR t.rade as he likes subject to reason##### able restrictions. Now assuming that the mode of employment used in s. 3(18) includes such questions as abolition of contract labour, the question would still be whether a provision which enables an industrial court to adjudicate on the question whether contract labour should or should not be aboli.,heLI is an unreasonable restriction on the employer's right to carry on his trade. We c:inn•.:·~ see how the fact that power is given to tho industrial court, which is a quasi-judicial trihuw1l to decide whether contract labour shculd be abolished or not wonld m'1ke the ##### definitio;•,. ;_· "industrial matter" in so far as it refers to t.he m·_ - · of employment, an unrc,1sonab]e restriction on the fundamental right of tho employer to carry on 1.rade. The matter being entrusted to a quasijudioial tribunal would be decided after giving both parties full opportunity of presenting their case aud after considering whether in the circumstances of a particular case the restriction on the mode of employment is a reasonable restriction or not. The tribunal would always go into the reasonableness of the mat##### ter ttnd if it comes to the conclusion that the mode of employment desired by labour is not reasonable it will not allow it; it is only when it comes to the con##### clusion that the mode uf employment desired by labour in a particular case is a reasonable restriction . l #### 3 -S.C.R. SUPREME COURT REPORTS 349 ##### that it will insist on that parT.icular mode of employ- '9~' ment bein0 rr used. Take, for example, the case of con- G d 0 . 5 tract I b a our 1tse · If . Th e tn 'b una I w1 'II I iave to go mto · Mills Ltd: avari "gar ### the facts of each case. If it comes to the conclusion v. ##### that on the facts the employment of contract labour Kepa.gaon Taluka is reasonable and thus doing away with it wonld be _Sakh"'_ _Kamg«_ an unreasonable restriction on the right of the emplo- _Sabha, Sakarwadi_ yer to carry on trade, it will permit contract labour to w.,:;h~o _1._ be carried on. On the other hand if it comes to the conclusion that employment of contract labonr is unreasonable in the circumstances of the case before it ##### it will hold that it should be abolished, the reason be ing that it.s abolition would be a reasonable restriction in the circumstances. Therefore the decision whether the mode of employment in a particular case is a reasonable restriction or unreasonable one is in the hands ##### of a quasi-judicial tribunal. In the circumstances it cannot be said that by providing in s. 3(18) that an "industrial matter" includes also the mode of employment, there is any contra.vention of the fundamental ### right oft.he employer to carry on trade. If the argu meBt on behalf of the appellant were to be accepted it wou Id mean that. judicittl and quasi-judicial decisions could be unreasonable restrictions on fundamentn,l rights and this the Constitution does uot envi##### sage at all. \Ve are therefore of opinion that this contention n,lso fails. Finally, Mr. Pat.hak draws our atteniion to ss. 3(13) ##### and 3(14) of the Act and submits that the appellant never said that contract labour employed in its mills was not in its employment. Sec. 3(13) defines the word "employee" and includes in it any person employed by a contractor to do any work for him in the execution of a contract wit.h an employer within the ##### meaning of sub-cl. (e) of cl. (14). Sec. 3(14) defines the word "employer" in an inclusive manner and includes "where the owner of any undertaking in the course of or for the purpose of conducting the underta.king contracts with any person for the execution by or under the contractor of the whole or any part of any work which is ordinarily part of the undertaking, the #### owner of the undertaking". It is urged that in view ##### 350 SUPREME COURT REPORTS [1961] ##### '9 [60 ] of these definitions, the employees of the contractors _Godavari St1gar_ are the employees of the mills and the mills are the ##### Mills Ltd. employers of these employees of the contractors. v. Therefore, Mr. Pathak urges that there is no necessity Kepargaon Taluka of abolishing contract labour and that the industrial Sakhar Kamgar. court may, if it so chooses, give the same wages and _Sabha, Sakarwad•_ hours of work and rest intervals and other terms and _wanchoo_ _1._ conditions of employment to the employees of the contractors as are provided for comparable direct employees of the appellant and in such circumstances it would not be necessary to abolish the contract system so long as the employees of contractors are to be in the same position as the direct employees of the appellant as to their terms and conditionA of service. This was not however the manner in which the case was contested before the industrial court or the appel##### late tribunal. All that we need therefore say is that when the matter goes back before the industrial court as directed by the appellate tribunal, tho industrial court may take this submission of the appellant into account and may consider whether it is necessary to abolish the contract system, provided the appellant is able to assure the industrial court that employees of tha contractors who are deemed to be its employees within the meaning of s. 3(13) and s. 3(14) would have ##### the full benefit of the same terms and conditions of service as its comparable direct employees. . The appeal fails and is hereby dismissed with costs. _Appeal dismissed._ _i_ # ..