Rashtriya Chem. & Fertilizers Ltd. v. General Employees Association and Ors.

_)._ , # RASHTRIYA CHEM. & FERTILIZERS LID. AND ANR. _v._ GENERAL EMPLOYEES ASSOCIATION AND ORS. APRIL 23, 2007 **==> picture [217 x 10] intentionally omitted <==** _Constitution of India, 1950--Article 226-Central Government circular not prohibiting contractual labour in the establishment-Writ petition challenging the circular-Petitioner conceding that the issue could not be_ c _decided in writ petition-High Court directing Central Government to make reference of the dispute to Industrial Court for adjudication-Held; Not appropriate-High Court was to consider the petitioner's stand when petitioner accepted that certain issues could not be decided in writ petition--It should have left it to them to avail remedy under 1947 Act-Industrial Disputes Act, 1947._ D .. _r_ Central Government issued circular refusing to abolish and prohibit contract labour in the Civil Works and Carpentry establishment of the appellant. First Respondent-General Employees Association challenged the Circular. Writ petitioner conceded that the said issue cannot be considered by High Court in the writ jurisdiction under Article 226 of the Constitution[E ] and the appropriate forum was to go into such question. High Court issued direction to the Central Government to make reference to the Industrial Tribunal for adjudication whether the contract labour system was genuine, or was a mere camouflage to deprive the contract employees of the benefits available to permanent employees of appellant No. 1 and granted interim F protection to the workers. Hence the present appeal. ## Allowing the appeals, the Court '-:· HELD: 1.1. Once the respondent No. 1 approached the High Court on the foundation that the Contract Labour (Regulation and Abolition) Act, 1970 G applied, it pre supposes existence of a valid contract. What the writ petitionerrespondent No.1 wanted was quashment of Notification for reconsideration. In view of what has been stated in second SAIL case the High Court has to consider whether the stand taken in the writ petition was inconsistent. In the instant case the writ petitioner itself accepted that certain issues could not 457 H 458 SUPREME COURT REPORTS [2007] _5_ S.C.R. " A[be ][decided ][in ][the ][writ petition. That ][being ][so, ][High ][Court ][giving ][directions ][in ] the nature done, do not appear to be appropriate. The High Court ought not to have given the directions in the manner done and should have left the respondent No.I-Association to avail remedy available in the I.D. Act [Para 11) (465-F, G; 466-A) B 1.2. It is open to respondent No.I to move the appropriate State Government seeking reference of the purported dispute to the Tribunal The State Government would consider whether any reference is called for. (Para 12] (466-B, CJ **==> picture [8 x 5] intentionally omitted <==** **----- Start of picture text -----**<br> ~<br>**----- End of picture text -----**<br> _Steel Authority of India Ltd. v. National and Union Waterfront Workers_ c _and Ors.,_ [2001] 7SCC l; _Steel Authority of India Ltd._ v. _Union of India of Ors.,_ (Second SAIL Case) (2006) 3 CLR 659; _Sankari Cement Alai Thozhilalar Munnetra Sangam. Tamil Nadu_ v. _Government of Tamil Nadu and Anr.,_ [1983) 1 SCC 304; _V. Veerarajc;n and Ors._ v. _Government a/Tamil and Ors.,_ (1987] 1 SCC 479 and _TELCO Convoy Drivers Mazdoor Sangh and Anr._ v. _State of_ D _[Bihar ][and ][Ors., ]_[[1989] ][3 ][SCC ][271, ][referred to. ] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2122 of2007. From the Judgment and Order dated 17.09.2003 of the High Court of Judicature at Bombay in Writ Petition No. 7543 of2000. E ## WITH ## C.A. No. 2123 of2007. Jamshed P. Cama, M.S. Bodanwala, Gopal Jain, R.N. Karanjawala, Nandini F[Gore, ][Jayant ][Mohan ][and ][Manik ][Karanjawala ][for ][the ][Appellants. ] _1_ • The Judgment of the Court was delivered by ## DR. ARIJIT PASAYAT, J. I. Lt:ave granted. 2. Challenge in these appeals is to the orders passed by a Division G Bench of the Bombay High Court directing reference to the Industrial Tribunal and granting interim protection to the workers in the Civil Appeal relating to SLP(C) No. 594 of2004. 3. First Respondent-General Employees Association (in short the H['Association') ][had ][questioned ][legality ][of ][the ][Circular ][dated ][8.11.2000 ][issued ] RASllTRIYACHEM. & FERTILIZERS LTD. _v._ GENERAL EMPLOYEES ASSOCIATION (PASAYAT, I.] 459 ~-;:. " ., by the Central Government conveying its decision refusing to abolish and A prohibit contract labour in the Civil Works and Carpentry establishment of Rashtriya Chemicals and Fertilizers Ltd.-Respondent No.I, in W.P. No.7543/ 2000. It was alleged by the writ petitioner that respondent Nos. 5 to 8 in the writ petition (who are non-official respondent Nos. 4 to 7 in this appeal) were dummy and sham contractors. It was conceded by the writ petitioner that the B said issue cannot be considered by the High Court in the writ jurisdiction under Article 226 of the Constitution oflndia, 1950 (in short the 'Constitution') and the appropriate forum - Industrial Tribunal has to go into such question . The writ petitioner requested that order may be made referring the matter to the Industrial Tribunal and meanwhile to afford interim protection. While accepting this prayer, the High Court, however, issued the following directions: c "(i) The appropriate Government, i.e., the Central Government is directed to make a Reference of the following demands to the Industrial Court for adjudication within two months from today; r (a) Whether the contracts between the Ist respondent _Mis._ D Rashtriya Chemicals and Fertilizers Ltd. and respondent Nos. 5 to 10 are sham and bogus and are a comoufiage to deprive the concerned contract employees of the benefits available to permanent workmen of the I respondent? (b) Whether. the employees listed at Exhibit A to the petition E should be declared as permanent workmen of the 1 respondent? ( c) What are the wages and consequential benefits to be paid to the employees list at Exhibit 'A' to the petition? • )- _'<:_ (ii) The Industrial Tribunal upon receipt of such Reference shall proceed with the matter expeditiously and dispose of the same as early as F possible and in any case not later than 30.6.2004. (iii) The interim order passed by this Court on 29.12.2000 shall continue until receipt of the communication by the petitioner from the Industrial Tribunal that the Reference has been received and for a period of two months therefrom. The petitioners shall be at liberty to make application G before the concerned Industrial Tribunal for continuation of the interim relief upon receipt of the communication that Reference has been received and if such application is made by the petitioner, the same shall be disposed of by the Industrial Tribunal within a period of four weeks therefrom. Needless to say that if for any reason the Industrial H _4GO_ [2007] _5_ S.C.R. ## SUPREME COURT REPORTS ## A B C Tribunal is not able to dispose of the application for interim relief that may be made by the petitioner within a period of four weeks from such application, the industrial Tribunal shall be free to pass an appropriate order for continuation of the interim order until disposal of the application for interim relief. In case interim order on the application is adverse to the petitioners same shall not be given effect to for a period four weeks. (iv) It is clarified that in case there is any change in the Contractor by respondent no. I the new Contractor shall engage the same workers subject to the order of the Industrial Tribunal. (v) It is further clarified that the above interim order is confined only to 39 employees who are presently working on the establishment of respondent no.I through respondent nos. _5_ to I 0. • (vi) All contentions of the parties are kept open to be agitated before the Industrial Tribunal." ## D 4. The connected Civil Appeal (relating to SLP(C) No.12961 of2003) is in respect of workers in a canteen in the Thar factory of the Appellant No. I. The first respondent-Union filed W.P. No.2940/1998 for a declaration that the employees (whose names were shown in the Annexure to the writ petition) were the regular employees of Appellant No. I and for consequential reliefs. E A Division Bench of the High Court has given following directions while disposing of the petition by judgment dated 23.1.2003: F G H (i) The appropriate Government that is the Government of Maharashtra is directed to make a Reference of the following dispute/s to the Industrial Tribunal for adjudication within two months from today. (a) Whether the contract between the Rashtriya Chemicals and Fertilizers Ltd. and the contractor/s is a sham and bogus one and is a camouflage to deprive the employees as per Annexure A of the benefits available to permanent workers of Rashtriya Chemicals and Fertilizers Ltd.? (b) Whether the employees whose names are shown in Exhibit A annexed to this order are employees in the Canteen of Rashtriya Chemicals and Fertilizers Ltd. and ifthe answer is in the affirmative, whether such employees should be declared as permanent workmen of Rashtriya Chemicals and Fertilizers Ltd.? _-f_ • ·• 461 RASHTRIY A CHEM. & FERTILIZERS LID.'- GENERAL EMPLOYEES ASSOCIATION (PASAYAT, J.] -·[} ] "I ( c) What are the wages and consequential benefits to be paid to A the employees as per the list Annexure A? (ii) The Industrial Tribunal upon receipt of the Reference shall proceed with the matter expeditiously and dispose of the same as early as possible and in no case later than 31.12.2003. .. " r (iii) The interim order passed by this Court on 24.6.1998 shall continue[B ] until receipt of the communication by the Petitioners from the Industrial Tribunal that Reference has been received and for a period of two months therefrom. The Petitioner shall be at liberty to make application before the concerned Industrial Tribunal for continuation of the interim relief upon receipt of the communication that Reference has been c received and we observe that if such application is made by the Petitioner, the same shall be disposed of by the Industrial Tribunal within a period of four weeks therefrom. We record the statement of the learned Senior Counsel for Respondent Nos. 1 and 2 that no objection shall be raised by the said respondents about the D maintainability of the application for interim relief by the petitioner. Needless to say if for any reason, the Industrial Tribunal is not able to dispose of the application for interim relief that may be made by the petitioner within a period of four weeks from such application, the Industrial Tribunal shall be free to pass an appropriate order for continuation of the interim order until disposal of the application for E interim relief. (iv) It is clarified that in case there is any change in the Contractor by Respondent Nos. 1 and 2, the new Contractor shall engage the same workers subject to the order of the Industrial Tribunal. ., ~ F (v) All contentions of the parties are kept open to be agitated before the Industrial Tribunal. ... _5._ Learned counsel· for the appellants submitted that after the decision of this Court in _Steel Authority of India Ltd and Ors,_ v. _National Union Waterfront Workers and Ors.,_ (2001] 7 SCC 1 the High Court ought not to G have given directions in the manner done. The prayer in the writ petitions was not for determination of the question whether the contract labour system was genuine, or was a mere camouflage to deprive the concerned contract employees of the benefits available to permanent employees of appellant No. I. The High Court in both the orders even formulated the terms of reference which is H impermissible. 462 (2007] _5_ S.C.R. .._ ~- ## SUPREME COURT REPORTS A 6. There is no appearance on behalf of the first respondent -Association in spite of service of notice. 7. In order to appreciate the stand taken by the appellant, it is necessary to take note of the observations made by this Court in several cases. In the _Govind Sugar Mills Ltd and Anr._ v. _Hind Mazdoor Sabha and Ors.,_ [1976] B 1 SCC 60 while considering Section 4K of the U.P. Industrial Disputes Act, 1947( in short 'UP Act), in _pari materia_ with Section 10(1) of Industrial Disputes Act, 1947 (in short 'ID Act') it was observed _inter alia_ as follows: c D E F G H "In the special appeal the High Court has taken the view following the decision of this Court in _State of U P._ v. _Basti Sugar Mills Co. Ltd_ that when action was taken under Section 3(b) of the Act it was obligatory for the State Government to make a reference under Section 4K for adjudication of the industrial dispute raised in relation to the said action. The High Court on a consideration of the entire facts and circumstances of the case allowed the writ petition and quashed the order of the State Government dated June 22, 1966 by grant of a writ of certiorari. In this appeal since the special leave was granted on a limited question we are not called upon to interfere with the said portion of the order of the High Court. But it further directed the State Government and the Labour Commissioner to refer the dispute for adjudication in exercise of their power under Section 4K of the Act. It seems to have been so done on the view that it was obligatory for the State Government to do so after the issuance of the notification under Section 3(b) of the Act. In our opinion this was not correct. > In the ji;dgment of this Court delivered a few days ago, _M Mahabir Jute Mills Ltd Gorakhpore_ v. _Snri Shibban Lal Saxena_ (judgment dated July 30, 1975), it has been held on a consideration of the provisions of law contained in Section 4K of the Act that after quashing the order of the. Government refusing to make a reference the High Court could ask the Government to reconsider the matter but it could not give premptory directions to make a reference. We may, however, take note of a sentence occurring in the judgment of this Court the case of _Bombay Union of Journalists_ (supra) at page 35 which reads thus: "if the appropriate Government refuse to make a reference for irrelevant considerations, or on extraneous grounds, or acts _ma/a fide,_ that, of course, would be another matter; in such a case a t RASHTRIYACHEM. _k_ FERTILIZERS LTD.'· GENERAL EMPLOYEES ASSOCIATION [PASAYAT, J.] 463 -.....>\ .., party would be entitled to move Court for a writ of _mandamus."_ A • _1_ • ..... ~ "-· We think what was meant to be conveyed by the sentence aforesaid was that the party would be entitled to move the High Court for interfering with the order of the Government and not necessarily for the issuance of a writ of mandamus to direct the Government to make reference. The mandamus would be to reconsider the matter. It does B not seem to be quite reasonable to take the view that after the refusal of the Government to make a reference is quashed a writ of mandamus to make a reference must necessarily follow. The matter has still to be left for the exercise of the power by the Government on relevant considerations in the light of the judgment quashing the order of c refusal" 8. It is now well settled that High Courts will not straightway direct the appropriate government to refer the dispute. It is for the appropriate government to apply its mind to relevant factors and satisfy itself as to the existence of a dispute before deciding to refer the dispute. We may refer to the following D observations of this Court in _Steel Authority of India Ltd._ v. _Union of India_ & _Ors.,_ Second SAIL Case (2006) 3 CLR 659)): "For the purpose of exercising jurisdiction under Section 10 of the 1970 Act, the appropriate government is required to apply its mind . Its order may be an administrative one but the same would not be E beyond the pale of judicial review. It must, therefore, apply its mind before making a reference on the basis of the materials placed before it by the workmen and/or management, as the case may be. While doing so, it may be inappropriate for the same authority on the basis of the materials that a notification under Section 10( 1 )( d) of the 194 7 Act be issued, although it stands judicially determined that the[F ] workmen were employed by the contractor. The state exercises administrative power both in relation to abolition of contract labour in terms of section 10 of the 1970 Act as also in relation to making a reference for industrial adjudication to labour court or a Tribunal under Section l 0( 1 )( d) of the 194 7 Act. While issuing a notification G under the 1970 Act, the State would have to proceed on the basis that the principal employer had appointed contractors and such appointments are valid in law, but while referring a dispute for industrial adjudication, validity of appointment of the contractor would itself be an issue as the state must _prima facie_ satisfy itself that there exists a dispute as to whether the workmen are in fact not employed by the H 464 SUPREME COURT REPORTS (2007] 5 S.C.R. A B contractor but by the management. We are, therefore, with respect, unable to agree with the opinion of the High Court. We would, however, hasten to add that this judgment shall not come in the way of the appropriate government to apply its mind for the purpose of issuance of a notification under Section 10 of the 1970 Act." 9. The exception to the above is, when the Court finds that the appropriate government refuses to make a reference of a dispute is unjustified. Jn such circumstances, the court may direct the government to make a reference C _Sankari Cement Alai Thozhilalar Munnetra Sangam, Tamil Nadu_ v. _Government of Tamil Nadu and Anr.,_ [1983] 1 SCC 304, _V. Veerarajan and Ors._ v. _Government of Tamil and Ors.,_ [1987] 1 SCC 479 and _TELCO Convoy Drivers Mazdoor Sangh and Anr._ v. _State of Bihar & Ors.,_ [1989] 3 SCC 271. I 0. The Circular dated 8.11.2000 of the Central Government which was D the subject matter of challenge in the first matter is extracted below: E F G H "I am directed to invite your kind attention to the above cited subject and to say that the matter relating to the prohibition of employment of contract labour in the establishment of Rashtriya Chemicals and Fertilizers Ltd., in their plants at Chem bur, Mumbai and Thal District Raigad, Maharashtra was discussed in the 44 Meeting of the Central Advisory Contract Labour Boardheld on 6-7th April, 2000 under the Chairmanship ofShri T.S. Shankaran. The Board made the following recommendations to the Government: "The Board observed that the Committee has examined in detail the issue with respect to the factors set out in Section 10 of the Act before coming too its conclusion. The Board, therefore, decided to accept the recommendations of the Committee and recommended to the Government accordingly" 2. In pursuance of the recommendations of the Board, the matter has been considered in detail by the Central Government and it has been decided not to prohibit employment of contract labour in the following work/jobs in the establishment of Rashtriya Chemicals and Fertilizers Ltd., in their plants at Chembur, Mumbai and Thal District Raigad, Maharashtra for which the appropriate government, under the Contract Labour (Regulation and Abolition) Act, 1970 is the Central _I_ RASHTRIYACHEM. _k_ FERffilZERS LTD.'· GENERAL EMPLOYEES ASSOCIATION [PASAYAT, J.] 465 \. -· ... A Government: (I) Cleaning of Roads, Stonn drains, Yards and Grass cutting. - (2) Dosing of Chemicals. (3) Jobs in Canteen. B (4) Maintenance of Railway Track in the Plant. ~ (5) Material handling and ... (6) Civil Engineering maintenance i.e., in the jobs of carpentry, masonry, repairs to electrical switchgear and equipment such as pumps, c cutters, maintenance operators, maintenance helpers, Assistants in Civil work, operators and general workers. ~ _f_ 3. As the question of interpretation of the term "establishments" ·and applicability of the Act to township is pending before the Constitution Bench of the Supreme Court and their ruling is awaited, it has been decided not to prohibit the employment of contract labour[D ] in the job of Security Guards covered by the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981, deployed in the colonies, at present. 4. A notification prohibiting employment of contract labour in E some other jobs/works in the establishment of Rashtriya Chemicals and Fertilizers Limited, in their plants at Chembur, Mumbai Priyadarshini Complex and Thal District Raigad, Maharashtra is being issued separately in consultation with the Ministry of Law, Justice and Company Affairs (Legislative Department). F 5. The employment of contract labour in the loading and unloading jobs being done by the Hathadi Workers are being referred back to the Board for their elucidation." -.;. 11. As rightly contended by learned counsel for the appellants once the respondent No. I-Association approached the High Court on the foundation G that the Contract Labour (Regulation and Abolition) Act, 1970 (in short the 'Act') applied, it pre supposes existence of a valid contract. What the writ petitioner (respondent No. I herein) wanted was quashment of Notification for reconsideration. In view of what has been stated in second SAIL case (supra) the High Court has to consider whether the stand taken in the writ petition H 466 SUPREME COURT REPORTS [2007] _5_ S.C.R. A was inconsistent. Jn the instant case the writ petitioner itself accepted that certain issues could not be decided in the writ petition. That being so, High Court giving directions in the nature done, do not appear to be appropriate. We are of the view that the High Court ought not to have given the directions in the manner done and should have left the respondent No. I-Association to B avail remedy available in the I.D. Act. 12. It is open to the respondent No. I-Association, if it is so advised, to move the appropriate State Government seeking reference of the purported dispute to the Tribunal. It is for the State Government to consider whether any reference is called for. We make it clear that we have not expressed any C op in ion on the desirability or otherwise of making reference. 13. Appeals are allowed with no orders as to costs. N.J. Appeals allowed. _,j_