High Court of KeralaSingle Judge2015-02-05Writ petition allowed; Exts.P8 and P9 set aside...

THE GENERAL MANAGER, CARBORUNDUM UNIVERSAL LTD., KORATTY, THRISSUR DIST. v. KERALA STATE, REPRESENTED BY THE SECRETARY TO GOVERNMENT, LABOUR AND REHABILITATION (E) DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM; THE SECRETARY, STATE ADVISORY CONTRACT LABOUR BOARD, KARAMANA, THIRUVANANTHAPURAM; THE SECRETARY, CARBORUNDUM UNIVERSAL EMPLOYEES UNION, KORATTY, THRISSUR; ADDITIONAL R4 TO R8 IMPLEADED; DAVIS K. VARGHESE

Case / Petition Number:WP(C).No. 16541 of 2006 (T)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Vinod Chandran
Judgment Date: 2015-02-05
Court Decision / Holding: Writ petition allowed; Exts.P8 and P9 set aside; Government may consider the matter afresh if so advised; one long-serving employee (David) to receive gratuity and provident fund benefits computed on full service; parties to bear costs.
Final Disposition: Writ petition allowed; Exts.P8 and P9 set aside; government to consider matter afresh; gratuity and provident fund benefits to an employee; costs to be borne by the parties.

Parties to the Case

Appellants / Petitioners

The General Manager, Carborundum Universal Ltd., Koratty, Thrissur District

Respondents

Kerala State represented by the Secretary to Government, Labour and Rehabilitation (E) Department, Government Secretariat, Thiruvananthapuram
The Secretary, State Advisory Contract Labour Board, Karamana, Thiruvananthapuram
The Secretary, Carborundum Universal Employees Union, Koratty, Thrissur
K.A. Devassy, Security Supervisor, Carborundum Universal Ltd., Koratty
C.T. Paily, Security Guard, Carborundum Universal Ltd., Koratty
A.K. Sankaran, Security Guard, Carborundum Universal Ltd., Koratty
M.S. Girishkumar, Security Guard, Carborundum Universal Ltd., Koratty
Davis K. Varghese, Security Guard, Carborundum Universal Ltd., Koratty
Additional R4 to R8 impleaded.

Legal Representation & Advocates

Counsels for Petitioners

• Sri M. Gopikrishnan Nambiar
• Sri P. Gopinath
• Sri Benny P. Thomas
• Sri K. John Mathai

Counsels for Respondents

• Sri Biju Meenattoor
• Sri P. Ramakrishnan

Case Synopsis & Summary

The petitioner is a company operating two units at Koratty and Edappally. It had entered into a contract for execution of certain works as per Ext.P1. The union representing contract labour workers filed complaints under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970, leading to government action abolishing contract labour in specified job descriptions including raw materials, housekeeping, furnace, crushing and grading, and later in mechanical repairing and cleaning in the crushing plant. The petition initially failed, but on appeal the matter was remanded for fresh consideration. The government ultimately issued Ext.P8 abolishing the work in the house keeping (security system) category and Ext.P9 directing regularization of employees in the same category. The petitioner argued there is no distinct work category of “house keeping (security system)” and that contract labour cannot be regularized under the Act; reliance was placed on a Supreme Court decision in Steel Authority of India Ltd. v. National Union Waterfront Workers, which held that abolition does not automatically entail absorption of contract labour. The court held that Ext.P8 and Ext.P9 were set aside for lack of clear categorization and for conflating two different job descriptions, and that abolition does not automatically require regularization. The court reserved liberty to the government to consider the matter afresh. It also awarded gratuity and provident fund benefits to one long-serving employee, computed de hors the contract labour status, and allowed the writ petition with costs against the petitioners.

Provisions of Law Cited

Contract Labour (Regulation and Abolition) Act, 1970 - Section 10Industrial Disputes Act, 1947

Legal Doctrines & Maxims

Absence of automatic absorption of contract labour upon abolition.
Abolition must be pursuant to a valid notification; regularization is not automatic.
Work categories must be properly delineated; combining different job descriptions under one head is improper.

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner's counsel contended that Ext.P8 (abolition) and Ext.P9 (regularization) are vitiated as there is no clear, separate work category of “house keeping (security system)” and the two job descriptions appear to be different. They argued that the Contract Labour Act does not mandate automatic regularization upon abolition; the court should examine whether abolition was properly reasoned and whether the established category exists. They emphasized that using the same head for two distinct departments defeats the objective of Section 10(2) and that the Government must consider the matter anew in light of constitutional and statutory principles. They urged compensation to the affected employee for long service, even if the contractual status is abolished.

Contentions of Respondents

The respondents argued that abolition of contract labour in specified job descriptions under Ext.P8 and the subsequent regularization order Ext.P9 are valid exercises of the Government’s power under the Contract Labour (Regulation and Abolition) Act, 1970. They asserted that the work descriptions were properly categorized and that there is a legitimate aim to regularize employees where contract labour existed in a department of perennial nature. They argued that the matter involved interpretation of the statute and existing statutory orders (G.O.s) and that courts should not interfere where government action is grounded on policy and statutory mandates. They relied on precedent that abolition does not necessarily entail automatic absorption but that regularization may be permissible where law and policy permit. They urged dismissal or modification of the challenge to Ext.P8 and Ext.P9 accordingly.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Steel Authority of India Ltd. and Others v. National Union Waterfront Workers and Others	2001(7) SCC 1	Positive	Cited to support the proposition that abolition under the CLRA Act does not automatically entail absorption; there is no obligation to regularize contract labour merely because abolition has occurred.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **THURSDAY, THE 5TH DAY OF FEBRUARY 2015/16TH MAGHA, 1936** ## **WP(C).No. 16541 of 2006 (T)** **---------------------------------------** ## **PETITIONER(S):** **-----------------------** **THE GENERAL MANAGER, CARBORUNDUM, CARBORUNDUM UNIVERSAL LTD., KORATTY, TRICHUR DIST.** **BY ADVS.SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.BENNY P. THOMAS SRI.K.JOHN MATHAI** ## **RESPONDENT(S):** **--------------------------** ## **1. KERALA STATE,** - **REPRESENTED BY THE SECRETARY TO GOVERNMENT, LABOUR AND REHABILITATION (E) DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 1.** **2. THE SECRETARY, STATE ADVISORY CONTRACT LABOUR BOARD, KARAMANA, THIRUVANANTHAPURAM - 695 002.** **3. THE SECRETARY, CARBORUNDUM UNIVERSAL EMPLOYEES UNION, KORATTY, THRISSUR - 680 308.** - **ADDITIONAL R4 TO R8 IMPLEADED.** **4. K.A.DEVASSY, SECURITY SUPERVISOR, CARBORUNDUM UNIVERSAL LTD., KORATTY.** **5. C.T.PAILY SECURITY GUARD, CARBORUNDUM UNIVERSAL LTD., KORATTY.** **6. A.K.SANKARAN, SECURITY GUARD, CARBORUNDUM UNIVERSAL LTD., KORATTY.** **7. M.S.GIRISHKUMAR, SECURITY GUARD, CARBORUNDUM UNIVERSAL LTD., KORATTY.** **Msv/** **-2-** **-2-** ## **WP(C).No. 16541 of 2006 (T)** **---------------------------------------** **8. DAVIS K. VARGHESE, SECURITY GUARD, CARBORUNDUM UNIVERSAL LTD., KORATTY.** *** ADDITIONAL R4 TO R8 IMPLEADED AS PER ORDER DTD.13.7.2006 IN IA.9552/2006.** **R1 TO R3 BY GOVERNMENT PLEADER SRI.BIJU MEENATTOOR R4 TO R8 BY ADV. SRI.P.RAMAKRISHNAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05-02-2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **msv/** **WP(C).No. 16541 of 2006 (T) ---------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS:** **--------------------------------------** **EXT.P1: PHOTOCOPY OF THE AGREEMENT DTD.31.1.2001.** **EXT.P2: PHOTOCOPY OF THE REPRESENTATION DTD.11.8.1990 TO THE LABOUR COMMISSIONER & LABOUR SECRETARY.** **EXT.P2(a): PHOTOCOPY OF THE LETTER DTD.23.11.1992 TO THE CHAIRMAN OF THE SUB COMMITTEE.** **EXT.P3: PHOTOCOPY OF THE NOTIFICATION NO. G.O. (RT)1072/94/LBR DTD.5.5.1994.** **EXT.P4: PHOTOCOPY OF THE JUDGMENT IN OP NO.7951/94 DTD.2.3.1998.** **EXT.P5: PHOTOCOPY OF THE JUDGMENT DTD. 17.11.2003 IN WA.NO.1259/1998. EXT.P6: PHOTOCOPY OF THE ORDER GO (RT) NO.1998/2004/LBR DTD.28.7.2004. EXT.P7: PHOTOCOPY OF THE JUDGMENT IN WP(C) NO.14674/2005 DTD.10.6.2005.** **EXT.P8: PHOTOCOPY OF THE NOTIFICATION VIDE G.O. (RT)NO.1054/LBR/2006 DTD.10.5.2006.** **EXT.P9: PHOTOCOPY OF THE G.O. (RT) NO. 1136/06/LBR DTD.16.5.2006.** **EXT.P10: PHOTOCOPY OF THE LETTER DTD.18.1.2006 TO THE 1ST RESPONDENT. EXT.P11: PHOTOCOPY OF THE COPY OF THE STATEMENT DTD.9.3.2004.** **EXT.P12: PHOTOCOPY OF THE LETTER DTD.29.12.2004.** **EXT.P13: PHOTOCOPY OF THE STATEMENT FILED BY THE 1ST RESPONDENT.** **EXT.P14: PHOTOCOPY OF THE LETTER NO.E-852/98 DTD.20.2.2004.** **EXT.P15: PHOTOCOPY OF THE MINUTES OF THE 71ST MEETING OF THE STATE ADVISORY CONTRACT LABOUR BOARD DTD.12.11.2004.** **EXT.P16: PHOTOCOPY OF THE REPORT OF THE SUB COMMITTEE DTD.10.12.1993.** **EXT.P17: PHOTOCOPY OF THE MINUTES OF THE 70TH MEETING OF THE BOARD HELD ON 4.5.2004.** **RESPONDENT(S)' EXHIBITS:** **-----------------------------------------** **EXT.R4(a): TRUE COPY OF REPRESENTATION DTD.9.3.2004 SUBMITTED BY THE 3RD RESPONDENT.** **Msv/** **-2-** **-2-** ## **WP(C).No. 16541 of 2006 (T)** **---------------------------------------** **EXT.R4(b): TRUE COPY OF LETTER DTD.7.3.2005 FROM THE 2ND RESPONDENT TO THE 1ST RESPONDENT.** **EXT.R4(c): TRUE COPY OF NOTICE DTD.26.12.2000 ISSUED BY THE PETITIONER.** **EXT.R4(d): TRUE COPY OF COMPLAINT DTD.8.6.2005 SUBMITTED BY THESE RESPONDENTS.** **//TRUE COPY//** **P.S.TO JUDGE** Ms **v/** ## **K.VINOD CHANDRAN, J** - - - - - - - - - - - - - - - - - - - - W.P.(C).No. 16541 of 2006 - - - - - - - - - - - - - - - - Dated 5[th] February, 2015 - - - - - - - - - - - - - - - - - - - - - - - - ## **JUDGMENT** The petitioner is a Company which has two units at Koratty and Edappally. The petitioner Management had entered into a contract for execution of certain works, as per Ext.P1. The Union representing such workmen under the contractors, filed complaints before the appropriate Government under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 (Act of 1970), as per Exts.P2 and P2(a). A notice was issued by the Government abolishing the contract labour in the following job specifications : “Raw materials, House keeping, Furnace, Crushing and Grading Departments of the Carborundum Universal Ltd., Silicon Carbide Plant.” **WP(C).16541/06** 2 2. The Management filed a writ petition which was dismissed by Ext.P4. However, in appeal, the matter was remanded for fresh consideration, which is evident from Ext.P5. Subsequently, after consideration, Ext.P6 order was passed abolishing the contract labour in mechanical repairing works and cleaning in breaking area (crushing plant). The same was again challenged in a writ petition, which was remanded by Ext.P7, again for fresh consideration. 3. Eventually the Government came out with Ext.P8 notification. Though the representation was for abolition of contract labour works in the Raw materials, house keeping, Furnace and Crushing and grading department; Government abolished the work in the “house keeping/security system”. Further to Ext.P8 notification, Government also issued Ext.P9 order directing regularization of the employees who were employed in “house keeping(security **WP(C).16541/06** 3 system)”. 4. The learned counsel for the petitioner would in fact, raise two contentions against Ext.P8 notification and Ext.P9 order; that, there is no work categorized as “house keeping(security system)”. Both of them are different and a person employed in one of such job description cannot be employed in the other. The Management also has a contention that, going by the provisions of the Act of 1970, there can be no regularization of the contract labour employees as directed by the Government in Ext.P9 which position stands declared by **Steel Authority of India Ltd. and Others v. National Union Waterfront Workers and Others (2001(7) SCC 1).** 5. The learned counsel for the petitioner however, would contend that the contract itself was a sham since, the contractor was an employee 4 ## **WP(C).16541/06** of the Company itself. In any event, it is submitted that only one employee remains in the petitioner/Company as a security personnel, who is said to be employed under a contract; however, payment being made by the Management itself. At least after Ext.P9, there is a regularization effected, is the contention. The workman could have raised a reference under the Industrial Disputes Act, 1947, (for brevity 'the I.D.Act') for regularization, which he was precluded from since there was an order issued by the Government, granting regularization. 6. The contention that, Government has not applied its mind in deciding the issue of abolition of contract labour, is very evident from the fact that the same has been done for the job description : “house keeping(security system)”, which, as submitted by the Management, are two entirely different work categorization. In such **WP(C).16541/06** 5 circumstance, definitely, Ext.P8 will have to be set aside for reason of the work categorization and the job description being not clear and for inclusion of two separate departments under the very same head. 7. If the issue of contract labour subsists in the establishment, definitely, the Government could look into it. Ext.P8 would hence stand set aside. When Ext.P8 is set aside, Ext.P9 also would have to be set aside. 8. It is to be further noticed that with respect to the challenge against Ext.P9, the binding precedent referred to above would indicate that there can be no regularization of contract labourers and what the Act of 1970 intends is, the abolition of contract labour so as to not perpetrate an assumed illegality insofar as the Management, employing persons under the **WP(C).16541/06** 6 contract, thus denying them benefits of a regular employment; where the employment is with respect to - (i) the process or operation of the establishment or other incidental work and (ii) is of perennial nature and (iii) one ordinarily done through regular workman; as specified under subsection (2) of Section 10. 9. The Act of 1970 as held by the Honourable Supreme Court, does not expressly or by necessary implication provide for automatic absorption of contract labour. On abolition made by a valid notification, there would be no obligation on the establishment hence, to regularize the employees/labourers engaged by the contractor on the work, for which the contract labour stands abolished. In such circumstance, Ext.P9 also would have to be set aside for that additional ground. I do so. **WP(C).16541/06** 7 10. As for the one employee, continuing on the basis of Ext.P9, it is to be noticed that the person was continued allegedly under a contract itself, in the security wing of the Management company. The Management is said to have no other contract labour, either in the security department or in the house keeping department, as of now. The continuing employee under the contractor, is said to be the only employee, who has been continued so, by reason of Ext.P9. This Court found that the employee is not entitled to be regularized or continued. However, this Court has also taken into consideration the fact that the said employee was continued for long years under a contract without any break in the service. By Exts.P8 and P9 orders, the employee is said to have been continued allegedly under a contract, since the regularization of employees were directed by the Government. In such circumstance, it is only proper that the employee be given adequate **WP(C).16541/06** 8 compensation, which he would have been otherwise entitled to, under the ID Act. The employee by name, David, shall be given the benefits of gratuity and provident Fund, computing the entire service he has rendered, in the establishment, _de hors_ the fact that the petitioner was employed under a contract, on the basis of the last pay drawn, as on the end of this month. With the above rider, the writ petition would stand allowed setting aside Exts.P8 and P9, but reserving liberty to the Government to consider the matter afresh, if so advised. Parties are left to suffer their respective costs. Sd/- ## **K.VINOD CHANDRAN Judge** Mrcs //True Copy//