VEGOILS PRIVATE LEMITED vs. THE WORKMEN

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 18 PETITIONER: VEGOILS PRIVATE LEMITED Vs. RESPONDENT: THE WORKMEN DATE OF JUDGMENT10/09/1971 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. REDDY, P. JAGANMOHAN CITATION: 1972 AIR 1942 1972 SCR (1) 673 1972 SCC (2) 724 ACT: Industrial Dispute-Abolition of Contract Labour-Principles to be followed-Effect of the Contract Labour (Regulation and Abolition) Act (Central Act 37 of 1970) and the Maharashtra Mathadi, Hamal and other Mannual Workers (Regulation of Employment and Welfare) Act 30 of 1969. HEADNOTE: The appellant--a private limited company-carried on the business of’ manufacturing edible oils, soaps and certain by-products. In connection with its business the appellant employed about 700 permanent workmen. However for loading and unloading seed and oil cake bags and for feeding the hoppers in the solvent extraction plant the appellant employed labour through a contractor. The workmen in an industrial dispute claimed inter alia that the work of loading and unloading seed bags as well as that of feeding the hoppers was of a perennial nature and therefore in respect of these contract labour should be abolished. The Industrial Tribunal on considering the evidence before it held that the work of feeding the hoppers could not be said to intermittent and sporadic as claimed by the appellant; it was on the other hand closely connected with the principal activity of the appellant. In similar plants in the region the work of feeding the hoppers was carried on by permanent workmen. On the basis of these factors the Tribunal held that the appellant also should carry out this work through permanent workmen. In the matter of loading and unloading of seed and cake bags the Tribunal held that these activities were also closely connected with the main industry and the work was of.a permanent character. The Tribunal noted that the comparable units in the same region carried on the work of loading and unloading through contract labour, but nevertheless, on the view that contract labour must be discouraged, the Tribunal held that in this respect also the appellant must employ only permanent workmen. The Tribunal referred to the Contract Labour (Regulation and Abolition) Act 1970, (Central Act 37 of 1970) and the Maharashtra Mathadi Hamal and Other Manual Workers (Regulation of Employment and Welfare) Act 30 of 1969 and observed, that these two enactments also supported its view. In appeal by special leave before this Court the http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 18 appellant apart from questioning the Tribunal’s decision on merits challenged the jurisdiction of the Tribunal to consider the question of abolition of contract labour in view of the provisions of the aforesaid two Acts. HELD: (i) The Industrial Tribunal acquired jurisdiction to entertain the dispute in view of the reference made by the State Government on April 17, 1967. Admittedly on that date neither Central Act 37 of 1970 nor, Maharashtra Act 30 of 1969 had been passed. Even during the proceedings before the Tribunal the appellant raised no objection after the passing of the two enactments that the Tribunal had no longer jurisdiction to adjudicate upon the dispute. Under these circumstances the Tribunal had to adjudicate upon the point referred to it having due regard to the principles laid down by the Courts, particularly this Court governing the abolition of contract labour. [689 E-G] (ii) Central Act 37 of 1970 had received the President’s assent before the passing of the Tribunal’s award but it came into force after the. 9-L3SupC.I./72 674 said award. The State Act had come into force before the passing of the award. Though the contention that the Tribunal lost jurisdiction to consider the question of contract labour in view of these enactments could not be accepted this Court would be justified when dealing with this appeal to give effect particularly to the provisions of the Central Act having due regard to the clearly expressed intention of the legislature in the said Act regarding the circumstances under which contract labour can be abolished. [689 C-D; 690 B] (iii) Even according to the evidence of the appellant’s witnesses it was clear that the feeding of hoppers in the solvent extraction plant was an activity closely and intimately connected with the main activity of the appellant, namely, crushing oil cakes and oil seeds for extraction of oil and other chemical production. Excepting for a few days this work had that by employing contract labour for this purpose the appellant would be enabled to keep down the costs on the ground that there would not be sufficient work for all the workmen if permanent labour was employed. There was no wrong approach by the Tribunal in this regard. Further the award of the Tribunal abolishing the contract labour in respect of feeding the hoppers was fully justified because it was in accordance with the principles laid down by this Court and substantially incorporated in ,Cis. (a) to (d) of s. 10(2) of the Central Art. The Tribunal’s direction in this regard must therefore be upheld.. [680 C-F; 681 A-B; 694 C-D] (iv) However the Tribunal’s direction to the appellant not to engage :any labour through a contractor for the work of loading and unloading after May 1, 1971 must be set aside. The Central Act had come into force on February 10, 1971. Under s. 10 of the said Act the jurisdiction to decide matters connected with prohibition of contract labour is vested in the appropriate Government. Therefore with effect from February 10, 1971 it is only the appropriate Government that can prohibit contract labour by following the Procedure and in accordance with the provisions ,of the Central Act. The Industrial Tribunal in the circumstances had no ,jurisdiction, though its award was dated November 20, 1970, to give a ,direction in that respect which becomes enforceable after the date of the ,coming into force of the Central Act. In any event, such a direction contained in the award could not be enforced from a date when abolition of contract labour can only be done by the appropriate http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 18 Government in accordance with the provisions of the Central Act. [692 A-D] Further under cl. (c) of s. 10(2) of the Central Act one of the relevant factors to be taken into account is to consider, when contract labour regarding any particular type of work is proposed to be abolished, whether that type of work is done ordinarily through regular workmen in the establishment, or an establishment similar thereto. In the present case similar establishments, as noted by the Tribunal, employed contract labour for loading and unloading. The evidence also showed that the work of loading and unloading required varying numbers of workmen from day to day justifying the employment of contract labour under the ,.principles laid down by this Court. [693 E] The Standard-Vacuum Refining Co. of India Ltd. v. Its Workmen & Ors., [1960] 3 S.C.R. 466, Shibu Metal Works v. Their Workmen, [1966] 1 L.L.J. 717 and National Iron and Steel Co. Ltd. and Ors. v. The State of West Bengal and Anr., [1967] 2 S.C.R. 391 referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION Civil Appeal No. 620 of 1971. 675 970, of the Industrial Tribunal, Maharashtra, Bombay in Refeence (I.T.) No. 110 of 1967. G. B. Pai, P. N. Tiwari and 0. C. Mathur, for the appellant. The respondent did not appear. The Judgment of the Court was delivered by Vaidialingam J. This appeal, by special leave, is, directed against the award (Part.-I) dated November 20, 1970 of the Industrial Tribunal, Maharashtra, Bombay in Reference (I.T. No. 110 of 1967). The reference was made by notification dated April 17, 1967 and three questions were referred for adjudication. We are not concerned in these proceedings with the subject matter of dispute relating to demand Nos. 2 and 3. Part I of the award, against which this appeal is preferred, related to demand No. 1, which was as follows: "Demand No. 1--Abolition of contract system: The Company shall abolish the contract system in whatever form and in any department of the company existing at present and the workmen employed by the contractors shall be treated as the Company’s regular employees and all the benefits of service conditions and wages available to the company’s employees will be extended to them." It will be seen that the above demand consisted really of two parts : (a) that the contract system should be abolished, and (b) that the workmen employed by the contractor should be treated as the appellant’s regular employees with all the benefits of service conditions that are available to the regular employees of the Company. The original parties to the reference were the Swastik Oil Mills Ltd., Wadala, Bombay and the workmen employed therein as represented by the Dyes and Chemical Workers Union. Prior to its incorporation in 1968, the appellant Company was carrying on business of manufacturing edible oils, soaps and its by products such as glycerine and deoiled cake meal in the name of Karamchand Premchand Private Limited. In or about March, 1970 the latter firm was taken over by the http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 18 appellant Company. The said business was originally carried on by Swastik Oil Mills Limited, which by the orders of the High Courts of Bombay and Gujarat was amalgamated with Karamchand Premchand Private Limited on April 18, 1967. Since the taking over of the said Karamchand 676 Premchand Private Limited by the, Vegoils Private Limited, namely, the appellant, the latter has been carrying on the said business. In connection with its business, the appellant employs about 700 permanent workmen at its factory in Wadala,, Bombay. According to the appellant, it has been employing for more than 30 years a contractor for loading, unloading, weighing and stacking materials and bags and feeding the hoppers. It may be mentioned at this Stage that the workmen had raised a dispute under demand No. 1 regarding the abolition of the contract system of employing labour in the two departments of the appellant, namely, (i) in the canteen section, and (ii) in the seeds godown and the solvent extraction plants section. But before the Industrial Tribunal the Union did not press their demand for abolition of contract labour in respect of the canteen section. As a consequence the Industrial Tribunal in the award has rejected the claim of the Union for abolition of the contract system in the canteen section. There fore, we will make no further reference to the stand taken by the parties regarding this section, in our judgment. We will now refer to the stand taken by the appellant and the Union regarding the abolition of contract labour in respect of seeds godown and the solvent extraction plants. The stand taken by the Union in its statement of claim dated May 30, 1967 was briefly as follows : The Company had work in this section which was of a regular and continuous nature. The work in that section was not intermittent or accidental type. The work required to be performed is of loading and unloading seed bags and also to feed the hoppers for the requirements of solvent extraction plants. The product left after the process of solvent extraction also is to be filled in gunny bags. All these items of work are of a permanent nature and was being regularly carried out by the contractor’s workmen by employing on an average more than 200 workmen. The work being of a continuous nature is being carried out throughout the year. Further, this type of work is an essential part of the solvent extraction unit. As the jobs were essentially connected with the day to day work of the Company, and as they were continuous, the employment of a contractor for getting these types of work done, is nothing but an unfair labour practice adopted by the appellant. The employment of contract labour has been disapproved by the various Committees and Commissions. This Court has also discussed and laid down principles regarding the employment of contract labour. The labourers working under a contractor were at his mercy and were not getting the benefits which the permanent employees of the appellant Company are normally entitled to. To 677 avoid giving the benefit to such workmen, the Company has adopted the device of having the work done by contract labour. The demand for abolition of contract labour is fair and reasonable and as such the demand has to be acceded to. In the written statement dated July 22, 1967, which was originally filed by the Swastik Oil Mills Limited,, the Company took up the following contentions : Wherever the work was of a perennial nature, the Company http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 18 has been having that work done only by its permanent employeesBut where certain items of work were of intermittent and sporadic nature and irregular in its working, to ensure efficiency, economy and proper working, the appellant had to engage contract labour. In respect of the seeds godown and solvent extraction plants, the appellant classified the type of work into four parts : (i) unloading of seeds and cake bags from railway wagons and motor trucks and stacking the same in the godown for easy identification in separate lots, (ii) loading of deoiled cake meal bags into motor lorries and wagons whenever they had to be despatched from the factory, (iii) feeding of cake in the hopper which in turn feed the solvent extraction plants through a system of long screw conveyors and other necessary equipment; and (iv) filling, weighing and stacking ,of small bags. The full particulars regarding the type of work involved in the above four items were given. All these items of work were of an intermittent and irregular nature. The loading and unloading in wagons and trucks was not a regular affair but dependent on the availability of railway wagons and trucks. The feeding of cakes into hoppers and filling up deoiled cakes were also of an irregular and intermittent nature. In view of these circumstances, it was not possible to employ permanent workmen to carry out the said items of work. Further, legislation regarding the regulation and abolition of contract labour was being contemplated by the Central Government and the State of Maharashtra. Various charts relating to the approximate number of workmen employed, their hours of work as well as the days on which they were employed for these items of work by the contractor, were also given. In view of the peculiar type of these items of work, the demand of the Union for abolition of contract labour was not justified. The Industrial Tribunal considered the demand under two heads : (i) the abolition of contract labour, and (ii) treating the workmen employed by the contractor as regular employees of the Company and giving them all the benefits of service conditions which the permanent employees were entitled to. 678 So far as the second part of the above demand is concerned, the Industrial Tribunal rejected the Union’s claim. According to the Industrial Tribunal the Union has not placed any material nor made-out any case justifying this part of the claim. In this connection the Industrial Tribunal relied upon the evidence of the contractor Shri Giri, as well as the documents filed by him,, and has come to the conclusion that the persons working under the contractor were not his permanent employees and that, on the other hand, they were free to go and work on any day under anybody else. In view of this circumstance, the Industrial Tribunal held that there was no relationship of permanent employees between the contractor and the labour force engaged by him for the daily work which he had to get done under the contract. Hence this part of the claim to treat the contractor’s workmen as regular employees of the Company was rejected. Regarding the first part of the demand, namely, abolition of contract labour, the appellant adduced volume of evidence, oral as well as documentary. The documentary evidence consisted of various charts prepared not only by the appellant but also by the contractor, Shri Giri, giving particulars about the number of workmen employed, the hours of work done by them, as well as the days on which there was http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 18 no work at all to be done. Some of the officers of the appellant Company as well as the contractor gave evidence regarding the manner in which the work was done in the seeds godown and the solvent extraction plants. In particular, the appellant led evidence to show that the work of loading and unloading in wagons and lorries was not of a continuous nature. The arrival of wagons on any particular day was uncertain. Nevertheless, the contractor has to be ready to clear the wagons as and when it arrives within the time allowed by the railway authorities, otherwise heavy demurrage had to be paid. While on certain days no wagon at all will arrive, on certain other days suddenly a large number of wagons will arrive necessitating the clearance of the goods promptly and immediately for which purpose the contractor was always having workmen ready to meet the situation. This type of work, according to the appellant company, could be done efficiently and promptly only by a contractor. The Union, on the other hand, placed reliance upon the charts furnished by The appellant and the contractor and pleaded that the work was of a continuous and perennial nature, which could be very efficiently discharged by the permanent employees of the appellant Company. The Union also referred to the practice obtaining in certain other companies doing similar business in the area and pointed out that the type of work that was being done by the appellant through a contractor was being done in those concerns by their permanent workmen. 679 The Industrial Tribunal considered the affidavit filed , by Vallabhdas A. Parikh, who was at the material time the Production Director of the Swastik Oil Mills, But he was not available, for giving evidence, hence the Company relied on the affidavits filed by Anirudhha R. Shah, the Head Time- keeper and Ramanlal M. Desai, who was incharge as ’the Head of the Department of the solvent section, crushing section, refinery and refined filling sections of the appellant. Further the business Manager of the appellant Sri Rajnikant C. Nanavati had also filed an affidavit. ’the, contractor Giri also gave evidence on behalf of the appellant. Such of those witnesses who had given affidavits supporting the claim of the appellant were cross-examined by the Union. The Industrial Tribunal placed reliance on the evidence of Ramanlal M. Desai, who was the Head of the Department of the Solvent section. This witness gave particulars regarding the approximate number of days that the solvent extraction plant worked in the years 1967, 1968 and 1969. From his evidence it was clear that out of 365 days in 1967, the plant did not work for 65 days because of nonavailability of raw materials and it had to be closed for general cleaning and repairs for about 23 days. Similarly it remained close, for 6 days due to holidays and for 8 days due to power failure. During all the other days the plant was working. The position in 1968 and 1969 was more or less substantially similar. Even in cross-examination Ramanlal M. Desai admitted that the solvent extraction plant was working for about 300 days out of 365 days in the year and that the solvent extraction plant was working in three shifts. The contractor Giri also gave evidence regarding the number of workmen engaged by him regarding the solvent extraction plant. The Industrial Tribunal is of the view that the work of filling the hoppers, in view of the evidence referred to above, cannot be said to be intermittent or sporadic. On the other hand, feeding of hoppers in the solvent ex- traction plant is intimately and closely connected with the http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 18 principal activity of the appellant, namely, that of crushing oil cakes and oil seeds for extraction of oil and other chemical productions. In- this view, the Industrial Tribunal held that the work of feeding the hoppers and other allied process connected, with the filling of bags with deoiled cakes must be considered to be a necessary and integral part of the industry carried on by the appellant. The Industrial Tribunal is also of the view that the work of feeding the hoppers and other activities connected with the same are of a permanent nature. In consequence, the Industrial Tribunal held that there was no justification for the appellant to employ contract labour for this purpose. Mr’ G. B. Pai, learned counsel, for the appellant, no doubt,. attacked this finding of the Industrial Tribunal. According to the learned counsel the evidence in this regard has not been properly appreciated and the Industrial Tribunal committed an error in 680 holding that the work connected with feeding of the hoppers and other activities connected with the same are of a permanent and perennial nature. The Union, though served, has not chosen to appear in this appeal. But Mr. Pai has drawn our attention to all the relevant materials on record. We are not inclined to accept the contention of Mr. Pai that the direction given, by the Industrial Tribunal abolishing the contract labour regarding the work of feeding the hoppers and other allied activities incidental and connected therewith is in any manner erroneous. The direction given in this regard, in our opinion, is fully justified. Even according to the evidence of the appellant’s witnesses, referred to above, it is clear that the feeding of hopoers in the solvent extraction plant is an activity closely and intimately connected with the main activity of the appellant, namely, crushing oil cakes and oil seeds for extraction of oil and other chemical production. Excepting a few days, as already referred to above, this work has to go on continuously almost Throughout the year. From this it follows that this item of work is incidental to the nature of the industry carried on by the appellant, which must be done almost every day and there should be no difficulty in having regular workmen in the employment of the appellant to do this type of work. It is not as if that the work is of an intermittent or temporary nature or so little that it would not be possible for the appellant to employ full time workmen for this purpose. Further, it cannot also be said that by employing con-tract labour for this purpose, the appellant could be enabled to keep down the costs on the ground that there would not be sufficient work for all the workmen if permanent labour was employed, There is also on record the statement Ex. C, filed on behalf of the appellant. That statement gives the items of work got done by the contract labour by three other concerns, namely, M/s Godrej Soap Works, M/s Tata Oil ’Mills and M/s. Hindustan Lever. From the said statement it is seen that feeding of cakes in the hoppers is done by contract labour in the appellant Company and M/s Godrej Soap Works. That work is done by the departmental workmen in M/s. Tata Oil Mills, M/s. Hindustan Lever does not have any solvent extraction plant, but the work of feeding the seeds. in the hoppers, filling of cakes in the bags and stitching cake bags and stacking those bags are done by departmental workmen. Therefore, from this it follows that the feeding of hoppers is an essential part of the industry carried on by the appellant and that it could "very well be http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 18 done by the departmental workmen as is being done by M/s Tata Oil Mills and M/s Hindustan Lever. In view of all these circumstances pointed out above the direction of 681 the Industrial Tribunal regarding this aspect is not erroneous. In fact Mr. Pai ,himself felt considerable difficulty in satisfying us that there has been any wrong approach made by the-Industrial Tribunal, in this regard. Further, the direct-ion given by the Industrial Tribunal abolishing the contract labour in respect of feeding the hoppers is quite in accordance with the principles laid down by this Court in various decisions. Those principles will be referred to by us when considering the direction given by the Industrial Tribunal abolishing the contract labour regarding loading and unloading of seeds bags in wagons and trucks. The Industrial’Tribunal considered the evidence of the, appellant’s witnesses regarding loading and unloading of seeds and cake bags from railway wagons and motor trucks and stacking the same in the godowns as well as the loading of deoiled cake meal bags in the motor lorries and wagons whenever required to be dispatched from the factory. Here again the Industrial Tribunal is of the view that these activities are also closely connected with the main industry carried on by the appellant and that the said work is also of a permanent character. This item of work forms an integral part of the process of the industry itself. On this reasoning, the Industrial Tribunal held that those activities also could be carried on by the appellant by its permanent workmen. The industrial Tribunal no doubt, noted that from Ex. C it is clear that the work of loading and unloading of seed bags, cake bags from wagons and lorries is being done in all the firms, namely, M/s Godrej Soap Works, M/s Tata Oil Mills and M/s Hindustan Lever, situated in the same area including the appellant, were got done by contract labour. But, nevertheless,, the Industrial Tribunal is of the view that the contract labour will have to be dis- couraged. The Industrial Tribunal also referred to a statement filed by the appellant Ex. C9. The said exhibit is as follows "EMPLOYMENT POSITION-LOADING AND UNLOADING CONTRACTOR Month No.of- Total- Aver- Total- Maxi- Mini- Total- emplo- Man- age- work- mum- mum amount yees on days atten ing emplo emplo paid to roll dance days yed per yed per cont- per day day day ractor March, 1967 67 1176 47 25 51 41 11,183.05 April, 1967 64 1188 47 25 56 43 11,300.02 May, 1967 63 6124548 46 55 43 12,510.40 June, 1967 82 1669 64 26 76 46 11,358 ;00 for the Swastik Oil Mills Ltd., Sd. V. A. Parikh, Production Director." 682 From the above figures furnished by the appellant, the Industrial Tribunal is of the view that the average number of employees on the roll were between 63 and 82 per month and that the total man-days ranged between 1188 to 1669 per month. The average attendance per day again ranged between 46 to- 47 per day. From this statement the Industrial Tribunal drew an inference that the total number of working days in every month was between 25 or 26 while the minimum and maximum persons employed per day fluctuated between 41 and 46 at the minimum and between 51 to 76 at the maximum. The Union also placed very strong reliance on this document. http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 18 Ex. C9 in support of its contention that the work of loading and unloading is of a permanent nature and that it could be done by the permanent employees of the Company. The Industrial Tribunal accepted this contention of the Union and ultimately held that even in respect of this item of work, the contract labour should be abolished. It must also be pointed out that the Industrial Tribunal has referred to two enactments : (1) passed by the Parliament and (2) by the Maharashtra State Legislature, to which we will refer later. It is the view of the Industrial Tribunal that these two enactments also support its view that the contract labour should be abolished as far as possible. Ultimately, the Industrial Tribunal directed the appellant not to engage any labourer through a contractor for the work of loading and unloading also with effect from the date after the termination of the present contract between the employer and the contractor, that is, after May 1, 1971. Mr. G. B. Pai, has very strenuously attacked this finding of the Industrial Tribunal. Learned Counsel raised three contentions : (1) The Tribunal had no jurisdiction, lo consider the question of abolition of contract labour in view of the Contract Labour (Regulation & Abolition) Act, 1970, (Act 37 of 1970) (hereinafter to be referred as the Central Act) and The Maharashtra Mathadi, Hamal and Other Manual Workers (Regulation of Employment and Welfare) Act, 1969, (Act 30 of 1969) (hereinafter to be referred as the State Act); (2) even on the basis of the principles laid down by this Court, the direction to abolish contract labour in respect of loading and unloading is erroneous in law, and (3) the finding that contract labour should be abolished in this regard is opposed to the evidence and the practice obtaining in other industries in the same area. Before we deal with the contention regarding jurisdiction of the industrial Tribunal based upon the Central Act and Maha- rashtra Act, we will refer to the principles laid down by this Court in considering the question of abolition of contract labour which is the subject of the second contention of Mr. Pai. According to 683 the learned counsel, the principles laid down by this Court have been ignored when the Industrial Tribunal directed abolition of contract labour regarding loading and unloading. There has been. a consistent demand by the labour for abolishing the system of contract labour and that has given rise to certain industrial adjudications, the correctness of which has corn,-- up for consideration before this Court. In The Standard-Vacuum Refining Co. of India Ltd. v. Its Workmen and others(1) two questions arose, namely, (1) whether a dispute raised by the permanent workmen regarding abolition of contract labour is an industrial dispute under s. 2(k) of the Industrial Disputes Act, and (2) whether the directions given by the Industrial Tribunal abolishing the contract system was justified. We are not concerned with the first aspect, referred to above, in the case before us. Regarding the second aspect, the Industrial Tribunal had in that case abolished the contract system obtaining in the particular establishment. This Court after refering to the recommendations of the Royal Commissions on Labour, as well as the opinion expressed by several Labour Inquiry Committees appointed in different States, has expressed the opinion that in a given case the Industrial Tribunal should nest its decision not merely on theoretical or abstract objections to contract labour but also on the terms and conditions on which contract labour is, employed and the grievance made by the http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 18 employees in respect thereof. In that case this Court further held that the contract labour was doing an itself of work which was incidental to the manufacturing process, which was carried on by the company and that type of work was necessary and also of a perennial nature which had to be done every day. It was also noted I that such type of work was generally done by the workmen in other industries in the area by the regular employees of the employer. In view of all these circumstances it was held by this Court that there should be no difficulty in having the said type of work getting done by regular workmen of the employer. It was also emphasised that the matter would be different if the work was of an intermittent or temporary nature or was so little that it would not be possible to employ full time workmen for the purpose. This Court approved the decision of the Industrial Tribunal abolishing contract labour in the above circumstance. The said principles laid down in the above decision have been referred to with approval and adopted in Shibu Metal Works v. Their Workmen 2 ) . The abolition of contract labour by the Industrial Tribunal Was also approved in. this case. In National Iron and Steel Co. Ltd. and others v. The State of West Bengal and another(3) after quoting with approval (1) [1960] 3 S.C.R. 466 (3) [1967] 2 S.C.R. 391. (2) [1966] 1 L.L.J. 717. 684 the principles laid down by this Court in The Standard- Vacuum Refining Co. of India Ltd. v. Its Workmen and others(-’), this Court afirmed the decision of the Industrial Tribunal abolishing ,contract labour on the ground that the employment of contract labour would not have served to keep down the costs of the employer on the ground that there would not be sufficient work for the workmen if permanent labour was employed. From the principles laid down by this Court and referred to above, it is clear that if the work for which contract labour is employed is incidental to and closely connected with the main activity of the industry and is of a perennial and permanent nature, the abolition of contract labour would be justified. It is also open to the Industrial Tribunal to have regard to the practice obtaining in other industries in or about the same area. It may be pointed out that most of the principles laid down by this Court have been given due regard in the Central Act, to which we will refer im- mediately. In our opinion, Mr.Pai is justified in his contention that the principles laid down by this Court,, though adverted to by the Tribunal, have not been given due regard, when it gave a ,direction regarding abolition of contract labour regarding loading and unloading. We will be discussing this aspect a little more ;elaborately when we deal with the third contention of Mr. Pai on merits. Now coming to the first contention, it is necessary to refer to the material provisions of the two enactments. The Central Act received the assent of the President on September 5, 1970 and came into force on February 10, 1970. Therefore, at the time when the award was passed, the Act had received the assent of the President, though it had not come into force, but the State Act had been passed on June 13, 1969 and we are informed that it had come into force even before the date of the award. The Central Act, as its preamble shows, was to regulate the employment of contract labour in certain establishments and to provide for the abolition in certain circumstances and for matters connected therewith. Under sub-s. (4) of s. 1, http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 18 the Act applies to the establishments mentioned therein as well as to every contractor who employs the number of workers referred to in cl. (b). There is no controversy that the Act applies to the appellant establishment. Section 2 defines the various expression. Expressions "appropriate Government" "contract labour" "contractor" "establishment" & "principal employer" are all defined in cls. (a) (b) (c) (e) and (g) respectively of sub-s. (1) of s. 2. Chapter 11 deals with the Advisory Board. Section 3 (1 ) provides for the Central 685 vernment constituting ,the Central Advisory Contract Labour hard, to advise the Central Government with regard to matters sing out of the Administration of the, Act. Sub-s. (2) provides, the composition of the said Board, and from cl. (c) it ’is seen at among other persons, the, said Board is to consist of the representatives of the contractor, workmen and the industries concern Under the proviso to sub- section (3) the number of members nominated to represent the workmen shall not be less than the, member of members nominated to represent the principal employers and the contractors. Section 4 deals with the constitution of a hilar Advisory Board by the State Government. The said State advisory Board is also to consist among other persons, of the representatives of the industry, the contractor and the workmen. proviso to sub-section 3 of s. 4 similar to the proviso to subsection (3) of s. 3 has also been enacted. Chapter III deals with the registration of establishments employing contract labour. Sections 6 to 15 are in this Chapter, section 6 deals with the appointment of registering officers by the appropriate Government by notification in the Official Gazette. section 7 makes it compulsory on the part of every principal employer of an establishment to which the Act applies to make an’ application to the registering officer within the time prescribed for Registration of the establishment. Section 8 deals with revocation registration in the circumstances mentioned therein. Section dealing with the effect of non- registration prohibits the principal employer of an establishment to which the Act applies from employing contract labour if the establishment has not been registered under s. 7 within the time prescribed or in the case of an establishment in respect of which registration has been revoked under s. 8, Section 10 which prohibits the employment of contract labour and which, in our opinion, is an important provision is as follows Section 10: Prohibition of employment of contract labour.- (1) Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board, or,, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process, operation or other work in any establishment. (2) Before issuing any notification under sub-section (1) in relation to an establishment, the appropriate, Government shall have regard to the conditions of work and benefits provided for the contract labour in that es- tablishment and other relevant factors, such as- (a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, 686 business, manufacture or occupation that is carried on in the establishments; (b) whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 18 industry, trade, business, manufacture or occupation carried on in that establishment; (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; (d) whether it is sufficient to employ considerable number of whole-time workmen. Explanation.-If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final." The following points emerge from S. 10(1) the appropriate Government has power to prohibit the employment of contract labour in any process,: operation or other work in any establishment; (2) Before issuing a notification prohibiting contract labour, the appropriate Government has to consult the Central or State Board, as the case may be, which we have already pointed out, comprises of the representatives of the workmen, contractor and the industry; (3) Before issuing any notification under sub-section (1), prohibiting the employment of contract, labour, the appropriate Government is bound to have regard not only to the conditions of work and benefits provided for the contract labour in a particular establishment, but also other relevant factors enumerated in cls. (a) to (d) of sub- section (2); and (4) under the Explanation which really relates to cl. (b), the decision of the appropriate Government, on the question whether any process operation or other work is of perennial nature, shall be final. Chapter IV deals with licensing of contractors. Two sections in this Chapter have to be noted, namely, ss. 11 and 12. Section 11 deals with the appointment of licensing officers by the appropriate Government for the purpose of Chapter IV. Sub-section (1) of S. 12 prohibits a contractor to whom. the Act applies, from undertaking or executing any work’ through contract labour except under and in accordance with the licence issued in that behalf by the licensing officers. Sub-section (2) of s. 12 provides for a licence issued to a contractor containing conditions relating to hours of work, fixation of wages and other essential amenities in respect of contract labour, which the appropriate Government may 687 deem fit to impose by the rules made under s. 35. Sections 13, 14 and 15 relate to the procedure for the grant of licence, revocation, suspension and amendment of licences and appeals by persons aggrieved by the orders made under ss. 7, 8, 12 and 14. Chapter V deals with the welfare and, health of contract labour. There are provisions made for the establishment of Can.teens and Rest Houses and to provide other facilities to the contract labour by the contractor. Section 20 casts a liability on the principal employer to provide the amenities referred to under ss. 16, 17, 18 and 19 for the benefit of contract labour employed in his establishment, if the contractor fails to provide those amenities. That section also enables the principal employer, if it provides those amenities, to recover from the contractor expenses so incurred by him. Section 21 makes the Contractor responsible for payment of wages to the contract labour. Sub-section (2) of s. 21 makes it obligatory on every principal employer to nominate a representative duly authorised by him to be present at the time of disbursement of wages by the contractor. The said sub-section also casts a duty on such representative to certify the amounts paid as wages as prescribed by the rules. Sub-section (4) makes the principal’ employer liable http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 18 to pay wages in full or the unpaid balance due, as the case may be, in case the contractor fails to make the payment within the period prescribed. it also enables the principal employer to recover from the contractor the amount so paid to the labour. Chapter VI provides for penalty for any person contravening any provision of the Act or the Rules. Chapter VII deals with Miscellaneous matters. Section 29 makes it obligatory on a principal employer and contractor ’to maintain the registers and records as provided therein. Section 30 provides that the Central Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any agreement or contract of service or in any standing orders applicable to the establishment whether made before or after the commencement of the Act. No doubt the said section also saves any agreement or contract or standing order, where under, the contract labour gets more benefits than those conferred on them under the Act. Section 35 gives power to the appropriate Government to make rules for carrying out the purpose of the Act and also in respect of various other matters mentioned in cls. (a) to (p) of sub-section (2). 688 The State Act, as we have already mentioned, was passed on June 13, 1969 and had already come into force when the award was passed. The State, Act is an Act for regulating the employment of unprotected manual workers employed in certain employments in the State of Maharashtra, to make provision for their adequate supply and proper and full utilization in such employments, and for matters connected therewith. It purports to be an Act for regulating employment of unprotected manual workers and to make better provisions for their terms and conditions of their employment as also for their welfare, health and safety measures. Sub-section (3) of s. 1 makes the Act applicable to the employments specified-in the Schedule. Item No. 5 of the Schedule is as follows "5-Employment in markets, and factories and other establishments, in connection with loading, unloading, stacking, carrying, weighing, measuring or such other work including work preparatory or incidental to such operations carried on by workers not covered by any other entries in this Schedule." From the above it will be seen that employment in factories and other establishments in connection with loading, unloading, stacking etc. are within the ambit of the Act. Section 2 defines the various expressions. The expressions contractor", "employer" " establishments, "Principal employerScheme", "unprotected worker" and "work’ are defined in cls.(2), (3), (4), (7), (10), (11) and (12) respectively of s. 2.Section 3 provides for the State Government framing a schemefor registration of employers and unprotected workers and to provide for the terms and conditions of work of such unprotected workers as well as for their general welfare in the employment. The, scheme so framed may provide also for the various matters mentioned in cls. (a) to (1) of sub-section (2) section 4 empowers the states government after consultation with the advisory committee to make one or more schemes for any scheduled employement or group of employments. Section 5 makes the decision of the State Government in respect of any question arising whether any scheme apply any class of unprotected http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 18 workers or employers, final. But the State Government should arrive at a decision after consulting the Advisory Committee constituted under s. 14. Section 6 deals with the establishment of a Board by the State, Government for any scheduled employment in any area. Sub-section (3) dealing with the composition of the Board provides that representation be given to employers, unprotected workers and the state Government. Section 14 provides for the State Government constituting an Advisory Committee to advise upon such matters arising out of the administration of the Act or any Scheme made under the 689 Act. Section 21 saves the rights and privileges of the unprotected workers employed in any scheduled employment of the rights and privileges that he was entitled to on the date of the Act coming into force any other law, contract, custom or usage. This right is saved notwithstanding anything contained in the Act. Section 25 makes void any contract or agreement whereby an unprotected worker relinquishes any right conferred by or accruing to , him under the Act or the Scheme. The said provision applies both to the contract or the agreement made either before or after the commencement of the Act. The question naturally arises what is the effect of the Central and the State Acts regarding the jurisdiction of the Industrial Tribunal to entertain and adjudicate upon a dispute regarding abolition of contract labour. The Central Act had received the assent of the President on September 5, 1970 before the date of the award, though the said Act has come into force only with effect from February 10, 1971. The State Act was already in force at the time when the award was passed. Though we are not inclined to accept the extreme contention of Mr. Pai that the Industrial Tribunal in view of these two enactments, had no jurisdiction to adjudicate upon the dispute regarding, abolition of contract labour, nevertheless, we are of the view that those two enactments, which are now in force, have to be taken into account in considering whether the award of the Industrial Tribunal regarding abolition of contract labour in respect of loading and unloading operations has to be sustained. The Industrial Tribunal acquires jurisdiction to entertain the dispute in view of the reference made by the State Government on April 17, 1967. Admittedly ’on that date none of these enactments have been passed. Even during the proceedings before the Industrial Tribunal, there is no indication, that the appellant raised an objection after the passing of the enactments that the Tribunal has no longer jurisdiction to adjudicate upon the dispute. Under those circumstances, the Tribunal had to adjudicate upon the point referred to it having due regard to the principles laid down by the courts, particularly this Court governing the abolition of contract labour. It may be that in future if a reference is proposed to be made or actually made by the authorities concerned regarding abolition of contract labour for adjudication by the Industrial Tribunal it may be open to the persons concerned to resist the reference on the ground that the jurisdiction to consider such matters and prohibiting contract labour is now vested with the appropriate Government under the Central Act. In fairness to the Industrial Tribunal it must be stated that it has referred to these two enactments. But the Industrial Tribunal has proceeded on the basis that the effect of these two enactments 10-L3Sup.C.I./72 690 is to abolish contract labour which is consistent with the http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 18 recommendations made by the Royal Commission and the various Committees constituted by the States. No doubt, there is a reference by the Industrial Tribunal to s. 10 of the Central Act dealing with prohibition of employment of contract labour, but in our opinion, the Industrial Tribunal has misapplied those provisions when it directed abolition of contract labour regarding loading and unloading operations. We are of the opinion that we will be justified when dealing with this appeal to give effect particularly to the provisions of the Central Act having due regard to the clearly expressed intention of the legislature in the said Act regarding the circumstances under which a contract labour can be abolished. The main grievance of the Union was that the conditions of employment of the persons working under a contractor were entirely different from that of the workmen under the permanent employ of the appellant and in order to improve the conditions of service of contract labour, the latter must be treated as the appellants regular employees with all benefits of service conditions etc. We have referred to the various provisions of the Central Act and, in our opinion, it has elaborately regulated the employment of contract labour. It has also made provisions for improving the ser- vice conditions of contract labour. ’An establishment has been prohibited from employing contract labour unless it gets it registered under s. 7. The said Act has also provided for licensing of contractors and casts an obligation on the contractors to provide the amenities and proper wages to the contract labour. It has cast an obligation on the principal employer to provide amenities to the contract labour, if the contractor fails to provide the same. Even in respect of payment of wages, the principal employer has to nominate a representative to be present when the contractor disburses the wages to the contract labour. In fact, ’it makes it obligatory on the principal employer to pay the wages or any deficiency in wages in consequence of default committed by the contractor. Contravention of the provisions of the Act by any person including the principal employer has been made A penal offence’ The said Act specifically deals with the Central Government and the State, Government: constituting the Central Advisory Board and the. State Advisory Board respectively. Those Boards consist of representatives of the workmen, industry and of the contractor. Section 10 dealing with prohibiting employment of contract labour gives power to the appropriate Government to prohibit employment of contract labour in any process, operation or other work in any establishment. But before issuing a. notification prohibiting the employment of contract labour, the appropriate Government is bound to consult the Central Board or the State Board, as 691 the case may be. That means the representatives of the contractor, the workmen and of the industry will have a voice in expressing their views when the Board concerned is being consulted With regard to a proposal to prohibit contract labour. Sub-section (2) lays down the various matters, which are, considered to be relevant factors, to be taken into account by the appropriate Government before. a notification prohibiting contract labour is issued. The appropriate Government is bound ,to have regard also to the conditions of work and benefits provided for the contract labour in the establishment. The Explanation which has to be read along with cl. (b) of subsection (2) makes final the decision of the appropriate Government regarding the question whether any process, or operation or other work is http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 18 of a perennial nature. We are emphasising the provisions of s. 10 to highlight the point that a particular authority acting in a particular manner has been given the power and jurisdiction to decide whether contract labour has to be prohibited in. any establishment. Before such a- decision is taken, the representatives of the workmen, contractor and the industry have an opportunity to express their opinion. The more important aspect to be noted is the provision in the Explanation which makes the decision of the appropriate Government final, on the question, whether any process or operation or work is of a perennial nature. We have already extracted the whole of s. 10 and one of the relevant factor is that contained in cl. (b) of sub-s. (2) in respect of which the Explanation makes the decision of the appropriate Government final. The appropriate Government. when taking’- action under s. 10 will have an overall picture; of the industries carrying on similar activities I and decide whether contract labour is to be abolished in respect ’of any of the activities of that industry. Therefore, it, is reasonable to conclude that the jurisdiction ’to sbide about the Abolition of contract labour, or to put it differently, to prohibit the- employment of, contract labour is now to be done in accordance ’with’ S. 10. Therefore, it is proper that the question whether- the contract labour regarding loading and unloading in the industry of the appellant is to be abolished or not, is left to be dealt with the appropriate Government under the, Act,, if it becomes necessary. On: this ground, we are of the opinion that the direction of the Industrial Tribunal in this ’regard all have to be set aside. The Maharashtra, Act also, as we have pointed out applies to employment in factories and other establishments in connection with loading and unloading etc. But, the said Act deals with different aspects, and that? Act; also has the effect of improving the conditions of both- unprotected worker and the worker as defined in the Act. But the provisions, more directly,in point, as pointed out above are above contained in the Central Act." 692 The legality of the direction given by the Industrial Tribunal abolishing contract labour in respect of loading and unloading from May 1, 1971 can also be considered from another point of view. The Central Act, as mentioned earlier, had come into force on February 10, 1971. Under s. 10 of the said Act tin jurisdiction to decide matters connected with prohibition of contract labour is now vested in the appropriate Government. Therefore, with effect from February 10, 1971, it is only the appropriate Government that can prohibit contract labour by following the procedure and in accordance with the provisions of the Central Act. The Industrial Tribunal, in the circumstances, will have no Jurisdiction, though its award is dated November 20,1970, to give a direction in that respect which becomes enforceable after the date of the coming into force of the ’Central Act. In any event, ’Such a direction contained in the award cannot be enforced from a date when abolition of contract labour can only be done by the appropriate Government in accordance with the provisions of the Central Act. In this view also it must be held that the direction of the Industrial Tribunal abolishing contract labour with effect from May 1, 1971 regarding loading and unloading cannot be sustained. In the view that we have expressed above that the direction of the Industrial Tribunal will have to be set aside, it may not be really necessary to consider elaborately the third http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 18 contention of Mr. Pai, which is really an attack against the decision of the Industrial ’Tribunal on merits. The learned counsel has taken us through the various items of evidence on record. The appellant has filed various charts relating to several periods showing the number of days in a month when the work of loading and unloading from wagons and trucks was done by the contractor as also the volume ,of work done together with particulars regarding days when there was absolutely no work. The contractor Giri has also given evidence in this behalf and has also filed statements giving particulars similar to the charts filed by the appellant. As a specimen we will only refer to the period commencing from March to June, 1967. A glance through the statement reveals that in March the work load ranges from 200 bags on 3rd to 14700 on the 30th. Similarly, in April 228 bags were handled on 3rd and about 13704 bags were dealt with on the 17th. Similarly in May, on the 9th, 10405 bags were handled whereas on 29th only 400 bags were handled. In June, on 9th 9600 bags were dealt with and on 26th 142 bags were, handled. These figures show the sharp difference in the nature of work that has to be done. We can also state that for these four months on 29th a total of 3200 bags were handled and, on 17th about 35714 bags were dealt with. These figures, which have been taken as illustrative clearly show the drastic variation in the nature of work that had to be done by the con,tractor regarding loading and unloading of wagons and trucks. 693 We have only given some illustrative figures and even during the intervening days there is a very wide discrepancy in the total number of bags dealt with. There is also evidence on record to, show that on some days no wagons or trucks are available. That means there will be no work of loading and unloading on those days; whereas on certain other days a number of wagons and trucks suddenly arrive, which means that there must be workmen ready to clear the goods within a specified time. It is also seen from Ex. C. 8 that the goods are allowed to be cleared from the railway wagons free of demurrage within five hours after the. arrival of the wagons. After the expiry of five hours, demurrage is. charged by the railway at 10 paise per hour per tonne on the carrying capacity of the wagon. The contractor Giri has stated that he has to keep in readiness the necessary workmen anticipating the arrival of wagons on any date or at any time of the day and if the goods are not cleared within live hours, heavy demuxrage will. have to be paid. Ex. C, to which we have already referred to shows that the work, of loading and unloading of seed bags and cake bags from lorries and wagons are done by contract labour by the three other concerns in the area, namely, M/s Godrej Soap Works, M/s Tata Oil Mills and Mys Hindustan Lever. At this stage it may be mentioned that under cl. (c) of s. 10(2) of the Central Act, one of the relevant factors to be taken into account is to consider, when contract labour regarding any particular type of work is proposed to be abolished, whether that type of work is, done ordinarily through regular workmen in that establishment or an establishment similar thereto. When it is shown that in similar establishments this type of work is not ordinarily done through regular workmen, but by contract labour, that is a circumstance which will operate in favour of the appellant. The evidence on the side of the appellant is to the effect that ,the work of loading and unloading in trucks and wagons is not of a perennial and permanent nature so as to justify the appellant maintaining a permanent staff for that http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 18 purpose. On the other hand, their evidence is that this type of work is of an intermittent and temporary nature and so little, that it would not be possible and profitable to employ full time workmen for the purpose and that this type of work is being done in the other concerns in the area through contract labour. These facts have not been seriously disputed by the Union. The Union has placed reliance on Ex. C. 9, a statement fur- nished by the appellant. We have earlier given a full extract of Ex. C. 9. The Union appears to have pressed into service that exhibit to show that the work of loading and unloading is of a continuous and perennial nature. No doubt, a perusal of Ex. C. 9, without anything more, may give the impression that the work 694 of loading and unloading is a continuous activity of a permanent nature. Unfortunately, the appellant does not appear to have impressed upon the, industrial Tribunal the fact that the particulars mentioned in Ex. C. 9 deal with the entire work done by the contractor on the basis of the contract entered into by him. The current contract in favour of the contractor is dated May 28., 1970. The previous contractors have been more or less substantially on the same lines as the present contract. The contractor has undertaken to do twenty types of jobs referred o in the contract for which the rate of payment has also been specified. They include feeding the hoppers and doing other work incidental to and closely related to the work of feeding the hoppers. We have already held that the Industrial Tribunal was justified in abolishing contract labour in respect of the work relating to feeding the hoppers. Though the Central Act has come into force, we have confirmed that part of the award regarding feeding of hoppers because we are satisfied that the, principles laid down by this Court and substantially incorporated in cls. (a) to (d) of S. 10(2) have been properly taken into account by the Industrial Tribunal. Ex. C. 9 is a chart relating to all the twenty items of jobs, which the contractor had to do under the contract. The Industrial Tribunal has proceeded on the basis that Ex. C. 9 relates only to the contract work of loading and unloading, which we have already shown is erroneous. Therefore, even on merits the direction of the Industrial Tribunal abolishing contract labour regarding loading and unloading cannot be sustained. in the result, the award of the Industrial Tribunal directing the appellant not to engage any labour through a contract for the work of loading and unloading is set aside and to that extent the appeal is allowed and the award of the Industrial Tribunal will stand modified. As the Union has not appeared before us to contest the appeal, there will be no order as to costs. G.C. Appeal allowed. 695