Introduction

The landmark judgment in Oil And Natural Gas Corporation Ltd. (S) v. President, Oil Field Employees Association And Others (S). (2022 INSC 145) delivered by the Supreme Court of India on February 4, 2022, addresses critical issues pertaining to the rights of workmen engaged through contractors in public sector undertakings. The case revolves around the contention of the Oil Field Employees Association, representing workmen employed by various contractors engaged by the Oil and Natural Gas Corporation Limited (ONGC), against the company's stance that these workmen are not its direct employees.

Summary of the Judgment

The Supreme Court upheld the judgment of the Bombay High Court, which in turn supported the decision of the Central Government Industrial Tribunal (CGIT) Mumbai. The core issue was whether workmen engaged by contractors should be entitled to pay fixation and allowances as per the award of the Tribunal. ONGC argued that a settlement reached with the majority of contractors' workmen should bind all similar workmen, including those represented by the respondent unions. However, the Court found that the settlement did not extend to workmen represented by the Oil Field Employees Association, thereby reinforcing their entitlement to the benefits outlined in the Tribunal’s award.

Analysis

Precedents Cited

The judgment extensively references several pivotal cases that have shaped the understanding of employer-employee relationships and the binding nature of industrial settlements:

• Workmen of the Food Corporation of India v. Food Corporation of India [(1985) 2 SCC 136]: Established that being engaged through contractors does not automatically make workmen employees of the principal employer.
• Parimal Chandra Raha v. Life Insurance Corporation of India [1995 Supp (2) SCC 611]: Highlighted scenarios where contractors act as de facto arms of the principal employer.
• Steel Authority of India Ltd. v. National Union Waterfront Workers [(2001) 7 SCC 1]: Asserted that abolition of contract labor does not inherently result in their absorption by the principal employer.
• Secretary, State of Karnataka v. Uma Devi [(2006) 4 SCC 1]: Emphasized that workers cannot bypass the contractor-employer hierarchy to seek direct employment benefits from the principal employer.
• Ramnagar Cane and Sugar Company Ltd. v. Jatin Chakravorty [(1960) 3 SCR 968]: Clarified the binding effect of settlements on all employees within an establishment under Section 18(3)(d) of the Industrial Disputes Act, 1947.
• Itc Ltd. Workers' Welfare Association v. Management Of Itc Ltd. [(2002) 3 SCC 411]: Reinforced that industrial settlements should be upheld unless they contravene mandatory provisions of the Act.

Legal Reasoning

The Supreme Court meticulously evaluated the nature of the settlement reached on September 19, 2016, between ONGC's contractors and certain unions representing their workmen. The appellants contended that this settlement, which included the implementation of a Fair Wage Policy (FWP), should be binding on all contract workers, including those represented by the respondent unions not party to the settlement. However, the Court discerned that the settlement was primarily between ONGC and the contractors, not directly with the workmen representatives in the current dispute.

Moreover, the Tribunal's finding that the settlement was not just and fair, especially since it required workmen to withdraw legitimate disputes in exchange for wage revisions, was upheld. The Court emphasized that the respondent unions represented workmen who were deemed employees of ONGC despite their engagement through contractors, thereby falling outside the scope of the 2016 settlement.

Impact

This judgment has profound implications for industrial relations, particularly in scenarios involving contract labor in public sector undertakings. It reaffirms that:

• Workmen engaged through contractors can be recognized as direct employees of the principal employer based on the nature of their engagement.
• Settlements reached between principal employers and contractors do not automatically extend to workmen represented by other unions.
• The fairness and justness of settlements are subject to judicial scrutiny, especially when they impose onerous conditions on workmen.

Future cases will likely reference this judgment when deliberating the scope of binding industrial settlements and the true nature of employer-employee relationships in contract labor scenarios.

Complex Concepts Simplified

Fair Wage Policy (FWP)

The Fair Wage Policy is a framework aimed at ensuring that all workers, regardless of their employment through contractors, receive equitable wages and allowances comparable to direct employees of the company. In this case, the FWP was central to the settlement but was deemed not to extend to workmen represented by the Oil Field Employees Association.

Section 18(3)(d) of the Industrial Disputes Act, 1947

This section delineates the binding nature of settlements reached during conciliation proceedings. Specifically, subsection (d) states that such settlements are binding not only on the parties involved but also on all individuals employed in the establishment at the time of the dispute and those who are subsequently employed.

Settlement in Conciliation Proceedings

A settlement arrived at during conciliation is meant to resolve disputes amicably without escalating to arbitration or litigation. However, for a settlement to be binding on all workmen, it must meet criteria of fairness and justness, ensuring that no group of workers is unfairly disadvantaged.

Conclusion

The Supreme Court's decision in ONGC v. President, Oil Field Employees Association underscores the judiciary's commitment to protecting the rights of workmen, especially those whose employment status may blur the lines between direct and contract labor. By affirming the High Court's stance, the Court has reinforced the principle that settlements must be just and inclusively binding to all affected workers, irrespective of their mode of engagement. This judgment serves as a critical precedent, ensuring that principal employers cannot circumvent their responsibilities towards workers by relying solely on agreements with contractors.