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Sakhar Kamgar Union v. Shri Chhatrapati Rajaram Sahakari Sakhar Karkhana Ltd. And Another

Bombay High Court

Sep 1, 1995

Judgment

Subsequent
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Factual and Procedural Background

This Writ Petition under Articles 226 and 227 of the Constitution of India challenges an order of the Industrial Court, Kolhapur dated 5 June 1989 dismissing Complaint (ULP) No. 173 of 1987 made under section 28 read with Items 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (the Act).

The Petitioner is a registered trade union representing employees engaged in the sugar house, godown and delivery department of the 1st Respondent, a Co‑operative Society operating a sugar factory at Kasaba Bhavada, District Kolhapur. The Complaint alleged that the factory had performed work through successive contractors since the crushing season of 1968/1969, although that work was ordinarily part of the undertaking; that changing contractors and disrupting services deprived the concerned workmen of legitimate rights; and that the workmen were entitled to permanency but were being deliberately deprived of that status. The Petitioner contended that these facts amounted to unfair labour practices under Items 9 and 10 of Schedule IV of the Act.

The 1st Respondent contested the Complaint, raising as a preliminary objection that the persons on whose behalf the Complaint was filed were not “employees” within the meaning of section 3(5) of the Act. The Industrial Court accepted that preliminary objection and dismissed the Complaint. The Petitioner challenged that dismissal by this Writ Petition.

Legal Issues Presented

Whether contract labour engaged by a contractor to carry out work which is "ordinarily part of the undertaking" of a principal employer fall within the definition of “employee” for the purposes of section 3(5) of the Maharashtra Act by virtue of clauses (13) and (14)(e) of section 3 of the Bombay Industrial Relations Act, 1946 (BIR Act).
Whether section 30 of the Contract Labour (Regulation and Abolition) Act, 1970 — which provides that that Act shall have effect notwithstanding anything inconsistent contained in any other law — operates to override or deny the deemed employee status conferred on such contract workmen by the BIR Act (and consequently by section 3(5) of the Maharashtra Act).

Arguments of the Parties

Petitioner's Arguments

The Complaint alleged that the concerned workers had been performing work (sugar house, godown, delivery) that was part of the undertaking since 1968/69 and, because the factory had been getting that work done through contractors and repeatedly changing contractors, the employees were deprived of legitimate rights and permanency.
The Petitioner asserted that these facts constituted unfair labour practices under Items 9 and 10 of Schedule IV of the Maharashtra Act and that the concerned persons were entitled to be treated as employees and to have the Complaint adjudicated on merits.

Respondent's Arguments

The 1st Respondent's primary contention (as a preliminary objection) was that the persons on whose behalf the Complaint was filed were not “employees” within the meaning of section 3(5) of the Maharashtra Act and therefore the Complaint was not maintainable.
The 1st Respondent also raised additional defences on the merits; those defences are referred to in the opinion but are not detailed because the Industrial Court dismissed the Complaint on the preliminary jurisdictional point.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court analysed the statutory definitions and the interplay of three statutes expressly referred to in the opinion:

The Bombay Industrial Relations Act, 1946 (BIR Act): sections 3(13) and 3(14) define “employee” and “employer.” The Court emphasised that clause (a) of section 3(13) includes a person employed by a contractor to do any work for him in the execution of a contract with an employer as an “employee” for the purposes of the BIR Act. Clause (e) of section 3(14) treats the owner of an undertaking as the employer where the owner contracts out the execution of work which is ordinarily part of the undertaking.
The Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (the Act): section 3(5) defines “employee” in relation to industries to which the BIR Act applies by reference to the BIR Act's definition (i.e., the persons described in section 3(13) of the BIR Act are employees for the purposes of section 3(5) of the Maharashtra Act).
The Contract Labour (Regulation and Abolition) Act, 1970 (CLRA): section 30 states that the provisions of that Act shall have effect notwithstanding anything inconsistent contained in any other law.

The Industrial Court accepted that persons employed through a contractor within the description of clause (d) of section 3(14) of the BIR Act would satisfy the definition of “employee” in section 3(13) of the BIR Act, but nevertheless relied on section 30 of the CLRA to hold that the CLRA would override the BIR Act and therefore those persons were not “employees” for the purposes of section 3(5) of the Maharashtra Act.

The High Court rejected that approach. Its core analytical steps were:

It read the BIR Act definitions together with section 3(5) of the Maharashtra Act to conclude that where work which is ordinarily part of the undertaking is entrusted to a contractor and executed by contract labour, those contract workmen are deemed to be employees for the purposes of the BIR Act and therefore for section 3(5) of the Maharashtra Act.
It examined the CLRA's purpose (as expressed in the Preamble and Statements of Objects and Reasons): the CLRA was enacted to regulate the employment of contract labour and to provide for its abolition in certain circumstances, and to redress abuses inherent in the contract labour system.
It interpreted section 30 of the CLRA narrowly: section 30 gives the CLRA effect notwithstanding inconsistencies with other laws, but this provision cannot properly be read so as to take away better benefits already afforded to contract labour by a cognate statute such as the BIR Act. In other words, the CLRA's non‑obstante clause does not mean it was intended to strip away benefits that contract workmen already enjoyed under State legislation; it is aimed at resolving inconsistencies but not at removing more favourable protections granted by existing laws.
Applying that interpretation, the High Court found it not possible to accept the Industrial Court's view that the deemed status of the contract workmen as employees under the BIR Act was inconsistent with the CLRA. The High Court held that the Industrial Court had misused section 30 of a benevolent statute to reach a result contrary to Parliament's intent and thereby caused injustice to the concerned employees.
Because the Industrial Court dismissed the Complaint solely on the preliminary jurisdictional objection, the High Court considered it necessary to quash that order, restore the Complaint to the Industrial Court's file, and remand the matter for trial on merits in accordance with law.

Holding and Implications

Writ Petition allowed; the impugned order of the Industrial Court dated 5 June 1989 is quashed and set aside.

Consequences and immediate effects:

The Complaint (ULP) No. 173 of 1987 is restored to the file of the Industrial Court, Kolhapur.
The Industrial Court is directed to dispose of the Complaint as expeditiously as possible and in accordance with law and the observations made in the judgment.
No order as to costs was made by the High Court. The issuance of a certified copy of the judgment is expedited.

Broader implications: The opinion clarifies that contract workmen engaged on work ordinarily part of an undertaking are to be treated as “employees” under the BIR Act and the Maharashtra Act for the purposes of maintaining complaints under the Maharashtra Act, and that section 30 of the CLRA should not be read as depriving such workers of better benefits conferred by State legislation. The opinion does not purport to announce a novel binding precedent beyond the disposition in this case; its immediate legal effect is to remit the Complaint for adjudication on merits.

Show all summary ...

1. This Writ Petition under Articles 226 and 227 of the Constitution of India is directed against an order of the Industrial Court, Kolhapur, dated 5th June, 1989 dismissing Complaint (ULP) No. 173 of 1987 under provisions of section 28 read with Items 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as ‘the Act’).

2. The 1st Respondent is a Co-operative Society manufacturing sugar in Kasaba Bhavada, District Kolhapur. The Petitioner is a registered trade union representing the employees working in the 1st Respondent Sugar Factory.

3. The Petitioner filed Complaint (ULP) No. 173 of 1987 on behalf of the employees working in sugar house, godown and delivery department of the 1st Respondent factory. It was alleged in the Complaint that the concerned employees had been working since the crushing season of 1968/1969; that the 1st Respondent factory was getting the work done in the sugar house, godown, and delivery department through Contractors, though the said work was very much the work of the undertaking itself; that by repeatedly changing the Contractors and disrupting the services of the employees, the employees were deprived of their legitimate rights. It was claimed in the Complaint that the concerned employees were entitled to be made permanent in service by the 1st Respondent who was deliberately depriving them of the benefits and status of permanency. In these circumstances, it was contended that the 1st Respondent was guilty of unfair labour practices within the meaning of Items 9 and 10 of Schedule IV of the Act.

4. The 1st Respondent appeared and contested the Complaint. The 1st Respondent contended that the Complaint was not maintainable because the employees on whose behalf the Complaint had been filed were not “employees” within the meaning of section 3(5) of the Act. The 1st Respondent also raised certain defences on merits with which we are not concerned in the present Writ Petition.

5. The Industrial Court by the impugned order has upheld the contention of the 1st Respondent that the Complaint was not maintainable and dismissed the Complaint. Being aggrieved, the Petitioner is before this Court by the present Writ Petition.

6. It is not in dispute that the sugar karkhana of the 1st Respondent is covered by the provisions of the Bombay Industrial Relations Act, 1946 (hereinafter referred to as the ‘BIR Act’). Sections 3(13) and 3(14) of the BIR Act respectively define the expressions “employee” and “employer”. The portions of the definition relevant for our purpose are:

“3. (13) “employee” means any person employed to do any skilled or unskilled work for hire or reward in any industry, and includes—

(a) a person employed by a contractor to do any work for him in the execution of a contract with an employer within the meaning of sub-clause (e) of clause (14);

(b)……”

“3. (14) “employer” includes—

(a) ………

(b) ………

(d) ………

(e) where the owner of any undertaking in the course of or for the purpose of conducting the undertaking contracts with any person for the execution by or under the contractor of the whole or any part of any work which is ordinarily part of the undertaking, the owner of the undertaking;

7. A combined reading of these definitions suggests that in an undertaking covered by the BIR Act, if any work which is ordinarily part of the undertaking has been entrusted to a contractor for execution by or under him and, for executing such work, the contractor engages contract labour, then notwithstanding the fact that there is no relationship of employer and employee between the principal employer and the contractor's workmen, for the purposes of the BIR Act, such contractor's workmen are deemed to be employees within the meaning of section 3(13) of the Act.

8. Section 3(5) of the Act defines “employee” in relation to an industry to which the Bombay Act applies, as an employee as defined in clause (13) of section 3 of the BIR Act. The expression ‘Bombay Act’ is defined in section 3(1) of the Act to mean Bombay Industrial Relations Act, 1946. Thus, a person who falls within the definition of the expression “employee” as defined in section 3(13) of the BIR Act, would be an employee within the meaning of sub-section (5) of section 3 of the Act and would be entitled to maintain a Complaint under the provisions of the Act.

9. A perusal of the impugned order would show that the learned Judge of the Labour Court accepted that a person employed through a contractor within the description of clause (d) of section 3(14) would answer the definition of employee in section 3(13) of the BIR Act. Nonetheless, by purporting to rely on the provisions of section 30 of the Contract Labour (Regulation and Abolition) Act, 1970, the Industrial Court took the view that the provisions of the latter Act would override the provisions of the BIR Act, and, therefore, the concerned employees would not be employees for the purpose of section 3(5) of the Act.

10. In my judgment, the view taken by the Industrial Court is not only erroneous, but also contrary to the intendment of the Parliament. The Contract Labour (Regulation and Abolition) Act, 1970, is an Act brought on the statute book “to regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith”, as indicated in the Preamble of the said Act. In the Statements and Objects and Reasons attached to the Bill moved in Parliament, the following reasons are given for moving the Bill and for bringing the statute on the statute book:—

“(1) ………

(2) The proposed Bill aims at abolition of contract labour in respect of such categories as may be notified by appropriate Government in the light of certain criteria that have been laid down, and at regulating the service conditions of contract labour where abolition is not possible. The Bill provides for the setting up of Advisory Boards of a tripartite character, representing various interests, to advise Central and State Governments in administering the legislation and registration of establishments and contractors. Under the Scheme of the Bill, the provision and maintenance of certain basic welfare amenities for contract labour, like drinking water and first-aid facilities, and in certain cases rest-rooms and canteens, have been made obligatory. Provisions have also been made to guard against details in the matter of wage payment”. (See in this connection, Gazette of India, 31-7-1967, Pt. II, S. II, Ext. p. 634).

11. From the aforesaid, it is clear that the Contract Labour (Regulation and Abolition) Act, 1970, was enacted by the Parliament to get over the abuses resulting from the system of employment of contract labour. It was not the intention of the Parliament to perpetuate system of contract labour even when contract labour were entitled to deemed status of employees by virtue of a State Legislation. The Industrial Court has emphasised the provisions of section 30 of the Contract Labour (Regulation and Abolition) Act, 1970, which reds as under:—

“30. The provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in 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 this Act.”

12. In my view, the provisions of section 30 of the Contract Labour (Regulation and Abolition) Act, 1970, cannot be read as overriding the benefits which were already conferred on the contract labour under a cognate statute like the BIR Act. The thrust of section 30 is towards overriding, “anything inconsistent therewith” contained in any other law. It is not possible to accept as correct the view of the Industrial Court that the benefit of direct employment conferred upon the contract labour by virtue of the conjoined effect of sections 3(13) and 3(14) of the BIR Act was something ‘inconsistent” with any of the provisions of the Contract Labour (Regulation and Abolition) Act, 1970. It is not possible to read section 30 of the Contract Labour (Regulation and Abolition) Act, 1970 as taking away better benefits already enjoyed by contract labour under the provisions of any other law. It is unfortunate that the Industrial Court used section 30 in a benevolent piece of legislation to bring about a result directly contrary to the intendment of the Parliament. It is not in dispute that the concerned workmen were employed on work which was part of the work of the undertaking of the sugar mill and that the work being executed by the contractor would fall within the description in clause (d) of section 3(14) of the Bombay Industrial Relations Act, 1946. Consequently, all such persons were entitled to the benefit of clause (e) of section 3(14) of the Bombay Industrial Relations Act, 1946. Hence, they would deemed to be ‘employees’ for the purposes of the Act.

13. In my view the impugned order is erroneous and causes injustice to the concerned employees by misinterpretation of the provisions of the applicable statutes. Hence, the said order is liable to be quashed and set aside. Since the Complaint has been dismissed only on the preliminary objection, it would be necessary to restore the Complaint and remand it to the Industrial Court for trial in accordance with law.

14. In the premises, this Writ Petition is allowed. The impugned order of the Industrial Court, Kolhapur dated 5th June, 1989 dismissing Complaint (ULP) No. 173 of 1987 is hereby quashed and set aside. The complaint is restored to the file of the Industrial Court, Kolhapur and the Industrial Court is directed to dispose of the same, as expeditiously as possible, in accordance with law and the observations made in this judgment. Rule is accordingly made absolute. No order as to costs.

15. Issuance of certified copy of this judgment is expedited.

Petition allowed.