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Attorney(S)
  • Sri J.M Thakore and Sri P.B Majmudar.
  • Sri P.M Thakkar.
Judges
  • Hon'ble Mr. Justice Amratlal Paramananddas Ravani
  • Hon'ble Mr. Justice Jagdish Udeshankar Mehta
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Citation Codes
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citation codes
Case Number
Attorney(S)
  • Sri J.M Thakore and Sri P.B Majmudar.
  • Sri P.M Thakkar.
Judges
  • Hon'ble Mr. Justice Amratlal Paramananddas Ravani
  • Hon'ble Mr. Justice Jagdish Udeshankar Mehta
Acts
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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The petitioner is a Union of employees of the Food Corporation of India (FCI) who filed a writ petition under Article 226 seeking a declaration that the employees working in eleven FCI depots in Gujarat are employees of FCI and are entitled to back wages and other consequential benefits. The eleven depots named in the petition include Sabarmati, Kaligam, Thrigarth, Adalaj, Ranip, Viramgam, Baroda, Nadiad, Palana, Marida and Dasrathgaon.

The petitioners alleged that about 1,600 employees had worked at these depots for roughly 14 years performing core and perennial functions (loading, unloading, re-stacking, weighment, and related railway siding work). The work was carried out through labour contractors who were changed periodically; however, the Union contended that from March 1, 1985 there was, in reality, no valid contractor and that the Corporation exercised direct control and supervision over the work. The Union further alleged that neither the Corporation nor the contractors held valid registration or licences under the Contract Labour (Regulation & Abolition) Act, 1970 for relevant periods, in particular after a statutory amendment effective January 28, 1986 which altered the definition of "appropriate Government."

The respondents (FCI) denied the petitioners' position, contending that the Corporation and the contractors had obtained the necessary registration and licences: Certificates of Registration were produced showing registration by the District Manager, FCI, Baroda on May 21, 1987 and by the District Manager, FCI, Sabarmati on June 4, 1987. Conciliation proceedings had been attempted and a failure report was placed on record by the petitioner.

Legal Issues Presented

  1. Whether employees engaged at the eleven FCI depots through contractors during periods when the principal employer (FCI) had no valid Certificate of Registration under Section 7 of the Contract Labour (Regulation & Abolition) Act, 1970 and/or when contractors had no valid licence under Section 12, should be treated as employees of the principal employer (FCI).
  2. Whether, in view of the amendment to the definition of "appropriate Government" effective January 28, 1986, the Corporation's failure to obtain registration from the Central Government (where required) and contractors' failure to obtain licences from the competent authority appointed by the Central Government alters the legal position described above.
  3. What relief is appropriate where the factual record is inadequate or disputed as to which specific workmen, for which periods, satisfy the conditions entitling them to be treated as direct employees of the principal employer.

Arguments of the Parties

Petitioner-Union's Arguments

  • The employees working at the eleven depots perform perennial and core functions of the Corporation and thus should be treated as FCI employees.
  • After the change in the statutory definition of "appropriate Government" on January 28, 1986, the contractors did not hold valid licences under the Act and the Corporation did not hold valid registration from the Central Government for relevant periods; consequently, these workers must be treated as employees of the principal employer.
  • Payments were, in practice, made directly by the Corporation to the workers during at least some of the relevant period, supporting the claim that contractors were not legally valid intermediaries.
  • The Union sought declarations and consequential relief including back wages and other benefits.

Respondent (Food Corporation of India) Arguments

  • The Corporation contended that it had obtained valid registration under the Act and that the contractors had obtained valid licences; therefore, the contract arrangements were lawful and the contract labourers are not entitled to be treated as direct employees of FCI.
  • Certificates of Registration were produced showing registration by District Managers (Baroda: May 21, 1987; Sabarmati: June 4, 1987). These documents also identified the contractors the principal employer intended to engage.
  • The respondents asserted that aggrieved workers should seek redress from the contractors rather than from the Corporation, as the contracts were said to be lawful once registration and licences were in place.

Submissions by the Learned Advocate General (for the Petitioner-Union)

  • Emphasised that the Contract Labour (Regulation & Abolition) Act, 1970 is social welfare legislation intended to regulate and, where practicable, abolish exploitative contract labour arrangements and should be construed to promote labour welfare.
  • Highlighted key statutory provisions relied upon in the analysis: Section 1(4) (scope), Section 7 (registration of principal employers), Section 9 (effect of non-registration), Section 12 (licensing of contractors), Sections 13–14 (grant and revocation of licences), Sections 16–21 (facilities and principal employer's responsibilities), and Section 29 (registers and records).
  • Explained that the 1986 amendment to the definition of "appropriate Government" (effective January 28, 1986) shifted, for FCI establishments, the authority to the Central Government; consequently registration and licences needed to be obtained from Central Government authorities after that date.
  • Argued that where either the principal employer lacked registration or the contractor lacked a licence for the relevant period, the contract labourers must be treated as employees of the principal employer.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
The Workmen of Best & Crompton Industries Ltd. v. The Management, (1985-I-LLJ-492) Workmen engaged by contractors working for a management without a valid licence are to be treated as workmen of the management itself. The court relied on this decision to support the principle that absence of a valid contractor licence results in the workers being treated as employees of the principal employer for the relevant period.
F.C.I. Loading & Unloading Workers Union v. Food Corporation of India, (1987-I-LLJ-407) In the absence of a Certificate of Registration by the Corporation under the Act, workmen of the contractor will be considered to be workmen of the principal employer. The court treated this authority as supporting the position that, where the principal employer has not secured registration required by the Act, contractor workers can be regarded as the principal employer's workmen for the relevant period.
Food Corporation of India, Haryana Region v. The Presiding Officer, Central Government Industrial Tribunal, Chandigarh, 1987 (2) SLR 678 Every worker who works for a principal employer to whom the Act applies is to be treated as the worker of the principal employer unless (1) the establishment has a Certificate of Registration for the relevant period and (2) it employed contract labour through a licensed contractor; if either condition is not satisfied, the contractor's labour shall be treated as the employer's workers. The court adopted this two-condition formulation as a central legal test and applied it to the undisputed chronology of registrations and licences in the case, concluding that there were periods where one or both conditions were not met, with legal consequences for the employment status of the workers for those periods.

Court's Reasoning and Analysis

The court's analysis proceeded from the text and object of the Contract Labour (Regulation & Abolition) Act, 1970: the Act regulates contract labour, prescribes mandatory registration of principal employers (Section 7) and mandatory licensing of contractors (Section 12), and imposes obligations and liabilities on principal employers for welfare measures and, in certain circumstances, payment of wages (Sections 16–21, 29).

The court examined the 1986 amendment to the definition of "appropriate Government" (effective January 28, 1986). For establishments like FCI, the amendment meant the Central Government became the "appropriate Government" for purposes of registration and licensing under the Act. On the facts admitted in the record, the court found that Certificates of Registration were obtained by the District Manager, FCI, Baroda on May 21, 1987 and by the District Manager, FCI, Sabarmati on June 4, 1987. Therefore, between January 28, 1986 and those registration dates there was no valid registration issued by the Central Government for the FCI establishments at issue.

The court further noted that contractors, for certain periods, did not possess licences issued under Section 12 by the competent authority appointed by the Central Government. The combined factual picture was that, for identified periods, either the principal employer lacked registration or the contractors lacked licences (or both).

The court adopted the legal principle (as laid down in the cited High Court authorities) that both conditions—(1) registration of the principal employer for the relevant period, and (2) engagement of contract labour through a licensed contractor for the relevant period—must be satisfied to treat workers as contract labour of the contractor rather than as workmen of the principal employer. If either condition is missing, then the worker is to be regarded as employed by the principal employer for that period.

Applying that legal principle to the undisputed chronological facts about registration and licensing, the court concluded that "for certain periods" the conditions mandated by the Act were not met, and therefore workers employed during those periods can claim to be direct employees of FCI.

However, the court emphasised that the factual material before it was inadequate and disputed. The petitioner's record did not permit a clean, generalised declaration that all members of the Union (or which specific members) were employed during the relevant unregistered/unlicensed periods. Because the material was vague, imprecise and not admitted by the other side, the court held it would be inappropriate to grant the broad declaratory relief sought in the writ petition without further factual determination.

The court also observed that FCI is an instrumentality of the State under Article 12 of the Constitution and therefore subject to obligations of fairness (Article 14) when exercising its statutory and administrative functions. The court acknowledged that FCI could, in principle, engage contractors for intermittent or specialised work, but insisted that the statutory safeguards under the Contract Labour Act cannot be ignored to defeat the rights of workers.

Holding and Implications

Holding (Core Ruling): The court declared that during periods when the two statutory conditions—(a) registration under Section 7 by the principal employer and (b) licence under Section 12 by the contractor—are not complied with, workmen employed through contractors can claim to be direct employees of the principal employer (Food Corporation of India) for those periods.

However, the court did not grant the general declaratory relief sought by the petitioner in respect of all union members because the evidence on record was inadequate and disputed; it was not possible, on the material before the court, to determine which specific workmen became direct employees of FCI for which periods.

Practical directions and immediate consequences:

  • The petitioner-Union and/or individual workmen may make representations to the respondent-Corporation within sixty days from the date of judgment (the opinion sets the deadline as on or before February 6, 1990) giving necessary particulars about their employment and claiming benefits.
  • On receipt of such representations, the respondent-Corporation is directed to decide the representations within sixty days in the light of the principles and observations set out in the judgment.
  • If the decision of the Corporation is adverse to any workman, that workman or the petitioner-Union is at liberty to move the appropriate authority under relevant labour laws for redressal.
  • The rule in the writ petition was made absolute to the extent described above, with no order as to costs.

Implications as to precedent and wider effect: The court applied and endorsed existing High Court authorities (Madras, Karnataka, Punjab & Haryana) setting out the two-condition test. The opinion does not explicitly state that it establishes a new precedent beyond applying and following those authorities; the immediate legal consequence is the recognition that, for specified periods when statutory requirements were not complied with, affected workers may claim direct employment status and pursue benefits via the procedure ordered by the court.

Show full summary ...

    Food Corporation Of India Workers' Union v. Food Corporation Of India And Others

    1. The petitioner which is a Union of Employees of the Food Corporation of India has approached this Court by way of writ petition under Art. 226 of the Constitution of India praying inter alia to hold that the employees of the petitioner-Union working in eleven depots of the Food Corporation, situated in Gujarat State mentioned in the petition are employees of the Food Corporation of India and prayed to issue a suitable writ, direction and/or order to give them necessary benefits of back wages and all other consequential benefits.

    2. According to the petitioner, respondent No. 1 - Food Corporation of India has got about 11 depots with rail-siding, viz., Sabarmati, Kaligam, Thrigarth, Adalaj, Ranip, Viramgam, Baroda, Nadiad, Palana, Marida and Dasrathgaon. According to the petitioner, the employees are doing the loading and unloading, re-stacking, breaking, weighment and other incidental work including railway siding in connection with the food-grains received and sent by the aforesaid eleven depots. This is the perennial type of work because this is one of the main objects of the Corporation to see that the food-grains are properly kept and despatched in a proper manner. According to the petitioner-Union, about 1600 employees are working in the aforesaid eleven depots and they are working for last about 14 years. The said work is being done by the Corporation through various labour contractors, but the contractors are changed from time to time after the period of about two years or so. From March 1, 1985 as such there is no contractor though on paper the Corporation might have shown the names of some contractors. In fact, the entire control and supervision was done directly by the Corporation qua its employees in the aforesaid eleven depots. It is also stated by the petitioner-Union that the contractors shown by the Corporation on record were not having any valid licence required under the Contract Labour (Regulation and abolition) Act, 1970 (hereinafter referred to as 'the Act') and, therefore, all these employees working in the eleven depots served through contractors who were not holding valid licence in the eye of law atleast since January 28, 1986 when the definition of the term "appropriate Government" under the Act was changed and, therefore, the employees of the Petitioner-Union working at the aforesaid eleven depots be treated as the employees of the Corporation itself. According to the petitioner-Union, the Corporation itself was not holding a valid Registration Certificate and also there was no valid licence of the contractors which was required in accordance with the provisions of the Act. It is urged by the learned Advocate General that since the petitioner-Union made a demand for giving the employees the permanency benefits, the Corporation closed eleven depots by way of illegal lock-out since March, 1987, with the result that the food-grains worth crores of rupees were wasted without proper handling. According to the petitioner-Union, thereafter conciliation proceedings were started wherein the petitioner-Union took the stand that after the change in the definition of term "appropriate Government" under the Act, there is no contractor with the Corporation and in fact, the payments have also been made directly by the Corporation to the employees as there was no contractor having a valid licence at the relevant time as required under the Act and the Rules made thereunder. It was, therefore, submitted on behalf of the petitioner-Union that there was no contractor in the eye of law at the relevant time for the last three years and if during that period to workers worked for the Corporation, they were required to be treated as the employees of the Corporation. In view of the rival contentions of the employer and the employees, the Conciliation Officer ultimately came to the conclusion that no amicable settlement could be brought about and the conciliation proceedings ended in failure. The petitioner has also annexed the failure report of the Conciliation Officer at Annexure 'B' to the petition. According to the petitioner, with ulterior motive, the just claim of the workers of the petition-Union at the aforesaid eleven depots is denied.

    3. On the other hand, the Corporation-respondent No. 1 herein, inter alia contended that it had obtained valid Registration under the Act and the contractors also obtained a valid licence and hence the contract is valid and legal and the contract labour is not entitled to be treated as direct employees of the respondent-Corporation and thus, it is contended that the employees are entitled to claim any relief from the Corporation and they can approach the contractors for redressal of their grievances. It is further submitted by the respondents that the Corporation was holding the Certificate from the State Govt. of Gujarat and the appropriate Government was changed from State Government to Central Government. The said Certificate was obtained on May 21, 1987 from the competent authority appointed by the Central Govt. which has been issued in the name of District Manager, Food Corporation of India, Baroda. A similar Certificate of Registration was also obtained by the District Manager, Food Corporation of India, Sabarmati, Ahmedabad on June 4, 1987. The said Certificates have been annexed by the respondents at Annexure 'I' collectively. Therefore, according to the respondents, the aforesaid documents make it absolutely clear that the Certificates of Registration were obtained by the principal employer as required by the Act on the aforesaid dates. It is stated on behalf of the respondents that though the 'appropriate Government' was changed from State Govt. to Central Govt. on January 28, 1986, the Certificates of Registration from the appropriate authority were taken on May 21, 1987 and June 4, 1987 and in the said Certificates the names of the contractors whom the principal employer wanted to engage have also been mentioned. According to the respondents, the contractors have also obtained licences after the change of the 'appropriate Government' from State Government to Central Government.

    4. The learned Advocate General, appearing on behalf of the petitioner-Union, urged that the Contract Labour (Regulation and abolition) Act, 1970 came into force on February 10, 1971. The object of the Act is to regulate and to improve the conditions service of contract labour and not merely to abolish contract labour. He urged that the Act is an important piece of social legislation and it seeks to regulate the employment of contract labour and where necessary to abolish the same. It is a legislation for the welfare of labourers whose conditions of service are not at all satisfactory. He urged that the Act being a piece of social legislation for the welfare of the labourers, it should be construed in such a way that it serves the object of the Act, that is to say, it should enhance the welfare of the labourers. He pointed out sub-section (4) of Section 1 of the Act, which reads as under :

    "1 (4) applies :

    (a) to every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract labour;

    (b) to every contractor who employs or who employed any day of the preceding twelve months twenty or more workmen;

    Provided that the appropriate Government may, after giving not less than two months' notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment or contractor employing such number of workmen less then twenty as may be specified in the notification."

    Thus, according to the learned Advocate General, the provisions of the Contract Labour (Regulation and abolition) Act, 1970 are applicable to the Corporation-respondent No. 1 herein and if the Corporation intends to engage a contractor, then it has to get itself registered under Section 7 of the Contract Labour (Regulation and abolition) Act, 1970, the provisions of which are in the following terms :

    "Registration of certain establishments :- (1) Every principal employer of an establishment to which this Act applies shall, within such period as the appropriate Government may, by notification in the Official Gazette, fix in this behalf with respect to establishments generally or with respect to any class of them, make an application to the registering officer in the prescribed manner for registration of the establishment.

    Provided that the registering officer may entertain any such application for registration after expiry of the period fixed in this behalf, if the registering officer is satisfied that the applicant was prevented by sufficient cause from making the application in time.

    (2) If the application for registration is complete in all respects, the registering officer shall register the establishment and issue to the principal employer of the establishment a Certificate of registration containing such particulars as may be prescribed."

    He also pointed out Sec 9. of the Contract Labour (Regulation & Abolition) Act, 1970 which spells out the effect of non-registration. This provision is in the following terms :

    "9. Effect of non-registration :- No principal employer of an establishment, to which this applies, shall -

    (a) in the case of an establishment required to be registered under Section 7, but which has not been registered within the time fixed for the purpose under that section,

    (b) in the case of an establishment the registration in respect of which has been revoked under Section 8, employ contract labour in the establishment after the expiry of the period referred to in Clause (a) or after the renovation of registration referred to in Clause (b) as the case may be."

    The learned Advocate General contended that a perusal of the aforesaid provisions of section 9 would show that if the principal employer of any establishment, who is required to secure a registration certificate under section 7 of the contract labour (regulation & abolition) act, 1970 fails to do so or his registration certificate is revoked under section 8 of the contract labour (regulation & abolition) act, 1970, then such principal employer shall not employ contract labour in the establishment after the period indicated in clause (a) and clause (b). He submitted that section 12 of the contract labour (regulation & abolition) act, 1970 provides that no contract shall undertake or execute any work though contract labour except under and in accordance with a licence issued in that behalf by the licensing officer. The provisions of section 12 of the contract labour (regulation & abolition) act, 1970 are in the following terms :

    "12. Licensing of contractors :-

    (1) With effect from such date as the appropriate government, may by notification in the Official Gazette, appoint, no contractor to whom this Act applied, shall undertake or execute any work though contract labour except under and in accordance with a licence issued in that behalf by the licensing officer.

    (2) Subject to the provisions of this Act, a licence under sub-sec (1) may contain such conditions including, in particular, conditions as to hours of work, fixation of wages and other essentials amenities in respect of contract labour as the appropriate Government may deem fit to impose in accordance with the rules, if any, made under Section 35 and shall be issued on payment of such fees and on the deposit of such sum, if any, as security for the due performance of the conditions as may be prescribed."

    According to the learned Advocate General, section 13 of the contractor labour (regulation & abolition) act, 1970 provides for grant of licences and Section 14 thereof provides for revocation, suspension and amendment of licences. sections 16, 17, 18 and 19 of the contract labour (regulation & abolition) act, 1970 envisage providing of facilities to the workers in the establishment employing contract labour. section 20 of the contract labour (regulation & abolition) act, 1970 makes principal employer finally responsible for providing the facilities envisaged by Secs. 16 to 19. If the contractor fails to do so, Section 21 fixes the responsibility on the principal employer for paying the wages to the workers. The learned Advocate General also drew our attention to section 29 of the contact labour (regulation & abolition) act, 1970, which inter alia, provides that the principal employer shall maintain such registers and records giving such particulars of contract labour employed, the nature of work performed by the contact labour the rates of wages paid to the contract labour and such other particulars in such forms as may be prescribed. section 29 of the contract labour (regulation & abolition) act, 1970 is in the following terms.

    "29. Registers and other records to be maintained :-

    (1) Every principal employer and every contractor shall maintain such registers and records giving such particulars of contract labour employed, the nature of work performed by the contract labour, the rates of wages paid to the contract labour and such other particulars in such form as may be prescribed.

    (2) Every principal employer and every contractor shall keep exhibited in such manner as may be prescribed within the premises of the establishment where the contract labour is employed, notice in he prescribed form containing particulars about the hours of work, nature of duty and other information as may be prescribed."

    5. The learned Advocate General, after referring to the aforesaid sections, urged that Section 2(a) of the Act was amended by act no. 14 of 1986 which came into force on January 28, 1986 wherein the definition of "appropriate Government" is given and it reads as under :

    "(a) "appropriate Government" means -

    (i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act, 1947, is the Central Government, the Central Government;

    (ii) in relation to any other establishment, the Government of the State in which that other establishment is situate."

    Now so far as the Industrial Disputes Act, 1947 is concerned, the definition of "appropriate Government", in so far as it is relevant for our purpose, is as follows :

    "2(a) "appropriate Government" means -

    (i) in relation to any industrial dispute concerning any industry carried on by or under the authority of the Central Government or the Food Corporation of India established under Section 3, the Central Government, and

    (ii) in relation to any other industrial dispute, the State Government".

    Thus, according to the learned Advocate General, before January 28, 1986 the appropriate Government under the provisions of the Contract Labour (Regulation and abolition) Act, 1970 was the State Government in respect of the contractor employed by the Food Corporation of India. However, from January 28, 1986 the said Act came to be amended and the "appropriate Government" under the provisions of the Contract Labour (Regulation & Abolition) Act, 1970 in respect of the establishment of the Food Corporation of India became the Central Government.

    6. The learned Advocate General urged that in the present case, after the change in the definition of "appropriate Government", the Food Corporation was not holding valid Certificate of Registration under Section 7 issued by the Central Government till May 21, 1987. Not only that, but the contractors who were given the contract by the Food Corporation were also not holding valid licences provided under Section 12 of the Act from the competent authority appointed by the Central Government. Thus, every worker who worked for the principal on such date to whom the provisions of the contract Labour (Regulation & Abolition) Act, 1970 are attracted is required to be treated as the worker of the principal employer. He submitted that the establishment ought to have secured a Certificate of Registration after January 28, 1986 from the Central Government and ought to have employed contract labour through a licensed contractor who may be holding a valid licence under Section 12 from the competent authority appointed by the Central Government, then also it cannot escape its liability qua the workers employed by the contractor unless it is further established that the contractor employed by the principal employer possessed the requisite licence from the competent authority envisaged by section 12 of the contract labour (regulation & abolition) act, 1970.

    7. Having regard to the provision of the Act, it is evident that (i) the principal employer should obtain a Certificate of Registration and (ii) the workmen can be employed on contract labour basis only through licensed contractor. The Certificate of Registration is required to be obtained by the principal employer, issued by the appropriate Government under the provisions of Section 7 of the Act. The licence is to be obtained by the contractors under the provisions of Section 12 of the Act. The workmen can be employed as contract labour only through licensed contractors. Unless both these conditions are complied with, the provisions of the Contract Labour (Regulation & Abolition) Act, 1970 would not be attracted. Both these conditions are required to be fulfilled, if one wishes to avail of the provisions of the Act. Even if one of the conditions is not complied with, the provisions of the Contract Labour (Regulation & Abolition) Act, 1970 would not be attracted. Therefore, in a situation wherein either of these two conditions is not satisfied, the position would be that a workman employed by an intermediary would be deemed to have been employed by the principal employer. This is the position which emerges from the examination and analysis of the provisions of the Act and the decisions relied upon by the learned Counsel for the petitioner.

    8. In the support of his submission, the learned Advocate General has relied upon the following decisions :

    1. (1985-I-LLJ-492) (The Workmen of Best & Crompton Industries Ltd. v. The Management).

    2. (1987-I-LLJ-407) (F. C. I. Loading & Unloading Workers Union v. Food Corporation of India).

    3. 1987 (2) SLR 678 (Food Corporation of India, Haryana Region v. The Presiding Officer, Central Government Industrial Tribunal, Chandigarh).

    9. In the present case it is an undisputed position that the Certificate of Registration was obtained by the principal employer i.e. the District Manager, F.C.I., Baroda, on May 21, 1987. Similar Certificate was also obtained by the District Manager, F.C.I., Sabarmati, Ahmedabad on June 4, 1987. Thus from January 28, 1986 till May 21, 1987 (in case of Baroda Division) and upto June 4, 1987 (in case of Sabarmati, Ahmedabad Division) there was no valid Certificate of Registration. Thus the condition of obtaining registration as provided under Section 7 of the Act remained unfulfilled.

    10. Similarly, as regards the position of the licence obtained by the contractors or in favour of the contractors as provided under Section 12 of the Act is concerned, the following picture emerges :

    --------------------------------------------------------------------------------

    From the aforesaid facts and the legal position discussed, it becomes clear that for certain periods the principal employer, i.e., the Food Corporation of India, did not possess Certificate of Registration as required under the provisions of Section 7 of the Act, Similarly, the contractors through whom the workmen were engaged also did not possess licence issued under Section 12 of the Act by the "appropriate Government" for certain periods. Therefore, in relation to this period, the workmen can very well claim that the workmen can very well claim that the workmen were employed directly by the principal employer, i.e., F.C.I.

    11. The decision of the Madras High court in the case of The Workmen of Best & Crompton Industries Ltd. v. The Management, reported in (1985-I-LLJ-492) lays down that workmen engaged by contractor working for management, without holding valid licence, would be workmen engaged by the management itself.

    12. The decision of the Karnataka High Court in the case of F. C. I. Loading and Unloading Workers Union v. Food Corporation Of India, reported in (1987-I-LLJ-407) lays down that in the absence of Certificate of Registration by the Corporation provided under the Act to employ contract labour, workmen of the contractor will be considered to be workmen of the principal employer.

    13. In case of Food Corporation of India, Haryana Region v. The Presiding Officer, Central Government Industrial Tribunal, Chandigarh & Anr.., reported in 1987 (2) SLR 678, the Punjab and Haryana High Court has laid down that every worker who works for a principal employer to whom the provisions of the Contract Labour (Regulation & Abolition) Act, 1970 are attracted is to be treated as the worker of the principal employer unless two conditions are satisfied : (1) that the establishment has secured a Certificate of Registration for the relevant period and (2) it had employed contract labour through a licensed contractor. If either of the conditions is not satisfied, them the contract labour employed through the contractor shall be treated to be a 'worker' of the employer.

    14. The aforesaid decision of the Punjab and Haryana High Court was challenged before the Supreme Court and it is an undisputed position that the Supreme Court has not entertained the S. L. P. and has rejected the same at the admission stage only.

    15. We are in respectful agreement with the principles laid down in the decisions of the Madras, Karnataka and Punjab & Haryana High Courts.

    16. The Food Corporation of India was set up under the Food Corporation Act, 1964. It can without incurring the liability of employing workmen where work is of an intermittent nature, employ a contractor for supply of labour or for handling certain works of the Corporation. Without in any way reflecting upon the bona fides of a public sector Corporation to engage a contractor for supply of labour treating it as a commodity, we may assume that the Corporation can engage a contractor for supply of labour. The Act shows that the Act was enacted to provide for the establishment of Food corporation for the purpose of trading in food-grains and other food stuffs and for matters connected therewith and incidental thereto. By Section 3 the Central Government was authorised to establish a corporation to be known as the Food Corporation of India. Section 5 periods for the initial capital and for acquiring power to increase the capital in such manner as the Central Government or the State Government, as the case may be, may determine, initial capital being provided by the Central Government. Section 7 provides for the constitution of the Board of Directors. The management of the Corporation is to vest in a Board or Directors and the Board of Directors in discharging its functions shall act amongst others according to the instructions on questions of policy as may be given by the Central Government. The annual net profit of the Food Corporation of India has to be paid to the Central Government (Section 33). Every Food Corporation has to submit to the Central Government an annual report of its working and affairs and the same has to be laid before both the Houses of Parliament. Section 45 confers a power on the Food Corporation to make regulations not inconsistent with the act and the Rules made thereunder to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act. Without prejudice to the generality of the power conferred by Section 45(1), the regulations must provide for, amongst others, the methods of appointment, the conditions of service and scales of pay of the officers and employees of a Food Corporation other than the Secretary of the Food Corporation of India.

    17. From the perusal of the scheme of the Act, it is evident that the Food Corporation of India is an instrumentality of the State comprehended in the expression 'other authority' in Art. 12 of Constitution and is subject, amongst other things, to Part III of the Constitution. If so, it must act fairly so as not to violate Art. 14 of the Constitution.

    18. No doubt, it was open to the Corporation to engage contractors having valid licences for handing of food-grains, but the question in the present case is whether once some workmen became the workmen of the Corporation as hereinbefore discussed, was it open to the Corporation to continue the said contractors and treat its workmen as workmen of the contractors. The answer is in the negative for the reasons hereinbefore discussed. An assertion in the Statement of objects and Reasons accompanying the Bill, which was enacted into the law,, may help the Corporation in freeing itself from the traditional master-servant relationship and help it in becoming an ideal employer where exploitation in any form is wholly eschewed. The Statement reads as under :

    "The system of employment of contract labour lends itself to various abuses. The question of its abolition has been under the consideration of Government for a long time. In the Second Five Year Plan, the Planning Commission made certain recommendations, namely, undertaking of studies to ascertain the extent of the problem of contract labour, progressive abolition of system and improvement of service conditions of contract labour where the abolition was not possible."

    Thus, the Act was enacted with a view to abolishing wherever possible or practicable, the employment of contract labour. The proposed Bill aimed at abolition of contract labour in respect of such categories as may be notified. In the present case, it is clear that there is breach of the provisions of the Contract Labour (Regulation & Abolition) Act, 1970. We have no more to say except that where the law helps, such anti-labour practices must be thwarted of nipped in the bud.

    19. Now the question arises as to what relief may be granted to the petitioner. The prayer of the petitioner is that it may be declared that the workmen who are members of the petitioner-Union and who are working in the eleven depots of the Food Corporation of India situated in the State of Gujarat are the employees of the Food Corporation of India and they are entitled to the benefits of backwages and other consequential benefits ensuring from the declaration that may be made. Would it be proper to grant the aforesaid relief in a petition under Art. 226 of the Constitution of India wherein the factual data placed on record by both sides is vague and imprecise. Moreover, whatever materials placed by the petitioner on record is not admitted by the otherside. Thus there is inadequate material on record and whatever material is there on record is not undisputed. On the basis of such material it will not be possible to come to the conclusion that all the members of the petitioner-Union were employed during the period when the two necessary conditions (or either of them, of obtaining registration by the principal employer and of obtaining licence by the contractor as required under the relevant provisions of the Act) were not fulfilled. In this view of the matter the prayer as made in the petition cannot be granted. However, we would like to make suitable observations and give appropriate directions in this behalf.

    20. In the result in declared that during the period when the two conditions of obtaining registration under Section 7 by the principal employer and of holding licence by the contractor are not complied with and the workmen are employed by contractor, the workmen can claim to be direct employees of the principal employer. However, in view of the inadequate and scanty material on record it is not possible to give a declaration as to which workman has become direct employee of the respondent Food Corporation of India. Therefore, it is directed that it will be open to the petitioner Union and/or for individual workman to make a representation to the respondent-Corporation with a period of sixty days from the date of this judgment, i.e. on or before February, 6, 1990 giving necessary details as regards the employment of the workman and claim necessary benefits. If and when such representation is made, the same shall be decided by the respondent-Corporation within a period of sixty days from the date of receipt of the same in the light of the principles laid down and the observations made in this judgment. In case the decision is against the workman, the workman concerned or the petitioner-Union will be at liberty to move the appropriate authority under the relevant labour laws for redressing his grievance. Rule made absolute to the aforesaid extent, with no order as to costs.

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    Food Corporation Of India Workers' Union v. Food Corporation Of India And Others
    (Dec 5, 1989)