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Zenith Industrial Services And Others v. Union Of India And Others

Orissa High Court
Apr 19, 1989
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Structured Summary of the Opinion (Gopalaswamy, J.)

Factual and Procedural Background

This writ petition under Article 226 was filed by Zenith Industrial Services (a registered partnership firm — petitioner 1) and its partners (petitioners 2 and 3) challenging Notification No. S.16025/58/77-LW dated 15 December 1979 issued by the Ministry of Labour under S.10(1) of the Contract Labour (Regulation & Abolition) Act, 1970. The notification prohibited employment of contract labour in overburden removal and in drilling and blasting in limestone, dolomite and manganese mines across the country.

Facts: Petitioner firm had entered into a contract with Orissa Cement Ltd. (opposite party 2) for excavation and removal of surface soil, refuse, spoils, deadstone, ferruginous clay, etc., in limestone quarries, under Contract No. RKN 200 dated 10 January 1978 (period stated as 1 January 1978 to 31 February 1980). The petitioner engaged contract labour (about 210 on rolls, average daily attendance 150). After issuance of the Ministry notification (annexure 4), the Regional Labour Commissioner (Central), Bhubaneswar (opposite party 3) advised Orissa Cement Ltd. not to employ contract labour in the prohibited categories (annexure 5), and Orissa Cement Ltd. terminated the petitioner's contract by letter dated 19 May 1980 effective 18 June 1980 (annexure 6). The petitioners sought quashing of annexures 4, 5 and 6.

Legal Issues Presented

  1. Whether the Central Government could issue a general notification under S.10(1) of the Act prohibiting employment of contract labour in specified works across all limestone, dolomite and manganese mines in the country (i.e., whether a notification of nationwide / industry‑wide scope is permissible under S.10(1)).
  2. Whether the Central Government complied with the mandatory procedural and substantive requirements of S.10(1) and S.10(2) — specifically consultation with the Central Board and having regard to the factors listed in clauses (a)–(d) of S.10(2) — before issuing the impugned notification.
  3. Whether, on the material on record, the impugned notification (annexure 4) was vitiated for want of the mandatory consultation and consideration required by S.10 and therefore liable to be quashed.

Arguments of the Parties

Petitioners' Arguments

  • The works entrusted to the petitioner (excavation and removal of surface soil, refuse, spoils, deadstone, ferruginous clay) are intermittent/ casual and not perennial; hence permanent employment of labour in those jobs is not required.
  • The number of labourers required fluctuates depending on the area selected for mining and quantity of material to be removed, so the work cannot provide regular employment throughout the year.
  • The petitioners claimed compliance with statutory welfare obligations and that contract labour were receiving benefits similar to regular workmen.
  • It was contended that the Central Government did not apply its mind to the particular facts of the petitioners' establishment and did not consider the conditions of work and benefits provided by the petitioners at Lanjiberna.
  • Counsel argued that S.10(1) contemplates establishment‑wise notifications only and that an omnibus notification covering all similar establishments (or an entire industry nationwide) is not authorized by the Act.
  • Primary legal challenge: the impugned notification was issued without complying with the requirements of S.10(1) and S.10(2) (including clauses (a)–(d)), and therefore is vitiated.

Opposite Parties' Arguments

  • Opposite party 2 (Orissa Cement Ltd.) accepted that the works were not perennial and stated it had engaged the petitioner for such non‑perennial jobs; it supported the petitioners' factual characterization (i.e., that the works are not perennial) but did not contest other aspects.
  • The Union of India and the Regional Labour Commissioner (opposite parties 1 and 3) stated that the Central Government, having been satisfied with recommendations of the Central Board, issued the general notification (annexure 4) and that the notification was in accordance with the Act and therefore valid and binding.
  • Counsel for petitioners argued against the permissibility of an omnibus notification under S.10(1); the opposite parties relied on the statutory scheme permitting prohibition after consultation with the Board.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
National Organic Chemical Industries, Ltd. v. State of Maharashtra (Writ Petition No. 270 of 1985) Observation about scrutiny of individual establishments under S.10 and that such scrutiny is contemplated; earlier decision considered challenge under Article 14 in that context. The court held that nothing in that decision prevents a general notification where similar circumstances exist across establishments; it rejected the contention that National Organic stands for the proposition that a general notification can never be issued under S.10(1).
B.H.E.L. Workers' Association, Hardwar v. Union of India [1985—I L.L.N 596] General proposition that the Act contemplates abolition where possible and that decisions about abolition are for the Government after considering S.10 matters. Used to support the statement that whether to abolish contract labour in particular processes is a decision for the appropriate Government under the Act.
Workmen of Food Corporation of India v. Food Corporation of India [1985—II L.L.N 20] Similar proposition to B.H.E.L. indicating governmental role under the Act in deciding abolition or regulation. Referenced to reinforce that the question of abolition is for the appropriate Government after considering S.10 factors.
Catering Cleaners of Southern Railway v. Union of India [1987—I L.L.N 480] That the appropriate Government is required to consult the Central/State Board before issuing a notification under S.10 and that the decision is subject to judicial review. Applied to emphasize that consultation with the Central Board is mandatory and that governmental decisions under S.10 remain open to judicial review; the court relied on this to require evidence of consultation and relevant consideration.
Vegoils (Private), Ltd. v. Workmen [(1971) 2 SCC 724 : A.I.R. 1972 S.C. 1942] The appropriate Government, when acting under S.10, may take an overall view of industries carrying on similar activities and decide whether contract labour should be abolished in respect of activities of that industry. Applied to support the proposition that a general notification addressing similar activities across establishments can be appropriate where justified by overall industry considerations.
Ramachandra Keshav Adke v. Govind Joti Charare [(1975) 1 SCC 559 : A.I.R. 1975 S.C. 915] Principle that where a power is given to be exercised in a specified way, it must be exercised in that way and not otherwise. Invoked to underline that the Central Government must follow the procedural requirements in S.10 (consultation and regard to specified factors) when issuing a notification; failure to do so invalidates the exercise of power.

Court's Reasoning and Analysis

The court began by examining the statutory provisions of S.10 of the Contract Labour (Regulation & Abolition) Act, 1970, reproducing both sub‑sections (1) and (2) and the clauses (a)–(d) that specify factors to be considered before issuing a prohibition notification. The court emphasized the mandatory nature of consultation with the Central Advisory Board (a tripartite body) as a precondition and the separate requirement that the appropriate Government have regard to conditions of work and the enumerated factors in S.10(2).

On the question of whether a general (industry‑wide or nationwide) notification is permissible, the court analyzed the petitioners' contention that S.10(1) permits only establishment‑wise notifications. The court rejected the argument that a general notification is never contemplated: it found that where the Central Government, after consultation with the Central Board, is satisfied that the works specified (here overburden removal and drilling and blasting in specified mines) are of perennial nature, ordinarily done by regular workmen and require considerable whole‑time workmen, a general notification like annexure 4 can validly be issued. The court relied on precedent (Vegoils) to show that the Government may have an overall industry perspective when deciding to abolish contract labour for certain activities.

However, the court distinguished permissibility from correctness of exercise: it stressed the procedural safeguards in S.10 — consultation with the Central Board and consideration of the factors in S.10(2). The court noted that these safeguards prevent arbitrary or abusive exercises of power and must be respected. Citing the principle in Ramachandra Keshav Adke, the court reiterated that where a power is given to be exercised in a specified manner, it must be so exercised.

Turning to the record, the court found no material placed before it showing (a) the nature of consultation the Central Government had with the Central Board before issuing annexure 4, and (b) the relevant factors that weighed with the Central Government in issuing the general notification. Given the absence of any material demonstrating compliance with the mandatory consultation requirement and the need to have regard to the S.10(2) factors, and applying the standard that governmental action under S.10 remains subject to judicial review (as stated in Catering Cleaners), the court concluded that the notification could not stand.

In short: the court accepted that a general notification is not per se invalid, but held that in the present case there was an absence of requisite material to show that the mandatory procedures and considerations had been followed; therefore the notification was vitiated.

Holding and Implications

Holding: The court quashed the impugned general notification (annexure 4) issued by the Central Government prohibiting employment of contract labour in the works specified (overburden removal and drilling and blasting in limestone, dolomite and manganese mines in the country). The writ petition was allowed; the order was made without costs.

Implications:

  • Direct effect: The specific notification challenged (annexure 4) was quashed and, consequently, the writ petition was allowed. The court's order invalidates the legal effect of that notification as issued in the circumstances shown on the record.
  • On procedural law: The decision underscores that while a general notification under S.10(1) is permissible in principle, the Central Government must demonstrate that it complied with mandatory consultation with the Central Board and had regard to the factors listed in S.10(2) before issuing such a notification. Failure to place such material on record will render the notification vulnerable to judicial review and possible quashing.
  • No broader pronouncement of novel law or declaration of a new precedent was articulated beyond applying existing principles (i.e., the decision focused on invalidity of the specific notification for failure to show compliance with statutory requirements).

D.P. Mohapatra, J. concurred.

Show all summary ...

Gopalaswamy, J.:— In this writ petition filed under Art. 226 of the Constitution, petitioner 1 Zenith industrial Services, a registered partnership firm and its partners petitioners 2 and 3, challenge the notification No. S. 16025/58/77-LW, dated 15 December, 1979, issued from the Ministry of Labour, New Delhi, Government of India under S. 10(1) of the Con tract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as the Act), prohibiting the employment of contract labour in the works for overburden removal and drilling and blasting in limestone, dolomite and manganese mines in the country with effect from the date on which the period or six months from the data of publication of the said notification expires.

2. The facts giving rise to the present writ petition may be briefly stated as follows. One of the objects of the petitioner-registered firm is to carry on the business of “contract” and in pursuance of the said object the petitioner-firm entered into a contract with the Orissa Cement, Ltd., a public limited company (opposite party 2) for doing the jobs of excavation and removal of surface soil, refuse, spoils, deadstone, ferruginous clay, etc., in the limestone quarries of opposite party 2 with effect from 1 February, 1978. Opposite party 2 is a manufacturer of cement and its cement factory is at Rajgangpur. Limestone is one of the main raw materials required for the manufacture of cement. Opposite party 2 owns limestone quarries at village Lanjiberna situated at a distance of 13 kms. from Rajgangpur in the district of Sundargarh. Before the actual mining operation of limestone is done, various preliminary operations have to be done such as excavation and removal of surface soil, refuge, spoils, deadstone, ferruginous clay and transporting the same to a place within a radius of two miles. It is for doing all these jobs such as excavation, etc., petitioner 1 firm was engaged as a contractor by opposite party 2 under Contract No. RKN 200, dated 10 January, 1978. The period of contract was from 1 January, 1978 to 31 February, 1980 and it may continue even thereafter subject to the satisfactory performance of the contract. For the performance of the contract, petitioner used to engage contract labour and 210 such workers were on its rolls though the average daily attendance was 150. The petitioner-firm claims that it has been complying with all the requirements of the Act relating to the welfare of the workers and the workers employed by him as contract labour were enjoying all the benefits available to regularly employed workmen. The Ministry of Labour, New Delhi, issued the notification, dated 15 December, 1979, annexure 4 prohibiting the employment of contract labour in the works of overburden removal and drilling and blasting in the limestone mines of the entire country. In pursuance of that notification, annexure 5, dated 11 March, 1980, was issued by the Regional Labour Commissioner (Central), Bhubaneswar, opposite party 3, advising the opposite party 2 not to employ contract labour through contractors in the prohibited categories of work mentioned in the notification annexure 4 and as a consequence of annexure 5, opposite party 2, by his letter, dated 19 May, 1980 (annexure 6), issued notice to petitioner 1 terminating the contract earlier entered into with it on 10 January, 1978 with effect from 18 June, 1980. Being aggrieved by the said notification of the Ministry of Labour (annexure 4) which has ultimately resulted in the termination of his contract by opposite party 2, the petitioner-firm and its partners filed this writ petition against opposite party 1, the Union of India, the Orissa Cement, Ltd., opposite party 2 and the Regional Labour Commissioner (Central), Bhubaneswar, opposite party 3, praying for quashing the above referred annexures 4, 5 and 6.

3. The petitioners plead in their writ petition that the jobs given to them under the contract are excavation and removal of surface soil, refuge spoils, deadstone and ferruginous clay and such jobs are not perennial in nature and the petitioners, therefore, cannot give employment regularly to all the workmen throughout the year. According to the petitioners at any given period the number of labourers required by the firm would depend upon several factors, such as, the area and the land which is sought to be exploited for mining operation and on the quantity of refuse spoils, deadstones, etc., extracted therefrom and to be loaded in the wagons, etc., and, therefore, the strength of the labour force employed by the firm is bound to vary from time to time. The petitioners state that during the period of contract, from time to time, opposite party 2 would be selecting a piece of land in the mining area and the petitioners are entrusted with the removal of surface soil, deadstones, etc., from that area and this job is done by the petitioners by engaging labourers and whenever no mining face is required by the opposite party 2 for raising minerals there is no work to be done for the petitioners. It is urged by the petitioners that in view of the above circumstances the contract work entrusted to them is of an intermittent or casual nature and there is no scope for the engagement of labourers permanently in that type of work. Petitioners allege that the Central Government has not applied its mind to the facts prevailing in the petitioners' establishment and has also not considered the conditions of work and the benefit provided to the workers at Lanjiberna by the petitioners' establishment. Hence the petitioners contend that as the impugned notification (annexure 4) was issued by the Central Government without duly complying with the provisions of Ss. 10(1) and 10(2) of the Act, the same is liable to be quashed.

4. Opposite party 2, Orissa Cement, Ltd., filed its counter stating that as the jobs entrusted to the petitioners under the contract were not of perennial nature, it became necessary for opposite party 2 to enter into a contract with the petitioner 1 for the performance of those jobs. It was further stated by opposite party 2 that it contemplated the renewal of the contract with the petitioners for a period of three years more had it not been terminated in pursuance of the notification (annexure 4). The tenor of the counter of opposite party 2 reveals that it also supports the contention of the petitioners that the works entrusted to them under the contract are not of perennial nature.

5. A counter was jointly filed by opposite parties 1 and 3 wherein it was stated that the Central Government, being fully satisfied with the recommendations made by the Central Board, issued the general notification, annexure 4, prohibiting the employment of contract labour in the works specified in the schedule thereto in the limestone, dolomite and manganese mines in the country. It was pleaded on behalf of the opposite parties 1 and 3 that the general notification issued by the Central Government (annexure 4) was in accordance with the provisions of the Act and, therefore, the same is valid and binding on the petitioners and opposite party 2.

6. At the outset Sri Jaganaath Das, the learned counsel for the petitioners, contended that an omnibus notification of the type of annexure 4 covering all the limestone, dolomite and manganese mines in the country is not contemplated under the Act and on that score also the notification is vitiated. He contends that prohibition of employment of contract labour can only be establishment-wise and the notification issued under S. 10(1) of the Act can be in respect of an individual establishment only and that a notification covering more than one establishment, and much less all the establishments pertaining to an industry in the entire country, is not contemplated under S. 10 of the Act. In the present case, according to the definition, “establishment” means any place where any industry, trade, business, manufacture or occupation is carried on. We are presently concerned with the limestone quarries owned by opposite party 2. If the above arguments of Sri Das are accepted it means there should be as many notifications under S. 10(1) of the Act as there are limestone quarries in the country. He could not cite any decision in support of his contention that for every individual establishment there should be a separate notification. In this context Sri Das cited the decision National Organic Chemical Industries, Ltd. v. State of Maharashtra [writ Petition No. 270 of 1985, reported infra in this volume]. There is nothing in the said decision to suggest that a general notification of the type of annexure 4 under S. 10(1) cannot be issued covering all similar establishments wherein similar circumstances exist justifying prohibition of employment of contract labour. In that decision the notification issued under S. 10(1) abolishing the contract labour system in the petitioner-company qua the jobs specified in that notification was challenged on the basis that it was violative of Art. 14 of the Constitution, While holding that the challenge based on Art. 14 is without any substance, their Lordships of the Bombay High Court observed thus:

“…In the present case a complaint was made by the union of the employees in the petitioner's establishment. If no complaint is made qua other establishments then it cannot be said that all of them stand on the same footing. It is the scrutiny of individual establishment which is contemplated by S. 10. Therefore, only because a notification is not issued qua other establishments, it cannot be said that there is a hostile discrimination…”

So the above observations cannot be stripped out of their context and should never be understood to mean that in no event, whatever be the circumstances, a general notification of the nature of annexure 4 cannot be issued under S. 10(1) of the Act.

7. On the other hand one of the factors to be taken into consideration before issuing a notification regarding an establishment under S. 10(1) is whether the work is one ordinarily through regular workmen in an establishment similar thereto. On a consideration of the provisions of S. 10 of the Act, it is clear that if the Central Government, after consultation with the Central Board, is satisfied that the works specified in the schedule annexed to the notification annexure 4 that is the overburden removal and drilling and blasting in the limestone, dolomite and manganese mines in the country are of perennial nature and are done ordinarily through regular workmen and demand the employment of considerable number of whole-time workmen, it can issue a general notification like annexure 4 abolishing contract labour in such works, having regard to the service conditions of such contract labour in general. So the contention of the petitioners that under the general notification annexure 4 the employment of contract labour prohibited in the works specified in the notification in all the limestone, dolomite and manganese mines in the country, even on that score the said notification should be held to be invalid is neither valid nor tenable.

8. The learned counsel for the petitioners impugned the notification issued by the Ministry of Labour, Government of India, under S. 10(1) of the Act (annexure 4) prohibiting employment of contract labour in the works of overburden removal and drilling and blasting in the limestone mines of the country, mainly on the ground that as the requirements laid down under Ss. 10(1) and 10(2), and Sub-cls. (a) to (d) were not fulfilled before the issuing of notification under S. 10(1), on that score alone, the notification is vitiated and liable to be quashed.

9. For convenience of reference, the provisions of S. 10 of the Act:

“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-sec. (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 establishment and other relevant factors, such as—

(a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment;

(b) whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture 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.”

10. The Contract Labour (Regulation and Abolition) Act, 1970, was enacted with a view to abolishing wherever possible or practicable the employment of contract labour. Under the Act no invidious distinction can be made against contract labour. So the Act 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 question whether the employment of contract labour in any process, operation, or other work in any establishment would be abolished or not is a matter for the decision of the Government after considering the matters required to be considered under S. 10 of the Act. See B.H.E.L Workers' Association, Hardwar v. Union of India [1985—I L.L.N 596] and Workmen of Food Corporation of India v. Food Corporation of India [1985—II L.L.N 20]. As held by the Supreme Court in Catering Cleaners of Southern Railway v. Union of India [1987—I L.L.N 480], the appropriate Government is required to consult the Central Board or the State Board, as the case may be, before arriving at its decision and the decision, of course, is subject to judicial review.

11. Section 10 of the Act dealing with the prohibition of employment of contract labour empowers the appropriate Government, in the instant case, the Central Government, to prohibit employment of contract labour in any process, operation or other work in the limestone, dolomite and manganese mines in the country. But before the Issuing of such notification prohibiting the employment of contract labour in the overburden removal and drilling and blasting work in the limestone, dolomite and manganese mines in the country, the Central Government is bound to consult the Central Advisory Board constituted under S. 3 of the Act. The Central Board is of a tripartite character, representing various interests and so the consultation which such a Board will enable the Central Government to know the views of the contractors, the workmen and of the industry in the matter of the proposed abolition of contract labour for doing the works in question in the concerned establishments. So such consultation is mandatory and it is a condition precedent before the issuance of a notification under S. 10(1) of the Act. Further, before issuing any notification under S. 10(1) in relation to an establishment the appropriate Government shall have regard to the conditions of work and benefits provided for contract labour in that establishment and other relevant factors given in detail in Cls. (a) to (d) of Sub-sec. (2). Explanation under Sub-sec. (2) provides that 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.

12. In Vegoils (Private), Ltd. v. Workmen [(1971) 2 SCC 724 : A.I.R 1972 S.C 1942], the Supreme Court observed that the appropriate Government when taking action under S. 10 will have an overall picture of the industries carrying on similar activities and decide whether contract labour is to be abolished in respect of any of the activities of that industry. In Ramachandra Keshav Adke v. Govind Joti Charare [(1975) 1 SCC 559 : A.I.R 1975 S.C 915], the Supreme Court held that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and other methods of performance are necessarily forbidden. In the case of Vegoil (Private), Ltd. case (vide supra), also while dealing with the provisions of S. 10 the Supreme Court observed thus:

“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 representations of the workmen, contractor and the industry have an opportunity to express their opinion.”

13. Under the scheme of the Act under S. 10 the Parliament has vested in the appropriate Government the power to prohibit the employment of contract labour in any process, operation or other work in any establishment but then such power has to be exercised in the manner indicated in the provisions of Sub-secs. (1) and (2) of S. 10. The prior consultation with the Advisory Board under Sub-sec. (1), and the relevant factors that should be taken into consideration under Sub-sec. (2), before issuing the notification are the in-built safeguards provided in that section itself to prevent the appropriate Government, from misusing or abusing its power, or exercising its power arbitrarily. In the present case no material was placed before the Court to indicate the nature of the consultation the Central Government had with the Central Board before issuing the notification annexure 4. Likewise there is nothing on record to show as to what are the relevant factors that weighed with the Central Government in issuing the general notification abolishing the contract labour in the overburden removal and drilling and blasting works in the limestone, dolomite and manganese mines in the country. No doubt the decision regarding the prohibition of employment of contract labour is always with the appropriate Government but then such a decision is subject to judicial review as held by the Supreme Court in Catering Cleaners of Southern Railway v. Union of India [1987—I L.L.N 480] (vide supra). In the present case we find that there is no material to support that the Central Government issued the general notification annexure 4 prohibiting the employment of contract labour in the works specified therein, in the limestone, dolomite and manganese mines in the country after satisfying the mandatory requirements of S. 10(1) and Cls. (a) to (d) of S. 10(2) of the Act and, therefore, the notification is liable to be quashed on that score.

14. In the result, the aforesaid notification annexure 4 issued by the Central Government prohibiting the employment of contract labour in the works specified therein in the limestone, dolomite and manganese mines in the country is hereby quashed and accordingly the writ petition is allowed, but in the circumstances of the case, without costs.

15. D.P Mohapatra, J.:— I agree.