IN THE HIGH COURT OF DELHI AT NEW DELHI SUBJECT : CONTRACT W.P.(C) No. 15536-636/2006 Reserved on: 3.11.2006 Date of Decision: November 18, 2006 Ramesh Kumar and Ors.... PETITIONERS Through Ms. Asha Jain Madan, Advocate. VERSUS Union of India and Ors. SHIV NARAYAN DHINGRA,J.... RESPONDENTS Through Mr. H.K.Gangwani, Advocate. Mr. Jagat Arora with Mr. Rajat Arora, Advocate 1. By this writ petition, the petitioner has assailed the validity of order dated 18th July, 2006 passed by the appropriate Government. The order reads as under: NO.-L-30012/16/2006-IR(M) Government of India/Bharat Sarkar Ministry of Labour/Shram Mantralaya New Delhi, Dated: 18/07/2006 To, 1. The General Manager, Marketing Division IOCL, Northern Region IOC Bhawan, 1. Community Centre Yusuf Sarai New Delhi 2. The General Manager DSO World Trade Centre, Babur Road New Delhi 3. M/s Bharat Fabricators & Contractors, Sh. Mange Ram Tomar, G-5/60, Sector 15, Rohini, New Delhi-85 4. M/s Kapoor & Co., 56/12, Ashok Nagar New Delhi-18 5. M/s S.K.Garden Traders, Flat No.59, Pocket-I, Sector 23 Dwarka New Delhi-45
6. M/s Joginder Engg. Works House No. 192, Village & P.O. Jaffarpur Kalan Najafgarh, New Delhi-73 7. Shri Ramesh Kumar & Others C/o Asha Jain mada, 320, New Lawyers' Chambers Supreme Court Of India New Delhi-110001 Subject: ID between the management of IOCL and M/s Bharat Fabricators & ontractors, Proprietor Sh. Mange Ram Romar and Shri Ramesh Kumar & Other 163 workmen over regularization in servce. Sir, I am directed to refer to the Failure of Conciliation Report No. ALC-1/8(50)/2005-LKS dated 12/04/2006 from the ALC (New Delhi) received in this Ministry on 12/04/2006 on the above mentioned subject and to say that prima facie, the Ministry does not consider this dispute fit for adjudication for the following reasons: The workmen who raised the dispute did not produce any authentic documents to show that they were engaged by the management of IOC. The contractors who had engaged the workmen are holding license under the Contract Labour (R&A) Act and the principal employer (IOCL) is registered under the above said Act for engaging workmen on contract basis Yours faithfully, (B.M.DAVID) UNDER SECRETARY 1.Regional Labour Commissioner (Central), New Delhi 2.Assistant Labour Commissioner (Central), New Delhi 3.Guard file 4.C.R. Section 2. The factual matrix in which the petitioner has sought a reference of dispute by the government is as under: The respondent Indian Oil Corporation (IOC) had engaged the services of the haulage contractors on the basis of a public tender. The haulage contract was awarded to M/s Bharat Fabricators at Madanpur Khaden Plant in order to handle the miscellaneous works at the plant. The petitioners were employed by the contractor to do the work under the contractor. They were issued entry passes by the respondent IOC for entering into the bottling plant at Madanpur Khaden Plant as contract labour. The petitioners filed a statement of claim before the Conciliation Officer alleging that the petitioners were engaged for the various jobs by the management of IOC through its different agencies and the petitioners have been working without any break for the last many years for IOC.
There was a substantial number of workmen of the class of the petitioners. The job being performed by the petitioners was of a permanent and perennial in nature however, the respondent in order to deprive the petitioners of equal wages employed the petitioners ostensibly through different agents. The said agents were and had always been only the name-lenders with no control of any kind over the workers. The petitioners have been working under direct control and supervision of the management. They were in continuous service of IOC for various period as stated in annexure giving the names of the petitioners, nature of work and the period for which the petitioners had worked. They were in fact the workers of IOC only because as per knowledge of the petitioners neither the management i.e IOC was registered under Contract Labour (Regulation and Abolition) Act nor the contractors were having license under the Act. The petitioners were performing jobs in the LPG plant, depot and terminal of IOC established at Delhi. Vide a notification dated 21.10.97, the contract labour had been banned for performing such jobs as were being performed by the petitioners. Their engagement through contractor was therefore, contrary to the notification and they under all circumstances be considered employees of IOC. The management of IOC should have absorbed the petitioners and regularised their services but it continued engaging them through different agencies basically for monetary and other gains since the petitioners were being paid less wages than the regular employees. Petitioners claimed that since they were discharging duties of perennial nature they have a claim over regularisation and therefore, they should be regualrised in the service of IOC. 3. To this claim the respondent IOC, took a stand that the petitioners were governed by Contract Labour (Regulation and Abolition) Act, which was a self-sufficient code. The petitioners admitted that they were the employees of contractors. They had no right to approach the authorities under Industrial Disputes Act without exhausting all remedies available under Contract Labour (Regulation and Abolition) Act, 1970. The respondent had engaged services contractors only for handling miscellaneous works at its establishments. The miscellaneous works were neither regular nor perennial in nature. Some of the claimants have been working only since 2003-04. The claimants took contradictory stand. On one hand they took the stand that they were the direct employees of the respondent and on the other hand they stated that in view of the notification dated 21.10.97, which prohibits contract labour, they being the contractor's employees became employees of the respondent. The respondent also claimed that no job prohibited by notification dated 21.10.97 was being performed by any of the petitioners. The notification dated 21.10.97 prohibited only jobs of Safai Karamchari, TLF Helper, Fieldwork Helper, Mali, M&I Helper, TT Tyre Mechanic, Workshop Mechanic, TT Electrical, Workshop Welder, Fitness Fitter etc. The respondent submitted that no valid industrial dispute was raised by the petitioners which could be referred. Mere allegation that the petitioners formed a substantial class and claimed to be the employees of IOC was not sufficient for reference of the dispute. It was the petitioners' own contention that they were employed through contractors. They could claim relief only against the contractor and not against the IOC. The respondent further submitted that no control was being exercised by the IOC or its officials on contract employees. The contract between the IOC and contractor was a bonafide contract for providing services. It was in accordance with the law and provisions of Contract Labour (Regulation and Abolition)
Act, 1970. There was no employer- employee relationship between the petitioners and the respondent/ioc. If, there was any relationship of employer and employee it was between the contractor and the respondent. The respondent/ioc was registered under provisions of Central Contract (Labour) Regulation Act 1970 and the contractors engaged were also having requisite license under the Act. None of the petitioners had filed any documents with the Conciliation Officer or with the Government showing that they were the employees of the respondent. Since the petitioners failed to show that they were employees of the respondent, the appropriate Government rightly refused to refer the dispute. 4_ It is argued by the counsel of petitioner that appropriate Government by refusing to refer the dispute had in fact transgressed its jurisdiction, the appropriate Government had no jurisdiction to decide the dispute. It only had administrative powers and under these powers, it could not refuse to refer any dispute. The petitioners had claimed that they were the employees of IOC and this assertion made by the petitioners in the statement of claim should have been sufficient for referring the dispute. Appropriate Government was not supposed to look into any other document nor it could demand any document. 5. The counsel for respondent argued that it was incumbent upon the appropriate Government to consider whether there was a prima facie dispute existing or not and the Government had a right to form an opinion if there was no dispute at all which could be referred and the appropriate Government was right in observing that there was no relationship of employer and employee between the petitioners and IOC/respondent. 6. The petitioners filed several photocopies of entry cards and these photocopies show that the petitioners workmen had been engaged through a contractor. Entry passes were issued to the employees of the contractor by IOC. 7. The counsel for petitioner raised arguments, one - that in view of the fact that there was a notification prohibiting engagement of contract labour in respect of IOC and but still IOC engaged employees through contractor, the employees so engaged must be considered as direct employees of IOC and therefore, the Government was bound to refer the dispute as raised by the employee. The other argument is that the contract entered into between the respondent IOC and the contractors was a camouflage & sham and this was evident from the written statement filed by the contractor, who in his written statement took the stand that all the employees were engaged at the instance of IOC and they were not the employees of the contractor. The counsel argued that since the contract itself was sham, the employees in view of judgment of Supreme Court in Steel Authority of India Ltd. were to be regularised by the IOC as its own employees and that is why the Government should have made reference. The third argument raised by the Counsel of petitioner is that the appropriate Government had no authority to refuse to refer the dispute as there was nothing to show prima facie that there was no dispute. Failure of the conciliation proceedings and refusal of the management in regularising the petitioner was evident and a dispute was there. The appropriate Government had no power to
adjudicate whether or not the petitioners were employees of IOC. If at all this issue was to be adjudicated this could have been adjudicated by the Labour Court / Tribunal and not by the appropriate Government. The refusal to refer the dispute was illegal and contrary to the law settled by the Supreme Court. The counsel for petitioner relied upon Dhanbad Colliery Karamchari Sangh v. Union of India 1991 (Supp) 2 SSC 10, wherein the Union had raised a dispute that the workmen employed in the mines run and maintained by M/s Bharat Coking Coal Ltd. were engaged by a contractor without obtaining license. The workmen in fact were under the direct employment of the management of M/s Bharat Coking Coal Limited. They claimed relief for a declaratioin to that effect and approached the Central Government and the Government refused to refer the dispute on the ground that the Union had failed to establish that the disputed workmen were engaged in prohibited categories of work under Contract Labour (Regulation and Abolition) Act, 1970. The Supreme Court directed the Central Government to make a reference within three months observing that the Government instead of referring the dispute for adjudication had itself decided the dispute which was not permissible under law. 8. The other case cited by the petitioner counsel is Telco Convoy Drivers Mazdoor Sangh v. State of Bihar 1989 (2) SCC 271 wherein about 900 Convoy Drivers_demanded from the management that they be given permanent status along with all facilities. This was refused by the management and the Union sought to raise a dispute whether the Convoy Drivers were workmen and employees of Telco or not. They were informed by the Labour Commissioner that in the opinion of Law Department, there was no relationship of master and servant between the Convoy Drivers and Telco so, the Government refused to refer the dispute. Supreme Court observed that the Government had no authority to decide the dispute by refusing to refer the dispute on the advice of Law Department that there was no relationship of master and servant. The government practically adjudicated the dispute. Formation of opinion as to whether industrial dispute exists or not was different from adjudicating the dispute. The Supreme Court gave directions for reference of the dispute. 9. The other judgment relied upon is Ram Singh and Ors. v. Union Territory, Chandigarh and Ors., JT 2003(8) SC 345 wherein the Supreme Court observed that normally the relationship of employer and employee does not exist between the employer and contractor and servant of an independent contractor. Where however, an employer retains control over the means and methods by which the work of a contractor is to be done, it may be said that the relationship between the employer and employee exists between him and the servants of such a contractor. In such a situation the mere fact of formal employment by an independent contractor will not relieve the master of liability of the servant being in his employment. In such cases it may be held that an independent contractor is created or is operating as a subterfuge and the employee will be regarded as a servant of the principal employer. This matter had reached the Supreme Court after it had been examined by the Tribunal. It was not a case where there was no adjudication by the Tribunal. 10. The counsel for the respondent has relied upon Bombay Union of Journalists and Others v. The State of Bombay and Anr., 1964 (6) SCR 22. In this case
the Supreme Court has devolved upon the issue of powers of Government in detail. The appellants had approached the Supreme Court since the Government had refused to refer to the Tribunal the dispute about the termination of services of the appellants observing that the termination was an act of retrenchment on the part of the management for which the management was willing to pay all legal dues and the management does not appear to have acted malafidely or vindictively. The Supreme Court observed as under: The first contention which has been raised before us by Mr. Bishan Narian on behalf of the appellants is that the reasons given by respondent No. 1 in refusing to make a reference show that respondent No.1 considered the merits of the dispute and came to the conclusion that the reference would not be justified; and Mr. Bishan Narain contends that in dealing with the merits of the dispute, while deciding the question as to whether a reference should be made or not under Section 12(5) of the Act respondent No. 1 has acted illegally and improperly. The relevant scheme of the Act as disclosed by Section 12 is clear. When any industrial dispute exists or is apprehended, the Conciliation Officer may hold conciliation proceedings in the manner prescribed by Section 12. If the Conciliation Officer's efforts to bring out a statement of the dispute fail, then he makes a failure report under Section 12(4); and Section 12(5) provides, inter alia, that if on a consideration of the report referred to in sub-section (4) the appropriate Government is satisfied that there is a case for reference to the Tribunal, it may make such reference. It, however, adds that where the appropriate Government does not make such a reference, it shall record and communicate to the parties concerned its reasons therefor. The argument, is that Section 12(5) imposes an obligation on respondent No.1 to record reasons for refusing to make a reference; and the reasons given by respondent N_.1 in the present case indicate that respondent No.1 acted beyond its jurisdiction in proceeding to consider the merits of the dispute while deciding whether the reference be made or not. This argument must be rejected, because when the appropriate Government considers the question as to whether a reference should be made under Section 12(5), it has to act under Section 19(1) of the Act, and Section 19(1) confers discretion on the appropriate Government either to refer the dispute, or not to refer it, for industrial adjudication according as it is of the opinion that it is expedient to do so or not. In other words, in dealing with an industrial dispute in respect of which a failure report has been submitted under Section 12(4) the appropriate Government ultimately exercises its power under Section 19(1), subject to this that Section 12(5) imposes an obligation on it to record reasons for not making the reference when the dispute has gone through conciliation and a failure report has been made under Section 12(4). This question has been considered by this Court in the case of the State of Bombay v. K.P.Krishnan & Ors 1961 (I) SCR 227. The decision in that case clearly shows that when the appropriate Government considers the question as to whether any industrial dispute should be referred for adjudication or not, it may consider, prima facie, the merits of the dispute and take into account other relevant considerations which would help it to decide whether making a reference would be expedient or not. It is true that if the dispute in question raise question of law, the appropriate Government should not purport to reach a final decision on the said question of law, because that would normally lie within the jurisdiction of the Industrial Tribunal. Similarly, on disputed questions of fact, the
appropriate Government cannot purport to reach final conclusions, for that again would be the province of the Industrial Tribunal. But it would not be possible to accept the plea that the appropriate Government is precluded from considering even prima facie the merits of the dispute when it decides the question as to whether its power to make a reference should be exercised under Section 10(1) read with Section 12(5), or not. If the claim made is patently frivolous, or is clearly belated, the appropriate Government may refuse to make a reference. Likewise, if the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse, the appropriate Government make take that into account in deciding whether a reference should be made or not. It must, therefore be held that a prima facie examination of the merits cannot be said to be foreign to the enquiry which the appropriate Government is entitled to make in dealing with a dispute under Section 19(1), and so, the argument that the appropriate Government exceeded its jurisdiction in expressing its prima facie view on the nature of the termination of services of appellants 2 and 3, cannot be accepted. 11. The other judgment relied upon by the respondent is Prem Kakar v. State of Haryana and Ors. 1976 SCC (L&S) 450, In this case, the appellant used to work as Electrical Foreman in the concern and he was dismissed from service. He asked for reference of an industrial dispute and the Government refused to refer the dispute observing that he was working in the capacity of a foreman which was a supervisory job and his wages were more than Rs.500/- p.m. therefore, his case was not covered under the definition of term 'Workman'. The Supreme Court observed that the Government found that the appellant was not a workman within the definition of 'workman' as given in Industrial Dispute Act and considered it was not a fit case for reference for adjudication. There was nothing wrong in the decision of the Government. It was argued that the issue whether the employee was a workman or not was a disputed question of fact and only to be decided by the Labour Court and not by the Government. The Supreme Court referring to the case _f Bombay Union of Journalists (supra) and State of Bombay v. K.P.Krishnan 1961(1)SCR 227 held that there was nothing wrong in the decision of the Court. 12. A Division Bench of this Court had occasion to consider this issue in Subhash Chand. v. Govt. of NCT 2005(117) DLT 527 and this Court had after surveying the entire case law observed that the scope of power exercisable by the appropriate Government falls in a very narrow compass and does not in any way permit it to encroach upon the determination of merits in dispute. The jurisdiction of the appropriate Government is primarily administrative in nature and scope. It must restrict its decision with regard to a dispute being non-existence vexatious and/or frivolous. This power extends to declining reference of a dipsute in the even of industrial harmony being adversely affected as understood in the larger sense. The Court described the scope of the powers by enumerating following points: (1)The appropriate Government can go into the merits of the dispute prima facie for the purpose of finding out whether an industrial dispute exists or is apprehended and whether the Government should make a reference or not.
(2)But in doing so, the appropriate Government cannot delve into the merits of the dispute and take upon itself the determination of the lis. (3)If the claim is patently frivolous and vexatious then the appropriate Government may refuse to make the reference. (4)In deciding whether to make a reference or not, the Government may take into consideration whether the impact of the claim on the general relations between the employer and the employees in the regions is likely to be adverse disturbing industrial harmony understood in its large sense. (5)While, the appropriate Government can examine the patent frivolousness of the demands, it shall not itself adjudicate on the demands made by the workman, which should be left to the Labour Court / Tribunal concerned. The Government should be very slow to attempt an examination of the demand with a view to decline the reference. It appears to be a settled principle of law that while the appropriate Government is exercising its power to make a reference under Section 10(1) of the Act such power is wide but has definite limitations in terms of the prescribed law. The Government would form an opinion as to relationship, and whether dispute exists or is apprehended. This exercise of powers is purely administrative in nature and must clearly be understood with definite distinction from a judicial or a quasi judicial power. Government cannot abrogate on to itself the power to adjudicate any question. The formation of opinion has to be prima facie based upon records before the Authority as well as the report submitted by the Conciliation Officer under Section 12 of the Act. 13. It is apparent from the decisions of the Supreme Court and this Court that the Government has a right to consider prima facie the merits of the dispute for the purpose of finding out whether an industrial dispute exists or not. In the present case though the petitioners had taken contradictory stand, but they wanted a dispute to be referred in terms 'that having served the IOC from two years to ten years as their employees they were now entitled for regularisation'. Reference of this dispute would have meant that the Tribunal would not have been able to go into the question whether they were employees of IOC or not. It is settled law that a Tribunal is a creature of reference and the Tribunal cannot travel beyond a reference. Once a dispute was referred in the terms in which the petitioners sought, the Tribunal could not have gone into the question whether the petitioners were in fact employees of IOC or not. 14. The petitioners had taken contradictory stand in their claim one stand of the petitioner was that they were employees of the contractor and since by notification under Section 10 of Contract Labour (Regulation and Abolition) Act 1970, the employment of contract labour had been prohibited therefore, the petitioners became di_ect employees of the IOC. The other stand taken by the petitioners is that the contract entered into between IOC and the contractor was camouflage & sham and therefore, they became employees of the IOC. The third stand taken by the petitioners is that they were the employees of IOC and they were recruited by IOC through some agency. The
Supreme Court in Steel Authority of India Limited v. Union of India & Ors., 2001 & SSC (1) has held that neither Section 10 of the CLRA Act nor any other provision in the Act, whether expressly or by necessary implication, provides for automatic absorption of contract labour on issuing a notification by the appropriate Government under Section 10(1) of CLRA Act prohibiting employment of contract labour. The supreme Court over ruled the judgment of AIR India case prospectively. The Supreme Court further observed that where it is alleged that a contract was a camouflage or sham, this issue would have to be adjudicated by an industrial adjudicator and it is only after industrial adjudicator comes to the conclusion that the contract was a camouflage and sham, he may order for absorption of the employee by the principal employer. 15. In the present case no dispute is sought be to raised by the petitioners about the contract being camouflage and sham. The petitioners sought to raise a dispute that they were employees of the IOC and they were entitled for regualrisation because the contract entered into between the IOC and contractor was sham. Thus, the petitioner had of their own, adjudicated the issue that the contract was sham and now they wanted a dispute to be referred about their regualrisation. They themselves decided that they had become employees of IOC. It is under these circumstances that the Government refused the reference observing that they were not the employees of IOC. I consider that the Government prima facie had considered whether the petitioners were employees of IOC or not and on a prima facie look it is apparent that the petitioners were not the employees of IOC and they were claiming regularisation in IOC. Government by observing that the petitioners were not employees of IOC had not adjudicated a dispute. The Government only saw the facts as placed by the petitioners in the statement of claim which revealed that the petitioners were employed by the contractors, but instead of raising a dispute about the contract being a sham and their right of absorption in IOC on that ground, the petitioners claimed regularisation in the IOC on the ground that they were employees of IOC and were working for IOC from 2-10 years. As already observed reference of such a dispute would have meant that the Tribunal would have no authority to go into the question whether the contract was sham or not and whether the petitioners were employed by the contractor or the nature of job which was being done by the petitioners was prohibited by the Government under Section 10 of the notification or not. 16. I, therefore, consider that the Government rightly refused the reference of the dispute in the terms sought by the petitioners. If the petitioners had sought a reference of the dispute that the contract was camouflage or sham and they should be treated as employees of IOC from the very beginning, the Government would have no option but to refer the dispute. Thus, the petitioners sought a wrong dispute to be referred, the Government had authority to refuse the reference of a wrong dispute. 17. I, therefore, find no merits in the writ petition, however, if the petitioners amend their statement of claim and raise a dispute about the contract being camouflage and their right to be absorbed by IOC, the Government may refer such a dispute for adjudication.
SD./- SHIV NARAYAN DHINGRA,J.