Steel
Authority of India Ltd Vs. Union of India
& Ors [2006] Insc 618 (26 September 2006)
S.B.
Sinha & Dalveer Bhandari
[Arising
out of SLP (Civil) No. 12621-13236 of 2004] S.B. SINHA, J :
Leave
granted.
Appellant
is a Government company. In carrying out its activities of manufacture of steel
and other products it appointed several contractors.
Respondent
Nos. 4 to 618 herein are said to have been employees of the contractors. They
raised a dispute before the State Government demanding their absorption as
permanent employees.
By a
notification dated 19.11.1985, the State Government referred the following
industrial dispute for adjudication by the Presiding Officer, Labour Court, in
exercise of its power under Section 10(1)(c) of the Industrial Disputes Act,
1947 (for short, 'the 1947' Act') :
"Are
the contract workers employed in the nature of contract work listed as per
Annexure working in the premises of Visveswaraya Iron and Steel Ltd., Bhadravathi,
justified in demanding absorption as regular permanent employees of Visveswaraya
Iron & Steel Ltd.
Bhadravathi?
In the said proceedings, the workmen in their statements of claim filed on
26.02.1986 prayed for their absorption as permanent employees in the employment
of Appellant. Inter alia, a jurisdictional question was raised by Appellant
herein on the premise that the matter relating to the regulation and abolition
of contract labour being governed by the Contract Labour (Regulation and
Abolition) Act, 1970 (for short, 'the 1970 Act'), the reference made by the
State Government was impermissible in law. It was contended that the State
Government having not issued any notification prohibiting employment of
contract labour in terms of Section 10 of the 1970 Act, the workmen did not
have any legal right to claim absorption.
Indisputably,
during the pendency of the said dispute before the Labour Court, Appellant herein filed a writ
petition, questioning the legality and/or validity of the said reference, which
was marked as Writ Petition No.26874 of 1995. One of the questions which was
raised therein was that the State Government had no jurisdiction to make a
reference in relation thereto. The writ petition was disposed of by the High
Court observing that Appellant may raise a preliminary issue in that behalf.
The
workmen, however, on 21.11.1997 filed an additional claim statement alleging
that the contracts entered into by and between Appellant and the contractors
being sham and bogus, they were direct employees of the management.
By
reason of an award dated 13.07.1999, the said reference was held to be not
maintainable. A writ petition came to be filed by some trade unions alleging
that the workmen were direct employees of Appellant and were, thus, entitled to
be absorbed as permanent workmen.
A
learned Single Judge of the High Court, by an order dated 05.12.2001, while
holding the said writ petition to be not maintainable, directed :
"For
the reasons stated supra, these writ petitions are allowed with a direction to
the Union of India the 2nd respondent to accept the petition presented before
this Court as the petition submitted by the petitioner Union raising an
industrial dispute in terms of Section 2(k) read with Section 12(1) of the I.D.
Act and also under the provisions of the Contract Labour (Regulation and
Abolition) Act, 1970. Further, keeping in view the law laid down by the Supreme
Court in the Steel Authority of India Ltd. case and notwithstanding the fact
that the conciliation proceedings are conducted, the second respondent shall in
exercise of its power, make reference to the appropriate Central Industrial
Tribunal or the Labour Court for adjudication of the existing industrial
dispute between the workmen of the petitioner/Union and the respondent No.1
Management within eight weeks from the date of receipt of a copy of this order.
The respondents 2 and 3 while exercising their power under Section 10(1)(d) of
the I.D. Act shall not consider the pendency of these petitions before this
Court from the year 1999 keeping in view the law laid down by the Apex Court in
the Steel Authority's case referred to and pass appropriate order making
reference either to Central Industrial Tribunal or Labour Court for
adjudication of the existing Industrial dispute between the workmen and first
respondent." Intra-court appeals were filed thereagainst on the ground
that no industrial dispute could be raised by the workmen concerned in terms of
the judgment of this Court in Steel Authority of India Ltd. and Others v.
National Union Waterfront Workers and Others [(2001) 7 SCC 1]. It was further
contended that the award of the Labour Court having been accepted by the workmen, the matter relating to
abolition of contract labour could only be decided by the Appropriate
Government in terms of Section 10 of the 1970 Act and not otherwise. By reason
of the impugned judgment, the said appeals have been dismissed.
It is
not disputed before us that the matter relating to abolition of contract labour
being governed by the provisions of the 1970 Act, the Industrial Court will have no jurisdiction in
relation thereto. It is also not in dispute that the decision of the
Constitution Bench of this Court in Steel Authority of India Ltd. (supra)
governs the field.
In the
said decision, it was, inter alia, held :
-
"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
sub-section (1) of Section 10, prohibiting employment of contract labour, in
any process, operation or other work in any establishment.
Consequently
the principal employer cannot be required to order absorption of the contract labour
working in the establishment concerned. xxx xxx xxx
-
On issuance of
prohibition notification under Section 10(1) of the CLRA Act prohibiting
employment of contract labour or otherwise, in an industrial dispute brought
before it by any contract labour in regard to conditions of service, the
industrial adjudicator will have to consider the question whether the
contractor has been interposed either on the ground of having undertaken to
produce any given result for the establishment or for supply of contract labour
for work of the establishment under a genuine contract or is a mere
ruse/camouflage to evade compliance with various beneficial legislations so as
to deprive the workers of the benefit thereunder. If the contract is found to
be not genuine but a mere camouflage, the so-called contract labour will have
to be treated as employees of the principal employer who shall be directed to regularise
the services of the contract labour in the establishment concerned subject to
the conditions as may be specified by it for that purpose in the light of para
6 hereunder.
-
If the contract
is found to be genuine and prohibition notification under Section 10(1) of the
CLRA Act in respect of the establishment concerned has been issued by the
appropriate Government, prohibiting employment of contract labour in any
process, operation or other work of any establishment and where in such
process, operation or other work of the establishment the principal employer
intends to employ regular workmen, he shall give preference to the erstwhile
contract labour, if otherwise found suitable and, if necessary, by relaxing the
condition as to maximum age appropriately, taking into consideration the age of
the workers at the time of their initial employment by the contractor and also
relaxing the condition as to academic qualifications other than technical
qualifications." The industrial dispute was raised by two Unions, namely, Visveswaraya
Iron & Steel Ltd. Workers Association, Bhadravathi and Visveswaraya Iron
& Steel Ltd. Contract Employees' Union,
Bhadravathi.
The
award dated 13.07.1999 was confined to only one issue, namely, Issue No.6
framed by the Labour Court. The said issue was determined by the Labour Court pursuant to or in furtherance of
the order of the High Court passed in Writ Petition No.26874 of 1995. While
determining the said question, the Labour Court framed seven issues by an order dated 31.12.1998, some of
which are :
-
"Whether
the 1st party proves that they were employed by the 2nd party Management in the
job of permanent and perennial in nature.
-
Whether the 2nd
party Management proves that the 1st party workmen were employed under
different contractors in the job of permanent and perennial in nature in
various departments of the Management.
-
Whether the 2nd
party proves that system of contract labour in respect of the nature of the
workers involved in this Reference was not abolished in the 2nd party Industry
and that this Reference is not sustainable." The Labour Court opined :
"The
plain reading of the first point in dispute to be decided by this Court is that
"are the contract workers employed in the nature of contract work,
justified in demanding absorption as regular permanent employees of the
management VISL, Bhadravathi (hereinafter called the Management). Therefore the
point in dispute pre- supposes that the 1 party Union Employees are the
contract workers employed in the nature of contract work under certain
contractors and whether such contract workers are to be absorbed by the
Management. The fact that the Union Employees who seek their absorption by the
Management are the contract workers is further very much evident from the
averments made in the claim statement preferred on behalf of the 1 party Union. Para 1 of the claim statement reads that they are
representing the contract labourers of the Management against whom the present
reference is made by the Government" The learned Presiding Officer of the Labour
Court observed that in the light of the judgment of the High Court between the
parties, the moot question that arose for consideration was as to whether the
court could decide the validity of the reference as it stood, holding :
"It
was contended that the dispute under reference since pertained to the abolition
of contract labour which contract labour was not abolished by the appropriate
Government under Sec.10 of the Contract Labour Act by way of Notification as
contemplated under the said provision the reference is bad in law inoperative
and illegal. I find substance in his arguments. Undisputedly, there is no
abolition of Contract Act under Sec. 10 of the said Act by the appropriate
Government in this case. It was well argued that the Industrial Disputes Act
where under the present reference is made is a general enactment and therefore,
a special central enactment namely, the Contract Labour Act shall prevail to
the extent that it applies over the provisions of I.D. Act" It was further
held :
"This
Court certainly has got no jurisdiction to pass Award in favour of the
employees holding them to be the employees of principal employer namely the
management. The question under reference, raised before this Court, certainly,
relates to the abolition of contract labour and that question cannot be decided
by this Court but by the competent appropriate Government under the provisions
of Sec. 10 of the Contract Labour Act" The Labour Court also took into
consideration the contention raised by the representatives of the Union that
the issue as to whether the members of the Unions were really the employees of
the management and not those of the employees of the contractors was to be
tried and decided by the said court as both the parties had led their oral and
documentary evidences in that behalf. Having regard to the nature of reference
by the Appropriate Government, which fell for consideration before the Labour
Court, it declined to go into the said question, opining that it was not within
its province to go into the question as to who the actual employer was as the
same did not fall in the category of matters, which can be said to be
incidental to the main dispute. It was opined :
"Therefore,
it is clear that the I party Union itself
apprehended that the reference made to this Court was not in accordance with
the law. The principle laid down by his lordship of our Hon'ble High Court in
the case reported in ILR 1994 Karnataka page 2603, taken support of by Learned
Representative for the I Party Union contending that jurisdiction point cannot
be raised by the management at this belated stage, in my opinion again had no
much substance the management in this case has challenged the jurisdiction of
this court at earliest point of time at para 2 of its counter statement.
Therefore, it cannot be said that the jurisdiction point was raised by the
management at a belated state. Therefore, as contended for the management and
as observed by his lordship of our Hon'ble High Court in the above said
unreported judgment, the proper course and remedy available for the I party
Union was not by way of reference on hand at least with the present terms, but
by way of approaching the Hon'ble High Court invoking its writ jurisdiction
seeking directions to the Central Government to take a decision under Section
10 of the Contract Labour Act, as was already done in respect of the 23
employees at Sl. No.26 Annexure to reference on hand. Therefore, for the
reasons foregoing I am constrained to hold that reference is not valid and
proper and that this court has no jurisdiction to adjudicate upon the same.
Accordingly Issue No. 6 is answered in the affirmative and following order is
passed." Before adverting to the questions raised before us, we may at
this juncture notice the contention of Mr. V.N. Raghupathy that whereas in the
reference only 26 workmen were made parties, more than 600 workmen were made
parties in the writ petition and, thus, only because before the appropriate
Government a demand was raised by some of the workmen contending that they were
workmen of the contractors, an industrial dispute could be raised that the
contract was a sham one and in truth and substance the workmen were employed by
the management.
Writ
Petitioner No.1 was Visveswaraya Iron & Steel Limited Contract Employees' Union. 615 workmen were parties thereto. They were
admittedly represented by Writ Petitioner No.1 only. An industrial dispute was
also raised, as noticed hereinbefore, by Visveswaraya Iron & Steel Ltd.
Workers
Association and Visveswaraya Iron & Steel Limited Contract Employees Union. The Contract Employees' Union was common both in the proceedings under the
Industrial Disputes Act also in the writ petition.
The
1970 Act is a complete code by itself. It not only provides for regulation of
contract labour but also abolition thereof. Relationship of employer and
employee is essentially a question of fact. Determination of the said question
would depend upon a large number of factors. Ordinarily, a writ court would not
go into such a question.
In
State of Karnataka and Others v. KGSD Canteen
Employees' Welfare Association and Others [(2006) 1 SCC 567], this Court held :
"Keeping
in view the facts and circumstances of this case as also the principle of law
enunciated in the above-referred decisions of this Court, we are, thus, of the
opinion that recourse to writ remedy was not apposite in this case." We
may reiterate that neither the Labour Court
nor the writ court could determine the question as to whether the contract labour
should be abolished or not, the same being within the exclusive domain of the
Appropriate Government.
A
decision in that behalf undoubtedly is required to be taken upon following the
procedure laid down in sub-section (1) of Section 10 of the 1947 Act. A
notification can be issued by an Appropriate Government prohibiting employment
of contract labour if the factors enumerated in sub- section (2) of Section 10
of the 1970 Act are satisfied.
When,
however, a contention is raised that the contract entered into by and between
the management and the contractor is a sham one, in view of the decision of
this Court in Steel Authority of India Limited (supra), an industrial
adjudicator would be entitled to determine the said issue. The industrial
adjudicator would have jurisdiction to determine the said issue as in the event
if it be held that the contract purportedly awarded by the management in favour
of the contractor was really a camouflage or a sham one, the employees
appointed by the contractor would, in effect and substance, be held to be
direct employees of the management.
The
view taken in the Steel Authority of India Limited (supra) has been reiterated
by this Court subsequently. [See e.g. Nitinkumar Nathalal Joshi and Others v.
Oil and Natural Gas Corporation Ltd. and Others (2002) 3 SCC 433] and Municipal
Corporation of Greater Mumbai v. K.V. Shramik Sangh and Others [(2002) 4 SCC
609].
In
A.P. SRTC and Others v. G. Srinivas Reddy and Others [(2006) 3 SCC 674, this
Court held :
"If
respondents want the relief of absorption, they will have to approach the
Industrial Tribunal/Court and establish that the contract labour system was
only a ruse/camouflage to avoid labour law benefits to them.
The
High Court could not, in exercise of its jurisdiction under Article 226, direct
absorption of respondents, on the ground that work for which respondents were
engaged as contract labour, was perennial in nature.
It was
further held :
"The
only remedy of respondents, as noticed above, is to approach the Industrial
Tribunal for declaring that the contract labour system under which they were
employed was a camouflage and therefore, they were, in fact, direct employees
of the Corporation and for consequential relief." Similar view has been
taken in KGSD Canteen Employees' Welfare Association (supra).
The
workmen whether before the Labour Court
or in writ proceedings were represented by the same Union. A trade union registered under the Trade Unions Act
is entitled to espouse the cause of the workmen. A definite stand was taken by
the employees that they had been working under the contractors. It would, thus,
in our opinion, not lie in their mouth to take a contradictory and inconsistent
plea that they were also the workmen of the principal employer. To raise such a
mutually destructive plea is impermissible in law. Such mutually destructive
plea, in our opinion, should not be allowed to be raised even in an industrial
adjudication. Common law principles of estoppel, waiver and acquiescence are
applicable in an industrial adjudication.
The
1947 Act was enacted, as the preamble indicates, for investigation and
settlement of industrial dispute and for certain other purposes. It envisages
collective bargaining. Settlement between Union
representing the workmen and the Management is envisaged thereunder. It
provides for settlement by mutual agreement. A settlement or an award in terms
of Section 18(3)(b) of the 1947 Act is binding on all workmen including those
who may be employed in future.
What
assumes importance is the ultimate goal wherefor the 1947 Act was enacted,
namely, industrial peace and harmony. Industrial peace and harmony is the
ultimate pursuit of the said Act, having regard to the underlying philosophy
involved therein. The issue before us is required to be determined keeping in
view the purport and object of the 1947 Act.
It is
interesting to note that in Modi Spinning & Weaving Mills Company Ltd.
& Another v. Ladha Ram & Co. [(1976) 4 SCC 320], this Court opined that
when an admission has been made in the pleadings, even an amendment thereof
would not be permitted.
We are
not oblivious of the decision of this Court in Panchdeo Narain Srivastava v.
Km. Jyoti Sahay and Another [AIR 1983 SC 462 = (1984) Supp. SCC 594], wherein
it has been held that an admission made by a party can be withdrawn and/or
explained away; but we may notice that subsequently a Division Bench of this
Court distinguished the said decision in Heeralal v. Kalyan Mal and Others
[(1998) 1 SCC 278].
The
effect of an admission in the context of Section 58 of the Indian Evidence Act
has been considered by this Court in Sangramsinh P. Gaekwad and Others v. Shantadevi
P. Gaekwad (Dead) through Lrs. and Others [(2005) 11 SCC 314], wherein it was
categorically held that judicial admissions by themselves can be made the
foundations of the rights of the parties and admissions in the pleadings are
admissible proprio vigore against the maker thereof. [See also Union of India
v. Pramod Gupta (Dead) by Lrs. and Others [(2005) 12 SCC 1] Recently this Court
in Baldev Singh and Others etc. v. Manohar Singh & Another etc. [2006 (7)
SCALE 517], held :
"Let
us now take up the last ground on which the application for amendment of the
written statement was rejected by the High Court as well as the Trial Court.
The rejection was made on the ground that inconsistent plea cannot be allowed
to be taken. We are unable to appreciate the ground of rejection made by the
High Court as well as the Trial Court. After going through the pleadings and
also the statements made in the application for amendment of the written
statement, we fail to understand how inconsistent plea could be said to have
been taken by the appellants in their application for amendment of the written
statement, excepting the plea taken by the appellants in the application for
amendment of written statement regarding the joint ownership of the suit
property. Accordingly, on facts, we are not satisfied that the application for
amendment of the written statement could be rejected also on this ground. That
apart, it is now well settled that an amendment of a plaint and amendment of a
written statement are not necessarily governed by exactly the same principle.
It is true that some general principles are certainly common to both, but the
rules that the plaintiff cannot be allowed to amend his pleadings so as to
alter materially or substitute his cause of action or the nature of his claim
has necessarily no counterpart in the law relating to amendment of the written
statement. Adding a new ground of defence or substituting or altering a defence
does not raise the same problem as adding, altering or substituting a new cause
of action. Accordingly, in the case of amendment of written statement, the
courts are inclined to be more liberal in allowing amendment of the written
statement than of plaint and question of prejudice is less likely to operate
with same rigour in the former than in the latter case." While laying down
the principle, this Court followed Modi Spinning & Weaving Mills Co.
(supra) and distinguished Hira Lal (supra).
It is,
thus, evident that by taking recourse to an amendment made in the pleading, the
party cannot be permitted to go beyond his admission. The principle would be
applied in an industrial adjudication having regard to the nature of the
reference made by the Appropriate Government as also in view of the fact that
an industrial adjudicator derives his jurisdiction from the reference only.
There
is another aspect of the matter which should also not be lost sight of. For the
purpose of exercising jurisdiction under Section 10 of the 1970 Act, the
appropriate Government is required to apply its mind. Its order may be an
administrative one but the same would not be beyond the pale of judicial
review. It must, therefore, apply its mind before making a reference on the
basis of the materials placed before it by the workmen and/or management, as
the case may be, While doing so, it may be inappropriate for the same authority
on the basis of the materials that a notification under Section 10(1)(d) of the
1947 Act be issued, although it stands judicially determined that the workmen
were employed by the contractor. The State exercises administrative power both
in relation to abolition of contract labour in terms of Section 10 of the 1970
Act as also in relation to making a reference for industrial adjudication to a Labour
Court or a Tribunal under Section 10(1)(d) of the 1947 Act. While issuing a
notification under the 1970 Act, the State would have to proceed on the basis
that the principal employer had appointed contractors and such appointments are
valid in law, but while referring a dispute for industrial adjudication,
validity of appointment of the contractor would itself be an issue as the State
must prima facie satisfy itself that there exists a dispute as to whether the
workmen are in fact not employed by the contractor but by the management. We
are, therefore, with respect, unable to agree with the opinion of the High Court.
We
would, however, hasten to add that this judgment shall not come in the way of
the appropriate Government to apply its mind for the purpose of issuance of a
notification under Section 10 of the 1970 Act.
For
the reasons aforementioned, the impugned judgment cannot be sustained, which is
set aside accordingly. The appeal is allowed. In the facts and circumstances of
this case, however, there shall be no order as to costs.
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