New Delhi General Mazdoor Union, ... vs Standing Conferance Of Public ...
1991 Latest Caselaw 350 Del

JUDGMENT

D.P. Wadhwa, J.

(1) These six writ petitions involve common questions of law. The principal questions being (1) would the "workmen" who have been employed as contract labour by the "principal employer" and who were hired by or through the "contractor" would become employees of the principal employer if the principal employer, is not registered under section 7 and/or the contractor does not possess a license under section 12 of the Contract Labour (Regulation and Abolition) Act, 1970 (for short 'the Act), and (2) if the first respondent is a State withhin the meaning of Article 12 of the Constitution and thus, amenable to the writ jurisdiction A subsidiary question has also been raised if the workmen will also become the employees of the principal employer having put in more than 240 days of a work in a year. In all these writ petitions workmen are represented by the petitioner, a trade union. In writ petition No. 3603/89 the petitioner is New Delhi General Mazdoor Union and in all other writ petitions the petitioner is Delhi Offices & Establishment Employees Union (Regd). The first respondent is common and it is Standing Conference of Public Enterprises 362 (SCOPE), a society registered under the Societies Registration Act, 1860, governed by its Memorandum and Articles of Association. It is the principal employer' as the term goes in the Act. Second respondent is different in all these petitions and is the 'contractor', again as the term goes in the aforesaid Act', who provided contract labour to the principal .employer under separate contracts. All these workmen were employed for purpose of various functions for the building complex of Scope at Lodhi Road, New Delhi. Some of the details are as under SI. Cwp No. Date of No. of Nature of duties Date of No. instilution workmen contract of (as represented writ petition ypetitoner 1 2 3 4 5 6 1. 3063/89 26-10-89 42 Security guards. 11-10-85 2. 2303/90 23-7-90 23 Operation and 11-9-89 maintenance of electric installation, etc. 3. 2304/90 23-7-90 10 Operation and 14-9-89 maintenance of fire fighting equipments. 4. 2305/90 23-7-90 11 Maintenance of 28-7-89 water supply, sanitary, drainage system and storage tanks. 5. 2306/90 23-7-90 2 Running and maintenance 10-4-89 of Hydropneumatic System for VlP Toilets and maintenance ofMCD 150mm dia. ma i n from Mcd ma i n to Scope building etc. 6. 2307/90 23-7-90 7 Operation and 10-4-89 maintenance of water treatment plant, 363 New Delhi General Mazdoor Union (in Cwp 3063/89) & Delhi 363 Offices & Establishment Employees Union (Regd.) (in CWPs. 2303 to 2307/90) v. Standing Conference of Public Enterprises (Scope) & another

(2) There is a dispute as to the number of days a particular workman performed his duties with the principal employer in a year and the period for' which he actually worked. It was contended that there were contracts for earlier period as well under which labour had been supplied by the contractor to the principal employer. It is, however, admitted that the workmen employed have been getting wages under the Minimum Wages Act, 1948 from their respective contractors as per provisions of the Act and they are getting benefits both under the Employees State Insurance Act, 1948 and Employees Provident Fund and Miscellaneous Provisions Act. 1962. There is no dispute, howevevr, that Scope at the time the contracts were entered into with respective contractorsn was not registered under section 7 of the Act and the contractors were also not having a license under section 12 of the Act. It was admitted that iin .the writ petitions where the inumber of workmen was less than 20, the Act was not applicable as far as the contractor was concerned, but Scope as a principal employer nevertheless had to get the registration. Scope did get registration and the concerned contractors got their license during the pendency of the writ petitions. Petitioiner said that did not make any difference as it woud not validate the employment for the earlier period and once their having become the employees of SCOPF. on account of non-compliance with the provision of the Act, they would not revert back to old position of their remaining employees of the contractor and working for the principal employer under a contract between the contractor and the principal employer.

(3) The contentions of the petitioners are quite brief. They say that the job being, done by tnem 's of perennial nature. They have been hired by Scope through 'the contractor, the second respondent', and an attendance register is main- tained by the contractor who keeps the same in his custody. The workmen also regularly mark their attendance. They have put in regular duties of eight hours a de/v. Neither the Scope nor the contractor has valid registration and license respectively under the Act, and in the absence of a valid registration or grant of license, as the case may be, Scope was debarred from engaging contract labour and as such all the contract labourers would ipso facto become the employees 364 of. Scope, the principal employer. In the petition itself reference is made to some decisions of the High Courts, namely, The Workmen of Best & Crompron Industries Ltd. v. The Management of Best & Crompton Engineering Ltd., 1985 (1) Labour Law Journal 492 (D. B" Madras), (1) (2) Food Corporation of India loading and unloading Workers Union v. Food Corporation of India, 1987 (1) Labour Law Journal 407 (D. B., Karnataka), (2) and (3) Food Corporation of India v. The Presiding Officer, Central Government Industrial Tribunal, Chandigarh and another, 1988 Laoubr & Industrial Cases 730, (D. B., Punjab & Haryana), (3) where it is stated that in somewhat similar circumstances contract labourers have been held to be the employees of the principal employer. Leading case on this subject is stated to be that of the Madras High Court in Best & Crompton Engineering Ltd. case. It is also mentioned that a special leave petition was filed against the decision of the Punjab & Haryana High Court in Food Corporation of India (1988 Labour & Industrial Cases 730) and that S. L. P. was dismissed by the Supreme Court. Petitioners also state that Scope is an instrumentality of State and cannot indulge in an unfair labour practice by employing labour circumventing the provisions of the Act and other labour laws.

(4) Scope denies that it is an instrumentality of the State. Though it admits it has various contracts with the second respondent in each of the petitions but it says it is ignorant as to what contract labour has been deputed on duty by the second respondent and whether these contract labourers have at all worked for 240 days in a year, as contended by the petitioners. On the very face of the allegations in. the petitions. Scope contends that many of the labourers cannot be said to have worked for even one year. It, therefore, says that the writ petitions involve disputed questions of facts which cannot be gone into in these writ proceedings and that the petitioners should have approached the Appropriate Authority for referring their disputes subject matter of the writ petitions, for adjudication by Industrial Tribunal. It is further staled that these contract labourers if at all found to be employed ultimately by the Scope have to be fit in the service rules of the Scope which again would be a matter for the Industrial Tribunal to consider.

(5) In an additional affidavit filed :n Writ' Petition 3063189 Scope admitted that the second respondent was sending 365 monthly attendance sheet along with its bills, the purpose of the sheet being only to show the number of guards deployed every month, but the personal identity of the persons so deployed was not known to Scope, and that Scope was basically concerned with the 'number of guards deployed as payment was to be made on that bas's under the contract. It was further stated that all instructions were issued by Scope to the Security Officer engaged and authorised by the second respondent and Scope did not directly deal with the guard and the guards were also not to report to any officer of the SCOPE. Further the number of guards used to change in accordance with the requirements and it was, therefore, denied that the petitioners had completed 240 days of continuous service. Lastly, it was contended that Scope had been increasing the amount payable to the second respondent depending on the revision of the minimum wages payable to the guards.

(6) The second respondent , it counter-affidavit admitted that it had an agreement with Scope for providing security personnel. This agreement is dated October 1l, 1985. It is stated that thereafter the second respondent was granted three months extension by the Scope from time to time and last extension was by letter dated April 4, 1987. Thereafter, there is no letter extending the agreement, but second respondent continued to provide the services under the terms of the earlier agreement and the extensions and the Scope had been making payments there under. Then the second respondent states that every month along with a monthly bill attendance sheet showing the names Of the persons who had worked during that month with the Scope was submitted to Scope for pavment. The names of the petitioners (Writ Petition No. 3063189) do appear in such a list. Lastly, it is stated that each of the petitioners had been going on leave with or without permission of the second respondent and had been absenting themselves from time to time without any notice to it and further that the second respondent had been providing different number of security personnel from time to time depending upon the requirement of the SCOPE.

(7) Resoondent No, 2 has been representted ' only in Writ Petitions Nos. 3063/89, 2304190, 2306190 and 2307/90. They 366 claim that the petitioners are their employees governed by various labour laws. It is stated that contractor in Writ Petition No. 3063189 has since obtained his license under section 12 of the Act on December 18, 19K9, while Scope got registration under section 7 on May 30, 1990. It is also stated that the petitioners are working under contract with the second respondent being his employces and they cannot be made employees of Scope to the detriment of the second respondent. Then it is commended (Writ Petitions 2306/99 and 2307190) that though the work under the contract entrusted to the second respondent was that of maintenance, those very employees have also been working under other contracts for Bal Bharti School and the State Trading Corporation of India Right o[ the petitioners to become employees of Scope only was questioned and it was asked if they would become employees of Bal Bharti School and State Trading Corporation of India as well by applying the principles of the Act. In the petitions it was also submitted that special training was imparted to the employees and it would be most in equitable to hold them to be the employees of Scope, thus. paralysing the work of the second respondent and putting him to a great deal of loss and may be even breach Of similar contracts which second respondent had entered into with other organisations.

(8) Before we refer to the relevant provisions of the Act it will be appropriate to examine what the Scope is and how it is governed and if there are any service regulations for its employees. This is relevant also to see if he Scope is an instrumentality of the State. Under Article 12 of the Constitution, the 'State' under Part Iii (Fundamental Rights) includes the Government and Parliameint of India and the Government and the Legislative of each of the Stale? and all local or other authorities within the territory of India oi under the control of the Government of India. As noted above. Scope is a society registered under the Socities Registration Act. 1860. It was registered on September 29. 1970 in the name "New Horizon". It was then rechristened in its present name (Standing Conference of Public Enterprises) . The basic objective of Scope is as under :- "SCOPE looks upon its task as ba;h internal and external to the public sector. Internally, it would endeavor to assist the publlic sector in such ways 367 as would help improve its total performance. Externally, it would help improve its total boundary role in conveying such information and advice to the community and the Government as would generally help the public sector in its role"

(9) There are other objects as well. In the booklet Memorandum arid Aricles of Association of Scope there is a copy of letter dated November S, 1976 addressed by the Government of India to the Chairman of SCOPP. wherein it is steted that in view of the aforesaid basic objective of Scope, Government had accorded formal recognition to Scope, it is mentioned in this letter that Government had taken note of title fact that structure of Scope would be as indicated in Articles 6 and 7 of the Articles of Association The a it is men ioned that with regard, to Article 3 under which Scope can admit Non-Central Government Enterprises as menbers, it had been decided that such membership might better be restricted to the institutional sector-wise representation through either Central or State level federations.

(10) Under Article 3 membership of Scope is open to (1) all public enterprises of the Central Government, (2) State Government enterprises etc. subject to approval and conftrm,aiion by the Executive Board, and (3) other organisations/icorporate bodies/institutions. again subject to approval and confirmation by the Executive Board. Public enterprise in title Articles of Association means a Government company or a statutory corporation owned and controlled by the .Central Government or State Government Scope has two administrative organs-Governing Council and the Executive Board. Under Article 6, Chief Executive of' a member enterprise automatically becomes the member of the Governing Council. Th'e Director-General, Bureau of Public Enterprises (8PE) and two Advisers in the Bureau not below the rank at Joint Secretaries, to be nominated by the Director-General. Bpe, shall be ex-officio members of the Governirg Council with full voting lights. A nominee of each State Scope, affiliated Scope, shall also be an ex-officio member of the Governing Council. It is made clear that in case the Chief Excutive is transferred, dies, retires or leaves his post, his successor automatically becomes the member of the Governing Council. Then functions of the Governing Council have been preseribed. The executive authority of Scope vests in the Executive Board whose functions are also prescribed. The Board consists of 29 members. Chairman, Vice-Chairman and Director General, B.P.E., are the ex-officio members of the Board. 19 members are to be elected by the Governing Council and 7 members are to be co-opted as per rules. Chairman and Vice-Chairman arc to be elected by the Governing Council The finances of the Scope are provided in Article 10 which is as under - Article 10 Finances : The finance of the Society shall be derived from subscriptions, contributions donations, bequests, gifts grants-in-aid, investments, loans, endowmen's, rents, revenue earning schemes or any other legitimate source approved by the Executive Board which is not contraiy to the objects of the Society."

(11) PETRON-IN-CHIEF of the Scope is Prime Minister of India. In a booklet published by Scope it is mentioned that "New Horizon", a registered society was set up in New Delhi on September 29, 1970 with the basic objective of promoting "better understanding among the public about the individual and collective contribution of public sector". Gradually the amorphous concepts began to take shape. The objectives were widened and "New Horizon" was rechristened as Scope which assumed the role and contours of an apex body of Central Public Sector Enterprises on April 10, 1973. It was given formal recognition by the Government of India on November 8, 1976 by a decision of the Union Cabinet. It is also stated that Scope was created by a decision of the Cabinet presided over by the Prime Minister and that it is an apex body of Public Sector Enterprises numbering about 214 with a total investment of nearly about Rs. 40,000 crores and employing about 20 lakhs people. In the form of application for membership of Scope one has to specify if the applicant is (1) a Govrnment of India enterprise, (2) a State Govt. enterprise, or (3) any other. The annual subscription for membership is prescribed as Rs. 30,000 for Schedule 'A' Company, Rs. 20,000 for Schedule 'B' Company and Rs. 10.000 for Schedule 'C' and D Company. We have been told that this categorisation of companies is of public enterprises guided by the B.P.E., a department of the Central Government in the Ministry of Finance/lndustry. The application form does not show the annual membership fee of a company outsidethe ee four categories which apply to Government companies. We are further told that the Chief Executive in Schedule 'A' public enterprise sets a pay in the pay-scale of Rs. 4,500-125-5,000, that in. Schedule 'B' Rs. 4,000-125-4,500, Schedule 'C' Rs. 3,500-100.4.000 and Schedule 'D' Rs. 3,000-100-3,700. At our instance Scope filed a list of members. They number 196 and all of then are Public Sector Undsrtakings. The building complex of Scope at Lodhi Road was built with contributions of various Public Sector Undertakings who have been provided space therein. They are paying service charges as well to the Scope for amenities who in turn has also utilised the services of contract labour for various Job requirements for the purpose. There is no private party who is either a member of the Scope or has got any space in the building complex. All funding of Scope is done by various Public Sector Undertakings and not even a penny has been received from any outside agency, cither by way of gift, bequest, donation, etc. Chairman and Vice-Chairman of the Scope have always been the Chief Executive of various Public Sector Undertakings, it, therefore, does appear to us that though if reference is made to the Memorandum and Articles of Association of the Scope, one may get the impression that Scope is neither an agency nor instrumentality of State so as to come within the purview of "other authorities" in Artcle 12 of the Constitution. But then, as the facts,

(12) The criteria evolved was applied by the Court in Ajay Hasia's and Tekraj Vasandi's (ICPS) cases. After examining these decisions we are clear in our opinion that our answer should be in the affirmative to hold that Scope is an "authority" Calling within the definition of 'Stale' in Article 12 of the Constitution. We have no doubt that it is the Central Government which controls the strings in the case of SCOPE. We may also note that in the service rules of Scope there is a provision for deputation of officers from Central/ State Governments and other public sector undertakings. These officers can thereafter be absorbed in SCOPE. Services of an employee of Scope can also belent to the Government or any authority subordinate thereto or to any other public undertaking. Further, where an order of suspension ^ made or disciplinary proceeding is taken against an employee who is on deputation to Scope from the Central or State Government or any other public undertaking or a local authority, the authority lending his services is to be in formed of the circumstances leading to the order of suspension or the commencement of disciplinary proceedings, as the case may be. An employee of Scope is liable to be transferred on deputation / foreign service to any department of the Government or any of the public sector undertaking anywhere in India or abroad. It is difficult to find these service conditions in a private organisation. These conditions show the nuxus of Scope with the Government. About finances coming from the government agencies, notwith-standing . Article 10. have already been noted above and influence of Government on Scope, through the 371 B.P.E., a department of the Central Government, we find is all pervasive. We, therefore, hold Scope is amenable to writ jurisdiction under Article 226 of the Constitution.

(13) At this stage itself we, may also refer to some of the other service rules applicable to this employees of SCOPE. Employees of Scope have been classified as regular, probationer, temporary, casual/daily rated/muster roll, part time, and on foreign service. They have also been defined as to who is a casual employee, a daily rated employee, etc. Recruitment rules of Scope prescribe procedure for employment of its employees. The sources of recruitment being from employment exchanges, open market through advertisement in the press, departmental candidates, reputed Engineering/Management Institutes through campus interviews, by absorotion of deputationists, any other source as may be approved by the competent authority in exceptional ircumstances, and by making reference to recognised associations and agencies who maintain rosters of suitable persons in different skills and specialities for promotion of the interests and welfare of Scheduled Casts/Scheduled Tribes. Ex-servicemen and other similar special categories. Modes of recruitment in unskilled, semi-skilled, skiled and supervisory groups is as under :- "All posts in this group to be filled by outside recruitment are notified to the appropriate Employment Exchange in the manner as provided in the relevant Act and orders issued from time to time. Simultaneously, an internal notice is issued for information of such of the employees who are qualified and may wish to be considered in the selection. Other sources of recruitment is drawn upon only when the Employment Exchange(s) indjcate their inability to sponsor candidates satisfying the prescribed requirements, through issue of a non-availability certificate. In such an event, an advertisement is issued in the leading daily newspapers."

(14) The rules also prescribe procedure for advertisement, the application form, eligibility of internal candidates, age limits, medical fitness, constitution of selection boards, etc. There are separate service rules, conduct, discipline and appeal rules and the recruitment rules of SCOPE. 372 Before we consider the rival contentions on the applicatlity of the Act: we may note its salient provisions. There is, however, no dispute that the first respondent is the 'principal employer' and the second a 'contractor' and petitioner the 'workmen' within the meaning of clauses (g), (c) and (b) respectively of section 2 of the Act. As the preamble shows, the Act was enacted to regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith. The Act applies to every establishment in which twenty or more workmen are employed, and to every contractor who employs, or who employed on any day of the preceding 12 months twenty or more workmen. Under clause (b) of section 2 of the Act, a workman shall be deemed to be employed as "contract labour" in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer. The Act envisages constitution of Advisory Boards for advising Government on such matters arising out of the administration of the Act as may be referred to it and to carry out other functions assigned to it under the Act. Under section 6 registering officers are to be appointed. Under section 7 every principal employer has-to apply, in the prescribed manner, for registration of the establishment to which this Act applies. As per rules the application has to be made within the period prescribed unless registering officer extends the time on sufficient cause being shown to him. A certificate of registration is to be issued containing such particualrs as may be, prescribed. Section 8 provides for revocation of registeration in certain cases. Section 9 deals with the effect of non-registration and it is as under :- "9. No principal employer of an establishment, to which this Act 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 eslablishment 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 revocation of registration referred to in clause (b), as the case may be. 373 Section 10 prohibits the employment of contract labour and it may again be quoted : - "10. (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 subsection (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 or occupation carried on in that establishment, (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; (d) wheher 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."

(15) Under section Ii licensing officers are to be appointed. Under section 12 a contractor is barred to undertake or to execute any work through contract labour except under and in accordance with the license issued in that behalf by the licensing officer. Rules prescribe as to how the contractor is to apply for grant of license and the license may contain such conditions including, in particular, conditions as to hours of work, fixation 374 of wages and other essential 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. Section 13 prescribes as to how an application for grant of license is to be made and the investigation to be conducted before the grant of any such license. Under section 14 a license could be revoked, suspended or amended. Section 15 provides for appeals to an appellate officer by any person aggrieved by an order made under section 7, 8, 12 or 14. Sections 16 to 19 provide for establishment and maintenance of canteens, rest-rooms, first-aid facilities and other facilities by the contractor. Under section 20, if any of these amenities are not provided by the contractor, these shall be provided by the principal employer. Under section 21, a contractor is responsible for payment of wages to each worker employed by him as contract labour. Sub-sections (2), (3) and (4) of section 21 are as under - "(2) Every principal employer shall nominate a representative duly authorised by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amounts paid as wages in such manner as may he prescribed. (3) It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the authorised representative of the principal employer. (4) In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor."

(16) Sections 23 and 24 provide for punishment for contravention of the provisions of the Act and may be set out as under :- "23. Whoever contravenes any provision of this Act or of any rules made there under prohibiting, res- 375 tricting or regulating the employment of contract labour, of contravenes any condition of a license granted under this Act. shall be punishable with imprisonment for a term which may extend to three months, or with fine which may extend to one thousand rupees, or with both, and in the case of a continuing contravention with an additional fine which may extend to one hundred rupees for every day during which such contravention continues after conviction for the first such contravention. 24. If any person contravences any of the provisions of this Act or any rules made there under for which no other penalty is elsewhere provided, he shall be punishable with imprisonment for a term which may extend to three months, or with fine which may extend to one thousand rupees, or with both." Section 27 provides for limitation of prosecutions and is as under ;- "27. No court shall take cognizance of an offence punishable under this Act unless the complaint thereof is made within three months from the date on which the alleged commission of the offence came to the knowledge of an inspector. Provided that where the offence consists of disobeying a written order made by an inspector, complaint thereof may be made within six months of the date on which the offence is alleged to have been committed." Then under section 28 inspectors are to be appointed and their duties prescribed. They can enter any premises or place where contract labour is employed and to examine the records. This section clothes an inspector with quite vast powers of search and seizure under the Code of Criminal Procedure and a person required to produce any document or thing or to give any infonfaation as may be required' by an inspector shall be deemed to be legally bound to do so within the meaning of section 175 and 176 of the Indian .Penal Code- Both the 376 principal employer and the contractor are to maintain registers and records giving such particulars of the contract labour employed, etc., as may be prescribed. Notices in the prescribed form containing particulars about the hours of work, nature of duties and such other information as may be prescribed are also to be exhibited at the place where contract labour is employed. This is section 29. Section 30 deals with the effect of laws and agreements inconsistent with this Act and this section is as under "30. (1) The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any agreement or contract of service or in any standing orders applicable to the establishment whether made before or after the commencement of this Act: Provided that where under any such agreement, 'contract of service or standing orders' the contract labour employed in the establishment are entitled to benefits in respect of any manner which are more favorable to them than those to which they would be entitled under this Act, the contract labour shall continue to be entitled to the more favorable benefits in respect of that matter notwithstanding that they receive benefits in respect of other matters under this Act, (2) Nothing contained in this Act shall be construed as precluding any such contract labour from entering into an agreement with the principal employer or the contractor, as the case may be, for granting them rights or privileges in respect of any matters which are more favorable to them than those to which they would be entitled under this Act."

(17) The petitioners strongly relied upon the case reported as Workman of Best & Crompton Engineering Ltd. v. The Management of Best & Crompton Engineering Ltd., 1985 (1) L.L.J. 492 (Madras, D. B.). We will discuss tihs case in detail inasmuch as it has been followed by some other High Courts. This was an appeal against the order of a Single Judge in writ petition by which the learned Single Judge quashed the Older of Industrial Tribunal who had directed reinstatement of 75 377 A workmen whose services were not requisitioned by the management, the first respondent, on the grouud that these workers were not its workmen but were only contract labour provided by the licensed contractor. However, it appeared that the contractor had no license under section 32 of the Act on the day when the services of the workmen had been terminated. Examining the various contentions of the parties the court noted that the Act legalised the employment of contract labour by any establishment through a contractor provided the establishment obtained the requisite license as principal employer under section 7 of the Act and provided also that the intermediary contractor obtained a license under section 12 of the Act. After examining the provisions of sections 7 and 12, the Court observed that the combined effect of these two provisions, in their view, made it clear that for a valid employment of : "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, contract labour, two conditions should be satisfied, viz., not only the principal employer but also the contractor should possess the requisite license. In other words, the holding of license by one alone will not enable the management to treat the workmen as contract labour."

(18) The court found that the license of the contractor expired on 20-8-1977 but the workmen still continued to work with the first respondent till their services were terminated on 16-10-1978. The court then examined the status of the workmen after they continued to work since expiry of the license. First respondent took up the position that it was under the bona fide impression that the contracter "continued to be a licensed contractor'. The court negatived- this' plea and held that it was not open to the management to contead that it was under the bona fide impression in the teeth of the provisions of the Act and said that as long as there was no valid license possessed by the contractor, the management's attitude as also the 378 attitude of the contractor vis-a-vis the workmen would be of no consequeance. The court then also referred to, the definition of workmen' in section 2(2)(b) of the Act and observer as under :-- "This definition in our view implies that if the workman is not hired through a contractor holding a .valid license under the Act, he would be a workman employed by the Management itself. Further, the Management must be aware that the contractor had no valid litence and that therefore, the workman could not be contract labour within the meaning of section 2(2)(b) of the Act. The Management yet engaged the services of these 75 workmen and paid their wages through the contracter Kesavan. The intermediary because of want of license in his favor will have no existence in the eye of law. It would thus lead to the position that there is but direct relationship between the Management and these 75 workmen. Would it not immediately lead to the result that there is an implied contract between the Management and these 75 workmen to the effect that as long as they did the work allotted to them, they would be paid their respective wages We thus come to the conclusion that in the above admitted circumstances, these 75 workmen were employed by the establishment."

(19) The count, thus, accepted the argument that in the circumstances of the case the workmen would ipso facto attain the status of workmen of the management. This judgment of the Madras High Court was followed by the Kamataka High Court in Food Corporation of India loading and unloading Workers Union v. Food Corporation of India 1987 (1) L.L.J. 407(7) Bombay High Court in United Labour Union and others v. Union of India and others. 1991 (1) L.I.J. 89. (8) and Gujarat High Court an Food Corporation of India Workers Union v. Food Corporation of India and others. 1990(1) L.L.N. 972 (D.B.). (9) In United Labour Union case Bombay High Court went to the extent of saying that existence of penal provisions in the Act made no difference and in the absence of registration of the principal employer under section 7 of the Actor license of the contractor under section 12 of the Act would still make the workmen of the contractor as that of the principal employer. 379 Madras High Court had also held that even if either of the principal employer or contractor was not having the requisite registration or license the wokmen would become the wokmen of the principal employer and at was not that botth the principal employer and the contractor should not have the registration and the license.

(20) Punjab & Haryana High.. , has also taken a similar view in Food Corporation of India, v. The Presiding Officer Central Government Industrial Tribunal, 1988 Labour .Industrial Cases 730 (D. B.) where it held as under :- "Every worker, in our "new, who works for a. principal employer to whom.the provisions of Central Labour Act are attracted, is to be treated as the worker of the principal employer unless two conditions are satisfied : - (i) that the establishmert bad secured a certificate of registration for the relevant period; and (ii) lit had employed contract labour through a licensed contractor."

(21) Contrary view has, however, also been, expressed by the Bombay High Court in Genefal Labonr Union (Red Flag) v. K.M. Desai and others, 1990 (1) L.LN. 181; (10) and Madras High Court in Ashok Layland Ltd. v. Government of Tamil Nadu and others, 1990 (1) L.L.N. 267. (11) In the Bombay case the principal employer was having registration but the contractor was not having' any license. Canteen of the principal employer was being.run by the contractor and the court held that the employer, of the contrctor did not become direct employees of the company, the principal employer. The court noticed the decisions of, 'the Madras High Court in Best and Crompton Industries Ltd. case to bold that the ratio of the case was not applicable to the case before the Bombay High Court. It held that there was no provision in the Act, whereby it could be construed even by remote possible way that the failure on the part of the contractor to register his contract under section 12 of the Act the employees employed by him would become the direct employees of the company. It was 380 noted that on the contrary for the failure of the contractor to register the contract penalty was prescribed. In the Ashok Leyland case the Single Judge of the Madras High Court, it appears, did not notice the Division Bench judgment in .Best and Crompton Indusries Ltd. case. In this case, however, under section 10 of the Industrial Disputes Act, 1947 the following dispute was referred for adjudication : "Whether the demand that the security guards under contractors are eligible to get the same wages and other benefits enjoyed by the regular security guards of the Ashok leyland Ltd., is justified if so to give appropriate directions."

(22) The petitioner contended 'that reference was not competent as far as the petitioner was concerned as the petitioner was not the employer of the security guards concerned and the workmen of the contractor were not its employees. The court also noticed the argument of the counsel for the petitioner that its liability is only under section 21 of the Act This judgment would be quite distinguishable from the Division Bench judgment of the Madras High Court as from the report it is not clear if both the principal employer and the contractor or either one of them was not registered or was not holding license.

(23) Supreme Court had occasion to deal with the provisions of the Act in M/s. Gammon India Ltd. etc. v. Union of India and others, 1974 (1) L.L.J. 489. (12) where constitutional validity of the Act was upheld. In Catering Cleanere of Southern Railway v. Union of India and others, 1987 (1) L.L.J. 345. (13) the court pointed out the pernicious effect of the contract labour and referred to its earner decision in Standard Vacuum Refining Company of India Ltd. v. Its Workmen (1960-11-LLJ-232) (14) and had to observe as under- "The practice of employing labour through contractors for doing work inside the premises of the primary employer, known to researchers of the International Labour Organisation and other such organisations, as Labour only contracting' or inside contracting system, has been termed as an archaic system and a relic of the early phase of capitalist production. which is now showing signs of revival in the more recent period. Of late there hag been a 381 New Delhi General Mazdoor Union (in Cwp 3C63/89) & Delhi 381 Offices & Establishment Employees Union (Regd.) (in CWPs. 3 to 2307/9) v. Standing Conference of Pubiic Enterprises Scope)& another noticeable tendency on the part of big companies including public sector companies to get the work done through contractors rather than through their own departments. As pointed out by a group of researcher's in the Economic and Political Weekly, Review of Management dated November 29, 1986, it is a matter of surprise that employment of contract labour is steadily on the increase in .many organized secters including the public -sector, . which one expects to function as a model employer."

(24) This petition in the Supreme Court was filed on. behalf of the Catering Cleaners working in the .catering establishments in various railway junctions of the Southern Railway and in the pantry cars of the long distance trains running under the control of the Southern Railway. These cleaners had been employed to do cleaning work under a contract system and they had been agitating for abolition of the same and turn then absorption as regular employees of the principal employer, namely, the Southern Railway. The Supreme Court noted that contract labour system had been abolished in many catering establishments of the Railways in other zones and found that the relevant considertion for abolition of contract .labour as contained in sub-section (2) of section 10 of the Act existed. It therefore, directed the Central Government to take appropriate action under section 10 of .the Act in the matter of prohlibiting the employment of contract labour in question within six months from the date of the Judgment, and at the same time directed the Southern Railway to refrain until then from employing contract labour and to get the work of cleaning catening establishments and pantry cars done departmentally by employing those very workmen who were previously employed by the contractor on the same wages and conditions of work as were applicable to those engaged in similar work .by the Western Railway. The court, however, also observed that if there was any dispute whether an individual workman was or was not employed by the contractor such dispate would be decided by. the. Deputy Labour Commissioner, Madras. The question whether the principal employer was having a valid registration or the contractor a valid license was not before the court in this case. In Mathura 382 Refinery Mazdoor Sangh v. Indian Oil Corporation Ltd. acc Ltd.), there were about 900 casual labourers employed as Contact labourers under different contractors, a labourer not remaining constant with one contractor however, and the grievance was that these labourers had been working for 10 to 15 days and were denied Wages and other benefits enjoyed by the employees of the Ioc Ltd. A writ petition under Article 32 of the Constirution was filed in the Supreme Court claiming that they had a right to be treated at par with the employees of Ioc Ltd. This writ petition was disposed of with a direction to the Central Government to refer to the Industrial Tribunal the question whether these labourers were employees of the Ioc Ltd. and whether termination of 'the services of some; of .such employees was justified. The Industrial Tribunal held that they were not employees of the Ioc Ltd. and were rather the employees of the contractors, The Industrial Tribunal, however, at the same time suggested steps an the interest of industrial. harmmony. An appeal was filed in the Supreme Court, against this award of the Industrial Tribunal. It was contended there, that similar direction be issued as given earlier in Dharwad. Distt Public Witness D. Literate Daily Wage Employees Association and others v. State of Karnataka and others . (16) That was, however, not a case under the Act and, the direction sought therein was to confirm the.daily rated and monthly rated employees as regular Government servants. 50,000; such workers had been employed in different government establishments of State of Karnataka and many of them had put in 15 to 20 years of continuous service and yet they were not regularised. The State of Karnataka come up with a scheme to absorb them as regular employee in a phased manner. The court, therefore, observed that in Mathura Refinery Mazdoor Sangh case before it the contract, labourers were not and had also not been found to be having a direct connection with the Ioc Ltd, The court observed that suggestions/ directions given by the Industrial Tribunal could be the only relief which was due to the appellants in the given situation and circumstances. The appeal was, therefore, dismissed From the report it is not cleaar if either the principial emplover or contractor or both were not registered or tensed. This judgment, therefore, cannot be of much avail to the respondents in the present case. In the case Labourers.Working on Salal Hydro-Project v. State of Jamma and Kashmir and others, the Natioanal 383. Hydro Electric Power Corporation (Corporation) as principal employer and the contractors to whom part of the work was entrusted for execution were duly registered and licensed. But the contractors were doing the work either through the workmen directly employer by them, while part of the work was being got done by them through sub-contractors described as "piece wagers". These sub-contractors did not bold any license under the Act though they fell within the definition of contractor in clause (c) of section 2 of the Act The court observed that this was done precisely to circumvent the provisions of the Act that they were being called "piece wagers" instead of sub-contractors. One of the questions raised was whether the workmen employed on the project work were ensued the rights and benefits provided to them under, the various labour laws including the Act. The court examined this question in the context whether the provisions of the Minimum Wages Act, 1948, and the Act were being followed in relation to the workmen employed on the project site. The court also examined various provisions of the Act including, as it would appear, the consequences of the subcontractors being not licensed. It had to say as under : - "In fact, if sub-contractors undertake or execute any work through contract labour without obtaining a license under section 12, sub-section (1), they would be guilty of a criminal offence punishable under section 23 or section 24. We would therefore direct the Central Government as the enforeing authority to take immediate steps for ensunng that the 'piece waters' or sub-contractors do not execute any portion of the project work without obtaining license under section 12, sub-section (1) and that they carry out their obligations under sections 16 to 21 read with Rules 41 to 62. Of course, if the contractors who have emploved 'piece wagers' or sub-contractors have provided the facilities set out in sections' 16 to 21 read with Rules 41 to 62 not only to the workmen employed directly by them but also to the workmen employed by the 'piece wagers'or subconartctors nothing more may remain to be done by the 'piece waters' or sub-contractors. But 384. there can be no doubt that the 'piece wages' or sub-contractors are equally responsible for implementing the provisions contained in these sections." The court gave the following direction :- "We would therefore direct the Central' Government to take immediate steps for ensuring that canteens, rest rooms and washing facilities were provided by the contractors and 'piece wagers' or sub-contractors to the workmen employed by them in accordance with the requirements of sections 16, 17 and 18, clause (c) read with rules 41 to 50 and 57 and the Central Government will make a report to this Court on or before 30th April, 1933 setting out what steps have been taken for securing implementation of these provisions and whether these provisions have been complied with by the contractors and 'piece wagers' or subcontractors."

(25) Various other directions were also given for compliance with the provisions of the Act.

(26) On the basis of this judgment it was argued by the pricipal employer before us that as the petitioners were similarly situtated, they cannot be held to have ipso facto become the employees of the first respondent on the ground that the pricipal employer was not registered or the contractor was not licensed. The first respondent submitted that if the contention of the petitioncers was correct that the petitioners became employees of the first respondent, then before the Supreme Court also the labourers as of the sub-contractors would also have become the employees of the principal emplover. But that portion was not accepeted by the Supreme Court inasmuch as the Supreme Court gave various directions for complying with the provisions of the Act. It was submitted that it was difficult to comprehend that the Supreme Court was oblivious of the fact that those employees had became ipso facto the emploryces of he principal employer it was submitted that at the most in. the present writ petitions only directions as given by the Supreme Court could be given. But that contingency will not arise inasmuch as the first respondent, the principal employer 385. has been registered and the second respondent, wherever required, has been duly licensed. Reference was made to a decision of the Supreme Court in Ballabhadas Mathuradas Lakhani and others v. Municipal Committee, Malkapur to contend that decision of the Supreme Court in Salal Hydro Project case was binding even if the point raised in these petitions was not squarely before the Supreme Court and not decided by it.

(27) We have carefully considered the various points raised in the present petitions. We are also aware of the objects and principles underlying the passage of the Act and the observation of the Supreme Court condemning the practice of employing contract labour. Nevertheless, we have to see the provisions of the Act to understand if the contentions of the petitioners raised are correct and could this court issue a mandamus or any other order or direction requiring the principal employer, respondent No. 1 to regularise the services of the petitioners retrospectively. or otherwise, and to pay them equal salary as that being given to regular employees of the principal employer. "The Act does not prohibit employment of contract labour altogether. It only regulates the employment of contract labour in certain establish* rents and provides for its abolition in certain circumstances which would appear to be the ultimate object. For that purpose it requires the registration of the principal employer, the licensing of the contractor, the benefits to be enjoyed by the contract labour, who is to provide for the same, the overseeing of the functioning of the Act, and providing for infraction thereof. Under section 10 of the Act the appropriate Government may prohibit the employment of contract labour in any establishment respecting any process, operation or other work. But before doing that the appropriate Government has to have regard to various conditions of work and benefits provided for the contract labour in that establishment and other relevant factors mentioned in sub-section (2) of the section poted above.In catering Cleaners case the Supreme Court did find that these circumstances existed and, therefore, directed the Central Government to issue notification under section 10 of the Act. In the present case there is no notification under section 10 of the Act. and employment of contract labour is not banned. In Salal Hydro Project case the Supreme Court did not hold that the casual workers employed by the sub-contractors would become the employees of (he principal employer. The fact that the court gave various 386 directions would show that the court did not consider these casual workers to have become the employees of the principal employer. Contravention of sections 7 and 12 is an offence. Powers have been given to the inspecting staff to oversee the working of the Act and to enter any premises for that purpose at all reasonable times and conduct search and sezure as well. If there is contravention of the provisions of the Act, the offender is liable to be punished under sections 23 and 24 of the Act. If what the petitioners contend is correct, the legislature could have provided for it and said in very simple words that contravention of provisions of section 7 or 12 or any one of these provisions would make the casual worker of the contractor ipso facto the employee of the principal employer. If the court say so it will amount to legislation and for which the court has no power. Court is not an extension of the legislature. Fields occupied, by the executive, legislature and the courts are all different. We. will not impinge upon the jurisdiction of the legislature. We may usefully quote the famous dictum of Lord Frankfurther. J. of the U.S. Supreme Court in Trop v. Dulles (356 Us 86)(19) :- "But it is not the business of this Court to pronounce policy. It must observe a fastidious regard for limilations on its own power, and this precludes the Court's giving effect to its own notions of what is wise or politic. That poliite. That self-restraint is of the essence in the observance of the judicial oath, for the Constitution has not authorized the judges to sit in judgment on the wisdom of what Congress and the Executive Branch do'

(28) Further the punishment provided in sections 23 and 24 are quite deterrent to make the principal employer and the contractor conform to the provisions of the Act. As we read these two sections 23 and 24 of the Act we are of the view that the offences prescribed there in are continuing offences and the offence would terminate only when the principal employer and the contractor get their respective registration and the license and conform to other provisions of the Act. That the offence would be a continuing offence, reference may be made to two decisions of the Supreme Court : (1) rendered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952-'Bhagirath Kangoria and others v. State of M.P. and others. ; and (2) under section 630(1)(b) of the Companies Act-M/s. Gokak Patel Volkart Ltd.v.Dandavya Gurushidaish Hiremath & ors., . If we 387 accept (he argument of the petitioners that they ipso facto become the employees of the princi.pal employer there would in fact be no offence and what would be there for the inspecting officers to go and investigate and to make the principal employer and the contractor to conform to the provisions of the Act, as in that case the petitioners would be better placed. In one of the petitions it was pointed out that a certain employee of the contractor was working at two different places with two different principal employers. Whose regular employee that worker would be, if the contention of the petitioners is to be accepted. Perhaps the petitioners would say that it should be left to :nea' choice which principal employer they must choose and where more benefits are available. But this example also puts the argument of the petitioners to test that what they contend Is not correct. We are not here concerned with an establishment covered under a notification under Section 10 of the Act where employment of contract labour is altogether prohibited. Section 9 puts a bar on the principal employer from employing contract labour in the absence of a registration under section 7 and similarly section 12 puts a bar on the contractor in the absence of a license. If we read these sections and the Rules 17 and 29 and the Forms 1 and Iv res- pecitvely for registration and license the principal purpose of all these provisions appear to be to see compliance with Chapter V of the Act dealing with the welfare and health of the contract labour including responsibility for the payment of wages to them. Further if we accept the contention of the petitioners that they become the employees of the principal employer as provisions of sections 7 and 12 have been contravened, it may amount to their entry into service by back door in contravention of the provisions of Service Rules, in breach of provisions for employment of Scheduled Castel/Scheduled Tribe candidates and employing candidates from employ rent eycbangcs and even at the cost to stealing a march over other employees. We reject the contention of the petitioners that in the circumstances of these cases they become the employees of the SCOPE.

(29) The other question if the petitioners could raise an industrial dispute under the Industrial Disputes Act, 1947 does not arise for consideration in the present positions before us and we have not addressed ourselves to this argument. Whether under this law or any other law the petitioners become the employees of principal emplover is not for us to sav The argument appears to be, though in the alternative, that petitioners being outside 388 0the abmit of the Act can raise an industrial dispute. The fact, however, remains that varisus disputed questions do arise as to the exact number of workers employed, the days when they worked, or were on duty, and the like. We cannot certainly go into these questions in these petitions considering even the number of employees involved. Mr. Rai, learned counsel for the petitioners, who very ably argued, submitted that in case we hold that the petitioners do not become the employees of the Scope we might direct the appropriate Government to refer the dispute to the Industrial Tribunal for adjudication and till the award of the lndustrial Tribunal the respondent be restrained from terminating the services of the petitioners. We do not think we should adopt such a course as such an issue has not been raised in these petitions. Further it is not that the contract labourers are being exploited. They are covered under all relevant labour laws and, as noted above, getting wages under the Minimum Wages Act and entitled to benefits under the Employees Provident Fund Act and the Employees State Insurance Act, and the like. Because of the view which we have taken it is not necessary for us to examine the other argument of the contractor-respondent as to the impact of the provisions of the Act on the contract of employment between the contractor and the workmen. In the face of provisions of any law such an argument does not appear to us to be relevant otherwise. It is true that various labour legislations have made great many mroads in the contract labour legislations have made great many inroads in the conract of employment but such contracts are not altogether oblierated. A workman can still get better terms under his contract of employment. Under the impact of these laws various expressed and implied terms are to be read into the contract of employment and of late tendency has also been, both legislative and responsive judicial pronouncements, of increasing incorporation of the tern's of contract by ever increasing labour welfare legislation, but then that has to be there in the context of our constitution and the patent exploitation of hapless labour which is mostly unorganized all over the country. There appears to be no basis in the argument of the contractor that relief sought by the petitioners in these cases, if granted, would be inducing breach of contract of employment. We have not been shown any such contract which even ohterwise we would have tested on me toucnstons of section 23 of the Contract Act, 1872, without anything more.. There has been a sea change in the character of the contract of employment particularly that concerning the termination of the contract. We, therefore, reject this argument.

(30) In this view of the matter it is with respect that we are unabie to agree with the view expressed by the Madias High Court in Best and Crompton case that the petitioners would become ipso facto the employees of the first respondent or the judgments of other High Court taking this view

(31) We would, therefore, dismiss all these writ petitions but would make no order as to costs. Rule is discharged.