Delhi High Court
Indian Oil Corpn. Ltd. vs Uoi & Anr. on 1 July, 2013
Author: Vipin Sanghi
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 21.02.2013
% Judgment delivered on: 01.07.2013
+ W.P.(C) 5775/1998
INDIAN OIL CORPN. LTD ..... Petitioner
Through: Mr. V.N. Koura, Ms. Paramjeet
Benipal & Mr. Sumit Benipal,
Advocates
versus
UOI & Anr. ..... Respondents
Through: Mr. Jatan Singh, Mr. Ruchir Mishra,
Mr. Tushar Singh & Mr. Mukesh
Kumar Tiwari, Advocates for the
respondent No. 1
Mr. B.K. Singh & Mr. Pradeep K.
Jaiswal, Advocates for respondent
No.2.
JUDGMENT
VIPIN SANGHI, J.
1. This petition under Article 226 of the Constitution of India has been
preferred by Indian Oil Corporation Ltd to seek the quashing of the gazetted
notification No. S.O. 734(E) dated 21.10.1997, issued by the Central
Government under Section 10 of the Contract Labour (Regulation and
Abolition) Act 1970 (the Act for short) prohibiting employment of contract
labour in respect of certain specified jobs being carried on in the petitioner
corporation‟s establishments.
2. The petitioner is a Public Sector Undertaking dealing in petroleum
products. It has depots, terminals and liquefied petroleum gas (LPG) plants
situated in the Northern Region. At the LPG plants, gas cylinders are filled
through a mechanical process and thereafter transported to various dealers
and sales points for further distribution. The petitioner claims that it hires
regular workmen to perform the jobs which are required for filling up the
cylinders.
3. The case of the petitioner is that it hires contract labour for various
jobs which, according to the petitioner, are not perennial or regular in nature.
The petitioner submits that the contracts so given to various contractors are
not contracts of service, but contracts for providing of services. The
petitioner submits that the process of filling cylinders is an automatic
process. It is the petitioner‟s case that as per the prevalent practice in the
industry, it uses the services of contractors to look after odd and intermittent
jobs, which arise in case of a breakdown or mechanical failure. The
breakdowns are normally repaired between ½ to 1 1/2 hours and, therefore,
no full time job is required for such eventualities.
4. On 30.06.1993, the Central Advisory Board (hereinafter referred to as
the „Board‟) constituted under Section 3 of the Act passed a resolution in
exercise of the powers conferred upon it by Section 5 of the Act,
constituting a committee to go into the question of prohibition of
employment of contract labour in miscellaneous works being carried out in
LPG plants, depots and terminals of Indian Oil Corporation Ltd. at several
locations and to submit a report as per the reference made to it. The terms of
reference of the said committee were as follows -
"To study the working of contract labour system in
miscellaneous work being carried out in LPG Plant, Depot and
Terminals of Indian Oil Corporation Ltd., at Jammu, Hissar,
Pathankot, Delhi, Kotkapura, Ambala, Patiala, Jalandhar and
Sawai Madhopur and keeping in view the provisions of Section
10 of the Contract Labour (Regulation & Abolition) Act, 1970,
to make suitable recommendations whether or not the
employment of contract labour in miscellaneous works being
carried out in LPG Plant, Depot, and Terminals of Indian Oil
Corporation Limited at Jammu, Pathankot, Delhi, Kotkapura,
Ambala, Patila, Jalandhar and Sawai Madhopur should be
prohibited".
5. The Committee visited some of the petitioner‟s establishments and the
petitioner submitted its comments to the Committee. Thereafter, on
10.08.1995 the Committee placed its report before the Board, thereby
recommending prohibition of contract labour in certain miscellaneous jobs.
On 11.09.1995, the Board held deliberations which were attended by the
representatives of the petitioner corporation. On the same day, the Board -
after noting that the report was unanimous, accepted the recommendations
of the Committee and referred the matter to the Central Government for its
decision, after consideration of the views of the Ministry of Petroleum and
Natural Gas. The petitioner sent further representations to the Ministry of
Petroleum and Natural Gas vide letter dated 06.05.1996 containing its
comments on the proposed ban of contact labour in certain miscellaneous
works being carried out in the petitioner‟s establishments. On 18.02.1997,
the Board recommended prohibition of contract labour in some of the
miscellaneous jobs and the Central Government vide the impugned
notification dated 21.10.1997 prohibited the employment of Contract Labour
in 8 works. The impugned notification dated 21.10.1997 reads as follows:
"THE GAZETTE OF INDIA : EXTRAORDINARY
[PART II - Sec 3(ii)
MINISTRY OF LABOUR
NOTIFICATION
New Delhi, the 21st October, 1997
S.O. 734(E) - In exercise of the powers conferred by sub-
section (1) of the section 10 of the Contract Labour (Regulation
and Abolition) Act, 1970 (37 of 1970), the Central Government,
after consultation with the Central Advisory Contract Labour
Board, hereby prohibits the employment of contract labour in
the works, specified in the Schedule annexed hereto in the
Liquified Petroleum Gas Plants, Depots and Terminals of the
Indian Oil Corporation Ltd. at Jammu, Hissar, Pathankot,
Delhi, Kotkapura, Ambala, Patiala, Jalandhar and Sawai
Madhopur.
SCHEDULE
(1) Loading and unloading of Liquified Petroleum Gas
Cylinder from chain conveyor in Liquified Petroleum
Gas Plants.
(2) Removal of Liquified Petroleum Gas Cylinders from one
place to another in the Liquified Petroleum Gas Plants
Complex.
(3) Putting the seal cap on the Liquified Petroleum Gas
Cylinders in the Liquified Petroleum Gas Plant.
(4) Preparation of soap solution and testing of cylinders
through soap solution method.
(5) Sorting out of defective and five year old cylinders in the
Liquified Petroleum Gas Plant Complex.
(6) Jobs of peon in offices of the Plants, Depots and
Terminals.
(7) Supplying of mobil container from store and putting hack
filled mobil tins in the depots.
(8) Loading/uploading of tube Lube Oil trucks and stacking
of drums in Depots except where the dealers themselves
carry the lube oils from Depots to their destination.
[F. No. U-23013/5/93-LW]
S.K. Das, Director, Genl. (Labour Welfare)/Jt. Secy".
6. Before proceeding further, I may take note of the concerned
legislation. The Act has been framed with the following preamble:
"An Act to regulate the employment of contract labour in
certain establishments and to provide for its abolition in
certain circumstances and for matters connected therewith".
(emphasis supplied)
7. The Statement of Objects and Reasons of the Act reads as under:
"The system of employment of contract labour lends itself to
various abuses. The question of its abolition has been under the
consideration of Government for a long time. In the Second
Five Year Plan, the Planning Commission made certain
recommendations, namely, undertaking of studies to ascertain
the extent of the problem of contract labour, progressive
abolition of the system and improvement of service conditions
of contract labour where the abolition was not possible. The
matter was discussed at various meetings of Tripartite
Committees at which the State Governments were also
represented and the general consensus of opinion was that the
system should be abolished wherever possible and practicable
and that in cases where this system could not be abolished
altogether, the working conditions of contract labour should be
regulated so as to ensure payment of wages and provision of
essential amenities.
2. The proposed Bill aims at the abolition of contract labour
in respect of such categories as may be notified by the
appropriate Government in the light of certain criteria that
have been laid down, and at regulating the service conditions
of contract labour where abolition is not possible. The Bill
provides for the setting up of Advisory Boards of a tripartite
character, representing various interests, to advise the Central
and State Governments in administering the legislation and
registration of establishments and contractors. Under the
Scheme of the Bill, the provision and maintenance of certain
basic welfare amenities for contract labour, like drinking water
and first-aid facilities, and in certain cases rest-rooms and
canteens, have been made obligatory. Provisions have also
been made to guard against defaults in the matter of wage
payment."
(emphasis supplied)
8. Section 1(4) of the Act stipulates the kind of establishments and
employers to which the same applies. Sub-section (5) of Section 1 details
the kinds of establishments/employments to which the Act does not apply.
The said sub-Section (5) of Section 1 reads as follows:
"(5)(a) It shall not apply to establishments in which work only
of an intermittent or casual nature is performed.
(b) If a question arises whether work performed in an
establishment is of an intermittent or casual nature, the
appropriate Government shall decide that question after
consultation with the Central Board or, as the case may be, a
State Board, and its decision shall be final.
Explanation: For the purpose of this sub-section, work
performed in an establishment shall not be deemed to be of an
intermittent nature-
(i) if it was performed for more than one hundred and twenty
days in the preceding twelve months, or
(ii) if it is of a seasonal character and is performed for more
than sixty days in a year."
(emphasis supplied)
9. Section 3 deals with the aspect of setting up of the Central Advisory
Board (the Board) and the mandate of the said Board. Insofar as it is
relevant, Section 3 reads as follows:
"3. CENTRAL ADVISORY BOARD. -(1) The Central
Government shall as soon as may be, constitute a board to be
called the Central Advisory Contract Labour Board
(hereinafter referred to as the Central Board) to advise the
Central Government on such matters arising out of the
administration of this Act as may be referred to it and to carry
out other functions assigned to it under this Act."
10. Similarly, the State Advisory Boards are set up with a similar mandate
under Section 4 of the Act.
11. Section 5 empowers the Board to constitute committees "for such
purpose or purposes as it may think fit."
12. Section 10 of the Act authorizes the Appropriate Government (which
is defined in Section 2(1)(a) of the Act) to prohibit employment of contract
labour; lays down the manner in which the said power is to be exercised,
and; lays down the guidelines / criteria to be followed while considering the
issue whether contract labour should be abolished in any process, operation
or other work in any establishment. Since the impugned notification has
been issued by resort to Section 10 of the Act, and the case involves
determination of the nature and scope of the power exercised by the
appropriate Government while issuing such a notification, I consider it
appropriate to set out the said provision at this stage.
"10. PROHIBITION OF EMPLOYMENT OF CONTRACT
LABOUR. -(1) Notwithstanding anything contained in this Act,
the appropriate Government may, after consultation with the
Central Board or, as the case may be, a State Board, prohibit,
by notification in the Official Gazette, employment of contract
labour in any process, operation or other work in any
establishment.
(2) Before issuing any notification under sub-section (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) whether it is sufficient to employ considerable number of
whole-time workmen.
Explanation : If a question arises whether any process or
operation or other work is of perennial nature, the decision of
the appropriate Government thereon shall be final."
13. Section 15 provides for appeals against orders passed under Sections 7
(Registration of certain establishments), 8 (Revocation of registration), 12
(Licencing of contractors) and 14 (Revocation, suspension and amendment
of licences) of the Act. The notification issued under Section 10 is,
however, not appealable.
14. Section 35 confers power on the appropriate government to frame
rules for carrying out the purposes of the Act. Though the said power is
general in nature, the specific matters in respect whereof the said power may
be exercised are contained in sub section (2) thereof. Pertinently, the aspect
of abolition of contract labour does not fall within any of the clauses (a) to
(o) specified in section 35(2) of the Act. In fact, the procedure for making a
rule under the Act, which is contained in section 35(3) and (4) of the Act,
shows that the same is distinct from the procedure for issuance of a
notification under section 10 of the Act.
Submissions of the petitioner
15. The first submission of Mr. V.N. Kaura, learned counsel for petitioner
is that the power under Section 10 of the Act is quasi judicial or
administrative in nature - which has civil consequences and, therefore, the
rule of audi alteram partem, i.e., principles of natural justice must be
complied with while exercising such power. It is submitted that the
principles of natural justice have been breached in the present case, as no
right of representation was allowed, and furthermore no speaking order was
passed. Reliance is placed on Smt Maneka Gandhi v. Union of India, AIR
1978 SC 597, wherein, the Supreme Court held that principles of natural
justice would be applicable to quasi judicial proceedings as well as to the
exercise of power which is administrative in nature. Learned counsel
submits that no reasons have been disclosed as to why the Central
Government accepted the recommendations made by the Board. Learned
counsel further relies on Indian Oil Corporation v SPS Engineering Ltd,
2006 (88) DRJ 93(DB), wherein a Division Bench of this Court, while
relying on numerous judgments of the Supreme Court, held that natural
justice requires reasons to be given to justify the decision taken by the
authority concerned. It is argued that the jobs being recommended for
abolition of contract labour arise only in case of rare mechanical failure, and
it is not economically feasible to employ regular workmen.
16. The next submission of learned counsel for petitioner is that the
power of the Central Government to prohibit contract labour under section
10 of the Act - though a statutory power, is not a legislative power. It is
either purely administrative power, or a quasi-judicial power. Whereas, the
powers under Section 3 and Section 5 of the Act are powers to make
delegated legislation.
17. In support of the submission that the power under Section 10 is an
executive/administrative power, he places reliance upon Steel Authority of
India Ltd v Union of India, (2006) 12 SCC 233, wherein, in para 36 of the
judgment, the Supreme Court observed as follows-
"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.......".
(emphasis supplied)
18. Learned Counsel submits that the reasons recorded in the report are
bad in law. He draws the attention of the court to the report of the
committee to contend that the reference made to the committee did not
include the study of the jobs of peons. Yet the report recommends abolition
of contract labour in the jobs of peons. It is further submitted that the
reference lays down the establishments in respect of which the report was to
be made. However, the committee visited establishments which were not a
part of the reference, and some of those establishments - in respect of which
the report was made, were not visited by the committee. It is argued that the
enquiry had to be in respect of each establishment as per the terms of
Section 10, which was not done. It is further submitted that extraneous
materials have been considered, as establishments not set out in the
reference were visited and their processes and conditions were considered.
He submits that the report of the committee went beyond its
reference/jurisdiction. The petitioner submits that the report proceeds on a
wrong premise inasmuch, as, while dealing with the job of "loading and
unloading of LPG Cylinders by chain conveyor for LPG" the Committee
records that the petitioner had admitted that the said job is performed by
regular workman and that it is of perennial nature and that considerable
number of whole-time workers are employed in this job. Learned counsel
points out that this was not the stand of the petitioner, and that the
Committee has wrongly interpreted the stand of the petitioner and proceeded
on a wrong premise. The stand of the petitioner before the Committee was:
"The filled cylinders are moved in a conveyor to loading
platform. Whenever there is a breakdown in any conveyor,
cylinders are to be moved on such occasions to another
conveyor. The moment, the defect in the conveyor is rectified
then normal movement of cylinders takes place. Incidents of
such occasions are of very few and do not require regular
workmen. Due to non-availability of trucks for loading the
filled cylinders, the cylinders are required to be moved from the
conveyor, which happens occasionally and rarely."
19. Learned counsel submits that in respect of large number of jobs the
Committee recommended abolition of contract labour without addressing
itself to the issue whether said jobs are whole time jobs, or only part time
jobs. In this regard attention is drawn to Section 10(2)(d) which states that
one of the relevant factors to be taken into consideration is whether the job
is sufficient to employ considerable number of whole time workman. The
nature of 16 jobs recommended to the committee for study, in respect
whereof the said aspect has not been considered, according to the petitioner,
are the following:
"x x x x x x x x x x
i...
ii. Loading unloading of Mobile tins of 5 kg/1kg weight
from chain conveyor...
iii. Removal of LPG Cylinder from one place to another
within LPG Plant.
iv. Putting the seal cap on the LPG Cylinders as well as in
Mobile tins in LPG Plants and depots respectively.
v...
vi. Supplying of Mobile container from store to one place
and putting back filled Mobile tin to the store in various
depots.
vii...
viii. Preparing of Soap solution in all LPG Plants.
ix. Sorting of defective cylinder and 5 years old cylinders.
x x x x x x x x x x"
20. It is also submitted that the Committee has not studied each plant or
number of breakdowns - monthwise.
21. It is further submitted that the Committee did not carry out any
comparative study in respect of other comparable industries/establishments
before making its recommendations.
22. Reliance is placed on Steel Authority of India & Others Vs. National
Union Water Front Workers & Others, JT 2001 (7) SC 268, wherein the
notification dated 09.12.1976, issued under section 10 of the Act, bearing
S.O. No. 779(E)8/9-12-76 which prohibited employment of the contract
labour in sweeping, cleaning, dusting and watching of buildings owned or
occupied by establishments, in respect of which the Appropriate
Government under the Act is the Central Government, was quashed by the
Supreme Court. The Supreme Court held that non-compliance of sub
section (2) of Section 10 is ex facie contrary to the provisions of the Act.
The Supreme Court held that the Central Government had not adverted to
any of the essential requirements contained in Section 10(2)(a) to (d) of the
Act and the only compliance was with regard to the consultation with the
Central Advisory Board. The Supreme Court held:
"52.......Consideration of the factors mentioned above has to
be in respect of each establishment, whether individually or
collectively, in respect of which notification under Sub-section
(1) of Section 10 is proposed to be issued. The impugned
notification apart from being an omnibus notification does not
reveal compliance of Sub-section (2) of Section 10. This is ex-
facie contrary to the postulates of Section 10 of the Act. Besides
it also exhibits non-application of mind by the Central
Government . We are, therefore, unable to sustain the said
impugned notification dated December 9, 1976 issued by the
Central Government."
23. The submission of the petitioner is that the Committee was expected
to function in the capacity of an expert body. Learned Counsel for the
petitioner relies on the decision of Supreme Court in Rohtas Industries Ltd.
v S.D. Agarwal and Another, AIR 1969 SC 707 to submit that the standard
required is of an expert and not the same as that of an ordinary citizen. He
submits that the Committee failed to meet the standard required of an expert.
24. Learned Counsel for the petitioner further submits that the notification
is discriminatory and in violative of Article 14 of the Constitution of India,
since the petitioners establishments have been singled out.
Submissions of the Respondents
25. On the other hand, Respondent No.1, the Union of India, in its counter
affidavit controverts the stand of the petitioner that no opportunity of being
heard was provided to the concerned parties prior to the issuance of the
impugned notification. It is submitted that the report of the Committee
which was submitted to the Board was forwarded to the Ministry of
Petroleum and Natural Gas for their comments so that the same could be
placed before the Board. Furthermore, the petitioner and officials of the
Ministry of Petroleum and Natural Gas attended the 29th meeting of the
Board held on 11.09.1995, wherein the Board accepted the
recommendations of the Committee. It is further submitted that after the
report of the Committee was accepted by the Board on 11.09.1995 and
referred to the government for its decision, several reminders were sent to
the Ministry of Petroleum and Natural Gas by the Ministry of Labour
requesting for their views before the impugned notification was issued, but
no response was received.
26. Learned Counsel for Respondent no 1 invites the courts attention to
page 29 of the record - a part of the committee‟s report, wherein the stand of
the management‟s representative put forth during a site visit by the
committee has been referred to. Learned Counsel submits that, therefore, the
management was heard and it participated in the deliberations of the
Committee. It is also submitted that the present is a case of conditional
legislation, and there is no right vested in the affected persons to claim a
right of hearing, or violation of principles of natural justice on account of
hearing not being granted.
27. Learned counsel for respondent no.1 places reliance on State of T.N.
Vs K. Sabanayagam, 1998 1 SCC 318 wherein the Supreme Court classified
conditional legislation into 3 categories. It observed in Para 21 that:
"In the aforesaid first two categories of cases delegate who
exercises conditional legislation acting on its pure subjective
satisfaction regarding existence of conditions precedent for
exercise of such power may not be required to hear parties
likely to be affected by the exercise of such power".
28. It is further submitted that the activities in respect of which contract
labour has been hired by the petitioner, in fact, qualify for engaging
permanent workers or regular employees. It is submitted that though it may
be true that contract loaders are deployed in case of electrical failure, it is
also true that the contact labour are required to make themselves available
throughout the eight hours shift.
29. Learned Counsel for respondent no 1 relies on Oil India Ltd. v. Union
of India& Ors., 2002(95) FLR 672. Referring to Steel Authority of India &
Others Vs. National Union Water Front Workers & Others (supra) the
court held :
"9. The ratio available from the decision above clearly
indicates that the embargo on the powers of the Court with
regard to the question at hand is final. The language
employed in the Explanation to Sub - section (2) of Section 10
suffers from no ambiguity or obscurity. The decision of the
Government that the jobs are perennial in nature cannot be
disturbed by this Court. This Court, therefore, has to exercise
due restrain in re-opening the question unless the records
indicate that no exercise was undertaken by the appropriate
Government to ascertain the nature or conditions of the work
and benefits provided". (emphasis supplied)
30. As regards the petitioner‟s contentions that every establishment was
not visited by the committee, respondent No.1 submits that it is not that the
committee visited only one establishment and prepared its report. It is
submitted that the committee visited various plants where the contract
labour system was prevalent and that, as such, it was not possible or
necessary to visit all establishments. It is submitted that the same system of
working was being followed in different establishments/plants and the
nature of duties etc did not differ. Consequently, there was no need felt to
visit all the establishments/plants. It is submitted that the petitioner has not
been able to point out any peculiarity in respect of any of the
plants/establishments which is unique to that plant/establishment, and is not
prevalent in other plants/establishments.
31. Respondent no 1 further denies that the impugned notification suffers
from non application of mind. It is submitted that due deliberations were
held and the same is evident from the fact that the committee recommended
prohibition of contract labour in 8 kinds of work, and cleared 5 other kinds
of works wherein contract labour was permitted.
32. Further, it is contended on behalf of respondent no 1 that the
impugned notification is not arbitrary or discriminatory in nature as similar
notifications have already been issued prohibiting employment of contract
labour in similar jobs and in other cases the notifications are under process.
33. Respondent no 2, Petroleum Workers Union, sought impleadment in
the matter and the Court vide its order dated 6.7.2000 granted the same.
Respondent no 2 submits that the petitioner had been exploiting its members
in the name of economy, and the benefits admissible to regular workmen
were being denied by them. It is submitted that aggrieved by this, the union
made various representations to the Ministry of Labour and to the Office of
the Chief Labour Commission, and it is on the basis of the said
representations that the Board passed the resolution dated 30.06.1993
constituting a committee to study the aspect of deployment of contract
labour in the petitioner corporation.
34. Respondent no 2 denies the petitioner‟s averment that contract labour
was hired only when mechanical breakdowns occurred. Respondent no 2
further submits that the object of the Act is to abolish contract labour
wherever possible. Learned Counsel draws the attention of the Court to the
report of the Vasudevan Committee - which was constituted after a fire
broke out in one of the plants of the petitioner corporation in 1983. Attention
is also drawn to the relevant portions of the Vasudevan committee report
which discuss safety features and practices to be followed. Para 4.6.1 of the
Vasudevan Committee report discusses the need for rigorous training of
manpower employed in the bottling plants in operating procedure as well
emergency situations. Para 4.6.4 recommends the need for important
operating instructions to be suitably displayed in all operating areas.
Similarly, Para 4.6.9 discusses the need to provide distinctive uniforms and
safety gear to the bottling plant personnel as well as security staff in the
bottling plants. Para 4.5.17 discusses the need for maintenance of a
systematic record of all safety checks carried out on the equipment.
35. It is submitted that the Vasudevan Committee report in para 4.6.5
recommended prohibition of employment of contract manpower within 15
meters of the bottling and filling shed. It is submitted that the aforesaid
recommendation for prohibition of contract labour within 15 metres of the
filing shed was made with a view to enhance safety mechanisms. It is further
submitted that substituting contract labour with regular manpower is in the
interest of safety, as regular manpower can be equipped with the requisite
training. Vasudevan committee report further observed that each oil
company has individually adopted the plant designs and operating practices
for their units. The report suggested that it would be desirable for all
companies to develop common standard procedures and each plant must be
subjected to periodic safety audits.
36. The report is also relied upon by Respondent no 2 to show that the
Vasudevan committee has laid down the extent of fire fighting facilities
required, as well as the committee‟s view that a review of the bottling plants
at Shakurbasti, Kanpur, Allahabad, Jammu, Cuttack and Paharpur be
undertaken on a priority basis.
37. Learned counsel submits that the impugned notification is neither
purely administrative nor quasi-judicial in nature. He submits that the
impugned notification is a case of conditional legislation. Reliance is placed
on Vasu Dev Singh & Ors v. Union of India & Ors, (2006) 12 SCC 753.
Reliance is also placed on Jay Polychem India Ltd & Ors. v Union of
India, 2004 IV AD(Delhi) 249, wherein a Division bench of this court
observed that the tests of challenge to conditional legislation were different
from ordinary cases of administrative adjudication, and that the court - in
exercise of judicial review, can only see whether the exercise is intra vires
the parent act.
38. To rebut the petitioner‟s submission that the impugned notification
has been issued in violation of principles of natural justice, learned Counsel
for respondent no 2 draws the attention of this court to the written
submissions made by the petitioner before the committee. It is argued that,
hence, the stand of petitioner was placed before the committee and
considered by it.
39. Learned counsel places reliance on Steel Authority of India & Others
Vs. National Union Water Front Workers & Others (supra) to submit that
the same lays down the guidelines to be followed while exercising the power
under Section 10. He places reliance on the following extract from Steel
Authority of India Ltd v Union of India (supra).
"22. 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".
"23. 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".
40. Reliance is also placed on Secretary, Haryana State Electricity
Board v. Suresh & ors., AIR 1999 SC 1160, wherein the Supreme Court
examined the scope of the Act and held that in jobs of perennial nature,
contractors must go out of the scene to bring together the principal employer
and contract labour. In support of the contention that all establishments need
not have been visited by the committee before it prepared its report, learned
counsel for respondent no 2 relies on Barat Fritz Werner Ltd. etc. etc. v.
State of Karantaka, AIR 2001 SC 1257.
Submissions in Rejoinder
41. Mr. Koura submits, without giving up his initial plea that the nature of
power exercised under section 10 of the Act is purely administrative or quasi
judicial, that even if one were to proceed on the basis that the exercise of
power under Section 10 of the Act is a legislative power, the exercise of the
power under Section 10 is a conditional legislation and not a delegated
legislation. Mr. Kaura places reliance on M.P. High Court Bar Assn. v
Union of India (UOI) & Ors., (2004) 11 SCC 766, to enunciate the scope of
delegated and conditional legislation.
42. He submits that in the case of conditional legislation, the exercise of
power by the authority has to be undertaken on the basis of objective
criterion and, consequently, principles of natural justice have to be read into
the statute.
43. He places reliance on extracts from State of T.N. Vs K. Sabanayagam
(supra). It is further submitted that criteria has been laid down in section 10
itself and the principles of natural justice have not been specifically
excluded in the statute.
44. The aforesaid were the only submissions advanced by the parties
during the course of arguments.
DISCUSSION
45. To deal with the petitioner‟s submission that the impugned
notification has been issued in violation of principles of natural justice, it
would be appropriate to begin by considering the scope of the said
principles. In Canara Bank v. V.K. Awasthy, (2005) 6 SCC 321, the
Supreme Court held, "concept of natural justice has undergone a great deal
of change in recent years. Rules of natural justice are not rules embodied
always expressly in a statute or in rules framed thereunder. They may be
implied from the nature of the duty to be performed under a statute. What
particular rule of natural justice should be implied and what its context
should be in a given case must depend to a great extent on the fact and
circumstances of that case, the frame-work of the statute under which the
enquiry is held. The old distinction between a judicial act and an
administrative act has withered away. Even an administrative order which
involves civil consequences must be consistent with the rules of natural
justice". (emphasis supplied)
46. Therefore, the first issue that arises for deliberation is the nature of
power coupled with duty as provided for under section 10 of the Act. The
aforesaid needs to be examined in the light of the rival contentions of the
parties - the petitioner contending that the said power is purely
administrative or quasi judicial in nature, while the respondents contending
that the said power is in the nature of conditional legislation.
47. In M.P. High Court Bar Assn. v Union of India, (supra), the
Supreme Court relied on the observations made in Hamdard Dawakhana
(Wakf) Lal Kuan, Delhi and Anr. v. Union of India and Ors, (1960) 2 SCR
671 and observed as follows -
"46.... The distinction between conditional legislation and
delegated legislation is that in the former the delegate's
power is that of determining when a legislative declared rule
of conduct shall become effective; Hampton & Co. v. U.S.,
276 US 394 and the latter involves delegation of rule-making
power which constitutionally may be exercised by the
administrative agent. This means that the legislature having
laid down the broad principles of its policy in the legislation
can then leave the details to be supplied by the administrative
authority. In other words by delegated legislation the
delegate completes the legislation by supplying details within
the limits prescribed by the statute and in the case of
conditional legislation the power of delegation is exercised
by the legislature conditionally leaving to the discretion of
an external authority the time and manner of carrying its
legislation into effect as also the determination of the area to
which it is to extend; ( R. v. Burah (1878) 3 AC 889 Russell v.
R. (1882) 7 AC 829 ; King Emperor v. Benoari Lal Sarma AIR
1945 PC 48 ; Sardar Inder Singh v. State of Rajasthan [1957
]1SCR 605. Thus when the delegate is given the power of
making rules and regulations in order to fill in the details to
carry out and subserve the purposes of the legislation the
manner in which the requirements of the statute are to be
met and the rights therein created to be enjoyed it is an
exercise of delegated legislation. But when the legislation is
complete in itself and the legislature has itself made the law
and the only function left to the delegate is to apply the law
to an area or to determine the time and manner of carrying it
into effect, it is conditional legislation." (emphasis supplied)
48. In Vasu Dev Singh & Ors v. Union of India & Ors (supra), the
Supreme Court examined the scope of conditional and delegated legislation.
The court observed -
"16. We, at the outset, would like to express our disagreement
to the contentions raised before us by the learned Counsel
appearing on behalf of Respondents that the impugned
notification is in effect and substance a conditional legislation
and not a delegated legislation. The distinction between
conditional legislation and delegated legislation is clear and
unambiguous. In a conditional legislation the delegate has
to apply the law to an area or to determine the time and
manner of carrying it into effect or at such time, as it decides
or to understand the rule of legislation, it would be a
conditional legislation. The legislature in such a case makes
the law, which is complete in all respects but the same is not
brought into operation immediately. The enforcement of the
law would depend upon the fulfilment of a condition and
what is delegated to the executive is the authority to
determine by exercising its own judgment as to whether such
conditions have been fulfilled and/or the time has come
when such legislation should be brought in force. The taking
effect of a legislation, therefore, is made dependent upon the
determination of such fact or condition by the executive
organ of the Government. Delegated legislation, however,
involves delegation of rule making power of legislation and
authorises an executive authority to bring in force such an
area by reason thereof. The discretion conferred on the
executive by way of delegated legislation is much wider.
Such power to make rules or regulations, however, must be
exercised within the four corners of the Act. Delegated
legislation, thus, is a device which has been fashioned by the
legislature to be exercised in the manner laid down in the
legislation itself. By reason of Section 3 of the Act,
Administrator, however, has been empowered to issue a
notification whereby and whereunder, an exemption is granted
for application of the Act itself". (emphasis supplied)
49. From the above observations of the Supreme Court, it appears that
conditional legislation is framed or passed for the purpose of - as it were,
switching „on‟ or „off‟ the pre-existing legislation at a particular time; for a
particular area; for a particular class of entities, or; in respect of a particular
class of activities. This exercise rests purely on the recording of its
satisfaction by the executive organ. Whereas, delegated legislation involves
a broader exercise - such as the creation of rules to carry out the purpose of
the legislation, and not just its application.
50. The Supreme Court in Steel Authority of India & Others Vs.
National Union Water Front Workers & Others (supra) examined the
validity of the notification issued under section 10 of the Act which
prohibited employment of contract labour for sweeping, cleaning, dusting
and watching of buildings owned or occupied by establishment in respect of
which the appropriate Government under the said Act was the Central
Government. The Supreme Court found that the Central Government had
not adverted to any of the essentials prescribed in section 10 of the Act
except the requirement of consultation with the Central Authority Board. It
was held that consideration of the relevant factors has to be in respect of
each establishment, whether individually or collectively, in respect of which
notification under Sub-section (1) of Section 10 is proposed to be issued.
The Supreme Court observed : "the impugned notification apart from being
an omnibus notification does not reveal compliance of Sub-section (2) of
Section 10. This is ex-facie contrary to the postulates o Section 10 of the Act.
Besides it also exhibits non-application of mind by the Central Government.
We are, therefore, unable to sustain the said impugned notification dated
December 9, 1976 issued by the Central Government".
51. The aspects that the appropriate government musts comply with,
while issuing a notification under section 10 of the Act, were noted by the
Supreme Court in the following words:
"48......Before issuing notification under Sub-section (1) in
respect of an establishment the appropriate Government is
enjoined to have regard to: (i) the conditions of work; (ii) the
benefits provided for the contract labour; and (iii) other
relevant factors like those specified in Clauses (a) to (d) of
Sub-section (2). Under Clause (a) the appropriate
Government has to ascertain whether the process, operation
or other work proposed to be prohibited is incidental to, or
necessary for the industry, trade, business, manufacture or
occupation that is carried on in the establishment; Clause (b)
requires the appropriate Government to determine 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;
Clause (c) contemplates a verification by the appropriate
Government as to whether that type of work is done ordinarily
through regular workmen in that establishment or an
establishment similar thereto; and Clause (d) requires
verification as to whether the work in that establishment is
sufficient to employ considerable number of whole-time
workmen. The list is not exhaustive. The appropriate
Government may also take into consideration other relevant
factors of the nature enumerated in Sub-section (2) of Section
10 before issuing notification under Section 10(1) of the CLRA
Act
49..
50..
51. Now reading the definition of "establishment" in Section
10, the position that emerges is that before issuing notification
under Sub-section (1) an appropriate Government is required
to: (i) consult the Central Board / State Board; (ii) consider
the conditions of work and benefits provided for the contract
labour and (iii) take note of the factors such as mentioned in
Clauses (a) to (d) of Sub- section (2) of Section 10, referred to
above, with reference to any office or department of the
Government or local authority or any place where any
industry, trade, business, manufacture or occupation is
carried on. These being the requirement of Section 10 of the
Act, we shall examine whether the impugned notification
fulfils these essentials."
52. It is, thus, evident that compliance of sub section (2) of Section 10 is
mandatory. The parliament has laid down guidelines to be complied with in
sub section (2), before a notification can be issued under 10(1). The Act
having laid down the purpose for which a notification can be issued under
section 10 of the Act i.e. to prohibit contract labour, as well as guidelines on
the basis of which the decision in that regard may be reached, what is left to
the appropriate Government is the recording of its satisfaction with regard to
the compliance of the guidelines - albeit by application of mind. The
appropriate government has to come to the conclusion whether the factors
mentioned in sub-section (2) of section 10 exist in respect of a particular
establishment and in respect of an employment/job of a particular kind,
before a notification is issued in that regard. Keeping in view the aforesaid
dicta, I am of the view that the exercise of power under Section 10 of the
Act, which requires recording of satisfaction that guidelines under 10(2) are
met, is in the nature of conditional legislation. The power under section 10
cannot be described as merely purely administrative or quasi judicial,
because by exercise of the said statutory power, the appropriate government
extends the prohibition against employment of contract labour to
establishments which undertake employment of contract labour in the
notified process, operation or other work by following the criteria and the
procedure set out in section 10 of the Act. There is no determination of a
„lis‟ by the appropriate government while issuing the notification under
section 10 of the Act. It is, thus, not exercise of a quasi judicial power
either. It is not a power to make delegate legislation as the purpose of the
notification issued under section 10 of the Act, is not to fill in the gaps in the
Act by making rules in conformity with the Act. As noticed above, the rule
making power is contained in section 35 - for which a separate procedure is
prescribed.
53. This view finds support from a Division Bench judgment of the
Karnataka High Court in M/s.Larsen and Toubro Limited, Bangalore and
Another v. State of Karnataka, (1999)IILLJ532Kan. The Division Bench
observed as follows -
"31.We find substance in the submission of Mr. Vijaya
Shankar, learned Advocate General appearing for the State of
Karnataka that exercise of powers under Section 10 would
fall under the 'conditional legislation' and not 'delegated
legislation' thus restricting the scope of judicial review.
Distinction between a conditional legislation and delegated
legislation as pointed out by the Supreme Court in Hamdard
Dawakhana and Another v. Union of India and Others ,AIR
1960 SC 554:
that in the former the delegate's power is that of
determining when a legislative declared rule of
conduct shall become effective, and the latter
involves delegation of rule making power which
constitutionally may be exercised by the
administrative agent.
This means that the legislature having laid down the broad
principles of its policy in the legislation can then leave the
details to be supplied by the administrative authority. In other
words by delegated legislation the delegate completes the
legislation by supplying details within the limits prescribed by
the statute and in the case of conditional legislation the power
of legislation is exercised by the legislature conditionally
leaving to the discretion of an external authority the time and
manner of carrying its legislation into effect as also the
determination of the area to which it is to extend.
32. Thus when the delegate is given the power of making rules
and regulations in order to fill in the details to carry out and
subserve the purposes of the legislation, the manner in which
the requirements of the statute are to be met and the rights
therein created to be enjoyed, it is an exercise of delegated
legislation." (emphasis supplied)
54. I find the petitioner‟s reliance on the decision in Steel Authority of
India Ltd v Union of India (supra) in support of its submission that the
power under Section 10 is purely administrative in nature, - as misplaced. It
is a well settled proposition of law that a decision is an authority only for
what it decides. An expression of a view point, unless part of the ratio,
cannot have binding effect. In Union of India (UOI) and Ors. v Dhanwanti
Devi and Ors. (1996) 6 SCC 44 , the Supreme Court has observed as
follows:
"10. Therefore, in order to understand and appreciate the
binding force of a decision it is always necessary to see what
were the facts in the case in which the decision was given and
what was the point which had to be decided. No judgment can
be read as if it is a statute. A word or a clause or a sentence in
the judgment cannot be regarded as a full exposition of law.
Law cannot afford to be static and therefore, Judges are to
employ an intelligent technique in the use of precedents........."
55. The question that arose for adjudication in Steel Authority of India
Ltd v Union of India (supra) was not the nature of power exercised by the
appropriate government under Section 10 of the Act. In the aforementioned
case, the Labour Court had held that the reference made by the State
Government in exercise of its powers under Section 10(1)(c) of the
Industrial Disputes Act 1947 (ID Act for short), relating to a claim raised by
the workmen for absorption as regular permanent employees of VISL Ltd as
bad in law, because, undisputedly there was no abolition of contract labour
by the appropriate government. However, a Single Judge of the High Court
allowed the writ petitions filed by the some trade unions, alleging that the
workmen were direct employees. The learned Single Judge directed the
petition to be treated as a petition in terms of Section 2(k) read with Section
12(1) of the ID Act and also under the provisions of the Act. The
government was also directed to make a reference to the Labour Court.
56. The intra court appeals having been dismissed, the matter came up
before the Supreme Court. In the light of the above mentioned facts, the
Supreme Court held that neither the Labour Court nor the Writ Court could
determine the question as to whether the contract labour should be
abolished, the same being within the exclusive domain of the Appropriate
Government. The Court proceeded to observe:
"36......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." (emphasis supplied)
57. A perusal of the above extract shows that the comments of the
Supreme Court on the nature of the power exercised under Section 10 of the
Act were made in the passing, and were not preceded by any consideration
of the issue whether the exercise of the said power amounted to conditional
legislation. In fact, the nature of the said power - exercised under section 10
of the Act, was not even a matter of consideration in the said case.
Therefore, the observations of the Court cannot be so construed to mean that
the intention was to give an opinion, binding in nature, as to the nature of
power being purely administrative. Merely because the said power is
exercised by the administrators who administer the affairs of the appropriate
government, it does not cease to be conditional legislation. For that matter,
every power to make conditional legislation is also an administrative power
and every such exercise is also an administrative exercise. But every
administrative exercise does not lead to framing of conditional legislation.
Since the power under section 10 is the power to make conditional
legislation, the consequence thereof is that, though it is an administrative
exercise, the scope of scrutiny of such action by the Court in writ
proceedings is very limited (see M/s. Larsen & Toubro Ltd. (supra) and Jai
Polychem India Ltd. (supra).
58. Having established that the power under Section 10 is in the nature of
conditional legislation, what ensues is twofold - Firstly, whether exercise of
the said power of conditional legislation requires compliance with principles
of natural justice and, secondly, if the first question is answered in the
affirmative, whether the said principles have been complied with. Reliance
may be placed on the decision in State of T.N. Vs K. Sabanayagam (supra)
to answer the first question. It would be relevant to produce the
classifications of conditional legislations, as observed in the aforementioned
case as follows:
"23. Conditional legislation can, therefore, be broadly
classified into three categories-
In the first category when the Legislature has completed its
task of enacting a Statute, the entire superstructure of the
legislation is ready but its further applicability to a given area
is left to the subjective satisfaction of the delegate who being
satisfied about the conditions indicating the ripe time for
applying the machinery of the said Act to a given area
exercises that power as a delegate of the parent legislative
body, Tulsipur Sugar Co. 's case (supra) is an illustration on
this point. When the Act itself is complete and is enacted to be
uniformly applied in future to all those who are to be covered
by the sweep of the Act, the Legislature can be said to have
completed its task. All that it leaves to the delegate is to apply
the same uniformly to a given area indicated by the parent
Legislature itself but at an appropriate time. This would be an
act of pure and simple conditional legislation depending upon
the subjective satisfaction of the delegate as to when the said
Act enacted and completed by the parent legislature is to be
made effective. As the parent legislature itself has laid down a
binding course of conduct to be followed by all and sundry to
be covered by the sweep of the legislation and as it has to act
as a binding rule of conduct within that sweep and on the
basis of which all their future actions are to be controlled and
guided, it can easily by visualised that if the parent legislature
while it enacted such law was not required to hear the parties
likely to be affected by the operation of the Act, its delegate
exercising in extremely limited and almost ministerial function
as an agent of the principal legislature applying the Act to the
area at an appropriate time is also not supposed and required
to hear all those who are likely to be affected in future by the
binding code of conduct uniformly laid down to be followed by
all within the sweep of the Act as enacted by the parent
legislature.
24. However, there may be second category of conditional
legalisation wherein the delegate has to decide whether and
under what circumstances a completed Act of the parent
legislation which has already come into force is to be partially
withdrawn from operation in a given area or in given cases so
as not to be applicable to a given class of persons who are
otherwise admittedly governed by the Act. When such a power
by way of conditional legislation is to be exercised by the
delegate a question may arise as to how the said power can be
exercised. In such an eventuality if the satisfaction regarding
the existence of condition precedent to the exercise of such
power depends upon pure subjective satisfaction of the
delegate and if such an exercise is not required to be based on
the prima facie proof of factual data for and against such an
exercise and if such an exercise is to uniformly apply in future
to a given common class of subjects to be governed by such an
exercise and when such an exercise is not to be confined to
individual cases only, then even in such category of cases
while exercising conditional legislative powers the delegate
may not be required to have an objective assessment after
considering rival versions on the data placed before it for
being taken into consideration by it in exercise of such power
of conditional legislation. For example if a tariff is fixed under
the Act exemption power is conferred on the delegate whether
to grant full exemption or partial exemption from the tariff
rate it may involve such an exercise of conditional legislative
function wherein the exercise has to be made by the delegate
on its own subjective satisfaction and once that exercise is
made whatever exemption is granted or partially granted or
partially withdrawn from time to time would be binding on the
entire class of persons similarly situated, and who will be
covered by the sweep of such exemptions, partial or whole,
and whether granted or withdrawn, wholly or partially, and in
exercise of such a power there may be no occasion to hear the
parties likely to be affected by such an exercise. For example
from a settled tariff say if earlier 30% exemption is granted by
the delegate and then reduced to 20% all those who are
similarly situated and covered by the sweep of such exemption
and its modification cannot be permitted to say in the absence
of any statutory provision to that effect that they should be
given a hearing before the granted exemption is wholly or
partially withdrawn.
25. In the aforesaid first two categories of cases delegate
who exercises conditional legislation acting on its pure
subjective satisfaction regarding existence of conditions
precedent for exercise of such power may not be required to
hear parties likely to be affected by the exercise of such
power. Where the delegate proceeds to fill up the details of the
legislation for the future which is part of the integrated action
of policy-making for the future, it is part of the future policy
and is legislative. But where he merely determines either
subjectively or objectively-depending upon the "Conditions"
imposed in the statute permitting exercise of power by the
delegate-there is no legislation involved in the real sense and
therefore, in our opinion, applicability of principles of fair
play, consultation or natural justice to the extent necessary
cannot be said to be foreclosed, of course, the fact that in such
cases of 'conditional legislation' these principles are not
foreclosed does not necessarily mean that they are always
mandated. In a case of purely ministerial function or in a case
where no objective conditions are prescribed and the matter is
left to the subjective satisfaction of the delegate (as in
categories one and two explained above) no such principles of
fair play, consultation or natural justice could be attracted.
That is because the very nature of the administrative
determination does not attract these formalities and not
because the determination is legislative in character. There
may also be situations where the persons affected are
unidentifiable class of persons or where public interest or
interests of State etc, preclude observance of such a
procedure.
26. But there may be a third category of cases wherein the
exercise of conditional legislation would depend upon
satisfaction of the delegate on objective facts placed by one
class of persons seeking benefit of such an exercise with a
view to deprive the rival class of persons who otherwise
might have already got statutory benefits under the Act and
who are likely to lose the existing benefits because of
exercise of such a power by the delegate. In such type of
cases the satisfaction of the delegate has necessarily to be
based on objective consideration of the relevant data for and
against the exercise of such power. May be such an exercise
may not amount to any judicial or quasi-judicial function. Still
it has to be treated to be one which requires objective
consideration of relevant factual data pressed in service by
one side and which could be tried to be rebutted by the other
side who would be adversely affected if such exercise of power
undertaken by the delegate. In such a third category of cases
of conditional legislation the Legislature fixes up objective
conditions for the exercise of power by the delegate to be
applied to past or existing facts and for deciding whether the
rights or liabilities created by the Act are to be denied or
extended to particular areas, persons or groups. This exercise
is not left to his subjective satisfaction nor it is mere
ministerial exercise. Section 36 of the Act with which we are
concerned falls in this third category of conditional legislative
functions. A mere look at the said Section shows that before an
appropriate Government can form its opinion regarding grant
of partial or full exemption to any establishment or class of
establishments which are otherwise already covered by the
sweep of the Act the following factual conditions must be
found to have existed at the relevant time to enable the
delegate to exercise its powers under the Act :
1. The financial position of the establishment or class of
establishments, as the case may be, must be such that it would
not be in public interest to apply all or any of the provisions of
the Act to such establishment or establishments.
2. There may be other relevant circumstances pertaining to
such establishment or establishments which would require
exercise of such power of exemption.
3. Such exercise must be in public interest as a whole and not
confined to the personal or private interest of the
establishment or establishments concerned................"
............. It must, therefore, be held that in such third
category of cases of exercise of power of conditional
legislation objective assessment of relevant data furnished by
rival classes of persons likely to be affected by such an
exercise cannot be said to be ruled out or a taboo to such an
exercise of power. It is also necessary to keep in view that in
such category of cases the delegate exercising power of
conditional legislation does not lay down a uniform course of
conduct to be followed by the entire class of persons covered
by the sweep of such an exercise but lay down a favourable
course of conduct for a smaller class of persons at the cost of
rival large category of persons covered by the very same
exercise of power. To that extent there is a mini lis between
these two rival categories of persons likely to be affected by
such an exercise by the delegate. Such exercise may also
cover existing situations as well as future situations sought to
be subjected to the exemption for the period prescribed in the
order and may sometimes affect to any permissible extent even
past transactions in individual cases. Such type of exercise of
power cannot be said to rule out consideration of rival
viewpoint on the question of grant of exemption to an
establishment or to class of establishments from the relevant
provisions of the Act. In the case before us the legislation has
prescribed objective standards and has permitted the delegate
to grant exemption and to withdraw the benefit of the statute
which is being enjoyed by the persons and in our opinion, in
such a situation, principles of fair play or consultation or
natural justice cannot be totally excluded." (emphasis
supplied)
59. In my view, the power under Section 10 clearly falls in the third
category of conditional legislation as laid down by State of T.N. Vs K.
Sabanayagam (supra). Before the appropriate government can issue a
notification in respect of contract labour under Section 10(1), it has to
necessarily apply the criteria as laid down in 10(2) on the basis of an
objective assessment. Only after this objective assessment, the government
can arrive at its satisfaction about the existence of the conditions in Section
10(2) to justify issuance of a notification under section 10 of the Act
prohibiting contract labour. Therefore, in my opinion, the conditional
legislation framed under section 10 of the Act requires that parties likely to
be affected be given an opportunity of being heard. In this regard, I agree
with learned counsel for petitioner, that the power under Section 10 of the
Act comes within the ambit of the third category of conditional legislation as
mentioned hereinabove, requiring that principles of natural justice be
complied with.
60. What remains to be seen, therefore, is whether in the facts of the
present case, it can be concluded that the said principles were not complied
with, as contended by the petitioner. It is the admitted position that the
petitioners written representations regarding the nature and process of works
carried on in the establishments in question were forwarded to the
committee. Furthermore, the petitioner has also stated that its representatives
attended the meeting held on 11.09.1995, wherein the Board deliberated and
chose to recommend the committee‟s report to the Central Government. It is
not the petitioner‟s case that no opportunity was given to make any
representations whatsoever before the Committee released its report. The
essence of audi alteram partem is that no party should be condemned
unheard. However, in the facts of the present case, the petitioner had the
opportunity to show to the committee the situation as it exists at the site of
its establishments when the committee visited the various establishments
and to put forwards its point of view. Moreover, the petitioner was given an
opportunity to make written representations to the committee as a chance to
explain and clarify its position on the nature of works and jobs which were
being studied by the committee. The committee has, in fact, also adverted to
the petitioner management‟s stand in its report regarding some of the works.
This shows that the committee considered the views of the petitioner before
forwarding its report to the Board. Subsequent to this, the petitioner was also
invited vide letter dated 5.09.1995 to attend a meeting held by the Board on
11.09.1995, wherein the report of the Committee was to be deliberated by
the Board. The said meeting was attended by the petitioner management‟s
representatives. This goes to show that the petitioner was in no way
condemned unheard. It cannot be said that the petitioner should have been
invited to attend every meeting, or be a part of the entire deliberation
process from start to finish. There is no watertight rule of natural justice
which propounds that only a certain kind of hearing or representation
qualifies as due process. Reliance may be placed on a recent judgment of
the Supreme Court in Chief General Manager, Calcutta Telephones
District, Bharat Sanchar Nigam Limited and Ors.v. Surendra Nath
Pandey and Ors., 2011 (2) SCALE 376, in this regard. In the
aforementioned judgment it was held that, "it must be remembered that rules
of Natural Justice are not embodied rules. They cannot be put in a strait-
jacket. The purpose of rules of Natural Justice is to ensure that the order
causing civil consequences is not passed arbitrarily. It is not that in every
case there must be an opportunity of oral hearing".
61. The original record, containing the deliberation which went into the
making of the impugned notification were directed to be produced vide
order dated 05.02.2013, and have been produced. On a perusal of the
documents which form part of the original record, relating to the report of
the committee as well as the procedure adopted by the Board and the
Government, it is observed that even the views of the Ministry of Petroleum
and Natural Gas were sought vide letters dated 28.12.95, 16.1.96, 19.2.96,
10.4.96 addressed by the Ministry of Labour. File noting dated 12.01.1996
reveals that the comments of the Ministry of Petroleum and Natural Gas
were still awaited and states that another reminder may be sent to them.
Similarly, file noting dated 5.02.1996 states that another reminder may be
sent to Ministry of Petroleum and Natural Gas for their comments and
views.
62. The petitioner has submitted that its representatives were not present
at the meeting held on 18.02.1997, but I do not see that as an adequate
ground to hold that the impugned notification has been issued in violation of
principles of natural justice. The petitioner was already granted an
opportunity to attend a meeting of the Board on an earlier occasion and, as
already discussed above, the petitioner need not have been invited to every
meeting of the Board. In fact, in the meeting held on 11.09.1995, wherein
the petitioner management‟s representatives were present, the Board
deliberated and proceeded to adopt the Committee report. Therefore, the
petitioner was aware that the Board had adopted the report. On 18.02.1997,
the Board recommended abolition of contract labour. The said
recommendation was based on the fact that the Board adopted the report of
the Committee at which meeting the petitioner was present. Therefore, it
cannot be said that the petitioner‟s absence in the subsequent meeting has
rendered the process of issuance of the impugned notification as being in
violation of principles of natural justice.
63. As regards the petitioner‟s reliance on Indian Oil Corporation v SPS
Engineering Ltd (supra), I am of the view that the said case does not have
any bearing on the facts of the present case. In the aforementioned case, the
petitioner‟s contract had been terminated after issuing show cause and
receiving the petitioner‟s reply. The termination order, however, did not deal
with the explanation provided by the petitioner in his reply and the Court
observed that since the petitioner had given its explanation to the show-
cause notice, it was incumbent upon the respondent to deal with these
explanations in the termination order. However, in the facts of the present
case, the comments of the petitioner were duly invited at the appropriate
stage and the same were adverted to on various occasions by the committee
in its report. Therefore, the government was not required to again advert to
any of the petitioner‟s comments and pass a detailed speaking order,
considering that it had already adopted the report of the committee which
gave due regard to the petitioner‟s comments.
64. The records indicate that matters mentioned in Section 10 were
generally complied with before issuance of the notification. In Alembic
Chemical Works Co. Ltd v. State of Gujarat, 1996 I LLJ 584, a Division
Bench of the Gujarat High Court held that the requirement of stating reasons
is fulfilled when the notification states that it was passed in consultation
with the Advisory Board and the Government had taken into consideration
the conditions of work and benefits provided for the contract labour and
other relevant factors enumerated in clauses (a) to (d) of sub-section (2) of
section 10 of the Act.
65. As regards the submission that the work is not of regular nature,
Explanation to Section 10 clearly lays down that the decision of the
appropriate government will be final as regards the nature of the process,
operation or work. The same has been reaffirmed in Oil India Ltd. v. Union
of India& Ors (supra). Section 1(5)(b) of the Act also prescribes that the
decision of the appropriate government - on the issue whether work
performed in an establishment is of an intermittent or casual nature, shall be
final. The scope of power under Article 226 of the Constitution is limited
and this court cannot go into the question whether the works were perennial
or incidental in nature. In view of the Explanation to Section 10, factors such
as scope and nature of work are non justiciable.
66. Coming to the next contention of the petitioner, in respect of the
committee not having visited all the establishments as laid down in the
reference, I am not inclined to agree with the petitioner‟s submission that the
same resulted in non application of mind. I would like to refer again to the
decision of the Constitution Bench in Steel Authority of India & Others Vs.
National Union Water Front Workers & Others (supra), wherein the
Supreme court, inter alia, observed:
"52. .... ..... ..... Consideration of the factors mentioned
above has to be in respect of each establishment, whether
individually or collectively, in respect of which notification
under Sub-section (1) of Section 10 is proposed to be
issued..." (emphasis supplied)
67. The definition of 'establishment' given in Section 2(e) of the CLRA
Act is as follows:
"i) any office or department of the Government or a local
authority or
ii) any place where any industry, trade, business, manufacture
or occupation is carried on."
68. Consequently, I am of the opinion that not visiting each establishment
as mentioned in the reference cannot vitiate the report on grounds that there
was non application of mind. The factors as mentioned in Section 10(2) need
to be studied individually or collectively, so as to be able to arrive at the
satisfaction as to their existence or non existence. Where, undeniably, the
processes and operations in different establishments are similar or identical,
and the circumstances prevalent are also the same, it is not necessary for the
committee to visit and inspect each and every establishment individually.
The operations of the petitioner undertaking are similar in each
establishment and, therefore, I do not consider that it was necessary for the
committee to visit each of the similar establishments. There has to be
substantial compliance with the requirement of inspection and study, and a
strict procedural compliance is not to be insisted upon. I also find it difficult
to accept the contention that extraneous factors were considered because the
committee visited establishments outside the scope of its reference. In
Orissa Industries Ltd. v. Union of India, 1993 LAB I.C. 515, a Division
Bench of the Orissa High court rejected the contention that applicability of
factors has to be judged qua each establishment.
69. I may also refer to Barat Fritz Werner Ltd v. State of Karantaka
(supra), wherein the Court observed as follows:
"24.It was next contended that conditions in each one of the
factories had to be ascertained and separate notification had
to be issued in respect of each one of the factories. This
argument needs to be rejected out right because when the
Government was formulating the policy it has to take note of
the conditions prevalent generally in such establishments and
not with reference to any one or other. In general, if it is found
that it would be appropriate to abolish contract labour in
canteens run by factories, individual distinctive features do
not affect such a decision.
25.It is next contended that only one notification is issued and
not with reference to each of the establishment separately and,
therefore, the action of the Government is vitiated. When the
notification is applicable to establishments falling in a
particular category, the fact that separate notification is not
issued will not make impact on the action of the Government
in the issue of a notification, if otherwise it is valid. Hence this
contention also has no merit".
70. The petitioner has placed reliance on Steel Authority of India &
Others v. National Union Water Front Workers & Others (supra) wherein
a similarly worded notification was quashed. However, the notification was
quashed in that case, as being omnibus, not being in respect a specified
establishment. The Supreme Court was also not satisfied that Section 10(2)
had been complied with. However, the notification in the present case is
neither omnibus, nor is it contrary to, or in non-compliance of Section 10(2)
as I have already discussed above. Therefore, I do not find that the
aforementioned judgment advances the case of the petitioner.
71. It has also been contended by the petitioner that no study was
conducted in respect of works mentioned in items (iii)- (xii) that have been
recommended for abolition of contract labour i.e. whether they, or any of
them, are part time or whole time works. A perusal of the report of the
committee shows that the committee observed that handling of cylinders for
various purposes, which is item (iii) - (x), is a very common and essential
item required to be done, which starts with receiving of new cylinders which
are unloaded and stacked at the plant complex. The committee observed that
the cylinders are then taken to the filling site and after being filled by LPG
through a conveyor belt and checked for leakages, the cylinders are brought
to a point where they can be loaded into trucks. The committee also stated
that the cylinders are required to be handled by the workers on various
points such as sorting of defective cylinders, checking for leakages, putting
warning stickers on the cylinders as well as painting and numbering them.
72. The committee in its report has observed that though the aforesaid
jobs are incidental in nature, they are perennial inasmuch, as, the said jobs
are required to be performed as long as the LPG plants are in running
process. The Committee has also adverted to the report of the Vasudevan
Committee, which recommended abolishing contract labour within 15
metres of the filling shed. The Committee observed that the said works
pertaining to cylinders were, in fact, being carried on very close to the main
activities of the LPG plant.
73. As regards the job of cleaning, sweeping and gardening, which fall
under item (xi) and (xii) respectively, the committee did not recommended
the same for prohibition of contract labour on the basis of the representation
made by the management that the same are not full time in nature, and the
employment of regular sweepers will increase the burden of expenditure of
the plants. Therefore, I find that there has been adequate discussion by the
Committee in its report regarding the aforesaid items.
74. Furthermore, in Barat Fritz Werner Ltd v. State of Karantaka
(supra), it was observed that the words "Process, operation or other work"
need not be interpreted to mean only the core activity and not peripheral
activity. In my view, therefore, the scope of the nature of the work has to be
considered within its widest ambit, the Act being a piece of social welfare
legislation.
75. As discussed hereinabove, after the report of the committee was
submitted, due opportunity was provided to the petitioner to make its
representations to the Board. In fact, a perusal of item on the agenda of the
meeting held on 18.02.1997, relating to consideration of the report of
another committee on prohibition of contract labour in some other
organization shows that the Board accepted the report of that committee
because it felt that in the light of the judgment of the Kerala High Court,
residential colonies could not be covered under the term "establishment".
Item 9 on the agenda shows that in that case the Board decided to abstain
from making recommendations to the government in respect of that
establishment, and instead obtained information about the number of
contract workers engaged. The minutes of the meeting held on 18.02.1997
thus demonstrate that the Board undertook discussions and different views
in respect of reports of separate committees where the same was felt
necessary.
76. Furthermore, subsequent to the meeting held on 18.02.1997, wherein
the Board adopted the report of the Committee, letter dated 18.03.1997 was
sent to all the members of the Board by Director to the Board Shri Arvind
Risbud forwarding the minutes of the meeting held on 18.02.1997 calling for
comments on the same. The said procedure is commonly followed to obviate
any discrepancies observed in the suggestions or discussions held during a
previous meeting. This too demonstrates the fact that the Board followed
due procedure as required. The minutes of the meeting were also forwarded
to State Governments as well as all participants to the meeting besides the
members of the Board.
77. Similarly, in the minutes of a previous meeting held on 11.09.1995,
where the petitioner‟s representatives too were present, in respect of one of
the items relating to a canteen in Bombay, the Board noted that the
recommendations of that committee were not unanimous and, therefore, as
per past practice, the government would hear affected parties before taking a
decision. Since the recommendations of the present committee were
unanimous, the same were accepted by the Board and the matter was
referred to the government for a decision after taking into account the views
of the Ministry of Petroleum and Natural Gas. As already discussed
hereinabove, several letters were sent by the Ministry of Labour to the
Ministry of Petroleum and Natural Gas for their views and comments.
78. It is also pertinent to note that even though the Board accepted the
report of the committee in its 29th meeting on 11.09.1995 - wherein the
representatives of the petitioner were present, the same was placed before
the Board once again on 18.02.1997 in view of a judgment passed by the
Bombay High Court relating to abolition of contract labour. This shows that
the government took adequate steps to obtain a final recommendation from
the Board inspite of an existing recommendation dated 11.09.1995. This, as
well as the repeated reminders sent to the Ministry of Petroleum and Natural
Gas, demonstrates that the government was diligent in seeking to obtain the
necessary data before it took a final decision in determining whether
contract labor in the specified works should be abolished, or not. Therefore,
it cannot be said that the government acted mechanically.
79. The next contention of the petitioner is that the impugned notification
is discriminatory and in violation of Article 14 of the Constitution of India,
since it does not apply to all establishments or to all processes. Without
going into too much detail, I do not agree with this contention for the
following reasons: It is a well settled position in law that reasonable
classification is permissible so long as it is based on an intelligible
differentia. As long as the classification is reasonable and has a rational
nexus to the object of the classification, the same cannot be truck down.
Reliance may be placed on the following observations in a recent judgment
of the Supreme Court in Namit Sharma v. Union of India, 2012 (8)SCALE
593, which are as follows:
"15. Article 14 forbids class legislation but does not forbid
reasonable classification which means:
(i) It must be based on reasonable and intelligible differentia;
and
(ii) Such differentia must be on a rational basis.
(iii) It must have nexus to the object of the Act.
xxxxx xxxxx xxxxx
38. The rule of equality or equal protection does not require
that a State must choose between attacking every aspect of a
problem or not attacking the problem at all, and particularly
with respect to social welfare programme. So long as the line
drawn, by the State is rationally supportable, the Courts will
not interpose their judgment as to the appropriate stopping
point. A statute is not invalid because it might have gone
further than it did, since the legislature need not strike at all
evils at the same time and may address itself to the phase of
the problem which seemed most acute to the legislative mind.
A classification based on experience was a reasonable
classification, and that it had a rational nexus to the object
thereof and to hold otherwise would be detrimental to the
interest of the service itself. This opinion was taken by this
Court in the case of State of UP and Ors. v. J.P. Chaurasia
and Ors. (1989) 1 SCC 121. Classification on the basis of
educational qualifications made with a view to achieve
administrative efficiency cannot be said to rest on any
fortuitous circumstances and one has always to bear in mind
the facts and circumstances of the case in order to judge the
validity of a classification. In the case of State of Jammu and
Kashmir v. Sh. Triloki Nath Khosa and Ors. (1974) 1 SCC 19,
it was noted that intelligible differentia and rational nexus are
the twin tests of reasonable classification.
39. If the law deals equally with members of a well defined
class, it is not open to the charge of denial of equal protection.
There may be cases where even a single individual may be in
a class by himself on account of some special circumstances
or reasons applicable to him and not applicable to others. Still
such law can be constitutional. [Ref. Constructional Law of
India by H.M. Seervai (Fourth Edition) Vol.1"
80. The object of the Act is to abolish contract labour wherever possible,
and there is no statutory restriction that the same cannot be done in respect
of individual establishments or individual corporations. It is well settled law,
in the light of Chiranjit Lal Chowdhuri v. The Union of India (UOI) and
Ors. AIR 1951 SC 41, that even a single establishment can be held to be a
class within itself. However, these observations are unnecessary because the
Central Government has banned contract labour in numerous other
establishments besides the petitioner‟s establishments. I do not find it
necessary to list out other establishments where contract labour has been
abolished. Suffice to say, there are several.
81. Therefore, having examined the petitioner‟s contentions as aforesaid,
I do not find any merit in this petition. The impugned notification has been
issued after providing the requisite opportunity of being heard to all the
concerned parties. The same has been issued after due application of mind
by the Committee, which is evident from a perusal of the Committee‟s
report as well as the recommendations laid down by the Vasudevan
Committee report as pointed out by the Respondents and discussed
hereinabove. The Board has duly considered the matter in the light of the
Committees report and made its recommendation to the Central
Government, which has issued the impugned notification.
82. For the aforesaid reasons, I am of the view that the challenge to the
impugned notification fails and the petition is dismissed with costs
quantified at Rs.20,000/- to be shared equally by the respondents. Interim
order stands vacated.
VIPIN SANGHI, J
JULY 01, 2013
sr
