Skip to content


The Paper Products Ltd. Vs. K.R. Powar - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtMumbai High Court
Decided On
Case NumberSpl. C.A. No. 1569 of 1966
Judge
Reported in(1971)73BOMLR434; (1971)ILLJ35Bom; 1971MhLJ908
ActsIndustrial Disputes Act, 1947 - Sections 10, 10(2), 33A and 39
AppellantThe Paper Products Ltd.
RespondentK.R. Powar
Excerpt:
industrial law - contract labour system--whether such system prohibited by law--how to ascertain whether evil of contract system exists in particular industry.;there is no principle of industrial law which prohibits absolutely all contract labour systems in all cases. the industrial tribunal has to consider each case on its merits and decide whether the contract system deserves to be continued or prohibited. it is necessary to be very vigilant and analytical when examining cases of individual industries to find out whether the evil of contract system exists in the employment of labour in that industry even if it is not called a contract system. it is equally necessary to ascertain that a system of employment of labour which has no such evil, and may even be more beneficial, is not.....vaidya, j.1. petitioner no. 1 in the above petition is the paper products ltd., a company incorporated under the indian companies act having its registered office at delhi, a branch office at bombay and a factory at roha in kolaba district. petitioner no. 2, expert services bureau private ltd., is a private limited company incorporated under the indian companies act (hereinafter referred to as 'bureau') engaged in providing amongst other things a security personnel to industrial units in india and particularly in the state of maharashtra. the bureau was established in 1961 and is a member of the world secret service association and of the association of british detectives, london, and claims to be represented in all parts of the world. the bureau undertakes contracts of watch and ward and.....
Judgment:

Vaidya, J.

1. Petitioner No. 1 in the above petition is the Paper Products Ltd., a company incorporated under the Indian Companies Act having its registered office at Delhi, a branch office at Bombay and a factory at Roha in Kolaba District. Petitioner No. 2, Expert Services Bureau Private Ltd., is a private limited company incorporated under the Indian Companies Act (hereinafter referred to as 'Bureau') engaged in providing amongst other things a security personnel to industrial units in India and particularly in the State of Maharashtra. The Bureau was established in 1961 and is a member of the World Secret Service Association and of the Association of British Detectives, London, and claims to be represented in all parts of the world. The Bureau undertakes contracts of watch and ward and security work in industrial undertakings. In the course of its business the Bureau has undertaken contract of watch and ward and of security in respect of petitioner No. 1's factory at Roha. The Bureau claims to have similar contracts for various other units numbering about 42 all over the State of Maharashtra.

2. On November 23, 1965, the Deputy Commissioner of Labour (Administration), Bombay, in exercise of his powers conferred by sub-s.(2) of S. 10 as delegated under S. 39 of the Industrial Disputes Act, 1947, referred a dispute between petitioner No. 1 and its workmen to the Industrial Tribunal, Maharashtra at Bombay. The dispute arose out of two demands of the workers, viz., (1) a demand for leave provision and paid holidays, the details of which are not relevant for this petition, and (2) a demand for abolishing the existing contract system regarding watchmen and to make all watchmen working at the Roha factory and its premises direct employees of petitioner No. 1 company from the dates on which the said watchmen were respectively appointed. It is undisputed that the watchmen engaged by petitioner No. 2 Bureau neither appeared in the proceedings before the Tribunal, nor did they support the demand made on behalf of the workmen of petitioner No. 1 company for the abolition of the said contract system. The Tribunal passed an award on June 16, 1966 granting reliefs in respect of the two demands of the workers. Regarding the second demand, the Tribunal directed the abolition of the contract system and absorption of all the workmen serving as watchmen as direct employees of petitioner No. 1 company. Feeling aggrieved by the reliefs granted in respect of the demands of the workers, the petitioners have moved this Court under Arts. 226 and 227 of the Constitution of India challenging the legality and correctness of the award in respect of the two reliefs. But at the hearing of the petition Mr. Singhavi, the learned counsel for the petitioners, stated that the petitioners were not challenging the reliefs granted by the Tribunal in respect of demand No. 1 in view of a settlement arrived at between petitioner No. 1 and the workmen on September 24, 1969. The relief granted by the Tribunal in respect of demand No. 2 is challenged by the petitioners on the ground that the Tribunal acted without jurisdiction and unjustly in directing the abolition of the contract system notwithstanding its finding that the contract system prevailing in the factory of petitioner No. 1 did not result in exploitation of labour.

3. The only question which, therefore, arises in this petition is as to whether the Tribunal which relied on the decision of the Supreme Court in Standard Vacuum Refg. Co. v. Their Workmen 1960 II L.L.J. 233, in directing the abolition of the contract system, correctly applied the principles laid down in the said decision and otherwise acted legally and justly in abolishing the said system. Petitioner No. 2 although not a party to the original dispute, has joined in the petition submitting that it is vitally concerned in the dispute between petitioner No. 1 and its workmen inasmuch as its entire business is likely to be affected by the impugned award.

4. In coming to the conclusion that the contract system should be abolished in view of the principles laid down by the Supreme Court in the aforesaid case, the Tribunal relied on certain assumptions and inferences based on the materials before it and also on certain general considerations. These assumptions and considerations may be summed up as follows :-

(1) The Tribunal held that the work of the watchmen, viz., of maintaining watch, was incidental to the running of the factory and this work was necessarily not of a temporary nature, nor intermittent, but a work that had to be maintained for all the 24 hours of the day and night and all round the year even when the factory was not working and hence the work was permanent and perennial.

(2) The work had to be done in and near the premises of the factory under the vigilant supervisor and managerial staff of the employer company.

(3) It was a matter of common knowledge that in most of the concerns in almost all the industries in the region, the watch is maintained by the direct employees and not under the contract system.

(4) Although taking into consideration the salary paid to the watchmen under the contract system and the salary paid under settlement dated July 13, 1965 to a peon, who, according to the Tribunal, was treated on an equal footing with a watchman, it appeared that there was no exploitation under the contract system, there was nothing to show that there was any special training given to these watchmen engaged by the Bureau which justified the contract system.

(5) Having regard to the conditions of the Service imposed by the Bureau on its employees, and, in particular, that they shall not form or join any trade union, and also the condition that they should not mix up with the factory workers, it was clear that deliberately there was imbibed in the watchmen a sense of aloofness or separateness from the other workmen and this made the workmen think that the training imparted to the watchmen was the training in spying and hence lead to a distrust between the workers of petitioner No. 1 company and the management which was unhealthy and detrimental to the maintenance of industrial peace and harmony.

For these reasons, the Tribunal came to the conclusion, relying on the principles laid down by the Supreme Court in the aforesaid case, that the contract system deserved to be abolished.

5. It must be noticed that after the petition filed by the petitioners was admitted, a civil application was filed, viz., Civil Application No. 2257 of 1966, by which the petitioners prayed that they may be allowed to proceed against respondents Nos. 2 and 3, who are workers employed in the factory at Roha under O.I. r. 8 of the Civil Procedure Code as representing themselves and all other persons employed by petitioner No. 1 or deriving a benefit under the impugned order. That prayer was granted and it was further directed that the Chemical Mazdoor Sabha, the trade union who appeared before the Tribunal, should be given notice of the petition. The Chemical Mazdoor Sabha has appeared on behalf of the workers through their counsel Mr. Sowani.

6. It is doubtful whether petitioner No. 2 can file this petition when the Bureau was not a party to the dispute before the Tribunal, but we do not wish to discuss this point any further than to state that the petition will be considered as if it is a petition by petitioner No. 1 alone, without prejudice to the rights, if any, of petitioner No. 2.

7. Mr. Singhavi, the learned counsel for the petitioners, submitted that the Tribunal did not correctly apply the principles laid down by the Supreme Court in the Standard Vacuum Refg. Co.'s case to the present case and the Tribunal wrongly assumed that the five factors mentioned by it were sufficient to justify the abolition of the contract system in the instant case in view of the said principles.

8. Turning to the decision of the Supreme Court, we find that the tests which are indicated in the judgment of the Supreme Court for deciding whether in a particular case the contract system should be abolished are stated in it on page 238 of the report as follows :

'...... In dealing with this question it may be relevant to bear in mind that industrial adjudication generally does not encourage the employment of contract labour in modern times. As has been observed by the Royal Commission on Labour :

'Whatever the merits of the system in primitive times, it is now desirable, if the management is to discharge completely the complex responsibility laid upon it by law and by equity, that the manager should have full control over the selection, hours of work and payment of the workers.'

The same opinion has been expressed by several labour enquiry committees appointed in different States. We agree that whenever a dispute is raised by workmen in regard to the employment of contract labour by any employer, it would be necessary for the Tribunal to examine the merits of the dispute, apart from the general consideration that contract labour should not be encouraged, and that in a given case the decision should rest not merely on theoretical or abstract objections to contract labour but also on the terms and conditions on which contract labour is employed and the grievance made by the employees in respect thereof. As in other matters of industrial adjudication, so in the case of contract labour, theoretical or academic considerations may be relevant, but their importance should not be over estimated.'

In other words, the Supreme Court has not tried to lay down that in all cases contract labour system should be abolished. What it has indicated is that the Tribunal should examine the merits of each dispute apart from the general considerations that contract labour should not be encouraged and take into consideration the terms and conditions on which contract labour is employed and the grievance made by the employees in respect thereof.

9. Now, it is true that the Tribunal in the present case has taken into consideration the terms and conditions of employment of workmen as watchmen by the Bureau and the grievance of the other employees that the said watchmen are trained to spy on them and on their trade union activities. It is also true that industrial adjudication is generally directed in such a manner as not to disturb the solidarity or workers; and it is pointed out in the very case referred to above by the Supreme Court that the regular workers had a community of interest with the workmen of the contractor who were in effect working for the same employer and they had also a substantial interest in the subject matter of the dispute in the sense that the class to which they belonged, viz., workmen was substantially affected thereby. However we think that the Tribunal in the present case erroneously relied on certain assumptions and ignored the facts and circumstances in the context of which the Supreme Court laid down the above principles.

10. The factory of the Standard Vacuum Refining Company's case are, in our opinion, easily distinguishable from the facts of the present case. There a dispute was raised by the workmen of the company with respect to contract labour employed by the company for cleaning and maintenance of the refinery (plant and premises) belonging to the company. It appears that the company was giving this work to contractors for a period of one year from October 1 to September, 30. The contractors used to be changed from year to year sometimes, with the result that the workmen employed by the previous contractors were thrown out of employment. The result of the system, therefore, was that that there was no security of service to the workmen who were in effect doing the work of the Standard Vacuum Refining Co. of India Ltd. The workmen of the contractors were not entitled to other benefits and amenities such as provident fund, gratuity, bonus, privilege leave, medial facilities, subsidised food and housing to which the regular workmen of the company were entitled. Although the work was of a permanent nature, the contract system was introduced to deny the workmen the rights and benefits which the company gave to its own workmen. It is in view of those facts that, in the dispute referred to the Industrial Tribunal under S. 10 of the Industrial Disputes Act, the Tribunal directed the company to abolish the contract system, holding that the work which was being done by the contractors was necessary for the company and had to be done daily, though it was not a part of the manufacturing process; and that doing of the work through annual contracts resulted in the deprivation of security of service and other benefits, privileges, leave, etc. for the workmen of the contractors. The Supreme Court held that the Tribunal's decision was right considering the nature of the work and the conditions of service in that case.

11. We find, however, that the facts and conditions of service in the present case are not similar to the facts in that case. In the first instance, as stated above, the watchmen employed by the Bureau have no grievance against the Bureau; they have not appeared before the Tribunal : and they have not opposed the petition although notice was served under O.I., r. 8 of the Civil Procedure Code.

12. The Assistant Manager of petitioner No. 2 Bureau, Victor . at Roha are given a starting wage of Rs. 75 per month and that after a period of six months, the wages are raised to Rs. 80 per month and then they are put in a grade of 80-3-110. Besides the above wages, the watchmen are provided with 2 pairs of uniforms, one cap and one pair of shoes every year and they are also given a washing allowance of Rs. 2.50 per month. They are given all the benefits of leave as per the Factories Act and of bonus as per the provisions of the Payment of Bonus Act in addition to the free accommodation in the factory premises.

13. The statements made by Mr. Dantas are not disputed by the workers in this case or by the union for whom Mr. Sowani appears. A perusal of these conditions show that the Tribunal was quite right in holding that there was no exploitation of the workers employed as watchmen. Mr. Sowani concedes this position in so far as monetary exploitation is concerned; but he contends that contract labour so employed, though it participates in the production in the factory of petitioner No. 1, is denied its fair share in the profits of the company in which other workers through their union are vitally interested. He, therefore, submits that the finding of the Tribunal that there is no exploitation of labour by the system of contract labour in the present case is erroneous. This contention must be rejected having regard to the conditions of service mentioned in the aforesaid affidavit and not disputed by respondents Nos. 2 or 3 or the union. In our judgment, the exploitation suggested by Mr. Sowani not only does not exist but must be ignored as the watchmen themselves have not come forward to support the demand of the workers in the present case.

14. Now, it is true that exploitation of labour may not be the conclusive test for determining whether contract labour system in a particular factory or unit should be permitted; but it is an important test. When the Tribunal finds that there is no exploitation of the workers working under the contract system, we think it should be slow to prohibit it unless law or justice requires it to be stopped. At present there is no law which prohibits the contract labour system such as exists in the present case. It is difficult to lay down any definite rule when it will be just to prohibit it even though it does not result in exploitation of labour. We, however, think that the Tribunal in this case proceeded to prohibit it on insufficient grounds. Of the five circumstances summarised above as having been found by the Tribunal, the Tribunal was clearly wrong in relying on what it described as 'common knowledge that in most of the concerns in all the industries in the region, watch is maintained by the direct employees and not under the contract system.' Mr. Sowani is unable to show how this was regarded as common knowledge. There is no material on the record to support this assumption of the Tribunal. Another factor relied on by the Tribunal, that the watchmen are employed elsewhere without any special training is also not supported by any evidence on record. The Tribunal further erred in proceeding on the footing that the special training given to the watchmen employed by the Bureau did not justify the contract system. It is possible that the training given by a special agency like the Bureau made the services of watchmen more economic and efficient and justified the contract system with regard to watchmen in the absence of anything else that made it an evil in fact.

15. Mr. Sowani contended that in any event, the Tribunal was quite right in its conclusion that the system must be stuck down as it generates distrust between employees and employers because the watchmen were trained as spies and a material part of their work was to spy over trade union activities. This contention must be rejected because the Tribunal's conclusion is not based on any evidence or material on the record. After referring to the grievance of the workmen, the Tribunal merely relied on a theory of industrial peace and harmony. As pointed out by the Supreme Court in the above case, theoretical grounds are relevant, but they must be considered along with the nature and conditions of the contract labour in a particular case before deciding whether the contract labour should be prohibited.

16. There is no material in the present case to show that the watchmen employed by the Bureau spied on the trade union activities. The finding of the Tribunal that 'evidently a distrust is created among the workers' is also not based on any evidence or any other material. No such material are referred to either in the affidavit in reply filed by the General Secretary of the Union in this Court or in the course of his arguments by Mr. Sowani. The Tribunal had no jurisdiction to come to such a conclusion without any basis or material on the record. If there was any material to show that the watchmen had acted as spies on the trade union activities, the further question as to whether such spying should be prohibited would have arisen. In our judgment, however, it is not necessary for us to go into that question in the facts of the present case as there is nothing to show that the watchmen employed by the Bureau in the factory did any spying on the trade union activities in the factory. The trade union and the workers cannot possibly have any reason to distrust the watchmen merely because they act as spies to prevent thefts or pilfering or to maintain peace in the factory premises. It is possible that it is in the interest of the workers themselves that such watchmen should belong to an independent agency like the Bureau just as it would be in the interest of the employees doing accounts work that there should be an independent audit by auditors who are also not employees.

17. The other circumstances mentioned by the Tribunal as circumstances justifying its conclusion to stop the contract labour of appointing watchmen do not by themselves support the said conclusion. That the work done by the watchmen is permanent or perennial and is done on the factory premises cannot by itself make the contract system an evil to be put an end to. We are, therefore, of the opinion that there is no legal or factual basis for the conclusion of the Tribunal to grant demand No. 2 of the workers in the present case for abolition of the contract system under which the watchmen are appointed. Applying the principles laid down by the Supreme Court in the above Standard Vacuum Refining Company's case and taking into consideration all that is urged by Mr. Sowani against the contract labour system and the nature and conditions of the work of watchmen employed at the factory of petitioner No. 1, we must unhesitatingly hold that the Tribunal was not justified in directing the abolition of the contract system.

18. It must be noticed that no case was cited at the Bar dealing with workmen employed as watchmen through a contractor like the Bureau in the present case. Mr. Singhavi referred to a decision of the Industrial Tribunal dated October 31, 1969 in a dispute between Kirloskar Engines Ltd., Poona, and the workmen employed under them, which is published in the Maharashtra Government Gazette, Part I-L on December 4, 1969. In that case, it appears that the police establishment in Poona, with the sanction of the Government of Bombay, had set up a scheme under which certain number of Ramoshi or workmen, who were employed as policemen at some time or other, were made available to private parties such as companies, concerns or even private individuals, as watchmen. But the police watchmen retained their status as police employees and were under the control, Supervision and discipline of the police authorities. The Commissioner of Police, Poona, however, terminated their services with effect from October 1, 1967 and thereafter the Kirloskar Oil Engines Ltd., Poona made an arrangement with the Expert Services Bureau Ltd., petitioner No. 2 in this case. The nature of the police scheme was a subject matter of a dispute between the workers and the management and it was carried to the Supreme Court in Kirloskar Oil Engines v. Hanumant Laxman Bibawe : (1963)ILLJ126SC and it was held by the Supreme Court :

'Considering the scheme under which the services of the watchmen were made available to the appellant and the oral evidence on record, it became clear that the watchman could not claim the status of industrial employee qua the company.'

The Supreme Court, therefore, only decided the question as to whether the watchman, who had started the dispute by making an application under S. 33A of the Industrial Disputes Act, 1947, was an employee; and they did not consider the general question as to whether the employment of watchmen under contract labour required to be prohibited. After stating this result of the said decision, the Tribunal considered the scheme of watchmen provided by Expert Services Bureau to Kirloskar Oil Engines Ltd. and came to the conclusion that the decision of the Supreme Court in Standard Vacuum Refg. Co. v. Their Workmen, could not be extended to the case of watchmen. The Tribunal, therefore, inter alia, rejected the demand for abolition of contract system in that case. In the course of its reasoning the Tribunal appears to have assumed that the conditions of service of the watchmen were irrelevant for deciding whether the system should be abolished. We do not think that the Tribunal was right in its view. The contract labour system in India-well known and universally condemned-sprang up during the British rule. Indented or contract labour in indigo farms was hardly better than pure slavery. Similar was the case of contract labour in tea gardens and Mahatma Gandhi's agitation against the same has now become a part of Indian history. A change for the better started before India achieved independence. The change continued at a greater pace after independence. Even so, contract system prevailed in a modified form. The contractor, the jobber, the Muccadam - he functioned under different names - provided teams of labour, dealt with them as herds of cattle, made them toil and slave, and pocketed a major slice of their earnings, which were meagre for lack of organisation in labour. Over a large number of years 'contract system' of labour has acquired an evil reputation, and quite rightly. But times have changed greatly, though not completely. It has therefore become necessary to be very vigilant and analytical when examining cases of individual industries to find out whether the evil of contract system exists in the employment of labour in that industry. It becomes necessary to ascertain whether any such evils exist in any form even if it is not called a contract system. But it is equally necessary to ascertain that a system of employment of labour which has no such evil, and may even be more beneficial, is not condemned by merely dubbing it a 'contract system'. In short, the absence or presence of the label 'contract system' should make no difference in examining the system of labour in any particular industry and a system should not be condemned merely because it is given that label.

19. Mr. Sowani drew our attention to the Contract Labour (Regulation and Abolition) Bill, 1967 stating that it was passed by the Rajya Sabha and is pending before the Lok Sabha. We cannot rely on the bill for any purpose as it has not yet become law. We have to decide the present case on the basis of the law at present in force. As stated above, in our opinion, there is no principle of law which prohibits absolutely all contract systems in all cases. The Industrial Tribunal has to consider each case on its merits and decide whether the contract system deserves to be contained or prohibited. Even the statement of objects and reasons annexed to the bill referred to by Mr. Sowani does not show that the bill was intended to prohibit absolutely the system of contract labour. It is well-known that contract labour is frowned upon by labour commissions and labour enquiry committees whenever such contract labour results in exploitation of workers. But it is also well-known that it is more convenient and reasonable to have sometimes certain services under contract labour rather than to have regular employees, as in the case of auditors referred to above. In the statement of objects and reasons, it is therefore, stated :

'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.'

Mr. Sowani, however, submitted that the criteria which are referred to in the statement of objects and reasons are the criteria mentioned in clause 10 of the bill, which are as follows :

'(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 for 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.'

Mr. Sowani, therefore, submitted that since these are the very criteria applied by the Tribunal in coming to the conclusion that the employment of watchmen under the contract labour system in the present case should be abolished, this Court should not interfere with the decision of the Tribunal under Arts. 226 and 227 of the Constitution of India. As stated above, the Tribunal has not applied all that is stated in the criteria on the basis of the material on record. Moreover, even the bill does not say that the moment the criteria are satisfied the contract labour system should be abolished. Even under the bill, an advisory board has to advise the State Government as to whether in the particular case, the contract labour system should be prohibited. If and when the Act comes into force and the advisory board is of the view that such a contract system should be abolished, the matter may be different. At the moment, however, we have no doubt that there was no material before the Tribunal to show that the system of employing watchmen under the contract labour in the present case was an evil system which required to be stopped. In the absence of any such material, the Tribunal was not justified in prohibiting it.

20. For these reasons, the direction of the Tribunal relating to the engagement of watchmen in sub-paragraph IV of paragraph 19 of its award must be struck down and the petition allowed to that extent. Rule is, therefore, made absolute. In the circumstances of the case, there shall be no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //