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Verkey and Co. Vs. Regional Labour Commissioner - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKarnataka High Court
Decided On
Case NumberW.P. No. 8398 of 1984
Judge
Reported inILR1985KAR3359
ActsMinimum Wages Act, 1948; Contract Labour (Regulation and Abolition) Act, 1970 - Sections 21; Contract Labour (Regulation and Abolition) Rules, 1971 - Rule 25(2)
AppellantVerkey and Co.
RespondentRegional Labour Commissioner
Appellant AdvocateG.S. Ullal, Adv. for bhoopalam Associates
Respondent AdvocateK. Shivashankar Bhat, Central Government Standing Counsel for Respondents-1 and 2; ;G. Dayananda, Adv. for Respondent-3; ;N. Santhosh Hegde, Adv. General
Excerpt:
.....wages -- private company which has entered into a contract with the railway administration of the central government for constructing buildings cannot be regarded as carrying on its business/industry by or under the authority of the central government -- not liable to pay its work - men wages at the rates fixed by the central government under the act.;the company has only entered into a contract for works with the railway administration. therefore it cannot be regarded as currying on its business/industry, by or under the authority of the central government/ railway administration. the matter would be entirely different if such contract is carried on by a government company or a statutory corporation like a construction corporation, established by the central government. in that event..........kind of work as the workmen directly employed by the principal employerto the establishment, the wages rates, holidays, hours of work and other conditions of service of the workmen of the contractor shall be the same as applicable to the workmen directlyemployed by the principal employer of the establishment on the same or similar kind of work :provided that in the case of any disagreement with regards to the type of work the same shall be decided by the chief labour commissioner (central) whose decision shall be final;(b) in other cases the wage rates, holidays, hours of work and conditions of service of the workmen of the contractor shall be such as may be specified in this behalf by the chief labour commissioner (central) ;explanation : while determining the wage rates, holidays,.....
Judgment:
ORDER

Rama Jois, J.

1. In this Writ Petition presented by T.K.Verkey & Co., the 1st petitioner ('the Company' for short) and its Manager, the 2nd petitioner, challenging the validity of the order made by the Regional Labour Commissioner (Central), Bangalore, the 1st respondent, on the application filed by the Labour Enforcement Officer (Central), Bangalore, the 2nd respondent under Section 20(3) of the Minimum Wages Act ('the Act' for short), the following question of law arises for consideration --

Whether the 1st Petitioner - Company which has entered into, a contract with the Railway Administration of the Central Government for constructing buildings can be regarded as carrying on its business/industry by or under the authority of the Central Government and,therefore liable to pay its workmen wages at the rates fixed by the Central Government under the Act ?

2. The facts of the case, in brief, are as follows : The Company is an independent building contractor. It has entered into a contract for construction of buildings with the Union Railways Wheel and Axle Plant, which is part of the Railway Administration of the Union Government. Thework spot is situate at Puttenahalli Village, Yelahanka Hobli, Bangalore District. The 2nd respondent Labour Enforcement Officer (Central) filed an application under Section 20(2) of the Act before the 1st respondent the Regional Labour Commissioner (Central) stating that the Company had not paid the minimum wages payable to its workmen in accordance with the notification issued by the Central Government under the Act. The 2nd respondent prayed for an order under Section 20(3) of the Act against the Company directing it to pay the difference of wages of Rs. 4,702/- for the period commencing from 27-2-1983 to 28-3-1983 as also compensation of Rs. 47,020/- to the concerned workmen. He also prayed that for the period commencing from 4-9-1982 to 20-2-1983 the Company should be directed to pay the difference of wages of Rs. 11,192-70 and compensation of Rs. 1,11,927/-. The Company raised objection before the authority to the effect that the notification issued by the Central Government under the Act had no application to the case of the Company as the Company was not carrying on the work by or under the authority of the Central Government or the Railway Administration and consequently there was no relationship of Principal and Agent between the Central Government and the Company. The objection was over-ruled.

Another objection raised by the Company was to the effect that the work-spot, where the Company was carrying on the work, was situated beyond 8 kms. from the periphery of the City and, therefore, the rates of wages payable within the City of Bangalore and in the area within 8 kms. from the periphery from the Bangalore Corporation limits was not applicable. But nevertheless the 2nd respondent had proceeded on the basis that the wages payable by the Company was at the rate payable at the City of Bangalore on the assumption that Puttenahalli Village was within 8 kms. from the periphery of the Bangalore Corporation Area. This objection was also over-ruled. Aggrieved by the order, the petitioners have presented this Writ Petition.

3. The plea of the petitioners is as follows : Under the Act, the Company is governed by the rates of wages fixed by the State Government, as it is the appropriate Government as defined under the Act it is only when a person was carrying on industry by or under the authority of the Central Government or Railway Administration, theappropriate Government for purposes of fixation of wages under the Act would be the Central Government. Respondents 1 and 2 proceeded on the basis that because the Company is having a contract for construction of buildings with the Railway Department, the employment under the Company was an employment under the authority of the Railway Administration/Central Government. This view is clearly erroneous. Therefore the order is without jurisdiction.

4. As against the above plea of the Company, the stand taken on behalf of the Respondents is as follows:

(i) Admittedly the Company has entered into a contract for construction of buildings with the Railway Administration. It is under the authority of the contract entered into with the Railway Administration, the Company is carrying on the contract work. Therefore the Company must be regarded as carrying on its industry by or under the authority of the Central Government/Railway Administration. There is no substance in the contention of the Company that the notification issued by the Central Government under the Act is not applicable to the employment under the Company.

(ii) In any event, by virtue of the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 ('the Contract Labour Act' for short) and the Contract Labour (Regulation and Abolition) (Central) Rules, 1971 ('the Central Rules' for short), the Company becomes liable to pay the wages at the same rate at which the principal employer viz., the Railway Administration is liable to pay the wages to its workmen. As the Railway Administration is undoubtedly liable to pay wages at. the rates fixed by the Central Government under the Act, automatically the Company also becomes liable to pay wages at those rates.

5. In view of the rival pleas, the question set out first arises for consideration.

6. The first aspect for consideration is whether the Company can be regarded as carrying on its business/ industry by or under the authority of the Railway Depart-ment. This is notrest Integra. It is covered by the judgment of this Court in Bharateeya Mazdoor Sangha-v- I.R.R. Canteen, 1978(53) FIR 356. In the said case, the question for consideration was whether the rates of wages fixed by the State Government under the Act was applicable to the employees of a railway canteen at Man galore. The contention of the petitioner therein was that it was applicable. Whereas the Respondent in the said case contended that the employment under the Railway Canteen was by or under the authority of the Railway Administration/Central Government and, therefore, the wages fixed by the State Government under the Act was inapplicable. The contention of the Respondent therein was negatived. The relevant portion of the judgment reads-

'I do not think that the canteen run by a private person in a railway premises under the aforesaid terms and conditions of a licence and with the help or assistance of the railway department can be regarded as an agent of the railways and, consequently as carrying on the canteen under the authority of the railway administration. In the nature of things as it is obligatory for the railways to provide canteen facilities for thepassengers and the visitors of a railway station, the railway authorities providefor the necessary accommodation and furniture for running a canteen. It is quite natural that railway authorities exercise certain control and super-vision over such canteens. This does not however convert a canteen run by a private person under a licence from the railway authorities into a canteen run under the authority of railways. As observed earlier, the owner of the canteen is not an agent of the railway administration. Further, any profit or loss occurring in the course of the business of the canteen has to be borne only by the 1st Respondent and not by the railways. Therefore, there is no substance in the contention of the 1st Respondent that the canteen is carried on under the authority of the Central Government and, therefore, only the Central Government has the power to fix minimum wageswander the Act.

In the light of the above discussion my conclusions are as follows :

(i) There is nothing in Section 135 of the Railways Act to hold that a railway canteen situated in the railway station within the municipal area of Mangalore City Municipal Council is not within the municipal area.

(ii) The railway canteen run by the 1st Respondent, under a licence from the railway authorities, is not one under the authority of Railway Administration and, therefore, the State Government is competent to fix minimum wages of employees working in the said canteen under Section 3 of the Minimum Wages Act.

(iii) The petitioner is entitled to the minimum wages fixed by the State Government in their notification dated 1st June, 1977.'

The above view was taken following the judgment of the Supreme Court in the case of Heavy Engineering Mazdoor Sabha -v.- State of Bihar, : (1969)IILLJ549SC in which the Supreme Court approved the similar view taken by the Calcutta High Court in Carlsbad Mineral Water Manufacturing Co.,-v.- P.K. Sarkar, 1952 (l) LLJ 488. The position of the petitioner Company is similar to that of the owner of the Railway canteen as the Company has only entered into a contract for works with the RailwayAdministration. Therefore it cannot be regarded as carrying on its business/industry, by or under the authority of the Central Government/Railway Administration. The matter would beentirely different if such contract is carried on by a Government company or a statutory Corporation like a construction corporation, established by the Central Government. In that event such a Company or Corporation would be an agent of the Central Government and, therefore, could be regarded as carrying on its activities by or under theauthority of the Central Government/Railway Administration. The decision of the Madhya Pradesh High Court in Rawel singh v. Goil, 1959 (2) LLJ 69 on the point no doubt supports the contention of the respondents, but that judgment is no longer good law in view of the judgment of the Supreme Court in Bharat Heavy Engineering Works which was followed by this Court in I.R.R. Canteen's case.

7. The next aspect for consideration is whether there are any provisions in the Contract Labour Act and the Rules framedthereunder, by the force of which the notification issued by the Central Government under the Act becomes applicable to the employees of the Company. Therefore I shall now proceed to consider the provisions of the Contract Labour Act on which the Learned Counsel for therespondents relied. The expression 'appropriate Government' is defined in Section 2(a) of the Contract Labour Act. It reads-

'2(a) 'appropriate Government' means,-

(1) in relation to -

(i) any establishment pertaining to any industry carried on by or under the authority of the Central Government, orpertaining to any such controlled industry as may be specified in this behalf by the Central Government, or

(ii) any establishment of any railway, Cantonment Board, major port, mine or oil-field, or

(iii) any establishment of a banking or insurance company, the Central Government.

(2) In relation to any other establishment, the Government of the State in which that other establishment is situated ; '

The expression 'contractor' is defined under Section 2(c) of the Contract Labour Act. It reads :

'2(c) 'contractor' in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establish-ment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor.'

The Company is certainly a contractor as defined above.

Section 12 of the Act deals with the licensing of contractors. It reads:

'12. Licensing of contractors, - (1) With effect from such date as the appropriate Government may, by notification in the Official Gazette, appoint, no contractor to whom this Act applies, shall undertake or execute any work through contract labour except under and accordance with a licence issued in that behalf by the licensing officer.

(2) Subject to the provisions of this Act, a licence under Sub-section (1) may contain such conditions including, in particular,conditions as to hours of work, fixation of wages and other essential amenities in respect of contract labour as the appropriate Government may deem fit to impose in accordance with the rules, if any, made under Section 35 and shall be issued on payment of such fees and on the deposit of such sum, if any, as security for the due performance of the conditions as may be prescribed.'

According to the above provision, the appointment of the licensing authority and the imposition of conditions of licence has to be made by the, appropriate Government. Therefore so long the Company/the contractor, cannot be regarded as carrying on its industry by or under theauthority of the Central Government/Railway Administration, the appropriate Government which could, require the Company, by rules framed by it to take licence to carry on its industry in conformity with the licence from the licensing authority appointed by it will be the State Government. Therefore the provisions of the Contract Labour (Regulation and Abolition) Karnataka Rules, 1971 framed by the State Government alone would govern the industry of the Company.

Section 21 on which strong reliance was placed by the Learned Counsel for the Respondents read:

'21. Responsibility for payment of wages. (1) A contractor shall be responsible for payment of wages to each worker employed by him as contract labour and such wages shall be paid before the expiry of such period as may be prescribed.

(2) Every principal employer shall nominate a representative duly authorised by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amounts paid as wages in such manner as may be prescribed.

(3) It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the authorised representative of the principal employer.

(4) In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any con-tract or as a debt payable by the contractor.'

Learned Counsel for the respondents submitted that by the force of the above provision as the principal employer be-comes liable to pay the wages, if the contractor fails to pay wages, it follows, the rates of wages payable by the principal employer, namely, the Railway Administration, would be the rates of wages payable by the Company under the Act I see no force in the submission. The said section hasnothing to do with the rates of wages, i.e., whether the contractor concerned is liable to pay wages in accordance with the rates fixed in the notification issued by the State Government or the Central Government under the Act. The object and purpose of the said provision is to ensure that wages payable in law by a contractor to his workmen are paid. It could be the wages at the rates fixed by the State Government under the Act or at the rates fixed by the Central Government under the Act depending upon which of the two is applicable to the industry of a contractor. If the contractor fails to pay wages legally payable by him' then under Section 21, theprincipal employer is under an obligation to pay the said wages and get it reimbursed from the Contractor. In other words it the contractor is liable to pay wages at the rate fixed by the Central Government under the Act and he fails to pay it, it would be the obligation of the principal employer to pay wages at the said rate to the workmen concerned and get it reimbursed from the contractor. Similarly if the rates of wages payable by the contractor are those fixed by the State Government concerned and he fails to pay the wages, Section 21 of the Contract Labour Act requires the principalemployer to pay the wages with a right to get itreimburse from the contractor. Section 21 does not provide that the rates of wages payable by the contractor is the rates of wages payable by the principal employer for the workmen if directly employed by it. Therefore there is nothing in Section 21 which supports the contention urged for therespondents.

8. Section 35 of the Contract Labour Act empowers the appropriate Government to frame the rules. In exercise of this power the Central Government has framed the Central Rules and the State Government has framed the Karnataka Rules. Rule 25 of both rules are similar. Relevant part of it reads-

'25. Forms and terms and conditions of licence. -

xxxx xxxx xxxx(2) Every licence granted under sub rule (1) or renewed under rule 29 shall be subject to the following conditions, namely -

xxx xxx xxx(iv) the rates of wages payable to the workmen by the contractor shall not be less than the rates prescribed under the Minimum Wages Act, 1948 (11 of 1948), for such employment where applicable and where the rates have been fixed by agreement, settlement or award, not less than the rates so fixed :

(v) (a) in cases where the workmen employed by the contractor per-form the same or similar kind of work as the workmen directly employed by the principal employerto the establishment, the wages rates, holidays, hours of work and other conditions of service of the workmen of the contractor shall be the same as applicable to the workmen directlyemployed by the principal employer of the establishment on the same or similar kind of work :

Provided that In the case of any disagreement with regards to the type of work the same shall be decided by the Chief Labour Commissioner (Central) whose decision shall be final;

(b) In other cases the wage rates, holidays, hours of work and conditions of service of the workmen of the contractor shall be such as may be specified in this behalf by the Chief Labour Commissioner (Central) ;

Explanation : While determining the wage rates, holidays, hours of work and other conditions of service under (b) above, the Chief Labour Commissioner shall have due regard to wage rates, holidays, hours of work and other conditions of service obtaining in similar employments;'

The form of licence prescribed under both the rules are also similarly worded. Clause (v) thereof is a reproduction of clause (v) of rule 25 (2). Learned Counsel for therespondents submitted that Rule 25 read with clause (v) of the condition of licence makes the Company liable to pay wages at the same rate at which the principal employer is liable to pay and, therefore, the rate fixed by the Central Government under the Central Act are applicable.

9. (i) The contention is fallacious. It may be seen from - Rule 25 (2) (iv) it is specifically provided that rates of wages payable to the workmen by the contractor shall not be less than the rate prescribed under the Minimum wages Act, 1948. This clause once again indicates that the rates of wages fixed by the appropriate Government alone governs. As under the Act, the appropriate Government in respect of employment under the Company is State Government, even in terms of Rule 25 (2) (iv) the Company is liable to pay wages only at the rates fixed by the State Government under the Act.

(ii) The Learned Counsel however relied on Rule 25 (2) (v) (a) extracted above and clause (v) of the condition of the licence which is similarly worded. In view of these provisions the Company becomes liable to pay the same rate of wages payable to the workmen directly employed by the principal employer only under a specific circumstance, namely, that the principal employer has employed workmen for doing exactly similar type of work for the doing of which the contractor concerned has also employed some of his work-men. In such cases the rates of wages payable by the contractor to such workmen would be at the rates at which the wages are payable by the principal employer to his workmen, doing similar work under him. This is a question of fact to be decided by the competent authority under the Act only when such question arises. This is clear from the proviso under the above rules which provide that if there were to be any dispute in this behalf the authority named in the proviso has to decide. No such case was made out by the 2nd Respondent before the 1st Respondent. The Respondents proceeded on the basis that the wages fixed by the Central Government under the Act was applicable to the employees of the Company on the ground that the industry of the Company was under the authority of Central Government/Railway Administration. The stand of the Respondents is untenable as pointed out earlier. As the appropriate Government, which has the power to fix the minimum wages payable to the workmen of the Company is the State Government, the Chief Labour Commissioner, Karnataka is the competent authority to decide a dispute arising under rule 25(2)(v) of the rules and the corresponding clause in the licence. Therefore Respondent-2 had no jurisdiction toinitiate action for payment of wages against the petitioner-company as it did and the 1st Respondent had no jurisdiction to pass the order.

11. It is also clear that even on the assumption that there are some workmen employed by the Company, who are doing similar kind of work as those employed by the Railway Administration, all that can be done is that the liability of the Company would have been fixed on the said basis by the competent authority functioning under the Karnataka Rules and if the company raises any dispute, it has got to be adjudged by the Chief Labour Commissioner, Karnataka. In any event, the authorities of the Central Government would not have the jurisdiction to proceed against the Company for non-payment of wages.

12. At the time of hearing, learned counsel for the respondents submittedthat ail along persons, who have entered into contract for works with the Central Government or Railways have been treated as persons carrying on their business/industry under the authority of the Central Government/Railway Administration and, consequently, all such contractors have registered themselves under the Central Rules and that licences have also been issued under the Central Rules. As held earlier, in view of the definition of the expression 'Appropriate Government'all such con-tractors cannot be regarded as carrying on their industry by or under the authority of Central Government/Railway Administration and consequently the appropriate Government would be the State Government and, therefore, they were required to be registered under the Karnataka Rules and had to take licence under the Karanataka Rules and are governed by the Karnataka Rules. In view of the above facts, the Advocate General for the State was directed to take notice and make his submission on the question of law arising for consideration in this case. Learned Advocate General submitted that having regard to the definition of the word 'appropriate Government' both under the Minimum Wages Act and under the Contract Labour Act, theappropriate Government for the purpose of this case would be only the State Government, in view of the judgment of this Court in I.R.R. Canteen's case and he had nothing to say against the said view.

13. In the result, I answer the question set out first in the negative and hold that the 1st petitioner Company is not liable to pay wages at the rates fixed by the Central Government under the provisions of the Minimum Wages Act and, therefore, the 2nd respondent had no jurisdiction to initiate action for enforcement of the payment of wages fixed under the Act by the Central Government against the Company and that the 1st respondent had no jurisdiction to pass the impugned order.

14. For the reasons aforesaid, I make the following order-

(i) Rule made absolute.

(ii) The impugned order dated 31-3-1984 (Annexure-H) is set aside.

(iii) No costs.


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