1. The petitioner-Union which is a registered Trade Union of employees working under respondent No. 2 - Company has brought in challenge in the present petition under Art. 226 of the Constitution, the order at Annexure 'A' passed by respondent No. 1-State of Gujarat in Labor and Employment Department on November 22, 1990 refusing to refer industrial disputes raised by the petitioner-Union for adjudication of the appropriate authority under the provisions of the Industrial Disputes Act, 1947 ('the Act' for short).
2. In order to appreciate the grievances of the petitioner-Union against the impugned order, a few relevant facts leading to this petition deserve to be noted at the outset.
3. Introductory facts : The petitioner-Union has filed this petition on behalf of 579 workmen who are said to be members of the petitioner-Union. The grievance of the petitioner is that they are treated to be workmen of labour contractors. These labour contractors are joined as respondents Nos. 3 to 5 in this petition. The petitioner had demanded permanency and certain other benefits for these workmen, as according to the petitioner, they are workmen of respondent No. 2-Company and the contractors are a mere camouflage and represent mere paper arrangement. It is also alleged that respondent No. 2 is a public sector undertaking and being instrumentality of the State can be said to be State falling within Art. 12 of the Constitution. The petitioner submitted a charter of demands to respondent No. 2 on April 2, 1990. The work-men demanded through the petitioner-Union that they should be treated as direct employees of the respondent-Company from the first date of joining of their service. They also demanded that they should be paid double overtime for Sundays and weekly off days and that this payment should be made with 12% interest. In demand No. 3, they sought money equivalent various leave benefits which were not offered to them and demand No. 4 was for payment of Rs. 200/- per month with retrospective effect because these workmen were not given canteen facilities, safety appliances, uniform etc. These demands were taken into conciliation by the Assistant Labour Commissioner, Baroda. After verifying the membership of the petitioner, the conciliation officer admitted these demands on September 10, 1990. The petitioner submitted its statement of justification on July 9, 1990 which is at Annexure 'D' to the petition. A list of 570 workmen was annexed to this statement. As conciliation failed, failure report was submitted by conciliation officer on October 1, 1990 to the Secretary of the first respondent. It is thereafter that the first respondent has passed the impugned order refusing to refer these four demands for adjudication of the appropriate authority under the I.D. Act. The ground given for refusing reference is that as the contractors' employees are not employees of the institution, that is respondent No. 2, reference is not made. It appears that thereafter, the petitioner submitted a review application at Annexure 'B' placing reliance on three Supreme Court decisions on the basis of which reconsideration of the petitioner's request for reference was sought for. This review application has remained unprocessed and unanswered by respondent No. 1 till date.
4. The Petitioner-Union had also filed Special Civil Application No. 4429 of 1989 in this Court claiming various reliefs on behalf of these workmen. This petition was withdrawn on December 18, 1989 after the Division Bench fixed time-limit for statutory inquiry regarding wages and service conditions contemplated under clause 5 of conditions of license issued to labour labour contractor under Section 12 of the Contract Labour (Regulation & Abolition) Act, 1970 ('the Contract Labour Act' for short). In that petition, the petitioner had prayed for abolition of the contract labour system. The Division Bench had fixed the time - limit in the said judgment for taking a decision by first respondent in connection with abolition of contract labour system prevailing in various activities carried on in the premises of respondent No. 2. This time-limit was fixed on the say of respondent No. 2 that a reference was pending before the State Contract Labour Advisory Board, in this connection. However, it appears that the report was already submitted by the said Board in 1983. On the basis of the said report, the first respondent prohibited contract labour system in some of the activities listed in the notification issued under Section 10(1) of the Contract Labour Act. The petitioner's contention is that this covers only nearly 5% of the total number of workmen numbering about 2000. It is in these circumstances, that the present petition is moved seeking reference of the four demands raised by the petitioner for reference for adjudication of the competent authority under the I.D. Act.
11. ..... ...... ...... the following points for determination arise for our consideration :-
(1) Whether the impugned order at Annexure 'A' to the petition involves patent error of law and jurisdiction and is required to be quashed.
(2) Whether the industrial disputes centering round the four demands mentioned in the order at Annexure 'A' are required to be referred for adjudication of the appropriate authority under the I. D. Act.
3. What final order is required to be passed in this connection.
12. Pointwise discussion : Before we proceed to consider these points, it will be necessary to have a look at the relevant statutory settings and the settled legal position in the light of which the present controversy will have to be resolved.
13. Statutory settings : The I.D. Act enjoins the appropriate Government to refer any industrial dispute for adjudication as per Section 10(1) of the Act when it is of the opinion that any industrial dispute exists or is apprehended. When we turn to the definition of the term 'industrial dispute', as laid down by Section 2(k) of the I.D. Act, we find that industrial dispute is defined to mean any dispute or difference between employers and employers or between employers and workmen or between workmen and workmen which is connected with the employment with the employment or non-employment or the terms of employment or with the conditions of labour of any person. It cannot be disputed that the disputes raised by the petitioner for the concerned workmen definitely raise a grievance in connection with the conditions of work of the concerned employees and they do raise an industrial dispute. But the moot question is as to whether the dispute raised by the petitioner-Union on behalf of the workmen is dispute or difference between employer and workmen. It also cannot be disputed that the concerned workmen are covered by the definition of the term 'workman' as laid down by Section 2(s) of the I.D. Act which lays down that a workman means any person (including an apprentice) employed in any industry to do any manual, unskilled, technical, operational, clerical or supervisory work for hire or reward. However, the real controversy centres round the question as to whether respondent No. 2 can be said to be employer of the respective workmen. For that purpose, we have to refer to Section 2(g) which defines 'employer' to mean (1) in relation to an industry carried on by or under the authority of any department of the Central Government or a State Government, the authority prescribed in this behalf or where no authority prescribed, the head of the department and (2) in relation to an industry carried on by or on behalf of that authority. That definition is not of much assistance so far as the facts of the present case are concerned. But the relevant question is whether the concerned workmen are employed by respondent No. 2 or not, or to put it differently, whether respondent No. 2 has direct control and supervision over all the concerned workmen. Now, it becomes at once clear that this question raises a highly disputed question of fact as to whether the concerned workmen on whose behalf the industrial dispute is raised centering round the four demands, were actually employed by respondent No. 2 through the agency of the so-called contractors or whether the contractors are the real employers of the concerned workmen and the respondent-Company has nothing to do with them save and except being saddled with the statutory obligation of the principal employer as laid down by the provisions of the Contract Labour Act. Keeping this in view, it is also pertinent to note that even if industrial dispute is apprehended, the appropriate Government can make reference of such dispute for adjudication. In the background of the aforesaid statutory provisions of the I.D. Act, it becomes at once clear that once an industrial dispute pertaining to service conditions of workmen in an industry is raised, it cannot be finally adjudicated upon by the appropriate Government and it has only to make reference for adjudication of such dispute by the appropriate authority under the I. D. Act. It is also pertinent to keep in view the salient fact that before enactment of the Contract Labour Act, all such industrial disputes which projected controversy between the workmen on the one hand and the alleged employer on the other, who might have contended that the concerned workmen were workmen of an intermediary contractor and were not actual workman of the principal employer, were all to be referred for adjudication of the appropriate authority under the I.D. Act and such reference could also cover cases demand regarding abolition of such contract labour system and for a declaration that the concerned workmen be treated as direct employees of the principal employer, by abolishing the intermediary, viz., the contractor. Thus, the industrial dispute as envisaged by the I.D. Act is a comprehensive one which by itself includes all such disputes including disputes demanding abolition of genuine contract labour system. It is only in 1970 after the enactment of the Contract Labour Act that a part of such industrial disputes have been carved out from the sweep of the provisions of the I.D. Act and is subjected to procedure envisaged by the Contract Labour Act for abolishing even genuine existing contract labour system qua activities for which abolition is contemplated by Section 10 of the Contract Labour Act. We may, therefore, at this stage, profitably turn to the provisions of the Contract Labour Act.
14. The preamble of the Labour Contract Act shows that it has been enacted to regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matter connected therewith. Thus, the said Act is enacted with a view to subserving twin objects (i) regulation of contract labour and (2) abolition of contract labour under certain circumstances. As per Section 2(b) contract labour is defined to cover a workman who shall be deemed to be employed as contract labour in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer. Section 2(c) defines 'Contractor' to mean a person who undertakes to produce a given result for the establishment, other than a mere supply of goods or article of manufacture to such establishment, though contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor. As per Section 2(e), the term 'establishment' means (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. Section 2(g) defines 'principal employer' to mean (i) in relation to an office or department of the Government or the local authority, the head of that office or department or such other officer as the Government or the local authority, as the case may be, may specify in this behalf, (ii) in a factory, the owner or occupier of the factory under the Factories Act, 1948, the person so named, so far as workmen is concerned, Section 2(i) defines the said term to mean any person employed in or in connection with the work of any establishment to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work for hire or reward. It would, therefore, be at once clear that even if a person is a workman within the meaning of Section 2(i) of the Contract Labour Act and would similarly be treated as a workman as defined by the I.D. Act, still he would be a contract labour if he has been hired in connection with work of an establishment or in connection with such work by or through a contractor with or without knowledge of the principal employer. It becomes apparent that provisions of the Contract Labour Act contemplate a genuine contract system wherein workmen are employed to do the work of the contractors who might be their own employees or on behalf of the principal employer. As per Chapter III of the Act, provision is made for registration of the establishments employing contract labour. Chapter IV deals with licensing of contractors and Chapter V deals with welfare and health of contract labour. These provisions provide for regulating contract labour and impose statutory obligations both on the contractor and the principal employer. In the background of these statutory provisions of the Contract Labour Act, Section 10 of the said Act is required to be examined which deals with prohibition of employment of contract labour. It lays down :
"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."
Sub. section (2) of Section 10 lays down the conditions on fulfillment of which abolition notification can be issued. It provides :
"Before issuing any notification under sub-sec (i) 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; and
(d) whether it is sufficient to employ considerable number of wholetime workmen."
It becomes apparent that Section 10 entitles the appropriate Government to abolish contract labour system in any process, operation or other work in any establishment when any of the conditions laid down is or are fulfilled and not otherwise. These are all objective conditions concerned with the nature of the activities carried by the contract labour and if these conditions are satisfied, then the appropriate Government on the advice of the Advisory Board can abolish contract labour system in connection with these activities in any establishment. Even if such contract labour system is abolished qua any activity, such abolition would obviously operate prospectively and it is a moot question whether the erstwhile contract laborers get discharged from service or whether they can follow their employer contractor to the premises of other principal employer who may employ such contractor or whether they can be declared as directly employees of erstwhile principal employer once intermediary contractor is effaced. All the same, conditions mentioned in Section 10(2) of the Contract Labour Act are in connection with a genuine and legally permissible contract system which may be prevalent in any establishment. The conditions laid down in the aforesaid provisions having nothing to do with the question whether so-called contract labour system employed in any establishment is a genuine contract labour system or a mere camouflage or paper arrangement and the contractor's workmen in essence and substance are the workmen of the principal employer. Such types of disputes are clearly foreign to the scope and ambit of Section 10 of the Contract Labour Act and the squarely fall within the four corners of the industrial disputes resolution machinery as contemplated by the I.D. Act.
15. In the light of these statutory settings, we may now proceed to consider the moot question as to whether the first respondent was justified in refusing to make reference of the industrial disputes centering round the four demands raised by the petitioner-Union for adjudication of the competent authority under the I.D. Act. So far as jurisdiction and power of the appropriate authority for making reference under Section 10(1) of the I.D. Act are concerned, the legal position is well settled by catena of the decisions of the Supreme Court to which our attention was invited by the learned Advocates appearing for the respective parties. We may briefly refer to these decisions. In the case of State of Bombay v. K. P. Krishnan, (1960-II-LLJ-592), the Constitution Bench of the Supreme Court speaking through Gajendragadkar, J. considered the question of power of the High Court to issue a writ of mandamus under Art. 226 of the Constitution in connection with the orders of the appropriate authority refusing to make reference the industrial disputes under the I.D. Act. The following pertinent observations were made in this connection (p. 603) :
"Whether Section 12(5) is construed as making it obligatory on the Government to make a reference when it is satisfied that there is a case for reference or as only conferring a discretion, if in refusing to make a reference Government is influenced by reasons which are wholly extraneous or irrelevant or which are not germane, then its decision may be open to challenge in a Court of law. Though considerations of expediency cannot be excluded when Government considers whether or not it should exercise its power to make a reference it would not be open to the Government to introduce and rely upon wholly irrelevant or extraneous consideration under the guise of expediency .... Even in dealing with the question as to whether it would be expedient or not to make the reference Government must not act in a punitive spirit but must consider the question fairly and reasonably and take into account only relevant facts and circumstances."
In a later decision in the case of Bombay Union of Journalists v. Sate of Bombay (1964-I-LLJ-351), the Supreme Court speaking through Gajendragadkar, J., against considered this very question and laid down as under : (pp. 354-355) :
"When the appropriate Government considers the question as to whether a reference should be made under Section 12(5) it has to act under Section 10(1) of the Act, and Section 10(1) confers discretion on the appropriate Government either to refer the dispute or not to refer it, for industrial adjudication according as it is of the opinion that it is expedient to do so or not. In other words, in dealing with an industrial dispute in respect of which a failure report has been submitted under Section 12(4) the appropriate Government ultimately exercises its powers under Section S. 10(1) subject to this that Section 12(5) imposes an obligation on it to record reasons for not making the reference when the dispute has gone through conciliation and a failure report has been made under Section 12(4) .... It is true that if the dispute in question raises questions of law, the appropriate Government should not purport to reach a final decision on the said questions of law, because that would normally lie within the jurisdiction of the industrial Tribunal. Similarly, on disputed questions of fact, the appropriate Government cannot purport to reach conclusions for that again would be the province of the Industrial Tribunal. But it would not be possible to accept the plea that the appropriate Government is precluded from considering even prima facie the merits of the dispute when it decides the question as to whether its powers to make a reference should be exercised under Section 10(1) read with Section 12(5) or not. If the claim made is patently frivolous, or is clearly belated the appropriate Government may refuse to make a reference. Likewise, if the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse, the appropriate Government may take that into account in deciding whether a reference should be made or not. It must, therefore, be held that a prima facie examination of the merits cannot be said to be foreign to the inquiry which the appropriate Government is entitled to make in dealing with a dispute under Section 10(1)."
16. We may also refer to a later decision of the Supreme Court in the case of Telco Convoy Drivers Mazdoor Sangh v. State of Bihar, (1989-II-LLJ-558). In that case, the Supreme Court was concerned with the legality of the order passed by the State of Bihar refusing to make reference of the dispute raised by the workmen through their union wherein they had demanded permanent status as convoy drivers working with Tata Engineering and Locomotive Co. Ltd. The dispute centered round the principal question whether convoy drivers were workmen or employees of TELCO or not. In other words, whether there was relationship of employees and employer between them or not. Request for reference of the said dispute was earlier rejected by the appropriate authority and on remand by the High Court in the writ petition, again, the Labour Commissioner being the competent authority refused to make the reference. The workmen carried the matter once again to the High Court which rejected the petition on the ground that the workmen had prima facie failed to satisfy that they were employed by TELCO and not by TELCO Contractors' Association. Under these circumstances, the workmen through their union carried the matter to the Supreme Court in appeal by special leave. The Supreme Court while allowing the appeal took the view that the function of the appropriate Government is an administrative function under Section 10(1) and not a judicial or quasi-judicial function and that in performing this administrative function, the Government cannot delve into the merits of the dispute and take upon itself the determination of the lis which would certainly be in excess of the power conferred on it by Section 10(1) of the Act. Applying the principles laid down by the Supreme Court in a number of earlier decisions referred to in the said judgment, it was held that there can be no doubt that the Government was not justified in deciding the dispute. Where, as in the instant case, the dispute is whether the persons raising the dispute are workmen of the employer or not, the same cannot be decided by the Government in exercise of its administrative function under Section 10(1) of the Act. It was further held that the Government should be very show to attempt an examination of the demand with a view to declining the reference and Courts will always be vigilant whenever the Government attempts to usurp the powers of the tribunal for adjudication of the valid disputes and that to allow the Government to do so would be to render Section 10 and Section 12(5) of the Act nugatory. Applying this principle, it was held that the view of the Government was not justified in adjudicating the dispute, viz., whether the convoy drivers were workmen or employees of TELCO or not and accordingly, the order of the Dy. Commissioner of Labour was set aside. having so found, it was further held on consideration of the facts and circumstances of the case that the dispute was required to be adjudicated upon by the Industrial Tribunal and as the Government had persistently declined to make a reference under Section 10(1) of the Act, it was thought fit to direct the Government to make such a reference. It was observed that in several instances, the Supreme Court had to direct the Government to make such a reference and the Supreme Court was of the view that such a reference should have been made. Accordingly, the State of Bihar was directed to make a reference under Section 10(1) of the Act raised by the Telco Convoy Drivers Mazdoor Sangh by its letter dated October 16, 1986, to an appropriate authority within one month of the order.
17. In the light of the aforesaid settled legal position, we have to examine the question whether the industrial dispute in the present case centering round the four demands was required to be referred for adjudication of appropriate authority under Section 10(1) of the Act. Mr. Shahani for the petitioner vehemently contended that on the facts of the present case, the appropriate Government has almost mechanically and as a matter of course, refused to make reference of the industrial dispute and has purported to adjudicate upon the dispute finally. He submitted that when the workmen through their union were seeking a declaration that they are the direct employees of the company, and that the contract system was a camouflage or a paper arrangement, the reference could not have been rejected on the ground that the workmen were workmen of the contractors and not of the respondent-Company. That was the very question which was required to be decided and adjudicated upon on evidence by the competent Court. This very question is answered against the workmen finally and the reference is rejected. This amounts to putting the cart before horse and accordingly, the impugned order is squarely governed by the ratio of the decision of the Supreme Court in Telco Convoy Drivers Mazdoor Sangh's case (supra) and consequently, reference of the demands is required to be made to the appropriate authority under the Act. That the reasons given for rejecting the reference clearly indicate that the appropriate Government has exceeded it jurisdiction and has adjudicated upon the very dispute which is required to be referred and hence, the impugned order is patently illegal and ultra vires.
18. We find considerable substance in the aforesaid contentions of Mr. Shahani. It is true that the appropriate authority while exercising powers under Section 10(1) can consider prima facie whether the dispute is required to be referred or whether it is patently frivolous dispute. But that does not mean that the Government can finally pronounce upon the matter and having so pronounced can refuse reference on the basis of such pronouncement. That is precisely what has been done in the present case by the appropriate Government as was done by the State of Bihar in Telco Convoy Drivers Mazdoor Sangh's case (supra) and such course was disapproved by the Supreme Court.
19. Mr. Shelat for the respondent-Company was right when he contended that mere ipse dixit on the part of the petitioner-Union that the contract system is a paper arrangement would not make out a prima facie case for reference and that there should be something more. In this connection, our attention was invited by Mr. Shelat to a decision of the Supreme Court in the case of Workmen, Food Corporation of India v. M/s. Food Corporation of India, (1985-II-LLJ-4) especially para 12 there of where it has been laid down as under (p. 9) :
"The expression 'employed' has at least two known connotations but as used in the definition the context would indicate that it is used in the sense of relationship brought about by express or implied contract of service in which the employee renders service for which he is engaged by the employer and the latter agrees to pay him in cash or kind as agreed between them or statutorily prescribed. It discloses a relationship of command and obedience. The essential condition of a person being a workman within the terms of the definition is that he should be employed to do the work in that industry and that there should be in other words, an employment of his by the employer and that there should be a relationship between the employer and him as between employer and employee or master and servant."
Supreme Court then dealt with the question as to whether the contractors' employees should be treated as employees of the industrial employer. In this connection, the Supreme Court made the following pertinent observations (p. 9) :
Now, where a contractor employs workman to do the work, which he contracted with a third person to accomplish on the definition as it stands, the workmen of the contractor would not without something more become the workmen of that third person. Therefore, when the contract system was in vogue, the workmen employed by the contractor were certainly not the workmen of the Corporation."
Placing reliance upon the aforesaid observations, it was vehemently contended by Mr. Shelat that when the contract system is in vogue, unless it is shown by the petitioner before the conciliator that there is something more in the facts of the case, than what appears at the first blush, prima facie case for reference would not be made out. He also invited our attention to the decision of the Supreme Court in Prem Kakar v. State of Haryana, (AIR) 1976 SC 1474 wherein the Supreme Court endorsed the view of the State Government in refusing to make reference when it was found during the conciliation proceeding that the concerned workman was not the workman within the meaning of the I.D. Act and, therefore, there was no case for reference for adjudication. Another decision to which our attention was drawn is in the case of A. Sundarambal v. Govt. of Goa, Damn and Diu, (1989-I-LLJ-61), where in teachers of an education institution having invoked the provisions of the I.D. Act and sought reference of their industrial disputes for adjudication by the competent Court were refused such reference on the ground that teachers were not workmen within the meaning of the Act. He also placed reliance on a decision of a learned single Judge of the Bombay High Court in the case of Philips Workers Union v. State of Maharashtra & Anr, (1987-II-LLJ-91) where in the learned single Judge held that where the Labour Contract Act applies to an establishment, it is for the appropriate Government, under Section 10 to prohibit the employment of contract labour and no reference under Section 10 can be sought for, for absorption of contract labour by the principal employer and for payment of all benefits available to the permanent employees of the principal employer. We fail to appreciate how these decisions can be of any avail to the respondent-Company on the facts of the present case. In (AIR) 1976 SC 1474 (Prem Kakar's case) and (1989-I-LLJ-61) (A. Sundarambal's)(supra) in the conciliation proceedings themselves, it remained an admitted position that employees were not workmen within the meaning of the said terms as defined by the I.D. Act. In Prem Kakar case (supra) the dispute was raised by an electrical foreman whose was a supervisory job, drawing wages of more than Rs. 500/- per month. Thus, on the definition of the workman as it stood in those days, the concerned workman could not be treated to be a workman within the meaning of the I.D. Act. Same was the position in the case reported in (1989-I-LLJ-61) (supra) where the workmen were admittedly teachers and hence it was found that they were not discharging any of the functions contemplated by Section 2(i) of the I. D. Act. It becomes, therefore, clear from the facts of those cases that no question of reference of industrial dispute survived. So far as the decision of the Bombay High Court in the case of Philips (supra) is concerned, the contract labour system was admittedly in vogue in the concern and all that the workmen had demanded was that they should be employed by the principal employer directly and should be given all benefits by-passing the contractor. As this dispute was covered by Section 10 of the Labour Contract act, the question for reference under the I.D. Act was found to be superfluous and redundant. Such are not the facts of the present case. But even otherwise, as we will show presently even in such case, if proper dispute is raised about the past relationship between the contractor's employees and the principal employer and if there is evidence to suggest that in past, they were under the direct supervision and control, including disputed control, of the principal employer, reference of such a dispute as covered by Section 2(k) of the I.D. Act could still be legitimately made under Section 10(1) of the I.D. Act and to that extent, with respect, we are not in a position to agree with the ratio of the decision of the Bombay High Court in the above case.
20. Mr. Shelat also invited our attention to a decision of a learned single Judge of the Madras high Court in the case of Workmen of Seshasayee P&B Ltd. v. State of Tamilnadu & Ors. (1991-I-LLJ-274). In that case, there was an existing contract labour system in the concern. The contractor had taken license under the Contract Labour Act and the workmen were admittedly employed by the contractor and they had entered into a settlement with the contractor regarding their earlier labour dispute. On the facts of the said case, the learned single Judge took the view that the Government was justified in declining to refer the dispute regarding status of contract labour for adjudication under the I.D. Act on the ground that there was no employer-employee relationship between the management and the workmen. The aforesaid decision of the Madras High Court therefore cannot be of any assistance to the respondents on the present entirely different set of facts which stare in the face of the respondents.
21. Our attention was then invited to a decision of the Division Bench of this Court in the case of F. C. I. Worker's union v. F. C. I., (1992-I-LLJ-257). On consideration of the Labour Contract Act, it was held that if during the relevant time, the contractor's employees were doing the work of the principal employer and at any time, if the contractor does not have a valid license under the Act, and the employees continued to do the work of the principal employer, there would be direct linkage between the employees and the employer and such workmen would not remain the workmen of the contractor. We fail to appreciate how the said decision can be of any avail in the present case. In that case, there was a direct petition under Art. 226 of Constitution against the FCI. It was an authority covered by Art. 226 of the Constitution. It was the demand of the workmen that they were the direct employees of the Corporation. That question was examined and it was held by the Division Bench that the workmen appeared to have become direct employees of the Corporation as the contractor had not got a valid license at the relevant time. However, the question was referred for reconsideration to the FCI. Mr. Shelat submitted that in the facts of the present case, it is not the contention of the learned Advocate for the petitioner that the concerned contractor at any time had ceased to hold a valid license under the Act and still had employed workmen. That may be so. Still the moot question with which we are concerned remains whether the appropriate authority could have refused to make reference of the dispute for adjudication under the I.D. Act on the facts of the present case and whether there was anything more than a mere facade of the contract system existing on spot and whether prima facie evidence of this nature was led before the conciliator which would justify a reference.
22. Mr. Shelat next invited our attention to an unreported decision of the Division Bench of this Court in Special Civil Application No. 5950 of 1983 decided by P. S. Poti, C.J. and G. T. Nanavati, J. on February 14, 1984. In that case, a direct petition under Art. 226 of the Constitution was moved in this Court against Indian Petrochemicals Corporation Limited which was a State within the sweep of Art. 12 of the Constitution, alleging that the Corporation had illegally refused to give work to the concerned workmen listed in the petition and hence it s action was hit by Arts. 14, 16 & 23 of the Constitution of India and that the Corporation had entered into a paper arrangement of employing those employees through the so-called contractor. The respondent-Corporation contested these proceedings and submitted that it was not a make-believe and/or paper arrangement but it was a genuine contract labour system prevailing in the Corporation and that these workmen were workmen under the contractor and the laborers were engaged by such contractor. Mr. Shelat invited our attention to the following observations of the Bench speaking through P. S. Poti C.J.
"In a petition where we are called upon to consider whether certain workmen are really workers of the first respondent, despite that fact that they are employed by a contractor, unless we have material on which we can come to that conclusion, no relief would be available to the petitioner. The matter mentioned in the petition and reiterated forcibly by the petitioner's counsel do not at enable the Court to come to the conclusion that they are workmen of the first respondent. Even when workers are engaged by a contractor to do the work of a factory or of a management, such workers will be doing the work of production or the maintenance in which the factory is engaged. They would be subject to certain timings, they would be subject to rules of entry and exit, they would be subject to supervision as to the quality of work and they would be subject to direction by the supervisors of the management as to how the work is to be done. None of these would establish a direct relationship. The case that the contractor is a make-believe requires much more materials than that is averred in the petition."
Now, it is obvious that in a direct petition under Art. 226, the Court could not go into disputed question of fact and the material filed before the Court in that case fell short of establishing the case of workmen to the effect that they were direct employees of the establishment. The aforesaid observations of the Division Bench pertaining to the merits of the controversy cannot be of any avail at the present stage when only question of reference of industrial dispute for adjudication is on the anvil. All the aforesaid disputed questions of fact were not gone into by the High Court in that case and it was held that these questions had to be thrashed out before appropriate forum. The Court also placed reliance on the salient aspect of the matter that the petitioner-Union was a party to a settlement reached on October 2, 1983 which recognised existence of the contractor and employment of such labour by the contractor. On the peculiar facts of the case, therefore, this Court refused to entertain the petition under Ar. 226 for resolving such dispute. It is obvious that the Court was not concerned with the question regarding legality of the action of the appropriate Government in refusing to make a reference under the I.D. Act. The facts of the case cannot serve any useful purpose for the respondents. Mr. Shelat next invited our attention to the decision of the Supreme Court in Gammon India Ltd. v. Union of India (1974-I-LLJ-489) especially para 17 there of where in it is observed that under the Contract Labour Act, principal employer has right of supervision and control over contractor' workmen and in that light submitted that merely because such a case is put up by the petitioner, no inference can be drawn that these workmen are direct employees of the respondent No. 2. It is difficult to appreciate this line of reasoning. Whether concerned workmen are direct employees of respondent No. 2 or not is the very question that has to be adjudicated upon by the competent Court in reference under the I.D. Act. That stage is still not reached. Mr. Shahani for the petitioner submitted that only limited supervision and control is available to the principal employer under Secs. 20 and 21 of the Contract Labour Act while the case of the petitioner is that respondent No. 2 is directly supervising the quality and quantity of work done by these workmen and has disciplinary control over them. That this aspect of the case is not covered by any provision of the Contract Labour Act and it has to be adjudicated upon by competent Court under the I.D. Act. It certainly raises a referable question. We find considerable force in this contention of Mr. Shahani. In Gammon India Ltd.'s case (supra), the Supreme Court was concerned with the limited question whether the provisions of Contract Labour Act applied to a case where contractor's employees were doing the work of establishment of the principal employer at a place which was away from the premises of the principal employer. Answering the question in the affirmative, the Supreme Court held that referring for abolition of such contract system could validly be entertained by appropriate Government. Such a question does not arise in the present proceedings.
23. Mr. Shahani on the other hand, invited our attention to the decision of the Supreme Court in the case of Jamshedpur Contractors Works union v. State of Bihar & Ors., 1990 (2) CLR 443 where in the Supreme Court considered the validity of the award of the Tribunal on a reference under Section 10 of the I.D. Act when the Tribunal had found that the workmen constituted contract labour and the reference was not maintainable. Rejecting this technical view, the Supreme Court substituted the terms of reference with regard to certain heads of dispute where in contract labour system was no more in vogue and as regards the head of dispute where in contract labour was yet in vogue, directed the State Government to take decision if contract labour system should be prohibited. This decision also proceeds on its own facts and cannot be of any assistance to the learned Advocate for the petitioner one way or the other Reliance placed by Mr. Shahani for the petitioner on the decision of the Supreme Court in Mathura Refinery Mazdoor Sangh v. Union of Indian & Ors., 1986 (1) Scale 45 also cannot be of any use to the petitioner for the simple reason that it only reproduces the order of the Supreme Court directing the Central Government to refer the question whether in law, the petitioner and the 48 workmen whose services have been terminated are employees of the Indian Oil Corporation, Mathura Refinery Project, Mathura and whether the termination of services of 48 workmen was justified. Nothing has been indicated in the said decision to show whether the workmen had demanded a declaration that they were direct employees of Mathura Refinery Project and the contract system was a camouflage. Mr. Shahani also invited our attention to an unreported decision of the Supreme Court in Abad Dairy Dudh Vitaran Kendra Sanchalak Mandal v. Abad Dairy & Ors., Civil Appeal No. 3609-3610 of 1989 decided on August 8, 1989 (reported in 1989 (2) CLR 654). In that case, the Supreme Court allowed the appeal by special leave against the decision of this Court which had taken the view that the concerned booth operators selling milk bottles manufactured by Abad Dairy at different milk booths in this city were not workmen within the meaning of Section 2(j) of I.D. Act so far as the Dairy was concerned and they were independent contractors working on commission basis and hence, there was no question of referring their dispute to the Industrial Tribunal. Reversing and said view of the High Court, it was held by the Supreme Court that during conciliation proceedings, there was lot of evidence brought on record to show that the concerned booth operators were prima facie workmen of the Diary. There were certain agreements entered into between the respondent-Dairy and the workmen. There were circulars and instructions issued by the respondent which showed that the members of the association were workmen and not commission agents as alleged. It was thus found that this was a case where reference of industrial dispute was required to be made and could not have been adjudicated upon at the stage of making reference in the light of the failure report. Mr. Shelat for the respondents was right when he contended that even that decision was rendered on the facts of the said case and did not lay down a general proposition.
24. Reliance was then placed by Mr. Shahani on a decision in N. D. D. B. Employees' Union v. State of Gujarat, (1992-I-LLJ-725). In that case, this Court while allowing the writ petition filed by the employees' union following various decisions of the Supreme Court, observed as under (pp-728-729) :
"While exercising the powers under Section 10(1) of the industrial Disputes Act, the appropriate Government is entitled to prima facie consider the merits of the dispute, whether it is patently frivolous or is clearly belated and its impact on the general relations between the employer and the employees in the region. But it is not empowered to reach a final decision on the question of law or facts as that would be within the province of Industrial Tribunal."
As this decision is rendered as per settled legal position, the ratio of the said decision has to be applied to the facts of the present case for finding out as to whether this is a fit case for reference or not.
25. Mr. Shahani also invited our attention to another decision of this Court in Special Civil Application No. 2119 of 1988 decided on December 15, 1990 (reported in 1991 (1) GLR 577, Gujarat Electricity Board v. Hind Mazdoor Sabha) whereby the Division Bench confirmed under Art. 227, the decision rendered by the Industrial Tribunal taking the view that the workmen engaged by the contractors in the Thermal Power Station of the Gujarat Electricity Board were employees of the Board and it was found that the Tribunal had jurisdiction to go into the question whether contract labour system was genuine or not and that the demands raised by the workmen could not be said to be frivolous. It was contended by the Board before the Court that in substance, the union prayed that contract labour system should be abolished and the workmen employed by the contractor should be treated as regular employees of the Board and that request could not have been entertained by the Tribunal. While rejecting this contention, reliance was placed by this Court on the decision of the Supreme Court in Workmen A. R. I v. A. R. I. Ltd., Bhavnagar, (AIR) 1988 SC 1, where in the Supreme Court had held that it is the duty of the Court in every case where ingenuity is expended to avoid taxing and welfare legislation to get behind the smoke screen and discover the true state of affairs and that is was within the jurisdiction of the tribunal to examine the reality behind the facade of paper arrangement of contract labour system. The ratio of the aforesaid decision does get attracted on the fats of the present case as in this case also, a similar dispute has been raised by the employees' union requesting adjudication by piercing the veil of the so-called labour contract system with a view to scrutinizing the real relationship between the parties that would be existing on spot. It is true that against the said decision, special leave to appeal is already granted by the Supreme Court but at present, the ratio of the said decision does hold the field.
26. In the light of the aforesaid settled legal position, we have to consider the type of evidence which was available before the conciliator and the Government on the basis of which a prima facie view of the matter had to be taken for deciding whether the case was fit one for reference. So far as this question is concerned, it is true that the respondent Company has submitted before the conciliator that the company was duly registered under the Contract Labour Act entitling it to employ contract labour. The concerned contractors also were having licences under the said Act and the company had to carry on its statutory obligations under the said Act which sought to regulate the contract labour employed by the contractors on the premises of the principal employer, viz., respondent No. 2-Company. However, we are concerned with the question whether save and except ipse dixit of the petitioner-Union that the said contract labour system was a mere camouflage, facade or paper arrangement, anything more by way of evidence or material was placed by the petitioner before the conciliator to indicate that this was a case for piercing veil and for finding out the real substance of the relationship between the parties. So far as this aspect is concerned, statement of justification dated July 9, 1990 at Annexure 'D' to the petition becomes material. For justification of demand No. 1, it has been pointed out in the said statement that workmen numbering 571 are employed in the company since many years. They have been working since more than 20 years. They are working in the company and for the company. These workmen are the concerned workmen in Spl. C.A. No. 4429 of 1989. The 571 workmen are doing all sorts of day to day jobs like maintenance, cleaning etc. The jobs which they are doing are of permanent nature and are perennial. Without the said jobs being performed, the whole company will stop production. These workmen have been employed by the company to do these jobs of permanent and perennial nature since years. The fact of the situation is that these 571 workmen though are working for the company and are employed by the company, are shown in the registers of so-called contractors dubiously only to deprive the workmen their security of job and rightful benefits and claims. The so-called contractors are a camouflage and it is totally a sham arrangement. They are make-believe trappings. It has been further averred in the said statement of justification that they are employed by the company, they are given work by the company, they work for the company, their economic control is in the hands of the company, they are supervised by the company and they are paid by the company. In addition to this, the petitioner also moved a review petition before the appropriate authority after the impugned order of rejection was made and communicated to the union. Their review application is dated November 26, 1990 and it is at Annexure 'B'. In para 5 of the said application, it is stated that in the charter of demand dated April 2, 1990, it has been repeatedly stated that the contractors are a camouflage and it is a sham arrangement. This is a question of detailed examination of facts based on the judgments of the Supreme Court in (i) D. M. Sahib & Sons, (AIR) 1966 SC 370, (ii) Silver Jubilee Tailoring House, (1973-II-LLJ-495) and (iii) Harsainbhai v. Alath Factory, (1978-II-LLJ-397). It has been averred that the Tribunal will life the veil behind this paper arrangement based on the fact that the members of the union have been continued inspite of several contractors having come and gone and that the workmen are in reality under direct control and supervision of the respondent-Company and are working in their premises and are far more permanent than any paper contractors. The attention of the appropriate authority is also drawn in Spl. C.A. No., 4429 to 1989 wherein the State of Gujarat was a party and where the chart given in para 6 of the petition and it has been pointed out therein that the contractors are merely changing their names while the workmen are recognised by their permanent card number. In ground 10(c), it was urged that the petitioner's members are under direct control of the principal employer who is in fact acting as direct and only employer. The appropriate Government is requested to refer to these details to satisfy that this is a fit case for referring this dispute to the Industrial Tribunal. In view of the aforesaid material placed before the conciliator and the appropriate authority and the contentions raised before the said authority, it cannot be said that the union had not shown anything more atleast prima facie do hors apparent existence of contract labour system for justifying reference of the dispute for adjudication by the appropriate authority under the I. D. Act.
27. At this stage, it becomes necessary to have a close look at the operation of the I.D. Act and Contract Labour Act and their inter-action in connection with a given dispute. As already noted earlier, the I.D. Act which is holding the field since 1947 contains a comprehensive definition of 'industrial dispute' which used to cover all sorts of disputes regarding service conditions of the workmen and the question as to who was the real employer of the workmen would also form the subject-matter of the industrial dispute alongwith ancillary question about abolition of existing contract labour system. But after enactment of the Contract Labour Act, a smaller field of industrial dispute is carved our for separate treatment under Section 10(1) of the Contract Labour Act for abolition of existing contract labour system in a given concern which earlier also fell within the province of industrial adjudication under the I.D. Act. To that extent, therefore, the dispute under the I.D. Act can be said to be prime dispute and dispute for abolishing existing labour contract system under the Contract Labour Act can be said to be subsidiary dispute. It is also pertinent to note that when Section 10(1) of the I.D. Act is read alongwith definition of the term 'industry' and 'workman' as defined by Section 2(j) and (s) respectively in juxtaposition with Section 10(2) of the Contract Labour Act, it becomes clear that the Contract Labour Act is more concerned with the activities wherein contract labour system is in vogue and which requires to be abolished if the conditions mentioned in Section 10(2)(a) to (d) are satisfied. Thus, any question for abolition of contract labour system under Section 10 of the Contract Labour Act is concerned with the activities which should or should not be permitted to be carried out through contract labour, while so far as employee-employer relationship under the I.D. Act is concerned, it deals more with persons or actors who carry on these activities. Thus, the field covered by Section 10(1) of the I.D. Act so far such questions are concerned, is entirely different from the field covered by Section 10(1) read with Section 10(2) of the Contract Labour Act.
28. It is now time for us to consider the moot question whether the dispute pertaining to abolition of contract labour system genuinely existing in the concern on the one hand and the dispute regarding the real relationship between the employees on the one hand and the principal employer on the other which may in its turn require piercing of the veil of the so-called facade of the intermediary contractors on the other, can co-exist or can be processed simultaneously or not. These types of disputes due to their interactions and inter-play can result in different contingencies, when there is a genuine contract system existing in a concern and it is sought to be abolished under the Contract Labour Act and also there is an alternative dispute pertaining to the question whether so-called contractor is an eye wash and the contract is paper arrangement and a declaration is sought that workmen of the contractor are really and in substance workmen of the principal employer who is the real employer. If both these types of disputes are raised, between the same parties, then four contingencies or possibilities may result on account of raising of such simultaneous disputes.
(1) The question of piercing the veil and declaring status off workmen as direct employees of the principal employer by-passing the contractor which may be treated to be a mere paper arrangement or eye wash may be decided earlier and the dispute regarding abolition of the contract labour prospectively may be taken up for decision of the appropriate authority later on. Even in such a case, if the industrial dispute is adjudicated upon the competent authority under the I.D. Act, in favour of the workmen and it is held that contract was a mere camouflage and there was direct relationship of employee-employer between the contractor workmen on the one hand and the principal employer on the other hand and thereafter if the appropriate Government has to consider the question of abolition of such contract labour system prospectively, such consideration by the appropriate Government, for abolition of contract labour would not survive and would become infructuous in view of resolution of the principal dispute or larger dispute between the parties.
(2) If the principal dispute is decided against the workmen and it is held that there is no direct relationship between the contractors' workmen on the one hand and principal employer on the other hand and that contract labour system was not a camouflage or paper arrangement, and thereafter if the appropriate Government, has to consider the question of abolition of contract labour system under the Contract Labour Act, such question may be decided by appropriate Government on its own merits and if the contract system gets abolished prospectively, the principal employer thereafter will be prohibited from engaging any contractor and through such contractor, contract labour prospectively.
(3) If the principal dispute is pending for resolution and in the meantime, the appropriate Government chooses to abolish the contract labour system prospectively, even the, the principal dispute can be decided by the appropriate authority under the I.D. Act and if an adjudication, it is found that contract system was a camouflage, the concerned workmen would be treated to be workmen of the principal employer all throughout and prospective abolition of the contract system in that concern qua that activity would reinforce the decision of the principal dispute and would guarantee a situation wherein, even in future, if the concerned workmen are terminated by the principal employer, the principal employer will not permitted to again employ contract labour in future qua this activity.
(4) If the principal dispute is pending before the appropriate authority under the I.D. Act and in the meantime, the appropriate Government rejects the request for abolition of the contract labour system qua the concerned activities even then, the principal dispute can be proceeded for adjudication and if it is found that the concerned workmen were employees of the principal employer qua these employees, direct relationship with their real master, i.e. principal employer would be established and even if appropriate Government under the Contract Labour Act has held that qua concerned activities, contract system can continue, despite such decision of the appropriate Government, there would be direct relationship of employees and employer and the contractor will get eliminated on account of the finding that the contract labour system was a camouflage qua these employees. On the other hand, if the appropriate Government has rejected the reference and has refused to prohibit contract labour system in a given activity as per provisions of the Contract Labour Act and thereafter pending industrial dispute gets decided against the workmen and they are not treated to be direct employees of the principal employer, then, in that eventuality, the contract labour system will continue qua the concerned activities and the employees employed by the contractor will continue to remain contractor's employees and will be treated as genuine contract labour subject to regulations of such labour contract by the provisions of the Contract Labour Act. To put it differently, following four types of situations can be contemplated in this connection :-
(1) I.D. Act references and references under the Contract Labour Act may both be allowed. In such contingency, for past years, the concerned workmen from the date of their entry would be treated as permanent workmen of the principal employer and will get all attendant benefits while for future years, for the concerned activities, principal employer will not be permitted to switch over to contract system.
(2) The aforesaid references may be dismissed. In such a situation, for past years, the concerned workmen will be treated as workmen of the contractor and not of the principal employer and their service conditions will be regulated by the provisions of the Contract Labour Act and for future years, there will be no prohibition on contract labour qua the concerned activities and the principal employer can switch over to fresh contractors for such activities after the earlier contractors leave or their contracts are terminated.
(3) Industrial dispute reference may be allowed while contract labour reference may be rejected. In such a contingency, for past years, workmen will be treated as direct employees of the principal employer and the concerned contract system will be treated to be a mere paper arrangement. In such a case, for future years, question of abolition of contract labour may be rendered infructuous and hence, such reference under the Contract Labour Act may be rejected in limine or even if it is rejected on merits, the principal employer will not be prohibited from engaging in future, contractors for carrying on the concerned activities though in past, such contract labour is treated to be a camouflage. In such a case, old employees may have to be retained by the principal employer, but the new employees engaged by the contractors will be treated to be employees of the future contractors only and their terms and conditions of service will be regulated by the Contract Labour Act.
(4) Industrial dispute reference may be rejected while contract labour reference may be allowed. In this contingency, for past years, workmen will be treated as employees of the contractors and their service conditions will be regulated by the provisions of the Contract Labour Act. They will have no direct linkage with the principal employer, subject to the provisions of the Contract Labour Act while for future years, for such activities, the contract labour system will stand abolished and prohibited and the principal employer will not be permitted to engage contractors for the concerned activities and will have to employ workmen directly under its employment for these activities.
29. It, therefore, becomes clear that references for declaration that workmen are direct employees of the principal employer and the intermediary contractor is a camouflage will have to be adjudicated upon their own merits under the I.D. Act and they operate in their own field, viz., in the personal field i.e., personal relation between the workmen on the one hand and the principal employer on the other; while reference for abolition of contract labour system under Section 10 of the Act would operate in their own field and they touch upon the industrial activities themselves, their nature and upon the question whether such activities can be allowed to be subject to contract labour system or not. Thus, former references investigate upon and cover personal relationship between the contesting parties while the latter references deal with objective aspects of industrial activities as such. These two types of references operate in different fields and they do not overlap nor do they intermix and both these types of references can be considered on their own merits under the respective Acts by the respective appropriate authorities.
30. In view of the aforesaid contingencies resulting from interaction of the principal dispute under the I.D. Act and subsidiary dispute under the Contract Labour Act, from the point of the view of time when such disputes get decided and the nature of the respective decisions under these two Acts, it is not possible to agree with the contention of the learned Advocate for the respondent that once the dispute regarding abolition of given labour contract system is in the offing and is referred to the appropriate Government under Section 10(1) of the Contract Labour Act is decided, no industrial dispute about de facto existence of such labour contract system can ever survive for reference under the I.D. Act. In this connection, it will be necessary to note that even if contract labour is in vogue in a concern, employees employed by the contractor can validly raise the following contentions which may buttress their grievance that even though they are the direct employees of the principal employer, they have wrongly been treated as employees of the contractor who is not a real intermediary. Such types of disputes which would be covered by the principal dispute under the I.D. Act can legitimately be raised in the following cases which are mentioned by way of illustrations only without suggesting that they are exhaustive :
(1) When it is alleged that employees were directly employed by the principal employer and subsequently contract system was introduced for the same activities resulting in snapping of relationship of employee-employer between the workmen on the one hand and the main employer on the other, thus violating Section 9A of the I.D. Act.
(2) When there is absence of proper registration of the concerned principal employer under the Contract Labour Act.
(3) When there is absence of proper licensing of the concerned contractor who employs contract labour at a given point of time.
(4) Even though the principal employer may be registered employer under the Act and the concerned contractor may be licensed contractor under the Act, his licence may not cover the activity which is carried on by the contract labour.
(5) Even though principal employer may be registered employer under the Contract Labour Act and the contractor may be having a valid licence to employ contract labour, under the Contract Labour Act, for a given activity, still licence issued to him may not cover exact number of permissible employees employed by him meaning thereby, number of permissible employees under the license may be less than number of employees actually employed and qua such excess number of employees, protective umbrella of licence would not be available to the contractor so far as the activity covered by the licence is concerned.
(6) Even though principal employer may be registered employer and the contractor may be licensed contractor, and the workmen employed by him might be covered by the permissible number of employees as recognised by the licence and even though such activities may be covered by a licence, in fact and in substance, control including disciplinary control and supervision of the entire activity may be with the principal employer and the wages of the employees may in fact be coming out of coffers of the principal employer, and may be getting paid through the contractor who may operate as a mere conduit pipe. Such type of control, supervision and payment being outside the scope of Section 10(2) read with Section 20 & 21 of the Contract Labour Act would give rise to a legitimate contention that the principal employer is in fact and substance the real employer and the so-called contractor is an eye wash.
31. As seen earlier, in the present case, it was clearly submitted by the petitioner - Union before the conciliator that even though the so-called contractor was operating under the provisions of the Contract Labour Act, the workmen were under the direct control and supervision of the principal employer and they were being paid by the principal employer and were therefore, the direct employees of the principal employer and contract system was a mere eyewash or camouflage. This submission is not a mere ipse dixit of the petitioner as suggested by the learned Advocate for the respondent - Company but is based on relevant factual averments which require investigation. It is easy to visualise that if such a contention is not controverted by the other side, case for reference of the industrial dispute for adjudication would become a complete one and in fact in such a situation a joint reference would be apposite. But if such case put forward by the union is resisted by the other side in conciliation proceedings, then a highly disputed question of fact would arise which cannot be adjudicated upon one way or the other hand by the conciliator or appropriate Government and a case for reference would arise even in such a contingency. It is difficult to appreciate how in conciliation proceedings or at the stage of initiation of reference proceedings, appropriate authority can go into this question or would expert parties to lead oral and documentary evidence in support of their rival contentions and having entered upon witness action, can pronounce upon this question. It is clearly outside the jurisdiction of the appropriate authority or for that matter, the conciliation at that stage and the question would require reference of the dispute for a adjudication under the I.D. Act before the appropriate authority where such witness action can be held and adjudicating authority can finally decide upon the disputed question in the light of the evidence led before it. Consequently, it is not possible to agree with the contention of the learned Advocate for the respondents that on the facts submitted by the petitioner-Union before appropriate authorities, no case was made out for reference and the appropriate Government was entitled to prima facie decide whether there was employee-employer relationship between the workmen and the principal employer.
32. On the facts of the present case, it becomes apparent that as highly disputed questions of fact were raised by the petitioner-Union for adjudication, the appropriate authority while rejecting the reference on the ground that the workmen were employees of the contractor and not of the institution, with respect, put the cart before the horse and purported to adjudicate upon the very question which was required to be referred for adjudication of the appropriate authority. The question that was hotly in dispute was finally answered against the workmen by the appropriate authority and on that basis, request for reference was rejected. This approach of the appropriate Government is beyond its jurisdiction and amounts of adjudication of the dispute by itself. In any case, the reason put forward for rejecting the request for reference are totally irrelevant and extraneous and cannot be sustained.
33. As discussed earlier at least in six types of cases, the principal dispute between the workmen on the one hand who are branded as contractors' employees and the principal employer on the other, against whom declaration is sought that the concerned workmen are the real employees of the principal employer and are entitled to all legally permissible benefits as such, would legitimately fall within the four corners of Section 10(1) read with Section 12(5) of the I.D. Act and when such grievances are raised by the workmen, they have to be properly processed and got adjudicated by appropriate authority under the I.D. Act notwithstanding the provisions of the Contract Labour Act. In view of our aforesaid conclusion on the conjoint reading of the relevant provisions of the I.D. Act and the Contract Labour Act, it is not possible for us to accept the contention of the learned Advocate for the respondents that because the petitioner had filed Special Civil Application No. 4429 of 1989 in this Court praying amongst other for abolition of the contract labour system they cannot simultaneously raise an industrial dispute about being declared direct employees of the principal employer. It is easy to visualise that when the prime dispute is regarding status of the workmen which they claimed as direct employees of the principal employer, in the alternative, they can certainly pray for abolition of the contract labour system at least prospectively qua the concerned activities. Such contentions in the alternative are well known to legal proceedings and are within permissible limits of pleadings. They do not imply any admissions merely because such pleas are raised in the alternative. A clear case of admission would be made out only when the sole dispute raised at a given stage is about abolition of contract labour system wholly accepting it to be a real one. Only in such type of cases, it can be urged that validity and genuineness of the existing labour contract system is accepted by the workmen and then a question may raise whether they can subsequently turn round and put forward a totally inconsistent case later on that such a contract system was a camouflage. But so far as the facts of the present case are concerned, no such clear cut admission is discernible from the averments made in Special Civil Application No. 4429 of 1989. On the contrary averments made in paras 2, 3 and 6 and grounds 'c' and 'd' show that the petitioner had contended that the concerned workmen had been direct employees of respondent No. 2 and the contract labour system was a paper arrangement. When we turn to the order passed in Special Civil Application No. 4429 of 1989, this position becomes equally clear. As the judgment of this Court which decided that case shows different prayers were put forward in the said petition against the second respondent. Prayer (A) was regarding equality of pay and service conditions of the workers; prayer (B) was to direct respondent No. 3 to investigate the complaint of the petitioner - Union and to ensure compliance of the equality clause of the licence of labour contractor and further directing respondents authorities to take a further action including prosecution as per law within a period of fortnight. Prayers (B), (C) and (D) were in the alternative, while prayer (A) being the main prayer concerning the principle dispute, was put forward in the forefront. Subsequently prayers for abolition of such system were raised in the alternative. Hence, it cannot be said that there was any unequivocal intention exhibited by the petitioner-Union while moving Special Civil Application No. 4429 of 1989 to give up the prayer to the effect that they were direct employees of the principal employer and that they had rested upon the sole prayer that contract system should be abolished prospectively. Consequently, on the facts of this case, it is not possible to agree with the contention of the learned Advocate for the respondent-Company that the petitioner are stopped from raising the grievance about the workmen not being treated as direct employees of the respondent-Company or that they are blowing hot and cold when in the present proceedings, they are praying for reference of the dispute to the effect that contract labour is a camouflage and they are direct employees of respondent No. 2. As observed earlier, such alternative contentions can be countenacnced and are within the permissible limits of substantive and procedural law and can simultaneously co-exist.
34. It has to kept in view that contract labour system has been castigated by the Supreme Court as an archaic system in the case of Sankar Mukerjee v. Union of India, (1990-II-LLJ-443). In that case, the Supreme Court was concerned with the question of abolition of contract labour in bricks department of an Iron and Steel Company. The workmen in that case were doing the work of cleaning and stacking of bricks and other allied jobs in the same department where other regular workmen were working. In para 6 of the report, the following pertinent observations are made in connection with contract labour system (p. 445) :
"It is surprising that more than forty years after the independence the practice of employing labour through contractors by big companies including public sector companies is still being accepted as a normal feature of labour employment. There is no security of service to the workmen and their wages are far below than that of the regular workmen of the Company. This Court in Standard vacuum Refining Company of India Ltd. v. Its Workmen, (1990-II-LLJ-238) and Catering Cleaners of Southern Railway v. Union of India, (1987-I-LLJ 345) has disapproved the system of contract labour holding it to be 'archaic' 'primitive' and of 'baneful nature'. The system, which is nothing but an approved version of bonded labour, is sought to be abolished by the Act. The Act is an important piece of social legislation for the welfare of laborers and has to be liberally construed."
"It is pertinent to note that respondent No. 2-Company is a Public Sector Company and would be covered by Art. 12 of the Constitution being an authority envisaged by the said provision. In fact, this Court in the case of Association of Offices, G. S. F. C. v. G. S. F. C., (1986-II-LLJ-238), decided on October 10, 1985 by R. C. Mankad, J. has held accordingly. This aspect of the matter could not be seriously controverted by the learned Advocate for respondent No. 2. In a Public Sector undertaking like respondent No. 2, when a large number of workmen come forward with a case that so-called contract labour is an eye wash, they are being exploited and they are under direct control and supervision of the Public Sector Undertaking, a serious question for adjudication by the Industrial Court would arise for consideration. Such a serious question cannot be bypassed and scuttled by merely observing that such workmen are the employees of the contractors. Whether any workman was an employee of the contractor or the principal employer is a moot question which cries for answer from the appropriate adjudicating authority under the Act and not from the appropriate Government which is required to make a reference of such dispute for adjudication. With respect, the appropriate Government in the present case has short-circuited the entire process and has mechanically refused to refer such an important question for consideration of the appropriate Court. It has to be kept in view that qua a Public Sector Undertaking wherein the first respondent is directly interested, it has to so behave as to be above suspicion like Ceasar's wife lest it may be felt by public at large and working force in particular that the State of Gujarat is trying to shield their own creatures and are trying to avoid botheration and inconvenience for them if ultimately it is found by the competent Court under the Act that so-called contract system was a camouflage and all these large body of workmen were direct employees of the undertaking with all consequential monetary benefits for them and burden on such undertakings and that all benefits regarding security of service were available to these workmen from their very entry in the service. It is easy to visualise that event though the appropriate Government decides to abolish contract labour system under Section 10(1) of the Contract Labour Act, such decision operates only in future and would not touch upon the past relationship between the workmen on the one hand the principal employer on the other hand and such abolition of contract system in future enjoins upon the undertaking to put its house in order in future and to employ fresh employees as workmen for the concerned activities in future without affecting the seniority of the existing employees; while if the industrial dispute reference are allowed after adjudication, the concerned workmen would get status as direct employees for the entire past period during which they have toiled on the premises of the principal employer, though contractors might have come and gone, one after another. All these legally permissible benefits to the concerned workmen if they are due to them, cannot be circumvented and bypassed by refusing to refer such disputes for adjudication of the appropriate authority nor can they be nipped in the bud. Such adjudication process is a filtering process not only for Public Sector Undertaking but even for appropriate Government which is interest in such undertaking. Ultimately on adjudication, if it is found that the workmen are not direct employees of the principal employer, then no additional financial burden would be cast on such undertaking and on the other hand, no body would go with a feeling that such grievance was not properly examined on merits by the appropriate Court and such adjudication would also not affect the principal employer in any manner as contract system would not be treated as paper arrangement which by itself is a serious charge on a public sector undertaking which is expected to behave as a model employer. If on the other hand, the contract system is found to be a camouflage, there is no reason why the public sector undertaking or for that matter, the appropriate Government which is interested in its working, should feel shy of meeting its obligations of giving all legally permissible benefits to its own workmen. For all these reasons, therefore, it must be held that once at the stage of conciliation and reference by the appropriate Government, contentions are raised by the workmen that they are the direct employees of the principal employer and the contract systems is a camouflage and if one or more of the six contingencies mentioned earlier are involved for consideration, if such contention are disputed by the other side, a case for reference of such industrial dispute for adjudication does arise and it cannot be short-circuited on the specious plea that the contention that the contract labour system is a camouflage refers to an existing contract labour system and the employees must be treated as contractor's employees only and, therefore, no reference should be made with a view to enabling the appropriate adjudicating authority to pierce the veil and to look at the substance of the matter rather than at its mere form or facade. In the light of the aforesaid discussion it must be held that the impugned order at Annexure 'A' suffers from a patent error of law and jurisdiction and has got to be quashed and set aside. The first point is accordingly answered in the affirmative.
35. Point No. 2 : As the impugned order at Annexure 'A' is held to be patently erroneous and without jurisdiction, the next question which survives for consideration is as to what proper order should be passed in the present proceedings. In the light of material placed before the conciliation officer and the case made out by the petitioner-Union, in our view, a clear referable question arises for consideration of the appropriate Court under the I.D. Act. The petitioner-Union had already moved a review petition before the appropriate Government for reconsidering the order at Annexure 'A' and for re-examining the question whether this is a fit case for reference. The said review was moved on November 26, 1990. Still, the first respondent has maintained stoic silence in the matter and has remained unmoved. Under the circumstances, the petitioner was driven to file this petition wherein one of the prayers, viz, prayer 11(B) is to direct the first respondent to decide the review application. However, at this late stage, no useful purpose will be served by directing the first respondent to consider the review application and hence, this prayer was rightly not pressed by the learned Advocate for the petitioner and he pressed prayer 11(A) for making reference to the Industrial Court under the Act. In out view, this course is required to be adopted on the facts and circumstances of the present case as the first respondent have not cared to reconsider the entire question and to re-examine its order at Annexure 'A' and the industrial dispute is lingering on since long. It would not be in the interest of industrial peace nor will be in the interest of respondent No. 2 to allow this industrial dispute to simmer on any further at the stage of reference. As back as in 1979, the Supreme Court in A. S. Production Agencies v. Indl. Tribunal, Haryana, (1979-I-LLJ-1) has laid down as under (pp-4-5) :
"The only requirement for taking action under Section 10(1) is that there must be some material before the Government which will enable the appropriate Government to form an opinion that an industrial dispute exists or is apprehended. This is an administrative function of the Government as the expression is understood in contradiction to judicial or quasi-judicial function. Merely because the Government rejects a request for a reference or declines to made a reference, it cannot be said that the industrial dispute has ceased to exist, nor could it be said to be a review of any judicial or quasi-judicial order or determination. The industrial dispute may nonetheless continue to remain in existence and if at a subsequent stage the appropriate Government is satisfied that in the interest of industrial peace and for promoting industrial peace and for promoting industrial harmony it is desirable to make a reference, the appropriate Government does not lack power to do so under Section 10(1), nor is it precluded from making the reference on the only ground that on an earlier occasion it had declined to make the reference."
36. Despite this settled legal position, the first respondent has not bothered to reconsider its decision at Annexure 'A' even though moved as early as in November, 1990. Consequently, at this late stage in June, 1991, we do not deem fit to require the first respondent to reconsider the decision on merits when we have found that on the material placed before the conciliation officer, and before the appropriate Government, a clear case for reference of industrial dispute was made out. We have, therefore, thought it fit to follow the procedure laid down by the Supreme Court in such cases, vide Telco Convoy Drivers Mazdoor Sangh's case (supra). We, therefore, hold that this is a fit case in which prayer 11(A) should be granted. We accordingly direct the second respondent to make reference of the industrial dispute centering round four demands as raised in Annexure 'C' and to refer them for adjudication of the appropriate court under the I.D. Act at the earliest. Such reference should be made within a period of two weeks from the date on which writ of this order is served on the first respondent. Point No. 2 is answered accordingly.
37. We may also mention one request of the learned Advocate for the petitioner. He stated that status quo regarding the concerned workmen has continued all throughout during the tendency of this petition. That status quo may be continued for sometime to enable the petitioner to approach the Tribunal for obtaining appropriate interim relief. As we have already directed a reference to be make in connection with the industrial dispute in question, in our view, interest of justice will be served if we direct that status quo regarding service conditions of concerned workmen which has remained current during the pendency of this petition will continue for a further period of two weeks from the date on which intimation regarding filing of the reference is received by the petitioner from the concerned authority so that within that time, the petitioner may apply to the Tribunal for appropriate interim relief which of course will have to considered by the Tribunal after hearing all concerned and in accordance with law. We make it clear that continuance of this interim relief during the pendency of this petition and by the present order would not weigh with the Tribunal way or the other, while considering the question of interim relief which the Tribunal will decide on its own merits.