AIR INDIA STATUTORY CORPORATION v. UNITED LABOUR UNION AND ORS.

640 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A wealth on the one hand, and the levelling up of the semi-started, naked millions on the other. A non-violent system of Government is clearly an impossibility so long as the wide gulf between the rich and the hungry millions persists. The contrast between the palaces of New Delhi and the miserable hovels of the poor labouring class nearby, cannot last one day in a free India in which the poor will B enjoy the same power as the richest in the land. A violent and bloody revolution is a certainty one day, unless there is voluntary abdication or riches and the power that riches give a sharing them for the common good."

c Pandit Jawahar Lal Nehru, the architect of social and economic planned democracy, in his "Independence and After That" (Collection of Speeches 1946-49) Publication Division, Government of India 1949 Edn. at page 28, had stated that social equality in the widest sense and equality of opportunity for every one, every man and woman must have the oppor- tunity to development to the best of his or her ability. However, merit must come from ability and hard work and not because of cast or birth or riches. Social equality would develop the sense of fraternity among the members of a social groups where each would consider the other as his equal, not higher or lower. A society, which does not treat each of its members as equals, forfeits its right of being called a democracy. All are equal partners in the freedom. Every one of our ninety four hundred million people must have equal right to opportunities and blessings that freedom of India has to offer. To bring freedom in a comprehensive sense to the common man, material resources and opportunity for appointment be made available to secure socio-economic empowerment which would ensure justice and full- ness of life to workmen, i.e., every man and woman. In "Beyond Justice" by F Agnes Heller at page 180, on the distribution of material, she has stated about on distributive justice thus :

"The distribution of material goods has always been of concern in images and theories of .iustice, but, even when the issue was given G the highest importance, it was subjected to and understood within a general theory of justice, and addressed \\ithin the framework of a complete socio-political concept of justice. As we have seen, in the prophetic concept of justice the misery of the poor called for divine retribution, since alleviating misery was believed to be a H matter not of optional charity but of moral duty. To neglect this

AIRIND!A'TATIJTORYCORPN.,. UNIONIABOURUNION(K.RAMASWAMY,J.( 641 -. duty was to sin, to breach the divine laws. Plato proposed the A abolition of private property for the caste of guardians in order to make the Republic as a whole just. Aristotle, who coined the term 'distributive justice', recommended as relative equality of wealth - neither too much nor too little, but 'medium wealth' - as a condition of good life of the good citizen and the good city. Even Rousseau, B the most egalitarian philosopher in respect of distribution, sub- jected the solution of this problem to :he general patterns of an socio-political concept of justice.

Locke did not completely break with this longstanding tradition either. As we have seen, he contributed to the emergence of the C concept 'retributive justice' rather than 'distributive justice. How- ever, he had already presented a sophisticated theory legitimizing inequality in property ownership, a theory deriving property from work. I have mentioned that Locke did not support the idea 'to each according to his entitlement' for he put 'entitlement' into the D 'to each' catego.ry, whereas the 'according to' category was defined by 'work' (mixing work and nature}. But Locke never claimed that entitlement was the main issue, let alone the only issue of justice.

Hume is undoubtedly the founding father of that branch of socio- political justice now called 'distributive'. He even claimed that property and property alone is the subject matter of justice. He asserted too that retribution (negative sanctions} in the suspen- sion of justice for the sake of social utility : 'When any man, vein in political society, renders himself by his crimes, obnoxious to the public, he is punished by the laws in his goods and persons; that is, the ordinary rules of justice are, with regard to him, suspended for a moment..,,,,

Humane also deduced justice from 'public utility'. Inequality in property ownership is just because it is useful. We can imagine two cases - and extreme cases - where property (inequality in property ownership) qua justice loses its social usefulness; the situation of absolute abundance and the situation of absolute scarcity. In the former, property is useless, redundant because, if all needs can be satisfied, we are beyond justice. In the latter situation property rules are violable, thus justice must be suspended. Yet we live in H

642 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A a situation of limited abundance (or limited scarcity). This is why property qua justice is useful. Thus in Humane the concept 'justice' reduces to the idea 'to each according to his property entitlement'; all other uses of the notion 'justice' are seen as relating to the 'suspension on justice' (although the term 'equity' can remain relevant in these other contexts). B Humane, an extremely sincere man, did not shirk from facing proposals alien to his own. He stated, nature is so liberal to mankind, that, were all her presents equally divided among the species, and improved by art and industry, every individual would c enjoy all the necessaries, and even most of the comforts of life ..... It must also be confessed, that, wherever we depart from this equality, we rob the poor of more satisfaction than we add to the rich..... 11

Justice K.K. Mathew in his "Democracy Equality and Freedom" at D page 55 has, t,herefore, stated that the single ·most important problem in constitutional law years to come in this country' will be how to implement the Directive Principles and at the same time give full play to the Fun- damental Rights. It is only by implementing the Directive Principles that distributive justice will be achieved in the society. Justice, as Artistotle said, E "is the bond of men in society" and "states without justice" are, as St. Augustine said, "robber-bands".

In Keshvananda Bhani's case, Jaganmohan Reddy, J. had held that "what is implicit in the Constitution is that there is duty on the courts to interpret the Constitution and the laws to further the Directive Principles F which under Article 37 are fundamental in the governance of the country'. The majority had held in favour of the way for the implementation of the Directive Principles under rule of law. Justice Palekar, in particular, had laid emphasis on social and economic justice to make Fundamental Rights a reality. G Coming to the meaning of "regulation" under the Act, in Blacks Law dictionary (sixth edition) at page 1286 the work "regulation" is defined as "the act of regulating; a rule or order prescribed for management or government; a regulating principle; a precept. Rule or order prescribed by superior or competent authority relating to action of those under its

AIRIND!ASTATUIDRYCORPN.,. UNIONIABOURUNION(KRAMASWAM,YJ.J 643

644 SUPREME COURT REPORTS {1996) SUPP. 9 S.C.R. A and has become a thing of public interest and use." Therein, there is a specific observation which is apposite to the facts in this case. It was held that the statute simply extends the law so as to meet this new development of commercial progress. There is no attempt to compel the owners to grant the public an interest in their property, but the Act declares their obliga- B tion, if they use it in the particular manner. It is immaterial whether the plaintiffs therein had built their warehouses and established their business before the regulation was made. It was held that after the regulation has come into force, they are enjoined to abide by the regulation to carry on the business. This Court had .approved the ratio in Prasadrao's case; when it was followed by Karnataka High Court against which an appeal came to C .be filed and the power to regulate rates of admission into cinema/theaters was upheld by this Court.

A!RINDJASTATIITORYCORPN.,. UNION!ABOURUNION[K.RAMASWAMY,J.) 645

men!. In Republic Aviation Corporation v. National Labour Relations Board, A 324· US 793 = 89 L.Ed. 1372, the owner of privately held bridges, ferries, turnpikes and railroads etc. may operate them as freely as a farmer does his farm, but when it operated privately to benefit the public, their opera- tion is essentially a public function. It was subject to State regulation. The Supreme Court, therefore, had held that when the rights of the private owners and the constitutional rights require interpretation, the balance has to be struck and the Court would, mindful of the fact that the right to exercise liberties safeguarded by the Constitution lies at the foundation of free government by· free men, in all cases weigh the circumstances and appraise the reasons in support of the regulations of the rights etc. It was accordingly held that for interpretation of the rights of the private owner vis-a-vis constitutional rights, it is but the duty of the Court to weigh the balance and to consider the case in the dropback. It Georgia Railroad & Banking Co. v. James M Smith, 128 US 377 = 32 L.Ed. 174, it was held that in the absence of any provision in the charter, legislature has power to prescribe rates when the property is put to public use and the statute was held to be constitutional. Gennan Aliance Insurance Co. v. !KL Lews, D 58 L.Ed. 1011 = 233 US 387, per majority it was held that a business may be as far as affected with a public interest as to permit legislative regulation of its rates and charges, although no public trust is imposed upon the property and although public may not have a legal right to demand and receive service. E It is true in Dena Nath's case, a Bench of two Judges was to consider the question whether or not the persons appointed as contract labour in violation of Sections 7 and 12 of the Act should be deemed to be direct employees of the principal employer. The Bench on literal consideration of the provisions, had concluded that the Act merely regulates conditions of service of the workmen employed by a contractor and engaged by the principal employer. On abolition of such contract labour altogether by the appropriate Government neither the Act nor the rules provide that labour should be directly absorbed by the principal employer. It was, therefore, concluded that the High Court exercising the power under Article 226 of the Constitution cannot give direction for absorption. True, Court cannot enquire into and decide the question whether employment of contract labour in any process operation or any other work in establishment should be abolished or not and it is for the appropriate Government to decide it. The Act does not provide total abolition of the contract labour system under the Act. The Act regulates contract labour system to prevent ex- ploitation of the contract labour. The preamble of the Act furnishes the H

646 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A key to its scope and operation. The Act regulates not only employment of contract labour in the establishment covered under the Act and its aboli- tion in certain circumstances covered under Section 10(2) but also "matters connected therewith". The phrase "matters connected therewith" gives clue to the intention of the Act. We have already examined in detail the operation of the provisions of the Act obviating the need to reiterate the same once over. The enforcement of the provisions to establish canteen in every establishment under Section 16 is to supply food to the workmen at the subsidised rates as it is a right to food, a basic human right. Similarly, the provision in Section 17 to provide rest rooms to the workmen is a right to leisure enshrined in Article 43 of the Constitution. Supply of wholesome drinking water, establishment of latrine and urinals as enjoined under Section 18 are part of basic human right to health assured under Article 39 and right to just and human conditions of work assured under Article

42. All of them are fundamental human rights lo the workmen and are facets of right to life guaranteed under Article 21. When the principal employer is enjoined to ensure those rights and payment of wages while the contract labour system is under regulation, the question arises whether after abolition of the contract labour system that workmen should be left in a lurch denuding them of the means of livelihood and the enjoyment of the basic fundamental rights provided while the contract labour system is regulated under the Act? The Advisory Committee constituted under Section 10(1). requires to consider whether the process, operation and other work is incidental to or necessary for the indus(ry, trade, business, manufacture or occupation that is carried on in the establishment, whether it is of a perennial nature, that is to say, whether it is of substantive duration having regard to the nature of indus(ry, trade, business, manufacture or · occupation carried on in that establishment, whether it is done ordinarily through regular workmen in the establishment or an establishment similar thereto, whether it is sufficient to employ considerable number of whole time workmen. Upon consideration of these facts, recommendation for abolition was made by the Advisory Board for the appropriate Government to examine the question and tak~ a decision in that behalf. The explanation to Section 10(2) provides that when any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final. It would thus give indication that on the abolition of the contract labour system by the publication of the notification in the official Gazette, the necessary concomitant is that the whole time workmen are required for carrying on the process, operation or other work being done in the industry, trade, business, manufacture or occupation in that estab- H

. AIRINDIASfATUTORY CORPN. '· UNION !ABDUR UNION (KRAMASWAMY,J.J 647

lishment. When the condition of the work which is of perennial nature etc., A as envisaged in sub-section (2) of Section 10, thus are satisfied, the con- tinuance of contract labour stand prohibited and abolished. The con- comitant result would be that source of regular employment becomes open.

What would be the consequence that ensue from abolition is the B question?It is true that we find no express provision in the Act declaring the contract labour working in the establishment of the principal employer in the particular service to be the direct employees of the principal employer. Does the Act intend to deny the workmen to continue to work under the Act or does it intend to denude him of the benefit of permanent employment and if so, what would be the remedy available to him. The c phrase "matters connected therewith" in the Preamble would furnish the consequence of abolition of contract labour. In this behalf, the Gujarat Electricity Board case, attempted, by interpretation, to fill in the gap but it also fell short of full play and got beset with insurmountable difficulties in its working which were not brought to the attention of the Bench. With due respect such scheme is not within the spirit of the Act. As seen, the object is to regulate the contract labour so long as the contract labour is not perennial. The labour is required to be paid the prescribed wages and are provided with other welfare benefits envisaged under the Act under direct supervision of the principal employer. The violation visits with penal con- sequences. Similarly, when the appropriate Govermnent finds that the employment is of perennial nature etc. contract system stand abolished, thereby, it intended that if the workmen were performing the duties of the post which were found to be of perennial nature on par with regular service, they also require to be regularised. The Act" did not intend to denude them of their source of livelihood and means of development, throwing them out from employment. As held earlier, it is a socio-economic welfare legislation. Right to socio-economic justice and empowerment are constitutional rights. Right to means of livelihood is_ also constitutional right. Right to facilities and opportunities are only part of and means to right to development. Without employment or appointment, the workmen will be denuded of their means of livelihood and resultant right to life, leaving them in the lurch since prior to abolition, they had the work and thereby earned livelihood. The Division Bench in Dena Nath's case has taken too narrow a view on technical consideration without keeping at the back of the mind the constitutional animations and the spirit of the provisions and the object which the Act seeks to achieve. The operation of H 1

648 SUPREME COURT REPORTS (1996) SUPP. 9 S.C.R.

A the Act is structured on an inbuilt procednre leaving no escape route. Abolition of contract labour system ensures right to the workmen for regularisation of them as employees in the establishment in which they

B were hitherto working as contract labour through the contractor. The contractor stands removed from the regulation under the Act and direct relationship of "employer and employee" is created between the principal employer and workmen. Gujarat Electricity's case, being of the co-ordinate - Bench, appears to have softened the rough edges of Dena Nath's ratio. The object of the Act is to prevent exploitation of labour. Section 7 and Section 12 enjoin the principal employer and the contractor to register under the Act, to supply the number of labour required by the principal employer through the contractor; to regulate their payment of wages and conditions of service and to provide welfare aminities, during subsistence of the contract labour. The failure to get the principal employer and the contrac- tor registered under the Act visits with penal consequences under the Act. The object, thereby, is to ensure continuity of work to the workmen in strict compliance of law. The conditions of the labour are not left at the whim and fancy of the principal employer. He is bound under the Act to regulate and ensure payment of the full wages, and also to provide all the amenities enjoined under Sections 16 to 19 of the Act and the rules made thereunder. On abolition !'f contract labour, the intermediary, i.e., contractor, is removed·. E from the field and direct linkage between labour and principal employer is established. Thereby, the principal employer's obligation to absorb them arises. The right of the employee for absorption gets ripened and fructified. If the interpretation in Dena Nath's case is given acceptance, it would be an open field for the principal employer to freely flout the provisions of the Act and engage workmen in defiance of the Act and adopt the principle of F hire and fire making it possible to exploit the appalling conditions in which the workmen are placed. The object of the Act, thereby gets rudely shat- tered and the object of the Act easily defeated. Statutory obligations of holding valid licence by the principal employer under Section 7 and by the contractor under Section 12 is to ensure compliance of the law. Dena G Nath's ratio falls foul of the constitutional goals of the trinity; they are free launchers to exploit the workmen. The contractor is an intermediary be- tween the workmen and the principal employer. The moment the contract labour system stands prohibited under Section 10(1), the embargo to continue as a contract labour is put an end to and direct relationship has been provided between the workmen and the principal employer. Thereby,

AIR IND!ASTATUIDRY CORPN. '· UNION LABOUR UNION [KRAMASWAMY,l.] 649

the principal employer directly becomes responsible for taking the services of the workmen hitherto regulated through the contractor. The object of the penal provisions was to prevent the prohibition of the employer to commit breach of the provisions of the Act and to put an end to exploita- tion of the labour and to deter him from acting in violation of the constitu- tional right of the workmen to attain decent standard of life, living, wages, right to health etc.

The founding fathers placed no limitation or fetters on the power of the High Court under Article 226 of the Constitution except self-imposed limitations. The arm of the Court is long enough to reach injustice wherever it is found. The Court as sentinal in the qui vive is to mete out justice in given facts. On finding that either the workmen were engaged in violation of the provisions of the Act or were continued as contract labour, despite prohibition of the contract labour under Section 10(1), the High Court has, by judicial review as the basic structure, constitutional duty to enforce the law by appropriate directions. The right to judicial review is now a basic structure of the Constitution by catena of decisions of this Court starting from Indira Gandhi v. Raj f'{arayan, AIR (1975) SC 2299 and Bommai's case. It would, therefore, be/necessary that instead of leaving the workmen in the lurch, the Court would properly mould the relief and grant the same in accordance with ·Jaw. E The public law remedy given by Article 226 of the constitution is to issue not only the prerogative writs provided therein but also any order or direction to enforce any of the fundamental rights and "for any other purpose". The distinction between public law and private law remedy by judicial adjudication gradually marginalised and became obliterated. In F L.J.C. v. Escorts Ltd. & Ors., [1986] 1 SCC 264 at 344, this Court in paragraph 102 had pointed out that the difficulty will lie in demarcating the frontier between the public law domain and the private law field. The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is G engaged when performing the action, the public law or private law charac- ter of the question and the host of other relevant circumstances. Therein, the question was whether the management of LIC should record reasons for accepting the purchase of the shares? It was in that fact situation that this Court held that there was no need to state reasons when the manage- ment of the shareholders by resolution reached the decision. This Court H

650 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A equally pointed out in other cases that when the State's power as economic power and economic entrepreneur and allocator of economic benefits is subject to the limitation of fundamental rights, a private Corporation under the functional control of the State engaged in an activity hazardous to the health and safety of the community, is imbued with public interest which the State ultimately proposes to regulate exclusively on its industrial policy. It would also be subject to the same limitations as held in M. C. Mehta & Ors. v. Union of India & Ors., [1987] 1 SCC 395.

The legal right of an individual may be foun,ded upon contract or a statute or an instrument having the force of law. For a public law remedy enforceable under Article 226 of the Constitution, the action of the authority needs to fall in the realm of public law • be it a legislative act of the State, an executive act of the State or an instrumentality or a person or authority imbued with public law element. The question requires to be determined in each case. However, it may not be possible to generalise the nature of the action which would come either under public law remedy or private law field nor is it desirable to give exhaustive list of such actions. As held by this Court in Calcutta Gas Co. Ltd. v. State of West Bengal, AIR (1961) SC 1044 para 5 that if the legal right of a Manager of a company is denuded on the basis of recommendation by the Board of Management of the company, it would give him right to enforce his right by filing a writ petition under Article 226 of the Constitution. In Mu/chand v. State of M.P., AIR (1968) SC 1218, this Court had held that even though the contract was void due to non-compliance of Article 229, still direction could be given for payment of the amount on the doctrine of restitution tinder Section 70 of the Act, since the State had 'derived benefit under the void contract. The F same view was reiterated in State of West Bengal v. V:K Manda/ & Ors., AIR (1962) SC 779 at 789 and in New Marine Coal Co. Ltd. v. Union of India, [1964] 2 SCR 859. In Gujarat State Financial Corporation v. Lotus Hotel, [1983] 3 SCC 370, a direction was issued to release loan to the respondent to comply with the contractual obligation by applying the doctrine of promissory estoppel. In Mahabir Auto Store v. Indian Oil G Corporation, [1990] 3 sec 752, contractual obligations were enforced under public law remedy of Article 226 against the instrumentality of the State. In Shreelekha Vidyarthi v. State of U.P., [1991] 1 SCC 212 contractual obligations were enforced when public law element was involved. Same judicial approach is adopted in other jurisdictions, namely, the House of H Lords in Gillie v. West Noifolk and Wisbech Area Health Authority, (1986)

AIRINDIASfATUTORY CORPN. "· UNION LABOUR UNION [KRAMASWAMY,J.J 651 . . \. AC 112 wherein the House of Lords held that though the claim of the plaintiff was negatived but on the anvil of power of judicial review, it was held that the public law content of the claim was so great as to make her case an exception to the general rule. Similarly in Dr. Roy v. Ke11sinstone and Chelsea Family Practioners Committee, (1992) !AC 624, the House of Lords reiterated that though a matter of private law is enforceable by ordinary actions, a court also is free from the constraints of judicial review and that public law remedy is available when the remuneration of Dr. Roy was sought to be curtailed. In L.I. C v. Co11Sumer Education and Research Centre & Ors., [1995] 5 SCC 482, this Court held that each case may be examined on its facts and circumstances to find out the nature and scope of the controversy. The distinction between public law and private law remedy has now become thin and practically obliterated.

In writ petition filed under Article 32 of the Constitution of India, the petitioners, in R.K. Panda & Ors. v. Steel Authority of India & Ors., [1994] 5 sec 304, contended that they had been working in Rourkela Plant D of the Steel Authority of India for period ranging between 10 and 20 years as contract labour. The employment was of perennial nature. The non- regularisation defeated their right to a job. The change of contractors under the terms of the agreement will not have any effect on their continu- ing as a contract labour of the predecessor contractors. The respondent contended that due to modernisation of the industry, the contract labour E are likely to be retrenched. They were prepared to allow the contract labour to retire on voluntary basis or to be absorbed for local employment. A Bench of three Judges of this Court had held that the contract labour were continuing in the employment of the respondent for last 10 years, in spite of change of contractors, and hence they were directed to be ab- F sorbed as regular employees. On such absorption, their inter se seniority be determined, department or job-wise, on the basis of continuous employ- ment; regular wages will be payable only for the period subsequent to absorption and for the period thereto. Such of those contract labour in respect of whom the rate of wages have not fixed, the minimum rate of G wages would be payable to such workmen of the wages of the regular employees. The establishment was further directed to pay the wages. If the staff is found in excess of the requirement, the direction for regularisation would not stand in their way to retrench the workmen in accordance with law. If there arises any dispute as regards the identification of the contract labour to be absorbed, the Chief Labour Commissioner, Central Govern- H

652 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A ment, on evidence, would go into that question. The retrenched employees shall also be entitled to the benefit of the decision. The 10 year period mentioned by the Court would count to calculate retrenchment benefits. This ratio is an authority for several propositions. In spite of there being no report by the Advisory Board under Section 10(2) and no prohibition under Section 10(1), the Act was enforced and this Court directed to absorb them within the guidelines laid down in the judgment. This ratio also is an authority for the proposition that the jurisdiciion of the Court under Article 32, pari mate1ia with Article 226 which is much \vider than Article 32 "for any other purpose" under which suitable directions are required to be given based on factual background. Therein the need to examine the correctness of Dena Nath's ratio did not arise nor is it a case of abolition of contract labour. So, its reference to be as a statement of laying the law in Dena Nath's case.

Prior to the Act came into force, in The Standard-Vacuu1n Refining D Co. of India v. Its Workmen & Ors., [1969] 3 SCR 466, a Bench of three 'fudges of this Court had held that the contract labour, on reference under Section 10 of the ID Act was required to be regularised, after the industrial dispute was adjudicated, under Section 2(k) of the ID Act. Since workmen had substantial interest in dispute, it was held that the direction issued by the Tribunal that the contract labour be abolished was held just in the E circumstances of the case and should not be interfered with. In other words, this Court upheld the jurisdiction of the Tribunal after deciding the dispute as an industrial dispute and gave direction to abolish the contract labour. The power of the Court is not fettered by the absence of any statutory prohibition. F In Security Guards Board for Greater Bombay and Thane District v. Security & Personnel Service Pvt. Ltd. & Ors., [1987] 3 SCC 413, the question as regards absorption of security guards employed in any factory or establishment etc. under Maharashtra Private Security Guards (Regula- tion of Employment and Welfare) Act, 1981 had come up for considera- G tion. It was held that the exemption under Section 23 is in regard to the security guards employed in the factory or establishment or in any class or classes of fabricating factory's establishment. The co-relationship of the security guards or classes of security guards who may be exempted from the operation of the Act is with the factory or establishment or class or classes of factories or establishments in which they work and not with the

AIR INDJASfATLTORY CORPN. '· UNION IABOUR UNION [KRAMASWAMY,J.) 653 agency or agent through and by whom they were employed. In other words, the ratio of that case is that it is not material as to through which contractor the employee came to be appointed or such labour came to be engaged in the establishment concerned. The direct relationship would emerge after the abolition of the contract labour. In Sankar Mukherjee & Ors. v. Union of India & 01>·., AIR (1990) SC 532, the State Government exercising the power under Section 10 of the Act prohibited employment of contract labour in cleaning and stacking and other allied jobs in the brick depart- ment. Loading and unloading of bricks from wagons and trucks was not abolished. Writ petition under Article 32 of the Constitution of India was · filed. A Bench of three Judges of this Court had held that the Act requires to be construed liberally so as to effectuate the object of the Act. The c bricks transportation to the factory, loading and unloading are continuous process; therefore, all the jobs are incidental to or allied to each other. All the workmen performing these jobs were to be treated alike. Loading and unloading job and the other jobs were of perennial nature. Therefore, there was no justification to exclude the job of loading and unloading of bricks D from wagons and trucks from the purview of the notification dated February 9, 1980. Thus, this Court had given direction to abolish the contract labour system and to absorb the employees working in loading and unloading the bricks which is of perennial nature. In national Federation of Railway Porters, Vendors & Bearers v. Union Of India & Ors., [1995] 3 SCC 152, a Bench of two Judges, to which one of us (K. Ramaswamy, J.) was a E member, was to consider whether the Railway Parcel Porters working in the different railway stations were contract labour for several years. When they filed writ petition, the Central Assistant Labour Commissioner was directed to enquire and find out whether the job is of a permanent and perennial nature and whether the petitioners were working for a long period. On receipt of the report, with findings in favour of workers, the Bench had directed the Railway Administration to regularise them into the service. This case also is an authority for the proposition t,!iat in an appropriate case the Court can give suitable directions to the competent authority, namely, Central Labour Commissioner to enquire and submit a report. The perennial nature of the work and other related aspects are required to be complied with before directions are given under of Section 10(1) and 10(2) of the Act. On receipt of the report, the Court could mould the relief in an appropriate manner to meet the given situation. In Fraga Tools case, this Court held that mandamus may be issued to enforce duties H

654 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A and positive obligation of a public nature even though the persons or the authorities are not public officials or authorities. The same view was laid in Anadi Mukta v. V.R. Rudani, [1989] 2 SCC 691 and Unni Krishnan v. State of A.P., [1993] 1 SCC 645. In Comptroller & Auditor General of India v. KS. Jagannathan, [1986] 2 SCC 679, this Court held that a mandamus would be issued to implement Directive Principles when Government have B adopted them. They are under public obligations to give preferential treatment implementing the rule of reservation under Articles 14 and 16(1) and (4) of the Constitution. In L.l.C. case, directions were issued to frame policies accessible in common man.

C Thus, we hold that though there is no express provision in the Act for absorption of the employees whose contract labour system stood abolished by publication of the notification under Section 10(1) of the Act, in a proper case, the Court as sentinal in the qui vive is required to direct the appropriate authority to act in accordance with law and submit a report to the Court and based thereon proper relief should be granted.

It is true that learned counsel for the appellant had given alternative proposal, but after going through its contents, we are of the view that the proposal would defeat, more often than not, the purpose of the Act and keep the workmen at the whim of the establishment. The request of the learned Solicitor General that the management may be left with that discretion so as to absorb the workman in the best manner favourable to the workmen cannot be accepted. In this behalf, it is necessary to recapitu- late that on abolition of the contract labour system, by necessary implica- tion, the principal employer is under statutory obligation to absorb the contract labour. The linkage between the contractor and the employee stood snapped and direct relationship stood restored between principal employer and the contract labour as its employees. Considered from this perspective, all the workmen in the respective services working on contract labour are required to be absorbed in the establishment of the appellant. Though there exists no specific scale of pay to be paid a regular employees, it is for the establishment to take such steps as are necessary to prescribe scale of pay like class 'D" employees. There is no impediment in the way of the appellants to absorb them in the last grade, namely, grade IV employees on regular basis. It is seen that the criteria to abolish the contract labour system is the duration of the work, the number of employees working on the job etc. That would be the indicia to absorb the

AIR INDIA STATUTORY CORPN. '· UNION !ABDUR UNION [KRAMASWAMY, !.) 655

employees on regular basis in the respective services in the establishments. A Therefore, the date of engagement will be the criieria to determine their inter se seniority. In case, there would be any need for retrenchment of any excess staff, necessarily, the principle of "last come, fist go" should be applied subject to his reappointment as and when the vacancy arises. Therefore, there is no impediment in way of the appellants to adopt the above procedure. The award proceedings as suggested in Gujarat Electricity Board case are beset with several incongruities and obstacles in the way of the contract labour for immediate absorption. Since, the contract labour gets into the service of the principal employer, the Union of the Existing employees may not espouse their cause for reference under Section 10 of the ID Act. The workmen, on abolition of contract labour system have no right to seek reference under Section 10 of!D Act. Moreover, the workmen immediately are kept out of job to endlessly keep waiting for award and thereafter resulting in further litigation and delay in enforcement. The management would always keep them at bay for absorption. It would be difficult for them to work out their right. Moreover, it is a tardy and time-consuming process and years would role by. Without wages, they cannot keep fighting the litigation endlessly. The right and remedy would be a teasing illusion and would be rendered otiose and practically compel the workmen to remain the mercy of the principal employer. Considered from this pragmatic perspective, with due respect to the learned Judges, E the remedy carved out in Gujarat Electricity Board case would be unsatis- factory. The shortcomings were not brought to the attention of this Court. So, that part of the direction in Gujarat Electricity Board case is not, with due respect to the Bench, correct in law. The Dena Nath's case, as held earlier, has not correctly laid down the law. Therefore, it stands over-ruled. Moreover, the Bombay High Court has correctly held that the High Court F under Article 2,l6 of the Constitution would direct the principal employer to absorb the contract labour, after its abolition, even though some of the contractors have violated Section 12 of the Act and the appellants have violated Section 7 of the Act. In the judgments under appeal, High Court has directed to absorb the services of the workman from the date of the G judgment. The respondent-Union did not challenge it. We are, therefore, constrained not to grant the benefit to the employees of the respondent- Union from the date of the abolition of the contract labour system. We, therefore, uphold the direction issued by the High Court to regularise their services with effect from the respective dates of the judgments of the High H

656 SUPREME COURT REP ORTS (1996] SUPP. 9 S.C.R. A Court with all consequential benefits. Before conclusion, we express our deep appreciation for valuable assistance given by all the learned counsel . in the appeals.

The appeals are accordingly dismissed, but, in the circumstances, without costs. B S.B. MAJMUDAR, J. : (Concurring Judgment) I have gone through the lucid and erudite judgment prepared by learned Brother Ramaswamy, J. I wholly concur with what has been held therein. I endorse each and every conclusion to which my learned Brother Ramaswamy, J. has reached. C However, as the fate of erstwhile contract labour on abolition of contract labour system under the provisions of Section 10(1) of the Contract Labour (Regulation and Abolition) Act, 1970 has always raised a vaxed question before the High Courts and before this Court. I have thought it fit to pen my observations on this question. It is true that a Bench of two-Judges of this Court to which I was a party in the case of Gujarat Electricity Board, Thennal Power Station, Ukai, Gujarat v. Hind Mazdoor Sabha & Ors., [1995) 5 SCC 27 in the light of earlier judgment of two-Judges' Bench of this Court in the case of Dena Nath v. National Fertilizers Ltd., [1992] 1 SCC 695 had to soften the rigour of the latter decision, by trying to evolve a locus paenitentiae for contract labourers on abolition of their contract labour from the establishment. But on further consideration it is found, as rightly held by Brother Ramaswamy, J., that such a scheme would not be work- able. Under the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as 'the Act') twin methodology had been adopted by the legislature. In the first instance, it sought to regulate contract labour p employed in any establishment wherein such labour was not of a perennial nature but had to be regulated so that the right to life available to workmen as per Article 21 would not be rendered illusory. Various welfare measures have been provided by the Act in connection with such regulations. The contract workers who are engaged by the contractor for the benefit of the principal employer are brought within the beneficial sweep of Chapter V G of the Act. Section 16 deals with provision of canteens for such workmen. Section 17 deals with rest-rooms. Section 18 enjoins the contractor employ- ing such contract labour in connection with work of such establishment to provided sufficient supply of wholesome drinking water as well as sufficient number of latrines and urinals of the prescribed types and washing facilities. Section 19 enables such contract labour to get first aid facilities

AIR INDIA STATlJTORY CORPN. '· UNION LABOUR UNION [S.B. MAJMUDAR I] 657

to be provided in the establishment. Section 20 imposes on the principal employer liability to discharge the obligations regarding providing of amenities as laid down by Sections 16, 17, 18 and 19 for the benefit of the contract labour employed in the establishment, if the contractor defaults in his duties. Section 21 enjoins the principal employer to see to it that proper wages are paid to such contract labour and to nominate a repre- B sentative 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 amount paid as wages as laid down by Section 21. Sub-service (4) of Section 21 makes the principal employer liable to pay such wages to the contract labourers if the contractor fails to make payment of their wages, and then to recover the same from the contractor. Chapter VI deals with penalties and procedure for enforcement of these welfare measures for the benefit of the contract labourers who are brought within the regulatory sweep of the Act. This is one facet of the Act. The other object of the Act is to abolish the contract labour system. In cases where the contract labour is employed on a work which 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 that is carried on in the estab- lishment of the principal employer. As per Section 10(2) of the Act, once conditions laid down therein are satisfied, the appropriate Government on the report of the Advisory Board has to abolish contract labour system from such process, operation or other work in an establishment. The E · conditions for undertaking such an exercise by such Government in con- nection with the establishment of principal employer are laid down by Section 10(2) clauses (a) to (d). These conditions clearly indicate that the work which the contract labourers are doing is of a perennial nature and is incidental to or necessary for the industry, trade, business, manufacture or occupation carried on in that establishment and it is otherwise done ordinarily through regular workmen in that establishment or an estab- lishment similar thereto and it is sufficient to em11loy considerable number of whole time workmen. Once these conditions art 'Stablished, on the basis of the report of the advisory board concerned, i1 · . an obligation of the appropriate Government to abolish such contract I · 1ur system prevailing in the given process or operation in the establishme. .

Now the moot question is as to what happens after such prohibition. It is obvious that prior to abolition, the contract labour doing work of perennial nature on the establishment of principal employer had the ad- H

658 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A vantage of regulatory provisions found in Chapter V and these provisions were given teeth by the legislature in Chapter VI by providing for penalties and procedure for imposition of sanctions by prosecution. The question is whether after abolition of contract labour system, the contract labourers who were earlier having regulatory protections would be rendered perso11a B 11011 grata and would be thrown out from the establishment and told off the gates. Then in such a case the remedy of abolition of contact labour would be worse than the disease and it has to be held that the legislature while trying to improve the lot of erstwhile contract labourers who are doing work of perennial nature for the principal employer and are doing work which is otherwise to be done by regular workmen had really left them in the lurch by making them lose all the facilities available to contract labour on the establishment as per Chapter V and desired them to wash their hands of the establishment and get out and face starvation. It is axiomatic that if they continued to be contract labourers their wages would have been guaranteed nnder Section 21 of the Act with an obligation in the principal · employer to pay them if the contractor fails to discharge his obligation in connection with payment of wages. Wages are the livelihood of workman and his large number of dependents. If on abolition of contract labour system, contract labour itself is to be abolished, it would cause economic ruin and economic death to contract labourer and his dependents for amelioration of whose lot order under Section 10 is to be passed. If it is held that on abolition of contract labour system, the erstwhile contract labourers are to be thrown out of the establishment, lock, stock and barrel, it would amount to throwing the baby out with the bath water. That obviously cannot be the scope, ambit and purport of Section 10 of the Act. F It has to be kept in view that contract labour system in an establishment is a tripartite system. In between contract workers and the principal employer is the intermediary contractor and because of this intermediary the employer is treated as principal employer with various statutory obligations flowing from the Act in connection with regulation of the working condi- G tions of the contract labourers who are brought by the intermediary con- tractor on the principal's establishment for the benefit and for the purpose of the principal employer and who do his work on his establishment through the agency of the contractor. When these contract workers carry out the work of the principal employer which is of a perennial nature and if provisions of Section 10 get attracted and such contract labour system in

AIR INDIA STATITTOR Y CORPN. '- UNION JABOUR UNION IS.B. MAJMUDAR J.) 659

the establishment gets abolished on fulfillment of the conditions requisite for that purpose, it is obvious that the intermediary contractor vanishes and along with him vanishes the term 'principal employer'. Unless there is a contractor agent there is no principal. Once the contractor intermediary goes the term 'principal' also goes with it. Then. remains out of this tripartite contractual scenario only two parties - the beneficiaries of the abolition of the erstwhile contract labour system i.e. the workmen on the one hand and the employer on the other who is no longer their principal employer but necessarily becomes a direct employer for these erstwhile contract labourers. It was urged that Section 10 nowhere provides for such a contingency in express term. It is obvious that no such express provision was required to be made as the very concept of abolition of a contract labour system wherein the work of the contract labour is of perennial nature for the establishment and which otherwise would have been done by regular workmen, would posit improvement of the lot of such workmen and not its worsening. Implicit in the provision of Section 10 is the legisla- tive intent that on abolition of contract labour system, the erstwhile con- D tract-workmen would become direct employees of the employer on whose establishment they were earlier working and were enjoying all the regulatory facilities on that very establishment under Chapter V prior to the abolition of such contract labour system. Though the legislature has expressly not mentioned the consequences of such abolition, but the very E scheme and ambit of Section 10 of the Act clearly indicates the inherent legislative intent of making the erstwhile contract labourers direct employees of the employer on abolition of the intermediary contractor. It was contended that contractor might have employed a number of workmen who may be in excess of the requirement and, therefore, the principal p employer on abolition of the contract labour may be burdened with excess workmen. It is difficult to appreciate this contention. The very condition engrafted in Section 10(2)(d) shows that while abolishing contract labour from the given establishment, one of the relevant considerations for the appropriate Government is to ascertain whether it is sufficient to appoint G considerable number of whole time workmen. Even otherwise there is an inbuilt safety valve in Section 21 of the Act which enjoins the principal employer to make payment of wages to the given number of contract workmen whom he has permitted to be brought for the work of the establishment if the contractor fails to make payment to them. It is, H

660 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A therefore, obvious that the principal employer as a worldly businessman in his practical commercial wisdom would not allow contractor to bring larger number of contract labour which may be in excess of the requirement of the principal employer. On the contrary, the principal employer would see to it that the contractor brings only these number of workmen who are required to discharge their duties to carry out the work of the principal employer on his establishment through, of course, the agency of the contractor, in fact the scheme of the Act and regulations framed there- under clearly indicate that even the number of the workmen required from the given contract work is to be specified in the licence given to the contractor. Consequently, the aforesaid apprehension projected on behalf of the principal employer is more imaginary than real. Even apart from that, after the absorption of the erstwhile contract workmen by the prin- cipal employer on abolition of contract labour system under Section 10, it is always open for the employer as an entrepreneur, in an appropriate case, if the excess working staff is not found to be required by him to retrench such excess staff in accordance with law by following the provisions of the Industrial Disputes Act, 1947. But that has nothing to do with the moot question as to what is the fate or erstwhile contract labour on abolition of contract labour system under the provisions of Section 10 of the Act. As rightly observed by Brother Ramaswamy, J. in his judgment, the scheme envisaged in the Gujarat Electricity Board's case is not workable as the existing workmen may not espouse the cause of erstwhile contract workmen who were aspiring to get employment on regular basis and even if they espouse their cause the litigation itself would be spread over a number of years and in the meantime the erstwhile contract labourers and their dependents would starve. I, therefore, wholly agree with Brother Ramas- wamy, J. in his view that the scheme envisaged by Gujarat Electricity Board's case is not workable and to that extent the said judgment cannot be given effect to.

Before parting with this judgment, it has to be appreciated that engagement of contract labour has been found to be unjustified by a catena of decisions of this Court. When the work is of perennial nature and instead of engaging regular workmen, the system of contract labour is resorted to, it would only be for fulfilling the basic purpose of securing monetary advantage to the principal employer by reducing expenditure on work fords. It wonld obviously be an unfair labour practice and is also an

AIRINDIASTATUIORY CXJRPN. v. UNION LABOUR UNION (S.B. MAJMUDAR, J.J 661

economically short-sighted and unsound policy, both from the point of view A

-· of the undertaking concerned and the country as a whole. Such a system was tried to be put to end by the legislature by enacting the Act but when it found that there are certain activities of establishment where the work is not of perennial nature then the contract labour may not be abolished but still it would be r~quired to be regulated so that the lot of the workmen is B not rendered miserable. The real scope and ambit of the Act is to abolish contract labour system as far as possible from every establishment. Conse- quently, on abolition which is the ultimate goal, the erstwhile regulated contract labour cannot be thrown out of establishment as tried to be submitted on behalf of the management taking resort to the express lan- guage of Section 10 of the Act. Such a conclusion reached by the two-Mem- C ber Bench in Dena Nath's case (supra), flies in the face of the very scope and ambit of the Act and frustrates the very scheme of abolition of contract labour envisaged by the Act. Such a conclusion, with respect, cannot be countenanced, as it results· in a situation where relatives of the patient are told by the operating surgeon that operation is successful but patient has D died.

So far as the judgment of the three-Member Bench of this Court in R.K Panda & Ors. v. Steel Authority of India & Ors., (1994) 5 SCC 304 is concerned, it is true that in para 6 of the Report in the last four lines it is observed while referring to Dena Nath's case (supra) that neither the Act E nor the Rules framed by the Central Government or by any appropriate Government provide that upon abolition of the contract Jabour, the labourers would be directly absorbed by the principal employer, but that is not the ratio of the decision of the said three-Member Bench. It has only referred to what Dena Nath's case decided. It is also required to be noted that the question which has been posed for our consideration is as to what is that fate of the erstwhile contract Jabour on abolition of contract labour system in the establishme.nt under Section 10 of the Act. Such a question had not come up for consideration before this Court in R.K Panda's case {supra). Therefore, it could not be urged that the ratio of Dena Nath's case was approved by three-Member Bench in RK Panda's case (supra). In the latter case no abolition was directed by the appropriate Government under Section 10 of the Act. It was a case in which the contract labourers were claiming to be absorbed directly by the principal employer without there being any order under Section 10. Consequently, the question with which we are concerned in the present case did not fall for consideration of the H

662 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A Bench in RK Pa11da's case (supra), nor had the Bench decided that question one way or the other. I, therefore, respectfully concur with the view taken by Brother Ramaswamy, J. on the scope and ambit of Section • 10 of the Act and hold that on abolition of the contract labour system from any establishment under Section 10 of the Act by the appropriate Govern- ment the logical and legitimate consequences thereof will be that the B erstwhile regulated contract labour covered by the sweep of such abolition for the concerned activities would be entitled I to be treated as direct employees of the employer on whose establishment they were ear lier working and they would be entitled to be treated as regular employees at least from the day on which the contract labour system in the establishment for the work which they were doing gets abolished.

T.N.A. Appeals dismissed.