Sadhan Mukherjee vs Indian Iron And Steel Company Ltd. ...

on 12 July, 2001

Calcutta High Court

Sadhan Mukherjee vs Indian Iron And Steel Company Ltd. ... on 12 July, 2001
Equivalent citations: 2002 (93) FLR 259, (2002) ILLJ 121 Cal
Author: D Seth
Bench: D Seth
JUDGMENT D.K. Seth, J.

1. A tender was floated inviting contracts for the performance of certain jobs including repair and
maintenance of boiler. The tender contained a Clause 6(1)(f), whereby it is stipulated that the
successful tenderer has to employ 51 numbers of workmen being annexured heads to be provided by
the company who are presently deployed for boiler repairs shall be deployed for the job under the
proposed contract. The petitioners are 63 such contractors' labour other than those 51 annexured
heads working under the present contract who seek to represent 119 similarly such contract labour
being engaged by the present contractor each of whom is holding gate-pass.

2. In this writ petition the petitioners claim that the said condition contained in paragraph 6(1)(f)
should be modified to include the scheme for protection of the said 63 petitioners as well as 119
other contract labour represented by them and the respondents should be directed to modify the
said clause in the tender so as to ensure continuation of the employment of the contractor's labour
who are alleged to have been employed over a long period of time. 1

3. Mr. Shaktinath Mukherjee learned counsel for the petitioners contends that by reason of the
Contract Labour (Abolition and Regulation) Act, 1970 the contract labour is prohibited and they are
to be absorbed in the establishment of the principal employer when the job is a perennial one.
According to him, even if, there may not be specific law on this subject requiring absorption or
employment of contract labour still, it is a social philosophy that has since been consistently
propounded by the High Courts and the Apex Court as is evident from the decisions cited by him.
According to him Articles 14 and 16 of the Constitution of India confer jurisdiction on the Courts to
enforce social philosophy in consonance with the Directive Principles of State Policy of the
Constitution of India. He had led this Court through the facts of each decision of the Apex Court to
which reference would be made at an appropriate stage and had contended that such philosophy is
now settled principle of law and Courts are not powerless when there is no specific law. The Court
has jurisdiction to do so. When it comes before the Court that a particular group of people who were
so long being protected suddenly become victims of non-protection or abolition of the protection, in
that event, the Court must rise to the occasion, and reach appropriate justice in deserving cases in
which the present one falls. He further contends that the petitioners are not asking for absorption
but are only claiming that though the contractor may change but the petitioners may be permitted to
continue as contractor's labour instead of engaging new hands particularly in view of their long
experience in the job by reason of their considerable period of continuation in the job. He had also
referred to the system followed by the Railways in respect of the contracts relating to parcel
handling or coal handling in which cases all tenders contain particular condition that the
contractors are to employ the existing workforce who were engaged in the job for such period by the
erstwhile contractors. He referred to one such tender form in order to point out therefrom that such
a condition is included in such tenders by the Railway Authorities. He further contends that since 51

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workers have already been given such protection, there is nothing to distinguish or reasonably
classify the said 51 persons from the petitioners and the other 119 persons so as to deprive the
protection of such condition included in the tender. According to him, the said 51 persons are also
contract labour while the petitioners and the said 119 persons are also contract labour. At the same
time he points out that the said 51 persons are also not sought to be absorbed; only they were sought
to be retained as contract labour even in the tender document. When such a condition could be
included in the tender document, then it cannot leave out the balance workforce without any
reasonable classification. On these grounds he contends that the said Clause 6(1)(f) should be
directed to be modified to extend protection to the petitioners as well as the said 119 persons.
Alternatively, he contends that even if the Court feels otherwise in interfering with the said
condition in the tender in that event, the Court should protect the interest of the petitioners and the
said 119 persons by making it clear that the successful tenderer shall employ these 63 petitioners
and the 119 persons before employing anyone else from outside. According to him, this is in
consonance with the principles laid down in the decisions cited by him which is now accepted
principle of law propounded by the Apex Court consistently.

4. Mr. Moloy Bose, learned counsel representing respondent No. 7, the erstwhile contractor had
placed the facts and had contended that these labour had been continuing for a long time as has
been alleged in the writ petition and that he has no objection if these contract labour continue or any
such condition is included in the tender document.

5. Mr. Lakshmi Kanta Gupta, learned counsel for the respondents, on the other hand, contends that
this writ petition is not maintainable at the behest of the petitioners who are contract labour. He
then contends that the petitioners cannot represent the said unknown 119 persons in a
representative capacity, the particulars of whom are not known to the respondent authorities. He
then contends that so far as the present tender is concerned, there is no relationship between the
petitioners and the company. Inasmuch as they will not be participants in the tender and as such
they cannot intervene in the matter of entering into a contract by floating a tender. He further
contends that the company has the freedom to enter into contracts. Such freedom cannot be
interfered with in exercise of writ jurisdiction. It is a question of offer and acceptance on certain
conditions as may suit the parties. The terms of the contract are set down by experts in the field and
such terms cannot be interfered with by the Courts, except on certain conditions of mala fide or
otherwise, as has been laid down in the decisions cited by him, to which reference would be made at
appropriate stage. In any event, according to him, the petitioners cannot compel the company to
include a particular condition in the tender. If they do not have such, fight in that event, they cannot
maintain a writ petition which is to be founded on a legal right. Unless the petitioners are able to
establish a legal right, they cannot insist upon any such condition being included in the tender
document through writ jurisdiction. He further contends that the condition contained in the tender
document floated by the Railways cannot bind the respondent company. He then contends that the
said 51 persons who are protected in the Tender Document are part of the 91 workers whose names
were mentioned as Annexured Heads in the tripartite settlement entered into in 1980 which under
the provisions of the Industrial Disputes Act the company is bound to follow and the breach whereof
would result into penal consequences inviting criminal law. Thus the said 51 persons stand
altogether on a different footing than the petitioners and the said 119 persons, who were not

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included in the said 91 persons related to the tripartite settlement. According to him, the tripartite
settlement is binding on all parties. Be that as it may, the tripartite settlement was between the
company and the Union. In the. present case, the petitioners being contract labour, they cannot be
treated to be workmen of the company in order to obtain the benefit of a relationship under which
they could be brought, at par with the members of the Union being the workman of the company.
Thus, they cannot now force themselves to be included within the said 51 candidates even if it is
contended that they were taken in the place and stead of the forty candidates out of 91 on account of
their retirement or death, as the case may be. He has also distinguished the decisions cited by Mr.
Mukherjee and had pointed out that the philosophy may be a sound principle of law so established
but that would be applicable when the question of absorption or otherwise crops up before this
Court. He also points out that such a situation could be available to the petitioners when there is a
notification under Section 10(1) of the Contract Labour (Regulation and Abolition) Act, 1970. He
then contends that such a notification was issued sometimes in 1979 superseded by another
notification in 1980. In the said notification some of the works were held to be notified works and
their jobs included within the notification in respect whereof contract labour were abolished. But the
job relating to the boiler was not included in the notification and it remained open for contract
labour. Therefore the protection which was extended by the decision of the Apex Court cannot be
extended in this case in view of the special facts of this case. The ratio decided in the decisions cited
cannot be attracted. On this ground he prays that this writ petition should be dismissed.

6. I have heard the learned counsel for the respective parties at length. In order, to appreciate the
respective contentions it may be necessary to refer to the admitted facts. It is not disputed that there
was a notification under Section 10(1) sometimes in 1979 superseded by further notification of 1980
issued under the Contract Labour (Regulation and Abolition) Act, 1970 in the said notification the
boiler job was not included. The boiler job remained open to contract labour. Ninety one persons
who were working as contract labour in the boiler were included in the tripartite settlement
following a strike in the establishment.

However, Mr. Gupta had contended that this tripartite settlement was forced upon the company, but
the same has since been disputed on behalf of the petitioner as well as respondent No. 7. Fifty one
persons who were sought to be protected in the tender are the only remaining persons of the 91
persons and the rest of whom had either superannuated or ceased to be workmen by reason of death
or otherwise. The petitioners and the 119 persons had been working for a long time and had been
issued gate pass as contract labour in the job related to the boiler. But this job was not included in
the notification under Section 10(1) issued in 1980 and that the job is still open to contract labour.

7. In this background, the question that has been raised by Mr. Mukherjee and countered by Mr.
Gupta are to be examined. Admittedly, the petitioners and the said 119 persons were not named in
the list that was included in the tripartite settlement entered into in 1980 in which the said 91
persons mentioned therein were referred to as annexured heads. Admittedly, the tripartite
settlement is binding on all the parties as provided in Section 18 of the Industrial Disputes Act and
any breach thereof makes the company liable to certain consequences including criminal offence
under Section 29 of the Industrial Disputes Act. The said 91 persons of whom now 51 are available,
are part of the tripartite settlement. These petitioners and the 119 persons sought to be represented

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by them were not in employment as contract labour at the point when the tripartite settlement was
entered into. It is not disputed by the petitioners that in the said tripartite settlement, any condition
was included in respect of the contract labour who would be employed in future. Therefore, unless
any such condition is shown to the Court, the petitioners and the said 119 persons cannot claim to be
standing on the same footing as that of the 91 persons now reduced to 51. Thus by reason of
inclusion of the said 51 persons in the tripartite settlement as annexured head they are a different
class than those of the petitioners and the said 119 persons. The tripartite settlement is binding
between the employer and the workmen. Admittedly, the petitioners and the said 119 persons
were/are not workmen upon whom the tripartite settlement in terms of Section 18 of the Industrial
Disputes Act would be binding. They are admittedly contract labour. As such there is no relationship
of employer and employee so far as the company and the petitioners and the 119 persons are
concerned. They may be contractor's labour and there might be some relation in-between the
licensed contractor and the principle employer. But then the contract labour are entitled to the
benefits provided in the Contract Labour (Regulation and Abolition) Act which a principal employer
is supposed to extend to the contract labour.

8. Since these petitioners and the 119 persons stand on altogether a different footing than that of the
said 51 persons, therefore the question of violation of the principle of equity or equality clause as
enshrined under Article 14 of the Constitution cannot be attracted in the facts and circumstances of
the case. Similarly the ratio decided in the case of Sengara Singh v. State of Punjab and Ors., , cited
by Mr. Mukherjee cannot be attracted in this case. In the said decision, a group of police personnel
were dismissed from service on account of their participation in a procession. The writ petition filed
against their termination of service was dismissed by the High Court. The order of dismissal was
ultimately affirmed by the Apex Court. After such affirmation of the termination, the Government
had picked up some of such police personnel numbering 40 who were re-employed while the
balance were left out. In such a situation, the Apex Court had held that the Government is not
entitled to make a discrimination in between the persons who are similarly situated. In the said case
all these people were dismissed from employment and such order was affirmed by the Apex Court
and therefore it formed a particular class. Out of the same class, a group has been chosen and thus
there was unreasonable classification and as such it was a discrimination. Whereas in the present
case, the facts are altogether distinguishable. Therefore, the ratio laid down therein cannot be
attracted in the present case.

9. So far as the protection extended to the contract labour is concerned, as has been held in Air India
Statutory Corporation v. United Labour Union, though it established a principle and had
propounded the philosophy but the same is related to the question of absorption or employment of
contract labour in the employ of the principal employer. In the said case, the facts were that a
notification under Section 10(1) was issued in which those particular jobs were held to be notified
jobs in respect whereof the contract labour was abolished by such notification. But the principal
employer did not absorb them and implement the notification under Section 10(1) of the 1970 Act.
In this background, the said decision had proceeded. But, in the present case, in the notification
under Section 10(1) of the 1970 Act, the boiler job was included and contract labour was not
abolished and the contract labour were allowed to continue as contract labour and there is no scope
for their absorption or employment. Thus the said decision also cannot help us in view of the

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distinguishing feature as is apparent from the facts of this case.

10. So long the petitioners remain contractor's labour except the relationship of principal employer,
there is no relationship of employer and the employee between the company and the said contract
labour. Therefore they cannot enforce any of their right as against the company except the rights as
are available within the scope and ambit of the 1970 Act in relation to service conditions. They can
neither enforce their absorption nor in the name of protection of their right to continue in
employment following the philosophy propounded in the decision of the Air India Statutory
Corporation (supra), nor they can compel the company to include a condition in the tender
document for the purpose of entering into contract with third parties. Indirectly the petitioners may
lose the protection which they had been enjoying so long. Still then having regard to the facts and
circumstances of the case and the area in respect whereof such right is being sought to be enforced,
being completely foreign to the rights of the petitioners, it is very difficult on the part of this Court to
accept such contention as raised by Mr. Mukherjee. If such contention is accepted, in that event it
would be stretching law too far, even to the extent of the area for entering into contract by an
employer with which the employees had nothing to do. The freedom to carry on business is a
Fundamental Right protected under Article 19(1)(g) of the Constitution. It cannot be prevented by
the Court unless the statute provides so. Had it been a different area, in that event the question
would have been different by reason of the social philosophy as has been laid down in the decisions
cited by Mr. Mukherjee. The area being altogether different and having nothing to do with
employment, this Court cannot stretch the said philosophy to the present case and to curtail the
freedom of the company to carry on its business or the freedom to enter into a contract by the
company.

11. So far as the contentions that such conditions are being included in the contract by the Railways
as raised by Mr. Mukherjee, is concerned, the same has no relevance when the organisation is
completely different; even then such condition is not followed by the Railway authorities itself in
every matter. It may be followed in parcel handling or coal handling contract but there is nothing to
show that the Railways are following such condition in every contract wherever contract labour are
engaged or labour contracts are involved. The form produced by Mr. Mukherjee which is taken on
record in Supplementary Affidavit provides such condition in paragraph 21 at page 11 of the said
Affidavit which refers to an order of stay in Civil Appeal No. 1358 of 1986 pending before the Apex
Court in which an interim order was granted in Civil Misc. Petition No. 6281 of 1988. Therefore, the
said condition was included in the form produced by reason of interim order subsisting. Thus the
said condition contained in paragraph 21 cannot be used as precedent to show that the Railways are
following it of its own. On the other hand it is being followed by reason of certain interim orders. So
far as the present case is concerned, no such interim order is operative in the field. But then without
any information with regard to the facts of the said case, it is not possible to rely on the said
condition for the purpose of taking a decision in the present case.

12. In the case of Secretary, Haryana State Electricity Board v. Suresh and Ors., cited by Mr.
Mukherjee, certain propositions have been laid down having regard to the social philosophy for the
protection of employment. He has referred to paragraph 1 of the said decision which runs as follows:

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"The doctrine of equality as enshrined in the Constitution promised an egalitarian Society and the
Contract Labour (Regulation and Abolition) Act, 1970 is the resultant effect of such a constitutional
mandate having its due focus in that perspective. This Court in Minerva Mills Ltd. v. Union of India,
in no uncertain terms laid down that the equality clause in the Constitution does not speak of mere
formal equality before the law but embodies the concept of real and substantive equality which
strikes at the inequalities arising on account of vast social and economic differentiation and is thus
consequently and essential ingredient of social and economic justice. In short, this Court has
equated the security clause in the Constitution so as to mean that the people of the country ought to
be secured of socio-economic justice by way of a fusion of Fundamental Right and Directive
Principles of State Policy. As a matter of fact this Court has been candid enough on more occasions
than one and rather, frequently to note that socialism ought not to be treated as a mere concept or
an ideal, but the same ought to be practised in every sphere of life and be treated by the law Courts
as a constitutional mandate since the law Courts exist for the society and required to act as a
guardian-angel of the society. As a matter of fact the socialistic concept of society is very well laid in
Part III and Part IV of the Constitution and the Constitution being supreme, it is a bounden duty of
the law Courts to give shape and offer reality to such a concept."

13. But as rightly pointed out by Mr. Gupta, the said decision is followed on the basis that the
members therein who were alleged to be contract labour were found in fact not to be contract labour
by application of the principles of lifting the veil as propounded in paragraph 19 of the said
judgment which runs as follows in 1999-I-LLJ-1086 at p. 1093:

"19. It has to be kept in view that this is not a case in which it is found that there was any genuine
contract labour system prevailing with the Board. If it was a genuine contract system, then
obviously, it had to be abolished as per Section 10 of the Contract Labour (Regulation and Abolition)
Act after following the procedure laid down therein. However, on the facts of the present case, it was
found by the Labour Court and as confirmed by the High Court that the so called contractor
Kashmir Singh was a mere name lender and had procured labour for the Board from the open
market. He was almost a broker or an agent of the Board for that purpose. The Labour Court also
noted that the Management witness Shri A.K. Chaudhary also could not tell whether Shri Kashmir
Singh was a licensed contractor or not. That workmen had made a statement that Shri Kashmir
Singh was not a licensed contractor. Under these circumstances, it has to be held that factually there
was no genuine contract system prevailing at the relevant time wherein the Board could have acted
as only the principal employer and Kashmir Singh as a licensed contractor employing labour on his
own account. It is also pertinent to note that nothing was brought on record to indicate that even the
Board at the relevant time, was registered as principal employer under the Contract Labour
(Regulation and Abolition) Act. Once the Board was not a principal employer and the so called
contractor Kashmir Singh was not a licensed contractor under the Act, the inevitable conclusion that
had to be reached was to the effect that the so called contract system was a mere camouflage, a
smoke and screen and disguised in almost a transparent veil which could easily be pierced and the
real contractual relationship between the Board, on the one hand, and the employees, on the other,
could be clearly visualised."

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14. Thus it appears that the said decision was based on the fact that the persons who were seeking
the relief were not really the contract labour but were shown to be contract labour in a situation
where the employer was not registered as a principal employer under the 1970 Act and the alleged
contractor was not a licensed contractor thereunder. Thus the said philosophy was founded on a
situation where the genuine employees were deprived of the benefit of employment through a
mechanical device. Thus the said decision also does not help us in the present facts of this case,
particularly when it is not related to a question of employment but related to a condition to be
included in the contract.

15. As observed earlier, the right to carry on business is a fundamental right under Article 19(1)(g) of
the Constitution which enshrines freedom to enter into contract while Article 301 permits freedom
of trade. Whether such right can be interfered with is a question that was dealt with in Tata Cellular
v. Union of India, . In Paragraph 113 of the said decision, the principle in which a contract can be
interfered with was laid down as follows:

"113. The principles deducible from the above are:

(1) The modern trend points to judicial restraint in administrative action.

(2) The Court does not sit as a Court of appeal but merely reviews the manner in which the decision
was made.

(3) The Court does not have the expertise to correct the administrative decision. If a review of the
administrative decision is permitted it will be substituting its own decision, without the necessary
expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to
tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the
contract is reached by process of negotiations through several tiers. More often than not, such
decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a
necessary concomitant for an administrative body functioning in an administrative sphere or
quasi-administrative sphere. However, the decision must not only be tested by the application of
Wednesbury principle of reasonableness (including its other facts pointed out above) but must be
free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to
increased and unbudgeted expenditure."

16. Thus here in this case the petitioners are seeking to enforce the company to include a particular
condition in the contract by invoking writ jurisdiction. The writ jurisdiction can be invoked only to
establish a legal right. So far as the contract or tender is concerned, the petitioners cannot claim any
legal right. Legal right whatever they might claim can be claimed in their employment for which

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their remedy is open before the appropriate forum, if occasion so arises and if they are so advised.
Nothing in this tender will entail their right which they have in any manner whatsoever which will
remain open to them for ever. But on the alleged ground that by reason of such condition in the
contract they would be deprived of the protection of employment, would be stretching a principle or
philosophy propounded in Air India Statutory Corporation (supra) or Haryana State Electricity
Board (supra), too far. It would be stretching such philosophy to an area where such philosophy has
no manner of application viz., in the realm of business or entering into contract to which area of
employment is completely foreign inasmuch as it is a field of business. It is an area of offer and
acceptance as contract in relation to the company's business with which employees are by no way
connected. Then again in between the company and the petitioners there is no relationship of
employer and employee, save as principal employer within the meaning of Contract Labour
(Regulation and Abolition) Act, 1970. The petitioners and the said 119 persons are completely
strangers in the floating of the tender. They cannot claim any right or interest in it. There is no scope
for consideration whether such contract will remotely affect their employment. Unless such
employment is protected legally under the statute creating an obligation of the company they cannot
claim to have any legal right which can be enforced through writ jurisdiction. The philosophy is
applicable when there is a legal right. It cannot be applied without a legal right. Such a legal right
does not arise in the present context.

17. Right to carry on business is a Fundamental Right guaranteed under Article 19(1)(g) of the
Constitution. Right to enter into a contract is a right flowing from right to carry on business. It is
part and parcel of the Fundamental Right guaranteed under Article 19(1)(g). Whenever, there is a
conflict between two rights, the dominant will dominate the dominated one. In a conflict between
Fundamental Right and legal right, the Fundamental Right will dominate. Where both cannot
coexist the legal right has no yield to the Fundamental Right. However, in this case with regard to
the entering into contract the petitioners and the said 119 persons do not have any legal right. As
such no conflict can be envisaged. If such a view, as contended by Mr. Mukherjee is accepted it will
create an administrative anarchy. Then not only employees but also contract labour will dominate
the administration of the employer even in respect of its business. It will be creating a complete
deadlock. It will not only affect but jeopardise the exercise of fundamental right to carry on business.
A philosophy has to operate within its applicable sphere. The philosophy, howsoever, lofty of ideal,
cannot outstretch itself to a field outside its applicable area. The Courts are creatures of statute. It
cannot travel beyond the Statute. Unless statute permits the Court it is not supposed to invoke and
apply such philosophy in an area completely foreign to it.

18. Thus, even if non-inclusion of such condition may indirectly affect the employment of the
petitioners of such 119 persons, still the Court is powerless to compel the company to include such
condition in the contract. But the Court would not be powerless when the petitioners will come with
their employment or absorption if in law they are so entitled which would be altogether a different
consideration which cannot have any manner of application in the present case.

19. In view of the above findings, it is not necessary to deal with the other contentions raised by the
respective counsel.

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20. In the result, this writ petition fails and is accordingly dismissed. Interim order stands
discharged. There will be no order as to costs.

21. In view of the order passed above, no order need be passed on the application for vacating
interim order, being CAN. No. 5833/2001.

22. Xerox certified copy of this order, if applied for, be given within seven days from the date of
making such application.

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