Indian Iron and Steel Company Limited and Another vs The State of Bihar and Another

B.P. Singh and Gurusharan Sharma, JJ.—The Petitioners herein have impugned the order passed by the Chief Judicial Magistrate, Dhanbad, in C.L.A. Case No. 21 of 1977 dated 28.10.1977, whereby cognizance has been taken of the offences Blunder Sections 23 and 24 of the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as ''the Act'')'' and Bit process has been issued against both the Petitioners. Petitioner No. 1 herein is M/s Indian Iron and Steel Company Limited, an in corporated Company, and its Chief Executive (Collierles), Chasnala Colliery, Br namely, Satya Pal Puri, is Petitioner No. 2.

The impugned order was passed by the Chief Judicial Magistrate on the complaint made to him by the Labour Enforcement Officer alleging that the Petitioners had engaged 160 contract labour for over burden removal through its Contractor, M/s Continental Construction Pvt. Ltd., despite the prohibition contained in the notification issued by the Government of India dated 1st February, 1975, u/s 10(1) of the Act.

The Petitioners contend that the violation of any notification issued by the appropriate Government u/s 10 of the Act does not amount to an offence because in terms of Section 23, unless there is a contravention of any provision of the Act or of any rule made there under prohibiting, restricting or regulating the employment of contract labour, no offence is committed. According to the Petitioners, a notification u/s 10 of the Act is not a provision of the Act nor can it be equated with the rules made under the Act. Consequently, an infringement of a notification u/s 10 of the Act does not attract the penal provision contained in Section 23 thereof.

Additionally, Petitioner No. 2 contends that without any enquiry whatsoever, he has been made an accused in the case in a mechanical manner, though he was not responsible for the engagement of contract labour. It is his case that even if an offence has been committed, he cannot be prosecuted in the facts and circumstances of the case.

The instant criminal miscellaneous petition came up for hearing before a learned Single Judge of this Court and reliance was placed upon a decision of a learned Single Judge of this Court in Sheoshankar Prasad Sinha and Others Vs. The State of Bihar and Others, holding that violation of a notification issued u/s 10(1) of the Act did not amount to an offence under the Act. The learned Single Judge before whom this criminal miscellaneous petition came up for hearing doubted the correctness of the earlier decision of this Court rendered by a Single Judge and, therefore, referred the matter to a Division Bench. That is how the instant criminal Miscellaneous petition has been placed before a Division Bench for disposal.

The system of employment of contract labour lends itself to various abuses, and consequently the question of its abolition had been under the consideration of the Government for a long period. After much deliberation a general consensus emerged that the system should be abolished wherever possible are practicable, and that in cases where this system could no be abolished altogether, the working conditions of the contract labour should be regulated so as to ensure payment of wages and provision of essential amenities. It was with this object in view that a bill was introduced in the Parliament aiming at the abolition of contract labour in respect of such categories, as may be notified by the appropriate Government in the light of certain criteria that have been laid down, and at regulating service conditions of contract labour where abolition is not possible. The title of the Act itself indicates that it is an Act to regulate the employment of contract labour in certain establishment and to provide for its abolition in certain circumstances. and for matters connected therewith. The Supreme Court in B.H.E.L. Workers Association, Hardwar and Others Vs. Union of India and Others, noticed the long title of the Act and observed that the Act does not provide for the total abolition of the contract labour, but only for its abolition in certain circumstances.

Section 10 of the Act provides as follows:

Prohibition of employment of contract labour. (1) Notwithstanding anything contained in this Act, 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.

(2) Before issuing any notification under Sub-section (1) 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 ordinary through regular workmen in that establishment or an establishment similar thereto;

(d) whether it is sufficient to employ considerable number of whole-time workmen

Explanation:- If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final.

From a bare perusal of the provision is clear that the appropriate Government may by notification in the official gazette prohibit employment of contract labour in any process, operation or other work in any establishment. Sub-section (2), however enumerates the matters which are required to be considered by the Government while issuing a prohibitory notification u/s 10 of the Act. Section 23 of the Act is a penal provision which provides as follows:

Contravention of provisions regarding employment of contract labour.- Whoever contravenes any provision of this Act or of any rules made thereunder prohibiting, restricting or regulating the employment of contract labour or contravenes any condition of a licence granted under this Act, shall be punishable with imprisonment for a (sic) which may extend to three month, (sic) with fine which may extend to one thousand rupees, or with both and in the case of a continuing contravention with an additional fine which may extend to one hundred rupees for every day during which such contravention continues after conviction for the first such contravention.

Prohibition of employment of contract labour is essentially a legislative function. However, having regard to the complexities of the issues involved the legislature thought it proper to delegate is power to the appropriate Government which could exercise that power by issuance of a notification prohibiting employment of contract labour in any process, operation or other work in any establishment. No doubt, it was open to the legislature itself to prohibit the employment of contract labour in any process, operation etc. by enumerating them under the Act. But, as a matter of legislative policy that power was left to be exercised by the appropriate Government after following the guidelines laid down in the Act itself. It, therefore, appears to us patent that the issuance of a notification u/s 10 of the Act is an exercise of power legislative in character; it is neither administrative nor quasi judicial. Once a notification is issued, the consequences under the Act must follow as if the legislature itself had prohibited the employment of contract labour in any process, operation etc. in any establishment. The submission urged on behalf of the Petitioner that the contravention of a notification issued by the appropriate Government u/s 10 of the Act does not amount to the contravention of any provision of the Act or the rules made there under, ignores this vital distinction between the exercise of legislature power and exercise of power administrative or quasi judicial in nature. This is supported by several decisions of the Supreme Court, which have clearly spelt out this vital distinction. Though the exercise of power may be by the executive, the nature of the power may be such that the exercise of such power pursuant to a law authorising such exercise, is also of legislative character. It may be characterised as delegated legislation or conditional legislation, but the action is legislative in character and becomes a part of the Act itself.

As early as in the case of Emperor v. Abdul Hamid AIR 1923 Patna 1 a Division Bench of this Court observed:

The next objection is, that the order of the Superintendent of Police cannot be called a law or legal process. The reply is that when a notification is issued by an executive authority in exercise of a power conferred by statute that notification is as much a part of the law as if it had been incorporated within the body of the statute at the time of its enactment. The command is in every respect a command by the appropriate legislative authority. In the present case if the notification was in compliance with Section 30 of the Police Act, then, in my opinion, it was a law and certainly a legal process.

In Tulsipur Sugar Co. Ltd. Vs. The Notified Area Committee, Tulsipur, a question arose as to whether the notification issued u/s 3 of the U.P. Town Area Act (Act 2 of 1914) which had the effect of making the Act applicable to a geographical area by issuance of a declaration was legislative in character. The Supreme Court after considering the provisions of the Act observed:

We are concerned in the present case with the power, of the State Government to make a declaration constituting a geographical area into a town area u/s 3 of the Act which does not require the State Government to make such declaration after giving notice of its intention so to do to the members of the public and inviting their representations regarding such action. The power of the State Government to make a declaration u/s 3 of the Act is legislative in character because the application of the rest of the provisions of the Act to the geographical area which is declared as a town area is dependent upon such declaration. Section 3 of the Act is in the nature of a conditional legislation Dealing with the nature of functions of a non-judicial authority, Prof. S.A. Do Smith in Judicial Review of Administrative Action (Third Edition) observed at page 163:

However, the analytical classification of a function may be a conclusive factor in excluding the operation of the audi alteram partem rule. It is generally assumed that in English law the making of a subordinate legislative instrument need not be preceded by notice or hearing unless the parent Act so provides.

The same principle was reiterated in AIR 1981 1127 (SC) In that case it was urged on behalf of the Petitioner that the issuance of the notification u/s 5 of the Bihar Agricultural Produce Market Act, 1960, declaring market yards in violation of principles of natural justice was bad. Objections ought to have been invited and heard before a market yard was established at any particular place since the principles of natural justice demanded it. In this context the Court held;

...We are unable to agree. We are here not concerned with the exercise of a judicial or quasi-judicial function where the very nature of the function involves the application of the rules of natural justice, or of an administrative function affecting the rights of persons, wherefore, a duty to act fairly. We are concerned with legislative activity; we are concerned with the meaning of legislative instrument, the declaration by notification of the Government that a certain place shall be a principle market yard for a market area, upon which declaration certain statutory provisions at once spring into action and certain consequences prescribed by statute follow forthwith. The making of the declaration, in the context, Is certainly an act legislative in character and does not oblige the observance of the rules of natural justice.

In I.E. Newspaper (Bombay) P. Ltd. v. Union of India AIR 1986 S.C. 515 the principle has been reiterated relying upon an earlier decision of the Supreme Court in Narinder Chand Hem Raj and Others Vs. Lt. Governor, Administrator, Union Territory, Himachal Pradesh and Others, wherein it M was held:

...The power to impose a tax is undoubtedly a legislative power. That power can be exercised by the legislature directly or subject to certain conditions, the legislature may delegate the power to some other authority. But the exercise of that power whether by the legislature or by its delegate is an exercise of a legislation power. The fact that the power was delegated to the executive does not convert that power into an executive or administrative power. No Court can issue a mandate to a legislature to enact a particular law. Similarly no a court can direct a subordinate legislative body to enact or not to enact a law which it may be competent to enact.

In Union of India (UOI) and Another Vs. Cynamide India Ltd. and Another etc., a question arose as to whether the issuance of a notification by the Central Government under the Drugs (Price Control) Order, 1979 was of legislative character. Their Lordships held that the price fixed is neither the function nor the forte of the Court since the Courts are neither concerned with the policy nor with the rates. It was observed:

The third observation we wish to make is price fixation is more in the nature of a legislative activity than any other. It is true that, with the proliferation of delegate legislation, there is a tendency for the line between legislation and administration to vanish into an illusion Administrative, quasi-judicial decision tend to merge in legislative activity and conversely, legislative activity tends to fade into and present an appearance of an administrative or quasi-judicial activity. Any attempt to draw a distinct line between legislative and administrative functions, it has been said, is difficult in theory and impossible in practice. Though difficult, it is necessary that the line must sometimes be drawn as different legal rights and consecequences may ensue. The distinction between two has usually been expressed as �one between the general and the particular�. A legislative act is the creation and promulgation of a general rule of conduct without reference to particular cases; an administrative act is the making and issue of a specific direction or the application of a general rule to a particular case in accordance with the requirements of policy�. �Legislation is the process of formulating a general rule of conduct without reference to particular cases and usually operating in future; administration is the process of performing particular acts, of issuing particular orders or of making decisions which apply general rules to particular cases�. It has also been said ''Rule making is normally directed toward the formulation of requirements having a general application to all members of a broadly identifiable class'' while, ''an adjudication, on the other hand, applies to specific individuals or situations''. But, this is only a broad distinction, not necessarily always true'' ...A price fixation measure does not concern itself with the interests of an individual manufacturer or procedure. It is generally in relation to a particular commodity or class of commodities or transactions. It is a direction of a general character, not directed against a particular situation. It is intended to operate in the future. It is conceived in the interest of the genera consumer public. The right of the citizen to obtain essential articles at fair prices: and the duty of the State to so provide them are transformed into the power of the State to fix prices and the obligation of the producer to charge no more than the price fixed. Viewed from whatever angle, the angle of general application, the prospectivity of its effect, the public interest served, and the rights and obligations flowing there from, there can be no question that price fixation is ordinarily a legislative activity....

The same principle has been reiterated in Sundarjas Kanyalal Bhathija and others Vs. The Collector, Thane, Maharashtra and others,

The authorities on the subject, therefore, leave us in no doubt that the issuance of a notification u/s 10 of the Act by the appropriate Government is legislative activity. Upon such declaration the statutory provisions at once spring into action and the consequences prescribed by the Act follow forthwith. The issuance of a notification in the context, is certainly an act legisative in character, and such a notification is as much a part of the law as if it had been Incorporated within the body of the statute at the time of its enactment. Contravention of such a notification is a contravention of a provisions of the Act, namely, the prohibitory notification issued, u/s 10 of the Act which itself becomes a part of Section 10 of the Act. Upon its breach the consequences envisaged u/s 23 of the Act must follow and, therefore, it is futile to contend in this case that Section 23 is not attracted if there is a contravention of a notification u/s 10 of the Act.

We are equally of the view that the Earlier decision of this Court rendered by a learned Single Judge in Indian Iron and Steel Co. Ltd. and Others Vs. State of Bihar and Others, does not lay down good law. The learned Judge was of the view that the matter was concluded by a decision of the Supreme Court it East India Commercial Co. Ltd. v. Collector of Customs AIR 1962 SC 1898. In out view, the conclusion was not justified because in M/s East India Commercial Co. Ltd., the Supreme Court held that the infringement of a condition of the licence not to sell the goods imported to a third party was not an infringement of an order and, therefore, did not attract Section 167(8) of the Sea Customs Act. The facts of the instant case are quite...ferent, because the infringement is not a condition of the licence, but of a prohibitory notification legislative in character and issued in exercise of legislative power conferred by Section 10 of the Act.

The matter may be viewed from another angle. Section 10 of the Act is the only provision which provides for the issuance of a notification prohibiting employment of contract labour in any process, operation or other work in any establishment. Section 23 makes the contravention of any provisions of the Act or any rule made there under prohibiting, restricting or regulating employment of contract labour an offence punishable with imprisonment of fine or both. If the submission urged on behalf of the Petitioners is to be accepted, the object of the Act in so far as it seeks to prohibit employment of contract labour in any process, operation or other work in any establishment, will be defeated altogether, because such a notification cannot be enforced. We are, therefore, of the view that the issuance of a notification being legislative in character, and such legislative power having been vested in the appropriate Government by the legislature itself, the notification issued in exercise of such legislative power must be read as a part of Section 10 of the Act. The contravention of such a notification will, therefore, amount to the contravention of Section 10 of the Act, and would amount to an offence punishable u/s 23 and 24 of the Act. We are, therefore, satisfied that there is no merit in the contention that the Chief Judicial Magistrate erred in law in taking cognizance of offences u/s 23 and 24 of the Act, since there was no contravention of any provision of the Act or any rule made there under prohibiting, restricting or regulating the employment of contract labour.

So far as the submission urged on behalf of Petitioner No. 2 is concerned, that appears to have force. Section 2(g) of the Act defines the principle employer as follows:

Definitions.-

(g) "Principal employer" means, -

(i) in relation to any office or department of the Government or local authority, the head of that office or department of such other officer, as the Government or other local authority, as the case may be, may specify in this be half,

(ii) in a factory, the owner or occupier of the factory and where a person has been named as the manager of the factory under the Factories Act, 1948 (63 of 1948), the person so named,

(iii) in a mine, the owner or agent of the mine and where a person has been named as the manager of the mine, the person so named,

(iv) in any other establishment, any person responsible for the supervision and control of the establishment,

Section 25 of the Act provides that if the person committing an offence under the Act is a company, the company as well as every person in charge of, and responsible to, the company for the conduct of its business at the time of commission of the offence shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. From the complaint lodged by the Labour Enforcement Officer it appears that Petitioner No. 2 has been made an accused only because he happened to be the Chief Executive of the Colliery in-question, and is also the principle employer as per Section 2(g)(iii) of the Act. While we do not express any view on the question as to whether Petitioner No. 2 should be prosecuted in the instant case, we do feel that before a prosecution is launched against an officer or a company, it must be preceded by some enquiry on the question as to whether the person sought to be prosecuted has some role to play in the employment of contractual labour in contravention of the notification. Mere mechanical reproduction of the words of the statute and the naming of an accused also in a mechanical manner without making some enquiry into the matter must not be encouraged because that may have the effect of harassing an innocent officer while exonerating one who ought to have been prosecuted. There is nothing in the complaint disclosing on what basis it is alleged that Petitioner No. 2 had engaged the contract labour for removal of overburden. The Act seeks to punish those who are responsible for the commission of an office and we cannot loss sight of the fact that the existence of mens rea is not excluded either by any express provision of the Act or by necessary implication. It was submitted on behalf of the Petitioners that the Company in question had appointed a Manager as statutorily required u/s 17 of the Mines Act.

Having regard to the fact and circumstances of the case we quash the issuance of process against Petitioner No. 2, but it will be open to the prosecution to file a supplementary prosecution report against the concerned officer after an appropriate enquiry as to the person who had role to play in the engagement of contract labour contrary to the prohibitory notification issued by the appropriate Government.

In the result, this criminal miscellaneous petition is partly allowed to the extent that the order issuing process against Petitioner No. 2 is quashed. However, the Border of the learned Chief Judicial Magistrate taking cognizance of offence under Sections 23 and 24 of the Act does not require interference by this Court, and this petition in so far as it seeks to quash the order taking cognizance is rejected.