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Judgment
This Judgment has been overruled by : Dena Nath and others Vs. National Fertilisers Ltd. and others, AIR 1992 SC 457 : (1991) 4
JT 413 : (1992) LabIC 75 : (1992) 1 LLJ 289 : (1991) 2 SCALE 1081 : (1992) 1 SCC 695 : (1991) 2 SCR 401 Supp
This Writ Appeal coming on for hearing on Tuesday the 16th, Wednesday the 17th, Thursday the 18th Monday the 29th day of October, 1984.
Upon perusing the Grounds of Appeal, the Order of The Honourable Mr. Justice Padmanabhan dated 19th October, 1982 and made in the
exercise of the Special Original Jurisdiction of the High Court in Writ Petition No. 4304 of 1981 and all other papers material to this case, and
upon hearing the arguments of Mr. T. Fenn Walter, Advocate for the Appellant and of Mr. T. S. Gopalan, Advocate for the Respondents No. 1
on 16th October, 1984 and 17th October, 1984 and of Mr. M. R. Narayanaswamy for Mr. T. S. Gopalan Advocate for the First Respondent on
the other day and notice taken out to the Respondents Nos. 3 and 4 not having been returned either unserved or served and having stood for
consideration till this day the Court made the following order :
JUDGMENT
Shanmukham, J.
This writ appeal is directed against the judgment of Mr. Justice Padmanabhan made in Writ Petition No. 4304 of 1981. The 1st respondent in this
appeal came forward with the said writ petition to quash the award passed by the 2nd respondent in I.D. No. 97 of 1979 directing reinstatement
of 75 workmen whose services were not requisitioned on and after 16th October, 1978 by the management (1st respondent therein) on the
ground that these workers are not their workmen but were only contractor labour provided by the licenced contractor, the 4th respondent herein.
The 2nd respondent (Presiding Officer, 2nd Additional Labour Court, Madras) rejected the stand taken by the management, but upheld the
contention of the workmen that the 4th respondent herein was not a labour contractor for the management, that the 4th respondent was a mere
name-lender and did not hold any requisite licence under The Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as the
Act). Ultimately, on such finding, the 2nd respondent directed reinstatement of these 75 workmen with back wages and other attendant benefits. It
is this order of the 2nd respondent that was sought to be quashed in W.P. No. 4304 of 1981. In the view of the learned Judge of this Court whose
order is appealed against, the conclusion of the Labour Court that the 4th respondent was not really a labour contractor, but was merely acting as
a tool in the hands of the management, is not supported either by the pleadings of the parties or by any evidence. According to the learned Judge,
there is absolutely nothing to displace the weighty documentary evidence in favour of the management and therefore, he was compelled, to
characterise the finding rendered by the Labour Court to the contrary as not only unsupported by any evidence, but also perverse, and to hold the
same vitiated by an error apparent on the face of the records. In view of his above conclusion on merits, the learned Judge did not examine the
question whether the industrial dispute has been properly raised and whether the Labour Court has jurisdiction to entertain the dispute, as it was
unnecessary for him.
The contentions of Mr. Fenn Walter advanced on behalf of these 75 workmen are two fold : The first is that on the facts in this case, there is no
difficulty in holding that an industrial dispute did arise so as to enable the Government to refer the dispute to the 2nd respondent herein. The other
contention is that the learned Judge erred in re-appraising the evidence and substituting his own finding in the place of those rendered by the 2nd
respondent, as such a course is not permissible under Art. 226 of the Constitution of India. The learned counsel would submit that even on the
materials before the Labour Court if two views are possible; yet this Court shall not interfere with the finding rendered by the Labour Court.
According to the learned counsel, the learned Judge was not right in his conclusion that the finding rendered by the Labour Court is perverse or not
not supported by evidence and pleadings.
It is needless to state that Mr. M. R. Narayanaswamy, learned senior counsel for the contesting 1st respondent argued to the contrary and
sought to support the order of the learned Judge.
As both points are argued at length, we propose to examine the questions that were left undecided by the learned Judge and that are whether
the industrial dispute has been properly raised and whether the Labour Court has jurisdiction to entertain the dispute. In this context, it is useful to
notice S. 2A :
Where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman, any dispute or difference
between that workman and his employer connected with, or arising out of, such discharge, dismissal, retrenchment or termination shall be deemed
to be an industrial dispute notwithstanding that no other workman nor any union of workmen is a party to the dispute.
It may be noticed that S. 2A was introduced by Act 35 of 1965 and came into effect from 1st December, 1965. Its object is to widen the scope
and the ambit of the existing provision regarding industrial dispute. Before this was introduced, the law according to the judicial decisions was that
an industrial dispute under the Act did not include an individual dispute which was not sponsored by either the workmen or union of workmen.
Now, as per the plain reading of the said provision, even a dispute between the management and an individual workman in respect of any dispute
or difference between that workman and his employer connected with or arising out of discharge, dismissal retrenchment or termination would be
deemed to be an industrial dispute notwithstanding other workman or any union of workmen is a party to that dispute. In this case, the services of
the 75 workmen were terminated. If so, the termination of every workman in our view shall be deemed to be an industrial dispute. The law does
not prohibit a common reference in respect of several individual disputes as in this case 75 workmen, as long as the points for determination are the
same and the evidence both oral and documentary are the same. Though therefore the termination of 75 workmen gave rise to several disputes, yet
the Government has enough jurisdiction to refer such several industrial disputes arising out of the termination of 75 workmen as a common dispute
to the 2nd respondent. It may be useful to point out that reconciliation was attempted by the Commissioner for Labour (Chingleput), Madras.
Thus, the matter was brought to the notice of the Conciliation Officer and the said Officer ultimately submitted his report stating that there could be
no reconciliation. Be that as it may, as S. 2A of the Industrial Disputes Act is couched in wide terms, we find no difficulty in holding that in the
circumstances, there arose an industrial dispute and consequently, there was a valid reference to the 2nd respondent by the Government.
It is true that before the Tribunal, the workmen took the stand that this is a dispute under S. 2(k) of the Industrial Disputes Act, that S. 2(k)
defines an industrial dispute as any dispute or difference between employees and employers, or between employers and workmen, or between
workmen and workmen which is connected with the employment or non-employment or the terms of employment or with the conditions of labour,
of any person, and that the learned counsel for the Union would argue that it is not necessary that the workmen involved in the dispute should have
been parties to the deliberations of the union evidenced by Ex. W. 1 so too admittedly. Ex. W. 1 does not contain the signature of any of the 75
workmen. Mr. M. R. Narayanaswamy, learned senior counsel for the 1st respondent would therefore urge that at this stage the appellant is not
entitled to rely upon S. 2A, of the Industrial Disputes Act. We are unable to agree. For, it is for the Court to apply the appropriate provision on the
facts established, but not to be carried away either by the Tribunal or the Court below. In our considered opinion, adherence to a wrong provision
both by the tribunal and the workmen is no bar to uphold the validity of the reference applying the correct provision of law. Indeed, the present
wave of judicial precedents is that no litigant would be denied his legitimate right by hyper-technicalities or by the wrong quotation of the provision
of law. In this view, we uphold the validity of the reference and the jurisdiction of the 2nd respondent to entertain and to decide the dispute.
The moot question that turns on the merits is whether the findings of the 2nd respondent cannot be supported on the evidence in this case. In
other words, are the findings of the 2nd respondent perverse so as to enable this Court to interfere with such finding under Art. 226 of the
Constitution of India. According to the learned Judge.
The net result of the above discussion is that the conclusion arrived at by the Labour Court that Kesavan was not really a labour contractor, but
he was merely acting as a tool in the hands of the Management is not supported either by the pleadings of the parties or by any evidence. On the
other hand, the finding is opposed to the documentary evidence, viz. Exs. M-2 to M-4, M-9 to M-12, M-22, M-23, M-27, M-31 and M-36
which according to the finding of the Labour Court would not show that Kesavan was a labour contractor. There is absolutely nothing to displace
the weighty documentary evidence in favour of the Management. I am therefore, compelled to characterise the finding entered by the Labour Court
to the contrary as not only unsupported by any evidence but as perverse and vitiated by an error apparent on the face of the records. Once I come
to the conclusion, the award of the Labour Court has fully to be set aside.
Even the learned Judge is quite alive to the limitation on Art. 226 of the Constitution of India in a case of this nature, is evident from his
observations quoted above. The appellant would be referred as the workmen, the 1st respondent as the Management and the 4th respondent as
Labour Contractor, and the Presiding Officer, Labour Court as 2nd respondent in the course of our judgment.
It would therefore, follow that if the findings of the 2nd respondent could be justified on the available materials, then there should be no
interference by this Court under Art. 226. We have to recall even if two views are possible in a given case, this Court shall not interfere with the
findings of the 2nd respondent; one of the findings of the 2nd respondent is, I do not think that the 2nd respondent (4th respondent herein) was
holding a valid licence to entitle him to function as a labour contractor. The other finding of the 2nd respondent is that on 16th October, 1978 when
the services of the workmen had been terminated, the contractor had no licence much less a valid licence. Further, the 2nd respondent observed :
Exhibit M-22 communication dated 16th January, 1979 from the Inspector of Labour to the second respondent shows that the licence granted to
the second respondent expired on 20th August, 1977 and that the second respondent had not applied for renewal of the licence thereafter. Exhibit
M-22 is a copy marked to the first respondent. We do not know what reply was sent by the second respondent to Exhibit M-22 communication.
But we have Exhibit M-23 copy of reply sent by the second respondent to the Inspector of Labour to the effect that the contractor had applied for
renewal of licence on 19th September, 1977 and had paid the requisite fees for the renewal of the licence. I do not think that this would show that
the second respondent had actually applied for renewal after paying fees on 19th September, 1977 and 23rd August, 1978 because Exhibit M-22
was issued on 16th January, 1979 one year and five months after the expiry of the period of the previous licence. I do not think that the statement
contained in Exhibit M-23 could be taken at face value. Thus, we find that when the service of the workmen were terminated on 16th October,
1978, the second respondent had no licence at all, much a valid licence. If he had any, it is open to the first respondent to produce a copy of it or
summon the Inspector of Labour to produce the said licence. Therefore, it cannot be that the second respondent had a valid licence during the
crucial period .................... The learned counsel for the Union pointed out that the 75 workmen were supervised by the supervisors of the first
respondent only and the supervision work has been counter-signed by the said supervisors and this would show that the 75 workmen were under
the effective control of the first respondent. Exhibit W. 2 and W. 3 registers contain the names and hours of work done by the 75 workmen, etc.
These two documents further prove that the work of the 75 workmen had been supervised by the employees of the first respondent and the place
where the workmen were employed, nature of the work done, the duration of the work have been counter-signed by the Works Manager
Ramasekhara Rao, admittedly an employee of the first respondent. Exhibits W-2 and W-3 further prove that the workmen had worked in the
machine shop, electrical shop, testing department, quality control department, and tool room. We are unable to correlate that several kinds of
skilled work just stated with the categories of work listed out in Exhibit M-16 by which the first respondent had obtained a licence as principal
employer. It is patent that the 75 workmen were not employed for the purpose of doing the kinds of work listed out in Exhibit M-16, but only for
doing skilled work like quality control, tool room maintenance, etc. I do not think that the Inspector of Factories would ever have granted Exhibit
M-16 licence as principal employer for engaging contract labour for doing work in the machine shop, quality control room, etc. This fact would
suggest that the second respondent was not really a labour contractor.
Per contra, the findings of the learned Judge are as follows :
From the above it is clear that the said Kesavan was a labour contractor licenced under the provisions of the Labour Contract Act, that the
Management was registered as principal employer under the said Act and that Kesavan was supplying the said 75 workmen as contract labour to
the Management.
His further finding is that
There is again absolutely no justification for the observation of the Labour Court that the 75 workman were not under the direct control of
Kesavan. When the preponderance of documentary evidence discloses the fact that the Management was registered as principal employer and
Kesavan was licensed as a labour contractor for the supply of 75 workmen to the pump factory of the Management under licence No. 1/76, it is
understandable why there should be, say, further written agreement between the Management and Kesavan regarding the terms under which
Kesavan undertook to supply labour to the Management. Exhibits M-9 to M-12 would show how the number or workmen supplied be Kesavan
and the amount received by him from the Management for the months of June and August, 1978. It is surprising that while at the end of paragraph
19 the Labour Court was prepared to concede that Exhibit M-27 among other documents would prove that Kesavan was a labour contractor, in
paragraph 15 the Labour Court should have observed that Exhibit M-27 would not prove that Kesavan was not really working as a labour
contractor.
The learned Judge very much relied on the admission in the reply statement filed by the Union wherein it is stated that
The petitioner union submits that Kesavan is a contractor. The 1st respondent is a principal employer and he is bound to give the relief claimed by
this union. The petitioner union admits that the first respondent is bound to reinstate all the 75 workmen with all benefits. The petitioner union
submits that in this case of non-employment of 75 workmen, there is no necessity for referring the matter to Labour Regulation Abolition Act and
this Honourable Court has got ample jurisdiction to go into the question of non-employment of the work and order appropriate relief. It is not the
intention of the petitioner union to obtain any direction for the abolition of the contract system.
It may be useful to notice at this stage the Act (Central Act 37/1970). It is enough to note that the Act legalised the employment of contract
labour by any establishment through a contractor provided the establishment obtained the requisite licence as principal employer under S. 7 of the
Act and provided also that intermediary contractor obtained a licence under S. 12 of the Act. It may not be out of place to refer to the decision of
the Supreme Court in Standard Vacuum Refining Co. v. Their Workmen 1960 II L.L.J. 233. On the following facts :
A claim by the workmen that the system adopted by the management of employing contractors for the cleaning, maintenance of the premises and
plant should be abolished and that regular workmen should be engaged by the management for the work was referred to an Industrial Tribunal
which, overruling the contentions of the management that the dispute was not an industrial dispute, held that the management should abolish the
contract system and should have it done through workmen engaged by itself.
The Supreme Court held,
That the dispute referred to the Industrial Tribunal was an ''Industrial dispute'' under S. 2(k) of the Industrial Disputes Act, 1947, because (a) the
dispute that the management should employ workmen directly and not through contractors in carrying on its work is real and substantial even
though the regular workmen who raised the dispute may not themselves be employed on the contract system, and (b) there is community of interest
between the regular workmen who raised the dispute and those whose cause they espoused because they belong to the same class and they do the
work of the same employer and it is possible for the management to give the relief which is claimed.
Whenever a dispute is raised by workmen is regard to the employment of contract labour by an employer, it would be necessary for the Industrial
Tribunal to examine the merits of the dispute apart from the general consideration that contract labour should not be encouraged, and, in any given
case, the decision should rest not merely on theoretical or abstract objections to contract labour but also on the terms and conditions of the
contract labour and the grievance made by the workmen thereof. Where the industrial dispute is confined to the cleaning maintenance work of the
premises and plant, the work in incidental to the manufacturing process and is necessary for it and is of a perennial nature which must be done
every day. Such work is generally done by workmen in regular employment of the employer and there should be no difficulty in having regular
workmen for this kind of work. The matter would be different if the work done was of an intermittent or temporary nature or was so little that it
would not be possible to employ full-time workmen for the purpose. The fact that the contract is a bona fide contract and is not a camouflage
would not necessarily mean that it should not be touched by Industrial Tribunals.
In order to enable the Management to have the benefit of the contract labour, the Act has now legalised the employment of such contract labour,
provided the intermediary contractor holds a valid licence and provided the Management also holds a valid licence as principal employer. This is
subject to the prohibition contemplated under S. 10. There is no need for us to examine the content of S. 10 in this case. In order to regulate the
employment of contract labour and to provide for abolition in certain circumstances, the said Act came to be passed. According to S. 7 :
Provided that the registering officer may entertain any such application for registration after expiry of the period fixed in this behalf, if the
registering officer is satisfied that the applicant was prevented by sufficient cause from making the application in time.
(2) If the application for registration is complete in all respects, the registering officer shall register the establishment and issue to the principal
employer of the establishment a certificate of registration containing such particulars as may be prescribed.
Under S. 12 of the Act, no contractor to whom this Act applies, shall undertake or execute any work through contract labour except under and in
accordance with a licence issued in that behalf by the licencing officer. Sub-s. (2) of S. 12 provides :
Subject to the provisions of this Act, a licence under sub-s. (1) may contain such condition including in particular conditions as to hours of work,
fixation of wages and other essential amenities in respect of contract labour as the appropriate Government may deem fit to impose in accordance
with the rules, if any, made under S. 35 and shall be issued on payment of such fees and on the deposit of such sum, if any, as security for the due
performance of the conditions as may be prescribed.
The combined effect of these two provisions in our view makes it clear that for a valid employment of
(1) Every principal employer of an establishment to which this Act applies shall, within such period as the appropriate Government may, by
notification in the Official Gazette, fix in this behalf with respect to establishments generally or with respect to any class of them, make an
application to the registering officer in the prescribed manner for registration of the establishment; contract labour, two condition should be
satisfied, viz., not only the principal employer but also the contractor should possess the requisite licence. In other words, the holding of licence by
one alone will not enable the management to treat the workmen as contract labour.
It is pertinent to note at this juncture that the rules are framed by the Tamil Nadu Government pursuant to the power conferred under S. 35(1)
of the Act and these rules are called Tamil Nadu Contract Labour (Regulation and Abolition) Rules, 1975. Under Rule 21(1) :
Every application by a contract for the grant of a licence shall be made in triplicate, in Form IV, to the licencing officer of the area in which the
establishment, in relation to which he is the contractor, is located.
(2) Every application for the grant of a licence shall be accompanied by a certificate by the principal employer in Form V to effect that the
applicant has been employed by him as a contractor in relation to his establishment and that he undertakes to be bound by all the provisions of the
Act and the rules made thereunder in so far as the provisions are applicable to him as principal employer in respect of the employment of contract
labour by the applicant.
(The other sub-sections are omitted as not relevant for the present occasion.) It is also essential to notice forms IV and V :
FORM IV
(See Rule 21 (1))
Application for Licence
Name and address of the contractor (including his father''s name in case of individuals).
Date of birth and Age (in case of individuals).
Particulars of Establishment where contract labour is to be employed :
(a) Name and address of the Establishment
(b) Type of business, trade, industry, manufacture or occupation, which is carried on in the establishment :
(c) Number and date of Certificate of Registration of the Establishment under the Act :
(d) Name and address of the Principal Employer :
Particulars of contract labour :
(a) Nature of work in which contract labour is employed or is to be employed in the establishment :
(b) Duration of the proposed contract work (give particulars of proposed date of commencing and ending) :
(c) Name and address of the agent or manager of contractor at the work site :
(d) Maximum No. of contract labour proposed to be employed in the establishment on any date :
Whether the contractor was convicted of any other within the preceding five years. If so, give details :
Whether there was any order against the contractor revoking or suspending licence or forfeiting security deposits in respect of an earlier
contract. If so, the date of such order.
Whether the contractor has worked in any other establishment within the past five years. If so, give details of the Principal Employer,
Establishments and nature of work.
Whether a certificate by the Principal Employer in Form V is enclosed.
Amount of licence fee paid - Number of Treasury Challan and date.
Particulars of security deposit, if any, requested to be adjusted, including treasury receipt number and date.
The amount of security or balance, if any, after adjustment of amount to be refunded under Rule 31, deposited with treasury receipt number
and date.
Declaration - I hereby declare that the details given above are correct to the best of my knowledge and belief.
Place : Signature of the applicant
Date : (Contractor)
Note : The application should be accompanied by a Treasury Receipt for the appropriate amount and a certificate in Form V from the principal
Employer.
(To be filled in the Office of the licencing Officer)
Date of receipt of the application with challan for fees/Security Deposit.
Signature of the Licencing Officer
FORM V
(see Rule 21(2)
Form of Certificate by Principal Employer
Certified that I have engaged the applicant (name of the Contractor) as a contractor in my establishment. I undertake to be bound by all the
provisions of the Contract Labour (Regulation and Abolition) Act, 1970 and the Tamil Nadu Contract Labour (Regulation and Abolition) Rules,
1975, in so far as the provisions are applicable to me in respect of the employment of contract labour by the applicant in my establishment.
Place : Signature of Principal Employer.
Date : Name and address of Establishment.
These rules and the forms do fortify our said conclusion. Sub-rule (1) of Rule 29 of the rules states that
Every contractor shall apply to the licencing officer for renewal of the licence, before its validity expires.
Under sub-rule (2) :
Every such application shall be in Form VII in triplicate and shall be made not less than thirty days before the date on which the licence expires,
and if the application is so made, the licence shall be deemed to have been renewed until such date when the renewed licence is issued.
It is thus obvious that the deeming renewal will not be available to a contractor, who had not made the renewal application within the period
specified therein.
The question whether the contractor had the requisite licence, has to be examined for two different periods, (i) the period ending 20th August,
1977 and (ii) thereafter. The 2nd respondent had observed that when the services of the workmen were terminated on 16th October, 1978, the
Labour Contractor had no licence at all much less a valid licence and that if he had any, it is open to the Management to produce a copy of it, or
summon the Inspector of Labour to produce the said licence. Therefore, he came to the conclusion that it cannot be that the 2nd respondent had a
valid licence during the crucial period. Per contra, the approach of the learned Judge is as follows :
The Labour Court stated that there was no evidence that on 16th October, 1978 Kesavan had a licence. The fact that Kesavan was granted a
licence in the first instance under licence No. 1/76 for supplying 30 labourers to the Management and subsequently the number of workmen was
raised to 75 is amply borne out by documentary evidence in the case. Exhibits W-17 to W-23 would clearly show that to the knowledge of the
authorities, Kesavan was supplying labour to the Management. The number of workmen was raised to 75 is amply borne out by documentary
evidence in the case. Exhibits W-17 to W-23 would clear show that to the knowledge of the authorities, Kesavan was supplying labour to the
Management and the Management was submitting its returns to the authorities duly constituted under the Contract Labour Act. It is too much to
believe that the authorities would have permitted Kesavan to continue to supply labour to the Management without obtaining a renewal of the
licence under the Contract Labour Act, particularly when on 16th January, 1979, the Inspector of Labour, Villupuram had addressed a letter to
Kesavan informing him that his licence was expiring on 20th August, 1977 and that he should renew the licence. Even if it is assumed for the sake
of argument that Kesavan did not renew the licence after 20th August, 1977, his failure to do so would not make the workmen supplied by him to
the Management, the workmen of the Management. Kesavan would only be liable to the penal consequences contemplated under the Contract
Labour Act.
Now, let us examine the evidence both oral and documentary on this aspect. For the present, we proceed on the assumption that Kesavan had
obtained a valid licence till 19th August, 1977. It is established from M-22 which is letter dated 16th January, 1979 written by the Inspector of
Labour, Villupuram, to the contractor that Kesavan had not applied for renewal till 16th January, 1979. It is seen from the said document that the
original licence had expired on 20th August, 1977. Unless the application for renewal is made not less than 30 days before the date on which
licence expired i.e., 20th July, 1977, there cannot be a deeming renewal as visualised under sub-rule (2) of Rule 29 of the Rules. The learned
Judge relied upon the two documents which, as pointed out by the learned senior counsel appearing for the Management, are found at pages 62
and 63 in the types set furnished to the learned Judge. One purports to be a letter dated 14th September, 1977 addressed by the contractor
Kesavan to the Inspector of Labour, Villupuram, stating that the contractor is submitting his application for renewal of his licence and also
enclosing a challan for Rs. 12.50 towards the licence fee for 30 workmen, while the other is form VII, i.e., application for renewal of licence. At
page 64 in the said typed set, the challan for receipt of payment of Rs. 12.50 is signed by Kesavan and also an endorsement by the State Bank of
India. In the same typed set, we find that the challan is said to have been issued by the State Bank of India on 19th May, 1977. How such a
challan could have been enclosed in the letter dated 14th September, 1977 remains a mystery. By that as it may, unless the renewal application is
made within the prescribed time as earlier pointed out by us, there could not be any deeming renewal. Besides, it has to be established as a matter
of fact whether renewal as such was granted. Such evidence was not placed before the 2nd respondent by the Management. It had the right to
summon such records from the Officer of the Assistant Inspector of Labour, Madras; but it did not care to do so. It is worthwhile to notice that the
Management had taken out I.A. 354 of 1980 in I.D. No. 97 of 1979 before the 2nd respondent to issue summons to Mr. Venkataramani,
Accountant of M/s. India Forge & Drop Stampings Ltd., Ambattur, Madras-600 058 to appear before the 2nd respondent and to give evidence
with regard to the bills submitted by the contractor Kesavan in favour of that company. Thus, the Management did resort to summoning a witness.
If they had not summoned the records, viz., the alleged renewal application made by Kesavan and the order if any passed thereon, it would be
rather unjust to criticise the 2nd respondent as not having allowed an opportunity to the Management to cause to produce such records. It is
needless to emphasize that the best evidence is the original licence or the secondary evidence, viz., the carbon copy that would be found in the
Office of the Assistant Inspector of Labour. In the above circumstances, any admission in his counter-statement filed by Kesavan or by the
workmen in their reply will have no evidential value at all. In the absence of such best evidence, it is highly hazardous to rely upon the alleged
admission on the part of the contractor or workmen. It is important to point out at this stage that while the contractor examined on the side of the
workmen as W.W. 2 was cross-examined at the instance of the Management, there was no suggestion to him that he had a valid licence and that
he applied for renewal twice, i.e., in 1977 and 1978. Quite rightly the 2nd respondent held that the contractor had no licence at all as on 16th
October, 1978. We therefore hold that such a finding cannot be characterised as perverse and we are unable to agree with the learned Judge that
the documents ought to have been market by the 2nd respondent. We had referred to these two documents already and they themselves do not
establish that any renewal was ordered as such. We had further pointed out that in this case as the renewal application was made long after the
prescribed time, the deeming renewal will not be availed of by the contractor. Thus, there is no evidence placed before the 2nd respondent to
substantiate that the contractor had obtained a renewal. It is also interesting to note that paragraph 5 of the affidavit filed in support of the writ
petition refers to two renewals, one made on 14th September, 1977 while the other in August, 1978. There is an indication that the first renewal
expired on 20th August, 1977 as pointed out by us earlier and that a second renewal was made in August, 1978. However, the documents which
are said to have been refused to be market by the 2nd respondent do not include any application for second renewal referred to in the affidavit.
We made specific reference to the pleadings to stress that it is highly hazardous to rely on an admission on the part of, or non denial by the,
contractor Kesavan and that the best evidence is the original certificate or the duplicate copy in the Office of the Assistant Inspector of Labour
which would be the secondary evidence to prove that Kesavan had obtained renewals twice. Looked at from another angle, it would be seen that
Kesavan could not be held to have obtained a valid licence even by way of renewal as on 20th August, 1977. Rule 29 mandates that the
application for renewal shall be made before its validity expired. In other words, what the rule points out is that if no renewal is made before the
licence expired, there cannot be any renewal at all and that the proper courses is to obtain a fresh licence. It is necessary to notice that only this
rule but not any provision in the Act provides for renewal. A careful reading of sub-rules (2) and (3) of Rule 29 will clearly point out that they
postulate a case where the application is not filed within the time specified in sub-rule (2), but was made before the licence expired as per mandate
in sub-rule (1). In this case, no application for renewal was made before the expiry of the licence. It would therefore, follow that the contractor is
not entitled to apply for renewal at all and that his only remedy if he wants to act as a licenced contractor, is to apply for a fresh licence. Otherwise,
the workmen would not be deemed to have been employed as contract labour. But in this case, no fresh licence was applied, nor was renewal
made before the expiry of the licence. We may incidentally add that if the first renewal applied for in the year 1977 as stated by the Management in
the affidavit filed in support of the writ petition was not valid, as pointed out by us, there cannot be a valid second renewal in 1978. In the
foregoing circumstances, it can hardly be said that the contractor had a valid licence as on 16th October, 1978 as rightly held by the 2nd
respondent. In other words, the finding of the 2nd respondent can hardly be criticised as perverse or not supported by evidence.
Now let us examine the status of these 75 workmen after they continued to work since the expiry of the licence, i.e., on 20th August, 1977 till
their services were terminated on 16th October, 1978. According to Mr. M. R. Narayanaswamy, learned senior counsel for the Management,
they would not ipso facto attain the status of management workmen because there is no contract of service, but on the other hand, the
Management was under the bona fide impression that the contractor continued to be a licenced contractor. In the first place, in our view, it is not
open to the Management to contend that it was under the bona fide impression in the teeth of the provisions of the Act. We have earlier pointed
out that both the Management and the contractor shall possess valid licences to stamp the workmen as ''contract labour''. In other words,
notwithstanding the Management had obtained a licence under S. 7 of the Act, it shall verify from the contractor from whom they proposed to
obtain a contract labour, whether he had a valid licence under S. 12 or whether the licence has been renewed in accordance with Rule 29.
Therefore, this contention is untenable.
The only other point is, what is the legal status of these workmen on the admitted facts as on 16th October, 1978. They started serving as
contract labour the Management in the first instance. The licence granted to their contractor later expired, i.e., on 20th August, 1977. There was
no renewal in the eye of law. Yet they continued to work and receive their wages through the contractor. To find the answer, it requires
examination of the definition of workman in the Industrial Disputes Act as also in the Act, besides the object of the Act and S. 2(2)(b) of the Act.
S. 2(s) in the industrial Disputes Act defines workman; almost in similar terms is the word defined in the Act.
S. 2(s) in Industrial Disputes Act :
Workman means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical
or supervisory work for hire or reward, whether the terms of employment express or implied, and for the purposes of any proceeding under this
Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a
consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person -
(i) Who is subject to the Air Force Act, 1950, or to Army Act, 1950, or the Navy Act, 1957, or
(ii) who is employed in the police service or as an office or other employee of a prison; or
(iii) who is employed mainly in a supervisory capacity, draws wages exceeding one thousand six hundred rupees per mensem or exercises, either
by the nature of the duties attached to the office or by reason of the powers vested to him, functions mainly of a managerial nature.
S. 2(2)(b) in Act 37 of 1970.
Workman means any person employed in or in connection with the work of any establishment to do any skilled, semi-skilled or unskilled manual,
supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied, but does not include any such
person -
(a) who is employed mainly in a managerial or administrative capacity; or
(b) who, being employed in a supervisory capacity, draws wages exceeding five hundred rupees per mensem or exercise, either by the nature of
the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature; or
(c) who is an out-worker that is to say, a person to who any articles or materials are given out by or on behalf of the principle employer to be
made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the purpose of the trade or
business of the principle employer and the process is to be carried out either in the home of the outworker or in some other premises, not being
premises under the control and management of the principle employer.
For our present purpose, it is enough to emphasize the common factor found in both the definitions i.e., the terms of the employment may be
expressed or implied. Also, the significance of S. 2(2)(b) of the Act has to be properly understood at this stage. It runs as follows :
A workman shall be deemed to be employed as ''contract labour'' in or in connection with the work of an establishment when he is hired in or in
connection with such work by or through contractor, with or without the knowledge of the principal employer.
This definition in our view implies that if the workman is not hired through a contractor holding a valid licence under the Act, he would be a
workman employed by the Management itself. Further, the Management must be aware that the contractor had no valid licence and that therefore,
the workman could not be contract labour within the meaning of S. 2(2)(b) of the Act. The Management yet engaged the services of these 75
workmen and paid their wages through the contractor Kesavan. The intermediary because of want of licence in his favour will have no existence in
the eye of law. It would thus lead to the position that there is not direct relationship between the Management and these 75 workmen. Would it not
immediately lead to the result that there is an implied contract between the Management and these 75 workmen to the effect that as long as they
did the work allotted to them, they would be paid their respective wages. We thus come to the conclusion that in the above admitted circumstance,
these 75 workmen were employed by the establishment.
Incidentally, we may point out that Rule 29 and its effect were not brought to the notice of the learned Judge. Consequently, it would follow
that the dismissal of these 75 workmen by the Management cannot be upheld as rightly pointed out by the 2nd respondent. As a matter of fact, the
learned Judge interfered with the order of the 2nd respondent, because according to his assessment of the evidence, the finding that these 75
workmen were employed by the establishment, is rather perverse and could not be supported on evidence.
We now propose to examine the status of these 75 workmen before 16th October, 1978. We had already emphasized that the best evidence
in proof of the fact that the contractor had a valid licence, is the original licence and in its absence, the duplicate maintained in the Office of the
Assistant Commissioner of Labour, as that would be secondary evidence in the eye of law, provided the Management established that the
contractor refused to produce the original. From the records filed in I.D. No. 97 of 1979, there is no trace that the management ever summoned
the contractor to produce his original certificate. Further, as already pointed out by us, the Management did not take any steps to summon the
carbon copy that would have been maintained by the Assistant Commissioner of Labour, nor did the Management issue notice to the contractor to
produce the original licence. Any amount of admission on the part of the contractor and non-denial on his part about the statement made by the
Management that he had a valid licence, would not make any improvement, as regards proof required in law. We must immediately point out that
through 75 workmen were employed admittedly through the contractor, the original licence granted to the contractor was for 30 persons. Clause
4(d) in form IV already extracted by us shows that the maximum number of contract labour proposes to be employed in the establishment on any
date should be furnished, i.e. the licence itself would indicate the maximum number contract labour the contractor is authorised to employed in any
establishment which in turn had obtained licence under S. 7 of the Act. In other words, if more workers other than the maximum number permitted
under the licence were to be employed by the management through the contractor, the additional force shall not be deemed to be contract labour.
It is seen from Exhibit M-13 a letter dated 14th February, 1979 written by the Assistant Commissioner of Labour to the Management that the
number of workers employed by the contractor through Kesavan was also increased upto 75 than that specified in the registration certificate issued
to the Management. It is therefore clear that even in the certificate of registration issued to the Management, the maximum number of contract
labour to be employed on any day through each contractor would be notified. Thus, both in the certificate issued to the Management and the
certificate issued to the contractor, the maximum number of contract labour would be specified. As already pointed out by us, such number of
workmen employed as per the certificate would be deemed to be contract labour and the excess force would not be covered under any of the
certificates and would not therefore be contract labour. In this case, it is evident from M-13 and M-16 dated 25th June, 1976, the maximum
number of labour to be employed through the contractor Kesavan was 30. There is no evidence as to who among the 75 would fall within the limit
recognised in the certificate. In the absence of such evidence, it is difficult to find out as to who among the 75 would be deemed to be contract
labour. In Ex. W-8, we find only the list of 75 workmen. Even that list would not render any help in ascertaining who among the 75 were
authorised as contract labour as specified in the certificate. It is needless to state that it is for the Management to substantiate that the workmen
who were admittedly working in their establishment, were contract labour, but not their own workmen. Above all, the workmen would not have
any access to such materials, because the respective certificates would be in the possession of the Management and the contractor. At best, they
could only summon from the Assistant Commissioner of Labour. Therefore, if the Management had failed to place evidence in this context, the only
possible inference as rightly pointed out by the 2nd respondent is that the contractor had no valid licence for 75 workmen who were admittedly
found working in the establishment of the Management. In the above conspectus, the documentary evidence such as Exhibits M-4, M-5, M-6, M-
8, M-10, M-11, M-12, M-13, M-14, M-15, M-16, M-17, M-18 and M-19 would be of no use to find out whether the contractor had a valid
licence to employ 75 workmen as contract labour. These documents only show that both the contractor and the Management were treating these
75 workmen as contract labour. As long as there is no valid licence possessed by the contractor, the Management''s attitude as also the attitude of
the contractor vis-a-vis the workmen would be of no consequence. This vital aspect was not brought to the notice of the learned Judge. The
learned Judge was obviously under the impression that the certificate issued to the contractor as also to the Management were subsequently
rectified. But the rectification has its own tale. From M. 16, it is clear that the amendment was ordered on 11th October, 1979. It is to be
remembered that the services of the 75 workmen were terminated on 16th October, 1978, i.e., long before the amendment was ordered. No
doubt, it is stated therein that item 1 to column 4 is amended for 75 labourers with effect from 1st January, 1977. We have our own doubt that
such a retrospective effect can be given by the licencing authority. However, we do not propose to express any opinion on this matter as that may
not be really relevant for the disposal of this appeal. For, we hold that such certificate giving retrospective effect will at best save the management
from being prosecuted under S. 23 of the Act. But, it shall not affect the rights of the workmen who served the establishment and did not fall within
the certificate so issued both to the Management and to the contractor. As a matter of fact, at the time when their services were terminated, there
was no order rectifying the certificate. Thus, on that date, there was no valid licence both to the Management and to the contractor to employ 75
workmen as contract labour. As long as the Management had not discharged its burden as to who are the workmen who would be deemed to be
contract labour, the reasonable course is to treat the whole strength as mere labourers but not contract labourers. Again, we have to point out that
the contract labour should be utilised for the nature of work in respect of which the licence was obtained. Clause 7(b) in Form I states that the
particulars of the nature of work in which contract labour is employed or is to be employed should be furnished. Even col. 3 in Form II which is the
certificate of registration issued to the Management refers to the nature of work in which contract labour is employed or is to be employed. In
other words, if their service were to be utilised for a purpose other than that for which the licence was obtained, it cannot be said that they continue
to be contract labour. The records relating to the nature of work in which these 75 workmen were employed as contract labour, are not produced
before the 2nd respondent by the Management. So, there is no evidence produced by the Management to satisfy that the services of these contract
labour were utilised only to the work for which they were contracted for through the contractor. The only record that is produced is W. 8, but that
is only prepared by the Madras State Central Workers'' Union. The learned Judge observed that :
Even assuming, without finding, that Exs. 2, 3 and 4 are of an help to the Union from the mere fact that the workmen had worked in the machine
shop, electrical shop, testing department, quality control department and tool room, it does not follow that they were being employed for skilled
work. The certificate of registration itself shows that the contract labour was to be engaged for fettling of rough castings, movement of materials,
loading and unloading and cleaning the factory premises. As rightly pointed out by Mr. Narayanaswami, merely from Exs. W-2, W-3 and W-4 no
inference could be drawn that these 75 workmen were not employed by Kesavan the contractor. Under S. 2(1)(b) of the Contract Labour Act a
workman shall be deemed to be employed as contract labour in or in connection with the work of an establishment when he is hired in or in
connection with such work by or through a contractor with or without the knowledge of the principal employer. The main question therefore will be
whether the 75 workmen were hire by the labour contractor or not.
However, the learned Judge had not considered the legal effect of the workmen being utilised for the nature of work other that for which the
licence was obtained. According to us, the nature work has a vital part to play is assessing the relationship between the Management and the so-
called contract labour. The object of the contract labour is to utilize such labour for unskilled works periodically but not regularly. Therefore, if the
Management were to utilise the services of these contract labour for the nature of work not permitted under the licence, they would cease to be
contract labours. This aspect we refer to for the limited purpose of pointing out that the Management had not produced necessary evidence to find
out whether these workmen were really utilised for the nature of work for which the licence was granted. To put it differently, the Management had
not produced any evidence to satisfy that the contractor had a valid licence for these 75 workmen and that these 75 workmen were really utilised
for the nature of work in respect of which the licence was granted. If so, we do not find any error in the 2nd respondent holding that :
It is pertinent that the 75 workmen were not employed for the purpose of doing the kinds of work listed out in Ex. M-16 but only for doing skilled
work like quality control, tool room maintenance, etc.
In view of our above assessment, we are unable to agree with the learned Judge that the finding of the 2nd respondent that Kesavan was not really
labour contractor, perverse or has not been fully supported by evidence.
The result is, the appeal succeeds and is allowed with cost. The judgment of the learned Judge is set aside and W.P. No. 4304 of 1981 will
stand dismissed with cost.