1967 (8) TMI 116 - SC - Indian Laws

Whether the resignation of the drivers and cleaners and the setting up of the contract system amounts to an unfair labour practice and exploitation of labour because by this device these and other transport workers are being victimized? Whether the salutary and beneficial legislation conceived in the best interest of the transport workers is being deliberately set at naught? Held that - The matter of dispute no doubt referred in the second part to ex-drivers but it referred generally to the new system in the first. The Tribunal was wrong in thinking that the first part also referred to the ex-drivers (now operators). On the whole however it is clear that the Company has not done anything illegal. A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has without the arrangement no proper means of obeying. This of course he can do only so long as he does not break that or any other law. The Company has declared before us that it is quite prepared if it was not already doing so to apply and observe the provisions of the Motor Transport Workers Act in respect of its employees proper where such provisions can be made applicable. In view of this declaration we see no reason to interfere because Parliament has not chosen to say that transport trucks will be run only through paid employees and not independent operators. The appeal fails

Summary

Issues Involved:
1. Abolition of the newly introduced contract system for running vehicles.
2. Reinstatement of ex-employees with back wages.

Issue-Wise Detailed Analysis:

1. Abolition of the Newly Introduced Contract System for Running Vehicles
The dispute arose when the Union demanded the abolition of a newly introduced contract system for the running of vehicles by the Company. This system was introduced following the passing of the Motor Transport Workers Act, 1961, which imposed several welfare and regulatory requirements on Motor Transport Undertakings. The Company admitted that it was impossible to implement all the conditions of the Act for its drivers, who were required to go on long journeys, making it difficult to enforce conditions of work hours or rest. Consequently, the Company adopted a system where former drivers became independent contractors, thus not falling within the ambit of the Act.

The Tribunal held that the contract system could not be described as an unfair labour practice. It found that the drivers voluntarily resigned and entered into agreements to become operators, considering the new system more beneficial. The Tribunal noted that none of the drivers appeared to complain against the new system, and the agreements were fair, allowing operators to work freely and even accept work from others. The Tribunal rejected the Union's claim to abolish the contract system, stating that there was no evidence of coercion or unfair advantage taken by the Company.

2. Reinstatement of Ex-Employees with Back Wages
The Union also demanded the reinstatement of ex-employees who had become operators, with back wages. The Tribunal saw difficulty in this demand because the drivers had voluntarily resigned. It posed the question of how to reinstate persons who had not been dismissed, discharged, or retrenched within the meaning of the Industrial Disputes Act. The Tribunal concluded that the drivers were not coerced into resigning and that the agreements entered into were fair. Therefore, it held that the reinstatement with back wages was not justified.

Analysis of Arguments and Judgment:
The Union argued that the resignation of drivers and the introduction of the contract system amounted to an unfair labour practice and exploitation, nullifying the beneficial legislation intended to improve the conditions of Motor Transport workers. It contended that the operators continued to be workmen and that the new system deprived them of benefits like leave, overtime payment, Provident Fund, gratuity, and insurance.

The Company argued that the hiring out of trucks to operators was not illegal and did not amount to exploitation or an unfair labour practice. It pointed out that the drivers voluntarily resigned and entered into agreements, including office-bearers of the Union.

The Court held that the Company, as a Motor Transport Undertaking, was not employing the drivers within the meaning of the Motor Transport Workers Act since they had resigned and become independent contractors. The Act's regulatory provisions were difficult to enforce for drivers on long journeys, and the Company was within its rights to adopt a system that avoided the regulatory law's penal consequences. The Court found no evidence of coercion or unfair labour practice and noted that the operators seemed satisfied with the new system.

The Court concluded that the Company's actions were legal and that the drivers voluntarily chose the new system, finding it more beneficial. It dismissed the Union's appeal, noting that there was no bar in law to the introduction of the contract system and that the Company was prepared to observe the Act's provisions for its employees where applicable.

Conclusion:
The appeal was dismissed, with the Court finding no unfair labour practice or exploitation in the introduction of the contract system. The drivers had voluntarily resigned and entered into agreements as independent contractors, and the Company's actions were within legal bounds. The demand for reinstatement with back wages was not justified, and the new system was not illegal. The Court made no order as to costs.