1999 (11) TMI 892 - HC - Companies Law

Summary

Issues Involved:
1. Legality of the exclusion of contract laborers from departmentalization based on age.
2. Binding nature of the tripartite settlement under section 18(3) of the Industrial Disputes Act.
3. Validity and effect of the notification issued under section 10 of the Contract Labour (Regulation and Abolition) Act, 1970.
4. Power of the High Court under Article 226 of the Constitution to direct absorption of contract laborers.
5. Applicability of the Supreme Court's decision in Air India Statutory Corporation v. United Labour Association.

Detailed Analysis:

1. Legality of the Exclusion of Contract Laborers from Departmentalization Based on Age:
The respondents, who were contract laborers, alleged that despite a notification prohibiting contract labor in certain jobs, they were not absorbed as regular workmen and continued to work as contract laborers. The tripartite settlement stipulated that only those medically fit and under 45 years of age would be considered for absorption. The learned trial Judge found this age condition designed to avoid statutory liability under section 10 of the Contract Labour Act, 1970, and held it void under section 23 of the Indian Contract Act, as it aimed to defeat the provisions of the Act.

2. Binding Nature of the Tripartite Settlement under Section 18(3) of the Industrial Disputes Act:
The appellants argued that the tripartite settlement was binding on the respondents under section 18(3) of the Industrial Disputes Act. However, the respondents contended that the Industrial Disputes Act was not applicable and the settlement was void as it contravened the Contract Labour Act and violated Article 16 of the Constitution. The court noted that the Supreme Court's decision in Air India Statutory Corporation overruled the Dena Nath case, which had previously held that there was no provision for direct absorption of contract laborers upon abolition of contract labor.

3. Validity and Effect of the Notification Issued under Section 10 of the Contract Labour Act:
The notification under section 10 of the Contract Labour Act was issued in 1982, prohibiting contract labor in specific jobs. The court emphasized that the Act aimed to protect laborers' livelihoods and ensure their continued employment. The Supreme Court in Air India's case clarified that the Act's purpose was to abolish the contract labor system and not to render laborers jobless. Thus, the tripartite settlement's provision that excluded laborers based on age was contrary to the Act's objectives and was rendered void.

4. Power of the High Court under Article 226 of the Constitution to Direct Absorption of Contract Laborers:
The court highlighted that the High Court and Supreme Court have the power under Articles 226 and 32 to direct appropriate authorities to act in accordance with the law and provide proper relief. The Supreme Court in Air India's case affirmed that courts could direct the absorption of contract laborers to prevent their economic ruin and uphold their constitutional rights to livelihood and employment.

5. Applicability of the Supreme Court's Decision in Air India Statutory Corporation v. United Labour Association:
The appellants argued that the tripartite settlement was valid under the Dena Nath ruling, which was in effect at the time of the settlement. However, the court noted that the subsequent Supreme Court decision in Air India Statutory Corporation overruled Dena Nath and invalidated the tripartite settlement's prejudicial provisions. The court found that the tripartite settlement could not be protected by the Dena Nath ruling once it was overruled.

Conclusion:
The court upheld the learned trial Judge's decision that the tripartite settlement's age-based exclusion was void and directed the absorption of the respondents. The appeal was dismissed, with the modification that the respondents would receive arrears of pay from December 1996, following the Supreme Court's judgment in Air India Statutory Corporation. The court affirmed the High Court's power to provide appropriate relief under Article 226 of the Constitution.