2025 (4) TMI 1419 - HC - Customs

Prohibiting the employment of contract labour at the Central Warehousing Corporation s Inland Clearance Depot (ICD) - Challenge to notification dated 17 November 2006 issued by the Ministry of Labour and Employment Government of India whereby employment of contract labour in the petitioner s establishment was prohibited - non-application of mind as required by and in accordance with Section 10 (2) of Customs Act 1962. Whether Incidental or Necessary the Nature of Work Carried Out by Contractual Labourers at CWC s ICD Patparganj? - HELD THAT - From interpretation of Section 10 (2) (a) it appears that the argument of work carried out being incidental to rather than a core function of the enterprise holds no water. Furthermore keeping in mind the language of the section incidental to or necessary for the industry the finding of the committee that contract labour has been carried on by the same workers despite changes in contractors since 1985 speaks to a certain necessary nature of the work being carried out. Whether the Work is of a Perennial nature - HELD THAT - The CACLB s findings on the subject are that the work is of perennial nature and that the same is evidenced by the continued hiring of the same workmen since 1985. Their analysis confirms the argument of the UOI that regardless of trends of mechanisation a manpower element will always be required given the nature of work - This drastic decline in total staff employed by the CWC from the year 2000 until 2020 does not reflect in the fluctuations of contract labourers deployed which were largely similar over 18 years out of the 20-year period for which data was produced. Whether work is done ordinarily through regular workmen in that establishment or an establishment similar thereto? - HELD THAT - The UOI echoes the unequivocal finding of the CACLB in its 53rd MoM that similar work is being carried out by regular employees at a similar establishment of the CCI. Whether the work is sufficient to employ a considerable number of whole time workmen? - HELD THAT - The deployment of around 300 contractual labourers each year over 18 years out of a 20-year timeframe speaks to a sufficiency of work. This number is no small one and cannot be brushed aside as being insignificant. Conclusion - i) There has been no error committed by the Government in the passing of the impugned notification and that the CACLB s 53rd MoM shows application of mind to the factors enshrined within Section 10 (2) (a) with specific consideration of data pertaining to the ICD at Patparganj. ii) The impugned notification 17 November 2006 issued by the Ministry of Labour and Employment Government of India under Section 10 (1) of the Act in respect to the prohibition of employment of contract labour at the CWC s ICD at Patparganj is upheld. Petition disposed off.

Summary

The core legal questions considered by the Court in this matter are:

1. Whether the impugned notification prohibiting the employment of contract labour at the Central Warehousing Corporation's Inland Clearance Depot (ICD) at Patparganj was issued in compliance with the requirements of Section 10(2) of the Contract Labour (Regulation and Abolition) Act, 1970 ("the Act").

2. Whether the appropriate Government applied its mind and considered the conditions of work, benefits provided to contract labourers, and other relevant factors before issuing the notification under Section 10(1) of the Act.

3. Whether the work carried out by contract labour at the ICD is incidental or necessary to the establishment's trade or business.

4. Whether the work is of a perennial nature, i.e., of sufficient duration and continuity to warrant prohibition of contract labour.

5. Whether the work is ordinarily done through regular workmen in the establishment or a similar establishment.

6. Whether the work is sufficient to employ a considerable number of whole-time workmen.

7. Whether the impugned notification suffers from non-application of mind or is an omnibus notification lacking specific consideration of the facts.

8. Whether the dissenting note of the employer-member on the Central Advisory Contract Labour Board (CACLB) was adequately considered.

9. The applicability and relevance of precedents including the Supreme Court's judgment in SAIL v National Union Waterfront Workers and other related judgments concerning contract labour and prohibition notifications.

Issue-wise Detailed Analysis:

1. Compliance with Section 10(2) of the Act and Application of Mind

The Act under Section 10(1) empowers the appropriate Government to prohibit employment of contract labour by notification after consultation with the Central Advisory Contract Labour Board (CACLB). Section 10(2) mandates that before issuing such notification, the Government must have regard to the conditions of work and benefits provided to contract labour, and other relevant factors including whether the work is incidental or necessary, perennial in nature, ordinarily done by regular workmen, and sufficient to employ considerable whole-time workmen.

The Court examined the CACLB's 53rd meeting minutes and the Committee's report constituted under Section 5 of the Act. It was found that the Government did apply its mind by considering the conditions of contract labourers, including wages, benefits, and nature of work. The Government also sought additional information from the CWC before issuing the notification, indicating deliberation and evaluation rather than a mechanical exercise.

The Court relied on the Supreme Court's guidance in Syed Yakoob v K.S. Radhakrishnan regarding the scope of judicial review under Article 226, emphasizing that the Court's role is supervisory and not appellate. Errors of law apparent on the face of the record or non-application of mind can be corrected, but findings of fact based on evidence are not to be reappraised.

The Court rejected the petitioner's contention of non-application of mind, noting that the CACLB's minutes explicitly record the presence and hearing of the management's representative and that the Government's request for additional data further evidences application of mind.

2. Whether the Work is Incidental or Necessary to the Establishment

The petitioner argued that the handling and transport (H&T) work carried out by contract labour is ancillary and not core to the CWC's main function of storage and preservation of food grains. It was also contended that depositors make their own arrangements for handling and that the CWC's role is limited.

The CACLB's Committee found that the work of handling import/export containers, loading/unloading, stuffing/de-stuffing has been carried out by contract labour since 1985 and is necessary for the establishment's operations. The Court relied on the Supreme Court's ruling in Barat Fritz Werner Ltd, which clarified that the prohibition under Section 10(1) is not limited to core activities but extends to incidental or necessary work.

The Court held that the work in question is clearly incidental to or necessary for the industry or business carried on by the establishment and thus satisfies Section 10(2)(a).

3. Whether the Work is Perennial in Nature

The petitioner contended that the work is not perennial, citing the revocability of the Customs license to operate the ICD and the potential reduction in business due to alternative terminals. It was also argued that the volume of work fluctuates with Government policy.

The CACLB's report and data submitted by the CWC showed consistent employment of contract labour over two decades, with an average of approximately 300 workers engaged annually for 20 or more days per month. This demonstrated continuity and sufficiency of work over a long period.

The Court rejected speculative arguments about license revocation and business reduction, noting that these were hypothetical and not supported by evidence. The Court held that the work is perennial as per Section 10(2)(b), supported by the long-term data on labour deployment and volume of business.

4. Whether the Work is Ordinarily Done Through Regular Workmen

The CACLB found that similar work is carried out by regular employees in a comparable establishment run by the Container Corporation of India (CCI). The petitioner disputed this, providing tender documents showing outsourcing of H&T work in other establishments.

The Court accepted the CACLB's finding that regular workmen perform similar functions in comparable establishments, satisfying Section 10(2)(c).

5. Whether the Work is Sufficient to Employ Considerable Number of Whole-time Workmen

The data showed consistent employment of around 300 contract labourers annually over 18 out of 20 years, which the Court held to be sufficient to employ a considerable number of whole-time workmen under Section 10(2)(d).

6. Treatment of the Dissenting Note of the Employer-member

The employer-member of the CACLB dissented, citing the revocability of the Customs license and the prevalent outsourcing practice at similar depots. The CACLB considered the dissent but did not agree, finding the revocability issue hypothetical and noting that CCI employs regular workmen for similar tasks.

The Court agreed with the CACLB's reasoning, rejecting the dissent as speculative and insufficient to overturn the majority view.

7. Applicability of Precedents and the Nature of the Notification

The petitioner relied heavily on the Supreme Court's judgment in SAIL v National Union Waterfront Workers, which invalidated an omnibus notification prohibiting contract labour across all Central Government establishments without specific application of mind.

The Court distinguished the present case, noting that the impugned notification was not omnibus but specific to the CWC's ICD at Patparganj. The Government had considered detailed data and reports specific to the establishment, unlike the SAIL case where no such consideration was evident.

Other judgments cited by the petitioner relating to regularisation of workmen or industrial disputes were held inapplicable as the present challenge was limited to the validity of the notification under Section 10(1).

The Court also noted that the Supreme Court in SAIL emphasized the welfare and protection of contract labourers and the legislative intent behind the Act to regulate and abolish contract labour where feasible, underscoring the social purpose of the statute.

8. Other Factors Raised by Parties

The petitioner's arguments regarding the nature of the contract as a job-work contract involving machinery, the economic impact of Voluntary Retirement Scheme (VRS), and the practice of outsourcing in other public sector undertakings were considered but found insufficient to override the statutory criteria under Section 10(2).

The Court emphasized that economic advantages to the employer are subordinate to the welfare of contract labourers as intended by the Act and the Supreme Court's rulings.

Significant Holdings:

"A writ of certiorari can be issued for correcting errors of jurisdiction committed by inferior courts or tribunals... There is, however, no doubt that the jurisdiction to issue a writ of certiorari is a supervisory jurisdiction and the Court exercising it is not entitled to act as an appellate Court... The adequacy or sufficiency of evidence led on a point and the inference of fact to be drawn from the said finding are within the exclusive jurisdiction of the Tribunal, and the said points cannot be agitated before a writ Court."

"The words 'process, operation or other work' need not be interpreted to mean only the core activity and not peripheral activity... The expression used therein is wide in ambit to cover other activity arising in industry and not merely the actual manufacture."

"Contract labour has been equated with bonded labour... The system, which is nothing but an improved version of bonded labour, is sought to be abolished by the Act. The Act is an important piece of social legislation for the welfare of labourers and has to be liberally construed."

"The impugned notification... is upheld as the Government applied its mind in accordance with Section 10(2) of the Act, considering the conditions of work, benefits provided, and other relevant factors including the perennial nature of the work, its necessity, and the sufficiency of work to employ considerable whole-time workmen."

The Court concluded that the impugned notification was validly issued after due application of mind, compliance with statutory requirements, and proper consideration of relevant factors. The writ petition challenging the notification was accordingly dismissed.