Writ Petition No.909 of 1989

22nd January, 1996

Petitioner Counsel: Mr.K.K.SINGHVI with Mr.S.S.PAKALE
Respondent Counsel: Mr.R.C.MASTER, Mr.P.K.RELE

Cases Cited:
AIR 1995 SC 1893 [Para 5,8,9]
W.P.No.891 OF 1992 dt/-11-12-1992(Bom) [Para 5,8]
1995 II CLR 194 [Para 7,9]

JUDGMENT

MAJITHIA, J. :- The petitioner, The General Employees' Association, a registered Trade Union under the Trade Unions Act, 1926, has challenged order contained in letter No.S-16014/22/87/LW dated June 8/9, 1988 of Government of India, Ministry of Labour, refusing to prohibit employment of contract labour in the canteen attached to the refineries of the establishment of HIndustan Petroleum Corporation Ltd., Mahul, Bombay, in this Writ Petition under Article 226 of the Constitution of India.

2. The facts as unfolded in the Writ Petition, briefly, are :-

Hindustan Petroleum Corporation Ltd., respondent No.2, is a wholly owned statutory Corporation of the Government of India which came into existence following the take over of the erstwhile Esso Inc., Caltex (India) Ltd. and Caltex Oil Refinery (India) Ltd., by the Government of India, pursuant to the Esso (Acquisition of Undertakings in India) Act, 1974 and the Caltex (Acquisition of Shares of Caltex Oil Refinery (India) Ltd. and of the Undertakings in India of Caltex (India) Ltd.) Act, 1977. Suvidha Catering Service, respondent No.3, is the catering contractor of respondent No.2. Respondent No.2 has a number of establishments in Bombay, namely, at Mahul, Sewree, Wadala and Mazagaon, Refineries and Liquified Petroleum Gas Bottling Plant at Mahul. All these establishments of respondent No.2 are factories within the meaning of Section 2(m) of the Factories Act, 1948. Respondent No.2 has also other establishments at Petroleum House and Arcadia at Churchgate, Bombay, and at Hindustan Bhavan, Ballard Estate, Bombay. These establishments of respondent No.2 are commercial establishments registered as such under the Bombay Shops and Establishments Act, 1946. The total number of workmen in each of the establishments, namely, those at Mahul, Sewree, Wadala and Mazagaon, exceed 500 and those establishments are factories within the meaning of Section 2(m) of the Factories Act. Respondent No.2 is, therefore, bound and liable to run and maintain a canteen at each of the establishments under the provisions of the Factories Act. Respondent No.2 is also departmentally running canteens at its establishments at Mazagaon and Sewree terminals. Respondent No.2 is also running canteens at its establishments at Mahul through the contractor, namely, Suvidha Catering Service, respondent No.3. Respondent No.2 supplies to respondent No.3, free of cost, liquified petroleum gas, electricity, water, utensils/crockery, furniture and fixtures. Respondent No.2 also supplies to respondent No.3 materials and provisions required for preparation of food articles. Respondent No.3 prepares food articles and beverages, etc., from the materials so supplied by respondent No.2 for serving the same to the workmen and officers of respondent No.2 employed in its establishments at Mahul. Respondent No.2 exercise complete control and supervision over the quality and quantity of materials and provisions purchased and released to respondent No.3.

Respondent No.2 has constituted a Canteen Committee at each of its establishments wherein a canteen is established, notwithstanding whether the canteen is run departmentally or through a contractor. Each such canteen is composed of representatives of the management of respondent No.2 and representative of the workmen of respondent No.2 employed in the concerned establishment. The Canteen Committee takes decisions in respect of, inter alia, menu of food articles to be prepared and served, number of workmen to be employed in each section of canteen, review of quality of food articles and review of service in the canteen.

The work performed by the workmen in the canteens, irrespective of the fact whether they are run and maintained by respondent No.2 departmentally or through a contractor, is of continuous and perennial nature and not casual or intermittant. The workman employed in the canteen at its establishments at Mahul through respondent No.3 performed the same or similar kind of work as is performed by the workmen directly employed by respondent No.2. However, the wages paid and other service conditions of the workmen employed through the contractor are far less favourable than those applicable to the workmen directly employed by respondent No.2 to do the same or similar kind of work. The Trade Unions of respondent No.2 took exception to the discrimination and exploitation of the workmen employed through contractor. The said Trade Unions arrived at a settlement with respondent No.2 on December 11, 1986. Clause of the Settlement is in the following terms :-

"21. Contract Labour :-

The Corporation will take steps to review engagement of contract labour in the Refinery with a view to reduce/eliminate employment of such labour as far as feasible. The first discussion will commence within six months from the date of signing this Settlement."

Respondent No.2, however, failed to commence negotiations.

The petitioner filed Writ Petition No.3025 of 1987 in this Court for the issuance of appropriate writ to respondent No.1 directing it to prohibit employment of contract labour in the canteens of the establishment of respondent No.2 at Mahul. The Writ Petition was rejected by a learned single Judge on September 21, 1987 on the sole ground that the matter should first be got decided from the appropriate Government under the Contract Labour (Regulation and Abolition) Act, 1970. The order was challenged in this Court in Appeal No.1119 of 1987. Before the Appellate Bench, the counsel for the Union of India made a statement that the Union of India will take a decision on the application dated July 21, 1987 filed by the petitioner for abolition of contract labour within six weeks. On the basis of this statement, the Writ Petition was withdrawn and the order dated September 21, 1987 passed by the learned single Judge was set aside.

The matter was considered by the Central Advisory Contract Labour Board. The petitioner filed written submission before the said Board and the relevant portion of the same reads thus :-

"2. Before dealing with the factual aspects of the instant case, the Union feels it necessary to traverse in brief on the policy for effectuating which the Contract Labour Act was enacted, besides the background of the employment of Contract Labour by the Corporation in some of their canteens.

3. The passing of the Contract Labour Act is basically as a consequence of the judgment of the Hon'ble Supreme Court of India in Standard Vaccum Refinery Co. of India Limited and its Workmen (AIR 1960 SC 948).

4. The statements of objects and reasons of the Contract Labour Act clearly establish that the recommendations of the Planning Commission related inter alia to undertaking of studies to ascertain the extent of the problem of contract labour, progressive abolition of the Contract Labour system and improvement of service conditions of contract labour where the abolition is not possible. The long title of the Contract Labour Act also faithfully reflects in brief the objects and reasons for enactment of the Contract Labour Act.

5. Thus, it is clear that this piece of welfare legislation, viz. the Contract Labour Act was enacted to prohibit the primitive and baneful nature of the system of Contract Labour where possible and to regulate the employment of the Contract Labour in such cases where it is not possible to do so. The criteria which the Supreme Court recognised in the case supra (AIR 1960 SC 948) were spelt out by His Lordship Wanchoo J. speaking for the Court. The provisions of Sub-Section (2) of Section 10 have been modelled on these observations of the Hon'ble Supreme Court.

6. The Union has set forth in detail in their representation of July 21, 1986 and July 29, 1987, the facts of the case. The Union does not therefore, feel it necessary to traverse the points already covered except to furnish the following comparative statements annexed hereto :-

Annexure : Description :

1.Details of number of workmen in the various factory establishments of the Corporation and number of workmen in the canteens attached thereto.

2. Comparative statement of wages paid to contract workmen and direct workmen of the Corporation doing same or similar kind of work.

3. Comparative statement of other conditions of service of the two categories of workmen as above doing the same or similar kind of work.

7. The Union relies on what they have stated in Paragraphs 6 and 7 of their Annexure (Justification Statement) to their letter dated 29.7.1987 and states that the Contract Labour system adopted by the Corporation is "Labour only Contracting system" of "in side contracting system" which the Hon'ble Supreme Court has termed as an archaic system and a relic of the early phase of capitalist production (AIR 1987 SC 777) in particular Para No.6.

8. As pointed out by the Union under paragraphs 3, 4 and 7 of Annexure to their letter dated 29.7.1987, the employment of the Contract Labour by the Corporation is in utter disregard to the provisions of the Contract Labour Act and Contract Labour (Regulation & Abolition) Central Rules, 1971 (Contract Labour Rules' for short hereinafter). The Union further says that no positive action has been initiated by the Enforcement Officer (Central) of the Regional Labour Commissioner's Office at Bombay to take remedial action in this regard inspite of the Union's communication is this respect.

9. The statutory obligation of the Corporation in maintaining a canteen necessarily means that the said operation/work is of a perennial nature. When the Corporation changes the contractor at frequent intervals, considerable prejudice is caused to the contract labour in respect of continuity of service, terminal benefits, security of employment, etc. This point is dealt with under Paragraph 8 of Annexure to the Union's letter dated 29.7.1987. Even when the contract is renewed with the same Contractor, the Contract Labour is not assured of the benefits which the workmen directly employed by the Corporation to do the same or similar kind of work in the departmentally run canteens of the Corporation's other factories are entitled to.

10. The concept of "similar kind of work" in Rule 25(2)(v)(a) of the Contract Labour Central Rules has been clarified by the Supreme Court of India in Mehrotra Enterprises v. State of UP and Ors. (1978 II LLJ 65(SC). The Union, therefore, says that any effort to justify the contravention of the Rule 25(2)(v)(a) of the Contract Labour Central Rules and the conditions under which licence has been granted for engaging Contract Labour in the Corporation's industrial establishments is not maintainable.

11. The ground raised by the Corporation earlier that the Contract Labour covered in the instant case is paid minimum wages as applicable to Shops & Establishments (Hotel Catering Establishments) under the Minimum Wages Act and Rules is untenable. This is because a plain reading of Rule 25 of the Contract Labour Central Rules will establish that :-

a) the rates of wages payable to the Contract Labour shall not be less than those prescribed under the Minimum Wages Act, 1948, for such employment, where applicable or at rates fixed by agreement, Settlement or Award if any subsisting (Rule 25(2)(iv).

b) Where, however, the Contract Labour performs the same or similar kind of work as the workmen directly employed by the principal employer, the wage rates, holidays, hours of work and other conditions of service of the Contract Labour on the same of similar kind of work. (Rule 25(2)(v)(a).

12. The applicability of payment of Minimum Wages under Rule 25(2)(iv) arises only when there are no workmen directly employed by the principal employer in that establishment on the same or similar kind of work. Where the principal employer has directly employed workmen in the establishment to do the same or similar kind of work, Rule 25(2)(v)(a) comes into operation and renders Rule 25(2)(2)(iv) inapplicable.

13. The maintenance and running of the canteens being a statutory obligation of the Corporation, the said operation/process/department is ancillary and necessary to the Industry. The services rendered by the Contract Labour for running the canteen are for the purpose of enabling the Corporation to comply with the said statutory obligations to run their industry. In the premises, when the contract workmen labourers to produce goods/services for the use of the principal employer in their Industry, and the same or similar kind of work is also performed by the direct workmen of the Corporation, the contract workmen are entitled to the same wages and other conditions of service as applicable to the direct workmen as a matter of fundamental right. Any other view is violative of Article 14 of the Constitution of India. The Union relies on the ratio of decision of the Hon'ble Supreme Court of India in :-

i) Dhirendra Chamoli and Anr. V. State of UP (1986 I LLJ 134 (SC).

ii) Surinder Singh & Anr. vs. the Engineer in Chief, CPWD & Ors. (1986-I-LLJ 403 (SC).

14. The Corporation has recognised the existence of this baneful system in their establishments, its pernicious features and the need to abolish it. This is evident from Clause No.21 of the Memorandum of Settlement arrived at between the Corporation and their employees' unions on 11.12.1986 in the course of conciliation proceedings under Section 12(3) of The Industrial Disputes Act, 1947. The said Clause No.21 reads as under :-

'21. Contract Labour :

The Corporation will take steps to review engagement of Contract Labour in the Refinery with a view to reduce/eliminate employment of such labour, as far as feasible. The first discussion will commence within six months from the date of signing this Settlement.'

15. The Union says that notwithstanding the said agreement, the Corporation failed and neglected to initiate discussions on the prohibition of Contract labour within six months from 11.12.1986 or at any time thereafter. The only logical inference flowing from the said failure and negligence of the Corporation is to continue the archaic system of employment of Contract labour for patently malafide reasons. The Corporation, as an instrumentality of the State under Article 12 of the Constitution, is expected to function as a model employer. That the Corporation even now continues to resort to contract labour in functional areas which satisfy the criteria laid down for prohibition of contract labour (Refer Paragraph 5 hereinabove) is opposed to the settled principles as enunciated by the Supreme Court in Workmen of Food Corporation of India (1985 S-C (L&S) 420) and in particular to head note on Page 421.

16. It is against this background that the Union had to move the Hon'ble High Court of Judicature at Bombay in Writ Petition No.3025 of 1987 under Article 226 of the Constitution of India and the Division Bench of the said Court in Appeal No.1119 of 1987.

17. The following observations of the Calcutta High Court and the Supreme Court on the abolition of the Contract Labour system are equally pertinent in this connection.

(a) The act is an important piece of social legislation and seeks to regulate the employment of Contract Labour and where necessary to abolish the same. It is a legislation for the welfare of labourers. The Act being a piece of social legislation, it should be liberally construed. (1977 Lab. I.C. (Cal.) 11037).

(b) Contract Labour - Abolition of - If the work for which contract labour is employed is incidental and closely connected with the main activity of the industry and is of a perennial and permanent nature, the abolition of the Contract Labour would be justified. Practice of other industries in or about the same area must also be taken into account, (1972 Lb. I.C. (SC) 760).

The more recent decision of the Supreme Court of India (AIR 1987 SC 777) is a reiteration of the ratio of the above two decisions besides interpreting the provisions of Section 10(2) of the Contract Labour Act in a broader sense.

18. From the facts and circumstances mentioned hereinabove and under paragraph 112 of Annexure to our letter dated 29.7.1987, it is abundantly clear that the instant case satisfactorily account for all the relevant factors mentioned in Section 10(2) of the Contract Labour Act.

19. In the aforesaid premises and on the ration of decision of the Hon'ble Supreme Court of India in Catering Clearners of Southern Railways vs. Union of India and others (AIR 1987 SC 777) - (1987 I LLJ (SC) 345) the instant case is one that calls for the Central Govt. to prohibit the employment of Contract Labour in the Corporation's establishments and absorb the Contract Labour in the Corporation's regular employment.

The central Advisory Contract Labour Board appears to have made some recommendations to the Central Govt. and on the basis of the same, the Central Govt. took a decision not to prohibit employment of contract labour in the canteen attached to the refineries of the establishment of Hindustan Petroleum Corporation Ltd., Mahul, Bombay. The Central Govt. conveyed its decision vide letter No.S-16014/22/87/LW dated June 8/9, 1988 to Shri S.Shankararama Krishnan, Central Govt. Advocate, Ministry of Law, Justice & Company Affairs, Department of Legal Affairs, Bombay, under copy to the petitioner. The decision of the Central Govt. as contained in this communication reads as under :-

"2. In pursuance of the recommendation of the Board, the matter has been considered in detail by the Central Government and it has been decided not to prohibit employment of Contract Labour in the Canteen attached to the refineries of the establishment of Hindustan Petroleum Corporation Ltd., Mahul, Bombay, for which the appropriate Government under the Contract Labour (Regulation and Abolition) Act, 1970 is the Central Government."

3. Written statement by way of affidavit was filed by Mr.Arun Kumar Ray, General Manager, Industrial Relations & Administration of the 2nd respondent-Corporation. The factual position was not controverted. However, it was stated that the workmen employed by the Corporation for running departmental canteens are not performing the same or similar kind of work as done by the workmen employed by the contractor.

4. At the hearing, affidavit dated December 1, 1995 was filed by Assistant Labour Commissioner (Central)-I, Bombay. The material on the basis of which the Central Govt. took the decision refusing to prohibit employment of contract labour in the canteen attached to the refineries of respondent No.2 was not disclosed. At the time of hearing of the Writ Petition, learned counsel appearing for respondent No.2 did not dispute that the nature of the work performed in the canteens run by the contractor is perennial that the canteens have to be statutorily run. In the light of this statement, it is not necessary to dilate further on this aspect of the matter.

5. The precise question which arises for consideration is whether the decision of the Central Govt. refusing to abolish contract labour in the canteen attached to the refineries of the establishment of respondent No.2 is valid at law. In Gujarat Electricity Board, Ukai v. Hind Mazdoor Sabha, AIR 1995 Supreme Court 1893, the Apex Court condemned the practice in the public sector undertakings of indulging in unfair labour practice by engaging contract labour when workmen can be employed directly even according to the test laid down by Section 10(2) of the Contract Labour (Regulation and Abolition) Act, 1970 (for short "the Act"). The Apex Court said that the only reason for engaging contract labour instead of direct employee is the monetary advantage by reducing expenditure. After expressing dismay over this matter, the Apex Court issued certain directions. Detailed reference to the same will be made in the later part of the judgment. Similar practice in the case of Bharat Petroleum Corporation Ltd. was condemned by this Court in Writ Petition No.891 of 1992 (Lalbavta Hotel & Bakery Masdoor Union and another v. Bharat Petroleum Corporation and others) decided on December 11, 1992. Reference to this decision will also be made in the later part of the judgment.

6. Para 2 of the letter dated June 8/9, 1988 quoted in the earlier part of the judgment, which was communicated by the Government of India to its Standing Counsel, does not indicate whether the statutory guidelines mentioned in Section 10(2) of the Act had been kept in mind while passing the order. The least we expected was that the Union of India will disclose in its affidavit the material which was taken into consideration for not prohibiting the employment of contract labour. In para 19 of the affidavit filed on its behalf by Assistant Labour Commissioner (Central)-I, it is stated thus:-

"19. With reference to paras 30 & 31 of the petition, I say that as no new facts have been furnished by the petitioner in the letter dated 25.8.1988 which was acknowledged by the Hon'ble Labour Minister on 7th Sept. 1988, it was not considered necessary to place the matter again before the Central Contract Labour Advisory Board. It may be noted that the appropriate Govt. can take a decision to prohibit employment of contract labour in a job/process/operation only after consultation with the appropriate contract labour Advisory Board. Since the Board has taken a decision on the written submissions after considering the submissions made by the union and the views expressed by the representative of the management, the same was referred to the Govt. for taking a final decision as no new facts have been furnished by the petitioner union, the Govt. could not have taken a decision without consulting the Board again."

In our view, there is no application of mind to the requirements mentioned in Clauses (a) to (d) of sub-Section (2) of Section 10 of the Act. The petitioner had placed the data before the Central Advisory Board, which disclosed how the workmen employed by the contractor for running the canteens and the workmen employed by respondent No.2 for running the departmental canteens, although performing similar functions, were paid different emoluments and benefits. The affidavit does not disclose that this material was taken into consideration. In the facts and circumstances of the case, we find that the decision of the Central Government not to abolish contract labour in the canteens in the refineries of respondent No.2 is only for expediency and is not in accordance with the provisions of the Act and cannot be upheld.

7. The Apex Court in ParimaChandra Raha & others v. Life Insurance Corporation of India & others, 1995 II CLR 194, had the occasion to deal with the claim of the workmen working in the canteens of life Insurance Corporation of India. The claim of these workmen was that the canteen workers in fact the employees of the Life Insurance Corporation and were entitled to the minimum of the salary paid to Class IV employees of the Corporation. The Apex Court after referring to the statute and the judicial decisions, observed thus :-

"(i) Where, as under the provisions of the Factories Act, it is statutorily obligatory on the employer to provide and maintain canteen for the use of his employees, the canteen becomes a part of the establishment and, therefore, the workers employed in such canteen are the employees of the management.

(ii) Where, although it is not statutorily obligatory to provide a canteen, it is otherwise an obligation on the employer to provide a canteen, the canteen becomes a part of the establishment and the workers working in the canteen, the employees of the management. The obligation to provide a canteen has to be distinguished from the obligation to provide facilities to run canteen. The canteen run pursuant to the latter obligation, does not become a part of the establishment.

(iii) The obligation to provide canteen may be explicit or implicit. Where the obligation is not explicitly accepted by or cast upon the employer either by an agreement or an award etc., it may be inferred from the circumstances, and the provision of the canteen may be held to have become a part of the service conditions of the employees. Whether the provision for canteen services has become a part of the service conditions or not, is a question of fact to be determined on the facts and circumstances in each case. Where to provide canteen services has become a part of the service conditions of the employees, the canteen becomes a part of the establishment and the workers in such canteen become the employee of the management.

(iv) Whether a particular facility or service has become implicitly a part of the service conditions of the employees or not, will depend, among others, on the nature of the service/facility, the contribution the service in question makes to the efficiency of the employees and the establishment, whether the service is available as a matter of right to all the employees in their capacity as employees and nothing more, the number of employees employed in the establishment and the number of employees, who avail of the service, the length of time for which the service has been continuously available, the hours during which it is available, the nature and character of management, the interest taken by the employer in providing, maintaining, supervising and controlling the service, the contribution made by the management in the form of infrastructure and funds for making the service available etc."

After applying the ratio of these conclusions, the Apex Court held that the Life Insurance Corporation had not explicitly undertaken to provide canteen services to its employees working in the offices in question. However from the facts on record, the Apex Court found that the Corporation had implicitly accepted the obligation to provide canteen services and not merely the facilities to run the canteen. After so concluding, the Apex Court observed that the canteen workers, who were the appellants in the Apex Court, working in the canteens in the offices of the Corporation were entitled to the relief of their absorption in the service of the Corporation as its regular employees and also for pay as is paid to other employees of the Corporation. The Apex Court in paras 32 of 35 observed thus :-

"32. The next question is as to what relief the appellants are entitled. As pointed out earlier, the appellants have prayed for the relief of their absorption by the Corporation as its regular employees and also for pay as is paid to the other employees of the Corporation. In view of our finding that the appellants who are the canteen workers in the four offices of the Corporation in Calcutta are entitled to be the employees of the Corporation, the appellants are certainly entitled to the first relief they have claimed. The question, however, is to what service conditions they would be entitled. They have prayed for the minimum salary paid to the employees of the Corporation which necessarily means the minimum salary of the lowest paid employees of the Corporation, i.e.of class IV employees. There would be no difficulty in directing the payment to them of the minimum of the salary paid to the Class IV employees of the Corporation. However, there is distinction between the present service conditions of the appellants and the other Class IV employees of the Corporation. For example, the appellants get free food and free tea. Their hours of service may also differ. There are also different categories of canteen workers such as General Manager, Canteen Manager-cum-Salesman, Kitchen Clerk, Canteen Clerk, Halwai, Assistant Halwai, Cook Bearer, Wash-boy, Sweeper etc. It is not possible for the Court to evaluate the work done by each of the categories. Hence different service conditions will have to be prescribed for the different appellants. The Corporation may have, therefore, to prescribe appropriate service conditions for the canteen workers.

33. Pending the prescription of such service conditions, the Corporation should pay to all the appellants the minimum of the salary presently paid to its Class IV employees taking into consideration and making allowance for the special facilities, if any, available to them and also their special working conditions. In addition, the Corporation should also give them the benefit of the other service conditions available to its Class IV employees.

34. The question further is from which date the appellants should be deemed to have become the employees of the Corporation and should therefore, be entitled to the minimum salary and the other benefits. Taking into consideration the relevant facts and circumstances on record, we are of the view that they should be deemed to have become the regular employees of the Corporation from the date of the filing of the writ petition before the High Court and should, therefore, be paid the arrears of salary and other monetary benefits, if any, from the said date after adjusting the salary and monetary benefits that they may have received. The years of continuous service put in by them even prior to the aforesaid date as canteen workers should, however, be taken into account for the purpose of calculating their retiral benefits.

35. We, however, make it clear that the above direction to treat the appellants as the regular employees of the Corporation will be subject to conditions, viz, (a) that they were above the minimum and below the maximum age limit and medically fit as per the regulations of the Corporation on the date of the filing of the writ petition and (b) then on the date of the filing of the writ petition before the High Court, they had put in a minimum of three years continuous service as canteen workers in the canteens in question. For the purposes of calculating the said three years qualifying service and the retiral benefits, the service prior to the attainment of the minimum qualifying age under the Corporation's regulations shall be ignored. "

The ratio of this judgment is fully applicable to the facts of the instant case.

8. In Gujarat Electricity Board's case (supra), the Apex Court expressed dismay over the continuance of contract labour in the undertakings in the public sector when workmen could be employed directly, as the test laid down in Section 10(2) of the Act was satisfied. In para 27 of the judgment, the Apex Court observed thus :-

"27. While parting with these matters, we cannot help expressing our dismay over the fact that even the undertakings in the public sector have been indulging in unfair labour practice by engaging contract labour when workmen can be employed directly even according to the tests laid down by Section 10(2) of the Act. The only ostensible purpose in engaging the contract labour instead of the direct employees is the monetary advantage by reducing the expenditure. Apart from the fact that it is an unfair labour practice, it is also an economically short-sighted and unsound policy, both from the point of view of the undertakings concerned and the country as a whole. The economic growth is not to be measured only in terms of production and profits. It has to be guaged primarily in terms of employment and earnings of the people. Man has to be the focal point of development. The attitude adopted by the undertakings is inconsistent with the need to reduce unemployment and the Govt. policy declared from time to time to give jobs to the unemployed,. This is apart from the mandate of the directive principles contained in Arts. 38, 39, 41, 42, 43, and 47 of our Constitution. We, therefore, recommend that--

(a) all undertakings which are employing the contract labour system in any process, operation or work which satisfies the factors mentioned in clauses (1) to (d) of Section 10(2) of the Act should on their own discontinue the contract labour and absorb as many of the labour as is feasible as their direct employees;

(b) both the Central and the State Government should appoint a committee to investigate the establishments in which the contract labour is engaged and where on the basis of the criteria laid down in clauses (a) to (d) of Section 10(2) of the Act, the contract labour system can be abolished and direct employment can be given to the contract labour. The appropriate Government on its own should take initiative to abolish the labour contracts in the establishments concerned by following the procedure laid down under the Act.

(c) the Central Government should amend the Act by incorporating a suitable provision to refer to the industrial adjudicator the question of the direct employment of the workers of the ex-contractor in the principal establishment, when the appropriate Government abolishes the contract labour.

In Lalbavta Hotel & Bakery Mazdoor Union's case (supra), this Court, in somewhat identical circumstance while dealing with the abolition of contract labour in the canteens of Bharat Petroleum Corporation, observed thus :-

".......Looking to the statutory guidelines prescribed in Section 10 (2) of the Act we are of the view that the work in the canteens being in discharge of statutory obligations under Section 46 of the Factories Act, 1948 is very much incidental to or connected with the work in the refinery. Then again, the facts whom that the canteen in the refinery has been running on all the days in a year from the day the refinery was established. It is therefore of a perennial nature. The work is full time. We also notice that while the work in the refinery canteen is carried out by engaging contract labour, the same type of work is carried out in the marketing installations through departmentally employed labour. Finally it is seen that there is enough work to employ a large number of full time workmen. Thus all the considerations specified in clauses (a) to (d) of the sub-section (2) of section 10, of the Act are fulfilled. We have already noticed that these considerations have been culled out from the judgment of the Supreme Court in the case of Standard Vacuum Oils case (supra) wherein the Supreme Court has pointed out that if these factors are present, then there is no justification for engaging contract labour. We are thus of the view that if there had been bonafide and careful application of mind to the factors contained in the guidelines specified under section 10(2) of the Act and the recommendations of the Committee appointed by the Board, it would have been impossible for the Central Government to arrive at the conclusion that the contract labour should not be abolished in the Refinery canteen. It is, however, unfortunate, that there was no application of mind either to the statutory guidelines or to the Committee's recommendations and the decision as not arrived at fairly justify.

We have already pointed out that the Central Board chose not to make any recommendations and, merely on the fallacious ground that the Committee's Report was not unanimous, it left the entire matter to the decision of the Central Government. The Central Government, however, chose not to act in accordance with the law in discharge of its statutory functions and duty.

9. We are conscious that the power to abolish contract labour system is exclusively vested in the appropriate Government and not in the Court or Tribunal. The glaring facts in this case, however, leave us with a distinct impression that the statutory authority which is vested with the power of abolition of contract labour under Section 10 of the Act is not having an open mind. We have arrived at this conclusion by considering the conduct of the Central Govt. referred to above, namely, the basis for refusing to abolish the contract labour was neither disclosed in the affidavit filed in reply to the petition or produced before us at the time of hearing of this petition. In a situation like the present one, and more particularly, keeping in view the ratio of the judgments in Parimal Chandra Raha's case (supra) and in Gujarat Electricity Board's case (supra), this is a fit case where we should exercise power under Article 226 of the Constitution and issue directions to respondent Nos. 1 and 2 to abolish contract labour in the refinery canteen of respondent No.2.

10. For the reasons stated above, we allow the Writ Petition. Rule is made absolute and the following order is passed :-

(i) Respondent Nos. 1 and 2 are directed to abolish the system of contract labour existing in the canteen attached to the refineries of respondent No. 2 at Mahul, Bombay, forthwith.

(ii) Respondent Nos. 1 and 2 shall determine the complement of different categories of workmen required for running the canteen within the refineries departmentally. Such number of workmen from amongst the present workers working in the canteen determined as the required complement shall stand absorbed as regular workmen in the employment of the 2nd respondent.

(iii) Upon absorption in the service of the 2nd respondent, the concerned workmen shall be entitled to the emoluments and conditions of service as are applicable to the workmen of corresponding categories in the other canteens.

(iv) If any workmen from amongst the existing contract labour are found surplus to the requirement in any category, the 2nd respondent shall discharge such workmen after complying with the provisions of Chapter V of the Industrial Disputes Act. While doing so, the 2nd respondent shall keep in mind the fact that the workmen concerned had been rendering service in the refinery canteen for over a period of time and, therefore, they ordinarily have a right to continue in employment and every effort should be made to continue them in service.

(v) No order as to costs.

Order accordingly.