The employment of contract labour for perennial and necessary work that can be adequately performed by regular workmen is not justified and can be abolished by an industrial tribunal.

Judgment

WANCHOO, J. : This is an appeal by special leave in an industrial mater. The appellant is the Standard Vacuum Refining Company of India Limited (hereinafter called the company). A dispute was raised by the workmen of the company (hereinafter called the respondents) with respect to contract labour employed by the company for cleaning maintenance of the refinery; (plant and premises) belonging to the company. The system in force in the company is that this work is given to contractors for a period of one year from October 1, to September 30. At the time when the reference was made the contract was with Ramji Gordhan and Company for the period from October 1, 1957 to September 30, 1958. On April 27, 1957, the respondents made a demand for abolition of the contract system that prevailed in the company and for absorbing the workmen employed through the contractors into the regular service of the company with retrospective effect from the date of their employment in the company through the contractors. The case of the respondents was that the contractor used to change sometimes from year to year with the result that the workmen employed by the previous contractor were thrown out of employment. As an instance, it as said that previous to October 1, 1957, the contract was with Gowri Construction Company. That company employed 67 workmen to do the work. But when the contract was given to Ramji Gordhan and Company, all these 67 workmen were thrown out of employment, though 40 of them were subsequently re-employed as fresh employees by Ramji Gordhan and Company. The result of the system therefore was that there was no security of service to the workmen who were in effect doing the work of the company. Besides the contractors were paying much less to the workmen than the amount paid by the company to its unskilled regular workmen. Further the workmen of the contractors were not entitled to other benefits and amenities such as provident fund gratuity, bonus, privilege leave, medical facilities and subsidized food and housing to which the regular workmen of the company were entitled. The work was of a permanent nature, but the contract system was introduced to deny the workmen the rights and benefits which the company gave to its own workmen.

2. The dispute was taken to the conciliation officer. When conciliation failed, the Government of Bombay made the following reference on May 13, 1958:

"The contract system for cleaning the premises and plant should be abolished and workers working in the refinery through the Ramji Gordhan and Company should be treated as workers of the Standard -Vacuum Refining Company of India Limited, Bombay and wage-scales, conditions of service, etc., that are applicable to the workers of the refinery be made applicable to them. Past service of these workers should be counted and they should be treated as continuously in the service of the STANVAC refinery from the date of their entertainment."

3. The company resisted the claim and raised two main contentions. In the first place it was contended that the reference under S. 10 of the Industrial Disputes Act, No. 14 of 1947, (hereinafter called the Act) was incompetent. In the second place it was contended that the work done by the contractor s workmen was not germane to the manufacturing process and was therefore entrusted to the contractor. If the workmen of the contractor were not satisfied with the conditions of service they could take up the matter with the contractor and the company had nothing to do with it. As to the difference between the wages and benefits and amenities of the regular workmen, it was said that the work of the two sets of workmen was very different and that in any case this was a matter between the contractor and its workmen. The contractor was an independent employer and it was incorrect to say that the real employer was the company. It was for the company to decide what was the best method of carrying on its business and the industria