2009 Supreme(SC) 678

SUPREME COURT OF INDIA
THE HONOURABLE MR. JUSTICE R.V. RAVEENDRAN & THE HONOURABLE MR. JUSTICE LOKESHWAR SINGH PANTA
International Airport Authority of India
Versus
International Air Cargo Workers' Union & Another
CIVIL APPEAL NO.2244 OF 2002
Date of Judgment : 13-04-2009

IMPORTANT POINTS
Only the appropriate government can abolish genuine labour contract. No court or Tribunal can do so.
Absorption of contract labour on abolition of contract labour is not automatic.
In case of sham or nominal contract, in absence of abolition of contract labour, remedy to workers lies in Industrial Disputes Act,1 947.

Headnote:(a) Contract Labour (Regulation and Abolition) Act, 1970 – Section 10 – Authority to abolish genuine labour contract – Vests only with the appropriate government – No court or Tribunal can do so. (Para 17)

       (1997) 9 SCC 377 – Relied upon

       (b) Contract Labour (Regulation and Abolition) Act, 1970 – Section 10 – Abolition of contract labour by notification – Absorption of contract labour – Not automatic – If even after notification prohibiting contract labour the system is continued, and the contract is sham or nominal the Industrial adjudicator should direct the principle employer to regularize their services in the establishment (Para 19)

       (1995) 5 SCC 27; (2001) 7 SCC 1 – Relied upon

       (c) Contract Labour (Regulation and Abolition) Act, 1970 – Section 10 – No prohibition under the Act – Contract is sham or nominal – Remedy to workmen lies in Industrial Disputes Act, 1947 and not the 1970 Act. (Para 20)

       (d) Constitution of India – Article 226 – Award by Tribunal – High Court should not interfere with the finding of Tribunal based on facts – However where the finding is without any basis, High Court has to interfere – Instantly workmen basing their claim on two grounds – Tribunal not adverting to any of them – Deciding on entirely different ground for which there was no foundation – Single Judge of High Court rightly interfered – Division Bench ought not have set it aside. (Para 24)

       (2000) 4 SCC 245; (1994) 5 SCC 204 – Relied upon

       (e) Contract Labour (Regulation and Abolition) Act, 1970 – Section 2(b) – Cargo handling agreement between IAAI and Air Freight – Licence – Not a contract – Workers were regular/permanent employees of Air Freight – Not contract labour of IAAI, upto 31.10.1985 – Thereafter IAAI was under no obligation to employ the workers – Memo filed by IAAI unilaterally before the Court to mitigate hardship of workers – Court accepting the memorandum upon agreement of workers – Thus their claim of direct employment as regular employees of IAAI stood rejected and attained finality – Memorandum not a settlement – Tribunal erred in calling it a settlement and holding that IAAI forced it on the workers. (Para 25)

       (f) Industrial Disputes Act, 1947 – Section 25F – Employees of erstwhile Air Freight employed by IAAI as casual labour in accordance with the memorandum filed before High Court till such time they formed the society – In the process they completing 180 days as casual labour – Not entitled to any relief. (Para 26)

       (g) Industrial Disputes Act, 1947 – Section 9A – Workers engaged as casual labour on the premise that their casual employment was purely ad hoc to be continued only till such a time they form their society and it negotiated and finalized the contract labour contract – This was recorded by the High Court while dismissing the writ petition filed by the workers union – Question of applying section 9A does not arise. (Para 26)

       (1982) 1SCC 645; (1970) 3 SCC 618 – Relied upon

       (h) Labour law – Employer-employee relationship – Tribunal holding that IAAI directly paid the contract labour and it took disciplinary action against them – Without any evidence – Perverse – Direct supervision of cargo handling is not denied – In fact it could not be otherwise – This alone not sufficient to make contract labour direct employees of the principle employer. (Para 28)

       Facts of the case:

       The litigation has reached its present stage after seven rounds.

       The International Airport Authority of India (IAAI) had established a cargo complex at Madras in the year 1978. Under an agreement dated 30.1.1978, it granted a licence M/s. Airfreight Private Ltd. to be its ground handling agent in respect of export, import and transshipment cargo consignments. Airfreight was to receive payment from the owners of the cargo for the work done, had to engage the services of required number of workers for handling the cargo and be responsible for payment of wages to the workers. It was also required to pay a licence fee to IAAI, linked to the total revenue realized by it. (minimum being Rs.12 lacs, maximum being Rs.43.50 lacs plus an agreed percentage of the revenue over and above 60 lacs). IAAI had no privity of contract, obligation or responsibility towards the workers employed by the Airfreight.

       In the year 1985 IAAI decided to take over the ground handling work and from 1.11.1985, Airfreight ceased to be the ground handling agent of IAAI at Madras Airport. The termination of the handling contract of Airfreight did not require IAAI or the new licencee of IAAI to take over the workers employed by Airfreight.

       The workers of Airfreight formed the `Airport Industrial Co-operative Service Society Ltd., on 28.11.1985. Pending finalization of a contract with the said society, in terms of the memo filed in WP No.11683/1985, IAAI started engaging some of the workers of Airfreight as casual labour on day to day basis depending on the actual requirements.

       An agreement was entered on 1.7.1986 under which the society agreed to provide 70 loaders cum packers at the Madras Air Cargo Complex on a consolidated monthly payment of Rs.45,870.

       A more detailed agreement was executed on 14.7.1986 between IAAI and society.

       The society entered into a fresh agreement dated 11.12.1987.

       The workers raised an industrial dispute demanding direct employment and the conciliation had ended in a failure on 26.9.1989.

       The dispute was referred to the Industrial Tribunal, Madras, by order dated 14.10.1991 :

       The notice issued by IAAI inviting tenders for the cargo handling work at the Air Cargo Complex was challenged by the first respondent Union which was dismissed.

       The reference made by the central government was decided by the Industrial Tribunal, Madras, in favour of the workers. The Tribunal directed IAAI to absorb the members of the society whose names were stated in the annexures to the claim statement, (excluding only those who died or left service), with effect from the date of the award.

       The said award was challenged by IAAI which was allowed.

       A Division Bench of the Madras High Court allowed the appeal and set aside the order of the learned Single Judge and restored the award of the Tribunal.

       Finding of the Court:

       (i) The contract labour agreement between IAAI and the society was not sham, nominal or as a camouflage and the contract labour were not the direct employees of IAAI.

       (ii) There was no violation of section 9A of the ID Act.

       (iii) In the absence of a notification under section 10 of CLRA Act prohibiting the employment of contract labour in the operation of cargo handling work, the workmen employed as contract labour are not entitled to claim absorption.

       Result:

       Appeal allowed in part.