Whether Service Of Contract Labourers Should Be Regularized Is A Matter Of Fact To Be Adjudicated By Industrial Tribunal: Andhra Pradesh High Court

The Andhra Pradesh High Court has dismissed a writ petition filed by Oil & Natural Gas Corp. Ltd. (ONGC) challenging the decision of Union Ministry of Labour referring its industrial dispute to Industrial Tribunal-cum-Labour Court, Hyderabad under Section 10(1)(d) r/w Section 2A of the Industrial Disputes Act.

One of the issues in industrial dispute was the demand of Union of contract labourers for regularization of their service as regular employees of ONGC. Reliance was placed on the Supreme Court decision in RK Panda & Anr. v. Steel Authority of India (1994) to hold that whether the engagement of contract labourers under the contractors was done to deprive them of benefits being extended to regular employees was a question of fact and Labour Court/Industrial Tribunal are competent to adjudicate such disputes on the basis of oral and documentary evidence.

Facts of the case

The petitioner i.e. ONGC, Rajajmundry, used to entrust duty to contractors for certain incidental jobs to be handled on temporary basis, and the contractors in turn appointed contract workers. One of such jobs was security work for which contractors engaged their own guards for providing security to various work centres of petitioner.

After the expiry of previous contract work, the fresh tender was granted to two contractors in 2003 and some contract labourers who worked as Security Guards with old contractors were not able to join the service. All such contract labourers had become members of 3^rd Respondent Union who had been working on an average period of 10 years with ONGC under different contractors. They sent a strike notice under Industrial Disputes Act to cancel the tender relating to security guards. Since the conciliation failed, the reference was made by the Government about the Industrial Dispute.

Contentions of Both Sides

The contract labourers contended that their services were perennial in nature and were being utilized as that of regular employees. Furthermore, despite changing in the contractors, a clause was also incorporated in the contract stating that the incumbent contractors should employ the guards who were employed by earlier contractors and in view of the same many workers have been continuing for last several years without any break. There is an employer and employee relationship between Petitioner and contract labourers as petitioner makes regulations governing the term of employment and contractor’s duty is merely to pay the wages to the workmen. By such artificial veil, the petitioner could avoid engaging the workers as its regular employees even though they have experience of working with petitioner organization of around 18 years.

The counsel for petitioner argued that the petitioner corporation ONGC mainly engaged in exploration and exploitation of oil and natural gas wherever it is available and hence there was no particular location and changed from place to place and as such it did not require permanent employees, one of which is security guards. As a consequence, the procurement of security guards was done through the contractors on tender basis. Only on humanitarian consideration there was a clause in tender notification and contracts that as far as possible the incumbent contractors shall endeavor to employ security guards who were employed by earlier contractors. However, there existed no direct employer and employee relationship between the petitioner and those workers and therefore the workers cannot claim regularization of their service.

Ruling of the Court

After hearing the contentions of both sides, a Single Judge Bench of Justice U. Durga Prasad Rao relied on the Apex Court decision in RK Panda & Anr. (supra) in which the petitioners alleged that they were employed by Steel Authority of India in Rourkela Plant through contractors but they were doing jobs which are perennial in nature and must be paid equivalent to regular employees. It was held that whether the engagement of labourers through a contractor was a mere camouflage and smoke screen was a question of fact and Labour Court/Industrial Tribunal are competent to adjudicate such disputes on the basis of oral and documentary evidence.

Thus, whether an artificial veil was created of contractor between Petitioner and workers was to be decided by the Industrial Tribunal. In the result, the writ petition was dismissed with the observation that the concerned Industrial Tribunal-cum-Labour Court shall conduct due enquiry with regard to reference made by Government and pass an award in accordance with law.

W.P. No. 24835 of 2004

Cause Title: Oil & Natural Gas Corpn. Ltd. v. The Government of India, Ministry of Labour & Ors.

Counsel for ONGC: D.S. Sivadarshan

Counsel for Contract Labourers Union: K. Chidambram

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