Industrial Dispute - Minority Union Not Bound By Settlement Between Majority Union & Employer: Supreme Court

A Bench comprising Justices L. Nageswara Rao and Aniruddha Bose refused to interfere with the order of the Bombay High Court, which largely upheld the decision of the Central Government Industrial Tribunal, Mumbai, that the demands of the workers' Union to have uniform policies for all workmen irrespective of contracts in ONGC was justified.

"In the instant case we do not find the settlement of 19th September, 2016 to be one which would be binding on the minority Union. That was a settlement essentially between the contractors and workmen engaged by the former. The appellants were only consenting parties to the settlement", the Court said after taking note of Section 18 of the Industrial Disputes Act 1947.

The bench followed the precedents Tata Engineering and Locomotive Co. Ltd. vs. Their Workmen [(1981) 4 SCC 627] which had observed :  "It is further unquestionable that a minority union of workers may raise an industrial dispute even if another union which consists of the majority of them enters into a settlement with the employer"

Factual Background

The Oil Field Employees Association ("Union"), a Union registered in 2014, issued a direct action notice on 26.08.2016 to the appellants, Oil and Natural Gas Corporation Limited ("ONGC"). The Union represented workmen engaged by contractors of ONGC. On 19.09.2016, the said Union and ONGC were called by a Conciliation Officer ("Officer") to resolve the dispute arising out of the said direct action notice. It is pertinent to note that on the same day a settlement was reached between another Union, which represents 77% of the workmen and the contractor ("majority Union"), wherein ONGC was a consenting party. On 26.09.2016, a Charter of Demands with the demand that wages and service conditions of workmen of the contractors should be at par with the employees of ONGC was submitted by the Union. In turn, ONGC proposed a Fair Wage Policy. Eventually, the Conciliation failed and accordingly a report was sent to the Central Government, which referred the dispute to the Industrial Tribunal under Section 10(2A)(1)(d) of the Industrial Disputes Act, 1947 ("1947 Act"). The validity of the reference order was challenged by ONGC before the Bombay High Court, which the High Court rejected. In the meanwhile two other Unions were impleaded by the Tribunal. On appeal, the High Court sustained the award, modified the implementation part of the award.

Contention raised by the appellants

Senior Advocate, Mr. J.P. Cama appearing on behalf of ONGC referred to the definition of 'workman' in Section 2(s) of the 1947 Act to argue that the reference was not maintainable as none of the workmen that the Unions represented were employed by ONGC. The settlement entered into on 19.09.2016, with the majority Union, covered all similarly situated workmen. Placing reliance on a catena of judgements, Mr. Cama contended that workmen of contractors could not be treated as workmen of the principal employer. It was asserted that there was no agreement to suggest the concerned workmen were employed with ONGC. Moreover, abolition of contract labour does not automatically lead to absorption by the principal employer.

Contention raised by the respondents

Senior Advocate, Mr. Pallav Shishodia appearing on behalf of the Unions argued that the concerned workmen were the employees of ONGC. It was urged that the settlement of 19.09.2016 was not to be treated as a settlement under Section 18(3)(d) to bind the concerned workmen as the same had not been finalised. It was submitted that the settlement pertained to workmen of contractors whereas the concerned workmen are entitled to service benefits directly from ONGC.

Analysis by the Supreme Court

The Court observed that in the facts of the present case where the Union had claimed that the workmen were employees of ONGC, the question of jurisdiction was a mixed question of fact and law. It was noted that the Union had stated that the contracts were sham and bogus. Referring to Steel Authority of India Ltd. And Ors. v. National Union Waterfront Workers And Ors. (2001) 7 SCC 1, the Court clarified that when a plea of sham contract is raised, the veil is pierced to verify the correct status of employment. Therefore, the jurisdiction of the Tribunal cannot be faulted.

Considering the judgments referred to by the parties, the Court opined that the settlement of 19.09.2016 being one between the contractor and their workmen, with ONGC as merely the consenting party, would not make the settlement binding between ONGC and the minority Union. A settlement arrived between contractor and workmen is of no consequence in binding the subject-dispute where ONGC has been found to be the employer. The Court was of the view that the engagement by the contractors cannot be the sole basis for determining their status as workmen of contractors.

Case Name: M/s. Oil And Natural Gas Corporation Ltd. v. The President, Oil Field Employees Association And Ors.

Citation: 2022 LiveLaw (SC) 176

Case No. and Date: Civil Appeal No. 1033 of 2022 | 4 Feb 2022

Corum: Justices L. Nageswara Rao and Aniruddha Bose

Author: Justice Aniruddha Bose

Counsel for the appellant: Senior Advocate, Mr. J.P. Cama; Advocate-on-Record Mr. Ankit Kumar Lal; Advocates, Mr. Akshay Amritanshu, Mr. G.D. Talreja, Mr. Kartikey Singh, Mr. Ashutosh Jain.

Counsel for the respondent: Senior Advocate, Mr. Pallav Shishodia; Respondent-in person, Mr. Shaligram G. Mishra; Advocate-on-Record, Dr. Vinod Kumar Tewari, Advocates, Mr. Pramod Tiwari, Mr. Manindra Dubey, Mr. Vivek Tiwari, Ms. Priyanka Dubey.

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