Before Finalizing A Contract, Contractual Labourers Must Be Given An Opportunity Of Being Heard As Per Principles Of Natural Justice, Karnataka High Court

The Bengaluru Bench of Karnataka High Court has directed Hindustan Aeronautics Ltd, (appellant in the writ appeal) to revise the “Comprehensive Contract” in a manner accepted by law and to communicate it to the HAL Contract Workers' Association (respondents in the writ appeal).

HAL was instructed to issue a preliminary notification to consider objections from people who might be affected because of the Contract, review those objections, and then make a final decision.

A Division Bench of Justices Anu Sivaraman and G Basavaraja held that the order of the Single Judge was reasonable. However, modifying the order, the Bench directed that an authorized representative of the contract workers or the respondent Union must be notified and given a chance to speak before finalizing the Revised Comprehensive Contract.

BACKGROUND

The Hindustan Aeronautics Ltd, involved in the Design, Manufacture, Repair and Overhaul of Fighter Aircraft, Trainer, Helicopters, Transport Aircraft, Aeroengines, Avionics and System Equipment had engaged contract labourers as per the “Revised Comprehensive Contract” for non-core activities due to a temporary increase in work. The contract workers were hired by the company through contractors to focus on its main activities and avoid managing non-essential tasks.

The Respondent workers challenged the Contract contending that it was illegal, void and violative of Articles 14, 21, 23, 39, 42 and 43 of the Constitution of India and did not comply with the provisions of The Contract Labour (Regulation & Abolition) Act, 1970. It was further argued that the contract did not protect the interest of Contract labourers as per the provisions of ESI Act and Provident Fund Act.

The Single Judge reviewed the Contract in dispute and determined that it was merely internal correspondence regarding the transition from 'contract' to 'comprehensive Contracts'. It was concluded that the Writ Petition was premature. However, the court instructed HAL to issue a preliminary notification to consider objections from people who might be affected because of the Contract, review those objections, and then make a final decision.

The Appellants filed a writ appeal before the Division Bench challenging the order.

Contentions of the Appellants:

The appellants (HAL) argued that their actions complied with the Act of 1970 and maintained that there was no legal requirement for consultation with contract labourers in these matters. Citing Section 10 of the Act, HAL argued that there was no prohibition in contract labour to be employed.

Regarding the challenge to the Contract by workers, the counsel argued that the Act did not require consultation with contract labourers regarding contract agreements.

Moreover, the counsel submitted that there was no direct relationship between the appellants and the labours engaged by contractors. Quoting Section 20 of the Act, it was contented that if a contractor failed to fulfil the obligations, the principal employer was required to provide necessary amenities and recover the amount from the contractor and that the wage payments were primarily the contractor's responsibility as per Section 21 of the Act.

Citing various judgements including 'Hindustan Steelworks Construction Limited v. The Commissioner of Labour (1996)' and 'Bharat Heavy Electricals Limited v. Mahendra Prasad Jakhmola (2019)', the counsel asserted that they were merely altering how work was executed rather than changing the employment status of contract labourers, reinforcing that no master-servant relationship existed with the Union.

Contentions of the Respondent workers

It was argued that the Contract was illegal and violative of the Constitution of India and the Contract Labour (Regulation & Abolition) Act, 1970. Moreover, the Memorandum of Settlement failed to protect contract labourers under the ESI and Provident Fund Acts.

It was submitted that the workers had the right to express their views on their employment, as any actions arising from the Contract would affect their rights and living conditions. It was further submitted that there was an “established permanent arrangement” for contract labour, and the finalization of the Contract in dispute would impact existing settlements.

Citing principles of 'natural justice', the Counsel relied upon the decision of the Apex Court in 'National Textile Workers Union v. P.R. Ramakrishnan and Others (1983(3) SCC 105') which held that even if the law did not explicitly grant any such rights to the workers, the contract labourers should be given the opportunity of being heard before any decisions were made regarding the Contract.

Workers also relied upon several judgements including 'Sankar Mukherjee and others v. Union of India and others reported in 1990 (Supp) SCC 668; Bhilwara Dugdh Utpadak Sahakari Samiti Limited v. Vinod Kumar Sharma Dead by LR's and others reported in (2011) 15 SCC 209; H.D. Singh v. Reserve Bank of India and others reported in (1985) 4 SCC 20., etc reinforcing that contract labourers must have a say in matters affecting their employment.

Findings of High Court:

The Court perused the statement of objects and reasons as well as provisions of the Act of 1970 and held that the Act allowed the use of contract labour only under strict conditions. Disapproving the non-existence of a jural relationship between principal employer, the Court held that the decision of the Learned Single Judge directing the Appellants to give the contract labourers an opportunity of being heard before finalizing the Contract was reasonable.

It held that although the Act did not require that contract labourers be consulted, there was no issue in their representatives being heard before any major changes were made to the Contract.

After hearing both the parties, the court modified the decision of the Single Judge. It directed that the appellants must ensure that a representative of the contract labourers or their union was notified and allowed to speak before finalizing the Contract in dispute. Accordingly, the Writ Appeal was disposed of.

Case Title: HINDUSTAN AERONAUTICS LIMITED A GOVERNMENT OF INDIA UNDERTAKING AND ORS vs. HINDUSTAN AERONAUTICS CONTRACT WORKERS ASSOCIATION

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