1995 (12) TMI 341 - SC - Indian Laws

Court upholds orders for worker permanency, dismisses appeals challenging decision on labor law exemptions.

The court upheld the Industrial Courts' orders directing the State Government to make workers permanent with associated benefits, dismissing appeals ... Definition of 'industry' under section 2(j) of the Industrial Disputes Act, 1947 - dominant nature test - sovereign functions strictly understood - substantially severable units - unfair labour practice under item 6 of Schedule IV (continuing casuals to deprive them of permanency) - allocation of burden of proof in unfair labour practice - regularisation / permanency as relief for long continuance of casual employmentDefinition of 'industry' under section 2(j) of the Industrial Disputes Act, 1947 - dominant nature test - sovereign functions strictly understood - substantially severable units - Whether the Forest Department schemes in question (Pachgaon Parwati Scheme and social forestry work in Ahmednagar) constitute an 'industry' within the meaning adopted from section 2(j) of the Industrial Disputes Act - HELD THAT: - The Court applied the dominant-nature test as articulated in Bangalore Water-Supply & Sewerage Board and examined whether the activities under the Pachgaon Parwati Scheme and the Ahmednagar social forestry work are sovereign functions strictly understood. Authorities (including Corporation of Nagpur and Nagendra Rao) were considered to delimit sovereign/regal functions to inalienable state activities; welfare or environmental activities are not automatically sovereign. The Pachgaon Parwati Scheme was shown by the affidavit to be for bio-aesthetic, recreational and educational objectives and afforestation/soil conservation under State schemes; such work is not inalienable or exclusively sovereign and could be undertaken by non-State agencies. The Court thus held these schemes are not part of the sovereign core excluded from the definition of 'industry' and that there was no threshold bar to invocation of the State Act by the employees. [Paras 16, 17]The schemes are not sovereign functions strictly understood and therefore the activities fall within the definition of 'industry' as applied; the workmen could invoke the State Act.Unfair labour practice under item 6 of Schedule IV (continuing casuals to deprive them of permanency) - allocation of burden of proof in unfair labour practice - Whether the appellants committed unfair labour practice by employing the respondents as casuals/badlis/temporaries for years with the object of depriving them of permanency - HELD THAT: - Item 6 prohibits employing persons as casuals or temporaries for years with the object of depriving them of permanent status. The Court held that imposing on workmen the primary burden of proving the employer's subjective object would frustrate the protective purpose of the Act. Where casuals have been continued for long years in work of a permanent character, an inference as to the employer's object is permissible. On the material before the Industrial Courts (continuous engagement for about five years, estabilished nature of the work as permanent in character), the necessary inference could be drawn that the primary object was to deny permanency (and the higher wages attendant thereby). [Paras 22]The appellants were guilty of the unfair labour practice described in item 6; the inference of intent to deprive permanency is justified on the facts.Regularisation / permanency as relief for long continuance of casual employment - Whether the Industrial Courts were justified in directing regularisation (making the workmen permanent with attendant benefits) as relief - HELD THAT: - The Court considered precedents and factual distinctions relied upon by the State. Delhi Development Horticulture Employees Union (concerning J.R.Y.) was held inapplicable because that scheme's object was short-term poverty relief; by contrast the present schemes pursued permanent bio aesthetic, recreational and conservation objectives. Reliance on administrative burden or speculative financial strain did not justify denial of relief; no adequate factual foundation was placed before the Court to show inapplicability (and some appointments predated the Employment Guarantee Act). The Court observed that regularisation granted in appropriate cases for sustained casual employment is in line with precedents and that the relief ordered does not automatically extend to all casuals-each claim must be decided on its merits. [Paras 26, 29, 30]The Industrial Courts were justified in ordering regularisation of the claimants; there is no interference with that relief.Final Conclusion: The appeals are dismissed. The Court held that the Forest Department schemes in question are not sovereign functions exempting them from the definition of 'industry', that the appellants committed the unfair labour practice of keeping long standing casual workers to deprive them of permanency, and that the Industrial Courts rightly ordered regularisation of the affected workmen; no order as to costs was made. Issues Involved:1. Whether the Forest Department of the State Government is an 'industry' under section 2(j) of the Industrial Disputes Act, 1947.2. Whether the State Government indulged in unfair labor practices as per item 6 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971.3. Whether the directions given by the Industrial Courts need interference.Issue-wise Detailed Analysis:1. Whether the Forest Department of the State Government is an 'industry' under section 2(j) of the Industrial Disputes Act, 1947:The primary question was whether the Forest Department qualifies as an 'industry' under section 2(j) of the Industrial Disputes Act, 1947. The court referred to the precedent set in the Bangalore Water-Supply case, which established the 'dominant nature test.' According to this test, the predominant nature of the services and the integrated nature of the departments determine if an entity qualifies as an industry. The court noted that sovereign functions, strictly understood, alone qualify for exemption, not welfare activities or economic adventures undertaken by the government. Even within departments discharging sovereign functions, units that are industries and substantially severable can be considered industries.The court examined the Pachgaon Parwati Scheme and the social forestry work in Ahmednagar district, which were aimed at bio-aesthetic development and afforestation, respectively. The court found that these activities could be undertaken by private agencies and were not inalienable functions of the State. Thus, the Forest Department's activities under these schemes could not be regarded as sovereign functions and were open to the provisions of the State Act.2. Whether the State Government indulged in unfair labor practices as per item 6 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971:The second issue was whether the State Government indulged in unfair labor practices by employing workers as 'badlis,' casuals, or temporaries for years to deprive them of permanent status. The Industrial Court found that the respondents had been employed for 5 to 6 years, working for periods ranging from 100 to 330 days each year. The court noted that it would be difficult for workers to prove the employer's intent to deprive them of permanent status. Therefore, it was permissible to infer such intent if workers were kept as casuals for long periods. The court concluded that the primary object of keeping the workers as casuals was to deprive them of permanent status and the associated benefits.3. Whether the directions given by the Industrial Courts need interference:The final issue was regarding the relief granted by the Industrial Courts, which directed the State to make the workers permanent with all benefits of permanent employees. The appellants argued that regularizing all casual workers would impose a significant financial burden on the State. The court noted that the relief of regularization was justified given that the workers had been employed for long periods. The court distinguished this case from the Delhi Development Horticulture Employees Union case, where the employment was under a scheme providing temporary income support. The court found the present case more akin to the State of Haryana v. Piara Singh, where regularization of casual laborers was favored.The court also addressed the argument that some workers were employed under the Maharashtra Employment Guarantee Act, 1977, noting that no factual basis for this submission was on record. The court dismissed the financial burden argument, stating that the relief granted would not apply automatically to all casual employees but would be decided on a case-by-case basis.Conclusion:The court dismissed the appeals, finding no ground to interfere with the Industrial Courts' orders. The directions to make the workers permanent with all associated benefits were upheld, and no order as to costs was made.