Supreme Court Directs Fresh Review of Contract Labour Prohibition in ONGC: ONGC Labour Union vs. ONGC Dehradun (2019)

Introduction

Date of the Judgment: 17 October 2019
Citation: (2019) INSC 8114
Judges: R. Banumathi, A.S. Bopanna, Hrishikesh Roy, JJ.

Can a government notification prohibiting contract labor be valid if it doesn’t consider the specific circumstances of each establishment and fails to include the affected labor unions in the decision-making process? The Supreme Court of India recently addressed this critical question in a case involving the Oil and Natural Gas Corporation (ONGC). The court’s decision highlights the importance of procedural fairness and thorough assessment in labor law matters.

This case involves an appeal by the ONGC Labour Union against a High Court decision that quashed a government notification prohibiting contract labor in ONGC. The Supreme Court, finding that the Labour Union was not heard by the High Court, ordered a fresh review of the matter, emphasizing the need for proper representation of affected parties.

Case Background

The case revolves around a notification issued by the Government of India on 08.09.1994, under Section 10(1) of the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA Act). This notification prohibited the employment of contract labor in 13 different categories of work within ONGC establishments. The ONGC challenged this notification in the High Court of Uttarakhand, which quashed the notification. The ONGC Labour Union, which was not a party in the High Court proceedings, appealed to the Supreme Court.

The Labour Union argued that the notification was issued after due consideration of the conditions of work and benefits provided to contract labor, as required by Section 10 of the CLRA Act. They contended that the High Court’s decision was flawed because it did not consider the detailed study and recommendations of a Sub-Committee formed to assess the issue.

The ONGC, on the other hand, argued that the notification was not based on an establishment-specific study and was therefore invalid. They claimed that the Central Government did not properly apply its mind and that the notification was issued hastily.

Timeline

Course of Proceedings

The ONGC initially challenged the 08.09.1994 notification in the Andhra Pradesh High Court in 2003, where an interim order was passed. Later, in 2013, the ONGC filed a writ petition in the High Court of Uttarakhand, challenging the same notification. The Uttarakhand High Court quashed the notification, relying on the judgment in Steel Authority of India Ltd. and Others vs. National Union Waterfront Workers and others (2001) 7 SCC 1, which dealt with an earlier notification of 1976. The High Court held that the Central Government had not conducted an establishment-specific study and had not applied its mind to the relevant factors as required under Section 10(2) of the CLRA Act.

The ONGC Labour Union, which was not a party in the High Court proceedings, appealed to the Supreme Court, arguing that the High Court’s decision was flawed because it did not consider the detailed study and recommendations of a Sub-Committee formed to assess the issue. The Labour Union contended that the High Court’s decision was made without the relevant materials and without hearing the affected workmen.

Legal Framework

The primary legal provision in question is Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970, which empowers the appropriate government to prohibit the employment of contract labor in any establishment. The relevant portions of Section 10 of the CLRA Act are as follows:

“10. Prohibition of employment of contract labour –(1) Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process, operation or other work in any establishment. (2) Before issuing any notification under sub-section (1) in relation to an establishment, the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors, such as – (a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment; (b) whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation that is carried on in that establishment; (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; (d) whether it is sufficient to employ considerable number of whole-time workmen. Explanation. – If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final.”

This section mandates that before issuing a notification prohibiting contract labor, the government must consider the conditions of work, benefits provided to contract labor, and other factors such as the nature of the work, its duration, and whether it is ordinarily done through regular workmen. The law also requires consultation with the Central or State Board.

Arguments

Appellant (ONGC Labour Union) Arguments:

• The ONGC Labour Union argued that the 08.09.1994 notification was issued after a thorough study by a Sub-Committee, which included inspections and deliberations at various ONGC establishments.
• They contended that the ONGC should have included the Labour Union in the High Court proceedings, as the notification directly impacted their members.
• The Labour Union highlighted that the Ministry of Petroleum & Natural Gas had undertaken a study before issuing the notification, and the High Court was not made aware of this.
• They pointed out that ONGC itself had initially decided to comply with the notification, as evidenced by internal communications.
• The appellant argued that the judgment in Steel Authority of India Ltd. and Others vs. National Union Waterfront Workers and others (2001) 7 SCC 1, which pertained to a different notification, should not have been the basis for the High Court’s decision.

Respondent (ONGC) Arguments:

• The ONGC argued that the Central Government is required to conduct an establishment-specific study before issuing a notification under Section 10(1) of the CLRA Act.
• They contended that the 08.09.1994 notification was issued hastily and without considering all factors in each establishment, as required by Section 10(2) of the CLRA Act.
• The ONGC claimed that the notification was issued due to a time frame stipulated by the Bombay High Court and that the decision-making process was flawed due to non-application of mind.
• The ONGC argued that the notification did not mention compliance with the requirements of Section 10(2) of the CLRA Act.

Central Government Arguments:

• The Central Government contended that the notification was issued in accordance with Section 10 of the CLRA Act.
• They stated that a background study on the employment of contract labor was conducted, relevant reports were received, and the process was finalized after consultation with the Central Advisory Contract Labour Board and other stakeholders.

Summary of Arguments

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues in a numbered list but the following issues were considered by the Court:

• Whether the High Court was correct in quashing the 08.09.1994 notification based on the judgment in Steel Authority of India Ltd. and Others vs. National Union Waterfront Workers and others (2001) 7 SCC 1, which pertained to a different notification?
• Whether the High Court should have considered the detailed study and recommendations of the Sub-Committee before quashing the notification?
• Whether the affected Labour Unions should have been given an opportunity to be heard in the High Court proceedings?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• Steel Authority of India Ltd. and Others vs. National Union Waterfront Workers and others (2001) 7 SCC 1 – Supreme Court of India: This case was cited by the High Court as the basis for quashing the 1994 notification. The Supreme Court noted that this case dealt with a different notification (1976) and was not directly applicable to the 1994 notification.

Legal Provisions:

• Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970: This section empowers the government to prohibit contract labor. The court analyzed the requirements of this section, particularly sub-section (2), which mandates consideration of various factors before issuing a prohibition notification.

Authorities Considered by the Court

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court held that the High Court erred in relying on the judgment in Steel Authority of India Ltd. and Others vs. National Union Waterfront Workers and others (2001) 7 SCC 1 as it was related to a different notification.
• The Court emphasized the importance of following the requirements of Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970, particularly the need to consider various factors before issuing a prohibition notification.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by the principles of natural justice and the need for a fair hearing. The Court was concerned that the High Court had not considered all the relevant materials, particularly the Sub-Committee’s study and recommendations, and that the affected Labour Unions were not given an opportunity to be heard. The Court’s decision was also influenced by the fact that the High Court had relied on a judgment that was not directly applicable to the case.

Fact:Law Ratio

The court emphasized the factual aspects of the case, particularly the omission of the Sub-Committee’s report and the lack of representation for the Labour Unions, more than the purely legal aspects.

Logical Reasoning

The Supreme Court considered the High Court’s decision to be flawed due to the non-consideration of the Sub-Committee’s report and the lack of representation for the Labour Unions. The Court also found that the High Court had incorrectly applied the Steel Authority of India Ltd. and Others vs. National Union Waterfront Workers and others (2001) 7 SCC 1 judgment, which pertained to a different notification. Therefore, the Court ordered a fresh review of the matter by the High Court.

The court quoted the following from the judgment:

“The impugned judgment indicates that the High Court had no access to the previous exercise undertaken by the Central Government, leading to issuance of the impugned notification under Section 10(1) of the CLRA Act.”

“The prohibition notification undoubtedly impact the life and livelihood of the contract labourers, but unfortunately neither the ONGC labour Union (the appellant herein) or the other recognized Labour Unions in the ONGC were represented or heard in the High Court.”

“The primary focus of the challenge in the 30.08.2001 SAIL verdict was to the previous notification (S.O. No.776 (E) dated 09.12.1976) issued by the Central Government, prohibiting employment of contract labour in respect of four categories of works in establishments, inter-alia, of the ONGC.”

Key Takeaways

• The Supreme Court emphasized the importance of adhering to the principles of natural justice, particularly the need to hear all affected parties in legal proceedings.
• The Court highlighted that High Courts must consider all relevant materials and facts before making a decision, especially in cases involving complex labor issues.
• The judgment underscores the need for establishment-specific studies when issuing notifications under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970.
• Relying on precedents must be done with caution, ensuring the factual context of the precedent is similar to the case at hand.
• The decision reinforces the need for proper representation of labor unions in cases that directly affect their members.

Directions

The Supreme Court ordered the restoration of Writ Petition No.1323 of 2013 (M/S) in the file of the High Court of Uttarakhand for fresh consideration. The Court directed that the ONGC Labour Union and other recognized Labour Unions within ONGC be impleaded in the restored proceedings. The Uttarakhand High Court was requested to decide the matter expeditiously, preferably within four months of notice being served on the respondents.

Specific Amendments Analysis

There were no specific amendments discussed in the judgement.

Development of Law

The ratio decidendi of this case is that any decision impacting the rights of a party should be made after giving them an opportunity to be heard. The Supreme Court emphasized that the principles of natural justice must be followed and that all relevant materials must be considered before making a decision. The Court also clarified that a judgment related to a previous notification cannot be applied to a later notification without considering the specific circumstances of the later notification. This case does not change the previous position of law but reinforces the existing principles of natural justice and the need for a thorough assessment of facts.

Conclusion

The Supreme Court’s decision in ONGC Labour Union vs. ONGC Dehradun & Ors. is a significant ruling that emphasizes the importance of procedural fairness and thorough assessment in labor law matters. By ordering a fresh review of the case, the Court has ensured that the affected labor unions will have an opportunity to present their case and that all relevant materials will be considered. The judgment serves as a reminder that decisions impacting the rights of parties must be made after giving them a fair hearing and considering all relevant facts and circumstances.