In the High Court of Kerela at Ernakulam
1978 (4) SCC 257 , 1978 AIR 1410
Alath Factory Thozhilali Union, Kozhikode & ors.
Date of Judgement
28th of July,1978
Justice V. R. Krishna Iyer; Justice D.A Desai; Justice O. Chinnapa Reddy
Indian labor laws seem to be highly protective of its unorganized sector with the large number of legislations that come as a result of it but the reality talks something different with labor being a subject of Concurrent List. Although laws like Industrial Disputes Act (1947), totally revolutionized labor reform in India but some aspects like the one dealt in the mentioned case still stand unresolved even after specific legislations like Contract Labour (Regulation and Abolition) Act,1970. The case establishes one of the prime principles of labor law concerning the regular employment of workers in the factory who were initially employed through an intermediary, here independent contractors; after the middlemen shy away from the responsibility of giving them employment.
The petitioner is the owner of a manufacturing factory dealing in ropes. A number of workmen engaged in the same were hired by contractors, and contracts, as alleged, had been enacted between the contractors and the owner. Twenty-nine of these workmen were denied employment in the factory and it was contended that they weren’t factory’s workmen but the contractors’. This conflict in the interests of management and labor was referred to as an industrial dispute by the Kerala state government.
The matter was referred to the High Court where it was first brought before a Single Learned Judge and the above case was fought on the contention of whether the workmen were workmen of the owner or the contractor. The Single judge bench ruled in favor of the workmen and declared that the petitioner was the employer and respondent union was the employee. The matter was then presented before the division bench of High Court where the previous judgment was upheld. This judgment was an appeal before the Apex Court through the special leave petition.
Whether ‘Workman’ under Section 2(s) of the Industrial Disputes Act 1947 also includes workmen hired by independent contractors to work in an employer’s factory?
The Court upheld the decisions of the previous court and refused the leave petition, hence, ruling in favor of the Respondent Union. The reasons behind the same given were:
- The fact that the workmen were denied employment, work is done by them contributed integrally to the industry, raw materials for the work were supplied by the management, factory premises and equipment and consequently, the finished product belonged to the management are irrefutable. The workmen were broadly under the control of the Management and defective articles were directed to be rectified by the Management. The string of all the circumstances is conclusive of the fact that there was the establishment of an employer-employee relationship.
- To be concise and clear it was stated again where a worker or group of workers labors to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He has economic control over the workers’ subsistence, skill, and continued employment. Just the absence of a direct relationship because of dubious intermediaries, the real-life bond between the employer and employee, cannot be ruled out. Many tools, covered up in layers of many authorities as demanded by the situation, the local conditions and so forth, might be turned to when labor legislation that necessitates welfare of the workmen on the employer, in light of Articles 38, 39, 42, 43 and 43-A of the Constitution. The Court must be sharp to maintain a distance from wickedness and accomplish the reason for the law.
The Court noted that the petitioner’s contention would be indisputable in a capitalist economy with fierce market competition and under the Contract Act drafted according to the English Common Law. But there has been more than a century’s gap between those strict doctrines and today’s social equity-driven industrial jurisprudence, upholding the essence of Preamble to the constitution. The Court stressed, that mere contracts cannot be held to take decisions finally but all the factors that revolve around are to deliberated upon. ‘All human beings are entitled to certain basic rights and while the advanced polities of the West may respect a far richer and deeper range of these than anywhere else, liberals have a duty to the rest of humanity to advance and promote minimal human rights everywhere and to strike down those who would deny them’. Indian justice runs the rule of law that supports the rule of life. The idea of classical contract laws and special branches tends to create confusions making it vulnerable to exploitative situations like these. In the words of the learned Judge Krishna Iyer,’Raw societal realities, not fine-spun legal niceties, not competitive market economics but complex protective principles, shape the law when the weaker, working-class sector needs succor for livelihood through labor.’
This case acts as a great precedent where the question of absorbing contract labor as regular employees of the principal employer concerns and where the provisions of Contract Labour (Regulation and Abolition) Act,1970 are defeated and fail to apply.There have been ample cases like Haryana State Electricity Board v. Suresh and others, and Bharat Heavy Electricals v. the State of Uttar Pradesh, where the judgment was cited to defeat and go beyond the provisions of the existing laws so that social justice prevails reinforcing equality as enshrined in the constitution which promises a utopian society and as the result of which legislations like Contract Labour (Regulation and Abolition) Act,1970 were brought into place. But these pieces of legislation are more misused, especially in this new millennium and not interpreted keeping in mind keeping in mind its real purpose. Thus cases like such keep the democratic polity surviving to maintain the socialist status as enshrined in the Constitution.
“The views of the authors are personal“
 Richard Tuck, The Rights of War and Peace: Political Thought and the International Order from Grotius to Kant Clarendon Press: Oxford 1999 ||PETER GOWAN.
 Social Justice and Labour Jurisprudence: Justice V.R. Krishna Iyer’s Contributions; by SAGE Publications By Sharath Babu, Rashmi Shetty (Chapter 13).
 Haryana State Electricity Board v. Suresh and others C.A. Nos. 11335-11359/95 etc.
 Bharat Heavy Electricals v. the State of Uttar Pradesh Appeal (civil) 2459-2461 of 1999
 Supra note 2.