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Abolition of System of Contract Labour

The Supreme Court of India in Godavari Sugar Mills Ltd. Vs. Kepargaon Taluka Sakhar Kamgarsabha, Sakarwadi, AIR 1961 SC 1016 : 1961 ( 3) SCR 342 held that “a question relating to the abolition of contract labour inevitably raised a dispute relating to matters contained in items (2), (9) and (10) of Sch. 11, namely, permanent increase in the number of 343 persons employed, the employees’ wages, hours of work and rest intervals and could, therefore, be referred only to an Industrial Court.

Labour Court

A dispute having arisen between the employer and its workmen regarding the employment of contract labour in the employer’s mills, the union representing the workmen which is the respondent in the present case after serving notice on the employer under s. 42(2) of the Bombay Industrial Relations Act made reference to the Industrial Court under S. 73A of the Act demanding the abolition of the system of employing contractors’ labour and the permanent increment of employees in the respective departments.
The contention of the employer, inter alia, was that the Industrial Court had no jurisdiction to decide the dispute which was within the exclusive jurisdiction of a Labour Court under item (6) of Sch. III of the Act, and that any award directing the abolition of contract labour would contravene the employer’s fundamental right to carry on business under Art. 19(1)(g) of the Constitution. The Industrial Court decided that the Industrial Court would have jurisdiction as the matter was covered by item (2) of Sch. 11 of the Act and that there was no contravention of the fundamental rights of the employer.
On appeal the Labour Appellate Tribunal, held, that the Industrial Court had jurisdiction to decide the matter although it was not covered by item (2) of Sch. 11 of the Act. As regards the question of contravention of the fundamental right it held that the question whether the restriction imposed was reasonable depended upon the facts of each case and the matter was outside the powers of a court of appeal. Eventually it set aside the entire award on the merits.
On appeal by the employer by special leave, Held, that the Industrial Court had jurisdiction to deal with the matter. Whatever might be the ambit of the word “employment” used in item (6) of Sch. III, if a matter was covered by Sch. 11 it could only be referred to the Industrial Court under s. 73A. A question relating to the abolition of contract labour inevitably raised a dispute relating to matters contained in items (2), (9) and (10) of Sch. 11, namely, permanent increase in the number of 343 persons employed, the employees’ wages, hours of work and rest intervals and could, therefore, be referred only to an Industrial Court.
The power given to the Industrial Court which was a quasi- judicial tribunal to decide whether contract labour should be abolished or not would not make the definition of “industrial ” matter” in so far as it referred to the mode of employment and unreasonable restriction on the fundamental right of the employer to carry on his trade and as such there was no contravention of his fundamental right by providing in S. 3(18) that an “industrial matter” included also the mode of employment of the employees.
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