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2015 DIGILAW 2474 (BOM)

Court on its Own Motion v. Union of India

2015-11-20

B.R.GAVAI, P.N.DESHMUKH

body2015
JUDGMENT : B.R. Gavai, J. One of the learned Judges of this Court noticed a Newspaper item in the daily "The Times of India", wherein it was reported that, in the depots run by the Food Corporation of India (hereinafter referred to as "the Corporation"), some of the departmental loaders were earning as much as Rs. 4,00,000/- p.m. The News item also reflected abuse of Government funds, inefficiency and reluctance on the part of the Authorities to act sternly against various persons who have indulged in siphoning of the Government funds. It was also reported that some of the loaders of the Corporation clandestinely engage the services of other persons by paying paltry amount to them, when under the incentives Scheme they are getting huge amount from the Food Corporation of India. It was also alleged that this was done in collusion with the Officers of the Corporation. The learned Judge of this Court, therefore, directed the said News item to be treated as a 'Public Interest Litigation'. Accordingly, the present P.I.L. has been registered. 2. Taking into consideration importance of the matter, we requested Mr. S.P. Bhandarkar, learned Counsel to assist us as an amicus curiae. Mr. Bhandarkar graciously accepted our request and with great labour and research, has assisted us in the present petition. 3. In response to the notice issued by this Court, the respondents have also filed their response on an affidavit. 4. Heard Mr. S.P. Bhandarkar, learned amicus curiae, Mr. Y.P. Rao, learned Counsel for respondent No. 3, Mr. K.H. Deshpande, learned Senior Advocate for respondent Nos. 4 to 6 and Mr. V.P. Marpakwar, learned Counsel for the Interveners. Mr. V. P. Marpakwar, learned Counsel submitted that the intervention is filed on behalf of the Union of departmental labourers only to submit that their service conditions cannot be changed to their detriment. 5. Though the respondents have denied the allegations regarding large scale engagement of proxy labourers and involvement of senior Officers in the said racket, perusal of the affidavit-in-reply filed by the respondents itself would reveal that, atleast some of the allegations which are made are not without substance. 6. Affidavit-in-reply filed on behalf of respondent Nos. 3 to 6 by Mr. Chandresh s/o. Baburao Thakre, Area Manager of Food Corporation of India at Nagpur would reveal that it has found some of the instances of engaging proxy labourers. 6. Affidavit-in-reply filed on behalf of respondent Nos. 3 to 6 by Mr. Chandresh s/o. Baburao Thakre, Area Manager of Food Corporation of India at Nagpur would reveal that it has found some of the instances of engaging proxy labourers. The Corporation, therefore, has already issued strict instructions vide letters dt. 20-2-2014 and 7-11-2014 to all the Field Offices directing them not to allow any proxy labourer and has also instructed them to take necessary disciplinary action wherever any such instance is found. 7. Be that as it may, the affidavit-in-reply filed as also the material placed before us by the respondent/Corporation would clearly show that huge payments are made to the departmental labourers engaged by the Corporation. No doubt that we will be happy if this trend progresses and every labourer in the country is in a position to receive Rs. 1.5 Lakhs to Rs. Two Lakhs per month by way of wages. But the ground reality is that though the departmental labourers engaged by the respondent/Corporation are getting an amount of Rs. 1.5 Lakhs upwards per month, vast majority of the labourers in the country remain unemployed and they are required to live with meagre wages which are not at times in three figures. 8. We appreciate the stand taken by Mr. K.H. Deshpande, learned Senior Advocate for respondent Nos. 4 to 6 and Mr. Y.R. Rao, learned Advocate for respondent No. 3 in placing the entire factual matrix before us. Mr. Rao fairly stated that, on account of certain difficulties which are beyond the control of respondent/Corporation, the respondent is required to unnecessarily incur the expenditure of more than Rs. 1800 Crores per year. 9. Some of the difficulties expressed by the Corporation and also noticed and pointed out to us by the learned amicus curiae appear to be thus : a. The Government of India has issued notifications in respect of various depots for prohibition of employment of contract labourers under the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as "the said Act"). It is submitted that, on account of notifications issued prohibiting engagement of contract labourers, the respondent has no other option than to engage the services of departmental labourers. It is submitted that, on account of notifications issued prohibiting engagement of contract labourers, the respondent has no other option than to engage the services of departmental labourers. It is further submitted that though the Corporation has approached the Government of India for exemption under the provisions of section 31 of the said Act, the Central Government is sitting idle over it. b. The Hon'ble Apex Court has directed equalisation of wages payable to the labourers working in the various depots of the Corporation on par with the wages of the employees at Calcutta Port and the Godowns in Calcutta City Complex. It is submitted that whenever wages of employees in the Calcutta Port and Calcutta City complex are increased, ipso facto the wages of all the employees are required to be increased. c. Though size of the sacks which was originally 95 kg and below has been now reduced to 50 kg. and below and the incentive which was earlier payable at a higher rate is sought to be reduced, the same cannot be implemented on account of departmental labourers approaching the Industrial Courts. d. It is submitted that though the wages payable to the departmental labourers at all the depots are now identical and that an attempt has been made by the respondent/Corporation to transfer the departmental labourers from one depot to another, the departmental labourers are refusing to join the services at the transferred place on the ground that the said amounts to change in the condition of service. It is submitted that, on account of this factor, there is surplus of 1594 employees at various depots and on the other than, there is deficit of 3180 labourers at other depots. 10. The respondent/Corporation had appointed one reputed International firm namely M/s. Deloittee Consultancy for giving certain suggestions for bringing out efficiency in the functioning of the Corporation, which has submitted its report. The report is on the basis of figures available in the financial year 2012-13. Perusal of the report would reveal that, on an average 65 % of the yearly volume is handled in the top 30% of the days. It is further stated therein that average number of days when handling operation took place is 255. It is further stated that, on an average, there was no work for 110 number of days. 11. Perusal of the report would reveal that, on an average 65 % of the yearly volume is handled in the top 30% of the days. It is further stated therein that average number of days when handling operation took place is 255. It is further stated that, on an average, there was no work for 110 number of days. 11. The respondent/Corporation, in addition to the aforesaid two systems, is also engaged in two other systems which are known as "Direct Payment System" and "No work, no pay system". M/s. Deloitee Consultancy has done a comparative study of work done through the departmental labourers and under the Contract system so also the "Direct Payment system" and "No work and No pay system". The comparative handling costs for all the four systems are mentioned in the report in paragraph 13, which are mentioned herein thus : Handling Cost for the year 2013-14 Departmental System 66.3 DPS 21.4 NWNP System 8.54 Contract Labour System 7.77 12. It could thus be seen that the handling cost for the Departmental System is Rs. 66.3, for DPS System - it is Rs. 21.4, for NWNP System - it is Rs. 8.54 and for the Contract Labour System - it is Rs. 7.77. 13. M/s. Deloitte Consultancy has also made a comparative study of time taken for loading and unloading of rakes and also for demurrage/wharfage incurred by the Corporation. Insofar as the time taken for loading and unloading is concerned, the result of the comparative study is as under : (No. of hours) Labour type Loading (2010-11) Loading (2011-12) Unloading (2010-11) Unloading (2011-12) Departmental 13:13 14:38 19:25 22:01 Contract 11:46 11:11 13:40 16:06 Insofar as the demurrage/wharfage incurred by the Corporation is concerned, the result of the comparative study is as under : S. No. Zone/Region 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 1 NEF Zone 826.6 899.5 1099.9 1961.3 2251.9 4510.3 2 East Zone 285.0 486.0 603.3 785.5 1385.3 2441.3 3 South Zone 185.5 226.9 553.0 695.8 1035.5 1961.9 4 North Zone 364.8 414.3 543.5 576.2 1681.5 1846.5 5 West Zone 629.5 587.5 1046.2 1222.1 2226.3 2490.7 G. Total 2273.4 2614.2 3845.9 5240.9 8580.5 13250.7 Details of result regarding comparative study in respect of trend of detention of rakes and incurrence of demurrage at the railheads and FCI owned siding are as under : (2010-2012) Railway Siding Railway siding Railhead Railhead Labour type Avg. Detention (in hrs) Avg. Demurrage paid (Rs./Rake) Avg. Detention (in hrs.) Avg. Demurrage paid (Rs./Rake) Departmental 17.16 1,34,002 8.13 38,029 Contract 10.45 61,654 6.36 30,577 14. It could thus be seen that, so far as the speed of loading and unloading is concerned, the Contract System is more efficient as compared to the Departmental System. It could also be seen that whereas the average demurrage paid is Rs. 38,029/- per rake for the Departmental System, it is Rs. 30,577/- per rake for the Contract System. It would thus be seen that, taking into consideration all the aspects including cost, speed and demurrage, the Contract System is much more beneficial to the Corporation as compared to the Departmental System. 15. The Government of India, Ministry of Commerce Affairs, Food and Public Distribution, Department of Food and Public Distribution, New Delhi finding that the Corporation is plagued with several functional and cost inefficiencies, which need to be removed for efficient management of food grains and saving costs, had set up a High Level Committee for removing the said inefficiency and giving suggestions for efficient management of the Corporation and saving costs vide order dt. 20-8-2012. The High Level Committee was consisting of the following persons : (a) Shri Shanta Kumar, M.P. Chairman (b) Chief Secretary, Govt. of Punjab or his representative Member (c) Chief Secretary, Govt. of Chhattisgarh or his representative Member (d) Prof. G. Raghuram, Dean, IIM, Ahmedabad Member (e) Dr.Ashok Gulati, Former Chairman, Commission for Agricultural Costs & Prices, GOI Member (f) Prof. Gunmadi Nancharaiah, Dean, School of Economics, University of Hyderabad Member (g) Chairman-cum-Managing Director, FCI Member & Convener (h) Shri Ram Sewak Sharman, Secretary (Electronics Special & IT) Special Invitee (For the use of technology) 16. The High Level Committee, after making elaborate study and consulting various stakeholders, including the State Governments, has prepared a detailed report and submitted it to the Government of India on 19-1-2015. The said Committee has specifically considered the issue related to the labourers. It will be relevant to refer to paragraph No. 3.6 of the said report, which is as under : "3.6. Issues related to Labour : The new role and structure of FCI, as envisaged above, raised a question of what would happen to large number of workers currently working with FCI, directly or indirectly. It will be relevant to refer to paragraph No. 3.6 of the said report, which is as under : "3.6. Issues related to Labour : The new role and structure of FCI, as envisaged above, raised a question of what would happen to large number of workers currently working with FCI, directly or indirectly. As indicated in Chapter 2, there are about one lakh contract workers who work through contractors, and they do the hardest job at market rates, which hovered around Rs. 10,000/- per month for the years 2012-13 and 2013-14. In contract, the cost departmental labour turns out to be 7 to 8 times higher than the contract labour as given below : 3.4 Average Salaries of Workers per Month Financial Year Average Salary (in Rs.) (Cost per Worker per Month) Departmental System DPS System NWNP System Contract System 2009-10 38459 11606 n.a. n.a. 2010-11 53389 14390 6855 4260 2011-12 63763 15490 9835 5223 2012-13 71538 22124 3456 10149 2013-14 78549 22975 4062 9774 April to Nov. 2014 **79588 26606 n.a. n.a. Note : Some of the cases where earnings exceed 4 lakhs, include arrears of wage revision w.e.f. 1-1-2012. *** This figure is not including the Other Account Heads which form about 22% (as per the Accounts Division's statement showing Dept. Salaries for Financial Year 2012-13) of the total emoluments paid to the Departmental labour. The Contract labour can easily be absorbed by state governments or private sector, which ever agency takes over the functions of FCI with respect to procurement, stocking and movement. HLC recommends that their conditions be improved by offering them better facilities. However, there is an issue of departmental labour of FCI for loading/unloading etc., which gets an average salary of more than Rs. 79,000/- per month (in 2014). This is 7-8 times higher than what contract labour gets. There were more than 370 persons in FCI labour that got salaries of more than Rs. 4 lakhs/per month. HLC has taken a serious note of this, and FCI's system of so called incentives that allows this. This practice needs to stop. With transfer of much of storage and movement functions to states, this departmental labour of FCI will become 'surplus. HLC recommends that they be offered suitable VRS and this cadre be gradually phased out. 4 lakhs/per month. HLC has taken a serious note of this, and FCI's system of so called incentives that allows this. This practice needs to stop. With transfer of much of storage and movement functions to states, this departmental labour of FCI will become 'surplus. HLC recommends that they be offered suitable VRS and this cadre be gradually phased out. And to do that, first thing will be to put a cap on the incentive system, where by no labour is allowed to work more than say 1.25 times the daily work agreed with Labour unions. Second, those depots where this problem of departmental labour exists must be mechanized on priority basis so that reliance on such labour reduces substantially. Third, these depots should be denotified in consultation with Labour Ministry. With this new role of FCI, HLC believes that it can play a pivotal role in ensuring that benefits of grain management policies (from procurement to PDS) reach larger number of farmers and consumers in a more cost effective and sustainable manner, and food security is guaranteed in a sustainable manner." 17. Perusal of the report would show that, on account of practice of engaging different types of handling systems, there is glaring disparity in the matter of payment, between the similarly circumstanced workers. The workers who are doing the work through contractors are getting approximately Rs. 10,000/- p.m.; whereas the salaries payable to the departmental labourers is approximately Rs. 80,000/- p.m. Not only this, but the affidavit filed on behalf of the respondent/ Corporation would reveal that the payment of about Rs. Four Lakhs which was referred in the daily "The Times of India" was on account of arrears which were to be paid to the departmental labourers for a period of 2½ years. However, perusal of the affidavit would further reveal that on an average payment made to the departmental labourers is to the tune of Rs. 1.41 Lakhs per month. It is stand of the Corporation that higher payment is on account of incentives. It is stated that the work is not of perennial nature. It is further submitted that wherever provisions of section 10 of the said Act are made applicable, the Corporation is left with no other alternative but to engage the services of departmental labourers. It is stand of the Corporation that higher payment is on account of incentives. It is stated that the work is not of perennial nature. It is further submitted that wherever provisions of section 10 of the said Act are made applicable, the Corporation is left with no other alternative but to engage the services of departmental labourers. It is, therefore, submitted that though salary payable to the departmental labourers is fixed, whenever the railway rakes arrive, the work is required to be undertaken through the same departmental labourers, which results in payment of higher incentives. 18. It could thus be seen from the report of experts appointed by the Corporation as well as the High Level Committee appointed by the Government of India, that huge cost is required to be incurred by the respondent-Corporation by engaging labourers as per the system of departmental labourers. It is submitted on behalf of the Corporation itself that, in the event the provisions of section 10 of the said Act are not made applicable to its depots, the Corporation would save approximately an amount of Rs. 1800 crores per year. The said figures are on the basis of the report conducted during the financial year 2012-13. The figures in the present financial year may even go higher. 19. It could thus clearly be seen that, on account of the respondent/ Corporation not being permitted to engage contract labourers, the public exchequer is required to suffer huge losses to the tune of Rs. 1800 Crores or more. 20. We make it clear that we do not intend to pass any order which will have any effect on the service conditions of the departmental labourers employed by the respondent/Corporation. However, it is to be noted that the High Level Committee itself has recommended discontinuing practice of departmental labourers. The High Level Committee has noticed that there were about 370 labourers in the respondent/Corporation who had got salaries of more than Rs. Four Lakhs per month. The Committee has, therefore, recommended that they should be offered suitable VRS and this cadre be gradually phased out. The Committee has also recommended that there should be a cap on the incentive system, whereby no labourer is allowed to work more than 1.25 times the daily work. Four Lakhs per month. The Committee has, therefore, recommended that they should be offered suitable VRS and this cadre be gradually phased out. The Committee has also recommended that there should be a cap on the incentive system, whereby no labourer is allowed to work more than 1.25 times the daily work. It is worth mentioning here that, by now it is a settled law that the incentive does not amount to a condition of service and is an additional payment to be made to an employee in addition to the salary and wages payable to him as per the service conditions. 21. The Committee has also recommended mechanisation of depots on priority basis so that reliance on such labourers reduces substantially. The Committee has also recommended de-notification in consultation with Labour Ministry. It is pertinent to note that though the Central Government has made applicable provisions of section 10 of the said Act to some of the depots, there is no notification issued in respect of various other depots and at such depots including various depots in the State of Maharashtra, the respondent/Corporation is engaging services of contract labourers. 22. We fail to understand as to why when the High Level Committee appointed by the Government of India has issued various recommendations for streamlining functioning of the respondent/Corporation and bringing efficiency in it, the Government of India has not taken any steps, though almost a period of 11 months has lapsed from the date of submission of the said report. 23. At the cost of repetition, we make it clear that we are not against the labourers getting handsome wages and incentives. However, at the same time, the situation which permits glaring disparities cannot be permitted to exist. On one hand there are persons doing similar work getting Rs. 10,000/- p.m., and, on the other hand, there are 370 labourers working with the same Corporation doing the same work who are getting an amount of Rs. Four Lakhs p.m (approximately). As already stated hereinabove, we would be happy if every labourer in this country gets a salary of Rs. Four Lakhs or more. However, it is a ground reality that, for the same work, one person gets an amount of Rs. Four Lakhs and the another person gets an amount of Rs. 8,000/- to Rs. Four Lakhs p.m (approximately). As already stated hereinabove, we would be happy if every labourer in this country gets a salary of Rs. Four Lakhs or more. However, it is a ground reality that, for the same work, one person gets an amount of Rs. Four Lakhs and the another person gets an amount of Rs. 8,000/- to Rs. 10,000/- p. m. We find that such a position would also be violative of Constitutional mandate. In a salary which one person gets i.e. an amount of Rs. Four Lakhs (approximately), 40 such other persons can be accommodated in a country which is facing large scale unemployment and the families of such 40 persons can be maintained in that amount. It will not be out of place to refer to Article 38 of the Constitution of India. Article 38 mandates the State to strive to minimise inequality in income. The present situation permits a huge difference in wages to be paid to two sets of employees, doing same work. 24. We fail to understand as to why the Government of India has not acted upon the report of the said High Level Committee for de-notifying the depots. We also fail to understand as to how the provisions of section 10 of the said Act could be made applicable to some of the depots when the same are not made applicable to other sets of depots, especially when the work being carried out is of the same nature. It will be relevant to refer to the provisions of section 10 of the said Act. 10. Prohibition of employment of contract labour. (1) Notwithstanding anything contained in this Act, (but, subject to the provisions of Clause (c) of sub-section (5) of section (1), 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 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. 25. Before issuing notification under section 10(1) of the said Act, the appropriate Government is bound to take into consideration the factors which are mentioned in sub-section (2) of the said Act. It will be relevant to refer clause (b) of sub-section (2) (cited supra), which requires to take into consideration as to whether the work is of perennial nature i.e. it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in the establishment. As could be seen from the report of M/s. Deloittee Consultancy, on an average 65 % of the yearly volume is handled in the top 30 % of the days. It could further be seen that whereas handling operation took place on 255 days i.e. on an average, there was no work for 110 number of days. It is pertinent to note that availability of work depends on arrival of railway rakes at the depots. Number of rakes arriving at a particular depot may differ from depot to depot and from time to time. We, therefore, prima facie find that it cannot be said that the work is of perennial nature. 26. Clause (c) of section 10(2) of the said Act (cited supra) requires the appropriate Authority to consider as to whether the work is done ordinarily through regular workman in that establishment or an establishment similar thereto. We, therefore, prima facie find that it cannot be said that the work is of perennial nature. 26. Clause (c) of section 10(2) of the said Act (cited supra) requires the appropriate Authority to consider as to whether the work is done ordinarily through regular workman in that establishment or an establishment similar thereto. As has been pointed out hereinabove, the Government of India has notified some of the depots and not all the depots which are run by the said Corporation. We fail to understand as to why the work at some of the depots cannot be permitted to be done by the contract labourers when, at the other depots, when the nature of work is the same and the employer is also the same, the work is done through the Contract Labour System. It is pertinent to note that M/s. Deloitt Consultancy has also done a comparative study in respect of similar work having been done by the similarly circumstanced employees like the employees of the Corporation. Report of M/s. Deloitt Consultancy states that except the Food Corporation of India, in all other similar establishments, the work is being executed by the Contract Labour System. We are of the view that when the expert's report and the report of the High Level Committee have brought all the above aspects to the notice of the Government of India, the Government of India ought to have taken necessary steps for de-notifying the depots of the Corporation which are covered under section 10 of the said Act. 27. We also fail to understand as to why the departmental labourers should not be transferred from one depot to another depot. As could be seen from the Judgment of the Apex Court in the case of Food Corporation of India Worker's Union vs. Food Corporation of India and others (Writ Petition (Civil) No. 222 of 1984, dated 20th July, 1990) reported in 1990 II LLN 664/1990 (Supp) SCC 296, it was the contention of the said Corporation that there cannot be similar wages at different depots since services of the departmental labourers were not transferable. The said contention has been rejected by Their Lordships of the Apex Court. By now it is a settled principle of law that transfer is an incidence of service. The said contention has been rejected by Their Lordships of the Apex Court. By now it is a settled principle of law that transfer is an incidence of service. When wages and all other service conditions of departmental labourers working at different depots are identical, we see no reason as to why their services could not be transferred from one depot to another. As has been submitted by the Corporation, 1594 departmental labourers are getting salary without any work; whereas at some of the depots, there is huge deficiency of labourers. 28. We further also fail to understand as to why the Food Corporation of India should not be in a position to change the amount of incentives to be paid to the departmental labourers per sack. When the size of the sacks has been reduced from 95 kg and below to 50 kg and below, there is no reason as to why there should not be proportionate reduction in the amount of incentives paid per sack. 29. In that view of the matter, we find that it will be in the interest of justice to issue certain directions to the respondent/Corporation as well as the Union of India so as to ensure that huge amount of public exchequer is not wasted and can be utilized for better purposes. 30. In that view of the matter, we dispose of the present Public Interest Litigation by passing the following order. (i) The Government of India is directed to decide the representation made by the Food Corporation of India for grant of exemption under the provisions of section 31 of the said Act within a period of one month from today, in the light of observations made by us hereinabove within a period of one month from today. (ii) The Government of India shall decide the issue regarding de-notification of the depots of the Food Corporation of India, in respect of which notification is issued under section 10 of the said Act, within a period of six months from today, in the light of observations made by us hereinabove and the report of M/s. Deloitt Consultancy and the report of High Level Committee appointed by the Government of India itself. (iii) We clarify that the respondent/Food Corporation of India would be entitled to transfer the services of departmental labourers from one depot to another subject to protecting their salary and all other service conditions. (iv) We also clarify that the respondent/Corporation would be at liberty to implement its policy of change in the Scheme of incentives. (v) The Government of India shall also take a decision regarding abolition of system of departmental labourers in a phased manner or absorbing their services in other establishments as recommended by the High Level Committee. 31. We express our gratitude to Mr. S.P. Bhandarkar, learned amicus curiae, Mr. K.H. Deshpande, learned Senior Advocate, Mr. Y.P. Rao learned Counsel and Mr. V.P. Marpakwar, learned Counsel for assisting this Court in deciding the issue in question, which will have an effect of saving huge public exchequer.