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Petitioner: FAUJI FERTILIZER COMPANY LTD. through Factory Managers VS Respondent: NATIONAL JUDGMENT
Court Name: Supreme Court of Pakistan Judge(s): Jawwad S. Khawaja, Iftikhar Muhammad Chaudhry, Ijaz Ahmad Chaudhry Title:FAUJI FERTILIZER COMPANY LTD. through Factory Managers vs NATIONAL
JUDGMENT
Reported As: 2013 SCMR 1253 Result: Appeals dismissed Judgment JUDGMENT ' IFTIKHAR MUHAMMAD CHAUDHRY, C.J.---These appeals by the leave of the Court have been filed against the common judgment dated 16-3-2005 passed by the High Court of Sindh at Karachi in Constitution Petitions Nos, D-739 of 1993 and D-754 of 1996. 2. The facts necessary for disposal of the listed appeals are that appellant in the titled appeals, namely, Fauji Fertilizer Company Ltd. (successor of. Messrs Pak Saudi Fertilizer Company Ltd.) [hereinafter referred to as the company"], is a company incorporated under the Companies Ordinance, 1984, and is engaged in the manufacturing and marketing of Urea Fertilizer. The company used to enter into contracts with separate independent contractors for the execution of work of bagging urea and connected activities like insertion, filling and stitching of bags as well as their loading. For separate periods Messrs Shahbaz and Co.; Messrs M.B.K. Jalbani (Pvt) Ltd.; Messrs Workman Associates; Messrs Mohammad Hussain and Co.; Abdul Majeed and Co. And Messrs Technical Associates were engaged by the company. As per terms and conditions of the contracts, the contractors were to engage the workers and provide their services to the company. The workers' wages were paid by, the contractoRs, However, the contractors were remunerated on the basis of volume of urea handled, During the period from 1984 to 1986, when Messrs Shahbaz and Co. Was the bagging and loading contractor, the employees of the contractor formed a union under the name and style of 'Pak Saudi Fertilizers Ltd. Bagging and Loading Contractors Mazdoor Union' [hereinafter referred to as contractor's union"], which was also declared a CBA by the Registrar of Trade Unions, Hyderabad. Previously, the union had used the office of 'Pak Saudi
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Fertilizer Employees' Union' [hereinafter referred to as employees' union"] for affecting the settlement with regard to the terms and conditions of services of workmen employed by Messrs Shahbaz and Co. After the registration of contractor's union as CBA, the contractor entered into fresh settlement with it on 9-5-1985. In the year 1989, the contractor's union served the charter of demand on the management of the company and Messrs M.B.K'Jalbani, the then contractor. However, the company approached the National Industrial Relations Commission [NIRC] by means of proceedings under section 22A(8)(g) of the Industrial Relations Ordinance, 1969 [hereinafter referred to, as "IRO 1969"] along with an application under regulation 32(2C) of the National Industrial Relations Commission (Procedure and Functions) Regulations, 1973 [hereinafter referred to as "the regulation 1973"]. Thereafter, a settlement was affected between Messrs M.B.K. Jalbani and the contractor's union and the grievances of workers were redressed. Later on, Messrs Workman Associates, the then contractor, also entered in to a settlement with the contractor's union vide memorandum of settlement dated 7-10-1991. On 8-3-1992, the contract was awarded to Messrs Workman and Co., which entered in to a settlement with the contractor's union on 9-3-1992. On 15-3-1992, the contractor's union filed proceedings before NIRC against Messrs Workman and Co as well as the company, alleging therein that the company was not justified in awarding the contract to one Muhammad Aslam, the Managing Partner of Messrs Workman Associates; that the lock-out affected in relation to 112. Workers (Respondents Nos, 3 to 114 in Constitution Petition No,D- 739 of 1993) employed by the Contractor were illegal; and that settlement dated 9-3-1992, whereby the wages/benefits of the workers were reduced, was an attempt to circumvent the earlier settlement dated 7-10-1991, and was as such illegal. The learned Member NIRC, Karachi vide the order dated 15-3-1992, inter alia, directed that the payments of wages continued to be made as per settlements dated 7-10-1991 and to lift the lock-out of workers, if any. Initially, the said petition was filed against the company and Messrs Workman Associates, however, Messrs Workman and Company was also impleaded by means of an application under Order I, Rule 10, C.P.C. In their reply, the company denied the existence of a relationship of employer and employee between the company and the members of the contractor's union on the ground that the members ' of the contractor's union were the employee of the contractor and that there was no lock-out. Ultimately the Member NIRC, Karachi vide order dated 10-4-1992 concluded that the management of the company was not responsible for making payments of wages to the workers/members of the contractor's union but rather, Messrs Workman and Co. Were liable to make such payments in accordance with settlement dated 9-3-1992 and that, prima facie, there was no proof of coercion in execution of the said settlement. Being aggrieved from the said order, the contractor's union filed an appeal before the full bench of NIRC, Islamabad, wherein the company raised an objection with regards to the locus standi of the union to file the appeal, being the CBA in the establishment of Messrs Shahbaz and Co.; it also objected that there was no relationship of employer and employee between the members of contractor's union and the company; and that the order appealed against was an interim order. It was further alleged that as per the contract executed between the company and the contractors, the payment to the contractors would be made on the basis of per ton of bagging and loading of the urea and connected activities. However, the workers started resorting to slow down tactics in work due to which the contractor was not in a position to make fixed payments of wages to the workers, who also filed a case under section 22A(8)(g) of IRO 1969 before the NIRC Bench, Karachi with a prayer to direct the members of the contractor's union to call off their slowdown in work and restore normalcy to the production process. The Commission, vide order dated 30-4-1992, directed the workers to call off their slowdown. Against the said order the contractor's union filed an appeal before the full bench of NIRC, wherein, Messrs Workman and Co. Claimed that the workers were in fact the employees of the company and not of the contractor. The learned full bench of NIRC, vide order dated 3-3-1993, declared that the members of the
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contractor's union were employees of the company and directed the management of the company to make payments to the workeRs, The case was, however, remanded to the single Bench of NIRC at Karachi for determining the issue pertaining to the alleged lock-out of 112 workeRs, The company being aggrieved and dissatisfied with the said judgment challenged the same before the High Court of Sindh at Karachi by means. Of Constitution Petition No, D-739 of 1993 wherein the learned High Court, vide order dated 18-3-1993, passed a status quo order. 3. In the meantime, members of the contractor's union (respondents Nos, 3 to 114) filed separate applications under section 25A of the IRO 1969 before the Labour Court VII, Sukkur, which were registered as applications Nos,36/92 to 147/92. The grievance of the applicants/workers was that they were working in the factory premises of the company, involved in the manufacturing of urea and that their job was to clean the machines and perform other manual work, which was of a permanent nature, and that the entire work was done by 362 workers, who were frisked/searched by the chowkidaars of the company, as such, for all intents and purposes they were the employees of the company. It was further alleged by the workers that they were locked-out and that some of the office bearers of the union were kidnapped and their signatures were forcibly obtained on the contract/settlement dated 9-3-1992. The Labour Court, after recording of evidence and hearing the parties, allowed all the grievance applications vide its decision dated 24-4-1996. The company being aggrieved of the said order, preferred appeals under section 37(3) of IRO 1969 before the Sindh Labour Appellate Tribunal, Karachi, which were dismissed in limine by means of a common order, dated 16-5-1996. The company assailed the said ordei before the High Court of Sindh, Karachi, by means of Constitution Petition No, D-754 of 1996. Both the petitions, namely, Constitution Petition No, D-754 of 1996 and Constitution Petition No,D-739 of 1993 were heard together by the learned High Court and by means of impugned judgment dated 16-3-2005, the C.P. No,D-754 of 1996 was dismissed and accordingly the C.P. No,D-739 of 1993 stood dismissed as having become infructuous. The company assailed the said judgment before this Court by means of Civil Petitions for leave to appeal No,2103 and 2104 of 2005 which were converted into Civil. Appeals Nos, 83 and 84 of 2006 as leave was granted on 26-1-2006. 4. Mr. Khalid Anwat, learned Senior Advocate Supreme Court submitted on behalf of Messrs Fauji Fertilizer Company Ltd. That the NIRC at the request of respondent union, vide interim order dated 14-3-1992, directed the company to continue paying the wages to the workers but the same was vacated on 30-4-1992., on the ground that, prima facie, the contractor was liable to make payments and not the company. Being aggrieved from the said order, the contractors' union filed appeal before the full Bench of NIRC, which decided on 3-3-1993. Declaring that the members of the contractors' union were employees of the company, however, the case was remanded to the Single Bench. In the meanwhile, the workers/members of the contractor's union made a switch in strategy and on 19-7-1992, approached the Labour Court through applications under section 25A of IRO 1969 on the identical facts and the same cause of action. According to him, although the complaints were made by individual workers that all applications were filed through one Abdul Haq, the then Secretary General of contractor's union. Thus, it is obvious that the contractor's union played a key role in the same. 5. The learned counsel further submitted that under section 22A(11) and (12) of IRO 1969, once a matter is pending before the NIRC, the Labour Court has no jurisdiction in the said matter. According to him, the Labour Court in order dated 24-4-1996, pointed out that tile workers had approached the NIRC and therefore, it should have refrained from assuming jurisdiction in the matter. There was no evidence to establish that a government owned factory would enter into a sham contract merely to deny workers their legitimate dues under the Labour Laws. 6. Mr. Abid Hassan Minto, Senior Advocate Supreme Court, appearing on behalf of respondents Nos,3 to 114 submitted that the application under section ".A(8)(g) read with section 15 of IRO 1969
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and regulation 32(2C) of the Regulation 1973, was filed for the enforcement of its rights granted under sections 26(1), (3) and 28 of the IRO 1969, as the company resorted to an illegal lock-out with mala fide intention to compel the office bearers of the contractor's union to sign a settlement for reduction of wages and benefits available to the workeRs, The contractor's union did not espouse the cause of removal from employment in terms of Standing Order No, 12(3) of the SO Ordinance; 1968. On the other hand, the respondents Nos, 3 to 114 were removed orally by the company without assigning any reason, as required under the S.O. No,12(3) ibid, as such, they approached the Labour Court by means of grievance applications under section 25A of the IRO 1969 for reinstatement with full back benefits. According to the learned counsel, the civil proceedings before the NIRC filed by the contractor's union was for the enforcement of its own rights, whereas, the grievance applications filed by the individual workers were for their reinstatement. Therefore, the Labour Court rightly assumed jurisdiction and the learned High. Court confirmed the same. 7. In this regard, it is to be noted that the proceedings filed before the NIRC were initiated by the contractor's union against Messrs Workman and Co as well as the company alleging therein that the company was not justified in awarding the contract to one Muhammad Aslam, the Managing Partner of Messrs Workman Associates. The illegal lock out by the company to the effect of 112 workers was also challenged through the same petition before the NIRC. Whereas the grievance applications under section 25A of the IRO 1969 were filed against the company with the following prayer:-- "It is, therefore, prayed that this honourable Court may be pleased to direct the respondents to reinstate the applicants with full back benefits with cost of this application." ' The argument of learned counsel for the appellant that applications filed before NIRC as well as before the Labour Court are identical, therefore, the Labour Court could have not entertained the petition, does not appeal to mind. Though the facts of both the proceedings were similar due to having arisen from common circumstances but both the proceedings were initiated by separate entities i,e, the contractor's union and the individual workers; and the prayers made in both the proceedings were absolutely different as mentioned above. Thus, it is held that both the proceedings were independent and the Labour Court had rightly assumed the jurisdiction in terms of section 25A of the IRO 1969 to redress the grievance of the workeRs, 8. 8. Learned counsel for the appellants next submitted that the complaint before the NIRC was filed by members of the contractor's union who were employees of the contractor and not of the company and therefore cannot claim to be employees of the company. The grievance of the workers in the said complaint was regarding the alleged lock-outs of 192 members, who were subsequently reduced to 112. Although vague allegations were made, it was never specifically claimedihat they were the employees of the company. Reference in this behalf has been made to the cases of Muhammad Sharif v. Punjab Labour Appellate Tribunal (Civil Appeal No,39 of 1977), Souvenir Tobacco Co. Ltd. v. Najammuddin (PLD 1977 Karachi 250), Mian Munir Ahmad v. The State (1985 SCMR 257), Farid Ahmad v. Pakistan Burmah Shell Ltd. (1987 SCMR 1463), Nasir Jamal v. Pak Suzuki Motor Company Ltd. (2000 PLC 52), Messrs Hinopak Motors Ltd. v. Chairman Labour Appellate Tribunal (2000 PLC 89) and Steel Authority of India Ltd. v. Union of India (AIR 2001 SC 3527). 9. The learned counsel next submitted that before the Labour Appellate'Tribunal, the company specifically raised the objection that under the Labour Laws there can be only one CBA in one establishment. As the company has its own CBA, the CBA of the contractor cannot claim its members to be employees of the company. 10. According to the learned counsel in the definition of employer provided in section 2(viii) of IRO 1969, there are three ingredients: firstly, the employer; secondly, the workman; and thirdly, that
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there must be a contract of employment. Learned counsel submitted that the phrase 'directly or through a contractor' provided in the definition of worker in section 2(xxviii) means not a contractor's employee but the employees of an employer whether they are directly recruited or recruited through a contractor. Unless this interpretation is given, the definition of employer becomes meaningless. The concept of a contractor is separately established, in terms of which, if the contractor is carrying on work at some factory then those factory premises are also deemed to be his premises. Merely because the contractor's workmen are working in the premises of the company, does not convert them into the workmen of the company as per the definition of "industrial establishment" mentioned in section 2(f)(iv) of the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 [hereinafter referred to as "the SO Ordinance, 1968"]. 11. Learned counsel for the respondent-workers submitted that the workers were directly involved with the affairs of the company, as they used to stitching, filling and loading of urea bags, cleanings of machines, insertion of polythene into bags, etc., which are the jobs connected with the manufacturing process as defined under section 2(g) of the Factories Act, 1934. The land, building, machines, raw materials, finished goods, etc., were the properties owned, managed, controlled by the company through its occupiers/manager. The hire and fire authority including settlement of wages and benefits of the workers rest with the company and the so called contractors were engaged for their personal gain. The work of the respondent workers was supervised, controlled and looked after by the incharge of bagging and loading department and his subordinate staff/supervisoRs, He further contended that the contractors were changed from time to time but the workers including the respondents Nos,3-114 continued in the employment of the company. The jobs done by them namely cleaning of machines floor etc. Were also connected with the manufacturing process within the premise's of the factory. Therefore, the workers were the employees of the company. He relied upon the case of Messrs Euro Ceramics Ltd. v. Registrar of Trade Union (1996 PLC 45), Messrs Dawood Cotton Mills v. Sindh Labour Appellate Tribunal (2004 PLC 348), Messrs Basti Sugar Mills v. Ram Ujagar (AIR 1964 SC 355) and Hussainbhai Calicut v. Alath Factory (AIR 1978 SC 1410). 12. In the first instance it would be appropriate to look at the definitions of "employer", "worker" and "establishment" provided in various statutes. As per the definition in section 2(viii) of IRO 1969, "employer" in relation to an establishment, means any person or body of persons; whether incorporated or not, who or which employs workmen in the establishment under a contract of employment. This definition of employer has to be read in juxtaposition with the definition of "worker" provided in section 2(xxviii) which provides that worker and workman means any person not falling within the definition of employer who is employed in an establishment or industry for hire or reward either directly or through a contractor whether the terms of employment be express or implied As per this definition the phrase directly or through a contractor' means employees of an employer whether they are directly recruited or recruited through a contractor. The word "establishment" has been defined in section 2(ix) to mean any y office, firm, industrial unit, undertaking, shop or premises in which workmen are employed for the purpose of carrying on any industry. Reference may also be made to section 2(c) of SO Ordinance, 1968 which provides that 'employer' means the owner of industrial or commercial establishment to which [the said] Ordinance applies. Section 2(f) (iv) ibid, inter alia, provides that `industrial establishment' means the establishment of a contractor who, directly or indirectly, employs workmen in connection with the execution of a contract to which he is a party, and includes, the premises in which, or the site at which, any process connected with such execution is carried on The learned High Court in the impugned judgment had also referred to section 2(h) of the Factory Act, 1934, which provides that worker means a person employed directly or through an, agency whether for wages or not in any
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manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work whatsoever, incidental to connect with the subject of the manufacturing process. 13. At this juncture, it would be appropriate to have a glance at the case-law referred to by the learned counsel for the appellant. In the case of Souvenir Tobacco Co. Ltd. v. Najammuddin (PLD 1977 Karachi 250) the employees of Canteen Managing Committee were declared not to be the employees of the company on the ground that according to the Karachi Factories Canteen Rules, 1953 read with the contents of the settlement, the affairs of the canteen of the company were directly under the control and the management of the Canteen Managing Committee and it was held that the application for re-instatement should have been filed against the said Committee and not against the company. In the case of Mian Munir Ahmad v. The State (1985 SCMR 257) the company used to run a beverage bottling at their factory and for the manufacturing of its product (Pepsi Cola) employed its own workers, who were on the payroll of the Factory. But certain other works were entrusted to contractors who employ their own labour. During the season in question the contract of loading and unloading the material in the Factory was awarded by the company to one Abdul Hamid Contractor, who had employed his own labour for the said work, who had nothing to do with the company, directly or indirectly. The employees of the contractor filed criminal complaints against the Managing Director of the company (appellant therein). The appellant approached the High Court for quashment of proceedings but the petition was dismissed on the ground that the High Court had no jurisdiction to exercise its inherent powers under section 561A, Cr.P.C., to quash proceedings pending before a labour Court as the same was not a Court subordinate to the High Court. The matter came to this court where the question for, consideration was that whether the High Court had no jurisdiction under section 561-A, Cr.P.0 in respect of the proceedings pending before the Labour Court, which was dealing with the case 'in its capacity as a Section 30 Magistrate'. A 3-Member Bench of this Court allowed the appeal and quashed all the criminal complaints. It was further observed that the contractor had employed its own labour they were not on the pay-roll of the Factory. The management of the Factory was not even aware of the number of the workers employed by the contractor or about the terms and conditions of their appointment or service. As such the Factory Management was not required to issue them any attendance tickets under the relevant law, i,e, section 2 of Schedule 2(g) of the W.P. Standing Orders Ordinance. In the case of Farid Ahmad v. Pakistan Burmah Shell Ltd. (1987 SCMR 1463) the respondent company owned a number of petrol pumps and stations in Karachi, most of which were run by dealers appointed by the company, whereas, some others were run and managed by contractoRs, Appellant, the employee of the contractor, was terminated by the then contractor. The said termination order was challenged by the appellant in the Labour Court through a Grievance Petition under section 25A of the IRO, but the same was dismissed on the ground that there was no privy of contract between him and the company. Appeal filed by him before the Labour Court was accepted and he was ordered to be reinstated. The said order, though was complied with by the company, but was challenged before the High. Court through a writ petition. The writ petition was allowed observing, inter alia, that the appellant was not an employee of the respondent company. In spite of the above judgment the appellant continued to work at the petrol pump. Afterwards, the then contractor, again terminated the services of the appellant. Thereupon, the appellant filed a criminal complaint before the NIRC against the company and its 3 officers under section 53(1-A) of the IRO, complaining "unfair labour practice". The matter came up before this Court when leave was granted to consider as to whether or not the appellant was an employee of company and whether it was open to the High Court to have decided this question in exercise of its constitutional jurisdiction as it involved a question of fact A 5-Member Bench of this Court, after relying upon the cases of Mian Munir Ahmad (ibid) and D.C. Works Limited v. State of Saurashtra (AIR 1.957 SC 269),
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on the ground that the contractor was not only the person who had employed the appellant but also the person who had the power of hiring and firing the employees, assigning works to be taken from them, etc., held that the appellant was not employees of the company but that of the contractor. In the case of Mehmood Hussain v. Presiding Officer, Punjab. Labour Court (2012 SCMR 1539) a 2-Members Bench of this Court held that the question of relationship between the owners of company and the persons employed by its contractors, had already been decided by this Court in the case of Mian Munir Ahmad (supra) wherein it was held that such persons were not the employees of the company but those of the contractor who has hired them,…
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