Were These Workers Unfairly Terminated? Exploring a Labor Dispute with IRCTC and Contractor Dynamics

A group of workmen were working at Janahhar under the contractor of IRCTC and were terminated after 3/4 years without notice and compensation. The workmen made an appeal to the labor commissioner, and conciliation is currently ongoing. IRCTC presented a submission in writing stating that they are not the principal employer and have an agreement with the contractor principal to principal. They submitted that as per the new catering policy of the Railway Board in 2010, the catering service was transferred to the railways and then to a new licensee. Temporary control was given to IRCTC. The Indian Railways have a statutory duty to provide catering service to its passengers. IRCTC is a subsidiary, and a new contractor is working in the same place and building with new workers, performing the same nature of work to provide cooked food items. The workmen are requesting reinstatement with full back wages. Please provide comments on the possibility of the case.

Understanding the Role of IRCTC in Railway Catering Services

The Indian Railway Catering and Tourism Corporation (IRCTC) is a subsidiary of the Indian Railways. One of its functions is to provide food and beverages to passengers on board and manage canteens at railway stations. From your description of the recent catering policy of the Railway Board, it seems these services have been executed through a contract system. If this is the case, the position of the Railways would be that of the Principal Employer, and the IRCTC would be considered the Contractor under the Contract Labour Act. For effective business purposes, IRCTC may subcontract these services to others. However, a subcontractor is also considered a contractor under the CLRA Act of 1970.

Regards,

Thank you for your thread. Something I clarified is the portion of my question on the principal employer. However, I would appreciate your input or anyone else's on the possibility of reinstatement of workers with full back wages and the other part of my question.

Let's try to understand the problem as it is and approach it in an unbiased manner, even though the ultimate sufferers are the poor contract workmen of the erstwhile subcontractor engaged by the IRCTC. In the absence of any mention about the duration of the contract as agreed between the IRCTC and the subcontractor, I am not sure on whom the liability to grant relief to the affected workmen should be fixed.

Liability and Relief Considerations

If the foreclosure of the contract in violation of the period fixed in the agreement without any valid reasons is attributable to the IRCTC, then the IRCTC should also be proceeded against for appropriate relief, including monetary compensation for non-employment. If the termination of the contract between the IRCTC and the subcontractor is on account of the expiration of the agreed period and subsequent non-renewal, the IRCTC is not responsible in any way; it is the responsibility of the subcontractor to secure continued employment for his workmen elsewhere or, if not possible, settle their dues as per the law.

Please also bear in mind whether the affected workmen were specially recruited for the IRCTC contract.

The case cited by the member who initiated this thread is perhaps one of the serious issues facing present-day labor matters and disputes. Labor unions at an all-India level are also demanding abolition or amendments to the Contract Labor (Regulation and Abolition) Act, 1970. In one of its judgments in 2011, the Honorable Supreme Court remarked, "It has been clearly stated therein that subterfuge was resorted to by the appellant to show that the workmen concerned were only workmen of a contractor. The Labor Court has held that the workmen were the employees of the appellant and not employees of the contractor."

Supreme Court Judgment on Labor Matters

The judgment of the Honorable Supreme Court in the case of BHILWARA DUGDH UTPADAK SAHAKARI S. LTD. is attached herewith. I hope that this judgment may be of some help in the matter.

Discussion on Indian Railways as Principal Employer

The discussion is helpful to me. The conclusion is that Indian Railways is the principal employer as per Section VIII of the Indian Railways Act 1989. It is statutorily duty-bound to provide catering services to its passengers, with IRCTC as the contractor and others as sub-contractors.

In my submission, the transfer of the catering unit to another contractor or licensee, even for other activities, is not permitted. The cessation or continuity of services in similar perennial work is crucial. Indian Railways, IRCTC, and the contractor have committed a statutory offense punishable under Section 25U of the 1947 Act for employing concerned workmen on a contract basis with breaks in their service. This constitutes unfair labor practice and is prohibited under Section 25T of the 1947 Act, either by the employer or the workmen as per Schedule V of the 1947 Act. Referring to the identical case of Balawant Raj Saluja and another vs. Air India Ltd and others (Supreme Court of India, 13 Nov 2013) and another judgment of the Supreme Court of India (21 Oct 2013) (State of Maharashtra and another vs. Sarva Shramik Sangh, Sangli and others).

I am sharing this for your feedback and comments.

Thank you all for your comments. When the Indian Railways is the principal employer and IRCTC is the contractor, and there is a sub-contractor involved, who will be responsible for termination, compensation, or the continuity of services? Why has the Labour Commissioner not been called as a party when providing catering services is the statutory duty of the Indian Railways, and IR continues to do so through IRCTC as a licensee, in which all cases the Indian Railways are the decision-makers and controllers. Please comment on...

All the dear friends contributing to this thread, while appreciating the valuable points expressed so far, I would like to raise a basic question: whether the supply of food and beverages to passengers on board can be considered a statutory obligation cast upon the Indian Railways?

Yes, Railways has its own Act (XIII of the Indian Railways Act, 1989) which is for providing catering services, either static or mobile, to the passengers. IRCTC, a subsidiary of IR, was established to upgrade and standardize catering services for the passengers. Currently, IR has withdrawn some units like Janahhar from IRCTC in the name of "departmentalize" and "non-railways model" of the catering policy from 2010. These units have been given to a new licensee for catering services.

I've made a cursory study of the Railways Act, 1989, and I am not able to find any provision in the Act making it obligatory on the part of the railways to extend catering services of food to the passengers. If you pinpoint any such provision that escaped my attention, it'll be useful for further discussion.

I would like to contribute to the subject matter as follows:

Background of Indian Railways Catering Management

Prior to 2010, all contracts of the Indian Railways catering business were managed by IRCTC, a wholly-owned company of Indian Railways.

Changes in Catering Policy 2010

In light of the Railway Budget Speech 2009-10 by the Honorable Railway Minister, a new catering policy for 2010 was formulated. According to this policy, Zonal Railways have taken over the catering business from IRCTC, except for Food Plaza, Food Courts, and fast food units. The base kitchens and mobile catering services have been taken over by the Zonal Railways from IRCTC.

Management by Zonal Railways

The Zonal Railways are managing this business departmentally with a specialized team of ex-cadre supervisors and officers up to the senior scale, along with trained personnel from reputed Institutes of Hotel Management, Catering Institutes, Food Craft Institutes, etc. This has been done with the objective of providing hygienic, good quality, affordable food to the traveling public by adopting the best trade and hospitality industry practices.

Contractual Changes and Labor Concerns

In the earlier system, IRCTC and its subcontractors were the contractors under the CLRA, as stated by Shri. Umakanthan ji. In the present system, there are no contractors. The termination of contracts with IRCTC and subsequently with subcontractors by IRCTC is the result of a Government decision. In light of this, we should discuss the issue of the termination of contract laborers after 3-4 years of service without notice and compensation, and advocate for contract laborers' reinstatement with full back wages.

Regards

As far as I understand, there is no provision for the regularization of services of a contract worker as a regular worker under the Contract Labour (Regulation and Abolition) Act (CLRA). Instead, this Act has an overriding effect as laid down under section 30 of the said Act. I believe that in the circumstances mentioned, there is only one hope: if the Honorable High Court or Supreme Court (if the case reaches that stage), may decide in favor of the workers on the same pattern as decided in the judgment mentioned by me in my earlier remarks on the previous page.

Thank you.

Thank you, Mr. Korgaonkar, for your elaborate reply, which helps us understand that it is the policy decision of the Government of India to run the catering services on "the non-railway model" to make it more hygienic and affordable. On the implementation part, the operations of base kitchens and mobile service have been taken over by the Zonal Railways from the IRCTC, except the ones you have mentioned; so far, so good.

However, the larger question of the rehabilitation of the displaced contract labor is still unresolved and needs to be discussed to find an efficacious remedy, as you mentioned. As everyone is aware, payment of monetary compensation is one remedy, and the other is the absorption of the displaced contract labor into the Railways, as vehemently proposed by the Questioner and Harsh Kumar, based on the ratio decidendi of the judgments cited.

Considering that the running of Railways is purely a commercial activity and not a sovereign function of the State, my humble submission is that a mere change in the particular policy of the Government of the day in that commercial activity to enhance its efficiency and utility will not have any statutory flavor compelling the judiciary to order the abolition of the contract labor system and the consequential absorption of the contract labor engaged so far. I seek more responses on this matter.

Thank you, Mr. Umakanthan, for your insights. Let me delve into the details of the 1989 Act. Thank you, Mr. Harsh Kumar, and other contributors. It is undeniable that each case is unique, varying in processes and characteristics. However, I would like to request you to consider some judgments from the High Court or Supreme Court that may be helpful for dealing with such a large group of displaced contract workers.

Relevant Court Cases

Cases like Balawant Raj Saluja and another vs. Air India Ltd and others (Supreme Court of India, Nov. 2013), State of Maharashtra and another vs. Sarva Shramil Sangh, Sangli and others (Supreme Court Of India, 21 Oct 2013), and Lordship Mankandey Katju, Chandramaouli Prasad vs. Binod Kr. Sharma (Decided on 1 September 2011) could provide valuable insights. I would appreciate more responses on this.

Regards.

Catering Service Provision by Indian Railways

Now I am sure about providing catering service to the passengers by the Railways. Please click on http://www.indianrailways.gov.in and go to Chapter - catering and vending services to see 701 under section 144 of the Indian Railways Act, 1989 (24 of 1989).

Regards.