Holding

The Board’s levy based on notional employment is permissible under Clause 54, the circulars do not infringe Article 14, and the levy increase and special levy are effective only prospectively from the dates of the circulars after Central Government approval.

Summary

The petitioners, companies engaged in mining and stevedoring at Mormugao port, challenged two circulars issued by the Mormugao Dock Labour Board that raised the general levy from 200% to 400% and the welfare levy from 30% to 60% for cargo handled by grab‑crane fitted ocean‑going vessels, and imposed a special levy of Rs 1 per tonne. They argued that the levy based on notional employment of gang workers was ultra vires Clause 54 of the Mormugao Dock Workers (Regulation of Employment) Scheme, that the differential treatment of ocean‑going vessels and transhippers violated Article 14 of the Constitution, and that the increase could not operate retrospectively because prior Central Government approval was a condition precedent. The Supreme Court held that Clause 54 permits recovery of scheme‑operating costs by treating gang workers as notionally employed, that the classification between the two types of vessels has a rational nexus to the scheme’s objectives and therefore does not breach Article 14, and that the levy increase and special levy could only take effect from the dates of the circulars after Central Government approval. Consequently, both appeals were dismissed.

Issues considered

The Board’s power to levy on the basis of notional employment of gang workers under Clause 54 of the Scheme.
Whether the differential levy on ocean‑going vessels versus transhippers violates Article 14 (equality) of the Constitution.
Whether the levy increase and special levy can have retrospective effect despite the requirement of prior Central Government approval under Clause 54(3).
The validity of the special levy of Rs 1 per tonne.

Legislation cited

Constitution of Indias. Article 14
Dock Workers (Regulation of Employment) Act, 1948s. 3, s. 4, s. 5A, s. 5B

Subjects

Dock workersLevyNotional employmentArticle 14EqualityRetrospective legislationMormugao DockSchemeGeneral levyWelfare levySpecial levyConstitutional lawEmployment regulation

Judgment

SOCIEDADE DE FORMENTO INDUSTRIAL A
-+ PVT. LTD. AND ORS.
v.
MORMUGAO DOCK LABOUR BOARD AND ANR.

JANUARY 18, 1995
B
[P.B. SAWANT AND S.C. AGRAWAL, JJ.]
)
+--
Dock Workers (Regulation of Ernployment) Act, 1948/Mormugao Dock
Workers (Regulation of Employment) Scheme, 196S: ss.3, 4, SA, SB/Clauses
3(e), 3(f), 32, S4-Circulars dated 19.3.1983 issued by Mormugao Dock c
Labour Board, increasing general levy from 200% to 400% and welfare levy
from 30% to 60% in respect of handling by grab crane fitted ships w.e.f
30.10.1982-Central Government according approval on 11.3.1983-Imposi-
tion of levy on the basis of notional employment-Held, is permissible under
the Scheme-Circulars neither ultra vires Clause S4 of Scheme nor violative
-~ of Article 14 of the Constitution-Prior approval of Central Government in D
terms of clause S4(3), being a condition precedent, increase in levy not to
have retrospective operation but would operate from date of Circulars.

Constitution of India :

Article 14-Mormugao Dock Workers Board--lssuance of Circulars
E
dated 19.3.1983 by-Increase in general levy and welfare levy from 200% to
400% and 30% to 60% respectively in respect of handling by grab crane fitted
ships--Circulars challenged as being discriminatory since a higher levy was
':"\. imposed on ocean going vessels fitted with grab cranes as compared to
transhippers-Held, Circulars not violative of Article 14. F
In order to ensure greater regularity of employment for registered
dock workers and to secure availability of adequate number of,. 4ock
workers to the registered employers for efficient performance of dock ~ork
at the Port of Murmugao, Government of India, in exe~cise of its powers
under the Dock Workers (Regulation of Employment) Act, 1948, framed G
the Murmugao Dock Workers (Regulation of Employment) Scheme 1965.
The scheme applied to stevedoring work and cargo handling from wharf
to transit shed and vice verse. The category of stevedors covered by the
Scheme were gang workers and winch drivers. The Scheme provided for
payment of attendance allowance and disappointment money to registered H
377
378 SUPREME COURT REPORTS [1995] 1 S.C.R.

A workers, and prescribed that registered employers would pay to the ad-
ministrative body in such manner and at such time as the respondent-
Board, whi~h was entrusted with the responsibility of administrating the
scheme, may direct the le"y ()ayable under Clause 54(1) of the Scheme and
the gross wages due to daily workers.

B The respondent-Board, by a resolution dated 30.10.82, decided to
increase the percentage of general levy payable in respect of handling by
grab craltt!s fitted to ships, from 200% to 400% on the actual payment of {

one set of winch drivers and on the notional employment of two gangs per +
hook (400% for each gang), and to enhance the welfare levy relating to the
C above operations from 30% to 60% of the time rate wages both in respect
of winch drivers and in respect of notional. employment of two gangs per
hook. The Central Government approved the resolution by its order i:lated
March 11,1983. Accordingly, the Board issued a Circular dated March 19,
1983 increasing the general levy and the welfare levy as aforesaid, from the
D date of the resolution, i.e. 30.10.1982. By another Circular a special levy of
Re.1/- per tonne was imposed in respect of all cargoes manually handled
from March 14, 1983. By a subsequent circular dated July 14, 1983 it was
clarified that the special levy was to be calculated in respect of cargoes
handled with the help of registered dock workers, whether gang workers
or winch drivers. The Companies and the firms engaged in mining and
E export of mineral ores and carrying on the business of stevedoring in
Mormugao Harbour filed writ petitions before the High Court challenging
the validity of the Circulars. It was contended on behalf of the petitioners
that the circulars were violative of Article 14 of the Constitution inasmuch
as higher levy was imposed in respect of loading of mineral ore through
F ocean going vessels fitted with grab cranes as compared to loading of ore
through transhippers fitted with grab cranes; and, in any event, retrospec-
tive increase in the levy was not permissible under the Scheme. The High
Court upheld the validity of the circulars, but held that the increased levy
and the special levy could not be realised with retrospective effect. Ag-
grieved, the writ petitioners as also the Board filed the appeals.
G
It was contended for the writ petitioner - appellants that imposition
of levy based on notional employment of gang workers was ultra vires
Clause 54 of the Scheme inasmuch as the said Clause did not authorise
levy on notional employment basis. Besides, the ground based on Article
H 14 of the Constitution, lt,~raised before the High Court, was also reiterated.
SOCIEDADE DE FORMENTO INDL" MORMUGAO DOCK LABOUR BD. (S.C. AGRAWAL 1.J 379

Dismissing the appeals, this Court A

HELD : 1. In view of Clause 54(1) of the Mormugao Dock Workers
(Regulation of Employment) Scheme, 1965 empowering the respondent-
Board to recover from registered employers the cost of operating the
Scheme, and the allowances payable to the gang workers under the Scheme
forming part of the cost of operating the Scheme, it would be permissible B
for the Board to recover the said cost by way of levy by treating the gang
,
-!,.-
workers as notionally employed in the matter of loading the ore by the
ocean going vessel fitted with grab crane. There is nothing in clause 54 of
the Scheme which prohibits the Board from recovering such cost of operat-
ing the scheme in this manner. Besides, notional employment of gang c
workers in connection with loading of ore on ocean going vessels fitted with
grab cranes has been recognised in the settlement of October 17, 1970
wherein it was expressly agreed that whenever gangs are not booked for
work, the employer shall pay double levy to the Board chargeable for one
gang for each working grab crane. (392-G, 393-B-C]
D
2.1 The circulars are not violative of the right guaranteed under
Article 14 of the Constitution. The High Court was right in holding that
ocean going vessels fitted with grab cranes cannot be equated with tran-
shippers fitted with grab cranes for the purpose of levy. The former utilise
the services of reserve pool workers for operating the grab cranes and the E
Board has to bear the burden for such workers; whereas the latter employ
regular winchmen to operate the grab cranes fitted on the transhipper as
their monthly workers and are responsible for paying all their dues such
as salary, provident fund, gratuity etc., moreover, they have to engage other

- staff to operate the transhipper as required under the Merchant Shipping
Act and incur further expenses. [395-B, 393-E-G]

2.2 The ocean going vessels fitted with grab cranes have always been
F

treated differently from transhippers fitted with grab cranes in the matter
of amount payable to the Board. The amount payable by the former is
governed by the settlement dated October 17,1970 while the latter are G
governed by the various agreements of 1977 which have been revised from
time to time. [393-H, 394-A]

2.3 The increased' off-take of iron ore since 1979 by ocean going
vessels fitted with grab cranes has resulted In loss opportunity of employ-
ment for the registered dock workers and consequent increase in the FI
380 SUPREME COURT REPORTS f1995) 1 S.C.R.

A burden on the Board for the minimum guaranteed wages and other-
amounts payable under the Scheme. By enhancing the general levy and ~

welfare levy under the Circular, the Board, keeping in view the economics
of tre cost of loading under the various modes, has sought ti, balance its
financial deficit caused· on account of increased off-take of ore through
ocean going vessels fitted with grab cranes. In doing so the Board cannot
B be said to have acted arbitrarily or unreasonably or having subjected the
petitioners to hostile or invidious discrimination. [394-E, 395-A-B]

P.MA. Setty v. State of Kamataka, [1988] Supp. 3 SCR 155; Sen '
-+
Antonio Independentschool District v. Bodriques, 411 U.S. 1 and G.K
c Krishnan v. The State of Tamil Na du andAnr:, [1975] 2 SCR 715, referred to.

3. As regards retrospective operation of the circulars, the High Court
has rightly held that the Circular increasing general levy and welfare levy
from 200% to 400% and from 30% to 60% could be made operative only from
the date of the Circular i.e. 19.3.1983, and not from 30.10.1982, the date of
D resolution, for the reason that prior approval of the Central Government as
~-
required under Clause 54(3) of the Scheme was accorded only on 11.3.1983.
Similarly the High Court has rightly held that the circular imposing the
special levy could not have retrospective operation. [395-D-E]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 258 of
E 1985 etc.

From the Judgment and Order dated 12.10.84 of the Bombay High
Court in W.P. No. 60of1983.

M. Chandersekhran, Additional Solicitor General, Soli J. Sorabjee,
F R.F. Nariman, Mr. Ravinder Narain, Aditya Narain and D.N. Mishra and
V. Balachandran for the appearing parties.
)r

-
fhe Judgment of the Court was delivered by
..,__
S.C. AGRAWAL, J. : These appeals, by special leave, arise out of
G Writ Petition No. 60 of 1983 filed by the appellants in C.A. No. 258 of 1985,
hereinafter referred to as 'the petitioners', in the High Court of Bombay,
~-
Pai..aji Bench, Goa, wherein they had challenged the validity of two cir-
culars dated March 19, 1983 issued by the Mormugao Dock Labour Board,
hereinafter referred to as 'the Board'. By one of those circulars the general
H levy payable in respect of handling by grab cranes fitted to ships with effect
SOCIEDADE DE FORMENTO !NDL "· MORMUGAO DOCK LABOUR BD. [S.C. AGRAWAL J.) 381

from October 30, 1982 was fixed at 400% _on the actual employment of one A
set of Winch Drivers and on the notional employment of two gangs per
hook (400% for each gang) and welfare levy relating to the above operation
was fixed at 60% of the time rate wages both in respect of Winch Drivers
and in respect of notional employment of two gangs per hook with effect
from October 30, 1982. By the other circular a special levy @ Re. 1/- per
tonne was imposed in respect of all cargoes manually handled from March
B
14, 1983. By a subsequent circular dated July 14, 1983 it was clarified that
the special levy is to be calculated in respect of cargoes handled with the
help of registered dock workers, whether gang workers or Winch Drivers.
The said circulars were issued in exercise of the powers conferred by clause
54 of the Mormugao Dock Workers (Regulation of Employment) Scheme, c
1965, hereinafter referred to as 'the Scheme' framed by the Government
of India in exercise of the powers conferred on it by the Dock Workers
(Regulation of Employment) Act, 1948 hereinafter referred to as 'the Act'.

The Act was enacted with a view to provide for regulating the D
employment of dock workers. Section 3 of the Act provides for a Scheme
for registration of dock workers and employers with a view to ensuring
greater regularity of employment and for regulating the employment of
dock workers, whether registered or not, in a port. Such a Scheme, among
other provisions, can provide for securing a minimum pay in respect of
periods during which employment, or full employment, is not available for E
dock workers to whom the Scheme applies and who are available for work.
Under Section 4 the power to frame the Scheme has been conferred on
the Central Government in relation to a major port the State Government
in relation to any other port. Section 5A or the Act provides for the

... establishment of a Dock Labour Board for a port or a group of ports. F
Under Section 5-B the Dock Labour Board has been entrusted with the
responsibility for administering the Scheme for the port for which it has
been established. The Board has been established by the Central Govern-
ment under Section 5-A of the Act for Mormugao Port which is a major
port. In exercise of the powers conferred oy Section 4(1) read with Section
3 the Scheme has been made by the Central Government. As indicated in G
Clause 2 the objects of the Scheme are to ensure greater regularity of
employment for dock workers and to secure that an adequate number of
dock workers is available for the efficient performance of dock work. The
Scheme applies to stevedoring work and cargo handling from wharf to
transit shed and vice-versa and the categories of stevedore workers covered H
382 SUPREME COURT REPORTS (1995) 1 S.C.R.

A by the Scheme are (a) gang workers and (b) winch drivers. The Scheme is
only applicable to registered dock workers and registered employers and
it does not apply to any dock worker unless he is employed or registered
for employment as a dock worker. In Clause 3 various expressions includ-
ing the expressions 'daily worker', 'dock employer', 'monthly worker',
B 'registered dock workers', 'registered employer and 'reserved pool' have
been defined. Sub-Clause (e) of Clause 3 defines a daily worker to mean
a registered dock worker who is not a monthly worker. The expression
'monthly worker' is defined in sub-clause (k) to mean a registered dock
worker who is engaged by a registered employer-or-a group of such
employers on monthly basis under a contract which requires for its ter-
C mination at least one month's notice on either side. A "registered dock
worker" is defined in sub-clause (n) to mean a dock worker whose name
is for the time being entered in the register or record. The expression "dock
employer" is defined in sub-clause (t) to mean the person by whom a dock
worker is employed or is to be employed and includes a group of dock
D employers formed under clause 16(1)(d). Under sub-clause (o) "registered
employer" means a dock employer whose name is for the time entered in
the employers' register. "Reserve pool" is defined in sub-clause (p) to mean
. a pool of registered dock workers who are available for work, and who are
not for the time being in the employment of a registered employer or a
group of dock employers as monthly workers. Clause 32 of the Scheme
E makes provision for.guaranteed minimum wages in a month and reads as
under:

"32. Guaranteed Minimum wages in a month. (1) A worker in the
reserve pool register shall be paid wages at least for fifteen days
F in a month at the wage rate inclusive of dearness allowance as
prescribed by the Board appropriate to the category to which he
...
permanently belongs, even though no work is found for him for .
the minimum number of fifteen days in a month. The days on which
work is allotted to the worker shall be counted towards the fifteen
days mentioned above. The guaranteed minimum wages in a month
G shall be :7

(a) for the number of days for which wages are guaranteed in
a month subject to the condition that the worker attended for work
H on all days of the month as directed by the Administrative Body.
SOCIEDADE DE FORMENTO INDL '· MORMUGAO DOCK LABOUR BD. !S.C. AORAWAL. J.J 383

(b) proportionate lo the number of days on which the worker A
attended for work provided he was excused from attendance on
all the remaining days of the month .
.
~

(2). Subject to the provisions of sub-clause (1) the minimum
number of days in a month for which wages are guaranteed may
be fixed by the Board for each year on the basis of the monthly
B
a~erage employment obtained by the workers in the reserve pool
in the lowest categories of stevedore workers during the preceding
year until the minimum number of days reaches 21, provided the
number so fixed shall not, in any case, be less than the number in
the preceding year. c
NOTE : This method of assessing the average employment is
detailed in Schedule II.

(3) The minimum number of days for which wages shall be guaran- D
teed under sub-clauses (1) and (2) shall not automatically apply
to workers in new categories that may be registered after the date
of enforcement of the scheme. The minimum number of days for
which wages shall be guaranteed to these categories shall be
determined under clause 19(2)(e). The annual refixation of the
minimum number of days as under sub-clause (2) shall be done E
independently in their case also.

Explanation. - In sub-clauses (1), (2) and (3) of this clause a 'day'
shall mean a 'shift'.

In Clause 33 provision has been made for payment of attendance F
allowance to a worker on the reserve pool register who is available for work
but for whom no work is found. Clause 35 makes provision for payment of
disappointment money where a worker in the reserve pool presents himself
for work and for any reason the work for which he has attended cannot
commence or proceed. In that event the worker shall be entitled to full G
time rate wages subject to the condition that he is available throughout the
shift and accepts alternative employment if provided. Clause 39 imposes
certain obligations on the registered employers. Under sub-clause (5)(i) it
is prescribed that a registered employer shall pay to the Administrative
Body in such manner and at such times as the Board may direct the levy H
384 SUPREME COURT REPORTS (1995) 1 S.C.R.

A payable under clause 54(1) and the gross wages due to daily workers.
Clause 54 deals with the cost of operating the Scheme and provides as
under:
-- I

-·.
"54; Cust of operating the Scheme. - (1) The cost of operating the
Scheme shall be defrayed by payments made by registered
B employers to .the Board. Every registered employer shall pay to
Board such amount by way of levy in respect of reserve pool
workers together with and at the same time as the payment of gross
wages due from him under clause 39(5)(i), as the Board may, from
time to time, prescribe by a written notice to registered employers.
-1

c If considered necessary, the Board may require any registered
employer to pay such amount by way of levy in respect of monthly
workers at such rate as it may determine and the amount payable
by way of such levy shall not be less than such amount as the Board
may fix as the minimum payable by every registered employer.

D (2) In determining what payments are to be made by registered ..........
employer under sub-clause (1), the Board may fix different rates
of levy for different categories of work or workers, provided that
the levy shall be so fixed that the same rate of levy will apply to
all dock employers who are in like circum_stances.
E
(3) The Board shall not sanction any levy exceeding hundred per
cent of the estimated total wage bill calculated on the basis of the
daily wage rate without the prior approval of the · ~entral Govern-
ment.
?
.r
F (4) A registered employer shall on demand make a payment to the
Board way of deposit, or provide such of the security for the due
paymen~ of the amount referred to in sub- clause (1) as the Board
may consider necessary.

(5) The Administrative Body shall furnish from time to time to the
G Board such statistics and other information as may reasonably be
_,._
required in connection with the operation and financing of the
Scheme.

(6) If a registered employer fails to make the payment due from
H him under sub-clause (1) within the time prescribed by the Ad-
SOCIEDADE DE FORMENTO INDL i·. MORMUGAO DOCK LABOUR BD. [S.C. AGRAWAL, J.J 385

ministrative Body, the Administrative Body shall serve a notice on A
the employer to the effect that, unless he pays his dues within three
days from the date of receipt of the notice, the supply of registered
dock workers to him shall be suspended. On the expiry of the
notice period, the Administrative Body shall suspend the supply
of registered dock workers to a defaulting employers until he pays
his dues."
B

Export of iron ore is a major item of export from Mormugao port.
The loading of the ore on the ocean going vessel is being done manually
by conventional method or mechanically. For the purpose of manual load-
ing the barge carrying the ore comes alongside the vessel which is anchored C
mid-stream and the ore is loaded on the vessel normally by two units of
~ch drivers and gang workers, each unit being constituted by four winch
drivers and then gang workers per crane and operating by shifts of 8 hours
each. The gang workers manually load the ore from the barge on net slings
which are lifted by the ocean-going vessel's cranes operated by the unit's D
winch drivers to its holds. Loading is done mechanically by the mechanical
ore handling plant that has been set up at Berth No. 9 at Mormugao port
in 1979 as well as by grab cranes. The mechanical ore handling plant can,
however, fully load vessels upto 65,000 DWT only and vessels with larger
capacity are partly loaded at Berth No. 9 by mechanical ore handling plant
and thereafter they are taken to mid-stream where they are loaded to their E
full capacity either by a vessel fitted with grab cranes which is called
"transhipper" or by grab cranes fitted on the ocean going vessel itself. For
loading by a transhipper the iron ore is carried to the ocean going vessel
in a barge and the transhippe~ moves between the barge and the ocean-
going vessel The ore is removed from the barge by use of grab cranes fitted F
to the transhipper and is placed on a conveyor belt and is directly taken
to the holds of the ocean-going vessel by the conveyor belt. Where the
ocean-going vessel itself is fitted with grab crane the barge containing the
ore is brought adjacent to the ocean going vessel and the grab crane of the
vessel lifts the ore from the barge and places it directly in the hold of the
vessel. Both these forms of loading require only winch drivers to operate G
the grab crane and they do not require any gang worke~ to load the ore
because the ore is collected and picked by the grab crane itself.

Vessels fitted with grab cranes were introduced some time in 1970.
The introduction of the said vessels gave rise to industrial unrest and it was H
386 SUPREME COURT REPORTS [1995] 1 S.C.R.

A resolved by a settlement dated October J 7, 1970 arrived at under Section
2(p) of the Industrial Disputes Act, 1947 between M/s V.M. Salgaocar &
Bros. Pvt. Ltd. and the workmen employed for stevedoring work at Mor-
mugoa Harbour. The said settlement provided for employment of suitable
winchmen frcm amongst the reserve pool winchmeff as their direct
B employees. As regards gang workers, the following provision was made in
the said settlement :

"(a) As regards gang workers, the employers may place requisition
for these workers, if they require, with the Pool Office of the Dock
Labour Board. Gangs booked for work on vessels equipped with
c grab-cranes, will be given hazeree on the same basis as given to
the winchmen.

(b) Wherever gangs are not booked for work, the employer shall
pay double the levy to the Dock Labour Board chargeable for one
gang for each working grab-crane."
D
Insofar as the owners of transhippers are concerned since they were
employing their own winchmen they claimed that they were not required
to register themselves under the Scheme and they were not liable to pay
any levy under the scheme on the ground that the cargo handled by them
E was outside the Scheme. A writ petition (W.P. No. 47 of 1971) was filed
• by M/s Chowgule & Co. Pvt. Ltd., owners of a transhipper vessel, in the
Court of Judicial Commissioner of Goa wherein it was contended that the
owners of the transhipper were not doing dock work wi~liin the meaning
of the Scheme and they were entitled to employ their own labour and they
p were not required to pay any levies for the cost of adminir,tering the
Scheme. The said writ petition was disposed of by the Judicial Commis-
sioner by his judgment dated August 19, 1974 whereby the contention that
the owners of the transhipper were outside the Scheme and did not
perform dock work was rejected and it was held that they were liable to
pay levy for the winchmen. It was, however, held that the owners of the
G transhipper were not liable to pay notional levy on the basis of gangmen
who were not actually utilised by the said owners. The Board as well as the ~·
owners of the transhipper filed appeals against the said judgment 'of the
Judicial Commissioner in this Court and the said appeals were disposed of
in terms of an agreement dated July 8, 1977 whereby it was agreed that the
. lf owners of the transhipper shall register themselves as employers within the
..:.
SOCIEDADEDEFORMENTO-INDLv. MORMUGAODOCKLABOURBD. [S.C.AGRAWAL,J.) 387

meaning of the Scheme with liberty to employ their o~ workmen on their A
transhipper who would be treated as monthly workers under the Scheme
and that the owner of the transhipper would pay a flat rate levy ·of 7 paise
per tonne of cargo handled though the transhipper which rate of levy would
not be changed except by mutual consent of the parties. It appears that
similar agreements were entered into with other owners of transhipper B
vessels in 1977. The rate of levy was revised from 7 paise per tonne to 21
paise per tonne and in April, 1983 a formula was agreed upon for future
revision of the same. The said levy is composite and all inclusive.

In the course of time the number of ocean going vessels fitted with
grab crane has increased and the volume of Cargo handled by such vessels C
has also been increasing from year to year. According to the figures
supplied by the Board the tonnage handled manually in 1969-70 was
65,56,229 which came down to 11,58,587 in 1982-83. The total tonnage
handled by transhippers/reloading equipment in the year 1969-70 was
2,23,052 and it went up to 50,09,509 in 1982-83. On account of the use of D
mechanised loading of ore in the vessel the requirement of gang workers
has been reduced but there has not been corresponding reduction in the
strength of the workers. The Board, therefore, passed a resolution on
October 30, 1982 setting up a committee to study the comparative cost upto
the point of landing in handling of ore by various modes and to recommend
~;scheme for rationalisation of levy structure for all modes of handling of Jt:
ore, for consideration by the Board. At the same time the board decided
to increase the percentage of general levy in respect of handling by grab
crane fitted ships from 200% to 400% and the welfare levy from 30% to
60% The Central Government gave its approval to the said increase by its
order dated March 11, 1983. Thereafter the Board issued the impugned p
circular dated March 19, 1983 increasing the general levy from 200% to
400% and the welfare levy from 30% to 60%. Similarly the Board decided
to impose a special levy@ Re. 1/- per tonne in respect of all cargo handled
manually by the registered dock workers. The said proposal was approved
by the Central Government by letter dated March 14, 1983 and thereupon G
the impugned circular dated March 19, 1983 was issued by the Board
imposing the special levy @ Re. 1/- per tonne in respect of all cargo
manually handled by the registered dock workers with effect from March
14, 1983. The said circular was clarified by the Board by resolution dated
July 14, 1983 that the special levy is authorised to be collected in respect
of all cargos handled with the help of registered dock workers whether H
388 SUPREME COURT REPORTS (1995) 1 S.C.R.

A gangworkers .or winch drivers. The said clarificatio11 was also approved by
the Central Government by its letter dated December 21, 1983. +
The committee that was constituted by the Board for rati.onali1'ation
of levy structure, in its report dated September 30, 1983, has expressed the
view that vessels fitted with grab cranes be classified into two categories
B based on the biting capacity and it has recommended that the levy be
charged at Rs. 3.25 per tonne in respect of ore loaded through grab cranes
upto 7 tonnes biting capacity and Rs. 3.75 per tonne in respect of ore
loaded through vessels fitted with grab cranes above 7 tonnes biting
•
-r
capacity. The Committee also recommended that in case of lumpy ore
c loaded through vessels fitted with grab cranes such rates be reduced by 25
paise per tonne in respect of both the categories. The committee further
recommended that these levy rates be subject to change every year propor-
tionate to the increase in the levy rates in respect of ore loaded through
winches/cranes with the help of gangworkers and winch drivers. According
to the committee, there was no difference in the FOB rates in respect of
D ore loaded through ship's gear either through cranes/winches or grab ,...._
cranes ·and that the cost of loading in respect of vessels fitted with grab
cranes was such cheaper then the one through, cranes/winches and, there-
fore, there was much scope for increasing the levy rate in respect of ore
loaded through vessels fitted with grab cranes. -
E
Petitioner No. 1 is a company registered under the Compan.les Act,
1956 and is engageq in mining and export of mineral ores particularly iron
ore. Petitioner No. 2 a shareholder and the Managing Director of
Petitioner no. 1. Petitioner no. 3 is a partnership firm carrying on the }<"
F business of stevedoring in Mormugao Harbour and are engaged by
petitioner no. 1 to handle the loading operations of petitioner no. 1 at
Mormugao port. Feeling aggrieved by the circulars dated March 19, 1983
increasing the general levy as well as welfare levy and imposing the special
levy the petitioners filed the writ petition giving rise to these appeals. In
the said writ petition they assailed the validity of the impugned circulars
G mainly on the ground that the said circulars were violative of the right to
equality guarantee under Article 14 of the Constitution inasmuch as much
higher levy has been imposed in respect of loading of ore done through
ocean going vessels fitted with grab cranes as compared to loading of ore
--
through transhipper fitted with grab cranes. It was submitted that although
H grab cranes were used for loading by both the modes the petitioners were.
SOCIEDADE DE FORMENTO INDL v. MORMUGAO DOCK LABOUR BD. (S.C. AGRAWAL. J.) 389

saddled with the levy in respect qf notional wages for gang workers A
although the services of the gang worker were not being required for the
loading operation through grab cranes and that while wages of gang worker .
are not taken into account in the matter of fixing the levy in respect of
lpading through transhipper, the notional wages of the gang workers have
been taken into account while imposing the levy in respect of loading done B
through going vessels fitted with grab cranes. The other ground that was
urged was that the increase in the levy has be~n made applicable with
retrospective effect on the basis that the approval of the Central Govern-
ment was obtained ex-post facto and that such retrospective increase in the
levy was not permissible under the Scheme.
c
On behalf of the Board it was pointed out that the owners of the
transhipper stand on a different footing from the petitioners inasmuch as
the transhippers are not required to utilise the services of the Board by
requisitioning the supply of dock workers under the agreements arrived
between the transhippers and the Board and that still they pay levy for D
handling of ore and that the amount of such levy was originally fixed at 7
paise in 1977 which was increased to 21 paise in September, 1980 and that
now a formula has been evolved with consent whereunder the amount of
levy payable by transhipper-owners comes to about 35 paise per tonne. In
this regard it was also submitted that the owners of transhippers are
required to invest huge capital cost and the same are manned by a staff E
crew as required under the Merchant Shipping Act and that the tranship-
pers are made to operate on special condit;ions imposed on them by the
Government of India and that transhippers are required to have their own
set of workers for operating their cranes and other equipment with'. the
result that they have to maintain two sets of crew and further the tranship- F
per owners do not draw labour from the Board, not even winch driver. In
the reply to the writ petition filed on behalf of the Board it was stated that
the Board has been suffering budgetary deficits since 1979-80. It was
pointed out that one of the factors for the continuous drain on the finances
of the Board has been the increased off-take of iron ore by vessels fitted
with grab cranes. According to the Board in 1979-80 only two small vessels G
fitted with grab cranes called at Mormugoa port. In 1980-81 the number
of such vessels was three while in 1981-82 it was five, but in 1982-83 the
said number was 11 and some of them were large vessels and this has
resulted in loss of opportunity of employment for the registered dock
workers. It was submitted that since the Board has to pay amount of H
390 SUPREME COURT REPORTS [1995) 1 S.C.R.

A mm1mum guaranteed wages and other amounts under t~e Scheme to
workers irrespective work being available or not, the financial burden on
the Board has increased. It was pointed out that efforts have been made
since 1979 to reduce the strength of registered dock workers on the roll of
the Board by introducing voluntary retirement scheme and other schemes
B and it has been brought own from 2314 to 1148 (consisting of 864 garig
workers and 284 winchmen) and that the impugned increase in levy was
justified and is not unreasonable, arbitrary or discriminatory.

The High Court has rejected the contention urged on behalf of the
petitioners that the impugned circulars are violative of Article 14 of the
C Constitution. The High Court has pointed out .that in vessels fitted with
grab cranes the services of the reserve pool winch drivers are required
during the loading operation only where as the owners of the transhippers
use winch drivers employed by them throughout the year as monthly
workers and the liabilities of the Board towards the latter workers are
D much lower than the liabilities towards the former and that apart from the
liability for the payment of the dues to the reserve pool workers the Board
has also to incur expenses in order to keep in readiness an adequate
number of reserve pool workers to satisfy the needs of the registered
employers as and when required, even though the services of the reserve
pool workers may be required for only two or three days at a time and, .
E therefore, it could not be said that grab crane fitted vessels and tranship-
pers are equals. According to the High Court though both use mechanised
method for loading of cargo on the ocean-going vessels the dissimilarities
resulting from different systems of engaging dock workers are so marked,
significant and of such import that make them unequal and a classification
p distinguishing them one from another was reasonable and justified. In this
context, the High Court has also mentioned that a registered employer
engaging monthly worker like the transhipper has to pay all the dues such
as salary, provident fund, gratuity, etc. whereas in the case of reserve pool
worker the burden to pay all the dues including disappointment money and
the attendance allowance is borne by the Board and that these two factors
G have a direct impact on the cost of operating the scheme and the liability
of the Board. The High Court has also rejected the contention that the levy
which involves imposition in respect of notional employment of gang
workers is unreasonable and arbitrary since no gang worker is employed
for handling cargo in the grab crane fitted vessels. The High Gourt has
H pointed out that use of grab crane method gave cause to unemployment of
SOCIEDADE DE FORMENTO !NOL v. MORMUGAO DOCK LABOUR so.1s.c. AGRA WAL J.] 391

gang-irorkers in an increasing proportion and that while under the conven- A
tional method the maximum output of a unit of four winch drivers and ten
gang workers is 300 tonnes of cargo per hook per shift, the cargo handled
by grab crane fitted vessels is on an average 2520 tonnes per grab crane
per shift and that this gives cause to a higher rate of unemployment of dock
workers (both winch drivers and gang workers) from the reserve pool with
B
the consequent increase in the liabilities of the Board if the grab crane
method of handling cargo is used. The High Court has observed that the
responsibility for such unemployment was impliedly admitted by some
users of the grab crane method of cargo handling inasmuch in the agree-
ment that was entered into on October 17, 1970 it was agreed that when-
ever gangs are not booked for work the employer shall pay double the levy C
to the Board chargeable for one gang for each working grab crane which
implies that the principle of charging levy on notional employment of gang
workers was found to be reasonable and fair by the trade, labour and the
Board. While upholding the validity of the impugned circulars the High
Court has, however, held that the said increased levy could not be raised D
with retrospective effect and can only operate prospectively. In this context,
the High Court has pointed out that in view of Clause 54(3) of the Scheme
prior approval of the Central Government was required before the Board
could sanction any levy exceeding 100% of the estimated total wage bill
calculated on the basis of daily wage rate and that the increase in the levy
under the impugned circular exceeded 100% of the estimated total wage E
bill and, therefore, the levy could only be imposed· after obtaining the
approval of the Central Government. According to the High Court Clause
54(3) of the Scheme denotes that the Board cannot fix the levy retrospec-
tively and since the approval of the Central Government is a condition
precedent to the levy and without it no levy could be imposed the resolu-
F
tion passed by the Board on October 30, 1982 has no value since it has to
be preceded by the approval of the Central Government. The High Court
has, therefore, held that the impugned circular regarding enhancement of
the general levy and welfare levy could not have retrospective effect from
October 30, 1982 and it could take effect only from March 19, 1983.
Similarly as regards the special levy the High Court has observed that the G
said levy could only take effect from July 14, 1983 the date of the resolution
clarifying the matter and not from March 14, 1983 as communicated by the
impugned circular.

Both sides have ~tied appeals against the judgment of the High Court. H
392 SUPREME COURT REPORTS (1995) 1 S.C.R.

A C.A. No. 258/85 has been filed by the petiti9ners while C.A.No. 541/85 has
been filed by the Board.
+
We will first take up C.A. No. 258/85 filed by the petitioners. In this
appeal the learned counsel has confined his challenge to the enhancement
· of the general levy from 200% to 400% and welfare lev}' from 30% to 60%.
B The learned counsel for the petitioners has assailed the imposition based
on the notional employment of gang workers. It has been urged that such
an imposition is ultra vires clause 54 of the Scheme inasmuch as the said
clalise, on a true construction, does not authorise levy on notional employ- ..
-.:r
ment-basis. The other ground that has been urged to assail the levy is based
c on Article 14 of the Constitution and it has been contended that there is
no real or substantial difference between owners of transhipper and the
petitioners so as to justify their being classified into separate categories and
that the said classification has no nexus to the object of the levy which is
to meet the social costs incurred by the Board for reserve pool gang
workers. The said consideration for imposing the levy applies to both the
D modes for loading, i.e., through transhippers fitted with grab cranes and
........
ocean going vessels fitted with grab cranes yet the notional levy is imposed
exclusively in respect of loading through ocean going vessels fitting with
grab crane.s.

E As regards the first contention urged by the learned counsel for the
petitioners based on clause 54 of the Scheme it is necessary to bear in mind
that the object of the Scheme, as set out in clause 2(1), is to ensure greater
regularity of employment for dock workers and to secure that an adequate
number of dock workers is available for the efficient performance of dock
F work. The Scheme seeks to achieve these twin objects by maintaining a
reserve pool of registered dock workers who are available for work and a
worker in the reserve pool is guaranteed minimum wages in a month under
clause 32 as well as attendance allowance under clause 33 and disappoint-
ment money under clause 35. Clause 54{1) empowers the Board to recover
from registered employers the cost of operating the S~heme. Since the
G Scheme applies to gang workers the cost of operating the Scheme includes
the payments made to gang workers under the. various clauses ·of the ~-

Scheme. Normally a gang consists of four winchmen and 10 gang workers ~
. to optrate a crane· per shift. For· operating the grab crane only winchmen
are required and gang workers are not required. But insofar as the Board
H is concerned it has to keep gang workers on its Rolls and to pay their
SOCIEDADE DE FORMENTO INDL •·. MORMUGAO DOCK LABOUR BD. (S.C. AGRAWAL. J.) 393

minimum wages and other allowances payable under the Scheme. to the A
gang workers in the reserve pool. Since the wages and allowances payable
to the workmen under the Scheme form part of the cost of operating the
Scheme it would be permissible for the Board to recover the said cost by
way of levy by treating the gang workers as notionally employed in the
matter of loading the ore by the ocean going vessel fitted with grab crane. B
There is nothing in clause 54 which prohibits the Board from recovering
such .cost of operating the Scheme in this manner. In this context, it may
also be mentioned that notional employment of gang workers in connection
with loading of ore on ocean going vessels fitted with grab crane has been
recognised in the settlement that was entered into on Octo.ber 17, 1970 by
M/s V.M. Salgaocar & Brother Pvt. Ltd. wherein it was expressly agreed C
that whenever gangs are not booked for work the employer shall pay
double the levy to the Board chargeable for one gang for each working
grab crane. It is, therefore, not possible to accept the contention urged on
behalf of the petitioners that it was not permissible for the Board to impose
the levy on the basis of notional employment of gang workers although the D
gang workers were not actually employed in the task of loading iron ore in
the vessels fitted with grab cranes.

Coming to the other contention based on Article 14 of the Constitu-
tion we are in agreement with the view of the High Court that grab crane
fitted vessels cannot be equated with transhippers fitted with grab cranes E
for the purpose of levy and that there are features which indicate that they
cannot treated at par. In this context, it has to be noted that transhippers
employ regul~ winchmen to ope.rate the grab cranes fitted on the tranship-
per as their monthly workers and are responsible for paying all their dues
such as salary, provident fund, gratuity, etc. Ocean going vessels fitted with F
grab cranes on the other hand utilise the services of reserve pool workers
for operating the grab cranes and the Board has to bear the burden for
such workers. Moreover, the oWn.ers of transhippers· have to engage other
staff to operate the transhipper as required under the Merchant Shipping
Act and they have· to incur expenses for maintaining the said vessel apart
from the heavy amount which has been invested in the vessel itself. It can G
also not be ignored that ever since the introduction of grab cranes for the
purpose of. loading the ore at Mormugoa port ill 1970, the ocean going
vessels fitted with grab cranes have been treated differently from tranship-
pers fitted with grab cranes in the matter of amount payable to the Board.
The amount payable by ocean going vessels fitted with grab cranes is H
y
394 SUPREME COURT REPORTS [1995] 1 S.C.R.

A governed by the settlemen~ dated October 17, 1970 while the transhippers
are governed by the various agreements of 1977 which have been revised
from time to time. Having regard to all these circumstances we are unable +-
to accept the contention urged on behalf of the petitioners that since
transhipper as well as the ocean going vessels fitted with grab cranes both
use grab cranes for the purpose of loading the ore they should be treated
B alike in the matter of imposition of levies by the Board.

It has been said that "no economic measure has yet been devised
which is free from all discriminatory impact and that in such a complex ~

arena in which no perfect alternatives exist, the court does well not to
c impose too rigorous a standard of criticism, under the equal protection
clause, reviewing fiscal services". (See P.MA. Setty v. State of Kamataka,
(1988] Supp 3 SCR 155 at p. 189). The same thought is expressed in San
Antonio Independent School District v. Bodrigue$ speaking through Justice
Stewart, 411 U.S. 1 at page 41; G.K Krishnan v. The State of Tamil Nadu
D & Anr., [1975] 2 SCR 715 at p. 730. Here we find that, according to the
Board, one of the factors contributing to the continuous drain on the ~
finances of the Board is the increased off-take of iron ore since 1979 by
vessels fitted with grab cranes because such off-take results in loss of
opportunity of employment for the registered dock workers and conse-
quent increase in the burden on the Board for the minimum guaranteed
E wages and other amounts payable under the scheme. The Board has made
•efforts to reduce the strength of registered Dock Workers on it~J roll from
2314 .in 1148 in June 1983. A substantial number, i.e., 864, of those. 1148
workers are gang workers who are denied opportunity of employment on
account of take of iron ore by vessels fitted with grab cranes. Annexure 'A'
F to the Rejoinder Affidavit filed on behalf of the petitioners in the High h
Court would show that prior to the enhancement of the general levy and
welfare levy under the impugned circular the charges came to about Rs.
1.48 per wet M/ton and as a result of enhancement of the general levy and
welfare levy by the impugned circular the said charges have beeil increased
to about Rs. 255 per wet M/Ton, Le., by about Re. 1 per wet M/Ton. On
G the other hand, the cost of manual loading was in the range of Rs. 8.11 to
Rs. 11.91 (Annexure 2 to the Affidavit in reply of A. Onkarappa·filed on
behalf of the Board in the High Court). The expenses for loading threugh
transhipper (as per para 8 of the affidavit in reply filed on behalf of the
~
•
Board in the High Court which was not disputed by the petitioners in their
l-1 rejoinder affidavit) come. to Rs. 27 to Rs. 33 per tonne. By enhancing the
SOCIBDADE DE FORMENTO INDJ... v. MORMUGAO DOCK LABOUR BO. (S.C. AGRAWAL. J.) 395

general levy and welfare levy under the impugned circular the Board, A
keeping in view the economics of the cost of loading under the various
'"T
modes, has sought to balance its financial deficit caused on account of

- increased off take of ore through ocean going vessels fitted with grab
cranes by enhancing the levies which has led to increase in the cost of
loading through vessels fitted with grab cranes. In doing so the Board
cannot be said to have acted arbitrarily or unreasonably or having subjected B
the petitioners to hostil!! or invidious discrimination. The impugned cir- ·
cular cannot, therefore, be held to be violative of the right guaranteed
--,... under Article 14 of the Constitution. C.A. No. 258 of 1985 filed by the
petitioners must, therefore, fail and has to be dismissed.

CA. No. 541of1985 filed by the Board is confined to the question
c
whether the enhancement of the levies under the impugned circulars could
be opcr".tive from October 30, 1982 the date of the passing of the resolution
by the Board. The High Court has held that the circular dated March 19,
1983 regarding increase in the general levy and welfare levy from 200% to
___.,_ 400% and 30% to 60% respectively could only operate from the date of D
such circular and could not be made operative with effect from October
30, 1982, the date of passing of the resolution, for the reason that prior
approval of the Central Government was required in view of clause 54(3)
of the Scheme and the proposal made by the Board in its resolution dated
October 30, 1982 was approved by the Central Government only on March E
11, 1983. We do not find any infirmity in this approach of the High Court.
Similarly as regards circular dated March 19, 1983 for imposition of special
levy the High Court has rightly held that the said circular could not have
retrospective effect. The said appe'al must also, therefore, be dismissed.
*\
.. In the result, both the appcal'S- {CA.No. 258/85 and 541/85) are
dismissed but in the circumstances there will be no order as to costs.
F

R.P. Appeals dismissed.

-