2006 Supreme(SC) 162

2006(2) Supreme 392
Supreme Court of India
(From Andhra Pradesh High Court)
Arijit Pasayat and R.V. Raveendran, JJ.
A.P.S.R.T.C. & Ors. —Appellants
versus
G. Srinivas Reddy & Ors. —Respondents
Civil Appeal No. 3424 of 2000
Decided on 24-2-2006
Counsel for the Parties :
For the Appellants : R. Santhan Krishnan, Praveen Kr. Pandey and Guntur Prabhakar, Advocates.
For the Respondents : T.N. Rao, Advocate.

Important pointWhere contract labour are engaged in connection with work in an establishment and employment of such contract labour is prohibited by issue of a notification u/s 10(1) of Contract Labour (Regulation and Abolition) Act, there is no automatic absorption of contract labour.

Headnote:(i) Labour Law—Contract Labour (Regulation and Abolition) Act, 1970—Section 10(1)—Circular issued by appellant for absorption of persons employed on casual basis/consolidated pay/piecemeal rate whose services had been ordered to be dispensed with, under earlier Circular—Circular provided that benefit thereof will not extend to persons engaged by contractors—Writ petition by respondents claiming to be scavengers employed by Corporation sought direction for regularisation—High Court disposed of writ directing authority to consider cases of respondents—Authority passed order holding that respondent worked only under a contractor and was not entitled to absorption—Order was set aside by Single Judge in writ holding that Corporation could not reject the claim by taking stand that respondents were employed as contract labour and circular was inapplicable—Division Bench dismissed appeal holding that work for which respondents were employed as contract labour was perennial in nature and not seasonal—Appeal—There was no notification u/s 10(1) of CLRA Act prohibiting contract labour—No contention nor a finding that contract was sham and nominal—In view of principles laid down in Steel Authority case, High Court could not have directed absorption of respondents who were held to be contract labour by assuming that contract labour was only a camouflage—Only remedy of respondents was to approach Industrial Tribunal for declaring that contract labour system was camouflage and they were direct employees of Corporation—Impugned order was liable to be set aside.

       Held : In this case, there was no notification under section 10(1) of CLRA Act, prohibiting contract labour. There was also neither a contention nor a finding that the contract with the contractor was sham and nominal and the contract labour working in the establishment were, in fact, employees of the principal employer himself. In view of the principles laid down in Steel Authority, the High Court could not have directed absorption of respondents who were held to be contract labour, by assuming that the contract labour system was only a camouflage and that there was a direct relationship of employer and employee between the corporation and the respondents. If respondents want the relief of absorption, they will have to approach the Industrial Tribunal/Court and establish that the contract labour system was only a ruse/camouflage to avoid labour law benefits to them. The High Court could not, in exercise of its jurisdiction under Article 226, direct absorption of respondents, on the ground that work for which respondents were engaged as contract labour, was perennial in nature. The respondents were not also entitled to the relief of absorption/regularization on the basis of the Circular dated 1.9.1988, as it specifically excluded contract labour. The order dated 5.11.1991 in the first round (WP No. 14353/1991) and the order dated 17.3.1998 in the second round (W.P. No. 30220/1997) did not examine the status of the respondents, nor recorded a finding that they were entitled to absorption. They merely disposed of the writ petitions with a direction to consider the representation/claim of the respondents for absorption. Therefore, if the Corporation on considering the claims of respondents found that they were not employed by the Corporation, but were contract labour, who were not entitled to seek absorption under the Circular dated 1.9.1988, the Corporation was justified in rejecting their claim for absorption. The only remedy of respondents, as noticed above, is to approach the Industrial Tribunal for declaring that the contract labour system under which they were employed was a camouflage and therefore, they were, in fact, direct employees of the Corporation and for consequential relief. (Paras 10 and 11)

       We find that at that stage, the authority considered the case of the third respondent and passed a reasoned order dated 21.4.1999 rejecting the claim on the ground that the third respondent was not a direct employee, but was a contract labour, and was not therefore entitled to absorption under the Circular dated 1.9.1988. This led to the third round of litigation in W.P. No. 17678/1999 wherein the prayer was for quashing the said order or rejection dated 21.4.1999 and for direction to absorb them into service in terms of the Circular dated 1.9.1988. Again, the High Court at the admission stage, disposed of the matter on an erroneous conclusion that the order dated 21.4.1999 was contrary to the decision in the second round (Order dated 17.3.1998 in W.P. No. 30220/1997) and directed the Corporation to pass fresh orders on the representations made by the respondents. The learned Single Judge proceeded on the assumption, without basis, that the order dated 17.3.1998 in the earlier petition (WP No. 30220/1997) had held that Respondents were entitled to the benefit of the Circular dated 1.9.1988, when in fact there was no such finding or direction. Therefore, the direction of the learned Single Judge, as confirmed by the Division Bench, to consider the cases of respondents under the Circular dated 1.9.1988 cannot be sustained. (Para 16)

       (ii) Constitution of India—Article 226—Power of judicial review concentrates and lays emphasis on decision making process rather than decision itself. (Para 13)