IMPORTANT POINT
Matter relating to abolition of contract labour being governed by provisions of Contract Labour, (Regulation and Abolition) Act, Industrial Court will have no jurisdiction in relation thereto.

Headnote:LABOUR LAW—Contract Labour (Regulation and Abolition) Act, 1970—Section 10—Industrial Disputes Act, 1947—Section 10(1)(c)—Appellant appointed several contractors in its activity of manufacturing of steel—Respondents were employees of contractors—Demand for absorption as permanent employees—Reference made by State Govt.—Maintainability of reference questioned on plea that State Govt. having not issued any notification prohibiting employment of contract labour, workmen did not have any legal right to claim absorption—Workmen had raised additional claim that contract entered into by appellant with contractors being sham and bogus, they were direct employees of management—Labour Court held reference to be not maintainable—Writ petition by Trade Union—High Court held writ petition to be not maintainable but directed Union of India to accept petition as presented in High Court as petition submitted by petitioner raising an industrial dispute u/s 2(k) r/w Section 12(1) of I.D. Act and also under provisions of CLRA Act—Appeal—Matter relating to abolition of contract labour being governed by 1970 Act, Industrial Court will have no jurisdiction in relation thereto—Definite stand was taken by employees that they had been working under the contractors—It would not lie in their mouth to take contradictory and inconsistent, plea that they were also workmen of principal employer—High Court was not right in its view.
       Held : It is not disputed before us that the matter relating to abolition of contract labour being governed by the provisions of the 1970 Act, the Industrial Court will have no jurisdiction in relation thereto. It is also not in dispute that the decision of the Constitution Bench of this Court in Steel Authority of India Ltd. (supra) governs the field. (Para 10)
       The 1970 Act is a complete code by itself. It not only provides for regulation of contract labour but also abolition thereof. Relationship of employer and employee is essentially a question of fact. Determination of the said question would depend upon a large number of factors. Ordinarily, a writ court would not go into such a question.(Para 20)
       We may reiterate that neither the Labour Court nor the writ court could determine the question as to whether the contract labour should be abolished or not, the same being within the exclusive domain of the Appropriate Government.(Para 22)
       A decision in that behalf undoubtedly is required to be taken upon following the procedure laid down in sub-section (1) of Section 10 of the 1947 Act. A notification can be issued by an Appropriate Government prohibiting employment of contract labour if the factors enumerated in sub-section (2) of Section 10 of the 1970 Act are satisfied.(Para 23)
       When, however, a contention is raised that the contract entered into by and between the management and the contractor is a sham one, in view of the decision of this Court in Steel Authority of India Limited (supra), an industrial adjudicator would be entitled to determine the said issue. The industrial adjudicator would have jurisdiction to determine the said issue as in the event if it be held that the contract purportedly awarded by the management in favour of the contractor was really a camouflage or a sham one, the employees appointed by the contractor would, in effect and substance, be held to be direct employees of the management.(Para 24)
       A definite stand was taken by the employees that they had been working under the contractors. It would, thus, in our opinion, not lie in their mouth to take a contradictory and inconsistent plea that they were also the workmen of the principal employer. To raise such a mutually destructive plea is impermissible in law. Such mutually destructive plea, in our opinion, should not be allowed to be raised even in an industrial adjudication. Common law principles of estoppel, waiver and acquiescence are applicable in an industrial adjudication.(Para 29)
       There is another aspect of the matter which should also not be lost sight of. For the purpose of exercising jurisdiction under Section 10 of the 1970 Act, the appropriate Government is required to apply its mind. Its order may be an administrative one but the same would not be beyond the pale of judicial review. It must, therefore, apply its mind before making a reference on the basis of the materials placed before it by the workmen and/or management, as the case may be, While doing so, it may be inappropriate for the same authority on the basis of the materials that a notification under Section 10(1)(d) of the 1947 Act be issued, although it stands judicially determined that the workmen were employed by the contractor. The State exercises administrative power both in relation to abolition of contract labour in terms of Section 10 of the 1970 Act as also in relation to making a reference for industrial adjudication to a Labour Court or a Tribunal under Section 10(1)(d) of the 1947 Act. While issuing a notification under the 1970 Act, the State would have to proceed on the basis that the principal employer had appointed contractors and such appointments are valid in law, but while referring a dispute for industrial adjudication, validity of appointment of the contractor would itself be an issue as the State must prima facie satisfy itself that there exists a dispute as to whether the workmen are in fact not employed by the contractor but by the management. We are, therefore, with respect, unable to agree with the opinion of the High Court. We would, however, hasten to add that this judgment shall not come in the way of the appropriate Government to apply its mind for the purpose of issuance of a notification under Section 10 of the 1970 Act.(Paras 38 and 39)

JUDGMENT

S.B. Sinha, J.—Leave granted.

2. Appellant is a Government company. In carrying out its activities of manufacture of steel and other products it appointed several contractors. Respondent Nos. 4 to 618 herein are said to have been employees of the contractors. They raised a dispute before the State Government demanding their absorption as permanent employees.

3. By a notification dated 19.11.1985, the State Government referred the following industrial dispute for adjudication by the Presiding Officer, Labour Court, in exercise of its power under Section 10(1)(c) of the Industrial Disputes Act, 1947 (for short, the 1947 Act):

"Are the contract workers employed in the nature of contract work listed as per Annexure working in the premises of Visveswaraya Iron and Steel Ltd., Bhadravathi, justified in demanding absorption as regular permanent employees of Visveswaraya Iron & Steel Ltd. Bhadravathi?

4. In the said proceedings, the workmen in their statements of claim filed on 26.02.1986 prayed for their absorption as permanent employees in the employment of Appellant. Inter alia, a jurisdictional question was raised by Appellant herein on the premise that the matter relating to the regulation and abolition of contract labour being governed by the Contract Labour (Regulation and Abolition) Act, 1970 (for short, the 1970 Act), the reference made by the State Government was impermissible in law. It was contended that the State Government having not issued any notification prohibiting employment of contract labour in terms of Section 10 of the 1970 Act, the workmen did not have any legal right to claim absorption.

5. Indisputably, during the pendency of the said dispute before the Labour Court, Appellant herein filed a writ petition, questioning the legality and/or validity of the said reference, which was marked as Writ Petition No.26874 of 1995. One of the questions which was raised therein was that the State Government had no jurisdiction to make a reference in relation thereto. The writ petition was disposed of by the High Court observing that Appellant may raise a preliminary issue in that behalf.

6. The workmen, however, on 21.11.1997 filed an additional claim statement alleging that the contracts entered into by and between Appellant and the contractors being sham and bogus, they were direct employees of the management.

7. By reason of an award dated 13.07.1999, the said reference was held to be not maintainable. A writ petition came to be filed by some trade unions alleging that the workmen were direct employees of Appellant and were, thus, entitled to be absorbed as permanent workmen.

8. A learned Single Judge of the High Court, by an order dated 05.12.2001, while holding the said writ petition to be not maintainable, directed:

"For the reasons stated supra, these writ petitions are allowed with a direction to the Union of India – the 2nd respondent to accept the petition presented before this Court as the petition submitted by the petitioner – Union raising an industrial dispute in terms of Section 2(k) read with Section 12(1) of the I.D. Act and also under the provisions of the Contract Labour (Regulation and Abolition) Act, 1970. Further, keeping in view the law laid down by the Supreme Court in the Steel Authority of India Ltd. case and notwithstanding the fact that the conciliation proceedings are conducted, the second respondent shall in exercise of its power, make reference to the appropriate Central Industrial Tribunal or the Labour Court for adjudication of the existing industrial dispute between the workmen of the petitioner/Union and the respondent No.1 Management within eight weeks from the date of receipt of a copy of this order. The respondents 2 and 3 while exercising their power under Section 10(1)(d) of the I.D. Act shall not consider the pendency of these petitions before this Court from the year 1999 keeping in view the law laid down by the Apex Court in the Steel Authoritys case referred to a

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2006 Supreme(SC) 899

IMPORTANT POINTMatter relating to abolition of contract labour being governed by provisions of Contract Labour, (Regulation and Abolition) Act, Industrial Court will have no jurisdiction in relation thereto.

Cases Referred (9)

IMPORTANT POINT
Matter relating to abolition of contract labour being governed by provisions of Contract Labour, (Regulation and Abolition) Act, Industrial Court will have no jurisdiction in relation thereto.