MANU/SC/0515/2001

Equivalent Citation: AIR2001SC 3527, [2001(91)FLR182], (2002)1GLR792, JT2001(7)SC 268, 2001LabIC 3656, (2001)IILLJ1087SC ,
2001(5)SC ALE626, (2001)7SC C 1, (2001)SC C (LS)1121, 2001(4)SC T1(SC ), (2002)1UPLBEC 228

IN THE SUPREME COURT OF INDIA

Civil Appeals Nos. 6009-6010 of 2001 (Arising out of SLP (C) Nos. 12657-58 of 1998)
with (C.A. Nos. 6011-12 of 2001, T.C. Nos. 1,5-7, 14-17 and 18 of 2000; C.A. Nos.
719-20 of 2001, 5798-99 of 2001, 6013-6022, 6023 of 2001, 4188 of 1994, 4195 of
1998
Decided On: 30.08.2001
Appellants: Steel Authority of India Ltd. and Ors.
vs.
Respondent: National Union Water Front Workers and Ors.
Hon'ble Judges/Coram:
S.S.M. Quadri, B.N. Kirpal, M.B. Shah, Ruma Pal and K.G. Balakrishnan, JJ.
Case Note:
Labour and Industrial - Interpretation - Section 2(1)(a) of CONTRACT LABOUR
(REGULATION AND ABOLITION) ACT,1970 - High Court dismissed Appeal as
well as Petition filed by Appellants and held that on relevant date "the
appropriate Government" was State Government - Hence, this Appeal -
Whether, interpretation of expression "appropriate government" as defined in
Section 2(1)(a) of Act was valid - Held, perusal of unamended definition of
"appropriate Government" showed that Central Government could be
appropriate Government - Thus, said phrase, under interpretation was lucid
and clear and there was no obscurity, ambiguity or abstruseness - Phrase
"any industry carried on under authority of Central Government" implied that
there was lack of conferment of power or permission by Central Government
to Government company or undertaking could disable such company /
undertaking to carry on industry in question - However, being instrumentality
or agency for Central Government did not by itself amount to having authority
of Central Government to carry on that particular industry - Court had to be
satisfied that particular industry in question was carried on by or under
authority of Central Government - Appeal allowed.

Labour and Industrial - Validity of notification - Section 10(1) of Contract

Labour (Regulation and Abolition) Act, 1970 - Whether, concept of automatic
absorption of contract labour in establishment of principal employer on
issuance of abolition notification, was implied in Section 10 of CLRA Act -
Held, in spite of absence of provision for absorption of contract labour in Bill
(on issuance of notification under Section 10(1) of CLRA Act prohibiting
engagement of contract labour) National Commission endorsed that measure -
Perusal of report of Joint Committee of Parliament on said Bill showed no
reference to automatic absorption of contract labour - However, Section 10 of
Act was intended to work as permanent solution to problem rather than to
provide one time measures - Though intendment of CLRA Act was to regulate

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conditions of service of contract labour and authorize in Section 10(1)
prohibition of contract labour system by appropriate Government on
consideration of factors enumerated in Section 10(2) of Act, did not provide
ground for absorption of contract labour on issuance of notification under
Section 10(1) - Appeal dismissed.

Labour and Industrial - Master and servant - Whether, on contractor engaging

contract labour in connection with work entrusted to him by principal
employer, relationship of master and servant between him (principal
employer) and contract labour could emerge - Held, combined reading of
terms 'establishment' and "workman' showed that workman engaged in
establishment could have direct relationship with principal employer as
servant of master - Person, who was not out worker but had satisfied
requirement of first limb of definition of 'workman' could fall within meaning
of term 'workman' - However, if such workman was within ambit of contract
labour, he could not be treated as regular employee of principal employer,
unless he fell within mentioned classes - Thus, at various stages there was
involvement of principal employer - Hence, provisions of CLRA Act neither
contemplated creation of direct relationship of master and servant between
principal employer and contract labour, nor could such relationship be implied
upon provisions of Act on issuing notification under Section 10(1) of CLRA Act
- Appeal dismissed.
Ratio Decidendi:
"Courts shall exercise their power judiciously and reliefs granted by them
shall be logical and tenable within framework of law."
JUDGMENT
S.S.M. Quadri, J.
1. Leave is granted in the Special Leave petitions.
2 . In Food Corporation of India, Bombay, v. Transport & Dock Workers Union, a two-
Judge Bench of this Court, having noticed the conflict of opinion between different
Benches including two three-Judge Benches of this Court on this interpretation of the
expression "appropriate Government" in Section 2(1)(a) of the Contract Labour
(Regulation and Abolition) Act, 1970 (for short, 'the CLRA Act') and in Section 2(1) of
the Industrial Disputes Act, 1947 (for short, 'the I.D. Act') and having regard to the
importance of the question of automatic absorption of contract labour in the
establishment of the principal employer as a consequence of an abolition notification
issued under Section 10(1) of the CLRA Act, referred these cases to a larger Bench. The
other cases were tagged with the said case as the same questions arise in them also.
That is how these cases have come up before us.
3. To comprehend the controversy in these cases, it will suffice to refer to the facts in
civil Appeal Nos. 6009-10/2001 @ S.L.P. Nos. 12657-12658 of 1998 which are
preferred from the judgment and order of the Calcutta High Court in W.P.No. 1773 of
1994 and FMAT No. 1460 of 1994 dated July 3, 1998. The appellants, a Central
Government Company and its branch manager, are engaged in the manufacture and sale
of various types of iron and steel materials in its plants located in various States of

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India. The business of the appellants includes import and export of several products and
by products through Central Marketing Organisation, a marketing unit of the appellant,
having network of branches in different parts of India. The work of handling the goods
in the stockyards of the appellants, was being entrusted to contractors after calling for
tenders in that behalf. The Government of West Bangal issued notification dated July
15,1989 under Section 10(1) of the CLRA Act (referred to in this judgment as 'the
prohibition notification') prohibiting the employment of contract labour in four specified
stockyards of the appellants at Calcutta. On the representation of the appellants, the
Government of West Bangal kept in abeyance the said notification initially for a period
of six months by notification dated August 28,1989 and thereafter extended that period
from time to time. It appears that the State Government did not, however, extend the
period beyond August 31,1994.
4 . The first respondent-Union representing the cause of 353 contract labourers filed
Writ Petition No. 10108/89 in the Calcutta High Court seeking a direction to the
appellants to absorb the contract labour in their regular establishment in view of the
prohibition notification of the State Government dated July 15, 1989 and further praying
that the notification dated August 28, 1989, keeping the prohibition notification in
abeyance, be quashed. A learned single Judge of the High Court allowed the writ
petition, set aside the notification dated August 28, 1989 and all subsequent
notifications extending the period and directed that the contract labour be absorbed and
regularized from the date of prohibition notification July 15, 1989 - within six months
from the date of Judgment i.e. April 25, 1994.
5. The appellants adopted a two-pronged attack strategy. Assailing the said judgment of
the learned single Judge, they filed writ appeal (FMAT No. 14.60 of 1994) and
challenging the prohibition notification of July 15, 1989 they filed Writ Petition No.
1733 of 1994 in the Calcutta High Court. While these cases were pending before the
High Court, this Court delivered judgment in Air India Statutory Corporation v. United
Labour Union MANU/SC/0163/1997 : (1997)ILL J1113SC : holding, inter alia, that in
case of Central Government Companies the appropriate Government is the Central
Government and thus upheld the validity of the notification dated December 9, 1976
issued by the Central Government under Section 10(1) of the CLRA Act prohibiting
employments of contract labour in all establishments of the Central Government
Companies. On July 3, 1998, a Division Bench of the High Court nonetheless dismissed
the writ appeal as well as the writ petition filed by the appellants taking the view that
on the relevant date "the appropriate Government" was the State Government. The
legality of the judgment and order is under challenge in these appeals.
6. Three points arise for determination in these appeals:
(i) what: is the true and correct import of the expression "appropriate
government" as defined in Clause (a) of Sub-section (1) of Section 2 of the
CLRA Act;
(ii) whether the notification dated December 9, 1976 issued by the Central
Government under Section 10(1) of the CLRA Act is valid and applies to all
Central Government companies; and
(iii) whether automatic absorption of contract labour, working in the
establishment of the principal employer as regular employees, follows on
issuance of a valid notification under Section 10(1) of the CLRA Act, prohibiting
the contract labour in the concerned establishment.

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7. Inasmuch as in some appeals the principal employers are the appellants and in some
others the contract labour or the union of employees is in appeal, we shall refer to the
parties in this judgment as the principal employer and the contract labour.
8. Before taking up these points, it needs to be noticed that the history of exploitation
of labour is as old as the history of civilization itself. There has been an ongoing
struggle by labourers and their organizations against such exploitation but it continues
in one form or the other. The Industrial Disputes Act, 1947 is an important legislation in
the direction of attaining fair treatment to labour and industrial peace which are sine
qua non for sustained economic growth of any country. The best description of that Act
is given by Krishna Iyer, J. speaking for a three-Judge Bench of this Court in Life
Insurance Corporation of India v. D.J. Bahadur MANU/SC/0305/1980 : (1981)ILLJ1SC :
The Industrial Disputes Act is a benign measure which seeks to pre-empt
industrial tensions, provide the mechanics of dispute-resolutions and set up the
necessary infra structure so that the energies of partners in production may not
be dissipated in counter productive battles and assurance of industrial justice
may create a climate of good-will.
9 . After the advent of the Constitution of India, the State is under an obligation to
improve the lot of the work force. Article 23 prohibits, inter alia, begar and other similar
forms of forced labour. The Directive Principle of State Policy incorporated in Article 38
mandates the State to secure a social order for promotion of welfare of the people and
to establish an egalitarian society. Article 39 enumerates the principles of policy of the
State which include welfare measures for the workers. The State policy embodied in
Article 43 mandates the State to endeavour to secure, by a suitable legislation or
economic organization or in any other way for all workers, agricultural, industrial or
otherwise, work, a living wage, conditions of work ensuring a decent standard of life
and full enjoyment of leisure and social and Cultural opportunities. Article 43A enjoins
on the State to take steps by suitable legislation or in any other way to secure the
participation of workers in the management of undertakings, establishment, or other
organizations engaged in any industry. The fundamental rights enshrined in Articles 14
and 16 guarantee equality before law and equality of opportunity in public employment.
Of course, the preamble to the Constitution is the lodestar and guides those who find
themselves in a grey area while dealing with its provisions. It is now well settled that in
interpreting a beneficial legislation enacted to give effect to directive principles of the
State policy which is otherwise constitutionally valid, the consideration of the Court
cannot be divorced from those objectives. In a case of ambiguity in the language of a
beneficial labour legislation, the Courts have to resolve the quandary in favour of
conferment of, rather than denial of, a benefit on the labour by the legislature but
without rewriting and/or doing violence to the provisions of the enactment.
10. The CLRA Act was enacted by the Parliament to deal with the abuses of contract
labour system, It appears that the Parliament adopted twin measures to curb the abuses
of employment of contract labour - the first is to regulate employment of contract
labour suitably and the second is to abolish it in certain circumstances. This approach is
clearly discernible from the provisions of the CLRA Act which came into force on
February 10, 1971. A perusal of the Statement of Objects and Reasons shows that in
respect of such categories as may be notified by the appropriate Government, in the
light of the prescribed criteria, the contract labour will be abolished and in respect of
the other categories the service conditions of the contract labour will be regulated.
Before concentrating on the relevant provisions of the CLRA Act, it may be useful to
have a bird's eye view of the Act. It contains seven chapters. Chapter I has two

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sections; the first relates to the commencement and application of the Act and the
second defines the terms used therein. Chapter II which has three sections provides for
the constitution of a Central Advisory Board by the Central Government and a State
Advisory Board by the State Government and empowers the Boards to constitute various
committees. Chapter III contains regulatory provisions for registration of establishments
which employ contract labour. Section 10 which prohibits the employment of contract
labour falls in this chapter, we shall revert to it presently. Chapter IV contains
provisions for purposes of licensing of Contractors to make sure that those who
undertake or execute any work through contract labour, adhere to the terms and
conditions of licences issued in that behalf. Power is reserved for revocation,
suspension and amendment of licenses by the Licensing Officer and provision is also
made for appeal against the order of the Licensing Officer. Chapter V takes care of the
welfare and health of contract labour obliging the appropriate Government to make
rules to ensure that the requirements of canteen, rest-rooms and other facilities like
sufficient supply of wholesome drinking water at convenient places, sufficient number
of latrines and urinals accessible to the contract labour in the establishment, washing
facilities and the first aid facilities, are complied with by the contractor. Where the
contract fails to provide these facilities the principal employer is enjoined to provide
canteen rest-rooms etc. mentioned above, for the benefit of the contract labour. Though
the contractor is made responsible for payment of wages to each worker employed by
him as contract labour before the prescribed period yet for effective implementation of
this requirement, care is taken to ensure presence of a nominee of the principal
employer at the time of the disbursement of wages. Here again, it is prescribed that if
the contractor fails to pay the wages to the contract labour, the principal employer shall
pay the full wages or unpaid wages, as the case may be, to the contract labour and a
right is conferred on him to recover the same from the amount payable to the
contractor, if however, no amount is payable to him then such amount is treated as a
debt due by the contractor to the principal employer. Chapter VI deals with the
contravention of the provisions of the Act, prescribes offences and lays down the
procedure for prosecution of the offenders. Chapter VII is titled 'miscellaneous' and it
contains eight sections which need not be elaborated here.
11. Now we shall advert to point No. 1.
12. The learned Solicitor General for the appellant - principal employer - has conceded
that the State Government is the appropriate Government in respect of the
establishments of the Central Government companies in questions. Mr. Shanti Bhushan,
the learned senior counsel appearing for the respondents-contract labour in these
appeals, submitted that in view of the concession made by the learned Solicitor,
General, he would not address the Court on that aspect and prayed that the judgment
and order of the High Court, under appeal, be confirmed.
1 3 . Mr. G.L. Sanghi, the learned senior counsel appearing for the appellants in the
appeals filed by the Food Corporation of India (FCI) principal employer-and M. K. K.
Venugopal, the learned senior counsel for the appellant - the principal employer -- in
the appeals filed by the Oil and Natural Gas Commission (ONGC) among others sail with
the learned Solicitor General, submitted that the appropriate Government on the
relevant date was the State Government and for that reason the notification issued by
the Central Government on December 9, 1976 was never sought to be applied to the
establishments of FCI and ONGC but in view of the amendment of the definition of the
expression, "appropriate Government" with effect from January 28, 1986, the Central
Government would thereafter be the appropriate Government. The learned Additional
Solicitor General who appeared for Indian Farmers and Fertiliser Co-operative Ltd.

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(IFFCO) and Mr. B. Sen, the learned senior counsel appearing for the appellant, adopted
the arguments of the learned Solicitor General on this point.
14. Ms. Indira Jai Singh, the learned senior counsel appearing for the contract labour
(respondents in the appeals filed by FCI), argued that in the case of FCI the appropriate
Government before and after the notification issued by the Central Government on
January 28, 1986, was the Central Government.
15. Mr. K.K. Singhvi, the learned senior counsel for the contract labour (respondents in
the appeal of ONGC), has argued that all Central Government Undertaking which fall
within the meaning of "other authorities" in Article 12 are agents or instrumentalities of
the State functioning under the authority of the Central Government, as such the Central
Government will be the appropriate Government, the Heavy Engineering's case was
wrongly decided by the two Judge Bench of this Court which was followed by a three-
Judge Bench in the cases of Hindustan Aeronautics Ltd. and Rashtriya Mill Mazdoor
Sangh in those cases the judgments of this Court in Sukhdev Singh's case, Ajay Hasia's
case, Central Inland Water Transport Corporation's case: C.V. Raman's case: and R.D.
Shetty v. International Airport's case MANU/SC/0048/1979 : (1979)IILLJ217SC were not
considered; the approach of the Court in the Heavy Engineering's case
MANU/SC/0309/1969 : (1969)IILL J549SC : (1969)IILL J549SC was based on private law
interpretation and that the approach of the Court ought to be based on public law
interpretation. It is submitted that in a catena of decisions of this Court, it has been
held that where there is deep and pervasive control, a company registered under the
Companies Act or a society registered under the Societies Act would be 'State' and,
therefore, it would satisfy the requirement of the definition of "appropriate
Government". He contended that in Air India's case (supra) a three-Judge Bench of this
Court had correctly decided that for all the establishments of the Air India the Central
Government was the appropriate Government, which deserved to be confirmed by us.
16. Notwithstanding the concession made by the learned Solicitor General which has
the support of Mr. Shanti Bhushan, we cannot give quietus to this issue as the other
learned Counsel strenuously canvassed to the contra. We, therefore, propose to decide
this point in the light of the contentions put forth by the other learned Counsel.
17. To begin with the relevant provisions of Section 1 of the CLRA Act. which deals,
inter alia, with its extent and application, may be noticed here:
Section 1:
(1) to (3) xxx xxx xxx
(4) It applies :
(a) to every establishment in which twenty or more workmen are employed or
were employed on any day of the preceding twelve months as contract labour;
(b) to every contractor who employs or who employed on any day of the
preceding twelve months twenty or more workmen;
Provided that the appropriate Government may, after giving not less than two month's
notice of its intention so to do, by notification in the Official Gazette, apply the
provisions of this Act to any establishment or contractor employing such number of
workmen less than twenty as may be specified in the notification.

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5(a) It shall not apply to establishments in which work only of an intermittent or casual
nature is performed.
(b) If a question arises whether work performed in an establishment is of an
intermittent or casual nature, the appropriate Government shall decide the question
after consultation with the Central Board or, as the case may be, a State Board, and its
decision shall be final.
Explanation: For the purpose of his subsection, work performed in an establishment
shall not be deemed to be of an intermittent nature :
(i) if it was performed for more than one hundred and twenty days in the
preceding twelve months, or
(ii) if it is of a seasonal character and is performed for more than sixty days in
a year.
18. A perusal of this section brings out that CLRA Act applies to every establishment
and every contractor of the specified description. However, the establishments in which
work only of an intermittent or casual nature is performed are excluded from the
purview of the Act.
19. We shall also refer to definitions of relevant terms in Sub-section (1) of Section 2
which contains interpretation clauses. Clause (a) defines the expression "appropriate
Government" thus:
2(1) In this Act, unless the context otherwise requires :
(a) "appropriate Government" means :
(i)in relation to an establishment in respect of which the appropriate
Government under the Industrial Disputes Act, 1947 (14 of 1947) is the Central
Government, the Central Government;
(ii) in relation to any other establishment, the Government of the State in which
that other establishment is situated.
20. Addressing to the definition of "appropriate Government", it may be pointed out
that Clause (a) of Section 2(1) was substituted by the Contract Labour (Regulation and
Abolition) Amendment Act, 1986 with effect from January 28, 1986. Before the said
amendment, the definition read as under:
2(1). (a) "appropriate Government" means :
(i) in relation to any establishment pertaining to any industry carried on by or
under the authority of the Central Government, or pertaining to any such
controlled industry as may be specified in this behalf by the Central
Government; or
(ii) any establishment of any railway, Cantonment Board, major port, mine or
oil field, or
(iii) any establishment of a banking or insurance company
the Central Government,

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 (2) in relation to any other establishment the Government of the State in which
that other establishment is situated.
21. A plain reading of the unamended definition shows that the Central Government will
be the appropriate Government if the establishment in question answers the description
given in Sub-clauses (i) to (iii). And in relation to any other establishment, the
Government of the State, in which the establishment in question is situated, will be the
appropriate Government. So far as Sub-clauses (ii) and (iii) are concerned, they present
no difficulty. The discussion has centered round Sub-Clause (i). It may be seen that
Sub-Clause (i) has two limbs. The first limb takes in an establishment pertaining to any
industry carried on by or under the authority of the Central Government and the second
limb embraces such controlled industries as may be specified in that behalf by the
Central Government.
22. Before embarking upon the discussion on the first limb, it will be apt to advert to
the amended definition of 'appropriate Government' which bears the same meaning as
given in Clause (a) of Section 2 of the Industrial Disputes Act, quoted hereunder:
2.(a) "appropriate Government" means :
(i) in relation to any industrial disputes concerning any industry carried on by
or under the authority of the Central Government or by a railway company (or
concerning any such controlled industry as may be specified in this behalf by
the Central Government) or in relation to an industrial dispute concerning (a
Dock Labour Board established under Section 5-A of the Dock Workers
(Regulation of Employment) Act, 1948 (9 of 1948), or (the Industrial Finance
Corporation of India Limited formed and registered under the Companies Act,
1956 (1 of 1956)), or the Employees, State Insurance Corporation established
under Section 3 of the Employees' State Insurance Act, 1948 (34 of 1948), or
the Board of trustees constituted under Section 3-A of the Coal Mines Provident
Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), or the Central Board
of Trustees and the State Boards of Trustees constituted under Section 5-A and
Section 5-B, respectively, of the Employees Provident Fund and Miscellaneous
Provisions Act, 1952 (19 of 1952), or the Life Insurance Corporation Act, 1956
(31 of 1956) or (the Oil and Natural Gas Corporation Limited registered under
the Companies Act, 1956 (1 of 1956)), or the Deposit Insurance and Credit
Insurance and Credit Guarantee Corporation established under Section 3 of he
Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), or
the Central Warehousing Corporation established under Section 3 of the
Warehousing Corporation Act, 1962 (58 of 1962), or the Unit Trust of India
established under Section 3 of the Unit Trust of India Act, 1963 (52 of 1963),
or the Food Corporation of India established under Section 3, or a Board of
Management established for two or more contiguous State under Section 16 of
the Food Corporations Act, 1964 (37 of 1964), or (the Airports Authority of
India constituted under Section 3 of the Airports Authority of India Act 1994
(55 of 1994), or a Regional Rural Bank established under Section 3 of the
Regional Rural Banks Act, 1976 (21 of 1976), or the Export Credit and
Guarantee Corporation Limited or the Industrial Reconstruction Corporation of
India Limited). Or (the National Housing bank established under Section 3 of
the National Housing Bank Act, 1987 (53 of 1987) or (the Banking Service
Commission established under Section 3 of the Banking Service Commission
Act, 1975) or (an air transport: service, or a banking or an insurance
company), a mine, an oil field), (a Cantonment Board) or a major port, the

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 Central Government; and
(ii) in relation to any other industrial dispute, the State Government:
2 3 . An analysis of this provision shows that the Central Government will be the
appropriate Government in relation to an industrial dispute concerning:
(1) any industry carried on by or under the authority of the Central
Government, or by a railway company; or
(2) any such controlled industry as may be specified in this behalf by the
Central Government; or
(3) the enumerated industries (which form part of the definition quoted above
and need not be reproduced here).
24. What is evident is that the phrase "any industry carried on by or under the authority
of the Central Government" is a common factor in both the unamended as well as the
amended definition.
25. It is a well settled proposition of law that the function of the Court is to interpret
the Statute to ascertain the intent of the legislature-parliament. Where the language of
the Statute is clear and explicit the Court must give effect to it because in that case
words of the Statute unequivocally speak the intention of the legislature. This rule of
literal interpretation has to be adhered to and a provision in the Statute has to be
understood in its ordinary natural sense unless the Court finds that the provision sought
to be interpreted is vague or obscurely worded in which event the other principles of
interpretation may be called in aid. A plain reading of the said phrase, under
interpretation, shows that it is lucid and clear. There is no obscurity, no ambiguity and
no abstruseness. therefore the words used there in must be construed in their natural
ordinary meaning as commonly understood.
26. We are afraid we cannot accept the contention that in construing that expression or
for that matter any of the provisions of the CLRA Act, the principle of literal
interpretation has to be discarded as it represents common law approach applicable
only to private law field and has no relevance when tested on the anvil of Article 14,
and instead the principle of public law interpretation should be adopted. To accept that
contention, in our view, would amount to abandoning a straight route and of treaded
road in an attempt to create a pathway in a wilderness which can only lead astray. We
have not come across any principles of public law interpretation as opposed to private
law interpretation for interpreting a statute either in any authoritative treatise on
interpretation of statutes or in pronouncement of any Court nor is any authority of this
Court or any other Court brought to our notice. We may, however, mention that there
does exist a distinction between public law and private law. This has been succinctly
brought out by the Rt. Hon. Sir Harry Woolf (as he then was, now Lord Woolf) in The
Second Harry Street Lecture delivered in the University of Manchester on February 19,
1986. The learned Law Lord stated:
I regard public law as being the system which enforces the proper performance
by public bodies of the duties which they owe to the public. I regard private law
as being the system which protects the private rights of private individuals or
the private rights of public bodies. The critical distinction arises out of the fact
that it is the public as a whole, or in the case of local government, the public in
the locality, who are the beneficiaries of what is protected by public law and it

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 is the individuals or bodies entitled to the rights who are the beneficiaries of
the protection provided by private law.
27. The divide between the public law and the private law in material in regard to the
remedies which could be availed when enforcing the rights, public or private but not in
regard to interpretation of the Statutes. We are not beset with the procedural mandate
as in the R.S.C. Order 53 of 1977 of England which was the subject matter of
consideration by the House of Lords in O Reilly v. Mackman (1983) 2 AC 237. In that
case the appellant sought declaration by ordinary action that the order passed by the
Prison's Board of visitors awarding penalty against him was void and no effect. The
House of Lords, dismissing the appeal filed against the judgment of the Court of Appeal,
held that where a public law issue arises, the proceedings should, be brought by
judicial review under R.S.C. Order 53 and not by private law action which would be
abuse of the process of Court.
2 8 . Now, going back to the definition of the said expression, it combines three
alternatives, viz. (a) any industry carried on by the Central Government; (b) any
industry carried on under the authority of the central Government; and (c) any industry
carried on by a railway company. Alternatives (a) and (c) indicate cases of any industry
carried on directly by the Central Government or a railway company. They are too clear
to admit of any polemic. In regard to alternative (b), surety, an industry being carried
on under the authority of the central Government cannot be equated with any industry
carried on by the Central Government itself. This leaves us to construe the words "under
the authority of the Central Government". The key word in them is 'authority'.
29. The relevant meaning of the word "authority" in the Concise Oxford Dictionary is
delegated power. In Black's law Dictionary the meanings of the word "authority" are
permission; right to exercise powers - often synonymous with power. The power
delegated by a principal to his agent. The lawful delegation of power by one person to
another, Power of agent to affect legal relations of principal by acts done in accordance
with principal's manifestations of consent to agent. In Corpus Juris Secundurn (at p.
1290) the following are the meanings of the term "authority" in its broad general sense,
the word has been defined as meaning control over power jurisdiction; power to act,
whether original or delegated. The word is frequently used to express derivative power;
and in this sense, the word may be used as meaning instructions, permission, power
delegated by one person to another, the result of the manifestations by the former to
the latter of the former's consent that the latter shall act for him, authority in this sense
- in the laws of at least one state, it has been similarly used as designating or meaning
an agency for the purpose of carrying out a state duty or function; some one to whom
by law a power has been given. In "Words and Phrases" we find various shades of
meaning of the word "authority" at pp.603, 606, 612 and 613; Authority, as the word is
used throughout the Restatement, is the power of one person to affect the legal
relations of another by acts done in accordance with the other's manifestations of
consent to him, an agency of one or more participating governmental units created by
statute for specific purpose of having delegated to it certain functions governmental in
character; the lawful delegation of power by one person to another, power of agency to
affect legal relations of principal by acts done in accordance with principal's
manifestations of consent to him.
30. From the above discussion, it follows that the phrase any industry carried on under
the authority of the Central Government implies an industry which is carried on by
virtue, of, pursuant to, conferment of, grant of, or delegation of power or permission by
the Central Government to a Central Government Company or other Government

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Company / undertaking. To put it differently, if there is lack of conferment of power or
permission by the Central Government to a Government company or undertaking it
would disable such a company / undertaking to carry on the industry in question.
3 1 . In interpreting the said phrase, support is sought to be drawn by the learned
Counsel for the contract labour from the cases laying down the principles as to under
what circumstances a Government company or undertaking will fall within the meaning
of State or other authorities in Article 12 of the Constitution. We shall preface our
discussion of those cases by indicating that for purpose of enforcement of fundamental
rights guaranteed in Part III of the Constitution the question whether a Government
Company or undertaking is State within the meaning of Article 12 is germane. It is
important to notice that in these cases the pertinent question is appropriateness of the
Government - which is the appropriate Government within the meaning of CLRA Act;
whether, the Central or the State Government, is the appropriate Government in regard
to the industry carried on by the Central / State Government Company or any
undertaking and not whether such Central / State Government company or undertaking
come within the meaning of Article 12. The word 'State' is defined in Article 12 "In this
part, unless the context otherwise requires, "the state" includes the Government and
Parliament of India and the Government and the Legislature of each of the states and all
local or other authorities within the territory of India or under the control of the
Government of India" which is quoted in the footnote.
32. In Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi MANU/SC/0667/1975 :
(1975)ILL J399SC, this Court, in the context whether service Regulations framed by
statutory corporations have the force of law, by majority, held that the statutory
corporations, like ONGC, IFFCO, LIC established under different statutes fell under
"other authorities" and were, therefore, State within the meaning of that term in Article
12 of the Constitution. The Court took into consideration the following factors (a) they
were owned, managed and could also be dissolved by the Central Government; (b) they
were completely under the control of the Central Government and (c) they were
performing public, or statutory duties for the benefit of the public and not for private
profit; and concluded that they, were in effect acting as the agencies of the Central
Government and the service Regulations made by them had the force of law, which
would be enforced by the Court by declaring that the dismissal of an employee of the
corporation in violation of the Regulations, was void.
33. In Ramanna Dayaram Shetty v. International Airport of India MANU/SC/0048/1979
: (1979)IILL J217SC, a three-Judge Bench of this Court laid down that Corporations
created by the Government for setting up and management of public enterprises and
carrying out public functions, act as instrumentality of the Government, they would be
subject to the same limitations in the field of constitutional and administrative laws as
Government itself, though in the eye of law they would be distinct and independent
legal entities. There, this Court was enforcing the mandate of Article 14 of the
Constitution against the respondent a Central Govt. Corporation.
3 4 . Managing Director, U.P. Warehousing Corporation v. Vijay Narayan Vajpayee
MANU/SC/0432/1980 : (1980)ILL J222SC : dealt with a case of dismissal of the
respondent employee of the appellant Corporation in violation of the principles of
natural justice. There also the court held the Corporation to be an instrumentality of the
State and extended protection of Articles 14 and 16 of the Constitution to the employee
taking the view that when the Government if bound to observe the equality clause in the
matter of employment the corporations set up and owned by the Government are
equally bound by the same discipline.

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35. In Ajay Hasia v. Khalid Mujib Sehravardi MANU/SC/0498/1980 : (1981)ILL J103SC :
the question decided by a Constitution Bench of this Court was: Whether Jammu &
Kashmir Regional Engineering College, Srinagar, registered as a society under the
Jammu & Kashmir Registration of Societies Act, 1898, was 'State' within the meaning of
Article 12 of the Constitution so as to be amenable to writ jurisdiction of the High Court.
Having examined the Memorandum of Association and the Rules of the Society, the
Court decided that the control of the State and the Central Government was deep and
pervasive and the society was a mere projection of the State and the Central
Government and it was, therefore, an instrumentality or agency of the State and Central
Government and as such an authority - State within the meaning of Article 12.
36. The principle laid down in the aforementioned cases that if the Government acting
through its officers was subject to certain constitutional limitations, a fortiori the
Government acting through the instrumentality or agency of a corporation should
equally be subject to the same limitations, was approved by the Constitution Bench and
it was pointed out that otherwise it would lead to considerable erosion of the efficiency
of the Fundamental Rights, for in that event the Government would be enabled to
override the Fundamental Rights by adopting the stratagem of carrying out its function
through the instrumentality or agency of a corporation while retaining control over it.
That principle has been consistently followed and reiterated in all subsequent cases-
See Delhi Transport Corpn. v. D.T.C. Mazdoor Congress 1991 (suppl.) (1) SCC 600,
Som Prakash Rekhi v. Union of India : : (1981)ILL J79SC , Manmohan Singh Jaitla v.
Commr. Union Territory of Chandigarh 1984 Suppl. SCC 540, P. K. Ramachandra Iyer v.
Union of India MANU/SC/0395/1983 : (1984)ILL J314SC, A. L. Kalra v. Project and
Equipment Corpn. of India Ltd. MANU/SC/0259/1984 : (1984)IILL J186SC :, Central
Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly (1986) 2 SCC 156, C. V.
Raman v. Management of Bank of India MANU/SC/0059/1988 : (1988)IILL J423aSC,
Lucknow Development Authority v. M. K. Gupta MANU/SC/0178/1994 : AIR1994SC787,
Star Enterprises v. City and Industrial Development Corporation of Maharashtra Ltd.
MANU/SC/0459/1990 : [1990]2SCR826, LIC of India v. Consumer Education & Research
center MANU/SC/0772/1995 : AIR1995SC1811 : and G. B. Mahajan v. Jalgaon Municipal
Council MANU/SC/0284/1991 : AIR1991SC1153, We do not propose to burden this
judgment by adding to the list and referring to each case separately.
37. We wish to clear the air that the principle, while discharging public functions and
duties the Govt. Companies/Corporations/Societies which are instrumentality or
agencies of the Government must be subjected to the same limitations in the field of
public law -- constitutional or administrative law - as the Government itself, do not lead
to the inference that they become agents of the center/State Government for all
purposes so as to bind such Government for all their acts, liabilities and obligations
under various Central and/or State Acts or under private law.
38. From the above discussion, it follows that the fact of being instrumentality of a
Central/State Govt. or being State within the meaning of Article 12 of the Constitution
cannot be determinative of the question as to whether an industry carried on by a
Company/ Corporation or an instrumentality of the Govt. is by or under the authority of
the Central Government for the purpose of or within the meaning of the definition of
appropriate Government in the CLRA Act. Take the case of a State Government
corporation/ company/undertaking set up and owned by the State Government which is
an instrumentality or agency of the State Government and is engaged in carrying on an
industry, can it be assumed that the industry is carried on under the authority of the
Central Government, and in relation to any industrial dispute concerning the industry

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can it be said that the appropriate Government is the Central Government ? We think
the answer must be in the negative. In the above example if, as a fact, any industry is
carried on by the State Government undertaking under the authority of the Central
Government, then in relation to any industrial dispute concerning that industry, the
appropriate Government will be the Central Government. This is so not because it is
agency or instrumentality of the Central Government but because the industry is carried
on by the State Govt. Company/ Corporation/Undertaking under the authority of the
Central Government. In our view, the same reasoning applies to a Central Government
undertaking as well. Further, the definition of establishment in CLRA Act takes in its fold
purely private undertakings which cannot be brought within the meaning of Article 12 of
the Constitution. In such a case how is 'appropriate Government' determined for the
purpose of CLRA Act or Industrial Disputes Act? In our view, the test which is
determinative is whether the industry carried on by the establishment in question is
under the authority of the Central Govt.? Obviously, there cannot be one test for one
part of definition of establishment and another test for another part. Thus, it is clear
that the criterion is whether an undertaking instrumentality of Government is carrying
on an industry under the authority of the Central Government and not whether the
undertaking is instrumentality or agency of the Government for purposes of Article 12 of
the Constitution, be it of Central Government or State Government.
39. There cannot be any dispute that all the Central Government companies with which
we are dealing here are not and cannot be equated to Central Government though they
may be State within the meaning of Article 12 of the Constitution. We have held above
that being the instrumentality or agency for the Central Government would not by itself
amount to having the authority of the Central Government to carry on that particular
industry. therefore, it will be incorrect to say that in relation to any establishment of a
Central Government Company/undertaking, the appropriate Government will be the
Central Government. To hold that the Central Government is the appropriate
Government in relation to any establishment, the Court must be satisfied that the
particular industry in question is carried on by or under the authority of the Central
Government. If this aspect is kept in mind it would be clear that the Central Government
will be the "appropriate Government" under the CLRA Act and the I.D. Act provided the
industry in question is carried on by a Central Government company/an undertaking
under the authority of the Central Government. Such an authority may be conferred,
either by a Statute or by virtue of relationship of principal and agent or delegation of
power. Where the authority, to carry on any industry for or on behalf of the Central
Government is conferred on the Government company/any undertaking by the Statute
under which it is created, no further question arises. But, if it is not so, the question
that arises is whether there is any conferment of authority on the Government company
any undertaking by the Central Government to carry on the industry in question. This is
a question of fact and has to be ascertained on the facts and in the circumstances of
each case.
40. We shall refer to the cases of this Court on this point.
4 1 . In Heavy Engineering Mazdoor Union v. State of Bihar MANU/SC/0309/1969 :
(1969)IILL J549SC the said expression (appropriate Government) came up for
consideration. The Heavy Engineering Corporation is a Central Government company.
The President of India appoints Directors of the company and the Central Government
gives directions as regards the functioning of the company. When disputes arose
between the workmen and the management of the company the Government of Bihar
referred the disputes to the Industrial tribunal for adjudication. The union of the
workmen raised an objection that the appropriate Government in that case was the

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Central Government, therefore, reference of the disputes to the Industrial Tribunal for
adjudication by the State Government was incompetent. A two-Judge Bench of this
Court elaborately dealt with the question of Appropriate Government and concluded that
the mere fact that the entire share capital was contributed by the Central Government
and the fact that all its shares were held by the President of India and certain officers of
the Central Government, would not make any difference. It was held that in the absence
of a statutory provision, a commercial corporation acting on its own behalf even though
it was controlled, wholly or partially, by a Government Department would be ordinarily
presumed not to be a servant or agent of the State. It was, however, clarified that an
inference that the corporation was the agent of the Government might be drawn where
it was performing in substance Governmental and not commercial functions. It must be
mentioned here that in the light of the judgments of this Court, referred to above, it is
difficult to agree with the distinction between a governmental activity and commercial
function of Government companies set up and owned by Government, in so far as their
function in the realm of public law are concerned. However, the contention that the
decision in that case MANU/SC/0309/1969 : (1969)IILL J549SC : (1969)IILL J549SC : is
based on concession of the counsel for the appellant is misconceived. This Court
summed up the submission in para 4 thus:
The undertaking, therefore, is not one carried on directly by the Central
Government nor by any one of its departments as in the case of posts and
telegraphs or the railways. It was, therefore, rightly conceded both in the High
Court as also before us that it is not an industry carried on by the Central
Government. That being the position, the question then, is, the undertaking
carried on under the authority of the Central Government ?
It is evident that the concession was with regard to the fact that it was not an
industry carried on by the Central Government and not in regard to "was the
undertaking carried on under the authority of the Central Government ?" Indeed
that was the question decided by the Court on contest and it was held that the
undertaking was not carried on by the Central Government company under the
authority of the Central Government and that the appropriate Government in
that case was the State Government and not the Central Government. From the
above discussion, it is evident that the Court correctly posed the question
whether the State Government or the Central Govt. was the appropriate
Government and rightly answered it.
4 2 . In Hindustan Aeronautics Ltd. v. Workmen MANU/SC/0347/1975 :
(1975)IILL J336SC, this Court was called upon to decide the question as to whether the
expression "appropriate Government", as defined in Section 2(a)(i) of the Industrial
Disputes Act, was the State Government or the Central Government. In that case dispute
arose between the management of the Barrackpore branch (West Bengal) of the
appellant and its employees. The Governor of West Bengal referred the dispute to
Industrial Tribunal under Section 10 of the I.D. Act. The competence of the State
Government to make the reference was called in question. A three-Judge Bench of this
Court relying on the decision in Heavy Engineering's case (supra) held that the
reference was valid. The Court took note of the factors, viz., if there is any disturbance
of industrial peace at Barrackpore where a considerable number of workmen were
working, the appropriate Government concerned in the maintenance of the industrial
peace was the West Bengal Government; that Barrackpore Industry was a separate unit,
the cause of action in relation to the industrial dispute arose at Barrackpore. Having
regard to the definitions of the terms "appropriate Government" and 'establishment', in
Section 2 of CLRA Act, it cannot be said that the factors which weighed with the Court

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were irrelevant. It was also pointed out therein that from time to time certain statutory
corporations were included in the definition but no public company of which the shares
were exclusively owned by the Government, was roped in the definition. What we have
expressed above about Heavy Engineering's case (supra) will, equally apply here.
43. The aforementioned phrase an industry carried on by or under the authority of the
Central Government' again fell for the consideration of a three Judge Bench of this Court
in Rashtriya Mill Mazdoor Sangh, Nagpur v. Model Mills, Nagpur 1984 Suppl. SCC 443.
The case arose in the context of Section 32(iv) of the Payment of Bonus Act, 1965,
which provides that noting in that Act shall apply to employees employed by an
establishment engaged in any industry carried on by or under the authority of any
department of the Central Government or a State Government or a local authority. under
Section 18-A of the Industries (Development and Regulation) Act. 1951 the Central
Government appointed an authorized Controller to replace the management of the
respondent Model Mills. That was done to give effect to the directives issued by the
Central Government under Section 16 of the said Act. On behalf of the respondent it
was contended that substitution of the management by the Controller appointed under
Section 18-A of the Industries (Development & Regulation) Act would tantamount to the
industry being run under the authority of the department of the Central Government.
Negativing the contention it was held:
While exercising power of giving directions under Section 16 the existing
management is subjected to regulatory control, failing which the management
has to be replaced to carry out the directions. In either case the industrial
undertaking retains its identity personality and status unchanged. On a pure
grammatical construction of Sub-section (4) of Section 32, it cannot be said
that on the appointment of an authorised controller the industrial undertaking
acquires the status of being engaged in any industry carried on under the
authority of the department of the Central Government.
4 4 . Food Corporation of India, Bombay's case (supra) is the only case which arose
directly under the CLRA Act. The Food Corporation of India (FCI) engaged, inter alia,
the contract labour for handling of food grains. Complaining that their case for
departmentalisation was not being considered either by the Central Government or by
the State Government, nor were they extended the benefits conferred by the CLRA Act, a
representative action was initiated in this Court by filing a writ petition under Article 32
of the Constitution seeking a writ of mandamus against the Central/ State Government
to abolish contract labour and to extend them the benefits under that Act. The FCI
resisted the claim for abolition of contract labour on the ground that the operations of
loading/ unloading foodgrains were seasonal, sporadic and varied from region to
region. However, it pleaded that the State Government and not the Central Government
was the appropriate Government under the CLRA Act. In view of the unamended
definition of the expression 'appropriate Government' under CLRA Act, which was in
force on the relevant date, it was pointed out that the FCI was not included in the
definition by name as it was done under the Industrial Disputes Act. Following the
judgment of this Court in Heavy Engineering's case (supra) and referring to the decision
of this Court in Rashtriya Mill Mazdoor Sangh's case (supra), the court took the view
that the same principle would govern the interpretation of the expression 'appropriate
Government' in the CLRA Act and held that the State Government was the appropriate
Government pertaining to the regional offices and warehouses which were situate in
various States. We find no illegality either in the approach or in the conclusion arrived
at by the Court in these cases.

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45. It was in that back ground of the case law that the Air India's case (supra) came to
be decided by a three Judge Bench of this Court. The Air India Corporation engaged
contract labour for sweeping, cleaning, dusting and watching of the buildings owned
and occupied by it The Central Government having consulted the Central Advisory Board
constituted under Section 3(1) of the CLRA Act issued notification under Section 10(1)
of the Act prohibiting employment of contract labour on and from 9-12-1976 for
sweeping, cleaning, dusting and watching of the buildings owned or occupied by the
establishment in respect of which the appropriate Government under the said Act is the
Central Government. However, the Regional Labour Commissioner, Bombay opined that
the State Government was the appropriate Government under the CLRA Act. The
respondent Union filed writ petition in the High Court at Bombay seeking a writ of
mandamus to the appellant to enforce the said notification prohibiting employment of
contract labour and for a direction to absorb all the contract labour doing sweeping,
cleaning, dusting and watching of the buildings owned or occupied by the Air India with
effect from the respective dates of their joining as contract labour with all consequential
rights/benefits. A learned Single Judge of the High Court allowed the writ petition on
November 16, 1989 and directed that all the contract labour should be regularised as
employees of the appellant from the date of filing of the writ petition. On appeal, the
Division Bench by order dated April 3, 1992, confirmed the judgment of the learned
single Judge and dismissed the appeal. On further appeal to this Court, it was held that
the word 'control' was required to be interpreted in the changing commercial scenario
broadly in keeping with the constitutional goals and perspectives; the interpretation
must be based on some rational and relevant principles and that the public law
interpretation is the basic tool of interpretation in that behalf relegating common law
principles to purely private law field. In that view of the matter, it concluded that the
two Judge Bench decision in Heavy Engineering's case narrowly interpreted the
expression 'appropriate Government; on the common law principles which would no
longer bear any relevance when it was tested on the anvil of Article 14. It noted that in
Hindusthan Aeronautics Ltd.; Rashtriya Mill Mazdoor Sangh, and Food Corporation of
India, the ratio of Heavy Engineering formed the foundation but in Hindustan
Aeronautics Ltd. there was no independent consideration except repetition and approval
of the ratio of Heavy Engineering case which was based on concession; in Food
Corporation of India the Court proceeded on the premise that warehouses of the
corporation were situate within the jurisdiction of the different State Governments and
that led to conclude that the appropriate Government would be the State Government.
Thus, distinguishing the aforementioned decisions, it was held therein (Air India's case)
that from the inception of the CLRA Act the appropriate Government was the Central
Government.
46. We have held above that in the case of a Central Government company/undertaking
an instrumentality of the Government, carrying on an industry, the criteria to determine
whether the Central Government is the appropriate Government within the meaning of
the CLRA Act, is that the industry must be carried on by or under the authority of the
Central Government and not that the company/undertaking is an instrumentality or an
agency of the Central Government for purposes of Article 12 of the Constitution, such
an authority may be conferred either by a statute or by virtue of relationship of principal
and agent or delegation of power and this fact has to be ascertained on the facts and in
the circumstances of each case. In view of this conclusion, with due respect, we are
unable to agree with the view expressed by the learned Judges on interpretation of the
expression 'appropriate Government' in Air India's case (supra). Point No. 1 is answered
accordingly.
4 7 . Point No. 2 relates to the validity of the notification issued by the Central

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Government under Section 10(1) of the Contract Labour (Regulation and Abolition) Act,
1970, dated December 9, 1976. The main contention against the validity of the
notification is that an omnibus notification like the impugned notification would be
contrary to the requirements of Section 10 of the CLRA Act and is illustrative of non
application of mind.
48. It would be profitable to refer to Section 10 of the Act:
10. Prohibition of employment of contract labour :
(1) Notwithstanding anything contained in this Act, the appropriate Government
may, after consultation with the Central Board or, as the case may be, a State
Board, prohibit, by notification in the Official Gazette, employment of contract
labour in any process, operation or other work in any establishment.
(2) Before issuing any notification under Sub section (1) in relation to an
establishment, the appropriate Government shall have regard to the conditions
of work and benefits provided for the contract labour in that establishment and
other relevant factors, such as:
(a) whether the process, operation or other work is incidential to, or necessary
for the industry, trade, business manufacture or occupation that is carried on in
the establishment;
(b) whether it is of perennial nature, that is to say, it is of sufficient duration
having regard to the nature of industry, trade, business, manufacture or
occupation carried on in that establishment
(c) whether it is done ordinarily through regular workmen in that establishment
or an establishment similar thereto;
(d) whether it is sufficient to employ considerable number of whole time
workmen.
Explanation ; If a question arises whether any process or operation or other work is of
perennial nature, the decision of the appropriate Government thereon shall be final.
1) A careful reading of Section 10 makes it evident that Sub-section (1) commences
with a non obstante clause and overrides the other provisions of the CLRA Act in
empowering the appropriate Government to prohibit by notification in the Official
Gazette, after consultation with Central Advisory Board / State Advisory Board, as the
case may be, employment of contract labour in any process, operation or other work in
any establishment. Before issuing notification under Sub-section (1) in respect of an
establishment the appropriate Government is enjoined to have regard to: (i) the
conditions of work; (ii) the benefits provided for the contract labour; and (iii) other
relevant factors like those specified in Clauses (a) to (d) of Sub-section (2). Under
Clause (a) the appropriate Government has to ascertain whether the process, operation
or other work proposed to be prohibited is incidental to, or necessary for the industry,
trade, business, manufacture or occupation that is carried on in the establishment;
Clause (b) requires the appropriate Government to determine whether it is of perennial
nature, that is to say, it is of sufficient duration having regard to the nature of industry,
trade,
business, manufacture or occupation carried on in that establishment; Clause (c)

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contemplates a verification by the appropriate Government as to whether that type of
work is done ordinarily through regular workmen in that establishment or an
establishment similar thereto; and Clause (d) requires verification as to whether the
work in that establishment is sufficient to employ considerable number of whole-time
workmen. The list is not exhaustive. The appropriate Government may also take into
consideration other relevant factors of the nature enumerated in Sub-section (2) of
Section 10 before issuing notification under Section 10(1) of the CLRA Act.
49. The definition of 'establishment' given in Section 2(e) of the CLRA Act is as follows
;
In Clause (e) 'establishment' is defined to mean :
i) any office or department of the Government or a local authority or
ii) any place where any industry, trade, business, manufacture or occupation is
carried on.
5 0 . The definition is in two parts: the first part takes in its fold any office or
department of the Government or local authority - the Government establishment; and
the second part encompasses any place where any industry, trade, business,
manufacture or occupation is carried on - the non-Govt. establishment. It is thus
evident that there can be plurality of establishments in regard to the Government or
local authority and also in regard to any; place where any industry, trade, business,
"manufacture or occupation is carried on.
5 1 . Now reading the definition of "establishment" in Section 10, the position that
emerges is that before issuing notification under Sub-section (1) an appropriate
Government is required to: (I) consult the Central Board / State Board; (ii) consider the
conditions of work and benefits provided for the contract labour and (iii) take note of
the factors such as mentioned in Clauses (a) to (d) of Sub- section (2) of Section 10,
referred to above, with reference to any office or department of the Government or local
authority or any place where any industry, trade, business, manufacture or occupation
is carried on. These being the requirement of Section 10 of the Act, we shall examine
whether the impugned notification fulfils these essentials.
52. The impugned notification issued by the Central Government on December 9, 1976,
reads as under:
S.O. No. 779(E)8/9-12-76 in exercise of the power conferred by Sub-section
(1) of Section 10 of the Contract Labour (Regularisation and Abolition) Act,
1970 (37 of 1970) the Central Government after consultation with the Central
Advisory Contract Labour Board hereby prohibits employment of contract labour
on and from the 1st March, 1977, for sweeping, cleaning, dusting and watching
of buildings owned or occupied by the establishments in respect of which the
appropriate Government under the said Act is the Central Government.
Provided that this notification shall not only apply to the outside cleaning and
other maintenance operations of multi-storeyed buildings where such cleaning
or maintenance operations cannot be carried out except with specialised
experience.
A glance through the said notification, makes it manifest that with effect from
March 1, 1977, it prohibits employment of contract labour for sweeping,

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 cleaning, dusting and watching of buildings owned or occupied by
establishment in respect of which the appropriate Government under the said
Act is the Central Government. This clearly indicates that the Central
Government had not adverted to any of the essentials, referred to above, except
the requirement of consultation with the Central Authority Board. Consideration
of the factors mentioned above has to be in respect of each establishment,
whether individually or collectively, in respect of which notification under Sub-
section (1) of Section 10 is proposed to be issued. The impugned notification
apart from being an omnibus notification does not reveal compliance of Sub-
section (2) of Section 10. This is ex-facie contrary to the postulates o Section
10 of the Act. Besides it also exhibits non-application of mind by the Central
Government . We are, therefore, unable to sustain the said impugned
notification dated December 9, 1976 issued by the Central Government.
5 3 . Point No. 3 remains to be considered. This is the moot point which generated
marathon debate and is indeed an important one.
54. The learned Solicitor General contended that contract labour had been in vogue for
quite some time past; having regard to the abuses of the contract labour system, the
CLRA Act was enacted by the Parliament to regulate the employment of contract labour
and to cause its abolition in an establishment when the given circumstances exist; prior
to the Act no mandamus could have been issued by Courts creating relationship of
employer and the employee between the principal employer and the contract labour and
the Act did not alter that position. When the principal employer entrusts the work to a
contractor there will be principal to principal relationship between them as such the
work force of the contractor cannot be said to be the employees of the establishment. It
was argued that under the Specific Relief Act a contract of employment could not be
enforced specifically much less can a new contract of employment between the principal
employer and the contract labour be created by the Court. He has also pointed out that
in every Government company-establishment which is an instrumentality of the State
there are service rules governing the appointment of staff providing among other things
for equality of opportunity to all aspirants for posts in such establishments, calling for
candidates from the employment exchange and the reservation in favour of Scheduled
Castes/Scheduled Tribes/other Backward Classes, so a direction by the Court to absorb
the contract labour en bloc could be complied with only in breach of the statutory
service rules. He has farther contended that conceding that the CLRA Act is a beneficial
legislation, the benefits which the Parliament though it fit to confer on the contract
labour are specified in the Act and the Court by way of interpretation cannot add to
those benefits.
55.The contentions of Mr. G. L. Sanghi for the principal employer are: that there was
never the relationship of master and servant between the F. C. I. and the contract
labour, the various provisions of the Act which require the contractor to maintain
canteen, rest rooms and other facilities like a sufficient supply of wholesome drinking
water at convenient places, sufficient number of latrines and urinals accessible to the
contract labour in the establishment, washing facilities and the first aid facilities
negative the existence of any direct relationship sought to be made out. The
responsibilities of the principal employer under the CLRA Act arise only in the event of
failure of the contractor to fulfil his statutory obligations and in such an event he is
bound to reimburse the principal employer. Whenever a contractor undertakes to
produce a given result or to provide services to an establishment/undertaking by
engaging contract labour, the relationship of the master and servant exists between the
contractor and the contract labour and not between the principal employer and the

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contract labour. When the Central Government / State Government / Local authorities
entrusts any work to a contractor who recruits contract labour, in connection with that
work, obviously the recruitment will not be in conformity with the statutory service
rules and the same position would obtain with regard to non-governmental
organisations, factories, mines etc. Further, having regard to the distinction between the
principal employer and the establishment, in the absence of conferment of any authority
on the manager by his principal employer to enter into a contract of employment on his
behalf, the manager by entrusting work to a contractor cannot make a contract of
service between the principal employer and the contract labour; if this analogy is
applied to the case of the Central Government/the State Government / local authority
the contractor who undertakes to produce a given result would be creating a status of
Government servant by selecting any appointing persons for a particular
establishment/undertaking. Such a consequence will obliterate the constitutional
scheme in relation to Government employment resulting in uncontemplated and
unimaginative liabilities in financial terms. He pointed out that under the Mines Act the
manager who has no authority to employ persons so as to create master and servant
relationship the same position will equally apply in the case of occupier of a factory
under the Factories Act. The provisions of the CLRA Act do not make the contractor an
agent for creating relationship of master and servant between the principal employer
and the contract labour in the situations pointed out above. In all such cases absorbing
the contract labour would amount to opening a new channel of recruitment and it could
not have been the intention of the Parliament in enacting CLRA Act to provide for
appointment to the posts in various Government / non-Government establishments by
circumventing the service rules. He canvassed that no direction could be issued to the
principal employer by the Court to absorb the contract labour in the establishment.
5 6 . Mr. T. R. Andhyarujina, the learned senior counsel appearing for the principal
employer (respondents in Transfer Case No. 7 of 2000 (Delhi Multi Storey Bldg. Emp.
Union v. Union of India and Anr.) urged that prior to coming into force of the CLRA Act,
the Industrial Courts were ordering abolition of contract labour system and giving
appropriate directions to the employer to employ contract labour on such terms and
conditions as the employer might deem fit but no direction was given to make
automatic absorption on abolition of contract labour. In 1946 in the Rege Committee
Report or in 1969 in the Report of Mr. Justice P. B. Gajendragadkar who was himself a
party to the judgment in Standard Vacuum Refining Co. of India Ltd. v. Its Workmen
MANU/SC/0242/1960 : (1960)IILL J238SC, no recommendation was made for automatic
absorption of the contract labour by the principal employer; the Statement of Objects
and Reasons of the CLRA Act also does not speak of automatic absorption of contract
labour which would show that the Parliament deliberately did not make any provision
for automatic absorption; when the contract is terminated either by the principal
employer or by the contractor or when the contractor himself terminates services of his
workers or when he abandons the contract, the workmen go along with the contractor
or may have a cause against the contractor but they can have no claim against the
principal employer as such no prohibition of employment of contract labour also the
same consequence should follow; by prohibiting the contract labour the Parliament
intended that labour in general should be benefited by making it impossible for he
principal employer to engage contract labour through a contractor and the benefit of
automatic absorption is to conferred by the CLRA Act on the contract labour working an
establishment at the time of issuing the notification prohibiting engagement of contract
labour.
57. Mr K. K. Venugopal, learned senior counsel appearing for the principal employer
(appellant in O.N.G.C.) contended that Section 10 of the CLRA Act did not speak of

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automatic absorption so giving a direction to make absorption of he contract labour as a
consequence of issuance of notification there under, prohibiting the engagement of the
contract labour in various processes, would be contrary to the Act. Had it been the
intention of the Parliament to establish relationship of master and servant between the
principal employer and the contract labour, submitted the learned Counsel, Section 10
of the CLRA Act would have been differently worded and new sub section to that effect
would have been enacted. If the Court were to accept the contention of the contract
labour that automatic absorption should follow a notification prohibiting employment of
contract labour, the Court would be adding a sub section to Section 10 prescribing for
automatic absorption on issuance of notification under Sub- section (1) of Section 10
which would be impermissible.
58. Mr. Shanti Bhushan argued that a contract employing contract labour for any work
of an establishment would, in law, create relationship of master and servant between
the establishment and the labour, he sought to derive support from judgments of this
Court in the following cases:
Maharashtra Sugar Mills Ltd. v. State of Bombay AIR 1951 SC 313; Shivnandan Sharma
v. Punjab National Bank Ltd. MANU/SC/0054/1955 : (1955)ILL J688SC ; Basti Sugar
Mills Ltd. v. Ram Ujagar MANU/SC/0145/1963 : (1963)IILL J447SC ; Saraspur Mills Co.
Ltd. v. Ramanlal Chimanlal MANU/SC/0301/1973 : (1973)IILL J130SC and Hussainbhai
v. Alath Factory The zhilali Union, Kozhikode MANU/SC/0265/1978 : (1978)IILL J397SC
. His further contention is that a joint reading of definitions of contract labour in Clause
(b) and of establishment in Clause (e) of Section 2 of the CLRA Act would show that a
legal relationship between a person employed to work in an industry and the owner of
the industry comes into existence and it would not make and difference whether that
relationship was brought about by the act of the principal / master or by the act of his
authorized agent; the very fact of being employed in connection with an industry,
creates rights in favour of the person employed and against the owner of the industry
by bringing into existence, in law a relationship of employer and the employee (master
and servant) between them. He pointed out that the definition of the expression
workman in Clause (i) excludes an out worker, a person to whom any articles and
materials are given out by or on behalf of the principal employer to be made up,
cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise
processed for sale for the purposes of the trade or business of the principal employer
when the process is to be carried out either in the home of the out-worker or in some
other premises not being premises under the control and management of the principal
employer and argued that it would show that those who work at the place either of or
under the control and management of the principal employer, must, be treated as the
workmen of the principal employer. It is further argued that where the work is of a
perennial nature, Sub- section (2) of Section 10 of the CLRA Act requires that the
contract labour should be abolished so it would be an abuse on the part of the employer
to resort to employing contract labour in such a case. Reliance is also placed on Rules
21(2), 25(2) (V) (a), 72, 73, 74-Form XII, Rules 75, 76, 77, 81(3), 82(2) and Forms I,
II, III and IV relating to certificate of registration. Form VI relating to license, Form XIV
relating to issue of employment card and Form XXV relating to annual returns if the
principal employer, to contend that the principal employer has to keep track with the
number of workmen employed and, therefore, the employer cannot be permitted to
plead that no relationship of master and servant exists between the principal employer
and the contract labour. It is elaborated that under the CLRA Act, the action of the
contractor who is the agent of the principal employer to engage contract labour, finds
him and creates relationship of master and servant between them, therefore, the only
consequence of notification under Section 10(1) could be to remove the contractor

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(middle man and mature the relationship which had already existed between the
workman and the principal employer into a completely direct relationship and that the
effect of the notification could never be to extinguish the rights of the persons for
whose benefit the notification was required to be issued; reliance is placed on the three
Judge Bench of this Court Air India's case, (supra) and it is pointed out that Justice S.
B. Majmudar who was a party to Gujarat Electricity Board, Thermal power Station, Ukai,
Gujarat v. Hind Mazdoor Sabha MANU/SC/0366/1995 : (1995)IILL J790SC case has
given very weighty reasons for automatic absorption in his concurring judgment.
Insofar as the reservation quota in favour of Scheduled Castes, Scheduled Tribes and
Backward Classes is concerned, he submitted that there would be many situations in
which the rule of reservation could not be complied with e.g. when a private company
had made appointments without following the rule of reservation and if such a company
were to be taken over by the State the claim of the workers for absorption could not be
denied on the ground that it would upset the rule of reservation. It is further contended
that if no issuing notification under Section 10(1) prohibiting employment of contract
labour, there is no automatic absorption; the employer cannot employ work force which
will result in closing down the industry producing a crippling effect on the
establishment; but; if automatic absorption is held to be the rule, no disturbance will be
caused in the functioning of the industry and the contract labourers should become
employees of the principal employer and that the employer will, however, have a right
to retrench any excess staff by following the principles of retrenchment and paying
retrenchment compensation as provided in the Industrial Disputes Act.
59. Mr. Bhaskar P. Gupta, the learned senior counsel appearing for the contract labour
(respondents in civil Appeal Nos 719-720 of 2001), submitted that identification forms
for working in different, departments of the company were issued by the appellant
company to the contract labour and, therefore, was a direct relationship of master and
servant between the management and the labourers; and if it. were to be held that there
was no automatic absorption on. prohibition of engagement of contract a labour the
workers would be placed in a position worse than that held by them before abolition. He
urged for construction of the provisions of the Act on the principles laid down in
Heydon's case to support the plea that the Act provided for absorption of the contract
labour on issuing abolition notification by necessary implication and provided penal
consequences to prevent exploitation and abuse, of the contract labour. In that case it is
submitted the company itself understood that the provisions of the Act required
automatic absorption and absorbed 1550 workers leaving only 400 workers to be
absorbed.
60. Ms. Indira Jaisingh has contended that the primary object of the labour laws is to
effectuate the Directive Principles of State policy and, therefore the provisions of CLRA
Act. have to be interpreted accordingly; the principles of contract law are inapplicable in
sricto sensu to labour-management relations; she relied on the following judgments of
this Court: Western India Automobile Association v. Industrial Tribunal, Bombay
MANU/FE/0005/1949, Bharat Bank Ltd. Delhi v. Employees of the Bharat Bank Ltd.
Delhi MANU/SC/0030/1950 : (1950)NULLLL J921SC , Rai Bahadur Diwan Badri Das v.
Industrial Tribunal, Punjab MANU/SC/0273/1962 : (1962)IILL J366SC and Uptron India
Ltd. v. Shammi Bhan MANU/SC/0258/1998 : [1998]1SCR719 . Prior to the enactment of
CLRA Act, it. is pointed out, the Courts have ordered abolition of contract labour and
their departmentalisation in Standard Vacuum's case (supra) and Hussainabhai's
(supra). She has argued that the Statement of Objects and Reasons does not say that
the CLRA Act is intended to alter the then existing law; it codifies the existing law and
confers quasi legislative power upon the Government to prohibit labour, it does not
affect the powers of the Court to direct absorption of contract labour (see) Bharat Fritz

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Werner Ltd. v. State of Kathmandu (2001) 2 JT (SC) 376; the abolition notification is
issued after consideration of all the facts and circumstances so the consequence can
only be that the contractor is displaced and a direct relationship is established between
the principal employer and the contract labour, in Air India's case (supra), it was held
that the consequence of the abolition of contract labour employer absorbing the contract
labour; the linkage between the contractor and the employee would be snapped and a
direct relationship between the principal employer and the contract labour would
emerge to make them its employees; she invited our attention to Vegoils Private Limited
v. The Workmen MANU/SC/0530/1971 : (1971)IILL J567SC, Dena Nath v. National
Fertilisers Ltd. MANU/SC/0077/1992 : (1992)ILL J289SC and Gujarat Electricity's case
(supra) and submitted that the award proceedings stipulated in Gujarat Electricity's case
(supra) was cumbersome procedure making the remedy "a teasing illusion", therefore,
automatic absorption alone was the proper solution. Our attention was also invited to
various Forms prescribed under the Rules to bring home the point that the principal
employer and complete control over the number of contract labourers being employed
and there could be no over employment without the knowledge of the employer and it
was urged that the fact that the labourers had been working for quite a number of years
would show that their continuance was necessary.
61. Mr. R. Venkataramani, the learned senior counsel appearing for the respondents in
the appeal filed by the O. N.G. C. submitted that though the CLRA Act itself did not
abolish the contract labour, it empowered the appropriate Government to abolish the
system in any establishment in the given circumstances. His connection is that Section
10 is intended to remove the contractor from the picture and that it cannot read as
leading to removal of workers. He has also relied on the reasoning of Justice Majumdar
in Air India's case (supra) and added that if the contract labour is not absorbed the
remedy of the abolition of the contract labour would be worse than the mischief sought
to be remedied. He submitted that this Court directed absorption in V.S.T. Industries
Ltd. v. B. S. T. Industries Workers Union (2001) SCC 298, G. B. Pant University of
Agriculture & Technology, Pant Nagar, Nainital v. State of U.P. MANU/SC/0505/2000 :
(2000)IILL J1109SC, Union of India v. Mohammed Aslam MANU/SC/0010/2001 : (2001)
1 SCC 720, Indian Petro Chemicals Corporation Ltd. v. Shramik Sena
MANU/SC/0443/1999 : (1999)IILLJ696SC .
62. Mr. K. K. Singhvi, the learned senior counsel for the contract labour, referred to the
reports of the Royal Commission appointed by the then British Government, the Rege.
Committee, the Second Planning Commission and the Second National Commission of
Labour headed by Justice Gajendragadkar to emphasis that the practice of exploiting the
labour and that each of these reports recommended abolition of the contract labour and
where it was not possible so to do, to regulate the same He pleaded for absorption of
the contract labour by the principal employer on the abolition of the contract labour
system in the process, operation or other work in the establishment in which it was
employed in three situations (1) where there has been notification for abolition of
contract labour, (2) where in violation of the notification, contract labour is employed;
and (3) where principal employer resorts to employing of contract labour without
getting itself registered or through a contractor who is not licensed. He laid emphasis
upon the Directive Principles contained in Articles 39 41 42 86 43 and urged for
interpreting the beneficial legislation like CLRA Act to promote the intention of the
legislature; he argued that the purpose of abolition of the contract labour was to
discontinue the exploitation of the contract labour and to bring it on par with the
regular workmen, therefore, it was implicit that on abolition of the contract labour
system, the concerned workmen should be absorbed as regular employees of the
principal employer, relying upon the reasoning of justice Majamudar in his concurring

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judgment in AIR India's case (supra), it was submitted that in labour laws the
development had been on ' the basis of the judgment of the Courts and therefore, we
should interpret Section 10 to hold that as a result of issuance of prohibition
notification, the contract labour working in an establishment at that time should stand
absorbed automatically.
6 3 . Ms. Asha Jain Madan, the learned Counsel appearing for the contract labour
(respondents in C.A. Nos.(sic) of 2001 @ S.L.P (C ) Nos. 12657-12658 of 1998),
adopted the argument of the other learned senior counsel; she also relied on the
concurring judgment of Justice Majumdar in AIR India's case (supra) in support of her
contention that automatic absorption should follow prohibition of contract labour by the
appropriate Government in any given establishment.
64. The contentions of the learned Counsel for the parties, exhaustively set out above,
can conveniently be dealt with under the following two issues:
A. Whether the concept of automatic absorption of contract labour in the
establishment of the principal employer on issuance of the abolition
notification, is implied in Section 10 of the CLA Act; and
B. Whether on a contractor engaging contract labour in connection with the
work entrusted to him by a principal employer, the relationship of master and
servant between him (the principal employer) and the contract labour, emerges.
65. For a proper examination of these issues a reference to Section 10 which provides
for prohibition of employment of contract labour and Clauses (b), (c), (e), (g) and (i) of
S ecti o n 2 of CLRA Act which defines the terms 'contract labour', contractor,
'establishment', 'principal employer' and 'workman' respectively will be apposite, To
interpret these and other relevant provisions of the CLRA Act, to which reference will be
made presently, we may with advantage, refer to "CRAIES on Statute Law" (16th Edition
by S. G. G. Edgar Page 96) quoting the following observation of Lindley M.R, in the Re
Mayfair Property Co. (1898) 2 Ch 28 in regard to Rule in Heydon's case (1584) 3 Co.
Rep.7a,
in order properly to interpret any statute it is as necessary now as it was when
Lord Coke reported Heydon's Case, to consider how the law stood when the
statute to be construed was passed, what the mischief was for which the old
law did not provide, and the remedy provided by the statute to cure that
mischief
66. What the learned Master of Rolls observed in 1898 holds good even in 2001, so we
proceed in the light of Rule in Heydon's case.
6 7 . We have extracted above Section 10 of the CLRA Act which empowers the
appropriate Government to prohibit employment of contract labour in any process,
operation or other work in any establishment, lays down the procedure and specifies the
relevant factors which shall be taken into consideration for issuing notification under
Sub- section (1) of Section 10. It is a common ground that the consequence of
prohibition notification under Section 10(1) of the CLRA Act prohibiting employment of
contact labour, is neither spelt out in Section 10 nor indicated anywhere in the Act. In
our view, the following consequences follow on issuing a notification under Section
10(1) of the CLRA Act.:
(1) contract labour working in the concerned establishment at the time of issue

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 of notification will cease to function ; (2) the contract of principal employer
with the contractor in regard to the contract labour comes to an end: (3) no
contract labour can be employed by the principal employer in any process,
operation or other work in the establishment to which the notification relates at
any time thereafter; (4) the contract labour is not rendered unemployed as is
generally assumed but continues in the employment of the contractor as the
notification does not sever the relationship of master and servant between the
contractor and the contract labour; (5) the contractor can utilize the services of
the contract labour in any other establishment in respect of which no
notification under Section 10(1) has been issued where all the benefits under
the CLRA Act which were being enjoyed by it, will be available; (6) if a
contractor intends to retrench his contract labour he can do so only in
conformity with the provisions of the I. D. Act. The point, now under
consideration, is: whether automatic absorption of contract labour working in
an establishment is implied in Section 10 of the CLRA Act and follows as a
consequence on issuance of the prohibition notification there under. We shall
revert to this aspect shortly.
68. Now we shall notice the definition of the terms referred to above.
69. The term 'contract labour' as defined in Clause (b) of Section 2 reads:
(2)(1)(b) a workman shall be deemed to be employed as 'contract labour' in or
in connection with the work of an establishment when he is hired in or in
connection with such work by or through a contractor, with or without the
knowledge of the principal employer.
70. By definition the term contract labour is a species of workman. A workman shall be
so deemed when he is hired in or in connection with the work of an establishment by or
through a contractor, with or without the knowledge of the principal employer. A
workman may be hired: (1) in an establishment by the principal employer or by his
agent with or without the knowledge of the principal employer; or (2) in connection
with the work of an establishment by the principal employer through a contractor or by
a contractor, with or without the knowledge of the principal employer. Where a
workman is hired in or in connection with the work of an establishment by the principal
employer through a contractor he merely acts as an agent so there will be master and
servant relationship between the principal employer and the workman. But where a
workman is hired in or in connection with the work of an establishment by a contractor,
either because he has undertaken to produce a given result for the establishment or
because he supplies workman for any work of the establishment a question might arise
whether the contractor is a mere camouflage as in Hussainbhai's case (supra) and in
Indian Petrochemicals Corporation's case (supra) etc; if the answer is in the affirmative,
the workman will be in fact an employee of the principal employer, but if the answer is
in the negative, the workman will be a contract labour.
71. Clause (c) of Section 2 defines 'contractor' as under:
(2)(1)(c) 'Contractor', in relation to an establishment, means a person who
undertakes to produce a given result for the establishment other than a mere
supply of goods or articles of manufacture to such establishment, through
contract labour or who supplies contract labour for any work of the
establishment and includes a subcontractor.
7 2 . It may be noticed that the term 'contractor' is defined in relation to an

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establishment to mean a person who undertakes to produce a given result for the
establishment through contract labour or supplies contract labour for any work of the
establishment and includes sub-contractor but excludes a supplier of goods or articles
of manufacture to such establishment.
73. The definition of 'principal employer' in Clause (g) of Section 2 runs thus:
(2)(1)(g)(i) in relation to any office or department of the Government or a local
authority, the head of that office or department or such other officer as the
Government or the local authority, as the case may be, may specify in this
behalf.
(ii) in a factory, the owner or occupier of the factory and where a person has
been named as the manager of the factory under the Factories Act 1948 (63 of
1948), the person so named,
(iii) in a mine, the owner or agent of the mine and where a person has been
named as the manager of the mine the person so named,
(iv) in any other establishment, any person responsible for the supervision and
control of the establishment.
Explanation: For the purpose of sub-Clause (iii) of this clause, the expressions
"mine",
"owner" and "agent" shall have the meanings respectively assigned to them in
Clause (i), Clause (j) and Clause (c) of Sub-section (1) of Section 2 of the
Mines Act 1952 (35 of 1952).
74. It contains four parts. Under the first part, the head of any office or department or
such other officer as the Government or the local authority, as the case may be, may
specify in that behalf, is called the 'principal employer'. The second part takes in the
owner or occupier of the factory and where a person has been named as the manager of
the factory under the Factories Act, 1948, the person so named is treated as the
principal employer. The third part includes, within the meaning of the principal
employer, the owner or agent of a mine or where a person has been named as the
manager of the mine, the person so named the explanation appended to this clause
clarifies that the expressions 'mine', owner and 'agent' shall have the meanings
respectively assigned to then in clause (i) clause (1) and clause (c) of Sub-section (1)
of Section 2 of the Mines Act, 1952. And the fourth part embraces every person
responsible for the supervision and control of any establishment within the fold of
principal employer.
75. The term 'Workman' as defined in Clause (i) of Section 2 of the CLRA Act is as
follows:
workman means any person employed in or in connection with the work of any
establishment to do any skilled, semi-skilled or un-skilled manual, supervisory,
technical or clerical work for hire or reward, whether the terms of employment
be express or implied but does not include any such person:
A) who is employed mainly in a managerial or administrative capacity;
B) who, being employed in a supervisory capacity draws wages exceeding five
hundred rupees per mensem or exercises, either by the nature of the duties

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 attached to the office or by reason of the powers vested in him, functions
mainly of a managerial nature; or
C) who is an out-worker that is to say, a person to whom any articles and
materials are given out by or on behalf of the principal employer to be made
up, cleaned, washed, altered ornamented, finished, repaired, adapted or
otherwise processed for sale for the purpose of the trade or business of the
principal employer and the process is to be carried out either in the home of the
out worker or in some other premises, not being premises under the control
and management of the principal employer.
76. The definition is quite lucid. It has two limbs. The first limb indicates the meaning
of the term as any person employed in or in connection with the work of any
establishment to do any skilled semi-skilled or unskilled, supervisory, technical or
clerical work for hire or reward. It is immaterial that the term of employment: are
express or implied. The second limb contains three exclusionary classes A) managerial
or administrative staff; B) supervisory staff drawing salary exceeding No. 500/- (p.m.)
and (C) an out worker which implies a person to whom articles and materials are given
out by or on behalf of the principal employer to be made up cleaned, washed, altered,
ornamented, finished, repaired, adapted or otherwise processed for sale for purposes of
the trade or business of the principal employer and the process is to be carried out
either in the home of the out worker or in some other place not being the premises
under the control and management of the principal employer.
Now we shall consider issue A.
Whether the concept of automatic absorption of contract labour in the
establishment of the principal employer on issuance of abolition notification, is
implied in Section 10 of the CLRA Act.
77. It would be useful to notice the historical perspective of the contract labour system
leading to the enactment of the CLRA Act for a proper appreciation of the issue under
examination. The problems and the abuses resulting from engagement of contract
labour had attracted the attention of the Government from time to time. In the pre-
independence era, in 1929 a Royal Commission was appointed by the then British
Government to study and report all the aspects of labour. Suffice it to mention that in
1931 the Royal Commission (also known as Whitely Commission) submitted its report
mentioning about existence of intermediary named "jobber" and recommended certain
measures to reduce the influence of the jobber. Nothing substantial turned on that. In
1946 Rege Committee noted that in India contractors would either supply labour or take
on such portions of work as they could handle. The Committee pointed out, whatever
may be the grounds advanced by employers, it is to be feared that the disadvantages of
the system are far more numerous and weightier than the advantages", though the Rege
Committee recognized need for contract labour yet urged for its abolition where it was
possible and recommended for regulating conditions of service where its continuance
was unavoidable. In 1956 the Second Planning Commission (of which the then Prime
Minister Pandit Jawahar Lal Nehru was the Chairman) observed that in the case of
contract labour the major problems relate to the regulations of working conditions and
ensuring them continuous employment and for that purposes suggested that it was
necessary to:
a)undertake studies to ascertain the extent and the nature of the problems
involved in different industries;

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 b) examine where contract labour could be progressively eliminated. This
should be undertaken straightway;
c) determine cases where responsibility for payment of wages, ensuring proper
conditions of work, etc. could be placed on the principal employer in addition
to the contractor;
d) secure the gradual abolition of the contract system where the studies show
this to be feasible, care being taken to ensure that the displaced labour is
provided with alternative employment;
e) secure for contract labour the conditions and protection enjoyed by other
workers engaged by the principal employer and
f) set up a scheme of decasualisation, wherever feasible.
78. It is no doubt true that one of the suggestions referred to above, does speak of care
being taken to ensure that the displaced labors provided with alternative employment,
but a careful reading of the recommendation shows that the Committee was not
unmindful of the fact that abolition of the contract labour system would result in
displacement of labour, nonetheless what if though fit to recommend was alternative
employment and not absorption in the establishment where the contract labour was
working.
7 9 . In 1969, the National Commission of Labour submitted its report recording the
finding that the contract labour system was functioning with advantage to the employer
and disadvantage to the contract labour and recommended that it should be abolished.
The Commission also observed that under the various enactments the definition of
'worker' was enlarged to include contract labour and thus benefits of working conditions
and hours of work admissible to labour directly employed were made available to the
contract labour as well.
8 0 . Indeed, the National Commission which was chaired by Justice P. B.
Gajendragadkar who was a party to the judgment of this Court in the Standard
Vacuum's case (supra) possibly inspired by that judgment enumerated factors, indicated
therein which would justify dispensing with the contract labour system, in para 29-11 of
its report, which is reproduced hereunder.
29.11 -Judicial awards have discouraged the practice of employment of contract
labour, particularly when the work is (i) perennial and must go on from day to
day, (ii) incidental and necessary for the work of the factory (iii) sufficient to
employ a considerable number of whole time workmen; and (iv) being done in
most concerns through regular workmen. These awards also came out against
the system of "middlemen.
81. While recommending abolition of contract labour altogether, it was emphasized that
such facilities which other regular workers enjoyed, should be made available to
contract labour if for some unavoidable reasons the contract labour had to stay. In para
29.15 of its report the National Commission of Labour noticed the fact of introduction of
The Contract Labour (Regulation and Abolition) Bill 1967 (for short 'the Bill') in the
Parliament, which incorporated to a great extent the said recommendations. The Bill
later became the CLRA Act. It is worth noticing that in spite of absence of a provision
for absorption of contract labour in the Bill (on issuance of notification under Section
10(1) of the CLRA Act prohibiting engagement of contract labour) the National

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Commission endorsed that measure.
8 2 . We have given punctilious reading to the report of the Joint Committee of the
Parliament on the said Bill. Neither in the main report nor in the dissent note, do we
find a reference to the automatic absorption of the contract labour. This may perhaps be
for the reason that on abolition of contract system in an establishment, the contract
labour nonetheless remains as the workforce of the contractors who get contracts in
various establishments where the contract labour could be engaged and where they
would be extended the same statutory benefits as they were enjoying before. We
noticed that it was clear to the Joint Committee that by abolition of contract labour, the
principal employer would be compelled to employ permanent workers for all types of
work which would result incurring high cost by him which implied creation of
employment opportunities on regular basis for the contract labour. This could as well be
yet another reason for not providing automatic absorption.
8 3 . This is so far as the recommendations of various commissions and committees
leading to enactment of CLRA Act.
8 4 . We have already referred to the Statement of Objects and Reasons of the Act
elsewhere in this judgment which also does not allude to the concept of automatic
absorption of the contract labour on issuance of notification for prohibition of
employment of the contract labour.
8 5 . Now turning to the provisions of the Act, the scheme of the Act is to regulate
conditions of the workers in contract labour system and to provide for its abolition by
the appropriate Government as provided in Section 10 of CLRA Act. In regard to the
regulatory measures, Section 7 requires the principal employer of an establishment to
get itself registered under the Act. Section 12 of the Act obliges every contractor to
obtain licence under the provisions of the Act Section 9 of the Act places an embargo on
the principal employer of an establishment, which is either not registered or registration
of which has been revoked under Section 8, from employing contract labour in the
establishment, Similarly, Section 12(1) bars a contractor from undertaking or executing
any work through contract labour except under and in accordance with a licence.
Sections 23 24 and 25 of the Act make contravention of the provisions of the Act and
other offences punishable thereunder. With regard to the welfare measures intended for
the contract labour, Section 16 imposes an obligation on the appropriate Government to
make rules to require the contractor to provide canteen for the use of the contract
labour. The contractor is also under an obligation to provide rest room as postulated
under Section 17 of the Act. Section 18 imposes a duty on every contractor employing
contract labour in connection with the work of an establishment to make arrangement
for a sufficient supply of wholesome drinking water for the contract labour at
convenient places, a sufficient number of latrines and urinals of the prescribed type at
convenient and accessible places for the contract labour in the establishment washing
facilities etc. Section 19 requires the contractor to provide and maintain a first aid box
equipped with prescribed contents at every place where contract labour is employed by
him. Section 21 specifically says that a contractor shall be responsible for payment of
wages to workers employed by him as contract labour and such wages have to be paid
before the expiry of such period as may be prescribed. The principal employer is
enjoined to have his representative present at the time of payment of wages. In the
event of the contractor failing to provide amenities mentioned above, Section 20
imposes an obligation on the principle employer to provide such amenities and to
recover the cost and expenses incurred therefore from the contract either by deducting
from any amount payable to the contractor or as a debt by the contractor. So also, Sub-

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section (4) of Section 21 says that in the case of the contractor failing to make payment
of wages as prescribed under Section 21, the principal employer shall be liable to make
payment of wages to the contract labour employed by the contractor and will be entitled
to recover the amount so paid from the contractor by deducting from any amount
payable to the contractor or as a debt by the contractor. These provisions clearly
bespeak treatment of contract labour as employees of the contractor and not of the
principal employer.
8 6 . If we may say so, the eloquence of the a CLRA Act in not spelling out the
consequences of abolition of contract labour system, discerned in the light of various
reports of the Commissions and the Committees and the Statement of Objects and
Reasons of the Act, appears to be that the Parliament intended to create a bar on
engaging contract labour in the establishment covered by the prohibition notification, by
a principal employer so as to leave no option with him except to employ the worker as
regular employees directly. Section 10 is intended to work as a permanent solution to
the problem rather than to provide a one time measures by departmentalizing the
existing contract labour who may, by a fortuitous circumstances be in a given
establishment for a very short time as on the date of the prohibition notification. It
could as well be that a contractor and his contract labour who were with an
establishment for a number of years were changed just before the issuance of
prohibition notification. In such a case there could be no justification to prefer the
contract labour engaged on the relevant date over the contract labour employed for
longer period earlier. These may be some of the reasons as to why no specific provision
is made for automatic absorption of contract labour in the CLRA Act.
87. In the light of the above discussion we are unable to perceive in Section 10 any
implicit requirement of automatic absorption of contract labour by the principal
employer in the concerned establishment on issuance of notification by the appropriate
Government under Section 10(1) prohibiting employment of contract labour in a given
establishment.
88. Here we may also take note of the judicial approach in regard to absorption of
contract labour on issuing direction for its abolition, for the cases decided before the
enactment of CLRA Act. In the Standard Vacuum's case (supra), the appellant company
engaged contractor for cleaning and maintenance work at the refinery and plant
belonging to it. The contract Labour made a demand for abolition of contract labour
made a demand for abolition of contract labour system and for absorption of the
contract labour in the regular service of the company. The dispute was referred to the
Tribunal under the Industrial Disputes Act. The appellant raised an objection to the
competence of the reference, inter alia, on the ground that there can be no dispute
between it and the respondents as they were the workmen of a different employer
namely, the contractor. The Tribunal found against the appellant on the question of
competence of the reference and passed award directing that the contract labour system
should be abolished. On appeal, this Court held that as the ingredients of Section 2(k)
of the Industrial Disputes Act were present, the dispute between the parties was an
industrial dispute and, therefore, reference was competent. It was further held that the
work entrusted to the contractor was incidental to and necessary for the work of the
refinery and was to perennial nature; it was sufficient to employ a considerable number
of whole-time workmen and that type of work was being done in most concerns through
regular workmen. therefore, the Tribunal's suggestion directing abolition of contract
labour was, right and no interference with the award of the Tribunal was called for.
However, it was observed that the date from which the direction for abolition of contract
labour was to be effective, should not be put into force with retrospective effect and

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having noted that a few months remained for the existing contract to come to an end,
permitted the existing contract to come to an end, permitted the existing contract
system to be continued for the rest of the period of the contract. A chary reading of the
above judgment shows that though direction for abolition of contract labour was
approved, no automatic absorption of the contract labour working as on the date of
abolition in the establishment was ordered by this Court. It is interesting to notice that
the conditions pointed out by this Court, namely, (i) the work was incidental and
necessary for the work of establishment; (ii) was of perennial nature; (iii) was
sufficient to employ a considerable number of whole time workmen and (iv) that type of
work was being done in most concerns through regular workman, have been
incorporated in Sub-section (2) of Section 10 of CLRA Act.
89. Much emphasis is laid on the judgment of this Court in The Standard Vacuum's case
(supra) in support of the contention that the Courts direction absorption of contract
labour as a consequences of prohibition of employment of contract labour. We have
pointed out above that a thoughtful reading of the said judgment would disclose that no
such principle has been laid down therein. On the contrary, the Court having affirmed
the direction prohibiting employment of contract labour extended the date from which
the prohibition was to take effect so as to permit the existing contractor to continue for
the rest of the period of the contract. Thus it is clear that before the enactment of the
CLRA Act the industrial adjudicators / courts did direct abolition of contract labour
system but did not order absorption of contract labour by the principal employer on
such abolition of the contract labour system.
90. Now, it would be apt to notice the judicial approach after the enactment of the
CLRA Act.
91. In Vegolis's case (supra), the question before this Court was had the Industrial
Tribunal jurisdiction to issue direction to the establishment to abolish contract labour
with effect from the date after coming into force of the CLRA Act? The appellant-
company had engaged contract labour in seeds godown and solvent extraction plants in
its factory. The appellant took the plea that the type of work was intermittent and
sporadic for which the contract labour was both efficient and economic. On the other
hand, the union of the workmen submitted that the work was continuous and perennial
in nature and that in similar companies the practice was to have permanent workmen; it
claimed that the contract labour system be abolished and the contract labour be
absorbed as regular employees in the concerned establishment of the appellant. The
Tribunal having found that the work for which the contract labour was engaged was
closely connected with the main industry carried on by the appellant and that the work
was also of perennial character, directed abolition of contract labour system from a date
after coming into force of the CLRA Act but rejected the claim for absorption of contract
labour in the establishment of the appellant. On appeal to this Court, after pointing out
the scheme of Section 10 of the Act, it was held that under the CLRA Act, the
jurisdiction to decide about the abolition of contract labour had to be in accordance with
Section 10, therefore, it would be proper that the question, whether the contract labour
in the appellant industry was to be abolished or not, be left to be dealt with by the
appropriate Government under the Act, if it became necessary. From this judgment, no
support can be drawn for the proposition that absorption of the abolition notification
under Section 10(1) of the Act.
92. A Constitution Bench of this Court in M/s Gammon India Ltd, v. Union of India
MANU/SC/0298/1974 : (1974)ILL J489SC considered the constitutional validity of the
CLRA Act and the Rules made hereunder in a petition under Article 32 of the

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Constitution of India. In that case, the work of construction of a building for the
banking company was entrusted to the petitioners -building contractors - who engaged
contract labour for construction work. While upholding the constitutional validity of the
CLRA Act and the Rules made thereunder, this Court summed up the object the Act and
the purpose for enacting Section 10 of the Act as follows:
The Act was passed to present the exploitation of contract labour and also to
introduce better conditions of work. The Act provides for regulation and
abolition of contract labour. The underlying policy of the Act is to abolish
contract labour, wherever possible and practicable, and where it cannot be
abolished altogether, the policy of the Act is that the working conditions of the
contract labour should be so regulated as to ensure payment of wages and
provisions or essential amenities. That is why the Act provides for regulated
conditions of work and contemplates progressive abolition to the extent
contemplated by Section 10 of the Act. Section 10 of the Act deals with
abolition while the rest of the Act deals mainly with regulation. The dominant
idea for Section 10 of the Act is to find out whether contract labour is necessary
for the industry, trade, business, manufacture or occupation which is carried on
in the establishment.
93. There is nothing in that judgment to conclude that on abolition of contract labour
system under Section 10(1), automatic absorption of contract labour in the
establishment of the principal employer in which they were working at that time, would
follow.
9 4 . In Dena Nath's case (supra), a two-Judge Bench of this Court considered the
question, whether as a consequence of non-compliance of Sections 7 and 12 of the
CLRA Act by the principal employer and the licensee respectively, the contract labour
employed by the principal employer would become the employees of the principal
employer. Having noticed the observation of three-Judge Bench of this Court in The
Standard-Vacuum's case (supra) and having pointed out that the guidelines enumerated
in Sub-section (2) of Section 10 of the Act are practically based on the guidelines given
by the Tribunal in the said case, it was held that the only consequence was the penal
provisions under Section s 23 to 25 as envisaged under the CLRA Act and that merely
because the contractor or the employer had violated any provision of the Act or the
Rules the High Court in proceedings under Article 226 of the Constitution could not
issue any mandamus for deeming the contract labour as having become the employees
of the principal employer. The Court thus resolved the conflict of opinions on the said
question among various High Courts. It was further held that neither the Act nor the
Rules framed by the Central Government or by any appropriate Government provided
that upon abolition of the contract labour, the labourers would be directly absorbed by
the principal employer.
9 5 . In the case of R.K. Panda v. Steel Authority of India MANU/SC/0793/1994 :
[1994]3SCR1034 contract labour was employed at Rourkela Plant of the Steel Authority
of India through contractors and continued in employment of long periods - between 10
and 20 years - as contract labourers. It was found that though the respondents were
changing the contractors, yet under the terms of the arrangement the incoming
contractors were obliged to retain the contract labour engaged by the outgoing
contractors. That apart, for about eight years the contract labour was continued to be
employed by virtue of the interim order of this Court. It was noticed that in B.H.E.L.
Worker's Association, Hardwar v. Union of India MANU/SC/0209/1985 :
(1985)ILL J428SC, Mathura Refinery Mazdoor Sangh through its Secretary v. India Oil

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Corpn. Ltd., Mathura Refinery Mathura Refinery Project, Mathura MANU/SC/0539/1991 :
[1991]1SCR468 : (supra), on the question -whether the contract labourers had become
the employees of the principal employer in course of time or whether the engagement
and employment of labourers through a contractor was a mere camouflage and a
smokescreen -- this Court took the view that it was a question of fact and had to be
established by the contract labourers on the basis of the requisite material in the
industrial Court or industrial tribunal. However, having regard to the various interim
orders passed by this Court and the time taken in deciding the case, this Court
considered the matter on merits and on the basis of the offer made by the respondents,
which was recorded, issued certain directions which need not be quoted here. However,
no order was made directing absorption of contract labour on abolition of contract
labour system.
96. In National Federation of Railway Porters, Vendors and Bearers v. Union of India
MANU/SC/0309/1995 : (1995)IILL J712SC , a two-Judge Bench of this Court on the
basis of findings contained in the report of the Labour Commissioner that there, was no
evidence that the labourers were the, employees of the Society (contractor) and that
they were contract labourers provided by the Society under the agreement, treated them
as labourers of the Northern Railway as they had employed 240 days of continuous
service in year, some from 1972, some from 1980 and some from 1985. Following the
order of this Court dated April 15, 1991 Raghavendra Gumashta v. Union of India, (writ
petition No. 277 of 1988), the Court directed their absorption in the Railway Service.
97. It is obvious that direction to absorb the labourers was given on the premise that
they were not the employees of the contractor (the society) but were of the Northern
Railways.
9 8 . In Mathuran Refinery Mazdoor Sangh's case, (supra), the disputes between the
contract labourers represented by the appellant and the respondent, referred to the
industrial tribunal for adjudication, included the question, whether the contract labours
were the employees of the respondent corporation the tribunal answered the question
against the appellant but issued, among others, a direction that the respondent should
give preference to the contract labour in the employment by waiving the requirement of
age and other qualification wherever possible. It was, however, clarified by the
industrial tribunal that the ameliorative steps should not be taken to mean that the
contract labour had become the direct employees of the refinery. Against those
directions, this Court dismissed the appeal holding that the suggestions and directions
given by the tribunal in the impugned award, could not be improved upon.
9 9 . In Association of Chemical Workers, Bombay v. A.L. Maspurkar
MANU/SC/0080/1993 : (1998)IIILL J800SC : a three-judge Bench of this Court declined
to go into the correctness of the pronouncement in Dena Nath's case, (supra) that
automatic absorption does not follow on prohibition of contract labour but directed the
principal employer to consider the contract labour, by giving them preference in
appointment.
100. In Gujarat Electricity Board's case (supra), a two-judge Bench of this Court has
held that if there is a genuine labour contract between the principal employer and the
contractor, the authority to abolish the contract labour vests in the appropriate
Government and not in any Court including industrial adjudicator. If the appropriate
Government abolishes the contract labour system in respect of an establishment the
industrial adjudicator would, after giving opportunity to the parties to place material
before it, decide whether the workmen be absorbed by the principal employer, if so,

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how many of them and on what terms, but if the appropriate Government declines to
abolish the contract labour the industrial adjudicator has to reject the reference. If,
however, the so-called contract, is not genuine but is sham and camouflage to hide the
reality, Section 10 would not apply and the workmen can rise an industrial dispute for
relief that they should be deemed to be employees of the principal employer. The Court
or the industrial adjudicator would have jurisdiction to entertain such a dispute and
grant necessary relief.
101. While this was the state of law in regard to the contract labour, the issue of
automatic absorption of the contract labour came up before a Bench of three learned
Judges of this Court in Air India case (supra). The Court held: (1) though there is no
express provision in the CLRA Act for absorption of the contract labour when
engagement of contract labour stood prohibited on publication of the notification under
Section 10(1) of the Act, from that moment the principal employer cannot continue
contract labour and direct relationship gets established between the workmen and the
principal employer; (2) the Act did not intend to denude the contract labour of their
source of livelihood and means of development throwing them out from employment;
and (3) in a proper case the Court as sentinel on the qui vive is required to direct the
appropriate authority to submit a report and if the finding is that the workmen were
engaged in violation of the provisions of the Act or were continued as contract labour
despite prohibition of the contract labour under Section 10(1), the High Court has a
constitutional duty to enforce the law and grant them appropriate relief of absorption in
the employment of the principal employer. Justice Majmudar, in his concurring
judgment, put it on the ground that when on the fulfilment of the requisite conditions,
the contract labour is abolished under Section 10(2), the intermediary contractor
vanishes and along with him vanishes the term "principal employer" and once the
intermediary contractor goes the term "principal" also goes with it; out of the tripartite
contractual scenario only two parties remain, the beneficiaries of the abolition of the
erstwhile contract labour system, i.e. the workmen on the one hand and the employer
on the other, who is no longer their principal employer but necessarily becomes a direct
employer for erstwhile contract labourers. The learned judge also held that in the
provision of Section 10 there is implicit legislative intent that on abolition of contract
labour system, the erstwhile contract workmen would become direct employees of the
employer on whose establishment they were earlier working and were enjoying all the
regulatory facilities under Chapter V in that very establishment. In regard to the
judgment in Gujarat Electricity Board's case (supra), to which he was a party, the
learned Judge observed that he wholly agreed with Justice Ramaswamy's view that the
scheme envisaged by Gujarat Electricity Board case was not workable and to that extent
the said judgment could not be given effect to.
102. For reasons we have given above, with due respect to the learned Judges, we are
unable to agree with their reasoning or conclusions.
103. The principle that a beneficial legislation needs to be construed liberally in favour
of the class for whose benefit it is intended, does not extend to reading in the
provision's of the Act what the legislature has not provided whether expressly or by
necessary implication, or substitution remedy or benefits for that provided by the
legislature. We have already noticed above the intendment of the CLRA Act that it
regulates the conditions of service of the contract labour and authorizes in Section
10(1) prohibition of contract labour system by the appropriate Government on
consideration of factors enumerated in Sub-section (2) of Section 10 of the Act among
other relevant factors. But, the presence of some or all those factors, in our view,
provide no ground for absorption of contract labour on issuing notification under Sub-

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section (1) of Section 10. Admittedly when the concept of automatic absorption of
contract labour as a consequence of issuing notification under Section 10(1) by the
appropriate Government, is not alluded to either in Section 10 or at any other place in
the Act and the consequence of violation of Sections 7 and 12 of the CLRA ACT is
explicitly in Sections 23 and 25 of the CLRA Act, it is not for the High Courts or this
Court to read in some unspecified remedy in Section 10 or substitute for penal
consequences specified in Sections 23 and 25 a different sequel, be it absorption of
contract labour in the establishment of principal employer or a lesser or a harsher
punishment. Such an interpretation of the provisions of the statute will be far beyond
the principle of ironing out the creases and the scope of interpretative legislation and as
such clearly impermissible. We have already held above, on consideration of various
aspects, that it is difficult to accept that the Parliament intended absorption of contract
labour in the establishment of principal employer or a lesser or a harsher punishment.
Such an interpretation of the provisions of the statute will be far beyond the principle of
ironing out the creases and the scope of interpretative legislation and as such clearly
impermissible. We have already held above, on consideration of various aspects, that it
is difficult to accept that the Parliament intended absorption of contract labour on issue
of abolition notification under Section 10(1) of CLRA Act.
104.We have gone thorough the decisions of this Court in V.S.T. Industries' case
(supra), G.B. Pant University's case (supra) and Mohammed Aslam's case (supra). All of
them relate to statutory liability to maintain the canteen by the principal employer in the
factory / establishment. That is why in those cases, as in The Saraspur Mills' case
(supra), the contract labour working in the canteen were treated as workers of the
principal employer. These cases stand on a different footing and it is not possible to
deduce from them the broad principle of law that on the contract labour system being
abolished under Sub-section (1) of Section 10 of the CRLA Act the contract labour
working in the establishment of the principal employer has to be absorbed as regular
employees of the establishment.
105. An analysis of the cases, discussed above, shows that they fall in three classes;(i)
where contract labour is engaged in or in connection with the work of an establishment
and employment of contract labour is prohibited either because the Industrial
adjudicator/Court ordered abolition of contract labour or because the appropriate
Government issued notification under Section 10(1) of the CLRA Act, no automatic
absorption of the contract labour working in the establishment was ordered; (ii) where
the contract was found to be sham and nominal rather a camouflage in which case the
contract labour working in the establishment of the principal employer was held, in fact
and in reality, the employees of the principal employer himself. Indeed, such cases do
not relate to abolition of contract, labour but present instances wherein the Court
pierced the veil and declared the correct position as a fact at the stage after
employment of contract labour stood prohibited; (iii) where in discharge of a statutory
obligation of maintaining canteen in an establishment the principal employer availed the
services of a contractor and the Courts have held that the contract labour would indeed
be the employees of the principal employer.
The next issue that remains to be dealt with:
B. Whether on a contractor engaging contract labour in connection with the
work entrusted to him by a principal employer, the relationship of master and
servant between him (the principal employer) and the contract labour emerges.
1 0 6 . Mr. Shanti Bhushan alone has taken this extreme stand that by virtue of

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engagement of contract labour by the contractor in any work of or in connection with
the work of an establishment, the relationship of master and servant is created between
the principal employer and the contract labour. We are afraid, we are unable to accept
the contention of the learned Counsel. A careful survey of the cases relied upon by him
shows that they do not support his proposition.
1 0 7 . In The Maharashtra Sugar Mills's case (supra), the question that fell for
consideration of this Court was whether the contract labour was covered by the
definition of 'employee' under the Bombay Industrial Relations Act, 1946 and, therefore,
should be treated as employees of the appellant-sugar mills. There contractors were
engaged by the appellant for carrying on certain operations in its establishment. The
contractors were to employ contract labour (workers) for carrying out the work
undertaken but they should have the approval of the appellant, although it was the
obligation of the contractors to pay wages to the workers. However, the contract labour
engaged by the contractors got the same amenities from the appellant as were available
to its muster roll workers. An industrial dispute arose in respect of the payment of
wages to the contract labour engaged by the contractors which, along with other
disputes, was referred to the Industrial Court by the Government. The reference was
contested, as being not maintainable by the appellant on the plea that the contractors'
workers were not 'employees' within the meaning of the said Act. The term 'employee'
is defined in the said Act to mean 'any person employed to do any skilled or unskilled
manual or clerical work for hire or reward in any industry and includes a person
employed by a contractor to do any work for him in execution of a contract with an
employer within the meaning of Sub-clause (3) of Clause 14'. It was on the basis of the
definition of the terms "the employer" and "the employee" the contract labour engaged
by the contractors was held to be employees of the appellant. The decision in that case
cannot be read as holding that when a contractor engages contract labour in connection
with the work of the principal employer, the relationship of master and servant is
created between the principal employer and the contract labour.
108. In Shivanandan Sharma's case (supra), the respondent-Bank entrusted its cash
department under a contract to the treasures who appointed cashiers, including the
appellant - the head cashier. The question before the three-Judge Bench of this Court
was: was the appellant an employee of the Bank ? On the construction of the agreement
entered into between the Bank and the treasurers, it was held that the treasurers were
under the employment of the Bank on a monthly basis for an indefinite terms as they
were under the complete control and direction of the Bank through its manager or other
functionaries and, therefore, the appointees including the appellant (nominees) of the
treasures, were also the employees of the Bank, this Court laid down.
If a master employs a servant and authorizes him to employ a number of
persons to do a particular job and to guarantee their fidelity and efficiency for a
cash consideration, the employees thus appointed by the servant would be
equally with the employer, servants of the master.
We do not think that the principle, quoted above, supports the proposition canvassed by
the learned Counsel.
109. The decision of the Constitution Bench of this Court in Basti Sugar Mills' case
(supra) was given in the context of reference of an industrial dispute under the Uttar
Pradesh Industrial Disputes Act, 1947. The appellant Sugar Mills entrusted the work of
removal of press mud to a contractor who engaged the respondents therein (contract
labour) in connection with that work. The services of the respondents were terminated

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by the contractor and they claimed that they should be reinstated in the service of the
appellant. The Constitution Bench held.
The words of the definition of workmen in Section 2(z) to mean "any person
(including an apprentice) employed in any industry to do one skilled or
unskilled, manual, supervisory, technical or clerical work for hire or reward,
whether the terms of employment be express or implied" are by themselves
sufficiently wide to bring in persons doing work in an industry whether the
employment was by the management or by the contractor or the management.
Unless however, the definition of the word 'employer" included the
management of the industry even when the employment was by the contractor
the workmen employed by the contractor could not get the benefit of the Act
since a dispute between them and the management would not be an industrial
dispute between "employer" and workmen. It was with a view to remove this
difficulty in the way of workmen employed by contractors that the definition of
employer has been extended by Sub-clause (iv) of Section 2(i). The position
thus is: (a) that the respondents are workmen within the meaning of Section
2(z), being persons employed in the industry to do manual work for reward,
and (b) they were employed by a contractor with whom the appellant-company
had contracted in the course of conducting the industry for the execution by the
said contractor of the work of removal of presumed which is ordinarily a part of
the industry. It follows therefore, from Section 2(z) read with Sub-clause (iv)
of Section 2(i) of the Act they are workmen of the appellant-company is their
employer.
110. It is evident that the decision in that case also turned on the wide language of
statutory definitions of the terms "workmen" and "employer." So it does not advance
the case pleaded by the learned Counsel.
111. In the Saraspur Mills's case (supra), the question was whether the respondents
engaged for working in the canteen run by the Co-operative Society for the appellant
company were the employees of the appellant-Mills. The respondents initiated
proceedings under Section 79 of the Bombay Industrial Relations Act, 1946 for payment
of D.A. in terms of the award of the Industrial Court. The appellant contested the claim
on the ground that the respondents were employees of the co-operative society and not
of the appellant. A two-Judge Bench of this Court approached the question from the
point of view of statutory liability of the appellant to run the canteen in the factory and
having construed the language employed in the definitions of "employee" and
"employer" in Sub-sections (13) and (14), respectively of Section 3 of the Act, and the
definition of "worker" contained in Section 2(i) of the Factories Act and having referred
to the Basti Sugar Mill's case (supra), held that even though in pursuance of a statutory
liability the appellant was to run the canteen in the factory, it was run by the co-
operative society as such the workers in the canteen (the respondents) would be the
employees of the appellant above.
112. In a three-Judge Bench decision of this Court in Hussainsainbhai's case (supra),
the petitioner who was manufacturing ropes entrusted the work to the contractors who
engaged their own workers. When, after some time, the workers were not engaged,
they raised an industrial dispute that they were denied employment. On reference of the
at dispute by the State Government, they succeeded in obtaining an award against the
petitioner who unsuccessfully changed the same in the High Court and then in the
Supreme Court. On examining various factors and applying the effective control test,
this Court held that though there was no direct relationship between the petitioner and

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the respondent yet on lifting the veil and looking at the conspectus of factors governing
employment, the naked truth, through draped in different perfect paper arrangement,
was that the real employer was the management not the immediate contractor.
Speaking for the Court, Justice Krishna Iyer observed thus:
Myriad devices, half-hidden in fold after fold of legal form depending on the
degree of concealment needed, the type of industry, the local conditions and
the like may be resorted to when labour legislation casts welfare obligations on
the real employer, based on Articles 38 39 42 43 and 43-A of the Constitution.
The Court must be astute to avoid the mischief and achieve the purpose of the
law and not be misled by the maya of legal appearances....
Of course, if there is total dissociation in fact between the disowning
management and the aggrieved workmen, the employment is, in substance and
in real life terms, by another. The management's adventitious connections
cannot ripen into real employment.
This case falls in Class (ii) mentioned above.
113. The above discussion amply justifies rejection of the contentions of Mr. Shanti
Bhusahan by us.
1 1 4 . We find no substance in the next submission of Mr. Shanti Bhushan that a
combined reading of the definition of the terms 'contract labour,' 'establishment' and
'workman' would show that a legal relationship between a person employed in an
industry and the owner of the industry is created irrespective of the fact as to who has
brought about such relationship.
115. We have quoted the definitions of these terms above and elucidated their import.
The word 'workman' as defined in wide terms. It is a generic term of which contract
labour is a species. It is true that a combined reading of the terms 'establishment' and
"workman' shows that a workman engaged in an establishment would have direct
relationship with the principal employer as a servant of master. But what is true of a
workman could not be correct of contract labour. The circumstances under which
contract labour could be treated as direct workman of the principal employer have
already been pointed out above.
116. We are not persuaded to accede to the contention that a workman, who is not an
out worker, must be treated as a regular employee of the principal employer. It has
been noticed above that an out worker falls within the exclusionary clause of the
definition of "workman.' The word 'out worker' connotes a person who carries out the
type of work, mentioned in Sub-clause (c) of Clause (i) of Section 2, of the principal
employer with the material supplied to him by such employer either (i) at his home or
(ii) in some other premises not under the control and management of the principal
employer. A person who is not an out worker but satisfies the requirement of the first
limb of the definition of 'workman' would by the very definition fall within the meaning
of the term 'workman.' Even so, if such a workman is within the ambit of the contract
labour, unless he falls within the aforementioned classes, he cannot be treated as
regular employee of the principal employer.
117. We have also perused all the Rules and Forms prescribed thereunder. It is clear
that at various stages there is involvement of the principal employer. On exhaustive
consideration of the provisions of the CLRA Act we have held above that neither they
contemplate creation of direct relationship of master and servant between the principal

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employer and the contract labour nor can such relationship be implied upon the
provisions of the Act on issuing notification under Section 10(1) of the CLRA Act, a
fortiorari much less can such a relationship be found to exist from the Rules and the
Forms made thereunder.
1 1 8 . The leftover contention of Ms. Indira Jaisingh may be dealt with here. The
contention of Ms. Indira Jaisingh that the principles of contract law stricto sensu do not
apply to the labour and management is too broad to merit acceptance.
119. In Rai Bahadur's case (supra), the industrial dispute referred to the Industrial
Tribunal was, whether all the employees of the appellant should be allowed 30 days'
earned leave with full wages for every 11 month's service without discrimination. The
appellant framed the rules on July 1, 1956 providing that every workman employed on
or before that date would be entitled to 30 days' earned leave with full wages for every
11 months' service. The contention of the employer after that date were not entitled to
the same period of leave. It was contended that the appellant was entitled to fix the
terms of employment on which it would employ the workmen and it was open for the
workman to accept or not to accept those terms so that Tribunal was not justified in
interfering with such matter. A three Judge Bench of this Court, by majority, held that
the Tribunal was justified in directing the appellant to provide the same uniform rules
as to earned leave for all its employees that the doctrine of absolute freedom of contract
had to yield to the higher claims for social justice and had to be so regulated. After
referring to Western India's case (supra) and the Bharat Bank's case (supra), Justice
P.B. Gajendragadkar speaking for the majority observed:
in order that industrial adjudication should be free from the tyranny of dogmas
or the sub-conscious pressure of pre-conceived notions, it is important that the
temptation to lay down broad principles should be avoided. Accordingly, it is
not necessary to decide the broad contention whether industrial adjudication
can interfere with the contract between the employers and the employees.
120. It is apparent that the case was decided on the ground that there could be no
discrimination of the employees in regard to their entitlement for earned leave on the
basis of a fixed date and that no general principle was laid down that the contract laws
are inapplicable to labour management relation.
121. In the case of Uptron India (supra), the controversy related to the termination of
the services of the workmen for unauthorized absence. The Industrial Employment
(Standing Orders) Act, 1946 provided that a workman is liable to automatic termination
on the ground of unauthorized absence. It is in that context that this Court has observed
that the general principles of the Contract Act, 1872 applicable to an agreement
between two persons having capacity to contract, are also applicable to a contract of
industrial employment but relationship but relationship so created is partly contractual
and partly non-contractual as the State have already, legislation, prescribed positive
obligations for the employer to wards his workmen, as for example, terms conditions
and obligations prescribed by the Payment of Wages Act, 1936; Industrial Employment
(Standing Orders) Act, 1946; Minimum Wages Act, 1948; Payment of Bonus Act, 1965;
Payment of Gratuity Act, 1972 etc. In our view, the law has been correctly laid down
therein. The judgment in that case cannot be read as laying down a principle of law that
at the provisions of the Contract Act are not applicable to relation between the labour
and the management.
122. The upshot of the above discussion is outlined thus:

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(1)(a)Before January 28, 1986, the determination of the question whether
Central Government or the State Government, is the appropriate Government in
relation to an establishment, will depend, in view of the definition of the
expression "appropriate Government" as stood in the CLRA Act, on the answer
to a further question, is the industry under consideration carried on by or under
the authority of the Central Government or does it pertain to any specified
controlled industry; or the establishment of any railway, cantonment board,
major port, mine or oilfield or the establishment of banking or insurance
company ? If the answer is in the affirmative, the Central Government will be
the appropriate Government; otherwise in relation to any other establishment
the Government of the State in which the establishment was situated, would be
the appropriate Government.
(b)After the said date in view of the new definition of that expression, the
answer, to the question referred to above, has to be found in Clause (a) of
Section 2 of the Industrial Disputes Act; if (i) the concerned Central
Government company / undertaking or any undertaking is included therein eo
nomin, or (ii)any industry is carried on (a) by or under the authority of the
Central Government or, (b) by railway company; or (c) by specified controlled
industry, then the Central Government will be the appropriate Government
otherwise in relation to any other establishment, the Government of the State in
which that other establishment is situated; will be the appropriate Government.
2(a) A Notification under Section 10(1) of the CLRA Act prohibiting employment
of contract labour in any process, operation or other work in any establishment
has to be issued by the appropriate Government:
(1) after consulting with the Central Advisory Board or the State Advisory
Board, as the case may be, and
(2) having regard to
(i) conditions of work and benefits provided for the contract labour in the
establishment in question; and
(ii) other relevant factors including those mentioned in Sub-section (2) of
Section 10
(b) inasmuch as the impugned notification issued by the Central Government on
December 9, 1976 does not satisfy the aforesaid requirements of Section 10, it
is quashed but we do so prospectively i.e. from the date of this judgment and
subject to the clarification that on the basis of this judgment no order passes or
no action taken giving effect to the said Notification on or before the date of
this judgment, shall be called in question in any Tribunal or Court including a
High Court if it has otherwise attained finality and/or it has been implemented.
(3) Neither Section 10 of the CLRA Act nor any other provision in the Act,
whether expressly or by necessary implication, provides for automatic
absorption of contract labour on issuing a notification by appropriate
Government under Sub-section (1) of S. 10 prohibiting employment of contract
labour, in any process, operation or other work in any establishment.
Consequently the principal employer cannot be required to order absorption of
the contract labour working in the concerned establishment.

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 (4) We overrule the judgment of this Court in Air India's case (supra)
prospectively and declare that any direction issued by any industrial
adjudicator/ any Court including High Court, for absorption of contact labour
following the judgment in Air India's case (supra), shall hold good and that the
same shall not be set aside, altered or modified on the basis of this judgment in
cases where such a direction has been given effect to and it has become final.
(5) On issuance of prohibition notification under Section 10(1) of the CLRA Act
prohibiting employment of contract labour or otherwise, in an industrial dispute
brought before it by any contract labour in regard to conditions of service, the
industrial adjudicator will have to consider the question whether the contractor
has been interposed either on the ground of having undertaken to produce any
given result for the establishment or for supply of contract labour for work of
the establishment under a genuine contract or is a mere ruse/camouflage to
evade compliance of various beneficial legislations so as to deprive the workers
of the benefit thereunder. If the contract is found to be genuine but a mere
camouflage, the so-called contract labour will have to be treated as employees
of the principal employer who shall be directed to regularize the services of the
contract labour in the concerned establishment subject to conditions as may be
specified by it for that purpose in the light of para 6 hereunder.
(6) If the contract is found to be genuine and prohibition notification under
Section 10(1) of the CLRA Act in respect of the concerned establishment has
been issued by the appropriate Government, prohibiting employment of
contract labour in any process, operation or other work of any establishment
and where in such process, operation or other work of the establishment the
principal employer intends to employ regular workmen he shall give preference
to the erstwhile contract labour, if otherwise found suitable and, if necessary,
by relaxing the condition as to maximum age appropriately taking into
consideration the age of the workers at the time of their initial employment by
the contractor and also relaxing the condition as to academic qualifications
other than technical qualifications.
123. We have used the expression "industrial adjudicator" by design as determination
of the questions aforementioned requires inquiry into disputed question of facts which
cannot conveniently be made by High Courts in exercise of jurisdiction under Article 226
of the Constitution. therefore, in such cases the appropriate authority to go into those
issues will be Industrial Tribunal / Court whose determination will be amenable to
judicial review.
In the result:
C.A. Nos. 6009-10/2001 arising out of S.L.P. (C) Nos. 12657-58/98
124. The order of the High Court at Calcutta, under challenge, insofar as it relates to
holding that the West Bengal Government is the appropriate Government within the
meaning of the CLRA Act, is confirmed but the direction that the contract labour shall be
absorbed and treated on par with the regular employees of the appellants, is set aside.
The appeals are accordingly allowed in part.
C.A. Nos. 6011/2000 rising out of S.L.P. (C) Nos. 20926/98
125. In the impugned order of the High Court of Judicature, Madhya Pradesh, Bench at
Jabalpur in C.P. 143 of 1998 dated October 14, 1998, it was held that no contempt of

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the High Court was committed. In view of this finding, no interference of this Court is
warranted. The appeal is accordingly dismissed.
T.C. No. 1/2000
126. W.A. No. 80/1998 on the file of the High Court of Judicature at Andhra Pradesh
was transferred to this Court and numbered as TC 1/2000. The writ appeal is directed
against the order of the learned single Judge dismissing W.P. No. 29865/1998 on 13-
11-1997. The petitioner questioned the competence of the State Government to make
reference of the industrial dispute to the Labour Court at Visakhapatnam. It will be open
to the labour Court to decide the question whether the reference was made by the
appropriate Government on the basis of the main judgment. Transferred Case No. 1/
2000 (W.A. No. 80/1998) is dismissed accordingly.
T.C. Nos. 5-7/2000
127. civil Writ Petitions Nos. 1329/97, 655/97 and 1453/97 on the file of the High
Court of Delhi were transferred to this Court and numbered as T.C. No. 5/2000, T.C. No.
6/2000 and T.C. No, 7/2000 respectively. The petitioners therein prayed for a writ of
mandamus directing the respondents to absorb them as regular employees in the
establishment in which they were working at the relevant time. Their claim is based on
the impugned notification dated December 9, 1976 issued by the Central Government.
In view of the finding recorded by us that the notification is illegal and it is not issued
by that appropriate Government the CLRA Act in relation to the establishment in
question, the petitioners in writ petitions cannot get any relief. However, we leave it
open to the appropriate Government to issued the notification under Section 10(1) of
the CLRA Act in respect of the concerned establishment of the petitioners. Subject to the
above observation the transferred cases are dismissed.
T.C. Nos. 17/2000 and 18/2000
128. I.P.A. Nos. 326/97 and 18/98 on the file of the High Court of Judicature, Madhya
Pradesh, Bench Jabalpur were transferred and numbered as TC Nos. 17/2000 and 18/
2000. The letters paten appeals were directed against the order of a learned single
Judge allowing the writ petitions and directing absorption of the members of the
respondent-union. The claim of the petitioners was based on a notification issued by the
Central Government on 17-3-1993 prohibiting with effect from the date of publication of
the notification the employment of contract labour in the limestone and dolomite mines
in the country, in the works specified in the schedule to the notification. The points that
arise in these cases are: (i) the validity of the notification and (ii) the consequential
orders that may be passed on issue of the abolition notification. Having regard to the
facts of these cases, we consider it appropriate to direct that the cases be transferred
back to the High Court to be decided by the High Court in the light of the main
judgment. Transferred cases are disposed of accordingly.
C.A. Nos. 6012/2001 arising out of S.L.P. (C) No. 9568/2000.
129. This appeal arises from the order of the High Court of Judicature at Jabalpur in
LPA No. 418/1999 dated 1-5-2000. The High Court declined to pass any order and
dismissed the LPA as this Court had stayed proceeding in the connected LPA Nos. 326 /
97 and 18/98 on August 17,1998. Inasmuch we have now transferred back those LPAs,
we consider it appropriate to transfer this case also back to the High Court to be heard
and decided along with the said cases. The appeal is accordingly disposed of.

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C.A.Nos. 719/720/2001
130. These appeals arise from the judgment and order of a Division Bench of the High
Court of Judicature of Calcutta in MAT Nos. 1704 and 1705 of 1999 dated August 12,
1999. A learned single Judge of the High Court directed, inter alia absorption of contract
labour on the ground that the type of work in which the contract labour was engaged
was prohibited in view of the notification issued by the Central Government on February
9, 1980 under Section 10(1) of the CCLRA Act. The appellants filed the application
against the notification on the ground that the respondents are not covered by the
Notification. Be that as it may, the Central Government issued a further notification on
14-10-1999 which appears to cover the respondent herein. The Division Bench
maintained the directions under appeals with modification in regard to interim order. In
view of the fact that we have overruled the judgment of this Court in Air India's case
(supra) which covered the field when the order of the High Court was passed, we set
aside the order of the High Court under challenge. Appeals are accordingly allowed.
T.C.No. 14/2000
131. M. A.T. No. 1592 /1997 pending before the Division Bench of the High Court of
Calcutta which was filed against the order to a learned single Judge dated 9-5-1997 in
C.O.No. 6545(W) of 1996, holding that having regard to the impugned notification of
the Central Government dated December 9, 1976 issued under Section 10(1) of the
CLRA Act prohibiting employment of contract labour, the appellants are bound to absorb
the contract labour as regular employees of the appellants. In view of the main
judgment, the order of the learned single Judge cannot be sustained. It is accordingly
set aside and the transferred case is allowed.
C.A.Nos. 5798-99/1998
132. In these appeals, the Food Corporation of India is the appellant. Having regard to
the unamended definition of the appropriate Government which was in force till 28-1-
1986, the appropriate Government within the meaning of CLRA Act was the Government
of the State in which the concerned establishment of FCI was situated. With effect from
28-1-1986, the amended definition of that expression under the CLRA Act came into
force. Consequently, the definition of that expression as given in the Industrial Disputes
Act would apply for purposes of the CLRA Act also. FCI is included within the definition
of appropriate Government in Sub-clause (i) of Clause (a) of Section 2 of the Industrial
Disputes Act. It follows that for any establishment of FCI for the purposes of the CLRA
Act, the appropriate Government will be the Central Government.
133. In these appeals, prohibition notification was issued on March 26, 1991 under
Section 10(1) of the CLRA Act prohibiting employment of contract labour in the
concerned establishment in the process, operation or work of handling of foodgrains
including loading and unloading from any means of transport, storing and stocking. The
respondents claimed absorption of contract labour in the concerned establishment of the
appellant. A Division Bench of the High Court of Bombay following the judgment of this
Court in Air India's case (supra) directed the appellant to absorb the contract labour
engaged in the depots of the appellant in Jalgaon, Srirampur and Ahmedanagar
(Khedgaon). Inasmuch we have overruled the judgment in Air India's case (supra), the
appeals deserve to be allowed. We, accordingly, set aside the judgment of the High
Court under challenge and allow these appeals leaving it open to the contract labour to
seek appropriate relief in terms of the main judgment.
C.A.Nos.6013-22/2001 @ SLP (C)Nos. 16122-16131/98

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134. These appeals by FCI from the judgment of a Division Bench of the Karnataka
High Court in W.A. Nos. 345-345/ 97 dated April 17, 1998 confirming the judgment of a
learned single judge passed in W.P.No. 22485/94 and batch dated 22-11-1996. The
learned single Judge directed absorption of the contract labour with effect from 29-1-
1996. Inasmuch as the impugned judgment, under challenge, was passed following the
judgment in Air India's (supra) which has since been over ruled, we set aside the
judgment of the High Court and allow these appeals accordingly leaving it open to the
contract labour to seek appropriate relief in terms of the main judgment.
C.A.Nos. 4188-94/98 and 4195/98
135. These appeals arise from a common judgment of the High Court of Karnataka in
W.A. Nos. 228-229, 231, 233-236/97 and 1742/97 dated 17-4-1998 are filed by union
of workmen and workmen of FCI. The Division Bench confirmed the judgment of the
learned single Judge directing absorption of contract labour in the concerned
establishment of the appellants w.e.f.29-1 1996. The grievance of the appellants is that
hey should have been absorbed with effect form the date of the prohibition notification
dated No. 1, 1990. inasmuch as in the connected civil appeals we have set aside the
judgment of Division Bench passed following the judgment of this Court in Air India's
Case (supra) which has since been overruled. The appellants are not entitled to any •
relief in these appeals. Accordingly, these appeals are dismissed.
T.P.(C) Nos. 284-302/2000 and 308-337/ 2000
1 3 6 . In these transfer petitions, the petitioners prayed for transfer of various writ
petitions/writ appeals pending in the High Court of Andhra pradesh mentioned in para
(a) of prayer on the ground that the question involved in those cases is pending
consideration of this Constitution Bench in SLP(C)Nos. 12657-58/98. Notice has been
ordered in these cases but the cases are not transferred. Inasmuch as we have already
pronounced the judgment in the abovementioned cases, we are not Inclined to allow
these transfer petitions. The High Court will now proceed to decide those cases in
accordance with the main judgment. Transfer petitions are dismissed accordingly.
C.A.No. 6029/2001 @ SLP (C) No. 16346/ 2000
137. The order under challenge in this appeal is the judgment of a Division Bench of
the High Court of Bombay in W.P.No. 4050/ 99 dated 2-8-2000. On the ground that the
members of respondents union (employees of ONGC) are covered by the notification
issued by the Central Government on Dec.9, 1976, the High Court ordered absorption of
the workers employed as contract labour. Inasmuch as the Central Government became
the appropriate Government, for an establishment of ONGC after the amended definition
of the appropriate Government came into force under the CLRA Act w.e.f. 28-1-1986
whereunder the definition of the said expression under the Industrial Disputes Act is
adopted in the CLRA Act, therefore, the Central Government will be the appropriate
Government for ONGC w.e.f. 28-1-1986. It follows that the notification issued on Dec.
9, 1976 would not cover the establishment of the appellant. However, as the High Court
directed absorption of the contract labour in the establishments of the appellant
following the judgment of this Court in Air India's case MANU/SC/0163/1997 :
(1997)ILL J1113SC : (1997)ILL J1113SC (supra) and that judgment has since been
overruled, both on the question of appropriate Government as well as on the point of
automatic absorption, we set aside the order under challenge and accordingly allow this
appeal.
CA.Nos. 6030-34/2001 @SLP(C)Nos 13146-150/2000

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138. These appeals are directed against the order of the High Court of Andhra Pradesh
in W.P.Nos. 1652-1655/999 and 1959-99 dated 22-11-1999. The Division Bench of the
High Court took note of the fact that the order of the learned single Judge had been
given effect to and on the facts declined to condone the delay of 353 days in filing the
writ appeals. In our view, having regard to the facts and circumstances of the case, no
interference with the impugned order, is warranted. The appeal are, therefore,
dismissed.
C.A.Nos. 6024-6025/2001 @ SLP (C)Nos. 8282-83/2000
139. These appeals are from the order of Division Bench of the High Court of Gujarat in
L.P.A.No. 118/2000 dated 19-4-2000 which was directed against the interim order
passed by a learned single Judge. Inasmuch as the writ petitions are pending before the
High Court, we are not inclined to interference with the orders impugned in the appeals.
We have it open to the High Court to dispose of the writ petitions in terms of the main
judgment. The appeal are accordingly dismissed.
T.P.(C) No. 169/2000
1 4 0 . In this transfer petition the petitioners seeks transfer of S.C.A.No. 5192/99
pending in the High Court of Gujarat. Notice has been issued but the case is not
transferred. In view of the fact that we have pronounced the judgment in the connected
case, we are not inclined to order transfer of the case from the High Court. We leave it
open to the High Court to dispose of the said appeal in accordance with the main
judgment of this Court. Transfer petition is dismissed accordingly.
C.A.No.6023/2001 @ SLP (C) No. 19391 / 99
141. The appeal arises from the judgment and order dated 19-8-1999 of the High Court
of Patna, Ranchi Bench, Ranchi, in L.P.A. No. 214/99 (R). The Division Bench declined
to interfere with the order of the learned single Judge dismissing the writ petition filed
by the appellant.
1 4 2 . The case arose out of the award dated Oct, 3, 1996 passed by the Central
Government Industrial Tribunal No. 1 directing the appellant to absorb the contract
labour. The Tribunal on appreciation of the evidence found that the contract labourers
were not regularized to deprive them from the due wages and other benefits on par with
the regular employees under sham paper work by virtue of the sham transaction. It was
also pointed out that the workmen in other coal washery were regularized. The claim of
the appellant that the washery was given to the purchaser was not accepted as being a
sham transaction to camouflage the real facts. The learned single Judge on
consideration of the entire material confirmed the award and the Division Bench
declined to interfere in the LPA. We find no reason to interfere with the order under
challenge. The appeal is, therefore, dismissed with costs.
C.A.No. 141/2001
143. This appeal arise from the judgment of the High Court of Judicature at Bombay
passed in W.P.No. 2616/99 dated 23-12-1999. The employment, of contract labour in
the concerned establishment of the appellant was prohibited by the notification issued
by the Central Government under Section 10(1) of the CLRA Act on 16-11-1999.
Following the judgment of this Court in Air India's case MANU/SC/0163/1997 :
(1997)ILLJ1113SC : (1997)ILLJ1113SC (supra), the High Court directed the appellant to
absorb the contract labour. Inasmuch as we have overruled the judgment of this Court

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in Air India's case (supra), the direction given by the High Court cannot be sustained.
We, however, leave it open to the respondent union to seek appropriate relief in terms
of the main judgment. The order, under challenge, is set aside. The appeal is
accordingly allowed.
144. In all these cases except in C.A.6023/ 2001 @ SLP (C) No. 19391/99, the parties
are directed to bear their own costs.

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