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 provisions of the Act what the legislature has not provided whether expressly or by necessary implication, or substituting 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-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 provided 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 on issue of abolition notification under Section 10(1) of CLRA Act. We have gone through the decisions of this Court in V.S.T. Industries case (supra), G. B. Pant Universitys case (supra) and Mohammed Aslams 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 CLRA Act the contract labour working in the establishment of the principal employer has to be absorbed as regular employees of the establishment.

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 is: 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.

Mr. Shanti Bhushan alone has taken this extreme stand that by virtue of 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 this contention of the learned counsel. A careful survey of the cases relied upon by him shows that they do not support his proposition.

In The Maharashtra Sugar Millss 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 definitions 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.

In Shivnandan Sharmas case (supra), the respondent-Bank entrusted its cash department under a contract to the treasurers 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 term 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 treasurers, were also the employees of the Bank. This Court laid down,

if a master employs a servant and

authorises 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. 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 by the contractor and they claimed that they should be re-instated 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 any 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 of 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 press-

mud 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 that they are workmen of the appellant

company and the appellant company is their

employer.

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.

In The Saraspur Mills 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 Mills 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. This case falls in class (iii) mentioned above.

In a three-Judge Bench decision of this Court in Hussainbhais 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 that dispute by the State Government, they succeeded in obtaining an award against the petitioner who unsuccessfully challenged 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 the respondent yet on lifting the veil and looking at the conspectus of factors governing employment, the naked truth, though 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 Managements adventitious connections

cannot ripen into real employment.

This case falls in class (ii) mentioned above.

The above discussion amply justifies rejection of the contentions of Mr. Shanti Bhushan by us.

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.

We have quoted the definitions of these terms above and elucidated their import. The word workman is 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. 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 materials 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 afore-mentioned classes, he cannot be treated as a regular employee of the principal employer.

We have also perused all the Rule 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 employer and the contract labour nor can such relationship be implied from 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. The leftover contention of Ms. Indira Jaisingh may be dealt with here. The contention of Ms. Indira Jaisingh that the principles of contract law sticto sensu do not apply to the labour and management is too broad to merit acceptance. In Rai Bahadurs 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 months 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 was that those who were employed 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 the 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 Indias case (supra) and The Bharat Banks 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.

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.

In the case of Uptron India (supra), the controversy related to the termination of the services of the workmen for unauthorised absence. The Industrial Employment (Standing Orders) Act, 1946 provided that a workman is liable to automatic termination on the ground of unauthorised 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 so created is partly contractual and partly non-contractual as the States have already, by legislation, prescribed positive obligations for the employer towards 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 the provisions of the Contract Act are not applicable to relation between the labour and the management.

The upshot of the above discussion is outlined thus: (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 nomine, 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 afore-said 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 passed 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 Section 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;

(4) We over-rule the judgment of this court in Air Indias case (supra) prospectively and declare that any direction issued by any industrial adjudicator/any court including High Court, for absorption of contract labour following the judgment in Air Indias 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 not 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 regularise the services of the contract labour in the concerned establishment subject to the 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.

We have used the expression industrial adjudicator by design as determination of the questions afore-mentioned requires inquiry into disputed questions 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.6009-6010 /2001 @S.L.P. (C) Nos. 12657-58/98 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.No.6011/2001@ SLP(C)No.20926/98

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 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

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.80/1998 ) is dismissed accordingly.

T.C. Nos.5-7/2000

Civil Writ Petition 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 TC. 5/2000, TC. 6/2000 and TC. 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 the appropriate Government under 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 issue 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

L.P.A. Nos. 326/97 and 18/98 on the file of the High Court of Judicature, Madhya Pradesh, Bench at Jabalpur were transferred and numbered as TC.Nos. 17/2000 and 18/2000. The Letter patent 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.No.6012/2001@SLP(C)No.9568/2000

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 proceedings 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.

C.A.Nos. 719-720/2001

These appeals arise from the judgment and order of a Division Bench of the High Court of Judicature at 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 CLRA 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 respondents herein. The Division Bench maintained the directions under appeals with modification in regard to interim order. In view of the fact that we have over-ruled the judgment of this Court in Air Indias 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

M.A.T. No.1592/1997 pending before the Division Bench of the High Court of Calcutta which was filed against the order of 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

In these appeals, the Food Corporation of India is the appellant. Having regard to the un-amended 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 (1) 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.

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 Indias case (supra) directed the appellant to absorb the contract labour engaged in the depots of the appellant in Jalgaon, Srirampur and Ahmednagar (Khedgaon). Inasmuch we have over-ruled the judgment in Air Indias 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

These appeals by FCI from the judgment of a Division Bench of the Karnataka High Court in W.A. Nos. 345-354/97 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 Indias case (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

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 17.4.98 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. 29.1.96. The grievance of the appellants is that they should have been absorbed with effect from the date of the prohibition notification dated November 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 Indias case (supra) which has since been over-ruled, 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

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 above-mentioned 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

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 respondent union (employees of ONGC) are covered by the notification issued by the Central Government on December 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 December 9, 1976 would not cover the establishments 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 Indias case (supra) and that judgment has since been over-ruled, 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.

C.A.Nos.6030-34/2001@SLP(C)Nos.13146-150/2000 These appeals are directed against the order of the High Court of Andhra Pradesh in W.A. Nos. 1652-1655/99 and 1959/99 dated 22.11.99. 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 appeals are, therefore, dismissed.

C.A.Nos.6024-25/2001@SLP(C)Nos.8282-83/2000

These appeals are from the order of the 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 interfere with the orders impugned in the appeals. We leave it open to the High Court to dispose of the writ petitions in terms of the main judgment. The appeals are accordingly dismissed.

T.P.(C)No. 169/2000

In this transfer petition, the petitioner 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 cases, 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

This 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.

The case arose out of the award dated October 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 regularised 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 regularised. 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

This appeal arises from the judgment of the High Court of Judicature at Bombay passed in W.P.No. 2616/99 dated 23.12.99. 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 16.11.99. Following the judgment of this Court in Air Indias case (supra), the High Court directed the appellant to absorb the contract labour. Inasmuch as we have over-ruled the judgment of this Court in Air Indias 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.

In all these cases except in C.A.6023/2001@SLP(C)No. 19391/99, the parties are directed to bear their own costs.

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.

The explanation appended to this clause clarifies that the expressions mine, owner and agent shall have the meanings respectively assigned to them in clause (j), clause (l) and clause (c) of sub-section (1) of section 2 of the Mines Act, 1952.

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) 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.

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.

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.

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. 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 (Regulation 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 an 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, 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 Advisory 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 of 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. Point No.3 remains to be considered. This is the moot point which generated marathon debate and is indeed an important one.

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 further contended that conceding that the CLRA Act is a beneficial legislation, the benefits which the Parliament thought 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. 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 as 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 contract labour. When the Central Government/State Government/local authority 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 and 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 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. 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 Vs. Union of India & 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 The Standard-Vacuum Refining Co. of India Ltd. Vs. ITS Workmen and Ors. , 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 on 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 benefitted by making it impossible for the principal employer to engage contract labour through a contractor and the benefit of automatic absorption is not conferred by the CLRA Act on the contract labour working in an establishment at the time of issuing the notification prohibiting engagement of contract labour. Mr. K.K. Venugopal, the 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 automatic absorption so giving a direction to make absorption of the contract labour as a consequence of issuance of notification thereunder, prohibiting the engagement of 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. Mr. Shanti Bhushan argued that a contractor 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: The Maharashtra Sugar Mills Ltd. Vs. The State of Bombay & Ors. , Shivnandan Sharma Vs.    The Punjab National Bank Ltd. , Basti Sugar Mills Ltd. Vs. Ram Ujagar & Ors. , The Saraspur Mills Co. Ltd. Vs. Ramanlal Chimanlal & Ors. and Hussainbhai, Calicut     Vs. The Alath Factory Thezhilali Union, Kozhikode and Ors. .    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 any difference whether that relationship was brought about by the act of the principal/master or by the act of his authorised 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 licence, Form XIV relating to issue of employment card and Form XXV    relating to annual returns of the principal employer, to contend that the principal employer has to keep track with the number of workmen employed, terms and conditions on which they are 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, binds 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 (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 in Air Indias 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 Vs. Hind Mazdoor Sabha & Ors.    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 on 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 affect 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 would 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.

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, there 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 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 Heydons 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.

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    Vs. The Industrial Tribunal, Bombay and Ors. , The Bharat Bank Ltd., Delhi Vs. Employees of the Bharat Bank Ltd., Delhi & Anr.    , Rai Bahadur Diwan Badri Das Vs. The Industrial Tribunal, Punjab and Uptron India Ltd. Vs. Shammi Bhan & Anr. . Prior to the enactment of CLRA Act, it is pointed out, the courts have ordered abolition of contract labour and their departmentalisation in The Standard-Vacuums case (supra) and Hussainbhais (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 contract labour; it does not affect the powers of the court to direct absorption of contract labour [see Barat Fritz Werner Ltd.etc.etc. Vs. State of Karnataka ; 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 Indias case (supra), it was held that the consequence of the abolition of contract labour, by necessary implication, would result in the principal 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 Vs. The Workmen , Dena Nath & Ors. Vs. National Fertilisers Ltd. & Ors. and Gujarat Electricitys case (supra) and submitted that the award proceedings stipulated in Gujarat Electricitys 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 had 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.