2026 INSC 87

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2026

[@ S.L.P. (CIVIL) NO. 9970 OF 2023]

M/S PREMIUM TRANSMISSION PRIVATE LIMITED … APPELLANT(S)

VERSUS

THE STATE OF MAHARASHTRA AND OTHERS … RESPONDENT(S)

J U D G M E N T

S.V.N. BHATTI, J.

1. Leave granted.

2. On 28.01.2020, the Deputy Labour Commissioner/the appropriate

Government, in exercise of powers under sub-section (1) of Section 10 and

Sub-section (1) of Section 12 of the Industrial Disputes Act, 1947 (For short,

“the ID Act”), referred an industrial dispute for adjudication to the Industrial

Court, Aurangabad. The operative portion of the reference order reads as

follows:

“(…) And whereas, considering the said report of the Deputy

Commissioner of Labour, Aurangabad Division, Aurangabad,

it is satisfied that there is a prima-facie case for referring the

said dispute to the Industrial Tribunal for adjudication.

Accordingly, in exercise of the powers conferred under Sub

Section (5) of Section 12 of the Industrial Disputes Act, 1947,

which has now been conferred by the said Notification, the

Deputy Commissioner of Labour, Aurangabad Division,

Aurangabad sending it to the Hon'ble Member, Industrial

Court, Aurangabad established under Hon'ble President,

2

Industrial Court, Maharashtra, Mumbai for adjudicating the

said dispute.

SCHEDULE

Demands as mentioned in the Schedule enclosed with the

original file.

Signature

(Shailendra B. Pole)

Deputy Labour

Aurangabad Division Commissioner,

Aurangabad”

3. The charter of demands considered by the Conciliation Officer, which

resulted in a failure report, is prefaced hereunder:

“I. All the workmen in Annexure - "A" are to be taken on muster

roll of Opponent no. 1 with immediate effect,

II. All the workmen in Annexure - "A" are to be deemed to in

employment of Opponent no. 1 from their respective dates of

joining as set out in Annexure - "A",

III. All the workmen in Annexure - "A" are to be granted the

classification of permanent workmen under the Model

Standing Orders after their completing 3 months of continuous

service from the first date of joining,

IV. All the workmen in Annexure - "A" are to be granted wages

equal to the wages paid to the workmen named in Annexure -

"B" (the highest paid to any workmen), and arrears in terms of

money in respect of the wages and benefits paid to each of the

workmen for the entire period actually worked in the Factory.

V. Prevent the Opponents from discharging, dismissing or

otherwise teminating the workmen named in Annexure - "A" for

their taking part in Industrial Dispute and for joining the

3

Applicant by resorting Unfair Labour Practice falling under Item

1, 4, 5, 11 of Vth Schedule of Industrial Disputes Act.

VI. All the workmen in Annexure - "A" be paid full wages, who

were shown to be students / training by Opponent no. 4 from

Sept. 2011 to Sept. 2015

VII. The paper arrangements between Opponent no. 1 and

other Opponents from time to time are sham and bogus and

that Opponent no. 1 alone is the employer of workmen of

Annexure- "A" and not Opponent no. 2, Opponent no. 3 and

Opponent no.4.”

4. M/S Premium Transmission Private Limited, MIDC, Aurangabad, filed

Writ Petition No. 7158 of 2020 against the State of Maharashtra through the

Deputy Labour Commissioner, Aurangabad, Conciliation Officer,

Aurangabad, and Aurangabad Mazdoor Union, Khokadpura, Aurangabad,

challenging the order of reference dated 28.01.2020. The array of parties is

referred to as Management, the appropriate Government, and the Union,

respectively.

5. A few admitted circumstances are that the Appellant-Management is

engaged in the business of manufacturing a wide range of transmission

engineering products such as Worm Gearbox, Helical & Bevel Helical

Gearbox, Vertical Coal Pulverising Mill Gearbox, Planetary Gearbox, Helical &

Worm Geared Motors, Bevel Helical Cooling Tower Gearbox, Fluid Coupling,

both Constant and Variable Speed, Extruder Gearbox, Elevator Machines etc.

5.1 According to the Management, the modern technology product line,

guided and assisted by computer numerical control machines, is in place and

in use in the manufacturing process. In the perennial work of operating

computer numerical control machines, the Management states that it has

appointed 118 fully trained personnel. The regular employees are under the

4

disciplinary and administrative control of the factory management, as notified

by the competent authority. The extended narrative of the Management is that

the production activities involve work other than regular/perennial work. For

the discharge of the ancillary and incidental works in the process of

manufacture, the Management entrusts these works to labour contractors

registered under the Contract Labour (Abolition & Regulation) Act, 1970 (for

short, “CLRA”). The said registered labour contractors provide workers to the

Management. The labour contractors, having been registered under CLRA, are

independent of management and have a separate identity under statutes such

as the EPF & MP Act, ESIC Act, Professional Tax Act, GST Act, and other

applicable statutes. The Management has been availing the services of labour

contractors, and the workforce made available by the registered labour

contractors was in accordance with the relevant license. The labour

contractors to whom the contracts were admittedly granted are OM Sai

Manpower Services Ltd. and M/S Aurangabad Multi Services. The members

of the Union are stated to be workers working in the company who were

drafted by the registered contractors. In other words, the contractual

obligations with the registered labour contractors are fully discharged, and

there is no deficiency in this behalf by the Management.

6. The record discloses that the Management availed labour contract

services from 2011 to 2020. The contract labour, due to a change in contract

or contract conditions, apprehended termination of their employment as

contract labour. Therefore, through the Union, the contract labour moved the

Conciliation Officer under Section 12 of the ID Act to maintain industrial

relations and peace . On 11.06.2019, the Union filed a

representation/requisition application directly before the Conciliation Officer.

5

The charter of demands is already noted, and for brevity, the same is not

referred to herein.

7. The Union terms the said labour contracts as sham, bogus, and

camouflaged to deny workers, working through the contractor, the benefits of

equal wages and other attendant benefits. On the very same day, i.e.,

11.06.2019, the Conciliation Officer admitted the representation as a dispute

for conciliation and issued notice to the Management. On 19.06.2019, the

Management responded to the letter dated 11.06.2019, and the charter of

demands set out therein. The foremost objection raised by the Management

is that the forum of a Conciliation Officer is directly approached by the Union,

and no demand was made on the Management before actually availing the

mechanism of conciliation under Section 12 of the ID Act. The Civil Appeal

arises out of the preliminary objection on the maintainability of the

conciliation proceedings and the consequential reference of the industrial

dispute. It is important to note that the Management is not covered by the

definition or meaning of public utility service covered by the first schedule

read with Section 2(n)(6) of the ID Act.

8. The conciliation undertaken between 19.06.2019 and 21.01.2020 has

not resulted in an amicable settlement of the alleged dispute. On 22.01.2020,

the Conciliation Officer submitted a failure report to the Deputy

Commissioner of Labour, Aurangabad/ appropriate Government. The report

dated 22.01.2020 led to the industrial dispute referred through the order

dated 28.01.2020.

6

9. In DP Maheshwari v. Delhi Administration and others ,

1

on raising

preliminary objection, and carrying on the litigation at a nascent stage, this

Court observed as follows:

“1 . It was just the other day that we were bemoaning the

unbecoming devices adopted by certain employers to avoid

decision of industrial disputes on merits. We noticed how they

would raise various preliminary objections, invite decision on

those objections in the first instance, carry the matter to the

High Court under Article 226 of the Constitution and to this

Court under Article 136 of the Constitution and delay a

decision of the real dispute for years, sometimes for over a

decade. Industrial peace, one presumes, hangs in the balance

in the meanwhile. We have now before us a case where a

dispute originating in 1969 and referred for adjudication by the

Government to the Labour Court in 1970 is still at the stage of

decision on a preliminary objection. There was a time when it

was thought prudent and wise policy to decide preliminary

issues first. But the time appears to have arrived for a reversal

of that policy. We think it is better that tribunals, particularly

those entrusted with the task of adjudicating labour disputes

Where delay may lead to misery and jeopardise industrial

peace, should decide all issues in dispute at the same time

without trying some of them as preliminary issues. Nor should

High Courts in the exercise of their jurisdiction under Article

226 of the Constitution stop proceedings before a Tribunal so

that a preliminary issue may be decided by them. Neither the

jurisdiction of the High Court under Article 226 of the

Constitution nor the jurisdiction of this Court under Article 136

may be allowed to be exploited by those who can well afford

1

(1983) 4 SCC 293.

7

to wait to the detriment of those who can ill afford to wait by

dragging the latter from Court to Court for adjudication of

peripheral issues, avoiding decision on issues more vital to

them. Article 226 and Article 136 are not meant to be used to

break the resistance of workmen in this fashion. Tribunals and

Courts who are requested to decide preliminary questions must

therefore ask them selves whether such threshold part -

adjudication is really necessary and whether it will not lead to

other woeful consequences . After all tribunals like Industrial

Tribunals are constituted to decide expeditiously special kinds

of disputes and their jurisdiction to so decide is not to be stifled

by all manner of preliminary objections journeyings up and

down. It is also worth while remembering that the nature of the

jurisdiction under Article 226 is supervisory and not appellate

while that under Article 136 is primarily supervisory but the

Court may exercise all necessary appellate powers to do

substantial justice. In the exercise of such jurisdiction neither

the High Court nor this Court is required to be too astute to

interfere with the exercise of jurisdiction by special tribunals at

interlocutory stages and on preliminary issues.”

(Emphasis supplied)

10. Let us examine whether the case on hand falls within the caution

administered by this Court in DP Maheshwari (supra). The Management’s

preliminary objection on the mode and method of initiation of conciliation

before the Conciliation Officer under Section 12 of the ID Act, the resultant

failure report dated 22.01.2020, and the consequential order of reference

dated 28.01.2020 filed as Writ Petition No. 7158 of 2020 in the High Court of

Judicature at Bombay are relevant for our consideration. The case of the

Management on the reference of an industrial dispute to the Industrial Court

can be stated as follows:

8

10.1 The Union approached the Conciliation Officer directly without first

serving a charter of demands on the Management. For the existence of

an “Industrial Dispute” under the ID Act, a charter of demand by the

Union must first be stated or raised with the employer, and the

employer rejects the same. A mere application to the Conciliation Officer

without a prior dispute with the employer cannot be termed an

industrial dispute. The Conciliation Officer admitted the dispute on

11.06.2019, on the very same day the Union filed the application. The

initiation process was carried out in undue haste, without prior notice

to the Appellant or a preliminary scrutiny/inquiry as required by the

Conciliation Manual. The dispute was admitted on 11.06.2019, but the

Union issued a letter informing the company about its formation and

the factory committee only on 18.06.2019. Therefore, the Union had no

standing to raise the dispute on the date it was admitted. The

individuals named in the dispute were contract labourers employed by

independent contractors, namely, M/s. Om Sai Manpower Services Pvt.

Ltd. and M/s. Aurangabad Multi Services are licensed under CLRA.

Therefore, there was no direct employer-employee relationship between

the Appellant and these workmen. Moreover, the Deputy Labour

Commissioner referred the matter to the Industrial Court

unquestioningly based on the Conciliation Officer’s failure report,

without applying their mind to the fact that no valid industrial dispute

existed due to the lack of a demand notice. The Appellant sought to

quash the Conciliation Admission Order dated 11.06.2019, the Failure

Report dated 22.01.2020, the Reference Order dated 28.01.2020 and

9

stay on the proceedings in Reference (IT) No. 01/2020 pending before

the Industrial Court.

11. The Union resisted Writ Petition No. 7158 of 2020, and we find it

unnecessary to refer to the detailed stand taken against the Writ Petition. The

Management argued that, for an industrial dispute to exist under Section 2(k)

of the ID Act, a demand must be raised at first instance with the employer,

and the employer’s rejection of that demand constitutes the industrial

dispute. The Union did not raise a dispute with the Management; instead, it

approached the Conciliation Officer directly. The Conciliation Officer, without

preliminary scrutiny or serving any charter of demand on the Management,

issued notice for appearance, more particularly in contravention of the

Manual of Conciliation Officer. At any rate, the conciliation cannot be said to

have commenced on the representation received from the Union. Per contra,

the Union argued that serving a demand notice directly on the employer often

results in immediate termination of service before the protection under

Section 33 of the ID Act is availed. The Conciliation Officer has the power to

intervene not just in existing disputes but also in apprehended disputes under

Section 12(1) of the ID Act. The Union contended the contracts were sham

and bogus, and the workers were actually direct employees. They relied on

Shambu Nath Goyal v. Bank of Baroda,

2

asserting that a written demand is

not a sine qua non for an industrial dispute to exist. The Management had

no intention to settle. They eventually terminated the workers during the

pendency of the reference, leading to complaints under Section 33-A of the ID

Act and the Prevention of Unfair Labour Practices Act.

2

(1978) 2 SCC 353.

10

12. The impugned judgment held that conciliation proceedings commence

when the Conciliation Officer gives formal intimation in writing declaring his

intention to commence proceedings from a specified date. In this case, the

Conciliation Officer validly issued notice on 11.06.2019 to commence

conciliation proceedings on 19.06.2019. On the requirement of serving a

charter of demand first to the Management, the impugned judgment

succinctly records that while normally a demand should be served on the

employer first, a written demand is not a sine qua non for an industrial

dispute to exist, unless it is a public utility service. On the crucial aspect of a

dispute or an apprehended dispute, it has been held that the Conciliation

Officer has discretion to intervene even if a dispute is apprehended. The

Conciliation Officer ought not, and need not, wait for the situation to escalate

into industrial unrest. The initiation of conciliation proceedings without a pre-

conciliation meeting cannot be said to be illegal or to contravene the procedure

stipulated in this regard. The conciliation manual is primarily for guidance

and should be treated as a document intended to guide the officer. In the case

at hand, there is a dispute regarding the relationship between the employer

and the employee, between the Management and the contract labour working

through the two labour contractors. The relationship is to be decided by the

Industrial Court, but not the Conciliation Officer. The appropriate

Government accepted the failure report, and the decision to refer the dispute

to the Industrial Court for adjudication conforms to the requirements of law.

Interference with the ongoing dispute-resolution mechanism would render the

cause or grievance remediless.

11

13. We have heard Mr. C.U. Singh, Learned Senior Advocate, Mr. Sandeep

Sudhakar Deshmukh , Advocate, and Shri B.H. Marlapalle, Learned Senior

Advocate for the parties.

14. Mr. C.U. Singh argues that the statutory redressal mechanism under

the ID Act can or could be availed by a union, subject to complying with the

pre-condition of, first, serving a charter of demand to the Management,

second, upon the Management declining to accept the charter of demands;

and alternatively, on the assertion and denial of demands a dispute is said to

be existing for deliberation before the Conciliation Officer. The Union

admittedly has not placed the charter of demands before the Management.

The invocation of a forum for conciliation under Section 12 of the ID Act

through a representation is ex facie illegal, and the consequent submission of

a failure report, leading to the reference of an industrial dispute, is likewise

illegal and liable to be interfered with and set aside. The High Court justified

the reference erroneously by relying on the concept of apprehended dispute.

The deliberation before the Conciliation Officer could not be equated with the

deliberation between the Management and the Union while examining the

charter of demands. He places strong reliance on Sindhu Resettlement

Corporation Ltd. v. Industrial Tribunal

3

and Prabhakar v. Joint Director,

Sericulture Department.

4

To sum up, the preliminary objections to the ongoing

dispute resolution are that, firstly, there is no dispute; secondly, the dispute

referred to the Industrial Court is illegal and contrary to the ID Act.

15. Mr. Sandeep Sudhakar Deshmukh, appearing for the Union, argues

that the preliminary objection is premised on the ratio laid down by this Court

in Sindhu (supra) and Prabhakar (supra). There is no statutory requirement

3

(1968) 1 SCR 515.

4

(2015) 15 SCC 1.

12

as a precondition for invoking the jurisdiction of the Conciliation Officer by

moving the Management a charter of demands, receiving an oral or written

rejection of the demands, and then moving the Conciliation Officer for a

mutually agreeable settlement under Section 12 of the ID Act. The ratio of the

cases relied on by the Management, at best, could be applied to a situation

where an employer-employee relationship is admitted. In the instant case, the

Management does not recognise the workers engaged through registered

contractors as the Management’s workmen. The case of workers is that

contract labour is either a sham or camouflaged to deny the workers of the

Union the attendant benefits. The charter of demands is for their treatment

on the muster rolls of the Management as the principal employer and for the

regularisation of their services. The contract under which the workers were

working was not extended, nor were the contract labour allowed to work, even

if a new contractor was given the work. As rightly noted by the High Court,

the charter of demands, if placed before the Management at the first instance,

would result in cessation of even the contract labour employment of the

workers. He relies on Vividh Kamgarh Sabha v. Kalyani

5

and Cipla Ltd v.

Maharashtra General Kamgar Union

6

for the proposition that the Union has

to canvas unfair labour practice resulting in termination of services of

workmen who are discharging work and duties normally discharged by

perennial workers. Shambu Nath Goyal v. Bank of Baroda

7

deals with an

apprehended dispute leading to conciliation/industrial dispute, and the said

ratio in all fours is applicable to the case on hand. The Management, by

raising a preliminary objection, cannot deprive the workers working through

5

(2001) 2 SCC 381.

6

(2001) 3 SCC 101.

7

(1978) 2 SCC 353.

13

the registered contractor of a legal remedy against the alleged illegal

termination or discontinuation of service. The initiation of conciliation

proceedings, submission of the report, and the consequent reference to the

Industrial Court are valid and legal. At best, having regard to the fact in issue

between the Management and the Union, appropriate issues are framed for

decision, but aborting the very dispute would be contrary to the ID Act.

16. Mr. B.H. Marlappalle, Learned Senior Advocate, contends that the

preliminary objection of the Management is without merit. He appears for the

contractors who facilitated providing contract labour services to the

Management. The charter of demands, according to him, would depend on

who the principal employer is of the workers engaged through contract labour.

He prays for the dismissal of the Civil Appeal.

17. We have taken note of the rival contentions and perused the record.

18. At the outset, we would like to refer to the constitution bench judgment

of this Court in Steel Authority of India Limited and others v. National Union

Waterfront Workers and Others.

8

Stated in fine, the factual background in

SAIL (supra) is:

18.1 The appellants therein, a Central Government Company, entrusts the

work of handling the goods in the stockyards to contractors after calling for

tenders in that regard. The Government of West Bengal issued a notification

dated 15.07.1989 under Section 10(1) of the CLRA prohibiting the

employment of contract labour in four specified stockyards of the appellants

at Kolkata.

8

(2001) 7 SCC 1.

14

18.2 On behalf of the appellants, the Government of West Bengal initially

kept the said notification in abeyance for a period of six months. It thereafter

extended that period from time to time, but not beyond 31.08.1994.

18.3 The Union representing the cause of 353 contract labourers moved the

High Court of Judicature at Calcutta 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 15.07.1989 , and

further prayed that the notification dated 28.08.1989, keeping the prohibition

notification in abeyance, be quashed.

18.4 The High Court allowed the writ petition, set aside the notification dated

28.08.1989, and all subsequent notifications extending the period and

directed that the contract labour be absorbed and regularised from the date

of the prohibition notification.

18.5 Assailing the said judgment, the appellant therein filed a writ appeal

and challenged the prohibition notification of 15.07.1989. They filed a writ

petition in the Calcutta High Court.

18.6 While these cases were pending before the High Court, this Court

delivered a judgment in Air India Statutory Corporation v. United Labour Union

9

holding, inter alia, that in the case of Central Government Companies, the

appropriate Government is the Central Government. It thus upheld the

validity of the notification dated 09.12.1976 issued by the Central

Government under Section 10(1) of the CLRA prohibiting employment of

contract labour in all establishments of the Central Government Companies.

18.7 On 03.07.1998, a Division Bench of the High Court dismissed the writ

appeal as well as the writ petition filed by the appellants, taking the view that

9

(1997) 9 SCC 377.

15

on the relevant date, the appropriate Government was the State Government.

The legality of this judgment and order was challenged in the appeal to this

Court.

19. For the present adjudication, we refer to the ratio decidendi in SAIL

(supra) on automatic absorption and between genuine and sham contracts ,

which can be, in a nutshell, stated thus:

On Automatic absorption

19.1 This Court examined the scheme of CLRA and held that Section 10 is

merely a regulatory and prohibitory provision. It creates a bar on employing

contract labour, but it does not create a positive right of absorption for the

workmen.

10

This Court settled that the prohibition of contract labour under

Section 10(1) does not imply an automatic absorption of contract labour as

direct employees of the principal employer.

19.2 This Court observed that CLRA provides for specific penal

consequences for violating the Section 10 notification under Sections 23 and

25. Further, it was held that when the legislature has provided penalties for

the violation, courts cannot read into the statute a consequence that the

legislature chose not to include.

19.3 The Court prospectively overruled the ratio settled in Air India (Supra),

wherein it was held that after notification under Section 10 of the CLRA is

issued, the intermediary vanishes. A direct relationship is established

between the principal employer

11

and employee.

19.4 The Court observed that in support of the contention of automatic

absorption, the emphasis is placed on the decision in Standard vacuum

10

Clause (i) of Section 2 (1) CLRA.

11

Clause (g) of Section 2(1) CLRA.

16

case

12

, in which the Court had directed absorption of contract labour as a

consequence of the prohibition of employment of contract labour. The Court

pointed out that no such principle has been laid in that Judgment. Still, a

mere direction extending the prohibition of contractual labour from the date

of prohibition was to take effect to permit the existing contract labour to

continue for the rest of the contract period.

Genuine vs. Sham contracts

19.5 The Court, while drawing a distinction between a prohibited valid

contract and a sham contract, held that, on the one hand, if the contract is

genuine but Section 10 of the CLRA notification subsequently prohibits

contract labour, the principal employer must stop employing contract labour.

The workers do not become employees. The contractor releases them.

19.6 On the other hand, if the contract is found to be sham, nominal, or a

camouflage, in which the principal employer controls the workers and pays

their salaries, but uses a contractor merely to bypass labour laws, then the

workers are de facto employees of the principal employer.

19.7 Further, this Court opined that the dispute regarding whether a

contract is sham or genuine is a disputed question of fact, and a writ Court

should not direct absorption without adjudicating it; an Industrial Court or

Labour Court must adjudicate this issue in a dispute raised by the workmen.

20. The stand of the Management on the relationship between the contract

labour and the Management is stated in the Civil Appeal as follows:

“Questions of Law:

(iii) Whether the Hon'ble High Court ought to have considered

that, the Conciliation Officer has not verified the locus standi

12

AIR (1960) SC 948.

17

of the alleged Union and its members, since the alleged Union

is unconnected to the business of the petitioner company and

the persons listed in the Annexure of the Application are not

the employees of the petitioner's company, therefore,

preliminary enquiry/investigation by the Conciliation Officer

was mandatory while admitting the dispute in Conciliation?”

“Grounds:

(F) Because the Hon'ble High Court failed to consider the

section 33 of the manual of the Industrial Dispute which

clearly holds that, the dispute should not be admitted in

conciliation if the employees on whose behalf it has been

sponsored are not workmen with the meaning of the Act.

Thereby the said provision clearly mandates to conduct

enquiry by the Conciliation Officer to look into the members of

the Union whether they are employees of the petitioner

employer against whom the demand is raised. Looking to the

present case, the petitioner has specifically shown that the

persons listed in the Annexure along with the request

application are not the employees of the petitioner company.

Moreover, bulky evidence was filed on record before the

Conciliation Officer as well as the Hon'ble High Court showing

that the petitioner company has entered into the agreement

with contract labour providing companies. The said contracts

are signed In terms of Registration and Licenses issued by the

Licensing Authority under Contract Labour (Abolition &

Regulation) Act, 1970. Therefore, prima facie, the petitioner

company has shown that the alleged Union having no

connection with the petitioner company and the alleged

members of the Union are not employees of the company.”

18

21. The preliminary objection on maintainability is examined from the case

stated by the Management. The Management endeavours to preliminarily

eclipse the industrial dispute by relying on the decisions of this Court in

Sindhu (supra) and Prabhakar (supra).

21.1 In Sindhu (supra), the respondent/R. S. Ambwaney was appointed as

an accounts clerk by the appellant therein on 13.12.1950. In 1953, the

appellant incorporated a subsidiary company, originally named Makenzies

Heinrich Bulzer (India) Limited and later incorporated as Sindhu Hotchief

(India) Limited. On 18.09.1953, the appellant formally placed Ambwaney’s

services at the disposal of the subsidiary. Sindhu Hotchief issued him an

appointment order dated 05.09.1953, placing him on 18robationn and

contemplating confirmation. Ambwaney worked in the subsidiary until

20.02.1958, when Sindhu Ho tchief terminated his services after paying

statutory retrenchment compensation. The next day , he reported to the

appellant therein for duty but was refused re-employment because his former

post had been permanently filled. He then demanded retrenchment

compensation from the appellant. Mazdoor Mahajan /union-respondent

supported this demand. Conciliation having failed, the Government of Gujarat

referred the matter to the Industrial Tribunal on 15.11.1960. The reference

(Demand No. 1) sought Ambwaney’s reinstatement in the appellant’s service

with wages from 21.02.1958. The Tribunal , by order dated 10.08.1961,

ordered reinstatement with back wages. The High Court of Gujarat dismissed

the writ petition of the appellant therein.

21.2 This Court, in the civil appeal filed by the management, found that

although Ambwaney initially remained an employee of the appellant when

placed at the subsidiary’s disposal, he later accepted confirmation in Sindhu

19

Hotchief and served there for 4½ years. A confirmation, coupled with receipt

of retrenchment compensation from the subsidiary, demonstrated that his

employment with the appellant therein had ended. Therefore, he had no

subsisting right to reinstatement. Letters from Ambwaney (07.03.1958) and

the union therein (10.07.1959) showed that their demands to the appellant

were confined to retrenchment compensation, not reinstatement. Because no

dispute on reinstatement existed between Ambwaney and the employer-

appellant, the State Government’s reference on that question was beyond

jurisdiction. In this background, it has been held that a mere demand made

to the Government, unpreceded by a dispute with the employer, cannot

constitute an industrial dispute under the ID Act. By voluntarily taking the

new job, accepting probation/confirmation, and receiving retrenchment

compensation from the subsidiary, the employee effectively entered a new

contract, terminating the old one.

21.3 We have to examine the circumstances in Sindhu (supra) to distinguish

between a dispute and an apprehended dispute.

21.4 In Prabhakar (supra), the petitioner–claimant was appointed as a Clerk

in the Sericulture Department, Government of Karnataka, Belgaum on

01.04.1984. His services were terminated on 01.04.1985. During the period

from 01.04.1985 to 1999, the petitioner did not approach any judicial/quasi-

judicial authority to challenge the said termination. In 1999, the claimant

approached the appropriate Government alleging that his services were

terminated illegally and in violation of the provisions of Section 25-F of the ID

Act. In the claim made by the petitioner, the only explanation given was that

he had approached his employer on several occasions with a request to

reinstate him in service and pay back wages and other consequential benefits.

20

The conciliation proceedings had started, which ended in failure. Thereafter,

the appropriate Government referred the matter regarding the validity of the

appellant’s termination for adjudication. His employer stated that the dispute

was not maintainable given that the claimant had raised the dispute after

fourteen years of his termination. On merits, it was further pleaded that the

management did not terminate the claimant’s services, but the claimant left

the services. After the evidence was led, the Labour Court passed the award

holding that the petitioner had worked for more than 240 days and his

services were terminated by the Management without complying with the

provisions of Section 25-F of the ID Act. As a result, the Labour Court ordered

reinstatement of the claimant but denied back wages.

21.5 The management preferred a writ petition against this award, which the

Single Judge of the High Court of Karnataka dismissed. The management

preferred a writ appeal against the dismissal of the Writ Petition by the Single

Judge which was allowed by the division bench on 06.06.2011. Challenging

the order of the Division Bench, the claimant preferred the appeal before this

Court. This Court held that the existence of an industrial dispute is strictly

contingent upon the demand and rejection test, whereby a formal demand by

the workman and its subsequent refusal by the employer serve as a

mandatory precondition; consequently, a belated demand raise d after a

significant lapse of time may negate the existence of a live dispute. Regarding

the power of Reference under Section 10 of the ID Act, the Court held that the

appropriate Government exercises a purely administrative function, requiring

subjective satisfaction based on material records that a dispute exists or is

apprehended, and that the claimant is indeed a workman. While the

Government must apply its mind to these jurisdictional facts and cannot act

21

mechanically. It is legally impermissible for the appropriate Government to

adjudicate the merits of the dispute, a function reserved exclusively for the

Industrial Court. Therefore, the Government’s order is subject to judicial

review; a refusal to refer a dispute based on an assessment of merits is

unsustainable in law, just as a reference made absent a valid existing or

apprehended dispute is liable to be quashed. This Court held that the

appropriate Government, while performing this administrative function,

would not decide the dispute between the parties, which may be termed as a

judicial function, and such judicial function is to be discharged by the Labour

Court/Industrial Court only. To fortify this observation, the Court relied on

the Judgement in Ram Avtar Sharma v. State of Haryana

13

, wherein it was

held that if the Government, while refusing to make reference, delves into the

merits of the dispute, the same is not permissible under law. The appropriate

course is to make a reference, and such disputes are decided by the Labour

Court/Industrial Court as an adjudicatory authority. Thus, this Court

concluded that where an industrial dispute exists or is apprehended, but the

appropriate Government refuses to refer, such a refusal can be challenged in

the court of law. Conversely, if the reference is made even when no dispute

exists or is apprehended, such a reference will also be subject to judicial

review.

22. The Union argues that the ratio laid down in the said decisions on facts

is distinguishable and cannot be treated as an authoritative pronouncement

where a tripartite situation, such as a registered contractor, workers working

through a registered contractor, and a contract contested as sham and

nominal only to defeat the rights of the workmen, is presented for decision. In

13

(1985) 3 SCC 189.

22

a case such as the present, the preliminary objection is first examined in all

fours as to whether the decisions in the above cases are applicable or

distinguishable.

23. The Union relies on Shambu Nath Goyal (Supra) and contends that in

cases where the industrial unrest is apprehended, it is sufficient to invoke the

forum for conciliation. The circumstances considered in Shambu Nath Goyal

(supra) are that the appellant therein, S.N. Goyal, was a clerk at the Bank of

Baroda. He was served a charge sheet on 31.07.1965, subjected to an inquiry,

and ultimately dismissed from service. The workman appealed his dismissal

to the Bank's appellate forum, but his appeal was unsuccessful. Following the

failure of conciliation proceedings, the appropriate Government referred to

Section 10(1) of the ID Act to adjudicate whether the dismissal was justified

and if the workman was entitled to relief. During the Tribunal proceedings,

the Bank raised a preliminary objection that no oral or written demand

regarding the workman was made to the Management before approaching the

Conciliation Officer. Therefore, the Bank argued, no “industrial dispute”

existed, rendering the Government’s reference incompetent. The Industrial

Tribunal, Chandigarh, upheld the Bank’s preliminary objection. It was held

that because no demand, either oral or in writing, was made by the workman

to the Bank before approaching the Conciliation Officer, there was no dispute

in existence on the date of the reference. Consequently, the Tribunal held that

the reference made by the Government was incompetent.

24. This Court held that the term “industrial dispute” is defined broadly as

any “dispute or difference” between employers and workmen connected with

employment, non-employment, the terms of employment, or conditions of

labour. The ID Act does not prescribe any specific manner in which a dispute

23

must arise. Specifically, a formal written demand by the workman is not

a sine qua non for an industrial dispute to exist. The only exception is for

public utility services, where Section 22 of the ID Act mandates a strike notice.

The court relied on the judgment of Beetham v. Trinidad Cement Ltd.,

14

to

define “difference.” In the said judgment, Lord Denning observed that a

difference exists whenever parties are at variance; they need not be “locked in

combat” or come to blows. It is sufficient if they are “sparring for an opening”.

Reading a requirement for a written demand into the statute would amount

to “re-writing the section”. An industrial dispute exists if there is a real,

substantial difference with persistence, which was satisfied here by the

workman’s continuous claim for reinstatement during the inquiry and appeal.

24.1 On the flair or nature of reference under Section 10(1) of the ID Act, the

decision further states that the appropriate Government has the power to

refer a matter for adjudication if it forms an opinion that an industrial dispute

either exists or is apprehended. The resultant order of reference is an

administrative act, and not a judicial or quasi-judicial determination. The

factual existence and expediency of referring are matters entirely for the

appropriate Government to decide. In Shambu Nath (supra), this Court also

considered constructive/implied demand through conduct which we may not

refer to, having appreciated the definite case of the Management and the

Union. This Court distinguished Sindhu Resettlement Corporation on two

grounds: (i) Sindhu did not examine the appropriate Government’s power to

refer apprehended disputes, and (ii) in Shambu Nath, unlike in Sindhu, there

was unimpeachable evidence that the workman had demanded

reinstatement, proving a dispute actually existed. This Court held that a

14

(1960) 1 All ER 274, 279 : 1960 AC 132.

24

formal written demand by a workman to the employer is not a sine qua non

for the existence of an industrial dispute under Section 2(k) of the ID Act. An

industrial dispute exists whenever there is a real and substantial difference

between the parties. The Government’s administrative decision to refer such

an apprehended dispute under Section 10(1) ought not to be canvassed before

courts as if it were a judicial determination. We keep the above in mind when

applying which citations are apt to the case at hand.

25. In Kalyani (supra), the union representing the workmen of a canteen

run by the respondent industry claimed that the members are not being

treated at par with other employees and are, in fact, notionally engaged

contractors to run the canteen. As the respondent was not accepting to treat

the appellants as their employees, a complaint was filed under Section 28(1)

of the Maharashtra Recognition of Trade Unions Act and Prevention of Unfair

Labour Practices Act, 1971 (for short, “MRTU”), thereby alleging that the

management therein had engaged in unfair labour practices under items 1(a),

2(b) and 4(a) of the Schedule II and items 3, 5, 6, 7, 9 & 10 of Schedule IV of

the MRTU. The complaint was dismissed by the High Court of Judicature at

Bombay. In Krantikari Suraksha Rakshak Sanghatana v. S.V. Naik,

15

the High

Court of Judicature at Bombay had held that the Industrial Court, on the

basis of a complaint under the MRTU Act, cannot abolish a labour contract

and issue a direction to the industry to be treated as direct employees of the

company. Similarly, in General Labour Union (Red Flag), Bombay v.

Ahmedabad Mfg. and Calico Printing Co Ltd.

16

, this Court opined that, if there

are workmen whom the employer has not accepted as its employees, then no

complaint would lie under the MRTU Act. The provisions of the MRTU can be

15

(1993) 1 CLR 1003 Bom.

16

(1995) Supp (1) SCC 175.

25

applied only to workmen who are admittedly employees of the employer. If

there is a dispute regarding the relationship, the appropriate remedy is sought

before the relevant forum. Only after the relationship is established can a

complaint be made under the MRTU Act. The appellants therein submitted

that they were employees of the respondent union, and only for the purposes

of defeating the claim, the industry therein has not admitted this fact. This

Court found no substance in the argument of the union therein. This Court

concluded that the complaint was not maintainable , noting that the

employee–employer relationship between the appellant and the respondent

was never established and, hence, the complaint lacked locus standi. Lastly,

this Court granted liberty to the appellant to approach the appropriate

authority for a clarification/declaration regarding the status of their

workmanship, and then to raise a dispute before the Industrial Court.

26. The ratio or the principle laid down in Cipla (Supra), to some extent, is

nearer to the facts under consideration before the conciliation officer. The

facts in issue in Cipla are that the respondent Union filed a complaint under

Section 28 of the MRTU Act against Cipla Ltd. The complaint alleged unfair

labour practices under Schedule IV, Items 1(a), (b), (d), and (f) of the MRTU

Act. The union therein alleged that Cipla engaged persons to keep the factory

premises clean and hygienic, but fraudulently showed them as contract

workmen working for a contractor. They claimed the contractor was merely a

name-lender and the actual employer was Cipla. The union therein asserted

that Cipla terminated these workmen every 11 months to deprive them of

permanent status and wages applicable to permanent employees .

Cipla

denied the existence of an employer-employee relationship, contending that

the workmen were employees of a specialised agency engaged for

26

housekeeping services under a valid agreement. The legal principle can be

stated that unless the employer-employee relationship is undisputed or

indisputable, the question of unfair labour practice cannot be inquired into

by the Labour Court under the MRTU Act if workmen seek to repudiate their

contract with a contractor and claim a direct legal relationship with the

principal employer, such an adjudication can only be done by a regular

Industrial Court or Court under the ID Act. The Labour Court cannot

adjudicate as it is constituted under the MRTU Act. Moreover, the proceedings

under the MRTU Act are summary in nature. Elaborate considerations

required to determine the existence of an employer-employee relationship, if

necessary by lifting the veil, fall outside the scope of Section 28 or Section 7

of the MRTU Act. Section 32 of the MRTU Act, which allows the court to decide

matters arising out of an application, does not enlarge the court’s jurisdiction.

It applies only to incidental questions where the employment status was

initially undisputed but later disputed, not to those where the relationship

was denied from the inception.

27. The citations relied on at the bar have been discussed in considerable

length to appreciate the actual controversy for decision in the Civil Appeal. In

fine, the management, by raising the preliminary objection, seeks to nip the

alleged industrial dispute in the bud, on the ground that no prior demand

was made on the management before approaching the conciliation officer.

Admittedly, the statute does not require moving the management at the first

instance and then approaching the Conciliation Officer. The sine qua non

condition is argued based on the ratio in Sindhu (Supra) and Prabhakar

(Supra).

27

28. Now, let us examine the circumstances of the case. The Management

admits to the existence of registered contractors through whom the labour

services of the members of the Union were availed. The contract is in

compliance with CLRA. There is no employer-employee relationship between

the Management and the members of the Union. On the contrary, the Union

alleges that the said contract is a sham or a camouflage. The principal

employer is the Management. The termination or discontinuation is illegal.

The Management resorted to unfair labour practices. Therefore, in the charter

of demands, the Union claimed adjudication of the relationship between the

Management and the members of the Union, as well as the nature of the

contract. From the cases pleaded by both parties, applying the ratio laid down

in Kalyani (supra) and Cipla (supra), the Union cannot work out a remedy

under the MRTU Act, and the applicable remedy is an Industrial Dispute

before the Industrial Court. SAIL (supra) is an authoritative pronouncement

for the notification issued under Section 10 of CLRA, the consequences

thereof, and the remedies available to the workmen discontinued by the

management. By applying the principle laid down by the constitution bench,

the proper forum is the Industrial Court/Court for adjudicating issues

concerning the employment and termination of employment of contract

labour. In the backdrop of well-settled principles of law, a workman working

under a contract has to determine their remedies on discontinuation or

termination before the Industrial Court. The next question is whether the

reference is illegal for want of a prior demand before the Management.

29. In the analysis, we notice that there existed a tripartite relationship,

namely, between the Management and the contractor; between the registered

contractor and the workers; and the extended limb of the above relationship

28

is the contract labour working for the Management through a registered

contractor. The Management does not admit that it is the principal employer

of the workmen. Section 2(k) of the ID Act reads as follows:

“(k) “industrial dispute” means any dispute or difference

between employers and employers, or between employers and

workmen, or between workmen and workmen, which is

connected with the employment or non-employment or the

terms of employment or with the conditions of labour, of any

person;”

30. Plainly interpreted, an industrial dispute means any “dispute or

difference” between employers and workmen connected with employment,

non-employment, the terms of employment, or conditions of labour.

31. From Management's perspective, the members of the third respondent

union are not its workers. The very denial of the status could also be

considered as a dispute in the established facts and circumstances of a case.

32. The relevant portion of Section 10(1) of the ID Act reads as follows:

“Where the appropriate Government is of opinion that any

industrial dispute exists or is apprehended, it may at any time

(…)

(Emphasis supplied)”

33. Section 10 enables the appropriate Government to refer an industrial

dispute to a board, to a labour court or to a tribunal, depending upon the

nature of the dispute. The step taken under Section 10 sets in motion a

process for adjudication of a dispute between the parties. The steps envisaged

under Section 12 are known as a conciliatory measure without actually

inviting adjudication between the Management and the Union. Section 12, in

terms, does not stipulate that a condition precedent to invoking its

29

jurisdiction is to first approach the Management and receive a reply, and then

knock on the doors of the Conciliation Officer. The process of reference is

administrative in nature and is not tested on the touchstone of a judicial or

quasi-judicial order by a statutory authority or a court.

34. Sub-section (1) of Section 10 of the ID Act, from a plain reading, enables

the appropriate Government to refer a dispute to a Board, Labour Court or a

Tribunal an “Industrial Dispute.” Let us assume for the present that, in terms

of the ratio of Sindhu (supra) and Prabhakar (supra), a demand before

Management on the dispute is essential to invoke the forum of the

Conciliation Officer. Notwithstanding the ratio, if a case falls within the

second limb or Section 10(1) of the ID Act, the appropriate Government is

within its jurisdiction to refer an apprehended dispute to the Labour Court.

By applying the same rule of interpretation, it can be construed that the

appropriate Government may refer an Industrial Dispute apprehended to the

Board, Labour Court and Tribunal. The argument of management introduces

words into the Section and, at the same time, ignores the second contingent

circumstance, namely, where an Industrial Dispute is apprehended and

renders otiose the words apprehended. Such an interpretation is clearly

unavailable, and the argument fails.

35. A dispute in fact or a dispute in law cannot be exhaustively dealt with

either by examples or through a definition. The dispute is presented in a

variety of dynamic circumstances where one party asserts a right, and

another party denies the right. Similarly, a party affirms the existence of a

fact, and another party disputes its existence. These situations would attract

the simple meaning of a dispute. Similarly, industrial disputes can have

different combinations; namely, between workers and management, un ion

30

and management, and , as in the present case, contract labour and the

Management. In a situation where an unresolved dispute subsists, the same

is resolved through the process of conciliation. The management, in the

instant case, objects to the status of workers and, at the same time, cannot

be heard to argue that the status asserted by them is not adjudicated by the

Industrial Court. The inconsistency is that the preliminary objection is raised

to reject the ongoing proceedings in Reference (IT) No. 1 of 2021, as there is

no demand made to the management beforehand. The Union and the workers

complain of unfair labour practice against the Management, and the remedy

for redressal of both unfair practice and declaration that the contract is a

sham is before the Industrial Court. Therefore, for the rule of law to prevail,

the grievances are not wished away without adjudication. Ubi jus ibi

remedium, i.e., where there is a right, there is a remedy in law, is a principle

to be kept in perspective. Through the reference, a forum for redressal alone

is provided to the contract labour. The argument of the Management derives

a forum to the Union/workers and hence not accepted.

35.1 Further, as per the ratio of SAIL (supra), the contract labour is given the

option to question the contract as a sham and nominal, and pray for

appropriate reliefs. The objection to continuing the industrial dispute under

Section 10 is substantial and has been rightly rejected by the High Court.

36. The two decisions relied on by the Management, once they are excluded,

would compel this Court to apply the principle laid down in SAIL (supra) and

Shambu Nath (Supra) to hold that even if an unfair labour practice is alleged,

the applicable statute is the ID Act and the forum, the labour court. In SAIL

(supra), this Court has held that in the case of sham and nominal contracts,

adjudicatory reliefs of the status of workman vis-à-vis the principal employer

31

are a sine qua non for any other relief. The roadmap for workers under

registered contractors for adjudication of disputes is as follows.

37. The power to refer an 'apprehended' dispute is the statutory application

of the old adage 'a stitch in time saves nine'. It enables the State to intervene

before the industrial peace is shattered. Consequently, permitting Preliminary

Objections to stall this urgent process negates the preventive intent of the

statute, converting a mechanism of immediate relief into an engine of delay.

The appropriate Government, in its armchair, while referring an Industrial

Dispute for resolution, keeps in its perspective industrial peace and

prosperity, to enable workers to work out their just and economic demands

and avoid strikes and lockouts. The administrative decision merely looks at

an Industrial Dispute or an apprehended Industrial Dispute. The merit or

otherwise of the dispute is for the adjudicatory body to decide.

38. The Union or the workers can move the labour court for a declaration

that the contract between the Management and the contractor is sham and

nominal and, consequently, that the contract labour is entitled to enter into

the rolls of the Management and regularisation, etc.

39. The Management establishes that the labour contract complies with the

provisions of law, including the CLRA. Being so, the issue is limited to the

benefits to which the employees are entitled under the CLRA. The relief a party

is entitled to before the Industrial Court is dependent on the case pleaded and

proved by both parties.

40. In the circumstances of this case, the Management's preliminary

objection is that the industrial dispute referred to is illegal and without merit.

For the reasons stated above, we are in agreement with the impugned

judgment. To keep the ongoing adjudication in line with the principles laid

32

down by this Court, the labour court is directed to frame two issues, namely,

(i) whether the contracts through which the employment is provided to the

contract labour are sham and nominal, and (ii) whether, considering the

nature of work discharged by the workm en of the subject Union, the

Management is the principal employer of the members of the Respondent-

Union.

41. The Industrial Court is directed to dispose of Reference (IT) No. 1 of

2021 expeditiously, preferably within four months from the date of receipt of

a copy of this judgment.

42. Therefore, the Civil Appeal fails and is dismissed accordingly. No order

as to costs.

43. Pending applications, if any, are disposed of accordingly.

.………..……….…………………J.

[PANKAJ MITHAL ]

.………..…………………………J.

[S.V.N. BHATTI]

New Delhi;

January 27, 2026.

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2026

[@ S.L.P. (CIVIL) NO. 12192 OF 2023]

M/S PREMIUM TRANSMISSION PRIVATE LIMITED … APPELLANT(S)

VERSUS

KISHAN SUBHASH RATHOD AND OTHERS … RESPONDENT(S)

J U D G M E N T

S.V.N. BHATTI, J.

1. Leave granted.

2. The instant appeal is at the instance of Premium Transmission Private

Limited/Appellant and assails the order dated 17.01.2023 of the Industrial

Court, Maharashtra bench at Aurangabad as confirmed by the High Court in

Writ Petition No. 3259 of 2023 dated 21.03.2023. This Civil Appeal has been

tagged and heard along with the Civil Appeal filed by the Appellant herein in

Civil Appeal arising out of S.L.P.(Civil) No. 9970 of 2023. For convenience,

judgments are pronounced separately.

3. The circumstances leading to the industrial dispute, several rounds of

litigation, orders of this Court as well as the High Court are set out in the

judgment disposing of the companion Civil Appeal. To avoid repetition, these

events are not adverted to once again. It would be sufficient if the narrative

starts with the complaint filed on 05.05.2022 by the Respondents before the

Industrial Court in Complaint No. 1 of 2022 praying for the following reliefs:

“5.1. The cause of action leading to the instant Complaint has

arisen in the territorial jurisdiction of this Hon'ble Court;

2

5.2. The Unfair Labour Practices complained of has been

emerged from 18.04.2020 and is continued on day to day

basis. There is no limitation period prescribed for a Complaint

under Section 33-A of the ID Act. Even otherwise in view of the

Orders passed by the Hon’ble Supreme Court in Suo Moto Writ

(Civil) No.3/2020 the instant Complaint under Section 33-A is

within limitation.

5.3. The subject matter of this Complaint is not res-subjudice

before any other Court, Tribunal, High Court or Supreme Court;

5.4. The subject matter of this Complaint is coming up for

consideration of the Hon’ble Court for the first time; and,

5.5. The Complainants are not in receipt of any caveat from

the Respondent.

(c) Direct the Respondents to pay compensation to the tune of

equal amount of wages due to each of the Complainant Nos. 1

to 118 in terms of prayer clause 9B) above;

(d) Allow the Complaint.

At Aurangabad, dated 05.05.2022.

Signatures of the Complainants”

4. The Management resisted the interim prayer. The Industrial Tribunal

vide order dated 17.01.2023 allowed the prayers and found prima-facie case,

balance of convenience and irreparable loss in favour of the workmen. One of

the main points for consideration in the order of the Industrial Tribunal was

under Section 33(1) of the Industrial Disputes Act, 1947 (for short, “ID Act”).

The view of the Industrial Tribunal on Section 33(1) of the Act is summarised:

4.1 Since a dispute (Reference (IT) No. 1 of 2020) was already pending, it

was incumbent upon the Appellant Company to approach the Tribunal

under Section 33(1) of the ID Act before altering service conditions or stopping

the work of the workmen. The failure to do so constituted a breach of the Act.

3

4.2 The Tribunal observed that the workmen were removed from service

through a “mere exchange of letters” between the Appellant Company and the

Contractors, which was not legally sufficient to sever their engagement given

the pending dispute. Hence, the balance of convenience lay in favor of the

workmen. It held that denying interim relief would cause “great hardship” and

“irreparable loss” to the workmen and their families, who were left without

work.

4.3 The Tribunal allowed the interim application and directed the Appellant

Company to provide work at the factory to the workmen (listed in Annexure-

A of the reference, excluding deleted names) within one month and pay

wages to these workmen regularly during the pendency of the complaint.

5. The management filed WP No. 3259 of 2023, through the impugned

order, the Writ Petition was dismissed, hence the Civil Appeal.

6. Mr. CU Singh, Learned Senior Counsel, contends that directing workers

working through a registered contractor either for continuation or

regularisation is completely illegal. The relief of regularisation or coming on

the muster rolls is dependent on the workers establishing their status vis-à-

vis the management. The prayer, as granted, virtually amounts to allowing

the dispute in the companion Civil Appeal. The test is not a prima facie case,

balance of convenience or irreparable loss; but, the legal test is whether

admittedly, the workers engaged through a registered contractor are workmen

of the contractor or if the Management is the principal employer. The

applicability of Section 33(1) of the ID Act arises only when the status of a

workman is established.

7. Mr. Sandeep Deshmukh , Learned Counsel appearing for the

respondents, submits that the workmen have been prevented from entering

4

the services because of the dispute referred by the Appropriate Government.

The workmen have been working on regular works and there is no dispute on

the working of the contract labour in the Management. The interim prayer

conforms to the larger dispute referred to the Industrial Tribunal.

8. We have appreciated the limited submissions canvassed by the counsel

appearing for the parties. The definition of workman in ID Act and the CLRA

is captured through the plain reading of Section 2(s) of the ID Act, and

Sections 2(1)(i) and 2(1)(b) of CLRA for a comparative study:

ID Act CLRA

Provision(s) 2(s) “workman” means any

person (including an

apprentice) employed in

any industry to do any

manual, unskilled, skilled,

technical, operational,

clerical or supervisory work

for hire or reward, whether

the terms of employment be

express or implied, and for

the purposes of any

proceeding under this Act

in relation to an industrial

dispute, includes any such

person who has been

dismissed, discharged or

retrenched in connection

with, or as a consequence

of, that dispute, or whose

dismissal, discharge or

retrenchment has led to

that dispute, but does not

include any such person—

(i) who is subject to the Air

Force Act, 1950 (45 of

1950), or the Army Act,

1950 (46 of 1950), or the

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;

2(1)(i) “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; or

(B) who, being employed in a

supervisory capacity draws

5

Navy Act, 1957 (62 of

1957); or

(ii) who is employed in the

police service or as an

officer or other employee of

a prison; or

(iii) who is employed mainly

in a managerial or

administrative capacity; or

(iv) who, being employed in

a supervisory capacity,

draws wages exceeding ten

thousand rupees per

mensem or exercises, either

by the nature of the duties

attached to the office or by

reason of the powers vested

in him, functions mainly of

a managerial nature.

wages exceeding five hundred

rupees per mensem or

exercises, either by the nature

of the duties 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 or 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 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.

Definition Any person (including an

apprentice) employed in

any industry to do any

manual, unskilled, skilled,

technical, operational,

clerical, or supervisory

work for hire or reward.

A person employed in or in

connection with the work of

any establishment to do any

skilled, semi-skilled or

unskilled, manual,

supervisory, technical or

clerical work for hire or

reward.

Inclusion Does not explicitly exclude

"Out-workers" (people

working from

home/outside).

Does not explicitly include

dismissed/discharged

workmen in the definition

itself (focus is on current

employment).

Exclusion

Does not explicitly exclude

"Out-workers" (people

working from

home/outside). Excludes

Excludes "Out -workers"

(people to whom articles are

given to be processed at their

own home/not under control

6

persons employed mainly

in a managerial or

administrative capacity.

of the principal employer).

Excludes persons employed

mainly in a managerial or

administrative capacity.

Supervisory

Exclusion

Excludes supervisors

drawing wages exceeding

Rs.10,000/month.

Excludes supervisors drawing

wages exceeding Rs.

500/month (Note: This

amount is outdated in text but

practically interpreted

similarly).

Relationship

Requires a Direct

Employer-Employee

relationship (Master -

Servant) between the

Management and the

Workman.

Recognizes a Tripartite

relationship: The workman is

hired by the Contractor but

works for the Principal

Employer.

9. Though the definition of “workman” under Section 2(1)(i) of the CLRA is

textually derived from Section 2(s) of the ID Act, 1947, the two differ

fundamentally in their juridical scope and the structural basis of the

employment between employer and employee. The definition under ID Act is

broad, which includes persons dismissed, discharged, or retrenched in

connection with an industrial dispute to ensure they retain locus standi for

adjudication. The CLRA, being regulatory in nature, contains no such

“extended meaning” for terminated employees. Furthermore, the CLRA

introduces a specific statutory exclusion for “out-workers” whereas the ID Act

does not have this specific statutory exclusion. Under the ID Act, the status

of such workers is determined by the “Control and Supervision Test”.

1

If the

employer controls how the work is done, they may still be workmen under ID

Act, even if working off-site. Under CLRA, they are statutorily barred from the

1

Dharangadhara Chemical Works Ltd. v. State of Saurashtra, AIR 1957 SC 264.

7

definition. Finally, the ID Act presupposes a direct privity of contract (master-

servant relationship) between the management and the worker, whereas the

CLRA definition strictly operates through the medium of a contractor,

covering workers hired “by or through” a third party for the establishment’s

work.

10. A plain reading of Section 33

2

of the ID Act makes it clear that the

restrictions from change of conditions etc., by the management is attracted

2

“33. Conditions of service, etc., to remain unchanged under certain circumstances during

pendency of proceedings.--(1) During the pendency of any conciliation proceeding before a

conciliation officer or a Board or of any proceeding before an arbitrator or a Labour Court or

Tribunal or National Tribunal in respect of an industrial dispute, no employer shall,--

(a) in regard to any matter connected with the dispute, alter, to the prejudice of the workmen

concerned in such dispute, the conditions of service applicable to them immediately before the

commencement of such proceeding; or

(b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal

or otherwise, any workmen concerned in such dispute, save with the express permission in

writing of the authority before which the proceeding is pending.

(2) During the pendency of any such proceeding in respect of an industrial dispute, the employer

may, in accordance with the standing orders applicable to a workman concerned in such

dispute or, where there are no such standing orders, in accordance with the terms of the

contract, whether express or implied, between him and the workman,

(a) alter, in regard to any matter not connected with the dispute, the conditions of service

applicable to that workman immediately before the commencement of such proceeding; or

(b) for any misconduct not connected with the dispute, or discharge or punish, whether by

dismissal or otherwise, that workman: Provided that no such workman shall be discharged or

dismissed, unless he has been paid wages for one month and an application has been made

by the employer to the authority before which the proceeding is pending for approval of the

action taken by the employer.

(3) Notwithstanding anything contained in sub-section (2), no employer shall, during the

pendency of any such proceeding in respect of an industrial dispute, take any action against

any protected workman concerned in such dispute—

(a) by altering, to the prejudice of such protected workman, the conditions of service applicable

to him immediately before the commencement of such proceedings; or

(b) by discharging or punishing, whether by dismissal or otherwise, such protected workman,

save with the express permission in writing of the authority before which the proceeding is

pending.

Explanation.--For the purposes of this sub-section, a "protected workman", in relation to an

establishment, means a workman who, being a member of the executive or other office bearer

of a registered trade union connected with the establishment, is recognised as such in

accordance with rules made in this behalf.

(4) In every establishment, the number of workmen to be recognised as protected workmen for

the purposes of sub-section (3) shall be one per cent. of the total number of workmen employed

therein subject to a minimum number of five protected workmen and a maximum number of one

hundred protected workmen and for the aforesaid purpose, the appropriate Government may

make rules providing for the distribution of such protected workmen among various trade

unions, if any, connected with the establishment and the manner in which the workmen may

be chosen and recognised as protected workmen.

(5) Where an employer makes an application to a conciliation officer, Board, an arbitrator, a

labour Court, Tribunal or National Tribunal under the proviso to sub-section (2) for approval of

the action taken by him, the authority concerned shall, without delay, hear such application

and pass, within a period of three months from the date of receipt of such application, such

8

and applicable if a workman is employed by the Management. The question

on relationship between the Management and the Workman is for decision in

Complaint (IT) No. 1 of 2021. At this stage, the interim prayer amounts to a

virtual pre-judgment of the main dispute between the parties. In this

litigation, the Management attempts to nip the dispute in the bud by raising

preliminary objections and the Union is praying for relief which the union

should agitate after the preliminary issues are decided in favour of the

workmen. Both the parties are not conforming to the requirements of law in

resolving a dispute of fact or dispute in law. Steel Authority of India and others.

v. National Union Waterfront Workers and others

3

, in the event of

discontinuation or discharge, provides for a few measures for workmen

working under a registered contractor and are summed up as follows:

10.1 Remedies Available if Notification Under Section 10(1) is Issued for

Abolition of Contract Labour

10.1.1 The issuance of a Section 10 notification does not lead to the

automatic absorption of contract workers as regular employees of the

principal employer.

10.1.2 The immediate legal effect of such abolition is that the contract

labour working in that specific process must cease to function in that

capacity. The principal employer is prohibited from employing contract labour

for that job thereafter.

order in relation thereto as it deems fit: Provided that where any such authority considers it

necessary or expedient so to do, it may, for reasons to be recorded in writing, extend such

period by such further period as it may think fit: Provided further that no proceedings before

any such authority shall lapse merely on the ground that any period specified in this sub-

section had expired without such proceedings being completed.”

3

(2001) 7 SCC 1.

9

10.1.3 The workers do not become unemployed immediately; they

remain employees of the contractor. The contractor can utilize their services

in any other establishment where contract labour is not prohibited.

10.2 Remedies Available if the Contract is Continued as a “Camouflage”

(Sham Contract)

10.2.1 If it is proved that the contract was a mere ruse or camouflage to

hide the real employer-employee relationship and that the principal employer

retained full control and supervision over the workers the contract is

disregarded as a legal fiction.

10.2.2 In such cases, workmen “will have to be treated as employees of

the principal employer who shall be directed to regularise the services of the

contract labour”. Unlike the Section 10 scenario, here the workers become

direct employees of the company. They are entitled to back wages and benefits

as if they were regular employees from the start (or a date determined by the

Tribunal).

10.2.3 Determining whether a contract is “sham” or “genuine” involves

disputed questions of fact (e.g., Who supervised the work? Who paid the

wages? Who supplied the tools?). Therefore, only the Industrial

Tribunal/Court can adjudicate the dispute. Writ Courts generally do not

decide these disputed questions under Article 226 of the Constitution of India.

10.3 Modes and Methods of re-employment if discontinuation of the contract

is valid

10.3.1 If the principal employer intends to employ regular workmen for

the work previously done by contract labour, they must give preference to the

erstwhile contract labourers.

10

10.3.2 The principal employer cannot simply hire fresh candidates from

the open market while ignoring the displaced contract workers. They are

legally bound to consider the contract workers who were working in that

establishment.

10.3.3 To ensure this "preference" is meaningful, the principal employer

may relax maximum age limit and academic qualifications; specifically, non-

technical posts to accommodate experienced workers.

11. In fine, we conclude in the facts and circumstances of the case, the

relief granted by the High Court and the Industrial Court through the orders

dated 21.03.2023 and 17.01.2023 are unsustainable. The impugned orders

are set aside. Liberty to the workmen is granted to pray for an interim measure

in terms of the dictum in SAIL (supra) before the Industrial Court. The Civil

Appeal is allowed with these observations. No order as to costs.

12. Pending applications, if any, are disposed of accordingly.

.………..……….…………………J.

[PANKAJ MITHAL ]

.………..…………………………J.

[S.V.N. BHATTI]

New Delhi;

January 27, 2026.