R.K. PANDA AND ORS. versus STEEL AUTHORITY OF INDIA AND ORS.

Citation: [1994] 3 S.C.R. 1034 · Decided: 12-05-1994 · Supreme Court of India · Bench: KULDIP SINGH · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
R.K. PANDA AND ORS. 
v. 
STEEL AUTHORITY OF INDIA AND ORS. 
MAY 12, 1994 
[KULDIP SINGH, P.B. SA WANT AND N.P. SINGH, JJ.] 
Contract Labour (Regulation and Abolition) Act 197(}-Held, does not 
confer any light on contract labourers to be absorbed or to beco1ne em11toyees 
of tlie principal en1ploye1--Question whether engage1ne11t of labourers through 
C a contractor is a canlollflage, held, to be 1101n1ally decided under lndust1ial 
Disputes Act-However, in view of the fact that interint relief had already been 
given by Court, directions regarding abso1ption given in Article 32 peti-
tion-Practice and procedure. 
A Writ Petition under Article 32 of the Constitution was filed on 
D behalf of workers employed through contractors at the Rourkela Plant of 
the Steel Authority of India (SAIL) contending that they had been working 
for periods ranging from HJ to 20 years under different contractors. They 
contended that they were doing jobs which are being done by the regular 
employees of SAIL. They claimed parity in pay with the regular employees 
E 
and regularisation. After the Writ petition was entertained in 1986, several 
interin1 orders were passed by the Court. 
Allowing the Writ Petition with certain directions, this Court 
HELD : 1. The framers of the Contract Labour (Regulation and 
F 
Abolition) Act 1970 have allowed and recognised contract labour, and they 
have never purported to abolish it in its entirety. The primary object 
appears to be that there should not be any exploitation of the contract 
labourers by the contractor or the establishment. For achieving that object 
statutory restrictions and responsibilities have been imposed on the con-
tractor as well as on the principal employer. Of course, if any expenses are 
G incurred for providing any amenity to the contract labourers or towards 
the payment of wages by the principal employer ~e is entitled to deduct the 
same from the bill of the contractor. The Act also conceives that the 
appropriate Government may after consultation with the Central Board 
or the State Board, as the case may be, prohibit by notification in the 
H Official Gazette, employment of contract labour in any process, operation 
1034 
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R.K P AND/\ 1·. Si\IL 
1035 
or other work in any establi:<ilunent, taking all facts and circumstances of A 
employment of contract,Jabour in such process, operation or the work into 
consideration. (1038-F-H, 1039-A] 
2. No right flows from the provisions of the Act for the contract 
labourers to be absorbed or to become the employees of the principal 
employer. Many principal employers while renewing the contracts have 
been insisting that the contractor or the new contractor retains the old 
employees, such a clause in the contract which is benevolently inserted in 
the contract to protect the continuance of the source of livelihood of the 
contract labourers cannot by itself give rise to a right to regularisation in 
B 
the employment of the principal employer. (1039-B-C; 1040-D] 
C 
3. Whether the contract labourers have become the employees of the 
principal employer in course of time and whether the engagement an.d 
employment of labourers through a contractor is a mere camouflage and 
a smoke screen, as has been urged in this case is a question of fact and 
has to be established by the contract labourers on the basis of the requisite D 
material. Normally the Labour Court and the Industrial Tribunal under 
the Industrial Disputes Act are the competent fora to adjudicate such 
disputes on the basis of the oral and documentary evidence produced 
before them. (1040-F-H] 
E 
4. Normally, the petitioners herein would have been directed to 
pursue the same remedy, but in view of various interirn orders already 
passed by this Court since 1986 as a result of which the majority of 
contract labourers are continuing in employment it is directed that all 
labourers who had been initially engaged through contractors, but have 
been continuously working with the Respondent SAIL for the last 10 yeras 
F 
on different jobs assigned to them in spite of the replacement and change 
of contractors shall be absorbed by the Respondent as their regular 
en1ployees subject to their being medically fit and below the age of super-
nnuation viz. 58 years. [1041-A, 1042-D] 
Gammon India Ltd. v. Union of India, (1974] 1 SCC 596= [1974] 
SCC (L & S) 252; BHEL Worken' Assn. v. Union of India, [1985] 1 SCC 
630= [1985] SCC (L & S) 371 =AIR (1985) SC 409; Math
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