STEEL AUTHORITY OF INDIA LTD. versus UNION OF INDIA AND ORS.

Citation: [2006] SUPP. 6 S.C.R. 663 · Decided: 26-09-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

STEEL AUTHORITY OF INDIA LTD. 
A 
v. 
UNION OF INDIA AND ORS. 
SEPTEMBER 26, 2006 
[S.B. SINHA AND DAL VEER BHANDARI, JJ.] 
B 
Labour Laws: 
. Industrial Disputes Act, J947-Section JO-Contract Labour 
(Regulation and Abolition) Act, J970--Section JO-Contract labour-
C 
Workers employed by contractors of Government Company-Claim of 
absorption as permanent employees-Reference by State. Government -
Direction by High Court to the Government to make reference of industrial 
dispute to the Industrial tribunal-Correctness of-Held: Labour Court or 
Writ Court cannot decide whether contract labour should be abolished or D 
not-It is within the exclusive domain of Appropriate Government who would 
issue Notification prohibiting employment of contract labour under section 
IO of J970 Act-However, industrial adjudicator would have the jurisdiction 
to determine the plea that contract between management and contractor is 
a sham one since if it is sustainable, workers employed by contractor would 
in effect be direct employees of management-Workers having made an E 
admission that they were working under contractors, cannot withdraw the 
same taking an inconsistent plea--Power of the Government to make reference, 
though an administrative order, not beyond judicial review--Thus, High 
Court erred in holding reference maintainable. 
Appellant-Government Company appointed contractors for F 
manufacturing steel and other products. Respondent nos. 4 to 618-employees 
of the contractors raised an industrial dispute before State Government 
claiming absorption as permanent employees of the appellant. State 
Government referred the dispute to the labour court. Appellant contended that 
the reference under Industrial Disputes Act, 1947 was not permissible since G 
the matter relating to the regulation and abolition of contract labour is 
governed by Contract Labour (Regulation and Abolition) Act, 1970; and that 
the State Government having not issued any notification prohibiting 
employment of contract labour in terms of section 10 of the 1970 Act, 
663 
H 
664 
SUPREME COURT REPORTS (2006) SUPP. 6 S.C.R. 
A workmen did not have any legal right to claim absorption. During pendency 
of the Industrial dispute, appellant challenged the reference. High Court 
disposed of the writ petition. However, workmen raised an additional claim 
that contracts between the appellant and the contractors were sham and bogus 
and as such were direct employees of the management. Thereafter, tribunal 
held the reference to be not maintainable. Trade union filed writ petition 
B alleging that the workmen were direct employees of appellant and were entitled 
to be absorbed as permanent workmen. Single Judge of High Court directed 
the Government to make reference of the industrial dispute to the Industrial 
tribunal. Thereafter, appeals were filed on the ground that no industrial 
dispute could be raised by the workmen; and that the award of Labour Court 
C having been accepted by the workmen, the matter relating to abolition of 
contract labour could only be decided by the Appropriate Government in terms 
ofsection 10 of the 1970 Act. Division Bench dismissed the same. Hence the 
present appeals. 
D 
Allowing the appeal, the Court 
HELO: 1.1. The Contract Labour (Regulation and Abolition) Act, 1970 
is a complete code by itself. The matter relating to regulation and abolition of 
contract labour being governed by the provisions of the 1970 Act, the industrial 
court will have no jurisdiction in relation thereto. (668-Fl 
E 
1.2. Relationship of employer and employee is essentially a question of 
fact. Determination of the said question would depend upon a large number of 
factors. Ordinarily, a writ court would not go into such a question. Neither 
the Labour Court nor the writ court could determine the question as to whether 
the contract labour should be abolished or not, the same being within the 
exclusive domain of the Appropriate Government. A decision in that behalf is 
F required to be taken upon following the procedure laid down in sub-section 
(1) of Section 10 of the Industrial Disputes Act, 1947. A notification can be 
issued by an Appropriate Government prohibiting employment of contract 
labour if the factors enumerated in sub-section (2) of Section 10 of the 1970 
Act are satisfied. (672-G-H; 673-B; 673-C-OJ 
G 
H 
1.3. The industrial adjudicator would have jurisdiction to determine the 
issue that the contract entered into by and between the 

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