http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

CASE NO.: Appeal (civil)  2122 of 2007

PETITIONER: Rashtriya Chem. & Fertilizers Ltd.& Anr.

RESPONDENT: General Employees Association & Ors

DATE OF JUDGMENT: 23/04/2007

BENCH: Dr. ARIJIT PASAYAT & R.V. RAVEENDRAN

JUDGMENT: J U D G M E N T (Arising out of SLP ( C) No. 594 of 2004 With

CIVIL APPEAL NO.2123 OF 2007 (Arising out of SLP (C) No. 12961 of 2003)

Dr. ARIJIT PASAYAT, J.

Leave granted.

Challenge in these appeals is to the orders passed by a  Division Bench of the Bombay High Court directing reference to  the Industrial Tribunal and granting interim protection to the  workers in the Civil Appeal relating to SLP(C ) No. 594 of 2004.

 First Respondent-General Employees Association (in short  the ’Association’) had questioned legality of the Circular  dated  8.11.2000 issued by the Central Government conveying its  decision refusing to abolish and  prohibit contract labour in the  Civil Works and Carpentry establishment of Rashtriya Chemicals  and Fertilizers Ltd.-Respondent No.1, in W.P. No.7543/2000.  It  was alleged by the writ petitioner that respondent Nos. 5 to 8 in  the writ petition (who are non-official respondent Nos. 4 to 7 in  this appeal) were dummy and sham contractors. It was conceded  by the writ petitioner that the said issue cannot be considered by  the High Court in the writ jurisdiction under Article 226 of the  Constitution of India, 1950 (in short the ’Constitution’) and the  appropriate forum - Industrial Tribunal has to go into such  question.  The writ petitioner requested that order may be made  referring the matter to the Industrial Tribunal and meanwhile to  afford interim protection.  While accepting this prayer, the High  Court, however, issued the following directions:   "(i)    The appropriate Government, i.e., the Central  Government is directed to make a Reference of the  following demands to the Industrial Court for  adjudication within two months from today;

(a)     Whether the contracts between the  Ist  respondent M/s. Rashtriya Chemicals  and Fertilizers Ltd. and respondent Nos.  5 to 10 are sham and bogus and are a  comoufiage to deprive the concerned  contract employees of the benefits  available to permanent workmen of the 1

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

respondent?

(b)     Whether the employees listed at  Exhibit A to the petition should be  declared as permanent workmen of the 1  respondent?

(c)     What are the wages and  consequential benefits to be paid to the  employees list at Exhibit ’A’ to the  petition?

(ii)    The Industrial Tribunal upon receipt of such  Reference shall proceed with the matter  expeditiously and dispose of the same as early as  possible and in any case not later than 30.6.2004.

(iii)   The interim order passed by this Court on  29.12.2000 shall continue until receipt of the  communication by the petitioner from the Industrial  Tribunal that the Reference has been received and  for a period of two months therefrom. The  petitioners shall be at liberty to make application  before the concerned Industrial Tribunal for  continuation of the interim relief upon receipt of the  communication that Reference has been received  and if such application is made by the  petitioner,  the same shall be disposed of by the Industrial  Tribunal within a period of four weeks therefrom.  Needless to say that if for any reason the Industrial  Tribunal is not able to dispose of the application for  interim relief that may be made by the petitioner  within a period of four weeks from such application,  the industrial Tribunal shall be free to pass an  appropriate order for continuation of the interim  order until disposal of the application for interim  relief. In case interim order on the application is  adverse to the petitioners same shall not be given  effect to for a period f four weeks.

(iv)    It is clarified that in case there is any change  in the Contractor by respondent no.1 the new  Contractor shall engage the same workers subject to  the order of the Industrial Tribunal.

(v)     It is further clarified that the above interim  order is confined only to 39 employees who are  presently working on the establishment of  respondent no.1 through respondent nos. 5 to 10.

(vi)    All contentions of the parties are kept open to  be agitated before the Industrial Tribunal."

The connected Civil Appeal (relating to SLP(C) No.12961 of  2003) is in respect of workers in a canteen in the Thar factory of  the Appellant No.1.  The first respondent-Union filed W.P.  No.2940/1998 for a declaration that the employees (whose names  were shown in the Annexure to the writ petition) were the regular  employees of Appellant No.1 and for consequential reliefs. A  Division Bench of the High Court has given following directions  while disposing of the petition by judgment dated 23.1.2003:  

(i) The appropriate Government that is the  Government of Maharashtra is directed to make a  Reference of the following dispute/s to the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

Industrial Tribunal for adjudication within two  months from today.

(a) Whether the contract between the  Rashtriya Chemicals and Fertilizers Ltd.  and the contractor/s is a sham and  bogus one and is a camouflage to deprive  the employees as per Annexure A of the  benefits available to permanent workers  of Rashtriya Chemicals and Fertilizers  Ltd.?

(b) Whether the employees whose names  are shown in Exhibit A annexed to this  order are employees in the Canteen of  Rashtriya Chemicals and Fertilizers Ltd.  and if the answer is in the affirmative,  whether such employees should be  declared as permanent workmen of  Rashtriya Chemicals and Fertilizers Ltd.?

(c) What are the wages and consequential  benefits to be paid to the employees as  per the list Annexure A?

(ii) The Industrial Tribunal upon receipt of the  Reference shall proceed with the matter  expeditiously and dispose of the same as early as  possible and in no case later than 3 1. 12. 2003.

(iii) The interim order passed by this Court on  24.6.1998 shall continue until receipt of the  communication by the Petitioners from the  Industrial Tribunal that Reference has been  received and for a period of two months therefrom.  The Petitioner shall be at liberty to make application  before the concerned Industrial Tribunal for  continuation of the interim relief upon receipt of the  communication that Reference has been received  and we observe that if such application is made by  the Petitioner, the same shall be disposed of by the  Industrial Tribunal within a period of four weeks  therefrom. We record the statement of the learned  Senior Counsel for Respondent Nos. 1 and 2 that no  objection shall be raised by the said respondents  about the maintainability of the application for  interim relief by the petitioner. Needless to say if for  any reason, the Industrial Tribunal is not able to  dispose of the application for interim relief that may  be made by the petitioner within a period of four  weeks from such application, the Industrial  Tribunal shall be free to pass an appropriate order  for continuation of the interim order until disposal  of the application for interim relief.

(iv) It is clarified that in case there is any change in  the Contractor by Respondent Nos. 1 and 2, the  new Contractor shall engage the same workers  subject to the order of the Industrial Tribunal.

(v) All contentions of the parties are kept open to be  agitated before the Industrial Tribunal.

Learned counsel for the appellants submitted that after the  decision of this Court in Steel Authority of India Ltd. and Others v.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

National Union Waterfront Workers and Ors. (2001(7) SCC 1) the  High Court ought not to have given directions in the manner done.  The prayer in the writ petitions was not for determination of the  question whether the contract labour system was genuine, or was  a mere camouflage to deprive the concerned contract employees of  the benefits available to permanent employees of appellant No.1.   The High Court in both the orders even formulated the terms of  reference which is impermissible.  

There is no appearance on behalf of the first respondent - Association in spite of service of notice.

In order to appreciate the stand taken by the appellant, it is  necessary to take note of the observations made by this Court in  several cases.  In the Govind Sugar Mills Ltd. and Another v. Hind  Mazdoor Sabha and Others [1976(1) SCC 60] while considering  Section 4K of the U.P. Industrial Disputes Act, 1947( in short ’UP  Act), in pari materia with Section 10(1) of Industrial Disputes Act,  1947 (in short ’ID Act’) it was observed inter alia as follows:

"In the special appeal the High Court has taken the  view following the decision of this Court in State of  U. P. v. Basti Sugar Mills Co. Ltd. that when action  was taken under Section 3(b) of the Act it was  obligatory for the State Government to make a  reference under Section 4K for adjudication of the  industrial dispute raised in relation to the said  action.  The High Court on a consideration of the  entire facts and circumstances of the case allowed  the writ petition and quashed the order of the State  Government dated June 22, 1966 by grant of a writ  of certiorari. In this appeal since the special leave  was granted on a limited question we are not called  upon to interfere with the said portion of the order  of the High Court. But it further directed the State  Government and the Labour Commissioner to refer  the dispute for adjudication in exercise of their  power under Section 4K of the Act. It seems to have  been so done on the view that it was obligatory for  the State Government to do so after the issuance of  the notification under Section 3(b) of the Act. In our  opinion this was not correct.

In the judgment of this Court delivered a few days  ago, M Mahabir Jute Mills Ltd. Gorakhpore V. Shri  Shibban Lal Saxena  (judgment dated July 30,  1975), it has been held on a consideration of the  provisions of law contained in Section 4K of the Act  that after quashing the order of the. Government  refusing to make a reference the High Court could  ask the Government to reconsider the matter but it  could not give peremptory directions to make a  reference. We may, however, take note of a sentence  occurring in the judgment of this Court the case of  Bombay Union of Journalists (supra) at page 35  which reads thus:

"if the appropriate Government refuse to  make a reference for irrelevant  considerations, or on extraneous  grounds, or acts mala fide, that, of  course, would be another matter; in such  a case a party would be entitled to move  Court for a writ of mandamus."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

We think what was meant to be conveyed by the  sentence aforesaid was that the party would be  entitled to move the High Court for interfering with  the order of the Government and not necessarily for  the issuance of a writ of mandamus to direct the  Government to make reference. The mandamus  would be to reconsider the matter. It does not seem  to be quite reasonable to take the view that after the  refusal of the Government to make a reference is  quashed a writ of mandamus to make a reference  must necessarily follow. The matter has still to be  left for the exercise of the power by the Government  on relevant considerations in the light of the  judgment quashing the order of refusal"

It is now well settled that High Courts will not straightway  direct the appropriate government to refer the dispute.  It is for the  appropriate government to apply its mind to relevant factors and  satisfy itself as to the existence of a dispute before deciding to refer  the dispute.  We may refer to the following observations of this  Court in Steel Authority of India Ltd. v. Union of India & Ors.   [(Second SAIL Case) (2006(3) CLR 659)]:   

"For the purpose of exercising jurisdiction under  Section 10 of the 1970 Act, the appropriate  government is required to apply its mind. Its order  may be an administrative one but the same would  not be beyond the pale of judicial review. It must,  therefore, apply its mind before making a reference  on the basis of the materials placed before it by the  workmen and/or management, as the case may be.  While doing so, it may be inappropriate for the same  authority on the basis of the materials that a  notification under Section 10(1)(d) of the 1947 Act  be issued, although it stands judicially determined  that the workmen were employed by the contractor.  The state exercises administrative power both in  relation to abolition of contract labour in terms of  section 10 of the 1970 Act as also in relation to  making a reference for industrial adjudication to  labour court or a Tribunal under Section 10(1)(d) of  the 1947 Act. While issuing a notification under the  1970 Act, the State would have to proceed on the  basis that the principal employer had appointed  contractors and such appointments are valid in law,  but while referring a dispute for industrial  adjudication, validity of appointment of the  contractor would itself be an issue as the state must  prima facie satisfy itself that there exists a dispute  as to whether the workmen are in fact not employed  by the contractor but by the management. We are,  therefore, with respect, unable to agree with the  opinion of the High Court.

We would, however, hasten to add that this  judgment shall not come in the way of the  appropriate government to apply its mind for the  purpose of issuance of a notification under Section  10 of the 1970 Act."

The exception to the above is, when the Court finds that the  appropriate government refuses to make a reference of a dispute is  unjustified.  In such circumstances, the court may direct the  government to make a reference Sankari Cement Alai Thozhilalar  Munnetra Sangam, Tamil Nadu v. Government of Tamil Nadu and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

Anr. (1983 (1) SCC 304),  V. Veerarajan and Ors. v. Government of  Tamil and Ors. (1987 (1) SCC 479 and TELCO Convoy Drivers  Mazdoor Sangh and Anr. v. State of Bihar & Ors. (1989 (3) SCC  271).      The Circular dated 8.11.2000 of the Central Government  which was the subject matter of challenge in the first matter is  extracted below:   "I am directed to invite your kind  attention to the above cited subject and to say  that the matter relating to the prohibition of  employment of contract labour in the  establishment of Rashtriya Chemicals and  Fertilizers Ltd., in their plants at Chembur,  Mumbai and Thal District Raigad,  Maharashtra was discussed in the 44 Meeting  of the Central Advisory Contract Labour  Boardheld on 6-7th April, 2000 under the  Chairmanship of Shri T.S. Shankaran. The  Board made the following recommendations to  the Government:  

"The Board observed that the  Committee has examined in detail the  issue with respect to the factors set  out in Section 10 of the Act before  coming too its conclusion. The Board,  therefore, decided to accept the  recommendations of the Committee  and recommended to the Government  accordingly"

2. In pursuance of the recommendations  of the Board, the matter has been considered  in detail by the Central Government and it has  been decided not to prohibit employment of  contract labour in the following work/jobs in  the establishment of Rashtriya Chemicals and  Fertilizers Ltd., in their plants at Chembur,  Mumbai and Thal District Raigad,  Maharashtra for which the appropriate  government, under the Contract Labour  (Regulation and Abolition) Act, 1970 is the  Central Government:

1) Cleaning of Roads, Storm drains, Yards  and Grass cutting. 2) Dosing of Chemicals. 3) Jobs in Canteen. 4) Maintenance of Railway Track in the  Plant. 5) Material handling and

6) Civil Engineering maintenance i.e., in  the jobs of carpentry, masonry, repairs to  electrical switchgear and equipment such as  pumps, cutters, maintenance operators,  maintenance helpers, Assistants in Civil work,  operators and general workers.     3. As the question of interpretation of the  term "establishments" and applicability of the  Act to township is pending before the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

Constitution Bench of the Supreme Court and  their ruling is awaited, it has been decided not  to prohibit the employment of contract labour  in the job of Security Guards covered by the  Maharashtra Private Security Guards  (Regulation of Employment and Welfare) Act,  1981, deployed in the colonies, at present.

4. A notification prohibiting employment  of contract labour in some other jobs/works in  the establishment of Rashtriya Chemicals and  Fertilizers Limited, in their plants at Chembur,  Mumbai Priyadarshini Complex and Thal  District Raigad, Maharashtra is being issued  separately in consultation with the Ministry of  Law, Justice and Company Affairs (Legislative  Deportment).

5. The employment of contract labour in  the loading and unloading jobs being done by  the Hathadi Workers are being referred back to  the Board for their elucidation."

As rightly contended by learned counsel for the appellants  once the respondent No.1-Association approached the High Court  on the foundation that the Contract Labour (Regulation and  Abolition) Act,1970 (in short the ’Act’) applied,  it pre supposes  existence of a valid contract.  What the writ petitioner (respondent  No.1 herein) wanted was quashment of Notification for  reconsideration.  In view of what has been stated in second SAIL  case (supra) the High Court has to consider whether the stand  taken in the writ petition was inconsistent.  In the instant case the  writ petitioner itself accepted that certain issues could not be  decided in the writ petition.  That being so, High Court giving  directions in the nature done, do not appear to be appropriate.   We are of the view that the High Court ought not to have given the  directions in the manner done and should have left the respondent  No.1-Association to avail remedy available in the I.D. Act.

It is open to the respondent No.1-Association, if it is so  advised, to move the appropriate State Government seeking  reference of the purported dispute to the Tribunal.  It is for the  State Government to consider whether any reference is called for.  We make it clear that we have not expressed any opinion on the  desirability or otherwise of making reference.

Appeals are allowed with no orders as to costs.