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CASE NO.: Appeal (civil)  3424 of 2000

PETITIONER: A.P.S.R.T.C. & Ors.                              

RESPONDENT: G. Srinivas Reddy & Ors.                         

DATE OF JUDGMENT: 24/02/2006

BENCH: Arijit Pasayat & R. V. Raveendran

JUDGMENT: J U D G M E N T

RAVEENDRAN, J.

       The Andhra Pradesh State Road Transport Corporation,  first appellant, (for short ’the Corporation’), issued a Circular  dated 1.9.1988 containing the guidelines for absorption of  persons employed on casual basis/consolidated pay/piecemeal  rate/work charged establishment, whose services had been  ordered to be dispensed with, under an earlier Circular dated  2.7.1987. The said guidelines provided, inter alia, that such  absorption shall be only against sanctioned vacancies, and that  the benefit was to be extended only to those who had been  engaged for more than one year. The Circular made it clear that  benefit thereof will not extend to persons engaged by its  contractors at Bus Stations and certain other categories of  persons detailed therein.  

2.      The respondents herein filed W.P. No.14353/1991  claiming to be scavengers employed by the Corporation,  seeking a direction for regularisation. That petition was  disposed of by order 5.11.1991 with a direction to consider  their cases in terms of the Circular dated 1.9.1988 and pass  appropriate orders. The High Court did not examine the claim  on merits.

3.      To give effect to the said order, the Divisional Manager  of the Adilabad Division of the Corporation sent a  communication dated 14.7.1992 instructing the Depot Manager,  Mancherial to verify the claims of the respondents (as they had  claimed that they were working in the said Depot) and to send  him the necessary information in the prescribed proforma.  Alleging inaction thereafter, the respondents herein again  approached the High Court in W.P. No.30220/1997 for a  declaration that the Corporation’s failure to take action in  pursuance of the said letter dated 14.7.1992 was illegal and  praying for a direction to the Corporation to absorb them into  its service.  

4.      A learned Single Judge of the High Court by order dated  17.3.1998 disposed of Writ Petition No.30220/1997 at the stage  of preliminary hearing, without examining the matter on merits,  by directing the Corporation to consider the claim for  absorption in accordance with the guidelines contained in the  Circular dated 14.7.1992.  In the said order, the High Court  proceeded on the erroneous assumption that the letter dated

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14.7.1992 of the Divisional Manager was the Circular  containing the guidelines relating to absorption.

5.      In pursuance of it, the claim of one of the respondents -  B. Madhuraiah (third respondent herein), was considered. He  was required to appear before a Selection Committee on  21.4.1999. He appeared before the Committee and admitted that  he had worked only under a contractor and not under the  Corporation. The Regional Manager, Adilabad Division,  therefore, passed an order dated 21.4.1999 holding that the third  respondent was not entitled to claim absorption. He held that  the provisions of the Circular dated 1.9.1988 providing for  absorption were inapplicable to the third Respondent, as he had  not directly worked under the Corporation. He recorded a  finding that third respondent was employed as a contract labour  by a contractor, receiving payment through the contractor, and  that there was no relationship of employee and employer  between him and the Corporation, either in regard to  assignment of work, or performance of work, or payment of  remuneration.  

6.      Feeling aggrieved, the respondents approached the High  Court for the third time, by filing W.P. No.17678 of 1999 for  quashing the said order dated 21.4.1999 and seeking a direction  to the Corporation to treat them as ex-casual employees and  absorb them under the terms of the Circular dated 1.9.1988. A  learned Single Judge by order dated 23.8.1999 disposed of the  said petition at the admission stage, quashing the said order  dated 21.4.1999 and directing the Corporation to pass a fresh  order on the representation of the respondents herein. The  learned Single Judge was of the view that the respondents  herein could not be denied relief on the ground that they were  employed as contract labour, as such a contention was not taken  by the Corporation in the earlier petition (W.P.  No.30220/1997). The learned Single Judge held that when the  direction in W.P. No.30220/1997 was to ’consider’ the case for  absorption in terms of the guidelines contained in Circular  dated 14.7.1992, the Corporation could not reject the claim by  taking a stand that respondents were employed as contract  labour and the Circular dated 1.9.1988 was inapplicable.   

7.      The order of the learned Single Judge was challenged by  the Corporation in Writ Appeal No.1422 of 1999. The  Corporation  contended that the Learned Single Judge  committed an error in quashing the order dated 21.4.1999. It  was pointed out that the respondents were employed as contract  labour and the Circular dated 1.9.1988 did not permit  absorption of contract labour, but only permitted absorption of  those directly employed by the Corporation on casual basis or  for a contractual period, on daily wages or on consolidated  salary or piece rate basis or under work changed establishment.  The Division Bench dismissed the Corporation’s appeal vide  order dated 30.9.1999. It accepted the contention of the  Corporation that respondents were employed as "contract  labour".  It also impliedly accepted the contention of the  Corporation that the respondents were not entitled to absorption  under the Circular dated 1.9.1988. It, however, held that the  work for which the respondents were employed as contract  labour, that is to clean the buses and to sweep the bus stand  premises, was perennial in nature and not seasonal. Purporting  to rely on the decisions of this Court in Air India Statutory  Corporation v. United Labour Union [1997 (9) SCC 377] and  Secretary, Haryana State Electricity Board v. Suresh [1999 (3)  SCC 601], it held that there was direct relationship of master  and servant between the principal employer (Corporation) and

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contract labour (Respondents) and, therefore, the respondents  were entitled to absorption. It did not, consider whether in the  absence of a notification under Section 10(1) of the Contract  Labour (Regulation and Abolition) Act, 1970 (for short ’the  CLRA Act’) prohibiting contract labour, there could be a  direction for absorption, even if the Respondents were contract  labour. Thus, the ground on which the Division Bench upheld  the decision of the learned Single Judge was different from the  ground on which the writ petition was disposed of by the Single  Judge. The said order of the Division Bench is challenged by  the Corporation in this appeal by special leave.  

8.      In Air India (supra), this Court had held that though there  is no express provision in the CLRA Act for absorption of  contract labour, when engagement of contract labour stood  prohibited on issuance of a notification under Section 10(1) of  the CLRA Act, a direct relationship was established between  the workers (contract labour) and the erstwhile principal  employer, and the principal employer is obliged to absorb the  workers. It also held that if the High Court finds that workmen  were engaged in violation of the provisions of CLRA Act or  were continued as contract labour, in spite of the prohibition  notification issued under Section 10(1) of the CLRA Act, the  High Court can, in exercise of its power of judicial review,  mould the relief properly and direct the principal employer to  absorb the contract labour, instead of leaving the workmen in  the lurch, and it was not necessary for the workmen to seek a  reference of the dispute relating to their absorption under  section 10 of the Industrial Disputes Act, 1947. In Haryana  State Electricity Board (supra), this Court following Air India,  had held that where the work for which contract labour is  employed, was perennial in nature (as contrasted from  seasonal), contract labour system should be abolished by  issuing a notification under section 10 of CLRA Act, so as to  render the contract labourers, the direct employees of the  principal employer. On the facts of the case, it was also held  that the contract system prevailing in the Electricity Board   (appellant herein) was not genuine, but a mere camouflage (to  deprive workers, of the benefits under various labour  enactments) and therefore, the court can pierce the veil and  visualize the direct relationship between the Board and the  contract labour. Consequently, this Court upheld the relief of  reinstatement granted to Safai Karamcharis by the High Court.   

9.      In Steel Authority of India Ltd. & Ors. v. National Union  Waterfront Workers & Ors. [2001 (7) SCC 1], a Constitution  Bench of this Court overruled the decision in Air India (supra)  and held that where  contract labour are engaged  in connection  with the work in an establishment and employment of such  contract labour is prohibited by issue of a notification under  Section 10(1) of the CLRA Act, there was no question of  automatic absorption of the contract labour working in the  establishment and the principal employer cannot be required to  absorb the contract labour. This Court also held that on a  contractor engaging contract labour in connection with the work  entrusted to him by the principal employer, it does not  culminate into a relationship of ’master and servant’ between  the principal employer and the contract labour. This Court held  that whether the contract labour system was genuine or a mere  camouflage has to be adjudicated only by the Industrial  Tribunal/court and not by the High Court in its writ jurisdiction.  We extract below the relevant portions of the principles  summed up by this Court  : "(5).   On issuance of prohibition notification under  Section 10(1) of the CLRA Act prohibiting employment of

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contract labour or otherwise, in an industrial dispute  brought before it by any contract labour in regard to  conditions of service, the industrial adjudicator will have  to consider the question whether the contractor has  been interposed either on the ground of having undertaken  to produce any given result for the establishment or for  supply of contract labour for work of the establishment  under a genuine contract or is a mere ruse/camouflage  to evade compliance with various beneficial legislations  so as to deprive the workers of the benefit thereunder. If  the contract is found to be not genuine but a mere  camouflage, the so-called contract labour will have to be  treated as employees of the principal employer who shall  be directed to regularize the services of the contract labour  in the establishment concerned subject to the conditions as  may be specified by it for that purpose in the light of para 6  hereunder.

(6).    If the contract is found to be genuine and  prohibition notification under Section 10(1) of the CLRA  Act in respect of the establishment concerned has been  issued by the appropriate Government, prohibiting  employment of contract labour in any process, operation or  other work of any establishment and where in such process,  operation or other work of the establishment the principal  employer intends to employ regular workmen, he shall give  preference to the erstwhile contract labour, if otherwise  found suitable and, if necessary, by relaxing the condition  as to maximum age appropriately, taking into consideration  the age of the workers at the time of their initial  employment by the contractor and also relaxing the  condition as to academic qualifications other than technical  qualifications.

We have used the expression "industrial adjudicator"  by design as determination of the questions  aforementioned requires enquiry into disputed  questions of facts which cannot conveniently be made  by High Courts in exercise of jurisdiction under Article  226 of the Constitution. Therefore, in such cases the  appropriate authority to go into those issues will be the  Industrial Tribunal/Court whose determination will be  amenable to judicial review." [Emphasis supplied]         10.     In this case, there was no notification under section 10(1)  of CLRA Act, prohibiting contract labour. There was also  neither a contention nor a finding that the contract with the  contractor was sham and nominal and the contract labour  working in the establishment were, in fact, employees of the  principal employer himself. In view of the principles laid down  in Steel Authority, the High Court could not have directed  absorption of respondents who were held to be contract labour,  by assuming that the contract labour system was only a  camouflage and that there was a direct relationship of employer  and employee between the corporation and the respondents. If  respondents want the relief of absorption, they will have to  approach the Industrial Tribunal/Court and establish that the  contract labour system was only a ruse/camouflage to avoid  labour law benefits to them. The High Court could not, in  exercise of its jurisdiction under Article 226, direct absorption  of respondents, on the ground that work for which respondents  were engaged as contract labour, was perennial in nature.  

11.     The respondents were not also entitled to the relief of

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absorption/regularization on the basis of the Circular dated  1.9.1988, as it specifically excluded contract labour. The order  dated 5.11.1991 in the first round (WP No.14353/1991) and the  order dated 17.3.1998 in the second round (W.P.  No.30220/1997) did not examine the status of the respondents,  nor recorded a finding that they were entitled to absorption.  They merely disposed of the writ petitions with a direction to  consider the representation/claim of the respondents for  absorption. Therefore, if the Corporation on considering the  claims of respondents found that they were not employed by the  Corporation, but were contract labour, who were not entitled to  seek absorption under the Circular dated 1.9.1988, the  Corporation was justified in rejecting their claim for absorption.  The only remedy of respondents, as noticed above, is to  approach the Industrial Tribunal for declaring that the contract  labour system under which they were employed was a  camouflage and therefore, they were, in fact, direct employees  of the Corporation and for consequential relief. The  Corporation has stated in the Special Leave Petition that such a  question was already raised by the Trade Unions and was  pending in I.D.No.1/1996 on the file of the Industrial Tribunal,  Hyderabad.  

12.     Learned counsel for the respondents made an alternative  submission that the relief granted to respondents, may be  sustained on the reasoning adopted by the learned Single Judge.  He submitted that having regard to the order in W.P.  No.30220/1997 which had attained finality, the Corporation had  no choice but to consider the cases of Respondents for  absorption by treating them as causal labour employed by the  Corporation. This takes us to the effect of the orders dated  5.11.1991 and 17.3.1998 made in the earlier writ petitions,  directing the Corporation to "consider" the cases of the  respondents.  

13.     We may, in this context, examine the significance and  meaning of a direction given by the court to "consider" a case.  When a court directs an authority to ’consider’, it requires the  authority to apply its mind to the facts and circumstances of the  case and then take a decision thereon in accordance with law.   There is a reason for a large number of writ petitions filed in  High Courts being disposed of with a direction to "consider"  the claim/case/representation of the petitioner/s in the writ  petitions.  

13.1) Where an order or action of the State or an authority is  found to be illegal, or in contravention of prescribed procedure,  or in breach of the rules of natural justice, or   arbitrary/unreasonable/ irrational, or prompted by mala fides or  extraneous consideration, or the result of abuse of power, such  action is open to judicial review. When the High Court finds  that the order or action requires interference and exercises the  power of judicial review, thereby resulting in the action/order of  the State or authority being quashed, the High Court will not  proceed to substitute its own decision in the matter, as that will  amount to exercising appellate power, but require the authority  to ’consider’ and decide the matter again. The power of judicial  review under Article 226 concentrates and lays emphasis on the  decision making process, rather than the decision itself.

13.2)   The High Courts also direct authorities to ’consider’, in a  different category of cases. Where an authority vested with the  power to decide a matter, fails to do so in spite of a request, the  person aggrieved approaches the High Court, which in exercise  of power of judicial review, directs the authority to ’consider’

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and decide the matter.  In such cases, while exercising the  power of judicial review, the High Court directs ’consideration’  without examining the facts or the legal question(s) involved  and without recording any findings on the issues. The High  Court may also direct the authority to ’consider’ afresh, where  the authority had decided a matter without considering the  relevant facts and circumstances, or by taking extraneous or  irrelevant matters into consideration. In such cases also, High  Court may not examine the validity or tenability of the claim on  merits, but require the authority to do so.  

13.3)   Where the High Court finds the decision-making process  erroneous and records its findings as to the manner in which the  decision should be made, and then directs the authority to  ’consider’ the matter, the authority will have to consider and  decide the matter in the light of its findings or observations of  the court. But where the High Court without recording any  findings, or without expressing any view, merely directs the  authority to ’consider’ the matter, the authority will have to  consider the matter in accordance with law, with reference to  the facts and circumstances of the case, its power not being  circumscribed by any observations or findings of the court.   

13.4)   We may also note that sometimes the High Courts  dispose of matter merely with a direction to the authority to  ’consider’ the matter without examining the issue raised even  though the facts necessary to decide the correctness of the order  are available. Neither pressure of work nor the complexity of  the issue can be a reason for the court, to avoid deciding the  issue which requires to be decided, and disposing of the matter  with a direction to ’consider’ the matter afresh. Be that as it  may.  

13.5)   There are also several instances where unscrupulous  petitioners with the connivance of ’pliable’ authorities have  misused the direction ’to consider’ issued by court. We may  illustrate by an example. A claim, which is stale, time-barred or  untenable, is put forth in the form of a representation. On the  ground that the authority has not disposed of the representation  within a reasonable time, the person making the representation  approaches the High Court with an innocuous prayer to direct  the authority to ’consider’ and dispose of the representation.  When the court disposes of the petition with a direction to  ’consider’, the authority grants the relief, taking shelter under  the order of the court directing him to ’consider’ the grant of  relief. Instances are also not wanting where authorities,  unfamiliar with the process and practice relating to writ  proceedings and the nuances of judicial review, have  interpreted or understood the order ’to consider’ as directing  grant of relief sought in the representation and consequently  granting reliefs which otherwise could not have been granted.   Thus, action of the authorities granting undeserving relief, in  pursuance of orders to ’consider’, may be on account of  ignorance, or on account of bona fide belief that they should  grant relief in view of court’s direction to ’consider’ the claim,  or on account of collusion/connivance between the person  making the representation and the authority deciding it.  Representations of daily wagers seeking   regularization/absorption into regular service is a species of  cases, where there has been a large scale misuse of the orders  ’to consider’.  

14.     Therefore, while disposing of writ petitions with a  direction to ’consider’, there is a need for the High Court to  make the direction clear and specific. The order should clearly

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indicate whether the High Court is recording any finding about  the entitlement of the petitioner to the relief or whether the  petition is being disposed of without examining the claim on  merits. The court should also normally fix a time-frame for  consideration and decision. If no time-frame is fixed and if the  authority does not decide the matter, the direction of the court  becomes virtually infructuous as the aggrieved petitioner will  have to come again to court with a fresh writ petition or file an  application for fixing time for deciding the matter.  

15.     In this case, the respondents approached the High Court  seeking a direction for regularization/absorption in the year  1991. That petition (WP No.14353/1991) was disposed of,  apparently, at the admission stage by order dated 5.11.1991,  with a direction to ’consider’ the representations of  Respondents without examining the question whether the  petitioners in the writ petition were entitled to the relief of  regularization/absorption and without fixing any time frame for  deciding the matter. Though the Divisional Manager, Adilabad,  by letter dated 14.7.1992 sought information and verification of  claims by the concerned depots, with the intention of giving  effect to the order dated 5.11.1991, no further action was taken.  This led to filing of the second petition (W.P. No.30220/1997)  wherein the respondents herein sought a direction to the  concerned authority to take a decision on the question of  absorption. The second petition was also disposed of at the  preliminary hearing stage by order dated 17.3.1998, without  examining the claim of respondents on merits. The said order  dated 17.3.1998 proceeded on an erroneous assumption that the  letter dated 14.7.1992 (by which the Divisional Manager,  Adilabad, sought information from the concerned Depot  Managers about the respondents herein) was the Circular  containing the guidelines for absorption, and disposed of Writ  Petition No. 30220/1997 by directing the authority concerned to  consider the cases of the respondents herein for absorption in  terms of the guidelines contained in the letter dated 14.7.1992  and decide the matter within three months.  

16.     We find that at that stage, the authority considered the  case of the third respondent and passed a reasoned order dated  21.4.1999 rejecting the claim on the ground that the third  respondent was not a direct employee, but was a contract  labour, and was not therefore entitled to absorption under the  Circular dated 1.9.1988. This led to the third round of litigation  in W.P. No.17678/1999 wherein the prayer was for quashing  the said order or rejection dated 21.4.1999 and for direction to  absorb them into service in terms of the Circular dated 1.9.1988  Again, the High Court at the admission stage, disposed of the  matter on an erroneous conclusion that the order dated  21.4.1999 was contrary to the decision in the second round  (Order dated 17.3.1998 in W.P. No.30220/1997) and directed  the Corporation to pass fresh orders on the representations  made by the respondents. The learned Single Judge proceeded  on the assumption, without basis, that the order dated 17.3.1998  in the earlier petition (WP No. 30220/1997) had held that  Respondents were entitled to the benefit of the Circular dated  1.9.1988, when in fact there was no such finding or direction.  Therefore, the direction of the learned Single Judge, as  confirmed by the Division Bench, to consider the cases of  respondents under the Circular dated 1.9.1988 cannot be  sustained. It is unfortunate that in this process, the Respondents  have been in courts for nearly 15 years.  

17.     For the reasons stated above, we allow this appeal, set  aside the order dated 30.9.1999 passed by the Division Bench

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of the A.P. High Court in Writ Appeal No.1422 of 1999 and  dismiss Writ Petition No.17678/1999 filed by the respondents.  Liberty is, however, reserved to the respondents to approach the  Industrial Tribunal/Court for relief, if any,  in accordance with  law. Parties to bear their respective costs.