Reportable  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2244 OF 2002

International Airport Authority of India … Appellant

Vs.

International Air Cargo Workers' Union & Anr. … Respondents

J U D G M E N T

R.V.RAVEENDRAN, J.

This appeal by special leave is filed against the judgment and order

dated  12.11.2001  passed  by  the  High  Court  of  Madras  in  Writ  Appeal

No.544/1998  reversing  the  order  dated  15.12.1997  passed  by  a  learned

Single  Judge in Writ  Petition No. 6126 of 1995 and restoring the award

dated 23.12.1994 passed by the Industrial Tribunal, Madras in ID NO.65 of

1991.  The  case  has  a  chequered  history  and  has  come  up  after  several

rounds of litigations.  

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2. The  International  Airport  Authority  of  India  (IAAI  for  short),  the

appellant herein, was established under the International Airports Authority

Act, 1971. It established a cargo complex at Madras in the year 1978. Under

an agreement dated 30.1.1978, it  granted a licence to a private company

known as M/s. Airfreight Private Ltd. (referred to as ‘Airfreight’) to be its

ground handling agent in respect of export, import and transshipment cargo

consignments. Under the said agreement, Airfreight was to receive payment

from the owners of the cargo for the work done, had to engage the services

of required number of workers for handling the cargo and be responsible for

payment of wages to the workers. It was also required to pay a licence fee to

IAAI, linked to the total revenue realized by it. (minimum being Rs.12 lacs,

maximum being  Rs.43.50  lacs  plus  an  agreed percentage  of  the  revenue

over  and  above  60  lacs).  IAAI had  no privity  of  contract,  obligation  or

responsibility towards the workers employed by the Airfreight.  

3. In the year 1985 IAAI decided to take over the ground handling work

and entrust it to a new licencee by inviting competitive tenders. Therefore,

by letter dated 19.9.1985 IAAI informed Airfreight that the ground handling

agency operations should be handed over to its officers on 31.10.1985. Thus

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from 1.11.1985, Airfreight ceased to be the ground handling agent of IAAI

at Madras Airport. The termination of the handling contract of Airfreight

did not require IAAI or the new licencee of IAAI to take over the workers

employed  by  Airfreight.  In  the  circumstances,  the  workers  (loaders  and

packers)  employed by Airfreight  in  connection  with the ground handling

work, who were likely to be retrenched/discharged, made an appeal to IAAI

to provide them employment.  

First Round

4. The  Airfreight  Workers  Union  also  filed  Writ  Petition

No.11683/1985 in the Madras High Court, seeking a direction to IAAI to

employ  all  those  workers  who  had  been  employed  by  Airfreight  in

connection  with  the  ground  handling  work  at  the  Madras  Airport  cargo

complex and not to recruit anyone from outside. IAAI and Airfreight were

impleaded as respondents 1 and 2 in the said writ petition. In view of the

appeal  made by the said workers,  IAAI unilaterally came forward with  a

scheme to mitigate their hardship, and filed the following memo before the

High Court :

"The authority (IAAI) will  consider  mitigating the  hardship  of  the  ex- loaders and packers of M/s Air Freight claimed to be caused on account of its take over of cargo handling function by accommodating them as far as possible except by way of regular absorption in the services of IAAI till such time the authority has made its own regular arrangements, on contract

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basis  through  a  Co-operative  Society  formed  on  specified  terms  and conditions and period as per the policy of IAAI framed from time to time".

The High Court recorded the memo filed by IAAI and dismissed the writ

petition on 12.12.1985, in view of the agreement expressed by the learned

counsel for Airfreight Workers Union.  

5. The workers of Airfreight took steps to form a co-operative society

which was registered under the name and style of ‘Airport  Industrial  Co-

operative Service Society Ltd.’, (‘society’ for short) on 28.11.1985. Pending

finalization of a contract with the said society, in terms of the memo filed in

WP  No.11683/1985,  IAAI  started  engaging  some  of  the  workers  of

Airfreight  as  casual  labour  on  day to  day basis  depending  on the  actual

requirements.  

Second Round

6. The  Airfreight  Workers  Union  and  the  society  filed  Writ  Petition

No.5164  of  1986  seeking  a  direction  to  IAAI  to  hand  over  the  ground

handling  work  at  the  Madras  Airport  Cargo  Complex  to  the  society,  on

terms to be mutually agreed or in the alternative absorb the ex-employees of

Airfreight on its permanent rolls and till then maintain status quo. During

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the  pendency  of  the  said  writ  petition,  an  agreement  was  entered  on

1.7.1986 under which the society agreed to provide 70 loaders cum packers

at the Madras Air Cargo Complex on a consolidated monthly payment of

Rs.45,870. It was further agreed as follows : (i) that the said arrangement

would  be in  force  for  a  period  of  six  months;  (ii)  that  if  any additional

loaders-cum-packers were required by IAAI, the society will provide them

at  the  rate  of  Rs.15  per  manshift;  (iii)  that  IAAI  would  sympathetically

consider  the  society's  request  for  increasing  the  monthly  payment  to

Rs.50,000; (iv) that the agreement would be implemented within 10 days;

and (v) that W.P. No.5164 of 1986 would be withdrawn voluntarily. The

agreement confirmed that  the settlement  had been arrived at  without  any

pressure from either side, in mutual interest, for the smooth operation of the

cargo complex.  In  view of  it,  when  W.P. No.5164 of  1986 came up on

2.7.1986, the learned counsel submitted that the matter was settled out of

court and accordingly the petition was dismissed as withdrawn.

Third Round

7. IAAI agreed  to  the  request  of  the  society  to  increase  the  monthly

payment  to  Rs.50,000  and  a  more  detailed  agreement  was  executed  on

14.7.1986  between  IAAI  and  society  under  which  the  society  agreed  to

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provide manpower (loaders-cum-packers) for unloading, shifting, stacking,

marking  unpacking,  packing,  stitching,  strapping,  counting  of  cargo  and

other miscellaneous porterage jobs at Madras Airport, round the clock, in

three shifts. The agreement reiterated that the total number of loaders-cum-

packers to be made available by the society on regular basis will be 70; that

the  additional  loaders  cum packers  will  be  made  available  on  a  further

payment of Rs.15 per manshift; and that the agreement would be in force

between 10.7.1986 to 19.1.1987. The said agreement specifically provided

as follows : (a) that the workers (members of the society) would have no

direct relationship whatsoever with IAAI, except on matters of execution of

work  and  all  dealings  and  remuneration  to  them would  be  through  the

society (vide clause 35); (b) that the society should make good any  damage

caused to the cargo consignments or to the property of IAAI, by the loaders-

cum-packers, either due to negligence or willful acts (vide cl. 21); (c) that

the  society  shall  comply  with  the  requirement  of  Contract  Labour

(Regulation  and Abolition)  Act,  1970  (‘CLRA Act’  for  short)  and  other

labour  laws,  in  particular,  the  statutory  provisions  regarding  minimum

wages;  (d)  that  to  ensure  that  wages  were  paid  by  the  society  to  its

employees whose services were made available to IAAI as contract labour,

IAAI will  have  the  right  to  demand that  the  wages  be  disbursed  by the

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society  to  its  employees,  in  the  presence  of  IAAI's  representative  (vide

clause  7);  (d)  that  IAAI  will  not  be  responsible  either  for  any  injury

sustained by the employees of the society during the performance of their

duties or for payment of any damages or compensation due to any dispute

between the  society  and  its  workers  (vide  cl.  8);  (e)  that  in  case  it  was

noticed by IAAI that the work carried out by the society was not upto the

required  standard,  and the  society failed  to  improve,  inspite  of  two days

written notice about the bad state of work and demand for improvement,

IAAI could impose fines and deduct the amount of fines from the society's

bills; and if fines had no effect, IAAI would have the right to terminate the

contract by giving a month’s notice and forfeit  the security deposit  (vide

clause  9);  (f)  that  the  society  would  carry  out  the  jobs  as  per  the

specifications of IAAI and to its satisfaction, and in case of any complaints

by IAAI either as regards the nature of service or as regards the personnel

doing the same, the society would attend to the complaints promptly (vide

clause 12); and (g) that the society, apart from being in constant touch with

the officers of IAAI, through an authorized representative, would also have

a supervisor  employed on round-the-clock basis  at  the  cargo complex to

supervise, control and ensure proper execution of the work assigned to the

loaders-cum-packers and to co-ordinate with IAAI (vide clause 17).

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8. The society entered into a fresh agreement dated 11.12.1987 agreeing

to provide loaders-cum-packers at the Madras airport complex, for a period

of two years from 1.9.1987. The lump sum payment by IAAI was revised as

Rs.60,000 per month for providing 70 loaders and three supervisors. It was

agreed that the said amount had been determined by assuming the minimum

wage  as  Rs.20  per  day  and  if  there  was  any  statutory  increase  beyond

Rs.20/-, such excess should be borne by IAAI.

9. When the said term was coming to an end, the International Air Cargo

Workers  Union  (first  respondent)  and  the  society  filed  Writ  Petition

No.9110 of 1989 seeking service security to the 89 workers and treat them

on  par  with  regular  employees  of  IAAI  by  giving  them wages/benefits/

privileges  of  regular  workmen.  The  said  petition  was  dismissed  on

18.12.1989  reserving  liberty  to  raise  the  issues  and  demands  in  the

proceedings under the Industrial Disputes Act, 1947 (‘ID Act’ for short), as

the  workers  had  already  raised  an  industrial  dispute  demanding  direct

employment and the conciliation had ended in a failure on 26.9.1989.  

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Fourth Round

10. The conciliation officer submitted a Failure Report dated 3.10.1989,

in regard to the conciliation Government of India however refused to refer

the dispute for adjudication on the ground that  workmen in dispute were

employed by the society and not by IAAI. The order of refusal also stated :  

“Therefore the dispute is not maintainable against the IAAI management under the ID Act indirectly. The Union has demanded abolition of contract labour  system in  the  loading/unloading operations  etc.  The question  of abolition of contract labour system is dealt with under CLRA Act which lays down the criteria and the procedure for abolition of this system. The Union could, therefore, avail of the remedy available under the said Act…. ”

The said communication dated 7.12.1989 was challenged in W.P. No.10719

of 1990. The said writ petition was allowed by order dated 26.3.1991 on the

ground that the central government could not pre-judge the issue and while

considering whether  a dispute should be referred under section 10 of  ID

Act, the government is not supposed to delve into merits of the case and

indulge in any adjudicatory process. The High Court, therefore, directed the

government to reconsider the matter and take a fresh decision in regard to

the request for reference. In pursuance of it, the government reconsidered

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the  matter  and  referred  the  following  dispute  to  the  Industrial  Tribunal,

Madras, by order dated 14.10.1991 :

"Whether the action of the Management of International Airport Authority of  India,  Madras  is  justified  in  not  absorbing  the  workers/members  of Airport International Cooperative Service Society, their Contractor. If not, to what relief the concerned workmen are entitled ?"

Fifth Round

11. In  the  meanwhile  IAAI  issued  a  tender  notice  dated  19.11.1990

inviting tenders for the cargo handling work at the Air Cargo Complex. The

said tender notice  was  challenged by the first  respondent  Union in  W.P.

No.18560 of  1990.  In  that  petition,  the first  respondent  Union  inter  alia

contended that the IAAI had no valid registration of its establishment under

section 7 of the CLRA Act and therefore the contract  labour namely the

workers employed by the  society should be treated directly employed by

IAAI.  The said  writ  petition  was  dismissed  by the  High  Court  by order

dated 6.12.1990 holding that in the absence of a notification under section

10 of the CLRA Act, prohibiting employment of contract labour in regard to

the process of cargo handling, and in the absence of any material to show

that  the  workers  were  deemed  to  be  workmen  of  IAAI,  the  appropriate

remedy  was  to  agitate  the  matter  before  the  concerned  labour  authority

instead of filing a writ petition. The said order of the learned Single Judge

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was challenged by the union by filing a writ appeal  (WA No.1265/1990)

which  was  dismissed  by  judgment  dated  3.1.1991.  The  Division  Bench

noted  that  IAAI had  registered  its  establishment  under  section  7  of  the

CLRA Act      on 23.3.1990 and the tender notice was issued only thereafter

on  19.11.1990.  The  Division  Bench  also  held  that  the  Union  having

consciously resorted to the remedy available under industrial law, and not

having  demurred  against  the  dismissal  of  WP No.9110/1989  cannot  re-

agitate the same question in a writ petition challenging the tender notice.  

Sixth Round

12. Again when IAAI invited fresh tenders,  the first  respondent  Union

filed W.P. No.273 of 1994 seeking a direction to IAAI not to invite tenders

for loading/unloading operations or take any other action which will have

the effect of discharging the workers engaged in the loading and unloading

operations. The said writ petition was dismissed by order dated 22.6.1994

on the ground that the issue was pending adjudication by Industrial Tribunal

and writ petitions for similar relief had been rejected earlier. The learned

single Judge observed :  

“Having  regard  to  the  memorandum  issued  by  IAAI  wherein  IAAI specifically stated that the workmen concerned would be accommodated as far as possible except by way of equal absorption in the services of IAAI (Underlining is mine), which was noticed and recorded by S.Mohan J., as he then was, with the consent of Mr. K.S.Janakiraman, then counsel

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for  workmen,  and  the  subsequent  agreement  entered  into  on  1.7.1986, 14.7.1986 and 21.5.1992, it would not in my opinion, be possible for the workmen to claim that the Authority should be directed not to disengage the workmen.”  

The writ appeal (WA No.800 of 1994) challenging the said order was also

dismissed on 27.6.1994.

Seventh (current) Round

13. The reference made by the central government which was registered

as ID No.65 of 1991 was decided by the  Industrial  Tribunal,  Madras,  in

favour of  the workers  by award dated 23.12.1994. The Tribunal  directed

IAAI to absorb the members of the society whose names were stated in the

annexures to the claim statement,  (excluding only those who died or left

service),  with  effect  from the  date  of  the  award.  In  the  said  award  the

tribunal recorded the following findings :

(a) The memo filed by IAAI in W.P. No.11683 of 1985 (which was agreed  to  by  the  workers  union),  resulting  in  dismissal  of  W.P. No.11683/1985  filed  by  the  workers'  union,  amounted  to  a  settlement which was not valid, as IAAI was in a dominant position to dictate terms and compel the workers union to enter into the settlement to circumvent the provisions of law and deprive the legitimate right of the workmen to permanent status.

(b) The said memo of IAAI requiring the workers to form a society was a ploy adopted by IAAI to defeat the legitimate claim of the workers to permanent status to which they were entitled as they had worked for 5 to 14 years previously under Airfreight and thereafter under the IAAI who

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was  the  principal  employer  and  after  the  termination  of  the  handling agency of Airfreight, their workers became the direct employees of IAAI.

(c) After  the  termination  of  the  handling  agency  in  favour  of Airfreight,  its  employees  were  directly  engaged by IAAI and  received salary from IAAI. Thus they became the direct employees of IAAI from November 1985. Once the workers became its employees, IAAI could not change their status from direct workers to indirect workers.  

(d) Even when the workmen were working as contract labour through the society, IAAI was exercising direct supervision and control over them, directly paying wages to them and taking disciplinary action against them and all these showed that they were considered and dealt with as direct employees of IAAI and the agreement between IAAI and the society was sham and nominal.  

(e) Any attempt by IAAI to appoint the workmen as contract labour is illegal and would amount to an unfair labour practice.  

14. The said award was challenged by IAAI in W.P. No.6126/1995. A

learned Single Judge of Madras High Court allowed the said writ petition by

order  dated  15.12.1997  and  set  aside  the  award  of  the  Tribunal.

Nevertheless having regard to the facts of the case, in particular IAAI being

a public sector undertaking was required to be a model employer, issued the

following directions :

(i) The Central Government and the Advisory Board constituted under the CLRA Act should consider whether deployment of contract labour in regard to packing, loading and unloading in IAAI's Madras Cargo Complex should be abolished and take appropriate decision thereon.

(ii) Till  such  a  decision  was  taken,  the  workers  concerned  shall  be continued notwithstanding the interruption in their employment as contract labourers  from 1994  to  the  date  of  that  order  (15.12.1997),  as  contract labour on the terms and conditions that were in force between IAAI and the

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society prior to 1994 subject to the condition that the wages payable to such workers shall not be less than what was paid to contract labour who were engaged between 1994 and 1997; and the said  workers  shall  be engaged from January,  1998,  their  engagement  being  subject  to  good  behaviour, conduct, discipline and efficient performance.

(iii) If  the  Central  Government  issues  a  notification  under  section  10 under  the  CLRA  Act,  prohibiting  contract  labour  in  regard  to  loading, unloading and packing in the cargo complex all those who had worked as contract labour under the contract between the society and the IAAI up to the numbers specified in the contract shall be absorbed in the IAAI as was directed  by this  Court  in  the  case  of  Air  India Statutory  Corporation  v. United Labour Union [1997 (9) SCC 377].

15. The  first  respondent  Union  challenged  the  said  order  of  learned

Single  Judge  before  a  Division  Bench  in  Writ  Appeal  No.544/1998.  A

Division Bench of the Madras High Court by its judgment dated 12.11.2001

allowed the appeal and set aside the order of the learned Single Judge and

restored the award of the Tribunal. The Division Bench was of the view that

when the Tribunal had recorded a finding of fact that the contract labour

were under the direct supervision and control of IAAI, that they were paid

salary directly by IAAI, that they were subjected to suspension and other

disciplinary control by IAAI, that the contract between IAAI and the society

was sham and nominal, the consequential finding that they were the direct

employees of IAAI ought not to have been disturbed by the learned Single

Judge. The Division Bench was of the view that the findings recorded by

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the tribunal were unexceptionable. The said decision is under challenge in

this appeal.

The legal background and questions for decision  

16. When  the  learned  Single  Judge  considered  the  matter,  the  legal

position was governed by the decision in Gujarat Electricity Board vs. Hind

Mazdoor Sabha – 1995 (5) SCC 27, partly modified by Air India Satutory

Corporation vs. United Labour Union – 1997 (9) SCC 377. By the time the

Division Bench decided the  writ  appeal,  the decision of  the Constitution

Bench  in  Steel  Authority  of  India  Ltd.,  vs.  National  Union  Waterfront

Workers – 2001 (7) SCC 1 (for  short  ‘SAIL’) had been rendered,  but  on

account of the short gap between the two dates, the Division Bench did not

notice the decision in SAIL.  

17. In Gujarat Electricity Board, this Court held :  

“….. the exclusive authority to decide whether the contract labour should be abolished or not is that of the appropriate Government under the said provision.  It  is  further  not  disputed  before  us  that  the  decision  of  the Government is final subject, of course, to the judicial review on the usual

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grounds.  However,  as  stated  earlier,  the  exclusive  jurisdiction  of  the appropriate Government under Section 10 of the Act arises only where the labour  contract  is  genuine  and  the  question  whether  the  contract  is genuine, or not can be examined and adjudicated upon by the court or the industrial  adjudicator,  as  the  case  may  be.  Hence  in  such  cases,  the workmen can make a grievance that there is no genuine contract and that they are in fact the employees of the principal employer.

If  the  contract  is  sham or  not  genuine,  the  workmen  of  the  so  called contractor  can  raise  an  industrial  dispute  for  declaring  that  they  were always  the  employees  of  the  principal  employer  and  for  claiming  the appropriate  service conditions.  When such dispute  is  raised,  it  is  not  a dispute for abolition of the labour contract and hence the provisions of Section 10  of the Act will not bar either the raising or the adjudication of the dispute. When such dispute is raised, the industrial adjudicator has to decide whether the contract is sham or genuine. It is only if the adjudicator comes  to  the  conclusion  that  the  contract  is  sham,  that  he  will  have jurisdiction  to  adjudicate  the  dispute.  If,  however,  he  comes  to  the conclusion that the contract is genuine, he may refer the workmen to the appropriate Government for abolition of the contract labour under Section 10 of the Act and keep the dispute pending. However, he can do so if the dispute is espoused by the direct workmen of the principal employer. If the workmen of the principal  employer have not  espoused the  dispute,  the adjudicator, after coming to the conclusion that the contract is genuine, has to reject the reference, the dispute being not an industrial dispute within the meaning of Section 2(k) of the ID Act. He will not be competent to give  any relief  to  the  workmen  of  the  erstwhile  contractor  even  if  the labour contract is abolished by the appropriate Government under Section 10 of the Act.”

In view of the provisions of section 10 of the Act, it is only the appropriate

government which has the authority to abolish genuine labour contract in

accordance  with  the  provisions  of  the  said  section.  No  court  including

industrial adjudicator has jurisdiction to do so.

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18. Gujarat Electricity Board was partly overruled in Air India in regard

to the question whether on abolition of contract labour system, the contract

labour have to be automatically absorbed by the  principal  employer, this

Court held as follows in Air India :

“The  moment  the  contract  labour  system  stands  prohibited  under section 10(1), the embargo to continue as a contract labour is put an end direct  relationship  has  been  provided  between  the  workmen  and  the principal  employer.  Thereby,  the  principal  employer  directly  becomes responsible  for  taking  the  services  of  the  workmen  hitherto  regulated through  the  contractor.  The  linkage  between  the  contractor  and  the employee stood snapped and direct relationship stood restored between the principal employer and the contract labour as its employees. Considered from this perspective, all the workmen in the respective services working on contract labour are required to be absorbed in the establishment of the employer.”  

19. A course correction, if we may use that expression, was applied by

the  Constitution  Bench,  in  SAIL.  This  Court  made  it  clear  that  neither

section  10  nor  any other  provision  in  CLRA Act  provides  for  automatic

absorption of contract labour on issuing a notification by the appropriate

government  under  section  10(1)  of  the  CLRA Act  and consequently  the

principal employer cannot be required to absorb the contract labour working

in  the  establishment.  This  Court  further  held  that  on  a  prohibition

notification being issued under section 10(1) of the CLRA Act, prohibiting

employment of contract labour in any process, operation or other work, if an

industrial dispute is raised by any contract labour in regard to conditions of

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service,  the  industrial  adjudicator  will  have  to  consider  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 as a mere

ruse/camouflage to evade compliance with various beneficial legislations so

as to deprive the workers of statutory benefits. If the contract is found to be

sham or  nominal  and  merely  a  camouflage,  then  the  so  called  contract

labour will have to be treated as direct employees of the principle employer

and  the  industrial  adjudicator  should  direct  the  principle  employer  to

regularize their services in the establishment subject to such conditions as it

may specify for that purpose. On the other hand if the contract is found to be

genuine  and  at  the  same  time  there  is  a  prohibition  notification  under

section 10(1) of CLRA Act, in respect of the establishment, the principal

employer intending to employ regular workmen for the process, operation or

other  work  of  the  establishment  in  regard  to  which  the  prohibition

notification has been issued, it shall give preference to the erstwhile contract

labour if otherwise found suitable, if necessary by giving relaxation of age.

As noticed above, SAIL did not specifically deal with the legal position as to

when a dispute is brought before the Industrial Adjudicator as to whether

18

the contract labour agreement is sham, nominal and merely a camouflage,

when there is no prohibition notification under section 10(1) of CLRA Act.

20. But where there is no abolition of contract labour under section 10 of

CLRA  Act,  but  the  contract  labour  contend  that  the  contract  between

principal  employer  and  contractor  is  sham  and  nominal,  the  remedy  is

purely  under  the  ID  Act.  The  principles  in  Gujarat  Electricity  Board

continue to govern the issue. The remedy of the workmen is to approach the

industrial adjudicator for an adjudication of their dispute that they are the

direct  employees  of  the  principle  employer  and  the  agreement  is  sham,

nominal  and  merely  a  camouflage,  even  when  there  is  no  order  under

section 10(1) of CLRA Act. The industrial adjudicator can grant the relief

sought  if  it  finds  that  contract  between  principal  employer  and  the

contractor is sham, nominal and merely a camouflage to deny employment

benefits to the employer and that there is in fact a direct employment, by

applying  tests  like:  who  pays  the  salary;  who  has  the  power  to

remove/dismiss from service or initiate disciplinary action; who can tell the

employee  the  way in  which  the  work  should  be  done,  in  short  who has

direction and control over the employee. But where there is no notification

under  section  10  of  the  CLRA  Act  and  where  it  is  not  proved  in  the

19

industrial adjudication that the contract was sham/nominal and camouflage,

then the question of directing the principal employer to absorb or regularize

the services of the contract labour does not arise. The tests that are applied

to find out whether a person is an employee or an independent contractor

may not  automatically  apply  in  finding  out  whether  the  contract  labour

agreement is a sham, nominal and is a mere camouflage. For example, if the

contract  is  for  supply  of  labour,  necessarily,  the  labour  supplied  by  the

contractor  will  work under  the directions,  supervision  and control  of  the

principal employer but that would not make the worker a direct employee of

the principal  employer,  if  the salary is  paid  by contractor,  if  the  right  to

regulate  employment  is  with  the  contractor,  and the  ultimate  supervision

and control lies with the contractor. The principal employer only controls

and directs the work to be done by a contract labour, when such labour is

assigned/allotted/sent  to  him.  But  it  is  the  contractor  as  employer,  who

chooses  whether  the  worker  is  to  be  assigned/allotted  to  the  principal

employer  or  used  otherwise.  In  short  worker  being  the  employee  of  the

contractor, the ultimate supervision and control lies with the contractor as

he decides where the employee will work and how long he will work and

subject  to  what  conditions.  Only  when  the  contractor  assigns/sends  the

worker to work under the principal employer, the worker works under the

20

supervision  and  control  of  the  principal  employer  but  that  is  secondary

control. The primary control is with the contractor.  

21. On  the  contention  urged,  the  following  questions  arise  for  our

consideration in this case:  

(i) Whether  the  agreement  between  the  contractor  society  and  the IAAI in regard to cargo handling work was sham and nominal and consequently, the workers engaged as contract labour in regard to cargo handling work, were the direct employees of IAAI ?  

(ii) Whether   the  status  of  loaders-cum-packers  engaged  in  cargo handling  work  was  illegally  changed  from that  of  direct  casual labour to contract labour in violation of section 9A of the ID Act, 1947?   

(iii) In the  absence of a notification under section 10 of CLRA Act prohibiting  the  employment  of  contract  labour  in  the process/operation of cargo handling work, whether the workmen employed as contract labour are entitled to claim absorption?

22. In the claim statement filed before the Tribunal, the specific case of

the first respondent representing 88 workers was two-fold. The first was that

they were employed as direct casual labour in IAAI from November, 1985

and  July,  1986;  that  when  the  union  filed  W.P.No.11683/1995  seeking

regularization of the workers, IAAI made the union to agree for the terms of

a memorandum filed in the said proceedings, as a result of which their status

21

was changed to that of contract labour through the society which became an

intermediary; and that as there was no settlement as defined in ID Act and

as there  was  no  notice  under  section  9A of  the  ID Act  before  effecting

change  in  status  of  the  said  workers,  the  introduction  of  the  contract

between IAAI and the society whereby the direct employees were converted

into contract labour, was violative of provisions of ID Act. The second was

that  the cargo handling  (loading,  unloading  and  packing operations)  was

one of the main functions of IAAI, that in Calcutta and Bombay Airports,

IAAI had engaged workers directly for the said operations, that therefore,

IAAI had to get the said work done through the direct employees even at

Madras  and  IAAI  cannot  adopt  different  yardsticks  for  different  places.

What is significant is that the union did not plead that the contract labour

agreement between the society and IAAI was sham and nominal. In fact, it

could not do so, as the contract was not with a private contractor operating

with a profit motive, but with a society of the very workers. Nor did the first

respondent   Union  allege  that   IAAI  was  exercising  direct  control  and

supervision over their work or that IAAI was directly paying their salary or

that IAAI was directly taking disciplinary action against them. In short, the

two grounds urged were violation of section 9A of the ID Act and adoption

22

of  different  standards  and  methods  at  different  cities  in  regard  to  cargo

handling.  

23. The Tribunal did not consider the first ground nor it did decide the

matter with reference to the second ground. On the other hand, it held that

IAAI being in a dominant position, the union was constrained to agree to

the IAAI’s memorandum (filed in Writ  Petition No. 11683 of  1985) and

form a co-operative  society as  a device to  deprive  the workmen of their

rights and to circumvent the provisions of various labour laws. The Tribunal

also held that IAAI could not change the status of the members of the union

from direct to indirect workers after they had worked as casual employees

directly under the IAAI for about seven months between November, 1985 to

July, 1986. It also held that IAAI exercised the control and supervision over

the workmen, punished and suspended the erring workers and made direct

payment  of  wages  and  therefore,  they  were  to  be  treated  as  the  direct

employees of IAAI and as they worked for more than 180 days, they are

entitled to permanent status under the provisions of Tamil Nadu Conferment

of Permanent Status to Workmen Act, 1984. As noticed above, the Division

Bench of the High Court while reversing the decision of the well reasoned

23

judgment  of  the  learned  Single  Judge,  re-affirmed  these  findings  of  the

Tribunal and restored the award.  

24. One of the reasons given by the Division Bench to restore the order of

the  Tribunal  is  that  the  High  Court  in  its  writ  jurisdiction  should  not

interfere with the award of Industrial Tribunal based on the findings of fact.

Reliance is placed on the decisions of this Court in  Indian Overseas Bank

vs. IOB Staff Canteen Workers' Union [2000 (4) SCC 245] and R. K. Panda

vs. Steel Authority of India [1994 (5) SCC 204]. It is true that in exercising

the writ jurisdiction, the High Court cannot sit in appeal over the findings

and  award  of  the  Industrial  Tribunal  and  therefore,  cannot  re-appreciate

evidence. The findings of fact recorded by a fact finding authority should

ordinarily be considered as final. The findings of the Tribunal should not be

interfered  in  writ  jusidiction  merely  on  the  ground  that  the  material  on

which the tribunal had acted was insufficient or not credible. It is also true

that as long as the findings of fact are based on some materials which are

relevant, findings may not be interfered with merely because another view is

also possible. But where the Tribunal records findings on no evidence or

irrelevant evidence, it is certainly open to the High Court to interfere with

the award of the Industrial Tribunal. In this case, the grounds on which the

24

union sought relief of absorption and the grounds on which the Tribunal

ultimately  granted  relief  are  completely  different.  Having  regard  to  the

several  decisions  in  the  earlier  rounds  of  litigation,  which  had  attained

finality,  it  is  doubtful  whether  the  Tribunal  could  have  considered  these

issues at all. Even assuming that the tribunal could have considered the said

grounds as having risen for decision, the question is whether there was any

basis  or  material  for  its  finding  and  assumptions.  Let  us  examine  the

findings.   

25. The first finding is that there was a settlement between the union and IAAI, as per memorandum filed in Writ Petition No. 11693 of 1985 and that the  workmen  were  pressurized  and  constrained  to  enter  into  the  said settlement by way of the memorandum filed by IAAI before the High Court.

25.1) We  find  that  there  was  neither  a  settlement  in  the  form  of  a

memorandum nor any pressure  on the  union  to  agree  for  the  same. It  is

necessary  to  remember  the  factual  background.  IAAI  had  granted  the

privilege  of  cargo  handling  work  by way of  licence  to  Airfreight.   The

licence  agreement  dated  30.1.1978 between  IAAI and Airfreight  showed

that it was not a contract labour agreement. In fact, there was no payment

made by IAAI to Airfreight for the ground handling of cargo. On the other

hand, for the privilege of being appointed as the ground handling agency,

25

Airfreight paid a licence fee to IAAI minimum being Rs.12 lakhs, maximum

being  Rs.43.50  lakhs  plus  a  share  in  the  revenue  over  and  above  the

stipulated revenue. Airfreight as ground handling agency, collected charges

in  regard  to  export,  import  and  transhipment  cargo  from

consignor/consignee and employed its own personnel and labour to manage

and control  the  entire  ground handling  cargo.  The  said  ground handling

agency agreement between IAAI and Airfreight continued till 31.10.1985. It

is,  therefore,  clear  that  upto  31.10.1985,  the  workmen  engaged  by  Air

Freight  in  regard  to  the  handling  of  cargo  were  the  regular/permanent

employees of Air Freight, and were in no way connected with IAAI. In fact,

they  would  not  even  fall  with  in  the  definition  of  “contract  labour”  in

section 2(b) of CLRA Act. When the agreement of IAAI with Air Freight

came to an end on 31.10.1985 , there was no obligation on the part of the

IAAI to employ the workers of Airfreight or to continue with the workers

previously employed by Airfreight in regard to cargo handling work. IAAI

at that juncture had the choice either to give a fresh licence to someone else,

or enter into a contract labour agreement, or get the work done directly. But

before  IAAI  could  choose  or  finalize  an  alternative  arrangement,  ex-

employees  of  Airfreight,  through  the  Airfreight  workers'  Union  which

subsequently  became  the  International  Air  Cargo  Workers'  Union  (first

26

respondent  herein)  approached  the  Madras  High  Court  in  Writ  Petition

No.11683  of  1985  with  a  prayer  that  IAAI  should  employ  the  workers

employed by Airfreight in regard to ground handling operations and should

not recruit any other person.  

25.2) IAAI being  a  statutory authority,  being  under  an  obligation  to  act

fairly, wanted to mitigate the hardship to the workers of Airfreight (loaders

and packers),  as a consequence of terminating the cargo ground handling

contract  of  Airfreight.  After  considering  the  matter,  it  therefore,  filed  a

memo before the court unilaterally indicating certain steps. It proposed to

mitigate the hardship of such workers. The steps indicated were :  

(a) Workers  of  Airfreight  who  were  engaged  in  the  cargo  handling operation could form a cooperative society;  

(b) Till  it  made  its  own  arrangements,  IAAI  would  consider accommodating the ex-loaders and packers of Airfreight as far as possible, on contract basis through a co-operative society formed by such workers, on terms, conditions and period to be decided by IAAI from time to time, as per its policy.  

(c) Under no circumstances the proposal/scheme would involve regular absorption of the workers in the service of IAAI.  

27

25.3) The workers being clearly aware of the legal position that they were

not entitled to absorption under IAAI as they were the regular employees of

Airfreight,  and  that  IAAI  had  no  obligation  to  absorb  or  employ  them,

submitted to the court that they were agreeable to what was stated by IAAI

in  the  memorandum.  Therefore,  the  High  Court  after  recording  the

memorandum submitted by IAAI and also recording the submission of the

counsel for the workers’ Union that it was agreeable to the memorandum,

dismissed the writ petition. Thus, the claim of workers of Airfreight who

were engaged in  the  cargo  handling  operations  till  31.10.1985,  that  they

should be employed directly as regular employees of IAAI, stood rejected

and attained finality.  

25.4) Having regard to the said factual background and having regard to the

fact that the memorandum filed by IAAI was not a settlement between the

parties,  but  was  only  an  unilateral  proposal  by  IAAI  in  a  pending  writ

petition, and in view of the fact  that  the union was agreeable for such a

course and did not press the relief of absorption or direct employment under

IAAI, it  is  not  possible  to hold that  the  terms of the memorandum were

terms  of  a  settlement  arrived  at  by  IAAI  from a  dominant  position,  by

applying pressure on the workers. This is not a case of the workers giving

28

up  any  right  or  interest,  but  a  case  of  a  benefit  or  concession  being

voluntarily  extended  by  IAAI  as  a  responsible  organization,  to  mitigate

hardship. It is unfortunate that in the absence of any pleadings or evidence

about any such pressure or undue influence, the Tribunal chose to refer to

the said memorandum filed in the writ proceedings as a settlement reached

by compulsion and pressure, ignoring the fact that it was filed unilaterally in

a writ petition and accepted by the workers and the High Court.   

26. The second finding by the Tribunal is that the workers were entitled to continue  as direct  casual  labour  of  IAAI beyond July,  1986 and they would have so continued but for change in their status as contract labour, effected by IAAI.  

26.1) As notice  above,  these  workers  were  the  permanent  employees  of

Airfreight. When Airfreight ceased to be the ground handling agent, it was

Airfreight's responsibility to deploy its workers elsewhere. But knowing that

Airfreight may not continue them in service in view of termination of the

licence, these workers requested IAAI to offer them employment. Though

there was no obligation to offer them employment or give any other relief,

on  humanitarian  grounds  and  to  mitigate  the  hardship  of  these  workers,

IAAI proposed that  if  the  workers  formed a co-operative society, it  may

consider giving the cargo handling work to such society so that the workers

29

of Airfreight can earn their livelihood. It also agreed purely as an interim

measure to employ them as casual labourers till the formalities of formation

of  the  society  and  the  society  entering  into  a  contract  with  IAAI  were

completed.  Therefore  the  direct  casual  employment  given to  the  workers

was purely an interim or ad hoc measure as a part of the package proposal

made  by  IAAI  in  its  memorandum  filed  before  the  High  Court,  duly

recorded by the High Court in W.P. No.11683 of 1985, and accepted by the

workers.  On  formation  of  the  society  and  on the  society  entering  into  a

contract  with  IAAI  for  providing  contract  labour,  there  was  no  need  to

employ these workers as casual labourers. Nor did the workers had any right

to claim continuation as casual labourers. In fact they did they claim any

such right. They worked for less than 240 days as casual labourers under

IAAI and were not entitled to claim the benefit  of either section 25F nor

regularization  on  the  basis  of  such  short  casual  service  as  daily  rated

employees. Therefore, it follows that on the basis of the service as casual

employees between November,  1985 and July, 1986,  the workers are not

entitled to any relief.  

26.2) As a corollary, we may also consider whether there was any violation

of  section  9A  of  ID  Act.  Section  9A  provides  that  no  employer,  who

30

proposes to effect any change in the conditions of service applicable to any

workman  in  respect  any matters  specified  in  the  Fourth  Schedule,  shall

effect such change, without giving to the workmen likely to be affected by

such change a notice in the prescribed manner of the nature of the change

proposed to be effected, or within 21 days of giving such notice. Thus the

notice of change under section 9A of ID Act is required only if the employer

wants to change the condition of service of its workmen in regard to matters

enumerated in the Fourth Schedule to the Act. This Court has held that a

change which is not related to the conditions of service enumerated in the

Fourth Schedule, in particular, retrenchment, will not attract the provisions

of section 9A of ID Act (vide workmen of L. Robert D'Souza v. Executive

Engineer, Southern Railways - 1982 (1) SCC 645, and Workmen of Sur Iron

& Steel  Co. Pvt.  Ltd. v.  Sur Iron & Steel  Company Pvt.  Ltd.  -  1970 (3)

SCC 618]. In this case, the action of IAAI in entering into a contract with

the society was something that was proposed when the workers  were the

employees of Airfreight. Further, the effect of the contract with the society

was not to change the conditions of service, but to put an end to the direct

casual daily wage employment of the said workers. As noticed above, the

workers were specifically put on notice that their casual employment was

purely  ad hoc and as a humanitarian measure, to be continued only till  a

31

contract labour contract was negotiated and finalized with the society. This

was recorded by the court  while dismissing the writ  petition filed by the

workers'  union.  The  workers  are  not  entitled  to  put  forth  a  contention

contrary to the proposal/scheme of IAAI recorded by the High Court in the

order dated 12.12.1985 passed in W.P. No.11683 of 1985. Therefore, the

question of violation of section 9A of ID Act does not arise.  

27. The third finding is that the contracts dated 1.7.1986, 14.7.1986 and 11.12.1987  between  society  and IAAI for  supply  of  contract  labour  was sham and nominal.  

27.1) We have  already  referred  to  the  circumstances  in  which  the  said

contract labour agreement was executed. To repeat, the workers were the

regular  and  permanent  employees  of  Airfreight  till  31.10.1985.  When

Airfreight  ceased  to  be  the  ground  handling  agent,  apprehending

retrenchment by Airfreight,  the workers  appealed to  the IAAI to provide

them some employment.  They also  approached the High Court  in  a writ

petition. IAAI categorically stated that it cannot absorb them. Purely as a

humanitarian measure and to mitigate their  hardship, the IAAI offered to

entrust the work of handling of cargo to a society formed by these workers

and the workers through their union, readily agreed to form a society and

32

the cargo handling work was given to the society and the workers as the

members of the society benefited from such work/contract by working as

contract labour. Instead of working under private employer operating with a

profit  motive,  they worked under  their  own society.  The contract  labour

agreement was entered by the IAAI with the workers' society not to deny the

workers of their right to continue as casual direct labour but, on the other

hand, to provide them succour by awarding the contract to their society. The

offer  of  IAAI  to  enter  into  a  contract  with  the  society  formed  by  the

workers, for supply of contract labour was readily welcomed and accepted

by the workers' union in W.P. No.11683 of 1985 filed by it. Virtually, the

seal of approval by the court was put on the same by recording the proposal

and the acceptance of the workers the same. The writ petition of the workers

was  dismissed  and  attained  finality.  Thus,  the  contracts  with  the  society

were genuine, beneficial voluntary bilateral contracts and there was nothing

sham or nominal about it. It should also be noticed that at no point of time,

the workers or their union pleaded that the agreement between IAAI and the

society was sham or nominal. A careful reading of the claim statement filed

before the tribunal and the evidence given by WW-1 shows that not even an

allegation  or  claim  to  that  effect  was  made  in  that  behalf.  In  these

33

circumstances,  it  is  un-understandable  as  to  how the tribunal  could  have

held that the agreement was sham and nominal.

27.2) Unfortunately,  the  Tribunal  goes  to  the  extent  of  referring  to  the

memo filed by the IAAI before the High Court in WP No.11683 of 1985

offering to give the cargo handling contract  to the society formed by the

workers of Airfreight, as a compromise or settlement which is opposed to

public policy, principles of natural justice and an unfair labour practice. It

further describes it as a settlement which the workers were constrained to

enter. We have already referred to this aspect and find that no such pressure

was applied and in fact the memo was not an agreement signed by parties,

and there was no obligation on the part of IAAI to make the said offer as per

the memo.  

28. The  last  finding  is  that  there  were  three  indicators  to  show  that contract  labour  for  loading/unloading  were  direct  employees  of  IAAI  : direct payment of wages, direct penal action by IAAI against the contract labour,  and  direct  control  and  supervision  of  contract  labour  by  IAAI. Therefore,  the  contracts  for  supply  of  contract  labour  were  ‘paper’ contracts and a camouflage to deny benefits of labour laws to the members of first respondent Union.   

28.1) We will first examine whether there was any material at all to hold

that the wages were being directly paid by IAAI to the contract labour. The

34

contracts  between IAAI and the society make it  crystal clear that a lump

sum consideration was to be paid by the IAAI to the society and the society

was  responsible  for  payment  to  its  members  who  were  send  as  contract

labour.  The  workers  did  not  produce  any  document  to  show  that  the

payment  was  made  by  IAAI  directly  to  the  workers.  But  The  Tribunal

wrongly held that Ex. W-1 to W-6 showed that the payment was directly

made.  Ex.  W-1  is  an  appointment  letter  dated  31.1.1978  issued  to  one

Godaraman by Airfreight. Ex.W-2 dated 31.10.1983 is a pay-slip of one D.

Natarajan issued by Airfreight. Both these documents relate to the period

prior  to  31.10.1985 when the workers  were  the  permanent  employees  of

Airfreight,  and  had  absolutely  no  connection  with  IAAI.  Ex.W-3  dated

18.4.1988 is a cash receipt for payment of ex-gratia amount paid to cargo

loaders for the period 22.3.1986 to 9.5.1986 and 17.5.1986 to 23.5.1986. It

shows that a sum of Rs.7,267.20 was paid as ex gratia amount. Though the

said receipt is dated 18.4.1988, it clearly shows that the payment related to

the work done between 22.3.1986 to 9.5.1986 and 17.5.1986 to 23.5.1986

when, admittedly, these workers were direct casual daily wage employees

under IAAI and when the contract between IAAI and the society had not

even come into existence. The contract labour arrangement admittedly came

into  existence  only  from  1.7.1986.  This  document  has,  therefore,  no

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relevance  to  show  that  any  payment  was  made  to  the  contract  labour

directly. Ex.W-4 is a Circular dated 18.2.1986 of IAAI notifying that wages

of 82 loaders mentioned therein had been drawn from 1.1.1986 to 31.1.1986

and  directed  the  said  daily  wage  labourers  to  receive  their  wages

immediately. This again is of no relevance as it related to the period prior to

the contract  labour  agreement  when the workers  were working as casual

daily wage employees directly under the IAAI. Ex.W-5 is the pay-slip of

one S.C. Yadav for May, 1990 who was working in the Bombay Airport and

Ex. W-6 is a pay-slip of one Aseem Das, Cargo Loader for June, 1990 who

was working in the Calcutta Airport. These two documents were produced

only to show that the IAAI had employed some persons as direct labour in

its cargo department in Calcutta and Bombay Airports and had nothing to do

with  the  workers  who  were  working  at  Madras.  On  the  basis  of  these

documents, the Tribunal has held that payments were being directly made to

workers  when  they  were  contract  labours.  This  is  a  finding  based  on

absolutely no evidence and shockingly perverse and is liable to be rejected

accordingly.

28.2) The Tribunal held that IAAI was taking penal and disciplinary action

by suspending  and  punishing  the  contract  labour  and  that  was  proof  of

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direct employment. This finding is also based on no evidence. Not even a

single  document  was  produced to  show that  any notice  of  suspension  or

show cause notice for disciplinary action or order imposing punishment was

passed by IAAI in regard to any of the contract labour. Reliance was placed

on Ex.W10, M-15 to M-17, M-21, M-23 as also M2, 24 to 31 and 34 to 40

to prove that IAAI was directly taking action against the contract labour.

None of them is relevant. Ex.W-10 is a letter dated 7.3.1990 from IAAI to

the society, stating that one Ram Chander, loader-cum-packer had given an

assurance to work in a disciplined manner and therefore it was decided to

allow him to work. This is not a communication addressed to the contract

labour but to the society informing the society that Ram Chander may be

permitted to work in view of his assurance to behalf properly. M-15 to M-17

are 3 letters dated 9.3.1987, 16.6.1988 and 11.6.1990 addressed by IAAI to

the  society  regarding  the  allotment  of  contract  labour  and  their

identification.  Ex.M-21  is  a  letter  dated  20/22.2.1991  from IAAI  to  the

society for supply of contract labour. Ex.M-23 is a letter dated 14.5.1991

from IAAI to the society regarding duty roster.  Ex.M24 is  a letter  dated

2.12.1987 from IAAI to the society informing that there is no improvement

in the attendance of the contract labour, and requesting the society to take

necessary action to improve their attendance. Ex.M25 to 31 and 34 to 40 are

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letters complaining about pilferage and other irregularities committed by the

contract  labour  noticed  by  security  personnel.  These  letters  give  the

particulars of the irregularities committed and inform the society not to send

them to work pending investigation. None of them relates to imposition of

punishment by IAAI as employer against any employee. These are merely

communications informing the contractor society that some of the contract

labour provided by it were guilty of some illegal acts and therefore directing

the contractor not to send those employees. This was expressly provided for

in clauses 20 and 25 of the Contract Labour Agreement. Thus, none of these

documents is evidence of any penal or disciplinary action by IAAI against

the contract labour.

28.3) The next  ground referred  is  that  the contract  labour  were working

under the direct supervision and control of officers of IAAI. This is not in

fact disputed. The contract labour were engaged in handling cargo, that is

loading, unloading and movement of cargo in the Cargo Complex of IAAI.

Naturally, the work had to be done under the supervision of the officers of

IAAI. Merely because the contract labour work is under the supervision of

the officers  of  the principal  employer, it  cannot  be taken as  evidence  of

direct employment under the principal employer. Clause 17 of the Contract

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Agreement  required  a  supervisor  to  be  employed  by  the  society  also.

Exercise of some control over the activities of contract labour while they

discharge their  duties  as  labourers,  is  inevitable  and such exercise is  not

sufficient to hold that the contract labour will become the direct employees

of the principle employer.  

28.3) It is thus seen that all the three grounds mentioned by the Tribunal

and which have found favour with the Division Bench as indicators of direct

employment by IAAI and the contract  labour agreement with  the society

being a camouflage, are wholly baseless.                                 

29. In view of the above we answer the questions as follows :  

(i) The contract labour agreement between IAAI and the society was not sham, nominal or as a camouflage and the contract labour were  not the direct employees of IAAI.  

(ii) There was no violation of section 9A of the ID Act.   

(iii) In  the  absence  of  a  notification  under  section  10  of  CLRA  Act prohibiting  the  employment  of  contract  labour  in  the  operation  of cargo handling work, the workmen employed as contract labour are not entitled to claim absorption.  

30. In the  light  of  our  findings  on the  two questions  the  order  of  the

Division Bench cannot be sustained and is  liable to be set  aside and the

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order of the learned Single Judge has to be restored. We may however note

that the last direction given by the learned Single Judge that in the event of

the Central Government issuing a notification under section 10 of CLRA

Act, all those who had worked as contract labour under the contract between

IAAI and society should be absorbed in the same manner as was directed by

this Court in Air India is a direction which is bad in law, as subsequent to

the said decision of the learned Single Judge, this Court in  SAIL, reversed

the decision in  Air India. IAAI did not challenge the said direction.  SAIL

has  also  made  it  clear  that  the  decision  in  Air  India is  overruled

prospectively  and  any  declaration  or  direction  issued  by  industrial

adjudicator or High Court for absorption of contract labour following the

judgment in Air India shall hold good and shall not be set aside, altered or

modified on the basis of the decision in SAIL. Therefore, the said direction

of  the  learned single  Judge  which  has  attained  finality,  as  IAAI did  not

challenge the same, is  not disturbed. In view of the above,  the appeal  is

allowed in part, the order of the Division Bench is set aside and the order of

the learned Single Judge is restored.

31. We are  informed  that  during  the  pendency of  the  writ  petition,  in

pursuance of an interim order, the workers were being paid Rs.1,000/- per

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month without extracting any work. In the writ appeal, the Division Bench

modified the said interim order on 1.9.1998. While continuing the direction

for  the  monthly  payment  of  Rs.1,000/-,  it  directed  that  the  workers  who

reported for work and worked under the current contractor should be paid

Rs.1,281/- per month and those who did not report to work, but awaited the

result  of  litigation,  should  continue  to  receive  Rs.1,000/-  per  month.  In

pursuance of it, seven workers apparently reported to work and worked up

to 15.4.2002 and were paid Rs.1,281 per month; the remaining 70 chose not

to report to work and continued to receive Rs.1,000/- per month. Apparently

those 70 were otherwise engaged or employed and therefore did not choose

to report to work. The judgment of the Division Bench dated 12.11.2001

which restored the award of the Tribunal, was stayed by this Court. When

IAAI challenged the judgment of the Division Bench restoring the award of

the Tribunal, this Court on 15.3.2002 directed that status quo as on the date

of the judgment of the High Court be maintained. By a subsequent interim

order dated 21.2.2003, this Court observed that it will be difficult for this

court to issue any direction in terms of the interim order granted by the High

Court would be a bad precedent in labour law, as that would mean directing

payment  for  not  doing  any work.  This  Court  therefore  directed  IAAI  to

extract appropriate work from the workers and to pay them Rs.1,000/- to

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such of them who worked. It was clarified that payment of Rs.1,000/- would

be  without  prejudice  to  the  rights  of  the  parties  as  may  be  finally

determined.  In  view of  our  final  decision,  the  only  further  direction  we

propose to make is that in regard to the period subsequent to 21.2.2003, if

any of  the  workers   had  worked and had  been paid  only Rs.1,000/-  per

month, IAAI shall pay for the said period by way of monthly salary a sum

equivalent  to  the  minimum wages.  The  difference between the  minimum

wage and Rs.1,000 shall be paid by the IAAI to the said workers who have

worked, within 3 months from today. Parties to bear their respective costs.

……………………..J.      (R V Raveendran)

New Delhi; ….……………………J. April 13, 2009. (Lokeshwar Singh Panta)

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