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PETITIONER: SECURITY GUARDS BOARD FOR GREATERBOMBAY & THANA DISTT. ETC.

       Vs.

RESPONDENT: SECURITY & PERSONNEL SERVICE PVT. LTD.& ORS. ETC.

DATE OF JUDGMENT28/04/1987

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) KHALID, V. (J)

CITATION:  1987 AIR 1370            1987 SCR  (3)  19  1987 SCC  (3) 413        JT 1987 (2)   328  1987 SCALE  (1)1198

ACT:     Maharashtra  Private  Security  Guards  (Regulation   of Employment  and Welfare) Act, 1981: s. 23 read with  ss.  22 and 1(4)--Exemption from Act--Denial of to security agencies or agents--Validity of-Government whether required to  state reasons. Administrative Law:     Exemption   from   provisions  of   a   statute--Refusal of--Government whether to state reasons.

HEADNOTE:     Section 1(4) of the Maharashtra Private Security  Guards (Regulation  of Employment and Welfare) Act, 1981 makes  the provisions of the Act applicable to security guards who were not  direct  and  regular employees of the  factory  or  the establishment. A ’security guard’ is defined in s. 2(10)  as a  person  who is engaged or is to be  engaged  through  any agency  or an agent to do security work. Section 3  empowers the  State  Government to make schemes to  provide  for  the registration of employers and security guards and the  terms and  conditions of employment of registered security  guards and their general welfare. Section 22 provides for preserva- tion  or’ existing rights and privileges of security  guards if  they  are more favourable to them than those  under  the Act.  Section  23 empowers the State  Government  to  exempt security guards from the operation of the provisions of  the Act or any scheme made thereunder.     The Security Guards Board was constituted under s. 6  of the  Act  and the Private Security  Guards  (Regulation  or’ Employment  and Welfare) Scheme, 1981 was also made to  give effect to the Act.     The  respondents’  applications for exemption  from  the provisions  of  the Act having been rejected  by  the  State Government  they filed writ petitions before the High  Court which were dismissed by a Single Judge. 20     On  appeal,  the Division Bench took the view  that  the applications  had  been rejected as a result of  the  policy decision  not to grant exemption to any security agency  and that this was wrong, that each application for exemption had to  be considered on its own merits and so disposed of,  and

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consequently directed the Government to consider the  appli- cations afresh.     In  these  appeals, it was contended for  the  appellant Security Guards Board that s. 23 of the Act did not  contem- plate the grant of exemption in favour of a security agency, on  which  ground alone the applications were liable  to  be rejected,  and  that the applications  were  rejected  after consideration  on merits and not on the basis of any  policy decision.  For the respondents it was argued that if  s.  23 was  read  in  the light of s. 22 it would  follow  that  an agency  could  ask for exemption from the operation  of  the Act,  that  wherever the conditions of service  were  better than  those  proposed under the scheme  the  Government  was under  a duty to grant exemption, and that the Act  did  not contemplate  the abolition of the agency system as  such  or termination of the contract of employment between the agency and the security guards, or for the transfer of the services of the security guards from the employment of the agency  to that of the factory or establishment. Allowing the appeals, the Court,     HELD: 1. The orders of the State Government refusing  to grant  exemption to the respondents from the  operation  or’ the  provisions of the Maharashtra Private  Security  Guards (Regulation of Employment and Welfare) Act, 1981 do not call for any interference. [32GH]     2.  Section  23  of the Act read with s.  1(4)  and  the definition of ’security guard’ in s. 2(10) makes it apparent that the exemption is in regard to security guards  employed in  any factory or establishment or in any class or  classes of  factories  or establishments and not in  respect  of  an agency or an agent. All security guards employed in a facto- ry may be exempted or security guards of a particular  grade or  doing  a particular type of work in the factory  may  be exempted. Again, all security guards employed in a class  of factories, say textile mills, may be exempted. All  security guards  in textile mills doing a particular type of work  or drawing  a  particular  scale of pay may  be  exempted.  The correlationship of the security guards or classes of securi- ty guards who may be exempted from the operation of the  Act is  to the factory or establishment or class or  classes  of factories  or establishments in which they work and  not  to the  agency or agent through and by whom they are  employed. [30A-D] 21     3.  The question is not one of locus standi at  all  but which  or what class of security guards are to  be  exempted from  the operation of the Act and the scheme. The  security guards  or classes of security guards employed in a  factory or  establishment or in a class or classes of  factories  or establishments  may apply to the Government to  exempt  them from  the  operation of the Act. Similarly a factory  or  an establishment  or a class or classes of factories or  estab- lishments  may  apply to the Government to  exempt  security guards  employed in their factories or  establishments  from the  operation of the Act. Where security guards  have  been engaged  or are to be engaged through an agency or agent  in any  factory  or establishment or a class  of  factories  or establishments,  such an agency Or agent may also  apply  to the Government, not t9 exempt all security guards engaged or to  be  engaged through them but to exempt  security  guards engaged or to be engaged in a factory or establishment or  a class  of factories or establishments. The exemption  to  be granted  by  the Government is not to be of  any  agency  or agent  but only of security guards employed in a factory  or establishment  or a class or classes of factories or  estab-

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lishments. [30H-31 A; 30E; G; 31 AB]     4.  Even if s. 23 is read in the light of s. 22 it  does not  follow that any agency can ask for exemption  from  the operation of the Act of all security guards employed through them.  All that s. 22 provides in effect is that the  rights or privileges of any registered security guard shall not  be altered to his detriment, which only means that if  hitherto as an employee of the agency the terms and conditions of his service were more attractive on the whole than the terms and conditions  of  service offered by the Act  and  the  scheme under  the factory or establishment, the original terms  and conditions of service will be preserved and become  applica- ble  to  their service under the factory  or  establishment. [31B-D]     5. The Act and the scheme provide for termination of the contract  of employment between the agency and the  security guards,  and  by necessary implication the services  of  the security guards will stand transferred to the service of the factory or establishment on allotment to it by the Board. It is  in  that fashion, among other things, that  security  of service is secured to the security guards. [31-DE]     6.  In cases of this nature where exemptions are  sought from  the operation of the Act, it is not necessary for  the Government  to  state its reasons. Of course if there  is  a charge  of mala fides or arbitrariness. the Court  may  look into the matter to discover if there were any mala fides  or if  the  refusal  of the Government was  arbitrary.  In  the instant case. there was none. [32GH] 22     7. The merits of each case were fully considered by  the Government and the applications were rejected because it was their  policy  not to grant exemption if it was not  in  the interest  of the security  guards.  There was  no  predeter- mined policy decision as such. [32F]     8.  Every individual registered security guard  who  was previously  working  in a factory or establishment  will  be allotted  to  the same factory or establishment and  if  the total  package  of the terms and conditions of  his  service were better than the terms and conditions of service offered by  the Board such person would be employed on the  previous terms and conditions of service. [33CD]     9. Charging of ’capitation fee’ by a union before  spon- soring a security guard tot registration under the scheme is not permissible under the Act or the scheme. [33E]

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.  1926-50 of 1986 etc.     From  the  Judgment and Order dated 20.2.  1986  of  the Bombay  High  Court  in O.S. Appeal  Nos.  616,  673,674  to 692,694 and 725 of 1985.     Soli  J. Sorabji, K.K. Singhvi, A.K. Gupta, B.  Bhushan, N.P.  Mohindra,  J.P. Cama, Mukul Mudgal,  A.M.  Khanwilkar, K.V.  Murrup  Menon, Mrs. V.D.  Khanna,  M.G.  Ramachandran, Pratap  H.  Toprani, Sanjeev Anand and A.S. Bhasme  for  the appearing parties. The Judgment of the Court was delivered by     CHINNAPPA  REDDY, J. It appears that there were  serious complaints  about  the service conditions  of  about  70,000 persons working as Security Guards in various factories  and establishments  in Greater Bombay and Thane Industrial  Com- plex,  the majority of whom were employed through about  250 Security  Agencies operating in those areas. The  complaints

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related not merely to insufficient remuneration paid to them by the agencies, but also to insecurity of service and other forms  of exploitation. There was a sample survey  conducted by the Government of Maharashtra to ascertain the extent  of exploita- 23 tion and to secure information regarding the service  condi- tions  of  the Security Guards. The sample  survey  revealed that  most  of the agencies were not  registered  under  the Shops and Establishments Act. There was only one  registered union but that union accounted for membership of 2200  only. It was found that most of the Security Guards did not  enjoy the  benefit of any Provident Fund Scheme or any  scheme  of Gratuity.  Most of them were not covered by  the  Employees’ State Insurance Scheme and had no medical facilities.  Leave facilities were inadequate. Rest intervals were not properly provided. Wages were low and only a few agencies paid  over- time and bonus. Most of them did not also have either drink- ing water facility, canteen facility or transport  facility. A very meager percentage of Guards were provided with living quarters.  It was recommended that it was absolutely  neces- sary  to  prevent exploitation of the  unprotected  Security Guards  and to provide them with better service  conditions. Pursuant  to  the  report of the committee  which  made  the sample survey, the Government issued the Maharashtra Private Security  Guards  (Regulation  of  Employment  and  Welfare) Ordinance.  The  Ordinance was replaced by  the  Maharashtra Private  Security Guards (Regulation of Employment and  Wel- fare)  Act,  1981. The vires of the Act were  challenged  in various writ petitions filed in the High Court of Bombay  by Security Agencies. They were dismissed by the High Court and a petition for special leave to appeal under Art. 136 of the Constitution  was dismissed by the Supreme Court on  January 5,  1983. While dismissing the special leave  petition,  the Supreme Court gave the following directions:               "It appears that some of the petitioners  have               applied  to  the State  Government  to  accord               exemption  to them from the operation  of  the               provisions  of  the  Private  Security  Guards               (Regulation   of  Employment   and   Welfare).               Scheme, 1981 and those applications are  under               the consideration of the State Government. We,               therefore, direct that the above scheme  shall               not  be  enforced as against  the  petitioners               herein till the end of January 1983. The State               Government  should  dispose  all  applications               made  by  the petitioners before  January  31,               1983."               This  order was subsequently modified  in  the               following manner:               "The  order dated January 5, 1983 is  modified               by  deleting the entire portion of  the  order               following upon the words "these special  leave               petitions  are dismissed." The scheme will  be               brought into force forthwith." 24     In  the  judgment of the learned Single Judge  who  dis- missed  the writ petitions initially, the learned Judge  had held  that  it was competent for security agencies  to  seek exemption  from the operation of the provisions of the  Act. As  many as 139 security agencies applied to the  Government under  sec.  23 of the Act for grant of exemption  from  the provisions  of  the  Act.  These  applications  were   first screened  by  the Advisory Committee  who  recommended  that exemption might be granted to 21 agencies. The cases of four

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other  agencies which were not recommended by  the  Advisory Committee were again investigated by the Labour Commissioner who  recommended  that  these four agencies  also  might  be granted  exemption from the provisions of the Act.  On  June 28, 1984, the Government of Maharashtra finally rejected all the applications for exemption filed by the various security agencies.  Several  security agencies thereupon  filed  writ petitions in the High Court of Bombay. The twenty five  writ petitions filed by the twenty one agencies whose cases  were recommended by the Advisory Committee and the four  agencies whose cases were recommended by the Labour Commissioner were admitted  by the High Court and the rest were  dismissed  in limine.  The twenty five writ petitions which were  admitted were  also finally dismissed on July 11, 1985 by  a  learned Single Judge. On appeals preferred by the twenty five  secu- rity  agencies,  a Division Bench of the Bombay  High  Court directed the State Government to consider afresh the  appli- cations for exemption. An objection raised on behalf of  the Security Guards Board and the Government of Maharashtra that security agencies could not seek exemption under sec. 23  of the  Act was overruled. The Bombay High Court took the  view that  the applications had been rejected as a result of  the policy  decision  not  to grant exemption  to  any  security agency  and  that this was wrong. The High Court  held  that each  application for exemption had to be considered on  its own  merits and so disposed of. Hence the direction  to  the Government to consider the applications afresh.     The  Security Guards Board constituted under sec.  6  of the Act has preferred these twenty five appeals against  the judgment of the Bombay High Court.     Shri  K.K. Singhvi, learned counsel for  the  appellant, the  Security  Guards  Board for Greater  Bombay  and  Thana District, argued that sec. 23 of the Act did not contemplate the  grant of exemption in favour of a security  agency  and therefore, the applications for exemption were liable to  be rejected on that ground alone. He further submitted that the High Court was wrong in holding that the applications had  25 been rejected on the basis of any policy decision. They were rejected  after  consideration of all  the  applications  on merits.  If there was a policy decision such a decision  was arrived  at on a consideration of all the  applications  for exemption and it was that none of the applications  deserved to be allowed. Shri Soli Sorabji and other learned  counsel, who  followed him, argued that the Act did  not  contemplate the  abolition of the agency system as such and it was  only meant  to regulate and provide better conditions of  service for Security Guards. Wherever the conditions of service were better than those proposed under the Scheme, the  Government was  under a duty to grant the necessary exemption  so  that the  employees  may  have the benefit  of  the  advantageous conditions of service. According to them, this result flowed from a perusal of the Act, in particular sees. 22 and 23. It was also urged that the High Court was right in its  conclu- sion  that the applications for exemption had not  been  re- jected on merits but because of a policy decision.     We  may  now proceed to consider the  rival  submissions with reference to the provisions of the Maharashtra  Private Security Guards (Regulation of Employment and Welfare)  Act, 1981.  The preamble to the Ordinance which preceded the  Act recited, ".  ....and whereas the Governor of Maharashtra  is satisfied that circumstances exist which render it necessary for him to take immediate action to make a law for  regulat- ing  the employment of private Security Guards  employed  in factories and establishments in the State of Maharashtra and

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for  making better provision for their terms and  conditions of  employment and welfare, through the establishment  of  a Board     therefore,    and    for     matters     connected therewith  .......  ". The long title of the Act is, "An Act for  regulating  the employment of private  Security  Guards employed  in  factories and establishments in the  State  of Maharashtra  and  for making  better  provisions  for  their terms   and  conditions of employment and  welfare,  through the  establishment  of a Board therefore,  and  for  matters connected  therewith." Sec. 1(4) makes the  Act  applicable, "to  persons who work as Security Guards in any  factory  or establishment, but who are not direct and regular  employees of  the  factory or the establishment as the case  may  be." Secs. 2(1), (3), (4), (5), (8) and (10) defines the  expres- sions "agency",    "employer",   "establishment",    "facto- ry",     "principal  employer"  and  "Security   Guard"   as follows:-               "  "agency",  or  "agent", in  relation  to  a               Security Guard,               26               means an individual or body of individuals  or               a  body Corporate, who undertakes  to  execute               any  security work or watch and ward work  for               any factory or establishment by engaging  such               Security  Guard on hire or otherwise,  or  who               supplies such Security Guards either in groups               or as an individual, and includes a sub-agency               or a sub-agent;               "employer",  in relation to a  Security  Guard               engaged  by  or through an  agency  or  agent,               means the principal employer, and in  relation               to  any other Security Guard, the  person  who               has  ultimate control over the affairs of  the               factory  or  establishment  and  includes  any               other  person  to  whom the  affairs  of  such               factory or establishment are entrusted, wheth-               er such person is called an Agent, Manager  or               by any other name prevailing in the factory or               establishment;               "establishment"  means  an  establishment   as               defined  in  clause (8) of section  2  of  the               Bombay Shops and Establishments Act, 1948;               "factory" means a factory as defined in clause               (m) of section 2 of the Factories Act, 1948;               "principal employer" means an employer who has               engaged  Security Guards through an agency  or               agent;               "Security  Guard" or "private Security  Guard"               means  a  person who is engaged or  is  to  be               engaged through any agency or an agent, wheth-               er  for wages or not, to do security  work  or               watch  and ward work in any factory or  estab-               lishment  and,  includes any person,  not  em-               ployed by any employer or agency or agent, but               working  with the permission of, or  under  an               agreement  with,  the employer  or  agency  or               agent, but does not include the members of any               employer’s  family  or  any person  who  is  a               direct  and regular employee of the  principal               employer;" Section 3 empowers the State Government for the purposes  of ensuring an adequate supply and full and proper  utilisation of  Security  Guards  in factories  and  establishments  and generally  for  making better provisions in  the  terms  and conditions  of  employment of such workers, to make  one  or

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more schemes to provide for the registration of emp- 27 loyers  and Security Guards in any factory or  establishment and to provide for the terms and conditions of employment of registered  Security Guards and to make provisions  for  the general  welfare  of such Security Guards.  The  matters  in regard  to  which provisions may be made in the  scheme  are also  set out in sec. 3(2) (a) to (n). We may  mention  that clause  (d) of sec. 3(2) in particular relates to terms  and conditions  of  employment, including the  rates  of  wages, hours  of work, maternity benefit, over-time payment,  leave with  wages,  provision for gratuity and  conditions  as  to weekly  and  other holidays and pay in respect  thereof.  We should also mention here that sec. 3(2)(g) provides that the scheme  may  prohibit,  restrict or  otherwise  control  the employment  of Security Guards to whom the scheme  does  not apply and the employment of Security Guards by employers  to whom the scheme does not apply. Sec. 3(3) provides that  the scheme  may further provide for punishment for a  contraven- tion  of  any provision of the scheme with  imprisonment  or with  fine.  Sec.  4 prescribes the  procedure  for  making, varying  or revoking a scheme. Sec. 6 provides for the  con- stitution  of a Board for the Security Guards in  any  area. Sec.  8 prescribes the powers and duties of the Board.  Sec. 15  provides for the constitution of an Advisory  Committee. Secs. 19, 20 and 21 provide for the application of Workmen’s Compensation Act, Payment of Wages Act and Maternity Benefit Act to Security Guards. Secs. 22 and 23 are important.  Sec. 22  provides  for the preservation of  existing  rights  and privileges if they are more favourable and sec. 23  provides for  exemption from the provisions of the Act. These  provi- sions  are important for our present purposes. They  are  as follows:-               "22.  Nothing  contained  in  this  Act  shall               affect  any  rights or privileges,  which  any               registered  Security  Guard  employed  in  any               factory  or establishment is entitled  to,  on               the  date on which this Act comes into  force,               under any other law, contract, custom or usage               applicable  to  such Security Guard,  if  such               rights  or privileges are more  favourable  to               him  than those to which he would be  entitled               under this Act and the Scheme:                         Provided  that, such Security  Guard               shall  not be entitled to receive  any  corre-               sponding benefit under the provisions of  this               Act and the Scheme.               23. The State Government may, after consulting               the Advisory Committee, by notification in the               Official  Gazette, and subject to such  condi-               tions and for such period               28               as  may  be  specified  in  the  notification,               exempt  from  the operation of all or  any  of               the,provisions of this Act or any Scheme  made               thereunder,  all  or any class or  classes  of               Security  Guards  employed in any  factory  or               establishment  or in any class or  classes  of               factories or establishments, if in the opinion               of  the  State Government, all  such  Security               Guards  or such class or classes  of  Security               Guards are in the enjoyment of benefits, which               are  on the whole not less favourable to  such               Security Guards than the benefits provided  by               or under this Act or any Scheme made  thereun-

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             der:                         Provided   that,  before  any   such               notification  is issued, the State  Government               shall  publish  a notice of its  intention  to               issue such notification, and invite objections               and suggestions in respect thereto and no such               notification shall be issued until the  objec-               tions and suggestions have been considered and               a  period  of one month has elapsed  from  the               date of first publication of the notice in the               Official Gazette:                         Provided  further  that,  the  State               Government  may, by notification in the  Offi-               cial  Gazette, at any time, for reasons to  be               specified,      rescind     the      aforesaid               notification."     Pursuant to the powers conferred by s. 4 of the Act, the Government  of  Maharashtra after  consulting  the  Advisory Committee  made the Private Security Guards  (Regulation  of Employment  and Welfare) Scheme, 1981. Paragraph 11  of  the Scheme  requires  the Board to maintain (1)  a  register  of employers, and (2) a Pool Register which shall be a register of  Security  Guards.  Paragraph 12 empowers  the  Board  to arrange  for the classification of Security Guards in  suit- able  categories  as may be determined by it  from  time  to time. Paragraph 14 requires ’every employer who has  engaged private Security Guards on the appointed day or at any  time thereafter  to  ’get himself registered with the  Board’  by applying  in the prescribed form. The employer of an  estab- lishment coming into existence after the commencement of the Scheme is required to apply for registration  simultaneously with the commencement of its business. Paragraph 15 requires ’any Security Guard who was working on the appointed day  or at  any  time thereafter in the employment in  the  area  to which  the  Scheme applies’ to ’apply to the Board’  in  the prescribed form. Paragraph 25 provides that every registered Security Guard shall be deemed to have accepted    29 the obligation of the Scheme. A registered Security Guard in the pool who is available for work is required not to engage himself for employment under any registered employer  unless he  is  allotted to that employer by the  Secretary  of  the Board. A registered Security Guard in the pool who is avail- able for work is further required to carry out directions of the  Board  and to accept employment  under  any  registered employer  for which he is considered suitable by the  Board. Paragraph  26 provides that every registered employer  shall accept the obligations of the Scheme. A registered  employer is  required  not to employ a Security Guard  other  than  a Security  Guard who has been allotted to him by  the  Secre- tary. A registered employer is however at liberty to  employ Security  Guard directly, A registered employer is  required to disburse to the Security Guard the wages and other allow- ances directly, if so directed by the Board and send to  the Board  a  statement of such payment  within  the  prescribed time. Paragraph 27 prohibits the employment by a  registered employer of a Security Guard unless the Security Guard is  a registered  Security Guard or a directly  employed  Security Guard.  Paragraph  29 makes detailed  provision  for  wages, allowances  and  other  conditions of  service  of  Security Guards. Paragraph 30 provides for the disbursement of  wages and  other allowances to the Security Guards.  Paragraph  31 provides for disciplinary procedure. Paragraph 32  prohibits the  termination of employment of registered Security  Guard except  in  accordance with the provisions  of  the  Scheme.

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Paragraph 33 and paragraph 34 provide for appeals and termi- nation.  Paragraph 35 provides. for revision.  Paragraph  37 provides  for  the cost of operating the  Scheme  and  makes provision  for  amenities  and benefits  to  the  registered Security Guards.     It  is obvious from s. 1(4) and the very  definition  of ’Security,  Guard’ that the Act and, therefore,  the  Scheme are  not  applicable to persons who are direct  and  regular employees  of a factory or establishment but are  applicable only to persons working in any factory or establishment  who are engaged or are to be engaged through an agency or  agent and  to persons who though not employed by the  employer  or agency  or agent are working with their permission or  under an  agreement with them. Section 23, we have seen,  provides for exemption from the operation of all or any of the provi- sions  of the Act or any scheme made thereunder of  "all  or any  class  or classes of Security Guards  employed  in  any factory  or  establishment  or in any class  or  classes  of factories  or  establishments." The basic  condition  to  be satisfied  is  that the State Government should  be  of  the opinion  that  "all such Security Guards or  such  class  or classes of Security Guards are in the enjoyment of benefits, which are on the whole not less 30 favourable to such Security Guards than the benefits provid- ed  by or under this Act or any Scheme made  thereunder.  "A close  scrutiny  of s. 23, particularly in the light  of  s. 1(4) read with the definition of ’Security Guard’, makes  it clear  that the exemption is not in respect of an agency  or an  agent or even a factory or establishment but in  respect of  all or any class or classes of Security Guards  employed in  any factory or establishment or in any class or  classes of  factories or establishments. In other words, the  exemp- tion  is  in regard to ’Security Guards’,  employed  in  any factory  or  establishment  or in any class  or  classes  of factories or establishments. The exemption may be in respect of  all the Security Guards employed in a factory or  estab- lishment or in a class or classes of factories or establish- ments or in respect of a class or classes of Security Guards so  employed. For example, all Security Guards  employed  in factory  may be exempted or Security Guards of a  particular grade  or doing a particular type of work in factory may  be exempted.  Again all Security Guards employed in a class  of factories,  say textile mills may be exempted. All  Security Guards in all textile mills doing a particular type of  work or  drawing a particular scale of pay may be  exempted.  The correlationship of the Security Guards or classes or Securi- ty Guards who may be exempted from the operation of the  Act is  to the factory or establishment or class or  classes  of factories or establishments in which they work and not  with the  agency or agent through and by whom they are  employed. This  analysis  has however no bearing on  the  question  of locus standi of the persons who may seek the intervention of the  State  Government  by the issue  of  notifications  for exemption.  Obviously  the  Security Guards  or  classes  or Security  Guards employed in a factory or establishment  may apply to the Government to exempt them from the operation of the  Act. Similarly Security Guards or classes  of  Security Guards  employed in classes of factories  or  establishments may  apply to the Government to exempt them from the  opera- tion  of the Act. Again a factory or an establishment  or  a class or classes of factories or establishments may apply to the  Government to exempt Security Guards employed in  their factories  or establishments from the operation of the  Act. Though agencies or agents do not enter the picture directly,

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since  the very definition of Security Guards means  persons engaged or to be engaged through an agency or agent, it must follow  that where Security Guards have been engaged or  are to  be engaged through them in any factory or  establishment or  a class of factories or establishments, such  agency  or agent  may also apply to the Government, not to  exempt  all Security Guards engaged or to be engaged through them out to exempt Security Guards engaged or to be engaged in a factory or establishment or a class of factories or  establishments. The question is  31 not  one of locus standi at all but which or what  class  of Security Guards are to be exempted from the operation of the Act and the Scheme. Therefore, we are of the view that  even an  agency  or agent may apply to the  Government  to  grant exemption, but the exemption to be granted by the Government is  not  to be of any agency or agent but only  of  Security Guards employed in a factory or establishment or a class  or classes of factories or establishments.     One  of the submissions of the learned counsel was  that if s. 23 was read in the light of s. 22 it would follow that an agency could ask for exemption from the operation of  the Act of all Security Guards employed through them. We do  not see  how that follows. All that s. 22 provides in effect  is that  the  rights or privileges of any  registered  Security Guard  shall not be altered to his detriment. It only  means that if hitherto as an employee of the agency, the terms and conditions of his services were more attractive on the whole than the terms and conditions of service offered by the  Act and  the  scheme  under the factory  or  establishment,  the original  terms and conditions of service will be  preserved and become applicable to their service under the factory  or establishment. It was submitted by the learned counsel  that the  Act and the Scheme did not provide for  termination  of the contract of employment between the agency and the  Secu- rity Guard or for the transfer of the services of the  Secu- rity Guards from the employment of the Agency to that.of the factory  or establishment. We do not agree with the  submis- sion. By necessary implication, the services of the Security Guards will stand transferred to the service of the  factory or  establishment on allotment to it by the Board. It is  in that  fashion, among other things, that security of  service is secured to the Security Guards.     The  High Court appeared to think that all the  applica- tions were rejected on the ground that a policy decision had been  taken  not to grant exemption in any  case.  The  High Court  relied on the affidavit of Shri Rajadhyaksha. It  was stated in the affidavit of Shri Rajadhyaksha that the  opin- ion of the Advisory Committee was sought on the applications for  exemption  and the Advisory Committee  recommended  the applications of 21 applicants. Later the cases of four other applicants  were  recommended by  the  Labour  Commissioner. After  referring to these circumstances,  Shri  Rajadhyaksha stated in the affidavit.               "I say that after the receipt of the recommen-               dations  from  the Advisory Committee  by  the               Department  of Industries, Energy and  Labour,               all the papers were submitted to the               32               Chief Minister through the Minister for Labour               and  the Minister of State for Labour to  con-               sider  whether  to publish the notice  of  the               Government’s intention to issue such notifica-               tion and invite objections and suggestions  in               respect thereto. I say that after  considering

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             all  the  pros and cons of  the  problem,  the               Hon’ble  the Chief Minister,  in  consultation               with  the Hon’ble Minister for Labour and  the               Hon’ble Minister of State for Labour took  the               decision  that  none of the agencies  who  had               applied for exemption should be granted exemp-               tion under s.23 of the said Act because grant-               ing  of  such  exemption will not  be  in  the               interest of the Security Guards employed  with               the agencies."               Later again Shri Rajadhyaksha stated;               "I  say that simply because the Advisory  Com-               mittee had recommended the case for exemption,               it was not obligatory on the State  Government               to publish a notice of its intention to  issue               notification for exemption as alleged therein.               I  say that it was for the Government to  con-               sider the entire matter and to decide  whether               such  a notification should be issued  or  not               and  if as a matter of policy and after  going               through the entire case the Government decided               not  to  grant exemption no exception  can  be               taken   to   the   decision   of   the   State               Government." We  do  not read the affidavit of Shri Rajadhyaksha  to  say that  there was a predetermined policy decision pursuant  to which  all  the  applications for  exemption  were  rejected without  any consideration on merits. What the  deponent  of the affidavit meant to say was that the merits of each  case were  fully  considered and the applications  were  rejected because it was their policy not to grant exemption if it was not in the interest of the Security Guards; A complaint  was made  that  the  Government did not state  its  reasons  for rejecting  the applications for exemption. We do  not  think that  in  cases of this nature where exemptions  are  sought from  the  operation  of the Act, it is  necessary  for  the Government  to state its reasons. Of course, if there  is  a charge  of mala-fides or arbitrariness, the court  may  look into  it to discover if there are any mala-fides or  if  the refusal  of  the Government was arbitrary. We do  not  think that the orders refusing to grant exemptions in the  present cases call for any interference on the sole ground of  fail- ure to state reasons.  33     In  the result all the appeals are allowed and the  writ petitions filed in the High Court are dismissed. Civil  Writ Petition  No. 12319 of 1985 filed by one of the agencies  in this  Court is also dismissed. The State of Maharashtra  has also filed a special leave petition against the judgment  of the  Bombay High Court. It is disposed of on the same  lines as the civil appeals.     On behalf of some of the Security Guards a writ petition was filed in the Bombay High Court and it has been withdrawn to this Court to be disposed of along with the appeals.  One of the contentions raised in the writ petition filed by  the workmen is that the Scheme does not offer any continuity  or guarantee of employment to those who are already working  in factories  or  establishments having  been  engaged  through agencies.  We  are  assured by Shri  K.K.  Singhvi,  learned counsel  for  the  Board that  every  individual  registered Security  Guard who was previously working in a  factory  or establishment will be allotted to the same factory or estab- lishment  and if the total package of the terms  and  condi- tions  of his service were better than the terms and  condi- tions of service offered by the Board such person should  be

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employed  on the previous terms and conditions  of  service. The assurance of Shri Singhvi is made part of our order. The learned counsel for the workmen also urged that there was an insistence  upon payment of ’capitation fee’ and  sponsoring by a union before a Security Guard was registered under  the Scheme. This, of course is not permissible under the Act  or the  Scheme  and whoever has been so insisting  will  desist from doing so. P.S.S.                                               Appeals allowed. 34