THE DIRECTOR STEEL AUTHORITY OF INDIA LTD.V. ISPAT KHADAN JANTA MAZDOOR UNION versus ISPAT KHADAN JANTA MAZDOOR UNION on 5 July 2019

[2019] 9 S.C.R. 123

THE DIRECTOR STEEL AUTHORITY OF INDIA LTD.

v.

ISPAT KHADAN JANTA MAZDOOR UNION

(Civil Appeal Nos. 8081-8082 of 2011)

JULY 05, 2019

[A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]

Contract Labour (Regulation & Abolition) Act, 1970 – ss.7,10(1), 12, 23 and 25 – Tripartite agreement entered between theappellant, contractors and contract labour (working in the captivemines of the appellant) as per which the contract labours were paiddue wages, not less than the rates prescribed under the 1948 Act –Prohibition notification dated 17[th] March, 1993 issued by theappropriate Government u/s.10(1) of the CLRA Act – No freshagreement, in the interregnum period, was executed – Existingagreement was extended from time to time and the contract labourwas allowed to continue on the same terms and conditions, till theirservices were terminated by the contractor in April, 1996 – Mattereventually referred to the Central Government Industrial Tribunal(CGIT) – CGIT inter alia held that the contract between the appellantand the contractors was genuine and not sham and bogus – HighCourt reversed the finding and held the contract to be sham andbogus – On appeal, held: Supreme Court in the Constitution Benchjudgment in Steel Authority of India Ltd. made it clear that neithers.10 nor any other provision in the CLRA Act provides for automaticabsorption of contract labour on issuance of prohibition notificationu/s.10(1) of the CLRA Act, and consequently the principal employeris not under legal obligation to absorb the contract labour workingin the establishment – Tribunal rightly concluded that the contractwas not sham and bogus and there shall be no automatic absorptionof contract labour on issuance of prohibition notification underthe CLRA Act – However, the finding of the CGIT that after theissuance of prohibition notification, the contract became sham andbogus is not sustainable – Mere issuance of the prohibitionnotification under CLRA Act will not make the contract/agreementvoid ab initio or bad in law – If the employees are allowed to continuein terms of the earlier agreement after the prohibition notification

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Acame into force, it may be illegal and continuance of service in theabsence of any contract has to face the penal consequences underthe CLRA Act – Impugned judgment set aside – Minimum WagesAct, 1948 – Industrial Disputes Act, 1947 – s.10(1), 25(H)–Constitution of India – Arts. 12, 226 and 227 – Indian ContractAct, 1872 – s.23.B

Contract Labour (Regulation & Abolition) Act, 1970 – Schemeof – Discussed.

Disposing of the appeals, the Court

HELD: 1.1 The exposition of the judgment of theCConstitution Bench of Supreme Court in Steel Authority of IndiaLtd. and Others vs. National Union Waterfront Workers and Othersmade it clear that neither Section 10 nor any other provision inthe CLRA Act provides for automatic absorption of contract labouron issuing a notification by the appropriate Government underDSection 10(1) of the CLRA Act, and consequently the principalemployer is not required or is under legal obligation by operationof law to absorb the contract labour working in the establishment.It was further held that on a issuance of notification under Section10(1) of the CLRA Act, prohibiting employment of contract labourin any process, operation or other work, if an industrial disputeEis raised by any contract labour in regard to condition of service,it is for the industrial adjudicator to consider whether thecontractor has been interposed either on the ground of havingundertaken to produce any given result for the establishment orfor supply of contract labour for work of the establishment underFa genuine contract, or as a mere ruse/camouflage to evadecompliance with various beneficial legislations so as to deprivethe workers of statutory benefits. If the contract is found to besham, nominal or camouflage, then the so-called labour will haveto be treated as direct employee of the principal employer andthe industrial adjudicator should direct the principal employer toGregularise their services in the establishment subject to suchconditions as it may specify for that purpose in the facts andcircumstances of the case. On the other hand, if the contract isfound to be genuine and a prohibition notification has been issuedunder Section 10(1) of the CLRA Act, in respect of theH

establishment, the principal employer intending to employ regularworkmen for the process, operation or other work of theestablishment in regard to which the prohibition notification hasbeen issued, it shall give preference to the erstwhile contractlabour if otherwise found suitable, if necessary by giving relaxationof age as it appears to be in fulfilment of the mandate of Section25(H) of the Industrial Disputes Act, 1947. [Paras 33-35][146-F-H; 147-A-D]

1.2 It was not disputed in the instant case that the contractlabourer who were working under a tripartite agreement wereallowed to continue under the self-same agreement executed priorto the prohibition notification dated 17[th] March, 1993 andextended from time to time by the competent authority even afterissuance of the prohibition notification and the services of thecontract workers were terminated by the contractor through whomthey were engaged after they proceeded on strike in April, 1996.The Tribunal in its award dated 16[th] September, 2009 has recordeda finding of fact based on oral and documentary evidence placedby the respective parties on record in reference to the fact whetherthe contract was sham and bogus which was a primary cause ofadjudication and it was observed that the contractors employedthe contract labour on their own and they were the appointingauthority. Witnesses, contract labourer were examined and intheir cross-examination they have stated that before the issuanceof notification dated 17[th] March, 1993, they were workers of thecontractor and payment was made to them by the contractors,wage slips also show that the wages were being paid by thecontractors. There was no fresh contract ever entered betweenthe parties. Exh. M/8 filed in R-721/05 and the evidence of thewitnesses shows that the contractor had terminated the servicesof the contract labour in April 1996 and transferred some of thecontract labourers from the place of work and was the disciplinaryauthority. It was further observed that the contractors had fullcontrol over the skilled and professional work and the SAIL hadright to reject the limestone, if it was not within the specifiedapproved grade as per terms and conditions of the agreementand after extensive appreciation of the oral/documentary evidenceon record, CGIT recorded a finding of fact holding that thecontract was not sham and bogus at least up to the date of issuance A

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Aof the prohibition notification dated 17[th] March, 1993. Althoughin paragraph 85 of the award the Tribunal has recorded a findingthat after the issuance of prohibition notification dated 17[th] March,1993 by operation of law, it became sham and bogus but such afinding recorded in para 85 of the Award dated 16[th] September,2009 is not sustainable in law for the simple reason that mereBissuance of the prohibition notification under CLRA Act will notmake the contract/agreement to be void ab initio or bad in lawand if the employees are allowed to continue in terms of the earlieragreement after the prohibition notification under CLRA Act hascome into force, it may be illegal and continuance of service inCthe absence of any contract which stands extinguished by virtueof prohibition notification has to face the penal consequences asembedded under the scheme of CLRA Act. The High Court hastaken note of the various provisions of Mines Creche Rules,1966, Maternity Benefits Act, Mines Act, 1952 and MetalliferousMines Regulations, 1961 and other statutory measures whichDare applicable over the establishment of the appellant includingvarious welfare schemes which provide safety and security of theworkers. To say so, every establishment is under obligation toimplement the mandate of law but that could not be a determiningfactor/denominator to test the contract agreement enteredEbetween the parties in arriving to a conclusion that such anagreement is sham, nominal or camouflage as held by the HighCourt in its impugned judgment. [Paras 39-42] [148-F-H;149-A-H; 150-A-C]

1.3 The finding recorded by the High Court under theFimpugned judgment is not sustainable for the reason that effectof the prohibition notification under Section 10(1) of CLRA Acthas been settled by the Constitution Bench of this Court in SteelAuthority of India Ltd. and Others and this Court has made it clearthat neither Section 10 nor any provision in the CLRA Actprovides for automatic absorption of contract labour on issuanceGof prohibition notification by the appropriate Government underSection 10(1) of the CLRA Act and the Tribunal in the first placebeing the fact finding authority has extensively examined thedocumentary and oral evidence which came on record and alsothe relationship of principal employer, contractor and contractH

labour and the fact that their services were terminated by thecontractor after the contract labour proceeded on a strike in April1996. The Tribunal also considered various other factors inextenso regarding the wage slips, identity cards and the natureof work being discharged by the contract labour subsequent tothe prohibition notification dated 17[th] March, 1993 and otherdocumentary evidence which came on record and recorded thefinding in return that the contract between the contractor andthe employee was not sham and bogus and the workmen werenot entitled for their absorption in service of the principalemployer. [Paras 44, 45] [150-H; 151-A-D]

1.4 To test it further, apart from the statutory compliancewhich every principal establishment is under an obligation tocomply with, its non-compliance or breach may at best entail inpenal consequences which is always for the safety and security ofthe employee/workmen which has been hired for discharge ofthe nature of job in a particular establishment. If the scheme ofthe CLRA Act and other legislative enactments which theprincipal establishment has to comply with under the mandate oflaw and taking note of the oral and documentary evidence whichcame on record, the finding which has been recorded by the CGITunder its award dated 16[th] September, 2009 in absence of thefinding of fact recorded being perverse or being of no evidenceand even if there are two views which could possibly be arrivedat, the view expressed by the Tribunal ordinarily was not open tobe interfered with by the High Court under its limited scope ofjudicial review under Article 226/227 of the Constitution of Indiaand this exposition has been settled by this Court in its variousjudicial precedents. It is true that judgment in Dena Nath andOthers is in reference to failure of compliance of Section 7 and 12and not in reference to Section 10(1) of the CLRA Act but if thescheme of CLRA Act is looked into which is a complete code initself, non-compliance or violation or breach of the provisions ofthe CLRA Act, it result into penal consequences as has beenreferred to in Sections 23 to 25 of the Act and there is no provisionwhich would entail any other consequence other than providedunder Section 23 to 25 of the Act. [Paras 46-48] [151-E-H;152-A-C]

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A1.5 The Tribunal under its award dated 16[th] September,2009 rightly arrived to the conclusion that the contract was notsham and bogus and there shall be no automatic absorption ofcontract labour on issuance of a prohibition notification underthe CLRA Act and the High Court committed manifest error inreversing the finding of fact in return under its impugnedBjudgment. The impugned judgment of the High Court is set aside.The respondent is at liberty to avail remedy for alleged breach ofthe provisions of the CLRA Act, if so advised, in accordance withlaw. [Paras 49, 50] [152-D-F]

Steel Authority of India Ltd. and Others v. NationalCUnion Waterfront Workers and Others (2001) 7 SCC1 : [2001] 2 Suppl. SCR 343 – followed.

International Airport Authority of India v. InternationalAir Cargo Workers’ Union and Another (2009) 13SCC 374 : [2009] 8 SCR 1 – relied on.

D

Air India Statutory Corporation and Others v. UnitedLabour Union and Others (1997) 9 SCC 377 :[1996] 9 Suppl. SCR 579 ;Dena Nath and Others v.National Fertilisers Ltd. and Others (1992) 1 SCC 695: [1991] 2 Suppl. SCR 401 ; Silver Jubilee TailoringEHouse and Others v. Chief Inspector of Shops andEstablishments and Another (1974) 3 SCC 498:[1974] 1 SCR 747;Hussainbhai, Calicut v. AlathFactory Thezhilali Union, Kozhikode and Others(1978) 4 SCC 257 : [1978] 3 SCR 1073; IndianFPetrochemicals Corporation Ltd. and Another v. ShramikSena and Others(1999) 6 SCC 439 : [1999] 1 Suppl.SCR 47 – referred to.

Case Law Reference

[1978] 3 SCR 1073referred toPara 36A[1999] 1 Suppl. SCR 47referred toPara 36[2009] 8 SCR 1relied onPara 37

CIVIL APPELLATE JURISDICTION: Civil AppealNos. 8081-8082 of 2011

B

From the Judgment and Order dated 06.09.2010 of the High Courtof Madhya Pradesh, Principal Seat at Jabalpur in Writ PetitionNos. 10963 and 12485 of 2009

With

Civil Appeal No. 8084 of 2011.

C

Ranjit Kumar, Parag P. Tripathi, Colin Gonsalves, Ajit Kumar Sinha,Ms. Indira Nair, Sr. Advs., Sunil Kumar Jain, Punya Garg,R. C. Shrivastava, Abhishek Jain, T. G. Narayanan Nair, A. K. Sasidharan,K. N. Madhusoodhanan, C. N. Sree Kumar, M. T. George, RameshBabu M. R., Amit Sharma, Ms. Malavika B. Pillai, Advs. for theappearing parties.

D

The Judgment of the Court was delivered by RASTOGI, J. 1. These appeals arise from the judgment dated6[th] September, 2010 passed by the Division Bench of the High Court ofMadhya Pradesh in Writ Petition No. 10963 of 2009 and 12485 of 2009setting aside the award passed by the Central Government IndustrialTribunal(CGIT), Jabalpur dated 16[th] September, 2009 answering thereference in the affirmative form and directing the contract labourerswho were in the employment of SAIL from 1993 till 1996(17[th] March,1993 to April 1996) to be reinstated, and their cases be considered forregularisation in accordance with Para 125 of the Judgment of this Courtin Steel Authority of India Ltd. and Others Vs. National UnionWaterfrontWorkers and Others1 declining to grant them back wages.

EF

2. The case involves a chequered history and almost after fourrounds of litigation, the matter has reached at a stage where the referencewas made by the appropriate Government under Section 10(1) of theIndustrial Disputes Act, 1947 to decide the industrial dispute raised bythe Union, namely, Ispat Khadan Janta Mazdoor Union vide notificationdated 27[th] January, 2003 followed with 22[nd] February, 2005.

G

A3. The seminal facts in brief which may be relevant for the presentpurpose are that the appellant Steel Authority of India Limited (hereinafterbeing referred to as “SAIL”) is a Government of India undertaking andis a State within the meaning of Article 12 of the Constitution of Indiaand has steel plants in different parts of India. SAIL has one of thecaptive lime stone and dolomite mines in Kuteshwar in the District ofBKatni of Madhya Pradesh. Limestone and Dolomite are necessaryingredients for manufacture of steel. The SAIL did blasting work as thiswork had been departmentalised vide Notification dated 15[th] December,1979 w.e.f. 22[nd] June, 1980. The contract labour of the contractors atKuteshwar Lime Stone Mines were doing the same jobs as enumeratedCin schedule of the prohibition Notification No. S.O. 707 dated 17[th] March,1993 issued under Section 10(1) of the Contract Labour(Regulation &Abolition) Act, 1970(hereinafter referred to as “CLRA Act”).

4. It is not disputed that the establishment of the appellant(SAIL)is the registered establishment in terms of Section 7 of the CLRA ActDand the contractors through whom the contract labour was engagedwere also holding a valid licence under Section 12 of the CLRA Act andthe workmen engaged as contract labour by the contractor in theestablishment of the appellant(SAIL) were paid their due wages in termsof the tri-partite agreement entered into from time to time not less thanthe rates so prescribed by the authority under the Minimum Wages Act,E1948.

5. The appropriate Government at a later stage issued a prohibitionnotification of employment of contract labour for the establishmentwherein their services hired by the appellant SAIL under Section 10(1)of the CLRA Act dated 17[th] March, 1993, the extract of which is referredFto hereunder:- “4. The Notification No.S.O.707 dated 17-3-93 was issued andpublished by the Government of India whereby prohibited witheffect from the date of publication of this notification, theemployment of Contract Labour in the works specified in theGfollowing schedule in the Lime Stone and Dolomite Mines in thecountry namely:

SCHEDULE

a. Raising of minerals including breaking sizing sorting of LimeStone Dolomite and,H

b. Transportation of limestone and dolomite which includesloading and unloading from trucks, dumpers, conveyors andtransportation from mine site to factory.”

6. Pursuant to a prohibition notification issued by the appropriateGovernment under Section 10(1) of the CLRA Act, the relationship ofcontractor and contract labour stands ceased and by legal fiction, contractcomes to extinct and the indisputed fact which has come on record isthat no fresh agreement, in the interregnum period, was executed andthe existing agreement to whom the appellant & contract labour is asignatory was extended from time to time by the competent authorityand the contract labour was allowed to continue on the same terms andconditions till their services were terminated by the contractor in themonth of April, 1996.

7. Prior to the judgment of the Constitution Bench of thisCourt[Steel Authority of India Ltd. and Others(supra)], the threeJudge Bench of this Court in Air India Statutory Corporation andOthers Vs. United Labour Union and Others[2] discussed the legalconsequence of the prohibition notification under Section 10(1) of theCLRA Act prohibiting employment of contract labour, it was held thaton abolition of contract labour system from any establishment underSection 10 of the Act by the appropriate Government, the logical andlegitimate consequences were that the erstwhile regulated contractlabourer covered by the sweep of such abolition for the activitiesconcerned would be entitled to be treated as direct employee of theemployer on whose establishment they were earlier working and theywould be entitled to be treated as regular employees from the day onwhich the contract labour system in the establishment for the work whichthey were doing gets abolished.

8. The effect of the prohibition notification under Section 10(1) ofthe CLRA Act issued by the appropriate Government at the later stage,came to be examined by the Constitution Bench of this Court in SteelAuthority of India Ltd. and Others (supra) wherein it was held thatthere is no provision under CLRA Act whether expressly or necessaryimplication which provides for automatic absorption of contract labouron issuance of a notification by the appropriate Government under Section10(1), prohibiting employment of contract labour in any process, operation A

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Aor other work in any other establishment and overruled the judgment inAir India Statutory Corporation and Others(supra) making it clearthat neither Section 10 nor any other provision in the CLRA Act providesfor automatic absorption of contact labour on issuance of a notificationby the appropriate Government under Section 10(1) of the CLRA Actand consequently the principal employer is not required by operation ofBlaw to absorb the contract labour working in the establishment. Theexposition of law will be discussed at the later stage.

9. It reveals from the record that after the Constitution BenchJudgment of this Court, the matter was agitated by the workers unionbefore the appropriate Government and after failure of the conciliationCproceedings, the case of 3404 workmen was referred for adjudicationby the appropriate Government vide its notification dated 27[th] January,2003 followed with 22[nd] February, 2005 to the Central GovernmentIndustrial Tribunal(CGIT) is reproduced hereunder:-

1. “The Government of India, Ministry of Labour vide itsDNotification No.L-29011/97/2002-IR(M) dated 27-1-2003has referred the following dispute for adjudication by thistribunal:- “I. “Whether the action of the Mines Manager, Koteshwar LimeStone Mines of Steel Authority of India Ltd. in terminatingservices of 3404 (3380+24- as per list attached) mine workers inApril 1996 who ceased to be contract labour after prohibition ofemployment of contract labour in Lime Stone Mine videNotification No.S.O.707 dated 17-3-93 was legal, fair andjustified? If not, what relief the concerned workmen or heirs incase of deceased worker are entitled to?

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II. Whether the action of the Mines manager, Koteshwar LimeStone Mines of Steel Authority of India ltd. in denying terminalbenefits of gratuity retrenchment compensation and exgratiaapplicable to VRS seeking employees is fair and justified. If not,to what relief these workers/heirs are entitled to?

G

III. Whether the action of the management of the MinesManager, Koteshwar Lime Stone Mines of Steel Authority ofIndia Ltd. in disregarding Clause-8 of Memorandum ofAgreement signed between the Steel Authority of India, NewDelhi and their Unions including HMS and employing workers H

through contractors on jobs of permanent and perennial nature inMines between 5-20 years even without ensuring statutory wagesand service conditions was legal, fair and justified? If not, to whatrelief concerned workmen/heirs are entitled?”

CORRIGENDUM

“Whether the employment of the workmen mentioned in thisMinistry’s order of even number dated 27-1-2003 throughcontractors is sham and bogus and whether in effect there isdirect employment by the company? If so, to what relief theworkmen concerned are entitled?”

10. The learned Tribunal(CGIT), as a fact finding authority, takingnote of the pleadings on record framed the following issues:- “I. Whether the reference R/40/03 is maintainable?

II. Whether the employment of the workmen throughcontractors is sham and bogus and whether the said employmentis considered to be direct employment by the management?

III. Whether the action of the Mines Manager, Kuteshwar LimeStone Mines of the Steel Authority of India Ltd. in terminating theservices of 3404(3380+24) as per list attached mine workers inApril 1996 who ceased to be contract labour after prohibition ofemployment of contract labour in lime stone vide NotificationNo.S.O.707 dated 17-03-93 was legal, fair and justified?

IV. Whether the said contact workers/heirs are entitled theterminal Benefits of gratuity, retrenchment compensation andex-gratia applicable to VRS from SAIL?

V. Whether Lime Stone Mines violated the provision of Clause-8of the memorandum of agreement signed between the SAIL, NewDelhi and their Unions and employing workers throughcontractors on jobs of permanent and perennial nature wasjustified, legal and fair?

VI. Whether the workmen/heirs are entitled to the wages to thepost in which they were engaged with parity of wages with thatof regular employees of the management with all consequentialbenefits?

VII. Any other relief, the workmen/heirs are entitled to?”

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A11. The parties to the reference were called upon to lay evidencein support of their respective claim and after taking note of theevidence(oral & documentary), the Tribunal recorded the facts in seriatimemerging from the records as under:-

(1) The evidence shows that the respective contractors employedBthe contract labours for their own and they were theappointing authority.

(2) Wage slips, wagesheets and the evidence of the witnessesclearly show that the contractors were paying wages to thecontract labours.

C

(3) Exhibit M/8 filed in R721/05 and the evidence of thewitnesses show that the contractor dismissed the employeeand also transferred some of the employees from the place ofwork and had disciplinary authority.

(4) The contract papers entered into between the managementDand the contractors and the evidence of the witnesses clearlyshow that contractors had full control and supervision over thework. The management had only to see that the labour lawswere being implemented and specified approved grade of limestone was being supplied.

E(5) The contract papers and the evidence show that thecontractors had full control over the skilled and professionalwork.

(6) It is further clear from the contract papers that the SAIL hadright to reject the limestone, if it was not within the specifiedFapproved grade as per terms and conditions of the agreement.

(7) The contract agreements further show that there was penalclause, if there was any breach of contract.

12. The Tribunal taking note of the evidence including oral anddocumentary adduced in support of the reference held that the contractGbetween the Management(SAIL) and the contractors was genuine andnot sham and bogus and the contract workers were allowed to continueeven after the prohibition notification under Section 10(1) dated17[th] March, 1993 under the CLRA Act on the same terms and conditionsand the services of the contract labourer were terminated by theHContractor in April, 1996.

DIRECTOR STEEL AUTHORITY OF INDIA LTD. v. ISPATKHADAN JANTA MAZDOOR UNION [RASTOGI, J.]

13. It may be noted that status of the workers after the issuanceof notification dated 17[th] March, 1993 has also been examined by theTribunal and held as follows:-

(1) The contract labours after notification cease to function.

(2) The contract labours were still working in the establishmentfrom 1993 to April 1996 under the umbrella of the contractorswho may be called as agent of the Principal employer or wereintermediary between the contract labours and the PrincipalEmployer after the publication of notification.

(3) The contract between the Principal Employer and thecontractors after publication of the notification ceases to existand became not genuine.

(4) The wages were being paid to the contract labour by the socalled contractors in the same way as from before.

(5) The principal Employer was in need of the workers for thespecified works even after the publication of the notificationas same workers were continuing in work till April, 1996.

(6) There is no evidence on the record to show that the principalemployer adopted the procedure of regularization and had in-tended to employ regular workers as has been directed by theHon’ble Apex Court at Para 125 sub-para-6 in the Constitu-tion Bench Judgment in the case of SAIL versus NationalUnion Water Front Workers (Supra) after the contract wasfound genuine before the notification.

(7) There was no automatic absorption of contract labour onissuing the notification prohibiting the employment of contractlabours.

(8) Contract labours were found employees of the respectivecontractors before notification.

14. At the same time, in para 85 of the Award, the Tribunal furtherheld that after issuance of the prohibition notification dated 17[th] March,1993 in the instant case, the principal employer(SAIL) was prohibited toemploy any contract labour in any process, operation or other work inthe establishment and when the contract with the contractors afterprohibition notification became void and not genuine and the extension A

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Aof the period of contract of the respective contractors which has beenallowed to continue in the establishment by operation of law becameab-initio void and sham and bogus. Para 85 of the Award is as under:- “85. It is an established fact that the notification dated 7-3-93came to the effect prohibiting the employment of contract laboursBfrom the date of its publication. As such, in the light of theconstitutional bench judgment in SAIL versus National Water FrontWorkers Union & others (Supra) the contract of Principalemployer with contractor in regard to the contract labour comesto an end beyond shadow of doubts and the contract with regardto the contract labours subsequently after the notification datedC17-3-1993 becomes not genuine. The Principal employer wasprohibited to employ any contract labour in any process,operation or other work in the establishment in any process,operation or other work in the establishment to which thenotification relates at any time thereafter. It is evident that whenDthe contract of the contractors after notification became itselfvoid and not genuine, the extension of the period of contract ofthe respective contractors would be ab-initio void and sham andbogus. Thus it is established that the contract of Principalemployer with contractors in regard to the contract laboursbecame subsequently sham and bogus after the notification No.ES.O. 707 dated 17-3-1993 coming into the effect from the date ofits publication.”

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15. The Tribunal finally held that the employment of the contractlabourer through contractors was not sham and bogus before notificationdated 17[th] March, 1993, but after publication of the said notification, byFoperation of law, the contract through contractors could not be consideredto be genuine but became void and sham as the contract labour wasallowed to continue in the establishment till April 1996. It was furtherobserved that the Union is at liberty to take recourse of the penalconsequences as mandated under Section 23 to 25 of the CLRA Act.GRest of the issues framed by the Tribunal(Issue nos. 3,4, 5 & 6) havebeen consequently decided accordingly under the Industrial Award dated16[th] September, 2009.

16. The appellant(SAIL) and the workers Union both filed writpetitions in the High Court of Madhya Pradesh. The Union assailed theHaward dated 16[th] September, 2009. At the same time, SAIL challenged the finding which was recorded in reference to the consequence of theprohibition notification as observed in Para 85 to that extent in the writpetition.

17. The High Court in its limited scope of judicial review examinedthe matter as a Court of Appeal reappreciated the evidence threadbareand based on the same set of evidence(oral/documentary) reversed thefinding of fact recorded by the Tribunal and observed that the contractto be sham and bogus and observed as under:- “41. As we have found the contract to be not genuine but merecamouflage in the facts and circumstances and consideringprohibition notification under Section 10(1) of CLRA Act, inevitableconclusion is that the contract labours have to be treated asemployees of the principal employer.

42. Considering the large number of workers involved in the instantcase and the notification issued under Section 10 of CLRA Act,the regular workmen have to be ultimately employed by the SAIL.We decline to grant the backwages to the workers in the instantcase. It would not be appropriate to saddle the huge liability ofback wages. However, we direct that the SAIL to start the processof regular employment. The workers who were in the employmentfrom 1993 till 1996 are ordered to be reinstated, and their casesbe considered for regularization in accordance with the directionsissued by the Apex Court in para 125 of Steel Authority of IndiaLtd. and others vs. National Union Waterfront Workers and others(supra).”

18. The judgment of the High Court dated 6[th] September, 2010 isa subject matter of challenge before us in these appeals.

19. Sh. Ranjit Kumar and Sh. Parag P. Tripathi, learned seniorcounsel for the appellant submit that the CGIT in its award dated 16[th]September, 2009 has not only extensively considered the oral anddocumentary evidence placed on record but also took note of the judgmentof the Constitution Bench of this Court in SteelAuthority of India Ltd.and Others(supra) and being the appropriate industrial adjudicator, aftergoing into merits and the evidence led by the respective parties to thecontract between management SAIL and contractors, arrived to theconclusion that the contract was genuine and not sham and bogus underits award dated 16[th] September, 2009 and the finding of fact recorded by A

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Athe Tribunal has attained finality and unless the approach of the Tribunalwas wholly perverse in the sense that the Tribunal has acted on noevidence, it was not justified for the High Court to interfere over theaward of the industrial adjudicator sitting as a Court of First Appeal toreappreciate the evidence and even if on the basis of the material onrecord, two views are possible and one view has been expressed by theBTribunal it was not open for the High Court to substitute its view underthe limited scope of judicial review under Sections 226 and 227 of theConstitution of India. In the given circumstances, the finding of factwhich has been reversed by the High Court under its impugned judgmentholding the contract is not genuine but a mere camouflage, is legally notCsustainable and deserves to be interfered by this Court.

20. Learned counsel further submits that normally the industrialadjudicator is the final Court of facts and on its extensive discussionbased on the material available on record, it was held that there is noemployer and employee relationship between the appellant andDrespondent workmen and, therefore, the question of compliance of Section25(n) of the Act does not arise and it was the contractor who hadterminated their services in April 1996 and it was the contractor whohad full control and supervision over the work of the labourers. It hasalso concluded after examining the witness and appraisal of thedocumentary evidence on record that the wage slips and identity cardsEwere issued to them by the respective contractors and it were thecontractors who paid wages to the contract labour and few of thewitnesses have also supported payment through contractors.

21. Thus, the conclusion which has been arrived at by the Tribunalthat the contractors were exercising exclusive control over the contractFlabours and tools and equipment were supplied by the contractors as perthe terms of the contract and payment was made by respectivecontractors to the contract labourers and not by the principal employerand it was the contractors who terminated the services of the contractlabourers because they proceeded on illegal strike in April 1996 and allGthe agreements between the management and the contractors enteredinto are of prior to the notification dated 17[th] March, 1993 prohibitingemployment of contract labour and subsequently it was only extendedby the competent authority from time to time until the services of thecontract labour were terminated, holding disciplinary powers against the H

contract labour being supported by the cogent evidence on record wasnot open for the High Court to sit as a Court of Appeal and reappraisedthe evidence under its impugned judgment.

22. Learned counsel placed reliance on the judgment of this Courtin Dena Nath and OthersVs. National Fertilisers Ltd. and Others3and submits that mere violation of the prohibition notification under Section10(1) of the CLRA Act would not entail absorption of the contract labourand at the best could be considered as further continuation to be illegalresulting in penal consequences envisaged under Section 23 to 25 of theAct.

23. Per contra, Sh. Colin Gonsalves, learned senior counsel forthe respondent, on the other hand, while supporting the finding recordedby the High Court in the impugned judgment further submits that theTribunal has committed a manifest error in not appreciating thedocumentary/oral evidence on record and thus on reappraisal of theevidence, the High Court was convinced that the finding of fact recordedby the Tribunal under its award dated 16[th] September, 2009, beingperverse, based on no evidence, has rightly interfered and recorded afinding that the contract was sham and bogus and in consequence thereofin terms of the Constitution Bench judgment of this Court, the workmenbecame employee of the principal employer (SAIL) in the instant caseand entitled for the wages payable to the regular employee of the appellantSAIL and be considered for regularisation of service.

24. Learned counsel further submits that the employees are entitledfor the back wages which has been wrongly denied by the High Courtwithout any justiciable reasons and as they are contesting their claimimmediately after their services were terminated, the delay in fact hascaused because of 3-4 rounds of litigation and was also due to the factthat earlier it was held by this Court in Air India Statutory Corporationand Others case (supra) that immediately on the issuance of a prohibitionnotification under Section 10(1) of the CLRA Act, the contract labourbecome entitled for automatic absorption in the establishment whereinhe was working prior to passing of the notification under Section 10(1)of the CLRA Act, which has been although overruled by the ConstitutionBench of this Court in SteelAuthority of India Ltd. and Others(supra)at a later point of time but at least there are no latches on the part of the AB

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Aemployees and they are entitled for wages for the period they haveworked and discharged their duties in the establishment of SAIL anddenial of their actual wages by the High Court in the impugned judgmentis legally not sustainable.

25. Learned counsel further submits that High Court has takenBnote of various tests for determining nature of contract which has beenlaid down from time to time by the judicial pronouncements i.e. supervisionand control, effective and absolute control, disciplinary action, paymentof wages etc., the primary tests as the determining factor in arriving to aconclusion as to whether any contract entered in contradistinction tothe tests laid down, if any, between the contractor and the contract labourCthat indeed is sham and bogus. The High Court on appraisal of the evidencerecorded its satisfaction on all the tests cumulatively and rightly held thatthe contract between the contract labour and the contractor was shamand bogus and once the finding has been recorded under the impugnedjudgment, the consequence is restoring the relationship of the principalDemployer and of contract labour as an employer and employee and thismakes the respondent entitled for their regularisation of service and thedifference of salary which has been paid to their counterparts who wereregular in employment of the appellant establishment which indeed couldnot have been denied to the respondent. In the given facts andcircumstances, no error has been committed by the High Court in theEimpugned judgment which may call for any interference.

26. Learned counsel for the respondent contended that the judgmentin Dena Nath and Others(supra) is not applicable for the reason that itwas of much prior to the Constitution Bench Judgment of this Court andit has no application for the further reason that it was a case where theFeffect of failure of compliance of Section 7 and 12 of the CLRA Actwas a question and there was no such prohibition notification under Section10(1) of the CLRA Act which came into consideration. Thus, what hasbeen expressed by this Court may not be of any assistance to theappellant.G27. We have considered the rival submissions made by the partiesand with their assistance perused the materials available on record.

28. Before we proceed to examine the question raised in theinstant appeals any further, it may be apposite to take note of the indisputed H

facts which has come on record and take a note of the facts recordedby the High Court in the impugned judgment.

29. It is not disputed that the appellant SAIL is a Government ofIndia undertaking and a State within the meaning of Article 12 of theConstitution of India and has its steel plants in the different parts ofIndia. SAIL has one of the captive lime stone and dolomite mines inKuteshwar in the District of Katni of Madhya Pradesh. Limestone andDolomite are necessary ingredients for manufacture of steel. The SAILdid blasting work as this work had been departmentalised by Notificationdated 15[th] December, 1979 w.e.f. 22[nd] June, 1980 and various tripartiteagreements were executed between the principal employer(SAIL),contractor and contract labour and from time to time wages to whichthe contract labour was entitled for in terms of tripartite agreement whichindisputedly was higher in comparison to the minimum wages notified bythe appropriate Government from time to time under the Minimum WagesAct, 1948 was paid to each of the contract labour who had worked inthe establishment of the appellant.

30. It is also not disputed that the contract labour which isrepresented through union had worked in the schedule work which hasbeen prohibited by the appropriate Government under its notificationissued under Section 10(1) of the CLRA Act, dated 17[th] March, 1993and there is no challenge to the prohibition notification dated 17[th] March,1993 at least in the instant proceedings.

31. After 3-4 rounds of litigation, a reference was made by theGovernment of India, Ministry of Labour vide its notification dated 27[th]January, 2003 followed by 22[nd] February, 2005 wherein respective claimswith supporting oral and documentary evidence were placed by thecontesting parties. CGIT under its award dated 16[th] September, 2009recorded a finding of fact holding that the contract was not sham andbogus and if, at all, there was any violation in continuation of the contractlabour after issuance of the prohibition notification dated 17[th] March,1973 that entail penal consequences as referred to under Sections 23 to25 of the CLRA Act and further held that the respondent workmenwere not entitled for reinstatement and answered the referenceaccordingly under its award dated 16[th] September, 2009. The finding offact in return came to be overturned by the High Court in its limited A

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Ascope of judicial review under Article 226 & 227 of the Constitution ofIndia under the impugned judgment dated 6[th] September, 2010.

32. Before we may advert to examine the question in the instantappeals any further, it will be apposite to take note of the legal effect ofthe prohibition notification issued by the appropriate Government inexercise of power under Section 10(1) of the CLRA Act and its exposition B

by the Constitution Bench of this Court in SteelAuthority of India Ltd.and Others(supra) overruling the judgment in Air India StatutoryCorporation and Others (supra). The legal consequence of Section10(1) of the CLRA Act, has been noticed in paragraph 68, 88, 105 and125 as follows:- C

“68. We have extracted above Section 10 of the CLRA Act whichempowers the appropriate Government to prohibit employmentof contract labour in any process, operation or other work in anyestablishment, lays down the procedure and specifies the relevantfactors which shall be taken into consideration for issuingnotification under sub-section (1) of Section 10. It is a commonground that the consequence of prohibition notification underSection 10(1) of the CLRA Act, prohibiting employment of contractlabour, is neither spelt out in Section 10 nor indicated anywhere inthe Act. In our view, the following consequences follow on issuinga notification under Section 10(1) of the CLRA Act:

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(1) contract labour working in the establishment concerned atthe time of issue of notification will cease to function;

(2) the contract of principal employer with the contractor inregard to the contract labour comes to an end; F

(3) no contract labour can be employed by the principalemployer in any process, operation or other work in theestablishment to which the notification relates at any timethereafter;

(4) the contract labour is not rendered unemployed as isgenerally assumed but continues in the employment of thecontractor as the notification does not sever the relationship ofmaster and servant between the contractor and the contractlabour; G

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(5) the contractor can utilise the services of the contract labourin any other establishment in respect of which no notificationunder Section 10(1) has been issued where all the benefitsunder the CLRA Act which were being enjoyed by it, will beavailable; A

(6) if a contractor intends to retrench his contract labour, hecan do so only in conformity with the provisions of the ID Act.

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The point now under consideration is: whether automatic absorptionof contract labour working in an establishment, is implied in Section10 of the CLRA Act and follows as a consequence on issuanceof the prohibition notification thereunder. We shall revert to thisaspect shortly.

of the prohibition notification thereunder. We shall revert to thisCaspect shortly.105. The principle that a beneficial legislation needs to be construedliberally in favour of the class for whose benefit it is intended,does not extend to reading in the provisions of the Act what thelegislature has not provided whether expressly or by necessaryDimplication, or substituting remedy or benefits for that provided bythe legislature. We have already noticed above the intendment ofthe CLRA Act that it regulates the conditions of service of thecontract labour and authorizes in Section 10(1) prohibition ofcontract labour system by the appropriate Government onEconsideration of factors enumerated in sub-section (2) of Section10 of the Act among other relevant factors. But, the presence ofsome or all those factors, in our view, provides no ground forabsorption of contract labour on issuing notification under sub-section (1) of Section 10. Admittedly, when the concept ofautomatic absorption of contract labour as a consequence ofFissuing notification under Section 10(1) by the appropriateGovernment, is not alluded to either in Section 10 or at any otherplace in the Act and the consequence of violation of Sections 7and 12 of the CLRA Act is explicitly provided in Sections 23 and25 of the CLRA Act, it is not for the High Courts or this Court toread in someunspecified remedy in Section 10 or substitute forGpenal consequences specified in Sections 23 and 25 a differentsequel, be it absorption of contract labour in the establishment ofprincipal employer or a lesser or a harsher punishment. Such an A

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interpretation of the provisions of the statute will be far beyondthe principle of ironing out the creases and the scope ofinterpretative legislation and as such, clearly impermissible. Wehave already held above, on consideration of various aspects, thatit is difficult to accept that Parliament intended absorption ofcontract labour on issue of abolition notification under Section10(1) of the CLRA Act.

125. The upshot of the above discussion is outlined thus:

(1) (a) Before 28-1-1986, the determination of the question whetherthe Central Government or the State Government is the appropriateGovernment in relation to an establishment, will depend, in viewof the definition of the expression “appropriate Government” asstood in the CLRA Act, on the answer to a further question, is theindustry under consideration carried on by or under the authorityof the Central Government or does it pertain to any specifiedcontrolled industry, or the establishment of any railway, cantonmentboard, major port, mine or oilfield or the establishment of bankingor insurance company? If the answer is in the affirmative, theCentral Government will be the appropriate Government; otherwisein relation to any other establishment the Government of the Statein which the establishment was situated, would be the appropriateGovernment; (b) After the said date in view of the new definition of thatexpression, the answer to the question referred to above, has tobe found in clause (a) of Section 2 of the Industrial Disputes Act;if (i) the Central Government company/undertaking concerned orany undertaking concerned is included therein eo nomine, or (ii)any industry is carried on (a) by or under the authority of theCentral Government, or (b) by a railway company; or

(c) by a specified controlled industry, then the Central Governmentwill be the appropriate Government; otherwise in relation to anyother establishment, the Government of the State in which thatother establishment is situated, will be the appropriate Government.

(2) (a) A notification under Section 10(1) of the CLRA Actprohibiting employment of contract labour in any process, operationor other work in any establishment has to be issued by theappropriate Government:

(1) after consulting with the Central Advisory Board or theState Advisory Board, as the case may be, and

(2) having regard to

(i) conditions of work and benefits provided for the contractlabour in the establishment in question, and

(ii) other relevant factors including those mentioned in sub-section (2) of Section 10; (b) Inasmuch as the impugned notification issued by the CentralGovernment on 9-12-1976 does not satisfy the aforesaidrequirements of Section 10, it is quashed but we do so prospectivelyi.e. from the date of this judgment and subject to the clarificationthat on the basis of this judgment no order passed or no actiontaken giving effect to the said notification on or before the date ofthis judgment, shall be called in question in any tribunal or courtincluding a High Court if it has otherwise attained finality and/or ithas been implemented.

(3) Neither Section 10 of the CLRA Act nor any other provisionin the Act, whether expressly or by necessary implication, providesfor automatic absorption of contract labour on issuing a notificationby the appropriate Government under sub-section (1) of Section10, prohibiting employment of contract labour, in any process,operation or other work in any establishment. Consequently theprincipal employer cannot be required to order absorption of thecontract labour working in the establishment concerned.

(4) We overrule the judgment of this Court in Air India case[(1997) 9 SCC 377] prospectively and declare that any directionissued by any industrial adjudicator/any court including the HighCourt, for absorption of contract labour following the judgment inAir India case [(1997) 9 SCC 377] shall hold good and that thesame shall not be set aside, altered or modified on the basis of thisjudgment in cases where such a direction has been given effectto and it has become final.

(5) On issuance of prohibition notification under Section 10(1) ofthe CLRA Act prohibiting employment of contract labour orotherwise, in an industrial dispute brought before it by any contractlabour in regard to conditions of service, the industrial adjudicator A

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Awill have to consider the question whether the contractor has beeninterposed either on the ground of having undertaken to produceany given result for the establishment or for supply of contractlabour for work of the establishment under a genuine contract oris a mere ruse/camouflage to evade compliance with variousbeneficial legislations so as to deprive the workers of the benefitBthereunder. If the contract is found to be not genuine but a merecamouflage, the so-called contract labour will have to be treatedas employees of the principal employer who shall be directed toregularise the services of the contract labour in the establishmentconcerned subject to the conditions as may be specified by it forCthat purpose in the light of para 6 hereunder.

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(6) If the contract is found to be genuine and prohibition notificationunder Section 10(1) of the CLRA Act in respect of theestablishment concerned has been issued by the appropriateGovernment, prohibiting employment of contract labour in anyprocess, operation or other work of any establishment and wherein such process, operation or other work of the establishment theprincipal employer intends to employ regular workmen, he shallgive preference to the erstwhile contract labour, if otherwise foundsuitable and, if necessary, by relaxing the condition as to maximumage appropriately, taking into consideration the age of the workersat the time of their initial employment by the contractor and alsorelaxing the condition as to academic qualifications other thantechnical qualifications.”

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33. The exposition of the judgment of the Constitution Bench ofthis Court made it clear that neither Section 10 nor any other provisionFin the CLRA Act provides for automatic absorption of contract labouron issuing a notification by the appropriate Government under Section10(1) of the CLRA Act, and consequently the principal employer is notrequired or is under legal obligation by operation of law to absorb thecontract labour working in the establishment.

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34. This court in SteelAuthority of India Ltd. and Others (supra)further held that on a issuance of notification under Section 10(1) of theCLRA Act, prohibiting employment of contract labour in any process,operation or other work, if an industrial dispute is raised by any contractlabour in regard to condition of service, it is for the industrial adjudicatorHto consider whether the contractor has been interposed either on the

ground of having undertaken to produce any given result for theestablishment or for supply of contract labour for work of theestablishment under a genuine contract, or as a mere ruse/camouflageto evade compliance with various beneficial legislations so as to deprivethe workers of statutory benefits. If the contract is found to be sham,nominal or camouflage, then the so-called labour will have to be treatedas direct employee of the principal employer and the industrial adjudicatorshould direct the principal employer to regularise their services in theestablishment subject to such conditions as it may specify for that purposein the facts and circumstances of the case.

35. On the other hand, if the contract is found to be genuine and aprohibition notification has been issued under Section 10(1) of the CLRAAct, in respect of the establishment, the principal employer intending toemploy regular workmen for the process, operation or other work of theestablishment in regard to which the prohibition notification has beenissued, it shall give preference to the erstwhile contract labour if otherwisefound suitable, if necessary by giving relaxation of age as it appears tobe in fulfilment of the mandate of Section 25(H) of the Industrial DisputesAct, 1947.

36. It may be noted that the learned counsel for the respondenthas placed reliance on the judgments of this Court in Silver JubileeTailoring House and OthersVs. Chief Inspector of Shops andEstablishments andAnother4;Hussainbhai, Calicut Vs. Alath FactoryThezhilali Union, Kozhikode and Others5;Indian PetrochemicalsCorporation Ltd. and AnotherVs. Shramik Sena and Others6andthese cases have been considered by the Constitution Bench of thisCourt in Steel Authority of India Ltd. and Others(supra) of which adetailed reference has been made by us.

37. Tests which are to be applied to find out whether the person isan employee or an independent contractor in finding out whether thecontract labour agreement is sham, nominal or a mere camouflage hasbeen examined by this Court in InternationalAirportAuthority of IndiaVs. International Air Cargo Workers’ Union and Another7by thetwo-judge Bench of this Court. The relevant paras are as under:- 4 1974 (3) SCC 498

51978(4) SCC 257

61999(6) SCC 439

7 2009 (13) SCC 374

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“38. The tests that are applied to find out whether a person is anemployee or an independent contractor may not automatically applyin finding out whether the contract labour agreement is a sham,nominal and is a mere camouflage. For example, if the contract isfor supply of labour, necessarily, the labour supplied by thecontractor will work under the directions, supervision and controlof the principal employer but that would not make the worker adirect employee of the principal employer, if the salary is paid bya contractor, if the right to regulate the employment is with thecontractor, and the ultimate supervision and control lies with thecontractor.

39. The principal employer only controls and directs the work tobe done by a contract labour, when such labour is assigned/allotted/sent to him. But it is the contractor as employer, who chooseswhether the worker is to be assigned/allotted to the principalemployer or used otherwise. In short, worker being the employeeof the contractor, the ultimate supervision and control lies with thecontractor as he decides where the employee will work and howlong he will work and subject to what conditions. Only when thecontractor assigns/sends the worker to work under the principalemployer, the worker works under the supervision and control ofthe principal employer but that is secondary control. The primarycontrol is with the contractor.”

38. These are the broad tests which have been laid down by thisCourt in examining the nature and control of the employer and whetherthe agreement pursuant to which contract labour has been engagedthrough contractor can be said to be sham, nominal and camouflage.

39. It was not disputed in the instant case that the contract labourerwho were working under a tripartite agreement were allowed to continueunder the self-same agreement executed prior to the prohibitionnotification dated 17[th] March, 1993 and extended from time to time bythe competent authority even after issuance of the prohibition notificationand the services of the contract workers were terminated by thecontractor through whom they were engaged after they proceeded onstrike in April, 1996.

40. The Tribunal in its award dated 16[th] September, 2009 hasrecorded a finding of fact based on oral and documentary evidence placed by the respective parties on record in reference to the fact whether thecontract was sham and bogus which was a primary cause of adjudicationand it was observed that the contractors employed the contract labouron their own and they were the appointing authority. Witnesses Mangaland Kodulal (contract labourer) were examined and in their cross-examination they have stated that before the issuance of notificationdated 17[th] March, 1993, they were workers of the contractor and paymentwas made to them by the contractors, wage slips also show that thewages were being paid by the contractors. Other witnesses also in cross-examination have supported that half of the PF amount of the workerswere deposited by their respective contractors. Exh. W/39 to W/54submitted by the contract labours are the photocopies of the identitycards, pay slips, PF slips etc. These pay slips and identity cards do notshow that all 3079 workers were working after the notification dated17[th] March, 1993 without break because number of these documentsare of prior to the notification. It further observed that all the agreementsbetween the management and the contractors are entered into prior tothe notification dated 17[th] March, 1993 prohibiting employment of contractlabour and only extended thereafter from time to time. It goes to showthat there was no fresh contract thereafter ever entered between theparties. Exh. M/8 filed in R-721/05 and the evidence of the witnessesshows that the contractor had terminated the services of the contractlabour in April 1996 and transferred some of the contract labourers fromthe place of work and was the disciplinary authority.

41. It was further observed that the contractors had full controlover the skilled and professional work and the SAIL had right to rejectthe limestone, if it was not within the specified approved grade as perterms and conditions of the agreement and after extensive appreciationof the oral/documentary evidence on record, CGIT recorded a findingof fact holding that the contract was not sham and bogus at least up tothe date of issuance of the prohibition notification dated 17[th] March,1993. Although in paragraph 85 of the award the Tribunal has recordeda finding that after the issuance of prohibition notification dated 17[th]March, 1993 by operation of law, it became sham and bogus but in ourconsidered view, such a finding recorded in para 85 of the Award dated16[th] September, 2009 is not sustainable in law for the simple reason thatmere issuance of the prohibition notification under CLRA Act will notmake the contract/agreement to be void ab initio or bad in law and if ABCDE

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Athe employees are allowed to continue in terms of the earlier agreementafter the prohibition notification under CLRA Act has come into force, itmay be illegal and continuance of service in the absence of any contractwhich stands extinguished by virtue of prohibition notification has to facethe penal consequences as embedded under the scheme of CLRA Act.B42. The High Court has taken note of the various provisions ofMines Creche Rules, 1966, Maternity Benefits Act, Mines Act, 1952and Metalliferous Mines Regulations, 1961 and other statutory measureswhich are applicable over the establishment of the appellant includingvarious welfare schemes which provide safety and security of theworkers. To say so, every establishment is under obligation to implementCthe mandate of law but that could not be a determining factor/denominatorto test the contract agreement entered between the parties in arriving toa conclusion that such an agreement is sham, nominal or camouflage asheld by the High Court in its impugned judgment.

43. The High Court appears to be primarily persuaded with theDissuance of a prohibition notification under Section 10(1) of the CLRAAct as one of the salient factor to indicate that the committee constitutedunder the Act, after examining various factors including perennial natureof work, under the CLRA Act has recommended for abolition of contractlabour and accepted by the Central Government coupled with theEcontinuation of employment of contract labour after issuance of theprohibition notification under Section 10(1) of the CLRA Act in holdingthat the action of the establishment was opposed to the public policyprinciples enshrined under Section 23 of the Indian Contract Act andtaking work from the contract labour was in violation of the statutorynotification dated 17[th] March, 1993 and that appears to be the reasonFwhich persuaded to hold that the finding recorded by the Tribunal thatcontractors had full control and supervision over the work in view of thefunctioning of the scheme of mines was unsustainable, instead holdingthe total control and supervision was that of management of the appellantand the contract was sham and bogus and also the fact that in all theGagreements executed between the parties, there was a provision ofabolition of contract labour in the matter of work of a perennial in natureand certain other conditions of agreement in recording its satisfactionthat the contract was sham and bogus.

44. In our considered view, the finding recorded by the High CourtHunder the impugned judgment is not sustainable for the reason that effect

of the prohibition notification under Section 10(1) of CLRA Act hasbeen settled by the Constitution Bench of this Court in SteelAuthorityof India Ltd. and Others (supra) and this Court has made it clear thatneither Section 10 nor any provision in the CLRA Act provides forautomatic absorption of contract labour on issuance of prohibitionnotification by the appropriate Government under Section 10(1) of theCLRA Act and the Tribunal in the first place being the fact findingauthority has extensively examined the documentary and oral evidencewhich came on record and also the relationship of principal employer,contractor and contract labour and the fact that their services wereterminated by the contractor after the contract labour proceeded on astrike in April 1996.

45. The Tribunal also considered various other factors in extensoregarding the wage slips, identity cards and the nature of work beingdischarged by the contract labour subsequent to the prohibition notificationdated 17[th] March, 1993 and other documentary evidence which cameon record and recorded the finding in return that the contract betweenthe contractor and the employee was not sham and bogus and theworkmen were not entitled for their absorption in service of the principalemployer.

46. To test it further, apart from the statutory compliance whichevery principal establishment is under an obligation to comply with, itsnon-compliance or breach may at best entail in penal consequences whichis always for the safety and security of the employee/workmen whichhas been hired for discharge of the nature of job in a particularestablishment. The exposition of law has been further considered inInternationalAirportAuthority of India case(supra) where the contractwas to supply of labour and necessary labour was supplied by thecontractor who worked under the directions, supervision and control ofthe principal employer, that in itself will not in any manner construe thecontract entered between the contractor and contract labour to be shamand bogus per se.

47. Thus, in our considered view, if the scheme of the CLRA Actand other legislative enactments which the principal establishment hasto comply with under the mandate of law and taking note of the oral anddocumentary evidence which came on record, the finding which hasbeen recorded by the CGIT under its award dated 16[th] September, 2009in absence of the finding of fact recorded being perverse or being of no A

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Aevidence and even if there are two views which could possibly be arrivedat, the view expressed by the Tribunal ordinarily was not open to beinterfered with by the High Court under its limited scope of judicial reviewunder Article 226/227 of the Constitution of India and this exposition hasbeen settled by this Court in its various judicial precedents.

48. It is true that judgment in Dena Nath and Others (supra) isin reference to failure of compliance of Section 7 and 12 and not inreference to Section 10(1) of the CLRA Act but if we look into thescheme of CLRA Act which is a complete code in itself, non-complianceor violation or breach of the provisions of the CLRA Act, it result intopenal consequences as has been referred to in Sections 23 to 25 of the B

CAct and there is no provision which would entail any other consequenceother than provided under Section 23 to 25 of the Act.

49. In our considered view, the Tribunal under its award dated16[th] September, 2009 has rightly arrived to the conclusion that the contractwas not sham and bogus and there shall be no automatic absorption ofDcontract labour on issuance of a prohibition notification under the CLRAAct and the High Court of Madhya Pradesh has committed a manifesterror in reversing the finding of fact in return under its impugned judgmentdated 6[th] September, 2010 which, in our view, is not sustainable anddeserves to be set aside.

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