M/S Premium Transmission Pvt. Limited vs. The State Of Maharashtra

REPORTABLE

IN THE SUPREME COURT OF INDIA
2026 INSC 87
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2026
[@ S.L.P. (CIVIL) NO. 9970 OF 2023]

M/S PREMIUM TRANSMISSION PRIVATE LIMITED … APPELLANT(S)


VERSUS


THE STATE OF MAHARASHTRA AND OTHERS … RESPONDENT(S)

J U D G M E N T
S.V.N. BHATTI, J.
1. Leave granted.
2. On 28.01.2020, the Deputy Labour Commissioner/the appropriate
Government, in exercise of powers under sub-section (1) of Section 10 and
Sub-section (1) of Section 12 of the Industrial Disputes Act, 1947 (For short,
“the ID Act”), referred an industrial dispute for adjudication to the Industrial
Court, Aurangabad. The operative portion of the reference order reads as
follows:
“(…) And whereas, considering the said report of the Deputy
Commissioner of Labour, Aurangabad Division, Aurangabad,
it is satisfied that there is a prima-facie case for referring the
said dispute to the Industrial Tribunal for adjudication.
Accordingly, in exercise of the powers conferred under Sub
Section (5) of Section 12 of the Industrial Disputes Act, 1947,
which has now been conferred by the said Notification, the
Signature Not Verified
Digitally signed by
geeta ahuja
Date: 2026.01.27
17:20:59 IST
Reason:
Deputy Commissioner of Labour, Aurangabad Division,
Aurangabad sending it to the Hon'ble Member, Industrial
Court, Aurangabad established under Hon'ble President,
1


Industrial Court, Maharashtra, Mumbai for adjudicating the
said dispute.
SCHEDULE
Demands as mentioned in the Schedule enclosed with the
original file.
Signature
(Shailendra B. Pole)
Deputy Labour
Aurangabad Division Commissioner,
Aurangabad”
3. The charter of demands considered by the Conciliation Officer, which
resulted in a failure report, is prefaced hereunder:
“I. All the workmen in Annexure - "A" are to be taken on muster
roll of Opponent no. 1 with immediate effect,
II. All the workmen in Annexure - "A" are to be deemed to in
employment of Opponent no. 1 from their respective dates of
joining as set out in Annexure - "A",
III. All the workmen in Annexure - "A" are to be granted the
classification of permanent workmen under the Model
Standing Orders after their completing 3 months of continuous
service from the first date of joining,
IV. All the workmen in Annexure - "A" are to be granted wages
equal to the wages paid to the workmen named in Annexure -
"B" (the highest paid to any workmen), and arrears in terms of
money in respect of the wages and benefits paid to each of the
workmen for the entire period actually worked in the Factory.
V. Prevent the Opponents from discharging, dismissing or
otherwise teminating the workmen named in Annexure - "A" for
their taking part in Industrial Dispute and for joining the
2


Applicant by resorting Unfair Labour Practice falling under Item
1, 4, 5, 11 of Vth Schedule of Industrial Disputes Act.
VI. All the workmen in Annexure - "A" be paid full wages, who
were shown to be students / training by Opponent no. 4 from
Sept. 2011 to Sept. 2015
VII. The paper arrangements between Opponent no. 1 and
other Opponents from time to time are sham and bogus and
that Opponent no. 1 alone is the employer of workmen of
Annexure- "A" and not Opponent no. 2, Opponent no. 3 and
Opponent no.4.”
4. M/S Premium Transmission Private Limited, MIDC, Aurangabad, filed
Writ Petition No. 7158 of 2020 against the State of Maharashtra through the
Deputy Labour Commissioner, Aurangabad, Conciliation Officer,
Aurangabad, and Aurangabad Mazdoor Union, Khokadpura, Aurangabad,
challenging the order of reference dated 28.01.2020. The array of parties is
referred to as Management, the appropriate Government, and the Union,
respectively.
5. A few admitted circumstances are that the Appellant-Management is
engaged in the business of manufacturing a wide range of transmission
engineering products such as Worm Gearbox, Helical & Bevel Helical
Gearbox, Vertical Coal Pulverising Mill Gearbox, Planetary Gearbox, Helical &
Worm Geared Motors, Bevel Helical Cooling Tower Gearbox, Fluid Coupling,
both Constant and Variable Speed, Extruder Gearbox, Elevator Machines etc.
5.1 According to the Management, the modern technology product line,
guided and assisted by computer numerical control machines, is in place and
in use in the manufacturing process. In the perennial work of operating
computer numerical control machines, the Management states that it has
appointed 118 fully trained personnel. The regular employees are under the
3


disciplinary and administrative control of the factory management, as notified
by the competent authority. The extended narrative of the Management is that
the production activities involve work other than regular/perennial work. For
the discharge of the ancillary and incidental works in the process of
manufacture, the Management entrusts these works to labour contractors
registered under the Contract Labour (Abolition & Regulation) Act, 1970 (for
short, “CLRA”). The said registered labour contractors provide workers to the
Management. The labour contractors, having been registered under CLRA, are
independent of management and have a separate identity under statutes such
as the EPF & MP Act, ESIC Act, Professional Tax Act, GST Act, and other
applicable statutes. The Management has been availing the services of labour
contractors, and the workforce made available by the registered labour
contractors was in accordance with the relevant license. The labour
contractors to whom the contracts were admittedly granted are OM Sai
Manpower Services Ltd. and M/S Aurangabad Multi Services. The members
of the Union are stated to be workers working in the company who were
drafted by the registered contractors. In other words, the contractual
obligations with the registered labour contractors are fully discharged, and
there is no deficiency in this behalf by the Management.
6. The record discloses that the Management availed labour contract
services from 2011 to 2020. The contract labour, due to a change in contract
or contract conditions, apprehended termination of their employment as
contract labour. Therefore, through the Union, the contract labour moved the
Conciliation Officer under Section 12 of the ID Act to maintain industrial
relations and peace. On 11.06.2019, the Union filed a
representation/requisition application directly before the Conciliation Officer.
4


The charter of demands is already noted, and for brevity, the same is not
referred to herein.
7. The Union terms the said labour contracts as sham, bogus, and
camouflaged to deny workers, working through the contractor, the benefits of
equal wages and other attendant benefits. On the very same day, i.e.,
11.06.2019, the Conciliation Officer admitted the representation as a dispute
for conciliation and issued notice to the Management. On 19.06.2019, the
Management responded to the letter dated 11.06.2019, and the charter of
demands set out therein. The foremost objection raised by the Management
is that the forum of a Conciliation Officer is directly approached by the Union,
and no demand was made on the Management before actually availing the
mechanism of conciliation under Section 12 of the ID Act. The Civil Appeal
arises out of the preliminary objection on the maintainability of the
conciliation proceedings and the consequential reference of the industrial
dispute. It is important to note that the Management is not covered by the
definition or meaning of public utility service covered by the first schedule
read with Section 2(n)(6) of the ID Act.
8. The conciliation undertaken between 19.06.2019 and 21.01.2020 has
not resulted in an amicable settlement of the alleged dispute. On 22.01.2020,
the Conciliation Officer submitted a failure report to the Deputy
Commissioner of Labour, Aurangabad/appropriate Government. The report
dated 22.01.2020 led to the industrial dispute referred through the order
dated 28.01.2020.
5


1
9. In DP Maheshwari v. Delhi Administration and others , on raising
preliminary objection, and carrying on the litigation at a nascent stage, this
Court observed as follows:
“1 . It was just the other day that we were bemoaning the
unbecoming devices adopted by certain employers to avoid
decision of industrial disputes on merits. We noticed how they
would raise various preliminary objections, invite decision on
those objections in the first instance, carry the matter to the
High Court under Article 226 of the Constitution and to this
Court under Article 136 of the Constitution and delay a
decision of the real dispute for years, sometimes for over a
decade. Industrial peace, one presumes, hangs in the balance
in the meanwhile. We have now before us a case where a
dispute originating in 1969 and referred for adjudication by the
Government to the Labour Court in 1970 is still at the stage of
decision on a preliminary objection. There was a time when it
was thought prudent and wise policy to decide preliminary
issues first. But the time appears to have arrived for a reversal
of that policy. We think it is better that tribunals, particularly
those entrusted with the task of adjudicating labour disputes
Where delay may lead to misery and jeopardise industrial
peace, should decide all issues in dispute at the same time
without trying some of them as preliminary issues. Nor should
High Courts in the exercise of their jurisdiction under Article
226 of the Constitution stop proceedings before a Tribunal so
that a preliminary issue may be decided by them. Neither the
jurisdiction of the High Court under Article 226 of the
Constitution nor the jurisdiction of this Court under Article 136
may be allowed to be exploited by those who can well afford

1
(1983) 4 SCC 293.
6


to wait to the detriment of those who can ill afford to wait by
dragging the latter from Court to Court for adjudication of
peripheral issues, avoiding decision on issues more vital to
them. Article 226 and Article 136 are not meant to be used to
break the resistance of workmen in this fashion. Tribunals and
Courts who are requested to decide preliminary questions must
therefore ask them selves whether such threshold part-
adjudication is really necessary and whether it will not lead to
other woeful consequences . After all tribunals like Industrial
Tribunals are constituted to decide expeditiously special kinds
of disputes and their jurisdiction to so decide is not to be stifled
by all manner of preliminary objections journeyings up and
down. It is also worth while remembering that the nature of the
jurisdiction under Article 226 is supervisory and not appellate
while that under Article 136 is primarily supervisory but the
Court may exercise all necessary appellate powers to do
substantial justice. In the exercise of such jurisdiction neither
the High Court nor this Court is required to be too astute to
interfere with the exercise of jurisdiction by special tribunals at
interlocutory stages and on preliminary issues.”
(Emphasis supplied)
10. Let us examine whether the case on hand falls within the caution
administered by this Court in DP Maheshwari (supra) . The Management’s
preliminary objection on the mode and method of initiation of conciliation
before the Conciliation Officer under Section 12 of the ID Act, the resultant
failure report dated 22.01.2020, and the consequential order of reference
dated 28.01.2020 filed as Writ Petition No. 7158 of 2020 in the High Court of
Judicature at Bombay are relevant for our consideration. The case of the
Management on the reference of an industrial dispute to the Industrial Court
can be stated as follows:
7


10.1 The Union approached the Conciliation Officer directly without first
serving a charter of demands on the Management. For the existence of
an “Industrial Dispute” under the ID Act, a charter of demand by the
Union must first be stated or raised with the employer, and the
employer rejects the same. A mere application to the Conciliation Officer
without a prior dispute with the employer cannot be termed an
industrial dispute. The Conciliation Officer admitted the dispute on
11.06.2019, on the very same day the Union filed the application. The
initiation process was carried out in undue haste, without prior notice
to the Appellant or a preliminary scrutiny/inquiry as required by the
Conciliation Manual. The dispute was admitted on 11.06.2019, but the
Union issued a letter informing the company about its formation and
the factory committee only on 18.06.2019. Therefore, the Union had no
standing to raise the dispute on the date it was admitted. The
individuals named in the dispute were contract labourers employed by
independent contractors, namely, M/s. Om Sai Manpower Services Pvt.
Ltd. and M/s. Aurangabad Multi Services are licensed under CLRA.
Therefore, there was no direct employer-employee relationship between
the Appellant and these workmen. Moreover, the Deputy Labour
Commissioner referred the matter to the Industrial Court
unquestioningly based on the Conciliation Officer’s failure report,
without applying their mind to the fact that no valid industrial dispute
existed due to the lack of a demand notice. The Appellant sought to
quash the Conciliation Admission Order dated 11.06.2019, the Failure
Report dated 22.01.2020, the Reference Order dated 28.01.2020 and
8


stay on the proceedings in Reference (IT) No. 01/2020 pending before
the Industrial Court.
11. The Union resisted Writ Petition No. 7158 of 2020, and we find it
unnecessary to refer to the detailed stand taken against the Writ Petition. The
Management argued that, for an industrial dispute to exist under Section 2(k)
of the ID Act, a demand must be raised at first instance with the employer,
and the employer’s rejection of that demand constitutes the industrial
dispute. The Union did not raise a dispute with the Management; instead, it
approached the Conciliation Officer directly. The Conciliation Officer, without
preliminary scrutiny or serving any charter of demand on the Management,
issued notice for appearance, more particularly in contravention of the
Manual of Conciliation Officer . At any rate, the conciliation cannot be said to
have commenced on the representation received from the Union. Per contra,
the Union argued that serving a demand notice directly on the employer often
results in immediate termination of service before the protection under
Section 33 of the ID Act is availed. The Conciliation Officer has the power to
intervene not just in existing disputes but also in apprehended disputes under
Section 12(1) of the ID Act. The Union contended the contracts were sham
and bogus, and the workers were actually direct employees. They relied on
2
Shambu Nath Goyal v. Bank of Baroda , asserting that a written demand is
not a sine qua non for an industrial dispute to exist. The Management had
no intention to settle. They eventually terminated the workers during the
pendency of the reference, leading to complaints under Section 33-A of the ID
Act and the Prevention of Unfair Labour Practices Act.

2
(1978) 2 SCC 353.
9


12. The impugned judgment held that conciliation proceedings commence
when the Conciliation Officer gives formal intimation in writing declaring his
intention to commence proceedings from a specified date. In this case, the
Conciliation Officer validly issued notice on 11.06.2019 to commence
conciliation proceedings on 19.06.2019. On the requirement of serving a
charter of demand first to the Management, the impugned judgment
succinctly records that while normally a demand should be served on the
employer first, a written demand is not a sine qua non for an industrial
dispute to exist, unless it is a public utility service. On the crucial aspect of a
dispute or an apprehended dispute, it has been held that the Conciliation
Officer has discretion to intervene even if a dispute is apprehended. The
Conciliation Officer ought not, and need not, wait for the situation to escalate
into industrial unrest. The initiation of conciliation proceedings without a pre-
conciliation meeting cannot be said to be illegal or to contravene the procedure
stipulated in this regard. The conciliation manual is primarily for guidance
and should be treated as a document intended to guide the officer. In the case
at hand, there is a dispute regarding the relationship between the employer
and the employee, between the Management and the contract labour working
through the two labour contractors. The relationship is to be decided by the
Industrial Court, but not the Conciliation Officer. The appropriate
Government accepted the failure report, and the decision to refer the dispute
to the Industrial Court for adjudication conforms to the requirements of law.
Interference with the ongoing dispute-resolution mechanism would render the
cause or grievance remediless.
10


13. We have heard Mr. C.U. Singh, Learned Senior Advocate, Mr. Sandeep
Sudhakar Deshmukh, Advocate, and Shri B.H. Marlapalle, Learned Senior
Advocate for the parties.
14. Mr. C.U. Singh argues that the statutory redressal mechanism under
the ID Act can or could be availed by a union, subject to complying with the
pre-condition of, first, serving a charter of demand to the Management,
second, upon the Management declining to accept the charter of demands;
and alternatively, on the assertion and denial of demands a dispute is said to
be existing for deliberation before the Conciliation Officer. The Union
admittedly has not placed the charter of demands before the Management.
The invocation of a forum for conciliation under Section 12 of the ID Act
through a representation is ex facie illegal, and the consequent submission of
a failure report, leading to the reference of an industrial dispute, is likewise
illegal and liable to be interfered with and set aside. The High Court justified
the reference erroneously by relying on the concept of apprehended dispute.
The deliberation before the Conciliation Officer could not be equated with the
deliberation between the Management and the Union while examining the
charter of demands. He places strong reliance on Sindhu Resettlement
3
Corporation Ltd. v. Industrial Tribunal and Prabhakar v. Joint Director,
4
Sericulture Department . To sum up, the preliminary objections to the ongoing
dispute resolution are that, firstly, there is no dispute; secondly, the dispute
referred to the Industrial Court is illegal and contrary to the ID Act.
15. Mr. Sandeep Sudhakar Deshmukh, appearing for the Union, argues
that the preliminary objection is premised on the ratio laid down by this Court
in Sindhu (supra) and Prabhakar (supra) . There is no statutory requirement

3
(1968) 1 SCR 515.
4
(2015) 15 SCC 1.
11


as a precondition for invoking the jurisdiction of the Conciliation Officer by
moving the Management a charter of demands, receiving an oral or written
rejection of the demands, and then moving the Conciliation Officer for a
mutually agreeable settlement under Section 12 of the ID Act. The ratio of the
cases relied on by the Management, at best, could be applied to a situation
where an employer-employee relationship is admitted. In the instant case, the
Management does not recognise the workers engaged through registered
contractors as the Management’s workmen. The case of workers is that
contract labour is either a sham or camouflaged to deny the workers of the
Union the attendant benefits. The charter of demands is for their treatment
on the muster rolls of the Management as the principal employer and for the
regularisation of their services. The contract under which the workers were
working was not extended, nor were the contract labour allowed to work, even
if a new contractor was given the work. As rightly noted by the High Court,
the charter of demands, if placed before the Management at the first instance,
would result in cessation of even the contract labour employment of the
5
workers. He relies on Vividh Kamgarh Sabha v. Kalyani and Cipla Ltd v.
6
Maharashtra General Kamgar Union for the proposition that the Union has
to canvas unfair labour practice resulting in termination of services of
workmen who are discharging work and duties normally discharged by
7
perennial workers. Shambu Nath Goyal v. Bank of Baroda deals with an
apprehended dispute leading to conciliation/industrial dispute, and the said
ratio in all fours is applicable to the case on hand. The Management, by
raising a preliminary objection, cannot deprive the workers working through

5
(2001) 2 SCC 381.
6
(2001) 3 SCC 101.
7
(1978) 2 SCC 353.
12


the registered contractor of a legal remedy against the alleged illegal
termination or discontinuation of service. The initiation of conciliation
proceedings, submission of the report, and the consequent reference to the
Industrial Court are valid and legal. At best, having regard to the fact in issue
between the Management and the Union, appropriate issues are framed for
decision, but aborting the very dispute would be contrary to the ID Act.
16. Mr. B.H. Marlappalle, Learned Senior Advocate, contends that the
preliminary objection of the Management is without merit. He appears for the
contractors who facilitated providing contract labour services to the
Management. The charter of demands, according to him, would depend on
who the principal employer is of the workers engaged through contract labour.
He prays for the dismissal of the Civil Appeal.
17. We have taken note of the rival contentions and perused the record.
18. At the outset, we would like to refer to the constitution bench judgment
of this Court in Steel Authority of India Limited and others v. National Union
8
Waterfront Workers and Others . Stated in fine, the factual background in
SAIL (supra) is:
18.1 The appellants therein, a Central Government Company, entrusts the
work of handling the goods in the stockyards to contractors after calling for
tenders in that regard. The Government of West Bengal issued a notification
dated 15.07.1989 under Section 10(1) of the CLRA prohibiting the
employment of contract labour in four specified stockyards of the appellants
at Kolkata.

8
(2001) 7 SCC 1.
13


18.2 On behalf of the appellants, the Government of West Bengal initially
kept the said notification in abeyance for a period of six months. It thereafter
extended that period from time to time, but not beyond 31.08.1994.
18.3 The Union representing the cause of 353 contract labourers moved the
High Court of Judicature at Calcutta seeking a direction to the appellants to
absorb the contract labour in their regular establishment in view of the
prohibition notification of the State Government dated 15.07.1989, and
further prayed that the notification dated 28.08.1989, keeping the prohibition
notification in abeyance, be quashed.

18.4 The High Court allowed the writ petition, set aside the notification dated
28.08.1989, and all subsequent notifications extending the period and
directed that the contract labour be absorbed and regularised from the date
of the prohibition notification.
18.5 Assailing the said judgment, the appellant therein filed a writ appeal
and challenged the prohibition notification of 15.07.1989. They filed a writ
petition in the Calcutta High Court.
18.6 While these cases were pending before the High Court, this Court
9
delivered a judgment in Air India Statutory Corporation v. United Labour Union
holding, inter alia , that in the case of Central Government Companies, the
appropriate Government is the Central Government. It thus upheld the
validity of the notification dated 09.12.1976 issued by the Central
Government under Section 10(1) of the CLRA prohibiting employment of
contract labour in all establishments of the Central Government Companies.
18.7 On 03.07.1998, a Division Bench of the High Court dismissed the writ
appeal as well as the writ petition filed by the appellants, taking the view that

9
(1997) 9 SCC 377.
14


on the relevant date, the appropriate Government was the State Government.
The legality of this judgment and order was challenged in the appeal to this
Court.
19. For the present adjudication, we refer to the ratio decidendi in SAIL
(supra) on automatic absorption and between genuine and sham contracts,
which can be, in a nutshell, stated thus:
On Automatic absorption
19.1 This Court examined the scheme of CLRA and held that Section 10 is
merely a regulatory and prohibitory provision. It creates a bar on employing
contract labour, but it does not create a positive right of absorption for the
10
workmen. This Court settled that the prohibition of contract labour under
Section 10(1) does not imply an automatic absorption of contract labour as
direct employees of the principal employer.
19.2 This Court observed that CLRA provides for specific penal
consequences for violating the Section 10 notification under Sections 23 and
25. Further, it was held that when the legislature has provided penalties for
the violation, courts cannot read into the statute a consequence that the
legislature chose not to include.
19.3 The Court prospectively overruled the ratio settled in Air India (Supra) ,
wherein it was held that after notification under Section 10 of the CLRA is
issued, the intermediary vanishes. A direct relationship is established
11
between the principal employer and employee.
19.4 The Court observed that in support of the contention of automatic
absorption, the emphasis is placed on the decision in Standard vacuum

10
Clause (i) of Section 2 (1) CLRA.
11
Clause (g) of Section 2(1) CLRA.
15


12
case , in which the Court had directed absorption of contract labour as a
consequence of the prohibition of employment of contract labour. The Court
pointed out that no such principle has been laid in that Judgment. Still, a
mere direction extending the prohibition of contractual labour from the date
of prohibition was to take effect to permit the existing contract labour to
continue for the rest of the contract period.
Genuine vs. Sham contracts
19.5 The Court, while drawing a distinction between a prohibited valid
contract and a sham contract, held that, on the one hand, if the contract is
genuine but Section 10 of the CLRA notification subsequently prohibits
contract labour, the principal employer must stop employing contract labour.
The workers do not become employees. The contractor releases them.
19.6 On the other hand, if the contract is found to be sham, nominal, or a
camouflage, in which the principal employer controls the workers and pays
their salaries, but uses a contractor merely to bypass labour laws, then the
workers are de facto employees of the principal employer.
19.7 Further, this Court opined that the dispute regarding whether a
contract is sham or genuine is a disputed question of fact, and a writ Court
should not direct absorption without adjudicating it; an Industrial Court or
Labour Court must adjudicate this issue in a dispute raised by the workmen.

20. The stand of the Management on the relationship between the contract
labour and the Management is stated in the Civil Appeal as follows:
“ Questions of Law:
(iii) Whether the Hon'ble High Court ought to have considered
that, the Conciliation Officer has not verified the locus standi

12
AIR (1960) SC 948.
16


of the alleged Union and its members, since the alleged Union
is unconnected to the business of the petitioner company and
the persons listed in the Annexure of the Application are not
the employees of the petitioner's company, therefore,
preliminary enquiry/investigation by the Conciliation Officer
was mandatory while admitting the dispute in Conciliation?”

“ Grounds:
(F) Because the Hon'ble High Court failed to consider the
section 33 of the manual of the Industrial Dispute which
clearly holds that, the dispute should not be admitted in
conciliation if the employees on whose behalf it has been
sponsored are not workmen with the meaning of the Act.
Thereby the said provision clearly mandates to conduct
enquiry by the Conciliation Officer to look into the members of
the Union whether they are employees of the petitioner
employer against whom the demand is raised. Looking to the
present case, the petitioner has specifically shown that the
persons listed in the Annexure along with the request
application are not the employees of the petitioner company.
Moreover, bulky evidence was filed on record before the
Conciliation Officer as well as the Hon'ble High Court showing
that the petitioner company has entered into the agreement
with contract labour providing companies. The said contracts
are signed In terms of Registration and Licenses issued by the
Licensing Authority under Contract Labour (Abolition &
Regulation) Act, 1970. Therefore, prima facie, the petitioner
company has shown that the alleged Union having no
connection with the petitioner company and the alleged
members of the Union are not employees of the company.”

17


21. The preliminary objection on maintainability is examined from the case
stated by the Management. The Management endeavours to preliminarily
eclipse the industrial dispute by relying on the decisions of this Court in
Sindhu (supra) and Prabhakar (supra) .
21.1 In Sindhu (supra) , the respondent/R. S. Ambwaney was appointed as
an accounts clerk by the appellant therein on 13.12.1950. In 1953, the
appellant incorporated a subsidiary company, originally named Makenzies
Heinrich Bulzer (India) Limited and later incorporated as Sindhu Hotchief
(India) Limited. On 18.09.1953, the appellant formally placed Ambwaney’s
services at the disposal of the subsidiary. Sindhu Hotchief issued him an
appointment order dated 05.09.1953, placing him on 18robationn and
contemplating confirmation. Ambwaney worked in the subsidiary until
20.02.1958, when Sindhu Hotchief terminated his services after paying
statutory retrenchment compensation. The next day, he reported to the
appellant therein for duty but was refused re-employment because his former
post had been permanently filled. He then demanded retrenchment
compensation from the appellant. Mazdoor Mahajan/union-respondent
supported this demand. Conciliation having failed, the Government of Gujarat
referred the matter to the Industrial Tribunal on 15.11.1960. The reference
(Demand No. 1) sought Ambwaney’s reinstatement in the appellant’s service
with wages from 21.02.1958. The Tribunal, by order dated 10.08.1961,
ordered reinstatement with back wages. The High Court of Gujarat dismissed
the writ petition of the appellant therein.
21.2 This Court, in the civil appeal filed by the management, found that
although Ambwaney initially remained an employee of the appellant when
placed at the subsidiary’s disposal, he later accepted confirmation in Sindhu
18


Hotchief and served there for 4½ years. A confirmation, coupled with receipt
of retrenchment compensation from the subsidiary, demonstrated that his
employment with the appellant therein had ended. Therefore, he had no
subsisting right to reinstatement. Letters from Ambwaney (07.03.1958) and
the union therein (10.07.1959) showed that their demands to the appellant
were confined to retrenchment compensation, not reinstatement. Because no
dispute on reinstatement existed between Ambwaney and the employer-
appellant, the State Government’s reference on that question was beyond
jurisdiction. In this background, it has been held that a mere demand made
to the Government, unpreceded by a dispute with the employer, cannot
constitute an industrial dispute under the ID Act. By voluntarily taking the
new job, accepting probation/confirmation, and receiving retrenchment
compensation from the subsidiary, the employee effectively entered a new
contract, terminating the old one.
21.3 We have to examine the circumstances in Sindhu (supra) to distinguish
between a dispute and an apprehended dispute.
21.4 In Prabhakar (supra) , the petitioner–claimant was appointed as a Clerk
in the Sericulture Department, Government of Karnataka, Belgaum on
01.04.1984. His services were terminated on 01.04.1985. During the period
from 01.04.1985 to 1999, the petitioner did not approach any judicial/quasi-
judicial authority to challenge the said termination. In 1999, the claimant
approached the appropriate Government alleging that his services were
terminated illegally and in violation of the provisions of Section 25-F of the ID
Act. In the claim made by the petitioner, the only explanation given was that
he had approached his employer on several occasions with a request to
reinstate him in service and pay back wages and other consequential benefits.
19


The conciliation proceedings had started, which ended in failure. Thereafter,
the appropriate Government referred the matter regarding the validity of the
appellant’s termination for adjudication. His employer stated that the dispute
was not maintainable given that the claimant had raised the dispute after
fourteen years of his termination. On merits, it was further pleaded that the
management did not terminate the claimant’s services, but the claimant left
the services. After the evidence was led, the Labour Court passed the award
holding that the petitioner had worked for more than 240 days and his
services were terminated by the Management without complying with the
provisions of Section 25-F of the ID Act. As a result, the Labour Court ordered
reinstatement of the claimant but denied back wages.
21.5 The management preferred a writ petition against this award, which the
Single Judge of the High Court of Karnataka dismissed. The management
preferred a writ appeal against the dismissal of the Writ Petition by the Single
Judge which was allowed by the division bench on 06.06.2011. Challenging
the order of the Division Bench, the claimant preferred the appeal before this
Court. This Court held that the existence of an industrial dispute is strictly
contingent upon the demand and rejection test, whereby a formal demand by
the workman and its subsequent refusal by the employer serve as a
mandatory precondition; consequently, a belated demand raised after a
significant lapse of time may negate the existence of a live dispute. Regarding
the power of Reference under Section 10 of the ID Act, the Court held that the
appropriate Government exercises a purely administrative function, requiring
subjective satisfaction based on material records that a dispute exists or is
apprehended, and that the claimant is indeed a workman. While the
Government must apply its mind to these jurisdictional facts and cannot act
20


mechanically. It is legally impermissible for the appropriate Government to
adjudicate the merits of the dispute, a function reserved exclusively for the
Industrial Court. Therefore, the Government’s order is subject to judicial
review; a refusal to refer a dispute based on an assessment of merits is
unsustainable in law, just as a reference made absent a valid existing or
apprehended dispute is liable to be quashed. This Court held that the
appropriate Government, while performing this administrative function,
would not decide the dispute between the parties, which may be termed as a
judicial function, and such judicial function is to be discharged by the Labour
Court/Industrial Court only. To fortify this observation, the Court relied on
13
the Judgement in Ram Avtar Sharma v. State of Haryana , wherein it was
held that if the Government, while refusing to make reference, delves into the
merits of the dispute, the same is not permissible under law. The appropriate
course is to make a reference, and such disputes are decided by the Labour
Court/Industrial Court as an adjudicatory authority. Thus, this Court
concluded that where an industrial dispute exists or is apprehended, but the
appropriate Government refuses to refer, such a refusal can be challenged in
the court of law. Conversely, if the reference is made even when no dispute
exists or is apprehended, such a reference will also be subject to judicial
review.

22. The Union argues that the ratio laid down in the said decisions on facts
is distinguishable and cannot be treated as an authoritative pronouncement
where a tripartite situation, such as a registered contractor, workers working
through a registered contractor, and a contract contested as sham and
nominal only to defeat the rights of the workmen, is presented for decision. In

13
(1985) 3 SCC 189.
21


a case such as the present, the preliminary objection is first examined in all
fours as to whether the decisions in the above cases are applicable or
distinguishable.
23. The Union relies on Shambu Nath Goyal (Supra) and contends that in
cases where the industrial unrest is apprehended, it is sufficient to invoke the
forum for conciliation. The circumstances considered in Shambu Nath Goyal
(supra) are that the appellant therein, S.N. Goyal, was a clerk at the Bank of
Baroda. He was served a charge sheet on 31.07.1965, subjected to an inquiry,
and ultimately dismissed from service. The workman appealed his dismissal
to the Bank's appellate forum, but his appeal was unsuccessful. Following the
failure of conciliation proceedings, the appropriate Government referred to
Section 10(1) of the ID Act to adjudicate whether the dismissal was justified
and if the workman was entitled to relief. During the Tribunal proceedings,
the Bank raised a preliminary objection that no oral or written demand
regarding the workman was made to the Management before approaching the
Conciliation Officer. Therefore, the Bank argued, no “industrial dispute”
existed, rendering the Government’s reference incompetent. The Industrial
Tribunal, Chandigarh, upheld the Bank’s preliminary objection. It was held
that because no demand, either oral or in writing, was made by the workman
to the Bank before approaching the Conciliation Officer, there was no dispute
in existence on the date of the reference. Consequently, the Tribunal held that
the reference made by the Government was incompetent.
24. This Court held that the term “industrial dispute” is defined broadly as
any “dispute or difference” between employers and workmen connected with
employment, non-employment, the terms of employment, or conditions of
labour. The ID Act does not prescribe any specific manner in which a dispute
22


must arise. Specifically, a formal written demand by the workman is not
a sine qua non for an industrial dispute to exist. The only exception is for
public utility services, where Section 22 of the ID Act mandates a strike notice.
14
The court relied on the judgment of Beetham v. Trinidad Cement Ltd., to
define “difference.” In the said judgment, Lord Denning observed that a
difference exists whenever parties are at variance; they need not be “locked in
combat” or come to blows. It is sufficient if they are “sparring for an opening”.
Reading a requirement for a written demand into the statute would amount
to “re-writing the section”. An industrial dispute exists if there is a real,
substantial difference with persistence, which was satisfied here by the
workman’s continuous claim for reinstatement during the inquiry and appeal.
24.1 On the flair or nature of reference under Section 10(1) of the ID Act, the
decision further states that the appropriate Government has the power to
refer a matter for adjudication if it forms an opinion that an industrial dispute
either exists or is apprehended. The resultant order of reference is an
administrative act, and not a judicial or quasi-judicial determination. The
factual existence and expediency of referring are matters entirely for the
appropriate Government to decide. In Shambu Nath (supra) , this Court also
considered constructive/implied demand through conduct which we may not
refer to, having appreciated the definite case of the Management and the
Union. This Court distinguished Sindhu Resettlement Corporation on two
grounds: (i) Sindhu did not examine the appropriate Government’s power to
refer apprehended disputes, and (ii) in Shambu Nath, unlike in Sindhu, there
was unimpeachable evidence that the workman had demanded
reinstatement, proving a dispute actually existed. This Court held that a

14
(1960) 1 All ER 274, 279 : 1960 AC 132.
23


formal written demand by a workman to the employer is not a sine qua non
for the existence of an industrial dispute under Section 2(k) of the ID Act. An
industrial dispute exists whenever there is a real and substantial difference
between the parties. The Government’s administrative decision to refer such
an apprehended dispute under Section 10(1) ought not to be canvassed before
courts as if it were a judicial determination. We keep the above in mind when
applying which citations are apt to the case at hand.
25. In Kalyani (supra), the union representing the workmen of a canteen
run by the respondent industry claimed that the members are not being
treated at par with other employees and are, in fact, notionally engaged
contractors to run the canteen. As the respondent was not accepting to treat
the appellants as their employees, a complaint was filed under Section 28(1)
of the Maharashtra Recognition of Trade Unions Act and Prevention of Unfair
Labour Practices Act, 1971 (for short, “MRTU”), thereby alleging that the
management therein had engaged in unfair labour practices under items 1(a),
2(b) and 4(a) of the Schedule II and items 3, 5, 6, 7, 9 & 10 of Schedule IV of
the MRTU. The complaint was dismissed by the High Court of Judicature at
15
Bombay. In Krantikari Suraksha Rakshak Sanghatana v. S.V. Naik, the High
Court of Judicature at Bombay had held that the Industrial Court, on the
basis of a complaint under the MRTU Act, cannot abolish a labour contract
and issue a direction to the industry to be treated as direct employees of the
company. Similarly, in General Labour Union (Red Flag), Bombay v.
16
Ahmedabad Mfg. and Calico Printing Co Ltd. , this Court opined that, if there
are workmen whom the employer has not accepted as its employees, then no
complaint would lie under the MRTU Act. The provisions of the MRTU can be

15
(1993) 1 CLR 1003 Bom.
16
(1995) Supp (1) SCC 175.
24


applied only to workmen who are admittedly employees of the employer. If
there is a dispute regarding the relationship, the appropriate remedy is sought
before the relevant forum. Only after the relationship is established can a
complaint be made under the MRTU Act. The appellants therein submitted
that they were employees of the respondent union, and only for the purposes
of defeating the claim, the industry therein has not admitted this fact. This
Court found no substance in the argument of the union therein. This Court
concluded that the complaint was not maintainable, noting that the
employee–employer relationship between the appellant and the respondent
was never established and, hence, the complaint lacked locus standi . Lastly,
this Court granted liberty to the appellant to approach the appropriate
authority for a clarification/declaration regarding the status of their
workmanship, and then to raise a dispute before the Industrial Court.
26. The ratio or the principle laid down in Cipla (Supra), to some extent, is
nearer to the facts under consideration before the conciliation officer. The
facts in issue in Cipla are that the respondent Union filed a complaint under
Section 28 of the MRTU Act against Cipla Ltd. The complaint alleged unfair
labour practices under Schedule IV, Items 1(a), (b), (d), and (f) of the MRTU
Act. The union therein alleged that Cipla engaged persons to keep the factory
premises clean and hygienic, but fraudulently showed them as contract
workmen working for a contractor. They claimed the contractor was merely a
name-lender and the actual employer was Cipla. The union therein asserted
that Cipla terminated these workmen every 11 months to deprive them of

permanent status and wages applicable to permanent employees. Cipla
denied the existence of an employer-employee relationship, contending that
the workmen were employees of a specialised agency engaged for
25


housekeeping services under a valid agreement. The legal principle can be
stated that unless the employer-employee relationship is undisputed or
indisputable, the question of unfair labour practice cannot be inquired into
by the Labour Court under the MRTU Act if workmen seek to repudiate their
contract with a contractor and claim a direct legal relationship with the
principal employer, such an adjudication can only be done by a regular
Industrial Court or Court under the ID Act. The Labour Court cannot
adjudicate as it is constituted under the MRTU Act. Moreover, the proceedings
under the MRTU Act are summary in nature. Elaborate considerations
required to determine the existence of an employer-employee relationship, if
necessary by lifting the veil, fall outside the scope of Section 28 or Section 7
of the MRTU Act. Section 32 of the MRTU Act, which allows the court to decide
matters arising out of an application, does not enlarge the court’s jurisdiction.
It applies only to incidental questions where the employment status was
initially undisputed but later disputed, not to those where the relationship
was denied from the inception.
27. The citations relied on at the bar have been discussed in considerable
length to appreciate the actual controversy for decision in the Civil Appeal. In
fine, the management, by raising the preliminary objection, seeks to nip the
alleged industrial dispute in the bud, on the ground that no prior demand
was made on the management before approaching the conciliation officer.
Admittedly, the statute does not require moving the management at the first
instance and then approaching the Conciliation Officer. The sine qua non
condition is argued based on the ratio in Sindhu (Supra) and Prabhakar
(Supra ).
26


28. Now, let us examine the circumstances of the case. The Management
admits to the existence of registered contractors through whom the labour
services of the members of the Union were availed. The contract is in
compliance with CLRA. There is no employer-employee relationship between
the Management and the members of the Union. On the contrary, the Union
alleges that the said contract is a sham or a camouflage. The principal
employer is the Management. The termination or discontinuation is illegal.
The Management resorted to unfair labour practices. Therefore, in the charter
of demands, the Union claimed adjudication of the relationship between the
Management and the members of the Union, as well as the nature of the
contract. From the cases pleaded by both parties, applying the ratio laid down
in Kalyani (supra) and Cipla (supra), the Union cannot work out a remedy
under the MRTU Act, and the applicable remedy is an Industrial Dispute
before the Industrial Court. SAIL (supra) is an authoritative pronouncement
for the notification issued under Section 10 of CLRA, the consequences
thereof, and the remedies available to the workmen discontinued by the
management. By applying the principle laid down by the constitution bench,
the proper forum is the Industrial Court/Court for adjudicating issues
concerning the employment and termination of employment of contract
labour. In the backdrop of well-settled principles of law, a workman working
under a contract has to determine their remedies on discontinuation or
termination before the Industrial Court. The next question is whether the
reference is illegal for want of a prior demand before the Management.
29. In the analysis, we notice that there existed a tripartite relationship,
namely, between the Management and the contractor; between the registered
contractor and the workers; and the extended limb of the above relationship
27


is the contract labour working for the Management through a registered
contractor. The Management does not admit that it is the principal employer
of the workmen. Section 2(k) of the ID Act reads as follows:
“(k) “industrial dispute” means any dispute or difference
between employers and employers, or between employers and
workmen, or between workmen and workmen, which is
connected with the employment or non-employment or the
terms of employment or with the conditions of labour, of any
person;”
30. Plainly interpreted, an industrial dispute means any “dispute or
difference” between employers and workmen connected with employment,
non-employment, the terms of employment, or conditions of labour.
31. From Management's perspective, the members of the third respondent
union are not its workers. The very denial of the status could also be
considered as a dispute in the established facts and circumstances of a case.
32. The relevant portion of Section 10(1) of the ID Act reads as follows:
“Where the appropriate Government is of opinion that any
industrial dispute exists or is apprehended, it may at any time
(…)
(Emphasis supplied)”
33. Section 10 enables the appropriate Government to refer an industrial
dispute to a board, to a labour court or to a tribunal, depending upon the
nature of the dispute. The step taken under Section 10 sets in motion a
process for adjudication of a dispute between the parties. The steps envisaged
under Section 12 are known as a conciliatory measure without actually
inviting adjudication between the Management and the Union. Section 12, in
terms, does not stipulate that a condition precedent to invoking its
28


jurisdiction is to first approach the Management and receive a reply, and then
knock on the doors of the Conciliation Officer. The process of reference is
administrative in nature and is not tested on the touchstone of a judicial or
quasi-judicial order by a statutory authority or a court.
34. Sub-section (1) of Section 10 of the ID Act, from a plain reading, enables
the appropriate Government to refer a dispute to a Board, Labour Court or a
Tribunal an “Industrial Dispute.” Let us assume for the present that, in terms
of the ratio of Sindhu (supra) and Prabhakar (supra), a demand before
Management on the dispute is essential to invoke the forum of the
Conciliation Officer. Notwithstanding the ratio, if a case falls within the
second limb or Section 10(1) of the ID Act, the appropriate Government is
within its jurisdiction to refer an apprehended dispute to the Labour Court.
By applying the same rule of interpretation, it can be construed that the
appropriate Government may refer an Industrial Dispute apprehended to the
Board, Labour Court and Tribunal. The argument of management introduces
words into the Section and, at the same time, ignores the second contingent
circumstance, namely, where an Industrial Dispute is apprehended and
renders otiose the words apprehended. Such an interpretation is clearly
unavailable, and the argument fails.
35. A dispute in fact or a dispute in law cannot be exhaustively dealt with
either by examples or through a definition. The dispute is presented in a
variety of dynamic circumstances where one party asserts a right, and
another party denies the right. Similarly, a party affirms the existence of a
fact, and another party disputes its existence. These situations would attract
the simple meaning of a dispute. Similarly, industrial disputes can have
different combinations; namely, between workers and management, union
29


and management, and, as in the present case, contract labour and the
Management. In a situation where an unresolved dispute subsists, the same
is resolved through the process of conciliation. The management, in the
instant case, objects to the status of workers and, at the same time, cannot
be heard to argue that the status asserted by them is not adjudicated by the
Industrial Court. The inconsistency is that the preliminary objection is raised
to reject the ongoing proceedings in Reference (IT) No. 1 of 2021, as there is
no demand made to the management beforehand. The Union and the workers
complain of unfair labour practice against the Management, and the remedy
for redressal of both unfair practice and declaration that the contract is a
sham is before the Industrial Court. Therefore, for the rule of law to prevail,
the grievances are not wished away without adjudication. Ubi jus ibi
remedium, i.e., where there is a right, there is a remedy in law, is a principle
to be kept in perspective. Through the reference, a forum for redressal alone
is provided to the contract labour. The argument of the Management derives
a forum to the Union/workers and hence not accepted.
35.1 Further, as per the ratio of SAIL (supra), the contract labour is given the
option to question the contract as a sham and nominal, and pray for
appropriate reliefs. The objection to continuing the industrial dispute under
Section 10 is substantial and has been rightly rejected by the High Court.

36. The two decisions relied on by the Management, once they are excluded,
would compel this Court to apply the principle laid down in SAIL (supra) and
Shambu Nath (Supra) to hold that even if an unfair labour practice is alleged,
the applicable statute is the ID Act and the forum, the labour court. In SAIL
(supra), this Court has held that in the case of sham and nominal contracts,
adjudicatory reliefs of the status of workman vis-à-vis the principal employer
30


are a sine qua non for any other relief. The roadmap for workers under
registered contractors for adjudication of disputes is as follows.
37. The power to refer an 'apprehended' dispute is the statutory application
of the old adage 'a stitch in time saves nine'. It enables the State to intervene
before the industrial peace is shattered. Consequently, permitting Preliminary
Objections to stall this urgent process negates the preventive intent of the
statute, converting a mechanism of immediate relief into an engine of delay.
The appropriate Government, in its armchair, while referring an Industrial
Dispute for resolution, keeps in its perspective industrial peace and
prosperity, to enable workers to work out their just and economic demands
and avoid strikes and lockouts. The administrative decision merely looks at
an Industrial Dispute or an apprehended Industrial Dispute. The merit or
otherwise of the dispute is for the adjudicatory body to decide.
38. The Union or the workers can move the labour court for a declaration
that the contract between the Management and the contractor is sham and
nominal and, consequently, that the contract labour is entitled to enter into
the rolls of the Management and regularisation, etc.
39. The Management establishes that the labour contract complies with the
provisions of law, including the CLRA. Being so, the issue is limited to the
benefits to which the employees are entitled under the CLRA. The relief a party
is entitled to before the Industrial Court is dependent on the case pleaded and
proved by both parties.
40. In the circumstances of this case, the Management's preliminary
objection is that the industrial dispute referred to is illegal and without merit.
For the reasons stated above, we are in agreement with the impugned
judgment. To keep the ongoing adjudication in line with the principles laid
31


down by this Court, the labour court is directed to frame two issues, namely,
(i) whether the contracts through which the employment is provided to the
contract labour are sham and nominal, and (ii) whether, considering the
nature of work discharged by the workmen of the subject Union, the
Management is the principal employer of the members of the Respondent-
Union.
41. The Industrial Court is directed to dispose of Reference (IT) No. 1 of
2021 expeditiously, preferably within four months from the date of receipt of
a copy of this judgment.

42. Therefore, the Civil Appeal fails and is dismissed accordingly. No order
as to costs.
43. Pending applications, if any, are disposed of accordingly.

.………..……….…………………J.
[PANKAJ MITHAL]






.………..…………………………J.
[S.V.N. BHATTI]

New Delhi;
January 27, 2026.


32


REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2026
[@ S.L.P. (CIVIL) NO. 12192 OF 2023]

M/S PREMIUM TRANSMISSION PRIVATE LIMITED … APPELLANT(S)

VERSUS

KISHAN SUBHASH RATHOD AND OTHERS … RESPONDENT(S)

J U D G M E N T
S.V.N. BHATTI, J.

1. Leave granted.
2. The instant appeal is at the instance of Premium Transmission Private
Limited/Appellant and assails the order dated 17.01.2023 of the Industrial
Court, Maharashtra bench at Aurangabad as confirmed by the High Court in
Writ Petition No. 3259 of 2023 dated 21.03.2023. This Civil Appeal has been
tagged and heard along with the Civil Appeal filed by the Appellant herein in
Civil Appeal arising out of S.L.P.(Civil) No. 9970 of 2023. For convenience,
judgments are pronounced separately.
3. The circumstances leading to the industrial dispute, several rounds of
litigation, orders of this Court as well as the High Court are set out in the
judgment disposing of the companion Civil Appeal. To avoid repetition, these
events are not adverted to once again. It would be sufficient if the narrative
starts with the complaint filed on 05.05.2022 by the Respondents before the
Industrial Court in Complaint No. 1 of 2022 praying for the following reliefs:

“ 5.1. The cause of action leading to the instant Complaint has
arisen in the territorial jurisdiction of this Hon'ble Court;
1


5.2. The Unfair Labour Practices complained of has been
emerged from 18.04.2020 and is continued on day to day
basis. There is no limitation period prescribed for a Complaint
under Section 33-A of the ID Act. Even otherwise in view of the
Orders passed by the Hon’ble Supreme Court in Suo Moto Writ
(Civil) No.3/2020 the instant Complaint under Section 33-A is
within limitation.
5.3. The subject matter of this Complaint is not res-subjudice
before any other Court, Tribunal, High Court or Supreme Court;
5.4. The subject matter of this Complaint is coming up for
consideration of the Hon’ble Court for the first time; and,
5.5. The Complainants are not in receipt of any caveat from
the Respondent.
(c) Direct the Respondents to pay compensation to the tune of
equal amount of wages due to each of the Complainant Nos. 1
to 118 in terms of prayer clause 9B) above;
(d) Allow the Complaint.
At Aurangabad, dated 05.05.2022.
Signatures of the Complainants”
4. The Management resisted the interim prayer. The Industrial Tribunal
vide order dated 17.01.2023 allowed the prayers and found prima-facie case,
balance of convenience and irreparable loss in favour of the workmen. One of
the main points for consideration in the order of the Industrial Tribunal was
under Section 33(1) of the Industrial Disputes Act, 1947 (for short, “ID Act”).
The view of the Industrial Tribunal on Section 33(1) of the Act is summarised:
4.1 Since a dispute (Reference (IT) No. 1 of 2020) was already pending, it
was incumbent upon the Appellant Company to approach the Tribunal
under Section 33(1) of the ID Act before altering service conditions or stopping
the work of the workmen. The failure to do so constituted a breach of the Act.
2


4.2 The Tribunal observed that the workmen were removed from service
through a “mere exchange of letters” between the Appellant Company and the
Contractors, which was not legally sufficient to sever their engagement given
the pending dispute. Hence , the balance of convenience lay in favor of the
workmen. It held that denying interim relief would cause “great hardship” and
“irreparable loss” to the workmen and their families, who were left without
work.
4.3 The Tribunal allowed the interim application and directed the Appellant
Company to provide work at the factory to the workmen (listed in Annexure-
A of the reference, excluding deleted names) within one month and pay
wages to these workmen regularly during the pendency of the complaint.
5. The management filed WP No. 3259 of 2023, through the impugned
order, the Writ Petition was dismissed, hence the Civil Appeal.
6. Mr. CU Singh, Learned Senior Counsel, contends that directing workers
working through a registered contractor either for continuation or
regularisation is completely illegal. The relief of regularisation or coming on
the muster rolls is dependent on the workers establishing their status vis-à-
vis the management. The prayer, as granted, virtually amounts to allowing
the dispute in the companion Civil Appeal. The test is not a prima facie case,
balance of convenience or irreparable loss; but, the legal test is whether
admittedly, the workers engaged through a registered contractor are workmen
of the contractor or if the Management is the principal employer. The
applicability of Section 33(1) of the ID Act arises only when the status of a
workman is established.
7. Mr. Sandeep Deshmukh, Learned Counsel appearing for the
respondents, submits that the workmen have been prevented from entering
3


the services because of the dispute referred by the Appropriate Government.
The workmen have been working on regular works and there is no dispute on
the working of the contract labour in the Management. The interim prayer
conforms to the larger dispute referred to the Industrial Tribunal.
8. We have appreciated the limited submissions canvassed by the counsel
appearing for the parties. The definition of workman in ID Act and the CLRA
is captured through the plain reading of Section 2(s) of the ID Act, and
Sections 2(1)(i) and 2(1)(b) of CLRA for a comparative study:

4

5

9. Though the definition of “workman” under Section 2(1)(i) of the CLRA is
textually derived from Section 2(s) of the ID Act, 1947, the two differ
fundamentally in their juridical scope and the structural basis of the
employment between employer and employee. The definition under ID Act is
broad, which includes persons dismissed, discharged, or retrenched in
connection with an industrial dispute to ensure they retain locus standi for
adjudication. The CLRA, being regulatory in nature, contains no such
“extended meaning” for terminated employees. Furthermore, the CLRA
introduces a specific statutory exclusion for “out-workers” whereas the ID Act
does not have this specific statutory exclusion. Under the ID Act, the status
1
of such workers is determined by the “Control and Supervision Test”. If the
employer controls how the work is done, they may still be workmen under ID
Act, even if working off-site. Under CLRA, they are statutorily barred from the

1
Dharangadhara Chemical Works Ltd. v. State of Saurashtra, AIR 1957 SC 264 .
6


definition. Finally, the ID Act presupposes a direct privity of contract (master-
servant relationship) between the management and the worker, whereas the
CLRA definition strictly operates through the medium of a contractor,
covering workers hired “by or through” a third party for the establishment’s
work.
2
10. A plain reading of Section 33 of the ID Act makes it clear that the
restrictions from change of conditions etc., by the management is attracted

2
33.
“ Conditions of service, etc., to remain unchanged under certain circumstances during
pendency of proceedings.--(1) During the pendency of any conciliation proceeding before a
conciliation officer or a Board or of any proceeding before an arbitrator or a Labour Court or
Tribunal or National Tribunal in respect of an industrial dispute, no employer shall,--
(a) in regard to any matter connected with the dispute, alter, to the prejudice of the workmen
concerned in such dispute, the conditions of service applicable to them immediately before the
commencement of such proceeding; or
(b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal
or otherwise, any workmen concerned in such dispute, save with the express permission in
writing of the authority before which the proceeding is pending.
(2) During the pendency of any such proceeding in respect of an industrial dispute, the employer
may, in accordance with the standing orders applicable to a workman concerned in such
dispute or, where there are no such standing orders, in accordance with the terms of the
contract, whether express or implied, between him and the workman,
(a) alter, in regard to any matter not connected with the dispute, the conditions of service
applicable to that workman immediately before the commencement of such proceeding; or
(b) for any misconduct not connected with the dispute, or discharge or punish, whether by
dismissal or otherwise, that workman: Provided that no such workman shall be discharged or
dismissed, unless he has been paid wages for one month and an application has been made
by the employer to the authority before which the proceeding is pending for approval of the
action taken by the employer.
(3) Notwithstanding anything contained in sub-section (2), no employer shall, during the
pendency of any such proceeding in respect of an industrial dispute, take any action against
any protected workman concerned in such dispute—
(a) by altering, to the prejudice of such protected workman, the conditions of service applicable
to him immediately before the commencement of such proceedings; or
(b) by discharging or punishing, whether by dismissal or otherwise, such protected workman,
save with the express permission in writing of the authority before which the proceeding is
pending.
Explanation.--For the purposes of this sub-section, a "protected workman", in relation to an
establishment, means a workman who, being a member of the executive or other office bearer
of a registered trade union connected with the establishment, is recognised as such in
accordance with rules made in this behalf.
(4) In every establishment, the number of workmen to be recognised as protected workmen for
the purposes of sub-section (3) shall be one per cent. of the total number of workmen employed
therein subject to a minimum number of five protected workmen and a maximum number of one
hundred protected workmen and for the aforesaid purpose, the appropriate Government may
make rules providing for the distribution of such protected workmen among various trade
unions, if any, connected with the establishment and the manner in which the workmen may
be chosen and recognised as protected workmen.
(5) Where an employer makes an application to a conciliation officer, Board, an arbitrator, a
labour Court, Tribunal or National Tribunal under the proviso to sub-section (2) for approval of
the action taken by him, the authority concerned shall, without delay, hear such application
and pass, within a period of three months from the date of receipt of such application, such
7


and applicable if a workman is employed by the Management. The question
on relationship between the Management and the Workman is for decision in
Complaint (IT) No. 1 of 2021. At this stage, the interim prayer amounts to a
virtual pre-judgment of the main dispute between the parties. In this
litigation, the Management attempts to nip the dispute in the bud by raising
preliminary objections and the Union is praying for relief which the union
should agitate after the preliminary issues are decided in favour of the
workmen. Both the parties are not conforming to the requirements of law in
resolving a dispute of fact or dispute in law. Steel Authority of India and others.
3
v. National Union Waterfront Workers and others , in the event of
discontinuation or discharge, provides for a few measures for workmen
working under a registered contractor and are summed up as follows:
10.1 Remedies Available if Notification Under Section 10(1) is Issued for
Abolition of Contract Labour
10.1.1 The issuance of a Section 10 notification does not lead to the
automatic absorption of contract workers as regular employees of the
principal employer.
10.1.2 The immediate legal effect of such abolition is that the contract
labour working in that specific process must cease to function in that
capacity. The principal employer is prohibited from employing contract labour
for that job thereafter.

order in relation thereto as it deems fit: Provided that where any such authority considers it
necessary or expedient so to do, it may, for reasons to be recorded in writing, extend such
period by such further period as it may think fit: Provided further that no proceedings before
any such authority shall lapse merely on the ground that any period specified in this sub-
section had expired without such proceedings being completed.”
3
(2001) 7 SCC 1.
8


10.1.3 The workers do not become unemployed immediately; they
remain employees of the contractor. The contractor can utilize their services
in any other establishment where contract labour is not prohibited.

10.2 Remedies Available if the Contract is Continued as a “Camouflage”
(Sham Contract)
10.2.1 If it is proved that the contract was a mere ruse or camouflage to
hide the real employer-employee relationship and that the principal employer
retained full control and supervision over the workers the contract is
disregarded as a legal fiction.
10.2.2 In such cases, workmen “will have to be treated as employees of
the principal employer who shall be directed to regularise the services of the
contract labour”. Unlike the Section 10 scenario, here the workers become
direct employees of the company. They are entitled to back wages and benefits
as if they were regular employees from the start (or a date determined by the
Tribunal).
10.2.3 Determining whether a contract is “sham” or “genuine” involves
disputed questions of fact (e.g., Who supervised the work? Who paid the
wages? Who supplied the tools?). Therefore, only the Industrial
Tribunal/Court can adjudicate the dispute. Writ Courts generally do not
decide these disputed questions under Article 226 of the Constitution of India.

10.3 Modes and Methods of re-employment if discontinuation of the contract
is valid
10.3.1 If the principal employer intends to employ regular workmen for
the work previously done by contract labour, they must give preference to the
erstwhile contract labourers.
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10.3.2 The principal employer cannot simply hire fresh candidates from
the open market while ignoring the displaced contract workers. They are
legally bound to consider the contract workers who were working in that
establishment.
10.3.3 To ensure this "preference" is meaningful, the principal employer
may relax maximum age limit and academic qualifications; specifically, non-
technical posts to accommodate experienced workers.
11. In fine, we conclude in the facts and circumstances of the case, the
relief granted by the High Court and the Industrial Court through the orders
dated 21.03.2023 and 17.01.2023 are unsustainable. The impugned orders
are set aside. Liberty to the workmen is granted to pray for an interim measure
in terms of the dictum in SAIL (supra) before the Industrial Court. The Civil
Appeal is allowed with these observations. No order as to costs.
12. Pending applications, if any, are disposed of accordingly.


.………..……….…………………J.
[PANKAJ MITHAL]





.………..…………………………J.
[S.V.N. BHATTI]

New Delhi;
January 27, 2026.
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