Steel Authority of
India Ltd. & ANR. Vs. State of West Bengal & Ors.  INSC 1641 (25
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 5846 OF 2008 (Arising
out of SLP (C) No.4578 of 2007) Steel Authority of India Ltd. and Anr.
...Appellants Versus State of West Bengal and Ors. ...Respondents
Dr. ARIJIT PASAYAT, J.
in this appeal is to the judgment of a Division Bench of the Calcutta High
Court dismissing the writ petition filed by the appellants. Challenge was to
the reference made by the Government of West Bengal of a purported industrial
dispute under Section 7-A of the Industrial Disputes Act, 1947 (in short the
`Act'). According to the appellants, the reference was incompetent in view of
what has been stated by this Court in Steel Authority of India Ltd. v. National
Union Waterfront Workers (2001 (7) SCC 1).
scenario as projected by the appellants in the present appeal and the writ
petition is as follows:
Respondent No.4 i.e.
National Union of Water Front Worker (in short the `Union') made a
representation to Regional Labour Commissioner (Central) on 21.4.1987 seeking
conciliation of proceeding for regularization of services of members of its
Union who were working as contract labours with M/s Bardhan and Co. under
principal employers i.e. the present appellants. Another representation was
made on 4.6.1987 to the Labour Commissioner claiming the status of the workers
as contract labours of aforesaid M/s Bardhan and Co. under present appellants
and for regularization. The State of West Bengal issued Notification on
15.7.1989 prohibiting employment of contract labours in the 4 stockyards. The
aforesaid notification was kept in abeyance from time to time and ultimately
was extended till March 1994. Some workers belonging to the Union filed Writ
Petition before the Calcutta High Court seeking absorption in view of
Notification dated 15.7.1989. It was inter-alia stated that they were working
as contract labours. Learned Single Judge of the Calcutta High Court by order
dated 25.4.1994 held that the writ petitioners were entitled to absorption and
regularisation from 15.7.1989 when the contract labour was abolished. The
present appellants were directed to absorb and regularize the writ petitioners
in any establishment under their control and the absorption was to be made
according to suitability and experience for a particular job.
An appeal was filed
by the present appellants which was dismissed by a Division Bench. Thereafter
Special Leave Petitions Nos. 12657-58 of 1998 were filed before this Court.
The matter was
referred to the Constitution Bench. The appeal was disposed of inter-alia with
the following observations and directions given, in SAIL's case (supra):
"127. The order
of the High Court at Calcutta under challenged insofar as it relates to holding
that the West Bengal Government is the appropriate Government within the
meaning of the CLRA Act, is confirmed but the direction that the contract
labour shall be absorbed and treated on par with the regular employees of the
appellants, is set aside. The appeals are accordingly allowed in part".
Workers raised a
dispute under Section 10(1) of the Act in October 2001 and January 2002. On
18.11.2003, as noted above, the reference was made to the Industrial Tribunal
which was challenged before the High Court by filing a writ petition. The
primary stand taken was that in view of the accepted position by the Union and
the employees at different points of time that the workers were contract
labours, and having at no point of time pleaded that the agreement with the
contractors was sham and bogus, after long lapse of time it was impermissible
to raise such a dispute purportedly in view of certain observations in SAIL's
case (supra). The High Court rejected the plea and as noted above dismissed the
writ petition. The learned counsel for the appellants have submitted that in
para 125 of SAIL's judgment it was categorically held that the direction to
absorb as given by the High Court was not sustainable and there is no question
of any fresh absorption. It is pointed out that at all points of time the Union
and the workers categorically admitted that the workers were contract labours.
Earlier a writ petition was filed under Article 32 of the Constitution of
India, 1950 (in short the `Constitution') which was disposed of on 14.11.1988.
Even at that point of time there was no plea that the agreement with the
contractors was bogus or sham. It is pointed out that on a representation made
by the appellants, the Government issued a Notification dated 15.7.1989. Even
earlier in the writ petition filed there was no plea regarding the agreement
being sham or bogus. The prayer was only for absorption and to quash the
Notification keeping in abeyance the Notification dated 15.7.1989. In the writ
petition it was categorically stated that the contractors were agents of the
principal employer. The direction given in the earlier writ petition filed by
the respondents regarding absorption and regularization from 15.7.1989 was set
aside. Therefore, for the first time the belated plea with unsupportable
material should not have been accepted by the High Court.
counsel for the respondent No.4-Union on the other hand submitted that the
Union always took a stand that their work was of perennial nature which should
be placed on equal terms with regular employed and, therefore, by implication
it was pleaded that the existing arrangement was sham. On 15.7.1989 the State
of West Bengal prohibited contract labour because work was of a perennial
nature and significant to employee full time workmen. This according to learned
counsel for respondent No.4 shows implicit acceptance that the use of contract
labour was of camouflage. The grievances of the Union and the workmen were
essentially to the effect that the agreements are nothing but sham and bogus
agreements. There has been no delay or latches. Before SAIL's decision in 2001,
decision in Air India Statutory Corporation and Ors. v. United Labour Union and
Ors. (1997 (9) SCC 377) the cases cited was in force. In view of that decision,
regularization was permissible following the Notification prohibiting contract
labour. The absorption was ordered by a learned Single Judge on 25.4.1994, but
the decision was stayed till the decision in SAIL was rendered on 30.8.2001.
scope of judicial review in cases of reference under Section 10 of the Act is
very limited. In SAIL's case (supra) it was, inter-alia, held that (a) The
State Government has jurisdiction to deal with the matter and (b) automatic
absorption is not permissible in law. The orders of a learned Single Judge and
the Division Bench assailed in the appeals directing absorption were bad in
law. It is inter party decision. For the first time in 2003 the plea about
regularization and absorption was raised.
Steel Authority of India Ltd. v. Union of India and Ors. (2006 (12) SCC 233),
it was inter alia noted as follows:
"20. The 1970
Act is a complete code by itself.
It not only provides
for regulation of contract labour but also abolition thereof. Relationship of
employer and employee is essentially a question of fact. Determination of the
said question would depend upon a large number of factors. Ordinarily, a writ
court would not go into such a question.
xx xx xx
24. When, however, a
contention is raised that the contract entered into by and between the management
and the contractor is a sham one, in view of the decision of this Court in
Steel Authority of India Ltd. an industrial adjudicator would be entitled to
determine the said issue. The industrial adjudicator would have jurisdiction to
determine the said issue as in the event if it be held that the contract
purportedly awarded by the management in favour of the contractor was really a
camouflage or a sham one, the employees appointed by the contractor would, in
effect and substance, be held to be direct employees of the management.
25. The view taken in
Steel Authority of India Ltd. has been reiterated by this Court subsequently.
(See e.g. Nitinkumar Nathalal Joshi v. ONGC Ltd. and Municipal Corpn. of
Greater Mumbai v. K.V. Shramik Sangh.) 8 xx xx xx
28. The workmen
whether before the Labour Court or in writ proceedings were represented by the
same union. A trade union registered under the Trade Unions Act is entitled to
espouse the cause of the workmen. A definite stand was taken by the employees
that they had been working under the contractors. It would, thus, in our
opinion, not lie in their mouth to take a contradictory and inconsistent plea
that they were also the workmen of the principal employer. To raise such a
mutually destructive plea is impermissible in law. Such mutually destructive
plea, in our opinion, should not be allowed to be raised even in an industrial
adjudication. Common law principles of estoppel, waiver and acquiescence are
applicable in an industrial adjudication.
xx xx xx
33. The effect of an
admission in the context of Section 58 of the Evidence Act has been considered
by this Court in Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad wherein it was
categorically held that judicial admissions by themselves can be made the
foundations of the rights of the parties and admissions in the pleadings are
admissible proprio vigore against the maker thereof. (See also Union of India
v. Pramod Gupta.) 34. Recently this Court in Baldev Singh v. Manohar Singh
held: (SCC p.504, para 15) "15. Let us now take up the last ground on
which the application for amendment of the written statement was rejected by
the High Court as well as the trial court.
The rejection was
made on the ground that inconsistent plea cannot be allowed to be taken. We are
unable to appreciate the ground of rejection made by the High Court as well as
the trial court. After going through the pleadings and also the statements made
in the application for amendment of the written statement, we fail to
understand how inconsistent plea could be said to have been taken by the
appellants in their application for amendment of the written statement,
excepting the plea taken by the appellants in the application for amendment of
written statement regarding the joint ownership of the suit property.
Accordingly, on facts, we are not satisfied that the application for amendment
of the written statement could be rejected also on this ground.
That apart, it is now
well settled that an amendment of a plaint and amendment of a written statement
are not necessarily governed by exactly the same principle. It is true that
some general principles are certainly common to both, but the rules that the plaintiff
cannot be allowed to amend his pleadings so as to alter materially or
substitute his cause of action or the nature of his claim has necessarily no
counterpart in the law 10 relating to amendment of the written statement.
Adding a new ground of defence or substituting or altering a defence does not
raise the same problem as adding, altering or substituting a new cause of
action. Accordingly, in the case of amendment of written statement, the courts
are inclined to be more liberal in allowing amendment of the written statement
than of plaint and question of prejudice is less likely to operate with same
rigour in the former than in the latter case."
While laying down the
principle, this Court followed Modi Spg. & Wvg. Mills Co. and distinguished
35. It is, thus,
evident that by taking recourse to an amendment made in the pleading, the party
cannot be permitted to go beyond his admission. The principle would be applied
in an industrial adjudication having regard to the nature of the reference made
by the appropriate Government as also in view of the fact that an industrial
adjudicator derives his jurisdiction from the reference only.
36. There is another
aspect of the matter which should also not be lost sight of. For the purpose of
exercising jurisdiction under Section 10 of the 1970 Act, the appropriate
Government is required to apply its mind. Its order may be an administrative
one but the same would not be beyond the pale of judicial review. It must,
therefore, apply its mind before making a reference on the basis of the 11
materials placed before it by the workmen and/or management, as the case may
While doing so, it
may be inappropriate for the same authority on the basis of the materials that
a notification under Section 10(1)(d) of the 1947 Act be issued, although it
stands judicially determined that the workmen were employed by the contractor.
The State exercises administrative power both in relation to abolition of
contract labour in terms of Section 10 of the 1970 Act as also in relation to
making a reference for industrial adjudication to a Labour Court or a Tribunal
under Section 10(1)(d) of the 1947 Act. While issuing a notification under the
1970 Act, the State would have to proceed on the basis that the principal
employer had appointed contractors and such appointments are valid in law, but
while referring a dispute for industrial adjudication, validity of appointment
of the contractor would itself be an issue as the State must prima facie
satisfy itself that there exists a dispute as to whether the workmen are in
fact not employed by the contractor but by the management. We are, therefore,
with respect, unable to agree with the opinion of the High Court."
is the stand of the appellants that admittedly the workmen were employed by the
contractors. So far as the question of under payment as pleaded and
categorizing it as unfair labour practice are concerned, obviously relate to
the contractors but it cannot by no stretch of imagination be categorized as
sham or bogus.
of respondent No.4-Union that somebody has to examine and see whether the
agreement was genuine or sham or bogus. It has to be the industrial
adjudicator. If it is found to be genuine the question of relaxation would
arise. It is pointed out that the originally demands were for salary or perks.
As observed by this Court in State of Haryana v. Charanjit Singh (2006 (9) SCC
321) the concept of equal pay for equal work is not applicable to the contract
labour. In para 22 it was observed as follows:
"22. One other
fact which must be noted is that Civil Appeals Nos. 6648, 6647, 6572 and 6570
of 2002 do not deal with casual or daily- rated workers. These are cases of
persons employed on contract. To such persons the principle of equal pay for
equal work has no application. The Full Bench judgment dealt only with
daily-rated and casual workers.
Where a person is
employed under a contract, it is the contract which will govern the terms and
conditions of service. In State of Haryana v. Surinder Kumar persons employed
on contract basis claimed equal pay as regular 13 workers on the footing that
their posts were interchangeable. It was held that these persons had no right
to the regular posts until they are duly selected and appointed. It was held
that they were not entitled to the same pay as regular employees by claiming
that they are discharging the same duties. It was held that the very object of
selection is to test the eligibility and then to make appointment in accordance
with the rules. It was held that the respondents had not been recruited in
accordance with the rules prescribed for recruitment."
that sense the question of short payment is not relevant. There is no pleading
about agreement being sham.
This Court had on
many occasions dealt with the question of delay in reference. In U.P. State
Road Transport Corpn. V. Babu Ram (2006 (5) SCC 433) it was observed as
certain observations made by this Court need to be noted. In Nedungadi Bank
Ltd. v. K.P. Madhavankutty it was noted at para 6 as follows: (SCC pp. 459-60)
"6. Law does not prescribe any time- limit for the appropriate Government
to exercise its powers under Section 10 of the Act. It is not that this power
can be exercised at any point of time and to revive matters which had since
been settled. Power is to be exercised reasonably and in a rational manner.
There appears to us to be no rational basis on which the Central Government has
exercised powers in this case after a lapse of about seven years of the order
dismissing the respondent from service. At the time reference was made no
industrial dispute existed or could be even said to have been apprehended. A
dispute which is stale could not be the subject- matter of reference under
Section 10 of the Act. As to when a dispute can be said to be stale would
depend on the facts and circumstances of each case. When the matter has become
final, it appears to us to be rather incongruous that the reference be made
under Section 10 of the Act in the circumstances like the present one. In fact
it could be said that there was no dispute pending at the time when the
reference in question was made. The only ground advanced by the respondent was
that two other employees who were dismissed from service were reinstated. Under
what circumstances they were dismissed and subsequently reinstated is nowhere
mentioned. Demand raised by the respondent for raising an industrial dispute
was ex facie bad and incompetent."
S.M. Nilajkar v. Telecom District Manager (2003 (4) SCC 27), it was observed as
"17. It was
submitted on behalf of the respondent that on account of delay in raising the
dispute by the appellants the High Court was justified in denying relief to the
appellants. We cannot agree. It is true, as held in Shalimar Works Ltd. v. Workmen
that merely because the Industrial Disputes Act does not provide for a
limitation for raising the dispute, it does not mean that the dispute can be
raised at any time and without regard to the delay and reasons therefor. There
is no limitation prescribed for reference of disputes to an Industrial
Tribunal; even so it is only reasonable that the disputes should be referred as
soon as possible after they have arisen and after conciliation proceedings have
failed, particularly so when disputes relate to discharge of workmen wholesale.
A delay of 4 years in raising the dispute after even re- employment of most of
the old workmen was held to be fatal in Shalimar Works Ltd. v. Workmen. In
Nedungadi Bank Ltd. v. K.P. Madhavankutty a delay of 7 years was held to be
fatal and disentitled the workmen to any relief. In Ratan Chandra Sammanta v.
Union of India it was held that a casual labourer retrenched by the employer
deprives himself of remedy available in law by delay itself; lapse of time
results in losing the remedy and the right as well. The delay would certainly
be fatal if it has resulted in material evidence relevant to 16 adjudication
being lost and rendered not available. However, we do not think that the delay
in the case at hand has been so culpable as to disentitle the appellants to any
Although the High
Court has opined that there was a delay of 7 to 9 years in raising the dispute
before the Tribunal but we find the High Court factually not correct. The
employment of the appellants was terminated sometime in 1985-86 or 1986-87.
Pursuant to the judgment in Daily Rated Casual Labour v.
Union of India the
Department was formulating a scheme to accommodate casual labourers and the
appellants were justified in awaiting the outcome thereof. On 16-1-1990 they
were refused to be accommodated in the Scheme.
On 28-12-1990 they
initiated the proceedings under the Industrial Disputes Act followed by
conciliation proceedings and then the dispute was referred to the Industrial
Tribunal-cum- Labour Court. We do not think that the appellants deserve to be
non-suited on the ground of delay."
Nedungadi Bank Ltd. v. K.P. Madhavankutty and Ors. (2000 (2) SCC 455) the delay
of 7 years in seeking reference to disentitle the workmen to any relief has
been dealt with. It is to be noted that all through respondent No.4 focused on
several other aspects and not on the question of bogus or sham agreement.
being the position the decision of the Division Bench cannot be maintained and
is set aside. The proceedings initiated pursuant to the reference made by the
State Government in 2003 stand quashed.
appeal is allowed.
(Dr. ARIJIT PASAYAT)