STEEL AUTHORITY OF INDIA LTD. AND ORS. ETC. ETC. v. NATIONAL UNION WATER FRONT WORKERS AND ORS, ETC. ETC.

The Judgment of the Court was delivered by c SYED SHAH MOHAMMED QUADRI, J. Leave is granted in the Special Leave petitions.

In Food Corporation ofIndia. Bombay and Ors. v. Transport and Dock Workers Union and Ors., 1 a two-Judge Bench of this Court, having noticed the conflict of opinion between different Benches including two three-Judge D Benches of this Court on the interpretation of the expression "appropriate Government" in Section 2(1)(a) of the Contract Labour (Regulation and Abolition) Act, I 970 (for short, 'the CLRA Act') and in Section 2(a) of the Industrial Disputes Act, 1947 (for short, 'the LO.Act') and having regard to the importance of the question of automatic absorption of the contract labour in the establishment of the principal employer as a consequence of an abolition notification issued under Section 10( 1) of the CLRA Act, referred these cases to a larger Bench. The other cases were tagged with the said case as the same questions arise in them also. That is how these cases have come up before us.

To comprehend the controversy in these cases, it will suffice to refer to the facts in Civil Appeal Nos. 6009-10 of 2001@ S.L.P. Nos. 12657- 12658 of 1998 which are preferred from the judgment and order of the Calcutta High Court in W.P.No. 1773of1994 and FMAT No.1460of1994 dated July 3, 1998. The appellants, a Central Government Company and its branch manager, are engaged in the manufacture and sale of various types of iron and steel materials in its plants located in various States of India. The G business of the appellants includes import and export of several products and bye-products through Central Marketing Organisation, a marketing unit of the appellant, having network of branches in different parts of India. The work of handling the goods in the stockyards of the appellants, was being

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A entrusted to contractors after calling for tenders in that behalf. The Government of West Bengal issued notification dated July 15, 1989 under Section 10(1) of the CLRA Act (referred to in this judgment as 'the prohibition notification') prohibiting the employment of contract labour in four specified stockyards of the appellants at Calcutta. On the representation of the appellants, the B Government of West Bengal kept in abeyance the said notification initially for a period of six months by notification dated August 28, 1989 and thereafter extended that period from time to time. It appears that the State Government did not, however, extend the period beyond August 31, 1994.

The first respondent-Union representing the cause of 353 contract labourers filed Writ Petition No. I 0 I 08/89 in the Calcutta High Court 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 July 15, 1989 and further praying that the notification dated August 28, 1989, keeping the prohibition notification in abeyance, be quashed. A learned Single Judge of the High Court allowed the writ petition, set aside the notification dated August 28, 1989 and all subsequent notifications extending the period and directed that the contract labour be absorbed and regularised from the date of prohibition notification - July 15, 1989 - within six months from the date of the judgment i.e., April 25, 1994.

The appellants adopted a two-pronged attack strategy. Assailing the said judgment of the learned Single Judge, they filed writ appeal (FMAT No.1460 of 1994) and challenging the prohibition notification of July 15, 1989 they filed Writ Petition No.1733 of 1994 in the Calcutta High Court. While these cases were pending before the High Court, this Court delivered judgment in Air India Statuto1y Corporation and Ors. v. United Labour Union and Ors. 1 holding, inter alia, that in case of Central Government F Companies the appropriate Government is the Central Government and thus upheld the validity of the notification dated December 9, 1976 issued by the Central Government under Section I 0( I) of the CLRA Act prohibiting employment of contract labour in all establishments of the Central Government Companies. On July 3, 1998, a Division Bench of the High Court nonetheless G dismissed the writ appeal as well as the writ petition filed by the appellants taking-the view that on the relevant date "the appropriate Government" was the State Government. The legality of that judgment and order is under challenge in these appeals.

Three points arise for determination in these appeals :

H 2. [t997J 9 sec 377

STEEL AUTHORITY OF INDIA LTD.'· NA TI ON AL UNION WATER FRONT WORKERS [QUADRI, J.] J 59

(i) what is the true and correct import of the expression "appropriate A government" as defined in clause (a) of sub-section (I) of Section 2 of the CLRA Act;

(ii) whether the notification dated December 9, 1976 issued by the Central Government under Section 10(1) of the CLRA Act is valid and applies to all Central Government companies; and B (iii) whether automatic absorption of contract labour, working in the establishment of the principal employer as regular employees, follows on issuance of a valid notification under Section 10(1) of the CLRA Act, prohibiting the contract labour in the concerned establishment. c Inasmuch as in some appeals the principal employers are the appellants and in some others the contract labour or the union of employees is in appeal, we shall refer to the parties in this judgment as the principal employer and the contract labour.

Before taking up these points, it needs to be noticed that the history of exploitation of labour is as old as the history of civilisation itself. There has been an ongoing struggle by labourers and their organisations against such exploitation but it continues in one form or the other.

The Industrial Disputes Ac,t, 1947 is an important legislation in the direction of attaining fair treatment to labour and industrial peace which are sine qua non for sustained economic growth of any c.ountry. The best description pf that Act is given by Krishna Iyer, J, speaking for a three-Judge Bench of this Court in Life Insurance Corporation of India v. D.J. Bahadur and Ors.,' thus :

"The Industrial Disputes Act is a benign measure which seeks to pre- F empt industrial tensions, provide the mechanics of dispute-resolutions and set up the necessary infrastructure so that the energies of partners in production may not be dissipated in counter-productive battles and assurance of industrial 'justice may create a climate of goodwill". G After the advent of ihe Constitution of India, the State is under an obligation to improve the lot of the work force.· Article 23 prohibits, inter alia, begar and other similar forms of forced labour. The Directive Principle of State Policy incorporated in Article 38 mandates the State to secure a

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A social order for promotion of welfare of the people and to establish an egalitarian society. Article 39 enumerates the principles of policy of the State which include welfare measures for the workers. The State policy embodied in Article 43 mandates the State to endeavour to secure, by a suitable legislation or economic organisation or in any other way for all workers, agricultural, B industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. Article 43A enjoins on the State to take steps by suitable legislation or in any other way to secure the participation of workers in the management of undertakings, establishment, or other organisations engaged in any industry. The fundamental rights enshrined in Articles 14 and 16 C guarantee equality before law and equality of opportunity in public employment. Of course, the preamble to the Constitution is the lodestar and guides those who find themselves in a grey area while dealing with its provisions. It is now well settled that in interpreting a beneficial legislation enacted to give effect to directive principles of the state policy which is otherwise constitutionally valid, the consideration of the Court cannot be D divorced from those objectives. Jn a case of ambiguity in the language of a beneficial labour legislation, the Courts have to resolve the quandary in favour of conferment of, rather than denial of, a benefit on the labour by the legislature but without rewriting and/or doing violence to the provisions of the enactment.

E The CLRA Act was enacted by the Parliament to deal with the abuses of contract labour system.' It appears that the Parliament adopted twin measures to curb the abuses of employment of contract labour - the first is to regulate employment of contract labour suitably and the second is to abolish it in certain circumstances. This approach is clearly discernible from the provisions of the CLRA Act which came into force on February 10, 1971. A perusal of the Statement of Objects and Reasons shows that in respect of such categories as may be notified by the appropriate Government, in the light of the prescribed criteria, the contract labour will be abolished and in respect of the other categories the service conditions of the contract labour will be regulated. Before concentrating on the relevant provisions of the CLRA Act, it may be useful to have a bird's eye view of that Act. It contains seven chapters. Chapter 1 has two sections; the first relates to the commencement and application of the Act and the second defines the terms used therein. Chapter II which has three sections provides for the constitution of a Central Advisory· Board by the Central Government and a State Advisory Board by the State Government and empowers the Boards to constitute various committees. H Chapter Ill contains regulatory provisions for registration of establishments

STEEL AUTHORITY OF INDIA LTD. '· NATIONAL UNION WATER FRONT WORKERS [QUADRI, J.] J 61

which employ contract labour. Section I 0 which prohibits the employment of A contract labour falls in this chapter; we shall revert to it presently. Chapter IV contains provisions for purposes of licensing of Contractors to make sure that those who undertake or execute any work through contract labour, adhere to the terms and conditions of licences issued in that behalf. Power is reserved for revocation, suspension and amendment of licenses by the Licensing Officer B and a provision is also made for appeal against the order of the Licensing•• Officer. Chapter V takes care of the welfare and health of contract labour obliging the appropriate Government to make rules to ensure that the requirements of canteen, rest-rooms and other facilities like sufficient supply of wholesome drinking water at convenient places, sufficient number of latrines and urinals accessible to the contract labour in the establishment, washing facilities and the first aid facilities, are complied with by the contractor. Where the contractor fails to provide these facilities the principal employer is enjoined to provide canteen, rest-rooms etc., mentioned above, for the benefit of the contract labour. Though the contractor is made responsible for payment of wages to each worker employed by him as contract labour before the prescribed period yet for effective implementation of this requirement, care is taken to ensure presence of a nominee of the principal employer at the time of the disbursement of wages. Here again, it is prescribed that if the contractor fails to pay the wages to the contract labour, the principal employer shall pay the full wages or unpaid wages, as the case may be, to the contract labour and a right is conferred on him to recover the same from the amount payable to the contractor; if however, no amount is payable to him then such amount is treated as a debt due by the contractor to the principal employer. Chapter VI deals with the contravention of the provisions of the Act, prescribes offences and lays down the procedure for prosecution of the offenders. Chapter VII is titled 'miscellaneous' and it contains eight sections which need not be elaborated here. F Now we shall advert to point No. I.

The learned Solicitor General for the appellant - principal employer - has conceded that the State Government is the appropriate Government in respect of the establishments of the Central Government companies in question. G Mr. Shanti Bhushan, the learned senior counsel appearing for the respondents - contract labour in these appeals, submitted that in view of the concession made by the learned Solicitor General, he would not address the Court on that aspect and prayed that the judgment and order of the High Court, under appeal, be confirmed. }{

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A Mr. G.L. Sanghi, the learned senior counsel appearing for the appellants in the appeals filed by the Food Corporation oflndia (FCI)- principal employer- and Mr. K.K. Venugopal, the learned senior counsel for the appellant - the principal employer - in the appeals filed by the Oil and Natural Gas Commission (ONGC) among others sail with the learned Solicitor General, B submitted that the appropriate Government on the relevant date was the State Government and for that reason the notification issued by the Central Government on December 9, 1976 was never sought to be applied to the establishments of FCl and ONGC but in view of the amendment of the definition of the expression, "appropriate Government" with effect from January 28, I986, the Central Government would thereafter be the appropriate C Government. The learned Additional Solicitor General who appeared for Indian Farmers and Fertiliser Co-operative Ltd. ( IFFCO) and Mr. B. Sen, the learned senior counsel appearing for the appellant, adopted the arguments of the learned Solicitor General on this point.

Ms. Indira Jaisingh, the learned senior counsel appearing for the contract D labour (respondents in the appeals filed by FCI), argued that in the case of FCI the appropriate Government before and after the notification issued by the Central Government on January 28, 1986, was the Central Government.

Mr. K.K. Singhvi, the learned senior counsel for the contract labour (respondents in the appeal of ONGC), has argued that all Central Government E Undertakings which fall within the meaning of "other authorities" in Article 12 are agents or instrumentalities of the State functioning under the authority of the Central Government, as such the Central Government will be the appropriate Government; the Heavy Engineering's case was wrongly decided by the two Judge Bench of this Court which was followed by a three-Judge F Bench in the cases of Hindustan Aeronautics Ltd and Rashtriya Mill Mazdoor Sangh; in those cases the judgments of this Court in Sukhdev Singh's case, Ajay Hasia's case, Central Inland Water Transport Corporation's case, C. V. Raman's case and R.D. Shetty International Airport's case were not considered; the approach of the Court in the Heavy Engineering's case was based on private law interpretation and that the approach of the Court ought to be based on public law interpretation. It is submitted that in a catena of decisions of this Court, it has been held that where there is deep and pervasive control, a company registered under the Companies Act or a society registered under the Societiei; Act would be 'State' and, therefore, it would satisfy the requirement of the definition of "appropriate Government". He contended that in Air India's case (supra) a three-Judge Bench of this Court had correctly

STEEL AUTHORITY OF INDIA LTD." NA TI ON AL UNION WATER FRONT WORKERS (QUADRI. J.] 363

decided that for all the establishments of the Air India the Central Government A was the appropriate Government, which deserved to be confirmed by us.

Notwithstanding the concession made by the learned Solicitor General which has the support of Mr. Shanti Bhushan, we cannot give a quietus to this issue as the other learned counsel strenuously canvassed to the contra. We, therefore, propose to decide this point in the light of the contentions put B forth by the other learned counsel.

To begin with the relevant provisions of Section I of the CLRA Act which deals, inter alia, with its extent and application, may be noticed here:

"Section I - c (I) to (3) *** *** *** (4) - It applies -

(a) to every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract Jabour;

(b) to every contractor who employs or who employed on any day of the preceding twelve months twenty or more workmen : Provided that the appropriate Government may, after giving not less than two months' notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment or contractor employing such number of workmen less than twenty as may be specified in the notification. (5) (a) It shall not apply to establishments in which work only of an intermittent or casual nature is performed. F

(b) If a question arises whether work performed in an establishment is of an intermittent or casual nature, the appropriate Government shall decide the question after consultation with the Central Board ., or, as the case may be, a State Board, and its decision shall be final. G Explanation : For the purpose of this sub-section, work performed in an establishment shall not be deemed to be of an intermittent nature -- (i) if it was performed for more than one hundred and twenty days H

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A in the preceding twelve months, or (ii) if it is of a seasonal character and is performed for more than sixty days in a year."

A perusal of this section brings out that CLRA Act applies to every establishment and every contractor of the specified description. However, the establishments in which work only of an intermittent or casual nature is performed are excluded from the purview of the Act.

We shall also refer to definitions of relevant terms in sub-section (I) of Section 2 which contains interpretation clauses. Clause (a) defines the expression "appropriate Government" thus : "2(1) In this Act, unless the context otherwise requires-

(a) "appropriate Government" means - (i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act, 1947 D (14of1947) is the Central Government, the Central Government; (ii) in relation to any other establishment, the Government of the State in which that other establishment is situated."

Addressing to the definition of "appropriate Government", it may be pointed out that clause (a) of Section 2(1) was substituted by the Contract Labour (Regulation and Abolition) Amendment Act, 1986 with effect from January 28, 1986. Before the said amendment, the definition read as under:

"2(1). (a) "appropriate Government" means- (i) in relation to any establishment pertaining to any industry carried on by or under the authority of the Central Government, or pertaining to any such controlled industry as may be specified in this behalf by the Central Government; or (ii) any establishment of any railway, Cantonment Board, major port, mine or oil-field, or G (iii) any establishment of a banking or insurance company, the Central Government, (2) in relation to any other establishment the Government of the State in which that other establishment is situated." IH

STEEL AUTHORITY OF INDIA LTD. "·NATIONAL UNION WATER FRONT WORKERS [QUADRI, J J J 65

A plain reading of the unamended definition shows that the Central A Government will be the appropriate Government if the establishment in question answers the description given in sub-clauses (i) to (iii). And in relation to any other establishment, the Government of the State, in which the establishment in question is situated, will be the appropriate Government. So far as sub-clauses (ii) and (iii) are concerned, they present no difficulty. The B discussion has centred round sub-clause (i). It may be seen that sub-clause (i) has two limbs. The first limb takes in an establishment pertaining to any industry carried on by or under the authority of the Central Government and the second limb embraces such controlled industries as may be specified in that behalf by the Central Government.

Before embarking upon the discussion on the first limb, it will be apt c to advert to the amended definition of' appropriate Government' which be.ars the same meaning as given in clause (a) of Section 2 of the Industrial Disputes Act, quoted hereunder:

"2. (a) "appropriate Government" means- D (i) in relation to any industrial disputes concerning any industry carried on by or under the authority of the Central Government or by a railway company [or concerning any such controlled industry as may be specified in this behalf by the Central Government] or in relation to an industrial dispute concerning [a Dock Labour Board established E· under section 5-A of the Dock Workers (Regulation of Employment) Act, 1948 (9of1948), or [the Industrial Finance Corporation oflndia Limited formed and registered under the Compani~s Act, 1956 (I of 1956)], or the Employees' State Insurance Corporation established under section 3 of the Employees' State Insurance Act, 1948 (34 of 1948), or the Board of Trustees constituted under section 3-A of the F Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), or the Central Board of Trustees and the State Boards of Trustees constituted under section 5-A and section 5-B, respectively, of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 ( 19 of 1952), or the Life Insurance Corporation Act, 1956 (3 I G of 1956), or [the Oil and Natural Gas Corporation Limited registered under the Companies Act, 1956 (I of 1956)], or the Deposit Insurance and Credit Insurance and Credit Guarantee Corporation established under section 3 of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), or the Central Warehousing Corporation established under section 3 of the Warehousing H

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A Corporations Act, 1962 (58 of 1962), or the Unit Trust of India established under section 3 of the Unit Trust of India Act, 1963 (52 of I963), or the Food Corporation of India established under section 3, or a Board of Management established for two or more contiguous States under section 16 of the Food Corporations Act, 1964 (37 of 1964), or [the Airports Authority of India constituted under section B 3 of the Airports Authority of India Act, 1994 (55 of 1994)], or a Regional Rural Bank established under section 3 of the Regional Rural Banks Act, 1976 (21 of 1976), or the Export Credit and Guarantee Corporation Limited or the Industrial Reconstruction Corporation of India Limited], or [the National Housing Bank c established under section 3 of the National Housing Bank Act, 1987 (53 of 1987) or [the Banking Service Commission established under section 3 of the Banking Service Commission Act, 1975,] or [an air transport service, or a banking or an insurance company], a mine, an oil field], (a Cantonment Board] or a major port, the Central Government; and D (ii) in relation to any other industrial dispute, the State Government;"

An analysis of this provision shows that the Central Government will be the appropriate Government in relation to an industrial dispute concerning:

E (I) any industry carried on by or under the authority of the Central Government, or by a railway company; or (2) any such controlled industry as may be specified in this behalf by the Central Government; or (3) the enumerated industries (which form part of the definition quoted F above and need not be reproduced here). • What is evident is that the phrase "any industry carried on by or under the authority of the Central Government'' is a common factor in both the unamended as well as the amended definition. G It is a well-settled proposition of law that the function of the Court is to interpret the Statute to ascertain the intent of the legislature-Parliament. Where the language of the Statute is clear and explicit the Court must give effect to it because in that case words of the Statute unequivocally speak the intention of the legislature. This rule of literal interpretation has to be adhered H to and a provision in the Statute has to be understood in its ordinary natural

STEEL AUTHORITY OF INDIA LTD v. NATIONAL UNION WATERFRONT WORKERS [QUADRI, J.J ) 67

, sense unless the Court finds that the provision sought to be interpreted is A ·vague or obscurely worded in which event the other principles of interpretation ·may be called in aid. A plain reading of the said phrase, under interpretation, shows that it is lucid and clear. There is no obscurity, no ambiguity and no abstruseness. Therefore· the words used therein must be construed in their natural ordinary meaning as commonly understood. B We are afraid we cannot accept the contention that in construing that expression or for that matter any of the provisions of the CLRA Act, the principle of literal interpretation has to be discarded as it represents common law approach applicable only to private law field and has no relevance when tested on the anvil of Article 14, and instead the principle of public law interpretation should be adopted. To accept that contention, in our view, would amount to abandoning a straight' route and oft treaded road in an attempt to create a pathway in a wilderness which can only lead astray. We .have not come across any principles of public law interpretation as opposed to private law interpretation for interpreting a statute either in any authoritative treatise on interpretation of statutes or in pronouncement of any Court nor is any authority of this Court or any other Court brought to our notice. We may, however, mention that there does exist a distinction between public law and private law. This has been succinctly brought out by the Rt. Hon. Sir Harry Woolf (as he then was, now Lord Woolf) in The Second Harry Street Lecture delivered in the University of Manchester on February 19, 1986. The learned E Law Lord stated :

"I regard public law as being the system which enforces the proper performance by public bodies of the duties which they owe to the public. I regard private law as being the system which protects the private rights of private individuals or the private rights of public F bodies. The critical distinction arises out of the fact that it is the public as a whole, or in the case of local government the public in the locality, who are the beneficiaries of what is protected by public law and it is the individuals or bodies entitled to the rights who are the beneficiaries of the protection provided by private law." G

The divide between the public law and the private law is material in regard to the remedies which could be availed when enforcing the rights, public or private, but not in regard to interpretation of the Statutes. We are not beset with the procedural mandate as in the R.S.C. Order 53 of 1977 of ·England which was the subject matter of consideration by the House of Lords ,H

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A in O'Reilly v. Mackman. 4 In that case the appellant sought declaration by ordinary action that the order passed by the Prison's Board of visitors awarding penalty against him was void and of no effect. The House of Lords, dismissing the appeal filed against the judgment of the Court of Appeal, held that where • a public law issue arises, the proceedings should be brought by judicial review under R.S.C. Order 53 and not by private law action which would be B abuse of the process of court. ..... Now, going back to the definition of the said expression, it combines three alternatives, viz., (a) any industry carried on by the Central Government; (b) any industry carried on under the authority of the Central Government; and (c) any industry carried on by a railway company. Alternatives (a) and c (c) indicate cases of any industry carried on directly by the Central Government or a railway company. They are too clear to admit of any polemic. In regard to alternative (b), surely, an industry being carried on under the authority of the Central Government cannot be equated with any industry carried on by the Central Government itself. This leaves us to construe the words "under D the authority of the Central Government". The key word in them is ·authority'.

The relevant meaning of the word "authority" in the Concise Oxford Dictionary is delegated power. In Black's Law Dictionary the meanings of the word "authority" are: permission; right to exercise powers - often , synonymous with power. The power delegated by a principal to his agent. E The la11ful delegation of power by one person to another. Power of agent to affect legal relations ofprincipal by acts done in accordance with principal's manifestations of consent to agent. In Corpus Juris Secundum (at p.1290) the following are the meanings of the term "authority": in its broad general sense, the word has been defined as meaning control over; power; jurisdiction; power to act, whether original or delegated. The word is frequently used to express derivative power; and in this sense, the word may be used as meaning instructions, permission, power delegated by one person to another, the result of the manifestations by the former to the latter of the farmer's consent that the latter shall act for him, authority in this sense - in the laws of at least one state, it has been similarly used as designating or meaning an agency for the purpose of carrying out a state duty or function; some one to whom by law a power has been given. In ·Words and Phrases' we find various shades of meaning of the word "authority" at pp.603, 606, 612 and 613: Authority, as the word is used throughout the Restatement, is the power of one person to affect the legal relations of another by acts done in accordance with the

H 4. [1983] 2 Appeal Cases 237

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other's manifestations of consent to him; an agency of one or more participating A governmental units created by statute for specific purpose of having delegated

- to it certain functions governmental in character; the lawful delegation of power by one person to another; power of agent to affect legal relations of principal by acts done in accordance with principal's manifestations of consent to him. B From the above discussion, it follows that the phrase "any industry carried on under the authority of the Central Government" implies an industry which is carried on by virtue of, pursuant to, conferment of, grant of, or delegation of power or permission by the Central Government to a Central Government Company or other Govt. company/undertaking. To put it differently, if there is lack of conferment of power or permission by the Central Government to a government company or undertaking, it would disable such a company/undertaking to carry on the industry in question.

In interpreting the said phrase, support is sought to be drawn by the learned counsel for the contract labour from the cases laying down the principles as to under what circumstances a Government company or undertaking will fall within the meaning of "State or other authorities" in Article 12 of the Constitution. We shall preface our discussion of those cases by indicating that for purposes of enforcement of fundamental rights guaranteed in Part Ill of the Constitution the question whether a Government Company or undertaking is "State" within the meaning of Article 12 is germane. It is important to notice that in these cases the pertinent question is appropriateness of the Government - which is the appropriate Government within the meaning of CLRA Act; whether, the Central or the State Government, is the appropriate Government in regard to the industry carried on by the Central/State Government Company or any undertaking and not p whether such Central/State Government company or undertaking come within the meaning of Article 12. The word ·State' is defined in Article 12 5 which is quoted in the footnote.

In Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr.,' this Court, in the context whether service Regulations framed by G

5. "In !his part, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government oflndia.''

6. 1975 (3) SCR 619. H

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A statutory corporations have the force of law, by majority, held that the statutory corporations, like ONGC, JFFCO, LIC established under different statutes fell under "other authorities" and were, therefore, "State" within the meaning of that term in Article 12 of the Constitution. The Court took into consideration the following factors, (a) they were owned, managed and could also be dissolved by the Central Government; (b) they were completely under the - B control of the Central Government and (c) they were performing public or statutory duties for the benefit of the public and not for private profit; and concluded that they were in effect acting as the agencies of the Central Government and the service Regulations made by them had the force of law, which would be enforced by the Court by declaring that the dismissal of an C employee of the corporation in violation of the Regulations, was void.

In Ramanna Dayaram Shetty v. The International Airport of India and Ors.,' a three-Judge Bench of this Court laid down that Corporations created by the Government for setting up and management of public enterprises and carrying out public functions, act as instrumentalities of the Government; D they would be subject to the same limitations in the field of constitutional and administrative laws as Government itself, though in the eye of law they would be distinct and independent legal entities. There, this Court was enforcing the mandate of Article 14 of the Constitution against the respondent - a Central Govt. Corporation. E Managing Director, U.P. Warehousing Corporation and Anr. v. Vinay Narayan Va)payee' dealt with a case of dismissal of the respondent-employee of the appellant-Corporation in violation of the principles of natural justice. There also the Court held the Corporation to be an instrumentality of the State and extended protection of Articles 14 and 16 of the Constitution to the F employee taking the view that when the Government is bound to observe the equality clause in the matter of employment the corporations set up and owned by the Government are equally bound by the same discipline.

In Ajay Hasia etc. v. Khalid Mujib Sehravardi and Ors. etc.', the question decided by a Constitution Bench of this Court was: whether Jammu & Kashmir G Regional Engineering College, Srinagar, registered as a society under the Jammu & Kashmir Registration of Societies Act, 1898, was 'State' within the meaning of Article 12 of the Constitution so as to be amenable to writ

7. 1979 (3) SCR 1014

8. 1980 (2) SCR 773

H 9. 1981(2)SCR79

STEEL AUTHORITY OF INDIA LTD. v. NATIONAL UNION WATER FRONT WORKERS (QUADRl, I.] J 7J jurisdiction of the High Court. Having examined the Memorandum of A Association and the Rules of the Society, the Court decided that the control of the State and the Central Government was deep and pervasive and the society was a mere projection of the State and the Central Government and it was, therefore, an instrumentality or agency of the State and Central Government and as such an authority-state within the meaning of Article 12. B The principle laid down in the aforementioned cases that if the government acting through its officers was subject to certain constitutional limitations, a fortiorari the government acting through the instrumentality or agency of a corporation should equally be subject to the same limitations, was approved by the Constitution Bench and it was pointed out that otherwise it would lead to considerable erosion of the efficiency of the Fundamental c Rights, for in that event the government would be enabled to override the Fundamental Rights by adopting the stratagem of carrying out its function through the instrumentality or agency of a corporation while retaining control over it. That principle has been consistently followed and reiterated in all subsequent cases- See Delhi Transport Corpn. v. D. T.C. Mazdoor Congress D and Ors.,'° Som Prakash Rekhi v. Union of India and Anr.,1 1 Manmohan Singh Jaitla etc. v. Commr., Union Territory of Chandigarh and Ors. etc., 12 P.K. Ramachandra Iyer and Ors. etc. v. Union of India and Ors. etc., 13 A.L. Kalra v. Project and Equipment Corpn. Of India Ltd.," Central Inland Water Transport Corpn. Ltd. and Anr. etc. v. Brojo Nath Ganguly and Anr. etc., 15 E C. V. Raman v. Management of Bank" of India and Anr. etc., 16 Lucknow Development Authority v. MK. Gupta,r Mis Star Enterprises and Ors. v. City and Industrial Development Corpn. of Maharashtra Ltd. and Ors.,'" LIC

of India and Anr. v. Consumer Education and Research Centre and Ors. 19

- and G.B. Mahajan and Ors. v. Jalgaon Municipal Council and Ors. 10 We do 10. 11. 1991 Suppl. (I) sec 600 1931 (I) sec 449 F

12. 1984 suppl. sec 540

13. 1984 (2) sec 141

14. 1984 (3) sec 316

15. 1986 (3) sec 156 G

16. 1988 (3) sec 105

17. 1994 (I) sec 243

18. 1990 (3) sec 280

19. 1995 (5) sec 482 '

20. 1991 (3)SCC91 H

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A not propose to burden this judgment by adding to the list and referring to each case separately.

We wish to clear the air that the principle, while discharging public functions and duties the Govt. Companies/Corporations/Societies which are instrumentalities or agencies of the Government must be subjected to the B same limitations in the field of public Jaw-constitutional or administrative law-as the Government itself, does not lead to the inference that they become agents of the Centre/State Government for all purposes so as to bind such Government for all their acts, liabilities and obligations under various Central and/or State Acts or under private law. c From the above discussion, it follows that the fact of being instrumentality of a Central/State Govt. or being ·State' within the meaning of Article 12 of the Constitution cannot be determinative of the question as to whether an industry carried on by a Company/Corporation or an instrumentality of the Govt. is by or under the authority of the Central D Government for the purpose of or within the meaning of the definition of ·appropriate Government' in the CLRA Act. Take the case of a State Government corporation/company/undertaking set up and owned by the State Government which is an instrumentality or agency of the State Government and is engaged in carrying on an industry, can it be assumed that the industry is carried on under the authority of the Central Government, and in relation to any industrial dispute concerning the industry can it be said that the appropriate Government is the Central Government? We think the answer must be in the negative. In the above example if, as a fact, any industry is carried on by the State Government undertaking under the authority of the Central Government, then in relation to any industrial dispute concerning that industry, the appropriate Government will be the Central Government. This .... is so not because it is agency or instrumentality of the Central Government but because the industry is carried on by the State Govt. Company/Corporation/ Undertaking under the authority of the Central Government. In our view, the same reasoning applies to a Central Government undertaking as well. Further, the definition of· establishment' in CLRA Act takes in its fold purely private undertakings which cannot be brought within the meaning of Article 12 of the Constitution. In such a case how is ·appropriate Government' determined for the purposes of CLRA Act or Industrial Disputes Act? In our view, the test which is determinative is: whether the industry carried on by the establishment in question is under the authority of the Central Govt? Obviously, H there cannot be one test for one part of definition of ·establishment' and

STEEL AUTHORITY OF INDIA LTD.'- NATIONAL UNION WATER FRONT WORKERS (QUADRI, l I J73

another test for another part. Thus, it is clear that the criterion is whether an undertaking/instrumentality of Government is carrying on an industry under the authority of the Central Government and not whether the undertaking is instrumentality or agency of the Government for purposes of Article 12 of the Constitution, be it of Central Government or State Government.

There cannot be any dispute that all the Central Government companies with which we are dealing here are not and cannot be equated to Central Government though they may be 'State' within the meaning of Article 12 of the Constitution. We have held above that being the instrumentality or agency of the Central Government would not by itself amount to having the authority of the Central Government to carry on that particular industry. Therefore, it will be incorrect to say that in relation to any establishment of a Central Government Company/undertaking, the appropriate Government will be the Central Government. To hold that the Central Government is "the appropriate Government" in relation to an establishment, the court must be satisfied that the particular industry in question is carried on by or under the authority of the Central Government. If this aspect is kept in mind it would be clear that the Central Government will be the "appropriate Government'· under the CLRA Act and the LO.Act provided the industry in question is carried on by a Central Government company/an undertaking under the authority of the Central Government. Such an authority may be conferred, either by a Statute or by virtue of relationship of principal and agent or delegation of power. E Where the authority, to carry on any industry for or on behalf of the Central Government, is conferred on the Government company/any undertaking by the. Statute under which it is created, no further question arises. But, if it is not so, the question that arises is whether there is any conferment of authority on the Government company/ any undertaking by the Central Government to carry on the industry in question. This is a questi.~m of fact and has to be F • ascertained on the facts and in the circumstances of each case. We shall refer to the cases of this Court on this point.

In Heavy Engineering Mazdoor Union v. State of Bihar and Ors. 21 the said expression (appropriate Government) came up for consideration. The Heavy Engineering Corporation is a Central Government company. The G President of India appoints Directors of the company and the Central Government gives directions as regards the functioning of the company. When disputes arose between the workmen and the management of the

21 !969(l)SCC 765 H

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A company, the Government of Bihar referred the disputes to the Industrial Tribunal for adjudication. The union of the workmen raised an objection that the appropriate Government in that case was the Central Government, therefore, reference of the disputes to the Industrial Tribunal for adjudication by the State Government was incompetent. A two-Judge Bench of this Court elaborately dealt with the question of appropriate Government and concluded that the mere fact that the entire share capital was contributed by the Central Government and the fact that all its shares were held by the President of India and certain officers of the Central Government, would not make any difference. It was held that in the absence of a statutory provision, a commercial corporation acting on its own behalf even though it was controlled, wholly or partially, by a Government Department would be ordinarily presumed not to be a servant or agent of the State. It was, however, clarified that an inference that the corporation was the agent of the Government might be drawn where it was performing in substance Governmental and not commercial functions. It mu.;t be mentioned here that in the light of the judgments of this Court, referred to above, it is difficult to agree with the distinction between D a governmental activity and commercial function of government companies set up and owned by government, insofar as their function in the realm of public law are concerned. However, the contention that the decision in that case 22 is based on concession of the counsel for the appellant is misconceived. This Court summed up the submission in para 4 thus : E "The undertaking, therefore, is not one carried on directly by the Central Government or by any one of its departments as in the case of posts and telegraphs or the railways. It was, therefore, rightly conceded both in the High Court as also before us that it is not an industry carried on by the Central Government. That being the position, F the question then is, is the undertaking carried on under the authority of the Central Government?"

It is evident that the concession was with regard to the fact that it was not an industry carried on by the Central Government and not in regard to "was the undertaking carried on under the authority of the Central Government?'· G Indeed that was the question decided by the Court on contest and it was held that the undertaking was not carried on by the Central Government company under the authcrity of the Central Government and that the appropriate Government in that case was the State Government and not the Central

H 22 1969 (I) sec 765

STEEL AUTHORITY OF INDIA LTD. v. NATIONAL UNION WATER FRONT WORKERS (QUADRI, l J J75

Government. From the above discussion, it is evident that the Court correctly A posed the question- whether the State Govt. or the Central Govt. was the appropriate Government and rightly answered it.

In Mis. Hindustan Aeronautics Ltd v. The Workmen and Ors., 23 this Court was called upon to decide the question as to whether the expression "appropriate Government", as defined in Section 2(a)(i) of the Industrial B Disputes Act, was the State Government or the Central Government. In that case dispute arose between the management of the Barrackpore branch (West Bengal) of the appellant and its employees. The Governor of West Bengal referred the dispute to Industrial Tribunal under Section I 0 of the I.D. Act. The competence of the State Government to make the reference was called C in question. A three-Judge Bench of this Court, relying on the decision in Heavy Engineering's case (supra), held that the reference was valid. The Court took note of the factors, viz; if there is any disturbance of industrial peace at Barrackpore where a considerable number of workmen were working, the appropriate Government concerned in the maintenance of the industrial peace was the West Bengal Government; that Barrackpore industry was a D separate unit; the cause of action in relation to the industrial dispute arose at Barrackpore. Having regard to the definitions of the terms 'appropriate Government' and 'establishment', in Section 2 ofCLRA Act, it cannot be said that the factors which weighed with the Court were irrelevant. It was also pointed out therein that from time to time certain statutory corporations were included in the definition but no public company of which the shares were exclusively owned by the Government, was roped in the definition. What we have expressed above about Heavy Engineering's case (supra) will, equally apply here.

The aforementioned phrase "an industry carried on by or under the authority of the Central Government" again fell for consideration of a three- Judge Bench of this Court in Rashtriya Mill Mazdoor Sangh, Nagpur v . . Model Mills, Nagpur and Anr-" The case arose in the context of Section

- 32(iv) of the Payment of Bonus Act, 1965, which provides that nothing in that Act shall apply to employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the G Central Government or a State Government or a local authority. Under Section 18-A of the Industries (Development and Regulation) Act, 1951, the Central Government appointed an authorised Controller to replace the management

23. 1975 (4) sec 679

24. 1984 Suppl. sec 443 H

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A of the respondent - Model Mills. That was done to give effect to the directives issued by the Central Government under Section 16 of the said Act. On behalf of the respondent it was contended that substitution of the management by the Controller appointed under Section 18-A of the Industries (Development and Regulation) Act would tantamount to the industry being run under the B authority of the department of the Central Government. Negativing the contention it was held :

"While exercising power of giving directions under Section 16 the existing management is subjected to regulatory control, failing which the management has to be replaced to carry out the directions. In either case the industrial undertaking retains its identity, personality c and status unchanged. On a pure grammatical construction of sub- section (4) of Section 32, it cannot be said that on the appointment of an authorised controller the industrial undertaking acquires the status of being engaged in any industry carried on under the authority of the department of the Central Government." D Food Corporation of India, Bombay's case (supra) is the only case which arose directly under the CLRA Act. The Food Corporation of India (FCI) engaged, inter alia, the contract labour for handling of foodgrains. Complaining that their case for departmentalisation was not being considered either by the Central Government or by the State Government, nor were they extended the benefits conferred by the CLRA Act, a representative action was initiated in this Court by filing a writ petition under Article 32 of the Constitution seeking a writ of mandamus against the Central/State Government to abolish contract labour and to extend them the benefits under that Act. The FCI resisted the claim for abolition of contract labour on the ground that the operations ofloading/unloading foodgrains were seasonal, sporadic and varied from region to region. However, it pleaded that the State Government and not the Central Government was the appropriate Government under the CLRA Act. In view of the unamended definition of the expression "appropriate Government" under CLRA Act, which was in force on the rdevant date, it was pointed out that the FCI was not included in the definition by name as it was done under the Industrial Disputes Act. Following the judgment of this Court in Heavy Engineering's case (supra) and referring to the decision of this Court in Rashtriya Mill Mazdoor Sangh's case (supra), the Court took the view that the same principle would govern the interpretation of the expression "appropriate Government" in the CLRA Act and held that the State H Government was the appropriate Government pertaining to the regional offices

STEEL AUTHORITY OF INDIA LTD '· NATIONAL UNION WATER FRONT WORKERS [QUADRI, l.J ) 77

and warehouses which were situate in various States. We find no illegality either in the approach or in the conclusion arrived at by the Court in these cases.

It was in that background of the case law that the Air India's case (supra) came to be decided by a three-Judge Bench of this Court. The Air India Corporation engaged contract labour for sweeping, cleaning, dusting and watching of the buildings owned and occupied by it. The Central Government having consulted the Central Advisory Board constituted under Section 3(1) of the CLRA Act issued notification under Section 10(1) of the Act prohibiting "employment of contract labour on and from 9.12.1976 for sweeping, cleaning, dusting and watching of the buildings owned or occupied by the establishment in respect of which the appropriate Government under the said Act is the Central Government". However, the Regional Labour Commissioner, Bombay opined that the State Government was the appropriate Government under the CLRA Act. The respondent-Union filed writ petition in the High Court at Bombay seeking a writ of mandamus to the appellant to enforce the said. notification prohibiting employment of contract labour and for a direction to absorb all the contract labour doing sweeping, cleaning, dusting and watching of the buildings owned or occupied by the Air India with effect from the respective dates of their joining as contract labour with all consequential rights/benefits. A learned Single Judge of the High Court allowed the writ petition on November 16, 1989 and directed that all the contract labour should be regularised as employees of the appellant from the date of filing of the writ petition. On appeal, the Division Bench, by order dated April 3, 1992, confirmed the judgment of the learned Single Judge and dismissed the appeal. On further appeal to this Court, it was held that the word "control" was required to be interpreted in the changing commercial scenario broadly in keeping with the constitutional goals and perspectives; the interpretation must be based on some rational and relevant principles and that' the public law interpretation is the basic tool of interpretation in that behalf relegating common law principles to purely private Jaw field. In that view of the matter, it concluded that the two-Judge Bench decision in Heavy Engineering's case narrowly interpreted the expression "appropriate G Government'' on the common law principles which would no longer bear any relevance when it was tested on the anvil of Article 14. It noted that in Hindustan Aeronautics Ltd., Rashtriya Mill Mazdoor Sangh and Food Corporation of India, the ratio of Heavy Engineering formed the foundation but in Hindustan Aeronautics Ltd there was no independent consideration except repetition and approval of the ratio of Heavy Engineering case which H

p. 378 Copy page pinpoint

A was based on concession; in Food Corporation of India, the Court proceeded on the premise that warehouses of the corporation were situate within the jurisdiction of the different State Governments and that led to conclude that the appropriate Government would be the State Government. Thus, distinguishing the aforementioned decisions, it was held therein (Air India's B case) that from the inception of the CLRA Act the appropriate Government was the Central Government.

We have held above that in the case of a Central Government company/ undertaking, an instrumentality of the Government, carrying on an industry, the criteria to determine whether the Central Government is the appropriate C Government within the meaning of the CLRA Act, is that the industry must be carried on by or under the authority of the Central Government and not that the company/undertaking is an instrumentality or an agency of the Central Government for purposes of Article 12 of the Constitution; such an authority may be conferred either by a statute or by virtue of relationship of principal and agent or delegation of power and this fact has to be ascertained on the D facts and in the circumstances of each case. In view of this conclusion, with due respect, we are unable to agree with the view expressed by the learned Judges on interpretation of the expression "appropriate Government" in Air India's case (supra). Point No. I is answered accordingly.

Point No. 2 relates to the validity of the notification issued by the E Central Government under Section I0(1) of the Contract Labour (Regulation and Abolition) Act, 1970, dated December 9, 1976. The main contention against the validity of the notification is that an omnibus notification like the impugned notification would be contrary to the requirements of Section IO of the CLRA Act and is illustrative of non-application of mind. F It would be profitable to refer to Section I0 of the Act :

"I 0. Prohibition of employment of contract labour - (I) Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process, operation or other work in any establishment. (2) Before issuing any notification under sub-section (I) in relation to an establishment, the appropriate Government shall have regard to the conditions of work and benefits provided for the contract

STEEL AUTHORITY OF INDIA LTD. ''·NATIONAL UNION WATER FRONT WORKERS [QUADRI, J.] J 79

labour in that establishment and other relevant factors, such as - A (a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment;

(b) whether it is of perennial nature, that is to say, it is of B sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment;

(c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; C (d) whether it is sufficient to employ considerable number of whole-time workmen.

Explanation : If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final." , D A careful reading of Section I 0 makes it evident that sub-section (I) commences with a non obstante clause and overrides the other provisions of the CLRA Act in empowering the appropriate Government to prohibit by notification in the Official Gazette, after consultation with Central Advisory E Board/State Advisory Board, as the case may be, employment of contract labour in any process, operation or other work in any establishment. Before issuing notification under sub-section (I) in respect of an establishment the appropriate Government is enjoined to have regard to: (i) the conditions of work; (ii) the benefits provided for the contract labour; and (iii) other relevant factors like those spe.cified in clauses (a) to (d) of sub-section (2). Under F clause (a) the appropriate Government has to ascertain whether the process, operation or other work proposed to be prohibited is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment; clause (b) requires the appropriate Government to determine whether it is of perennial nature, that is to say, it is of sufficient G duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment; clause (c) contemplates a verification by the appropriate Government as to whether that type of work is done ordinarily through regular workmen in that establishment or an establishment similar thereto; and clause (d) requires vNification as to whether the work in that establishment is sufficient to employ considerable number of H ... -

p. 380 Copy page pinpoint

A whole-time workmen. The list is not exhaustive. The appropriate Government may also take into consideration other relevant factors of the nature enumerated in sub-section (2) of Section l 0 before issuing notification under Section I 0(1) of the CLRA Act.

The definition of 'establishment' given in Section 2( e) of the CLRA B Act is as follows: "In clause (e) - "establishment" is defined to mean -

(i) any office or department of the Government or a local authority, or c (ii) any place where any industry, trade, business, manufacture or occupation is carried on.'

The definition is in two parts : the first part takes in its fold any office or department of the Government or local authority - the Government D establishment; and the second part encompasses any place where any industry, trade, business, manufacture or occupation is carried on - the non-Govt. establishment. It is thus evident that there can be plurality of establishments in regard to the Government or local authority and also in regard to any place where any industry, trade, business, manufacture or occupation is carried on.

E Now, reading the definition of'establishment' in Section 10, the position that emerges is that before issuing notification under sub-section (I) an appropriate Government is required to: (i) consult the Central Board/State Board; (ii) consider the conditions of work and benefits provided for the contract labour and (iii) take note of the factors such as mentioned in clauses (a) to (d) of sub-section (2) of Section I0, referred to above, with reference F to any office or department of the Government or local authority or any place where any industry, trade, business, manufacture or occupation is carried on. These being the requirement of Section I0 of the Act, we shall examine whether the impugned notification fulfils these essentials.

G The impugned notification issued by the Central Government on December 9, 1976, reads as under :

"S.O.No.779(E) 8/9.12.76 in exercise of the power conferred by Sub- section (I) of Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 (37 of 1970) the Central Government after H consultation with the Central Advisory Contract Labour Board hereby

STEEL AUTHORITY OF INDIA LTD.'· NATIONAL UNION WATER FRONT WORKERS [QUADRI,lj 38 J

prohibits employment of contract labour on and from the I st March, A 1977, for sweeping, cleaning, dusting and watching of buildings owned or occupied by the establishments in respect of which the appropriate Government under the said Act is the Central Government.

Provided that this notification shall not only apply to the outside cleaning and other maintenance operations of multi-storeyed buildings B • where such cleaning or maintenance operations cannot be carried out except with specialised experience."

A glance through the said notification, makes it manifest that with effect from March 1, 1977, it prohibits employment of contract labour for sweeping, cleaning, dusting and watching of buildings owned or occupied by establishment in respect of which the appropriate Government under the said Act is the Central Government. This clearly indicates that the Central Government had not adverted to any of the essentials, referred to above, except the requirement of consultation with the Central Advisory Board. Consideration of the factors mentioned above has to be in respect of each establishment, whether individually or collectively, in respect of which notification under sub-section 1 of Section 10 is proposed to be issued. The impugned notification apart from being an omnibus notification does not reveal compliance of sub-section (2) of Section I 0. This is ex facie contrary to the postulates of Section I 0 of the Act. Besides it also exhibits non- appucation of mind by the Central Government. We are, therefore, unable to sustain the said impugned notification dated December 9, 1976 issued by the Central Government.

Point No. 3 remains to be considered. This is the moot point which generated marathon debate and is indeed an important one. p The learned Solicitor General contended that contract labour had been in vogue for quite some time past; having regard to the abuses or'the contract labour system, the CLRA Act was enacted by the Parliament to regulate the employment of contract labour and to cause its abolition in an establishment when the given circumstances exist; prior to the Act no mandamus could G have been issued by courts creating relationship of employer and the employee between the principal employer and the contract labour and the Act did not alter that position. When the principal employer entrusts the work to a contractor there will be principal to principal relationship between them as such the work force of the contractor cannot be said to be the employees of H