Holding

All criteria of Section 10(2) are satisfied, but a mandamus cannot be issued; the Court directs the Central Government to exercise its power under Section 10 within six months and the Southern Railway to refrain from employing contract labour and to regularise the workers if the Government fails to act.

Summary

The petitioners, about 300 catering cleaners employed by contractors on the Southern Railway, alleged that they were paid meagre wages and denied statutory benefits, and sought a writ of mandamus under Article 32 to compel the abolition of the contract‑labour system and their regularisation as railway employees. The Court examined whether the cleaning of catering establishments and pantry cars satisfied the criteria of Section 10(2) of the Contract Labour (Abolition and Regulation) Act, 1970, namely that the work is necessary to the railway’s business, of perennial nature, normally performed by regular workmen and requires a considerable number of whole‑time workers. Finding that all these conditions were met, the Court held that the appropriate Government, not the Court, must exercise the power under Section 10 to prohibit the employment of contract labour. Consequently, the Court declined to issue a mandamus and instead directed the Central Government to act within six months, and ordered the Southern Railway to refrain from employing contract cleaners and to regularise them if the Government failed to act. The petition was therefore disposed of with these directions.

Issues considered

Whether the cleaning of catering establishments and pantry cars falls within the criteria of Section 10(2) of the Contract Labour (Abolition and Regulation) Act, 1970, permitting prohibition of contract labour.
Whether a writ of mandamus under Article 32 can be issued directing the Central Government to prohibit contract labour when the appropriate Government has not yet exercised its statutory power.
Whether the Southern Railway must regularise the contract cleaners as its own employees pending governmental action.

Legislation cited

Contract Labour (Abolition and Regulation) Act, 1970s. 10, s. 10(2), s. 1(4), s. 1(5), s. 2(b), s. 2(c), s. 2(e), s. 2(g)
Factories Act, 1948
Industrial Disputes Act
Minimum Wages Act, 1948

Subjects

contract labourinside contractingSection 10mandamusArticle 32minimum wagesrailwaylabour lawabolition of contract labourCentral GovernmentSouthern Railway

Judgment

CATERING CLEANERS OF SOUTHERN RAILWAY ETC.
A v.
UNION OF INDIA & ORS. ETC.

FEBRUARY 4, 1987

B [O. CHINNAPPA REDDY AND V. KHALID, JJ.]

"Labour only contracting" or "Inside contracting system"
adopted by the Southern, South Central and South Eastern Railways in
respect of catering cleaners while the other units of the Indian Railway
have abolished it-Whether a writ of mandamus lie in a petition under
Article 32 of the Constitution compelling the primary employees to
C abolish the practice in the light of the provisions of s.10 of the Contract
Labour (Abolition and Regulation) Act, 1970-The Contract Labour
(Abolition and Regulation) Central Rules, 1971, section 25(ii)(iv) and
25(ii)(v)(a) and (b).
\ ..
D More than a quarter of a century ago, in the Standard Vacuum
Refining Company v. Its Workmen, [ !960) 3 SCR 466 the Supreme
Court affirmed the direction of the Industrial Tribunal for the abolition·
of the contract system of labour. As a result thereof, the Contract
Labour (Abolition and Regulation) Act came to be passed, "to regulate
,
the employment of contract labour in certain establishments and to
E provide for its abolition in certain circumstances and for matters con-
nected therewith". The Central Government, in exercise of its powers
conferred by section 35 of the Act, has made the Contract Labour
(Abolition and Regulation) Central Rules, 1971. Section 10 of the Act
empowers the appropriate Government to prohibit by notification in
the Official Gazette, employment of contract labour in any process,
F operation or other work in any establishment subject to the fulfilment
of the conditions in sub-sedion (2) thereof and after consulting the
Central Board or the State Board as the case may be. Rule 25 prescribes
the forms, terms and condition of licence including the payment of
minimum wages under the Minimum Wages Act, 1948 holiday, hours of
work etc. etc.
G
The Writ Petitioners, alleged that in spite of the Report of the
Parliamentary Committee of Petitions under the Chairmanship of Shri
K.P. Tewari dated 30.4. 1984 and their representations the Southern
Railway persisted in employing contract labour for cleaning its catering
establishments and pantry cars by paying a pittance averaging Rs.2.00
H to Rs.2.50 per day. Most of the other Railways had abolished the

164
SOU1HERN RAILWAY v. U.0.1. 165

system of employing labour through a contractor. Therefore, they A
sought relief for the abolition of the Contract Labour system by the
issuance of a writ of mandamus under Article 32 of the Constitution and
for a direction to treat them as regular employees.

Issuing an appropriate writ in the nature of a direction, the
Court, B

. )-" HELD: 1.1 It is clear that, on the facts presented and on the
I report of the Parliamentary Committee of Petitions, the work of clean-
ing catering establishments and pantry cars is necessary and incidental
to the industry or business of the Southern Railway and so requirement
(a) of S.10(2) is satisfied, that it is of a perennial nature and so C
requirement (b) is satisfied, that the work is done through regular
workmen in most Railways in the country and so requirement (c) is
satisfied and that the work requires the employment of sufficient
number of whole time workmen and so requirement (d) is also satisfied.
Thus all the relevant factors mentioned in s. 10(2) of the Contract
Labour (Abolition and Regulation) Act are satisfactorily accounted for. D
In addition there is the factor of profitability of the catering
establishments. [177F-H; 178AJ

.-I_ Despite this, the Supreme Court will not issue of writ of man-
damus to the Railway unless and until the Government of India fails or
refuses to exercise the power vested in it under section 10 of the Act. E
Under section 10 Parliament has vested in the appropriate Government
the power to prohibit the employment of Contract Labour in any pro-
cess operation or other work in any establishment. The appropriate
. Government is required to consult the Central Board or the State Board
· ~- as the case may be before arriving at its decision. The decision, of
\ course, will be subject to judicial review. In the circumstances the F
appropriate order to make in the present case is to direct the Central
Government to take appropriate action under s. 10 of the Contract
Labour (Abolition and Regulation) Act in the matter of prohibiting the
employment of contract labour in the work of cleaning catering estab-
lishments and pantry cars in the Southern Railway within a period of
six months. [178B-DJ G

(The Court further directed that (i) without waiting for the deci-
sion of the Central Government the administration of the Southern
Railway will be free, of its own motion to abolish the Contract labour
system and to regularise the services of those employed in the work of
cleaning catering establishments and pantry cars in the Southern H
166 SUPREME COURT REPORTS [1987] 2 S.C.R.

A Railway. In any case, the administration of the Southern Railway will
refrain, until the decisiou of the Central Government under s. !O, from
employing Contract labour; (ii) The work of cleaning catering establish-
ments and pantry cars will be done departmentally by employing those
workmen who were previously employed by the Contractor on the same
wages and conditions of work as are applicable to those engaged in
B similar work by the Western Railway. If there is any dispute
whether an .individual workman was or was not employed by the Con-
tractor such dispute shall be decided by the Deputy Labour Commis-
sioner, Madras; (iii) Any further directions may be sought, if necessary
from the Madras High Court; (iv) If the Central Government does not
rmally decide the question within six months the Southern Railway
administration will within three months thereafter absorb the workmen
c into their service and regul'arise their services. [J78D-G I

ORIGINAL JURISDICTION: Writ Petition No. 19 of 1986 etc.

(Under Article 32 of the Constitution of India).
D
R. Venkataramani, K.B. Rohtagi. C.V. Sobba Rao and Miss
Sushma Relan for the appearing parties.

The Judgment of the Court was delivered by

E CHINNAPPA REDDY, J. The petitim1ers describe themselves
as 'catering cleaners of Southern Railways represented by V. China
Thambi and M. Mohan of the Vegetarian Refreshment Room, Central
Station, Madras'. The petition is claimed to be filed in a representative
capacity on behalf of about three hundred and odd catering cleaners . - .
working in the catering establishments in various railway junctions of
F the Southern Railway and in the pantry cars of long distance trains /
running under the control of the Southern Railway. Since a long time
they have been agitating for the abolition of the Contract system under
which they are employed to do cleaning work in the catering establish-
ments and the pantry cars and for their absorption as regular
employees of the principal employer, namely, the Southern Railway.
G They complain that they are not even paid minimum wages. They are
paid a pittance averaging from Rs·.2.00 to Rs.2.50 per day. Although
the contract system has been abolished in almost all the other Rail-
ways, the Southern Railway persists in employing contract labour for
cleaning its catering establishments and pantry cars. As the several
representations made by them to the authorities concerned proved
H fruitless they have been forced to seek the intervention of this Court
SOUTHERN RAILWAY v. U.0.1. [REDDY, J.] 167

under Art. 32 of the Constitution to direct the respondents to exercise
l, their powers under Section 10(1) of the Contract Labour (Regulation
A
and Abolition) Act, 1970 and to abolish the contract system in respect
of catering cleaners in the Southern Railway and further to direct the
respondents to regularise the services of the existing catering cleaners
employed in the catering establishments at various junctions and in the
pantry cars of long distance trains and to absorb them as employees of B
the catering establishments of the Southern Railway . .They also seek a
direction to extend to them the service benefits presently available to
other categories of employees in the catering establishments of the
Railways.

We issued notice to the respondents on January 21, 1986. After
some considerable time the writ petition was listed before us on
c
August 5, 1986. We were informed at that time that in almost all the
railways except the Southern Railway, the contract labour system had
been abolished in regard to catering cleaners. We wondered why the
Southern Railway could not also fall in line and directed the Southern
Railway Administration to consider whether the contract labour D
system could not be abolished in the Southern Railway also and
whether the services of the catering cleaners could not be suitably
regularised. The learned counsel for the workmen complained before
us that the workmen were not even being paid the minimum wages. As
the Railway Administration was the principal employer, we directed
the Railway Administration to take immediate steps to see that the E
minimum wages were paid to the catering cleaners. As the interim
order of the Court regarding payment of wages was not complied with,
..._ the petit:::,n was adjoured from time to time. On April 19, 1986we also
made a further order that the Southern Railway Administration should
'· not take any further action pursuant to the tenders invited by them for
contract labour. On December 4, 1986 the Additional Solicitor Gen- F
era! who appeared on behalf of the Railway Administration undertook
to deposit the arrears due from August upto date with the Deputy
Labour Commissioner, Madras. We also directed the learned counsel
for the employees to file a list of the employees entitled to be paid
wages. We directed that the amount should be paid after verification
by the Deputy Chief Superintendent, Southern Railway. We were told G
that there is some dispute about the names of the employees. We now
direct that the Deputy Labour Commissioner, Madras will enquire
into the question as to who were working as catering cleaners in the
Madras Central Station, and also to determine the wages due to them
from August, 1986 upto date giving credit to any amount that may
have been paid to them. On such determination, the Railway H
168 SUIPREME COURT REPORTS [1987] 2 S.C.R.

A Administration shall deposit the amount with the Deputy Labour
Commissioner who shall pay over the same to the employees. The
determination by the Deputy Labour Commissioner is directed to be
completed before February 28, 1987 and the deposit by the Adminis-
tration is directed to be made before March 15, 1987. This part of the
order covers only the catering cleaners employed in the Central
B Station, Madras.

In answer to the writ petition the Railway Administration has
adopted a so.mewhat unhelpful attitude. According to the Administra-
tion it has not been found to be possible to abolish the contract labour
system because the nature of the cleaning work in the catering units of
C the Southern Railway was fluctuating and intermittant. The contract
labour system is followed not only in the Southern Railway but also in
the South Central Railway and the South Eastern Railway. They claim \-
that any departmental units not working profitably could be handed
over to a private licensee and this was the alternative that was adopted
by the Southern Railway in the case of catering cleaners. Experience
D showed that it was difficult to extract work from catering cleaners if
they were engaged on a regular basis by the railway and it was not
possible to supervise their work effectively. According to them, all
pros and cons were examined before entrusting the cleaning work to
private contractors. The Southern Railway had a moral responsibility
to the public to ensure satisfactory service and that was the reawn why
E the work was entrusted to a private agency which was considered the
most suitable method of doing the work.

We notice that the Railway Administration has not chosen to
support its statements by any facts and figures but has contended itself
by making vague and general statements. No attempt has been made
F to expalin why what has been done in most of the other railways
cannot be and should not be done in the Southern Railway too. It is
not explained why cleaning work is considered to be intermitted and
what difficulty exists in supervising the work. The Railway Adminis-
tration wants to suggest that the units are working at a loss without
expressly saying so. The suggestion is implicit in the statement that
G departmental units not working profitably could always be handed
over to private licensees. We are afraid that everything that has been
said by the Administration of the Southern Railway against abolishing
the contract labour system and regularising the services of the catering
cleaners has been contradicted by the Parliamentary Committee of
Petitions under the Chairmanship of Shri K.P. Tewari who went into
H the question in some depth. The Committee was submitting its report
SOUTHERN RAILWAY v. U.0.1. [REDDY, J.l 169

on the complaint of Shri Samar Mukherji, a member of Parliament A
regarding the grievances of the railway catering workers working
under contractors in the Southern Railway. The Committee first dealt
with the grievances of the Bearers and Servers. In paragraph 2.19 of
their report the Committee noticed that the railway catering depart-
ment was earning a profit of about Rs.50 lakhs per annum. In para-
graph 2.21 the Committee dealt with the grievances of the catering B
·Y 1cleaners. We think that it will be useful to extract here the whole of
paragraph 2.21 of the report. It is as follows:

" It has been submitted in the representation that as
the job of the cleaners is of permanent nature, these clean-
ers should be absorbed by the Railways on regular basis.
During their study visit, it was pointed out by the petition-
c
-I
ers to the Committee that cleaners were not paid minimum
wages statutorily fixed by State Governments by the con-
tractors and there was no machinery set up by the Southern
Railway to ensure that all labour laws regarding minimum
wages, overtime allowances, payment of compensation etc. D
were implemented in their case. In this connection, the
Ministry of Railways (Railway Board) in their written note
have stated that the work of cleaning is entrusted to con-
tractors as per the recommendations of High Power Com-
mittee (Alagesan Committee) appointed by the Ministry of
Railway in the year 1955 so that the establishment cost E
could be kept down. If this work is entrusted to the regular
railway employees the establishment cost would go up and
this would prove to be an uneconomical proposition. The
Ministry have further stated that the cleaning contractors at
Madras and Bangalore City hl!Ve engaged 61 and 22 clean-
ers respectively who are paid fair living wage of Rs.5.25 per F
head at Madras Central Railway Station and at Rs.8.06 per
cleaner per day at Bangalore City Railway Station as fixed
by the State Government of Tamil Nadu and Karnataka.
These payments are witnessed by the Railway's represen-
tative.
G
The Committee, however, are of the opinion that the
job of cleaning in Railway Catering Units is of a permanent
nature. Further if the work which is at present being done
by a very small number of cleaners employed through the
contractors by the Southern Railway is entrusted to the
regular employees the establishment cost would increase H
170 SUPREME COURT REPORTS [1987] 2 S.C.R.

only marginally and it will not in any way affect the profits
A
. being earned by the Catering Department. The Committee
recommended that the Government should review the pre-
sent practice of employment of cleaners through contrac-
tors and consider their employment directly by the Rail-
ways. This would end the exploitation of cleaners which has
B also been alleged in the representation.

New Delhi K.P. Tewari
Dated the 30th April, 1984 Chairman
Vaisaka 10, 1906 (Saka) Committee of Petitions."

The Report, we see, states that the railway catering department
c was earning a profit, that the work of the catering cleaners was of a
perennial nature, that the cost of entrusting the work to regular emp-
loyees would increase the establishment cost only marginally and that
the laws relating to minimum wages, over time allowance etc. and
other labour laws were not being observed in regard to catering clean-
D ers. The recommendation of the Committee was that in order to pre··
vent the exploitation of cleaners, it was necessary that the Govern·
ment should review the e~Jsting practice of employing them through
contractors and consider their direct employment by the Railway
Administration. Strengthened by the report of the Committee, the
catering cleaners submitted! several memoranda to the authorities con-
E cerned but to no avail.

The practice of employing labour through contractors for doing
work inside the premises of the primary employer, known to re-
searchers of the International Labour Organisation and other _such
organisations as 'Labour only contracting' or 'inside contracting'
F system, has been termed as an arobaic system and a relic of the early
phase of capitalist production, which is now showing signs of revival in
the more recent period. Of late there has been a noticeable tendency
on the part of big companies including public sector companies to get
the work done through conlractors rather than through their own de-
partments. As pointed out by a group of researchers in the Economic
G and Political Weekly, Review of Management, dated November 29,
1986, it is a matter of surprise that employment of contract labour is
steadily on the increase in many organised sectors including the public
sector, which one expects to function as a model employer. More than
a quarter of a century ago in the Standard Vacuum Refining Company
of India Ltd. v. Its Workmen, [1960] 3 S.C.R. 466 this Court had
H
SOUTIIERN RAILWAY v. U.0.1. [REDDY, J.] 171

occasion to refer to some of the pernicious features of the contract A
labour system. It is an important decision, unfortunately not very
much noticed in later cases. The importance of the case lies· in the fact
that it was held to be competent for an Industrial Tribunal functioning
under the Industrial Disputes Act to abolish the contract labour
system in an industrial undertaking which happened to be a private
enterprise in that case. The facts are interesting. A dispute was raised B
by the workmen of the company with respect to contract labour,
employed by the company (the Standard Vacuum Refining Company
of India Limited) for cleaning maintenance of the refinery (plant and
premises), belonging to the company. The system was that the work
was entrusted to a contractor who engaged the labour. The regular
workmen of the Company made a demand for abolition of the contract \ C
system and for absorbing the workmen employed through the con-
tractors into the regular service of the company. The complaint of the
workmen was that the contract labour had no security of service
though they were doing the work of the company and that they were
being paid much less than the wages paid by the company to its unskil-
led regular workmen. They were also not entitled to other benefits and D
amenities such as provident fund, gratuity, bonus, privilege leave,
medical facilities and subsidised food and housing to which the regular
workmen of the company were entitled. Their case was that though the
work was of a permanent nature, the contract system had been intr-0-
duced to deny them the rights and benefits which the company gave to
its regular employees. On behalf of the company, it was contended E
that the reference under Section 10 of the Industrial Disputes Act was
incompetent as there was no dispute betwee11 the Company and its
workmen, that, it was a matter for the Company to decide what was
the best method of carrying out its business, whether by employing a
Contractor or otherwise and that the Industrial Tribunal could not
interfere with that function of the management. The dispute regarding F
wages and conditions of service was really one to be settled betwen the
Contractor and his employees and had nothing to do with the Com-
pany. The Tribunal by its award gave a direction to the company to
discontinue the practice of getting the work done through contractors
and to have it done through workmen engaged by itself. The company
was directed to engage regular workmen for this work and to give G
preference to the workmen employed by the contractor. There was an
appeal to the Supreme Court by special leave under Article 136 of the
Constitution. The Supreme Court held that the Tribunal was justified
in giving the direction for the abolition of the contract system, observ-
ing that it was relevant to bear in mind that industrial adjudication
generally did not encourage the employment of contract labour in H
172 SUPREME COURT REPORTS [1987] 2 S.C.R.

A modern times. Quoting from the report of the Royal Commission on
Labour, it was said that whatever merit there was in the system in
primitive times, it was now desirable for the management to discharge
completely the complex responsibility laid upon it. The Court also
referred to similar opinions expressed by several Labour Enquiry
Committees appointed in different States. Proceeding to consider the
B merit of the contract labour system in the case before them, Wanchoo
J. speaking for the Court observed: 'f-
'
"The contract in this case related to four matters. But the
reference is confined to one only, viz., cleaning mainte-
nance work at the refinery including premises and plant
and we shall deal with that only. So far as this work is
c concerned, it is incidental to the manufacturing process and
is necessary for it and of a perennial nature which must be
done every day. Such work is generally done by workmen
in the regular employ of the employer and there should be
no difficulty itn having regular workmen for this kind of
D work. The matter would be different if the work was of
intermittent or temporary nature or was so little that it
would not be possible to employ full-time workmen for the
purpose. Under the circumstances the order of the tribunal
appears to be just and there are no good reasons for in-
terfering with it."
E
The Court held that the contract in the case was a bona fide contract
but that it did not affect the issue. The award of the Tribunal was
upheld. ·..J("·

The Supreme Court having pronounced on the ·primitive' and
)
I
F baneful nature of the system of contract labour, there was a cry raised
against the system by the Planning Commission and various other
committees appointed by the Government. The Indian Labour Confer-
ence discussed the award of the Tribunal in 1959 and following its
recommendation but after considerable delay, the Contract Labour
(Abolition and Regulation) Act was passed in The Statement of
G Objects and Reasons was as follows:

"The system of employment of contract labour lends itself
to various abuses. The question of its abolition has been
under the consideration of Government for a long time. In
the second Five Year Plan, the Planning Commission made
H certain recommendations, namely, undertaking of studies
SOUTHERN RAILWAY v. U.0.L [REDDY. J.l 173

to ascertain the extent of the problem of contract labour,
A
progressive abolition of system and improvement of
service, conditions of contract labour where the abolition
was not possible. The matter was discussed at various
meetings of Tripartite Committee at which the State
Government were also represented and general consensus
of opinion was that the system should be abolished wheFe- B
ver possible or practicable and that in cases where this
system could not be abolished altogether, the working con-
ditions of contract labour should be regulated so as to
ensure payment of wages and provision of essential
amenities.

The proposed Bill aims at abolition of contract labour in
c
respect of such categories as may be notified by appm-
priate Government in the light of certain criteria that have
been laid down, and at regulating the service conditions of
contract labour where abolition is not possible. The Bill
provides for the setting up of Advisory Boards of a tri- D
partite character, representing various interests, to advise
Central and State Governments in administering the legis-
lation and registration of establishments and contractors.
Under the Scheme of the Bill, the provision and mainte-
nance of certain basic welfare amenities for contract
labour, like drinking water and first-aid facilities, and in E
certain cases rest-rooms and canteens, have been made
' obligatory. Provisions have also been made to guard
against details in the matter of wage payment."

The long title of the Act describes it as "an Act to regulate the employ-
ment of contract labour in certain establishments and to provide for its F
abolition in certain circumstances and for matters connected theFe-
with". Sec. 1(4) makes the Act applicable to all establishments in
which 20 or more workmen are employed or were employed on any
day of the preceding 12 months as contract labour and to every con-
tractor who employs or who employed on any day of the preceding 12
months 20 or more workmen. Sec. 1(5) makes the Act inapplicable to G
establishments in which work only of an intermittent or casual nature
is performed and further provides that the question whether work per-
formed in an establishment is of an intermittent or casual nature, if
raised, shall be decided by the appropriate Govt. in consultation with
the Central Board or State Board as the case may be and that such
decision final. H
174 SUPREME COURT REPORTS [1987] 2 S.C.R.

Sec. 2(b), (c), (e) and (g) define "Contract Labour'', "Contractor", \·
A
"Establishment" and "Principal Employer" in the following terms:-

"(b) a workman shall be deemed to be employed as "con-
tract labour" in or in connection with the work of an
establishment when he is hired in or in connection
B with such work by or through a contractor, with or
without the knowledge of the principal employer;"

"(c) "contractor", in relation to an establishment, means a
person who undertakes to produce a given result for the
establishment, other than a mere supply of goods or arti-
cles of manufacture to such establishment, through con-
c tract fabour or who supplies contract labour for any work
of the establishment and includes a sub-contractor;"

"(e) "establishment" means-

D (i) any office or department of the Government or a
local authority, or

(ii) any place where any industry, trade, business,
manufacture or occupation is carried on;"

E "(g) "principal employer" means-

(i) in rdation to any office or department of the
Government or a local authority, the head of that office or
department or such other officer as the Government or the
local authority, as the case may be, may specify in this
F behalf, -

(ii) in a factory, the owner or occupier of the factory
and where a person has been named as the manager of the
factory under the Factories Act, 1948, the person so
named,
G
(iii) in a mine, the owner or agent of the mine and
where a person has been named as the manager of the
mine, the person so named,

(iv) in any other establishment, any person responsi-
H ble for the supt:rvision and control of the establishment.
SOUTHERN RAILWAY v. U.0.I. [REDDY, J.] 175
..
Explanation:- For the purpose of sub-clause (iii) of
A
this cJause, the expressions "mine", "owflers" and "agent"
1 shall have the meanings respectively assigned to them in
clause (j), clause (I) and clause (c) of sub-section (1) of
section 2 of the Mines Act, 1952."

Section 3 and 4 provide for the constitution of the Central and B
State advisory Boards. Sec. 7 provides for the registration of establish-
--4· ments. Sec. 8 provides for revocation of registration in certain cases
and Sec. 9 prescribes the effect of non-registration. Sec. 10 provides
for the prohibition of employment of contract labour in certain proces-
~1 ses, operations or other work in establishments by the appropriate
Government after consulation with the Central or State Board as the
case may be. Sec. 10 is as follows:
c
•-f "10.(l) Notwithstanding anything contained in this Act,
the appropriate Government may, after consulation with
the Central Board or, as the case may be, a State Board,
prohibit, by notification in the Official Gazette, employ-
D
men! of contract Labour in any process, operation or other
work in any establishment.

(2) Before issuing any notification under sub-sec.(l)
~ in relation to an establishment, the appropriate Govern-
men! shall have regard to the conditions of work and
E
benefits provided for the contract labour in that establish-
~
men! and other relevant factors, such as-
(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; F

(b) whether it is of perennial nature, that is to say, it
is of sufficient duration having regard ot the nature of
industry, trade, business, manufacture or occupation
carried on in that establishment;
G
(c) whether it is done ordinarily through regular
.'\
,\ workmen in that establishment or an establishment
similar thereto;

(d) whether it is sufficient to employ considerable
number of whole-time workmen. H
176 SUPREME COURT REPORTS [1987] 2 S.C.R.

Explanation:-If a question arises whether any process
A or operation or other work is of perennial nature, the deci-
sion of the appropriate Government thereon shall be
final.''

Sec. 12 provides for licensing of contractors. Sec. 13, 14 and 15 provide
B for the grant, revocation, suspension, and amendment of licensees and
appeals. Sections 16 to 21 make detailed provision for the Welfare &
Health of contract labour. Sec. 16 deals with canteens, Sec. 17 with
Rest rooms, Sec. 18 with facilities for drinking water, latrines, urinals
and washing and Sec. 19 with first-aid facilities. Sec. 20 provides that if
any amenity required to be provided under Sec. 16 to 19 for the benefit
of contract labour employed in an establishment is not provided by the
C contractor within the prescribed time such amenity shall be provided
by the Principal Employer within such time as may be prescribed. Sec.
21, while making the contractor responsible for payment of wages to
each worker employed by him as contract labour, further provides that
every Principal Employer shall nominate a representative duly autho-
D rised by him to be present at the time of disbursement of wages by
contractor to ensure and certify that wages are paid in the prescribed
manner. It is further provided that if the Contractor fails to pay wages
within the prescribed time or makes short payment, it shall be the
liability of Principal Emjployer to make payment of wages in full. Sec.
22 to 27 provide for penalties and procedure. Sec. 28 provides for
E appointment of inspecting staff. Sec. 30 makes the provisions of the
Act effective notwithstanding anything inconsistent therewith con-
tained in arms of any agreement or contract of service or any standing
orders applicable to the establishment. Any favourable benefits that
the Contract labour may be entitled to under the agreement, contract
of service or standing orders are however saved. Sec. 31 provides for
F exemptions. Sec. 33 enables the Central Govt. to give directions to any
State as to the carrying into execution in the State the provisions of the
Act. Sec. 35 provides for the making of rules for carrying out the
purposes of the Act. The Rules made by the Central Govt. are Fe-
quired to be placed before the Parliament.

G The Central Govt., in exercise of the powers conferred by Sec.
35 of the Act, has made the Contract Labour (Regulation and Aboli-
tion) Central Rules, 1971. Chapter II of the rules relates to matters /.
pertaining to the Central Board, while Chapter III of the Rules deals
with registration of establishments and licensing of contractors. Rule
25 prescribes the forms, terms & condition of licence and in particular
H Rule 25(ii)(iv) prescribes that it shall be the condition of every licence
SOUTHERN RAILWAY v. U.0.1. [REDDY, J.] 177

that the rates of wages shall not be less than the rates prescribed under
A
the Minimum Wages Act, 1948. Rule 25(ii)(iv) prescribes that it shall
-/I
be the condition of every licence that the rates of wages shall not be
less than the rates prescribed under the Minimum Wages Act, 1948 for
such employment where applicable, and where the rates have been
fixed by agreement, settlement or award, not less than the rates so
fixed, Rule 25(ii)(v)(a) prescribes that it shall be the condition of every B
licence that,
-i
"In cases where the workmen employed by the con-
tractor perform the same or similar kind of work as the
""' 'f workmen directly employed by the principal employer of
the establishment, the wage rates, holidays, hours of work
and other conditions of service of the workmen of the con-
c
tractor shall be the same as applicable to the workmen
--1 directly employed by the principal employer of the estab-
Jishment on the same or similar kind of work:

Provided that in the case of any disagreement with D
regard to the type of work the same shall be decided by the
Chief Labour Commisioner (Central) whose decision shall
be final."
...( Similarly Rule 25(ii)(v)(b) provides that in other cases the wage rates,
holidays, hours of work and conditions of service of the workmen of E
the contractor shall be such as may be specified in this behalf by the
Chief Labour Commissioner (Central). While determining the wage
rates, holidays, hours of work and other conditions of service under
Rule 25(ii)(v)(b) the Chief Labour Commissioner is required to have
')>-· regard to the wages rates, holidays, hours of work and other canditions
'
of service obtaining in similar employments. F

On the facts presented to us and on the report of the Parliamen-
tary Committee of Petitions it appears to be clear that the work of
cleaning catering establishments and pantry cars is necessary and inci-
dental to the industry or business of the Southern Railway and so
requirement (a) of S.10(2) is satisfied, that it is of a perennial nature G
and so requirement (b) is satisfied, that the work is done through
~ regular workmen in most Railways in the country and so require-
ment (c) is. satisfied and that the work requires the employment of
sufficient number of wholetime workmen and so requirement (d) is
also satisfied. Thus all the relevant factors mentioned in S.10(2)
appear ta be satisfactorily accounted for. In addition we have the H
178 SUPREME COURT REPORTS [1987] 2 S.C.R.

A factor of profitability of the catering establishments. On these facts the
petitioners straight away invite us to issue a mandamus directing the \"'
Cental Government to abolish the contract labour system under which
cleaners in catering establishments and pantry cars are at present emp-
Joyed ih the Southern Railway. But, we refrain from doing so because
under Section 10, Parliament has vested in the appropriate Govern-
B
men! the power to prohibit the employment of contract labour in any
process, operation or other work in any establishment. The appm-
priate Government is required to consult the Central Board or the "'\--
State Board as the case may be before arriving at its decision. The
decision, of course, will be subject to judicial review. But we do not
think that we will be justified in issuing the mandamus prayed for ~ ...
c unless and until the Government fails or refuses to exercise the power
vested in it under S.10. In the circumstances the appropriate order to
make in the present cas·~ is to direct the Central Government to take
appropriate action under s.10 of the Contract Labour (Abolition and \-
Regulation) Act in the matter of prohibiting the employment of con-
tract labour in the work of cleaning catering establishments and pantry
D
cars in the Southern Railway. This must be done within six months
from today. Without waiting for the decision of the Central Govern-
ment the administration of the Southern Railway will be free, of its
own motion to abolish the Contract labour system and to regularise the
services of the employed in the work of cleaning catering establish-
ments and pantry cars im the Southern Railway. In any case, the )-
E
administration of the Southern Railway will refrain, until the decision
of the Central Government under s.10, from ~mploying Contract
>
labour. The work of cleaning catering establishments and pantry cars
will be clone departmentally by employing those workmen who were
previously employed by the Contractor on the same wages and condi-
--4(""
tions of work as are applicable to those engaged in similar work by the
F
Western Railway. If thern is any dispute whether an individual work-
man was or was not employed by the Contractor such dispute shall be
decided by the Deputy Labour Commissioner, Madras. Any futther
directions may be sought, if necessary, from the Madras High Court. If
the Central Government does not finally decide the question within six
months from today, the Southern Railway administration will within
G
three months thereafter absorb the workmen into their service and
regularise their services. .,..._

S.R. Petition disposed of.